<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
BancTec, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
BancTec, Inc.
- --------------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] 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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO]
4851 LBJ FREEWAY
DALLAS, TEXAS 75244
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 22, 1997
Notice is hereby given that the Annual Meeting of Stockholders of BancTec,
Inc., a Delaware corporation (the "Company"), will be held at Texas Commerce
Bank Tower, Fourth Floor Boardroom, 2200 Ross Avenue, Dallas, Texas on May 22,
1997, at 10:00 a.m., Dallas, Texas time for the following purposes:
(i) To elect two directors;
(ii) To approve an increase in the number of shares available for grants
under the BancTec, Inc. 1989 Stock Plan by 1,000,000 shares; and
(iii) To transact such other business as may properly come before the
meeting or any adjournment(s) thereof.
The accompanying Proxy Statement contains information regarding, and a more
complete description of, the items of business to be considered at the
meeting.
Only stockholders of record at the close of business on April 7, 1997, are
entitled to notice of, and to vote at, the Annual Meeting of Stockholders or
any adjournment(s) thereof.
You are cordially invited and urged to attend the meeting, but if you are
unable to attend, you are requested to sign and date the accompanying proxy
and return it promptly in the enclosed self-addressed envelope. If you attend
the meeting, you may vote in person, if you wish, whether or not you have
returned your proxy. In any event, a proxy may be revoked at any time before
it is exercised.
By Order of the Board of Directors
Tod V. Mongan
Secretary
Dallas, Texas
April 14, 1997
<PAGE>
[LOGO]
4851 LBJ FREEWAY
DALLAS, TEXAS 75244
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 22, 1997
This Proxy Statement is sent to stockholders of BancTec, Inc., a Delaware
corporation (the "Company"), in connection with the solicitation of proxies by
the Board of Directors of the Company (the "Board") for use at the Annual
Meeting of Stockholders of the Company, and any adjournment(s) thereof (the
"Meeting"), to be held on May 22, 1997, at 10:00 a.m., Dallas, Texas time at
Texas Commerce Bank Tower, Fourth Floor Boardroom, 2200 Ross Avenue, Dallas,
Texas for the purposes set forth in the accompanying Notice of Annual Meeting
of Stockholders. Solicitation of proxies may be made in person or by mail,
telephone, or telegraph by directors, officers, and regular employees of the
Company. The Company has also retained D.F. King to solicit stockholders in
connection with the matters to be presented at the Meeting for a fee not to
exceed $4,500 plus reimbursement of certain expenses. The Company may also
request banking institutions, brokerage firms, custodians, nominees, and
fiduciaries to forward solicitation materials to the beneficial owners of
Common Stock of the Company held of record by such persons, and the Company
will reimburse the forwarding expenses. The cost of solicitation of proxies
will be paid by the Company. This Proxy Statement was first mailed to
stockholders on or about April 14, 1997.
The Company's Annual Report on Form 10-K covering the twelve month period
from January 1, 1996 through December 31, 1996 ("Fiscal 1996"), including
audited financial statements, is enclosed herewith. Such Annual Report on Form
10-K does not form any part of the material for the solicitation of proxies.
Any stockholder returning the accompanying proxy may revoke such proxy at
any time prior to its exercise: (i) by giving written notice to the Company of
such revocation; (ii) by voting in person at the Meeting; or (iii) by
executing and delivering to the Company a later dated proxy.
The voting securities of the Company are shares of its Common Stock, $.01
par value ("Common Stock"), each share of which entitles the holder thereof to
one vote. On April 7, 1997, there were outstanding and entitled to vote
21,225,176 shares of Common Stock. Only stockholders of record at the close of
business on April 7, 1997, are entitled to notice of, and to vote at, the
Meeting.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock entitled to vote is necessary to constitute
a quorum at the Meeting. If a quorum is not present or represented at the
Meeting, the stockholders entitled to vote thereat, present in person or
represented by proxy, have the power to adjourn the Meeting from time to time,
without notice other than an announcement at the Meeting, until a quorum is
present or represented. At any such adjourned Meeting at which a quorum is
present or represented, any business may be transacted that might have been
transacted at the original Meeting. Abstentions and broker non-votes are each
included in the determination of the number of shares present for purposes of
a quorum, but will not be counted as votes in favor of a proposal.
Cumulative voting is not permitted in the election of directors of the
Company. On all matters (including election of directors) submitted to a vote
of the stockholders at the Meeting, each stockholder will be entitled to
<PAGE>
one vote for each share of Common Stock owned of record by such stockholder at
the close of business on April 7, 1997.
Proxies in the accompanying form, if properly executed and returned, will be
voted at the Meeting in accordance with the instructions thereon. Any proxy
upon which no instructions have been indicated with respect to any of the
following matters will be voted as follows: (i) "FOR" the election of the two
persons named in this Proxy Statement as the Board's nominees for election to
the Board; (ii) "FOR" the increase in the number of shares available for
grants under the BancTec, Inc. 1989 Stock Plan (the "1989 Plan") by 1,000,000
shares; and (iii) in accordance with the discretion of the holders of such
proxies with respect to any other business that properly comes before the
stockholders at the Meeting. The Board knows of no matters, other than those
stated above, to be presented for consideration at the Meeting. If, however,
other matters properly come before the Meeting, it is the intention of the
persons named in the accompanying proxy to vote such proxy in accordance with
their judgment on any such matters. The persons named in the accompanying
proxy may also, if it is deemed to be advisable, vote such proxy to adjourn
the Meeting from time to time.
ELECTION OF DIRECTORS
The directors of the Company have been divided into three classes. The
members of each class serve for three years. Pursuant to the Company's bylaws,
the Board has fixed the number of directors at nine. Three of the nine
directors' terms expire this year. The term of office for each director shall
be until the year following each nominee's name below or until a successor is
elected and qualified. Directors are elected by a plurality of the votes of
shares of Common Stock present in person or by proxy and entitled to vote at
the Meeting.
The Board recommends a vote FOR the election of the following nominees to be
elected for a term expiring in 2000:
<TABLE>
<CAPTION>
NAME AGE POSITION
------------------------------- --- ---------------------------------------
<S> <C> <C>
Michael E. Faherty............. 62 Director
Paul J. Ferri.................. 58 Director
The following directors are presently serving unexpired terms, ending the
year following such director's name:
<CAPTION>
NAME AGE POSITION
------------------------------- --- ---------------------------------------
<S> <C> <C>
Grahame N. Clark, Jr. (1999)... 54 Chairman, President and Chief Executive
Officer and Director
Rawles Fulgham (1998).......... 69 Director
Thomas G. Kamp (1998).......... 71 Director
A.A. Meitz (1999).............. 59 Director
Michael A. Stone (1999)........ 60 Director
Norton A. Stuart, Jr. (1998)... 62 Director
</TABLE>
Mr. Faherty has been a director of the Company since September 1984. Since
1977, Mr. Faherty has been president of MICO, Inc., a family-owned consulting
and contract executive business. As part of the contract executive business,
Mr. Faherty from time to time serves as a corporate officer of companies.
Currently, he is serving as chairman of eccs inc. (a manufacturer of mass
storage subsystems and an integrator of systems utilizing such subsystems).
Mr. Faherty also serves as a director of eccs inc. and of Frontier Corporation
(a provider of telecommunication services).
Mr. Ferri has been a director of the Company since September 1978. Mr. Ferri
has been managing general partner in Matrix Partners I, II, III, and IV, L.P.
(venture capital investment partnerships) since January 1982, August 1985,
March 1990, and January 1995, respectively. In addition, Mr. Ferri is a
director of Applix, Inc. (real time decision support software), Cascade
Communications Corp. (frame relay data communications
2
<PAGE>
products), Stratus Computer, Inc. (fault tolerant computer systems), Techforce
Corp. (integrated network support solutions), and VideoServer Inc. (video
teleconferencing).
Mr. Clark has been a director of the Company since September 1985. Mr. Clark
has been Chairman and Chief Executive Officer of the Company since April 1987
and President since September 1995. Mr. Clark also serves as a director of El
Chico Restaurants, Inc. (owner and franchiser of El Chico and other Tex-Mex
style Mexican restaurants) and The Dyson-Kissner-Moran Corporation (a private
investment company).
Mr. Fulgham has been a director of the Company since June 1982. Since
September 1989, Mr. Fulgham has served as senior advisor of Merrill Lynch &
Co., Inc. From August 1982 to September 1989, Mr. Fulgham was executive
director of Merrill Lynch Private Capital Inc. In addition, Mr. Fulgham
presently serves on the Advisory and Audit Committees of Dorchester Hugoton,
Ltd. (engaged in development, production and processing of natural gas) and as
a director of Dresser Industries, Inc. (a supplier to energy-related
companies), NCH Corporation (a manufacturer of products used in maintenance
applications), and Global Industrial Technologies, Inc. (a provider of
products for industrial production and infrastructure development).
Mr. Kamp has been a director of the Company since June 1982. Mr. Kamp served
as chairman of the board of Premier Computer Corporation (a disk drive
remanufacturer) from 1985 to 1990, and also served as chairman of the board of
Rodime, Inc. (a disk drive manufacturer) from 1989 to 1991. Mr. Kamp was vice
chairman of Control Data Corporation until December 1984 and chairman of
Centronics Data Computer Corporation (a holding company) from January 1985
until January 1988.
Mr. Meitz was formerly with the firm of Booz-Allen & Hamilton, Inc. (an
international management and technology consulting firm) for more than 25
years and was a Senior Vice President until he elected retirement in August
1994. Mr. Meitz also served as a member of the Booz-Allen Board of Directors
and Chairman of its Audit Committee. The majority of his work has focused on
issues of business strategy, marketing and organization design. In addition,
Mr. Meitz served as a director of Recognition International Inc. until October
1995. Presently, Mr. Meitz serves as a director of Associated Materials
Incorporated (a building products company), Northern Trust Bank of Texas (a
subsidiary of Northern Trust Bank of Illinois), Greyhound Lines Inc. (a
transportation company), and ComStream Corp. (a satellite communications
business).
Mr. Stone has been a director of the Company since January 1979. Since March
1985, Mr. Stone has been general partner of Davis Venture Group, L.P., the
general partner of Davis Venture Partners, L.P. (a venture capital
partnership).
Mr. Stuart has been a director of the Company since February 1986. Mr.
Stuart served as President of the Company from April 1987 to September 1995.
Should any nominee named herein for the office of director become unable or
unwilling to accept nomination or election, it is intended that the persons
acting under the proxy will vote for the election, in his stead, of such other
person as the Board may recommend. The Board has no reason to believe that any
nominee named above will be unable or unwilling to serve if elected.
MEETINGS AND COMMITTEES OF THE BOARD
The Board held five meetings in Fiscal 1996, and each director attended at
least 75% of the aggregate of (i) the total number of meetings of the Board
held during the period for which he served as a director and (ii) the total
number of meetings held by all committees of the Board on which he served.
The Board does not have a standing nominating committee or a committee
performing similar functions. Nominees to the Board are selected by the entire
Board.
The Board has an Option Committee (herein so called), which is composed of
Michael E. Faherty, Paul J. Ferri, Rawles Fulgham, Thomas G. Kamp, A.A. Meitz
and Michael A. Stone. The Option Committee administers the 1989 Plan and the
1994 Plan. The Option Committee held four meetings during Fiscal 1996.
3
<PAGE>
The Board has a Compensation Committee (herein so called), which is composed
of Michael E. Faherty, Paul J. Ferri, Rawles Fulgham, Thomas G. Kamp, A.A.
Meitz, and Michael Stone. The Compensation Committee reviews and makes
recommendations regarding compensation and other employment benefits of
officers and employees of the Company. The Compensation Committee held one
meeting during Fiscal 1996.
