<PAGE> Page 1 of 44 Pages
As Filed with the Securities and Exchange Commission on
June 10, 1997
Registration No. 33-
- ----------------------------------------------------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------------
FORM S-8/S-3
REGISTRATION STATEMENT
under
the Securities Act of 1933
---------------------------
LEC TECHNOLOGIES, INC.
(Formerly known as Leasing Edge Corporation)
(Exact name of registrant as specified in its charter)
------------------------------------------------------
Delaware 11-2990598
- ------------------- ----------------------------
(State or other (I.R.S. Employer
jurisdiction Identification No.)
of incorporation or
organization)
6540 South Pecos Road
Suite 104
Las Vegas, Nevada 89120
(702) 454-7900
(Address including zip code, and telephone number,
including area code, of registrant's principal
executive offices and principal place of business)
1994 STOCK OPTION PLAN
1996 STOCK OPTION PLAN
1996 NON-PLAN DIRECTOR STOCK OPTIONS
1997 STOCK OPTION PLAN
page> Page 2 of 44 Pages
(Full Title of the Plans)
-----------------------------------
Michael F. Daniels
President and Chief Executive Officer
6540 South Pecos Road
Suite 103
Las Vegas, Nevada 89120
(702) 454-7900
(Name, address, including zip code, and
telephone number including area code, of agent for
service)
--------------------------
Copies of Communications to:
Stephen M. Davis, Esq.
Werbel & Carnelutti
711 Fifth Avenue
New York, New York 10022
(212) 832-8300
---------------------------
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CALCULATION OF REGISTRATION FEE
Title of Securities Common Stock ($.01 par value per share)
to be Registered
Amount to be 2,600,000 shares
Registered(1)
Proposed Maximum Offering
Price Per Share(2) $1.42
Proposed Maximum Aggregate
Offering Price (2) $3,692,000
Amount of Registration
Fee $1,118.79
(1) For the sole purpose of calculating the registration fee,
the number of shares to be registered under this Registration
Statement represents the sum of shares issuable upon exercise of
options issued under the Registrant's 1994 Stock Option Plan
("1994 Plan") (250,000 shares), 1996 Stock Option Plan ("1996
Plan") (1,000,000 shares), 1996 Non-Plan Director Stock Options
(350,000 shares) ("Non-Plan Options") and 1997 Stock Option Plan
("1997 Plan") (1,000,000 shares) (collectively, the "Plans").
(2) Estimated solely for the purpose of calculating the
registration fee based on the average of the high and low price
of the Common Stock on June 6, 1997.
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EXPLANATORY NOTE
This Registration Statement contains two parts. The
first part contains a prospectus pursuant to Form S-3 (in
accordance with Section C of the General Instructions to Form S-
8) which covers reoffers and resales by affiliates (as that term
is defined in Rule 405 under the Securities Act of 1933, as
amended) of the Registrant of shares of Common Stock of the
Registrant, issued upon exercise of options granted pursuant to
the Registrant's 1994 Stock Option Plan, 1996 Stock Option Plan,
Non-Plan Options and 1997 Stock Option Plan. Pursuant to the
Note to Part I of Form S-8, the plan information specified by
Part I is not being filed with the Securities and Exchange
Commission. The second part contains information required in the
Registration Statement pursuant to Part II of Form S-8.
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LEC TECHNOLOGIES, INC.
CROSS-REFERENCE SHEET
Showing the Location in the Prospectus
of the Information
Required by the Items of Part I of Form S-3
Item Location in Prospectus
1. Forepart of the Registration Facing Page, Outside
Statement and Outside Front Front Cover Page
Cover Page of Prospectus
2. Inside Front and Outside Back Inside Front Cover Page
Cover Pages of Prospectus
3. Summary Information, Risk Outside Front Cover
Factors and Ratio of Earnings Page, The Company,
to Fixed Charges Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Outside Front Cover
Offering Price Page; Plan of Distribution
6. Dilution Not Applicable
7. Selling Security Holders Selling Shareholders
8. Plan of Distribution Outside Front Cover Page;
Plan of Distribution
9. Description of Securities Information Incorporated
to be Registered by Reference; Securities
to be Offered
10. Interests of Named Not Applicable
Experts and Counsel
11. Material Changes Not Applicable
12. Incorporation of Certain Incorporation of
Information by Reference Certain Documents
by Reference
13. Disclosure of Commission Not Applicable
Position on Indemnification
for Securities Act Liabilities
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<PAGE> Page 6 of 44 Pages
PROSPECTUS
LEC TECHNOLOGIES, INC.
2,600,000 SHARES OF COMMON STOCK
($.01 Par Value)
This Prospectus pertains to 2,600,000 shares (the "Shares")
of LEC Technologies, Inc. (the "Company") $.01 par value common
stock ("Common Stock"). The Shares have been or may be acquired
by certain officers and directors of the Company and others who
may be deemed to be affiliates of the Company identified herein
(the "Selling Shareholders") pursuant to certain stock options
granted to such persons by the Company. See "Selling
Shareholders" and "Plan of Distribution." The Company will not
receive any part of the proceeds from the sales of the Shares.
All expenses of registration incurred in connection with this
offering are being borne by the Company, but all selling and
other expenses incurred by the Selling Shareholders will be borne
by such Selling Shareholders.
The Selling Shareholders have not advised the Company of any
specific plans for the distribution of the Shares covered by this
Prospectus, but it is anticipated that the Shares will be sold
from time to time primarily in transactions (which may include
block transactions) on the National Association of Securities
Dealers Automated Quotation ("NASDAQ") System at the market price
then prevailing or at prices related to prevailing prices,
although sales may also be made in negotiated transactions at
negotiated prices or otherwise. See "Selling Shareholders" and
"Plan of Distribution."
The Common Stock of the Company is traded and quoted on The
Nasdaq SmallCap Market tier of The Nasdaq Stock Market (the
"Nasdaq SmallCap Market"). On May 15, 1997, the closing sales
price of the Company's Common Stock, as reported by the NASDAQ as
$1.41 (NASDAQ Symbol: LECE).
THE PURCHASE OF SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE
OF RISK. SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is June 10, 1997
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No person has been authorized to give any information or to
make any representations, other than those contained in this
Prospectus, and, if given or made, such information or
representations must not be relied upon as having been authorized
by the Company. This Prospectus does not constitute an offering
in any state in which such offering may not lawfully be made.
Neither the delivery of this Prospectus nor any sales made
hereunder shall under any circumstances create any implication
that there has been no change in the information herein since the
date hereof.
AVAILABLE INFORMATION
A Registration Statement on Form S-8/S-3 in respect of the
Shares offered by this Prospectus (the "Registration Statement")
has been filed with the Securities and Exchange Commission (the
"Commission"), 450 Fifth Street, N.W., Washington, D.C. 20549,
under the Securities Act of 1933, as amended (the "Act").
The Company is subject to the information requirements of
the Securities Exchange Act of 1934 (the "Exchange Act") and in
accordance therewith files reports, proxy statements and other
information with the Commission. These reports, proxy statements
and other information may be inspected and copied at the Public
Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the
Commission at 7 World Trade Center, 13th floor, New York, New
York 10048, and Suite 1400, Northwestern Atrium Center, 500 West
Madison Street, Chicago, Illinois 60661-2511. Copies of such
material can be obtained from the Public Reference Section of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission
maintains a web site that contains reports, proxy and information
statements and other information regarding the Company; the
address of such site is http://www.sec.gov.
The Company's securities are listed on the Nasdaq SmallCap
Market. Reports and other information about the Company may be
inspected at the offices maintained by the National Association
of Securities Dealers, Inc., NASDAQ Reports Section, at 1735 K
Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are hereby incorporated by reference in this
Prospectus the following documents and information heretofore
filed with the Commission:
(1) The Company's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1996.
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(2) The Company's Proxy Statement dated February 3, 1997 with
respect to a special meeting of shareholders held on
March 12, 1997.
(3) The description of the Company's Common Stock contained in
the Company's Registration Statement on Form S-2
(Registration No. 33-64246) filed pursuant to the Securities
Act of 1933 and declared effective on August 4, 1993.
