<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE TO
TENDER OFFER STATEMENT UNDER SECTION
14(d)(1) OR 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
GRC INTERNATIONAL, INC.
(NAME OF SUBJECT COMPANY)
LMN CORPORATION
AT&T CORP.
(NAME OF FILING PERSON -- OFFEROR)
COMMON STOCK, PAR VALUE $0.10 PER SHARE
(TITLE OF CLASS OF SECURITIES)
361922 10 7
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
MARILYN J. WASSER, ESQ.
VICE PRESIDENT AND SECRETARY
AT&T CORP.
32 AVENUE OF THE AMERICAS
NEW YORK, NY 10013-2412
TELEPHONE: (212) 387-5400
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF FILING PERSONS)
------------------------
COPY TO:
STEVEN A. ROSENBLUM, ESQ.
WACHTELL, LIPTON, ROSEN & KATZ
51 WEST 52ND STREET
NEW YORK, NEW YORK 10019
TELEPHONE: (212) 403-1000
------------------------
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE
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<S> <C>
$187,279,020 $37,455.81
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</TABLE>
* Estimated for purposes of calculating the amount of filing fee only. The
amount assumes the purchase of 12,485,268 shares of common stock, par value
$.10 per share (the "Shares"), at a price per Share of $15.00 in cash. Such
number of Shares represents all of the Shares outstanding as of January 31,
2000.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
Amount Previously Paid: None.
Form or Registration No.: Not applicable.
Filing Party: Not applicable.
Date Filed: Not applicable.
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[x] third-party tender offer subject to Rule 14d-1.
[ ] issuer tender offer subject to Rule 13e-4.
[ ] going-private transaction subject to Rule 13e-3.
[ ] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer: [ ]
Page 1 of 5 Pages
Exhibit Index begins on Page 5
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<PAGE> 2
This Tender Offer Statement on Schedule TO is filed by AT&T Corp., a New
York corporation ("AT&T"), and LMN Corporation, a Delaware corporation and a
wholly owned subsidiary of AT&T ("Purchaser"). The Schedule TO relates to the
offer by Purchaser to purchase all outstanding shares of Common Stock, par value
$0.10 per share (the "Shares"), of GRC International, Inc., a Delaware
corporation ("GRC"), at a purchase price of $15.00 per Share, net to the seller
in cash, upon the terms and subject to the conditions set forth in the Offer to
Purchase (the "Offer to Purchase") and in the related Letter of Transmittal,
copies of which are attached hereto as Exhibits (a)(1) and (a)(2) (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer"). The information set forth in the Offer to Purchase and the related
Letter of Transmittal is incorporated herein by reference with respect to Items
1-9 and 11 of Schedule TO. The Agreement and Plan of Merger, dated as of
February 14, 2000, among GRC, AT&T and Purchaser, a copy of which is attached as
Exhibit (d)(1) hereto, the Non-Disclosure Agreement, dated December 21, 1999,
between AT&T and GRC, a copy of which is attached as Exhibit (d)(2) hereto, the
Stockholders Agreement dated as of February 14, 2000, among AT&T, Purchaser and
Cilluffo Associates, L.P., a copy of which is attached as Exhibit (d)(3) hereto,
the Stockholders Agreement, dated as of February 14, 2000, among AT&T, Purchaser
and Gerald R. McNichols, a copy of which is attached as Exhibit (d)(4) hereto,
the form of Employment and Consulting Agreement between Gary L. Denman and GRC,
a copy of which is attached as Exhibit (d)(5) hereto, and the Employment
Agreement, dated February 14, 2000, among Michael G. Stolarik, GRC and AT&T, a
copy of which is attached as Exhibit (d)(6) hereto, are incorporated herein by
reference with respect to Items 5 and 11 of Schedule TO.
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSONS.
None of AT&T, Purchaser or, to the best knowledge of such corporations, any
of the persons listed on Schedule I to the Offer to Purchase has during the last
five years (i) been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) been a party to any judicial or
administrative proceeding (except for matters that were dismissed without
sanction or settlement) that resulted in a judgment, decree or final order
enjoining the person from future violations of, or prohibiting activities
subject to, federal or state securities laws or finding any violation of such
laws.
ITEM 10. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not applicable.
ITEM 12. EXHIBITS.
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(a)(1) Offer to Purchase dated February 22, 2000.
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5) Form of Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.
(a)(6) Text of press release issued by AT&T dated February 14, 2000
(incorporated by reference to the Schedule TO filed by AT&T
and Purchaser with the Securities and Exchange Commission on
February 14, 2000).
(a)(7) Text of press release issued by AT&T dated February 22,
2000.
(a)(8) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(9) Form of summary advertisement dated February 22, 2000.
(b) Not applicable.
(d)(1) Agreement and Plan of Merger, dated as of February 14, 2000,
among GRC, AT&T and Purchaser.
</TABLE>
2
<PAGE> 3
<TABLE>
<S> <C>
(d)(2) Non-Disclosure Agreement, dated December 21, 1999, between
GRC and AT&T.
(d)(3) Stockholders Agreement, dated as of February 14, 2000, among
AT&T, Purchaser and Cilluffo Associates, L.P.
(d)(4) Stockholders Agreement, dated as of February 14, 2000, among
AT&T, Purchaser and Gerald R. McNichols.
(d)(5) Form of Employment and Consulting Agreement between Gary L.
Denman and GRC.
(d)(6) Employment Agreement, dated February 14, 2000, among Michael
G. Stolarik, GRC and AT&T.
(g) None.
(h) Not applicable.
</TABLE>
ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3.
Not applicable.
3
<PAGE> 4
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: February 22, 2000
LMN CORPORATION
By /s/ MARY JANE MCKEEVER
------------------------------------
Name: Mary Jane McKeever
Title: President
AT&T CORP.
By /s/ MARY JANE MCKEEVER
------------------------------------
Name: Mary Jane McKeever
Title: Vice President
4
<PAGE> 5
EXHIBIT INDEX
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(a)(1) Offer to Purchase dated February 22, 2000.
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5) Form of Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.
(a)(6) Text of press release issued by AT&T Corp. dated February
14, 2000 (incorporated by reference to the Schedule TO filed
by AT&T Corp. and LMN Corporation with the Securities and
Exchange Commission on February 14, 2000).
(a)(7) Text of press release issued by AT&T dated February 22,
2000.
(a)(8) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(9) Form of summary advertisement dated February 22, 2000.
(b) Not applicable.
(d)(1) Agreement and Plan of Merger, dated as of February 14, 2000,
among GRC International, Inc., AT&T Corp. and LMN
Corporation.
(d)(2) Non-Disclosure Agreement, dated December 21, 1999, between
GRC International, Inc. and AT&T Corp.
(d)(3) Stockholders Agreement, dated as of February 14, 2000, among
AT&T Corp., LMN Corporation and Cilluffo Associates, L.P.
(d)(4) Stockholders Agreement, dated as of February 14, 2000, among
AT&T Corp., LNM Corporation and Gerald R. McNichols.
(d)(5) Form of Employment and Consulting Agreement between Gary L.
Denman and GRC International, Inc.
(d)(6) Employment Agreement, dated February 14, 2000, among Michael
G. Stolarik, GRC International, Inc., and AT&T Corp.
(g) None.
(h) Not applicable.
</TABLE>
5
<PAGE> 1
Exhibit (a)(1)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
GRC INTERNATIONAL, INC.
at
$15.00 NET PER SHARE
by
LMN CORPORATION
a wholly owned subsidiary of
AT&T CORP.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
EASTERN TIME, ON MONDAY, MARCH 20, 2000, UNLESS THE
OFFER IS EXTENDED.
A SUMMARY OF THE PRINCIPAL TERMS OF THE OFFER APPEARS ON PAGES (II) THROUGH
(III). YOU SHOULD READ THIS ENTIRE DOCUMENT CAREFULLY BEFORE DECIDING WHETHER TO
TENDER YOUR SHARES.
------------------------------------
The Dealer Manager for the Offer is:
LEHMAN BROTHERS
February 22, 2000
<PAGE> 2
TABLE OF CONTENTS
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PAGE
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Summary of the Offer............................................. ii
Introduction..................................................... 1
1. Terms of the Offer.......................................... 2
2. Acceptance for Payment and Payment.......................... 4
3. Procedures for Accepting the Offer and Tendering Shares..... 5
4. Withdrawal Rights........................................... 7
5. Material Federal Income Tax Consequences.................... 8
6. Price Range of the Shares; Dividends........................ 8
7. Possible Effects of the Offer on the Market for the Shares;
New York Stock Exchange Listing; Securities Exchange Act
Registration; Margin Regulations............................ 9
8. Certain Information Concerning GRC International............ 10
9. Certain Information Concerning AT&T and the Purchaser....... 11
10. Background of the Offer; Contacts with GRC International.... 12
11. Purpose of the Offer; the Merger Agreement; the Stockholder
Agreements; Statutory Requirements; Appraisal Rights; Plans
for GRC International....................................... 14
12. Source and Amount of Funds.................................. 26
13. Dividends and Distributions................................. 26
14. Conditions of the Offer..................................... 27
15. Legal Matters; Required Regulatory Approvals................ 29
16. Fees and Expenses........................................... 31
17. Miscellaneous............................................... 32
</TABLE>
Schedule I -- Directors and Executive Officers of AT&T and the Purchaser
i
<PAGE> 3
SUMMARY OF THE OFFER
PRINCIPAL TERMS
- AT&T Corp. through its wholly owned subsidiary is offering to buy all
outstanding shares of GRC International, Inc. common stock. The tender
price is $15.00 per share, in cash. Tendering stockholders will not have
to pay brokerage fees or commissions.
- The offer is the first step in our plan to acquire all of the outstanding
GRC International shares, as provided in our merger agreement with GRC
International. If the offer is successful, we will acquire any remaining
GRC International shares in a later merger for $15.00 per share in cash.
GRC International stockholders will not have appraisal rights in the
tender offer, however they will have appraisal rights in the merger.
- The offer will expire at 12:00 midnight, Eastern time, on Monday, March
20, 2000, unless we extend the offer. We have agreed with GRC
International that we will extend the offer until 5:00 p.m., Eastern
time, on March 27, 2000, unless another party commences a competing
tender offer for the GRC International shares that expires on or before
March 27, 2000, in which case we have agreed to extend the offer until
5:00 p.m., Eastern time, on the business day before the competing tender
offer is initially scheduled to expire.
- If we are required to extend the offer under the circumstances described
above or if we otherwise decide to extend the offer, we will issue a
press release giving the new expiration date no later than 9:00 a.m.,
Eastern time, on the first business day after the previously scheduled
expiration of the offer.
GRC INTERNATIONAL BOARD RECOMMENDATION
- The board of directors of GRC International has unanimously approved the
offer, the merger and the merger agreement and determined that the terms
of each are advisable, fair to, and in the best interests of, GRC
International and its stockholders, and recommends that stockholders of
GRC International accept the offer and tender their shares pursuant to
the offer.
CONDITIONS
We are not required to complete the offer unless:
- we receive U.S. federal antitrust clearance for the acquisition,
- at least a majority of the outstanding GRC International shares (assuming
exercise of all outstanding stock options and warrants) are validly
tendered and not withdrawn prior to the expiration of the offer.
Other conditions to the offer are described on pages 27 through 29. The
offer is not conditioned on AT&T obtaining financing.
PROCEDURES FOR TENDERING
If you wish to accept the offer, this is what you must do:
- If you are a record holder (i.e., a stock certificate has been issued to
you), you must complete and sign the enclosed letter of transmittal and
send it with your stock certificate to the depositary for the offer or
follow the procedures described in the offer for book-entry transfer.
These materials must reach the depositary before the offer expires.
Detailed instructions are contained in the letter of transmittal and on
pages 5 through 7 of this document.
- If you are a record holder but your stock certificate is not available or
you cannot deliver it to the depositary before the offer expires, you may
be able to tender your shares using the enclosed notice
ii
<PAGE> 4
of guaranteed delivery. Please call our information agent, Georgeson
Shareholder Communications Inc., at 800-223-2064 for assistance. See page
6 for further details.
- If you hold your shares through a broker or bank, you should contact your
broker or bank and give instructions that your shares be tendered.
WITHDRAWAL RIGHTS
- If, after tendering your shares in the offer, you decide that you do NOT
want to accept the offer, you can withdraw your shares by instructing the
depositary before the offer expires. If you tendered by giving
instructions to a broker or bank, you must instruct the broker or bank to
arrange for the withdrawal of your shares. See pages 7 through 8 for
further details.
NO SUBSEQUENT OFFERING PERIOD
- We have agreed not to provide a subsequent offering period during which
GRC International stockholders who do not tender in the offer would have
another opportunity to tender at the same price. Those stockholders will
have to wait until after the merger is completed to receive their cash
consideration.
STOCKHOLDER AGREEMENTS
- We have entered into separate agreements with two significant
stockholders of GRC International. In these agreements, the stockholders
have agreed to tender their GRC International shares in the offer. The
shares covered by the stockholder agreements represent over 25% of the
outstanding GRC International shares. See pages 22 through 23 for further
details.
RECENT GRC INTERNATIONAL TRADING PRICES; SUBSEQUENT TRADING
- The closing price for GRC International common stock was:
$13 3/8 on February 11, 2000, the last full trading day before we
announced the execution of the merger agreement with GRC International,
and
$14 3/4 on February 18, 2000, the last trading day before the printing
of these materials.
Before deciding whether to tender, you should obtain a current market
quotation for the shares.
- If the offer is successful, we expect the GRC International shares to
continue to be traded on the New York Stock Exchange until the time of
the merger, although we expect trading volume to be below its pre-offer
level.
FURTHER INFORMATION
- If you have questions about the offer, you can call:
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Our Information Agent:
GEORGESON SHAREHOLDER COMMUNICATIONS
INC.
Banks and brokers call collect: (212)440-9800
All others call toll free: (800)223-2064
Our Dealer Manager:
LEHMAN BROTHERS INC.
Call collect: (212)526-9611 or
(212)526-2660
</TABLE>
iii
<PAGE> 5
To: All Holders of Shares of Common Stock of GRC International, Inc.
INTRODUCTION
LMN Corporation (the "Purchaser"), a wholly owned subsidiary of AT&T Corp.,
is offering to purchase all outstanding shares of common stock of GRC
International, Inc. at a purchase price of $15.00 per share, net to the seller
in cash, without interest thereon (the "Offer Price"), on the terms and subject
to the conditions set forth in this Offer to Purchase and in the related Letter
of Transmittal (which, as amended or supplemented from time to time,
collectively constitute the "Offer"). As used in this document, the term "Share"
means a share of GRC International common stock.
You will not be required to pay brokerage fees or commissions or, except as
described in Instruction 6 of the Letter of Transmittal, stock transfer taxes on
the purchase of Shares in the Offer. However, if you do not complete and sign
the Substitute Form W-9 that is included in the Letter of Transmittal, you may
be subject to a required backup federal income tax withholding of 31% of the
gross proceeds payable to you. See Section 3. We will pay all charges and
expenses of Lehman Brothers Inc., as Dealer Manager, EquiServe, as Depositary,
and Georgeson Shareholder Communications Inc., as Information Agent, incurred in
connection with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF GRC INTERNATIONAL HAS UNANIMOUSLY APPROVED THE
OFFER, THE MERGER (AS DEFINED BELOW) AND THE MERGER AGREEMENT (AS DEFINED BELOW)
AND HAS DETERMINED THAT THE TERMS OF EACH ARE ADVISABLE, FAIR TO, AND IN THE
BEST INTERESTS OF, GRC INTERNATIONAL AND ITS STOCKHOLDERS, AND RECOMMENDS THAT
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
We are not required to purchase any Shares unless at least a majority of
the outstanding Shares (assuming exercise of all stock options and warrants and
the conversion or exchange of all securities convertible or exchangeable into
Shares) are validly tendered and not withdrawn prior to the expiration of the
Offer (the "Minimum Condition"). We reserve the right (subject to the applicable
rules and regulations of the Securities and Exchange Commission and the prior
written consent of GRC International), which we presently have no intention of
exercising, to waive or reduce the Minimum Condition and to elect to purchase a
smaller number of Shares. The Offer is also subject to certain other terms and
conditions. See Sections 1, 14, and 15 below.
We are making the Offer under the Agreement and Plan of Merger, dated as of
February 14, 2000 (the "Merger Agreement"), among GRC International, AT&T and
the Purchaser. Following the consummation of the Offer and the satisfaction or
waiver of certain conditions, GRC International will merge with the Purchaser
(the "Merger"), with GRC International continuing as the surviving corporation.
In the Merger, each outstanding Share that is not owned by us or GRC
International (other than Shares held by stockholders who perfect their
appraisal rights under Delaware law) will be converted into the right to receive
$15.00 net in cash, without interest, or any higher price paid per Share in the
Offer (the "Merger Consideration"). Section 11 below contains a more detailed
description of the Merger Agreement. Section 5 below describes the principal
federal income tax consequences of the sale of Shares in the Offer and the
Merger.
Banc of America Securities LLC, GRC International's financial advisor, has
delivered to the Board of Directors of GRC International a written opinion that,
as of the date of the Merger Agreement, the per Share consideration to be
received by the stockholders of GRC International in the Offer and the Merger
was fair from a financial point of view to such stockholders. A copy of the Banc
of America Securities opinion is included with GRC International's
Solicitation/Recommendation Statement on Schedule 14D-9, which is being mailed
with this document, and stockholders are urged to read the opinion in its
entirety for a description of the assumptions made, matters considered and
limitations of the review undertaken by Banc of America Securities.
Approval of the Merger Agreement requires the affirmative vote of holders
of a majority of the outstanding Shares. As a result, if the Minimum Condition
and the other conditions to the Offer are satisfied and the Offer is completed,
we will own a sufficient number of Shares to ensure that the Merger Agreement
will be approved by GRC International's stockholders. See Section 11.
<PAGE> 6
GRC International has advised us that, to its knowledge, all of its
executive officers and directors intend to tender all Shares that they own of
record or beneficially in the Offer (other than Shares that they have the right
to purchase by exercising stock options and Shares, if any, that if tendered
would cause them to incur liability under the short-swing profits provisions of
the Securities Exchange Act).
GRC International has informed us that, as of January 31, 2000 there were
12,485,268 Shares issued and outstanding and 2,426,442 Shares reserved for
issuance upon the exercise of outstanding stock options and warrants.
THE OFFER IS CONDITIONED UPON THE FULFILLMENT OF THE CONDITIONS DESCRIBED
IN SECTION 14 BELOW. THE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN TIME, ON
MONDAY, MARCH 20, 2000, UNLESS WE EXTEND IT.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH YOU SHOULD READ CAREFULLY BEFORE YOU MAKE ANY
DECISION WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), we will purchase all Shares validly tendered and not withdrawn in
accordance with the procedures set forth in Section 4 of this Offer to Purchase
on or prior to the Expiration Date. The term "Expiration Date" means 12:00
midnight, Eastern time, on Monday, March 20, 2000. We have agreed with GRC
International that we will extend the Offer until 5:00 p.m., Eastern time, on
March 27, 2000, unless another party commences a competing tender offer for the
GRC International shares that expires on or before March 27, 2000, in which case
we have agreed to extend the Offer until 5:00 p.m., Eastern time, on the
business day before the competing tender offer is initially scheduled to expire.
In addition, GRC International has the right to require that we extend the
period of time for which the Offer is open, but only until April 17, 2000, if
the Merger Agreement has not been terminated and at the then-scheduled
expiration date of the Offer any of the conditions to the Offer described in
Section 14, other than the Minimum Condition, has not been satisfied or waived,
and if at the time of such extension any such condition is reasonably capable of
being satisfied and the failure of any such condition to be satisfied is not the
result of a willful breach by GRC International of any of its covenants and
agreements contained in the Merger Agreement. We may also, in our sole
discretion, extend the period of time for which the Offer is open if at the
then-scheduled expiration date any of the Offer conditions are not satisfied or
waived and may also extend the Offer for any period required by applicable
rules, regulations, interpretations or positions of the SEC or its staff
applicable to the Offer or for any period required by applicable law. If we
extend the Offer under any of these circumstances, the term "Expiration Date"
will mean the time and date at which the Offer, as so extended, will expire.
Upon the terms and subject to the conditions of the Offer, we will
purchase, as soon as permitted under the terms of the Offer, all Shares validly
tendered and not withdrawn prior to the expiration of the Offer. If at the
Expiration Date, the conditions to the Offer described in Section 14 have not
been satisfied or earlier waived, then, subject to the provisions of the Merger
Agreement, we may extend the Expiration Date for an additional period or periods
of time by giving oral or written notice of the extension to the Depositary.
During any such extension, all Shares previously tendered and not withdrawn will
remain subject to the Offer and subject to your right to withdraw Shares. See
Section 4.
Subject to the applicable regulations of the SEC and the terms of the
Merger Agreement, we also reserve the right, in our sole discretion, at any time
or from time to time, to: (a) delay purchase of or, regardless of whether we
previously purchased any Shares, payment for any Shares pending receipt of any
regulatory or governmental approvals specified in Section 15; (b) terminate the
Offer (whether or not any Shares have previously been purchased) if any
condition referred to in Section 14 has not been satisfied or upon the
occurrence of any event specified in Section 14; and (c) except as set forth in
the Merger Agreement, waive any condition or otherwise amend the Offer in any
respect, in each case, by giving oral or written notice of the delay,
termination, waiver or amendment to the Depositary and, other than in the case
of any waiver, by making a public announcement thereof. We acknowledge (a) that
Rule 14e-1(c) under the Securities Exchange Act requires us to pay the
consideration offered or return the Shares tendered promptly after the
termination or withdrawal of the Offer and (b) that we may not delay
2
<PAGE> 7
purchase of, or payment for (except as provided in clause (a) of the preceding
sentence), any Shares upon the occurrence of any event specified in Section 14
without extending the period of time during which the Offer is open.
The rights we reserve in the preceding paragraph are in addition to our
rights described in Section 14. Any extension, delay, termination or amendment
of the Offer will be followed as promptly as practicable by a public
announcement. An announcement in the case of an extension will be made no later
than 9:00 a.m., Eastern time, on the next business day after the previously
scheduled Expiration Date. Without limiting the manner in which we may choose to
make any public announcement, subject to applicable law (including Rules
14d-4(d) and 14d-6(c) under the Securities Exchange Act, which require that
material changes be promptly disseminated to holders of Shares), we will have no
obligation to publish, advertise or otherwise communicate any such public
announcement other than by issuing a release to the Dow Jones News Service.
In the Merger Agreement, we have agreed that, without the prior written
consent of GRC International, we will not (a) decrease the Offer Price or change
the form of consideration payable in the Offer; (b) seek to purchase less than
all outstanding Shares; (c) amend or waive satisfaction of the Minimum
Condition; or (d) impose additional conditions to the Offer or amend any other
term of the Offer in any manner materially adverse to the holders of Shares.
If we make a material change in the terms of the Offer, or if we waive a
material condition to the Offer, we will extend the Offer and disseminate
additional tender offer materials to the extent required by Rules 14d-4(d),
14d-6(c) and 14e-1 under the Securities Exchange Act. The minimum period during
which a tender offer must remain open following material changes in the terms of
the offer, other than a change in price or a change in percentage of securities
sought, depends upon the facts and circumstances, including the materiality of
the changes. In the SEC's view, an offer should remain open for a minimum of
five business days from the date the material change is first published, sent or
given to stockholders, and, if material changes are made with respect to
information that approaches the significance of price and the percentage of
securities sought, a minimum of ten business days may be required to allow for
adequate dissemination and investor response. With respect to a change in price,
a minimum ten-business-day period from the date of the change is generally
required to allow for adequate dissemination to stockholders. Accordingly, if
prior to the Expiration Date, we decrease the number of Shares being sought, or
increase or decrease the consideration offered pursuant to the Offer, and if the
Offer is scheduled to expire at any time earlier than the period ending on the
tenth business day from the date that notice of the increase or decrease is
first published, sent or given to holders of Shares, we will extend the Offer at
least until the expiration of such period of ten business days. For purposes of
the Offer, a "business day" means any day other than a Saturday, Sunday or a
federal holiday and consists of the time period from 12:01 a.m. through 12:00
midnight, Eastern time.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE SATISFACTION OF THE
MINIMUM CONDITION.
Consummation of the Offer is also conditioned upon expiration or
termination of all waiting periods imposed by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the regulations thereunder (the "HSR
Act"), and the other conditions set forth in Section 14 below. We reserve the
right (but are not obligated), in accordance with applicable rules and
regulations of the SEC and with the Merger Agreement, to waive any or all of
those conditions. If, by the Expiration Date, any or all of those conditions
have not been satisfied, we may, without the consent of GRC International, elect
to (a) extend the Offer and, subject to applicable withdrawal rights, retain all
tendered Shares until the expiration of the Offer, as extended, subject to the
terms of the Offer and the Merger Agreement; (b) waive all of the unsatisfied
conditions (other than the Minimum Condition) and, subject to complying with
applicable rules and regulations of the SEC, accept for payment all Shares so
tendered; or (c) terminate the Offer and not accept for payment any Shares and
return all tendered Shares to tendering stockholders. In the event that we waive
any condition set forth in Section 14, the SEC may, if the waiver is deemed to
constitute a material change to the information previously provided to the
stockholders, require that the Offer remain open for an additional period of
time and/or that we disseminate information concerning such waiver.
3
<PAGE> 8
GRC International has provided us with its stockholder lists and security
position listings for the purpose of disseminating the Offer to holders of
Shares. We will mail this Offer to Purchase, the related Letter of Transmittal
and other relevant materials to record holders of Shares and we will furnish the
materials to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the
securityholder lists or, if applicable, who are listed as participants in a
clearing agency's security position listing, for forwarding to beneficial owners
of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT.
Upon the terms and subject to the conditions of the Offer (including, if we
extend or amend the Offer, the terms and conditions of the Offer as so extended
or amended), we will purchase, by accepting for payment, and will pay for, all
Shares validly tendered and not withdrawn (as permitted by Section 4) prior to
the Expiration Date promptly after the later of (a) the Expiration Date and (b)
the satisfaction or waiver of the conditions to the Offer set forth in Section
14. See Section 14. In addition, subject to applicable rules of the SEC, we
reserve the right to delay acceptance for payment of, or payment for, Shares
pending receipt of any regulatory or governmental approvals specified in Section
15.
For information with respect to regulatory approvals that we are required
to obtain prior to the completion of the Offer, see Section 15.
In all cases, we will pay for Shares purchased in the Offer only after
timely receipt by the Depositary of (a) certificates representing the Shares
("Share Certificates") or timely confirmation (a "Book-Entry Confirmation") of
the book-entry transfer of the Shares into the Depositary's account at The
Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the
procedures set forth in Section 3; (b) the appropriate Letter of Transmittal (or
a facsimile), properly completed and duly executed, with any required signature
guarantees or an Agent's Message (as defined below) in connection with a
book-entry transfer; and (c) any other documents that the Letter of Transmittal
requires.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares which are the subject of the Book-Entry
Confirmation that the participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that we may enforce that agreement
against the participant.
For purposes of the Offer, we will be deemed to have accepted for payment,
and purchased, Shares validly tendered and not withdrawn if, as and when we give
oral or written notice to the Depositary of our acceptance of the Shares for
payment pursuant to the Offer. In all cases, upon the terms and subject to the
conditions of the Offer, payment for Shares purchased pursuant to the Offer will
be made by deposit of the purchase price for the Shares with the Depositary,
which will act as agent for tendering stockholders for the purpose of receiving
payment from us and transmitting payment to validly tendering stockholders.
UNDER NO CIRCUMSTANCES WILL WE PAY INTEREST ON THE PURCHASE PRICE FOR
SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
If we do not purchase any tendered Shares pursuant to the Offer for any
reason, or if you submit Share Certificates representing more Shares than you
wish to tender, we will return Share Certificates representing unpurchased or
untendered Shares, without expense to you (or, in the case of Shares delivered
by book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility pursuant to the procedures set forth in Section 3, the Shares will be
credited to an account maintained within the Book-Entry Transfer Facility), as
promptly as practicable following the expiration, termination or withdrawal of
the Offer.
IF, PRIOR TO THE EXPIRATION DATE, WE INCREASE THE PRICE OFFERED TO HOLDERS
OF SHARES IN THE OFFER, WE WILL PAY THE INCREASED PRICE TO ALL HOLDERS OF SHARES
THAT WE PURCHASE IN THE OFFER, WHETHER OR NOT THE SHARES WERE TENDERED BEFORE
THE INCREASE IN PRICE.
We reserve the right, subject to the provisions of the Merger Agreement, to
transfer or assign, in whole or from time to time in part, to one or more of our
subsidiaries or affiliates the right to purchase all
4
<PAGE> 9
or any portion of the Shares tendered in the Offer, but any such transfer or
assignment will not relieve us of our obligations under the Offer or prejudice
your rights to receive payment for Shares validly tendered and accepted for
payment in the Offer.
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES.
Valid Tender of Shares. Except as set forth below, in order for you to
tender Shares in the Offer, the Depositary must receive the Letter of
Transmittal (or a facsimile), properly completed and signed, together with any
required signature guarantees or an Agent's Message in connection with a
book-entry delivery of Shares and any other documents that the Letter of
Transmittal requires at one of its addresses set forth on the back cover of this
Offer to Purchase on or prior to the Expiration Date and either (a) you must
deliver Share Certificates representing tendered Shares to the Depositary or you
must cause your Shares to be tendered pursuant to the procedure for book-entry
transfer set forth below and the Depositary must receive Book-Entry
Confirmation, in each case on or prior to the Expiration Date, or (b) you must
comply with the guaranteed delivery procedures set forth below.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT YOUR OPTION AND SOLE RISK, AND DELIVERY WILL BE CONSIDERED MADE
ONLY WHEN THE DEPOSITARY ACTUALLY RECEIVES THE SHARE CERTIFICATES. IF DELIVERY
IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO ENSURE TIMELY
DELIVERY.
Book-Entry Transfer. The Depositary will make a request to establish an
account with respect to the Shares at the Book-Entry Transfer Facility for
purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in the system of the
Book-Entry Transfer Facility may make book-entry delivery of Shares by causing
the Book-Entry Transfer Facility to transfer the Shares into the Depositary's
account at the Book-Entry Transfer Facility in accordance with the Book-Entry
Transfer Facility's procedures. However, although Shares may be delivered
through book-entry transfer into the Depositary's account at the Book-Entry
Transfer Facility, the Depositary must receive the Letter of Transmittal (or
facsimile), properly completed and signed, with any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer, and
any other required documents, at one of its addresses set forth on the back
cover of this Offer to Purchase on or before the Expiration Date, or you must
comply with the guaranteed delivery procedure set forth below.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE THE
BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
Signature Guarantees. A bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of the Securities
Transfer Agents Medallion Program (an "Eligible Institution") must guarantee
signatures on all Letters of Transmittal, unless the Shares tendered are
tendered (a) by a registered holder of Shares who has not completed either the
box labeled "Special Payment Instructions" or the box labeled "Special Delivery
Instructions" on the Letter of Transmittal or (b) for the account of an Eligible
Institution. See Instruction 1 of the Letter of Transmittal.
If the Share Certificates are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made to, or
Share Certificates for unpurchased Shares are to be issued or returned to, a
person other than the registered holder, then the tendered certificates must be
endorsed or accompanied by appropriate stock powers, signed exactly as the name
or names of the registered holder or holders appear on the certificates, with
the signatures on the certificates or stock powers guaranteed by an Eligible
Institution as provided in the Letter of Transmittal. See Instructions 1 and 5
of the Letter of Transmittal.
If the Share Certificates are forwarded separately to the Depositary, a
properly completed and duly executed Letter of Transmittal (or facsimile) must
accompany each delivery of Share Certificates.
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<PAGE> 10
Guaranteed Delivery. If you want to tender Shares in the Offer and your
Share Certificates are not immediately available or time will not permit all
required documents to reach the Depositary on or before the Expiration Date or
the procedures for book-entry transfer cannot be completed on time, your Shares
may nevertheless be tendered if you comply with all of the following guaranteed
delivery procedures:
(a) your tender is made by or through an Eligible Institution;
(b) the Depositary receives, as described below, a properly completed
and signed Notice of Guaranteed Delivery, substantially in the form made
available by us, on or before the Expiration Date; and
(c) the Depositary receives the Share Certificates (or a Book-Entry
Confirmation) representing all tendered Shares, in proper form for transfer
together with a properly completed and duly executed Letter of Transmittal
(or facsimile), with any required signature guarantees (or, in the case of
a book-entry transfer, an Agent's Message) and any other documents required
by the Letter of Transmittal within three trading days after the date of
execution of the Notice of Guaranteed Delivery. A "trading day" is any day
on which the New York Stock Exchange is open for business.
You may deliver the Notice of Guaranteed Delivery by hand, mail or
facsimile transmission to the Depositary. The Notice of Guaranteed Delivery must
include a guarantee by an Eligible Institution in the form set forth in the
Notice of Guaranteed Delivery.
Notwithstanding any other provision of the Offer, we will pay for Shares
only after timely receipt by the Depositary of Share Certificates for, or of
Book-Entry Confirmation with respect to, the Shares, a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), together with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message) and any other documents required by the appropriate Letter of
Transmittal. Accordingly, payment might not be made to all tendering
stockholders at the same time, and will depend upon when the Depositary receives
Share Certificates or Book-Entry Confirmation that the Shares have been
transferred into the Depositary's account at the Book-Entry Transfer Facility.
Backup Federal Income Tax Withholding. Under the backup federal income tax
withholding laws applicable to certain stockholders (other than certain exempt
stockholders, including, among others, all corporations and certain foreign
individuals), the Depositary may be required to withhold 31% of the amount of
any payments made to those stockholders pursuant to the Offer. To prevent backup
federal income tax withholding, you must provide the Depositary with your
correct taxpayer identification number and certify that you are not subject to
backup federal income tax withholding by completing the Substitute Form W-9
included in the Letter of Transmittal. See Instruction 11 of the Letter of
Transmittal.
Appointment as Proxy. By executing the Letter of Transmittal, you
irrevocably appoint our designees, and each of them, as your agents,
attorneys-in-fact and proxies, with full power of substitution, in the manner
set forth in the Letter of Transmittal, to the full extent of your rights with
respect to the Shares that you tender and that we accept for payment and with
respect to any and all other Shares and other securities or rights issued or
issuable in respect of those Shares on or after the date of this Offer to
Purchase. All such powers of attorney and proxies will be considered irrevocable
and coupled with an interest in the tendered Shares. This appointment will be
effective when we accept your Shares for payment in accordance with the terms of
the Offer. Upon such acceptance for payment, all other powers of attorney and
proxies given by you with respect to your Shares and such other securities or
rights prior to such payment will be revoked, without further action, and no
subsequent powers of attorney and proxies may be given by you (and, if given,
will not be deemed effective). Our designees will, with respect to the Shares
and such other securities and rights for which the appointment is effective, be
empowered to exercise all your voting and other rights as they in their sole
discretion may deem proper at any annual or special meeting of GRC
International's stockholders, or any adjournment or postponement thereof, or by
consent in lieu of any such meeting or otherwise. In order for Shares to be
deemed validly tendered, immediately upon the acceptance for payment of such
Shares, we or our designee must be able to exercise
6
<PAGE> 11
full voting, consent and other rights with respect to such Shares and other
securities, including voting at any meeting of stockholders.
Determination of Validity. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares will be determined by us, in our sole discretion, which
determination will be final and binding on all parties. We reserve the absolute
right to reject any or all tenders determined by us not to be in proper form or
the acceptance of or payment for which may, in the opinion of our counsel, be
unlawful. We also reserve the absolute right to waive any of the conditions of
the Offer or any defect or irregularity in any tender of Shares of any
particular stockholder whether or not similar defects or irregularities are
waived in the case of other stockholders.
Our interpretation of the terms and conditions of the Offer will be final
and binding. No tender of Shares will be deemed to have been validly made until
all defects and irregularities with respect to the tender have been cured or
waived by us. None of AT&T, the Purchaser or any of their respective affiliates
or assigns, the Dealer Manager, the Depositary, the Information Agent or any
other person or entity will be under any duty to give any notification of any
defects or irregularities in tenders or incur any liability for failure to give
any such notification.
Our acceptance for payment of Shares tendered pursuant to any of the
procedures described above will constitute a binding agreement between us and
you upon the terms and subject to the conditions of the Offer.
4. WITHDRAWAL RIGHTS.
Except as described in this Section 4, tenders of Shares made in the Offer
are irrevocable. You may withdraw Shares that you have previously tendered in
the Offer at any time on or before the Expiration Date and, unless theretofore
accepted for payment as provided herein, may also be withdrawn at any time after
April 21, 2000.
If, for any reason, acceptance for payment of any Shares tendered in the
Offer is delayed, or we are unable to accept for payment or pay for Shares
tendered in the Offer, then, without prejudice to our rights set forth in this
document, the Depositary may, nevertheless, on our behalf, retain Shares that
you have tendered, and you may not withdraw your Shares except to the extent
that you are entitled to and duly exercise withdrawal rights as described in
this Section 4. Any such delay will be by an extension of the Offer to the
extent required by law.
In order for your withdrawal to be effective, you must deliver a written or
facsimile transmission notice of withdrawal to the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase. Any such notice
of withdrawal must specify your name, the number of Shares that you want to
withdraw, and (if Share Certificates have been tendered) the name of the
registered holder of the Shares as shown on the Share Certificate, if different
from your name. If Share Certificates have been delivered or otherwise
identified to the Depositary, then prior to the physical release of such
certificates, you must submit the serial numbers shown on the particular
certificates evidencing the Shares to be withdrawn and an Eligible Institution
must guarantee the signature on the notice of withdrawal, except in the case of
Shares tendered for the account of an Eligible Institution. If Shares have been
tendered pursuant to the procedures for book-entry transfer set forth in Section
3, the notice of withdrawal must also specify the name and number of the account
at the appropriate Book-Entry Transfer Facility to be credited with the
withdrawn Shares, in which case a notice of withdrawal will be effective if
delivered to the Depositary by any method of delivery described in the first
sentence of this paragraph. You may not rescind a withdrawal of Shares. Any
Shares that you withdraw will be considered not validly tendered for purposes of
the Offer, but you may tender your Shares again at any time before the
Expiration Date by following any of the procedures described in Section 3.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by us, in our sole discretion, which
determination will be final and binding. None of AT&T,
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<PAGE> 12
the Purchaser or any of their respective affiliates or assigns, the Dealer
Manager, the Depositary, the Information Agent or any other person or entity
will be under any duty to give any notification of any defects or irregularities
in any notice of withdrawal or incur any liability for failure to give any such
notification.
5. MATERIAL FEDERAL INCOME TAX CONSEQUENCES.
Your receipt of cash for Shares in the Offer or the Merger will be a
taxable transaction for federal income tax purposes and may also be a taxable
transaction under applicable state, local, foreign and other tax laws. For
federal income tax purposes, if you sell or exchange your Shares in the Offer or
the Merger, you would generally recognize gain or loss equal to the difference
between the amount of cash received and your tax basis for the Shares that you
sold or exchanged. That gain or loss will be capital gain or loss (assuming you
hold your Shares as a capital asset) and any such capital gain or loss will be
long term if, as of the date of sale or exchange, you have held the Shares for
more than one year or will be short term if, as of such date, you have held the
Shares for one year or less.
The discussion above may not be applicable to certain types of
stockholders, including stockholders who acquired Shares through the exercise of
employee stock options or otherwise as compensation, individuals who are not
citizens or residents of the United States, foreign corporations, or entities
that are otherwise subject to special tax treatment under the Internal Revenue
Code (such as insurance companies, tax-exempt entities and regulated investment
companies).
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY. YOU ARE URGED TO CONSULT YOUR TAX ADVISOR WITH RESPECT TO THE
SPECIFIC TAX CONSEQUENCES TO YOU OF THE OFFER AND MERGER, INCLUDING FEDERAL,
STATE, LOCAL AND FOREIGN TAX CONSEQUENCES.
6. PRICE RANGE OF THE SHARES; DIVIDENDS.
According to GRC International's Annual Report on Form 10-K for the fiscal
year ended June 30, 1999, the Shares are traded on the New York Stock Exchange
under the symbol "GRH." The following table sets forth, for the periods
indicated, the reported high and low sale prices for the Shares on the New York
Stock Exchange, as reported in GRC International's Form 10-K with respect to
periods occurring in fiscal 1998 and 1999, and as reported during the current
fiscal year by published financial sources, with respect to periods occurring in
fiscal 2000. During such period, GRC International has paid no cash dividends on
the Shares.
GRC INTERNATIONAL, INC.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
FISCAL 1998
Quarter Ended March 31, 1998................................ $ 7.00 $ 5.56
Quarter Ended June 30, 1998................................. 11.25 4.94
FISCAL 1999
Quarter Ended September 30, 1998............................ 11.38 4.63
Quarter Ended December 31, 1998............................. 7.50 3.88
Quarter Ended March 31, 1999................................ 8.19 5.94
Quarter Ended June 30, 1999................................. 8.50 6.50
FISCAL 2000
Quarter Ended September 30, 1999............................ 10.00 7.13
Quarter Ended December 31, 1999............................. 11.88 8.19
Quarter Ending March 31, 2000 (through February 18, 2000)... 14.88 11.81
</TABLE>
Under the terms of the Merger Agreement, GRC International is not permitted
to declare or pay dividends with respect to the Shares without the prior written
consent of AT&T.
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<PAGE> 13
On February 11, 2000, the last full day of trading prior to the
announcement of the execution of the Merger Agreement by GRC International, AT&T
and the Purchaser, the reported closing price on the New York Stock Exchange for
the Shares was $13 3/8 per Share. On February 18, 2000, the last full day of
trading prior to the commencement of the Offer, the reported closing price on
the New York Stock Exchange for the Shares was $14 3/4 per Share.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
7. POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR THE SHARES; NEW YORK STOCK
EXCHANGE LISTING; SECURITIES EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS.
Possible Effects of the Offer on the Market for the Shares. The purchase
of Shares pursuant to the Offer will reduce the number of Shares that might
otherwise trade publicly and could adversely affect the liquidity and market
value of the remaining Shares held by the public. The purchase of Shares
pursuant to the Offer can also be expected to reduce the number of holders of
Shares. We cannot predict whether the reduction in the number of Shares that
might otherwise trade publicly would have an adverse or beneficial effect on the
market price for, or marketability of, the Shares or whether it would cause
future market prices to be greater or less than the Offer Price.
NYSE Listing. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the requirements of the New York Stock
Exchange for continued listing on the New York Stock Exchange. According to the
New York Stock Exchange's published guidelines, the New York Stock Exchange
would consider delisting the Shares if, among other things, (a) the number of
record holders of 100 or more Shares should fall below 1,200; (b) the number of
publicly held Shares (exclusive of holdings of AT&T and the Purchaser and any
other subsidiaries or affiliates of AT&T and of officers or directors of GRC
International or their immediate families or other concentrated holdings of 10%
or more ("Excluded Holdings")) should fall below 600,000; or (c) the aggregate
market value of such publicly held Shares (exclusive of Excluded Holdings)
should fall below $5,000,000. If, as a result of the purchase of Shares pursuant
to the Offer or otherwise, the Shares no longer meet the requirements of the New
York Stock Exchange for continued listing and the listing of the Shares is
discontinued, the market for the Shares could be adversely affected.
If the New York Stock Exchange were to delist the Shares, it is possible
that the Shares would continue to trade on another securities exchange or in the
over-the-counter market and that price or other quotations would be reported by
such exchange or through the National Association of Securities Dealers
Automated Quotation System or other sources. The extent of the public market for
the Shares and the availability of such quotations would depend upon such
factors as the number of stockholders and/or the aggregate market value of the
publicly traded Shares remaining at such time, the interest in maintaining a
market in the Shares on the part of securities firms, the possible termination
of registration under the Securities Exchange Act as described below and other
factors. We cannot predict whether the reduction in the number of Shares that
might otherwise trade publicly would have an adverse or beneficial effect on the
market price for or marketability of the Shares or whether it would cause future
market prices to be greater or less than the Offer Price.
Securities Exchange Act Registration. The Shares are currently registered
under the Securities Exchange Act. The purchase of the Shares pursuant to the
Offer may result in the Shares becoming eligible for deregistration under the
Securities Exchange Act. Registration of the Shares may be terminated upon
application by GRC International to the SEC if the Shares are not listed on a
"national securities exchange" and there are fewer than 300 record holders of
Shares. Termination of registration of the Shares under the Securities Exchange
Act would substantially reduce the information that GRC International would be
required to furnish to its stockholders and the SEC and would make certain
provisions of the Securities Exchange Act, such as the short-swing profit
recovery provisions of Section 16(b) and the requirements of furnishing a proxy
statement in connection with stockholders' meetings pursuant to Section 14(a) or
14(c) and the related requirement of an annual report, no longer applicable to
GRC International. If the Shares are no longer registered under the Securities
Exchange
9
<PAGE> 14
Act, the requirements of Rule 13e-3 under the Securities Exchange Act with
respect to "going private" transactions would no longer be applicable to GRC
International. In addition, the ability of "affiliates" of GRC International and
persons holding "restricted securities" of GRC International to dispose of such
securities pursuant to Rule 144 promulgated under the Securities Act of 1933 may
be impaired or, with respect to certain persons, eliminated. If registration of
the Shares under the Securities Exchange Act were terminated, the Shares would
no longer be "margin securities" or eligible for stock exchange listing or
NASDAQ reporting. We believe that the purchase of the Shares pursuant to the
Offer may result in the Shares becoming eligible for deregistration under the
Securities Exchange Act, and it would be our intention to cause GRC
International to make an application for termination of registration of the
Shares as soon as possible after successful completion of the Offer if the
Shares are then eligible for such termination.
If registration of the Shares is not terminated prior to the Merger, then
the registration of the Shares under the Securities Exchange Act and the listing
of the Shares on the New York Stock Exchange will be terminated following the
completion of the Merger.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System, which have
the effect, among other things, of allowing brokers to extend credit on the
collateral of the Shares for the purpose of buying, carrying or trading in
securities ("Purpose Loans"). Depending upon factors such as the number of
record holders of the Shares and the number and market value of publicly held
Shares, following the purchase of Shares pursuant to the Offer, the Shares might
no longer constitute "margin securities" for purposes of the Federal Reserve
Board's margin regulations and, therefore, could no longer be used as collateral
for Purpose Loans made by brokers. In addition, if registration of the Shares
under the Securities Exchange Act were terminated, the Shares would no longer
constitute "margin securities."
8. CERTAIN INFORMATION CONCERNING GRC INTERNATIONAL.
GRC International's principal executive offices are located at 1900 Gallows
Road, Vienna, Virginia 22182. It's telephone number at such offices is
(703)506-5000. The following description of GRC International and its business
has been taken from GRC International's Annual Report on Form 10-K for the
fiscal year ended June 30, 1999 and is qualified in its entirety by reference to
GRC International's Form 10-K:
GRC International provides a broad range of professional services to
the U.S. Government (96% of revenues) and information technology services
to commercial clients (4% of revenues). GRC International's U.S. Government
business is primarily with the Department of Defense and its
instrumentalities. Approximately 17% of the business is performed under
classified contracts which require security clearances of employees.
Almost all of GRC International's revenues have been generated from
GRC International's professional services business. GRC International's
capabilities focus on information technology consulting services provided
primarily to the U.S. Government, but has recently expanded those service
offerings to commercial clients. Commercial sales now represent about 4% of
total GRC International revenues.
The areas of expertise encompassed by these services include: software
and system engineering; business decision support systems; analytical
modeling and simulation; database design and implementation; legacy
migration engineering; network design and integration; systems integration;
post deployment software support; operational support and management;
virtual manufacturing consulting; communications engineering; and test and
evaluation; among others. These services are applied to such areas as:
financial and personnel management; automated acquisition systems;
transportation planning and analysis; manufacturing analysis; logistics
planning; security clearance processing; WAN/LAN analysis; training
systems; as well as information warfare systems relying on radar, optics,
communication networks, electronics, navigation guidance, control, space,
and surveillance systems.
10
<PAGE> 15
GRC International files annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
reports, statements or other information filed at the SEC's public reference
room at 450 Fifth Street, N.W. Washington, D.C. 20549, or at the SEC's public
reference rooms in New York, New York and Chicago, Illinois. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms. GRC
International's SEC filings are also available to the public from commercial
document retrieval services and at the Internet world wide web site maintained
by the SEC at http://www.sec.gov.
Although we have no knowledge that any such information is untrue, we take
no responsibility for the accuracy or completeness of information contained in
this Offer to Purchase with respect to GRC International or any of its
subsidiaries or affiliates or for any failure by GRC International to disclose
events which may have occurred or may affect the significance or accuracy of any
such information.
In the course of the discussions between us and GRC International (see
Section 10), GRC International provided us with certain projections of its
future operating performance. These projections were not prepared with a view to
public disclosure or compliance with published guidelines of the SEC or the
guidelines established by the American Institute of Certified Public Accountants
regarding projections, and are included in this Offer to Purchase only because
GRC International provided them to us. Neither we nor GRC International, nor
either of our respective financial advisors, assumes any responsibility for the
accuracy of these projections. While presented with numerical specificity, these
projections are based upon a variety of assumptions relating to the businesses
of GRC International which may not be realized and are subject to significant
uncertainties and contingencies, many of which are beyond the control of GRC
International. There can be no assurance that the projections will be realized,
and actual results may vary materially from those shown.
Set forth below is a summary of the projections provided by GRC
International. The projections should be read together with the financial
statements of GRC International referred to herein.
GRC INTERNATIONAL, INC.
PROJECTED FINANCIAL INFORMATION
(IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDING JUNE 30,
--------------------------------------------------------
2000 2001 2002 2003 2004 2005
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Revenues............................. $210.0 $247.0 $284.1 $326.7 $375.7 $432.0
Earnings before interest and taxes... 15.6 19.0 22.8 26.3 30.4 35.0
Net income........................... 8.9 11.3 14.2 16.8 19.7 23.0
Earnings per share................... 0.71 0.86 1.06 1.23 1.41 1.61
</TABLE>
During the course of AT&T's due diligence investigation, GRC International
provided updated revenue projections as follows: Fiscal Year 2000: $214.1
million; Fiscal Year 2001: $264.9 million; Fiscal Year 2002: $322.3 million;
Fiscal Year 2003: $370.6 million; Fiscal Year 2004: $426.1 million; and Fiscal
Year 2005: $490.1 million.
9. CERTAIN INFORMATION CONCERNING AT&T AND THE PURCHASER.
AT&T is among the world's communications leaders, providing voice, data and
video telecommunications services to large and small businesses, consumers and
government entities. AT&T and its subsidiaries furnish regional, domestic,
international, local and Internet communication transmission services, including
cellular telephone and other wireless services, and cable television services.
The Purchaser was formed on February 11, 2000 solely for the purpose of engaging
in the transactions contemplated by the Merger Agreement.
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The principal executive offices of AT&T and the Purchaser are located at 32
Avenue of the Americas, New York, New York 10013-2412. Their telephone number at
such offices is (212) 387-5400. The Purchaser has not conducted any business
other than in connection with the Offer and the Merger.
The name, business address, citizenship, present principal occupation and
employment history for the past five years of each of the directors and
executive officers of AT&T and the Purchaser are set forth in Schedule I.
AT&T is subject to the information and reporting requirements of the
Securities Exchange Act and is required to file periodic reports, proxy
statements and other information with the SEC relating to its business,
financial condition and other matters. Certain information, as of particular
dates, concerning AT&T's business, principal physical properties, capital
structure, material pending legal proceedings, operating results, financial
condition, directors and officers (including their remuneration and stock
options granted to them), the principal holders of AT&T's securities, any
material interests of such persons in transactions with AT&T and certain other
matters is required to be disclosed in proxy statements and annual reports
distributed to AT&T's stockholders and filed with the SEC. You may inspect or
copy these reports, proxy statements and other information at the SEC's public
reference facilities and they should also be available for inspection in the
same manner as set forth with respect to GRC International in Section 8.
