TRANSITION AGREEMENT
Exhibit 99.2
THIS TRANSITION AGREEMENT (this “Agreement”) is entered into as of January 20, 2010, by and
between GTSI Corp., a Delaware corporation (the “Company” or “GTSI), and Xxxxx X. Xxxx (“Xx.
Xxxx”), an individual currently residing in Fairfax, Virginia.
RECITALS:
R. 1. Xx. Xxxx is currently employed as GTSI’s Chief Executive Officer “CEO”) and also serves
as a member of the GTSI’s board of directors (the “Board”), pursuant to an Employment Agreement
dated as of February 16, 2006 between GTSI and Xx. Xxxx (as amended through the date hereof, the
“Leto Employment Agreement”).
R. 2. As of 5:00 pm on February 15, 2010 (“Resignation Date”), Xx. Xxxx will be deemed for all
purposes to have resigned as an officer (including as CEO) of GTSI and to have resigned as a member
of the Board as of April 21, 2010.
R. 3. The Company desires to benefit from the experience and ability of Xx. Xxxx arising from
his prior experience, in general and with GTSI by having Xx. Xxxx (a) remain as an employee of the
Company during the period starting on the Resignation Date and ending on May 31, 2010, and (b)
serve the Company as an consultant during the period starting on June 1, 2010 and ending on
December 31, 2010, or such earlier date as provided herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants, and undertakings contained
in this Agreement, the Company and Xx. Xxxx hereby agree as follows:
1. Resignation. Xx. Xxxx is hereby irrevocably resigning as an officer (including as GTSI’s CEO
effective as of the Resignation Date and as a Board member effective as of April 21, 2010. Subject
to Section 7, Xx. Xxxx will continue to serve hereunder as an employee of the Company during the
period starting on the Resignation Date and ending on May 31, 2010 (“Employee”). From June 1, 2010
to December 31, 2010, Xx. Xxxx will serve GTSI as a non-employee consultant (“Consultant”), as
described herein.
2. Term. As used herein, “Term” means the entire period referenced in Section 1 (the Resignation
Date to December 31, 2010) during which Xx. Xxxx will serve GTSI hereunder first as Employee during
the period starting on the Resignation Date and ending on May 31, 2010 and thereafter Consultant
during the period starting on June 1, 2010 and ending on December 31, 2010, subject to extension or
termination as provided in Section 7.
Transition Agreement, January 20, 2010, page 2 of 7
3. Employee-Consultant Services.
(a) General. During the Term, Xx. Xxxx will report directly to the Chairman of the Board (the
“Chairman”) and will not for all general purposes participate in
management discussions and decisions, except as may be specifically requested by the Chairman
from time to time.
(b) Duties. During the Term, Xx. Xxxx shall, during the Company’s normal business hours and
upon reasonable notice, be available to perform such mentoring, consulting and advisory services as
are reasonably requested by the Chairman and are reasonably consistent with Xx. Xxxx’x experience,
background and current and former positions with the Company.
(c) Specific Service. Xx. Xxxx acknowledges and agrees that with reasonable notice and upon
request of the Chairman, Xx. Xxxx shall make himself available for such mentoring, consulting and
advisory services as may be requested by the Chairman. In providing such services, Xx. Xxxx will
endeavor to do so in a professional and diligent manner, providing the Company, its subsidiaries,
and management of the Company and its subsidiaries with the benefits of his informed and
professional judgment. Xx. Xxxx agrees to attend such meetings as reasonably requested from time
to time for proper communication of his advice and consultation. Xx. Xxxx shall coordinate the
furnishing of his services pursuant to this Agreement with Company representatives so that such
services can be provided in a manner as to generally conform to the Company’s business schedules,
but the method of performance, time of performance, place of performance, hours utilized in such
performance, and other details of the manner of performance of Xx. Xxxx’x services hereunder shall
be within Xx. Xxxx’x sole control and discretion. While as an Employee or Consultant hereunder,
Xx. Xxxx shall have the right to devote his business day and working efforts to other business,
professional, public service, or community pursuits as do not materially interfere or conflict (as
determined by mutual agreement of the Company and Xx. Xxxx) with the rendering of consulting
services to the Company hereunder.