(4) Any other reports filed pursuant to Section 13(a) or 15(d)
of the Exchange Act since the end of the fiscal year covered
by the Company's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1996.
(5) All documents filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, after the
date of this Prospectus and prior to the filing of a post-
effective amendment which indicates that all securities
offered have been sold or which deregisters all securities
then remaining unsold, shall be deemed to be incorporated by
reference in this Prospectus and to be part thereof from the
date of filing such documents.
Any statement contained in a document, all or a portion of
which is incorporated by reference herein, shall be deemed to be
modified or superseded for purposes of this Prospectus to the
extent that a statement contained or incorporated by reference
herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to
each person to whom a copy of this Prospectus has been delivered,
upon the written or oral request of any such person, a copy of
any or all such documents which are incorporated herein by
reference (other than exhibits to such documents unless such
exhibits are specifically incorporated by reference into the
documents that this Prospectus incorporates). Written or oral
requests for copies should be directed to: Secretary, LEC
Technologies, Inc., 6540 South Pecos Road, Suite 103, Las Vegas,
Nevada, 89120, telephone number: (702)454-7900.
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<PAGE> Page 9 of 44 Pages
THE COMPANY
LEC Technologies, Inc. (with its subsidiaries, the "Company"
or "LEC") is a technology services company, providing solutions
that help organizations reduce technology cost and risk,
primarily through the leasing, distribution and remarketing of
high technology equipment. Such equipment generally consists of
midrange computer systems, telecommunications systems, system
peripherals (terminals, printers, communications controllers,
etc.) and point-of-sale systems.
As an independent organization, the Company provides
customers with technical, financial and product alternatives,
irrespective of hardware platform or manufacturer. In addition
to working with its customers to develop strategies governing
when to acquire equipment, upgrade existing equipment and order
new equipment to take advantage of current technology, LEC also
acts as an outlet for the equipment being displaced.
LEC's business is diversified by customer, customer type,
equipment type, equipment manufacturer, and geographic location
of its customers and subsidiaries. The Company's customers
include "Fortune 1000" corporations or companies of similar size
as well as smaller corporations. A significant portion of the
Company's business is with long-term, repeat customers. Three
customers of the Company, Tiffany & Co., Bed, Bath & Beyond and
The Hertz Corporation, respectively, accounted for approximately
25.0%, 12.8% and 7.4%, and 11.5%, 13.1% and 10.2% of consolidated
revenues for the years ended December 31, 1996 and 1995,
respectively.
The Company's services are organized into three groups of
related businesses, and are provided generally through separate
business units, although there is a significant amount of
interrelated activities. The three business groups are as
follows:
Leasing Services: Leasing, remarketing, financial
engineering, consulting and third-party maintenance and
systems integration services for midrange systems,
telecommunications equipment, point-of-sale systems and
system peripherals. The Company conducts its leasing
services business under the trade name Leasing Edge
Corporation.
Distribution Services: Sale of terminals, printers,
communications controllers, supplies, technical consulting
and third-party maintenance services. Business units
comprising Distribution Services are Superior Computer
Systems, Inc. ("SCS") and Pacific Mountain Computer
Products, Inc. ("PMCPI"), wholly-owned subsidiaries of LEC
Technologies, Inc.
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<PAGE> Page 10 of 44 Pages
Remarketing Services: Remarketing of previously leased
equipment, displaced equipment, and used equipment purchased
from other lessors or brokers. This unit also has
consignment relationships with certain customers to assist
such organizations in the sale of their used equipment.
Business units comprising Remarketing Services include
Leasing Edge Corporation, SCS, PMCPI and Atlantic Digital
International ("ADI"), a division of Leasing Edge
Corporation, which specializes in the acquisition and
remarketing of Digital Equipment Corporation equipment on
both a domestic and an international basis.
The Company's leasing operations are conducted primarily
through its principal office in Las Vegas, Nevada and its
distribution and remarketing operations are conducted primarily
through its subsidiaries' offices located in Minneapolis,
Minnesota; Woodland Hills, California; and Atlanta, Georgia.
The Company was founded in 1980 under the name TJ Computer
Services Inc. ("TJCS"). In 1989, all of the outstanding common
stock of TJCS was acquired by Harrison Development, Inc., an
inactive public corporation organized in Colorado, which then
changed its name to TJ Systems Corporation. In October 1991, the
Company reincorporated in the State of Delaware and in June 1995
changed its name to Leasing Edge Corporation. In March 1997, the
Company's shareholders approved a change in the Company's name to
LEC Technologies, Inc. to more accurately reflect the evolving
nature of the Company's business. The executive offices of the
Company are located at 6540 S. Pecos Road, Suite 103, Las Vegas,
Nevada, 89120, and its telephone number is (702) 454-7900.
RISK FACTORS
The purchase of the Common Stock offered hereby
involves certain risks. Accordingly, prospective investors
should carefully consider, along with other matters referred to
herein, the following risk factors relating to the Company and
this offering.
Cash Intensive Operations; Immediate Need for
Additional Financing. Since equipment the Company leases must be
paid for by the Company prior to leasing, the Company requires a
substantial amount of cash for its leasing activities. The
Company's growth has been significantly dependent upon its
ability to borrow funds or raise equity or debt financing to
acquire additional equipment for lease. Historically, the
Company has derived most of the funds necessary for the purchase
of equipment from nonrecourse financing and the remainder from
internally generated funds, recourse indebtedness and existing
cash.
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<PAGE> Page 11 of 44 Pages
On October 31, 1996, the Company's revolving line of
credit agreement with Bank of America matured and was
subsequently replaced with a term loan agreement (the "Amended
Agreement") effective February 28, 1997. The Amended Agreement
expires on August 15, 1997 (the "Initial Expiration Date");
however, the Initial Expiration Date may be further extended at
the Company's option to January 1, 1998 (the "Optional Expiration
Date"), subject to the Company's satisfaction of certain
conditions. Terms of the Amended Agreement require the Company
to make monthly graduated principal reductions in an aggregate of
$500,000 through August 15, 1997 or, if the Company exercises its
extension option, in an aggregate of $1,110,000 through January
1, 1998. The Amended Agreement provides for interest at Bank of
America's prime rate plus two percent through the Initial
Expiration Date, increasing to prime plus four percent thereafter
and is collateralized by certain personal property of the
Company. At December 31, 1996, the Company was not in compliance
with certain covenants under the prior revolving line of credit
agreement. Such covenants were subsequently modified or deleted
in the Amended Agreement. Restrictive covenants under the
Amended Agreement include the maintenance of consolidated
tangible net worth, as defined, of at least $4.5 million
beginning March 31, 1997; restrictions on the payment of cash
dividends on shares of the Company's common stock; and
limitations on unfinanced capital expenditures, as defined. At
March 31, 1997, the Company had outstanding borrowings under the
prior revolving line of credit agreement of $2,256,365.
In January 1995, PMCPI entered into a revolving credit
agreement (the "Merrill Line") with Merrill Lynch Financial
Services, Inc. Borrowings under the Merrill Line are limited to
the lesser of $500,000 or an amount equal to 80 percent of
PMCPI's accounts receivable, as defined, plus 60 percent of
inventory, as defined. The Merrill Line is secured by accounts
receivable and inventory of PMCPI and is guaranteed by the
Company. The Merrill Line expires June 30, 1997. At March 31,
1997, PMCPI had outstanding borrowings under the Merrill Line of
$484,937. The Merrill Line is currently due on June 30, 1997;
however the lender has been granting one month extensions to such
due date.
In November 1995, the Company entered into a letter
agreement with Union Chelsea National Bank (UCNB) whereby UCNB
agreed to make available to the Company a $250,000 line of credit
(the "Equity Line") to be used to fund the Company's equity
investment in certain leases discounted by UCNB (i.e., the
difference between the cost of the leased equipment and the
discounted present value of the minimum lease payments assigned
to UCNB). On July 18, 1996, the Equity Line was increased to
$1,000,000. Borrowings under the Equity Line are evidenced by
term notes and require monthly payments of principal and interest
over a period equal to the term of the related discounted lease
with a final balloon payment of between 30 and 50 percent
depending on the lease term. Interest rates on the term notes
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<PAGE> Page 12 of 44 Pages
are the applicable discounted lease rate plus 1.25%. At March
31, 1997, the Company had outstanding term notes under the Equity
Line of $1,000,000.
