<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT / / FILED BY A PARTY OTHER THAN THE REGISTRANT / /
- - --------------------------------------------------------------------------------
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
BGS SYSTEMS, INC.
(Name of Registrant as Specified In Its Charter)
C. RUSSEL HANSEN, JR., VICE PRESIDENT, GENERAL COUNSEL
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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.:
3) Filing Party:
4) Date Filed:
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<PAGE> 2
BGS SYSTEMS, INC.
128 TECHNOLOGY CENTER
WALTHAM, MASSACHUSETTS 02254-9111
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 13, 1995
The Annual Meeting of the Stockholders of BGS Systems, Inc. ("BGS" or the
"Company") will be held at the corporate offices of the Company, 128 Technology
Center, Waltham, Massachusetts on Tuesday, June 13, 1995, at 10:00 a.m. local
time, for the following purposes:
1. To fix the number of directors at four and to elect one member of
the Board of Directors to serve as the Class III director for a term of
three years.
2. To approve the Company's 1995 Employee Stock Purchase Plan as
described in the Proxy Statement.
3. To transact such other business, if any, as may properly come
before the meeting.
Only holders of BGS Common Stock of record at the close of business on
April 18, 1995 will be entitled to notice of and to vote at the Annual Meeting.
The stock transfer books of the Company will remain open.
All stockholders are cordially invited to attend the meeting.
By Order of the Board of Directors
JEFFREY P. BUZEN, Clerk
Waltham, Massachusetts
May 9, 1995
IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE AND MAIL
THE ENCLOSED PROXY CARD PROMPTLY IN ORDER TO ASSURE REPRESENTATION OF YOUR
SHARES. THE ENCLOSED RETURN ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE U.S.A.
<PAGE> 3
BGS SYSTEMS, INC.
128 TECHNOLOGY CENTER
WALTHAM, MASSACHUSETTS 02254-9111
PROXY STATEMENT
FOR THE
1995 ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of BGS Systems, Inc. ("BGS" or the "Company")
for the 1995 Annual Meeting of Stockholders to be held on June 13, 1995, and at
any adjournment thereof (the "Meeting").
As of April 18, 1995, the record date for the Meeting, there were 3,101,964
shares of Common Stock, $.10 par value per share, of the Company ("Common
Stock") outstanding and entitled to be voted at the Meeting. Each such share is
entitled to one vote on each matter to be voted upon. To be voted, proxies must
be filed with the Clerk prior to voting. A majority of such shares, present in
person or represented by proxy, will constitute a quorum at the meeting.
Abstentions and broker non-votes (as described below) will be considered present
for purposes of determining the presence of a quorum. Directors will be elected
by a plurality of the votes cast. For all other matters to be voted upon at the
Meeting, the affirmative vote of a majority of shares present in person or
represented by proxy, and entitled to vote on the matter, is necessary for
approval. For purposes of determining the outcome of the vote on these matters,
an instruction to "abstain" from voting on a proposal will be treated as shares
present and entitled to vote, and will have the same effect as a vote against a
proposal. "Broker non-votes" which occur when brokers are prohibited from
exercising discretionary voting authority for beneficial owners who have not
provided voting instructions, are not counted for the purpose of determining the
number of shares present in person or represented by proxy on a voting matter
and have no effect on the outcome of the vote.
Properly executed and dated proxies received will be voted in accordance
with instructions thereon. If the proxy card is signed and returned and no
instructions are given on the proxy with respect to the matters to be acted
upon, the shares represented by the proxy will be voted for the election of the
nominee for Director designated below, to approve the Company's 1995 Employee
Stock Purchase Plan and in the discretion of the proxy holders on any other
matters that properly come before the Meeting. A stockholder giving a proxy may
revoke it at any time before it is exercised by filing with the Clerk of BGS an
instrument of revocation or a duly executed proxy bearing a later date. A proxy
may also be revoked by attending the Meeting and voting in person. Attendance at
the Meeting will not in and of itself constitute the revocation of a proxy.
Votes will be counted by the Inspector of Election appointed at the Meeting
and the Company's Transfer Agent, The First National Bank of Boston. The
Inspector of Election has customarily been Normand Bilodeau, the Company's Chief
Financial Officer.
This Proxy Statement, the accompanying Proxy card, and the Annual Report of
BGS, including financial statements for the fiscal year 1995, are first being
mailed to stockholders on or about May 9, 1995.
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I. ELECTION OF DIRECTORS
The Board of Directors of BGS is divided into three classes, with the term
of office of each class ending in successive years. The term of the Class III
Director expires with this Annual Meeting of Stockholders. The nominee for Class
III, if elected, will serve three years until the 1998 Annual Meeting and until
a successor has been elected and qualified. The current Directors of Classes I
and II will continue in office until the 1996 and 1997 Annual Meetings
respectively.
At the Meeting, the current Class III director, Harold S. Schwenk, Jr.,
will be nominated for election to the Board of Directors. Unless otherwise
instructed, the persons named in the accompanying proxy will vote, as permitted
by the By-Laws of the Company, to fix the number of directors at four and to
elect Dr. Schwenk as the Class III Director. Proxies may not be voted for a
greater number of persons than the number of nominees named. If, for any reason,
a nominee should not be a candidate for election at the Meeting, the proxies
will be cast for a substitute nominee designated by the Board of Directors. The
Board does not anticipate that the nominee will be unavailable.
NOMINEE FOR ELECTION AT THIS MEETING TO A TERM EXPIRING IN 1998 (CLASS III
DIRECTOR):
HAROLD S. SCHWENK, JR.
Dr. Schwenk, 53, has been a director since 1975. He is Chairman of the Board,
Chief Executive Officer and President of the Company. He has been Chairman and
President since 1975 and Chief Executive Officer since 1983. He also served as
the acting Chief Financial Officer from April 1985 to April 1990. Dr. Schwenk
received his Ph.D. in Applied Mathematics from Harvard University in 1972. Dr.
Schwenk serves ex officio on the Compensation Committee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE CLASS III NOMINEE LISTED
ABOVE.
DIRECTORS WHOSE TERM CONTINUES UNTIL 1996 (CLASS I DIRECTORS):
JEFFREY P. BUZEN
Dr. Buzen, 51, has been a director since 1975. He is Chief Scientist, Senior
Vice President, and Treasurer of the Company and has served as Clerk and
Director since 1975. Dr. Buzen developed the mathematical techniques upon which
many of the Company's products are based. In addition to his work at the
Company, Dr. Buzen has held faculty positions at Harvard and Brown Universities
and has published numerous articles on the theory and practice of capacity
management. Dr. Buzen received a Ph.D. in Applied Mathematics from Harvard
University in 1971.
PAUL R. DUNCAN
Mr. Duncan, 54, has been a director since 1988. He has been Executive Vice
President of Reebok International Ltd., a publicly-held athletic footwear
corporation based in Stoughton, Massachusetts and Chief Financial Officer for
more than five years. Mr. Duncan is also a director of Reebok International Ltd.
and Cabletron Systems, Inc. Mr. Duncan is Chairman of the Audit and Compensation
Committees.
