<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
SOUTHEAST INTERACTIVE TECHNOLOGY FUND I, LLC
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
Southeast Interactive Technology Fund I, LLC
2525 Meridian Parkway, Suite 300A
Durham, North Carolina 27713
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OF
SOUTHEAST INTERACTIVE TECHNOLOGY FUND I, LLC
TO BE HELD DECEMBER 11, 1998
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Shareholders of
Southeast Interactive Technology Fund I, LLC, a North Carolina limited liability
company (the "Fund"), will be held at MCNC, 3021 Cornwallis Road, Research
Triangle Park, North Carolina on December 11, 1998 at 2:00 p.m. and at any
adjournments thereof, for the purpose of considering and acting upon the
following matters:
1. To elect five directors of the Fund to serve until the 1999
Annual Meeting of Shareholders and until their successors have been
duly elected and qualified;
2. To approve an amendment to the Operating Agreement that
includes a clarification of language regarding management fees;
3. To ratify the appointment of PricewaterhouseCoopers LLP as
the independent public accountants of the Fund for the year ending
December 31, 1998; and
4. To transact such other business as may properly come before
the meeting or any adjournment thereof.
All shareholders of record at the close of business on November 4, 1998
will be entitled to vote at the meeting or any adjournment thereof.
By order of the Managers,
David C. Blivin, CPA
Managing Director
Date: _________________
<PAGE> 3
Southeast Interactive Technology Fund I, LLC
2525 Meridian Parkway, Suite 300A
Durham, North Carolina 27713
---------------------------
PROXY STATEMENT
---------------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 11, 1998
GENERAL
This Proxy Statement is being furnished by Southeast Interactive
Technology Fund I, LLC, a North Carolina limited liability company (the "Fund"),
to the holders of shares of membership interest in the Fund ("Shareholders") as
a proxy statement in connection with the solicitation of appointments of proxy
by the managers of the Fund ("directors") for use at the annual meeting of
Shareholders to be held at 2:00 p.m. on December 11, 1998, at MCNC, 3021
Cornwallis Road, Research Triangle Park, North Carolina (the "Annual Meeting")
and at any adjournments thereof. The Annual Meeting has been called for the
purpose of considering and acting upon the following proposals: (i) to elect
five directors to serve until the 1998 Annual Meeting of Shareholders and until
their successors have been duly elected and qualified; (ii) to approve an
amendment to the Operating Agreement of the Fund (the "Operating Agreement")
that includes a clarification of language regarding management fees; (iii) to
ratify the appointment of PricewaterhouseCoopers LLP as the independent public
accountants of the Fund for the year ending December 31, 1998; and (iv) to
transact such other business as may properly come before the meeting or any
adjournments thereof.
Voting of Proxies; Revocation
Persons named on the enclosed appointment of proxy as proxies for the
Shareholders at the Annual Meeting are David C. Blivin and Norvell E. Miller,
IV. Shares of membership interest in the Fund ("Shares") represented by each
appointment of proxy which is properly executed, returned, and not revoked will
be voted in accordance with the directions thereon. If no directions are given,
those Shares will be voted "FOR" the election of each of the five nominees named
herein and "FOR" the other proposals described herein. If, at or before the
Annual Meeting, any nominee becomes unavailable for any reason, the proxies will
be authorized to vote for a substitute nominee. On such other matters as may
properly come before the Annual Meeting, the proxies will be authorized to vote
Shares represented by appointments of proxy in accordance with their best
judgment.
A Shareholder may revoke an appointment of proxy at any time before the
Shares represented by it have been voted by filing with the Fund at the address
above an instrument revoking it or a properly executed appointment of proxy
bearing a later date, or by attending the Annual Meeting and announcing his or
her intention to vote in person.
<PAGE> 4
Expenses of the Solicitation
The Fund will pay the cost of preparing, assembling, and mailing this
Proxy Statement to Shareholders and certain other proxy solicitation expenses.
In addition to the use of mail, appointments of proxy may be solicited in person
or by telephone by officers, directors, or employees of the Fund or Southeast
Venture Partners, LLC (the "Advisor") without additional compensation.
Record Date
The Board of Directors has set November 4, 1998 as the record date for
the determination of Shareholders entitled to notice of and to vote at the
Annual Meeting. Only Shareholders of record on that date will be entitled to
vote at the Annual Meeting.
