<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14A-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
LIGHTBRIDGE, INC.
(Name of Registrant as Specified In Its Charter)
Not Applicable
(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:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
LIGHTBRIDGE, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 22, 1997
Notice is hereby given that the 1997 Annual Meeting of Stockholders of
Lightbridge, Inc., a Delaware corporation (the "Company"), will be held on
Thursday, May 22, 1997 at 10 A.M., Eastern daylight savings time, at the offices
of Foley, Hoag & Eliot LLP, One Post Office Square, Boston, Massachusetts (the
"Meeting"), for the purpose of considering and voting upon the following
matters:
1. to elect one person to the Board of Directors to serve as a Class I
director for a three-year term; and
2. to transact such further business as may properly come before the
Meeting or any adjournment thereof.
As of the date of this Notice, the Board of Directors has no knowledge of
any other business to be transacted at the Meeting.
The Board of Directors has fixed the close of business on Tuesday, April 1,
1997, as the record date for the determination of stockholders entitled to
notice of and to vote at the Meeting and at any adjournments thereof.
By order of the Board of Directors,
JOHN D. PATTERSON, JR.
Secretary
April 21, 1997
Waltham, Massachusetts
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE PROMPTLY COMPLETE,
DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE.
IF MORE THAN ONE PROXY IS ENCLOSED, PLEASE COMPLETE AND RETURN ALL OF THEM.
<PAGE> 3
LIGHTBRIDGE, INC.
281 WINTER STREET
WALTHAM, MASSACHUSETTS 02154
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 22, 1997
This Proxy Statement and the enclosed Notice of Meeting and form of proxy
are being mailed to stockholders on or about April 21, 1997 in connection with
the solicitation of proxies by the Board of Directors of Lightbridge, Inc. (the
"Company") for use at the 1997 Annual Meeting of Stockholders of the Company to
be held at the offices of Foley, Hoag & Eliot LLP, One Post Office Square,
Boston, Massachusetts, at 10 A.M., Eastern daylight savings time, on Thursday,
May 22, 1997, and at any and all adjournments thereof (the "Meeting"). Proxies
that have been properly executed and returned by a stockholder will be voted in
accordance with the stockholder's directions. If no choice is specified by the
stockholder, then the shares covered by the proxy will be voted as recommended
by management. Stockholders are encouraged to vote on the matter to be
considered. Any stockholder may revoke the stockholder's proxy at any time
before the proxy has been exercised.
On April 1, 1997, the record date for the determination of stockholders
entitled to vote at the Meeting, there were outstanding and entitled to vote
14,436,846 shares of the Company's common stock, $.01 par value ("Common
Stock"). Each share of Common Stock entitles its record holder to one vote on
each matter considered at the Meeting.
QUORUM AND TABULATION OF VOTES
Under the Company's By-Laws, the holders of a majority of the shares of
Common Stock issued and outstanding and entitled to vote at the Meeting shall
constitute a quorum for the transaction of business at the Meeting. Shares of
Common Stock present in person or represented by proxy (including shares that
abstain or do not vote with respect to one or more of the matters presented for
stockholder approval) will be counted for the purpose of determining whether a
quorum exists at the Meeting.
The election of a director of the Company (Proposal One) requires the
affirmative vote of the holders of a plurality of the shares of Common Stock
properly cast at the Meeting in favor of a nominee.
The following shares will not be counted as votes cast or votes made in
favor of a given matter: (i) shares that abstain from voting as to such matter;
and (ii) shares held in "street name" by brokers or nominees who indicate on
their proxies that they do not have discretionary authority to vote such shares
as to such matter. Each matter will be tabulated separately.
Votes will be tabulated by the Company's transfer agent and registrar,
American Stock Transfer & Trust Company.
PROPOSAL ONE: ELECTION OF DIRECTOR
The Company has a classified Board of Directors consisting of one Class I
director, two Class II directors and two Class III directors. The Class I, Class
II and Class III directors serve until the annual meetings of stockholders for
1997, 1998 and 1999, respectively, and until their respective successors are
elected and qualified. Each director elected at an annual meeting of
stockholders serves a term of three years. The Class I director elected at the
Meeting will hold office until the date of the Company's annual meeting in the
year 2000 and thereafter until a successor is elected and qualified or until
such director sooner dies, resigns, is removed or becomes disqualified.
<PAGE> 4
The Board of Directors has nominated Douglas A. Kingsley, the current Class
I director of the Company, for election at the Meeting. Unless marked otherwise,
returned proxies will be voted to re-elect Mr. Kingsley as the Class I director.
Mr. Kingsley has agreed to serve if elected, and the Company has no reason to
believe that he will be unable to serve. If Mr. Kingsley is unable or declines
to serve as a director at the time of the Meeting, then the Board will designate
another nominee and proxies will be voted in favor of such nominee.
The following tables set forth certain information with respect to each of
the members of the Board of Directors of the Company, including the nominee for
election as a Class I director.
