<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Learmonth & Burchett Management Systems P/C
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(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:
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(4) Date Filed:
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Notes:
<PAGE>
[Learmonth & Burchett Management Systems Plc Letterhead]
October 29, 1997
To the holders of our ordinary shares and American Depositary Receipts ("ADRs"):
It is our pleasure to invite you to the Annual General Meeting of Learmonth
& Burchett Management Systems Plc to be held on Friday, November 21, 1997 at
11:00 a.m. central standard time ("CST"), at the Company's executive offices
located at 1800 West Loop South, Suite 900, Houston, Texas 77027.
Whether or not you plan to attend, and regardless of the number of shares
or ADRs you own, it is important that your shares be represented at the meeting.
You are accordingly urged to sign, date and return your proxy promptly. To be
effective, holders of ordinary shares must return the proxy to the Company's
registered office at Macfarlanes, 10 Norwich Street, London EC4A 1BD England by
5:00 p.m. London time (11:00 a.m. CST) on Wednesday, November 19, 1997. ADR
holders should return the ADR proxy to the depositary, Morgan Guaranty Trust
Company of New York ("Morgan"), by 3:00 p.m. eastern standard time on Monday,
November 17, 1997 in the envelope provided by Morgan, which requires no postage
if mailed in the United States. U.S. holders of ordinary shares may return the
proxy so that it is received at the Company's executive offices in Houston by
5:00 p.m. CST on Monday, November 17, 1997; the Company has made arrangements to
send the materials via courier to its U.K. offices by the deadline. Your return
of a proxy in advance will not affect your right to vote in person at the
meeting.
We hope that you will be able to attend the meeting. The officers and
directors of Learmonth & Burchett Management Systems Plc look forward to seeing
you at that time.
Sincerely,
GERALD N. CHRISTOPHER
Chairman of the Board
of Directors
MICHAEL S. BENNETT
Director and
Chief Executive Officer
<PAGE>
LEARMONTH & BURCHETT
MANAGEMENT SYSTEMS PLC
Registered No: 1294569
1800 West Loop South
Suite 900
Houston, Texas 77027
_____________________
NOTICE OF ANNUAL GENERAL MEETING
To be held November 21, 1997
_____________________
The Annual General Meeting of Learmonth & Burchett Management Systems Plc
(the "Company"), a public limited company formed in the United Kingdom, with a
registered office at 10 Norwich Street, London, England EC4A 1BD, will be held
at the Company's executive offices located at 1800 West Loop South, Suite 900,
Houston, Texas, USA on Friday, November 21, 1997 at 11:00 a.m. central standard
time ("CST") for the following purposes:
As ORDINARY BUSINESS:
1. To receive and adopt the audited consolidated financial reports and
accounts of the Company and its subsidiaries for the year ended April
30, 1997, including the Directors' and Auditor's reports contained
herein and in the Form 10-K enclosed herewith.
2. To re-elect G. Felda Hardymon, who retires as a Director by rotation.
3. To re-elect Roger A. Learmonth, who retires as a Director by rotation.
4. To re-appoint the auditors Price Waterhouse to hold office until the
next Annual General Meeting and to authorize the Directors to fix
their remuneration.
5. To approve the payment of fees to the non-Executive Directors of the
Company of an aggregate of up to (Pounds)18,000 for each such Director
in the year ending April 30, 1998 (being in excess of the
(Pounds)40,000 limit currently set forth in the Company's Articles of
Association).
As SPECIAL BUSINESS, to consider, and if thought fit to pass, the following
resolutions, of which Resolutions 6 and 7 will be proposed as Ordinary
Resolutions and Resolution 8 will be proposed as a Special Resolution:
6. To approve the adoption of an amendment to the 1996 Equity Incentive
Plan to increase the number of ordinary shares allocated for the
issuance of options by an additional _________________ ordinary
shares.
-1-
<PAGE>
7. To authorize the Directors to allot additional shares.
8. To approve disapplication of preemptive rights of holders of ordinary
shares.
The full verbatim text of each of the resolutions numbered 7 and 8 above is
set out on pages __-__ of the accompanying Proxy Statement and should be deemed
to be incorporated in this Notice.
IF YOU ARE UNABLE TO BE PRESENT PERSONALLY, PLEASE SIGN AND DATE THE ENCLOSED
PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
A shareholder who is entitled to be present and vote at the Annual General
Meeting may appoint a proxy to attend and vote in his/her stead. Any proxy so
appointed need not be a shareholder. To be effective, forms of proxy must be
deposited at the Company's registered office by 11:00 a.m. CST (5:00 p.m. London
time) on Wednesday, November 19, 1997. The registered office of the Company is
located at Macfarlanes, 10 Norwich Street, London EC4A 1BD England. For the
convenience of U.S. holders of ordinary shares (not ADRs), the Company will send
to its registered office all proxies received at its Houston headquarters by
5:00 p.m. CST on Monday, November 17, 1997. ADR holders should return the ADR
proxy to the depositary, Morgan Guaranty Trust Company of New York ("Morgan"),
by 3:00 p.m. eastern standard time on Monday, November 17, 1997 in the envelope
provided by Morgan, which requires no postage if mailed in the United States.
Completion of the proxy card does not preclude a shareholder from attending and
voting at the meeting.
This Proxy Statement and the Form 10-K set forth the information required
by the UK Companies Act and constitute the Directors' and Auditor's Report and
Accounts adopted by the Board of Directors of the Company.
BY ORDER OF THE BOARD OF DIRECTORS,
Stephen E. Odom
Company Secretary
October 29, 1997
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<PAGE>
LEARMONTH & BURCHETT
MANAGEMENT SYSTEMS PLC
Registered No: 1294569
1800 West Loop South
Suite 900
Houston, Texas 77027
_____________________
PROXY STATEMENT
AND
DIRECTORS' REPORT
ANNUAL GENERAL MEETING
_____________________
This Proxy Statement and Directors' Report is presented ,and the
accompanying proxy is solicited, by and on behalf of the Board of Directors of
Learmonth & Burchett Management Systems Plc (the "Company") for use at the
Annual General Meeting ("AGM") to be held at the Company's executive offices
located at 1800 West Loop South, Suite 900, Houston, Texas 77027 on Friday,
November 21, 1997 at 11:00 a.m. CST and any adjournments thereof.
Holders of ordinary shares of 10 pence each in the capital of the Company
("Ordinary Shares") on the Register of Members at the date of the AGM will be
entitled to vote at the AGM. On September 30, 1997 (being the latest practicable
date prior to the printing of this document), there were 26,113,740 Ordinary
Shares in issue, the holders of which are entitled on a poll to one vote per
share on each matter to come before the AGM. Holders of the Company's American
Depositary Receipts ("ADR"), consisting of two (2) Ordinary Shares per each ADR,
shall be entitled to two (2) votes per ADR on each matter to come before the
AGM. Proxies properly executed and returned will be voted at the AGM in
accordance with any directions noted thereon or, if no direction is indicated,
proxies will be voted FOR receiving and adopting the Accounts (including the
Reports), FOR election of each of the directors, FOR appointment of the
auditors, FOR approval of the increase in the aggregate level of the non-
Executive Directors' remuneration, FOR approval of the increase in the number of
Ordinary Shares allocated to the 1996 Equity Incentive Plan, FOR authorizing the
Directors to allot shares and FOR disapplication of preemptive rights. Proxies
will be voted in the discretion of the holders of the proxy with respect to any
other business that may properly come before the meeting and all matters
incidental to the conduct of the meeting. Any shareholder signing and
delivering a proxy may revoke it at any time before it is voted by delivering to
the Company Secretary a written revocation or a duly executed proxy bearing a
later date than the date of the proxy being revoked. Any shareholder attending
the meeting in person may revoke his or her proxy and vote his or her shares at
the meeting. In accordance with the terms of the Company's American Depositary
Receipts, holders of ADRs may instruct the Depositary, Morgan Guaranty Trust
Company of New York, how the American Depositary Shares (each of which
represents two ordinary shares) underlying their ADRs should be voted.
