<PAGE>
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UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
Amendment No. 1
(Mark One) Annual Report Pursuant to Section 13 or 15(d)
[X] of the Securities Exchange Act of 1934 [Fee Required]
For Fiscal Year Ended June 30, 1996
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 [No Fee Required]
For the Transition Period From ..... to .....
Registrant, State of Incorporation,
Address and Telephone Number
----------------------------
GRC INTERNATIONAL, INC.
(a Delaware Corporation)
Commission 1900 Gallows Road I.R.S. Employer
File No. Vienna, Virginia 22182 Identification No.
- ------------ ------------------
1-7517 (703) 506-5000 95-2131929
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- ------------------------
Common Stock, $.10 par value New York Stock Exchange
Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such report(s), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO .
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of July 31, 1996, the aggregate market value of the Registrant's voting
common stock held by non-affiliates was $123,733,700. As of July 31, 1996,
there were 9,291,203 shares of the Registrant's $.10 par value common stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Corporation's 1996 Annual Report to Stockholders for the
year ended June 30, 1996 are incorporated by reference into Parts I and II of
this report.
Portions of the Proxy Statement for the Corporation's 1996 Annual Meeting
of Shareholders are incorporated by reference into Part III of this report. The
Proxy Statement shall be filed in accordance with the rules of the Commission
within 120 days after the close of the fiscal year to which this report
pertains.
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<PAGE>
EXPLANATORY NOTE
----------------
This Amendment No. 1 on Form 10-K/A to the Annual Report on Form 10-K
for the year ended June 30, 1996 (the "Form 10-K") hereby amends the Form 10-K
to include the exhibits filed herewith as indicated on the exhibit index.
SIGNATURES
----------
Pursuant to the requirements of section 13 or 15(d) of the Securities
and Exchange Act of 1934, the Registrant has duly caused this Amendment to
be signed on its behalf by the undersigned, thereunto duly authorized.
GRC INTERNATIONAL INC.
Date: October 1, 1996 By: /s/ Jim Roth
--------------- -----------------------------
Jim Roth
President and Chief Executive
Office, and Director
Pursuant to the Securities and Exchange Act of 1934, this Amendment
has been signed below by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated:
Date: October 1, 1996 By: /s/ Jim Roth
--------------- -------------------------------
Jim Roth
President and Chief Executive
Officer, and Director
Date: October 1, 1996 By: /s/ Ronald B. Alexander
--------------- -------------------------------
Ronald B. Alexander
Senior Vice President-Finance,
Chief Financial Officer and
Treasurer
Date: October 1, 1996 By: /s/ H. Furlong Baldwin
--------------- -------------------------------
H. Furlong Baldwin, Director*
*by Ronald B. Alexander
pursuant to Power of Attorney
Date: October 1, 1996 By: /s/ Leslie B. Disharoon
--------------- -------------------------------
Leslie B. Disharoon, Director*
*by Ronald B. Alexander
pursuant to Power of Attorney
41
<PAGE>
Date: October 1, 1996 By: /s/ Charles H.P. Duell
--------------- -------------------------------
Charles H.P. Duell, Director*
*by Ronald B. Alexander
pursuant to Power of Attorney
Date: October 1, 1996 By: /s/ Edward C. Meyer
--------------- -------------------------------
Edward C. Meyer, Chairman*
of the Board
*by Ronald B. Alexander
pursuant to Power of Attorney
Date: October 1, 1996 By: /s/ George R. Packard
--------------- -------------------------------
George R. Packard, Director*
*by Ronald B. Alexander
pursuant to Power of Attorney
Date: October 1, 1996 By: /s/ Herbert Rabin
--------------- -------------------------------
Herbert Rabin, Director*
*by Ronald B. Alexander
pursuant to Power of Attorney
Date: October 1, 1996 By: /s/ Harris W. Seed
--------------- -------------------------------
Harris W. Seed, Director*
and Assistant Secretary
*by Ronald B. Alexander
pursuant to Power of Attorney
Date: October 1, 1996 By: /s/ E. Kirby Warren
--------------- -------------------------------
E. Kirby Warren, Director*
*by Ronald B. Alexander
pursuant to Power of Attorney
Date: October 1, 1996 By: /s/ Joseph R. Wright, Jr.
--------------- -------------------------------
Joseph R. Wright, Jr., Director*
*by Ronald B. Alexander
pursuant to Power of Attorney
42
<PAGE>
INDEX TO EXHIBITS
(Exhibit Numbers correspond to Exhibit Table,
Regulation S-K, Item 601)
Exhibit
Number
- ------
3.1 Restated Certificate of Incorporation (incorporated by reference to
Exhibit 3.1 to the 1994 Form 10-K)
3.2 Bylaws (incorporated by reference to Exhibit 3.2 to the 1995 Form
10-K)
10.1* 1985 Employee Stock Option Plan
10.2*+ 1994 Employee Option Plan
10.3* Officers Stock Option Plan
10.4*+ Cash Compensation Replacement Plan
10.5* Incentive Compensation Plan (incorporated by reference to Exhibit 10.7
to the 1995 Form 10-K)
10.6*+ Directors Fee Replacement Plan
10.7*+ Directors Phantom Stock Plan
10.8*+ Directors Retirement Plan
10.9+ Amended and Restated Revolving Credit and Term Loan Agreement, with
Exhibits, with Mercantile-Safe Deposit & Trust Company, dated as of
February 12, 1996, First Confirmation and Amendment thereto dated May
15, 1996, Second Confirmation and Amendment thereto dated July 18,
1996, and Third Confirmation and Amendment thereto dated September 24,
1996
10.10 Lease Agreement dated as of June 30, 1989, with Exhibits, between the
Company and Centennial III Limited Partnership (incorporated by
reference to Exhibit 10.17 to the 1989 Form 10-K)
10.11 Lease Amendment No. 1, with Exhibits, to Lease between the Company and
Centennial III Limited Partnership (incorporated by reference to
Exhibit 10.6 to the 1990 Form 10-K)
10.12 Lease Amendments Nos. 2, 3, 4 and 5 to Lease between the Company and
Richmond Land Corporation (as successor to Centennial III Limited
Partnership) (incorporated by referenced to Exhibit 10.12 to the 1994
Form 10-K)
<PAGE>
10.13 Lease Amendment No. 6 to Lease between the Company and Richmond Land
Corporation (as successor to Centennial III Limited Partnership)
(incorporated by referenced to Exhibit 10.13 to the 1995 Form 10-K)
10.14 Amended and Restated Rights Agreement dated June 30, 1995 between the
Company and the American Stock Transfer & Trust Company (incorporated
by referenced to Exhibit 10.14 to the 1995 Form 10-K)
10.15*+ Employment Agreement between the Company and Jim Roth
10.16* Note dated July 9, 1992, and Deed of Trust dated as of August 11,
1993, by and between the Company and Jim Roth (incorporated by
reference to Exhibit 10.15 to the 1994 Form 10-K)
10.17*+ Employment Agreement between the Company and Gary L. Denman
10.18*+ Employment Agreement between the Company and James P. McCoy
10.19*+ Employment Agreement between the Company and Thomas E. McCabe
10.20*+ Employment Agreement between the Company and Clifford C. Bream
10.21*+ Employment Agreement between the Company and Ronald B. Alexander
10.22 Purchase and Sale Agreement and Joint Escrow Instructions between
General Research Corporation and Bermant Development Company
(incorporated by reference to Exhibit 10.19 to the 1995 Form 10-K)
10.23 First Amendment to Purchase and Sale Agreement and Joint Escrow
Instructions between General Research Corporation and Bermant
Development Company (incorporated by reference to Exhibit 10.20 to the
1995 Form 10-K)
10.24 Building Lease between the Company and Bermant Development Company
(incorporated by reference to Exhibit 10.21 to the 1995 Form 10-K)
10.25 Interim Lease between the Company and Bermant Development Company
(incorporated by reference to Exhibit 10.22 to the 1995 Form 10-K)
<PAGE>
10.26+ Patent Application Assignment and Royalty Agreement dated as of
October 15, 1993, by and among the Company (as successor to SWL Inc.),
Robert E. Pfister and William D. Kight
11+ Statement of Computation of Earnings Per Share
21+ Subsidiaries of the Registrant
23 Consent of Deloitte & Touche LLP (included on Page 43 of Form 10-K)
24 Powers of Attorney (included as a part of signature pages to the
Form 10-K)
27 Financial Data Schedule
*Indicates management contract or compensatory plan.
+Filed herewith.
<PAGE>
Exhibit 10.2
------------
GRC INTERNATIONAL, INC.
1994 EMPLOYEE STOCK OPTION PLAN
1. PURPOSE
The purpose of the 1994 Employee Option Plan is to enable the Company to
attract and retain key employees who are expected to materially contribute to
the prosperity of the Company and its affiliates, by enabling such employees to
acquire a proprietary interest (or increase their proprietary interest) in the
Company in accordance with the terms and conditions of this Plan. It is intended
that certain options granted under the Plan shall constitute incentive stock
options in accordance with the provisions of Section 422 of the Internal Revenue
Code of 1986.
2. DEFINITIONS
2.1. "Board" means the Board of Directors of the Company.
-----
2.2. "Cause", in the context of termination of employment, shall be
-----
defined in the context of executive employment and shall include, but not be
limited to, any material violation by an Optionee of any written employment
agreement, any act of dishonesty with respect to the Company or a Related
Corporation thereof, or the commission of any act reflecting unfavorably on the
Company or a Related Corporation thereof.
2.3. "Code" means the Internal Revenue Code of 1986, as amended from
----
time to time.
2.4. "Committee" means the Committee of the Board appointed pursuant to
---------
Section 4.3 hereof.
2.5. "Company" means GRC International, Inc., a Delaware corporation,
-------
or any successor thereto by merger, consolidation or otherwise which may agree
to continue this Plan.
2.6. "Director" means director of the Company.
--------
2.7. "Disability" means the inability to engage in any substantial
----------
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than twelve months.
2.8. "Effective Date" means November 4, 1994.
--------------
2.9. "Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended from time to time.
2.10. "Fair Market Value" means the average of the high and low sale
-----------------
prices of the Stock quoted on the New York Stock Exchange Composite Transaction
Reporting System (or on the exchange or system where the Stock is principally
traded) on the date for which Fair Market Value is to be determined (or if
unavailable on such date, on the next preceding trading
rev 9/27/96 FORM 2(e)(4)
<PAGE>
date). If the Fair Market Value is not available on such date, the Committee
shall determine the Fair Market Value; provided, however, in the case of
Incentive Stock Options such determination shall conform to the Treasury
Regulations under Section 422 of the Code.
2.11. "Grant Date" means the date as of which an Option is granted by
----------
the Committee pursuant to the Plan.
2.12. "Incentive Stock Option" means an option that qualifies as an
----------------------
incentive stock option under Section 422 of the Code.
2.13. "Key Employee" means any employee of the Company or a Related
------------
Corporation who has or is expected to materially contribute to its prosperity
of the Company and or a Subsidiary. The term "Key Employee" shall include
officers but exclude non-employee directors.
2.14. "Nonqualified Stock Option" shall mean any Option granted under
-------------------------
this Plan which is not an Incentive Stock Option.
2.15. "Officer" means any person serving as an officer (as defined in
-------
the Company's bylaws).
2.16. "Option" shall mean an Incentive Stock Option or Nonqualified Stock
------
Option granted pursuant to the terms of the Plan without distinction as to the
type.
2.17. "Option Agreement" means the agreement executed between the
----------------
Company and the Optionee pursuant to Section 9 hereof.
2.18. "Option Price" means the purchase price of shares of Stock
------------
subject to an Option.
2.19. "Option Term" means the period beginning on the Grant Date and
-----------
ending on the day an Option expires under the terms of the Option Agreement or
the Plan.
2.20. "Optionee" shall mean any Key Employee who is granted an Option
--------
pursuant to the Plan.
2.21. "Parent" has the meaning set forth in Section 424(e) of the Code.
------
2.22. "Plan" means the GRC International, Inc. 1994 Employee Option Plan.
----
2.23. "Related Corporation" means any Parent or Subsidiary.
-------------------
2.24. "Section 16 Optionee" means an Optionee who is a director,
-------------------
officer or ten percent beneficial owner of the Company, as those terms are used
under Section 16 of the Exchange Act.
2.25. "Stock" means shares of the Company's $0.10 par value common stock.
-----
2.26. "Subsidiary" has the meaning set forth in Section 424(f) of the
----------
Code.
rev 9/27/96
-2-
<PAGE>
2.27. "Substantial Stockholder" shall mean any Key Employee who,
-----------------------
immediately before an Incentive Stock Option is granted, owns (within the
meaning of Section 422(b)(6) of the Code, after the application of the
attribution rules contained in Section 424(d) of the Code) more than 10% of the
total combined voting power of all classes of stock either of the Company or any
Related Corporation thereof.
2.28. "Treasury Regulations" means (i) any proposed or final regulations
--------------------
issued by the Internal Revenue Service with respect to incentive stock options
and any supplement or modification thereof, and (ii) any rulings, procedures,
releases or other position statements published by the Internal Revenue Service
with respect to incentive stock options.
3. STOCK SUBJECT TO PLAN
The Stock subject to Options to be granted under the Plan may be shares
of the Company's authorized but unissued Stock, or shares of Stock reacquired by
the Company and held as treasury stock. The aggregate number of shares which may
be issued under Options under this Plan shall not exceed 750,000 shares of
Stock, of which up to 550,000 may be issued to Officers of the Company, unless
such number of shares are adjusted as provided in Section 13. In the event that
any outstanding Option under the Plan expires or terminates for any reason
without having been exercised in full, the shares of Stock allocable to the
unexercised portion of such Option shall become available for other Options
under the Plan.
4. ADMINISTRATION OF PLAN
4.1. Administration by Committee. The Plan shall be administered by the
---------------------------
Committee which shall be appointed pursuant to Section 4.3 hereof.
4.2. Powers of Committee. The Committee has full and final authority
-------------------
in its discretion to:
(i) determine Key Employees, taking into account the nature of the
services rendered by the particular employee to the Company or a Subsidiary, the
employee's potential contribution to the long-term success of the Company or a
Subsidiary and such other factors as the Committee in its discretion shall deem
relevant;
(ii) grant Options from time to time to such Key Employees;
(iii) determine the duration, terms and provisions of the Options
and of Option Agreements, including but not limited to, any vesting provisions;
(iv) condition the exercise of any Options granted hereunder on the
attainment of certain specified goals by the Key Employee or by the Company or a
Related Corporation thereof;
(v) restrict the sale or otherwise provide for the repurchase of
shares acquired pursuant to the terms of an Option;
(vi) determine the time or times at which Options shall be granted;
(vii) determine the number of shares to be covered by each Option;
rev 9/27/96
-3-
<PAGE>
(viii) determine the Fair Market Value and the Option Price;
(ix) interpret the Plan;
(x) prescribe, amend and rescind rules and regulations relating to
the Plan; and
(xi) make all other determinations, orders and decisions necessary
or advisable for the administration of the Plan. All such determinations and
actions shall be conclusive and binding for all purposes and upon all persons.
4.3. Committee.
---------
4.3.1. The Plan shall be administered by a Committee appointed or
designated by the Board. The Committee shall at all times contain at least two
members, each of which is a Director. Members of the Committee shall not be
eligible to receive Options and shall be "disinterested persons" as defined in
Rule 16b-3 of the Exchange Act.
4.3.2. The Board of Directors may from time to time remove members
from, or add members to, the Committee. Vacancies on the Committee, however
caused, shall be filled by the Board.
4.3.3. The interpretation and construction by the Committee of any
provision of the Plan, or of any Option granted under it, shall be final.
5. GRANTING OF OPTIONS
5.1. Granting of Options to Key Employees.
------------------------------------
5.1.1. The Committee may grant Options under the Plan to Key
Employees for such number of shares as the Committee may determine, except that
no Key Employee may be granted in any fiscal year Options to purchase more than
100,000 shares of Stock.
5.1.2. The Committee shall designate any Option granted as either an
"Incentive Stock Option" or "Nonqualified Stock Option" or the Committee may
designate a portion of a grant as an "Incentive Stock Option" and the remaining
portion as a "Nonqualified Stock Option". Any portion of a grant shall be a
"Nonqualified Stock Option" if it (i) is not designated as an "Incentive Stock
Option" or (ii) even if designated as an "Incentive Stock Option" shall fail to
meet the applicable requirements of Code Section 422. More than one Option may
be granted to a Key Employee subject to the terms and restrictions set forth
herein.
5.1.3. An Option shall not be granted prior to the Effective Date or
on or after the tenth anniversary of the Effective Date.
5.2. Limitation on Grant of Incentive Stock Options. Incentive Stock
----------------------------------------------
Options shall comply with the requirements of Code Section 422.
rev 9/27/96
-4-
<PAGE>
6. OPTION PRICE
6.1 Committee to Determine Option Price. The Committee shall determine
-----------------------------------
the Option Price of shares of Common Stock for which Options are granted under
the Plan. The Option Price per share of Common Stock shall be at least equal to
the Fair Market Value of a share of Common Stock on the Grant Date.
6.2 Incentive Stock Option Price Where Optionee is Substantial
-----------------------------------------------------------
Stockholder. If any Optionee is a Substantial Stockholder, the Option Price
- -----------
determined by the Committee for an Incentive Stock Option shall not be less than
110% of the Fair Market Value of the Common Stock on the Grant Date.
7. TERM OF OPTIONS
7.1 In General. The term of each Option granted under this Plan shall
----------
be for such period as the Committee shall determine, not to exceed 10 years, and
shall be subject to earlier termination as hereinafter provided. An Option
shall not be exercisable after the expiration of the Option Term.
7.2 Term of Incentive Stock Option Where Optionee is Substantial
------------------------------------------------------------
Stockholder. Notwithstanding Section 7.1, if any Optionee is a Substantial
- -----------
Stockholder, the term of an Incentive Stock Option shall not exceed 5 years from
the Grant Date.
8. EXERCISE OF OPTIONS
8.1 Time of Exercise. Each Option shall be exercisable in accordance
----------------
with the terms of the applicable Option Agreement, except that Options shall
become immediately exercisable in full, notwithstanding any delayed
exercisability provisions in the Option Agreement, upon the death or Disability
of the Optionee.
8.2 Manner of Exercise. To exercise an Option in whole or in part, an
------------------
Optionee shall give written notice of exercise to the Committee specifying the
number of shares as to which the Option is being exercised, accompanied by
payment in full of the Option Price for such shares either in cash or in such
other consideration as approved by the Committee in its sole discretion
including, but not limited to, (i) shares of previously owned Common Stock held
by the Optionee for at least six (6) months, or (ii) in the event of hardship
and with the advance approval of the Committee, the Company's retention of
shares of Common Stock otherwise issuable to the Optionee upon exercise. Shares
of Common Stock used to make payments under (i) and (ii) shall be valued at Fair
Market Value on the date such notice is received by the Company's Stock Option
Administrator (or if unavailable on such date, on the next preceding trading
date), and the number of shares to be required for payments under (I) or (ii)
shall be rounded to the nearest whole share so that no cash payment shall be
required by reason of any fractional amount. Not less than 10 shares may be
purchased at any one time unless the number purchased is the total number
purchasable under the Option.
8.3 No Rights of Stockholder. The holder of an Option shall not have
------------------------
any of the rights of a stockholder with respect to the shares covered by his
Option until the Option is duly exercised.
rev 9/27/96
-5-
<PAGE>
8.4 Additional Restrictions on Exercise. The exercise of each Option
-----------------------------------
shall also be subject to any restrictions, terms or conditions contained in the
rules and regulations of the Committee or in the Option Agreement.
9. OPTION AGREEMENT
Promptly after the grant of an Option under the Plan, and before the
exercise of any part thereof, the Company and the Optionee shall execute an
Option Agreement incorporating the terms of this Plan and specifying the Option
Price, the number of shares of Common Stock subject to the Option, the terms and
conditions of the Option, and such other matters, as the Committee in its sole
discretion may determine. In the case of an Incentive Stock Option the Option
Agreement shall contain (i) such provisions as are required of incentive stock
options under the Code and applicable Treasury Regulations, and (ii) a provision
that the Option is not transferable by the Optionee other than by will or the
laws of descent and distribution, and is exercisable, during his lifetime, only
by him. The Option Agreement may also contain any other provision restricting
exercise or otherwise as the Committee shall deem appropriate; provided that in
the case of an Incentive Stock Option such provision is not inconsistent with
Section 422 of the Code.
10. TERMINATION OF EMPLOYMENT
10.1 Termination For Any Reason Other Than Death Or Disability.
---------------------------------------------------------
10.1.1 If an Optionee's employment ceases for any reason other
than death or Disability or termination for Cause, his or her Option(s) shall
remain in effect until the earlier of the end of the Option Term or the
expiration of 3 months after the Optionee's termination.
10.1.2 Any change in corporate ownership or structure which renders
the employees of any Related Corporation ineligible for further grants of
Incentive Stock Options by the Company under Section 422 of the Code shall be
considered a termination for reasons other than death or Disibility. Options
held by such employees (whether Incentive Stock Options or Non-Qualified Stock
Options) shall be governed by the provisions of Section 10.1.1.
10.2. Termination For Cause. If an Optionee's employment is terminated
---------------------
for Cause, his or her Options shall lapse forthwith.
10.3. Disability. If an Optionee's employment ceases by reason of such
----------
Optionee's Disability, his or her Options shall remain in effect until the
earlier of the end of the Option Term or the expiration of 1 year after the
Optionee's termination.
10.4 Death. If an Optionee employment ceases by reason of Optionee's
-----
death, his or her Options shall remain in effect until the earlier of the end of
the Option Term or the expiration of 1 year after Optionee's death, and may be
exercised by the person to whom the Option has been transferred by will or the
laws of the descent and distribution.
10.5 Committee's Discretion. Notwithstanding the foregoing provisions of
----------------------
this Section 10, the Committee may, in its absolute discretion, extend the
privilege to exercise all or any part of the Option in accordance with its terms
for any period of time within the Option Term.
rev 9/27/96
-6-
<PAGE>
11. NON-GUARANTEE OF EMPLOYMENT
Nothing in the Plan or in any Option granted pursuant to the Plan shall
be construed as a contract of employment between the Company or a Related
Corporation thereof and the Optionee, or as a contractual right to continue in
the employ of the Company or a Related Corporation thereof or as a limitation of
the right of the Company or a Related Corporation thereof to discharge the
Optionee at any time.
12. NON-TRANSFERABILITY OF OPTIONS
Except as may be expressly permitted by the Committee with respect to any
Nonqualified Stock Option, Options shall not be transferable otherwise than by
will or the laws of descent and distribution and during the lifetime of the
Optionee, an Option may be exercised only by him or her.
13. STOCK ADJUSTMENT
13.1 Changes in Capital Structure. In the event that the outstanding
----------------------------
shares of Stock of the Company are hereafter increased or decreased or changed
into or exchanged for a different number or kind of shares other than securities
of the Company or of another corporation by reason of reorganization, merger,
consolidation, recapitalization, reclassification, stock split-up, combination
of shares, or dividend payable in capital stock, appropriate adjustment shall be
made by the Committee in the number and kind of shares for the purchase of which
Options may be granted under the Plan. In addition, the Committee shall make
appropriate adjustment in the number and kind of shares as to which outstanding
Options, or portions thereof then unexercised, shall be exercisable to the end
that the Optionee's proportionate interest shall be maintained as before the
occurrence of the event. No outstanding Incentive Stock Option shall be adjusted
in a manner which would disqualify the Incentive Stock Option as an incentive
stock option under Section 422 of the Code. Any such adjustment made by the
Committee shall be conclusive.
13.2 Liquidation or Dissolution. If the Company dissolves and
--------------------------
liquidates, then notwithstanding any restrictions on exercise set forth in this
Plan or any Option, each Optionee shall have the right to exercise his Option at
any time on or before the tenth day prior to the effective date of such
liquidation and dissolution. The Committee may establish a different period for
exercise by notice to the Optionee, and it may establish limitations on exercise
to avoid subjecting the Optionee to liability under Section 16(b) of the
Exchange Act. Any Option not so exercised shall terminate on the last day for
exercise prior to such effective date.
13.3 Limitation on Rights of Optionee. Except as expressly provided in
--------------------------------
Section 13.1 or 13.2 hereof, an Optionee shall have no rights by reason of the
issuance of (i) shares of Common Stock of the Company pursuant to this Plan,
(ii) additional shares of Common Stock, (iii) any other security or debenture
convertible into Stock, (iv) or any other equity security, including issuance
pursuant to a plan of merger, consolidation, or statutory share exchange, and no
adjustment by reason thereof shall be made with respect to the number of shares
of Stock subject to an Option or the Option Price.
13.4 Rights of the Company. The grant of an Option pursuant to the Plan
---------------------
shall not affect in any way the right or power of the Company to
engage in corporate transactions, including but not limited to issuing
additional shares of stock; making adjustments,
rev 9/27/96
-7-
<PAGE>
reclassifications, reorganizations or changes in its capital or business
structure; participating in mergers, consolidations, or share exchanges with
one or more corporations or entities; or dissolving, liquidating, or selling
or transfering all or any part of its business or assets.
14. LEGAL RESTRICTIONS
The Company will not be obligated to issue or deliver shares of Stock
upon exercise of an Option if counsel to the Company determines that such
issuance would violate any law or regulation of any governmental authority or
any agreement between the Company and any securities exchange upon which the
Stock is then listed or quoted. In connection with any stock issuance or
delivery, the person acquiring the shares shall, if requested by the Company,
give assurances satisfactory to counsel by the Company regarding such matters as
the Company may deem desirable, and other restrictions may apply to the shares,
to assure compliance with all legal requirements. The Company shall in no event
be obliged to take any action in order to cause the exercise of any Option.
15. TERM OF PLAN
Options may be granted pursuant to the Plan from time to time at any time
after the Effective Date, except that Incentive Stock Options may not be granted
more than 10 years after the Effective Date.
16. AMENDMENT OF THE PLAN
The Board may at any time terminate, suspend or amend the Plan,
provided that no such amendment shall be made without shareholder approval
- --------
if such shareholder approval is required by any federal or state law or
regulation or the rules of any stock exchange or system on which the Stock
may then be listed or quoted.
17. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS
Subject to the terms and conditions of the Plan and any Option Agreement,
the Committee may modify, extend or renew outstanding Options granted under the
Plan, or accept the surrender of outstanding Options, to the extent not
previously exercised, and authorize the granting of new Options in substitution
therefor. The Committee may not change the terms or conditions of any
outstanding Option in a manner that would adversely affect the rights of the
Optionee without the express written consent of the Optionee (or the person
entitled to exercise the Option if the Optionee is deceased) unless permitted by
the terms of the Option Agreement.
18. APPLICATION OF FUNDS
The proceeds received by the Company from the sale of Stock pursuant to
the exercise of the Optionee shall be used for its general corporate purposes.
19. WITHHOLDING TAXES
19.1 Elections to Pay Withholding Taxes. Any Optionee may pay the amount
----------------------------------
of any federal, state or local taxes required by law to be withheld in
connection with the exercise of an Option, as well as any additional taxes on
the exercise up to Optionee's marginal rate, either in
rev 9/27/96
-8-
<PAGE>
cash or in such other consideration as approved by the Committee in its sole
discretion including, but not limited to (i) shares of previously owned Stock
held by the Optionee least six months (valued at Fair Market Value), or (ii) the
Company's retention of shares of Stock otherwise issuable to the Optionee upon
exercise (valued at Fair Market Value); provided that only the amount of taxes
--------
required to be withheld by law may be paid pursuant to (ii). Shares of Stock
used to make payments under (i) and (ii) shall be valued as of the exercise
date, and the number of shares to be required for payments under (i) or (ii)
shall be rounded to the nearest whole share so that no cash payment shall be
required by reason of any fractional amount.
19.2 Compulsory Payment of Tax Withholding Obligations. In the event an
-------------------------------------------------
Optionee does not satisfy his tax withholding obligations pursuant to Section
19.1, the Company or a Related Corporation thereof shall have the right to
deduct from any compensation or any other payment of any kind due Optionee the
amount of any federal, state or local taxes required by law to be withheld as
the result of the exercise of an Option or the disposition (as that term is
defined in Section 424(c) of the Code) of shares acquired pursuant to the
exercise of an Incentive Stock Option. In lieu of such deduction, the Company
may require the Optionee to make a cash payment to the Company or a Related
Corporation thereof equal to the amount required to be withheld. In the event
the Optionee does not make such payment when requested, the Company may refuse
to issue any stock certificate pursuant to the exercise of any Option until
arrangements satisfactory to the Committee for such payment have been made.
20. MISCELLANEOUS
20.1 Exclusion from Retirement and Fringe Benefit Computation. The award
--------------------------------------------------------
and exercise of Options pursuant to the Plan shall not be taken into account as
"wages," "salary," or "compensation" in determining eligibility, benefits or
otherwise under (i) any pension, retirement, profit-sharing or other qualified
or non-qualified plan or deferred compensation; (ii) any employee welfare or
fringe benefit plan including, but not limited to, group life or disability
insurance; or (iii) any form of extraordinary pay including, but not limited to,
bonuses, sick pay and vacation pay.
20.2 Notice of Disqualifying Disposition. In the event an Optionee makes
-----------------------------------
a disposition (as that term is defined in Section 424(c) of the Code) of any
shares of Stock acquired pursuant to the exercise of an Incentive Stock
Option within two years from the date the Incentive Stock Option is granted or
within one year after the shares are transferred to the Optionee, the Optionee
shall notify the Committee of such disposition in writing.
20.3 Gender. As used herein the masculine gender shall include the
------
feminine as the identity of an Optionee may require.
20.4 Governing Law. The validity, interpretation and administration of
-------------
the Plan and of any rules, regulations, determinations or decisions made
thereunder, and the rights of any and all persons having or claiming to have any
interest therein or thereunder, shall be determined exclusively in accordance
with the laws of the State of Delaware, and applicable federal law, without
reguard to principles of conflicts of law. Without limiting the generality of
the foregoing, the period within which any action in connection with the Plan
must be commenced shall be governed by the laws of the State of Delaware without
regard to the place where the
Rev 9/27/96
-9-
<PAGE>
act or omission complained of took place, the residence of any party to such
action or the place where the action may be brought.
20.5 Headings. The headings in this Plan are for reference purposes only
--------
and shall not affect the meaning or interpretation of the Plan.
20.6 Notices. All notice and other communications made or given pursuant
-------
to this Plan shall be in writing and shall be sufficiently made or given if hand
delivered or mailed by certified mail, addressed to the Optionee at the address
contained in the records of the Company, or to the Company at its principal
office.
-10-
rev 9/27/96
<PAGE>
Exhibit 10.4
------------
GRC INTERNATIONAL, INC.
CASH COMPENSATION REPLACEMENT PLAN
1. PURPOSE
The loyal and dedicated service of key executives is essential to the
growth and progress of any public company. Accordingly, the Cash Compensation
Replacement Plan (the "Plan") of GRC International, Inc. (the "Company") has
been adopted to better enable the Company to retain and attract qualified key
executives, while reducing the Company's cash outlay for executive compensation.
The Plan is also designed to provide a stronger nexus between the contributions
made to the Company by its key executives and the value of the compensation they
receive.
2. ADMINISTRATION
The Plan will be administered on a calendar quarter basis. The Plan
will be administered by a committee of three or more persons (the "Committee").
Such persons shall not be eligible to participate in the Plan, and will be
appointed by the Board of Directors of the Company. Awards of the Company's
Common Stock, par value $.10 per share ("Stock"), and options to purchase the
Stock ("Options"), and the amount and nature of the Stock and Options so
awarded, will be automatic, as provided in Sections 5 and 6 of the Plan. All
questions of interpretation of the Plan will be determined by the Committee.
Such determinations will be final and binding upon all persons having an
interest in the Plan.
3. PARTICIPATION IN THE PLAN
Employees of the Company (or subsidiaries thereof) who are determined
by the Committee to be "key executives" for the purposes of this Plan, whether
or not such employees are officers of the Company or any subsidiary of the
Company, are eligible to participate in the Plan. A list of such eligible
executives will be established by majority vote of the Committee, with such list
to be revised as necessary. In determining which executives may participate in
the Plan, the Committee may take into account the nature of the services
rendered by such executives, their present and potential contributions to the
Company's success, and such other factors as the Committee in its discretion
deems relevant. Options available under the Plan may be granted to key
executives who have received options under other plans and/or may be eligible to
do so in the future.
4. STOCK SUBJECT TO THE PLAN
4.1. Total Shares Available. Up to four hundred forty thousand
----------------------
(440,000) shares (subject to adjustment under Section 8 of the Plan) of Stock
are authorized for issuance under the Plan. Such shares of Stock may be issued
(i) outright, or (ii) upon the exercise of Options. The total number of shares
of Stock awarded under (i) and (ii) shall not exceed 440,000 (subject to
adjustment). The Company may issue authorized but unissued shares of its Stock,
may repurchase shares in the open market or in private transactions, or may
otherwise make a sufficient number of shares available under the Plan. The
Company shall not be required to reserve or otherwise set aside funds or shares
of Stock for the payment of its obligations hereunder. The Company shall make
available as and when required a sufficient number of shares of Stock to meet
the needs of the Plan.
4.2. Unexercised or Expired Options. Upon the expiration or
------------------------------
termination of any Option under the Plan, the Stock allocable to the unexercised
or surrendered portion of such
FORM 2(e)(3)
<PAGE>
Option will revert to the Plan's pool of Stock, and shall be available for other
awards of Stock and Options under the Plan.
5. AWARDS OF STOCK
5.1. Fair Market Value of Stock. For purposes of determining the\
--------------------------
number of shares of Stock to be awarded with respect to any calendar quarter,
the fair market value of the Stock shall be the average of the high and low sale
prices of the Stock quoted on the New York Stock Exchange Composite Transaction
Reporting System for the Fridays of such quarter ("Quarterly Fair Market
Value"). If such sale prices are not available for any such Friday, then the
average of the high and low sale prices on the next preceding day on which such
sale prices are available shall be used in lieu thereof.
5.2. Election. Quarterly awards of Stock will be made to each
--------
eligible key executive who has submitted to the Committee at least six (6)
months prior to the end of the calendar quarter in question a written election
to receive Stock in lieu of up to twenty five percent (25%) of salary and up to
one hundred percent (100%) of bonus payable during such quarter. Each such
election shall be effective until revoked by a later written election, but no
such later election shall become effective until the first calendar quarter to
end at least six (6) months after the later election is received by the Company.
The amount of salary and bonus to be applied to Stock awards, in accordance with
a key executive's election, shall be the "Stock Award Compensation".
5.3. Stock Awards and Formula. Shortly after the end of each calendar
------------------------
quarter, there shall be awarded to each key executive who has previously
submitted an appropriate election in accordance with Section 5.2 above, the
nearest whole number of shares of Stock which most closely approximates the key
executive's Stock Award Compensation for the quarter in accordance with the
following formula:
<TABLE>
<S> <C>
[1.25] X [Key Executive's Stock Award Compensation for the Quarter] = Number
- ------------------------------------------------------------------- of
Quarterly Fair Market Value Shares of Stock
</TABLE>
6. Payment of Tax Withholding Obligations. The amount required to
--------------------------------------
be withheld under applicable income tax laws in connection with any award of
Stock under the Plan shall be paid by the Company's retention of shares from the
shares of Stock to be awarded. Shares of Stock used to make such tax withholding
payments shall be valued at the average of the high and low sale prices of the
Stock quoted on the New York Stock Exchange Composite Transaction Reporting
System on the date of award (or if unavailable on such date, on the next
preceding trading date), and the number of shares to be required for payments
shall be rounded up or down to the nearest whole share so that no cash payment
to the Company shall be required by reason of any fractional amount.
6. AWARDS OF OPTIONS
All Options awarded under the Plan will be "non-statutory options,"
and therefore are not entitled to special tax treatment under Section 422 of the
Internal Revenue Code of 1986, as it may be amended from time to time (the
"Code"). Each Option awarded under the Plan will be evidenced by a written
agreement in such form as the Committee may from time to time approve,
consistent with and subject to the following terms and conditions:
6.1. Exercise Price of Options. The exercise price of Options to be
-------------------------
awarded with respect to any calendar quarter shall be twenty five percent (25%)
of the Quarterly Fair Market Value for such quarter.
6.2. Election. Quarterly awards of Options will be made to each
--------
eligible key executive who has submitted to the Committee at least six (6)
months prior to the end of the calendar quarter in question a written election
to receive Options in lieu of up to twenty five
2
<PAGE>
percent (25%) of salary and up to one hundred percent (100%) of bonus payable
during such quarter. Each such election shall be effective until revoked by a
later written election, but no such later election shall become effective until
the first calendar quarter to end at least six (6) months after the later
election is received by the Company. The amount of salary and bonus to be
applied to Option awards, in accordance with a key executive's election, shall
be the "Option Award Compensation".
6.3. Option Awards and Formula. As of the end of each calendar
-------------------------
quarter, there shall be awarded to each key executive who has previously
submitted an appropriate election in accordance with Section 6.2 above, the
nearest whole number of Options which most closely approximates the key
executive's Option Award Compensation for the quarter in accordance with the
following formula:
<TABLE>
<S> <C>
[1.25] X [Key Executive's Option Award Compensation for the Quarter] = Number
- -------------------------------------------------------------------- of Options
(Quarterly Fair Market Value) Minus (Exercise Price of Options)
</TABLE>
6.4. Period of Option. Options awarded under the Plan become
----------------
exercisable in increments. Eighty percent (80%) of each Option is exercisable
immediately; ten percent (10%) of each Option shall become exercisable on or
after the second anniversary of the date on which it was awarded; five percent
(5%) of each Option shall become exercisable on or after the third anniversary
of such date; and five percent (5%) of each Option shall become exercisable on
or after the fourth anniversary of such date; provided, however, that any Option
-------- -------
awarded pursuant to the Plan will become exercisable in full upon the death or
disability of the key executive.
6.5. Exercise of Options.
-------------------
(a) To exercise an Option in whole or in part, an Optionee shall
give written notice of exercise to the Company's Stock Option Administrator
specifying the number of shares as to which the Option is being exercised,
accompanied by payment in full of the Option Price for such shares either in
cash or in such other consideration as approved by the Committee in its sole
discretion including, but not limited to, (i) shares of previously owned Common
Stock which, if acquired by exercise of an option, have been held by the
Optionee for at least six (6) months, or (ii) in the event of hardship and with
the advance approval of the Committee, the Company's retention of shares of
Common Stock otherwise issuable to the Optionee upon exercise. Shares of Stock
used to make payments under (i) and (ii) shall be valued at the average of the
high and low sale prices of the Stock quoted on the New York Stock Exchange
Composite Transaction Reporting System on the date such notice is received by
the Stock Option Administrator (or if unavailable on such date, on the next
preceding trading date), and the number of shares to be required for payments
under (I) or (ii) shall be rounded up or down to the nearest whole share so that
no cash payment shall be required by reason of any fractional amount.
(b) Notwithstanding any other provision in this Plan to the
contrary, no Option may be exercised at a time or in a manner which could result
in the loss of any tax deduction for the Company under Section 162(m) of the
Code.
6.6. Elections to Pay Withholding Taxes. Any key executive may pay
----------------------------------
the amount of any federal, state or local taxes required by law to be withheld
in connection with the exercise of an Option, as well as any additional taxes on
the exercise up to the key executive's marginal rate, either in cash or in such
other consideration as approved by the Committee in its sole discretion
including, but not limited to (i) shares of previously owned Stock, or (ii) the
Company's retention of shares of Stock otherwise issuable to the key executive
upon exercise; provided that only the amount of taxes required to be withheld by
--------
law may be paid pursuant to (ii). Shares of Stock used to make payments under
(i) and (ii) shall be valued at the average of
3
<PAGE>
the high and low sale prices of the Stock quoted on the New York Stock Exchange
Composite Transaction Reporting System on the date the exercise notice is
received by the Company's Stock Option Administrator, and the number of shares
to be required for payments under (i) or (ii) shall be rounded up or down to the
nearest whole share so that no cash payment shall be required by reason of any
fractional amount.
6.7. Termination of Options.
----------------------
(a) Options awarded pursuant to the Plan may not be exercised
after the third anniversary of a key executive's termination as an employee for
any reason, including, but not limited to, such key executive's resignation or
voluntary departure from the Company, involuntary termination by the Company of
such key executive's employment, or termination of employment by reason of
death, disability or retirement. Any Options which have not been exercised on or
before such third anniversary shall thereupon expire, except as provided in
subsection (b) below.
(b) Any Option granted a key executive under the Plan and
unexercised, in whole or in part, on the date of his death may be exercised by
the personal representative of the deceased key executive's estate, or by any
heir, devisee, or other taker who, by will or operation of law, is entitled to
said Option or any portion thereof. In each such case, such Option(s) may be
exercised at any time on or before the third anniversary of the earlier of the
key executive's termination of employment or death, as provided in subsection
(a) above.
(c) Options awarded pursuant to the Plan shall have no stated or
other expiration date except as provide in this Section 6.7. Such Options are
not forfeitable in the event of termination of employment or otherwise.
6.8. No Shareholder Rights By Reason of Options. A key executive
------------------------------------------
shall not have any rights whatsoever as a shareholder with respect to any
unexercised Option until the Option has been duly exercised in accordance with
the procedures approved from time to time by the Committee. No adjustment will
be made for dividends or other rights with respect to which the record date
occurs prior to the date the Option has been duly exercised.
6.9. Options Not Assignable Or Transferable. Options awarded under
--------------------------------------
the Plan are not assignable or transferable other than by will or by the laws of
intestate succession. During the lifetime of a key executive, Options awarded
under the Plan will be exercisable only by that key executive.
7. LIMITATION OF RIGHTS
7.1. No Right to Continue as an Employee. Neither the Plan, the
-----------------------------------
awarding of any Stock or Option, nor any other action taken pursuant to the Plan
constitutes or is evidence of any agreement or understanding, express or
implied, that the Company will retain a key executive for any period of time or
at any particular rate of compensation.
7.2. No Rights to Receive Stock or Options After Eligibility Ceases.
--------------------------------------------------------------
A key executive has no rights to receive Stock or Options under the Plan, and
will not receive any Stock or Options, with respect to any calendar quarter, or
part thereof, in which he or she is no longer considered by the Committee to be
a "key executive".
7.3. Limitation on Rights of Optionee. Except as expressly provided
--------------------------------
in Section 8, an Optionee shall have no rights by reason of the issuance by the
Company to any other person of (i) shares of Stock pursuant to this Plan, (ii)
additional shares of Stock, (iii) any other security or debenture convertible
into Stock, (iv) or any other equity security, including issuance pursuant to a
plan of merger, consolidation, or statutory share exchange, and no adjustment.
4
<PAGE>
by reason thereof shall be made with respect to the number of shares of Stock
subject to an Option or the exercise price.
7.4. Rights of the Company. The grant of an Option pursuant to the
---------------------
Plan shall not affect in any way the right or power of the Company to issue
additional shares of Stock or other securities; to make adjustments,
reclassifications, reorganizations or changes in its capital or business
structure; to participate in a merger, consolidation, or share exchange with
another corporation; or to dissolve, liquidate, or sell or transfer all or any
part of its business or assets.
8. ADJUSTMENTS
In the event any change is made to the Stock by reason of merger,
consolidation, reorganization, recapitalization, stock dividend, stock split,
combination of shares, exchange of shares, change in corporate structure or
otherwise, including but not limited to any change whereby the Stock is
converted into or exchanged for another class of shares or shares of another
entity, appropriate and comparable adjustments will be made to the number and
kind of shares subject to the Plan, and to the number and kind of shares and
price per share of Stock subject to outstanding Options issued pursuant to the
Plan, and to the prices of Stock used in calculating the Quarterly Fair Market
Value of the Stock. All such adjustments will be made in such a manner as
avoids dilution or enlargement of the rights of key executives under the Plan.
