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)
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Delaware
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001-14785
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52-1868008
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(State
of incorporation)
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(Commission
File Number)
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(I.R.S.
Employer Identification Number)
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1332
Londontown Blvd., Suite 200, Sykesville,
MD 21784
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(Address
of principal executive offices and zip code)
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(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))
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Item
1.01.
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Entry
into a Material Definitive
Agreement.
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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.
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Item
5.02
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Departure
of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers;
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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.
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Item
9.01.
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Financial
Statements and Exhibits.
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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.
GSE SYSTEMS, INC.
/s/ Jeffery G.
Hough
Jeffery G. Hough
Senior Vice President
and Chief
Financial Officer