SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Schedule 13D
Under the Securities Exchange Act of 1934
OAO Technology Solutions, Inc.
(Name of Issuer)
Common Stock, $.01 par value
(Title of Class of Securities)
205103-67082B10
(CUSIP Number)
A. Christopher Ducanes, Corporate Counsel
OAO Technology Solutions, Inc.
7500 Greenway Center Drive, 16th Floor
Greenbelt, Maryland 20770
(301)486-2332
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
August 31, 1999
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1 (b)(3) or (4), check the following box |_|.
<PAGE>
CUSIP NO. 205103-67082B10 13D Page 1 of 3 Pages
1. NAME OF REPORTING PERSON
Gregory A. Pratt
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) |_|
(b) |X|
3. SEC USE ONLY
4. SOURCE OF FUNDS*
PF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Pennsylvania
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7. SOLE VOTING POWER
861,111
8. SHARED VOTING POWER
9. SOLE DISPOSITIVE POWER
861,111
10. SHARED DISPOSITIVE POWER
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
861,111
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
|_|
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5%
14. TYPE OF REPORTING PERSON*
IN
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ITEM 1. Security and Issuer Page 2 of 3 Pages
The title of the class of equity securities to which this Schedule 13D
relates is Common Stock ($.01 par value per share) of OAO Technology Solutions,
Inc. (hereinafter referred to as the "Shares"). The name and address of the
issuer of the Shares is OAO Technology Solutions, Inc., 7500 Greenway Center
Drive, 16th Floor, Greenbelt, Maryland 20770 (hereinafter referred to as the
"Issuer").
ITEM 2. Identity and Background
a. Name b. Business Address c. Occupation
Gregory A. Pratt OAO Technology Solutions, Inc. President
16th Floor and CEO
7500 Greenway Center Drive
Greenbelt, Maryland 20770
d. No
e. No
f. United States
ITEM 3. Source and Amount of Funds or Other Consideration
A full recourse five year loan in the principal amount of $2,932,500 with
interest at the Federal statutory rate, secured by a pledge of the 750,000
shares (See Item 4), which represents a price per share of $3.91, the then
present fair market value.
ITEM 4. Purpose of Transaction
Pursuant to Gregory A. Pratt's employment agreement with OAO Technology
Solutions, Inc. (the "Agreement"), Mr. Pratt was entitled to purchase 750,000
restricted shares of OAOT.
The Reporting Person acquired the Shares as an investment in connection
with the completion of the Transaction described in the preceding paragraph.
ITEM 5. Interest in the Securities of the Issuer
Number of Shares Percentage of
Name of Person Beneficially Owned Outstanding Shares
- - - -------------- ------------------ ------------------
Gregory A. Pratt 861,111 * 5%
*Sole voting and dispositive Power
ITEM 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
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Page 3 of 3 Pages
With the exception of the agreements listed in ITEMS 3 and 4 above, no
contracts or other arrangements exist.
ITEM 7. Material to be Filed as Exhibits
Exhibit A Restricted Stock Grant Letter dated as of July 14, 1999
Exhibit B Acceptance of Grant dated as of July 14, 1999
Exhibit C Term Note dated as of July 14, 1999
Exhibit D Pledge Agreement dated as of July 14,1999
SIGNATURES
After reasonable inquiry and to best of my knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: August 31, 1999 OAO Technology Solutions, Inc.
By: /s/ Gregory A. Pratt
------------------------
Gregory A. Pratt
<PAGE>
EXHIBIT INDEX
Exhibit Title
- - - ------- -----
A Restricted Stock Grant Letter dated as of July 14, 1999
B Acceptance of Grant dated as of July 14, 1999
C Term Note dated as of July 14, 1999
D Pledge Agreement dated as of July 14, 1999
<PAGE>
EXHIBIT A
OAO TECHNOLOGY SOLUTIONS, INC.
RESTRICTED STOCK GRANT LETTER
DATE OF GRANT: July 14, 1999
OAO Technology Solutions, Inc. (the "Company") has adopted the 1996 Equity
Compensation Plan (the "Plan") to provide an incentive to its employees,
officers, directors and key advisors. This Restricted Stock Grant is granted to
Gregory A. Pratt (the "Grantee") in accordance with the Plan. Capitalized terms
used and not otherwise defined in this Grant Letter are used herein as defined
in the Plan.
1. Stock Grant
The Company hereby offers to the Grantee the opportunity to acquire from
the Company 750,000 shares of common stock of the Company, $.01 par value (the
"Shares"), at a cost of $3.91 per share.
