EMPLOYMENT AGREEMENT
AGREEMENT,
dated as of May 1, 2006, 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 shall have the, duties, responsibilities, and authorities normally
performed by the chief executive officer of a company 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. Employee shall
devote substantially all of his business time and attention to promote and
advance the business of the Company.
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, 2008.
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, 2006, the Company shall pay to Employee
a base
annual salary at the rate of Two Hundred and Forty Thousand Dollars
($240,000). On May 1, 2007, 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 2006, 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 2006 were presented to and accepted by the Board at
the January 24, 2006 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.
|
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 be 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.
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 he 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 or Employee's employment
under
the provision so indicated.
|
| (e) |
Date
of Termination. "Date of Termination" shall mean (i) if Employees
employment is terminated by his death, the date of his death, (ii)
if
Employee's employment is terminated pursuant to Section 10(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.
|
Section
l0. 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 salary through the Date of Termination at the rate
in effect
at 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.
|
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 fur 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 lo the party to whom it is to be given at the
address of such party set forth in the preamble in this Agreement (or to
such
other address as the party shall have furnished in writing in accordance
with
the provisions of this Section 17).
Section
18. Governing
Law.
This
Agreement shall he 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. Xxxxxxx
|
/s/
Xxxx X. Xxxxx
|
|
|
Xxxxxx
X Xxxxxxx, Chairman
|
Xxxx
X. Xxxxx
|
