<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [_]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
GRC INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
CILLUFFO ASSOCIATES, L.P.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
----------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
PRELIMINARY COPY August 16, 1999
PROXY STATEMENT
OF CILLUFFO ASSOCIATES, L.P.
IN CONNECTION WITH THE
1999 ANNUAL MEETING OF STOCKHOLDERS
OF GRC INTERNATIONAL, INC.
This Proxy Statement is being furnished to stockholders of GRC International,
Inc. ("GRCI" or the "Company") in connection with a solicitation by Cilluffo
Associates, L.P. ("Cilluffo Associates") and the other Participants described
below under "Certain Information Concerning Participants in the Solicitation."
Cilluffo Associates believes that Cilluffo Associates and the other Participants
(together, "we" or the "Cilluffo Associates Group") collectively currently
constitute the largest holders of shares ("Shares") of the Company's common
stock, par value $.10 per share ("Common Stock"). The Cilluffo Associates Group
owns, in the aggregate, 17.1% of the Company's outstanding Shares. This Proxy
Statement is for use at the 1999 Annual Meeting of Stockholders of the Company
and at any adjournments thereof (the "1999 Annual Meeting"). According to
Section 2 of Article II of the Company's Bylaws (the "Bylaws"), an annual
meeting of stockholders shall be held on the first Thursday of November (i.e.,
November 4, 1999) at 1:30 p.m. In the event the 1999 Annual Meeting is not held
on such date, such Bylaw states that the Company's Board of Directors (the
"Board") shall cause a meeting in lieu thereof to be held as soon thereafter as
is convenient. The Company has not yet announced the date, time, place or the
record date (the "Record Date") of the 1999 Annual Meeting, but the Cilluffo
Associates Group expects that the Company will provide such information in due
course. Only stockholders of record at the close of business on the Record Date
will be entitled to notice of and to vote at the 1999 Annual Meeting.
NO PROXY CARD FOR USE AT THE 1999 ANNUAL MEETING IS INCLUDED WITH THIS PROXY
STATEMENT BUT ONE WILL BE PROVIDED BY CILLUFFO ASSOCIATES AFTER THE COMPANY
NOTIFIES STOCKHOLDERS OF THE RECORD DATE AND MATTERS TO BE VOTED UPON AT THE
1999 ANNUAL MEETING OR AT AN EARLIER DATE IF CILLUFFO ASSOCIATES DEEMS IT
APPROPRIATE. Any stockholder who executes and delivers such a proxy will have
the right to revoke it at any time before it is exercised, by filing with
Cilluffo Associates, L.P., c/o MacKenzie Partners, Inc., the firm assisting
Cilluffo Associates in this solicitation, at 156 Fifth Avenue, New York, New
York 10010, or with the Secretary of the Company at its principal executive
offices at 1900 Gallows Road, Vienna, Virginia 22182, an instrument revoking it
or a duly executed proxy bearing a later date or by appearing in person and
voting at the 1999 Annual Meeting.
This Proxy Statement is first being sent or given to one or more stockholders
on or about August [___], 1999. The Company has reported in the proxy statement
relating to the Annual Meeting of Stockholders held on November 5, 1998 (the
"1998 Annual Meeting") that, as of September 18, 1998, the record date for such
meeting, the Company's outstanding voting securities consisted of 10,216,563
Shares. According to the Company's quarterly report on Form 10-Q for the fiscal
quarter ended March 31, 1999, there were 10,245,571 Shares outstanding on April
30, 1999 and, unless otherwise indicated, references herein to the percentage of
outstanding Shares owned by any person were computed based upon such number of
outstanding Shares. Each Share is entitled to one vote, except that each
stockholder is entitled to cumulate his or her votes in electing directors.
Under cumulative voting, each stockholder is entitled to the number of votes to
which such stockholder's Shares would normally be entitled, multiplied by the
number of directors to be elected. A stockholder then may cast all of such votes
for a single candidate or may allocate them among as many candidates as the
stockholder may choose.
THE PROPOSAL
As more fully discussed below, Cilluffo Associates is soliciting proxies in
connection with the 1999 Annual Meeting for the election of Neal B. Freeman,
Richard N. Perle and Guy P. Wyser-Pratte (collectively, the "Cilluffo Associates
Nominees") as directors of the Company. The proposed election of the Cilluffo
Associates Nominees is referred to herein as the "Proposal."
PROPOSAL FOR ELECTION OF DIRECTORS
Cilluffo Associates is soliciting the proxies of stockholders for the election
of the Cilluffo Associates Nominees as directors of the company at the 1999
Annual Meeting, to serve until their successors are duly elected and qualified.
On August 5, 1999, Cilluffo Associates provided written notice to the Company
of its intent to nominate the Cilluffo Associates Nominees for election to the
Board. Such notice was provided pursuant to Section 4 of Article III of the
Company's Bylaws, which sets forth certain requirements for stockholders
intending to nominate candidates for election to the Board, including, in
general, the
<PAGE>
requirement that a notice containing specified information be submitted to the
Secretary of the Company not less than 10 and not more than 120 days prior to
any meeting of stockholders called for the purpose of electing directors. For
information concerning the Cilluffo Associates Nominees, see "The Cilluffo
Associates Nominees" below.
