Exhibit 10.7
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GRC INTERNATIONAL, INC.
DIRECTORS PHANTOM STOCK PLAN
1. PURPOSE
(a) General Purpose. The loyal and dedicated service of "outside"
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Directors is essential to the growth and progress of any public company.
Accordingly, the Directors Phantom Stock Plan (the "Plan") of GRC International,
Inc. (the "Company") has been adopted to better enable the Company to retain and
attract qualified outside Directors to serve on the Company's Board of
Directors, while providing to such Directors the opportunity to defer receipt of
their compensation. The Program is also intended to provide a stronger nexus
between the contributions made to the Company by its outside Directors and the
value of the compensation they receive, by permitting such Directors to receive
their compensation in the form of phantom stock units ("Units") which are
determined by reference to the Company's $.10 par value Common Stock (the
"Stock") as hereinafter set forth.
(b) Nonqualified Plan. It is intended that this Plan be maintained as
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an unfunded, unsecured, nonqualified deferred compensation arrangement, not
subject to the provisions of the Employee Retirement Income Security Act of 1974
and not eligible for the insurance protection provided by the Pension Benefit
Guaranty Corporation.
2. ADMINISTRATION
The Plan will be administered by a committee of three or more persons
(the "Committee"). Such persons may not be eligible to participate in the
Program, and will be appointed by the Board of Directors of the Company. Awards
of the Company's Common Stock, par value $.10 per share ("Stock"), and options
to purchase the Stock ("Options"), and the amount and nature of the Stock and
Options so awarded, will be automatic, as provided in Sections 5 and 6 of the
Program. All questions of interpretation of the Program will be determined by
the Committee. Such determinations will be final and binding upon all persons
having an interest in the Program.
3. PARTICIPATION
3.1. Eligibility. Each member of the Board of Directors of the
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Company who is not an employee of the Company or any of its subsidiaries is
eligible to participate in the Plan.
3.2. Time of Election. Prior to the beginning of a calendar year,
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each eligible Director may elect to participate in the Plan by directing that
all or any part of the compensation which is not being deferred under any other
plan and which otherwise would have been payable currently for services rendered
as a Director (including the annual Director's retainer and meeting fees) and,
where applicable, as Chairman, during such calendar year and succeeding calendar
years shall be credited to a phantom stock account (the "Director's Phantom
Stock Account"). Any person who shall become a Director during any calendar
year, and who was not a Director of the Company prior to the beginning of such
calendar year, may elect, within 30 days after the Director's term begins, to
defer payment of all or any part of the Director's compensation earned during
the remainder of such calendar year and for succeeding calendar years.
3.3. Form and Duration of Election. An election to participate in the
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Plan shall be made by completing a Deferral Election Form in the form attached
to this Plan (as such Form may be modified by the Company from time to time) and
filing such Form with the Secretary of the Company. Such election shall continue
until the Director terminates or changes such election by filing a new Deferral
Election Form with the Secretary of the Company. Any new
Deferral Election Form shall become effective as of the end of the calendar year
in which such notice is given and shall be effective only with respect to fees
payable for services rendered as a Director thereafter. Amounts credited to the
Director's Phantom Stock Account prior to the effective date of the new Deferral
Election Form shall not be affected by such new Form and shall be distributed
only in accordance with the terms of the previously filed Form applicable to the
previously credited amounts. The time or times at which amounts credited to a
Director's Phantom Stock Account may be redeemed shall be subject to the
additional restrictions contained in Section 5.
3.4. Renewal. A Director who has terminated his election to
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participate may thereafter file another Deferral Election Form to participate
for the calendar year subsequent to the filing of such election and succeeding
calendar years.