Except as set forth elsewhere in this Offer to Purchase or Schedule I
hereto: (a) neither we nor, to our knowledge, any of the persons listed in
Schedule I hereto or any associate or majority-owned subsidiary of ours or of
any of the persons so listed, beneficially owns or has a right to acquire any
Shares or any other equity securities of GRC International; (b) neither we nor,
to our knowledge, any of the persons or entities referred to in clause (a) above
or any of their executive officers, directors or subsidiaries has effected any
transaction in the Shares or any other equity securities of GRC International
during the past 60 days; (c) neither we nor, to our knowledge, any of the
persons listed in Schedule I hereto, has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of GRC International (including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any such securities, joint ventures, loan or option arrangements, puts or
calls, guaranties of loans, guaranties against loss or the giving or withholding
of proxies, consents or authorizations); (d) since February 22, 1998, there have
been no transactions which would require reporting under the rules and
regulations of the SEC between us or any of our subsidiaries or, to our
knowledge, any of the persons listed in Schedule I hereto, on the one hand, and
GRC International or any of its executive officers, directors or affiliates, on
the other hand; and (e) since February 22, 1998, there have been no contacts,
negotiations or transactions between us or any of our subsidiaries or, to our
knowledge, any of the persons listed in Schedule I hereto, on the one hand, and
GRC International or any of its subsidiaries or affiliates, on the other hand,
concerning a merger, consolidation or acquisition, a tender offer or other
acquisition of securities, an election of directors or a sale or other transfer
of a material amount of assets.
10. BACKGROUND OF THE OFFER; CONTACTS WITH GRC INTERNATIONAL.
In the summer of 1999, AT&T's Government Markets business unit ("AT&T
Government Markets") began a review of possible strategic initiatives that might
complement its existing business and contract base and enable it to seek a
broader range of business opportunities with the federal government. Shortly
thereafter, AT&T Government Markets engaged Lehman Brothers Inc. ("Lehman
Brothers") to assist it in its review. During its review, AT&T Government
Markets identified GRC International as a potential acquisition candidate.
On December 13, 1999, a representative of Lehman Brothers contacted the
Vice Chairman of the Board of Directors of GRC International and indicated
AT&T's interest in exploring a business relationship with GRC International.
After conferring with members of GRC International senior management, the GRC
International Vice Chairman informed the Lehman Brothers' representative that if
AT&T were interested in further discussions, it would be desirable for AT&T
promptly to clarify its interest. At the same time, a meeting between the
parties was scheduled for December 22, 1999.
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<PAGE> 17
On December 21, 1999, AT&T and GRC International executed a confidentiality
agreement.
On December 22, 1999, representatives of AT&T and a representative of
Lehman Brothers met with Gary L. Denman, the Chief Executive Officer of GRC
International, and James P. Allen, its Chief Financial Officer. At that meeting,
Dr. Denman and Mr. Allen reviewed GRC International's businesses and operations.
At the conclusion of the discussions, AT&T's representatives indicated to Dr.
Denman and Mr. Allen AT&T's interest in exploring a potential acquisition of GRC
International. In response, the GRC representatives stated that GRC
International was considering a proposal that it had received from a third party
regarding a transaction involving GRC International, requested AT&T to further
clarify its interest and indicated that the Board of Directors of GRC
International would not likely be receptive to a proposal from AT&T that valued
the Shares at less than $15.00 per Share. On December 27, 1999, AT&T's
representative informed GRC International's representatives that AT&T was
preparing a letter to clarify its interest.
On December 28, 1999, AT&T provided a letter to Dr. Denman, which indicated
AT&T's non-binding interest in acquiring GRC International for cash at a
purchase price in the range of $14.00 to $15.50 per Share, subject to
satisfactory completion of due diligence investigations and negotiation of
definitive transaction documents. In its letter, AT&T requested of GRC that AT&T
be permitted to proceed with due diligence activities and that GRC International
negotiate with AT&T on an exclusive basis through January 31, 2000. Over the
next several days, representatives of AT&T and GRC International and their
respective financial advisors held numerous conversations regarding AT&T's
indication of interest.
On December 30, 1999, following a meeting of the Board of Directors of GRC
International, a representative of Banc of America Securities, GRC
International's financial advisor, contacted a representative of AT&T and stated
that GRC International was not interested in pursuing further discussions
regarding a potential acquisition transaction at the lower end of AT&T's
indicated price range, but would be willing to explore a potential acquisition
transaction based at the higher end of AT&T's indicated range. Later that day,
the AT&T representative informed the representative of Banc of America
Securities of AT&T's willingness to proceed with further discussions based on a
$15.00 per Share transaction price.
Over the next several days, the parties held a number of discussions
regarding, among other matters, AT&T's intentions with respect to the GRC
International workforce and operations in the event that AT&T were to acquire
GRC International.
Following a meeting of GRC International's Board of Directors on January 4,
2000, a representative of Banc of America Securities contacted an AT&T
representative. He stated that the Board of Directors of GRC International was
willing to proceed with negotiations with AT&T on an exclusive basis regarding a
potential acquisition of GRC International based on AT&T's indicated interest at
a transaction price of $15.00 per Share, provided that the parties reach
agreement on the terms of the transaction no later than January 31, 2000.
Over the period from January 10, 2000 through January 12, 2000,
representatives of AT&T and Lehman Brothers met with members of senior
management of GRC International and representatives of Banc of America
Securities to conduct a review of GRC International's business and operations.
Also during this period, AT&T conducted legal, business and financial due
diligence with respect to GRC International.
On January 14, 2000, GRC International provided AT&T a draft merger
agreement that contemplated an all cash acquisition of GRC International through
a first-step tender offer for all outstanding Shares followed by a second-step
merger in which all remaining Shares would be converted into the right to
receive the same per Share consideration paid in the tender offer.
On January 26, 1999, AT&T's legal counsel informed GRC International's
counsel that as a condition to entering into the proposed transaction, AT&T
would require several significant stockholders of GRC International to enter
into an agreement with AT&T pursuant to which, among other things, such
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<PAGE> 18
stockholders would agree to tender their Shares in the first-step tender offer.
Beginning that day and continuing through February 14, 2000, the parties'
representatives and their respective legal counsel negotiated the terms of the
Merger Agreement. Although the parties were not able to reach final agreement on
the terms of the proposed transaction by the January 31, 2000 deadline, the
parties viewed the negotiations as sufficiently productive to warrant continued
negotiations.
On February 9, 2000, AT&T's senior executive management approved the
submission of the proposed transaction to AT&T's Board of Directors, and on
February 11, 2000, the Board of Directors of AT&T, acting by unanimous written
consent, approved the proposed acquisition of GRC International, subject to
satisfactory completion of definitive transaction documents.
On February 14, 2000, the GRC International Board of Directors met to
consider the proposed transaction with AT&T. At the meeting, the GRC
International Board unanimously approved the Offer, the Merger and the Merger
Agreement, determined that the terms of each are advisable, fair to, and in the
best interests of, GRC International and its stockholders, and determined to
recommend that stockholders of GRC International accept the Offer and tender
their shares pursuant to the Offer. Following the meeting, the Merger Agreement
and the Stockholder Agreements were executed. The parties issued separate press
releases announcing execution of the Merger Agreement shortly thereafter.
11. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; THE STOCKHOLDER AGREEMENTS;
STATUTORY REQUIREMENTS; APPRAISAL RIGHTS; PLANS FOR GRC INTERNATIONAL.
PURPOSE. The purpose of the Offer and the Merger is to acquire control of,
and the entire equity interest in, GRC International. The Offer, as the first
step in the acquisition of GRC International, is intended to facilitate the
acquisition of all the Shares. The purpose of the Merger is to acquire all
capital stock of GRC International not purchased pursuant to the Offer or
otherwise.
Stockholders of GRC International who sell their Shares in the Offer will
cease to have any equity interest in GRC International or any right to
participate in its earnings and future growth. If the Merger is consummated,
non-tendering stockholders will no longer have an equity interest in GRC
International. Similarly, after selling their Shares in the Offer or the
subsequent Merger, stockholders of GRC International will not bear the risk of
any decrease in the value of GRC International.
THE MERGER AGREEMENT. The following summary description of the Merger
Agreement is qualified in its entirety by reference to the agreement itself,
which we have filed as an exhibit to the Tender Offer Statement on Schedule TO
that we filed with the SEC, which you may examine and copy as set forth in
Section 8 above (except that it will not be available at the regional offices of
the SEC).
THE OFFER. The Merger Agreement provides for the commencement of the Offer
by the Purchaser. The obligation of the Purchaser to accept for payment and pay
for Shares validly tendered pursuant to the Offer is subject to the prior
satisfaction or waiver by the Purchaser of the conditions to the Offer set forth
in Section 14 hereof. The Merger Agreement provides that, without the prior
written consent of GRC International, the Purchaser will not (a) decrease the
Offer Price, or change the form of consideration payable in the Offer; (b) seek
to purchase less than all outstanding Shares; (c) amend or waive the
satisfaction of the Minimum Condition; or (d) impose additional conditions to
the Offer or amend any other terms of the Offer in any manner materially adverse
to the holders of Shares.
The Purchaser has agreed that it will not, without the consent of GRC
International, terminate or withdraw the Offer or (except as described below)
extend the expiration date of the Offer; however, subject to the immediately
following two sentences, without the consent of GRC International, the Purchaser
has the right to terminate or withdraw the Offer or extend the Offer from time
to time if at the then-scheduled expiration date of the Offer the conditions to
the Offer, as set forth in Section 14, have not been satisfied or earlier
waived. The Purchaser has agreed in the Merger Agreement that it will extend the
Offer until 5:00 p.m., Eastern time, on March 27, 2000, unless another party
commences a competing tender offer for the Shares that expires on or before
March 27, 2000, in which case the Purchaser will extend the Offer until 5:00
p.m., Eastern time, on the business day before the competing tender offer is
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<PAGE> 19
initially scheduled to expire. In addition, GRC International has the right to
require the Purchaser to extend the period of time for which the Offer is open,
but only until April 17, 2000, if the Merger Agreement has not been terminated
and at the then-scheduled expiration date of the Offer any of the conditions to
the Offer described in Section 14, other than the Minimum Condition, has not
been satisfied or waived, and if at the time of such extension any such
condition is reasonably capable of being satisfied and the failure of any such
condition to be satisfied is not the result of a willful breach by GRC
International of any of its covenants and agreements contained in the Merger
Agreement. The Purchaser may, without the consent of GRC International, extend
the expiration date of the Offer for any period required by applicable rules,
regulations, interpretations or positions of the SEC or its staff applicable to
the Offer or for any period required by applicable law.
THE MERGER. The Merger Agreement provides that on or promptly following
the second business day after the satisfaction of the conditions to the Merger
contained in the Merger Agreement, the Purchaser will be merged with and into
GRC International. As a result of the Merger, the separate corporate existence
of the Purchaser will cease and GRC International will continue as the surviving
corporation ("the Surviving Corporation"). At the effective time of the Merger
(the "Effective Time"), each Share issued and outstanding immediately prior to
the Effective Time (other than any Shares held by AT&T, the Purchaser, any
wholly-owned subsidiary of AT&T or the Purchaser, in the treasury of GRC
International or by any subsidiary of GRC International, which Shares will be
canceled and retired and will cease to exist, and any Shares held by
stockholders who shall have properly demanded and perfected appraisal rights
under applicable Delaware law) will be canceled and retired and will be
converted into the right to receive the Merger Consideration in cash, without
interest thereon. At the Effective Time, each share of common stock of the
Purchaser outstanding immediately prior to the Effective Time will be converted
into one share of common stock of the Surviving Corporation.
The Merger Agreement provides that the directors of the Purchaser
immediately before the Effective Time will be the initial directors of the
Surviving Corporation and that the officers of GRC International immediately
before the Effective Time will be the initial officers of the Surviving
Corporation. The Merger Agreement provides that, at the Effective Time, the
certificate of incorporation of the Purchaser immediately before the Effective
Time will be the certificate of incorporation of the Surviving Corporation,
except that the certificate of incorporation of the Surviving Corporation will
provide that the Surviving Corporation will be named "GRC International, Inc."
The Merger Agreement also provides that the bylaws of the Purchaser immediately
before the Effective Time will be the bylaws of the Surviving Corporation,
subject to a requirement in the Merger Agreement that certain indemnification
provisions be preserved. See "Indemnification; Directors' and Officers'
Insurance."
The Surviving Corporation or the designated paying agent will be entitled
to deduct and withhold from the consideration otherwise payable pursuant to the
Merger Agreement to any holder of Shares such amounts that the Surviving
Corporation or the paying agent is required to deduct and withhold with respect
to the making of such payment under the Internal Revenue Code, the rules and
regulations promulgated thereunder or any provision of state, local or foreign
tax law.
GRC International has agreed in the Merger Agreement that, if required by
applicable law in order to consummate the Merger, it will as promptly as
practicable after the consummation of the Offer (a) prepare and file with the
SEC a Proxy Statement relating to the Merger Agreement, and use its reasonable
efforts to have it cleared by the SEC and to cause the Proxy Statement to be
mailed to its stockholders and (b) convene a special meeting of its stockholders
for the purpose of considering and taking action upon the Merger Agreement.
The Merger Agreement further provides that, notwithstanding the foregoing,
if the Purchaser acquires at least 90% of the outstanding Shares pursuant to the
Offer, the parties to the Merger Agreement will take all necessary and
appropriate actions to cause the Merger to become effective as soon as
practicable after the acceptance for payment of and payment for the Shares by
the Purchaser pursuant to the Offer
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<PAGE> 20
without a meeting of the stockholders of GRC International, in accordance with
Section 253 of the Delaware General Corporation Law (the "DGCL").
STOCK OPTIONS AND OTHER AWARDS. The GRC International board of directors
and its Compensation Committee have adopted amendments to the GRC International
1985 Employee Stock Option Plan, the GRC International 1994 Employee Stock
Option Plan, the GRC International 1998 Employee Stock Option Plan, the GRC
International Cash Compensation Replacement Plan, and the GRC International
Directors Fee Replacement Plan (collectively, the "Stock Plans") to provide that
upon the consummation of the Offer, each then outstanding stock option granted
under any of the Stock Plans (the "Options") will be converted into an
obligation of GRC International to pay cash in an amount in respect thereof
equal to the product of (a) the excess, if any, of the per Share price paid for
Shares tendered in the Offer over the exercise price of the Option and (b) the
number of Shares subject to such Option, less any income or employment tax
withholding required under the Code or any provision of foreign, state or local
law. Holders of Options that are exercisable as of the consummation of the Offer
will receive the cash payment described above as soon as reasonably practicable
following consummation of the Offer. Holders of Options that are not exercisable
as of the consummation of the Offer and that were granted under GRC
International's 1985, 1994 or 1998 employee stock option plan will receive such
cash payment at the time each such unvested Option would otherwise have become
exercisable subject to the satisfaction of the terms and conditions set forth in
the applicable option award agreement and the plan under which such Option was
granted, or at such earlier date as may be determined by AT&T in its sole
discretion. If the holder's employment or service with GRC International or any
of its subsidiaries is involuntarily terminated for reasons other than "cause"
(as defined in the Merger Agreement) following the consummation of the Offer,
GRC International or the Surviving Corporation, as applicable, will make the
payment of the amount described above shortly after such termination. Holders of
Options granted under the GRC International Cash Compensation Replacement Plan
or the GRC International Directors Fee Replacement Plan, whether or not such
Options are exercisable as of the consummation of the Offer, will receive the
payment described above as soon as reasonably practicable following the
consummation of the Offer. Each deferred stock unit credited to a director's
account under GRC International's terminated Director Retirement Plan will be
converted into the right to receive cash in an amount equal to the product of
(a) the per Share price paid for Shares tendered in the Offer and (b) the number
of deferred stock units held by such director.
DIRECTORS. The Merger Agreement provides that, upon the payment by the
Purchaser for Shares pursuant to the Offer, AT&T will be entitled to designate
up to such number of directors, rounded up to the next whole number, on the GRC
International Board of Directors as will give AT&T representation equal to the
product of the total number of directors on the GRC International Board (giving
effect to the directors so elected pursuant to such provision and including
current directors serving as officers of GRC International) multiplied by the
percentage that the aggregate number of Shares beneficially owned by AT&T or its
affiliates bears to the total number of Shares then outstanding. Subject to any
applicable legal limitations, GRC International has agreed that it will, upon
request of AT&T, promptly take all actions necessary to cause AT&T's designees
to be so elected. However, AT&T's right to designate directors is subject, prior
to the time the Merger becomes effective, to there being at least two members on
the GRC International Board who are neither officers of or designees of GRC
International nor affiliates or associates of AT&T ("Independent Directors"). If
no Independent Directors remain, the remaining directors will designate one
person to fill such vacancy who is an Independent Director and who will be
deemed to be an Independent Director for all purposes of the Merger Agreement.
Following the time AT&T's designees constitute a majority of the GRC
International Board, and prior to the Effective Time, any amendment or
termination of the Merger Agreement by GRC International, any extension by GRC
International of the time for performance of any of the obligations of AT&T and
any other action by GRC International in connection with the Merger Agreement
required to be taken by the GRC International Board, would require the approval
of a majority of the Independent Directors.
REPRESENTATIONS AND WARRANTIES. GRC International has made customary
representations and warranties to AT&T and the Purchaser in the Merger Agreement
with respect to, among other matters, its
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<PAGE> 21
organization and qualification, capitalization, authority, conflicts, required
filings, consents, financial statements, public filings, absence of certain
changes or events, litigation, employee benefit plans, labor and employment,
properties, intellectual property, insurance, environmental matters, government
contracts, licenses and permits, material contracts, taxes, information to be
included in the Proxy Statement, brokers, the inapplicability of takeover
statutes and the expiration of the rights issued under GRC International's
shareholder rights plan. AT&T and the Purchaser have made customary
representations and warranties to GRC International with respect to, among other
matters, their organization, authority, conflicts and required filings, consent,
financing arrangements, brokers, and information to be included in the Proxy
Statement.
COVENANTS. The Merger Agreement obligates GRC International and its
subsidiaries, from the date of the Merger Agreement until the Effective Time, to
conduct their businesses in the ordinary course of business consistent with past
practice and obligates GRC International and its subsidiaries to use their
reasonable efforts to preserve intact their business organizations and keep
available the services of their present officers and employees, use all
reasonable efforts to preserve their relationships with principal customers,
suppliers and others with which they have business dealings, comply in all
material respects with all applicable laws and regulations and maintain in full
force and effect all the permits necessary for their businesses. The Merger
Agreement also contains specific restrictive covenants as to certain
impermissible activities prior to the Effective Time without the prior written
consent of AT&T relating to, among other things, amendments to GRC
International's certificate of incorporation or by-laws, issuances or sales of
its securities, changes in capital structure, dividends and other distributions,
repurchases or redemptions of securities, material acquisitions or dispositions,
increases in compensation or adoption of new benefit plans, changes in
accounting methods, tax elections, settlement of litigation and certain other
material events or transactions.
NO SOLICITATION. The Merger Agreement requires GRC International, its
affiliates and their respective officers, directors, employees, representatives
and agents (collectively, "Agents") to immediately cease any existing
discussions or negotiations with any parties with respect to any proposal or
offer (in each case whether or not in writing) to acquire in any manner,
directly or indirectly, all or a substantial part of the assets or business and
properties of GRC International or any of its subsidiaries or any capital stock
of or other equity interest in GRC International or any of its subsidiaries,
whether by merger, tender offer, exchange offer, sale of assets or similar
transactions involving GRC International or any subsidiary, division or
operating or principal business unit of GRC International (an "Acquisition
Proposal"). The Merger Agreement further provides that GRC International and its
controlled affiliates will not, and they will use their best efforts to cause
their respective Agents not to, directly or indirectly, encourage, solicit,
participate in or initiate discussions or negotiations with or provide any
information to any person concerning an Acquisition Proposal. However, before
the Purchaser purchases Shares in the Offer, GRC International may furnish
information concerning its business, properties or assets in response to a
request for such information made after the date of the Merger Agreement which
was not encouraged, solicited or initiated, directly or indirectly, by GRC
International or any of its affiliates or their respective Agents after the date
of the Merger Agreement, and may participate in discussions and negotiations
with the recipient concerning an Acquisition Proposal, if and only to the extent
that (x) such party has submitted a written Acquisition Proposal to the GRC
International Board of Directors relating to such transaction, (y) the GRC
International Board determines in good faith (i) after consulting with its
independent financial advisors (A) that such party is reasonably capable of
consummating such Acquisition Proposal, taking into account the legal,
financial, regulatory and other aspects of such Acquisition Proposal and the
party making such Acquisition Proposal and (B) such Acquisition Proposal is
reasonably likely to be a Superior Proposal, and (ii) after receipt of advice
from outside legal counsel to GRC International, that failure to take such
action would be inconsistent with the fiduciary duties of the Board of Directors
of GRC International under applicable law, and (z) such party has signed a
confidentiality agreement substantially identical to the confidentiality
agreement entered into between GRC International and AT&T. A "Superior Proposal"
is an Acquisition Proposal that involves payment of consideration to GRC
International's stockholders that is financially superior to that payable in the
Offer and the Merger.
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GRC International is required under the Merger Agreement, promptly
following receipt of an Acquisition Proposal (and in any event not later than 24
hours after receipt), to notify AT&T of the receipt of the Acquisition Proposal,
which notice must indicate in reasonable detail the identity of the offeror and
the material terms and conditions of the proposal, and GRC International is
required to keep AT&T promptly advised of the status and material terms of any
such inquiry, offer or proposal.
PUBLIC ANNOUNCEMENTS. AT&T and GRC International have agreed to consult
with each other before issuing any press release or other public statements with
respect to the Offer or the Merger, and each has agreed not to issue any such
press release or make any such public statement prior to consultation, except as
may be required by law or in accordance with any listing agreement that they may
have with any securities exchange.
EFFORTS. Subject to the terms and conditions contained in the Merger
Agreement, AT&T, the Purchaser and GRC International have agreed to use their
reasonable best efforts to obtain in a timely manner all necessary waivers,
consents and approvals and to effect all necessary registrations and filings,
and to use all reasonable best efforts to take, or cause to be taken, all other
actions and to do, or cause to be done, all other things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by the Merger Agreement. The obligations include, but
are not limited to, cooperating in responding to inquiries from, and making
presentations to, regulatory authorities and customers, defending against and
responding to any action, suit, proceeding, or investigation challenging or
relating to the Merger Agreement or the transactions contemplated therein, and
promptly making all regulatory filings and applications as are necessary for the
consummation of the transactions contemplated by the Merger Agreement.
Notwithstanding anything in the Merger Agreement to the contrary, in connection
with any filing or submission or other action required to be made or taken by
any party to effect the transactions contemplated by the Merger Agreement, GRC
International is not permitted, without the prior written consent of AT&T, to
commit to any divestiture transaction, and AT&T is not required to divest or
hold separate or otherwise take or commence to take any action that, in the
reasonable discretion of AT&T, limits its freedom of action with respect to, or
its ability to retain, GRC International or any of GRC International's
affiliates or any material portion of GRC International's assets or businesses.
EMPLOYEE BENEFIT PLANS. The Merger Agreement provides, that from the
consummation of the Offer until the first anniversary thereof, GRC International
or the Surviving Corporation, as applicable, will provide medical, dental,
vision care, life and disability insurance, severance, vacation and "section
125" benefits to the employees of GRC International and its subsidiaries who are
so employed as of the consummation of the Offer (the "Employees") and their
eligible dependents that are substantially similar in the aggregate to GRC
International's current welfare benefit plans. The Merger Agreement also
specifies the circumstances under which Employees will receive credit for prior
service with GRC International and its subsidiaries in the event GRC
International or a subsidiary becomes a participating company in the employee
benefit plans of AT&T, or an Employee otherwise becomes employed by a company
that participates in the employee benefit plans of AT&T.
INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. Subject to the
limitations on indemnification contained in the DGCL, GRC International will, to
the fullest extent permitted under applicable law and regardless of whether the
Merger becomes effective, and after the Effective Time, the Surviving
Corporation will for a period of six years following the Effective Time, to the
fullest extent permitted under applicable law, and AT&T will, for such six-year
period, to the extent GRC International or the Surviving Corporation would be
required or permitted under applicable law, indemnify and hold harmless each
director and officer of GRC International (collectively, the "Indemnified
Parties") from and against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages, liabilities and
amounts paid in settlement in connection with any claim, action, suit,
proceeding or investigation arising out of or pertaining to matters relating to
their duties or actions in their capacity as officers and directors in
connection with any of the transactions contemplated by the Merger Agreement and
existing at the Effective Time, including without limitation liabilities arising
under the federal securities laws in connection with the Offer or the Merger. In
the event of any such claim, action, suit,
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proceeding or investigation (whether arising prior to or after the Effective
Time), GRC International or the Surviving Corporation will advance the
reasonable fees and expenses of counsel selected by the Indemnified Parties,
which counsel must be reasonably satisfactory to GRC International or the
Surviving Corporation, as applicable, promptly as statements for such fees and
expenses are received (provided the person to whom such expenses are advanced
provides a customary undertaking complying with applicable law to repay such
advances if it is ultimately determined that such person is not entitled to
indemnification). GRC International, AT&T (after the consummation of the Offer)
and the Surviving Corporation will cooperate in the defense of any such matter,
however, none of GRC International, AT&T or the Surviving Corporation will be
liable for any settlement effected without its prior written consent. For six
years after the Effective Time, AT&T will cause to be maintained or obtained
officers' and directors' liability insurance covering the Indemnified Parties
who are currently covered by GRC International's officers and directors
liability insurance policy with respect to matters or events occurring prior to
the Effective Time on terms not less favorable than those in effect on the date
of the Merger Agreement in terms of coverage and amounts to the extent
available. However, if the aggregate annual premiums for such insurance at any
time during such period exceed 150% of the per annum rate of premium paid by GRC
International for such insurance as of the date of the Merger Agreement, then
AT&T will be required to provide the maximum coverage then available at an
annual premium equal to 150% of such per annum rate as of the date of the Merger
Agreement. The Surviving Corporation is required to continue in effect, without
amendment, repeal or modification in any manner that would adversely affect the
rights of the persons entitled to their protections and privileges, the
indemnification provisions provided on the date of the Merger Agreement by GRC
International's by-laws for a period of not less than six years following the
Effective Time. Neither GRC International nor the Surviving Corporation will
have any obligation under the indemnification provisions of the Merger Agreement
to indemnify any Indemnified Party against any cost, expense, judgment, fine,
loss, claim, damage, liability or settlement amount found to have resulted
solely from such Indemnified Person's own gross negligence or willful
misconduct.
If the Surviving Corporation or any of its successors or assigns
consolidates with or merges into any other entity and is not the continuing or
surviving corporation or entity of such consolidation or merger, or transfers
all or substantially all of its properties and assets to any entity, then proper
provision will be made so that the successors and assigns of the Surviving
Corporation assume the obligations contained in the indemnification provisions
of the Merger Agreement.
NOTIFICATION OF CERTAIN MATTERS. GRC International has agreed to promptly
notify AT&T of the occurrence or non-occurrence of any fact or event which would
be reasonably likely to cause any representation or warranty contained in the
Merger Agreement to be untrue or inaccurate in any material respect at any time
prior to the Effective Time, cause any condition to the Offer not to be
satisfied in any material respect at any time prior to the date the Purchaser
purchases Shares pursuant to the Offer, cause any covenant, condition or
agreement under the Merger Agreement not to be complied with or satisfied in any
material respect, and of any failure by GRC International to comply in all
material respects with its covenants and agreements contained in the Merger
Agreement. GRC International is also required to give prompt notice to AT&T of
any notice or other communication from any third party alleging that the consent
of such third party is or may be required in connection with the transactions
contemplated by the Merger Agreement.
STATE TAKEOVER LAWS. The Merger Agreement provides that GRC International
will take all action necessary to render any applicable state takeover statute
or other similar statute or regulation inapplicable to the Offer, the Merger,
the Merger Agreement or any other transaction contemplated by the Merger
Agreement.
CONDITIONS TO CONSUMMATION OF THE MERGER. Pursuant to the Merger
Agreement, the respective obligations of AT&T, the Purchaser and GRC
International to consummate the Merger are subject to the satisfaction, at or
before the Effective Time, of each of the following conditions: (a) the
Purchaser shall have purchased, or caused to be purchased, Shares pursuant to
the Offer; (b) the stockholders of GRC International shall have approved the
transactions contemplated by the Merger Agreement, if required by
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applicable law; and (c) no statute, rule, regulation, judgment, writ, decree,
order or injunction shall have been promulgated, enacted, entered or enforced,
and no other action shall have been taken, by any governmental entity that in
any of the foregoing cases has the effect of making illegal or directly or
indirectly restraining, prohibiting or restricting the consummation of the
Merger.
TERMINATION. The Merger Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, notwithstanding any prior
approval by the stockholders of GRC International:
(a) by the written consent of AT&T and GRC International;
(b) by either AT&T or GRC International if any governmental entity
shall have issued an order, decree or ruling or taken any other action
permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by the Merger Agreement and such order, decree,
ruling or other action shall have become final and non-appealable, but only
if the party seeking to terminate has used its reasonable best efforts to
have such action vacated or reversed in accordance with its obligations
described under "Efforts;"
(c) by GRC International:
(i) if any person has made a bona fide written offer to acquire GRC
International which was not encouraged, solicited or initiated, directly
or indirectly, by GRC International or any of its affiliates or their
respective Agents after the date of the Merger Agreement (A) that the
GRC International Board of Directors determines in its good faith
judgment is a Superior Proposal and (B) as a result of which the GRC
International Board determines in good faith, after receiving advice
from outside counsel to GRC International, that failure to take such
action would be inconsistent with its fiduciary duties under applicable
law. However, before terminating the Merger Agreement pursuant to this
provision, not less than five business days prior to such termination,
GRC International must notify AT&T of its intention to so terminate the
Merger Agreement and must cause its financial and legal advisers to
negotiate during such five-business-day period with AT&T in an effort to
make such adjustments in the terms and conditions of the Merger
Agreement as would enable GRC International to proceed with the
transactions contemplated by the Merger Agreement on such adjusted terms
(during which period the Purchaser may not accept for payment or
purchase Shares pursuant to the Offer), and notwithstanding such
negotiations and adjustments, the GRC International Board must
reasonably conclude, in its good faith judgment, that the transactions
contemplated by the Merger Agreement on such terms as adjusted, are not
at least as favorable to the stockholders of GRC International as the
competing third party offer. Any termination under this provision will
not be effective until GRC International has made payment of the full
termination fee required by the Merger Agreement (see "Fees and
Expenses");
(ii) if as the result of the failure to be satisfied of any of the
conditions described in Section 14, AT&T or the Purchaser has terminated
the Offer or the Offer has expired without the Purchaser having
purchased any Shares; provided, however, that the GRC International may
not terminate the Merger Agreement pursuant to this provision if the
failure of any such condition to be satisfied at the time of such
termination results from GRC International's failure to perform any of
its obligations under the Merger Agreement or from facts or
circumstances that constitute a breach of any representation or warranty
of GRC International under the Merger Agreement; or
(iii) if AT&T or the Purchaser has breached in any material respect
any of its representations, warranties, covenants or other agreements
contained in the Merger Agreement which breach or failure to perform is
incapable of being cured or has not been cured within 15 business days
after GRC International gives AT&T written notice of the breach;
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(d) by AT&T or the Purchaser:
(i) if prior to the purchase of any Shares pursuant to the Offer,
the GRC International Board of Directors or any committee of the Board
has withdrawn, modified or changed, or publicly proposed to withdraw,
modify or change, in a manner adverse to AT&T or the Purchaser, its
approval or recommendation of the Offer, the Merger Agreement or the
Merger or has approved or recommended or publicly proposed to approve or
recommend an Acquisition Proposal, or if the GRC International Board of
Directors or any committee of the Board fails to reaffirm publicly and
unconditionally its recommendation that GRC International stockholders
tender their Shares in the Offer, which reaffirmation must be made
within ten days after AT&T's written request to do so and must also
include the unconditional rejection of such Acquisition Proposal (to the
extent not previously withdrawn);
(ii) if AT&T or the Purchaser has withdrawn or terminated the Offer
or the Offer has expired in accordance with its terms and the terms of
the Merger Agreement without AT&T or the Purchaser having purchased any
Shares in the Offer, unless AT&T or the Purchaser is in material breach
of its obligations under the Merger Agreement;
(iii) any Person or "group", other than AT&T or their affiliates or
any group of which any of them is a member, has acquired beneficial
ownership of 25% or more of the Shares; provided that for purposes of
this provision, none of Cilluffo Associates, L.P., Gerald McNichols, or
their representative affiliates or any group of which any of them is a
member, shall be deemed to have acquired 25% or more of the Shares
solely by virtue of the execution, delivery or performance of the
Stockholders Agreements; or
(iv) if GRC International has breached any of its representations
or warranties which breach would give rise to the failure to be
satisfied of the condition regarding GRC International's representations
and warranties described in Section 14, or if, prior to the consummation
of the Offer, GRC International has failed to perform its covenants or
other agreements contained in the Merger Agreement which failure to
perform would give rise to the failure to be satisfied of the condition
regarding GRC International's covenants described in Section 14, which
breach or failure to perform is incapable of being cured or has not been
cured within 15 business days after AT&T gives GRC International written
notice of the breach.
FEES AND EXPENSES. Except as provided below, all fees, costs and expenses
incurred in connection with the Merger Agreement and the transactions
contemplated by the Merger Agreement will be paid by the party incurring such
expenses.
If (a) AT&T or the Purchaser terminates the Merger Agreement pursuant to
subparagraph (d)(i) of "Termination" above, or GRC International terminates the
Merger Agreement pursuant to subparagraph (c)(i) of "Termination" above or (b)
GRC International terminates the Merger Agreement pursuant to subparagraph
(c)(ii) or AT&T or the Purchaser terminates the Merger Agreement pursuant to
subparagraph (d)(ii) or (d)(iii) of "Termination" above and, in the case of a
termination under subparagraph (c)(ii), (d)(ii) or (d)(iii), at any time after
the date of the Merger Agreement and prior to such termination an Acquisition
Proposal has been publicly announced or otherwise publicly communicated to the
stockholders of GRC International generally and prior to the first anniversary
of such termination, GRC International enters into a definitive agreement with
respect to an Acquisition Proposal or an Acquisition Proposal is consummated,
then GRC International is obligated to pay to AT&T (1) in the case of a
termination pursuant to subparagraph (d)(i), not later than one business day
following such termination, (2) in the case of a termination pursuant to
subparagraph (c)(i), prior to such termination, or (3) in the case of a
termination of the Merger Agreement pursuant to subparagraph (c)(ii), (d)(ii) or
(d)(iii), not later than one business day following the entering into of a
definitive agreement with respect to, or the consummation of, an Acquisition
Proposal prior to the first anniversary of such termination, as applicable, a
termination fee of $6 million and must reimburse AT&T for up to $500,000 of
out-of-pocket expenses.
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AMENDMENT. The Merger Agreement may be amended by AT&T, the Purchaser and
the GRC International Board of Directors at any time prior to the Effective
Time, except that, after approval of the Merger Agreement by the stockholders of
GRC International, no amendment may be made which would not otherwise be
permitted under the DGCL.
EXTENSION; WAIVER. At any time prior to the Effective Time, subject to the
provisions of the Merger Agreement requiring certain actions be approved by the
Independent Directors, the parties may (a) extend the time for the performance
of any of the obligations or other acts of the other party, (b) waive any
inaccuracies in the representations and warranties of the other party contained
in the Merger Agreement or (c) waive compliance with any of the agreements of
the other party or with any conditions to its own obligations.
THE STOCKHOLDER AGREEMENTS. Concurrently with the execution of the Merger
Agreement, AT&T and the Purchaser entered into separate Stockholder Agreements
(the "Stockholder Agreements") with two significant stockholders of GRC
International (the "Stockholders"). The Stockholder Agreement with Cilluffo
Associates, L.P., a Delaware limited partnership whose managing general partner
is Frank J. A. Cilluffo, a member of the Board of Directors of GRC
International, relates to 1,708,000 Shares beneficially owned by Cilluffo
Associates, and the Stockholder Agreement with Dr. Gerald R. McNichols, who
serves on the GRC Board of Directors, relates to 2,001,700 Shares beneficially
owned by him (such Shares, with respect to each Stockholder, and any shares of
capital stock or other voting securities of GRC International which such
Stockholder may acquire beneficial ownership of during the term of such
Stockholder's Stockholder Agreement, such Stockholder's "Covered Shares"). The
following summary description of the Stockholder Agreements is qualified in its
entirety by reference to the agreements themselves, copies of which we have
filed as exhibits to the Tender Offer Statement on Schedule TO that we filed
with the SEC.
Each Stockholder has agreed in the applicable Stockholder Agreement to
tender and not withdraw his or its Covered Shares pursuant to the Offer. Each
also agreed that, while the Stockholder Agreement is in effect, at any meeting
of the stockholders of GRC International, such Stockholder will vote his or its
Covered Shares in favor of the Merger Agreement, against any action or agreement
that would result in a breach of any covenant, representation or warranty or any
other obligation or agreement of GRC International under the Merger Agreement,
against any Acquisition Proposal made by any person other than AT&T or any of
its affiliates and against any action or agreement that would impede, interfere
with, delay, postpone or attempt to discourage the Merger or the Offer. Each
Stockholder has also granted representatives of AT&T an irrevocable proxy to
vote such Stockholder's Covered Shares in favor of the Merger Agreement and
otherwise as contemplated by the preceding sentence.
In addition each Stockholder has agreed not to (a) sell, transfer, pledge,
encumber, grant, assign or otherwise dispose of or enforce any redemption
agreement with GRC International, or enter into any contract, option or other
agreement or understanding with respect to any transfer of any or all of his or
its Covered Shares, (b) grant any proxy or power-of-attorney, deposit any
Covered Shares into a voting trust or enter into a voting agreement with respect
to his or its Covered Shares or any interest in any of such Stockholder's
Covered Shares (except to AT&T and Purchaser) or (c) take any other action would
make any representation or warranty of such Stockholder under the applicable
Stockholder Agreement untrue or incorrect or have the effect of preventing or
disabling such Stockholder from performing his or its obligations under the
applicable Stockholder Agreement or would otherwise hinder or delay AT&T or the
Purchaser from acquiring a majority of the Shares.
Each Stockholder further agreed, while the applicable Stockholder Agreement
is in effect, except with respect to AT&T and its affiliates, that such
Stockholder will not, and will not permit any of his or its Agents to (a)
initiate, solicit or encourage, directly or indirectly, any inquiries or the
marking of any proposal with respect to any matter described in the preceding
paragraph or any Acquisition Proposal or (b) participate in any negotiations
concerning, or provide to any other person any information or data relating to
GRC International or any of its subsidiaries for the purpose of, or have any
discussions with any person relating to, or cooperate with or assist or
participate in, or facilitate, any inquiries or the
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making of any proposal which constitutes, or would reasonably be expected to
lead to, any effort or attempt by any other person to seek to effect any matter
described in the preceding paragraph or any Acquisition Proposal, or agree to or
endorse any Acquisition Proposal, or otherwise facilitate any effort or attempt
to make or implement such an Acquisition Proposal. Each Stockholder agreed
immediately to cease and cause to be terminated any existing activities,
discussions or negotiations with any persons conducted prior to the date of the
Stockholder Agreements by such Stockholder with respect to any possible
Acquisition Proposal, or any matter described in the preceding paragraph. The
Stockholder Agreements provide, however, that nothing contained therein will
restrict Dr. McNichols or Mr. Cilluffo from exercising his fiduciary duties to
the stockholders of GRC International in his capacity as a director of GRC
International under applicable law or otherwise prohibit him from taking such
actions, in his capacity as a director of GRC International, as may be permitted
(under the circumstances therein specified) pursuant to the provisions of the
Merger Agreement described above under "The Merger Agreement -- No
Solicitation." The obligations of Cilluffo Associates under its Stockholder
Agreement are subject to its prior obligations under certain option agreements
with respect to an aggregate of 111,000 Shares, which agreements are filed as
exhibits to the Statement on Schedule 13D filed by, among others, Cilluffo
Associates with respect to GRC International.
A Stockholder Agreement and the proxy contained therein will terminate on
the earliest of (a) the termination of the Merger Agreement in accordance with
its terms, (b) the termination of the Stockholder Agreement by AT&T, (c) the
Effective Time and (d) June 30, 2000.
AGREEMENTS WITH GRC INTERNATIONAL SENIOR MANAGEMENT. At the time we
entered into the Merger Agreement with GRC International, we also entered into
an employment agreement with Michael G. Stolarik, the current Chief Operating
Officer of GRC International, which agreement would become effective on the day
we consummate the Offer and which amends and restates Mr. Stolarik's current
employment agreement with GRC International.
Mr. Stolarik's amended and restated employment agreement provides that he
would continue to serve as Chief Operating Officer of GRC International for a
period of six months after the consummation of the Offer, and thereafter, in
addition, as President, for an initial term of employment ending December 31,
2002. The agreement would automatically renew annually, unless either party
gives the other 90 days prior written notice of its intent not to renew. Mr.
Stolarik would receive an annual base salary during the term of employment of
$240,000, subject to adjustment upon annual review, and would have an annual
target bonus of 45% of his base salary. Mr. Stolarik's actual bonus would be
determined in part by reference to GRC International's performance during the
relevant period. Additionally, Mr. Stolarik would receive special cash payments
(non-benefit bearing) of $60,000 payable on each of September 1, 2000, September
1, 2001 and September 1, 2002, provided he remains employed by GRC International
on each of the payment dates. Mr. Stolarik would be entitled to participate in
GRC International's health and welfare plans and 401(k) savings plan. If Mr.
Stolarik's employment were to be terminated by GRC International for any reason
other than cause (as defined in the employment agreement) prior to the
expiration of the initial term of employment, or for any reason after expiration
of the initial term of employment, GRC International would pay to Mr. Stolarik
severance of two times his annual base salary in effect on the date of such
termination. As soon as practicable after the consummation of the Offer, Mr.
Stolarik would receive options to purchase 30,000 shares of AT&T common stock.
Options would vest at the rate of 3,750 per year on each of the first four
anniversaries of the consummation of the Offer, with an additional 15,000
Options vesting on the third anniversary. As consideration for the cancellation
of Mr. Stolarik's unvested options, GRC International will pay Mr. Stolarik cash
in the amount of $148,120 on September 1, 2000, $440,300 on September 1, 2001,
and $440,230 on September 1, 2002, provided that Mr. Stolarik is employed on
each such date or, if Mr. Stolarik's employment is involuntarily terminated by
GRC International other than for cause, all such payments not yet paid will be
paid as soon as practicable after such termination.
Dr. Denman has agreed to enter into an employment and consulting agreement
with GRC International, which would amend and restate his current employment
agreement and would become effective on the day we consummate the Offer.
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Dr. Denman's amended and restated employment and consulting agreement
provides that he would continue to serve as President and Chief Executive
Officer of GRC International for a term of employment of six months from the
consummation of the Offer and would serve as a consultant for a period of two
years thereafter, unless the consulting agreement is terminated by either party
upon 30 days prior written notice. Dr. Denman's compensation would be based on
an annual base salary during the term of employment of $330,000 and an annual
bonus of $250,000, both pro-rated for the term of employment. Dr. Denman's
employment agreement also provides for an automobile allowance and participation
in GRC International's health and welfare plans and 401(k) savings plan. At the
expiration of the term of employment, GRC International would pay to Dr. Denman
severance of two times his annual base salary, plus two times his annual bonus
in effect prior to the consummation of the Offer, which amount equals
$1,162,240, plus a lump sum of $10,000 in satisfaction of an obligation under
his current employment agreement to provide lifetime dental and vision care
insurance. Dr. Denman's unvested options to purchase Shares would be converted
into the right to receive the excess of the amount per Share paid in the Offer
over the exercise price for such options, on the same basis as other GRC
International employees. Under the agreement, he would receive $75,000 per year
for his consulting services plus $2,000 per day for each day of consulting
services provided in excess of three days per month. AT&T contemplates that Dr.
Denman would join AT&T Government Markets' advisory board as part of the
consulting services provided by him under the employment and consulting
agreement. GRC International would pay for continuation coverage for Dr.
Denman's medical, dental and vision benefits for two years after the expiration
of the term of employment.
James P. Allen, Chief Financial Officer of GRC International, has entered
into a Separation and Release Agreement with GRC International that provides for
his continued employment with GRC International until June 30, 2000. Pursuant to
the Separation and Release Agreement, unless he voluntarily resigns or is
terminated for cause prior to June 30, 2000, for the duration of his employment
Mr. Allen will be entitled to receive (a) the same base salary as he received
under his former employment agreement, (b) an additional $200 per month in lieu
of previous executive perquisites and (c) a cash bonus not to exceed $100,000.
Upon consummation of the Offer, Mr. Allen will be entitled to receive a
severance payment of two times his annual base salary. In addition, unless he
voluntarily resigns or is terminated for cause prior to the 30th calendar day
following consummation of the Offer, Mr. Allen will be entitled to receive a
payment in respect of his unvested stock options equal to 50% of the product of
(i) the excess, if any, of the Offer Price over the per Share exercise price of
each such stock option and (ii) the number of Shares subject thereto.
GRC International has offered a Separation and Release Agreement to Thomas
E. McCabe, Senior Vice President, Director of Corporate Development and General
Counsel, that provides for substantially the same terms as Mr. Allen's
Separation and Release Agreement.
EFFECTS OF INABILITY TO CONSUMMATE THE MERGER. If, following the
consummation of the Offer, the Merger is not consummated for any reason (see
"Conditions to the Consummation of the Offer"), AT&T, which owns 100% of the
Common Stock of the Purchaser, indirectly will control the number of Shares
acquired by the Purchaser pursuant to the Offer. Under the Merger Agreement,
promptly following payment by the Purchaser for Shares purchased pursuant to the
Offer, and from time to time thereafter, subject to applicable law and subject
to there being two Independent Directors, GRC International has agreed to take
all actions necessary to cause at least a majority of the directors of GRC
International to consist of persons designated by AT&T (whether by means of
increasing the size of the Board of Directors or seeking the resignation of
directors and causing AT&T designees to be elected). As a result of its
ownership of such Shares and right to designate nominees for election to GRC
International's Board of Directors, AT&T indirectly will be able to influence
decisions of the Board and the decisions of the Purchaser as a stockholder of
GRC International. This concentration of influence in one stockholder may
adversely affect the market value of the Shares.
If AT&T controls more than 50% of the outstanding Shares following the
consummation of the Offer but the Merger is not consummated, stockholders of GRC
International, other than those affiliated with AT&T, will lack sufficient
voting power to elect directors or to cause other actions to be taken which
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require majority approval. If for any reason following completion of the Offer
the Merger is not consummated, AT&T and the Purchaser reserve the right to
acquire additional Shares through private purchases, market transactions, tender
or exchange offers or otherwise on terms and at prices that may be more or less
favorable than those of the Offer or, subject to any applicable legal
restrictions, to dispose of any or all Shares acquired by AT&T and the
Purchaser.
Approval of the Merger requires the affirmative vote of holders of a
majority of the outstanding Shares. As a result, if the Minimum Condition and
the other conditions to the Offer are satisfied and the Offer is completed, we
will own a sufficient number of Shares to ensure that the Merger will be
approved by GRC International's stockholders.
STATUTORY REQUIREMENTS. In general, under the DGCL a merger of two
Delaware corporations requires the adoption of a resolution by the board of
directors of each of the corporations desiring to merge approving an agreement
of merger containing provisions with respect to certain statutorily specified
matters and the approval of such agreement of merger by the stockholders of each
corporation by the affirmative vote of the holders of a majority of all the
outstanding shares of stock entitled to vote on such merger. According to GRC
International's certificate of incorporation, the Shares are the only securities
of GRC International which entitle the holders thereof to voting rights.
The DGCL also provides that if a parent company owns at least 90% of each
class of stock of a subsidiary, the parent company can effect a short-form
merger with that subsidiary without the action of the other stockholders of the
subsidiary. Accordingly, if as a result of the Offer or otherwise the Purchaser
acquires or controls the voting power of at least 90% of the Shares, the
Purchaser could, and intends (subject to the conditions to its obligations to
effect the Merger contained in the Merger Agreement), to effect the Merger
without prior notice to, or any action by, any other stockholder of GRC
International.
APPRAISAL RIGHTS. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, stockholders of GRC International
will have certain rights under Section 262 of the DGCL to dissent and demand
appraisal of, and payment in cash of the fair value of, their Shares. Such
rights, if the statutory procedures were complied with, could lead to a judicial
determination of the fair value (excluding any element of value arising from the
accomplishment or expectation of the Merger) required to be paid in cash to such
dissenting holders for their Shares. Any such judicial determination of the fair
value of Shares could be based upon considerations other than, or in addition
to, the price paid in the Offer and the market value of the Shares, including
asset values and the investment value of the Shares. The value so determined
could be more or less than the purchase price per Share pursuant to the Offer or
the consideration per Share to be paid in the Merger.
In addition, several decisions by Delaware courts have held that, in
certain instances, a controlling stockholder of a corporation involved in a
merger has a fiduciary duty to the other stockholders that requires the merger
to be fair to such other stockholders. In determining whether a merger is fair
to minority stockholders, the Delaware courts have considered, among other
things, the type and amount of consideration to be received by the stockholders
and whether there were fair dealings among the parties. Although the remedies of
rescission or other damages are possible in an action challenging a merger as a
breach of fiduciary duty, decisions of the Delaware courts have indicated that
in most cases the remedy available in a merger that is found not to be "fair" to
minority stockholders is a damages remedy based on essentially the same
principles as an appraisal.
THE FOREGOING SUMMARY OF THE RIGHTS OF OBJECTING STOCKHOLDERS DOES NOT
PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY
STOCKHOLDERS DESIRING TO EXERCISE ANY AVAILABLE DISSENTERS' RIGHTS.
THE PRESERVATION AND EXERCISE OF DISSENTERS' RIGHTS REQUIRE STRICT
ADHERENCE TO THE APPLICABLE PROVISIONS OF THE DGCL.
PLANS FOR GRC INTERNATIONAL. If AT&T acquires control of GRC
International, it is its present intent to operate GRC International as a
subsidiary under GRC International's current name in its current headquarters in
Vienna, Virginia. AT&T intends to conduct a review of GRC International and its
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subsidiaries and their respective assets, businesses, corporate structure,
capitalization, operations, properties, policies, management and personnel.
Subject to this review, AT&T currently anticipates that, except as disclosed in
this Offer to Purchase, the existing management of GRC International will be
retained and GRC International will conduct its business on a basis generally
consistent with its existing plans and programs. However, AT&T may take actions
or make changes, if any, that it considers desirable in light of the
circumstances which then exist, and reserves the right to effect such actions or
changes. AT&T's decisions could be affected by information hereafter obtained,
changes in general economic or market conditions or in the business of GRC
International or its subsidiaries, actions by GRC International or its
subsidiaries and other factors. In addition to Dr. Denman, AT&T is currently
considering inviting two members of the GRC International Board of Directors to
join AT&T Government Markets' advisory board, for which the two individuals
would receive customary compensation for consulting services.
Except as described in this Offer to Purchase, neither AT&T nor the
Purchaser has any present plans or proposals that would relate to or would
result in (a) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving GRC International or any of its
subsidiaries, (b) a sale or transfer of a material amount of assets of GRC
International or any of its subsidiaries, (c) any change in the present Board of
Directors or management of GRC International, (d) any material change in the
present capitalization or dividend policy of GRC International, (e) any material
change in GRC International's corporate structure or business, (f) causing a
class of securities of GRC International to be delisted from a national
securities exchange or to cease to be authorized to be quoted in an inter-dealer
quotation system of a registered national securities association or (g) a class
of equity securities of GRC International becoming eligible for termination of
registration pursuant to Section 12(g)(4) of the Securities Exchange Act.