In accordance with the Company's Certificate of Incorporation and Bylaws and
the Delaware General Corporation Law, the Company's Board of Directors is to
consist of not less than seven (7) nor more than fourteen (14) directors, as may
be determined by resolution adopted by a majority of the entire Board. The
directors are to be divided into three classes as nearly equal in number as
possible. At each annual meeting of stockholders, members of one of the classes,
on a rotating basis, are elected for a three-year term. The Company's proxy
statement in connection with the 1998 Annual Meeting of Stockholders (the "1998
Proxy Statement") contemplated a Board comprised of seven (7) directors, three
(3) of whom have the terms that expire in 1999. A Company press release dated
April 12, 1999 announced the election of a director to a new seat on the Board.
A Company press release dated August 6, 1999 announced that another director
will be nominated. Cilluffo Associates believes, based on the Company's
Certificate of Incorporation and Bylaws, that the director elected in accordance
with the April 12, 1999 press release and the director potentially to be added
in accordance with the August 6, 1999 press release should be members of the
classes whose terms expire in 2000 and 2001. According to the 1998 Proxy
Statement, three (3) directors are to be elected at the 1999 Annual Meeting. The
Cilluffo Associates Nominees, if elected, would serve for the term expiring in
2002. If any additional directorships are to be voted upon at the 1999 Annual
Meeting, Cilluffo Associates reserves the right to nominate additional persons
to fill such positions.
The Cilluffo Associates Nominees
Each of the Cilluffo Associates Nominees has consented to serve as a director
if elected. On August 5, 1999, Cilluffo Associates entered into an option
agreement (the "Option Agreements") with each of the Cilluffo Associates
Nominees. Pursuant to the Option Agreements, Cilluffo Associates granted each
Cilluffo Associates Nominee an option (an "Option") to purchase 37,000 Shares
from Cilluffo Associates for $8.25 per Share in cash beginning as of the date of
the respective Option Agreement. Each Option shall expire on and shall not be
exercisable after December 15, 2000.
Cilluffo Associates granted the Options to the Cilluffo Associates Nominees in
consideration for each such Cilluffo Associates Nominee's participation in, and
support of, Cilluffo Associates' solicitation (the "Solicitation") of proxies in
connection with the election of Directors at the 1999 Annual Meeting. The Option
Agreements also provide that Cilluffo Associates will indemnify and hold
harmless the Cilluffo Associates Nominees from certain liabilities that could
arise out of, or result from, the service by the respective Cilluffo Associates
Nominee as a nominee (including liabilities under federal securities laws).
Except as described in this Proxy Statement, there are no arrangements or
understandings between any such nominee and any other person pursuant to which
he was selected as a Cilluffo Associates Nominee.
The information below concerning age, principal occupation, directorships and
beneficial ownership of Common Stock has been furnished by the respective
Cilluffo Associates Nominees. Unless otherwise indicated, each person shown as
the beneficial owner of Shares possesses sole voting and dispositive power with
respect to such Shares.
<TABLE>
<CAPTION>
Name, Business Present Principal Occupation and Principal Number of Shares of Percent of
Address and Age Occupations During Last Five (5) Years; Directorships Common Stock Owned Common Stock
- --------------- ------------------------------------------------------ ------------------ -------------
<S> <C> <C> <C>
Neal B. Freeman Chairman and Chief Executive Officer of The Blackwell 49,000(1)(2) 0.5%
Corporation, a television production and distribution
c/o The Blackwell company, since 1981. Director of COMSAT Corporation
Corporation since 1983. Vice Chairman of The Ethics and Public
P.O. Box 2169 Policy Center and a director of National Review, Inc. and
Vienna, VA 22183 Forum Network, Inc.
Age 59
Richard N. Perle Consultant since 1994. Resident Fellow, the American 37,200(1)(3) 0.4%
Enterprise Institute's Commission on Future Defenses,
5 Grafton Street since 1987. Assistant Secretary of Defense for
Chevy Chase, MD International Security Policy of the U.S. Department of
20815 Defense from 1981 until 1987. Chairman of Hollinger
Age 57 Digital, Inc. and a director of Hollinger International,
Inc., Jerusalem Post, Geobiotics, American Interactive
Media, Inc., AppNet Systems, Inc. and Morgan Crucible,
PLC.
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
Name, Business Present Principal Occupation and Principal Number of Shares of Percent of
Address and Age Occupations During Last Five (5) Years; Directorships Common Stock Owned Common Stock
- --------------- ----------------------------------------------------- ------------------ -------------
<S> <C> <C> <C>
Guy P. Wyser-Pratte President of the investment management firms Wyser- 37,000(1) 0.4%
Pratte & Co., Inc. and Wyser-Pratte Management Co.,
c/o Wyser-Pratte & Inc. since 1994. Director of COMSAT Corporation since
Co., Inc. and Wyser- August 1997. Director of The Eureka (US$) Fund, The
Pratte Management Eureka (DM) Fund and the International Rescue Committee,
Co., Inc. a non-governmental international refugee organization,
63 Wall Street a member of the Council on Foreign Relations and a
New York, New trustee of the U.S. Marine Corps University Foundation.