(d) Additional Services. During the Term, Xx. Xxxx will continue to represent GTSI as a
member of the Eyak Technology, LLC Board of Directors, until such time as the Chairman, in
agreement with GTSI’s CEO, select an alternate representative. While serving as the GTSI
representative, Xx. Xxxx agrees to continue representing GTSI’s interest and to provide the
Chairman, and subsequently the Board and GTSI’s CEO with a written summary or presentation of
EyakTek Board meetings, within 10 business days following such meetings.
4. Support Facilities. During the Term, the Company shall provide Xx. Xxxx with his current
Company portable computer and cell phone, all free and clear of any obligation to GTSI (provided
that all additional charges and fees not covered by GTSI’s expense policy for employees and
directors will be covered by Xx. Xxxx).
5. Compensation, Benefits and Reimbursement.
(a) Employee. Subject to the terms and conditions hereof, Xx. Xxxx will be compensated as
follows:
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Transition Agreement, January 20, 2010, page 3 of 7
| (1) | From February 16, 2010 to March 31, 2010, a base salary at the rate
per annum equal to 100% of his current base salary of $525, 000 (“Base Salary”)
will be paid to Xx. Xxxx for his services as an Employee hereunder; and |
||
| (2) | From April 1, 2010 to May 31, 2010, a base salary at the rate per
annum equal to 75% of the Base Salary will be paid to Xx. Xxxx for his services as
an Employee hereunder. |
(b) Consultant. Xx. Xxxx will be compensated as follows:
| (1) | From June 1, 2010 to June 30, 2010, a base salary at the rate per
annum equal to 75% of the Base Salary will be paid to Xx. Xxxx for his services as
a Consultant hereunder. |
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| (2) | From July 1, 2010 to September 31, 2010, fees at the rate per annum
equal to 50% of the Base Salary will be paid to Xx. Xxxx for his services as a
Consultant hereunder; and |
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| (3) | From October 1, 2010 to December 31, 2010, fees at the rate per
annum equal to 25% of the Base Salary will be paid to Xx. Xxxx for his services as
a Consultant hereunder. |
(c) Payment Timing. Xx. Xxxx will be paid (a) on GTSI’s normal payroll cycle while serving as
an Employee hereunder and (b) on a monthly basis while serving as a Consultant hereunder.
(d) Employee Benefits. While serving as an Employee hereunder,, Xx. Xxxx will be entitled
to such employee benefits, to include healthcare benefits, vacation benefits and comparable fringe
benefits and perquisites as may be provided generally to GTSI’s employees and senior officers
pursuant to policies established from time to time by GTSI. In addition, GTSI will withhold from
Xx. Xxxx’x compensation hereunder and pay over to the appropriate governmental agencies all
payroll taxes, including income, social security, and unemployment compensation taxes, required by
the federal, state and local governments with jurisdiction over GTSI. GTSI will also continue to
deduct Xx. Xxxx’x normal employee contribution for the benefits he has elected for the Plan year
2010). As an Employee hereunder, Xx. Xxxx will also retain all rights under existing stock awards
as an employee through May 31, 2010 (and any applicable period beyond this date as set out in such
awards), unless earlier terminated as provided herein.
(e) Expiration of Employee Benefits. Except as otherwise specifically provided herein, upon
expiration of the Term as an Employee, Xx. Xxxx will not be entitled to the benefits normally
provided to individuals leaving employment with GTSI, including payment for any accrued vacation
time. Notwithstanding the foregoing, the Company will reimburse Xx. Xxxx monthly for the cost of
his COBRA contribution for the six-month period following the end of the employment period
hereunder (May 31, 2010).
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Transition Agreement, January 20, 2010, page 4 of 7
(f) Consultant Period. While serving as a Consultant hereunder, Xx. Xxxx will be considered
an independent consultant, and as such, GTSI and Xx. Xxxx will be independent to one another, and
nothing herein shall be deemed to cause this Agreement to create an agency, employment
relationship, partnership, or joint venture between the parties. Except as expressly provided in
this Agreement, GTSI shall not be liable for any debts, accounts, obligations, or other
liabilities whatsoever of Consultant, including Consultant’s obligation to withhold Social
Security and income taxes for itself or any of its employees.
