EMPLOYMENT AGREEMENT
AGREEMENT,
dated as of May 1,2008, between GSE Systems, Inc. a Delaware corporation with
principal executive offices at 0000 Xxxxxxxxxx Xxxx, Xxxxxxxxx, XX 00000 (the
"Company"), and Xxxx X. Xxxxx, residing at 00 Xxxxxxxx Xxxxxx,
Xxxxxxxx, XX 00000 ("Employee").
WITNESSETH
WHEREAS,
the Company desires to employ Employee upon the terms and subject to the terms
and conditions set forth in this Agreement.
NOW,
THEREFORE, in consideration of the premises, the mutual promises, covenants, and
conditions herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
intending to be legally bound hereby agree as follows:
Section
1. Employment.
The
Company hereby agrees to continue to employ Employee, and Employee hereby agrees
to continue to serve the Company, all upon the terms and subject to the
conditions set forth in this Agreement.
Section
2.
Capacity and Duties.
Employee
is and shall be employed in the capacity of Chief Executive Officer of the
Company and Vice Chairman of the GSE Board of Directors and shall have the
duties, responsibilities, and authorities normally performed by the Chief
Executive Officer of a company and Vice Chairman of a Board of Directors and
such other duties, responsibilities, and authorities as are assigned to him by
the Board of Directors of the Company (the "Board") so long as such additional
duties, responsibilities, and authorities are consistent with Employee's
position and level of authority as Chief Executive Officer of the Company and
Vice Chairman of the GSE Board of Directors. Employee shall devote substantially
all of his business time and attention to promote and advance the business of
the Company.
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Section
3. Term
of Employment.
Unless
sooner terminated in accordance with the provisions of this Agreement, the term
of employment of Employee by the Company pursuant to this Agreement shall be for
the period (the "Employment Period") commencing on the date hereof and ending on
April 30, 2010.
Section
4. Compensation.
During
the Employment Period, subject to all the terms and conditions of this Agreement
and as compensation for all services to be rendered by Employee under this
Agreement, the Company shall pay to or provide Employee with the
following:
(a) Base Salary.
Commencing May 1, 2008, the Company shall pay to Employee a base annual salary
at the rate of Two Hundred and Sixty Thousand Dollars ($260,000). On May 1,
2009, the base annual salary shall be increased, as determined by the Board, by
a minimum of the greater of (i) 3% or (ii) the percentage increase in the
Consumer Price Index (as hereinafter defined) over the preceding twelve months.
The "Consumer Price Index" shall mean the Consumer Price Index for all Urban
Consumers published by the Bureau of Labor Statistics, United States Department
of Labor, or the supplement or successor thereto if publication of such index
should be discontinued. The base salary will be payable at such intervals (at
least monthly) as salaries are paid generally to other executive officers of the
Company.
(b) Bonus. Once the
Company's year end financial information is available,
but not later than March 31 of the subsequent year, the Board shall determine
Employee's bonus (the "Bonus") for the year then ending based upon meeting the
goals set by Employee and accepted by the Board at the beginning of each year.
Employee's target bonus is One Hundred and Fifty Thousand Dollars ($150,000) for
2008, and Employee's target bonus shall increase each succeeding year by the
greater of (i) 3% or (ii) the percentage increase in the Consumer Price Index
over the preceding twelve months. Employee's goals for 2008 were presented to
and accepted by the Board at the March 19, 2008 meeting of the Board of
Directors.
(c) Vacation. Employee
shall be entitled to vacation in accordance with the Company's policy for its
senior executives. Vacation may be carried into the subsequent year if not used
in the year earned.
(d) Automobile. The
Company shall provide Employee with an automobile of his choice (comparable to
the automobile currently provided by the Company to Employee) at the Company's
expense and shall pay the maintenance, gas, and insurance expenses in connection
with such automobile.
(e) Employee Benefit
Plans. Employee shall be entitled to participate in all employee benefit plans
maintained by the Company for its senior executives or employees, including
without limitation the Company's medical and 401(k) plans.
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Section
5.
Expenses
The
Company shall reimburse Employee for all reasonable expenses (including, but not
limited to, business travel and customer entertainment expenses) incurred by him
in connection with his employment hereunder in accordance with the written
policy and guidelines established by the Company for executive
officers.