DIRECTOR WHOSE TERM CONTINUES UNTIL 1997 (CLASS II DIRECTOR):
JUDITH N. GOLDBERG
Mrs. Goldberg, 48, has been a director since April 1994. Mrs. Goldberg has been
a private investor for over five years. She serves as a Director and Chairman of
the Board of Young Audiences of Massachusetts, Inc., a not for profit arts in
education organization. She received her A.B. from
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Harvard-Radcliffe College in 1968 and her M.A.T. from Yale University in 1969.
Mrs. Goldberg is a member of the Audit and Compensation Committees.
ADDITIONAL INFORMATION CONCERNING THE BOARD OF DIRECTORS
MEETINGS AND COMMITTEES
The Board of Directors met seven times and acted by written consent three
times during fiscal 1995. For the incumbent Board of Directors as a whole,
attendance was 100% of the aggregate of (1) the total number of meetings of the
Board of Directors and (2) the total number of meetings of all committees of the
Board on which they served (during the periods they served). In addition, the
Company's directors frequently take part in the consideration of Company matters
and documents and in communications with the Chairman of the Board and others
wholly apart from such meetings.
Each director who is not an employee of the Company is paid an annual
retainer of $7,000 and a fee of $500 for each Board of Directors meeting
attended. Non-employee directors (Mr. Duncan and Mrs. Goldberg) who serve on the
committees of the Board receive an additional $4,000 per year for each committee
on which they serve.
The Audit Committee, which is composed entirely of the nonemployee
directors, held one meeting during fiscal 1995. The responsibilities of the
Audit Committee are to make recommendations to the Board of Directors regarding
the engagement of the Company's independent auditors, to review and approve any
major accounting policy changes affecting the Company's operating results, to
review the arrangements for and scope of the independent audit and the results
of the audit, to review the scope of non-audit activities performed by the
independent auditors, to assure that the auditors are in fact independent and to
establish and monitor policies to prohibit unethical, questionable or illegal
activities by employees of the Company.
The Compensation Committee, composed of the non-employee directors, held
four meetings in fiscal 1995. The Committee administers the Company's stock
option plans, determines the compensation of the Chief Executive Officer and
reviews the compensation of certain other senior executives. Dr. Schwenk, Chief
Executive Officer and President, serves ex officio. See "Compensation Committee
Interlocks and Insider Participation" below.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Paul R. Duncan and Judith N. Goldberg are the current members of the
Compensation Committee. Dr. Schwenk, Chief Executive Officer and President,
serves ex officio. See "Certain Transactions" on page 12 regarding Dr. Schwenk's
compensation and "Report of the Compensation Committee of the Board of Directors
on Executive Compensation" under the caption "General" on page 8 for a
description of Dr. Schwenk's ex officio service.
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of April 18, 1995,
with respect to the beneficial ownership of the Company's Common Stock by (i)
each stockholder known by the Company to be the beneficial owner of more than 5%
of the Company's Common Stock, (ii) each director and nominee, (iii) each of the
executives named in the Summary Compensation Table and (iv) all current
directors and executive officers as a group.
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<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY
OWNED AT PERCENTAGE OF
NAME AND ADDRESS OF APRIL 18, COMMON STOCK
BENEFICIAL OWNER 1995 OUTSTANDING
----------------------------------------------------- -------------
<S> <C> <C>
Jeffrey P. Buzen..................................... 634,757(1) 20.3
128 Technology Center, Waltham, MA 02254-9111
Paul R. Duncan....................................... 16,000(2) *
Judith N. Goldberg................................... 591,257(3) 19.0
128 Technology Center, Waltham, MA 02254-9111
Harold S. Schwenk, Jr. .............................. 629,575(4) 20.1
128 Technology Center, Waltham, MA 02254-9111
James S. McGuire..................................... 4,435(5) *
C. Russel Hansen, Jr................................. 586,906(6) 18.9
128 Technology Center, Waltham, MA 02254-9111
Normand Bilodeau..................................... 405(7) *
Robert P. Goldberg Revocable Trust #2................ 519,661(8) 16.7
128 Technology Center, Waltham, MA 02254-9111
Wellington Management Company........................ 318,280(9) 10.3
75 State Street, Boston, MA 02109
Directors and Executive Officers
as a Group (7 persons)............................. 1,882,514(10) 59.2
</TABLE>
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* Represents less than 1% of the Common Stock outstanding.
(1) Includes 30,000 shares of Common Stock subject to options which are
presently exercisable. Excludes 20,000 shares of Common Stock subject to
options which are not presently exercisable.
(2) Includes: (a) 12,000 shares of Common Stock subject to options which are
presently exercisable, and (b) 2,000 shares of Common Stock which Mr.
Duncan, if he remains in office at the June 13, 1995 Annual Meeting, will
have the right to acquire within 60 days of April 18, 1995, through the
exercise of options. Excludes 8,000 shares of Common Stock subject to
options which are not presently exercisable.
(3) Includes: (a) 519,661 shares of Common Stock owned by the Robert P.
Goldberg Revocable Trust #2, with respect to which shares Mrs. Goldberg as
co-trustee, has shared power to vote and control the disposition, (b) 2,000
shares of Common Stock subject to options which are presently exercisable
and (c) 2,000 shares of Common Stock which Mrs. Goldberg, if she remains in
office at the June 13, 1995 Annual Meeting, will have the right to acquire
within 60 days of April 18, 1995, through the exercise of options. Excludes
8,000 shares of Common Stock subject to options which are not presently
exercisable. The shares also include (a) 6,436 shares of Common Stock owned
by Mrs. Goldberg's children and (b) 61,160 shares of Common Stock held by
two unrelated co-trustees of four irrevocable trusts (15,290 in each trust)
for the benefit of Mrs. Goldberg's children. Mrs. Goldberg disclaims
beneficial ownership of all 67,596 shares.
(4) Includes: (a) 9,180 shares of Common Stock held of record by Dr. Schwenk as
custodian for the benefit of his daughters, (b) 2,750 shares held of record
by Dr. Schwenk's wife as custodian for the benefit of their son, and (c)
3,235 shares of Common Stock held of record by Dr. Schwenk's wife. Dr.
Schwenk disclaims beneficial ownership of all of such 15,165 shares. Also
includes:
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30,000 shares of Common Stock subject to options which are presently
exercisable and 147,672 shares of Common Stock held in the Harold S.
Schwenk, Jr. Qualified Annuity Trust -- 1995 with respect to which shares
Dr. Schwenk as grantor-trustee, has sole power to vote and control the
disposition. Excludes (a) 20,000 shares of Common Stock subject to options
which are not presently exercisable and (b) 525 shares held by Dr.
Schwenk's son who is of the age of majority and does not share Dr.
Schwenk's household.
(5) Excludes 25,000 shares of Common Stock subject to options which are not
exercisable within 60 days of April 18, 1995.
(6) Includes: (a) 519,661 shares of Common Stock owned by the Robert P.
Goldberg Revocable Trust #2, with respect to which shares Mr. Hansen as
co-trustee, has shared power to vote and control the disposition and (b)
61,160 shares of Common Stock held of record by four irrevocable trusts of
which Mr. Hansen is a co-trustee for the benefit of children who are not
related to Mr. Hansen. Mr. Hansen disclaims beneficial ownership of all
580,821 shares. Also includes 4,000 shares of Common Stock subject to
options which are presently exercisable. Excludes 6,000 shares of Common
Stock subject to options which are not presently exercisable.
