<PAGE> 1
(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 the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
LCC INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
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0-11.
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(3) Per unit price or other underlying value of transaction computed
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<PAGE> 2
LCC INTERNATIONAL, INC.
7925 JONES BRANCH DRIVE
MCLEAN, VA 22102
April 30, 1997
Dear Stockholder:
You are cordially invited to attend the 1997 Annual Meeting of Stockholders
of LCC International, Inc., to be held on Tuesday, May 20, 1997 at 10:00 a.m.
(eastern daylight time) at the Sheraton Premiere at Tysons Corner, 8661 Leesburg
Pike, Vienna, Virginia 22182.
At this meeting, you will be asked to vote, in person or by proxy, on the
following matters: (i) the election of the Board of Directors; (ii) the
ratification of the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors; and (iii) any other business as may properly come before
the meeting or any adjournments thereof. The official Notice of Meeting, proxy
statement and form of proxy and the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 are included with this letter. The matters
listed in the Notice of Meeting are described in detail in the proxy statement.
Regardless of your plans for attending in person, it is important that your
shares be represented and voted at the 1997 Annual Meeting. Accordingly, you are
urged to complete, sign and mail the enclosed proxy card as soon as possible.
Sincerely,
PIYUSH SODHA
President and Chief Executive Officer
<PAGE> 3
LCC INTERNATIONAL, INC.
7925 JONES BRANCH DRIVE
MCLEAN, VIRGINIA 22102
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 20, 1997
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders (the
"Annual Meeting") of LCC International, Inc. (the "Company") will be held on
Tuesday, May 20, 1997 at 10:00 a.m. (eastern daylight time) at the Sheraton
Premiere at Tysons Corner, 8661 Leesburg Pike, Vienna, Virginia 22182, to
consider and act upon the following proposals:
1. To elect the Board of Directors, which consists of five members;
2. To ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending December 31, 1997; and
3. To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on April 7, 1997 as
the record date for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting. Only holders of Class A Common Stock and Class B
Common Stock of record at the close of business on that date will be entitled to
notice of and to vote at the Annual Meeting or any adjournments thereof. A list
of the Company's stockholders entitled to vote at the Annual Meeting will be
open to the examination of any stockholder for any purpose germane to the
meeting during ordinary business hours for a period of ten (10) days before the
Annual Meeting at the Company's offices.
By Order of the Board of Directors
PIYUSH SODHA
President and Chief Executive Officer
Arlington, Virginia
April 30, 1997
<PAGE> 4
LCC INTERNATIONAL, INC.
7925 JONES BRANCH DRIVE
MCLEAN, VIRGINIA 22102
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1997
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
This Proxy Statement and the accompanying Notice of Annual Meeting and form
of Revocable Proxy are being furnished, on or about April 30, 1997, to the
stockholders of LCC International, Inc. (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company to be used at
the 1997 Annual Meeting of Stockholders of the Company (the "Annual Meeting") to
be held on Tuesday, May 20, 1997 at 10:00 a.m. (eastern daylight time) at the
Sheraton Premiere at Tysons Corner, 8661 Leesburg Pike, Vienna, Virginia 22182,
and any adjournment thereof.
The purpose of the Annual Meeting is (i) to elect the Board of Directors,
which consists of five members; (ii) to ratify the appointment of KPMG Peat
Marwick LLP as the Company's independent auditors for the fiscal year ending
December 31, 1997; and (iii) to transact such other business as may properly
come before the Annual Meeting or any adjournments thereof.
If the enclosed form of proxy is properly executed and returned to the
Company in time to be voted at the Annual Meeting, the shares represented
thereby will be voted in accordance with the instructions thereon. EXECUTED BUT
UNMARKED PROXIES WILL BE VOTED: (i) FOR THE ELECTION OF FIVE DIRECTORS TO THE
BOARD OF DIRECTORS; AND (ii) FOR THE RATIFICATION OF THE APPOINTMENT OF KPMG
PEAT MARWICK LLP AS THE COMPANY'S INDEPENDENT AUDITORS. If any other matters are
properly brought before the Annual Meeting, proxies will be voted in the
discretion of the proxy holders. The Company is not aware of any such matters
that are proposed to be presented at its Annual Meeting.
The cost of soliciting proxies in the form enclosed herewith will be borne
entirely by the Company. The Company has retained D.F. King & Co., Inc. to
solicit proxies on its behalf for a fee of approximately $3,500. In addition,
proxies may be solicited by directors, officers and regular employees of the
Company, without extra remuneration, by personal interviews, telephone,
telegraph or otherwise. The Company will request persons, firms and corporations
holding shares in their name or in the names of their nominees, which are
beneficially owned by others, to send proxy materials to and obtain proxies from
the beneficial owners and will reimburse the holders for their reasonable
expenses in doing so.
The securities which can be voted at the Annual Meeting consist of shares
of Class A Common Stock, par value $.01 per share, ("Class A Common Stock") and
Class B Common Stock, par value $.01 per share, ("Class B Common Stock" and
together with the Class A Common Stock, the "Common Stock") of the Company. Each
outstanding share of Class A Common Stock entitles its owner to one vote on each
matter as to which a vote is taken at the Annual Meeting. Each outstanding share
of Class B Common Stock entitles its owner to ten votes on each matter as to
which a vote is taken at the Annual Meeting. The close of business on April 7,
1997 has been fixed by the Board of Directors as the record date (the "Record
Date") for determination of stockholders entitled to vote at the Annual Meeting.
The number of shares of Class A Common Stock and Class B Common Stock
outstanding and entitled to vote on the Record Date was 6,082,405 and 8,460,984,
respectively. The presence, in person or by proxy, of shares of Common Stock
issued and outstanding and constituting at least a majority of the votes
entitled to vote on the Record Date is necessary to constitute a quorum at the
Annual Meeting. Stockholders' votes will be tabulated by the Company's Secretary
and Corporate Controller, who have been appointed by the Board of Directors to
act as inspectors of election for the Annual Meeting. Under Delaware corporate
law and the Company's Amended and Restated Bylaws (the "Bylaws"), directors are
elected by a plurality of votes cast by the shares present (in person or by
proxy) and entitled to vote. Unless otherwise required by law or the Company's
Restated Certificate of Incorporation or Bylaws, any other matter put to a
stockholder vote will be decided by the
<PAGE> 5
affirmative vote of a majority of the votes cast on the matter. Abstentions and
broker non-votes are not included as votes cast and accordingly will be excluded
from the total number of votes upon which a majority is based. Thus, votes to
abstain and broker non-votes will have no effect on the vote tabulation for such
proposals.
The presence of a stockholder at the Annual Meeting will not automatically
revoke the stockholder's proxy. However, a stockholder may revoke a proxy at any
time prior to its exercise by filing with the Secretary of the Company a written
notice of revocation, by delivering to the Company a duly executed proxy bearing
a later date or by attending the Annual Meeting and voting in person.
------------------------
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
APPROVAL OF THE PROPOSALS SET FORTH IN THIS PROXY STATEMENT.
