EMPLOYMENT AGREEMENT
Exhibit
10.3
AGREEMENT,
dated as of April 30, 2010, between GSE Systems, Inc. a Delaware
corporation with principal executive offices at 0000 Xxxxxxxxxx Xxxx.,
Xxxxxxxxxx, XX 00000 (the "Company"), and Xxxxx Xxxxxx, residing at
000 Xxxxxx Xxxx, Xxxxxx, 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
shall be employed in the capacity of Chief Operating Officer of the Company,
reporting to the Chief Executive Officer of the Company and shall be responsible
for the Company’s Strategic Business Units. 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 he for
the period (the "Employment Period") commencing on June 1, 2010 and ending on
May 31, 2012.
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 June 1, 2010, the Company shall pay to Employee a
base annual salary at the rate of Two Hundred Thousand Dollars
($200,000). On May 1, 2011, the base annual salary shall be
increased, as determined by the Chief Executive Officer 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 as salaries are paid generally to other executive officers of the
Company.
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(b) Bonus. Once
the Company's year end financial information is available the CEO shall
determine Employee's bonus (the "Bonus") for the year then ending based upon
(i) meeting the goals set by Employee and accepted by the CEO and
(ii) overall Company performance. Upon determination of the Bonus by
the CEO, the CEO shall seek approval of the Compensation
Committee, which has the final approval of all
bonuses. The Employee's target bonus is Fifty Thousand Dollars
($50,000) for 2010, 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. . Within 30
days of the date of this Agreement, Employee's goals for 2010 will be prepared
and mutually agreed upon. Any bonus amount paid to Employee shall be paid no
later than April 15 of the following year.
(c) Vacation. Employee
shall be entitled to vacation in accordance with the Company's policy for its
senior executives.
(d) Automobile. The
Company shall provide Employee with an automobile allowance of Seven Thousand
Two Hundred Dollars ($7,200.00) per year, and shall pay the gas and
insurance in connection with such automobile.
(e) Club
Membership. The Company shall provide Employee an allowance for club membership
of Four Thousand Dollars ($4,000.00) per year.
(f) Medical
and Dental Insurance. The Company shall pay Employees monthly Medical
and Dental Insurance premiums in association with Company provided health
insurance plans.
(g) 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, continuing education, 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
and for a period of one (1) year after the termination of his employment 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 in competition with the
Company, 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.
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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 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.
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.
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(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 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
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.
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(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 for one year from the Date of Termination. 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. Accelerated
Vesting of Options Upon Change of Control.
After the
date of this Agreement, in the event of a Change of Control (as defined below)
of the Company, the options granted to Employee pursuant to Section 5 (c) above,
shall become fully vested immediately prior to the date such Change of Control
shall be deemed to have occurred and any conditions to the Employee’s
entitlement to such options under the Company’s option plan or otherwise shall
be deemed to have satisfied.
For
purposes of this Section 11, a “Change in Control” of the Company shall be
deemed to have occurred as of the first day that any one or more of the
following conditions shall have been satisfied:
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(i)
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Any
person (other than a person in control of the Company as of the date of
this Agreement, or other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or a company
owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of voting securities
of the Company) becomes the beneficial owner, directly or indirectly, of
securities of the Company representing a majority of the combined voting
power of the Company’s then outstanding securities;
or
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(ii)
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The
stockholders of the Company approve: (x) a plan of complete liquidation of
the Company; or (y) an agreement for the sale or disposition of all or
substantially all the Company’s assets: or (z) a merger, consolidation, or
reorganization of the Company with or involving any other corporation,
other than a merger, consolidation, or reorganization that would result in
the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least a
majority of the combined voting power of the voting securities of the
Company (or such surviving entity) outstanding immediately after such
merger, consolidation, or
reorganization.
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For
purposes of this definition of Change in Control, “Person” shall have the
meaning ascribed to such term in Section 3(a)(9) of the Securities Act of 1934,
as amended (the “1934 Act”), and used in Section 13(d) and 14(d) thereof,
including a “group” as defined in Section 13(d) thereof, and “Beneficial Owner”
shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules
and regulations under the 1934 Act.
Section
12. Successors;
Binding Agreement.
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
13. Severance
upon Change of Control.
In the
event a Change of Control occurs and Employee is either (1) not offered
employment by the Successor Company or (2) employment is offered upon conditions
that result in Employee’s decision to terminate employment for Good Reason (as
defined herein); then the following shall occur. Employee shall
receive continuation of salary and bonus programs (average of prior 2 years
bonus), and all benefits (including medical, dental and life insurance coverage
and any other Company-provided benefits, including car and club allowances that
Employee is receiving as of the Effective Date) (collectively, “Severance
Benefits”) from the Date of Termination of employment for a period of twelve
months.
Good
Reason” shall mean Employee’s good faith determination that any of the following
occurs: (a) without Employee prior written consent Employee’s duties,
responsibilities or authority become inconsistent with those of Employee’s
current position; (b) Employee’s annual base salary (as the same may be
increased at any time hereafter) and bonus programs are reduced; (c) Employee’s
benefits (including medical, dental and life insurance coverage and any other
Company-provided benefits, including car or club allowances to which Employee is
entitled as of the Effective Date) are either discontinued or materially
reduced; (d) Employee’s primary office or location is moved more than fifty (50)
miles from Employee’s current office or location; or (e) either the Company or
the Successor Company fails to honor all the terms and provisions of this
Agreement
Section
14. 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
15. 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.
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Section
16. 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
17. 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
18. 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
19. 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).
Section
20. 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.
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IN
WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first above written.
GSE
SYSTEMS, INC.
By: _________________________________ ______________________________
Xxxx X. Xxxxx, Chief Executive
Officer Date
_________________________________ ______________________________
Xxxxx
Xxxxxx Date
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