(7) Includes 5 shares of Common Stock held of record by Mr. Bilodeau's wife.
Mr. Bilodeau disclaims beneficial ownership of all 5 shares.
(8) Mr. Hansen and Mrs. Goldberg as trustees with equal voting rights, have
shared power (by majority vote) to vote and control the disposition of all
of the 519,661 shares of Common Stock owned by the Trust.
(9) Represents holdings as of December 31, 1994, based on information contained
in a Schedule 13G filed by Wellington Management Company with the
Securities and Exchange Commission.
(10) Includes 78,000 shares subject to options which are presently exercisable
and 4,000 shares that may be acquired within 60 days of the record date
through the exercise of stock options. Excludes 87,000 shares of Common
Stock subject to options which are not presently exercisable.
There are no arrangements known to the Company which may result at a later
date in a change in control of the Company.
ITEM 2
APPROVAL OF 1995 EMPLOYEE STOCK PURCHASE PLAN
Because the final offering under the 1990 Stock Purchase Plan will expire
on June 30, 1995, and because management believes it advisable and in the best
interests of the Company to continue to encourage stock ownership by employees
of the Company and its subsidiaries, on January 26, 1995, the Board of Directors
of the Company adopted, subject to stockholder approval, the 1995 Employee Stock
Purchase Plan (the "1995 Stock Purchase Plan") covering an additional 30,000
shares of the Company's Common Stock. The 30,000 shares issuable under the 1995
Stock Purchase Plan represents less than 1% of the 3,101,964 shares of Common
Stock outstanding on April 18, 1995 (net of treasury shares). The 1995 Stock
Purchase Plan is in all material respects similar to the 1990 Stock Purchase
Plan. The effect of the adoption of the 1995 Stock Purchase Plan will be to
extend the benefits provided by the 1990 Stock Purchase Plan (except with
respect to the maximum number of shares) for another two years. The 1995 Stock
Purchase Plan is summarized below. This summary is qualified in all respects by
reference to the full text of the 1995 Stock Purchase Plan, which appears as
Exhibit A to this Proxy Statement.
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GENERAL
The 1995 Stock Purchase Plan consists of four semiannual offerings of 7,500
shares each. The number of shares available for an offering may be increased, at
the election of the Board of Directors, by the shares, if any, which were made
available but not purchased during an earlier offering. The offerings will
commence on January 1 and July 1 and end on June 30 and December 31,
respectively of each year. The first offering under the 1995 Stock Purchase Plan
will commence on July 1, 1995, or such time thereafter as the Company shall have
qualified and registered the shares subject to the 1995 Stock Purchase Plan
under applicable Federal and state securities laws, and will end on December 31,
1995, and the last offering will commence on January 1, 1997 and end on June 30,
1997.
With certain exceptions, all full-time employees, including officers, who
have been employed by the Company or its subsidiaries for at least 30 days are
eligible to participate in the 1995 Stock Purchase Plan. No director, nominee
for director or executive officer set forth in the Executive Compensation table,
however, will be eligible to participate in the 1995 Employee Stock Purchase
Plan if he owns shares representing 5% or more of the total number of shares of
the Company's Common Stock outstanding. Participation terminates automatically
upon termination of employment.
During each semiannual offering, the maximum number of shares which may be
purchased by a participating employee is determined on the first day of the
offering period under a formula whereby 85% of the market value of a share of
the Company's Common Stock on the first day of the offering is divided into an
amount equal to that portion of that employee's semiannualized base pay which he
or she has elected to have withheld. An employee may elect to have a whole
number percentage from one to ten percent withheld from his or her base pay for
this purpose. As of April 18, 1995, the market value of the 30,000 shares of
Common Stock issuable under the 1995 Stock Purchase Plan would have been
$893,750.
FEDERAL INCOME TAX CONSEQUENCES
If the 1995 Stock Purchase Plan is approved by the stockholders, it will
meet the requirements of Section 423 of the Code. Under these circumstances, no
income tax consequences arise until a participating employee disposes of the
stock acquired under the 1995 Stock Purchase Plan. If he or she disposes of the
stock more than two years after the first day of the plan year in which the
stock was purchased or more than one year from the date of exercise with respect
to those shares or if he or she dies while still owning the stock, the
difference between (1) the purchase price and (2) the fair market value at the
beginning of the plan year or the fair market value at the time of disposition
or death, whichever difference is less, will be ordinary income, and the excess,
in the event of disposition, of the sale price over the sum of the amount
recognized as ordinary income plus the purchase price will be capital gain. If
he or she disposes of the stock less than two years after the first day of the
plan year in which the stock was purchased or less than one year from the date
of exercise with respect to those shares, he or she must recognize ordinary
income on any spread between the purchase price and the market value of the
stock at the time the purchase is complete, whether or not the stock has
increased or decreased in value thereafter. Capital gain or loss rules then
apply (long-or-short-term depending on how long the stock was held) to any
change in market value between the date of completion of the purchase and the
date of any sale. For tax purposes, a "disposition" includes not only a sale,
but also a gift. In the event of a disposition less than two years from the
first day of the plan year in which the stock was purchased or less than one
year from the date of exercise, the Company will be entitled to a deduction
equal to the amount taxable to the employee as ordinary income.
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ADMINISTRATION; OTHER
The 1995 Stock Purchase Plan is administered by the Compensation Committee
of the Board of Directors which is authorized to decide questions of eligibility
and to make rules and regulations for the administration and interpretation of
the 1995 Stock Purchase Plan.
In the event of any stock split, stock dividend, merger, consolidation,
reorganization, recapitalization or other change in corporate structure or
capitalization affecting the Company's Common Stock, the Committee shall make
adjustments in the number, kind, and price of shares, issuable under the 1995
Stock Purchase Plan, including adjustment in the maximum number of shares
authorized under the 1995 Stock Purchase Plan. The Board of Directors may at any
time terminate, suspend or amend the 1995 Stock Purchase Plan, provided that
such termination, suspension or amendment will not affect elections already
accepted by the Company and provided that no amendment of the 1995 Stock
Purchase Plan will, without approval of the Company's stockholders, (a) increase
the aggregate number of shares that may be issued in connection with the 1995
Stock Purchase Plan, (b) change the purchase price formula of the 1995 Stock
Purchase Plan, or (c) materially modify the requirements as to eligibility for
participation in the 1995 Stock Purchase Plan.
