Document:

Exhibit 10.16

COMMUNITY TRUST BANCORP, INC.

2016 EXECUTIVE COMMITTEE

LONG-TERM INCENTIVE COMPENSATION PLAN

ARTICLE I

OBJECTIVES

Section 1.01

The 2016 Executive Committee Long-Term Incentive Compensation Plan is designed to reward members of the Executive Committee for Community Trust Bancorp, Inc.'s attainment of profitability on a long-term basis and is adopted to achieve the following objectives:

	
(a)

	
Increase the profitability and growth of Community Trust Bancorp, Inc. in a manner which is consistent with other goals of Community Trust Bancorp, Inc., its stockholders, and its employees;

	
(b)

	
Provide executive compensation which is competitive with other financial institutions;

	
(c)

	
Attract and retain personnel of outstanding ability and encourage excellence in the performance of individual responsibilities; and

	
(d)

	
Motivate and reward members of the Executive Committee for their contribution to the long-term success of Community Trust Bancorp, Inc.

ARTICLE II

DEFINITIONS

Section 2.01

As used herein, the following words and phrases shall have the meanings below unless the context clearly indicates otherwise:

	
(a)

	
"Annual Long-Term Incentive Plan" or "Plan" means the 2016 Executive Committee Long-Term Incentive Compensation Plan set forth in this document and all amendments thereto.

	
(b)

	
"Board" means the Board of Directors of Community Trust Bancorp, Inc.

	
(c)

	
"Change in Control" shall have the meaning specified in the Company's 2015 Stock Ownership Incentive Plan.

	
(d)

	
"Cumulative Net Income" shall mean Community Trust Bancorp, Inc.'s cumulative net income for the three (3) years ending December 31, 2018, computed in accordance with generally accepted accounting principles, and giving effect to the accrual for payment of all incentive compensation.

	
(e)

	
"Company" means Community Trust Bancorp, Inc. and its subsidiaries.

	
(f)

	
"Compensation Committee" means the Compensation Committee of the Board.

	
(g)

	
"Disability" shall have the meaning specified in the Company's 2015 Stock Ownership Incentive Plan.

	
(h)

	
"Effective Date" means January 1, 2016, the date on which the Plan becomes effective.

	
(i)

	
"Fiscal Year" means the accounting period adopted by the Company for federal income tax purposes.

	
(j)

	
"Participant" means each member of the Executive Committee as of January 1, 2016.

	
(k)

	
"Performance Goal" shall have the meaning set forth in Section 7.01 below.

	
(l)

	
"Performance Period" means the three (3) Fiscal Years beginning on January 1, 2016.

	
(m)

	
"Performance Unit" shall have the meaning specified in the Company's 2015 Stock Ownership Incentive Plan, with each Performance Unit to have a potential value of $1.00.

	
(n)

	
"Retirement" shall have the meaning specified in the Company's 2015 Stock Ownership Incentive Plan.

	
(o)

	
"Salary" or "Salaries" means the base salary in effect for each Participant as of the last pay period in December 2016.

ARTICLE III

ADMINISTRATION OF THE PLAN

Section 3.01

The Compensation Committee shall administer the Plan and employ such agents as may reasonably be required to administer the Plan.

Section 3.02

The Compensation Committee shall adopt such rules and regulations of general application as are beneficial for the administration of the Plan and shall make all discretionary decisions involving a Participant in the Plan. The Compensation Committee shall also have the right to interpret the Plan, consistently with the applicable provisions of the 2015 Stock Ownership Incentive Plan, to determine the Effective Date, and to approve Participants in the Plan.

Section 3.03

A majority of the Compensation Committee shall constitute a quorum. The acts of a majority of the members present at any meeting at which there is a quorum shall be valid acts. Acts reduced to and approved in writing by a majority of the Compensation Committee shall also be valid acts.

Section 3.04

All incentive compensation payable under the Plan shall be paid from the general assets of the Company. To the extent that any person acquires a right to receive payments under the Plan, such right shall be no greater than the right of any unsecured creditor of the Company.