The Company is continuously seeking debt and/or equity
financing to fund the growth of its lease portfolio. However,
should the Company fail to receive additional equity financing or
refinance its existing debt in 1997, the Company's portfolio
growth and resultant cash flows could be materially and adversely
affected. In addition, there is no assurance that financial
institutions will continue to finance the Company's future
leasing transactions on a nonrecourse basis or that the Company
will continue to attract customers that meet the credit standards
of its nonrecourse financing sources or that, if it receives such
additional financing for future lease transactions, it will be on
terms favorable to the Company. Any failure to continue to
finance the Company or to finance the Company on favorable terms
would have a material adverse effect on the Company's business,
results of operations and financial condition.
Realization of Residual Values; 1995 and 1996 Write-
Downs. At the inception of each lease, the Company establishes
the residual value of the leased equipment, which is the
estimated market value of the equipment at the end of the initial
lease term. The Company's cash flow depends to a great extent on
its ability to realize the residual value of leased equipment
after the initial term of its leases with its customers.
Historically, the Company has realized its estimated investment
in residual values through (i) renegotiation of the leases during
their term to add or modify equipment; (ii) renewal or extension
of the original leases; (iii) leasing equipment to a new user; or
(iv) sale of the equipment. Each of these alternatives impacts
the timing of the Company's cash realization of such recorded
residual values. Equipment may be returned to the Company at the
end of an initial or extended lease term when it may not be
possible for the Company to resell or re-lease the equipment on
favorable terms. Developments in the high technology equipment
market tend to occur at rapid rates, adding to the risk of
obsolescence and shortened product life cycles which could affect
the Company's ability to realize the residual value of such
equipment. In addition, if the lessee defaults on a lease, the
financial institution that provided nonrecourse financing may
foreclose on its security interest in the leased equipment and
the Company may not realize any portion of such residual value.
If the residual value in any equipment cannot be realized after
the initial lease term, the recorded investment in the equipment
must be written down, resulting in lower cash flow and reduced
earnings. In 1996 and 1995, the Company reduced recorded
residual values and inventory by approximately $1,100,000 and
$210,000, respectively, to their net realizable values. There
can be no assurance that the Company will not experience further
material residual value or inventory write-downs in the future.
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Dependence on Major Customers. The Company's three
largest customers accounted for approximately 25.0%, 12.8% and
7.4% and 11.5%, 13.1% and 10.2% of consolidated revenues for the
years ended December 31, 1996 and 1995, respectively. However,
the Company does not believe its businesses are dependent on any
single customer or on any single source for the purchasing,
selling or leasing of equipment.
Reliance Upon Major Suppliers. PMCPI and SCS are
highly dependent on their suppliers, the manufacturers. Most
manufacturers extend terms of net 30 days or provide an inventory
line of credit for purposes of ordering equipment. Any event of
default on any credit facility offered by a manufacturer could
materially affect the Company's ability to acquire equipment for
resale.
Quarterly and Annual Fluctuations in Operating Results.
It is often difficult to predict when a particular leasing
transaction will be consummated. The timing of new lease
transactions, combined with the effects of lease accounting
practices, may result in significant revenue and income
fluctuations from quarter to quarter or from year to year.
Volatility of Stock Price and Depth of Trading Market.
The Company's Common Stock trades on the Nasdaq SmallCap Market.
The market price of the Company's Common Stock, like the shares
of many other small cap companies, has been and may continue to
be volatile. Furthermore, general conditions in the computer
hardware and equipment leasing industries may have a significant
impact on the market price of the Company's Common Stock.
Effect of Tax Laws. The amount of equipment acquired
by computer, telecommunications and point-of-sale equipment users
through leasing rather than purchasing is dependent, in part,
upon the favorable federal income tax treatment applied to the
lessor and lessee. At present, the lessor is generally permitted
to depreciate such equipment on a five-year basis and interest
payments on nonrecourse debt are deducted in calculating taxable
income. The lessee is generally permitted deductions for lease
payments in calculating taxable income, and such lease payments
are not a preference item for purposes of calculating the
lessee's alternative minimum tax. Any changes in the current
federal income tax treatment of leases for lessors and/or lessees
could have a material adverse effect upon demand for equipment
leases in general and the Company's lease operations in
particular.
Dependence on Key Executive. The Company is highly
dependent on the services of Michael F. Daniels, its Chief
Executive Officer and President. While the Company has procured
"key man" insurance coverage in the amount of $500,000 on Mr.
Daniels' life and has entered into an employment agreement with
Mr. Daniels expiring in June 2000, the loss of the services of
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<PAGE> Page 14 of 44 Pages
Mr. Daniels could have a material adverse effect on the Company,
since no assurance can be given that an adequate replacement for
Mr. Daniels could be found in a reasonable period of time.
Competition. The computer leasing and distribution
industries are extremely competitive and are composed of numerous
competitors, many of which are larger and have substantially
greater resources, financial and otherwise, than the Company.
Dividend Policy. The Company does not currently pay
cash dividends on its Common Stock and does not anticipate paying
such dividends at any time in the future. The Company's
borrowing facility currently prohibits the payment of cash
dividends on the Company's Common Stock.
Shares Eligible for Future Sale. The Company has
7,432,451 shares of its Common Stock underlying currently
exercisable options and warrants. Additionally, the Company's
officers and directors are holders of 408,250 currently
outstanding shares of Common Stock which are eligible for resale
in the public market subject, where applicable, to the volume
limitations and other requirements of Rule 144 adopted under the
Act. Sales of a substantial number of shares of Common Stock in
the public market following this offering, or the perception that
such sales could occur, could materially and adversely affect the
market price of the Common Stock.
NASDAQ Listing Requirements. In order to maintain a
company's listing on the NASDAQ System, a company must satisfy
certain criteria. There can be no assurance that the Company
will not fail to satisfy one or more of these criteria at some
future time. In such event, the Company's listed securities will
be subject to delisting from the NASDAQ System. Trading, if any,
in the listed securities would therefore be conducted in the
over-the-counter market in what are commonly referred to as the
"pink sheets." As a result, an investor may find it more
difficult to dispose of, or to obtain accurate quotations as to
the value of, the Company's securities. In addition, if the
Company's securities are delisted, they would be subject to a
Securities and Exchange Commission rule that imposes additional
sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and
accredited investors (generally, persons or institutions with
assets in excess of $1,000,000 or annual income exceeding
$200,000 or $300,000 together with their spouse.) For
transactions covered by this rule, the broker-dealer must make a
special suitability determination for the purchaser and have
received the purchaser's written consent to the transaction prior
to sale. Consequently, the rule may affect the ability of
broker-dealers to sell the Company's securities and may affect
the ability of purchasers in this offering to sell their
securities in the secondary market.
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USE OF PROCEEDS
The Company will not receive any proceeds from the sale
of the Shares by the Selling Shareholders.
SELLING SHAREHOLDERS
The following table sets forth the name of each present
Selling Shareholder and the number of shares of Common Stock
which each such Selling Shareholder (1) beneficially owned of
record as of April 7, 1997 (including shares of Common Stock
underlying exercisable options); (2) may acquire pursuant to the
exercise of a previously granted option or options under the
Plans, all of which shares may be sold pursuant to this
Prospectus; (3) the amount of Common Stock to be beneficially
owned by each Selling Shareholder assuming the sale of all shares
acquired upon the exercise of such options granted under the
Plans; and (4) the percentage of shares to be beneficially owned
by each Selling Shareholder after the exercise of the options
granted and the sale thereof.