Voting Securities
The voting securities of the Fund are its shares of limited liability
company membership interest, of which 244 were outstanding on the record date.
Voting Procedures; Votes Required for Approval
The representation in person or by proxy of a majority of the votes
entitled to be cast is necessary to provide a quorum at the Annual Meeting. At
the Annual Meeting, each Shareholder will be entitled to cast one vote for each
Share held of record on the record date for each matter submitted for voting
and, in the election of directors, for each director to be elected.
In voting for directors, the five nominees receiving the highest
numbers of votes will be elected. With respect to the election of directors,
votes may be cast in favor of nominees or withheld. Withheld votes are not
treated as votes cast and, therefore, have no effect on the election of
directors. The proposal to amend the Operating Agreement will be approved if
Shareholders holding two-thirds (66 2/3%) or more of the outstanding Shares vote
in favor of the amendment. The proposal to ratify the appointment of independent
public accountants and any other proposal properly before the Annual Meeting
will be approved if Shareholders holding (i) more than 50% of the outstanding
Shares or (ii) if less, 67% or more of the Shares which are present or
represented by proxy at the meeting, vote in favor of the proposal.
2
<PAGE> 5
Amount and Nature of Beneficial Ownership of Voting Securities
The following table sets forth certain information regarding the
beneficial ownership of Shares as of the record date by (i) any person known to
the Fund to be the beneficial owner of more than five percent of the outstanding
Shares and (ii) each director or nominee for director. Each person included on
the table has sole voting power and sole investment power with respect the
Shares beneficially owned thereby.
Amount and
Nature of
Beneficial Percent
Name and Address of Beneficial Owner Ownership(1) of Class(2)
-----------------------------------------------------------------------
Interstate/Johnson Lane
Corporation 14 5.7%
David C. Blivin 1 *
Norvell E. Miller, IV --- ---
Robert M. Price --- ---
Vacant --- ---
(1) Amounts presented are the number of Shares held by each
person.
(2) An "*" indicates less than one percent.
Section 30(f) Beneficial Ownership Reporting Compliance
Section 30(f) of the Investment Company Act of 1940, as amended (the
"Act"), requires every person who is an officer, director, member of an advisory
board, investment adviser or an affiliate of an investment adviser of a
registered investment company or who owns more than ten percent of a registered
investment company's outstanding securities to file initial reports of ownership
and reports of changes in their ownership of such securities with the United
States Securities and Exchange Commission (the "SEC"). Reporting persons are
required by SEC regulations to furnish the Fund with copies of all Section 30(f)
forms they file. To the Advisor's knowledge, no such reports are required since
no single entity own more than ten percent of the Fund.
PROPOSAL TO ELECT DIRECTORS
Election of Directors
The Board of Directors presently consists of five directors. Directors
are elected annually and serve until the next annual meeting of Shareholders and
until their successors are elected and qualified. five directors are to be
elected at the Annual Meeting. The following table provides certain information
with respect to the nominees. The Board of Directors recommends that you vote
"FOR" all of the nominees listed below.
Name Age Current Position
---- --- ----------------
David C. Blivin * 41 Managing Director
Norvell E. Miller * 41 Managing Director
Robert M. Price 67 Nominee
Vacant
Vacant
* Messrs. Blivin and Miller are shareholders and directors of
the Advisor. Consequently, each of these nominees is an
"interested person" within the meaning of Section 2(a)(19) of
the Act.
3
<PAGE> 6
The education and experience of each nominee is discussed below.
David C. Blivin - Mr. Blivin has served as the Managing Director of the
Fund and the Advisor since their inception in May 1995. His experience also
includes serving as the Chief Financial Officer of Montrose Capital Corporation
from July 1987 to June 1996. He is a 1985 graduate of the Duke University Fuqua
School of Business and a Certified Public Accountant. Prior to joining Montrose
Capital Corporation, Mr. Blivin worked as a Senior Auditor with Arthur Andersen
LLP and in this capacity audited a number of technology companies. As Chief
Financial Officer for Montrose Capital Corporation, Mr. Blivin has negotiated
financings and developed business plans for a number of entities in which
Montrose Capital Corporation invested during his terms. Mr. Blivin has served on
the Board of Directors of Virtus Corporation and The Pantry, Inc.