------------------------
CERTAIN BACKGROUND INFORMATION REGARDING THE COMPANY
The Company's business commenced in 1983 in a corporation named LCC
Incorporated (presently named Cherrywood Holdings, Inc. ("Cherrywood")), a
Kansas corporation organized in 1983 and wholly owned by Dr. Rajendra and Neera
Singh and certain Singh family trusts. In 1994 Cherrywood transferred the
business to Telcom Ventures, L.L.C. ("Telcom Ventures"), a Delaware limited
liability company, for a 75% interest in Telcom Ventures. At the same time,
certain entities formed by The Carlyle Group, a Washington, D.C.-based
investment group (the "Carlyle Investors"), acquired a 25% interest in Telcom
Ventures in consideration of a cash contribution. Telcom Ventures then formed
LCC, L.L.C. (the "Limited Liability Company"), a Delaware limited liability
company, and transferred the business to the Limited Liability Company in
exchange for a 99% interest in the Limited Liability Company. Cherrywood and TC
Group, L.L.C., an affiliate of the Carlyle Investors ("TC Group"), received
direct interests of 0.75% and 0.25%, respectively, in the Limited Liability
Company. LCC International, Inc. was formed in June 1996 for the purpose of
effecting an initial public offering of equity interests in the Limited
Liability Company which was accomplished by the merger of the Limited Liability
Company with and into LCC International, Inc. (the "Merger") in connection with
the initial public offering of LCC International, Inc.'s Class A Common Stock
(the "Offering"). Prior to the Merger, Telcom Ventures transferred its interest
in the Limited Liability Company to RF Investors, L.L.C. ("RF Investors"), a
Delaware limited liability company of which Telcom Ventures owns 99% and
Cherrywood and TC Group own .75% and .25%, respectively. Since the Offering,
Cherrywood and TC Group have transferred to RF Investors the shares of the
Company which they received as a result of the Merger.
Unless the context indicates or requires otherwise, references in this
Proxy Statement to the "Company" are to its predecessor entities prior to the
Merger and to LCC International, Inc. after the Merger.
2
<PAGE> 6
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of April 22, 1997 by (i) each
director (and director nominee), (ii) the Chief Executive Officer and each of
the other four most highly compensated executive officers whose total annual
salary and bonus exceeded $100,000 during the year ended December 31, 1996 (the
"Named Executive Officers"), (iii) all persons known to the Company to be
beneficial owners of more than 5% of its outstanding Class A or Class B Common
Stock and (iv) all directors and executive officers as a group. This information
is based upon the most recent filing made by such persons with the Securities
and Exchange Commission (the "Commission") or information provided to the
Company by such persons. Under the rules of the Commission, a person is deemed a
"beneficial owner" of a security if such person has or shares the power to vote
or direct the voting of such security or the power to dispose or direct the
disposition of such security. A person is also deemed to be a beneficial owner
of any securities of which that person has the right to acquire beneficial
ownership within 60 days. More than one person may be deemed to be a beneficial
owner of the same securities.
<TABLE>
<CAPTION>
NUMBER OF SHARES
-------------------------------- PERCENT OF
NUMBER OF NUMBER OF COMMON STOCK
NAME, ADDRESS AND TITLE(1) CLASS A SHARES CLASS B SHARES OUTSTANDING(15)
- ---------------------------------------------------- -------------- -------------- ---------------
<S> <C> <C> <C>
RF Investors, L.L.C.(2)(3).......................... 28,411 8,460,984 58.4%
c/o Telcom Ventures, L.L.C.
211 North Union Street
Alexandria, Virginia 22314
Telcom Ventures, L.L.C.(2)(3)(4).................... 28,411 8,460,984 58.4%
211 North Union Street
Alexandria, Virginia 22314
Cherrywood Holdings, Inc.(2)(3)(4).................. 28,411 8,460,984 58.4%
c/o Telcom Ventures, L.L.C.
211 North Union Street
Alexandria, Virginia 22314
MCI Telecommunications Corporation(5)(6)............ 2,841,099 -- 16.4%
1801 Pennsylvania Ave., N.W.
Washington, DC 20006
Standish, Ayer & Wood, Inc.(7)...................... 328,100 -- 2.3%
One Financial Center
Boston, MA 02111
Rajendra Singh, Chairperson of the Board of 68,411 8,575,984 59.0%
Directors(2)(3)(4)(8).............................
c/o Telcom Ventures, L.L.C.
211 North Union Street
Alexandria, Virginia 22314
Neera Singh, Director(2)(3)(4)(8)................... 68,411 8,575,984 59.0%
c/o Telcom Ventures, L.L.C.
211 North Union Street
Alexandria, Virginia 22314
Mark D. Ein, Director(9)............................ 11,000 -- *
c/o The Carlyle Group
1001 Pennsylvania Ave., NW
Washington, DC 20004
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
NUMBER OF SHARES
-------------------------------- PERCENT OF
NUMBER OF NUMBER OF COMMON STOCK
NAME, ADDRESS AND TITLE(1) CLASS A SHARES CLASS B SHARES OUTSTANDING(15)
- ---------------------------------------------------- -------------- -------------- ---------------
<S> <C> <C> <C>
Arno A. Penzias, Director........................... -- -- --
c/o Lucent Technologies/Bell Labs
700 Mountain Ave.
Murray Hill, NJ 07974-0636
Piyush Sodha, Director, President and Chief 322,990 -- 2.1%
Executive Officer(10).............................
c/o LCC International, Inc.
7925 Jones Branch Drive
McLean, Virginia 22102
Richard Hozik, Senior Vice President, Chief 18,600 -- 0.1%
Financial Officer and Treasurer(11)...............
c/o LCC International, Inc.
7925 Jones Branch Drive
McLean, Virginia 22102
Donald R. Rose, Senior Vice President, 605,724 -- 4.0%
Software(11)......................................
c/o LCC International, Inc.
7925 Jones Branch Drive
McLean, Virginia 22102
Gerard L. Vincent, Senior Vice President, 15,900 -- 0.1%
Engineering(12)...................................
c/o LCC International, Inc.
7925 Jones Branch Drive
McLean, Virginia 22102
Frank F. Navarette, Vice President, Sales and 16,100 -- 0.1%
Marketing(13).....................................
c/o LCC International, Inc.
7925 Jones Branch Drive
McLean, Virginia 22102
All Directors, and Executive Officers as a Group (12 1,144,775 8,575,984 61.9%
persons)(14)......................................
</TABLE>
- ---------------
* Less than 0.1%.
(1) Unless otherwise noted, the Company believes that each of the stockholders
has sole voting and dispositive power with respect to the shares of Common
Stock owned by it, him or her.
(2) Includes the 85,233 shares of Class B Common Stock received by Cherrywood
and the 28,411 shares of Class A Common Stock received by TC Group as a
result of the Merger. These shares were transferred to RF Investors in
April 1997. Cherrywood and TC Group hold .75% and .25%, respectively, of
the outstanding equity interests of RF Investors.
(3) Represents all outstanding shares of the Class B Common Stock.
(4) Telcom Ventures is owned 75% by Cherrywood and 25% by certain entities
formed by the Carlyle Investors. Cherrywood is owned by Dr. Rajendra Singh,
Neera Singh and certain Single family trusts. Dr. Rajendra Singh and Neera
Singh are the sole directors and executive officers of Cherrywood.
(5) Consists entirely of shares which may be acquired within 60 days upon
exchange of the Company's outstanding indebtedness to MCI
Telecommunications ("MCI"). See "Certain Relationships and Related
Transactions -- The Exchangeable Notes."
(6) Represents 31.9% of the outstanding shares of the Class A Common stock
exclusive of shares purchased by employees of the Company on or about March
31, 1997 pursuant to the Company's Stock Purchase Plan, estimated to be
approximately 16,500 shares.
4
<PAGE> 8
(7) Represents 5.4% of the outstanding shares of the Class A Common stock
exclusive of shares purchased by employees of the Company on or about March
31, 1997 pursuant to the Company's Stock Purchase Plan, estimated to be
approximately 16,500 shares.