NOMINEE FOR DIRECTOR WITH TERM EXPIRING IN 2000 (CLASS I DIRECTOR)
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND OTHER BUSINESS EXPERIENCE
NAME AGE AND DIRECTORSHIPS DURING PAST FIVE YEARS
---- --- --------------------------------------------------
<S> <C> <C>
Douglas A. Kingsley(1)........ 35 Director of the Company since April 1996; Vice
President of Advent International Corporation, a
venture capital firm, since January 1996; Investment
Manager at Advent International Corporation from
September 1990 to December 1995; director of LeCroy
Corporation, a manufacturer of electronic
instrumentation.
</TABLE>
- ---------------
(1) Member of the Audit Committee.
DIRECTORS WITH TERMS EXPIRING IN 1998 (CLASS II DIRECTORS)
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND OTHER BUSINESS EXPERIENCE
NAME AGE AND DIRECTORSHIPS DURING PAST FIVE YEARS
---- --- --------------------------------------------------
<S> <C> <C>
Andrew I. Fillat(1)........... 48 Director of the Company since April 1996; Senior Vice
President of Advent International Corporation, a
venture capital firm, since July 1995; Vice President
of Advent International Corporation from April 1989 to
June 1995.
D. Quinn Mills(2)............. 55 Director of the Company since June 1990; Albert J.
Weatherhead, Jr. Professor of Economics at the Harvard
Business School since 1976.
</TABLE>
- ---------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
2
<PAGE> 5
DIRECTORS WITH TERMS EXPIRING IN 1999 (CLASS III DIRECTORS)
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND OTHER BUSINESS EXPERIENCE
NAME AGE AND DIRECTORSHIPS DURING PAST FIVE YEARS
---- --- --------------------------------------------------
<S> <C> <C>
Pamela D.A. Reeve............. 47 President and director of the Company since November
1989; Chief Executive Officer of the Company since
September 1993; Chief Operating Officer of the Company
from November 1989 to September 1993; President of the
Massachusetts Software Council; director of PageMart
Wireless, Inc., a provider of wireless messaging
services.
Torrence C. Harder(1)......... 53 Director of the Company since June 1989; President and
director of Harder Management Company, a registered
investment advisory firm, since 1971; President and
director of Entrepreneurial Ventures, Inc. and
Entrepreneurial Inc., venture capital firms, since 1987
and 1990, respectively;
co-founder of the Company.
</TABLE>
- ---------------
(1) Member of the Compensation Committee.
BOARD AND COMMITTEE MEETINGS
During the fiscal year ended December 31, 1996 ("fiscal 1996"), the Board
of Directors of the Company met eleven times and acted by unanimous written
consent once. Each director attended at least 75% of the meetings of the Board
of Directors held while such director was a member of the Board.
The Board of Directors has an Audit Committee, which reviews the results
and scope of the annual audit of the Company's financial statements conducted by
the Company's independent accountants, the scope of other services provided by
the Company's independent accountants, proposed changes in the Company's
financial and accounting standards and principles, and the Company's policies
and procedures with respect to its internal accounting, auditing and financial
controls. The Audit Committee also makes recommendations to the Board of
Directors on the engagement of independent accountants, as well as other matters
that may come before the Committee or at the direction of the Board of
Directors. In fiscal 1996, the Audit Committee met twice and took no action by
written consent. The current Audit Committee members are Mr. Kingsley and Mr.
Mills, each of whom attended both meetings in fiscal 1996.
The Board of Directors has a Compensation Committee, which provides
recommendations concerning salaries and incentive compensation for employees of
and consultants to the Company. The Compensation Committee also administers the
Company's 1990 Incentive and Nonqualified Stock Option Plan (the "1990 Option
Plan"), 1996 Incentive and Non-Qualified Stock Option Plan (the "1996 Option
Plan") and 1996 Employee Stock Purchase Plan. In fiscal 1996, the Compensation
Committee met twice and acted by unanimous written consent once. The current
Compensation Committee members are Mr. Fillat and Mr. Harder, each of whom
attended both meetings in fiscal 1996.
The Board of Directors does not have a nominating committee.
DIRECTORS' COMPENSATION
Upon election to the Board of Directors, each non-employee director of the
Company automatically receives a grant of a non-qualified option under the 1996
Option Plan to purchase 20,000 shares of Common Stock, which option vests in 3
equal annual installments. In addition, any director who is re-elected to the
Board at an annual meeting of stockholders (or special meeting in lieu thereof)
is automatically granted a
3
<PAGE> 6
fully vested non-qualified option to purchase 4,000 shares of Common Stock,
provided that (i) any prior automatic grants held by the director have fully
vested or (ii) at least two annual meetings of stockholders of the Company (or
special meetings in lieu thereof) have elapsed between any prior automatic grant
made to the director and the meeting upon which the subsequent automatic grant
would occur. Upon the closing of the Company's initial public offering in
October 1996, each of Messrs. Fillat, Harder, Kingsley and Mills received a
non-qualified option to purchase 20,000 shares of Common Stock at an exercise
price of $12.375, the closing price of the Common Stock as reported on the
Nasdaq National Market on the closing date.
