SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT |X|
FILED BY A PARTY OTHER THAN THE REGISTRANT |_|
CHECK THE APPROPRIATE BOX:
| | Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Golf Entertainment, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
|_| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock $0.01 par value per share
Series A Convertible Preferred Stock $0.01 par value per share
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule
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0-11 (set forth the amount on which the filing fee is calculated and state
how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
$NONE
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|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
December 1, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of the Stockholders
of Golf Entertainment, Inc., a Delaware corporation (the "Company"), to be held
at 10:00 a.m. on December 27, 1999 at 2500 Northwinds Parkway, Three Northwinds
Center, Alpharetta, Georgia 30004, including any adjournment or postponement
thereof (the "Annual Meeting"). At the Annual Meeting, you will be asked:
1. To consider and vote upon a proposal to approve and adopt a Purchase
and Sale Agreement dated as of September 24, 1999 between the
Company and Somerset Capital Group, Ltd., a Connecticut corporation,
by which the Company proposes to sell for $3,559,500 in cash, a
Promissory Note and assumption of certain debt, substantially all of
the Company's business equipment leases and its equipment that has
been subject to those leases and the assumption of approximately
$12,500,000 of debt associated with such leases (the "Proposed
Sale"), and to authorize the Company's chief executive officer to
enter into such a transaction, or to make such modifications to the
Proposed Sale, subject to applicable law, as are necessary to
accomplish the sale of the Company's lease portfolio and the
equipment that was and is subject to those leases. A copy of the
Agreements related to the Proposed Sale is attached hereto as
Exhibit A.;
2. To elect three (3) directors for the Company;
3. To consider and act upon a proposal to amend the Company's 1997
Stock Option Plan to increase the number of shares issuable under
the Company's 1997 Stock Option Plan;
4. To approve a change to the Company's Certificate of Incorporation to
provide for a staggered board of directors by dividing the directors
of the Company into three classes, the term of office of those of
the first class to expire at the next annual meeting, the second
class one year thereafter, and the third class two years after the
next annual meeting, and at each annual election held after such
classification and election, directors will be chosen for the full
term of their class of director;
5. To approve Goldstein Golub Kessler LLP as independent auditors for
the Company for the year ended December 31, 1999 and
6. Such other business as may properly come before the Annual Meeting
or any adjournment or adjournments thereof.
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YOUR BOARD OF DIRECTORS HAS DETERMINED THAT THE SLATE OF DIRECTORS BEING
PROPOSED SHOULD BE ELECTED, AND RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR EACH
OF THE PROPOSED DIRECTORS.
YOUR BOARD OF DIRECTORS HAS DETERMINED THAT THE PROPOSED SALE IS FAIR TO
AND IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS, HAS APPROVED AND
ADOPTED THE PROPOSED SALE (SUBJECT TO STOCKHOLDER APPROVAL) AND RECOMMENDS THAT
STOCKHOLDERS VOTE FOR APPROVAL AND ADOPTION OF THE PROPOSED SALE. In arriving at
its recommendation, the Board gave careful consideration to a number of factors,
as described in the Proxy Statement, including the opinion of its financial
adviser, J.P. Turner & Company ("J.P. Turner"), to the effect that the
consideration to be received by the Company is fair, from a financial point of
view, to the Company's stockholders. The written opinion of J.P. Turner is
attached as Exhibit B to the enclosed Proxy Statement. You are urged to read the
opinion in its entirety for a description of the assumptions made, the matters
considered and the procedures followed by J.P. Turner.
DETAILS OF THE PROPOSED SALE APPEAR IN THE ACCOMPANYING PROXY STATEMENT.
PLEASE GIVE THIS MATERIAL YOUR CAREFUL ATTENTION.
YOUR BOARD OF DIRECTORS HAS DETERMINED THAT THE INCREASE OF SHARES
AVAILABLE UNDER THE STOCK OPTION PLAN IS IN THE BEST INTERESTS OF THE BOARD, AS
IS THE INSTITUTION OF A STAGGERED BOARD OF DIRECTORS, AND RATIFICATION OF
GOLDSTEIN GOLUB KESSLER LLP AS THE COMPANY's AUDITORS FOR THE YEAR ENDED
DECEMBER 31, 1999.
Election of the Directors requires a plurality of the shares of common
stock, $0.01 par value per share (the "Common Stock") present in person or by
proxy at the Annual Meeting and entitled to vote thereat. Approval of the
amendment to the Company's Certificate of Incorporation requires the affirmative
vote of a majority of the Company's issued and outstanding shares of Common
Stock. Approval of the other items, except the Proposed Sale, requires the
affirmative vote of a majority of the shares of Common Stock present in person
or by proxy at the Annual Meeting and entitled to vote thereat.
Approval of the Proposed Sale requires the affirmative vote of a majority
of the Company's issued and outstanding shares of Common Stock voting separately
as a class, and the affirmative vote of at least a majority of the issued and
outstanding shares of the Company's Series A Preferred Stock (the "Preferred
Stock") voting separately as a class.
It is important that your shares of Common Stock or Preferred Stock be
represented at the Annual Meeting. Whether or not you plan to attend the Annual
Meeting in person, please complete, sign and date the enclosed proxy card and
mail it promptly using the enclosed, pre-addressed, postage-paid, return
envelope. If you attend the Annual Meeting in person, you may revoke the proxy
given and vote in person if you wish, even if you have previously returned your
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proxy card. Your prompt attention will be greatly appreciated.
Sincerely,
Ronald G. Farrell
Chief Executive Officer
YOUR VOTE IS IMPORTANT.
PLEASE PROMPTLY RETURN YOUR PROXY.
GOLF ENTERTAINMENT, INC.
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 27, 1999
TO THE STOCKHOLDERS OF GOLF ENTERTAINMENT, INC.
NOTICE IS HEREBY GIVEN that an Annual Meeting (the "Annual Meeting") of
Stockholders of Golf Entertainment, Inc., (the "Company"), will be held at 10:00
a.m. on December 27, 1999, at 2500 Northwinds Parkway, Three Northwinds Center,
Alpharetta, GA 30004. At the Annual Meeting, you will be asked:
1. To consider and vote upon a proposal to approve and adopt a Purchase
and Sale Agreement dated as of September 24, 1999 between the
Company and Somerset Capital Group, Ltd., a Connecticut corporation
(the ("Buyer"), by which the Company proposes to sell for $3,559,500
in cash, a Promissory Note and assumption of certain debt,
substantially all of the Company's business equipment leases and the
equipment that has been and is subject to those leases and the
assumption of approximately $12,500,000 of debt associated with such
leases (the "Proposed Sale"), and to authorize the Company's chief
executive officer to enter into such a transaction, or to make such
modifications to the Proposed Sale, subject to applicable law, as
are necessary to accomplish the sale of the Company's lease
portfolio and the equipment it has leased. A copy of the Agreements
related to the Proposed Sale is attached hereto as Exhibit A.;
2. To elect three (3) directors for the Company;
3. To consider and act upon a proposal to amend the Company's 1997
Stock Option Plan to increase the number of shares issuable under
the Company's 1997 Stock Option Plan; and
4. To approve a change to the Company's Certificate of Incorporation to
provide for a staggered board of directors by dividing the directors
of the Company into three classes, the term of office of those of
the first class to expire at the next annual meeting, the second
class one year thereafter, and the third class two years after the
next annual meeting, and at each annual election held after such
classification and election, directors will be chosen for the full
term of their class of director;
5. To approve Goldstein Golub Kessler LLP as independent auditors for
the Company for the year ended December 31, 1999; and
6. Such other business as may properly come before the Annual Meeting
or any adjournment or adjournments thereof.
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The Board of Directors has fixed the close of business on November 15,
1999 as the record date (the "Record Date") for the determination of the holders
of its Common Stock and its Series A Preferred Stock entitled to notice of, and
to vote at, the Annual Meeting or any adjournment thereof. Only stockholders of
record at the close of business on the Record Date are entitled to notice of,
and to vote at, the Annual Meeting.. The stock transfer books will not be
closed. A list of stockholders entitled to vote at the Annual Meeting will be
available for examination at the offices of the Company for ten days prior to
the Annual Meeting.
EACH STOCKHOLDER IS CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN
PERSON. TO ASSURE REPRESENTATION AT THE ANNUAL MEETING, HOWEVER, STOCKHOLDERS
ARE URGED TO DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS
POSSIBLE IN THE POSTAGE PRE-PAID ENVELOPE ENCLOSED FOR THAT PURPOSE. ANY
STOCKHOLDER ATTENDING THE ANNUAL MEETING MAY VOTE IN PERSON EVEN IF HE OR SHE
HAD PREVIOUSLY RETURNED A PROXY CARD.
By Order of the Board of Directors
Ronald G. Farrell
Chief Executive Officer
Alpharetta, Georgia
December 1, 1999
<PAGE>
GOLF ENTERTAINMENT, INC.
THREE NORTHWINDS CENTER, SUITE 175
2500 NORTHWINDS PARKWAY
ALPHARETTA, GEORGIA 30004
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PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting
TIME, DATE AND PLACE OF ANNUAL MEETING
This Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of Golf Entertainment, Inc.
(the "Company") for use at the Annual Meeting of Stockholders to be held at
10:00 a.m. E.S.T. on December 27, 1999 at 2500 Northwinds Parkway, Three
Northwinds Center, Alpharetta, GA 30004, and at any meeting held upon
adjournment or postponement thereof (the "Annual Meeting").
Copies of this Proxy Statement, the attached Notice of Annual Meeting of
Stockholders, and the enclosed form of proxy are first being mailed to the
Company's stockholders on or about December 2, 1999.
PURPOSE OF THE ANNUAL MEETING; RECOMMENDATION OF THE BOARD OF DIRECTORS
At the Annual Meeting, holders of the Company's common stock, $0.01 par
value per share (the "Common Stock") will elect directors for the Company to
serve until the next annual meeting and until their successors have been duly
elected and qualified. The holders of Common Stock will also vote on the
increase of shares available pursuant to the Company's 1997 Stock Option Plan,
the institution of staggered terms for the board of directors, and the
ratification of independent auditors.
Also, the holders of the Company's Common Stock, voting as a class, and
holders of the Company's Class A Preferred Stock (the "Preferred Stock") voting
as a class, will consider and vote upon a proposal to approve and adopt the
Purchase and Sale Agreement dated as of September 24, 1999 and attendant
documents (the "Agreements") between the Company and Somerset Capital Group,
Ltd., a Connecticut corporation (the "Buyer") by which the Company proposes to
sell (the "Proposed Sale") for up to $3,559,500 in cash, a Promissory Note and
assumption of debt, the business equipment leases of the Company (the "Lease
Portfolio") and the equipment that is now, and has been subject to such leases,
and the assumption of approximately $12,500,000 of debt associated with such
leases.
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IF THE PROPOSED SALE IS APPROVED AND COMPLETED, THE COMPANY WILL NO LONGER
BE IN THE BUSINESS OF LEASING EQUIPMENT. IF THAT OCCURS, THE COMPANY EXPECTS TO
CONTINUE TO PURSUE THE BUSINESS OF OWNING AND MANAGING GOLF ENTERTAINMENT
FACILITIES. IF THE PROPOSED SALE IS NOT APPROVED, THE COMPANY EXPECTS TO SEARCH
FOR OTHER PURCHASERS FOR THE COMPANY'S LEASE BUSINESS, OR LIQUIDATE THAT LINE OF
BUSINESS.
The Stockholders will also be asked to approve allowing the chief
executive officer of the Company to have discretion to alter the terms of the
Proposed Sale if, in his discretion, such changes would be necessary to
accomplish the sale of the Lease Portfolio. If the Proposed Sale is approved,
Excel Bank, N.A. and Finova Capital Corporation (collectively, the "Lenders")
have agreed to simultaneously release the Company from certain guarantees that
the Company has previously give to those two Lenders for their loans to LEC
Leasing, Inc. and another subsidiary of the Company. A copy of the Agreements,
has been attached as Exhibit A to this Proxy Statement.
Pursuant to the applicable provisions of the Delaware General Corporation
Law (the "DGCL"), the Company is required to obtain the affirmative vote of a
majority of the outstanding shares of Common Stock prior to the Proposed Sale.
The Company must also obtain approval by a majority of shares of Preferred Stock
outstanding. The Company expects to continue to engage in its golf entertainment
line of business, assuming the Proposed Sale is completed.
1. THE BOARD OF DIRECTORS HAS APPROVED THE PROPOSED SALE (SUBJECT TO STOCKHOLDER
APPROVAL) AND RECOMMENDS A VOTE FOR THE PROPOSED SALE.
2. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION OF
EACH OF THE DIRECTORS NOMINATED.
3. THE BOARD OF DIRECTORS HAS APPROVED THE INCREASE IN THE NUMBER OF SHARES
ISSUABLE PURSUANT TO THE COMPANY'S 1997 STOCK OPTION PLAN AND RECOMMENDS A VOTE
FOR THAT PROPOSAL.
4. THE BOARD OF DIRECTORS HAS APPROVED THE INSTITUTION OF STAGGERED TERMS FOR
THE DIRECTORS, AND RECOMMENDS A VOTE FOR THAT PROPOSAL.
5. THE BOARD OF DIRECTORS HAS APPROVED GOLDSTEIN GOLUB KESSLER LLP AS THE
COMPANY'S INDEPENDENT AUDITORS FOR THE YEAR ENDED DECEMBER 31, 1999, AND
RECOMMENDS A VOTE FOR THAT PROPOSAL.
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RECORD DATE AND OUTSTANDING SHARES
The Board of Directors of the Company has fixed the close of business on
November 15, 1999 as the record date (the "Record Date") for the determination
of stockholders entitled to notice of, and vote at, the Annual Meeting or any
adjournment thereof. Accordingly, only holders of record of the Company's Common
Stock and Preferred Stock at the close of business on the Record Date will be
entitled to vote at the Annual Meeting, either by proxy or in person. As of the
Record Date, there were approximately 200 holders of record of the Common Stock
of the Company and approximately 27 holders of record of the Preferred Stock of
the Company, and 2,641,711 shares of Common Stock and 228,516 shares of the
Preferred Stock were issued and outstanding.
INTENTIONS AND AGREEMENT TO VOTE
The members of the Board of Directors of the Company, who beneficially
hold or have been granted proxies to vote an aggregate of 45.4% of the
outstanding shares of Common Stock of the Company, have agreed to vote their
shares for the election of each of the Directors nominated, and for the Proposed
Sale, and for the other Proposals. As of the Record Date, the total number of
shares of Common Stock which the Directors have indicated their intention to
vote equal 1,198,443 shares of Common Stock. In addition, certain members of
management of the Company holding an additional 44,000 shares of Common Stock
(1.7%) have indicated their intention to vote their shares for the election of
the nominated Directors and for the Proposed Sale and the Agreements, and for
each of the other Proposals. Accordingly, approval of the election of the
nominated Directors and approval of the Proposed Sale by the Company's
stockholders and approval of each of the other Proposals is likely. See
"Ownership of Common Stock by Management."
QUORUM AND VOTING OF PROXIES; REVOCATION
The presence at the Annual Meeting, in person or by proxy of the holders
of a majority of the Company's aggregate shares of issued and outstanding Common
Stock on the Record Date will constitute a quorum at the Annual Meeting. Shares
of Common Stock and Preferred Stock which are represented by properly executed
proxy cards received by the Company at or prior to the Annual Meeting, and not
duly and timely revoked, will be voted according to the instructions indicated
on the proxy card. Unless contrary instructions are given, the proxies will be
voted FOR the election of all nominees named on this Proxy Statement and FOR the
Proposed Sale and FOR approval of each of the other Proposals set forth in the
Notice of Meeting.
Any holder of Common Stock or Preferred Stock has the power to revoke his
or her proxy at any time before it is voted at the Annual Meeting by delivering
a written notice of revocation to the Secretary of the Company, by a duly
executed proxy bearing a later date, or by voting by ballot at the Annual
Meeting.
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Shares represented by proxies that reflect abstentions or include "broker
non-votes" will be treated as shares that are present and entitled to vote for
purposes of determining the presence or absence of a quorum. In the event that a
quorum is not present at the Annual Meeting, it is expected that the meeting
will be adjourned or postponed to solicit additional proxies. The persons named
as proxies with respect to the Annual Meeting may propose and vote for one or
more adjournments of the Annual Meeting to permit further solicitation of
proxies in favor of the proposals.
VOTING RIGHTS
Each share of Common Stock is entitled to one vote on each matter to be
acted upon or which may properly come before the Annual Meeting. Each share of
Preferred Stock is entitled to one vote on the Proposed Sale, which is one of
the Proposals being considered at the Annual Meeting. The shares of Preferred
Stock are considered separately, as a class for purposes of obtaining approval
by a majority of holders of the Preferred Stock to approve and adopt the
Proposed Sale.
VOTE REQUIRED
Directors are elected by a plurality of the shares of Common Stock present
in person or by Proxy and entitled to vote. Only those votes actually cast will
be counted for the purpose of determining whether a particular nominee received
sufficient votes to be elected. Accordingly, abstentions and broker non-votes,
which occur when a broker submits a Proxy card without exercising discretionary
voting authority on a non-routine matter, will not be included in vote totals
and will not be considered in determining the outcome of the vote.
The affirmative vote of the holders of a majority of the issued and
outstanding shares of Common Stock and Preferred Stock on the Record Date,
voting separately in separate classes, is required to approve the Proposed Sale.
This will require the affirmative vote of the holders of a majority of the
issued and outstanding shares of Common Stock on the Record Date, voting as a
class, and a majority of the issued and outstanding shares of Preferred Stock on
the Record Date, voting as a class. Abstentions and "broker non-votes" will have
the effect of votes against approval of the Proposed Sale. A broker non-vote
occurs when a nominee holding shares for a beneficial owner does not vote on a
proposal because the nominee does not have discretionary voting power and has
not received instructions from the beneficial owner.
Approval of the Proposal that amends the Certificate of Incorporation to
implement a staggered board of directors requires the affirmative vote of a
majority of the issued and outstanding shares of Common Stock, whether or not
such shares are voted at the Annual Meeting. The Proposals amending the 1997
Stock Option Plan and ratifying the selection of the independent auditors
requires the affirmative vote of a majority of the shares of Common Stock
present in person or by proxy at the Annual Meeting and entitled to vote on that
Proposal. Abstentions will be counted
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in determining the minimum number of votes required for approval and will,
therefore, have the effect of negative votes. Broker non-votes will not be
counted as votes for or against approval of any other Proposal.
NO DISSENTERS' RIGHTS
Stockholders of the Company who do not approve of the Proposed Sale are
not entitled to appraisal or any other rights with respect to the Proposed Sale
under Delaware law or the Company's Restated Certificate of Incorporation or
Bylaws.
PROXY SOLICITATION AND EXPENSES
The accompanying proxy is being solicited on behalf of the Board of
Directors of the Company. All expenses of this solicitation, including the cost
of preparing, assembling, and mailing this proxy soliciting material and Notice
of Annual Meeting of Stockholders, will be paid by the Company. Additional
solicitation of holders of Common Stock or Preferred Stock by mail, telephone,
facsimile or by personal solicitation may be done by directors, officers and
regular employees of the Company, for which they will receive no additional
compensation. Brokerage houses and other nominees, fiduciaries and custodians
nominally holding shares of Common Stock and Preferred Stock as of the Record
Date will be requested to forward proxy soliciting material to the beneficial
owners of such shares, and will be reimbursed by the Company for their
reasonable out-of-pocket expenses.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
OWNERSHIP OF COMMON STOCK BY MANAGEMENT
The following table sets forth, as of October 15, 1999, certain
information concerning those persons known to the Company, based on information
obtained from such persons, with respect to the beneficial ownership (as such
term is defined in Rule 13d-3 under the Securities Exchange Act of 1934) of
shares (the "Common Stock") of common stock, $0.01 par value, of the Company by
(i) each person known by the Company to be the owner of more than 5% of the
outstanding Common Stock, (ii) each Director of the Company and the nominee for
Director, (iii) each executive officer of the Company earning more than $100,000
during the year ended December 31, 1998 and (iv) all executive officers and
Directors as a group:
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Amount and Nature
Name and Address of of Beneficial Own- Percentage of
Beneficial Owner (1) ership (2) Class (3)
-------------------- ------------------ -------------
LEC Acquisition LLC 749,599 (4) 28.4%
Ronald G. Farrell 200,000 (5) 7.6%
William J. Vargas 46,500 (6) 1.8%
Larry M. Segall 78,844 (7) 3.0%
Derrick Ashcroft 58,650 (8) 2.2%
Richard Falcone 33,500 (9) 1.3%
John Chiste _______ ____
Snow, Becker, Krauss, LLC 135,000 (10) 5.1%
All Directors and
Executive Officers
as a Group (6 persons) 417,494 14.3%
<F1> The address for all individuals identified herein is 2500 Northwinds
Parkway, Three Northwinds Center # 175, Alpharetta, Georgia 30004.
<F2> Unless otherwise noted, the Company believes that all persons named in the
table have sole investment power with respect to all shares of common stock
beneficially owned by them. A person is deemed to be the beneficial owner of
securities that can be acquired by such person within 60 days from the date
hereof upon the exercise of warrants or options or upon the conversion of
convertible securities. Each beneficial owner's percentage ownership is
determined by assuming that options or warrants or shares of Series A
Convertible Preferred Stock that are held by such person (but not those held by
any other person) and which are exercisable or convertible within 60 days from
the date hereof have been exercised or converted.
<F3> Based on 2,641,711 shares of Common Stock outstanding as of October 15,
1999.
<F4> The Company has granted LEC Acquisition LLC a warrant to purchase 6%
Convertible Debentures of the Company in the principal amount of $1,429,170
which are convertible into shares of Common Stock. LEC Acquisition LLC has
purchased 500,000 shares pursuant to such convertible debentures. The number of
shares of Common Stock reflected in the Table does not include the remaining
4,263,901 shares which are issuable to holders of 6% Convertible Debentures upon
conversion. Mr. Farrell, as the managing partner of LEC Acquisition LLC,
exercises voting control over shares held by LEC Acquisition LLC. Additionally,
pursuant to the terms of the operating
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agreement of the LLC, RGF Investments, Inc., a member of the LLC, will receive
and Mr. Farrell may receive shares of Common Stock at such time as the LLC
distributes shares of Common Stock to its members. Mr. Farrell has disclaimed
beneficial ownership of shares owned by LEC Acquisition, LLC.
<F5> Includes options to purchase 200,000 shares of Common Stock granted to Mr.
Farrell which are currently exercisable.
<F6> Includes options to purchase 2,500 shares of Common Stock granted to Mr.
Vargas which are currently exercisable.
<F7> Includes options to purchase 25,000 shares of Common Stock granted to Mr.
Segall which are currently exercisable.
<F8> Includes options to purchase 25,000 shares of Common Stock granted to Mr.
Ashcroft which are currently exercisable. Mr. Ashcroft has not been renominated
as a director of the Company. However, he will remain a director through the end
of the Annual Meeting.
<F9> Includes options to purchase 30,000 shares of Common Stock granted to Mr.
Falcone which are currently exercisable. Mr. Falcone has not been renominated as
a director of the Company. However, he will remain a director through the end of
the Annual Meeting.
<F10> The Company has been informed that Snow Becker Krauss PC has granted a
proxy to Mr. Farrell to vote such shares through July 7, 2000.
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ACTIONS TO BE TAKEN AT THE MEETING
PROPOSAL 1
THE BOARD OF DIRECTORS HAS APPROVED AND RECOMMENDS THAT THE HOLDERS OF
COMMON STOCK AND PREFERRED STOCK ADOPT AND APPROVE THE SALE OF THE LEASE
PORTFOLIO AND RELATED EQUIPMENT PURSUANT TO THE PURCHASE AND SALE AGREEMENT, AND
TO ALLOW THE CHIEF EXECUTIVE OFFICER DISCRETION TO ALTER OR AMEND THE TERMS, AS
PERMITTED BY LAW.
THE PROPOSED SALE
GENERAL
On September 24, 1999, the Company and Somerset Capital Group, Ltd., a
corporation organized under the laws of the State of Connecticut (the "Buyer")
entered into a Purchase and Sale Agreement (the "Purchase Agreement") for the
sale to Buyer of substantially all of the Company's leases of business equipment
(the "Lease Portfolio"), the business equipment which is subject to those leases
and certain other business equipment (collectively, the "Purchased Assets"). The
purchase price is $3,559,500, consisting of cash in the amount of $524,500,
which will be paid at Closing, a promissory note in the amount of $400,000, the
assumption of certain recourse debt, and the assumption or repayment of the
outstanding indebtedness owed to Excel Bank, N.A. and Finova Capital Corporation
(the "Lenders") up to a maximum amount of $2,635,000. The Buyer will also assume
all non-recourse debt (approximately $12,500,000) which encumbers the Leases and
Equipment. The purchase price may be reduced by the extent that the Company
takes in new revenue from June 30, 1999 from leases that were not specifically
excluded, and to the extent that revenue from June 30, 1999 from certain
recurring sources exceeds the sum of $55,000 per month for two months, and fully
for the months thereafter.
In addition, on September 24, 1999, the Company engaged the Buyer as the
managing agent of the Purchased Assets. See MANAGEMENT AGREEMENT below for a
further description of that agreement.
Also, on September 24, 1999, the Company entered into an agreement with
the Buyer whereby the Buyer will assist the Company in disposing of certain
leases of equipment to Net Grocer, Inc. in exchange for 25% of the proceeds from
such sale. The Buyer has also agreed that, to the extent the proceeds of such
sale are insufficient to payoff amounts owed with respect to such leases, the
Buyer will pay 25% of such deficiency, up to $75,000. See AGREEMENT WITH RESPECT
TO NET GROCER LEASES below for a further description of that agreement.
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If the Proposed Sale is completed, the Company will cease its equipment
leasing business.
THE BUYER
The Buyer is Somerset Capital Group, Ltd., based in Bridgeport,
Connecticut. The Buyer is in the business of leasing business equipment, and it,
or its affiliates, have been in that business for 10 years. The Buyer told the
Company that it currently owns or manages on behalf of third parties, equipment
with an original cost in excess of $125,000,000.
Prior to entering into the Agreements, there were no contracts or other
arrangements between the Company and the Buyer. No officer or director of the
Buyer is an officer or director or employee of the Company or any of its
subsidiaries and no officer or director of the Company is or will be after
completion of the Proposed Sale an officer, director or employee of Buyer.
ESTIMATED USE OF PROCEEDS
The net proceeds to the Company from the Proposed Sale, after paying
legal, accounting and other expenses associated with the Proposed Sale, are
expected to be approximately $200,000 in cash and the $400,000 promissory note.
The actual or net proceeds derived from the Proposed Sale may be more or less
than this amount. The net proceeds will be used for general corporate purposes,
including funding a certificate of deposit to Excel Bank, N.A. as collateral for
certain recourse debt not being assumed by the Buyer.
IF THE PROPOSED SALE IS NOT APPROVED
If the Proposed Sale is not approved, the actions of the Company are
expected to be limited by, among other things, the actions of the Lenders or the
Company's other creditors. While the directors of the Company have not
determined what actions the Company would take if the Proposed Sale is not
approved, alternatives for the Company would include continuing its efforts to
sell its Lease Portfolio, subcontracting the management of the Lease Portfolio
to a third party, or ceasing business activities and liquidating the Leases in
the Lease Portfolio and disposing of the equipment associated with the Lease
Portfolio. There is no assurance that the Company will be able to consummate a
disposition transaction with another buyer or that the Company will be able to
consummate an agreement with a third party to manage the Lease Portfolio. In the
interim, however, the Company will be delayed in fully implementing its golf
entertainment line of business.
9
<PAGE>
THE COMPANY
EQUIPMENT LEASING AND RESALE BUSINESS SUBJECT TO THE PROPOSED SALE.
The Company is in the process of entering the business of owning and
operating golf entertainment facilities. Mr. Ronald G. Farrell introduced in
late 1998 a plan to re-orient the Company from its existing equipment leasing
business to one that owns and operates golf courses. On February 17, 1999, the
stockholders of the Company approved the issuance of convertible debentures to
an investment company managed by Mr. Farrell, as well as the change of the
Company's name to Golf Entertainment, Inc. from LEC Technologies, Inc.
The Company's existing, and traditional, line of business has been leasing
business equipment. The equipment generally has been midrange computer systems,
telecommunications systems, system peripherals (terminals, printers,
communications controllers, etc.) and point-of-sale systems. The Company has
provided customers with technical, financial and product alternatives, of
various hardware platforms or manufacturers, and has assisted customers with
equipment upgrades or selling used equipment.
The Company's business has been diversified by customer, customer type,
equipment type, equipment manufacturer, and geographic location of its customers
and subsidiaries. The Company's customers have included "Fortune 1000"
corporations or companies of similar size as well as smaller corporations. A
significant portion of the Company's business has been with long-term, repeat
customers. Three customers of the Company, Tiffany & Co., Bed, Bath & Beyond and
The Hertz Corporation, respectively, accounted for approximately 17.2%, 7.6%,
and 2.3% of consolidated revenues for the year ended December 31, 1998, 15.0%,
9.2% and 3.7% of consolidated revenues for the year ended December 31, 1997 and
25.0%, 12.8% and 7.4% of consolidated revenues for the year ended December 31,
1996.
Unfortunately, the Company's business has not been profitable. For
example, the Company lost $3,202,265 in the year ended December 31, 1998,
recorded net income of $329,000 in the year ended December 31, 1997, and had a
loss of $1,398,316 in the year ended December 31, 1996. (See "SELECTED FINANCIAL
DATA" herein). The losses have generally been caused by the Company's inability
to obtain sufficient capital needed to make the required equity investment in a
sufficient number of leases to achieve profitability, and acquisitions that have
not contributed to the Company's profitability. The Company could not foresee
being able to prevent future losses in the lease business.
PRIOR HISTORY OF THE COMPANY
The Company was founded in 1980 under the name TJ Computer Services, Inc.
("TJ CS").
10
<PAGE>
In 1989, all of the outstanding common stock of TJ CS 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 stockholders approved a
change in the Company's name to LEC Technologies, Inc. to more accurately
reflect the evolving nature of the Company's business. In February 1999, the
Company's stockholders approved a change in the Company's name to Golf
Entertainment, Inc. to reflect the re-orientation of the Company. The Company's
principal address is currently 2500 Northwinds Parkway, Three Northwinds Center,
Suite 175, Alpharetta, Georgia 30004 and its telephone number is (770) 667-9890.
GOLF ENTERTAINMENT BUSINESS.
The Company is proceeding with its announced intention to become involved
in the golf entertainment business by purchasing or leasing existing golf
facilities, and then enhancing value by adding amenities and improving
management and operating systems.
Golf Entertainment plans to develop new golf recreational facilities, and
may acquire other golf related businesses. Facilities will be centered around a
driving range and will provide a variety of golf practice areas for pitching,
putting, chipping and sand play, and will be user-friendly for all levels of
golfer and will appeal to the entire family. The driving range may permit night
play and limited year round use. Each facility will offer instructional programs
for men, women and juniors, and will be staffed with professional instructors.
Most facilities will include a clubhouse that will house a full line pro shop
and a snack bar, a miniature golf course(s) and batting cages. Where feasible,
the facilities will include par-3 or executive-length (shorter than a
regulation-length) golf courses. Golf Entertainment's revenues will be derived
from selling balls to be used on the driving range, charging for rounds of
miniature golf, charging for the use of the batting cages, selling golf
equipment, golf apparel and related accessories through the pro shop, fees for
instructional programs and from food and beverage sales. Golf Entertainment will
seek to realize economies of scale at its facilities through centralized
management information systems, accounting, cash management and purchasing
programs. Golf Entertainment intends to purchase products from a number of
suppliers, including Karsts Manufacturing Company (Ping), Tommy Armor Golf,
Cobra Golf Company, Inc., Masan Golf Company, Callahan Golf Company, Titlest and
Foot Joy.
Golf Entertainment also may seek long-term management contracts to operate
golf courses and golf related facilities.
11
<PAGE>
STOCK MARKET PERFORMANCE
The following table sets forth the high and low closing sales prices per
share of the Company's Common Stock on the NASDAQ Stock Market's Small Cap
Market for the quarterly periods presented. The quotations were retroactively
adjusted to reflect the one-for-four reverse stock split that became effective
on September 15, 1998. The Company has not paid cash dividends on shares of its
Common Stock.
1999 1998 1997
Fiscal Quarter High Low High Low High Low
- -------------- ---- --- ---- --- ---- ---
First Quarter 1.19 0.69 3.63 1.88 5.00 3.52
Second Quarter 2.00 0.69 4.25 2.13 6.00 2.52
Third Quarter 0.97 0.75 2.00 0.63 5.76 3.00
Fourth Quarter -- -- 1.69 0.53 4.76 2.36
All figures in Dollars per share.
The Proposed Sale was publicly announced on September 28 , 1999. The
closing sales price on the business day before that announcement was $0.8125.
SELECTED FINANCIAL DATA
The following financial information is derived from the consolidated
financial statements of the Company and its wholly owned subsidiaries for the
periods indicated and should be read together with the financial statements and
notes thereto contained in the Company's Report on Form 10-K, which is part of
the Company's Annual Report to Shareholders. The information set forth in the
following table should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operation" appearing in the
Company's Report on Form 10-K. All per share data has been retroactively
adjusted to reflect the one-for-four reverse stock split which became effective
on September 15, 1998 and the one-for-eight reverse stock split which became
effective on February 24, 1994.
12
<PAGE>
For the Year Ended December 31, and the six months ended June 30, 1999 (In
thousands, except per share data)
<TABLE>
<CAPTION>
Six Months
Ended 1999 1998 1997 1996 1995 1994
---------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Revenues $ 2,990 $ 30,623 $ 30,715 $ 21,237 $ 18,150 $ 19,768
Net income(loss) (744) (3,202) 330 (1,398) 201 (4,129)
Net income(loss) per
common share (0.45) (2.63) 0.09 (1.80) (0.04) (12.48)
Total assets 22,441 26,381 29,074 27,687 27,285 30,832
Discounted lease
rentals 13,498 15,450 15,906 14,809 16,260 20,718
Total liabilities 20,364 23,929 23,595 22,449 21,410 26.630
Total stockholders'
equity 2,077 2,452 5,478 5,238 5,875 4,202
</TABLE>
For other Financial Data on the Company, please see the Company's Report
on Form 10K.
PRO FORMA FINANCIAL DATA
PRO FORMA CONSOLIDATED SELECTED FINANCIAL DATA
The following unaudited pro forma consolidated selected financial data for
the three years ended December 31, 1998 were derived from the consolidated
financial statements of the Company and its wholly owned subsidiaries for the
periods indicated, adjusted to give pro forma effect to the Proposed Sale as if
the transaction had occurred at the beginning of each period presented. All per
share data has been retroactively adjusted to reflect the one-for-four reverse
stock split which became effective on September 15, 1998. This pro forma
consolidated selected financial data should be read in conjunction with the
description of the Proposed Sale contained in this Proxy Statement and the pro
forma financial data appearing elsewhere herein and the Company's consolidated
financial statements included in the Company's Report on Form 10-K, submitted as
part of the Company's Annual Report.
GOLF ENTERTAINMENT, INC. AND SUBSIDIARIES
13
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED SELECTED FINANCIAL DATA
For the Year Ended December 31,
(In thousands, except per share data)
1998 1997 1996
---- ---- ----
Revenues 18,316 17,647 7,044
(Loss) from continuing operations (3,339) (591) (454)
(Loss) from continuing operations per
common share (2.74) (0.70) (0.75)
Total assets 6,294 9,252 8,494
Discounted lease rentals 678 116 0
Total liabilities 5,105 5,037 4,519
Total stockholders' equity 1,189 4,215 3,975
COMPARATIVE PER SHARE DATA
The following table reflects the historical net income (loss) per share
from continuing operations in comparison with the pro forma net income (loss)
per share from continuing operations after giving effect to the Proposed Sale.
This pro forma consolidated selected financial data should be read in
conjunction with the description of the Proposed Sale contained in this Proxy
Statement and the pro forma financial data appearing elsewhere herein and the
Company's consolidated financial statements included in the Company's Report on
Form 10-K, submitted as part of the Company's Annual Report.
GOLF ENTERTAINMENT, INC. AND SUBSIDIARIES
PRO FORMA COMPARATIVE PER SHARE DATA
1998 1997 1996
---- ---- ----
Net Income (loss) per share:
Pro forma - basic and diluted (2.74) (0.70) (0.75)
Historical - basic (2.63) 0.09 (1.80)
Historical - diluted (2.63) 0.08 (1.80)
PRO FORMA FINANCIAL DATA
The following unaudited pro forma consolidated balance sheet as of June
30, 1999 reflects the historical accounts of the Company as of that date,
adjusted to give pro forma effect to the Proposed Sale as if the transaction had
occurred as of June 30, 1999.
The following unaudited pro forma consolidated statements of operations
for the six months ended June 30, 1999 and for the three fiscal years ended
December 31, 1998 reflect the historical accounts of the Company for those
periods, adjusted to give pro forma effect to the Proposed Sale as if the
transaction had occurred at the beginning of each period presented.
This pro forma consolidated financial data and accompanying notes should
be read in conjunction with the description of the Proposed Sale contained in
this Proxy Statement and the pro forma financial data appearing elsewhere herein
and the Company's consolidated financial statements included in the Company's
Report on Form 10-K, submitted as part of the Company's Annual Report.
The Company believes that the assumptions used in the following statements
provide a
14
<PAGE>
reasonable basis on which to present the pro forma data. The pro forma financial
data is provided FOR INFORMATIONAL PURPOSES ONLY and should not be construed as
indicative of the Company's financial condition or results of operations had the
Proposed Sale been consummated on the dates assumed and are not intended to
project the Company's financial condition on any future date or results of
operations for any future period.
The information contained herein was not prepared with a view toward
compliance with the published guidelines of the SEC or the American Institute of
Certified Public Accountants regarding forward-looking information or generally
accepted accounting principles and was not examined, reviewed or compiled by
independent public accountants and, accordingly, the independent public
accountants do not express an opinion or any other form of assurance with
respect thereto. This section contains "forward looking statements" within the
meaning of the PSLRA.
<PAGE>
GOLF ENTERTAINMENT, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
As of June 30, 1999
-------------------------------------------
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
<S> <C> <C> <C>
ASSETS:
Cash 246,615 269,361 (2) 515,976
Cash - restricted 0 75,000 (2) 75,000
Receivables - net of allowance
for doubtful accounts of
$304,367 at June 30, 1999 584,625 584,625
Notes and accounts receivable
- other 249,833 249,833
Note receivable - Somerset
Capital Group 0 400,000 (2) 400,000
Inventory, net of reserve of
$940,868 at June 30, 1999 1,574,916 1,574,916
Leased assets:
Operating leases, net 10,492,615 (10,492,615)(1) 0
Sales-type and direct financing
leases 7,968,162 (7,445,825)(1) 522,337
Furniture and equipment - net of
accumulated depreciation of
$481,832 at June 30, 1999 911,510 911,510
Other assets 412,288 (219,380)(1) 192,908
---------- ----------- ---------
TOTAL ASSETS 22,440,564 (17,413,459) 5,027,105
========== =========== =========
</TABLE>
<PAGE>
GOLF ENTERTAINMENT, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
As of June 30, 1999
--------------------------------------------
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ----------
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Accounts payable 2,612,963 2,612,963
Accrued liabilities 430,654 (364,067)(1) 66,587
Notes payable and lines of credit 3,698,573 (2,815,139)(1) 883,434
Nonrecourse and recourse discounted
lease rentals 13,498,144 (12,970,802)(1) 527,342
Other liabilities 123,506 123,506
----------- ----------- -----------
TOTAL LIABILITIES 20,363,840 (16,150,008) 4,213,832
----------- ----------- -----------
STOCKHOLDERS' EQUITY:
Series A convertible preferred stock,
$.01 par value; 1,000,000 shares
authorized, 380,000 shares issued;
229,016 shares outstanding 2,290 2,290
Common stock, $.01 par value;
25,000,000 shares authorized,
2,641,492 shares issued and
outstanding at June 30, 1999 26,415 26,415
Additional paid-in capital 10,711,004 10,711,004
Accumulated deficit (8,662,985) (1,263,451)(3) (9,926,436)
----------- ----------- -----------
TOTAL SHAREHOLDERS' EQUITY 2,076,724 (1,263,451) 813,273
----------- ----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY 22,440,564 (17,413,459) 5,027,105
=========== =========== ===========
</TABLE>
<PAGE>
Notes to Unaudited Pro Forma Balance Sheet
(1) To reflect the elimination of assets and liabilities relating to and
resulting from the Proposed Sale of LEC Leasing, Inc.'s lease portfolio.
(2) To reflect the net proceeds resulting from and related to the Proposed
Sale of LEC Leasing, Inc.'s lease portfolio, calculated as follows:
Gross proceeds from sale of net assets $ 3,559,500
Repayment of secured senior indebtedness (2,815,139)
-----------
Net proceeds from sale 744,361
-----------
Promissory note $ 400,000
Restricted cash 75,000
Cash 269,361
-----------
Net proceeds from sale $ 744,361
-----------
(3) To reflect the estimated loss for financial statement purposes resulting
from the Proposed Sale calculated as follows:
Gross proceeds from sale of net assets $ 3,559,500
Netbook value of assets and liabilities
related to and resulting from the Proposed
Sale of LEC Leasing, Inc.'s lease Portfolio (4,822,951)
-----------
Estimated loss on sale $(1,263,451)
-----------
(4) Due to the Company's historical operating losses, the Company has not
reflected a tax benefit related to the estimated loss on sale.
<PAGE>
GOLF ENTERTAINMENT, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended December 31, 1996
--------------------------------------------
Pro Forma
Historical Adjustments Pro Forma
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Operating leases 9,694,905 (9,694,905)(1) --
Sales-type leases 2,721,483 (2,721,483)(1) --
Finance income 285,121 (285,121)(1) --
Direct sales 1,137,686 (1,137,686)(1) --
Other 339,385 (339,385)(1)
----------- ----------- -----------
Total revenues from leasing operations 14,178,580 (14,178,580) --
Distribution sales 7,038,154 0 7,038,154
Other 20,666 (15,076)(1) 5,590
----------- ----------- -----------
Total revenues 21,237,400 (14,193,656) 7,043,744
----------- ----------- -----------
Costs and expenses:
Operating leases 6,881,020 (6,881,020)(1) --
Sales-type leases 2,101,426 (2,101,426)(1) --
Interest expense 1,325,444 (1,325,444)(1) --
Direct sales 1,224,406 (1,224,406)(1) --
Write-down of inventory and
residual values 1,099,089 (1,099,089)(1) --
----------- ----------- -----------
Total costs from leasing operations 12,631,385 (12,631,385) --
Distribution cost of sales 6,190,582 0 6,190,582
S,G & A expenses 3,416,093 (2,179,690)(1) 1,236,403
Interest expense 397,656 (326,493)(2) 71,163
----------- ----------- -----------
Total costs and expenses 22,635,716 (15,137,568) 7,498,148
----------- ----------- -----------
Net income (loss) (1,398,316) 943,912 (454,404)
=========== =========== ===========
</TABLE>
<PAGE>
GOLF ENTERTAINMENT, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended December 31, 1997
-------------------------------------------
Pro Forma
Historical Adjustments Pro Forma
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Operating leases 8,618,861 (8,618,861)(1) --
Sales-type leases 2,108,977 (2,108,977)(1) --
Finance income 475,140 (475,140)(1) --
Direct sales 1,882,638 (1,882,638)(1) --
Other --
----------- ----------- -----------
Total revenues from leasing operations 13,085,616 (13,085,616) --
Distribution sales 17,612,586 0 17,612,586
Other 16,422 0 16,422
----------- ----------- -----------
Total revenues 30,714,624 (13,085,616) 17,629,008
----------- ----------- -----------
Costs and expenses:
Operating leases 5,641,067 (5,641,067)(1) --
Sales-type leases 1,685,134 (1,685,134)(1) --
Interest expense 1,326,894 (1,326,894)(1) --
Direct sales 1,806,939 (1,806,939)(1) --
Write-down of inventory and
residual values 75,331 (75,331)(1) --
----------- ----------- -----------
Total costs from leasing operations 10,535,365 (10,535,365) --
Distribution cost of sales 14,686,695 0 14,686,695
S,G & A expenses 4,549,586 (1,167,313)(1) 3,382,273
Interest expense 613,447 (448,659)(2) 164,788
----------- ----------- -----------
Total costs and expenses 30,385,093 (12,151,337) 18,233,756
----------- ----------- -----------
Net income (loss) 329,531 (934,279) (604,748)
=========== =========== ===========
</TABLE>
<PAGE>
GOLF ENTERTAINMENT, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended December 31, 1998
--------------------------------------------
Pro Forma
Historical Adjustments Pro Forma
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Operating leases 6,869,524 (6,869,524)(1) --
Sales-type leases 3,388,533 (3,388,533)(1) --
Finance income 792,499 (792,499)(1) --
Direct sales 1,350,945 (1,350,945)(1) --
Other --
----------- ----------- -----------
Total revenues from leasing operations 12,401,501 (12,401,501) --
Distribution sales 18,214,475 0 18,214,475
Other 7,040 0 7,040
----------- ----------- -----------
Total revenues 30,623,016 (12,401,501) 18,221,515
----------- ----------- -----------
Costs and expenses:
Operating leases 4,473,301 (4,473,301)(1) --
Sales-type leases 1,947,882 (1,947,882)(1) --
Interest expense 1,341,652 (1,341,652)(1) --
Direct sales 1,479,925 (1,479,925)(1) --
Write-down of inventory and
residual values 1,205,029 (1,205,029)(1) --
----------- ----------- -----------
Total costs from leasing operations 10,447,789 (10,447,789) --
Distribution cost of sales 15,330,762 0 15,330,762
S,G & A expenses 7,206,266 (1,348,716)(1) 5,857,550
Interest expense 840,464 (430,425)(2) 410,039
----------- ----------- -----------
Total costs and expenses 33,825,281 (12,226,930) 21,598,351
----------- ----------- -----------
Net income (loss) (3,202,265) (174,571) (3,376,836)
=========== =========== ===========
</TABLE>
<PAGE>
GOLF ENTERTAINMENT, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Six Months Ended June 30, 1999
------------------------------------------
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ----------
<S> <C> <C> <C>
Revenues:
Operating leases 2,990,097 (2,990,097)(1) --
Sales-type leases 303,712 (303,712)(1) --
Finance income 490,579 (490,579)(1) --
Direct sales 135,317 (135,317)(1) --
Other -- 0
---------- ---------- ----------
Total revenues from leasing operations 3,919,705 (3,919,705) --
Distribution sales 1,327,113 0 1,327,113
Golf operations 125,676 125,676
Other (1,555) (1,555)
---------- ---------- ----------
Total revenues 5,370,939 (3,919,705) 1,451,234
---------- ---------- ----------
Costs and expenses:
Operating leases 1,599,700 (1,599,700)(1) --
Sales-type leases 193,160 (193,160)(1) --
Interest expense 626,577 (626,577)(1) --
Direct sales 136,285 (136,285)(1) --
Write-down of inventory and
residual values -- 0 --
---------- ---------- ----------
Total costs from leasing operations 2,555,722 (2,555,722) --
Distribution cost of sales 1,308,043 0 1,308,043
Golf operations 22,069 22,069
S,G & A expenses 1,971,429 (713,964)(1) 1,257,465
Interest expense 257,664 (241,725)(2) 15,939
---------- ---------- ----------
Total costs and expenses 6,114,927 (3,511,411) 2,603,516
---------- ---------- ----------
Net loss (743,988) (408,294) (1,152,282)
========== ========== ==========
</TABLE>
<PAGE>
Notes to Unaudited Pro Forma Statements of Operations
(1) To reflect the elimination of lease revenues, lease expenses, and selling,
general and administrative expenses related to the lease assets being
sold.
(2) To reflect the elimination of interest expense directly related to the
lease operations of LEC Leasing, Inc.
<PAGE>
THE COMPANY'S REASONS FOR THE PROPOSED SALE
BACKGROUND OF THE PROPOSED SALE
In late 1998 Mr. Farrell was introduced to the Company. After preliminary
discussions with the directors during which the directors indicated that they
were considering possible alternatives with regard to the equipment leasing
business, Mr. Farrell told the directors that he was interested in redirecting
the Company into owning and operating golf entertainment facilities. The Company
had experienced significant losses in its existing equipment leasing business
since 1997. Mr. Farrell also indicated that he would be willing to invest
capital in the Company's golf entertainment business.