York 10005
Age 59
</TABLE>
(1) Includes 37,000 Shares that are subject to the respective Option described
under "The Cilluffo Associates Nominees" above.
(2) Includes 12,000 Shares held directly.
(3) Includes 200 Shares held directly.
All transactions in securities of the Company engaged in by any proposed
Cilluffo Associates Nominee herein during the past two years are summarized in
Appendix A.
Reasons for Nomination of the Cilluffo Associates Nominees
Cilluffo Associates is and has been for many years a long-term and major
stockholder of the Company. We began purchasing shares of the Company's Common
Stock in 1989. One of our Managing Partners, General Meyer, served on the
Board from 1992 to 1998. Mr. Cilluffo, our other Managing Partner, has been a
member of the Board since 1996. We believe that our ownership of approximately
1.7 million Shares makes us the Company's largest stockholder.
The successful management of the Company is of the utmost importance to us. We
believe, and have believed for many years, that there is great value in the
Company, its technologies and its employees. However, we also believe that such
value is not appropriately reflected in the Company's stock market price, and we
have become increasingly concerned. Based on the Company's own calculation of
cumulative total stockholder return in the Company's 1998 Proxy Statement, a
$100 investment made on June 30, 1993 in the S&P 500 Index and the S&P
Technology - 500 grew to $282 and $429, respectively, by June 30, 1998. IN
CONTRAST, A $100 INVESTMENT IN THE COMPANY MADE ON JUNE 30, 1993 ROSE TO ONLY
$174 BY JUNE 30, 1998.
Cilluffo Associates has nominated additional candidates to the Board in order to
obtain a better understanding of the problems and opportunities facing our
Company and, most importantly, to have a more influential voice in addressing
them. Cilluffo Associates is nominating these individuals because of their
backgrounds and relevant business experience. In the opinion of Cilluffo
Associates, each of the nominees will bring a wealth of relevant knowledge and
experience to bear upon the management of the Company based upon their
respective business, government and investment backgrounds.
Cilluffo Associates is particularly focused on identifying methods to enhance
the Company's return on sales and operating margins and otherwise to enhance
stockholder value. Cilluffo Associates is concerned that the Board and
management have a stated goal of seeking acquisitions and that such acquisitions
might be dilutive and not accretive to stockholder value. Cilluffo Associates is
concerned that there could be substantial business risks involved in
acquisitions. First, there is the risk of a failure to understand or evaluate
fully all material aspects of an acquisition. Second, there are significant
business risks and uncertainties associated with the merging and absorption of
an acquisition into the existing business of GRCI. Consequently, Cilluffo
Associates believes that material acquisitions should be submitted to the
stockholders for approval. For this purpose, Cilluffo Associates would define
"material" as 5% or more of the outstanding equity of GRCI prior to the
acquisition. Accordingly, Cilluffo Associates would support special stockholder
meetings, as necessary, to seek possible approval of any such proposed
acquisition.
Cilluffo Associates has also been concerned about matters concerning the
corporate governance of the Company. Cilluffo Associates believes that election
of the Cilluffo Associates Nominees will significantly enhance the independence
of the Board and thereby in and of itself improve corporate governance. In
addition, at the annual stockholder meeting of November 5, 1998, two non-binding
stockholder proposals affecting important corporate governance matters were
submitted and approved by stockholders which held greater than a majority of the
Shares that were voted. The two proposals were (1) termination of the
shareholder rights plan ("poison pill") and (2) declassification of the Board.
The Board subsequently voted to terminate the poison pill as of August 31, 2000,
but reserved the right to implement a new poison pill without shareholder
approval. Thus, the Board deferred the termination of the existing poison pill
and, directly contrary to the shareholder proposal, reserved the right to
implement a new poison pill without shareholder approval.
The Board flatly rejected the proposal to declassify the Board, asserting a
belief that a classified structure is important to its U.S. government
customers. Cilluffo Associates is unaware of any such U.S. government policy
regarding this issue.
In addition, the Company stated in a press release of May 20, 1999 that it had
been "advised that the classified board would be extremely difficult to
eliminate due to the eighty percent supermajority voting requirement contained
in the company's charter." While Cilluffo Associates acknowledges that attaining
the eighty-percent requirement might be difficult, Cilluffo Associates believes
that the vote by the stockholders at the last annual stockholders meeting
deserves to be respected. Accordingly, Cilluffo Associates believes that the
Board should submit to a stockholders' vote an amendment to the Certificate of
Incorporation declassifying the Board. Cilluffo Associates also believes the
Board should recommend its approval.