There are approximately 164 employees who are eligible to participate in
the 1995 Stock Purchase Plan as of January 31, 1995, at which time the market
value of a share of the Company's Common Stock was $25.68. The following table
sets forth the number of shares of the Company's Common Stock purchased in 1994
under the Company's Employee Stock Purchase Plan then in effect and the average
exercise price paid therefor during the plan year by the persons listed below:
BENEFITS UNDER THE 1990 EMPLOYEE STOCK PURCHASE PLAN IN 1995
<TABLE>
<CAPTION>
Number of Shares Average Exercise
Name and Position Purchased Price ($)
<S> <C> <C>
- - ----------------------------------------------------------------------------
Harold S. Schwenk, Jr. -- --
Chairman, CEO and President
Jeffrey P. Buzen -- --
Chief Scientist, Senior Vice
President, Clerk and Treasurer
James S. McGuire 435 $20.08
Chief Operating Officer
C. Russel Hansen, Jr. 707 $21.09
Vice President and General
Counsel
Normand Bilodeau -- --
Chief Financial Officer
All Employees as a Group 15,579 $21.09
</TABLE>
THE BOARD OF DIRECTORS BELIEVES THAT THIS PROPOSAL IS IN THE BEST INTEREST OF
THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
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REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD
OF DIRECTORS ON EXECUTIVE COMPENSATION
General
The Compensation Committee is composed of the two outside, independent
directors, Paul R. Duncan (Chairman) and Judith N. Goldberg. The Chief Executive
Officer, Harold S. Schwenk, Jr., sits ex officio. The Committee's
responsibilities include setting the compensation of the Chief Executive Officer
and reviewing the compensation for all other executive officers and other senior
officers of the Company. The Committee also grants all stock options to
executive officers and other employees. Dr. Schwenk provides compensation
information, survey data and other material requested by the Committee. He makes
recommendations to the Committee on the compensation of the other executive
officers, and he participates in the discussions regarding these officers. He
does not attend or participate in the discussions regarding his own
compensation, and makes no recommendation with respect thereto. He does not vote
on the Compensation Committee. He does not administer the Company's stock option
plans.
Compensation Philosophy
The Committee reviews an officer's bonus on the basis of the quantitative
performance of the Company (e.g. earnings per share and earnings per share
growth) and each officer's contribution to that performance (e.g. contribution
to revenue and revenue growth, cost control and relative contribution to margin
levels). The Committee also considers qualitative accomplishments of each
officer and the Company as a whole (e.g. effort, development of management and
development and execution of strategic plans). The relative weights of these
factors are imprecise and vary from year to year. The Committee also considers
the compensation levels of other officers with roughly comparable job
descriptions in other companies. With respect to an officer's base pay, the
Committee considers the same factors, but predominant weight is given to base
pay compensation levels at comparable companies. In fiscal 1995, the single most
important factor in determining the bonuses of all officers was corporate
performance -- principally earnings per share and the growth in earnings per
share.
Compensation Comparability and Compensation Surveys
Factors of comparability include line of business, size of revenue, level
of earnings, geographic location and number of employees. In general, companies
in these surveys were either in the computer software industry or located in the
Massachusetts area or both. The Committee did not design its executive
compensation study with the express purpose of including any or all of the
companies that have from time to time during the past year been included in the
CRSP Index for Nasdaq Computer & Data Processing Stocks (shown on the Stock
Performance Graph on page 13). Instead, the Committee reviewed information from
what the Committee understood to be the most widely respected management
compensation surveys (ranging in number from two to four, depending on the
executive office in question). The salary levels were not set with reference to
a high, medium or low end of the companies or surveys studied. As noted above,
the surveys play a more significant role in determining base pay than other
factors. In determining bonuses (where Company performance played the largest
role last year), the surveys are used as a verification benchmark to assure that
the Company's compensation is comparable. For fiscal 1995, each of the base pay
and the total compensation of the group of executive officers fell in the upper
middle range of compensation reported.
The compensation of Mr. McGuire is determined under an employment agreement
which is under review by the Compensation Committee. The base pay and the bonus
were initially established under
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that agreement, and they are currently reviewed and determined on the basis of
the compensation policies noted above for other officers. The agreement reflects
these policies and is terminable at any time by the Company or Mr. McGuire. See
"Employment Agreements" on page 12.
Determination of the Chief Executive Officer's Compensation for the Last Fiscal
Year
The Committee has complete discretion in determining the compensation of
the Chief Executive Officer. In determining such compensation for the last
fiscal year on a quantitative basis, the Committee considered relative levels of
compensation of other chief executive officers in the compensation surveys
reviewed for other executive officers as well as the Company's corporate
performance. Earnings per share grew from $2.23 in fiscal 1994 to $2.38 in
fiscal 1995, an increase of 7%. Qualitatively, the Committee considered the pace
and impact of the introduction of new products in areas of strategic importance
and the pursuit of new technology in other new areas. Having previously granted
Dr. Schwenk long term stock options, the Committee did not grant Dr. Schwenk any
equity compensation in fiscal 1995. For fiscal 1995, Dr. Schwenk's base pay and
total compensation fell in the upper middle of the range of compensation
reported in the surveys.
Compensation Methods
Base salaries and bonuses for executive officers are viewed as appropriate
remuneration vehicles to enhance performance on an annual basis. The Company has
utilized stock options for executive officers to provide longer term
performance-related incentives, in order to link their rewards directly to
shareholder gains over a longer period of time. These options are generally
granted at a premium to the market price on the date of grant. The size and
duration of the grants are based on prior grants of stock options, if any, to
the particular individual and historical and current grants to all other past
and current option holders, taking into account the Company's preference for
long-term stock performance based compensation.
On June 14, 1994, the Committee determined to grant Mr. McGuire options to
acquire 25,000 shares. See "Option Grants in Last Fiscal Year" on page 11. The
Committee made no new stock option grants to other executive officers during
fiscal 1995. The Committee believes that the executive officers have been
granted appropriate options to date, and it will periodically continue to
consider additional grants in the future.
Deductibility of Compensation Expense
The Committee has reviewed Section 162(m) of the Internal Revenue Code
added by the Omnibus Budget Reconciliation Act of 1993. The new provisions
generally took effect on January 1, 1994, although there are some later
transitional dates, and were intended to limit deductions for certain
compensation in excess of one million dollars annually paid to the chief
executive officer and four other highest paid executive officers of corporations
required to register under Section 12(g) of the Securities Exchange Act of 1934.
The Committee has decided to take no action at this time with respect to
the Company's compensation program as a result of this change in the tax law but
to continue to evaluate the possible effects of the new provisions. The
Committee believes it has ample time to analyze the limitations because the
impact of the legislation and proposed regulations will not be significant for
at least the next several years. In addition, aggregate compensation for any
executive officer is unlikely to exceed the one million dollar limit during this
period. The Committee believes that the passage of time will not
Page 9
<PAGE> 12
only provide greater opportunity for reflection but also the opportunity to
gather additional information and clarification.
Paul R. Duncan, Chairman
Judith N. Goldberg
Harold S. Schwenk, Jr., ex officio member
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded, earned or paid for
services rendered in all capacities to the Company and its subsidiaries during
each of fiscal 1993, 1994 and 1995 to the Company's Chief Executive Officer and
the Company's four most highly compensated executive officers other than the
Chief Executive Officer. This information includes the dollar values for base
salaries, bonus awards, and certain other compensation, if any, whether paid or
deferred.
