BGS SYSTEMS INC, DEF 14A, 1997-05-01

BGS SYSTEMS INC
DEF 14A, 1997-05-01
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<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 /X/ 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 and General Counsel
(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)(1) 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:

- --------------------------------------------------------------------------------
<PAGE> 2

BGS SYSTEMS, INC.

ONE FIRST AVENUE
WALTHAM, MASSACHUSETTS 02254-9111

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD

JUNE 10, 1997

To the Stockholders of
BGS Systems, Inc.:

The Annual Meeting of Stockholders of BGS Systems, Inc. ("BGS" or the
"Company") will be held on Tuesday, June 10, 1997, at 10:00 a.m. local time at
BGS' headquarters, One First Avenue, Waltham, Massachusetts 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 II director for a term of
three years.

2. To approve the Company's 1997 Employee Stock Purchase Plan as
described in the accompanying Proxy Statement.

3. To approve an amendment to the Company's 1993 Stock Option Plan as
described in the accompanying Proxy Statement.

4. To approve an amendment to the Company's 1993 Outside Director
Stock Option Plan as described in the accompanying Proxy Statement.

5. To transact such other business as may properly come before the
meeting or any adjournments thereof.

The Board of Directors has fixed April 14, 1997, as the record date for the
determination of stockholders entitled to vote at the Annual Meeting and to
receive notice thereof. 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 6, 1997

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 UNITED
STATES.
<PAGE> 3

BGS SYSTEMS, INC.

ONE FIRST AVENUE
WALTHAM, MASSACHUSETTS 02254-9111

PROXY STATEMENT
FOR
1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 10, 1997

This Proxy Statement is furnished to stockholders by the Board of Directors
for solicitation of proxies for use at the Annual Meeting of Stockholders on
Tuesday, June 10, 1997, at 10 a.m., and at all adjournments thereof (the
"Meeting"), for the purposes set forth in the attached Notice of Annual Meeting
of Stockholders. The address of the Company's principal executive office is One
First Avenue, Waltham, MA 02254-9111. The approximate date on which this proxy
statement and the enclosed form of proxy are first sent or given to stockholders
is May 6, 1997. Only stockholders of record at the close of business on April
14, 1997, are entitled to vote at the Meeting.

On April 14, 1997, the Company had 6,269,084 outstanding shares of Common
Stock, $.10 par value, constituting the only class of voting securities of the
Company. Each such share is entitled to one vote on each matter to be voted
upon. A majority of the shares entitled to vote and either present in person or
represented by a properly signed and returned proxy will constitute a quorum for
the transaction of business at the Meeting. 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 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 of Stockholders
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, Boston EquiServe. The Inspector of Election
has customarily been Normand Bilodeau, the Company's Chief Financial Officer.

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I. ELECTION OF DIRECTORS

NOMINEE AND CONTINUING DIRECTORS

The Company's By-Laws provide that the number of directors shall be
determined from time to time by majority vote of the stockholders, among others.
The Board of Directors of BGS is divided into three classes, with the terms of
office of each class ending in successive years. The term of the Class II
Director expires with this Annual Meeting of Stockholders. The nominee for Class
II, if elected, will serve three years until the 2000 Annual Meeting or until a
successor has been elected and qualified. The current Directors of Class III
will continue in office until the 1999 Annual Meeting; the current Director of
Class I will continue in office until the 1998 Annual Meeting.

At the Meeting, the current Class II director, Judith N. Goldberg, 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 Mrs.
Goldberg as the Class II Director. Proxies cannot be voted for more than one
nominee. If the nominee should be unavailable to serve as a director, an event
which is not anticipated, the shares of stock represented by proxies (except
proxies marked to the contrary) shall be voted for the election of such other
nominee as may be designated by the Board of Directors.

NOMINEE FOR ELECTION FOR A TERM ENDING IN 2000 (CLASS II DIRECTOR):

JUDITH N. GOLDBERG
Mrs. Goldberg, 50, has been a director since April 1994. Mrs. Goldberg has been
a private investor for over five years. She received her A.B. from
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.

TO CONTINUE IN OFFICE UNTIL 1999 (CLASS III DIRECTORS):

JEFFREY P. BUZEN
Dr. Buzen, 53, 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, 56, has been a director since 1988. He has been an Executive Vice
President of Reebok International Ltd., a publicly-held athletic footwear
corporation based in Stoughton, Massachusetts since 1990. In November 1996, Mr.
Duncan transitioned to a new part-time position with Reebok in which he is
responsible for special projects. He was previously President of the Reebok
Specialty Business Group since October 1995. Mr. Duncan had been Chief Operating
Officer of the Reebok Division from June 1995 to October 1995. Prior to June
1995, Mr. Duncan was Executive Vice President and Chief Financial Officer. Mr.
Duncan joined Reebok in 1985 as Senior Vice President and Chief Financial
Officer. Mr. Duncan is also a director of Reebok International Ltd. and
Cabletron Systems, Inc.. Mr. Duncan is Chairman of the Audit and Compensation
Committees.

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TO CONTINUE IN OFFICE UNTIL 1998 (CLASS I DIRECTOR):

HAROLD S. SCHWENK, JR.
Dr. Schwenk, 55, 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 II NOMINEE LISTED
ABOVE.