The Board has an Audit Committee (herein so called), which is composed of
Michael E. Faherty, Paul J. Ferri, Rawles Fulgham, Thomas G. Kamp, A.A. Meitz,
and Michael A. Stone. The Audit Committee reviews the Company's financial
results, recommends the appointment of the Company's outside auditors, reviews
the scope and results of audits, and reviews internal accounting controls. The
Audit Committee held two meetings during Fiscal 1996.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
earned during Fiscal 1996, the nine-month period ended December 31, 1995
("Fiscal 1995A"), and the fiscal year ended March 27, 1995 ("Fiscal 1995"), by
the Company's Chief Executive Officer and each of the Company's four other
most highly compensated executive officers (based upon salary and bonus earned
during Fiscal 1996). All information relating to shares of Common Stock and
options to purchase Common Stock contained herein have been adjusted to
reflect the three-for-two stock split of Common Stock effected in February
1993.
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
--------------------------------- --------------------
RESTRICTED
NAME AND PRINCIPAL FISCAL PERFORMANCE STOCK OPTIONS
POSITION(S) YEAR SALARY($) BONUS($)(1) BONUS(2) AWARD(S)($) (#)(3)
------------------ ------ --------- ----------- ----------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Grahame N. Clark, Jr.... 1996 280,919 289,000 153,000 210,902(4) 100,000
Chairman, President and
Chief Executive Offi-
cer 1995A 198,835 165,106 -0- -0- 81,000
1995 256,877 -0- -0- 35,035 20,000
William E. Bassett...... 1996 178,018 171,000 -0- 60,151(5) 25,000
Executive Vice Presi-
dent; President, 1995A 132,183 -0- -0- -0- 11,500
BancTec USA, Inc. 1995 171,083 -0- -0- 14,674 3,500
Raghavan Rajaji......... 1996 201,653 144,500 42,500 6,817(6) 57,500
Senior Vice President,
Treasurer and 1995A 46,923 38,709 -0- -0- 70,000
Chief Financial Officer 1995 -0- -0- -0- -0- -0-
John G. Guthrie......... 1996 176,653 119,000 63,000 13,583(7) 50,000
Senior Vice President 1995A 123,249 76,978 -0- -0- 5,500
1995 161,022 -0- -0- 9,278 3,500
James E. Uren........... 1996 136,226 133,875 70,875 57,908(8) 62,500
Senior Vice President 1995A 84,846 61,622 -0- 26,899 43,500
1995 96,219 -0- -0- 14,217 15,000
</TABLE>
- --------
(1) Reflects bonus earned during the fiscal year. In some instances, all or a
portion of the bonus was paid during the next fiscal year.
(2) Bonus vests ratably over a period of three years and is not available to
the individual until the later of retirement from the Company or
attainment of the age of 62.
(3) Options to acquire shares of Common Stock.
(4) On December 31, 1996, Mr. Clark held 36,312 shares of restricted Common
Stock granted under the 1989 Plan with a value of $749,127 based upon the
last sales price of Common Stock reported on the NYSE on December 31,
1996, the last trading day of Fiscal 1996. Of these 36,312 shares of
restricted stock, 10,676 shares vest, in whole or in part, within three
years of the date of grant and the remaining shares of restricted stock
will vest beyond three years from the date of grant. Of such 10,676
shares, 1,403 vested on January 1, 1997, 571 vested on January 3, 1997,
2,120 will vest on April 1, 1997, 514 shares will vest on May 17, 1997,
2,120 will vest on April 1, 1998, 1,403 will vest on January 1, 1998, 571
will vest on January 3,
4
<PAGE>
1998, 1,403 will best on January 1, 1999, and 571 will vest on January 3,
1999. Dividends, if any, paid in respect of Common Stock will be paid in
respect of Common Stock held as restricted stock.
(5) On December 31, 1996, Mr. Bassett did not hold any shares of restricted
Common Stock. Mr. Bassett retired from the Company on January 3, 1997.
(6) On December 31, 1996, Mr. Rajaji held 401 shares of restricted Common
Stock granted under the 1989 Plan with a value of $8,273 based upon the
last sales price of Common Stock reported on the NYSE December 31, 1996,
the last trading day of Fiscal 1996. Of these 401 shares of restricted
stock, 133 shares vested on January 3, 1997, 134 shares will vest on
January 3, 1998, and 134 shares will vest on January 3, 1999. Dividends,
if any, paid in respect of Common Stock will be paid in respect of Common
Stock held as restricted stock.
(7) On December 31, 1996, Mr. Guthrie held 938 shares of restricted Common
Stock granted under the 1989 Plan with a value of $19,351 based upon the
last sales price of Common Stock reported on the NYSE on December 31,
1996, the last trading day of Fiscal 1996. Of these 938 shares of
restricted stock, 266 shares vested on January 3, 1997, 139 shares will
vest on April 1, 1997, 266 will vest on January 3, 1998, and 267 will vest
on January 3, 1999. Dividends, if any, paid in respect of Common Stock
will be paid in respect of Common Stock held as restricted stock.
(8) On December 31, 1996, Mr. Uren held 4,256 shares of restricted Common
Stock granted under the 1989 Plan with a value of $87,801 based upon the
last sales price of Common Stock reported on the NYSE on December 31,
1996, the last trading day of Fiscal 1996. Of these 4,256 shares of
restricted stock, 1,271 shares vested on January 1, 1997, 213 vested on
January 3, 1997, 213 will vest on April 1, 1997, 861 will vest on June 30,
1997, 1,272 will vest on January 1, 1997, 213 will vest on January 3,
1998, and 213 will vest on January 3, 1999. Dividends, if any, paid in
respect of Common Stock will be paid in respect of Common Stock held as
restricted stock.
OPTION GRANTS IN FISCAL 1996
The following table sets forth information related to options granted to the
named executive officers during Fiscal 1996.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(1)
- -------------------------------------------------------------------------------- ---------------------
PERCENT OF TOTAL
OPTIONS OPTIONS GRANTED TO EXERCISE OR
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION
NAME (#)(2) FISCAL YEAR(%) ($/SH)(3) DATE 5% ($) 10% ($)
---- ------- ------------------ ----------- ---------------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Grahame N. Clark, Jr.... 100,000 14.2348 21.75 October 22, 2002 739,708 1,678,145
William E. Bassett...... 25,000 3.5586 20.25 December 3, 2006 318,378 806,832
Raghavan Rajaji......... 2,500 0.3558 22.50 May 22, 2002 19,130 43,400
55,000 7.8291 21.75 October 22, 2002 406,839 922,980
John G. Guthrie......... 50,000 7.1173 21.75 October 22, 2002 369,854 839,073
James E. Uren........... 2,500 .3558 22.50 May 22, 2002 19,130 43,400
60,000 8.5409 21.75 October 22, 2002 443,825 1,006,887
</TABLE>
- --------
(1) The potential realizable value portion of the foregoing table illustrates
the value that might be realized upon exercise of the options immediately
prior to the expiration of their term, assuming the specified compound
rates of appreciation of the Common Stock over the term of the options.
These amounts do not take into account provisions of certain options
providing for termination of the options following termination of
employment, nontransferability, or vesting periods of up to five years.
These amounts represent certain assumed rates of appreciation only. Actual
gains on stock option exercises are dependent on the future performance of
the Common Stock and overall stock market conditions. There can be no
assurance that the
5
<PAGE>
potential values reflected in this table will be achieved. All amounts have
been rounded to the nearest whole dollar amount.
(2) Options to acquire shares of Common Stock, which were granted on May 22,
1996, October 22, 1996, and December 3, 1996, under the 1989 Plan will
vest ratably over five years beginning one year after the date of grant
with the exception of Mr. Bassett's option, which will vest over a period
of seven years from date of grant.
(3) The option exercise price may be paid in shares of Common Stock owned by
the executive officer, in Cash, or a combination of either of the
foregoing, as approved by the Option Committee in its discretion.
AGGREGATED OPTION EXERCISES IN FISCAL 1996
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information related to the number of options
exercised in Fiscal 1996 and the value realized by the named executive
officers. Further, the table provides information related to the number and
value of options held by the named executive officer at the end of Fiscal
1996.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
ON VALUE ------------------------------- -------------------------------
NAME EXERCISE(#) REALIZED($)(2) EXERCISABLE(#) UNEXERCISABLE(#) EXERCISABLE($) UNEXERCISABLE($)
---- ---------- -------------- -------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Grahame N. Clark, Jr.... 44,250 679,665 128,200 232,800 528,570 255,280
William E. Bassett...... 19,800 338,184 55,500 61,000 283,611 82,704
Raghavan Rajaji......... -0- -0- 14,000 113,500 9,900 39,600
John G. Guthrie......... 3,690 55,399 12,900 64,100 16,808 32,537
James E. Uren........... 1,948 28,920 29,100 119,900 45,469 96,486
</TABLE>
- --------
(1) The last sales price of Common Stock as reported on the NYSE on December
31, 1996, the last trading day of Fiscal 1996, was $20.63. Value is
calculated on the basis of the remainder of $20.63 minus the exercise
price multiplied by the number of shares of Common Stock underlying the
option.
(2) Value is calculated based on the remainder of the closing market price of
Common Stock on the date of the exercise minus the exercise price
multiplied by the number of shares to which the exercise relates.
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company is entitled to receive
compensation in the amount of $20,000 per year plus a fee of $1,000 for each
day on which he attends a meeting of the Board or a meeting of a committee of
the Board, if the committee meeting is not held on the same day as a Board
meeting.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements (the "Agreements") with
Grahame N. Clark, Jr., Norton A. Stuart, Jr., Tod V. Mongan, and Raghavan
Rajaji. Each of the Agreements provides for the payment of base salary amounts
and the participation in any employee benefit or bonus plan or arrangement
made available by the Company on a basis consistent with the terms,
conditions, and overall administration of such plan or arrangement. The term
of Mr. Stuart's Agreement is five years from May 28, 1992. The Agreements for
Messrs. Clark and Mongan expire on November 7, 2000 and Mr. Rajaji's Agreement
expires on September 27, 2000.
Upon the death of an executive during the term of that executive's
Agreement, the Company is obligated to pay the executive's base salary for a
period of months (not to exceed twelve months) determined by multiplying two
times the number of complete twelve-month periods of employment of the
executive with the Company. Each Agreement provides that if the executive's
employment is terminated (whether such termination is by the executive or by
the Company) within three years after a Triggering Event (which, generally
speaking, is defined
6
<PAGE>
in the Agreement as a change in control of the Company) for any reason other
than (i) termination by the Company for cause (as defined in the Agreement),
(ii) the executive having reached the age of 65, or (iii) the executive's
death, the Company is obligated to make a lump sum cash payment equal to 2.99
times the average of the executive's annualized includable compensation (as
defined in the Agreement) received from the Company during the period
consisting of the five full taxable years ending immediately preceding the
Triggering Event. The Company is obligated to transfer to an irrevocable trust
upon the occurrence of a Triggering Event, or as soon thereafter as the
Company knows of the Triggering Event, the amount of cash that the Company
would be obligated to pay under the Agreement if such executive's employment
were terminated on that date.
COMPENSATION COMMITTEE AND OPTION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
During Fiscal 1996, the Compensation Committee was composed of Michael E.
Faherty, Paul J. Ferri, Rawles Fulgham, Thomas G. Kamp, A.A. Meitz, and
Michael A. Stone and the Option Committee was composed of Michael E. Faherty,
Paul J. Ferri, Rawles Fulgham, Thomas G. Kamp, A.A. Meitz, Michael A. Stone,
and Merle J. Volding. See "Election of Directors" and "Meetings and Committees
of the Board." No member of the Compensation Committee or the Option Committee
is an officer of the Company. No member of the Compensation Committee or the
Option Committee was formerly an officer of the Company except for Mr.