In 1998, Mr. Farrell was appointed a director of the Company and employed
as the Chief Executive Officer of the Company. In December, 1998, the Company
issued to a limited liability company managed by Mr. Farrell, a warrant to
purchase convertible debentures of the Company convertible into shares of Common
Stock of the Company, subject to shareholder approval, of the issuance of common
stock upon exercise of the convertible debentures. On February 17, 1999, the
stockholders of the Company approved the issuance of common stock to the limited
liability company managed by Mr. Farrell upon conversion of the convertible
debentures, and the change of the name of the Company to Golf Entertainment,
Inc. from LEC Technologies, Inc.
In January, 1999, the Company engaged J.P. Turner & Company, LLC to advise
it concerning various strategic alternatives relating to its equipment leasing
business. In early 1999, the Company negotiated a sale of its equipment leasing
business to a company owned and controlled by Michael F. Daniels, a former chief
executive officer and director of the Company. Mr. Daniels' company was
subsequently unable to complete the sale.
15
<PAGE>
The Company then re-opened its search for qualified purchasers. The
Company entered into serious negotiations with two purchasers. Of those two
purchasers, Somerset Capital Group, Ltd. (the "Buyer"), presented the strongest
bid.
The Buyer examined the Lease Portfolio, and agreed to purchase the Lease
Portfolio as of June 30, 1999. The Agreements allocate the revenue, expenses and
other economic incidents of the Leases in the Lease Portfolio as of June 30,
1999.
THE BOARD OF DIRECTORS' DECISION
The Company's Board has determined that the Proposed Sale is in the best
interest of the Company and its Stockholders. Accordingly, the Board unanimously
approved the Proposed Sale, and directed that the Proposed Sale be submitted to
the stockholders of the Company for approval, with a recommendation to approve
such Proposed Sale.
As described herein, the board's decision to approve the Proposed Sale
followed months of exploring and analyzing the advantages and disadvantages of
redirecting the Company's focus. In making its recommendation to the
stockholders of the Company, the Board considered a number of factors, including
those material factors noted immediately below which were determined by the
Board to favor a decision to consummate the Proposed Sale and those set forth in
the subsequent paragraph which disfavored a decision to consummate the Proposed
Sale.
REASONS FOR THE PROPOSED SALE
The Directors determined that, in light of the significant losses from the
Company's equipment leasing business and the sizeable indebtedness of the
Company form that business, that it was in the best interest of the Company that
its equipment leasing business be sold and the Company should develop a golf
entertainment business. As of June 30, 1999, the Company had an accumulated
deficit of $8,662,985. For information regarding the Company's net income (loss)
for the last five (5) fiscal years, see SELECTED FINANCIAL DATA above. In
particular, in the fiscal year ended December 31, 1998 the Company lost
$3,202,000, or $2.63 per share, on revenue of $30,623,000, and in the six months
ended June 30, 1999, the Company lost $744,000, or $0.45 per share, on revenue
of $5,371,000.
The Directors believe that the Company will be unable to end the losses
from the equipment leasing business.
The Directors agreed to the Proposed Sale to repay indebtedness incurred
in connection with the Company's equipment leasing business and to generate
capital for the development of the golf entertainment business. The Proposed
Sale will generate approximately $200,000 in cash (after
16
<PAGE>
deducting estimated expenses of $315,000), plus $400,000 in payments from the
Buyer over the next three (3) years. These funds will be used to pay ongoing
expenses of the Company, including funding a certificate of deposit to Excel
Bank, N.A. as collateral for certain recourse debt not being assumed by the
Buyer. Furthermore, the Buyer is assuming approximately $12,500,000 of debt
associated with the Company's business equipment leases and approximately
$2,600,000 of senior secured debt.
The Directors agreed to the Proposed Sale, and the attendant termination
of the Company's guarantees, to reduce the Company's liabilities. As of June 30,
1999, the Company had guaranteed $1,366,725 of debt owed by its subsidiaries to
Excel Bank, N.A. and $1,448,414 of debt owed by its subsidiaries to Finova
Capital Corporation. That debt and the Company's guarantee will be eliminated,
or at a minimum, substantially reduced by the Proposed Sale. As of September 30,
1999, the balance owed on that debt was approximately $2,600,000. The Proposed
Sale will reduce the Company's liabilities by approximately $15,100,000.
The Board of Directors agreed to the sale to Somerset Capital Group, Ltd.
after contacting five prospective buyers, including a prospective buyer that was
owned and operated by Michael Daniels, a former chief executive officer and
director of the Company. The offer made by the Buyer is higher than any other
firm offer received. The Board decided to accept the Buyer's offer because none
of those other prospective buyers was able to demonstrate to the Board
sufficient resources or commitment to completing a transaction to make a solid,
binding, closable offer for the stock or assets of the Company on terms more
beneficial to the Company than those contained in the Agreements.
The Board of Directors believes that approval and consummation of the
Proposed Sale will enhance shareholder value by reducing liabilities, raising
capital for the Company's new business activities and terminating the Company's
equipment leasing business that has proved unprofitable since inception.
The Company's Board also considered the following potentially negative
factors in its deliberations concerning the Proposed Sale:
The Board of Directors considered as a negative factor the fact that the
Buyer is not paying the entire purchase price in cash at closing. Instead, the
Buyer is executing a $400,000 promissory note for a portion of the purchase
price. To satisfy the Board of Directors' concern, the Board of Directors has
relied on the Buyer's audited financial statements dated December 31, 1998 and
various credit references, including those of Excel Bank, N.A.
The board of directors did not quantify or assign any relative weight to
the various factors considered. Ultimately, the Board of Directors felt that the
risk of these negative factors was diminished by the specific language of the
Agreements, and that the negative factors were substantially outweighed by the
advantages of the Proposed Sale.
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THE FAIRNESS OPINION
J.P. Turner & Company has delivered to the Board of Directors its written
opinion dated October 27, 1999 (the "Fairness Opinion"), to the effect that,
based upon, and subject to various considerations set forth in the Fairness
Opinion, as of such date, the Purchase Price to be received by the Company is
fair, from a financial point of view, to the Company's stockholders. No
limitations were imposed by the Company's Board of Directors with respect to the
investigations made and the procedures followed by J.P. Turner in rendering the
Fairness Opinion. In this regard, the Company has paid J.P. Turner $63,500 and
100,000 shares of the Company's Common Stock, which have certain restrictions
regarding transfer.
THE FULL TEXT OF THE FAIRNESS OPINION, WHICH SETS FORTH THE ASSUMPTIONS
MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED, LIMITATIONS ON AND THE SCOPE OF
THE REVIEW IN RENDERING SUCH OPINION, IS ATTACHED TO THIS PROXY STATEMENT AS
APPENDIX B AND IS INCORPORATED BY REFERENCE HEREIN. THE FAIRNESS OPINION IS
ADDRESSED TO THE COMPANY'S BOARD OF DIRECTORS AND ADDRESSES THE FAIRNESS OF THE
PURCHASE PRICE TO THE COMPANY'S STOCKHOLDERS FROM A FINANCIAL POINT OF VIEW AND
IT DOES NOT ADDRESS ANY OTHER ASPECT OF THE AGREEMENT NOR DOES IT CONSTITUTE A
RECOMMENDATION TO ANY HOLDER OF THE COMPANY'S CAPITAL STOCK AS TO HOW TO VOTE AT
THE ANNUAL MEETING. THE SUMMARY OF THE FAIRNESS OPINION SET FORTH IN THIS PROXY
STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH
OPINION. HOLDERS OF THE COMMON STOCK AND PREFERRED STOCK ARE ENCOURAGED TO
CAREFULLY READ THE FAIRNESS OPINION IN ITS ENTIRETY.
In connection with the Fairness Opinion, J.P. Turner contracted with SLF
Valuation Services, Inc. ("SLFV") to evaluate the Proposed Sale. Between them,
they (i) reviewed certain internal financial statements and other financial and
operating data pertaining to the Company's lease portfolio to be sold that were
prepared by management, including such information contained in publicly
available financial statements of the Company; (ii) discussed the past and
current operations, financial condition and prospects of the Company's existing
business with management; (iii) reviewed the financial performance of certain
publicly traded companies deemed relevant; (iv) reviewed the Agreements; (v)
discussed with experts in the industry the valuation and sale of comparable
companies and (vi) performed such other analyses as was deemed appropriate.
The Fairness Opinion was necessarily based on economic market and other
conditions as in effect on, and the information made available as of June 30,
1999, and information on the
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Transaction, Net Assets and Purchaser, as defined in the Fairness Opinion,
through October 26, 1999. Although subsequent developments may affect the
Fairness Opinion, no party has any obligation to update, revise or reaffirm the
opinion.
The following summarizes the material portions of the financial analyses
performed in connection with the Fairness Opinion. Three valuation methods were
initially consider, as follows:
Adjusted Book Value Approach
This method entails totaling the fair market value of the assets, and then
subtracting liabilities. This method is primarily used where the underlying
value of the tangible net assets constitute the prime determinant of corporate
worth.
Earnings/Cash Flow Technique
This method entails estimating fair market value by considering some
multiple of the Company's earnings, or the Company's net cash flow. This method
is primarily used where the company being valued is a going concern with fairly
regular after-tax earnings or cash flow. Value is effectively the present value
of future expected after-tax earnings or cash flow.
Market Comparison Technique
This method compares other companies similar to the one being evaluated to
determine the value that a purchaser might pay for the company being valued.
This method is used where there is a market for comparable companies, and where
it is difficult to find exactly comparable companies, this method is less
useful.
Selection of the Appropriate Approach
The adjusted book value approach was selected to determine the fair market
value of the Company, based on the Company's asset make-up, and its financial
results. In particular, the Company's history of losses suggested that there was
no justification for a positive outlook. For example, the Company relies too
heavily on one customer (representing 43% of the Company's active lease
business), and it has been unable to achieve a positive interest rate
differential between its cost of borrowing and the rate of return on its
equipment leases. These results made it difficult to use an earnings/cash flow
valuation method.
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Over fifty publicly traded companies that lease durable goods were
analyzed, but none of those companies was comparable, either because of the
equipment that they leased, or their size, structure or profitability. Because
there were no adequate comparables, the market value approach could not work.
The fairest valuation method was to analyze the adjusted book value of the
Company.
Calculation of Value
The valuation was based on the adjusted book value of the Company. In so
doing, extensive meetings were held with the Company's officers. The Company's
lease portfolio was analyzed, specifically including the residual value of the
equipment leased, and potential developments in the high technology equipment
market that might effect the value of that equipment. It was determined that it
was appropriate to reduce the value of the equipment for additional obsolescence
and for the estimated return that an investor would require on assets of this
nature, but did not otherwise adjust the value of the Company's assets or
liabilities.
General
The foregoing approaches were considered, and consideration was given to
various qualitative factors relating to the Company. Notwithstanding the general
reliance on the adjusted book value method, the analysis must be looked at as a
whole, and separating factors, without considering all factors, could create a
misleading view of the process and analysis.
THE AGREEMENTS
The following is a brief summary of certain provisions of the Agreements.
THIS DESCRIPTION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE COMPLETE TEXT
OF THE AGREEMENT, A COPY OF WHICH IS ATTACHED TO THIS PROXY STATEMENT AS
APPENDIX A AND INCORPORATED HEREIN BY REFERENCE. CAPITALIZED TERMS APPEARING
BELOW AND ELSEWHERE IN THIS PROXY STATEMENT THAT ARE NOT OTHERWISE DEFINED
HEREIN HAVE THE MEANINGS SET FORTH IN THE AGREEMENTS. ALL STOCKHOLDERS ARE URGED
TO CAREFULLY READ THE AGREEMENT IN ITS ENTIRETY. WHENEVER PARTICULAR SECTIONS OR
DEFINED TERMS ARE REFERRED TO, IT IS INTENDED THAT SUCH SECTIONS AND DEFINED
TERMS SHALL BE INCORPORATED BY REFERENCE.
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PURCHASE PRICE
The Company expects to be paid $3,559,500 in cash, a Promissory Note and
payoff and assumption of certain debt for the Proposed Sale. As currently
structured, the Company will be paid by assumption of non-recourse debt totaling
approximately $12,500,000; by delivery of a Promissory Note in the principal
amount of up to $400,000 payable in 30 equal installments, with interest on the
unpaid balance at the rate of 10% per annum (the "Promissory Note"); by cash
proceeds of a loan from Excel Bank, N.A. in the amount of $2,635,000, which will
be used entirely for paying obligations to Excel Bank, N.A. and Finova Capital
Corporation; and by a payment of up to $524,500 in cash. It is possible that the
purchase price will need to be adjusted downward at closing based on the status
of the Lease Portfolio. The purchase price (cash portion first) would be
adjusted downward if the Company used proceeds it received from the sale of
lease portfolio assets subsequent to June 30, 1999 for any purpose other than
reduction of debt owed Excel Bank, N.A. and/or Finova Capital Corporation.
MANAGEMENT AGREEMENT
As part of the Proposed Sale, the Buyer began managing the Lease Portfolio
on October 1, 1999. Under the Management Agreement, the Buyer will collect
payments on the leases and remit those payments to the Company's Lenders, and be
paid 20% of the revenue generated from the Lease Portfolio during the term of
the Management Agreement for these services, plus another 3% of the amount so
paid. Notwithstanding the foregoing, the Buyer has further agreed that, if the
Proposed Sale is consummated, the Buyer will not be entitled to any compensation
under the Management Agreement.
AGREEMENT WITH EXCEL BANK, N.A.
As part of, and a condition to, the Proposed Sale, Excel Bank, N.A.,
currently a lender to the Company, will lend money on a secured basis to the
Buyer to enable the Buyer to consummate the Proposed Sale. Excel Bank, N.A. also
will require, among other things, that Finova Capital Corporation, another
lender to the Company, be paid off, that Excel Bank, N.A. have a first position
security interest in the leases and equipment sold, that the Company pledge to
Excel Bank, N.A. a certificate of deposit in the amount of $75,000, which will
later be increased to $300,000, and that Excel Bank, N.A. be paid $50,000 in
fees plus its expenses, and receive warrants for the purchase of 35,000 shares
of the Company's Common Stock. The certificate of deposit will secure repayment
of debt associated with certain leases that are not being purchased by the
Buyer.
ASSUMPTION OF LIABILITIES
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The Buyer will assume approximately $12,500,000 of non-recourse debt
associated with the Lease Portfolio. These amounts represent discounted lease
rentals owed by lease customers.
SECURITY
The Buyer is not giving security for its payments under the Promissory
Note.
REPRESENTATIONS AND WARRANTIES
Pursuant to the Purchase Agreement, the Company represents and warrants to
the Buyer, among other things, that the Company has the authority to enter into
the Proposed Sale and that the Company is the owner of the Leases in the Lease
Portfolio, and the Equipment subject to such leases, that there are no
undisclosed liabilities or encumbrances affecting the Lease Portfolio, that the
Company has been operated in the ordinary course of its business, and that there
is no litigation that would affect the transaction.
INDEMNIFICATION
The Purchase Agreement provides that the Company will after the closing of
the Proposed Sale indemnify, defend and hold harmless the Buyer, its successors
and assigns and all directors, officers, employees and representatives of each
of them from and against any and losses, damages, costs, liabilities and claims
of any kind which such persons may at any time suffer or incur, or become
subject to, as a result of or in connection with: (i) any breach or inaccuracy
of any of the representations and warranties made by the Company in or pursuant
to the Purchase Agreement; (ii) any failure by the Company to carry out,
perform, satisfy and discharge any of its covenants, agreements, undertakings,
liabilities or obligations under the Purchase Agreement or under any of the
documents and materials delivered by the Company pursuant to the Purchase
Agreement; and (iii) the Company's rejection of any previous offer to sell its
Lease Portfolio to any party other than the Buyer.
In addition, the Buyer will after the closing of the Proposed Sale
indemnify, defend and hold harmless the Company, its successors and assigns and
all directors, officers, employees and representatives of each of them from and
against any and losses, damages, costs, liabilities and claims of any kind which
such persons may at any time suffer or incur, or become subject to, as a result
of or in connection with: (i) any breach or inaccuracy of any of the
representations and warranties made by the Buyer in or pursuant to the Purchase
Agreement; (ii) any failure by the Buyer to carry out, perform, satisfy and
discharge any of its covenants, agreements, undertakings, liabilities
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or obligations under the Purchase Agreement or under any of the documents and
materials delivered by the Buyer pursuant to the Purchase Agreement; and (iii)
the ownership or service of the Lease Portfolio by Buyer from and after the
Closing Date.
CONDITIONS OF THE PROPOSED SALE
The Proposed Sale is conditioned upon, among other things, (i) receipt of
the Fairness Opinion of J.P. Turner, (ii) approval of the Proposed Sale by the
Company's Board of Directors, (iii) approval of the Proposed Sale by a majority
of the outstanding shares of Common Stock voting as a class and a majority of
the outstanding shares of Preferred Stock voting as a class, (iv) the Buyer
obtaining approval for a loan for the Proposed Sale, and (v) the Buyer's
satisfaction that all of the Seller's representations and warranties have been
satisfied.
COVENANT NOT TO COMPETE
The Company has agreed for a period of 30 months after the closing that it
will not, directly or indirectly or through any other entity, engage in the
equipment leasing business or sell business equipment, except that the Company
can complete sales of existing equipment not covered by the Purchase Agreement.
TERMINATION
The Purchase Agreement may be terminated if the conditions are not met
prior to closing. Closing was originally scheduled for November 19, 1999, but
the date of closing has been extended to no later than December 31, 1999. The
Purchase Agreement does not provide for liquidated damages to either party if
the Purchase Agreement is terminated without a closing.
PAYOFF OF THE COMPANY'S LENDERS
The Company expects that the proceeds from the Proposed Sale will be
sufficient to payoff all, or substantially all, of the amount owed to Excel
Bank, N.A., and Finova Capital Corporation (the "Lenders"), and that the Company
will be released from its guarantees to those institutions. However, the Lenders
have not provided the Company with final payoff amounts. If the proceeds from
the Proposed Sale are insufficient to payoff the indebtedness to the Lenders
(and other funds are not available to payoff the remaining amount due), the
Lenders would retain first position liens on the equipment and the Lease
Portfolio, in which case, unless the Lenders waive or release their liens, the
Company would not be able to meet all conditions precedent for the Proposed
Sale. Without a waiver of such conditions precedent by the Buyer, the Proposed
Sale would not be consummated. If the Lenders are not paid in full, the Lenders
might also waive or release their liens (allowing consummation of the Proposed
Sale), but not release the Company from the unpaid
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indebtedness and guarantees for that amount.
Currently, the Company is in default of its obligations to the Lenders.
Neither Lender has agreed with the Company to forebear enforcement of their
rights or remedies under their respective loan agreements pending the Proposed
Sale. It is anticipated that, if the Proposed Sale is not concluded, the Lenders
will foreclose on the equipment and the Lease Portfolio, with no assurance that
the proceeds from any liquidation sale would be sufficient to payoff the
Lenders.
OTHER ISSUES
REGULATORY APPROVALS
Consummation of the Agreement does not require any regulatory approvals
other than the federal filings required under applicable U.S. securities laws in
connection with this Proxy Statement.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
THIS SECTION IS A SUMMARY OF THE MATERIAL FEDERAL INCOME TAX CONSEQUENCES TO THE
COMPANY AND THE STOCKHOLDERS OF THE COMPANY FROM THE PROPOSED SALE, EXCEPT WHERE
SPECIFICALLY NOTED, THIS SUMMARY DOES NOT APPLY TO STATE OR LOCAL TAXES. THE
SUMMARY IS BASED UPON THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, JUDICIAL
DECISIONS, UNITED STATES TREASURY DEPARTMENT REGULATIONS PROMULGATED THEREUNDER,
ADMINISTRATIVE RULINGS OF THE UNITED STATES TREASURY DEPARTMENT, AND OTHER
INTERPRETATIONS THEREOF, ANY OF WHICH COULD BE CHANGED AT ANY TIME. NO RULING
HAS BEEN OR WILL BE REQUESTED FROM THE INTERNAL REVENUE SERVICE WITH RESPECT TO
ANY CONSEQUENCES RESULTING FROM THE PROPOSED SALE.
The Proposed Sale will not have any federal income tax consequences to the
Company's stockholders because no distributions of sale proceeds will be made to
the stockholders.
Upon consummation of the Proposed Sale, the Company will recognize taxable
income of approximately $3,300,000. However, the Company expects that it will
not have to pay federal income taxes due to available net operating loss carry
forwards.
ACCOUNTING TREATMENT
The Proposed Sale will be treated as an asset sale, from an accounting
point of view.
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EXPENSES AND OTHER FEES
Each party will bear its own expenses in respect of the Proposed Sale,
whether or not consummated.
CERTAIN CONSIDERATIONS
The Company is refocusing its business to the golf entertainment business.
Some of the relevant considerations associated with that business, and the
Company's position in that business include the following:
REMAINING LIABILITIES
The Company believes that the Proposed Sale will result in the payoff or
assumption of all, or substantially all of the Company's debt to Excel Bank,
N.A. and Finova Capital Corporation, the Company's principal lenders. However,
the Buyer has agreed to payoff or assume a maximum of $2,635,000 in liabilities
to the Company's principal lenders. If such liabilities exceed that amount, the
Company will have to pay such liabilities from other sources to consummate the
Proposed Sale. Also, because the transaction is structured as an asset sale, and
not a sale of stock, the Company remains liable to other creditors of the
Company, and the Company's subsidiaries remain liable for their existing
obligations. Also, the Company and its subsidiaries have other remaining
creditors who will not be paid in full from the sale of the lease portfolio, and
such creditors could seek payment from the Company or its subsidiaries. At least
one such creditor has obtained a judgment against certain of the Company's
subsidiaries that has not been paid.
ADDITIONAL CAPITAL REQUIREMENTS
To develop the Company's golf entertainment business it will need
substantially more cash than it will receive from the Proposed Sale. The Company
will have to obtain those funds from public or private sources of equity
investment or debt issuances, or combinations thereof. Failure to raise
additional capital will adversely affect the Company's fiscal strength. If the
Company cannot raise additional funds, it will be limited in its ability to
acquire or develop golf facilities, will have greater dependence on the
performance of a lesser number of golf facilities and will have less capital to
enable it to withstand economic downturns.
BUSINESS STRATEGY; POSSIBLE LACK OF SUITABLE LOCATIONS
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The Company's ability to generate revenue, net income and operating cash
flow depends upon its success in acquiring or leasing and developing golf
recreational facilities at suitable locations upon satisfactory terms. This in
turn depends on a number of factors, including the availability and cost of
suitable locations, the availability of adequate financing for the Company, the
hiring, training and retention of skilled management and other personnel, the
ability to obtain the necessary governmental permits and approvals and third
party consents, the competitive environment and other factors, some of which are
beyond the Company's control. There can be no assurance that suitable golf
facility acquisition or lease opportunities will be available or that the
Company will be able to consummate acquisition or leasing transactions on
satisfactory terms.
The development of golf recreational facilities is subject to all the
delays and uncertainties associated with development and construction projects
generally, such as the performance by construction contractors, costs of
materials, labor and energy, inflation, adverse weather, adverse subsurface
conditions and other factors that could cause construction and expansion and
renovation costs to exceed estimates. If necessary, the Company will hire a
construction manager to oversee construction activities at facilities acquired
by the Company and on acquired sites. The acquisition and development of golf
recreational facilities may become more expensive in the future to the extent
that competition for sites increases. The future success and growth of this
business will depend on, among other things, the ability to acquire suitable
operating properties and development sites and to obtain required financing for
future acquisitions and development of golf facilities. There can be no
assurance that the Company will be able to acquire suitable sites or facilities
or to obtain financing on favorable terms.
COMPETITION
The golf industry is highly competitive and includes competition from
other golf facilities, traditional golf ranges and golf courses, as well as
other recreational pursuits. Many potential competitors have considerably
greater financial and other resources, experience and customer recognition than
the Company will have. The golf entertainment business will also experience
competition in its day-to-day operations from existing and newly constructed
golf and recreational facilities. Such competition may adversely impact the cash
flow from its golf facilities.
DEPENDENCE ON DISCRETIONARY CONSUMER SPENDING
The amount spent by consumers on discretionary items, such as family,
leisure and entertainment activities, like those to be offered by golf
recreational facilities acquired, developed and operated by the Company, have
historically been dependent upon levels of discretionary income, which may be
adversely affected by general economic conditions. A decrease in consumer
spending on golf will have an adverse effect on the Company's financial
condition and results of operations.
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DEPENDENCE ON KEY EMPLOYEES; RECRUITMENT OF ADDITIONAL PERSONNEL
The continuing services of Mr. Farrell are considered essential to the
successful operation of the Company's golf entertainment business. Currently,
the Company has an employment contract with Mr. Farrell through December, 2003.
If Mr. Farrell should die or withdraw, or be removed from his position with the
Company, there can be no assurance that a capable successor could be found.
Accordingly, the Company will seek to hire a person with experience and
knowledge in the golf entertainment business who will be responsible for the
operation of the business. As golf centers are acquired and developed, those
facilities will need to be staffed. There can be no assurances that the Company
will be able to attract or retain persons to serve in such capacities.
BOARD OF DIRECTORS' RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED SALE, AND
AUTHORIZE THE COMPANY'S CHIEF EXECUTIVE OFFICER TO ALTER THE TERMS OF THE
PROPOSED SALE AS MAY BE REQUIRED TO COMPLETE THE SALE OF THE COMPANY'S LEASE
PORTFOLIO.
PROPOSAL 2: ELECTION OF DIRECTORS
NOMINEES TO THE BOARD OF DIRECTORS
Three directors will be elected at the 1999 Annual Meeting to hold office
for the term until the next Annual Meeting and until their successors are duly
elected and qualified. However, if the stockholders approve Proposal 4 herein
regarding institution of staggered terms for directors, Mr. Segall will be put
in the first class of directors, and he will be elected for a term until the
next annual meeting and until his successor is duly elected and qualified. Mr.
Chiste will be put in the second class of directors, and he will be elected for
a term until the annual meeting after the next annual meeting and until his
successor is duly elected and qualified. Mr. Farrell will be put in the third
class of directors, and he will be elected for a term until two annual meetings
after the next annual meeting and until his successor is duly elected and
qualified.
The enclosed proxy provides a means for the holders of Common Stock to
vote for all of the nominees listed therein, to withhold authority to vote for
one or more of such nominees, or to withhold authority to vote for all of such
nominees. Each properly executed proxy received on time for the Annual Meeting
will be voted as specified therein, or if a stockholder does not specify how
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the shares represented by his or her proxy are to be voted, such shares will be
voted for the persons listed below. In the event that any nominee for Director
should become unavailable to serve, it is intended that votes will be cast,
pursuant to the enclosed form of proxy, for such substitute nominee as may be
nominated by the Company. At this time, the Board of Directors knows of no
reason why any nominee may be unable to serve. There is no arrangement or
understanding between any director or nominee and any other person pursuant to
which such person was selected as a director or nominee.
NOMINEES FOR DIRECTORS
The Nominees for Directors of the Company at November 1, 1999, their ages,
their titles, their years of employment with the Company, and their principal
occupations for the past five years are given bellow. The following table sets
forth information concerning the nominees:
Name Age Position
- ---- --- --------
Ronald G. Farrell 56 Chairman of the Board, Chief Executive Officer
and President
John Chiste 43 Director
Larry Segall 44 Director
BIOGRAPHICAL INFORMATION ABOUT NOMINEES
Ronald G. Farrell. Mr. Farrell, age 56, has served as the Chairman of the
Board, and Chief Executive Officer of the Company since November 20, 1998, and
as President since August 16, 1999. From July, 1992 through December, 1996, Mr.
Farrell served as Chairman and CEO of Computer Integration Corp., a publicly
traded company. Mr. Farrell is the founder, Chairman and President of R.G.
Farrell, Inc. and RGF Investments, Inc., both founded in 1985. These companies
are wholly owned by Mr. Farrell and are engaged in financial consulting in
connection with private placements, public offerings, venture capital
transactions and leveraged buyout and roll-up transactions. During the ten years
from 1985 to 1995, Mr. Farrell directed the acquisition of fourteen companies
and was instrumental in four public offerings.
John Chiste. Mr. Chiste, age 43, is nominated for the first time to the
Company's Board of Directors. Mr. Chiste has been the Treasurer and Chief
Financial Officer Bluegreen Corp. since November, 1997. From May, 1994 to
October, 1997, he was the Chief Financial Officer of Computer Integration Corp.
Prior to that, Mr. Chiste was Chief Financial Officer of Sports/Leisure, Inc.
from May, 1992 to December, 1992. Prior to his employment by Sports/leisure,
Inc., Mr. Chiste was employed by Ernst & Young, LLP for 13 years, most recently
as a Senior Manager. Mr. Chiste is a Certified Public Accountant.
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Larry Segall. Mr. Segall, age 44, has served as a Director of the Company
since November, 1989. Mr. Segall has been the Chief Financial Officer of Vitamin
Shoppe Industries, Inc. since October, 1997, and the Chief Financial Officer,
Secretary and Treasurer of its new e-commerce online subsidiary, Vitamin
Shoppe.com, Inc. since June, 1999. From 1985 to 1996, Mr. Segall held a number
of financial management positions and was Vice President, Treasurer and
Controller of Tiffany & Co. In 1997, he was Senior Vice President -
Merchandising Planning for Tiffany & Co. and was responsible for worldwide
strategic sales, merchandising and product planning, including product
development, product sourcing/replenishment, internal manufacturing, inventory
management and distribution resource planning. From 1983 to 1985 he was the
Controller of Murijani International Ltd. From 1977 to 1983 he was employed by
Deloitte & Touche LLP.
INFORMATION ABOUT THE BOARD OF DIRECTORS,
COMMITTEES OF THE BOARD AND
EXECUTIVE OFFICERS
MEETINGS OF THE BOARD OF DIRECTORS AND INFORMATION REGARDING COMMITTEES
The Board of Directors of the Company held a total of thirteen meetings
during the fiscal year ended December 31, 1998. From December 31, 1998 to
September 30, 1999, the Board of Directors held another five meetings. All
incumbent directors attended at least 85 percent of those meetings and of its
committees of the Board on which they sit.
The Board of Directors has the following committees: the Compensation
Committee (to be comprised of Messrs. Chiste and Segall if they are elected);
the Audit Committee (to be comprised of Messrs. Chiste and Segall if they are
elected); and the Stock Option Plan Committee (comprised of Messrs. Chiste and
Segall if they are elected).
The Compensation Committee is charged with periodically reviewing the
compensation of the Company's officers and employees and recommending
appropriate adjustments. The Compensation Committee met one time during the
fiscal year 1998, and once from the end of that year to September 30, 1999.
During fiscal year 1998, Messrs. Segall, Ashcroft, and Falcone were members of
the Compensation Committee.
The Audit Committee recommends engagement of the Company's independent
accountants and is primarily responsible for reviewing their performance and
their fees and for reviewing and evaluating with the independent auditors and
management the Company's accounting policies and its system of internal
controls. The Audit Committee met once during fiscal year 1998, and once from
the end of that year to September 30, 1999. During fiscal year 1998, Messrs.
Segall and Ashcroft were members of the Audit Committee.
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The Committee also recommends to the Board of Directors the appointment of
the Company's independent auditors. At least annually, the Committee reviews the
services performed and the fees charged by the independent auditors. The
independent auditors have direct access to the Committee and may discuss any
matters that arise in connection with their audits, the maintenance of internal
controls and any other matters relating to the Company's financial affairs. The
Committee may authorize the independent auditors to investigate any matters that
the Committee deems appropriate and may present its recommendations and
conclusions to the Board.
The Stock Option Plan Committee administers the Company's Stock Option
Plans and makes awards under such plans. The Stock Option Committee met once
during fiscal year 1998. During fiscal year 1998, Messrs. Segall, Daniels and
Ashcroft were members of the Stock Option Plan Committee.
SECTION 16 (A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to section 16 of the Securities Exchange Act of 1934, the
Company's Directors and executive officers and beneficial owners of more than
ten percent of the Company's Common Stock are required to file certain reports,
within specified time periods, indicating their holding of and transactions in
the Common Stock and derivative securities. Based solely on a review of such
reports provided to the Company and written representations from such persons
regarding the necessity to file such reports, the Company is not aware of any
failures to file reports or report transactions in a timely manner during the
Company's fiscal year ended December 31, 1998.
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the
compensation paid and/or accrued to each of the Company's executive officers for
services rendered in all capacities to the Company during the three years ended
December 31, 1998. No other executive officer received annual compensation in
excess of $100,000 in any of the three fiscal years ended December 31, 1998.
This information includes the dollar value of base salaries, bonuses, awards,
the number of stock options granted and certain other compensation, if any,
whether paid or deferred.
(A) SUMMARY COMPENSATION TABLE
30
<PAGE>
<TABLE>
<CAPTION>
Name of Individual and Other Annual
Principal Position Fiscal Year Salary ($) Bonus ($) Compensation ($)
- ------------------ ----------- ---------- --------- ----------------
<S> <C> <C> <C> <C>
Ronald G. Farrell 1998 -- -- --
Chairman & CEO
Michael F. Daniels 1998 $326,385 -- $ 34,573 (2)
President (1) 1997 $336,519 -- $181,653 (2)
1996 $273,077 -- $258,619 (2)
William J. Vargas 1998 $123,417 -- --
CFO & Secretary 1997 $128,871 -- --
1996 $115,341 -- --
</TABLE>
(A) SUMMARY COMPENSATION TABLE (CONT'D)
Restricted Securities All Other
Name of Individual and Fiscal Stock Underlying Annual
Principal Position Year Awards($) Options/SARs(#) Compensation
- ------------------ ---- --------- --------------- ------------
Ronald G. Farrell 1998 -- -- --
Chairman & CEO
Michael F. Daniels 1998 -- 200,000(4) 2,500(3)
President 1997 -- --(4) 4,750(3)
1996 -- 62,500(4) 4,750(3)
William J. Vargas 1998 -- 77,500(4) 1,825(3)
CFO & Secretary 1997 -- --(4) 4,750(3)
1996 -- 17,500(4) 1,900(3)
31
<PAGE>
(1) Michael F. Daniels served as the Company's Chairman & CEO during the
period January 1, 1996 through November 20, 1998. Mr. Daniels resigned as
President of the Company in March, 1999.
(2) Consists of commission income based upon realization of excess residual
values related to leases entered into prior to May 15, 1993.
(3) Represents Company matching contribution to 401(k) Profit Sharing Plan.
(4) In January of 1997, August of 1997 and January of 1998, Messrs. Daniels
and Vargas were granted stock options to purchase an aggregate of 404,000
shares and 163,750 shares, respectively. On December 8, 1997, Messrs.
Daniels and Vargas voluntarily rescinded their respective 1997 option
grants, together with all grants received prior thereto, with the
exception of 147,531 stock options received by Mr. Daniels during 1993. In
October 1998, Messrs. Daniels and Vargas voluntarily rescinded their
respective 1998 option grants, to the extent that they had not been
exercised, except for 2,500 stock options received by Mr. Vargas. Messrs.
Daniels and Vargas received no compensation for such rescissions. All
share amounts have been retroactively adjusted to reflect the one-for-four
reverse stock split that was effective September 15, 1998.
(B) OPTION/SAR GRANTS IN LAST FISCAL YEAR
Number of Percent of
Securities Total
Underlying Options/SAR's Exercise
Options/SAR's Granted to or Base Expiration
Name Granted (#) In Fiscal Year Price ($/Sh) Date
- ---- ----------- -------------- ------------ ----------
Ronald G.
Farrell -- -- -- --
Michael F.
Daniels 200,000(1) 40.7% $ 0.10 1/30/03
William J.
Vargas 77,500(1) 15.8% $ 0.10 1/30/03
32
<PAGE>
(1) In October 1998, Messrs. Daniels and Vargas voluntarily rescinded any
stock option grants made in 1998, to the extent that they had not been
exercised, with the exception of 2,500 stock option grants made to Mr.
Vargas.
(C) AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION/SAR VALUES
Number of Value of
Securities Unexercised
Underlying In-The-Money
Options/SAR's Options/SAR's
At Fiscal At Fiscal
Shares Year End(#) Year End($)
Acquired Value Exercisable/ Exercisable/
Name On Exercised Realized Unexercisable Unexercisable
- ---- ------------ -------- ------------- -------------
Ronald G.
Farrell N/A N/A N/A N/A
Michael F.
Daniels 100,000 $53,000 14,531/-- $5,340/--
33
<PAGE>
William J.
Vargas 35,000 $18,550 2,500/-- $1,469/--
The last sales price for the Company's Common Stock on the Nasdaq SmallCap
Market on December 31, 1998 was $0.6875.
(D) DIRECTORS COMPENSATION
Each non-employee director of the Company is paid $1,000 per month. In addition,
each director is entitled to participate in the Company's stock option plans.
The Company does not pay its directors any additional fees for committee
participation.
(E) EMPLOYMENT CONTRACTS
Ronald G. Farrell serves as the Company's Chief Executive Officer under an
employment agreement dated November 30, 1998 and effective January 1, 1999
through December 31, 2003, as amended. Mr. Farrell's compensation under such
agreement was originally $240,000 through December 31, 1999, and increases by
10% per year thereafter, but was amended in May, 1999 to an annual salary of
$360,000 through December 31, 1999, with annual 10% increases, due to increased
responsibility associated with the Company's golf operations. In addition, Mr.
Farrell is eligible to receive an annual bonus, payable quarterly, based on
Company performance. Such bonus may not exceed Mr. Farrell's base salary for
such respective fiscal year. Mr. Farrell was also granted the option to purchase
a total of 300,000 shares of the Company's Common Stock, vesting in 100,000
share increments on each of December 31, 1999, December 31, 2000 and December
31, 2001. Pursuant to such employment agreement, if Mr. Farrell should die
during the term thereof, a death benefit equal to eighteen months salary
(currently $540,000) shall be paid to his estate. Mr. Farrell may be terminated
for cause, and if so, the Company will pay ten (10) days' salary, and any amount
that has already been accrued.
Michael F. Daniels served as the Company's President under an employment
agreement dated October 1, 1998 and initially set to expire September 30, 2001.
Mr. Daniels resigned as President of the Company in March, 1999, and was
terminated from all remaining positions with the Company and its subsidiaries in
May, 1999. Mr. Daniels' compensation under his employment agreement was set at
$350,000 per annum and he was eligible for a bonus based on company performance.
In previous employment agreements, Mr. Daniels was entitled to receive
commissions equal to 25% of the net proceeds realized by the Company in excess
of the residual value of equipment subject to leases which commenced prior to
May 15, 1993 and for which Mr. Daniels was the lead salesperson. Certain
promissory notes executed by Mr. Daniels also provide that the
34
<PAGE>
Company can offset against any amounts to be paid to Mr. Daniels any amount that
Mr. Daniels owes the Company. The Company has not paid Mr. Daniels since his
termination in May, 1999. Mr. Daniels has commenced an arbitration proceeding
against the Company for payment of amounts allegedly due under his employment
agreement, and the Company is vigorously defending that matter.
William J. Vargas has served as the Company's Chief Financial Officer,
Treasurer and Secretary under an employment agreement dated July 1, 1995 and
originally expiring June 30, 2000. Mr. Vargas' compensation under such agreement
is $135,000 per annum. Mr. Vargas has indicated his intention to resign from the
Company effective December 1, 1999, and will remain on a contract basis
thereafter, if necessary, to perform certain services for the Company.
REPORT OF THE BOARD OF DIRECTORS.
The Board of Directors is responsible for reviewing all elements of the
total compensation program for all officers of the Company and sets compensation
packages for each of the Company's officers. Although certain executive officers
served on the Company's Board, they did not participate in any decisions
regarding their own compensation as an executive officer.
COMPENSATION POLICIES.
The policy of the Company and the guidelines followed by the Board are
intended to achieve the following objectives:
Assist the Company in attracting and retaining talented and well-qualified
executives;
Reward performance and imitative;
Be competitive with other companies in the Company's chosen field;
Be significantly related to accomplishments and the Company's short-term
and long-term successes, particularly measured in terms of growth in net
operating income and cash flow from operations; and
Encourage executives to achieve meaningful levels of ownership of the
Company's stock.
The Company's compensation practices embody the principles that
compensation should be set to link management's interests to those of long-term
stockholders and to encourage management to enhance shareholder value.
Accordingly, the Company encourages meaningful stock ownership by management,
including participation in various benefit plans providing for stock or stock
options.
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<PAGE>
The Company's approach to base compensation levels is to offer competitive
salaries in comparison with prevailing market practices. The Board examines
market compensation levels and trends. Additionally, for this purpose, the Board
also considers the pool of executives who are currently employed in similar
positions in public companies in similar fields.
At present, the compensation of the executive officers of the Company
consists of salary, incentive bonuses, stock options and participation in
medical benefit plans. The Company maintains five stock option plans covering an
aggregate of 671,895 shares of Common Stock . In 1998, stock options for 511,250
shares of Common Stock were issued to its executive officers and directors.
The Board has approved employment agreements with certain executive
officers (see, Employment Agreements) establishing, among other things, future
compensation. According to the agreements, compensation will be paid in cash,
Common Stock, or a combination thereof, taking into account the Company's cash
flow requirements and any other aspect of the Company's financial condition
deemed relevant by the Chairman and Chief Executive Officer, or, in the case of
the Chairman and Chief Executive Officer, by the Board.
The Board annually evaluates executive officer salary levels. This annual
review considers the prior year's performance, decision-making responsibilities
of each position and the experience, and team-building skills of each incumbent.
The Board views performance as the single most important measurement factor.
Under Section 162(m) of the Internal Revenue Code of 1986, as amended, the
Company may not deduct certain forms of compensation in excess of $1,000,000
paid to certain of the Company's highest paid executive officers. The Board
believes that, while there may be circumstances in which the Company's interest
are best served by maintaining flexibility whether or not the compensation is
fully deductible under Section 162 (m), it is generally in the Company's best
interest to comply with Section 162(m).
CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S COMPENSATION.
In determining the compensation of the Chairman and Chief Executive
Officer, the Board takes into account various qualitative and quantitative
indicators of corporate and individual performance in determining the level and
composition of compensation. While the Board considers more or less equally such
performance measures as growth in revenues, market capitalization, net operating
income, cash flow from operations, and earnings, the Board does not apply any
specific quantitative formula in making compensation decisions. The Board also
values achievements that may be difficult to quantify and recognizes the
importance of qualitative factors.
The base salary for Ronald G. Farrell, the Company's Chairman and Chief
Executive Officer, was originally $240,000, with 10% increases annually, to be
paid in cash, Common Stock, or combination thereof, taking into account the
Company's cash flow requirements and other aspects of the Company's financial
condition. The base salary was amended in May, 1999 to $360,000 per
36
<PAGE>
annum, with 10% annual increases to reflect Mr. Farrell's greater
responsibility, particularly associated with the Company's golf business. In
addition, Mr. Farrell was granted Common Stock and stock options as provided in
his employment agreement (see, Employment Contracts).
Mr. Farrell's base salary was established in light of his duties and the
scope of his responsibilities in the context of the policies and guidelines
enumerated above. In the Board's evaluation of total compensation for Mr.
Farrell, appropriate weight will be given to his leadership in growth of the
Company's revenues, in obtaining financing for such growth, in returning the
Company to profitability, in increasing shareholder value and in accomplishing
the Company's short-term and long-term objectives.
By: The Board of Directors
Ronald G. Farrell
Larry M. Segall
L. Derrick Ashcroft
Richard D. Falcone
PERFORMANCE CHART
The following graph assumes an investment of $100 on December 31, 1993 and
thereafter compares the yearly percentage change in cumulative total return to
shareholders of the Company with an industry peer group (consisting of Amplicon,
Inc., Condisco, Inc. and Electro Rent Corp.) and a broad market index (the CRSP
Total Return Index for the Nasdaq Stock Market (U.S.)). The graph shows
performance on a total return (dividend reinvestment) basis. The graph lines
connect calendar year-end dates and do not reflect fluctuations between those
dates.
The following table was represented as a line graph in the printed material.
5-YEAR CUMULATIVE TOTAL RETURN SUMMARY
Description 1993 1994 1995 1996 1997 1998
- ----------- ---- ---- ---- ---- ---- ----
Golf Entertainment, Inc. 100.00 74.54 46.35 29.30 18.64 4.88
CRSP Total Return Index 100.00 97.75 138.26 170.01 208.58 293.21
Peer Group Only 100.00 107.01 144.26 182.76 282.03 266.67
The Compensation Committee report on Executive Compensation and the
Performance Graph above shall not be deemed "soliciting material" or
incorporated by reference into any of the Company's filings with the Securities
and Exchange Commission by implication or by any reference
37
<PAGE>
in any such filing to this Proxy Statement.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Mr. Segall, a director of the Company, is currently the Chief Financial
Officer of Vitamin Shoppe Industries, Inc. and was formerly an officer of
Tiffany & Co., two of the Company's equipment leasing customers. Mr. Falcone, a
director of the Company, was formerly Chief Operating Officer of NetGrocer,
Inc., one of the Company's equipment leasing customers. Neither Mr. Segall nor
Mr. Falcone receive any cash or other remuneration from the Company other than
their fees as directors and participation in the Company's stock option plans.
The Company believes that the terms of its lease arrangements with Vitamin
Shoppe Industries, Inc. and Tiffany & Co. (which are subject to the Purchase
Agreement) and its lease agreement with Netgrocer (which is subject to an
agreement with the Buyer) are fair and have been reached on an arm's length
basis. Mr. Falcone has not been renominated as a director of the Company.
Mr. Daniels has borrowed as much as $250,000 from the Company, the
repayment of which is to include payment of interest of at least 8% on the
unpaid balance. The amounts owed became due upon his termination from the
Company. Mr. Daniels is in default of his obligation to repay the Company.
LEC Acquisition, LLC, a Company controlled by Mr. Farrell, has a warrant
to purchase up to $1,429,170 of the Company's convertible debentures. The
convertible debentures are convertible into shares of the Company's Common Stock
at $0.30 per share.
BOARD OF DIRECTORS' RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES.
PROPOSAL 3
THE BOARD OF DIRECTORS PROPOSES THAT THE COMPANY AMEND ITS EXISTING 1997
STOCK OPTION PLAN TO INCREASE TO 1,250,000 THE NUMBER OF SHARES OF COMMON STOCK
ISSUABLE PURSUANT TO THE 1997 STOCK OPTION PLAN.
THE STOCK OPTION PLAN
38
<PAGE>
The Company's 1997 Stock Option Plan allows the Company to issue up to
250,000 shares of Common Stock to qualified employees. The Board of Directors
has decided that it is in the Company's best interests to authorize the Company
to issue another 1,000,000 shares of Common Stock pursuant to the 1997 Stock
Option Plan and has amended the 1997 Stock Option Plan accordingly, subject to
stockholder approval. This amendment to the 1997 Stock Option Plan is being
submitted for stockholder approval so that, stock options for all or a portion
of the additional shares granted by the Company may be considered incentive
stock options as defined in Section 422 of the Internal Revenue Code of 1986, as
amended.
The Board of Directors will consider including the stock options provided
for in Mr. Farrell's Employment Agreement under the 1997 Stock Option Plan.
THE PURPOSE FOR THE INCREASED AUTHORIZATION
The Board of Directors expects to use the increased number of shares
issuable pursuant to the Company's Stock Option Plan to attract and retain
qualified personnel for the Company's golf entertainment business.
BOARD OF DIRECTORS'S RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO INCREASE THE
NUMBER OF SHARES OF COMMON STOCK ISSUABLE PURSUANT TO THE COMPANY'S 1997 STOCK
OPTION PLAN.
PROPOSAL 4
THE BOARD OF DIRECTORS HAS APPROVED AND RECOMMENDS THAT THE HOLDERS OF
COMMON STOCK ADOPT AN AMENDMENT TO THE CERTIFICATE OF INCORPORATION OF THE
COMPANY TO PROVIDE THAT THE DIRECTORS OF THE COMPANY BE DIVIDED INTO THREE
CLASSES, THE TERM OF OFFICE OF THOSE OF THE FIRST CLASS TO EXPIRE AT THE ANNUAL
MEETING NEXT ENSUING, THE TERM OF OFFICE OF THOSE OF THE SECOND CLASS TO EXPIRE
AT THE ANNUAL MEETING THEREAFTER, AND THE TERM OF OFFICE OF THOSE OF THE THIRD
CLASS TO EXPIRE AT THE ANNUAL MEETING TWO YEARS FROM THIS ANNUAL MEETING. AT
EACH ANNUAL ELECTION HELD AFTER SUCH CLASSIFICATION AND ELECTION, DIRECTORS
SHALL BE CHOSEN FOR A FULL TERM, AS THE CASE MAY BE, TO SUCCEED THOSE WHOSE
TERMS EXPIRE.