Section 3.05

The Compensation Committee may authorize the Chairman of the Board, President and Chief Executive Officer of the Company to send a written notice of such Plan to each Participant, substantially in the form of Attachment A hereto, and to execute and deliver, on behalf of the Company, a Performance Unit Agreement granting Performance Units to the Participant consistent with the Plan. No person shall have rights under the Plan until receiving and executing a Performance Unit Agreement, also executed by the Company, substantially in the form of Attachment B hereto.

Section 3.06

All costs and expenses involved in the administration of the Plan shall be paid by the Company.

Section 3.07

Any determination or action of the Compensation Committee or the Board shall be final, conclusive and binding on all Participants and their beneficiaries, heirs, personal representatives, executors, and administrators.

Section 3.08

The Board of Directors, in its sole discretion, may amend, modify or terminate the Plan at any time. Notwithstanding the foregoing, after the ninetieth (90th) day of the year, the Performance Goals specified in Section 7.01 of this Plan may not be amended in a manner which would increase the amount of compensation payable pursuant to Performance Units over the amount which would have been payable under the Performance Goals previously established for such year.

ARTICLE IV

PARTICIPANT ELIGIBILITY

Section 4.01

The Participants in the Plan will be the members of the Executive Committee of the Company as of January 1, 2016.

Section 4.02

Voluntary or involuntary termination of full-time employment of a Participant prior to the expiration of the Performance Period will result in such Participant forfeiting any payment for Performance Units for the Performance Period, except as provided in Sections 4.03 and 4.04 below.

Section 4.03

In the case of termination of employment by reason of death, Disability, or Retirement of a Participant prior to the expiration of the Performance Period, any then outstanding Performance Units of such Participant shall be payable in an amount equal to the maximum amount payable under the Performance Unit (as set forth in Section 7.01 below) multiplied by a percentage equal to the percentage that would have been earned under the terms of the Performance Unit Agreement assuming that the rate at which the Performance Goal set forth in Section 7.01 below has been achieved, as of the date of such termination of employment, would have continued until the end of the Performance Period.

Section 4.04

If, within the 24-month period beginning on the date of a Change in Control, a Participant's employment is terminated other than for Cause or by Participants for Good Reason ("Change in Control Termination Event"), any then outstanding Performance Units shall become fully vested and payable as soon as reasonably practicable, but no later than seventy-four (74) days following the Change in Control Termination Event, in an amount which is equal to the greater of (a) the maximum amount payable under the Performance Unit (as set forth in Section 7.01 below) multiplied by a percentage equal to the percentage that would have been earned under the terms of the Performance Unit Agreement assuming that the rate at which the Performance Goal has been achieved as of the date of such Change in Control would have been continued until the end of the Performance Period; or (b) the maximum amount payable under the Performance Unit (as set forth in Section 7.01 below) multiplied by the percentage of the Performance Period completed by the Participant at the time of the Change in Control Termination Event.

Section 4.05

New employees of the Company and persons promoted during the Performance Period who were not eligible to participate in the Plan at the beginning of the Performance Period, but have become members of the Executive Committee, shall participate in the Plan so long as such eligibility came into existence no later than six (6) months after the beginning of the Performance Period. If a person becomes eligible at a date later than six (6) months into the Performance Period, such person shall not be a Participant under the Plan.

ARTICLE V

PAYMENTS TO PARTICIPANTS

Section 5.01

The maximum payment in cash or shares that can be made pursuant to Performance Units granted to any one Participant in any calendar year is $1,000,000. Subject to this limitation and such terms and conditions as the Compensation Committee may impose, Performance Units shall be payable: (a) within seventy-four (74) days following the end of the Performance Period during which the Participant attained at least the minimum acceptable level of achievement under the Performance Goal; or (b) in the event of a Change in Control Termination Event, as soon as reasonably practicable following the Change in Control Termination Event, but no later than seventy-four (74) days following the Change in Control Termination Event.