Subject to the Grantee's acceptance of this offer the Company will prepare
and issue a certificate representing the Shares, which shall be registered in
the name of the Grantee and which shall bear the following restrictive legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER DESCRIBED IN A RESTRICTED STOCK GRANT LETTER, A COPY OF WHICH IS
ON FILE AT THE OFFICES OF OAO TECHNOLOGY SOLUTIONS, INC. ANY ATTEMPTED
TRANSFER, PLEDGE, OR DISPOSITION OF, THESE SHARES WITHOUT COMPLIANCE WITH
THE PROVISIONS OF SUCH LETTER, AND ANY LEVY UPON THESE SHARES, SHALL BE
NULL AND VOID.
2. Acceptance by the Grantee; Deposit of Certificate into Escrow
The Grantee shall signify acceptance of the offer to acquire the Shares by
delivering to the Company, as escrow agent (the "Escrow Agent"):
(i) an executed copy of the Acceptance of Grant attached as Exhibit A
hereto;
(ii) two stock powers in the form of Exhibit C hereto, signed in blank with
a medallion signature guarantee, for completion by the Escrow Agent at the time
of any transfer of any of the Shares pursuant to this Grant Letter; and
(iii) two executed copies of the 83(b) Election attached as Exhibit B
hereto.
Upon receipt from the Grantee of the foregoing items, the Company shall
cause certificates representing the Shares to be issued in Grantee's name and
deposited with the Escrow Agent, to be held in accordance with the terms of this
Grant.
<PAGE>
3. Vesting
The Shares are subject to (i) the vesting schedule set forth below, and
(ii) the restrictions imposed under the Plan and under Section 4 hereof. The
vesting schedule for the Shares is as follows:
25% on July 1, 1999; and
25% each year thereafter until the Shares are 100% vested.
Vesting will cease upon the Grantee's separation from the service of the
Company in conformance with Mr. Pratt's Employment Agreement, dated June 25,
1998, or as otherwise amended and agreed by the Compensation Committee of the
Board of Directors and Mr. Pratt.
Vesting will be accelerated in the event the closing price of the Company's
shares of common stock equals or exceeds $25.00 for 20 consecutive trading days
or there is a re-organization. As used herein, a "Reorganization" shall be
deemed to have occurred if the shareholders of the Company approve (or, if
shareholder approval is not required, the Board approves) an agreement providing
for (i) the merger or consolidation of the Company with another separate
corporation where the shareholders of the Company, immediately prior to the
merger or consolidation, will not beneficially own, immediately after the merger
or consolidation, shares entitling such shareholders to more than 50% of all
votes to which all shareholders of the surviving corporation would be entitled
in the election of directors (without consideration of the rights of any class
of stock to elect directors by a separate class vote.)
In the event of the Grantee's disability, as defined in the Plan, the
Grantee will continue to vest according to the above schedule during the period
of disability, and upon return to employment with the Company or any Affiliate
upon the Grantee's recovery, during the period of the Grantee's re-employment.
In the event the Grantee fails to return to employment upon recovery from
disability, vesting will cease and the Company's repurchase right shall become
effective.
4. Restrictions
(a) Unvested Shares. All unvested Shares will be held by the Escrow Agent
until they become vested, at which time the Escrow Agent shall deliver to the
Grantee the Share certificate(s) registered in the Grantee's name. The Grantee
may not sell, assign, transfer, pledge or otherwise dispose of any unvested
Shares.
(b) Impermissible Transfers Void. Any attempt to assign, transfer, pledge
or otherwise dispose of any Shares contrary to the provisions of this Grant
Letter, and the levy of any execution, attachment or similar process upon Shares
during the Restriction Period or upon any unvested Shares, shall be null and
void and without effect.
<PAGE>
5. Permitted Transferees.
A Grantee may transfer vested Shares to immediate family members (spouse,
siblings, or children), family trusts, or family partnerships, or by will or by
the laws of descent and distribution ("Permitted Transferees") provided that the
Grantee receives no consideration for the transfer and the transferred Shares
shall continue to be subject to the same restrictions as were applicable
immediately before the transfer, and the transferee acknowledges such
restrictions in a written instrument.
6. Not Applicable
7. Effect of Changes in Shares
If any change is made to the common stock of the Company by reason of
merger, consolidation, reorganization, recapitalization, stock dividend, stock
split, combination of shares, exchange of shares, or any other change in capital
structure made without receipt of consideration, then, unless such change
results in the termination of the Restriction Period, any new, substituted, or
additional securities distributed with respect to the Shares shall be
immediately subject to the restrictions imposed upon the Shares to the same
extent that the Shares immediately prior thereto have been covered by such
provisions.
8. Voting of Shares; Dividends
During the Restriction Period, the Grantee shall exercise all voting rights
in connection with the Shares.
Effective as of the date on which the Grantee signifies acceptance of the
Shares, the Grantee or Permitted Transferees, shall be entitled to receive any
dividends, rights or other distributions payable to stockholders of record of
the Company on and after the date of such acceptance; provided, however, that
neither the Grantee nor any Permitted Transferees shall have any dividend rights
or any other rights whatsoever with respect to any Shares which are forfeited or
repurchased by the Company.