4. THE DIRECTOR'S PHANTOM STOCK ACCOUNT
All compensation which a Director has elected to defer under the Plan
and which is not deferred under any other plan shall be credited to the
Director's Phantom Stock Account as follows:
4.1. Fair Market Value. For purposes of this Section 4, the "Fair
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Market Value" of the Stock shall be the average of the high and low sale prices
of the Stock quoted on the New York Stock Exchange Composite Transaction
Reporting System for the Fridays of the applicable calendar quarter. If such
sale prices are not available for any such Friday, then the average of the high
and low sale prices on the next preceding day on which such sale prices are
available shall be used in lieu thereof.
4.2. Phantom Stock Units. As of the end of each calendar quarter,
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there shall be credited to the a participating Director's Phantom Stock Account
the nearest whole number of Units which most closely approximates the Director's
compensation for the quarter in accordance with the following formula:
Applicable Director's
Compensation for the Quarter Number
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Fair Market Value of Stock of Phantom Stock
4.3. Dividends. In accordance with the formula set forth below, there
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shall also be credited to each Director's Phantom Stock Account the nearest
whole number of Units which most closely approximates the amount of any
dividends to which such Director would have been entitled if the number of Units
already credited to the Director's Phantom Stock Account as of the dividend
record date had been shares of issued and outstanding Stock on such date. Any
such dividend amounts shall be credited to each Director's Phantom Stock Account
as the end of each calendar quarter in which the dividends were paid.
Dividend Amount = Number
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Fair Market Value of Stock of Phantom Stock
4.4. No Fractional Shares. No fractional Units shall be credited to a
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Director's Phantom Stock Account. The compensation and dividends to be applied
to a Director's Phantom Stock Account each quarter shall be credited as the
nearest number of whole Units in accordance with the above formulas.
4.5. No Interest to Be Paid. No Director shall be entitled to
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interest on any compensation or dividends to be credited in the form of Units
into the applicable Director's Phantom Stock Account at the end of each calendar
quarter.
5. DISTRIBUTION FROM ACCOUNTS
5.1. Date and Form of Distribution. Distribution from the Director's
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Phantom Stock Account shall be made in the form of cash on the date(s) elected
by the Director in the applicable Deferral Election Form(s) previously filed by
the Director under the Plan. The
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amount of cash paid on account of each Unit shall be equal to the average of the
high and low sale prices of the Stock quoted on the New York Stock Exchange
Composite Transaction Reporting System for the Fridays of the calendar quarter
immediately preceding the distribution. If such sale prices are not available
for any such Friday, then the average of the high and low sale prices on the
next preceding day on which such sale prices are available shall be used in lieu
thereof. Distribution shall be in the form of a lump-sum payment or in annual
installments, as previously elected by the Director in the applicable Deferral
Election Form(s) previously filed by the Director under the Plan. In the case of
installment payments, the Company shall pay the applicable Director (or such
Director's beneficiary or estate) interest on unpaid installments after the
first installment. Such interest shall be paid annually on the subsequent
installment payment dates, at an interest rate equal to the prime rate of
interest as published in the Wall Street Journal on the date of the previous
installment payment.
5.2. Six-Month Limitation. Other provisions of the Plan and the
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Deferral Election Form notwithstanding, amounts credited to a Director's Phantom
Stock Account as Units may be distributed or otherwise redeemed only upon a
fixed date or dates at least six (6) months after the crediting of such amounts
as Units, or incident to death, retirement, disability or termination or
employment, to the extent necessary to comply with Rule 16a-1(c)(3)(ii) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Units
shall be deemed to be distributed in the order in which they were credited to a
Director's Phantom Stock Account, so that earlier-credited Units shall be
distributed before later-credited Units. In addition, if any distribution is to
be made under this Section 5 with respect to a Unit credited (i) less than six
(6) months before the date of distribution and (ii) at a time when the Director
is subject to reporting under Section 16(a) of the Exchange Act, such
distribution shall be delayed until the first business say that is more than six
(6) months after the date such Unit was credited under the Plan. This six (6)
month holding requirement shall apply to Units credited with respect to cash
dividends and other dividends, as well as to Units credited with respect to
Directors' compensation.