BY RUNNING OUR OWN SLATE OF NOMINEES, WE BELIEVE WE ARE GIVING STOCKHOLDERS A
CHOICE. IF YOU - LIKE US - ARE NOT SATISFIED AND BELIEVE THAT THE COMPANY WOULD
BENEFIT BY HAVING NOMINEES
-3-
<PAGE>
SELECTED BY THE COMPANY'S LARGEST STOCKHOLDER SERVE ON THE BOARD, WE URGE YOU TO
SUPPORT OUR NOMINEES.
QUORUM AND VOTING
The proxy statement to be furnished by the Company to stockholders in
connection with the 1999 Annual Meeting (the "GRCI Proxy Statement") is required
to provide information about the number of Shares outstanding and entitled to
vote on the Record Date, and reference is made thereto for such information.
The presence in person or by proxy of the holders of a majority of the
Shares entitled to vote thereat are necessary to constitute a quorum at the 1999
Annual Meeting. If a quorum is not present or represented by proxy, the
stockholders entitled to vote, present or represented by proxy, have the power
to adjourn the 1999 Annual Meeting from time to time without notice other than
an announcement at the meeting at which such adjournment is taken (unless such
meeting adjourned for 30 days or more) until the requisite amount of Shares
shall be present.
Each holder of a Share is entitled to one vote for each Share held, except
that cumulative voting will apply in the election of directors. In the election
of directors under cumulative voting, each stockholder is entitled to the number
of votes to which such stockholder's Shares would normally be entitled,
multiplied by the number of directors to be elected. A stockholder may then cast
all of such votes for a single candidate or may allocate them among as many
candidates as the stockholder may choose. Directors will be elected by a
plurality of the votes cast by stockholders at the 1999 Annual Meeting. Votes
not cast at the 1999 Annual Meeting because authority to vote for nominees is
withheld and as a result of broker non-votes will not affect the outcome of the
election of directors.
The Cilluffo Associates Group intends to vote all of its Shares, and those
for which the Cilluffo Associates Group proxy holders (the "Cilluffo Proxy
Holders") are given proxies, FOR the election of the Cilluffo Associates
Nominees. The Cilluffo Associates Group intend to cumulate their votes, and
those for which the Cilluffo Proxy Holders are given proxies, in such a manner
as to obtain the maximum representation on the Board.
Unless otherwise indicated by a stockholder, the granting of a proxy to the
Cilluffo Proxy Holders will give the Cilluffo Proxy Holders discretionary
authority to cumulate all votes to which the stockholder is entitled and to
allocate them in favor of any or all of the Cilluffo Associates Nominees as
Cilluffo Associates may determine. The effect of cumulation and voting in
accordance with that discretionary authority may be to offset the effect of a
stockholder's having withheld authority to vote for one of the Cilluffo
Associates Nominees because the Cilluffo Proxy Holders will be able to allocate
votes of stockholders who have not withheld authority to vote in any manner they
determine among such nominees. If a stockholder desires specifically to allocate
votes among the Cilluffo Associates Nominees, the stockholder should so specify
on the Cilluffo Associates Group proxy card (the "Cilluffo Proxy Card") when it
is provided.
OTHER MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
Mr. Cilluffo, in his capacity as a director, may be aware or may become
aware of matters which might be under consideration for presentation for a vote
of stockholders at the 1999 Annual Meeting. However, the only matter that the
Cilluffo Associates Group knows will be presented for a vote is the election of
directors, which is required by the Bylaws. If any other matter properly comes
before the 1999 Annual Meeting, the Cilluffo Proxy Holders will have
discretionary authority to vote all Shares covered by such proxies in accordance
with their best judgment with respect to such matter, unless they are directed
by a proxy to do otherwise.
While matters presented at the 1998 Annual Meeting included (i) election
of directors, (ii) ratification of public accountants, (iii) a shareholder
proposal to declassify the Board, (iv) a shareholder proposal to terminate the
Shareholder Rights Plan, and (v) consideration of other matters which properly
came before the meeting, any of which may be presented at the 1999 Annual
Meeting, the Cilluffo Associates Group does not know of any matters to be
presented for a vote of stockholders at the 1999 Annual Meeting other than the
election of directors.
PROXY PROCEDURES
The Shares represented by each Cilluffo Proxy Card which is properly
executed and returned in time to be filed with the Secretary of the Company will
be voted at the 1999 Annual Meeting in accordance with the instructions marked
thereon. Executed but unmarked Cilluffo Proxy Cards will be voted FOR the
election of the Cilluffo Associates Nominees as directors.
In order for your views on the above described Proposal to be represented
at the 1999 Annual Meeting, when you receive the Cilluffo Proxy Card, please
mark, sign and date it and return it to Cilluffo Associates, L.P., c/o MacKenzie
Partners, Inc, at 156 Fifth Avenue, New York, New York 10010, in the envelope
with which it will be enclosed, in time to be voted at the 1999 Annual Meeting.