ADDITIONAL INFORMATION CONCERNING THE BOARD OF DIRECTORS

MEETINGS AND COMMITTEES

The Board of Directors met eight times and acted by written consent twice
during fiscal 1997. 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 employed by the Company receives an annual fee of
$7,000 and an additional fee of $4,000 per year for each committee on which such
director serves. Non-employee directors are paid $500 for attendance at meetings
of the Board of Directors. No directors' fees are paid to directors who were
also employees of the Company.

Pursuant to the terms of the Company's 1993 Outside Director Stock Option
Plan, each director who is not an officer or employee of the Company (an
"Outside Director") receives a one time automatic grant of options to acquire
20,000 shares of Common Stock as an initial award exercisable ratably over a
five year period. Additionally, the Outside Director Stock Option Plan also
authorizes the automatic grant to purchase 4,000 shares of Common Stock as an
annual award to Outside Directors. Options granted under the annual award become
exercisable on the date of the fifth annual meeting of stockholders following
the date of grant. All options expire ten years from the date of grant and have
an exercise price equal to 115% of the fair market value of the Company's Common
Stock on the date of grant.

The Board of Directors has two standing committees: the Audit Committee and
the Compensation Committee.

Members of the Audit Committee are Mr. Duncan and Mrs. Goldberg. The Audit
Committee met two times during fiscal 1997. Its primary functions are to
recommend the appointment of independent auditors; review the scope of the
annual audit; review the independence of the auditors; review and approve
non-audit services provided by the auditors; review findings and recommendations
of the auditors and management's response; review the internal audit and control
function; and review compliance with the Company's ethical business practices
policy.

Members of the Compensation Committee are Mr. Duncan (Chairman) and Mrs.
Goldberg. The Committee held four meetings in fiscal 1997. Its primary functions
are to administer the Company's

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stock option plans, determine the compensation of the Chief Executive Officer
and review compensation changes for certain other senior executives. Dr.
Schwenk, Chief Executive Officer and President serves ex officio. See
"Compensation Committee Interlocks and Insider Participation" below.

None of the members of the Audit Committee or the Compensation Committee is
a past or current officer or employee of the Company. The Board of Directors
does not maintain a nominating committee or a committee performing similar
functions.

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 Relationships and Related Transactions" on page
9 regarding Dr. Schwenk's compensation and "Compensation Committee Report on
Executive Compensation" below under the caption, "General" for a description of
Dr. Schwenk's ex officio service.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

General
- -------
The current members of the Compensation Committee (the "Committee") are
Paul R. Duncan, who serves as 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 selected executive officers of the Company.
The Committee also grants all stock options to executive officers and other
employees. Dr. Schwenk provides compensation information and other material
requested by the Committee. He makes recommendations to the Committee on the
compensation of the selected 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 selected 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 such 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. In
fiscal 1997, the Committee did not consider the compensation levels of other
officers with roughly comparable job descriptions in other companies. In fiscal
1997, the single most important factor in determining the bonuses of the
selected officers reviewed by the Committee was corporate
performance--principally earnings per share and the growth in earnings per
share.

The compensation of Mr. McGuire is determined under an employment
agreement. The base pay and the bonus were initially established under that
agreement, and they are currently reviewed and determined, on the basis of the
compensation policies noted above. The agreement reflects these policies and is
terminable at any time by the Company or Mr. McGuire. See "Employment
Agreements" on page 10.

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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 the Company's
corporate performance. Earnings per share grew from $1.27 in fiscal 1996 to
$1.44 in fiscal 1997, an increase of 13%. 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 1997.

Compensation Methods
- --------------------
Base salaries and bonuses for selected executive officers are viewed as
appropriate remuneration vehicles to enhance performance on an annual basis. The
Company has utilized stock options for such 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. The Committee made no new stock
option grants to executive officers during fiscal 1997. 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 decided to take no specific action at this time with
respect to the $1 million compensation deduction limit under Section 162(m) of
the Internal Revenue Code. The Company's compensation levels have never exceeded
the limits and are not expected to exceed the limit by a material amount over
the next several years.

The Compensation Committee
Paul R. Duncan, Chairman
Judith N. Goldberg
Harold S. Schwenk, Jr., ex officio member

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SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information as of April 14, 1997,
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 directors and
executive officers as a group.

<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY PERCENTAGE
OWNED(1) AT OF
NAME AND ADDRESS OF APRIL 14, COMMON STOCK
BENEFICIAL OWNER 1997 OUTSTANDING
------------------------------------------------------ ------------- ------------
<S> <C> <C>
Jeffrey P. Buzen...................................... 1,309,514(2) 20.8
One First Avenue, Waltham, MA 02254-9111
Paul R. Duncan........................................ 36,000(3) *
Judith N. Goldberg.................................... 1,140,514(4) 18.1
One First Avenue, Waltham, MA 02254-9111
Harold S. Schwenk, Jr................................. 1,229,150(5) 19.5
One First Avenue, Waltham, MA 02254-9111
James S. McGuire...................................... 81,768(6) 1.3
C. Russel Hansen, Jr.................................. 1,083,666(7) 17.2
One First Avenue, Waltham, MA 02254-9111
Normand Bilodeau...................................... 810(8) *
John P. Pryor......................................... 4,000(9) *
Robert P. Goldberg Revocable Trust #2................. 939,322(10) 14.9
One First Avenue, Waltham, MA 02254-9111
Wellington Management Company......................... 749,020(11) 11.9
75 State Street, Boston, MA 02109
Fleet Financial Group................................. 330,650(12) 5.3
One Federal Street, Boston, MA 02110
Directors and Executive Officers as a Group
(7 persons).......................................... 3,823,780(13) 60.8
</TABLE>

- ---------------
* Represents less than 1% of the Common Stock outstanding.

