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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of
[x] Definitive Proxy Statement the Commission Only
[ ] Definitive Additional Materials (as permitted by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
LEC TECHNOLOGIES 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):
[x] 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:
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(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 0-11:1
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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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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LEC TECHNOLOGIES, INC.
6540 SOUTH PECOS ROAD
SUITE 103
LAS VEGAS, NEVADA 89120
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NOTICE OF SPECIAL MEETING
TO BE HELD FEBRUARY 12, 1999
To all Stockholders of
LEC TECHNOLOGIES, INC.
NOTICE IS HEREBY GIVEN that the Special Meeting of Stockholders (the
"Special Meeting") of LEC TECHNOLOGIES, INC., a Delaware corporation (the
"Company"), will be held at its principal offices at 6540 South Pecos Road,
Suite 103, Las Vegas, Nevada 89120 on February 12, 1999 at the hour of 10:30
a.m., Pacific Standard Time, for the following purposes:
1. To authorize the issuance of 4,763,901 shares of Common Stock, par value
$0.01, of the Company, to be delivered upon the conversion of the 6%
Convertible Debentures of the Company;
2. To approve an amendment to the Certificate of Incorporation changing the
name of the Company to Golf Entertainment, Inc.; and
3. To transact such other business as may properly come before the Special
Meeting or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on January 28, 1999 are
entitled to notice of and to vote at such meeting or any adjournments thereof.
By order of the Board of Directors.
Ronald G. Farrell,
Chairman and Chief Executive Officer
Las Vegas, Nevada
January 29, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE PROMPTLY COMPLETE,
SIGN AND DATE THE ENCLOSED PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS
OF THE COMPANY AND RETURN IT TO THE COMPANY. THE PROXY MAY BE REVOKED AT ANY
TIME BEFORE IT IS VOTED, ANY STOCKHOLDERS EXECUTING PROXIES MAY ATTEND THE
MEETING AND VOTE IN PERSON SHOULD THEY SO DESIRE.
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LEC TECHNOLOGIES, INC.
6540 SOUTH PECOS ROAD
SUITE 103
LAS VEGAS, NEVADA 89120
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PROXY STATEMENT FOR SPECIAL
MEETING OF STOCKHOLDERS
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The Board of Directors of LEC Technologies, Inc. (the "Company") presents
this Proxy Statement to all Stockholders of the Company and solicits their
proxies for the Special Meeting of Stockholders to be held on February 12, 1999
(the "Special Meeting"). All proxies duly executed and received will be voted on
all matters presented at the Special Meeting in accordance with the instructions
given by such proxies. In the absence of specific instructions, proxies so
received will be voted for the proposal to authorize the issuance of 4,763,901
shares of Common Stock, to be delivered upon the conversion of the 6%
Convertible Debentures of the Company, and for the proposal to amend the
Company's Certificate of Incorporation to change the name of the Company to Golf
Entertainment, Inc. The Board of Directors does not know of any other matter
that may be brought before the Special Meeting. In the event that any other
matter should come before the Special Meeting, the persons named in the enclosed
proxy will have discretionary authority to vote all proxies not marked to the
contrary with respect to such matter in accordance with their best judgment. The
proxy may be revoked at any time before being voted. This Proxy Statement is
being mailed on or about January 29, 1999.
A total of X,XXX,XXX shares of Common Stock of the Company were outstanding
as of January 28, 1999. The Common Stock is the only outstanding class of
securities of the Company entitled to vote. Each share of Common Stock has one
vote. Only Stockholders of record as of the close of business on January 28,
1999 will be entitled to vote at the Special Meeting or any adjournment or
adjournments thereof.
The affirmative vote by Stockholders holding a majority of the outstanding
shares of Common Stock entitled to vote is required to approve the proposal to
authorize the issuance of shares of Common Stock. The affirmative vote by a
majority of the Shareholders voting is required to approve the proposal to amend
the Company's Certificate of Incorporation. Shares represented by proxies that
are marked "abstain" with respect to all matters and proxies that are marked to
deny discretionary authority on all other matters will only be counted for the
purpose of determining the presence of a quorum. In addition, where brokers are
prohibited from exercising discretionary authority for beneficial owners who
have not provided voting instructions (commonly referred to as "broker
non-votes"), those shares will not be included in the vote totals.
A list of stockholders entitled to vote at the Special Meeting will be
available at the Company's offices, 6540 South Pecos Road, Suite 103, Las Vegas,
Nevada 89120 for a period of ten days prior to the Special Meeting for
examination by any stockholder and at the Special Meeting.