"GOING PRIVATE" TRANSACTIONS. The SEC has adopted Rule 13e-3 under the
Exchange Act which is applicable to certain "going private" transactions and
which may under certain circumstances be applicable to the Merger. However, Rule
13e-3 would be inapplicable if (a) the Shares are deregistered under the
Exchange Act prior to the Merger or other business combination or (b) the Merger
or other business combination is consummated within one year after the purchase
of the Shares pursuant to the Offer and the amount paid per Share in the Merger
or other business combination is at least equal to the amount paid per Share in
the Offer. If applicable, Rule 13e-3 requires, among other things, that certain
financial information concerning the fairness of the proposed transaction and
the consideration offered to minority stockholders in such transaction be filed
with the SEC and disclosed to stockholders prior to the consummation of the
transaction.
12. SOURCE AND AMOUNT OF FUNDS.
The Purchaser estimates that the total amount of funds required to purchase
all outstanding Shares pursuant to the Offer and to pay related fees and
expenses will be approximately $190 million. Additional net funds of
approximately $8 million would be required to purchase Shares issuable upon the
exercise of currently exercisable stock options and warrants. The funds
necessary to purchase Shares pursuant to the Offer will be provided to the
Purchaser by AT&T as a capital contribution or loan or combination thereof. AT&T
will provide the funds to the Purchaser from cash on hand and cash generated
from general corporate activities.
13. DIVIDENDS AND DISTRIBUTIONS.
If on or after the date of the Merger Agreement GRC International (a)
splits, combines or otherwise changes the Shares or its capitalization, (b)
acquires Shares or otherwise causes a reduction in the number of Shares, (c)
issues or sells additional Shares (other than the issuance of Shares reserved
for issuance as of the date of the Merger Agreement under option and employee
stock purchase plans in accordance with their terms as publicly disclosed as of
the date of the Merger Agreement) or any shares of any other class of capital
stock, other voting securities or any securities convertible into or
exchangeable for, or rights, warrants or options, conditional or otherwise, to
acquire, any of the foregoing or (d) discloses that it has taken such action,
then, without prejudice to the Purchaser's rights under Section 14, the
Purchaser, in its sole discretion, may make such adjustments in the purchase
price and other terms of the Offer as it deems
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<PAGE> 31
appropriate to reflect such split, combination or other change or action,
including, without limitation, the Minimum Condition or the number or type of
securities offered to be purchased.
If on or after the date of the Merger Agreement GRC International declares
or pays any dividend on the Shares or any distribution (including, without
limitation, the issuance of additional Shares pursuant to a stock dividend or
stock split, the issuance of other securities or the issuance of rights for the
purchase of any securities) with respect to the Shares that is payable or
distributable to stockholders of record on a date prior to the transfer into the
name of the Purchaser or its nominees or transferees on GRC International's
stock transfer records of the Shares purchased pursuant to the Offer, and if
Shares are purchased in the Offer, then, without prejudice to the Purchaser's
rights under Section 14, (a) the purchase price per Share payable by the
Purchaser pursuant to the Offer shall be reduced by the amount of any such cash
dividend or cash distribution and (b) any such non-cash dividend, distribution,
issuance, proceeds or rights to be received by the tendering stockholders will
(i) be received and held by the tendering stockholders for the account of the
Purchaser and will be required to be promptly remitted and transferred by each
tendering stockholder to the Depositary for the account of the Purchaser,
accompanied by appropriate documentation of transfer or (ii) at the direction of
the Purchaser, be exercised for the benefit of the Purchaser, in which case the
proceeds of such exercise will promptly be remitted to the Purchaser. Pending
such remittance and subject to applicable law, the Purchaser will be entitled to
all rights and privileges as owner of any such non-cash dividend, distribution,
issuance, proceeds or rights and may withhold the entire purchase price or
deduct from the purchase price the amount or value thereof, as determined by the
Purchaser in its sole discretion.
14. CONDITIONS OF THE OFFER.
Conditions to the Offer. Notwithstanding any other provision of the Offer,
Purchaser will not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) promulgated
under the Securities Exchange Act (relating to Purchaser's obligation to pay for
or return tendered Shares promptly after termination or withdrawal of the
Offer), pay for, and (subject to any such rules or regulations) may delay the
acceptance for payment of any tendered Shares and (except as provided in the
Merger Agreement) amend or terminate the Offer as to any Shares not then paid
for if (i) the Minimum Condition shall not have been satisfied or (ii) any
applicable waiting period under the HSR Act shall not have expired or been
terminated prior to the expiration of the Offer or (iii) at any time after the
date of the Merger Agreement and prior to the time of payment for any such
Shares (whether or not any Shares have theretofore been accepted for payment or
paid for pursuant to the Offer), any of the following events shall occur and be
continuing or conditions exists:
(a) (x) there shall have been any action taken by any federal, state
or local government or any court, administrative or regulatory agency or
commission or other governmental authority or agency, domestic or foreign
(a "Governmental Entity"), or any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction, proposed, sought,
promulgated, enacted, entered, enforced, issued, amended or deemed
applicable by a Governmental Entity to AT&T, the Purchaser, GRC
International, any other affiliate of AT&T or GRC International, the Offer
or the Merger, that would or is reasonably likely, directly or indirectly,
to (i) make the acceptance for payment of, or payment for or purchase of
all or a substantial number of the Shares pursuant to the Offer illegal, or
otherwise restrict or prohibit the making of the Offer or the consummation
of the Offer or the Merger, (ii) result in a significant delay in or
restrict the ability of the Purchaser to accept for payment, pay for or
purchase all or a substantial number of the Shares pursuant to the Offer or
to effect the Merger, (iii) render the Purchaser unable to accept for
payment or pay for or purchase all or a substantial number of the Shares
pursuant to the Offer, (iv) impose material limitations on the ability of
AT&T, the Purchaser or any of their respective subsidiaries or affiliates
to acquire or hold, transfer or dispose of, or effectively to exercise all
rights of ownership of, all or a substantial number of the Shares including
without limitation the right to vote the Shares purchased by it pursuant to
the Offer on an equal basis with all other Shares on all matters properly
presented to the stockholders of GRC International, (v) require the
divestiture by AT&T, the Purchaser or any of their respective subsidiaries
or affiliates of any Shares, or require the Purchaser, AT&T, GRC
International, or any of
27
<PAGE> 32
their respective subsidiaries or affiliates to dispose of or hold separate
all or any material portion of their respective businesses, assets or
properties or impose any material limitations on the ability of any of such
entities to conduct their respective businesses or own such assets,
properties or Shares or on the ability of AT&T or the Purchaser to conduct
the business of GRC International and its Subsidiaries and own the assets
and properties of GRC International and its subsidiaries, (vi) impose any
material limitations on the ability of AT&T, the Purchaser or any of their
respective subsidiaries or affiliates effectively to control the business
or operations of GRC International, AT&T, the Purchaser or any of their
respective subsidiaries or affiliates, or (vii) otherwise materially
adversely affect AT&T, the Purchaser, GRC International or any of their
respective subsidiaries or affiliates, or their business, assets,
liabilities, condition (financial or otherwise) or results of operations,
or the value of the Shares; or
(y) there shall have been instituted or pending any action, proceeding
or counterclaim by any Governmental Entity, challenging the making of the
Offer or the acquisition by the Purchaser of the Shares pursuant to the
Offer or the consummation of the Merger, or seeking to, directly or
indirectly, result in any of the consequences referred to in clauses (i)
through (vii) in subclause (x) above; or
(z) or there shall have been threatened any action, proceeding or
counterclaim by any Governmental Entity, challenging the making of the
Offer or the acquisition by the Purchaser of the Shares pursuant to the
Offer or the consummation of the Merger, or seeking to, directly or
indirectly, result in any of the consequences referred to in clauses (i)
through (vii) in subclause (x) above that, in the good faith judgment of
AT&T, has a reasonable probability of success.
(b) the Merger Agreement shall have been terminated in accordance with
its terms or any event shall have occurred which gives AT&T or the
Purchaser the right to terminate the Merger Agreement or not consummate the
Merger; or
(c) since the date of the Merger Agreement there shall have occurred
any event, change, effect or development that, individually or when
considered together with any other event, change, effect or development, is
or would be reasonably likely to be materially adverse to the business,
results of operations, properties (including intangible properties),
condition (financial or otherwise), assets or liabilities of GRC
International and its subsidiaries, taken as a whole (a "Material Adverse
Effect"); or
(d) (i) the representations and warranties of GRC International set
forth in Sections 4.2 (relating to the capitalization of GRC
International), 4.3 (relating to GRC International's authority relative to
the Merger Agreement), 4.4(a)(ii) (relating to violations of GRC
International's certificate of incorporation and bylaws), 4.20 (relating to
takeover statutes) or 4.21 (relating to Rights Plans) in the Merger
Agreement shall not be true and correct in all material respects both when
made and as of the date of determination, as if made at and as of such time
(except to the extent expressly made as of an earlier date, in which case
any of such representations and warranties shall not be true and correct in
all material respects as of such earlier date) or (ii) any of the other
representations and warranties of GRC International set forth in the Merger
Agreement (without giving effect to any explicit limitation as to
"materiality" or "Material Adverse Effect" set forth therein) shall not be
true and correct both when made and as of determination, as if made at and
as of such time (except to the extent expressly made as of an earlier date,
in which case as of such earlier date), except where the failure of any
such representation or warranty to be so true and correct does not have,
and would not have, individually or when taken together with all such
failures to be so true and correct, a Material Adverse Effect; or
(e) GRC International shall have failed to perform in any material
respect any obligation or to comply in any material respect with any
agreement or covenant of GRC International to be performed or complied with
by it under the Merger Agreement; or
(f) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market in the United States,
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<PAGE> 33
(ii) a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) any limitation (whether or not
mandatory) by any Governmental Entity on, or other event that materially
and adversely affects, the extension of credit by banks or other lending
institutions or (iv) in the case of any of the foregoing existing at the
time of the execution of the Merger Agreement, a material acceleration or
worsening thereof; or
(g) the Board of Directors of GRC International or any committee
thereof (i) shall have withdrawn, or modified or changed in a manner
adverse to AT&T or the Purchaser (including by amendment of the Schedule
14D-9) its approval or recommendation of the Merger Agreement or the
transactions contemplated hereby, including the Offer or the Merger, (ii)
recommended or approved an Acquisition Proposal, (iii) shall have adopted
any resolution to effect any of the foregoing, or (iv) upon the request of
AT&T, shall fail to reaffirm publicly and unconditionally its approval or
recommendation of the Offer, the Merger Agreement or the Merger within ten
days after AT&T's written request to do so under the circumstances
described in Section 8.1(d)(i) (relating to the withdrawal of the Board's
recommendation) of the Merger Agreement; or
(h) any Person or "group" (as defined in Section 13(d)(3) of the
Securities Exchange Act), other than AT&T, the Purchaser, or their
affiliates or any group of which any of them is a member, shall have
acquired or announced its intention to acquire beneficial ownership (as
determined pursuant to Rule 13d-3 promulgated under the Securities Exchange
Act) of 25% or more of the Shares; provided that for purposes of this
condition, none of Cilluffo Associates, L.P., Gerald McNichols, or their
representative affiliates or any group of which any of them is a member,
shall be deemed to have acquired 25% or more of the Shares solely by virtue
of the execution, delivery or performance of the Stockholder Agreements;
which, in the judgment of AT&T or the Purchaser with respect to each and every
matter referred to above and regardless of the circumstances giving rise to any
such condition, makes it inadvisable to proceed with the Offer or with such
acceptance for payment of or payment for Shares or to proceed with the Merger.
The foregoing conditions are for the sole benefit of the Purchaser and may
be asserted by the Purchaser regardless of the circumstances (including any
action or inaction by AT&T or the Purchaser) giving rise to any such conditions
and may be waived by the Purchaser in whole or in part at any time and from time
to time, in each case, in its sole discretion, subject to the terms of the
Merger Agreement. The failure by the Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right, the waiver
of any such right with respect to particular facts and circumstances shall not
be deemed a waiver with respect to any other facts and circumstances and each
such right shall be deemed an ongoing right which may be asserted at any time
and from time to time.
A public announcement may be made of a material change in, or waiver of,
such conditions and the Offer may, in certain circumstances, be extended in
connection with any such change or waiver.
The Purchaser acknowledges that the SEC believes that (a) if the Purchaser
is delayed in accepting the Shares it must either extend the Offer or terminate
the Offer and promptly return the Shares and (b) the circumstances in which a
delay in payment is permitted are limited and do not include unsatisfied
conditions of the Offer, except with respect to most required regulatory
approvals.
15. LEGAL MATTERS; REQUIRED REGULATORY APPROVALS.
Except as set forth in this Offer to Purchase, based on our review of
publicly available filings by GRC International with the SEC and other
information regarding GRC International, we are not aware of any licenses or
regulatory permits that appear to be material to the business of GRC
International and its subsidiaries, taken as a whole, and that might be
adversely affected by our acquisition of Shares in the Offer. In addition, we
are not aware of any filings, approvals or other actions by or with any
governmental authority or administrative or regulatory agency that would be
required for our acquisition or ownership of the Shares. Should any such
approval or other action be required, we expect to seek such approval or action,
except as described below under "State Takeover Laws." Should any such approval
or other action be required, we cannot be certain that we would be able to
obtain any such approval or action without
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substantial conditions or that adverse consequences might not result to GRC
International's or its subsidiaries' businesses, or that certain parts of GRC
International's, AT&T's, the Purchaser's or any of their respective
subsidiaries' businesses might not have to be disposed of or held separate in
order to obtain such approval or action. In that event, we may not be required
to purchase any Shares in the Offer. See Introduction and Section 14 for a
description of the conditions to the Offer.
State Takeover Laws. A number of states (including Delaware, where GRC
International is incorporated) have adopted takeover laws and regulations that
purport to be applicable to attempts to acquire securities of corporations that
are incorporated in those states or that have substantial assets, stockholders,
principal executive offices or principal places of business in those states. To
the extent that these state takeover statutes purport to apply to the Offer or
the Merger, we believe that those laws conflict with federal law and are an
unconstitutional burden on interstate commerce. In 1982, the Supreme Court of
the United States, in Edgar v. Mite Corp., invalidated on constitutional grounds
the Illinois Business Takeovers Statute, which as a matter of state securities
law made takeovers of corporations meeting certain requirements more difficult.
The reasoning in that decision is likely to apply to certain other state
takeover statutes. In 1987, however, in CTS Corp. v. Dynamics Corp. of America,
the Supreme Court of the United States held that the State of Indiana could as a
matter of corporate law and, in particular, those aspects of corporate law
concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without the prior
approval of the remaining stockholders, as long as those laws were applicable
only under certain conditions. Subsequently, in TLX Acquisition Corp. v. Telex
Corp., a federal district court in Oklahoma ruled that the Oklahoma statutes
were unconstitutional insofar as they apply to corporations incorporated outside
Oklahoma, because they would subject those corporations to inconsistent
regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a federal district
court in Tennessee ruled that four Tennessee takeover statutes were
unconstitutional as applied to corporations incorporated outside Tennessee. This
decision was affirmed by the United States Court of Appeals for the Sixth
Circuit. In December 1988, a federal district court in Florida held, in Grand
Metropolitan PLC v. Butterworth, that the provisions of the Florida Affiliated
Transactions Act and Florida Control Share Acquisition Act were unconstitutional
as applied to corporations incorporated outside of Florida.
We have not attempted to comply with any state takeover statutes in
connection with the Offer or the Merger. We reserve the right to challenge the
validity or applicability of any state law allegedly applicable to the Offer or
the Merger, and nothing in this Offer to Purchase nor any action that we take in
connection with the Offer is intended as a waiver of that right. In the event
that it is asserted that one or more takeover statutes apply to the Offer or the
Merger, and it is not determined by an appropriate court that the statutes in
question do not apply or are invalid as applied to the Offer or the Merger, as
applicable, we may be required to file certain documents with, or receive
approvals from, the relevant state authorities, and we might be unable to accept
for payment or purchase Shares tendered in the Offer or be delayed in continuing
or consummating the Offer. In that case, we may not be obligated to accept for
purchase, or pay for, any Shares tendered. See Section 14.
Antitrust. Under the HSR Act, and the related rules and regulations that
have been issued by the Federal Trade Commission (the "FTC"), certain
acquisition transactions may not be consummated until certain information and
documentary material has been furnished for review by the FTC and the Antitrust
Division of the Department of Justice (the "Antitrust Division") and certain
waiting period requirements have been satisfied. These requirements apply to our
acquisition of Shares in the Offer and the Merger.
Under the HSR Act, the purchase of Shares in the Offer may not be completed
until the expiration of a 15-calendar-day waiting period following the filing of
certain required information and documentary material concerning the Offer with
the FTC and have filed the Antitrust Division, unless the waiting period is
earlier terminated by the FTC and the Antitrust Division. We expect to file a
Premerger Notification and Report Form under the HSR Act with the FTC and the
Antitrust Division in connection with the purchase of Shares in the Offer and
the Merger on or about February 28, 2000, and, in that event, the required
waiting period with respect to the Offer and the Merger will expire at 11:59
p.m., New York City time, on or about March 14, 2000, unless earlier terminated
by the FTC or the Antitrust
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<PAGE> 35
Division or we receive a request for additional information or documentary
material prior to that time. If within the 15-calendar-day waiting period either
the FTC or the Antitrust Division requests additional information or documentary
material from us, the waiting period with respect to the Offer and the Merger
would be extended for an additional period of 10 calendar days following the
date of our substantial compliance with that request. Only one extension of the
waiting period pursuant to a request for additional information is authorized by
the HSR rules. After that time, the waiting period could be extended only by
court order or with our consent. The FTC or the Antitrust Division may terminate
the additional 10-calendar-day waiting period before its expiration. In
practice, complying with a request for additional information or documentary
material can take a significant period of time. Although GRC International is
required to file certain information and documentary material with the FTC and
the Antitrust Division in connection with the Offer, neither GRC International's
failure to make those filings nor a request made to GRC International from the
FTC or the Antitrust Division for additional information or documentary material
will extend the waiting period with respect to the purchase of Shares in the
Offer and the Merger.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as our acquisition of Shares in the
Offer and the Merger. At any time before or after our purchase of Shares, the
FTC or the Antitrust Division could take any action under the antitrust laws
that either considers necessary or desirable in the public interest, including
seeking to enjoin the purchase of Shares in the Offer and the Merger, the
divestiture of Shares purchased in the Offer or the divestiture of substantial
assets of AT&T, the Purchaser, GRC International or any of their respective
subsidiaries or affiliates. Private parties as well as state attorneys general
may also bring legal actions under the antitrust laws under certain
circumstances. See Section 14.
Based upon an examination of publicly available information relating to the
businesses in which GRC International is engaged, we believe that the
acquisition of Shares in the Offer and the Merger should not violate the
applicable antitrust laws. Nevertheless, we cannot be certain that a challenge
to the Offer and the Merger on antitrust grounds will not be made, or, if such
challenge is made, what the result will be. See Section 14.
16. FEES AND EXPENSES.
AT&T retained Lehman Brothers to render financial advisory services to AT&T
concerning its acquisition of GRC International and to act as Dealer Manager in
connection with the Offer, pursuant to which Lehman Brothers will receive
customary fees upon consummation of the acquisition. AT&T has also agreed to
indemnify Lehman Brothers against certain liabilities and expenses in connection
with its engagement, including liabilities under the federal securities laws.
Lehman Brothers has rendered various investment banking services and other
advisory services to AT&T and its affiliates in the past and may continue to
render such services, for which they have received and may continue to receive
customary compensation from AT&T and its affiliates. In the ordinary course of
business, Lehman Brothers and its affiliates are engaged in securities trading
and brokerage activities as well as investment banking and financial advisory
services. In the ordinary course of their trading and brokerage activities,
Lehman Brothers and its affiliates may hold positions, for their own account of
customers, in equity, debt or other securities of AT&T or GRC International.
We have retained Georgeson Shareholder Communications Inc. as Information
Agent in connection with the Offer. The Information Agent may contact holders of
Shares by mail, telephone, telex, telegraph and personal interview and may
request brokers, dealers and other nominee stockholders to forward material
relating to the Offer to beneficial owners of Shares. We will pay the
Information Agent reasonable and customary compensation for these services in
addition to reimbursing the Information Agent for its reasonable out-of-pocket
expenses. We have agreed to indemnify the Information Agent against certain
liabilities and expenses in connection with the Offer, including certain
liabilities under the federal securities laws.
In addition, we have retained EquiServe as the Depositary. We will pay the
Depositary reasonable and customary compensation for its services in connection
with the Offer, will reimburse the Depositary for its
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<PAGE> 36
reasonable out-of-pocket expenses and will indemnify the Depositary against
certain liabilities and expenses, including certain liabilities under the
federal securities laws.
Except as set forth above, we will not pay any fees or commissions to any
broker, dealer or other person for soliciting tenders of Shares pursuant to the
Offer. We will reimburse brokers, dealers, commercial banks and trust companies
and other nominees, upon request, for customary clerical and mailing expenses
incurred by them in forwarding offering materials to their customers.
17. MISCELLANEOUS.
We are not aware of any jurisdiction where the making of the Offer is
prohibited by any administrative or judicial action pursuant to any valid state
statute. If we become aware of any valid state statute prohibiting the making of
the Offer or the acceptance of the Shares, we will make a good faith effort to
comply with that state statute. If, after a good faith effort, we cannot comply
with the state statute, we will not make the Offer to, nor will we accept
tenders from or on behalf of, the holders of Shares in that state. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of Purchaser by the Dealer Manager or one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
We have filed with the SEC a Tender Offer Statement on Schedule TO,
together with exhibits, furnishing certain additional information with respect
to the Offer, and may file amendments to our Schedule TO. Our Schedule TO and
any exhibits or amendments may be examined and copies may be obtained from the
SEC in the same manner as described in Section 8 with respect to information
concerning GRC International, except that copies will not be available at the
regional offices of the SEC.
WE HAVE NOT AUTHORIZED ANY PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON OUR BEHALF NOT CONTAINED IN THIS OFFER TO PURCHASE OR IN THE
LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, YOU SHOULD NOT RELY ON ANY SUCH
INFORMATION OR REPRESENTATION AS HAVING BEEN AUTHORIZED.
Neither the delivery of the Offer to Purchase nor any purchase pursuant to
the Offer will under any circumstances create any implication that there has
been no change in the affairs of AT&T, the Purchaser, GRC International or any
of their respective subsidiaries since the date as of which information is
furnished or the date of this Offer to Purchase.
LMN CORPORATION
February 22, 2000
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF AT&T AND THE PURCHASER
DIRECTORS AND EXECUTIVE OFFICERS OF AT&T. The following table sets forth
the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years of each
director and executive officer of AT&T. Unless otherwise indicated below each
occupation set forth opposite each person refers to employment with AT&T. The
business address of each such person is c/o AT&T Corp., 32 Avenue of the
Americas, New York, New York 10013-2412, and each such person is a citizen of
the United States of America.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
--------------------- ------------------------------------------------
<S> <C> <C> <C>
1. DIRECTORS OF AT&T C. Michael Armstrong Chairman and Chief Executive Officer, AT&T Corp.
since November 1997. Chairman and Chief
Executive Officer of Hughes Electronics
Corporation, a commercial electronics, space and
telecommunications company, 1992-1997. Hughes
Electronics Corporation, 200 North Sepulveda
Blvd., El Segundo, CA 90245-0956.
Kenneth T. Derr Chairman of the Board, Retired, of Chevron
Corporation, an international oil company;
Chairman and Chief Executive Officer of Chevron
Corporation, 1989-1999. Chevron Corporation, 575
Market Street, San Francisco, CA 94105-2856.
M. Kathryn Eickhoff President of Eickhoff Economics Incorporated, an
economics consulting company, since 1987.
Eickhoff Economics Incorporated, 510 LaGuardia
Place, 4th Floor, New York, NY 10012.
Walter Y. Elisha Retired Chairman and Chief Executive Officer of
Springs Industries Inc., a textile manufacturing
company, 1981-1997; Chairman, 1983-1998. Springs
Industries, Inc., 205 N. White St., Fort Mill,
SC 29715. Phone: 803-547-1500.
George M. C. Fisher Chairman of the Board, Eastman Kodak Company, an
international oil company, Chairman and Chief
Executive Officer, 1993-1999. Eastman Kodak
Company, 343 State St., Rochester, NY 14650.
Donald V. Fites Retired Chairman and Chief Executive Officer,
Caterpillar Inc., an equipment manufacturer,
Chairman and Chief Executive, 1990-1999.
Caterpillar Inc., 100 N.E. Adams Street, Peoria,
Illinois 61629.
Amos B. Hostetter, Chairman of Pilot House Associates, LLC, an
Jr. investment firm, since 1997. Pilot House
Associates, the Pilot House, Lewis Wharf,
Boston, MA 02110. Chief Executive Officer of
Media One Group, 1996-1997; Chairman and Chief
Executive Officer; 1980-1996. MediaOne Group,
Inc., 188 Inverness Dr. West, Englewood, CO
80112.
Ralph S. Larsen Chairman and Chief Executive Officer of Johnson
& Johnson, a pharmaceutical, medical and
consumer products company, since 1989. Johnson &
Johnson, 1 Johnson & Johnson Plaza, New
Brunswick, NJ 08933.
</TABLE>
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<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
--------------------- ------------------------------------------------
<S> <C> <C> <C>
John C. Malone Chairman of Liberty Media Group, a cable
programming company, since 1990. Former Chairman
1996-1999, Chief Executive Officer 1994-1999,
and President 1994-1997 of Tele-Communications,
Inc. Liberty Media Group, 9197 S. Peoria St.,
Englewood, CO 80112.
Donald F. McHenry President of IRC Group, LLC, an international
relations consulting company, since 1981. The
IRC Group, LLC, 1320 19th Street NW, Suite 410,
Washington, D.C., 20036.
Michael I. Sovern President Emeritus and Chancellor, Kent
Professor of Law at Columbia University.
President 1980-1993. Columbia University, 435
West 116th Street, Box B20, New York, New York,
10027.
Sandford I. Weill Chairman and Chief Executive Officer of
Travelers Group, a financial services company,
and its predecessor, Commercial Credit Company,
1986-1998. Citigroup, Inc., 153 East 153rd
Street, New York, New York, 10043.
Thomas H. Wyman Senior Advisor of SBC Warburg Inc., 1996-1997,
an investment banking firm, Chairman of
S.G.Warburg & Co. Inc., 1992-1996, and Vice
Chairman of S.G. Warburg Group plc, 1993-1995,
Chairman of UB Investments US Inc., 1989-1996.
SBC Warburg, 1 High Timber St., London EC4V 3SB
UK.
John D. Zeglis Chairman and Chief Executive Officer of AT&T
Wireless Group since December 1999, President,
AT&T Corp. since November 1997; Vice Chairman of
AT&T Corp., June -- Nov. 1997, General Counsel
and Senior Executive Vice President, 1996-1997,
Senior Vice President and General Counsel,
1986-1996.
</TABLE>
34
<PAGE> 39
<TABLE>
<CAPTION>
DATE
BECAME
EXECUTIVE
NAME PRESENT TITLE OFFICER
--------------------- ------------------------------------------------ ---------
<S> <C> <C> <C>
2. EXECUTIVE OFFICERS C. Michael Armstrong Chairman of the Board and Chief Executive 10-97
OF AT&T Officer
Harold W. Burlingame Executive Vice President, Merger & Joint Venture 9-86
Integration
James W. Cicconi General Counsel and Executive Vice President, 12-98
Law & Government Affairs
Mirian Graddick Executive Vice President, Human Resources 3-99
Daniel R. Hesse Executive Vice President, and President & CEO, 5-97
AT&T Wireless Services
Frank Ianna Executive Vice President, and President, AT&T 3-97
Network Services
Michael G. Keith Executive Vice President, AT&T Wireless Group 12-98
Richard J. Martin Executive Vice President, Public Relations and 11-97
Employee Communication
David C. Nagel President, AT&T Labs & Chief Technology Officer 3-97
Charles H. Noski Senior Executive Vice President and Chief 12-99
Financial Officer
John C. Petrillo Executive Vice President, Corporate 1-96
Strategy and Business Development
Richard Roscitt Executive Vice President and President AT&T 9-97
Business Services
Daniel E. Somers President and CEO -- AT&T Broadband 5-97
John D. Zeglis** President, AT&T; Chief Executive Officer, AT&T 9-86
Wireless Group
</TABLE>
- ---------------
All of the above executive officers have held high-level managerial
positions with AT&T or its Affiliates for more than the past five years, except
Messrs. Armstrong, Cicconi, Nagel, Noski and Somers.
Prior to joining AT&T in October 1997, Mr. Armstrong was Chairman and Chief
Executive Officer of Hughes Electronics Corporation, a commercial electronics,
space and telecommunications company, located at 200 Sepulveda Blvd., El
Segundo, California, 90245-0956.
Prior to joining AT&T in September 1998 Mr. Cicconi was a Partner at the
law firm of Akin, Gump, Strauss, Hauer and Field, 1333 New Hampshire Avenue
N.W., Suite 400, Washington, D.C., 20036, from 1991.
Prior to joining AT&T in April 1996, Mr. Nagel was with Apple Computer,
Inc., a computer manufacturing firm, located at 1 Infinite Loop, Cupertino,
California, 95014, where he served as Senior Vice President from 1995 and
General Manager from 1988 through 1995.
Prior to joining AT&T in May 1997, Mr. Somers was Chairman and CEO for Bell
Cablemedia, PLC, a cable TV and cable telephone company, Bell Cablemedia, PLC,
Bell Cablemedia House, 5 Limeharbour, London, England E14 9TY, for two years
and, from 1992 to 1995, Mr. Somers was Executive Vice President and CFO for Bell
Canada International, an international telecommunications firm with operations
in Latin America and the Asia Pacific region. Bell Canada International Inc.,
1000, Rue de La Gauchetiere Ouest, Ste. 1100, Montreal, Quebec, H3B 4Y8, Canada.
Prior to joining AT&T in December 1999, Mr. Noski served as President and
Chief Operating Officer of Hughes Electronics Corporation, a commercial
electronics, space and telecommunications company, located at 200 Sepulveda
Blvd, El Segundo, California, 90245-0956, from 1997-1999. He served as Vice
35
<PAGE> 40
Chairman and CFO for that company from 1996 through 1997 and as Corporate Senior
Vice President and CFO from 1992.
DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. The following table
sets forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years of each
director and executive officer of the Purchaser.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
------------------------------- ------------------------------------------------
<S> <C> <C>
1. DIRECTORS AND EXECUTIVE Mary Jane McKeever President, AT&T Government Markets, since 1997;
OFFICERS OF THE PURCHASER President and sole Director previously Vice President, AT&T Business
Development and Corporate Strategy during 1997;
Vice President and General Manager, AT&T Skynet
Service.
AT&T Government Markets, 2020 K Street,
Washington, D.C., 20006-1817.
Gary A. Swenson General Attorney, AT&T Corp.
Secretary
AT&T Corp., 295 North Maple Avenue, Basking
Ridge, New Jersey, 07920.
Raymond E. Liguori Financial Vice President, AT&T Corp., since
Treasurer April 1999. AT&T Corp., 295 North Maple Avenue,
Basking Ridge, New Jersey, 07920. Prior to
joining AT&T, Mr. Liguori was First Vice
President -- Latin America Equity Analyst, for
Merrill Lynch & Co., Inc., a securities firm,
Merrill Lynch & Co., World Financial Center,
South Tower, New York, New York.
</TABLE>
36
<PAGE> 41
Facsimile copies of Letters of Transmittal, properly completed and duly
executed, will be accepted. The appropriate Letter of Transmittal, certificates
for Shares and any other required documents should be sent or delivered by each
stockholder of GRC International or his broker, dealer, commercial bank, trust
company or other nominee to the Depositary at one of its addresses set forth
below:
The Depositary for the Offer is:
EQUISERVE
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Courier:
EquiServe Securities Transfer & Reporting EquiServe
Attn: Corporate Actions Services Inc. Attn: Corporate Actions
P.O. Box 8029 c/o EquiServe 150 Royall Street
Boston, MA 02266-8029 100 Williams Street, Galleria Canton, MA 02021
New York, NY 10038
Facsimile Transmission: Telephone to Confirm Fax:
(781) 575-2232 or (781) 575-2775 or
(781) 575-2233 (781) 575-3417
</TABLE>
You may direct questions and requests for assistance to the Information
Agent or the Dealer Manager at their respective telephone numbers and addresses
set forth below. You may obtain additional copies of this Offer to Purchase, the
Letter of Transmittal, the Notice of Guaranteed Delivery and other tender offer
materials from the Information Agent as set forth below and they will be
furnished promptly at our expense. You may also contact your broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Offer.
The Information Agent for the Offer is:
[Georgeson Shareholder logo]
17 State Street, 10th Floor
New York, New York 10004
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll Free: (800) 223-2064
The Dealer Manager for the Offer is:
LEHMAN BROTHERS
Three World Financial Center
200 Vesey Street
New York, New York 10285
Call Collect: (212) 526-9611 or (212) 526-2660
<PAGE> 1
Exhibit (a)(2)
Letter of Transmittal
To Tender Shares of Common Stock
of
GRC INTERNATIONAL, INC.
Pursuant to the Offer to Purchase Dated February 22, 2000
by
LMN CORPORATION
a wholly owned subsidiary of
AT&T CORP.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
EASTERN TIME, ON MONDAY, MARCH 20, 2000, UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
EQUISERVE
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Courier:
EquiServe Securities Transfer & EquiServe
Attn: Corporate Actions Reporting Attn: Corporate Actions
P.O. Box 8029 Services Inc. 150 Royall Street
Boston, MA 02266-8029 c/o EquiServe Canton, MA 02021
100 Williams Street, Galleria
New York, NY 10038
Facsimile Transmission: Telephone to Confirm Fax:
(781) 575-2232 or (781) 575-2775 or
(781) 575-2233 (781) 575-3417
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER
THAN AS LISTED ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS
LETTER OF TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9
PROVIDED BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
NAMES(S) APPEAR ON CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST, IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------------------
SHARE TOTAL NUMBER OF NUMBER OF
CERTIFICATE SHARES REPRESENTED BY SHARES
NUMBER(S)* SHARE CERTIFICATE(S)* TENDERED**
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TOTAL CERTS SHARES TENDERED
------------------------------------------------
TOTAL BOOK SHARES TENDERED
------------------------------------------------
TOTAL SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------------------------
* Certificate numbers are not required if tender is made by book-entry transfer.
** If you desire to tender fewer than all Shares represented by a certificate listed above, please indicate in this column the
number of Shares you wish to tender. Otherwise, all Shares represented by such certificate will be deemed to have been
tendered. See Instruction 4.
[ ] CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE BEEN LOST OR
DESTROYED AND SEE INSTRUCTION 9.
Number of Shares represented by the lost or destroyed certificates:
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
This Letter of Transmittal is to be completed by stockholders of GRC
International, Inc. either if certificates ("Share Certificates") representing
shares of Common Stock, par value $.10 per share (the "Shares"), are to be
forwarded herewith or, unless an Agent's Message (as defined in the Offer to
Purchase) is utilized, if delivery of Shares is to be made by book-entry
transfer to an account maintained by EquiServe (the "Depositary") at The
Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the
procedures set forth in Section 3 of the Offer to Purchase dated February 22,
2000 (the "Offer to Purchase"). DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER
FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Stockholders whose Share Certificates are not immediately available or who
cannot deliver their Share Certificates and all other required documents to the
Depositary on or prior to the expiration date of the Offer or who are unable to
complete the procedure for book-entry transfer prior to the expiration date of
the Offer may nevertheless tender their Shares pursuant to the guaranteed
delivery procedures set forth in Section 3 of the Offer to Purchase. See
Instruction 2 below.
NOTE: SIGNATURE(S) MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL CAREFULLY.
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN
ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY TRANSFER FACILITY
AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
Provide Account Number and Transaction Code Number:
Account Number:
Transaction Code Number:
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING.
PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY.
Name(s) of Registered Holder(s):
Window Ticket Number (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution which Guaranteed Delivery:
IF DELIVERED BY BOOK-ENTRY TRANSFER TO THE BOOK-ENTRY TRANSFER
FACILITY, CHECK BOX: [ ]
Account Number:
Transaction Code Number:
2
<PAGE> 3
Ladies and Gentlemen:
The undersigned hereby tenders to LMN Corporation (the "Purchaser"), a
Delaware corporation and a wholly owned subsidiary of AT&T Corp., a New York
corporation ("Parent"), the above-described shares of Common Stock, par value
$.10 per share (the "Shares"), of GRC International, Inc., a Delaware
corporation (the "Company"), pursuant to the Purchaser's offer to purchase all
outstanding Shares at $15.00 per Share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated February 22, 2000 (the "Offer to Purchase"), receipt of
which is hereby acknowledged, and in this Letter of Transmittal (which, as
amended or supplemented from time to time, collectively constitute the "Offer").
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith, in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, the Purchaser all
right, title and interest in and to all the Shares that are being tendered
hereby and all dividends, distributions (including, without limitation,
distributions of additional Shares) and rights declared, paid or distributed in
respect of such Shares on or after February 22, 2000 (collectively,
"Distributions") and irrevocably appoints EquiServe (the "Depositary") the true
and lawful agent and attorney-in-fact of the undersigned with respect to such
Shares and all Distributions, with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest), to
(i) deliver certificates representing Shares ("Share Certificates") and all
Distributions, or transfer ownership of such Shares and all Distributions on the
account books maintained by the Book-Entry Transfer Facility, together, in
either case, with all accompanying evidences of transfer and authenticity, to or
upon the order of the Purchaser; (ii) present such Shares and all Distributions
for transfer on the books of the Company; and (iii) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares and all
Distributions, all in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints each of Mary Jane McKeever,
Marilyn Wasser and Gary Swenson as agent, attorney-in-fact and proxy of the
undersigned, each with full power of substitution, to vote in such manner as
such attorney and proxy or his substitute shall, in his sole discretion, deem
proper and otherwise act (by written consent or otherwise) with respect to all
the Shares tendered hereby which have been accepted for payment by the Purchaser
prior to the time of such vote or other action and all Shares and other
securities issued in Distributions in respect of such Shares, which the
undersigned is entitled to vote at any meeting of stockholders of the Company
(whether annual or special and whether or not an adjourned or postponed meeting)
or consent in lieu of any such meeting or otherwise. This proxy and power of
attorney is coupled with an interest in the Shares tendered hereby, is
irrevocable and is granted in consideration of, and is effective upon, the
acceptance for payment of such Shares by the Purchaser in accordance with the
terms of the Offer. Such acceptance for payment shall revoke all other proxies
and powers of attorney granted by the undersigned at any time with respect to
such Shares (and all Shares and other securities issued in Distributions in
respect of such Shares), and no subsequent proxy or power of attorney shall be
given or written consent executed (and if given or executed, shall not be
effective) by the undersigned with respect thereto. The undersigned understands
that, in order for Shares to be deemed validly tendered, immediately upon the
Purchaser's acceptance of such Shares for payment, the Purchaser or its designee
must be able to exercise full voting, consent and other rights with respect to
such Shares and other securities, including, without limitation, voting at any
meeting of the Company's stockholders.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and all Distributions, and that when such Shares are accepted
for payment by the Purchaser, the Purchaser will acquire good, marketable and
unencumbered title thereto and to all Distributions, free and clear of all
liens, restrictions, charges and encumbrances, and that none of such Shares or
Distributions will be subject to any adverse claim. The undersigned, upon
request, shall execute and deliver all additional documents deemed by the
Depositary or the Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the Shares tendered hereby and all Distributions. In
addition, the undersigned shall remit and transfer promptly to the Depositary
for the account of the Purchaser all Distributions in respect of the Shares
tendered hereby, accompanied by appropriate documentation of transfer, and
pending such remittance and transfer or appropriate assurance thereof, the
Purchaser shall be entitled to all rights and privileges as owner of each such
Distribution and may withhold the entire purchase price of the Shares tendered
hereby, or deduct from such purchase price, the amount or value of such
Distribution as determined by the Purchaser in its sole discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable. See
Section 4 in the Offer to Purchase.
3
<PAGE> 4
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer. The Purchaser's acceptance of such Shares for
payment will constitute a binding agreement between the undersigned and the
Purchaser upon the terms and subject to the conditions of the Offer. Without
limiting the foregoing, if the price to be paid in the Offer is amended in
accordance with the Offer, the price to be paid to the undersigned will be the
amended price notwithstanding the fact that a different price is stated in this
Letter of Transmittal. The undersigned recognizes that under certain
circumstances set forth in the Offer to Purchase, the Purchaser may not be
required to accept for payment any of the Shares tendered hereby.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased, and return all Share Certificates not purchased or not tendered in
the name(s) of the registered holder(s) appearing above in the box entitled
"Description of Shares Tendered." Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions," please mail the check for the
purchase price of all Shares purchased and all Share Certificates not tendered
or not purchased (and accompanying documents, as appropriate) to the address(es)
of the registered holder(s) appearing above in the box entitled "Description of
Shares Tendered." In the event that the boxes entitled "Special Payment
Instructions" and "Special Delivery Instruction" are both completed, please
issue the check for the purchase price of all Shares purchased and return all
Share Certificates not purchased or not tendered in the name(s) of, and mail
such check and Share Certificates to, the person(s) so indicated. Unless
otherwise indicated herein in the box entitled "Special Payment Instructions,"
please credit any Shares tendered hereby and delivered by book-entry transfer,
but which are not purchased, by crediting the account at the Book-Entry Transfer
Facility. The undersigned recognizes that the Purchaser has no obligation,
pursuant to the Special Payment Instructions, to transfer any Shares from the
name of the registered holder(s) thereof if the Purchaser does not purchase any
of the Shares tendered hereby.
The undersigned understands that the Purchaser reserves the right to
transfer or assign, in whole at any time, or in part from time to time, to one
or more of its affiliates, the right to purchase all or any portion of the
Shares tendered pursuant to the Offer, but any such transfer or assignment will
not relieve the Purchaser of its obligations under the Offer and will in no way
prejudice the rights of tendering stockholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer.
4
<PAGE> 5
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Share Certificates not tendered or not
purchased and/or the check for the purchase price of the Shares purchased
are to be issued in the name of and sent to someone other than the
undersigned, or if Shares tendered by book-entry transfer which are not
purchased are to be returned by credit to an account maintained at the
Book-Entry Transfer Facility other than the account indicated above.
Issue [ ] Check and/or [ ] Certificates to:
Name:
----------------------------------------------------
(PLEASE PRINT)
Address:
--------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NO.)
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
[ ] Credit unpurchased Shares tendered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below:
------------------------------------------------------------
(ACCOUNT NUMBER)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Share Certificates not tendered or not
purchased and/or the check for the purchase price of the Shares purchased
are to be sent to someone other than the undersigned, or to the
undersigned at an address other than that shown above.
Mail [ ] Check and/or [ ] Certificates to:
Name:
----------------------------------------------------
(PLEASE PRINT)
Address:
--------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NO.)
------------------------------------------------------------
5
<PAGE> 6
SIGN HERE
(AND PLEASE COMPLETE SUBSTITUTE FORM W-9)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S) OF HOLDER(S)
Dated: ____________________, 2000
(Must be signed by registered holder(s) exactly as name(s) appear(s) on Share
Certificate(s) or on a security position listing or by person(s) authorized to
become registered holder(s) by Share Certificates and documents transmitted
herewith. If a signature is by an officer on behalf of a corporation or by an
executor, administrator, trustee, guardian, attorney-in-fact, agent or other
person acting in a fiduciary or representative capacity, please provide the
following information. See Instructions 1 and 5.)
Name(s):
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Name of Firm:
Capacity (full title):
Address:
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
(Area Code) Telephone Number:
Taxpayer Identification or
Social Security No.:
(SEE SUBSTITUTE FORM W-9)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
- --------------------------------------------------------------------------------
AUTHORIZED SIGNATURE
- --------------------------------------------------------------------------------
NAME (PLEASE PRINT)
- --------------------------------------------------------------------------------
NAME OF FIRM
- --------------------------------------------------------------------------------
ADDRESS
- --------------------------------------------------------------------------------
ZIP CODE
- --------------------------------------------------------------------------------
(AREA CODE) TELEPHONE NO.
Dated: ____________________, 2000
6
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
To complete the Letter of Transmittal, you must do the following:
- Fill in the box entitled "Description of Shares Being Tendered."
- Sign and date the Letter of Transmittal in the box entitled "Sign
Here."
- Fill in and sign in the box entitled "Substitute Form W-9."
In completing the Letter of Transmittal, you may (but are not required to)
also do the following:
- If you want the payment for any Shares purchased issued in the name of
another person, complete the box entitled "Special Payment
Instructions."
- If you want any certificate for Shares not tendered or Shares not
purchased issued in the name of another person, complete the box
entitled "Special Payment Instructions."
- If you want any payment for Shares or certificate for Shares not
tendered or purchased delivered to an address other than that
appearing under your signature, complete the box entitled "Special
Delivery Instructions."
If you complete the box entitled "Special Payment Instructions" or "Special
Delivery Instructions," you must have your signature guaranteed by an Eligible
Institution (as defined in Instruction 1 below) unless the Letter of Transmittal
is signed by an Eligible Institution.
1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be guaranteed by a bank, broker, dealer, credit union, savings association
or other entity that is a member in good standing of the Securities Transfer
Agents Medallion Program (an "Eligible Institution"), unless (i) this Letter of
Transmittal is signed by the registered holder(s) (which term, for purposes of
this document, shall include any participant in the Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of Shares) of the
Shares tendered hereby and such holder(s) has not completed either the box
entitled "Special Payment Instructions" or the box entitled "Special Delivery
Instructions" herein or (ii) such Shares are tendered for the account of an
Eligible Institution. If a Share Certificate is registered in the name of a
person other than the person signing this Letter of Transmittal, or if payment
is to be made, or a Share Certificate not accepted for payment and not tendered
is to be returned to a person other than the registered holder(s), then such
Share Certificate must be endorsed or accompanied by appropriate stock powers,
in either case signed exactly as the name(s) of the registered holder(s) appear
on such Share Certificate, with the signatures on such Share Certificate or
stock powers guaranteed as described above. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES. This Letter
of Transmittal is to be used either if Share Certificates are to be forwarded
herewith or, unless an Agent's Message (as defined below) is used, if Shares are
to be delivered by book-entry transfer pursuant to the procedure set forth in
Section 3 of the Offer to Purchase. Share Certificates representing all
physically tendered Shares, or confirmation of a book-entry transfer, if such
procedure is available, into the Depositary's account at the Book-Entry Transfer
Facility ("Book-Entry Confirmation") of all Shares delivered by book-entry
transfer together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), or an Agent's Message in the case of
book-entry transfer, and any other documents required by this Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth herein prior to the expiration date of the Offer. If Share Certificates
are forwarded to the Depositary in multiple deliveries, a properly completed and
duly executed Letter of Transmittal must accompany each such delivery.
Stockholders whose Share Certificates are not immediately available, who
cannot deliver their Share Certificates and all other required documents to the
Depositary prior to the expiration date of the Offer or who cannot complete the
procedure for delivery by book-entry transfer on a timely basis may tender their
Shares pursuant to the guaranteed delivery procedure described in Section 3 of
the Offer to Purchase. Pursuant to such procedure: (i) such tender must be made
by or through an Eligible Institution; (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form made available
by the Purchaser, must be received by the Depositary prior to the expiration
date of the Offer; and (iii) the Share Certificates representing all physically
delivered Shares in proper form for transfer by delivery, or Book-Entry
Confirmation of all Shares delivered by book-entry transfer, in each case
together with a Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message), and any other documents required by
this Letter of Transmittal, must be received by the Depositary within three New
York Stock Exchange trading days after the date of execution of such Notice of
Guaranteed Delivery, all as described in Section 3 of the Offer to Purchase.
7
<PAGE> 8
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of the
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participants in the Book-Entry
Transfer Facility tendering the Shares that such participant has received this
Letter of Transmittal and agrees to be bound by the terms of this Letter of
Transmittal and that the Purchaser may enforce such agreement against such
participant.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of Transmittal
(or facsimile hereof), all tendering stockholders waive any right to receive any
notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the certificate numbers, the number of Shares
represented by such Share Certificates and the number of Shares tendered should
be listed on a separate signed schedule and attached hereto.
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY
BOOK-ENTRY TRANSFER). If fewer than all the Shares represented by any Share
Certificate delivered to the Depositary herewith are to be tendered hereby, fill
in the number of Shares which are to be tendered in the box entitled "Number of
Shares Tendered." In such cases, a new certificate representing the remainder of
the Shares that were represented by the Share Certificates delivered to the
Depositary herewith will be sent to each person signing this Letter of
Transmittal, unless otherwise provided in the box entitled "Special Delivery
Instructions" herein as soon as practicable after the expiration or termination
of the Offer. All Shares represented by Share Certificates delivered to the
Depositary will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Share Certificates evidencing such Shares without alteration,
enlargement or any other change whatsoever.
If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share Certificates or separate stock
powers are required, unless payment is to be made to, or Share Certificates not
tendered or not purchased are to be issued in the name of, a person other than
the registered holder(s), in which case, the Share Certificate(s) representing
the Shares tendered hereby must be endorsed or accompanied by appropriate stock
powers, in either case signed exactly as the name(s) of the registered holder(s)
appear on such Share Certificate(s). Signatures on such Share Certificate(s) and
stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
representing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificate(s). Signatures on such
Share Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any certificate or stock power is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory to
the Purchaser of such person's authority to so act must be submitted.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, the Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or Share
Certificate(s) representing Shares not tendered or not purchased are to be
issued in the name of, a person other than the registered holder(s), the amount
of any stock transfer taxes (whether imposed on the registered holder(s), such
other person or otherwise) payable on account of
8
<PAGE> 9
the transfer to such other person will be deducted from the purchase price of
such Shares purchased, unless evidence satisfactory to the Purchaser of the
payment of such taxes, or exemption therefrom, is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE SHARE CERTIFICATES REPRESENTING THE
SHARES TENDERED HEREBY.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
representing Shares not tendered or not purchased are to be issued, in the name
of a person other than the person(s) signing this Letter of Transmittal or if
such check or any such Share Certificate is to be sent to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal but at an address other than that shown in the box
entitled "Description of Shares Tendered" herein, the appropriate boxes in this
Letter of Transmittal must be completed. Stockholders delivering Shares tendered
hereby by book-entry transfer may request that Shares not purchased be credited
to the account maintained at the Book-Entry Transfer Facility as such
stockholder may designate in the box entitled "Special Payment Instructions"
herein. If no such instructions are given, all such Shares not purchased will be
returned by crediting the same account at the Book-Entry Transfer Facility as
the account from which such Shares were delivered.
8. WAIVER OF CONDITIONS. The conditions of the Offer may be waived, in
whole or in part, by the Purchaser, in its sole discretion, at any time and from
time to time, in the case of any Shares tendered. See Section 14 of the Offer to
Purchase.
9. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Share Certificate(s)
have been lost, destroyed or stolen, the stockholder should promptly notify the
Depositary by checking the box immediately preceding the special payment/special
delivery instructions, indicating the number of Shares lost and delivering the
Letter of Transmittal. The stockholder should also contact the Company's
transfer agent, American Stock Transfer & Trust Company, 6201 15th Avenue,
Brooklyn, NY 11219 (telephone 718-921-8206, contact Carolyn 0'Neil) for
instructions as to the procedures for replacing the Share Certificate(s). This
Letter of Transmittal and related documents cannot be processed until the lost,
destroyed or stolen certificates have been replaced and the replacement Share
Certificates have been delivered to the Depositary in accordance with the
Procedures set forth in Section 3 of the Offer to Purchase and the instructions
contained in this Letter of Transmittal.
10. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Information Agent or the
Dealer Manager at their respective addresses or telephone numbers set forth
below. Additional copies of the Offer to Purchase, this Letter of Transmittal,
the Notice of Guaranteed Delivery and the Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 may be obtained from the
Information Agent or the Dealer Manager or from brokers, dealers, commercial
banks or trust companies.