GENERAL
39
<PAGE>
The Company's by-laws currently provide for the Company to have no less
than three (3) and no more than seven (7) directors. Currently, directors are
elected at Annual Meetings of Stockholders and serve until their successors are
elected and qualified.
If this Proposal is approved, the directors will be divided into three
classes, each class containing as even of number of directors as is possible.
The first class will be elected to serve until their successor is duly elected
and qualified at the next annual meeting. The second class will be elected to
serve until their successor is duly elected and qualified at the annual meeting
after the next annual meeting. The third class will be elected to serve until
their successor is duly elected and qualified at the second annual meeting after
the next annual meeting. Thereafter, each director will be elected for a term of
three (3) years.
If this Proposal is not approved, all directors will continue to be
elected for only a one year term.
This Proposal, to be adopted, must be approved by the affirmative vote of
a majority of the issued and outstanding shares of Common Stock of the Company,
whether or not such shares are voted at the Annual Meeting or not.
POTENTIAL POSITIVE AND NEGATIVE EFFECTS
The effect of this Proposal will be to allow directors to serve for three
(3) year terms. The board of directors believes that staggered terms for
directors promotes continuity and stability in the Company's board of directors,
since at any time a majority of the directors on the Board generally will have
had previous experience as directors. Staggered terms have the effect, however,
of making it more difficult to change the composition and obtain control of the
Board in a relatively short time since, at least two annual meetings of the
stockholders, instead of one annual meeting, is generally required to replace a
majority of the directors on the Board. Since directors will serve for
three-years, rather than one-year terms, stockholders will generally also have
to wait longer to replace a director, even when the only reason for replacement
is dissatisfaction with the director's performance. This will make it more
difficult for a dissident shareholder, or acquirer to take over the Board, and
may make the Company less attractive to any such acquirer.
AS APPLIED THIS YEAR
Mr. Segall will be elected in the first class of directors, to serve until
his successor is elected and qualified at the next annual meeting of the board
of directors. Mr. Chiste will be elected in the second class of directors, to
serve until his successor is elected and qualified at the annual meeting
following the next annual meeting of the board of directors. Mr. Farrell will be
elected in the third class of directors, to serve until his successor is elected
and qualified at the second annual meeting following next annual meeting of the
board of directors. Therefore, Mr. Segall is expected to serve
40
<PAGE>
one year after this annual meeting, with his successor to serve for three years.
Mr. Chiste is expected to serve two years after this annual meeting, with his
successor to serve for three years. Mr. Farrell is expected to serve for three
years after this annual meeting, with his successor to serve for three years.
BOARD OF DIRECTORS'S RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO AMEND THE
COMPANY'S CERTIFICATE OF INCORPORATION TO DIVIDE THE BOARD OF DIRECTORS INTO
THREE CLASSES, AND TO INSTITUTE STAGGERED THREE YEAR TERMS FOR DIRECTORS.
PROPOSAL 5
RATIFICATION OF THE APPOINTMENT OF GOLDSTEIN GOLUB KESSLER LLP AS
INDEPENDENT AUDITORS FOR THE COMPANY FOR THE YEAR ENDED DECEMBER 31, 1999.
The Board of Directors of the Company has reappointed Goldstein Golub
Kessler LLP as the Company's independent auditors to audit the Company's books
and records for the year ended December 31, 1999, subject to ratification by the
stockholders. Goldstein Golub Kessler LLP has completed the audit for the year
ended December 31, 1998, and the results are included in the Company's Report on
Form 10 - K, a copy of which is included as part of the Company's annual report.
The Board of Directors has also asked Goldstein Golub Kessler LLP to assist in
preparing the federal tax returns for the Company and its subsidiaries.
Representatives of Goldstein Golub Kessler LLP are expected to be present
at the Annual Meeting with the opportunity to make a statement if they so
desire. Such representatives are expected to be available to respond to
appropriate questions.
BOARD OF DIRECTORS'S RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF GOLDSTEIN GOLUB KESSLER LLP AS THE INDEPENDENT AUDITORS FOR THE
COMPANY FOR THE YEAR ENDED DECEMBER 31, 1999.
41
<PAGE>
OTHER MATTERS
The Board of Directors is not aware of any business to be presented at the
Annual Meeting except the matters set forth in the accompanying Notice and
described in this Proxy Statement. Unless otherwise directed, all shares
represented by Proxies will be voted in favor of the Proposals described in this
Proxy Statement. If any other matters come before the Annual Meeting, the
persons named in the accompanying Proxy will vote on those matters in accordance
with their judgment on such matters.
MISCELLANEOUS
DEADLINE FOR STOCKHOLDER PROPOSALS
The Company presently anticipates that its next Annual Meeting of
Stockholders to shareholders, consisting of a letter to shareholders from the
Chief Executive Officer of the Company and a copy of the Company's Annual Report
on Form 10 - K will be held in fall of 2000. Any proposal by a Stockholder of
the Company intended to be presented at the 2000 Annual Meeting of Stockholders
is required to be received by the Company at its principal place of business not
later than June 30, 2000 for inclusion in the Company's Proxy Statement and form
of proxy relating to that meeting.
ANNUAL REPORT
Concurrently herewith, the Company is sending a copy of its Annual Report
to Shareholders, consisting of a letter to shareholders from the Chief Executive
Officer of the Company and a copy of the Company's Annual Report on Form 10-K to
each stockholder entitled to vote at the Annual Meeting. A copy of the Annual
Report on Form 10-K, filed with the Securities and Exchange Commission, may be
obtained for nominal fee by writing to Stockholder Services, Golf Entertainment,
Inc., 2500 Northwinds Parkway, Three Northwinds Center, Suite 175, Alpharetta,
Georgia 30004.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Proxy Statement contains forward-looking statements including
statements containing the words "believes," "anticipates," "expects," "intends"
and words of similar import. These statements involve known and unknown risks
and uncertainties that may cause the Company's actual results or outcomes to be
materially different from those anticipated and discussed herein. Important
factors that the Company believes might cause such differences include: (1)
concentration
42
<PAGE>
of the Company's assets into one industry segment, (2) the seasonal nature of
the golf business and weather risks associated with the golf business; (3)
actions of competitors, (4) the need for funding, and substantial leveraging of
the Company; (5) restrictions that may be imposed by any lender to the Company;
(6) environmental regulation; (7) the Company's dependence on key personnel; (8)
control of the Company by existing shareholder(s); and (9) volatility of the
stock price.
There is no assurance that any assumption or projection will, in fact, be
realized. In assessing forward-looking statements contained herein, stockholders
are urged to read carefully all cautionary statements contained in this Proxy
Statement and in those other filings with the Commission.
By Order of the Board of Directors
Ronald G. Farrell
Chairman of the Board of Directors
December 1, 1999
43
<PAGE>
Exhibits
- --------
Exhibit A - Purchase and Sale Agreement and Management Agreement and
Agreement with Respect to Net Grocer, Inc. Leases dated
September 24, 1999 by and between the Company and Somerset
Capital Group, Ltd.
Exhibit B - Fairness Opinion of J. P. Turner
44
<PAGE>
EX-A
PURCHASE AND SALE AGREEMENT
PURCHASE AND SALE AGREEMENT
by and among
SOMERSET CAPITAL GROUP, LTD.
and
LEC LEASING, INC.
and
GOLF ENTERTAINMENT, INC.
dated this 24th day of September, 1999
<PAGE>
TABLE OF CONTENTS
ARTICLE I.....................................................................1
DEFINITIONS...................................................................2
1.01 AGREEMENT...........................................................2
1.02 CLOSING DATE........................................................2
1.03 CUSTOMER............................................................2
1.04 EQUIPMENT...........................................................2
1.06 RESERVED............................................................2
1.07 LEASE OR LEASES.....................................................2
1.09 RESERVED............................................................3
1.10 PERSON..............................................................3
1.11 RESERVED............................................................3
1.12 PURCHASE PRICE......................................................3
1.13 RECORDS.............................................................3
1.14 RECURRING REVENUE...................................................3
1.15 REVENUE, GENERAL....................................................4
2.01 PURCHASE AND SALE...................................................4
2.02 PAYMENT ON CLOSING..................................................4
2.03 PAYMENT OF LOANS....................................................6
ARTICLE III...................................................................6
REPRESENTATION AND WARRANTIES OF SELLER AND OF GOLF...........................6
3.01 ORGANIZATION AND OWNERSHIP OF ASSETS................................6
3.02 AUTHORIZATION, ENFORCEABILITY.......................................7
3.03 NO ADVERSE CONSEQUENCES.............................................7
3.04 TITLE TO LEASE PORTFOLIO: LIENS AND ENCUMBRANCES....................8
3.05 THE LEASES AND LEASE PORTFOLIO......................................8
3.06 NO LITIGATION: LABOR DISPUTES, COMPLIANCE WITH LAWS.................8
3.07 NO BROKERS..........................................................9
3.08 BUSINESS IN THE ORDINARY COURSE.....................................9
3.09 REPRESENTATIONS AS OF THE CLOSING DATE..............................9
3.10 REPRESENTATIONS BY GOLF.............................................9
3.11 REPRESENTATIONS BY SELLER AND GOLF.................................10
ARTICLE IV...................................................................10
REPRESENTATIONS AND WARRANTIES OF PURCHASER..................................10
4.01 ORGANIZATION.......................................................10
4.02 AUTHORIZATION: ENFORCEABILITY......................................10
4.03 BROKERS............................................................11
4.04 PURCHASER'S REPRESENTATIONS........................................11
4.05 REPRESENTATIONS AS OF THE CLOSING DATE.............................11
ARTICLE V....................................................................11
CERTAIN MATTERS PENDING THE CLOSING..........................................11
5.01 SELLER'S OBLIGATIONS PENDING CLOSING...............................11
5.02 EXCEPTION TO SELLER'S OBLIGATIONS PENDING CLOSING..................13
5.03 PURCHASER'S OBLIGATIONS PENDING CLOSING............................13
1
<PAGE>
ARTICLE VI...................................................................13
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASER.........................13
6.01 COMPLIANCE WITH AGREEMENT..........................................14
6.02 PROCEEDINGS AND INSTRUMENTS SATISFACTORY...........................14
6.03 REPRESENTATIONS AND WARRANTIES.....................................14
6.04 NO ADVERSE CHANGE..................................................14
6.05 DELIVERIES AT CLOSING..............................................14
6.06 LOAN CONTINGENCY...................................................14
ARTICLE VII..................................................................15
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER............................15
7.01 COMPLIANCE WITH AGREEMENT..........................................15
7.02 PROCEEDINGS AND INSTRUMENTS SATISFACTORY...........................15
7.03 REPRESENTATIONS AND WARRANTIES.....................................15
7.04 DELIVERIES AT CLOSING..............................................15
ARTICLE VIII.................................................................16
INDEMNIFICATION..............................................................16
8.01 INDEMNIFICATION BY SELLER..........................................16
8.02 INDEMNIFICATION BY PURCHASER.......................................16
8.03 NOTIFICATION OF CLAIMS.............................................17
ARTICLE IX...................................................................19
CLOSING......................................................................19
9.01 CLOSING............................................................19
9.02 CLOSING DATE DELIVERIES............................................19
ARTICLE X....................................................................20
COVENANTS NOT TO COMPETE.....................................................20
10.01 CONSIDERATION......................................................21
10.02 SELLER'S COVENANT..................................................21
10.03 PURCHASER'S COVENANT...............................................21
10.04 REMEDIES...........................................................21
ARTICLE XI...................................................................22
POST-CLOSING OBLIGATIONS.....................................................22
11.01 SELLER'S OBLIGATIONS...............................................22
ARTICLE XII..................................................................22
TERMINATION, MISCELLANEOUS...................................................22
12.01 CONFIDENTIALITY....................................................22
12.02 RESERVED...........................................................23
12.03 EXTENSION OF CLOSING...............................................23
12.04 FURTHER ASSURANCES.................................................23
12.05 SURVIVAL...........................................................23
12.06 ENTIRE AGREEMENT: AMENDMENT........................................23
12.07 NOTICES............................................................24
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12.08 COUNTERPARTS, HEADINGS.............................................25
12.09 SEVERABILITY.......................................................25
12.10 NO RELIANCE........................................................25
12.11 TIME OF ESSENCE....................................................25
12.12 SINGULAR/PLURAL; GENDER............................................25
12.13 GOVERNING LAW......................................................26
12.14 LITIGATION.........................................................26
12.15 JOINT PREPARATION..................................................26
12.16 EXPENSES...........................................................27
12.17 ASSIGNMENT.........................................................27
12.18 INCOME TAX POSITION................................................27
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT, made this 24th day of September,
1999, by and between LEC Leasing, Inc., a corporation organized and existing
under the laws of the State of Nevada and having its principal office and
place
of business at Alpharetta, Georgia, (the "Seller") and Golf Entertainment, Inc.,
a corporation organized and existing under the laws of the State of
___________________ and having its principal office and place of business at
_____________________, _______________, _______________ ("Golf") and Somerset
Capital Group, Ltd., a corporation organized and existing under the laws of the
State of Connecticut and having its principal office and place of business at
1087 Broad Street, Bridgeport, Connecticut ("Purchaser").
WITNESSETH:
WHEREAS, the Seller is a wholly owned subsidiary of Golf; and
WHEREAS, the Seller owns a portfolio of equipment leases; and
WHEREAS, the Purchaser wishes to purchase the equipment that is being
leased pursuant to the equipment leases in the portfolio from the Seller and
assume those leases, and Seller wishes to sell the equipment that is being
leased pursuant to the equipment leases in the portfolio to the Purchaser and
assign those leases to Purchaser on the terms and conditions stated herein;
NOW, THEREFORE, in consideration of the mutual covenants, conditions and
agreements set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, it is hereby agreed as
follows:
<PAGE>
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have the meanings
specified:
1.01 AGREEMENT.
"Agreement" shall mean this Purchase and Sale Agreement, together with the
Schedules and Exhibits attached hereto, as the same shall be amended from time
to time in accordance with the terms hereof.
1.02 CLOSING DATE.
"Closing Date" shall mean the date the transactions contemplated under
this Agreement are to be consummated as provided in the Agreement.
1.03 CUSTOMER.
"Customer" shall mean an Person that leases equipment through a Lease with
the Seller.
1.04 EQUIPMENT.
"Equipment" shall mean all equipment shown and described in SCHEDULE 1.04
and all equipment which is or was subject to any one or more of the Leases and
to any leases which were terminated prior to their original expiration date
which was on June 30, 1999 or thereafter and the proceeds of the sale of any of
the equipment hereinbefore described which took place on/or after June 30, 1999.
1.05 RESERVED
1.06 RESERVED
1.07 LEASE OR LEASES.
"Lease" or "Leases" shall mean any agreement or agreements for the lease
by the Seller of Equipment to any third party either shown or described in the
Lease Portfolio or entered into
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by the Seller after June 30, 1999 excepting and excluding, however, those leases
shown on
SCHEDULE 1.07.
1.08 LEASE PORTFOLIO.
"Lease Portfolio" shall mean, all Leases shown or described in SCHEDULE
1.08.
1.09 RESERVED
1.10 PERSON.
"Person" shall mean any natural person, partnership, corporation,
association or other legal entity.
1.11 RESERVED
1.12 PURCHASE PRICE.
"Purchase Price" shall mean that amount to be paid by the Purchaser to
purchase the assets specified in this Agreement.
1.13 RECORDS.
"Records" shall mean all files and records, including invoice and
accounting records, correspondence with Customers and other written materials,
of Seller relating to the Leases including, without limitation, as to each
Lease, the documents shown on SCHEDULE 1.13.
1.14 RECURRING REVENUE.
"Recurring Revenue" shall mean revenue that was received by the Seller on
June 30, 1999 and thereafter, or that was received prior to June 30, 1999 but
was not due until June 30, 1999 or thereafter, on account of regular periodic
recurring payment obligations under any Lease during the term stated in the
Lease, or during any extension of the term of the Lease or during any holdover
period following expiration of the Lease term.
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1.15 REVENUE, GENERAL.
"Revenue, General" shall mean any revenue received by the Seller on June
30, 1999 and thereafter, or that was received prior to June 30, 1999 but was not
due until June 30, 1999 or thereafter, derived from or with respect to any and
all Leases, including, without limitation, any revenue from Lease renewals and
any revenue from the sale of Equipment, excepting and excluding, however, any
Recurring Revenue, and further excepting and excluding revenue generated from
the transactions shown in SCHEDULE 1.15.
ARTICLE II
PURCHASE AND SALE
2.01 PURCHASE AND SALE.
At the Closing and upon all of the terms and subject to all of the
conditions of this Agreement, the Seller shall, upon performance by the
Purchaser of its obligations hereunder including, without limitation, payment of
the Purchase Price, sell, assign, convey, transfer and deliver to Purchaser, and
Purchaser shall purchase and take possession of all Leases of the Lease
Portfolio and Equipment and Seller shall assign to Purchaser and Purchaser shall
assume all of the Leases in the Lease Portfolio, which shall entitle the
Purchaser full right, title and ownership interest to the Equipment and the
Leases and the Seller shall fulfill all of its other obligations hereunder. No
sale or other transfer of any asset or liability of Seller or Golf, other than
those specifically described in this Agreement, shall occur.
2.02 PAYMENT ON CLOSING.
(a) At the Closing, the Purchaser shall pay the Seller the Purchase Price
of $3,559,500.00 and an amount equal to the balance due on the non-recourse debt
which
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encumbers the Leases and Equipment as of the Closing Date, subject to adjustment
as hereinafter provided to be paid as follows:
i. The assumption by the Purchaser of all
non-recourse debt which encumbers the Leases and
Equipment on the Closing Date and recourse debt
shown on SCHEDULE 2.02(a)i.
ii. By delivery of a duly executed promissory note
with interest at the rate of ten (10%) percent
payable in thirty (30) consecutive equal monthly
installments including both the principal and
interest, otherwise in the form of Exhibit "A"
attached: $400,000.00
iii. By cash to be borrowed from Excel Bank, N.A.
("Excel") or another financial institution
acceptable to Purchaser in an amount required to
discharge Seller's obligations, including those
with Seller's affiliates as joint obligors, to
Excel and to Finova Capital Corporation
("Finova") ("Seller's Obligations") estimated
at, as of August 31, 1999, and not to exceed: 2,635,000.00
iv. By cash to be paid at Closing: 524,500.00
-------------
TOTAL $3,559,500.00
(b) The Purchase Price shall be: (i) reduced by the aggregate amount of
all Recurring Revenue in excess of $55,000.00, if any, during each of the months
of July and August, 1999 and all Recurring Revenue thereafter and until the
Closing Date and shall, further, be reduced by all Revenue, General; (ii) the
considerations to be paid at Closing shall be reduced by an amount equal to the
reduction in the Purchase Price applied: (A) by a reduction in the cash paid to
discharge Seller's Obligations pursuant to Section 2.02(a)iii hereof to the
extent of any reduction of Seller's Obligations below $2,635,000.00 and (B) as
to any excess by reduction in the amount of cash to be paid at Closing pursuant
to Section 2.02(a)iv; and (C) if cash to be paid at Closing
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is reduced to zero, by a reduction in the principal of the promissory note to be
delivered at Closing pursuant to Section 2.02(a)ii.
(c) If, during the period from June 30, 1999 to Closing Date Seller's
Obligations is reduced by an amount greater than the reduction in the Purchase
Price required by the provisions of Section 2.02(b), then the amount of cash to
be paid by Purchaser related to Seller's Obligations pursuant to Section
2.02(a)ii shall be reduced by that excess amount and the promissory note
pursuant to Section 2.02(a)i shall be increased by that excess amount.
(d) All payments shall be in U.S. dollars, pursuant to Seller's wiring or
other delivery instructions.
2.03 PAYMENT OF LOANS.
It shall be the Seller's obligation to make, as required by applicable
loan documents, all regular recurring and such other payments which are due on
account of Seller's Obligations so that there is no default under any of said
obligations between the date of this Agreement and the date of Closing. It is
contemplated that the cash to be borrowed by the Purchaser for the purpose of
the purchase shall be in an amount adequate to fully pay and discharge Seller's
Obligations so that the Seller and Golf will, at the Closing, have a termination
of all Seller's Obligations including, without limitation, any guaranty of
Seller's Obligations by Golf.
ARTICLE III
REPRESENTATION AND WARRANTIES OF SELLER AND OF GOLF
Seller and Golf represent and warrant to Purchaser the following:
3.01 ORGANIZATION AND OWNERSHIP OF ASSETS.
The Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada. Seller has full corporate power
to own the Equipment that is the
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subject of the Lease Portfolio, and to conduct the business required of the
Seller pursuant to the Leases in the Lease Portfolio.
3.02 AUTHORIZATION, ENFORCEABILITY.
The execution, delivery and performance of this Agreement and all of the
documents required hereby to be executed and delivered by Seller are or will at
Closing be within the corporate power of Seller, and will have been duly
authorized by all necessary action by Seller and, to the extent applicable, by
Golf Entertainment, Inc. All Persons executing this Agreement and to execute all
closing documentation are incumbent in the offices which such officers purport
to hold. This Agreement is, and the other documents required will be, when
executed and delivered to Purchaser, the valid and binding obligations of Seller
enforceable against Seller in accordance with their respective terms subject
only to bankruptcy, insolvency, reorganization, moratoriums or similar laws in
effect affecting the enforceability or rights of creditors generally and by
general equitable principles which may limit the right to obtain equitable
relief.
3.03 NO ADVERSE CONSEQUENCES.
Except as listed on SCHEDULE 3.03, neither the execution, delivery or
performance of this Agreement by Seller nor the consummation of the sale and
purchase of the Lease Portfolio or the Equipment, or any other transaction
contemplated by this Agreement by Seller, does or will, after the giving of
notice, or the lapse of time, or otherwise:
(a) conflict with, result in a breach of, or constitute a default under
any Lease;
(b) terminate or amend, or give any party the right to terminate or amend
or refuse to perform, any Lease;
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(c) accelerate or give any party the right to accelerate the time within
which, or the terms under which, any duties or obligations are to be performed,
or any rights or benefits are to be received, under any Lease; or
(d) require the consent of any Person other than Seller.
3.04 TITLE TO LEASE PORTFOLIO: LIENS AND ENCUMBRANCES.
Seller owns good and marketable title to all of the Leases in the Lease
Portfolio free and clear of any and all mortgages, liens, encumbrances, pledges,
or security interests except for security interests held by Excel and/or Finova
which shall be released at Closing, and items set forth on SCHEDULE 3.04.
3.05 THE LEASES AND LEASE PORTFOLIO.
Except as set forth in SCHEDULE 3.05:
(a) no event of default exists under any of the Leases and no event has
occurred under any of the Leases which would constitute a default thereunder but
for the requirement, if any, that notice be given or time elapse or both;
(b) the copies of the Leases previously furnished and to be furnished to
Purchaser are true and complete copies and include any and all amendments
thereto;
(c) all Equipment has been paid for in full; and
(d) all sales and personal property taxes due on the Equipment has been
paid in full, or adequate reserves have been maintained to pay such amounts.
3.06 NO LITIGATION: LABOR DISPUTES, COMPLIANCE WITH LAWS.
Except as set forth in SCHEDULE 3.06 there is no judgment, litigation,
arbitration proceeding, or proceeding before or by any agency or other
administrative or regulatory body,
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authority or bankruptcy court, which, if concluded adversely to the Seller,
would have a materially detrimental effect on the Lease Portfolio.
3.07 NO BROKERS.
Neither this Agreement nor the sale and purchase of the Lease Portfolio or
any other transaction contemplated by this Agreement was induced or procured
through any Person acting on behalf of or representing Seller as broker, finder,
investment, banker, financial advisor or in any similar capacity, except as
identified in SCHEDULE 3.07.
3.08 BUSINESS IN THE ORDINARY COURSE.
Seller represents and warrants that it has, since June 30, 1999 to the
date hereof, serviced the Leases in the Lease Portfolio in the ordinary course
of business in accordance with good practices, further, except as set forth in
SCHEDULE 3.08 hereof, not entered into any agreements either extending the term
of or renewing or modifying the terms of any of the Leases, and has not sold or
disposed of any Equipment at less than reasonable fair market value.
3.09 REPRESENTATIONS AS OF THE CLOSING DATE.
Seller's representations and warranties set forth in this Agreement shall
be true and correct on the date of this Agreement and as of the Closing Date, as
though such representations and warranties were made on and as of such time.
3.10 REPRESENTATIONS BY GOLF.
Golf represents and warrants that all of Seller's and Golf's
representations and warranties set forth in this Agreement shall be true and
correct as of the date of this Agreement and as of the Closing Date, as though
such representations and warranties were made on and as of such time.
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3.11 REPRESENTATIONS BY SELLER AND GOLF.
The representations and warrants of the Seller and Golf under this Article
shall not, in any event, extend to any actions taken by the Purchaser in it's
capacity as Asset Manager under that certain Asset Management Agreement by and
between Seller and Purchaser of even date herewith with respect to any of the
Assets that are the subject of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
4.01 ORGANIZATION.
Purchaser is a corporation duly organized and validly existing under the
laws of the State of Connecticut. Purchaser has full corporate power to purchase
the Lease Portfolio pursuant to this Agreement and to conduct the business
required of the Purchaser pursuant to the Leases in the Lease Portfolio.
4.02 AUTHORIZATION: ENFORCEABILITY.
The execution, delivery and performance of this Agreement and all
documents required hereby to be executed and delivered by Purchaser are within
the corporate power of Purchaser and have been duly authorized by all necessary
corporate action by Purchaser. All persons executing this Agreement and to
execute all closing documentation are incumbent in the offices which such
officers purport to hold. This Agreement is, and the other documents required
hereby will be, when executed and delivered by Purchaser, the valid and binding
obligations of Purchaser, enforceable against Purchaser, in accordance with
their respective terms subject only to bankruptcy, insolvency, reorganization,
moratoriums or similar laws at the time in effect
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affecting the enforceability or right of creditors generally and by general
equitable principles which may limit the right to obtain equitable relief.
4.03 BROKERS.
Neither this Agreement nor the sale and purchase of the Purchased Assets
or any other transaction contemplated by this Agreement was induced or procured
through any Person acting on behalf of or representing Purchaser as broker,
finder, investment banker, financial advisor or in any similar capacity.
4.04 PURCHASER'S REPRESENTATIONS.
Purchaser's representations and warranties set forth in this Agreement
shall be true and correct on the date of this Agreement and as of the Closing
Date.
4.05 REPRESENTATIONS AS OF THE CLOSING DATE.
Purchaser's representations and warranties set forth in this Agreement
shall be true and correct on the date of this Agreement and as of the Closing
Date, as though such representations and warranties were made on and as of such
time.
ARTICLE V
CERTAIN MATTERS PENDING THE CLOSING
From and after the date of this Agreement and until the Closing Date:
5.01 SELLER'S OBLIGATIONS PENDING CLOSING.
Seller and Golf do hereby covenant and agree that from the date hereof
through the Closing Date, Seller shall:
(a) service the Leases in the Lease Portfolio in the ordinary course of
business in accordance with good practices, introduce representatives of
Purchaser to Customers, and assist in the transfer of the Lease Portfolio;
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(b) except with Purchaser's prior consent, not to be unreasonably
withheld, not enter into, or become obligated under any Lease, or other
agreement or commitment, relating to any of the assets which are the subject of
this Agreement;
(c) use it best efforts to obtain the consent of all Persons required in
order to consummate the transactions contemplated by this Agreement prior to the
Closing Date;
(d) not issue any notices, releases, statements and communications to
employees, Customers or other persons doing business with Seller and to the
general public relating to the transactions covered by this Agreement except at
such times and in such manner as may be approved by the Seller, approval not to
be unreasonably withheld;
(e) give the Purchaser notice on a periodic basis and not less than
monthly of all Recurring Revenue and all Revenue, General, including a specific
designation of the Lease or Equipment from which any such revenue is derived;
(f) prepare and produce at the Closing a certified schedule of all
Recurring Revenue and Revenue, General including as to each receipt a
designation of the Lease and/or Equipment to which the receipt applies;
(g) not, without written approval of the Purchaser, not to be unreasonably
withheld, enter into any renewal, or other amendment, or modification of any one
or more of the terms of any one or more of the Leases; and
(h) procure from any lender holding a security interest not to be released
at Closing on any of the Equipment and on any one or more of the Leases, a
consent to the transfer of the Equipment and Leases and to the assignment and
assumption agreement, and an affidavit indicating that there has not been any
default on any of the obligations with respect to any such security interest.
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5.02 EXCEPTION TO SELLER'S OBLIGATIONS PENDING CLOSING.
Seller shall not be deemed to be in breach of any of its obligations
pending Closing as set forth in Section 5.01 hereof to the degree that any such
claimed breach of obligations either results from or arises out of any actions
of the Purchaser in its capacity as Asset Manager under that certain Asset
Management Agreement of even date herewith with respect to any of the Assets
that are the subject of this Agreement.
5.03 PURCHASER'S OBLIGATIONS PENDING CLOSING.
Purchaserdoes hereby covenant and agree that from the date hereof through
the Closing Date, Purchaser shall: (a) use its best efforts to obtain the
consent of all persons required in order to consummate the transactions
contemplated by this Agreement prior to the Closing Date;
(b) not issue any notices, releases, statements and communications to
employees, Customers or other persons doing business with Purchaser and to the
general public relating to the transactions covered by this Agreement except at
such times and in such manner as may be approved by the Seller, approval not to
be unreasonably withheld; and
(c) use its best efforts to procure from Excel, and/or another qualified
lending institution, financing necessary to pay and discharge the Seller's
Obligations.
ARTICLE VI
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASER
Each and every obligation of Purchaser to be performed on the Closing Date
shall be subject to the satisfaction prior to or at the Closing in all material
respects of the following express conditions precedent.
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6.01 COMPLIANCE WITH AGREEMENT.
Seller shall have performed and complied in all respects with all of their
obligations under this Agreement which are to be performed or complied with by
them prior to or on the Closing Date.
6.02 PROCEEDINGS AND INSTRUMENTS SATISFACTORY.
All proceedings, corporate and other, to be taken by Seller in connection
with the performance of this Agreement, and all documents incident thereto,
shall be complete in accordance with this Agreement.
6.03 REPRESENTATIONS AND WARRANTIES.
The representations and warranties made by Seller in this Agreement shall
be true and correct as of the Closing Date except to the degree that any default
hereunder shall arise out of any actions taken by the Purchaser in it's capacity
as Asset Manager under that certain Asset Management Agreement by and between
Seller and Purchaser of even date herewith with respect to any of the Assets
that are the subject of this Agreement.
6.04 NO ADVERSE CHANGE.
Between the date of this Agreement and the Closing Date, there shall have
been no adverse change in the financial condition or results or operation of the
Lease Portfolio.
6.05 DELIVERIES AT CLOSING.
Seller shall have delivered or cause to be delivered to Purchaser the
documents, each properly executed and dated as of the Closing Date as required
pursuant to this Agreement.
6.06 LOAN CONTINGENCY.
The obligations of the Purchaser hereunder are subject to and conditioned
on the Purchaser being able to procure, from Excel Bank, N.A. or another lender
designated by the
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Purchaser, on or before September 24, 1999 at 5:00 p.m., an unconditional and
unqualified commitment for a loan in the amount adequate to satisfy Seller's
Obligations and at an interest rate and on other terms and conditions reasonably
acceptable to Purchaser. In the event that Purchaser is unable to procure such a
commitment within the time limited, then it shall have the right to terminate
its obligations under this Agreement by notice to the Seller given not later
than forty-eight (48) hours after the expiration of the time limited for
procuring the loan commitment.
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
Each and every obligation of Seller to be performed on the Closing Date
shall be subject to the satisfaction prior to or at the Closing of the following
express conditions precedent.
7.01 COMPLIANCE WITH AGREEMENT.
Purchaser shall have performed and complied in all material respects with all of
its obligations under this Agreement which are to be performed or complied with
by it prior to or on the Closing Date.
7.02 PROCEEDINGS AND INSTRUMENTS SATISFACTORY.
All proceedings, corporate and other, to be taken by Purchaser and Golf
Entertainment, Inc. and its shareholders in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
complete in accordance with this Agreement.
7.03 REPRESENTATIONS AND WARRANTIES.
The representations and warranties by Purchaser shall be true and correct
as of the Closing Date.
7.04 DELIVERIES AT CLOSING.
Purchaser shall have delivered or cause to be delivered to Seller the
documents:
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(a) required by this Agreement, each properly executed and dated as of the
Closing Date, and also shall have made the payments described in Section
2.02(a), as adjusted; and
(b) acknowledgement by each of Excel and Finova that Seller's Obligations
have been paid and discharged.
ARTICLE VIII
INDEMNIFICATION
8.01 INDEMNIFICATION BY SELLER.
If the transactions contemplated herein shall close, Seller and Golf shall
indemnify and hold harmless Purchaser its successors and assigns and all
directors, officers, employees and representatives of each of the foregoing and
promptly defend such Persons from and against any and all losses, damages,
costs, liabilities and claims of any kind which such Persons may at any time
suffer or incur, or become subject to, as a result of or in connection with:
(i) any breach or inaccuracy of any of the representations and
warranties made by Seller in or pursuant to this Agreement; and
(ii) any failure by Seller to carry out, perform, satisfy and discharge
any of its covenants, agreements, undertakings, liabilities or
obligations under this Agreement or under any of the documents and
materials delivered by Seller pursuant to this Agreement;
(iii) Seller's rejection of any previous offer to sell its Lease Portfolio
to any party other than Purchaser.
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8.02 INDEMNIFICATION BY PURCHASER.
If the transactions contemplated herein shall close, Purchaser shall
indemnify and hold harmless Seller, its shareholder and affiliated entities,
successors and all assigns and all directors, officers, employees and
representatives of each of the foregoing from and against, and reimburse such
Persons for, any and all losses, damages, costs, liabilities and claims of any
kind which such Persons may at any time suffer or incur, or become subject to,
as a result of or in connection with:
(i) any breach or inaccuracy of any representations and warranties made
by Purchaser in or pursuant to this Agreement;
(ii) any failure by Purchaser to carry out, perform satisfy and discharge
any of its covenants, agreements, undertakings, liabilities or
obligations under this Agreement or under any of the documents and
materials delivered by Purchaser pursuant to this Agreement;
iii) the ownership or service of the Lease Portfolio by Purchaser from
and after the Closing Date;
8.03 NOTIFICATION OF CLAIMS.
(a) A party entitled to be indemnified pursuant to Section 8.01 or
8.02 hereof (the "Indemnified Party") shall notify the party liable for such
indemnification (the "Indemnifying Party") in writing of any claim or demand
which the Indemnified Party has determined has given or could give rise to a
right of indemnification under this Agreement. Subject to the Indemnifying
Party's right to defend in good faith third party claims as hereinafter
provided, the Indemnifying Party shall satisfy its obligations under this
Article within thirty (30) days after the receipt of written notice thereof from
the Indemnified Party.
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(b) If the Indemnified Party shall notify the Indemnifying Party of
any claim or demand pursuant to Section 8.03(a), and if such claim or demand
relates to a claim or demand asserted by a third party against the Indemnified
Party which the Indemnifying Party acknowledges is a claim or demand for which
it must indemnify or hold harmless the Indemnified Party under Section 8.01 or
8.02 hereof, the Indemnifying Party may elect to defend any such claim or demand
asserted against the Indemnified Party. The Indemnified Party shall cooperate in
the defense of any such claim or demand. The Indemnifying Party shall notify the
Indemnified Party in writing, within fifteen (15) days after the date of the
notice of claim given by the Indemnified Party to the Indemnifying Party under
Section 8.03(a) of its election to defend in good faith any such third party
claim or demand. So long as the Indemnifying Party is defending in good faith
any such claim or demand asserted by a third party against the Indemnified
Party, the Indemnified Party shall not settle or compromise such claim or
demand. The Indemnified Party shall make available to the Indemnifying Party or
its agents all Records and other materials in the Indemnified Party's possession
reasonably required by it for its use in contesting any third party claim or
demand.
In the event that the Indemnifying Party shall elect not to defend, the
Indemnified Party may, but shall not be obligated to, assume the defense of such
claim at the cost and expense of the Indemnifying Party, subject to the right of
the Indemnifying Party to assume the defense of such claim at any time prior to
settlement, compromise or final determination thereof.
Anything in this Section 8.03 to the contrary notwithstanding, (i) if
there is a reasonable probability that a claim may materially and adversely
affect the Indemnified Party other than as a result of money damages or other
money payments, the Indemnified Party shall have the right, at its own cost and
expense, to defend, compromise or settle such claim, and (ii) the Indemnifying
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Party shall not, without the Indemnified Party's written consent, settle or
compromise any claim or consent to entry of any judgment that does not include
an unconditional term thereof giving by the claimant or the plaintiff to the
Indemnified Party a release from all liability in respect to such claim.
ARTICLE IX
CLOSING
9.01 CLOSING.
The closing of this transaction shall take place at 10:00 a.m. on November
19, 1999 or on such other time and date as may be agreed upon by the parties
hereto at such place as may be designated by Excel, or if none is so designated,
at such a place as may be agreed upon by the parties or, if there is no
agreement, at the offices of Seller's attorneys, Harkleroad and Hermance in
Atlanta, Georgia.
9.02 CLOSING DATE DELIVERIES.
At the Closing on the Closing Date:
(a) Seller shall deliver or cause to be delivered to Purchaser properly
executed and dated as of the Closing Date:
(i) all executed original Leases;
(ii) all Records pertaining to the Leases; (iii) a Bill of Sale
confirming the sale of the Equipment;
(iv) an Assignment and Assumption Agreement assigning the Leases
and the Lease Portfolio;
(v) a certificate as to all Recurring Revenue and Revenue,
General;
19
<PAGE>
(vi) a certificate of incumbency as to any corporate officer
executing any closing documents on behalf of the Seller.
(vii) an opinion directed by its counsel to the Purchaser in form
reasonably acceptable to the Purchaser, dated as of the
Closing Date, confirming the matters set forth in Sections
3.01 and 3.02 hereof; and
(viii) consents and affidavits required by Section 5.01(h);
(ix) notices to all lessees of all Leases, duly executed by the
Seller, of the transfer to Purchaser of Seller's interest in
all Leases and Equipment, in form set forth on SCHEDULE 9.02
(ix); and
(x) all other documents necessary or appropriate to complete the
transaction contemplated by this Agreement.
(b) Purchaser shall deliver, or cause to be delivered to Seller properly
executed and dated as of the Closing Date:
(i) the Cash Consideration;
(ii) the Promissory Note;
(iii) an Assignment and Assumption Agreement assigning the Lease
Portfolio;
(iv) an opinion directed by its counsel to the Seller, in form
reasonably acceptable to the Seller, dated as of the Closing
Date, confirming the matters set forth in Sections 4.01 and
4.02 hereof; and
(vi) all other documents necessary or appropriate to complete the
transaction contemplated by this Agreement.
20
<PAGE>
ARTICLE X
COVENANTs NOT TO COMPETE
10.01 CONSIDERATION.
The parties acknowledges that the covenants provided for in this Article
are an essential part of this Agreement and a material consideration for the
undertakings of each party under this agreement.
10.02 SELLER'S COVENANT.
The Seller and Golf agree that, for the period of three (3) years
following the Closing Date that neither they, nor either of them will, directly
or indirectly through the use of subsidiaries, affiliates or, as the subsidiary
of a larger organization, negotiate, arrange for, enter into or in any other way
be involved in any activities relating to or pertaining to the sale or leasing
of personal property of any kind to any one or more of the persons who are
lessees under any one or more of the Leases. There shall, however, be excepted
and excluded from this covenant any of Seller's activities relating to or
pertaining to any leases and/or equipment owned by Seller as of the date of
Closing which are not included among the assets which are being sold and
transferred under this agreement.
10.03 PURCHASER'S COVENANT.
The Purchaser agrees that, in the event that the transactions contemplated
hereby do not close for any reason, then the Purchaser will not, for a period of
two years after the scheduled closing date, solicit leases from any existing
customer of Seller excepting and excluding, however, Northrop/Grumman
Corporation, Computer Sciences Corporation, and The Hertz Corporation.
21
<PAGE>
10.04 REMEDIES.
The parties hereto recognize that any remedy at law available for the
breach of either of the covenants hereinbefore set forth will be inadequate and
that offended party shall be entitled to injunctive relief, either temporary
and/or permanent with respect to any violation of the covenant which shall be in
addition to and not in limitation of any and all remedies that the offended
party may have in either law or equity for the enforcement of this covenant.
ARTICLE XI
POST-CLOSING OBLIGATIONS
11.01 SELLER'S OBLIGATIONS.
Seller will, after the Closing, with due diligence and in no event later
than three (3) days after receipt, forward to the Purchaser by overnight mail
directed to the address hereinafter given for notices to the Purchaser, all
communications from any lessee under any Lease and all remittances or payments
on account of any assets being sold and transferred under this Agreement. If any
such remittances are by draft made payable to the Seller, then the Seller shall
forward the same on to the Purchaser duly endorsed to the order of the
Purchaser.
ARTICLE XII
TERMINATION, MISCELLANEOUS
12.01 CONFIDENTIALITY.
Purchaser acknowledges that it has been given access to confidential
information, including trade secrets and business and financial records of the
Seller. If the transaction contemplate hereunder does not close, Purchaser shall
return promptly all copies of all
22
<PAGE>
confidential information, trade secrets, business or financial information or
records of Seller to Seller, and Purchaser shall not disclose, nor use in its
business in any way, and confidential information, trade secrets, or business or
financial information or records of Seller.
12.02 RESERVED
12.03 EXTENSION OF CLOSING.
In addition to any other provisions herein, Purchaser and Seller may elect
to extend the Closing Date to any date to which such parties agree in writing.
12.04 FURTHER ASSURANCES.
From time to time after the Closing Date, upon the reasonable request of
Purchaser, Seller shall execute and deliver or cause to be executed and
delivered such further instruments of conveyance, assignment and transfer and
take such further action as Purchaser may reasonably request in order more
effectively to perfect the sale, assignment, and transfer of the Lease Portfolio
and the Equipment. Seller agrees to cooperate with Purchaser in all reasonable
respects to assure to Purchaser the continued title to and possession of the
Lease Portfolio and the Equipment.
12.05 SURVIVAL.
The covenants and indemnities herein continue until all such covenants and
indemnities are satisfied. The representations and warranties made in this
Agreement or made pursuant hereto shall survive the Closing and the consummation
of the transactions contemplated by this Agreement (except as otherwise provided
herein) for a period of thirty (30) months.
12.06 ENTIRE AGREEMENT: AMENDMENT.
This Agreement and the documents referred to herein and to be delivered
pursuant hereto constitute the entire agreement between the parties pertaining
to the subject matter hereof, and
23
<PAGE>
supersede all prior and contemporaneous agreements, understandings, negotiations
and discussions of the parties, whether oral or written, and there are no
warranties, representations or other agreements between the parties in
connection with the subject matter hereof, except as specifically set forth
herein. No amendment, supplement, modification, waiver or termination of this
Agreement shall be binding unless executed in writing by both parties hereto. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision of this Agreement, whether or not
similar, unless otherwise expressly provided.
12.07 NOTICES.
All notices shall be in writing and shall be deemed to have been properly
given on the earlier of (i) when delivered in person, (ii) when deposited in the
United States Mail, with adequate postage, and sent by registered or certified
mail with return receipt requested, to the appropriate party at the address set
out below, or (iii) when deposited with Federal Express, Express Mail or other
overnight delivery service for next day delivery, addressed to the appropriate
party at the address set out below.
If to Purchaser: Somerset Capital Group, Ltd.
1087 Broad Street, Suite 201
Bridgeport, Connecticut 06604-4260
With a copy to: Bernard Green, Esq.
Green and Gross, P.C.
1087 Broad Street
Bridgeport, Connecticut 06604
If to Seller: LEC Leasing, Inc.
Three Northwinds Center Road
2500 Northwinds Parkway, Suite 175
Alpharetta, Georgia 30004
24
<PAGE>
With a copy to: Harkleroad & Hermance, P.C.
Suite 2500 - International Tower
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Rejection or other refusal by the addressee to accept, or the inability of the
courier service or the United States Postal Service to deliver because of a
changed address of which no notice was given, shall be deemed to be receipt of
the notice sent. Any party shall have the right, from time to time, to change
the address to which notices to it shall be sent by giving to the other party or
parties at least ten (10) days prior notice of the changed address in the manner
provided herein.
12.08 COUNTERPARTS, HEADINGS.
This Agreement may be executed in several counterparts, each of which
shall be deemed an original, but such counterparts shall together constitute but
one and the same agreement. Article and Section headings in this Agreement are
inserted for convenience of reference only and shall not constitute a part
hereof.
12.09 SEVERABILITY.
If any provision, clause, or part of this Agreement or the application
thereof under certain circumstances is held invalid, the remainder of this
Agreement, or the application of such provision, clause or part under other
circumstances shall not be affected thereby.
12.10 NO RELIANCE.
(a) no third party is entitled to rely on any of the
representations, warranties and agreements of Purchaser and Seller contained in
this Agreement; and
(b) Purchaser and Seller assume no liability to any third party
because of any reliance on the representations, warranties and agreements of
Purchaser and Seller contained in this Agreement.
25
<PAGE>
12.11 TIME OF ESSENCE.
Time if of the essence of this Agreement.
12.12 SINGULAR/PLURAL; GENDER.
Where the context so requires or permits, the singular form includes the
plural, and the use of the plural form includes the singular, and the use of any
gender includes any and all genders.
12.13 GOVERNING LAW.
All or part of this Agreement and the legal relations between the parties
hereto has been negotiated in the State of Connecticut. This Agreement is to be
governed by and construed in accordance with the laws of the State of
Connecticut. The parties hereto consent to jurisdiction and venue in the
Connecticut Courts of Fairfield County, Connecticut or in the courts of Fulton
County, Georgia and in the United States District Court for the District of
Connecticut or the Northern District of Georgia for all actions and proceedings
relating to this Agreement and the transactions contemplated herein excepting
and excluding however any actions brought with respect to Article XI.
12.14 LITIGATION.
In any litigation arising out of or under this Agreement, the court
deciding the matter shall have the right to award to any prevailing party or
parties all reasonable and necessary expenses incurred in either the prosecution
or defense of the litigation including, without limitation, reasonable
attorneys' fees.
26
<PAGE>
12.15 JOINT PREPARATION.
This Agreement shall be deemed to have been jointly prepared, and no
ambiguity herein shall be construed against any party based upon the identity of
the author of this Agreement or any portion hereof.
12.16 EXPENSES.
Each party shall bear its expenses incurred in connection with this
Agreement and in connection with all things required to be done by each
hereunder.
12.17 ASSIGNMENT.
Neither party hereto may assign its rights or obligations hereunder
without the written consent of the other party hereto until the closing occurs;
thereafter, all rights and obligations that remain hereunder shall inure to and
be binding upon the parties and their respective successors and assigns.
12.18 INCOME TAX POSITION.
Neither Purchaser nor Seller shall take a position for income tax purposes
which is inconsistent with this Agreement.
27
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Purchase and Sale
Agreement to be duly executed and sealed as of the day and year first above
written.
SELLER:
LEC LEASING, INC.
By:/s/ Ronald G. Farrell
---------------------------------
Title: President
-----------------------------
Attest: /s/ William J. Vargas
-----------------------------
Title: Chief Financial Officer
-----------------------------
[CORPORATE SEAL]
GOLF ENTERTAINMENT, INC.
By:/s/ Ronald G. Farrell
---------------------------------
Title: President
-----------------------------
Attest: /s/ William J. Vargas
-----------------------------
Title: Chief Financial Officer
-----------------------------
[CORPORATE SEAL]
PURCHASER:
SOMERSET CAPITAL GROUP, LTD.
By: /s/ Pedro Wasmer
-----------------------------
Title: President
--------------------------
Attest: [ILLEGIBLE]
--------------------------
Title: V.P. & Corp. Secy.
--------------------------
[CORPORATE SEAL]
28
<PAGE>
EXHIBIT "A"
PROMISSORY NOTE
<PAGE>
PROMISSORY NOTE
$400,000 October ____, 1999
FOR VALUE RECEIVED, the undersigned, (hereinafter referred to as "Maker"),
promises to pay to the order of LEC LEASING, INC., (hereinafter referred to as
"Payee", which term shall include any holder hereof), at 9925 Haynes Bridge
Road, Alpharetta, Georgia 30202, or at such other place as Payee may designate,
the principal sum of Four Hundred Thousand Dollars ($400,000), together with all
charges herein provided and interest thereon at the annual rate of ten percent
(10%) on the unpaid balance from the date hereof, payable in immediately
available U.S. funds or in other form reasonably satisfactory to Payee, at the
rates and in the manner hereinafter set forth.