(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes shares as to which an
individual exercises voting or investment power. Stock subject to options
currently exercisable or exercisable within 60 days following April 14,
1997 are deemed outstanding for the purpose of computing the share
ownership and percentage of the person holding such options, but are not
deemed outstanding for the purpose of computing the percentage of any other
person.

(2) Includes 100,000 shares of Common Stock subject to options which are
presently exercisable.

(3) Includes: (a) 32,000 shares of Common Stock subject to options which are
presently exercisable, and (b) 4,000 shares of Common Stock which Mr.
Duncan, if he remains in office at the June 10, 1997 Annual Meeting, will
have the right to acquire within 60 days of April 14, 1997, through the
exercise of options.

(4) Includes: (a) 939,322 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

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control the disposition and (b) 12,000 shares of Common Stock subject to
options which are presently exercisable and (c) 4,000 shares of Common
Stock which Mrs. Goldberg, if she remains in office at the June 10, 1997
Annual Meeting, will have the right to acquire within 60 days of April 14,
1997, through the exercise of options. The shares also include (a) 12,872
shares of Common Stock owned by Mrs. Goldberg's children and (b) 122,320
shares of Common Stock held by two unrelated co-trustees of four
irrevocable trusts (30,580 in each trust) for the benefit of Mrs.
Goldberg's children. Mrs. Goldberg disclaims beneficial ownership of all
135,192 shares.

(5) Includes: (a) 18,360 shares of Common Stock held of record by Dr. Schwenk
as custodian for the benefit of his daughters (b) 5,500 shares held of
record by Dr. Schwenk's wife as custodian for the benefit of their son, (c)
6,470 shares of Common Stock held of record by Dr. Schwenk's wife, and (d)
182,503 shares of Common Stock held in the Schwenk Family Remainder
Trust -- 1995 with respect to which shares Dr. Schwenk's wife and an
unrelated trustee serve as trustees and have shared power to vote and
control the disposition. Dr. Schwenk disclaims beneficial ownership of all
of such 212,833 shares. Also includes: 100,000 shares of Common Stock
subject to options which are presently exercisable.

(6) Includes: (a) 20,000 shares of Common Stock subject to options which are
presently exercisable and (b) 60,000 shares that may be acquired within 60
days of April 14, 1997 through the exercise of stock options.

(7) Includes: (a) 939,322 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)
122,320 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
1,061,642 shares. Also includes 16,000 shares of Common Stock subject to
options which are presently exercisable.

(8) Includes 10 shares of Common Stock held of record by Mr. Bilodeau's wife.
Mr. Bilodeau disclaims beneficial ownership of all 10 shares.

(9) Includes 4,000 shares of Common Stock subject to options which are
presently exercisable.

(10) 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 939,322 shares of Common Stock owned by the Trust.

(11) Wellington Management Company LLP's beneficial ownership of Common Stock of
the Company as set forth in its most recent statement, filed on January 24,
1997, pursuant to Section 13G of the Act, consists of no shares over which
it has sole voting power, 291,420 shares over which it has shared voting
power, no shares over which it has sole dispositive power and 749,020
shares over which it has shared dispositive power.

(12) Fleet Financial Group's beneficial ownership of Common Stock of the Company
as set forth in its most recent statement, filed on February 13, 1997,
pursuant to Section 13G of the Act, consists of 265,650 shares over which
it has sole voting power, no shares over which it has shared voting power,
329,650 shares over which it has sole dispositive power and 1,000 shares
over which it has shared dispositive power.

(13) Includes 284,000 shares subject to options which are presently exercisable
and 68,000 shares that may be acquired within 60 days of the record date
through the exercise of stock options.

There are no arrangements known to the Company which may result at a later
date in a change in control of the Company.

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EXECUTIVE COMPENSATION

The following table shows compensation for services rendered in all
capacities to the Company during 1997, 1996 and 1995 by the Chief Executive
Officer and the next four highest-paid executive officers.
- --------------------------------------------------------------------------------

SUMMARY COMPENSATION TABLE

<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Long Term
Compensation
--------------
Annual
Compensation Awards
----------------------------------------

Securities All Other
Name and Bonus Underlying Compensation
Principal Position Year Salary($) ($) Options(#) ($)(1)
- ------------------------------------------------------------------------------------------------------------
Harold S. Schwenk, Jr. 1997 250,000 112,500 -- 1,044
Chairman, Chief Executive 1996 216,300 96,000 -- 854
Officer and President 1995 216,300 90,000 -- 1,332

Jeffrey P. Buzen 1997 250,000 112,500 -- 1,044
Chief Scientist and 1996 216,300 96,000 -- 854
Senior Vice President 1995 216,300 90,000 -- 1,332

James S. McGuire 1997 175,000 87,500 -- 1,044
Chief Operating Officer 1996 150,000 71,250 90,000 854
1995 150,000 75,000 50,000 1,145

John P. Pryor(1) 1997 120,000 86,975 -- 1,044
Vice President, 1996 91,000 49,967 20,000 --
Marketing and Sales 1995 -- -- -- --

Normand Bilodeau 1997 106,676 40,000 -- 937
Chief Financial Officer 1996 93,741 28,000 -- 711
1995 92,650 30,000 -- 564
</TABLE>

- --------------------------------------------------------------------------------

(1) Represents amounts allocated under the Company's Profit-Sharing Retirement
Plan and Trust.

