EMPLOYMENT AGREEMENT
Exhibit 99.1
This Employment Agreement (this “Agreement”) is entered into as of the October 7, 2011, by and
between GTSI Corp., a Delaware corporation (the “Company”), and Xxxxxx Xxxxxxxxx (the “Executive”).
The Company hereby agrees to employ the Executive as its Chief Operating Officer, and the
Executive hereby agrees to work in such employ of the Company, subject to the terms and
conditions of this Agreement, for the period commencing September 30, 2011 (the “Effective
Date”) and continuing until such time as the Executive’s employment hereunder is terminated in
accordance with Section 3 hereof (the “Employment Period”).
(a) Position and Duties.
(i) During the Employment Period, the Executive shall serve as the Company’s Chief Operating
Officer reporting to the Company’s Chief Executive Officer (the “CEO”) with the appropriate
authority, duties and responsibilities attendant to such positions and any other duties and
responsibilities that may, from time to time, be assigned by the CEO that are not inconsistent
with the Executive’s position as Chief Operating Officer.
(ii) During the Employment Period, and excluding any periods of vacation and sick leave to which
the Executive is entitled, the Executive agrees to devote substantially all of his business
attention and time to the business and affairs of the Company and to use the Executive’s best
efforts to perform the Executive’s duties and responsibilities with the Company. During the
Employment Period the Executive will not engage in any other business, profession or occupation
for compensation or otherwise without the prior written consent of the Board; provided that it
shall not be a breach of this Agreement for the Executive to (A) serve on civic, charitable or,
with prior approval of the Board, corporate boards or committees, (B) manage passive personal
investments or (C) participate in charitable, civic, educational, community or industry affairs,
so long as such activities in the aggregate do not interfere or conflict with the performance of
the Executive’s duties and responsibilities as a senior officer of the Company in accordance
with this Agreement or create a potential business or fiduciary conflict.
(iii) Other Agreements. The Executive shall be bound by the terms and conditions set
forth in the GTSI Corp. Employee Confidentiality and Non-Solicitation Agreement and the GTSI
Corp. Employee Non-Competition Agreement between the Executive and the Company and such
agreements are hereby incorporated by reference into this Agreement as if fully set forth
herein.
(b) Compensation.
(i) Annual Base Salary. During the Employment Period, the Executive shall receive a
base salary at an annual rate of not less than $400,000.00 (the “Annual Base Salary”), payable
in accordance with the regular payroll practices of the Company. The Annual Base Salary will be
reviewed at least annually by the Board, or a committee thereof to which the Board may from time
to time have delegated such authority (the “Committee”), and may be modified in the Board’s (or
Committee’s) sole discretion, in which event any modified Annual Base Salary will be deemed the
Annual Base Salary under this Agreement.
(ii) Annual Bonus. Under the provisions of the Company’s current executive annual
incentive performance bonus program, during the Employment Period, the Executive shall be
eligible to receive an annual bonus (“Annual Bonus”), in the form of cash and/or a form of stock
award as established by the Board, or by the Committee, after good-faith consultation with the
Executive. Payment of Annual Bonuses shall be subject in each case to the Executive’s continued
employment hereunder. For calendar year 2011, you will be eligible to participate in the GTSI
Executive Incentive plan on a pro-rated basis. For the calendar year 2012, GTSI will guarantee
50% of your incentive opportunity (at 100% attainment), an amount equal to $125,000. This
incentive is contingent on successful active performance for the calendar year 2012 and if
earned, would be paid on or about March 15, 2013.