Section 5.02

A Participant may elect to defer payment of all or part of his or her compensation under the Performance Units so long as the Participant requests such deferred payment under the terms of the Company's Voluntary Deferred Compensation Plan; provided, however that such election to defer payment is subject to, and shall be made in accordance with, U. S. Treas. Reg. 1.409A-2(b)(1).

 

ARTICLE VI

 

DETERMINATION OF TARGET AWARD FUND FOR PERFORMANCE UNITS

Section 6.01

The target award fund shall be generated by a percentage of the Salary of the CTBI Chief Executive Officer, the CTB Chief Executive Officer, and the other members of the Executive Committee, respectively. The target award fund shall be computed as shown in Table I below; however, the target award may be changed by the Compensation Committee of the Board of Directors at any time during the Performance Period at their discretion; provided, however, that the target award as a percentage of Salary may not be increased after the ninetieth (90th) day of the 2016 calendar year.

TABLE I

TARGET AWARD FUND

	
PARTICIPANTS

	
SALARIES

 

 

	
TARGET AWARD

EXPRESSED AS A

 % OF SALARY

	
TARGET AWARD

 FUND

	
CTBI Chief Executive

 Officer

	
$

	
X 40%

	
$

	 	 
	
CTB CEO

	
        $

	
X 30%

	
        $

	
All Other Members of

the Executive

 Committee

	
$

	
X 20%

	
$

	
(aggregate Salaries)*

	 

*The aggregate Salaries may be increased to reflect the Salaries of any new members of the Executive Committee to the extent permitted under Section 4.05 above.

Section 6.02

The actual amount of payments under the Performance Units shall be calculated according to a schedule comparing Cumulative Net Income to the Performance Goals described in Section 7.01 below. When performance meets established Performance Goals, the award fund will be adjusted according to the table shown in Section 7.01 below.

Section 6.03

Subject to Sections 4.03 and 4.04 above, there shall be a minimum acceptable performance beneath which no amounts may be paid under the Performance Units (sometimes referred to as the "threshold") and a maximum performance above which there is no additional amount paid to avoid excessive payout in the event of windfall profits. Such minimum and maximum may be amended when necessary at any time in the sole discretion of the Compensation Committee; provided, however, that the minimum may not be reduced and the maximum may not be increased after the ninetieth (90th) day of the 2016 calendar year.

ARTICLE VII

CALCULATION OF PERFORMANCE UNIT PAYMENTS

Section 7.01

The amount payable to the Participants under the Performance Units is determined based on Cumulative Net Income, as shown in Table II below:

TABLE II

2016 PERFORMANCE GOALS

	
CUMULATIVE NET

 INCOME

	
Award as a % of

 Target Award

	
Award as a % of

CTBI Chief Executive

 Officer Salary

	
Award as a % of CTB CEO

Salary

	
Award as a %

of Salary of All

Other

Members of

the Executive

 Committee

	
90% of Target Cumulative Net Income (Minimum)

	
25%

	
10.0%

	
      7.50%

	
2.50%

	
93% of Target Cumulative

Net Income

	
50%

	
20.0%

	
15.0%

	
10.0%

	
96% of Target Cumulative

Net Income

	
75%

	
30.0%

	
22.5%

	
15.0%

	
Target Cumulative Net Income (Per Schedule 1)

	
100%

	
40.0%

	
30.0%

	
20.0%

	
103% of Target Cumulative Net Income

	
120%

	
48.0%

	
36.0%

	
24.0%

	
107% of Target Cumulative Net Income

	
135%

	
54.0%

	
40.5%

	
27.05%

	
110.0% of Target Cumulative Net Income

(Maximum)

	
150%

	
60.0%

	
45.0%

	
30.0%

 

ARTICLE VIII

MISCELLANEOUS PROVISIONS

Section 8.01

The Compensation Committee may elect to remove unusual, extraordinary or non-recurring items from the calculation of Cumulative Net Income.

Section 8.02

Payments pursuant to the Performance Units shall be subject to recoupment by the Company to the extent required by applicable laws and regulations.

