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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
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TABLE OF CONTENTS
PAGE
----
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
Schedule I -- Directors and Executive Officers of AT&T and the Purchaser
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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
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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:
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
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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.
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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
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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.
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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
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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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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
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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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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.
HIGH LOW
------ ------
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
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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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
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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.
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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)
FISCAL YEAR ENDING JUNE 30,
--------------------------------------------------------
2000 2001 2002 2003 2004 2005
------ ------ ------ ------ ------ ------
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
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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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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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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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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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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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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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
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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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(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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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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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.
PRINCIPAL OCCUPATION AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
--------------------- ------------------------------------------------
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.
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PRINCIPAL OCCUPATION AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
--------------------- ------------------------------------------------
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.
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DATE
BECAME
EXECUTIVE
NAME PRESENT TITLE OFFICER
--------------------- ------------------------------------------------ ---------
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
- ---------------
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
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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.
PRINCIPAL OCCUPATION AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
------------------------------- ------------------------------------------------
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.
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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
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
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