form8-kmoren_eberle.htm

0000944480-10-000014.txt : 20100430 0000944480-10-000014.hdr.sgml : 20100430 20100430160225 ACCESSION NUMBER: 0000944480-10-000014 CONFORMED SUBMISSION TYPE: 8-K CONFIRMING COPY: PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20100430 ITEM INFORMATION: Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers FILED AS OF DATE: 20100430 DATE AS OF CHANGE: 20100430 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GSE SYSTEMS INC CENTRAL INDEX KEY: 0000944480 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 521868008 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-14785 BUSINESS ADDRESS: STREET 1: 1332 LONDONTOWN BLVD CITY: SYKESVILLE STATE: MD ZIP: 21784 BUSINESS PHONE: 4109707874 MAIL ADDRESS: STREET 1: 1332 LONDONTOWN BLVD CITY: SYKESVILLE STATE: MD ZIP: 21784 8-K 1 form8-kmoren_eberle.htm FORM 8-K ENTRY INTO A MATERIAL AGREEMENT form8-kmoren_eberle.htm

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): April 30, 2010

GSE SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-14785	52-1868008
(State of incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)
1332 Londontown Blvd., Suite 200, Sykesville, MD 21784
(Address of principal executive offices and zip code)

(410) 970-7800

Registrant's telephone number, including area code

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 (see General Instructions A.2 below):

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

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

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

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

Item 1.01.

Entry into a Material Definitive Agreement.

On April 30, 2010, the Company entered into a new employment agreement (the “Agreement”) with its Chief Executive Officer, Mr. John V. Moran. The Agreement commences on May 1, 2010 through October 31, 2010, at which time Mr. Moran will retire from the Company, resign as a member of the Board of Directors and become a consultant to the Company. In addition, on April 30, 2010, the Company entered into a consulting agreement (the “Consulting Agreement”) with Mr. Moran which will commence on November 1, 2010 and end on October 31, 2013. Both the Agreement and the Consulting Agreement were approved by the Board of Directors of the Company.

During the term of the Agreement, Mr. Moran will be paid a base salary of $300,000 and a $30,000 retention bonus for working until October 31, 2010. In addition, Mr. Moran shall be provided with an automobile of his choice (comparable to the one currently provided to him by the Company) at the Company’s expense. The Company shall pay for all maintenance, gas and insurance expenses incurred in connection with the automobile. The Company shall provide Mr. Moran an allowance for a club membership in an amount not exceeding $4,000 for any calendar year. Mr. Moran is also entitled to receive vacation in accordance with the Company’s policy for its senior executives. He is also entitled to participate in the Company’s employee benefits plan for its senior executives or employees to include the Company’s medical and 401(k) plans. In addition, Mr. Moran is entitled to reimbursement by the Company for all reasonable expenses incurred by him in connection with this employment. Reimbursable expenses include, but are not limited to, business travel and customer entertainment expenses.

The Company may terminate the Agreement for cause. Examples of “cause” include (i) willful and continued failure to perform contractual duties after the Company has communicated its demand for substantial performance; (ii) willfully engaging in misconduct which has a material adverse effect on the Company’s reputation, operations, prospects or business relations; (iii) conviction for any felony or entry of a plea of “no contest” for a crime of moral turpitude; (iv) or breach of the terms and conditions of the Agreement. Notice of termination must be in writing and must state the reason for termination and Mr. Moran (with his attorney) shall have the opportunity to be heard by the Company’s Board of Directors. In the event of termination for cause, Mr. Moran shall continue to receive his full salary through the date of termination. In the event of disability, Mr. Moran will continue to receive his full salary (less any sum payable under the Company’s disability benefit plan) until his employment is terminated. Termination of employment due to the death or disability of the employee shall not constitute a breach of the Agreement.

Under the terms of the Consulting Agreement, Mr. Moran shall receive a consulting fee equal to $130,000 per annum for the first year of the Consulting Agreement and $100,000 per annum for the remaining two years of the Consulting Agreement. In addition, Mr. Moran shall be provided with an automobile of his choice (comparable to the one currently provided to him by the Company) at the Company’s expense. The Company shall pay for all maintenance, gas and insurance expenses incurred in connection with the automobile. The Company shall provide Mr. Moran an allowance for a club membership in an amount not exceeding $4,000 for any calendar year. Mr. Moran shall be eligible to participate in any employee benefits plan of the Company available by its terms to consultants.

The Company may terminate the Consulting Agreement for Cause. Cause is defined as (i) fraud, misappropriation or theft or (ii) breach of any of the terms of the Consulting Agreement.

The foregoing is a brief description of the terms of the Agreement and Consulting Agreement described herein and by its nature is incomplete. It is qualified in its entirety by the text of the Agreement and the Consulting Agreement, copies of which are included herewith as Exhibits to this Current Report of Form 8-K. All readers of this Current Report are encouraged to read the entire text of the Agreement and the Consulting Agreement.

Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers;

Compensatory Arrangements of Certain Officers.