Section 8.03

The Company shall not merge into or consolidate with another entity or sell substantially all of its assets to another entity unless such other entity shall become obligated to perform the terms and conditions hereof relating to any amounts earned under Performance Units but not yet paid to the Participant.

SCHEDULE A

2016 Plan

CUMULATIVE NET INCOME TARGETS

  

	
CUMULATIVE NET INCOME TARGETS

	 % OF UNITS EARNED 
	$138 Million	 25%
	 $142 Million 	 50%
	$147 Million	 75%
	$153 Million	 100%
	 $158 Million 	 120%
	$164 Million	 135%
	$168 Million	 150%Restricted Share Unit Agreement

This Restricted Share Unit Agreement (this "Agreement") is made and entered into as of January 22, 2016 (the "Grant Date") by and between GSE Systems, Inc., a Delaware corporation, (the "Company") and Kyle Loudermilk (the "Grantee").

WHEREAS, the Company and the Grantee entered into an employment agreement dated July 1, 2015 (the "Employment Agreement") pursuant to which Grantee is employed by the Company through December 31, 2018 (as defined in the Employment Agreement, the "Initial Term");

WHEREAS, the Company has adopted the GSE Systems, Inc. 1995 Long-Term Incentive Plan, as amended and restated effective March 6, 2014 (the "Plan"), pursuant to which restricted share units ("RSUs") may be granted;

WHEREAS, pursuant to the Employment Agreement and the terms of the Plan, the compensation committee of the board of directors of the Company has determined that it is in the best interests of the Company and its stockholders to enter into this Agreement and grant the award of Restricted Share Units described herein, and the Board has approved the same.

NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows:

1.            Grant of Restricted Share Units. Pursuant to Section 6 of the Plan, the Company hereby grants to the Grantee an Award of 129,824 RSUs. Each RSU represents the right to receive one share of the common stock of the Company, subject to the terms and conditions set forth in this Agreement and the Plan.

2.            [Reserved.]

3.            [Reserved.]

4.            Vesting of RSUs. The RSUs are subject to forfeiture until they vest. The RSUs will vest and become nonforfeitable pursuant to the schedule attached hereto as Exhibit 1.  The number of RSUs that vest and become payable under this Agreement shall be determined by the Board of Directors pursuant to the terms hereof. Notwithstanding anything herein to the contrary, any unvested RSUs will expire on January 1, 2018.

5.            Termination of Employment. Except as otherwise expressly provided in this Agreement or the Employment Agreement, if the Grantee's employment under the terms of his Employment Agreement terminates for any reason at any time before all of his or her RSUs have vested, the Grantee's unvested RSUs shall be automatically forfeited upon such termination of employment, and neither the Company nor any Affiliate shall have any further obligations to the Grantee under this Agreement.

6.            [Reserved.]

7.            Payment of RSUs. Payment in respect of the RSUs vested shall be made in shares of Common Stock and shall be issued to the Grantee as soon as practicable following the vesting date and, in any event, within 30 days following the vesting date. The Company shall (a) issue and deliver to the Grantee the number of shares of Common Stock equal to the number of vested RSUs, and (b) enter the Grantee's name on the books of the Company as the stockholder of record with respect to the shares of Common Stock delivered to the Grantee.

8.            Transferability. Subject to any exceptions set forth in this Agreement or the Plan, the RSUs or the rights relating thereto may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Grantee. 

9.            Rights as Stockholder; Dividend Equivalents.

9.1    The Grantee shall not have any rights of a stockholder with respect to the shares of Common Stock underlying the RSUs, including, but not limited to, voting rights and the right to receive or accrue dividends or dividend equivalents.

9.2    Upon and following the vesting of the RSUs and the issuance of shares, the Grantee shall be the record owner of the shares of Common Stock underlying the RSUs unless and until such shares are sold or otherwise disposed of, and as record owner shall be entitled to all rights of a stockholder of the Company (including voting and dividend rights).