(8) Includes 115,000 shares which may be acquired within 60 days pursuant to
options granted, or to be granted, to Dr. Rajendra Singh and Neera Singh
pursuant to the Company's directors' stock option plan.
(9) Includes 10,000 shares which may be acquired within 60 days pursuant to
options granted under the Company's directors' stock option plan. Mr. Ein
is a Principal of The Carlyle Group, an affiliate of the Carlyle Investors.
Mr. Ein disclaims beneficial ownership of the shares of Common Stock owned
indirectly by the Carlyle Investors through their 25% ownership of Telcom
Ventures and any shares of stock issuable upon the exercise of stock
options granted to TC Group in connection with the Offering.
(10) Includes 319,790 shares which may be acquired within 60 days pursuant to
stock options granted under the Company's employee stock option plan.
(11) Consists entirely of shares which may be acquired within 60 days pursuant
to stock options granted under the Company's employee stock option plan.
(12) Includes 15,500 shares which may be acquired within 60 days pursuant to
stock options granted under the Company's employee stock option plan.
(13) Includes 15,500 shares which may be acquired within 60 days pursuant to
stock options granted under the Company's employee stock option plan, and
200 shares held by this executive's son.
(14) Includes the shares held by RF Investors and shares which may be acquired
within 60 days pursuant to options granted pursuant to the Company's
employee and directors' stock option plans.
(15) For purposes of this calculation, the shares of the Class A Common Stock
purchased by employees of the Company on or about March 31, 1997 pursuant
to the Company's Employee Stock Purchase Plan, estimated to be
approximately 16,500 shares, are not included.
5
<PAGE> 9
MATTERS TO BE ACTED ON
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Board of Directors consists of five members. At the Annual Meeting,
five directors will be elected, each to serve until the next Annual Meeting of
Stockholders and until his or her successor is elected and qualified or until
such director's earlier death, resignation or removal.
Unless otherwise instructed on the proxy, the persons named in the proxy to
vote the shares represented by each properly executed proxy shall vote for the
election as directors the persons named below as nominees. Directors will be
elected by a plurality vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ITS NOMINEES FOR
DIRECTORS.
INFORMATION AS TO NOMINEES
Set forth below is certain information with respect to the nominees of the
Board of Directors for election as directors at the Annual Meeting.
<TABLE>
<CAPTION>
NAME AGE POSITION
------------------------------------ --- ------------------------------------------------
<S> <C> <C>
Dr. Rajendra Singh.................. 42 Chairperson of the Board of Directors
Neera Singh......................... 38 Director
Piyush Sodha........................ 38 President, Chief Executive Officer and Director
Mark D. Ein......................... 32 Director
Arno A. Penzias..................... 64 Director
</TABLE>
Dr. Rajendra Singh. Dr. Rajendra Singh is the Chairperson of the Board of
the Directors and member of the Compensation Committee and co-founder of the
Company. Dr. Singh was President of the Company from its formation in 1983 until
September 1994, and was Chief Executive Officer from January 1994 until January
1995, and Treasurer from January 1994 until January 1996. Dr. Singh is also
Chairman of the Members Committee of Telcom Ventures L.L.C. and of RF Investors,
L.L.C. Dr. Singh is married to Neera Singh, a Director and, until September
1996, an executive officer, of the Company. Dr. Singh is also a principal owner
of Cherrywood Holdings, Inc.
Neera Singh. Neera Singh is a co-founder of the Company and has been a
Director of the Company since its inception. Ms. Singh has served as Vice
President of the Company from its formation in 1983 to October 1991 and
Executive Vice President from January 1994 until September 1996. Ms. Singh also
has served as Co-Chairperson of the Company from January 1995 until September
1996. Ms. Singh is a member of the Audit Committee. Ms. Singh is a member of the
Members Committee of Telcom Ventures, L.L.C. and RF Investors, L.L.C. Ms. Singh
is married to Dr. Rajendra Singh, a Director and former executive officer of the
Company. Ms. Singh is also a principal owner of Cherrywood Holdings, Inc.
Piyush Sodha. Piyush Sodha has been Chief Executive Officer of the Company
since January 1995 and has been President of the Company since September 1994.
From October 1990 through September 1994 he was Chief Operating Officer of the
Company. Mr. Sodha has been a Director since January 1994. Prior to joining the
Company, Mr. Sodha was Director, Product Line Management in the cellular systems
division of Northern Telecom Ltd. from 1987 to 1990. From 1985 to 1987 he was a
consultant in the telecommunications practice at Booz-Allen & Hamilton Inc., and
prior thereto he was Senior Associate Engineer at International Business
Machines Corporation.
Mark D. Ein. Mark D. Ein has served as a Director of the Company since
January 1994. He is a member of the Audit and Compensation Committees and the
Chairperson of the Audit Committee. Mr. Ein is a Principal of The Carlyle Group,
a private investment firm and an affiliate of the Carlyle Investors. Mr. Ein is
currently a director of Telcom Ventures, L.L.C., RF Investors, L.L.C., American
Tower Corporation, Inc.
6
<PAGE> 10
and various private companies. Mr. Ein worked for Brentwood Associates, a
private equity investment firm, from 1989 to 1990, and for Goldman, Sachs & Co.
from 1986 to 1989.
Arno A. Penzias. Arno A. Penzias has been a Director of the Company since
July 1996. He is a member of the Audit and Compensation Committees and the
Chairperson of the Compensation Committee. Dr. Penzias currently is Vice
President and Chief Scientist of Lucent Technologies, Bell Labs Innovations.
From 1995 until 1996, Dr. Penzias was Vice President and Chief Scientist of AT&T
Bell Laboratories. From 1981 through 1995, he was Vice President, Research of
AT&T Bell Laboratories. As a scientist, Dr. Penzias is best known for his
contributions to astrophysics, which earned him the Nobel Prize for Physics in
1978. Dr. Penzias also is currently a member of the Boards of Directors of
WarpSpeed Communications, Inc., a communications service company, and Arthur D.
Little, Inc., a consulting company.
CORPORATE GOVERNANCE AND OTHER MATTERS
The Board of Directors acts as a nominating committee for selecting
nominees for election as directors. The Company's Bylaws also permit
stockholders eligible to vote at the Annual Meeting to make nominations for
directors if such nominations are made pursuant to timely notice in writing to
the Secretary of the Company and include certain information specified in
Section 3.4 of the Company's Bylaws concerning each person the stockholder
proposes to nominate for election and the nominating stockholder. The Bylaws
also permit stockholders to propose other business to be brought before an
annual meeting, provided that such proposals are made pursuant to timely notice
in writing to the Secretary of the Company. To be timely for the Annual Meeting,
notice must have been delivered to, or mailed to and received at, the principal
executive offices of the Company no later than February 20, 1997. No such
nominations or proposals have been received in connection with the Annual
Meeting.
The Board of Directors has established an Audit Committee and a
Compensation and Stock Option Committee (the "Compensation Committee"). The
Audit Committee is comprised of Messrs. Ein and Penzias and Ms. Singh; Mr. Ein
is Chairperson of the Committee. The Audit Committee examines and considers
matters relating to the financial affairs of the Company, including reviewing
the Company's annual financial statements, the scope of the independent annual
audit and internal audits and the independent auditors' letter to management
concerning the effectiveness of the Company's internal financial and accounting
controls. The Audit Committee did not meet during the year ended December 31,
1996 but did meet in January and April 1997.