During 1997, no options were granted to the officers listed in the Summary
Compensation Table.

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AGGREGATED YEAR END OPTION VALUES

The following table shows specified information with respect to the number
and value of unexercised options at January 31, 1997 for each person named in
the Summary Compensation Table. None of such persons exercised options during
fiscal 1997.

AGGREGATED YEAR END OPTION VALUES

<TABLE>
<CAPTION>
Number of Securities
Underlying Value of Unexercised
Unexercised Options In-the-Money
at FY-End (#) Options at FY-End ($)(1)
--------------------------- ---------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Harold S. Schwenk,
Jr................... 80,000 20,000 1,009,600 252,400
Jeffrey P. Buzen....... 80,000 20,000 1,009,600 252,400
James S. McGuire....... 20,000 120,000 247,100 1,297,550
John Pryor............. 4,000 16,000 36,500 146,000
Normand Bilodeau....... 0 0 -- --
</TABLE>

- ---------------
(1) The value of options at fiscal year end was computed utilizing the closing
market price of the Common Stock on January 31, 1997 ($28.50) less the
option exercise price.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

From February 1, 1996, 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, 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.

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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. Mr. McGuire's base pay and incentive payments exceeded
these contractual amounts in 1997 by vote of the Compensation Committee.

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.

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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, 1997 with the cumulative total return on the CRSP Total Return
Index for The NASDAQ Stock Market (US & Foreign) and the CRSP Total Return 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, 1992 in BGS Common Stock and
in each of such indices, and the reinvestment of all dividends.

[STOCK PERFORMANCE GRAPH APPEARS HERE]

<TABLE>
<CAPTION>
CRSP Total Return CRSP Total Return
Index for Nasdaq Index for Nasdaq
Measurement Period 'BGS Systems, Stock Market (US Computer & Data
(Fiscal Year Covered) Inc.' & Foreign) Processing Stock
<S> <C> <C> <C>
1992 100 100 100
1993 103 113 106
1994 66 131 113
1995 67 123 127
1996 93 174 196
1997 141 226 266
</TABLE>

SECTION 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's directors, executive officers, and persons who beneficially own more
than ten percent of the Company's stock, to

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<PAGE> 14

file with the Securities and Exchange Commission initial reports of such
ownership of the Company's securities and reports of changes in such ownership.
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 upon a review of such filings, the Company
believes that during fiscal year 1997, its officers, directors and greater than
ten percent beneficial owners complied with all applicable Section 16(a) filings
on a timely basis.

ITEM 2

APPROVAL OF THE 1997 EMPLOYEE STOCK PURCHASE PLAN

Because the final offering under the 1995 Stock Purchase Plan will expire
on June 30, 1997, 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 March 27, 1997, the Board of Directors
of the Company adopted, subject to stockholder approval, the 1997 Employee Stock
Purchase Plan (the "1997 Stock Purchase Plan") covering an additional 150,000
shares of the Company's Common Stock. The 150,000 shares issuable under the 1997
Stock Purchase Plan represent approximately 2% of the 6,289,084 shares of Common
Stock outstanding on April 14, 1997 (net of treasury shares). The 1997 Stock
Purchase Plan is in all material respects similar to the 1995 Stock Purchase
Plan. The effect of the adoption of the 1997 Stock Purchase Plan will be to
extend the benefits provided by the 1995 Stock Purchase Plan five years. The
1997 Stock Purchase Plan is summarized below. This summary is qualified in all
respects by reference to the full text of the 1997 Stock Purchase Plan, which
appears as Exhibit A to this Proxy Statement.

GENERAL

The 1997 Stock Purchase Plan consists of ten semiannual offerings of 15,000
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 1997 Stock Purchase Plan
will commence on July 1, 1997, or such time thereafter as the Company shall have
qualified and registered the shares subject to the 1997 Stock Purchase Plan
under applicable Federal and state securities laws, and will end on December 31,
1997, and the last offering will commence on January 1, 2002 and end on June 30,
2002.

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 1997 Stock Purchase Plan. No employee, however,
will be eligible to participate in the 1997 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.

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 14, 1997, the market value

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<PAGE> 15

of the 150,000 shares of Common Stock issuable under the 1997 Stock Purchase
Plan would have been $4,500,000.

FEDERAL INCOME TAX CONSIDERATIONS

If the 1997 Stock Purchase Plan is approved by the shareholders, 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 1997 Stock Purchase Plan. If he or she disposes of the
stock more than two years after the first day of the offering period 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 offering period 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 offering period 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 offering period 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.

