Document:

Exhibit 10.19

 

GTSI

 

2005 EXECUTIVE INCENTIVE COMPENSATION PLAN

 

I. 
Introduction

 

The 2005 Executive Incentive Compensation Plan, (“the
Executive Plan” or the “Plan”), seeks to motivate and reward Executive employees for helping GTSI
achieve and exceed its 2005 sales, financial and strategic goals. The Executive
Plan focuses attention on specific performance measures that lead to increased
net profit and shareholder value.

 

The provisions in this Plan apply to employees in Executive positions who are eligible for
only this incentive Plan, which occur during the term of the Plan year, which
begins January 1, 2005 and extends through December 31, 2005.

 

For calendar year 2005, there will be four measurement periods
corresponding to the four (4) calendar quarters.    Each measurement period will be evaluated
separately against the respective plan Earnings Before Tax (“EBT”) objective.

 

II. 
Eligibility & Participation

 

Participation in this Plan is limited to
Executive employees.  Participants
generally hold one of the following titles: 
CEO, Senior Vice President, Group Vice President and Vice President.  The Compensation Committee of the Board of
Directors specifically approves these employees for participation.  Participants in the Executive Plan are
excluded from participating in other GTSI annual cash-based incentive plans
(outside of the LTIP and stock).

 

Employees hired during the year will be eligible for a pro-rated
incentive starting on their date of hire. 
Part-time employees are eligible for a pro-rated incentive based on
their scheduled time as a percent of a full-time schedule.  Those employees who transfer or are promoted
from one position to another are eligible for pro-rated incentives for both
their new position and prior position.

 

Eligibility for participation and receipt of
compensation under the Plan are expressly conditioned upon strict compliance
with GTSI’s policies and procedures regarding ethical business conduct,
appropriate business practice, and proper handling of contacts with customer
and government representatives, vendors, agents, brokers and other
intermediaries.  GTSI has full authority
to cancel incentive compensation eligibility if, in its sole discretion, it
finds noncompliance with such policies and procedures.

 

 

III. Total Compensation

 

All Plan participants will
receive a base salary and an incentive. The target incentive is usually
expressed as a percent of the participant’s base salary.   In these cases, GTSI will calculate the
target incentive amount by applying the target incentive percent to the base
salary in effect as of the beginning of the designated period.

 

IV. 
Target Incentive

 

Target incentive, which is expressed as a fixed dollar amount, is the
amount earned for achieving 100% in all of the assigned incentive categories.  For employees who are participating in the
Plan for a partial year, the target incentive amount is calculated by
pro-rating the target incentive by the number of months they are eligible as
defined in Section II.  Any
increases in base salary received during the year will be reflected in the
target for the next designated period.

 

The annual target incentives for the following positions are defined as
follows:

 

	
  Position

  	
   

  	
  Annual
  Target Incentive as a

  Percentage of Base Salary

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Chairman & CEO

  	
   

  	
  100%

  (80% EBT; 20% MBO)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Sr. Vice President/CFO

  	
   

  	
  40 – 50%

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Group Vice President Sales and Vice
  President Sales

  	
   

  	
  40% - 70%

  (at least 50% EBT with remainder

  based on MBO)

  	
   

  

 

V. 
Incentive Categories & Weighting

 

Participants are evaluated on attainment of
defined objectives, on a period-by-period non-cumulative basis.

 

The following percentage applies for each
designated period:

 

	
  January – March

  	
  1/6th of the annual
  payout

  
	
  April – June

  	
  1/6th of the annual
  payout

  
	
  July – September

  	
  1/3rd of the annual
  payout

  
	
  October – December

  	
  1/3rd of the annual
  payout

  

 

 

Over-achievement on the Executive Plan will yield a payout that is
higher than the target incentive amount. 
Conversely, underachievement will deliver a payout that is less than the
target incentive amount.

 

At the end of each calculating period, the incentive amount earned for
the Executive Plan will be the period’s achievement; interpolating the payout
percent from the appropriate schedule and multiplying the result by the
category’s target incentive amount.  The
resulting payout will be rounded to the nearest dollar.

 

In the event of unusual nonrecurring events, GTSI may, at its sole
discretion, adjust the incentive schedule to reflect more accurately the
contributions of participants in the Plan.

 

Company Financial Goals (EBT)

•                  Earnings
before Tax (consistent with GAAP accounting)

 

The Compensation Committee of the GTSI’s Board of Directors establishes
the Company’s EBT goals and the attainment range/minimum and maximum payment
levels.