The Compensation Committee is comprised of Messrs. Ein, Penzias and Singh;
Mr. Penzias is Chairperson of the Committee. The Compensation Committee
considers and makes recommendations to the Board of Directors with respect to
programs for human resource development and management organization and
succession, approves changes in senior executive compensation, considers and
makes recommendations to the Board of Directors with respect to general
compensation matters and policies and employee benefit and incentive plans and
administers the Company's stock option plans and ERISA plans, grants stock
options under such stock option plans and exercises all other authority granted
to it to administer such stock option and ERISA plans. The Compensation
Committee met once during the year ended December 31, 1996 and it took action by
unanimous written consent (i) to grant options pursuant to the Directors Plan
and the Employee Plan (as such terms are defined below) in connection with the
Offering and (ii) with respect to the implementation of the Employee Plan and
the Company's Employee Stock Purchase Plan. The Compensation Committee also met
in January and April 1997.
During the year ended December 31, 1996, the Board of Directors held nine
meetings. No incumbent director attended fewer than 75% of the total number of
meetings of the Board of Directors and committees of the Board of Directors on
which he or she served during the period on which he or she served, except for
Mr. Penzias.
COMPENSATION OF DIRECTORS
The Company has entered into an agreement with one of its directors, Arno
A. Penzias, pursuant to which the Company has agreed to compensate Mr. Penzias
for his services as a director as follows: (i) an
7
<PAGE> 11
annual fee of $20,000, (ii) a fee of $1,000 for each meeting of the Board of
Directors he attends, (iii) an annual fee of $2,000 for each Committee on which
he serves (he presently serves on the Audit and Compensation Committees), and
(iv) an annual fee of $3,000 for any committee which he chairs. The Company paid
Mr. Penzias a total of $8,500 pursuant to this agreement during the year ended
December 31, 1996. In addition, in connection with the Offering, the Company
granted Mr. Penzias an option, pursuant to the Directors Plan, to purchase
10,000 shares of Class A Common Stock.
Other than options granted to them pursuant to the Directors Plan in
connection with the Offering described below, none of the other directors
received compensation from the Company in 1996 in connection with their service
as directors.
1996 DIRECTORS STOCK OPTION PLAN
The Company has adopted the LCC International, Inc. 1996 Directors Stock
Option Plan (the "Directors Plan"). The Directors Plan provides for the
"formula" grant of options and authorizes the issuance of up to 60,000 shares of
Class A Common Stock and 250,000 shares of Class B Common Stock. The option
exercise price for options granted under the Directors Plan is 100% of the fair
market value of the underlying shares on the date of the grant of the options.
Under the Directors Plan, each director of the Company who is not eligible to
hold shares of Class B Common Stock is granted an initial option to purchase
10,000 shares of Class A Common Stock in connection with the Offering or on
later commencement of service and may thereafter be granted additional options
to purchase shares of Class A Common Stock upon authorization thereof by the
Board of Directors. Each Eligible Director who is eligible to hold shares of
Class B Common Stock is granted an initial option to purchase 35,000 shares of
Class B Common Stock in connection with the Offering or on later commencement of
service, and an additional option to purchase 22,500 shares of Class B Common
Stock as of each of the next four annual meetings of the stockholders of the
Company if the Eligible Director continues to be an Eligible Director. Based on
the foregoing, in connection with the Offering, each of Messrs. Ein and Penzias
was granted an option to purchase 10,000 shares of Class A Common Stock and each
of Dr. Singh and Ms. Singh was granted an option to purchase 35,000 shares of
Class B Common Stock.
MANAGEMENT
The executive officers of the Company, and their respective ages as of
April 17, 1997, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
-------------------------------------- --- --------------------------------------
<S> <C> <C>
Piyush Sodha.......................... 38 President and Chief Executive Officer
J. Michael Bonin...................... 40 Senior Vice President, Hardware
Richard Hozik......................... 46 Senior Vice President, Chief Financial
Officer and Treasurer
Donald R. Rose........................ 41 Senior Vice President, Software
Gerard L. Vincent..................... 42 Senior Vice President, Engineering
Peter A. Deliso....................... 36 Vice President, Corporate Affairs,
General Counsel and Secretary
Frank F. Navarette.................... 54 Vice President, Sales and Marketing
Louis R. Olsen........................ 39 Vice President, Program Management
</TABLE>
PIYUSH SODHA. See "Information as to Nominees" above.
J. MICHAEL BONIN. J. Michael Bonin has been Senior Vice President,
Hardware Products, of the Company since January 1997. From July 1993 until
January 1997 he was Vice President, Hardware Products, of the Company. From 1989
until 1993 he was Director of Hardware Products of the Company. Prior to joining
the Company in 1989, Mr. Bonin was Vice President and General Manager of T-Line
Services, Inc., a digital microwave communications firm in San Francisco,
California. Prior thereto, from 1985 to 1987,
8
<PAGE> 12
Mr. Bonin was principal and founder of a start-up manufacturing division for an
international optical laser company in Irvine, California.
RICHARD HOZIK. Richard Hozik has been Senior Vice President and Chief
Financial Officer of the Company since November 1995 and Treasurer since January
1996. From October 1992 to October 1995, Mr. Hozik was employed by the J.E.
Robert Companies, a privately held real estate investment and management
company, where he held the position of Senior Vice President and Chief Financial
Officer. From April 1992 to September 1992, Mr. Hozik was the Managing Partner
of Hozik & Associates, a management consulting firm. From March 1982 to March
1992, Mr. Hozik was with GRC International, Inc. (formerly Flow General Inc.)
("GRC"), a publicly traded international technology-based products and services
company, where he served as Vice President, Treasurer and Chief Financial
Officer of GRC and President and Chief Executive Officer of its Biomedical
Group. From 1973 to 1982, Mr. Hozik was with the international public accounting
firm of Arthur Andersen LLP.
DONALD R. ROSE. Donald R. Rose has been the Senior Vice President,
Software of the Company since August 1996. From October 1990 until August 1996,
Mr. Rose was Senior Vice President, Engineering of the Company, and from 1987
until October 1990, he was Vice President, Engineering of the Company. Before
joining the Company, Mr. Rose was Senior Project Engineer of Los Angeles
Cellular Telephone Co. and a Senior Engineer of Moffet, Larson & Johnson, P.C.,
a telecommunications consulting firm.
GERARD L. VINCENT. Gerard L. Vincent has been Senior Vice President,
Engineering of the Company since August 1996. From January 1995 to August 1996,
Mr. Vincent was Vice President, Engineering of the Company, and from December
1993 to January 1995, he was Director of Engineering of the Company. Prior to
joining the Company, Mr. Vincent was Director, Department of Cellular
Engineering of France Telecom, from December 1989 to December 1993.
PETER A. DELISO. Peter A. Deliso has been the Company's General Counsel
since June 1994 and Vice President, Corporate Affairs, and Secretary since
January 1996. From late 1989 until January 1994, Mr. Deliso served as Corporate
Counsel for Mobile Telecommunication Technologies Corp. ("Mtel") and its various
domestic and international subsidiaries. Prior to his employment with Mtel, Mr.
Deliso was with the law firm of Garvey, Schubert & Barer specializing in
international, corporate and securities law.
FRANK F. NAVARRETTE. Frank F. Navarrette has been Vice President, Sales
and Marketing, of the Company since October 1994 and was Director, Business
Development of Telcom Ventures from April 1994 to October 1994. From 1992 to
1994, he was Vice President Mexico-Central America for Motorola. From 1988 to
1992, he was Director Domestic Infrastructure Support-Motorola. From 1986 to
1988, he was OPS Manager for the North-East Corridor-Motorola. Mr. Navarrette
was Manager Program Management North-East Corridor-Motorola.