On April 30, 2010, the Company’s Board of Directors appointed James Eberle, Chief Operating Officer of the Company and entered into approved an employment agreement (the “Employment Agreement”) with Mr. Eberle. The Employment Agreement will run from June 1, 2010 until May 31, 2012. Mr. Eberle shall receive a base annual salary of $200,000. On the anniversary date of the Employment Agreement, the Company shall increase the base salary by an amount equal to the greater of (i) three percent (3%) and (ii) an amount equal to the percentage increase in the Consumer Price Index over the preceding twelve (12) month period.

For each year the Agreement is in effect, the Compensation Committee of the Board of Directors and the Company’s Chief Executive Officer shall determine the bonus amount for the most recently completed fiscal year and payment shall be made by March 15 of the subsequent year. The bonus is performance based and the performance goals shall be as jointly agreed to Mr. Eberle and the Chief Executive Officer and approved by the Board of Directors. For the 2010, Mr. Eberle’s target bonus is $50,000. For each year of the Employment Agreement, the Company’s Board of Directors shall increase the bonus target by an amount equal to the greater of (i) three percent (3%) and (ii) an amount equal to the percentage increase in the Consumer Price Index over the preceding twelve (12) month period.

Mr. Eberle shall be entitled to receive an automobile allowance of $7,200 per year and reimbursement for gas and insurance in connection with such automobile. Mr. Eberle shall also receive an allowance for a club membership of $4,000 per year. The Company shall pay the monthly medical and dental insurance premiums for Mr. Eberle in connection with Company-provided health insurance plans. Mr. Eberle is entitled to receive vacation in accordance with the Company’s policy for its senior executives and may participate in other Company sponsored benefit plans including life insurance and 401(k) retirement plans. Mr. Eberle is entitled to reimbursement by the Company for all reasonable expenses incurred by him in connection with his employment. Reimbursable expenses include, but are not limited to, business travel and customer entertainment expenses.

The Company may terminate the Employment Agreement for cause. Examples of “cause” include (i) willful and continued failure to substantially perform contractual duties after the Company has communicated its demand for substantial performance; (ii) willfully engaging in misconduct which has a material adverse effect on the Company’s reputation, operations, prospects or business relations; (iii) conviction for any felony or entry of a plea of “no contest” for a crime of moral turpitude; (iv) or breach of the terms and conditions of the Employment Agreement. Notice of termination must be in writing and must state the reason for termination and Mr. Eberle (with his attorney) shall have the opportunity to be heard by the Company’s Board of Directors. In the event of termination for cause, Mr. Eberle shall continue to receive his full salary through the date of termination. In the event of disability, Mr. Eberle will continue to receive his full salary (less any sum payable under the Company’s disability benefit plan) until his employment is terminated. Termination of employment due to the death or disability shall not constitute a breach of the Employment Agreement.

If the Company shall terminate Mr. Eberle’s employment in breach of the terms of the Employment Agreement, then the Company shall pay the officer his full salary and provide his benefits for one year from the date of Termination. Additionally, all options to purchase the Company's common stock granted to Mr. Eberle 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 Mr. Eberle's employment by the Company had not terminated.

In the event a Change of Control occurs and Mr. Eberle is either (1) not offered employment by the Successor Company or (2) employment is offered upon conditions that result in his decision to terminate employment for Good Reason (as defined in the Agreement); then the following shall occur. He shall receive continuation of salary and bonus programs (average of prior two-years bonus), and all benefits (including medical, dental and life insurance coverage and any other Company-provided benefits, including car and club allowances that he is receiving as of the Effective Date) from the Date of Termination of employment for a period of twelve months.

The foregoing is a brief description of the terms of the Employment Agreement and by its nature is incomplete. It is qualified in its entirety by the text of the Employment Agreement, a copy of which is included herewith as an Exhibit to this Current Report on Form 8-K. All readers of this Current Report on Form 8-K are encouraged to read the entire text of the Employment Agreement.

Mr. Eberle, age 42, has been the President of MXL Industries, Inc. since June 2004. MXL is a complete, turn-key provider of optical quality mold design, tooling, molding, and coating of polycarbonate and acrylic parts concentrating on meeting stringent optical performance requirements for a broad spectrum of customers. From 1990 to May 2004, Mr. Eberle worked at General Physics Corporation, most recently as VP of Operations. General Physics is a wholly-subsidiary of GP Strategies Corporation (NYSE: GPX). General Physics is a global performance improvement solutions provider of sales and technical training, e-Learning solutions, management consulting and engineering services.

In June 2008, Mr. Eberle was involved in a management buyout of MXL with Mr. Jerome I. Feldman, Chairman of the Board of the Company. Mr. Eberle owns 12% of MXL and Mr. Feldman owns 25% of MXL.

Item 9.01.

Financial Statements and Exhibits.

(c)

Exhibits.

The following are filed as exhibits to this report:

Exhibit No. Description

10.1 Employment Agreement, dated as of April 30, 2010 between John V. Moran and GSE Systems, Inc.

10.2 Consulting Agreement, dated as of April 30, 2010 between John V. Moran and GSE Systems, Inc.

10.3 Employment Agreement, dated as of April 30, 2010 between James Eberle and GSE Systems, Inc.

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 hereunto duly authorized.

Date: April 30, 2010

GSE SYSTEMS, INC.