11. SUBSTITUTE FORM W-9. Each tendering stockholder is required to
provide the Depositary with a correct Taxpayer Identification Number ("TIN") on
the Substitute Form W-9 which is provided under "Important Tax Information"
below, and to certify, under penalties of perjury, that such number is correct
and that such stockholder is not subject to backup withholding of Federal income
tax. If a tendering stockholder has been notified by the Internal Revenue
Service that such stockholder is subject to backup withholding, such stockholder
must cross out item (2) of the Certification box of the Substitute Form W-9,
unless such stockholder has since been notified by the Internal Revenue Service
that such stockholder is no longer subject to backup withholding. Failure to
provide the information on the Substitute Form W-9 may subject the tendering
stockholder to a $50 penalty imposed by the Internal Revenue Service and to 31%
Federal income tax withholding on the payment of the purchase price of all
Shares purchased from such stockholder. If the tendering stockholder has not
been issued a TIN and has applied for one or intends to apply for one in the
near future, such stockholder should write "Applied For" in the space provided
for the TIN in Part I of the Substitute Form W-9, and sign and date the
Substitute Form W-9 and the Certificate of Awaiting Taxpayer Identification
Number. If "Applied For" is written in Part I and the Depositary is not provided
with a TIN within 60 days, the Depositary will withhold 31% on all payments of
the purchase price to such stockholder until a TIN is provided to the
Depositary. Each foreign stockholder must complete and submit Form W-8 in order
to be exempt from the 31% Federal income tax backup withholding due on payments
with respect to the Shares.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF), TOGETHER
WITH ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY
TRANSFER, AN AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED
BY THE DEPOSITARY PRIOR TO THE EXPIRATION OF THE OFFER, AND EITHER SHARE
CERTIFICATES FOR TENDERED SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES
MUST BE DELIVERED PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH
CASE PRIOR TO THE EXPIRATION DATE OF THE OFFER, OR THE TENDERING STOCKHOLDER
MUST COMPLY WITH THE PROCEDURES FOR GUARANTEED DELIVERY.
9
<PAGE> 10
IMPORTANT TAX INFORMATION
Under the Federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required by law to provide the Depositary (as payer)
with such stockholder's correct TIN on Substitute Form W-9 below. If such
stockholder is an individual, the TIN is such stockholder's social security
number. If the Depositary is not provided with the correct TIN, the stockholder
may be subject to a $50 penalty imposed by the Internal Revenue Service and
payments that are made to such stockholder with respect to Shares purchased
pursuant to the Offer may be subject to backup withholding of 31%.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit a Form W-8, signed under penalties of
perjury, attesting to such individual's exempt status. A Form W-8 can be
obtained from the Depositary. Exempt stockholders should furnish their TIN,
write "Exempt" on the face of the Substitute Form W-9, and sign, date and return
the Substitute Form W-9 to the Depositary. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions. A stockholder should consult his or her tax advisor as
to such stockholder's qualification for an exemption from backup withholding and
the procedure for obtaining such exemption.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the Federal income tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct TIN by
completing the form below certifying that (a) the TIN provided on Substitute
Form W-9 is correct (or that such stockholder is awaiting a TIN) and (b) that
(i) such stockholder has not been notified by the Internal Revenue Service that
such stockholder is subject to backup withholding as a result of a failure to
report all interest or dividends or (ii) the Internal Revenue Service has
notified such stockholder that such stockholder is no longer subject to backup
withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance on
which number to report. If the tendering stockholder has not been issued a TIN
and has applied for a number or intends to apply for a number in the near
future, the stockholder should write "Applied For" in the space provided for the
TIN in Part I, and sign and date the Substitute Form W-9 and the Certificate of
Awaiting Taxpayer Identification Number. If "Applied For" is written in Part I
and the Depositary is not provided with a TIN within 60 days, the Depositary
will withhold 31% of all payments of the purchase price to such stockholder
until a TIN is provided to the Depositary.
10
<PAGE> 11
TO BE COMPLETED BY ALL TENDERING STOCKHOLDERS
(SEE INSTRUCTION 11)
PAYER'S NAME: EQUISERVE, AS DEPOSITARY
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUBSTITUTE PART 1 -- Taxpayer Identification Number -- -------------------------------
FORM W-9 Please provide your TIN in the box at right and Social Security Number
certify by signing and dating below. If
DEPARTMENT OF THE TREASURY awaiting TIN, write "Applied For." OR
INTERNAL REVENUE SERVICE -------------------------------
Employer Identification Number
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER (TIN)
AND CERTIFICATION
----------------------------------------------------------------------------------------
PART 2 -- For Payees Exempt from Backup Withholding -- Check the box if you are NOT
subject to backup withholding. [ ]
----------------------------------------------------------------------------------------
PART 3 -- CERTIFICATION -- UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
(1) The number shown on this form is my correct taxpayer identification number (or I am
waiting for a number to be issued to me), and
(2) I am not subject to backup withholding because: (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue Service (IRS) that
I am subject to backup withholding as a result of a failure to report all interest
or dividends, or (c) the IRS has notified me that I am no longer subject to backup
withholding.
CERTIFICATE INSTRUCTIONS -- You must cross out item 2 above if you have been notified by
IRS that you are currently subject to backup withholding because you have failed to
report all interest and dividends on your tax return. For real estate transactions, item
2 does not apply. For mortgage interest paid, acquisition or abandonment of secured
property, cancellation of debt, contributions to an individual retirement arrangement
(IRA), and generally, payments other than interest and dividends, you are not required
to sign the Certification, but you must provide your correct TIN. (See the instructions
on page 2).
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
SIGNATURE ____________________________________ DATE __________________
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF
ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. IN ADDITION, FAILURE TO
PROVIDE SUCH INFORMATION MAY RESULT IN A PENALTY IMPOSED BY THE INTERNAL
REVENUE SERVICE. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION
OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR"
INSTEAD OF A TIN IN THE SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (b) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of payment, 31% of all
reportable payments made to me will be withheld until I provide a number.
____________________________________ __________________
Signature Date
11
<PAGE> 12
Questions and requests for assistance or additional copies of the Offer to
Purchase, Letter of Transmittal and other tender offer materials may be directed
to the Information Agent or the Dealer Manager as set forth below:
The Information Agent for the Offer is:
[Georgeson Shareholder logo]
17 State Street, 10th Floor
New York, New York 10004
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll Free: (800) 223-2064
The Dealer Manager for the Offer is:
LEHMAN BROTHERS
Three World Financial Center
200 Vesey Street
New York, New York 10285
Call Collect: (212) 526-9611 or (212) 526-2660
<PAGE> 1
Exhibit (a)(3)
Notice of Guaranteed Delivery
for Tender of Shares of Common Stock
of
GRC INTERNATIONAL, INC.
to
LMN CORPORATION
a wholly owned subsidiary of
AT&T CORP.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery (or one substantially in the form
hereof) must be used to accept the Offer (as defined below) if (a) certificates
representing shares of Common Stock, par value $.10 per share (the "Shares"), of
GRC International, Inc., a Delaware corporation ("Share Certificates"), are not
immediately available; (b) time will not permit all required documents to reach
EquiServe (the "Depositary") on or prior to the Expiration Date (as defined in
Section 1 of the Offer to Purchase described below); or (c) the procedure for
book-entry transfer, as set forth in the Offer to Purchase, cannot be completed
on a timely basis. This Notice of Guaranteed Delivery may be delivered by hand
or mail or transmitted by facsimile transmission to the Depositary. See Section
3 of the Offer to Purchase.
The Depositary for the Offer is:
EQUISERVE
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Courier:
EquiServe Securities Transfer & Reporting EquiServe
Attn: Corporate Actions Services Inc. Attn: Corporate Actions
P.O. Box 8029 c/o EquiServe 150 Royall Street
Boston, MA 02266-8029 100 Williams Street, Galleria Canton, MA 02021
New York, NY 10038
Facsimile Transmission: Telephone to Confirm Fax:
(781) 575-2232 or (781) 575-2775 or
(781) 575-2233 (781) 575-3417
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER
THAN AS LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX IN THE LETTER OF TRANSMITTAL.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to LMN Corporation, a Delaware corporation
and a wholly owned subsidiary of AT&T Corp., a New York corporation, upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
February 22, 2000 (the "Offer to Purchase") and the related Letter of
Transmittal (which, as amended or supplemented from time to time, collectively
constitute the "Offer"), receipt of each of which is hereby acknowledged, the
number of Shares indicated below pursuant to the guaranteed delivery procedures
set forth in Section 3 of the Offer to Purchase:
<TABLE>
<S> <C>
- ------------------------------------------------------------ ------------------------------------------------------------
- --------------------------------------------------------- ---------------------------------------------------------
----------------------------------------------------------- -----------------------------------------------------------
NAMES(S) OF RECORD HOLDER(S) NUMBER OF SHARES
- ----------------------------------------------------------- -----------------------------------------------------------
CERTIFICATE NO.(S) (IF AVAILABLE)
-----------------------------------------------------------
ADDRESS(ES) Indicate account number at Book-Entry Transfer Facility if
Shares will be tendered by book-entry transfer:
- -----------------------------------------------------------
ZIP CODE -----------------------------------------------------------
ACCOUNT NUMBER
-----------------------------------------------------------
(AREA CODE) TELEPHONE NO. DATED: , 2000
X --------------------------------------------------------
X--------------------------------------------------------
SIGNATURE(S) OF RECORD HOLDER(S)
- ------------------------------------------------------------ ------------------------------------------------------------
</TABLE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a bank, broker, dealer, credit union, savings association
or other entity that is a member in good standing of the Securities Transfer
Agents Medallion Program (an "Eligible Institution"), hereby guarantees delivery
to the Depositary, at one of its addresses set forth above, of either the Share
Certificates evidencing all Shares tendered hereby in proper form for transfer,
or confirmation of the book-entry transfer of Shares into the Depositary's
account at The Depository Trust Company, in either case together with delivery
of a properly completed and duly executed Letter of Transmittal (or facsimile
thereof) with any required signature guarantee, or an Agent's Message (as
defined in the Offer to Purchase) in connection with a book-entry delivery, and
any other documents required by the Letter of Transmittal, within three New York
Stock Exchange trading days after the date of execution of this Notice of
Guaranteed Delivery.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and Share
Certificates to the Depositary within the time period indicated herein. Failure
to do so may result in financial loss to such Eligible Institution.
<TABLE>
<S> <C>
X
- -------------------------------------------- -----------------------------------------------------------
NAME OF FIRM AUTHORIZED SIGNATURE
- -------------------------------------------- -----------------------------------------------------------
ADDRESS NAME (PLEASE PRINT OR TYPE)
- -------------------------------------------- -----------------------------------------------------------
ZIP CODE TITLE
DATED: , 2000
- --------------------------------------------
(AREA CODE) TELEPHONE NO.
</TABLE>
NOTE: DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL
<PAGE> 1
Exhibit (a)(4)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
GRC INTERNATIONAL, INC.
at
$15.00 NET PER SHARE
by
LMN CORPORATION
a wholly owned subsidiary of
AT&T CORP.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN TIME, ON
MONDAY, MARCH 20, 2000, UNLESS THE OFFER IS EXTENDED.
February 22, 2000
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by LMN Corporation, a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of AT&T Corp., a New York corporation
("Parent"), to act as Dealer Manager in connection with the Purchaser's offer to
purchase all outstanding shares of Common Stock, par value $.10 per share (the
"Shares"), of GRC International, Inc., a Delaware corporation (the "Company"),
at a purchase price of $15.00 per Share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated February 22, 2000 (the "Offer to Purchase") and in the
related Letter of Transmittal (which, as amended or supplemented from time to
time, collectively constitute the "Offer") enclosed herewith.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Shares registered in your name or in the name of
your nominee.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not properly withdrawn prior to the expiration of the Offer at
least a majority of the total number of outstanding Shares on a fully diluted
basis on the date of purchase and (ii) the expiration or termination of any
applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended. The Offer is also subject to the other conditions set
forth in the Offer to Purchase. See Section 14 of the Offer to Purchase.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER,
THE MERGER (AS DEFINED BELOW) AND THE MERGER AGREEMENT (AS DEFINED BELOW) AND
DETERMINED THAT THE TERMS OF EACH ARE ADVISABLE, FAIR TO, AND IN THE BEST
INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, AND RECOMMENDS THAT THE
COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE
OFFER.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of February 14, 2000 (the "Merger Agreement"), among the Company, Parent and
the Purchaser pursuant to which, following the consummation of the Offer and in
accordance with the Delaware General Corporation Law, and subject to the
satisfaction or waiver of certain conditions, the Purchaser will be merged with
and into the Company (the "Merger"), with the Company continuing as the
surviving corporation and as a wholly owned subsidiary of Parent.
<PAGE> 2
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase dated February 22, 2000.
2. The Letter of Transmittal for your use to tender Shares and for
the information of your clients. Facsimile copies of the Letter of
Transmittal may be used to tender Shares.
3. A printed form of letter which may be sent to your clients for
whose accounts you hold Shares registered in your name or in the name of
your nominee, with space provided for obtaining such clients' instructions
with regard to the Offer.
4. The Notice of Guaranteed Delivery for Shares to be used to accept
the Offer if certificates for Shares ("Share Certificates") and all other
required documents are not immediately available or cannot be delivered to
EquiServe (the "Depositary") by the Expiration Date (as defined in the
Offer to Purchase) or if the procedure for book-entry transfer cannot be
completed by the Expiration Date.
5. A letter to stockholders from Joseph R. Wright, Jr., the Chairman
of the Board of Directors of the Company accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
7. A return envelope addressed to the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, EASTERN TIME, ON MONDAY, MARCH 20, 2000, UNLESS THE
OFFER IS EXTENDED.
In order to accept the Offer, a duly executed and properly completed Letter
of Transmittal and any required signature guarantees, or an Agent's Message (as
defined in the Offer to Purchase) in connection with a book-entry delivery of
Shares, and any other required documents should be sent to the Depositary and
either Share Certificates representing the tendered Shares should be delivered
to the Depositary, or Shares should be tendered by book-entry transfer into the
Depositary's account maintained at the Book Entry Transfer Facility (as
described in the Offer to Purchase), all in accordance with the instructions set
forth in the Letter of Transmittal and the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Share Certificates or other required documents on or prior to the
Expiration Date or to comply with the book-entry transfer procedures on a timely
basis, a tender may be effected by following the guaranteed delivery procedures
specified in Section 3 of the Offer to Purchase.
The Purchaser will not pay any commissions or fees to any broker, dealer or
other person (other than the Information Agent) for soliciting tenders of Shares
pursuant to the Offer. The Purchaser will, however, upon request, reimburse you
for customary clerical and mailing expenses incurred by you in forwarding any of
the enclosed materials to your clients. The Purchaser will pay or cause to be
paid any stock transfer taxes applicable to its purchase of Shares pursuant to
the Offer, except as otherwise provided in Instruction 6 of the Letter of
Transmittal.
Any inquiries you may have with respect to the Offer should be addressed
to, and additional copies of the enclosed material may be obtained from, the
Information Agent or the Dealer Manager at their respective addresses and
telephone numbers set forth on the back cover of the Offer to Purchase.
Very truly yours,
LEHMAN BROTHERS
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF PARENT, THE PURCHASER, THE COMPANY, THE DEALER
MANAGER, THE DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF
THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY
DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
<PAGE> 1
Exhibit (a)(5)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
GRC INTERNATIONAL, INC.
at
$15.00 NET PER SHARE
by
LMN CORPORATION
a wholly owned subsidiary of
AT&T CORP.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN
TIME, ON MONDAY, MARCH 20, 2000, UNLESS THE OFFER IS EXTENDED.
February 22, 2000
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated February
22, 2000 (the "Offer to Purchase") and the related Letter of Transmittal (which,
as amended or supplemented from time to time, collectively constitute the
"Offer") in connection with the offer by LMN Corporation, a Delaware corporation
(the "Purchaser") and a wholly owned subsidiary of AT&T Corp., a New York
corporation, to purchase all outstanding shares of Common Stock, par value $.10
per share (the "Shares"), of GRC International, Inc., a Delaware corporation
(the "Company"), at a purchase price of $15.00 per Share, net to the seller in
cash, without interest thereon, upon the terms and subject to the conditions set
forth in the Offer to Purchase and in the related Letter of Transmittal enclosed
herewith. Holders of Shares whose certificates for such Shares (the "Share
Certificates") are not immediately available, or who cannot deliver their Share
Certificates and all other required documents to EquiServe (the "Depositary") on
or prior to the Expiration Date (as defined in the Offer to Purchase), or who
cannot complete the procedures for book-entry transfer on a timely basis, must
tender their Shares according to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase.
WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE ENCLOSED LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR
YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR
YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all Shares held by us for your account pursuant to
the terms and conditions set forth in the Offer.
Please note the following:
1. The tender price is $15.00 per Share, net to you in cash, without
interest thereon, upon the terms and subject to the conditions set forth in
the Offer.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company has unanimously approved the
Offer, the Merger (as defined below) and the Merger Agreement (as defined
below) and determined that the terms of each are advisable, fair to, and in
the best interests of, the Company and its stockholders, and recommends
that the Company's stockholders accept the Offer and tender their Shares
pursuant to the Offer.
<PAGE> 2
4. The Offer is being made pursuant to an Agreement and Plan of
Merger, dated as of February 14, 2000 (the "Merger Agreement"), among the
Company, Parent and the Purchaser pursuant to which, following the
consummation of the Offer and in accordance with the Delaware General
Corporation Law, and subject to the satisfaction or waiver of certain
conditions, the Purchaser will be merged with and into the Company (the
"Merger"), with the Company continuing as the surviving corporation and as
a wholly owned subsidiary of Parent.
5. The Offer is conditioned upon, among other things, (i) there being
validly tendered and not properly withdrawn prior to the expiration date of
the Offer at least a majority of the total number of outstanding Shares on
a fully diluted basis on the date of purchase and (ii) the expiration or
termination of any applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended. The Offer is also subject
to the other conditions set forth in the Offer to Purchase. See the
Introduction and Section 14 of the Offer to Purchase.
6. Any stock transfer taxes applicable to the sale of Shares to the
Purchaser pursuant to the Offer will be paid by the Purchaser, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
7. The Offer and withdrawal rights will expire at 12:00 Midnight,
Eastern time, on Monday, March 20, 2000, unless the Offer is extended.
8. Payment for Shares purchased pursuant to the Offer will in all
cases be made only after timely receipt by the Depositary of (a) Share
Certificates or timely confirmation of the book-entry transfer of such
Shares into the account maintained by the Book-Entry Transfer Facility (as
described in the Offer to Purchase), pursuant to the procedures set forth
in Section 3 of the Offer to Purchase, (b) the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees or an Agent's Message (as defined in the Offer to
Purchase), in connection with a book-entry delivery and (c) any other
documents required by the Letter of Transmittal. Accordingly, payment may
not be made to all tendering stockholders at the same time, depending upon
when Share Certificates or confirmations of book-entry transfer of such
Shares into the Depositary's account at the Book-Entry Transfer Facility
are actually received by the Depositary.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form set forth on the back page of this letter. If you
authorize the tender of your Shares, all such Shares will be tendered unless
otherwise specified on the back page of this letter. An envelope to return your
instructions to us is enclosed. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN
AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE
EXPIRATION OF THE OFFER.
The Purchaser is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If the Purchaser becomes aware of any valid state statute prohibiting
the making of the Offer or the acceptance of the Shares pursuant thereto, the
Purchaser will make a good faith effort to comply with such statute or seek to
have such statute declared inapplicable to the Offer. If, after such good faith
effort, the Purchaser cannot comply with such state statute, the Offer will not
be made to (nor will tenders be accepted from or on behalf of) holders of Shares
in such state. In any jurisdiction where the securities, "blue sky" or other
laws require the Offer to be made by a licensed broker or dealer, the Offer
shall be deemed to be made on behalf of the Purchaser by Lehman Brothers Inc.
(the Dealer Manager), or one or more registered brokers or dealers licensed
under the laws of such jurisdiction.
<PAGE> 3
Instructions with Respect to the Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
GRC INTERNATIONAL, INC.
by
LMN CORPORATION
a wholly owned subsidiary of
AT&T CORP.
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer
to Purchase dated February 22, 2000 (the "Offer to Purchase") and the related
Letter of Transmittal (which, as amended or supplemented from time to time,
collectively constitute the "Offer") in connection with the offer by LMN
Corporation, a Delaware corporation (the "Purchaser") and a wholly owned
subsidiary of AT&T Corp., a New York corporation, to purchase all outstanding
shares of Common Stock, par value $.10 per share (the "Shares"), of GRC
International, Inc., a Delaware corporation, at a purchase price of $15.00 per
Share, net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) which are held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
Number of Shares to be Tendered: ------------------ Shares*
- --------------------------------------------------------------------------------
Sign Below
Account Number:
- ------------------ Signature(s)
- -----------------------------------------------------------------
Dated:
- ------------------ , 2000
- --------------------------------------------------------------------------------
PLEASE TYPE OR PRINT NAME(S)
- --------------------------------------------------------------------------------
PLEASE TYPE OR PRINT ADDRESS(ES) HERE
- --------------------------------------------------------------------------------
AREA CODE AND TELEPHONE NUMBER(S)
- --------------------------------------------------------------------------------
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER(S)
- ---------------
* Unless otherwise indicated, it will be assumed that you instruct us to tender
all Shares held by us for your account.
<PAGE> 1
Exhibit (a)(7)
AT&T COMMENCES TENDER OFFER
FOR GRC INTERNATIONAL, INC.
For Immediate Release: Tuesday, February 22, 2000
NEW YORK - AT&T today announced that its wholly owned subsidiary, LMN
Corporation, commenced its previously announced tender offer to acquire all of
the outstanding shares of GRC International, Inc. for $15 per share in cash.
The tender offer is scheduled to expire at 12:00 midnight, Eastern time, on
Monday, March 20, 2000, unless extended. The offer is being made pursuant to an
Agreement and Plan of Merger entered into between AT&T and GRC International on
February 14, 2000. The tender offer is subject to certain conditions, including
at least a majority of GRC International's outstanding shares, on a fully
diluted basis, being tendered without withdrawal prior to the expiration of
AT&T's offer, and obtaining clearance of the transaction under federal antitrust
laws.
This news release does not constitute an offer to purchase or a
solicitation of an offer to sell any securities. The complete terms and
conditions of this tender offer are set forth in an offer to purchase and
related letter of transmittal which are being filed today with the Securities
and Exchange Commission and mailed to GRC International's stockholders.
<PAGE> 1
Exhibit (a)(8)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER FOR THE PAYEE (YOU)
TO GIVE THE PAYER.--Social Security numbers have nine digits separated by two
hyphens: i.e., 000-00-0000. Employer identification numbers have nine digits
separated by only one hyphen: i.e., 00-0000000. The table below will help
determine the number to give the payer. All "Section" references are to the
Internal Revenue Code of 1986, as amended. "IRS" is the Internal Revenue
Service.
<TABLE>
<C> <S> <C>
- ------------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ------------------------------------------------------------
1. Individual The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, the
first individual on
the account(1)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
4. a. The usual revocable savings The
trust account (grantor is also grantor-trustee(1)
trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust
under state law
5. Sole proprietorship The owner(3)
- ------------------------------------------------------------
- ------------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------------
6. Sole proprietorship The owner(3)
7. A valid trust, estate, or pension The legal entity(4)
trust
8. Corporate The corporation
9. Association, club, religious, The organization
charitable, educational, or other
tax-exempt organization
10. Partnership The partnership
11. A broker or registered nominee The broker or
nominee
12. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a state or
local government, school district,
or prison) that receives
agricultural program payments
- ------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your social security number or
your employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the taxpayer identification number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title.)
NOTE: If no name is circled when there is more than one name listed, the number
will be considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number, obtain Form SS-5,
Application for a Social Security Card at the local Social Security
Administration office, or Form SS-4, Application for Employer Identification
Number, by calling 1 (800) TAX-FORM, and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from withholding include:
- An organization exempt from tax under Section 501(a), an individual
retirement account (IRA), or a custodial account under Section 403(b)(7), if
the account satisfies the requirements of Section 401(f)(2).
- The United States or a state thereof, the District of Columbia, a possession
of the United States, or a political subdivision or wholly-owned agency or
instrumentality of any one or more of the foregoing.
- An international organization or any agency or instrumentality thereof.
- A foreign government and any political subdivision, agency or
instrumentality thereof.
Payees that may be exempt from backup withholding include:
- A corporation.
- A financial institution.
- A dealer in securities or commodities required to register in the United
States, the District of Columbia, or a possession of the United States.
- A real estate investment trust.
- A common trust fund operated by a bank under Section 584(a).
- An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- A middleman known in the investment community as a nominee or who is listed
in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
- A futures commission merchant registered with the Commodity Futures Trading
Commission.
- A foreign central bank of issue.
Payments of dividends and patronage dividends generally exempt from backup
withholding include:
- Payments to nonresident aliens subject to withholding under Section 1441.
- Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident alien partner.
- Payments of patronage dividends not paid in money.
- Payments made by certain foreign organizations.
- Section 404(k) payments made by an ESOP.
Payments of interest generally exempt from backup withholding include:
- Payments of tax-exempt interest (including exempt-interest dividends under
Section 852).
- Payments described in Section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under Section 1451.
- Payments made by certain foreign organizations.
Certain payments, other than payments of interest, dividends, and patronage
dividends, that are exempt from information reporting are also exempt from
backup withholding. For details, see Sections 6041, 6041A, 6042, 6044, 6045,
6049, 6050A and 6050N and the regulations thereunder.
EXEMPT PAYEES SHOULD COMPLETE A SUBSTITUTE FORM W-9 TO AVOID POSSIBLE ERRONEOUS
BACKUP WITHHOLDING. Furnish your taxpayer identification number, write "EXEMPT"
on the form, sign and date the form and return it to the payer.
PRIVACY ACT NOTICE. -- Section 6109 requires you to provide your correct
taxpayer identification number to payers who must report the payments to the
IRS. The IRS uses the numbers for identification purposes and to help verify the
accuracy of your return and may also provide this information to various
government agencies for tax enforcement or litigation purposes. Payers must be
given the numbers whether or not recipients are required to file tax returns.
Payers must generally withhold 31% of taxable interest, dividend, and certain
other payments to a payee who does not furnish a taxpayer identification number
to a payer. Certain penalties may also apply.
PENALTIES
(1) FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you fail to furnish
your taxpayer identification number to a payer, you are subject to a penalty of
$50 for each such failure unless your failure is due to reasonable cause and not
to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
<PAGE> 1
Exhibit (a)(9)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares (as defined below). The Offer (as defined below) is made solely
by the Offer to Purchase, dated February 22, 2000, and the related Letter of
Transmittal (and any amendments or supplements thereto), and is being made to
all holders of Shares. Purchaser (as defined below) is not aware of any state
where the making of the Offer is prohibited by administrative or judicial action
pursuant to any valid state statute. If Purchaser becomes aware of any valid
state statute prohibiting the making of the Offer or the acceptance of the
Shares pursuant thereto, Purchaser shall make a good faith effort to comply with
such statute or seek to have such statute declared inapplicable to the Offer.
If, after such good faith effort, Purchaser cannot comply with such state
statute, the Offer will not be made to (nor will tenders be accepted from or on
behalf of) holders of Shares in such state. In any jurisdiction where the
securities, "blue sky" or other laws require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on behalf of Purchaser by
Lehman Brothers Inc. (the Dealer Manager) or one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
GRC INTERNATIONAL, INC.
AT
$15.00 NET PER SHARE
BY
LMN CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
AT&T CORP.
LMN Corporation, a Delaware corporation ("Purchaser") and a wholly
owned subsidiary of AT&T Corp., a New York corporation ("Parent"), hereby offers
to purchase all outstanding shares of Common Stock, par value $.10 per share
(the "Shares"), of GRC International, Inc., a Delaware corporation (the
"Company"), at a purchase price of $15.00 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase, dated February 22, 2000 (the "Offer to Purchase"), and
in the related Letter of Transmittal (which, as amended or supplemented from
time to time, collectively constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN TIME ON
MONDAY, MARCH 20, 2000, UNLESS THE OFFER IS EXTENDED.
<PAGE> 2
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING
VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER
AT LEAST A MAJORITY OF THE TOTAL NUMBER OF OUTSTANDING SHARES ON A FULLY DILUTED
BASIS ON THE DATE OF PURCHASE (THE "MINIMUM CONDITION") AND (II) THE EXPIRATION
OR TERMINATION OF ANY APPLICABLE WAITING PERIODS UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED. THE OFFER IS ALSO SUBJECT TO THE
OTHER CONDITIONS SET FORTH IN THE OFFER TO PURCHASE. SEE SECTION 14 OF THE OFFER
TO PURCHASE.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE
OFFER, THE MERGER (AS DEFINED BELOW) AND THE MERGER AGREEMENT (AS DEFINED BELOW)
AND DETERMINED THAT THE TERMS OF EACH ARE ADVISABLE, FAIR TO, AND IN THE BEST
INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, AND RECOMMENDS THAT THE
COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE
OFFER.
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of February 14, 2000 (the "Merger Agreement"), among the Company,
Parent and Purchaser pursuant to which, following the consummation of the Offer
and in accordance with the Delaware General Corporation Law, and subject to the
satisfaction or waiver of certain conditions, Purchaser will be merged with and
into the Company (the "Merger"), with the Company continuing as the surviving
corporation and as a wholly owned subsidiary of Parent. At the effective time of
the Merger (the "Effective Time"), each Share issued and outstanding immediately
prior to the Effective Time (other than any Shares held by Parent, Purchaser,
any wholly owned subsidiary of Parent or Purchaser, in the treasury of the
Company or by any subsidiary of the Company, and other than Shares, if any, held
by stockholders who validly perfect their appraisal rights under Delaware law)
will be converted into the right to receive an amount in cash, without interest,
less any withholding taxes required under applicable law, equal to the price per
Share paid in the Offer. The Merger Agreement is more fully described in the
Offer to Purchase.
For purposes of the Offer, Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered to Purchaser and not
properly withdrawn if, as and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance of such Shares for payment pursuant to the
Offer. In all cases, upon the terms and subject to the conditions of the Offer,
payment for Shares purchased pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from Purchaser and
transmitting payment to validly tendering stockholders. Under no circumstances
will interest on the purchase price for Shares be paid by Purchaser, regardless
of any extension of the Offer or any delay in making such payment. In all cases,
payment for Shares accepted for payment pursuant to the Offer will be made only
after timely receipt by the Depositary of (i) certificates representing Shares
(the "Share Certificates") or timely confirmation of the book-entry transfer of
such Shares into the Depositary's account at The Depository Trust Company
("DTC") pursuant to the procedures set forth in Section 3 of the Offer to
Purchase, (ii) the Letter of Transmittal (or a facsimile thereof), delivered
with the Offer to Purchase, properly completed and duly executed, with any
required signature guarantees or an Agent's Message (as defined in the Offer to
Purchase) in connection
2
<PAGE> 3
with a book-entry transfer of Shares and (iii) any other documents required by
the Letter of Transmittal.
Purchaser expressly reserves the right, in its sole discretion (subject
to the terms and conditions of the Merger Agreement), at any time and from time
to time, to extend the period of time during which the Offer is open for any
reason, including the existence of any of the conditions specified in Section 14
of the Offer to Purchase, and thereby delay acceptance for payment of and
payment for any Shares, by giving oral or written notice of such extension to
the Depositary. Any such extension will be followed as promptly as practicable
by public announcement thereof, and such announcement will be made no later than
9:00 a.m., Eastern time, on the next business day after the previously scheduled
Expiration Date (as defined below). During any such extension, all Shares
previously tendered and not properly withdrawn will remain subject to the Offer,
subject to the right of a tendering stockholder to withdraw such stockholder's
Shares. The term "Expiration Date" means 12:00 midnight, Eastern time, on
Monday, March 20, 2000, unless and until Purchaser, subject to the terms of the
Merger Agreement, shall have further extended the period of time for which the
Offer is open, in which event the term "Expiration Date" shall mean the time and
date at which the Offer, as so extended by Purchaser, shall expire. Pursuant to
the Merger Agreement, Parent and Purchaser shall extend the Offer until 5:00
p.m., Eastern time, on March 27, 2000, unless another party commences a
competing tender offer for the Shares that expires before March 27, 2000, in
which case, Purchaser shall extend the Offer until 5:00 p.m., Eastern time, on
the business day prior to the day on which the competing tender offer is
initially scheduled to expire. Under the Merger Agreement, under certain
circumstances, the Company may also require Purchaser to extend the Offer, but
only until April 17, 2000, if at the scheduled Expiration Date any of the
conditions set forth in Section 14 of the Offer to Purchase (other than the
Minimum Condition) are not satisfied or waived. No subsequent offering period
will be available.
Tenders of Shares made pursuant to the Offer are irrevocable, except
that Shares tendered pursuant to the Offer may be withdrawn at any time on or
prior to the Expiration Date and, unless theretofore accepted for payment as
provided in the Offer to Purchase, may also be withdrawn at any time after April
21, 2000. In order for a withdrawal to be effective, a written or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of the Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn, and (if Share
Certificates have been tendered) the name of the registered holder of the Shares
as set forth in the Share Certificate, if different from that of the person who
tendered such Shares. If Share Certificates evidencing Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then prior to the
physical release of such certificates, unless the Shares have been tendered by
an Eligible Institution (as defined in the Offer to Purchase), the tendering
stockholder must submit the serial numbers shown on the particular certificates
evidencing the Shares to be withdrawn and the signature on the notice of
withdrawal must be guaranteed by an Eligible Institution. If Shares have been
tendered pursuant to the procedures for book-entry transfer as set forth in
Section 3 of the Offer to Purchase, any notice of withdrawal must also specify
the name and number of the account at DTC to be credited with the withdrawn
Shares and otherwise comply with DTC's procedures, in which case a notice of
withdrawal will be effective if delivered to the Depositary by any method of
delivery described in this paragraph. Withdrawals of Shares may not be
rescinded, and any Shares
3
<PAGE> 4
properly withdrawn will thereafter be deemed not validly tendered for purposes
of the Offer, but may be tendered at any subsequent time prior to the Expiration
Date by following any of the procedures described in Section 3 of the Offer to
Purchase. All questions as to the form and validity (including time of receipt)
of notices of withdrawal will be determined by Purchaser, in its sole
discretion, whose determination shall be final and binding.
The information required to be disclosed pursuant to Rule 14d-6(d)(1)
of the General Rules and Regulations under the Securities Exchange Act of 1934,
as amended, is contained in the Offer to Purchase, and is incorporated herein by
reference.
The Company has provided Purchaser with the Company's stockholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase and the related Letter of Transmittal
and, if required, other relevant materials will be mailed to record holders of
Shares whose names appear on the stockholder list, and will be furnished to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the stockholder list or who are
listed as participants in a clearing agency's security position listing for
subsequent transmittal to beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the Dealer
Manager or the Information Agent at their respective telephone numbers and
addresses listed below. Additional copies of the Offer to Purchase, the Letter
of Transmittal, the Notice of Guaranteed Delivery and other tender offer
materials may be obtained at Purchaser's expense from the Information Agent.
Neither Parent nor Purchaser will pay any fees or commissions to any broker,
dealer or other person other than the Information Agent for soliciting tenders
of Shares pursuant to the Offer.
The Information Agent for the Offer is:
[GEORGESON LOGO]
17 State Street, 10th Floor
New York, New York 10004
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll Free: (800) 223-2064
The Dealer Manager for the Offer is:
[LEHMAN LOGO]
Three World Financial Center
200 Vesey Street
New York, New York 10285
Call Collect: (212) 526-9611 or (212) 526-2660
February 22, 2000
<PAGE> 1
Exhibit (d)(1)
GRC INTERNATIONAL, INC.,
AT&T CORP.
and
LMN CORPORATION
AGREEMENT AND PLAN OF MERGER
Dated as of February 14, 2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
ARTICLE I. THE TENDER OFFER ............................................... 2
SECTION 1.1. The Offer ............................................. 2
SECTION 1.2. Company Action ........................................ 4
SECTION 1.3. Directors ............................................. 5
ARTICLE II. THE MERGER ..................................................... 7
SECTION 2.1. The Merger ............................................ 7
SECTION 2.2. Closing; Effective Time................................ 7
SECTION 2.3. Effect of the Merger................................... 7
SECTION 2.4. Subsequent Actions..................................... 8
SECTION 2.5. Certificate of Incorporation; By-Laws;
Directors and Officers ............................. 8
SECTION 2.6. Conversion of Securities............................... 9
SECTION 2.7. Dissenting Shares...................................... 9
SECTION 2.8. Surrender of Shares; Stock Transfer Books ............. 10
SECTION 2.9. Stock Plans ........................................... 12
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF PARENT AND
PURCHASER ...................................................... 14
SECTION 3.1. Corporate Organization................................. 14
SECTION 3.2. Authority Relative to this Agreement................... 14
SECTION 3.3. No Conflict; Required Filings and Consents............. 15
SECTION 3.4. Financing Arrangements................................. 16
SECTION 3.5. Brokers ............................................... 16
SECTION 3.6. Offer Documents; Proxy Statement....................... 16
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY................... 16
SECTION 4.1. Organization and Qualification; Subsidiaries........... 16
SECTION 4.2. Capitalization ........................................ 17
SECTION 4.3. Authority Relative to this Agreement................... 19
SECTION 4.4. No Conflict; Required Filings and Consents............. 20
SECTION 4.5. SEC Filings; Financial Statements...................... 21
SECTION 4.6. Absence of Certain Changes or Events................... 22
SECTION 4.7. Litigation ............................................ 24
SECTION 4.8. Employee Benefit Plans................................. 24
SECTION 4.9. Labor and Employment................................... 27
SECTION 4.10. Properties ............................................ 28
SECTION 4.11. Intellectual Property.................................. 29
SECTION 4.12. Insurance ............................................. 30
SECTION 4.13. Environmental Matters.................................. 31
SECTION 4.14. Government Contracts................................... 32
SECTION 4.15. Licenses and Permits; Compliance with Laws ............ 32
SECTION 4.16. Material Contracts.................................... 33
SECTION 4.17. Taxes ................................................ 35
SECTION 4.18. Offer Documents; Proxy Statement...................... 37
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C>
SECTION 4.19. Brokers................................................ 38
SECTION 4.20. Takeover Statutes...................................... 38
SECTION 4.21. Rights Plan............................................ 38
ARTICLE V. CONDUCT OF BUSINESS PENDING THE MERGER............................. 38
SECTION 5.1. Conduct of Business by the Company
Pending the Closing..................................... 38
SECTION 5.2. No Solicitation......................................... 42
ARTICLE VI. ADDITIONAL AGREEMENTS............................................. 43
SECTION 6.1. Proxy Statement......................................... 43
SECTION 6.2. Meeting of Stockholders of the Company.................. 44
SECTION 6.3. Compliance with Law..................................... 44
SECTION 6.4. Notification of Certain Matters......................... 44
SECTION 6.5. Access to Information................................... 45
SECTION 6.6. Public Announcements.................................... 45
SECTION 6.7. Reasonable Best Efforts; Cooperation.................... 45
SECTION 6.8. Agreement to Defend and Indemnify....................... 46
SECTION 6.9. Takeover Statutes....................................... 47
SECTION 6.10. Employment Matters..................................... 47
SECTION 6.11. Company Employee Benefit Plans......................... 48
ARTICLE VII. CONDITIONS OF MERGER............................................. 50
ARTICLE VIII. TERMINATION, AMENDMENT AND WAIVER............................... 50
SECTION 8.1. Termination............................................. 50
SECTION 8.2. Effect of Termination................................... 53
ARTICLE IX. GENERAL PROVISIONS................................................ 54
SECTION 9.1. Non-Survival of Representations,
Warranties and Agreements........................... 54
SECTION 9.2. Notices................................................. 54
SECTION 9.3. Expenses................................................ 55
SECTION 9.4. Certain Definitions..................................... 55
SECTION 9.5. Headings................................................ 56
SECTION 9.6. Severability............................................ 56
SECTION 9.7. Schedules............................................... 56
SECTION 9.8. Entire Agreement; No Third-Party Beneficiaries.......... 56
SECTION 9.9. Assignment.............................................. 56
SECTION 9.10. Governing Law.......................................... 57
SECTION 9.11. Amendment.............................................. 57
SECTION 9.12. Waiver................................................. 57
SECTION 9.13. Counterparts........................................... 57
</TABLE>
(ii)
<PAGE> 4
SCHEDULES
2.9(b) Stock Plans
4.1 Subsidiaries
4.2(a) Options, Warrants, Etc.
4.2(b) Joint Ventures, Etc.
4.4(a) Conflicts
4.4(b) Company Consents
4.5(c) Undisclosed Liabilities
4.5(d) Amendments to Filed Documents
4.6 Changes, Events, Etc.
4.7 Litigation
4.8 ERISA
4.8(a)(ii) Options
4.9 Labor and Employment
4.10 Properties
4.11 Intellectual Property
4.12 Insurance
4.13 Environmental Matters
4.14 Government Contracts
4.15 Compliance with Laws
4.16 Material Contracts
4.17 Tax
5.1(i) Settlement of Proceedings
5.2(f) Indemnification Agreements
6.8 Indemnification Insurance
6.10 Executive Compensation
6.11 Employee Benefit Matters
Annex I - Conditions to the Offer
Index of Defined Terms
Exhibit A - Form of Stockholders Agreement
Exhibit B - Form of Stockholders Agreement
(iii)
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 14, 2000
(the "Agreement"), among GRC INTERNATIONAL, INC., a Delaware corporation (the
"Company"), AT&T CORP., a New York corporation ("Parent"), and LMN CORPORATION,
a Delaware corporation and an indirect wholly owned subsidiary of Parent
("Purchaser").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of the Company and
Purchaser have each determined that it is in the best interests of their
respective stockholders for Parent to acquire the Company upon the terms and
subject to the conditions set forth herein; and
WHEREAS, in furtherance thereof, it is proposed that Purchaser
will make a cash tender offer (as it may be amended from time to time as
permitted under this Agreement, the "Offer") to acquire all of the issued and
outstanding shares (the "Shares") of the common stock, $.10 par value, of the
Company (the "Company Common Stock") at a purchase price of fifteen dollars
($15) per Share (such price or such higher price as may be paid in the Offer,
the "Per Share Amount"), net to the seller in cash; and
WHEREAS, the respective Boards of Directors of the Company,
Purchaser and Parent have each approved this Agreement and the merger (the
"Merger") of Purchaser with and into the Company following the consummation of
the Offer and upon the terms and subject to the conditions set forth herein; and
WHEREAS, the Board of Directors of the Company (the "Board of
Directors") has determined that the consideration to be paid for each Share in
the Offer and the Merger is fair to the holders of such Shares and to recommend
that the holders of such Shares accept the Offer and approve this Agreement and
the transactions contemplated hereby; and
WHEREAS, the Board of Directors has approved the terms of the
Stockholders Agreements attached hereto as Exhibits A and B (the "Stockholders
Agreements") to be entered into among Parent, Purchaser and certain holders of
Shares (the "Stockholders") simultaneously herewith, pursuant to which such
Stockholders have, among other things, agreed to tender their Shares pursuant to
the Offer.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, the Company, Parent and Purchaser hereby agree as follows:
<PAGE> 6
ARTICLE I.
THE TENDER OFFER
SECTION 1.1. The Offer.
(a) Provided that this Agreement shall not have been
terminated in accordance with Section 8.1 hereof and none of the events set
forth in Annex I hereto shall have occurred and be existing, Purchaser shall
commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) the Offer as promptly as reasonably
practicable, but in no event later than seven business days following the public
announcement by Parent and the Company of the execution of this Agreement. The
obligation of Purchaser to accept for payment and pay for any Shares tendered
pursuant to the Offer shall be subject to the satisfaction of the conditions set
forth in Annex I. Purchaser expressly reserves the right from time to time,
subject to Sections 1.1(b) and 1.1(d) hereof, without the consent of the Company
to waive any such condition, to increase the Per Share Amount, or to make any
other changes in the terms and conditions of the Offer. The Per Share Amount
shall be net to the seller in cash, without interest, subject to reduction only
for any applicable withholding taxes or stock transfer taxes payable by the
seller. The Company agrees that no Shares held by the Company or any Subsidiary
(as hereinafter defined) will be tendered pursuant to the Offer.
(b) Without the prior written consent of the Company,
Purchaser shall not (i) decrease the Per Share Amount or change the form of
consideration payable in the Offer, (ii) seek to purchase less than all
outstanding Shares, (iii) amend or waive satisfaction of the Minimum Condition
(as defined in Annex I) or (iv) impose conditions to the Offer in addition to
those set forth in Annex I hereto, or amend any other term or condition of the
Offer in any manner materially adverse to the holders of Shares. Upon the terms
and subject to the conditions of the Offer and this Agreement, Purchaser will
accept for payment and purchase, as soon as permitted under the terms of the
Offer and applicable law (subject to the first proviso to Section 8.1(c)(i))
(the "Share Purchase Date") all Shares validly tendered and not withdrawn prior
to the expiration of the Offer. On or prior to the Share Purchase Date, Parent
shall provide or cause to be provided to Purchaser the funds necessary to pay
for Shares that Purchaser becomes obligated to accept for payment, and pay for,
pursuant to the Offer. Purchaser shall not provide for a subsequent offering
period in accordance with Rule 14d-11 under the Exchange Act.
(c) The Offer shall be made by means of an offer to purchase
(the "Offer to Purchase") having only the conditions set forth in Annex I
hereto. As soon as reasonably practicable on the date the Offer is commenced,
Purchaser shall file with the Securities and Exchange Commission (the "SEC") a
Tender Offer
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<PAGE> 7
Statement on Schedule TO (together with all amendments and supplements thereto,
the "Schedule TO") with respect to the Offer that will comply in all material
respects with the provisions of all applicable Federal securities laws, and will
contain (including as an exhibit) or incorporate by reference the Offer to
Purchase and forms of the related letter of transmittal and summary
advertisement (which documents, together with any supplements or amendments
thereto, are referred to collectively herein as the "Offer Documents"). Parent
and Purchaser agree promptly to correct the Schedule TO or the Offer Documents
if and to the extent that it or they shall have become false or misleading in
any material respect (and the Company, with respect to written information
supplied by it specifically for use in the Schedule TO or the Offer Documents,
shall promptly notify Parent of any required corrections of such information and
shall cooperate with Parent and Purchaser with respect to correcting such
information) and to supplement the Schedule TO or the Offer Documents to include
any information that shall become necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading (and the Company shall supplement the information provided by it
specifically for use in the Schedule TO or the Offer Documents to include any
information that shall become necessary in order to make the statements therein
that are based on such provided information, in light of the circumstances under
which they were made, not misleading), and Parent and Purchaser further agree to
take all steps necessary to cause the Schedule TO, as so corrected or
supplemented, to be filed with the SEC and the Offer Documents, as so corrected
or supplemented, to be disseminated to holders of Shares, in each case to the
extent required by applicable Federal securities laws. The Company and its
counsel shall be given a reasonable opportunity to review and comment on the
Schedule TO and any Offer Documents before they are filed with the SEC.
(d) The Offer to Purchase shall provide (i) for an initial
expiration date of 20 business days (as defined in Rule 14d-1 under the Exchange
Act) from and including the date of commencement of the Offer (the "Initial
Expiration Date"). Purchaser shall extend the expiration date of the Offer until
5:00 p.m., Eastern time, on the earlier of (i) the thirtieth (30th) business day
following the public announcement by Parent and the Company of the execution of
this Agreement (which thirty business days shall for this purpose include the
date of such public announcement) and (ii) if a tender offer (other than the
Offer) shall have been commenced for all or a portion of the Shares, the
business day immediately preceding the initial expiration date of such tender
offer (such earlier date, the "Extended Expiration Date"). Unless this Agreement
shall have been terminated pursuant to Section 8.1 hereof, Purchaser agrees that
it shall not, without the consent of the Company, terminate or withdraw the
Offer or (except as provided in this Section 1.1(d)) extend the expiration date
of the Offer; provided, however, that, subject to the immediately following
sentence,
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<PAGE> 8
without the consent of the Company, Purchaser shall have the right to terminate
or withdraw the Offer or extend the Offer from time to time if at the
then-scheduled expiration date of the Offer the conditions to the Offer
described in Annex I hereto shall not have been satisfied or earlier waived.
Unless this Agreement shall have been terminated pursuant to Section 8.1, if at
the then-scheduled expiration date of the Offer, the conditions to the Offer
described in Annex I hereto (other than the Minimum Condition) shall not have
been satisfied or earlier waived, upon the request of the Company, Purchaser
shall from time to time extend the expiration date of the Offer for up to a
maximum of 20 business days in the aggregate (it being understood and agreed
that the period from the Initial Expiration Date to and including the Extended
Expiration Date shall be counted in such 20-business-day period) for all such
extensions (the period of each such extension to be determined by Purchaser),
provided that at the time of such extension any such condition is reasonably
capable of being satisfied and provided further that the failure of any such
condition to be satisfied shall not result from a willful breach by the Company
of any of its covenants and agreements contained in this Agreement, until the
date Purchaser becomes obligated, pursuant to the terms of the Offer and this
Agreement, to accept for payment and pay for Shares tendered pursuant to the
Offer. Notwithstanding the foregoing, Purchaser may, without the consent of the
Company, extend the expiration date of the Offer (as it may be extended) for any
period required by applicable rules, regulations, interpretations or positions
of the SEC or the staff thereof applicable to the Offer or for any period
required by applicable law.
SECTION 1.2. Company Action.
(a) The Company hereby approves of and consents to the Offer
and represents and warrants that the Board of Directors, at a meeting duly
called and held on February 14, 2000, acting by the unanimous vote of those
present: (i) approved and adopted this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, and the Stockholders
Agreements; (ii) recommended that the stockholders of the Company accept the
Offer, tender their Shares pursuant to the Offer and approve this Agreement and
the transactions contemplated hereby, including the Merger; and (iii) determined
that this Agreement and the transactions contemplated hereby, including the
Offer and the Merger, are advisable, fair to and in the best interests of the
stockholders of the Company.
(b) The Company hereby agrees to file with the SEC, as
promptly as practicable after the filing by Purchaser of the Schedule TO with
respect to the Offer but in any event on the date such Schedule TO is filed with
the SEC, a Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9
(together with any amendments or supplements thereto, the "Schedule 14D-9") that
(i) will comply in all material respects with the provisions
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<PAGE> 9
of all applicable Federal securities laws and (ii) will include the opinion of
the Company Financial Advisor referred to in Section 4.3(c) hereof. The Company
agrees to mail such Schedule 14D-9 to the stockholders of the Company along with
the Offer Documents promptly after the commencement of the Offer. The Company
agrees that the Schedule 14D-9 and the Offer Documents shall contain the
recommendations of the Board of Directors described in Section 1.2(a) hereof.
The Company agrees promptly to correct the Schedule 14D-9 if and to the extent
that it shall become false or misleading in any material respect (and each of
Parent and Purchaser, with respect to written information supplied by it
specifically for use in the Schedule 14D-9, shall promptly notify the Company of
any required corrections of such information and cooperate with the Company with
respect to correcting such information) and to supplement the information
contained in the Schedule 14D-9 to include any information that shall become
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading (and each of Parent and Purchaser
shall supplement the information provided by it specifically for use in the
Schedule 14D-9 to include any information that shall become necessary in order
to make the statements therein that are based on such provided information, in
light of the circumstances under which they were made, not misleading), and the
Company shall take all steps necessary to cause the Schedule 14D-9, as so
corrected or supplemented, to be filed with the SEC and disseminated to the
Company's stockholders, in each case to the extent required by applicable
Federal securities laws. Parent and its counsel shall be given a reasonable
opportunity to review and comment on the Schedule 14D-9 before it is filed with
the SEC.