LOUIS R. OLSEN. Louis R. Olsen has been the Vice President, Program
Management of the Company since February 1997. From April 1996 to February 1997,
Mr. Olsen was Vice President, Strategic Initiatives for the Company. From
November 1995 to April 1996, Mr. Olsen was Assistant Vice President, Engineering
for Sprint Spectrum. From April, 1995 to November 1995, Mr. Olsen was Vice
President, Engineering of the Company, and from July 1993 to April, 1995 was the
Director of Engineering for the Company. From January 1991 to July 1993, he was
Manager of Engineering for the Company. Prior to joining the Company in 1989 Mr.
Olsen held various positions in the wireless and satellite industries starting
in 1978, including Chief Engineer, ATS Mobile Telephone.
9
<PAGE> 13
EXECUTIVE COMPENSATION
The following table sets forth certain summary information concerning the
compensation paid to the Named Executive Officers for the year ended December
31, 1996.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION(1) ------------
----------------------- COMMON STOCK ALL OTHER
NAME AND PRINCIPAL POSITION SALARY($) BONUS($)(2) OPTIONS(3) COMPENSATION(4)
- ------------------------------------------ -------- ----------- ------------ ---------------
<S> <C> <C> <C> <C>
Piyush Sodha, President and Chief
Executive Officer....................... $241,000 $309,000 535,362 --
Richard Hozik, Senior Vice President,
Chief Financial Officer and Treasurer... $174,000 $121,000 93,000 $2,000
Donald R. Rose, Senior Vice President,
Software................................ $166,000 $771,000 757,155 $5,000
Gerard L. Vincent, Senior Vice President,
Engineering............................. $175,000 $ 34,000 100,000 $4,000
Frank F. Navarette, Vice President, Sales
and Marketing........................... $157,000 $ 40,000 77,500 $3,000
</TABLE>
- ---------------
(1) All amounts are rounded to the nearest $1,000. The amount of perquisites and
other personal benefits, securities or other property has been omitted
because the applicable amount of such compensation is less than $50,000 or
10% of the total annual salary and bonus reported for each Named Executive
Officer.
(2) Includes distributions in 1996 prior to the Offering under the Limited
Liability Company's Phantom Membership Plan of approximately $309,000 to Mr.
Sodha, $51,000 to Mr. Hozik, $771,000 to Mr. Rose and $5,000 to Mr.
Navarette. Rights under this plan were converted into options in connection
with the Offering and no further distributions will be made thereunder.
(3) See the Table entitled "Option Grants in Last Fiscal Year" below.
(4) Includes payments by the Company for life insurance (in all cases less than
$500 per individual) and contributions to the Company's 401(k) Plan.
10
<PAGE> 14
\
Option Grants. The following table contains information with respect to
grants of stock options for Class A Common Stock to each of the Named Executive
Officers during the year ended December 31, 1996. All such grants are made under
the LCC International, Inc. 1996 Employee Stock Option Plan (the "Employee
Plan"). There are 3,224,000 shares of Class A Common Stock reserved for issuance
under the Employee Plan. In September 1996, the Compensation Committee granted
non-incentive options to purchase a total of approximately 2,735,000 shares of
Class A Common Stock to 272 employees of the Company and its affiliates,
including to the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------------------------------------------------------------
% OF TOTAL
CLASS A
COMMON STOCK POTENTIAL REALIZED VALUE AT
NUMBER OF UNDERLYING ASSUMED ANNUAL RATE OF
SHARES OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO MARKET EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE ON PRICE EXPIRATION ----------------------------------------
NAME GRANTED FISCAL YEAR GRANT DATE ($/SH) DATE 0% 5% 10%
- ---------------- ---------- ------------ ---------- -------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Piyush Sodha.... 302,862(1) 11.1% $16.00 $ 4.00 9/24/2006 $3,634,344 $ 6,681,136 $11,357,320
77,500(2) 2.8% $16.00 $ 9.16 9/24/2006 $ 530,000 $ 1,309,750 $ 2,506,350
77,500(3) 2.8% $16.00 $10.84 9/24/2006 $ 399,900 $ 1,179,550 $ 2,376,150
77,500(4) 2.8% $16.00 $12.00 9/24/2006 $ 310,000 $ 1,088,650 $ 2,286,250
Richard Hozik... 93,000(5) 3.4% $16.00 $ 4.00 9/24/2006 $1,116,000 $ 2,051,580 $ 3,487,500
Donald R. Rose.. 757,155(1) 27.7% $16.00 $ 4.00 9/24/2006 $9,085,860 $16,702,839 $28,393,312
Gerard L. Vincent 77,500(6) 2.8% $16.00 $ 9.70 9/24/2006 $ 488,250 $ 1,267,900 $ 2,464,500
22,500(7) .8% $16.00 $16.00 9/24/2006 $ 0 $ 226,350 $ 573,750
Frank F. Navarrete 77,500(6) 2.8% $16.00 $16.00 9/24/2006 $ 488,250 $ 1,267,900 $ 2,464,500
</TABLE>
- ---------------
(1) The option was granted in connection with the Offering and in conjunction
with the conversion of outstanding interests under the Limited Liability
Company's Phantom Membership Plan, which interests were granted in 1994, and
is vested presently as to 80% of the shares and vests as to the remaining
20% on 12/15/97.
(2) The option was granted in connection with the Offering in conjunction with
the conversion of outstanding interests under the Limited Liability
Company's Employee Option Plan, which interests were granted in March 1996,
and is vested presently as to 100% of the shares.
(3) The option was granted in connection with the Offering in conjunction with
the conversion of outstanding interests under the Limited Liability
Company's Employee Option Plan, which interests were granted in March 1996,
and vests as to 100% of the shares on 1/1/98.
(4) The option was granted in connection with the Offering in conjunction with
the conversion of outstanding interests under the Limited Liability
Company's Employee Option Plan, which interests were granted in March 1996,
and vests as to 100% of the shares on 1/1/99.
(5) The option was granted in connection with the Offering and in conjunction
with the conversion of outstanding interests under the Limited Liability
Company's Phantom Membership Plan, which interests were granted in 1995 and
is vested presently as to 20% of the shares and vests as to an additional
20% of the shares on each of January 1, 1998, January 1, 1999, January 1,
2000 and January 1, 2001.
(6) The option was granted in connection with the Offering in conjunction with
the conversion of outstanding interests under the Limited Liability
Company's Employee Option Plan, which interests were granted in March 1996,
and is vested presently as to 20% of the shares and vests as to an
additional 20% of the shares on each of March 1, 1998, March 1, 1999, March
1, 2000 and March 1, 2001.
(7) The option was granted in connection with the Offering and vests as to
33 1/3% of the shares on each of September 24, 1997, September 24, 1998 and
September 24, 1999.
11
<PAGE> 15
Option Exercises and Year-end Values. The following table provides
information regarding the value of all unexercised options held at December 31,
1996 by the Named Executive Officers. No Named Executive Officer exercised any
stock options during the fiscal year.