/s/ Jeffery G. Hough

Jeffery G. Hough

Senior Vice President and Chief Financial Officer

EX-10.1 2 exh10-1moran_employ.htm MORAN EMPLOYMENT AGREEMENT exh10-1moran_employ.htm

Exhibit 10.1

EMPLOYMENT AGREEMENT

AGREEMENT, dated as of April 30, 2010, between GSE Systems, Inc. a Delaware corporation with principal executive offices at Suite 200, 1332 Londontown Boulevard, Sykesville MD 21784, and John V. Moran, residing at 48 Longview Avenue, Randolph, NJ 07869 ("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.

(a) 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.

(b) Employee wishes to retire from the Company at the end of the Employment Period (as hereinafter defined). In addition to the duties set forth in Section 2(a), Employee shall perform such duties as are assigned to him by the Board to effect the orderly and effective transition of his responsibilities as Chief Executive Officer of the Company and Vice Chairman of the Board. Employee hereby agrees that on the last day of the Employment Period, he will resign as Chief Executive Officer of the Company, as Vice Chairman of the Board, as a member of the Board and any committee thereof, and all other positions that he holds as an employee of or otherwise with the Company and all affiliates of the Company, except pursuant to the Consulting Agreement (the “Consulting Agreement”) between Employee and the Company dated as of the date hereof.

Section 3. Term of Employment.

The term of employment of Employee by the Company pursuant to this Agreement shall be for the period (the "Employment Period") commencing on May 1, 2010 and ending on October 31, 2010 or such earlier date this Agreement is terminated in accordance with the provisions hereof.

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. The Company shall pay to Employee a base annual salary at the rate of Three Hundred Thousand Dollars ($300,000). 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) Vacation. Employee shall be entitled to vacation in accordance with the Company's policy for its senior executives.

(c) 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.

(d) Club Membership. The Company shall provide Employee with an allowance for club membership at the rate of Four Thousand Dollars ($4,000) per year.

(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.

(f) Stay Bonus. If the Employment Period ends on October 31, 2010, the Company shall pay Employee a stay bonus of Thirty Thousand Dollars ($30,000) on October 31, 2010.

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, Transfer Restrictions.

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, (c) become engaged in a business that is directly competitive with the business of the Company or any of its subsidiaries, or (d) sell, assign, or otherwise transfer in any manner any securities of the Company or any interest therein.

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.

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.

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.

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 and the Consulting Agreement set 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).

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: _____________________________ _____________________________

Lawrence M. Gordon John V. Moran

Vice President and General Counsel

EX-10.2 3 exh10-2moran_consult.htm MORAN CONSULTING AGREEMENT exh10-2moran_consult.htm

Exhibit 10.2

CONSULTING AGREEMENT

AGREEMENT, dated as of April 30, 2010, between GSE Systems, Inc., a Delaware corporation with principal executive offices at Suite 200, 1332 Londontown Boulevard, Sykesville MD 21784 (the “Company”), and John V. Moran, residing at 48 Longview Avenue, Randolph, NJ 07869 (“Consultant”).

WHEREAS, the Company and Consultant have entered into an Employment Agreement dated the date hereof (the “Employment Agreement”) with a term commencing on the May 1, 2010 and ending on October 31, 2010 or such earlier date that the Employment Agreement is terminated in accordance with the provisions thereof (the “Employment Agreement Termination Date”); and

WHEREAS, Consultant will retire from the Company on the Employment Agreement Termination Date; and

WHEREAS, subject to the terms and conditions set forth herein, the Company wishes to retain Consultant after his retirement to perform consulting and advisory services relating to the business and operations of the Company as set forth herein, and Consultant wishes to provide such consulting and advisory services; and

NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants, terms and conditions set forth herein, and the other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. Position and Responsibilities.

(a) Consulting Position. During the Term (as hereinafter defined), the Company shall retain Consultant to render services as a consultant, and Consultant hereby agrees to be available to provide such consulting and advisory services to the Company and its affiliates as are reasonably requested by the Board, including, without limitation, introductions to and meetings with key customers and existing and potential investors. Consultant shall render the consulting and advisory services hereunder at such time and places and in such manner as may be reasonably requested by the Company from time to time, provided that Consultant shall not be required to allocate more than ten hours a month during the Term to the performance of his services hereunder. Consultant shall be permitted to obtain full-time employment with a third party during the Term, provided such employment does not (i) interfere with Consultant’s obligations to the Company pursuant to this Agreement or (ii) violate the covenants of Consultant set forth in Section 4 of this Agreement).

(b) Term. The Company shall retain Consultant hereunder for a period commencing on November 1, 2010 and ending on October 31, 2013 or such earlier date that Consultant’s retention as a consultant hereunder is terminated in accordance with the provisions of Section 3 hereof (the “Term”).

(c) Status. Consultant hereby acknowledges that during the Term he will be acting as an independent contractor of the Company and not an employee, that he is solely responsible for his actions or inactions, and that nothing in this Agreement shall be construed to create an employment relationship between the Company and Consultant. Consultant shall have no authority or power to enter into contracts or agreements on behalf of the Company or to otherwise create obligations of the Company to third parties, and Consultant shall not create obligations on the part of the Company or represent to any party that he has such power or authority. Consultant, as an independent contractor, shall also comply with the provisions related to payment of taxes and other self-employment payments in accordance with Section 6(c) hereof.