9. AMENDMENT OF THE PLAN
The Board of Directors of the Company may suspend or terminate the
Plan or revise or amend it in any respect whatsoever; provided that, without
--------
approval of the shareholders of the Company, no revision or amendment may change
the number of shares subject to the Plan (except as provided in Section 8 of the
Plan) or materially increase the benefits accruing to participants under the
Plan, and provided further that no revision or amendment or termination shall,
----------------
without the consent of the affected key executive(s), impair the rights of any
key executive under any Option previously awarded.
10. LEGAL RESTRICTIONS
The Company will not be obligated to issue shares of Stock if counsel
to the Company determines that such issuance would violate any law or regulation
of any governmental authority or any agreement between the Company and any
national securities exchange upon which the Stock is listed. In connection with
any stock issuance or transfer, the person acquiring the shares shall, if
requested by the Company, give assurances satisfactory to counsel to the Company
regarding such matters as the Company may deem desirable to assure compliance
with all legal requirements. The Company shall in no event be obliged to take
any action in order to cause the exercise of any Option.
11. GOVERNING LAW
The Plan will be governed, and its provisions construed, in accordance
with the laws of the State of Delaware and applicable federal law, without
regard to conflicts of law.
As amended, effective July 1, 1996
Note: Amendments needing shareholder approval are: (i) addition of stock
component and conditional grants of stock, (ii) deletion of expiration date of
the plan.
sec\stk-plns\forms\form-2e3.ccr
5
<PAGE>
Exhibit 10.6
------------
GRC INTERNATIONAL, INC.
DIRECTORS FEE REPLACEMENT PLAN
1. PURPOSE
The loyal and dedicated service of "outside" directors is essential to
the growth and progress of any public company. Accordingly, the Directors Fee
Replacement Plan (the "Plan") of GRC International, Inc. (the "Company") has
been adopted to better enable the Company to retain and attract qualified
outside directors to serve on the Company's Board of Directors, while reducing
the Company's cash outlay of director's fees. The Plan is also designed to
provide a stronger nexus between the contributions made to the Company by its
outside directors and the value of the compensation they receive.
2. ADMINISTRATION
The Plan will be administered on a calendar quarter basis. The Plan
will be administered by a committee of three or more persons (the "Committee")
who will be appointed by the Board of Directors of the Company. Awards of the
Company's Common Stock, par value $.10 per share ("Stock"), and options to
purchase the Stock ("Options"), and the amount and nature of the Stock and
Options so awarded, will be automatic, as provided in Sections 5 and 6 of the
Plan. All questions of interpretation of the Plan will be determined by the
Committee. Such determinations will be final and binding upon all persons
having an interest in the Plan.
3. PARTICIPATION IN THE PLAN
Directors who are not employees of the Company or any subsidiary of
the Company are eligible to participate in the Plan.
4. STOCK SUBJECT TO THE PLAN
4.1. Total Shares Available. Up to one hundred fifty thousand
----------------------
(150,000) shares (subject to adjustment under Section 11 of the Plan) of Stock
are authorized for issuance under the Plan. Such shares of Stock may be issued
(i) outright, or (ii) upon the exercise of Options. The total number of shares
of Stock awarded under (i) and (ii) shall not exceed 150,000. The Company may
issue authorized but unissued shares of its Stock, may repurchase shares in the
open market or in private transactions, or may otherwise make a sufficient
number of shares available under the Plan. The Company shall not be required to
reserve or otherwise set aside funds or shares of Stock for the payment of its
obligations hereunder. The Company shall make available as and when required a
sufficient number of shares of Stock to meet the needs of the Plan.
4.2. Unexercised or Expired Options. Upon the expiration or
------------------------------
termination of any Option under the Plan, the Stock allocable to the unexercised
or surrendered portion of such Option will revert to the Plan's pool of Stock,
and may thereupon become subject to Stock and Options subsequently awarded under
the Plan.
5. AWARDS OF STOCK
5.1. Fair Market Value of Stock. For purposes of determining the
--------------------------
number of shares of Stock to be awarded with respect to any calendar quarter,
the Fair Market Value of the Stock shall be the average of the high and low sale
prices of the Stock quoted on the New York Stock Exchange Composite Transaction
Reporting System for the Fridays of such quarter. If such sale prices are not
available for any such Friday, then the average of the high
<PAGE>
and low sale prices on the next preceding day on which such sale prices are
available shall be used in lieu thereof.
5.2. Election. Quarterly awards of Stock will be made to each
--------
eligible director who has submitted to the Committee at least six (6) months
prior to the end of the calendar quarter in question a written election to
receive Stock in lieu of all or any part of the compensation which is not being
deferred under any other plan and which otherwise would have been payable
currently for services rendered as a director (including the director's retainer
and meeting fees) and, where applicable, as Chairman. Each such election shall
be effective until revoked by a later written election, but no such later
election shall become effective until the first calendar quarter to end at least
six (6) months after the later election is received by the Company.
5.3. Stock Awards and Formula. Shortly after the end of each calendar
------------------------
quarter, a director who has previously submitted an appropriate election to
receive Stock in accordance with Section 5.2 above shall receive a combination
of Stock and cash. One-half (1/2) of the director's compensation for the quarter
shall be payable in cash, and one-half (1/2) shall be payable in Stock. The
number of shares of Stock to be awarded shall be the nearest whole number which
most closely approximates the director's compensation for the quarter in
accordance with the following formula:
One-Half (1/2) of Director's Number
Applicable Compensation for the Quarter = of Shares
---------------------------------------
Fair Market Value of Stock of Stock
6. AWARDS OF OPTIONS
All Options awarded under the Plan will be "non-statutory options,"
and therefore are not entitled to special tax treatment under Section 422 of the
Internal Revenue Code of 1986, as it may be amended from time to time (the
"Code"). Each Option awarded under the Plan will be evidenced by a written
agreement in such form as the Committee may from time to time approve,
consistent with and subject to the following terms and conditions:
6.1. Fair Market Value of Stock. For purposes of determining the
--------------------------
number of Options to be awarded with respect to any calendar quarter, the Fair
Market Value of the Stock for such quarter shall be the average of the high and
low sale prices of the Stock quoted on the New York Stock Exchange Composite
Transaction Reporting System for the Fridays of such quarter. If such sale
prices are not available for any such Friday, then the average of the high and
low sale prices on the next preceding day on which such sale prices are
available shall be used in lieu thereof.
6.2. Exercise Price of Options. The exercise price of Options to be
-------------------------
awarded with respect to any calendar quarter shall be twenty five percent (25%)
of the Fair Market Value of the Stock for such quarter.
6.3. Election. Quarterly awards of Options will be made to each
--------
eligible director who has submitted to the Committee at least six (6) months
prior to the end of the calendar quarter in question a written election to
receive Options in lieu of all or any part of the compensation which is not
being deferred under any other plan and which otherwise would have been payable
currently for services rendered as a director (including the director's retainer
and meeting fees) and, where applicable, as Chairman. Each such election shall
be effective until revoked by a later written election, but no such later
election shall become effective until the first calendar quarter to end at least
six (6) months after the later election is received by the Company.
-2-
<PAGE>
6.4. Option Awards and Formula. As of the end of each calendar
-------------------------
quarter, there shall be awarded to each director who has previously
submitted an appropriate election in accordance with Section 5.2 above
the nearest whole number of Options which most closely approximates
the director's compensation for the quarter in accordance with the
following formula:
Director's Applicable Compensation for the Quarter
-------------------------------------------------------------- = Number
(Fair Market Value of Stock) Minus (Exercise Price of Options) of Options
6.5. Exercise of Options. Options may be exercised at any time after
-------------------
their grant. To exercise an Option in whole or in part, an Optionee shall give
written notice of exercise to the Company's Stock Option Administrator
specifying the number of shares as to which the Option is being exercised,
accompanied by payment in full of the Option Price for such shares either in
cash or in such other consideration as approved by the Committee in its sole
discretion including, but not limited to, (i) shares of previously owned Common
Stock held by the Optionee for at least six (6) months, or (ii) in the event of
hardship and with the advance approval of the Committee, the Company's retention
of shares of Common Stock otherwise issuable to the Optionee upon exercise.
Shares of Stock used to make payments under subsections (ii) and (iii) shall be
valued at the average of the high and low sale prices of the Stock quoted on the
New York Stock Exchange Composite Transaction Reporting System on the date such
notice is received by the Stock Option Administrator (or if unavailable on such
date, on the next preceding trading date), and the number of shares to be
required for payments under (Ii) or (iii) shall be rounded to the nearest whole
share so that no cash payment shall be required by reason of any fractional
amount.
6.6. Termination of Options.
----------------------
(a) Options awarded pursuant to the Plan may not be exercised
after the third anniversary of a director's termination as a director for any
reason, including, but not limited to, such director's resignation or cessation
of service following a decision not to stand for reelection, or his termination
as a director due to removal, death, disability or retirement. Any Options which
have not been exercised on or before such third anniversary shall thereupon
expire.
(b) Any Option awarded a director under the Plan and
unexercised, in whole or in part, on the date of his death may be exercised by
the personal representative of the deceased director's estate, or by any heir,
devisee, or other taker who, by will or operation of law, is entitled to said
Option or any portion thereof. In each such case, such Option(s) may be
exercised at any time on or before the third anniversary of the director's
death, as provided in Section 6.6(a).
6.7. No Shareholder Rights By Reason of Options. A director does not
------------------------------------------
have any rights whatsoever as a shareholder with respect to any unexercised
Option until the date of the issuance to that director of a stock certificate(s)
for shares to be issued upon the proper exercise of said Option. No adjustment
will be made for dividends or other rights with respect to which the record date
occurs prior to the date such certificate is issued.
6.8. Options Not Assignable Or Transferable. Options awarded under
--------------------------------------
the Plan are not assignable or transferable other than by will or by the laws of
intestate succession. During the lifetime of a director, Options awarded under
the Plan will be exercisable only by that director.
-3-
<PAGE>
7. TIME FOR AWARDS
No Stock or Options may be awarded under the Plan with respect to
outside director's compensation for services performed after December 31, 1997.
8. LIMITATION OF RIGHTS
8.1. No Right to Continue as a Director. Neither the Plan, the
-----------------------------------
awarding of any Stock or Option, nor any other action taken pursuant to the Plan
constitutes or is evidence of any agreement or understanding, express or
implied, that the Company will retain a director for any period of time or at
any particular rate of compensation.
8.2. No Rights to Receive Stock or Options After Eligibility Ceases.
--------------------------------------------------------------
A director has no rights to receive Stock or Options under the Plan, and will
not receive any Stock or Options for any calendar quarter, or part thereof, once
he or she: (i) becomes an employee of the Company or any subsidiary of the
Company; or (ii) ceases to be a director.
8.3. Limitation on Rights of Optionee. Except as expressly provided
--------------------------------
in Section 9, an Optionee shall have no rights by reason of the issuance of (i)
shares of Stock pursuant to this Plan, (ii) additional shares of Stock, (iii)
any other security or debenture convertible into Stock, (iv) or any other equity
security, including issuance pursuant to a plan of merger, consolidation, or
statutory share exchange, and no adjustment by reason thereof shall be made with
respect to the number of shares of Stock subject to an Option or the exercise
price.
8.4. Rights of the Company. The grant of an Option pursuant to the
---------------------
Plan shall not affect in any way the right or power of the Company to issue
additional shares of stock; to make adjustments, reclassifications,
reorganizations or changes in its capital or business structure; to participate
in a merger, consolidation, or share exchange with another corporation; or to
dissolve, liquidate, or sell or transfer all or any part of its business or
assets.
9. ADJUSTMENTS
In the event any change is made to the Stock by reason of merger,
consolidation, reorganization, recapitalization, stock dividend, stock split,
combination of shares, exchange of shares, change in corporate structure or
otherwise, including but not limited to any change whereby the Stock is
converted into or exchanged for another class of shares or shares of another
entity, appropriate and comparable adjustments will be made to the number and
kind of shares subject to the Plan, and to the number and kind of shares and
price per share of Stock subject to outstanding Options issued pursuant to the
Plan, and the prices of Stock used in calculating the Fair Market Value of the
Stock under Sections 5.1 and 6.1. All such adjustments will be made in such a
manner as avoids dilution or enlargement of the rights of directors under the
Plan.
10. AMENDMENT OF THE PLAN
The Board of Directors of the Company may suspend or terminate the
Plan or revise or amend it in any respect whatsoever; provided that, without
--------
approval of the shareholders of the Company, no revision or amendment may change
the number of shares subject to the Plan (except as provided in Section 9 of the
Plan) or materially increase the benefits accruing to participants under the
Plan, and provided further that no revision or amendment or termination shall,
----------------
without the consent of the affected director(s), impair the rights of any
director under any Option previously awarded.
11. LEGAL RESTRICTIONS
The Company will not be obligated to issue shares of Stock if counsel
to the Company determines that such issuance would violate any law or regulation
of any governmental
-4-
<PAGE>
authority or any agreement between the Company and any national securities
exchange upon which the Stock is listed. In connection with any stock issuance
or transfer, the person acquiring the shares shall, if requested by the Company,
give assurances satisfactory to counsel by the Company regarding such matters as
the Company may deem desirable to assure compliance with all legal requirements.
The Company shall in no event be obliged to take any action in order to cause
the exercise of any Option.
12. GOVERNING LAW
The Plan will be governed, and its provisions construed, in accordance
with the laws of the State of Delaware and applicable federal law, without
regard to conflicts of law.
-5-
<PAGE>
Exhibit 10.7
------------
GRC INTERNATIONAL, INC.
DIRECTORS PHANTOM STOCK PLAN
1. PURPOSE
(a) General Purpose. The loyal and dedicated service of "outside"
---------------
Directors is essential to the growth and progress of any public company.
Accordingly, the Directors Phantom Stock Plan (the "Plan") of GRC International,
Inc. (the "Company") has been adopted to better enable the Company to retain and
attract qualified outside Directors to serve on the Company's Board of
Directors, while providing to such Directors the opportunity to defer receipt of
their compensation. The Program is also intended to provide a stronger nexus
between the contributions made to the Company by its outside Directors and the
value of the compensation they receive, by permitting such Directors to receive
their compensation in the form of phantom stock units ("Units") which are
determined by reference to the Company's $.10 par value Common Stock (the
"Stock") as hereinafter set forth.
(b) Nonqualified Plan. It is intended that this Plan be maintained as
-----------------
an unfunded, unsecured, nonqualified deferred compensation arrangement, not
subject to the provisions of the Employee Retirement Income Security Act of 1974
and not eligible for the insurance protection provided by the Pension Benefit
Guaranty Corporation.
2. ADMINISTRATION
The Plan will be administered by a committee of three or more persons
(the "Committee"). Such persons may not be eligible to participate in the
Program, and will be appointed by the Board of Directors of the Company. Awards
of the Company's Common Stock, par value $.10 per share ("Stock"), and options
to purchase the Stock ("Options"), and the amount and nature of the Stock and
Options so awarded, will be automatic, as provided in Sections 5 and 6 of the
Program. All questions of interpretation of the Program will be determined by
the Committee. Such determinations will be final and binding upon all persons
having an interest in the Program.
3. PARTICIPATION
3.1. Eligibility. Each member of the Board of Directors of the
-----------
Company who is not an employee of the Company or any of its subsidiaries is
eligible to participate in the Plan.
3.2. Time of Election. Prior to the beginning of a calendar year,
----------------
each eligible Director may elect to participate in the Plan by directing that
all or any part of the compensation which is not being deferred under any other
plan and which otherwise would have been payable currently for services rendered
as a Director (including the annual Director's retainer and meeting fees) and,
where applicable, as Chairman, during such calendar year and succeeding calendar
years shall be credited to a phantom stock account (the "Director's Phantom
Stock Account"). Any person who shall become a Director during any calendar
year, and who was not a Director of the Company prior to the beginning of such
calendar year, may elect, within 30 days after the Director's term begins, to
defer payment of all or any part of the Director's compensation earned during
the remainder of such calendar year and for succeeding calendar years.
3.3. Form and Duration of Election. An election to participate in the
-----------------------------
Plan shall be made by completing a Deferral Election Form in the form attached
to this Plan (as such Form may be modified by the Company from time to time) and
filing such Form with the Secretary of the Company. Such election shall continue
until the Director terminates or changes such election by filing a new Deferral
Election Form with the Secretary of the Company. Any new
<PAGE>
Deferral Election Form shall become effective as of the end of the calendar year
in which such notice is given and shall be effective only with respect to fees
payable for services rendered as a Director thereafter. Amounts credited to the
Director's Phantom Stock Account prior to the effective date of the new Deferral
Election Form shall not be affected by such new Form and shall be distributed
only in accordance with the terms of the previously filed Form applicable to the
previously credited amounts. The time or times at which amounts credited to a
Director's Phantom Stock Account may be redeemed shall be subject to the
additional restrictions contained in Section 5.
3.4. Renewal. A Director who has terminated his election to
-------
participate may thereafter file another Deferral Election Form to participate
for the calendar year subsequent to the filing of such election and succeeding
calendar years.
4. THE DIRECTOR'S PHANTOM STOCK ACCOUNT
All compensation which a Director has elected to defer under the Plan
and which is not deferred under any other plan shall be credited to the
Director's Phantom Stock Account as follows:
4.1. Fair Market Value. For purposes of this Section 4, the "Fair
-----------------
Market Value" of the Stock shall be the average of the high and low sale prices
of the Stock quoted on the New York Stock Exchange Composite Transaction
Reporting System for the Fridays of the applicable calendar quarter. If such
sale prices are not available for any such Friday, then the average of the high
and low sale prices on the next preceding day on which such sale prices are
available shall be used in lieu thereof.
4.2. Phantom Stock Units. As of the end of each calendar quarter,
-------------------
there shall be credited to the a participating Director's Phantom Stock Account
the nearest whole number of Units which most closely approximates the Director's
compensation for the quarter in accordance with the following formula:
Applicable Director's
Compensation for the Quarter Number
-------------------------------------- = of Units
Fair Market Value of Stock of Phantom Stock
4.3. Dividends. In accordance with the formula set forth below, there
---------
shall also be credited to each Director's Phantom Stock Account the nearest
whole number of Units which most closely approximates the amount of any
dividends to which such Director would have been entitled if the number of Units
already credited to the Director's Phantom Stock Account as of the dividend
record date had been shares of issued and outstanding Stock on such date. Any
such dividend amounts shall be credited to each Director's Phantom Stock Account
as the end of each calendar quarter in which the dividends were paid.
Dividend Amount = Number
-------------------------- of Units
Fair Market Value of Stock of Phantom Stock
4.4. No Fractional Shares. No fractional Units shall be credited to a
--------------------
Director's Phantom Stock Account. The compensation and dividends to be applied
to a Director's Phantom Stock Account each quarter shall be credited as the
nearest number of whole Units in accordance with the above formulas.
4.5. No Interest to Be Paid. No Director shall be entitled to
----------------------
interest on any compensation or dividends to be credited in the form of Units
into the applicable Director's Phantom Stock Account at the end of each calendar
quarter.
5. DISTRIBUTION FROM ACCOUNTS
5.1. Date and Form of Distribution. Distribution from the Director's
-----------------------------
Phantom Stock Account shall be made in the form of cash on the date(s) elected
by the Director in the applicable Deferral Election Form(s) previously filed by
the Director under the Plan. The
2
<PAGE>
amount of cash paid on account of each Unit shall be equal to the average of the
high and low sale prices of the Stock quoted on the New York Stock Exchange
Composite Transaction Reporting System for the Fridays of the calendar quarter
immediately preceding the distribution. If such sale prices are not available
for any such Friday, then the average of the high and low sale prices on the
next preceding day on which such sale prices are available shall be used in lieu
thereof. Distribution shall be in the form of a lump-sum payment or in annual
installments, as previously elected by the Director in the applicable Deferral
Election Form(s) previously filed by the Director under the Plan. In the case of
installment payments, the Company shall pay the applicable Director (or such
Director's beneficiary or estate) interest on unpaid installments after the
first installment. Such interest shall be paid annually on the subsequent
installment payment dates, at an interest rate equal to the prime rate of
interest as published in the Wall Street Journal on the date of the previous
installment payment.
5.2. Six-Month Limitation. Other provisions of the Plan and the
--------------------
Deferral Election Form notwithstanding, amounts credited to a Director's Phantom
Stock Account as Units may be distributed or otherwise redeemed only upon a
fixed date or dates at least six (6) months after the crediting of such amounts
as Units, or incident to death, retirement, disability or termination or
employment, to the extent necessary to comply with Rule 16a-1(c)(3)(ii) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Units
shall be deemed to be distributed in the order in which they were credited to a
Director's Phantom Stock Account, so that earlier-credited Units shall be
distributed before later-credited Units. In addition, if any distribution is to
be made under this Section 5 with respect to a Unit credited (i) less than six
(6) months before the date of distribution and (ii) at a time when the Director
is subject to reporting under Section 16(a) of the Exchange Act, such
distribution shall be delayed until the first business say that is more than six
(6) months after the date such Unit was credited under the Plan. This six (6)
month holding requirement shall apply to Units credited with respect to cash
dividends and other dividends, as well as to Units credited with respect to
Directors' compensation.
5.3. Additional Limitation on Modifications. No Director then subject
--------------------------------------
to reporting under Section 16(a) of the Exchange Act may modify the time or
manner of payment under the Plan with respect to Units already credited to such
Director's Phantom Stock Account. In addition, no modification of the time or
manner of payment under the Plan shall be authorized if and to the extent that
such authorization or the making of such modification would constitute
"constructive receipt" on the part of a Director of amounts credited to a
Director's Phantom Stock Account under the federal income tax laws.
6. DISTRIBUTION ON DEATH
If a Director should die before all amounts credited to the Director's
Phantom Stock Account shall have been paid, the remaining balance shall be paid
to the Director's designated beneficiary in the manner and on the date(s)
previously elected by the Director in the applicable Deferral Election Form(s).
Such balance shall be paid to the Director's estate if (a) no such designation
has been made or (b) the designated beneficiary shall have predeceased the
Director and no further designation has been made by the Director. Payments
under this Section 6 shall be determined in the same manner as under Section 5.
7. MISCELLANEOUS
7.1. Account Not Transferable or Assignable. The right of a Director
--------------------------------------
to receive any amount credited to the Director's Phantom Stock Account shall not
be transferable or assignable by the Director, except by will or by the laws of
descent and distribution (or to a designated beneficiary), and no part of such
amount shall be subject to attachment or other legal process.
7.2. No Advance Funding Required. The Company shall not be required
---------------------------
to reserve or otherwise set aside funds or Stock for the payment of its
obligations hereunder.
3
<PAGE>
7.3. Limitation of Rights. The establishment and maintenance of, or
--------------------
allocation and credits to the Director's Phantom Stock Account shall not vest in
any Director or beneficiary any right, title or interest in and to any specific
assets of the Company, including any Units credited to the Director's Phantom
Stock Account, and a Director shall not have any interest in the Units credited
to the Phantom Stock Account until distributed in accordance with the terms of
the Plan. A Director shall not have any dividend or voting rights or any other
rights of a stockholder (for this purpose, the rights provided in Section 4.3
with respect to the crediting of amounts equivalent to dividends and in Section
7.6 with respect to adjustments shall not be deemed "rights of a stockholder").
The right of a Director to receive payments under this Plan shall be no greater
than the right of an unsecured general creditor of the Company.
7.4. No Right to Continue as a Director. Neither the Program, the
----------------------------------
awarding of any Stock or Option, nor any other action taken pursuant to the
Program constitutes or is evidence of any agreement or understanding, express or
implied, that the Company will retain a director for any period of time or at
any particular rate of compensation.
7.5. Amendment or Termination. The Board of Directors may at any time
------------------------
amend or terminate the Plan. No amendment or termination shall impair the rights
of a Director with respect to amounts then credited to the Director's Phantom
Stock Account.
7.6. Adjustments. Upon the occurrence of any event affecting the
-----------
outstanding Stock, including stock dividends, extraordinary non-cash dividends,
forward or reverse stock splits, recapitalizations, mergers, consolidations and
the like, an appropriate adjustment will also be made in the number of Units
credited to the Director's Phantom Stock Account, including, where appropriate,
an adjustment in the nature of the Stock by which Units are valued under
Sections 4 and 5 hereof. All such adjustments shall be made so as to prevent
dilution or enlargement of the rights of Directors participating in the Plan.
7.7. Intent. It is the intent of the Company that Units and related
------
rights under the Plan credited to Directors who are then subject to Section 16
of the Exchange Act shall not constitute "derivative securities" under Rule 16a-
1(c) under the Exchange Act by virtue of Rule 16a-1(c)(3)(ii), and that
Directors participating in the Plan shall not, for that reason, fail to qualify
as "disinterested persons" under Rule 16b-3(c)(2)(i). Accordingly, the Plan
shall be construed in a manner consistent with the requirements of Rule 16a-
1(c)(3)(ii) and Rule 16b-3(c)(2)(i)(C), and if any Plan provision does not
comply with the requirements of Rule 16a-1(c)(3)(ii) as then applicable to any
transaction by such a Director or the requirements of Rule 16b-3(c)(2)(i)(C)
(permitting disinterested person to elect to receive fees in either cash or an
equivalent amount of securities), such provision shall be deemed amended to the
extent necessary to conform to the applicable requirements of such Rules so that
such a Director shall avoid liability under Section 16(b) and, if then a
Director, shall continue to qualify as a "disinterested person" under
Rule 16b-3.
7.8. Applicable Law. The Plan shall be construed under the laws of
--------------
the State of Virginia and applicable federal law, without regard to conflicts of
law.
7.9. Effective Date. The Plan shall be effective with respect to any
--------------
compensation earned by a Director beginning January 1, 1995.
4
<PAGE>
GRC INTERNATIONAL, INC.
DIRECTORS PHANTOM STOCK PLAN
DEFERRAL ELECTION FORM
----------------------
(This form must be filed prior to beginning of the calendar year for which it is
to be effective.)
(New directors have a 30-day grace period to file this form after their term
begins, for form to be effective for first calendar year of service)
This deferral election is made in accordance with and subject to the terms of
the GRC International, Inc. (the "Company") Directors Phantom Stock Plan (the
"Plan").
1. Compensation to be Deferred. (please check appropriate box and fill in
---------------------------
applicable blanks).
(a) __ Effective January 1, ____, or as soon thereafter as legally
permissible, I hereby elect to defer the following compensation
into my Phantom Stock Account at the Company (check all boxes
that apply):
[__] Annual Retainer
[__] Meeting Fees
[__] Chairman's Fee
(b) __ Effective January 1, ____, I hereby elect to discontinue all
-----------
deferrals into my Phantom Stock Account.
2. Date of Payment. I hereby elect to receive payment from my Phantom Stock
---------------
Account on (in the case of installments, commencing on) the date indicated below
(please check appropriate box and fill in applicable blanks).
(a) __ The first day of the calendar quarter next following termination
of my service as a Director.
(b) __ The earlier of January 1, _____ or the first day of the calendar
quarter next following termination of my service as a Director.
(c) __ The first day of the calendar quarter next following my death.
(d) __ The earlier of January 1, _____, or the first day of the calendar
quarter next following my death.
3. Form of Distribution. I hereby elect to receive my Phantom Stock Account in
--------------------
the form of:
(a) __ A lump sum payment.
(b) __ Annual installments over ____ years (not to exceed 15).
4. Designation of Beneficiary. I hereby designate the following beneficiary to
--------------------------
receive any amount credited to my Phantom Stock Account under the Plan which has
not been paid to me prior to my death (please print beneficiary's name, address
and social security number).
Beneficiary's Name: ____________________________________
5
<PAGE>
Beneficiary's Address: _________________________________
_________________________________
Beneficiary's Social
Security Number: _________________________________
5. Effect of Election. The above election will continue to be effective for
-------------------
future calendar years unless prior to the beginning of any future calendar year
I file with the Secretary of the Company a new Deferral Election Form with
respect to such calendar year. I understand that a new Deferral Election Form
will only affect compensation with respect to years commencing after the date
such new Deferral Election Form is filed with the Company, and that no new
Deferral Election Form for any future year may change the time or form of
distribution of amounts deferred pursuant to the Deferral Election Form which I
am filing today.
Signature: ________________________________________
Printed Name: _____________________________________
Date: _____________________________________________
CONSENT OF SPOUSE
-----------------
(must be competed and notarized if Director is married and spouse is not
beneficiary)
I consent to and approve designation of the above named beneficiary to receive
proceeds of my spouse's GRCI Phantom Stock Account in the event of my spouse's
death.
________________________________________
(spouse's signature)
________________________________________
(date)
STATE OF )
COUNTY OF )
Before me, the undersigned Notary Public in and for said County and said State,
personally appeared this date, __________, whose name is signed to the foregoing
release and who is known to me.
This the __ day of ____________, _________.
____________________________________
Notary Public
My Commission Expires:
6
<PAGE>
Exhibit 10.8
------------
GRC INTERNATIONAL, INC.
DIRECTORS RETIREMENT PLAN
Article 1. PURPOSE OF PLAN.
---------------
(a) General Purpose. GRC International, Inc. (the "Company"), hereby
---------------
establishes this Directors Retirement Plan (the "Plan") as of the 1st day of
July, 1991 to provide supplementary retirement income for its eligible
Directors. The Company believes that the interests of its shareholders will
best be served by being able to attract and retain well qualified individuals to
serve as Directors and that this Plan is consistent with those objectives.
(b) Nonqualified Plan. It is intended that this Plan be maintained as an
-----------------
unfunded, unsecured, nonqualified deferred compensation arrangement, not subject
to the substantive provisions of the Employee Retirement Income Security Act of
1974 and not eligible for the insurance protection provided by the Pension
Benefit Guaranty Corporation, provided, however, that if a Change of Control
occurs, all benefits payable hereunder will be paid in accordance with Article
5.
Article 2. DEFINITIONS.
-----------
For purposes of this Plan and any explanatory material associated with
it, the following terms shall have the following meanings unless stated
otherwise:
(a) "Board" means the board of directors of the Company.
(b) "Change of Control" means the occurrence of any one of the following
events without the approval of a majority of the Continuing Directors:
(i) any Person, other than the Company or a Related Party, acquires
directly or indirectly the Beneficial Ownership of any voting security of the
Company and immediately after such acquisition such Person is, directly or
indirectly, the Beneficial Owner of voting securities representing twenty-five
percent (25%) or more of the total voting power of all the then outstanding
voting securities; or
(ii) the Continuing Directors cease for any reason to constitute a
majority of the members of the Board; or
(iii) the shareholders of the Company approve a merger,
consolidation, recapitalization or reorganization of the Company, a reverse
stock split of outstanding voting securities, or an acquisition of voting
securities or assets by the Company, or consummation of any such transaction if
shareholder approval is not obtained, other than (A) any such transaction which
would result in at least eighty percent (80%) of the total voting power
represented by the voting securities of the Company or the voting securities of
such surviving entity outstanding immediately after such transaction being
Beneficially Owned by at least eighty percent (80%) of the holders of
outstanding voting securities of the Company immediately prior to the
transaction, with the voting power of each such continuing holder relative to
other such continuing holders not substantially altered in the transaction, or
(B) any
<PAGE>
such transaction in which all of the voting securities of the Company or voting
securities of the surviving entity are Beneficially Owned by Related Parties; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets other than any such
transaction which would result in Related Parties owning or acquiring more than
fifty percent (50%) of the assets owned by the Company immediately prior to the
transaction.
For purposes of this Article 2(b):
(i) the terms "Person," "Beneficial Owner," "Beneficially Owns," and
"Beneficial Ownership" shall have the meanings ascribed to such terms for
purposes of Section 13(d) of the Securities Exchange Act of 1934 and the rules
thereunder;
(ii) "Related Party" means (A) a majority-owned subsidiary of the
Company; or (B) an employee or group of employees of the Company or any
majority-owned subsidiary of the Company; or (C) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
majority-owned subsidiary of the Company; or (D) a corporation owned directly or
indirectly by the shareholders of the Company in substantially the same
proportion as their ownership of voting securities; or (E) a Person Beneficially
Owning more than ten percent (10%) of any outstanding class of voting security
of the Company who would be required to report such ownership on a Schedule 13D
or an amendment thereto, if, prior to any acquisition of a voting security which
resulted in such Person Beneficially Owning more than ten percent (10%) of such
class, the Board approved the transaction giving rise to the increase in
Beneficial Ownership, provided that such Person has not, prior to obtaining
Board approval of any such transaction, publicly announced an intention to take
actions which, if consummated or successful (at a time such Person has not been
deemed a "Related Party"), would constitute a Change of Control; and
(iii) "Continuing Directors" means the individuals who constituted
the Board as of July 1, 1991, or who constitute the Board at any time thereafter
if their election or nomination for election to the Board was approved by a vote
of a majority of the Directors then in office who either were Directors as of
July 1, 1991 or whose election or nomination for election was previously so
approved.
(c) "Change of Control Annuity" means the benefit described in
Article 5.
(d) "Committee" means those Directors appointed by the Board to
administer the Plan.
(e) "Death Benefit" means that benefit described in Article 6.
(f) "Designated Beneficiary" means the beneficiary designated in
accordance with Article 6.
(g) "Director" means a member of the Board who occupied such position
on or after the Effective Date.
-2-
<PAGE>
(h) "Distribution Event" means a Director's termination of service as a
Director for any reason.
(i) "Effective Date" means July 1, 1991.
(j) "Plan Year" means the "short year" commencing with the Effective
Date of this Plan and ending December 31, 1991 and each subsequent calendar
year.
(k) "Retirement Benefit" means either the "Standard Retirement Benefit"
or the "Alternate Retirement Benefit". "Standard Retirement Benefit" means a
monthly benefit payable in accordance with the applicable terms of Article 4.
"Alternate Retirement Benefit" shall mean the alternate form of Retirement
Benefit described in Article 4(d).
(l) "Service" means service performed on behalf of the Company as a
Director.
(m) "Year of Service" means the twelve (12) month period commencing
with the date on which the individual became a Director, and each such 12 month
period thereafter; provided, however, that a Director will not be given credit
for a Year of Service for any such 12 month period in which the Director's fees,
wages, salary or bonuses paid to him by the Company exceed $150,000 in the
aggregate.
Article 3. ELIGIBILITY.
-----------
(a) Each Director who has completed five (5) or more Years of Service
shall be eligible to participate in the Plan. If a Change of Control occurs,
however, a Director shall be entitled to a Change of Control Annuity without
regard to whether he has completed five (5) Years of Service.
(b) Notwithstanding any provision of this Plan to the contrary, if any
Director, while still serving on the Board, engages in any conduct specifically
intended by such Director to cause significant harm or damage to the Company
(excluding any conduct required to comply with a legal obligation), then such
Director shall forfeit any Retirement Benefit (and the corresponding Death
Benefit) otherwise payable hereunder; provided, however, that in the event of a
Change of Control while such Director is still serving on the Board, such
conduct shall not result in the forfeiture of such Director's Change of Control
Annuity (nor of the corresponding Death Benefit).
Article 4. RETIREMENT BENEFIT.
------------------
(a) Grant. Upon a Director's Distribution Event, such Director shall
-----
become entitled to an irrevocable Standard Retirement Benefit as hereinafter
provided, unless the Director requests and the Board approves an Alternate
Retirement Benefit pursuant to Article 4(d).
(b) Amount and Service Requirement. No Director with less than five
------------------------------
(5) Years of Service shall be eligible for any Retirement Benefit, provided,
however, that such Director shall nevertheless be entitled to a Change of
Control Annuity under the circumstances described in Article 5. Any Director
who has completed more than five (5) Years of Service shall receive a Standard
Retirement Benefit consisting of monthly payments equal to one-twelfth (1/12) of
the Director's annual retainer in effect at the time of such Director's
Distribution Event multiplied by the applicable percentage set forth in the
following table:
-3-
<PAGE>
Years of Service Applicable
As a Director Percentage
------------- ----------
Less than 5 0%
5 50%
6 60%
7 70%
8 80%
9 90%
10 or more 100%
It is recognized and acknowledged that the following named Directors have
completed ten (10) or more Years of Service and are eligible for a Standard
Retirement Benefit calculated using a 100% applicable percentage under the
foregoing table: H. Furlong Baldwin and Harris W. Seed. It is further
recognized and acknowledged that as of November 4, 1994, (i) Director Herbert
Rabin has completed six (6) Years of Service.
(c) Form and Duration of Standard Retirement Benefit. The Standard
------------------------------------------------
Retirement Benefit shall be payable to the Director monthly (commencing with the
first business day of the Plan Year following the Director's Distribution Event)
for a period of (i) 180 months, or (ii) the Director's life, whichever period is
shorter.
(d) Alternate Retirement Benefit. At the written request of the
----------------------------
Director, the Board may, in its absolute discretion, approve or disapprove any
Alternate Retirement Benefit, including but not limited to a lump sum, provided,
however, that such Alternate Retirement Benefit is the actuarial equivalent (as
determined by the Board) of the Standard Retirement Benefit, and provided,
further, that such Alternate Retirement Benefit shall be payable on or
commencing with the first business day of the Plan Year following the Director's
Distribution Event. Any Director requesting an Alternate Retirement Benefit
shall do so at the time and in the manner prescribed by the Board.
Article 5. CHANGE OF CONTROL ANNUITY.
-------------------------
(a) Notwithstanding any other provision of this Plan to the contrary,
upon the occurrence of a Change of Control, each serving Director (who has not
received and is not yet receiving a Retirement Benefit) and each former Director
(who has received or is receiving a Retirement Benefit) shall become entitled to
an irrevocable Change of Control Annuity instead of a Retirement Benefit.
(b) In the event of a Change of Control, the Company shall purchase a
Change of Control Annuity for each Director from an insurance company with a
Best's rating of at least "AAA". Each Change of Control Annuity shall provide
for a monthly payment equal to one-twelfth (1/12) of (i) the then current annual
Director retainer fee, or (ii) the annual Director retainer fee in effect just
prior to the Change of Control, whichever amount is higher. With respect to a
serving Director, such monthly payment shall commence on the first business day
of the month following the Director's Distribution Event and continue for a
period of (i) 180 months, or (ii) the Director's life, whichever is shorter.
With respect to a former Director, such monthly payment shall commence on the
first business day of the month following the Change of Control and continue for
a period of (i) 180 months (less the number of whole months elapsed since the
first business day of the Plan Year following the Director's Distribution
-4-
<PAGE>
Event), or (ii) the Director's life, whichever is shorter. Each Change of
Control Annuity shall also include a cash surrender feature entitling the
recipient to redeem the contract for its present value, based on the actuarial
life expectancy of the Director at the time of the Company's purchase of the
Change of Control Annuity without regard to the health, medical condition or
other circumstances of the Director. In addition, such Change in Control
Benefit shall be actuarially adjusted, if and to the extent appropriate, to
reflect any prior payment to a Director in the form of an Alternate Retirement
Benefit. As an example of such actuarial adjustment, if a Director retires at a
time when the annual retainer is $12,000, and the Director receives a lump sum
settlement as an Alternate Retirement Benefit rather than the Standard
Retirement Benefit, and subsequently a Change of Control occurs when the annual
retainer is $18,000, then such Director's Change of Control Annuity shall be a
monthly payment equal to $500, or $6,000 per year, which is the amount by which
the retainer was increased.
(c) If a Change of Control has occurred or appears to be imminent, the
Board or the Committee shall take any steps that may be necessary to implement
the provisions of this Plan, including the purchase of Change of Control
Annuities in accordance with this Article 5.
Article 6. DEATH BENEFIT.
-------------
(a) Death While Serving as a Director. If a Director should die while
---------------------------------
serving as a Director, and such Director has not requested an Alternate
Retirement Benefit, then, the monthly amount that would have been payable to the
Director as his Standard Retirement Benefit shall be paid to the Designated
Beneficiary commencing with the first business day of the month following the
Director's death and continuing through the month which includes the first
anniversary of the Director's death.
(b) Death After Distribution Event. If a Director should die after
------------------------------
his Distribution Event, and such Director has not requested an Alternate
Retirement Benefit, then the monthly amount that would have been payable to the
Director as his Standard Retirement Benefit for the next six (6) months or, if
longer, until the next anniversary of the commencement of the Director's
Standard Retirement Benefit, shall be paid to the Designated Beneficiary.
(c) Inapplicable to Alternate Retirement Benefit, Change of Control
---------------------------------------------------------------
Annuity. The Death Benefit shall be payable only with respect to the Standard
- -------
Retirement Benefit. No Death Benefit shall be payable with respect to any
Alternate Retirement Benefit or Change of Control Annuity.
(d) Beneficiary Designation. A Director shall make a beneficiary
-----------------------
designation in writing on a form filed with the Committee and may change such
beneficiary designation at any time by written notice to the Committee. If no
beneficiary designation has been filed or if the Designated Beneficiary
predeceased the Director, any Death Benefit hereunder shall be paid to the
Director's estate.
Article 7. HARDSHIP.
--------
Upon receipt of a written request from a Director (or, if applicable,
the Designated Beneficiary), the Committee, in its sole discretion, may
determine that acceleration of any payments hereunder is necessary on account of
a severe financial hardship to the Director or Designated Beneficiary. In such
case, the Committee may accelerate payments as necessary to relieve the
hardship. If the Director dies after receiving a hardship distribution, the
Death
-5-
<PAGE>
Benefit payable pursuant to Article 6 shall be reduced by the amount of any
monthly payments which were previously accelerated and which relate to the
relevant period for which Death Benefits would otherwise be payable. The Board
shall determine the existence of a severe financial hardship in a manner
consistent with Internal Revenue Service rules and regulations pertaining to the
avoidance of constructive receipt of income.
Article 8. MISCELLANEOUS.
-------------
(a) No person shall be entitled to anticipate any payment hereunder by
assignment, alienation, sale, pledge, encumbrance or transfer of such payments
in any form or manner prior to actual or constructive receipt thereof.
(b) Subject to the provisions of Article 5 regarding the Change of
Control Annuity, the Company's obligations hereunder shall be entirely unfunded
and unsecured, and upon the nonpayment of any obligation hereunder, a Director
or his Designated Beneficiary shall have the right only of an unsecured creditor
of the Company.
(c) The Board, either acting directly or through the Committee, shall
interpret the Plan and make all determinations necessary or desirable to
implement the Plan. The determination of either the Board or the Committee
shall be final and conclusive. The Board or the Committee may obtain such
advice or assistance as it deems appropriate from persons not serving on the
Board of Directors or the Committee.
(d) Any payment due hereunder shall be made on the first business day
of the applicable month.
(e) Whenever the Board or Committee exercises any discretion under
this Plan with respect to a Director, that Director shall not participate in the
voting on such matters.
(f) This Plan shall be subject to and governed by the laws of the
Commonwealth of Virginia without regard to the conflict of laws and principles
thereof.
(g) The Board may amend or terminate this Plan at any time and for any
reason, provided, however, that no such amendment or termination shall reduce or
impair the rights of any Director accrued prior to such action, and provided,
further, that this Plan shall not be amended or terminated following a Change of
Control without the consent of a majority of the Continuing Directors.
(as amended, _________ __, 199_)
-6-
<PAGE>
Exhibit 10.9
------------
AMENDED AND RESTATED
REVOLVING CREDIT AND TERM LOAN AGREEMENT
dated as of
February 12, 1996,
by and among
GRC INTERNATIONAL, INC.