9. Withholding of Taxes
The Company shall have the right to require the Grantee to pay to the
Company the amount of any taxes which the Company is required to withhold in
respect of this grant.
10. No Contract for Employment
Nothing contained in this Grant Letter shall be deemed to require the
Company or any Affiliate to continue the Grantee's employment.
11. Administration
This Grant is made pursuant to the terms, conditions and other provisions
of the Plan as in effect on the Date of Grant, and as the Plan may be amended
from time to time. The terms of the Plan are incorporated herein
<PAGE>
by reference. All questions of interpretation and application of the Plan and of
this Grant shall be determined by the Compensation Committee, in its discretion,
and such determination shall be final and binding upon all persons. The
validity, construction and effect of this Grant shall be determined in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
OAO TECHNOLOGY SOLUTIONS, INC.
By: /s/ J. Jeffrey Fox
--------------------------
<PAGE>
EXHIBIT B
ACCEPTANCE OF GRANT
The Grantee acknowledges and agrees with the terms and conditions of the
attached Grant Letter pursuant to which OAO Technology Solutions, Inc. (the
"Company") has offered the Grantee the opportunity to acquire shares (the
"Shares") under the Company's 1996 Equity Compensation Plan.
As a condition to the issuance of the Shares, the Grantee hereby represents
and warrants to the Company and agrees with the Company as follows:
1. Investment Intent. The Grantee is acquiring the Shares for the Grantee's
own account for investment and not with a view to, or for sale in connection
with, any distribution of the Shares or any portion thereof and not with any
present intention of selling, offering to sell or otherwise disposing of or
distributing the Shares or any portion thereof in any transaction other than a
transaction exempt from registration under the 1933 Act. The Grantee represents
that the entire legal and beneficial interest in the Shares is being acquired,
and will be held, for the Grantee's account only, and neither in whole or in
part for any other person except for permitted transferees.
2. Information Concerning the Company. The Grantee has heretofore had the
opportunity to discuss with officers and directors of the Company the plans,
operations and financial condition of the Company and has heretofore received
all such information as the Grantee has requested.
3. Economic Risk. The Grantee understands that the Shares are highly
speculative securities involving a high degree of risk. The Grantee is able,
without impairing his financial condition, to hold the Shares for an indefinite
period of time and to suffer a complete loss of value of the Shares.
4. Restricted Securities. The Grantee understands that so long as he
remains an affiliate of the Company, the Shares are characterized as "control
securities" under the Securities Act of 1933, as amended (the "1933 Act"), and
as such, are subject to the provisions of Rule 144 under the 1933 Act, except
that there is no minimum holding period requirement.
5. Disposition of Shares. The Grantee hereby agrees not to sell, assign,
transfer, pledge or otherwise dispose of any portion of the Shares unless and
until the Grantee shall have complied with all of the requirements of the
Restricted Stock Grant Letter.
6. Legends. The Grantee understands that the certificates representing the
Shares will bear any legends required by the securities or "blue sky" laws of
any state in addition to the legends set forth in the Grant Letter.
<PAGE>
7. Section 83(b) Election. The Grantee understands that under Section 83 of
the Internal Revenue Code of 1986, as amended (the "Code"), the difference
between the purchase price (if any) paid for the Shares and their fair market
value on the date of vesting would be reportable as ordinary income at such
time. The Grantee understands that by filing an election with the Internal
Revenue Service pursuant to Section 83(b) of the Code within 30 days after the
date of grant, in lieu of the foregoing, the Grantee will be taxed at the time
the Shares are granted to the Grantee on the fair market value of the Shares.
The Section 83(b) election, which may avoid adverse tax consequences in the
future, must be made within the 30-day period after the Date of Grant. The form
for making this election is attached as Exhibit B hereto. THE GRANTEE
ACKNOWLEDGES THAT IT IS THE GRANTEE'S SOLE RESPONSIBILITY TO SEEK ADVICE
REGARDING SECTION 83(B). THE GRANTEE IS RELYING SOLELY ON THE GRANTEE'S ADVISORS
WITH RESPECT TO THIS SECTION 83(B) ELECTION AND THE COMPANY SHALL HAVE NO
RESPONSIBILITY OR LIABILITY IN CONNECTION THEREWITH.
The Grantee, intending to be legally bound hereby, has executed this
Acceptance of Grant on the date set forth below.
Dated: July 14, 1999
GRANTEE:
/s/ Gregory A. Pratt
--------------------------
Gregory A. Pratt
<PAGE>
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, the undersigned, Gregory A. Pratt, hereby sells,
assigns and transfers unto OAO Technology Solutions, Inc., 750,000 shares
of the common stock of OAO Technology Solutions, Inc. standing in the name
of the undersigned on the books of said corporation represented by
Certificate(s) No.(s) TBD inclusive and do hereby irrevocably constitute
and appoint J. Jeffrey Fox attorney to transfer the said stock on the books
of the within named corporation with full power of substitution in the
premises.