2. Compensation. In consideration of Consultant’s performance of consulting and advisory services hereunder, Consultant’s continued compliance with the covenants set forth in Section 4 hereof, and Consultant’s execution and delivery to the Company on November 1, 2010 of a release and covenant not to sue in the form attached hereto (the “Release”), Consultant shall be entitled to receive the following compensation and benefits from the Company:

(a) Consulting Fees. During the Term, Consultant shall receive a consulting fee equal to $100,000 per annum (the “Consulting Fee”), which shall be earned and payable in equal bi-monthly installments during the Term, except that the consulting fee for the first six months of the Term shall be earned in equal bi-monthly installments but shall be payable in a lump sum on May 1, 2011.

(b) Benefits. During the Term, Consultant shall be eligible to participate in any employee benefits plans and programs of the Company available by their terms to consultants.

(d) Automobile. The Company shall provide Consultant with an automobile of his choice (comparable to the automobile provided by the Company to Consultant pursuant to the Employment Agreement) at the Company's expense and shall pay the maintenance, gas, and insurance expenses in connection with such automobile.

(e) Club Membership. The Company shall provide Consultant with an allowance for club membership at the rate of $4,000 per year.

(f) Vesting of Options. Options to purchase the Company's common stock granted to Consultant under the Company's option plan or otherwise shall continue to vest during the Term and, except if the Company terminates Consultant's retention as a consultant hereunder for Cause (as hereinafter defined), or Consultant terminates his retention as consultant hereunder for any reason other than death, any such options remaining unvested on the last day of the Term shall become fully vested on such day.

3. Termination of Consulting Arrangement.

(a) Early Termination. Either the Company or Consultant may terminate Consultant’s retention as a consultant hereunder at any time prior to September 30, 2013 for any reason or no reason.

(b) Termination by the Company for Cause or by Consultant. If, prior to September 30, 2013, the Company terminates Consultant’s retention as a consultant hereunder for Cause, or Consultant terminates his retention as a consultant hereunder for any reason other than death, all obligations of the Company hereunder shall cease. The date of termination by the Company for Cause of Consultant’s retention as a consultant hereunder shall be the date specified in a written notice of termination from the Company to Consultant. The date of a termination by Consultant of his retention as a consultant hereunder shall be the date specified in a written notice of termination from Consultant to the Company, provided that Consultant shall provide at least 30 days’ advance written notice of his intention to terminate as a consultant hereunder. For purposes of this Agreement, “Cause” shall mean (i) fraud, misappropriation or theft by Consultant against the Company or any of its affiliates or (ii) the breach by Consultant of any of the covenants in Section 4 hereof.

(i) No termination by the Company of Consultant’s retention as a consultant hereunder for any reason other than Cause shall affect the Company’s obligations to Consultant under any provision of this Agreement, including, but not limited to, the Company’s payment obligations under Sections 2(a) and 2(b) of this Agreement. It is intended that the payments under Sections 2(a) and 2(b) of this Agreement after termination by the Company of Consultant’s retention as a consultant hereunder for any reason other than Cause shall satisfy the safe harbor set forth in Treasury Regulations Section 1.409A-1(n)(2)(ii), and to the extent such payments do not satisfy the applicable safe harbor, the excess amount shall be treated as deferred compensation under Code Section 409A and as such shall be payable pursuant to the schedule set forth in Sections 2(a) and 2(b) of this Agreement. The date of termination by the Company of Consultant’s retention as a consultant hereunder for any reason other than Cause shall be the date specified in a written notice of termination to Consultant.

(ii) The death of Consultant during the Term shall not affect the Company’s obligations to Consultant under any provision of this Agreement, including, but not limited to, the Company’s payment obligations under Sections 2(a) and 2(b) of this Agreement, and any amounts that would otherwise have been paid by the Company to Consultant shall be paid to his estate or heirs. Payments under Sections 2(a) and 2(b) of this Agreement after the death of the Consultant shall be treated as deferred compensation under Code Section 409A and as such shall be payable pursuant to the schedule set forth in Sections 2(a) and 2(b) of this Agreement.

4. Covenants by Consultant.

(a) Confidentiality. Except as may be required by applicable law, Consultant shall not, at any time or under any circumstances during the Term and thereafter, directly or indirectly, communicate or disclose to any person any Confidential and Proprietary Information howsoever acquired (except as set forth below), nor shall Consultant utilize or make available any such knowledge or information directly or indirectly in connection with any business or activity in which Consultant is or proposes to be involved, or in connection with the transfer or proposed transfer of any of Consultant’s securities or in connection with the solicitation or acceptance of employment with any person. For purposes of this Agreement, “Confidential and Proprietary Information” means all proprietary trade secrets and/or proprietary information and any information, concept or idea in whatever form, tangible or intangible, pertaining in any manner to the business of the Company or any affiliate of the Company, or to the Company’s (or any of the Company’s affiliates’) customers, clients, employees, Referral Sources (as hereinafter defined) or business associates, unless the information is or becomes publicly known through lawful means (other than disclosure by Consultant, unless such disclosure by Consultant is made in good faith in the course of performing Consultant’s duties under this Agreement, or with the express written consent of the Board). As used herein, “Referral Source” means any person or entity that, directly or indirectly, refers customers or business to the Company. Consultant will be under no obligation of confidentiality with respect to any information that Consultant can show (i) is or becomes available to the general public through no fault of Consultant; (ii) was known to Consultant before disclosure without obligation of confidentiality; (iii) is independently developed by Consultant; or (iv) is lawfully received from a third party without obligation of confidentiality.