Volding, a member of the Option Committee.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for setting and administering the
policies governing annual compensation of the executive officers of the
Company. These policies are based upon the philosophy that the Company's long-
term success is best achieved through recruitment and retention of the best
people in the industry. The Compensation Committee applies this philosophy in
determining compensation for the Company's executive officers in three areas:
salary; bonuses; and stock options and awards.
Base Salary. The Company strives to offer salaries to its executive officers
which are competitive in its industry for similar positions requiring similar
qualifications. In determining executive officers' salaries, the Compensation
Committee considers information provided by Hewitt Associates and from
published salary surveys specific to the Company's industry, size, and
geographic location.
The executive officers' base salaries are targeted at slightly below the
median as indicated in the salary surveys. Base salaries are reviewed bi-
annually to determine if adjustments are necessary based upon competitive
practices and economic conditions. In addition, executive officers' salaries
are periodically adjusted based on individual performance and changes in job
content and responsibilities.
The Compensation Committee evaluates the performance and sets the salary of
the Company's Chairman, President and Chief Executive Officer, Grahame N.
Clark, Jr. Mr. Clark does not participate in any discussions of the
Compensation Committee regarding his salary or performance. Mr. Clark
evaluates the performance of all other executive officers and recommends
salary adjustments which are reviewed and acted upon by the Compensation
Committee. Performance evaluations for individual executive officers are based
on achievement of predetermined individual goals. For Mr. Clark, these goals
are set by the Compensation Committee, and for all other officers, these goals
are set by Mr. Clark.
Bonuses. The Company seeks to provide additional incentives and rewards to
executives who make contributions of outstanding value to the Company. For
this reason, the Compensation Committee administers a bonus plan, which can
comprise a substantial portion of the total compensation of executive officers
when earned and paid. It is the intention of the Compensation Committee to
weight the total compensation of the executive officers heavily in the area of
incentive compensation. The Compensation Committee believes that optimal
performance is encouraged through the use of incentive programs, furthering
the goal of having performance compensation as an important component of total
executive compensation.
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In consultation with the Chairman, the Compensation Committee determines
annually the total amount of cash bonuses available for executive officers.
Awards under the plan are contingent upon the performance of the Company as a
whole, based upon the Company attaining certain financial and operational
goals set by the Board annually in consultation with the Chairman. The target
amounts of bonus available to each executive officer are set annually by the
Compensation Committee with regard to Mr. Clark and by Mr. Clark, subject to
review and approval by the Compensation Committee, with regard to executive
officers other than Mr. Clark. In all cases the target amounts for individual
officers are based upon such officer's individual goals and objectives and the
goals and objectives established for the particular operating unit such
officer is responsible for managing. Executive officers earn a percentage of
the target amounts under the bonus plan based on the achievement of these
performance goals and objectives as determined annually by the Compensation
Committee and a percentage based on the Company's attainment of the pre-tax
goals. Awards are weighted so that proportionately higher awards are received
when the Company's performance exceeds targets and proportionately smaller or
no awards are made when the Company does not meet targets.
Stock Options. The Compensation Committee believes that employee equity
participation provides significant additional motivation to executive officers
to maximize value for the Company's stockholders, and therefore recommends to
the Option Committee periodic grants of stock options under the 1989 Plan.
Stock options are approved by the Option Committee, based on the
recommendation of the Compensation Committee, with exercise prices at the
prevailing market price at date of grant. The stock options will have value
only if the Company's stock price increases over the exercise price.
Therefore, the Compensation Committee believes that stock options serve to
align the interest of executive officers closely with the other stockholders
because of the direct benefit executive officers receive through improved
stock performance.
The Compensation Committee makes recommendations to the Option Committee
concerning the size and frequency of option grants for executive officers,
after consideration of recommendations from the Chairman. Recommendations for
options are based upon relative position and responsibilities of each
executive officer, historical and expected contributions of each officer to
the Company, and previous option grants to such executive officers within the
Company. Generally, option grants vest over five years and expire six years
from date of grant. Option grants for Fiscal 1996 are set forth in the table
entitled "Option Grants in Fiscal 1996."
Restricted Stock. The Company has implemented the use of restricted stock in
order to further the goal of having its executive officers maintain a "stake"
in the long-term success of the Company, through equity ownership, as well as
encouraging long-term employment with the Company. Restricted awards are given
to executive officers in lieu of base salary increases and in lieu of a fixed
percentage of the available bonus for each fiscal year.
Each time an executive officer's base salary is increased such executive
officer must take a minimum of 50% of such increase as a restricted stock
award. It is such officer's option to take up to the entire amount of such
increase as a restricted stock award but in no event can the percentage fall
below 50%. The amount of restricted stock awarded is based on the base salary
increase, the percentage to be taken in stock, the number of years remaining
until such officer reaches sixty years of age, and the closing price of the
Company's Common Stock on the day of the award. This restricted stock award
vests in equal annual installments over the number of years remaining until
such officer attains the age of sixty.
Executive officers are required to take 15% of their annual incentive bonus,
if any, in the form of a restricted stock award. The number of shares of
restricted stock awarded is based upon the closing price of the Company's
Common Stock on the date the incentive bonus is approved by the Compensation
Committee. The restricted stock awarded to each executive officer vests over a
period of three years.
Supplemental Long-Term Performance Bonus Plan. The Company, after
consultation with Hewitt Associates, has instituted a long-term bonus plan as
an additional encouragement for long-term employment with the Company. The
Compensation Committee determines which executive officers are eligible to
participate in the plan. The bonus available for each participant is based
upon their position within the Company, age, and
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years of service with the Company. The amount of bonus actually paid is a
percentage (45%, 35%, or 25%) of the incentive bonus actually paid to the
executive officer. See "Bonus" previously discussed. The bonus awarded to each
executive officer vests over a period of three years and is not available to
the executive officer until the later of retirement or attainment of the age of
62. If no incentive bonus is paid to the executive officer, no long-term
performance bonus will be paid.
COMPENSATION COMMITTEE
Michael E. Faherty
Paul J. Ferri
Rawles Fulgham
Thomas G. Kamp
A.A. Meitz
Michael A. Stone
PERFORMANCE GRAPH
The following chart compares the yearly percentage change in the cumulative
total stockholder return of the Company's Common Stock during the five fiscal
years ended December 31, 1996, with the yearly change in cumulative total
return of the NYSE Composite Index and Standard and Poors (S&P) Computer
Software and Services Industry Group Index. The comparison assumes that $100
was invested on March 29, 1992, in the Company's Common Stock and in each of
the foregoing indices and assumes reinvestment of dividends.
LOGO
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PROPOSAL TO AMEND THE 1989 STOCK PLAN TO INCREASE THE NUMBER
OF SHARES OF COMMON STOCK RESERVED FOR ISSUANCE
GENERAL
On May 31, 1989, the Board of Directors of the Company adopted the BancTec,
Inc. 1989 Stock Plan (the "1989 Plan"). The stockholders of the Company
approved the 1989 Plan on September 6, 1989. The description in this Proxy
Statement of the 1989 Plan is intended solely as a summary, does not purport
to be complete, and is qualified in its entirety by the full text of the 1989
Plan attached hereto as Exhibit A.
THE AMENDMENT
The proposed amendment to the 1989 Plan (the "Amendment") would increase the
aggregate number of shares of Common Stock that may be issued either as
restricted stock or upon the exercise of options under the 1989 Plan from
2,500,000 shares to 3,500,000 shares.
REASONS FOR THE 1989 PLAN
The 1989 Plan is an arrangement under which certain individuals may be
granted awards ("Awards") for incentive stock options, nonstatutory stock
options, and restricted stock as described below. The reasons for the 1989
Plan are to incentivize officers, directors, and employees of the Company; to
attract individuals with a high degree of training, experience, and ability;
to provide an opportunity to such individuals to acquire a proprietary
interest in the success of the Company; to increase their interest in the
Company's welfare; and to encourage them to remain with the Company.
ADMINISTRATION OF THE 1989 PLAN
The 1989 Plan is administered by the Option Committee, which consists of all
nonemployee members of the Board. See "Meetings and Committees of the Board."
Each member of the Option Committee is subject to a nondiscretionary formula
regarding the granting of Awards under the 1989 Plan. The Option Committee is
authorized to designate recipients of Awards under the 1989 Plan, to interpret
and construe the provisions of the 1989 Plan and any Awards granted
thereunder, and to do all things necessary or appropriate to administer the
1989 Plan in accordance with its terms.
ELIGIBILITY
Awards may be granted under the 1989 Plan to employees of the Company,
including officers and directors, and, subject to the nondiscretionary formula
mentioned above, nonemployee directors of the Company. However, only employees
of the Company are entitled to receive incentive stock option Awards. The
Option Committee or the Chief Executive Officer of the Company, in its or his
sole discretion as outlined in the 1989 Plan, determines which eligible
individuals receive Awards under the 1989 Plan.
The approximate number of individuals who are officers or employees of the
Company is 3,650. The number of nonemployee directors of the Company is eight.
GRANT, TERM, AND RESTRICTIONS ON AWARDS
Awards granted under the 1989 Plan may include incentive stock options,
which are qualified under Section 422A of the Internal Revenue Code of 1986
(the "Code"), nonstatutory stock options, which are not qualified under
Section 422A of the Code, and restricted stock. Restricted stock is Common
Stock that may not be disposed of or encumbered in any way until the periods
of restriction on the stock have elapsed.
Awards may be granted only by the Option Committee. In some circumstances,
the Option Committee may also grant cash awards in connection with the grant
of a stock Award. Any individual who receives an Award
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may be required to remain in the employ of the Company for a stated period of
time before the stock option may be exercised or the restrictions on
restricted stock lapse.
Common Stock purchased upon exercise of incentive options cannot be disposed
of until at least two years after the options are granted under the 1989 Plan
and until at least one year after the option is exercised. The maximum value
of incentive options that can become first exercisable in any one year can be
no more than $100,000. If these limitations are not met, the options will lose
their status as incentive options under Section 422A of the Code and will be
treated as nonstatutory options under the 1989 Plan.
Each Award is to be granted under an agreement (an "Agreement") between the
Company and the individual receiving the Award. Each Agreement specifies the
exercise periods of options and the restriction periods on restricted stock.
The rights under the Agreement are not transferable by the individual
receiving an Award except under the laws of descent and distribution. During
the lifetime of the individual receiving an Award, only the individual or his
legal representative may exercise the Award.
PURCHASE PRICE
The purchase price for each share of Common Stock subject to an incentive
option granted under the 1989 Plan may not be less than the greater of the par
value of such share and 100% of the fair market value of such share on the
date that the incentive option is granted. The purchase price for each share
of Common Stock subject to a nonstatutory option granted under the 1989 Plan
may not be less than the greater of the par value of such share or 50% of the
fair market value of such share on the date that the nonstatutory option is
granted. The purchase price of Common Stock may be paid by cash, check, or
shares of Common Stock. Awards of restricted stock are granted without a
purchase price.
On February 28, 1997, the last sales price of Common Stock reported on the
New York Stock Exchange was $25.50.
TERMINATION OF AWARDS
Awards of incentive options granted under the 1989 Plan shall terminate with
respect to any portion of the incentive option not previously exercised by an
individual after six years from the date that the incentive option is granted,
unless the option terminates sooner by reason of termination of employment,
disability, or death. The unexercised or restricted portion of an Award shall
terminate immediately if an individual's employment is terminated for
misconduct. If termination of employment is voluntary, such portion of the
Award shall terminate thirty days after employment terminates. If employment
is terminated by the Company for reasons other than misconduct, such portion
of the Award shall terminate ninety days after employment terminates. The
unexercised or restricted portion of an Award will terminate twelve months
after the occurrence of the disability or death of an individual.