Dated: July 14, 1999 /s/ Gregory A. Pratt
----------------------------
Gregory A. Pratt
Signed in the presence of:
/s/ A. Christopher Ducanes
- - - -------------------------------
<PAGE>
EXHIBIT C
TERM NOTE
(Gregory A. Pratt)
$2,932,500 July 14, 1999
In consideration of the loan (hereinafter referred to as a "Loan"), OAO
Technology Solutions, Inc., a Delaware corporation (the "Lender"), has made to
Gregory A. Pratt, (the "Borrower"), and for value received, the Borrower hereby
promises to pay to the order of the Lender, at the Lender's office located at
7500 Greenway Center Drive, 16th Floor, Greenbelt, MD 20770 or at such other
place in the continental United States as the Lender may designate in writing,
in lawful money of the United States, and in immediately available funds, the
principal sum of $2,932,500 together with all accrued interest thereon.
The Borrower hereby further promises to pay to the order of the Lender
interest on the outstanding principal amount from the date hereof, at a per
annum rate equal to 5.82% (the "Loan Rate"). The Borrower shall pay on demand
interest on any overdue payment of principal and interest (to the extent legally
enforceable) at the Loan Rate plus three percent (3%).
The unpaid principal balance of the Note, together with all accrued and
unpaid interest, shall be paid in full on July 14, 2004.
All payments made on this Note (including, without limitation, prepayments)
shall be applied, at the option of the Lender, first to late charges and
collection costs, if any, then to accrued interest and then to principal.
Interest payable hereunder shall be calculated for actual days elapsed on the
basis of a 360-day year. All accrued and unpaid interest shall be due and
payable upon maturity of this Note. After maturity or in the event of default,
interest shall continue to accrue on the Note at the rate set forth above and
shall be payable on demand of the Lender.
The outstanding principal amount of this Note may be prepaid in whole or in
part without any prepayment penalty or premium at any time or from time to time
by Borrower upon notice to the Lender; provided, that any prepayment shall be
applied first to any interest due to the date of such prepayment on this Note
and thereafter shall be applied to the installments of principal hereunder in
the inverse order of maturity.
Notwithstanding anything in this Note, the interest rate charged hereon
shall not exceed the maximum rate allowable by applicable law. If any stated
interest rate herein exceeds the maximum allowable rate, then the interest rate
shall be reduced to the maximum allowable rate, and any excess payment of
interest made by Borrower at any time shall be applied to the unpaid balance of
any outstanding principal of this Note.
An event of default hereunder shall consist of:
(i) a default in the payment by the Borrower to the Lender of principal or
interest under this Note as and when the same shall become due and payable; or
(ii) an event of default under the Pledge Agreement signed on July 14, 1999
by the Borrower;
(iii) institution of any proceeding by or against the Borrower under any
present or future bankruptcy or insolvency statute or similar law and, if
involuntary, if the same are not stayed or dismissed within sixty (60) days, or
the Borrower's assignment for the benefit of creditors or the appointment of a
receiver, trustee, conservator or other judicial representative for the Borrower
or the Borrower's property or the Borrower's being adjudicated a bankrupt or
insolvent; or
<PAGE>
(iv) the expiration of the thirty (30) day period following the date the
Borrower ceases for any reason to remain in the employ of Lender.
Upon the occurrence of an event of default hereunder, this Note shall be
due within 90 days of default without any action or notice by Lender, be
accelerated and become immediately due and payable after 90 days of default, and
Lender shall have all of the rights and remedies provided for herein or
otherwise available at law or in equity, all of which remedies shall be
cumulative.
In the event of default, the Lender may either accept cash payment or use
the proceeds from a cashless sale of the vested shares of the Borrower that is
held as Collateral to pay off Borrower's Loan Principal and Interest. Interest
due and payable by Borrower for unvested shares will be forgiven.
In the event the Borrower sells or otherwise transfers for value one or
more shares of the Lender's common stock purchased with the proceeds of this
Note, then any unpaid portion of the principal balance of this Note attributable
to the purchase price of those shares shall become immediately due and payable,
together with all accrued and unpaid interest on that principal portion.
For purposes of applying the provisions of this Note, the Borrower shall be
considered to remain in the Lender's employ for so long as the Borrower renders
services as a full-time employee of the Lender, any successor entity or one or
more of the Lender's fifty (50%) percent or more owned (directly or indirectly)
subsidiaries.