(b) Return of Property to Company. On or before the first day of the Term, Consultant will return to the Company all (i) written, descriptive or tangible matter containing Confidential and Proprietary Information, including all copies thereof, which was developed or compiled by Consultant or made available to Consultant in the course of employment with the Company, including, without limitation, drawings, blueprints, tapes, disks, codes, descriptions or other papers, documents or materials that contain any such Confidential and Proprietary Information, and (ii) Company property including, without limitation, all computer (hardware and software) and business equipment, drawings, designs, specifications, tapes, disks, codes, notes, memoranda or data made available or furnished to Consultant by, or obtained by Consultant from, the Company or any of its subsidiaries or affiliates, and any copies thereof, whether or not they contain Confidential and Proprietary Information. Anything to the contrary notwithstanding, nothing in this Section 4(b) shall require Consultant to return to the Company such property of the Company that Consultant will require for purposes of carrying out his duties as a consultant hereunder.

(c) Nondisparagement; Confidentiality of Agreement. Consultant agrees that neither he nor anyone acting by, through, under or in concert with him shall disparage or otherwise communicate, whether written or oral, negative statements or opinions about the Company, its affiliates, members of the Board, or the officers, employees, business, agents, customers or shareholders of the Company or any of its affiliates.

(d) Non-Competition and Non-Solicitation.

(i) During the period commencing on November 1, 2010 and ending on October 31, 2014 (the “Restricted Period”), Consultant shall not, either directly or indirectly, individually or by or through any Covered Entity (as hereinafter defined), participate in, assist, aid or advise in any way, any business or enterprise that competes with the Company anywhere in the world (a “Competitor”), except that Consultant may participate in, assist, aid or advise a division or subsidiary of a Competitor so long as such subsidiary or division does not compete with the Company anywhere in the world. For purposes of this Agreement, “Covered Entity” shall mean every affiliate of Consultant and every business, association, trust, corporation, partnership, limited liability company, proprietorship or other entity (A) in which Consultant or any affiliate of Consultant has invested (whether through debt or equity securities), (B) to which Consultant or any affiliate of Consultant has contributed any capital or made any advances, (C) in which Consultant or any affiliate of Consultant has an ownership interest or profit sharing percentage, (D) from which Consultant or any affiliate of Consultant receives or is entitled to receive income, compensation or consulting fees, or (E) in which Consultant or any affiliate of Consultant has an interest as a lender (other than solely as a trade creditor for the sale of goods or provision of services that do not otherwise violate the provisions of this Agreement). The agreements of Consultant contained herein specifically apply to each entity which is presently a Covered Entity or which becomes a Covered Entity subsequent to the date of this Agreement. Notwithstanding anything contained in the foregoing provisions to the contrary, (x) the term “Covered Entity” shall not include the Company, any subsidiary of the Company, or any affiliate of the Company and (y) nothing contained in this Section 4(d)(i) prohibits Consultant or any affiliate of Consultant from owning less than one percent of any class of voting securities publicly held and quoted on a recognized securities exchange or inter-deal quotation system of any issuer, and no such issuer shall be considered a Covered Entity solely by virtue of such ownership or the incidents thereof.

(ii) During the Restricted Period, Consultant shall not, either directly or indirectly, and shall not permit any Covered Entity which is controlled by Consultant to either, directly or indirectly, (A) solicit, or take any other action that is intended to solicit, the business of any customers or Referral Sources with which the Company or any of its affiliates conducts business or receives referrals or has conducted business or received referrals within the 12 months preceding such solicitation or other action; or (B) hire, solicit, take away, or attempt to hire, solicit or take away (either on such Consultant’s behalf or on behalf of any other person or entity) any person (1) who is then an employee of the Company or any affiliate of the Company; or (2) who has terminated his or her employment with the Company or any affiliate of the Company within the 12 months preceding such hiring, solicitation or other action.

(e) Enforcement; Remedies: Consultant agrees and acknowledges that the Company has a valid and legitimate business interest in protecting its business from any activity prohibited by the covenants in Section 4 hereof. Consultant acknowledges that Consultant’s expertise in the business of the Company is of a special and unique character which gives this expertise a particular value, and that a breach of Section 4 hereof by Consultant will cause serious and irreparable harm to the Company. Consultant therefore acknowledges that a breach of Section 4 hereof by Consultant cannot be adequately compensated in an action for damages at law, and equitable relief would be necessary to protect the Company from a violation of this Agreement and from the harm which this Agreement is intended to prevent. By reason thereof, Consultant acknowledges that the Company is entitled, in addition to any other remedies it may have under this Agreement or otherwise, to preliminary and permanent injunctive and other equitable relief to prevent or curtail any breach of this Agreement without any requirement to prove actual damages or post a bond. Consultant acknowledges, however, that no specification in this Agreement of a particular legal or equitable remedy may be construed as a waiver of or prohibition against pursuing other legal or equitable remedies in the event of a breach of this Agreement by Consultant.