This Proxy Statement and Directors' Report and the enclosed form of Proxy
were mailed to shareholders on or about October 29, 1997.
<PAGE>
PROPOSAL NUMBER 1
RECEIVING AND ADOPTING THE REPORT AND ACCOUNTS
In accordance with the requirements of the UK Companies Act 1985, the
Company has prepared Audited Consolidated Financial Reports of the Company and
its subsidiaries for the fiscal year ended April 30, 1997 (the "Audited
Accounts"), a copy of which are included in the copy of the Company's Form 10-K
enclosed with this Proxy Statement and which is required to be laid before the
Company in the AGM. The information required in the Director's Report is
incorporated in the Form 10-K enclosed herewith and in this Proxy Statement.
Proposal Number 1 is to adopt the Audited Accounts and the Directors' Report as
contained herein and in the Company's Form 10-K.
THE BOARD OF DIRECTORS RECOMMENDS
RECEIVING AND ADOPTING THE REPORT AND ACCOUNTS
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<PAGE>
PROPOSAL NUMBERS 2 THROUGH 3
RE-ELECTION OF DIRECTORS
Two directors are to be proposed for re-election at the 1997 AGM. Unless
instructions are given to the contrary, it is the intention of the persons named
as proxies to vote the shares to which each proxy relates FOR the election of
each of the nominees listed below. All of the nominees named below are
presently serving as directors of the Company and are anticipated to be
available for election and able to serve.
Set forth below is certain information concerning the nominees and
incumbent directors:
CURRENT DIRECTORS WHOSE TERMS EXPIRE IN 1997 AND
NOMINEES FOR RE-ELECTION AT THE 1997 ANNUAL GENERAL MEETING
________________________________________________________________________________
G. FELDA HARDYMON - Mr. Hardymon has served as a Director since 1994. Mr.
Hardymon has served as a General Partner of Bessemer Venture Partners, a group
of venture capital funds, since 1981. Prior to joining Bessemer, Mr. Hardymon
was Vice President of Business Development Services, Inc., the venture capital
subsidiary of General Electric Company. Mr. Hardymon serves on the board of
Video Server, Inc., a supplier of networking equipment and associated software
for multimedia conferences.
ROGER A. LEARMONTH - Mr. Learmonth has served as a Director since co-
founding the Company in 1977. Mr. Learmonth served as the Company's Chief
Executive Officer until October 1994. Prior to founding the Company, Mr.
Learmonth was employed by BIS Applied Systems.
THE BOARD OF DIRECTORS RECOMMENDS
RE-ELECTION OF THE NOMINEES
DESCRIBED ABOVE
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<PAGE>
- --------------------------------------------------------------------------------
INCUMBENT DIRECTORS (NOT UP FOR RE-ELECTION)
- --------------------------------------------------------------------------------
GERALD N. CHRISTOPHER - Mr. Christopher has served as Chairman and Director
of Learmonth & Burchett Management Systems Plc since August 2, 1996. He
previously held the positions of President and Chief Executive Officer of Amber
Wave Systems, Inc., Extension Technology, Inc., and Channel Computing, Inc.
Additionally, he was the Chief Financial Officer of Bachman Information Systems,
Inc.
MICHAEL S. BENNETT - Mr. Bennett has served as the President, Chief
Executive Officer and Director since August 2, 1996. Mr. Bennett served as the
President and Chief Executive Officer of Summagraphics until the time of its
acquisition by Lockheed Martin's CalComp subsidiary. Prior to Summagraphics,
Mr. Bennett served as Senior Executive with Dell Computer and Chief Executive
Officer of several high technology organizations. He also has spent over 12
years in various capacities with Digital Equipment Corporation in both domestic
and international positions.
RAINER H. BURCHETT - Mr. Burchett has served as a Director of the Company
since 1977 and as its Chairman until his resignation as such on August 2, 1996.
Mr. Burchett co-founded the Company in 1977. Prior to founding the Company, he
was employed by BIS Applied Systems, a consulting company.
FORMER DIRECTORS
DAVID B. RODWAY - Mr. Rodway served as Senior Vice President-Development
of the Company from 1994 and as a Director from 1991 until his resignation in
February of 1997. Mr. Rodway joined the Company in 1990 as Associate Director.
Prior to joining the Company, Mr. Rodway served as Research and Development
Director of Hugin Sweda International, a supplier of retail information systems,
and prior to that was Director of Software Sciences, a systems contractor and
subsidiary of Thorn EMI, a U.K.-based conglomerate, responsible for research and
development.
INFORMATION CONCERNING THE BOARD AND ITS COMMITTEES
The Board of Directors held 15 meetings in the fiscal year ended April 30,
1997 and all members of the Board of Directors attended at least seventy-five
percent (75%) of such meetings. The Board has two standing committees: the Audit
Committee and the Remuneration Committee.
The members of the Audit Committee in the fiscal year ended April 30, 1997
were Messrs. Hardymon and Christopher. The Audit Committee held 5 meetings in
the fiscal year ended April 30, 1997 and each member attended at least seventy-
five percent (75%) of such meetings. The independent accountants of the Company
may, at any time they consider appropriate, request a meeting of the Audit
Committee. The responsibilities of the Audit Committee are to: consider
-4-
<PAGE>
and recommend the appointment of the Company's independent accountants; approve
the audit fee; consider any questions of resignation or dismissal of the
auditors; discuss with the independent accountants the nature and scope of the
audit; review the quarterly and annual financial statements before submission to
the Board; discuss problems and reservations arising from the quarterly
unaudited accounts and annual audits and any other matters the independent
accountants may wish to discuss; review the independent accountants' management
letter and management's response; review the Company's statement on internal
control systems; and consider the major findings of internal investigations and
management's response.
The members of the Remuneration Committee in the fiscal year ended April
30, 1996 were Messrs. Tebbs (Chairman), Burchett, Hardymon and O'Hara/1/. On
August 2, 1996, the Board of Directors of the Company voted to reconstitute the
Remuneration Committee with Board members Messrs. Christopher, Hardymon and
Burchett. The Remuneration Committee held 7 meetings in the fiscal year ended
April 30, 1997 and each member attended at least seventy-five percent (75%) of
such meetings. The Remuneration Committee meets from time to time to approve
and recommend to the Board the remuneration of the Executive Officers and key
personnel. In particular, the Remuneration Committee is required to approve any
new service agreement entered into between the Company and any of the Executive
Directors. Prior to August 2nd, when Mr. Burchett was an executive officer of
the Company, both committees met without his presence when determining Mr.
Burchett's own remuneration. The Remuneration Committee also sets and approves
share allocations under the Company's 1996 Equity Incentive Plan and 1996 Non-
Employee Directors' Share Option Plan and fixes the eligibility requirements,
contribution period and exercise price of options issued under the 1996 Stock
Purchase Plan, except for option grants to Executive Officers which are set by
the entire Board of Directors.
In fiscal 1997, each of the Directors who was not an Executive Director was
entitled to compensation from the Company for serving on the Board of Directors
equal to an annual fee of (Pounds)15,000. In lieu of the Director's fee, Gerald
N. Christopher, as Chairman of the Board received cash compensation of
approximately $50,000 in the fiscal year ended April 30, 1997 pursuant to his
employment arrangement with the Company. Additionally, the Company reimburses
each of these Directors for out-of-pocket expenses incurred in attending
meetings of the Board of Directors.