<TABLE>
<CAPTION>
NUMBER OF
SHARES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1996 DECEMBER 31, 1996(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Piyush Sodha.................................. 242,290 293,072 $3,513,205 $2,699,544
Richard Hozik................................. 0 93,000 $ 0 $1,348,500
Donald R. Rose................................ 605,724 151,431 $8,728,998 $2,195,750
Gerard L. Vincent............................. 0 77,500 $ 0 $ 738,250
Frank F. Navarette............................ 0 77,500 $ 0 $ 682,000
</TABLE>
- ---------------
(1) Based on a per share price of $18.50 on December 31, 1996.
EMPLOYMENT AGREEMENTS
None of the Named Executive Officers has an employment agreement with the
Company other than an agreement which is terminable at will.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The 1996 compensation programs described in this Proxy Statement were
established by the Members Committee of the Limited Liability Company and were
based on (i) published reports of independent consulting firms regarding the
base compensation, cash bonus and options paid or granted to executives with
comparable titles and responsibilities to the Company's executive officers by
companies in the wireless telecommunications industry whose revenues and
earnings are comparable to those of the Company and (ii) an analysis of the
value of options granted performed by an independent consulting firm engaged by
the Company. The option grants listed in the Summary Compensation Table above
reflect grants made at the time of the Offering, primarily in conjunction with
the conversion of the outstanding interests of the Named Executive Officers in
the Limited Liability Company's Phantom Membership and Employee Option Plans,
which interests were granted in 1994 and 1995 and March 1996, respectively. In
1996 Mr. Sodha participated in the same executive compensation plans available
to the Company's other executive officers and had a base salary of $241,000.
Starting in January 1997 the Compensation Committee has commenced a review
of the compensation programs and levels of compensation of the Company's
executive officers, and intends to adopt, during the coming months, policies
regarding compensation of such executives comparable to practices of companies
in the wireless telecommunications industry.
Respectfully submitted,
COMPENSATION AND STOCK OPTION COMMITTEE
Mark D. Ein
Arno A. Penzias
Rajendra Singh
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Dr. Rajendra Singh, Chairperson of the Board of Directors and a member of
the Compensation Committee, is Chairman of the Members Committees of Telcom
Ventures and RF Investors. As of April 22, 1997, RF Investors owned
approximately 58.4% of the outstanding Common Stock, Telcom Ventures owned
12
<PAGE> 16
99% of the outstanding interests in RF Investors and Dr. Singh and members of
his family and certain family trusts beneficially owned 75% of the outstanding
interests in Telcom Ventures.
Corporate Opportunity
Concurrently with the Offering, the Company and Telcom Ventures, RF
Investors, Cherrywood, Dr. Rajendra Singh, Neera Singh, certain Singh family
trusts (the five immediately foregoing persons and entities being collectively
referred to as the "Singh Family Group") and the Carlyle Investors (all of the
foregoing, together with their respective successors or members of their
immediate family, the "Telcom Ventures Group") entered into an Intercompany
Agreement. Under the Intercompany Agreement, Telcom Ventures, RF Investors,
Cherrywood and the Singh Family Group have agreed that, until the earlier of (i)
the date on which the Telcom Ventures Group no longer possesses voting control
of the Company or (ii) the occurrence of certain termination events specified in
the 1993 Formation Agreement among the members of the Telcom Ventures Group (the
"Formation Agreement"), none of them will, directly or indirectly, participate
or engage, other than through the Company, in any of the Company's traditional
business activities, defined as (i) the provision of cellular radio frequency
engineering and network design services to the wireless telecommunications
industry, (ii) the provision of program management services or deployment or
construction related consulting services to the wireless telecommunications
industry and (iii) the manufacture, sale, license, distribution or servicing of
any radio network planning software tools or drive test field measurement and
analysis equipment which are used by the Company in connection with the Company
services described in the foregoing clauses (i) or (ii). The foregoing
prohibition does not apply to services provided to third parties in which any
member of the Telcom Ventures Group holds or is considering the acquisition of
an investment where the provision of services is incidental to such member's
investment or to the ownership by any member of the Telcom Ventures Group of up
to 5% of the outstanding securities of any entity as long as no member of the
Telcom Ventures Group participates in the management of such entity. Under the
Intercompany Agreement, each of the Carlyle Investors (but not its affiliates)
has also agreed not to invest in any entity whose primary business is to compete
with the Company in its traditional business activities (excluding program
management) until the earlier of (i) the date on which such Carlyle Investor no
longer owns directly or indirectly, an interest in the Company or (ii) the
occurrence of certain termination events specified in the Formation Agreement.
In consideration of the foregoing agreements of the Telcom Ventures Group,
the Company has agreed that, if any opportunity to invest in or acquire a third
party the value of which could reasonably be deemed to exceed $1 million (an
"Investment Opportunity") is presented to the Company that it wishes to refer to
a third party, the Company must give written notice to Telcom Ventures of such
Investment Opportunity. Telcom Ventures has five business days following its
receipt of the notice to inform the Company of its desire to pursue the
Investment Opportunity. If Telcom Ventures does not wish to pursue the
Investment Opportunity, or fails to provide timely notice to the Company of its
interest, the Company may refer the Investment Opportunity to any third party.
Advances To and From Telcom Ventures and Related Parties
Since January 1, 1995, the Limited Liability Company made loans totaling
$15.3 million to Telcom Ventures at a variable interest rate of prime plus 3.0%,
escalating at 0.25% increments at various intervals over the term of the debt.
Prior to the Offering, a total of $16.95 million, representing the amount of
such advances, along with accrued interest thereon, was dividended to Telcom
Ventures and used to repay the loans.
Immediately following the Offering, the Company made a loan of $3.5 million
to Telcom Ventures from proceeds of the Offering to assist Telcom Ventures in
paying certain taxes due in connection with the MCI Note Assumption (as defined
below). The loan is repayable over five years, with equal annual principal
payments over the term of the loan. Interest accrues at the rate of LIBOR plus
1.75% and is payable annually. The loan constitutes senior indebtedness of
Telcom Ventures. Upon the sale by Telcom Ventures or any of its affiliates
(defined as each entity controlling, controlled by or under common control with,
Telcom Ventures, each natural person that controls Telcom Ventures and each
member of Telcom Ventures as of the date of the
13
<PAGE> 17
loan) of shares of Common Stock resulting in Telcom Ventures and such
affiliates, in the aggregate, owning less than 25% of the outstanding Common
Stock, the Company may declare the loan to be due and payable.
During 1995, the Company converted outstanding receivables in the amount of
$1.4 million owed by Corporacion Mobilcom S.A. de C.V. (d/b/a Tricom), a company
in which Dr. Rajendra Singh and members of his family holds an 15.0% indirect
interest and of which the Carlyle Investors own through Telcom Ventures
approximately 4.5%, into promissory notes. The notes bear interest at
approximately 16.5% per annum, payable monthly. The principal amount and all
accrued interest, a total of $1.6 million, was paid in September 1996.
Registration Rights
Concurrently with the Offering, the Company, RF Investors and MCI entered
into a Registration Rights Agreement relating to the Class A Common Stock
issuable upon conversion of Class B Common Stock or upon conversion of the
outstanding indebtedness of the Company to MCI. Under the Registration Rights
Agreement, RF Investors and MCI have certain "demand" rights to require the
Company to register their Common Stock for sale and may register shares on a
"piggyback" basis in connection with most registered public offerings of
securities of the Company.
Provision of Services and Products to Telcom Ventures and Parties Related
Thereto
The Company provides engineering services and software products to Telcom
Ventures and various other companies owned, in part, by Telcom Ventures or its
members. Revenues earned during 1996 for such services and products were $2.2
million. Trade accounts receivable from these related parties were $819,000 at
December 31, 1996.