Execution of the Cilluffo Proxy Card will not affect your right to attend the
1999 Annual Meeting and to vote in person. Any proxy (including a proxy given to
GRCI) may be revoked at any time before it is voted by (a) submitting a duly
executed new proxy bearing a later date, (b) attending and voting in person at
the particular meeting or (c) at any time before a previously executed proxy is
voted, giving written notice of revocation to either (i) Cilluffo Associates,
L.P., c/o MacKenzie Partners, Inc, at 156 Fifth Avenue, New York, New York
10010, or (ii) the Secretary of the Company at 1900 Gallows Road, Vienna,
Virginia 22182. Cilluffo Associates Group requests that a copy of any revocation
sent to GRCI also be sent to Cilluffo Associates, L.P., c/o MacKenzie Partners
at the above address. Merely attending the 1999 Annual Meeting will not revoke
any previous proxy which has been duly executed by you. The Cilluffo Proxy Card
that will be furnished to you by Cilluffo Associates, if properly executed and
delivered, will revoke all prior proxies. Only your latest dated proxy for the
1999 Annual Meeting will count.
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<PAGE>
Only holders of record as of the close of business on the Record Date will
be entitled to vote. If you are a stockholder of record on the Record Date, you
will retain your voting rights for the 1999 Annual Meeting. Accordingly, it is
important that you vote the Shares held by you on the Record Date, or grant a
proxy to vote such Shares on the Cilluffo Proxy Card, even if you sell such
Shares after the Record Date.
IF ANY OF YOUR SHARES ARE HELD IN THE NAME OF A BROKERAGE FIRM, BANK, BANK
NOMINEE OR OTHER INSTITUTION ON THE RECORD DATE, ONLY IT CAN VOTE SUCH SHARES
AND ONLY UPON RECEIPT OF YOUR SPECIFIC INSTRUCTIONS. ACCORDINGLY, PLEASE
CONTACT THE PERSON RESPONSIBLE FOR YOUR ACCOUNT AND INSTRUCT THAT PERSON TO
EXECUTE ON YOUR BEHALF THE CILLUFFO PROXY CARD.
The Cilluffo Associates Group URGES YOU TO MARK, SIGN, DATE AND RETURN THE
CILLUFFO PROXY CARD when it is provided to you. No postage will be required for
mailing within the United States.
CERTAIN INFORMATION CONCERNING PARTICIPANTS IN THE SOLICITATION
Information concerning Cilluffo Associates, Frank J. A. Cilluffo, Neal B.
Freeman, General Edward C. Meyer (Ret.), Richard N. Perle and Guy P. Wyser-
Pratte (collectively, the "Participants"), who each could be deemed to be
"participants in the solicitation" as defined in the proxy rules promulgated by
the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and their affiliates and associates, is
set forth on Appendix A hereto.
Cilluffo Associates and Messrs. Cilluffo, Freeman, Perle and Wyser-Pratte
and General Meyer intend to vote any Shares they now own or may acquire in favor
of the Cilluffo Associates Nominees.
In connection with requests by certain partners of Cilluffo Associates to
withdraw all or a portion of such partners' capital investment in Cilluffo
Associates, in accordance with the terms of its partnership agreement, Cilluffo
Associates designated the Shares as a security subject to withholding by
Cilluffo Associates. As a result of such designation, under the terms of the
partnership agreement, Cilluffo Associates is generally not required to
distribute the underlying Shares or any cash or other capital with respect
thereto prior to December 31, 2000. However, such distribution could occur
earlier in the event that the business of Cilluffo Associates is earlier
terminated, the ownership of the Shares is no longer reportable on Schedule 13D,
or the Managing Partners otherwise determine.
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table presents, as of July 31, 1998, based solely (except as
otherwise described herein) on information contained in the 1998 Proxy
Statement, the Shares and percentages of Shares beneficially owned by the
Company's principal stockholders, directors, nominees, highest paid executive
officers, and by all directors and executive officers as a group, as of July 31,
1998, unless another date is indicated. The information with respect to members
of the Cilluffo Associates Group has been provided by the members thereof as of
August 5, 1999. Unless otherwise indicated, each person shown as the beneficial
owner of Shares possesses sole voting and dispositive power with respect to such
Shares.
<TABLE>
<CAPTION>
Number of Shares % of Class
---------------- ----------
<S> <C> <C>
Edward C. Meyer 1,734,966 (1) 16.9%
Frank J. A. Cilluffo 1,720,787 (2)(1)(14) 16.8%
Cilluffo Associates, L.P. 1,708,000 (3)(1) 16.7%
Jim Roth 268,406 (4) 2.6%
Joseph R. Wright, Jr. 190,152 (5)(14) 1.8%
Peter A. Cohen 118,160 (6)(14) 1.2%
Gary L. Denman 71,880 (7)(14) 0.7%
Ronald B. Alexander 50,162 (8) 0.5%
Thomas E. McCabe 30,938 (9) 0.3%
James. L. Selsor 18,985 (10) 0.2%
Leslie B. Disharoon 15,000 (14) 0.1%
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
Number of Shares % of Class
---------------- ----------
<S> <C> <C>
Charles H. P. Duell 11,071 (11)(14) 0.1%
Michael G. Stolarik 10,691 0.1%
Herbert Rabin 7,916 (12) 0.1%
H. Furlong Baldwin 6,000 (14) 0.1%
George R. Packard 5,135 (13) 0.1%
E. Kirby Warren 1,500 0.0%
Leon E. Salomon 288 (14)(16) 0.0%
All Directors & Executive Officers (17 persons) 2,553,749 23.6% (15)
</TABLE>
(1) Includes 1,708,000 Shares owned by Cilluffo Associates, L.P., of which
General Meyer is a managing general partner. General Meyer shares
voting and dispositive power as to these Shares with Cilluffo
Associates and its other managing general partner. Also includes
26,966 Shares, which may be acquired by General Meyer in his own right
upon exercise of options exercisable within 60 days. As described in
"The Cilluffo Associates Nominees" above, Cilluffo Associates has
granted Options with respect to an aggregate of 111,000 Shares to the
Cilluffo Associates Nominees.