(iii) Equity Awards. Executive will be granted non-statutory stock options (each an
“Option”), effective as of the date of grant (the “Grand Date”), to purchase a total of 200,000
shares of the Company’s Common Stock under the terms and conditions of the Company’s 2007 Stock
Incentive Plan (the “Options”), subject to the Executive’s continued employment hereunder from
the Grant Date to the date of vesting of such Options. These options will be granted as
follows: one Option for 100,000 shares will be granted as of your first day of employment; the
second Option for 100,000 shares will be granted as of close of business of the first business
day in 2012 provided the Executive is still an employee of the Company. For each grant, the
exercise price will be equal to the closing price of the Company’s Common Stock on the Grant
Date or, if there has been no trading in the Company’s Common Stock of the respective Grant
Date, then the immediately preceding date upon which the Company’s Common Stock is so traded (as
reported the following business day in The Wall Street Journal). Such Options will vest in
one-third equal increments on each of the first three anniversaries of the Grant Date. Except
as set forth in Section 3(c)(ii) in connection with a Change in Control, any Options that fail
to vest because of the termination of the Employment Period shall be forfeited and
null and void. The level of the Executive’s additional participation in any equity awards, if
any, shall be determined in the sole discretion of the Board or the Committee from time to time.
Any awards granted to the Executive shall be granted pursuant to and, to the extent not
contrary to the terms of this Agreement, shall be subject to all of the terms and conditions
imposed under Company’s 2007 Stock Incentive Plan (as it may be amended from time to time) and
any other executive compensation plans generally offered by Company to it senior officers.
(iv) Tax Withholdings. The Company will withhold from the Executive’s compensation
hereunder and pay to the appropriate governmental agencies payroll taxes, including income,
social security, and unemployment compensation taxes, required by the federal, state and local
governments with jurisdiction over the Company.
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(c) Benefits.
(i) Executive Benefit Plans. During the Employment Period, Executive will be entitled
to such comparable fringe benefits and perquisites as may be provided to any or all of Company’s
senior officers pursuant to policies established at any time, and from time to time, by the
Board. These fringe benefits and perquisites will include the Executive’s participation in
compensatory, benefit and incentive plans and arrangements, as well as holidays, group health
insurance, short term and long term disability insurance and life insurance, and supplemental
executive health care benefits (Inova Executive physical).
(ii) Leave. The Executive will be eligible to receive and take twenty (20) days of
annual paid leave that Company generally makes available to its senior officers in accordance
with the Company’s leave policies (as may be revised from time to time).
(iii) Business and Entertainment Expenses. Upon presentation of appropriate
documentation, the Executive shall be reimbursed in accordance with the Company’s expense
reimbursement policy, for all reasonable business and entertainment expenses incurred in
connection with the performance of the Executive’s duties hereunder and the Company’s policies
with regard thereto.
(a) By Company.
(i) Termination for Cause. The Company may for Cause (as defined below) terminate the
Employment Period at any time upon at least five (5) Business Days prior notice to the
Executive. In any event, as of the date of termination of the Employment Period set forth in
the notice (the “Termination Date”), the Executive will be relieved of all of his duties
hereunder and the Executive will not be entitled to the accrual or provision of any compensation
(including Annual Bonus) or benefit (including the vesting of Options) after the Termination
Date, but Executive will be entitled to the provision of all Annual Base Salary and other
benefits that will have
accrued as of the Termination Date, including all vested Options, paid leave benefits, and
reimbursement of incurred business expenses.
(ii) Termination without Cause. The Company may, in its sole discretion, without Cause,
terminate the Employment Period at any time by providing Executive with thirty (30) days prior
notice. Notwithstanding the foregoing, the Company may, at its option, provide up to thirty (30)
days’ Annual Base Salary and benefits in lieu of such thirty (30) days’ notice of any portion
thereof. Upon termination of the Employment Period under this Section 3(a)(ii) (the “Termination
Date”), the Company will be obligated to pay the Executive:
(x) All compensation earned and accrued hereunder, but not yet paid, as of the Termination
Date (e.g., previous year’s Annual Bonus payments) and other benefits that will have accrued
as of the Termination Date, including all vested Options, paid leave benefits, reimbursement
of incurred business expenses, and reimbursement for COBRA contribution for up to the first
365 days after the Termination Date. The Option exercise period would be extended to the
maximum period permitted under Company’s 2007 Stock Incentive Plan, without subsequent
stockholders approval and the Company incurring any charge or costs. If as a result of the
terms of this Agreement the exercise period of an Option is extended, such extension is only
permissible to the extent that it does not result in an impermissible extension of the
Option for purposes of Code Section 409A.