 

VI. Incentive Calculation for Achievement of Company Financial
Goals  – EBT

 

The 2005 Executive Plan has four (4) designated periods.  Each period is independent of the other and
each period has three unique Company Financial Goal (EBT) achievement thresholds.  These thresholds represent (a) the entry
point into the Plan; (b) 100% achievement of Plan; and (c) maximum
payout of the Plan.  The range of
achievement from entry to maximum payout is 0% to 200% payout of the
Participant’s target incentive.

 

VII. 
Administration

 

All incentive compensation earned under this Plan will be credited and
scheduled to be paid within 45 days after the close of the quarter.

 

A participant must be an active employee as of the payment date to be
eligible for payout under this plan.  The
Plan is administered by the Vice President, Human Resources in coordination
with Finance and the various department leaders, subject to approval by the
CEO.

 

VIII.  Payment Terms Upon Separation of Employment
or due to Death or Disability

 

Participants whose employment ends because of death or disability after
completion of a designated period, but before payment, shall remain eligible
for any incentive otherwise due for the designated period.   GTSI shall make such determination of the
applicability of this provision, in its sole discretion.

 

 

X. 
General Conditions

 

Participants who are on a performance improvement plan (PIP) at any
time during a designated period are not eligible for an incentive payment for
performance during such period (s).

 

All employees of the Company are employed in an “at will” capacity
which means that either the employee or the Company may terminate the
relationship at any time with the understanding that neither party has the
obligation to base that decision on any reason other than their intent not to
continue the employment relationship. 
Nothing in this Plan shall in any way diminish or limit the Company’s
right to terminate the employment of any employee at will at any time, in its
sole discretion.

 

If any GTSI employee disputes any aspect of this Plan or any GTSI
decision with respect to any incentive received under this Plan, the employee
must submit written notice of the dispute to the direct supervisor within four
months after the employee’s receipt of the applicable payment.  Failure to do so will constitute a waiver by
the employee of any such complaint or claim.

 

GTSI reserves the right to revise any of the provisions of this Plan or
to terminate the Plan itself at anytime during the year, without prior notice.  In any such case, GTSI will distribute the
revisions or notice of termination to affected employees.

 

The issuance of this Plan does not, in any
way, commit GTSI to pay a similar kind of compensation in any subsequent
year.  GTSI may eliminate or reduce
incentive compensation at any time during the year, without prior notice
provided that payment is made for the period prior to the effective date of the
change and the Plan participants are notified in writing.Exhibit 10.20

 

FORM OF GTSI
CHANGE OF CONTROL AGREEMENT

 

This Change of Control
Agreement (“Agreement”) is entered into as of January 01,
2005 (the “Effective Date”), by and between                                 (“Executive”) and GTSI Corp. (the “Company”),
a Delaware corporation. The Agreement provides, without changing the nature of
the at-will employment relationship, certain benefits if the Executive is
terminated after the Company affects a change of control, all as outlined
below.

 

1. 
Terms and Termination Of Employment.

 

1. 1                              Definition. The capitalized terms used in this Agreement
will have the meaning set out in Exhibit  A – Definitions.

 

1.2                                 Change
of Control Termination. In the event Executive’s employment with the
Company is terminated without Cause, or the Executive resigns 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 but not limited to an attempt to avoid the Company or its
successor’s obligations under this Agreement, then the following will occur:

 

(a) Company will provide to Executive,
within thirty (30) days after the effective date of such termination without
Cause or resignation for Good Reason, a severance payment, subject to standard
withholdings and deductions, in an amount equal to   [X]   months (“Period”) of the Executive’s
Annual Total Target Compensation.  This
amount will be paid for over a total of [X] months,
payable in bi-monthly payments on GTSI’s normal pay periods. Payments will
begin on the initial pay period following the Effective Date. In addition, the
Company will provide, at its expense, said Executive with continued group
health insurance benefits (medical, dental and vision) for Executive and
Executive’s eligible dependents under COBRA for a period of up to [X] months
following the effective date of Executives termination without Cause or
resignation for Good Reason; or the Executive is gainfully employed at another
place of work, whichever is sooner.

 

(b) Any unvested options in Company
stock issued to Executive pursuant to the Company’s 1996 Stock Option Plan or
Capitalization Plan will have their vesting accelerated in full so as to become
one hundred percent (100%) vested and immediately exercisable in full as of the
date of such termination.