ADMINISTRATION AND OTHER INFORMATION

The 1997 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 1997 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, price of shares, issuable under the 1997 Stock
Purchase Plan, including adjustment in the maximum number of shares authorized
under the 1997 Stock Purchase Plan. The Board of Directors may at any time
terminate, suspend or amend the 1997 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 1997 Stock Purchase Plan
will, without approval of the Company's shareholders, (a) increase the aggregate
number of shares that may be issued in connection with the 1997 Stock Purchase
Plan, (b) change the purchase price formula of the 1997 Stock Purchase Plan, or
(c) materially modify the requirements as to eligibility for participation in
the 1997 Stock Purchase Plan.

There are approximately 220 employees who are eligible to participate in
the 1997 Stock Purchase Plan as of January 31, 1997, at which time the market
value of a share of the Company's Common Stock was $28.50. The following table
sets forth the number of shares of the Company's common stock purchased

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<PAGE> 16

in 1996 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
in the Summary Compensation Table:

BENEFITS UNDER THE 1995 EMPLOYEE STOCK PURCHASE PLAN IN 1996

<TABLE>
<CAPTION>
NUMBER OF AVERAGE
SHARES 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................................................. 472 15.93
Chief Operating Officer
John P. Pryor.................................................... -- --
Vice President, Marketing and Sales
Normand Bilodeau................................................. -- --
Chief Financial Officer
</TABLE>

The affirmative vote of the holders of a majority in interest of the Common
Stock present, or represented, and entitled to vote at the meeting is required
to approve the proposed amendments to the 1997 Stock Purchase Plan. Broker
non-votes will not be counted as present or represented for this purpose.
Abstentions will be counted as present and entitled to vote and, accordingly,
will have the effect of a negative vote.

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.

ITEM 3

APPROVAL OF AN AMENDMENT TO THE 1993 STOCK OPTION PLAN

In June 1993, the Company adopted the 1993 Stock Option Plan (the "Employee
Plan"). Under the Plan, 300,000 shares of the Company's Common Stock are
available for grant to employees. Option prices and exercise periods are
determined by the Compensation Committee of the Board of Directors on the date
of grant. All options under the Employee Plan become exercisable in installments
over a two-to-five year period commencing one year from the date of grant and
expire ten years from the date of grant.

The Board of Directors believes that the continued growth and profitability
of the Company will depend, in large part, upon the ability of the Company to
maintain a competitive position in attracting and retaining qualified employees.
Accordingly, on February 26, 1997, the Board of Directors voted to recommend to
the stockholders for adoption at the annual meeting of stockholders in 1997 an
amendment to the Employee Plan which would amend Section 4, "Stock Subject to
Plan," to increase the number of shares reserved for issuance under the Employee
Plan from 300,000 to 550,000 shares. In

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<PAGE> 17

addition, the Board voted to amend Section 6(b), "Payment of Purchase Price," to
allow eligible optionees to purchase shares acquired through the exercise of
such options with cash, check or, if permitted by the Compensation Committee in
its sole discretion, the surrender of Company stock having a value equal to the
purchase price of the stock. The proposed amendment to Section 6 would also
permit an employee to pay the withholding tax using these same payment methods.
The following is a brief summary of the proposed amendments to the Employee
Plan.

Currently Section 4 of the Employee Plan limits the maximum number of
shares of Common Stock of the Company which may be issued and sold under such
plan to 300,000 shares. The proposed amendment to the Employee Plan would
provide the Company with the additional shares needed to continue granting stock
options to officers, key employees and directors, thereby enabling the Company
to enjoy the benefits arising from capital stock ownership by persons who are
expected to contribute to the Company's future growth and success.

Section 6(b) of the Employee Plan provides for the payment of the exercise
price by delivery of cash or a check to the order of the Company in an amount
equal to the exercise price of such options. The proposed amendment to the
Employee Plan would allow eligible optionees to purchase shares acquired through
the exercise of such options with cash, check or, if permitted by the
Compensation Committee in its sole discretion, the surrender of Company stock
having a value equal to the purchase price of the stock. The proposed amendment
to Section 6 would also permit an employee to pay the withholding tax using
these same payment methods. The right to use qualified stock in lieu of cash if
so determined by the Compensation Committee provides a more flexible payment
approach for employees wishing to exercise their options to make payment of the
purchase price and withholding taxes payable in connection therewith.

SUMMARY OF FEDERAL INCOME TAX CONSIDERATIONS

The rules governing the tax treatment of options and stock acquired from
the exercise of options are quite technical. Therefore, the description of tax
consequences set forth below is necessarily general in nature and does not
purport to be complete. Moreover, statutory provisions are subject to change, as
are their interpretations, and their application may vary in individual
circumstances. Finally, the tax consequences under applicable state and local
income tax laws may not be the same as under the federal income tax laws.

Incentive Stock Options. No taxable income will be recognized by an
optionee upon the grant or exercise of an incentive stock option granted under
the Plan, and no corresponding expense deduction will be available to the
Company. Generally, if an optionee holds shares acquired upon the exercise of
incentive stock options for at least two years from the grant of the option and
for at least one year from the date of transfer of the purchased shares to him,
any gain recognized by the optionee on a subsequent sale of such shares will be
treated as capital gain. The gain recognized upon the sale of the stock is the
difference between the option exercise price and the sale price of the stock.
The maximum federal tax rate on long term capital gains is currently 28% and the
maximum marginal federal tax rate on ordinary income and short term capital
gains is 39.6%. The net federal income tax effect on the holder of incentive
stock options is to defer, until the time the stock is sold, taxation of any
increase in the stock's value from the time of grant to the time of exercise,
and if current tax rates are in effect at the time of sale, to provide slightly
lower taxation of such increase. The Plan provides that options granted
thereunder to any employee which are intended to constitute incentive stock
options shall not constitute incentive stock options to the extent that such
options, in the aggregate, become exercisable

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<PAGE> 18

for the first time in any one calendar year for shares with an aggregate fair
market value (determined as of the respective date or dates of grant) of more
than $100,000.