The proceeds of the loan evidenced by this Note shall be applied solely to
the payment of the purchase price of 750,000 shares of the Lender's common stock
and payment of this Note shall be secured by a pledge of those shares with the
Lender pursuant to the Pledge Agreement to be executed this date by the
Borrower. THE BORROWER, HOWEVER, SHALL REMAIN PERSONALLY LIABLE FOR PAYMENT OF
THIS NOTE AND ASSETS OF THE MAKER, IN ADDITION TO THE COLLATERAL UNDER THE
PLEDGE AGREEMENT, MAY BE APPLIED TO THE SATISFACTION OF THE BORROWER'S
OBLIGATIONS HEREUNDER.
Neither the reference to nor the provisions of any agreement or document
referred to herein shall affect or impair the absolute and unconditional
obligation of the Borrower to pay the principal of and interest on this Note as
herein provided.
Any action, suit or proceeding where the amount in controversy as to at
least one party, exclusive of interest and costs, exceeds $1,000,000 ("Summary
Proceeding"), arising out of or relating to this Agreement, or the breach,
termination or validity thereof, shall be litigated exclusively in the Superior
Court of the State of Delaware (the "Delaware Superior Court") as a summary
proceeding pursuant to Rules 124-131 of the Delaware Superior Court, or any
successor rules (the "Summary Proceeding Rules"). Each of the parties hereto
hereby irrevocably and unconditionally (i) submits to the jurisdiction of the
Delaware Superior Court for any Summary Proceeding, (ii) agrees not to commence
any Summary Proceeding except in the Delaware Superior Court, (iii) waives, and
agrees not to plead or to make, any objection to the venue of any Summary
Proceeding in the Delaware Superior Court, (iv) waives, and agrees not to plead
or to make, any claim that any Summary Proceeding brought in the Delaware
Superior Court has been brought in an improper or otherwise inconvenient forum,
(v) waives, and agrees not to plead or to make, any claim that the Delaware
Superior Court lacks personal jurisdiction over it, (vi) waives its right to
remove any Summary Proceeding to the federal courts except where such courts are
vested with sole and exclusive jurisdiction by statute and (vii) understands and
agrees that it shall not seek a jury trial or punitive damages in any Summary
Proceeding based upon or arising out of or otherwise related to this Agreement
waives any and all rights to any such jury trial or to seek punitive damages.
In the event any action, suit or proceeding where the amount in controversy
as to at least one party, exclusive of interest and costs, does not exceed
$1,000,000 (a "Proceeding"), arising out of or relating to this Agreement or the
breach, termination or validity thereof is brought, the parties to such
Proceeding agree to make application to the Delaware Superior Court to proceed
under the Summary Proceeding Rules. Until such time as such application is
rejected, such Proceeding shall be treated as a Summary Proceeding and all of
the foregoing provisions of this Section relating to Summary Proceedings shall
apply to such Proceeding.
<PAGE>
If a Summary Proceeding is not available to resolve any dispute hereunder,
the controversy or claim shall be settled by arbitration conducted on a
confidential basis, under the U.S. Arbitration Act, if applicable, and the then
current Commercial Arbitration Rules of the American Arbitration Association
(the "Association") strictly in accordance with the terms of this Agreement and
the substantive law of the State of Delaware. The arbitration shall be conducted
at the Association's regional office located closest to the Lender's principal
place of business by a single arbitrator. Judgment upon the arbitrator's award
may be entered and enforced in any court of competent jurisdiction. Neither
party shall institute a proceeding hereunder unless at least 60 days prior
thereto such party shall have given written notice to the other party of its
intent to do so.
Neither party shall be precluded hereby from securing equitable remedies in
courts of any jurisdiction, including, but not limited to, temporary restraining
orders and preliminary injunctions to protect its rights and interests but shall
not be sought as a means to avoid or stay arbitration or Summary Proceedings.
The Borrower hereby waives presentment, demand, protest and notice of
dishonor and protest, and also waives all other exemptions; and agrees that
extension or extensions of the time of payment of this Note or any installment
or part thereof may be made before, at or after maturity by agreement by the
Lender. Upon default hereunder the Lender shall have the right to offset the
amount owed by the Borrower against any amounts owed by the Lender in any
capacity to the Borrower, whether or not due, and the Lender shall be deemed to
have exercised such right of offset and to have made a charge against any such
account or amounts immediately upon the occurrence of an event of default
hereunder even though such charge is made or entered on the books of the Lender
subsequent thereto. The Borrower shall pay to the Lender, upon demand, all costs
and expenses, including, without limitation, attorneys' fees and legal expenses,
that may be incurred by the Lender in connection with the enforcement of this
Note.
Notices required to be given hereunder shall be deemed validly given (i)
three business days after sent, postage prepaid, by certified mail, return
receipt requested, (ii) one business day after sent, charges paid by the sender,
by Federal Express Next Day Delivery or other guaranteed delivery service, (iii)
when sent by facsimile transmission, or (iv) when delivered by hand:
If to the Lender: Chief Financial Officer
OAO Technology Solutions, Inc.