Directors who are employees of the Company are not paid any separate fees
for serving as directors.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table provides certain summary
information concerning compensation paid to the Company's President and Chief
Executive Officer and its four other executive officers (collectively, the
"Named Executive Officers") for the fiscal years ended December 31, 1996 and
September 30, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL ------------
COMPENSATION SECURITIES ALL OTHER
--------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION(S) YEAR SALARY($) BONUS($) OPTIONS(#) ($)(1)
------------------------------ ---- --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Pamela D.A. Reeve....................... 1996 $165,000 $60,000 -- $2,475
President and Chief Executive Officer 1995 165,000 55,700 -- 1,696
William G. Brown........................ 1996 108,462 65,000 70,000 1,488
Chief Financial Officer, Vice 1995 90,000 36,400 -- 891
President of Finance and
Administration and Treasurer
Michael A. Perfit....................... 1996 92,700 20,000 -- 695
Senior Vice President of Technology 1995 92,700 18,300 -- 695
Richard H. Antell....................... 1996 105,000 40,000 90,000 --
Vice President of Software Development 1995 99,000 37,000 -- --
Douglas E. Blackwell.................... 1996 105,000 40,000 90,000 787
Vice President of Service Delivery 1995 102,000 15,000 40,000 --
</TABLE>
- ---------------
(1) Represents matching contributions made by the Company pursuant to the
Lightbridge, Inc. 401(k) Plan.
4
<PAGE> 7
Option Grants in Last Fiscal Year. The following table sets forth certain
information with respect to grants of stock options to the only Named Executive
Officers to whom stock options were granted during fiscal 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
----------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATE OF STOCK
SECURITIES TOTAL PRICE APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OPTION TERM(3)
OPTIONS TO EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME GRANTED(#) FISCAL YEAR(1) ($/SH)(2) DATE 5%($) 10%($)
---- ---------- --------------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
William G. Brown........... 70,000(5) 8.6 8.50 6-14-06 374,192 948,277
Richard H. Antell.......... 20,000(4) 11.0% $2.00 4-24-06 $ 25,156 $ 63,750
70,000(5) 8.50 6-14-06 374,192 948,277
Douglas E. Blackwell....... 70,000(4) 11.0 2.00 4-24-06 88,045 223,124
20,000(5) 8.50 6-14-06 106,912 270,936
</TABLE>
- ---------------
(1) In fiscal 1996 the Company granted to employees options to purchase an
aggregate of 625,800 shares of Common Stock pursuant to the 1990 Option Plan
and options to purchase an aggregate of 191,300 shares of Common Stock
pursuant to the 1996 Option Plan.
(2) All options were granted prior to the date on which the Common Stock became
publicly tradable and were granted at fair market value on the date of grant
as determined by the Compensation Committee. The Compensation Committee
determined the market value of the Common Stock based on various factors,
including the illiquid nature of an investment in the Common Stock, the
Company's historical financial performance and the Company's future
prospects.
(3) Amounts reported in this column represent hypothetical values that may be
realized upon exercise of the options immediately prior to the expiration of
their term, assuming the specified compounded rates of appreciation of the
price of the Common Stock over the term of the options. These numbers are
calculated based on rules promulgated by the Securities and Exchange
Commission and do not represent the Company's estimate of future stock price
growth. Any actual gains on stock option exercises and Common Stock holdings
depend on the timing of such exercise and the future performance of the
Common Stock. There can be no assurance that the rates of appreciation
assumed in this table will be achieved or that the amounts reflected will be
received by the Named Executive Officers. This table does not take into
account any appreciation in the price of the Common Stock from the date of
grant to the current date. The values shown are net of the option exercise
price but do not include deductions for taxes or other expenses associated
with the exercise.
(4) All options were granted as incentive stock options that become exercisable
as to 20% of the shares subject thereto on the date of grant and an
additional 5% at the end of each three-month period thereafter.
(5) All options were granted as incentive stock options that become exercisable
as to 20% of the shares subject thereto on the first anniversary of the date
of grant and an additional 5% at the end of each three-month period
thereafter.
5
<PAGE> 8
Option Exercises and Fiscal Year-End Values. The following table sets
forth certain information concerning stock options exercised during fiscal 1996
and stock options held as of April 1, 1997 by each of the Named Executive
Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED VALUE OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END($)(1)
ON REALIZED --------------------------------- ---------------------------------
NAME EXERCISE(#) ($) EXERCISABLE(#) UNEXERCISABLE(#) EXERCISABLE($) UNEXERCISABLE($)
---- ----------- -------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Pamela D.A. Reeve..... -- -- 379,000 76,000 $2,493,190 $485,860
Richard H. Antell..... 5,800 $ 38,686 76,400 152,000 474,128 477,000
William G. Brown...... -- -- 50,000 140,000 313,200 420,000
Douglas E. Blackwell.. 22,000 136,000 41,250 121,750 176,000 450,500
Michael A. Perfit..... -- -- -- -- -- --
</TABLE>
- ---------------
(1) Value is based on the last sale price of the Common Stock on April 1, 1997
($6.75 per share), as reported by the Nasdaq National Market, less the
applicable option exercise price. These values have not been and may never
be realized. Actual gains upon exercise, if any, will depend on the value of
the Common Stock on the date of the sale of the shares.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company's Board of Directors is
responsible for establishing the Company's executive compensation policies and
practices, which includes making specific recommendations to the Board of
Directors concerning compensation for the Company's executive officers.