________________________________________________
/1/ Messrs. Sydney O'Hara and David Tebbs resigned as Directors in January
and July 1996, respectively.
CORPORATE GOVERNANCE
The situation on compliance with the Cadbury Committee recommendations and Code
of Best Practice is substantially the same as was reported last year. As a
relatively small public company the Board has felt that two External Directors
on the main Board committees, the Audit and Remuneration Committees are
sufficient. As a result the Chairman serves on the Audit and Remuneration
Committees which are, however, chaired by External Directors. The Audit
Committee is comprised of Felda Hardymon and Gerald N. Christopher. The
Remuneration
-5-
<PAGE>
Committee is comprised of Mr. Hardymon, Mr. Christopher and Rainer Burchett.
There is no present intention to alter the composition of the Audit and
Remuneration Committees. The view that the above arrangements are satisfactory
for smaller companies has been supported by the City Group for Smaller Companies
(CISCO) in their guidance notes on The Financial Aspects of Corporate
Governance.
GOING CONCERN
After making enquiries, the Directors have a reasonable expectation that both
the Company and its subsidiaries (the "Group") have adequate resources to
continue in operational existence for the foreseeable future. For this reason,
they continue to adopt the going concern basis in preparing the accounts.
INTERNAL FINANCIAL CONTROLS
The Directors are responsible for ensuring that the Group maintains a system of
internal financial controls, including suitable monitoring procedures. The
system is designed to ensure the maintenance of proper accounting records and
the reliability of the financial information used within the business or for
publication, but any such system can only provide reasonable, and not absolute,
assurance against misstatement or loss.
The Group's internal financial control and monitoring procedures include:
a) clear responsibilities on the part of line and financial management for the
maintenance of good financial controls and the production of accurate and
timely financial management information
b) the control of key financial risks through clearly laid down authorization
levels and proper segregation of accounting duties
c) detailed monthly budgeting and reporting of trading results, balance sheets
and cash flows, with regular review by management of variances from budget
d) reporting on compliance with internal financial controls and procedures by
senior Group personnel. These reports are reviewed by the Audit Committee
prior to the issue of quarterly and annual reports.
The Directors confirm they have reviewed the effectiveness of the Group's
internal financial control systems.
Except as disclosed in the information provided above, the Company believes it
has complied with the Code of Best Practice in the Report of the Cadbury
Committee on the Financial Aspects of Corporate Governance.
-6-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table and notes thereto set forth certain information with
respect to the beneficial ownership of the Ordinary Shares as of September 30,
1997 by (i) each person who is known to the Company to beneficially own more
than 5% of the outstanding Ordinary Shares of the Company; (ii) each Named
Executive Officer and each director of the Company; (iii) each current executive
officer and (iv) all officers and directors of the Company as a group. Except
as otherwise indicated, each of the shareholders named below has sole voting and
investment power with respect to the Ordinary Shares beneficially owned:
ORDINARY SHARES
BENEFICIALLY OWNED(1)
OFFICERS, DIRECTORS AND 5% SHAREHOLDERS NUMBER PERCENT
--------------------------------------- -------------------------
Rainer H. Burchett...............................1,500,000(2) 5.4%
c/o Learmonth & Burchett
Management Systems Plc
10 Norwich Street
London EC4A 1BD England
Roger A. Learmonth...............................1,049,749(3) 3.8%
c/o Learmonth & Burchett
Management Systems Plc
10 Norwich Street
London EC4 1BD England
S Squared Technology Corp........................2,005,154 7.2%
515 Madison Avenue
New York, NY 10022
Bessemer Venture Partners III L.P................1,996,898(4) 7.2%
83 Walnut Street
Wellesley Hills, MA 02181
Pioneering Management Corp.......................1,417,500 5.1%
60 State Street
Boston, MA 02109
Edgemont Asset Management Corp...................1,335,000 4.8%
140 E. 45th Street
New York, NY 10017
Gerald N. Christopher............................ 210,333(5) *
Michael S. Bennett............................... 340,055(6) 1.2%
Stephen E. Odom.................................. 242,084(7) *
Peter Combe...................................... 313,550(8) 1.1%
Rick Pleczko..................................... 276,238(9) *
Felda Hardymon................................... 65,262(10) *
All current directors and executive officers
as a group (11)........................... 3,932,009 14.2%
________________
* Less than one percent.
(1) Applicable percentage of ownership as of September 30, 1997 is based upon
27,470,556
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<PAGE>
Ordinary Shares outstanding (including 1,356,816 Ordinary Shares
issuable within 60 days of September 30, 1997 upon the exercise of options
beneficially owned by the indicated shareholder on that date). Unless
otherwise indicated, the persons named in the table have sole voting power
and sole investment control with respect to all Ordinary Shares
beneficially owned. Beneficial ownership is determined in accordance with
the rules of the Securities and Exchange Commission and includes voting and
investment power with respect to such Ordinary Shares.
(2) Includes 692,000 Ordinary Shares held by 9 trusts for which Mr. Burchett is
a co-trustee. Does not include 36,001 Ordinary Shares owned of record by
LBMS Trustee Company Limited of which Mr. Burchett is a shareholder and a
director. Mr. Burchett disclaims beneficial ownership in all shares held
by LBMS Trustee Company Limited, including shares to be acquired in the
future pursuant to subscription rights granted to LBMS Trustee Company
Limited.
(3) Includes 600,000 Ordinary Shares held in a trust for which Mr. Learmonth
serves as co-trustee. Also includes 2,850 Ordinary Shares held by his
daughter. Does not include 36,001 Ordinary Shares owned of record by LBMS
Trustee Company Limited of which Mr. Learmonth is a director. Mr. Learmonth
disclaims beneficial ownership in all shares held by LBMS Trustee Company
Limited, including shares to be acquired in the future pursuant to
subscription rights granted to the LBMS Trustee Company Limited.
(4) Does not include 38,903 Ordinary Shares owned by BVP III Special Situations
L.P. and 80,566 owned beneficially by certain consultants and employees of
Bessemer Securities Corporation, the sole owner of the sole limited partner
of Bessemer Venture Partners III L.P. Under certain circumstances Bessemer
Venture Partners III L.P. may direct the voting of such shares.
(5) Includes 208,333 Ordinary Shares issuable upon exercise of the vested
portion of a share option.
(6) Includes 333,333 Ordinary Shares issuable upon exercise of the vested
portion of a share option.
(7) Includes 232,000 Ordinary Shares issuable upon exercise of the vested
portion of a share option.
(8) Includes 313,550 Ordinary Shares issuable upon exercise of the vested
portion of a share option.
(9) Includes 269,600 Ordinary Shares issuable upon exercise of the vested
portion of a share option.
(10) Excludes 1,996,898 Ordinary Shares owned by Bessemer Venture Partners III
LP. Mr. Hardymon is a general partner of the general partner of Bessemer
Venture Partners III LP.
(11) Includes 1,356,816 Ordinary Shares issuable upon exercise of the vested
portions of share options but excludes shares owned by Bessemer Venture
Partners III LP, of which Mr. Hardymon is a general partner of the general
partner of Bessemer.