If an optionee sells the stock prior to the expiration of the applicable
holding period (a "disqualifying disposition"), he or she will realize ordinary
income in an amount equal to the lesser of (i) the fair market value of the
stock on the date of exercise less the option exercise price, or (ii) the amount
realized on the disposition of the stock less the option exercise price; and the
Company will receive a corresponding business expense deduction. The amount by
which the proceeds of sale exceed the fair market value of shares on the date of
exercise will be treated as long-term capital gain if the shares are held for
more than one year prior to the sale and as short-term capital gain if the
shares are held for a shorter period. In the case of a sale where a loss, if
sustained, would have been recognized, the amount of the optionee's income, and
the amount of the Company's corresponding expense deduction will not exceed the
difference between the sale price and the adjusted basis of the shares.

Non-statutory Options. Generally, no taxable income will be recognized by
an optionee upon the grant of a non-statutory option. The optionee must
recognize as ordinary income in the year in which the option is exercised the
amount by which the fair market value of the purchased shares on the date of
exercise of the option exceed the option exercise price. The amount of the
optionee's taxable income will ordinarily be deductible by the Company in the
same year in which the optionee recognizes the taxable income, subject to the
requirements of Section 162(m). Any additional gain or any loss recognized upon
the subsequent disposition of the purchased shares will be a capital gain or
loss, and will be a long-term gain or loss if the shares are held for more than
one year.

Alternative Minimum Tax. With regard to "alternative minimum tax"
applicable to individuals, in the year of option exercise an optionee must
generally include in his alternative minimum taxable income the difference
between the exercise price and the fair market value of the stock on the date of
exercise, and in the year of sale any additional gain or loss is included in
alternative minimum taxable income. The highest rate at which alternative
minimum tax is imposed upon an individual's alternative minimum taxable income
is 28%, but tax is only imposed to the extent that such tax exceeds the
taxpayer's regular income tax liability for the taxable year.

The text of the proposed amendments is attached hereto as Exhibit B.

The affirmative vote of the holders of a majority in interest of the Common
Stock present, or represented, and entitled to vote at the meeting is required
to approve the proposed amendments to the Employee Plan. Broker non-votes will
not be counted as present or represented for this purpose. Abstentions will be
counted as present and entitled to vote and, accordingly, will have the effect
of a negative vote.

THE BOARD OF DIRECTORS BELIEVES THAT THE PROPOSED AMENDMENT IS IN THE BEST
INTEREST OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" THIS
PROPOSAL.

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ITEM 4

APPROVAL OF AN AMENDMENT TO THE
1993 OUTSIDE DIRECTOR STOCK OPTION PLAN

The 1993 Outside Director Stock Option Plan (the "Directors Plan") was
adopted by the Board of Directors on March 25, 1993, and approved by the
Company's stockholders on June 8, 1993.

The Directors Plan was adopted to increase the Company's ability to attract
and retain non-employee directors of the Company by providing them with an
opportunity to purchase Common Stock, to provide additional incentives to the
Company's directors and to encourage the highest level of performance by them by
offering a personal financial stake in the Company's success. The Company also
believes that the Directors Plan encourages directors to make a greater equity
investment in the Company, more closely aligning the interest of the directors
and the stockholders. The material terms of the Directors Plan are summarized
under the caption "Additional Information Concerning the Board of
Directors -- Meetings and Committees" above. On March 27, 1997, the Board of
Directors voted to recommend to the stockholders for adoption at the annual
meeting of stockholders in 1997 an amendment to the Directors Plan which would
amend Section 4(a) "Stock Subject to Plan" to increase the number of shares
reserved for issuance under the Directors Plan from 80,000 to 130,000 shares. In
addition, the Board voted to amend Sections 5(e) "Payment" and 8(d)
"Withholding" to allow eligible optionees to purchase shares acquired through
the exercise of such options with cash, check, or the surrender of Company stock
having a value equal to the purchase price of the stock. The proposed amendment
to Section 8(d) would also permit an optionee to pay the withholding tax using
these same payment methods. The following is a brief summary of the proposed
amendments to the Directors Plan.

Currently Section 4(a) of the Directors Plan limits the maximum number of
shares of Common Stock of the Company which may be issued and sold under such
plan to 80,000 shares. The proposed amendment to the Directors Plan would
provide the Company with the additional shares needed to continue granting stock
options to non-employee directors, thereby enabling the Company to enjoy the
benefits arising from capital stock ownership by persons who are expected to
contribute to the Company's future growth and success.