- - --------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
--------------
Annual Compensation
Awards
---------------------------------------
Securities All Other
Name and Bonus Underlying Compensation
Principal Position Year Salary($) ($) Options(#) ($)(1)
- - ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Harold S. Schwenk, Jr. 1995 216,300 90,000 -- 1,332
Chairman, Chief Executive 1994 216,300 60,000 -- 1,659
Officer and President 1993 216,300 60,000 -- 1,410
Jeffrey P. Buzen 1995 216,300 90,000 -- 1,332
Chief Scientist and Senior 1994 216,300 60,000 -- 1,657
Vice President 1993 216,300 60,000 -- 1,410
James S. McGuire 1995 150,000 75,000 25,000 1,145
Chief Operating Officer 1994 150,000 50,000 -- 1,710
1993 150,000 75,000 -- 1,410
C. Russel Hansen, Jr. 1995 130,000 12,000 -- 896
Vice President and General 1994 130,000 26,667 -- 891
Counsel 1993 130,000 20,000 -- --
Normand Bilodeau 1995 92,650 30,000 -- 564
Chief Financial Officer 1994 90,001 5,000 -- 634
1993 83,138 23,000 -- 632
</TABLE>
- - --------------------------------------------------------------------------------
(1) Represents amounts allocated under the Company's Profit-Sharing Retirement
Plan and Trust.
Page 10
<PAGE> 13
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning options
granted during 1995 to the named executives:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------ POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED ANNUAL
NUMBER OF OPTIONS RATES OF STOCK PRICE
SECURITIES GRANTED TO EXERCISE APPRECIATION FOR OPTION
UNDERLYING EMPLOYEES OR BASE TERM
OPTIONS IN FISCAL PRICE EXPIRATION ------------------------
GRANTED YEAR ($/SHARE) DATE 5% ($) 10% ($)
---------- ----------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Harold S. Schwenk, Jr. ...... -0-
Jeffrey P. Buzen............. -0-
James S. McGuire............. 5,000 100% $ 31.50 7/14/04 99,068 251,055
5,000 $ 33.08 7/14/04 104,037 263,648
5,000 $ 34.73 7/14/04 109,226 276,798
5,000 $ 36.47 7/14/04 114,698 290,666
5,000 $ 38.29 7/14/04 120,422 305,171
C. Russel Hansen, Jr. ....... -0-
Normand Bilodeau............. -0-
</TABLE>
- - ---------------
(1) The options were granted for a term of approximately ten years, subject to
earlier termination in certain events related to termination of employment.
The options are exercisable in 5,000 share increments on July 1 of each year
commencing July 1, 1995. The fair market value was $24.00 per share on the
grant date (June 14, 1994). The Compensation Committee retains the
discretion, but not the obligation, to accelerate the vesting of these
options at any time for any or no reason.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth certain information regarding the number and
value at January 31, 1995, of unexercised options held by each of the executive
officers named in the Summary Compensation Table above. None of the unexercised
options were in-the-money as of January 31, 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying
Unexercised Options
at FY-End (#)
---------------------
Exercisable/
Name Unexercisable
- - ----------------------------------------------
<S> <C>
Harold S. Schwenk, Jr. 20,000 E/30,000 U
Jeffrey P. Buzen 20,000 E/30,000 U
James S. McGuire 0 E/25,000 U
C. Russel Hansen, Jr. 2,000 E/8,000 U
Normand Bilodeau 0 E/0 U
</TABLE>
Page 11
<PAGE> 14
CERTAIN TRANSACTIONS
From February 1, 1995, to the present, there have been no (and there are no
currently proposed) transactions in which the amount involved exceeds $60,000 to
which the Company or any of its subsidiaries was (or is to be) a party and in
which any executive officer, director, five percent beneficial owner of the
Company's Common Stock or member of the immediate family of any of the foregoing
persons had (or will have) a direct or indirect material interest, except as set
forth below and payments set forth under "Executive Compensation" above.
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement with Mr. McGuire on
December 5, 1990. The agreement, currently under review by the Compensation
Committee, is terminable at any time by the Company or Mr. McGuire. In the event
the Company terminates Mr. McGuire's employment without cause, the Company has
agreed to make decreasing salary continuation payments over a 36 month period
(ranging from 100% of base monthly salary in the first 6 months to 33 1/3% in
the last 24) or until Mr. McGuire finds other employment (which he has agreed to
make reasonable efforts to do), whichever first occurs. The agreement provides
for an annual base salary of $150,000, and participation in an incentive plan
whereby Mr. McGuire could receive up to an additional $75,000 in incentive
payments, in the event that Mr. McGuire achieves the higher goals established in
the program. The Company has the discretion to make additional payments for
additional performance.
TERMINATION OF EMPLOYMENT ARRANGEMENTS
The Company's policy on involuntary termination with respect to all other
officers and other employees is to determine the amount of payments made, if
any, in connection therewith on a case by case basis. Although the policy makes
reference to a maximum payment of one week's pay for each six months' employment
(plus four weeks' pay if four weeks notice is not given), the actual amounts may
be greater or lower or nothing at all depending on the unique facts of each
termination. See "Employment Agreements" above for a discussion of termination
arrangements for Mr. McGuire.
GRAPHICAL COMPARISONS OF COMMON STOCK TO MARKET INDICES
The following graph sets forth the yearly percentage change in the
cumulative stockholder return on BGS Common Stock during the five fiscal years
ended January 31, 1995 with the cumulative total return on the CRSP Total Return
Index for The Nasdaq Stock Market (US & Foreign) and the CRSP Index for Nasdaq
Computer & Data Processing Stocks. The CRSP Index for Nasdaq Computer and Data
Processing Stocks includes all companies within SIC Code 737. The comparison
assumes $100 was invested on January 31, 1990 in BGS Common Stock and in each of
such indices, and assumes reinvestment of dividends.
Page 12
<PAGE> 15
[STOCK PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered)
1990 1991 1992 1993 1994 1995
- - ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BGS Systems, Inc. 100.0 170.1 261.6 270.3 172.9 175.3
CRSP Index for Nasdaq
Stock Market (US & 100.0 102.5 156.7 176.6 203.7 191.8
Foreign)
CRSP Index for Nasdaq
Computer and Data 100.0 134.7 237.8 250.9 268.1 302.3
Processing Stocks
</TABLE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who beneficially own
more than ten percent of the Common Stock, to file initial reports of ownership
and reports of changes in ownership with the Securities and Exchange Commission
(the "SEC"). Executive officers, directors and greater than ten percent
beneficial owners are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file. The Company assists its executive
officers and directors with these filings. Based solely on the information
furnished to the Company by the Company's executive officers and directors, the
Company believes that during fiscal year 1995, all Section 16(a) reports were
filed on a timely basis.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Company's 1996 Annual
Meeting of Stockholders pursuant to Rule 14a-8 promulgated by the Securities and
Exchange Commission must be received by the Company at its executive offices,
attention of the Clerk, on or before January 10, 1996.
Page 13
<PAGE> 16
RELATIONSHIPS WITH INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Ernst & Young LLP, independent public accountants, has audited
the accounts of the Company and subsidiaries since 1978 and has been selected to
do so for fiscal year 1996. A representative of Ernst & Young is expected to be
present at the Meeting with the opportunity to make a statement if he desires to
do so and to be available to respond to appropriate questions.
OTHER BUSINESS
Management does not know of any other matters which may come before the
Meeting. However, if any other matters are properly presented to the Meeting, it
is the intention of the persons named in the accompanying proxy to vote, or
otherwise act, in accordance with their judgment on such matters.