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(y) An aggregate severance payment equal to the Annual Base Salary in effect as of the
Termination Date (the “Severance Payment”). The Severance Payment will be paid during the
period commencing on the Termination Date and ending on the first anniversary thereof (the
“Severance Period”) and will be paid in 24 equal semimonthly payments in accordance with
Company’s standard payroll schedule during the Severance Period, provided that the amount
payable during the first six months shall not exceed two times the maximum amount that may
be taken into account under a qualified retirement plan under Section 401(a)(17) of the
Internal Revenue Code of 1986, as amended (the “Code”) for the year in which the Termination
Date occurs. Any portion of the Severance Payment scheduled but not payable during the
first six months because of the limitation in the prior sentence shall be paid in a lump sum
with the first payment due after the end of the six months.
(iii) Definition of Cause. Termination by the Company of the Employment Period for
“Cause” means termination as a result of (x) deliberate and premeditated acts against the
Company’s best interests; or (y) acts or omissions involving unacceptable performance under
standard business results for a company in Company’s market and industry, as reasonably
determined by the Board, or (z) improper conduct (examples of which include, but are not limited
to: failure or refusal to perform assigned duties or to follow Company’s policies, as determined
in the Board’s sole discretion ; commission of sexual harassment or other employment practice
liabilities; excessive absenteeism; unlawful use or possession of drugs or misuse of legal drugs
or alcohol; misappropriation of a Company asset or
opportunity; the offer, payment, solicitation or acceptance of any bribe or kickback with
respect to Company’s business; the assertion, representation or certification of any false claim
or statement to a customer of the Company; or indictment or conviction for any felony whatsoever
or for any misdemeanor involving moral turpitude).
(b) Death or Disability. The Employment Period will be terminated immediately and
automatically upon Executive’s death or “Disability.” The term “Disability” will mean the
Executive’s inability to perform all of the essential functions of his position hereunder for a
period of 26 consecutive weeks or for an aggregate of 150 days during any 365-day period by reason
of illness, accident or any other physical or mental incapacity, as may be permitted by applicable
law. The Executive’s capability to continue performance of the Executive’s duties hereunder will
be determined by a panel composed of two independent medical doctors appointed by the Board and one
appointed by the Executive or his designated representative. Upon termination of the Employment
Period under this Section 3(b), the Executive will not be entitled to the accrual or provision of
any compensation (including Annual Bonus) or benefit (including vesting of Options) after the
Termination Date, but Executive will be entitled to the provision of all Annual Base Salary and
benefits that will have accrued as of the Termination Date, including all vested Options, paid
leave benefits, reimbursement of incurred business expenses, and any Annual Bonus earned as of the
Termination Date (to be paid out when all Annual Bonus payments are made). As this position is
eligible for an annual bonus program, any bonus considered ‘earned’ would be eligible to be paid
after the measured year and paid in the March-April timeframe following the previously measured
years performance. This annual bonus program does not pro-rate for a partial year.
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(c) By Executive
(i) Termination without Cause. The Executive may, in his sole discretion, without
cause, terminate the Employment Period at any time by providing the Company with 30 days prior
notice. If Executive exercises such termination right, the Company may, at its option, at any
time after receiving such notice from the Executive, relieve him of his duties hereunder and
terminate the Employment Period at any time prior to the expiration of said notice period. If
the Employment Period is terminated by the Executive pursuant to this Section 3(c)(i), the
Executive will be entitled to the provision of all Annual Base Salary and other benefits that
will have accrued as of the Termination Date, including all vested Options, paid leave benefits,
and reimbursement of incurred business expenses, but will not be entitled to any further accrual
or provision of any other compensation (including Annual Bonus) or benefits (including the
vesting of Options) after the Termination Date.