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ACTIONS TO BE TAKEN AT THE SPECIAL MEETING
PROPOSAL 1: AUTHORIZATION OF THE ISSUANCE OF 4,763,901 SHARES OF COMMON
STOCK
At meetings of the Board of Directors held in November 1998, the Board of
Directors appointed Ronald G. Farrell Chairman of the Board and Chief Executive
Officer of the Company. The Board of Directors also authorized management to
enter into an agreement with a company affiliated with Mr. Farrell, LEC
Acquisition LLC, whereby LEC Acquisition LLC would purchase, for $70,829.70,
236,099 shares of the Company's Common Stock and a warrant entitling LEC
Acquisition LLC, for a period of one year, to purchase 6% Convertible Debentures
of the Company in the principal amount of $1,429,360 which will be convertible
into 4,763,901 shares of Common Stock, subject to shareholder approval.
The purpose of the appointment and the agreement was to examine strategic
opportunities for the Company, including opportunities in the golf and leisure
time industry. The Board of Directors also authorized management to engage an
investment banking firm to advise it concerning strategic alternatives in
connection with its computer businesses.
Management and members of the Board of Directors, numbering seven people,
owning XXXX shares of Common Stock, are going to vote in favor of Proposal 1.
LEC Acquisition LLC is a Georgia limited liability company which was formed
for the purpose of acquiring the Company. The principal stockholder of LEC
Acquisition LLC is Ronald G. Farrell. Mr. Farrell is the Chairman and President
of R.G Farrell, Inc. and RGF Investments, Inc., both founded in 1985, which are
engaged in financial consulting in connection with private placements, public
offerings, venture capital transactions, leveraged buyout and rollup
transactions.
THE COMPANY'S PLANS IN THE GOLF AND LEISURE TIME INDUSTRY
General
The Company intends to focus principally on acquiring and consolidating the
ownership of existing golf ranges and golf centers. The Company believes that
the fragmented ownership of golf ranges and centers, currently characteristic of
the industry in the United States, coupled with Mr. Farrell's extensive business
experience in negotiating and financing acquisition opportunities, offer it an
opportunity for growth. The Company intends to enhance these existing golf
facilities by adding amenities and improving management and operating systems.
The Company also will develop new golf recreational facilities, and may acquire
other golf related businesses. The Company intends that its facilities will be
centered around a driving range and will provide a variety of golf practice
areas for pitching, putting, chipping and sand play. The Company intends that
its facilities will be user-friendly for all levels of golfer and will appeal to
the entire family. Each driving range will, generally, 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, a
snack bar, a miniature golf course(s) and batting cages. Where feasible, the
Company intends that the facilities will include par-3 or executive-length
(shorter than a regulation-length) golf courses. The Company'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. The Company will seek
to realize economies of scale at its facilities through centralized management
information systems, accounting, cash management and purchasing programs.
The Company also may seek long-term management contracts to operate golf
courses and golf related facilities.
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Business Strategy
The Company's goal is to become a leading consolidator, owner and operator
of golf related recreational facilities in the United States. The Company
intends to accomplish this goal by focusing its activities principally on
acquiring and consolidating the ownership of operating facilities that have the
potential for revenue growth through the expansion and upgrading of those
facilities to include better amenities, more efficient management and more
effective marketing strategies. The Company also intends to develop new golf
recreational facilities in attractive markets and may acquire other golf related
businesses. The Company intends to employ a person with experience and knowledge
in the business to be conducted by the Company who will serve as President of
the Company with responsibility for the operations of the Company's business.
Mr. Farrell, as Chairman and Chief Executive Officer of the Company, will focus
his activities on raising additional equity capital, securing debt facilities
for the Company, and identifying and negotiating acquisitions for the Company.
CHARACTERISTICS OF THE COMMON STOCK BEING AUTHORIZED
The Common Stock to be issued upon conversion of the 6% Convertible
Debentures will have the same voting rights and other characteristics of the
other Common Stock of the Company as set forth in the Company's Certificate of
Incorporation.
COMPENSATION OF DIRECTORS
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 1991 and
1993 Director Stock Option Plans and the 1994 Stock Option Plan, the 1996 Stock
Option Plan and the 1997 Stock Option Plan. Issuances of options to directors
under the 1991 and 1993 Director Stock Option Plans and the 1994 Stock Option
Plan were determined by the Director Stock Option Plan Committee then in effect.
The Company does not pay its directors any additional fees for committee
participation.