Section
6.
Non-Competition, Non-Solicitation.
Employee
agrees that during the period he is employed by the Company under this Agreement
he will not directly or indirectly, (a) solicit or offer employment to any
person who was employed by the Company or any of its subsidiaries while Employee
was employed by the Company (b) solicit, offer or induce any person, entity or
governmental authority that was under contract with the Company or with whom the
Company or any of its subsidiaries was having business discussions with while
Employee was employed by the Company, or (c) become engaged in a business that
is directly competitive with the business of the Company or any of its
subsidiaries.
Section
7.
Patents.
Any
interest in patents, patent applications, inventions, copyrights, developments,
and processes ("Such Inventions") which Employee now or hereafter during the
period he is employed by the Company under this Agreement or otherwise may own
or develop relating to the fields in which the Company or any of its
subsidiaries may then be engaged shall belong to the Company; and forthwith upon
request of the Company, Employee shall execute all such assignments and other
documents and take all such other action as the Company may reasonably request
in order to vest in the Company all his right, title, and interest in and to
Such Inventions free and clear of all liens, charges, and
encumbrances.
Section
8.
Confidential Information.
All
confidential information which Employee may now possess, may obtain during or
after the Employment Period, or may create prior to the end of the period he is
employed by the Company under this Agreement or otherwise relating to the
business of the Company or of any of its customers or suppliers shall not be
published, disclosed, or made accessible by him to any other person, firm, or
corporation either during or after the termination of his employment or used by
him except during the Employment Period in the business and for the benefit of
the Company, in each case without prior written permission of the Company.
Employee shall return all tangible evidence of such confidential information to
the Company prior to or at the termination of his employment.
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Section
9. Termination
Employee's
employment hereunder may be terminated without any breach of this Agreement only
under the following circumstances:
(a)
Death. Employee's employment hereunder shall terminate upon his
death.
(b)
Disability. If, as a result of Employee's incapacity due to physical or mental
illness, Employee shall have been absent from his duties hereunder on a
full-time basis for the entire period of three (3) consecutive months, and
within 30 days after a Notice of Termination (as defined in Section 9(d)) is
given shall not have returned to the performance of his duties hereunder on a
full-time basis, the Company may terminate Employee's employment
hereunder.
(c)
Cause. The Company may terminate Employee's employment hereunder for Cause. For
purposes of this Agreement, the Company shall have "Cause" to terminate
Employee's employment hereunder upon the occurrence of any of the following (i)
the willful and continued failure by Employee to substantially perform his
duties or obligations hereunder (other than any such failure resulting from
Employee's incapacity due to physical or mental illness), after demand for
substantial performance is delivered by the Company that specifically identifies
the manner in which the Company believes Employee has not substantially
performed his duties or obligations, (ii) the willful engaging by Employee in
misconduct which, in the reasonable opinion of the Board of the Company, will
have a material adverse effect on the reputation, operations, prospects or
business relations of the Company, (iii) the conviction of Employee of any
felony or the entry by Employee of any plea of nolo contendere in response
to an indictment for a crime involving moral turpitude, or (iv) the breach by
Employee of a term or condition of this Agreement. For purposes of this
paragraph, no act, or failure to act, on Employee's part shall be considered
"willful" unless done, or omitted to be done, by him not in good faith and
without reasonable belief that his action or omission was in the best interest
of the Company. Notwithstanding the foregoing, Employee shall not be deemed to
have been terminated for Cause without the following (i) reasonable notice to
Employee setting forth the reasons for the Company's intention to terminate for
Cause, (ii) an opportunity for Employee, together with his counsel, to be heard
before the Board, and (iii) delivery to Employee of a Notice of Termination in
accordance with Section 9( d).
(d)
Notice of Termination. Any termination of Employee's employment by the Company
(other than termination pursuant to Section 9(a)) shall be communicated by a
Notice of Termination to the other party hereto. For purposes of this Agreement,
a "Notice of Termination" shall mean a written notice which shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of Employee's employment under the provision so
indicated.