(ii) Change of Control. For purposes of this Section 3, a “Change of Control” will be
deemed to have occurred upon the happening of any of the following events: (1) the Company’s
stockholders approve a merger or consolidation of Company with any other corporation, other than
a merger or consolidation which would result in
the voting securities of Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being the surviving entity) more than 50% of the combined
voting power of the voting securities of Company or such surviving entity outstanding
immediately after such merger or consolidation; or (2) the Company’s stockholders approve an
agreement to liquidate the Company or sell all or substantially all of Company’s assets.
(x) If, during the Employment Period, (1) a Change of Control occurs and the Employment
Period is terminated without Cause or an event occurs constituting Good Reason (as defined
below), or (2) one or more events that constitute a material breach of this Agreement
leading to the Executive’s resignation for Good Reason are effected in anticipation of a
Change of Control, including an attempt by the Company or its successor to avoid the
Company’s or its successor’s obligations under this Agreement, the Executive may, in his
sole discretion, terminate the Employment Period upon five days’ notice to the Company. If
the Executive terminates the Employment Period pursuant to this Section 3(c)(ii), the
Company may, at its option, at any time after receiving such notice from the Executive,
relieve him of his duties hereunder and terminate the Employment Period at any time prior to
the expiration of said notice period. Any vested Options as set out above, shall remain in
full force and effect.
(y) If the Employment Period is terminated by the Executive pursuant to this Section
3(c)(ii) for Good Reason, or by the Company without Cause in connection with a Change of
Control, the Executive will receive the following, commencing on the Termination Date:
(1) A severance payment equal to twelve months of Annual Base Salary in effect as of the
Termination Date. The Severance Payment will be paid during the 12 months following the
Termination Date and will be paid in 24 equal semimonthly payments in accordance with
the Company’s standard payroll schedule during such 12 months, provided that the amount
payable during the first six months shall not exceed two times the maximum amount that
may be taken into account under a qualified retirement plan under Code Section
401(a)(17) for the year in which the Termination Date occurs. Any portion of the
Severance Payment scheduled but not payable during the first six months because of the
limitation in the prior sentence shall be paid in a lump sum with the first payment due
after the end of the six months.
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(2) All other benefits that will have accrued as of the Termination Date, including all
vested Options, paid leave benefits, and reimbursement of incurred business expenses.
Any outstanding unvested Options or any other stock awards (whether restricted stock,
stock options or other awards) in Company common stock previously granted to the
Executive will have their vesting accelerated in full so as to become 100% vested and
immediately exercisable in full as of the date of such Change of Control.
(3) The Company’s obligation to provide the foregoing will be subject to a reasonable
release and waiver under the same or similar terms that have been or will be required of
other executive officers of the Company.
(z) For all purposes of this Agreement, “Good Reason” means any one of the following events,
provided that the Executive has notified the Company of the existence of the event within 60
days after its initial occurrence or existence; the Company has not within 30 days after its
receipt of the notice remedied the matter in compliance with this Agreement; and within 30
days after the expiration of the 30-day period referenced above, the Executive provides the
Company with notice of the Executive’s termination of the Employment Period: (1) any
material diminution of the Executive’s then existing Annual Base Salary; (2) any material
diminution of Executive’s duties, responsibilities, authority, reporting structure, titles
or offices hereunder; (3) any involuntary material increase, as determined by the Company’s
Board of Directors acting in good faith, in the Executive’s daily commute time from his
principal residence to his primary work location; or (4) any other action or inaction by the
Company that constitutes a material breach of its obligations under this Agreement.
4. Non-Waiver. It is understood and agreed that one party’s failure at any time to require
the performance by the other party of any of the terms, provisions, covenants or conditions hereof
will in no way affect the first party’s right thereafter to enforce the same, nor will the waiver
by either party of the breach of any term, provision, covenant or condition hereof be taken or held
to be a waiver of any succeeding breach.
5. Severability. If any provision of this Agreement conflicts with the law under which
this Agreement is to be construed, or if any such provision is held invalid or unenforceable by a
court of competent jurisdiction or any arbitrator, such provision will be deleted from this
Agreement and the Agreement will be construed to give full effect to the remaining provisions
thereof.
