Document:

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.

      
 

      
        
          
          

        

        
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      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.

      

      
        
          
          

        

        
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      Section
5.                      Expenses

      

      The
Company shall reimburse Employee for all reasonable expenses (including, but not
limited to, business travel and customer entertainment expenses) incurred by him
in connection with his employment hereunder in accordance with the written
policy and guidelines established by the Company for executive
officers.

      

      Section
6.                      Non-Competition,
Non-Solicitation, 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.

      

      
        
          
          

        

        
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      Section
9.                      Termination

      

      Employee's
employment hereunder may be terminated without any breach of this Agreement only
under the following circumstances:

       

      (a)
Death. Employee's employment hereunder shall terminate upon his
death.

       

      (b)
Disability. If, as a result of Employee's incapacity due to physical or mental
illness, Employee shall have been absent from his duties hereunder on a
full-time basis for the entire period of three (3) consecutive months, and
within 30 days after a Notice of Termination (as defined in Section 9(d)) is
given shall not have returned to the performance of his duties hereunder on a
full-time basis, the Company may terminate Employee's employment
hereunder.

       

      (c)
Cause. The Company may terminate Employee's employment hereunder for Cause. For
purposes of this Agreement, the Company shall have "Cause" to terminate
Employee's employment hereunder upon the occurrence of any of the following (i)
the willful and continued failure by Employee to substantially perform his
duties or obligations hereunder (other than any such failure resulting from
Employee's incapacity due to physical or mental illness), after demand for
substantial performance is delivered by the Company that specifically identifies
the manner in which the Company believes Employee has not substantially
performed his duties or obligations, (ii) the willful engaging by Employee in
misconduct which, in the reasonable opinion of the Board of the Company, will
have a material adverse effect on the reputation, operations, prospects or
business relations of the Company, (iii) the conviction of Employee of any
felony or the entry by Employee of any plea of nolo contendere in response
to an indictment for a crime involving moral turpitude, or (iv) the breach by
Employee of a term or condition of this Agreement. For purposes of this
paragraph, no act, or failure to act, on Employee's part shall be considered
"willful" unless done, or omitted to be done, by him not in good faith and
without reasonable belief that his action or omission was in the best interest
of the Company. Notwithstanding the foregoing, Employee shall not be deemed to
have been terminated for Cause without the following (i) reasonable notice to
Employee setting forth the reasons for the Company's intention to terminate for
Cause, (ii) an opportunity for Employee, together with his counsel, to be heard
before the Board, and (iii) delivery to Employee of a Notice of Termination in
accordance with Section 9( d).

       

      (d)
Notice of Termination. Any termination of Employee's employment by the Company
(other than termination pursuant to Section 9(a)) shall be communicated by a
Notice of Termination to the other party hereto. For purposes of this Agreement,
a "Notice of Termination" shall mean a written notice which shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of Employee's employment under the provision so
indicated.

       

      (e) Date
of Termination. "Date of Termination" shall mean (i) if Employee's employment is
terminated by his death, the date of his death, (ii) if Employee's employment is
terminated pursuant to Section l0(b), 30 days after Notice of Termination is
given (provided that Employee shall not have returned to the performance of his
duties on a full-time basis during such 30 day period), and (iii) if Employee's
employment is terminated for any other reason, the date specified in the Notice
of Termination, which shall not be earlier than the date on which the Notice of
Termination is given; provided that if within 30 days after any Notice of
Termination is given the party receiving such Notice of Termination notifies the
other party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is resolved, either by mutual
written agreement of the parties or by a judgment, order, or decree of a court
of competent jurisdiction.

       

      
        
          
          

        

        
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      Section
10.                                       Compensation
upon Termination or During Disability.

      

      (a)
During any period that Employee fails to perform his duties hereunder as a
result of incapacity due to physical or mental illness ("disability period"),
Employee shall continue to receive his full salary at the rate then in effect
for such period until his employment is terminated pursuant to Section 9(b),
provided that payments so made to Employee during the disability period shall be
reduced by the sum of the amounts, if any, payable to Employee at or prior to
the time of any such payment under disability benefit plans of the Company and
which were not previously applied to reduce any such payment.

       

      (b) If
Employee's employment shall be terminated for Cause, the Company shall pay
Employee his full salary through the Date of Termination at the rate in effect
at the time Notice of Termination is given.

       

      (c) If
the Company shall terminate Employee's employment in breach of the terms of this
Agreement, then the Company shall pay Employee his full salary and provide
Employee his benefits through the term of this Agreement. Additionally, all
options to purchase the Company's common stock granted to Employee under the
Company's option plan or otherwise shall immediately become fully vested and
shall terminate on such date as they would have terminated if Employee's
employment by the Company had not terminated. Additionally, Employee shall be
released from the non-compete and non-solicitation provisions contained in
Section 6 of this Agreement.

      

      Section
11.                                       Successors;
Binding Agreement.

      

      (a) The
Company will require any successor (whether direct or indirect, by purchase;
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company, by agreement in form and reasonably substance
satisfactory to Employee, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.

      

      
        
          
          

        

        
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      Section
12.                                       No
Third Party Beneficiaries.

      

      This
Agreement does not create, and shall not be construed as creating, any rights
enforceable by any person not a party to this Agreement (except as provided in
Section 11).

      

      Section
13.                                       Fees
and Expenses.

      

      The
Company shall pay all reasonable legal fees and related expenses (including the
costs of experts, evidence, and counsel) incurred by Employee as a result of a
contest or dispute over Employee's termination of employment if such contest or
dispute is settled or adjudicated on terms that are substantially in favor of
Employee. In addition, the Company shall pay Employee interest, at the
prevailing prime rate, on any amounts payable to Employee hereunder that are not
paid when due.

      

      Section
14.                                       Representations
and Warranties of Employee.

      

      Employee
represents and warrants to the Company that (a) Employee is under no contractual
or other restriction or obligation which is inconsistent with the execution of
this Agreement, the performance of his duties hereunder, or the other rights of
the Company hereunder and (b) Employee is under no physical or mental disability
that would hinder his performance of duties under this Agreement.

      

      Section
15.                                       Life
Insurance.

      

      If
requested by the Company, Employee shall submit to such physical examinations
and otherwise take such actions and execute and deliver such documents as may be
reasonably necessary to enable the Company, at its expense and for its own
benefit, to obtain life insurance on the life of Employee. Employee has no
reason to believe that his life is not insurable with a reputable insurance
company at rates now prevailing in the City of Baltimore for healthy men of his
age.

      

      Section
16.                                       Modification.

      

      This
Agreement 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).

      

      
        
          
          

        

        
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      Section
18.                                Governing
Law.

      

      This
Agreement shall be governed by and construed in accordance with the laws of the
State of Maryland, without giving effect to conflict of laws.

      

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

      

      

      GSE
SYSTEMS, INC.

      

      

      By:  _____________________________                                              _____________________________

      Lawrence M.
Gordon                                                                                     John
V. Moran

      Vice President and General
Counsel

      

      

      7exh10-2moran_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”).

       

      
        
           

        

        
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      (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.

       

      (c) Signing
Bonus.  The Company shall pay Consultant a signing bonus of
$30,000 on May 1, 2011.

       

      (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.

       

      
        
           

        

        
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      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.

       

      (c) Other
Terminations.

       

      (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.

       

      
        
           

        

        
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      (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.

       

      
        
           

        

        
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      (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.

       

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      (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.

       

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      (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.

       

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

      (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.

       

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

      (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

       

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      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.

       

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

      (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.

       

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

      (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

       

       

      12

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