EXPENSES OF SOLICITATION
All expenses of soliciting proxies will be paid by the Company. Proxies may
be solicited personally, or by telephone, by employees of the Company, but the
Company will not pay any compensation for such solicitations. The Company will
reimburse brokers, banks and other persons holding shares in their names or in
the names of nominees for their expenses for sending material to principals and
obtaining their proxies.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED JANUARY 31, 1995, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
EXCLUDING CERTAIN EXHIBITS THERETO, MAY BE OBTAINED WITHOUT CHARGE BY CONTACTING
THE OFFICE OF INVESTOR RELATIONS, BGS SYSTEMS, INC., 128 TECHNOLOGY CENTER,
WALTHAM, MASSACHUSETTS 02254-9111. STOCKHOLDERS MAY ALSO OBTAIN A LIST OF THE
COMPANIES INCLUDED IN THE CRSP INDEX FOR NASDAQ COMPUTER AND DATA PROCESSING
STOCKS (SIC CODE 737) BY CONTACTING THAT OFFICE OF INVESTOR RELATIONS.
By Order of the Board of Directors
JEFFREY P. BUZEN, Clerk
Page 14
<PAGE> 17
EXHIBIT A
1995 EMPLOYEE STOCK PURCHASE PLAN
JANUARY 26, 1995
1. Purpose.
The purpose of this 1995 Employee Stock Purchase Plan (the "Plan") is to
provide employees of BGS Systems, Inc. (the "Company"), and its subsidiaries,
who wish to become shareholders of the Company an opportunity to purchase Common
Stock, $.10 par value per share, of the Company (the "Shares"). The Plan is
intended to qualify as an "employee stock purchase plan" within the meaning of
Section 423 of the Internal Revenue Code of 1986, as amended (the "Code"). The
provisions of the Plan shall, accordingly, be construed so as to extend and
limit participation in a manner consistent with the requirements of that Section
of the Code.
2. Definitions.
(a) "Base pay" means an Employee's regular straight-time earnings,
including commissions paid, payments for overtime, incentive compensation,
bonuses, and other special payments. "Base pay" shall include any amounts
deducted from an Employee's earnings pursuant to any salary reduction plan of
the Company or any Subsidiary.
(b) "Employee" means any person who is customarily employed for 20 or more
hours per week and more than five months in a calendar year by (1) the Company
or (2) any Subsidiary.
(c) "Offering Commencement Date" means the applicable date on which an
Offering under the Plan commences pursuant to Paragraph 4.
(d) "Offering Termination Date" means the applicable date on which an
Offering under the Plan terminates pursuant to Paragraph 4.
(e) "Subsidiary" means any present or future corporation organized in one
of the United States which (i) would be a "subsidiary corporation" as that term
is defined in Section 425 of the Code and (ii) is designated as a participant in
the Plan by the Administering Group described in Paragraph 13.
3. Eligibility.
(a) Any Employee who shall have completed 30 days of employment and shall
be employed by the Company or any Subsidiary on the date his or her
participation in the Plan is to become effective shall be eligible to
participate in the Plan.
(b) Any provision of the Plan to the contrary notwithstanding, no Employee
shall be granted an option to participate in the Plan:
(i) if, immediately after the grant, such Employee would own stock,
and/or hold outstanding options to purchase stock, possessing 5% or more of
the total combined voting power or value of all classes of stock of the
Company or of any subsidiary of the Company (for purposes of this Paragraph
the rules of Section 425(d) of the Code shall apply in determining stock
ownership of any employee); or
(ii) which permits his or her rights to purchase stock under all
employee stock purchase plans of the Company and its subsidiaries to accrue
at a rate which exceeds $25,000 in fair market value of the stock
(determined at the time such option is granted) for each calendar year in
which such option is outstanding at any time.
1
<PAGE> 18
4. Offering Dates.
The Plan will be implemented by four semiannual offerings (referred to
herein collectively as "Offerings" and individually as an "Offering") of a
maximum of 7,500 Shares each (subject to adjustments as provided in Paragraphs
12(a) and 17). The first Offering shall commence on July 1, 1995 and terminate
on December 31, 1995 and the final Offering shall commence on January 1, 1997
and terminate on June 30, 1997. The date on which an Offering commences is
referred to as an "Offering Commencement Date", and the date on which an
Offering terminates is referred to as an "Offering Termination Date."
Participation in any one or more of the Offerings under the Plan shall
neither limit, nor require, participation in any other Offering.
5. Participation.
(a) An eligible Employee may become a participant in an Offering by
completing an authorization for payroll deduction ("Authorization") on the form
provided by the Company and filing it with the Company at least fourteen (14)
days and no more than sixty (60) days prior to the applicable Offering
Commencement Date.
(b) Payroll deductions for a participant shall commence on the applicable
Offering Commencement Date of the Offering for which such participant's
Authorization is filed and shall end on the Offering Termination Date of such
Offering, unless sooner terminated pursuant to Paragraph 10.
6. Payroll Deductions.
(a) At the time a participant files his Authorization for a payroll
deduction, the participant shall elect to have deductions made at the rate of 1,
2, 3, 4, 5, 6, 7, 8, 9 or 10 percent from his or her base pay (not in excess of
$75,000 per annum) on each payday during the time he or she is a participant in
an Offering.
(b) All payroll deductions made for a participant shall be credited to his
or her account under the Plan. A participant may not make any separate cash
payment into such account.
(c) Except as provided in Paragraph 8(b) or 10, a participant may not make
any changes to his or her participation during an Offering and, specifically, a
participant may not during an Offering alter the amount of his or her payroll
deductions for such Offering.
7. Granting of Option.
(a) For each of the Offerings, a participating Employee shall be deemed to
have been granted an option (the "Option") to purchase, on the applicable
Offering Commencement Date, a maximum number of Shares equal to an amount
determined as follows: 85% of the market value of a share of Common Stock on the
applicable Offering Commencement Date shall be divided into an amount equal to
(x) that percentage of the employee's base pay which he or she has elected to
have withheld (but not in any case in excess of 10%) multiplied by (y) the
Employee's semiannualized base pay. The market value of the Shares shall be
determined as provided in clauses (i) and (ii) of subparagraph (b) below. An
Employee's "semiannualized base pay" for any Offering shall be determined as
follows: (i) for any Employee who was employed by the Company for the entirety
of the six-month period ending on the day prior to the Offering Commencement
Date, the Employee's total base pay for such six-month period; and (ii) for any
Employee not employed for the entirety of such six-month period, the sum of the
base pay earned in each of the full calendar months prior to the Offering
Commence-
2
<PAGE> 19
ment Date during which the Employee was employed by the Company, divided by the
number of full calendar months for which the Employee was employed, multiplied
by six.
(b) The purchase price of a Share purchased with payroll deductions made
during each Offering (the "Option Exercise Price") shall be the lower of:
(i) 85% of the closing sale price for the Shares as reported on The
Nasdaq Stock Market (or, if the Common Stock is then listed on a recognized
stock exchange, 85% of the composite closing price of the Shares on such
stock exchange), as published in The Wall Street Journal, on the Offering
Commencement Date applicable to such Offering (or on the next regular
business date on which Shares shall be traded in the event that no Shares
shall have been traded on the Offering Commencement Date); or
(ii) 85% of the closing sale price for the Common Stock as reported on
The Nasdaq Stock Market (or, if the Common Stock is then listed on a
recognized stock exchange, 85% of the composite closing price of the Shares
on such stock exchange), as published in The Wall Street Journal, on the
Offering Termination Date applicable to such Offering (or on the next
regular business date on which Shares shall be traded in the event that no
Shares shall have been traded on the Offering Termination Date).