(g) Survivor Benefits. If Xx. Xxxx dies or becomes disabled before December 31, 2010, the
unpaid balance of Xx. Xxxx’x salary for the balance of the Term as an Employee or compensation as a
Consultant, whichever is applicable, as if the Term had expired on December 31, 2010, will be
immediately payable in a lump sum to Xx. Xxxx’x surviving spouse or his estate.
(h) Reimbursement. The Company shall reimburse Xx. Xxxx for all reasonable out-of-pocket
expenses that are actually incurred by him in performance of his specific duties for GTSI as an
Employee and as a Consultant during the Term, including transportation; hotel accommodations and
such other expenses as might be incurred by a senior executive of the Company in furtherance of
Company business. Before the last day of the month following each month of the Term when
reimbursable expenses are incurred, Xx. Xxxx shall submit to the Company a monthly statement
setting forth the reimbursable expenses incurred for the prior month, with expenses reviewed by
GTSI’s Governance Committee. With such statements, Xx. Xxxx shall furnish all records, receipts
and other evidence in support of his reimbursable expense statement as may be requested by the
Company or Governance Committee according to its policy in effect for employee expense reports.
Upon approval of the expense statements, the Company shall promptly reimburse Xx. Xxxx for the
approved expenses. In addition, should Xx. Xxxx be subject to any lease termination fees directly
related to his automobile associated with his Employment Agreement, GTSI will reimburse Xx. Xxxx
for such amounts, subject to compliance with this Section.
(i) Board Service. The parties agree and acknowledge that Xx. Xxxx is as of the date of this
Agreement a GTSI Board Member. During that portion of the Term that Xx. Xxxx serves as Consultant
hereunder and as a Board member (if any), Xx. Xxxx will be compensated for his Board services as a
non-employee director consistent with GTSI’s the applicable policies for non-employee directors.
(j) No Other Compensation. Except as set forth herein, no other compensation or fees, shall be
payable to Xx. Xxxx for services performed hereunder in his capacity as Employee or Consultant.
6. Non-Compete, Non-Solicitation and Confidential Information.
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Transition Agreement, January 20, 2010, page 5 of 7
(a) Xx. Xxxx hereby agrees that notwithstanding any other provision hereof, he will not at any
time during the Term, and without the prior written consent of the Chairman (i) solicit any GTSI
officer or senior employee (Manager and above) to take a position with a company that primarily
sells information technology products and/or
services to the federal government, or to a company that is otherwise viewed by the GTSI
management or Board as a competitor of GTSI or (ii) accept any employment, consultant or similar
arrangement with a company that primarily sells information technology products and/or services to
the federal government, or to a company that is otherwise viewed by the GTSI management or Board as
a competitor of GTSI.
(b) Xx. Xxxx also agrees not to make any unauthorized disclosure of any confidential business
information or trade secrets of the Company (which he acknowledges are valuable and unique assets
of the Company used in its business to obtain a competitive advantage over the Company’s
competitors who do not know or use this information), or make any unauthorized use thereof;
provided, however, this restriction shall not apply to any information that has entered the public
domain (other than by his own acts or omissions). The obligations of Xx. Xxxx set forth in this
Section 6 (b) shall apply during the Term and shall survive termination of the Term or the
termination of Xx. Xxxx’x services under this Agreement regardless of the reason for such
termination for a period of 365 consecutive days following such termination.
7. Termination and Renewal of the Term. Notwithstanding anything herein to the contrary, the Term
shall terminate upon the earlier of: (a) Xx. Xxxx ceasing to be an Employee before May 31, 2010 or
Consultant at any time during the period from June 1, 2010 to the expiration of the Term, or Xx.