EXECUTIVE COMPENSATION
The Company has entered into an employment agreement with Mr. Farrell as of
January 1, 1999 (the "Agreement"). The Agreement stipulates that Mr. Farrell
will serve as Chief Executive Officer of the Company for a five year term,
commencing January 1, 1999, provided, however, that the Company may terminate
the Agreement if, on December 31, 1999, (i) the Company has not sold its
computer business, and (ii) the net tangible asset value of the golf and leisure
assets of the Company do not equal more than fifty percent (50%) of the net
tangible asset value of the Company as a whole. Otherwise the Agreement is only
terminable by the Company for cause. The Agreement provides for compensation as
follows:
o Minimum base salary will be $240,000 for 1999 and will be increased by
ten percent (10%) per year for the term of the agreement.
o Bonus and Incentive Compensation: Five percent (5%) of operating income
of the Company during the fiscal year.
o Stock Options: The Company has granted Mr. Farrell options to purchase
300,000 shares of Common Stock for ten years. The options will have an
exercise price of the fair market value of the Common Stock as of
December 31, 1998 or $0.6875.
o Other benefits: Mr. Farrell will also receive medical and life insurance
and will be entitled to participate in the Company's 401(k) plan.
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The following table sets forth certain information with respect to the
compensation paid and/or accrued to the President and the Chief Financial
Officer of the Company for services rendered to the Company during the last
three fiscal years. No other executive officer received annual compensation in
excess of $100,000 in any of the three years ended December 31, 1998. This
information includes the dollar value of base salaries, bonuses, awards, the
number of stock options granted and certain other compensation, if any, whether
paid or deferred.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
Salary Bonus Other Annual
Name and Principal Position Year ($) ($) Compensation ($)
- --------------------------- ---- ------ ----- ----------------
Michael F. Daniels 1998 $326,385 $-- $ 34,573(1)
President 1997 336,519 -- 181,653(1)
1996 273,077 -- 258,619(1)
William J. Vargas 1998 123,417 -- --
CFO & Secretary 1997 128,871 -- --
1996 115,341 -- --
LONG TERM COMPENSATION
AWARDS
Restricted Securities All Other
Stock Underlying Other Annual
Name and Principal Position Year Awards Options/SARs Compensation ($)
- --------------------------- ---- ---------- ------------ ----------------
Michael F. Daniels 1998 -- 200,000(3) $ 34,573(1)
President 1997 -- -- (3) 181,653(1)
1996 -- 62,500(3) 258,619(1)
William J. Vargas 1998 -- 77,500(3) --
CFO & Secretary 1997 -- -- (3) --
1996 -- 17,500(3) --
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(1) Consists of commission income based upon realization of excess residual
values related to leases entered into prior to May 15, 1993.
(2) Represents Company matching contribution to 401(k) Profit Sharing Plan.
(3) In January of 1997, August of 1997 and January 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 14,531 stock
options received by Mr. Daniels in 1993. In October 1998, Messrs. Daniels
and Vargas voluntarily rescinded their respective 1998 option grants, to the
extent that 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.
The following table discloses for the President and the Chief Financial
Officer each stock option grant in the last fiscal year as a percentage of total
options granted to Employees in such fiscal year.
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Number of Percent of Total
Securities Options/SAR's
Underlying Granted to Exercise
Option/SAR's Employees In or Base Expiration
Name Granted (#) Fiscal Year Price ($/Sh) Date
- ------------------ ------------ ---------------- ------------ ----------
Michael F. Daniels 200,000(1) 40.7% $0.10 1/30/03
William J. Vargas 77,500(1) 15.8% $0.10 1/30/03
- -------------
(1) In October, 1998, Messrs. Daniels and Vargas voluntarily rescinded any stock
option grants made in 1998, to the extent that they had not been exercised,
with the exception of 2,500 stock option grants made to Mr. Vargas.
The following table discloses for the President and the Chief Financial
Officer each stock option exercised in the last fiscal year and the value of all
options at the end of the last fiscal year.
Number of Value of
Securities Unexercised
Underlying In The-Money
Options/SAR's Options/SAR's
At FY-END (#) At FY-END ($)
Shares
Acquired Value Exercisable/ Exercisable/
Name On Exercise Realized Unexercisable Unexercisable
- ------------------ ----------- -------- ------------- -------------
Michael F. Daniels 100,000 $53,000 14,531/-- $5,340/--
William J. Vargas 35,000 $18,550 2,500/-- $1,469/--
The last sales price for the Common Stock on the Nasdaq SmallCap Market on
December 31, 1998 was $0.6875.