CERTAIN TRANSACTIONS
The 1989 Plan contains antidilution provisions applicable in the event of
any change in the number of outstanding shares of Common Stock of the Company
that is (i) effective without receipt of consideration by the Company, by
reason of a stock dividend, stock split, or other recapitalization or merger
in which the Company is the surviving entity, (ii) by reason of assumptions
and conversions of outstanding Awards due to an acquisition of the Company. In
any such event, appropriate adjustments will be made in the maximum number of
shares which may be issued under the 1989 Plan and the number of shares under
and exercise price of outstanding Awards.
In addition, in the case of (i) a dissolution or liquidation of the Company,
(ii) a merger or consolidation of the Company in which the Company is not the
surviving entity, or (iii) a transaction in which another entity becomes the
owner of at least 50% of the total voting power of all classes of stock of the
Company, every Award
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made pursuant to the 1989 Plan shall terminate. However, immediately prior to
such a transaction, the holders of such Awards shall have the right to
exercise all options and the restrictions applicable to the holders of
restricted stock shall lapse.
AMENDMENTS
The Board or the Option Committee may at any time, without the consent of
the holders of Awards, alter, amend, revise, suspend, or discontinue the 1989
Plan, provided that such action shall not adversely affect Awards previously
granted. Any amendments to the 1989 Plan that would (i) materially increase
the benefits accruing to individuals participating in the 1989 Plan, or (ii)
materially increase the number of shares of Common Stock subject to the 1989
Plan, or (iii) materially modify the requirements as to eligibility for
participation in the 1989 Plan must be approved by the holders of a majority
of shares of Common Stock represented and entitled to vote thereon at a
meeting of the shareholders of the Company.
FEDERAL INCOME TAX CONSEQUENCES
Incentive Stock Options. An optionee who receives an incentive stock option
under the 1989 Plan will ordinarily not recognize any income for federal
income tax purposes as a result of the receipt or exercise of such option.
However, the exercise of an incentive stock option will give rise to an
increase in the optionee's alternative minimum taxable income for purposes of
the alternative minimum tax in an amount equal to the excess of the fair
market value of the Common Stock at the time the optionee's rights to the
stock are freely transferable or are not subject to a substantial risk of
forfeiture over the exercise price. The Company will not be entitled to a
compensation deduction for federal income tax purposes with respect to either
the grant of an incentive stock option under the 1989 Plan or the exercise of
such an option by the optionee. If the optionee does not dispose of the shares
of Common Stock acquired through the exercise of the incentive stock option
within two years of the date of the grant of such option, and within one year
after the exercise date, and if the optionee is employed by the Company (or
certain related entities) from the time the option is granted until three
months before its exercise, any gain or loss recognized upon the disposition
will constitute a long-term capital gain or loss, and the Company will not be
entitled to a deduction. If an optionee disposes of the shares prior to the
expiration of such holding periods (a "disqualified disposition"), the
optionee will recognize, at the time of such disposition, ordinary income
equal to the difference between the exercise price and the lower of (i) the
fair market value of the shares subject to the option on the date of exercise
or (ii) the amount realized by the optionee on the sale of such shares; any
remaining gain shall be taxed as capital gain. In the event of a disqualified
disposition, the Company will be entitled to a deduction in an amount equal to
the income recognized by the optionee.
If an optionee pays the exercise price of an incentive stock option solely
with Common Stock, and if the shares surrendered are (i) shares not received
pursuant to the exercise of an incentive stock option and not subject to a
substantial risk or forfeiture or (ii) the result of the optionee's exercise
of another incentive stock option, the exercise of which satisfied the above
stated holding period requirements, the optionee will not recognize income and
the basis and holding period of the surrendered Common Stock shall be
transferred to that number of new shares equal to the number of old shares
surrendered. If more shares are received than were surrendered, the additional
shares' basis will be zero. If these conditions are not met, the payment of
the exercise price with shares of Common Stock may be treated as a
disqualified disposition or otherwise taxable disposition.
Nonstatutory Options. The grant of a nonstatutory option under the 1989 Plan
should not ordinarily be a taxable event for federal income tax purposes. Upon
exercise of a nonstatutory option, the optionee will recognize ordinary income
in an amount equal to the difference between the amount paid by the optionee
for the shares of Common Stock and the fair market value of such shares
determined on the later of (i) the date of exercise or (ii) the date on which
the shares of Common Stock become transferable by the optionee or are not
subject to a substantial risk of forfeiture, unless such optionee files an
election to recognize income as of the date the shares are transferred to him,
in which case the optionee will recognize the difference between the exercise
price and the fair market value of the Common Stock on such date. If the
Company withholds all
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<PAGE>
amounts required to be withheld under applicable law or other authority, the
Company ordinarily will be entitled to a deduction equivalent to the amount of
compensation income recognized by the optionee.
If an optionee pays the exercise price of nonstatutory options solely with
Common Stock, the shares received will generally have the same basis and
holding period as the Common Stock surrendered. If more shares are received
than were surrendered, the additional shares will cause the optionee to
recognize compensation income either at the time of transfer or when
restrictions with respect to those shares lapse.
Restricted Stock. An individual who receives an Award of restricted stock is
taxed at the time that the Award is no longer subject to a substantial risk of
forfeiture or becomes transferable, whichever occurs first. At such time, he
will include in gross income the excess of the then fair market value of the
restricted stock over the amount, if any, paid for such stock. However, the
individual may elect to include the fair market value of restricted stock
(determined without regard to any restriction, other than a restriction which
by its terms will never lapse) in his gross income for the taxable year in
which he first receives such stock by filing an election within 30 days after
such receipt. The Company ordinarily will be entitled to a deduction
equivalent to the amount of compensation income recognized by the optionee.
VOTE REQUIRED AND RECOMMENDATION FOR APPROVAL OF THE PROPOSED AMENDMENT TO THE
1989 PLAN
To be approved by the stockholders, the Amendment must receive the approval
of stockholders holding at least a majority of the outstanding shares of
Common Stock. The enclosed form of proxy provides a means for stockholders to
vote for the Amendment, to vote against the Amendment, or to abstain from
voting with respect to the Amendment. Each properly executed proxy received in
time for the meeting will be voted as specified therein. If a stockholder
executes and returns a proxy but does not specify otherwise, the shares
represented by such stockholder's proxy will be voted "FOR" the Amendment.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF THE
AMENDMENT. SINCE THE AMENDMENT WILL INCREASE THE NUMBER OF OPTIONS AND AWARDS
OF RESTRICTED STOCK THAT MAY BE GRANTED TO ALL DIRECTORS AND EXECUTIVE
OFFICERS OF THE COMPANY, EACH OF THE DIRECTORS AND EXECUTIVE OFFICERS OF THE
COMPANY HAS AN INTEREST IN, AND MAY BENEFIT FROM, THE ADOPTION OF THE
AMENDMENT.
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CERTAIN STOCKHOLDERS
The following table sets forth certain information as of March 20, 1997,
regarding the ownership of Common Stock of: (i) each person who is known by
the Company to be the beneficial owner of more than five percent of the
outstanding shares of Common Stock; (ii) each director of the Company; (iii)
each executive officer named in the Summary Compensation Table; and (iv) all
executive officers and directors of the Company as a group. Included in the
"Number of Shares of Common Stock" are shares attributable to options that are
exercisable as of, or will be exercisable within 60 days after, March 20,
1997.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SHARES OF OUTSTANDING
COMMON COMMON
NAME OF BENEFICIAL OWNER(1) STOCK STOCK
--------------------------- --------- -----------
<S> <C> <C>
FMR Corp.(2)......................................... 2,322,448 11.0%
82 Devonshire Street
Boston, Massachusetts 02109
Pioneering Management Corp.(3)....................... 1,604,600 7.6%
60 State Street
Boston, Massachusetts 02109
Grahame N. Clark, Jr.(4)............................. 258,474 1.2%
Norton A. Stuart, Jr.(5)............................. 102,291 *
William E. Bassett(6)................................ 90,683 *
Merle J. Volding(7).................................. 88,529 *
Michael E. Faherty(8)................................ 84,042 *
Michael A. Stone(9).................................. 68,250 *
Rawles Fulgham(10)................................... 69,000 *
Paul J. Ferri(11).................................... 53,250 *
James E. Uren(12).................................... 40,776 *
Thomas G. Kamp(13)................................... 39,750 *
John G. Guthrie(14).................................. 17,399 *
Raghavan Rajaji(15).................................. 16,101 *
A.A. Meitz(16)....................................... 3,950 *
All executive officers and directors as
a group (17 persons)(17)............................ 1,180,900 5.6%
</TABLE>
- --------
* Less than one percent.
(1) Except as otherwise indicated, each stockholder has sole investment and
sole voting power with respect to the shares of Common Stock shown.
(2) As of March 8, 1996, FMR Corp. beneficially owned 2,322,448 shares of the
Common Stock of the Company. This number includes 2,037,900 shares
beneficially owned by Fidelity Management & Research Company, as a result
of its serving as investment advisor to various investment companies
registered under Section 8 of the Investment Company Act of 1940 and as a
result of acting as sub-advisor to Fidelity American Special Situations
Trust ("FASST"), and 284,548 shares beneficially owned by Fidelity
Management Trust Company, as a result of its serving as investment manager
of the institutional account(s).
(3) As of January 21, 1997, Pioneering Management Corporation has sole voting
power for 1,604,600 shares, sole dispositive power for 50,000 shares, and
shared dispositive power for 1,554,600 shares of Common Stock of the
Company. Pioneering Management Corporation serves as investment advisor to
investment companies that beneficially own these shares.
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<PAGE>
(4) Includes 156,200 shares that Mr. Clark may acquire pursuant to stock
options and 34,338 shares of unreleased restricted stock.
(5) Includes 67,535 shares that Mr. Stuart may acquire pursuant to stock
options and 291 shares of unreleased restricted stock.
(6) Includes 66,700 shares that Mr. Bassett may acquire pursuant to stock
options.
(7) Includes 55,702 shares that Mr. Volding may acquire pursuant to stock
options.
(8) Includes 42,000 shares that Mr. Faherty may acquire pursuant to stock
options.
(9) Includes 42,000 shares that Mr. Stone may acquire pursuant to stock
options.
(10) Includes 42,000 shares that Mr. Fulgham may acquire pursuant to stock
options.
(11) Includes 42,000 shares that Mr. Ferri may acquire pursuant to stock
options.
(12) Includes 32,100 shares that Mr. Uren may acquire pursuant to stock
options and 3,884 shares of unreleased restricted stock.
(13) Includes 31,000 shares that Mr. Kamp may acquire pursuant to stock
options.
(14) Includes 13,600 shares that Mr. Guthrie may acquire pursuant to stock
options and 1,660 shares of unreleased restricted stock.
(15) Includes 14,000 shares that Mr. Rajaji may acquire pursuant to stock
options and 1,468 shares of unreleased restricted stock.
(16) Includes 1,000 shares that Mr. Meitz may acquire pursuant to stock
options.
(17) Also includes 760,187 shares subject to stock options and 87,447 shares
of unreleased restricted stock.
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STOCKHOLDER PROPOSALS
Any stockholder of the Company desiring to present a proposal for action at
the Annual Meeting of Stockholders to be held in 1998 must deliver the
proposal to the executive offices of the Company by no later than January 1,
1998, unless the Company notifies the stockholders otherwise.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board, upon the recommendation of the Audit Committee, has selected
Arthur Andersen & Co. to act as independent auditors for the fiscal year
ending in December 1997.
Arthur Andersen & Co. has advised the Company that it will have a
representative in attendance at the Meeting with the opportunity to make a
statement, if such representative desires to do so, and to respond to
appropriate questions presented at the Meeting.
OTHER MATTERS
The Board does not intend to bring any other matters before the Meeting and
does not know of any matters which will be brought before the Meeting by
others. However, if any other matters properly come before the Meeting, it is
the intention of the persons named in the accompanying proxy to vote such
proxy in accordance with their judgment on such matters.