-8-
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by or
paid for services rendered to the Company in all capacities during fiscal 1997,
fiscal 1996 and fiscal 1995 by (i) the Company's Chief Executive Officer(s) and
(ii) each of the four most highly paid executive officers who received
compensation in excess of $100,000 for the fiscal year 1997 (together, the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
------------
Awards of
Annual Compensation Securities
------------------- Underlying All Other
Name and Principal Position Year (4) Salary($) Bonus($) Options Compensation (5)
- --------------------------- -------- -------- -------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Michael S. Bennett (1) 1997 $147,050 $ 53,066 400,000 $ 1,258
Chief Executive Officer 1996 N/A N/A N/A N/A
And President 1995 N/A N/A N/A N/A
John P. Bantleman (2) 1997 $174,474 $ 0 N/A $ 3,498
Chief Executive Officer 1996 $189,272 $ 55,000 100,000 $ 1,133
1995 $151,073 $100,000 564,000 $ 2,719
Stephen E. Odom (3) 1997 $150,000 $ 50,000 150,000 $ 4,244
Chief Financial Officer 1996 $150,000 $ 50,000 100,000 $ 0
And Secretary 1995 N/A N/A 200,000 N/A
Peter Combe 1997 $158,000 $ 50,000 150,000 $11,544
Senior Vice President 1996 $153,412 $ 73,770 100,000 $ 1,547
1995 $121,183 $104,423 199,000 $ 1,414
Rick Pleczko 1997 $141,616 $ 40,000 150,000 $12,639
Senior Vice President 1996 $137,100 $ 77,540 100,000 $ 2,070
1995 $107,831 $ 59,873 143,000 $ 1,863
</TABLE>
(1) Michael S. Bennett joined the Company in August 1996. For fiscal 1997 Mr.
Bennett's annual salary would have been $200,000 and Mr. Bennett would have
been entitled to bonus compensation of up to $100,000.
(2) John P. Bantleman resigned as President and Chief Executive Officer and as
a Director of the Company in August 1996.
(3) Stephen E. Odom joined the Company in April 1995, just prior to the fiscal
year end. For fiscal 1995 Mr. Odom's annual salary would have been $150,000
and Mr. Odom would have been entitled to bonus compensation of up to
$50,000.
(4) The periods covered by this table are the fiscal years ended in April 1997,
1996 and 1995.
(5) Represents Company contributions to the Company's 401(k) Plan, a defined
contribution plan available to U.S. employees only, car allowance, and
excess insurance premiums paid by the Company. Other compensation in the
form of perquisites and other personal benefits has been omitted as the
aggregate amount of such
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<PAGE>
perquisites and other personal benefits constituted the lesser of $50,000
or 10% of the total annual salary and bonus of the Named Executive Officer
for such year.
SHARE OPTION INFORMATION
The following table sets forth certain information regarding the option
grants made pursuant to the Company's 1996 Equity Incentive Plan (the "Share
Option Plan") during fiscal 1997 to each of the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
ORDINARY SHARES PERCENTAGE EXERCISE ANNUAL RATES OF
UNDERLYING OF TOTAL PRICE STOCK PRICE
OPTIONS OPTIONS IN U.S. EXPIRATION APPRECIATION FOR
NAME GRANTED GRANTED (3) DOLLARS (4) DATE OPTION TERM (5)
- ---- ------- ---------- ---------- ---------- ---------------
5% 10%
---------------
Michael S. Bennett (1) 400,000 16.0% 1.185 8/1/06 $298,096 $755,434
John P. Bantleman (2) N/A 0% N/A N/A N/A N/A
Stephen Odom 150,000 6.0% 1.185 8/1/06 $111,786 $283,288
Peter Combe 150,000 6.0% 1.185 8/1/06 $111,786 $283,288
Rick Pleczko 150,000 6.0% 1.185 8/1/06 $111,786 $283,288
</TABLE>
__________________
(1) Michael S. Bennett joined the Company as its President, Chief Executive
Officer and as a Director on August 2, 1996. Pursuant to his employment
arrangement with the Board of Directors, the Remuneration Committee granted
Mr. Bennett an option to purchase 400,000 Ordinary Shares at an exercise
price of $1.185 per share.
(2) John P. Bantleman resigned as President and Chief Executive Officer and as
a Director of the Company in August 1996. Upon Mr. Bantleman's
resignation, 520,500 unvested options previously granted to him expired as
of such date. 209,750 vested stock options remained exercisable until May
31, 1997 but were held as collateral against past advances from Learmonth &
Burchett Management Systems, Inc. to Mr. Bantleman. On or before May 31,
1997, Mr. Bantleman exercised his vested options and repaid such past
advances in full.
(3) Based on an aggregate of 2,499,000 options granted to employees in fiscal
1997, including options granted to the Named Executive Officers.
(4) The market value at the date of grant was $1.185 per Ordinary Share based
on a $2.37 closing price for the Company's American Depositary Receipts on
the NASDAQ Stock Exchange on the date of grant of August 2, 1996.
(5) Amounts represent hypothetical gains that could be achieved for the
respective options at the end of the ten-year option term. The assumed 5%
and 10% rates of share appreciation are mandated by rules of the Securities
and Exchange Commission and do not represent the Company's estimate of the
future market price of the Ordinary Shares.
-10-
<PAGE>
OPTION EXERCISES AND YEAR-END INTERESTS
The following table sets forth for each of the Named Executive Officers
certain information concerning the value of unexercised options at the end of
fiscal 1997 (including options granted in fiscal 1997) and the value of options
exercised in fiscal 1997.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF NET VALUES OF UNEXERCISED
ORDINARY SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS (3)
ACQUIRED VALUE ----------------------- ------------------------
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Michael S. Bennett N/A N/A 177,777 (2) 222,223 $155,999 $195,001
John P. Bantleman (1) N/A N/A 209,750 N/A $165,917 N/A
Stephen Odom N/A N/A 163,666 (2) 286,333 $ 58,499 $ 73,126
Peter Combe N/A N/A 127,766 (2) 8,734 $ 68,546 $149,148
Rick Pleczko N/A N/A 101,666 (2) 6,834 $ 67,910 $139,251
</TABLE>
- ----------------
(1) John P. Bantleman resigned as President and Chief Executive Officer and as
a Director of the Company in August 1996. Upon Mr. Bantleman's
resignation, 520,500 unvested options previously granted to him expired as
of such date. 209,750 vested stock options remained exercisable until May
31, 1997 but were held as collateral against past advances from Learmonth &
Burchett Management Systems, Inc. to Mr. Bantleman.
(2) The 1996 Equity Incentive Options granted to the Executive Officers in
August 1996 vest over an eighteen-month period, with six-eighteenths of the
shares vesting February 2, 1997 and an additional one-eighteenth vesting
over the remaining twelve months thereafter. Options under the Executive
Share Option Scheme generally vest 20% per year for a period of five years.
(3) Based on the estimated fair value of the Company's Ordinary Shares at the
end of fiscal 1997 (as determined by the price per American Depositary
Share of $4.125 on the NASDAQ Stock Exchange at April 30, 1997), less the
exercise price payable for such Ordinary Shares.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of the Company's
outstanding share capital, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission ("SEC") and NASDAQ.
Officers, directors and greater than 10% shareholders are required by SEC
regulations to furnish the Company with all copies of Section 16(a) forms they
file. Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that during the fiscal year
ended April 30, 1997, all filing requirements were timely satisfied.