(the "Borrower"),
SWL INC.,
GENERAL RESEARCH CORPORATION
and
MERCANTILE-SAFE DEPOSIT
AND TRUST COMPANY
(the "Bank")
<PAGE>
TABLE OF CONTENTS
Section Page
- ------- ----
Credit Facility
---------------
<TABLE>
<CAPTION>
<S> <C> <C>
1.1 Term Loans 2
1.2 Revolving Credit Loan; Letters of Credit 2
1.3 Advances and Payments 3
1.4 Notice and Manner of Borrowing 4
1.5 Method of Payment 4
1.6 Use of Loan Proceeds 4
1.7 Unused Facility Fee 4
1.8 Collateral Security 4
Definitions
-----------
2.1 Definitions 5
2.2 Amendments, etc. Included 9
Representations and Warranties
------------------------------
3.1 Organization and Authority; Conflicting
Laws and Agreements 9
3.2 Subsidiaries 10
3.3 Margin Stock 10
3.4 Financial Statements 10
3.5 Financial Condition 10
3.6 Litigation; Tax Returns; Governmental
Approvals 10
3.7 Liens 11
3.8 Enforceability 11
3.9 No Defaults 11
3.10 ERISA 11
3.11 Commercial Loan 11
3.12 Capital Stock 11
3.13 Hazardous Materials 12
3.14 Assignments under the Federal
Assignment of Claims Act 12
</TABLE>
<PAGE>
Section Page
- ------- ----
Covenants
---------
<TABLE>
<CAPTION>
<S> <C> <C>
4.1 Payment of Taxes and Other Claims 12
4.2 Maintenance of Properties 13
4.3 Corporate Existence 13
4.4 Maintenance of Insurance 13
4.5 Financial Information, Tax Returns and Reports 13
4.6 Indebtedness 16
4.7 Liens 16
4.8 Disposition of Stock and Indebtedness 17
4.9 Investments, Loans, Advances, Guarantees and
Contingent Liabilities 17
4.10 Merger and Sale of Assets 18
4.11 Dealings with Affiliates 18
4.12 Limitations on Certain Contracts 18
4.13 ERISA 19
4.14 Issuance of Stock 19
4.15 Financial Condition and Ratios 19
4.16 Obligations of Borrower Unconditional 20
4.17 Businesses 20
4.18 Compliance with Laws 20
4.19 Hazardous Materials 20
4.20 Material Agreements 21
4.21 Assignments under the Federal
Assignment of Claims Act 21
Events of Default and Remedies
------------------------------
5.1 Events of Default 21
5.2 Acceleration 23
5.3 Costs of Collection 23
5.4 Consent to Jurisdiction; Waiver of Jury Trial 24
5.5 Service of Process 24
5.6 Acceleration of Other Obligations to Bank 24
5.7 Remedies Cumulative 24
</TABLE>
-ii-
<PAGE>
Section Page
- ------- ----
Conditions Precedent to Lending
-------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
6.1 Conditions to the Making of the Initial Term Loan
and the Initial Advance under the Revolving Credit Loan 24
6.2 Conditions to the Making of Each Advance under
the Revolving Credit Loan 25
6.3 Conditions to the Making of any Supplemental
Term Loan 26
Collateral Security
-------------------
7.1 Security Documents 27
7.2 Deposit Balances 27
Miscellaneous
-------------
8.1 Exercise of Rights 28
8.2 Payment Due on Banking Day 28
8.3 Assessments 28
8.4 Survival 28
8.5 Notices 29
8.6 Counterparts 29
8.7 Successors and Assigns; Governing Law;
Amendments 29
8.8 Section Headings; Construction 29
8.9 Transaction Expenses 30
8.10 Estoppel Certificates 30
8.11 Indemnification 30
8.12 Publicity 31
</TABLE>
Exhibit A -- Form of Term Loan Note
- ---------
Exhibit B -- Form of Consolidated, Amended and Restated
- ---------
Revolving Credit Master Note
Exhibit C -- Form of Borrowing Base Certificate
- ---------
-iii-
<PAGE>
AMENDED AND RESTATED
--------------------
REVOLVING CREDIT AGREEMENT
--------------------------
THIS AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT (this "Agreement"),
dated as of the 12th day of February, 1996, by and among GRC INTERNATIONAL,
INC., a Delaware corporation (the "Borrower"), SWL INC., a Virginia corporation
("SWL"), GENERAL RESEARCH CORPORATION, a Virginia corporation ("GRC") and
MERCANTILE-SAFE DEPOSIT AND TRUST COMPANY, a Maryland banking institution (the
"Bank").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to (i) a Revolving Credit and Term Loan Agreement dated
July 30, 1990 (the "Original Loan Agreement") by and among the Bank, the
Borrower, SWL, GRC, Moseley Associates, Inc. ("Moseley") and Semifab, Inc.
("Semifab") and (ii) a Revolving Credit Master Note dated August 9, 1990
executed by the Borrower, SWL, GRC, Moseley and Semifab in favor of the Bank
(the "Original Note"), the Bank established a $10,000,000 revolving credit
facility in favor of the Borrower, SWL, GRC, Moseley and Semifab; and
WHEREAS, the Original Loan Agreement was amended as of May 28, 1992 for the
purpose, among other things, of releasing Moseley and Semifab as obligors
thereunder; and
WHEREAS, in connection with such amendment to the Original Loan Agreement,
the Borrower, together with SWL and GRC executed an Amended and Restated
Revolving Credit Master Note (the "Primary Note") dated May 28, 1992 in favor of
the Bank, which Primary Note amended and restated the terms of the Original
Note; and
WHEREAS, pursuant to a Revolving Credit Note (Commercial) executed by the
Borrower and dated December 8, 1995 (the "Supplemental Note"), the Bank made an
additional $5,000,000 in revolving credit available to the Borrower; and
WHEREAS, the Borrower has requested and the Bank has agreed (i) to amend
and restate the Original Loan Agreement, as amended, for the purpose, among
other things, of including the Borrower's obligations under the Supplemental
Note as an additional obligation thereunder and (ii) to consolidate the
indebtedness evidenced by the Primary Note and the Supplemental Note (such
indebtedness, as so consolidated, the "Revolving Credit Loan") by having the
Borrower execute and deliver to the Bank a Consolidated, Amended and Restated
Revolving Credit Master Note; and
<PAGE>
WHEREAS, pursuant to a letter from the Bank to the Borrower dated September
8, 1995, the Bank has agreed to make available to the Borrower, on an offering
basis, an additional $5,000,000 revolving credit facility (the "Acquisition
Facility") for the purpose of providing bridge financing to fund acquisitions by
the Borrower from time to time, on the condition that advances under such
facility will be at the Bank's sole discretion; and
WHEREAS, pursuant to such revolving credit facility, the Borrower has
requested and the Bank has agreed initially to lend the Borrower the sum of Two
Million Two Hundred Thousand Dollars ($2,200,000) (the "Term Loan") on the date
hereof; and
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein contained, the parties hereby agree as follows:
1. CREDIT FACILITY.
---------------
1.1. Term Loans. (a) Pursuant to the Acquisition Facility, the Borrower
----------
shall execute and deliver to the Bank on the date of the funding of the Term
Loan (the "Closing Date") a Term Loan Note in the principal amount of
$2,200,000, substantially in the form of Exhibit A attached hereto (the "Term
---------
Loan Note"). The Term Loan shall bear interest at a fluctuating rate of
interest equal to the Prime Rate set by the Bank from time to time, adjusted
upwards and downwards on and as of the date of any change in the Prime Rate and
calculated on the basis of a 360-day year factor applied to actual days elapsed,
and shall mature on September 1, 1997.
(b) The parties anticipate that from time to time hereafter, the Borrower
may make requests for proposals from the Bank regarding additional bridge and/or
term loans under the Acquisition Facility for the purpose of financing future
acquisitions by the Borrower or any of its Subsidiaries. The Bank may (but
shall in no way be obligated to) consider such requests and make one or more
proposals to the Borrower regarding such requests. Upon the Borrower's
acceptance of such a proposal by the Bank, the Borrower shall execute a term
loan promissory note in such form and containing such terms and conditions
(including without limitation applicable interest rate(s), amortization and
additional collateral, if any) as may then be agreed to by the Bank and the
Borrower. Each such promissory note shall be deemed a "Supplemental Term Loan
Note," and the loan evidenced thereby shall be deemed a "Supplemental Term
Loan," for all purposes hereunder. Nothing herein shall imply or be interpreted
as a commitment by the Bank to lend, or by the Borrower to borrow, any
Supplemental Term Loan.
1.2. Revolving Credit Loan; Letters of Credit. (a) On the Closing Date
----------------------------------------
(hereinafter defined) the Borrower shall execute and deliver to the Bank a
-2-
<PAGE>
Consolidated, Amended and Restated Revolving Credit Master Note in the face
principal amount of $15,000,000, substantially in the form of Exhibit B attached
---------
hereto (the "Revolving Credit Note"). The Revolving Credit Loan shall bear
interest at a fluctuating rate of interest equal to the Prime Rate set by the
Bank from time to time, adjusted upwards and downwards on and as of the date of
any change in the Prime Rate and calculated on the basis of a 360-day year
factor applied to actual days elapsed. The Bank is hereby authorized to
indicate by notation on its internal loan accounting system, with appropriate
reference to the customer number assigned by the Bank, all advances of the
Revolving Credit Loan made pursuant to this Agreement and all payments of
principal. Such notations shall be presumptive as to the aggregate unpaid
principal balance of the Revolving Credit Loan, but the failure of the Bank to
make any such notation shall not affect the obligations of the Borrower
hereunder or in connection with the Revolving Credit Loan. The entire, then
outstanding principal balance of the Revolving Credit Loan, together with the
accrued and unpaid interest thereon, shall be due and payable on January 15,
1998, except that the Revolving Credit Loan shall be automatically extended for
one or more successive, one-year renewal terms unless the Bank, at its sole
option, delivers written notice of non-renewal to the Borrower at least fifteen
(15) calendar months prior to the end of the initial period or any renewal
period. Upon the Bank's request, the Borrower shall execute and deliver to the
Bank a new Revolving Credit Note, dated the applicable anniversary of the
Closing Date, upon each renewal of the Revolving Credit Loan, provided that the
failure of the Bank to request or of the Borrower to execute and deliver a new
Revolving Credit Note shall not affect the obligations of the Borrower hereunder
or in connection with the Revolving Credit Loan.
(b) Subject to the terms and conditions hereof, the Bank agrees to
issue letters of credit for the account of the Borrower on any Banking Day prior
to the maturity date of the Revolving Credit Loan, in such form as may be
approved from time to time by the Bank; provided that the Bank shall have no
obligation to issue any letter of credit if, after giving effect to such
issuance, the aggregate amount of all letters of credit so issued and
outstanding, when added to the then outstanding principal balance of the
Revolving Credit Loan, would exceed the Maximum Availability, as set forth in
Section 1.3. Each letter of credit shall be issued pursuant to the Bank's
standard letter of credit application, reimbursement agreement and/or such other
documentation as the Bank may require, and shall be in such amount(s) and
subject to such duration, draw and other conditions as are acceptable to the
Bank in its sole discretion.
1.3. Advances and Payments. The aggregate amount of all advances under
---------------------
the Revolving Credit Loan at any one time outstanding shall not exceed the
lesser of (x) $15,000,000 or (y) the Loan Formula (hereinafter defined) (the
"Maximum Availability"). The Borrower shall from time to time make such
payments of principal, together with accrued interest on the principal so paid,
to the Bank as shall be necessary in order to maintain the outstanding balance
of such advances at or below the maximum allowable aggregate amount outstanding
established pursuant to the
-3-
<PAGE>
immediately preceding sentence. Each Borrowing Base Certificate furnished to the
Bank pursuant to Section 4.5(d) hereof shall (subject to such modifications and
adjustments as the Bank may reasonably deem appropriate as a result of its
independent review of the calculations and supporting data and documentation
relating to such certificate) govern the Loan Formula for the period until the
next such certificate is delivered to the Bank; provided, however, that the Bank
shall not be obligated to make any advance under the Revolving Credit Loan on
the basis of a certificate which reports Loan Formula data that is more than
forty-five (45) days old.
1.4. Notice and Manner of Borrowing. The Bank shall, from time to time,
------------------------------
subject to the maximum aggregate outstanding amount permitted under Section
1.3 hereof and so long as no Event of Default or Potential Default has occurred
or is continuing, make advances under the Revolving Credit Loan upon receipt of
requests therefor (which may be given in writing, by telephone or in any other
manner which the Bank deems reasonable and appropriate under the circumstances)
from the Borrower's chief executive officer, chief financial officer or such
other authorized officer or officers as the Borrower may from time to time
specify to the Bank in writing. Each such request shall include the date and
amount of the advance subject thereto and shall comply with such additional
requirements as may be set forth in the Revolving Credit Note.
1.5. Method of Payment. All payments hereunder and under the Notes shall
-----------------
be made by not later than 2:00 P.M. (Baltimore time) on the date when due, to
the Bank at its address referred to in Section 8.5 hereof in immediately
available funds. Whenever any payment hereunder or under the Notes becomes due
on a day which is not a Banking Day (hereinafter defined), such payment may be
made on the next succeeding Banking Day and such extension of time shall be
included in the computation of the interest due.
1.6. Use of Loan Proceeds. The Borrower shall use the proceeds of the
--------------------
Term Loan for the purpose of financing a portion of the price of its acquisition
of the assets of Quintessential Solutions Incorporated. The Borrower may use
the proceeds of the Revolving Credit Loan for working capital or other corporate
purposes, subject, however, to the restrictions set forth in this Agreement.
1.7. Unused Facility Fee. The Borrower shall pay the Bank a facility fee
-------------------
(the "Facility Fee"), payable quarterly in arrears, equal to 1/8 of 1% of the
difference between (i) the average daily amount outstanding of the Revolving
Credit Loan during the quarter for which such payment is made and (ii)
$15,000,000.
1.8. Collateral Security. The Borrower covenants and agrees that the Term
-------------------
Loans and all advances under the Revolving Credit Loan at any time outstanding
and all present and future indebtedness from time to time owing to the Bank from
the Borrower or any Subsidiary (hereinafter defined), whether pursuant to this
Agreement,
-4-
<PAGE>
any other credit facility, any guarantee or otherwise, shall at all times be
secured by and entitled to the benefit of all collateral security of every type
and description heretofore or hereafter afforded the Bank by the Borrower or any
Subsidiary, whether pursuant to this Agreement, any other credit facility, any
guarantee or otherwise.
2. DEFINITIONS.
-----------
2.1. Definitions. The following terms, when used herein, shall have the
-----------
following meanings:
"Acquisition Facility" shall have the meaning set forth in the sixth
--------------------
recital paragraph hereof.
"Affiliate" shall mean a person, partnership, venture, trust or corporation
---------
(including a subsidiary) (i) which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control with,
the Borrower, (ii) which beneficially owns or holds five percent (5%) or more of
any class of the voting shares (that is, shares entitled to vote for corporate
directors) of the Borrower, or (iii) five percent (5%) or more of the voting
shares (or in the case of a person which is not a corporation, five percent (5%)
or more of the equity interest) of which is beneficially owned or held by the
Borrower or another Affiliate. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a person, partnership, venture, trust or corporation
whether through the ownership of voting securities, by contract or otherwise.
"Banking Day" shall have the meaning set forth in the form of Term Loan
-----------
Note set forth as Exhibit A attached hereto.
---------
"Closing Date" shall have the meaning set forth in Section 1.1(a) hereof.
------------
"Collateral" shall have the meaning collectively set forth in Section 1 of
----------
the Security Agreements and Section 1 of the Pledge Agreement, and
"Receivables," "Inventory" and "Equipment" shall have the meanings set forth in
----------- --------- ---------
Section 1 of the Security Agreements.
"Default Rate" shall mean a fluctuating rate of interest, adjusted daily,
------------
equal to the Prime Rate plus three percent (3%) per annum.
"Environmental Complaint" shall mean any complaint, order, citation or
-----------------------
notice with regard to air emissions, water discharges, noise emissions or any
other environmental, health or safety matter affecting the Borrower.
"ERISA," "Plan," and "PBGC" shall have the meanings set forth in Section
----- ---- ----
3.10 of this Agreement.
-5-
<PAGE>
"Event of Default" shall mean any of the events specified in Section 5.1
----------------
hereof. "Potential Default" shall mean the occurrence of any event or existence
-----------------
of any condition which, with the giving of notice, would become an Event of
Default.
"Financial Statements" shall have the meaning set forth in Section 3.4 of
--------------------
this Agreement.
"GRC" shall mean General Research Corporation, a Virginia corporation and
---
an inactive subsidiary of the Borrower.
"Hazardous Material" shall mean any oil, petroleum products or their
------------------
byproducts or any hazardous, toxic or dangerous waste, substance or material
defined as such in (or for purposes of) the Comprehensive Environmental
Response, Compensation and Liability Act, any so-called "Superfund" or
"Superlien" law or any other federal, state or local statute, law, ordinance,
code, rule, regulation, order or decree (collectively, "Toxic Waste Laws"), as
----------------
now or any time hereafter in effect, regulating, relating to or imposing
liability or standards of conduct concerning any hazardous, toxic or dangerous
waste, substance or material.
"Loan Documents" shall mean, collectively, this Agreement, the Notes and
--------------
the Security Documents.
"Loan Formula" shall mean, as of any time that the same is to be
-------------
determined, the aggregate book value of the Eligible Accounts. "Eligible
---------
Accounts" shall mean (A) eighty percent (80%) of all accounts receivable of the
- ---------
Borrower, as classified in a manner consistent with documents filed by the
Borrower with the United States Securities and Exchange Commission, which are by
their terms payable within thirty (30) days after the billing for performance of
services or the shipment of goods and which are not more than sixty (60) days
past due; and (B) fifty percent (50%) of all amounts fully earned by GRC and SWL
for the performance of services which are classified by the Borrower as unbilled
receivables ("Unbilled Receivables"); provided, however, that no more than
--------------------
$2,500,000 in Unbilled Receivables shall be includable in the Borrowing Base for
purposes of Section 1.3 hereof. With respect to any joint venture which is an
Affiliate, Eligible Accounts shall also include eighty percent (80%) of the
accounts receivable of such joint venture which (1) are distributable by such
joint venture to any the Borrower when collected, (2) have been duly billed to
the account debtor and (3) by their terms are payable within thirty (30) days
after the billing for performance of services or the shipment of goods and which
are not more than sixty (60) days past due; provided, however, that the accounts
receivable of a particular joint venture shall not be eligible as provided
herein unless (a) the Borrower owns an interest in income and profits of at
least 51% in the aggregate of such joint venture and also controls its
management, and (b) such accounts receivable have not been pledged or assigned
to any other Person or Eligible Accounts shall not include (w) amounts owed by
an account debtor of the Borrower or any joint venture (as provided above) who
is
-6-
<PAGE>
the subject of any bankruptcy, reorganization, insolvency or liquidation
proceeding, (x) accounts receivable of the Borrower or of any joint venture (as
provided above) which are questionable as to collectibility, (y) accounts
receivable of the Borrower or of any joint venture (as provided above) which are
owed with respect to a particular job, contract or project more than one-half of
the accounts (measured by amounts outstanding) for which are ineligible under
clauses (w) and (x) above, or (z) any accounts receivable of a joint venture
which arise from then outstanding accounts receivable of the Borrower,
regardless of whether the corresponding Borrower's receivable is then included
in the Borrowing Base. "Borrowing Base" shall have the same meaning as "Loan
--------------
Formula" for purposes of this Agreement.
"Loans" shall mean collectively, the Revolving Credit Loan, the Term Loan
-----
and any Supplemental Term Loan made pursuant to Section 1.1(b) hereof.
"Maximum Availability" shall have the meaning set forth in Section 1.3.
--------------------
"Notes" shall mean, collectively, the Revolving Credit Note, the Term Loan
-----
Note and any Supplemental Term Loan Note executed pursuant to Section 1.1(b)
hereof, and shall also include any other document, agreement or instrument
evidencing all or any portion of the Loans and all extensions and renewals
thereof and substitutions therefor.
"Obligations" shall mean, collectively, (i) the payment of all principal of
-----------
and interest on the Notes as and when the same become due and payable (whether
by lapse of time, acceleration or otherwise), (ii) the payment of all interest,
fees and charges payable by the Borrower under the terms of the Loan Documents,
(iii) the payment of all other indebtedness, obligations and liabilities arising
under, and the observance and performance of all covenants and agreements
contained in, the Loan Documents, (iv) the payment of all principal of and
interest on any other loans, credits or advances at any time heretofore or
hereafter made to the Borrower by the Bank, whether or not related to or arising
from the Loans or the Loan Documents, and (v) the payment in full of all
expenses and charges, legal or otherwise, including reasonable attorneys' fees,
suffered or incurred by the Bank in collecting or enforcing payment of the Notes
or any or all of the other foregoing indebtedness or in realizing upon,
protecting or preserving any collateral security for the Notes or such other
indebtedness.
"Premises" shall mean the significant sites of the Borrower's operations,
--------
including without limitation those sites sets forth below:
1900 Gallows Road 5383 Hollister Ave. 635 Discovery Dr.
Vienna, VA 22182 Santa Barbara, CA 93111 Huntsville, AL 35806
-7-
<PAGE>
300 N. Continental 2221 Camino del Rio S. 31255 Cedar Valley Drive
Boulevard, Suite 550 Suite 305 Suite 300
El Segundo, CA 90245 San Diego, CA 92108 Westlake Village, CA 91362
985 Space Center Drive 1980 N. Atlantic Avenue 7200 North Nine Avenue
Suite 310 Suite 1030 Suite 4
Colorado Springs, CO 80915 Cocoa Beach, FL 32931 Pensacola, FL 32504
One 11th Avenue 7351 Shadeland Station 5 Cherry Hill Drive
Suite D-2 Suite 260 Suite 220
Shalimar, FL 32579 Indianapolis, IN 46256 Danvers, MA 01923
8310 Guilford Road 20 Trafalgar Square 3900 Juan Tabo, N.E.
Suite A Suite 455 Suite 12
Columbia, MD 21046 Nashua, NH 03063 Albuquerque, NM 87111
2940 Presidential Drive 2300 Computer Avenue 7410 Northside Drive
Suite 390 Building G Suite 105
Fairborn, OH 45324 Willow Grove, PA 19090 North Charleston, SC 29420
6100 Bandera Road 2121 Eisenhower Avenue Airport Plaza 2
Suite 507 Suite 200 2611 Jefferson Davis Hwy.
San Antonia, TX 78238 Alexandria, VA 22314 Suite 4000
Arlington, VA 22202
Crystal Gateway I 14120 Parke Long Court 16156 Dahlgren Road
1235 Jefferson David Hwy. Suite 101 Suite 136
Suite 501 Chantilly, VA 22021 Dahlgren, VA 22448
Arlington, VA 22202
621 Lynnhaven Parkway Zygimantu 10-6
Suite 360 2001 Vilnius Lithuania
Virginia Beach, VA 23452
"Prime Rate" shall have the meaning set forth in the form of Term Loan
----------
Note set forth as Exhibit A attached hereto.
---------
"Revolving Credit Note" shall have the meaning given in Section 1.2(a)
---------------------
hereof.
-8-
<PAGE>
"Security Documents" shall mean the instruments referred to in Section
------------------
7.1 hereof creating or providing security for the Notes, including (without
limitation) the "Security Agreements" and the "Pledge Agreement" referred to in
------------------- ----------------
Section 7.1 hereof.
"Subsidiary" shall mean each corporation (if any) actively engaged in
----------
business, a majority of the issued and outstanding voting shares (that is,
shares entitled to vote for corporate directors) of which shall, at the time as
of which any determination is being made, be owned by the Borrower either
directly or through Subsidiaries.
"Supplemental Term Loan" shall have the meaning given in Section
----------------------
1.1(b) hereof.
"Supplemental Term Loan Note" shall have the meaning given in Section
---------------------------
1.1(b) hereof.
"SWL" shall mean SWL Inc., a Virginia corporation and an inactive
---
subsidiary of the Borrower.
"Term Loan Note" shall have the meaning given in Section 1.1(a)
--------------
hereof.
"UCC" shall mean the Uniform Commercial Code, as in effect in any
---
applicable jurisdiction.
2.2. Amendments, etc. Included. All defined terms herein for
-------------------------
agreements, instruments and other documents shall be deemed to include any and
all amendments, modifications, extensions and renewals thereof, substitutions
therefor and supplements, exhibits and schedules thereto.
3. REPRESENTATIONS AND WARRANTIES.
------------------------------
The Borrower represents and warrants to the Bank that:
3.1. Organization and Authority; Conflicting Laws and Agreements.
-----------------------------------------------------------
The Borrower is a corporation duly organized and existing and is in good
standing under the laws of the jurisdiction of its incorporation, has full and
adequate corporate power to own its property and to carry on its business as now
conducted, is duly licensed or qualified to do business in all jurisdictions
where the nature of its business or the character of its properties requires
such licensing or qualification and has full right, power and authority to enter
into this Agreement and the Security Documents, to make the borrowings herein
provided for, to issue the Notes and to perform each and all of the matters and
things provided for in this Agreement and in the Security Documents; and this
Agreement, the Security Documents and the Notes do not, nor will the performance
or observance by the Borrower or any Subsidiary of any of the matters or things
provided for in this Agreement, the Security Documents or the Notes contravene,
conflict with or in any way be restricted by any law, rule or regulation or
order of court
-9-
<PAGE>
applicable to the Borrower, any Subsidiary or any of their respective
businesses, operations or properties or any provision of any organizational
document of the Borrower or any lease, mortgage, indenture, contract or
agreement of or affecting the Borrower, any Subsidiary or any of their
respective properties.
3.2. Subsidiaries. The Borrower has no Subsidiaries.
------------
3.3. Margin Stock. Neither the Borrower nor any Subsidiary is
------------
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System), and no part of the proceeds of the
Loans hereunder will be used to purchase or carry any margin stock or to extend
credit to others for that purpose.
3.4. Financial Statements. The consolidated financial statements of
--------------------
the Borrower and the Subsidiaries examined by Deloitte & Touche LLP for the
fiscal year ended June 30, 1995 (the "Financial Statements"), which have
heretofore been furnished to the Bank, are complete and correct and fairly
present the consolidated financial condition of the Borrower and the
Subsidiaries as of said date and the results of their operations for the period
covered thereby, all in accordance with generally accepted accounting principles
consistently applied throughout, except as otherwise noted therein. Neither the
Borrower nor any Subsidiary has any liabilities which are material to the
Borrower and such Subsidiary, direct or indirect, fixed or contingent, other
than as indicated in the Financial Statements.
3.5. Financial Condition. Since the date of the Financial
-------------------
Statements, there have been no material adverse changes in the condition,
financial or otherwise, of the Borrower and the Subsidiaries nor any changes in
the operations of the Borrower and the Subsidiaries except those occurring in
the ordinary course of business.
3.6. Litigation; Tax Returns; Governmental Approvals. There is no
-----------------------------------------------
litigation or governmental proceeding pending, nor to the knowledge of the
Borrower threatened, against the Borrower or any Subsidiary which, if adversely
determined, would result in any material adverse change in the consolidated
financial condition, properties, business or operations of the Borrower or the
performance by the Borrower of its obligations hereunder, under the Security
Documents or under the Notes, except as previously disclosed in writing to the
Bank. All federal, state and local income tax returns of the Borrower for the
fiscal year ended June 30, 1995, and for all fiscal years ended prior to said
date, have been filed with the appropriate taxing authorities, and all taxes
shown due thereon have been timely paid. To the best of the Borrower's
knowledge there are no objections to or controversies in respect of any of the
income tax returns of the Borrower and the Subsidiaries for any fiscal year
ended after said date pending or threatened, except for those (if any)
previously disclosed in writing to the Bank, the Borrower warranting that such
disclosures are true and accurate as of the date hereof. No authorization,
consent, approval, license, exemption, filing or registration from or with any
court or governmental department, agency or
-10-
<PAGE>
instrumentality, is or will be necessary for the valid execution, delivery or
performance by the Borrower of this Agreement, the Security Documents or the
Notes.
3.7. Liens. There are no liens, security interests or encumbrances
-----
on any of the assets or properties of the Borrower or any Subsidiary, except (i)
as permitted by Section 4.7 hereof, and (ii) as provided in Schedule I to this
Agreement and in Schedule I to each of the Security Agreements.
3.8. Enforceability. This Agreement, the Security Documents and the
--------------
Notes are the legal, valid and binding obligations of the Borrower, enforceable
against the Borrower in accordance with their respective terms, except as the
same may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws of general application relating to or affecting the
enforcement of creditor's rights and by general principles of equity.
3.9. No Defaults. The Borrower is and will remain in full compliance
-----------
with all of the terms and conditions hereof, and no Event of Default or
Potential Default has occurred and is continuing.
3.10. ERISA. The Borrower and the Subsidiaries are in compliance in
-----
all material respects with the Employee Retirement Income Security Act of 1974
("ERISA") as amended, to the extent applicable to them or to any plan, including
both single employer and multi-employer plans subject to Title IV of ERISA and
established or maintained for employees or former employees of the Borrower, any
Subsidiary or any member of the "controlled group" (as defined in ERISA) (such a
plan being hereinafter referred to as a "Plan"). Neither the Borrower nor any
Subsidiary has received any notice to the contrary from the Pension Benefit
Guaranty Corporation ("PBGC") or any other governmental entity or agency, and no
"reportable event" (as defined in ERISA) has occurred and is continuing. Except
as specifically otherwise disclosed in any information given to the Bank, the
present value of all vested benefits (determined on PBGC-guaranteed benefits and
using PBGC interest and mortality assumptions) under all single-employer Plans
maintained by the Borrower or a commonly-controlled entity does not, as of the
most recent valuation date, exceed the value of the assets of such Plans
allocable to such benefits.
3.11. Commercial Loan. Each Loan is a "commercial loan" within the
---------------
meaning of Section 12-101(c) of the Commercial Law Article of the Annotated Code
of Maryland, as amended.
3.12. Capital Stock. All issued and outstanding shares of all
-------------
classes of capital stock of SWL and GRC, including common and preferred stock as
well as convertible debt, are owned legally and beneficially by the Borrower.
With respect to the shares of stock pledged pursuant to the Pledge
Agreement, (i) there exists no voting trust or similar arrangement and there is
no
-11-
<PAGE>
restriction on, arrangement concerning, or agreement or contract relating to
the voting thereof, (ii) no proxy is currently in effect relating thereto, and
(iii) such shares have never been traded on any exchange or in any market and
have neither been registered with the United States Securities and Exchange
Commission nor offered or sold to the public.
3.13. Hazardous Materials. Except as previously disclosed in writing
-------------------
to the Bank, to the best of its knowledge, the Borrower has never caused or
permitted any Hazardous Material to be disposed of on, under or at any of its
properties (including, without limitation, the Premises), and none of its
properties have ever been used (whether by the Borrower or, to its best
knowledge, by any other person or entity) as a dump site or storage (whether
permanent or temporary) site for any Hazardous Material. To the best of the
Borrower's knowledge the Premises contain no underground tanks or asbestos, nor
any transformers containing Polychlorinated Biphenyls.
3.14. Assignments under the Federal Assignment of Claims Act. Except
------------------------------------------------------
as previously disclosed in writing to the Bank, neither the Borrower nor any
Subsidiary has executed an assignment of a government contract (i) with respect
to which the United States or any of its departments, agencies or
instrumentalities is currently making payments, and (ii) which has been filed,
along with a notice of assignment, pursuant to the Federal Assignment of Claims
Act.
4. COVENANTS.
---------
So long as any of the Notes remains outstanding, the Borrower
hereby covenants and agrees with the Bank as follows:
4.1. Payment of Taxes and Other Claims. The Borrower will, and will
---------------------------------
cause each Subsidiary to, pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all taxes, judgments, assessments
and governmental charges levied or imposed upon the Borrower or any Subsidiary
or upon the income, profits or property of the Borrower or any Subsidiary and
(b) all lawful claims for labor, materials and supplies which if unpaid might by
law become a lien upon the property of the Borrower or any Subsidiary; provided,
however, that the Borrower shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim, the amount,
applicability or validity of which is being contested diligently and in good
faith by appropriate proceedings and for which the Borrower or the Subsidiary
concerned shall have set aside on its books adequate reserves with respect
thereto; provided, further, that the foregoing proviso shall not relieve the
Borrower of its obligation to comply with Section 4.7 hereof; and provided,
further, that such proceedings do not materially impair the value or security of
the Collateral or any part thereof.
-12-
<PAGE>
4.2. Maintenance of Properties. The Borrower will cause the Premises
-------------------------
and all other properties owned, leased or operated by the Borrower or any
Subsidiary and used or held for use in the conduct of their respective
businesses to be maintained and kept in good condition, repair and working order
and supplied with all necessary equipment, and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the reasonable judgment of the Borrower may be necessary or advisable
so that the business carried on in connection therewith may be properly and
advantageously conducted at all times.
4.3. Corporate Existence. The Borrower will do or cause to be done,
-------------------
and will cause each Subsidiary to do or cause to be done, all things necessary
to preserve and keep in full force and effect their existence, organizational
status and good standing in the state of their organization and in every other
jurisdiction where the character of their properties or the nature of their
businesses requires them to qualify to do business, as well as the rights
(charter and statutory) and franchises of the Borrower and each Subsidiary. The
Borrower will not create any new subsidiaries, nor change its name, identity or
corporate structure, nor transact business under any trade name, nor change the
location of any material item of the Collateral or of its chief executive
offices or principal place of business without, in each case, first giving the
Bank thirty (30) days' prior written notice of its intent to do so.
4.4. Maintenance of Insurance. In addition to the specific
------------------------
requirements set forth in Section 2(f) of the Security Agreements, the Borrower
will maintain, and will cause each Subsidiary to maintain, insurance coverage by
good and responsible insurance underwriters in such forms and amounts and
against such risks as are customary for companies engaged in similar businesses
and owning and operating similar properties. The Borrower shall from time to
time file with the Bank, promptly upon its request, a detailed list of the
insurance then in effect covering the Borrower's properties (including, without
limitation, the Collateral), stating the names of the insurance companies, the
amounts and rates of the insurance, the dates of the expiration thereof and the
properties and risks covered thereby.
4.5. Financial Information, Tax Returns and Reports. The Borrower
----------------------------------------------
will, and will cause each Subsidiary to, employ generally accepted accounting
principles, applied on a consistent basis, and furnish to the Bank:
(a) as soon as available and in any event within forty-five (45) days
after the end of each interim fiscal quarter of each fiscal year of the Borrower
(or on the next Banking Day thereafter, if the forty-fifth day is not a Banking
Day), a consolidated and consolidating balance sheet of the Borrower and the
Subsidiaries as of the end of such interim fiscal period, and a consolidated and
consolidating statement of earnings of the Borrower and the Subsidiaries for
such fiscal period and for the period beginning on the first day of such fiscal
year and ending on the date of such balance sheet, setting forth in comparative
form the corresponding figures for the corresponding period
-13-
<PAGE>
of the preceding fiscal year, all in reasonable detail and certified by the
chief financial officer of the Borrower;
(b) as soon as available and in any event within ninety (90) days
after the last day of each fiscal year (or on the next Banking Day thereafter,
if the ninetieth day is not a Banking Day), consolidated financial statements
which have been examined by Deloitte & Touche LLP or another firm of independent
public accountants of recognized standing selected by the Borrower, covering the
operations of the Borrower and the Subsidiaries as of the end of such year and a
consolidated statement of earnings, shareholders' equity and cash flow for the
Borrower and the Subsidiaries for the year then ended, each on a comparative
basis with corresponding financial statements for the preceding fiscal year,
which financial statements shall be accompanied by a report of such independent
public accountants without exceptions or qualifications not acceptable to the
Bank and stating in substance that such financial statements have been prepared
in accordance with generally accepted accounting principles and that the
examination of accounts in connection with such financial statements has been
made in accordance with generally accepted auditing standards and, accordingly,
included such tests of accounting records and other auditing procedures as such
accountants considered necessary or advisable under the circumstances; and the
Borrower shall also provide the Bank with such unaudited consolidating financial
statements as are used to prepare the foregoing financial statements;
(c) each set of financial statements delivered to the Bank pursuant
to paragraphs (a) and (b) above shall be accompanied by the written statement of
the Borrower, signed by its chief financial officer, to the effect that such
officer has reexamined the terms and provisions of this Agreement and the
Security Documents and that, to the best of his knowledge, the Borrower has not
been in default during the preceding fiscal period in the fulfillment of any of
the terms, covenants, provisions or conditions hereof or thereof, and that no
Event of Default or Potential Default has occurred and is continuing as of the
date of said statement; or if the signer is aware of any such Event of Default
or Potential Default, he shall disclose in reasonable detail the nature thereof
and such curative action as may be or has been taken by the Borrower;
(d) within thirty (30) days following the end of each calendar month,
a copy of a computation of the Loan Formula substantially in the form of Exhibit
-------
C attached hereto, computing the Loan Formula as of the end of such month and
- -
certified as being correct by the chief financial officer of the Borrower;
(e) within forty-five (45) days following the end of each fiscal
quarter of each fiscal year of the Borrower, and also promptly upon a request
therefor by the Bank, a copy of the Borrower's backlog report (a "Backlog
Report") containing information regarding all contracts (other than classified
government contracts) entered into between the Borrower or any Subsidiary
(either as contractor or subcontractor) and the United States or any of its
departments, agencies or instrumentalities;
-14-
<PAGE>
(f) promptly upon any filing thereof by the Borrower or any
Subsidiary with the Securities and Exchange Commission, any annual, periodic or
special report or registration statement (without exhibits) generally available
to the public;
(g) promptly upon any request therefor by the Bank, a copy of any
application for any patent, copyright, trademark, trade name or other
intellectual property right filed by the Borrower or any Subsidiary with the
United States Patent and Trademark Office, the United States Copyright Office,
or any similar office or agency of the United States or any State thereof;
(h) such additional information (including, without limitation,
federal, state and local income tax and property tax returns and separate
financial statements) for the Borrower and/or any Subsidiary as the Bank may
reasonably request concerning the Borrower and such Subsidiary(ies) in order to
enable the Bank to determine whether the covenants, terms and provisions of this
Agreement have been complied with by the Borrower; and for that purpose the
Borrower agrees that all pertinent and relevant books, documents and vouchers
relating to its business and affairs and those of its Subsidiaries shall at all
times during regular business hours be open to the inspection of such accountant
or other agent (who may make copies of all or any part thereof) as shall from
time to time be designated by the Bank; and
(i) promptly upon any officer of the Borrower learning of the same,
notice of the occurrence of any Event of Default, notice of any material change
in the financial status of the Borrower or any Subsidiary, and notice of the
institution of any litigation against the Borrower or any Subsidiary which
could, if adversely determined, have a material, adverse effect on the financial
condition or operations of the Borrower or any Subsidiary.
The Bank agrees that it will hold and maintain confidential all
financial information, Backlog Reports and other proprietary information with
respect to the Borrower and its Subsidiaries and all information obtained during
inspections of the books and records of Borrower and its Subsidiaries which are
specifically designated by the Borrower as confidential and will not, without
the consent of the Borrower, disclose such information to any non-affiliated
third party. Notwithstanding the foregoing obligation of the Bank, the Borrower
hereby authorizes the Bank to disclose information obtained pursuant to this
Agreement (i) where required by governmental or regulatory authorities and (ii)
to its outside and in-house legal counsel, auditors, examiners and accountants.
In addition, the foregoing obligation of the Bank shall not apply in connection
with any exercise of the Bank's rights and remedies under the Loan Documents
arising during any period(s) when an Event of Default has occurred and is
continuing.
-15-
<PAGE>
4.6. Indebtedness. The Borrower covenants that it will not, and will
------------
not permit any Subsidiary to, create, incur, assume or suffer to exist any
indebtedness for borrowed money (including as such all indebtedness representing
the deferred purchase price of property), except:
(a) the indebtedness evidenced by the Notes;
(b) indebtedness or leases of the Borrower or any Subsidiary
outstanding on the date hereof and disclosed or reflected in the Financial
Statements or in the footnotes thereto;
(c) indebtedness of the Borrower or any wholly owned Subsidiary
to any other wholly owned Subsidiary;
(d) purchase money indebtedness of the Borrower and all
Subsidiaries;
(e) any existing or future indebtedness owed solely to the Bank
or any Payee under the Notes;
(f) leases entered into by the Borrower or any wholly owned
Subsidiary in the ordinary course of business; and
(g) any unsecured indebtedness in addition to any of the
foregoing, which is subordinated to the Notes and which in the aggregate does
not exceed $1,500,000 at any time.
4.7. Liens. The Borrower covenants that it will not, and will not
-----
permit any Subsidiary to, create, assume or suffer to exist any lien, security
interest or encumbrance upon any of their property or assets, whether now owned
or hereafter acquired, except:
(a) liens for taxes not yet due or which are being actively
contested in good faith by appropriate proceedings;
(b) other liens, security interests, charges or encumbrances
incidental to the conduct of their businesses or the ownership of their
properties and assets which were not incurred in connection with the borrowing
of money or the obtaining of advances or credit, and which do not, in the
aggregate, materially detract from the value of their properties or assets or
materially impair the use thereof in the operation of their businesses;
(c) liens and security interests existing on the date hereof and
disclosed or reflected in the Financial Statements or in the footnotes thereto;
-16-
<PAGE>
(d) liens and security interests in favor of the Bank; and
(e) liens and security interests on property or assets securing
indebtedness incurred to purchase such property or assets (but not extending to
any other property or assets), to the extent permitted under Section 4.6(d)
hereof.
4.8. Disposition of Stock and Indebtedness. The Borrower covenants
-------------------------------------
that it will not, and will not allow any Subsidiary to, sell, transfer or
otherwise dispose of, or part with control of, any shares of stock or
indebtedness of any Subsidiary, except to the Borrower or any other wholly owned
Subsidiary or to the Bank as collateral security for the Notes.
4.9. Investments, Loans, Advances, Guarantees and Contingent
-------------------------------------------------------
Liabilities. The Borrower covenants that it will not, and will not permit any
- -----------
Subsidiary to, make or permit to remain outstanding any loan or advance to, or
guarantee, endorse or otherwise be or become contingently liable, directly or
indirectly, in connection with the obligations, stock or dividends of, or own,
purchase or acquire any stock, obligations or securities of, or any other
interest in, or make any capital contribution to, any other person or entity
(including any joint venture), except that the Borrower or any Subsidiary may:
(a) permit to remain outstanding all presently existing loans,
advances and investments in or to any Subsidiary and disclosed or reflected in
the Financial Statements or in the footnotes thereto;
(b) make loans, advances and investments in or to any wholly
owned Subsidiary;
(c) acquire and own stock, obligations or securities received in
settlement of debts (created in the ordinary course of business) owing to the
Borrower or any Subsidiary;
(d) own, purchase or acquire prime commercial paper rated P-1 by
Moody's Investor Services, Inc. and A-1 by Standard and Poors Corporation,
bankers acceptances of, and certificates of deposit in, the Bank or any other
United States commercial bank with capital resources in excess of $150,000,000,
obligations of the United States Government or any agency thereof, and
obligations guaranteed by the United States Government, all of the foregoing in
each case to become due within one (1) year from the date of purchase;
(e) permit to exist guarantees of obligations of any wholly
owned Subsidiary, which obligations are not prohibited by Section 4.6; and
(f) make deposits and extensions of credit and endorse
negotiable instruments for deposit or collection, all in the ordinary course of
business.
-17-
<PAGE>
4.10. Merger and Sale of Assets. The Borrower covenants that it will
-------------------------
not, and will not permit any Subsidiary to, merge or consolidate with any other
person or entity, or sell, lease, transfer or otherwise dispose of all or any
substantial part of their assets, except that:
(a) any Subsidiary may merge with the Borrower (provided that
such Borrower shall be the continuing or surviving corporation) or with any one
or more other Subsidiaries; and
(b) any Subsidiary may sell, lease, transfer or otherwise
dispose of any of its assets to the Borrower or any Subsidiary.
4.11. Dealings with Affiliates. The Borrower will not, and will not
------------------------
permit any Subsidiary to, enter into any transaction with an Affiliate except on
terms no less favorable to the Borrower or such Subsidiary than if such
transaction were an arm's length transaction with a non-affiliated person or
entity.