9.3    Grantee is aware that the Company has a policy governing the trades of its insiders and, in accordance therewith, Grantee acknowledges that he has been advised to consider execution of a Rule 10b5-1 plan to provide for any future transactions in the Company's securities that he may desire to make in order to meet his personal planning needs. The Company will assist the Grantee in the preparation of a Rule 10b-5-1 plan, at the Company's expense, upon Grantee's request.

10.            No Right to Continued Service. Neither the Plan nor this Agreement shall confer upon the Grantee any right to be retained in any position, as an Employee, Consultant or Director of the Company. Further, nothing in the Plan or this Agreement shall be construed to limit the discretion of the Company to terminate the Grantee's employment at any time, with or without Cause.

11.            Adjustments. If any change is made to the outstanding Common Stock or the capital structure of the Company, if required, the RSUs shall be adjusted or terminated in any manner as contemplated by Section 7 of the Plan.

12.            Tax Liability and Withholding.

12.1                  The Grantee shall be required to pay to the Company, and the Company shall have the right to deduct from any compensation paid to the Grantee pursuant to the Plan, the amount of any required withholding taxes in respect of the RSUs and to take all such other action as the Board of Directors deems reasonably necessary to satisfy all obligations for the payment of such withholding taxes. The Board of Directors may permit the Grantee to satisfy any federal, state or local tax withholding obligation by any of the following means, or by a combination of such means:

(a)        tendering a cash payment;

(b)        authorizing the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable or deliverable to the Grantee as a result of the vesting of the RSUs; provided, however, that no shares of Common Stock shall be withheld with a value exceeding the minimum amount of tax required to be withheld by law; or

(c)        delivering to the Company previously owned and unencumbered shares of Common Stock.

12.2                  Notwithstanding any action the Company takes with respect to any or all income tax, social insurance, payroll tax, or other tax-related withholding ("Tax-Related Items"), the ultimate liability for all Tax-Related Items is and remains the Grantee's responsibility, and the Company (a) makes no representation or undertakings regarding the treatment of any Tax-Related Items in connection with the grant, vesting or settlement of the RSUs or the subsequent sale of any shares, and (b) does not commit to structure the RSUs to reduce or eliminate the Grantee's liability for Tax-Related Items. Within 5 days of any vesting date of an RSU, the Company has the right, but not the obligation, to purchase from Grantee a number of the vested shares of common stock underlying such vested RSU equal to 33% of the value of the vested common stock, using the VWAP of the Common Stock for the five trading day period, ending on the trading date prior to the vesting event, as reported on the NYSE MKT or, if the Company's common stock is not then listed on the NYSE MKT, as reported by such other exchange as shall then have the Company's common stock listed.

13.            Compliance with Law. The issuance and transfer of shares of Common Stock in connection with the RSUs shall be subject to compliance by the Company and the Grantee with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Company's shares of Common Stock may be listed. No shares of Common Stock shall be transferred unless and until any then applicable requirements of state and federal laws and regulatory agencies have been fully complied with to the satisfaction of the Company and its counsel. The Company will ensure that a sufficient number of shares of its common stock are registered on Form S-8 prior to the vesting of any RSU.

14.            Notices. Any notice required to be delivered to the Company under this Agreement shall be in writing and addressed to the Senior Vice President and General Counsel of the Company at the Company's principal corporate offices. Any notice required to be delivered to the Grantee under this Agreement shall be in writing and addressed to the Grantee at the Grantee's address as shown in the records of the Company. Either party may designate another address in writing (or by such other method approved by the Company) from time to time.

15.            Governing Law. This Agreement will be construed and interpreted in accordance with the laws of the State of Maryland without regard to conflict of law principles.

16.            Interpretation. Any dispute regarding the interpretation of this Agreement shall be submitted by the Grantee or the Company to the Board of Directors for review. The resolution of such dispute by the Board of Directors shall be final and binding on the Grantee and the Company.

17.            RSUs Subject to Plan. This Agreement is subject to the Plan as approved by the Company's stockholders. The terms and provisions of the Plan as it may be amended from time to time are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.

