ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information concerning the Company's executive officers required by this
Item is included in the section entitled "Employees" in Item I of the Company's
Form 10-K.
DIRECTORS
Set forth below is certain information concerning the directors as of
April 30, 1997:
Name Age Year Elected
---- --- ------------
Gerald N. Christopher 56 1996
Michael S. Bennett 45 1996
Rainer H. Burchett 58 1977
G. Felda Hardymon 49 1994
Roger A. Learmonth 52 1977
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
certain high technology organizations, including Amber Wave Systems, Inc.,
Extension Technology, Inc., and Channel Computing, Inc. Additionally, he was
the Chief Financial Officer of another high technology organization, Bachman
Information Systems, Inc. Mr. Christopher and the Company are parties to an
Agreement dated August 2, 1996 pursuant to which Mr. Christopher serves as
Chairman of the Board of the Company.
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, a high technology
organization, until the time of its acquisition by Lockheed Martin's CalComp
subsidiary. Prior to Summagraphics, Mr. Bennett served as Senior Executive with
Dell Computer, a manufacturer and distributor of computer equipment, and Chief
Executive Officer of several high technology organizations. He also has spent
over 12 years in various capacities with Digital Equipment Corporation, a
manufacturer and distributor of computer equipment, in both domestic and
international positions. Mr. Bennett and the Company are parties to Agreements
dated August 2, 1996 and July 1, 1997 pursuant to which Mr. Bennett serves as a
President, Chief Executive Officer and Director of the Company.
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.
3
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. He 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, a consulting company.
ITEM 11. 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 $100,000 for the fiscal year 1997 (together, the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Awards of
Annual Compensation Securities
------------------- Underlying All Other
Name and Principal Position Year(5) Salary Bonus($) Options Compensation(4)
(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.
4
(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) 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 perquisites and other personal benefits
constituted the lesser of $50,000 or 10% of the total annual salary and
bonus of the Named Executive Officer for such year.
(5) The periods covered by this table are the fiscal years ended in April 1997,
1996 and 1995.
SHARE OPTION INFORMATION
The following table sets forth certain information regarding the option
grants made pursuant to the Company's 1996 Equity Incentive Plan (the "Share
Option Plan") during fiscal 1997 to each of the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
ORDINARY SHARES PERCENT EXERCISE ANNUAL RATES OF
UNDERLYING OF TOTAL PRICE STOCK PRICE
OPTIONS OPTIONS IN U.S. EXPIRATION APPRECIATION FOR
NAME GRANTED(#)(3) GRANTED($) DOLLARS($/SH) DATE OPTION TERM (4)
---- ------------- ---------- ------------ ---- ---------------
5%($) 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
(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 $1.185 per share.
(2) John P. Bantleman resigned as President and Chief Executive Officer and as
a Director of the Company in August 1996. Upon Mr. Bantleman's
resignation, 520,500 unvested options previously granted to him expired as
of such date and 209,750 vested stock options remained exercisable until May
31, 1997 but were held as collateral against past advances from Learmonth &
Burchett Management Systems, Inc. to Mr. Bantleman. On or before May 31,
1997, Mr. Bantleman exercised his vested options and repaid such past
advances in full.
5
(3) The 1996 Equity Incentive Options granted to the Executive Officers in
August 1996 vest over an eighteen-month period, with six-eighteenths of the
shares vesting February 2, 1997 and an additional one-eighteenth vesting
per month over the remaining twelve months thereafter.
(4) Amounts represent hypothetical gains that could be achieved for the
respective options at the end of the ten-year option term. The assumed 5%
and 10% rates of share appreciation are mandated by rules of the Securities
and Exchange Commission and do not represent the Company's estimate of the
future market price of the Ordinary Shares.
OPTION EXERCISES AND YEAR-END INTERESTS
The following table sets forth for each of the Named Executive Officers
certain information concerning the value of unexercised options at the end of
fiscal 1997 (including options granted in fiscal 1997) and the value of options
exercised in fiscal 1997.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF ORDINARY
SHARES UNDERLYING NET VALUES OF UNEXERCISED
ORDINARY SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS (2)
ACQUIRED VALUE ------------------- ------------------------
ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------- ---------- ----------- ------------- ----------- -------------
Michael S. Bennett N/A N/A 177,777 222,223 $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 163,666 286,333 $58,499 $ 73,126
Peter Combe N/A N/A 127,766 338,734 $68,546 $149,148
Rick Pleczko N/A N/A 101,666 256,834 $67,910 $139,251
(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
and 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) 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.