The Compensation Committee seeks to achieve three broad goals in connection
with the Company's executive compensation programs and decisions regarding
individual compensation. First, the Compensation Committee structures executive
compensation programs in a manner that the Committee believes will enable the
Company to attract and retain key executives. Second, the Compensation Committee
establishes compensation programs that are designed to reward executives for the
achievement by the Company of net income goals and the achievement by the
executives of certain assigned objectives. By tying compensation in part to
particular goals, the Compensation Committee believes that a
performance-oriented environment is created for the Company's executives.
Finally, the Company's executive compensation programs are intended to provide
executives with an equity interest in the Company so as to link a portion of the
compensation of the Company's executives with the performance of the Common
Stock.
The Company's executive compensation program generally consists of three
elements: (1) base salary; (2) annual cash bonus; and (3) a stock-based equity
incentive in the form of participation in the Company's stock option plans. The
Company's executive officers are also eligible to participate in other employee
benefit plans, including health and life insurance plans, the Lightbridge, Inc.
401(k) Plan and the Lightbridge, Inc. 1996 Employee Stock Purchase Plan, on
substantially the same terms as other employees who meet applicable eligibility
criteria, subject to any legal limitations on the amounts that may be
contributed or on the benefits that may be payable under these plans. In
establishing base salaries for executives, the Compensation Committee monitors
salaries at other companies, particularly companies in the software and wireless
telecommunications industries, as well as other high growth and small
capitalization companies in the Company's geographic area, that have been
determined to be comparable to the Company. For these purposes, the Company
relied upon industry research surveys conducted by Coopers & Lybrand L.L.P. and
others and upon information provided by the directors based on their experience.
In addition, for each executive the Compensation Committee considers historic
salary levels, work responsibilities and base salary
6
<PAGE> 9
relative to other executives at the Company. To the extent determined to be
appropriate, the Compensation Committee also considers general economic
conditions, the Company's financial performance and each individual's
performance.
The Compensation Committee generally structures cash bonuses by linking
them to annual net income goals and the achievement by the executives of certain
assigned objectives. In order to provide additional long-term incentives to act
on the Company's behalf, cash bonuses are payable in three equal annual
installments, with the last two payments being subject to the executive's
continued employment at the time of payment and to the approval of the Board of
Directors at the time of payment. The individual objectives set for executive
officers of the Company are generally both objective and subjective in nature
and include such goals as profit, revenue and business unit objectives. The
Compensation Committee believes that these arrangements tie each executive's
performance closely to a key measure of success of the Company or the
executive's business unit.
In fiscal 1996, stock options were granted to certain of the executive
officers in order to provide long-term incentives to act on behalf of the
Company. In determining the size of each stock option grant, the Compensation
Committee emphasized the seniority, responsibilities and performance of the
executive. The Compensation Committee intends to evaluate the merits of option
awards during fiscal 1997 and will consider increasing the proportion of overall
compensation of certain executive officers consisting of stock options and other
equity-based incentives.
The Compensation Committee's approach to the compensation package for
Pamela D.A. Reeve, the President and Chief Executive Officer of the Company, in
fiscal 1996 was to be competitive with other companies in the software and
wireless telecommunications industries, as well as other high growth and small
capitalization companies in the Company's geographic area, that have been
determined to be comparable to the Company. The Compensation Committee also
sought to tie a large percentage of Ms. Reeve's total compensation package to
Company performance. Ms. Reeve is a party to an at-will employment agreement
with the Company that establishes her annual base salary during the term of the
agreement, subject to increase (but not decrease) at the discretion of the Board
of Directors. Ms. Reeve's base salary was designed to give her assurance of a
base level of compensation, commensurate with her position and duration of
employment with the Company. She received a base salary of $165,000 in both
fiscal 1996 and fiscal 1995. See "Certain Transactions -- Employment Agreement"
below.
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally
disallows a tax deduction to public companies for compensation over $1,000,000
paid to its chief executive officer and its four other most highly compensated
executive officers. Qualifying performance-based compensation will not be
subject to the deduction limit if certain requirements are met. In this regard,
the Company has limited the number of shares subject to stock options that may
be granted to the Company's employees in a manner that complies with the
performance-based requirements of Section 162(m). Based on the compensation
awarded to the Company's executive officers, it does not appear that the Section
162(m) limitation will have a significant impact on the Company in the new term.
While the Committee does not currently intend to qualify its incentive awards as
a performance-based plan, it will continue to monitor the impact of Section
162(m) on the Company.
Andrew I. Fillat
Torrence C. Harder
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Board of Directors has established a Compensation Committee,
which currently consists of Messrs. Fillat and Harder. Decisions as to executive
compensation are made by the Board of Directors, primarily upon the
recommendation of the Compensation Committee. During fiscal 1996, Mr. Harder has
been a party to certain transactions with the Company. See "Certain
Transactions." There are no family relationships among the executive officers or
directors of the Company.
7
<PAGE> 10
PERFORMANCE GRAPH
The following graph compares the performance of the Company's cumulative
stockholder return with that of a broad market index, the Nasdaq Stock Market
Index for U.S. Companies, and an industry index, the Nasdaq Computer & Data
Processing Servicing Index. The cumulative stockholder returns for shares of the
Company's Common Stock and for the market and industry indexes are calculated
assuming $100 was invested on September 27, 1996, the date on which the Common
Stock commenced trading on the Nasdaq National Market. The Company paid no cash
dividends during the periods shown. The performance of the market and industry
indices is shown on a total return (dividends-reinvested) basis.