7500 Greenway Center, 16th Floor
Greenbelt, MD 20770-3522
If to the Borrower: Gregory A. Pratt
1125 Kaolin Road
Kennett Square, PA 19348
or to such other address, or in care of such other person, as the holder or the
Borrower shall hereafter specify to the other from time to time by due notice.
Any failure by the Lender to exercise any right hereunder shall not be
construed as a waiver of the right to exercise the same or any other right at
any time. No amendment to or modification of this Note shall be binding upon the
Lender unless in writing and signed by it. Any provision hereof found to be
illegal, invalid or unenforceable for any reason whatsoever shall not affect the
validity, legality or enforceability of the remainder hereof. This Note shall
apply to and bind the successors of the Borrower and shall inure to the benefit
of the Lender, its successors and assigns.
This Note shall be governed by and interpreted in accordance with the laws
of the State of Delaware.
IN WITNESS WHEREOF, the Borrower has duly executed this Term Note as of the
date first written above.
<PAGE>
/s/ Gregory A. Pratt
-----------------------
GREGORY A. PRATT
<PAGE>
EXHIBIT D
PLEDGE AGREEMENT
For good and valuable consideration and intending to be legally bound,
GREGORY A. PRATT ("Pledgor") hereby assigns, pledges and grants to OAO
TECHNOLOGY SOLUTIONS, INC. a Delaware corporation ("Lender"), a security
interest in the shares of capital stock and/or other securities of Lender, now
owned by or standing in the name of Pledgor or in which Pledgor has a legal or
beneficial interest, which are described on Schedule A attached hereto and made
a part hereof (collectively, the "Securities"), and cash and non-cash proceeds,
distributions, additions, substitutions, exchanges, redemptions and replacements
of, on or by reason of any of the foregoing (collectively, the "Collateral"), as
security for the payment and performance of all indebtedness, liabilities and
obligations of Borrower (primary, secondary, direct, contingent, related,
unrelated, sole, joint or several) to Lender, whether for principal, interest,
fees, expenses or otherwise, (the "Obligations"), arising under that certain
promissory note, dated of even date herewith, issued by Borrower in the
principal amount of $2,932,500 (the "Note"), all on the following terms and
conditions.
A. Representations and Warranties. Pledgor represents and warrants that:
1. Pledgor has good title to the Securities free and clear of all liens and
encumbrances except the security interest created hereby.
2. Pledgor has delivered to Lender all stock certificates representing or
evidencing the Securities, accompanied by corresponding assignment or transfer
powers duly executed in blank by Pledgor, and this Pledge Agreement and such
powers have been duly and validly executed and are binding and enforceable
against Pledgor in accordance with their terms; and the pledge of the Securities
in accordance with the terms hereof creates a valid and perfected first priority
security interest in the Securities securing payment of the Obligations.
3. No authorization, approval, consent, or other action by, and no notice
to or filing with, any governmental authority, regulatory body or other person
or entity is required either (i) for the pledge by Pledgor of the Collateral
pursuant to this Pledge Agreement or for the execution, delivery or performance
of this Pledge Agreement by Pledgor, or (ii) for the exercise by Lender of the
voting or other rights provided for in this Pledge Agreement or the remedies in
respect of the Collateral pursuant to this Pledge Agreement (except as may be
required in connection with such disposition by laws affecting the offering and
sale of securities generally).
B. Negative Pledge. Pledgor agrees not to (i) sell or otherwise dispose of,
or grant any option with respect to, any of the Collateral, or (ii) create or
permit to exist any lien, security interest or other charge or encumbrance upon
or with respect to any of the Collateral, except the security interest under
this Pledge Agreement.
C. Not Applicable.
D. Pledgor's Rights in the Pledged Collateral Before Default. So long as no
Event of Default (as such term is defined in the Note) shall have occurred and
be continuing and Pledgor is in full compliance with the terms hereof:
1. Pledgor shall be entitled to receive and retain any normal, regularly
declared cash dividends or cash interest payments (as the case may be) paid in
respect of the Collateral, if such dividends and payments are permitted under
the Loan Documents.
2. Pledgor may exercise all voting rights, if any, pertaining to the
Collateral for any purpose not inconsistent with the terms hereof or of the
Obligations or Loan Documents. In the event any Collateral has been transferred
into the name of Lender or a nominee or nominees of Lender prior to the
occurrence of such Event of Default, Lender or its nominee shall execute and
deliver upon request of Pledgor an appropriate proxy in order to permit Pledgor
to vote, if applicable, the same.
<PAGE>
E. Further Assurances. Pledgor shall from time to time promptly take all
actions (and execute, deliver and record all instruments and documents)
necessary or appropriate or requested by Lender, to continue the validity,
enforceability and perfected status of the pledge of the Collateral hereunder or
to enable Lender to exercise and enforce the rights and remedies hereunder with
respect to any of the Pledged Collateral.