(e) Date
of Termination. "Date of Termination" shall mean (i) if Employee's employment is
terminated by his death, the date of his death, (ii) if Employee's employment is
terminated pursuant to Section l0(b), 30 days after Notice of Termination is
given (provided that Employee shall not have returned to the performance of his
duties on a full-time basis during such 30 day period), and (iii) if Employee's
employment is terminated for any other reason, the date specified in the Notice
of Termination, which shall not be earlier than the date on which the Notice of
Termination is given; provided that if within 30 days after any Notice of
Termination is given the party receiving such Notice of Termination notifies the
other party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is resolved, either by mutual
written agreement of the parties or by a judgment, order, or decree of a court
of competent jurisdiction.
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Section
10. Compensation
upon Termination or During Disability.
(a)
During any period that Employee fails to perform his duties hereunder as a
result of incapacity due to physical or mental illness ("disability period"),
Employee shall continue to receive his full salary at the rate then in effect
for such period until his employment is terminated pursuant to Section 9(b),
provided that payments so made to Employee during the disability period shall be
reduced by the sum of the amounts, if any, payable to Employee at or prior to
the time of any such payment under disability benefit plans of the Company and
which were not previously applied to reduce any such payment.
(b) If
Employee's employment shall be terminated for Cause, the Company shall pay
Employee his full salary through the Date of Termination at the rate in effect
at the time Notice of Termination is given.
(c) If
the Company shall terminate Employee's employment in breach of the terms of this
Agreement, then the Company shall pay Employee his full salary and provide
Employee his benefits through the term of this Agreement. Additionally, all
options to purchase the Company's common stock granted to Employee under the
Company's option plan or otherwise shall immediately become fully vested and
shall terminate on such date as they would have terminated if Employee's
employment by the Company had not terminated. Additionally, Employee shall be
released from the non-compete and non-solicitation provisions contained in
Section 6 of this Agreement.
Section
11. Successors;
Binding Agreement.
(a) The
Company will require any successor (whether direct or indirect, by purchase;
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company, by agreement in form and reasonably substance
satisfactory to Employee, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.
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Section
12. No
Third Party Beneficiaries.
This
Agreement does not create, and shall not be construed as creating, any rights
enforceable by any person not a party to this Agreement (except as provided in
Section 11).
Section
13. Fees
and Expenses.
The
Company shall pay all reasonable legal fees and related expenses (including the
costs of experts, evidence, and counsel) incurred by Employee as a result of a
contest or dispute over Employee's termination of employment if such contest or
dispute is settled or adjudicated on terms that are substantially in favor of
Employee. In addition, the Company shall pay Employee interest, at the
prevailing prime rate, on any amounts payable to Employee hereunder that are not
paid when due.
Section
14. Representations
and Warranties of Employee.
Employee
represents and warrants to the Company that (a) Employee is under no contractual
or other restriction or obligation which is inconsistent with the execution of
this Agreement, the performance of his duties hereunder, or the other rights of
the Company hereunder and (b) Employee is under no physical or mental disability
that would hinder his performance of duties under this Agreement.
Section
15. Life
Insurance.
If
requested by the Company, Employee shall submit to such physical examinations
and otherwise take such actions and execute and deliver such documents as may be
reasonably necessary to enable the Company, at its expense and for its own
benefit, to obtain life insurance on the life of Employee. Employee has no
reason to believe that his life is not insurable with a reputable insurance
company at rates now prevailing in the City of Baltimore for healthy men of his
age.
Section
16. Modification.
This
Agreement sets forth the entire understanding of the parties with respect to the
subject matter hereof, supersede all existing agreements between them concerning
such subject matter, and may be modified only by a written instrument duly
executed by each party.
Section
17. Notices.
Any
notice or other communication required or permitted to be given hereunder shall
be in writing and shall be mailed by certified mail, return receipt requested,
or delivered against receipt to the party to whom it is to be given at the
address of such party set forth in the preamble to this Agreement (or to such
other address as the party shall have furnished in writing in accordance with
the provisions of this Section 17).
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Section
18. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of the
State of Maryland, without giving effect to conflict of laws.
IN
WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first above written.
GSE
SYSTEMS, INC.
By: __/s/ Xxxxxx X.
Feldman_________ _____/s/ Xxxx X.
Moran____5/5/2008__
Xxxxxx X. Xxxxxxx,
Chairman Xxxx X.
Xxxxx
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