The Company shared office space and office equipment with Telcom Ventures
during 1996 and the first quarter of 1997. Prior to the Offering the Limited
Liability Company allocated such costs between the Limited Liability Company and
Telcom Ventures on a usage basis as it deemed appropriate. From January 1, 1996
through the Offering, the aggregate amount of such cost allocated to Telcom
Ventures was approximately $579,000. The amount of such costs owed to the
Company is included as part of the loans totaling $16.95 million made by the
Company to Telcom Ventures and repaid prior to the Offering. See "-- Advances To
and From Telcom Ventures and Related Parties." Concurrently with the Offering,
the Company and Telcom Ventures entered into an Overhead and Administrative
Services Agreement. Pursuant to the Overhead and Administrative Services
Agreement, certain management personnel and other employees of the Company
provide certain administrative services, principally related to human resource
management functions and, until the first quarter of 1997, to administration of
accounts payable and accounts receivable systems and provisions of general
office support services, to Telcom Ventures and, until the first quarter of
1997, Telcom Ventures subleased office space from the Company. Telcom Ventures
is obligated to pay the Company a monthly fee for such administrative services
and office space based on a reasonable estimate of the Company's cost of
providing same. While this agreement is not the result of arm's length
negotiations, it is designed to reimburse the Company for its costs in providing
such services (including costs of personnel), and the Company believes that the
terms of such agreements are reasonable. Telcom Ventures paid the Company
approximately $115,000 in January 1997 pursuant to the Overhead and
Administrative Services Agreement for the period beginning on September 25, 1996
and ending on December 31, 1996.
COMPARATIVE STOCK PERFORMANCE
The following chart sets forth comparative information regarding the
Company's cumulative stockholder return on its Class A Common Stock since its
initial public offering completed in September 1996. Total stockholder return is
measured by dividing total dividends (assuming dividend reinvestment) plus share
price change for a period by the share price at the beginning of the measurement
period. The Company's cumulative stockholder return based on an investment of
$100 at September 25, 1996 when the Company's Class A Common Stock was first
traded on the Nasdaq National Market at its closing price of $20.25 is compared
to the cumulative total return of the Nasdaq Market Index and an index comprised
of publicly
14
<PAGE> 18
traded companies which are principally in the consulting and/or
telecommunications products and services business (the "Companies") during that
same period. As of December 31, 1996, the Companies that constituted the peer
group consisted of: Computer Sciences Corporation, Alternative Resources
Corporation, American Management Systems, Incorporated, Computer Horizons Corp.,
Technology Solutions Company, Ciber, Inc., Allen Telecom Inc. and Gilbert Assoc.
Inc.
COMPARISON OF 3 MONTH CUMULATIVE TOTAL RETURN*
AMONG LCC INTERNATIONAL, INC., THE NASDAQ STOCK MARKET -- US INDEX AND A PEER
GROUP
<TABLE>
<CAPTION>
LCC
MEASUREMENT PERIOD INTERNATIONAL, NASDAQ STOCK
(FISCAL YEAR COVERED) INC. PEER GROUP MARKET -- US
<S> <C> <C> <C>
9/25/96 100 100 100
9/96 91 102 100
10/96 73 102 99
11/96 80 112 105
12/96 93 101 105
</TABLE>
* $100 invested on 9/26/96 in stock or index -- including reinvestment of
dividends. Fiscal year ending December 31.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following is a summary of certain transactions and relationships among
the Company and its associated entities, and among the directors, executive
officers and stockholders of the Company and its associated entities. For a
description of certain other transactions, see "Compensation Committee
Interlocks."
The Merger
The Company was formed in June 1996 for the purpose of effecting an initial
public offering of equity interests of the Limited Liability Company. In
connection with the Offering, the Limited Liability Company merged with and into
the Company. As a result of the Merger, the Company owns all of the assets and
rights and is subject to all of the obligations and liabilities of the Limited
Liability Company.
In connection with the Merger, 11,250,751 shares of Class B Common Stock
were issued to RF Investors, 85,233 shares of Class B Common Stock were issued
to Cherrywood and 28,411 shares of Class A Common Stock were issued to TC Group.
15
<PAGE> 19
Pursuant to the Merger, the Company is required to indemnify Telcom
Ventures, RF Investors, Cherrywood, the Carlyle Investors and TC Group against
any liability for obligations and liabilities associated with the Limited
Liability Company's operations. The Company has paid all of the costs of the
Limited Liability Company and such entities, including transfer taxes and
related fees, in connection with the Merger.
Share Registrations
In December 1996 the Company filed a registration statement under the
Securities Act of 1933 with respect to the 3,894,000 shares of Common Stock
available upon exercise of options under the Employee Plan, the Directors Plan
and the Company's Employee Stock Purchase Plan.
Carlyle Option Designee Stock Options
The Company has reserved 85,000 shares of Class A Common Stock (subject to
anti-dilution adjustments in the event of a stock split, recapitalization or
similar transaction) for issuance pursuant to options to be granted to a
designee of the Carlyle Investors (the "Carlyle Option Designee Stock Options").
The option exercise price for the Carlyle Option Designee Stock Options will be
100% of the fair market value of the Class A Common Stock on the date of grant
of the option. TC Group was granted an initial option to purchase 25,000 shares
of Class A Common Stock in connection with the Offering and TC Group or one or
more other designees of the Carlyle Investors will be granted an additional
option to purchase 15,000 shares of Class A Common Stock on each of September
24, 1997, 1998, 1999 and 2000. Options granted will vest immediately. The
options will expire no later than the fifth anniversary of the date of grant.
The Exchangeable Notes, MCI Note Assumption, MCI Conversion
In June 1994 the Limited Liability Company and Telcom Ventures entered into
a Note Purchase Agreement with a then unrelated third party, MCI, which provided
for the issuance of a $20 million subordinated note by the Limited Liability
Company (the "LCC Note") and of a $30 million subordinated note by Telcom
Ventures (the "Telcom Ventures Note") to MCI in return for cash in such amounts.
The LCC Note and the Telcom Ventures Note (collectively, the "Exchangeable
Notes") are both due June 28, 2000 and bear interest at a rate equal to 6.8% per
annum, payable semiannually. Immediately prior to the Merger, the Telcom
Ventures Note was assumed by the Limited Liability Company (the "MCI Note
Assumption"), and the $30 million principal repayment obligation and interest
thereon became the sole obligation of the Limited Liability Company and,
following the Merger, the sole obligation of the Company.
Since January 1, 1996, the Company has paid MCI approximately $1.9 million
(net of a $497,000 reimbursement from Telcom Ventures) in interest under the
Exchangeable Notes. The Company presently intends to exercise its option in
August 1997 to cause the Exchangeable Notes to be converted into 2,841,099
shares Class A Common Stock.
Certain Relationships Between Cherrywood and the Carlyle Investors Affecting
the Company
The RF Investors and Telcom Ventures limited liability company agreements
provide that, for as long as the Carlyle Investors collectively own at least 5%
of the total membership interests of Telcom Ventures, Telcom Ventures shall vote
any and all shares of the Company held by it, and shall cause RF Investors to
vote any and all shares held by it, from time to time: (i) to elect as directors
of the Company up to two persons recommended by the Carlyle Investors and (ii)
not take any of the following actions without the consent of the Carlyle
Investors: (a) approve any amendment to the Certificate of Incorporation or the
Bylaws of the Company; (b) approve the incurrence by the Company of any debt (or
the granting of security relating to the incurrence of debt) if as a result of
such incurrence, the debt to equity ratio of the Company exceeds 6:1, or, if as
a result of such debt incurrence, the total outstanding debt of the Company
exceeds $50 million plus or minus, as the case may be, the cumulative net income
or net losses of the Company after January 1994; (c) approve any new affiliated
party transactions in excess of $150,000 or of modifications to existing
transactions, subject to certain limited exceptions; (d) approve appointment of
independent accountants of the
16
<PAGE> 20
Company other than one of the "big six" accounting firms; or (e) approve certain
events relating to bankruptcy or insolvency of the Company.