5.3. Additional Limitation on Modifications. No Director then subject
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to reporting under Section 16(a) of the Exchange Act may modify the time or
manner of payment under the Plan with respect to Units already credited to such
Director's Phantom Stock Account. In addition, no modification of the time or
manner of payment under the Plan shall be authorized if and to the extent that
such authorization or the making of such modification would constitute
"constructive receipt" on the part of a Director of amounts credited to a
Director's Phantom Stock Account under the federal income tax laws.
6. DISTRIBUTION ON DEATH
If a Director should die before all amounts credited to the Director's
Phantom Stock Account shall have been paid, the remaining balance shall be paid
to the Director's designated beneficiary in the manner and on the date(s)
previously elected by the Director in the applicable Deferral Election Form(s).
Such balance shall be paid to the Director's estate if (a) no such designation
has been made or (b) the designated beneficiary shall have predeceased the
Director and no further designation has been made by the Director. Payments
under this Section 6 shall be determined in the same manner as under Section 5.
7. MISCELLANEOUS
7.1. Account Not Transferable or Assignable. The right of a Director
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to receive any amount credited to the Director's Phantom Stock Account shall not
be transferable or assignable by the Director, except by will or by the laws of
descent and distribution (or to a designated beneficiary), and no part of such
amount shall be subject to attachment or other legal process.
7.2. No Advance Funding Required. The Company shall not be required
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to reserve or otherwise set aside funds or Stock for the payment of its
obligations hereunder.
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7.3. Limitation of Rights. The establishment and maintenance of, or
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allocation and credits to the Director's Phantom Stock Account shall not vest in
any Director or beneficiary any right, title or interest in and to any specific
assets of the Company, including any Units credited to the Director's Phantom
Stock Account, and a Director shall not have any interest in the Units credited
to the Phantom Stock Account until distributed in accordance with the terms of
the Plan. A Director shall not have any dividend or voting rights or any other
rights of a stockholder (for this purpose, the rights provided in Section 4.3
with respect to the crediting of amounts equivalent to dividends and in Section
7.6 with respect to adjustments shall not be deemed "rights of a stockholder").
The right of a Director to receive payments under this Plan shall be no greater
than the right of an unsecured general creditor of the Company.
7.4. No Right to Continue as a Director. Neither the Program, the
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awarding of any Stock or Option, nor any other action taken pursuant to the
Program constitutes or is evidence of any agreement or understanding, express or
implied, that the Company will retain a director for any period of time or at
any particular rate of compensation.
7.5. Amendment or Termination. The Board of Directors may at any time
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amend or terminate the Plan. No amendment or termination shall impair the rights
of a Director with respect to amounts then credited to the Director's Phantom
Stock Account.
7.6. Adjustments. Upon the occurrence of any event affecting the
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outstanding Stock, including stock dividends, extraordinary non-cash dividends,
forward or reverse stock splits, recapitalizations, mergers, consolidations and
the like, an appropriate adjustment will also be made in the number of Units
credited to the Director's Phantom Stock Account, including, where appropriate,
an adjustment in the nature of the Stock by which Units are valued under
Sections 4 and 5 hereof. All such adjustments shall be made so as to prevent
dilution or enlargement of the rights of Directors participating in the Plan.
7.7. Intent. It is the intent of the Company that Units and related
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rights under the Plan credited to Directors who are then subject to Section 16
of the Exchange Act shall not constitute "derivative securities" under Rule 16a-
1(c) under the Exchange Act by virtue of Rule 16a-1(c)(3)(ii), and that
Directors participating in the Plan shall not, for that reason, fail to qualify
as "disinterested persons" under Rule 16b-3(c)(2)(i). Accordingly, the Plan
shall be construed in a manner consistent with the requirements of Rule 16a-
1(c)(3)(ii) and Rule 16b-3(c)(2)(i)(C), and if any Plan provision does not
comply with the requirements of Rule 16a-1(c)(3)(ii) as then applicable to any
transaction by such a Director or the requirements of Rule 16b-3(c)(2)(i)(C)
(permitting disinterested person to elect to receive fees in either cash or an
equivalent amount of securities), such provision shall be deemed amended to the
extent necessary to conform to the applicable requirements of such Rules so that
such a Director shall avoid liability under Section 16(b) and, if then a
Director, shall continue to qualify as a "disinterested person" under
Rule 16b-3.