4.12. Limitations on Certain Contracts. The Borrower will not, and
--------------------------------
will not permit any Subsidiary to, enter into or be a party to:
(a) any contract providing for the making of loans, advances
or capital contributions by the Borrower or any Subsidiary to any person or
entity or for the purchase of any property from any person or entity (except for
employee loans or advances in the ordinary course of business), in each case in
order to enable such person or entity to maintain working capital, net worth or
any other balance sheet condition or to pay debts, dividends or expenses;
(b) any contract for the purchase by the Borrower or any
Subsidiary of materials, supplies or other property or services if such contract
(or any related document) requires that payment for such materials, supplies or
other property or services shall be made regardless of whether or not delivery
of such materials, supplies or other property or services is ever made or
tendered;
(c) any contract to rent or lease (as lessee) any real or
personal property if such contract (or any related document) provides that the
obligation to make payments thereunder is absolute and unconditional under
conditions not customarily found in commercial leases then in general use or
requires that the lessee purchase or otherwise acquire securities or obligations
of the lessor;
(d) any contract for the sale or use of materials, supplies or
other property or the rendering of services which requires that payment to the
Borrower or any Subsidiary for such materials, supplies or other property, or
the use thereof, or for such services shall be subordinated to any indebtedness
of the purchaser or user of
-18-
<PAGE>
such materials, supplies or other property or the person or entity entitled to
the benefit of such services owed or to be owed to any other person or entity;
or
(e) any other contract which, in economic effect, is
substantially equivalent to a guarantee by the Borrower or any Subsidiary,
except as permitted by Section 4.9 hereof.
4.13. ERISA. The Borrower will, and will cause each Subsidiary to,
-----
promptly pay and discharge all obligations and liabilities arising under ERISA
of a character which, if unpaid or unperformed, might result in the imposition
of a lien or charge against any of their properties or assets, and will promptly
notify the Bank of the occurrence of any reportable event (as defined in ERISA)
which might result in the termination by PBGC of any Plan or of termination of
any such Plan or appointment of a trustee therefor. The Borrower will notify
the Bank of its or any Subsidiary's intention to terminate or withdraw from any
Plan and will not, and will not permit any Subsidiary to, terminate any such
Plan or withdraw therefrom unless the Borrower or such Subsidiary shall be in
compliance with all of the terms and conditions of this Agreement after giving
effect to any liability to PBGC or to the Plan resulting from such termination
or withdrawal.
4.14. Issuance of Stock. The Borrower shall not permit any
-----------------
Subsidiary (either directly, or indirectly by the issuance of rights or options
for, or securities convertible into, such shares) to issue, sell or dispose of
any shares of any class of its stock, except to the Borrower or any other wholly
owned Subsidiary.
4.15. Financial Condition and Ratios. Commencing with the fiscal
------------------------------
year ending June 30, 1996, the Borrower and the Subsidiaries will at all times
throughout the term of this Agreement satisfy or maintain certain minimum
financial conditions and ratios as follows:
(a) Working Capital. Consolidated working capital, equal to
---------------
consolidated current assets less consolidated current liabilities, of not less
than $19,000,000.
(b) Current Ratio. Consolidated current assets of not less
-------------
than 175% of consolidated current liabilities -- that is, a current ratio of
1.75:1.0.
(c) Tangible Net worth. Consolidated tangible assets
------------------
(excluding patents, copyrights, capitalized research and development costs,
goodwill and other intangible assets) in excess of consolidated liabilities by
at least $24,000,000.
-19-
<PAGE>
(d) Quick Ratio. Consolidated cash, cash equivalents and trade
-----------
receivables of not less than 125% of consolidated current liabilities -- that
is, a quick ratio of 1.25:1.0.
(e) Maximum Operating Loss. The Borrower shall not have an
----------------------
operating loss (i) for the fiscal quarter ending December 31, 1995 in excess of
$500,000, (ii) for the fiscal quarter ending March 31, 1996 in excess of
$1,250,000 and (iii) for each fiscal quarter thereafter in excess of $250,000.
(f) Maximum Aggregate Operating Loss. The Borrower shall not
--------------------------------
have an aggregate operating loss for any period of two consecutive fiscal years
in excess of $1,000,000.
(g) Debt Ratio. Consolidated total liabilities of not more
----------
than 125% of consolidated tangible net worth -- that is, a debt ratio of
1.5:1.0.
4.16. Obligations of the Borrower Unconditional. The payment and
-----------------------------------------
performance by the Borrower of its obligations hereunder and under the Notes and
the Security Documents shall be absolute and unconditional, irrespective of any
defense or right of set-off, recoupment or counterclaim it might otherwise have
against the Bank or any other person or entity; and the Borrower shall pay
absolute net during the term thereof all payments to be made on account of the
Loans as prescribed in the Notes and all other payments required hereunder and
thereunder, free of all deductions and without any abatement, diminution or set-
off whatsoever.
4.17. Businesses. The Borrower will not, and will not permit any
----------
Subsidiary to, make or suffer to be made any material change in the manner in
which their businesses are conducted.
4.18. Compliance with Laws. The Borrower will, and will cause each
--------------------
Subsidiary to, comply with all applicable federal, state and local laws, rules,
ordinances and regulations where noncompliance could have a material adverse
effect on their respective financial conditions, properties, businesses or
operations; provided, however, that the Borrower or any Subsidiary, as the case
may be, may in good faith and by appropriate proceedings contest the
applicability or validity of any such law, so long as such Borrower or such
Subsidiary is prosecuting such contest diligently and has set aside on its books
adequate reserves with respect thereto.
4.19. Hazardous Materials. The Borrower will indemnify and defend
-------------------
the Bank and hold the Bank harmless from and against any and all losses,
liabilities, damages, injuries, costs, expenses and claims of any and every kind
whatsoever paid, incurred or suffered by, or asserted against the Bank for, with
respect to, or as a direct or indirect result of, the presence on or under, or
the escape, seepage, leakage, spillage, discharge, emission, discharging or
release from the Premises or any of the Borrower's other properties of, any
Hazardous Material (including, without limitation,
-20-
<PAGE>
any losses, liabilities, damages, injuries, costs, expenses or claims asserted
or arising under any Toxic Waste Laws), regardless of whether or not caused by,
or within the control of, the Borrower. If the Borrower receives any notice of
(a) the happening of any event involving the use, spill, discharge or clean-up
of any Hazardous Material or (b) an Environmental Complaint from any person or
entity, including, but not limited to, the United States Environmental
Protection Agency, then the Borrower shall promptly give both oral and written
notice of the same to the Bank. Upon obtaining knowledge of an Environmental
Complaint from any source and by any means, the Bank shall have the right, but
not the obligation, upon five (5) Banking Days' prior written notice to the
Borrower to take such reasonable actions as it deems necessary or advisable to
clean up, remove, resolve or minimize the impact of, or otherwise deal with, any
such Hazardous Material or Environmental Complaint. Any and all sums expended by
the Bank for such purposes, together with interest thereon at the Default Rate,
shall be immediately reimbursed by the Borrower and shall constitute an
Obligation which is secured by the Collateral.
4.20. Material Agreements. Upon the request of the Bank from time to
-------------------
time, the Borrower shall deliver a list of all material leases, mortgages,
indentures, contracts or agreements of or affecting the Borrower, any Subsidiary
or any of their respective properties and true and correct copies of such
document(s) as the Bank may specify.
4.21. Assignments under the Federal Assignment of Claims Act. The
------------------------------------------------------
Borrower shall not execute any assignment of any government contract, to which
the Borrower or any Subsidiary is a party (either as a contractor or
subcontractor), in favor of any person other than the Bank without the prior
written consent of the Bank. In addition, the Borrower will promptly notify the
Bank upon its discovery of any attempt by any person other than the Bank to file
such an assignment under the Federal Assignment of Claims Act.
5. EVENTS OF DEFAULT AND REMEDIES.
------------------------------
5.1. Events of Default. The occurrence or existence of any one or
-----------------
more of the following events or conditions shall constitute an Event of Default:
(a) (i) default in the payment when due of any installment of
the principal of or interest on any Note, whether at the stated maturity thereof
or at any other time provided in such Note or in this Agreement, or (ii) default
for a period of five (5) days after notice in the payment when due of any other
amount payable by the Borrower under this Agreement, any Note or any of the
Security Documents;
(b) default in the observance or performance of any covenant
set forth in Sections 4.6 through 4.13, 4.15 or 4.17 hereof;
-21-
<PAGE>
(c) default in the observance or performance by the Borrower of
any other provision of this Agreement or any of the Security Documents which is
not remedied within thirty (30) days after notice thereof to the Borrower by
Bank; provided, however, that if such default cannot be corrected within thirty
(30) days, it shall not be an Event of Default so long as, in the opinion of the
Bank, the Borrower is diligently taking appropriate corrective action to cure
the same and such default will not, in the sole judgment of the Bank, impair the
security for the Loans;
(d) a default shall occur under any evidence of indebtedness
issued, assumed or guaranteed by the Borrower or any Subsidiary (other than any
such indebtedness owing by any Subsidiary to the Borrower or to another
Subsidiary) or under any indenture, agreement or other instrument under which
the same may be issued, and such default shall continue for the period of time
(if any) necessary to permit the acceleration of the maturity of any such
indebtedness in the aggregate amount of $50,000 or more;
(e) any representation or warranty made by the Borrower in this
Agreement or any of the Security Documents, or in any of the exhibits hereto or
thereto, or in any opinion, report, statement (including, without limitation,
financial statements) or certificate furnished by it pursuant to this Agreement
or any of the Security Documents, proves to have been false, misleading or
incomplete in any material respect as of the date of the issuance or making
thereof;
(f) the Borrower or any Subsidiary shall (i) have entered
involuntarily against it an order for relief under the United States Bankruptcy
Code, as amended, (ii) not pay, or admit in writing its inability to pay, its
debts generally as they become due or suspend payment of its obligations, (iii)
become insolvent or make an assignment for the benefit of creditors, (iv) apply
for, seek, consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, conservator, liquidator or similar official for it or any
substantial part of its property, (v) institute any proceeding seeking an order
for relief or other protection under the United States Bankruptcy Code, as
amended, or seeking dissolution, winding up, liquidation, reorganization,
arrangement, marshalling of assets, adjustment or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (vi) fail to contest in
good faith any appointment or proceeding described in Section 5.1(g) hereof, or
(vii) take any corporate action in furtherance of any of the foregoing purposes;
(g) a custodian, receiver, trustee, conservator, liquidator or
similar official shall be appointed for the Borrower or any Subsidiary or any
substantial part of any of their respective properties, or a proceeding for such
purposes or the purposes described in Section 5.1(f) hereof shall be instituted
against the Borrower or any Subsidiary and such appointment continues
undischarged or any such proceeding continues undismissed or unstayed for a
period of thirty (30) days;
-22-
<PAGE>
(h) any final judgments, writs or warrants of attachment or of
any similar processes aggregating in excess of $50,000 shall be entered or filed
against the Borrower, any Subsidiary or against any of their properties or
assets and remain unpaid, unvacated, unbonded or unstayed on appeal for a period
of five (5) days after entry or filing;
(i) any "reportable event" (as defined in ERISA) which
constitutes grounds for the termination of any Plan of the Borrower or any
member of the "controlled group" (as defined by ERISA) or for the appointment by
the appropriate United States District Court of a trustee to administer or
liquidate any such Plan, shall have occurred and be continuing thirty (30) days
after written notice of such effect shall have been given to the Borrower by the
PBGC or the Bank; or any such Plan shall be terminated; or the Borrower or any
member of the controlled group shall have withdrawn from such Plan or a trustee
shall be appointed by the appropriate United States District Court to administer
any such Plan; or the PBGC shall institute proceedings to administer or
terminate any such Plan; and in the case of vested liabilities allocable to, or
the withdrawal liability of the Borrower or any members of the controlled group
with respect to, such Plans shall exceed (either singly or in the aggregate in
the case of any such liability arising under more than one such Plan and in the
case of more than one liability arising under one or more such Plans) 5% of
consolidated assets of the Borrower and its Subsidiaries (as determined in
accordance with generally accepted accounting principles);
(j) the Borrower or any Subsidiary shall lose any license,
franchise or permit which materially affects their business operations as
presently conducted, if the same is not restored within thirty (30) days after
such loss.
5.2. Acceleration. (a) When any Event of Default (other than any
------------
Event of Default described in Sections 5.1(f) and (g) hereof) has occurred and
is continuing, the Bank may declare the principal of and the accrued interest on
the Notes to be forthwith due and payable and thereupon the Notes, including
both principal and interest, shall be and become immediately due and payable,
together with all other amounts payable under this Agreement, the Notes and the
Security Documents, without further demand, presentment, protest or notice of
any kind.
(b) When any Event of Default described in Section 5.1(f) or
(g) hereof has occurred and is continuing, then the Notes shall immediately
become due and payable, together with all other amounts payable under this
Agreement, the Notes and the Security Documents, without presentment, demand,
protest or notice of any kind.
5.3. Costs of Collection. The Borrower agrees to pay to the Bank all
-------------------
expenses and costs incurred or paid by the Bank, including reasonable attorneys'
fees and court costs, in connection with any default by the Borrower hereunder
or in
-23-
<PAGE>
connection with the enforcement of any of the terms hereof or of the Notes or
any Security Document or in connection with protecting or realizing upon any
collateral for the Obligations, including any of the foregoing incurred in
connection with any bankruptcy, reorganization or similar proceedings instituted
by or against the Borrower or any Subsidiary.
5.4. Consent to Jurisdiction; Waiver of Jury Trial. (a) The Borrower
---------------------------------------------
hereby agrees that any action or proceeding with respect to this Agreement or
the Notes or any action or proceeding brought to enforce any breach hereof or
thereof against the Borrower or any of its property may be brought in any
federal or state court situated in the State of Maryland and/or in any other
court having jurisdiction over the subject matter, in one or more actions or
proceedings, all at the sole election of the Bank, and by execution and delivery
of this Agreement, the Borrower irrevocably consents to jurisdiction in each
such court.
(b) The Borrower irrevocably waives any right it may have to a
trial by jury in any action or proceeding described in the foregoing Section
5.4(a), and hereby acknowledge that this waiver is a material provision of this
Agreement and shall be specifically enforceable.
5.5. Service of Process. If, for any reason, the Borrower is unable
------------------
to receive service of process in the manner provided by the Maryland Rules of
Procedure, then the Borrower hereby irrevocably appoints the State Department of
Assessments and Taxation as its agent for the purpose of gaining jurisdiction
over the Borrower in the State of Maryland in connection with any of the
Obligations; provided, however, that the Bank shall promptly notify the Borrower
-------- -------
in writing of any such service of process.
5.6. Acceleration of Other Obligations to Bank. When any Event of
-----------------------------------------
Default has occurred and is continuing, the Bank may declare any and/or all
other indebtedness of the Borrower or any Subsidiary owing to the Bank, whether
now existing or created in the future, to be immediately due and payable,
without presentment, demand, protest or further notice of any kind.
5.7. Remedies Cumulative. All rights, remedies and powers of the
-------------------
Bank hereunder are irrevocable and cumulative, and not alternative or exclusive,
and shall be in addition to all other rights, remedies and powers given hereby
or by any of the other Loan Documents or any laws now existing or hereafter
enacted.
6. CONDITIONS PRECEDENT TO LENDING.
-------------------------------
6.1. Conditions to the Making of the Initial Term Loan and the
---------------------------------------------------------
Initial Advance under the Revolving Credit Loan. The obligation of the Bank to
- -----------------------------------------------
make the initial Term Loan and the initial advance under the Revolving Credit
Loan hereunder is subject to the following conditions precedent:
-24-
<PAGE>
(a) Notes. The Bank shall have received the Term Loan Note and
-----
the Revolving Credit Note, duly executed by the Borrower on the Closing Date.
(b) Opinion of Borrower's In-House Legal Counsel. The Bank
--------------------------------------------
shall have received a written opinion of in-house legal counsel for the
Borrower, dated the Closing Date, in form and substance reasonably satisfactory
to the Bank.
(c) Evidence of Authorization. The Bank shall have received
-------------------------
copies of all corporate action taken by the Borrower to authorize this
Agreement, the Security Documents, the Notes and the borrowings hereunder,
certified as of the Closing Date and including a certification as to the
incumbency and signature(s) of the person(s) authorized to execute and deliver
or furnish such documents and all related materials and information.
(d) Estoppel Certificate. The Borrower shall deliver to the
--------------------
Bank a certificate, dated as of the Closing Date, to the effect that (i) no
Event of Default or Potential Default has occurred and is continuing and (ii)
all representations and warranties contained herein and in the Security
Documents are true, accurate and complete in all material respects.
(e) Organizational Documents. The Borrower shall deliver to the
------------------------
Bank certified copies of the organizational documents of the Borrower and
certificates of good standing for the Borrower from the states of its
organization, the states where its chief executive offices are located, the
states where its principal places of business are located and any other states
where the Premises are located.
(f) Consents and Approvals. The Bank shall have received copies
----------------------
of such consents and approvals as the Borrower may be required to obtain from
any person or entity in order to enter into this Agreement or any of the
Security Documents and to consummate the transactions contemplated hereby or
thereby.
(g) Transaction Expenses. The Borrower shall have paid any
--------------------
statements for transaction expenses which are payable under Section 8.9 hereof.
(h) Disclosure Letter. The Bank shall have received specific
-----------------
written disclosure from the Borrower prior to the Closing Date as to any matters
for which disclosure is required under Section 3.6 or 3.13 hereof.
(i) Other Documents. The Bank shall have received such other
---------------
documents, certificates and opinions, and evidence of such other matters, as it
may reasonably require.
6.2. Conditions to the Making of Each Advance under the Revolving
------------------------------------------------------------
Credit Loan. The obligation of the Bank to make each advance under the Revolving
- -----------
Credit Loan) is subject to the conditions precedent that on the date of the
making of
-25-
<PAGE>
such advance, (i) the Borrower shall have performed and observed, and shall then
be in compliance with, all of the terms, covenants and conditions of this
Agreement, the Notes and the Security Documents, (ii) there shall not have
occurred or be existing any Event of Default, and (iii) the representations and
warranties contained herein and in the Security Documents shall be true,
accurate and complete, with the same effect as though such representations and
warranties had been made at the time of such advance; and each and every request
for an advance under the Revolving Credit Loan shall constitute a confirmation
and warranty by the Borrower that this Section 6.2 has been satisfied in full.
6.3. Conditions to the Making of any Supplemental Term Loan. The
------------------------------------------------------
obligation of the Bank to make any Supplemental Term Loan hereunder is subject
to the following conditions precedent:
(a) Note. The Bank shall have received the appropriate
----
Supplemental Term Loan Note, duly executed by the Borrower (or its Subsidiary,
as the case may be).
(b) Opinion of Borrower's In-House Legal Counsel. The Bank
--------------------------------------------
shall have received a written opinion of in-house legal counsel for the Borrower
(or such Subsidiary), dated the date of such Supplemental Term Loan Note, in
form and substance reasonably satisfactory to the Bank.
(c) Evidence of Authorization. The Bank shall have received
-------------------------
copies of all corporate action taken by the Borrower (or such Subsidiary) to
authorize such Supplemental Term Loan Note and the borrowings thereunder,
certified as of the date of such Supplemental Term Loan Note and including a
certification as to the incumbency and signature(s) of the person(s) authorized
to execute and deliver or furnish such documents and all related materials and
information.
(d) Estoppel Certificate. The Borrower (or such Subsidiary)
--------------------
shall deliver to the Bank a certificate, dated as of the date of such
Supplemental Term Loan Note, to the effect that (i) no Event of Default or
Potential Default has occurred and is continuing and (ii) all representations
and warranties contained herein and in the Security Documents are true, accurate
and complete in all material respects.
(e) Transaction Expenses. The Borrower (or such Subsidiary)
--------------------
shall have paid any statements for transaction expenses which are payable under
Section 8.9 hereof.
(f) Other Documents. The Bank shall have received such other
---------------
documents, certificates and opinions, and evidence of such other matters, as it
may reasonably require.
-26-
<PAGE>
7. COLLATERAL SECURITY.
-------------------
7.1. Security Documents. (a) As collateral security for the
------------------
Obligations, (a) the Borrower has executed and delivered to the Bank a Pledge
and Security Agreement dated as of July 30, 1990 (the "Pledge Agreement"), under
which the Borrower has pledged all of the issued and outstanding capital stock
of each of SWL and GRC, and (b) SWL and GRC have each executed and delivered to
the Bank a Security Agreement (together, the "Security Agreements") covering and
creating a security interest in any and all of its inventory, goods, accounts,
accounts receivable, general intangibles, chattel paper, instruments and
equipment, whether now owned or existing or hereafter acquired or arising (said
Pledge Agreement and Security Agreements, together with any and all additional
documents, agreements, instruments and certificates which may from time to time
secure all or any portion of the Loans, being herein sometimes collectively
referred to as the "Security Documents").
(b) Each of the Borrower, SWL and GRC hereby represents,
warrants and covenants to the Bank (i) that all of the assets of SWL and GRC
have been transferred to the Borrower pursuant to separate Asset Purchase
Agreements each dated as of June 30, 1995 by and between the Borrower and SWL
and GRC, respectively, and (ii) that such assets have been transferred to the
Borrower in each case subject to the Bank's security interest therein created
under the Security Agreements. In addition, the parties agree that the Borrower
shall hereby assume all of the obligations of each of SWL and GRC, respectively,
under the Security Agreements as though it were an original party to such
agreements, and further agree that such Security Agreements shall hereby be
amended to include within the term "Obligations" therein the Borrower's
obligations under the Notes.
(c) Finally, the parties agree that the Bank shall have the
right, upon an Event of Default, (i) to obtain lien search reports covering the
assets of the Borrower, SWL and GRC for all appropriate jurisdictions, (ii) to
require the Borrower to obtain such releases, waivers and subordination
agreements as the Bank may reasonably require and to execute and deliver to the
Bank additional financing statements, amendments to financing statements,
continuation statements and other documents, certificates, instruments and
agreements and (iii) and to file or record the foregoing documents in all
appropriate jurisdictions, all as the Bank deems necessary or advisable to
maintain its first priority perfected security interest in the Collateral and
otherwise to accomplish or facilitate the purposes of this Section 7.1, and the
parties further agree that the Borrower shall pay all filing, recordation and
registration fees and taxes, as well as all other costs and expenses (including
reasonable legal expenses) incurred by the Bank in connection therewith.
7.2. Deposit Balances. As additional security for the payment,
----------------
performance and discharge of the Obligations, the Borrower hereby pledges to the
Bank, grants the Bank a security interest in, and gives to the Bank a first
priority lien upon and a right of set-off against, all deposit balances now or
hereafter arising in any
-27-
<PAGE>
of its accounts with the Bank and all property and securities of every kind and
nature which have been or at any time shall be delivered to the Bank or
otherwise come into the Bank's possession, custody or control for any purpose
whatsoever, whether or not for the express purpose of being used by the Bank as
collateral security or for safekeeping or for any other or different purpose, or
which shall be in transit to the Bank or set apart for or on behalf of the Bank,
in any way, by the Borrower or for its account, or in which the Borrower may
have any interest, whether the Bank shall accept the same for the purpose for
which delivered or not, and any and all cash and non-cash proceeds of said
property and securities and every part thereof, with the right of the Bank, in
its discretion, to resort first to any part of said security without exhausting
its rights against any other collateral or source of payment.
8. MISCELLANEOUS.
-------------
8.1. Exercise of Rights. Any delay on the part of the Bank in
------------------
exercising any power, privilege or right under this Agreement shall not operate
as a waiver thereof, and no single or partial exercise of any power, privilege
or right hereunder shall preclude other or further exercise thereof, or the
exercise of any other power, privilege or right. The waiver by the Bank of any
default by the Borrower shall not constitute a waiver of any subsequent
defaults, but shall be restricted to the default so waived. The failure of the
Bank to enforce any of the terms and provisions hereof, or its failure to
declare a default hereunder, shall apply only in the particular instance, and
shall not operate as a continuing waiver. If any part of this Agreement should
be contrary to any law which the Bank might seek to apply or enforce, or should
be otherwise defective, the other provisions of this Agreement shall not be
affected thereby, but shall continue in full force and effect.
8.2. Payment Due on Banking Day. If any payment or prepayment of
--------------------------
principal or interest on the Notes shall fall due on a day which is not a
Banking Day, interest at the applicable rate shall continue to accrue on such
principal from the stated due date thereof to and including the next succeeding
Banking Day, on which day the same shall be payable.
8.3. Assessments. The Borrower agrees that it will pay all
-----------
documentary, stamp, recording and similar taxes which are payable in respect of
this Agreement, the Security Documents or the Notes, including interest and
penalties, in the event any such taxes are assessed, irrespective of when such
assessment is made.
8.4. Survival. All representations and warranties of the Borrower
--------
made herein or in certificates given pursuant hereto shall survive the execution
and delivery of this Agreement, the Security Documents and the Notes, and shall
continue in full force and effect with respect to the date as of which they were
made as long as any of the Notes shall remain outstanding.
-28-
<PAGE>
8.5. Notices. All notices and other communications provided for
-------
herein or in any of the Security Documents shall be in writing, except as
otherwise specifically provided for hereinabove, and shall be deemed to have
been given or made when served personally or on the first Banking Day following
deposit in the United States mail and addressed, if to the Borrower, to GRC
International, Inc., 1900 Gallows Road, Vienna, Virginia 22182, Attention:
Chief Financial Officer (with a copy to Thomas E. McCabe, Esq., Senior Vice
President, General Counsel and Secretary, at the same address), or if to the
Bank, to Two Hopkins Plaza, Suite 200, Baltimore, Maryland 21201, Attention:
Mr. Philip G. Enstice, Senior Vice President (with a copy to Venable, Baetjer
and Howard, LLP, Two Hopkins Plaza, Suite 1800, Baltimore, Maryland 21201,
Attention: Mitchell Kolkin, Esq.), or at such other address as shall be
designated by either party hereto in a written notice to the other party
pursuant to this Section 8.5.
8.6. Counterparts. This Agreement may be executed in any number of
------------
counterparts, and by different parties on different counterparts, all of which
taken together shall constitute one and the same instrument. Any of the parties
hereto may execute this Agreement by signing any such counterpart and each of
such counterparts shall for all purposes be deemed to be an original. This
Agreement shall become effective when each of the parties hereto has executed
this Agreement or a separate counterpart hereof, and delivered the same to the
Bank.
8.7. Successors and Assigns; Governing Law; Amendments. This
-------------------------------------------------
Agreement shall be binding upon the Borrower and its successors and assigns, and
shall inure to the benefit of the Bank and its successors and assigns, the term
"Bank" as used herein to include any subsequent holder of any Note. The Bank
reserves the right to sell, assign, encumber, transfer or otherwise dispose of
all or any part of its right, title and interest in and to any of the Notes, the
Collateral, the Security Documents and this Agreement, including any undivided
participation therein, all without the consent of or notice to the Borrower;
provided, however, that the Borrower shall continue to recognize the Bank as the
holder of such right, title and interest until it shall have received written
notice from the Bank of disposition. This Agreement and the rights and duties
of the parties hereto shall be construed and determined in accordance with the
internal laws of the State of Maryland, without regard to principles of
conflicts of laws. This Agreement constitutes the entire understanding of the
parties with respect to the subject matter hereof and any prior understandings,
commitments and agreements, whether written or oral, with respect thereto are
superseded hereby. This Agreement, the Notes and the Security Documents may not
be amended or modified except by a written instrument signed by the Borrower and
the Bank. The Borrower may not assign its rights or obligations hereunder
without the prior written consent of the Bank.
8.8. Section Headings; Construction. Section headings used in this
------------------------------
Agreement are for convenience of reference only and shall not affect the
construction of this Agreement. When used in this Agreement, the singular of
any word shall include
-29-
<PAGE>
the plural, the plural shall include the singular and the use of any gender
shall include all genders.
8.9. Transaction Expenses. The Borrower shall pay all out-of-pocket
--------------------
costs and expenses incurred by the Bank in connection with the negotiation,
preparation, execution and delivery of this Agreement, all related documents and
any subsequent amendments hereof or thereof, or in connection with the
consummation of any of the transactions contemplated hereby or thereby,
including the reasonable fees and expenses of Venable, Baetjer and Howard, LLP,
special counsel for the Bank.
8.10. Estoppel Certificates. The Borrower will, upon not less than
---------------------
fifteen (15) business days' request by the Bank, execute, acknowledge and
deliver to the Bank a statement in writing, certifying (a) that this Agreement
is unmodified and in full force and effect and that the payments required by
this Agreement, the Notes and the Security Documents to be paid by the Borrower
have been paid, and (b) the then unpaid balance of the Loans; and stating
whether or not, to the knowledge of the signer of such certificate, any Event of
Default or Potential Default has occurred and is continuing and, if so,
specifying each such default of which the signer may have knowledge.
8.11. Indemnification. The Borrower shall protect, indemnify and
---------------
save harmless the Bank and its officers, employees and agents from and against,
any and all liabilities, suits, actions, claims, demands, losses, expenses and
costs of every kind and nature incurred by, or asserted or imposed against, the
Bank and its officers, agents or employees, or any of them, by reason of any
accident, injury (including death) or damage to any person or property, however
caused (other than if by the willful misconduct of such person), resulting from,
connected with or growing out of any act of commission or omission of the
Borrower or any officer, employee, agent, assignee, contractor or subcontractor
of the Borrower or any use, non-use, possession, occupation, condition,
operation, service, design, construction, acquisition, maintenance or management
of, or on, or in connection with, the Premises, the Collateral, or any part
thereof, or by reason of any suit or proceeding brought by or against the Bank
in any way relating to or arising out of the transactions contemplated by the
Loan Documents, the enforcement of any of the terms thereof or the exercise of
any of the remedies provided for therein, regardless of whether such
liabilities, suits, actions, claims, demands, damages, losses, expenses and
costs are against or are suffered or sustained by the Bank or any of its
officers, agents or employees, or are against legal entities to whom the Bank or
any of its officers, agents or employees may become liable therefor. The
Borrower, if so requested by the Bank, shall undertake to defend, at its sole
cost and expense, any and all suits, actions and proceedings brought against the
Bank or any of its officers, agents or employees in connection with any of the
matters mentioned in this Section 8.11.
-30-
<PAGE>
8.12. Publicity. Any public notices, advertisements or similar
---------
announcements relating to this Agreement or the Loans shall be subject to the
prior approval of each of the parties hereto.
IN WITNESS WHEREOF, the parties have caused this Loan Agreement to be
duly executed under seal, intending it to be a sealed instrument, as of the day
and year first above written.
[SEAL]
ATTEST or WITNESS: GRC INTERNATIONAL, INC.
/s/ T. E. McCabe By: /s/ Philip R. Pietras (SEAL)
- ------------------------- -----------------------
Name: Philip R. Pietras
-------------------
Title: V.P., Treasurer & CEO
-----------------------
ATTEST or WITNESS: SWL INC.
/s/ T. E. McCabe By: /s/ Philip R. Pietras (SEAL)
- ------------------------- -----------------------
Name: Philip R. Pietras
-------------------
Title: V.P., Treasurer & CEO
-----------------------
ATTEST or WITNESS: GENERAL RESEARCH
CORPORATION
/s/ T. E. McCabe By: /s/ Philip R. Pietras (SEAL)
- ------------------------- -----------------------
Name: Philip R. Pietras
-------------------
Title: V.P., Treasurer & CEO
-----------------------
ATTEST or WITNESS: MERCANTILE-SAFE DEPOSIT
AND TRUST COMPANY
[SIGNATURE APPEARS HERE] By: /s/ Philip G. Enshce (SEAL)
- ------------------------- -----------------------
Name: Philip G. Enshce
-------------------
Title: Senior Vice President
-----------------------
-31-
<PAGE>
Exhibit A
---------
TERM LOAN NOTE
--------------
$2,200,000.00 Baltimore, Maryland
February ___, 1996
FOR VALUE RECEIVED, GRC INTERNATIONAL, INC., a Delaware corporation
(hereinafter referred to as the "Maker"), promises to pay to the order of
MERCANTILE-SAFE DEPOSIT AND TRUST COMPANY, a Maryland banking institution
(hereinafter, the "Bank," or, together with all subsequent holders of this Note,
the "Payee"), the principal sum of Two Million Two Hundred Thousand and no/
100ths Dollars ($2,200,000), together with interest on the unpaid principal
balance hereof from time to time outstanding, at a fluctuating rate of interest
equal to the "Prime Rate" (hereinafter defined), adjusted (both upwards and
downwards) on the date of any change in the Prime Rate. Interest on the
outstanding principal balance hereof shall be payable monthly in arrears
beginning on March 1, 1996 and continuing on the first day of each month
thereafter, through and including September 1, 1997, and the entire, then
outstanding principal balance hereof, together with all accrued and unpaid
interest hereon, shall be due and payable on September 1, 1997.
If any payment required to be made hereunder is not received within
fifteen (15) calendar days after the date that the same becomes due and payable,
the Maker shall pay a late payment charge equal to five percent (5%) of the
amount of such payment then due. The Maker shall also pay, promptly upon
demand, all costs of collection, including reasonable attorney's fees if this
Note is referred to an attorney for collection after default, whether or not
any action shall be instituted to enforce or collect this Note. Time is of the
essence hereof for all purposes.
The "Prime Rate" is a fluctuating interest rate set by the Bank from
time to time as an interest rate base for borrowings. The Prime Rate is one of
several interest rate bases used by the Bank; and the Bank lends at rates above
and below the Prime Rate. The Maker will be afforded the same interest rate base
as the Bank's other commercial borrowers who are tied to the Prime Rate. On the
date hereof the Prime Rate is eight and one-quarter percent (8 1/4%) per annum.
All payments on this Note shall be applied first to the payment of
accrued but unpaid interest, and any remainder shall be applied to reduction of
the principal balance hereof. The rate of interest hereon shall be calculated on
the basis of a 360-day year factor applied to actual days elapsed. All payments
hereunder shall be payable in lawful money of the United States of America and
shall be made to the Payee in immediately available funds at Two Hopkins Plaza,
Suite 200, Baltimore,
<PAGE>
Maryland 21201, or at such other address as the Payee may from time to time
designate in writing to the Maker.
The Maker shall have the right and privilege to prepay this
Note, in whole or in part, at any time upon at least five (5) days' prior
written notice of intention to prepay to the Payee; provided that: (a) each
partial prepayment of principal shall be in multiples of $5,000, unless
otherwise agreed by the Payee, (b) each prepayment shall be made on a date when
an installment of interest or principal hereon is due, (c) each prepayment shall
include all accrued and unpaid interest on or with respect to the principal
amount to be prepaid, and (d) partial prepayments of principal shall be applied
in inverse order of maturity. Such prepayment shall not be subject to any
premium or penalty for prepayment.
The Maker waives presentment and demand for payment, notice of
intent to accelerate maturity, notice of nonpayment, bringing of suit and
diligence in taking any action to collect any sums owing hereunder or in
proceeding against any of the rights and properties securing payment hereof.
From time to time, without affecting the obligation of the Maker to pay the
outstanding principal balance of this Note and to observe the covenants of the
Maker contained herein, without giving notice to or obtaining the consent of the
Maker, and without liability on the part of the Payee, the Payee may, at the
option of the Payee, extend the time for payment of interest hereon and/or
principal hereof, reduce the payments hereunder, release anyone liable on this
Note, accept a renewal of this Note, join in any extension or subordination or
exercise any option or election hereunder, reduce the rate of interest on this
Note or exercise any option or election hereunder. No one or more of such
actions shall constitute a novation.
If default be made in the payment in whole or in part of any sum
provided for herein, or if an event of default shall occur under any instrument
or document executed as security for, as evidence of, or otherwise in connection
with this Note or the indebtedness evidenced hereto or under the Amended and
Restated Revolving Credit and Term Loan Agreement dated February 12, 1996 by and
between the Maker and the Payee (the "Loan Agreement") (this Note, the Loan
Agreement, other promissory notes issued and to be issued pursuant to the Loan
Agreement and the "Security Documents" (defined below) being hereinafter
collectively called the "Loan Documents"), then the Payee may, at its option,
without further notice or demand (except as may be otherwise specifically
provided for in the Loan Documents), declare the unpaid principal balance and
accrued interest on this Note at once due and payable, foreclose all liens
securing payment hereof, pursue any and all other rights, remedies and recourses
available to the Payee, or pursue any combination of the foregoing, all remedies
hereunder and under the Loan Documents being cumulative. The Payee shall have
the right to rescind any acceleration in payment of this Note for default as
aforesaid, if the Payee so elects, in which event this Note shall be construed,
interpreted and enforced in the same manner as if the Payee had not elected to
declare the unpaid principal balance and accrued interest of this Note at once
due and payable.
-2-
<PAGE>
Failure to exercise any of the foregoing options upon the happening of
one or more of the foregoing events shall not constitute a waiver of the right
to exercise the same or any other option at any subsequent time in respect to
the same or any other event, and no single or partial exercise of any right or
remedy shall preclude other or further exercise of the same or any other right
or remedy. The Payee shall have no duty to exercise any or all of the rights and
remedies herein provided or contemplated. The acceptance by the Payee of any
payment hereunder that is less than payment in full of all amounts due and
payable at the time of such payment shall not constitute a waiver of the right
to exercise any of the foregoing options at the time or at any subsequent time,
or nullify any prior exercise of any such option without the express written
consent of the Payee.
This Note, together with other promissory notes issued and to be
issued pursuant to the Loan Agreement, are secured, inter alia, by Security
----- ----
Agreements dated as of July 30, 1990 and executed by SWL Inc.("SWL") and General
Research Corporation ("GRC"), respectively (the "Security Agreements"), covering
SWL's and GRC's accounts, instruments, chattel paper, inventory, goods,
equipment, fixtures, machinery, deposit balances, contract rights, general
intangibles and other tangible and intangible personal property, as well as a
Pledge and Security Agreement dated as of July 30, 1990 executed by the Maker
for the benefit of the Bank, covering the stock owner by the Maker in each of
SWL and GRC, all as more particularly described therein (collectively, the
"Security Documents"). Pursuant to Section 7.1 of the Loan Agreement each of the
Maker, SWL and GRC has represented, warranted and covenanted to the Bank (i)
that all of the assets of SWL and GRC have been transferred to the Maker
pursuant to separate Asset Purchase Agreements each dated as of June 30, 1995 by
and between the Maker and SWL and GRC, respectively, and (ii) that such assets
have been transferred to the Maker in each case subject to the Bank's security
interest therein created under the Security Agreements. In addition, the Maker,
SWL and GRC have agreed that the Maker shall assume all of the obligations of
each of SWL and GRC, respectively, under the Security Agreements as though it
were an original party to such agreements, and have further agreed that such
Security Agreements shall be amended to include within the term "Obligations"
therein the Maker's obligations under this Note.
This Note shall be governed by and construed according to the laws of
the State of Maryland, without regard to principles of conflict of laws.
Any attorney at law may appear in any court of record in the State of
Maryland or in the United States, after demand on this Note following an event
of default under any Loan Document, and waive the issuing of service of process
and confess a judgment against the Maker in favor of the Payee for the amount
then appearing due hereunder, together with interest, costs of suit and
attorneys' fees and thereupon release all errors and waive the right of appeal.
-3-
<PAGE>
It is expressly stipulated and agreed that the loan evidenced by this
Note is a "commercial loan" as defined in the Commercial Law Article of the
Annotated Code of Maryland.
In any case where the date of maturity of interest on, or principal of,
this Note shall be a Sunday or legal holiday, or a day on which banking
institutions in the city of payment are authorized by law or executive order to
close (any other day being herein referred to as a "Banking Day"), then payment
of interest or principal need not be made on such date, but may be made on the
next succeeding Banking Day; provided, however, that interest shall continue to
accrue through the actual date of payment.
Executed under seal and intending this Note to be a sealed instrument,
as of the date and year above written.
ATTEST or WITNESS GRC INTERNATIONAL, INC.
By: (SEAL)
- ---------------------- ------------------------
Name:
--------------------------
Title:
-------------------------
-4-
<PAGE>
Exhibit B
---------
CONSOLIDATED, AMENDED AND RESTATED
----------------------------------
REVOLVING CREDIT MASTER NOTE
----------------------------
$15,000,000.00 Baltimore, Maryland
February __, 1996
THIS CONSOLIDATED, AMENDED AND RESTATED REVOLVING CREDIT MASTER NOTE
(this "Note") is executed this __day of February, 1996, by GRC INTERNATIONAL,
INC., a Delaware corporation (hereinafter referred to as the "Maker"), in favor
of MERCANTILE-SAFE DEPOSIT AND TRUST COMPANY, a Maryland banking institution
(hereinafter, the "Bank," or, together with all subsequent holders of this Note,
the "Payee").
RECITALS
--------
1. The Maker, together with SWL Inc. ("SWL"), General Research
Corporation ("GRC"), Moseley Associates, Inc. and Semifab, Inc., executed in
favor of the Bank a Revolving Credit Master Note (the "Original Note") dated
August 9, 1990 in the principal face amount of $10,000,000.
2. The Maker, together with SWL and GRC, executed in favor of the
Bank an Amended and Restated Revolving Credit Master Note (the "Primary Note")
dated May 28, 1992 in the principal face amount of $10,000,000, amending and
restating the terms of the Original Note.
3. The Maker executed in favor of the Bank a Revolving Credit Note
(Commercial)(the "Supplemental Note") dated December 8, 1995 in the principal
face amount of $5,000,000.
4. The Maker has requested and the Bank has agreed, to consolidate
the Primary Note and the Supplemental Note and to modify, amend and restate the
provisions thereof, so that the same shall constitute a single indebtedness
payable in accordance with the terms set forth below.
WITNESSETH
----------
NOW THEREFORE, in consideration of the foregoing and of the promises
contained herein, the Maker agrees as follows:
A. The indebtedness evidenced by the Primary Note and the
Supplemental Note are hereby combined and consolidated, so that together they
shall constitute a single indebtedness.
<PAGE>
B. The Primary Note and the Supplemental Note, as hereby consolidated,
are hereby amended and restated in their entirety (hereinafter referred to
collectively as the "Note"), as follows:
* * * * *
FOR VALUE RECEIVED, GRC INTERNATIONAL, INC., a Delaware corporation
(hereinafter referred to as the "Maker"), promises to pay the order of
MERCANTILE-SAFE DEPOSIT AND TRUST COMPANY, a Maryland banking institution
(hereinafter, the "Bank," or, together with all subsequent holders of this Note,
the "Payee"), the principal sum of Fifteen Million and no/100ths Dollars
($15,000,000.00) or such lesser aggregate amount as may be advanced by the Payee
from time to time pursuant to Section 1.3 of the "Loan Agreement" (hereinafter
defined), adjusted (both upwards and downwards) on the date of any change in the
Prime Rate. Interest on the outstanding principal balance hereof shall be
payable monthly in arrears on the first day of each calendar month, commencing
on March 1, 1996, and the entire, then outstanding principal balance hereof,
together with the accrued and unpaid interest hereon, shall be due and payable
on January 15, 1998, except that such due date shall be automatically extended
for one or more successive, one-year renewal terms unless the Bank, at its sole
option, delivers written notice of non-renewal to the Maker at least fifteen
(15) calendar months prior to the end of the initial period or any renewal
period.
If any payment required to be made hereunder is not received within
fifteen (15) calendar days after the date that the same becomes due and payable,
the Maker shall pay a late payment charge equal to five percent (5%) of the
amount of such payment then due. The Maker shall also pay, promptly upon
demand, all costs of collection, including reasonable attorneys' fees if this
Note is referred to an attorney for collection after default, whether or not any
action shall be instituted to enforce or collect this Note. Time is of the
essence hereof for all purposes.
The "Prime Rate" is a fluctuating interest rate set by the Bank from
time to time as an interest rate base for borrowings. The Prime Rate is one of
several interest rate bases used by the Bank; and the Bank lends at rates above
and below the Prime Rate. The Maker will be afforded the same interest rate
base as the Bank's other commercial borrowers who are tied to the Prime Rate.
On the date hereof the Prime Rate is eight and one-quarter percent (8 1/4%) per
annum.