The RF Investors and Telcom Ventures limited liability company agreements
provide for various rights of the Carlyle Investors to cause the distribution to
the Carlyle Investors of Common Stock held by RF Investors. Following the third
anniversary of the closing of the Offering, the Carlyle Investors will have the
right to cause the distribution to the Carlyle Investors (by RF Investors and
then Telcom Ventures), of up to the Carlyle Investors' indirect proportionate
interest in the shares of Common Stock then held by RF Investors which is in
excess of 10% of the Common Stock then outstanding (treating Class A Common
Stock and Class B Common Stock as a single class of Common Stock for this
purpose). The Carlyle Investors' initial indirect proportionate interest in RF
Investors is 25%, which interest will be recalculated following any
non-proportional distribution to the Carlyle Investors. Following the fifth
anniversary of the closing of the Offering, the Carlyle Investors will have the
right to cause the distribution to the Carlyle Investors (by RF Investors and
then Telcom Ventures), of up to the full amount of the Carlyle Investors' then
indirect proportionate interest in the shares of Common Stock, so long as the
Common Stock remaining held by RF Investors would leave RF Investors with at
least 51% of the voting power of the Common Stock then outstanding. Upon the
first distribution to the Carlyle Investors, the Carlyle Investors will have the
right to exercise one of the three rights held by RF Investors to demand
registration of shares of Common Stock under the Securities Act of 1933. The
ability of the Carlyle Investors to require distributions of Class A Common
Stock or demand a registration thereof would be subject to a determination by an
investment banker reasonably acceptable to RF Investors and the Carlyle
Investors that such action would not materially adversely impact the market for
the Common Stock.
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers, directors and certain
beneficial holders of common stock to file reports about their ownership of the
Company's Class A Common Stock. Based solely on its review of the copies of such
reports furnished to the Company by its directors and officers during and with
respect to the year 1995, the Company believes that none of its directors and
officers failed to file on a timely basis any reports required by Section 16(a)
of the Exchange Act.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
(PROPOSAL 2)
The Board of Directors has appointed KPMG Peat Marwick LLP ("KPMG") as the
Company's independent auditors for the fiscal year ending December 31, 1997,
subject to ratification by stockholders at the Annual Meeting. Representatives
of KPMG will be present at the Annual Meeting and will have the opportunity to
make a statement if they so desire and to be available to respond to appropriate
questions. Unless otherwise indicated, properly executed proxies will be voted
in favor of ratifying the appointment of KPMG to audit the financial statements
of the Company for the fiscal year ending December 31, 1997.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2.
DATE OF SUBMISSION OF STOCKHOLDER PROPOSALS
TO BE INCLUDED IN PROXY MATERIALS
Any proposal or proposal intended to be presented by any stockholder at the
1998 Annual Meeting of Stockholders must be received by the Company by December
19, 1997 to be considered for inclusion in the Company's proxy statement and
form of proxy relating to that meeting. Nothing in this paragraph shall be
deemed to require the Company to include in the proxy statement and the proxy
relating to the 1998 Annual Meeting of Stockholders any stockholder proposal
that does not meet all of the requirements for such inclusion in effect at that
time.
17
<PAGE> 21
OTHER BUSINESS TO BE TRANSACTED
As of the date of this proxy statement, the Board of Directors knows of no
other business which may come before the Annual Meeting. If any other business
is properly brought before the Annual Meeting, it is the intention of the proxy
holders to vote or act in accordance with their best judgment with respect to
such matters.
By Order of the Board of Directors
PIYUSH SODHA
President and Chief Executive Officer
Arlington, Virginia
April 29, 1997
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1996 ACCOMPANIES THIS PROXY STATEMENT.
18
<PAGE> 22
REVOCABLE PROXY
LCC INTERNATIONAL, INC.
ANNUAL MEETING OF STOCKHOLDERS MAY 20, 1997
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned stockholder hereby appoints Mr. Piyush Sodha and Mr.
Richard Hozik, or either of them, attorneys and proxies of the undersigned,
with full power of substitution and with authority in each of them to act in
the absence of the other, to vote and act for the undersigned at the Annual
Meeting of Stockholders of the Company to be held on Tuesday, May 20, 1997 at
10:00 a.m. (eastern daylight time) at the Sheraton Premiere at Tysons Corner,
8661 Leesburg Pike, Vienna, Virginia 22182, and at any adjournments thereof, in
respect of all shares of the Class A Common Stock of the Company which the
undersigned may be entitled to vote, on the following matters:
(CONTINUED AND TO BE DATED AND SIGNED ON REVERSE SIDE.)
<PAGE> 23
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
LCC INTERNATIONAL, INC.
MAY 20, 1997
<TABLE>
<CAPTION>
FOR all of the nominees
listed at right (except
as marked to the WITHHOLD
contrary below). AUTHORITY
<S> <C> <C> <C> <C>
1. Election of the [ ] [ ] Nominees: Rajendra Singh
Board of Directors Neera Singh
(fve persons): Arno A. Penzias
Piyush Sodha
Mark D. Ein
</TABLE>
FOR, except vote withheld from the following nominees:
- --------------------------------------------------------------
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
2. Proposal to ratify the appointment of [ ] [ ] [ ]
KPMG Peat Marwick LLP as the independent
auditors of the Company for the fiscal
year ending December 31, 1997;
</TABLE>
3. In their discretion, on any other matters that may properly come before the
meeting, or any adjournments thereof, in accordance with there
commendations of a majority of the Board of Directors.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE
UNDERSIGNED STOCKHOLDER. HOWEVER, IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR THE NOMINEES IN PROPOSAL 1, AND FOR PROPOSAL 2.
The undersigned hereby acknowledges prior receipt of a copy of the
Notice of Annual Meeting of Stockholders and proxy statement dated April 29,
1997 and the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, and hereby revokes any proxy or proxies heretofore given.
This Proxy may be revoked at any time before it is voted by delivering to the
Secretary of the Company either a written revocation of proxy or a duly executed
proxy bearing a later date, or by appearing at the Annual Meeting and voting in
person.
If you receive more than one proxy card, please sign and return all
cards in the accompanying envelope.
PLEASE MARK, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY TO ENSURE A QUORUM
AT THE MEETING. IT IS IMPORTANT WHETHER YOU OWN FEW OR MANY SHARES. DELAY IN
RETURNING YOUR PROXY MAY SUBJECT THE COMPANY TO ADDITIONAL EXPENSE.
I PLAN TO ATTEND THE MAY 20, 1997 ANNUAL STOCKHOLDERS MEETING [ ]
<TABLE>
<S> <C>
Signature of Stockholder or Authorized Representative Date: , 1997
--------------------------------------------- ------------
</TABLE>
Note: Please date and sign exactly as name appears hereon. Each executor,
administrator, trustee, guardian, attorney-in-fact and other fiduciary
shoudl sign and indicate his or her full title. In the cases of stock
ownership in the name of two or more persons, both persons should sign.