(f) Severability and Modification of Any Unenforceable Covenant. It is the parties’ intent that each of the covenants in this Section 4 be read and interpreted with every reasonable inference given to its enforceability. However, it is also the parties’ intent that if any term, provision or condition of the covenants is held to be invalid, void or unenforceable, the remainder of the provisions thereof shall remain in full force and effect and shall in no way be affected, impaired or invalidated. It is also the parties’ intent that if it is determined any of the covenants are unenforceable because of overbreadth, then the covenants shall be modified so as to make it reasonable and enforceable under the prevailing circumstances. In the event that the time period or scope of any covenant is declared by a court or arbitrator of competent jurisdiction to exceed the maximum time period or scope that such court or arbitrator deems enforceable, then such court or arbitrator shall reduce the time period or scope to the maximum time period or scope permitted by law.

(g) Tolling. In the event of the breach by Consultant of any covenant set forth in Section 4(d) hereof, the running of the period of restriction shall be automatically tolled and suspended for the amount of time that the breach continues, and shall automatically recommence when the breach is remedied so that the Company shall receive the benefit of Consultant’s compliance with the covenants.

5. Effectiveness of this Agreement. This Agreement shall be void ab initio and of no force and effect unless (a) the Employment Agreement Termination Date is October 31, 2010 (if the Company terminates the Employment Agreement without Cause (as defined in the Employment Agreement) prior to such date, the Employment Agreement Termination Date for purposes of this Agreement shall be deemed to be October 31, 2010), (b) Consultant complies with his obligations to resign set forth in Section 2(b) of the Employment Agreement, (c) on November 1, 2010, Consultant executes and delivers to the Company the Release, and (d) Consultant does not revoke the Release as provided therein.

6. Miscellaneous Provisions.

(a) Entire Agreement. This Agreement and the Employment Agreement set forth the entire agreement of the parties in respect of the subject matter contained herein and therein and supersede all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto, and any prior agreement of the parties in respect of the subject matter contained herein between Consultant and the Company.

(b) Benefits of Agreement. This Agreement shall inure to the benefit of and be binding upon the heirs, executors, administrators and legal personal representatives of Consultant and the successors and permitted assigns of the Company, respectively.

(c) Taxes and Self-Employment Payments. Consultant shall be solely responsible for and shall file on a timely basis tax returns and payments required to be filed or made with respect to his performance of services and the receipt of compensation under this Agreement, including, without limitation, tax returns and payments to United States federal, state and local income taxes, and payroll tax authorities, and social security, unemployment or disability insurance payments. No federal, state or local income tax of any kind shall be withheld or paid by the Company with respect to any amount paid to Consultant during the Term. Consultant shall indemnify Company and hold it harmless from and against all claims, damages, losses and expenses, including reasonable fees and expenses of attorneys, relating to any obligation imposed by law on Company to pay any withholding taxes, payroll taxes, social security, unemployment or disability insurance, or similar items in connection with consideration received by Consultant pursuant to this Agreement, whether such obligations are imposed by the Internal Revenue Service or any other federal, state or local governmental authority.

(d) 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.

(e) Waiver. The failure of either party hereto at any time to enforce performance by the other party of any provision of this Agreement shall in no way affect such party’s rights thereafter to enforce the same, nor shall the waiver by either party of any breach of any provision hereof be deemed to be a waiver by such party of any other breach of the same or any other provision hereof.

(f) Section Headings. The headings of the several sections in this Agreement are inserted solely for the convenience of the parties and are not a part of and are not intended to govern, limit or aid in the construction of any term or provision hereof.

(g) Notices. Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be (i) given by Federal Express, Express Mail, or similar overnight delivery or courier service or (ii) 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 at such other address as the party shall have furnished in writing in accordance with the provisions of this Section 6(g)). Any notice or other communication shall be deemed given at the time of receipt thereof.

(h) Severability. If any provision of this Agreement shall be held by a court or arbitrator to be invalid, unenforceable, or void, such provision shall be enforced to the fullest extent permitted by law, and the remainder of this Agreement shall remain in full force and effect. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

(i) Arbitration.

(i) Any controversy, claim, cause of action, in law or equity, or dispute involving the parties (or their affiliated persons or entities) directly or indirectly concerning this Agreement, or the subject matter thereof, including its enforcement, performance, breach, or interpretation, shall be resolved solely and exclusively by final and binding arbitration held in New York, New York by one arbitrator in accordance with the rules of employment arbitration then followed by the American Arbitration Association or any successor to the functions thereof. The arbitrator shall apply New York law (without giving effect to conflicts of law) in the resolution of all controversies, claims and disputes and shall have the right and authority to determine how his or her decision or determination as to each issue or matter in dispute may be implemented or enforced. Any decision or award of the arbitrator shall be final and conclusive on the parties to this Agreement and their respective affiliates, and there shall be no appeal therefrom in the absence of one of the grounds for vacating an award set forth in CPLR §7511(b). Each party in any such arbitration shall be responsible for its own attorneys’ fees, costs and necessary disbursement; provided, however, that if one party refuses to arbitrate and the other party seeks to compel arbitration by court order, if such other party prevails, it shall be entitled to recover reasonable attorneys’ fees, costs and necessary disbursements.