All payments on this Note shall be applied first to the payment of
accrued but unpaid interest, and any remainder shall be applied to reduction of
the principal balance hereof. The rate of interest hereon shall be calculated
on the basis of a 360-day year factor applied to actual days elapsed. All
payments hereunder shall be
-2-
<PAGE>
payable in lawful money of the United States of America and shall be made to the
Payee in immediately available funds at Two Hopkins Plaza, Suite 200, Baltimore,
Maryland 21201, or at such other address as the Payee may from time to time
designate in writing to the Maker.
All advances by the Payee under this Note shall be made upon the
following terms and conditions: (a) the aggregate principal amount of all
advances shall not exceed $15,000,000; (b) each advance shall be made in the
manner provided for in Section 1.3 of the Loan Agreement; and (c) the Payee
shall make a notation on its internal loan accounting system, with appropriate
reference to the customer number assigned by the Bank to this Note, reflecting
the date and amount of each advance; provided, however, that the Payee's failure
to make appropriate notation of any advance or prepayment shall not limit or
otherwise affect the obligations of the Maker hereunder.
The Maker shall have the right and privilege to prepay this Note, in
whole or in part, at any time. Such prepayments shall be made automatically by
the Bank, in the manner provided for in Section 1.3 of the Loan Agreement from
any available funds of the Maker deposited with the Payee. The date and amount
of all payments (including prepayments) shall be noted by the Payee on its
internal loan accounting system, with reference to the appropriate customer
number, and no prepayment shall be subject to any premium or penalty for
prepayment.
The Maker waives presentment and demand for payment, notice of intent to
accelerate maturity, notice of nonpayment, bringing of suit and diligence in
taking any action to collect any sums owing hereunder or in proceeding against
any of the rights and properties securing payment hereof. From time to time,
without affecting the obligation of the Maker to pay the outstanding principal
balance of this Note and to observe the covenants of the Maker contained herein,
without giving notice to or obtaining the consent of the Maker, and without
liability on the part of the Payee, the Payee may, at the option of the Payee,
extend the time for payment of interest hereon and/or principal hereof, reduce
the payments hereunder, release anyone liable on this Note, accept a renewal of
this Note, join in any extension or subordination or exercise any option or
election hereunder, reduce the rate of interest on this Note or exercise any
option or election hereunder. No one or more of such actions shall constitute a
novation.
This Note is a consolidation, amendment and restatement of the PRimary
Note and the Supplemental Note and is not intended as a novation of any
promissory note(s) previously executed by the Maker in favor of the Bank.
If default be made in the payment in whole or in part of any sum
provided for herein, or if an event of default shall occur under any instrument
or document executed as security for, as evidence of, or otherwise in connection
with this Note or the indebtedness evidenced hereto or under the Amended and
Restated Revolving
-3-
<PAGE>
waiver of the right to exercise any of the foregoing options at that time or at
any subsequent time, or nullify any prior exercise of any such option without
the express written consent of the Payee.
This Note is secured, inter alia, by a Security Agreement dated as of
----- ----
July ____, 1990 executed by each Maker (other than GRC International, Inc.)
covering such Maker's accounts, instruments, chattel paper, inventory, goods,
equipment, fixtures, machinery, deposit balances, contract rights, general
intangibles and other tangible and intangible personal property, as well as a
Pledge and Security Agreement dated as of July ____, 1990 executed by GRC
International, Inc. for the benefit of the Payee, covering the stock owned by
GRC International, Inc., in each of the other Makers, all as more particularly
described therein.
This Note shall be governed by and construed according to the laws of
the State of Maryland, without regard to principles of conflict of laws.
Any attorney at law may appear in any court of record in the State of
Maryland or in the United States, after demand on this Note following an event
of default under any Loan Document, and waive the issuing of service of process
and confess a judgment against the Makers in favor of the Payee for the amount
then appearing due hereunder, together with interest, costs of suit and
attorneys' fees, and thereupon release all errors and waive all right of appeal.
It is expressly stipulated and agreed that the loan evidenced by this
Note is a "commercial loan" as defined in the Commercial Law Article of the
Annotated Code of Maryland.
In any case where the date of maturity of interest on, or principal of,
this Note shall be a Sunday or legal holiday, or a day on which banking
institutions in the city of payment are authorized by law or executive order to
close (any other day being herein referred to as a "Banking Day"), then payment
of interest or principal need not be made on such date, but may be made on the
next succeeding Banking Day; provided, however, that interest shall continue to
accrue through the actual date of payment.
Each and every representation, warranty, covenant (affirmative, negative
or otherwise), agreement, undertaking, obligation, restriction, limitation,
waiver and other provision made or incurred by or imposed on the Makers
pursuant to this Note shall be deemed to be the joint and several
representation, warranty, covenant, undertaking, obligation, restriction,
limitation, waiver or agreement of each Maker.
-4-
<PAGE>
an original party to such agreements, and have further agreed that such Security
Agreements shall be amended to include within the term "Obligations" therein the
Maker's obligations under this Note.
This Note shall be governed by and construed according to the laws of the
State of Maryland, without regard to principles of conflict of laws.
Any attorney at law may appear in any court of record in the State of
Maryland or in the United States, after demand on this Note following an event
of default under any Loan Document, and waive the issuing of service of process
and confess a judgment against the Maker in favor of the Payee for the amount
then appearing due hereunder, together with interest, costs of suit and
attorneys' fees, and thereupon release all errors and waive the right of appeal.
It is expressly stipulated and agreed that the loan evidenced by this Note
is a "commercial loan" as defined in the Commercial Law Article of the Annotated
Code of Maryland.
In any case where the date of maturity of interest on, or principal of,
this Note shall be a Sunday or legal holiday, or a day on which banking
institutions in the city of payment are authorized by law or executive order to
close (any other day being herein referred to as a "Banking Day"), then payment
of interest or principal need not be made on such date, but may be made on the
next succeeding Banking Day; provided, however, that interest shall continue to
accrue through the actual date of payment.
Executed under seal and intending this Note to be a sealed instrument, as
of the date and year first above written.
ATTEST or WITNESS GRC INTERNATIONAL, INC.
- -------------------------- By: (SEAL)
-------------------------
Name:
--------------------------
Title:
-------------------------
-5-
<PAGE>
Exhibit C
---------
BORROWING BASE CERTIFICATE
--------------------------
NUMBER: DATE:
--- -------------
Pursuant to the Amended and Restated Revolving Credit Agreement
("Agreement") between the undersigned and Mercantile-Safe Deposit and Trust
Company (the "Bank"), the undersigned hereby certify as of the above date, as
follows:
<TABLE>
<CAPTION>
($000)
<S> <C> <C> <C>
1. Maximum Borrowing Base Available At $
----- -------------
2. Total Principal Loan Balance
Outstanding At $
----- -------------
3. Excess Available Under the Line of
Credit (line 1 less Line 2)(A) At $
----- -------------
4. If Line 2 is greater than Line 1,
the Balance to be repaid By $
----- -------------
</TABLE>
The borrowing base available was determined as follows:
<TABLE>
<CAPTION>
Potential
Base Borrowing
Percentage Amount Amount
---------- ------ ---------
<S> <C> <C> <C> <C>
i. "Eligible Accounts"
(as defined in Section 2.1 of
the Agreement) 80% $ $
------ ---------
ii. "Unbilled Receivables" (as defined
in Section 2.1) 50% $ $ (B)
------ ---------
Maximum Borrowing as of
$
------------------- =========
</TABLE>
(A) Maximum of $15,000
(B) Subject to a maximum of $2,500
<PAGE>
FIRST CONFIRMATION AND AMENDMENT
--------------------------------
THIS FIRST CONFIRMATION AND AMENDMENT (this "Amendment") is executed
as of this ____ day of May, 1996 and is effective as of March 31, 1996, by and
among GRC INTERNATIONAL, INC., a Delaware corporation (the "Borrower"), SWL
INC., a Virginia corporation ("SWL"), GENERAL RESEARCH CORPORATION, a Virginia
corporation ("GRC"), and MERCANTILE-SAFE DEPOSIT AND TRUST COMPANY, a Maryland
banking institution (the "Bank").
RECITALS
--------
WHEREAS, pursuant to that certain Amended and Restated Revolving
Credit and Term Loan Agreement (the "Loan Agreement") dated as of the 12th day
of February, 1996, by and among the Bank, the Borrower, SWL and GRC, the Bank
established (i) a $15,000,000 revolving credit facility (the "Revolving Credit
Loan") in favor of the Borrower for general working capital purposes and other
valid business purposes and (ii) a $5,000,000 facility (the "Acquisition
Facility") for the stated purpose of providing bridge and/or term financing to
fund acquisitions by the Borrower from time to time, on the condition that
advances under such facility would be at the Bank's sole discretion; and
WHEREAS, the parties desire with this Amendment (i) to amend the Loan
Agreement, among other things, to amend certain of the financial covenants of
the Borrower established thereunder and (ii) to provide that advances under the
Acquisition Facility may also be used for working capital and other valid
business purposes, all as more particularly set forth herein; and
WHEREAS, all capitalized terms used but not defined herein shall have
the meanings assigned to such terms in the Loan Agreement.
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby confirm and agree as follows:
1. The Borrower, SWL and GRC hereby confirm their obligations under, and
unconditionally and irrevocably covenant and agree to be bound by all of the
terms, provisions, covenants and conditions contained in the Loan Agreement, as
the same shall be amended hereby.
2. The Loan Agreement shall be amended as follows:
(a) The first sentence of Section 1.1(b) shall be amended and
restated in its entirety, to read as follows:
<PAGE>
"The parties anticipate that from time to time hereafter, the Borrower may
make requests for proposals from the Bank regarding additional bridge
and/or term loans under the Acquisition Facility for (i) the purpose of
financing future acquisitions by the Borrower or any of its Subsidiaries or
(ii) for working capital or other corporate purposes."
(b) Section 4.15 shall be amended and restated in its
entirety, to read as follows:
"4.15. Financial Condition and Ratios. Commencing with the fiscal year
------------------------------
ending June 30, 1996, the Borrower and the Subsidiaries will at all times
throughout the term of this Agreement satisfy or maintain certain minimum
financial conditions and ratios as follows:
(a) Working Capital. Consolidated working capital, equal to
---------------
consolidated current assets less consolidated current liabilities, of not
less than $15,000,000.
(b) Current Ratio. Consolidated current assets of not less
-------------
than 150% of consolidated current liabilities -- that is, a current ratio of
1.50:1.0.
(c) Consolidated Tangible Net Worth. Consolidated tangible
-------------------------------
assets (excluding patents, copyrights, capitalized research and development
costs, goodwill and other intangible assets) in excess of consolidated
liabilities ("Consolidated Tangible Net Worth") by at least $20,000,000.
(d) Quick Ratio. Consolidated cash, cash equivalents and
-----------
trade receivables of not less than 100% of consolidated current liabilities --
that is, a quick ratio of 1.00:1.0.
(e) Maximum Operating Loss. The Borrower shall not have an
----------------------
operating loss (i) for the fiscal quarter ending December 31, 1995 in excess of
$500,000 and (ii) for each fiscal quarter thereafter in excess of $1,500,000.
For purposes of this Section 4.15(e), the term "operating loss" shall not
include, for a particular fiscal quarter, non-cash charge-offs in an amount up
to but not exceeding $500,000 for such quarter.
(f) Maximum Aggregate Operating Loss. The Borrower shall not
--------------------------------
have an aggregate operating loss for any period of two consecutive fiscal years
in excess of $1,000,000. For purposes of this Section 4.15(f), the term
"operating loss" shall not include, for a particular period of two consecutive
fiscal years, non-cash charge-offs in an amount not to exceed $750,000 for such
period.
-2-
<PAGE>
(g) Debt Ratio. Consolidated total liabilities of not more
----------
than 200% of Consolidated Tangible Net Worth -- that is, a debt ratio of
2.00:1.0."
3. All other terms and conditions of the Loan Agreement shall remain
unchanged and shall continue in full force and effect.
4. The Borrower, SWL and GRC (i) will execute and deliver to the Bank such
additional financing statements, amendments to financing statements,
continuation statements and other documents, certificates, instruments and
agreements as the Bank deems necessary or advisable to accomplish or facilitate
the transactions contemplated hereby and will pay all filing, recordation and
registration fees and taxes incurred in connection therewith and (ii) will pay
all costs and expenses (including reasonable legal expenses) incurred by the
Bank in connection herewith.
-3-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed and delivered this
First Confirmation and Amendment under seal as of the day and year first above
written.
ATTEST/WITNESS: GRC INTERNATIONAL, INC.
/s/ T E McCabe (SEAL) By: /s/ R.B. Alexander (SEAL)
- -------------------------- -----------------------------
Name: Ronald B. Alexander
Title: Senior Vice President-Finance,
Chief Financial Officer &
Treasurer
ATTEST/WITNESS: SWL INC.
/s/ T E McCabe (SEAL) By: /s/ R.B. Alexander (SEAL)
- -------------------------- -----------------------------
Name: Ronald B. Alexander
Title: Senior Vice President-Finance,
Chief Financial Officer &
Treasurer
ATTEST/WITNESS: GENERAL RESEARCH CORPORATION
/s/ T E McCabe (SEAL) By: /s/ R.B. Alexander (SEAL)
- -------------------------- -----------------------------
Name: Ronald B. Alexander
Title: Senior Vice President-Finance,
Chief Financial Officer &
Treasurer
ATTEST/WITNESS: MERCANTILE-SAFE DEPOSIT AND
TRUST COMPANY
[SIGNATURE APPEARS HERE] By: /s/ Philip G. Enstice (SEAL)
- -------------------------- -----------------------------
Name: Philip G. Enstice
Title: Senior Vice President
-4-
<PAGE>
SECOND CONFIRMATION AND AMENDMENT
---------------------------------
THIS SECOND CONFIRMATION AND AMENDMENT (this "Amendment") is dated this
18 day of July, 1996 and effective as of June 30, 1996, by and among GRC
- --
INTERNATIONAL, INC., a Delaware corporation (the "Borrower"), SWL INC., a
Virginia corporation ("SWL"), GENERAL RESEARCH CORPORATION, a Virginia
corporation ("GRC"), and MERCANTILE-SAFE DEPOSIT AND TRUST COMPANY, a Maryland
banking institution (the "Bank").
RECITALS
--------
WHEREAS, pursuant to that certain Amended and Restated Revolving
Credit and Term Loan Agreement dated as of the 12th day of February, 1996, by
and among the Bank, the Borrower, SWL and GRC, the Bank established (i) a
$15,000,000 revolving credit facility (the "Revolving Credit Loan") in favor of
the Borrower for general working capital purposes and other valid business
purposes and (ii) a $5,000,000 facility (the "Acquisition Facility") for the
stated purpose of providing bridge and/or term financing to fund acquisitions by
the Borrower from time to time, on the condition that advances under such
facility would be at the Bank's sole discretion; and
WHEREAS, pursuant to that certain First Confirmation and Amendment (the
"First Amendment") effective as of March 31, 1996, the parties amended the
above-referenced Loan Agreement for the purpose, among other things, (i) of
amending certain of the financial covenants of the Borrower established
thereunder and (ii) of providing that advances under the Acquisition Facility
may also be used for working capital and other valid business purposes, all as
more particularly set forth herein (such Loan Agreement, as amended by the First
Amendment, the "Loan Agreement"); and
WHEREAS, the parties desire with this Amendment, among other things,
(i) to amend the Loan Agreement to increase the Revolving Credit Loan from
$15,000,000 to $22,000,000 and (ii) to provide explicitly that the amount of the
annual "Facility Fee" payable pursuant to Section 1.7 shall be at least $25,000;
and
WHEREAS, all capitalized terms used but not defined herein shall have
the meanings assigned to such terms in the Loan Agreement.
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby confirm and agree as follows:
1. The Borrower, SWL and GRC hereby confirm their obligations under, and
unconditionally and irrevocably covenant and agree to be bound by all of the
terms,
<PAGE>
provisions, covenants and conditions contained in the Loan Agreement, as
the same shall be amended hereby.
2. The Loan Agreement shall be amended as follows:
(a) Section 1.3 shall be amended to change the reference in the third
line thereof from "$15,000,000" to "$22,000,000."
(b) Section 1.7 shall be amended in its entirety to read as follows:
"1.7. Unused Facility Fee. The Borrower shall pay the Bank a
-------------------
facility fee (the "Facility Fee"), payable quarterly in arrears, equal to
1/8 of 1% of the difference between (i) the average daily amount
outstanding of the Revolving Credit Loan during the quarter for which such
payment is made and (ii) $22,000,000; provided that the total annual
Facility Fee shall be at least $25,000 and any shortfall shall be payable
with respect to the final calendar quarter of each year."
(c) The definition of the term "Revolving Credit Note" in Section 2.1
shall be amended in its entirety to read as follows:
""Revolving Credit Note" shall mean the Amended and Restated Revolving
---------------------
Credit Master Note executed and delivered to the Bank on July 18, 1996."
--
3. The "Security Documents," as that term is defined in Section 2.1 of
the Loan Agreement, shall be amended (i) to include within the term
"Obligations" used therein the Revolving Credit Loan, as amended hereby, and
(ii) to change the definition of the term "Loan Agreement," as used therein, to
refer to that certain Amended and Restated Revolving Credit and Term Loan
Agreement dated as of the 12th day of February, 1996, by and among the Bank, the
Borrower, SWL and GRC, as amended by that certain First Confirmation and
Amendment among the parties, effective as of March 31, 1996, and as further
amended hereby.
4. All other terms and conditions of the Loan Agreement shall remain
unchanged and shall continue in full force and effect.
5. The obligation of the Bank to make any further advance under the
Revolving Credit Loan is subject to the following conditions precedent:
(a) Revolving Credit Note. The Bank shall have received the
---------------------
"Revolving Credit Note" (as defined in the Loan Agreement, as amended hereby),
duly executed by the Borrower.
-2-
<PAGE>
(b) Opinion of Borrower's Counsel. The Bank shall have received a
-----------------------------
favorable written opinion of the in-house counsel to the Borrower, dated as of
the date hereof, as to such matters as the Bank may reasonably request.
(c) Evidence of Authorization. The Bank shall have received copies
-------------------------
of all corporate action taken by the Borrower to authorize this Amendment, the
Revolving Credit Note and the borrowings thereunder, certified as of the date
hereof and including a certification as to any applicable powers of attorney and
as to the incumbency and signature(s) of the individuals authorized to execute
and deliver or furnish such documents and all related materials and information.
(d) Security Documents. The Borrower shall have executed and
------------------
delivered to the Bank for filing all necessary and advisable Uniform Commercial
Code ("UCC") financing statements, amendments and other appropriate filings, in
all appropriate recording offices, and shall have obtained such releases,
waivers and subordination agreements as the Bank may reasonably require, all in
order to transfer and assign to the Bank, and to perfect (including in cases in
which the such perfection may have lapsed) the Bank's first priority lien on and
security interest in the "Collateral" (as defined in the Security Documents),
and shall have paid all applicable filing and recording fees and taxes with
respect thereto.
(e) Other Documents. The Bank shall have received such other
---------------
documents, certificates and opinions, and evidence of such other matters, as it
may reasonably require.
6. The Borrower, SWL and GRC (i) will execute and deliver to the Bank
such additional financing statements, amendments to financing statements,
continuation statements and other documents, certificates, instruments and
agreements as the Bank deems necessary or advisable to accomplish or facilitate
the transactions contemplated hereby and will pay all filing, recordation and
registration fees and taxes incurred in connection therewith and (ii) will pay
all costs and expenses (including reasonable legal expenses) incurred by the
Bank in connection herewith.
-3-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed and delivered
this First Confirmation and Amendment under seal as of the day and year first
above written.
ATTEST/WITNESS: GRC INTERNATIONAL, INC.
/s/ T E McCabe (SEAL) By:/s/ R. B. Alexander (SEAL)
- ----------------------------- ----------------------------
Name: Ronald B. Alexander
Title: SR VP CFO
ATTEST/WITNESS: SWL INC.
/s/ T E McCabe (SEAL) By:/s/ R. B. Alexander (SEAL)
- ----------------------------- ----------------------------
Name: Ronald B. Alexander
Title: SR VP CFO
ATTEST/WITNESS: GENERAL RESEARCH CORPORATION
/s/ T E McCabe (SEAL) By:/s/ R. B. Alexander (SEAL)
- ----------------------------- ----------------------------
Name: Ronald B. Alexander
Title: SR VP CFO
ATTEST/WITNESS: MERCANTILE-SAFE DEPOSIT AND
TRUST COMPANY
/s/ Joseph C. Schmidt By:/s/ Philip G. Enstice (SEAL)
- ----------------------------- ----------------------------
Name: Philip G. Enstice
Title: SR VP
-4-
<PAGE>
THIRD CONFIRMATION AND AMENDMENT
--------------------------------
THIS THIRD CONFIRMATION AND AMENDMENT (this "Amendment") is dated this 24th
day of September, 1996 and effective as of June 30, 1996, by and among GRC
INTERNATIONAL, INC., a Delaware corporation (the "Borrower"), SWL INC., a
Virginia corporation ("SWL"), GENERAL RESEARCH CORPORATION, a Virginia
corporation ("GRC"), and MERCANTILE-SAFE DEPOSIT AND TRUST COMPANY, a Maryland
banking institution (the "Bank").
RECITALS
--------
WHEREAS, pursuant to that certain Amended and Restated Revolving Credit and
Term Loan Agreement dated as of the 12th day of February, 1996, by and among the
Bank, the Borrower, SWL and GRC, the Bank established (i) a $15,000,000
revolving credit facility (the "Revolving Credit Loan") in favor of the Borrower
for general working capital purposes and other valid business purposes and (ii)
a $5,000,000 facility (the "Acquisition Facility") for the stated purpose of
providing bridge and/or term financing to fund acquisitions by the Borrower from
time to time, on the condition that advances under such facility would be at the
Bank's sole discretion; and
WHEREAS, pursuant to that certain First Confirmation and Amendment (the
"First Amendment") effective as of March 31, 1996, the parties amended the
above-referenced Loan Agreement for the purpose, among other things, (i) of
amending certain of the financial covenants of the Borrower established
thereunder and (ii) of providing that advances under the Acquisition Facility
may also be used for working capital and other valid business purposes, all as
more particularly set forth therein; and
WHEREAS, pursuant to that certain Second Confirmation and Amendment (the
"Second Amendment") effective as of June 30, 1996, the parties amended the
above-referenced Loan Agreement for the purpose, among other things, (i) of
increasing the Revolving Credit Loan from $15,000,000 to $22,000,000 and (ii) of
providing explicitly that the amount of the annual "Facility Fee" payable
pursuant to Section 1.7 thereof shall be at least $25,000 (such Loan Agreement,
as amended by the First Amendment and the Second Amendment, the "Loan
Agreement"); and
WHEREAS, the parties desire with this Amendment, among other things, to
amend the Loan Agreement (i) to extend the maturity of the Term Loan referenced
in Section 1.1(a) thereof (the maturity of such Term Loan, together with the
maturity of other term loans of the Borrower, to be extended pursuant to
allonges separate from this Amendment) and (ii) to amend certain financial
covenants of the Borrower established thereunder; and
<PAGE>
WHEREAS, all capitalized terms used but not defined herein shall have
the meanings assigned to such terms in the Loan Agreement.
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby confirm and agree as follows:
1. The Borrower, SWL and GRC hereby confirm their obligations under, and
unconditionally and irrevocably covenant and agree to be bound by all of the
terms, provisions, covenants and conditions contained in the Loan Agreement, as
the same shall be amended hereby.
2. The Loan Agreement shall be amended as follows:
(a) Section 1.1(a) shall be amended to change the reference to
"September 1, 1997" in the last line thereof to "September 1, 1998."
(b) Section 4.15 shall be amended and restated in its entirety, to
read as follows:
4.15. Financial Condition and Ratios. Commencing with the
------------------------------
fiscal year ended June 30, 1996 (except as otherwise set forth in this
Section 4.15), the Borrower and the Subsidiaries will at all times
throughout the term of this Agreement satisfy or maintain certain minimum
financial conditions and ratios as follows:
(a) Working Capital. Consolidated working capital, equal
---------------
to consolidated current assets less consolidated current liabilities, of
(i) not less than $8,000,000 for the fiscal quarters ended June 30, 1996
and September 30, 1996 and (ii) not less than $15,000,000 thereafter.
(b) Current Ratio. (i) Consolidated current assets for the
-------------
fiscal quarters ended June 30, 1996 and September 30, 1996 of not less than
130% of consolidated current liabilities -- that is, a current ratio of
1.30:1.0, and (ii) consolidated current assets thereafter of not less than
150% of consolidated current liabilities -- that is, a current ratio of
1.50:1.0.
(c) Consolidated Tangible Net Worth. Consolidated tangible
-------------------------------
assets (excluding patents, copyrights, capitalized research and development
costs, goodwill and other intangible assets) in excess of consolidated
liabilities ("Consolidated Tangible Net Worth") by at least (i) $7,000,000
for
-2-
<PAGE>
the fiscal quarters ended June 30, 1996, September 30, 1996, December
31, 1996 and March 31, 1997 and (ii) $8,000,000 thereafter.
(d) Quick Ratio. Consolidated cash, cash equivalents and trade
-----------
receivables of not less than 100% of consolidated current liabilities --
that is, a quick ratio of 1.00:1.0.
(e) Maximum Operating Loss. Commencing with the fiscal quarter
----------------------
ended June 30, 1997, the Borrower shall not have an operating loss in
excess of $500,000. For purposes of this Section 4.15(e), the term
"operating loss" shall not include, for a particular fiscal quarter, non-
cash charge-offs in an amount up to but not exceeding $500,000 for such
quarter.
(f) [Intentionally deleted]
(g) Debt Ratio. Consolidated total liabilities of not more than
----------
1000% of Consolidated Tangible Net Worth -- that is, a debt ratio of
10.00:1.0."
3. All other terms and conditions of the Loan Agreement shall remain
unchanged and shall continue in full force and effect.
4. The Borrower, SWL and GRC (i) will execute and deliver to the Bank
such additional financing statements, amendments to financing statements,
continuation statements and other documents, certificates, instruments and
agreements as the Bank deems necessary or advisable to accomplish or facilitate
the transactions contemplated hereby and will pay all filing, recordation and
registration fees and taxes incurred in connection therewith and (ii) will pay
all costs and expenses (including reasonable legal expenses) incurred by the
Bank in connection herewith.
-3-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Third Confirmation and Amendment under seal as of the day and year first above
written.
ATTEST/WITNESS: GRC INTERNATIONAL, INC.
/s/ T. E. McCabe (SEAL) By: [SIGNATURE APPEARS HERE] (SEAL)
- -------------------- ---------------------------
Name:
Title:
ATTEST/WITNESS: SWL INC.
/s/ T. E. McCabe (SEAL) By: [SIGNATURE APPEARS HERE] (SEAL)
- -------------------- ---------------------------
Name:
Title:
ATTEST/WITNESS: GENERAL RESEARCH CORPORATION
/s/ T. E. McCabe (SEAL) By: [SIGNATURE APPEARS HERE] (SEAL)
- -------------------- ---------------------------
Name:
Title:
ATTEST/WITNESS: MERCANTILE-SAFE DEPOSIT AND
TRUST COMPANY
[SIGNATURE APPEARS HERE] By: /s/ Nicholas C. Richardson (SEAL)
- ------------------------- ---------------------------
Name: Nicholas C. Richardson
Title: Asst. Vice President
-4-
<PAGE>
ALLONGE
TO
TERM LOAN NOTE OF
GRC INTERNATIONAL, INC.
TO
MERCANTILE-SAFE DEPOSIT AND TRUST COMPANY
IN THE PRINCIPAL AMOUNT OF
TWO MILLION TWO HUNDRED THOUSAND DOLLARS ($2,200,000)
DATED FEBRUARY 12, 1996
WITNESSETH:
By consent of the Maker, as evidenced by its execution of this Allonge, the
Term Loan Note identified in the caption above (the "Term Note") is hereby
amended as follows (unless otherwise defined or the context otherwise requires,
the defined terms used herein shall have the same meanings assigned to them in
the Term Note):
1. The references to "September 1, 1997" in each of the eleventh and last lines
of the first paragraph of the Term Note shall be changed to "September 1, 1998."
2. All other terms and conditions of the Term Note shall remain the same. This
Allonge shall not be deemed a novation nor shall it limit, reduce or otherwise
affect the Maker's obligations set forth in the Term Note. This Allonge is made
in addition to, and not in substitution of, the Maker's original obligations as
described in the Term Note. This Allonge shall be affixed to the original Term
Note and shall be considered to be a part thereof.
This Allonge, executed under seal in Baltimore, Maryland and intended to be
a sealed instrument, is dated September 24, 1996 and is effective as of June
30, 1996.
ATTEST/WITNESS: GRC INTERNATIONAL, INC.
[SIGNATURE APPEARS HERE] By:[SIGNATURE APPEARS HERE]
- ------------------------ -----------------------
Name:
Title:
<PAGE>
ALLONGE
TO
TERM LOAN NOTE OF
GRC INTERNATIONAL, INC.
TO
MERCANTILE-SAFE DEPOSIT AND TRUST COMPANY
IN THE PRINCIPAL AMOUNT OF
FOUR HUNDRED THOUSAND DOLLARS ($400,000)
DATED MARCH 8, 1996
WITNESSETH:
By consent of the Maker, as evidenced by its execution of this Allonge, the
Term Loan Note identified in the caption above (the "Term Note") is hereby
amended as follows (unless otherwise defined or the context otherwise requires,
the defined terms used herein shall have the same meanings assigned to them in
the Term Note):
1. The references to "September 1, 1997" in each of the eleventh and last lines
of the first paragraph of the Term Note shall be changed to "September 1, 1998."
2. All other terms and conditions of the Term Note shall remain the same. This
Allonge shall not be deemed a novation nor shall it limit, reduce or otherwise
affect the Maker's obligations set forth in the Term Note. This Allonge is made
in addition to, and not in substitution of, the Maker's original obligations as
described in the Term Note. This Allonge shall be affixed to the original Term
Note and shall be considered to be a part thereof.
This Allonge, executed under seal in Baltimore, Maryland and intended to be
a sealed instrument, is dated September 24, 1996 and is effective as of
June 30, 1996.
ATTEST/WITNESS: GRC INTERNATIONAL, INC.
/s/ T.E. McCabe By: /s/ Ronald B. Alexander
- ------------------------ -------------------------
Name:
Title:
<PAGE>
ALLONGE
TO
SECURED NOTE (COMMERCIAL) OF
GRC INTERNATIONAL, INC.
TO
MERCANTILE-SAFE DEPOSIT AND TRUST COMPANY
IN THE PRINCIPAL AMOUNT OF
TWO MILLION SIX HUNDRED THOUSAND DOLLARS ($2,600,000)
DATED JUNE 7, 1996
WITNESSETH:
By consent of the Maker, as evidenced by its execution of this Allonge, the
Secured Note (Commercial) identified in the caption above (the "Secured Note")
is hereby amended as follows (unless otherwise defined or the context otherwise
requires, the defined terms used herein shall have the same meanings assigned to
them in the Secured Note):
1. The reference to "September 1, 1997" in the first sentence of the Secured
Note shall be changed to "September 1, 1998."
2. All other terms and conditions of the Secured Note shall remain the same.
This Allonge shall not be deemed a novation nor shall it limit, reduce or
otherwise affect the Maker's obligations set forth in the Secured Note. This
Allonge is made in addition to, and not in substitution of, the Maker's original
obligations as described in the Secured Note. This Allonge shall be affixed to
the original Secured Note and shall be considered to be a part thereof.
This Allonge, executed under seal in Baltimore, Maryland and intended to be
a sealed instrument, is dated September 24, 1996 and is effective as of June
30, 1996.
ATTEST/WITNESS: GRC INTERNATIONAL, INC.
/s/ T.E. McCabe By: /s/ Ronald B. Alexander
- ------------------------ -------------------------
Name:
Title:
<PAGE>
Exhibit 10.15
-------------
CEO EMPLOYMENT AGREEMENT
------------------------
This EMPLOYMENT AGREEMENT is made and entered into, in duplicate, as of the date
hereinafter set forth, at Vienna, Virginia, by and between the undersigned
employee ("Employee"), and GRC International, Inc., a Delaware corporation
("Company"). In consideration of the mutual premises, promises, covenants, and
agreements herein contained, Employee and Company hereby agree as follows:
1. Duties
------
(a) The Company shall employ Employee in the capacity set forth in Item 1(a)
on Exhibit A, attached hereto and made a part hereof. Employee accepts such
employment and agrees to perform the duties of such office(s). Employee's duties
will include all of those generally associated with said position, subject to
the direction and assignment of the Company's Board of Directors. Employee shall
devote substantially all his working time and energies to the foregoing duties.
The duties assigned to Employee shall be performed at the place of employment
specified in Item 1(b) of Exhibit A.
(b) This Agreement supersedes and replaces in their entirety all previous
Employment Agreements between the parties hereto.
2. Term of Employment
------------------
(a) Except as provided in Section 2(b) hereof, the term of the employment
relationship provided for herein shall commence as of the Effective Date of
this Agreement and end on the Termination Date of this Agreement, both as
specified in Exhibit A, Item 2.
(b) Section 2(a) of the Agreement and Item 2 of Exhibit A notwithstanding, if
a Change of Control (as defined below) shall have occurred during the term of
this Agreement, this Agreement shall continue in effect for a period of not less
than twelve (12) months beyond the month in which such Change of Control
occurred.
For purposes of this Agreement, a "Change of Control" shall mean the
satisfaction of the conditions set forth in any one of the following paragraphs:
(i) any person (as defined in Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as modified and used in
Sections 13(d) and 14(d) thereof, except that neither (A) the Company or any of
-------
its subsidiaries, (B) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its subsidiaries, (C) an
underwriter temporarily holding securities pursuant to an offering of such
securities, nor (D) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company shall be included in such term) (a "Person")
is or becomes the "beneficial owner" as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired directly
from the Company or its affiliates) representing 25% or more of the combined
voting power of the Company's then outstanding securities; or
(ii) during any period of up to two consecutive years (not including
any period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute
<PAGE>
the Board of Directors of the Company (the "Board") and any new director (other
than a director designated by a Person who has entered into an agreement with
the Company to effect a transaction described in clause (i), (iii) or (iv) of
this paragraph) whose election by the Board or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof; or
(iii) the shareholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than (A) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity), in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, at
least 75% of the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation, or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no Person
acquires more than 50% of the combined voting power of the Company's then
outstanding securities; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all the Company's assets.
3. Salary. During the term of Employee's employment hereunder, the Company
------
shall pay Employee the annual salary set forth in Exhibit A, Item 3(a) ("Gross
Annual Salary").
4. Bonus.
-----
(a) The Company shall pay Employee an annual bonus in the amount calculated
according to the formula set forth in Exhibit A, Item 3(b) ("Annual Bonus
Amount").
(b) Within 30 days of the Company's receipt from its auditors of their report
on the Company's consolidated financial statements for the applicable fiscal
year most recently ended, the Company shall deliver to Employee a lump sum equal
to the Annual Bonus Amount.
(c) If Employee's employment with the Company pursuant to this Agreement
shall be terminated for cause prior to the end of any fiscal year of the
Company, Employee shall not be entitled to any portion of the Annual Bonus
Amount for such fiscal year.
5. Lifetime Medical and Dental Coverage for Employee and Spouse.
------------------------------------------------------------
(a) If Employee has not breached this Employment Agreement, Employee shall be
entitled to coverage for Employee and his spouse Marilyn R. Roth ("Spouse")
under the Company's standard medical and dental insurance policy after the
termination of Employee's employment with the Company, for their lifetimes (this
benefit is hereinafter referred to as "Lifetime Coverage").
(b) (i) If, for any policy year beginning after the termination of
Employee's employment with the Company, in which policy year Employee and Spouse
are both alive for any portion of such policy year, "Quantity X" (defined as the
Company's per employee cost for the type of
2
<PAGE>
insurance provided to Employee and Spouse in that policy year) is less than
"Quantity Y" (defined as the Company's per employee cost for the type of
insurance provided to Employee and Spouse as of the termination of Employee's
employment, plus cumulative annual increases of 5% for each policy year to begin
after the termination of Employee's employment), then, subject to the provisions
of paragraph (ii) of this Section 5(b), the Company shall also pay Employee in
cash, within 90 days after the end of each such policy year, an amount equal to
the difference between Quantity X, and Quantity Y, so that Employee receives an
annual benefit equivalent to the greater of Quantity X or Quantity Y. If
Quantity X is greater than Quantity Y, Employee shall not be obligated to
reimburse the Company for such excess. If, in any policy year, the Company is
unable to include Employee and Spouse in its employee family coverage for any
reason, its only obligation to Employee under this Section 5 shall be to pay
Employee the equivalent of Quantity Y for such year.
(ii) Regarding the Lifetime Coverage, it is the intent of the parties
that the Company's cost for the Lifetime Coverage in any policy year shall in no
event exceed the greater of Quantity X or Quantity Y, and that the Lifetime
Coverage not result in a windfall to Employee or Spouse, but simply to provide
them, after the termination of Employee's employment with the Company, with
roughly the level of medical and dental insurance coverage which the Company
provided them while Employee was employed by the Company (the current Company
cost of which is estimated to be approximately $6,000), with a limit on the
Company's financial obligation should it be unable to arrange for such coverage.
With that being the intent, by way of example, if the government came to provide
universal health care with essentially the equivalent benefits now provided by
the Company, the Company would no longer be obligated to provide Employee with
the Lifetime Coverage. Also, to the fullest extent permitted by law, the
Company's coverage would only be supplemental to Medicare or any other
government or other arrangement which might be in force now or at a later date.
(c) (i) If, for any policy year beginning after the termination of
Employee's employment with the Company, in which policy year either Employee or
Spouse is deceased during the entirety of such policy year, "Quantity X"
(defined as the Company's per employee cost for the type of insurance provided
to Employee or Spouse in that policy year) is less than "Quantity Y" (defined as
the Company's per employee cost, for an unmarried employee with no additional
insured person, for the type of insurance provided to Employee as of the
termination of Employee's employment, plus cumulative annual increases of 5% for
each policy year to begin after the termination of Employee's employment), then,
subject to the provisions of paragraph (ii) of this Section 5(c), the Company
shall also pay Employee or Spouse, in cash, within 90 days after the end of each
such policy year, an amount equal to the difference between Quantity X, and
Quantity Y, so that Employee or Spouse receives an annual benefit equivalent to
the greater of Quantity X or Quantity Y. If Quantity X is greater than Quantity
Y, neither Employee nor Spouse shall be obligated to reimburse the Company for
such excess. If, in any policy year, the Company is unable to include Employee
or Spouse in its employee family coverage for any reason, its only obligation to
Employee (or Spouse, if Employee is deceased) under this Section 5 shall be to
pay Employee (or Spouse, if Employee is deceased) the equivalent of Quantity Y
for such year. By way of example, if the Company were unable to include Spouse
in its group policy after Employee's death, the Company's only obligation with
respect to Spouse would be to pay Spouse the equivalent of Quantity Y each year
of Spouse's life after Employee's death.
(ii) Regarding the Lifetime Coverage, it is the intent of the parties
that the Company's cost for the Lifetime Coverage in any policy year shall in no
event exceed the
3
<PAGE>
greater of Quantity X or Quantity Y, and that the Lifetime Coverage not result
in a windfall to Employee or Spouse, but simply to provide them, after the
termination of Employee's employment with the Company, with roughly the level of
medical and dental insurance coverage which the Company would have provided to
an unmarried employee with no additional insured person, while Employee was
employed by the Company (the current Company cost of which is estimated to be
approximately $3,000), with a limit on the Company's financial obligation should
it be unable to arrange for such coverage. With that being the intent, by way of
example, if the government came to provide universal health care with
essentially the equivalent benefits now provided by the Company, the Company
would no longer be obligated to provide Employee or Spouse with the Lifetime
Coverage. Also, to the fullest extent permitted by law, the Company's coverage
would only be supplemental to Medicare or any other government or other
arrangement which might be in force now or at a later date.
(d) The provisions of this Section 5 shall survive any termination of this
Agreement.
6. Relocation.
----------
(a) If Employee relocates his principal residence within 1 year after the
expiration of this Agreement, the Company shall reimburse Employee for his
reasonable moving expenses incurred as a result of such relocation (subject to
the limits of the then-current standard Company policy covering such relocations
and subject to an aggregate limitation of $100,000, except as provided in
Section 6(b)).
(b) Notwithstanding the limitations contained in Section 6(a), if Employee
relocates his principal residence within 1 year after the expiration of this
Agreement, the Company shall purchase (or cause to be purchased) Employee's
Virginia residence ("Virginia Residence") from Employee, upon the following
terms and conditions:
(i) Employee must list the Virginia Residence on the Multiple Listing
Service and in good faith hold the same open for sale, and engage in his behalf
and at his expense a qualified real estate agent who is a principal or associate
broker of a reputable, established real estate brokerage firm in the Washington,
D.C. metropolitan area, and otherwise exercise his best efforts to sell the
Virginia Residence including, without limitation, making such minor, cosmetic or
structural repairs and improvements as may be suggested by his real estate agent
or which otherwise will improve the marketability of the Virginia Residence
(hereinafter, any reasonable, documented payments by Employee to effect said
repairs are referred to as "fix-up expenses");
(ii) (A) If Employee receives an offer from a qualified purchaser
for the purchase of the Virginia Residence at a purchase price which will at
least return Employee's Cost to Employee, and Employee desires to accept without
recourse against the Company, he may do so. (Employee's Cost is defined as
Employee's purchase price plus any other charges paid by Employee in connection
with his purchase of the Virginia Residence, plus the cost of improvements to
the Virginia Residence made at Employee's expense at any time during his
ownership of the Virginia Residence, plus fix-up expenses, plus any charges
which would be listed on page 2 of the HUD-1 Settlement Statement and paid by
Employee.) All offers which Employee does not desire to accept shall be
submitted to the Company for its approval or disapproval. The Company may
instruct Employee to accept any offer which the Company deems appropriate, even
if such offer does not constitute an Acceptable Offer. (An Acceptable Officer
is defined as one which would at least return Employee's Cost to Employee.) If
the Company instructs Employee to accept an offer which does not constitute an
Acceptable Offer,
4
<PAGE>
then the Company shall, at settlement, pay to Employee or the settlement agent
an amount which, when added to the amount actually paid to Employee at
settlement, will return Employee's Cost to Employee.
(B) If, after a three-month period of actively seeking a purchaser for
the Virginia Residence, Employee has not received an Acceptable Offer and the
Company has not instructed Employee to accept an offer which does not constitute
an Acceptable Offer, then, upon the Company's receipt from Employee of written
notice of such fact, the Company shall, within 45 days thereafter, itself make
(or cause to be made) an Acceptable Offer to Employee; provided, however, that
-------- -------
Employee shall keep the Virginia Residence on the market during such 45 day
period and notify the Company in writing of any offers received during such
period, and the Company may instruct Employee to accept any such offer which the
Company deems appropriate, even if such offer does not constitute an Acceptable
Offer. During such 45 day period, if the Company instructs Employee to accept
an offer which does not constitute an Acceptable Offer, then the Company shall,
at settlement, pay to Employee or the settlement agent an amount which, when
added to the amount actually paid to Employee at settlement, will return
Employee's Cost to Employee, and the Company shall no longer be obligated to
make (or cause to be made) an Acceptable Offer.
7. Estate Planning. The Company will pay up to $10,000 during each fiscal
---------------
year of this Agreement to legal, accounting and other professionals of
Employee's choice who provide estate planning, tax planning and related services
to Employee. Employee shall submit such invoices to the Company together with a
written request that the Company pay such invoices to the applicable
professional(s). Such professionals shall be selected by Employee in his sole
discretion and the Company shall have no liability whatsoever with respect to
the selection of such professionals.