 

(c) Prior to Executive gaining the right
to receive, and in exchange for, the severance compensation, benefits and
option acceleration provided in Sections 1.2 (a) and (b) above, to
which Executive would not otherwise be entitled, Executive will first enter
into and execute a release substantially in the form attached hereto as Exhibit B
(the “Release”) upon Executive’s termination of employment. Unless the Release
is executed by Executive and delivered to the Company within twenty-one (21)
days (forty-five (45) days in the event of a group termination) after the
termination of Executive’s employment with the Company, Executive will not
receive any severance benefits provided under this Agreement, acceleration, if
any, of Executive’s Options as provided in this Agreement will not apply and
Executive’s options in such event may be exercised following the date of
Executive’s termination only to the extent provided under their original terms
in accordance with the applicable stock option plan and option agreements.

 

1.3  Gross-up Payment.

 

(a) In the event it is determined that
any payment or distribution by the Company to or for the benefit of the
Executive in accordance with Section 1.2 above (a “Payment”) would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the “Code”), then the Executive will be entitled to
receive an additional payment (a “Gross-up Payment”) in an amount such that,
after payment by the Executive of the excise tax imposed by Section 4999
of the Code on the Gross-up Payment, the Executive retains an amount of the
Gross-up Payment equal to the excise tax imposed upon the Payment. Executive
and Company agree to use commercially reasonable efforts to reach mutual
agreement, upon advise from each party’s tax advisors, regarding the applicable
excise tax and the amount of the Gross-up Payment.

 

 

(b) The Executive will 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 result
in a requirement by the Company to pay the Gross-up Payment. The Executive will
provide such notice within thirty (30) days of its receipt.

 

1.4  At-Will Employment.
Executive’s relationship with the Company continues to be an at-will employment
relationship. The Company or Executive has the right to terminate Executive’s
employment with the Company at any time with or without Cause and with or
without notice. Nothing in this Agreement confers upon the Executive any right
to continue in the employ of the Company prior to, or after a Change of Control
of the Company or in any way limit the rights of the Company, except as
expressly stated herein, to discharge the Executive at any time prior to, or
after the date of a Change of Control of the Company for any reason whatsoever,
with or without cause.

 

2.  
General Provisions.

 

2.1 Notices. Any notices provided 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/her address as listed on the
Company payroll (which address may be changed by written notice).

 

2.2  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 enforceable
consistent with the intent of the parties insofar as possible.

 

2.3 Waiver. Any waiver of a breach of any provisions of this Agreement
will not be deemed to have waived any preceding or succeeding breach of the
same or any other provision of this Agreement.

 

2.4  Entire Agreement;
Survival. This Agreement, together with Executive’s offer letter (if any),
the GTSI Non-Disclosure Agreement signed by the Executive (if any) forms the
complete and exclusive statement of Executive’s employment with the Company,
and will survive any Change of Control. This Agreement is entered into without
reliance on any promise, representation, statement or agreement other than
those expressly contained or incorporated herein, and it cannot be modified or
amended except in a writing signed by Executive and another duly authorized
officer of the Company. The terms and conditions of the Company’s Director and
Officers Insurance Policy, that by their nature survive Executive’s termination
of employment with the Company shall also survive any termination hereunder.

 

2.5  Successors and Assigns.
This Agreement is intended to bind and inure to the benefit of and be
enforceable by Executive, the Company and their respective successors, assigns,
heirs, executors and administrators, except that Executive may not assign any
of his duties hereunder and he may not assign any of his rights hereunder
without the written consent of the Company, which shall not be withheld
unreasonably.

 

2.6  Attorneys’ Fees. If
either party brings any action to enforce the rights hereunder, the prevailing
party in any such action shall be entitled to recover his/her or its reasonable
attorneys’ fees and costs incurred in connection with such action.

 

2.7  Governing Law. All
questions concerning the construction, validity and interpretation of this
Agreement will be governed by the law of the Commonwealth of Virginia as
applied to contracts made and to be performed entirely within Virginia.

 

IN WITNESS WHEREOF, the parties have executed
this Agreement effective as of the Effective Date above written.