Name Shares Beneficially Expected to Acquire
Owned as of Pursuant to the Plans
April 7, 1997 and Offered Pursuant
to the Prospectus
- ----------------------------------------------------------------
Michael F. Daniels,
Chairman, President,
Chief Executive Officer 623,958 579,000
William J. Vargas,
Vice President -
Finance, Chief
Financial Officer
and Treasurer 66,833 152,500
Larry M. Segall,
Director 266,875 240,000
L. Derrick Ashcroft,
Director 152,500 147,500
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Amount of Common Stock Percentage of Outstanding
to be Beneficially Common Stock to be
Owned After Exercise Beneficially Owned Upon
and Sale Exercise and Sale
461,625 9.4%
31,000 X
26,875 X
5,000 X
X less than one percent
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<PAGE> Page 17 of 44 Pages
PLAN OF DISTRIBUTION
The Company has been advised by the Selling
Shareholders that they intend to sell all or a portion of the
shares offered hereby from time to time in the over-the-counter
market and that sales will be made at prices prevailing at the
times of such sales. The Selling Shareholders may also make
private sales directly or through a broker or brokers, who may
act as agent or as principal. The Selling Shareholders will be
responsible for payment of any and all commissions to brokers,
which will be negotiated on an individual basis. In connection
with any sales, the Selling Shareholders and any brokers
participating in such sales may be deemed to be underwriters
within the meaning of the Securities Act.
The Company has advised the Selling Shareholders that
the anti-manipulative Rules 10b-2, 10b-6 and 10b-7 under the
Exchange Act may apply to their sales in the market, has
furnished the Selling Shareholders with a copy of these Rules and
has informed them of the possible need for delivery of copies of
this Prospectus.
There can be no assurances that the Selling
Shareholders will sell any or all of the shares of Common Stock
offered hereunder.
The Company will pay all expenses incident to the
offering and sale of the Common Stock to the public other than
brokerage commissions which will be paid by the Selling
Shareholders.
SECURITIES TO BE OFFERED
The shares offered hereby are shares of Common Stock,
$0.01 par value, of the Company. The holders of Common Stock are
entitled to one vote for each share held of record on all matters
submitted to a vote of stockholders, including the election of
directors. The holders of Common Stock are entitled to any
dividends that may be declared by the Board of Directors out of
funds legally available therefor, subject to the prior rights of
holders of the Company's Series A Convertible Preferred Stock and
holders of other series of Preferred Stock, if any, and the
Company's contractual restrictions against the payment of
dividends on Common Stock. In the event of liquidation or
dissolution of the Company, holders of Common Stock are entitled
to share ratably in all assets remaining after payment of
liabilities and the liquidation of preferences of any outstanding
shares of Preferred Stock. Holders of Common Stock have no
preemptive rights and have no right to convert their Common Stock
into any other securities. All of the outstanding shares of
Common Stock are fully paid and nonassessable.
<PAGE>
<PAGE> Page 18 of 44 Pages
The Common Stock is not subject to call or assessment, has no
preemptive conversion or cumulative voting rights and is not
subject to redemption. The Company has only one class of
directors.
American Stock Transfer and Trust Company is the transfer
agent and the registrar of the Company's Common Stock.
LEGAL MATTERS
The validity of the shares of the Company's Common
Stock offered hereby will be passed upon for the Company by
Werbel & Carnelutti, a Professional Corporation, 711 Fifth
Avenue, New York, New York 10022.
EXPERTS
The consolidated financial statements of LEC
Technologies, Inc. (formerly Leasing Edge Corporation) as of
December 31, 1996 and 1995 and for each of the years in the two-
year period ended December 31, 1996 have been incorporated by
reference herein and in the registration statement in reliance
upon the report of KPMG Peat Marwick LLP, independent certified
public accountants, incorporated by reference herein, and upon
the authority of said firm as experts in accounting and auditing.
<PAGE>
<PAGE> Pages 19 of 43 Pages
LEC TECHNOLOGIES, INC.
- ----------------------------- 2,600,000
TABLE OF CONTENTS
- ----------------------------- Shares
of Common Stock,
$.01 par value
Page
Available Information 2
Incorporation of Certain
Information by Reference 2
------------------------
The Company PROSPECTUS
4 ------------------------
Investment
Considerations 5
Use of Proceeds 9 June 10, 1997
Selling Shareholders 9
Plan of Distribution 10
Legal Matters 11
Experts 11
- ---------------------
<PAGE>
<PAGE> Page 20 of 44 Pages
LEC TECHNOLOGIES, INC.
REGISTRATION STATEMENT ON FORM S-8/S-3
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents, and any amendments thereto, filed
by the Company with the Securities and Exchange Commission are
incorporated in this Registration Statement by reference and
shall be deemed to be a part hereof from the date of filing such
documents:
(a) The Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1996.
(b) Any other reports filed pursuant to Section 13(a) or
15(d) of the Exchange Act since the end of the fiscal year
covered by the Annual Report referred to in (a) above.
(c) All documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the
fil0ing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be
incorporated by reference in the Registration Statement and to be
part thereof from the date of filing of such documents.
(d) The description of the Company's Common Stock contained
in the Company's Registration Statement on Form S-2 (Registration
No. 33-64246) filed pursuant to the Securities Act of 1933 and
declared effective on August 4, 1993.
(e) The Company's Proxy Statement dated February 3, 1997
with respect to its special meeting of shareholders held on March
12, 1997.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
000
Not applicable.
<PAGE>
<PAGE> Page 21 of 44 Pages
Item 6. Indemnification of Directors and Officers
Section 145 of the General Corporation Law of the State of
Delaware sets forth the conditions and limitations governing the
indemnification of officers, directors and other persons.
References are made to Article VI of the Company's By-Laws,
which provides for indemnification of officers and directors of
the Company to the full extent authorized by the aforesaid
section of the General Corporation Law of the State of Delaware.
Section 102(b) of the General Corporation Law of the State
of Delaware permits a corporation to eliminate or limit the
personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty of
care as a director. Reference is made to Article Eighth of the
Company's Restated Certificate of Incorporation, which limits a
director's liability in accordance with the aforesaid section of
the General Corporation Law of the State of Delaware.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
The Company hereby incorporates by reference the following
list of exhibits filed as part of this Registration Statement.
Exhibit
Number Document
3.1 Certificate of Amendment of Certificate of Incorporation
dated March, 1997.
4.1x 1994 Stock Option Plan.
4.2xx 1996 Stock Option Plan.
4.3 Form of 1996 Non-Plan Director Stock Option Agreement.
4.4 1997 Stock Option Plan.
5.1 Opinion of Werbel & Carnelutti as to the legality of
securities issued and to be issued.
23.1 Consent of Werbel & Carnelutti (contained in Exhibit 5.1).
23.2 Consent of KPMG Peat Marwick LLP.
- --------------------------
<PAGE>
<PAGE> Page 22 of 44 Pages
x Incorporated by reference in the Company's 1994 Proxy
Statement, Commission File No. 0-18303.
xx Incorporated by reference in the Company's 1996 Proxy
Statement, Commission File No. 0-18303.
Item 9. Undertakings
A. The Company hereby undertakes:
1. to file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, as amended;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in this Registration Statement; and
(iii) to include any material information with respect
to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information
in the Registration Statement including (but not limited to) any
addition of a managing underwriter, provided, however, that the
undertakings set forth in paragraphs (i) and (ii) above do not
apply if the information required to be included in a post-
effective amendment by those paragraphs if contained in periodic
reports filed by the Company pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934, as amended, that
are incorporated by reference in this Registration Statement.
2. The Company hereby undertakes that, for the purpose of
determining any liability under the Securities Act of 1933, as
amended, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offer
herein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
<PAGE>
<PAGE> Page 23 of 44 Pages
3. The Company hereby undertakes to remove from
registration by means of a post-effective amendment any of the
securities being registered hereby which remain unsold at the
termination of the offering.
B. The Company hereby undertakes that, for the purpose of
determining any liability under the Securities Act of 1933, as
amended, each filing of the Company's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934, as amended (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d)
of the Securities Exchange Act of 1934, as amended) that is
incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to
directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933, as amended, and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the person of the Company in the successful defense of any
action, suit or proceeding) is asserted by such director,
officer, or controlling person in connection with the securities
being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933, as amended, and will be
governed by the final adjudication of such issue.