8. Competition. Employee agrees that until termination or expiration of
-----------
this Employment Agreement, absent the expressed, prior written authorization of
the Company's Board of Directors, Employee shall not, directly or indirectly,
engage in any activity competitive with or adverse to the Company's business or
welfare, whether alone, as a partner of any partnership or joint venture, or as
an officer, director, employee, or holder of 5% or more of any class of stock,
of any corporation.
9. Business Disclosures. Employee agrees that during the term of his
--------------------
employment with the Company and thereafter, he will not, without the express,
prior written consent of the Company's Board of Directors, disclose, other than
to an authorized employee, officer or director of the Company, any confidential
information of, regarding or relating to the Company. For purposes of the
preceding sentence, the phrase "confidential information" shall include, but not
be limited to, any information relating to the Company's businesses, customers,
trade practices, or trade secrets and know-how. Upon the termination of
Employee's employment for whatever reason, Employee, without the prior express
written consent of the Board of Directors, shall not remove from the premises or
possession of the Company or retain, publish or disseminate, any figures,
calculations, letters, customer lists, documents, written instruments or any
other material of a confidential nature, whether originals, photocopies or other
facsimile or reproductions thereof, or other confidential information of any
type or description in connection with or in any way pertaining to the Company
or its affairs.
5
<PAGE>
10. Development of Inventions and Improvements
------------------------------------------
(a) Employee agrees that he will keep the Company informed of any inventions,
discoveries, improvements, trade secrets, and secret processes made by him, in
whole or in part, or conceived by him, alone or with others (herein collectively
referred to as "Intellectual Property"), if such Intellectual Property results
from any work he may do for or on behalf of the Company or at the request or
upon the premises of the Company or which work relates to the activities,
investigations or obligations of the Company or its affiliates (such
Intellectual Property hereinafter referred to as "Employer Work Product"). For
purposes of the preceding sentence, the term "affiliates" shall include, without
limitation, any entity with which the Company is carrying on a joint enterprise
or in which the Company has a substantial interest.
(b) At the expense of the Company, Employee shall assist the Company, its
agents, employees or nominees, in making application for and obtaining patents
with respect to any and all Employer Work Product in such countries throughout
the world as the Company shall designate. Employee agrees to and shall execute
any and all papers necessary to secure on behalf of the Company such United
States or foreign patents covering Employer Work Product which the Company deems
necessary or appropriate. In addition, Employee shall give the Company any and
all information in his possession or known to him respecting any Employer Work
Product or any patents or applications relating thereto.
(c) Such Employer Work Product shall be the property of the Company, or its
nominees, whether patented or not, and Employee shall, without charge to the
Company, assign to the Company all of his right, title, and interest, if any, in
such Employer Work Product and Employee shall execute, acknowledge and deliver
any instrument confirming the complete ownership by the Company of such Employer
Work Product.
(d) Employee agrees to deliver to the Company upon its request therefor, any
and all sketches, drawings, models, figures, and other materials and information
created or acquired by Employee during the term of the employment relationship
with respect to any Intellectual Property covered by this Section 10 and to
execute and deliver to the Company any applications, assignments or other
written instruments reasonably necessary or appropriate to the Company's
securing such patents, or the renewal or continuation thereof, or in any
litigation or other proceedings connected therewith.
(e) Descriptions of all Intellectual Property, whether patented or not, which
Employee has made or conceived prior to his employment by the Company, are
described in Exhibit B hereto, and such Intellectual Property shall be excluded
from this Agreement. Employee represents, warrants, and covenants that the
absence of a description of any Intellectual Property on Exhibit B shall
indicate conclusively that Employee neither owned prior to his employment by the
Company nor has any claim to, any such Intellectual Property.
(f) Employee shall not at any time, except as required in the proper conduct
of the business of the Company or as authorized in writing by the Company,
publish, disclose or authorize, assist or permit anyone else to publish or
disclose any secret or confidential matter relating to any aspect of any of the
businesses of the Company with which Employee's service may in any way acquaint
him.
(g) This Agreement will further incorporate any and all provisions with
respect to patents, inventions, discoveries, improvements, trade secrets, secret
processes, and data to which the
6
<PAGE>
Company may be required to cause its employees to agree under the terms and
provisions of any contract entered into by the Company with the United States
Government or any agency thereof or any foreign government or agency thereof or
any supranational agency, or under the terms of any subcontract to which the
Company under a prime contract issued by any of the above-mentioned governments
or agencies, whether the same be in any contracts to which the Company is
presently or may in the future become a party.
(h) Employee agrees that upon the termination of his employment he will
execute and comply with the Termination Statement attached hereto as Exhibit C.
11. Termination of Contract Prior to Expiration of Term
---------------------------------------------------
(a) Subject to the provisions of Sections 11(b) and 11(c), this Agreement may
be terminated immediately by the Company for cause upon written notice to
Employee. The Company shall have cause to terminate Employee under any of the
following circumstances:
(i) Failure on the part of the Employee to exert his best efforts in
performing the functions assigned to him by the Company, which failure can
reasonably be expected to have a material adverse effect on the Company,
provided that the functions assigned to Employee shall at all times be in
keeping with the position for which Employee was hired, as described in Section
1 of this Agreement; or
(ii) Employee is in breach of the terms of Sections 8, 9 or 10 hereof,
is guilty of dishonesty or chronic absenteeism, or is convicted of a felony or
of a misdemeanor involving moral turpitude.
(b) Notwithstanding anything to the contrary in this Agreement, at any time
during the 12-month period following the Change of Control specified in Section
2(b), Employee's employment may be terminated for any reason by the Company or
by Employee by delivering to the other party written notice of termination at
least ninety (90) days prior to the effective date of such termination;
provided, however, that upon such termination of employment during the
- -------- -------
twelve-month period following the Change of Control, Employee shall receive (i)
a lump-sum severance payment in an amount equal to 2 times the Gross Annual
Salary specified in Item 3(a) of Exhibit A, less any income, employment, excise
or other tax withholdings which the Company is required by law to deduct
therefrom, (ii) any unpaid Annual Bonus Amount(s), less any income, excise or
other employment tax withholdings which the Company is required by law to deduct
therefrom. If Employee's employment is terminated by either party under this
Section 11(b) prior to the end of any fiscal year of the Company, Employee shall
be entitled to the Annual Bonus Amount for such fiscal year on a pro rata basis,
--- ----
determined according to the percentage of such fiscal year for which Employee
shall have been employed pursuant to this Agreement.
(c) Termination of this Agreement will not relieve Employee from any
liability pursuant to Sections 9 or 10 which, by their respective terms,
continue beyond the termination of this Agreement.
12. Disability. If Employee is unable to fulfill the duties of his position
----------
by reason of any illness, incapacity or disability, Employee's salary shall be
payable for only 90 days following the onset of such illness, incapacity or
disability, provided, however, that if Employee (i) has applied for insurance
benefits under the Company's long-term disability policy during said 90 day
7
<PAGE>
period, and (ii) has not yet begun to receive payments under said policy during
said 90 day period, then Employee's salary shall continue to be payable for up
to 180 days following the onset of such illness, incapacity or disability until
the Employee begins to receive such payments. During the foregoing 90 day
period (or 180 day period, if applicable), Employee's salary, to the extent not
covered by the Company's short-term disability benefits, shall be paid through
the use of Employee's sick leave, if any, accumulated prior to January 1, 1994,
but if such sick leave is or becomes exhausted, Employee's salary shall never-
theless be paid for the 90 day period (or 180 day period, if applicable). If
Employee shall return to full employment and full discharge of his or her duties
during the term of this Agreement, full compensation shall be prospectively
reinstated for any remaining term of this Agreement.
13. Notice
------
(a) Any notice required to be given pursuant to the provisions of this
Agreement shall be in writing and sent by (i) registered or certified mail,
return receipt requested, (ii) express courier, or (iii) hand-delivery, to the
party entitled to receive such notice, at an address specified in this Agreement
or in the Exhibits hereto or at such other address of which written notice has
been given to the other party by any of the foregoing means.
(b) Any notice required to be given to the Company shall be given to the
Senior Vice President, General Counsel and Secretary, GRC International, Inc.,
1900 Gallows Road, Vienna, Virginia 22182 and to the Personnel Department to
which Employee normally reports. Any notice required hereunder to be given by
the Company shall be given by or at the direction of the Board of Directors of
the Company.
14. Disputes.
--------
(a) This Agreement has been executed in and shall be governed by the laws of
the Commonwealth of Virginia.
(b) All disputes arising in connection with this Agreement shall be finally
settled under the rules of arbitration of the American Arbitration Association
by one (1) arbitrator appointed in accordance with its rules. The place of
arbitration shall be Tysons Corner, Virginia and the proceedings shall be
conducted in the English language. The arbitrators award shall, in addition to
dealing with the merits of the case, fix the costs of the arbitration and decide
which of the parties shall bear the costs and reasonable legal fees and expenses
of the parties, or in what proportions the said costs, fees and expenses shall
be borne by the parties. If enforcement of the arbitrators' award is required,
the cost of enforcement shall be borne by the party against which enforcement is
sought.
(c) It is agreed that in the event of any breach, violation or evasion of the
terms of this Employment Agreement, such breach, violation or evasion will
result in immediate and irreparable injury to the Company and will authorize the
Company to seek injunctive relief, including, but not limited to, any order of
specific performance, as well as all other legal or equitable remedies to which
the Company may be entitled.
15. Waiver of Breach. The waiver by the Company of a breach of any provision
----------------
of this Agreement by Employee shall not operate or be construed as a waiver of
any subsequent breach by Employee. No such waiver shall be valid unless set
forth in writing signed by an authorized officer of the Company.
8
<PAGE>
16. Assignment. Employee acknowledges that the services to be rendered by
----------
him are unique and personal. Accordingly, Employee may not assign any of his
rights or delegate any of his duties or obligations under this Agreement. The
rights and obligations of the Company under this Agreement shall inure to the
benefit of and shall be binding upon the successors and assigns of the Company.
17. Severability. Any provision of this Agreement which may be determined
------------
to be unenforceable or invalid as a matter of law shall be deemed stricken from
this Agreement and all remaining provisions shall continue in full force and
effect.
18. Entire Agreement. This Agreement supersedes all previous Employment
----------------
Agreements between Employee and the Company and contains the entire under-
standing of the parties and may not be modified, amended or terminated unless
the provisions of such modification, amendment or termination are set forth in
writing signed by all of the parties to this Agreement. This Agreement, and any
modification, amendment or termination thereof, shall be approved by and
executed on behalf or at the direction of the Company's Board of Directors.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of July
1, 1995.
ATTEST: GRC INTERNATIONAL, INC.
/s/ Thomas E. McCabe By: /s/ Edward C. Meyer
- ---------------------------------- ----------------------------------
Thomas E. McCabe Edward C. Meyer
Sr. Vice President, Chairman of the Board
General Counsel & Sec'y
WITNESS EMPLOYEE
/s/ Sue Meyer /s/ James Roth
- ---------------------------------- -------------------------------------
James Roth
APPROVED AND RATIFIED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF
GRC INTERNATIONAL, INC.
By: /s/ Leslie B. Disharoon
---------------------------------------------
Leslie B. Disharoon, Committee Chairman
9
<PAGE>
EXHIBIT A
---------
DETAILS OF EMPLOYMENT
---------------------
EMPLOYEE: James Roth
----------
ITEM 1(a) Title(s): President & Chief Executive Officer
-----------------------------------
ITEM 1(b) Place of Employment: Vienna, Virginia
----------------
ITEM 2 Effective Date (of Employment Agreement): July 1, 1995
------------
Termination Date: June 30, 1998
-------------
Effective Date of this Exhibit: July 1, 1995
------------
ITEM 3(a) Gross Annual Salary:
Three Hundred Thousand Dollars ($300,000)
-----------------------------------------
ITEM 3(b) Annual Bonus Amount:
Equal to 2% of the Company's annual net income, determined without
------------------------------------------------------------------
regard to any extraordinary items of income or loss, as reported by
-------------------------------------------------------------------
the Company in its audited consolidated financial statements
------------------------------------------------------------
ITEM 4 Notice to Employee:
James Roth James Roth
------------------------ --------------------------
President & CEO and/ 2140 Owls Cove Lane
------------------------ --------------------------
GRC International, Inc. or Reston, Virginia 22091
------------------------ --------------------------
1900 Gallows Road
------------------------
Vienna, Virginia 22182
------------------------
EMPLOYEE: GRC INTERNATIONAL, INC.
/s/ James Roth By: /s/ Edward C. Meyer
- ------------------------------------ -----------------------------------
James Roth Edward C. Meyer
Chairman of the Board
APPROVED AND RATIFIED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF
GRC INTERNATIONAL, INC.
By: /s/ Leslie B. Disharoon
-------------------------------------------
Leslie B. Disharoon, Committee Chairman
10
<PAGE>
EXHIBIT B
---------
SCHEDULE OF INTELLECTUAL PROPERTY
---------------------------------
Employee developed or conceived prior to his employment by the Company the
following Intellectual Property, as that term is defined in the Employment
Agreement to which this Exhibit is attached and made a part of, whether or not
such Intellectual Property is the subject of a patent or patent application:
Date: July 1, 1995 EMPLOYEE
/s/ James Roth
-------------------------------
James Roth
11
<PAGE>
EXHIBIT C
---------
TERMINATION STATEMENT
---------------------
In connection with the termination of my employment with the Company pursuant to
the above-referenced Employment Agreement, I hereby represent, warrant and
covenant that:
1. Upon termination of my employment relationship with the Company I did not
have in my possession and do not now have in my possession any confidential or
business property of the Company including, but not limited to, any confidential
information described in Section 9 of the aforementioned Employment Agreement,
and Company Work Product described in Section 10 of the Employment Agreement or
any testing equipment, materials, components, sub-assemblies, drawings or
blueprints.
2. I have returned or left in the possession of the Company all notebooks which
I used during my employment relationship with the Company.
3. I have returned to the Company any and all identification cards and credit
cards issued to me as an employee of the Company and any and all keys to
property of the Company, including, without limitation, offices of the Company,
Company cars, and the like.
4. I am not aware of any action or situation involving any violation of the
Company's Corporate Standards of Conduct by any employee, director, consultant
of the Company, except as follows:
4. My forwarding addresses are as follows:
HOME ADDRESS BUSINESS ADDRESS
- ------------------------------ --------------------------------
- ------------------------------ --------------------------------
- ------------------------------ --------------------------------
- ------------------------------ --------------------------------
EMPLOYEE:
--------------------------------
James Roth
--------------------------------
(Date)
12
<PAGE>
Exhibit 10.17
-------------
GRC INTERNATIONAL, INC.
EMPLOYMENT AGREEMENT
(SENIOR VICE PRESIDENT & above - GARY L. DENMAN)
THIS EMPLOYMENT AGREEMENT is made in Vienna, Virginia as of December 8, 1995 by
and between Gary L. Denman (hereinafter referred to in the first person or as
"Employee") and GRC International, Inc., a corporation with its principal
offices at 1900 Gallows Road, Vienna, Virginia 22182 ("Company"). The term
"Company" shall also include any parent, subsidiary or affiliate of the Company.
As a condition to, and in consideration of, the Company's employment of
Employee, the parties mutually agree as follows:
1. DUTIES.
------
(a) I agree to work for the Company in the capacity set forth in Item 1(a) of
Exhibit A attached hereto. My duties will include all of those generally
associated with said position, subject to the direction and assignment of the
Company's Board of Directors. The duties assigned to me shall be performed at
the place of employment specified in Item 1(b) of Exhibit A or at such other
location as the Board of Directors may determine is in the best interest of the
Company. All of my working time and energies shall be devoted to the foregoing
duties. I will inform the Company, in writing, if I engage in any outside
business activity, and I will obtain the prior written approval of the Company,
if I engage in any outside business activity which (i) requires the use of
skills for which I was hired by the Company or the use of skills attained during
the course of my employment with the Company or (ii) would, in the opinion of
the Company, compete with or conflict with my employment with the Company. While
employed by the Company, absent the expressed, prior written authorization of
the Company's Board of Directors, I will not, directly or indirectly, engage in
any activity competitive with or adverse to the Company's business or welfare,
whether alone, as a partner of any partnership or joint venture or as an
officer, director, employee, or holder of 5% or more of any class of stock, of
any corporation.
(b) I agree that for a period of one year immediately following termination
(voluntary or otherwise) of my employment with the Company, I will not interfere
with the business of the Company by inducing an employee to leave the Company's
employment, by inducing a consultant to sever the consultant's relationship with
the Company, or by inducing a customer to sever the customer's relationship with
the Company.
(c) This Agreement cancels and replaces in their entirety any and all previous
employment agreements entered into between me and the Company or any of its
subsidiaries.
2. INTELLECTUAL PROPERTY.
---------------------
(a) In this Agreement, (i) "Intellectual Property" means any patent, trademark,
copyright, semiconductor mask right, trade secret, invention, discovery, design,
idea or improvement (whether or not any of the foregoing are patentable,
protectable by copyright, or otherwise protectable), and (ii) the word "made",
when used with "Intellectual Property", means made, devised, developed,
conceived or reduced to practice. Exhibit B to this Agreement contains a
complete list of all Intellectual Property I consider proprietary to me, and,
during my employment with the Company, I agree to update Exhibit B from time to
time as may be necessary to keep it current. I will not incorporate or permit to
be incorporated into any work performed for or on behalf of the Company any
Intellectual Property proprietary to me or any third party.
(b) I will disclose to the Company all Intellectual Property made by me, alone
or with others, during any period of employment with the Company. All such
disclosures shall be reviewed by the Company in confidence to determine any
issues which may arise.
<PAGE>
(c) I will assign to the Company all right, title and interest in and to all
Intellectual Property made at any time by me alone or with others during or
after my employment with the Company, if such Intellectual Property was made
using Company equipment, supplies, facilities, or trade secret information, or
such Intellectual Property either (i) relates at the time of conception or
reduction to practice of the invention to the Company's business, or actual or
demonstrably anticipated research or development of the Company; or (ii) results
from any work performed by me for the Company. All Intellectual Property subject
to this paragraph shall remain Company property whether or not so disclosed or
assigned to the Company. I will cooperate fully with the Company during and
after employment in accomplishing the intent of this provision and execute such
instruments and documents reasonably requested by the Company, in order to more
fully vest in the Company all ownership rights in the Intellectual Property. In
addition, I irrevocably appoint the Company and each of its officers as my agent
and attorney-in-fact to act in my name and stead to execute and file any
documents and to do all other lawfully permitted actions to further the
prosecution, issuance and enforcement of patents, copyrights and other
proprietary rights with the same force and effect as if executed and delivered
by me.
(d) The provisions of the foregoing Section 2(c) shall not apply to an
invention developed by me entirely on my own time without using Company
equipment, supplies, facilities, or trade secret information except for those
inventions that either (i) relate at the time of conception or reduction to
practice of the invention to the Company's business, or actual or demonstrably
anticipated research or development of the Company; or (ii) result from any work
performed by me for the Company.
3. PROPRIETARY INFORMATION. I understand that in the course of my
-----------------------
employment with the Company, I will be making use of, acquiring or adding to
proprietary and/or confidential information and materials of the Company or of
other parties ("Proprietary Information"). I will not disclose or use any
Proprietary Information either during or after my employment with the Company,
except to the extent expressly authorized in writing by an officer of the
Company. The following are some examples of Proprietary Information, even if
not marked or identified as such:
(i) Computer software of all kinds, source and object codes, algorithms, coding
sheets, compilers, assemblers, design concepts, routines and subroutines, and
all related documents and materials;
(ii) Business practices, marketing techniques, mailing lists, purchasing
information, price lists, pricing policies, quoting procedures, customer and
prospective customer lists and information, and all materials or information
relating to the manner in which the Company does business.
(iii) Discoveries, concepts and ideas, whether or not patentable, protectable
by copyright, or otherwise protectable, trade secrets, "know-how," production
processes, research and development activities, and information on products or
programs;
(iv) Financial information, cost structure, bidding strategy, salary structure,
and such other information not in the public domain as may be helpful to
competitors or harmful to the Company, its customers or employees.
(v) Any other information, materials or documents related to the business or
activities of the Company which are not generally known to others engaged
in similar businesses or activities; and
(vi) All ideas which are derived from my access to or knowledge of any of the
above.
4. CONFLICTS OF INTEREST. I have read and understood the Company's
---------------------
Corporate Standards of Conduct, and while employed by the Company, I agree to
abide by said Standards of Conduct, as the same may be amended from time to
time, and to complete the Company's Ethics Questionnaire as required by the
Company from time to time. Except as fully disclosed in a document attached to
this agreement, I am not a party to any agreement or understanding with any
other person or business, nor am
-2-
<PAGE>
I subject to any other legal restriction or obligation, which would in any way
prohibit, impede or hinder my employment with the Company or the performance of
my duties in the course of such employment.
COMPENSATION.
------------
(a) During the term of my employment hereunder, the Company shall pay me the
annual salary set forth in Exhibit A, Item 3(a) ("Gross Annual Salary").
(b) In addition to the Gross Annual Salary, I shall be entitled to receive the
additional compensation, if any, specified in Exhibit A, Item 3(b) ("Additional
Compensation").
6. DISABILITY. If I am is unable to fulfill the duties of my position by
----------
reason of any illness, incapacity or disability, my salary shall be payable for
only 90 days following the onset of such illness, incapacity or disability,
provided, however, that if I (i) have applied for insurance benefits under the
Company's long-term disability policy during said 90 day period, and (ii) have
not yet begun to receive payments under said policy during said 90 day period,
then my salary shall continue to be payable for up to 180 days following the
onset of such illness, incapacity or disability until I begin to receive such
payments. During the foregoing 90 day period (or 180 day period, if
applicable), my salary, to the extent not covered by the Company's short-term
disability benefits, shall be paid through the use of my sick leave, if any,
accumulated prior to January 1, 1994, but if such sick leave is or becomes
exhausted, my salary shall nevertheless be paid for the 90 day period (or 180
day period, if applicable). If I shall return to full employment and full
discharge of my duties during the term of this Agreement, full compensation
shall be prospectively reinstated for any remaining term of this Agreement.
7. TERMINATION AND SEVERANCE.
-------------------------
(a) Subject to Section 7(f) regarding a Change of Control, this Agreement may
be terminated by either party without cause on six (6) months written notice to
the other party. Subject to Section 7(f) regarding a Change of Control, this
Agreement may be terminated by the Company immediately for cause by written
notice to me. For purposes of this Section 7, cause for termination shall exist
in the event of my dishonesty, chronic absenteeism, conviction of a felony,
conviction of a misdemeanor involving moral turpitude, or material breach of
this Agreement.
(b) To the maximum extent permitted by law, I hereby expressly authorize the
Company in advance upon my termination to deduct from my final paycheck(s) and
from my paid time off (PTO) check all amounts I owe the Company (including but
not limited to repayment of advances, loans or any other obligations).
(c) Upon termination of employment, I will execute and comply with the Employee
Termination Certificate attached hereto as Exhibit C, and deliver to the Company
all notes, data, tapes, lists, reference materials, sketches, drawings,
memoranda, records and other documents which are in my possession or control
belonging to the Company or relating to its business.
(d) Termination of this Agreement will not relieve me from my obligations under
Sections 1(b), 2 and 3 of this Agreement, which, by their respective terms,
continue beyond the termination of this Agreement.
(e) In the event of my death, this Agreement will terminate and all accrued and
unpaid compensation and expenses, less all amounts I owe the Company (including
but not limited to repayment of advances, loans or any other obligations), will
be payable to my estate.
(f) Notwithstanding any other provision of this Agreement to the contrary, at
any time during the twelve-month period following a Change of Control (as
hereinafter defined), (i) if the Company, with or without cause, terminates my
employment or gives me notice of termination, or (ii) if I terminate my
employment or give notice of termination by reason of a material breach by the
Company of the terms of
-3-
<PAGE>
this Agreement (including but not limited to the terms set forth on Exhibit A
hereto), then I shall receive, in addition to any other compensation provided
for in this Agreement, a lump-sum severance payment in an amount equal to the
Gross Annual Salary, less any income, excise, employment or other tax
withholdings which the Company is required by law to deduct therefrom.
(g) For purposes of this Agreement, a Change in Control shall mean the
satisfaction of the conditions set forth in any one of the following paragraphs:
(i) any person (as defined in Section 3(a)(9) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") as modified and used in Sections
13(d) and 14(d) thereof, except that neither (A) the Company or any of its
------
subsidiaries, (B) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its subsidiaries, (C) an
underwriter temporarily holding securities pursuant to an offering of such
securities, nor (D) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company shall be included in such term) (a "Person")
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such Person any securities
acquired directly from the Company or its affiliates) representing 25% or more
of the combined voting power of the Company's then outstanding securities; or
(ii) during any period of up to two consecutive years (not including any
period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board of Directors of the Company (the
"Board") and any new director (other than a director designated by a Person who
has entered into an agreement with the Company to effect a transaction described
in clause (i), (iii) or (iv) of this paragraph) whose election by the Board or
nomination for election by the Company's stockholders was approved by a vote of
at least two thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority thereof; or
(iii) the shareholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than (A) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity), in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, at
least 75% of the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation, or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no Person
acquires more than 50% of the combined voting power of the Company's then
outstanding securities; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all the Company's assets.
8. NOTICE.
------
(a) Any notice to be given to me under this Agreement shall be in writing and
delivered by (i) registered or certified mail, return receipt requested; (ii)
express courier; or (iii) hand-delivery, at an address specified for me in this
Agreement or in any Exhibit hereto or at such other address of which written
notice has been given to the Company by me by any of the foregoing means.
(b) Any notice to be given to the Company under this Agreement shall be in
writing and delivered by any of the means specified in subsection (a) above, to
the President, with a copy to the Senior Vice
-4-
<PAGE>
President, with a copy to the Senior Vice President, General Counsel &
Secretary, GRC International, Inc., 1900 Gallows Road, Vienna, Virginia 22182.
9. DISPUTES.
--------
(a) This Agreement has been executed in and shall be governed by the laws of
the Commonwealth of Virginia.
(b) Any controversy or claim arising out of or relating to Employee's
employment or this Agreement shall be resolved in the courts of Fairfax County,
Virginia, and Employee hereby submits to the jurisdiction of such courts, and
agrees to accept service of process from such courts.
(c) I understand and agree that the Company will suffer irreparable harm if I
breach any of my obligations under this agreement and that monetary damages may
be inadequate to compensate for such breach. Accordingly, in the event of a
breach or threatened breach by me, the Company, in addition to and not in
limitation of any other rights, remedies or damages available to it at law or in
equity or otherwise, shall be entitled to a injunctive relief preventing any
such breach by myself or by my partners, agents, representatives, servants,
employers, employees and/or any and all persons directly or indirectly acting
for or with me.
10. ASSIGNMENT. My services are unique and personal. Accordingly, I may not
----------
assign any rights or delegate any duties or obligations under this Agreement.
The rights and obligations of the Company under this Agreement shall inure to
the benefit of and shall be binding upon the successors and assigns of the
Company.
11. ENTIRE AGREEMENT. This agreement, together with all documents attached
----------------
to this agreement or specifically referred to in it, contains the entire
agreement and understandings by and between the Company and me with respect to
the covenants described in this agreement, and any representation, promise,
agreement or understanding, written or oral, not contained in this agreement
shall be of no force or effect. No change or modification of this agreement
shall be valid or binding unless the change or modification is in writing and
signed by the parties to this agreement. Any representation contrary to this
agreement, express or implied, written or oral, is hereby disclaimed. Nothing
in this agreement shall obligate the Company to employ me for any length of
time. No waiver of any provision of this agreement shall be valid unless it is
in writing and signed by the party against whom such waiver is sought to be
enforced, and no waiver of any provision shall be deemed a waiver of any other
provision or a waiver of the same provision at any other time. This agreement
supersedes all previous agreements between the Company and me.
12. SEVERABILITY. Any provision of this agreement which may be determined to
------------
be unenforceable, invalid or illegal shall be deemed stricken from this
agreement and all remaining provisions shall continue in full force and effect.
13. REASONABLENESS OF RESTRICTIONS. I have carefully read and considered the
------------------------------
provisions of this agreement and, having done so, agree that the restrictions
set forth in this agreement are fair and reasonable and are reasonably required
for the Company's protection. This agreement shall be construed fairly as to
all parties and not in favor of or against any party, regardless of which party
prepared this agreement. In the event that, notwithstanding the foregoing, any
part of his agreement shall be held to be invalid or unenforceable, the
remaining parts of the agreement shall nevertheless continue to be valid and
enforceable as though the invalid or unenforceable parts had not been included
in the agreement. If any provision is held invalid or unenforceable with
respect to particular circumstances, it shall nevertheless remain in full force
and effect in all other circumstances.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this agreement as of the date
first set forth above.
ATTEST: GRC INTERNATIONAL, INC.
/s/ Thomas E. McCabe By: /s/ Jim Roth
- ----------------------------------------------- -------------------------
Thomas E. McCabe Jim Roth
Sr. Vice President, General Counsel & Secretary President & Chief
Executive Officer
WITNESS EMPLOYEE
[SIGNATURE APPEARS HERE] /s/ Gary L. Denman
- ----------------------------------------------- -------------------------
APPROVED AND RATIFIED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF
GRC INTERNATIONAL, INC.
By: /s/ Leslie B. Disharoon
-----------------------------------------------------------
Leslie B. Disharoon, Committee Chairman
-6-
<PAGE>
EXHIBIT A
---------
DETAILS OF EMPLOYMENT
---------------------
EMPLOYEE: Gary L. Denman
ITEM 1(a) Position: Executive Vice President & Chief Operating Officer
ITEM 1(b) Place of Employment: 1900 Gallows Road, Vienna, Virginia 22182
ITEM 2 Effective Date of Employment Agreement: December 8, 1995
Effective Date of this Exhibit: December 8, 1995
ITEM 3(a) Gross Annual Salary: One hundred eighty thousand dollars
($180,000.00)
ITEM 3(b) Additional Compensation (if any): To be determined annually by the
President and CEO of GRC
International, Inc.
ITEM 4 Notice to Employee:
8427 Blevins Way Court 1900 Gallows Road
------------------------- and/ -------------------------
Vienna, Virginia 22182 or Vienna, Virginia 22182
------------------------- -------------------------
------------------------- -------------------------
EMPLOYEE: GRC INTERNATIONAL, INC.
/s/ Gary L. Denman By: /s/ Jim Roth
- ------------------------- -------------------------
Jim Roth
President & Chief
Executive Officer
APPROVED AND RATIFIED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF
GRC INTERNATIONAL, INC.
By: /s/ Leslie B. Disharoon
----------------------------------------------------
Leslie B. Disharoon, Committee Chairman
-7-
<PAGE>
EXHIBIT B
---------
SCHEDULE OF INTELLECTUAL PROPERTY
---------------------------------
I developed or conceived prior to employment with the Company, and consider
proprietary to me, the following Intellectual Property, as that term is defined
in the Employment Agreement to which this Exhibit is attached:
EMPLOYEE
/s/ Gary L. Denman
-------------------------
-------------------------
(Date)
-8-
<PAGE>
EXHIBIT C
---------
TERMINATION STATEMENT
---------------------
(to be signed upon termination of employment)
1. I, ___________________(employee's name), am cognizant of my legal
obligations, as stated in a certain EMPLOYMENT AGREEMENT dated ________________
_________________________________ between myself and GRC International, Inc.
(together with its subsidiaries, the "Company"), and I hereby specifically
reaffirm all of the terms stated in that agreement.
2. I hereby certify that all materials related directly or indirectly to my
employment with the Company have been returned to the Company. I further certify
that no computer listings, programs, object codes, source codes, product
development guides, flowcharts, test equipment, drawings, blueprints or other
materials owned by the Company or provided to or used by me in connection with
my employment at the Company, whether in machine-readable form or otherwise,
have been retained by me or given to any other third person or entity in
anticipation of my employment termination or for any other reason, and I also
certify that none of those materials will be removed from the Company's premises
by me.
3. I also certify that I have returned all company identification and credit
cards issued to me and all keys to Company and/or customer property that have
been in my possession.
4. I am not aware of any action or situation involving any violation of the
Company's Corporate Standards of Conduct by any employee, director, consultant
or representative of the Company, except as follows:
5. My forwarding addresses are as follows:
HOME ADDRESS BUSINESS ADDRESS
------------------------- -------------------------
------------------------- -------------------------
------------------------- -------------------------
------------------------- -------------------------
EMPLOYEE:
-------------------------
Gary L. Denman
-------------------------
(Date)
-9-
<PAGE>
Exhibit 10.18
-------------
GRC INTERNATIONAL, INC.
EMPLOYMENT AGREEMENT
(VICE PRESIDENT & above)
THIS EMPLOYMENT AGREEMENT is made in Vienna, Virginia as of December 8, 1995 by
and between James P. McCoy (hereinafter referred to in the first person or as
"Employee") and GRC International, Inc., a corporation with its principal
offices at 1900 Gallows Road, Vienna, Virginia 22182 ("Company"). The term
"Company" shall also include any parent, subsidiary or affiliate of the Company.
As a condition to, and in consideration of, the Company's employment of
Employee, the parties mutually agree as follows:
1. DUTIES.
------
(a) I agree to work for the Company in the capacity set forth in Item 1(a) of
Exhibit A attached hereto. My duties will include all of those generally
associated with said position, subject to the direction and assignment of the
Company's Board of Directors. The duties assigned to me shall be performed at
the place of employment specified in Item 1(b) of Exhibit A or at such other
location as the Board of Directors may determine is in the best interest of the
Company. All of my working time and energies shall be devoted to the foregoing
duties. I will inform the Company, in writing, if I engage in any outside
business activity, and I will obtain the prior written approval of the Company,
if I engage in any outside business activity which (i) requires the use of
skills for which I was hired by the Company or the use of skills attained during
the course of my employment with the Company or (ii) would, in the opinion of
the Company, compete with or conflict with my employment with the Company. While
employed by the Company, absent the expressed, prior written authorization of
the Company's Board of Directors, I will not, directly or indirectly, engage in
any activity competitive with or adverse to the Company's business or welfare,
whether alone, as a partner of any partnership or joint venture or as an
officer, director, employee, or holder of 5% or more of any class of stock, of
any corporation.
(b) I agree that for a period of one year immediately following termination
(voluntary or otherwise) of my employment with the Company, I will not interfere
with the business of the Company by inducing an employee to leave the Company's
employment, by inducing a consultant to sever the consultant's relationship with
the Company, or by inducing a customer to sever the customer's relationship with
the Company.
(c) This Agreement cancels and replaces in their entirety any and all previous
employment agreements entered into between me and the Company or any of its
subsidiaries.
2. INTELLECTUAL PROPERTY.
---------------------
(a) In this Agreement, (i) "Intellectual Property" means any patent, trademark,
copyright, semiconductor mask right, trade secret, invention, discovery, design,
idea or improvement (whether or not any of the foregoing are patentable,
protectable by copyright, or otherwise protectable), and (ii) the word "made",
when used with "Intellectual Property", means made, devised, developed,
conceived or reduced to practice. Exhibit B to this Agreement contains a
complete list of all Intellectual Property I consider proprietary to me, and,
during my employment with the Company, I agree to update Exhibit B from time to
time as may be necessary to keep it current. I will not incorporate or permit to
be incorporated into any work performed for or on behalf of the Company any
Intellectual Property proprietary to me or any third party.
(b) I will disclose to the Company all Intellectual Property made by me, alone
or with others, during any period of employment with the Company. All such
disclosures shall be reviewed by the Company in confidence to determine any
issues which may arise.
<PAGE>
(c) I will assign to the Company all right, title and interest in and to all
Intellectual Property made at any time by me alone or with others during or
after my employment with the Company, if such Intellectual Property was made
using Company equipment, supplies, facilities, or trade secret information, or
such Intellectual Property either (i) relates at the time of conception or
reduction to practice of the invention to the Company's business, or actual or
demonstrably anticipated research or development of the Company; or (ii) results
from any work performed by me for the Company. All Intellectual Property subject
to this paragraph shall remain Company property whether or not so disclosed or
assigned to the Company. I will cooperate fully with the Company during and
after employment in accomplishing the intent of this provision and execute such
instruments and documents reasonably requested by the Company, in order to more
fully vest in the Company all ownership rights in the Intellectual Property. In
addition, I irrevocably appoint the Company and each of its officers as my agent
and attorney-in-fact to act in my name and stead to execute and file any
documents and to do all other lawfully permitted actions to further the
prosecution, issuance and enforcement of patents, copyrights and other
proprietary rights with the same force and effect as if executed and delivered
by me.
(d) The provisions of the foregoing Section 2(c) shall not apply to an
invention developed by me entirely on my own time without using Company
equipment, supplies, facilities, or trade secret information except for those
inventions that either (i) relate at the time of conception or reduction to
practice of the invention to the Company's business, or actual or demonstrably
anticipated research or development of the Company; or (ii) result from any work
performed by me for the Company.
3. PROPRIETARY INFORMATION. I understand that in the course of my
-----------------------
employment with the Company, I will be making use of, acquiring or adding to
proprietary and/or confidential information and materials of the Company or of
other parties ("Proprietary Information"). I will not disclose or use any
Proprietary Information either during or after my employment with the Company,
except to the extent expressly authorized in writing by an officer of the
Company. The following are some examples of Proprietary Information, even if
not marked or identified as such:
(i) Computer software of all kinds, source and object codes, algorithms, coding
sheets, compilers, assemblers, design concepts, routines and subroutines, and
all related documents and materials;
(ii) Business practices, marketing techniques, mailing lists, purchasing
information, price lists, pricing policies, quoting procedures, customer and
prospective customer lists and information, and all materials or information
relating to the manner in which the Company does business.
(iii) Discoveries, concepts and ideas, whether or not patentable, protectable
by copyright, or otherwise protectable, trade secrets, "know-how," production
processes, research and development activities, and information on products or
programs;
(iv) Financial information, cost structure, bidding strategy, salary structure,
and such other information not in the public domain as may be helpful to
competitors or harmful to the Company, its customers or employees.
(v) Any other information, materials or documents related to the business or
activities of the Company which are not generally known to others engaged
in similar businesses or activities; and
(vi) All ideas which are derived from my access to or knowledge of any of the
above.
4. CONFLICTS OF INTEREST. I have read and understood the Company's
---------------------
Corporate Standards of Conduct, and while employed by the Company, I agree to
abide by said Standards of Conduct, as the same may be amended from time to
time, and to complete the Company's Ethics Questionnaire as required by the
Company from time to time. Except as fully disclosed in a document attached to
this agreement, I am not a party to any agreement or understanding with any
other person or business, nor am
-2-
<PAGE>
I subject to any other legal restriction or obligation, which would in any way
prohibit, impede or hinder my employment with the Company or the performance of
my duties in the course of such employment.
COMPENSATION.
------------
(a) During the term of my employment hereunder, the Company shall pay me the
annual salary set forth in Exhibit A, Item 3(a) ("Gross Annual Salary").
(b) In addition to the Gross Annual Salary, I shall be entitled to receive the
additional compensation, if any, specified in Exhibit A, Item 3(b) ("Additional
Compensation").
6. DISABILITY. If I am is unable to fulfill the duties of my position by
----------
reason of any illness, incapacity or disability, my salary shall be payable for
only 90 days following the onset of such illness, incapacity or disability,
provided, however, that if I (i) have applied for insurance benefits under the
Company's long-term disability policy during said 90 day period, and (ii) have
not yet begun to receive payments under said policy during said 90 day period,
then my salary shall continue to be payable for up to 180 days following the
onset of such illness, incapacity or disability until I begin to receive such
payments. During the foregoing 90 day period (or 180 day period, if
applicable), my salary, to the extent not covered by the Company's short-term
disability benefits, shall be paid through the use of my sick leave, if any,
accumulated prior to January 1, 1994, but if such sick leave is or becomes
exhausted, my salary shall nevertheless be paid for the 90 day period (or 180
day period, if applicable). If I shall return to full employment and full
discharge of my duties during the term of this Agreement, full compensation
shall be prospectively reinstated for any remaining term of this Agreement.
7. TERMINATION AND SEVERANCE.
-------------------------
(a) Subject to Section 7(f) regarding a Change of Control, this Agreement may
be terminated by either party without cause on six (6) months written notice to
the other party. Subject to Section 7(f) regarding a Change of Control, this
Agreement may be terminated by the Company immediately for cause by written
notice to me. For purposes of this Section 7, cause for termination shall exist
in the event of my dishonesty, chronic absenteeism, conviction of a felony,
conviction of a misdemeanor involving moral turpitude, or material breach of
this Agreement.
(b) To the maximum extent permitted by law, I hereby expressly authorize the
Company in advance upon my termination to deduct from my final paycheck(s) and
from my paid time off (PTO) check all amounts I owe the Company (including but
not limited to repayment of advances, loans or any other obligations).
(c) Upon termination of employment, I will execute and comply with the Employee
Termination Certificate attached hereto as Exhibit C, and deliver to the Company
all notes, data, tapes, lists, reference materials, sketches, drawings,
memoranda, records and other documents which are in my possession or control
belonging to the Company or relating to its business.
(d) Termination of this Agreement will not relieve me from my obligations under
Sections 1(b), 2 and 3 of this Agreement, which, by their respective terms,
continue beyond the termination of this Agreement.
(e) In the event of my death, this Agreement will terminate and all accrued and
unpaid compensation and expenses, less all amounts I owe the Company (including
but not limited to repayment of advances, loans or any other obligations), will
be payable to my estate.
(f) Notwithstanding any other provision of this Agreement to the contrary,
if the Company, with or without cause, terminates my employment or gives me
notice of termination, or if I terminate my employment or give notice of
termination by reason of a material breach by the Company of the terms of this
Agreement (including but not limited to the terms set forth on Exhibit A
hereto), at any time during the
-3-
<PAGE>
twelve-month period following a Change of Control (as hereinafter defined), then
I shall receive, in addition to any other compensation provided for in this
Agreement, a lump-sum severance payment in an amount equal to the Gross Annual
Salary, less any income, excise, employment or other tax withholdings which the
Company is required by law to deduct therefrom.
(g) For purposes of this Agreement, a Change in Control shall mean the
satisfaction of the conditions set forth in any one of the following paragraphs:
(i) any person (as defined in Section 3(a)(9) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") as modified and used in Sections
13(d) and 14(d) thereof, except that neither (A) the Company or any of its
------
subsidiaries, (B) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its subsidiaries, (C) an
underwriter temporarily holding securities pursuant to an offering of such
securities, nor (D) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company shall be included in such term) (a "Person")
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such Person any securities
acquired directly from the Company or its affiliates) representing 25% or more
of the combined voting power of the Company's then outstanding securities; or
(ii) during any period of up to two consecutive years (not including any
period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board of Directors of the Company (the
"Board") and any new director (other than a director designated by a Person who
has entered into an agreement with the Company to effect a transaction described
in clause (i), (iii) or (iv) of this paragraph) whose election by the Board or
nomination for election by the Company's stockholders was approved by a vote of
at least two thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority thereof; or
(iii) the shareholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than (A) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity), in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, at
least 75% of the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation, or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no Person
acquires more than 50% of the combined voting power of the Company's then
outstanding securities; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all the Company's assets.
8. NOTICE.
------
(a) Any notice to be given to me under this Agreement shall be in writing and
delivered by (i) registered or certified mail, return receipt requested; (ii)
express courier; or (iii) hand-delivery, at an address specified for me in this
Agreement or in any Exhibit hereto or at such other address of which written
notice has been given to the Company by me by any of the foregoing means.
(b) Any notice to be given to the Company under this Agreement shall be in
writing and delivered by any of the means specified in subsection (a) above, to
the President, with a copy to the Senior Vice
-4-
<PAGE>
President, General Counsel & Secretary, GRC International, Inc., 1900 Gallows
Road, Vienna, Virginia 22182.
9. DISPUTES.
--------
(a) This Agreement has been executed in and shall be governed by the laws of
the Commonwealth of Virginia.
(b) Any controversy or claim arising out of or relating to Employee's
employment or this Agreement shall be resolved in the courts of Fairfax County,
Virginia, and Employee hereby submits to the jurisdiction of such courts, and
agrees to accept service of process from such courts.