By Order of the Board of Directors
Tod V. Mongan
Secretary
Dallas, Texas
April 14, 1997
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<PAGE>
BANCTEC, INC.
1989 STOCK PLAN
SCOPE AND PURPOSE OF PLAN
This BancTec, Inc. 1989 Stock Plan (the "Plan") provides for the granting
of:
(a) Incentive Options (hereinafter defined) to certain key employees of
BancTec, Inc., a Delaware corporation (the "Corporation"), or of its
Affiliates (hereinafter defined), and
(b) Nonstatutory Stock Options (hereinafter defined) to certain key
employees and nonemployee directors of the Corporation or of its
Affiliates.
(c) Restricted Stock (hereinafter defined) to certain key employees and
nonemployee directors of the Corporation or of its Affiliates.
The purpose of the Plan is to provide an incentive for key employees and
directors of the Corporation or its Affiliates to remain in the service of the
Corporation or its Affiliates, to extend to them the opportunity to acquire a
proprietary interest in the Corporation so that they will apply their best
efforts for the benefit of the Corporation, and to aid the Corporation in
attracting able persons to enter the service of the Corporation and its
Affiliates.
SECTION 1. DEFINITIONS.
1.1. "Act" shall mean the Securities Exchange Act of 1934, as amended.
1.2. "Affiliates" shall mean (a) any corporation, other than the
Corporation, in an unbroken chain of corporations ending with the Corporation
if each of the corporations, other than the Corporation, owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain and (b) any
corporation, other than the Corporation, in an unbroken chain of corporations
beginning with the Corporation if each of the corporations, other than the
last corporation in the unbroken chain, owns stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain.
1.3. "Agreement" shall mean the written agreement between the Corporation
and a Holder evidencing the Award granted by the Corporation and the
understanding of the parties with respect thereto.
1.4. "Award" shall mean an award granted in accordance with the provisions
of the Plan in the form of an Option, Restricted Stock or any combination
thereof.
1.5. "Board of Directors" shall mean the board of directors of the
Corporation.
1.6. "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.7. "Committee" shall mean the committee appointed pursuant to Section 3
hereof by the Board of Directors to administer this Plan.
1.8. "Eligible Individuals" shall mean (a) key employees, including officers
and directors who are also employees of the Corporation or of any of its
Affiliates and (b) nonemployee directors of the Corporation or of any of its
Affiliates. Notwithstanding the foregoing provisions of this Section 1.8, to
ensure that the requirements of the third sentence of Section 3.1 are
satisfied, the Board of Directors may from time to time specify individuals
who shall not be eligible for the Awards or the grant of options or stock
appreciation rights or allocations of stock under any other plan of the
Corporation or its affiliates (as such terms are used in subsection (d)(3) of
Rule 16b-3 promulgated under the Act); provided, however, that the Board of
Directors may at any time determine that any individual who has been so
excluded from eligibility shall become eligible for Awards and
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<PAGE>
grants of such options or stock appreciation rights or allocations of stock
under any other plans of the Corporation and its Affiliates as it may specify.
1.9. "Fair Market Value" shall mean:
(a) If shares of Stock of the same class are listed or admitted to
unlisted trading privileges on any national or regional securities exchange
at the date of determining the Fair Market Value, the last reported sale
price on such exchange on the last business day prior to the date in
question; or
(b) If shares of Stock of the same class shall not be listed or admitted
to unlisted trading privileges as provided in Subsection 1.9(a) and sales
prices therefor in the over-the-counter market shall be reported by the
National Association of Securities Dealers, Inc. Automated Quotations, Inc.
("NASDAQ") National Market System at the date of determining the Fair
Market Value, the last reported sale price so reported on the last business
day prior to the date in question; or
(c) If shares of Stock of the same class shall not be listed or admitted
to unlisted trading privileges as provided in Subsection 1.9(a) and sales
prices therefor shall not be reported by the NASDAQ National Market System
as provided in Subsection 1.9(b), and bid and asked prices therefor in the
over-the-counter market shall be reported by NASDAQ (or, if not so
reported, by the National Quotation Bureau Incorporated) at the date of
determining the Fair Market Value, the average of the closing bid and asked
prices on the last business day prior to the date in question; and
(d) If shares of Stock of the same class shall not be listed or admitted
to unlisted trading privileges as provided in Subsection 1.9(a) and sales
prices or bid and asked prices therefor shall not be reported by NASDAQ (or
the National Quotation Bureau Incorporated) as provided in Subsection
1.9(b) or Subsection 1.9(c) at the date of determining the Fair Market
Value, the value determined in good faith by the Board of Directors.
For purposes of valuing Incentive Options, the Fair Market Value of Stock
shall be determined without regard to any restriction other than one which, by
its terms, will never lapse.
1.10. "Holder" shall mean an Eligible Individual to whom an Award has been
granted.
1.11. "Incentive Options" shall mean stock options that are intended to
satisfy the requirements of section 422A of the Code.
1.12. "Nonstatutory Options" shall mean stock options that do not satisfy
the requirements of section 422A of the Code.
1.13. "Options" shall mean either Incentive Options or Nonstatutory Options,
or both.
1.14. "Restricted Stock" shall mean Stock delivered under the Plan that is
subject to (i) the requirements of Section 6 and (ii) such other restrictions
as the Committee deems appropriate or desirable.
1.15. "Restriction Period" shall mean the period or periods specified in the
Restricted Stock Agreement of the Holder, which shall specify a period
commencing on the date an Award is granted and ending on such date as the
Committee shall determine.
1.16. "Stock" shall mean the Corporation's authorized $.01 par value common
stock, together with any other securities with respect to which Options
granted hereunder may become exercisable.
SECTION 2. STOCK AND MAXIMUM NUMBER OF SHARES SUBJECT TO THE PLAN.
2.1. Description of Stock and Maximum Shares Allocated. Both Restricted
Stock and Stock which Options granted hereunder give a Holder the right to
purchase may be unissued or reacquired shares of Stock, as the Board of
Directors may, in its sole and absolute discretion, from time to time
determine.
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Subject to the adjustments in Section 7.6 hereof, the aggregate number of
(i) shares of Restricted Stock that may be the subject of an Award hereunder
and (ii) shares of Stock that may be issued pursuant to the exercise of all
Options granted hereunder shall not exceed 2,500,000 shares of BancTec, Inc.
Stock.
2.2. Restoration of Unpurchased Shares. If an Award hereunder expires or
terminates for any reason during the term of this Plan and prior to the
completion of the Restriction Period or exercise of an Option in full or if
all of the shares of Stock subject to an Award have not for any other reason
been issued pursuant to the Award, the shares of Stock subject to but not
issued or otherwise used under such Award shall be "restored" to the Plan by
again being available for Awards granted after the shares' restoration.
2.3. Maximum Number of Shares and Awards that May Be Granted to Committee
Members. Notwithstanding any other provision in the Plan or any Agreement,
other than the provisions of Subsection 3.1(a) concerning "disinterested
persons," the maximum number of shares that any Committee member who is not a
disinterested person (as specified in Section 3) may acquire hereunder
pursuant to an Award to any Committee member who is not a disinterested person
is 200,000 shares. In addition, the maximum period that may be specified in
the Agreement of a Committee member who is not a disinterested person within
which an Option or Award granted hereunder may be exercised is ten (10) years.
2.4. Issuance of Stock in Name of Holder. Upon issuance of Stock to any
Holder pursuant to the terms of this Plan and any Holder's Agreement, such
Stock shall only be issued into the name of the Holder or his legal
representative.
SECTION 3. ADMINISTRATION OF THE PLAN.
3.1 Committee. The Plan shall be administered by the Committee. The
Committee shall consist of all non-employee members of the Board of Directors.
In the event that the Stock is registered under Section 12 of the Act, all
members of the Committee shall be "disinterested persons," as defined in Rule
16b-3 promulgated under the Act, and shall be subject to the following
limitations:
(a) Except for awards granted pursuant to Section 3.1(b), members of the
Committee shall not be eligible to receive stock options, stock
appreciation rights, or an allocation of stock under any plan of the
Corporation or its Affiliates (as such terms are used in Rule 16b-3) while
they are serving as members of the Committee, and they must not have
received such options, stock appreciation rights, or an allocation of stock
under any plan of the Corporation or its Affiliates within one year prior
to their appointment to the Committee.
(b) Options shall be granted to each current and future member of the
Committee as follows:
1. An Option to purchase 5,000 shares of Stock will be granted to
current members of the Committee and to future members of the Committee
upon appointment and participation as a member thereof. Said Option may
be exercised with respect to 20 percent of said Stock on each of the
first five anniversaries of the date of such grant. This grant shall be
effective as of the first meeting of the Committee at which such member
shall attend in person and vote; provided, however, that for those
persons who are members of the Committee at the date the stockholders
of the Corporation approve this section, this grant shall be effective
as of the first meeting of the Board of Directors in the calendar year
following the date of such approval by the stockholders.
2. For each person who is a member of the Committee both before and
after the regular annual meeting of stockholders of the Corporation
each year (beginning with the annual meeting in 1992), an Option to
purchase 5,000 shares of Stock will be granted. Said Option may be
exercised with respect to 20 percent of said Stock on each of the first
five anniversaries of the date of such grant. The grant shall be
effective as of the first meeting of the Board of Directors in each
calendar year following each such annual meeting of stockholders.
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3. The Options granted pursuant to this section shall be exercisable
at 100 percent of Fair Market Value at the effective date of the grant.
4. The number of shares exercisable hereunder and exercise prices
shall be adjusted according to the provisions of Section 7 and any
other relevant provisions hereof.
5. These provisions may not be amended more than once every six
months, other than to comport with changes in the Code, the Act, or the
regulations thereunder.
3.2 Duration, Removal, Etc. The members of the Committee shall serve at the
pleasure of the Board of Directors, which shall have the power, at any time
and from time to time, to remove members from the Committee or to add members
thereto. Vacancies on the Committee, however caused, shall be filled by action
of the Board of Directors.
3.3 Meetings and Actions of Committee. The Committee shall elect one of its
members as its Chairman and shall hold its meetings at such times and places
as it may determine. All decisions and determinations of the Committee shall
be made by the majority vote or decision of all of its members present at a
meeting; provided, however, that any decision or determination reduced to
writing and signed by all of the members of the Committee shall be as fully
effective as if it had been made at a meeting duly called and held. The
Committee may make any rules and regulations for the conduct of its business
that are not inconsistent with the provisions hereof and with the bylaws of
the Corporation as it may deem advisable.
3.4 Committee's Powers. Subject to the express provisions hereof, the
Committee shall have the authority, in its sole and absolute discretion, (a)
to adopt, amend, and rescind administrative and interpretive rules and
regulations relating to the Plan; (b) to determine the terms and provisions of
the respective Agreements (which need not be identical), including, but not
limited to provisions defining or otherwise relating to (i) subject to Section
7 of the Plan, the term and the period or periods and extent of exercisability
of the Options, (ii) the extent to which the transferability of shares of
Stock issued upon exercise of Options is restricted, (iii) the extent to which
the transferability of shares of Restricted Stock shall be restricted, (iv)
the restrictions that shall be placed upon Restricted Stock at the time of its
Award, (v) the effect of termination of employment upon the exercisability of
the Options and the termination of the Restriction Period with respect to
Restricted Stock, and (vi) the effect of approved leaves of absence
(consistent with any applicable regulations of the Internal Revenue Service);
(c) to accelerate the time of exercisability of any Option that has been
granted; (d) to construe the respective Agreements and the Plan; and (e) to
make all other determinations and perform all other acts necessary or
advisable for administering the Plan, including the delegation of such
ministerial acts and responsibilities as the Committee deems appropriate. The
Committee may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any Agreement in the manner and to the extent
it shall deem expedient to carry it into effect, and it shall be the sole and
final judge of such expediency. The Committee shall have full discretion to
make all determinations on the matters referred to in this Section 3.4, and
such determinations shall be final, binding and conclusive.