 

	
  GTSI Corp.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Executive

  	
   

  	
  Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  M. Dendy Young

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Chief Executive Officer

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

GTSI Change of Control Provision, Exhibits

 

Exhibit A

Definitions

 

The following definitions will apply to the GTSI Change of Control
Agreement:

 

(a) ”Total
Target Average Annual Compensation” means the average of the Executive’s annual
rate of base salary and incentive as in effect on the day prior to the
termination without cause or resignation for Good Reason.

 

“Cause” means Executive’s (i) willful and
continued failure to substantially perform his/her duties with the Company or
willful and continued failure to substantially follow and comply with the
specific and lawful directives of the CEO, as reasonably determined by the CEO
(other than any such failure resulting from your incapacity due to physical or
mental illness or any such actual or anticipated failure after notice of
resignation), after a written demand for substantial performance is delivered
to the Executive by the CEO, which demand specifically identifies the manner in
which the CEO believes that the Executive has not substantially performed
his/her duties, (ii) conviction of any felony involving moral turpitude; (iii) engaging
in illegal business practices or other practices contrary to the written
policies of the Company; (iv) misappropriation of assets of the Company; (v) continual
or repeated insobriety or drug use; (vi) continual or repeated absence for
reasons other than disability or sickness; (vii) fraud; or (viii) embezzlement
of Company funds.

 

“Change of Control” means (i) the acquisition by any individual or
entity resulting in the control of 50% or more of outstanding shares of GTSI; (ii) a
change in a majority of the Company Board of Directors (other than through an “act
of God”) and clearly related to the acquisition if the change occurred during
any 12 consecutive months, and the new directors were not elected by the
Company’s stockholders or by a majority of the directors who were in office at
the beginning of the 12 months; or (iii) the stockholders of the Company
approve a merger or consolidation of the Company with any other corporation
(and the consummation thereafter), other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent more than 50% of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation.

 

“Change of Control Period” means the period of time starting six (6) months
prior to the date the Change of Control is effected and ending twenty-four (24) months following
such Change of Control.

 

“Good Reason” means any one of the following events
(so long as Executive tenders his resignation to the Company within sixty (60)
days after the occurrence of the event which forms the basis for any
termination for Good Reason and clearly related to the Change of Control
event): (i) any reduction of the Executive’s then existing annual base
salary or annual bonus target; (ii) any material reduction in the package
of benefits and incentives, taken as a whole, provided to the Executive (except
that employee contributions may be raised to the extent of any cost increases
imposed by third parties as applied to the Company as a whole) or any action by
the Company which would materially and adversely affect the Executive’s
participation or reduce the Executive’s benefits under any such plans, except
to the extent that such benefits and incentives are reduced as to be made
equivalent to the benefits and incentives of all other executive officers of
the Company and/or its successor or assign; (iii) any diminution of the
Executive’s duties, responsibilities, authority, reporting structure, titles or
offices, excluding for this purpose an isolated, insubstantial or inadvertent
action not taken in bad faith which is remedied by the Company immediately
after notice thereof is given by the Executive; (iv) request that the
Executive relocate to a work site that would increase the Executive’s one-way
commute distance by more than thirty-five (35) miles from his then principal
residence, unless the Executive accepts such relocation opportunity; (v) any
material breach by the Company of its obligations under this Agreement; or (vi) any
failure by the Company to obtain the assumption of this Agreement by any
successor or assign of the Company.

 

 

Exhibit B

RELEASE AND OBLIGATION AGREEMENT

 

I
understand that my position with GTSI Corp. (the “Company”) terminated
effective                               
(the “Separation Date”).  The Company has
agreed that if I choose to sign this Release, the Company will, within thirty
(30) days after the Effective Date of this Release and Obligation Agreement (“Release”),
pay me certain severance benefits (minus the standard withholdings and
deductions) pursuant to the terms of the GTSI Change of Control Agreement (the “Agreement”)
entered into on                               between myself and the Company, and any
agreements incorporated therein by reference. 
I understand that I am not entitled to such severance benefits unless I
sign and comply with this Release.  I
further understand that, regardless of whether I sign this Release, the Company
will pay me all of my accrued salary and paid time off through the Separation
Date, to which I am entitled by law.