(c) I understand and agree that the Company will suffer irreparable harm if I
breach any of my obligations under this agreement and that monetary damages may
be inadequate to compensate for such breach. Accordingly, in the event of a
breach or threatened breach by me, the Company, in addition to and not in
limitation of any other rights, remedies or damages available to it at law or in
equity or otherwise, shall be entitled to an injunctive relief preventing any
such breach by myself or by my partners, agents, representatives, servants,
employers, employees and/or any and all persons directly or indirectly acting
for or with me.
10. ASSIGNMENT. My services are unique and personal. Accordingly, I may not
----------
assign any rights or delegate any duties or obligations under this Agreement.
The rights and obligations of the Company under this Agreement shall inure to
the benefit of and shall be binding upon the successors and assigns of the
Company.
11. ENTIRE AGREEMENT. This agreement, together with all documents attached
----------------
to this agreement or specifically referred to in it, contains the entire
agreement and understandings by and between the Company and me with respect to
the covenants described in this agreement, and any representation, promise,
agreement or understanding, written or oral, not contained in this agreement
shall be of no force or effect. No change or modification of this agreement
shall be valid or binding unless the change or modification is in writing and
signed by the parties to this agreement. Any representation contrary to this
agreement, express or implied, written or oral, is hereby disclaimed. Nothing
in this agreement shall obligate the Company to employ me for any length of
time. No waiver of any provision of this agreement shall be valid unless it is
in writing and signed by the party against whom such waiver is sought to be
enforced, and no waiver of any provision shall be deemed a waiver of any other
provision or a waiver of the same provision at any other time. This agreement
supersedes all previous agreements between the Company and me.
12. SEVERABILITY. Any provision of this agreement which may be determined to
------------
be unenforceable, invalid or illegal shall be deemed stricken from this
agreement and all remaining provisions shall continue in full force and effect.
13. REASONABLENESS OF RESTRICTIONS. I have carefully read and considered the
------------------------------
provisions of this agreement and, having done so, agree that the restrictions
set forth in this agreement are fair and reasonable and are reasonably required
for the Company's protection. This agreement shall be construed fairly as to
all parties and not in favor of or against any party, regardless of which party
prepared this agreement. In the event that, notwithstanding the foregoing, any
part of his agreement shall be held to be invalid or unenforceable, the
remaining parts of the agreement shall nevertheless continue to be valid and
enforceable as though the invalid or unenforceable parts had not been included
in the agreement. If any provision is held invalid or unenforceable with
respect to particular circumstances, it shall nevertheless remain in full force
and effect in all other circumstances.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this agreement as of the date
first set forth above.
ATTEST: GRC INTERNATIONAL, INC.
/s/ Thomas E. McCabe By: /s/ Jim Roth
- ----------------------------------- -------------------------
Thomas E. McCabe Jim Roth
Sr. Vice President & Secretary President & Chief
Executive Officer
WITNESS EMPLOYEE
/s/ Sue Meyer /s/ James E. McCoy
- ----------------------------------- -------------------------
(Signature)
James E. McCoy
-------------------------
(Please print name)
APPROVED AND RATIFIED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF
GRC INTERNATIONAL, INC.
By: /s/ Leslie B. Disharoon
------------------------------------------
Leslie B. Disharoon, Committee Chairman
-6-
<PAGE>
EXHIBIT A
---------
DETAILS OF EMPLOYMENT
---------------------
EMPLOYEE: James P. McCoy
ITEM 1(a) Position: Senior Vice President, General Manager, Professional
Services Operation
ITEM 1(b) Place of Employment: 1900 Gallows Road, Vienna, Virginia 22182
ITEM 2 Effective Date of Employment Agreement: December 8, 1995
Effective Date of this Exhibit: December 8, 1995
ITEM 3(a) Gross Annual Salary: One hundred fifty thousand dollars and no/100
($150,000.00)
ITEM 3(b) Additional Compensation (if any): To be determined annually by the
President and CEO of GRC
International, Inc.
ITEM 4 Notice to Employee:
1900 Gallows Road 12859 Valleywood Drive
------------------------- and/ ---------------------------
Vienna, Virginia 22182 or Woodbridge, Virginia 22192
------------------------- ---------------------------
------------------------- -------------------------
EMPLOYEE: GRC INTERNATIONAL, INC.
/s/ James P. McCoy By: /s/ Jim Roth
- ------------------------- -------------------------
Jim Roth
President & Chief
Executive Officer
APPROVED AND RATIFIED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF
GRC INTERNATIONAL, INC.
By: /s/ Leslie B. Disharoon
----------------------------------------------------
Leslie B. Disharoon, Committee Chairman
-7-
<PAGE>
EXHIBIT B
---------
SCHEDULE OF INTELLECTUAL PROPERTY
---------------------------------
I developed or conceived prior to employment with the Company, and consider
proprietary to me, the following Intellectual Property, as that term is defined
in the Employment Agreement to which this Exhibit is attached:
EMPLOYEE
/s/ James P. McCoy
-------------------------
James P. McCoy
-------------------------
4 Jan 96
-------------------------
(Date)
-8-
<PAGE>
EXHIBIT C
---------
TERMINATION STATEMENT
---------------------
(to be signed upon termination of employment)
1. I, ___________________(employee's name), am cognizant of my legal
obligations, as stated in a certain EMPLOYMENT AGREEMENT dated ________________
_________________________________ between myself and GRC International, Inc.
(together with its subsidiaries, the "Company"), and I hereby specifically
reaffirm all of the terms stated in that agreement.
2. I hereby certify that all materials related directly or indirectly to my
employment with the Company have been returned to the Company. I further certify
that no computer listings, programs, object codes, source codes, product
development guides, flowcharts, test equipment, drawings, blueprints or other
materials owned by the Company or provided to or used by me in connection with
my employment at the Company, whether in machine-readable form or otherwise,
have been retained by me or given to any other third person or entity in
anticipation of my employment termination or for any other reason, and I also
certify that none of those materials will be removed from the Company's premises
by me.
3. I also certify that I have returned all company identification and credit
cards issued to me and all keys to Company and/or customer property that have
been in my possession.
4. I am not aware of any action or situation involving any violation of the
Company's Corporate Standards of Conduct by any employee, director, consultant
or representative of the Company, except as follows:
5. My forwarding addresses are as follows:
HOME ADDRESS BUSINESS ADDRESS
------------------------- -------------------------
------------------------- -------------------------
------------------------- -------------------------
------------------------- -------------------------
EMPLOYEE:
-------------------------
(Signature)
-------------------------
(Please print name)
-------------------------
(Date)
-9-
<PAGE>
Exhibit 10.19
-------------
GRC INTERNATIONAL, INC.
EMPLOYMENT AGREEMENT
(VICE PRESIDENT & above)
THIS EMPLOYMENT AGREEMENT is made in Vienna, Virginia as of December 8, 1995 by
and between Thomas E. McCabe (hereinafter referred to in the first person or as
"Employee") and GRC International, Inc., a corporation with its principal
offices at 1900 Gallows Road, Vienna, Virginia 22182 ("Company"). The term
"Company" shall also include any parent, subsidiary or affiliate of the Company.
As a condition to, and in consideration of, the Company's employment of
Employee, the parties mutually agree as follows:
1. DUTIES.
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(a) I agree to work for the Company in the capacity set forth in Item 1(a) of
Exhibit A attached hereto. My duties will include all of those generally
associated with said position, subject to the direction and assignment of the
Company's Board of Directors. The duties assigned to me shall be performed at
the place of employment specified in Item 1(b) of Exhibit A or at such other
location as the Board of Directors may determine is in the best interest of the
Company. All of my working time and energies shall be devoted to the foregoing
duties. I will inform the Company, in writing, if I engage in any outside
business activity, and I will obtain the prior written approval of the Company,
if I engage in any outside business activity which (i) requires the use of
skills for which I was hired by the Company or the use of skills attained during
the course of my employment with the Company or (ii) would, in the opinion of
the Company, compete with or conflict with my employment with the Company. While
employed by the Company, absent the expressed, prior written authorization of
the Company's Board of Directors, I will not, directly or indirectly, engage in
any activity competitive with or adverse to the Company's business or welfare,
whether alone, as a partner of any partnership or joint venture or as an
officer, director, employee, or holder of 5% or more of any class of stock, of
any corporation.
(b) I agree that for a period of one year immediately following termination
(voluntary or otherwise) of my employment with the Company, I will not interfere
with the business of the Company by inducing an employee to leave the Company's
employment, by inducing a consultant to sever the consultant's relationship with
the Company, or by inducing a customer to sever the customer's relationship with
the Company.
(c) This Agreement cancels and replaces in their entirety any and all previous
employment agreements entered into between me and the Company or any of its
subsidiaries.
2. INTELLECTUAL PROPERTY.
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(a) In this Agreement, (i) "Intellectual Property" means any patent, trademark,
copyright, semiconductor mask right, trade secret, invention, discovery, design,
idea or improvement (whether or not any of the foregoing are patentable,
protectable by copyright, or otherwise protectable), and (ii) the word "made",
when used with "Intellectual Property", means made, devised, developed,
conceived or reduced to practice. Exhibit B to this Agreement contains a
complete list of all Intellectual Property I consider proprietary to me, and,
during my employment with the Company, I agree to update Exhibit B from time to
time as may be necessary to keep it current. I will not incorporate or permit to
be incorporated into any work performed for or on behalf of the Company any
Intellectual Property proprietary to me or any third party.
(b) I will disclose to the Company all Intellectual Property made by me, alone
or with others, during any period of employment with the Company. All such
disclosures shall be reviewed by the Company in confidence to determine any
issues which may arise.
<PAGE>
(c) I will assign to the Company all right, title and interest in and to all
Intellectual Property made at any time by me alone or with others during or
after my employment with the Company, if such Intellectual Property was made
using Company equipment, supplies, facilities, or trade secret information, or
such Intellectual Property either (i) relates at the time of conception or
reduction to practice of the invention to the Company's business, or actual or
demonstrably anticipated research or development of the Company; or (ii) results
from any work performed by me for the Company. All Intellectual Property subject
to this paragraph shall remain Company property whether or not so disclosed or
assigned to the Company. I will cooperate fully with the Company during and
after employment in accomplishing the intent of this provision and execute such
instruments and documents reasonably requested by the Company, in order to more
fully vest in the Company all ownership rights in the Intellectual Property. In
addition, I irrevocably appoint the Company and each of its officers as my agent
and attorney-in-fact to act in my name and stead to execute and file any
documents and to do all other lawfully permitted actions to further the
prosecution, issuance and enforcement of patents, copyrights and other
proprietary rights with the same force and effect as if executed and delivered
by me.
(d) The provisions of the foregoing Section 2(c) shall not apply to an
invention developed by me entirely on my own time without using Company
equipment, supplies, facilities, or trade secret information except for those
inventions that either (i) relate at the time of conception or reduction to
practice of the invention to the Company's business, or actual or demonstrably
anticipated research or development of the Company; or (ii) result from any work
performed by me for the Company.
3. PROPRIETARY INFORMATION. I understand that in the course of my
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employment with the Company, I will be making use of, acquiring or adding to
proprietary and/or confidential information and materials of the Company or of
other parties ("Proprietary Information"). I will not disclose or use any
Proprietary Information either during or after my employment with the Company,
except to the extent expressly authorized in writing by an officer of the
Company. The following are some examples of Proprietary Information, even if
not marked or identified as such:
(i) Computer software of all kinds, source and object codes, algorithms, coding
sheets, compilers, assemblers, design concepts, routines and subroutines, and
all related documents and materials;
(ii) Business practices, marketing techniques, mailing lists, purchasing
information, price lists, pricing policies, quoting procedures, customer and
prospective customer lists and information, and all materials or information
relating to the manner in which the Company does business.
(iii) Discoveries, concepts and ideas, whether or not patentable, protectable
by copyright, or otherwise protectable, trade secrets, "know-how," production
processes, research and development activities, and information on products or
programs;
(iv) Financial information, cost structure, bidding strategy, salary structure,
and such other information not in the public domain as may be helpful to
competitors or harmful to the Company, its customers or employees.
(v) Any other information, materials or documents related to the business or
activities of the Company which are not generally known to others engaged
in similar businesses or activities; and
(vi) All ideas which are derived from my access to or knowledge of any of the
above.
4. CONFLICTS OF INTEREST. I have read and understood the Company's
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Corporate Standards of Conduct, and while employed by the Company, I agree to
abide by said Standards of Conduct, as the same may be amended from time to
time, and to complete the Company's Ethics Questionnaire as required by the
Company from time to time. Except as fully disclosed in a document attached to
this agreement, I am not a party to any agreement or understanding with any
other person or business, nor am
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<PAGE>
I subject to any other legal restriction or obligation, which would in any way
prohibit, impede or hinder my employment with the Company or the performance of
my duties in the course of such employment.
5. COMPENSATION.
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(a) During the term of my employment hereunder, the Company shall pay me the
annual salary set forth in Exhibit A, Item 3(a) ("Gross Annual Salary").
(b) In addition to the Gross Annual Salary, I shall be entitled to receive the
additional compensation, if any, specified in Exhibit A, Item 3(b) ("Additional
Compensation").
6. DISABILITY. If I am is unable to fulfill the duties of my position by
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reason of any illness, incapacity or disability, my salary shall be payable for
only 90 days following the onset of such illness, incapacity or disability,
provided, however, that if I (i) have applied for insurance benefits under the
Company's long-term disability policy during said 90 day period, and (ii) have
not yet begun to receive payments under said policy during said 90 day period,
then my salary shall continue to be payable for up to 180 days following the
onset of such illness, incapacity or disability until I begin to receive such
payments. During the foregoing 90 day period (or 180 day period, if
applicable), my salary, to the extent not covered by the Company's short-term
disability benefits, shall be paid through the use of my sick leave, if any,
accumulated prior to January 1, 1994, but if such sick leave is or becomes
exhausted, my salary shall nevertheless be paid for the 90 day period (or 180
day period, if applicable). If I shall return to full employment and full
discharge of my duties during the term of this Agreement, full compensation
shall be prospectively reinstated for any remaining term of this Agreement.
7. TERMINATION AND SEVERANCE.
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(a) Subject to Section 7(f) regarding a Change of Control, this Agreement may
be terminated by either party without cause on six (6) months written notice to
the other party. Subject to Section 7(f) regarding a Change of Control, this
Agreement may be terminated by the Company immediately for cause by written
notice to me. For purposes of this Section 7, cause for termination shall exist
in the event of my dishonesty, chronic absenteeism, conviction of a felony,
conviction of a misdemeanor involving moral turpitude, or material breach of
this Agreement.
(b) To the maximum extent permitted by law, I hereby expressly authorize the
Company in advance upon my termination to deduct from my final paycheck(s) and
from my paid time off (PTO) check all amounts I owe the Company (including but
not limited to repayment of advances, loans or any other obligations).
(c) Upon termination of employment, I will execute and comply with the Employee
Termination Certificate attached hereto as Exhibit C, and deliver to the Company
all notes, data, tapes, lists, reference materials, sketches, drawings,
memoranda, records and other documents which are in my possession or control
belonging to the Company or relating to its business.
(d) Termination of this Agreement will not relieve me from my obligations under
Sections 1(b), 2 and 3 of this Agreement, which, by their respective terms,
continue beyond the termination of this Agreement.
(e) In the event of my death, this Agreement will terminate and all accrued and
unpaid compensation and expenses, less all amounts I owe the Company (including
but not limited to repayment of advances, loans or any other obligations), will
be payable to my estate.
(f) Notwithstanding any other provision of this Agreement to the contrary,
if the Company, with or without cause, terminates my employment or gives me
notice of termination, or if I terminate my employment or give notice of
termination by reason of a material breach by the Company of the terms of this
Agreement (including but not limited to the terms set forth on Exhibit A
hereto), at any time during the
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<PAGE>
twelve-month period following a Change of Control (as hereinafter defined), then
I shall receive, in addition to any other compensation provided for in this
Agreement, a lump-sum severance payment in an amount equal to the Gross Annual
Salary, less any income, excise, employment or other tax withholdings which the
Company is required by law to deduct therefrom.
(g) For purposes of this Agreement, a Change in Control shall mean the
satisfaction of the conditions set forth in any one of the following paragraphs:
(i) any person (as defined in Section 3(a)(9) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") as modified and used in Sections
13(d) and 14(d) thereof, except that neither (A) the Company or any of its
------
subsidiaries, (B) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its subsidiaries, (C) an
underwriter temporarily holding securities pursuant to an offering of such
securities, nor (D) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company shall be included in such term) (a "Person")
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such Person any securities
acquired directly from the Company or its affiliates) representing 25% or more
of the combined voting power of the Company's then outstanding securities; or
(ii) during any period of up to two consecutive years (not including any
period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board of Directors of the Company (the
"Board") and any new director (other than a director designated by a Person who
has entered into an agreement with the Company to effect a transaction described
in clause (i), (iii) or (iv) of this paragraph) whose election by the Board or
nomination for election by the Company's stockholders was approved by a vote of
at least two thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority thereof; or
(iii) the shareholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than (A) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity), in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, at
least 75% of the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation, or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no Person
acquires more than 50% of the combined voting power of the Company's then
outstanding securities; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all the Company's assets.
8. NOTICE.
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(a) Any notice to be given to me under this Agreement shall be in writing and
delivered by (i) registered or certified mail, return receipt requested; (ii)
express courier; or (iii) hand-delivery, at an address specified for me in this
Agreement or in any Exhibit hereto or at such other address of which written
notice has been given to the Company by me by any of the foregoing means.
(b) Any notice to be given to the Company under this Agreement shall be in
writing and delivered by any of the means specified in subsection (a) above, to
the President, with a copy to the Senior Vice
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<PAGE>
President, General Counsel & Secretary, GRC International, Inc., 1900 Gallows
Road, Vienna, Virginia 22182.
9. DISPUTES.
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(a) This Agreement has been executed in and shall be governed by the laws of
the Commonwealth of Virginia.
(b) Any controversy or claim arising out of or relating to Employee's
employment or this Agreement shall be resolved in the courts of Fairfax County,
Virginia, and Employee hereby submits to the jurisdiction of such courts, and
agrees to accept service of process from such courts.
(c) I understand and agree that the Company will suffer irreparable harm if I
breach any of my obligations under this agreement and that monetary damages may
be inadequate to compensate for such breach. Accordingly, in the event of a
breach or threatened breach by me, the Company, in addition to and not in
limitation of any other rights, remedies or damages available to it at law or in
equity or otherwise, shall be entitled to an injunctive relief preventing any
such breach by myself or by my partners, agents, representatives, servants,
employers, employees and/or any and all persons directly or indirectly acting
for or with me.
10. ASSIGNMENT. My services are unique and personal. Accordingly, I may not
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assign any rights or delegate any duties or obligations under this Agreement.
The rights and obligations of the Company under this Agreement shall inure to
the benefit of and shall be binding upon the successors and assigns of the
Company.
11. ENTIRE AGREEMENT. This agreement, together with all documents attached
----------------
to this agreement or specifically referred to in it, contains the entire
agreement and understandings by and between the Company and me with respect to
the covenants described in this agreement, and any representation, promise,
agreement or understanding, written or oral, not contained in this agreement
shall be of no force or effect. No change or modification of this agreement
shall be valid or binding unless the change or modification is in writing and
signed by the parties to this agreement. Any representation contrary to this
agreement, express or implied, written or oral, is hereby disclaimed. Nothing
in this agreement shall obligate the Company to employ me for any length of
time. No waiver of any provision of this agreement shall be valid unless it is
in writing and signed by the party against whom such waiver is sought to be
enforced, and no waiver of any provision shall be deemed a waiver of any other
provision or a waiver of the same provision at any other time. This agreement
supersedes all previous agreements between the Company and me.
12. SEVERABILITY. Any provision of this agreement which may be determined to
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be unenforceable, invalid or illegal shall be deemed stricken from this
agreement and all remaining provisions shall continue in full force and effect.
13. REASONABLENESS OF RESTRICTIONS. I have carefully read and considered the
------------------------------
provisions of this agreement and, having done so, agree that the restrictions
set forth in this agreement are fair and reasonable and are reasonably required
for the Company's protection. This agreement shall be construed fairly as to
all parties and not in favor of or against any party, regardless of which party
prepared this agreement. In the event that, notwithstanding the foregoing, any
part of his agreement shall be held to be invalid or unenforceable, the
remaining parts of the agreement shall nevertheless continue to be valid and
enforceable as though the invalid or unenforceable parts had not been included
in the agreement. If any provision is held invalid or unenforceable with
respect to particular circumstances, it shall nevertheless remain in full force
and effect in all other circumstances.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this agreement as of the date
first set forth above.
WITNESS: GRC INTERNATIONAL, INC.
/s/ Sue Meyer By: /s/ Jim Roth
- ----------------------------------- -------------------------
Sue Meyer Jim Roth
President & Chief
Executive Officer
WITNESS EMPLOYEE
/s/ Michele L. Beck /s/ T. E. McCabe
- ----------------------------------- -------------------------
(Signature)
Thomas E. McCabe
-------------------------
(Please print name)
APPROVED AND RATIFIED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF
GRC INTERNATIONAL, INC.
By: /s/ Leslie B. Disharoon
------------------------------------------
Leslie B. Disharoon, Committee Chairman
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<PAGE>
EXHIBIT A
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DETAILS OF EMPLOYMENT
---------------------
EMPLOYEE: Thomas E. McCabe
ITEM 1(a) Position: Senior Vice President, General Counsel and Secretary, GRCI
ITEM 1(b) Place of Employment: 1900 Gallows Road, Vienna, Virginia 22182
ITEM 2 Effective Date of Employment Agreement: December 8, 1995
Effective Date of this Exhibit: December 8, 1995
ITEM 3(a) Gross Annual Salary: One hundred fifty thousand dollars and no/100
($150,000.00)
ITEM 3(b) Additional Compensation (if any): To be determined annually by the
President and CEO of GRC
International, Inc.
ITEM 4 Notice to Employee:
1900 Gallows Road 7829 Old Dominion Drive
------------------------- and/ -------------------------
Vienna, Virginia 22182 or McLean, Virginia 22102
------------------------- -------------------------
------------------------- -------------------------
EMPLOYEE: GRC INTERNATIONAL, INC.
/s/ T. E. McCabe By: /s/ Jim Roth
- ------------------------- -------------------------
Jim Roth
President & Chief
Executive Officer
APPROVED AND RATIFIED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF
GRC INTERNATIONAL, INC.
By: /s/ Leslie B. Disharoon
----------------------------------------------------
Leslie B. Disharoon, Committee Chairman
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<PAGE>
EXHIBIT B
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SCHEDULE OF INTELLECTUAL PROPERTY
---------------------------------
I developed or conceived prior to employment with the Company, and consider
proprietary to me, the following Intellectual Property, as that term is defined
in the Employment Agreement to which this Exhibit is attached:
EMPLOYEE
/s/ T. E. McCabe
-------------------------
(Signature)
Thomas E. McCabe
-------------------------
(Please print name)
12/13/95
-------------------------
(Date)
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<PAGE>
EXHIBIT C
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TERMINATION STATEMENT
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(to be signed upon termination of employment)
1. I, ___________________(employee's name), am cognizant of my legal
obligations, as stated in a certain EMPLOYMENT AGREEMENT dated ________________
_________________________________ between myself and GRC International, Inc.
(together with its subsidiaries, the "Company"), and I hereby specifically
reaffirm all of the terms stated in that agreement.
2. I hereby certify that all materials related directly or indirectly to my
employment with the Company have been returned to the Company. I further certify
that no computer listings, programs, object codes, source codes, product
development guides, flowcharts, test equipment, drawings, blueprints or other
materials owned by the Company or provided to or used by me in connection with
my employment at the Company, whether in machine-readable form or otherwise,
have been retained by me or given to any other third person or entity in
anticipation of my employment termination or for any other reason, and I also
certify that none of those materials will be removed from the Company's premises
by me.
3. I also certify that I have returned all company identification and credit
cards issued to me and all keys to Company and/or customer property that have
been in my possession.
4. I am not aware of any action or situation involving any violation of the
Company's Corporate Standards of Conduct by any employee, director, consultant
or representative of the Company, except as follows:
5. My forwarding addresses are as follows:
HOME ADDRESS BUSINESS ADDRESS
------------------------- -------------------------
------------------------- -------------------------
------------------------- -------------------------
------------------------- -------------------------
EMPLOYEE:
-------------------------
(Signature)
-------------------------
(Please print name)
-------------------------
(Date)
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<PAGE>
Exhibit 10.20
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EXECUTIVE EMPLOYMENT AGREEMENT
------------------------------
This EMPLOYMENT AGREEMENT is made as of the date hereinafter set forth, in
Vienna, Virginia, by and between the undersigned employee ("Employee"), and GRC
International, Inc., a Delaware corporation ("Company"). In consideration of the
mutual premises, promises, covenants and agreements herein contained, Employee
and the Company agree as follows:
1. Duties.
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(a) The Company hereby employs Employee in the capacity set forth in Item 1(a)
of Exhibit A attached hereto and made a part hereof. Employee hereby accepts
such employment and agrees to perform the duties of such office(s). Employee's
duties will include all of those generally associated with said position,
subject to the direction and assignment of the Company's Board of Directors. All
of employee's working time and energies shall be devoted to the foregoing
duties. The duties assigned to Employee shall be performed at the place of
employment specified in Item 1(b) of Exhibit A or at such other location as the
Board of Directors may determine is in the best interest of the Company.
(b) This Agreement cancels and replaces in their entirety any and all previous
employment agreements entered into between Employee and the Company or any of
its subsidiaries.
2. Term of Employment. The employment relationship provided for herein shall
------------------
commence as of the Effective Date of this Agreement as specified in Exhibit A,
Item 2, and remain in effect until such time as the Agreement shall be
terminated pursuant to Section 7 below.
3. Compensation.
------------
(a) During the term of Employee's employment hereunder, the Company shall pay
Employee the annual salary set forth in Exhibit A, Item 3(a) ("Gross Annual
Salary").
(b) In addition to the Gross Annual Salary, Employee shall be entitled to
receive the additional compensation, if any, specified in Exhibit A, Item 3(b)
("Additional Compensation").
(c) Employee shall be entitled to receive such fringe benefits as the Company
normally confers upon its employees holding similar or equivalent positions.
(d) In the event of Employee's death, this Agreement will be terminated and all
accrued and unpaid compensation and expenses will be payable to the Employee's
estate.
(e) If the Company, with or without cause, terminates Employee's employment or
gives Employee notice of termination, or if the Employee terminates his
employment or gives notice of termination by reason of a material breach by the
Company of the terms of this Agreement (including but not limited to the terms
set forth on Exhibit A hereto), at any time during the twelve-month period
following a Change of Control (as hereinafter defined), then Employee shall
receive, in addition to any other compensation provided for in this Agreement, a
lump-sum severance payment in an amount equal to the Gross Annual Salary, less
any income, excise, employment or other tax holdings which the Company is
required by law to deduct therefrom.
<PAGE>
(f) For purposes of this Agreement, a Change in Control shall mean the
satisfaction of the conditions set forth in any one of the following paragraphs:
(i) any person (as defined in Section 3(a)(9) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") as modified and used in Sections
13(d) and 14(d) thereof, except that neither (A) the Company or any of its
------
subsidiaries, (B) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its subsidiaries, (C) an
underwriter temporarily holding securities pursuant to an offering of such
securities, nor (D) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company shall be included in such term) (a "Person")
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such Person any securities
acquired directly from the Company or its affiliates) representing 25% or more
of the combined voting power of the Company's then outstanding securities; or
(ii) during any period of up to two consecutive years (not including any
period prior to the execution of this Agreement, individuals who at the
beginning of such period constitute the Board of Directors of the Company
(the "Board") and any new director (other than a director designated by a Person
who has entered into an agreement with the Company to effect a transaction
described in clause (i), (iii) or (iv) of this paragraph) whose election by the
Board or nomination for election by the Company's stockholders was approved by a
vote of at least two thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof; or
(iii) the shareholders of the Company approve a merger or consolidation of
the Company with any other corporation, other than (A) a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity), in combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company, at least 75%
of the combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation, or
(B) a merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person acquires more than 50% of
the combined voting power of the Company's then outstanding securities; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all the Company's assets.
4. Competition.
-----------
(a) Until termination or expiration of this Employment Agreement, absent the
expressed, prior written authorization of the Company's Board of Directors,
Employee shall not, directly or indirectly, engage in any activity competitive
with or adverse to the Company's business or welfare, whether alone, as a
partner of any partnership or joint venture or as an officer, director,
employee, or holder of 5% or more of any class of stock, of any corporation.
2
<PAGE>
(b) Employee acknowledges and agrees that the Company's telecommunications
business (i) markets the OSU(TM) Network Interface and its derivatives, products
which provide performance monitoring, alarm surveillance, overhead byte
modification and translation, interoperability between otherwise incompatible
systems, network isolation and security, network test access, and/or numerous
other functions, (ii) provides custom telecommunications software, and (iii)
produces network analysis software (collectively, the foregoing businesses
described in (i), (ii) and (iii) are hereinafter referred to as the
"Telecommunications Business"). During employment and for a period of eighteen
(18) months after the termination of employment, absent the expressed, prior
written authorization of the Company's Board of Directors, Employee shall not,
directly or indirectly, whether alone, as a partner of any partnership or joint
venture or as an officer, director, employee, or holder of 5% or more of any
class of stock, of any corporation, engage in any activity in competition with
any portion of the Company's Telecommunications Business as it exists at the
time of the termination of Employee's employment.
(c) During employment and for a period of eighteen (18) months after the
termination of employment, absent the expressed, prior written authorization of
the Company's Board of Directors, Employee shall not, directly or indirectly,
whether alone, as a partner of any partnership or joint venture or as an
officer, director, employee, or holder of 5% or more of any class of stock, of
any corporation, solicit any customer of the Telecommunications Business for
purpose of providing goods or services or software that compete with goods or
services or software offered by the Telecommunications Business.
(d) During employment and for a period of eighteen (18) months after the
termination of employment, absent the expressed, prior written authorization of
the Company's Board of Directors, Employee shall not, directly or indirectly,
whether alone, as a partner of any partnership or joint venture or as an
officer, director, employee, or holder of 5% or more of any class stock, of any
corporation, solicit, induce or otherwise cause any employee or consultant of
the Company to terminate or modify their relationship with the Company for the
purpose of working for, or to become an employee or consultant to or for, any
entity that provides goods or services or software that compete with goods or
services or software offered by the Telecommunications Business.
(e) Employee acknowledges and agrees that the services to be rendered by
Employee to the Company, the information disclosed to Employee during and by
virtue of his employment, and the Employee's commitments and obligations to the
Company are of a special, unique and extraordinary character, and that the
breach of any provision of this Section 4 will cause irreparable injury and
damage to the Company, and consequently the Company shall be entitled to, in
addition to all other remedies available to it, injunctive and equitable relief
to prevent a breach all or any part of this Section 4, and to secure the
enforcement of all or any part of this Section 4.
5. Business Disclosures. During the term of employment with the Company and
--------------------
thereafter, Employee will not, without the express, prior written consent of the
Company's Board of Directors, disclose, other than to an authorized employee,
officer or director of the Company, any confidential information of, regarding
or relating to the Company. For purposes of the preceding sentence, the phrase
"confidential information" shall include, but not be limited to, any information
relating to the Company's businesses, customers, trade practices, or trade
secrets and know-how. Upon the termination of Employee's employment for whatever
reason, Employee, without the prior, express written consent of the Board of
Directors, shall not remove
3
<PAGE>
from the premises or possession of the Company or retain, publish or
disseminate, any figures, calculations, letters, customer lists, documents,
written instruments or any other material of a confidential nature, whether
originals, photocopies or other facsimile or reproductions thereof, or other
confidential information of any type or description in connection with or in any
way pertaining to the Company of its affairs.
6. Development of Inventions and Improvements.
------------------------------------------
(a) Employee will keep the Company informed of any inventions, discoveries,
improvements, trade secrets, and secret processes made by Employee, in whole or
in part, or conceived by Employee, alone or with others (herein collectively
referred to as "Intellectual Property"), if such Intellectual Property results
from any work Employee may do for or on behalf of the Company or at the request
or upon the premises of the Company or which work relates to the activities,
investigations or obligations of the Company or its affiliates (such
Intellectual Property hereinafter referred to as "Company Work Product"). For
purposes of the preceding sentence, the term "affiliates" shall include, without
limitation, any entity with which the Company is carrying on a joint enterprise
or in which the Company has a substantial interest.
(b) At the expense of the Company, Employee shall assist the Company, its
agents, employees or nominees, in making application for and obtaining patents
with respect to any and all Company Work Product in such countries throughout
the world as the Company shall designate. Employee agrees to and shall execute
any and all papers necessary to secure on behalf of the Company such United
States or foreign patents covering Company Work Product which the Company deems
necessary or appropriate. In addition, Employee shall give the Company any and
all information in Employee's possession or known to Employee respecting any
Company Work Product or any patents or applications relating thereto.
(c) Such Company Work Product shall be the property of the Company, or its
nominees, whether patented or not, and Employee shall, without charge to the
Company, assign to the Company all of Employee's right, title, and interest, if
any, in such Company Work Product and Employee shall execute, acknowledge and
deliver any instrument confirming the complete ownership by the Company of such
Company Work Product.
(d) Employee shall deliver to the Company upon its request therefor, any and
all sketches, drawings, models, figures, and other materials and information
created or acquired by Employee during the term of employment with respect to
any Intellectual Property covered by this Section 6 and to execute and deliver
to the Company any applications, assignments or other written instruments
reasonably necessary or appropriate to the Company's securing such patents, or
the renewal or continuation thereof, or in any litigation or other proceedings
connected therewith.
(e) Descriptions of all Intellectual Property, whether patented or not, which
Employee has made or conceived prior to his employment by the Company, are
described in Exhibit B hereto, and such Intellectual Property shall be excluded
from this Agreement. Employee represents, warrants, and covenants that the
absence of a description of any Intellectual Property on Exhibit B shall
indicate conclusively that Employee neither owned prior to his employment by the
Company nor has any claim to any such Intellectual Property.
4
<PAGE>
(f) Employee shall not, at any time, except as required in the proper conduct of
the business of the Company or as authorized in writing by the Company, publish,
disclose or authorize, assist or permit anyone else to publish or disclose any
secret or confidential matter relating to any aspect of any of the businesses of
the Company.
(g) This Agreement will further incorporate any and all provisions with respect
to patents, inventions, discoveries, improvements, trade secrets, secret
processes, and data to which the Company may be required to cause its employees
to agree under the terms and provisions of any contract entered into by the
Company with the United States Government or any agency thereof or any foreign
government or agency thereof or any supranational agency, or under the terms of
any subcontract to which the Company under a prime contract issued by any of the
above-mentioned governments or agencies, whether the same be in any contracts to
which the Company is presently or may in the future become a party.
(h) Upon termination of employment, Employee will execute and comply with the
Termination Statement attached hereto as Exhibit C.
7. Termination of Contract.
-----------------------
(a) Except as provided in Section 7(c) below, and subject to Section 3(e)
hereof, this Agreement may be terminated by the Company upon six (6) months
written notice to Employee.
(b) Subject to Section 3(e) hereof, this Agreement may be terminated by Employee
upon six (6) months written notice to the Company.
(c) Subject to Section 3(e) hereof, the Company may terminate this Agreement for
cause immediately upon written notice to Employee. For purposes of this Section
7(c), the Company shall have cause for termination under any of the following
circumstances:
(i) Failure on the part of the Employee to exert best efforts in
performing the functions assigned to Employee by the Company, which failure can
reasonably be expected to have a material adverse effect on the Company,
provided that the functions assigned to Employee shall at all times be in
keeping with the position for which Employee was hired, as described in
Section 1 of this Agreement; or
(ii) Employee is in breach of the terms of Sections 4, 5 or 6 hereof,
is guilty of dishonesty or chronic absenteeism, or is convicted of a felony, or
is convicted of a misdemeanor involving moral turpitude.
(d) Termination of this Agreement will not relieve Employee from any liability
pursuant to Sections 4, 5 or 6 which, by their respective terms, continue beyond
the termination of this Agreement.
8. Disability. If Employee is unable to fulfill the duties of his or her
----------
position by reason of any illness, incapacity or disability, Employee's salary
shall be payable for only 90 days following the onset of such illness,
incapacity or disability, provided, however, that if Employee (i) has applied
for insurance benefits under the Company's long-term disability policy during
said 90 day period, and (ii) has not yet begun to receive payments under said
policy during said 90 day
5
<PAGE>
period, then Employee's salary shall continued to be payable for up to 180 days
following the onset of such illness, incapacity or disability until the Employee
begins to receive such payments. During the foregoing 90 day period (or 180 day
period, if applicable), Employee's salary, to the extent not covered by the
Company's short-term disability benefits, shall be paid through the use of
Employee's sick leave, if any, accumulated prior to January 1, 1994, but if such
sick leave is or becomes exhausted, Employee's salary shall nevertheless be paid
for the 90 day period (or 180 day period, if applicable). If Employee shall
return to full employment and full discharge of his or her duties during the
term of this Agreement, full compensation shall be prospectively reinstated for
any remaining term of this Agreement.
9. Notice.
------
(a) Any notice to be given to Employee under this Agreement shall be in writing
and delivered by (i) registered or certified mail, return receipt requested;
(ii) express courier; or (iii) hand-delivery, at an address specified for
Employee in this Agreement or in any Exhibit hereto or at such other address of
which written notice has been given to the Company by Employee by any of the
foregoing means.
(b) Any notice to be given to the Company under this Agreement shall be in
writing and delivered by any of the means specified in Section 9(a) above, to
the President, with a copy to the Senior Vice President, General Counsel &
Secretary, GRC International, Inc., 1900 Gallows Road, Vienna, Virginia 22182.
10. Disputes.
--------
(a) This Agreement has been executed in and shall be governed by the laws of the
Commonwealth of Virginia.
(b) Any controversy or claim arising out of or relating to Employee's employment
or this Agreement shall be resolved in the courts of Fairfax County, Virginia,
and Employee hereby submits to the jurisdiction of such courts, and agrees to
accept service of process from such courts.
(c) It is agreed that in the event of any breach, violation or evasion of the
terms of this Employment Agreement, such breach, violation or evasion will
result in immediate and irreparable injury to the Company and will authorize the
Company to seek injunctive relief, including, but not limited to, any order of
specific performance, as well as all other legal or equitable remedies to which
the Company may be entitled.
11. Waiver of Breach. The waiver by the Company of a breach of any provision of
----------------
this Agreement by Employee shall not operate or be construed as a waiver of any
subsequent breach by Employee. No such waiver shall be valid unless set forth in
writing signed by an authorized officer of the Company.
12. Assignment. Employee's services are unique and personal. Accordingly,
----------
Employee may not assign any rights or delegate any duties or obligations under
this Agreement. The rights and obligations of the Company under this Agreement
shall inure to the benefit of and shall be binding upon the successors and
assigns of the Company.
6
<PAGE>
13. Severability. Any provision of this Agreement which may be determined to be
------------
unenforceable, invalid or illegal shall be deemed stricken from this Agreement
and all remaining provisions shall continue in full force and effect.
14. Entire Agreement. This Agreement supersedes all previous Employment
----------------
Agreements between Employee and the Company and contains the entire
understanding of the parties and may not be modified, amended or terminated
unless the provisions of such modification, amendment, or termination are set
forth in writing signed by all of the parties to this Agreement. This Agreement,
and any modification, amendment or termination thereof, shall be approved by
and executed on behalf or at the direction of the Company's Board of Directors.
IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement
as of November 2, 1995.
ATTEST: GRC INTERNATIONAL, INC.
/s/ T.E. McCabe By: /s/ Jim Roth
- ------------------------------------ ---------------------------
Thomas E. McCabe Jim Roth
Sr. Vice President, General Counsel & President & Chief Executive
Secretary Officer
WITNESS EMPLOYEE
/s/ Michele L. Zeck /s/ Charles C. Bream
- ------------------------------------ ---------------------------
Charles C. (Cliff) Bream
APPROVED AND RATIFIED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF
GRC INTERNATIONAL, INC.
By: /s/ Leslie B. Disharoon
---------------------------------------
Leslie B. Disharoon, Committee Chairman
7
<PAGE>
EXHIBIT A
---------
DETAILS OF EMPLOYMENT
---------------------
EMPLOYEE: Charles C. (Cliff) Bream
------------------------
ITEM 1(a) Position: Senior Vice President, General Manager - Telecom Division
---------------------------------------------------------
ITEM 1(b) Place of Employment: 1900 Gallows Road, Vienna, Virginia 22182
-----------------------------------------
ITEM 2 Effective Date of Employment Agreement: November 2, 1995
----------------
Effective Date of this Exhibit: November 2, 1995
----------------
ITEM 3(a) Gross Annual Salary: $140,000
--------
ITEM 3(b) Additional Compensation (if any):
(i) Stock options to purchase 50,000 shares of GRC International, Inc.
common stock, subject to the approval of the Compensation Committee
-----------------------------------------------------
of the Board of Directors
-------------------------
(ii) Bonus for Fiscal Year Ending June 30, 1996 as Shown in Attachment 1
-------------------------------------------------------------------
hereto
------
ITEM 4 Notice to Employee:
Charles C. (Cliff) Bream Charles C. (Cliff) Bream
-------------------------------- ---------------------------------
and/
1900 Gallows Road or 19027 Loudoun Orchard Rd.
-------------------------------- ---------------------------------
Vienna, Virginia 22182 Leesburg, Virginia 22075
-------------------------------- ---------------------------------
EMPLOYEE: GRC INTERNATIONAL, INC.
/s Charles C. Bream By: /s/ Jim Roth
- ------------------------------ ------------------------------
Charles C. (Cliff) Bream Jim Roth
President & Chief Executive
Officer
APPROVED AND RATIFIED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF
GRC INTERNATIONAL, INC.
By: /s/ Leslie B. Disharoon
----------------------------------
Leslie B. Disharoon, Committee Chairman
8
<PAGE>
ATTACHMENT 1 TO BREAM EMPLOYMENT AGREEMENT
------------------------------------------
BONUS FOR FISCAL YEAR ENDING JUNE 30, 1996
------------------------------------------
Employee shall receive the following bonus compensation based on successful
completion of the milestones indicated in the fiscal year ending June 30, 1996
("FY96"):
<TABLE>
<CAPTION>
Milestone Bonus
--------- -----
<S> <C>
1. Complete beta testing of OC-3 OSU(TM) Network Interface $1,866.67
2. Complete the OC-3 OSU(TM) Network Interface $1,866.67
3. Complete the cost reduction program $5,600.00
4. Produce a working prototype of the OC-12 OSU(TM) Network Interface $5,600.00
5. Complete an economic justification study for customer use of the
OSU(TM) Network Interface $1,866.67
6. Revise the marketing and sales plans
to include emphasis on an OEM strategy $3,733.33
7. Complete ISO-9000 certification $5,600.00
8. Produce OSU(TM) Network Interface revenues of a least $6.5 million
which are recognized in the Company's financial statements in FY96,
and, in addition, a backlog of firm purchase orders signed by both the
Company and the customer totaling at least $3.0 million at the end of FY96 $11,200.00
9. Produce OSU(TM) Network Interface revenues of at least $7.8 million
which are recognized in the Company's financial statements in FY96,
and, in addition, a backlog of firm purchase orders signed by both the
Company and the customer totaling at least $3.6 million at the end of FY96 $18,666.67
----------
MAXIMUM POTENTIAL BONUS FOR FY96: $56,000.00
-------------------------------- ----------
</TABLE>
9
<PAGE>
EXHIBIT B
---------
SCHEDULE OF INTELLECTUAL PROPERTY
---------------------------------
Employee developed or conceived prior to employment with the Company the
following Intellectual Property, as that term is defined in Section 6 of the
Employment Agreement to which this Exhibit is attached, whether or not such
Intellectual Property is the subject of a patent or patent application:
EMPLOYEE
/s/ Charles C. Bream
---------------------------
Charles C. (Cliff) Bream
11/3/95
---------------------------
(Date)
10
<PAGE>
EXHIBIT C
---------
TERMINATION STATEMENT
---------------------
In connection with the termination of my employment with the Company pursuant to
the above-referenced Employment Agreement, I hereby represent, warrant and
covenant that:
1. Upon termination of my employment relationship with the Company I did not
have in my possession and do not now have in my possession any confidential or
business property of the Company including, but not limited to, any confidential
information described in Section 5 of the aforementioned Employment Agreement,
the Company Work Product described in Section 6 of the Employment Agreement or
any testing equipment, materials, components, sub-assemblies, drawings or
blueprints.