SECTION 4. ELIGIBILITY AND PARTICIPATION.
4.1. Eligible Individuals. Awards may be granted hereunder only to persons
who are Eligible Individuals at the time of the grant thereof.
Notwithstanding any provision contained herein to the contrary, a person
shall not be eligible to receive an Incentive Option hereunder unless he is an
employee of the Corporation or an Affiliate, nor shall a person be eligible to
receive an Incentive Option hereunder if he, at the time such Option is
granted, would own (within the meaning of sections 422A and 425 of the Code)
stock possessing more than ten percent (10%) of the total combined voting
power or value of all classes of stock of the Corporation or of an Affiliate,
unless at the time such Incentive Option is granted, (i) the exercise price
per share of Stock is at least one hundred and ten percent
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(110%) of the Fair Market Value of each share of Stock to which the Incentive
Option relates and (ii) the Incentive Option is not exercisable after the
expiration of five (5) years from the date it is granted.
4.2. No Right to Award. The adoption of the Plan shall not be deemed to give
any person a right to be granted an Option or to receive an Award.
SECTION 5. GRANT OF AWARDS AND CERTAIN TERMS OF THE AGREEMENTS.
Subject to the express provisions hereof, the Committee shall determine
which Eligible Individuals shall be granted Awards hereunder from time to
time. In making grants, the Committee shall take into consideration the
contribution the potential Holder has made or may make to the success of the
Corporation or its Affiliates and such other considerations as the Board of
Directors may from time to time specify. The Committee shall also determine
the number of shares subject to each such Award and shall authorize and cause
the Corporation to grant Awards in accordance with such determinations.
The date on which the Committee completes all action constituting an offer
of an Award to an individual, including the specification of the number of
shares of Stock to be subject to the Award, shall be the date on which the
Award covered by an Agreement is granted, even though certain terms of the
Agreement may not be at such time determined and even though the Agreement may
not be executed until a later time. For purposes of the preceding sentence, an
offer shall not be deemed made until the Committee has communicated the grant
thereof to the potential Holder. In no event, however, shall an Optionee gain
any rights in addition to those specified by the Committee in its grant,
regardless of the time that may pass between the grant of the Award and the
actual execution of the Agreement by the Corporation and the Holder.
Each Award granted hereunder shall be evidenced by an Agreement, executed by
the Corporation and the Eligible Individual to whom the Award is granted,
incorporating such terms as the Committee shall deem necessary or desirable.
More than one Award may be granted hereunder to the same Eligible Individual
and be outstanding concurrently hereunder. In the event an Eligible Individual
is granted any combination of one or more Incentive Options, one or more
Nonstatutory Options and one or more grants of Restricted Stock, such grants
shall be evidenced by separate Agreements, one for each of the Incentive
Option grants, one for each of the Nonstatutory Option grants and one for each
of the Restricted Stock awards.
Each Agreement may contain or otherwise provide for conditions giving rise
to the forfeiture of the Stock acquired pursuant to an Award granted hereunder
or otherwise, and such restrictions on the transferability of shares of the
Stock acquired pursuant to an Award granted hereunder or otherwise as the
Committee in its sole and absolute discretion shall deem proper or advisable.
Such conditions giving rise to forfeiture may include, but need not be limited
to, the requirement that the Holder render substantial services to the
Corporation or its Affiliates for a specified period of time. Such
restrictions on transferability may include, but need not be limited to,
options and rights of first refusal in favor of the Corporation and
shareholders of the Corporation other than the Holder of such shares of Stock
who is a party to the particular Agreement or a subsequent holder of the
shares of Stock who is bound by such Agreement.
In addition, the Committee may grant cash awards payable in connection with
the exercise of an Award the terms and conditions of such awards to be such as
the Committee in its sole discretion deems appropriate; provided, however,
that no such cash award shall be effective unless it can comply and does
comply with any applicable requirements for exemption from liability pursuant
to Rule 16b-3 promulgated under the Act.
Notwithstanding the foregoing provisions of this Section 5, the Chief
Executive Officer of the Corporation may, from time to time, at his sole
discretion but subject to the following provisions of this Section 5, grant
Awards to individuals who are not at the time of grant individuals subject to
liability under section 16(b) of the Act. The total number of shares of the
Restricted Stock or other Stock, as appropriate, that shall at any time be
subject to grant pursuant to the immediately preceding sentence shall be
specified from time to time by resolution of the Board of Directors, and such
number of shares shall be included within the number of shares stated in
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Section 2.1. The Board of Directors may further limit the authority of the
Chief Executive Officer to grant Awards and may prescribe some or all of the
terms of any such Awards to such extent as the Board of Directors deems
appropriate.
SECTION 6. RESTRICTED STOCK.
6.1. Methods of Acquisition. Restricted Stock may be received by an Eligible
Individual either as an Award or as the result of an exercise of an Option.
Restricted Stock shall be subject to a Restriction Period, after which
restrictions will lapse.
6.2. Restrictions on Disposal. Except as otherwise provided in this Section
6 and Section 7 of the Plan, no shares of Restricted Stock received by an
Eligible Individual shall be sold, exchanged, transferred, pledged,
hypothecated or otherwise disposed of during the Restriction Period.
6.3. Custody of Stock During Restriction Period. The Committee may require
under such terms and conditions as it deems appropriate or desirable that the
certificates for Restricted Stock delivered under the Plan may be held in
custody by a bank or other institution, or that the Corporation may itself
hold such shares in custody until the Restriction Period expires or until
restrictions thereon otherwise lapse, and may require, as a condition of
receipt of any Restricted Stock that the Eligible Individual shall have
delivered a stock power endorsed in blank relating to the Restricted Stock.
6.4. Limited Exchange of Restricted Stock. Nothing in this Section 6 shall
preclude a Eligible Individual from exchanging any shares of Restricted Stock
subject to the restrictions contained herein for any other shares of Stock
that are similarly restricted, but only to the extent such exchanges are
permitted under the terms of the Plan or his Agreement at the time of the
exchange.
SECTION 7. TERMS AND CONDITIONS OF AWARDS.
All Awards granted hereunder shall comply with, be deemed to include, and
shall be subject to the following terms and conditions:
7.1. Number of Shares. Each Agreement shall state the number of shares of
Stock to which it relates.
7.2. Option Exercise Price. Each Incentive Stock Option Agreement and
Nonstatutory Stock Option Agreement shall state the exercise price per share
of Stock. The exercise price per share of Stock subject to an Incentive Option
shall not be less than the greater of (a) the par value per share of the Stock
or (b) 100% of the Fair Market Value per share of the Stock on the date of the
grant of the Option. The exercise price per share of Stock subject to a
Nonstatutory Option shall not be less than fifty percent (50%) of the Fair
Market Value per share of the Stock on the date of the grant of the Option.
7.3. Medium and Time of Payment, Method of Exercise, and Withholding
Taxes. The exercise price of an Option shall be payable upon the exercise of
the Option (i) in cash (ii) by check payable to the order of the Corporation,
(iii) with the consent of the Committee, with shares of Stock of the
Corporation owned by the Holder, including a multiple series of exchanges of
such Stock, or (iv) by a combination of cash and such shares.
Exercise of an Option shall not be effective until the Corporation has
received written notice of exercise. Such notice must specify the number of
whole shares to be purchased and be accompanied by payment in full of the
aggregate exercise price of the number of shares purchased. The Corporation
shall not in any case be required to sell, issue, or deliver a fractional
share of Stock with respect to any Award.
The Committee may, in its discretion, require a Holder to pay to the
Corporation at the time of exercise of an Option or portion thereof or the
lapse of a Restriction Period, as applicable, the amount that the Corporation
deems necessary to satisfy its obligation to withhold Federal, state or local
income or other taxes incurred by
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reason of the exercise. Where the exercise of an Option or lapse of a
Restriction Period does not give rise to an obligation to withhold Federal
income or other taxes on the date of exercise, the Corporation may, in its
discretion, require a Holder to place unrestricted shares of Stock, which may
be the shares received upon exercise of the Option or released by the lapse of
the Restriction Period, in escrow for the benefit of the Corporation until
such time as Federal income or other tax withholding is no longer required
with respect to such shares or until such withholding is required on amounts
included in the gross income of the Holder as a result of the exercise of an
Option, the disposition of shares of Stock acquired pursuant thereto or the
lapse of the Restriction Period. At such later time, the Corporation, in its
discretion, may require a Holder to pay to the Corporation the amount that the
Corporation deems necessary to satisfy its obligation to withhold Federal,
state or local income or other taxes incurred by reason of the exercise of the
Option, the disposition of shares of Stock or the lapse of the Restriction
Period. Upon receipt of such payment by the Corporation, such shares of Stock
shall be released from escrow to the Holder.
7.4. Term, Time of Exercise, and Transferability of Awards and Options. In
addition to such other terms and conditions as may be included in a particular
Agreement granting an Award, the rights of a Holder under an Award shall be
exercisable during a Holder's lifetime only by him or by his guardian or legal
representative. Each Award shall also be subject to the following terms and
conditions:
(a) Termination of Employment or Directorship. The provisions of this
Section 7.4(a) shall apply to the extent a Holder's Agreement does not
expressly provide otherwise. If a Holder ceases to be employed by at least
one of the employers in the group of employers consisting of the
Corporation and its Affiliates because the Holder voluntarily terminates
employment with such group of employers and the Holder does not remain or
thereupon become a director of the Corporation or one or more of its
Affiliates, or if a Holder voluntarily ceases to be a director of at least
one of the corporations in the group of corporations consisting of the
Corporation and its Affiliates and the Holder does not remain or thereupon
become an employee of the Corporation or one or more of it's Affiliates,
the Holder shall have the right for thirty (30) days after such termination
or cessation to exercise the Option with respect to that portion thereof
that has become exercisable and, with respect to Restricted Stock, receive
an additional thirty (30) days for restrictions on such Restricted Stock to
lapse pursuant to the Holder's Agreement as of the date of the Holder's
termination of employment or cessation of directorship, whichever occurs
latest, and thereafter (i) that portion of the Option shall terminate and
cease to be exercisable and (ii) the shares of Restricted Stock with
respect to which the restrictions applicable to such Restricted Stock have
not lapsed shall revert to the Corporation.
If a Holder ceases to be employed by at least one of the employers in the
group of employers consisting of the Corporation and its Affiliates because
any of such entities terminates the Holder's employment for misconduct, (i)
the portion, if any, of an Award or Option that remains unexercised,
including that portion, if any, that pursuant to the Agreement is not yet
exercisable, at the time of the Holder's termination of employment, shall
terminate and cease to be exercisable as of such time and (ii) the shares
of Restricted Stock with respect to which the restrictions applicable to
such Restricted Stock have not lapsed shall revert to the Corporation.
"Misconduct" shall be as defined in the Corporation's Personnel Policy and
Procedures Manual.
If a Holder ceases to be employed by at least one of the employers in the
group of employers consisting of the Corporation and its Affiliates because
one or more of such entities terminates the employment of the Holder, but
not for misconduct, and the Holder does not remain or thereupon become a
director of the Corporation or one or more of it's Affiliates, the Holder
shall have the right for ninety (90) days after such termination or
cessation to exercise the Option with respect to that portion thereof that
has become exercisable and, with respect to Restricted Stock, receive an
additional ninety (90) days for restrictions on such Restricted Stock to
lapse pursuant to the Holder's Agreement as of the date of the Holder's
termination of employment or cessation of directorship, whichever occurs
latest, and thereafter (i) that portion of the Option shall terminate and
cease to be exercisable and (ii) the shares of Restricted Stock with
respect to which the restrictions applicable to such Restricted Stock have
not lapsed shall revert to the Corporation.