[LINE CHART DEPICTING THE FOLLOWING INFORMATION:]
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG LIGHTBRIDGE, INC, THE NASDAQ STOCK MARKET INDEX FOR U.S. COMPANIES AND
THE NASDAQ COMPUTER & DATA PROCESSING SERVICING INDEX
<TABLE>
<CAPTION>
9/27/96 10/96 11/96 12/96
<S> <C> <C> <C> <C>
LIGHTBRIDGE, INC. $100 $103 $ 95 $ 85
NASDAQ STOCK MARKET INDEX 100 99 105 105
FOR U.S. COMPANIES
NASDAQ COMPUTER & DATA 100 97 104 103
PROCESSING SERVICING INDEX
</TABLE>
8
<PAGE> 11
CERTAIN TRANSACTIONS
SETTLEMENT AGREEMENT AND RELATED MATTERS
On February 2, 1996, Entrepreneurial Limited Partnership I, Entrepreneurial
Limited Partnership II, Entrepreneurial Limited Partnership III and
Entrepreneurial Limited Partnership IV (collectively, the "Entrepreneurial
Partnerships"), Torrence C. Harder, the Company and certain other partnerships
and corporations entered into a settlement agreement (the "Settlement
Agreement") with Brian E. Boyle relating to litigation between the Company, the
Entrepreneurial Partnerships and one corporation, on the one hand, and Mr.
Boyle, the Company's former Chief Executive Officer and Chairman of the Board,
on the other hand. In the litigation, each of the Company and Mr. Boyle alleged,
among other things, that the other had violated certain provisions of contracts
between them. On February 2, 1996, after giving effect to the Settlement
Agreement, Mr. Boyle was the beneficial owner of 2,258,132 shares of Common
Stock, the Entrepreneurial Partnerships were the beneficial owners of an
aggregate of 3,639,524 shares of Common Stock and Mr. Harder, a director of the
Company, was the beneficial owner of 4,582,384 shares of Common Stock. Mr.
Harder serves as a general partner of certain of the Entrepreneurial
Partnerships. Mr. Harder is also president and a director and stockholder of the
other corporations that were parties to the Settlement Agreement and that also
serve as general partners of certain of the Entrepreneurial Partnerships. In
addition, D. Quinn Mills, a director of the Company, holds a limited partnership
interest in two of the Entrepreneurial Partnerships.
Pursuant to the Settlement Agreement, Mr. Boyle granted to the Company
options to purchase an aggregate of 600,000 shares of Common Stock owned by him,
and granted to the Entrepreneurial Partnerships options to purchase an aggregate
of 600,000 shares of Common Stock owned by him. The exercise prices of the
options ranged from $1.70 to $2.20 per share. The options expired between April
1, 1996 and February 3, 1997, and each option could be extended for an
additional 45-day period upon payment of a specified per-share amount. The
Settlement Agreement also provided for the Company and the Entrepreneurial
Partnerships to receive the right to acquire certain interests in the
Entrepreneurial Partnerships owned by Mr. Boyle. The Entrepreneurial
Partnerships, which shared the costs of the litigation with the Company, agreed
to cooperate with the Company in order to permit the Company to receive as
proceeds of the settlement of the litigation, to the extent practical, shares of
Common Stock, rather than interests in the Entrepreneurial Partnerships.
On April 1, 1996, the Company and the Entrepreneurial Partnerships
exercised the options granted by Mr. Boyle that were to expire on that day.
Pursuant to such options, the Company repurchased 200,000 shares of Common Stock
and the Entrepreneurial Partnerships purchased an aggregate of 200,000 shares of
Common Stock, at a price of $1.70 per share. The Company paid $113,000 of the
exercise price of its option in cash, and paid the remaining $227,000 by
delivering an 8% promissory note payable to Mr. Boyle. In connection with the
exercise of the options by the Entrepreneurial Partnerships, the Company loaned
an aggregate of $113,000 to the Entrepreneurial Partnerships at an interest rate
of 16% per annum, which loan was repaid in May 1996. In May 1996, the Company
repurchased an aggregate of 200,000 shares of Common Stock from the
Entrepreneurial Partnerships at a price of $1.70 per share. At the same time, in
consideration of the agreement of the Entrepreneurial Partnerships described
above regarding the form of the proceeds to be received by the Company from the
settlement of the litigation against Mr. Boyle, the Company reimbursed the
Entrepreneurial Partnerships for a portion of the legal fees and expenses
incurred by them in connection with the litigation in an aggregate amount of
$260,000. The Company repurchased an additional 200,000 shares of Common Stock
from Mr. Boyle at a price of $1.95 per share on September 3, 1996, pursuant to
options granted by Mr. Boyle that were to expire on that day. The Company paid
$130,000 of the exercise price in cash and the remaining $260,000 by delivering
an 8% promissory note payable to Mr. Boyle.