On the first day of the first calendar month after the date of this Note,
the Maker shall pay the interest accrued on this Note to the end of the prior
month. Thereafter, this Note shall be due and payable in thirty (30) consecutive
equal monthly payments, each in the amount of $14,999.57 to be applied first on
account of interest accrued on the Note to the date of payment and, thereafter,
in reduction of principal with the first such installment to be due and payable
on the first day of the second calendar month following the month during which
this Note is made.
If not sooner paid, the entire balance of this Note shall be due and
payable ___________, 2002.
Maker may prepay all or any portion of the amount due hereunder without
penalty, provided however that any prepayment of principal or reduction in the
principal amount of this Note shall not reduce the principal amount due of any
monthly payment, until this Note is paid in full.
Upon the failure by Maker to make any payment of principal or interest or
any combination thereof on this Note, when due or within any applicable cure
period, at the option of Payee, the entire unpaid balance of principal and
interest evidenced by this Note shall immediately become due and payable without
demand made therefor and without notice to any person, notice of the exercise of
said option being hereby expressly waived, and Payee shall have all remedies
available under law and equity, time being of the essence of this Note.
Upon the failure to make a payment when due, Payee may send notice of such
failure by means permitted in the Purchase and Sale Agreement of even date
herewith.
Presentment for payment, notice of dishonor, protest, notice of protest
and diligence in bringing suit against any party hereto are hereby waived by
Maker.
<PAGE>
Neither any forbearance nor any delay of the Payee to exercise any right,
remedy, power or privilege under this Note, nor any course of dealing between
any of the Maker and the Payee, shall operate as a waiver hereof or impair any
such right, remedy, power or privileges by Payee shall preclude further or other
exercise thereof.
This Note shall be governed by and interpreted in accord with the laws
thereof. The Maker consents to jurisdiction and venue in the Georgia Courts of
Fulton County, Georgia and in the United States District Court for the Northern
District of Georgia. If this Note is not paid when due, Maker shall also be
liable for reasonable legal fees relating to the collection hereof.
The provisions of this Note are deemed to be severable, and the invalidity
or unenforceability of any provision shall not affect or impair the remaining
provisions, which shall continue in full force and effect and no modification of
this Note shall be binding or enforceable unless in writing and signed by or on
behalf of the party against whom enforcement is sought.
All capitalized terms herein shall have the same meaning as such term has
in the Purchase and Sale Agreement of even date herewith. This Note is subject
to rights which the Maker has as Purchaser under said Purchase and Sale
Agreement.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby
have caused this Note to be duly executed the day and year first above written
under the undersigned's hand and seal.
Somerset Capital Group, Ltd.
By: ________________________________
Its: ________________________________
2
<PAGE>
EXHIBIT "B"
BILL OF SALE
<PAGE>
BILL OF SALE
This Bill of Sale is entered into under the following circumstances:
Somerset Capital Group, Ltd., a Connecticut corporation ("Purchaser") and
LEC Leasing, Inc. ("Seller"), a Nevada corporation have entered into an
agreement this same date, (the "Agreement") for the sale by Seller to Purchaser
of certain business equipment as set forth on SCHEDULE 1.04 to the Agreement,
which equipment is currently being leased to various customers pursuant to
Leases, as further defined in the Agreement, for consideration specified in the
Agreement.
In view of such Agreement, Seller, for good and valuable consideration
paid, and pursuant to the Agreement, does hereby sell, assign, transfer and
deliver to Purchaser the Equipment as set forth on SCHEDULE 1.04.
This Bill of Sale is executed and delivered this ___ day of _________1999.
LEC LEASING, INC.
By: __________________
Title: _______________
Attest: ______________________
Title: _______________________
[CORPORATE SEAL]
<PAGE>
EXHIBIT "C"
ASSIGNMENT AND ASSUMPTION AGREEMENT
<PAGE>
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement is entered into by and between
Somerset Capital Group, Ltd. ("Purchaser") and LEC Leasing, Inc. ("Seller"), as
of this ___day of ___________, 1999.
In view of the fact that Seller and Purchaser have entered into an
agreement (referred to as the "Agreement") this same day whereby Seller will
assign, and Purchaser will assume, all rights and obligations of Seller under
certain Leases, as listed on SCHEDULE 1.04, 1.08 and 3.04 of the Agreement, the
parties agree as follows:
Seller does hereby assign all of its right, title, interest and
obligations pursuant to the Leases listed in the Agreement. Purchaser does
hereby assume and agree to perform, discharge, pay, and fully satisfy, all of
the obligations and commitments of Seller arising from the Leases listed in
either SCHEDULE 1.04, 1.08 or SCHEDULE 3.04 of the Agreement, whether primary,
secondary, matured or unmatured, fixed, absolute or contingent, including, all
obligations, if any, of Seller with respect to repair or payment for the
Equipment, and Purchaser shall all also assume all rights of Seller pursuant to
such Leases, including but not limited to, the right, if any, to receive
payments under such Leases.
1
<PAGE>
This Assignment and Assumption Agreement is executed and delivered this
______ day of ________________, 1999.
LEC LEASING, INC.
By: __________________________
Title:________________________
Attest: ___________________________
Title: ____________________________
[CORPORATE SEAL]
SOMERSET CAPITAL GROUP, LTD.
By: __________________________
Title: _______________________
Attest: ___________________________
Title: ____________________________
[CORPORATE SEAL]
GOLF ENTERTAINMENT, INC.
By: __________________________
Title: _______________________
Attest: ___________________________
Title: ____________________________
[CORPORATE SEAL]
2
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1546 H-8250-A HERTZ CORP.
1588 AP-GRP-14 BED, BATH & BEYOND 5 IBM 4683 P41 REGISTERS
5 IBM 4683 002 REGISTERS
1597 TC-VM-SF TIFFANY & CO 1 AT&T 7056 ASD VOICE MAIL
1600 TC-PBX-GA TIFFANY & CO 1 AT&T PBX TELEPHONE SYS
1602 AP-GRP-15 BED, BATH & BEYOND 10 IBM 4683 P42 REGISTERS
8 IBM 4683 002 REGISTERS
1607 TC-PBX-VA TIFFANY & CO 1 AT&T PBX TELEPHONE SYS
1608 TC-PBX-BOS TIFFANY & CO 1 AT&T PBX TELEPHONE SYS
1610 AP-GRP-16 BED, BATH & BEYOND 14 IBM 4693 421 REGISTERS
1611 AP-087-01 BED, BATH & BEYOND 12 IBM 4693 421 REGISTERS
1617 NMM-002 NAT'L MERCHANTS MKTG 2 IBM 4693 421 REGISTERS
3 IBM 4693 541 REGISTERS
1618 TC-4683-MAD TIFFANY & CO 2 IBM 4693 541 REGISTERS
1619 TC-4693-HR TIFFANY & CO 8 IBM 4693 541 REGISTERS
1620 TC-4693-WP TIFFANY & CO 9 IBM 4693 541 REGISTERS
1621 TC-4693-LAB TIFFANY & CO 1 IBM 4693 541 REGISTERS
3 IBM 4019 039 PRINTERS
1622 TC-4693-SH TIFFANY & CO 8 IBM 4693 541 REGISTERS
1 IBM 4693 541 REGISTERS
1 IBM 9577 DNG CONTROLLER
1623 TC-4693-NY TIFFANY & CO 21 IBM 4693 541 REGISTERS
47 IBM 4693 541 REGISTERS
1624 TC-PBX-DAL TIFFANY & CO 1 AT&T PBX TELEPHONE SYS
1625 TC-PBX-CM TIFFANY & CO 1 AT&T PBX TELEPHONE SYS
1626 TC-PBX-BH TIFFANY & CO 1 AT&T PBX TELEPHONE SYS
1627 TC-PBX-TROY TIFFANY & CO 1 AT&T PBX TELEPHONE SYS
1629 HGC-TJLR HARTFORD GRAD CTR 1 IBM 9402 200 PROCESSOR
1631 AP-086-01 BED, BATH & BEYOND 10 IBM 4693 421 REGISTERS
1632 AP-088-01 BED, BATH & BEYOND 12 IBM 4693 421 REGISTERS
1637 NMM-003 NATIONAL BOOK 6 IBM 4693 421 REGISTERS
4 IBM 4693 741 REGISTERS
</TABLE>
Schedule 1.04 Page 1
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1638 AP-093-01 BED, BATH & BEYOND 12 IBM 4693 421 REGISTERS
1639 HGC-007R HARTFORD GRAD CTR
1640 AP-096-01 BED, BATH & BEYOND 10 IBM 4693 421 REGISTERS
1641 TC-VM-CH TIFFANY & CO 1 AT&T 7056 PSD VOICE MAIL
1643 AP-090-01 BED, BATH & BEYOND 12 IBM 4693 421 REGISTERS
1644 TC-VM-SD TIFFANY & CO 1 AT&T 7056 ASD VOICE MAIL SYST
1645 AP-091-01 BED, BATH & BEYOND 10 IBM 4693 421 REGISTERS
1649 AP-089-01 BED, BATH & BEYOND 8 IBM 4693 421 REGISTERS
1650 AP-092-01 BED, BATH & BEYOND 10 IBM 4693 421 REGISTERS
1652 AP-097-01 BED, BATH & BEYOND 10 IBM 4693 421 REGISTERS
1655 AP-098-01 BED, BATH & BEYOND 10 IBM 4693 421 REGISTERS
1656 AP-094-01 BED, BATH & BEYOND 10 IBM 4693 421 REGISTERS
1658 TC-4693-MAD1 TIFFANY 2 IBM 4693 541 REGISTERS
1659 AP-099-01 BED, BATH & BEYOND 10 IBM 4693 421 REGISTERS
1660 AP-082-01 BED, BATH & BEYOND 12 IBM 4693 421 REGISTERS
1661 AP-100-01 BED, BATH & BEYOND 10 IBM 4693 421 REGISTERS
1666 TC-4693-NY1 TIFFANY & CO 13 IBM 4693 541 REGISTERS
1667 TC-4693-KOP TIFFANY & CO 8 IBM 4693 541 REGISTERS
1668 NNM-004 NATIONAL BOOK 4 IBM 4693 421 REGISTERS
1674 AP-031-01 BED, BATH & BEYOND 4 IBM 4693 421 REGISTERS
1676 NNM-005 NATIONAL BOOK 2 IBM 4693 741 REGISTERS
6 IBM 4693 421 REGISTERS
1681 ND-132 NEWSDAY 1 EMC 5500 9M42 TAPE ROBOTIC
1686 HGC-009R HARTFORD GRADUATE CENTER
1693 TC-VM-PB TIFFANY & CO AT&T 7056 ASN VOICE MAIL
1694 TC-VM-BAL TIFFANY & CO AT&T 7056 ASN VOICE MAIL
1695 TC-VM-OB TIFFANY & CO AT&T 7056 ASN VOICE MAIL
1696 TC-VM-HO TIFFANY & CO AT&T 7056 ASN VOICE MAIL
1698 ND-133 NEWSDAY 1 P120 CHATTERBOOK CD
</TABLE>
Schedule 1.04 Page 2
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1700 TC-VM-TO TIFFANY & CO AT&T 63153P VOICE MAIL
1704 NNM-006 NATIONAL BOOK 4 IBM 4693 421 REGISTERS
1705 TC-4693-XTRA TIFFANY & CO 4 IBM 4693 741 REGISTERS
1706 TC-4693-BH TIFFANY & CO 12 IBM 4693 741 REGISTERS
1707 TC-4693-DC TIFFANY & CO 7 IBM 4693 741 REGISTERS
1708 TC-4693-CM TIFFANY & CO 8 IBM 4693 741 REGISTERS
1709 TC-4693-AT TIFFANY & CO 7 IBM 4693 741 REGISTERS
1710 TC-VM-PH TIFFANY & CO AT&T 7056 PSN VOICE MAIL
1712 NNM-007 NATIONAL BOOK 1 YALE FORKLIFT
1713 TC-4693-CC TIFFANY & CO 7 IBM 4693 741 REGISTERS
1715 ND-135 NEWSDAY 1 INNOVATIVE HASN 335 MAILING MACHINE
1718 TC-VIDEO-F TIFFANY & CO AT&T 3830 527 VIDEO CONFERENCE
1720 TIFFANY & CO 2 AT&T 3830 527 VIDEO CONFERENCE
1723 CASE CORP 2 MEMOREX 5600 SULTAN AUTO
ROBOTIC LIBRARY
1724 TIFFANY & CO 10 IBM 5494 EXT CONTROLLER
10 IBM 5494 1100 TOKEN RING ADP
10 IBM 5494 1200 TWINAX EXP KIT
1726 CASE 13 HUGHES VSAT 1.2M SATTELITE DISH
1727 CASE 19 HUGHES VSAT 1.2M SATTELITE DISH
1728 CASE 24 HUGHES VSAT 1.2M SATTELITE DISH
1729 CASE 16 HUGHES VSAT 1.2M SATTELITE DISH
1731 HARTFORD GRAD 1 SUN X972A RACK MOUNT RAILS
4 SUN M1170 M1200 UPGRADE\ULTRA 2
5 SUN UBA1-92 128EB 167MHZ,128MB,2X2G
4 SUN X5501A 8.4G 5400PRM SCSI
1 SUN X1021A PRESTOSERVER NFS
13 SUN X1018A SBUS ADAPTER
5 SUN X6272A 16-32G 4MM TAPE AUTO
7 SUN X903A 50-68 1.2 METER EXT
5 SUN X904A 50-68 2.0 METER EXT
2 SUN UNFIR-MSC 2.0-P SPAC FIREWAL
2 SUN FIR-2.0-P FIREWALL-1.2
1 SUN X5161A INT DISKBD 4GB
</TABLE>
Schedule 1.04 Page 3
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 SUN ENTCAB EXPANSION CABINET
1 SUN X5511A DISK 4.2GB/7200
1 SUN X5151A DISK 2GB/7200
2 SUN X7001A OPT MEMORY 32MB
3 SUN X765A INT DISK 2GB
1 SUN X5225A INT DISK 4GB/5400
2 SUN X907A CABLE
1 SUN ENT4000 4000 SERVER FAMIL
1 SUN X790A STORAGE ARRAY MD
1 SUN X1057A CHNL HOST ADAPT
2 SUN X6253A 4-8GB 4MM TAPE
2 SUN X6152A CD SPRCSTRG
1 SUN X5156A 644M INT CD
1 SUN X5153A 2G INT DISK
2 SUN X7001A 32M MEMEORY
1 SUN NETRA-I 1145 143MHZ 17"
2 CISCO VIP2-20 PROC. 2 MODEL 20
2 CISCO PA-FE-TX 1 PORT ADAPTER
1 CISCO PA-8E 8PORT ETHERNET
1 CISCO CAB-V35MT CABLE
1 CISCO 7507 7SLOT,2CYBUS
1 CISCO MEM-RSP FLC16M FLASH MEM 16MG
1 CISCO MEM-RSP 32 RSP1/2 DRAM 32MG
1 CISCO SF-G75BS 11.0.7 DESKTOP
1 CISCO 2511 COMSRV/RTR 2500
2 CISCO SF25E REM.ACCES SERVER
2 CISCO MEM-1X16D 16MB RAM SIMM
3 CISCO CAB-OCTAL KIT CABLE
1 CISCO 2509 COMSRV/RTR 2500
2 CISCO MEM-1X8F-U ADD'L 8MB FLASH
1 CISCO WS-C5001 CATALYST 500-SVR
2 CISCO WS-X5213 CATALYST 5K ETHER
1 CISCO WS-C2901 14 PORT SE SWITCH
2 CISCO WS-C3016A CATALYST 3000
2 CISCO WS-X3002 4 PORT 10-BASE-T
2 CISCO WS-X3001 100 BASE-T MODULE
1 CISCO FR-NF75 7500 SWITCHING LIC
2 CISCO WX-X3004 CAT\3000 STACKPORT
1 CISCO CWSI-1.0 SOLAR SOLARIS STANDALONE
1 QMS 2425EX PRT-SYS, 110V
1 QMS P550 DUPLEX KIT
1 QMS 2425 KIT,OPT,PRT-SYS
1 QMS 2600 433-103 KIT,OTRBD,MULTI
4 LEXMARK OPTRA LEXMARK PRINTER
4 LEXMARK DUPLEX OPTRA DUPLEXER
3 LEXMARK DUAL-R DUAL R FEEDER
4 LEXMARK 16MB MEMORY
2 LIGHTWAVE SCS RACK MOUNT 12 PRT
6 LIGHTWAVE DUAL 2 PORT SPOOLER MODULE
6 LIGHTWAVE CABLE RJ45 2 MET
6 LIGHTWAVE CABLE RJ45 5 MET
12 LIGHTWAVE RECEPTACL CONSOLE ADAPTER
</TABLE>
Schedule 1.04 Page 4
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1732 PEROT 1 CISCO AS5200 ETHERNET AS5200
1 CISCO AS5200 2500 2500 SERIES IOS
1 CISCO AS5200 DRAM 12MG UPGRADE
1 CISCO AS5200 4MB BOOT FLASH
1 CISCO AS52 2CT1 DUAL T1/PRI CARD
1 CISCO AS52 24B-MCOM V.34 CARRIER CARD
1735 TIFFANY & CO 1 IBM 9406 500 LIC SYSTEM UNIT
1 IBM 9406 2612 EIA 232/V.24 ADP
1 IBM 9406 2142 12.6 RPR PROC
1 IBM 9406 2613 V.35 1-LINE ADP
1 IBM 9406 2619 16/4MBPS TKN RNG
1 IBM 9406 2621 MEDIA DEVICE
1 IBM 9406 2623 COMM CONTROLLER
2 IBM 9406 2644 3490 MAGNETIC TP
1 IBM 9406 2674 OPTICAL BUS ADP
1 IBM 9406 2686 OPTICAL (266MBPS)
2 IBM 9406 3184 32MB MAIN STORAGE
1 IBM 9406 5051 8 DISK UNIT STG
1 IBM 9406 5052 16 DISK UNIT
1 IBM 9406 5070 UNIT EXP TOWER
2 IBM 9406 5143 BULK 400 POWER
4 IBM 9406 6050 TWINAX WKST CTR
1 IBM 9406 6380 2.5GB CART TAPE
2 IBM 9406 6512 DISK UNIT CNTRL
25 IBM 9406 6606 1.96GB DISK UNIT
2 IBM 9406 8186 128MB MAIN STOR
52 IBM CABLES
1746 CASE 17 HUGHES VSAT 1.2M SATTELITE DISH
1747 CASE 8 HUGHES VSAT 1.2M SATTELITE DISH
1751 TIFFANY & CO 1 IBM 9406 6607 4.19GB DISK UNIT
1755 TIFFANY & CO 1 IBM 5494 EXT REMOTE CONTROLLER
1 IBM 5494 1100 TOKEN RING ADP
1 IBM 5494 1200 TWINAX EXP KIT
1761 NORTHROP 1 IBM 7006 42T RISC/600
1 IBM 7006 3030 1080MB SCSI2 DISK
1 IBM 7006 2610 3.5-2.88MB DISK DR
1 IBM 7006 2643 GXT500 GRAPH ADAPT
1 IBM 7006 3107 SER PORT CONV CABLE
1 IBM 7006 3610 P70 MONITOR 19.1"
4 IBM PNY 32MB PYN MEMORY
1 IBM 7006 4043 5MB L2 CACHE
1 IBM 7006 9397 1080MB BSE SCSI DR
1 IBM 7006 9800 POWER CORD
4 IBM 7006 42T RISC/600
4 IBM 7006 3030 1080MB SCSI2 DISK
4 IBM 7006 2610 3.5-2.88MB DISK DR
4 IBM 7006 2643 GXT500 GRAPH ADAPT
4 IBM 7006 3107 SER PORT CONV CABLE
4 IBM 7006 3610 P70 MONITOR 19.1"
</TABLE>
Schedule 1.04 Page 5
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
4 IBM 7006 3750 WRAP PLUG
4 IBM 7006 3751 DIAGNOSTIC MEDIA
16 SIMMS PNY 32MB MEMORY
4 IBM 7006 4043 5MB L2 CACHE
4 IBM 7006 9010 KEYBOARD 101 KEYS
4 IBM 7006 9041 3 BUTTON MOUSE
4 IBM 7006 9300 LANGUAGE GROUP
4 IBM 7006 9397 1080MB BASE SCSCI DR
4 IBM 7006 9800 POWER CORD
16 IBM 7006 42T RISC/600
16 IBM 7006 3030 1080MB SCSI2 DISK
16 IBM 7006 2610 3.5-2.88MB DISK DR
16 IBM 7006 2643 GXT500 GRAPH ADAPT
16 IBM 7006 3107 SER PORT CONV CABLE
16 IBM 7006 3610 P70 MONITOR 19.1
16 SIMMS PNY 32MB MEMORY
16 IBM 7006 4043 5MB L2 CACHE
16 IBM 7006 9010 KEYBOARD 101 KEYS
16 IBM 7006 9041 3 BUTTON MOUSE
16 IBM 7006 9300 LANGUAGE GROUP
16 IBM 7006 9397 1080MB SCSI2 DISK DR
16 IBM 7006 9800 POWER CORD
21 IBM 6094 020 LIGHT PGM K/B
21 IBM 6094 010 DIALS
21 IBM 6093 011 CURSOR PAD
1762 NORTHROP 1 IBM 7006 42T RISC/6000
1 IBM 7006 3030 1080MB SCSI2 DISK
1 IBM 7006 2610 3.5-2.88MB DISK DR
1 IBM 7006 2643 GXT500 GRAPH ADAPT
1 IBM 7006 3107 SER PORT CONV CABLE
1 IBM 7006 3610 P70 MONITOR 19.1"
4 SIMMS PNY 32MB MEMORY
1 IBM 7006 4043 5MB L2 CACHE
1 IBM 7006 9010 KEYBOARD 101
1 IBM 7006 9041 3 BUTTON MOUSE
1 IBM 7006 9300 LANGUAGE GROUP
1 IBM 7006 9397 1080MB SCSI2 DISK DR
1 IBM 7006 9800 POWER CORD
1 IBM 6094 020 LIGHT PGM K/B
1 IBM 6094 010 DIALS
1 IBM 6093 011 CURSOR PAD
1763 NORTHROP 5 IBM 7006 42T RISC 6000
5 IBM 7006 3030 1080MB SCSI2 DISK
5 IBM 7006 2610 3.5-2.88MB DISK DR
5 IBM 7006 2643 GXT500 GRAPH ADAPT
5 IBM 7006 3107 SER PORT CONV CABLE
5 IBM 7006 3610 P70 MONITOR 19.1"
20 SIMMS PNY 32MB MEMORY
5 IBM 7006 4043 5MB L2 CACHE
5 IBM 7006 9010 KEYBOARD 101
5 IBM 7006 9041 3 BUTTON MOUSE
5 IBM 7006 9300 LANGUAGE GROUP
</TABLE>
Schedule 1.04 Page 6
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
5 IBM 7006 9397 1080MB SCSI2 DISK DR
5 IBM 7006 9800 POWER CORD
5 IBM 6094 020 LIGHT PGM K/B
5 IBM 6094 010 DIALS
5 IBM 6093 011 CURSOR PAD
1770 TIFFANY & CO 1 IBM 9406 500 LIC SYSTEM UNIT
1 IBM 9406 2142 500 PROCESSOR
1 IBM 9406 2612 EIA 232/V.24 ADP
1 IBM 9406 2619 16/4MBPS TOKEN
1 IBM 9406 5006 BACKUP TAPE
1 IBM 9406 5143 400W POWER SUPPLY
1 IBM 9406 6380 2.5GB 1/4" CART TP
1 IBM 9406 6512 DISK UNIT CNTRL/RAID
11 IBM 9406 6607 4.19GB DISK UNIT/A
2 IBM 9406 8186 4.19GB DISK UNIT/A
1771 TIFFANY & CO 1 IBM 7857 017 19.2 BAUD MODEM
1773 TIFFANY & CO 3 IBM 9406 6607 4.19GB DISK UNIT/A
1774 TIFFANY & CO 9 IBM 4693 741 BASE POS TERMINAL
9 IBM 4693 0149 TOKEN RING ADPT
9 IBM 4693 3324 KEYBOARD
9 IBM 4693 3326 DISTR K/B CABLE
9 IBM 4693 3330 KEYBUTTON KIT
9 IBM 4693 3360 CASH DRAW ASSEMBLY
9 IBM 4693 3365 DIST CASH DRAW CBL
9 IBM 4693 3390 TOKEN RING CABLE
9 IBM 4693 3879 TILL FOR CASH DRAW
9 IBM 4693 3924 MONO VIDEO DISPLAY
9 IBM 4693 4635 BATTERY
9 IBM 4693 4654 4MB MEMORY
9 IBM 4693 4800 MDL 4 PRINTER
9 IBM 4693 4922 PRINTER DIST CABLE
9 IBM 4693 4923 PRINTER RIBBON
9 IBM 4693 7429 MONITOR STAND
1 IBM 6887 750 CONTROLLER
1 IBM 6887 G40 14" MONITOR
1 IBM 6887 7632 TOKEN RING NETWORK
1 IBM 6887 7099 MULTI PROTOCOL ADP
1 IBM 6887 7498 POS EXPANSION CARD
1 IBM 6887 3111 DUAL STORE TAPE
1 IBM CABLE PRINTER
1 IBM HOST COMM CABLE
1 IBM 14.4 DATA MODEM
1 LEXMARK 4039 10T LASER PRINTER
1776 NEWSDAY 6 MICROAGE POWERCORD 166CLONE
6 MICROAGE 64MB MEMORY UPGRADE
6 MICROAGE INTERNAL ZIP DRIVE
1 MICROAGE HP LASERJET PRINTER
1779 NATIONSBANC 2 STORAGETEK SD 3H32 CARTRIDGE DRIVE
2 STORAGETEK 9415 OVERHEAD DISPLAY
</TABLE>
Schedule 1.04 Page 7
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
2 STORAGETEK 2511 AUTO CARTRIDGE LIBR
2 STORAGETEK 3R13 RW,CTU,SCSI ADAPT
2 STORAGETEK 3R23 RW,CTU,SCSI ADAPT
1781 NAT'L MERCHANT 1 IBM 4693 741 POS TERMINAL
7 IBM 4693 421 POS TERMINAL
1 IBM V.3229 MODEM
1 IBM CABLE
10 IBM T/R CABLE 25'
1 IBM RJ45 MAY-8 PORT
1782 TIFFANY & CO 1 IBM 9406 6501 DASD CONTROLLER
1783 TC-4693-XTRAA TIFFANY & CO
1785 TIFFANY & CO 4 IBM 4693 741 BASE POS TERMINAL
4 IBM 4693 0149 TOKEN RING ADPT
4 IBM 4693 3324 KEYBOARD
4 IBM 4693 3326 DISTR K/B CABLE
4 IBM 4693 3330 KEYBUTTON KIT
4 IBM 4693 3360 CASH DRAW ASSEMBLY
4 IBM 4693 3365 DIST CASH DRAW CBLE
4 IBM 4693 3390 TOKEN RING CABLE
4 IBM 4693 3879 TILL FOR CASH DRAW
4 IBM 4693 3924 MONO VIDEO DISPLAY
4 IBM 4693 4635 BATTERY
4 IBM 4693 4654 4MB MEMORY
4 IBM 4693 4800 MDL 4 PRINTER
4 IBM 4693 4922 PRINTER DIST CABLE
4 IBM 4693 4923 PRINTER RIBBON
4 IBM 4693 7429 MONITOR STAND
1787 TIFFANY & CO 1 AT&T 2177 GEI DATAPORT EXTERNAL
3 AT&T 2178 001A DEFINITY MULTIMEDIA
1 AT&T 2565 B4S XSX4 BRI (PBX)
2 AT&T 27634 ABC DTE CABLE
1 AT&T 3830 088 MDL 650 DOC CAMERA
1 AT&T 3830 198 S4000 PFS OPTION
1 AT&T 3830 532 S4500 ZX W/32" MONT
1 AT&T 3835 211 APPL INTEG T1
1 AT&T 69770 NULL MODEM ADPT
3 AT&T 8302 901A POWERKIT FOR DEFIN
1788 TIFFANY & CO 1 IBM 9406 2644 3490 MAGNETIC TAPE
1790 NAT'L MERCHANT 2 IBM 4693 421 POS TERMINAL
2 IBM T/R 25' CABLE
1 IBM 4693 741 POS TERMINAL
1 IBM V.3229 MODEM
1 IBM MODEM CABLE
1791 PEROT 1 AMDAHL SP100 8121 SPECTRIS STORAGE
1794 PEROT 1 AMDAHL SP100 8121 SPECTRIS STORAGE
</TABLE>
Schedule 1.04 Page 8
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1795 NATIONSBANC 1 STORAGETEK SD-3H32 3H34 MODEL UPGRADE
1796 BLUE CROSS 1 AMDAHL SP100 8121 SPECTRIS STRGE PROC
1798 LETHOFF 1 IBM 9406 D35 AS\400
3 IBM 9332 600 DISC STORAGE
1 IBM 4019 001 LASER PRINTER
1 IBM 9309 002 RACK ENCLOSURE
1 IBM 5853 002 MODEM
1 IBM 4234 002 DOT BAND PRINTER
1800 NATIONSBANC 1 STORAGETEK SD-3H32 3H34 MODEL UPGRADE
1806 CASE 8 SUTMYN 959361 001 ERSCON CHANNELS
8 SUTMYN 54942561 CABLE
1809 TIFFANY & CO 1 IBM 9348 001 MAGNETIC TAPE UNIT
1810 NEWSDAY 1 HP HP755CM COLOR PRNT-PLOTTER
1815 BLUE CROSS 1 AMDAHL HDS 7700 DISK ARRAY SUBSYS
1816 BLUE CROSS 12 CISCO WS-5020BF 5K START KIT-CHASSIS
2 CISCO WS-C5000 CATALYST 5000 CHAS
2 CISCO WS-5008A POWER SUPPLY
2 CISCO WSC5008A/2 DUAL POWER SUPPLY
2 CISCO WS-X5006 FX MULTI MODE FIBER
8 CISCO WS-X5213 5K 10/100 ETHERNET
24 CISCO WS-C5020 10BT GRP ETHERNET
12 CISCO WS-C0058A POWER SUPPLY
1818 CASE 70 HUGHES VSAT 11.2M SATTELITE DISH
1819 BED BATH & BEY 7 LEXMARK 15A1000 LASER PRINTER
7 LEXMARK I-DATA TWINAX CONVERTER
91 IBM 3488 V13 INFOWINDOW
91 IBM G41 14" MONITOR
1820 TC-AS400-1 TIFFANY & CO
1823 BLUE CROSS 2 STORAGETEK 9490 M34 CARTRIDGE SUBSYS
2 STORAGETEK 9311 001 LIBRARY CTL UNIT
2 STORAGETEK 9310 001 POWDERHORN 6000 CART
2 STORAGETEK 4420 001 PASS THRU PORT
1824 TIFFANY & CO 1 IBM 9406 510 UPGRADE TO 510
1 IBM 9406 6512 DISK UNIT CNTRLR
6 IBM 9406 6607 4.19GB DISK UNIT/A
2 IBM 9406 7255 OPT BASE 256MB
1 IBM 9406 5080 256MBPS STRGE UNIT
1 IBM 9406 2143 510 PROCESSOR
1 IBM 9406 3154 128MB MAIN STORAGE
1825 NEWSDAY 2 MICRON P150 LAPTOPS
1826 TIFFANY & CO 3 IBM 4694 244 POS TERMINAL
</TABLE>
Schedule 1.04 Page 9
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3 IBM 4694 3324 POS KEYBOARD
3 IBM 4694 3325 INTEGRATED K/B CBLE
3 IBM 4694 3330 KEYBUTTON KIT
3 IBM 4694 3360 CASH DRAW ASSEMBLY
3 IBM 4694 3364 INTEG CASH CABLE
3 IBM 4694 3390 TOKEN RING CABLE
3 IBM 4694 3879 TILL/CASH DRAW
3 IBM 4694 3920 VIDEO DISPLAY
3 IBM 4694 4800 MODEL 4 PRINTER
3 IBM 4694 4920 PRINTER INTEG CABLE
3 IBM 4694 4923 PRINTER RIBBON
3 IBM 4694 7462 TOKEN RING NETWORK
3 IBM 4694 7900 DUMP SWITCH
1 IBM 6887 VAG PC 750
1 IBM 92G7632 NETWORK ADAPTER
1 IBM 42H4332 ADPT MULTIPROTOCAL
1 IBM 85H8101 ISA STORE CNTRLR
1 IBM 44H3111 800 INT TAPE DRIVE
1 IBM 6542 103 14" COLOR MONITOR
1 LEXMARK 4039 10P LASER PRINTER
1 LEXMARK INTERFACE CABLE
1 IBM 28.8 DATA MODEM
1 IBM COMM CABLE
1827 TIFFANY & CO 2 IBM 4694 244 POS TERMINAL
2 IBM 4694 3324 POS KEYBOARD
2 IBM 4694 3325 INTEGRATED K/B CBLE
2 IBM 4694 3330 KEYBUTTON KIT
2 IBM 4694 3360 CASH DRAW ASSEMBLY
2 IBM 4694 3364 INTEG CASH CABLE
2 IBM 4694 3390 TOKEN RING CABLE
2 IBM 4694 3879 TILL/CASH DRAW
2 IBM 4694 3920 VIDEO DISPLAY
2 IBM 4694 4800 MODEL 4 PRINTER
2 IBM 4694 4920 PRINTER INTEG CABLE
2 IBM 4694 4923 PRINTER RIBBON
2 IBM 4694 7462 TOKEN RING NETWORK
2 IBM 4694 7900 DUMP SWITCH
2 SUREMARK 4610 T12 POS PRINTER
2 4610 3455 INTEG PLATE
2 4610 4920 INTEG PART CABLE
1 IBM 6887 KAG 750 CONTROLLER
2 IBM 92G7632 NETWORK ADAPTER
2 IBM 42H4332 ADPT MULTIPROTOCAL
1 IBM 85H8101 ISA STORE CNTRLR
1 IBM 44H3111 800 INT TAPE DR
1 IBM 6542 103 14" COLOR MONITOR
1 LEXMARK 4039 10P LASER PRINTER
1 LEXMARK INTERFACE CABLE
1 IBM 28.8 DATA MODEM
1 IBM COMM CABLE
1828 TIFFANY & CO 2 IBM 4694 244 POS TERMINAL
2 IBM 4694 3324 POS KEY BOARD
2 IBM 4694 3325 INTEG K/B CABLE
</TABLE>
Schedule 1.04 Page 10
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
2 IBM 4694 3330 KEYBUTTON KIT
2 IBM 4694 3360 CASH DRAW ASSEMBLY
2 IBM 4694 3364 INTEG CASH CABLE
2 IBM 4694 3390 TOKEN RING CABLE
2 IBM 4694 3879 TILL/CASH DRAW
2 IBM 4694 3920 VIDEO DISPLAY
2 IBM 4694 4800 MODEL 4 PRINTER
2 IBM 4694 4920 PRINTER INTEG CABLE
2 IBM 4694 4923 PRINTER RIBBON
2 IBM 4694 7462 TOKEN RING NETWORK
2 IBM 4694 7900 DUMP SWITCH
5 IBM 4694 244 POS TERMINAL
5 IBM 4694 3324 POS KEYBOARD
5 IBM 4694 3326 DISTR K/B CABLE
5 IBM 4694 3330 KEYBUTTON KIT
5 IBM 4694 3360 CASH DRAW ASSEMBLY
5 IBM 4694 3365 DISTR CASH CABLE
5 IBM 4694 3390 TOKEN RING CABLE
5 IBM 4694 3879 TILL/CASH DRAW
5 IBM 4694 3924 VIDEO DISPLAY
5 IBM 4694 4800 MODEL 4 PRINTER
5 IBM 4694 4922 PRINTER DISTR CABLE