SECURITY OWNERSHIP AND CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of January 28, 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 Act of 1934) of shares of Common
Stock of the Company by (i) each person known by the Company to be the owner of
more than 5% of the outstanding shares of Common Stock, (ii) each Director of
the Company, (iii) each executive officer of the Company named in the Summary
Compensation Table and (iv) all executive officers and Directors as a group:
Name and Address of Amount and Nature
Beneficial Owner (1) of Beneficial Ownership (2) Percentage of Class (3)
- -------------------- --------------------------- -----------------------
LEC Acquisition LLC 236,099 (4) 14.3%
Michael F. Daniels 221,850 (5) 13.4%
William J. Vargas 46,500 (6) 2.8%
Larry M. Segall 58,844 (7) 3.6%
L. Derrick Ashcroft 38,650 (8) 2.3%
Richard D. Falcone 13,500 (9) 0.8%
All Directors and
Executive Officers as
a Group (6 persons) 379,344 22.5%
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(1) The address for all individuals identified herein is 6540 S. Pecos Road,
Suite 103, Las Vegas, Nevada 89120.
(2) 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, provided, however, that the shares into which the 6%
Convertible Debentures may be converted into, that are subject to this vote,
are not included. See Note (4). 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, other than the
holders of the 6% Convertible Debentures, (but not those held by any other
person) and which are exercisable or convertible within 60 days from January
28, 1999 have been exercised or converted.
(3) Based on XXXXXX shares of Common Stock outstanding as of January 28, 1999.
(4) Does not include the 4,763,901 shares issuable to the holders of the 6%
Convertible Debentures upon conversion, depending upon shareholder approval
at this Special Meeting.
(5) Includes options to purchase 14,531 shares of common stock granted to Mr.
Daniels which are currently exercisable.
(6) Includes options to purchase 2,500 shares of common stock granted to Mr.
Vargas which are currently exercisable.
(7) Includes options to purchase 5,000 shares of common stock granted to Mr.
Segall which are currently exercisable.
(8) Includes options to purchase 5,000 shares of common stock granted to Mr.
Ashcroft which are currently exercisable.
(9) Includes options to purchase 10,000 shares of common stock granted to Mr.
Falcone which are currently exercisable.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
PROPOSAL 1.
PROPOSAL 2: AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO
CHANGE THE COMPANY'S NAME TO GOLF ENTERTAINMENT, INC.
The Board of Directors has approved a proposal to amend the Company's
Certificate of Incorporation to change the name of the Company to "Golf
Entertainment, Inc." The Board of Directors believes that the current name of
the Company, LEC Technologies, Inc., too closely identifies the Company with its
computer leasing segment and does not reflect the planned golf and leisure parts
of the Company's business. See "The Company's Plans in the Golf and Leisure Time
Industry." Therefore, the Board of Directors believes that a change of the
Company's name will enable the public to identify the Company's core business.
If the proposed Amendment is approved, Article First of the Company's
Certificate of Incorporation will be amended to read in its entirety as follows:
First: The name of the corporation is Golf Entertainment, Inc.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
PROPOSAL 2.
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OTHER MATTERS
The Board of Directors is not aware of any business to be presented at the
Special Meeting except the matters set forth in the Notice and described in this
Proxy Statement. Unless otherwise directed, all shares represented by Board of
Directors' Proxies will be voted in favor of the proposals of the Board of
Directors described in this Proxy Statement. If any other matters come before
the Special Meeting, the persons named in the accompanying Proxy will vote on
those matters according to their best judgment.
EXPENSES
The entire cost of preparing, assembling, printing and mailing this Proxy
Statement, the enclosed Proxy and other materials, and the cost of soliciting
Proxies with respect to the Special Meeting, will be borne by the Company. The
Company will request banks and brokers to solicit their customers who
beneficially own shares listed of record in names of nominees and will reimburse
those banks and brokers for the reasonable out-of-pocket expenses of such
solicitations. The original solicitation of Proxies by mail may be supplemented
by telephone and telegram by officers and other regular employees of the
Company, but no additional compensation will be paid to such individuals.
STOCKHOLDER PROPOSALS
A proposal to be included in the proxy statement or proxy for the Company's
next Annual Meeting of Stockholders will be submitted timely only if the
proposal has been received at the Company's principal executive office no later
than February 12, 1999. For proposals to be included in the proxy for this
Special Meeting, the proposal must be received at the Company's principal
executive office at a reasonable time before the solicitation of proxies for
this meeting is made.
AVAILABLE INFORMATION
Copies of the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1997 as filed with the Securities and Exchange Commission,
including the financial statements, can be obtained without charge by
Stockholders (including beneficial owners of the Company's Common Stock) upon
written request to Michael F. Daniels, the Company's President, 6540 South Pecos
Road, Suite 103, Las Vegas, Nevada 89120, or on the Commission's web site at
http://www.sec.gov.
By order of the Board of Directors,
Ronald G. Farrell, Chairman and
Chief Executive Officer
Las Vegas, Nevada
January 29, 1999
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