GTSI CHANGE OF CONTROL
AGREEMENT
This Change of Control Agreement
(“Agreement”) is entered into as of
September 1, 2009 (the “Effective Date”),
by and between William Weber (“Executive”) and GTSI
Corp., a Delaware corporation (the “Company” or
“GTSI”).
R1. The Company may from time to time consider the
possibility of being acquired or otherwise controlled by another
individual or entity. The Company’s board of directors (the
“Board”) recognizes that such consideration can be a
distraction to Executive and can cause Executive to consider
alternative employment opportunities. The Board has determined that
it is in the best interests of the Company and its stockholders to
assure that the Company will have Executive’s continued
dedication and objectivity, notwithstanding the possibility, threat
or occurrence of a Change of Control (as defined below).
R2. The Board believes that it is imperative,
without changing the nature of the at-will employment relationship
between Executive and GTSI, to provide Executive upon a Change of
Control event with reasonable financial security and incentive and
encouragement to remain employed by the Company’s employment
notwithstanding the possibility of a Change of Control.
NOW, THEREFORE, in consideration of the mutual
promises contained herein, and for good and valuable other
consideration, the receipt and adequacy of which is hereby
acknowledged, Executive and GTSI, each intending to be legally
bound, agree as follows:
1.
Definition . The
capitalized terms used but not defined in Sections 1 through 5
below shall have the meanings ascribed to them in
Exhibit A.
2. Change
of Control Benefits .
(a) Change of Control Event . If a
Change of Control occurs while Executive is employed by the Company
on a full time basis, the following, subject to the terms and
conditions hereof, shall apply:
(i) Accelerated Vesting . On the
date that the Change of Control occurs, any unvested stock awards,
whether in the form of restricted stock, stock settled appreciation
rights, stock options, or any other form of unvested stock awards
granted by Company to Executive shall become immediately vested and
exercisable as to the number of shares that would have otherwise
vested before the fifth anniversary of the date of the Change of
Control had Executive remained employed by Company during such
period.
(ii) Employment Termination . If
(x) Executive’s employment with the Company is
terminated by the Company without Cause during the Change of
Control Period or (y) Executive resigns as an employee of the
Company for Good Reason during the Change of Control Period, or
events leading to 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:
(1) The Company will pay to Executive,
commencing with the Company’s first standard full payroll
period after the effective date of such termination of employment
(“Termination Date”), substantially equal installments
of severance payments, subject to standard withholdings and
deductions, in an aggregate cumulative amount equal to
Executive’s Total Severance Amount during the period
commencing on the Termination Date and ending on the 90
th day after the first anniversary of the
Termination Date (the “15-Month Severance Period”).
Such severance installments will be payable by the Company during
the 15-Month Severance twice a month on the Company’s
standard payroll schedule. Notwithstanding the foregoing, the
severance installments payable during the first six months after
the Termination Date shall not exceed two times the maximum amount
that may be taken into account under a qualified retirement plan
under Section 401(a)(7) 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 installments
scheduled but not payable under this Section 2(a)(ii)(1)
during the first six months after the Termination Date because of
the immediately preceding sentence shall be paid in a lump sum with
the first severance installment due after the end of such six-month
period.
(2) The Company will provide, at its
expense, Executive with continued group health insurance benefits
(medical, dental and vision) for Executive and Executive’s
eligible dependents under the Consolidated Omnibus Budget
Reconciliation Act of 1986, as amended (“COBRA”), for a
period ending on the earlier of (x) the first anniversary of
the Termination Date or (y) the date on which Executive
becomes gainfully employed again.
(3) Any unvested stock awards, whether in
the form of restricted stock, stock settled appreciation rights,
stock options, or any other form of unvested stock award granted by
the Company to Executive shall upon the Termination Date become
immediately vested and exercisable as to the number of shares that
would vest during the 15-Month Severance. Notwithstanding the
foregoing, if the Termination Date is prior to the actual date on
which the Change of Control occurs, the exercise period for such
stock awards, and all existing stock awards, shall be extended to
cover such Change of Control date.
(b) Notwithstanding anything herein to the
contrary, prior to Executive having the right to receive, and in
exchange for, the severance compensation, benefits and stock award
vesting acceleration provided in Section 2(a), to which
Executive would not otherwise be entitled, Executive shall first
enter into and execute and deliver to the Company a release and
obligation agreement in the form of Exhibit B attached hereto
(the “Release”) upon Executive’s termination of
employment with the Company. Unless the Release is executed by
Executive and delivered to the Company within 21 days after
the Termination Date, Executive will not be entitled to
(i) any severance benefits provided under this Agreement,
(ii) acceleration, if any, of Executive’s stock awards
as provided in this Agreement and (iii) Executive’s
rights in such stock awards following the Termination Date will
only be to the extent provided under their original terms in
accordance with the applicable stock option or stock incentive plan
and award agreements.
2
(a) If it is determined that any payment or
distribution by the Company to or for the benefit of Executive in
accordance with Section 2 (a “Payment”) would be
subject to the excise tax imposed by Code Section 4999,
Executive will be entitled to receive an additional payment in an
amount such that, after payment by Executive of the excise tax
imposed by Code Section 4999 and regular federal and state
income taxes on the Gross-up Payment, Executive retains an amount
of the Gross-up Payment equal to the excise tax imposed upon the
Payment (a “Gross-up Payment”). Executive and the
Company shall use commercially reasonable efforts to reach mutual
agreement, with advice from each party’s tax advisers,
regarding the applicable excise tax and the amount of the Gross-up
Payment.
(b) Executive will, within 30 days
after his receipt thereof, notify the Company in writing of any
inquiry, claim or proceeding brought by the Internal Revenue
Service, or other state or federal taxing authority, that would
reasonably be expected to result in a requirement that the Company
pay the Gross-up Payment.
Notwithstanding anything herein to the contrary,
(a) Executive’s relationship with the Company shall
continue to be an at-will employment relationship, (b) the
Company and Executive each has the right to terminate
Executive’s employment with the Company at any time, with or
without Cause, and with or without notice, and (c) nothing
herein confers upon Executive any right to continue in the
Company’s employ prior to, on or after a Change of Control
occurs or in any other way limit the Company’s rights, except
as expressly stated herein, to discharge Executive as an employee
at any time prior to, on or after the date of a Change of Control
for any reason whatsoever, with or without Cause.
(a) Notices . Any notices provided
hereunder or otherwise in respect hereof will be in writing and
will be deemed effective upon personal delivery (including,
personal delivery by facsimile transmission), the day delivery is
confirmed by a national courier, or the third day after mailing by
first class mail, to the Company at its primary office location and
to Executive at his address as listed on the Company payroll (which
address may be changed by written notice).
(b) Severability . Whenever
possible, each provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law, but
if any provision of this Agreement is held to be invalid or
unenforceable in any respect under any applicable law or rule in
any jurisdiction, such invalidity or unenforceability will not
affect any other provision or any other jurisdiction, and such
invalid or unenforceable provision will be reformed, construed and
enforced in such jurisdiction so as to render it valid and
enfor
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