-11-
<PAGE>
EMPLOYMENT ARRANGEMENTS WITH EXECUTIVE OFFICERS
During the fiscal year ended April 30, 1997, Michael S. Bennett and the
Company were parties to an agreement pursuant to which Mr. Bennett served as
President and Chief Executive Officer of the Company and a member of the
Company's Board of Directors. The agreement had an effective date of August 2,
1996 with no initial fixed term and no termination notification requirement as
Mr. Bennett was an employee at will. The initial salary payable under the
agreement was $200,000 per year. Pursuant to the agreement, the initial salary
could be adjusted by the Board of Directors at an annual review. In August
1996, the Company issued to Mr. Bennett options to purchase 400,000 Ordinary
Shares at an exercise price of $1.185. Mr. Bennett was also entitled to a bonus
of $100,000 at target performance and to participate in certain of the Company's
benefit plans. In the event of a change of control of the Company, Mr. Bennett
would have been entitled to a severance payment of $300,000 and all of his then
unvested share options would have become immediately vested.
Effective July 1, 1997, Mr. Bennett and the Company entered into a new
agreement pursuant to which Mr. Bennett continues to serve as President and
Chief Executive Officer of the Company and a member of the Company's Board of
Directors. Under the agreement there is no initial fixed term and no
termination notification requirement as Mr. Bennett is an employee at will. The
initial salary payable under the agreement is $200,000 per year. Pursuant to
the agreement, the initial salary may be adjusted by the Board of Directors at
an annual review. The Company has also issued to Mr. Bennett options to
purchase an additional 400,000 Ordinary Shares at an exercise price of $1.50.
Mr. Bennett is also entitled to a bonus of $175,000 under the Company's
incentive bonus plan and to participate in certain of the Company's benefit
plans. Additionally, in the initial term of the agreement, Mr. Bennett is
entitled to an additional bonus of $150,000 based on achievement of certain
Company performance targets and other objectives. In the event of a change of
control of the Company, Mr. Bennett will be entitled to a severance payment
equivalent to one-year's salary and benefits plus any earned but unpaid bonuses.
Additionally, all unvested options granted pursuant to the July 1, 1997
agreement will become vested, either immediately or over a period of time, as
determined by the terms of the agreement.
Gerald N. Christopher and the Company are parties to an agreement pursuant
to which Mr. Christopher serves as Chairman of the Board of Directors of the
Company. The agreement has an effective date of August 2, 1996 with no initial
fixed term and no termination notification requirement as Mr. Christopher is an
employee at will. The initial salary payable under the agreement is $3,000 per
week, subject to adjustment effective January 1, 1997, when Mr. Christopher's
yearly salary is set at a rate of $1,000 per week. The Company has also issued
to Mr. Christopher options to purchase 250,000 Ordinary Shares at an exercise
price of $1.185. Mr. Christopher is also entitled to reimbursement for the cost
of an apartment and reasonable living expenses in the Houston area, as well as
for reasonable travel expenses.
John P. Bantleman resigned as President and Chief Executive Officer and as
a Director of the Company on August 2, 1996. Under the terms of a termination
agreement with the Company, Mr. Bantleman received a lump sum of $106,000 (less
payroll deductions and taxation
-12-
<PAGE>
withholding), representing six months salary continuation and an automobile
allowance. Health benefits were continued for six months. Upon Mr. Bantleman's
resignation, the Board voted to accelerate 154,000 of his unvested options
resulting in his holding 209,750 vested stock options exercisable through May
31, 1997. Such options were held as collateral against Mr. Bantleman's
outstanding advances of $90,000 from the Company. The balance of his unvested
options expired upon his resignation. On or before May 31, 1997, Mr. Bantleman
exercised his options and repaid in full the outstanding advance balance of
$90,000.
OTHER INFORMATION
DIRECTORS AND THEIR INTERESTS; CERTAIN TRANSACTIONS
On August 2, 1996, at a meeting of the Board of Directors of the Company,
it was unanimously voted that, subject to the approval of the 1996 Equity
Incentive Plan, Messrs. Christopher and Bennett were granted options to purchase
250,000 and 400,000 Ordinary Shares, respectively, equivalent to 125,000 and
200,000 American Depositary Shares, respectively. The aggregate purchase prices
are $296,250 and $474,000, respectively. On August 2, 1996, Messrs. Odom,
Combe, Rodway and Pleczko were each granted options to purchase 150,000 Ordinary
Shares, equivalent to 75,000 American Depositary Shares for an aggregate
purchase price of $177,750.
John P. Bantleman resigned as President and Chief Executive Officer and as
a Director of the Company on August 2, 1996. Under the terms of a termination
agreement with the Company, Mr. Bantleman received a lump sum of $106,000 (less
payroll deductions and taxation withholding), representing six months salary
continuation and an automobile allowance. Health benefits were continued for
six months. Upon Mr. Bantleman's resignation, the Board voted to accelerate
154,000 of his unvested options resulting in his holding 209,750 vested stock
options exercisable through May 31, 1997. Such options were held as collateral
against Mr. Bantleman's advances of $90,000 from the Company. The balance of
his unvested options expired upon his resignation. On or before May 31, 1997,
Mr. Bantleman exercised his options and repaid in full the outstanding advance
balance of $90,000.
Pursuant to the terms of a new employment agreement effective July 1, 1997,
the Board of Directors has agreed to issue an option to purchase 400,000
Ordinary Shares to Mike Bennett at an exercise price of $1.50 per share for an
aggregate purchase price of $600,000. The Option shall be subject to vesting
terms set by the Remuneration Committee and shall expire at the end of a ten-
year period as provided by the 1996 Equity Incentive Plan. Pursuant to Mr.
Bennett's employment agreement, upon a change of control of the Company, the
Option shall become vested, either immediately or over a period of time, as
determined by the terms of the agreement.
The Company's Register of Directors' Interests, which is open to
inspection, contains a full detail of directors' shareholdings and options.
-13-
<PAGE>
REMUNERATION COMMITTEE REPORT
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the following report and
the Performance Graph on page 8 shall not be incorporated by reference into any
such filings.
REPORT OF THE LEARMONTH & BURCHETT MANAGEMENT
SYSTEMS PLC BOARD OF DIRECTORS
REMUNERATION COMMITTEE
The Company's executive compensation program is administered by the
Remuneration Committee of the Board of Directors (the "Committee"). The
Committee, which is composed of a majority of independent directors, makes
recommendations to the Board of Directors on the three key components of the
executive compensation program: base salary, annual incentive awards and long-
term incentives.
The Committee establishes individual compensation awards based on the
contribution the executive has made in attaining the Company's short term and
strategic performance objectives as well as the executive's anticipated future
contribution. The Company's executive compensation program consists primarily
of the following integrated components:
1. Base Salary - which is designed to compensate executives competitively
within the industry and marketplace.
2. Annual Incentives - which provide a direct link between executive
compensation and annual Company performance against predetermined measures.
3. Long-Term Incentives - which consist of stock options designed to link
management decision making with long-term Company performance and shareholder
interests.
Base Salary. Base salary levels for executive officers of the Company are
reviewed annually by the Remuneration Committee. Executive officers of the
Company are paid salaries in line with their responsibilities.
Annual Incentives. Generally, executive officers are eligible to receive
incentive cash bonuses. Awards are based on the attainment of performance
measures keyed to management's annual operating plan and are generally based on
the achievement of targeted operating profit and revenue growth. As Company
performance for fiscal 1997 met the targeted measures, the incentive cash
bonuses actually paid were at the targeted amounts.
-14-
<PAGE>
Long-Term Incentives. The Company currently provides long-term incentives
through its 1996 Equity Incentive Plan, its 1996 Non-Employee Director Incentive
Plan and its 1996 Stock Purchase Plan (the "Plans"). Under the 1996 Equity
Incentive Plan and the 1996 Non-Employee Director Incentive Plan, options are
granted by the Remuneration Committee, consisting of non-employee Directors of
the Company. Share options are intended to offer an equity incentive for
superior performance and to foster the retention of key personnel through awards
structured to vest and become exercisable over time provided that the individual
remains employed by the Company. There is no set formula for the award of
options. Factors considered in making option awards to officers and employees
of the Company include industry practices and norms, prior grants to such
officers or employees, the importance of retaining such officer's or employee's
services, such officer's or employee's potential to contribute to the success of
the Company and such officer's or employee's past contributions to the Company.