Norvell E. Miller, IV- Mr. Miller has been a Managing Director of
Southeast Interactive Technology Funds I and II, LLC. Mr. Miller has extensive
experience in venture company operations, investment banking and fund
management. As Managing Director of EMS Financial, Inc. he co-founded or
invested in numerous companies. Representative transactions include Pixel Magic
Imaging, Inc., an Austin, TX based digital imaging firm and Vision Software, a
North Carolina based enterprise software and communication company selling into
the public safety sector. Landfall Village LLC, a third generation CCRC, where
Mr. Miller is a Managing General Partner. The Mobius Group Inc, where Mr. Miller
was a cofounder and lead investor until he sold his holdings to UAI Technology
Inc. Sirrom Capital Inc. where Mr., Miller invested as a Limited Partner and
subsequently the company had successful initial public offerings. DentalCare
Partners Inc. where Mr. Miller was a cofounder and Chief Executive Officer prior
to the company's merger with Family Dental, Inc. of Cleveland, Ohio. In
addition, Mr. Miller successfully invested in and exited Waxter Associates, SVI
Ltd., AMS Inc. and Affordable Care, Inc. He also served as a senior vice
president for McMillion/Eubanks, Inc. in Chapel Hill, NC.
Prior to becoming active in managing venture capital investments, Mr.
Miller served as the founding Director of Investments for the University of
North Carolina at Chapel Hill from 1980-1985 and instructed in the business
school. Mr. Miller is a Chartered Financial Analyst and has a Masters of
Business Administration from the Fuqua School at Duke University.
Mr. Miller is the past president and sits on the Board of Directors of
the Coastal Entrepreneurial Council (CEC) and the NC Investors Film Symposium.
He served on the Board of the Council for Entrepreneurial Development (CED) from
1991-1994.
Robert M. Price - Mr. Price is retired Chairman of the Board and Chief
Executive Officer of Control Data Corporation. Mr. Price worked at Control Data
from 1961 to 1990 serving in a variety of positions, which included
responsibilities in early strategic and international expansion, operations and
marketing. Mr. Price received his Bachelors Degree from Duke University and his
Masters Degree in Applied Mathematics from Georgia Institute of Technology. He
has worked at Lawrence Livermore Radiation Laboratory, Convair Corporation, the
Georgia Institute of Technology and Standard Oil of California, Inc. prior to
joining Control Data Corporation. Currently, Mr. Price is President and CEO of
PSV, Inc. ("PSV"), a consortium of consultants specializing in management of
technology. PSV offers services in technology commercialization, corporate
strategy, human resource management and general management practice.
Additionally, Mr. Price teaches management of technology at the Fuqua School of
Business at Duke University. He is also Chairman of the Alpha Center which
provides training and business strategy systems to entrepreneurs in the field of
human services. Mr. Price serves on the Boards of Directors of International
Multifoods, Inc., Premark International Inc., Rohr, Inc., Public Service Company
of New Mexico Inc., and Forth Shift Corporation. He also serves on the Board of
Visitors of Duke University's Fuqua School of Business and is on the board of
the United Way of Minneapolis.
4
<PAGE> 7
PROPOSAL TO AMEND THE FUND OPERATING AGREEMENT
Background
The operating agreement of a limited liability company such as the Fund
defines the rights and duties of the company's managers and members. It is
similar in function to the partnership agreement of a partnership or the
articles of incorporation and bylaws of a corporation. Although the advisory and
management agreement between an investment fund and its advisor is the contract
which technically governs the relationship between the two entities, the Fund's
Operating Agreement contains nonbinding language regarding the Advisor's
management fees. The operating agreement of the Fund (the "Operating Agreement")