Section 5(e) of the Directors Plan provides for the payment of the exercise
price by delivery of cash or a check to the order of the Company in an amount
equal to the exercise price of such options. The proposed amendment to the
Directors Plan would allow eligible optionees to purchase shares acquired
through the exercise of options with cash, check, or the surrender of Company
stock having a value equal to the purchase price of the stock. The proposed
amendment to Section 8(d) would also permit the optionee to pay the withholding
tax using these same methods. The right to use qualified stock in lieu of cash
provides a more flexible payment approach for optionees wishing to exercise
their options to make payment of the purchase price and withholding taxes
payable in connection therewith.

SUMMARY OF FEDERAL INCOME TAX CONSIDERATIONS

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<PAGE> 20

consequences under applicable state and local income tax laws may not be the
same as under the federal income tax laws.

Options under the Directors Plan are non-statutory options. Generally, no
taxable income will be recognized by an optionee upon the grant of a
non-statutory option. An optionee who acquires shares by exercise of an option
generally recognizes as taxable ordinary income, at the time of exercise, the
difference between the exercise price and the fair market value of the shares on
the date of exercise. The amount of the optionee's taxable income will
ordinarily be deductible by the Company in the same year in which the optionee
recognizes the taxable income, subject to the requirements of Section 162(m).
Any additional gain or any loss recognized upon the subsequent disposition of
the purchased shares will be a capital gain or loss, and will be a long-term
gain or loss if the shares are held for more than one year.

The text of the proposed amendment is attached hereto as Exhibit C.

The affirmative vote of the holders of a majority in interest of the Common
Stock present, or represented and entitled to vote at the meeting is required to
approve the proposed amendments to the Directors Plan. Broker non-votes will not
be counted as present or represented for this purpose. Abstentions will be
counted as present and entitled to vote and, accordingly, will have the effect
of a negative vote.

THE BOARD OF DIRECTORS BELIEVES THAT THE PROPOSED AMENDMENT IS IN THE BEST
INTEREST OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" THIS
PROPOSAL.

SUBMISSION OF STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING

Any proposal submitted for inclusion in the Company's proxy statement and
form of proxy for the 1998 Annual Meeting of Stockholders must be sent by
certified mail -- return receipt requested and received at the Company's
principal executive offices in Waltham, Massachusetts, on or before January 6,
1998. Proposals should be addressed to the attention of the Clerk of the
Corporation, BGS Systems, Inc., One First Avenue, Waltham, Massachusetts
02254-9111.

RELATIONSHIPS WITH INDEPENDENT PUBLIC ACCOUNTANTS

The Audit Committee recommended and the Board of Directors appointed the
firm of Ernst & Young LLP, independent public accountants, to audit the books
and accounts of the Company and its subsidiaries for the year 1998.

Ernst & Young LLP has audited the accounts of the Company since 1978. A
representative of Ernst & Young LLP is expected to be present at the
stockholders meeting and available to respond to appropriate questions and will
be given an opportunity to make a statement, if the representative chooses to do
so.

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OTHER MATTERS

The Management knows of no other matters that may properly be presented at
the Meeting, but if other matters do properly come before the meeting, the
persons named in the proxy intend to vote according to their best judgment.

Stockholders are encouraged to date, sign and return the enclosed proxy in
the enclosed envelope, to which no postage need be affixed if mailed in the
United States. If you attend the Annual Meeting, you may revoke your proxy at
that time and vote in person if you desire; otherwise, your proxy will be voted
for you.

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, 1997, 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., ONE FIRST AVENUE, WALTHAM,
MASSACHUSETTS 02254-9111. THE COMPANY HAS ESTABLISHED A PUBLICLY ACCESSIBLE HOME
PAGE ON THE INTERNET WORLD WIDE WEB FOR COMPANY PRODUCT AND FINANCIAL
INFORMATION. BGS INFORMATION CAN BE OBTAINED BY REFERENCE TO THE WORLD WIDE WEB
URL HTTP://WWW.BGS.COM.

By Order of the Board of Directors

JEFFREY P. BUZEN, Clerk
Dated: May 6, 1997

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EXHIBIT A

1997 EMPLOYEE STOCK PURCHASE PLAN
MARCH 27, 1997

1. PURPOSE.

The purpose of this 1997 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

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<PAGE> 23

(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.

4. OFFERING DATES.

The Plan will be implemented by ten semiannual offerings (referred to
herein collectively as "Offerings" and individually as an "Offering") of a
maximum of 15,000 Shares each (subject to adjustments as provided in Paragraphs
12(a) and 17). During the term of the Plan, Offerings will commence on January 1
and July 1 and end on June 30 and December 31, respectively, of each year. The
first Offering shall commence on July 1, 1997 and terminate on December 31, 1997
and the final Offering shall commence on January 1, 2002 and terminate on June
30, 2002. 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

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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
Commencement 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
of shall have been traded on the Offering Commencement Date); or

(ii) 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
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

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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 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.

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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 150,000 Shares, and the maximum so available during any
Offering under the Plan shall be 15,000 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 15,000 (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 less than 15,000 Shares are purchased during an Offering, the
amount not purchased may be carried over to and made available during any
subsequent Offering or Offerings.

(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 participants 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

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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 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

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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.

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.

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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 10, 1997.

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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EXHIBIT B

AMENDMENT NO. 1 TO BGS SYSTEMS, INC.

1993 STOCK OPTION PLAN

This is the first amendment to the BGS Systems, Inc. 1993 Stock Option Plan
(the "Plan").