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That portion of an Option which is not exercisable on the date of
termination of employment or cessation of directorship shall terminate and
be forfeited to the Corporation on the date of such termination or
cessation.
(b) Disability. The provisions of this Section 7.4(b) shall apply to the
extent a Holder's Agreement does not expressly provide otherwise. If a
Holder ceases to be employed by at least one of the employers in the group
of employers consisting of the Corporation and its Affiliates by reason of
disability (as defined in section 22(e)(3) of the Code) and does not remain
or thereupon become a director of the Corporation or one or more of its
Affiliates, or if the Holder is only a director and ceases by reason of
such disability to be a director of at least one of the corporations in the
group of corporations consisting of the Corporation and its Affiliates, the
Holder shall have the right for twelve (12) months after the date of
termination of employment with or cessation of directorship of such group
of employers by reason of disability, whichever occurs latest, to exercise
an Option to the extent such Option is exercisable and, with respect to
Restricted Stock, receive an additional twelve (12) months for restrictions
on such Restricted Stock to lapse pursuant to the terms of the Holder's
Agreement on the date of his termination of employment or cessation of
directorship, and thereafter (i) the Option shall terminate and cease to be
exercisable and (ii) the shares of Restricted Stock with respect to which
the restrictions applicable to such Restricted Stock have not lapsed shall
revert to the Corporation.
(c) Death. The provisions of this Section 7.4(c) shall apply to the
extent a Holder's Agreement does not expressly provide otherwise. If a
Holder dies while in the employ of the Corporation or an Affiliate or dies
while a director of the Corporation or an Affiliate, an Option shall be
exercisable by the Holder's legal representatives, heirs, legatees, or
distributees for twelve (12) months following the date of the Holder's
death to the extent such Option is exercisable and, with respect to
Restricted Stock, receive an additional twelve (12) months for restrictions
on such Restricted Stock to lapse pursuant to the Holder's Agreement on the
Holder's date of death, and thereafter (i) the Option shall terminate and
cease to be exercisable and (ii) the shares of Restricted Stock with
respect to which the restrictions applicable to such Restricted Stock have
not lapsed shall revert to the Corporation.
Notwithstanding any other provision of this Plan, including the provisions
of items (a), (b), and (c) of this Section 7.4, no Incentive Option shall be
exercisable after the expiration of the later of six (6) years from the date
it is granted, or the period specified in Section 4.1, if applicable.
The Committee shall have authority to prescribe in any Option Agreement that
the Option evidenced thereby may be exercised in full or in part as to any
number of shares subject thereto at any time or from time to time during the
term of the Option, or in such installments at such times during said term as
the Committee may prescribe. Except as provided above and unless otherwise
provided in any Agreement, an Option may be exercised at any time or from time
to time during the term of the Option. Such exercise may be as to any or all
whole (but no fractional) shares which have become purchasable under the Award
or Option.
Within a reasonable time or such time as may be permitted by law after (i)
the Corporation receives written notice that the Holder has elected to
exercise all or a portion of an Option, such notice to be accompanied by
payment in full of the aggregate Option exercise price of the number of shares
of Stock purchased or (ii) the Restriction Period with respect to a Holder's
Restricted Stock has lapsed, the Corporation shall deliver a certificate
representing such shares and pay any other amounts payable in consequence of
such exercise. In the event that a Holder is entitled to receive shares due to
his exercise of any combination of an Incentive Option, or portion thereof, or
a Nonstatutory Stock Option, or a portion thereof and the lapse of a
Restriction Period, separate Stock certificates shall be issued, one for the
Stock subject to the Incentive Option one for the Stock subject to the Award
or Nonstatutory Stock Option, and one for the released Restricted Stock. The
number of the shares of Stock transferrable due to an exercise of an Option or
the lapse of a Restriction Period under this Plan shall not be increased due
to the passage of time, except as may be provided in an Agreement. However,
this number of such shares of Stock which are transferrable may increase due
to the occurrence of certain events which are fully described in Section 7.6.
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Nothing herein or in any Award granted hereunder shall require the
Corporation to issue any shares pursuant to such Award if such issuance would,
in the opinion of counsel for the Corporation, constitute a violation of the
Securities Act of 1933, as amended, or any similar or superseding statute or
statutes, or any other applicable statute or regulation, as then in effect. At
the time of receipt of shares pursuant to an Award, the Corporation may, as a
condition precedent, require from the Holder of the Award (or in the event of
his death, his legal representatives, heirs, legatees, or distributees) such
written representations, if any, concerning his intentions with regard to the
retention or disposition of the shares being acquired pursuant to such Award
and such written covenants and agreements, if any, as to the manner of
disposal of such shares as, in the opinion of counsel to the Corporation, may
be necessary to ensure that any disposition by such Holder (or in the event of
his death, his legal representatives, heirs, legatees, or distributees), will
not involve a violation of the Securities Act of 1933, as amended, or any
similar or superseding statute or statutes, or any other applicable state or
federal statute or regulation, as then in effect.
7.5. Limitation on Aggregate Value of Shares That May Become First
Exercisable During Any Calendar Year Under an Incentive Option. Except as is
otherwise provided in the second paragraph of Section 7.6 hereof, with respect
to any Incentive Option granted under this Plan, the sum of:
(a) the aggregate Fair Market Value of shares of Stock subject to such
Incentive Option that first become purchasable in a calendar year under
such Incentive Option, and
(b) the aggregate Fair Market Value of shares of Stock or stock of any
Affiliate (or a predecessor of the Corporation or an Affiliate) subject to
any other incentive stock option (within the meaning of section 422A of the
Code) of the Corporation or its Affiliates (or a predecessor corporation of
any such corporation), that first become purchasable in a calendar year
under such incentive stock option
may not (with respect to any Holder) exceed $100,000 or such other amount as
may be specified by section 422A of the Code, with such Fair Market Value to
be determined as of the date the Incentive Option or such other incentive
stock option is granted.
For purposes of this Section 7.5, "predecessor corporation" means (i) a
corporation that was a party to a transaction described in section 425(a) of
the Code (or which would be so described if a substitution or assumption under
such section had been effected) with the Corporation, (ii) a corporation
which, at the time the new incentive stock option (within the meaning of
section 422A of the Code) is granted, is an Affiliate of the Corporation or a
predecessor corporation of any such corporations, or (iii) a predecessor
corporation of any such corporations.
7.6. Adjustments Upon Changes in Capitalization, Merger, Etc. Notwithstanding
any other provision hereof, in the event of any change in the number of
outstanding shares of Stock
(a) effected without receipt of consideration therefor by the
Corporation, by reason of a stock dividend, or split, combination, exchange
of shares or other recapitalization, merger, or otherwise, in which the
Corporation is the surviving corporation,
(b) by reason of a spin-off to the shareholders of a part of the
Corporation into a separate entity, or
(c) by reason of assumptions and conversions of outstanding grants due to
an acquisition by the Corporation of a separate entity,
(1) the aggregate number and class of the reserved shares, (2) the number
and class of shares subject to each outstanding Award and (3) the exercise
price of each outstanding Option shall be automatically adjusted to accurately
and equitably reflect the effect thereon of such change; provided, however,
that any fractional share resulting from such adjustment may be eliminated. In
the event of a dispute concerning such adjustment, the Committee has full
discretion to determine the resolution of the dispute. Such determination
shall be final, binding and conclusive. The number of reserved shares or the
number of shares subject to any outstanding Award
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shall be automatically reduced by any fraction included therein which results
from any adjustment made pursuant to this Section 7.6.
The following provisions of this Section 7.6 shall apply unless a Holder's
Agreement provides otherwise. The occurrence of:
(a) a dissolution or liquidation of the Corporation,
(b) a merger or consolidation (other than a merger effecting a
reincorporation of the Corporation in another state or any other merger or
a consolidation in which the shareholders of the surviving corporation and
their proportionate interests therein immediately after the merger or
consolidation are substantially identical to the shareholders of the
Corporation and their proportionate interests therein immediately prior to
the merger or consolidation) in which the Corporation is not the surviving
corporation (or survives only as a subsidiary of another corporation in a
transaction in which the shareholders of the parent of the Corporation and
their proportionate interests therein immediately after the transaction are
not substantially identical to the shareholders of the Corporation and
their proportionate interests therein immediately prior to the
transaction),
(c) a transaction in which any person becomes the owner of 50% or more of
the total combined voting power of all classes of stock of the Corporation
shall cause every Award then outstanding to terminate, but (i) the Holders of
each such then outstanding Options shall, in any event, have the right,
immediately prior to such dissolution, liquidation, merger, consolidation, or
transaction, to exercise such Options, to the extent not theretofore
exercised, without regard to the determination as to the periods and
installments of exercisability made pursuant to a Holder's Agreement if (and
only if) such Options have not at that time expired or been terminated and
(ii) the restrictions applicable to the Holders of Restricted Stock pursuant
to every such terminating award shall lapse immediately prior to such
dissolution, liquidation, merger, consolidation, or transaction without regard
to the determination as to the periods and installments of vesting of
Restricted Stock made pursuant to a Holder's Agreement if (and only if) such
Restricted Stock has not at that time otherwise reverted to the Corporation.
7.7. Rights as a Shareholder. A Holder shall have no right as a shareholder
with respect to any shares covered by his Award until a certificate
representing such shares is issued and delivered to him. No adjustment shall
be made for dividends (ordinary or extraordinary, whether in cash or other
property) or distributions or other rights for which the record date is prior
to the date such certificate is issued, except as provided in Section 7.6
hereof.
7.8. Modification, Extension and Renewal of Awards. Subject to the terms and
conditions of and within the limitations of the Plan, the Committee may
modify, extend or renew outstanding Awards granted under the Plan, or accept
the surrender of Awards outstanding hereunder (to the extent not theretofore
exercised) and authorize the granting of new Awards hereunder in substitution
therefor (to the extent not theretofore exercised). The Committee may not,
however, without the consent of the Holder, modify any outstanding Awards so
as to specify a higher or lower exercise price as to Options or accept the
surrender of outstanding Incentive Options and authorize the granting of new
Awards in substitution therefor specifying a higher or lower exercise price.
In addition, no modification of an Award granted hereunder shall, without the
consent of the Holder, alter or impair any rights or obligations under any
Award theretofore granted hereunder to such Holder under the Plan, except as
may be necessary, with respect to Incentive Options, to satisfy the
requirements of section 422A of the Code.
7.9. Furnish Information. Each Holder shall furnish to the Corporation all
information requested by the Corporation to enable it to comply with any
reporting or other requirement imposed upon the Corporation by or under any
applicable statute or regulation.
7.10. Obligation to Exercise. The granting of an Option hereunder shall
impose no obligation upon the Holder to exercise the same or any part thereof.
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7.11. Agreement Provisions. The Agreements authorized under the Plan shall
contain such provisions in addition to those required by the Plan (including,
without limitation, restrictions or the removal of restrictions upon (i) the
exercise of an Option and the retention or transfer of shares thereby acquired
and (ii) Restricted Stock and the lapse of the Restriction Period) as the
Committee shall deem advisable. Each Option Agreement shall identify the
Option evidenced thereby as an Incentive Option or a Nonstatutory Option, as
the case may be, and no Agreement shall cover both an Incentive Option and a
Nonstatutory Option or both either type of Option and Restricted Stock. Each
Agreement relating to an Incentive Option granted hereunder shall contain such
limitations and restrictions upon the exercise of the Incentive Option to
which it relates as shall be necessary for the Incentive Option to which such
Agreement relates to constitute an incentive stock option, as defined in
section 422A of the Code.
7.12. Non-Transferability of Award. An Award granted under this Plan shall
not be transferable except by will or by the laws of descent and distribution.