(c) In connection with the Offer, the Company shall promptly
upon execution of this Agreement furnish Parent with mailing labels containing
the names and addresses of all record holders of Shares, non-objecting
beneficial owners list and security position listings of Shares held in stock
depositories, each as of a recent date, and shall promptly furnish Parent with
such additional information, including updated lists of stockholders, mailing
labels and security position listings, and such other information and assistance
as Parent or its agents may reasonably request for the purpose of communicating
the Offer to the record and beneficial holders of Shares.
SECTION 1.3. Directors. Promptly upon the purchase by
Purchaser of any Shares pursuant to the Offer, Parent shall be entitled to
designate up to such number of directors, rounded to the nearest whole number,
on the Board of Directors as will give Parent, subject to compliance with
Section 14(f) of the Exchange Act, representation on the Board of Directors
equal to that number of directors which equals the product of the total number
of directors on the Board of Directors (giving effect to the directors appointed
or elected pursuant to this sentence and including current directors serving as
officers of the Company) multiplied by the percentage that the aggregate number
of Shares
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<PAGE> 10
beneficially owned by Parent or any affiliate of Parent (including for purposes
of this Section 1.3 such Shares as are accepted for payment pursuant to the
Offer, but excluding Shares held by the Company or any Subsidiary) bears to the
number of Shares outstanding. At such time, the Company will also cause, if
requested by Parent, (i) each committee of the Board of Directors, (ii) the
board of directors of each of the Subsidiaries and (iii) if requested by Parent,
each committee of such board to include persons designated by Parent
constituting up to the same percentage of each such committee or board as
Parent's designees constitute on the Board of Directors. The Company shall, upon
request by Parent, promptly take all actions necessary to cause Parent's
designees to be elected or appointed to the Board of Directors in accordance
with the terms of this Section 1.3, including, without limitation, increasing
the size of the Board of Directors and/or securing the resignations of such
number of directors as is necessary to enable Parent's designees to be elected
to the Board of Directors in accordance with the terms of this Section 1.3;
provided, however, that, in the event that Parent's designees are appointed or
elected to the Board of Directors, until the Effective Time (as defined in
Section 2.2(b) hereof) the Board of Directors shall have at least two directors
who are directors on the date hereof and who are neither officers of the Company
nor designees, affiliates or associates (within the meaning of the Federal
securities laws) of Parent (two or more of such directors, the "Independent
Directors"); provided further, that if no Independent Directors remain, the
other directors shall designate one person to fill one of the vacancies who
shall be neither an officer of the Company nor a designee, affiliate or
associate of Parent, and such person shall be deemed to be an Independent
Director for purposes of this Agreement. The Company represents and warrants to
Parent and Purchaser that nothing contained in the Stipulation and Settlement
Agreement dated December 15, 1999 settling Corcoran v. GRC International, Inc.
(C.A. No.: 17239) and Corcoran v. Denman, et al. (C.A. No.: 17490) in the
Delaware Court of Chancery, New Castle County (the "Settlement Agreement")
prohibits the Company from complying with its obligations under this Section 1.3
(it being understood that the Settlement Agreement restricts the manner in which
the Company may comply with this Section 1.3 by (i) limiting the size of the
Board of Directors to 13 directors and (ii) prescribing the classes into which
certain directors must be placed). Subject to applicable law, the Company shall
promptly take all action necessary pursuant to Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder in order to fulfill its obligations under
this Section 1.3 and shall include in the Schedule 14D-9 mailed to stockholders
promptly after the commencement of the Offer (or an amendment thereof or an
information statement pursuant to Rule 14f-1 if Parent has not theretofore
designated directors or timely provided the requisite information) such
information with respect to the Company and its officers and directors as is
required under Section 14(f) and Rule 14f-1 in order to fulfill its obligations
under this Section 1.3. Parent will supply the
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<PAGE> 11
Company any information with respect to itself and its nominees, officers,
directors and affiliates required by Section 14(f) and Rule 14f-1.
Notwithstanding anything in this Agreement to the contrary, following the time
directors designated by Parent constitute a majority of the Board of Directors
and prior to the Effective Time, the affirmative vote of a majority of the
Independent Directors shall be required to (i) amend or terminate this Agreement
on behalf of the Company, (ii) exercise or waive any of the Company's rights or
remedies hereunder, (iii) extend the time for performance of Parent's
obligations hereunder or (iv) take any other action by the Company in connection
with this Agreement required to be taken by the Board of Directors, and such
affirmative majority vote shall be sufficient to take any such action.
ARTICLE II.
THE MERGER
SECTION 2.1. The Merger. At the Effective Time (as defined in
Section 2.2) and upon the terms and subject to the conditions of this Agreement
and the Delaware General Corporation Law (the "DGCL"), Purchaser shall be merged
with and into the Company, the separate corporate existence of Purchaser shall
cease, and the Company shall continue as the surviving corporation. The Company
as the surviving corporation after the Merger hereinafter sometimes is referred
to as the "Surviving Corporation."
SECTION 2.2. Closing; Effective Time. (a) The closing of the
Merger (the "Closing") will take place at 10:00 a.m. on the second business day
after satisfaction or waiver of the conditions set forth in Article VII, at the
offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New
York, 10019, unless another date, time or place is agreed to in writing between
Parent and the Company. The date on which the Closing occurs is referred to in
this Agreement as the "Closing Date."
(b) On the Closing Date or as promptly as practicable
thereafter, the parties hereto shall cause the Merger to be consummated by
filing a Certificate of Merger, in accordance with Section 251, or a Certificate
of Ownership and Merger, in accordance with Section 253 of the DGCL, with the
Secretary of State of the State of Delaware, in such form as required by, and
executed in accordance with the relevant provisions of, the DGCL (the time of
such filing (or such later time as is specified in such Certificate of Merger or
Certificate of Merger and Ownership, as applicable, as agreed between Parent and
the Company) being the "Effective Time").
SECTION 2.3. Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of the
DGCL. Without limiting the
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<PAGE> 12
generality of the foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, powers and franchises of the Company and Purchaser
shall vest in the Surviving Corporation, and all debts, liabilities and duties
of the Company and Purchaser shall become the debts, liabilities and duties of
the Surviving Corporation.
SECTION 2.4. Subsequent Actions. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Company or Purchaser acquired or
to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out this Agreement, the officers and
directors of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of either the Company or Purchaser, all such
deeds, bills of sale, assignments and assurances and to take and do, in the name
and on behalf of each of such corporations or otherwise, all such other actions
and things as may be necessary or desirable to vest, perfect or confirm any and
all right, title and interest in, to and under such rights, properties or assets
in the Surviving Corporation or otherwise to carry out this Agreement.
SECTION 2.5. Certificate of Incorporation; By-Laws; Directors
and Officers.
(a) At the Effective Time, the Certificate of Incorporation of
the Surviving Corporation shall be amended in its entirety to read as the
Certificate of Incorporation of Purchaser, as in effect immediately before the
Effective Time, until thereafter amended as provided by law and such Certificate
of Incorporation; provided, however, that the Certificate of Incorporation of
the Surviving Corporation shall provide that the Surviving Corporation shall be
named "GRC International, Inc."
(b) Subject to Section 6.8, the By-Laws of Purchaser, as in
effect immediately prior to the Effective Time, shall be the By-Laws of the
Surviving Corporation until thereafter amended as provided by law, the
Certificate of Incorporation of the Surviving Corporation and such By-Laws.
(c) The directors of Purchaser immediately prior to the
Effective Time will be the initial directors of the Surviving Corporation, and
the officers of the Company immediately prior to the Effective Time will be the
initial officers of the Surviving Corporation, in each case until their
successors are elected or appointed and qualified. If, at the Effective Time, a
vacancy shall exist on the Board of Directors or in any office of the Surviving
Corporation, such vacancy may thereafter be filled in the manner provided by
law.
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<PAGE> 13
SECTION 2.6. Conversion of Securities. At the Effective Time,
by virtue of the Merger and without any action on the part of Purchaser, the
Company or the holder of any of the following securities:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be canceled pursuant to Section 2.6(b)
and any Dissenting Shares (as defined in Section 2.7(a)) shall be canceled and
be converted into the right to receive the Per Share Amount in cash payable to
the holder thereof, without interest, upon surrender of the certificate
representing such Share. Each holder of a certificate representing any such
Shares shall cease to have any rights with respect thereto, except the right to
receive the Per Share Amount, without interest, upon the surrender of such
certificate in accordance with Section 2.8 hereof.
(b) Each Share held in the treasury of the Company or owned by
any Subsidiary and each Share owned by Parent or any direct or indirect wholly
owned subsidiary of Parent immediately prior to the Effective Time shall be
canceled and no payment or other consideration shall be made with respect
thereto.
(c) Each share of common stock, $.0l par value, of Purchaser
issued and outstanding immediately prior to the Effective Time shall be
converted into and thereafter represent one validly issued, fully paid and
nonassessable share of common stock, $.0l par value, of the Surviving
Corporation.
SECTION 2.7. Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the
contrary, Shares that are outstanding immediately prior to the Effective Time
and that are held by any stockholder who has not voted in favor of or consented
to the Merger and who duly demands appraisal of his Shares pursuant to the DGCL
and complies with all the provisions of the DGCL concerning the right of holders
of Shares to demand appraisal of their Shares in connection with the Merger
(collectively, the "Dissenting Shares") shall not be converted into the right to
receive cash pursuant to Section 2.6, but shall become the right to receive such
cash consideration as may be determined to be due to such stockholder as
provided in the DGCL. If, however, such stockholder withdraws his demand for
appraisal or fails to perfect or otherwise loses his right of appraisal, in any
case pursuant to the DGCL, his Shares shall be deemed to be converted as of the
Effective Time into the right to receive cash pursuant to Section 2.6(a) hereof,
without any interest thereon, upon surrender of the certificate or certificates
representing such Shares.
(b) The Company shall give Parent (i) prompt notice of any
demands for appraisal of Shares received by the Company and (ii) the opportunity
to participate in and direct all
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<PAGE> 14
negotiations and proceedings with respect to any such demands. The Company shall
not, without the prior written consent of Parent, make any payment with respect
to, or settle, offer to settle or otherwise negotiate, any such demands.
(c) Each Dissenting Share, if any, shall be canceled after
payment in respect thereof has been made to the holder thereof pursuant to the
DGCL.
SECTION 2.8. Surrender of Shares; Stock Transfer Books.
(a) Before the Effective Time, Parent shall designate a bank
or trust company who shall be reasonably satisfactory to the Company to act as
paying agent in the Merger (the "Exchange Agent") to receive the funds necessary
to make the payments contemplated by Section 2.6. Parent shall, from time to
time, make available or cause to be made available to the Exchange Agent funds
in amounts and at times necessary for the payments under Section 2.8(b) to which
holders of Shares shall be entitled at the Effective Time pursuant to Section
2.6. Such funds shall be invested by the Exchange Agent as directed by Parent.
Any net profits resulting from, or interest or income produced by, such
investments shall be payable as directed by Parent.
(b) As soon as reasonably practicable after the Effective
Time, the Surviving Corporation shall cause the Exchange Agent to mail to each
holder of record of a certificate or certificates that immediately prior to the
Effective Time represented Shares (the "Certificates"), (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in a form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
consideration as provided in Section 2.6(a). Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Exchange Agent,
the holder of such Certificate shall be entitled to receive in exchange therefor
the amount of cash, without interest, into which the Shares theretofore
represented by such Certificate shall have been converted pursuant to Section
2.6(a), and the Certificate so surrendered shall forthwith be canceled. Until so
surrendered, each such Certificate (other than Certificates representing
Dissenting Shares and Certificates representing Shares to be canceled pursuant
to Section 2.6(b)) shall represent solely the right to receive the aggregate Per
Share Amount, without interest, relating thereto.
(c) If payment of cash in respect of canceled Shares is to be
made to a Person other than the Person in whose name a
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<PAGE> 15
surrendered Certificate is registered, it shall be a condition to such payment
that the Certificate so surrendered shall be properly endorsed or shall be
otherwise in proper form for transfer and that the Person requesting such
payment shall have paid any transfer and other taxes required by reason of such
payment in a name other than that of the registered holder of the Certificate
surrendered or shall have established to the satisfaction of Parent or the
Exchange Agent that such tax either has been paid or is not payable. If a
mutilated Certificate is surrendered to the Exchange Agent or if the holder of a
Certificate submits an affidavit to the Exchange Agent stating that the
Certificate has been lost, destroyed or wrongfully taken, such holder shall, if
required by the Surviving Corporation, furnish an indemnity bond sufficient in
the reasonable judgment of the Surviving Corporation to protect Parent, the
Surviving Corporation and the Exchange Agent from any loss that any of them may
suffer.
(d) All cash paid upon the surrender of Certificates in
accordance with the terms of this Article II shall be deemed to have been paid
in full satisfaction of all rights pertaining to the Shares theretofore
represented by such Certificates. At the Effective Time, the stock transfer
books of the Company shall be closed and thereafter there shall not be any
further registration of transfers of Shares that were outstanding immediately
prior to the Effective Time on the records of the Surviving Corporation. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation, they shall be canceled and exchanged for cash as provided in
Section 2.6(a) and this Section 2.8. No interest shall accrue or be paid on any
cash payable upon the surrender of a Certificate or Certificates.
(e) Promptly following the date which is six months after the
Effective Time, the Exchange Agent shall deliver to Parent all cash,
certificates and other documents in its possession relating to the transactions
contemplated hereby, and the Exchange Agent's duties shall terminate.
Thereafter, each holder of a Certificate (other than Certificates representing
Dissenting Shares and Certificates representing Shares to be canceled pursuant
to Section 2.6(b)) shall look only to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) and only as general creditors
thereof, with respect to any Merger consideration that may be payable upon due
surrender of the Certificates held by such holder. Notwithstanding the
foregoing, none of Parent, Purchaser, the Company or the Exchange Agent shall be
liable to any Person in respect of any cash delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(f) Parent or the Exchange Agent shall be entitled to deduct
and withhold from the consideration otherwise payable pursuant to this Agreement
to any holder of Shares such amounts as Parent or the Exchange Agent is required
to deduct and
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<PAGE> 16
withhold with respect to the making of such payment under the Internal Revenue
Code of 1986, as amended (the "Code") or under any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by Parent or the
Exchange Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares in respect of which
such deduction and withholding was made by the Parent or the Exchange Agent.
SECTION 2.9. Stock Plans. (a) Options Outstanding. The Company
currently maintains the GRC International, Inc. 1985 Employee Stock Option Plan,
the GRC International, Inc. 1994 Employee Stock Option Plan, the GRC
International, Inc. 1998 Employee Stock Option Plan, the GRC International, Inc.
Cash Compensation Replacement Plan, and the GRC International, Inc. Directors
Fee Replacement Plan (collectively referred to as the "Stock Plans"), more
specifically described in Section 4.2, which provide for the granting of options
to purchase and awards of Company Common Stock, and the GRC International, Inc.
1985 Employee Stock Purchase Plan ("ESPP"), which permits employees to purchase
Company Common Stock. As of the date of this Agreement, the Company has taken
all actions necessary to amend each Stock Plan and the ESPP to provide that no
further options, awards or rights to receive equity shall be granted, offered or
elected under any Stock Plan after the date hereof. As of the date of this
Agreement, the Company has taken all actions necessary to cause the GRC
International, Inc. Cash Compensation Replacement Plan, the GRC International,
Inc. Directors Fee Replacement Plan, and the ESPP to terminate, and all
participant contributions and deferral amounts credited on behalf of the
participants under such plans at the time of such termination shall be paid to
them in cash by the Company as soon as administratively practicable thereafter.
(b) Conversion of Options. The Board of Directors of the
Company has adopted an amendment to provide that the Stock Plans are amended so
that upon the consummation of the Offer each then outstanding and unexercised
option to purchase shares of Company Common Stock granted under any of the Stock
Plans (the "Options"), whether or not then exercisable or vested, shall be
converted into an obligation of the Company to pay, and a right of the holder
thereof to receive in full satisfaction of such Option, cash in an amount in
respect thereof equal to the product of (A) the excess, if any, of the Per Share
Amount over the exercise price thereof and (B) the number of shares of Company
Common Stock subject to such Option, less any income or employment tax
withholding required under the Code or any provision of foreign, state or local
law.
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<PAGE> 17
(c) Option Payments.
(i) With respect to each Option granted pursuant to the
terms of the GRC International, Inc. 1985 Employee Stock Option Plan,
the GRC International, Inc. 1994 Employee Stock Option Plan or the GRC
International, Inc. 1998 Stock Option Plan (the "Option Plans") that is
fully vested and exercisable as of the consummation of the Offer, the
Company shall make the payment of the amount determined pursuant to
Section 2.9(b) above as soon as reasonably practicable following the
consummation of the Offer.
(ii) With respect to each Option granted pursuant to the
terms of an Option Plan that is not vested and exercisable as of the
consummation of the Offer, the Company or the Surviving Corporation, as
applicable, shall make the payment of the amount determined pursuant to
Section 2.9(b) above at the time each such unvested Option would
otherwise have become vested and exercisable subject to the
satisfaction of the terms and conditions set forth in the applicable
option award agreement and the Option Plan pursuant to which such
Option was granted, or at such earlier date as may be determined by
Parent in its sole and absolute discretion; provided, however, if such
holder's employment or service with the Company or any Subsidiary is
involuntarily terminated by the Company or any Subsidiary for reasons
other than Cause (as defined in Section 9.4), all of such holder's
Options shall become vested upon such termination of employment or
service, and the Company or the Surviving Corporation, as applicable,
shall make the payment of the amount determined pursuant to Section
2.9(b) as soon as reasonably practicable following such termination.
For purposes of this Section 2.9(c)(ii), a termination of employment by
an Option holder, after the consummation of the Offer, following (A) a
material decrease in such holder's base salary, (B) a relocation of
such holder's principal place of employment to a location that
increases his or her commute by more than 30 miles from such holder's
commute to his or her principal place of employment prior to the
consummation of the Offer or (C) a non-employee director's cessation of
service on the Board of Directors upon the request of the Company or
the Surviving Corporation, as applicable, shall be deemed to be an
involuntary termination.
(iii) With respect to each Option granted pursuant to the
terms of the GRC International, Inc. Cash Compensation Replacement Plan
or the GRC International, Inc. Directors Fee Replacement Plan, whether
or not such Option is vested and exercisable as of the consummation of
the Offer, the Company shall make the payment of the amount determined
pursuant to Section 2.9(b) above as soon as reasonably practicable
following the consummation of the Offer.
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<PAGE> 18
(iv) Parent shall from time to time provide the Company or
the Surviving Corporation, as applicable, with sufficient funds to
satisfy the obligations of the Company or the Surviving Corporation, as
applicable, under this Section 2.9.
(d) Directors Retirement Plan. The Company has recently
terminated the GRC International, Inc. Directors Retirement Plan (the "Director
Retirement Plan"). In exchange for their benefits under such plan, certain
directors of the Company received the right to receive shares of Company Common
Stock ("Deferred Stock Units") subsequent to their resignation from the Board of
Directors. Immediately following the consummation of the Offer, each Deferred
Stock Unit shall be converted into the right to receive cash in an amount equal
to the product of (A) the Per Share Amount and (B) the number of Deferred Stock
Units held by each such director, which cash amount shall be payable as soon as
practicable following the director's cessation of service on the Board of
Directors.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
Parent and Purchaser represent and warrant to the Company as
follows:
SECTION 3.1. Corporate Organization. Each of Parent and
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has the requisite
corporate power and authority to carry on its business as it is now being
conducted.
SECTION 3.2. Authority Relative to this Agreement. Parent and
Purchaser have the necessary corporate power and authority to enter into this
Agreement and to carry out their obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and Purchaser and the consummation by Parent and Purchaser of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent and Purchaser and no other corporate
proceeding is necessary for the execution and delivery of this Agreement by
Parent or Purchaser, the performance by Parent or Purchaser of their respective
obligations hereunder and the consummation by Parent or Purchaser of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Parent and Purchaser and, assuming due authorization, execution and
delivery by the Company, constitutes a legal, valid and binding obligation of
each such corporation, enforceable against each of them in accordance with its
terms.
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<PAGE> 19
SECTION 3.3. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent and
Purchaser do not, and the performance of this Agreement by Parent and Purchaser
will not, (i) assuming all notices, reports or other filings described in
clauses (i) through (vi) of Section 3.3(b) have been given or made, conflict
with or violate any law, regulation, court order, judgment or decree applicable
to Parent or Purchaser or by which any of their property is bound or affected,
(ii) violate or conflict with either the Certificate of Incorporation or By-Laws
of either Parent or Purchaser, or (iii) result in any violation or breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment or cancellation of, or result in the creation of a lien or encumbrance
on any of the property or assets of Parent or Purchaser pursuant to, any note,
bond, mortgage, indenture, agreement, contract, instrument, permit, license,
franchise or other obligation to which Parent or Purchaser is a party or by
which Parent or Purchaser or any of them or their property is bound or affected,
except for, in the case of clauses (i) and (iii), conflicts, violations,
breaches or defaults which would not prevent or materially delay the
consummation of the Offer and the Merger.
(b) Except for (i) applicable requirements, if any, of the
Exchange Act, (ii) the pre-merger notification requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (iii) the filing and recordation of appropriate merger documents as
required by the DGCL, (iv) filings as may be required by any applicable "blue
sky" laws, (v) any filings required under applicable foreign antitrust or
competition laws, (vi) any required notifications or filings with any national
or international securities exchange on which Parent's securities are listed and
(vii) as would not prevent or materially delay the consummation of the Offer and
the Merger, neither Parent nor Purchaser is required to submit any notice,
report or other filing with any federal, state or local government or any court,
administrative or regulatory agency or commission or other governmental
authority or agency, domestic or foreign (a "Governmental Entity"), in
connection with the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby. No waiver, consent,
approval or authorization of any Governmental Entity, is required to be obtained
or made by either Parent or Purchaser in connection with its execution, delivery
or performance of this Agreement or the consummation of the transactions
contemplated hereby, except (i) where the failure to obtain such waivers,
consents, approvals or authorizations would not prevent or materially delay the
performance by Parent or Purchaser of their respective obligations under this
Agreement or (ii) in connection with any submission required above.
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<PAGE> 20
SECTION 3.4. Financing Arrangements. Parent has or will have
funds available to it sufficient to consummate the Offer and the Merger in
accordance with the terms of this Agreement.
SECTION 3.5. Brokers. No broker, finder or investment banker
(other than Lehman Brothers Inc.) is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by and on behalf of Parent or Purchaser.
Any amounts due to Lehman Brothers Inc. in connection with the transactions
contemplated by this Agreement shall be paid by Parent.
SECTION 3.6. Offer Documents; Proxy Statement. None of the
information supplied by or on behalf of Parent or Purchaser (the "Parent
Information"), for inclusion in the Proxy Statement (as defined in Section
4.18), will, on the date the Proxy Statement is first mailed to stockholders or
at the time of the Company Stockholders' Meeting (as defined in Section 4.18),
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Offer Documents will not, at the respective times the Offer
Documents are filed with the SEC or first published, sent or given to the
Company's stockholders, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. Notwithstanding the foregoing, Parent and Purchaser
do not make any representation or warranty with respect to statements made or
incorporated by reference in any of the foregoing documents based upon
information that has been supplied by the Company or its accountants, counsel or
other authorized representatives for use in any of the foregoing documents. The
Offer Documents will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and
Purchaser as follows:
SECTION 4.1. Organization and Qualification; Subsidiaries. (a)
Each of the Company and the Subsidiaries (defined below in Section 4.1(d)) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite corporate power
and authority and any necessary governmental authority and approvals to own,
operate or lease the properties
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<PAGE> 21
that it purports to own, operate or lease and to carry on its business as it is
now being conducted, and is duly qualified or licensed as a foreign corporation
to do business, and is in good standing, in each jurisdiction where the
character of its properties owned, operated or leased or the nature of its
activities makes such qualification or licensing necessary, except for any such
failures which, when taken together with all other such failures, would not have
a Material Adverse Effect or prevent or materially delay the consummation of the
Offer or the Merger. For purposes of this Agreement, "Material Adverse Effect"
means any condition, change or effect that is or is reasonably likely to be
materially adverse to the business, results of operations, properties (including
intangible properties), condition (financial or otherwise), assets or
liabilities of the Company and the Subsidiaries taken as a whole.
(b) A true and complete list of all the Subsidiaries, together
with the jurisdiction of incorporation or organization of each Subsidiary and
the percentage of each Subsidiary's outstanding capital stock owned by the
Company or another Subsidiary, is set forth in Schedule 4.1 hereto.
(c) The Company has heretofore furnished to Parent a complete
and correct copy of the Certificate of Incorporation (the "Company Certificate
of Incorporation") and the By-laws (the "Company By-laws") of the Company as
currently in effect. No other similar organizational documents are applicable to
or binding upon the Company. The Company is not in violation of any of the
provisions of the Company Certificate of Incorporation or Company By-laws.
(d) For purposes of this Agreement, "Subsidiary" means any
corporation or other legal entity of which the Company (either alone or through
or together with any other Subsidiary) (i) owns, directly or indirectly, more
than 50% of the stock or other equity interests the holders of which are
generally entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity, or (ii) in the case of
partnerships, serves as a general partner, or (iii) in the case of a limited
liability company, serves as managing member or (iv) otherwise has the ability
to elect a majority of the directors, trustees or managing members thereof.
SECTION 4.2. Capitalization. (a) The authorized capital stock
of the Company consists of: (i) 30,000,000 shares of Company Common Stock and
(ii) 300,000 shares of preferred stock, $1.00 par value per share, of the
Company (the "Company Preferred Stock"). As of December 31, 1999, (A) 12,442,607
shares of Company Common Stock were issued and outstanding, all of which were
duly authorized, validly issued, fully paid and nonassessable and not subject to
preemptive (or similar) rights, (B) no shares of Company Preferred Stock were
issued and outstanding, (C) 32,721 shares of Company Common Stock were reserved
for issuance upon the exercise of outstanding Options
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<PAGE> 22
under the Company's 1985 Employee Stock Option Plan and Options with respect to
32,721 shares of Company Common Stock were outstanding thereunder, (D) 598,114
shares of Company Common Stock were reserved for issuance upon the exercise of
outstanding Options under the Company's 1994 Employee Stock Plan and Options
with respect to 546,573 shares of Company Common Stock were outstanding
thereunder, (E) 1,512,126 shares of Company Common Stock were reserved for
issuance under the Company's 1998 Employee Stock Option Plan and Options with
respect to 1,290,092 shares of Company Common Stock were outstanding thereunder,
(F) 160,853 shares of Company Common Stock were reserved for issuance under the
Company's Cash Compensation Replacement Plan and Options with respect to 43,897
shares of Company Common Stock were outstanding thereunder, (G) 218,938 shares
of Company Common Stock were reserved for issuance under the Company's Directors
Fee Replacement Plan and Options with respect to 98,440 shares of Company Common
Stock were outstanding thereunder, (H) 219,328 shares of Company Common Stock
were reserved for issuance under the Company's Employee Stock Purchase Plan, (I)
300,000 shares of Company Common Stock were held in the treasury of the Company
and (J) 445,000 shares of Company Common Stock were reserved for issuance upon
exercise of warrants to purchase shares of Company Common Stock described on
Schedule 4.2(a) hereto (the "Warrants"). Since December 31, 1999, (i) no Options
have been granted, (ii) no shares of Company Common Stock have been issued
except for shares issued pursuant to the exercise of Options outstanding as of
December 31, 1999, and (iii) no shares of Preferred Stock have been issued.
Except as set forth in Schedule 4.2(a) or in this Section 4.2(a): (x) there are
no shares of capital stock or other voting securities of the Company, options,
calls, warrants or rights, agreements, arrangements or commitments of any
character obligating the Company or any of its Subsidiaries to issue, deliver or
sell or cause to be issued, delivered or sold any shares of capital stock or
other voting securities or securities convertible into or exchangeable for
capital stock or voting securities of or other equity interests in the Company
or any of the Subsidiaries or equity equivalents, interests in the ownership or
earnings of the Company or other similar rights (collectively, "Company
Securities"); (y) there are no bonds, debentures, notes or other indebtedness of
the Company having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which stockholders of the
Company may vote ("Company Voting Debt"); and (z) there are no stockholders
agreements, voting trusts or other agreements or understandings to which the
Company or any Subsidiary is a party or by which it is bound relating to the
issued or unissued capital stock of the Company (including any such agreements
or understandings that may limit in any way the solicitation of proxies by or on
behalf of the Company from, or the casting of votes by, the stockholders of the
Company with respect to the Merger) or granting to any person or group of
persons the right to elect, or to designate or nominate for election, a director
to the Board of Directors. Except as set forth in Schedule 4.2(a),
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<PAGE> 23
there are no programs in place or outstanding obligations of the Company or any
of the Subsidiaries (1) to repurchase, redeem or otherwise acquire any Company
Securities or (2) to vote or to dispose of any shares of the capital stock of
any of the Subsidiaries. All shares of Company Common Stock subject to issuance
as aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, shall be duly authorized,
validly issued, fully paid and nonassessable and free of preemptive (or similar)
rights and registration rights. Upon consummation of the Merger, each holder of
Warrants shall be entitled to receive, pursuant to the terms thereof, upon
payment of the aggregate Purchase Price (as defined in the Warrants) then in
effect, the Per Share Amount for each share of Company Common Stock that would
otherwise have been issuable upon the exercise of such Warrants immediately
prior to consummation of the Merger. No event has occurred since the issuance of
the Warrants that has resulted in an adjustment to the Purchase Price in effect
on the date of their issuance.
(b) All the shares of outstanding capital stock of each of the
Subsidiaries are duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive (or similar) rights and, except as set forth in
Schedule 4.1, are owned by the Company or a wholly owned Subsidiary and are
owned free and clear of any liens, security interests, pledges, agreements,
claims, charges or encumbrances of any nature whatsoever. There are no existing
options, calls, warrants or other rights, agreements arrangements or commitments
of any character relating to the issued or unissued capital stock or other
equity interests or securities of any Subsidiary. Except for the Subsidiaries
and except as set forth in Schedule 4.2(b), the Company does not directly or
indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for, any equity or similar interest in any
other corporation, partnership, joint venture or other business association or
entity. Except as set forth in Schedule 4.2(b), neither the Company nor any
Subsidiary is under any current or prospective obligation to provide funds to,
make a capital contribution or investment in or loan to, or to assume any
liability or obligation of, any corporation, partnership, joint venture or the
business association or entity.
SECTION 4.3. Authority Relative to this Agreement.
(a) The Company has the necessary corporate power and
authority to enter into this Agreement and, subject to obtaining any necessary
stockholder approval of the Merger, to carry out its obligations hereunder and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company, subject to the approval of the
Merger by the Company's stockholders in accordance with the DGCL. This Agreement
has
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<PAGE> 24
been duly executed and delivered by the Company and constitutes a legal, valid
and binding obligation of the Company, enforceable against it in accordance with
its terms. The affirmative vote of the holders of a majority of the shares of
Company Common Stock entitled to vote approving this Agreement is the only vote
of the holders of any class or series of the Company's capital stock necessary
to approve this Agreement and the transactions contemplated hereby; provided,
however, that no such vote shall be required if the Merger is subject to Section
253 of the DGCL.
(b) At a Board of Directors' meeting duly called and held on
February 14, 2000, the Board of Directors (i) determined that this Agreement and
the transactions contemplated hereby are advisable, fair to and in the best
interests of the stockholders and that the Per Share Amount to be paid for each
Share in the Offer and the Merger is fair to the holders of such Shares, (ii)
declared advisable and in all respects approved and adopted this Agreement, the
Offer, the Merger and the other transactions contemplated hereby, and (iii)
resolved to recommend the approval and adoption of this Agreement and the Merger
by the stockholders of the Company.
(c) Banc of America Securities LLC (the "Company Financial
Advisor") has delivered to the Board of Directors its written opinion, dated
prior to or as of the date of this Agreement, that based on the assumptions,
qualifications and limitations contained therein, the Per Share Amount to be
received by the Company's stockholders in the Offer and the Merger is fair from
a financial point of view to such stockholders. The Company has provided a copy
of such opinion to Parent.
SECTION 4.4. No Conflict; Required Filings and Consents.
(a) Except as set forth in Schedule 4.4(a) hereto, the
execution and delivery of this Agreement by the Company does not, and the
performance hereof by the Company will not, (i) conflict with or violate any
law, regulation, court order, judgment or decree applicable to the Company or
any of the Subsidiaries or by which its or any of their property is bound or
affected, (ii) violate or conflict with the Certificate of Incorporation or
By-Laws or equivalent organizational documents of the Company or any Subsidiary,
or (iii) result in any violation or breach of or constitute a default (or an
event which with notice or lapse of time of both would become a default) under,
or result in any, or give rise to any rights of termination, amendment,
cancellation or acceleration of any obligations or any loss of any material
benefit under or, result in the creation of a lien or encumbrance on any of the
properties or assets of the Company or any of the Subsidiaries pursuant to, any
note, bond, mortgage, indenture, agreement, contract, instrument, permit,
license, franchise or other obligation to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the Subsidiaries or
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<PAGE> 25
its or any of them or their property is bound or affected, except for, in the
case of clauses (i) and (iii), conflicts, violations, breaches or defaults
which, individually or in the aggregate, would not (x) have a Material Adverse
Effect, (y) impair, in any material respect, the ability of the Company to
perform its obligations under this Agreement or (z) be reasonably likely to
prevent or materially delay the consummation of the Offer and the Merger.
(b) Except for (i) applicable requirements, if any, of the
Exchange Act, (ii) the pre-merger notification requirements of the HSR Act,
(iii) the filing and recordation of appropriate merger or other documents as
required by the DGCL, (iv) filings as may be required by any "blue sky" laws of
various states and/or the rules of the National Association of Securities
Dealers, Inc., (v) any required notifications or filings with the New York Stock
Exchange, Inc. and (vi) as set forth in Schedule 4.4(b) hereto, the Company and
each of the Subsidiaries are not required to submit any notice, report or other
filing with any Governmental Entity, in connection with the execution, delivery
or performance of this Agreement or the consummation of the transactions
contemplated hereby, except where the failure to make such submission would not
prevent or materially delay the performance by the Company of its obligations
under this Agreement. No waivers, consents, approvals or authorizations of any
Governmental Entity are required to be obtained or made by the Company in
connection with its execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby, except (i) where the
failure to obtain such waivers, consents, approvals or authorizations would not
prevent or materially delay the performance by the Company of its obligations
under this Agreement, (ii) in connection with any submission required above or
(iii) as set forth in Schedule 4.4(b) hereto.
SECTION 4.5. SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports and documents
(including all exhibits thereto) required to be filed with the SEC since July 1,
1998, including its (i) Annual Reports on Form 10-K for the fiscal years ended
June 30, 1999 and June 30, 1998, respectively, (ii) the Quarterly Report on Form
10-Q for the fiscal quarter ended September 30, 1999, (iii) all proxy statements
relating to the Company's meetings of stockholders (whether annual or special)
held since July 1, 1998 and (iv) all other reports or registration statements
filed by the Company with the SEC since July 1, 1998 (collectively, including
the exhibits thereto, the "SEC Reports"). The SEC Reports (including but not
limited to any financial statements or schedules included or incorporated by
reference therein) (i) at the time they became effective, in the case of
registration statements, or when filed, in the case of any other SEC Report,
complied as to form in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act,
as
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<PAGE> 26
the case may be, and the rules and regulations promulgated thereunder and (ii)
do not (except to the extent revised or superseded by a subsequent filing with
the SEC), and did not at the time they were filed, contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. None of the
Subsidiaries is required to file any statements or reports with the SEC pursuant
to Sections 13(a) or 15(d) of the Exchange Act.
(b) The consolidated financial statements contained in the SEC
Reports were prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes thereto) and fairly present the consolidated
financial position of the Company and its Subsidiaries as at the respective
dates thereof and the consolidated results of operations and changes in
financial position of the Company and its Subsidiaries for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments (which in the aggregate are
not material in amount).
(c) Except (i) as set forth in Schedule 4.5(c) or (ii) as and
to the extent disclosed or reflected in the audited consolidated financial
statements of the Company and the Subsidiaries at June 30, 1999, including the
notes thereto, contained in the Annual Report on Form 10-K of the Company for
the fiscal year ended June 30, 1999 (the "Company 1999 10-K") and except for (x)
liabilities and obligations incurred in the ordinary course of business
consistent with past practice since June 30, 1999 and (y) liabilities and
obligations that have not had and would not have, individually or in the
aggregate, a Material Adverse Effect (without taking into account the effects of
the Offer and the Merger), the Company and the Subsidiaries have no liabilities
of any nature (whether accrued, absolute, contingent or otherwise).
(d) The Company has heretofore furnished to Parent a complete
and correct copy of any material amendments or modifications which have not yet
been filed with the SEC to agreements, documents or other instruments which
previously had been filed by the Company with the SEC pursuant to the Securities
Act and the rules and regulations promulgated thereunder or the Exchange Act and
the rules and regulations promulgated thereunder other than with respect to any
such agreement, document or other instrument that has been heretofore
terminated.
SECTION 4.6. Absence of Certain Changes or Events. Except as
expressly contemplated by this Agreement or as set forth in Schedule 4.6 hereto
or in any SEC Report filed and publicly available prior to the date of this
Agreement, since June 30, 1999, the business of the Company and the Subsidiaries
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has been conducted in the ordinary course consistent with past practice and
there has not been:
(a) any Material Adverse Effect;
(b) any damage, destruction or loss (whether or not covered by
insurance) with respect to any of the assets of the Company or any of its
Subsidiaries, except as would not, individually or in the aggregate, have a
Material Adverse Effect;
(c) any redemption or other acquisition of Shares by the
Company or any of the Subsidiaries or any declaration, setting aside or payment
of any dividend or other distribution in cash, stock or property with respect to
the Company Common Stock, except for purchases heretofore made pursuant to the
terms of the Company Employee Benefit Plans (as defined in Section 4.8(a));
(d) any material change by the Company in accounting methods,
principles or practices;
(e) any material revaluation by the Company of any material
asset (including, without limitation, any writing down of the value of inventory
or writing off of notes or accounts receivable), other than in the ordinary
course of business consistent with past practice;
(f) any entry by the Company or any Subsidiary into any
commitment or transaction material to the Company and the Subsidiaries taken as
a whole, other than commitments or transactions entered into in the ordinary
course of business consistent with past practice;
(g) any increase in or amendment to (in the case of directors
and executive officers of the Company) or any material increase in or material
amendment to (in the case of other officers and Key Management Personnel) or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation rights,
performance awards or restricted stock awards, or the acceleration of vesting of
any such options, rights or awards) stock purchase or other employee benefit
plan or agreement or arrangement, or any other increase in the compensation
payable or to become payable to any present or former directors, officers or Key
Management Personnel of the Company or any Subsidiary, except for increases in
base compensation and bonuses in the ordinary course of business consistent with
past practice;
(h) any entry by the Company or any Subsidiary into any
employment, consulting, severance, termination or indemnification agreement or
arrangement with any director, officer or key employee of the Company or any
Subsidiary or any entry into any such material agreement with any other person;
or
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(i) any agreement, in writing or otherwise, by the Company or
any Subsidiary to take any of the actions described in this Section 4.6, except
as expressly contemplated by this Agreement.
SECTION 4.7. Litigation. Except as disclosed in the Company 1999
10-K or in Schedule 4.7 hereto, there are no claims, actions, suits, proceedings
or investigations pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries, or any properties
or rights of the Company or any of its Subsidiaries, before any Governmental
Entity or arbitrator, except as would not, individually or in the aggregate,
have a Material Adverse Effect. Except as disclosed in the Company 1999 10-K or
in Schedule 4.7 hereto, neither the Company nor any of its Subsidiaries nor any
of their property is subject to any material order, judgment, injunction or
decree.
SECTION 4.8. Employee Benefit Plans.
(a) (i) Schedule 4.8 sets forth a list of all "employee
benefit plans", as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and all other employee benefit or
executive compensation arrangements, perquisite programs or payroll practices,
including, without limitation, any such arrangements or payroll practices
providing severance pay, sick leave, vacation pay, salary continuation for
disability, retirement benefits, deferred compensation, bonus pay, incentive
pay, stock options (including those held by directors, employees, and
consultants), hospitalization insurance, medical insurance, life insurance,
scholarships or tuition reimbursements, that are maintained by the Company, any
Subsidiary or any entity within the same "controlled group" as the Company or
Subsidiary, within the meaning of Section 4001(a)(14) of ERISA (a "Company ERISA
Affiliate") or to which the Company, any Subsidiary or Company ERISA Affiliate
is obligated to contribute thereunder for current or former employees or
directors of the Company, any Subsidiary or Company ERISA Affiliate (the
"Company Employee Benefit Plans").
(ii) Schedule 4.8(a)(ii) sets forth, with respect to each
Option that is outstanding under the Option Plans as of January 31,
2000, the name of the holder of such Option, the number of shares of
Company Common Stock subject to such Option, the exercise price per
share of such Option and the date on which such Options vest or become
exercisable (it being understood that Schedule 4.8(a)(ii) does not
include information concerning the Warrants).
(b) None of the Company Employee Benefit Plans is a
"multiemployer plan", as defined in Section 4001(a)(3) of ERISA (the "Company
Multiemployer Plan") or a plan that has two or more contributing sponsors at
least two of whom are not under common
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<PAGE> 29
control, within the meaning of Section 4063 of ERISA. Neither the Company, any
Subsidiary nor any Company ERISA Affiliate has withdrawn in a complete or
partial withdrawal from any Company Multiemployer Plan, nor has any of them
incurred any liability due to the termination or reorganization of a Company
Multiemployer Plan. The aggregate withdrawal liability from each of such Company
Multiemployer Plan would not exceed $0.
(c) None of the Company Employee Benefit Plans is a "single
employer plan", as defined in Section 4001(a)(15) of ERISA, that is subject to
Title IV of ERISA. Neither the Company, any Subsidiary nor any Company ERISA
Affiliate has incurred any outstanding liability under Section 4062 of ERISA to
the Pension Benefit Guaranty Corporation or to a trustee appointed under Section
4042 of ERISA. Neither the Company, any Subsidiary nor any Company ERISA
Affiliate has engaged in any transaction described in Section 4069 of ERISA.
Except as set forth on Schedule 4.8 hereto, neither the Company nor any
Subsidiary maintains, or is required, either currently or in the future, to
provide life, health, medical or other welfare benefits to employees, directors,
former employees, former directors, or retirees after their termination of
employment or service, other than pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985. The Company and each Subsidiary have reserved the
right to amend, terminate or modify at any time all plans or arrangements
providing for retiree health or life insurance coverage.
(d) Except as set forth in Schedule 4.8, each Company Employee
Benefit Plan that is intended to qualify under Section 401 of Internal Revenue
Code of 1986, as amended (the "Code"), and each trust maintained pursuant
thereto, has been determined to be exempt from federal income taxation under
Section 501 of the Code by the IRS, and, to the Company's knowledge, nothing
material has occurred with respect to the operation of any such Company Employee
Benefit Plan that is reasonably likely to cause the loss of such qualification
or exemption or the imposition of any material liability, penalty or tax under
ERISA or the Code, or the assertion of material claims by participants (as that
term is defined in section 3(7) of ERISA) other than routine benefit claims.
(e) All contributions (including all employer contributions
and employee salary reduction contributions) required to have been made under
any of the Company Employee Benefit Plans to any funds or trusts established
thereunder or in connection therewith have been made by the due date thereof.
(f) There has been no material violation of ERISA or the Code
with respect to the filing of applicable reports, documents and notices
regarding the Company Employee Benefit Plans with the Secretary of Labor or the
Secretary of the Treasury or the furnishing of required reports, documents or
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<PAGE> 30
notices to the participants or beneficiaries of the Company Employee Benefit
Plans.
(g) None of the Company, the Subsidiaries, the officers or
directors of the Company or any of the Subsidiaries or the Company Employee
Benefits Plans which are subject to ERISA, any trusts created thereunder or any
trustee or administrator thereof, has engaged in a "prohibited transaction" (as
such term is defined in Section 406 of ERISA or Section 4975 of the Code) or any
other breach of fiduciary responsibility that could subject the Company, any of
the Subsidiaries or any officer or director of the Company or any of the
Subsidiaries to any material tax or penalty on prohibited transactions imposed
by such Section 4975 or to any material liability under Section 502(i) or (1) of
ERISA.
(h) The Company has no Company-owned life insurance policies
currently in force.
(i) True, correct and complete copies of the following
documents, with respect to each of the Company Employee Benefit Plans, have been
delivered or made available to Parent by the Company: (i) all Company Employee
Benefit Plans and related trust documents, and amendments thereto; (ii) the most
recent Forms 5500 (iii) summary plan descriptions; and (iv) any other documents,
records or materials as may be reasonably requested by the Parent.
(j) There are no pending actions, claims or lawsuits which
have been asserted, instituted or, to the Company's knowledge, threatened,
against the Company Employee Benefit Plans, the assets of any of the trusts in
their capacity as such under such plans or the plan sponsor or the plan
administrator, or against any fiduciary of the Company Employee Benefit Plans
with respect to the operation of such plans (other than routine benefit claims).
(k) All Company Employee Benefit Plans subject to ERISA or the
Code have been maintained and administered, in all material respects, in
accordance with their terms and with all provisions of ERISA and the Code,
respectively, (including rules and regulations thereunder) and other applicable
federal and state laws and regulations.
(l) Except as set forth and excepted in Schedule 4.8(l) and
Sections 2.9, 6.10 and 6.11, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby (either
alone or in conjunction with any other event) will (i) result in any payment
(including, without limitation, severance, unemployment compensation, "excess
parachute payment" (within the meaning of Section 280G of the Code), forgiveness
of indebtedness or otherwise) becoming due to any director or any employee of
the Company or any Subsidiary under any Company Employee Benefit Plan or
otherwise; (ii)
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<PAGE> 31
materially increase any benefits otherwise payable under any Company Employee
Benefit Plan; (iii) result in any acceleration of the time of payment or vesting
of any such benefits; (iv) limit or prohibit the ability to amend or terminate
any Company Employee Benefit Plan; (v) require the funding of any trust or other
funding vehicle; or (vi) renew or extend the term of any agreement in respect of
compensation for an employee of the Company which would create any liability to
the Company or Purchaser or their respective affiliates after consummation of
the Offer.
SECTION 4.9. Labor and Employment. (a) Except as disclosed in
Schedule 4.9(a) of this Agreement, (i) there is no unfair labor practice charge
pending or, to the Company's knowledge, threatened against the Company or any
Subsidiary; (ii) there is no labor strike, slowdown, stoppage or other similar
labor activity actually pending or, to the Company's knowledge, threatened
against or involving the Company or any Subsidiary; (iii) no material labor
grievance is pending or, to the Company's knowledge, threatened; (iv) to the
Company's knowledge, for the 12 month period ending on the date of this
Agreement, neither the Company nor any Subsidiary has been the subject of any
union organizational campaign; (v) neither the Company nor any Subsidiary has
any material labor negotiations in process with any labor union or other labor
organization; (vi) neither the Company nor any Subsidiary is presently, nor has
any of them in the past been a party to or bound by any collective bargaining
agreement or union contract; and (vii) to the Company's knowledge, there are no
efforts in process by labor unions to organize any employees who are not now
represented by recognized collective bargaining agents; and (viii) neither the
Company nor any Subsidiary has closed any plant or facility or implemented any
early retirement, or window program within the past six (6) months, nor has the
Company or any Subsidiary planned or announced any such action or program for
the future.
(b) Except as set forth in Schedule 4.9(b) of this
Agreement, neither the Company nor any of its Subsidiaries is a party to any
written, oral or implied contract or agreement with any current or former
officer or director of the Company or any Subsidiary, or any independent
contractor relating to the employment or service of any such person which to the
Company's knowledge is reasonably likely to result in any material liability to
or obligation of the Company after the Closing Date. The Company has delivered
to Parent true and complete copies of all such contracts or agreements or
detailed descriptions of individual agreements (or, in the case of any contract
or agreement that is not in writing, a description of the terms and conditions
of such contract or agreement), and the Company and its Subsidiaries have been
in compliance in all material respects with the terms and conditions of all such
written, oral and implied contracts and agreements.
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<PAGE> 32
(c) Except as disclosed in Schedule 4.9(c), or except to the
extent any undisclosed non-compliance would not result in any material liability
to the Company after the Closing Date, the Company and its Subsidiaries have
policies in place to address compliance in all material respects with all
federal, state and local laws and regulations relating to employment and
employment practices such as wages and hours and the payment and withholding of
taxes, the Fair Labor Standards Act, Title VII of the Civil Rights Act of 1964,
the Age Discrimination in Employment Act, state and local human rights laws, the
National Labor Relations Act, state labor laws, the Rehabilitation Act of 1974,
the Occupational Safety and Health Act, the Worker Adjustment and Retraining
Notification Act of 1988 state worker's compensation laws, state disability
laws, state unemployment laws, the Immigration Reform and Control Act of 1986,
the Polygraph Protection Act of 1988, the Equal Pay Act, and the Americans with
Disabilities Act, with respect to each current employee or director of the
Company or any Subsidiary.
(d) Except as disclosed in Schedule 4.9(d), or except to the
extent any undisclosed non-compliance would not result in any material liability
to the Company or any of its Subsidiaries after the Closing Date, there are no
such claims, causes of action, charges, suits, complaints, administrative
proceedings, government investigations or proceedings, arbitrations or other
proceedings pending or to the Company's knowledge threatened against the Company
or any of its affiliates relating to employment or employment practices with
respect to any employee or former employee or director of the Company, and the
Company has no notice of, nor has knowledge of any matter that could reasonably
be the basis for any claim or assertion of liability against the Company or any
of its affiliates relating to any federal, state or local law relating to
employment or employment practices with respect to any such person.
Section 4.10. Properties. Schedule 4.10(a) hereto lists all
real property owned or leased by the Company or any of its Subsidiaries. Except
as set forth on Schedule 4.10(b) hereto, each of the Company and its
Subsidiaries has good, valid and, in the case of real property, marketable fee
simple, title to all the material assets and properties that it owns and that
are reflected on the Company's consolidated balance sheet as of June 30, 1999,
or that were thereafter acquired (except for assets and properties sold,
consumed or otherwise disposed of in the ordinary course of business by them
since such date), and such assets and properties are owned free and clear of all
liens, claims and encumbrances, except for (a) liens for taxes and assessments
not yet due and payable or for taxes the validity of which is being contested in
good faith, (b) liens, claims and encumbrances to secure indebtedness reflected
on the Company's consolidated balance sheet as of June 30, 1999, or indebtedness
(including purchase money indebtedness) incurred in the ordinary course of
business and consistent with past practice after the date thereof, (c)
mechanic's, materialmen's, and other liens,
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<PAGE> 33
claims and encumbrances that have arisen in the ordinary course of business and
(d) imperfections of title and liens, claims and encumbrances the existence of
which do not, individually or in the aggregate, have a Material Adverse Effect.
Except as set forth on Schedule 4.10(c), neither the Company nor any of the
Subsidiaries is, nor to the knowledge of the Company is any other party, in
material breach of any lease agreement to which the Company or any Subsidiary is
a party (the "Company Leases"). The execution and delivery of this Agreement and
the performance of the Company's obligations under this Agreement and the
consummation of the transactions contemplated hereby will not (i) constitute a
breach by the Company or any Subsidiary under any Company Leases (ii) give rise
to any right of any third party to terminate any Company Lease, or (iii) cause a
loss or impairment of rights under any Company Lease, except for any such
breaches, terminations, losses or impairments as would not, individually or in
the aggregate, have a Material Adverse Effect. All the material buildings,
structures, equipment and other tangible assets of the Company and its
Subsidiaries (whether owned or leased) are in normal operating condition (normal
wear and tear excepted) and are fit for use in the ordinary course of business
of the Company. Notwithstanding anything to the contrary, no representations or
warranties set forth in this Section 4.10 shall apply to any personal property
of the Company or any Subsidiary that is surplus to the operating needs of the
business of the Company or any Subsidiary as presently conducted.