9
<PAGE> 12
On August 26, 1996, the Company and Mr. Boyle entered into a letter
agreement pursuant to which Mr. Boyle, his wife and a corporation controlled by
Mr. Boyle agreed to sell in the Company's initial public offering an aggregate
of 778,132 shares of Common Stock representing all of the shares of Common Stock
owned by them not subject to the options held by the Company and the
Entrepreneurial Partnerships described above. The Company agreed to indemnify
Mr. Boyle, his wife and the corporation against certain liabilities, including
liabilities under the Securities Act of 1933, arising in connection with its
initial public offering. Pursuant to the terms of this letter agreement, in
connection with the closing of the Company's initial public offering on October
7, 1996, the Company exercised all of its remaining options to purchase Common
Stock from Mr. Boyle and repaid the promissory notes issued to Mr. Boyle in
connection with the exercise of such options. In addition, in accordance with
the terms of the letter agreement, the Company also paid Mr. Boyle the sum of
$75,000, issued to a trust for the benefit of Mr. Boyle's children a 3-year
warrant to purchase 100,000 shares of Common Stock at $10.00 per share and
granted incidental ("piggyback") registration rights with respect to such
shares. The letter agreement also provided for the Company, Mr. Boyle, the
Entrepreneurial Partnerships and certain other parties to re-affirm and ratify
the mutual release executed by them under the terms of the Settlement Agreement.
EMPLOYMENT AGREEMENT
In August 1996 the Company executed an employment agreement with Pamela
D.A. Reeve. The Company agreed to employ Ms. Reeve as President and Chief
Executive Officer of the Company at an initial base salary of $165,000 per year.
The employment agreement is terminable at will by either party, but if Ms.
Reeve's employment is terminated by the Company for any reason, other than death
or disability, within one year after a change of control of the Company or if
the Company terminates Ms. Reeve's employment at any time without cause, the
Company is required to continue to pay Ms. Reeve's salary for a period of twelve
months after such termination, offset by any amounts received by Ms. Reeve from
subsequent employment during such period.
OTHER
On February 23, 1993, the Company entered into license and maintenance
agreements with RentGrow, Inc. ("RentGrow") pursuant to which the Company
granted to RentGrow a license to use and develop the Company's Credit Decision
System software in the real estate rental, real estate broker and real estate
mortgage brokers markets in exchange for certain payments by RentGrow. The
license is exclusive for the first four years and seven months of the agreement
and nonexclusive thereafter. Mr. Harder is a director of RentGrow and through
the Entrepreneurial Partnerships and another related limited partnership, owned,
as of December 31, 1995, approximately 54% (on a fully diluted basis) of the
outstanding capital stock of RentGrow. Under the terms of the license, the
Company was to receive $250,000, comprised of five installments in varying
amounts through August 1996. The final payment was not made in August 1996. The
Company received from RentGrow a 3-year 11.25% promissory note dated January 1,
1997 in the principal amount of $75,584, representing the final payment and
other amounts owed to the Company at December 31, 1996.
In August 1995, certain accredited investors made subordinated bridge loans
to the Company in the aggregate amount of $1,151,000 and received warrants to
purchase an aggregate of 287,750 shares of Common Stock at $2.00 per share. As
part of such bridge loans, one of the Entrepreneurial Partnerships loaned
$50,000 to the Company and received a warrant to purchase 12,500 shares of
Common Stock. The bridge loans carried interest at the rate of 16% per annum and
were repaid in full in April 1996.
10
<PAGE> 13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of April 1, 1997 by (i)
each person or group known to the Company to be the beneficial owner of more
than five percent of the outstanding Common Stock; (ii) each of the Company's
directors, including the director nominee; (iii) each of the Named Executive
Officers; and (iv) all directors, including the director nominee, and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(2)
---------------------
NAMES AND ADDRESSES OF BENEFICIAL HOLDERS(1) NUMBER PERCENT
-------------------------------------------- --------- -------
<S> <C> <C>
Torrence C. Harder(3).................................................... 4,239,757 29.3%
Entrepreneurial Limited Partnership I
Entrepreneurial Limited Partnership II
Entrepreneurial Limited Partnership III
Entrepreneurial Limited Partnership IV(4)................................ 3,096,897 21.4
c/o The Harder Group
281 Winter Street
Waltham, Massachusetts 02154
Advent International Investors II Limited Partnership
Advent Partners Limited Partnership
Global Private Equity II Limited Partnership(5).......................... 2,000,000 13.9
101 Federal Street
Boston, Massachusetts 02110
Massachusetts Capital Resource Company(6)................................ 1,309,958 8.8
420 Boylston Street
Boston, Massachusetts 02116
Pamela D.A. Reeve(7)..................................................... 792,214 5.3
D. Quinn Mills(8)........................................................ 413,232 2.9
Michael A. Perfit(9)..................................................... 337,694 2.3
William G. Brown(10)..................................................... 106,700 *
Richard H. Antell(11).................................................... 88,000 *
Douglas E. Blackwell(12)................................................. 63,250 *
Andrew I. Fillat(13)..................................................... 5,500 *
Douglas A. Kingsley(14).................................................. 5,500 *
All directors, including the director nominee, and executive officers as
a group (9 persons)(15)................................................ 6,051,847 40.3
</TABLE>
- ---------------
* Less than one percent.