5 IBM 4694 4923 PRINTER RIBBON
5 IBM 4694 7429 MONITOR STAND DIST
5 IBM 4694 7462 TOKEN RING NETWORK
5 IBM 4694 7900 DUMP SWITCH
5 IBM 4694 9500 FLAT TOP DISTR
1 IBM 6887 VAG PC 750
1 IBM 92H7632 NETWORK ADAPTER
1 IBM 42H4332 ADPT MULTIPROTOCAL
1 IBM 85H8101 ISA STORE CONTROLLER
1 IBM 44H3111 800 INT TAPE DRIVE
1 IBM 6542 103 14" COLOR MONITOR
1 LEXMARK 4039 10P LASER PRINTER
1 LEXMARK INTERFACE CABLE
1 IBM 28.8 DATA MODEM
1 IBM COMM CABLE
1829 TIFFANY & CO 1 IBM 4694 244 POS TERMINAL
1 IBM 4694 3324 POS KEYBOARD
1 IBM 4694 3325 INTEG K/B CABLE
1 IBM 4694 3330 KEYBUTTON KIT
1 IBM 4694 3360 CASH DRAW ASSEMBLY
1 IBM 4694 3364 INTEG CASH CABLE
1 IBM 4694 3390 TOKEN RING CABLE
1 IBM 4694 3879 TILL/CASH DRAW
1 IBM 4694 3920 VIDEO DISPLAY
1 IBM 4694 4800 MODEL 4 PRINTER
1 IBM 4694 4920 PRINTER INTEG CABLE
1 IBM 4694 4923 PRINTER RIBBON
1 IBM 4694 7462 TOKEN RING NETWORK
1 IBM 4694 7900 DUMP SWITCH
5 IBM 4694 244 POS TERMINAL
5 IBM 4694 3324 POS KEYBOARD
5 IBM 4694 3326 DISTR K/B CABLE
</TABLE>
Schedule 1.04 Page 11
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
5 IBM 4694 3330 KEYBUTTON KIT
5 IBM 4694 3360 CASH DRAW ASSEMBLY
5 IBM 4694 3365 DISTR CASH CABLE
5 IBM 4694 3390 TOKEN RING CABLE
5 IBM 4694 3879 TILL/CASH DRAW
5 IBM 4694 3924 VIDEO DISPLAY
5 IBM 4694 4800 MODEL 4 PRINTER
5 IBM 4694 4922 PRINTER DISTR CABLE
5 IBM 4694 4923 PRINTER RIBBON
5 IBM 4694 7429 MONITOR STAND DIST
5 IBM 4694 7462 TOKEN RING NETWORK
5 IBM 4694 7900 DUMP SWITCH
5 IBM 4694 9500 FLAT TOP DISTR
1 IBM 6887 VAG PC 750
1 IBM 92G7632 NETWORK ADAPTER
1 IBM 42H4332 ADPT MULTIPROTOCAL
1 IBM 85H8101 ISA STORE CNTRLR
1 IBM 44H3111 800 INT TAPE DRIVE
1 IBM 6542 103 14" COLOR MONITOR
1 LEXMARK 4039 10P LASER PRINTER
1 LEXMARK INTERFACE CABLE
1 IBM 28.8 DATA MODEM
1 IBM COMM CABLE
1830 TIFFANY & CO 2 IBM 4694 244 POS TERMINAL
2 IBM 4694 3324 POS KEYBOARD
2 IBM 4694 3325 INTEG K/B CABLE
2 IBM 4694 3330 KEYBUTTON KIT
2 IBM 4694 3360 CASH DRAW ASSEMBLY
2 IBM 4694 3364 INTEG CASH CABLE
2 IBM 4694 3390 TOKEN RING CABLE
2 IBM 4694 3879 TILL/CASH DRAW
2 IBM 4694 3920 VIDEO DISPLAY
2 IBM 4694 4800 MODEL 4 PRINTER
2 IBM 4694 4920 PRINTER INTEG CABLE
2 IBM 4694 4923 PRINTER RIBBON
2 IBM 4694 7462 TOKEN RING NETWORK
2 IBM 4694 7900 DUMP SWITCH
9 IBM 4694 244 POS TERMINAL
9 IBM 4694 3324 POS KEYBOARD
9 IBM 4694 3326 DISTR K/B CABLE
9 IBM 4694 3330 KEYBUTTON KIT
9 IBM 4694 3360 CASH DRAW ASSEMBLY
9 IBM 4694 3365 DISTR CASH CABLE
9 IBM 4694 3390 TOKEN RING CABLE
9 IBM 4694 3879 TILL/CASH DRAW
9 IBM 4694 3924 VIDEO DISPLAY
9 IBM 4694 4800 MODEL 4 PRINTER
9 IBM 4694 4922 PRINTER DISTR CABLE
9 IBM 4694 4923 PRINTER RIBBON
9 IBM 4694 7429 MONITOR STAND DIST
9 IBM 4694 7462 TOKEN RING NETWORK
9 IBM 4694 7900 DUMP SWITCH
9 IBM 4694 9500 FLAT TOP DISTR
1 IBM 6887 VAG PC 750
</TABLE>
Schedule 1.04 Page 12
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 IBM 92G7632 NETWORK ADAPTER
1 IBM 42H4332 ADPT MULTIPROTOCAL
1 IBM 85H8101 ISA STORE CNTRLR
1 IBM 44H3111 800 INT TAPE DRIVE
1 IBM 6542 103 14" COLOR MONITOR
1 LEXMARK 4039 10P LASER PRINTER
1 LEXMARK INTERFACE CABLE
1 IBM 28.8 DATA MODEM
1 IBM COMM CABLE
1831 TIFFANY & CO 3 IBM 4694 244 POS TERMINAL
3 IBM 4694 3324 POS KEYBOARD
3 IBM 4694 3325 INTEG K/B CABLE
3 IBM 4694 3330 KEYBUTTON KIT
3 IBM 4694 3360 CASH DRAW ASSEMBLY
3 IBM 4694 3364 INTEG CASH CABLE
3 IBM 4694 3390 TOKEN RING CABLE
3 IBM 4694 3879 TILL/CASH DRAW
3 IBM 4694 3920 VIDEO DISPLAY
3 IBM 4694 4800 MODEL 4 PRINTER
3 IBM 4694 4920 PRINTER INTEG CABLE
3 IBM 4694 4923 PRINTER RIBBON
3 IBM 4694 7462 TOKEN RING NETWORK
3 IBM 4694 7900 DUMP SWITCH
8 IBM 4694 244 POS TERMINAL
8 IBM 4694 3324 POS KEYBOARD
8 IBM 4694 3326 DISTR K/B CABLE
8 IBM 4694 3330 KEYBUTTON KIT
8 IBM 4694 3360 CASH DRAW ASSEMBLY
8 IBM 4694 3365 DISTR CASH CABLE
8 IBM 4694 3390 TOKEN RING CABLE
8 IBM 4694 3879 TILL/CASH DRAW
8 IBM 4694 3924 VIDEO DISPLAY
8 IBM 4694 4800 MODEL 4 PRINTER
8 IBM 4694 4922 PRINTER DISTR CABLE
8 IBM 4694 4923 PRINTER RIBBON
8 IBM 4694 7429 MONITOR STAND DIST
8 IBM 4694 7462 TOKEN RING NETWORK
8 IBM 4694 7900 DUMP SWITCH
8 IBM 4694 9500 FLAT TOP DISTR
1 IBM 6887 VAG PC 750
1 IBM 92G7632 NETWORK ADAPTER
1 IBM 42H4332 ADPT MULTIPROTOCAL
1 IBM 85H8101 ISA STORE CNTRLR
1 IBM 44H3111 800 INT TAPE DRIVE
1 IBM 6542 103 14" COLOR MONITOR
1 LEXMARK 4039 10P LASER PRINTER
1 LEXMARK INTERFACE CABLE
1 IBM 28.8 DATA MODEM
1 IBM COMM CABLE
1833 BED BATH & BEY 7 IBM 5494 EXT CONTROLLER
7 IBM 5494 1100 TOKEN RING ADPT
1839 TIFFANY & CO 3 IBM 4694 244 POS TERMINAL
</TABLE>
Schedule 1.04 Page 13
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3 IBM 4694 3324 POS KEYBOARD
3 IBM 4694 3325 INTEG K/B CABLE
3 IBM 4694 3330 KEYBUTTON KIT
3 IBM 4694 3360 CASH DRAW ASSEMBLY
3 IBM 4694 3364 INTEG CASH CABLE
3 IBM 4694 3390 TOKEN RING CABLE
3 IBM 4694 3879 TILL/CASH DRAW
3 IBM 4694 3920 VIDEO DISPLAY
3 IBM 4694 4800 MODEL 4 PRINTER
3 IBM 4694 4920 PRINTER INTEG CABLE
3 IBM 4694 4923 PRINTER RIBBON
3 IBM 4694 7462 TOKEN RING NETWORK
3 IBM 4694 7900 DUMP SWITCH
8 IBM 4694 244 POS TERMINAL
8 IBM 4694 3324 POS KEYBOARD
8 IBM 4694 3326 DISTR K/B CABLE
8 IBM 4694 3330 KEYBUTTON KIT
8 IBM 4694 3360 CASH DRAW ASSEMBLY
8 IBM 4694 3365 DISTR CASH CABLE
8 IBM 4694 3390 TOKEN RING CABLE
8 IBM 4694 3879 TILL/CASH DRAW
8 IBM 4694 3924 VIDEO DISPLAY
8 IBM 4694 4800 MODEL 4 PRINTER
8 IBM 4694 4922 PRINTER DISTR CABLE
8 IBM 4694 4923 PRINTER RIBBON
8 IBM 4694 7429 MONITOR STAND DIST
8 IBM 4694 7462 TOKEN RING NETWORK
8 IBM 4694 7900 DUMP SWITCH
8 IBM 4694 9500 FLAT TOP DISTR
1 IBM 6887 VAG PC 750
1 IBM 92G7632 NETWORK ADAPTER
1 IBM 42H4332 ADPT MULTIPROTOCAL
1 IBM 85H8101 ISA STORE CNTRLR
1 IBM 44H3111 800 INT TAPE DRV
1 IBM 6542 103 14" COLOR MONITOR
1 LEXMARK 4039 10P LASER PRINTER
1 LEXMARK INTERFACE CABLE
1 IBM 28.8 DATA MODEM
1 IBM COMM CABLE
1840 TIFFANY & CO 2 IBM 4694 244 POS TERMINAL
2 IBM 4694 3324 POS KEYBOARD
2 IBM 4694 3325 INTEG K/B CABLE
2 IBM 4694 3330 KEYBUTTON KIT
2 IBM 4694 3360 CASH DRAW ASSEMBLY
2 IBM 4694 3364 INTEG CASH CABLE
2 IBM 4694 3390 TOKEN RING CABLE
2 IBM 4694 3879 TILL/CASH DRAW
2 IBM 4694 3920 VIDEO DISPLAY
2 IBM 4694 4800 MODEL 4 PRINTER
2 IBM 4694 4920 PRINTER DISTR CABLE
2 IBM 4694 4923 PRINTER RIBBON
2 IBM 4694 7462 TOKEN RING NETWORK
2 IBM 4694 7900 DUMP SWITCH
2 IBM 6887 VAG PC 750
</TABLE>
Schedule 1.04 Page 14
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 IBM 92G7632 NETWORK ADAPTER
1 IBM 42H4332 ADPT MULTIPROTOCAL
1 IBM 85H8101 ISA STORE CNTRLR
1 IBM 44H3111 800 INT TAPE DRV
1 IBM 6542 103 14" COLOR MONITOR
1 LEXMARK 4039 10P LASER PRINTER
1 LEXMARK INTERFACE CABLE
1 IBM 28.8 DATA MODEM
1 IBM COMM CABLE
6 IBM 4694 244 POS TERMINAL
6 IBM 4694 3324 POS KEYBOARD
6 IBM 4694 3326 DISTR K/B CABLE
6 IBM 4694 3330 KEYBUTTON KIT
6 IBM 4694 3360 CASH DRAW ASSEMBLY
6 IBM 4694 3365 DISTR CASH CABLE
6 IBM 4694 3390 TOKEN RING CABLE
6 IBM 4694 3879 TILL/CASH DRAW
6 IBM 4694 3924 VIDEO DISPLAY
6 IBM 4694 4800 MODEL 4 PRINTER
6 IBM 4694 4922 PRINTER DISTR CABLE
6 IBM 4694 4923 PRINTER RIBBON
6 IBM 4694 7429 MONITOR STAND DIST
6 IBM 4694 7462 TOKEN RING NETWORK
6 IBM 4694 7900 DUMP SWITCH
6 IBM 4694 9500 FLAT TOP DISTR
1841 TIFFANY & CO 6 IBM 4694 244 POS TERMINAL
6 IBM 4694 3324 POS KEYBOARD
6 IBM 4694 3326 DISTR K/B CABLE
6 IBM 4694 3330 KEYBUTTON KIT
6 IBM 4694 3360 CASH DRAW ASSEMBLY
6 IBM 4694 3365 DISTR CASH CABLE
6 IBM 4694 3390 TOKEN RING CABLE
6 IBM 4694 3879 TILL/CASH DRAW
6 IBM 4694 3924 VIDEO DISPLAY
6 IBM 4694 4800 MODEL 4 PRINTER
6 IBM 4694 4922 PRINTER DISTR CABLE
6 IBM 4694 4923 PRINTER RIBBON
6 IBM 4694 7429 MONITOR STAND DIST
6 IBM 4694 7462 TOKEN RING NETWORK
6 IBM 4694 7900 DUMP SWITCH
6 IBM 4694 9300 FLAT TOP DISTR
6 IBM 6887 VAG PC 750
1 IBM 92G7632 NETWORK ADAPTER
1 IBM 42H4332 ADPT MULTIPROTOCAL
1 IBM 85H8101 ISA STORE CNTRLR
1 IBM 44H3111 800 INT TAPE DRV
1 IBM 6542 103 14" COLOR MONITOR
1 LEXMARK 4039 10P LASER PRINTER
1 LEXMARK INTERFACE CABLE
1 IBM 28.8 DATA MODEM
1 IBM COMM CABLE
1842 BLUE CROSS 1 AMDAHL SP200 8121 SPECTRIS DASD
1 AMDAHL SP200 7085 3072MB CACHE+256MB
</TABLE>
Schedule 1.04 Page 15
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 AMDAHL SP200 7043 8 SHA
2 AMDAHL SP200 8122 SPECTRIS STRGE UNIT
3 AMDAHL SP200 7112 A-GSI 4 RANKS
3 AMDAHL SP200 7116 A-GSI 4 RANKS
1843 BLUE CROSS 1 AMDAHL SP200 8888 SP100 UPGRADE
3 AMDAHL SP200 7089 256MB CACHE ADD-ON
1 AMDAHL SP200 7207 8 SHA TO 12 SHA
1 AMDAHL SP200 8122 SPECTRIS STRGE UNIT
2 AMDAHL SP200 7112 A-GSI 4 RANKS
2 AMDAHL SP200 7116 B-GSI 4 RANKS
1845 TIFFANY & CO 10 IBM 4694 244 POS TERMINAL
10 IBM 4694 3324 POS KEYBOARD
10 IBM 4694 3326 DISTR K/B CABLE
10 IBM 4694 3330 KEYBUTTON KIT
10 IBM 4694 3360 CASH DRAW ASSEMBLY
10 IBM 4694 3365 DISTR CASH CABLE
10 IBM 4694 3390 TOKEN RING CABLE
10 IBM 4694 3879 TILL/CASH DRAW
10 IBM 4694 3924 VIDEO DISPLAY
10 IBM 4694 4800 MODEL 4 PRINTER
10 IBM 4694 4922 PRINTER DISTR CABLE
10 IBM 4694 4923 PRINTER RIBBON
10 IBM 4694 7429 MONITOR STAND DIST
10 IBM 4694 7462 TOKEN RING NETWORK
10 IBM 4694 7900 DUMP SWITCH
10 IBM 4694 9300 FLAT TOP DISTR
10 IBM 6887 VAG PC 750
1 IBM 92G7632 NETWORK ADAPTER
1 IBM 42H4332 ADPT MULTIPROTOCAL
1 IBM 85H8101 ISA STORE CNTRLR
1 IBM 44H3111 800 INT TAPE DRV
1 IBM 6542 103 14" COLOR MONITOR
1 LEXMARK 4039 10P LASER PRINTER
1 LEXMARK INTERFACE CABLE
1 IBM 28.8 DATA MODEM
1 IBM COMM CABLE
1847 TIFFANY & CO 1 IBM 3590 B11 TAPE DRIVE
1 IBM 9309 002 RACK ENCLOSURE
1848 TIFFANY & CO 2 IBM 4694 244 POS TERMINAL
2 IBM 4694 3324 POS KEYBOARD
2 IBM 4694 3325 INTEG K/B CABLE
2 IBM 4694 3330 KEYBUTTON KIT
2 IBM 4694 3360 CASH DRAW ASSEMBLY
2 IBM 4694 3364 INTEG CASH CABLE
2 IBM 4694 3390 TOKEN RING CABLE
2 IBM 4694 3879 TILL/CASH DRAW
2 IBM 4694 3920 VIDEO DISPLAY
2 IBM 4694 4800 MODEL 4 PRINTER
2 IBM 4694 4920 PRINTER INTEG CABLE
2 IBM 4694 4923 PRINTER RIBBON
2 IBM 4694 7462 TOKEN RING NETWORK
</TABLE>
Schedule 1.04 Page 16
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
2 IBM 4694 7900 DUMP SWITCH
1850 TIFFANY & CO 1 IBM 9406 6501 DASD CONTROLLER
1851 PEROT SYSTEMS 1 AMDAHL SP100 8121 SPECTRIS DASD
1 AMDAHL SP100 7051 768MB SHARED STORG
1 AMDAHL SP100 7043 8 SERIAL HOST ADAP
1 AMDAHL SP100 8122 SPECTRIS STORG UNIT
1 AMDAHL SP100 7112 A-GSI 4 RANKS 45.4GB
1 AMDAHL SP100 7116 B-GSI 4 RANKS 45.4GB
1852 PEACEHEALTH 1 DEC SW800 FA CABINET
1 DEC SW8XP AA 2ND POWER
2 DEC HSJ50 AF STORAGEWORKS CNTRL
15 DEC RZ29B VA 4.3GB DISK
3 DEC BA356 JC SHELF 6 DEVICES
3 DEC BA35X MG 8 BIT MODULE
3 DEC BN21H 01 SCSI CABLE
3 DEC BA35X HF 150 WATT POWER SUPP
1853 TIFFANY & CO 4 IBM 4694 244 POS TERMINAL
4 IBM 4694 3324 POS KEYBOARD
4 IBM 4694 3326 DISTR K/B CABLE
4 IBM 4694 3330 KEYBUTTON KIT
4 IBM 4694 3360 CASH DRAW ASSEMBLY
4 IBM 4694 3365 DISTR CASH CABLE
4 IBM 4694 3390 TOKEN RING CABLE
4 IBM 4694 3879 TILL/CASH DRAW
4 IBM 4694 3924 VIDEO DISPLAY
4 IBM 4694 4800 MODEL 4 PRINTER
4 IBM 4694 4922 PRINTER DISTR CABLE
4 IBM 4694 4923 PRINTER RIBBON
4 IBM 4694 7429 MONITOR STAND DIST
4 IBM 4694 7462 TOKEN RING NETWORK
4 IBM 4694 7900 DUMP SWITCH
4 IBM 4694 9300 FLAT TOP DISTR
1 IBM 6887 VAG PC 750
1 IBM 92G7632 NETWORK ADAPTER
1 IBM 42H4332 ADPT MULTIPROTOCAL
1 IBM 85H8101 ISA STORE CNTRLR
1 IBM 44H3111 800 INT TAPE DRV
1 IBM 6542 103 14" COLOR MONITOR
1 LEXMARK 4039 10P LASER PRINTER
1 LEXMARK INTERFACE CABLE
1 IBM 28.8 DATA MODEM
1 IBM COMM CABLE
1 IBM 4694 244 POS TERMINAL
1 IBM 4694 3324 POS KEYBOARD
1 IBM 4694 3325 INTEG K/B CABLE
1 IBM 4694 3330 KEYBUTTON KIT
1 IBM 4694 3360 CASH DRAW ASSEMBLY
1 IBM 4694 3365 DISTR CASH TABLE
1 IBM 4694 3390 TOKEN RING CABLE
1 IBM 4694 3879 TILL/CASH DRAW
1 IBM 4694 3924 VIDEO DISPLAY
</TABLE>
Schedule 1.04 Page 17
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 IBM 4694 4800 MODEL 4 PRINTER
1 IBM 4694 4922 PRINTER INTEG CABLE
1 IBM 4694 4923 PRINTER RIBBON
1 IBM 4694 7429 MONITOR STAND DIST
1 IBM 4694 7462 TOKEN RING NETWORK
1 IBM 4694 7900 DUMP SWITCH
1854 TIFFANY & CO 6 IBM 4694 244 POS TERMINAL
6 IBM 4694 3324 POS KEYBOARD
6 IBM 4694 3326 DISTR K/B CABLE
6 IBM 4694 3330 KEYBUTTON KIT
6 IBM 4694 3360 CASH DRAW ASSEMBLY
6 IBM 4694 3365 DISTR CASH CABLE
6 IBM 4694 3390 TOKEN RING CABLE
6 IBM 4694 3879 TILL/CASH DRAW
6 IBM 4694 3924 VIDEO DISPLAY
6 IBM 4694 4800 MODEL 4 PRINTER
6 IBM 4694 4922 PRINTER DISTR CABLE
6 IBM 4694 4923 PRINTER RIBBON
6 IBM 4694 7429 MONITOR STAND DIST
6 IBM 4694 7462 TOKEN RING NETWORK
6 IBM 4694 7900 DUMP SWITCH
6 IBM 4694 9300 FLAT TOP DISTR
1 IBM 6887 VAG PC 750
1 IBM 92G7632 NETWORK ADAPTER
1 IBM 42H4332 ADPT MULTIPROTOCAL
1 IBM 85H8101 ISA STORE CNTRLR
1 IBM 44H3111 800 INT TAPE DRV
1 IBM 6542 103 14" COLOR MONITOR
1 LEXMARK 4039 10P LASER PRINTER
1 LEXMARK INTERFACE CABLE
1 IBM 28.8 DATA MODEM
1 IBM COMM CABLE
2 IBM 4694 244 POS TERMINAL
2 IBM 4694 3324 POS KEYBOARD
2 IBM 4694 3325 INTEG K/B CABLE
2 IBM 4694 3330 KEYBUTTON KIT
2 IBM 4694 3360 CASH DRAW ASSEMBLY
2 IBM 4694 3365 DISTR CASH TABLE
2 IBM 4694 3390 TOKEN RING CABLE
2 IBM 4694 3879 TILL/CASH DRAW
2 IBM 4694 3924 VIDEO DISPLAY
2 IBM 4694 4800 MODEL 4 PRINTER
2 IBM 4694 4920 PRINTER INTEG CABLE
2 IBM 4694 4923 PRINTER RIBBON
2 IBM 4694 7462 TOKEN RING NETWORK
2 IBM 4694 7900 DUMP SWITCH
1855 TIFFANY & CO 5 IBM 4694 244 POS TERMINAL
5 IBM 4694 3324 POS KEYBOARD
5 IBM 4694 3326 DISTR K/B CABLE
5 IBM 4694 3330 KEYBUTTON KIT
5 IBM 4694 3360 CASH DRAW ASSEMBLY
5 IBM 4694 3365 DISTR CASH CABLE
5 IBM 4694 3390 TOKEN RING CABLE
</TABLE>
Schedule 1.04 Page 18
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
5 IBM 4694 3879 TILL/CASH DRAW
5 IBM 4694 3924 VIDEO DISPLAY
5 IBM 4694 4800 MODEL 4 PRINTER
5 IBM 4694 4922 PRINTER DISTR CABLE
5 IBM 4694 4923 PRINTER RIBBON
5 IBM 4694 7429 MONITOR STAND DIST
5 IBM 4694 7462 TOKEN RING NETWORK
5 IBM 4694 7900 DUMP SWITCH
5 IBM 4694 9300 FLAT TOP DISTR
1 IBM 6887 VAG PC 750
1 IBM 92G7632 NETWORK ADAPTER
1 IBM 42H4332 ADPT MULTIPROTOCAL
1 IBM 85H8101 ISA STORE CNTRLR
1 IBM 44H3111 800 INT TAPE DRV
1 IBM 6542 103 14" COLOR MONITOR
1 LEXMARK 4039 10P LASER PRINTER
1 LEXMARK INTERFACE CABLE
1 IBM 28.8 DATA MODEM
1 IBM COMM CABLE
4 IBM 4694 244 POS TERMINAL
4 IBM 4694 3324 POS KEYBOARD
4 IBM 4694 3325 INTEG K/B CABLE
4 IBM 4694 3330 KEYBUTTON KIT
4 IBM 4694 3360 CASH DRAW ASSEMBLY
4 IBM 4694 3364 INTEG CASH CABLE
4 IBM 4694 3390 TOKEN RING CABLE
4 IBM 4694 3879 TILL/CASH DRAW
4 IBM 4694 3920 VIDEO DISPLAY
4 IBM 4694 4800 MODEL 4 PRINTER
4 IBM 4694 4920 PRINTER INTEG CABLE
4 IBM 4694 4923 PRINTER RIBBON
4 IBM 4694 7462 TOKEN RING NETWORK
4 IBM 4694 7900 DUMP SWITCH
1857 IBM 1 JAPAN DIGITAL 3000E ENGNRG DOC. PLOTTER
1 JAPAN DIGITAL COLLATE OPTION
1 JAPAN DIGITAL NETWORK INTERFACE
1 JAPAN DIGITAL SCAN/COPY/PLOT SYS
1 JAPAN DIGITAL 3150 PRINTFOLD FOLDER
1859 CASE 21 HUGHES VSAT 1.2M SATTELITE DISH
1860 TIFFANY & CO IBM 9406 320 PROCESSOR
1861 BED BATH & BEY 16 IBM 4317 001 NETWORK PRINTER
16 IBM H2438 IPDS SIMMS
16 IBM H2439 POST SCRIPT LEVEL 2
16 IBM H2445 TWINAX SCS INTERFACE
4 IBM 5494 EXT REMOTE CONTROLLER
4 IBM 5494 1100 TOKEN RING ADAPTER
52 IBM 3488 V13 INFOWINDOW LOGIC
52 IBM G41 14" COLOR MONITOR
1862 TIFFANY & CO 11 IBM 5494 EXT CONTROLLERS
11 IBM 5494 1200 TWINAX EXPANSION
</TABLE>
Schedule 1.04 Page 19
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
11 IBM 5494 1100 TOKEN RING
1865 TIFFANY & CO 16 IBM 9406 6607 4.19GB DISK UNIT
13 IBM 9406 6050 TWINAX WORKSTATION
1 IBM 9406 2617 ETHNT 802.3 ADPTR
2 IBM 9406 2609 EIA 232/V.24
1 IBM 9406 2623 SIX LINE COMM CONTRL
1 IBM 9406 5072 1063MBPS SYS UNIT
1 IBM 9406 2688 OPTICAL LINK
1868 BED BATH & BEY 28 IBM 3488 V13 INFOWINDOW LOGIC
28 IBM G41 14" COLOR MONITOR
38 IBM 4317 001 NETWORK PRINTER
38 IBM H2438 IPDS SIMMS
38 IBM H2439 POST SCRIPT LEVEL 2
38 IBM H2445 TWINAX SCS INTERFACE
2 IBM 5494 EXT REMOTE CONTROLLER
2 IBM 5494 1100 TOKEN RING ADAPTER
1869 BLUE CROSS BLUE 1 AMDAHL SP200 8121 SPECTRIS STOR PROC
1 AMDAHL SP200 7042 4 SHA
1 AMDAHL SP200 7053 1024MB CACHE
1 AMDAHL SU200 8122 STORAGE UNIT BASE
2 AMDAHL SU200 7112 A-GSI 4 RANKS
2 AMDAHL SU200 7116 B-GSI 4 RANKS
1870 TIFFANY & CO 1 IBM 9406 843875 OPTICAL LINK PROCESS
1871 BED BATH & BEY 35 IBM 4317 001 LASER PRINTER
H2438 IPDS SIMMS
H2439 POST SCRIPT LEVEL 2
H2445 TWINAX SCS INTERFACE
208 IBM 3488 V13 INFOWINDOW LOGIC
208 IBM G41 14" COLOR MONITOR
16 IBM 5494 EXT REMOTE CONTROLLER
18 IBM 5494 1100 TOKEN RING ADAPTER
1872 TIFFANY & CO 1 IBM 9406 2162 MODEL 530 PROC
2 IBM 9406 2688
2 IBM 9406 3165 1024MB MAIN STORAGE
2 IBM 9406 5072 1063MBPS SYS UNIT
1 IBM 9406 5082 1063MBPS SYS TOWER
1 IBM 9406 MODEL UPGRADE
2 IBM 9406 6512 DISK UNIT CONTROLLER
1 IBM 9406 6606 1.96GB DISK UNIT/A
1 IBM 9406 8052 STORAGE UNIT BASE
2 IBM 9406 8265 1024MB MAIN STORAGE
1874 CASE 9 HUGHES VSAT 1.2M SATTELITE DISH
1875 TIFFANY & CO 1 IBM 6887 VAG PC 750
1 IBM 95G7632 NETWORK ADAPTER
1 IBM 42H4332 ADPT MULTIPROTOCAL
1 IBM 85H8101 ISA STORE CNTRLR
1 IBM 44H3111 800 INT TAPE DRIVE
</TABLE>
Schedule 1.04 Page 20
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 IBM 6540 00N 14" COLOR MONITOR
1 IBM 43J1000 LEXMARK LASER PRNT
1 IBM INTERFACE CABLE
1 IBM 28.8 DATA MODEM
1 IBM COMM CABLE
8 IBM 4694 244 POS TERMINAL
8 IBM 4694 3324 POS KEYBOARD
8 IBM 4694 3326 DISTRIBUTED CABLE
8 IBM 4694 3330 KEYBUTTON KIT
8 IBM 4694 3360 CASH DRAW ASSEMBLY
8 IBM 4694 3365 DISTRIB CASH CABLE
8 IBM 4694 3390 TOKEN RING CABLE
8 IBM 4694 3879 TILL/CASH DRAW
8 IBM 4694 3924 VIDEO DISPLAY
8 IBM 4694 4800 MODEL 4 PRINTER
8 IBM 4694 4922 PRINTER DISTR CABLE
8 IBM 4694 4923 PRINTER RIBBON
8 IBM 4694 7429 MONITOR STAND SWIVEL
8 IBM 4694 7462 TOKEN RING NETWORK
8 IBM 4694 7900 DUMP SWITCH
8 IBM 4694 8Q1588 FLAT TOP DISTR.
1876 TIFFANY & CO 1 IBM 6887 VAG PC 750
1 IBM 95G7632 NETWORK ADAPTER
1 IBM 42H4332 ADPT MULTIPROTOCAL
1 IBM 85H8101 ISA STORE CNTRLR
1 IBM 44H3111 800 INT TAPE DRIVE
1 IBM 6540 00N 14" COLOR MONITOR
1 IBM 43J1000 LEXMARK LASER PRNT
1 IBM INTERFACE CABLE
1 IBM 28.8 DATA MODEM
1 IBM COMM CABLE
9 IBM 4694 244 POS TERMINAL
9 IBM 4694 3324 POS KEYBOARD
9 IBM 4694 3326 DISTRIBUTED CABLE
9 IBM 4694 3330 KEYBUTTON KIT
9 IBM 4694 3360 CASH DRAW ASSEMBLY
9 IBM 4694 3365 DISTRIB CASH CABLE
9 IBM 4694 3390 TOKEN RING CABLE
9 IBM 4694 3879 TILL/CASH DRAW
9 IBM 4694 3924 VIDEO DISPLAY
9 IBM 4694 4800 MODEL 4 PRINTER
9 IBM 4694 4922 PRINTER DISTR CABLE
9 IBM 4694 4923 PRINTER RIBBON
9 IBM 4694 7429 MONITOR STAND SWIVEL
9 IBM 4694 7462 TOKEN RING NETWORK
9 IBM 4694 7900 DUMP SWITCH
9 IBM 4694 8Q1588 FLAT TOP DISTR.
1877 TIFFANY & CO 1 IBM 6887 VAG PC 750
1 IBM 95G7632 NETWORK ADAPTER
1 IBM 42H4332 ADPT MULTIPROTOCAL
1 IBM 85H8101 ISA STORE CNTRLR
1 IBM 44H3111 800 INT TAPE DRIVE
1 IBM 6540 00N 14" COLOR MONITOR
</TABLE>
Schedule 1.04 Page 21
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 IBM 43J1000 LEXMARK LASER PRNT
1 IBM INTERFACE CABLE
1 IBM 28.8 DATA MODEM
1 IBM COMM CABLE
14 IBM 4694 244 POS TERMINAL
14 IBM 4694 3324 POS KEYBOARD
14 IBM 4694 3326 DISTRIBUTED CABLE
14 IBM 4694 3330 KEYBUTTON KIT
14 IBM 4694 3360 CASH DRAW ASSEMBLY
14 IBM 4694 3365 DISTRIB CASH CABLE
14 IBM 4694 3390 TOKEN RING CABLE
14 IBM 4694 3879 TILL/CASH DRAW
14 IBM 4694 3924 VIDEO DISPLAY
14 IBM 4694 4800 MODEL 4 PRINTER
14 IBM 4694 4922 PRINTER DISTR CABLE
14 IBM 4694 4923 PRINTER RIBBON
14 IBM 4694 7429 MONITOR STAND SWIVEL
14 IBM 4694 7462 TOKEN RING NETWORK
14 IBM 4694 7900 DUMP SWITCH
14 IBM 4694 8Q1588 FLAT TOP DISTR.
1878 TIFFANY & CO 1 IBM 6887 VAG PC 750
1 IBM 95G7632 NETWORK ADAPTER
1 IBM 42H4332 ADPT MULTIPROTOCAL
1 IBM 85H8101 ISA STORE CNTRLR
1 IBM 44H3111 800 INT TAPE DRIVE
1 IBM 6540 00N 14" COLOR MONITOR
1 IBM 43J1000 LEXMARK LASER PRNT
1 IBM INTERFACE CABLE
1 IBM 28.8 DATA MODEM
1 IBM COMM CABLE
6 IBM 4694 244 POS TERMINAL
6 IBM 4694 3324 POS KEYBOARD
6 IBM 4694 3326 DISTRIBUTED CABLE
6 IBM 4694 3330 KEYBUTTON KIT
6 IBM 4694 3360 CASH DRAW ASSEMBLY
6 IBM 4694 3365 DISTRIB CASH CABLE
6 IBM 4694 3390 TOKEN RING CABLE
6 IBM 4694 3879 TILL/CASH DRAW
6 IBM 4694 3924 VIDEO DISPLAY
6 IBM 4694 4800 MODEL 4 PRINTER
6 IBM 4694 4922 PRINTER DISTR CABLE
6 IBM 4694 4923 PRINTER RIBBON
6 IBM 4694 7429 MONITOR STAND SWIVEL
6 IBM 4694 7462 TOKEN RING NETWORK
6 IBM 4694 7900 DUMP SWITCH
6 IBM 4694 8Q1588 FLAT TOP DISTR.
1879 TIFFANY & CO 1 IBM 6887 VAG PC 750
1 IBM 95G7632 NETWORK ADAPTER
1 IBM 42H4332 ADPT MULTIPROTOCAL
1 IBM 85H8101 ISA STORE CNTRLR
1 IBM 44H3111 800 INT TAPE DRIVE
1 IBM 6540 00N 14" COLOR MONITOR
1 IBM 43J1000 LEXMARK LASER PRNT
</TABLE>
Schedule 1.04 Page 22
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 IBM INTERFACE CABLE
1 IBM 28.8 DATA MODEM
1 IBM COMM CABLE
17 IBM 4694 244 POS TERMINAL
17 IBM 4694 3324 POS KEYBOARD
17 IBM 4694 3326 DISTRIBUTED CABLE
17 IBM 4694 3330 KEYBUTTON KIT
17 IBM 4694 3360 CASH DRAW ASSEMBLY
17 IBM 4694 3365 DISTRIB CASH CABLE
17 IBM 4694 3390 TOKEN RING CABLE
17 IBM 4694 3879 TILL/CASH DRAW
17 IBM 4694 3924 VIDEO DISPLAY
17 IBM 4694 4800 MODEL 4 PRINTER
17 IBM 4694 4922 PRINTER DISTR CABLE
17 IBM 4694 4923 PRINTER RIBBON
17 IBM 4694 7429 MONITOR STAND SWIVEL
17 IBM 4694 7462 TOKEN RING NETWORK
17 IBM 4694 7900 DUMP SWITCH
17 IBM 4694 8Q1588 FLAT TOP DISTR.
1880 NEWSDAY 1 EMC 5500 9M14 DISK ARRAY
1881 TIFFANY & CO 2 IBM 4694 244 POS TERMINAL
2 IBM 4694 3324 POS KEYBOARD
2 IBM 4694 3325 INTEGRATED K/B CBLE
2 IBM 4694 3330 KEYBUTTON KIT
2 IBM 4694 3360 CASH DRAW ASSEMBLY
2 IBM 4694 3364 INTEG CASH CABLE
2 IBM 4694 3390 TOKEN RING CABLE
2 IBM 4694 3879 TILL/CASH DRAW
2 IBM 4694 3920 VIDEO DISPLAY
2 IBM 4694 4800 MODEL 4 PRINTER
2 IBM 4694 4920 PRINTER INTEG CABLE
2 IBM 4694 4923 PRINTER RIBBON
2 IBM 4694 7462 TOKEN RING NETWORK
2 IBM 4694 7900 DUMP SWITCH
1 IBM 6887 VAG PC 750
1 IBM 95G7632 NETWORK ADAPTER
1 IBM 42H4332 ADPT MULTIPROTOCAL
1 IBM 85H8101 ISA STORE CNTRLR
1 IBM 44H3111 800 INT TAPE DRIVE
1 IBM 6540 00N 14" COLOR MONITOR
1 IBM 43J1000 LEXMARK LASER PRNT
1 IBM INTERFACE CABLE
1 IBM 28.8 DATA MODEM
1 IBM COMM CABLE
5 IBM 4694 244 POS TERMINAL
5 IBM 4694 3324 POS KEYBOARD
5 IBM 4694 3326 DISTRIBUTED CABLE
5 IBM 4694 3330 KEYBUTTON KIT
5 IBM 4694 3360 CASH DRAW ASSEMBLY
5 IBM 4694 3365 DISTRIB CASH CABLE
5 IBM 4694 3390 TOKEN RING CABLE
5 IBM 4694 3879 TILL/CASH DRAW
5 IBM 4694 3924 VIDEO DISPLAY
</TABLE>
Schedule 1.04 Page 23
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
5 IBM 4694 4800 MODEL 4 PRINTER
5 IBM 4694 4922 PRINTER DISTR CABLE
5 IBM 4694 4923 PRINTER RIBBON
5 IBM 4694 7429 MONITOR STAND SWIVEL
5 IBM 4694 7462 TOKEN RING NETWORK
5 IBM 4694 7900 DUMP SWITCH
5 IBM 4694 8Q1588 FLAT TOP DISTR.
1883 TIFFANY & CO 8 IBM 9406 6607 4.19GB DISK UNIT
1884 TIFFANY & CO 8 IBM 9406 6607 4.19GB DISK UNIT
1885 TIFFANY & CO IBM 6887 VAG PC 750
IBM 95G7632 NETWORK ADAPTER
IBM 42H4332 ADPT MULTIPROTOCAL
IBM 85H8101 ISA STORE CNTRLR
IBM 44H3111 800 INT TAPE DRIVE
IBM 6540 00N 14" COLOR MONITOR
IBM 43J1000 LEXMARK LASER PRNT
IBM INTERFACE CABLE
IBM 28.8 DATA MODEM
IBM COMM CABLE
1887 BED BATH & BEY 84 IBM 3488 V13 INFOWINDOW LOGIC
84 IBM G42 14" COLOR MONITOR
6 IBM 4317 001 NETWORK PRINTER
6 IBM H2438 IPDS SIMMS
6 IBM H2439 POST SCRIPT LEVEL 2
6 IBM H2445 TWINAX SCS INTERFACE
6 IBM 5494 EXT REMOTE CONTROLLER
6 IBM 5494 1100 TOKEN RING ADAPTER
14 IBM 4312 001 LASER PRINTER TWINAX
1895 TIFFANY & CO 2 IBM 9406 3186 128MB MAIN STORAGE
1896 TC-259GM-4 TIFFANY & CO
1898 TC-DIAMOND-E TIFFANY & CO
1900 IA-980-35 BED, BATH & BEYOND
1901 TIFFANY & CO 4 IBM 5494 EXT REMOTE CONTROLLER
5494 1100 TOKEN RING ADAPTER
5494 1200 TWINAX EXPANSION KIT
1902 TC-259GM-5 TIFFANY & CO
1903 BLUE CROSS 1 HP 7700 ARRAY SUBSYSTEM
1905 CASE 6 HUGHES VSAT 1.2M SATTELITE DISH
1908 BLUE CROSS 1 AMDAHL SP200 8121 SPECTRIS STOR PROC 60
1 AMDAHL SP200 7043 8 SHA
1 AMDAHL SP200 7086 3072MBCACHE=2304MB
1 AMDAHL SU200 8122 SPECTRIS STOR UNIT BASE
</TABLE>
Schedule 1.04 Page 24
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 AMDAHL SU200 8122 SPECTRIS STOR UNIT BASE
