EMPLOYMENT AGREEMENT
Exhibit 99.1
This Employment Agreement (this “Agreement”) is entered into as of the December 01, 2010, by and
between GTSI Corp., a Delaware corporation (the “Company”), and Xxxxxxxx Xxxxxxxx (the
“Executive”).
WHEREAS, the Executive desires to serve the Company as its President and Chief Executive Officer,
and the Company is willing to employ the Executive in such capacities, on the terms and conditions
set forth below;
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Employment Period.
The Company hereby agrees to employ the Executive as its President and Chief Executive 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 December 01, 2010 (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”).
2. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, the Executive shall serve as the Company’s President and Chief
Executive Officer reporting to the Company’s Board of Directors (the “Board”) 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 Board that are not
inconsistent with the Executive’s position as President and Chief Executive Officer. Subject to
applicable laws, applicable rules, regulations and policies of a national securities exchange
and fiduciary duties, during the Employment Period the Board shall cause the Executive to be
nominated for election by the Company’s stockholders as a Board member.
(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.
Company Confidential
(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 the calendar year 2011, GTSI will guarantee 50% of your incentive
opportunity (at 100% attainment), an amount equal to $225,000. This incentive is contingent on
successful active performance for the calendar year 2011 and if earned, would be paid on or
about March 15, 2012.
(iii) Equity Awards. Executive will be granted, as of November 23, 2010 (the “Grant
Date”), an award of options to purchase up to 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. 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.
(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, including deferred compensation and
profit participation plans, as well as holidays, group health insurance, short term and long
term disability insurance and life insurance, and supplemental executive health care benefits.
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(ii) Leave. The Executive will be eligible to receive and take 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.
3. Termination of Employment.
(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) If the Termination Date is before the Executive’s 65th birthday, 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.
(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.
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(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.
(3) 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.
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(4) 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 material change in the geographic location at which Executive
must perform his services hereunder; 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.
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).
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8. Construction of this Agreement and Certain Terms and Phrases.
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 a director (once
elected) and 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.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement effective as of the date
first above-written.
| GTSI Corp. | Xxxxxxxx Xxxxxxxx | |||||||||
By:
|
/s/ Xxxx X. Xxxxx | Signature: | /s/ Xxxxxxxx Xxxxxxxx | |||||||
| Xxxx X. Xxxxx, Chairman, Board of Directors | ||||||||||
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