F. Lender's Duties Toward Collateral. Lender shall be under no obligation
to take any actions and shall have no liability (except for gross negligence or
willful misconduct) with respect to the preservation or protection of the
Collateral or any underlying interests represented thereby as against any prior
or other parties. In the event Pledgor requests that Lender take or omit to take
action(s) with respect to the Collateral, Lender may refuse so to do with
impunity if Pledgor does not, upon request of Lender, post sufficient,
creditworthy indemnities with Lender which, in Lender's sole discretion, are
sufficient to hold it harmless from any possible liability of any kind in
connection therewith.
G. Waivers by Pledgor. Pledgor agrees that Lender, at any time and without
affecting its rights in the Collateral and without notice to Pledgor, may grant
any extensions, releases or other modifications of any kind respecting the Loan
Documents, the Obligations and any Collateral. Pledgor, except as otherwise
provided herein or in the Loan Documents, waives all notices of any kind in
connection with the Obligations, the Loan Documents and any changes therein or
defaults or enforcements proceedings thereunder, whether against Pledgor or any
other party. Pledgor hereby waives any rights it has at equity or in law to
require Lender to apply any rights of marshalling or other equitable doctrines
in such circumstances.
H. Remedies Upon Default. After the occurrence of any Event of Default (as
defined in the Loan Documents) or if any representation, warranty or agreement
of Pledgor hereunder is breached or proves to be false, erroneous or misleading
in any material respect:
1. Lender may transfer or cause to be transferred any of the Collateral
into its own or a nominee's or nominees' names.
2. Lender shall be entitled to receive and apply in payment of the
Obligations any cash dividends, interest or other payment on the Collateral.
3. Lender shall be entitled to exercise in Lender's discretion all voting
rights, if any, pertaining to the Collateral, and in connection therewith and at
the written request of Lender, Pledgor shall promptly execute any appropriate
dividend, payment or brokerage orders or proxies.
4. Pledgor shall promptly take any action necessary or required or
requested by Lender, in order to allow Lender fully to enforce the pledge of the
Collateral hereunder and realize thereon to the fullest possible extent
including, but not limited to, the filing of any claims with any court,
liquidator or trustee, custodian, receiver or other like person or party.
5. Lender shall have all the rights and remedies granted or available to it
hereunder, under the Uniform Commercial Code as in effect from time to time in
Delaware, under any other statute or the common law, or under any of the Loan
Documents, including without limitation the right to sell the Collateral or any
portion thereof at one or more public or private sales upon ten (10) days'
written notice and to bid thereat or purchase any part or all thereof in its own
or a nominee's or nominees' names, free and clear of any equity of redemption;
and to apply the net proceeds of the sale, after deduction for any expenses of
sale, including without limitation the payment of all Lender's reasonable
attorneys' fees in connection with the Obligations and the sale, to the payment
of the Obligations in any manner or order which Lender in its sole discretion
may elect, without further notice to or consent of Pledgor and without regard to
any equitable principles of marshalling or other like equitable doctrines.
6. Lender may increase, in its sole discretion, but shall not be required
to do so, the Obligations by making additional advances or incurring expenses
for the account of Pledgor deemed appropriate or desirable by Lender in order to
protect, enhance, preserve or otherwise further the sale or disposition of the
Collateral or any other property it holds as security for the Obligations. In
the event of a default, the Lender will either a) permit Pledgor to sell vested
shares to reimburse Lender for Pledgor's Obligations; b) provided a sale of
Pledgor's vested shares would not be permitted due to a quiet period or similar
event, Lender will purchase from
<PAGE>
Pledgor the necessary amount of vested shares to pay off the Obligations of
Pledgor to Lender; or c) extend additional amounts of time to Pledgor before
Collateral is used to pay off Pledgor's obligations.
I. Dispositions of Collateral. Pledgor recognizes that Lender may be unable
to effect a sale to the public of all or part of the Collateral by reason of
certain prohibitions or restrictions in the federal or state securities laws and
regulations (collectively, the "Securities Laws"), or the provisions of other
federal and state laws, regulations or rulings, but may be compelled to resort
to one or more private sales to a restricted group of purchasers who will be
required to agree to acquire the Collateral for their own account, for
investment and not with a view to the further distribution or resale thereof
without restriction. Pledgor agrees that any sales(s) so made may be at prices
and on other terms less favorable to Pledgor than if the Collateral was sold to
the public, and that Lender has no obligation to delay sale of the Collateral
for period(s) of time necessary to permit the issuer thereof to register the
Collateral for sale to the public under any of the Securities Laws. Pledgor
agrees that negotiated sales whether for cash or credit made under the foregoing
circumstances shall not be deemed for that reason not to have been made in a
commercially reasonable manner. Pledgor shall cooperate with Lender and shall
satisfy any requirements under the Securities Laws applicable to the sale or
transfer of the Collateral by Lender.