8. Exercise of Option.
With respect to each Offering during the term of the Plan:
(a) Unless a participant gives written notice of withdrawal to the Company
as hereinafter provided, his or her Option will be deemed to have been exercised
automatically on the Offering Termination Date applicable to such Offering, for
the purchase of the number of full shares of Common Stock which the accumulated
payroll deductions in his or her account at that time will purchase at the
applicable Option Exercise Price (but not in excess of the number of shares for
which Options have been granted to the Employee pursuant to Paragraph 7(a)), and
any excess in his or her account at that time will be returned to him or her.
(b) An Employee who has elected to participate in an Offering may cancel
such election as to all (but not part) of the unexercised rights granted under
such Offering by giving written notice of such cancellation to the Company
before the expiration of any exercise period. Any amounts withheld for the
purchase of Shares from the Employee's compensation through payroll deductions
shall be paid to the Employee without interest.
(c) Fractional Shares will not be issued under the Plan and any accumulated
payroll deductions which would have been used to purchase fractional Shares or
which are in excess of the limitations of Paragraph 7(a) shall be returned to an
Employee promptly following the termination of an Offering.
9. Delivery.
As promptly as practicable after the Offering Termination Date of each
Offering, the Company will deliver to each participant, as appropriate, the
certificate or certificates representing the Shares purchased upon the exercise
of such participant's Option.
10. Withdrawal.
(a) As provided in Paragraph 8(b), a participant may withdraw payroll
deductions credited to his or her account under any Offering at any time prior
to the applicable Offering Termination Date by giving seven days' prior written
notice of withdrawal to the Company. All of the participant's payroll deductions
credited to his or her account will be paid, without interest, to the
participant promptly after
3
<PAGE> 20
receipt of such notice of withdrawal and no further payroll deductions will be
made from his or her pay during such Offering. The Company may, at its option,
treat any attempt by a participant to borrow on the security of accumulated
payroll deductions as an election, under Paragraph 8(b), to withdraw such
deductions.
(b) A participant's withdrawal from any Offering will not have any effect
upon his or her eligibility to participate in any succeeding Offering or in any
similar plan which may hereafter be adopted by the Company.
(c) Upon termination of the participant's employment for any reason,
including retirement but excluding death while in the employ of the Company or a
Subsidiary, the payroll deductions credited to his or her account will be
returned, without interest, to the participant or, in the case of his or her
death subsequent to the termination of employment, to the person or persons
entitled thereto under Paragraph 14.
(d) Upon termination of the participant's employment because of death, his
or her beneficiary (as defined in Paragraph 14) shall have the right to elect,
by written notice given to the Company prior to the expiration of the period of
30 days commencing with the date of the death of the participant, either
(i) to withdraw all of the payroll deductions credited to the
participant's account under the Plan; or
(ii) to exercise the participant's option for the purchase of Shares
on the Offering Termination Date next following the date of the
participant's death for the purchase of the number of full Shares which the
accumulated payroll deductions in the participant's account at the date of
the participant's death will purchase at the applicable Option Exercise
Price (but not in excess of the number of Shares for which Options have
been granted to the participant pursuant to Paragraph 7(a)), and any excess
in such account will be returned to said beneficiary.
In the event that no such written notice of election shall be duly received
by the Company, the beneficiary shall automatically be deemed to have elected to
withdraw the payroll deductions credited to the participant's account at the
date of the participant's death and the same will be paid promptly to the said
beneficiary.
11. Interest
No interest will be paid or allowed on any money paid into the Plan or
credited to the account of any participant employee.
12. Stock.
(a) The maximum number of Shares which shall be made available for sale
under the Plan is 30,000 Shares, and the maximum so available during any
Offering under the Plan shall be 7,500 Shares, subject to further adjustment
upon changes in capitalization of the Company as provided in Paragraph 17, plus
any Shares available but not issued in any prior Offering under the Plan. If the
total number of Shares for which Options are exercised on any Offering
Termination Date in accordance with Paragraph 8 exceeds 7,500 (as adjusted upon
changes in capitalization as provided in Paragraph 17) plus any Shares available
but not issued in any prior Offering, the Company shall make a pro rata
allocation of the Shares available for delivery and distribution in as nearly a
uniform manner as shall be practicable and as it shall determine to be
equitable, and the balance of payroll deductions credited to the account of each
participant under the Plan shall be returned to him or her as promptly as
possible. If fewer than 7,500 Shares are purchased during an Offering, the
amount not purchased may be carried over to and made available during any
subsequent Offering or Offerings.
4
<PAGE> 21
(b) The participant will have no interest in the Shares covered by his or
her Option until such Option has been exercised.
(c) Shares to be delivered to a participant under the Plan will be
registered in the name of the participant, or, if the participant so directs by
written notice to the Company prior to the Offering Termination Date applicable
thereto, in the names of the participant and one such other person as may be
designated by the participant, as joint tenants with rights of survivorship, to
the extent permitted by applicable law.
(d) The Board of Directors of the Company may, in its discretion, require
as conditions to the exercise of any Option that the Shares reserved for issue
upon the exercise of the Option shall have been duly authorized for trading on
The Nasdaq Stock Market and that either
(i) a Registration Statement under the Securities Act of 1933, as
amended, with respect to said Shares shall be effective; or
(ii) the participant shall have represented in form and substance
satisfactory to the Company that it is the participant's intention to
purchase such Shares for investment.
13. Administration.
The Plan shall be administered by a Committee designated by the Board of
Directors, or, if no such Committee is established, by the Board of Directors of
the Company (hereinafter, the Committee so designated by the Board of Directors,
or, if no such Committee is established, the Board of Directors shall be
referred to as the "Administrating Group"). The officer of the Company charged
with day-to-day administration of the Plan shall, solely for matters involving
the Plan, be an ex-officio member of the Administrating Group. The
interpretation and construction of any provision of the Plan and the adoption of
rules and regulations for administering the Plan shall be made by the
Administrating Group. Determinations made by the Administrating Group with
respect to any matter or provisions contained in the Plan shall be final,
conclusive and binding upon the Company and upon all participants, their heirs
or legal representatives. Any rule or regulation adopted by the Administrating
Group shall remain in full force and effect unless and until altered, amended,
or repealed by the Administrating Group. The Company shall indemnify
Administrating Group members, to the fullest extent permitted by applicable
statute, for any expenses incurred in defending a civil or criminal action or
proceeding, arising out of such member's actions with respect to administration
of the Plan, in advance of the final disposition of such action or proceeding,
upon receipt of an undertaking by the person indemnified to repay such payment
if such member shall be adjudicated not to have acted in the reasonable belief
that such member's action was in the best interest of the Company.