18.            Successors and Assigns. The Company may assign any of its rights under this Agreement. This Agreement will be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement will be binding upon the Grantee and the Grantee's beneficiaries, executors and administrators.

19.            Severability. The invalidity or unenforceability of any provision of the Plan or this Agreement shall not affect the validity or enforceability of any other provision of the Plan or this Agreement, and each provision of the Plan and this Agreement shall be severable and enforceable to the extent permitted by law.

20.            Discretionary Nature of Plan. The Plan is discretionary and may be amended, cancelled or terminated by the Company at any time, in its discretion. The grant of the RSUs in this Agreement does not create any contractual right or other right to receive any RSUs or other Awards in the future. Future Awards, if any, will be at the sole discretion of the Board of Directors of the Company. Any amendment, modification, or termination of the Plan shall not constitute a change or impairment of the terms and conditions of the Grantee's employment with the Company.

21.            Amendment. The Board of Directors has the right to amend, alter, suspend, discontinue or cancel the RSUs, prospectively or retroactively; provided, that, no such amendment shall adversely affect the Grantee's material rights under this Agreement without the Grantee's consent.

22.            [Reserved.]

23.            Section 409A. This Agreement is intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), and any exemption from Section 409A of the Code, and shall in all respects be administered in accordance with and interpreted to ensure compliance with Section 409A of the Code. Grantee's termination of employment events under this Agreement shall be interpreted in a manner consistent with the separation from service rules under Section 409A of the Code. Furthermore, if, at the time of termination of employment with the Company, Company has stock which is publicly traded on an established securities market and Grantee is a "specified employee" (as defined in Section 409A of the Code) and it is necessary to postpone the vesting or distribution of Common Stock otherwise payable pursuant to this Agreement as a result of such termination of employment to prevent any accelerated or additional tax under Section 409A of the Code, then Company shall postpone the commencement of the payment of such payment or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to Grantee) that are not otherwise paid within the short-deferral exception under Section 409A of the Code and are in excess of the lessor of two (2) times (i) Grantee's then annual compensation or (ii) the limit on compensation then set forth in Section 401(a)(17) of the Code, until the first payroll date that occurs after the date that is six months following Grantee's separation from service with the Company (within the meaning of Section 409A of the Code).  The accumulated postponed distribution of shares of Common Stock shall be made within ten days after the end of the six month period.

24.            No Impact on Other Benefits. The value of the Grantee's RSUs is not part of his or her normal or expected compensation for purposes of calculating any severance, retirement, welfare, insurance or similar employee benefit.

25.            Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.

26.            Acceptance. The Grantee hereby acknowledges receipt of a copy of the Plan and this Agreement. The Grantee has read and understands the terms and provisions thereof, and accepts the RSUs subject to all of the terms and conditions of the Plan and this Agreement. The Grantee acknowledges that there may be adverse tax consequences upon the vesting or settlement of the RSUs or disposition of the underlying shares and that the Grantee has been advised to consult a tax advisor prior to such vesting, settlement or disposition.

[Signature Page Follows]

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

	 	
GSE SYSTEMS, INC.

 

 

	 	
By: /s/ Jeffery G. Hough                                                    

Name: Jeffery G. Hough

Title: Chief Financial Officer    

	 	 
	 	
/s/  Kyle J. Loudermilk

Kyle J. Loudermilk

 

EXHIBIT 1

So long as the Grantee's service as an Employee, Consultant, or Director of the Company is continuous from the Grant Date through the applicable vesting date specified below, 12.5% of the RSUs awarded pursuant to this Agreement shall vest on each of the following vesting dates:

March 31, 2016

June 30, 2016

September 30, 2016

December 31, 2016

March 31, 2017

June 30, 2017

September 30, 2017

December 31, 2017

Notwithstanding the foregoing, to the extent not already vested or previously forfeited, the RSUs will become 100% vested as of the effective date of a Change in Control, as defined in the Employment Agreement. Except in the case of the Grantee's cessation of service in connection with a Change in Control, none of the RSUs will vest after the Grantee's service ceases.

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