6. Governing Law and Jurisdiction. This Agreement will be interpreted, construed and
governed according to the laws of the Commonwealth of Virginia, without regard to the conflict of
law provisions thereof. Any actions brought by any party pursuant to this Agreement shall be
brought exclusively in the state and federal courts of the Commonwealth of Virginia.
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7. Code Section 409A. To the extent that such requirements are applicable, this Agreement
is intended to comply with the requirements of Code Section 409A (“Section 409A”) and shall be
interpreted and administered in accordance with that intent. If any provision of this Agreement
would otherwise conflict with or frustrate this intent, that provision shall be interpreted and
deemed amended so as to avoid the conflict. The nature of any such amendment shall be determined by
the Board. If the Executive qualifies as a “specified employee,” as defined in Treasury Regulation
Section 1.409A-1(i), incurs a “separation from service,” as defined in Treasury Regulation Section
1.409A-1(h), for any reason other than death and becomes entitled to a distribution under the
Agreement, then to the extent required by Section 409A, no distribution otherwise payable to the
Executive during the first six months after the date of such separation
from service, shall be paid to Executive until the date which is one day after the date which is
six months after the date of such separation from service (or, if earlier, the date of Executive’s
death).
a. The words “including,” “include” and “includes” are not exclusive and will be deemed to be
followed by the words “without limitation”; if exclusion is intended, the word “comprising” is
used instead.
b. Whenever this Agreement refers to a number of days, such number will refer to calendar days
unless Business Days are specified. For purposes of this Agreement, Business Days will mean any
day other than a Sunday, Saturday or other day on which banking institutions are authorized or
obligated to close in New York, New York.
c. The parties have participated jointly in the negotiation and drafting of this Agreement. If
an ambiguity or question of intent or interpretation arises, this Agreement will be construed as
if drafted jointly by the parties and no presumption or burden of proof will arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.
d. Both the Executive and the Company have received independent legal advice with respect to the
advisability of entering into this Agreement and neither has been entitled to rely upon nor has
in fact relied upon the advice of the other party or such other party’s counsel in entering into
this Agreement. The paragraph headings and captions contained in this Agreement are for
convenience only and will not be construed to define, limit or affect the scope or meaning of
the provisions hereof. Any reference herein to the term “Section” without any reference to a
specified document or law will be deemed to refer to the specified Section of this Agreement.
9. Indemnification. The Company agrees to indemnify the Executive as an officer of the
Company to the fullest extent permitted by the Company’s Restated Certificate of Incorporation and
Bylaws, as such governing instruments are in effect as of the date hereof or as such indemnity
provisions may be increased from time to time.
11. Entire Agreement. This Agreement contains and represents the entire agreement of the
Company and the Executive and supersedes all prior agreements, representations or understandings,
oral or written, express or implied with respect to the subject matter hereof. This Agreement may
not be modified or amended in any way unless in writing signed by each of the Company and the
Executive.
12. Assignment. Neither this Agreement nor any rights or obligations of the Company or the
Executive hereunder may be assigned by the Company or the Executive without the other party’s prior
written consent. Subject to the foregoing, this Agreement will be binding upon and inure to the
benefit of the Company and the Executive and their heirs, estate, representatives, successors and
assigns.
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13. Notices. All notices required or permitted hereunder will be in writing and will be
deemed properly given if delivered personally or sent by certified or registered mail, postage
prepaid, return receipt requested, or sent by telegram, telex, fax or similar form of
telecommunication, and will be deemed to have been given when received. Any such notice or
communication will be addressed: (a) if to the Company, to General Counsel, 0000 Xxxxxx Xxxx Xxxxx,
Xxxxxxx Xxxxxxxx 00000; or (b) if to the Executive, to his last known home address on file with the
Company; or to such other address as the Company or the Executive will have furnished to the other
in writing.
| GTSI Corp. | Xxxxxx Xxxxxxxxx | |||||||||
By:
|
Signature: | |||||||||
| Chief Executive Officer | ||||||||||
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