The Plan is hereby amended as follows:

1. Section 4 is amended to read in its entirety as follows:

"4. Stock Subject to Plan. Subject to adjustment as provided in Section
15 below, the maximum number of shares of Common Stock of the Company
which may be issued and sold under the Plan is 550,000 shares. If an
option granted under the Plan shall expire or terminate for any reason
without having been exercised in full, the unpurchased shares subject to
such option shall again be available for subsequent options grants under
the Plan."

2. Section 6(b) is amended to read in its entirety as follows:

"6(b) Payment of Purchase Price. Payment shall be made either (a) in
cash, (b) by check, (c) if permitted by the Committee (with respect to
an Incentive Option, such permission to have been granted at the time of
the Incentive Option grant), by delivery and assignment to the Company
of shares of Company stock (provided that such shares have been held by
the Optionee for at least 6 months before such delivery) having a Market
Price (as determined by the Committee) equal to the exercise or purchase
price or by a combination of (a), (b) and/or (c). If shares of Company
stock are used to pay the exercise price of an Incentive Option, the
Company prior to such payment must be furnished with evidence
satisfactory to it that the acquisition of such shares and their
transfer in payment of the exercise price satisfy the requirements of
Section 422 of the Code and other applicable laws. Notwithstanding the
foregoing, the purchase or exercise price of an Option may not be paid
by delivery and assignment to the Company of shares of Company stock to
the extent that such delivery and assignment or the execution of such
irrevocable instructions would constitute a violation of the provisions
of any law (including without limitation Section 16 of the Exchange Act)
or related regulation or rule, or any agreement or policy of the
Company, restricting the transfer or redemption of the Company's stock.

3. Section 6 is amended by adding the following new sentence at the end of
said Section 6:

"The optionee may elect to satisfy such obligation(s), in whole or in
part, by (i) delivering to the Company a check for the amount required
to be withheld or (ii) if the Committee in its sole discretion approves
in any specific or general case, having the Company withhold Shares or
delivering to the Company already-owned shares of Common Stock, having a
value equal to the amount required to be withheld, as determined by the
Committee."

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EXHIBIT C

AMENDMENT NO. 1 TO BGS SYSTEMS, INC.

1993 OUTSIDE DIRECTOR STOCK OPTION PLAN

This is the first amendment to the BGS Systems, Inc. 1993 Outside Director
Stock Option Plan (the "Plan").

The Plan is hereby amended as follows:

1. Section 4(a) is amended to read in its entirety as follows:

"(a) Number. The total number of shares of Common Stock subject to
Awards under the Plan may not exceed 130,000 shares, subject to
adjustment pursuant to Section 8(b). The shares to be delivered under
the Plan may consist, in whole or in part, of treasury stock or
authorized but unissued Common Stock, not reserved for any other
purpose."

2. Section 5(e) is amended to read in its entirety as follows:

"(e) Payment. Each Outside Director to whom an option is granted may
exercise such option from time to time, in whole or in part, during the
period that it is exercisable, by payment of the Option Price of each
share purchased, in cash, or by delivery to the Company of a number of
shares of Common Stock (provided that such shares have been held by such
Outside Director for at least 6 months before such delivery) having an
aggregate market price of not less than the product of the Option Price
multiplied by the number of shares the participant intends to purchase
upon exercise of the option on the date of delivery. Notwith-standing
the foregoing, the exercise price of an option may not be paid by
delivery to the Company of shares of Common Stock to the extent that
such delivery would constitute a violation of the provisions of any law
(including without limitation Section 16 of the Act) or related
regulation or rule."

3. Section 8(d) is amended to read in its entirety as follows:

"(d) Withholding. The Company shall have the right to deduct from
payments of any kind otherwise due to the optionee any federal, state or
local taxes of any kind required by law to be withheld with respect to
any shares issued upon exercise of Options under the Plan. The optionee
may elect to satisfy such obligation(s), in whole or in part, by (i)
delivering to the Company a check for the amount required to be withheld
or (ii) if the Committee in its sole discretion approves in any specific
or general case, having the Company withhold Shares or delivering to the
Company already-owned shares of Common Stock having a value equal to the
amount required to be withheld, as determined by the Committee."

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APPENDIX

BGS SYSTEMS, INC.

PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 10, 1997

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, One First Avenue, Waltham, Massachusetts on June 10,
1997 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 to elect the nominee listed
below to serve as the Class II Director.

Nominee: Judith N. Goldberg

[ ] FOR [ ] WITHHELD

2. Approval of the Company's 1997 Employee Stock Purchase Plan as
described in the accompanying proxy statement.

[ ] FOR [ ] AGAINST [ ] WITHHELD

3. Approval of an Amendment to the Company's 1993 Stock Option Plan as
described in the accompanying proxy statement.

[ ] FOR [ ] AGAINST [ ] WITHHELD

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<PAGE> 33
4. Approval of an Amendment to the Company's 1993 Outside Director Stock
Option Plan as described in the accompanying proxy statement.

5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before said meeting or any adjournments thereof.

[ ] MARK HERE IF YOU PLAN TO ATTEND THE MEETING

[ ] MARK HERE FOR ADDRESS CHANGE AND MARK BELOW.

In signing, please write name(s) 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 ____________________