(2) Includes 1,708,000 Shares owned by Cilluffo Associates, L.P., of which
Mr. Cilluffo is a managing general partner. Mr. Cilluffo shares voting
and dispositive power as to these Shares with Cilluffo Associates and
its other managing general partner. Also includes 12,787 Shares owned
by Mr. Cilluffo individually.
(3) Shares beneficially owned by Cilluffo Associates, L.P. and its
managing general partners, Frank J. A. Cilluffo and General Meyer. See
note (1) above.
(4) Includes 172,941 Shares subject to options exercisable within 60 days,
89,113 Shares with shared voting and dispositive power, 5,968 Shares
in the Company's Employee Stock Purchase Plan, and 384 Shares in the
Company's Deferred Income Plan.
(5) Includes 164,152 Shares subject to options exercisable within 60 days
and 1,000 Shares owned by Mr. Wright's wife.
(6) Includes 75,000 Shares subject to options exercisable within 60 days
and 22,000 Shares held by family members not in Mr. Cohen's household,
for which shares Mr. Cohen has investment discretion.
(7) Includes 67,838 Shares subject to options exercisable within 60 days,
3,869 Shares in the Company's Employee Stock Purchase Plan and 173
Shares in the Company's Deferred Income Plan.
(8) Includes 50,000 Shares subject to options exercisable within 60 days
and 162 Shares in the Company's Deferred Income Plan.
(9) Includes 30,553 Shares subject to options exercisable within 60 days,
1 Share in the Company's Employee Stock Purchase Plan and 384 Shares
in the Company's Deferred Income Plan.
(10) Includes 10,335 Shares subject to options exercisable within 60 days.
(11) Includes 3,000 Shares owned by a general partnership. Mr. Duell
disclaims beneficial ownership of such Shares except to the extent of
his pecuniary interest therein.
(12) Represents Shares subject to options exercisable within 60 days.
(13) Includes 4,785 Shares subject to options exercisable within 60 days.
(14) Current director of the Company.
(15) The sum of the number of Shares outstanding as of September 18, 1998,
as set forth in the 1998 Proxy Statement, plus the number of Shares
subject to options exercisable within 60 days held by directors and
executive officers as set forth above, serves as the denominator for
the calculation of the percentage owned by directors and executive
officers as a group.
(16) As reported in a Form 5 filed August 4, 1999.
-6-
<PAGE>
CERTAIN OTHER INFORMATION
Information concerning the date, time and exact location of the 1999 Annual
Meeting, certain information concerning the Company's management, the procedures
for submitting proposals for consideration at the 2000 Annual Meeting of
Stockholders of the Company and certain other matters concerning the Company and
the 1999 Annual Meeting is or will be contained in the GRCI Proxy Statement and
is incorporated herein by reference.
Certain information in this Proxy Statement is taken from the 1998 Proxy
Statement, from other documents filed with the Securities and Exchange
Commission and from Company press releases. Cilluffo Associates assumes no
responsibility for the accuracy or completeness of such information.
PROXY SOLICITATION; EXPENSES
Proxies may be solicited by Cilluffo Associates, partners and employees of
Cilluffo Associates, and by the other Participants by mail and other courier
services, telephone, telecopier, the Internet and personal solicitation. Regular
employees of Cilluffo Associates and its affiliates may be used to solicit
proxies and, if used, will not receive additional compensation for such efforts.
Banks, brokerage houses and other custodians, nominees and fiduciaries will be
requested to forward the solicitation material of the Cilluffo Associates Group
to their customers for whom they hold Shares, and Cilluffo Associates will
reimburse them for their reasonable out-of-pocket expenses.
Cilluffo Associates has retained MacKenzie Partners, Inc. ("MacKenzie
Partners") for solicitation and advisory services in connection with the
solicitation. For the successful completion of the Solicitation, MacKenzie
Partners is to receive a fee estimated not to exceed $50,000 plus out-of-pocket
expenses estimated not to exceed $25,000. Cilluffo Associates has also agreed to
indemnify MacKenzie Partners against certain liabilities and expenses, including
liabilities and expenses under the federal securities laws. MacKenzie Partners
will solicit proxies for the 1999 Annual Meeting from individuals, brokers,
banks, bank nominees and other institutional holders. It is anticipated that
MacKenzie Partners will employ approximately [___] persons to solicit votes from
stockholders for the 1999 Annual Meeting.