1 AMDAHL SU200 8122 SPECTRIS STOR UNIT BASE
4 AMDAHL SU200 7112 A-GS1 4 RANKS
2 AMDAHL SU200 7112 A-GS1 4 RANKS
1 AMDAHL SU200 7113 B-GS1 1 RANK
4 AMDAHL SU200 7116 B-GS1 4 RANK
1 AMDAHL SU200 7116 B-GS1 4 RANK
1909 VSI-009 VITAMIN SHOPPE
1910 TIFFANY & CO 1 IBM 9406 620 AS/400E SYSTEM UNIT
1 IBM 9406 0348 V.24/EIA232 PCI CABLE
1 IBM 9406 2180 MODEL 620 PROCESSOR
1 IBM 9406 2612 EIA 232/V.24 ONE-LINE
1 IBM 9406 2619 16/4MBPS TOKEN-RING
2 IBM 9406 2623 SIX LINE COMM CONTROLLER
1 IBM 9406 2626 16/4 MBPS TOKEN-RING
1 IBM 9406 2722 PCI TWINAXIAL WORKSTATION
1 IBM 9406 2726 PCI RAID DISK UNIT CTLR
2 IBM 9406 3002 128MB MAIN STORAGE
1 IBM 9406 6501 DASD CONTROLLER
1 IBM 9406 6512 DISK UNIT CNTLR
20 IBM 9406 6813 8.58GB DISK UNIT
2 IBM 9406 7128 DASD EXPANSION UNIT
1911 TIFFANY & CO 2 3610 024 PARADYNE 3610 DSU W/TDM
1912 TC-DIAMOND-F TIFFANY & CO
1913 TC-AS400-1A TIFFANY & CO
1914 TIFFANY & CO 4 PARADYNE 4 PORT TI DSU/CSU
1917 VITAMIN SHOPPE 10 IBM 4694 244 1.6GB HARD DRIVE
3324 2KEYBOARD W/3 TRACK
3328 KEYBOARD CABLE
3927 9" COLOR DISPLAY
3503 2X20 40 CHARACTER
3345 INTEGRATED CABLE
3360 F/S CASH DRAWER-NO TIL
3879 FIXED TILL-FULL SIZE
3364 INTEG CASH DRAWER
2 IBM 4694 9514 2.8M POWER CORD
0811 MONITOR FILLER PANEL
3 IBM 4694 SPECIFY LOCK FOR REGISTERS
4610 PRINTER/IMPACT W/MICR
4920 CABLE FOR 4/4R PRINTER
1150 THERMAL PRINTER
2 IBM 4694 9450 16MB RAM
1918 BED BATH & BEY 5 IBM 5494 EXT REMOTE CONTROLLER
5 IBM 1100 TOKEN RING
1 IBM 4317 001 LASER PRINTER
1 IBM 4141 TWINAX
1 IBM 4820 IPDS SIMM
</TABLE>
Schedule 1.04 Page 25
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 IBM 4810 POST SCRIPT
1 IBM MEMORY 8MB MEMORY SIMM
1 IBM 3488 V13 INFOWINDOW LOGIC
1 IBM 6540 00N 14" MONITOR
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
1919 BED BATH & BEY 50 IBM 3487 HC3 INFOWINDOW -COLOR
2 IBM 5494 1200 TWINAX EXPANSION KIT
1 IBM 5494 1100 TOKEN RING ADAPTER
1920 TIFFANY & CO 1 IBM 9406 2619 TOKEN RING ADAPTER
1921 TIFFANY & CO 1 IBM 6887 6AC STORE CONTROLLER
1 IBM 6540 00N COLOR MONITOR
1 IBM 43J 100 LEXMARK PRINTER
1 IBM PRINTER CABLE
1 IBM MODEM
1 IBM 4690 SYSTEM SALE SOFTWARE
1922 TIFFANY & CO 8 IBM 9406 6713 8GB DASD W/REGULATOR
1924 TIFFANY & CO 1 IBM 9406 620 AS/400E SYSTEM UNIT
1 IBM 0037 3590-811 LCL SRG RACK MNT
1 IBM 0044 DATA LOSS PROTECTION
1 IBM 0348 V.24/EIA232 PCI CABLE
1 IBM 2180 MODEL 620 PROCESSOR
1 IBM 2724 PCI 16/4NBPB TOKENRING
2 IBM 2726 PCI RAID DISK UNIT CTLR
1 IBM 2729 PCI MAGNETIC MEDIA
1 IBM 2809 PCI LAN/WAN/WORKSTA.
1 IBM 2924 ENGLISH
2 IBM 3002 128MG MAIN STORAGE
1 IBM 5000 TSP SPECIFY CODE
1 IBM 5023 SOFTWARE VERSION
1 IBM 5519 ALT IPL SPECIFY 3590
1 IBM 5520 COMPLETE SYSTEM ORDER
12 IBM 6813 8.5OB DISK UNIT
1 IBM 7128 DASD EXPANSION UNIT
1 IBM 8813 OPT BASE 8.5BGB DISK
1 IBM 9082 14 FOOT LINE CORD
1 IBM 9083 LOCKING LINE CORD PLUG
1 IBM 9329 BASE PCI INTERGRATED
1 IBM 9364 BASE SYSTEM UNIT EXP.
1 IBM 9720 BASE PCI WAN/TWINAXIAL
1 IBM 9309 002 RACK ENCLOSURE
1 IBM 9081 POWER CORD
</TABLE>
Schedule 1.04 Page 26
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 IBM 9171 GENERAL PURPOSE
1 IBM 3590 811 TAPE DRIVE
1 IBM 5125 25 N SGSI CABLE
1 IBM 9221 FIRST B11 IN RACK
1 IBM 9590 NO DATA CARTRIDGES
1 IBM 7852 400 AS/400 TSP MODEL
1 IBM 5000 AS/400 TSP SPECIFY
1 IBM 3486 BO3 AS400 TSP MODEL
1 IBM 5000 AS/400 TSP SPECIFY
1 IBM 5900 AS400 TSP TWINX CABLE
1 IBM 9122 122-KEY TYPEWRITER
1 IBM 9203 TILT/SWIVEL STAND
1927 BED BATH & BEY 5 IBM 5494 EXT REMOTE CONTROLLER
5 IBM 1100 TOKEN RING CABLE
46 IBM 3488 V13 INFOWINDOW LOGIC
46 IBM 6540 00N G42 14" MONITOR
1928 TIFFANY & CO 1 IBM 6887 6AE PC 750 P/166 1. G/16 PAR
72H 3482 NETWORK ADAPTER
1 IBM 85H 8101 CONTROLLER ADAPTER
44H 3111 800 INTERNAL TAPE DRIVE
1 IBM 6540 00N 14" COLOR MONITOR
1 IBM 43J 100 LASER PRINTER
1 IBM PRINTER CABLE
1 IBM 33.6 DATA MODEM
1 IBM 43J 100 LASER PRINTER
1 IBM 33.6 DATA MODEM
1930 VITAMIN SHOPPE 10 IBM 4894 244 IBM 6X86-P166
20 IBM 4894 9450 8MB MEMORY MODULE
10 IBM 4894 3324 ANPOS/2 KEYBOARD W/MAG
10 IBM 4894 3326 PS/2 ALPHANUMERIC CABLE
10 IBM 4894 3927 9" COLOR DISPLAY ARTICULAT
10 IBM 4894 3503 2X20 40 CHARACTER LCD
10 IBM 4894 3345 INTEGRATED CABLE FOR LCD
10 IBM 4894 3360 FULL SIZE CASH DRAWER/NO TILL
10 IBM 4894 3879 FIXED TILL-FULL SIZE
10 IBM 4894 3364 INTEGRATED CASH DRAWER CABLE
20 IBM 4894 9514 2.8M POWER CORD/NON LOCK PLUG
10 IBM 4894 811 MONITOR FILLER PANEL WIDE CONFIG
30 IBM 4894 SPECIFY LOCK FOR POS REGISTERS
10 IBM 4894 4610 MODEL T12 TH
10 IBM 4894 4920 CALBE MODEL 4/4R PRINTER
10 IBM 4894 1150 FILLER PANEL FOR THERMAL PRINTER
10 IBM 4894 SYM-1908 SYMBOL SCANNER FOR 4594POS
1932 BED BATH & BEY 130 IBM 3488 V13 INFOWINDOW LOGIC
130 IBM 6540 00N G42 14" MONITOR
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 40 IPDS SIMM
2 IBM 43J 2200 OPTRA 1620 LASER
2 IBM 44H 11 CX TX SCS ADAPTER
2 IBM 44H 40 IPDS SIMM
</TABLE>
Schedule 1.04 Page 27
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 40 IPDS SIMM
1 IBM 3488 V13 INFOWINDOW LOGIC
1 IBM 6540 00N G42 14" MONITOR
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 40 IPDS SIMM
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 40 IPDS SIMM
1 IBM 5494 EXT REMOTE CONTROLLER
1 IBM 1100 TOKEN RING
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 40 IPDS SIMM
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 40 IPDS SIMM
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 40 IPDS SIMM
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 40 IPDS SIMM
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 40 IPDS SIMM
1933 CASE CORP. 1 HUGHES 1.2M DEICE INSTALL PKG
1 HUGHES REMOTE INSTALLATION PKG
1 HUGHES SHIPPING CHARGES
1 HUGHES REMOTE INSTALLATION PKG
1 HUGHES 1.2M PES INSTALL PKG
1 HUGHES SHIPPING CHARGES
1 HUGHES REMOTE INSTALLATION PKG
1 HUGHES 1.2M PES INSTALL PKG
1 HUGHES SHIPPING CHARGES
1 HUGHES REMOTE INSTALLATION PKG
1 HUGHES 1.2M PES INSTALL PKG
1 HUGHES SHIPPING CHARGES
1934 VITAMIN SHOPPE 20 IBM 4694 244 IBM 6X86-P166
40 IBM 9450 8MB MEMORY MODULE
20 IBM 3324 ANPOS/2 KEYBOARD W/MAG
20 IBM 3328 PS/2 ALPHANUMERIC CABLE
20 IBM 3927 9" COLOR DISPLAY ARTICULAT
20 IBM 3503 2X20 40 CHARACTER LCD
20 IBM 3345 INTEGRATED CABLE FOR LCD
20 IBM 3360 FULL SIZE CASH DRAWER/NO TILL
20 IBM 3879 FIXED TILL-FULL SIZE
20 IBM 3364 INTEGRATED CASH DRAWER CABLE
40 IBM 9514 2.8M POWER CORD/NON LOCK PLUG
20 IBM 811 MONITOR FILLER PANEL WIDE CONFIG
60 IBM SPECIFY LOCK FOR POS REGISTERS
</TABLE>
Schedule 1.04 Page 28
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
20 IBM 4610 MODEL T12 THERMAL PRINTER
20 IBM 4920 CABLE MODEL 4/4R PRINTER
20 IBM 1150 FILLER PANEL FOR THERMAL PRINTER
17 IBM SYM-1908 SYMBOL SCANNER FOR 4594POS
1935 BED BATH & BEY 43 IBM 3488 V43 14" COLOR MONITOR
6 IBM 5494 EXT CONTROLLER
1936 NETGROCER, INC. 1 RAYMOND MODEL 35 CSR30TT NARROW AISLE
1 RAYMOND MODEL 35 CSR30TT NARROW AISLE
1937 NEWSDAY, INC. 1 IMP A4 IMPRESSION A4 COMPUTER & VIDEO PROJ.
1 PADDING BAG W/WHEELS & TELESCOPING
1939 TIFFANY & CO 264 IBM INFOWINDOW-GREEN
1941 TC-PBX-TROY-A TIFFANY & CO
1942 TIFFANY & CO 1 IBM TN 746B ANALOG INTERFACE
1943 TC-2KPDM-A
1944 BED BATH & BEY 1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 40 IPDS SIMM
1 IBM 44H 11 CX TX SCS ADAPTER
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 1 MARKNET TOKEN RING ADAPTER
1 IBM 44H 40 IPDS SIMM
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 40 IPDS SIMM
0 IBM MAINTENANCE CONTRACT SETUP
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM MAINTENANCE CONTRACT SETUP
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 40 IPDS SIMM
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 40 IPDS SIMM
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 40 IPDS SIMM
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 40 IPDS SIMM
1 IBM 5494 EXT REMOTE CONTROLLER
1 IBM 1100 TOKEN RING
1 IBM 5494 EXT REMOTE CONTROLLER
1 IBM 1100 TOKEN RING
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 1 MARKNET TOKEN RING ADAPTER
1 IBM 44H 40 IPDS SIMM
</TABLE>
Schedule 1.04 Page 29
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
1 IBM 3488 V13 INFOWINDOW LOGIC
1 IBM 6540 00N G42 14" MONITOR
1 IBM 3488 V13 INFOWINDOW LOGIC
1 IBM 6540 00N G42 14" MONITOR
1 IBM 3488 V13 INFOWINDOW LOGIC
1 IBM 6540 00N G42 14" MONITOR
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 40 IPDS SIMM
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 40 IPDS SIMM
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 40 IPDS SIMM
1 IBM 5494 EXT REMOTE CONTROLLER
1 IBM 1100 TOKEN RING
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 1 MARKNET TOKEN RING ADAPTER
1 IBM 44H 40 IPDS SIMM
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 1 MARKNET TOKEN RING ADAPTER
1 IBM 44H 40 IPDS SIMM
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 1 MARKNET TOKEN RING ADAPTER
1 IBM 44H 40 IPDS SIMM
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
1 IBM 5494 EXT REMOTE CONTROLLER
1 IBM 1100 TOKEN RING
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 40 IPDS SIMM
1 IBM 3488 V13 INFOWINDOW LOGIC
1 IBM 6540 00N G42 14" MONITOR
1 IBM 3488 V13 INFOWINDOW LOGIC
1 IBM 6540 00N G42 14" MONITOR
1 IBM 5494 EXT REMOTE CONTROLLER
1 IBM 1100 TOKEN RING
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 1 MARKNET TOKEN RING ADAPTER
1 IBM 44H 40 IPDS SIMM
1 IBM 1200 TWINAX EXPANSION KIT
2 IBM 3488 V13 INFOWINDOW LOGIC
2 IBM 6540 00N G42 14" MONITOR
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
</TABLE>
Schedule 1.04 Page 30
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 1 MARKNET TOKEN RING ADAPTER
1 IBM 44H 40 IPDS SIMM
1 IBM 5494 EXT REMOTE CONTROLLER
1 IBM 1100 TOKEN RING
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 40 IPDS SIMM
1945 TC-25F3D-A TIFFANY & CO
1950 VITAMIN SHOPPE 15 49694 244 IBM 6X86-P166
30 9450 8MB MEMORY MODULE
15 3324 ANPOS/2 KEYBOARD W/MAG
15 3328 PS/2 ALPHANUMERIC CABLE
15 3927 9" COLOR DISPLAY ARTICULATING ARM
15 3503 2X20 40 CHARACTER LCD DISPLAY
15 3345 INTEGRATED CABLE FOR LCD DISPLAY
15 3360 FULL SIZE CASH DRAWER/NO TILL
15 3879 FIXED TILL-FULL SIZE
15 3364 INTEGRATED CASH DRAWER CABLE
30 9514 2.8M POWER CORD/NON LOCK PLUG
15 811 MONITOR T12 THERMAL PRINTER
45 SPECIFY LOCK FOR POS REGISTERS
15 4610 MODEL T12 THERMAL PRINTER
15 4920 CABLE MODEL 4/4R PRINTER
15 1150 FILLER PANEL FOR THERMAL PRINTER
15 SYM 1908 SYMBOL SCANNER FOR 4694POS
1951 BLUE CROSS 1 7700E SCALABLE STORAGE SERVER
1 7700E SCALABLE STORAGE SERVER
1953 NEWSDAY,INC. 1 F230 NETAPP F230 FILLER MEMORY OR PROTOCOL
1 FNS NETAPP NFS SOFTWARE FOR F230
1 CIFS NET WINDOWS SOFTWARE FOR F230
1 X320 256MB SYSTEM MEMORY FOR C/F2XX/F3XX
1 X3113 NVRAM ADAPTER WITH 8MB
1 X615B STORAGE SHELF 2 W/O DISK DRIVES FW
7 X219 9.1 (8.6) GB WIDE ULTRASCSI DISK DRIVE
1 X1001 10/100 BASE T NETWORK ADAPTER
1 SK F230 BASIC SPARES KIT FOR F230
1 SK-SHELF 2B STORAGE SHELF 2 BASIC SPARES KIT
1954 TIFFANY & CO 8 IBM 4694 244 IBM 4694 POINT-OF-SALE TERMINAL DISTRIBUTED
2 IBM 4694 244 IBM 4694 POINT-OF-SALE TERMINAL INTEGRATED
1 IBM 6875 P5H IBM STORE CONTROLLER
1 IBM 6540 00N IBM COLOR MONITOR
1 IBM 43J 1000 LEXMARK PRINTER
1 IBM PRINTER CABLE
1 IBM MODEM & COMMUNICATION CABLE
1 IBM SOFTWARE FOR THE 4690 SYSTEM
1955 NEWSDAY,INC. 32 PC300 GL IBM PENT 2 300 SYS 128MB 32.XCD & SND
19 G72 17" MONITOR
32 3C905 3COM 101100
</TABLE>
Schedule 1.04 Page 31
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
33 VIDEO CRD XPERT XL 4MB VIDEO
1 2.5GB 2.5GB HARD DRIVE INSTALLED
1 PC300 GL IBM PENT 2 300 SYS 128MB 32.XCD & SND WINNT
1 3C905 3COM 101100
1956 NEWSDAY,INC. 1 STK 4410 1 LBRY STOR MODULE
1 STK 4411 1 LBRY CNTL UNIT
1 STK 4430 1 LBRY MANGE UNIT
1 STK 4490 M30 STK CONTROLLER W/4 CHANNELS
2 STK 4490 M34 STK 36-TRACK 4 TRANSPORTS CORTRIDGE UNIT
1 STK 4490 M30 STK CONTROLLER W/2 CHANNELS
1 STK 4490 M34 STK 36-TRACK 4 TRANSPORTS CORTRIDGE UNIT
1 STK CC80 CLIPPER CAP DOOR
1958 TC-PBX-BOS-A TIFFANY & CO
1959 VITAMIN SHOPPE 20 4694 244 IBM 6X86-P166
40 4694 9450 8MB MEMORY MODULE
20 4694 3324 ANPOS/2 KEYBOARD W/MAG
20 4694 3328 PS/2 ALPHANUMERIC CABLE
20 4694 3927 9" COLOR DISPLAY ARM
20 4694 3503 2X20 40 CHARACTER LCD DISPLAY
20 4694 3345 INTEGRATED CABLE FOR LCD DISPLAY
20 4694 3360 FULL SIZE CASH DRAWER
20 4694 3879 FIXED TILL-FULL SIZE
20 4694 3364 INTEGRATED CASH DRAWER CABLE
40 4694 9514 2.8M POWER CORD/NON LOCK PLUG
20 4694 811 MONITOR FILLER PANEL
60 SPECIFY LOCK FOR POS REGISTERS
24 4694 4610 MODEL T12 THERMAL PRINTER
24 4694 4920 CABLE MODEL 4/4R PRINTER
24 4694 1150 FILLER PANEL FOR THERMAL
20 SYM 1908 SYMBOL SCANNER FOR 4694POS
1960 BLUE CROSS 1 7700E HDS UPGRADE SRAM RAID 5 ARRAY SUBSYSTEM
1961 BED BATH & BEY 1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 1 MARKNET TOKEN RING ADAPTER
1 IBM 44H 40 IPDS SIMM
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
1 IBM 5494 EXT REMOTE CONTROLLER
1 IBM 1100 TOKEN RING ADAPTER
1 IBM 1853 CABLE V.35 FOR 5494
1 IBM 5494 EXT REMOTE CONTROLLER
1 IBM 1100 TOKEN RING ADAPTER
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 1 MARKNET TOKEN RING ADAPTER
1 IBM 44H 40 IPDS SIMM
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 40 IPDS SIMM
1 IBM 3488 V13 INFOWINDOW LOGIC
</TABLE>
Schedule 1.04 Page 32
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 IBM 6540 00N G42 14" MONITOR
3 IBM 5494 EXT REMOTE CONTROLLER
3 IBM 1100 TOKEN RING ADAPTER
1 IBM 5494 EXT REMOTE CONTROLLER
1 IBM 1100 TOKEN RING ADAPTER
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 1 MARKNET TOKEN RING ADAPTER
IBM 44H 40 IPDS SIMM
13 IBM 6540 00N G42 14" MONITOR
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
1 IBM 5494 EXT REMOTE CONTROLLER
1 IBM 1100 TOKEN RING ADAPTER
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 1 MARKNET TOKEN RING ADAPTER
1 IBM 44H 40 IPDS SIMM
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 1 MARKNET TOKEN RING ADAPTER
1 IBM 44H 40 IPDS SIMM
1 IBM 5494 EXT REMOTE CONTROLLER
1 IBM 1100 TOKEN RING ADAPTER
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
1 IBM 1853 CABLE V.35 FOR 5494
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 1 MARKNET TOKEN RING ADAPTER
1 IBM 44H 40 IPDS SIMM
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
13 IBM 6540 00N G42 14" MONITOR
1962 TIFFANY & CO 1 IBM 9406 2638 PCZ 100/10MBPS ETHERNET 10A
1964 TIFFANY & CO
1966 BED BATH & BEY 124 IBM 3488 V43 AS/400 TERMINALS
9 IBM 5494 EXT AS/400 REMOTE CONTROLLERS
1967 BED BATH & BEY 13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
1 IBM 43J 2638 LASER PRINTER 16PPM 4MB
1 IBM 5494 EXT REMOTE CONTROLLER 28 PORT
1 IBM 5494 EXT REMOTE CONTROLLER 28 PORT
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
1 IBM 43J 2638 LASER PRINTER 16PPM 4MB
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
1 IBM 5494 EXT REMOTE CONTROLLER 28 PORT
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
1 IBM 43J 2638 LASER PRINTER 16PPM 4MB
1 IBM 44H 50 IPDS SIMM
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
</TABLE>
Schedule 1.04 Page 33
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 IBM 43J 2638 LASER PRINTER 16PPM 4MB
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
1 IBM 5494 EXT REMOTE CONTROLLER 28 PORT
1 IBM 5494 EXT REMOTE CONTROLLER 28 PORT
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
1 IBM 43J 2638 LASER PRINTER 16PPM 4MB
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
1 IBM 3488 V13 INFOWINDOW LOGIC
1 IBM 6540 00N G42 14" MONITOR
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
1 IBM 43J 2638 LASER PRINTER 16PPM 4MB
1 IBM 6540 00N G42 14" MONITOR
1 IBM 5494 EXT REMOTE CONTROLLER 28 PORT
1 IBM 5494 EXT REMOTE CONTROLLER 28 PORT
1 IBM 1100 TOKEN RING ADAPTER
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM PMCP PARALLEL 10'CABLE
5 IBM 3488 V13 INFOWINDOW LOGIC
5 IBM 6540 00N G42 14" MONITOR
8 IBM DECISION DATA LM-4880 LOGIC UNIT
8 IBM DECISION DATA MG05057A 14" SVGA
1 IBM 43J 2600 OPTRA S 1625 16PPM LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
1 IBM 43J 2200 OPTRA 1620 LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 40 IPDS SIMM
1 IBM 43J 2600 OPTRA S 1625 16PPM LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
1 IBM 43J 2600 OPTRA S 1625 16PPM LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
1 IBM 43J 2600 OPTRA S 1625 16PPM LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
1 IBM 43J 2600 OPTRA S 1625 16PPM LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
1 IBM 43J 2600 OPTRA S 1625 16PPM LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
1 IBM 43J 2600 OPTRA S 1625 16PPM LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
1968 TIFFANY & CO 1 63175A ATTENDANT CONSOLE E-BLACK
1 63176A ATTND SEL CONSOLE E-BLACK
1969 NEWSDAY,INC. 2 2645 51U THINKPAD 600 PII 266 32MB 4GB 24X CDROM
2 12J 2467 SELECTABASE 600
2 3547 3 SELECTADOCK 3
2 32IBM 600 32 MEG UPGRADE FOR TP600
</TABLE>
Schedule 1.04 Page 34
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1970 TIFFANY & CO 8 4694 244 4694 BASE POS TERMINAL MODEL 244
8 2900 POWER SUPPLY 110-127V
8 3324 POS ALPHANUMERIC KEYBOARD
8 3326 DISTRIBUTED KEYBOARD CABLE
8 3330 KEYBUTTON KIT RETAIL FORMAT
8 3360 CASH DRAWER ASSEMBLY, NO TILL
8 3365 DISTRIBUTED CASH DRAWER CABLE
8 3390 TOKEN RING CABLE
8 3879 FIXED TILL FOR CASH DRAWER
8 3924 MONO VIDEO DISPLAY-DISTRIBUTED
8 4800 MODEL 4 PRINTER
8 4922 MODEL 4 PRINTER DISTIBUTED CABLE
8 4923 MODEL 4 PRINTER RIBBON/PAPER
8 7429 MONITOR TILT/SWIVEL STAND-DISTRIBUTED
8 7462 TOKEN RING NETWORK, 16/4
8 7900 4690 OS DUMP SWITCH FEATURE
32 9203 SYSTEM LOCK
8 8Q1588 FLAT TOP FOR DISTRIBUTED MODELS
8 9510 LINE CORD 4.3M NON-LOCK
8 9511 LINE CORD 1.8M NON-LOCK
8 9537 SOFTWARE USAGE-THIRD PARTY
1 4694 244 4694 BASE POS TERMINAL MODEL 244
1 2900 POWER SUPPLY 110-127V
1 3324 POS ALPHANUMERIC KEYBOARD
1 3325 INTEGRATED KEYBOARD CABLE
1 3330 KEYBUTTON KIT RETAIL FORMAT
1 3360 CASH DRAWER ASSEMBLY, NO TILL
1 3364 INTEGRATED CASH DRAWER CABLE
1 3390 TOKEN RING CABLE
1 3879 FIXED TILL FOR CASH DRAWER
1 3920 MONO VIDEO DISPLAY-DISTRIBUTED
1 4800 MODEL 4 PRINTER
1 4920 MODEL 4 PRINTER DISTIBUTED CABLE
1 4923 MODEL 4 PRINTER RIBBON/PAPER
1 7462 TOKEN RING NETWORK, 16/4
1 7900 4690 OS DUMP SWITCH FEATURE
4 9203 SYSTEM LOCK
1 9510 LINE CORD 4.3M NON-LOCK
1 9537 SOFTWARE USAGE-THIRD PARTY
1 43J 1000 LEXMARK LASER PRINTER
1 PRINTER INTERFACE CABLE
1 33.6 DATA MODEM
1 HOST COMMUNICATIONS INTERFACE CABLE
1971 TIFFANY & CO 12 IBM 9406 6813 8.5GB DASD (CC/M) FOR FC681
2 IBM 9406 7128 5 DISK EXPANSION UNIT
1972 NEWSDAY,INC. 2 ULTRA 10 300 MHZ 256MB 24XCD NO COUNTRY
2 17-IN ENTRY LEVEL COLOR MONITOR
2 UNIX COUNTRY KIT
2 SOLARIS 2.6HW 5/98 ENGLISH SERVER MEDIA
1973 TIFFANY & CO 1 IBM 9406 640 AS/400E SYSTEM UNIT
1 IBM 3 ORDER INSTALLED BY IBM
1 IBM 22 9348-001 LCL SRC RACK MNT
</TABLE>
Schedule 1.04 Page 35
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 IBM 27 3490E C10,C11,C22 OTHER RACK
1 IBM 37 3590-B11 LCL CRC RACK MNT
1 IBM 43 MIRRORED SYSTEM BUS LEVEL
1 IBM 46 OPTICONNECTED SYSTEM
1 IBM 56 3590-B11 LCL SRC SIDE MNT
1 IBM 330 V.24/EIA232 20FT CABLE
1 IBM 2239 MODEL 640 4-WAY PROCESSOR
30 IBM 2609 EIA 232/V.24 TWO-LINE ADPT
1 IBM 2612 EIA 232/V.24 ONE-LINE ADPT
2 IBM 2619 16/4MBPS TOKEN-RING/HP
1 IBM 2621 REMOVABLE MEDIA DEVICE ATTCH
11 IBM 2623 SIX LINE COMM CONTROLLER
2 IBM 2644 3490 MAGNETIC TAPE ATTACH/HP
4 IBM 2688 OPTICAL LINK PROC(1063MBPS)
1 IBM 2695 OPTICAL BUS ADAPTER
1 IBM 2924 ENGLISH
1 IBM 2961 240 VOLT POWER CORD
2 IBM 3180 512MB MAIN STORAGE
1 IBM 5024 SOFTWARE VERSION V4R2
3 IBM 5052 16 DISK UNIT STORG EXPANSN
4 IBM 5072 1063MBPS SYS UNIT EXPAN TOWER
2 IBM 5082 1063MBPS STORAGE EXP TOWER
3 IBM 5143 BULK 400W POWER SUPPLY
1 IBM 5519 ALT IPL SPECIFY FOR 3590
1 IBM 5520 COMPLETE SYSTEM ORDER
1 IBM 5682 OPTICONNECT IN TOWER
10 IBM 6140 TWINAXIAL WKSTN CTLR
1 IBM 6141 ASCII WORKSTATION CONTROLLER
2 IBM 6501 DASD CONTROLLER
5 IBM 6512 DISK UNIT CNTLR FOR RAID
73 IBM 6607 4.19GB DISK UNIT/A
1 IBM 7607 OPTIONAL DISK UNIT(4.19GB)
2 IBM 8192 1024MB OPTIONAL BASE
61 IBM 9023 V.24 CABLE 20 FT ENHANCED
1 IBM 9082 14 FOOT LINE CORD
1 IBM 9083 LOCKING LINE CORD PLUG
1 IBM 9182 14FT LINE CORD SPECIFY
1 IBM 9183 LOCKING LINE CORD PLUG SPECIFY
1 IBM 9280 BASE TWINAXIAL WSC
1 IBM 9699 BASE TWO-LINE WAN 10 A
1 IBM 9754 BASE MFIOP WITH RAID
2 IBM 9980 3490-CXX EXT CABLE CONN
1974 TIFFANY & CO 1 IBM 9406 530 9406 SYSTEM UNIT
2 IBM 37 3590-B11 LCL SRC RACK MNT
1 IBM 43 MIRRORED SYSTEM BUS LEVEL
1 IBM 2153 MODEL 530 4-WAY PROCESSOR
21 IBM 2609 EIA 232/V.24 TWO LINE ADPT
2 IBM 2619 16/4MBPS TOKEN-RING/HP
1 IBM 2621 REMOVABLE MEDIA DEVICE ATTCH
7 IBM 2623 SIX LINE COMM CONTROLLER
2 IBM 2644 3490 MAGNETIC TAPE ATTACH/HP
2 IBM 2688 OPTICAL LINK PROC(1063MBPS)
1 IBM 2924 ENGLISH
1 IBM 2961 240 VOLT POWER CORD
</TABLE>
Schedule 1.04 Page 36
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
2 IBM 3163 256MB MAIN STORAGE
1 IBM 4961 240 VOLT POWER CORD
1 IBM 5023 SOFTWARE VERSION V4R1
3 IBM 5052 16 DISK UNIT STORG EXPANSN
3 IBM 5072 1063MBPS SYS UNIT EXPAN TOWER
1 IBM 5082 1063MBPS STORAGE EXP TOWER
3 IBM 5143 BULK 400W POWER SUPPLY
1 IBM 5519 ALT IPL SPECIFY FOR 3590
1 IBM 5528 COMPLETE SYSTEM ORDER
1 IBM 5540 ATTACH TWINAXAL WKSTA CTRL
3 IBM 6050 TWINAX WKST CTRL-ENHANCED
2 IBM 6501 DASD CONTROLLER
2 IBM 6512 DISK UNIT CNTLR FOR RAID
2 IBM 6530 STORAGE DEVICE CONTROLLER
57 IBM 6607 4.19GB DISK UNIT/A
2 IBM 8265 OPT BASE 1024MB MAIN STORAGE
1 IBM 8587 OPT BASE 4.19GB DISK UNIT/A
13 IBM 9023 V.24 CABLE 20 FT ENHANCED
1 IBM 9051 BASE 8 DISK UNIT EXPANSION
1 IBM 9082 14 FOOT LINE CORD
1 IBM 9083 LOCKING LINE CORD PLUG
1 IBM 9149 TWINAXIAL PASSTHRU ADAPTER
1 IBM 9162 BASE MFIOP W/TWINAXIAL WSC
1 IBM 9182 14FT LINE CORD SPECIFY
1 IBM 9183 LOCKING LINE CORD PLUG SPECIFY
5 IBM 9240 STD 400W POWER SUPPLY
6 IBM 9243 STD FEATURE POWER SUPPLY
6 IBM 9245 STD BATTERY BACK-UP
1 IBM 9520 BASE CD-ROM
1 IBM 9612 STD EIA 232/V.24 1-LINE AD
1 IBM 9576 BASE OPTICAL BUS ADAPTER
30 IBM 9835 V.24 ENHANCED CABLE 50FT
2 IBM 9980 3490-CXX EXT CABLE CONN
1975 BED BATH & BEY 1 IBM 5494 EXT REMOTE CONTROLLER 28 PORT
1 IBM 43J 2638 LASER PRINTER 16PPM 4MB
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
1 IBM 5494 EXT REMOTE CONTROLLER 28 PORT
1 IBM 43J 2638 LASER PRINTER 16PPM 4MB
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
1 IBM 5494 EXT REMOTE CONTROLLER 28 PORT
1 IBM 43J 2638 LASER PRINTER 16PPM 4MB
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
1 IBM 5494 EXT REMOTE CONTROLLER 28 PORT
1 IBM 43J 2638 LASER PRINTER 16PPM 4MB
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
1 IBM 5494 EXT REMOTE CONTROLLER 28 PORT
</TABLE>
Schedule 1.04 Page 37
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 IBM 43J 2638 LASER PRINTER 16PPM 4MB
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
1 IBM 5494 EXT REMOTE CONTROLLER 28 PORT
13 IBM 3488 V13 INFOWINDOW LOGIC
1 IBM 43J 2638 LASER PRINTER 16PPM 4MB
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
13 IBM 6540 00N G42 14" MONITOR
1 IBM 5494 EXT REMOTE CONTROLLER 28 PORT
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
1 IBM 43J 2638 LASER PRINTER 16PPM 4MB
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
1 IBM 5494 EXT REMOTE CONTROLLER 28 PORT
1 IBM 43J 2638 LASER PRINTER 16PPM 4MB
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
13 IBM 6540 00N G42 14" MONITOR
5 IBM 3488 V13 INFOWINDOW LOGIC
5 IBM 6540 00N G42 14" MONITOR
1 IBM 43J 2600 OPTRA S 1625 16PPM LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
1 IBM 43J 2600 OPTRA S 1625 16PPM LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
1 IBM 43J 2600 OPTRA S 1625 16PPM LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
1 IBM 3488 V13 INFOWINDOW LOGIC
1 IBM 6540 00N G42 14" MONITOR
1 IBM 43J 2600 OPTRA S 1625 16PPM LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
1 IBM 43J 2600 OPTRA S 1625 16PPM LASER
1 IBM 44H 11 CX TX SCS ADAPTER
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
1 IBM 43J 2600 OPTRA S 1625 16PPM LASER
1976 TIFFANY & CO 3 IBM 4694 244 4694 BASE POS TERMINAL MODEL 244
3 IBM 2900 POWER SUPPLY 110-127V
3 IBM 3324 POS ALPHANUMERIC KEYBOARD
3 IBM 3326 DISTRIBUTED KEYBOARD CABLE
3 IBM 3330 KEYBUTTON KIT RETAIL FORMAT
3 IBM 3360 CASH DRAWER ASSEMBLY, NO TILL
3 IBM 3365 DISTRIBUTED CASH DRAWER CABLE
3 IBM 3390 TOKEN RING CABLE
3 IBM 3879 FIXED TILL FOR CASH DRAWER
3 IBM 3924 MONO VIDEO DISPLAY-DISTRIBUTED
3 IBM 4800 MODEL 4 PRINTER
3 IBM 4922 MODEL 4 PRINTER DISTIBUTED CABLE
3 IBM 4923 MODEL 4 PRINTER RIBBON/PAPER
3 IBM 7429 MONITOR TILT/SWIVEL STAND-DISTRIBUTED
3 IBM 7462 TOKEN RING NETWORK, 16/4
3 IBM 7900 4690 OS DUMP SWITCH FEATURE
</TABLE>
Schedule 1.04 Page 38
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
12 IBM 9203 SYSTEM LOCK
3 IBM 9300 FLAT TOP DISTRIBUTED MODELS
3 IBM 9510 LINE CORD 4.3M NON-LOCK
3 IBM 9511 LINE CORD 1.8M NON-LOCK
3 IBM 9534 SOFTWARE USAGE-4690 OS
1977 TIFFANY & CO 1 IBM 4694 244 4694 BASE POS TERMINAL MODEL 244
1 IBM 2900 POWER SUPPLY 110-127V
1 IBM 3324 POS ALPHANUMERIC KEYBOARD
1 IBM 3325 INTEGRATED KEYBOARD CABLE
1 IBM 3330 KEYBUTTON KIT RETAIL FORMAT
1 IBM 3360 CASH DRAWER ASSEMBLY, NO TILL
1 IBM 3364 INTEGRATED CASH DRAWER CABLE
1 IBM 3390 TOKEN RING CABLE
1 IBM 3879 FIXED TILL FOR CASH DRAWER
1 IBM 3920 MONO VIDEO DISPLAY-DISTRIBUTED
1 IBM 4800 MODEL 4 PRINTER
1 IBM 4920 MODEL 4 PRINTER DISTIBUTED CABLE
1 IBM 4923 MODEL 4 PRINTER RIBBON/PAPER
1 IBM 7462 TOKEN RING NETWORK, 16/4
1 IBM 7900 4690 OS DUMP SWITCH FEATURE
4 IBM 9203 SYSTEM LOCK
1 IBM 9510 LINE CORD 4.3M NON-LOCK
1 IBM 9537 SOFTWARE USAGE-THIRD PARTY
1 IBM 43J 1000 LEXMARK LASER PRINTER
1 IBM PRINTER INTERFACE CABLE
1 IBM 33.6 DATA MODEM
1 IBM HOST COMMUNICATIONS INTERFACE CABLE
1978 TIFFANY & CO 1 IBM 9406 S20 AS/400E SYSTEM UNIT
1 IBM 3 ORDER INSTALLED BY IBM
1 IBM 37 3590-B11 LCL SRC RACK MNT
1 IBM 44 DATA LOSS PROTECTION
1 IBM 348 V.24/EIA232 20-FT PCI CABLE
6 IBM 1323 2-BYTE 1.96GB DISK UNIT KIT
7 IBM 1326 2-BYTE 1.96GB DISK UNIT KIT
6 IBM 1327 2-BYTE 4.19GB DISK UNIT KIT
1 IBM 1350 2.5GB 1/4-INCH TAPE KIT
1 IBM 2165 MODEL S20 2-WAY PROCESSOR
1 IBM 2724 PCI 16/4MBPS TOKEN RING 10A
1 IBM 2741 PCI RAID DISK UNIT CTLR
1 IBM 2862 128MB 10P MEMORY
1 IBM 2924 ENGLISH
2 IBM 3002 128MB MAIN STORAGE
2 IBM 3002 128MB MAIN STORAGE
10 IBM 3002 128MB MAIN STORAGE
1 IBM 5064 SYSTEM UNIT EXPANSION
1 IBM 5517 ALT IPL SPEC FOR QIC-2500
1 IBM 5520 COMPLETE SYSTEM ORDER
1 IBM 6501 DASD CONTROLLER
1 IBM 6512 DISK UNIT CNTLR FOR RAID
1 IBM 6617 INTEGRATED PC SERVER
6 IBM 6607 4.19GB DISK UNIT
3 IBM 7128 DASD CONTROLLER
1 IBM 9062 14 FOOT LINE CORD
</TABLE>
Schedule 1.04 Page 39
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 IBM 9331 BASE PCI EXP UNIT FOR SPD CDS
1 IBM 9720 BASE PCI WAN/TWINAXIAL 10A
1 IBM 9724 BASE PCI TOKEN RING ADAPTER
1 IBM 7855 O1Z 12-192 KPS MODEM
1 IBM 3590 B11 TAPE DRIVE WITH RACL
1 IBM 5125 25 M SCSI CABLE
1 IBM 8130 30 DATA CARTRIDGES (PLANT)
1 IBM 9222 SECOND OR FOURTH B11
1 IBM 9400 ATTACHED TO AS/400
1 IBM 9410 INTERPOSER FOR AS/400
1 IBM 9309 2 RACK ENCLOSURE, 1.6 METER
1 IBM 9060 WATERTIGHT POWER CORD
1 IBM 9171 GENERAL PURPOSE I/O RACK
1979 BALLY NORTH 48 706 28157 COMPAQ DESKPRO 2000MT
48 550 353151 MAGNAVOX 15" SVGA COLOR DIGITAL MONITOR
48 1125 1 SPORTSTER WINMDM 28.8/33.6
48 706 990100 DESKPRO 3 YEAR ENHANCED WARRNTY
1980 BED BATH & BEY 13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
1 IBM 5494 EXT REMOTE CONTROLLER
1 IBM 43J 2638 LASER PRINTER
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
1 IBM 5494 EXT REMOTE CONTROLLER
13 IBM G41 14" COLOR MONITOR 6542301
1 IBM 43J 2638 LASER PRINTER
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
13 IBM 3488 V13 INFOWINDOW LOGIC
1 IBM 5494 EXT REMOTE CONTROLLER
13 IBM G41 14" COLOR MONITOR 6542301
1 IBM 43J 2638 LASER PRINTER
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
13 IBM 3488 V13 INFOWINDOW LOGIC
1 IBM 5494 EXT REMOTE CONTROLLER
1 IBM 43J 2638 LASER PRINTER
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6546 0AN G54 15" SVGA MONITOR
1 IBM 5494 EXT REMOTE CONTROLLER
1 IBM 43J 2638 LASER PRINTER
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6546 0AN G54 15" SVGA MONITOR
1 IBM 3488 V13 INFOWINDOW LOGIC
1 IBM 6540 00N G42 14" MONITOR
1 IBM 3488 V13 INFOWINDOW LOGIC
1 IBM 6540 00N G42 14" MONITOR
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6546 0AN G54 15" SVGA MONITOR
1 IBM 5494 EXT REMOTE CONTROLLER
1 IBM 43J 2638 LASER PRINTER
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
1 IBM 5494 EXT REMOTE CONTROLLER
1 IBM 43J 2638 LASER PRINTER
</TABLE>
Schedule 1.04 Page 40
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
1 IBM 5494 EXT REMOTE CONTROLLER
1 IBM 43J 2638 LASER PRINTER
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
1 IBM 5494 EXT REMOTE CONTROLLER
1 IBM 43J 2638 LASER PRINTER
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6540 00N G42 14" MONITOR
13 IBM 3488 V13 INFOWINDOW LOGIC
13 IBM 6546 0AN G54 15" SVGA MONITOR
1 IBM 5494 EXT REMOTE CONTROLLER
1 IBM 43J 2638 LASER PRINTER
1 IBM 44H 50 IPDS OPTION FOR OPTRA S SERIES
1981 BED BATH & BEY 91 3488 V43 COLOR DISPLAY
5 5494 EXT CONTROLLER
1982 GRUMMAN DATA 1 7006 42T IBM RS6000
2397 1080 MB SCSI-2 DISK DRIVE
2610 3.5 IN 2.88MB DISK DRIVE
2643 POWER GXT500 GRAPH ADAPT SEL
3750 SERV PUBLICATION WRAP PLUGS
3751 DIAGNOSTIC MEDIA
4 4026 32NB SIMM MEM SELECT(128MB)
4043 .5MB L2 CACHE
9010 KEYBOARD 101 KEYS 101 US/ENGLISH
9041 3 BUTTON MOUSE SPECIFY
9300 LANGUAGE GROUP US ENGLISH
9397 1080 MB BASE SCSI-2 DISK DRIVE
9617 P70 MONITOR(15.9")
9800 POWER CORD US/CANADA
1983 TIFFANY & CO 1 IBM 5494 EXT REMOTE CONTROLLER
1 IBM 1100 TOKEN RING ADAPTER 80 DEVICE
1 IBM 1200 TWINAX EXPANSION KIT 28 PORT
1984 TIFFANY & CO 8 4694 244 4694 BASE POS TERMINAL MODEL 244
8 2900 POWER SUPPLY 110-127V
8 3324 POS ALPHANUMERIC KEYBOARD
8 3326 DISTRIBUTED KEYBOARD CABLE
8 3330 KEYBUTTON KIT RETAIL FORMAT
8 3360 CASH DRAWER ASSEMBLY, NO TILL
8 3365 DISTRIBUTED CASH DRAWER CABLE
8 3390 TOKEN RING CABLE
8 3879 FIXED TILL FOR CASH DRAWER
8 3924 MONO VIDEO DISPLAY-DISTRIBUTED
8 4800 MODEL 4 PRINTER
8 4922 MODEL 4 PRINTER DISTRIBUTED CABLE
8 4923 MODEL 4 PRINTER RIBBON/PAPER
8 7429 MONITOR TILT/SWIVEL STAND-DISTRIBUTED
</TABLE>
Schedule 1.04 Page 41
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
8 7462 TOKEN RING NETWORK, 16/4
8 7900 4690 OS DUMP SWITCH FEATURE
32 9203 SYSTEM LOCK
8 8Q1588 FLAT TOP FOR DISTRIBUTED MODELS
8 9510 LINE CORD 4.3M NON-LOCK
8 9511 LINE CORD 1.8M NON-LOCK
8 9537 SOFTWARE USAGE-THIRD PARTY
1 4694 244 4694 BASE POS TERMINAL MODEL 244
1 2900 POWER SUPPLY 110-127V
1 3324 POS ALPHANUMERIC KEYBOARD
1 3325 INTEGRATED KEYBOARD CABLE
1 3330 KEYBUTTON KIT RETAIL FORMAT
1 3360 CASH DRAWER ASSEMBLY, NO TILL
1 3364 INTEGRATED CASH DRAWER CABLE
1 3390 TOKEN RING CABLE
1 3879 FIXED TILL FOR CASH DRAWER
1 3920 MONO VIDEO DISPLAY-INTEGRATED
1 4800 MODEL 4 PRINTER
1 4920 MODEL 4 PRINTER DISTRIBUTED CABLE
1 4923 MODEL 4 PRINTER RIBBON/PAPER
1 7462 TOKEN RING NETWORK, 16/4
1 7900 4690 OS DUMP SWITCH FEATURE
4 9203 SYSTEM LOCK
1 9510 LINE CORD 4.3M NON-LOCK
1 9537 SOFTWARE USAGE-THIRD PARTY
1 43J 1000 LEXMARK LASER PRINTER
1 PRINTER INTERFACE CABLE
1 33.6 DATA MODEM
1 HOST COMMUNICATIONS INTERFACE CABLE
1985 TIFFANY & CO 8 4694 244 4694 BASE POS TERMINAL MODEL 244
8 2900 POWER SUPPLY 110-127V
8 3324 POS ALPHANUMERIC KEYBOARD
8 3326 DISTRIBUTED KEYBOARD CABLE
8 3330 KEYBUTTON KIT RETAIL FORMAT
8 3360 CASH DRAWER ASSEMBLY, NO TILL
8 3365 DISTRIBUTED CASH DRAWER CABLE
8 3390 TOKEN RING CABLE
8 3879 FIXED TILL FOR CASH DRAWER
8 3924 MONO VIDEO DISPLAY-DISTRIBUTED
8 4800 MODEL 4 PRINTER
8 4922 MODEL 4 PRINTER DISTRIBUTED CABLE
8 4923 MODEL 4 PRINTER RIBBON/PAPER
8 7429 MONITOR TILT/SWIVEL STAND-DISTRIBUTED
8 7462 TOKEN RING NETWORK, 16/4
8 7900 4690 OS DUMP SWITCH FEATURE
32 9203 SYSTEM LOCK
8 8Q1588 FLAT TOP FOR DISTRIBUTED MODELS
8 9510 LINE CORD 4.3M NON-LOCK
8 9511 LINE CORD 1.8M NON-LOCK
8 9537 SOFTWARE USAGE-THIRD PARTY
1 4694 244 4694 BASE POS TERMINAL MODEL 244
1 2900 POWER SUPPLY 110-127V
1 3324 POS ALPHANUMERIC KEYBOARD
1 3325 INTEGRATED KEYBOARD CABLE
</TABLE>
Schedule 1.04 Page 42
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 3330 KEYBUTTON KIT RETAIL FORMAT
1 3360 CASH DRAWER ASSEMBLY, NO TILL
1 3364 INTEGRATED CASH DRAWER CABLE
1 3390 TOKEN RING CABLE
1 3879 FIXED TILL FOR CASH DRAWER
1 3920 MONO VIDEO DISPLAY-INTEGRATED
1 4800 MODEL 4 PRINTER
1 4920 MODEL 4 PRINTER DISTRIBUTED CABLE
1 4923 MODEL 4 PRINTER RIBBON/PAPER
1 7462 TOKEN RING NETWORK, 16/4
1 7900 4690 OS DUMP SWITCH FEATURE
4 9203 SYSTEM LOCK
1 9510 LINE CORD 4.3M NON-LOCK
1 9537 SOFTWARE USAGE-THIRD PARTY
1 43J 1000 LEXMARK LASER PRINTER
1 PRINTER INTERFACE CABLE
1 33.6 DATA MODEM
1 HOST COMMUNICATIONS INTERFACE CABLE
1986 GRUMMAN DATA 1 7006 42T RISC/6000 PNY 32MB MEMORY
1 6093 11
1 6094 10
1 6094 20
1987 TIFFANY & CO 2 IBM 9406 5052 STORAGE EXPANSION UNIT
2 IBM 9406 5143 400 WATT POWER SUPPLY
2 IBM 9406 6532 RAID DISK UNIT CONTROLLER
10 IBM 9406 6713 DASD W/REGULATOR
1988 BALLY, INC. 11 PTC 912 TELXON 912
SC 912 CHARGING CRADLES
A3X681 5 Y CABLE
STRPROM SOFTWARE
1989 TIFFANY & CO. 1 IBM 9406 5052 STORAGE EXPANSION UNIT
1 IBM 9406 5143 400 WATT POWER SUPPLY
1 IBM 9406 6532 RAID DISK UNIT CONTROLLER
10 IBM 9406 6713 8GB DASD W/REGULATOR
1990 IA-980-49 BED, BATH & BEYOND 56 IBM 3488 V13 INFOWINDOW LOGIC
39 IBM 6546 OAN 15" G54 SVGA MONITOR
5 IBM 5494 EXT REMOTE CONTROLLER
4 LEXMARK 43J 2638 LASER PRINTERS
8 LEXMARK 44H 0050 IPDS OPTION
6 LEXMARK 44H 0011 CX TX SCS ADAPTOR
6 LEXMARK 43J 2600 LASER PRINTERS
1 LEXMARK 44H 0001 TOKEN RING
14 IBM 6540 00N 14" G42 MONITOR
1 LEXMARK 43J 2200 LASER PRINTERS
1 LEXMARK 44H 0040 IPDS SIMM
3 IBM 6542 301 14" G41 COLOR MONITOR
9 LEXMARK EXTENDED WARRANTY
1991 BAL-003 BALLY NORTH AMERICA 12 MAGNAVOX PHL15C3220 15" .28MM MONITOR
12 COMPAQ 356050 002 COMPAQ DESKPRO CELARON 300A COMPTRS
</TABLE>
Schedule 1.04 Page 43
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
12 COMPAQ 185894 003 EXTENDED WARRANTY
12 SPORTSTER MBUSR1125 MODEMS
12 NEWCOM MMNC 16X CD ROM
6 HP HPLJ6MP LASER PRINTER
6 6' PRINTER CABLE
1 24 PORT STACKABLE HUB
1 HUB CABLE
1992 VSI-008 VITAMIN SHOPPE INDUSTRIES 15 IBM 4694 244 BASE POS TERMINAL
30 IBM 4694 9450 8MB MEMORY MODULE
15 IBM 4694 3324 KEYBOARD
15 IBM 4694 3328 ALPHANUMERIC CABLE
15 IBM 4694 3927 9" COLOR DISPLAY ARTICULATING ARM
15 IBM 4694 3503 40 CHARACTER LCD DISPLAY
15 IBM 4694 3345 INTEGRATED CABLE FOR LCD DISPLAY
15 IBM 4694 3360 CASH DRAWER
15 IBM 4694 3879 FIXED TILL
15 IBM 4694 3364 CASH DRAW CABLE
30 IBM 4694 9514 2.8M POWER CORD
15 IBM 4694 811 MONITOR FILLER PANEL
45 IBM SPECIFY LOCK FOR POS REGISTERS
15 IBM 4694 4610 MODEL T12 THERMAL PRINTER
15 IBM 4694 4920 CABLE MODEL 4/4R PRINTER
15 IBM 4694 1150 FILLER PANEL FOR THERMAL PRINTER
15 IBM SYM 1908 SYMBOL SCANNER FOR 4694 POS TERMINAL
1993 VSI-007 VITAMIN SHOPPE INDUSTRIES 15 IBM 4694 244 BASE POS TERMINAL
30 IBM 4694 9450 8MB MEMORY MODULE
15 IBM 4694 3324 KEYBOARD
15 IBM 4694 3328 ALPHANUMERIC CABLE
15 IBM 4694 3927 9" COLOR DISPLAY ARTICULATING ARM
15 IBM 4694 3503 40 CHARACTER LCD DISPLAY
15 IBM 4694 3345 INTEGRATED CABLE FOR LCD DISPLAY
15 IBM 4694 3360 CASH DRAWER
15 IBM 4694 3879 FIXED TILL
15 IBM 4694 3364 CASH DRAW CABLE
30 IBM 4694 9514 2.8M POWER CORD
15 IBM 4694 811 MONITOR FILLER PANEL
45 IBM SPECIFY LOCK FOR POS REGISTERS
15 IBM 4694 4610 MODEL T12 THERMAL PRINTER
15 IBM 4694 4920 CABLE MODEL 4/4R PRINTER
15 IBM 4694 1150 FILLER PANEL FOR THERMAL PRINTER
15 IBM SYM 1908 SYMBOL SCANNER FOR 4694 POS TERMINAL
1994 TC-PBX-GA-B TIFFANY & COMPANY 1 LUCENT 1272 6US R6SI VAS RTU
2 LUCENT 1272 SSU SIZE SENS/100 PORTS
1 LUCENT 63552 DOCUMENTATION
1 LUCENT 6300 UEP S-1-S1386/R61RSC UP
1 LUCENT 63532 CALL CLASSIFIER PACK
1 LUCENT 63794 CDROM ADMIN DOCS
1995 TC-PBX-TROY-B TIFFANY & COMPANY 1 LUCENT 1272 6US R6SI VAS RTU
2 LUCENT 1272 SSU SIZE SENS/100 PORTS
1 LUCENT 63552 DOCUMENTATION
1 LUCENT 6300 UEP S-1-S1386/R61RSC UP
</TABLE>
Schedule 1.04 Page 44
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 LUCENT 63532 CALL CLASSIFIER PACK
1 LUCENT 63794 CDROM ADMIN DOCS
1996 TC-PBX-VA-B TIFFANY & COMPANY 1 LUCENT 1272 6US R6SI VAS RTU
2 LUCENT 1272 SSU SIZE SENS/100 PORTS
1 LUCENT 63552 DOCUMENTATION
1 LUCENT 6300 UEP S-1-S1386/R61RSC UP
1 LUCENT 63532 CALL CLASSIFIER PACK
1 LUCENT 63794 CDROM ADMIN DOCS
1997 TC-PBX-DAL-A TIFFANY & COMPANY 1 LUCENT 1272 6US R6SI VAS RTU
2 LUCENT 1272 SSU SIZE SENS/100 PORTS
1 LUCENT 63552 DOCUMENTATION
1 LUCENT 6300 UEP S-1-S1386/R61RSC UP
1 LUCENT 63532 CALL CLASSIFIER PACK
1 LUCENT 63794 CDROM ADMIN DOCS
1998 TC-4694-NY TIFFANY & COMPANY 8 IBM 4694 244 BASE POS TERMINAL
8 IBM 4694 2900 POWER SUPPLY 110-127V
8 IBM 4694 3324 POS ALPHANUMERIC KEYBD W/ CD READER
8 IBM 4694 3325 INTEGRATED KEYBOARD CABLE
8 IBM 4694 3330 KEYBUTTON KIT RETAIL FORMAT
8 IBM 4694 3360 CASH DRAWER ASSEMBLY, NO TILL
8 IBM 4694 3364 INTEGRATED CASH DRAWER CABLE
8 IBM 4694 3390 TOKEN RING CABLE
8 IBM 4694 3879 FIXED TILL FOR CASH DRAWER
8 IBM 4694 3920 MONO VIDEO DISPLAY-INTEGRATED
8 IBM 4694 4800 MODEL 4 PRINTER
8 IBM 4694 4920 MODEL 4 PRINTER DISTRIBUTED CABLE
8 IBM 4694 4923 MODEL 4 PRINTER RIBBON/PAPER
8 IBM 4694 7462 TOKEN RING NETWORK, 16/4
32 IBM 4694 9203 SYSTEM LOCK
8 IBM 4694 9510 LINE CORD 4.3M NON-LOCK
8 IBM 4694 9537 SOFTWARE USAGE - THIRD PARTY
1999 TC-PBX-BOS-B TIFFANY & COMPANY 1 LUCENT 1272 6US R6SI VAS RTU
2 LUCENT 1272 SSU SIZE SENS/100 PORTS
1 LUCENT 63552 DOCUMENTATION
1 LUCENT 6300 UEP S-1-S1386/R61RSC UP
1 LUCENT 63532 CALL CLASSIFIER PACK
1 LUCENT 63794 CDROM ADMIN DOCS
1 LUCENT 1272 UDU UNIFORM DIAL SFW
2000 IA-980-50 BED, BATH & BEYOND 45 IBM 3488 V13 INFOWINDOW LOGIC BASE
45 IBM 6546 OAN 15" G54 SVGA MONITOR
13 IBM 5494 EXT IBM CONTROLLER
2 LEXMARK 43J 2600 LASER PRINTER
2 LEXMARK 44H 0011 CX TX SCS ADAPTOR
2 LEXMARK 44H 0050 IPDS OPTION
2 EXTENDED WARRANTY
2001 TC-2385D-B TIFFANY & COMPANY 1 IBM 6512 DASD CONTROLLER
2002 TC-OA81D-1 TIFFANY & COMPANY 6 IBM 6713 8.58GB DISK UNIT
1 IBM 5083 1063MBPS STORAGE EXPANSION TOWER
</TABLE>
Schedule 1.04 Page 45
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 IBM 6533 RAID DISK UNIT CONTROLLER