Because the receipt of value by an executive officer under the Plans is
dependent upon an increase in the price of the Company's ADRs, this portion of
the executives' compensation is directly aligned with an increase in shareholder
value.
The Board of Directors approves the compensation of the Chief Executive
Officer. The Chief Executive Officer and the Company are parties to a Service
Agreement pursuant to which Michael S. Bennett serves as Chief Executive Officer
of the Company. The salary payable under the agreement may be adjusted by the
Board of Directors at any time. The Committee believes Mr. Bennett is paid a
reasonable salary. Mr. Bennett is also entitled to bonuses as determined by the
Board of Directors of the Company and to participate in the Company's benefit
plans. The bonuses payable and option grants are determined generally using the
same measurements employed in determining such awards for other executive
officers described above.
Compensation Committee Interlocks. Gerald N. Christopher and the Company
are parties to an agreement pursuant to which Mr. Christopher serves as Chairman
of the Board of Directors of the Company. The agreement has an effective date
of August 2, 1996 with no initial fixed term and no termination notification
requirement as Mr. Christopher is an employee at will. The initial salary
payable under the agreement is $3,000 per week, subject to adjustment effective
January 1, 1997, when Mr. Christopher's yearly salary is set at a rate of $1,000
per week. The Company has also issued to Mr. Christopher options to purchase
250,000 Ordinary Shares at an exercise price of $1.185. Mr. Christopher is also
entitled to reimbursement for the cost of an apartment and reasonable living
expenses in the Houston area, as well as for reasonable travel expenses.
Remuneration Committee
Rainer Burchett
Gerald Christopher
Felda Hardymon
-15-
<PAGE>
PERFORMANCE GRAPH
Comparison of cumulative total return among Learmonth & Burchett Management
Systems PLC,
S&P Midcap 400 Index and S&P Midcap Computer Software and Services Index*
TOTAL SHAREHOLDER RETURNS
-------------------------
(Dividends Reinvested)
ANNUAL RETURN PERCENTAGE
Months Ending
Company/Index Apr96 Apr97
- -------------------------------------------------------------------------------
LEARMONTH & BURCHETT MANAGEMENT SYSTEMS PLC -38.16 -29.79
S&P MIDCAP 400 INDEX 11.01 10.13
S&P MIDCAP COMPUTER (SOFTWARE&SVC) 8.59 -10.88
INDEXED RETURNS
Base Months Ending
Period
Company/Index 16Nov95 Apr96 Apr97
- -------------------------------------------------------------------------------
LEARMONTH & BURCHETT MANAGEMENT SYSTEMS PLC 100 61.84 43.42
S&P MIDCAP 400 INDEX 100 111.01 122.25
S&P MIDCAP COMPUTER (SOFTWARE&SVC) 100 108.59 96.78
FIGURE 1
_______
* Assumes $100 invested in the Company's American Depositary Shares, S&P
Midcap 400 Index and S&P Midcap Computer Software & Services Index on
November 16, 1995, the date of the Company's initial public offering in the
United States. Assumes reinvestment of dividends.
The stock prices on the foregoing Performance Graph are not necessarily
indicative of future stock price performance. Each of the Report of the
Remuneration Committee of the Board of Directors set forth above under "Report
of the Remuneration Committee" and the Performance Graph shall not be deemed
incorporated by reference by any general statement incorporating this Proxy
Statement into any filing under the Securities Act of 1933, as amended, or under
the Exchange Act, except to the extent that the Company specifically
incorporates such information by reference, and shall not otherwise be deemed
filed under such Acts.
-16-
<PAGE>
PROPOSAL NUMBER 4
RE-APPOINTMENT OF AUDITORS
Proposal Number 4 is to re-appoint Price Waterhouse as the auditors of the
Company until the next AGM, and to authorize the Board of Directors to fix their
remuneration.
THE BOARD OF DIRECTORS RECOMMENDS
THE RE-APPOINTMENT OF PRICE WATERHOUSE TO HOLD
OFFICE UNTIL THE NEXT ANNUAL GENERAL MEETING AND THE
AUTHORIZATION OF THE DIRECTORS TO FIX THEIR REMUNERATION
-17-
<PAGE>
PROPOSAL NUMBER 5
APPROVAL OF INCREASE
IN THE AGGREGATE LEVEL OF THE
NON-EXECUTIVE DIRECTORS' REMUNERATION
Article 84 of the Company's Articles of Association imposes a limit of an
aggregate total of (Pounds)40,000 on the payment of fees to Directors for the
performance of their duties. Each year the actual amount of fees paid to
Directors is reviewed by the Remuneration Committee of the Board of Directors.
The Company's current policy is to pay fees only to non-Executive Directors.
The non-Executive Directors' compensation during the last fiscal year was set in
November 1996 at (Pounds)15,000 per Director, a (Pounds)2,000 increase over the
previous fiscal year's compensation. In order to properly compensate and retain
qualified members of the Board of Directors and in consideration of the
Directors' responsibility and liability due to the Company's securities current
listing on NASDAQ, the shareholders are being asked to approve an increase in
the amount of fees payable by the Company for the services of Directors during
the current fiscal year of an aggregate sum not to exceed (Pounds)18,000 for
each Director (excluding the Chairman of the Board, whose compensation is set by
his employment agreement with the Company) in the current fiscal year. This
increase shall be effective only during the current fiscal year.
THE BOARD OF DIRECTORS RECOMMENDS
APPROVAL OF THE INCREASE IN THE
AGGREGATE LEVEL OF THE NON-EXECUTIVE
DIRECTORS' REMUNERATION
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<PAGE>
COMPENSATION PROPOSAL
Proposal Number 6 involves the adoption of an amendment to the 1996 Equity
Incentive Plan. The Board of Directors considers this proposal to be extremely
important to the Company's ability to retain and attract talented employees in
the highly competitive U.S. software market.
PROPOSAL NUMBER 6
APPROVAL OF AN AMENDMENT TO THE COMPANY'S
1996 EQUITY INCENTIVE PLAN
The shareholders of the Company are being asked to approve an amendment to the
1996 Equity Incentive Plan authorizing the reservation of an additional
________________ of the Company's Ordinary Shares for option grants under such
Plan, which if approved would result in a total of ____________________ Ordinary
Shares being issuable under the 1996 Equity Incentive Plan, not including
Ordinary Shares forfeited under the Executive Share Option Schemes that are
added to the authorized shares available pursuant to the terms of the Plan. As
of September 30, 1997, there are currently 2,500,000 shares authorized for
option grants under the 1996 Equity Incentive Plan and 1,182,500 Ordinary Shares
forfeited under the Executive Share Option Scheme since August 2, 1997 which are
added to the authorized pool of Shares, of which there are 3,033,125 Ordinary
Shares subject to outstanding options and 649,375 Ordinary Shares available for
grant. In addition, there are outstanding and unexercised options under the
Executive Share Option Scheme for the purchase of approximately 1,383,000
Ordinary Shares. Shares subject to any such options which expire, terminate
unexercised, or are otherwise returned to the Company, upon forfeiture thereof
will be added to the available pool under the 1996 Equity Incentive Plan. If
this amendment is approved, there will be a total of reserved under the 1996
Equity Incentive Plan, of which 3,033,125 will be subject to outstanding options
and will be available for grant. The amendment to the 1996 Equity Incentive Plan
was adopted by the Board of Directors on October 22, 1997, subject to
stockholder approval. There are approximately employees of the Company and its
subsidiaries who are eligible to participate in the 1996 Equity Incentive Plan.