<PAGE>
<PAGE> Page 24 of 44 Pages
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Company certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Forms S-8 and
S-3 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in
Clark County, State of Nevada, on the 10th day of June, 1997.
LEC TECHNOLOGIES, INC.
By: /s/ Michael F. Daniels
---------------------------------
Name: Michael F. Daniels
Title: President
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signature Title
/s/Michael F. Daniels Chairman, President and June 10, 1997
Michael F. Daniels Chief Executive Officer
(Principal Executive
Officer)
<PAGE>
<PAGE> Page 25 of 44 Pages
/s/ L. Derrick Ashcroft
- ------------------------ Director June 10, 1997
L. Derrick Ashcroft
/s/ Larry M. Segall Director June 10, 1997
- -----------------------
Larry M. Segall
/s/ William J. Vargas Vice President-- June 10, 1997
- ----------------------- Finance, Chief Financial
William J. Vargas Officer and Treasurer
(Principal Accounting and
Financial Officer)
<PAGE>
<PAGE> Page 26 of 44 Pages
June 10, 1997
LEC Technologies, Inc.
6540 South Pecos Road
Suite 103
Las Vegas, Nevada 89120
Re: Registration Statement on Form S-8/S-3
LEC Technologies, Inc.
Gentlemen:
We have acted as counsel to LEC Technologies, Inc., a
Delaware corporation (the "Company"), in connection with the
Registration Statement on Form S-8/S-3 under the Securities Act
of 1933, as amended, of an aggregate of 2,600,000 shares of the
Company's Common Stock, par value $.01 per share (the "Common
Stock"), reserved for issuance under the Company's 1994 Stock
Option Plan, 1996 Stock Option Plan, 1996 Non-Plan Director Stock
Options and 1997 Stock Option Plan referred to in the above
referenced Registration Statement (collectively the "Plans").
We have examined the proceedings taken by you in
connection with the sale and issuance of the Common Stock under
the Plans. In such examinations, we have assumed the genuineness
of all signatures, the authenticity of all documents submitted to
us as originals, the conformity to the originals thereof of all
documents submitted to us as certified or photostatic copies, and
the authenticity of the originals of such latter documents. As
to any facts material to our opinion, we have relied on the
representations of executive officers and other representatives
of the Company.
It is our opinion that, when issued and sold in the
manner referred to in the Plans and pursuant to the agreements
which accompany the Plans, the Common Stock will be legally and
validly issued, fully paid and non-assessable.
This opinion is rendered solely for your benefit in
connection with the transaction described above. This opinion
may not be used or relied upon by any other person without our
prior written consent.
<PAGE>
<PAGE> Page 27 of 44 Pages
We consent to the use of this opinion as an exhibit to
the Registration Statement and further consent to the use of our
name wherever appearing in the Registration Statement, including
any Prospectus constituting a part thereof, and any amendments
thereto.
Very truly yours,
WERBEL & CARNELUTTI
A Professional Corporation
By: /s/ Stephen M. Davis
------------------------------
Member of the Firm
<PAGE>
<PAGE> Page 28 of 44 Pages
<EX.3.1> EXHIBIT 3.1
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
LEASING EDGE CORPORATION
It is hereby certified that:
1. The name of the corporation (hereinafter called
the "Corporation") is Leasing Edge Corporation.
2. The Certificate of Incorporation of the
Corporation is hereby amended by striking out Article FIRST
thereof and by substituting in lieu of said Article the following
new Article FIRST:
"FIRST: The name of the Corporation (the "Corporation") is
LEC Technologies, Inc.
3. The Certificate of Incorporation of the
Corporation is hereby further amended by striking out Article
FOURTH thereof and by substituting in lieu of said Article the
following new Article FOURTH:
"FOURTH: The Corporation shall be authorized to issue (i)
twenty-five million (25,000,000) shares of common stock,
one cent ($.01) par value. . ."
4. The Amendment of the Certificate of Incorporation
of the Corporation herein certified has been duly adopted,
pursuant to the provisions of Sections 228 and 242 of the General
Corporation Law of the State of Delaware.
Signed and attested to on March 26, 1997.
/s/ Michael F. Daniels
-------------------------------
Michael F. Daniels, President
Attest:
/s/ William Vargas
- -------------------------------
William Vargas, Secretary
<PAGE>
<PAGE> Page 29 of 44 Pages
<EX.4.3>
EXHIBIT 4.3
Form of 1996 Non-Plan Director Stock Option Agreement
STOCK OPTION AGREEMENT, dated as of May 10, 1996, by
and between Leasing Edge Corporation, a Delaware corporation (the
"Company"), and (the "Optionee").
(i) Grant of Option. The Company hereby grants to the
Optionee an option (the "Option") to purchase up to an aggregate
of shares of the Company's common stock, par value
$0.01 per share (the "Common Stock") at a price of $1.75 per
share. The Option granted hereunder shall not be deemed an
Incentive Stock Option within the meaning of the Internal Revenue
Code of 1986, as amended.
(ii) Timing of Exercise. The Optionee may exercise
this Option, all at any time or in part from time to time, at any
time prior to its expiration. This Option will expire ten years
from the date of grant of this Option with respect to any then
unexercised portion hereof.
(iii) Manner of Exercise. This Option shall be
exercised by delivering written notice to the Company stating the
number of shares of Common Stock to be purchased, the person or
persons in whose name the shares are to be issued and each such
person's address and social security number. Such notice shall
not be effective unless accompanied by the full purchase price
for all shares to be purchased. The purchase price shall be
payable in cash or in shares of the Company's Common Stock or any
combination thereof. Payment in currency or by check shall be
considered payment in cash. In the event that all or part of the
purchase price is paid in shares of the Company's Common Stock,
the shares used in payment shall be valued at their Fair Market
Value (as defined in the Company's 1996 Stock Option Plan) on the
date of exercise of this Option.
(iv) Restrictions on Purchase and Sales of Shares.
The Company shall not be obligated to sell or issue any shares
pursuant to this Option unless the shares are at that time
effectively registered or exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"). The
Optionee hereby agrees that, as a further condition to the
exercise of this Option, the Optionee, if the Company so
requests, will execute an agreement in form satisfactory to the
Company in which the Optionee represents that he is purchasing
the shares for his personal account and not with a view to or for
sale in connection with any distribution.
<PAGE>
<PAGE> Page 30 of 44 Pages
The Optionee further agrees that if the shares of Common Stock to
be issued upon exercise of this Option are not subject to an
effective registration statement filed with the Securities and
Exchange Commission pursuant to the requirements of the
Securities Act, such shares shall bear an appropriate restrictive
legend.
(v) Adjustment. The number of shares of Common Stock
of the Company subject to this Option and the price per share of
such shares shall be equitably adjusted by the Company from time
to time to account for transactions which change the
capitalization of the Company such as stock splits, stock
dividends, liquidating dividends, reclassifications, mergers or
consolidations other similar transactions. The Board of
Directors of the Company is vested with financial authority with
respect to the determination of any such adjustment, and the
extent thereof, and any such determination shall be final,
binding and conclusive. Any adjustment in the number of shares
shall apply, proportionately, only to the unexercised portion of
this Option. If fractions of a share would result from any such
adjustment, the number of shares shall be revised to the next
lower whole number of shares.
(vi) No Rights Until Exercise. The Optionee shall
have no rights hereunder as a shareholder with respect to any
shares subject to this Option until the date of the issuance of a
stock certificate to him for such shares.
LEASING EDGE CORPORATION
By:
----------------------------------
Name: Michael F. Daniels
Title: President & CEO
OPTIONEE:
--------------------------------------
Name:
<PAGE>
<PAGE> Page 31 of 44 Pages
<EX.4.4.>
EXHIBIT 4.4
LEC Technologies, Inc.