contemplates the payment of an annual management fee to the Advisor that is
equal to 5% of the net asset value of the Fund. One-half of this fee (2.5%) is
payable in cash on a monthly basis (the "Current Fee") while the remaining half
is deferred and becomes payable once the Fund has made distributions to
shareholders in excess of specified amounts (the "Deferred Fee"). The Operating
Agreement further contemplates a reduction in the Current Fee to 2% upon the
"formation" of a new venture capital fund by W. Clay Hamner, David C. Blivin, or
E. Lee Bryan (the "Fee Reduction Provision").
At the time of its organization in 1995, the capitalization goal for
the Fund was $25 million. The theory underlying the Fee Reduction Provision was
that once the asset base for the Advisor's management fee exceeded $50 million
(presumably comprised of two $25 million funds), the advisory and management
agreement would be amended to reduce the Current Fee to 2% and still enable the
Advisor to generate an adequate level of revenue to cover its cost of
operations. However, the initial offering for the Fund was closed in August 1995
with a capitalization of only $6.1 million. At the time of the initial closing,
the Fee Reduction Provision should have been modified to reflect the economic
impact of closing the Fund at a much lower level of initial capitalization than
had been originally contemplated. In 1996, Messrs. Blivin, Hamner and Bryan
organized Southeast Interactive Technology Fund II, LLC ("Fund II"). An initial
closing was held for Fund II in December 1996 with initial subscriptions
totaling approximately $3 million. The Advisor also serves as the investment
advisor to Fund II.
5
<PAGE> 8
The following table presents certain information regarding the fees
paid by the Fund since its inception. In addition to information regarding the
Advisor's Current and Deferred Fees, the table reflects the impact of
professional fees paid to the Advisor by portfolio companies, one-half of which
are remitted to the Fund on an annual basis. After adjustment for remitted fees,
Current Fees paid to the Advisor have ranged from 2.5% to (0.62%) of the Fund's
net asset value ("NAV"). The last two columns of the table reflect the pro forma
impact of the Fee Reduction Provision had it become effective in 1997 and 1998,
which is 50 basis points in each year.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Remitted Remitted NET Net Current
CURRENT Service Fees- Service Fees - management fee Fees as
Fees(1) Cash(3) Warrants or Shares(3) paid by Fund I a % of NAV
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995 78,541 78,541 2.50%
1996 139,552 27,000 43,000 69,552 1.25%
1997 143,919 29,000 (18,500) 133,419 2.32%
1998 117,850 - 146,897 (29,047) -0.62%
- ------------------------------------------------------------------------------------------------------------
$479,862 $56,000 $171,397 $252,465 1.32% avg
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Net Total Total Pro Forma Pro Forma
Current Deferred Advisory Fees as Total Fees As
Fees Fees (2) Fees a % of NAV Fees(4) a % of NAV
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1995 78,541 78,541 157,082 5.00% 157,082 5.00%
1996 69,552 139,552 209,104 3.75% 209,104 3.75%
1997 133,419 143,919 277,338 4.82% 248,554 4.32%
1998 (29,047) 117,850 88,803 1.88% 65,233 1.38%
- --------------------------------------------------------------------------------------------------------------------
$252,465 $479,862 $732,327 3.82% $679,973 3.54%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
1) Current Fees paid to the Advisor since inception of the Fund. The Advisor
receives an annual management fee equal to 5% of the Funds "NAV". The current
fee portion is payable in cash on a monthly basis while the Deferred Fee
portion is deferred and becomes payable only if the Fund makes distributions
to Shareholders in excess of specified amounts.
2) Deferred Fees accrued by the Advisor since inception of the Fund. See Note 1
above.
3) The Advisor is obligated to remit to the Fund one-half of any fees paid to it
by portfolio companies in exchange for certain professional services rendered
by the Advisor. Portfolio companies typically pay such fees in cash,
warrants, shares of common stock, or a combination thereof. Values presented
for fees paid in warrants or shares are based on the Advisor's estimate of
fair market value as of the date of this proxy statement. The value realized
by the Fund upon disposition of fees paid in securities will be subject to
the market value of the securities on the date of disposition.
4) Presents, on a pro forma basis, the amount of total fees payable to the
Advisor if the Fee Reduction Provision had become effective December 31,
1996, the date of the initial closing for Fund II.
6
<PAGE> 9
Proposal
The Board is proposing to amend to Section 8.8 (a) of the Operating
Agreement to clarify the nonbinding language regarding management fees by
deleting the fifth sentence of that section and replacing it with the following
two sentences:
"The portion of the management fee described in clause (i) above
will be reduced to two percent (2.0%) of the net asset value of the Fund
commencing on the first day of any month following a month during which the net
asset value of all venture capital funds under management by the Advisor shall
exceed $50 million (the "Fee Reduction Provision"). Upon the occurrence of such
event, the Managers shall cause the Advisory Agreement to be amended to include
the Fee Reduction Provision".