(1) The address of all persons who are executive officers or directors of the
Company is in care of the Company, 281 Winter Street, Waltham,
Massachusetts 02154.
(2) Unless otherwise noted, each person or group identified possesses sole
voting and investment power with respect to such shares, subject to
community property laws where applicable. Shares not outstanding but deemed
beneficially owned by virtue of the right of a person or group to acquire
them within 60 days of April 1, 1997 are treated as outstanding only for
purposes of determining the amount and percent owned by such person or
group. As of April 1, 1997, there were 14,436,846 shares of Common Stock
outstanding.
(3) Consists of 280,000 shares beneficially owned by Mr. Harder's children,
862,860 shares owned by a trust of which Mr. Harder is the trustee and
beneficiary and the shares described in Note 4. Mr. Harder is the general
partner of, or the majority stockholder of the corporate general partner
of, Entrepreneurial Limited Partnership I, Entrepreneurial Limited
Partnership II, Entrepreneurial Limited Partnership III and Entrepreneurial
Limited Partnership IV. Mr. Harder is a director of the Company.
11
<PAGE> 14
(4) Consists of 1,427,613 shares held by Entrepreneurial Limited Partnership I,
798,356 shares held by Entrepreneurial Limited Partnership II, 100,000
shares held by Entrepreneurial Limited Partnership III, 12,500 shares
purchasable upon exercise of a warrant held by Entrepreneurial Limited
Partnership III and 758,428 shares held by Entrepreneurial Limited
Partnership IV. The general partner of Entrepreneurial Limited Partnership
I is Entrepreneurial Ventures, Inc., of which Mr. Harder is the majority
stockholder, president and a director. The general partners of
Entrepreneurial Limited Partnership II and Entrepreneurial Limited
Partnership III are Mr. Harder and Entrepreneurial, Inc., of which Mr.
Harder is the majority stockholder, president and a director. As a result
of the foregoing relationships, Mr. Harder may be deemed to be the
beneficial owner of the shares held by the Partnerships. After April 1,
1997, Entrepreneurial Limited Partnership I, in anticipation of its
dissolution, distributed an aggregate of 1,402,863 shares to its partners,
including Entrepreneurial Ventures, Inc. and the Company; after giving
effect to such distribution on a pro forma basis as of April 1, 1997, the
Partnerships and Mr. Harder would have owned 1,927,518 and 3,070,378
shares, respectively, or 13.4% and 21.3% of the outstanding shares,
respectively.
(5) Consists of 1,668 shares held by Advent International Investors II Limited
Partnership, 93,332 shares held by Advent Partners Limited Partnership and
1,905,000 shares held by Global Private Equity II Limited Partnership.
Advent International Corporation is the general partner of Advent
International Investors II Limited Partnership, Advent Partners Limited
Partnership and Advent International Limited Partnership, which is the
general partner of Global Private Equity II Limited Partnership. Because
Advent International Corporation is controlled by a group of 4 persons,
none of whom may act independently and a majority of whom must act in
concert to exercise voting or investment power over the holdings of such
entity, individually, no individual in this group is deemed to share such
voting or investment power.
(6) Includes 500,000 shares currently purchasable upon exercise of a warrant.
William J. Torpey, Jr. is the President and Joan C. McArdle is the Vice
President of Massachusetts Capital Resource Company, and as a result, may
be deemed to be the beneficial owners of the shares held by Massachusetts
Capital Resource Company.
(7) Includes 4,400 shares held by trusts for the benefit of certain of the
children of Ms. Reeve and 379,000 shares subject to stock options
exercisable within 60 days of April 1, 1997. Ms. Reeve is the President and
Chief Executive Officer and a director of the Company.
(8) Includes 341,466 shares owned by a trust of which Dr. Mills is the trustee
and beneficiary and 21,766 shares purchasable upon exercise of a warrant
held by a child of Dr. Mills. Dr. Mills is a director of the Company.
(9) Consists of 331,194 shares held by a trust and a pension plan for the
benefit of Mr. Perfit and 6,500 shares purchasable upon exercise of a
warrant held by such trust. Mr. Perfit is the Senior Vice President of
Technology of the Company.
(10) Includes 5,500 shares held by trust for the children of Mr. Brown and
50,000 shares subject to stock options exercisable within 60 days of April
1, 1997. Mr. Brown is the Chief Financial Officer, Vice President of
Finance and Administration and Treasurer of the Company.
(11) Consists of 76,400 shares subject to stock options exercisable within 60
days of April 1, 1997. Mr. Antell is the Vice President of Software
Development of the Company.
(12) Consists of 41,250 shares subject to stock options exercisable within 60
days of April 1, 1997. Mr. Blackwell is the Vice President of Service
Delivery of the Company.
(13) Consists of shares held by Advent Partners Limited Partnership. Mr. Fillat
holds a limited partnership interest in Advent Partners Limited Partnership
representing beneficial ownership of the shares listed in the table. He
disclaims beneficial ownership of the remaining 1,994,500 shares described
in Note 5. Mr. Fillat is a director of the Company.
(14) Consists of shares held by Advent Partners Limited Partnership. Mr.