1997 STOCK OPTION PLAN
1. Purpose. The purpose of this Plan is to
strengthen LEC Technologies, Inc. by providing an incentive to
its employees and directors, encouraging them to devote their
abilities to the success of the Company. It is intended that
this purpose be achieved by extending to employees and directors
of the Company or any subsidiary an added long-term incentive for
high levels of performance and exceptional efforts through the
grant of options to purchase shares of the Company's common stock
under this LEC Technologies, Inc. 1997 Stock Option Plan.
2. Definitions. For purposes of the Plan:
2.1 "Agreement" means the written agreement
between the Company and an Optionee evidencing the grant of an
Option and setting forth the terms and conditions thereof.
2.2 "Board" means the Board of Directors of the
Company.
2.3 "Cause" means with respect to an Eligible
Employee, including an Eligible Employee who is a director of the
Company, (i) the voluntary termination of employment by such
Eligible Employee, (ii) intentional failure to perform, or
habitual neglect of, reasonably assigned duties, (iii) dishonesty
or willful misconduct in the performance of an Optionee's duties,
(iv) an Optionee's engaging in a transaction in connection with
the performance of such Optionee's duties to the Company or any
of its Subsidiaries thereof which transaction is adverse to the
interests of the Company or any of its Subsidiaries and which is
engaged in for personal profit to the Optionee, (v) willful
violation of any law, rule or regulation in connection with the
performance of an Optionee's duties, (vi) willful violation of
any policy adopted by the Company relating to the performance or
behavior of employees or (vii) acts of carelessness or misconduct
which have in the reasonable judgment of the Company's Board of
Directors, an adverse effect on the Company.
2.4 "Change in Capitalization" means any increase
or reduction in the number of Shares, or any change (including,
but not limited to, a change in value) in the Shares or exchange
of Shares for a different number or kind of shares or other
securities of the Company, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, spin-
off, split-up, issuance of warrants or rights or debentures,
stock
<PAGE>
<PAGE> Page 32 of 44 Pages
dividend, stock split or reverse stock split, cash dividend,
property dividend, combination or exchange of shares, repurchase
of shares, public offering, private placement, change in
corporate structure or otherwise.
2.5 "Code" means the Internal Revenue Code of
1986, as amended.
2.6 "Company" means LEC Technologies, Inc.
2.7 "Director Option" means an Option granted to a
Nonemployee Director pursuant to Section 5.
2.8 "Disability" means a physical or mental
infirmity which impairs the Optionee's ability to perform
substantially his or her duties for a period of sixty (60)
consecutive days.
2.9 "Eligible Employee" means an officer or other
employee of the Company or a Subsidiary who is designated by the
Board as eligible to receive Options subject to the conditions
set forth herein.
2.10 "Employee Options" means an Option granted to
an Eligible Employee pursuant to Section 6.
2.11 "Exchange Act" means the Securities Exchange
Act of 1934, as amended.
2.12 "Fair Market Value" on any date means the
last sales price of the Shares on such date on the principal
national securities exchange on which such Shares are listed or
admitted to trading, or if such Shares are not so listed or
admitted to trading, the last sales price per Share on such date
as quoted on the National Association of Securities Dealers
Automated Quotation System or such other market in which such
prices are regularly quoted, or, if there have been no published
sales prices with respect to the Shares on such date, the Fair
Market Value shall be the value established by the Board in good
faith.
2.13 "Nonemployee Director" means a director of
the Company who is not an employee of the Company or any
Subsidiary.
2.14 "Option" means an Employee Option, a Director
Option, or any or all of them.
2.15 "Optionee" means a person to whom an Option
has been granted under the Plan.
<PAGE>
<PAGE> Page 33 of 44 Pages
2.16 "Parent" means any corporation which is a
parent corporation with respect to the Company.
2.17 "Plan" means the LEC Technologies, Inc. 1997
Stock Option Plan.
2.18 "Shares" means the common stock, par value
$.01 per share, of the Company.
2.19 "Subsidiary" means any corporation which is a
subsidiary corporation with respect to the Company.
2.20 "Successor Corporation" means a corporation,
or a parent or subsidiary thereof which issues or assumes a stock
option granted hereunder.
3. Administration.
3.1 The Plan shall be administered by the Board
which shall hold meetings at such times as may be necessary for
the proper administration of the Plan. The Board shall keep
minutes of its meetings. A quorum shall consist of not less than
two members of the Board and a majority of a quorum may authorize
any action. Any decision or determination reduced to writing and
signed by a majority of all of the members of the Board shall be
as fully effective as if made by a majority vote at a meeting
duly called and held. No member of the Board shall be liable for
any action, failure to act, determination or interpretation made
in good faith with respect to this Plan or any transaction
hereunder, except for liability arising from his or her own
willful misfeasance, fraud or bad faith. The Company hereby
agrees to indemnify each member of the Board for all costs and
expenses and, to the extent permitted by applicable law, any
liability incurred in connection with defending against,
responding to, negotiation for the settlement of or otherwise
dealing with any claim, cause of action or dispute of any kind
arising in connection with any action or failure to act in
administering this Plan or in authorizing or denying
authorization to any transaction hereunder.
3.2 Subject to the express terms and conditions
set forth herein, the Board shall have the power from time to
time to determine those Eligible Employees to whom Employee
Options shall be granted under the Plan and the number of Stock
Options to be granted to each Eligible Employee and to prescribe
the terms and conditions (which need not be identical) of each
Employee Option, including the purchase price per Share subject
to each Employee Option, and make any amendment or modification
to any Agreement consistent with the terms of the Plan.
<PAGE>
<PAGE> Page 34 of 44 Pages
3.3 Subject to the express terms and conditions
set forth herein, the Board shall have the power from time to
time:
(a) to construe and interpret the Plan and
the Options granted thereunder and to establish, amend and revoke
rules and regulations for the administration of the Plan,
including, but not limited to, correcting any defect or supplying
any omission, or reconciling any inconsistency in the Plan or in
any Agreement, in the manner and to the extent it shall deem
necessary or advisable to make the Plan fully effective, and all
decisions and determinations by the Board in the exercise of this
power shall be final, binding and conclusive upon the Company,
its Subsidiaries, the Optionees and all other persons having any
interest therein;
(b) to determine the duration and purposes
for leaves of absence which may be granted to an Optionee on an
individual basis without constituting a termination of employment
or service for purposes of the Plan;
(c) to exercise its discretion with respect
to the powers and rights granted to it as set forth in the Plan;
(d) generally, to exercise such powers and
to perform such acts as are deemed necessary or advisable to
promote the best interests of the Company with respect to the
Plan.
4. Stock Subject to Plan.
4.1 The maximum number of Shares that may be made
the subject of Options granted under the Plan is one million
(1,000,000) Shares or such greater number of shares as approved
by the Board of Directors by amendment to the Plan (or the number
and kind of shares of stock or other securities to which such
Shares are adjusted upon a Change in Capitalization pursuant to
Section 8) and the Company shall reserve for the purposes of the
Plan, out of its authorized but unissued Shares or out of Shares
held in the Company's treasury, or partly out of each, such
number of Shares as shall be determined by the Board.
4.2 Whenever any outstanding Option or portion
thereof expires, is canceled or is otherwise terminated for any
reason, the Shares allocable to the canceled or otherwise
terminated Option or portion thereof may again be the subject of
Options granted hereunder.
<PAGE>
<PAGE> Page 35 of 44 Pages
5. Option Grants for Nonemployee Directors.
5.1 Authority of Board. Subject to the provisions
of the Plan, the Board shall have full and final authority to
select those Nonemployee Directors who will receive Director
Options, the terms and conditions of which shall be set forth in
an Agreement.
5.2 Purchase Price. The purchase price or the
manner in which the purchase price is to be determined for Shares
under each Director Option shall be determined by the Board and
set forth in the Agreement evidencing the Option, provided that
the purchase price per Share under each Director Option shall be
not less than the Fair Market Value of a Share on the date the
Director Option is granted.
5.3 Duration. Director Options shall be for a
term to be designated by the Board and set forth in the Agreement
evidencing the Option.