The entire expense of preparing, assembling, printing and mailing this
Proxy Statement and related materials, and the cost of soliciting proxies for
the proposal endorsed by the Cilluffo Associates Group, will be borne by
Cilluffo Associates. Cilluffo Associates estimates such expenses to be
[$__________] (including professional fees and expenses, but excluding any costs
represented by salaries and wages of regular employees of Cilluffo Associates
and its affiliates and the costs to Cilluffo Associates of granting the
Options). The total expenditures to date have been approximately [$________],
paid by Cilluffo Associates. Cilluffo Associates does not intend to seek
reimbursement from the Company for Cilluffo Associates' expenses.
STOCKHOLDERS' PROPOSALS IN COMPANY'S PROXY STATEMENT
Pursuant to Rule 14a-8(e)(2) under the Exchange Act, any proposal by a
stockholder at the Annual Meeting to be included in the Company's proxy
Statement must be received in writing at the Company's principal executive
offices not less than 120 calendar days in advance of the date of the company's
proxy statement released to security holders in connection with its 1998 Annual
Meeting of Stockholders. Accordingly, any such stockholder proposal should have
been so received by the Company no later than June 8, 1999.
Dated: August 16, 1999
Sincerely,
Your Fellow Stockholder,
CILLUFFO ASSOCIATES, L.P.
-7-
<PAGE>
APPENDIX A
Information is being given herein for (i) Cilluffo Associates, L.P.
("Cilluffo Associates"), (ii) Neal B. Freeman ("Mr. Freeman"), a natural person
and nominee for the Board, (iii) Richard N. Perle ("Mr. Perle"), a natural
person and nominee for the Board, (iv) Guy P. Wyser-Pratte ("Mr. Wyser-Pratte"),
a natural person and nominee for the Board, (v) Frank J. A. Cilluffo ("Mr.
Cilluffo"), a natural person, a managing general partner of Cilluffo Associates
and a director of the Company, and (vi) General Edward C. Meyer (Ret.) ("General
Meyer"), a natural person and a managing general partner of Cilluffo Associates,
and (vii) the associates and affiliates of each of the foregoing.
Cilluffo Associates is a Delaware limited partnership. Its principal
business is investing in securities for its own account. Its address is 160
Broadway, East Building, New York, New York 10038. The Shares owned by Cilluffo
Associates were purchased in accounts which hold other securities and may have
been subject to ordinary course margin indebtedness from time-to-time. There was
no margin indebtedness attributable to the Shares as of August [__],1999. The
partnership agreement of Cilluffo Associates contains provisions whereby Mr.
Cilluffo and General Meyer, as its general partners, may receive a general
partner's allocation of profits, if any, derived from the partnership's
investments.
The present principal occupation of Mr. Cilluffo is participating in the
management of Cilluffo Associates as a managing partner. Mr. Cilluffo's business
address is 181 Pleasant Street, Portsmouth, NH 03801.
General Meyer serves as Chairman of Mitretek Systems, an information
technology company. Mitretek Systems' address, and General Meyer's business
address, is 7525 Colshire Dr., McLean, Virginia 22102. General Meyer is also a
managing partner of Cilluffo Associates.
The Participants' beneficial ownership is set forth under "The Cilluffo
Associates Nominees" and "Security Ownership of Directors and Management."
Christian V. Cilluffo, the son of Mr. Cilluffo, owns 10,000 Shares. His address
is 179 Pleasant Street, Portsmouth, NH 03801. Four Seas Partners, a partnership
in which Mr. Cilluffo is a general partner, owns 28,000 shares. Its address is
181 Pleasant Street, Portsmouth, NH 03801. While Christian V. Cilluffo and Four
Seas Partners are associates of Mr. Cilluffo, neither is a member of the
Cilluffo Associates Group. Except as otherwise set forth herein, Participants'
associates (other than associates who are themselves Participants) do not own
shares.
Although each of Cilluffo Associates, Mr. Cilluffo, General Meyer,
Mr. Freeman, Mr. Perle and Mr. Wyser-Pratte could be deemed, by virtue of
Rule 13d-5(b)(1) under Exchange Act, to be the beneficial owner of the Shares
owned by each other, each such party disclaims such beneficial ownership,
except to the extent of their pecuniary interest therein.
To the knowledge of the Participants, none of the Participants is, or has
been within the past year, a party to any contract, arrangement or understanding
with any person with respect to any securities of the Company, including but not
limited to joint ventures, loan or option arrangements, puts or calls,
guarantees against loss or guarantees of profits, division of losses or profits,
or the giving or withholding of proxies, except as set forth in the Proxy
Statement (which term includes this Appendix A).
All securities of the Company owned of record by any Participant or
associate are also owned beneficially by the respective Participant or
associate.