The Holder may not make any disposition of an Award or any interest therein.
As used in this Plan, "disposition" means any sale, transfer, encumbrance,
gift, donation, assignment, pledge, hypothecation, or other disposition,
whether similar or dissimilar to those previously enumerated, whether
voluntary or involuntary, and whether during the Holder's lifetime or upon or
after his death, including, but not limited to, any disposition by operation
of law, by court order, by judicial process, or by foreclosure, levy, or
attachment, except a transfer by will or by the laws of descent or
distribution. Any attempted disposition in violation of this Section 7.12
shall be void and ineffective for all purposes.
SECTION 8. REMEDIES.
8.1. Remedies. The Corporation shall be entitled to recover from a Holder
reasonable attorneys' fees incurred in connection with the enforcement of the
terms and provisions of the Plan and any Agreement whether by an action to
enforce specific performance or for damages for its breach or otherwise.
8.2. Specific Performance. The Corporation shall be entitled to enforce the
terms and provisions of this Section 8, including the remedy of specific
performance, in Dallas, Dallas County, Texas.
SECTION 9. DURATION OF PLAN.
No Incentive Options may be granted hereunder after the date that is ten
(10) years from the earlier of (i) the date the Plan is adopted by the Board
of Directors or (ii) the date the Plan is approved by the shareholders of
the Corporation.
SECTION 10. AMENDMENT OF PLAN.
The Board of Directors may, insofar as permitted by law, with respect to any
shares at the time that are not subject to Awards, suspend or discontinue the
Plan or revise or amend it in any respect whatsoever; provided, however, that,
without the approval of the holders of a majority of the outstanding shares of
voting stock of all classes of the Corporation, no such revision or amendment
shall (i) cause the Plan to no longer comply with the requirements of Section
16(b) of the Act, any rule promulgated thereunder, any successor statute or
rule or other such regulatory requirements, or in any manner cause Incentive
Options issued under it to fail to satisfy the requirements applicable to
incentive stock options as defined in section 422A of the Code.
SECTION 11. GENERAL.
11.1. Application of Funds. The proceeds received by the Corporation from
the sale of shares pursuant to Awards and Options shall be used for general
corporate purposes.
11.2. Right of the Corporation and Affiliates to Terminate
Employment. Nothing contained in the Plan, or in any Agreement, shall confer
upon any Holder the right to continue in the employ of the Corporation
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<PAGE>
or any Affiliate, or interfere in any way with the rights of the Corporation
or any Affiliate to terminate his employment any time.
11.3. No Liability for Good Faith Determinations. Neither the members of the
Board of Directors nor any member of the Committee shall be liable, even if
negligent, for any act, omission, or determination taken or made in good faith
with respect to the Plan or any Award granted under it, and members of the
Board of Directors and the Committee shall be entitled to indemnification and
reimbursement by the Corporation in respect of any claim, loss, damage, or
expense (including attorneys' fees, the costs of settling any suit, provided
such settlement is approved by independent legal counsel selected by the
Corporation, and amounts paid in satisfaction of a judgment, except a judgment
based on a finding of bad faith) arising therefrom to the full extent
permitted by law and under any directors and officers liability or similar
insurance coverage that may from time to time be in effect.
11.4. Information Confidential. As partial consideration for the granting of
each Award hereunder, the Agreement may, in the Committee's sole and absolute
discretion, provide that the Holder shall agree with the Corporation that he
will keep confidential all information and knowledge that he has relating to
the manner and amount of his participation in the Plan; provided, however,
that such information may be disclosed as required by law and may be given in
confidence to the Holder's spouse, tax and financial advisors, or to a
financial institution to the extent that such information is necessary to
secure a loan. In the event any breach of this promise comes to the attention
of the Committee, it shall take into consideration such breach in determining
whether to recommend the grant of any future Award to such Holder as a factor
militating against the advisability of granting any such future Award to such
individual.
11.5. Other Benefits. Participation in the Plan shall not preclude the
Holder from eligibility in any other stock option plan of the Corporation or
any Affiliate or any old age benefit, insurance, pension, profit sharing,
retirement, bonus, or other extra compensation plans which the Corporation or
any Affiliate has adopted, or may, at any time, adopt for the benefit of its
employees.
11.6 Execution of Receipts and Releases. Any payment of cash or any issuance
or transfer of shares of Stock to the Holder, or to his legal representative,
heir, legatee, or distributee, in accordance with the provisions hereof,
shall, to the extent thereof, be in full satisfaction of all claims of such
persons hereunder. The Committee may require any Holder, legal representative,
heir, legatee, or distributee, as a condition precedent to such payment, to
execute a release and receipt therefor in such form as it shall determine.
11.7. No Guarantee of Interests. The Committee, the Board of Directors and
the Corporation, individually and collectively, do not guarantee the Stock of
the Corporation from loss or depreciation.
11.8. Payment of Expenses. All expenses incident to the administration,
termination, or protection of the Plan, including, but not limited to, legal
and accounting fees, shall be paid by the Corporation or its Affiliates;
provided, however, the Corporation or an Affiliate may recover any and all
damages, fees, expenses, and/or costs arising out of any actions taken by the
Corporation to enforce its rights hereunder.
11.9. Corporation Records. Records of the Corporation or its Affiliates
regarding the Holder's period of employment, termination of employment and the
reason therefor, leaves of absence, re-employment, and other matters shall be
conclusive for all purposes hereunder, unless determined by the Committee to
be incorrect.
11.10. Information. The Corporation and its Affiliates shall, upon request
or as may be specifically required hereunder, furnish or cause to be
furnished, all of the information or documentation which is necessary or
required by the Committee to perform its duties and functions under the Plan.
11.11. No Liability of Corporation. The Corporation assumes no obligation or
responsibility to the Holder or his legal representatives, heirs, legatees, or
distributees for any act of, or failure to act on the part of, the Committee.
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<PAGE>
11.12 Corporation Action. Any action required of the Corporation shall be by
resolution of its Board of Directors or by a person authorized to act by
resolution of the Board of Directors.
11.13. Severability. If any provision of this Plan is held to be illegal or
invalid for any reason, the illegality or invalidity shall not affect the
remaining provisions hereof, but such provision shall be fully severable, and
the Plan shall be construed and enforced as if the illegal or invalid
provision had never been included herein.
11.14. Notices. Whenever any notice is required or permitted hereunder, such
notice must be in writing and personally delivered or sent by mail or by a
nationally recognized courier service. Any notice required or permitted to be
delivered hereunder shall be deemed to be delivered on the date on which it is
personally delivered, or, if mailed, whether actually received or not, on the
third business day after it is deposited in the United States mail, certified
or registered, postage prepaid, addressed to the person who is to receive it
at the address which such person has previously specified by written notice
delivered in accordance herewith or, if by courier, twenty-four (24) hours
after it is sent, addressed as described in this Section. The Corporation or a
Holder may change, at any time and from time to time, by written notice to the
other, the address which it or he had previously specified for receiving
notices. Until changed in accordance herewith, the Corporation and each Holder
shall specify as its and his address for receiving notices the address set
forth in the Agreement pertaining to the shares to which such notice relates.
11.15. Waiver of Notice. Any person entitled to notice hereunder may waive
such notice.
11.16. Successors. The Plan shall be binding upon the Holder, his legal
representatives, heirs, legatees and distributees upon the Corporation, its
successors, and assigns, and upon the Committee, and its successors.
11.17. Headings. The titles and headings of Sections are included for
convenience of reference only and are not to be considered in construction of
the provisions hereof.
11.18. Governing Law. All questions arising with respect to the provisions
of the Plan shall be determined by application of the laws of the State of
Delaware except to the extent Delaware law is preempted by federal law.
Questions arising with respect to the provisions of an Agreement that are
matters of contract law shall be governed by the laws of the state specified
in the Agreement, except to the extent preempted by federal law and except to
the extent that Delaware corporate law conflicts with the contract law of such
state, in which event Delaware corporate law shall govern. The obligation of
the Corporation to sell and deliver Stock hereunder is subject to applicable
laws and to the approval of any governmental authority required in connection
with the authorization, issuance, sale, or delivery of such Stock.
11.19. Word Usage. Words used in the masculine shall apply to the feminine
where applicable, and wherever the context of this Plan dictates, the plural
shall be read as the singular and the singular as the plural.
SECTION 12. APPROVAL OF SHAREHOLDERS.
The Plan shall take effect on the date it is approved by the shareholders of
the Corporation. If this Plan is not approved by the holders of a majority of
the outstanding shares of equity securities of the Corporation having voting
rights within the period beginning on the date the Board of Directors adopts
the Plan and ending twelve (12) months after the date the Plan is adopted by
the Board of Directors, none of the Options granted hereunder shall constitute
Incentive Options; and in the event that the Plan is not so approved on or
before the first annual meeting of stockholders of the Corporation following
the date the Board of Directors adopts the Plan, if any Awards or Options are
granted under the Plan before the date such stockholders do approve the Plan
to individuals subject to suit under Section 16b of the Act at the time of
grant, such Awards or Options shall be null, void, and of no force and effect
as of their grant date. If subsequent to the adoption of this Plan, the rules
and regulations promulgated under the Act associated with the beneficial
treatment of certain events under Section 16(b) of the Act are amended so as
to remove a requirement for shareholder approval listed in this Section 12 or
in Section 10, and the Code does not require shareholder approval, that
requirement for shareholder approval in this Section 12 and Section 10 shall
be automatically deleted from this Plan.
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<PAGE>
BANCTEC, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 22,1997
The undersigned hereby appoints Grahame N. Clark, Jr. and Raghavan Rajaji as
proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote as designated below, all the shares of common
stock of BancTec, Inc. held of record by the undersigned on April 7, 1997, at
the Annual Meeting of Stockholders to be held on May 22,1997, at 10:00 a.m.,
Dallas, Texas time, at the Texas Commerce Bank Tower, Fourth Floor Boardroom,
2200 Ross Avenue, Dallas, Texas, and at any adjournment(s) thereof. Receipt of
the Notice of Annual Meeting of Stockholders and the Proxy Statement in
connection therewith, each dated April 14, 1997, is hereby acknowledged. The
undersigned hereby revokes any proxies heretofore given.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS HEREON. IN THE
ABSENCE OF SUCH SPECIFICATIONS, THE PROXY WILL BE VOTED FOR THE ELECTION TO THE
BOARD OF DIRECTORS OF THE NOMINEES LISTED ON THIS PROXY, FOR APPROVAL OF AN
INCREASE IN THE NUMBER OF SHARES AVAILABLE FOR GRANTS UNDER THE BANCTEC, INC.
1989 STOCK PLAN AND IN THE DISCRETION OF THE PROXIES ON ANY OTHER BUSINESS.
_______________
| SEE REVERSE |
| SIDE |
_______________
<PAGE>
Please mark your
[X] votes in this
example.
FOR all nominees WITHHOLD
listed to the right AUTHORITY
(except as marked to to vote for all nominees
the contrary) listed to the right
1. Election of [ ] [ ] NOMINEES: Michael E. Faherty
Directors and Paul J. Ferri
For, except vote withheld from the following nominee(s):
__________________________________________________________
FOR AGAINST ABSTAIN
2. FOR APPROVAL OF AN
INCREASE IN THE NUMBER OF [ ] [ ] [ ]
SHARES AVAILABLE FOR
GRANTS UNDER THE BANCTEC,
INC. 1989 STOCK PLAN.
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE WITH RESPECT TO ANY OTHER MATTER WHICH MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT(S)
THEREOF.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 22, 1997.
SIGNATURE(S)___________________________________________DATE_____________________
When signing on behalf of a corporation, partnership, estate, trust, or in any
other representative capacity, please sign name and title. For joint accounts
each joint owner must sign.