5.4 Vesting. Each Director Option shall,
commencing not earlier than the date of its grant, become
exercisable in such installments (which need not be equal or may
be one installment) and at such times as may be designated by the
Board and set forth in the Agreement evidencing the Option. To
the extent not exercised, installments shall accumulate and be
exercisable, in whole or part, at any time after becoming
exercisable, to not later than the date the Director Option
expires. The Board may accelerate the exercisability of any
Option or portion thereof at any time.
6. Option Grants for Eligible Employees.
6.1 Authority of Board. Subject to the provisions
of the Plan, the Board shall have full and final authority to
select those Eligible Employees who will receive Employee
Options, the terms and conditions of which shall be set forth in
an Agreement; provided, however, that no Eligible Employee shall
receive a Stock Option unless he is an employee of the Company, a
Parent or a Subsidiary at the time the Stock Option is granted.
6.2 Purchase Price. The purchase price or the
manner in which the purchase price is to be determined for Shares
under each Employee Option shall be determined by the Board and
set forth in the Agreement evidencing the Option, provided that
the purchase price per Share under each Employee Option shall be
not less than the Fair Market Value of a Share on the date the
Employee Option is granted.
<PAGE>
<PAGE> Page 36 of 44 Pages
6.3 Duration. Employee Options granted hereunder
shall be for such term as the Board shall determine, provided
that no Employee Option shall be exercisable after the expiration
of ten (10) years from the date it is granted. The Board may,
subsequent to the granting of any Employee Option, extend the
term thereof but in no event shall the term as so extended exceed
the maximum term provided for in the preceding sentence.
6.4 Vesting. Each Employee Option shall,
commencing not earlier then the date of its grant, become
exercisable in such installments (which need not be equal or may
be in one installment) and at such times as may be designated by
the Board and set forth in the Agreement evidencing the Option.
To the extent not otherwise provided by the Board, Employee
Options shall be exercisable in three (3) equal installments each
equal to one-third of the entire Option granted, the first of
which shall become exercisable on the first anniversary of the
date of the grant of the Employee Option, the second installment
of which shall become exercisable on the second anniversary of
the date of grant of the Employee Option, and the final
installment of which shall become exercisable on the third
anniversary of the date of grant. To the extent not exercised,
installments shall accumulate and be exercisable, in whole or
part, at any time after becoming exercisable, to not later than
the date the Employee Option expires. The Board may accelerate
the exercisability of any Option or portion thereof at any time.
6.5 Modification or Substitution. The Board may,
in its discretion, modify outstanding Employee Options or accept
the surrender of outstanding Employee Options (to the extent not
exercised) and grant new Options in substitution for them.
Notwithstanding the foregoing, no modification of an Employee
Option shall adversely alter or impair any rights or obligations
under the Employee Option without the Optionee's consent.
7. Terms and Conditions Applicable to All Options
7.1 Non-transferability. No Option granted
hereunder shall be transferable by the Optionee to whom granted
otherwise than by will or the laws of descent and distribution,
and an Option may be exercised during the lifetime of such
Optionee only by the Optionee or his or her guardian or legal
representative. The terms of each Option shall be final, binding
and conclusive upon the beneficiaries, executors, administrators,
heirs and successors of the Optionee.
<PAGE>
<PAGE> Page 37 of 44 Pages
7.2 Method of Exercise. The exercise of an Option
shall be made only by a written notice delivered in person or by
mail to the Secretary of the Company at the Company's principal
executive office, specifying the number of Shares to be purchased
and accompanied by payment therefor and otherwise in accordance
with the Agreement pursuant to which the Option was granted. The
purchase price for any Shares purchased pursuant to the exercise
of an Option shall be paid in full upon such exercise, as
determined by the Board in its discretion, by any one or a
combination of the following: (i) cash, or (ii) transferring
Shares to the Company upon such terms and conditions as
determined by the Board. At the Optionee's request and subject
to the consent of the Board, Shares to be acquired upon the
exercise of a portion of an Employee Option will be applied
automatically to pay the purchase price in connection with the
exercise of additional portions of the Employee Option then being
exercised. The written notice pursuant to this Section 7.2 may
also provide instructions from the Optionee to the Company that
upon receipt of the purchase price in cash from the Optionee's
broker or dealer, designated as such on the written notice, in
payment for any Shares purchased pursuant to the exercise of an
Option, the Company shall issue such Shares directly to the
designated broker or dealer. Any Shares transferred to the
Company as payment of the purchase price under an Option shall be
valued at their Fair Market Value on the day preceding the date
of exercise of such Option. If requested by the Board, the
Optionee shall deliver the Agreement evidencing the Option to the
Secretary of the Company who shall endorse thereon a notation of
such exercise and return such Agreement to the Optionee. No
fractional shares (or cash in lieu thereof) shall be issued upon
exercise of an Option and the number of Shares that may be
purchased upon exercise shall be rounded to the nearest number of
whole Shares.
7.3 Rights of Optionees. No Optionee shall be
deemed for any purpose to be the owner of any Shares subject to
any Option unless and until (i) the Option shall have been
exercised pursuant to the terms thereof, (ii) the Company shall
have issued and delivered the Shares to the Optionee and (iii)
the Optionee's name shall have been entered as a stockholder of
record on the books of the Company. Thereupon, the Optionee
shall have full voting, dividend and other ownership rights with
respect to such Shares.
7.4 Termination of Employment. Unless otherwise
provided in the Agreement evidencing the Option, an Option (other
than an Option granted to a Nonemployee Director) shall terminate
upon an Optionee's termination of employment with the Company and
its Subsidiaries as follows:
<PAGE>
<PAGE> Page 38 of 44 Pages
(a) in the event the Optionee's employment
terminates as a result of Disability, the Optionee may at any
time within three (3) months after such event exercise the Option
or portion thereof that was exercisable on the date of such
termination;
(b) if an Optionee's employment terminates
for Cause, the Option shall terminate immediately and no rights
thereunder may be exercised;
(c) if an Optionee's employment terminates
without Cause, the Optionee may at any time within one (1) month
after such event exercise the Option or portion thereof that was
exercisable on the date of such termination; and
(d) if an Optionee dies while an employee of
the Company or any Subsidiary or within six (6) months after
termination as a result of Disability as described in clause (a)
of this Section 7.4, the Option may be exercised at any time
within six (6) months after the Optionee's death by the person or
persons to whom such rights under the Option shall pass by will
or by the laws of descent and distribution; provided, however,
that an Option may be exercised to the extent, and only to the
extent, that the Option or portion thereof was exercisable on the
date of death or earlier termination.
Notwithstanding the foregoing, in no event may any
Option be exercised by anyone after the expiration of the term of
the Option.
7.5 Termination of Nonemployee Director Options.
Nonemployee Director Options granted to Nonemployee Directors of
the Company or a Subsidiary shall terminate under such
circumstances as are provided in the Agreement evidencing the
Option, and if not expressly specified, as of the close of
business on the last day of the term of the Option, but in no
event may such an Option be exercised by anyone after the
expiration of the term of the Option.
8. Adjustment Upon Changes in Capitalization.
8.1 Subject to Section 10, in the event of a
Change in Capitalization, the Board shall conclusively determine
the appropriate adjustments, if any, to the maximum number or
class of Shares or other stock or securities with respect to
which Options may be granted under the Plan, the number and class
of Shares or other stock or securities which are subject to
outstanding Options granted under the Plan, and the purchase
price therefor, if applicable.
<PAGE>
<PAGE> Page 39 of 44 Pages
8.2 If, by reason of a Change in Capitalization,
an Optionee shall be entitled to exercise an Option with respect
to new, additional or different shares of stock or securities,
such new, additional or different shares shall thereupon be
subject to all of the conditions which were applicable to the
Shares subject to the Option, as the case may be, prior to such
Change in Capitalization.