(ii) The parties hereby agree that any action to compel arbitration pursuant to this Agreement shall be brought in any appropriate state court in New York, and in connection with such action to compel, the laws of New York (without giving effect to conflicts of law) shall control. Application may also be made only to such court for confirmation of any decision or award of the arbitrator, for an order of the enforcement and for any other remedies which may be necessary to effectuate such decision or award. The parties hereby consent to the jurisdiction of the arbitrator and of such court and waive any objection to the jurisdiction of such arbitrator and court.

(iii) Notwithstanding the foregoing, the Company shall be entitled to seek injunctive relief, in any court of competent jurisdiction, to enforce this Agreement and this Section 6(i) shall not limit the right of the Company to seek judicial relief pursuant to Section 4(e) of this Agreement without prior arbitration.

(j) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original but both of which together shall constitute one and the same instrument.

(k) Construction. The language in all parts of this Agreement shall in all cases be construed simply, according to its fair meaning, and not strictly for or against any of the parties. Without limitation, there shall be no presumption against any party on the ground that such party was responsible for drafting this Agreement or any part thereof.

(l) Code Section 409A. The parties hereby acknowledge and agree that, to the extent applicable, this Agreement shall be interpreted in accordance with, and the parties agree to use their best efforts to achieve timely compliance with, Section 409A of the Internal Revenue Code of 1986, as amended, and the Department of Treasury Regulations and other interpretive guidance issued thereunder (“Section 409A”), including, without limitation, any such regulations or other guidance that may be issued after the date hereof. Notwithstanding any provision of this Agreement to the contrary, in the event that the Company determines that any amounts payable hereunder would otherwise be taxable to Consultant under Section 409A, the Company may adopt such amendments to this Agreement and appropriate policies and procedures, including amendments and policies with retroactive effect, that the Company determines in its sole discretion are necessary or appropriate to comply with the requirements of Section 409A and thereby avoid the application of penalty taxes under such Section.

(m) Amendment. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Consultant and such officer of the Company as may be specifically designated by the Board.

(n) Independent Legal Counsel. Consultant acknowledges that Consultant has read and understands this Agreement, and acknowledges that Consultant has had the opportunity to obtain independent legal advice prior to execution of this Agreement. To the extent that Consultant fails to obtain independent legal advice, Consultant covenants that such failure will not be used by Consultant as a defense to the enforcement of the provisions of the Agreement.

(o) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to conflict of laws.

(p) Nondisparagement by the Company. The Company agrees that neither the Company nor anyone acting by, through, under or in concert with the Company shall disparage or otherwise communicate, whether written or oral, negative statements or opinions about Consultant.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above.

GSE SYSTEMS, INC.

By: _____________________________ _____________________________

Lawrence M. Gordon John V. Moran

Vice President and General Counsel

RELEASE AND COVENANT NOT TO SUE

1. Release. For good and valuable consideration, John V. Moran (“Releasor”), provides this Release and Covenant Not to Sue (“Release”), wherein he releases and discharges the Company, and all predecessors, successors and their respective parent corporations, affiliates, related, and/or subsidiary entities, and all of their past and present investors, directors, shareholders, officers, general or limited partners, employees, attorneys, agents and representatives and assigns of each of the foregoing, and the employee benefit plans in which Releasor is or has been a participant by virtue of his employment with or service to the Company (cumulatively “Released Parties”), from any and all claims, debts, demands, accounts, judgments, rights, causes of action, equitable relief, damages, costs, charges, complaints, obligations, promises, agreements, controversies, suits, expenses, compensation, responsibility and liability of every kind and character whatsoever (including attorneys’ fees and costs), whether in law or equity, known or unknown, asserted or unasserted, suspected or unsuspected, which Releasor has or may have had against such entities or persons based on any events or circumstances arising or occurring on or prior to the date hereof, arising directly or indirectly out of, relating to, or in any other way involving in any manner whatsoever Releasor’s employment by or service to the Company or any of the Released Parties or the termination thereof, and includes but is not limited to:

(a) any and all claims of wrongful discharge, breach of contract or promissory or equitable estoppel, any and all claims for employee benefits, including, but not limited to, any and all claims under the Employee Retirement Income Security Act of 1974, as amended, the Fair Labor Standards Act, as amended, and any and all claims of employment discrimination on any basis, including, but not limited to, all claims under Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act of 1967, as amended (the “ADEA”), the Civil Rights Act of 1866, 42 U.S.C. § 1981, the Civil Rights Act of 1991, the Americans with Disabilities Act of 1990, the Immigration Reform and Control Act of 1986, the Maryland Human Relations Commission Act, or any other federal, state, or local human rights law; and

(b) any and all claims under common law, including but not limited to breach of contract, assault, battery, false imprisonment, emotional distress, prima facie tort, breach of privacy, duress, defamation, fraud, negligence, misrepresentation, conversion, or any similar, or related, or different claims.