SECTION 4.11. Intellectual Property.
(a) Except as set forth on Schedule 4.11, the Company and its
Subsidiaries have good title to or, with respect to items not owned by the
Company or its Subsidiaries, sufficient rights to use all patents, trademarks
and service marks (registered or unregistered), trade names, domain names,
computer software and copyrights, and applications and registrations therefor
(collectively, "Intellectual Property"), owned or licensed by the Company or any
Subsidiary or utilized by the Company or any Subsidiary in the conduct of its
and their businesses and good title to or, with respect to items not owned by
the Company or its Subsidiaries, sufficient rights to use all material
inventions, processes, designs, formulae, trade secrets and know-how utilized in
the conduct of the businesses of the Company and its Subsidiaries, as presently
conducted (all of the foregoing items, including the items of Intellectual
Property, collectively referred to as the "Company Intellectual Property"). The
Company has no knowledge of any infringement by others of Intellectual Property
owned by the Company or any Subsidiary nor the misappropriation of any trade
secrets owned by the Company or any Subsidiary, except where such infringement
or misappropriation would not, individually or in the aggregate, have a Material
Adverse Effect. To the Company's knowledge, the conduct of the businesses of the
Company and the Subsidiaries does not infringe on any Intellectual Property
rights of others nor does it involve the misappropriation of any trade secrets
of others, except where
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<PAGE> 34
such infringement or misappropriation would not, individually or in the
aggregate, have a Material Adverse Effect.
(b) Except as set forth on Schedule 4.11 and except as would
not, individually or in the aggregate, have a Material Adverse Effect, with
respect to each item of Company Intellectual Property: (i) if the Company or any
Subsidiary has held itself out as the owner thereof or otherwise developed or
caused the development of the item, the Company or its Subsidiaries exclusively
possess all rights, title and interest in and to the item; and (ii) no charge,
complaint, action, suit, proceeding, hearing, investigation, claim, demand or
assertion is pending or, to the knowledge of the Company, is threatened that
challenges the legality, validity, enforceability, use or ownership of the item
or that concerns the infringement of the item.
(c) The Company and each Subsidiary have taken reasonable
steps to protect the Company's and each Subsidiary's rights in all inventions,
processes, designs, formulae, know-how, trade secrets and other confidential
information of the Company and each Subsidiary, and have taken reasonable steps
to enforce rights in Intellectual Property owned by the Company or any
Subsidiary against known infringement by third parties. The Company and each
Subsidiary have taken reasonable steps, including all steps that the Company or
any Subsidiary may be contractually obligated to undertake, to protect
confidential information or trade secrets provided by another Person to the
Company or any Subsidiary.
(d) Except as set forth on Schedule 4.11, neither this
Agreement nor the assignment to Parent or the Surviving Corporation, by
operation of law or otherwise, of title to or the rights to use any or all of
the Company Intellectual Property will to the Company's knowledge after the
Effective Time (a) cause or result in an infringement or misappropriation of any
Intellectual Property right of any Person; (b) prevent the Surviving Corporation
or its assignee (provided that such assignee has the necessary national security
clearance and is allowed access to and use of such Company Intellectual Property
by the U.S. Government) from using the Company Intellectual Property in
substantially the same manner as it is used by the Company and each Subsidiary
prior to the Effective Time (other than by virtue of agreements, relationships
or the status of Parent and its affiliates); or (c) subject Parent or the
Surviving Corporation to any obligation to pay royalties or other amounts to any
third party in excess of those payable by the Company or any Subsidiary,
respectively, prior to the Effective Time.
SECTION 4.12. Insurance. Schedule 4.12 sets forth a true and
complete list of all insurance policies carried by, or covering the Company and
the Subsidiaries with respect to their businesses, assets and properties,
together with, in respect of
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<PAGE> 35
each such policy, the name of the insurer, the policy number, the type of
policy, the amount of coverage and the deductible. True and complete copies of
each such policy have previously been provided to Parent. All such policies are
in full force and effect, and no notice of cancellation has been received by the
Company with respect to any such policy. All premiums due on such policies have
been paid in a timely manner, and the Company and the Subsidiaries have complied
in all material respects with the terms and provisions of such policies. The
insurance coverage provided by such policies is adequate and customary for the
industry in which the Company and the Subsidiaries operate.
SECTION 4.13. Environmental Matters.
(a) For purposes of this Agreement, the following terms shall
have the following meanings: (i) "Hazardous Substances" means any pollutant or
contaminant or any hazardous or toxic substance, waste, chemical, or material,
including as those terms are defined in any Environmental Law, and including
without limitation (A) petroleum and petroleum products including crude oil and
any fractions thereof; (B) natural gas, synthetic gas, and mixtures thereof; (C)
radon; (D) asbestos and asbestos-containing materials; (ii) "Environmental Law"
means any Law relating to regulation of pollution or the protection of human
health or the environment, including without limitation the following federal
statutes and their state counterparts, as each may be amended from time to time,
and any regulations promulgated thereunder: the Atomic Energy Act, the Clean Air
Act, the Clean Water Act, the Comprehensive Environmental Response,
Compensation, and Liability Act, the Federal Insecticide, Fungicide, and
Rodenticide Act, the Hazardous Materials Transportation Act, the Occupational
Safety and Health Act, the Resource Conservation and Recovery Act, and the Safe
Drinking Water Act.
(b) Except as set forth on Schedule 4.13 hereto: (i) neither
the Company nor any Subsidiary is in material violation or has in the last three
(3) years been in material violation of any Environmental Law; (ii) none of the
properties currently owned or leased by the Company or any Subsidiary is
contaminated with any Hazardous Substance to an extent that may require cleanup
or other remediation or give rise to any material liability under any
Environmental Law; (iii) none of the properties formerly owned or leased by the
Company or by any current or former Subsidiary is contaminated with any
Hazardous Substance to an extent that may require cleanup or other remediation
or give rise to any material liability under any Environmental Law; (iv) no
operations of the Company or of any present or former Subsidiary have given rise
to any off-site contamination that may require cleanup or other remediation or
give rise to any material liability under any Environmental Law; (v) the
material Company and each Subsidiary has all material permits, licenses and
other authorizations required under any Environmental Law ("Environmental
Permits"); (vi) the Company and
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each Subsidiary is in material compliance with its Environmental Permits; and
(vii) there are no pending or, to the Company's knowledge, threatened claims
against the Company or any Subsidiary relating to any Environmental Law or
Hazardous Substance.
SECTION 4.14. Government Contracts.
(a) Except as disclosed in Schedule 4.14, with respect to
Government Contracts, or teaming agreements or arrangements in respect of
Government Contracts, held by the Company or any Subsidiary or any joint venture
in which the Company participates as a venturer, there is no (i) material civil,
criminal or other investigation of which the Company has knowledge by any
Governmental Entity, (ii) suspension or debarment proceeding (or equivalent
proceeding) against the Company or any Subsidiary or, to the Company's
knowledge, any basis therefor, (iii) as of the date hereof, request for a
contract price adjustment based on a claimed disallowance by Defense Contract
Audit Agency or any other Governmental Entity or claim of defective pricing or
mischarging of any kind, (iv) as of the date hereof, claim or request for
equitable adjustment or other demand by the Company or any Subsidiary against
the U.S. Government or any third party or, to the Company's knowledge, any basis
therefor, (v) written notice challenging, questioning or disallowing any cost(s)
or, to the Company's knowledge, any basis therefor, (vi) as of the date hereof,
notice of contract termination or absence or reduction in funding; or (vii)
material cure notice or show cause notice or any material claim or demand by any
Person relating to or arising under a Government Contract or, to the Company's
knowledge, any basis therefor.
(b) For the purposes of this Agreement, with respect to any
party, "Government Contract" means any prime contract, subcontract, option,
basic ordering agreement, forward pricing rate agreement, letter contract,
purchase order, delivery order, change order, task order, Bid or other
arrangement of any kind between such party or any of its subsidiaries and (i)
the U.S. Government (acting on its own behalf or on behalf of another country or
international organization), (ii) any prime contractor of the U.S. Government or
(iii) any subcontractor with respect to any contract of a type described in
clauses (i) or (ii) above. For the purposes of this Agreement, with respect to
any party, "Bid" means any quotation, bid or proposal made by such party or any
of its subsidiaries that if accepted or awarded would lead to a Contract with
the U.S. Government or any other person for the design, manufacture and sale of
products or the provision of services.
SECTION 4.15. Licenses and Permits; Compliance with Laws.
Except as set forth on Schedule 4.15, the Company and the Subsidiaries hold, and
at all applicable times hereunder held, all material permits, licenses,
variances, exemptions, franchises, authorizations and approvals from all
Governmental
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Entities that are required for the operation of the businesses of the Company
and the Subsidiaries as presently conducted and the ownership, operation, lease
and holding by the Company and the Subsidiaries of their respective properties
and assets (the "Company Permits"). No suspension or cancellation of any of the
Company Permits is pending or, to the knowledge of the Company, threatened,
except where the failure to have, or suspension or cancellation of, any of the
Company Permits would not, individually or in the aggregate, have a Material
Adverse Effect. Except where individually or in the aggregate the existence of a
conflict with, a violation of, or a default under would not have a Material
Adverse Effect, none of the Company or any Subsidiary is in conflict with, or in
default under or violation of and the Company and the Subsidiaries have not
received any notices of violations with respect to, (i) any federal, state,
local or foreign statutes, laws, ordinances, rules, regulations, judgments,
decrees, orders, concessions, grants, franchises, permits, licenses and other
governmental authorizations and approvals ("Laws") applicable to the Company or
any Subsidiary or by which any asset of the Company or any Subsidiary is bound
or affected, (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which the
Company or any Subsidiary is a party or by which the Company or any Subsidiary
or its or any of their respective properties are bound or affected or (iii) any
Company Permits.
SECTION 4.16. Material Contracts.
(a) Except for any contract filed as an exhibit to any SEC
Report or as set forth on Schedule 4.16(a) hereto (collectively, the "Company
Material Contracts") and except for classified contracts, neither the Company
nor any of the Subsidiaries is a party to or bound by:
(i) any "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC);
(ii) any contract or agreement for the purchase of materials
or personal property from any supplier or for the furnishing of
services to the Company or any Subsidiary that requires future
aggregate payments by the Company or any of the Subsidiaries of
$150,000 or more;
(iii) any U.S. Government prime contract (including teaming
agreements in respect thereof), U.S. Government subcontract (other than
any subcontract requiring future aggregate payments of less than
$100,000) or any commercial contract for the sale of the Company's
services or licensed software;
(iv) (A) any contract, agreement or instrument relating to or
evidencing purchase money indebtedness in excess of $100,000 or
indebtedness for borrowed money of the
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Company or any Subsidiary, (B) any guarantee or assumption of an
obligation for purchase money indebtedness in excess of $100,000 or
borrowed money or other obligations of reimbursement of any maker of a
letter of credit or any guaranty of minimum equity or capital or
make-whole or similar agreement or (C) extension of credit by the
Company or any Subsidiary in excess of $100,000 or loan by the Company
or any Subsidiary;
(v) except for teaming and other agreements entered into in
the ordinary course of business, any non-competition agreement or any
other agreement or obligation which purports to limit in any respect
the manner in which, or the localities in which, the business of the
Company or the Subsidiaries may be conducted;
(vi) any partnership, joint venture, strategic alliance or
cooperation agreement (or any agreement similar to any of the
foregoing);
(vii) any voting or other agreement governing how any Shares
shall be voted;
(viii) any contract or other agreement which would prohibit or
materially delay the consummation of the Merger or any of the
transactions contemplated by this Agreement;
(ix) any licenses, whether as licensor or licensee, of
Intellectual Property other than commercial-off-the-shelf software
licenses; or
(x) any brokerage or finders fee agreements other than
agreements for normal brokerage commissions or finders fees payable in
the ordinary course of business.
(b) Except as set forth on Schedule 4.16(b) hereto, each
Company Material Contract is valid and binding on the Company (or, to the extent
a Subsidiary is a party, such Subsidiary) and, to the Company's knowledge, each
other party thereto, and each is in full force and effect, and the Company and
each Subsidiary and, to the Company's knowledge, each other party thereto have
performed all obligations required to be performed by them to date under each
Company Material Contract, except where such noncompliance, individually or in
the aggregate, would not have a Material Adverse Effect. Neither the Company nor
any Subsidiary knows of, or has given or received notice of, any violation or
default under (nor, to the knowledge of the Company, has there occurred any
event or does there exist any condition which with the passage of time or the
giving of notice or both would result in such a violation or default under) any
Company Material Contract, except where any such violations or defaults,
individually or in the aggregate, would not have a Material Adverse Effect.
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(c) Except as disclosed in the Company's proxy statement for
the 1999 annual meeting of stockholders or in Schedule 4.16 or as expressly
provided for in this Agreement, neither the Company nor any of the Subsidiaries
is a party to any oral or written (i) employment or consulting or similar
agreement that (A) cannot be terminated on eight weeks' or less notice without
any material additional expense other than the payment of accrued compensation
and/or expenses or (B) requires payments of compensation to any one Person in
excess of $125,000 (exclusive of bonuses, to the extent such bonuses do not
exceed 50% of such Person's other compensation) per year or aggregate payments
of compensation to any one Person in excess of $200,000 or (ii) agreement or
arrangement, with any director, officer or other key employee of the Company or
any Subsidiary the benefits of which are contingent or vest or accelerate, or
the terms of which are altered, upon the occurrence of a transaction of the
nature contemplated by this Agreement.
SECTION 4.17. Taxes.
(a) Except as set forth in Schedule 4.17, all material Tax
Returns (as defined below) by or on behalf of the Company or any Subsidiary or
any affiliated, combined or unitary group of which the Company or any Subsidiary
is or was a member have been duly and timely filed with the appropriate taxing
authorities. All such Tax Returns were correct and complete in all material
respects. All Taxes shown as due thereon have been paid, and the most recent
financial statements contained in the SEC Reports provide an adequate accrual
for the payment of Taxes for the periods covered by such reports.
(b) Except as set forth in Schedule 4.17, neither the Company
nor any Subsidiary has requested any extension of time within which to file any
Tax Return in respect of any taxable year, which Tax Return has not since been
filed.
(c) Except as set forth in Schedule 4.17, there are no
outstanding waivers or comparable consents that have been given by the Company
or any Subsidiary or with respect to any Tax Return of the Company or any
Subsidiary regarding the application of any statute of limitations with respect
to any Taxes or Tax Returns of the Company or any such Subsidiary.
(d) Except as set forth in Schedule 4.17, no United States
federal, state, local or foreign audits, investigations, other administrative
proceedings or court proceedings are presently pending against the Company or
any Subsidiary that could materially affect the liability for Taxes of the
Company or any Subsidiary or against the Company or any Subsidiary with regard
to any Taxes or Tax Returns of the Company or any Subsidiary and no notification
has been received by the Company or any Subsidiary that such an audit,
investigation or other proceeding is pending or threatened. No issue has been
raised by a Tax authority in any audit of the Company or any Subsidiary
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that if raised with respect to any other period not so audited could be expected
to result in a proposed deficiency for any period not so audited. No claim has
ever been made by an authority in a jurisdiction where any of the Company and
its Subsidiaries does not file Tax Returns that it is or may be subject to
taxation in that jurisdiction.
(e) No deficiency or adjustment for any Taxes has been
threatened, proposed, assessed or asserted against the Company or any
Subsidiary. Except as set forth in Schedule 4.17, there are no encumbrances for
Taxes upon the assets or properties of the Company or any Subsidiary except for
statutory encumbrances for Taxes not yet due for which adequate reserves have
been established in accordance with generally accepted accounting principles.
(f) Neither the Company nor any Subsidiary is a party to, or
is bound by, any Tax sharing, Tax indemnity, cost sharing, or similar agreement,
policy or practice relating to Taxes. Except as set forth in Schedule 4.17, no
closing agreement pursuant to section 7121 of the Code (or any predecessor
provision) or any similar provision of any state, local or foreign law has been
entered into by or on behalf of the Company or any Subsidiary.
(g) The Company has made available to Parent true and complete
copies of all federal, state, local and foreign income Tax Returns, and state
and local property and sales Tax Returns and any other Tax Returns filed by the
Company or any Subsidiary for any of the taxable periods that remains open, as
of the date hereof, for examination or assessment of Tax.
(h) Except as disclosed on Schedule 4.17, neither the Company
nor any Subsidiary: (i) has been a member of an affiliated group filing a
consolidated federal income Tax Return (other than a group the common parent of
which is the Company) or (ii) has any liability for the Taxes of any person
(other than the Company and its Subsidiaries) under Section 1.1502-6 of the
Treasury Regulations (or any similar provision of state, local or foreign law),
as a transferee or successor, by contract or otherwise.
(i) Neither the Company nor any of its Subsidiaries has filed
a consent under Section 341(f) of the Code.
(j) The net operating loss carryforwards ("NOLs") of the
Company and its Subsidiaries as of June 30, 1999 equal the amount of the NOLs
set forth in Notes to Consolidated Financial Statements contained in the Company
1999 10-K and, except for limitations that may apply by reason of the Merger or
related transactions contemplated by this Agreement, such NOLs are not subject
to limitation under Section 382 of the Code, Section 1.1502-15 or -21 of the
Treasury Regulations or otherwise.
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<PAGE> 41
(k) For purposes of this Agreement, "Taxes" shall mean all
taxes, charges, fees, levies or other assessments, including, without
limitation, all net income, gross income, gross receipts, sales, use, ad
valorem, goods and services, capital, transfer, franchise, profits, license,
withholding, payroll, employment, employer health, excise, severance, stamp,
occupation, real and personal property, social security, estimated, recording,
gift, value assessed, windfall profits or other taxes, customs duties, fees,
assessments or charges of any kind whatsoever, whether computed on a separate,
consolidated, unitary, combined or other basis, together with any interest,
fines, penalties, additions to tax or other additional amounts imposed by any
taxing authority (domestic or foreign). For purposes of this Agreement, "Tax
Return" shall mean any return, declaration, report, estimate, information or
other document (including any documents, statements or schedules attached
thereto) required to be filed with any federal, state, local or foreign tax
authority with respect to Taxes.
SECTION 4.18. Offer Documents; Proxy Statement. The Schedule
14D-9, when filed with the SEC and first published, sent or given to
stockholders of the Company, will comply in all material respects with the
Exchange Act and the rules and regulations thereunder. Neither the Schedule
14D-9 nor any of the information provided by or on behalf of the Company
specifically for inclusion in the Schedule TO or the Offer Documents will, at
the respective times the Schedule 14D-9, the Schedule TO and the Offer Documents
or any amendments or supplements thereto are filed with the SEC or first
published, sent or given to stockholders of the Company, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading. No
representation is made by the Company with respect to written information
supplied by Parent or Purchaser specifically for inclusion in the Schedule
14D-9. Any proxy statement to be sent to the stockholders of the Company in
connection with a meeting of the Company's stockholders to consider the Merger
(the "Company Stockholders' Meeting") or the information statement to be sent to
such stockholders, as appropriate (such proxy statement or information
statement, as amended or supplemented, is herein referred to as the "Proxy
Statement"), will comply in all material respects with the applicable
requirements of the Exchange Act and the rules and regulations thereunder,
except that no representation or warranty is being made by the Company with
respect to Parent Information. The Proxy Statement will not, at the time the
Proxy Statement (or any amendment or supplement thereto) is filed with the SEC
or first sent to stockholders, at the time of the Company Stockholders Meeting
or at the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
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SECTION 4.19. Brokers. No broker, finder or investment banker
(other than the Company Financial Advisor) is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by and on behalf of
the Company. The Company has heretofore furnished to Parent true and complete
copies of all agreements and other arrangements between the Company and the
Company Financial Advisor.
SECTION 4.20. Takeover Statutes. The Board of Directors has
approved the Offer, the Merger and this Agreement, and such approval is
sufficient to render inapplicable to the Offer, the Merger, this Agreement the
limitations on business combinations contained in any restrictive provision of
any "fair price," "moratorium," "control share acquisition," "interested
stockholder" or other similar anti-takeover statute or regulation (including,
without limitation, Section 203 of the DGCL) or restrictive provision of any
applicable anti-takeover provision in the Company's Certificate of Incorporation
(including Article 9 thereof) or By-Laws. No other state takeover statute or
similar statute or regulation or other comparable takeover provision of the
Company's Certificate of Incorporation or By-Laws applies to the Offer, the
Merger, this Agreement or any of the transactions contemplated by this
Agreement.
SECTION 4.21. Rights Plan. All rights ("Rights") to acquire
Company Common Stock, other securities or other consideration in lieu thereof
issued under the Amended and Restated Rights Agreement dated December 13, 1999
between the Company and The American Stock Transfer & Trust Company (the "Rights
Agreement") expired immediately prior to the execution and delivery of this
Agreement and the Stockholders Agreements, and no holder of Rights has any right
thereunder to acquire shares of Company Common Stock or any other securities or
any other consideration in lieu thereof.
Article V.
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1. Conduct of Business by the Company Pending the
Closing. From the date of this Agreement to the Effective Time, except as
expressly contemplated by this Agreement (including as specified on the
Schedules hereto), the Company shall, and shall cause each of the Subsidiaries,
to (i) (other than inactive Subsidiaries) carry on its respective businesses in
the ordinary course consistent with past practice, (ii) use reasonable efforts
to preserve intact its current business organizations and keep available the
services of its current officers and employees, (iii) use all reasonable efforts
to preserve its relationships with principal customers, suppliers and other
Persons with which it has business dealings, (iv) comply in all material
respects with all laws and regulations
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applicable to it or any of its properties, assets or business and (v) maintain
in full force and effect all the Company Permits necessary for such business. By
way of amplification and not limitation of the foregoing, the Company shall not,
and it shall cause the Subsidiaries not to, between the date of this Agreement
and the Effective Time, except as permitted by this Agreement (including as
specified on the Schedules hereto), directly or indirectly, do, or commit to do,
any of the following without the prior written consent of Parent:
(a) Amend or otherwise change its certificate of incorporation
or bylaws or the equivalent organizational documents;
(b) Issue, grant, deliver, sell, pledge, dispose of or
encumber any shares of capital stock of any class, any Company Voting Debt or
any options, warrants, convertible securities or other rights of any kind to
acquire any shares of capital stock, or any Company Voting Debt or any other
ownership interest (including but not limited to stock appreciation rights,
phantom stock or stock-based performance units) of the Company or any Subsidiary
(except for the issuance of shares of Company Common Stock required to be issued
pursuant to the terms of the Warrants or Options outstanding as of the date
hereof;
(c) Declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock (other than dividends or distributions by any wholly owned
Subsidiary of the Company to its parent);
(d) Reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any shares of capital stock of the
Company or any Subsidiary or any securities convertible into or exercisable for
any such shares of its capital stock or securities, other than pursuant to
Options and Stock Plans in accordance with their terms as in effect on the date
hereof;
(e) (i) Acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership or other business organization or
division thereof, or any assets that are material, individually or in the
aggregate, to the Company and the Subsidiaries, taken as a whole; (ii) incur any
indebtedness for borrowed money (including by issuance of debt securities) other
than borrowings in the ordinary course of business under the Company's existing
credit facility or issue any debt securities or warrants or other rights to
acquire any debt securities of the Company or any Subsidiary, or assume,
guarantee or endorse (other than for collection or deposit in the ordinary
course of business), or otherwise as an accommodation become responsible for,
the obligations of any person, or make any loans or advances or make any capital
contributions to, or investments in, any other Person; (iii) enter into any
material
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contract or agreement other than in the ordinary course of business; or (iv) (A)
authorize or make capital expenditures in excess of $1,600,000 in the aggregate
for the license of or in connection with Lawson Associates, Inc. enterprise
management software, (B) for the period commencing on the date hereof and ending
on March 31, 2000, authorize or make capital expenditures (other than as set
forth in clause (A) above) in excess of $75,000 individually or $500,000 in the
aggregate and (C) for the period commencing on April 1, 2000 and ending on June
30, 2000, authorize or make capital expenditures (other than as set forth in
clause (A) above) in excess of $75,000 individually or, when taken together with
all capital expenditures authorized or made pursuant to subclause (B) above,
$1,200,000 in the aggregate.
(f) (i) Increase the compensation or fringe benefits of any of
its directors, officers or employees, except as required by contractual
obligations existing as of the date hereof and except for increases in salary or
wages in connection with a promotion or change in position granted in the
ordinary course to employees of the Company or a Subsidiary who are not one of
the Key Management Personnel, in the ordinary course of business in accordance
with past practice, (ii) grant any increase in severance or termination pay not
currently required to be paid under existing severance plans or contracts to any
director, officer or other employee of the Company or any Subsidiary, including
without limitation any increase as a result of promotion, (iii) enter into any
employment, consulting or severance agreement or arrangement, including any
arrangement to provide post-retirement medical or life insurance benefits, with
any present or former director, officer or other employee of the Company or any
Subsidiary or (iv) except as set forth on Schedule 5.2(f) hereto and except as
is required by law, establish, adopt, enter into or amend or terminate, or take
any action to accelerate any rights or benefits under, or make any material
determination not in the ordinary course of business consistent with past
practice under, any collective bargaining agreement, Company Employee Benefit
Plan or employee benefit arrangement that would have been Company Employee
Benefit Plans if they were in effect as of the date hereof, including, but not
limited to, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any directors, officers or employees;
(g) Except as may be required as a result of a change in law
or in generally accepted accounting principles, change any of the accounting
methods, practices or principles used by it;
(h) Except as may be required to comply with a change in law,
make any material tax election, make or change any method of accounting with
respect to Taxes, file any amended Tax Returns that may have a material adverse
effect on the tax position of the Company or any Subsidiary or settle or
compromise any
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<PAGE> 45
material federal, state, local or foreign Tax liability or refund;
(i) Except for the settlement of any suit, action or claim
disclosed on Schedule 5.1(i) hereto, settle or compromise any pending suit,
action, audit or claim (A) against the Company or any Subsidiary by any
Governmental Entity, including, but not limited to, DCAA, or (B) which is
material to the Company and the Subsidiaries, taken as a whole, or which relates
to the transactions contemplated hereby;
(j) Adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any Subsidiary (other than the Merger);
(k) (i) Pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction (A) in the
ordinary course of business and consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in the most
recent consolidated financial statements of the Company included in the SEC
Reports filed prior to the date of this Agreement or (B) of liabilities incurred
in the ordinary course of business and consistent with past practice, (ii)
cancel any material indebtedness (individually or in the aggregate) or waive any
claims (except in connection with the settlement of any suit, action or claim
disclosed on Schedule 5.1(i) hereto) or rights of substantial value or (iii)
waive the benefits of, or agree to modify in any manner, any confidentiality,
standstill or similar agreement to which the Company or any Subsidiary is a
party;
(l) Sell, lease (as lessor), license or otherwise dispose of
or subject to any lien or encumbrance any properties or assets, except sales of
excess or obsolete assets or real property in the ordinary course consistent
with past practice;
(m) (i) Except for teaming agreements entered into in the
ordinary course of business, enter into any "non-compete" or similar agreement
or (ii) knowingly execute any new Information Technology (IT) design or study
contract, excluding acceptance of individual Task Orders or Delivery Orders
under existing contracts, that creates an actual organizational conflict of
interest (under Federal Acquisition Regulation Subpart 9.5) with an existing
unclassified contract of Parent; provided, however, that in order to protect the
U.S. Government interest against the creation of an actual conflict of interest
in the execution of new contracts, designated representatives of the Company and
Parent will meet or communicate weekly or as otherwise required, and to the
extent permitted by applicable laws and regulation, to take reasonable actions
to avoid such conflicts; or
(n) Take, or propose to take, or agree to take in
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writing or otherwise, any of the actions described in Sections 5.1(a) through
5.1(m) or any action which would result in any of the conditions set forth in
Annex I not being satisfied.
SECTION 5.2. No Solicitation.
(a) Except as set forth in this Section 5.2, neither the
Company nor any of its affiliates controlled by it shall (and each shall use its
best efforts to cause its respective officers, directors, employees,
representatives and agents, including, but not limited to, investment bankers,
attorneys and accountants (collectively, "Agents"), not to), directly or
indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any Person (other than Parent,
any of its affiliates or Agents) concerning any proposal or offer (in each case,
whether or not in writing and whether or not delivered to the stockholders of
the Company generally) to acquire in any manner, directly or indirectly, all or
a substantial part of the assets or business and properties of the Company or
any of its Subsidiaries or any capital stock of or other equity interest in the
Company or any of its Subsidiaries, whether by merger, tender offer, exchange
offer, sale of assets or similar transactions involving the Company or any
Subsidiary, division or operating or principal business unit of the Company,
other than pursuant to the transactions contemplated by this Agreement
(collectively, an "Acquisition Proposal"). Except as provided in this Section
5.2, the Company shall not have any activities, discussions or negotiations with
any Person with respect to any of the foregoing. A "Superior Proposal" is an
Acquisition Proposal that involves payment of consideration to the Company's
stockholders that is financially superior to that payable in the Offer and the
Merger. The Company, its affiliates and their respective Agents shall
immediately cease any existing discussions or negotiations, if any, with any
Persons conducted heretofore with respect to any Acquisition Proposal.
(b) Prior to the Share Purchase Date, the Company may furnish
information concerning its business, properties or assets to any Person in
response to a request for such information made after the date of this Agreement
which was not encouraged, solicited or initiated, directly or indirectly, by the
Company or any of its affiliates or their respective Agents after the date of
this Agreement, and may participate in discussions and negotiations with such
Person concerning an Acquisition Proposal, in each case if and only to the
extent that (x) such Person has submitted a written Acquisition Proposal to the
Board of Directors relating to such transaction, (y) the Board of Directors
determines in good faith (i) after consulting with its independent financial
advisors, (A) that such Person is reasonably capable of consummating such
Acquisition Proposal, taking into account the legal, financial, regulatory and
other aspects of such Acquisition Proposal and the Person making such
Acquisition Proposal and (B) such Acquisition Proposal is reasonably likely to
be a Superior Proposal and (ii) after
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receipt of advice from outside legal counsel to the Company, that failure to
take such action would be inconsistent with its fiduciary duties under
applicable law, and (z) such Person has signed a confidentiality agreement
substantially identical to the Confidentiality Agreement. The Company will
promptly provide to Parent any written material information regarding the
Company provided to such Person which was not previously provided or otherwise
made available to Parent.
(c) The Company will promptly following receipt of an
Acquisition Proposal (and in any event not later than 24 hours after receipt
thereof) notify Parent of the receipt of the Acquisition Proposal and shall in
such notice indicate in reasonable detail the identity of the offeror and the
material terms and conditions of any proposal and shall keep Parent promptly
advised of the status and material terms of any such inquiry, offer or proposal.
(d) The Board of Directors may withdraw or modify its approval
or recommendation of the Offer and/or the Merger, provided (i) the Board of
Directors determines in good faith, after receipt of advice from outside legal
counsel to the Company, that the failure to do so would be inconsistent with its
fiduciary duties to the Company's stockholders under applicable law, and (ii)
the Company notifies Parent of any such withdrawal or modification prior to its
release to the public.
(e) Nothing contained in this Section 5.2 or any other
provision hereof shall prohibit the Company or the Board of Directors from (i)
taking and disclosing to the Company's stockholders a position with respect to a
tender or exchange offer by a third party pursuant to Rules 14d-9 and 14e-2
promulgated under the Exchange Act, or (ii) making such disclosure to the
Company's stockholders as, in the good faith judgment of the Board of Directors,
after receiving advice from outside counsel, is required under applicable law,
provided that the Board of Directors may not, except as permitted by Section
5.2(d), withdraw or modify its approval or recommendation of the Offer or the
Merger.
(f) Nothing contained in this Section 5.2 shall prohibit
Purchaser from purchasing Shares pursuant to the Offer or consummating the
Merger.
Article VI.
ADDITIONAL AGREEMENTS
SECTION 6.1. Proxy Statement. As promptly as practicable after
the consummation of the Offer and if required by the Exchange Act, the Company
shall prepare and file with the SEC, and shall use all reasonable efforts to
have cleared by the SEC, and promptly thereafter shall mail to stockholders, the
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Proxy Statement. The Proxy Statement shall contain the recommendation of the
Board of Directors that the Company's stockholders approve this Agreement and
the Merger.
SECTION 6.2. Meeting of Stockholders of the Company. Following
the consummation of the Offer, the Company shall promptly take all action
necessary in accordance with the DGCL and its Certificate of Incorporation and
By-Laws to convene the Company Stockholders' Meeting, if such meeting is
required. The stockholder vote required for approval of the Merger will be no
greater than that set forth in the DGCL. The Company shall use its reasonable
efforts to solicit from stockholders of the Company proxies in favor of the
Merger and shall take all other action necessary or, in the reasonable opinion
of Parent, advisable to secure any vote of stockholders required by the DGCL to
effect the Merger. Notwithstanding the foregoing, if Purchaser or any other
subsidiary of Parent shall acquire at least 90 percent of the outstanding
Shares, and provided that the conditions set forth in Article VII shall have
been satisfied or waived, the Company shall, at the request of Parent, take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable after such acquisition, without the approval of the stockholders
of the Company, in accordance with Section 253 of the DGCL.
SECTION 6.3. Compliance with Law. Each of the Company, Parent
and Purchaser will comply in all material respects with all applicable laws and
with all applicable rules and regulations of any Governmental Entity in
connection with its execution, delivery and performance of this Agreement and
the transactions contemplated hereby.
SECTION 6.4. Notification of Certain Matters. The Company
shall give prompt notice to Parent (A) of the occurrence, or non-occurrence of
any event whose occurrence, or non-occurrence would be likely to cause (i) any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any respect at any time from the date hereof to the Effective
Time, (ii) any condition set forth in Annex I to be unsatisfied in any material
respect at any time from the date hereof to the date Parent purchases Shares
pursuant to the Offer or (iii) any covenant, condition or agreement contained in
this Agreement not to be complied with or satisfied in all material respects;
and (B) any failure by the Company to comply with in all material respects any
of its covenants or agreements hereunder; provided, however, that the delivery
of any notice pursuant to this Section 6.4 shall not limit or otherwise affect
the remedies available to Parent hereunder. The Company shall give prompt notice
to Parent of any notice or other communication from any third party alleging
that the consent of such third party is or may be required in connection with
the transactions contemplated by this Agreement.
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SECTION 6.5. Access to Information. Except as may be
prohibited by applicable law, from the date hereof to the Effective Time, the
Company shall, and shall cause its Subsidiaries, officers, directors, employees,
auditors and agents to, afford the Agents of Parent and Purchaser reasonable
access at all reasonable times to their respective Agents, properties, offices
and other facilities and to all books, records and contracts, and shall promptly
furnish Parent and Purchaser with (a) all financial, operating and other data
and information as Parent or Purchaser, through its Agents, may reasonably
request and (b) a copy of each report, schedule and other document filed or
received by the Company or any of the Subsidiaries during such period pursuant
to the requirements of applicable securities or federal Tax laws.
SECTION 6.6. Public Announcements. So long as this Agreement
is in effect, Parent and the Company shall consult with each other before
issuing, and provide each other a reasonable opportunity to review and comment
upon, any press release or other public statements with respect to the Offer or
the Merger and shall not issue, or permit their affiliates to issue, any such
press release or make any such public statement prior to such consultation,
except as may be required by law or in accordance with any listing agreement
with any securities exchange on which such party's securities are listed.
SECTION 6.7. Reasonable Best Efforts; Cooperation. Upon the
terms and subject to the conditions hereof, each of the parties hereto shall use
its reasonable best efforts to obtain in a timely manner all necessary waivers,
consents and approvals and to effect all necessary registrations and filings,
and to use all reasonable best efforts to take, or cause to be taken, all other
actions and to do, or cause to be done, all other things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, including, without limitation, (i)
cooperating in responding to inquiries from, and making presentations to,
regulatory authorities and customers, (ii) defending against and responding to
any action, suit, proceeding, or investigation, whether judicial or
administrative, challenging or relating to this Agreement or the transactions
contemplated hereby, including seeking to have any stay or temporary restraining
order entered, by any court or other Governmental Entity vacated or reversed
(iii) cooperating in the preparation and filing of the Offer Documents, the
Schedule 14D-9 and the Proxy Statement and (iv) promptly making all regulatory
filings and applications, including without limitation any required filings
under the HSR Act, and any amendments thereto as are necessary for the
consummation of the transactions contemplated by this Agreement. Notwithstanding
anything herein to the contrary, in connection with any filing or submission or
other action required to be made or taken by any party to effect the Merger and
all other transactions contemplated hereby, the Company shall not, without the
prior written consent of Parent, commit to any divestiture
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<PAGE> 50
transaction, and Parent shall not be required to divest or hold separate or
otherwise take or commence to take any action that, in the reasonable discretion
of Parent, limits its freedom of action with respect to, or its ability to
retain, the Company or any of the Company's affiliates or any material portion
of the Company's assets or businesses.
SECTION 6.8. Agreement to Defend and Indemnify.
(a) It is understood and agreed that, subject to the
limitations on indemnification contained in the DGCL, the Company shall, to the
fullest extent permitted under applicable law and regardless of whether the
Merger becomes effective, indemnify and hold harmless, and after the Effective
Time, the Surviving Corporation shall for a period of six years following the
Effective Time, to the fullest extent permitted under applicable law, and Parent
shall, for such six-year period, but only to the extent the Company or the
Surviving Corporation would be required or permitted under applicable law,
indemnify and hold harmless, each director and officer of the Company
(collectively, the "Indemnified Parties") from and against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection with any
claim, action, suit, proceeding or investigation arising out of or pertaining to
matters relating to their duties or actions in their capacity as officers and
directors in connection with any of the transactions contemplated hereby and
existing at the Effective Time, including without limitation liabilities arising
under the Securities Act or the Exchange Act in connection with the Offer or the
Merger, and in the event of any such claim, action, suit, proceeding or
investigation (whether arising prior to or after the Effective Time), (i) the
Company or the Surviving Corporation shall advance the reasonable fees and
expenses of counsel selected by the Indemnified Parties, which counsel shall be
reasonably satisfactory to the Company or the Surviving Corporation, promptly as
statements therefor are received (provided the person to whom such expenses are
advanced provides a customary undertaking complying with applicable law to repay
such advances if it is ultimately determined that such person is not entitled to
indemnification), and (ii) the Company, Parent (but only after the consummation
of the Offer) and the Surviving Corporation will cooperate in the defense of any
such matter; provided, however, that none of the Company, Parent nor the
Surviving Corporation shall be liable for any settlement effected without its
prior written consent; and provided further that none of the Company, Parent nor
the Surviving Corporation shall be obliged pursuant to this Section 6.8 to pay
the fees and disbursements of more than one counsel for all Indemnified Parties
in any single action except to the extent that, in the opinion of counsel for
the Indemnified Parties, two or more of such Indemnified Parties have
conflicting interests in the outcome of such action. For six years after the
Effective Time, Parent shall cause to be maintained or obtained officers' and
directors' liability
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<PAGE> 51
insurance covering the Indemnified Parties who are currently covered by the
Company's officers and directors liability insurance policy with respect to
matters or events occurring prior to the Effective Time on terms not less
favorable than those in effect on the date hereof in terms of coverage and
amounts to the extent available; provided, however, that if the aggregate annual
premiums for such insurance at any time during such period exceed 150% of the
per annum rate of premium paid by the Company for such insurance as of the date
of this Agreement (which amounts under current policies are set forth on
Schedule 6.8), then Parent shall be required to provide the maximum coverage
that will then be available at an annual premium equal to 150% of such per annum
rate as of the date of this Agreement. The Surviving Corporation shall continue
in effect, without amendment, repeal or modification in any manner that would
adversely affect the rights of the persons entitled to the protections and
privileges thereof, the indemnification provisions provided on the date hereof
by the Company By-Laws for a period of not less than six years following the
Effective Time. This Section 6.8 shall survive the consummation of the Merger or
any termination of this Agreement pursuant to Section 8.1 hereof.
Notwithstanding anything in this Section 6.8 to the contrary, neither the
Company nor the Surviving Corporation shall have any obligation under this
Section 6.8 to indemnify any Indemnified Party against any cost, expense,
judgment, fine, loss, claim, damage, liability or settlement amount found to
have resulted solely from such Indemnified Person's own gross negligence or
willful misconduct. Notwithstanding Section 9.8 hereof, this Section 6.8 is
intended to be for the benefit of and to grant third-party rights to Indemnified
Parties whether or not parties to this Agreement, and each of the Indemnified
Parties shall be entitled to enforce the covenants contained in this Section
6.8.
(b) If the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any Person, then and in each such case, proper provision shall be made so
that the successors and assigns of the Surviving Corporation assume the
obligations set forth in this Section 6.8.
SECTION 6.9. Takeover Statutes. If any state takeover statute
or other similar statute or regulation becomes or is deemed to become applicable
to the Offer, the Merger, this Agreement or any of the transactions contemplated
hereby, the Company shall promptly take all action necessary to render such
statute or regulation inapplicable to all of the foregoing.
SECTION 6.10. Employment Matters. The Company will, and will
cause its Subsidiaries to, and from and after the Effective Time the Surviving
Corporation will, honor, in accordance with their terms all existing employment
and severance agreements between the Company or any of its Subsidiaries and any
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<PAGE> 52
officer, director or employee of the Company or any of its Subsidiaries
specified in Schedule 6.10 hereto, including the obligation of the Company to
make any payment to any officer, director or employee on a date that is prior to
the Effective Time pursuant to the terms of any such employment agreement or
severance agreement. Notwithstanding anything contained herein to the contrary,
no such payments shall be made pursuant to the terms of the agreements with the
employees listed on Schedule 4.8(l) hereto without the prior consent of Parent,
which consent shall not be unreasonably withheld.
SECTION 6.11. Company Employee Benefit Plans. (a) For the
period commencing at the consummation of the Offer until the first anniversary
thereof, the Company or the Surviving Corporation, as applicable, shall provide
medical, dental, vision care, life and disability insurance, severance, vacation
and "section 125" benefits for the employees of the Company and any Subsidiary
as of the consummation of the Offer (the "Employees") and their eligible
dependents that are substantially similar in the aggregate to those provided as
of the date of this Agreement under the Company Employee Benefit Plans listed on
Schedule 6.11 hereto. Subject to the eligibility requirements thereof, as soon
as reasonably practicable following the Effective Time the Employees will become
eligible to participate in the Parent Employee Stock Purchase Plan and an
Employee's service with the Company and any Subsidiary prior to the Effective
Time will be recognized for purposes of determining eligibility to participate
in such plan.
(b) For the period commencing at the consummation of the Offer
until the first anniversary thereof, the Company or the Surviving Corporation,
as applicable, shall provide benefits to the Employees under a defined
contribution plan with a cash-or-deferred arrangement providing benefits to the
Employees, including Company contributions, which are comparable to the benefits
provided to the Employees under the GRC International, Inc. Employees' Deferred
Income Plan as of the date of this Agreement (the "401(k) Plan"); provided that
nothing herein shall require the Company or the Surviving Corporation to provide
or permit investment in the securities of Parent or to continue to make
available the specific investment options currently available under the 401(k)
Plan, including without limitation any investment in Company Common Stock.
(c) In the event the Company or any Subsidiary becomes a
participating company in the employee benefit plans of Parent, or an Employee
otherwise becomes employed by a company that participates in the employee
benefit plans of Parent (a "Participating Company"), Parent shall recognize, or
shall cause the Participating Company to recognize, each Employee's service with
or recognized by the Company and any Subsidiary as follows:
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<PAGE> 53
(i) service prior to the Effective Time shall be recognized
for purposes of determining eligibility to participate in the defined
contribution plan and health and welfare plans then made available to
the Employees generally, and for eligibility to receive matching
contributions and vesting in matching contributions under any such
defined contribution plan, but not for purposes of determining levels
or amounts of benefits under any of Parent's disability or severance
plans, or for vesting or benefit accruals under any of Parent's defined
benefit plans, or for eligibility for post-employment medical, dental,
life insurance or toll discount plans or programs;
(ii)service after the Effective Time but prior to the date on
which an Employee becomes employed by a Participating Company shall be
recognized for purposes of determining levels or amounts of benefits
under Parent's disability or severance plans in which such employee is
then eligible to participate, and for vesting under Parent's defined
benefit pension plan in which such employee is then eligible to
participate, but not for purposes of benefit accruals under any defined
benefit pension plan and not for eligibility for post-employment
medical, dental, life insurance or toll discount plans or programs; and
(iii) service after the date on which an Employee becomes
employed by a Participating Company shall be recognized for all
purposes under the employee benefit plans of Parent in which such
employee is then eligible to participate.
(d) Nothing contained in this Agreement shall be interpreted
as (i) preventing the Company, Parent or the Surviving Corporation from
amending, modifying or terminating any Company Employee Benefit Plan or other
related contract, arrangement, commitment or understanding in accordance with
their terms and applicable law or (ii) interfering with the Company's or the
Surviving Corporation's right or obligation to make such changes as are
necessary to comply with applicable law.
(e) From and after the date hereof, all communications
relating to the Company Employee Benefit Plans, including, without limitation,
the Stock Plans, shall be subject to Parent's comment and approval prior to
distribution, which shall not be unreasonably withheld or delayed, and the
Company shall cooperate with and assist Parent in providing necessary or
desirable communications to the employees and directors of the Company regarding
the transactions contemplated hereby.
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<PAGE> 54
ARTICLE VII.
CONDITIONS OF MERGER
The respective obligations of each party to effect the Merger
shall be subject to the satisfaction on or prior to the Effective Time of the
following conditions:
(a) Purchaser shall have made, or caused to be made, the Offer
and shall have purchased, or caused to be purchased, Shares pursuant to the
Offer;
(b) The Merger and this Agreement shall have been approved and
adopted by the requisite vote of the stockholders of the Company, if required by
the DGCL; and
(c) No statute, rule, regulation, judgment, writ, decree,
order or injunction shall have been promulgated, enacted, entered or enforced,
and no other action shall have been taken, by any Governmental Entity that in
any of the foregoing cases has the effect of making illegal or directly or
indirectly restraining, prohibiting or restricting the consummation of the
Merger.
Article VIII.
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1. Termination. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, whether
prior to or after approval of matters presented in connection with the Merger by
the stockholders of the Company:
(a) Subject to Section 1.3, by the mutual written consent of
Parent and the Company; or
(b) By either of Parent or the Company if any Governmental
Entity of competent jurisdiction shall have issued an order, decree or ruling or
taken any other action (which order, decree or ruling or other action each party
hereto shall use its reasonable best efforts to have vacated or reversed in
accordance with Section 6.7), in each case permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement and such
order, decree, ruling or other action shall have become final and
non-appealable.
(c) By the Company:
(i) if any Person shall have made a bona fide written offer to
acquire the Company which was not encouraged, solicited or initiated,
directly or indirectly, by the Company or any of its affiliates or
their respective Agents after the date hereof (A) that the Board of
Directors
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<PAGE> 55
determines in its good faith judgment is a Superior Proposal and (B) as
a result of which the Board of Directors determines in good faith,
after receiving advice from outside counsel to the Company, that
failure to take such action would be inconsistent with its fiduciary
duties under applicable law; provided, however, that not less than five
business days prior to such termination, the Company shall notify
Parent of its intention to terminate this Agreement pursuant to this
Section 8.1(c)(i) and shall cause its respective financial and legal
advisers to negotiate during such five-business-day period with Parent
in an effort to make such adjustments in the terms and conditions of
this Agreement as would enable the Company to proceed with the
transactions contemplated herein on such adjusted terms (during which
period Purchaser shall not accept for payment or purchase Shares
pursuant to the Offer), and notwithstanding such negotiations and
adjustments, the Board of Directors reasonably concludes, in its good
faith judgment, that the transactions contemplated herein on such terms
as adjusted, are not at least as favorable to the stockholders of the
Company as such offer and provided that the Company shall have complied
with the notice provisions of Section 5.2(b); and provided, further,
that such termination under this clause (i) shall not be effective
until the Company has made payment of the full Termination Fee required
by Section 8.2(b); or
(ii) if as the result of the failure to be satisfied of any of
the conditions set forth in Annex I, Parent or Purchaser shall have
terminated the Offer or the Offer shall have expired without Purchaser
having purchased any Shares pursuant thereto; provided, however, that
the Company may not terminate this Agreement pursuant to this Section
8.1(c)(ii) if the failure of any such condition to be satisfied at the
time of such termination results from (A) the Company's failure to
perform any of its obligations under this Agreement or (B) facts or
circumstances that constitute a breach of any representation or
warranty of the Company under this Agreement; or
(iii) if Parent, Purchaser or any of their affiliates shall
have failed to commence the Offer in accordance with the first sentence
of Section 1.1(a); provided, however, that the Company may not
terminate this Agreement pursuant to this Section 8.1(c)(iii) if such
failure to have commenced the Offer shall have been caused by (A) the
Company's failure to perform any of its obligations under this
Agreement or (B) facts or circumstances that constitute a breach of any
representation or warranty of the Company under this Agreement; or
(iv) if Parent or Purchaser shall have breached in any
material respect any of its representations, warranties, covenants or
other agreements contained in this
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<PAGE> 56
Agreement which breach or failure to perform is incapable of being
cured or has not been cured by the date that is 15 business days
following written notice thereof to Parent from the Company.
(d) By Parent or Purchaser:
(i) if prior to the purchase of any Shares pursuant to the
Offer, the Board of Directors or any committee thereof shall have
withdrawn, or modified or changed, or publicly proposed to withdraw,
modify or change, in a manner adverse to Parent or Purchaser (including
by amendment of the Schedule 14D-9) its approval or recommendation of
the Offer, this Agreement or the Merger or shall have approved or
recommended or publicly proposed to approve or recommend an Acquisition
Proposal, or if the Board of Directors or any committee thereof fails
to reaffirm publicly and unconditionally its recommendation to the
Company's stockholders that they tender their Shares in the Offer,
which public reaffirmation must be made within ten days after Parent's
written request to do so (which request may be made at any time that an
Acquisition Proposal is pending and not withdrawn) and must also
include the unconditional rejection of such Acquisition Proposal (to
the extent not previously withdrawn); or
(ii) if Parent or Purchaser shall have withdrawn or terminated
the Offer or the Offer shall have expired in accordance with its terms
and the terms of this Agreement without Parent or Purchaser having
purchased any Shares thereunder; provided that Parent or Purchaser may
not terminate this Agreement pursuant to this Section 8.1(d)(ii) if
Parent or Purchaser is in material breach of its obligations under this
Agreement; or
(iii) any Person or "group" (as defined in Section 13(d)(3) of
the Exchange Act), other than Parent, Purchaser, or their affiliates or
any group of which any of them is a member, shall have acquired
beneficial ownership (as determined pursuant to Rule 13d-3 promulgated
under the Exchange Act) of 25% or more of the Shares; provided that for
purposes of this Section 8.1(d)(iii), none of Cilluffo Associates,
L.P., Gerald McNichols or their respective affiliates or any group of
which any of them is a member shall be deemed to have acquired 25% or
more of the Shares solely by virtue of the execution, delivery or
performance of the Stockholders Agreements; or
(iv) if the Company shall have breached any of its
representations or warranties which breach would give rise to the
failure of the condition set forth in clause (d) of Annex I hereto to
be satisfied or if, prior to consummation of the Offer, the Company
shall have failed to perform its covenants or other agreements
contained in this
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<PAGE> 57
Agreement which failure to perform would give rise to the failure of
the condition set forth in clause (e) of Annex I hereto to be
satisfied, which breach or failure to perform is incapable of being
cured or has not been cured by the date that is 15 business days
following written notice thereof to the Company from Parent.
SECTION 8.2. Effect of Termination.
