Exhibit 10.1
AGREEMENT
This Agreement is by and between GP Strategies Corporation ("GP Strategies") and
GSE Systems, Inc. ("GSE") and is effective as of August 28, 2003. GP Strategies
and GSE may hereinafter be collectively referred to as the "Parties."
WITNESSETH:
WHEREAS, ManTech International Corporation ("ManTech") has agreed to sell to GP
Strategies 914,784 shares of its GSE common stock, its subordinated note in the
principal amount of $650,000 owed by GSE (the "Subordinated Note"), and the GSE
common stock convertible from the GSE Series A preferred stock under a certain
Preferred Stock Issuance Agreement dated December 5, 2001 (hereinafter the
"ManTech and GP Strategies Deal"); and
WHEREAS, pursuant to the Preferred Stock Issuance Agreement, ManTech's Series A
preferred stock is convertible to GSE common stock at the price of $2.645 per
share (hereinafter the "Stock Conversion Price"); and
WHEREAS, the market value of GSE's common stock is $1.5526 per share based on a
60-day average from August 27, 2003 (hereinafter "Market Value"); and
WHEREAS, ManTech is willing to conclude the ManTech and GP Strategies Deal if
the Stock Conversion Price in the Preferred Stock Issuance Agreement is reduced
to Market Value, and GP Strategies is willing to conclude the ManTech and GP
Strategies Deal if the Subordinated Note is convertible into GSE common stock at
Market Value (hereinafter collectively referred to as the "ManTech/GP Strategies
Request"); and
WHEREAS, if the ManTech/GP Strategies Request is approved, then GP Strategies
will own at least 55.51% (and potentially up to 57.59%) of the outstanding
common stock of GSE after consummation of the ManTech and GP Strategies Deal;
and
WHEREAS, the ManTech and GP Strategies Deal is viewed by GSE management as in
the best interest of all of the GSE stockholders, as essential for GSE's ongoing
business operations, and anticipated to provide GSE with numerous financial and
strategic benefits; and
WHEREAS, the Special Independent Negotiating Committee (the "Special Committee")
of the Board of Directors of GSE was formed by unanimous consent at a GSE board
meeting on June 10, 2003, to specifically consider certain aspects and
conditions of the ManTech and GP Strategies Deal; and
NOW THEREFORE, in consideration of the foregoing recitals and the mutual
promises and covenants contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereby agree as follows:
GP Strategies Commitments
Corporate Insurance
GSE is currently spending approximately $1 million annually for corporate
insurance (directors and officer's insurance, liability insurance, property
insurance, etc.). If the ManTech/GP Strategies Request is approved, GP
Strategies agrees to use its best efforts to include GSE in the GP Strategies
corporate insurance program as a subsidiary for corporate insurance purposes. GP
Strategies estimates that, subject to underwriting criteria and approval, this
proposal will save GSE approximately $500,000 annually of corporate insurance
expenses.
Management Services Agreement
If the ManTech/GP Strategies Request is approved, GP Strategies agrees to
negotiate in good faith a management services agreement ("Management Services
Agreement") to reduce GSE's general and administrative ("G&A") expenses, by
assuming responsibility for certain G&A functions, including, but not limited
to, human resources, information technology services, accounting, employee
benefits, contract management and legal.
If the ManTech/GP Strategies Request is approved, GP Strategies shall submit a
proposed Management Services Agreement to GSE and the Special Committee no later
than September 15, 2003. The Parties anticipate that the Management Services
Agreement will save GSE approximately $500,000 of its annual G&A expenses. The
Management Services Agreement will provide that the fee payable by GSE to GP
Strategies thereunder (the "MSA Fee") shall be payable on not less than a
quarterly basis. The Management Services Agreement will provide that the MSA Fee
will be payable in cash, unless otherwise approved by the Special Committee.
If the ManTech/GP Strategies Request is approved, the Parties will negotiate in
good faith to implement the Management Services Agreement no later than October
1, 2003, subject to final approval by the Special Committee.
Assistance with Payment and Performance Bonds
If the ManTech/GP Strategies Request is approved, GP Strategies will use its
best efforts to obtain payment and performance bonds for GSE.
Miscellaneous
For purposes of this Agreement, best efforts shall mean the diligent, reasonable
and good faith efforts of the obligated person to accomplish the applicable
objective, which efforts shall not require such person to act in a manner that
would be contrary to normal commercial practices to accomplish the objective. In
order to effectuate certain of the transactions described herein for which GP
Strategies has obligated itself to use its best efforts (e.g., obtaining payment
and performance bonds for GSE), GP Strategies may be required: (a) pursuant to
the terms of its loan agreements with its senior lenders, to obtain approval of
such transactions with such senior lenders, and (b) pursuant to GP Strategies'
corporate approval policies, to obtain approval of such transactions from its
Board of Directors. In any such case, GP Strategies will use its best efforts to
obtain any such approval.
Fees or other charges to GSE for any of the above services will be at or below
market rates for comparable transactions and reflect the same type fees GP
Strategies charges its subsidiary companies.
Attached is an estimate of the potential savings GSE may realize through the
services of GP Strategies.
Except as expressly stated herein, GP Strategies does not commit or promise to
take any action for, or on behalf of, GSE.
The laws of the State of Maryland, without giving effect to its choice of law
principles, shall govern all matters arising under or relating to this Agreement
and the Parties agree to the exclusive jurisdiction of Maryland courts for any
disputes or claims arising hereunder.
Any related party transaction between GP Strategies and GSE, whether before or
after the consummation of the ManTech and GP Strategies Deal, shall require
approval by the independent directors of GSE.
Neither party shall be responsible for any of the other's expenses in connection
with the negotiation, documents, or transactions contemplated hereby.
This Agreement shall be of no force or effect in the event that the ManTech and
GP Strategies Deal is not consummated for any reason.
This Agreement constitutes the entire and complete understanding and agreement
between the Parties with respect to the subject matter hereof and it shall be
binding upon the Parties in accordance with its terms. In entering into this
Agreement, neither party has relied upon any statement, representation, warranty
or agreement of the other party except for those expressly contained in this
Agreement. This Agreement supersedes any prior proposals, representations,
understandings or commitments, whether oral or written, regarding the subject
matter hereof.
IN WITNESS WHEREOF, this Agreement has been duly executed by the Parties hereto
as of the date indicated above.
GP Strategies Corporation: GSE Systems, Inc.:
Signature: /s/ Xxxxxx Xxxxxx Signature: /s/ Chin-Our Xxxxx Xxx
Name: Xxxxxx Xxxxxx Name: Chin-Our Xxxxx Xxx
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Title: Vice President Title: President
& General Counsel & Chief Operating Officer