COMPENSATION 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)18,000. Additionally, the Company reimburses
each of these Directors for out-of-pocket expenses incurred in attending
meetings of the Board of Directors.
6
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. The Options vest over an eighteen-month
period, with six-eighteenths of the Ordinary Shares vesting on February 2, 1997
and an additional one-eighteenth vesting each month thereafter for the remaining
twelve months. Mr. Bennett was also entitled to a bonus of $100,000 if the
Company exceeds certain performance targets 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.
Such Options vest over a three-year period with one-third of such Options
vesting on the first anniversary of the Option Grant and one-thirty-sixth of
the Options vesting each month thereafter for the remaining twenty-four months.
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 was $3,000 per
week, subject to adjustment effective January 1, 1997, when Mr. Christopher's
yearly salary was 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. The Options vest over an eighteen-month period, with six-
eighteenths of the Ordinary Shares vesting on February 2, 1997 and an additional
one-eighteenth vesting each month thereafter for the
7
remaining twelve months. 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 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.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Until August 2, 1996, Mr. Burchett was a member of the remuneration
Committee of the Board of Directors. While on such committee, the committee met
without his presence when determining Mr. Burchett's own remuneration.
On August 2, 1996, Mr. Christopher was appointed as a director and as a
member of the Remuneration Committee. Pursuant to an agreement between Mr.
Christopher and the Company, Mr. Christopher was paid approximately $73,000
during fiscal year ended April 30, 1997.
8
ITEM 12. 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 June 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) 5.6%
c/o Learmonth & Burchett
Management Systems Plc
10 Norwich Street
London EC4A 1BD England
Roger A. Learmonth.............................. 1,049,749(3) 3.9%
c/o Learmonth & Burchett
Management Systems Plc
10 Norwich Street
London EC4 1BD England
S Squared Technology Corp....................... 2,146,854 8.0%
515 Madison Avenue
New York, NY 10022
Bessemer Venture Partners III L.P............... 2,035,801(4) 7.6%
83 Walnut Street
Wellesley Hills, MA 02181
Pioneering Management Corp...................... 1,417,500 5.3%
60 State Street
Boston, MA 02109
Edgemont Asset Management Corp.................. 1,335,000 5.0%
140 E. 45th Street
New York, NY 10017
Gerald N. Christopher........................... 168,667(5) *
Michael S. Bennett.............................. 273,389(6) *
Stephen E. Odom................................. 217,084(7) *
Peter Combe..................................... 172,550(8) *
Rick Pleczko.................................... 159,338(9) *
Felda Hardymon.................................. 65,262(10) *
All current directors and executive officers
as a group (11)............................ 3,606,039 13.4%
________________
* Less than one percent.
(1) Applicable percentage of ownership as of June 30, 1997 is based upon
26,924,650 Ordinary Shares outstanding (including 991,028 Ordinary Shares
issuable within 60 days
9
of June 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.
(3) Does not include 38,903 Ordinary Shares owned by BVP III Special Situations
L.P. and 92,643 owned beneficially by certain present or former officers 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.
(4) Includes 166,667 Ordinary Shares issuable upon exercise of the vested
portion of a share option.
(5) Includes 266,667 Ordinary Shares issuable upon exercise of the vested
portion of a share option.
(6) Includes 207,000 Ordinary Shares issuable upon exercise of the vested
portion of a share option.
(7) Includes 168,550 Ordinary Shares issuable upon exercise of the vested
portion of a share option.
(8) Includes 139,600 Ordinary Shares issuable upon exercise of the vested
portion of a share option.
(9) 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.
(10) Includes 991,028 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.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See the discussion under the caption "Compensation Committee Interlocks and
Insider Participation" relating to Mr. Christopher.
10
SIGNATURE
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this amended report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Date: August 28, 1997
LEARMONTH & BURCHETT MANAGEMENT SYSTEMS PLC
By: /s/ Stephen E. Odom
----------------------------------------
Stephen E. Odom, Chief Financial Officer
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