1 IBM 2688 OPTICAL LINK PROCESSOR
2003 TC-2385D-A TIFFANY & COMPANY 10 IBM 6907 4.19GB DASD
2004 TC-A1071-A TIFFANY & COMPANY 8 IBM 6907 4.19GB DASD
2005 TC-2KPDM-D TIFFANY & COMPANY 1 IBM SOFTWARE
2006 IA-980-51 BED, BATH & BEYOND 24 IBM 3488 V13 INFOWINDOW LOGIC BASE
24 IBM 6546 OAN 15" G54 SVGA MONITOR
7 IBM 5494 EXT REMOTE CONTROLLER
1 IBM 5494 1100 TOKEN RING ADAPTOR
1 IBM 5494 1200 TWINAX EXPANSION KIT
1 LEXMARK 44H 0001 TOKEN RING PRINT SERVER
1 LEXMARK 44H 0050 IPDS OPTION
1 LEXMARK 43J 2600 LASER PRINTER
1 EXTENDED WARRANTY
2007 TC-2385D-C TIFFANY & COMPANY 1 IBM 9406 650 9406-530 UPGADE TO 9406-650 W/ FEATURES
1 IBM 9406 2924 ENGLISH
84 IBM 9406 6907 4.19GB DISK UNIT
1 IBM 9406 9754 BASE MFIOP WITH RAID
1 IBM 9406 9280 BASE TWINAXIAL WSC
4 IBM 9406 8192 1024MB OPTIONAL BASE
4 IBM 9406 3189 128MB MAIN STORAGE
3 IBM 9406 0325 IPCS EXTENSION CABLES FOR NT
3 IBM 9406 1700 IPCS KEWBOARD/MOUSE FOR NT
3 IBM 9406 2724 PCI 16/4MBPS TOKEN RING IOA
12 IBM 9406 2862 128MB IOP MEMORY
3 IBM 9406 6617 INTEGRATED PC SERVER
1 IBM 9406 9699 BASE TWO-LINE WAN IOA
1 IBM 9406 0330 V.24/EIA232 20-FT CABLE
1 IBM 9406 9251 BASE I/O TOWER
1 IBM 9406 5057 STORAGE EXPANSION UNIT
2 IBM 9406 5058 STORAGE EXPANSION UNIT
3 IBM 9406 5083 1063MBPS STORAGE EXPANSION TOWER
5 IBM 9406 6533 RAID DISK UNIT CONTROLLER
2 IBM 9406 2688 OPTICAL LINK POC 1063MBPS
1 IBM 9406 2695 OPTICAL BUS ADAPTOR
1 IBM 9406 2240 MODEL 650 8-WAY PROCESSOR
1 IBM SOFTWARE & INSTALLATION
2008 IA-980-052 BED, BATH & BEYOND 2 IBM 5494 EXT REMOTE CONTROLLERS
2009 CAS-004-R4 CASE CORPORATION 1 HUGHES 5400 84B AUTO TAPE LIBRARY
4 HUGHES 5400 8211 BMC CHANNELS
2 HUGHES 5400 8212 GATE 2/5 CHANNELS
2010 CAS-005-R4 CASE CORPORATION 2 HUGHES 5491 9211 ESCON CHANNELS
2 HUGHES 5491 9212 GATE 2/5 CHANNELS
2011 IA-980-053 BED, BATH & BEYOND 1 LEXMARK 43J 2600 LASER PRINTER
1 LEXMARK 44H 0011 CX TX ADAPTOR
1 LEXMARK 44H 0060 IPDS SIMM
</TABLE>
Schedule 1.04 Page 46
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
2 IBM 5494 EXT REMOTE CONTROLLER
1 LEXMARK 43J 2638 LASER PRINTER
1 LEXMARK 44H 0050 IPDS OPTION
EXTENDED MAINTENANCE
2012 TC-3M2DM TIFFANY & COMPANY 1 IBM 9406 S20 AS-400E SYSTEM UNIT W/ FEATURES
1 IBM 9406 0040 DATA LOSS PROTECTION
1 IBM 9406 0056 3590-BII LCL SRC SIDE MOUNT
2 IBM 9406 0325 IPCS EXTENSION CABLE FOR NT
1 IBM 9406 0330 V.24/EIA232 20FT CABLE
1 IBM 9406 0348 V.24/EIA232 20FT PCI CABLE
1 IBM 9406 0421 JDE VALIDATE NO PRELOAD
2 IBM 9406 1700 IPGS KEYBD/MOUSE FOR NT
1 IBM 9406 2177 MODEL S-20 4-WAY ISV PROCESSOR
1 IBM 9406 2629 LAN/WAN/WORKSTATION IOP
1 IBM 9406 2688 1063MBPS OPTICAL LINK PROCESSOR
1 IBM 9406 2699 TWO-LINE WAN IOA
2 IBM 9406 2724 PCI 16/4MBPS TOKEN RING IOA
1 IBM 9406 2729 PCI MAGNETIC MEDIA CONTROLLER
2 IBM 9406 2741 PCI RAID DISK UNIT CONTROLLER
1 IBM 9406 2809 PCI LAN/WAN/WORKSTATION IOP
1 IBM 9406 2830 MAIN STORAGE EXPANSION
8 IBM 9406 2862 126MB IOP MEMORY
1 IBM 9406 2924 ENGLISH
1 IBM 9406 3002 128MB MAIN STORAGE
1 IBM 9406 5024 SOFTWARE VERSION V4R2
1 IBM 9406 5058 STORAGE EXPANSION UNIT
1 IBM 9406 5064 SYSTEM EXPANSION UNIT
1 IBM 9406 5073 1063MBPS SYSTEM UNIT EXPANSION TOWER
1 IBM 9406 5083 1063MBPS STORAGE EXPANSION TOWER
1 IBM 9406 5519 ALT IPL SPECIFY FOR 3590
1 IBM 9406 5520 COMPLETE SYSTEM ORDER
2 IBM 9406 6533 RAIN DISK UNIT CONTROLLER
2 IBM 9406 6617 INTEGRATED PC SERVER
23 IBM 9406 6713 8.58GB DISK UNIT
17 IBM 9406 6807 4.19GB DISK UNIT
2 IBM 9406 7128 DASD EXPANSION UNIT
1 IBM 9406 9082 14 FOOT LINE CORD
1 IBM 9406 9329 BASE PCI INTEGRATED EXPANSION UNIT
1 IBM 9406 9707 BASE 4.19GB DISK UNIT
1 IBM 9406 9720 BASE PCI WAN/TWINAX IOA
1 IBM 9406 9724 BASE PCI TOKEN RING ADAPTOR
SOFTWARE
2013 VSI-009 VITAMIN SHOPPE INDUSTRIES 20 IBM 4694 244 BASE POS TERMINAL
20 IBM 4694 ANPS/2 KEYBOARDS W/ MSR US ENGLISH
20 IBM 4694 INTEGRATED PS/2 ALPHANUMERIC POS KEY
20 IBM 4694 INTEGRATED COLOR DISPLAY
20 IBM 4694 40-CHARACTER LIQUID CRYSTAL DISPLAY
20 IBM 4694 3360 CASH DRAWER ASSEMBLY, NO TILL
20 IBM 4694 3364 INTEGRATED CASH DRAWER CABLE
20 IBM 4694 APA/VF DISPLAY INTEGRATED CABLE ASSMBLY
20 IBM 4694 3879 FIXED TILL FOR CASH DRAWER
20 IBM 4694 4610 MODEL T12 THERMAL PRINTER W/ MICR
20 IBM 4694 INTEGRATED CABLE FOR MODEL 4 &
</TABLE>
Schedule 1.04 Page 47
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SUREMARK PRINTERS
40 IBM 4694 2.8M POWER CARD W/NON-LOCKING PLUG
20 IBM 4694 MONITOR FILLER PANEL FOR WIDE CONFIG
60 IBM 4694 9202 SYSTEM LOCK #9952
20 IBM 4694 FILLER PANEL FOR 4610 SUREMARK PRINTER
40 IBM 4694 32MB UPGRADE, RPQ ONLY
20 IBM 4694 LS 9100 PEARL WHITE/HH
20 IBM 4694 LS 9100 PRODUCT REFERENCE GUIDE
2014 BCBS-012 BLUE CROSS BLUE SHIELD 1 PERIPHONICS 204IS2 VPS/IS 2 MODEL 9500 VOICE RESPONSE SYSTEM
1 PERIPHONICS 204CPS VPS/CPS CALL PROCESSING SUBSYSTEM
2 PERIPHONICS 208.14F QUAD 10/100MBPS ETHERNET S-BUS MODULE
1 PERIPHONICS 204IS VPS/IS MODEL 9500 VOICE RESPONSE SYSTEM
2 PERIPHONICS 208.5.2 32MB EXPANSION RAM
1 PERIPHONICS 220.1 AUDIO TAPE INPUT FEATURE
2 PERIPHONICS 236.1 2-CHNL CONTINOUS SPEECH RECOGNITION MOD
6 PERIPHONICS 236.11 2-CHNL CONTINOUS SPEECH RECOGNITION MOD
1 PERIPHONICS 260.5 EXPANSION HOST PORT
2 PERIPHONICS 314.5 SNMP SOFTWARE LICENSE
3 PERIPHONICS 320.1 HOST INTERFACE SOFTWARE
1 PERIPHONICS 331 CALLER MSG RECORDING SOFTWARE LICENSE
2 PERIPHONICS 388 PERIVIEW CONSOLIDATION SFTWARE LICENSE
2 PERIPHONICS 301.5.3 BASIC SYSTEM SOFTWARE 5.3X
1 PERIPHONICS 401 VPS EQUIPMENT INSTALLATION
2015 TC-A1071-B TIFFANY & COMPANY 1 IBM SOFTWARE (AS-400 SERIAL # 1071)
2016 TC-2385D-D TIFFANY & COMPANY 1 IBM SOFTWARE (AS-400 SERIAL # 2385D)
2017 IA-980-054 BED, BATH & BEYOND 8 IBM 5494 EXT REMOTE CONTROLLER
2 IBM 5494 1500 IBM ETHERNET ADAPTOR
2 LEXMARK 43J 2200 OPTRA S 1625-16PPM PRINTER
2 LEXMARK 44H IPDS FEATURE
2 LEXMARK 44H ETHERNET FEATURE
26 IBM 3488 V43 TERMINAL W/ MONITOR
2019 TC-PBX-727 TIFFANY & COMPANY 2 LUCENT 6950 EA1 7' MODEM CABLE
2 LUCENT 6950 EP5 572 SERIAL PRINTER
2 LUCENT 6950 ET7 715BCS TERM WHITE
2 LUCENT 1227 333 CC DELUXE: 50 AGT
1 LUCENT 1264 AM1 AMW SOFTWARE-RTU-G3I
1 LUCENT 1264 ARS ARS SOFTWARE-RTU
1 LUCENT 1264 DCS G3I DCS SOFTWARE
1 LUCENT 1264 IS3 G3IV3 RTU SOFTWARE SFT
1 LUCENT 3204 W1B MDW9000 WIRELESS SET-BLK
1 LUCENT 3203 03B MDC9000 CORDLESS-BLK
245 LUCENT 3233 03B 8403 DIGITAL VT BLK
30 LUCENT 3234 04B 8410 DIGITAL VT-BLK
243 LUCENT 3235 05B 8410 DIGITAL VT W/ DISPLAY-BLK
7 LUCENT 3236 07B 8434 TERM W/ POWER-BLK
4 LUCENT 32318 DXS (BLACK)
4 LUCENT 3274 10B 302B1 CONSOLE (BLACK)
1 LUCENT 2171 ADM 7400A DATA MODULE
1 LUCENT 2172 101 7400B PLUS DATA MODULE
3 LUCENT 2725 18C CRD M25B RS232C-10FT
</TABLE>
Schedule 1.04 Page 48
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
2 LUCENT 2750 D08 1030A CONN (BLACK)
1 LUCENT 2725 02S 4 CND-MTNG CRD-25FT
1 LUCENT 31019 EXTERNAL RINGER
3 LUCENT 24023 7 AH BATTERY CAB.
1 LUCENT 2403 208 8 KVA ENHANCED UPS
1 LUCENT 6300 59C G31 MCC 386 MODEL C
11 LUCENT 63010 SIZE SENSITIVE < 2300
1 LUCENT 63113 HYBRID LN INTERFACE
1 LUCENT 63114 DIGITAL LINE INTERFACE
7 LUCENT 63115 TRUNK LINE INTERFACE
5 LUCENT 63116 DID TRUNK INTERFACE
1 LUCENT 63118 AUX TRUNK INTERFACE CP
2 LUCENT 63123 TONE DETECTOR
21 LUCENT 63136 16 PORT ANALOG INTERFACE
1 LUCENT 63141 ANNOUNCEMENT BOARD
1 LUCENT 63150 UNIVERSAL COUPLER
3 LUCENT 63153 PROCESSOR INTERFACE
6 LUCENT 63156 DS1/DMI TRUNK INTERFACE
1 LUCENT 63185 120A1 CSU MODULE
118 LUCENT 63190 STANDARD CABLE 10-100
1 LUCENT 63202 EPN DUPLEX CONTROL
1 LUCENT 63203 PPN DUP G3I 386
4 LUCENT 63210 SWRM SNEAK FUSE
6 LUCENT 63212 SWRM 188B1 ADM FIELD
1 LUCENT 63213 SWRM AUXILIARY FIELD
5 LUCENT 63214 SWRM 1PR JUMPER WIRE
1 LUCENT 32036 BATTERY (BLACK)
120 LUCENT REMOTE ADMINISTRATIVE ASSISTANCE
250 LUCENT T&M ADJUNCT EQUIPMENT MAINTENANCE
1 LUCENT LABOR CHARGES FOR WIRE WORK
2,500 LUCENT PBX ENGINEER CONSULTANT TIME
1 LUCENT TECHNICIAN VISIT CHARGE
1 LUCENT MATERIAL SHIPPING CHARGE
1 LUCENT MISC WIRE MATERIAL
1 LUCENT DS1/ISDA-PRI INTERFACE CARD
2 LUCENT DS1 CABLE
12 LUCENT 3233 058A 8410 D VOICE TERM
20 LUCENT 3235 05BA 840D VOICE TERM
1 LUCENT 1335 STA T/NOVA ECS R5.0 STATION ADMIN
1 LUCENT 2161 PDMA PROCESSOR DATA UNIT
1 LUCENT 21611A RS232C INTERFACE
1 LUCENT 21702A TDALONE HSG MODULES
1 LUCENT 2177 GEI DATAPORT EXP-EXTERNAL
3 LUCENT 63185A 120A1 CHANNEL SERVICE UNIT
1 LUCENT 69770 NULL MODEM ADAPTOR
1 LUCENT 1470 010A DEF BCMS ADMIN TRNG CD-ROM
3 LUCENT 2178 001A DEFINIRTY MULTIMEDIA LINK
1 LUCENT 2565 B4S VSX4 BRI I/F (PBX)
2 LUCENT 27634 ABC DTE CABLES
1 LUCENT 3830 306 S4000ZX 30FPS OPTION
1 LUCENT 3835 010 PBX SW ENG G1/3-384A
1 LUCENT 3835 026 SOFTWARE ENG-VSX-8BRI/2T
1 LUCENT 3835 212 APPL INTEG T2 PVS/GVS
3 LUCENT 63114A DIGITAL LINE CIRCUIT CARD
3 LUCENT 8302 901A POWERKIT FOR DEFINITY D
</TABLE>
Schedule 1.04 Page 49
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
4 LUCENT 63156A DS1/ISDA-PRI INTERFACE CARD
1 LUCENT 31932A 8102 & 8110 DSGTN STRP
1 LUCENT 32307A 8403 DESIG CARD (PKG 25 TF)
1 LUCENT 1264 PRIA G3I ISDN PRIMARY RATE INTF SFT
4 LUCENT 63123A TONE DETECTOR
2 LUCENT 63185 120A1 CHANNEL SERVICE UNIT
3 LUCENT B-LEVEL 3(p) LEVEL PLENUM 4PR CABLE
30 AT&T 530 AT&T 530 PHONE - BLACK
20 AT&T 548 12 12' PHONE CORD - BLACK
20 AT&T 548 6 6' PHONE CORD - BLACK
20 AT&T 548 25 25' BLACK COIL CORD
10 AT&T A-RJ45-15 15' RJ45 PATCH PANEL
10 AT&T A-RJ45-25 25' RJ45 PATCH PANEL
20 LUCENT 3235 05BA 8410 D VOICE TERM
5 LUCENT 3236 09BP 8434DX DCP TERMINAL W/ POWER
2 LUCENT 3235 RTB 8411 DIGITAL SET/DIS & POWER
4 LUCENT 3122 022A MOD BASE UNIT CALL CENTER
1 LUCENT 3122 050A MIRAGE HEADSET
1 LUCENT 32344A 10 BIN DSC CD-PKG 104 LASE
1 LUCENT 32311A 10BTN DESIG CARD (PKG 108)
1 LUCENT 3122 035A TRI-STAR HEADPIECE
2 LUCENT 34521 ADP-02 SUPRA ACCESSORY KIT
4 LUCENT 3236 11BA 8434DX TERM W/PWR+X-MODE (BLACK)
2021 VSI-011 VITAMIN SHOPPE INDUSTRIES 15 IBM 4694 244 6X86-P266 W/3.2GB AND 32MB RAM
30 IBM 4694 32MB MEMORY MODULE
15 IBM 4694 ANPOS/2 KEYBD W/3 TRACK MAG STRIPE RDR
15 IBM 4694 INTGRTD PS/2 ALPHANUMERIC POS KEYBD CABLE
15 IBM 4694 9" COLOR DIS W/INT'DARTICULATING ARM
15 IBM 4694 2X20 40 CHARACTER LCD DISPLAY
15 IBM 4694 INTEGRATED CABLE FOR LCD DISPLAY
15 IBM 4694 FULL SIZE CASH DRAWER, NO TILL
15 IBM 4694 FULL SIZE FIXED TILL
15 IBM 4694 INTEGRATED CASH DRAWER CABLE
30 IBM 4694 2.8M POWER CORD W/ NON-LOCKING PLUG
15 IBM 4694 MONITOR FILLER PANEL FOR WIDE CONFIG
45 IBM 4694 CASH DRAWER LOCKS
15 IBM 4610 MODEL T12 THERMAL/IMPACT W/MICR
15 IBM INTEGRATED CABLE FOR MODEL 4/4R PRINTER
15 IBM 4610 FILLER PANEL FOR THERMAL PRINTER
15 IBM OMNI-DIRECTIONAL SYMBOLS SCANNER FOR POS
15 IBM MULTITECH EXTERNAL 336 MODEM
2022 IA-980-055 BED, BATH & BEYOND 3 IBM 5494 EXT REMOTE CONTROLLER
3 IBM 5494 1100 ETHERNET ADAPTOR
3 IBM 3488 V13 INFOWINDOW LOGIC BASE
3 IBM 6546 OAN 15" G54 COLOR MONITOR
2026 TC-3M2D3-A TIFFANY & COMPANY 1 IBM SOFTWARE
2027 TC-3995 TIFFANY & COMPANY 1 IBM IBM OPTICAL LIBRARY DATASERVER
1 IBM 2)5.2GB MULTIF. OPTICAL DRIVES
1 IBM 10-PACK 5.2 GB WORM OPT. MEDIA
2 IBM 52-PACK 5.2 GB REWR. OPT MEDIA
1 IBM 5.2GB EXT MULTIF. LIB FEATURE
</TABLE>
Schedule 1.04 Page 50
<PAGE>
LEC LEASING, INC.
SCHEDULE 1.04
EQUIPMENT UNDER LEASE AS OF
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
ACCT ACCOUNT LESSEE QTY MFR MACHINE MODEL DESCRIPTION
# NAME
- ---- ------------- ------------------------- ----- ------------- ---------- -------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 IBM IBM CABLE FOR AS/400 PCI MAGNETIC
1 IBM 3995 IBM 3995 110/117/120V 50/60 HZ CABLE
1 IBM IBM ORDER INSTALL
1 IBM ENGLISH
1 IBM ULTRA SCSI ATTACH 3995-CXX
2028 TC-A1071-C TIFFANY & COMPANY 1 IBM 9406 640 IBM ORDER INSTALL
1 IBM 9406 2924 ENGLISH
1 IBM 9406 0009 ULTRA SCSI ATTACH 3995-CXX
1 IBM 9406 6534 MAGNETIC MEDIA CONTROLLER
2029 IA-980-56 BED, BATH & BEYOND 738 IBM 3487 HC3 14" COLOR MONITOR W/ FEATURES 9122 7 9201
2 IBM 5494 EXT REMOTE CONTROLLER
2 IBM 5494 1853 V.35 CABLE
26 IBM 3488 V43 MONITOR
2 IBM 5494 002 LIC REMOTE
1 IBM 3488 V13 INFOWINDOW II LOGIC BASE
10 IBM 5494 001 REMOTE CONTROLLER
2 IBM 5494 1200 TWINAX EXPANSION KIT
5 IBM 5394 01B 8/16 DEVICE
1 IBM 5494 1100 TOKEN RING
</TABLE>
Schedule 1.04 Page 51
<PAGE>
SCHEDULE 1.07
EXCLUDED LEASES
o Newsday Leases upgraded/renewed in Acct #2033, ND-149
Acct # Acct Name
------ ---------
1681 ND-132
1880 ND-140
<PAGE>
SCHEDULE 1.08
LEASE PORTFOLIO
AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ---- ----- --------
ACCT START END MONTHLY
# ACCOUNT NAME CUSTOMER DATE TERM DATE PAYMENT
- ---- ------------- ------------------------- ----- ---- ----- --------
<S> <C> <C> <C> <C> <C> <C>
1979 BAL-001 BALLY NORTH AMERICA 09-98 36 08-01 1,512
1988 BAL-002 BALLY NORTH AMERICA 10-98 36 09-01 567
1991 BAL-003 BALLY NORTH AMERICA 11-98 36 10-01 743
1588 AP-GRP-14 BED, BATH & BEYOND MTM 2,805
1602 AP-GRP-15 BED, BATH & BEYOND MTM 2,111
1610 AP-GRP-16 BED, BATH & BEYOND 08-95 48 07-99 1,459
1611 AP-087-01 BED, BATH & BEYOND 08-95 48 07-99 1,442
1631 AP-086-01 BED, BATH & BEYOND 09-95 48 08-99 1,066
1632 AP-088-01 BED, BATH & BEYOND 09-95 48 08-99 1,258
1638 AP-093-01 BED, BATH & BEYOND 10-95 48 09-99 1,274
1640 AP-096-01 BED, BATH & BEYOND 10-95 48 09-99 1,082
1643 AP-090-01 BED, BATH & BEYOND 10-95 48 09-99 1,274
1645 AP-091-01 BED, BATH & BEYOND 10-95 48 09-99 1,082
1649 AP-089-01 BED, BATH & BEYOND 10-95 48 09-99 880
1650 AP-092-01 BED, BATH & BEYOND 11-95 48 10-99 1,081
1652 AP-097-01 BED, BATH & BEYOND 11-95 48 10-99 1,078
1655 AP-098-01 BED, BATH & BEYOND 11-95 48 10-99 1,078
1656 AP-094-01 BED, BATH & BEYOND 11-95 48 10-99 1,078
1659 AP-099-01 BED, BATH & BEYOND 11-95 48 10-99 1,078
1660 AP-082-01 BED, BATH & BEYOND 11-95 48 10-99 1,274
1661 AP-100-01 BED, BATH & BEYOND 12-95 48 11-99 1,078
1674 AP-031-01 BED, BATH & BEYOND 01-96 48 12-99 398
1819 IA-980-24 BED, BATH & BEYOND 04-97 36 03-00 2,308
1833 IA-980-25 BED, BATH & BEYOND 04-97 36 03-00 1,133
1861 IA-980-29 BED, BATH & BEYOND 07-97 36 06-00 2,568
1868 IA-980-32 BED, BATH & BEYOND 08-97 36 07-00 2,891
1871 IA-980-33 BED, BATH & BEYOND 09-97 36 08-00 8,841
1887 IA-980-34 BED, BATH & BEYOND 11-97 36 10-00 3,493
1900 IA-980-35 BED, BATH & BEYOND 01-98 36 12-00 621
1918 IA-980-38 BED, BATH & BEYOND 02-98 36 01-01 2,242
1927 IA-980-39 BED, BATH & BEYOND 03-98 36 02-01 1,769
1932 IA-980-40 BED, BATH & BEYOND 03-98 36 02-01 838
1935 IA-980-41 BED, BATH & BEYOND 05-98 24 04-00 1,693
1944 IA-980-42 BED, BATH & BEYOND 05-98 36 04-01 4,436
1961 IA-980-043 BED, BATH & BEYOND 07-98 36 06-01 2,322
1966 IA-980-44 BED, BATH & BEYOND 08-98 24 07-01 3,596
1967 IA-980-45 BED, BATH & BEYOND 08-98 36 07-01 3,068
1975 IA-980-46 BED, BATH & BEYOND 09-98 36 08-01 3,648
1980 IA-980-47 BED, BATH & BEYOND 09-98 36 08-01 4,251
1981 IA-980-48 BED, BATH & BEYOND 10-98 24 09-00 2,479
1990 IA-980-49 BED, BATH & BEYOND 10-98 36 09-01 2,374
2000 IA-980-50 BED, BATH & BEYOND 11-98 36 10-01 2,491
2006 IA-980-51 BED, BATH & BEYOND 12-98 36 11-01 1,440
2008 IA-980-052 BED, BATH & BEYOND 01-99 24 36861 201
2011 IA-980-053 BED, BATH & BEYOND 02-99 36 01-02 367
2017 IA-980-054 BED, BATH & BEYOND 03-99 36 02-02 1,619
2022 IA-980-055 BED, BATH & BEYOND 03-99 36 02-02 497
2029 IA-980-56 BED, BATH & BEYOND 05-99 24 04-01 13,700
1796 BCBS-001 BLUE CROSS BLUE SHIELD 02-97 36 01-00 5,554
</TABLE>
<PAGE>
SCHEDULE 1.08
LEASE PORTFOLIO
AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ---- ----- --------
ACCT START END MONTHLY
# ACCOUNT NAME CUSTOMER DATE TERM DATE PAYMENT
- ---- ------------- ------------------------- ----- ---- ----- --------
<S> <C> <C> <C> <C> <C> <C>
1815 BCBS-002 BLUE CROSS BLUE SHIELD 04-97 36 03-00 9,064
1816 BCBS-003 BLUE CROSS BLUE SHIELD 03-97 36 02-00 7,922
1823 BCBS-004 BLUE CROSS BLUE SHIELD 05-97 36 04-00 18,784
1842 BCBS-006 BLUE CROSS BLUE SHIELD 09-97 36 08-00 5,880
1843 BCBS-005 BLUE CROSS BLUE SHIELD 07-97 31 01-00 3,650
1869 BCBS-007 BLUE CROSS BLUE SHIELD 10-97 36 09-00 3,674
1903 BCBS-008 BLUE CROSS BLUE SHIELD 01-98 36 12-00 4,159
1908 BCBS-009 BLUE CROSS BLUE SHIELD 01-98 36 12-00 9,817
1951 BCBS-010 BLUE CROSS BLUE SHIELD 06-98 36 05-01 24,600
1960 BCBS-011 BLUE CROSS BLUE SHIELD 07-98 35 05-01 1,846
2014 BCBS-012 BLUE CROSS BLUE SHIELD 05-99 36 04-02 6,155
1726 CAS-007 CASE CORPORATION 07-96 54 12-00 2,537
1727 CAS-008 CASE CORPORATION 07-96 55 01-01 3,631
1728 CAS-009 CASE CORPORATION 07-96 56 02-01 4,546
1729 CAS-010 CASE CORPORATION 07-96 57 03-01 3,051
1746 CAS-011 CASE CORPORATION 08-96 57 04-01 3,176
1747 CAS-012 CASE CORPORATION 08-96 58 05-01 1,528
1806 CAS-016 CASE CORPORATION 02-97 40 05-00 1,646
1818 CAS-014 CASE CORPORATION 04-97 51 06-01 14,554
1859 CAS-015 CASE CORPORATION 07-97 60 06-02 3,741
1874 CAS-016 CASE CORPORATION 10-97 60 09-02 1,521
1905 CAS-017 CASE CORPORATION 01-98 60 12-02 1,069
1933 CAS-018 CASE CORPORATION 04-98 60 03-03 678
2009 CAS-004-R4 CASE CORPORATION 03-99 12 02-00 3,215
2010 CAS-005-R4 CASE CORPORATION 03-99 12 02-00 167
1723 CAS-006 CASE CORPORATION 06-96 48 05-00 47,276
1761 GDS-42T-9 GRUMMAN 11-96 36 10-99 8,397
1762 GDS-42T-10 GRUMMAN 11-96 36 10-99 399
1763 GDS-42T-11 GRUMMAN 12-96 36 11-99 1,997
1982 GDS-42T-1R GRUMMAN 09-98 12 08-99 325
1986 GDS-42T-3R GRUMMAN 10-98 12 09-99 410
1629 HGC-TJLR HARTFORD GRADUATE CTR 09-95 48 08-99 755
1639 HGC-007R HARTFORD GRADUATE CTR MTM 11,240
1686 HGC-009R HARTFORD GRADUATE CTR MTM 3,580
1731 HGC-014 HARTFORD GRADUATE CTR 08-96 60 07-01 7,029
1546 H-8250-A HERTZ MTM 18,460
1857 IBM-001 INT'L BUSINESS MACHINE 08-97 36 07-00 2,477
1798 LI-001-R LETHOFF, INC. MTM 350
1779 NBS-001 NATIONSBANC SERVICES 12-96 36 11-99 6,320
1795 NBS-002 NATIONSBANC SERVICES 03-97 33 11-99 3,415
1800 NBS-003 NATIONSBANC SERVICES 03-97 33 11-99 3,415
1617 NMM-002 NAT'L MERCHANTS MKTG 08-95 48 07-99 832
1637 NMM-003 NAT'L MERCHANTS MKTG 09-95 48 08-99 1,271
1668 NNM-004 NAT'L MERCHANTS MKTG 12-95 48 11-99 770
1676 NMM-005 NAT'L MERCHANTS MKTG 01-96 48 12-99 998
1781 NMM-008 NAT'L MERCHANTS MKTG 12-96 48 11-00 956
1790 NMM-009 NAT'L MERCHANTS MKTG 01-97 48 12-01 365
1704 NMM-006 NAT'L MERCHANTS MKTG 05-96 48 04-00 457
1712 NMM-007 NAT'L MERCHANTS MKTG 06-96 60 05-01 431
1681 ND-132 NEWSDAY, INC. 03-96 60 02-01 17,370
1698 ND-133 NEWSDAY, INC. MTM 314
1715 ND-135 NEWSDAY, INC. MTM 594
1776 ND-137 NEWSDAY, INC. 12-96 36 11-99 795
1810 ND-138 NEWSDAY, INC. 03-97 36 02-00 255
1825 ND-139 NEWSDAY, INC. 05-97 36 04-00 285
</TABLE>
<PAGE>
SCHEDULE 1.08
LEASE PORTFOLIO
AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ---- ----- --------
ACCT START END MONTHLY
# ACCOUNT NAME CUSTOMER DATE TERM DATE PAYMENT
- ---- ------------- ------------------------- ----- ---- ----- --------
<S> <C> <C> <C> <C> <C> <C>
1880 ND-140 NEWSDAY, INC. 10-97 64 01-03 12,445
1937 ND-143 NEWSDAY, INC. 04-98 24 36617 241
1953 ND-144 NEWSDAY, INC. 06-98 18 11-99 2,685
1955 ND-146 NEWSDAY, INC. 06-98 30 11-00 2,625
1956 ND-145 NEWSDAY, INC. 06-98 48 05-02 5,550
1969 ND-147 NEWSDAY, INC. 8-98 24 7-00 465
1972 ND-148 NEWSDAY, INC. 10-98 12 09-99 785
1852 PH-001 PEACEHEALTH 08-97 24 07-99 3,015
1732 PER-001 PEROT SYSTEMS 09-96 36 08-99 1,110
1791 PER-002 PEROT SYSTEMS 02-97 36 01-00 5,655
1794 PER-003 PEROT SYSTEMS 03-97 36 02-00 5,605
1851 PER-004 PEROT SYSTEMS 07-97 36 06-00 3,861
1597 TC-VM-SF TIFFANY & COMPANY 05-95 60 04-00 587
1600 TC-PBX-GA TIFFANY & COMPANY 05-95 60 04-00 1,488
1607 TC-PBX-VA TIFFANY & COMPANY 07-95 60 06-00 1,506
1608 TC-PBX-BOS TIFFANY & COMPANY 07-95 60 06-00 1,634
1618 TC-4683-MAD TIFFANY & COMPANY 09-95 60 08-00 311
1619 TC-4693-HR TIFFANY & COMPANY 09-95 60 08-00 897
1620 TC-4693-WP TIFFANY & COMPANY 09-95 60 08-00 1,193
1621 TC-4693-LAB TIFFANY & COMPANY 09-95 60 08-00 293
1622 TC-4693-SH TIFFANY & COMPANY 09-95 60 08-00 1,089
1623 TC-4693-NY TIFFANY & COMPANY 09-95 60 08-00 7,172
1624 TC-PBX-DAL TIFFANY & COMPANY 09-95 60 08-00 1,477
1625 TC-PBX-CM TIFFANY & COMPANY 09-95 60 08-00 664
1626 TC-PBX-BH TIFFANY & COMPANY 09-95 60 08-00 655
1627 TC-PBX-TROY TIFFANY & COMPANY 09-95 60 08-00 1,503
1641 TC-VM-CH TIFFANY & COMPANY 10-95 60 09-00 470
1644 TC-VM-SD TIFFANY & COMPANY 10-95 60 09-00 611
1658 TC-4693-MAD1 TIFFANY & COMPANY 12-95 57 08-00 200
1666 TC-4693-NY1 TIFFANY & COMPANY 12-95 57 08-00 1,297
1667 TC-4693-KOP TIFFANY & COMPANY 12-95 57 08-00 1,036
1693 TC-VM-PB TIFFANY & COMPANY 03-96 60 02-01 551
1694 TC-VM-BAL TIFFANY & COMPANY 03-96 60 02-01 601
1695 TC-VM-OB TIFFANY & COMPANY 03-96 60 02-01 587
1696 TC-VM-HO TIFFANY & COMPANY 03-96 60 02-01 594
1718 TC-VIDEO-F TIFFANY & COMPANY MTM 1,455
1720 TC-VIDEO-G TIFFANY & COMPANY MTM 1,846
1724 TC-5494-01 TIFFANY & COMPANY 07-96 36 06-99 2,236
1735 TC-GENESIS TIFFANY & COMPANY 09-96 36 08-99 5,450
1751 TC-GENESIS-A TIFFANY & COMPANY 09-96 36 08-99 385
1755 TC-5494-01A TIFFANY & COMPANY 10-96 33 06-99 261
1770 TC-DIAMOND TIFFANY & COMPANY 01-97 36 12-99 3,927
1771 TC-DIAMOND-A TIFFANY & COMPANY 01-97 36 12-99 41
</TABLE>
<PAGE>
SCHEDULE 1.08
LEASE PORTFOLIO
AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ---- ----- --------
ACCT START END MONTHLY
# ACCOUNT NAME CUSTOMER DATE TERM DATE PAYMENT
- ---- ------------- ------------------------- ----- ---- ----- --------
<S> <C> <C> <C> <C> <C> <C>
1773 TC-GENESIS-B TIFFANY & COMPANY 11-96 34 08-99 295
1774 TC-4693-HAC TIFFANY & COMPANY 11-96 48 10-00 1,245
1782 TC-GENESIS-C TIFFANY & COMPANY 11-96 34 08-99 117
1783 TC-4693-XTRAA TIFFANY & COMPANY 12-96 42 05-00 35
1785 TC-4693-XB TIFFANY & COMPANY 12-96 42 05-00 712
1787 TC-VIDEO-I TIFFANY & COMPANY 12-96 36 11-99 1,644
1788 TC-DIAMOND-B TIFFANY & COMPANY 02-97 35 12-99 149
1809 TC-GENESIS-D TIFFANY & COMPANY 02-97 31 08-00 568
1820 TC-AS400-1 TIFFANY & COMPANY 04-97 29 08-99 133
1824 TC-GENESIS-E TIFFANY & COMPANY 05-97 28 08-99 5,833
1826 TC-4694-DMC TIFFANY & COMPANY 04-97 36 03-00 533
1827 TC-4694-LAB TIFFANY & COMPANY 04-97 36 03-00 565
1828 TC-4694-PB TIFFANY & COMPANY 04-97 36 03-00 1,080
1829 TC-4694-BAL TIFFANY & COMPANY 04-97 36 03-00 946
1830 TC-4694-MI TIFFANY & COMPANY 04-97 36 03-00 1,626
1831 TC-4694-SF TIFFANY & COMPANY 05-97 36 04-00 1,624
1839 TC-4694-PA TIFFANY & COMPANY 05-97 36 04-00 1,217
1840 TC-4694-MA TIFFANY & COMPANY 05-97 36 04-00 1,217
1841 TC-4694-HHI TIFFANY & COMPANY 07-97 36 06-00 947
1845 TC-4694-CA TIFFANY & COMPANY 06-97 36 05-00 1,622
1847 TC-GENESIS-F TIFFANY & COMPANY 06-97 27 08-99 1,520
1848 TC-4694-MHI TIFFANY & COMPANY 07-97 36 06-00 402
1850 TC-DIAMOND-C TIFFANY & COMPANY 07-97 29 11-99 199
1853 TC-4694-DTX TIFFANY & COMPANY 08-97 36 07-00 809
1854 TC-4694-HTX TIFFANY & COMPANY 08-97 36 07-00 1,217
1855 TC-4694-SD TIFFANY & COMPANY 08-97 36 07-00 1,350
1860 TC-ETOILE/BU TIFFANY & COMPANY 07-97 36 06-00 59,946
1862 TC-5494-02R TIFFANY & COMPANY 07-97 36 06-00 2,350
1865 TC-259GM-1 TIFFANY & COMPANY 09-97 34 06-00 3,838
1870 TC-2F81D-2 TIFFANY & COMPANY 11-97 32 06-00 84
1872 TC-2F81D TIFFANY & COMPANY 09-97 34 06-00 18,848
1875 TC-4694-HILL TIFFANY & COMPANY 11-97 36 10-00 1,349
1876 TC-4694-OH TIFFANY & COMPANY 11-97 36 10-00 1,488
1877 TC-4694-CH TIFFANY & COMPANY 11-97 36 10-00 2,044
1878 TC-4694-NC TIFFANY & COMPANY 11-97 36 10-00 1,070
1879 TC-4694-TR TIFFANY & COMPANY 11-97 36 10-00 2,369
1881 TC-4694-OB TIFFANY & COMPANY 09-97 36 08-00 1,085
1883 TC-259GM-2 TIFFANY & COMPANY 10-97 33 06-00 524
1884 TC-2F81D-1 TIFFANY & COMPANY 10-97 33 06-00 524
1885 TC-4694-TRI TIFFANY & COMPANY 12-97 36 11-00 246
1895 TC-DIAMOND-D TIFFANY & COMPANY 11-97 26 12-99 469
1896 TC-259GM-4 TIFFANY & COMPANY 11-97 32 06-00 861
1898 TC-DIAMOND-E TIFFANY & COMPANY 12-97 25 12-99 480
1901 TC-5494-03 TIFFANY & COMPANY 12-97 31 06-00 1,269
1902 TC-259GM-5 TIFFANY & COMPANY 12-97 31 06-00 2,299
1910 TC-25F3D TIFFANY & COMPANY 02-98 36 01-01 10,832
1912 TC-DIAMOND-F TIFFANY & COMPANY 01-98 24 12-99 493
1913 TC-AS400-1A TIFFANY & COMPANY 01-98 20 08-99 460
1920 TC-DIAMOND-G TIFFANY & COMPANY 02-98 23 12-99 154
</TABLE>
<PAGE>
SCHEDULE 1.08
LEASE PORTFOLIO
AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ---- ----- --------
ACCT START END MONTHLY
# ACCOUNT NAME CUSTOMER DATE TERM DATE PAYMENT
- ---- ------------- ------------------------- ----- ---- ----- --------
<S> <C> <C> <C> <C> <C> <C>
1921 TC-4694-TR2 TIFFANY & COMPANY 02-98 33 10-00 399
1922 TC-GENESIS-H TIFFANY & COMPANY 02-98 19 08-99 1,671
1924 TC-2KPDM TIFFANY & COMPANY 03-98 36 02-01 7,571
1928 TC-4693-LAB1 TIFFANY & COMPANY 03-98 30 08-00 305
1939 TC-3486-4 TIFFANY & COMPANY 06-98 24 05-00 4,360
1941 TC-PBX-TROY-A TIFFANY & COMPANY 05-98 28 08-00 38
1942 TC-PBX-GA-A TIFFANY & COMPANY 05-98 24 04-00 191
1943 TC-2KPDM-A TIFFANY & COMPANY 05-98 34 02-01 366
1945 TC-25F3D-A TIFFANY & COMPANY 06-98 32 01-01 178
1954 TC-4694-MAN TIFFANY & COMPANY 06-98 36 05-01 1,619
1958 TC-PBX-BOS-A TIFFANY & COMPANY 06-98 25 06-00 65
1962 TC-2KPDM-B TIFFANY & COMPANY 07-98 32 02-00 56
1964 TC-GENESIS-I TIFFANY & COMPANY 07-98 14 08-99 2,311
1968 TC-PBX-VA-A TIFFANY & COMPANY 08-98 23 06-00 186
1970 TC-4694-DV TIFFANY & COMPANY 08-98 36 07-01 1,482
1971 TC-2KPDM-C TIFFANY & COMPANY 09-98 30 02-01 1,395
1973 TC-A1071 TIFFANY & COMPANY 09-98 36 08-01 49,585
1974 TC-2385D TIFFANY & COMPANY 09-98 36 08-01 37,381
1976 TC-4694-SF1 TIFFANY & COMPANY 09-98 20 04-00 858
1977 TC-4694-AZ TIFFANY & COMPANY 09-98 36 08-01 1,482
1978 TC-0A81D TIFFANY & COMPANY 09-98 36 08-01 5,800
1983 TC-5494-01B TIFFANY & COMPANY 10-98 9 06-99 995
1984 TC-4694-LV TIFFANY & COMPANY 10-98 36 09-01 1,482
1985 TC-4694-WA TIFFANY & COMPANY 10-98 36 09-01 1,482
1987 TC-259GM-6 TIFFANY & COMPANY 10-98 21 06-00 2,713
1989 TC-2F81D-4 TIFFANY & COMPANY 10-98 21 06-00 1,945
1994 TC-PBX-GA-B TIFFANY & COMPANY 11-98 18 04-00 884
1995 TC-PBX-TROY-B TIFFANY & COMPANY 11-98 22 08-00 722
1996 TC-PBX-VA-B TIFFANY & COMPANY 11-98 20 06-00 794
1997 TC-PBX-DAL-A TIFFANY & COMPANY 11-98 22 08-00 701
1998 TC-4694-NY TIFFANY & COMPANY 11-98 36 10-01 1,053
1999 TC-PBX-BOS-B TIFFANY & COMPANY 11-98 20 06-00 790
2001 TC-2385D-B TIFFANY & COMPANY 12-98 33 08-01 383
2002 TC-OA81D-1 TIFFANY & COMPANY 11-98 34 08-01 845
2003 TC-2385D-A TIFFANY & COMPANY 11-98 34 08-01 412
2004 TC-A1071-A TIFFANY & COMPANY 11-98 34 08-01 370
2005 TC-2KPDM-D TIFFANY & COMPANY 12-98 27 02-01 100
2007 TC-2385D-C TIFFANY & COMPANY 01-99 32 08-01 35,621
2012 TC-3M2DM TIFFANY & COMPANY 02-99 36 01-02 8,326
2015 TC-A1071-B TIFFANY & COMPANY 03-99 30 08-01 280
2016 TC-2385D-D TIFFANY & COMPANY 03-99 30 08-01 281
2019 TC-PBX-727 TIFFANY & COMPANY 04-99 42 09-02 14,000
2026 TC-3M2D3-A TIFFANY & COMPANY 04-99 34 01-02 260
2027 TC-3995 TIFFANY & COMPANY 04-99 36 03-02 1,799
2028 TC-A1071-C TIFFANY & COMPANY 04-99 29 08-01 105
1700 TC-VM-TO TIFFANY & COMPANY 03-96 60 02-01 506
1705 TC-4693-XTRA TIFFANY & COMPANY 06-96 48 05-00 444
1706 TC-4693-BH TIFFANY & COMPANY 06-96 48 05-00 1,479
1707 TC-4693-DC TIFFANY & COMPANY 06-96 48 05-00 912
</TABLE>
<PAGE>
SCHEDULE 1.08
LEASE PORTFOLIO
AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
- ---- ------------- ------------------------- ----- ---- ----- --------
ACCT START END MONTHLY
# ACCOUNT NAME CUSTOMER DATE TERM DATE PAYMENT
- ---- ------------- ------------------------- ----- ---- ----- --------
<S> <C> <C> <C> <C> <C> <C>
1708 TC-4693-CM TIFFANY & COMPANY 06-96 48 05-00 1,028
1709 TC-4693-AT TIFFANY & COMPANY 06-96 48 05-00 912
1710 TC-VM-PH TIFFANY & COMPANY 04-96 60 03-01 500
1713 TC-4693-CC TIFFANY & COMPANY 06-96 48 05-00 1,023
1909 VSI-001 VITAMIN SHOPPE INDUSTRIES 01-98 36 12-00 4,661
1917 VSI-002 VITAMIN SHOPPE INDUSTRIES 02-98 36 01-01 1,582
1930 VSI-003 VITAMIN SHOPPE INDUSTRIES 04-98 36 03-01 1,760
1934 VSI-004 VITAMIN SHOPPE INDUSTRIES 04-98 36 03-01 3,466
1950 VSI-005 VITAMIN SHOPPE INDUSTRIES 06-98 36 05-01 2,693
1959 VSI-006 VITAMIN SHOPPE INDUSTRIES 07-98 36 06-01 3,637
1992 VSI-008 VITAMIN SHOPPE INDUSTRIES 11-98 36 10-01 2,640
1993 VSI-007 VITAMIN SHOPPE INDUSTRIES 11-98 36 10-01 2,640
2013 VSI-009 VITAMIN SHOPPE INDUSTRIES 02-99 36 01-02 3,487
2021 VSI-011 VITAMIN SHOPPE INDUSTRIES 04-99 36 03-02 2,596
=======
845,641
=======
</TABLE>
<PAGE>
SCHEDULE 1.13
DOCUMENTS
o Lease Agreements
o Lease Schedules
o All Amendments to Leases and/or Schedules
o Delivery and Acceptance Receipt
o Consent and Agreement, if applicable
o Secured Promissory Note (recourse), if applicable
o Security Agreement and Assignment of Lease, if applicable
o Promissory Note (nonrecourse), if applicable
o Copies of Vendor Invoices
o Assignments of Purchase Order to Vendors
o Purchase Orders to Vendors
o Bills of Sale
o Certificates of Incumbencies
o Copies of UCC filings
o Purchase Orders from Lessees
o Direct-Pay Permits
o Sales Tax Exemptions
o Copies Sales Tax Returns
o Copies Property Tax Returns
o Copies Cash receipts Journals
o Copies Inventory Records
<PAGE>
SCHEDULE 1.15
EXCLUDED REVENUE
o Newsday upgrade/renewal
Acct # Acct Name
------ ---------
2033 ND-149
o Tiffany AS-400 sale proceeds
Acct # Acct Name
------ ---------
1735 TC-GENESIS
1751 TC-GENESIS-A
1773 TC-GENESIS-B
1782 TC-GENESIS-C
1809 TC-GENESIS-D
1824 TC-GENESIS-E
1846 TC-GENESIS-F
1890 TC-GENESIS-G
1922 TC-GENESIS-H
1964 TC-GENESIS-I
1770 TC-DIAMOND
1771 TC-DIAMOND-A
1788 TC-DIAMOND-B
1850 TC-DIAMOND-C
1895 TC-DIAMOND-D
1898 TC-DIAMOND-E
1912 TC-DIAMOND-F
1920 TC-DIAMOND-G
o Tiffany AS-400 remaining contractual lease payments
Same as above
o Tiffany 5494 controller proceeds
Acct # Acct Name
------ ---------
1724 TC-5494-01
1755 TC-5494-01A
1983 TC-5494-01B
<PAGE>
SCHEDULE 1.15 [CONT.]
EXCLUDED REVENUE
o Peace Health DEC storage equipment sale proceeds
Acct # Acct Name
------ ---------
1851 PH-001
o Blue Cross Blue Shield initial payment, due May 1, 1999, received July 12,
1999
Acct # Acct Name
------ ---------
2014 BCBS-012
o Any reimbursement by Purchaser of Seller's "equity investment" in leases
entered into subsequent to June 30, 1999
<PAGE>
SCHEDULE 2.02(A)I
ASSUMED RECOURSE DEBT
o All National Merchants Marketing leases, specifically
Acct # Acct Name
------ ---------
1617 NMM-002
1637 NMM-003
1668 NMM-004
1676 NMM-005
1704 NMM-006
1712 NMM-007
1781 NMM-008
1789 NMM-009
<PAGE>
SCHEDULE 3.03
DEFAULTS ARISING OUT OF TRANSFER
o Finova Capital Corporation
o Excel Bank, N.A.
o Sterling Bank and Trust, FSB
o Concord Commercial, Inc.
o Although the Lease Agreements do not require the formal consent of the
Lessee's prior to transfer, they do contain notification provisions which
will be addressed via Schedules 9.02(ix)
<PAGE>
SCHEDULE 3.04
LIENS AND ENCUMBRANCES
o Finova Capital Corporation
o Excel Bank, N.A.
o Sterling Bank and Trust, FSB
o Concord Commercial, Inc.
<PAGE>
SCHEDULE 3.05
DEFAULTS; NON-PAYMENT
To the best of Seller's knowledge, NONE
<PAGE>
SCHEDULE 3.06
LITIGATION
To the best of Seller's knowledge, NONE
<PAGE>
SCHEDULE 3.07
NO BROKERS
Excel Bank, N.A. has requested a finder's fee to be paid by Seller related to
this transaction
<PAGE>
SCHEDULE 3.08
LEASE MODIFICATION
o Newsday, Inc. leases ND-132 and ND-140 were consolidated into ND-149
o Certain expired leases have continued on a month-to-month basis
<PAGE>
SCHEDULE 9.02(viii)
CONSENTS AND AFFIDAVITS
To be provided at Closing from:
o Excel bank, N.A.
o Sterling Bank and Trust, FSB
o Concord Commercial, Inc.
<PAGE>
SCHEDULE 9.02(ix)
NOTICES OF TRANSFER
(LEC LEASING, INC. LETTERHEAD)
September _______, 1999
Dear _______________,
LEC Leasing, Inc. ("LEC") is pleased to advise you that it has agreed to sell,
transfer and assign all of its rights and obligations subject to the Leases
between LEC and <The Lessee> to Somerset Capital group, Ltd. ("Somerset"), a
company with a strong presence in leasing high technology and capital equipment
for almost twenty years.
This sale, transfer and assignment will be effective upon its approval by the
shareholders of LEC's parent company, Golf Entertainment, Inc., but no later
than October 31, 1999.
In anticipation of this event, LEC has entered into a Management Agreement with
Somerset commencing October 1, 1999 and expiring on the effective date of the
sale and formal transfer of yours Leases to Somerset. Therefore, as of October
1, 1999, all correspondence and remittances pertaining to your leases should be
directed to:
LEC Leasing, Inc.
c/o Somerset Capital group, Ltd.
1087 Broad Street, Suite 201
Bridgeport, CT 06604
Phone: (203) 394-6182 Fax: (203) 394-6192
Attention: Pedro E. Wasmer
LEC will make arrangements in the near future to introduce <The Lessee> to
Somerset. In the meantime, Somerset will forward you information on the company
for your reference.
Please feel free to contact Bob Garofalo at LEC's offices in Las Vegas or Pedro
Wasmer, President of Somerset, with any questions.
<PAGE>
We at LEC appreciate your past confidence and support and are certain that your
new relationship with Somerset will be mutually beneficial, and that it will be
a continuation of the best aspects of your long relationship with LEC.
Please acknowledge your receipt and understanding of this letter by signing one
copy of it in the space below and returning same to the undersigned, directly to
LEC, at the address in this letterhead.
Very truly yours,
Lessee: _________________________
By: _____________________________
Name: ___________________________
Title: __________________________
Date: ___________________________
<PAGE>
ASSET MANAGEMENT AGREEMENT
This Agreement is made and entered into as of the 24th day of September,
1999 by and between LEC LEASING, INC. (the "Owner"), a corporation organized and
existing under the laws of the State of Nevada and having an office and place of
business at 2500 Northwinds Parkway, Suite 175, Three Northwinds Center,
Alpharetta, Georgia 30004 and SOMERSET CAPITAL GROUP, LTD. (the "Agent"), a
Connecticut corporation having its principal office at 1087 Broad Street,
Bridgeport, Connecticut 06604.
RECITALS:
WHEREAS, the parties hereto have entered into an agreement for the
acquisition by the Agent from the owner of certain assets therein defined with
closing scheduled for November 19, 1999;
WHEREAS, the Agent is engaged in the business of and has expertise in the
management of equipment leases, equipment lease portfolios and the management of
equipment subject to such leases; and
WHEREAS, the parties wish to enter into this Agreement both for the
purpose of facilitating the closing of the purchase and sale agreement referred
to and, for the more effective management of the seller's assets.
NOW THEREFORE, in consideration of these presents and the mutual
undertakings herein contained. The Owner hereby employs the Agent to serve as
the managing agent of the Equipment, Lease and Lease Portfolio and the Agent
hereby accepts such employment effective as of October 1, 1999 subject to the
terms and conditions set forth.
<PAGE>
ARTICLE I
DEFINITIONS
The following terms in this agreement shall have meanings set forth as
follows:
1.01 "Assets" shall mean Equipment, Leases and Lease Portfolio as defined
in the Purchase Agreement.
1.02 "Closing Date" shall mean the Closing Date defined as such in the
Purchase Agreement.
1.03 "Equipment" shall mean the equipment defined as such in the Purchase
Agreement together with such additional equipment as may be assigned
to the Agent hereunder.
1.04 "Leases" shall mean that term as defined in the purchase agreement
together with such other leases as the owner may transfer to the
Agent for management hereunder.
1.05 "Lease Portfolio" shall mean that term as defined in the purchase
agreement together with such other leases as the owner may transfer
to the Agent for management hereunder.
1.06 "Purchase Agreement" shall mean that certain agreement between the
parties hereto realing to the sale of equipment leases and lease
portfolio dated September 24, 1999.
1.07 "Records" shall mean that term as defined in the Purchase Agreement.
1.08 "Revenue" shall mean the aggregate of Recurring Revenue and Revenue,
General as defined in the Purchase Agreement.
2
<PAGE>
ARTICLE II
TERM
2.01 The term of Agent's employment shall commence as of the date of
transfer by the Owner to the Agent of Records pertaining to any such asset and
notification to lessees and other interested parties of the appointment of the
Agent hereby.
2.02 This Agreement shall terminate on the earlier of the Closing Date, or
the end of the calendar month which is not less than six (6) months from the
date hereof, or by notice given by either party, effective as of the date of a
calendar month stated in the notice which shall, in any event, not be earlier
than ten (10) days after the giving of notice.
ARTICLE III
OBLIGATIONS
3.01 Owner's Obligations: It shall be the obligation of the Owner
hereunder to do all of the following with reasonable dispatch and due diligence:
a. Transfer to the Agent all Records.
b. Give notice to all lessees and such other persons as may be
reasonably required by the Agent, in form designated by Agent, of
Agent's appointment to manage the Assets.
c. If required, from time to time, give to the Agent, in form
reasonably required by the Agent, authorizations necessary to manage
the Assets.
d. Forward to Agent, by overnight mail, all receipts and remittances
received from third parties with respect to the Assets and, if by
check or draft, duly endorsed to the order of the Agent.
e. Forward to the Agent by telecopier and by U.S. Mail all
communications relating to or pertaining to the Assets.
3
<PAGE>
3.02 Agent's Obligations: It shall be the obligations of the Agent in the
management of the Assets to do the following:
a. Send invoices with respect to all sums to become due with respect to
the Assets.
b. Collect all sums due from third parties with respect to the Assets.
c. Provide for the management, sale or other distribution of all
equipment, part of the Assets when the Equipment is no longer
subject to any Lease.
d. Negotiate early renewals, modifications or extensions of any leases
which are part of the Assets.
e. Keep owner informed of operations.
f. Perform such other duties and take such other actions as are
commercially reasonable and necessary with respect to the management
of the Assets consistent with similar such activities taken by the
Agent with respect to other Lease Portfolios under its management.
g. In a timely fashion, prepare and forward to Owner for filing all
state, federal and local sales and property tax returns with respect
to the Assets and any sales thereof.
ARTICLE IV
FUNDS
4.01 All funds that come into the Agent's hands with respect to the Assets
shall, as and when received, be put into an account to be established for the
purpose with Chase Manhattan Bank at Bridgeport, Connecticut, to be designated
Somerset Capital Group, Ltd. i/t/f LEC Leasing, Inc.