9. Effect of Certain Transactions.
In the event of (i) the liquidation or dissolution
of the Company or (ii) a merger or consolidation of the Company
(a "Transaction"), the Plan and the Options issued hereunder
shall continue in effect in accordance with their respective
terms and each Optionee shall be entitled to receive in respect
of each Share subject to any outstanding Options, as the case may
be, upon exercise of any Option, the same number and kind of
stock, securities, cash, property, or other consideration that
each holder of a Share was entitled to receive in the Transaction
in respect of a Share. In the event that, after a Transaction,
there occurs any change of a type described in Section 2.4 hereof
with respect to the shares of the surviving or resulting
corporation, then adjustments similar to, and subject to the same
conditions as, those in Section 8 hereof shall be made by the
Board.
10. Termination and Amendment of the Program.
10.1 The Plan shall terminate on the day
preceding the tenth anniversary of the date of its adoption by
the Board and no Option may be granted thereafter. The Board may
sooner terminate or amend the Plan at any time and from time to
time.
10.2 Except as provided in Sections 8 and 9
hereof, rights and obligations under any Option granted before
any amendment or termination of the Plan shall not be adversely
altered or impaired by such amendment or termination, except with
the consent of the Optionee, nor shall any amendment or
termination deprive any Optionee of any Shares which he may have
acquired through or as a result of the Plan.
11. Non-Exclusivity of the Plan. The adoption of the
Plan by the Board shall not be construed as amending, modifying
or rescinding any previously approved incentive arrangement or as
creating any limitations on the power of the Board to adopt such
other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options otherwise than
under the Plan, and such arrangements may be either applicable
generally or only in specific cases.
<PAGE>
<PAGE> Page 40 of 44 Pages
12. Limitation of Liability. As illustrative of the
limitations of liability of the Company, but not intended to be
exhaustive thereof, nothing in the Plan shall be construed to:
(i) give any person any right to be granted an Option
other than at the sole discretion of the Board;
(ii) give any person any rights whatsoever with respect
to Shares except as specifically provided in the Plan;
(iii) limit in any way the right of the Company to
terminate the employment of any person at any time; or
(iv) be evidence of any agreement or understanding,
expressed or implied, that the Company will employ any person at
any particular rate of compensation or for any particular period
of time.
13. Regulations and Other Approvals; Governing Law.
13.1 This Plan and the rights of all persons
claiming hereunder shall be construed and determined in
accordance with the laws of the State of Delaware.
13.2 The obligation of the Company to sell or
deliver Shares with respect to Options granted under the Plan
shall be subject to all applicable laws, rules and regulations,
including all applicable federal and state securities laws, and
the obtaining of all such approvals by governmental agencies as
may be deemed necessary or appropriate by the Board.
13.3 The Plan is intended to comply with Rule 16b-
3 promulgated under the Exchange Act and the Board shall
interpret and administer the provisions of the Plan or any
Agreement in a manner consistent therewith. Any provisions
inconsistent with such Rule shall be inoperative and shall not
affect the validity of the Plan.
13.4 The Board may make such changes as may be
necessary or appropriate to comply with the rules and regulations
of any government authority.
13.5 Each Option is subject to the requirement
that, if at any time the Board determines, in its discretion,
that the listing, registration or qualification of Shares
issuable pursuant to the Plan is required by any securities
exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of
an Option or the issuance of Shares, no Options shall be granted
<PAGE>
<PAGE> Page 41 of 44 Pages
or payment made or Shares issued, in whole or in part, unless
listing, registration, qualification, consent or approval has
been effected or obtained free of any conditions, or as otherwise
determined to be acceptable to the Board.
13.6 Notwithstanding anything contained in the
Plan to the contrary, in the event that the disposition of Shares
acquired pursuant to the Plan is not covered by a then current
registration statement under the Securities Act of 1933, as
amended, and is not otherwise exempt from such registration, such
Shares shall be restricted against transfer to the extent
required by the Securities Act of 1933, as amended, and Rule 144
or other regulations thereunder. The Board may require any
individual receiving Shares pursuant to the Plan, as a condition
precedent to receipt of such Shares upon exercise of an Option,
to represent and warrant to the Company in writing that the
Shares acquired by such individual are acquired without a view to
any distribution thereof and will not be sold or transferred
other than pursuant to an effective registration thereof under
said act or pursuant to a exemption applicable under the
Securities Act of 1933, as amended, or the rules and regulations
promulgated thereunder. The certificates evidencing any of such
Shares shall be appropriately amended to reflect their status as
restricted securities as aforesaid.
14. Miscellaneous.
14.1 Multiple Agreements. The terms of each
Option may differ from other Options granted under the Plan at
the same time, or at some other time. The Board may also grant
more than one Option to a given Eligible Employee during the term
of the Plan, either in addition to, or in substitution for, one
or more Options previously granted to that Eligible Employee.
14.2 Withholding of Taxes. The Company shall have
the right to deduct from any distribution of cash to any
Optionee, an amount equal to the federal, state and local income
taxes and other amounts as may be required by law to be withheld
(the "Withholding Taxes") with respect to any Option. If an
Optionee is entitled to receive Shares upon exercise of an
Option, the Optionee shall pay the Withholding Taxes to the
Company prior to the issuance of such Shares. In satisfaction of
the Withholding Taxes, the Optionee may make a written election
(the "Tax Election"), which may be accepted or rejected in the
discretion of the Board, to have withheld a portion of the Shares
issuable to him or her upon exercise of the Option having an
aggregate Fair Market Value, on the date preceding the date of
exercise, equal to the Withholding Taxes, provided that in
respect of an Optionee who may be subject to liability under
Section 16(b) of the Exchange Act either (i) (A) the Optionee
makes the Tax Election at least six (6) months after the date the
<PAGE>
<PAGE> Page 42 of 44 Pages
Option was granted, (B) the Option is exercised during the ten
day period beginning on the third business day and ending on the
twelfth business day following the release for publication of the
Company's quarterly or annual statements of earnings (a "Window
Period") and (C) the Tax Election is made during the Window
Period in which the Option is exercised or prior to such Window
Period and subsequent to the immediately preceding Window Period
or (ii) (A) the Tax Election is made at least six months prior to
the date the Option is exercised and (B) the Tax election is
irrevocable with respect to the exercise of all Options which are
exercised prior to the expiration of six months following an
election to revoke the Tax Election. Notwithstanding the
foregoing, the Board may, by the adoption of rules or otherwise,
(i) modify the provisions in the preceding sentence or impose
such other restrictions or limitations on Tax Elections as may be
necessary to ensure that the Tax Elections will be exempt
transactions under Section 16(b) of the Exchange Act, and (ii)
permit Tax Elections to be made at such other times and subject
to such other conditions as the Board determines will constitute
exempt transactions under Section 16(b) of the Exchange Act.
14.3 Designation of Beneficiary. Each Optionee
may designate a person or persons to receive in the event of his
or her death, any Option or any amount payable pursuant thereto,
to which he or she would then be entitled. Such designation will
be made upon forms supplied by and delivered to the Company and
may be revoked in writing. If an Optionee fails effectively to
designate a beneficiary, then his or her estate will be deemed to
be the beneficiary.
15. Effective Date. The effective date of the Plan
shall be the date of its adoption by the Board.
<PAGE> <PAGE>
<PAGE> Page 43 of 44 Pages
<EX.23.2> EXHIBIT 23.2
The Board of Directors
LEC Technologies, Inc.
We consent to the use of our report incorporated herein by
reference and to the reference to our firm under the heading
"Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
Las Vegas, NV
June 9, 1997
<PAGE>
<PAGE> Page 44 of 44 Pages
<Corresp.>
June 10, 1997
VIA EDGAR
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Registration Statement on Form S-3/S-8 of
LEC Corporation
Ladies and Gentlemen:
On behalf of LEC Corporation (the "Company"), a
Delaware corporation, and pursuant to the Securities Act of 1933,
as amended, and the rules and regulations promulgated thereunder,
we hereby submit for filing via direct electronic transmission
the above referenced Registration Statement relating to the
offering of common stock of the Company.
If there are any questions with respect to the enclosed
materials, please do not hesitate to call me or Stephen M. Davis
at (212) 832-8300.
Very truly yours,
/s/ Victoria J. Vitrano
------------------------
Victoria J. Vitrano
Enclosures
97569