2. No Suits.

(a) Releasor represents and warrants that Releasor has never commenced or filed any action, charge, complaint, or other proceeding, whether administrative, judicial, legislative, or otherwise, based upon or seeking relief on account of any action or failure to act by the Released Parties which may have occurred or failed to occur prior to the execution of this Release (“Action”). Releasor further covenants and agrees never to commence, file, voluntarily aid or in any way prosecute or cause to be commenced or prosecuted an Action against any of the Released Parties. The foregoing sentence shall not apply to a charge filed with the EEOC or an analogous state or local administrative agency; however, to the extent any Action is brought by anyone (including Releasor and/or the EEOC), Releasor expressly waives any claim to any form of monetary or other damages, or any other form of recovery or relief in connection with any such Action.

(b) Releasor agrees that in the event Releasor files any civil complaint or commences any litigation of any kind on a claim that is covered by this Release, Releasor shall consent to its immediate and summary dismissal, and Releasor shall pay all of the reasonable attorneys’ fees, expenses, and costs incurred by Company and/or any other of the Released Parties in responding to such action, including, but not limited to, any consequential damages and attorneys’ fees that any of the Released Parties may suffer or incur. The Released Parties shall also have the right of set-off (and return, if payment has already been made) of such sum(s) against any obligation to Releasor under the Consulting Agreement, and to immediately terminate Releasor’s payments thereunder. In the event that Releasor breaches any of Releasor’s obligations under this Release and/or files any civil complaint or commences any litigation of any kind that is covered by this Release, then, in addition to all other rights of Company and other Released Parties under this Release, Releasor will reimburse Company all amounts paid to Releasor pursuant to the Consulting Agreement. In addition to the remedies noted above, Company may pursue all other remedies available under law or equity to address any breach by Releasor of this Release.

(c) Releasor further agrees not to aid or abet any employee(s) of or person(s) having dealings with Company or any of the other Released Parties in bringing any claims, charges, or suits against any or all of them, except as required by legal process.

(d) The second sentence of paragraph 2(a) and all provisions of paragraph 2(b) shall not apply to any claims that Releasor files under the ADEA or any challenge that Releasor makes to the validity of the ADEA waiver contained in this Agreement. While Releasor may challenge the validity of the ADEA waiver herein, in the event Releasor is unsuccessful, Company and the Released Parties are not precluded from recovering attorneys’ fees or costs to the extent specifically authorized under federal law.

3. Knowing and Voluntary Waiver. Notwithstanding any other provision of this Agreement to the contrary:

(a) Releasor agrees that this Release constitutes a knowing and voluntary waiver of all rights or claims Releasor may have against the Released Parties or any of them, as of the date of execution of this Release, except as specifically set forth herein.

(b) Releasor acknowledges that as required by the Older Workers Benefit Protection Act, the Company has advised Releasor to consult with an attorney prior to executing this Release. Releasor further acknowledges that Company has given Releasor a period of at least twenty-one (21) days in which to consider this Release. If Releasor executed this Release at any time prior to the end of the twenty-one (21) day period that Company gave Releasor in which to consider this Release, such early execution was a knowing and voluntary waiver of Releasor’s right to consider this Agreement for at least twenty-one (21) days, and was due to Releasor’s belief that Releasor had ample time in which to consider and understand this Release, and in which to review this Release with an attorney.

(c) Releasor may revoke this Release by delivering a letter, by certified mail, return receipt requested, within seven days of Releasor’s execution of this Agreement, to Lawrence M. Gordon, Vice President and General Counsel, GSE Systems, Inc., Suite 200, 1332 Londontown Boulevard, Sykesville MD 21784. This Release shall become effective on the eighth (8th) day after Releasor executes this Release (the “Effective Date”) unless Releasor revokes it prior thereto as aforestated.

4. Acknowledgment. Releasor expressly acknowledges, represents and warrants that Releasor has carefully read this Release; that Releasor fully understands the terms, conditions and significance of this Release; that Releasor has had ample time to consider and negotiate this Release; that the Company has advised Releasor to consult with an attorney concerning this Release; that Releasor has had a full opportunity to review this Release with an attorney; and that Releasor has executed this Release voluntarily, knowingly, and with such advice of counsel as Releasor has deemed appropriate.

________________________

John V. Moran

Dated: November 1, 2010

EX-10.3 4 exh10-3eberle_employ.htm EBERLE EMPLOYMENT AGREEMENT exh10-3eberle_employ.htm

Exhibit 10.3

EMPLOYMENT AGREEMENT

AGREEMENT, dated as of April 30, 2010, between GSE Systems, Inc. a Delaware corporation with principal executive offices at 1332 Londontown Blvd., Sykesville, MD 21784 (the "Company"), and James Eberle, residing at 645 Quarry Road, Lititz, PA 17543 ("Employee").

WITNESSETH

WHEREAS, the Company desires to employ Employee upon the terms and subject to the terms and conditions set forth in this Agreement.

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.

(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.

(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.

(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.

Section 7. Patents.

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.

(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.

(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:

(i)

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

(ii)

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.

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.

Section 16. Representations and Warranties of Employee.

Section 17. Life Insurance.

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.

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.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.

GSE SYSTEMS, INC.

By: _________________________________ ______________________________

John V. Moran, Chief Executive Officer Date

_________________________________ ______________________________

James Eberle Date