The Board of Directors believes that the amendment to the 1996 Equity Incentive
Plan is important to the continued functioning of the 1996 Equity Incentive
Plan, which has proved an effective means of motivating and encouraging the
continued employment of the employees of LBMS and its subsidiaries.
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF
THIS AMENDMENT TO THE COMPANY'S
1996 EQUITY INCENTIVE PLAN
-19-
<PAGE>
SUMMARY OF THE 1996 EQUITY INCENTIVE PLAN
On August 2, 1996, the Board of Directors of the Company (the "Board" and
"LBMS," respectively) unanimously adopted the 1996 Equity Incentive Plan (the
"1996 Plan"). The 1996 Plan is designed to advance the Company's interests by
providing a method by which eligible employees of LBMS and LBMS' subsidiaries
(collectively, the "Company") purchase Ordinary Shares, (Pounds)0.10 par value
of LBMS (the "Shares"), which may be converted into American Depositary Shares
("ADSs"), consisting of the right to purchase two (2) such Shares of LBMS, and
thereby acquire an interest in the future of the Company.
The 1996 Plan became effective on November 15, 1996, the date on which it
was approved by the shareholders of LBMS. As of September 30, 1997, options for
the purchase of a total of 3,033,125 Ordinary Shares were outstanding under the
1996 Plan, at exercise prices ranging from $1.185 to $2.69 per Ordinary Share.
Such options are exercisable, and expire, at varying dates. The following is
merely a brief summary description of the 1996 Plan.
The 1996 Plan is designed to advance the Company's interests by enhancing
its ability to attract and retain employees who are in a position to make
significant contributions to the success of the Company and its subsidiaries
through ownership of Shares. A total of 2,500,000 Shares, plus that number of
Shares as may become available by reason of forfeiture of Options under the
Company's Executive Share Option Scheme on or after August 2, 1996, are reserved
and available for Awards made under the Plan, subject to adjustment for Share
dividends and similar events. It is proposed that the limit of 2,500,000 Shares
be raised by an additional ___________________ Shares by resolution to be passed
at the AGM of the Company to be held on November 21, 1997. From August 2, 1996
to September 30,1997, approximately 1,182,500 option shares under the Executive
Share Option Scheme were forfeited. The Plan provides for the grant of both
"incentive stock options," as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code") (any Option intended to qualify as an
incentive stock option being hereinafter referred to as an "ISO"), and Options
that are not incentive stock options. ISOs shall be awarded only to persons in
the employ of the Company or any of its subsidiaries ("Employees").
The Plan will be administered by a committee of the Board (the
"Committee"). Only persons currently or formerly in the employ of the Company
or any of its subsidiaries ("Employees") and members of their families (except
without limitation non-Employee "non-Executive" directors of the Company or a
subsidiary of the Company) who, in the opinion of the Committee, are in a
position to make a significant contribution to the success of the Company or its
subsidiaries will be eligible to receive Awards under the Plan ("Participants").
The exercise price of an Option granted under the Plan may not be less than
100% (110% in the case of an ISO granted to a ten-percent shareholder) of the
fair market value of the Shares subject to the Option, determined as of the time
the Option is granted. A "ten-percent shareholder" is any person who at the
time of grant owns, directly or indirectly, or is deemed to own by reason of the
attribution rules of Section 424(d) of the Code, Shares possessing more than 10%
of the total combined voting power of all classes of Shares of the Company or of
its parent or subsidiary corporation. In no case may the exercise price paid
for Shares which is part of an original issue of
-20-
<PAGE>
authorized Shares be less than the par value per Share. The Committee may not
reduce the exercise price of an Option at any time after the time of grant
unless the duration of such option were limited to seven years. The term of each
Option may be set by the Committee but cannot exceed 10 years from the day
immediately preceding the date the Option was granted, or such earlier date as
may have been specified by the Committee at the time the Option was granted
(five years from the day immediately preceding such grant date in the case of an
ISO granted to a ten-percent shareholder).
Any exercise of an Option must be in writing, signed by the proper person
and delivered or mailed to the Company, accompanied by any documents required by
the Committee and payment in full for the number of Shares for which the Option
is exercised. The Option price may be paid in cash or by check acceptable to
the Company, bank draft or money order payable to the order of the Company, or
by delivery of an unconditional and irrevocable undertaking by a broker to
deliver promptly to the Company sufficient funds to pay the exercise price, or
if so permitted by the instrument evidencing the Option (or in the case of an
Option which is not an ISO, by the Committee on or after grant of the Option),
by delivery of a promissory note of the Option holder to the Company, payable on
such terms as are specified by the Committee, or by any combination of the
permissible forms of payment.
The Company may make a loan to any Participant other than a Director of a
U.K. Group Company ("Loan"), either on the date of or after the grant of any
Award to such Participant. A Loan may be made either in connection with the
purchase of Shares under the Award or with the payment of any Federal, state and
local income tax with respect to income recognized as a result of the Award. No
Loan may have a term (including extensions) exceeding ten years in duration.
Furthermore, in connection with any Award, Learmonth & Burchett Management
Systems, Inc., a Company subsidiary, may at the time such Award is made or at a
later date, provide for and grant a cash award to the Participant ("Supplemental
Grant") not to exceed an amount equal to the amount of any Federal, state and
local income tax on ordinary income for which the Participant may be liable with
respect to the Award plus an additional amount on a grossed-up basis intended to
make the Participant whole on an after-tax basis after discharging all the
Participant's income tax liabilities arising from all Awards.
Each Option will be exercisable at such time or times, and on such
conditions, as the Committee may specify. The Committee may at any time and
from time to time accelerate the time at which all or any part of the Option may
be exercised.
Except as otherwise provided by the Committee, if a Participant dies,
Options exercisable immediately prior to death may be exercised by the
Participant's executor or administrator or, if the Shareholder is not a citizen
of the United Kingdom, by the Participant's transferee, during a period of one
year following such death (or such shorter or longer period as the Board may
determine). Except as otherwise determined by the Committee, Options not
exercisable at a Participant's death terminate upon such death.
In the case of termination of a Participant's employment with the Company
for reasons other than death, except as otherwise provided by the Committee, to
the extent Options were exercisable immediately prior to such termination, they
remain exercisable for three months following such
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<PAGE>
termination, or such longer period as the Committee at the time may determine
(or for the remainder of their original term, if less), unless the Award
provides otherwise by its terms. Otherwise, all Options terminate to the extent
not exercisable immediately prior to such termination of the Participant's
employment with the Company. If any such termination of employment is due to the
Participant's discharge for cause, such Participant's Options may be terminated
immediately.
In the event of a "Change in Control," as defined in the Plan to include a
new majority on the Board within eighteen months after a tender or exchange
offer or a proxy solicitation, all outstanding Options shall become immediately
exercisable in full.
In the event of the sale of all or substantially all of the assets of the
Company, all outstanding Options shall remain exercisable for a period of six
months following such sale, or for such shorter period (but in no event less
than 30 days) as may be provided in any plan or liquidation of the Company.