14. Designation of Beneficiary.
A participant may file a written designation of a beneficiary who is to
receive any Shares and/or cash in the event of the death of the participant
prior to the delivery of such Shares or cash to the participant. Such
designation of beneficiary may be changed by the participant at any time by
written notice to the Company. Upon the death of a participant and upon receipt
by the Company of proof of the identity and existence at the participant's death
of a beneficiary validly designated by the participant under the Plan, the
Company shall deliver such Shares and/or cash to such beneficiary. In the event
of the death of a participant and in the absence of a beneficiary validly
designated under the Plan who is living at the time of such participant's death,
the Company shall deliver such Shares and/or cash to the executor or
administrator of the estate of the participant, or if no such executor or
administrator has been appointed (to the knowledge of the Company) the Company,
in its discretion, may deliver such Shares and/or cash to the spouse or to any
one or more dependents of the participant
5
<PAGE> 22
as the Company may designate. No beneficiary, shall prior to the death of the
participant by whom he has been designated, acquire any interest in the Shares
or cash credited to the participant under the Plan.
15. Transferability.
Neither payroll deductions credited to a participant's account nor any
rights with regard to the exercise of an Option or to receive stock under the
Plan may be assigned, transferred, pledged, or otherwise disposed of in any way
by the participant otherwise than by will or the laws of descent and
distribution. Any such attempted assignment, transfer, pledge, or other
disposition shall be without effect, except that the Company may treat such act
as an election to withdraw funds in accordance with Paragraph 8(b).
16. Use of Funds.
All payroll deductions received or held by the Company under this Plan may
be used by the Company for any corporate purpose and the Company shall not be
obligated to segregate such payroll deductions.
17. Effect of Changes in Shares.
In the event of any changes of outstanding Shares by reason of stock
dividends, subdivisions, combinations and exchanges of Shares, recapitalizations
or mergers in which the Company is the surviving corporation, the aggregate
number and class of Shares available under this Plan and the Option Exercise
Price per Share shall be appropriately adjusted by the Board of Directors of the
Company, whose determination shall be conclusive. Any such adjustments may
provide for the elimination of any fractional Shares which would otherwise
become subject to any Options.
18. Amendment or Termination.
The Board of Directors of the Company may at any time terminate or amend
the Plan. Except as hereinafter provided, no such termination can affect Options
previously granted, nor may an amendment make any change in any Option
theretofore granted which would adversely affect the rights of any participant
nor may an amendment be made without the prior approval of the stockholders of
the Company if such amendment would (a) materially increase the benefits
accruing to participants under the Plan, (b) materially increase the number of
Shares which may be issued under the Plan, or (c) materially modify the
requirements as to eligibility for participation under the Plan. The Board of
Directors shall have the right to amend or modify the terms and provisions of
the Plan and of any outstanding Options granted under the Plan to the extent
necessary to qualify any or all such Options for favorable federal income tax
treatment. The Board of Directors shall have the right to amend or modify the
terms and provisions of the Plan and of any outstanding Options granted under
the Plan to the extent necessary (except, in the case of previously granted
Options, if such amendment or modification would constitute a "modification"
under Section 425(h) of the Code) to qualify any or all of such Options and the
holders thereof for such favorable or requisite treatment as may be afforded or
mandated by Rule 16b-3, as amended from time to time, of the Securities and
Exchange Commission, or any successor rule.
19. Notices.
All notices or other communications by a participant to the Company under
or in connection with the Plan shall be deemed to have been duly given when
received by the Director of Human Resources.
6
<PAGE> 23
20. Merger.
If the Company shall at any time merge with another corporation and the
Company is the surviving entity, the holder of each Option then outstanding will
thereafter be entitled to receive at the next Offering Termination Date upon the
exercise of such Option for each Share as to which such Option shall be
exercised the securities or property which a holder of one share of the Common
Stock was entitled to receive upon and at the time of such merger, and the Board
of Directors of the Company shall take such steps in connection with such merger
or consolidation as the Board of Directors shall deem necessary to assure that
the provisions of Paragraph 17 shall thereafter be applicable, as nearly as
reasonably may be, in relation to the said securities or property as to which
such holder of such option might thereafter be entitled to receive thereunder.
In the event of a merger or consolidation in which the Company is not the
surviving entity, or of a sale of assets in which the Company is not the
surviving entity, the Plan shall terminate, and all payroll deductions credited
to participants' accounts shall be returned to them; provided, however, that the
Board of Directors may, in the event of such merger, consolidation or sale,
accelerate the Offering Termination Date of the Offering then in effect and
permit participants to purchase Shares under the Plan at such accelerated
Offering Termination Date.
21. Approval of Stockholders.
The Plan has been adopted by the Board of Directors of the Company, but is
subject to the approval of the stockholders of the Company at the Annual Meeting
of Stockholders to be held on June 13, 1995.
22. Registration and Qualification of the Plan Under Applicable Securities
Laws.
Notwithstanding anything in the Plan to the contrary, no Option shall be
granted under the Plan until such time as the Company has qualified or
registered the Shares which are subject to the Option under the applicable
federal and state securities laws to the extent required by such laws. In the
event the Shares shall not have been so qualified and registered prior to the
date an Offering is scheduled to commence, the Offering Commencement Date shall
be the date upon which the registration of the Shares and other qualification
shall have become effective.
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<PAGE> 24
APPENDIX
BGS SYSTEMS, INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 13, 1995
The undersigned, having received notice of the meeting and management's
proxy statement therefor, and revoking all prior proxies, hereby appoint(s)
Jeffrey P. Buzen, Harold S. Schwenk, Jr. and C. Russel Hansen, Jr. and each of
them, attorneys or attorney of the undersigned (with full power of substitution)
for and in the name(s) of the undersigned to attend the Annual Meeting of
Stockholders of BGS Systems, Inc. (the "Company") to be held at the corporate
offices of the Company, 128 Technology Center, Waltham, Massachusetts on June
13, 1995 and any adjourned sessions thereof, and there to vote and act upon the
following matters in respect of all shares of stock of the Company which the
undersigned will be entitled to vote or act upon, with all powers the
undersigned would possess if personally present.
Attendance of the undersigned at the meeting or at any adjourned session
thereof will not be deemed to revoke this proxy unless the undersigned shall
affirmatively indicate at the meeting the intention of the undersigned to vote
said shares in person. If the undersigned hold(s) any of the shares of the
Company in fiduciary, custodial or joint capacity or capacities, this proxy is
signed by the undersigned in every such capacity as well as individually.
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF THE COMPANY
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
/ X / PLEASE MARK VOTES AS IN THIS EXAMPLE.
The shares represented by this proxy will be voted as directed by the
undersigned. If no direction is given with respect to any election or proposal
specified below, this proxy will be voted for such election or proposal.
1. To fix the number of directors at four and elect the nominee listed below to
serve as Class III Director.
Nominee: Harold S. Schwenk, Jr.
/ / FOR / / WITHHELD
2. Approval of the Company's 1995 Employee Stock Purchase Plan as described in
the accompanying proxy statement
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before said meeting or any adjournments thereof.
<PAGE> 25
/ / MARK HERE IF YOU PLAN TO ATTEND THE MEETING
/ / MARK HERE FOR ADDRESS CHANGE AND MARK BELOW.
In signing, please write (name) exactly as appearing hereon. When signing as
attorney, executor, administrator or other fiduciary, please give your full
title as such. Joint owners should each sign personally.
Signature: Date
- - --------------------------------------- -------------------------------------
Signature: Date
- - --------------------------------------- -------------------------------------