(a) In the event of termination of this Agreement by either
the Company or Parent or Purchaser as provided in Section 8.1, (A) this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Purchaser or the Company, other than as
provided in Section 9.1 and except that nothing herein shall relieve any party
for breach of any of its representations, warranties, covenants or agreements
set forth in this Agreement and (B) unless this Agreement has been terminated
pursuant to Section 8.1(c)(ii) or Section 8.1(d)(ii), Purchaser shall terminate
the Offer without the purchase of Shares thereunder.
(b) If (A) Parent or Purchaser terminates this Agreement under
Section 8.1(d)(i), or the Company terminates this Agreement pursuant to Section
8.1(c)(i) or (B) the Company terminates this Agreement pursuant to Section
8.1(c)(ii) or Parent or Purchaser terminates this Agreement pursuant to Section
8.1(d)(ii) or 8.1(d)(iii) and in the case of a termination under Section
8.1(c)(ii), 8.1(d)(ii) or 8.1(d)(iii) (x) at any time after the date of this
Agreement and prior to such termination an Acquisition Proposal shall have been
publicly announced or otherwise publicly communicated to the stockholders of the
Company generally and (y) prior to the first anniversary of such termination,
the Company shall enter into a definitive agreement with respect to an
Acquisition Proposal or an Acquisition Proposal is consummated, then the Company
shall pay to Parent, or cause to be paid, (1) in the case of a termination of
this Agreement by Parent or Purchaser pursuant to Section 8.1(d)(i), not later
than one business day following such termination, (2) in the case of a
termination of this Agreement by the Company pursuant to Section 8.1(c)(i),
prior to such termination, or (3) in the case of a termination of this Agreement
by the Company pursuant to Section 8.1(c)(ii) or by Parent or Purchaser pursuant
to Section 8.1(d)(ii) or 8.1(d)(iii), not later than one business day following
the entering into of a definitive agreement with respect to, or the consummation
of, an Acquisition Proposal prior to the first anniversary of such termination,
as applicable, a termination fee, in cash, by wire transfer of immediately
available funds to an account designated by Parent, in an amount equal to the
sum of (x) $6 million plus (y) out-of-pocket expenses incurred by Parent or
Purchaser exclusively in connection with the transactions contemplated by this
Agreement not to exceed $500,000 in the aggregate (such sum is referred to
herein as the "Termination Fee").
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Article IX.
GENERAL PROVISIONS
SECTION 9.1. Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.1, as the case may be, except that the agreements set
forth in Article II, Section 6.8, Section 6.10 and Article IX shall survive the
Effective Time indefinitely and those set forth in Section 8.2 and Article IX
shall survive termination indefinitely.
SECTION 9.2. Notices. All notices and other communications
given or made pursuant hereto shall be in writing (and shall be deemed to have
been duly given or made when received) by delivery in person, by facsimile,
cable, telecopy, telegram or telex or by registered or certified mail (postage
prepaid, return receipt requested)), in each case to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Parent or Purchaser:
AT&T Government Markets
2020 K Street N.W.
Eighth Floor
Washington, DC 20006-1817
Attention: Mary Jane McKeever, President
Facsimile: (202) 776-6004
With a copy to:
Vice President
AT&T Corp.
295 North Maple Avenue Room 1212P2
Basking Ridge, NJ 07920-1002
Attention: Marilyn J. Wasser
Facsimile: (908) 221-6618
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attention: Steven A. Rosenblum, Esq.
Facsimile: (212) 403-2000
(b) if to the Company:
GRC International, Inc.
900 Gallows Road
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<PAGE> 59
Vienna, VA 22182
Attention: Gary L. Denman, Chief
Executive Officer
Facsimile: (703) 449-6890
With a copy to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019
Attention: Michael A. Schwartz, Esq.
Facsimile: (212) 728-8111
SECTION 9.3. Expenses. Except as expressly set forth in
Section 8.2(b), all fees, costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such fees, costs and expenses.
SECTION 9.4. Certain Definitions. For purposes of this
Agreement, the term:
(a) "affiliate" of a Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned Person;
(b) "Cause" means (i) conviction (including a plea of guilty
or nolo contendere) of a crime involving theft, fraud, dishonesty or moral
turpitude; (ii) intentional or grossly negligent disclosure of confidential or
trade secret information of the Company or Surviving Corporation, as applicable,
or any of their affiliates, to anyone who is not entitled to receive such
information; (iii)gross omission or gross dereliction of any statutory or common
law duty of loyalty to the Company or Surviving Corporation, as applicable, or
any of their affiliates; (iv) willful and knowing violation of the Company's or
Surviving Corporation's, as applicable, Code of Conduct or other written
policies or procedures; or (v) repeated failure to carry out the duties of the
employee's position despite specific instruction to do so.
(c) "control" (including the terms "controlled by" and "under
common control with") means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of stock, as trustee or executor, by contract or
credit arrangement or otherwise;
(d) "Key Management Personnel" means those employees of the
Company or any Subsidiary who are identified on Schedule 9.4(d).
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<PAGE> 60
(e) "knowledge" of the Company means the actual knowledge,
after reasonable inquiry, of the Company's executive officers, including
reasonable inquiry of the Company's counsel; and
(f) "Person" means an individual, corporation, partnership,
association, trust, any unincorporated organization or group (within the meaning
of Section 13(d)(3) of the Exchange Act).
SECTION 9.5. Headings. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 9.6. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the maximum
extent possible.
SECTION 9.7. Schedules. The Schedules to this Agreement shall
be construed with and as an integral part of this Agreement and any matter
disclosed on any particular Schedule shall be deemed to be disclosed on any
other Schedule (or in another part of the same Schedule) if the facts and
circumstances relating to such matter, as disclosed on the particular Schedule,
would fairly apprise the party to which the representation and warranty is being
made of facts and circumstances that such party should fairly anticipate would
be applicable to such other Schedule (or part of such other Schedule).
SECTION 9.8. Entire Agreement; No Third-Party Beneficiaries.
This Agreement and the Non-Disclosure Agreement dated December 21, 1999 between
the Company and Parent (the "Confidentiality Agreement"), constitute the entire
agreement and supersede any and all other prior agreements, undertakings,
statements, information and materials, both written and oral, among the parties,
or any of them, with respect to the subject matter hereof and, except as
otherwise expressly provided in Section 6.8 hereof, this Agreement is not
intended to confer upon any other Person any rights or remedies hereunder.
SECTION 9.9. Assignment. This Agreement shall not be assigned
by operation of law or otherwise, except that Parent and Purchaser may assign
all or any of their rights hereunder to any
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<PAGE> 61
affiliate of Parent, provided that no such assignment shall relieve the
assigning party of its obligations hereunder.
SECTION 9.10. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware
applicable to contracts executed in and to be performed entirely within that
State.
SECTION 9.11. Amendment. This Agreement may be amended by the
parties hereto by action taken by Parent and Purchaser, and by action taken by
the Board of Directors at any time prior to the Effective Time; provided,
however, that, after approval of the Merger by the stockholders of the Company,
no amendment may be made which would not otherwise be permitted pursuant to
Section 251(d) of the DGCL. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 9.12. Waiver. Subject to Section 1.3, at any time
prior to the Effective Time, any party hereto may (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties of the other
parties hereto contained herein or in any document delivered pursuant hereto and
(c) waive compliance by the other parties hereto with any of their agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only as against such party and only if
set forth in an instrument in writing signed by such party. The failure of any
party hereto to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights.
SECTION 9.13. Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which shall constitute one and the same agreement.
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<PAGE> 62
IN WITNESS WHEREOF, Parent, Purchaser and the Company have
caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
GRC INTERNATIONAL, INC.
By:/s/ Gary L. Denman
Name: Gary L. Denman
Title: President and CEO
AT&T CORP.
By:/s/ Mary Jane McKeever
Name: Mary Jane McKeever
Title: Vice President
LMN CORPORATION
By:/s/ Mary Jane McKeever
Name: Mary Jane McKeever
Title: President
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<PAGE> 63
ANNEX I
Conditions to the Offer. Notwithstanding any other provision of the Offer,
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) promulgated
under the Exchange Act (relating to Purchaser's obligation to pay for or return
tendered Shares promptly after termination or withdrawal of the Offer), pay for,
and (subject to any such rules or regulations) may delay the acceptance for
payment of any tendered Shares and (except as provided in this Agreement) amend
or terminate the Offer as to any Shares not then paid for if (i) there shall not
have been validly tendered and not withdrawn prior to the expiration of the
Offer such number of shares of Company Common Stock which represents at least a
majority of the number of shares of Company Common Stock (assuming the exercise
of all Options and Warrants and the conversion or exchange of all securities
convertible or exchangeable into shares of Company Common Stock) (the "Minimum
Condition") or (ii) any applicable waiting period under the HSR Act shall not
have expired or been terminated prior to the expiration of the Offer or (iii) at
any time after the date of this Agreement and prior to the time of payment for
any such Shares (whether or not any Shares have theretofore been accepted for
payment or paid for pursuant to the Offer), any of the following events shall
occur and be continuing or conditions exists:
(a) (x) there shall have been any action taken by a Governmental
Entity, or any statute, rule, regulation, legislation, interpretation,
judgment, order or injunction, proposed, sought, promulgated, enacted,
entered, enforced, issued, amended or deemed applicable by a Governmental
Entity to Parent, Purchaser, the Company, any other affiliate of Parent or
the Company, the Offer or the Merger, that would or is reasonably likely,
directly or indirectly, to (i) make the acceptance for payment of, or
payment for or purchase of all or a substantial number of the Shares
pursuant to the Offer illegal, or otherwise restrict or prohibit the making
of the Offer or the consummation of the Offer or the Merger, (ii) result in
a significant delay in or restrict the ability of Purchaser to accept for
payment, pay for or purchase all or a substantial number of the Shares
pursuant to the Offer or to effect the Merger, (iii) render Purchaser
unable to accept for payment or pay for or purchase all or a substantial
number of the Shares pursuant to the Offer, (iv) impose material
limitations on the ability of Parent, Purchaser or any of their respective
Subsidiaries or affiliates to acquire or hold, transfer or dispose of, or
effectively to exercise all rights of ownership of, all or a substantial
number of the Shares including without limitation the right to vote the
Shares purchased by it pursuant to the Offer on an equal basis with all
other Shares on all matters properly presented to the stockholders of the
Company, (v) require the divestiture by
<PAGE> 64
Parent, Purchaser or any of their respective Subsidiaries or affiliates of
any Shares, or require Purchaser, Parent, the Company, or any of their
respective Subsidiaries or affiliates to dispose of or hold separate all or
any material portion of their respective businesses, assets or properties
or impose any material limitations on the ability of any of such entities
to conduct their respective businesses or own such assets, properties or
Shares or on the ability of Parent or Purchaser to conduct the business of
the Company and its Subsidiaries and own the assets and properties of the
Company and its Subsidiaries, (vi) impose any material limitations on the
ability of Parent, Purchaser or any of their respective Subsidiaries or
affiliates effectively to control the business or operations of the
Company, Parent, Purchaser or any of their respective Subsidiaries or
affiliates, or (vii) otherwise materially adversely affect Parent,
Purchaser, the Company or any of their respective Subsidiaries or
affiliates, or their business, assets, liabilities, condition (financial or
otherwise) or results of operations, or the value of the Shares; or
(y) there shall have been instituted or pending any action, proceeding
or counterclaim by any Governmental Entity, challenging the making of the
Offer or the acquisition by Purchaser of the Shares pursuant to the Offer
or the consummation of the Merger, or seeking to, directly or indirectly,
result in any of the consequences referred to in clauses (i) through (vii)
in subclause (x) above; or
(z) or there shall have been threatened any action, proceeding or
counterclaim by any Governmental Entity, challenging the making of the
Offer or the acquisition by Purchaser of the Shares pursuant to the Offer
or the consummation of the Merger, or seeking to, directly or indirectly,
result in any of the consequences referred to in clauses (i) through (vii)
in subclause (x) above that, in the good faith judgment of Parent, has a
reasonable probability of success.
(b) this Agreement shall have been terminated in accordance with its terms
or any event shall have occurred which gives Parent or Purchaser the right to
terminate this Agreement or not consummate the Merger; or
(c) since the date of this Agreement there shall have occurred any event,
change, effect or development that, individually or when considered together
with any other event, change, effect or development, has had or would have a
Material Adverse Effect; or
(d) (i) the representations and warranties of the Company set forth in
Sections 4.2, 4.3, 4.4(a)(ii), 4.20 or 4.21 shall not be true and correct in all
material respects both when
I-2
<PAGE> 65
made and as of the date of determination, as if made at and as of such time
(except to the extent expressly made as of an earlier date, in which case any of
such representations or warranties shall not be true and correct in all material
respects as of such earlier date) or (ii) any of the other representations and
warranties of the Company set forth in this Agreement (without giving effect to
any explicit limitation as to "materiality" or "Material Adverse Effect" set
forth therein) shall not be true and correct both when made and as of the date
of determination, as if made at and as of such time (except to the extent
expressly made as of an earlier date, in which case as of such earlier date),
except where the failure of any such representation or warranty to be so true
and correct does not have, and would not have, individually or when taken
together with all such failures to be so true and correct, a Material Adverse
Effect; or
(e) the Company shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or covenant
of the Company to be performed or complied with by it under this Agreement; or
(f) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on any national securities exchange or in
the over-the-counter market in the United States, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) any limitation (whether or not mandatory) by any
Governmental Entity on, or other event that materially and adversely affects,
the extension of credit by banks or other lending institutions or (iv) in the
case of any of the foregoing existing at the time of the execution of this
Agreement, a material acceleration or worsening thereof; or
(g) the Board of Directors or any committee thereof (i) shall have
withdrawn, or modified or changed in a manner adverse to Parent or Purchaser
(including by amendment of the Schedule 14D-9) its approval or recommendation of
this Agreement or the transactions contemplated hereby, including the Offer or
the Merger, (ii) recommended or approved an Acquisition Proposal, (iii) shall
have adopted any resolution to effect any of the foregoing, or (iv) upon request
of Purchaser, shall fail to reaffirm publicly and unconditionally its approval
or recommendation of the Offer, this Agreement or the Merger within ten days
after Parent's written request to do so under the circumstances described in
Section 8.1(d)(i) of this Agreement; or
(h) any Person or "group" (as defined in Section 13(d)(3) of the Exchange
Act), other than Parent, Purchaser, or their affiliates or any group of which
any of them is a member, shall have acquired beneficial ownership (as determined
pursuant to Rule 13d-3 promulgated under the Exchange Act) of 25% or more of the
Shares; provided that for purposes of this condition, none of Cilluffo
Associates, L.P., Gerald McNichols, or their
I-3
<PAGE> 66
respective affiliates or any group of which any of them is a member, shall be
deemed to have acquired 25% or more of the Shares solely by virtue of the
execution, delivery or performance of the Stockholders Agreements;
which, in the judgment of Parent or Purchaser with respect to each and every
matter referred to above and regardless of the circumstances giving rise to any
such condition, makes it inadvisable to proceed with the Offer or with such
acceptance for payment of or payment for Shares or to proceed with the Merger.
The foregoing conditions are for the sole benefit of Purchaser and may be
asserted by Purchaser regardless of the circumstances (including any action or
inaction by Parent or Purchaser) giving rise to any such conditions and may be
waived by Purchaser in whole or in part at any time and from time to time, in
their sole discretion subject to the terms of this Agreement. The failure by
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right, the waiver of any such right with respect to
particular facts and circumstances shall not be deemed a waiver with respect to
any other facts and circumstances and each such right shall be deemed an ongoing
right which may be asserted at any time and from time to time. Terms used but
not defined herein shall have the meanings assigned to such terms in the
Agreement to which this Annex I is a part.
I-4
<PAGE> 67
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
Section
Term Containing Definition
<S> <C>
Acquisition Proposal 5.2(a)
Affiliate 9.4(a)
Agents 5.2(a)
Agreement 1st Paragraph
Bid 4.14(b)
Board of Directors 5th Paragraph
Cause 9.4(b)
Certificates 2.8(b)
Closing 2.2(a)
Closing Date 2.2(a)
Code 4.8(d). 2.8(f)
Company 1st Paragraph
Company 1999 10-K 4.5(c)
Company By-laws 4.1(c)
Company Certificate of Incorporation 4.1(c)
Company Common Stock 3rd Paragraph
Company Employee Benefit Plans 4.8(a)
Company ERISA Affiliate 4.8(a)
Company Financial Advisor 4.3(c)
Company Intellectual Property 4.11(a)
Company Leases 4.10
Company Material Contracts 4.16(a)
Company Multiemployer Plan 4.8(b)
Company Permits 4.15
Company Preferred Stock 4.2(a)
Company Securities 4.2(a)
Company Stockholders' Meeting 4.18
Company Voting Debt 4.2(a)
Confidentiality Agreement 9.8
Control 9.4(b)
Deferred Stock Units 2.9(d)
DGCL 2.1
Director Retirement Plan 2.9(d)
Dissenting Shares 2.7(a)
Effective Time 2.2(b)
Environmental Law 4.13(a)
Environmental Permits 4.13(b)
ERISA 4.8(a)
ESPP 2.9(a)
Exchange Act 1.1(a)
Exchange Agent 2.8(a)
Extended Expiration Date 1.1(d)
Government Contract 4.14(b)
Governmental Entity 3.3(b)
Hazardous Substances 4.13(a)
HSR Act 3.3(b)
Indemnified Parties 6.8(a)
Independent Directors 1.3
Initial Expiration Date 1.1(d)
</TABLE>
<PAGE> 68
<TABLE>
<CAPTION>
<S> <C>
Intellectual Property 4.11(a)
Key Management Personnel 9.4(e)
Knowledge 9.4(d)
Laws 4.15
Material Adverse Effect 4.1
Merger 4th Paragraph
Minimum Condition Annex I
NOLs 4.17(j)
Offer 3rd Paragraph
Offer Documents 1.1(c)
Offer to Purchase 1.1(c)
Option Plans 2.9(c)
Options 2.9(b)
Parent 1st Paragraph
Parent Information 3.6
Per Share Amount 3rd Paragraph
Person 9.4(c)
Proxy Statement 4.18
Purchaser 1st Paragraph
Rights 4.21
Rights Agreement 4.21
Schedule 14D-9 1.2(b)
Schedule TO 1.1(c)
SEC 1.1(c)
SEC Reports 4.5(a)
Securities Act 4.5(a)
Settlement Agreement 1.3
Share Purchase Date 1.1(b)
Shares 3rd Paragraph
Stock Plans 2.9(a)
Stockholders 6th Paragraph
Stockholders Agreements 6th Paragraph
Subsidiary 4.1(d)
Superior Proposal 5.2(a)
Surviving Corporation 2.1
Tax Return 4.17(k)
Taxes 4.17(k)
Termination Fee 8.2(b)
Warrants 4.2(a)
</TABLE>
<PAGE> 1
Exhibit (d)(2)
GRC International, Inc.
1900 Gallows Road
Vienna, Virginia 22182
December 21, 1999
AT&T Corp.
295 North Maple Avenue
Basking Ridge, New Jersey 07920
Gentlemen:
In connection with your evaluation of a possible transaction (the
"Transaction") between GRC International, Inc. and its subsidiaries
(collectively, "GRC"), and AT&T Corp. and its subsidiaries and affiliates
(collectively, "AT&T"), with respect to certain GRC companies or assets in or
relating to the provision of a broad range of professional services to the U.S.
Government and information technology services to commercial clients (the
"Business"), GRC has delivered or intends to deliver to AT&T and its
Representatives (as defined below) certain oral and written Evaluation Material
(as defined below) concerning the properties, business, financial condition,
prospects, activities and plans of the Business.
As used herein, (1) "Evaluation Material" means all proprietary and
confidential data, reports, business plans, analyses, compilations, studies,
interpretations, forecasts, records, agreements and other materials (in whatever
form maintained, whether documentary, computer storage or otherwise) that
contain or otherwise reflect information concerning the Business that GRC or its
Representatives may provide to AT&T ("Provided Material"), together with all
data, reports, analyses, compilations, studies, interpretations, forecasts,
records or other materials (in whatever form maintained, whether documentary,
computer storage or otherwise), whether prepared by AT&T or its Representatives
or others, that contain or otherwise reflect or are based upon, in whole or in
part, any Provided Material ("Derived Material"); (2) "person" shall be broadly
interpreted to include, without limitation, any corporation, partnership,
limited liability company, trust, other entity or individual; and (3)
"Representatives" means, with respect to either GRC or AT&T, the affiliates of
such party, and the directors, officers, employees, accountants, attorneys,
financial advisors and agents of such party and such party's affiliates.
In consideration of GRC and its Representatives providing AT&T and its
Representatives with the Provided Material, AT&T agrees to treat all Evaluation
Material in accordance with the provisions of this letter agreement, and to take
or abstain from taking certain other actions hereinafter set forth.
<PAGE> 2
1. Evaluation Material. The term "Evaluation Material" does not include
information which (a) is or becomes generally available to the public other than
as a result of a breach of this letter agreement by AT&T or its Representatives,
(b) was within AT&T's possession prior to its being furnished to AT&T by or on
behalf of GRC; provided that the source of such information was not known by
AT&T to be bound by a confidentiality agreement with, or other contractual,
legal or fiduciary obligation of confidentiality to, GRC in relation to that
information, (c) is or becomes available to AT&T from a source other than GRC or
any of its Representatives; provided that such source was not known by AT&T to
be bound by a confidentiality agreement with, or other contractual, legal or
fiduciary obligation of confidentiality to, GRC with respect to such
information, or (d) is independently developed by an employee or employees of
AT&T or its Representatives without the benefit of access to any information
that would otherwise be Evaluation Material.
2. Use of Evaluation Material. AT&T and its Representatives will use
the Evaluation Material solely for the purpose of evaluating a possible
Transaction, will keep the Evaluation Material confidential, and will not
disclose or use the Evaluation Material for purposes other than the evaluation
of a possible Transaction; provided that any of such information may be
disclosed to AT&T's Representatives who need to know such information for the
sole purpose of evaluating a possible Transaction (it being understood that such
Representatives shall be informed by AT&T of the confidential nature of such
information and that by receiving such information they are agreeing to be bound
by the confidentiality obligations in this letter agreement). AT&T agrees to be
responsible for any breach of this letter agreement by any of its
Representatives.
3. Non-Disclosure of Discussions. In addition, each of GRC and AT&T
agrees that, without the prior written consent of the other party, it and its
Representatives will not make any public announcement or public statement
concerning the fact that any Evaluation Material has been made available
hereunder, that discussions or negotiations are taking place concerning a
possible Transaction involving the parties or any of the terms, conditions or
other facts with respect thereto (including the status thereof); provided that a
party may make such public announcement or public statement if in the opinion of
such party's outside counsel or General Counsel, such public announcement or
public statement is necessary to avoid committing a violation of law or of any
rule or regulation of any securities association, stock exchanges or national
securities quotations system on which such party's securities are listed or
trade. In such event, the disclosing party shall use its best efforts to give
advance notice to the other party and to consult with the other party on the
timing and content of any such public announcement or public statement.
4. Required Disclosure. In the event that AT&T or its Representatives
are requested or required (by oral questions, interrogatories, requests for
information or documents in legal proceedings, subpoena, civil investigative
demand or other similar process) to disclose any of the Evaluation Material, or
either party is so requested required to disclose any of the facts disclosure of
which is prohibited under paragraph (3) of this letter agreement, the party
requested or required to make the disclosure shall provide the other party with
prompt notice of any such request or requirement so that the other party may
seek a protective order or other appropriate remedy and/or waive compliance with
the provisions of this letter agreement. If, in the absence of a protective
order or other remedy or the receipt of a waiver by GRC, AT&T or its
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<PAGE> 3
Representative must nonetheless, in the opinion of AT&T's or (in the case of
disclosure requested or required of a Representatives) such Representative's
outside counsel or General Counsel, disclose any Evaluation Material, AT&T or
such Representative may, without liability hereunder, disclose only that portion
of the Evaluation Material which such counsel advises is legally required to be
disclosed; provided that AT&T or such Representative exercises its reasonable
efforts to preserve the confidentiality of the Evaluation Material, including,
without limitation, by cooperation with GRC to obtain an appropriate protective
order or other reliable assurance that confidential treatment will be accorded
the Evaluation Material.
5. Termination of Discussions. If either party decides that it does not
wish to proceed with discussions or negotiations relating to a Transaction with
the other party, the party so deciding will promptly notify the other party of
that decision. In that case, or at any time upon the request of GRC, AT&T will
promptly deliver to GRC or, at AT&T's option, destroy, all written Evaluation
Material (and all copies thereof and extracts therefrom). The destruction of
Evaluation Material shall be certified in writing by an authorized officer of
AT&T. With respect to Evaluation Material in electronic form, AT&T shall only be
required to use all reasonable endeavors to return or destroy any such
Evaluation Material. Notwithstanding the termination of any discussions or the
return or destruction of the Evaluation Material, each party and its
Representatives will continue to be bound by their obligations of
confidentiality and other obligations hereunder for a period of two years from
the date hereof, and AT&T agrees, for a period of two years from the date
hereof, not to solicit for employment any employee of GRC.
6. Miscellaneous. Each party agrees that unless and until a definitive
agreement between the parties with respect to any Transaction has been executed
and delivered, neither GRC nor AT&T will be under any legal obligations of any
kinds whatsoever with respect to a Transaction by virtue of this or any written
or oral expression with respect to such a Transaction by either party or any of
its respective Representatives, except for the matters specifically agreed to in
this letter agreement. Each party further agrees that GRC shall have no
obligation to furnish Evaluation Material to AT&T or its Representative, and
that neither party shall have any obligation to authorize or pursue any
Transaction except as specifically provided herein. Each party acknowledges and
agrees that each reserves the right, in its sole and absolute discretion, to
reject any and all proposals and to terminate discussions and negotiations with
the other at any time subject to the provisions set forth herein. The agreements
set forth in this letter agreement may be modified or waived only by a separate
writing between the parties hereto.
7. Injunctive Relief. It is further understood and agreed that money
damages would not be a sufficient remedy for any breach of this letter agreement
by either party or any of its Representatives and that the non-breaching party
shall be entitled to equitable relief, including injunction and specific
performance, as a remedy for any such breach. Such remedies shall not be deemed
to be the exclusive remedies for a breach of this letter agreement but shall be
in addition to all other remedies available at law or equity.
8. No Waiver. Any forbearance or delay by either party in exercising
any right, power or privilege under the terms of this letter agreement shall not
be construed as a waiver thereof or of a right thereafter to enforce the same.
-3-
<PAGE> 4
9. Successors and Assigns. This letter agreement shall inure to the
benefit of the parties hereto and shall be binding upon their respective
successors and assigns.
10. Governing Law. This letter agreement shall be governed by New York
law, without reference to its conflict of laws principles.
Please confirm your agreement with the foregoing by signing and
returning one copy of this letter agreement to the undersigned, whereupon it
shall become a binding agreement.
Very truly yours,
GRC INTERNATIONAL INC.
By: /s/ Thomas E. McCabe
Name: Thomas E. McCabe
Title: SVP, Director of Corporate
Development, General Counsel
Accepted and Agreed as of the date first written above:
AT&T CORP.
By: /s/ Nathaniel Friends
Name: NATHANIEL FRIENDS
Title: GENERAL ATTORNEY
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<PAGE> 1
Exhibit (d)(3)
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated as of February 14, 2000 (this
"Agreement"), among AT&T Corp., a New York corporation ("Parent"), LMN
Corporation, a Delaware corporation and a wholly owned subsidiary of Parent
("Sub"), and Cilluffo Associates, L.P., a Delaware limited partnership
("Stockholder') and a stockholder of GRC International, Inc., a Delaware
corporation (the "Company").
WHEREAS, Parent, Sub and the Company are, concurrently with the
execution hereof, entering into an Agreement and Plan of Merger, dated as of
February 14, 2000 (the "Merger Agreement"), pursuant to which, upon the terms
and subject to the conditions set forth in the Merger Agreement, Sub will make
an offer (the "Offer") to acquire all of the issued and outstanding shares of
common stock, par value $0.10 per share, of the Company (the "Company Common
Stock"), at a purchase price of $15.00 per share, net to the seller in cash, the
consummation of which will be followed by the merger of Sub with and into the
Company, with the Company being the surviving corporation (the "Merger");
WHEREAS, Stockholder is the record and/or beneficial owner of 1,708,000
shares of Company Common Stock (collectively, the "Existing Shares") (all such
Existing Shares, together with all other shares of capital stock or other voting
securities of the Company or any of its Subsidiaries with respect to which
Stockholder has beneficial ownership (for purposes of this Agreement,
"beneficial ownership" shall have the meaning set forth in Rule 13d-3 under the
Exchange Act) as of the date of this Agreement, and any shares of capital stock
or other voting securities of the Company or any of its Subsidiaries, beneficial
ownership of which is directly or indirectly acquired after the date hereof,
including, without limitation, shares received pursuant to any stock splits,
stock dividends or distributions, shares acquired by purchase or upon the
exercise, conversion or exchange of any option, warrant or convertible security
or otherwise, and shares or any voting securities of the Company or any of its
Subsidiaries received pursuant to any change in the capital stock of the Company
or such Subsidiary by reason of any recapitalization, merger, reorganization,
consolidation, combination, exchange of shares or the like, are referred to
herein as the "Shares");
WHEREAS, each of the parties hereto desires to enter into this
Agreement to provide for, among other things, (1) the obligation of Stockholder
to tender, or cause the record holder of the Shares to tender, the Shares
beneficially owned by Stockholder (other than Shares subject to unexercised
options) (the "Tender Shares") in the Offer, (2) the obligation of Stockholder
to vote, or cause the record holder of the Shares to vote, the Shares
beneficially owned by Stockholder (other than Shares subject to unexercised
options) (the "Voting Shares") in the manner specified herein and (3) certain
restrictions on the sale or the transfer of the record and beneficial ownership
of Shares by Stockholder (this Agreement and all other agreements, instruments
and other documents executed and delivered by Stockholder in connection with
this Agreement are collectively referred to as the "Support Documents"); and
WHEREAS, Stockholder acknowledges that Parent and Sub are entering into
the Merger Agreement in reliance on the representations, warranties, covenants
and other agreements of Stockholder set forth in this Agreement and would not
enter into the Merger Agreement if Stockholder did not enter into this
Agreement.
<PAGE> 2
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, and intending to be legally bound hereby, Parent, Sub and
Stockholder agree as follows:
1. Defined Terms. Terms used herein without definition shall have the
meanings assigned to such terms in the Merger Agreement.
2. Agreement to Tender. Stockholder hereby agrees to validly tender, or
cause the record owner to validly tender, all of the Tender Shares pursuant to
and in accordance with the terms of the Offer within 18 business days of the
commencement thereof, and not to withdraw or permit to be withdrawn any Shares
therefrom.
3. Agreement to Vote. Stockholder hereby agrees that, from and after
the date hereof and until the Termination Date (as defined in Section 19), at
any meeting of the stockholders of the Company, however called, or in connection
with any written consent of the stockholders of the Company, Stockholder shall
appear at each such meeting, in person or by proxy, or otherwise cause the
Voting Shares to be counted as present thereat for purposes of establishing a
quorum, and Stockholder shall vote (or cause to be voted) or act by written
consent with respect to all of the Voting Shares that are beneficially owned by
Stockholder or as to which Stockholder has, directly or indirectly, the right to
vote or direct the voting, (a) in favor of adoption and approval of the Merger
Agreement and the Merger and the approval of the terms thereof and each of the
other actions contemplated by the Merger Agreement and this Agreement, and any
other action reasonably requested by Parent in furtherance thereof; (b) against
any action or agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the Company
contained in the Merger Agreement or of Stockholder contained in this Agreement;
and (c) against any Acquisition Proposal made by any person other than Parent or
any of its affiliates. Stockholder hereby agrees that it will not enter into any
voting or other agreement or understanding with any person or entity or grant a
proxy or power of attorney with respect to the Shares prior to the Termination
Date (other than a proxy or power of attorney to an officer of the Company that
may be exercised solely in accordance with this Section 3 and except as provided
in Section 4 below) or vote or give instructions in any manner inconsistent with
clause (a), (b) or (c) of the preceding sentence. Stockholder hereby agrees,
during the period commencing on the date hereof and ending on the Termination
Date, not to, and, if applicable, not to permit any of Stockholder's affiliates
to, vote or execute any written consent in lieu of a stockholders meeting or
vote, if such consent or vote by the stockholders of the Company would be
inconsistent with or frustrate the purposes of the other covenants of
Stockholder pursuant to this paragraph. As used in this Agreement, "person"
shall have the meaning specified in Sections 3(a)(9) and 13(d)(3) of the
Exchange Act.
4. PROXY. SUBJECT TO SECTION 19 HEREOF, STOCKHOLDER HEREBY GRANTS TO,
AND APPOINTS, MARY JANE MCKEEVER, MARILYN WASSER AND GARY SWENSON, IN THEIR
RESPECTIVE CAPACITIES AS OFFICERS OF PARENT, AND ANY INDIVIDUAL WHO SHALL
HEREAFTER SUCCEED ANY SUCH OFFICER OF PARENT, AND ANY OTHER PERSON DESIGNATED IN
WRITING BY PARENT, EACH OF THEM INDIVIDUALLY, STOCKHOLDER'S PROXY AND
ATTORNEY-IN-FACT (WITH FULL POWER OF SUBSTITUTION) TO VOTE OR ACT BY WRITTEN
CONSENT, TO THE FULLEST EXTENT PERMITTED BY AND SUBJECT TO
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<PAGE> 3
APPLICABLE LAW, WITH RESPECT TO THE SHARES IN ACCORDANCE WITH SECTION 3 HEREOF
IN RESPECT OF ANY MATTER SPECIFIED IN CLAUSE (a), (b) or (c) OF SUCH SECTION 3.
THIS PROXY IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE. STOCKHOLDER
WILL TAKE SUCH FURTHER ACTION OR EXECUTE SUCH OTHER INSTRUMENTS AS MAY BE
NECESSARY TO EFFECTUATE THE INTENT OF THIS PROXY AND HEREBY REVOKES ANY PROXY
PREVIOUSLY GRANTED BY STOCKHOLDER WITH RESPECT TO THE SHARES. NOTWITHSTANDING
THE FOREGOING, NEITHER PARENT NOR ANY OF THE AFORENAMED PROXIES SHALL EXERCISE
THE POWERS SET FORTH IN THIS SECTION 4 UNLESS AND UNTIL PARENT SHALL HAVE
RECEIVED ALL APPLICABLE REGULATORY APPROVALS REQUIRED UNDER APPLICABLE LAW FOR
SUCH EXERCISE.
5. Representations and Warranties of Parent and Sub. Parent and Sub
represent and warrant to Stockholder as follows:
(a) Each of Parent and Sub is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation.
(b) Each of Parent and Sub has the requisite corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement by Parent and Sub and
the consummation by Parent and Sub of the transactions contemplated hereby have
been duly authorized by the respective Boards of Directors of Parent and Sub and
no other corporate proceedings on the part of Parent or Sub are necessary to
authorize the execution and delivery of this Agreement by Parent and Sub and the
consummation by them of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by Parent and Sub and (assuming the valid
authorization, execution and delivery of this Agreement by Stockholder) is a
valid and binding obligation of each of Parent and Sub, enforceable against each
of Parent and Sub in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws affecting creditors' rights generally and
general equitable principles (whether considered in a proceeding in equity or at
law).
(c) The execution and delivery of this Agreement by Parent and Sub do
not, and the performance of this Agreement by Parent and Sub will not, (i)
conflict with or violate the certificate of incorporation or by-laws of Parent
or Sub, (ii) conflict with or violate any law, rule, regulation or order
applicable to Parent or Sub or by which any of their respective properties is
bound, or (iii) conflict with, result in any breach of or constitute a default
(or an event that with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or require payment under, or result in the creation of any lien
on the properties or assets of Parent or Sub pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Parent or Sub is a party or by which
Parent or Sub or any of their respective properties is bound, except for any
thereof that would materially impair the ability of Parent or Sub to perform its
obligations hereunder or to consummate the transactions contemplated hereby on a
timely basis.
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<PAGE> 4
(d) The execution and delivery of this Agreement by Parent and Sub do
not, and the performance by Parent and Sub of their obligations hereunder will
not, require Parent or Sub to obtain any consent, approval, authorization or
permit of, or to make any filing with or notification to, any Governmental
Entity, other than as set forth in Section 3.3 of the Merger Agreement.
(e) There is no suit, action, investigation or proceeding pending or,
to the knowledge of Parent or Sub, threatened against Parent or Sub at law or in
equity before or by any Governmental Entity that could reasonably be expected to
materially impair the ability of Parent or Sub to perform their obligations
hereunder on a timely basis, and there is no agreement, commitment or law to
which Parent or Sub is subject that could reasonably be expected to materially
impair the ability of Parent or Sub to perform their obligations hereunder on a
timely basis.
6. Representations and Warranties of Stockholder. Stockholder
represents and warrants to Parent and Sub as follows:
(a) Stockholder has been duly organized and is validly existing and in
good standing under the laws of the State of Delaware.
(b) Stockholder has all necessary corporate power and authority to
enter into this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby, and the execution, delivery and
performance of this Agreement by Stockholder and the consummation by Stockholder
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Stockholder.
(c) This Agreement has been duly executed and delivered by Stockholder
and (assuming the valid authorization, execution and delivery of this Agreement
by Parent and Sub) is a valid and binding obligation of Stockholder, enforceable
against Stockholder in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws affecting creditors' rights generally and
general equitable principles (whether considered in a proceeding in equity or at
law).
(d) The execution and delivery of this Agreement by Stockholder do not,
and the performance of this Agreement by Stockholder will not, (i) conflict with
or violate the limited partnership agreement or other organizational documents
of Stockholder, (ii) conflict with or violate any law, rule, regulation or order
applicable to Stockholder or by which any of Stockholder's properties is bound,
or (iii) conflict with, result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, or require payment under, or result in the creation of any lien
on the properties or assets of Stockholder pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Stockholder is a party or by which
Stockholder or any of its properties is bound, except for any thereof that would
not result in the imposition of a lien on the Shares or materially impair the
ability of Stockholder to perform its obligations hereunder or to consummate the
transactions contemplated hereby on a timely basis.
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<PAGE> 5
(e) The execution and delivery of this Agreement by Stockholder do not,
and the performance by Stockholder of Stockholder's obligations hereunder will
not, require Stockholder to obtain any consent, approval, authorization or
permit of, or to make any filing with or notification to, any Governmental
Entity, except for an amendment to the Statement on Schedule 13D filed by, among
others, Stockholder with respect to the Company.
(f) There is no suit, action, investigation or proceeding pending or,
to the knowledge of Stockholder, threatened against Stockholder at law or in
equity before or by any Governmental Entity that could reasonably be expected to
materially impair the ability of Stockholder to perform its obligations
hereunder on a timely basis, and there is no agreement, commitment or law to
which Stockholder is subject that could reasonably be expected to materially
impair the ability of Stockholder to perform its obligations hereunder on a
timely basis.
(g) Except as set forth on Schedule I hereto or as otherwise provided
herein, (i) the Existing Shares are owned beneficially and of record by
Stockholder; (ii) Stockholder has not appointed or granted any proxy which is
still effective with respect to any Shares other than as provided in this
Agreement; and (iii) Stockholder has sole voting power and sole power of
disposition with respect to all of the Existing Shares, with no restrictions on
Stockholder's rights of disposition pertaining thereto. The Existing Shares
constitute all of the shares of Company Common Stock owned of record or
beneficially by Stockholder. All of the Existing Shares are issued and
outstanding and, except for the Rights associated with such Existing Shares,
Stockholder does not own, of record or beneficially, any warrants, options,
convertible securities or other rights to acquire any shares of Company Common
Stock.
7. Agreements of Stockholder. (a) Stockholder hereby agrees, while this
Agreement is in effect, and except as expressly contemplated hereby, not to (i)
sell, transfer, pledge, encumber, grant, assign or otherwise dispose of, enforce
any redemption agreement with the Company or enter into any contract, option or
other arrangement or understanding with respect to or consent to the offer for
sale, sale, transfer, pledge, encumbrance, grant, assignment or other
disposition of, record or beneficial ownership of any of the Shares (whether
acquired heretofore or hereafter) or any interest in any of the foregoing,
except to Parent or Sub, (ii) grant any proxies or powers of attorney, deposit
any Shares into a voting trust or enter into a voting agreement with respect to
any Shares, or any interest in any of the Shares, except to Parent or Sub or
(iii) take any action that would make any representation or warranty of
Stockholder contained herein untrue or incorrect or have the effect of
preventing or disabling Stockholder from performing its obligations under this
Agreement.
(b) Stockholder hereby agrees, while this Agreement is in effect,
except with respect to Parent and its affiliates, that Stockholder shall not,
and shall not permit any affiliates or, if applicable, any director, officer,
employee consultant, agent, advisor or representative of Stockholder or any of
Stockholder's affiliates (collectively, the "Representatives") to (i) initiate,
solicit or encourage, directly or indirectly, any inquiries or the making of any
proposal with respect to any matter described in Section 7(a) hereof or any
Acquisition Proposal or (ii) participate in any negotiations concerning, or
provide to any other person any information or data relating to the Company or
any of its Subsidiaries for the purpose of, or have any discussions with any
person relating to, or cooperate with or assist or participate in, or
facilitate, any inquiries or the making of any proposal which constitutes, or
would reasonably be expected
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<PAGE> 6
to lead to, any effort or attempt by any other person to seek to effect any
matter described in Section 7(a) hereof or any Acquisition Proposal, or agree to
or endorse any Acquisition Proposal, or otherwise facilitate any effort or
attempt to make or implement such an Acquisition Proposal. Stockholder agrees
immediately to cease and cause to be terminated any existing activities,
discussions or negotiations with any persons conducted heretofore by Stockholder
with respect to any possible Acquisition Proposal, or any matter described in
Section 7(a) hereof, and will take the necessary steps to inform Stockholder's
Representatives of the obligations undertaken by Stockholder with respect to
Stockholder's Representatives in this Section 7; provided, that nothing in this
Agreement shall restrict Frank J. A. Cilluffo in the exercise of his fiduciary
duties to stockholders of the Company, in his capacity as a director of the
Company, under applicable law or otherwise prohibit him from taking such
actions, in his capacity as a director of the Company, as may be permitted
(under the circumstances therein specified) pursuant to Section 5.2 of the
Merger Agreement.
(c) Stockholder hereby agrees, while this Agreement is in effect, to
notify Parent promptly of the number of any additional shares of Company Common
Stock and the number and type of any other Shares acquired by Stockholder, if
any, after the date hereof.
8. Further Assurances. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further action as may be necessary
or desirable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement. Without limiting
the generality of the foregoing, none of the parties hereto shall enter into an
agreement or arrangement (or alter, amend or terminate any existing agreement or
arrangement) if such action would materially impair the ability of such party to
effectuate, carry out or comply with all the terms of this Agreement.
9. Survival. None of the representations, warranties, covenants and
agreements of the parties herein shall survive beyond the Termination Date.
10. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed duly given if given in the manner set forth in
Section 9.2 of the Merger Agreement. All notices hereunder shall be given to a
party at his or its address stated on the signature pages of this Agreement or
at its address set forth in Section 9.2 of the Merger Agreement or at any other
address as the party may specify for this purpose by notice to the other parties
pursuant to this Section 10.
11. No Waivers. No failure or delay by Parent or Sub in exercising any
right, power or privilege under any Support Document shall operate as a waiver
of that right, power or privilege. A single or partial exercise of any right,
power or privilege shall not preclude any other or further exercise of that
right, power or privilege or the exercise of any other right, power or
privilege. The rights and remedies provided in the Support Documents shall be
cumulative and not exclusive of any rights or remedies provided by law.
12. Amendments, Etc. No amendment, modification, termination or waiver
of any provision of any Support Document, and no consent to any departure by
Stockholder or Parent or Sub from any provision of any Support Document, shall
be effective unless it shall be
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<PAGE> 7
in writing and signed and delivered by each party hereto, and then it shall be
effective only in the specific instance and for the specific purpose for which
it is given.
13. Successors and Assigns; Third Party Beneficiaries.
(a) No party shall assign any of such party's rights or remedies or
delegate any of such party's obligations or liabilities, in whole or in part,
under any Support Document, except that Parent or Sub may assign all or any of
its rights hereunder to any affiliate of Parent or Sub. Any assignment or
delegation in contravention of this Section 13 shall be void ab initio and shall
not relieve the assigning or delegating party of any obligation under any
Support Document.
(b) The provisions of each Support Document shall be binding upon and
inure solely to the benefit of the parties hereto and their respective permitted
heirs, executors, legal representatives, successors and assigns, and no other
person.
14. Governing Law; Submission to Jurisdiction. This Agreement and each
other Support Document and all rights, remedies, liabilities, powers and duties
of the parties hereto and thereto, shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts
executed in and to be performed entirely within that State. Parent, Sub and each
Stockholder hereby (w) submit to the non-exclusive jurisdiction of any State and
Federal courts sitting in Delaware with respect to matters arising out of or
relating hereto, (x) agree that all claims with respect to such matters may be
heard and determined in an action or proceeding in such Delaware State or
Federal court, and (y) agree that a final judgment in any such action or
proceeding will be conclusive and may be enforced in other jurisdictions by suit
on the judgment or in any other manner provided by law.
15. Severability of Provisions. If any term or other provision of any
Support Document is invalid, illegal or incapable of being enforced by any law
or public policy, all other terms and provisions of such Support Document shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify such Support Document so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
16. Headings and References. Article and Section headings in any
Support Document are included for convenience of reference only and do not
constitute a part of the Support Document for any other purpose. References to
Articles and Sections in any Support Document are references to the Articles and
Sections of the Support Document unless the context shall require otherwise. Any
of the terms defined in this Agreement may, unless the context otherwise
requires, be used in the singular or the plural, depending on the reference. The
use in this Agreement of the word "include" or "including," when following any
general statement, term or matter, shall not be construed to limit such
statement, term or matter to the specific items or matters set forth immediately
following such word or to similar items or matters, whether or not nonlimiting
language (such as "without limitation" or "but not limited to" or words of
similar import) is used with reference thereto, but rather shall be deemed to
refer
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<PAGE> 8
to all other items or matters that fall within the broadest possible scope of
such general statement, term or matter.
17. Entire Agreement. The Support Documents and the Merger Agreement
embody the entire agreement and understanding of each of the parties hereto, and
supersede all other written or oral prior agreements or understandings, with
respect to the subject matter of the Support Documents.
18. Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of any Support Document were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of the Support Documents and to enforce
specifically the terms and provisions of any Support Document in any Federal
court sitting in the State of Delaware or State of Delaware court, this being in
addition to any other remedy to which they are entitled at law or in equity.
19. Termination. This Agreement and the proxy set forth in Section 4
shall terminate upon the earliest of the following dates (such date is referred
to herein as the "Termination Date"): (i) the date on which the Merger Agreement
is terminated in accordance with Article VIII thereof; (ii) the date on which
Parent terminates this Agreement upon written notice to Stockholder (Parent may
so terminate this Agreement and the proxy set forth herein at any time); (iii)
the Effective Time; and (iv) June 30, 2000.
20. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if all
signatures were on the same instrument.
21. Limitation on Representations Warranties and Covenants. Reference
is made to those certain option agreements, each dated as of August 5, 1999,
attached as Exhibits C, D, and E to Amendment No. 14 to the Statement on
Schedule 13D filed by, among others, Stockholder with respect to the Company on
August 5, 1999 (the "Option Agreements"). All of the representations, warranties
and covenants of Stockholder contained in this Agreement are subject to the
obligations of Stockholder under the Option Agreements; provided, however, that
Stockholder shall comply with its covenants hereunder to the fullest extent not
prohibited by Stockholder's obligations under the Option Agreements. Stockholder
represents and warrants to Parent and Sub that none of the Option Agreements has
been amended prior to the date hereof. Stockholder covenants and agrees not to
amend any Option Agreement while this Agreement is in effect.
22. WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT, AS A CONDITION
OF SUCH PARTY'S RIGHT TO ENFORCE OR DEFEND ANY RIGHT UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER SUPPORT DOCUMENT, WAIVES ANY RIGHT TO A TRIAL BY
JURY IN ANY ACTION TO ENFORCE OR DEFEND ANY RIGHT UNDER THIS AGREEMENT OR ANY
OTHER SUPPORT DOCUMENT AND AGREES THAT ANY ACTION SHALL BE TRIED BEFORE A COURT
AND NOT BEFORE A JURY.
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<PAGE> 9
IN WITNESS WHEREOF, Parent, Sub and the undersigned
Stockholder have caused this Agreement to be duly executed as of the day and
year first above written.
AT&T CORP.
By: /s/ Mary Jane McKeever
Name: Mary Jane McKeever
Title: Vice President
LMN CORPORATION
By: /s/ Mary Jane McKeever
Name: Mary Jane McKeever
Title:President
CILLUFFO ASSOCIATES, L.P.
160 Broadway, East Building
New York, New York 10038
Attn: Frank J. A. Cilluffo
Facsimile: (603) -
By: /s/ Frank J.A. Cilluffo
Name: Frank J. A. Cilluffo
Title: Managing General Partner
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<PAGE> 1
Exhibit (d)(4)
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated as of February 14, 2000 (this
"Agreement"), among AT&T Corp., a New York corporation ("Parent"), LMN
Corporation, a Delaware corporation and a wholly owned subsidiary of Parent
("Sub"), and Gerald R. McNichols, an individual ("Stockholder') and a
stockholder of GRC International, Inc., a Delaware corporation (the "Company").
WHEREAS, Parent, Sub and the Company are, concurrently with the
execution hereof, entering into an Agreement and Plan of Merger, dated as of
February 14, 2000 (the "Merger Agreement"), pursuant to which, upon the terms
and subject to the conditions set forth in the Merger Agreement, Sub will make
an offer (the "Offer") to acquire all of the issued and outstanding shares of
common stock, par value $0.10 per share, of the Company (the "Company Common
Stock"), at a purchase price of $15.00 per share, net to the seller in cash, the
consummation of which will be followed by the merger of Sub with and into the
Company, with the Company being the surviving corporation (the "Merger");
WHEREAS, Stockholder is the record and/or beneficial owner of 2,001,700
shares of Company Common Stock (collectively, the "Existing Shares") (all such
Existing Shares, together with all other shares of capital stock or other voting
securities of the Company or any of its Subsidiaries with respect to which
Stockholder has beneficial ownership (for purposes of this Agreement,
"beneficial ownership" shall have the meaning set forth in Rule 13d-3 under the
Exchange Act) as of the date of this Agreement, and any shares of capital stock
or other voting securities of the Company or any of its Subsidiaries, beneficial
ownership of which is directly or indirectly acquired after the date hereof,
including, without limitation, shares received pursuant to any stock splits,
stock dividends or distributions, shares acquired by purchase or upon the
exercise, conversion or exchange of any option, warrant or convertible security
or otherwise, and shares or any voting securities of the Company or any of its
Subsidiaries received pursuant to any change in the capital stock of the Company
or such Subsidiary by reason of any recapitalization, merger, reorganization,
consolidation, combination, exchange of shares or the like, are referred to
herein as the "Shares");
WHEREAS, each of the parties hereto desires to enter into this
Agreement to provide for, among other things, (1) the obligation of Stockholder
to tender, or cause the record holder of the Shares to tender, the Shares
beneficially owned by Stockholder (other than Shares subject to unexercised
options) (the "Tender Shares") in the Offer, (2) the obligation of Stockholder
to vote, or cause the record holder of the Shares to vote, the Shares
beneficially owned by Stockholder (other than Shares subject to unexercised
options) (the "Voting Shares") in the manner specified herein and (3) certain
restrictions on the sale or the transfer of the record and beneficial ownership
of Shares by Stockholder (this Agreement and all other agreements, instruments
and other documents executed and delivered by Stockholder in connection with
this Agreement are collectively referred to as the "Support Documents"); and
WHEREAS, Stockholder acknowledges that Parent and Sub are entering into
the Merger Agreement in reliance on the representations, warranties, covenants
and other agreements of Stockholder set forth in this Agreement and would not
enter into the Merger Agreement if Stockholder did not enter into this
Agreement.
