8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 25, 2008

GTSI Corp.
(Exact name of registrant as specified in its charter)

Delaware	0-19394	54-1248422
(State or other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

3901 Stonecroft Boulevard Chantilly, Virginia	20151-1010
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (703) 502-2000

(Former name or former address if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.02 Termination of a Material Definitive Agreement
 
On February 27, 2008, GTSI Corp. (the “Company” or “GTSI”) announced that GTSI has paid in full its subordinated secured term loan agreement (“Credit Agreement”) with one of its lenders. A copy of this press release is attached to this report as Exhibit 99.1.

GTSI and its wholly owned subsidiaries, Technology Logistics, Inc. and GTSI Financial Services, Inc. were parties to a Credit Agreement with Crystal Capital Fund, L.P. (the “Lender”), dated June 2, 2006, as amended. All capitalized terms used herein without definition shall have the respective meanings assigned to such terms in the Credit Agreement, or Payout Letter (as defined below), as applicable.

Pursuant to a payout arrangement letter dated February 25, 2008 (the “Payout Letter”), the Company paid in full all of its liabilities, obligations and indebtedness owing under the Credit Agreement and notified the Lender that GTSI would repay all amounts due under the Credit Agreement thereby terminating the Credit Agreement effective as of February 25, 2008. The pay-off amount was $10,213,472.22 for the principal, interest and other amounts owing by the Company under the Credit Agreement. This amount includes an early termination fee of $125,138.89.

Pursuant to the Credit Agreement, GTSI further agrees to pay any and all legal fees and expenses incurred by the Administrative Agent in connection with the termination of the Credit Agreement and the other Loan Documents.

The foregoing description of the Payout Letter is only a summary and is qualified in its entirety by reference to the complete text of the Payout Letter, which is attached hereto as Exhibit 99.2.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits.

99.1 Press Release issued by GTSI Corp., dated February 27, 2008

99.2 Payout Letter dated February 25, 2008 addressed to GTSI Corp. from Crystal Capital Fund, L.P.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

GTSI Corp.

By: /s/ Joe Ragan                           
       Joe Ragan
       Senior Vice President and CFO

Date: February 29, 2008

EXHIBIT INDEX

Exhibit No. Description

99.1 Press Release issued by GTSI Corp., dated February 27, 2008

99.2 Payout Letter dated February 25, 2008 addressed to GTSI Corp. from Crystal Capital Fund, L.P.

EX-99.1

Exhibit 99.1

GTSI Pays Off Subordinated Debt

CHANTILLY, VA. — February 27, 2008 — GTSI Corp.® (NASDAQ: GTSI), an enterprise solutions and services provider to government, today announced that it has paid in full a subordinated secured term loan agreement with Crystal Capital. The $10 million interest only loan was executed on June 2, 2006 as part of the closing terms for GTSI’s credit agreement. During 2007 GTSI paid greater than $1 million of interest on this debt.

“The decision to retire this debt out of operating cash flow indicates that GTSI enjoys a strong balance sheet resulting from our enhanced business focus on delivering strategic enterprise infrastructure technology solutions and professional services to our customers,” said Jim Leto, GTSI’s Chief Executive Officer. “We appreciate Crystal Capital’s support over the past couple of years and are excited about the future opportunities for GTSI. As a result of this action, GTSI has no outstanding debt and will continue to drive margin expansion and reduce operating expenses.”

About GTSI Corp.
GTSI Corp. is the first information technology solutions provider offering a Technology Lifecycle Management (TLM) approach to IT infrastructure solutions delivered through industry-leading professional and financial services.  GTSI employs a proactive, strategic methodology that streamlines technology lifecycle management, from initial assessment to acquisition, implementation, refresh, and disposal.  TLM allows government agencies to implement solutions of national and local significance quickly and cost-effectively. GTSI’s certified engineers and project managers leverage strategic partnerships with technology innovators. These experts use proven, repeatable processes to design, deploy, manage, and support simple to complex solutions, to meet governments’ current and future requirements and business objectives. GTSI is headquartered in Northern Virginia, outside of Washington, D.C. Further information about the Company is available at www.GTSI.com/About.

GTSI Contacts:
Paul Liberty
703.502.2540
paul.liberty@gtsi.com

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GTSI and GTSI.com are registered trademarks of GTSI Corp. in the U.S. and other Countries. All trade names are the property of their respective owners.

EX-99.2

Exhibit 99.2

CRYSTAL CAPITAL FUND, L.P.
Two International Place
Boston, MA 02110

GTSI Corp.
3901 Stonecroft Boulevard
Chantilly, Virginia 20151

Re: Payout Arrangements

Ladies and Gentlemen:

We refer to the Credit Agreement dated as of June 2, 2006 (as amended, and in effect from time to time, the “Credit Agreement”) by and among GTSI Corp., a Delaware corporation (the “Borrower”), the persons party thereto from time to time as Guarantors (as defined therein), the financial institutions party thereto from time to time (the “Lenders”) and Crystal Capital Fund, L.P., in its capacity as Administrative Agent for the Lenders (in such capacity, the “Administrative Agent”). All capitalized terms used herein without definition shall have the respective meanings assigned to such terms in the Credit Agreement.