7
<PAGE> 10
PROPOSAL TO RATIFY THE APPOINTMENT OF ACCOUNTANTS
The Board of Directors has selected PricewaterhouseCoopers LLP as the
independent accountants to audit the financial statements of the Fund for the
year ending December 31, 1998. A representative of PricewaterhouseCoopers LLP is
expected to be present at the Annual Meeting, will have an opportunity to make a
statement if he or she desires to do so, and is expected to be available to
respond to appropriate questions. The Board of Directors unanimously recommends
a vote "FOR" the proposal to ratify the appointment of PricewaterhouseCoopers
LLP as the Fund's independent accountants for the year ending December 31, 1998.
Meetings of the Board of Directors
During 1997, the Board of Directors met one time and acted by unanimous
written consent one time. There are no committees of the Board of Directors. An
annual retainer of $1,000 was paid by the Fund to each of the independent
members of the Board of Directors during the year.
Related Parties and Transactions with Affiliates
On August 30, 1996, the SEC issued an order under Section 17(b) of the
1940 Act granting an exemption from Sections 17(a)(1) and (3) of the 1940 Act in
response to an application filed by the Fund to purchase a $600,000 convertible
note (the "Note") from One Room Systems, Inc. ("ORSI"). ORSI is controlled by E.
Lee Bryan, a director of the Fund. The Note bears interest at the rate of 10%
per annum, payable monthly, is secured by certain receivables of ORSI and is
personally guaranteed by Mr. Bryan. The Note matured in August 1998 and is
convertible, at the Fund's option, into common stock of ORSI at a conversion
price of $1.00 per share, subject to certain adjustments. In connection with its
investment in the Note, the Fund also received a warrant to purchase up to
120,000 in additional shares of common stock of ORSI at the conversion price.
The Advisor and ORSI have negotiated a modification of the Note to extend its
maturity date and enhance the equity rights of the Fund thereunder. The
principal amount of the note now totals $693,000, is collateralized with liquid
assets and matures on August 31, 1999. In addition, the Fund now holds warrants
to purchase up to 933,000 shares of common stock of ORSI.
8
<PAGE> 11
APPENDIX A
Southeast Interactive Technology Fund I, LLC
2525 Meridian Parkway, Suite 300A
Durham, North Carolina 27713
Appointment of Proxy
This Appointment of Proxy is solicited on behalf of the Board of
Directors. The undersigned hereby appoints David C. Blivin, CPA and Norvell E.
Miller, IV and each of them proxies, with power of substitution, to represent
the undersigned at the Annual Meeting of Shareholders of Southeast Interactive
Technology Fund I, LLC. (the "Fund"), to be held at 2:00 p.m., on December 11,
1998 at MCNC, 3021 Cornwallis Road, Research Triangle Park, North Carolina, and
at any adjournments thereof, to vote the number of shares which the undersigned
would be entitled to vote if present in person in such manner as such proxies
may determine, and to vote on the following proposals as specified below by the
undersigned.
1. Election of Directors:
For _____ Against _____ For All Except _____
Nominees: David C. Blivin, Norvell E. Miller IV, Robert M. Price
Instruction: To withhold authority to vote for any individual
nominee mar "For All Except" and write that nominee's name in
the space provided:
2. To approve amendment to the Operating Agreement that includes
clarifying language regarding management fees.
For _____ Against _____ For All Except _____
3. To ratify the appointment of PricewaterhouseCoopers LLP as the
independent public accountants of the Fund for the year ending
December 31, 1998:
For _____ Against _____ For All Except _____
4. In their discretion, the proxies are authorized to vote upon
other business as may properly come before the meeting or any
adjournment thereof.
The shares represented by this appointment of proxy will be voted as
directed above. In the absence of any direction, such shares will be voted by
the proxies "FOR" proposal and each of the listed nominees for director. Please
sign exactly as your name(s) appear on this card. If shares are held by joint
tenants, both should sign. If signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, pleas sign in partnership name by authorized person.
Date: ______________, 1998
----------------------------
Shareholder sign above
-----------------------------
Co-holder (if any) sign above