<PAGE> 2
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, and intending to be legally bound hereby, Parent, Sub and
Stockholder agree as follows:
1. Defined Terms. Terms used herein without definition shall have the
meanings assigned to such terms in the Merger Agreement.
2. Agreement to Tender. Stockholder hereby agrees to validly tender, or
cause the record owner to validly tender, all of the Tender Shares pursuant to
and in accordance with the terms of the Offer within 18 business days of the
commencement thereof, and not to withdraw or permit to be withdrawn any Shares
therefrom.
3. Agreement to Vote. Stockholder hereby agrees that, from and after
the date hereof and until the Termination Date (as defined in Section 19), at
any meeting of the stockholders of the Company, however called, or in connection
with any written consent of the stockholders of the Company, Stockholder shall
appear at each such meeting, in person or by proxy, or otherwise cause the
Voting Shares to be counted as present thereat for purposes of establishing a
quorum, and Stockholder shall vote (or cause to be voted) or act by written
consent with respect to all of the Voting Shares that are beneficially owned by
him or as to which he has, directly or indirectly, the right to vote or direct
the voting, (a) in favor of adoption and approval of the Merger Agreement and
the Merger and the approval of the terms thereof and each of the other actions
contemplated by the Merger Agreement and this Agreement, and any other action
reasonably requested by Parent in furtherance thereof; (b) against any action or
agreement that would result in a breach of any covenant, representation or
warranty or any other obligation or agreement of the Company contained in the
Merger Agreement or of Stockholder contained in this Agreement; and (c) against
any Acquisition Proposal made by any person other than Parent or any of its
affiliates. Stockholder hereby agrees that he will not enter into any voting or
other agreement or understanding with any person or entity or grant a proxy or
power of attorney with respect to the Shares prior to the Termination Date
(other than a proxy or power of attorney to an officer of the Company that may
be exercised solely in accordance with this Section 3 and except as provided in
Section 4 below) or vote or give instructions in any manner inconsistent with
clause (a), (b) or (c) of the preceding sentence. Stockholder hereby agrees,
during the period commencing on the date hereof and ending on the Termination
Date, not to, and, if applicable, not to permit any of his affiliates to, vote
or execute any written consent in lieu of a stockholders meeting or vote, if
such consent or vote by the stockholders of the Company would be inconsistent
with or frustrate the purposes of the other covenants of Stockholder pursuant to
this paragraph. As used in this Agreement, "person" shall have the meaning
specified in Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
4. PROXY. SUBJECT TO SECTION 19 HEREOF, STOCKHOLDER HEREBY GRANTS TO,
AND APPOINTS, MARY JANE MCKEEVER, MARILYN WASSER AND GARY SWENSON, IN THEIR
RESPECTIVE CAPACITIES AS OFFICERS OF PARENT, AND ANY INDIVIDUAL WHO SHALL
HEREAFTER SUCCEED ANY SUCH OFFICER OF PARENT, AND ANY OTHER PERSON DESIGNATED IN
WRITING BY PARENT, EACH OF THEM INDIVIDUALLY, STOCKHOLDER'S PROXY AND
ATTORNEY-IN-FACT (WITH FULL POWER OF SUBSTITUTION) TO VOTE OR ACT BY
<PAGE> 3
WRITTEN CONSENT, TO THE FULLEST EXTENT PERMITTED BY AND SUBJECT TO APPLICABLE
LAW, WITH RESPECT TO THE SHARES IN ACCORDANCE WITH SECTION 3 HEREOF IN RESPECT
OF ANY MATTER SPECIFIED IN CLAUSE (a), (b) or (c) OF SUCH SECTION 3. THIS PROXY
IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE. STOCKHOLDER WILL TAKE SUCH
FURTHER ACTION OR EXECUTE SUCH OTHER INSTRUMENTS AS MAY BE NECESSARY TO
EFFECTUATE THE INTENT OF THIS PROXY AND HEREBY REVOKES ANY PROXY PREVIOUSLY
GRANTED BY STOCKHOLDER WITH RESPECT TO THE SHARES. NOTWITHSTANDING THE
FOREGOING, NEITHER PARENT NOR ANY OF THE AFORENAMED PROXIES SHALL EXERCISE THE
POWERS SET FORTH IN THIS SECTION 4 UNLESS AND UNTIL PARENT SHALL HAVE RECEIVED
ALL APPLICABLE REGULATORY APPROVALS REQUIRED UNDER APPLICABLE LAW FOR SUCH
EXERCISE.
5. Representations and Warranties of Parent and Sub. Parent and Sub
represent and warrant to Stockholder as follows:
(a) Each of Parent and Sub is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation.
(b) Each of Parent and Sub has the requisite corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement by Parent and Sub and
the consummation by Parent and Sub of the transactions contemplated hereby have
been duly authorized by the respective Boards of Directors of Parent and Sub and
no other corporate proceedings on the part of Parent or Sub are necessary to
authorize the execution and delivery of this Agreement by Parent and Sub and the
consummation by them of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by Parent and Sub and (assuming the valid
authorization, execution and delivery of this Agreement by Stockholder) is a
valid and binding obligation of each of Parent and Sub, enforceable against each
of Parent and Sub in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws affecting creditors' rights generally and
general equitable principles (whether considered in a proceeding in equity or at
law).
(c) The execution and delivery of this Agreement by Parent and Sub do
not, and the performance of this Agreement by Parent and Sub will not, (i)
conflict with or violate the certificate of incorporation or by-laws of Parent
or Sub, (ii) conflict with or violate any law, rule, regulation or order
applicable to Parent or Sub or by which any of their respective properties is
bound, or (iii) conflict with, result in any breach of or constitute a default
(or an event that with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or require payment under, or result in the creation of any lien
on the properties or assets of Parent or Sub pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Parent or Sub is a party or by which
Parent or Sub or any of their respective properties is bound, except for any
thereof that would materially impair the ability of Parent or Sub to perform its
obligations hereunder or to consummate the transactions contemplated hereby on a
timely basis.
<PAGE> 4
(d) The execution and delivery of this Agreement by Parent and Sub do
not, and the performance by Parent and Sub of their obligations hereunder will
not, require Parent or Sub to obtain any consent, approval, authorization or
permit of, or to make any filing with or notification to, any Governmental
Entity, other than as set forth in Section 3.3 of the Merger Agreement.
(e) There is no suit, action, investigation or proceeding pending or,
to the knowledge of Parent or Sub, threatened against Parent or Sub at law or in
equity before or by any Governmental Entity that could reasonably be expected to
materially impair the ability of Parent or Sub to perform their obligations
hereunder on a timely basis, and there is no agreement, commitment or law to
which Parent or Sub is subject that could reasonably be expected to materially
impair the ability of Parent or Sub to perform their obligations hereunder on a
timely basis.
6. Representations and Warranties of Stockholder. Stockholder
represents and warrants to Parent and Sub as follows:
(a) This Agreement has been duly executed and delivered by Stockholder
and (assuming the valid authorization, execution and delivery of this Agreement
by Parent and Sub) is a valid and binding obligation of Stockholder, enforceable
against Stockholder in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws affecting creditors' rights generally and
general equitable principles (whether considered in a proceeding in equity or at
law).
(b) The execution and delivery of this Agreement by Stockholder do not,
and the performance of this Agreement by Stockholder will not, (i) conflict with
or violate any law, rule, regulation or order applicable to Stockholder or by
which any of Stockholder's properties is bound or (ii) conflict with, result in
any breach of or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or require payment
under, or result in the creation of any lien on the properties or assets of
Stockholder pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Stockholder is a party or by which Stockholder or any of his properties
is bound, except for any thereof that would not result in the imposition of a
lien on the Shares or materially impair the ability of Stockholder to perform
his obligations hereunder or to consummate the transactions contemplated hereby
on a timely basis.
(c) The execution and delivery of this Agreement by Stockholder do not,
and the performance by Stockholder of his obligations hereunder will not,
require Stockholder to obtain any consent, approval, authorization or permit of,
or to make any filing with or notification to, any Governmental Entity, except
for an amendment to the Statement on Schedule 13D filed by Stockholder with
respect to the Company.
(d) There is no suit, action, investigation or proceeding pending or,
to the knowledge of Stockholder, threatened against Stockholder at law or in
equity before or by any Governmental Entity that could reasonably be expected to
materially impair the ability of
<PAGE> 5
Stockholder to perform his obligations hereunder on a timely basis, and there is
no agreement, commitment or law to which Stockholder is subject that could
reasonably be expected to materially impair the ability of Stockholder to
perform his obligations hereunder on a timely basis.
(e) Except as set forth on Schedule I hereto, (i) the Existing Shares
are owned beneficially and of record by Stockholder; (ii) Stockholder has not
appointed or granted any proxy which is still effective with respect to any
Shares other than as provided in this Agreement; and (iii) Stockholder has sole
voting power and sole power of disposition with respect to all of the Existing
Shares, with no restrictions on Stockholder's rights of disposition pertaining
thereto. The Existing Shares constitute all of the shares of Company Common
Stock owned of record or beneficially by Stockholder. All of the Existing Shares
are issued and outstanding and, except for the Rights associated with such
Existing Shares, Stockholder does not own, of record or beneficially, any
warrants, options, convertible securities or other rights to acquire any shares
of Company Common Stock.
7. Agreements of Stockholder. (a) Stockholder hereby agrees, while this
Agreement is in effect, and except as expressly contemplated hereby, not to (i)
sell, transfer, pledge, encumber, grant, assign or otherwise dispose of, enforce
any redemption agreement with the Company or enter into any contract, option or
other arrangement or understanding with respect to or consent to the offer for
sale, sale, transfer, pledge, encumbrance, grant, assignment or other
disposition of, record or beneficial ownership of any of the Shares (whether
acquired heretofore or hereafter) or any interest in any of the foregoing,
except to Parent or Sub, (ii) grant any proxies or powers of attorney, deposit
any Shares into a voting trust or enter into a voting agreement with respect to
any Shares, or any interest in any of the Shares, except to Parent or Sub or
(iii) take any action that would make any representation or warranty of
Stockholder contained herein untrue or incorrect or have the effect of
preventing or disabling Stockholder from performing his obligations under this
Agreement.
(b) Stockholder hereby agrees, while this Agreement is in effect,
except with respect to Parent and its affiliates, that he shall not, and shall
not permit any affiliates or, if applicable, any director, officer, employee
consultant, agent, advisor or representative of Stockholder or any of his
affiliates (collectively, the "Representatives") to (i) initiate, solicit or
encourage, directly or indirectly, any inquiries or the making of any proposal
with respect to any matter described in Section 7(a) hereof or any Acquisition
Proposal or (ii) participate in any negotiations concerning, or provide to any
other person any information or data relating to the Company or any of its
Subsidiaries for the purpose of, or have any discussions with any person
relating to, or cooperate with or assist or participate in, or facilitate, any
inquiries or the making of any proposal which constitutes, or would reasonably
be expected to lead to, any effort or attempt by any other person to seek to
effect any matter described in Section 7(a) hereof or any Acquisition Proposal,
or agree to or endorse any Acquisition Proposal, or otherwise facilitate any
effort or attempt to make or implement such an Acquisition Proposal. Stockholder
agrees immediately to cease and cause to be terminated any existing activities,
discussions or negotiations with any persons conducted heretofore by Stockholder
with respect to any possible Acquisition Proposal, or any matter described in
Section 7(a) hereof, and will take the necessary steps to inform Stockholder's
Representatives of the obligations undertaken by Stockholder with respect to
Stockholder's Representatives in this Section 7; provided, that nothing in this
<PAGE> 6
Agreement shall restrict Stockholder in the exercise of his fiduciary duties to
the stockholders of the Company, in his capacity as a director of the Company,
under applicable law or otherwise prohibit him from taking such actions, in his
capacity as a director of the Company, as may be permitted (under the
circumstances therein specified) pursuant to Section 5.2 of the Merger
Agreement.
(c) Stockholder hereby agrees, while this Agreement is in effect, to
notify Parent promptly of the number of any additional shares of Company Common
Stock and the number and type of any other Shares acquired by Stockholder, if
any, after the date hereof.
8. Further Assurances. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further action as may be necessary
or desirable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement. Without limiting
the generality of the foregoing, none of the parties hereto shall enter into an
agreement or arrangement (or alter, amend or terminate any existing agreement or
arrangement) if such action would materially impair the ability of such party to
effectuate, carry out or comply with all the terms of this Agreement.
9. Survival. None of the representations, warranties, covenants and
agreements of the parties herein shall survive beyond the Termination Date.
10. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed duly given if given in the manner set forth in
Section 9.2 of the Merger Agreement. All notices hereunder shall be given to
Stockholder at his address stated on the signature pages of this Agreement or to
Parent or Sub at Parent's address set forth in Section 9.2 of the Merger
Agreement or at any other address as the party may specify for this purpose by
notice to the other parties pursuant to this Section 10.
11. No Waivers. No failure or delay by Parent or Sub in exercising any
right, power or privilege under any Support Document shall operate as a waiver
of that right, power or privilege. A single or partial exercise of any right,
power or privilege shall not preclude any other or further exercise of that
right, power or privilege or the exercise of any other right, power or
privilege. The rights and remedies provided in the Support Documents shall be
cumulative and not exclusive of any rights or remedies provided by law.
12. Amendments, Etc. No amendment, modification, termination or waiver
of any provision of any Support Document, and no consent to any departure by
Stockholder or Parent or Sub from any provision of any Support Document, shall
be effective unless it shall be in writing and signed and delivered by each
party hereto, and then it shall be effective only in the specific instance and
for the specific purpose for which it is given.
13. Successors and Assigns; Third Party Beneficiaries.
(a) No party shall assign any of such party's rights or remedies or
delegate any of such party's obligations or liabilities, in whole or in part,
under any Support Document, except that Parent or Sub may assign all or any of
its rights hereunder to any affiliate of Parent or Sub. Any assignment or
delegation in contravention of this Section 13 shall be void ab initio and
<PAGE> 7
shall not relieve the assigning or delegating party of any obligation under any
Support Document.
(b) The provisions of each Support Document shall be binding upon and
inure solely to the benefit of the parties hereto and their respective permitted
heirs, executors, legal representatives, successors and assigns, and no other
person.
14. Governing Law; Submission to Jurisdiction. This Agreement and each
other Support Document and all rights, remedies, liabilities, powers and duties
of the parties hereto and thereto, shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts
executed in and to be performed entirely within that State. Parent, Sub and each
Stockholder hereby (w) submit to the jurisdiction of any State and Federal
courts sitting in Delaware with respect to matters arising out of or relating
hereto, (x) agree that all claims with respect to such matters may be heard and
determined in an action or proceeding in such Delaware State or Federal court,
and (y) agree that a final judgment in any such action or proceeding will be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
15. Severability of Provisions. If any term or other provision of any
Support Document is invalid, illegal or incapable of being enforced by any law
or public policy, all other terms and provisions of such Support Document shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify such Support Document so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
16. Headings and References. Article and Section headings in any
Support Document are included for convenience of reference only and do not
constitute a part of the Support Document for any other purpose. References to
Articles and Sections in any Support Document are references to the Articles and
Sections of the Support Document unless the context shall require otherwise. Any
of the terms defined in this Agreement may, unless the context otherwise
requires, be used in the singular or the plural, depending on the reference. The
use in this Agreement of the word "include" or "including," when following any
general statement, term or matter, shall not be construed to limit such
statement, term or matter to the specific items or matters set forth immediately
following such word or to similar items or matters, whether or not nonlimiting
language (such as "without limitation" or "but not limited to" or words of
similar import) is used with reference thereto, but rather shall be deemed to
refer to all other items or matters that fall within the broadest possible scope
of such general statement, term or matter.
17. Entire Agreement. The Support Documents and the Merger Agreement
embody the entire agreement and understanding of each of the parties hereto, and
supersede all other written or oral prior agreements or understandings, with
respect to the subject matter of the Support Documents.
<PAGE> 8
18. Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of any Support Document were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of the Support Documents and to enforce
specifically the terms and provisions of any Support Document in any Federal
court sitting in the State of Delaware or State of Delaware court, this being in
addition to any other remedy to which they are entitled at law or in equity.
19. Termination. This Agreement and the proxy set forth in Section 4
shall terminate upon the earliest of the following dates (such date is referred
to herein as the "Termination Date"): (i) the date on which the Merger Agreement
is terminated in accordance with Article VIII thereof; (ii) the date on which
Parent terminates this Agreement upon written notice to Stockholder (Parent may
so terminate this Agreement and the proxy set forth herein at any time); (iii)
the Effective Time; and (iv) June 30, 2000.
20. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if all
signatures were on the same instrument.
21. WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT, AS A CONDITION
OF SUCH PARTY'S RIGHT TO ENFORCE OR DEFEND ANY RIGHT UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER SUPPORT DOCUMENT, WAIVES ANY RIGHT TO A TRIAL BY
JURY IN ANY ACTION TO ENFORCE OR DEFEND ANY RIGHT UNDER THIS AGREEMENT OR ANY
OTHER SUPPORT DOCUMENT AND AGREES THAT ANY ACTION SHALL BE TRIED BEFORE A COURT
AND NOT BEFORE A JURY.
<PAGE> 9
IN WITNESS WHEREOF, Parent, Sub and the undersigned
Stockholder have caused this Agreement to be duly executed as of the day and
year first above written.
AT&T CORP.
By: /s/ Mary Jane McKeever
Name: Mary Jane McKeever
Title: Vice President
LMN CORPORATION
By: /s/ Mary Jane McKeever
Name: Mary Jane McKeever
Title:President
/s/ Gerald R. McNichols
Gerald R. McNichols
<PAGE> 1
Exhibit (d)(5)
FORM OF
GRC INTERNATIONAL, INC.
EMPLOYMENT AGREEMENT
(CEO)
THIS EMPLOYMENT AND CONSULTING AGREEMENT (this "Amended Agreement") is made in
Vienna, Virginia, as of February , 2000, 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 ("GRCI" or "Employer"), and amends and restates the
Employment Agreement between the parties dated as of July 1, 1998. The term
"Company" shall include Parent, as defined below, and any subsidiary, or
affiliate of Parent. As a condition to, and in consideration of, GRCI's
continued employment of Employee, and for other good and valuable consideration
the receipt and sufficiency of which is hereby acknowledged, and conditioned
upon the execution of the Agreement and Plan of Merger by and among GRCI, AT&T
Corp. (the "Parent") and the Purchaser (a subsidiary of the Parent) (the "Merger
Agreement"), the parties mutually agree as follows:
1 DUTIES.
(a) I agree to work for GRCI in the capacity set forth in Item 1(a) of
Exhibit A attached hereto for the period ending six months after the Share
Purchase Date as defined in the Merger Agreement (the "Term of
Employment"). My duties will include all of those generally associated with
said position, subject to the direction and assignment of the President of
AT&T Government Markets, or any successor to such position, and to
participate as requested with the Government Markets leadership team to
support the successful transition, integration, growth and synergies of the
new combined business. The duties assigned to me shall generally be
performed at the place of employment specified in Item 1(b) of Exhibit A,
but I understand I may be required to attend meetings at the premises of
customers and at the offices of AT&T Government Markets in Washington, D.C.
During the Term of Employment all of my working time and energies shall be
devoted to the foregoing duties. In addition to the duties set forth in
Item 1(a) of Exhibit A, I agree to use my reasonable best efforts to
implement the terms of the Merger Agreement, to provide guidance to the
President AT&T Government Markets (or the successor to such position)
regarding historical operation of GRCI, to introduce the President of AT&T
Government Markets to GRCI's current and prospective principal business
contacts and to Transition overall management and leadership
responsibilities for the current GRC business to Mike Stolarik at a time
not later than the end of my Term of Employment. I shall participate in and
facilitate the successful integration of GRC and the current Government
Markets Professional Services Organization by working in concert with Mike
Stolarik and Larry Spilman. This includes the joint review of programs and
business plans, and the introduction of customers and other key
stakeholders. I will recommend key consultants that would support current
operations and the growth and synergy objectives of the combined
Professional Services team. In addition, I will support
<PAGE> 2
the integration of the common support functions with those in Government
Markets and provide for the orderly transition and termination of all functions
associated with the GRC public company.
(b) (1) For a period of two years following the expiration of the Term of
Employment, (the "Consulting Term"), I agree to provide such
consulting services to the Company as the Company may require from
time to time. In fulfilling this obligation, I shall make my services
available, and shall devote all my working time and energies to
performing such services the equivalent of a minimum of three full
working days per calendar month, in the aggregate. Performance of
requested consulting services which reasonably require services in
excess of three full working days per month will be compensated as
provided in Subsection 5(c). In that regard, I shall be reasonably
available to the President of AT&T Government Markets or her delegate
for miscellaneous calls and consultation on a reasonably continuous
basis, taking into account my travel schedule and other commitments.
In the event I am employed by another employer subsequent to the
expiration of the Term of Employment on a substantially full-time
basis, I will ensure that the terms and conditions of such employment
will permit me to fulfill the foregoing obligation.
(2) I understand and agree that such services shall be provided as an
independent contractor of the Company, and that as such I shall not be
eligible to participate in, or receive any benefits as an employee of
the Company under, any employee benefit plan or program maintained by
the Company for the benefit of its employees, or any workers'
compensation or unemployment compensation program applicable to the
Company.
(3) I or the Company may terminate my consulting services upon 30 days
prior written notice; provided, however, that so long as the Company
is paying me the consideration set forth in section 5.(c) hereof, and
for the twelve month period following the cessation of such payments,
I will continue to be subject to the provisions of subsections 1(c)
and 1(d) hereof.
(4) During the Consulting Term, reasonable and customary expenses I incur
to provide requested consulting services will be reimbursed, including
travel from my place of residence which may be outside the Washington,
DC metro area.
(c) During the Term of Employment, I will obtain the prior written approval of
Parent if I intend to engage in any outside business activity, and the Parent
may refuse to give such consent if, in the exercise of its reasonable business
judgment, such outside business activity would compete with or conflict with my
employment with GRCI. During the Term of Employment and the Consulting Term and
any period during which I am receiving disability
<PAGE> 3
benefits from GRCI or Parent, absent the express, prior written authorization of
the President, AT&T Government Markets, which authorization shall not be
unreasonably withheld, 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, independent contractor, consultant, or holder of 5%
or more of any class of stock, of any corporation, and will comply with the AT&T
Non-Competition guidelines, set forth in Exhibit B to this agreement.
(d) I agree that for a period of one year immediately following the end of the
Consulting Term, or the one year period immediately following the last payment
made by the Company pursuant to subsection 5.(c) hereof, whichever is shorter, I
will continue to comply with the AT&T Non-Competition guidelines and further
covenant that I will not interfere with the business of the Company by directly
or indirectly soliciting 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.
(e) This Amended Agreement is specifically subject to and conditioned upon, and
will become automatically effective upon, the Share Purchase Date as that term
is defined in the Merger Agreement, and upon its effectiveness shall be deemed
to cancel and replace in their entirety any and all previous employment
agreements entered into between me and GRCI (including, but not limited to, the
Employment Agreement between GRCI and the Employee dated as of July 1, 1998 (the
"Former Agreement")).
2. INTELLECTUAL PROPERTY
(a) In this Amended 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 C to this Amended Agreement
contains a complete list of all Intellectual Property I consider proprietary to
me, and, during my employment with GRCI, 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 GRCI. All such disclosures
shall be reviewed by the Company in confidence to determine any issues which may
arise.
(c) I agree to comply with the terms of the Intellectual Property Agreement set
forth in Exhibit D to this Agreement, the terms of which are incorporated in
this Agreement by reference as if fully set forth herein.
<PAGE> 4
3. PROPRIETARY INFORMATION. I understand that in the course of my employment
with GRCI, 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 GRCI, except to the extent
expressly authorized in writing by an officer of Parent. 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.
Further, I will use my best efforts to safeguard any classified information
which comes into my possession and to fully comply with all governmental
statutes, rules, regulations and procedures affecting the handling of classified
information.
4. CONFLICTS OF INTEREST. I have read and understood the Parent's Code of
Conduct, a copy of which is attached as Exhibit E, and while employed by GRCI, I
agree to abide by the Parent's Code of Conduct, as the same may be amended from
time to time, and to complete any of the Parent's or GRCI's ethics
questionnaires as may be required by the Parent or GRCI from time to time.
Except as fully disclosed in a document attached to this Amended Agreement, I am
not a party to any agreement or understanding with any other person or business,
nor am I subject to any other legal restriction or obligation, which would in
any way prohibit, impede or hinder my employment with GRCI or the performance of
my duties in the course of such employment.
<PAGE> 5
5. COMPENSATION.
(a) Base Salary. During the Term of Employment, GRCI shall pay me the annual
base salary set forth in Exhibit A, Item 3(a) ("Base Salary") payable in
substantially equal monthly installments (in arrears).
(b) Annual Bonus. At the end of the Term of Employment, and provided I have
complied with the requirements of sections 1.(c) and 3 hereof, I shall be
entitled to an annual bonus of $250,000, prorated based on the number of full or
partial calendar months of such Term of Employment divided by 12 ("Annual
Bonus"). In recognition of the Annual Bonus provisions of Employment Agreement
between the parties dated as of July 1, 1998, I shall be entitled to an annual
bonus of $250,000 prorated for the period beginning July 1, 1999 and ending
with the beginning of the Term of Employment.
(c) Consulting Fee. During the Consulting Term, the Company shall pay me
compensation of $75,000 annually, payable in substantially equal monthly
installments (in arrears). Additionally, the company will pay me $2000.00 per
day in the aggregate for requested consulting services that meaningfully exceed
three days per month.
(d) Car Allowance. During the Term of Employment, GRCI will provide me with an
automobile allowance of up to $1,000 per month during the Employment Term. In
addition, GRCI will reimburse my actual, reasonable expenses of operating the
vehicle.
(e) Unvested Options. I am the holder of certain options to purchase shares of
GRCI which, as of the Effective Date of this Agreement, are not vested and
which, pursuant to the terms of the Option Plans would have substantially
reduced value after the Effective Date of this Agreement. In consideration of my
agreement to cancel such unvested options and as further consideration for the
performance of my obligations pursuant to sections 1, 2, 3 and 4 hereof, GRCI
shall pay me an amount equal to the excess of the Per Share Amount (as defined
in the Merger Agreement) over the exercise price of those unvested options, as
if they were fully exercisable on the date before the Effective Date, in
installments corresponding to the original vesting period of such options, but
in no event later than the expiration of the Term of Employment.
6. DISABILITY. If I am 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 GRCI'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 GRCI'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 or is
inapplicable to me, 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 Amended Agreement, full
compensation shall be prospectively reinstated for any remaining
<PAGE> 6
term of this Amended Agreement. During the period of such disability, I shall
not be entitled to the compensation set forth in subsection 5(c).
7. TERMINATION AND SEVERANCE
(a) This Agreement shall remain in effect from the Effective Date through
the end of the Consulting Term. This Agreement will be terminated by the Company
or by GRCI immediately for Cause by written notice to me. For purposes of this
Agreement, "Cause" means:
(i) the willful and continued failure of Employee to substantially
perform his or her duties with GRCI (other than any such failure
resulting from incapacity due to physical or mental illness),
after a written demand for substantial performance is delivered
to Employee by GRCI which specifically identifies the manner in
which GRCI believes that Employee has not substantially
performed his or her duties;
(ii) the willful engaging by Employee in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the
Company;
(iii) Employee's personal dishonesty or breach of fiduciary duty to
the Company that in either case results or was intended to
result in personal profit to Employee at the expense of the
Company; or
(iv) willful violation by Employee of any law, rule or regulation
(other than traffic violations, misdemeanors or similar
offenses) or cease-and-desist order, court order, judgment or
supervisory agreement, which violation is materially and
demonstrably injurious to the Company
(v) material breach of the Employee's covenants pursuant to section
1.(c), 2 and 3 hereof.
For purposes of the preceding clauses (i) through (iv), no act or failure to
act, on the part of Employee, shall be considered "willful" unless it is done,
or omitted to be done, by Employee in bad faith and without reasonable belief
that Employee's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon the instructions or with the express approval
of the Board or of a Company officer with authority to direct Employee or based
upon the advice of counsel for the Company, shall be conclusively presumed to be
done, or omitted to be done, by Employee in good faith and in the best interest
of the Company.
(b) To the maximum extent permitted by law, I hereby expressly authorize
GRCI in advance upon my termination to deduct from my final paycheck(s) and from
my paid time off (PTO) check all amounts I owe GRCI (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
Termination Agreement and Release attached hereto as Exhibit F and deliver to
the Company all notes,
<PAGE> 7
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 Amended Agreement, whether by expiration of its
term, or otherwise, will not relieve me from my obligations under Sections
1(c), 2, and 3, and Exhibits B and D of this Amended Agreement, which by their
respective terms, continue beyond the termination of this Amended Agreement for
periods set forth in Sections 1(c), 2 and 3.
(e) In the event this Agreement is terminated prior to the end of the
Consulting Term as a result of my death or total disability (as determined by
the Board of Parent):
(i) no further payments will be made under subsection 5.(a), (c) or
(d) for any period after the date of my death in the event
causing my total disability
(ii) I or my estate will receive my Annual Bonus, pro-rated from the
Effective date to the date of my death or the event causing my
total disability, plus the entire amount that would otherwise
have been payable pursuant to subsection 5.(e) for unvested
options and which then remains unpaid, plus the amount set forth
in subsection 7(f)(x) below.
(f) Notwithstanding any other provision of this Amended Agreement to
the contrary, as soon as practicable following the expiration of the Term of
Employment:
(x) in addition to any additional Base Salary I have earned, GRCI
shall pay me a lump-sum severance payment in an amount equal to
two (2) times my Gross Annual Salary, plus two (2) times my
Target Gross Annual Bonus, which sum I and GRCI agree equals
$1,162,240, plus $10,000 (in complete satisfaction of any
obligation of the Company to provide lifetime dental and vision
coverage), less any income, excise, employment or other tax
withholdings which GRCI is required by law to deduct therefrom,
which payment shall be in complete satisfaction of any obligation
of the Company pursuant to any other agreement I have had with
the Company regarding payments due as a result of a change in
control of the Company;
(y) GRCI shall continue to provide me with the same level of
insurance benefits and officer perquisites which I have been
receiving from GRCI immediately prior to termination, and such
benefits and perquisites shall be provided until the earlier of
(A) such time as I obtain new benefits coverage by reason of new
employment, or (B) the two (2) year anniversary of my termination
of employment with GRCI.
(g) In the event of the termination of this Agreement prior to the
expiration of the Consulting Term for cause, or if I resign at any time for
whatever reason (except as provided in the immediately following paragraph), I
will not have any rights to any amounts, payments, or property described in
this Agreement that were not paid or which were not vested at that time.
(h) Notwithstanding any other provision of this Amended Agreement, in the
event that any payment or benefit received or to be received by Employee in
connection with termination
<PAGE> 8
of Employee's employment (whether pursuant to the terms of this Amended
Agreement or any other plan, arrangement or agreement with GRCI, or any person
affiliated with GRCI or such Person)(all such payments and benefits, including
the Severance Benefits, being hereinafter called the "Total Benefits"), would
be subject (in whole or in part) to the excise tax (the "Excise Tax") imposed
under Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), then the Severance Benefits shall be reduced to the extent necessary
so that no portion of the Total Benefits is subject to the Excise Tax if (A)
the net amount of such Total Benefits, as so reduced, (and after deduction of
the net amount of federal, state and local income taxes and FICA and Medicare
taxes on such reduced Total Benefits) is greater than (B) the excess of (i) the
net amount of such Total Benefits, without reduction (but after deduction of
the net amount of federal, state and local income taxes and FICA and Medicare
taxes on such Total Benefits), over (ii) the amount of Excise Tax to which
Employee would be subject in respect of such Total Benefits. For purposes of
determining whether and the extent to which the Total Benefits will be subject
to the Excise Tax, (i) no portion of the Total Benefits the receipt or
enjoyment of which Employee shall have effectively waived in writing prior to
Employee's date of termination of employment shall be taken into account, (ii)
no portion of the Total Benefits shall be taken into account which in the
opinion of tax counsel selected by Parent does not constitute a "parachute
payment" within the meaning of Section 280G(b)(2) of the Code, and (iii) the
value of any noncash benefit or any deferred payment or benefit included in the
Total Benefits shall be determined by Parent's independent auditors in
accordance with the principles of Sections 280G(d)(3) and (d)(4) of the Code.
For purposes of this Section 7(h), the term "Severance Benefits" means the
benefits provided for by clauses (x) and (y) of Section 7(f) hereof.
8. BENEFITS.
During the Term of Employment, in addition to any other entitlement under
the terms of this Agreement, I will continue in the employee benefit plans and
programs generally available to other similarly situated active employees of
GRCI.
9. NOTICE.
(a) Any notice to be given to me under this Amended 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 Amended Agreement or in any Exhibit hereto or at such
other address of which written notice has been given to GRCI by me by any of
the foregoing means.
(b) Any notice to be given to the Company under this Amended Agreement shall
be in writing and delivered by any of the means specified in subsection (a)
above, to the President, AT&T Government Markets, with a copy to the General
Counsel, AT&T Business Services, AT&T Corp., 295 North Maple Avenue, Basking
Ridge, New Jersey 07920.
10. DISPUTES.
<PAGE> 9
(a) This Amended 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 Amended 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 Amended 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.
11. ASSIGNMENT, SUCCESSORS. My services are unique and personal. Accordingly,
I may not assign any rights or delegate any duties or obligations under this
Amended Agreement. The rights and obligations of the Company under this Amended
Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Company.
12. ENTIRE AGREEMENT. This Amended Agreement, together with all documents
attached to this Amended 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 Amended Agreement, and any
representation, promise, agreement or understanding, written or oral, not
contained in this Amended Agreement shall be of no force or effect. No change
or modification of this Amended Agreement shall be valid or binding unless the
change or modification is in writing and signed by the parties to this Amended
Agreement. Any representation contrary to this Amended Agreement, express or
implied, written or oral, is hereby disclaimed. Nothing in this Amended
Agreement shall obligate GRCI to employ me for any length of time. No waiver of
any provision of this Amended 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.
13. SEVERABILITY. Any provision of this Amended Agreement which may be
determined to be unenforceable, invalid or illegal shall be deemed stricken
from this Amended Agreement and all remaining provisions shall continue in full
force and effect.
14. REASONABLENESS OF RESTRICTIONS. I have carefully read and considered the
provisions of this Amended Agreement and, having done so, agree that the
restrictions set forth in this Amended Agreement are fair and reasonable and
are reasonably required for the Company's protection. This Amended Agreement
shall be construed fairly as to all parties and not in favor of or against any
party, regardless of which party prepared this Amended Agreement. In the event
that, notwithstanding the foregoing, any part of this Amended
<PAGE> 10
Agreement shall be held to be invalid or unenforceable, the remaining parts of
the Amended Agreement shall nevertheless continue to be valid and enforceable
as though the invalid or unenforceable parts had not been included in the
Amended 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.
IN WITNESS WHEREOF, the parties have executed this Amended Agreement as of the
date first set forth above.
ATTEST: GRC INTERNATIONAL, INC.
By:
- ------------------------- ----------------------
WITNESS EMPLOYEE
- ------------------------- -------------------------
APPROVED AND RATIFIED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
OF GRC INTERNATIONAL, INC.
By:
----------------------
<PAGE> 11
EXHIBIT A
DETAILS OF EMPLOYMENT
EMPLOYEE: Gary L. Denman
ITEM 1(a) Position: PRESIDENT, GRC INTERNATIONAL [AN AT&T COMPANY]
ITEM 1(b) Principal Office: VIENNA, VA
ITEM 2 Effective Date of this Amended Agreement: The date of the
consummation of the Offer as more specifically set forth in
the Merger Agreement
ITEM 3(a) Gross Annual Salary:
[THREE HUNDRED THIRTY THOUSAND DOLLARS ($330,000)]
ITEM 3(b) Gross Annual Bonus:
TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000)
ITEM 4 Notice to Employee:
Gary L. Denman Gary L. Denman
1900 Gallows Road and/ 8427 Blevins Way Court
Vienna, VA 22182 or Vienna, VA 22182
EMPLOYEE: GRC INTERNATIONAL, INC.
By:
- ---------------------------- ------------------------------
APPROVED AND RATIFIED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF
GRC INTERNATIONAL, INC.
By: _________________________
<PAGE> 1
Exhibit (d)(6)
GRC INTERNATIONAL, INC.
EMPLOYMENT AGREEMENT
(Chief Operating Officer)
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made in Vienna, Virginia, as of
February 14, 2000, by and between Michael G. Stolarik (hereinafter referred to
in the first person or as "Employee"), GRC International, Inc., a corporation
with its principal offices at 1900 Gallows Road, Vienna, Virginia 22182 ("GRCI"
or "Employer") and, solely with respect to the obligations set forth in
subsections 5.(c) and (e), AT&T Corp., a New York corporation (the "Parent"),
and amends and restates in its entirety the Employment Agreement between the
Employee and GRCI dated as of April 9, 1999. Where appropriate within this
Agreement, the term "Company" shall include Parent and any subsidiary, or
affiliate of Parent. As a condition to, and in consideration of, the Employer's
continued employment of Employee, and for other good and valuable consideration
the receipt and sufficiency of which is hereby acknowledged, and conditioned
upon the execution of the Agreement and Plan of Merger by and among GRCI, the
Parent and the Purchaser (a subsidiary of the Parent)(the "Merger Agreement"),
the parties mutually agree as follows:
1 DUTIES.
(a) I agree to work for the Employer in the capacity set forth in Item 1
(a) of Exhibit A attached hereto for the period beginning with the Effective
Date (which, for purposes of this Agreement shall be the Share Purchase Date as
that term is defined in the Merger Agreement) and ending December 31, 2002 (the
"Term of Employment"). Unless I or the Company have given 90 days advance
written notice of our intent not to renew this Agreement, the Term of Employment
shall be automatically renewed for successive one-year terms after December 31,
2002. My duties will include all of those generally associated with said
position, subject to the direction and assignment of President of AT&T
Government Markets, [or any successor to such position]. The duties assigned to
me shall generally be performed at the principal office specified in Item 1(b)
of Exhibit A, but I understand I may be required to attend meetings at the
premises of customers and at the offices of AT&T Government Markets in
Washington, D.C. During the Term of Employment all of my working time and
energies shall be devoted to the foregoing duties. In addition to the duties set
forth in Item 1 (a) of Exhibit A, I agree to use my reasonable best efforts to
implement the terms and covenants of the Agreement and Plan of Merger by and
among [the Company, the Parent and the Purchaser] dated February 14, 2000 (the
"Merger Agreement"). It is the intent of this Agreement that after the first six
months of the Term of Employment, I shall assume and perform the duties of
President of GRCI.
(b) During the Term of Employment, I will obtain the prior written approval
of Parent if I intend to engage in any outside business activity, and the Parent
may refuse to give such
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<PAGE> 2
consent if, in the exercise of its reasonable business judgment, such outside
business activity would compete with or conflict with my employment with the
Employer. During the Term of Employment and for a period of one year thereafter,
absent the express, prior written authorization of the President of AT&T
Government Markets, or any successor to such position 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, independent contractor,
consultant, or holder of 5% or more of any class of stock, of any corporation,
and will comply with the AT&T Non-Competition guidelines, set forth in Exhibit B
to this agreement.
(c) I agree that for a period of one year immediately following termination
(voluntary or otherwise) of my employment with the Employer, I will not
interfere with the business of the Company by directly or indirectly 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.
(d) This Agreement is specifically subject to and conditioned upon, and
will become automatically effective upon, the Share Purchase Date as that term
is defined in the Merger Agreement, and upon its effectiveness shall be deemed
to amend and restate in their entirety any and all previous employment
agreements entered into between me and the Employer (including, but not limited
to, the Employment Agreement between the GRCI and the Employee dated as of April
9, 1999).
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 Employer, 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 Employer.
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<PAGE> 3
(c) I agree to comply with the terms of the Intellectual Property Agreement
set forth in Exhibit C to this Agreement, the terms of which are incorporated in
this Agreement by reference as if fully set forth herein.
3. PROPRIETARY INFORMATION. I understand that in the course of my
employment with the Employer, 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 Employer,
except to the extent expressly authorized in writing by an officer of Parent.
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.
Further, I will use my best efforts to safeguard any classified information
which comes into my possession and to fully comply with all governmental
statutes, rules, regulations and procedures affecting the handling of classified
information.
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<PAGE> 4
4. CONFLICTS OF INTEREST. I have read and understood the Parent's Code of
Conduct, and during the Term of Employment, I agree to abide by the Parent's
Code of Conduct, as the same may be amended from time to time, and to complete
any of the Parent's or the Employer's ethics questionnaires as may be required
by the Parent or the Employer 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 I subject to any other
legal restriction or obligation, which would in any way prohibit, impede or
hinder my employment with the Employer or the performance of my duties in the
course of such employment.
5. COMPENSATION.
(a) Base Salary. During the Term of Employment, the Employer shall pay me
the annual base salary set forth in Exhibit A, Item 3(a) ("Base Salary") payable
in substantially equal monthly installments (in arrears). The Base Salary listed
on Exhibit A will be my initial Base Salary for calendar year 2000 and shall be
subject to annual review in accordance with the Company's standard practice.
(b) Annual Bonus. With respect to each calendar year of the Term of
Employment, I shall be entitled to participate in the annual incentive award
programs of the Employer generally available to similarly situated executive
level employees of the Employer, prorated based on the number of full or partial
calendar months I am actively employed by the Employer in each such calendar
year ("Annual Bonus"). The Employer agrees that my target Annual Bonus for
calendar year 2000 is 45% of my Base Salary, pro-rated for partial service from
June 30, 2000 through December 31, 2000. As of June 30, 2000, I shall be
entitled to receive the bonus provided for under the terms of the Former
Agreement, pro-rated for service during that portion of GRCI's fiscal year
through June 30, 2000. The actual amount of my Annual Bonus will be determined
in accordance with the terms and conditions and metrics established by the
Employer for payout of such Annual Bonus in accordance with its usual practice.
(c) Special 2000 AT&T Stock Option Grant. I will receive a special grant of
15,000 options to purchase AT&T common stock. The grant date will be as soon as
practical after the Effective Date of this Agreement and the price will be 100%
of the Fair Market Value on the date of grant. These options will vest and
become exercisable as follows: 25% on each of the first four anniversaries of
the date of grant, provided that I remain continuously employed by Employer or
any other entity which is a member of Parent's controlled group of corporations
throughout the period ending on each vesting date. I will have no vested
interest in any such stock prior to the first anniversary of the date of grant.
I understand that while the Company cannot guarantee stock options grants in
future years, I will be eligible for grants to the extent they are applicable to
other similarly situated employees.
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<PAGE> 5
(d) Unvested Options. I am the holder of certain options to purchase shares
of GRCI which, as of the Effective Date of this Agreement are not vested and
which, pursuant to the terms of the GRCI 1998 Stock Option and upon consummation
of the transactions contemplated by the Merger Agreement would have
substantially reduced value after the Effective Date of this Agreement. In
consideration of my agreement to cancel such unvested options and as further
consideration for the performance of my obligations pursuant to sections 1, 2, 3
and 4 hereof, the Employer shall pay me an amount in cash of $148,120 on
September 1, 2000, $440,300 on September 1, 2001 and $440,230 on September 1,
2002, provided I am actively employed by the Company on each date payments are
due. In the event of the involuntary termination of my employment by the Company
for any reason other than for Cause, I will paid all amounts set forth above not
yet paid as soon as practicable after the date my employment terminates.
(e) Retention. I will receive a special one-time grant of 15,000 options to
purchase AT&T common stock. The grant date will be as soon as practical after
the Effective Date of this Agreement and the price will be 100% of the Fair
Market Value on the date of grant. These options will vest and become
exercisable on the third anniversary of the Effective Date, provided that I
remain continuously employed by Parent or any other entity which is a member of
Parent's controlled group of corporations throughout the period ending on such
third anniversary. I will have no vested interest in any such stock prior to
third anniversary of the Effective Date.
Additionally, I will receive special cash payments (non-benefit
bearing) of $60,000 payable on each of September 1, 2000, September 1, 2001 and
September 1, 2002, provided I remain employed by the Company on each of the
payment dates.
(f) Non-Competition. As indicated in the attached AT&T Non-Competition
Guideline (ATTACHMENT D), a number of AT&T incentive arrangements and benefit
plans are subject to non-competition constraints. The AT&T Non-Competition
Guideline provides definitions and standards for evaluating possible violations
of non-competition clauses contained in certain AT&T incentive compensation and
benefit plans and programs. The plan and program documents define the
consequences for competitive activity, which is generally forfeiture, reduction
or other modification of benefits and compensation not yet paid out.
6. TERMINATION AND SEVERANCE.
(a) This Agreement may be terminated by the Parent immediately for Cause by
written notice to me. For purposes of this Agreement, "Cause" means:
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<PAGE> 6
(i)conviction (including a plea of guilty or nolo contendere) of a crime
involving theft, fraud, dishonesty or moral turpitude;
(ii) intentional or grossly negligent disclosure of confidential or trade
secret information of the Company (or any of its Affiliates) to anyone who
is not entitled to receive such information;
(iii) gross omission or gross dereliction of any statutory or common law
duty of loyalty to the Company or any of its Affiliates;
(iv) willful violation of the Company's Code of Conduct or other written
Company policies or procedures;
(v) repeated failure to carry out the duties of the employee's position
despite specific instruction to do so; or
(v) material breach of the Employee's covenants pursuant to section
1.(c), 2 and 3 hereof.
For purposes of the preceding clauses, no act or failure to act, on the part of
Employee, shall be considered "willful" unless it is done, or omitted to be
done, by Employee in bad faith and without reasonable belief that Employee's
action or omission was in the best interests of the Company. Any act, or failure
to act, based upon the instructions or with the express approval of the Board or
of a Company officer with authority to direct Employee or based upon the advice
of counsel for the Company, shall be conclusively presumed to be done, or
omitted to be done, by Employee in good faith and in the best interests of the
Company.
(b) To the maximum extent permitted by law, I hereby expressly authorize
the Employer 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
Termination Agreement and Release attached hereto as Exhibit D 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, whether by expiration of its term, or
otherwise, will not relieve me from my obligations under Sections 1, 2, and 3,
and Exhibits B and C of this
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<PAGE> 7
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.
(i) no further payments will be made under subsection 5.(a), (b) or (e)
for any period after the date of my death or of the event causing my
total disability
(ii) I or my estate will receive my Annual Bonus, pro-rated from the
Effective date to the date of my death or of the event causing my
total disability, plus the entire amount that would otherwise been
payable pursuant to subsection 5.(d) for unvested options and which
then remains unpaid.
(f) Notwithstanding any other provision of this Agreement to the contrary,
upon the Employer initiated termination of my employment at any time for any
reason other than for Cause, or in the event of my voluntary termination of
employment at any time on or after the third anniversary the Effective Time set
forth in the Merger Agreement:
(x) in addition to any Base Salary I have earned, the Employer shall pay
me a lump-sum severance payment as soon as practicable after my
termination or within 30 days of termination of my employment in an
amount equal to two (2) times my Base Salary in effect at the time
of such termination, less any income, excise, employment or other
tax withholdings which the Employer is required by law to deduct
therefrom, such payment being expressly in lieu of any other
severance or termination payment to which I might otherwise be
entitled under the terms of any other benefit plan, program or
policy of the Employer or the Company, other than payments due under
the terms of this Agreement;
(y) the Employer shall continue to provide me with the same level of
insurance benefits and officer perquisites which I have been
receiving from the Company immediately prior to termination, and
such benefits and perquisites shall be provided until the earlier of
(A) such time as I obtain new benefits coverage by reason of new
employment, or (B) the two (2) year anniversary of my termination of
employment with the Company; and
(g) In the event of the termination of this Agreement prior to the
expiration of the Term of Employment for cause, or if I resign at any time for
whatever reason, except as provided in subsection (f) above I will not have any
rights to any amounts, payments, or property described in this Agreement that
were not paid or which were not vested at that time.
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<PAGE> 8
(h) Notwithstanding any other provision of this Agreement, in the event
that any payment or benefit received or to be received by Employee in connection
with the termination of Employee's employment (whether pursuant to the terms of
this Agreement or any other plan, arrangement or agreement with the Parent,
GRCI, or any person affiliated with the Parent, GRCI or such Person) (all such
payments and benefits, including the Severance Benefits, being hereinafter
called the "Total Benefits"), would be subject (in whole or in part) to the
excise tax (the "Excise Tax") imposed under Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code"), then such payments shall be reduced to
the extent necessary so that no portion of the Total Benefits is subject to the
Excise Tax if (A) the net amount of such Total Benefits, as so reduced, (and
after deduction of the net amount of federal, state and local income taxes and
FICA and Medicare taxes on such reduced Total Benefits) is greater than (B) the
excess of (i) the net amount of such Total Benefits, without reduction (but
after deduction of the net amount of federal, state and local income taxes and
FICA and Medicare taxes on such Total Benefits), over (ii) the amount of Excise
Tax to which Employee would be subject in respect of such Total Benefits. For
purposes of determining whether and the extent to which the Total Benefits will
be subject to the Excise Tax, (i) no portion of the Total Benefits the receipt
or enjoyment of which Employee shall have effectively waived in writing prior to
Employee's date of termination of employment shall be taken into account, (ii)
no portion of the Total Benefits shall be taken into account which in the
opinion of tax counsel selected by Parent does not constitute a "parachute
payment" within the meaning of Section 280G(b)(2) of the Code, and (iii) the
value of any noncash benefit or any deferred payment or benefit included in the
Total Benefits shall be determined by Parent's independent auditors in
accordance with the principles of Sections 280G(d)(3) and (d)(4) of the Code.
For purposes of this Section 7(h), the term "Severance Benefits" means the
benefits provided for by clauses (x) and (y) of Section 7(f) hereof.
7. BENEFITS.
During the Term of Employment, in addition to any other entitlement
under the terms of this Agreement, I will continue in the employee benefit plans
and programs generally available to other similarly situated active employees of
GRCI.
8. DISABILITY. If I am 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
GRCI'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 GRCI's short-
-8-
<PAGE> 9
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 or is inapplicable to me, 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 Amended
Agreement, full compensation shall be prospectively reinstated for any remaining
term of this Amended Agreement.
9. 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 Parent 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, AT&T Government Markets, with a copy to the General Counsel, AT&T
Business Services, AT&T Corp., 295 North Maple Avenue, Basking Ridge, New Jersey
07920.
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) 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.
11. ASSIGNMENT; SUCCESSORS. My services are unique and personal.
Accordingly, I may not assign any rights or delegate any duties or obligations
under this Agreement. The
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<PAGE> 10
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.
12. 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.
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. 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
AT&T Corp.
By: /s/ Mary Jane McKeever
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<PAGE> 11
GRC International, Inc.
By: /s/ Gary L. Denman
------------------------------------------
WITNESS EMPLOYEE
/s/ Thomas E. McCabe /s/ Michael G. Stolarik
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<PAGE> 12
EXHIBIT A
DETAILS OF EMPLOYMENT
EMPLOYEE: Michael G. Stolarik
ITEM l(a) Position: CHIEF OPERATING OFFICER. GRC INTERNATIONAL, INC.
(for first six months of the Term of Employment, with the
intent that, thereafter, Employee shall perform the duties of
President and Chief Operating Officer)
ITEM 1 (b) Principal Office: Vienna, VA
ITEM 2 Effective Date of this Agreement: The date of the successful
completion of the tender offer contemplated by the Merger
Agreement
ITEM 3(a) Gross Annual Salary:
$240,000, subject to annual review in accordance with the
Company's standard practice
ITEM 3(b) Target Annual Bonus:
FORTY-FIVE PERCENT OF BASE SALARY
ITEM 4 Notice to Employee:
Michael G. Stolarik
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Vienna, VA 22182
EMPLOYEE: AT&T Corp.:
/s/ Michael G. Stolarik By: /s/ Mary Jane McKeever
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