4.02 Somerset shall, periodically but not less than bi-weekly, remit all
such funds received by it with respect to the Assets by wire transfer, to Excel
Bank, N.A. at New York, New
4
<PAGE>
York to be deposited into an account established for this purpose by LEC
Leasing, Inc., each of which wire transmittals shall be accompanied by a
statement of account showing the source of all funds transmitted.
4.03 A copy of the wire transfer and the accompanying statement shall be
sent promptly to LEC Leasing, Inc.
ARTICLE V
COMPENSATION TO THE AGENT
5.01 The Owner shall pay the Agent all of its reasonable and necessary
expenses and disbursements incurred in performing its duties hereunder,
including but not limited costs directly related to the management of the Assets
including, but not limited to, with respect to Equipment, refurbishing, storage,
transportation, and the cost of features necessary to enhance value for sale
purposes and, generally, commissions and property taxes, to be paid not later
than ten (10) days after invoice or on the Closing Date, whichever is earlier.
Expenses reimbursable under this Section shall not include any charges that are
reimbursable under Section 5.02 hereof.
5.02 Owner shall pay Agent compensation to Agent for services hereunder
twenty (20%) percent of the Revenues together with a sum equal to three (3%)
percent of any such compensation on account of Connecticut's sales and use tax
with payment to be due, with respect to Revenues received during any calendar
month, on the tenth (10th) day of the following calendar month provided there
shall be no payment due hereunder until ten (10) days after the Closing Date or
any agreed adjournment of the Closing Date. The compensation hereunder shall be
to the Agent on account of all of its overhead expenses, expenses of its
regularly employed personnel, and all other expenses arising out of its regular
recurring operations as well as any profits that may arise out of this
Agreement.
5
<PAGE>
5.03 The Agent agrees that, in the event that the closing of the Purchase
Agreement takes place either on the Closing Date or any agreed upon adjournment
date, then it shall not be entitled to any compensation whatsoever as provided
in Section 5.02 or as provided in Section 5.01 hereunder, except to the extent
that the Owner has recovered from any third party any of the expenses
reimbursable under this Section 5.01. and it hereby, subject to the condition
stated, waives any claim for any such compensation.
ARTICLE VI
ROBERT GAROFALO
6.01 Designation of Representative: Robert Garofalo shall serve as Owner's
designated representative with respect to management of the Assets by the Agent
and Agent shall consult with Garofalo with respect to discretionary actions to
be taken on Asset management including new Leases, early Lease terminations,
Lease extensions and disposition of Equipment.
6.02 Garofalo's Salary: Owner shall be responsible for paying Garofalo's
salary and related taxes imposed on Owner with respect to the salary provided,
however, if the closing of the Purchase Agreement occurs on the Closing Date or
any adjourned Closing Date, then the Agent shall reimburse the Owner on the
Closing Date for Garofalo's salary and related taxes imposed on the Owner with
respect to the salary pro rated from the date of the commencement of the term of
this Agreement to the Closing Date together with all reasonable and necessary
out of pocket expenses incurred by Garofalo relating to marketing activities
during this same period.
6.03 Discretionary Actions: The parties recognize that the activities of
the Agent shall, in some respects, involve the exercise of discretion; among
these matters are those relating to disposition of Equipment, negotiation of
leases and negotiations pertaining to modification of existing leases.
Notwithstanding the obligation to consult with Garofalo, the actions with
respect to matters above stated, or similar such matters, shall be at Agent's
discretion and it shall have
6
<PAGE>
no liability hereunder with respect to any such discriminatory actions unless
there has been an abuse by it in the exercise of this discretion. The parties
hereto acknowledge that the Agent is acting as an independent contractor, and
neither it nor any of its employees will be employees of the Owner.
ARTICLE VII
NOTICES
7.01 All notices shall be in writing and shall be deemed to have been
properly given on the earlier of (i) when delivered in person, (ii) when
deposited in the United States Mail, with adequate postage, and sent by
registered or certified mail with return receipt requested, to the appropriate
party at the address set out below, or (iii) when deposited with Federal
Express, Express Mail or other overnight delivery service for next day delivery,
addressed to the appropriate party at the address set out below.
If to Purchaser: Somerset Capital Group, Ltd.
1087 Broad Street, Suite 201
Bridgeport, Connecticut 06604-4260
With a copy to: Bernard Green, Esq.
Green and Gross, P.C.
1087 Broad Street
Bridgeport, Connecticut 06604
If to Seller: LEC Leasing, Inc.
2500 Northwinds Parkway, Suite 175
Three Northwinds Center
Alpharetta, Georgia 30004
With a copy to: Harkleroad & Hermance, P.C.
Suite 2500 - International Tower
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Rejection or other refusal by the addressee to accept, or the inability of the
courier service or the United States Postal Service to deliver because of a
changed address of which no notice was
7
<PAGE>
given, shall be deemed to be receipt of the notice sent. Any party shall have
the right, from time to time, to change the address to which notices to it shall
be sent by giving to the other party or parties at least ten (10) days prior
notice of the changed address in the manner provided herein.
ARTICLE VIII
MISCELLANEOUS
8.01 Governing Law: All or part of this Agreement and the legal relations
between the parties hereto has been negotiated in the State of Connecticut. This
Agreement is to be governed by and construed in accordance with the laws of the
State of Connecticut. The parties hereto consent to jurisdiction and venue in
the Connecticut Courts of Fairfield County, Connecticut or in the courts of
Fulton County, Georgia and in the United States District Court for the District
of Connecticut or the Northern District of Georgia for all actions and
proceedings relating to this Agreement and the transactions contemplated herein
excepting and excluding however any actions brought with respect to Article XI
of the Purchase Agreement.
8.02 Litigation: In any litigation arising out of or under this Agreement,
the court deciding the matter shall have the right to award to any prevailing
party or parties all reasonable and necessary expenses incurred in either the
prosecution or defense of the litigation including, without limitation,
reasonable attorneys' fees.
OWNER:
LEC LEASING, INC.
By: /s/ R.G. Farrell
----------------------------
Title: Pres.
-------------------------
Attest: William J. Vargas
------------------------
Title: Chief Financial Officer
-------------------------
[CORPORATE SEAL]
8
<PAGE>
AGENT:
SOMERSET CAPITAL GROUP, LTD.
By: /s/ Pedro Wasmer
----------------------------
Title: President
-------------------------
Attest: /s/ [ILLEGIBLE]
------------------------
Title: V.P. & Corp. Secy.
-------------------------
[CORPORATE SEAL]
9
<PAGE>
AGREEMENT WITH RESPECT TO
NET GROCER LEASES
This Agreement is entered into this 24th day of September, 1999, regarding
matters related to the Closing of the transactions contemplated by the Purchase
and Sale Agreement dated September 24, 1999(the "Purchase and Sale Agreement")
between LEC Leasing, Inc., as Seller, and Somerset Capital Group, Ltd., as
Purchaser.
Net Grocer Lease. Notwithstanding anything to the contrary herein or in
the Purchase and Sales Agreement, the parties agree that Purchaser shall not
purchase from Seller and Seller will not sell to Purchaser any of the equipment
subject to the Lease Agreement (the "Net Grocer Equipment") by and between
Seller and Net Grocer, Inc. (the "Net Grocer Leases"), such Leases being
excluded from the term "Leases" and "Lease Portfolio" as used in the Purchase
and Sale Agreement and Seller shall not assign the Net Grocer Leases to
Purchaser and Purchaser shall not assume the Net Grocer Leases. Upon the
termination of the Net Grocer Leases, Seller shall retain all Net Grocer
Equipment, and Seller shall retain all proceeds from the sale of the Net Grocer
Equipment.
Notwithstanding the foregoing, Purchaser shall use its best efforts to
sell and assign or refinance the Net Grocer Equipment and the Net Grocer Leases
to or with a third party. If the Net Grocer Equipment and Net Grocer Leases are
sold and assigned under any circumstances or refinanced before the termination
of the Net Grocer Leases, the Purchaser and the Seller shall share in the excess
proceeds or deficit proceeds as follows:
(a) if such sale shall produce proceeds in excess of that amount required to
pay all debt with Excel Bank, N.A. related to such Net Grocer Leases,
Purchaser shall receive 25% of such excess and Seller shall receive 75% of
that excess, with Seller's share of the excess to be remitted immediately
to Seller as prepayment of the Promissory Note, between Purchaser and
Seller, with any excess being delivered to Seller;
(b) if such sale or refinancing shall produce proceeds that are less that the
amount required to pay all debt with Excel Bank, N.A. related to the Net
Grocer Leases, Purchaser shall pay directly to Excel Bank, N.A. promptly
upon such sale or refinancing an amount equal to 25% of the deficiency,
and Seller shall be liable for the remaining 75% of such deficiency.
For purposes of this Agreement, proceeds from sale and assignment, and/or
from refinancing Net Grocer Leases and/or Net Grocer Equipment shall include all
proceeds from all Net Grocer Lease Schedules number I thru 7, and/or from the
Equipment subject thereto whether in the form of fixed rental or month-to-month
rentals, sale, or refinancing.
<PAGE>
Agreed to this 24th day of September, 1999
LEC LEASING, INC.
By: /s/ R.G. Farrell
-----------------------------
Title: Pres.
--------------------------
Attest: William J. Vargas
-------------------------
Title: Chief Financial Officer
--------------------------
(CORPORATE SEAL)
GOLF ENTERTAINMENT, INC.
By: /s/ R.G. Farrell
-----------------------------
Title: Pres.
--------------------------
Attest: William J. Vargas
-------------------------
Title: Chief Financial Officer
--------------------------
(CORPORATE SEAL)
SOMERSET CAPITAL GROUP, LTD.
By: /s/ Pedro Wasmer
----------------------------
Title: President
-------------------------
Attest: /s/ [ILLEGIBLE]
------------------------
Title: V.P. & Corp. Secy.
-------------------------
(CORPORATE SEAL)
<PAGE>
EXHIBIT B
FAIRNESS OPINIONS
October 27, 1999
Mr. Ronald G. Farrell,
Chairman of the Board,
& Members of the Board
Golf Entertainment, Inc.
Suite 175
3 Northwinds Center
2500 Northwinds Parkway
Alpharetta, GA 30004
Dear Sirs:
I. Engagement Background
J.P. Turner & Company, L.L.C. ("JPT") is a broker/dealer licensed to conduct
business throughout 46 of the 50 states of the United States of America. Golf
Entertainment, Inc. ("GECC"), then known as LEC Technologies, Inc. ("LECE")
engaged JPT on January 12, 1999 to perform a fairness opinion regarding the sale
of all subsidiaries of GECC to a former insider (the "January Proposal").
Subsequently on September 28, 1999, GECC revised the engagement and requested
that JPT deliver an opinion to the Board of Directors of GECC (the "Board") that
the sale of a certain portfolio of equipment leases owned by LEC Leasing, Inc.
(a subsidiary of GECC; the "Seller") to Somerset Capital Group, Ltd.
("Purchaser") is fair from a financial point of view to the shareholders of all
of the issued and outstanding stock of GECC (the "Fairness Opinion").
The engagement also included JPT's assistance in marketing efforts to identify
and negotiate with potential additional purchasers outside of those identified
by GECC's Chairman. The purpose of the sale was to divest GECC of all existing
business operations and liabilities in order to retain the "public shell"
desired for pursuit of an unrelated business strategy.
<PAGE>
II. Relationship of JPT with Interested Parties
A component of GECC's new strategy was the retention of JPT as GECC's investment
banker. A portion of the compensation plans relating to the investment banking
contract involve JPT's equity investment in GECC. Consequently, in order to
avoid a potential conflict of interest in JPT's rendering of a Fairness Opinion
regarding the sale, JPT contracted with a well respected and experienced,
independent firm primarily engaged in the performance of business valuations and
fairness opinions, SLF Valuation Services Inc. ("SLFV") to evaluate the proposed
transaction. SLFV has delivered a fairness opinion dated October 27, 1999 to JPT
regarding the proposed transaction (the "SLFV Fairness Opinion"; see attached as
"Exhibit A"). SLFV's compensation has been entirely monetary and has been paid
directly by JPT. SLFV earns its fee solely through the generation of the SLFV
Fairness Opinion - such fee is earned regardless of the content or conclusion of
the SLFV Fairness Opinion.
Neither JPT nor SLFV received any instructions from the Seller or the Purchaser
with regard to the conclusions to be contained within the Fairness Opinion.
III. The Transaction
JPT understands that the Purchaser has made an offer (the "Purchase
Transaction") to purchase from the Seller a portfolio of certain equipment
leases (substantially the entire lease portfolio of GECC) for $3,559,500 in the
following manner: $524,500 in cash, $400,000 30-month fully amortized (i.e.,
level payment) promissory note with a 10% interest rate, repayment/refinancing
of the approximate $2,635,000 Excel and Finova obligations which were primarily
formerly used to fund the Seller's initial equity investment in the individual
leases as they were written, and the assumption of all non-recourse debt and
certain recourse debt securing the lease portfolio.
IV. Purpose of the Fairness Opinion
The Fairness Opinion is being undertaken in order to assess the adequacy of
compensation to be received by the Seller in exchange for the lease portfolio
being sold. Consequently, the Fairness Opinion shall be included in various
legal filings as well as in correspondence with former, current, and future
investors in Seller.
<PAGE>
JPT's opinions expressed herein are provided for the information of the Board in
its evaluation of the Purchase Transaction and our opinions are not intended to
be and do not constitute a recommendation to any shareholder with respect to any
offer. JPT's opinions are not and should not be construed as a valuation of the
shares of common and preferred stock of GECC (the "Shares"). Furthermore, JPT
does not estimate or predict the future with respect to the performance of
GECC's publicly traded securities. JPT's opinions may not be published or
otherwise used or referred to, nor shall any public reference to JPT be made,
without our prior written consent. We consent to the reference to this letter
and its inclusion in GECC's proxy solicitation materials distributed by the
Board to its shareholders in connection with the proposed transaction and any
appropriate references in any future filings with the U.S. Securities & Exchange
Commission.
V. Scope of Review
For the purpose of attesting to the Fairness Opinion, JPT and/or SLFV have
recently analyzed certain publicly-available and confidential financial,
operational and other information relating to the Seller and the Purchaser,
including information derived from discussions with members of the management of
the Seller. Except as expressly described herein, JPT and SLFV have not
conducted any independent investigations to verify the accuracy and completeness
thereof.
In carrying out this engagement and in formulating this opinion, the following
items, among others, have been reviewed and relied upon:
1. Purchase and Sale Agreement dated September 24, 1999 in connection with the
Purchase Transaction.
2. Annual reports of GECC for the three fiscal years ended December 31, 1997.
3. Form 10-K of GECC for the two fiscal years ended December 31, 1998.
4. Form 10-Q of GECC for the six months ended June 30, 1999.
5. Draft income statement and balance sheet of the Seller for the six months
ended June 30, 1999.
6. Certain internal information and documentation, contracts and agreements,
primarily financial in nature, concerning the business, assets, liabilities and
future prospects of the Seller.
7. Certain financial information with respect to the Purchaser (SLFV).
8. Opinions of, and discussions with, experts in the computer and equipment
leasing industry, including an independent expert in the market valuation of
leased computer and related equipment (SLFV).
9. Meetings and/or discussions with members of senior management of the Seller
concerning the Seller's past and proposed future business operations, financial
condition and results and prospects.
<PAGE>
10. Discussion with a representative of a major customer of the Seller (SLFV).
11. Attendance in January 1999 at the former head office of the Seller in Las
Vegas, Nevada to review Seller's business operations.
12. Public information relating to the business, operations and financial
performance and stock trading history of the Seller and other selected public
companies that were considered relevant (SLFV).
13. A letter of representation as to certain factual matters dated the date
hereof provided by the Seller and addressed to JPT and SLFV.
14. SLFV Fairness Opinion (see Exhibit "A"); and
15. Such other information, investigations and analyses as JPT and/or SLFV
considered appropriate in the circumstances.
VI. Methodological Basis of the Fairness Opinion
There are two main components to the Fairness Opinion. They are:
1. The fair market value of the Net Assets.
2. The value of the consideration for the Net Assets.
If the value of the consideration for the Net Assets exceeds the fair market
value of the Net Assets sold, then the transaction is considered fair, from a
financial point-of-view, to the seller's shareholders.
A. Value of the Net Assets
1. Approaches Considered
Accepted business valuation practice generally dictates the use of either an
earnings/cash flow based or asset-based technique in the determination of fair
market value. Where a company is a going concern and earning an acceptable rate
of return on its assets employed, an earnings/cash flow-based technique would be
the primary valuation technique as it would generate the highest value. In such
a case, the asset-based technique is used to support the value determined under
the earnings-based technique and to quantify the amount of goodwill, if any,
therein. Only when the asset-based technique produces a higher value, may it be
used as a primary valuation technique for a company that is a going concern.
<PAGE>
The following approaches were considered to determine the fair market value of
the Net Assets:
a. Adjusted Book Value Approach
The adjusted book value approach is an asset-based technique that is generally
used to determine the value of a company where the underlying value of its
tangible net assets constitutes the prime determinant of corporate worth. To
quantify value on this basis, the fair market value of all tangible assets are
added and, from that, liabilities are subtracted.
b. Earnings and Cash Flow Techniques
Earnings and cash flow techniques are employed to develop value where a business
interest is viable as a going concern. The most commonly adopted earnings/cash
flow techniques are:
1. Capitalization of normalized after tax earnings or net
free cash flow.
a) This technique is appropriate where
normalized after tax earnings or net free cash
flow can be predicted with a reasonable degree of confidence.
b) To determine the value of a business using
this technique, maintainable earnings or net free cash flow is
capitalized at a rate of return reflecting the appropriate level of risk related
thereto. Maintainable earnings or net free cash flow is based on that which is
expected to be earned in the future.
2. Discounting of projected after tax net free cash flow.
a) This approach involves an estimate of future annual net free cash
flow, and the selection of an appropriate discount rate. This approach is a
present value calculation of future cash flow expectations.
b) Net free cash flow represents the cash
that the investor has completely available to take out of the business or to do
with as he wishes with absolutely no impairment of the ongoing ability of the
business to continue to produce the expected levels of cash flow in the future.
c) In addition to the expected net free cash flow in each year, this technique
also requires, among others, that:
i) Where the business is expected to
operate beyond the expected cash flow projection period, the subsequent results
are capitalized and then discounted to present value. This is generally known as
the residual value.
<PAGE>
ii) Where the business is expected to terminate at the end of the cash flow
projection period, an estimate of residual value is made and discounted to
present value.
3. Capitalization of Normalized Earnings Before
Interest & Income Taxes ("EBIT")
a) Under this technique, a multiple which reflects the internal and
external risks associated with a company is applied to its normalized EBIT.
c. Market Comparison Technique
The market comparison technique analyzes comparable companies to establish
value. It is an efficient technique in that it provides the best insights what a
notional purchaser would be prepared to pay. The market technique utilizes
capitalization multiples based on current market prices with historical
financial data of the publicly traded comparable companies. Selected
capitalization multiples are then applied to the company's historical financial
results to arrive at an indication of value. A difficulty in using this
technique is to find exactly comparable companies.
2. Selection of Appropriate Approach
An adjusted book value approach was used to determine the fair market value of
the Net Assets. In arriving at this approach, the following factors, among
others, were considered:
1. Historical operating results and financial position of GECC and its
subsidiaries, which demonstrates an inability by management to successfully
operate a leasing operation with no current justification for a positive
outlook. Factors include:
a) GECC had an accumulated deficit of $7.9 million at December 31, 1998 and net
operating loss carryforwards for Federal income tax purposes of approximately
$5.3 million at that date. The loss per common share for the fiscal years ended
December 31, 1997, 1998 and the six months ended June 30, 1999 were $1.80,
$2.63, and $.45, respectively.
b) GECC has demonstrated a historical inability to adequately manage its
selling, general and administrative expenses ("SG&A"). SG&A expressed as a
percentage of revenue has increased from an average of approximately 15 percent
in fiscal 1996 and 1997 to 24 percent in fiscal 1998 and 37 percent in the six
months ended June 30, 1999.
2. Reliance on customers.
<PAGE>
a) A review of the Seller's investment in leased assets for fiscal 1998 and the
six months to June 30, 1999 indicated that there were seventeen active
customers, of which one customer represented 43 percent of the total investment
in leased assets during both of these periods. This increases the risk
attributable to the future viability of the leasing business and the ability to
generate new business.
3. Interest rate differential
a) It is understood that for several years, the Seller has not been able to
achieve a positive interest rate differential between its cost of borrowing and
the rate of return that it receives on new equipment leases, which has been
reflected in prior historical losses. This has and will likely continue to
negatively impact the Seller's overall cash flows from leasing activities.
4. Industry
a) Approximately fifty publicly traded companies were identified that lease
durable goods. Potentially comparable companies were subsequently identified by
eliminating the following types of companies:
i) Companies that do not lease computer
equipment (i.e. vehicles, construction equipment, trailers)
ii) Diversified leasing companies for which computer equipment leasing does not
comprise a major portion of gross revenue.
iii) Companies with revenues in excess of $100 million. The Seller's revenue for
fiscal 1998 was $12.4 million.
1) Following the above elimination, three companies were identified as being
potentially comparable. A detailed level of analysis (quantitative and
qualitative) was performed on each company. Based on the results of the
analysis, none of these companies were deemed to be comparable. The reasons
included the following:
i) Favorable financial structure.
ii) Vertical integration (systems consulting).
iii) High level of profitability.
2) Based on the industry analysis as set out above and discussions with
individuals within the leasing industry, it is understood that leasing companies
with revenues comparable to the Seller are typically privately held.
5. Historical inability to dispose of the leasing business of the Seller.
<PAGE>
a) JPT and other parties have attempted to dispose of the business of the Seller
since approximately January 1999. In the past ten months, one offer was received
from GECC's then President. This offer was terminated in May 1999. Since that
time, no offers have been received by GECC in this regard, other than the
current Purchaser.
6. Strategic plan of GECC.
a) GECC has stated that it "is continuing its efforts to divest itself of its
technology services businesses and is focusing primarily on acquiring and
consolidating the ownership of existing golf ranges and golf centers."
b) Since the resignation of Mr. Michael Daniels as President of GECC on March
23, 1999, and Mr. Rooney on August 17, 1999 (appointed on April 19, 1999), Mr.
Ron Farrell has assumed the President's title until a replacement is found. No
replacement has yet been found.
c) Therefore, it appears that no new leasing business will be generated in the
future under the current structure and if a purchaser is not found, the leasing
operations of the Seller will be wound down in an orderly manner.
B. Calculation of Value
As indicated above, the net assets have been valued based on an adjusted book
value approach. To determine the appropriate adjustments, JPT and SLFV performed
financial analysis as appropriate and, among others, held detailed meetings and
discussions with management of the Seller were held with respect to the Net
Assets.
The Seller's cash flow and viability depends to a great degree on its ability to
realize the residual value of leased equipment after the initial term of the
lease by re-leasing or selling such equipment. At the inception of each lease
and at the end of each fiscal year thereafter, the Seller establishes the
residual value of the leased equipment, which is the estimated market value
thereof at the end of the initial lease term. In determining the estimated
market value, management considers, among others, developments in the high
technology equipment market that tend to occur at rapid rates and which add to
the risk of obsolescence and shortened product life cycles.
The Net Assets (at June 30, 1999) include the estimated residual value of the
Seller's portfolio of leases expiring between July 31, 1999 and December 31,
2003. The residual value is greater than the Net Assets.
<PAGE>
It was deemed appropriate in this matter to reduce the estimated residual value
of the leased equipment at June 30, 1999 for additional annual obsolescence on
the equipment that will likely occur in the future. In determining the
adjustment to the residual value of the leased equipment, consideration was also
given to the estimated return that an investor would require on assets of this
nature.
No other adjustments to the Net Assets were deemed necessary or appropriate.
VII. General
This analysis must be considered as a whole and that selecting portions of the
analysis and factors considered by it, without considering all factors and
analyses together, could create a misleading view of the process employed and
that the analysis is not necessarily amenable to partial analysis or summary
description. Any attempt to do so could lead to undue emphasis on a particular
factor or analysis.
VIII. Value of the Consideration for the Net Assets
The terms of the consideration paid for the Net Assets are set out herein. In
determining the risk associated with the consideration, the value of the
promissory note has been adjusted to recognize the additional risk that payments
thereon may not be made.
To determine the appropriate adjustment, discussions on the business operations
of the Purchaser were held with the CFO of GECC and the 1998 fiscal year
financial statements of the Purchaser were reviewed. The resulting adjustment
represents a discount of 8 percent off the initial principal amount of $400,000.
IX. Assumptions and Limitations
JPT and SLFV have relied upon, and have assumed the completeness, accuracy and
fair representation of all financial and other information, data, advice,
opinions and representations obtained from public sources, the Seller, and its
affiliates or advisors or otherwise, pursuant to JPT's engagement and the
opinion herein is conditional upon such completeness, accuracy, and fair
representation.
Subject to the exercise of professional judgment and except as expressly
described herein, neither JPT nor SLFV have attempted to verify independently
the accuracy or completeness of any information, data, advice, opinions or
representations provided to JPT and/or SLFV.
The conclusion herein is based on JPT's and SLFV's review of financial
information of the Seller with respect to business activities up to June 30,
1999. This includes due diligence performed by JPT and SLFV with respect to the
January Proposal. Neither JPT nor SLFV have reviewed any documentation or
information of the Seller with respect to business activities subsequent to June
30, 1999.
<PAGE>
Although subsequent developments may affect the Fairness Opinion, JPT does not
have any obligation to update, revise, or affirm the Fairness Opinion as a
result thereof.
Senior management of GECC has represented to JPT and SLFV, in a letter delivered
as at the date hereof; among other things, that the information, data, opinions,
and other materials (the "Information") provided to JPT and SLFV by or on behalf
of the Seller are complete and correct at the date the Information was provided
to JPT and SLFV and that, since the date of the Information, there has been no
material change, financial or otherwise, in the position of the Seller, or in
its assets, liabilities (contingent or otherwise), business, or operations
(excluding the shut-down of GECC's leasing operations and this Purchase
Transaction) and there has been no change of any material fact which is of a
nature as to render the Information untrue or misleading in any material
respect.
The opinion herein is rendered on the basis of securities markets, economic,
general business, and financial conditions prevailing as of the date hereof and
the condition and prospects, financial and otherwise, of the Seller as they were
reflected in the information and documents reviewed by JPT and SLFV and as they
were represented to JPT and SLFV in discussions with management of the Seller.
In JPT's and SLFV's analyses and in connection with the preparation of the
Fairness Opinion, JPT and SLFV have made numerous assumptions with respect to
industry performance, general business, market, economic conditions, and other
matters, many of which are beyond the control of any party involved in the
Purchase Transaction.
X. Fairness Opinion
Based upon JPT's analysis, and subject to the foregoing, JPT is of the opinion
that, as at the date hereof, the Purchase Transaction is fair, from a financial
point- of-view, to the holders of all the issued and outstanding stock of GECC.
Yours very truly,
J.P. Turner & Company, L.L.C.
<PAGE>
SLF Valuation Services Inc.
business valuators & litigation accountants
toronto, montreal , ottawa
October 27, 1999
Mr. Ben Hughes, Director Research & Analysis
J.P. Turner & Company, L.L.C.
3340 Peachtree Road, Suite 450
Atlanta, Georgia
30326
Dear Sir
We understand that Golf Entertainment, Inc. ("GECC"), formerly LEC
Technologies, Inc., is the owner of all of the issued and outstanding shares of
common stock of LEC Leasing, Inc. (the "Seller"), which owns a portfolio of
equipment leases (the "Leases and Equipment"). We furthermore understand that
Somerset Capital Group, Ltd. (the "Purchaser") has purchased from the Seller
(the "Purchase Transaction") the Leases and Equipment.
All amounts herein are expressed in United States dollars, unless otherwise
specified.
The terms and conditions of the Purchase Transaction are set out in the Purchase
and Sale Agreement, dated September 24, 1999 (the "Purchase Agreement"). These
include the following:
1. At closing, the Purchaser shall pay the Seller the purchase price of
$3,559,500 and an amount equal to the balance due on the non-recourse debt
which encumbers the Leases and Equipment on the closing date of the
Purchase Transaction, subject to adjustment as referred to in the Purchase
Agreement.
2. The purchase price shall be paid as follows:
a) Cash to be paid at closing of $524,500.
b) The assumption by the Purchaser of all non-recourse debt and certain
recourse debt that encumbers the Leases and Equipment on the closing
date of the Purchase Transaction.
c) By delivery of a duly executed promissory note in the principal amount
of $400,000 with interest at the rate of 10 percent payable in thirty
consecutive equal monthly installments including both principal and
interest.
d) By cash to be borrowed from Excel Bank, N.A. ("Excel") or another
financial institution acceptable to the Purchaser in an amount
required to discharge Seller's obligations including those with
Seller's affiliates as joint obligors, to Excel and to Finova Capital
Corporation, estimated as at August 31, 1999 and not to exceed
$2,635,000.
1167 Caledonia Road
Toronto, Ontario
Canada, M6A 2X1
Tel: 416 785 5353
Fax: 416 785 5663
<PAGE>
The assets and liabilities that form part of the Purchase Transaction are
hereinafter referred to as the "Net Assets."
ENGAGEMENT OF SLF VALUATION SERVICES INC.
SLF Valuation Services Inc. ("SLFV") was first contacted by J.P. Turner &
Company, L.L.C. ("JPT") in connection with a proposed sale of the assets and
liabilities of the Seller and other subsidiaries of GECC on January 15, 1999
(the "January Proposal"). SLFV was retained as financial advisor to JPT
effective February 22, 1999, to assist JPT in advising the Board of Directors of
GECC ("the Board") with respect to its review of the January Proposal. After the
completion of a significant portion of due diligence, SLFV was advised on or
about May 6, 1999, that the January Proposal had terminated. SLFV's fixed fee in
this regard was $30,000 Cdn.
and was not contingent on any event.
On September 29, 1999, SLFV was contacted by JPT in connection with the Purchase
Transaction. JPT advised SLFV that JPT had been retained by the Board to provide
an opinion to the Board with respect to the fairness, from a financial point of
view, of the Purchase Transaction to holders of all the issued and outstanding
stock of GECC (the "JPT Opinion").
SLFV was retained as financial advisor to JPT on September 29, 1999, to assist
JPT in advising the Board with respect to its review of the Purchase
Transaction. In connection with the engagement, SLFV has been requested to
provide a written opinion (the "Fairness Opinion") as at the date hereof to JPT
with respect to the fairness, from a financial point of view, of the Purchase
Transaction to holders of all the issued and outstanding stock of GECC.
The fixed fee with respect to the Fairness Opinion is $25,500 Cdn. and is
not contingent on any event.
SLFV furthermore consents to the inclusion and reference to the Fairness Opinion
and its conclusion in GECC's proxy solicitation materials distributed by the
Board to its shareholders in connection with the Purchase Transaction and any
appropriate references in any future filings with the U.S. Securities & Exchange
Commission.
Pursuant to the terms of SLFV's engagement, SLFV has not been engaged to prepare
a formal valuation of any of the Net Assets or any class of shares of GECC and
this Fairness Opinion should not be construed as such. However, SLFV has
performed financial analyses that are considered appropriate and necessary in
the circumstances to support the conclusions reached in the Fairness Opinion.
SLFV received no instructions from JPT, GECC, the Seller or the Purchaser in
connection with the preparation of this Fairness Opinion.
<PAGE>
SLFV's opinions expressed herein are provided for the information of JPT in its
preparation of the JPT Opinion and SLFV's opinions are not intended to be and do
not constitute a recommendation to any shareholder with respect to the Purchase
Transaction or any other transaction. SLFV's opinions are not and should not be
construed as a valuation of the Net Assets of the Seller. SLFV's opinions may
not be published or otherwise used or referred to, except as provided for
herein, nor shall any public reference to SLFV be made, without SLFV's prior
written consent.
CREDENTIALS OF SLFV
SLFV is an independent business valuation firm in Canada with operations in all
facets of business and securities valuation, corporate finance and acquisitions
and divestitures. The opinions expressed herein are the opinions of SLFV and the
form and content herein have been approved for release by its President, who is
experienced and qualified in merger, acquisition and divestiture and business
valuation matters.
RELATIONSHIP OF SLFV WITH INTERESTED PARTIES
SLFV is not a security holder, creditor, insider, associate or affiliate of JPT,
GECC, the Seller or the Purchaser and, except as referred to herein, has not
previously provided financial advisory services to GECC, the Seller or the
Purchaser.
There are no understandings or agreements between SLFV and GECC, the Seller or
the Purchaser with respect to any future business dealings.
SCOPE OF REVIEW CONDUCTED BY SLFV
For the purpose of preparing this Fairness Opinion, SLFV has analyzed certain
publicly available and confidential financial, operational and other information
relating to the Seller and Purchaser, including information derived from
discussions with members of the management of the Seller and GECC. Except as
expressly described herein, SLFV has not conducted any independent
investigations to verify the accuracy and completeness thereof.
In carrying out this engagement and in formulating SLFV's opinion, SLFV has
reviewed and relied upon, in part, among other things:
1. Purchase and Sale Agreement, dated September 24, 1999, in connection with the
Purchase Transaction.
2. Annual reports of GECC for the three fiscal years ended December 31, 1997.
3. Form 10-K of GECC for the two fiscal years ended December 31, 1998.
4. Form 10-Q of GECC for the six months ended June 30, 1999.
<PAGE>
5. Draft income statement and balance sheet of certain subsidiaries of GECC
for the six months ended June 30, 1999.
6. Certain internal information and documentation, contracts and agreements,
primarily financial in nature, concerning the business, assets, liabilities
and future prospects of the Seller.
7. Certain financial information with respect to the Purchaser.
8. Opinions of, and discussions with, experts in the computer and equipment
leasing industry, including an independent expert in the market valuation
of leased computer and related equipment.
9. Meetings and/or discussions with members of senior management of the Seller
concerning the Seller's past and proposed future business operations,
financial condition and results and prospects.
10. Discussion with a representative of a major customer of the Seller.
11. Attendance in January 1999 at the former head office of the Seller in
Las Vegas, Nevada to review its business operations.
12. Public information relating to the business, operations and financial
performance and stock trading history of the Seller and other selected
public companies that SLFV considered relevant.
13. A letter of representation as to certain factual matters dated the date
hereof provided by the Seller and addressed to SLFV and JPT.
14. Such other information, investigations and analyses as SLFV considered
appropriate in the circumstances.
METHODOLOGICAL BASIS OF THE FAIRNESS OPINION
If the value of the consideration for the net Assets exceeds the fair market
value of the Net Assets sold, then the transaction is considered fair, from a
financial point of view, to the shareholders of GECC. There are two main
components to the Fairness Opinion. They are:
1. The fair market value of the Net Assets.
Fair market value is defined as "the highest price available in an open and
unrestricted market between informed and prudent parties dealing at arm's
length under no compulsion to transact in terms of money or money's worth."
<PAGE>
2. The value of the consideration for the Net Assets.
VALUE OF THE NET ASSETS
APPROACHES CONSIDERED
Accepted business valuation practice generally dictates the use of either an
earnings/cash flow based or asset-based technique in the determination of fair
market value. Where a company is a going concern and earning an acceptable rate
of return on its assets employed, an earnings/cash flow-based technique would be
the primary valuation technique as it would generate the highest value. In such
a case, the asset-based technique is used to support the value determined under
the earnings-based technique and to quantify the amount of goodwill, if any,
therein. Only when the asset-based technique produces a higher value, may it be
used as a primary valuation technique for a company that is a going concern.
SLFV considered the following approaches to determine the fair market value of
the Net Assets:
ADJUSTED BOOK VALUE APPROACH
The adjusted book value approach is an asset-based technique that is generally
used to determine the value of a company that is a going concern and where the
underlying value of its tangible net assets constitutes the prime determinant of
corporate worth. To quantify value on this basis, the fair market value of all
tangible net assets are added and, from that, liabilities are subtracted.
EARNINGS/CASH FLOW TECHNIQUES
Earnings/cash flow techniques are employed to develop value where a business
interest is viable as a going concern. The most commonly adopted earnings/cash
flow techniques are:
1. Capitalization of normalized after tax earnings/net free cash flow.
a) This technique is appropriate where normalized after tax earnings or
net free cash flow can be predicted with a reasonable degree of
confidence.
b) To determine the value of a business using this technique,
maintainable earnings or net free cash flow is capitalized at a rate
of return reflecting the appropriate level of risk related thereto.
Maintainable earnings/net free cash flow is based on that which is
expected to be earned in the future.
2. Discounting of projected after tax net free cash flow.
a) This approach involves an estimate of future annual net free cash
flow, and the selection of an appropriate discount rate. This approach
is a present value calculation of future cash flow expectations.
<PAGE>
b) Net free cash flow represents the cash that the investor has
completely available to take out of the business or to do with as he
wishes with absolutely no impairment of the ongoing ability of the
business to continue to produce the expected levels of cash flow in
the future.
c) In addition to the expected net free cash flow in each year, this
technique also requires, among others, that:
i) Where the business is expected to operate beyond the expected
cash flow projection period, the subsequent results are
capitalized and then discounted to present value. This is
generally known as the residual value.
ii) Where the business is expected to terminate at the end of the
cash flow projection period, an estimate of residual value is
made and discounted to present value.
3. Capitalization of Normalized Earnings Before Interest & Income Taxes ("EBIT")
a) Under this technique, a multiple, which reflects the internal and
external risks associated with a company, is applied to its normalized
EBIT.
MARKET COMPARISON TECHNIQUE
The market comparison technique analyzes comparable companies to establish
value. It is an efficient technique in that it provides the best insights as to
what a notional purchaser would be prepared to pay. The market technique
utilizes capitalization multiples based on current market prices with historical
financial data of the publicly traded comparable companies. Selected
capitalization multiples are then applied to the company's historical financial
results to arrive at an indication of value. A difficulty in using this
technique is to find exactly comparable companies.
Selection of Appropriate Approach
SLFV has used an adjusted book value approach to determine the fair market value
of the Net Assets. In arriving at this approach, SLFV considered, among others,
the following factors:
1. Historical operating results and financial position of GECC and its
subsidiaries, which demonstrates an inability by management to successfully
operate a leasing operation with no current justification for a positive
outlook. Factors include:
a) GECC had an accumulated deficit of $7.9 million at December 31, 1998
and net operating loss carryforwards for Federal income tax purposes
of approximately $5.3 million at that date. The loss per common share
for the fiscal years ended December 31, 1997, 1998 and the six months
ended June 30, 1999 were $1.80, $2.63 and $.45, respectively.
<PAGE>
b) GECC has demonstrated a historical inability to adequately manage its
selling, general and administrative expenses ("SG&A"). SG&A expressed
as a percentage of revenue has increased from an average of
approximately 15 percent in fiscal 1996 and 1997 to 24 percent in
fiscal 1998 and 37 percent in the six months ended June 30, 1999.
2. Reliance on customers.
a) Our review of the Seller's investment in leased assets for fiscal 1998
and the six months to June 30, 1999 indicated that there were
seventeen active customers, of which one customer represented 43
percent of the total investment in leased assets during both of these
periods. This increases the risk attributable to the future viability
of the leasing business and the ability to generate new business.
3. Interest rate differential
a) We understand that for several years, the Seller has not been able to
achieve a positive interest rate differential between its cost of
borrowing and the rate of return that it receives on new equipment
leases, which has been reflected in prior historical losses. This has
and will likely continue to negatively impact the Seller's overall
cash flows from leasing activities.
4. Industry
a) SLFV identified approximately fifty publicly traded companies that
lease durable goods. Potentially comparable companies were
subsequently identified by eliminating the following types of
companies:
i) Companies that do not lease computer equipment (i.e. vehicles,
construction equipment, trailers)
ii) Diversified leasing companies for which computer equipment
leasing does not comprise a major portion of gross revenue.
iii) Companies with revenues in excess of $100 million. The Seller's
revenue for fiscal 1998 was $12.4 million.
b) Following the above elimination, three companies were identified as
being potentially comparable. SLFV performed a detailed level of
analysis (quantitative and qualitative) on each company. Based on the
results of the analysis, none of these companies was deemed
comparable. The reasons for the exclusions included the following:
i) Favorable financial structure.
ii) Vertical integration (systems consulting).
iii) High level of profitability.
c) Based on our industry analysis as set out above and discussions with
individuals within the leasing industry, we understand that leasing
companies with revenues comparable to the Seller are typically
privately held.
<PAGE>
5. Historical inability to dispose of the leasing business of the Seller.
a) We understand that JPT and/or other parties have attempted to dispose
of the business of the Seller since approximately January 1999. In the
past ten months, one offer was received from GECC's then President.
This offer was terminated in May 1999. Since that time, no offers have
been received by GECC in this regard.
6. Strategic plan of GECC.
a) GECC has stated that it "is continuing its efforts to divest itself of
its technology services businesses and is focusing primarily on
acquiring and consolidating the ownership of existing golf ranges and
golf centers."
b) Since the resignation of Mr. Michael Daniels as President of GECC on
March 23, 1999, and Mr. Rooney on August 17, 1999 (appointed on April
19, 1999), Mr. Ron Farrell has assumed the President's title until a
replacement is found. No replacement has yet been found.
c) Therefore, it appears that no new leasing business will be generated
in the future under the current structure and if a purchaser is not
found, the leasing operations of the Seller will be wound down in an
orderly manner.
CALCULATION OF VALUE
As indicated above, we have valued the net assets based on an adjusted book
value approach. To determine the appropriate adjustments, SLFV performed
financial analysis as appropriate and, among others, held detailed meetings and
discussions with management of the Seller with respect to the Net Assets.
The Seller's cash flow and viability depends to a great degree on its ability to
realize the residual value of leased equipment after the initial term of the
lease by re-leasing or selling such equipment. At the inception of each lease
and at the end of each fiscal year thereafter, the Seller establishes the
residual value of the leased equipment, which is the estimated market value
thereof at the end of the initial lease term. In determining the estimated
market value, management considers, among others, developments in the high
technology equipment market that tend to occur at rapid rates and which add to
the risk of obsolescence and shortened product life cycles.
The Net Assets (at June 30, 1999) include the estimated residual value of the
Seller's portfolio of leases expiring between July 31, 1999 and December 31,
2003. The residual value is greater than the Net Assets.
SLFV has deemed it appropriate in this matter to reduce the estimated residual
value of the leased equipment at June 30, 1999 for additional annual
obsolescence on the equipment that will likely occur in the future. In
determining the estimated residual value of the leased equipment, SLFV has also
recognized the estimated return that an investor would require on assets of this
nature.
<PAGE>
SLFV did not consider it appropriate to adjust any other assets or liabilities
comprising the Net Assets.
GENERAL
SLFV believes that its analysis must be considered as a whole and that selecting
portions of the analysis and factors considered by it, without considering all
factors and analyses together, could create a misleading view of the process
employed and that the analysis is not necessarily amenable to partial analysis
or summary description. Any attempt to do so could lead to undue emphasis on a
particular factor or analysis.
Value of the Consideration for the Net Assets
The terms of the consideration paid for the Net Assets are set out herein. In
determining the risk associated with the consideration, we have adjusted the
promissory note to recognize additional risk that payments thereon may not be
made.
To determine the appropriate adjustment, we have discussed the business
operation of the Purchaser with the former CFO of GECC and have reviewed the
balance sheet, income statement and related notes of the Purchaser for its 1998
fiscal year. Our adjustment represents a discount of 8 percent off the initial
principal amount of $400,000.
ASSUMPTIONS AND LIMITATIONS
SLFV has relied upon, and has assumed the completeness, accuracy and fair
representation of all financial and other information, data, advice, opinions
and representations obtained by SLFV from public sources or provided to SLFV by
JPT, the Seller and its affiliates or advisors or otherwise pursuant to SLFV's
engagement and the opinion herein is conditional upon such completeness,
accuracy and fair representation.
Subject to the exercise of professional judgment and except as expressly
described herein, SLFV has not attempted to verify independently the accuracy or
completeness of any information, data, advice, opinions or representations
provided to SLFV.
The conclusion herein is based on SLFV's review of financial information of the
Seller with respect to business activities up to June 30, 1999. This includes
due diligence performed by SLFV with respect to the January Proposal. SLFV has
not reviewed any documentation or information of the Seller with respect to
business activities subsequent to June 30, 1999.
Although subsequent developments may affect the Fairness Opinion, SLFV does not
have any obligation to update, revise or affirm the Fairness Opinion as a result
thereof.
<PAGE>
Senior management of GECC has represented to SLFV and JPT, in a letter delivered
as at the date hereof; among other things, that the information, data, opinions
and other materials (the "Information") provided to SLFV and JPT by or on behalf
of the Seller are complete and accurate at the date the Information was provided
to SLFV and JPT and that, since the date of the Information, there has been no
material change, financial or otherwise, in the position of the Seller, or in
its assets, liabilities (contingent or otherwise), business or operations and
there has been no change of any material fact which is of a nature as to render
the Information untrue or misleading in any material respect.
The opinion herein is rendered on the basis of securities markets, economic and
general business and financial conditions prevailing as at the date hereof and
the condition and prospects, financial and otherwise, of the Seller as they were
reflected in the information and documents reviewed by SLFV and as they were
represented to SLFV in discussions with management of the Seller and SLFV does
not estimate or predict the future with respect to the performance of GECC's
publicly traded securities. In SLFV's analyses and in connection with the
preparation of the Fairness Opinion, SLFV has made numerous assumptions with
respect to industry performance, general business, market and economic
conditions and other matters, many of which are beyond the control of any party
involved in the Purchase Transaction.
FAIRNESS OPINION
Based upon SLFV's analysis, and subject to the foregoing, SLFV is of the opinion
that, as at the date hereof, the Purchase Transaction is fair, from a financial
point of view, to the holders of all the issued and outstanding stock of GECC.
Yours very truly,
SLF VALUATION SERVICES INC.
<PAGE>
ANNUAL REPORT
[LOGO]
GOLF ENTERTAINMENT, INC.
2500 Northwinds Parkway
Three Northwinds Center
Suite 175
Alpharetta, Georgia 30004
================================================================================
TO OUR SHAREHOLDERS
REFOCUSING FOR THE FUTURE
I am please to report that the past year was one of great change,
transition and adjustment for Golf Entertainment, Inc. Although the financial
results were disappointing, I believe that the past year will be remembered as a
watershed year for our Company -
- Your Board of Directors came to the difficult conclusion that the
Company was unable to effectively compete in the technology
services industry and that a new strategic direction was
necessary.
- To that end, you, our shareholders, approved changing the
Company's name to Golf Entertainment, Inc. and approved the
issuance of shares of common stock upon the conversion of the
Company's 6% Convertible Debentures to a new investment group
that will provide the seed capital for the Company's new
strategic direction - to become an owner and consolidator of golf
entertainment facilities.
TANGIBLE RESULTS
The Company has already begun to implement the change in strategy. To
that end, the Company has already accomplished several items that it believes
will benefit the Company and its shareholders, including:
- Reducing corporate expenses from $362,700 in the Fourth Quarter
of 1998 to $185,300 in the Third Quarter of 1999, a savings of
approximately $177,400 per quarter.
- Eliminating almost $140,000 of old debt through settlement of
various claims.
- Closing its Las Vegas, Nevada offices, thereby reducing general
and administrative expenditures by approximately $35,000 per
month.
- Ceasing operations of the Company's operating subsidiaries.
- Replacing the former chief executive officer and other management
of the Company.
- Acquiring a golf facility in Oklahoma City, Oklahoma.
- Acquiring a golf facility in Columbia, South Carolina.
<PAGE>
THE FUTURE
Our strategies in 1999 and beyond are fourfold:
- To sell the Company's lease portfolio and exit the technology
services business as reflected in our proxy statement.
- To gain revenue growth and improve margins in order to enhance
the Company's value to our shareholders.
- To enhance growth through acquisition, gain the confidence of the
investment community and our credibility to our shareholders
through solid business practices, timely reporting and more
meaningful analyses of results. - To form strategic alliances
with major lenders for the financing of strategic acquisition
opportunities.
We believe that these strategies are consistent with our basic goals of
delivering value to our shareholders.
CONCLUSION
We deeply appreciate the contributions of our employees, directors and
friends during the past year as well as the support of our shareholders. We are
extremely confident that the actions taken in 1998 and thus far in 1999 will
provide the foundation necessary to finally deliver the results and performance
that our shareholders deserve.
Ronald G. Farrell
Chief Executive Officer
<PAGE>
10-K INCORPORATED BY REFERENCE,
AS FILED ON APRIL 15, 1999