In connection with any sale or disposition of the Collateral, Lender is
authorized to comply with any limitation or restriction as it may be advised by
its counsel is necessary or desirable in order to avoid any violation of
applicable law or to obtain any required approval of the purchaser(s) by any
governmental regulatory body or officer and it is agreed that such compliance
shall not result in such sale being considered not to have been made in a
commercially reasonable manner nor shall Lender be liable or accountable by
reason of the fact that the proceeds obtained at such sale(s) are less than
might otherwise have been obtained.
Lender may elect to obtain the advice of any independent nationally-known
investment banking firm, which is a member firm of the New York Stock Exchange,
with respect to the method and manner of sale or other disposition of any of the
Collateral, the best price reasonably obtainable therefor, the consideration of
cash and/or credit terms, or any other details concerning such sale or
disposition. Lender, in its sole discretion, may elect to sell on such credit
terms which it deems reasonable.
J. Lender's Expenses. Pledgor shall pay Lender on demand all costs and
expenses incurred by Lender (including, without limitation, counsel fees and
expenses) in connection with (i) the preparation, negotiation, and closing of
this Pledge Agreement, and any modifications hereto, (ii) the custody,
preservation, sale or collection or realization of the Collateral, and (iii) the
exercise or enforcement of Lender's rights hereunder.
K. Successors and Assigns. This Pledge Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
personal representatives, successors and assigns and shall be governed as to its
validity, interpretation and effect by the laws of the State of Delaware; and
any terms used herein which are defined in the Uniform Commercial Code as
enacted in Delaware shall have the meanings therein set forth.
L. Amendments and Waivers. No amendment or waiver of any provision of this
Agreement nor consent to any departure by Pledgor herefrom shall in any event be
effective unless the same shall be in writing and signed by Lender, and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No failure or delay on
the part of Lender in the exercise of any right, power, or remedy under this
Pledge Agreement or any of the Loan Documents shall under any circumstances
constitute or be deemed to be a waiver thereof, or prevent the exercise thereof
in that or any other instance.
M. Attorney-in-Fact. Pledgor hereby irrevocably appoints Lender as its
attorney-in-fact, in the name of Pledgor or otherwise, from time to time in
Lender's discretion and at Pledgor's expense, to take any action and to execute,
deliver and record any instruments or documents in connection with the
Collateral which Lender may deem necessary or advisable to accomplish the
purposes of this Pledge Agreement including, without limitation, to receive,
endorse, and collect all instruments made payable to Pledgor representing any
dividend, interest, or other distribution in respect of the Pledged Collateral
or any part thereof and to give full discharge for the same. Lender shall not,
in its capacity as such attorney-in-fact, be liable for any acts or omissions,
nor for any error of judgment or mistake of fact or law, but only for gross
negligence or willful misconduct.
<PAGE>
N. Entire Agreement. This Pledge Agreement, and all agreements and
instruments to be delivered by the parties pursuant hereto or in connection
herewith, represent the entire understanding of the parties with respect to the
subject matter hereof. Except as otherwise indicated, all agreements defined
herein refer to the same as from time to time amended or supplemented or the
terms thereof waived or modified in accordance herewith and therewith. Any
provision hereof found to be illegal, invalid or unenforceable for any reason
whatsoever shall not affect the legality, validity or enforceability of the
remainder hereof.
P. Joint and Several Obligations. If more than one Pledgor signs this
Pledge Agreement, all references herein to Pledgor shall include all such
Pledgors and each shall be jointly and severally bound by the terms and
provisions hereof.
Q. Notices. All notices, demands or other communications required or
permitted hereunder shall be in writing and shall be given as provided in the
Note, using Pledgor's address as indicated below.
R. Partial Releases; Termination. Any of the Collateral may be released
from this Pledge Agreement without altering, varying, or diminishing in any way
this Pledge Agreement or the security interest granted hereby as to the
Collateral not expressly released, and this Pledge Agreement and such security
interest shall continue in full force and effect as to all of the Collateral not
expressly released. This Pledge Agreement and Lender's rights in the Collateral
shall cease, terminate and be void upon the repayment in full of the
Obligations. Upon such repayment and termination, Lender shall execute such
documents as may reasonably be required by Pledgor to release Lender's security
interest in the Collateral.
IN WITNESS WHEREOF, Pledgor has executed this Pledge Agreement as of the
14th day of July, 1999.
WITNESS OR ATTEST: PLEDGOR:
/s/ A. Christopher Ducanes /s/ Gregory A. Pratt
- - - ----------------------------- --------------------------
Name: Gregory A. Pratt
Address: 1125 Kaolin Road
Kennett Square, PA 19348
Fax No.: 610-444-5795
<PAGE>
Schedule A
Description of Pledged Securities
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Stock Certificate No. of Percentage of
Issuer Class of Stock No. Shares Issued Shares
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OAO Technology Common Stock TBD 750,000 5%
Solutions, Inc.
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