7.8. Applicable Law. The Plan shall be construed under the laws of
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the State of Virginia and applicable federal law, without regard to conflicts of
law.
7.9. Effective Date. The Plan shall be effective with respect to any
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compensation earned by a Director beginning January 1, 1995.
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GRC INTERNATIONAL, INC.
DIRECTORS PHANTOM STOCK PLAN
DEFERRAL ELECTION FORM
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(This form must be filed prior to beginning of the calendar year for which it is
to be effective.)
(New directors have a 30-day grace period to file this form after their term
begins, for form to be effective for first calendar year of service)
This deferral election is made in accordance with and subject to the terms of
the GRC International, Inc. (the "Company") Directors Phantom Stock Plan (the
"Plan").
1. Compensation to be Deferred. (please check appropriate box and fill in
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applicable blanks).
(a) __ Effective January 1, ____, or as soon thereafter as legally
permissible, I hereby elect to defer the following compensation
into my Phantom Stock Account at the Company (check all boxes
that apply):
[__] Annual Retainer
[__] Meeting Fees
[__] Chairman's Fee
(b) __ Effective January 1, ____, I hereby elect to discontinue all
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deferrals into my Phantom Stock Account.
2. Date of Payment. I hereby elect to receive payment from my Phantom Stock
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Account on (in the case of installments, commencing on) the date indicated below
(please check appropriate box and fill in applicable blanks).
(a) __ The first day of the calendar quarter next following termination
of my service as a Director.
(b) __ The earlier of January 1, _____ or the first day of the calendar
quarter next following termination of my service as a Director.
(c) __ The first day of the calendar quarter next following my death.
(d) __ The earlier of January 1, _____, or the first day of the calendar
quarter next following my death.
3. Form of Distribution. I hereby elect to receive my Phantom Stock Account in
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the form of:
(a) __ A lump sum payment.
(b) __ Annual installments over ____ years (not to exceed 15).
4. Designation of Beneficiary. I hereby designate the following beneficiary to
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receive any amount credited to my Phantom Stock Account under the Plan which has
not been paid to me prior to my death (please print beneficiary's name, address
and social security number).
Beneficiary's Name: ____________________________________
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Beneficiary's Address: _________________________________
_________________________________
Beneficiary's Social
Security Number: _________________________________
5. Effect of Election. The above election will continue to be effective for
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future calendar years unless prior to the beginning of any future calendar year
I file with the Secretary of the Company a new Deferral Election Form with
respect to such calendar year. I understand that a new Deferral Election Form
will only affect compensation with respect to years commencing after the date
such new Deferral Election Form is filed with the Company, and that no new
Deferral Election Form for any future year may change the time or form of
distribution of amounts deferred pursuant to the Deferral Election Form which I
am filing today.
Signature: ________________________________________
Printed Name: _____________________________________
Date: _____________________________________________
CONSENT OF SPOUSE
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(must be competed and notarized if Director is married and spouse is not
beneficiary)
I consent to and approve designation of the above named beneficiary to receive
proceeds of my spouse's GRCI Phantom Stock Account in the event of my spouse's
death.
________________________________________
(spouse's signature)
________________________________________
(date)
STATE OF )
COUNTY OF )
Before me, the undersigned Notary Public in and for said County and said State,
personally appeared this date, __________, whose name is signed to the foregoing
release and who is known to me.
This the __ day of ____________, _________.
____________________________________
Notary Public
My Commission Expires:
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