Kingsley holds a limited partnership interest in Advent Partners Limited
Partnership representing beneficial ownership of the shares listed in the
table. He disclaims beneficial ownership of the remaining 1,994,500 shares
described in Note 5. Mr. Kingsley is a director of the Company and is a
nominee for re-election at the Meeting.
(15) Represents shares described in Notes 3, 7, 8, 9, 10, 11, 12, 13 and 14.
12
<PAGE> 15
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and persons who own more than ten percent of the
outstanding Common Stock file with the Securities and Exchange Commission
reports of ownership on Form 3 and reports of changes in ownership on Forms 4
and 5. Securities and Exchange Commission regulations require directors,
executive officers and greater-than-ten-percent stockholders to furnish the
Company with copies of all Forms 3, 4 and 5 filed with the Securities and
Exchange Commission.
Based solely upon a review of Forms 3 and 4 that were furnished to the
Company during fiscal 1996, Forms 5 that were furnished to the Company by
certain directors and executive officers of the Company with respect to fiscal
1996 and representation letters of certain other directors and executive
officers to the effect that Form 5 filings were not required, the Company
believes that all Section 16(a) filing requirements applicable to its directors,
executive officers and greater-than-ten-percent stockholders were fulfilled in a
timely manner.
SOLICITATION
The Company will bear the cost of soliciting proxies. Brokers, banks and
other nominees will be reimbursed for their out-of-pocket expenses and other
reasonable clerical expenses incurred in obtaining instructions from beneficial
owners of the Common Stock. In addition to the solicitation by mail, the
directors, officers and certain employees of the Company may solicit proxies,
without additional remuneration, by telephone, facsimile, telegraph and in
person. It is expected that the expense of such special solicitation will be
nominal.
STOCKHOLDER PROPOSALS
Any stockholder intending to present a proposal at the 1998 Annual Meeting
of Stockholders must submit such proposal to the Company at its offices no later
than January 21, 1998 in order to be considered for inclusion in the proxy
statement relating to that meeting.
In addition, in accordance with the Company's By-Laws, any stockholder
wishing to bring an item of business before the 1998 Annual Meeting of
Stockholders must deliver notice of such item of business to the Company at its
offices no later than March 23, 1998, even if such item is not to be included in
the proxy statement relating to that meeting.
MISCELLANEOUS
The Board of Directors does not know of any other business that will be
presented for consideration at the Meeting other than that described in this
Proxy Statement. However, if any other business should come before the Meeting,
the persons named in the enclosed form of proxy will vote, or otherwise act, in
accordance with their best judgment.
AVAILABLE INFORMATION
Stockholders of record at the close of business on April 1, 1997 will
receive a Proxy Statement and the Company's Annual Report to Stockholders, which
contains detailed financial information concerning the Company. The Company will
mail, without charge, a copy of its Annual Report on Form 10-K for fiscal 1996
(excluding exhibits) to any stockholder solicited hereby who requests it in
writing. Please submit such requests to Investor Relations, Lightbridge, Inc.,
281 Winter Street, Waltham, Massachusetts 02154.
13
<PAGE> 16
- --------------------------------------------------------------------------------
LIGHTBRIDGE, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS -- MAY 22, 1997
The undersigned stockholder of Lightbridge, Inc. (the "Company") hereby
appoints Pamela D.A. Reeve, William G. Brown and Kevin F. Collins, and each or
any of them, proxies, with full power of substitution to each and to each
substitute appointed pursuant to such power, of the undersigned to vote all
shares of common stock of the Company which the undersigned may be entitled to
vote at the Annual Meeting of Stockholders of the Company to be held on
Thursday, May 22, 1997, and at any and all adjournments thereof, with all
powers the undersigned would possess if personally present. The proxies are
authorized to vote as indicated on the reverse upon the matter set forth on the
reverse and in their discretion upon all other matters which may properly
come before said Meeting. The undersigned hereby acknowledges receipt of a copy
of the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement
for the Annual Meeting of Stockholders and hereby revokes all proxies, if any,
heretofore given by the undersigned to others for said Meeting.
(IMPORTANT -- TO BE SIGNED AND DATED ON REVERSE SIDE)
- --------------------------------------------------------------------------------
<PAGE> 17
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
LIGHTBRIDGE, INC.
MAY 22, 1997
<TABLE>
PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
PLEASE MARK YOUR
[X] VOTES AS IN THIS
EXAMPLE.
WITHHOLD
FOR AUTHORITY
the nominee for the nominee
PROPOSAL 1:
ELECTION OF [ ] [ ] NOMINEE: Douglas A. Kingsley If this proxy is properly executed and returned,
DIRECTOR the shares represented hereby will be voted. If a
choice is specified with respect to the matter to
be acted upon, the shares will be voted upon the
matter in accordance with the specification so
made. IN THE ABSENCE OF ANY SPECIFICATIONS, THE
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR
PROPOSAL 1.
PLEASE MARK, SIGN, DATE AND RETURN CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
Signature Date 1997 Signature Date 1997
---------------------------------- ------- ------------------------ --------
NOTE: Please date, sign exactly as name appears hereon and return promptly. If the shares are registered in the name of two or more
persons, each should sign. Executors, trustees, guardians, custodians, administrators, attorneys and corporate officers should add
their titles.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
