LCC class A shareholders waive cash penalties for late registration of private placement

By Devika Patel

Knoxville, Tenn., Jan. 3 - LCC International, Inc. said it amended its agreement with stockholders who participated in the company's $17.09 million private placement of class A shares, which settled in April 2007.

Under the original agreement, LCC was obligated to register the offered shares or be subject to cash penalties.

The agreement called for a cash penalty of 1% per month, up to a maximum of 10%, for each month beyond June 3, 2007 that the company failed to file a registration statement for the shares. An additional 1% cash penalty would be added each month after Aug. 20 until the registration statement took effect, with a maximum 10% penalty for each of these two time periods.

Due to the delay in filing its 2006 form10-K and 2007 quarterly form 10-Qs, the company has not been in compliance with its filing requirements and, as a result, has not been able to register the shares.

The company said it reached an agreement with the shareholders on Dec. 27 that alleviated its obligation to pay the penalties in cash, which would have amounted to a maximum of $3.4 million.

Under the new agreement, the company may exchange each share of the class A common stock (issued at $3.35 per share) for 1.125 shares of a new series of preferred stock.

These preferreds will convert back to common stock after the company's next equity offering of $10 million or more or at the end of 18 months. The conversion will be at the sale price in the equity offering or at the market price of the company's common stock if conversion is after 18 months, with a floor of $2.00 per share.

In return, the investors have agreed not to short sell or hedge LCC stock until the earlier of six months after the company has complied with its filing obligations or the settlement of an equity offering.

The prohibition on hedging will take effect when LCC informs the investors that it plans to conduct a qualified equity financing.

In addition, the investors agreed to release the company from all accrued and future penalties for its registration requirements.

LCC, based in McLean, Va., is a wireless voice and data networking services provider.

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