2. I have returned or left in the possession of the Company all notebooks which
I used during my employment relationship with the Company.
3. I have returned to the Company any and all identification cards and credit
cards issued to me as an employee of the Company and any and all keys to
property of the Company, including, without limitation, offices of the Company,
Company cars, and the like.
4. I am not aware of any action or situation involving any violation of the
Company's Corporate Standards of Conduct by any employee, director, consultant
or representative of the Company, except as follows:
4. My forwarding addresses are as follows:
HOME ADDRESS BUSINESS ADDRESS
- ---------------------------------- -----------------------------------
- ---------------------------------- -----------------------------------
- ---------------------------------- -----------------------------------
- ---------------------------------- -----------------------------------
EMPLOYEE:
-----------------------------------
Charles C. (Cliff) Bream
-----------------------------------
(Date)
11
<PAGE>
Exhibit 10.21
-------------
GRC INTERNATIONAL, INC.
EMPLOYMENT AGREEMENT
(SENIOR VICE PRESIDENT & above)
THIS EMPLOYMENT AGREEMENT is made in Vienna, Virginia as of April 29, 1996 by
--------------
and between Ronald B. Alexander (hereinafter referred to in the first person ofr
-------------------
as "Employee") and GRC International, Inc., a corporation with its principal
offices at 1900 Gallows Road, Vienna, Virginia 22182 ("Company"). The term
"Company" shall also include any parent, subsidiary or affiliate of the Company.
As a condition to, and in consideration of, the Company's employment of
Employee, the parties mutually agree as follows:
1. DUTIES.
------
(a) I agree to work for the Company in the capacity set forth in item 1(a) of
Exhibit A attached hereto. My duties will include all those generally associated
with said position, subject to the direction and assignment of the Company's
Board of Directors. The duties assigned to me shall be performed at the place of
employment specified in item 1(b) of Exhibit A or at such other location as the
Board of Directors may determine is in the best interest of the Company. All of
my working time and energies shall be devoted to the foregoing duties. I will
inform the Company, in writing, if I engage in any outside business activity,
and I will obtain the prior written approval of the Company, if I engage in any
outside business activity which (i) requires the use of skills for which I was
hired by the Company or the use of skills attained during the course of my
employment with the Company or (ii) would, in the opinion of the Company,
compete with or conflict with my employment with the Company. While employed by
the Company, absent the expressed, prior written authorization of the Company's
Board of Directors, I will not, directly or indirectly, engage in any activity
competitive with or adverse to the Company's business or welfare, whether alone,
as a partner of any partnership or joint venture or as an officer, director,
employee, or holder of 5% or more of any class of stock, of any corporation.
(b) I agree that for a period of one year immediately following termination
(voluntary or otherwise) of my employment with the Company, I will not interfere
with the business of the Company by inducing an employee to leave the Company's
employment, by inducing a consultant to sever the consultant's relationship with
the Company, or by inducing a customer to sever the customer's relationship with
the Company.
(c) This Agreement cancels and replaces in their entirety any and all previous
employment agreements entered into between me and the Company or any of its
subsidiaries.
2. INTELLECTUAL PROPERTY.
---------------------
(a) In this Agreement, (i) "Intellectual Property" means any patent,
trademark, copyright, semiconductor mask right, trade secret, invention,
discovery, design, idea or improvement (whether or not any of the foregoing are
patentable, protectable by copyright, or otherwise protectable), and (ii) the
word "made", when used with "Intellectual Property", means made, devised,
developed, conceived or reduced to practice. Exhibit B to this Agreement
contains a complete list of all Intellectual Property I consider proprietary to
me, and, during my employment with the Company, I agree to update Exhibit B from
time to time as may be necessary to keep it current. I will not incorporate or
permit to be incorporated into any work performed for or on behalf of the
Company any Intellectual Property proprietary to me or any third party.
(b) I will disclose to the Company all Intellectual Property made by me, alone
or with others, during any period of employment with the Company. All such
disclosures shall be reviewed by the Company in confidence to determine any
issues which may arise.
<PAGE>
(c) I will assign to the Company all right, title and interest in and to all
Intellectual Property made at any time by me alone or with others during or
after my employment with the Company, if such Intellectual Property was made
using Company equipment, supplies, facilities, or trade secret information, or
such Intellectual Property either (i) relates at the time of conception or
reduction to practice of the invention to the Company's business, or actual or
demonstrably anticipated research or development of the Company; or (ii) results
from any work performed by me for the Company. All Intellectual Property
subject to this paragraph shall remain Company property whether or not so
disclosed or assigned to the Company. I will cooperate fully with the Company
during and after employment in accomplishing the intent of this provision and
execute such instruments and documents reasonably requested by the Company, in
order to more fully vest in the Company all ownership rights in the
Intellectual Property. In addition, I irrevocably appoint the Company and each
of its officers as my agent and attorney-in-fact to act in my name and stead to
execute and file any documents and to do all other lawfully permitted actions to
further the prosecution, issuance and enforcement of patents, copyrights and
other proprietary rights with the same force and effect as if executed and
delivered by me.
(d) The provisions of the foregoing Section 2(c) shall not apply to an
invention developed by me entirely on my own time without using Company
equipment, supplies, facilities, or trade secret information except for those
inventions that either (i) relate at the time of conception or reduction to
practice of the invention to the Company's business, or actual or demonstrably
anticipated research or development of the Company; or (ii) result from any work
performed by me for the Company.
3. PROPRIETARY INFORMATION. I understand that in the course of my employment
-----------------------
with the Company, I will be making use of, acquiring or adding to proprietary
and/or confidential information and materials of the Company or of other parties
("Proprietary Information"). I will not disclose or use any Proprietary
Information either during or after my employment with the Company, except to the
extent expressly authorized in writing by an officer of the Company. The
following are some examples of Proprietary Information, even if not marked or
identified as such:
(i) Computer software of all kinds, source and object codes, algorithms,
coding sheets, compilers, assemblers, design concepts, routines and subroutines,
and all related documents and materials;
(ii) Business practices, marketing techniques, mailing lists, purchasing
information, price lists, pricing policies, quoting procedures, customer and
prospective customer lists and information, and all materials or information
relating to the manner in which the Company does business.
(iii) Discoveries, concepts and ideas, whether or not patentable, protectable by
copyright, or otherwise protectable, trade secrets, "know how", production
processes, research and development activities, and information on products or
programs.
(iv) Financial information, cost structure, bidding strategy, salary structure,
and such other information not in the public domain as may be helpful to
competitors or harmful to the Company, its customers or employees.
(v) Any other information, materials or documents related to the business or
activities of the Company which are not generally known to others engaged in
similar businesses or activities; and
(vi) All ideas which are derived from my access to or knowledge of any of the
above.
4. CONFLICTS OF INTEREST. I have read and understood the Company's Corporate
---------------------
Standards of Conduct, and while employed by the Company, I agree to abide by
said Standards of Conduct, as the same may be amended from time to time, and to
complete the Company's Ethics Questionnaire as required by the Company from time
to time. Except as fully disclosed in a document attached to this agreement, I
am not a party to any agreement or understanding with any other person or
business, nor am
-2-
<PAGE>
I subject to any other legal restriction or obligation, which would in any way
prohibit, impede or hinder my employment with the Company or the performance of
my duties in the course of such employment.
5. COMPENSATION.
------------
(a) During the term of my employment hereunder, the Company shall pay me the
annual salary set forth in Exhibit A, Item 3(a) ("Gross Annual Salary").
(b) In addition to the Gross Annual Salary, I shall be entitled to receive the
additional compensation, if any, specified in Exhibit A, Item 3(b) ("Additional
Compensation").
6. DISABILITY. If I am is unable to fulfill the duties of my position by
----------
reason of any illness, incapacity or disability, my salary shall be payable for
only 90 days following the onset of such illness, incapacity or disability,
provided, however, that if I (i) have applied for insurance benefits under the
Company's long-term disability policy during said 90 day period, and (ii) have
not yet begun to receive payments under said policy during said 90 day period,
then my salary shall continue to be payable for up to 180 days following the
onset of such illness, incapacity or disability until I begin to receive such
payments. During the foregoing 90 day period (or 180 day period, if applicable),
my salary, to the extent not covered by the Company's short-term disability
benefits, shall be paid through the use of my sick leave, if any, accumulated
prior to January 1, 1994, but if such sick leave is or becomes exhausted, my
salary shall nevertheless be paid for the 90 day period (or 180 day period, if
applicable). If I shall return to full employment and full discharge of my
duties during the term of this Agreement, full compensation shall be
prospectively reinstated for any remaining term of this Agreement.
7. TERMINATION AND SEVERANCE.
-------------------------
(a) Subject to Section 7(f) regarding a Change of Control, this Agreement may
be terminated by either party without cause on six (6) months written notice to
the other party. Subject to Section 7(f) regarding a Change of Control, this
Agreement may be terminated by the Company immediately for cause by written
notice to me. For purposes of this Section 7, cause for termination shall exist
in the event of my dishonesty, chronic absenteeism, conviction of a felony,
conviction of a misdemeanor involving moral turpitude, or material breach of
this Agreement.
(b) To the maximum extent permitted by law, I hereby expressly authorize the
Company in advance upon my termination to deduct from my final paycheck(s) and
from my paid time off (PTO) check all amounts I owe the Company (including but
not limited to repayment of advances, loans or any other obligations).
(c) Upon termination of employment, I will execute and comply with the
Employee Termination Certificate attached hereto as Exhibit C, and deliver to
the Company all notes, data, tapes, lists, reference materials, sketches,
drawings, memoranda, records and other documents which are in my possession or
control belonging to the Company or relating to its business.
(d) Termination of this Agreement will not relieve me from my obligations
under Sections 1(b), 2 and 3 of this Agreement, which, by their respective
terms, continue beyond the termination of this Agreement.
(e) In the event of my death, this Agreement will terminate and all accrued
and unpaid compensation and expenses, less all amounts I owe the Company
(including but not limited to repayment of advances, loans or any other
obligations), will be payable to my estate.
(f) Notwithstanding any other provision of this Agreement to the contrary, at
any time during the twelve-month period following a Change of Control (as
hereinafter defined), (i) if the Company, with or without cause, terminates my
employment or gives me notice of termination, or (ii) if I terminate my
employment or give notice of termination by reason of a material breach by the
Company of the terms of
-3-
<PAGE>
this Agreement (including but not limited to the terms set forth on Exhibit A
hereto), then I shall receive, in addition to any other compensation provided
for in this Agreement, a lump-sum severance payment in an amount equal to the
Gross Annual Salary, less any income, excise, employment or other tax
withholdings which the Company is required by law to deduct therefrom.
(g) For purposes of this Agreement, a Change in Control shall mean the
satisfaction of the conditions set forth in any one of the following paragraphs:
(i) any person (as defined in Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") as modified and used in
Sections 13(d) and 14(d) thereof, except that neither (A) the Company or any of
------
its subsidiaries, (B) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its subsidiaries, (C) an
underwriter temporarily holding securities pursuant to an offering of such
securities, nor (D) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company shall be included in such term) (a "Person")
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such Person any securities
acquired directly from the Company or its affiliates) representing 25% or more
of the combined voting power of the Company's then outstanding securities; or
(ii) during any period of up to two consecutive years (not including
any period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board of Directors of the Company (the
"Board") and any new director (other than a director designated by a Person who
has entered into an agreement with the Company to effect a transaction described
in clause (i), (iii) or (iv) of this paragraph) whose election by the Board or
nomination for election by the Company's stockholders was approved by a vote of
at least two thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority thereof; or
(iii) the shareholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than (A) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity), in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, at
least 75% of the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation, or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no Person
acquires more than 50% of the combined voting power of the Company's then
outstanding securities; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all the Company's assets.
8. NOTICE.
------
(a) Any notice to be given to me under this Agreement shall be in writing
and delivered by (i) registered or certified mail, return receipt requested;
(ii) express courier; or (iii) hand-delivery, at an address specified for me in
this Agreement or in any Exhibit hereto or at such other address of which
written notice has been given to the Company by me by any of the foregoing
means.
(b) Any notice to be given to the Company under this Agreement shall be
in writing and delivered by any of the means specified in subsection (a) above,
to the President, with a copy to the Senior Vice
-4-
<PAGE>
President, General Counsel & Secretary, GRC International, Inc., 1900 Gallows
Road, Vienna, Virginia 22182.
9. DISPUTES.
--------
(a) This Agreement has been executed in and shall be governed by the laws of
the Commonwealth of Virginia.
(b) Any controversy or claim arising out of or relating to Employee's
employment or this Agreement shall be resolved in the courts of Fairfax County,
Virginia, and Employee hereby submits to the jurisdiction of such courts, and
agrees to accept service of process from such courts.
(c) I understand and agree that the Company will suffer irreparable harm if I
breach any of my obligations under this agreement and that monetary damages may
be inadequate to compensate for such breach. Accordingly, in the event of a
breach or threatened breach by me, the Company, in addition to and not in
limitation of any other rights, remedies or damages available to it at
law or in equity or otherwise, shall be entitled to a injunctive relief
preventing any such breach by myself or by my partners, agents, representatives,
servants, employers, employees and/or any and all persons directly or indirectly
acting for or with me.
10. ASSIGNMENT. My services are unique and personal. Accordingly, I may not
----------
assign any rights or delegate any duties or obligations under this Agreement.
The rights and obligations of the Company under this Agreement shall inure to
the benefit of and shall be binding upon the successors and assigns of the
Company.
11. ENTIRE AGREEMENT. This agreement, together with all documents attached to
----------------
this agreement or specifically referred to in it, contains the entire agreement
and understandings by and between the Company and me with respect to the
covenants described in this agreement, and any representation, promise,
agreement or understanding, written or oral, not contained in this agreement
shall be of no force or effect. No change or modification of this agreement
shall be valid of binding unless the change or modification is in writing and
signed by the parties to this agreement. Any representation contrary to this
agreement, express or implied, written or oral, is hereby disclaimed. Nothing
in this agreement shall obligate the Company to employ me for any length of
time. No waiver of any provision of this agreement shall be valid unless it is
in writing and signed by the party against whom such waiver is sought to be
enforced, and no waiver of any provision shall be deemed a waiver of any other
provision or a waiver of the same provision at any other time. This agreement
supersedes all previous agreements between the Company and me.
12. SEVERABILITY. Any provision of this agreement which may be determined to be
------------
unenforceable, invalid or illegal shall be deemed stricken from this agreement
and all remaining provisions shall continue in full force and effect.
13. REASONABLENESS OF RESTRICTIONS. I have carefully read and considered the
------------------------------
provisions of this agreement and, having done so, agree that the restrictions
set forth in this agreement are fair and reasonable and are reasonably required
for the Company's protection. This agreement shall be construed fairly as to
all parties and not in favor of or against any party, regardless of which party
prepared this agreement. In the event that, notwithstanding the foregoing, any
part of this agreement shall be held to be invalid or unenforceable, the
remaining parts of the agreement shall nevertheless continue to be valid and
enforceable as though the invalid or unenforceable parts had not been included
in the agreement. If any provision is held invalid or unenforceable with
respect to particular circumstances, it shall nevertheless remain in full force
and effect in all other circumstances.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this agreement as of the date
first set forth above.
ATTEST: GRC INTERNATIONAL, INC.
/s/ T.E. McCabe By: /s/ Jim Roth
- -------------------------------- ---------------------------------
Thomas E. McCabe Jim Roth
Sr. Vice President, General President & Chief Executive
Counsel & Secretary Officer
WITNESS: EMPLOYEE:
(SIGNATURE APPEARS HERE) /s/ Ronald B. Alexander
- -------------------------------- -------------------------------------
(Signature)
/s/ Ronald B. Alexander
-------------------------------------
(Please print name)
APPROVED AND RATIFIED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
OF GRC INTERNATIONAL, INC.
By: /s/ Leslie B. Disharoon
---------------------------------------
Leslie B. Disharoon, Committee Chairman
-6-
<PAGE>
EXHIBIT A
---------
DETAILS OF EMPLOYMENT
---------------------
EMPLOYEE: Ronald B. Alexander
ITEM 1(a) Position: Senior Vice President, Treasurer & Chief Financial Officer
ITEM 1(b) Place of Employment: 1900 Gallows Road, Vienna, Virginia 22182
ITEM 2 Effective Date of Employment Agreement: April 29, 1996
Effective Date of this Exhibit: April 29, 1996
ITEM 3(a) Gross Annual Salary: One hundred sixty thousand dollars and no/100
($160,000.00)
ITEM 3(b) Additional Compensation (if any): One-time bonus of forty thousands
dollars ($40,000) payable October 29, 1996.
Additional compensation (if any) to be
determined annually by the President and CEO
of GRC International, Inc.
ITEM 4 Notice to Employee:
1900 Gallows Road 3122 Miller Heights Road
------------------------------ ------------------------------
and/
Vienna, Virginia 22182 or Oakton, Virginia 22124
------------------------------ ------------------------------
------------------------------ ------------------------------
EMPLOYEE: GRC INTERNATIONAL, INC.
[SIGNATURE APPEARS HERE] By: /s/ Jim Roth
-----------------------------
Jim Roth
President & Chief Executive
Officer
APPROVED AND RATIFIED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF
GRC INTERNATIONAL, INC.
By: /s/ Leslie B. Disharoor
---------------------------------------------
Leslie B. Disharoor, Committee Chairman
-7-
<PAGE>
EXHIBIT B
---------
SCHEDULE OF INTELLECTUAL PROPERTY
---------------------------------
I developed or conceived prior to employment with the Company, and consider
proprietary to me, the following intellectual Property, as that term is defined
in the Employment Agreement to which this Exhibit is attached:
EMPLOYEE
/s/ Ronald B. Alexander
---------------------------
(signature)
/s/ Ronald B. Alexander
---------------------------
(Please print name)
April 29, 1996
---------------------------
(Date)
-8-
<PAGE>
EXHIBIT C
---------
TERMINATION STATEMENT
---------------------
(to be signed upon termination of employment)
1. I,_____________________________________(employee's name), am cognizant of
my legal obligations, as stated in a certain EMPLOYMENT AGREEMENT dated ________
_________________________ between myself and GRC International, Inc. (together
with its subsidiaries, the "Company"), and I hereby specifically reaffirm all of
the terms stated in that agreement.
2. I hereby certify that all materials related directly or indirectly to my
employment with the Company have been returned to the Company. I further certify
that no computer listings, programs, object codes, source codes, product
development guides, flowcharts, test equipment, drawings, blueprints or other
materials owned by the Company or provided to or used by me in connection with
any employment at the Company, whether in machine-readable form or otherwise,
have been retained by me or given to any other third person or entity in
anticipation of my employment termination or for any other reason, and I also
certify that none of those materials will be removed from the Company's premises
by me.
3. I also certify that I have returned all company identification and credit
cards issued to me and all keys to Company and/or customer property that have
been in my possession.
4. I am not aware of any action or situation involving any violation of the
Company's Corporate Standards of Conduct by any employee, director, consultant
or representative of the Company, except as follows:
5. My forwarding addresses are as follows:
HOME ADDRESS BUSINESS ADDRESS
___________________________ ___________________________
___________________________ ___________________________
___________________________ ___________________________
___________________________ ___________________________
EMPLOYEE:
________________________________
(Signature)
________________________________
(Please print name)
________________________________
(Date)
-9-
<PAGE>
EXHIBIT 10.26
-------------
PATENT APPLICATION ASSIGNMENT AND ROYALTY AGREEMENT
---------------------------------------------------
This Patent Application Assignment and Royalty Agreement (the "AGREEMENT") is
entered into as of October 15, 1993, by and among SWL Inc., a Virginia
corporation with its principal offices at 1900 Gallows Road, Vienna, Virginia
22182 ("COMPANY"), and Robert E. Pfister and William D. Kight, individual
persons having their principal place of business at 9705 Patuxent Woods Drive,
#21, Columbia, Maryland 21046 (collectively, Messers. Pfister and Kight are
hereinafter referred to as "EMPLOYEES").
RECITALS
--------
A. EMPLOYEES jointly claim to be the true and first inventors the OPTICAL
SERVICE UNIT (as hereinafter defined) and the owners of the PATENT APPLICATION
(as hereinafter defined), and EMPLOYEES jointly claim to have filed the
PATENT APPLICATION prior to their employment with COMPANY.
B. COMPANY desires that EMPLOYEES assign to COMPANY the PATENT APPLICATION and
the PATENT RIGHTS (as hereinafter defined).
C. EMPLOYEES desire that COMPANY pay EMPLOYEES the PURCHASE PRICE (as
hereinafter defined) and a ROYALTY (as hereinafter defined).
D. Simultaneously with the execution of this Agreement, COMPANY is entering
into an Employment Agreement and a Nondisclosure Agreement with each of the
EMPLOYEES (the "Employment Agreements" and the "Nondisclosure Agreements").
E. Simultaneously with the execution of this Agreement, COMPANY is entering
into a Purchase and Sale Agreement with PKE, Inc., a Maryland corporation of
which EMPLOYEES are the principals (the "Purchase and Sale Agreement").
F. As a material inducement to the respective parties to enter into the
Employment Agreements and the Nondisclosure Agreements, and to COMPANY to enter
into the Purchase and Sale Agreement, the parties are entering into this
Agreement under the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, and of the mutual
promises contained herein, the parties agree as follows:
ARTICLE 1. - DEFINITIONS
------------------------
For purposes of this Agreement, the following terms shall have the definitions
indicated:
1.1 DISTRIBUTION DATE shall mean the earlier of (i) the issuance of the UNITED
-----------------
STATES PATENT, or (ii) the third (3rd) anniversary of the filing of the PATENT
APPLICATION.
1.2 NET PROFITS shall mean the worldwide revenues collected by COMPANY from the
-----------
sale or lease of the OPTICAL SERVICE UNIT, less the following general categories
of expenses incurred or accrued on or after the date of this Agreement,
calculated on a worldwide basis in accordance with the normal accounting and
allocation procedures of COMPANY and its parent corporation, GRC International,
Inc. ("GRCI"):
1.2.1. Costs of revenues
<PAGE>
1.2.2. General, administrative and marketing expenses, including, but not
limited to, all commissions and taxes other than income taxes;
1.2.3. Research and development;
1.2.4. Depreciation;
1.2.5. Interest; and
1.2.6. All other expenses related to the OPTICAL SERVICE UNIT anywhere in
the world, including but not limited to patent and any other costs
or reasonable accruals or reserves associated with COMPANY's
protection or prosecution of the PATENT RIGHTS or reasonably taken
in anticipation of possible legal or other costs associated with
the manufacture, assembly, use, sale or leasing of the OPTICAL
SERVICE UNIT, or license fees or other costs paid by COMPANY to
third parties.
Income taxes shall not be included in the calculation of NET PROFITS.
1.3. OPTICAL SERVICE UNIT shall mean the device invented by EMPLOYEES which is
--------------------
described in the PATENT APPLICATION.
1.4. PATENT shall mean any validly issued, unexpired patent disclosing the
------
OPTICAL SERVICE UNIT which may hereafter be issued with respect to the PATENT
APPLICATION or with respect to any other patent application included in the
PATENT RIGHTS.
1.5. PATENT APPLICATION shall mean an application for a United States patent,
------------------
filed on August 18, 1993, for the OPTICAL SERVICE UNIT under the title of
"Method and Apparatus for the Monitoring and Demarcation of Synchronous Optical
Networks", Serial Number 08/108,338.
1.6. PATENT RIGHTS shall mean the PATENT APPLICATION and all rights, both within
-------------
and without the United States, arising from the PATENT APPLICATION and from any
patents which may be issued with respect to the PATENT APPLICATION, and all
rights, both within and without the United States, arising from patent
applications and resulting patents claiming priority from or based on the PATENT
APPLICATION, and all divisions, reissues and extensions thereof.
1.7. PURCHASE PRICE shall mean Forty Thousand Dollars ($40,000) in cash.
--------------
1.8. ROYALTY shall mean an aggregate of sixteen-and-one-half percent (16 1/2%)
-------
of the cumulative NET PROFITS carrying forward any cumulative losses calculated
in accordance with Section 1.2 above. Such royalty shall be paid by COMPANY to
EMPLOYEE, dividing such royalty equally between each EMPLOYEE so that each
receives eight-and-one-quarter percent (8 1/4%) of the NET PROFITS, less any
withholding or other taxes which may be required by law.
1.9. TERMINATION DATE shall mean the earlier of (i) the expiration of the UNITED
----------------
STATES PATENT, or (ii) the twentieth (20th) anniversary of the filing of the
PATENT APPLICATION.
2
<PAGE>
1.10. UNITED STATES PATENT shall mean any validly issued, unexpired patent
--------------------
disclosing the OPTICAL SERVICE UNIT which may hereafter be issued in the United
States of America with respect to the PATENT APPLICATION.
ARTICLE 2. -CONDITION PRECEDENT
-------------------------------
2.1. This Agreement shall automatically be rendered null and void if the
Employment Agreements, the Nondisclosure Agreements and the Purchase and Sale
Agreement are not executed and delivered by the signatories thereto
simultaneously with the execution and delivery of this Agreement.
ARTICLE 3. -ASSIGNMENT OF PATENT APPLICATION AND PATENT RIGHTS
--------------------------------------------------------------
3.1. EMPLOYEES hereby assign irrevocably to COMPANY all rights to the OPTICAL
SERVICE UNIT, the PATENT, the PATENT APPLICATION and the PATENT RIGHTS.
3.2. Simultaneous with the execution of this Agreement, EMPLOYEES shall
execute the form of assignment set forth in Exhibit A attached hereto. Upon
COMPANY's request, EMPLOYEES shall execute such other forms of assignment or
other documents which may be necessary or desirable for the transfer or
prosecution of the PATENT APPLICATION and the PATENT RIGHTS and shall cooperate
in the obtaining of any legalization or notarization of any such documents.
3.3. EMPLOYEES hereby further agree to give to COMPANY all information and
assistance in their power to facilitate the obtaining of PATENTS and to sign
execute or deliver all further documents forms and papers required to be
produced or obtained by COMPANY in connection with the PATENT RIGHTS.
3.4. Upon COMPANY's request, EMPLOYEES shall deliver to COMPANY all documents
and correspondence relating to the PATENT RIGHTS but may retain copies thereof.
3.5 In the event that any legal or other difficulty should arise in obtaining
the acceptance of COMPANY as assignee of any of the PATENT RIGHTS with the right
to be substituted as applicant in any country in place of EMPLOYEES, so that it
is necessary for EMPLOYEES, to pursue the subject application and obtain grant
of letters patent thereon, EMPLOYEES, if requested by COMPANY, will, at the
expense of COMPANY, pursue such application and, when the patent has been
granted, enter into such further form of assignment or other document as is
necessary or desirable to vest in COMPANY full legal right title and interest in
such patents.
3.6. EMPLOYEES hereby further agree that in the event that they shall make any
improvement to the OPTICAL SERVICE UNIT, they will forthwith communicate the
particulars thereof to COMPANY and execute such documents as may be necessary or
desirable to transfer all rights in said improvements to COMPANY.
3.7. If COMPANY terminates the employment of both EMPLOYEES without "cause" (as
that term is defined in Section 7(a) of the Employment Agreements), then, after
EMPLOYEES' repayment to COMPANY of the PURCHASE PRICE plus interest at an annual
rate of seven percent (7%), compounded monthly, COMPANY shall promptly take such
actions as may be required of it in order to assign the PATENT RIGHTS back to
EMPLOYEES; provided, however, that in such event COMPANY and all parties to whom
COMPANY has sold or leased
3
<PAGE>
or contracted to sell or lease the OPTICAL SERVICE UNIT or other products
containing the OPTICAL SERVICE UNIT (COMPANY and such parties to whom COMPANY
has sold or leased are hereinafter referred to collectively as "LICENSEES")
Shall nevertheless have a fully-paid up and transferable license of the PATENT
RIGHTS in order that LICENSEES may sell or lease the affected units of the
OPTICAL SERVICE UNIT and other products containing the OPTICAL SERVICE UNIT, and
provided, further, that all parties which, at the time of the assignment of the
PATENT RIGHTS, are using or have contracted to use the OPTICAL SERVICE UNIT or
other products containing the OPTICAL SERVICE UNIT (such parties are hereinafter
referred to as "USERS") shall, nevertheless, have a fully-paid up and
transferable license to use the affected units of OPTICAL SERVICE UNIT and
other products containing the OPTICAL SERVICE UNIT. For purpose of this
section, the transfer of one or both EMPLOYEES to any affiliate of COMPANY shall
not be considered a termination of EMPLOYEES' employment.
ARTICLE 4. - PAYMENT OF PURCHASE PRICE
--------------------------------------
4.1. Simultaneously with the execution of this Agreement, COMPANY shall pay the
PURCHASE PRICE jointly to EMPLOYEES.
ARTICLE 5. - PAYMENT OF ROYALTIES
---------------------------------
5.1. Until the DISTRIBUTION DATE, COMPANY shall calculate, but not pay the
ROYALTY.
5.2. Within thirty (30) days after the DISTRIBUTION DATE, COMPANY shall pay
EMPLOYEES the ROYALTIES which shall have accumulated prior to the DISTRIBUTION
DATE.
5.3. After the DISTRIBUTION DATE but prior to the TERMINATION DATE, COMPANY
shall pay EMPLOYEES the ROYALTY within thirty (30) days after the closing of
COMPANY's financial records for each of its fiscal quarters.
5.4. After the TERMINATION DATE, COMPANY shall have no further obligation to
pay any further ROYALTIES to EMPLOYEES.
5.5. COMPANY agrees that it will at all times keep complete, true and correct
books of account relating to the OPTICAL SERVICE UNIT containing a current
record of sales, leases and other data in sufficient detail to enable the
ROYALTIES to be computed and verified. COMPANY shall permit EMPLOYEES to inspect
said books of account at reasonable hours, at reasonable intervals, and with
reasonable advance written notice to COMPANY in each instance. Upon the written
request of both EMPLOYEES to COMPANY, COMPANY shall instruct its independent
certified public accountants to inspect said books of account, and the cost of
such accountants' inspection shall be borne by EMPLOYEES, and COMPANY shall
subtract such cost from the ROYALTIES otherwise due, unless such accountants
discover underpayments for any calendar quarter in excess of ten percent (10%)
of the ROYALTIES due for such quarter, in which event COMPANY shall bear the
cost of such accountants' inspection.
ARTICLE 6. - REPRESENTATIONS AND WARRANTIES; INDEMNITY
------------------------------------------------------
6.1. EMPLOYEES hereby warrant that:
4
<PAGE>
6.1.1. There are no outstanding liabilities in respect of the PATENT
APPLICATION;
6.1.2. To the best of their knowledge, they are the true and first
inventors of the OPTICAL SERVICE UNIT and there are no lawful grounds of
objection to the grant of a patent with respect to the PATENT APPLICATION;
6.1.3. To the best of their knowledge, the OPTICAL SERVICE UNIT has not
been used or published prior to the date of the PATENT APPLICATION and
that the OPTICAL SERVICE UNIT is fully described in the PATENT
APPLICATION;
6.1.4. To the best of their knowledge, the COMPANY's manufacture,
assembly, use, sale or leasing of the OPTICAL SERVICE UNIT, as disclosed
in the PATENT APPLICATION, will not infringe any proprietary right
(including any patent, copyright, trademark or trade secret) or any other
entity;
6.1.5. To the best of their knowledge, neither of the EMPLOYEES has, nor
has any other person, done or omitted any act whereby, the PATENT RIGHTS
or the right to obtain any PATENT is or will be impaired, or whereby the
conditions or circumstances affecting the validity of the PATENT RIGHTS or
of any PATENT is or will be impaired;
6.1.6. They have not prior to the date hereof assigned or pledged or
agreed to assign or pledge the PATENT APPLICATION or any rights thereto or
relating to the OPTICAL SERVICE UNIT;
6.1.7. They are not under any service or other agreement with any other
person whereby they are obliged to give such person any rights in the
OPTICAL SERVICE UNIT, the PATENT APPLICATION or any other of the PATENT
RIGHTS.
6.2. EMPLOYEES will indemnify and defend COMPANY from any claim, liability
and expense, including attorneys fees, arising out of any breach of any of the
foregoing representations and warranties, it being noted that most of such
representations and warranties are made only to the best of EMPLOYEES'
knowledge.
ARTICLE 7. - MISCELLANEOUS
--------------------------
7.1. Force Majeure. The parties shall not be liable for any failure to perform
-------------
any obligation hereunder when such failure arise from any acts of public
enemies, acts of any local, state or national government or of any governmental
agency, labor disputes, riots and strikes.
7.2. Successors and Assigns. No party shall assign any of its rights or
----------------------
obligations under this Agreement without the prior written consent of the other
party hereto, which consent shall not be unreasonably withheld. In the event
any party hereto is merged or consolidated with any third party, this Agreement
shall inure to the benefit of and be binding on the surviving entity of such a
merger or consolidation. In the event of the death of an EMPLOYEE, any ROYALTY
otherwise payable to such EMPLOYEE shall be payable to his estate.
7.3. Headings. The article and paragraph headings contained in this Agreement
--------
are for reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
5
<PAGE>
7.4. Final Expression. This Agreement is intended by the parties as a final
----------------
expression of their agreement and is intended also as a complete and exclusive
statement of the terms of their agreement.
7.5. Severability. If any one or more provisions of this Agreement should be
------------
held to be unenforceable in any respect for any reason under the laws of any
jurisdiction, such unenforceability shall not affect any other provision of this
Agreement, and all other provisions of this Agreement shall remain in full force
and effect. Such unenforceable provision or provisions shall be void ab initio
---------
with respect to such jurisdiction.
7.6. Waivers. No waiver of any of the provisions of this Agreement shall be
-------
effective unless set forth in a written instrument executed by the waiving
party. No waiver of any of the provisions of this Agreement shall be deemed to
or shall constitute a waiver of any other provision hereof nor shall such waiver
constitute a continuing waiver.
7.7. Notice. Any notice or other communication required or permitted to be
------
given under this Agreement shall be delivered in writing by mail or courier, or
given by telefax. Any such notice shall be effective (i) if delivered in writing
by mail or courier, when delivered at the appropriate party's address set forth
below, (ii) if given by fax, when transmitted to the fax number specified below,
provided the sender's fax machine generates proof of transmission. If by any of
such means a different address or number shall have been designated, then that
address or number shall be used instead of the address or number set forth
below.
If to COMPANY:
- -------------
SWL Inc.
1900 Gallows Road
Vienna, Virginia 22182
Attention: The President
Fax: (703) 847-6592
If to Mr. Pfister:
- -----------------
Robert E. Pfister
14564 Black Ankle Road
Mt. Airy, Maryland 21771
Tel.: (301) 696-1902
If to Mr. Kight:
- ---------------
William D. Kight
3045 Patuxent Overlook Court
Ellicott City, Maryland 21042
Tel.: (410) 461-0081
7.8. Counterparts: Effectiveness. This Agreement may be executed in two (2) or
---------------------------
more counterparts, each of which shall be deemed to be an original for all
purposes. This Agreement and any amendments hereto shall become effective when
each party has received notice in person or by telefax of a duly executed
signature page that such counterparts have been signed by the other party.
6
<PAGE>
7.9. Amendments. Any amendments, revisions or modifications to this Agreement
----------
must be in writing and must be signed by all the parties hereto.
7.10. Joint and Several Liability. The obligations of EMPLOYEES under this
---------------------------
Agreement and any associated liability shall be joint and several.
ARTICLE 8. - DISPUTES AND LAW APPLICABLE
----------------------------------------
8.1. Any and all disputes arising out of or in connection with this Agreement
or any provision thereof shall be finally settled under the rules of arbitration
of the American Arbitration Association by one (1) arbitrator appointed in
accordance with its rules. The place of arbitration shall be Vienna, Virginia,
and the proceedings shall be conducted in the English language. The arbitrator's
award shall, in addition to dealing with the merits of the case, fix the costs
of the arbitration and decide which of the parties shall bear the costs and
reasonable legal fees and expenses of the parties, or in what proportions the
said costs, fees and expenses shall be borne by the parties. If enforcement of
the arbitrator's award is required, the cost of enforcement shall be borne by
the party against which enforcement is sought.
8.2. This Agreement shall be construed in accordance with and governed by the
laws of the Commonwealth of Virginia, U.S.A. without regard to conflict of laws.
IN WITNESS WHEREOF the parties have executed this Agreement as of the date first
set forth above.
SWL INC.
By: /s/ Joseph J. Eash III
-------------------------------
Joseph J. Eash III
President and Chief Executive Officer
ROBERT E. PFISTER
/s/ Robert E. Pfister
- ----------------------------------
WILLIAM D. KIGHT
/s/ William D. Kight
- ----------------------------------
7
<PAGE>
EXHIBIT A
ASSIGNMENT
WHEREAS I/We, the below named inventor(s), [hereinafter referred to as
Assignor(s)], have made an invention entitled: Method and Apparatus for the
Monitoring and Demarcation of Synchronous Optical Networks for which I/We
executed an application for United States Letters Patent concurrently herewith
or filed an application for United States Letters patent on August 18, 1993
(Serial No. 08/108,338);and
WHEREAS,
-----------------------------------------------------------------
(Full Name of Assignee)
a corporation of
--------------------------------------------------------------
(State or Country of Incorporation)
whose post office address is
--------------------------------------------------
- ------------------------------------------------------------------------------
(hereinafter referred to as Assignee), is desirous of security the entire right,
title and interest in and to this invention in all countries throughout the
world, and in and to the application for United States Letters Patent to be
issued upon this application;
NOW THEREFORE, be it known that for and in consideration of the sum of One
Dollar ($1.00) in hand paid and other good and valuable consideration the
receipt of which from assignee is hereby acknowledged, I/We, as assignor(s),
have sold, assigned, transferred, and set over, and do hereby sell, assign,
transfer, and set over unto the assignee, its lawful successors and assigns,
my/our entire right, title, and interest in and to this invention and this
application, and all divisions, and continuations thereof, and all Letters
Patent of the United States which may be granted thereon, and all reissues
thereof, and all rights to claim priority on the basis of such application, and
all applications for Letters Patent which may hereafter be filed for this
invention in any foreign country and all Letters Patent which may be granted on
this invention in any foreign country, and all extensions, renewals, and
reissues thereof; and I/We hereby authorize and request the Commissioner of
Patents and Trademarks of the United States and any official of any foreign
country whose duty it is to issue patents on applications as described above, to
issue all Letters Patents for this invention to assignee, its successors and
assigns, in accordance with the terms of this Assignment;
AND, I/WE HEREBY covenant that I/We have the full right to convey the
interest assigned by this Assignment, and I/We have not executed and will not
execute any agreement in conflict with this Assignment.
AND I/WE HEREBY further covenant and agree that I/We will, without further
consideration, communicate with assignee, its successors and assigns, any facts
known to me/us respecting this invention, and testify in any legal proceeding,
sign all lawful papers when called upon to do so, execute and deliver any and
all papers that may be necessary desirable to perfect the title to this
invention in said assignee, its successors and assigns, execute all divisional,
continuation, and reissue applications, make all rightful oaths and generally do
everything possible to aid assignee, its successors and assigns, to obtain and
enforce proper patent protection for this invention in the United States and any
foreign country, it being understood that any expense incident to the execution
of such papers shall be borne by the assignee, its successors and assigns.
IN TESTIMONY WHEREOF, I/We have hereunto set our hands.
<TABLE>
<CAPTION>
------------------------------------------
<S> <C>
County of Fairfax ) 1. FULL NAME OF SOLE OR FIRST ASSIGNOR
--------------------
) ss. William D. Kight
------------------------------------------
State of Virginia ) ADDRESS
-------------------
3045 Patuxent Overlook Court
Subscribed and sworn to before me this 15th day Ellicott City, Maryland 21042
---- ------------------------------------------
of October , 1993. FIRST ASSIGNOR'S SIGNATURE
------------------------------- --
/s/Michele L. Zeck Notary Public /s/ William W. Kight
- ------------------------ ------------------------------------------
My Commission Expires Dec, 31 ,1994 DATE
--------- October 15, 1993
SEAL ------------------------------------------
County of Fairfax ) ------------------------------------------
-------------------- ss. 2. FULL NAME OF SECOND ASSIGNOR, IF ANY
)
Robert E. Pfister
State of Virginia ) ------------------------------------------
-------------------- ADDRESS
Subscribed and sworn to before me this 15th day 14564 Black Ankle Road
---- Mt. Airy, Maryland 21771
of October , 1993. ------------------------------------------
------------------------------- -- SECOND ASSIGNOR'S SIGNATURE
/s/Michele L. Zeck Notary Public
- ------------------------ /s/ Robert E. Pfister
My Commission Expires Dec, 31 ,1994 ------------------------------------------
--------- DATE
SEAL October 15, 1993
------------------------------------------
County of ) ss.
-------------------- ------------------------------------------
) 3. FULL NAME OF THIRD ASSIGNOR, IF ANY
State of )
-------------------- ------------------------------------------
ADDRESS
Subscribed and sworn to before me this day
----
of , 19 .
------------------------------- -- ------------------------------------------
Notary Public THIRD ASSIGNOR'S SIGNATURE
- ------------------------
SEAL ------------------------------------------
DATE
------------------------------------------
</TABLE>
<PAGE>
Exhibit 11
----------
GRC International, Inc.
Statement of Computation of Earnings per Share
(in thousands except for per share amounts)
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
PRIMARY
Weighted Average Number of Shares of Common
Stock Outstanding 9,172 9,001 9,038
Net effect of Dilutive Stock Options
Based on the Treasury Stock Method - 392 388
--------------------------------------------
Weighted Average Shares Outstanding 9,172 9,393 9,426
--------------------------------------------
Net Income (loss) Before Cumulative Effect
of Accounting Change (17,637) 5,030 6,113
Cumulative Effect of Accounting Change - - 1,000
---------------------------------------------
Net Income (loss) (17,637) 5,030 7,113
---------------------------------------------
Per Share Amount:
Before Cumulative Effect of Accounting Change ($1.92) $0.54 $0.65
From Cumulative Effect of Accounting Change $0.00 $0.00 $0.11
---------------------------------------------
Net Income (loss) ($1.92) $0.54 $0.76
---------------------------------------------
FULLY DILUTED
Weighted Average Number of Shares of Common
Stock Outstanding 9,172 9,001 9,038
Net effect of Dilutive Stock Options
Based on the Treasury Stock Method 490 392 388
-------------------------------------------
Weighted Average Shares Outstanding 9,662 9,393 9,426
--------------------------------------------
Net Income (loss) Before Cumulative Effect
of Accounting Change (17,637) 5,030 6,113
Cumulative Effect of Accounting Change - - 1,000
-------------------------------------------
Net Income (loss) (17,637) 5,030 7,113
-------------------------------------------
Per Share Amount:
Before Cumulative Effect of Accounting Change ($1.83) $0.54 $.065
From Cumulative Effect of Accounting Change $0.00 $0.00 $0.11
------------------------------------------
Net Income (loss) ($1.83) $0.54 $0.76
------------------------------------------
</TABLE>
<PAGE>
Exhibit 21
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SUBSIDIARIES OF REGISTRANT
--------------------------
As of June 30, 1996, the Registrant had no significant active subsidiaries.