It is anticipated that each Cilluffo Associates Nominee, upon election,
will receive director's fees, consistent with the Company's past practice, for
services as a director of the Company. According to the Company's 1998 Proxy
Statement, non-employee directors are paid an annual retainer of $12,000 and an
additional $1,000 for each Board meeting they attend, and $500 for each
committee meeting they attend. Committee Chairmen are paid $800 for each
committee meeting they attend. The Chairman of the Board and Vice Chairman of
the Board have received additional stock option grants, and the Chairman of the
Board has received a Chairman's fee in lieu of retainer and meeting fees. The
Company also provides each director a $50,000 term life insurance policy. Non-
employee directors may elect to forego their cash compensation in exchange for
Shares, phantom Share units having the same value as Shares, or Share options.
The exercise price of the options is equal to 25% of the average fair market
value of the Share during the quarter in which the cash compensation would have
been received. The number of options granted is determined by dividing the
foregone compensation by the option "spread" at grant, which is the difference
between (i) the average fair market value of the Share during the quarter, and
(ii) the exercise price of the option. The "spread" is less than the "grant date
value" of the option under the Black-Scholes option pricing model. The options
are immediately exercisable. They expire 3 years after a director leaves the
Board, and otherwise have no fixed expiration date. The Company had a retirement
plan for non-employee directors, which Cilluffo Associates believes has been
terminated.
None of the Participants and none of their associates has any arrangement
or understanding with any person with respect to (i) any future employment with
the Company or (ii) any future transactions to which the Company or any of its
affiliates may be a party.
-8-
<PAGE>
The following is a summary of all transactions in Company securities by the
Participants over the last two years.
<TABLE>
<CAPTION>
Frank J. A. Cilluffo
DATE OF TRANSACTION TYPE OF TRANSACTION NUMBER OF SHARES
------------------- ------------------- ----------------
<S> <C> <C>
10/2/97 Stock Award (1) 407
-----------------------------------------------------------------------------
1/6/98 Stock Award (1) 351
-----------------------------------------------------------------------------
4/2/98 Stock Award (1) 558
-----------------------------------------------------------------------------
7/1/98 Stock Award (1) 283
-----------------------------------------------------------------------------
10/1/98 Stock Award (1) 283
-----------------------------------------------------------------------------
11/13/98 Purchase 4,000
-----------------------------------------------------------------------------
11/13/98 Purchase 4,000
-----------------------------------------------------------------------------
1/4/99 Stock Award (1) 370
-----------------------------------------------------------------------------
4/1/99 Stock Award (1) 343
-----------------------------------------------------------------------------
5/1/99 Director Stock Option Grant (3) 3,000
-----------------------------------------------------------------------------
5/1/99 Unit Acquisition (2) 1,618
-----------------------------------------------------------------------------
7/1/99 Stock Award (1) 330
-----------------------------------------------------------------------------
</TABLE>
(1) Shares awarded in lieu of directors fees under the Company's
Directors Fee Replacement Plan.
(2) Deferred Stock Units to be settled in Common Stock after
termination of Mr. Cilluffo's service as a director.
Acquired in connection with the termination of the Company's
Directors Retirement Plan.
(3) 50% exercisable 2 years after grant; 75% exercisable 3 years
after grant; and 100% exercisable 4 years after grant.
<TABLE>
<CAPTION>
Neal B. Freeman
DATE OF TRANSACTION TYPE OF TRANSACTION NUMBER OF SHARES
------------------- ------------------- ----------------
<S> <C> <C>
6/25/98 Sale 2,000
------------------------------------------------------------------
9/15/98 Purchase 3,000
------------------------------------------------------------------
2/24/99 Purchase 3,000
------------------------------------------------------------------
5/27/99 Purchase 3,000
------------------------------------------------------------------
6/8/99 Purchase 3,000
------------------------------------------------------------------
</TABLE>
-9-
<PAGE>
<TABLE>
<CAPTION>
General Edward C. Meyer (Ret.)(1)
DATE OF TRANSACTION TYPE OF TRANSACTION NUMBER OF SHARES
------------------- ------------------- ----------------
<S> <C> <C>
9/30/97 Option Grant 1,301
------------------------------------------------------------------
12/31/97 Option Grant 1,040
------------------------------------------------------------------
3/31/98 Option Grant 1,699
------------------------------------------------------------------
6/30/98 Option Grant 587
------------------------------------------------------------------
9/30/98 Option Grant 942
------------------------------------------------------------------
12/31/98 Option Grant 695
------------------------------------------------------------------
</TABLE>
(1) General Meyer retired as a director of the Company effective
November 5, 1998.
<TABLE>
<CAPTION>
Richard N. Perle
DATE OF TRANSACTION TYPE OF TRANSACTION NUMBER OF SHARES
------------------- ------------------- ----------------
<S> <C> <C>
11/25/98 Purchase 2,000
------------------------------------------------------------------
12/31/98 Sale 2,000
------------------------------------------------------------------
01/04/99 Purchase 200
------------------------------------------------------------------
</TABLE>
-10-