Xxxx’x death or disability during the Term, (b) notice provided to Xx. Xxxx by GTSI on or after
June 1, 2010 of GTSI’s termination of the Term due to Xx. Xxxx’x non-performance with the terms of
this Agreement, or (c) expiration of the Term as of December 31, 2010. Upon any termination of the
Term before December 31, 2010, except as may be specifically otherwise provided herein (to include
Section 5(g)), no compensation, fees or benefits shall continue thereafter to accrue for the
benefit of, or otherwise be provided to, Xx. Xxxx, or his surviving spouse or estate. If, however,
the Company elects, pursuant to clause (b) of the immediately preceding sentence, to terminate the
Term due to Xx. Xxxx’x non-performance, GTSI shall within 30 days thereafter pay to Xx. Xxxx (or,
in the event of his death after such termination, to his surviving spouse or estate), an amount
equal to the compensation and fees Xx. Xxxx would have earned up to the date of termination. By
the end of the Term or after the end of the Term, the parties may jointly renew the terms of the
Consultant relationship at the end of the Term or elect to initiate an additional consultancy
period. In such a case, GTSI and Xx. Xxxx will separately agree to a new agreement setting out
terms and conditions for such a relationship.
8. Notices. For purposes of this Agreement, notices, demands, consents, waivers, approvals and all
other communications provided for in or otherwise contemplated by this Agreement shall be in
writing and shall be deemed to have been duly given when delivered by hand at, or by sending the
same by prepaid first class mail (airmail if to an address outside the country of posting) to, the
following addresses:
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Transition Agreement, January 20, 2010, page 6 of 7
If Xxxxx X. Xxxx
In Michigan:
0000 Xxxxxxxxx Xxxxx Xxxx Xxxxx
Xxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
0000 Xxxxxxxxx Xxxxx Xxxx Xxxxx
Xxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
In Florida:
0000 Xxxxxxx Xxxxx
Xxxxxxxxxx Xxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
0000 Xxxxxxx Xxxxx
Xxxxxxxxxx Xxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
If to the Company:
GTSI Corp.
0000 Xxxxxx Xxxx Xxxxx
Xxxxxxx,XX 00000
Attention: Chairman, Board of Directors
With a copy to: General Counsel
0000 Xxxxxx Xxxx Xxxxx
Xxxxxxx,XX 00000
Attention: Chairman, Board of Directors
With a copy to: General Counsel
or to such other address as either party may furnish to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon receipt.
9. Successor Obligations and Assignment. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and be binding upon the Company’s successors and assigns.
10. Amendment. This Agreement may not be modified except by an agreement in writing executed by
both the Company and Xx. Xxxx.
11. Governing Law and Jurisdiction. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia, without giving effect to principles of
conflicts of laws.
12. Validity. If any portion or provision of this Agreement is found to be invalid or
unenforceable, the other portions or provisions hereof shall not be affected thereby.
13. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be an original, but all of which together shall constitute one and the same
instrument.
14. Construction of this Agreement and Certain Terms and Phrases.
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Transition Agreement, January 20, 2010, page 7 of 7
(a) The section headings contained in this Agreement are inserted for purposes of convenience
of reference only and shall not affect the meaning or interpretation hereof.
(b) Unless the context of this Agreement otherwise requires, (i) words of any gender include
each other gender; (ii) words using the singular or plural number also include the plural or
singular number, respectively; (iii) the terms “hereof,” “herein,” “hereunder,” “hereby” and
derivative or similar words refer to this entire Agreement; and (iv) the term “Section” refers to
the specified Section of this Agreement.
(c) The word “including” is not exclusive; if exclusion is intended, the word “comprising” is
used instead.
(d) The word “or” shall be construed to mean “and/or” unless the context clearly prohibits
that construction.
(e) The Company and Xx. Xxxx have participated jointly in the negotiation and drafting of this
Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the Company and Xx. Xxxx and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions
of this Agreement.
15. Effect of Agreement. The terms and conditions of this Agreement shall supersede any
obligations and rights of the Company and its subsidiaries, on the one hand, and Xx. Xxxx, on the
other hand, respecting employment, compensation and benefits prior to the Term. The execution of
this Agreement shall constitute for all purposes the termination, as of the date hereof of the Leto
Employment Agreement, with neither party having any obligation or liability thereunder or otherwise
in respect thereof that survives the execution of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.
| GTSI Corp. |
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| By: | /S/ | |||
| Xxxx Xxxxx, | ||||
| Chairman, Board of Directors | ||||
| /S/ | ||||
| Xxxxx Xxxx | ||||
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