 

In
consideration for the severance benefits I am receiving under the Agreement, I
agree to the following:

 

Non-Compete.
I agree that for [X] months
from the Separation Date, I will not, without the prior written consent of GTSI’s
CEO 
(or equivalent), either directly or indirectly, for myself or on behalf
of or in conjunction with any other person, company, partnership, corporation,
business, group or other entity, as an officer, director, owner, partner,
member, joint venture, or in any other capacity, whether as an employee,
independent contractor, consultant, advisor or sales representative provide
managerial services in support of a “Competitive Business”.  I understand that the term “Competitive
Business” means and includes any business or activity (to include a division or
group within a corporation), as it relates to the sales of information
technology products and/or services to any U.S. federal, state of local
government entity, and its annual sales primarily consist of Information
Technology (“IT”) products and IT product-related solutions that are
substantially the same as any material business or significant activity
conducted by GTSI during my period of employment with GTSI; and has an office
that is within fifty (50) miles of each and every one of GTSI’s place of
business (including its facilities and employee’s home offices).  For purpose of clarification, but in no way
limiting the foregoing, the federal, state or local business of the following
companies will be considered Competitive Businesses:  Dell Corporation Public
Sector, Northrop Grumman IT, APTIS, GovConnection, iGov, DLT Solutions,
Lockheed Martin IT, Government Micro Resources, World Wide Technology, Insight
Enterprises, Inc., Vion Corporation, and CDW-G.

 

Non-Solicitation of
Employees. I also
agree that for 6 months
from the Separation Date, I will not, without the prior written consent of GTSI’s
CEO (or equivalent) solicit or attempt to solicit for employment for or on
behalf of any corporation, partnership, venture or other business entity any
person who, as of the Separation Date or within 6 months prior to that date,
was employed by GTSI or a subsidiary as an employee, manager or executive and
with whom I had material contact during the course of his employment with GTSI
(whether or not such person would commit a breach of contract).

 

Non-Solicitation of Customers and Non-Disparagement. I acknowledge that I owe GTSI a duty of
loyalty, and to preserve and protect, among other things, GTSI’s Confidential
Information, as well as GTSI’s relationships with its present and potential
customers and partners. As a result, I agree that for 6 months
from the Separation Date, I will not solicit or make any statement or do any
act intended to cause such customer or partner to make use of or obtain from any
person or business, services or goods which are similar or related to those
offered by GTSI; or discuss with any other GTSI employee the present operations
or formation and future operations of any business competing with or intended
to compete with GTSI. I further agree, that my communications with any GTSI
employee, customer, vendor, supplier and any competitor and any person
associated with any media) which in any way relates to GTSI or to GTSI’s
directors, officers, management or employees: 
(1) will be truthful; and (2) will not disparage or undermine
the reputation or business practices of GTSI or its directors, officers,
management or employees.

 

Release: I
hereby release GTSI and its officers, directors, agents, attorneys, employees,
shareholders, parents, subsidiaries, and affiliates from any and all claims,
liabilities, demands, causes of action, attorneys’ fees, damages, or
obligations of every kind and nature, whether they are now known or unknown,
arising at any time prior to the date I sign this Release.  This general release includes, but is not
limited to:  all federal and state
statutory and common law claims, claims related to my employment or the
termination of my employment or related to breach of contract, tort, wrongful
termination, discrimination, harassment, defamation, fraud, wages or benefits,
or claims for any form of equity or compensation.  Notwithstanding the release in the preceding
sentence, I am not releasing any right of

 

 

indemnification,
or Company Director and Officer insurance protection, I may have for any
liabilities and costs of defense (including without limitation reasonable
attorneys’ fees) arising from my actions within the course and scope of my
employment with the Company.

 

If
I am forty (40) years of age or older as of the Separation Date, I acknowledge
that I am knowingly and voluntarily waiving and releasing any rights I may have
under the federal Age Discrimination in Employment Act of 1967, as amended (“ADEA”).  I also acknowledge that the consideration
given for the waiver in the above paragraph is in addition to anything of value
to which I was already entitled.  I have
been advised by this writing, as required by the ADEA that:  (a) my waiver and release do not apply
to any claims that may arise after my signing of this Release; (b) I
should consult with an attorney prior to executing this Release; (c) I
have twenty-one (21) days (forty-five (45) days in the event of a group
termination) within which to consider this Release (although I may choose to
voluntarily execute this Release earlier); (d) I have seven (7) days
following the execution of this release to revoke the Release; and (e) this
Release will not be effective until the eighth day after this Release has been
signed both by me and by the Company (“Release Effective Date”).

 

 

	
  Agreed:

  	
   

  	
   

  	
   

  
	
   

  	
  Date

  	
   

  	
  [Executive]

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