The Borrower has advised the Administrative Agent that it intends to repay all amounts due under the Credit Agreement and has requested that the Administrative Agent provide the Borrower with appropriate pay-off figures for the principal, interest and other amounts owing by the Borrower to the Lenders under the Credit Agreement.

Pay-Off Amount as of the Computation Date. The pay-off figures for the Borrower as of February 25th, 2008 (the “Computation Date”) under the Credit Agreement are as follows (collectively, together with any additional interest accruing, or legal fees and expenses incurred, after the Computation Date, the “Pay-Off Amount”):

Principal:	$	10,000,000.00
Interest:	$	83,333.33
Early Termination Fee:	$	125,138.89
Legal Fees and Expenses	$	0
Total:	$	10,213,472.22

Interest, Etc. Accruing after the Computation Date. From and after the Computation Date and until the Pay-Off Date (as defined below), interest shall continue to accrue on the unpaid principal amount of the Term Loan at the rates set forth in the Credit Agreement. The Borrower further agrees to pay any and all legal fees and expenses incurred by counsel to the Administrative Agent in connection with this letter and the termination of the Credit Agreement and the other Loan Documents, including those amounts which are billed after the Computation Date. Upon request of the Borrower, the Administrative Agent shall provide the Borrower with a revised figure for the amount of interest to be paid as part of the Pay-Off Amount plus any additional legal fees and expenses incurred since the Computation Date and to be paid as part of the Pay-Off Amount.

Discharge and Release on the Payment Date. The Administrative Agent acknowledges and agrees that, upon the Administrative Agent’s receipt of payment in full in cash of the Pay-Off Amount, including any additional interest accruing and additional fees and expenses incurred after the Computation Date, on or prior to 2:00 p.m. (Boston time) on the date of payment (the time of the Administrative Agent’s receipt of such payment being hereinafter referred to as the “Pay-Off Date”), (a) all indebtedness and obligations of the Borrower to the Administrative Agent and the Lenders under or in respect of the Credit Agreement and the other Loan Documents shall be deemed to be and shall be paid and discharged in full and (b) the Administrative Agent and the Lenders shall, at the request and expense of the Borrower, release or terminate all security interests and liens which the Borrower may have granted to the Administrative Agent for the benefit of the Lenders pursuant to the Credit Agreement.

Reservations. The Borrower acknowledges and agrees that its obligations and liabilities under the Credit Agreement and the other Loan Documents shall be reinstated with full force and effect, if at any time on or after the Pay-Off Date, all or any portion of the Pay-Off Amount paid to the Administrative Agent or the Lenders is voided or rescinded or must otherwise be returned by the Administrative Agent or the Lenders to the Borrower upon the Borrower’s insolvency, bankruptcy or reorganization or otherwise, all as though such payment had not been made. In addition, nothing contained in this letter shall terminate or otherwise impair those expense reimbursement, indemnification or other provisions of the Credit Agreement and the other Loan Documents which by their express terms survive the repayment of the Term Loan.

Pay-Off Date Deliveries. On the Pay-Off Date, the Administrative Agent, on behalf of the Lenders will deliver the following to the Borrower at the Borrower’s sole cost and expense:

(a)	Uniform Commercial Code termination statements in form suitable for filing in those jurisdictions listed on Schedule 1 attached hereto;
(b)	instruments of termination, release and reassignment of security interest duly executed by the Administrative Agent and in a form suitable for recording with the United States Patent and Trademark Office with respect to the Trademark Security Agreement; and
(c)	instruments of termination, release and reassignment of security interest duly executed by the Administrative Agent and in a form suitable for recording with the United States Copyright Office with respect to the Copyright Security Agreement;

Further Assurances. The Administrative Agent, on behalf of the Lenders, further agrees to deliver to the Borrower, after the Pay-Off Date, at the Borrower’s sole cost and expense, such other releases or termination statements as the Borrower may reasonably request in connection with the Administrative Agent’s and the Lenders’ above-described release and termination of the security interests and liens granted to the Administrative Agent for the benefit of the Lenders.

Governing Law. This letter shall be governed by the laws of the State of New York (without reference to conflict of laws).

[Remainder of page intentionally left blank.]

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Very truly yours,
CRYSTAL CAPITAL FUND, L.P.,
as the Administrative Agent
By:	Crystal Capital GP, LLC,
	its General Partner
By:	//S// Joshua Franklin
	Name: Joshua Franklin
	Title: Director

Schedule 1

UCC-3s to be filed

Debtor Name Jurisdiction File Number File Date

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