PROPOSALS NUMBER 7 AND 8
AUTHORITY TO ALLOT SHARES AND
DISAPPLICATION OF PREEMPTIVE
RIGHTS CONFERRED UNDER
THE COMPANIES ACT
Proposal Number 7 will provide the directors with authority under the UK
Companies Act 1985 to allot relevant securities having an aggregate nominal
value not exceeding the nominal value of the present unissued share capital of
the Company. This power expires at the date of the next AGM of the Company:
That the Directors of the Company be and are generally and unconditionally
authorized to exercise all powers of the Company to allot relevant
securities (as defined in Section 80 of the Companies Act 1985) up to an
aggregate nominal amount not exceeding (Pounds)788,928, provided that all
other U.K. and U.S. regulatory requirements have been met and that the
authority shall expire on the date of the next AGM of the Company save that
the Company may before such expiry make an offer or agreement which would
or might require relevant securities to be allotted after such expiry and
Directors may allot relevant securities in pursuance of such an offer or
agreement as if the authority conferred hereby had not expired.
Proposal Number 8 will give the Directors the power to allot equity
securities for cash otherwise than on a preemptive basis having an aggregate
nominal value not exceeding (Pounds)788,928, permitting the allotment of shares
where necessary other than strictly in accordance with the preemptive provisions
set out in Section 89 of the Companies Act 1985. This power will continue until
expiry at the next AGM of the Company:
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<PAGE>
That the Directors be empowered pursuant to section 95 of the Companies Act
1985 to allot equity securities (as defined in section 94 of that Act) for
cash pursuant to the authority conferred on them by Proposal Number 7
above, as if Section 89(1) of that Act did not apply to such allotment
provided that all other U.K. and U.S. regulatory requirements have been met
and that this power shall be limited to:
(i) The allotment of equity securities in connection with a rights issue
in favor of ordinary shareholders where the equity securities respectively
attributable to the interests of all ordinary shareholders are
proportionate (as nearly as may be) to the respective numbers of ordinary
shares held by them, subject to such exclusions or other arrangements as
the Directors may deem necessary or expedient in relation to fractional
entitlements or legal or practical problems arising under the law of or the
requirements of any regulatory body or any stock exchange in any overseas
territory or otherwise.
(ii) The allotment (otherwise than pursuant to sub-paragraph (i) above) of
equity securities up to an aggregate nominal value not exceeding
(Pounds)788,928 and shall expire on the date of the next AGM of the Company
provided that the Company may make an offer or agreement before this power
has expired, which would or might require securities to be allotted after
such expiry and the Directors may allot equity securities in pursuance of
such offer or agreement as if the power conferred hereby had not expired.
Notwithstanding the above authorizations, the rules of the National
Association of Securities Dealers, Inc. require shareholder approval of any
issuance of shares that would equal or exceed 20% of the Company's outstanding
shares.
THE BOARD OF DIRECTORS RECOMMENDS
ADOPTING THE PROPOSALS TO AUTHORIZE
THE DIRECTORS TO ALLOT SHARES AND TO
DISAPPLY THE PREEMPTIVE RIGHTS
CONFERRED UNDER THE U.K. COMPANIES ACT
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MISCELLANEOUS INFORMATION
QUORUM, REQUIRED VOTE AND METHOD OF TABULATION
Consistent with the UK Companies Act and under the Company's Articles of
Association:
Votes of Shareholders
Each shareholder present in person has one vote on a show of hands, and one
vote for every Ordinary Share held.
Requisite majority for an ordinary resolution
Ordinary resolutions, being those effecting the Proposals for receiving the
Report and Accounts, the election of directors, the appointment of
auditors, for approval of the increase in the aggregate fees payable to
directors, approval of the increase in the number of Ordinary Shares
allocated to the 1996 Equity Incentive Plan and authorising the directors
to allot shares, require to be passed (on a show of hands) by a simple
majority of such shareholders present in person who (being entitled to do
so) vote in person and (on a poll) by a majority of the votes cast by
shareholders present in person or by proxy.
Requisite majority for a special resolution
A special resolution, being that effecting the Proposal for the
disapplication of pre-emptive rights of ordinary shareholders, require to
be passed (on a show of hands) by three-quarters in number of those present
in person who (being entitled to do so) vote and (on a poll) by a three-
quarters majority of the votes cast by shareholders present in person or by
proxy.
Who may demand a poll
A resolution shall be voted on a poll at the demand of: (i) the Chairman of
the AGM; or (ii) not less than five shareholders (present in person or by
proxy) having the right to vote at the AGM; or (iii) by a shareholder or
shareholders (present in person or by proxy) holding not less than one-
tenth of the total voting rights of all shareholders.
Votes cast by proxy or in person at the AGM will be counted by persons
appointed by the Company to act as election inspectors for the AGM. The
election inspectors will count shares represented by proxies that withhold
authority to vote for a particular matter or that reflect abstentions and
"broker non-votes" (i.e., shares represented at the Meeting held by brokers or
nominees as to which (i) instructions have not been received from the beneficial
owners or persons entitled to vote and (ii) the broker or nominee does not have
the discretionary voting power on a particular matter) only as shares that are
present and entitled to vote on the matter for purposes of determining the
presence of a quorum, but neither abstentions nor broker non-votes have any
effect on the outcome of voting on the matter.
AUDITORS
The Board of Directors has selected the firm of Price Waterhouse LLP,
independent auditors, as auditors for the Company for the fiscal year ending
April 30, 1998. Price Waterhouse have
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indicated their willingness to continue in office and a resolution for their re-
appointment is submitted herein for vote at the AGM. A representative of Price
Waterhouse is expected to be present at the AGM with the opportunity to make a
statement if he or she desires and to respond to appropriate questions.
SHAREHOLDER PROPOSALS
Pursuant to Rule 14a-8 promulgated by the SEC, shareholder proposals
intended to be included in the Company's proxy material for the Company's 1998
AGM of Shareholders must be received by the Company no later than July 1, 1998
at its principal office, 1800 West Loop South, Suite 900, Houston, Texas 77027
Attention: Company Secretary.
OTHER MATTERS
The management has no knowledge of any other matter that may come before
the AGM and does not, itself, currently intend to present any such other matter.
However, if any such other matters properly come before the meeting or any
adjournment thereof, the persons named as proxies will have discretionary
authority to vote the shares represented by the accompanying proxy in accordance
with their own judgement.
PROXY SOLICITATION
The cost of soliciting proxies will be paid by the Company. Proxies may be
solicited without extra compensation by certain directors, officers and regular
employees of the Company by mail, telegram or personally.
Shareholders are urged to send their proxies without delay. Your
cooperation is appreciated.
REGISTERED OFFICE
The Company's registered office in the United Kingdom is 10 Norwich Street,
London, England EC4A 1BD, att: Company Secretary Department.
ADVISORS
Solicitors and Attorneys
Macfarlanes (U.K.)
Ropes & Gray (U.S.)
Bankers
Barclays Bank Plc (U.K.)
Wells Fargo Bank, N.A. (U.S.)
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U.K. Registrar and Transfer Office
Royal Bank of Scotland Plc
Registrars Department, PO Box 82
Caxton, House, Redcliffe Way
Bristol BS99 7NH
England
U.S. Stock Transfer Agent and Depositary
Morgan ADR Service Center
P.O. Box 8205
Boston, Mass. 02266-8205
(617) 774-4237
DIVIDENDS
In the fiscal year ended April 30, 1997. No interim dividend was paid and no
final dividend is proposed on the Ordinary Shares.
CLOSE COMPANY
As at April 30, 1997, the Company was not a Close Company within the meaning of
the Income and Corporation Tax Act 1988.
POLICY ON PAYMENT OF SUPPLIERS
Suppliers are paid in accordance with the individual payment terms as agreed
with each supplier.
This Proxy Statement and Directors' Report is Approved by, and signed on behalf
of the Board of Directors of the Company by Stephen E. Odom, Company Secretary.
Stephen Odom
Secretary
29 October 1997
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