Exhibit 10.60
MANAGEMENT SERVICES AGREEMENT
This Agreement is made as of January 1, 2004 between GP Strategies Corporation,
a Delaware corporation ("GP") and GSE Systems, Inc., a Delaware corporation
("GSE").
W I T N E S S E T H
WHEREAS, GP has processes, systems, equipment and personnel capable of
supporting the business operations of its own and other businesses; and
WHEREAS, GSE has need of the types of business support services that GP
can provide and GSE wishes to avail itself of services GP can provide; and
WHEREAS GP and GSE desire in this Agreement to evidence the terms upon
which GP shall provide mutually agreed services;
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, and for other good and valuable consideration, the parties agree as
follows:
ARTICLE I. - MANAGEMENT SERVICES
During the term of this Agreement, GP shall provide the following
support services to the extent and in the areas described (collectively, the
"Services"):
1. Supervision and administration of payroll and employee-benefit
services covering GSE employees, including the administration of health care
claims.
2. Obtaining and maintaining in force all insurance policies necessary
or appropriate in connection with GSE's activities, provided that GP shall have
no obligation to pay premiums or other fees under such insurance policies on
GSE's behalf (and GP shall be promptly reimbursed for any insurance-related cost
it incurs on GSE's behalf).
3. GP shall provide GSE with financial analysis and support, accounting
and audit service and support, and accounts payable services using the systems,
processes and practices utilized by GP.
4. GP shall provide GSE with legal advice through its in-house counsel,
and supervision of matters referred to outside counsel, including assistance
with respect to the preparation and review of SEC reports, general corporate and
securities matters, corporate governance issues, issues relating to compliance
with the Sarbanes-Oxley Act, claims, litigation, the preparation and review of
contracts and other matters. GP shall have the authority to engage on behalf of
GSE outside counsel satisfactory to GSE, provided that such engagement shall be
approved in advance by GSE and further provided that all fees and expenses in
connection with services rendered by such counsel shall be borne by GSE.
5. GP shall assist GSE to comply with federal, state and local laws,
rules and regulations applicable to GSE's activities, including the preparation
and filing of tax returns, reports and other documents required of GSE by any
public authority or agency.
6. GP shall advise GSE in banking, financial and cash management
affairs, and shall use its best efforts to obtain payment and performance bonds
and letters of credit for GSE. Any fees charged by GP for obtaining such bonds
or letters of credit for GSE shall be based on commercially reasonable terms and
payment thereof is subject to approval by GSE's independent directors. To the
extent requested by GSE, GP shall prepare and present to GSE's Board of
Directors recommendations as to the appropriate means of financing GSE's
activities and shall assist in the supervision of banking and other cash control
matters.
7. GP shall assist GSE in matters relating to purchasing, leasing,
procurement, disposal and other activities relating to resources utilized in its
business, and GSE shall receive the financial benefit of such activities. By way
of example only, if GP negotiates a volume discount or other savings relating to
purchasing, such benefits shall flow directly to GSE.
8. GP shall assist GSE with invoicing and collection services, but GP
shall not be a guarantor of the collectability of any amounts owed to GSE. 9. GP
shall provide network support services and financial system support services
using the systems and processes used by GP. This includes providing the actual
financial system that GSE will utilize.
10. GP shall provide human resources advice and services to GSE
management and GSE employees, including assistance regarding employment issues,
benefits, policies and procedures and the administration thereof.
11. GP shall assist GSE with such other general and administrative
services as are necessary to enable GSE to function in the ordinary course of
business.
12. GP shall provide GSE with executive management support to assist
GSE with business performance and development.
ARTICLE II. - PERSONNEL AND EXPENSES
GP shall employ and maintain a staff adequate, in its judgment, to
provide management and administrative services to GSE pursuant to this
Agreement. In addition to the Compensation stated in Article VI, GSE shall
reimburse GP any for any reasonable travel and temporary living expenses
incurred while traveling and other reasonable out-of-pocket costs incurred by
its employees in providing the services described in Article I of this
Agreement. GP shall invoice GSE quarterly and GSE shall, within 30 days after
the receipt of each such invoice, remit payment to GP.
GSE shall pay directly to the provider/vendor, or shall reimburse GP
after the payment therefor by GP, all costs related to services furnished by
third parties, such as legal and accounting fees, insurance premiums, facility
costs, printing costs, costs of consulting services furnished by independent
contractors, and all taxes and other services requested by GSE or reasonably
required to carry out the objectives of this Agreement. GP agrees to work with
GSE in good faith to minimize the use of third parties for any services
contemplated hereunder and any such third party use shall be governed by
Articles I and III.
ARTICLE III. - EXTENT OF GP's AUTHORITY
GP shall not have the authority to obligate GSE for any expenditure in
excess of $10,000 or other obligation not outlined herein without prior approval
from an officer or other authorized manager of GSE.
ARTICLE IV. - CONFIDENTIAL INFORMATION
For purposes of this Agreement, "Confidential Information" shall mean
information disclosed to GP or known by GP or any of its officers, directors,
stockholders, agents or employees as a consequence of or through the performance
by GP of this Agreement, which in the reasonable judgment of GSE is not
generally known in any industry in which GSE is engaged, about GSE's products,
processes and services, including information relating to research, development,
inventions, manufacturing, purchasing, accounting, engineering, marketing,
merchandising and selling. Except as may be required by law or as required in
the fulfillment of its duties under this Agreement, GP will not, directly or
indirectly, use, disseminate or disclose any Confidential Information, and GP
shall take all steps reasonably necessary to prevent the dissemination or
disclosure of Confidential Information by any of its agents or employees. Upon
termination of this Agreement, GP will return to GSE all documents, records,
notebooks and similar repositories of such Confidential Information, including
copies thereof, then in GP's possession, whether prepared by GP, its agents,
employees or others. However, nothing in this Article IV shall require GP to
segregate records, electronic data or other information that would increase the
cost of providing the services under this Agreement unless GSE pays the
additional cost of doing so.
ARTICLE V. - COOPERATION
A. GSE shall make available to GP such information, records and other
data as may be needed by GP to perform the services required by this Agreement.
Any material misstatement by GSE or any failure by GSE to inform GP of any
material fact with respect to GSE shall relieve GP of any liability relating to
such material fact or omission arising under this Agreement.
B. Each party hereto will, and will cause their respective subsidiaries
to, give one another reasonable access (including duplication rights) to any
books, records, contracts, instruments and other information used in the
businesses of GP and GSE prior to the date hereof which may prove reasonably
necessary to the other party in connection with their respective businesses both
before and after the date hereof.
ARTICLE VI. - COMPENSATION
As compensation for the services provided by GP hereunder, in addition
to the reimbursement payable to GP under Article II above, GP shall receive a
total yearly fee of Six Hundred Eighty Five Thousand Dollars ($685,000), which
fee shall be applicable to the first year and, if exercised, the second year of
this Agreement. The total yearly fee of $685,000 shall be reduced to $620,000
for the first year, and $590,000 for the second year, in the event that GP does
not provide a loan guarantee to GSE in the amount of $1,800,000. Thereafter, any
fee for the services provided by GP hereunder shall be agreed upon by GP and GSE
not less than 30 days prior to the commencement of any year, subject to approval
by GSE's independent directors. The fee compensation for all services shall be
payable in equal quarterly installments on the last day of each calendar year
quarter (with the first such quarterly fee being due on April 1, 2004).
ARTICLE VII. - LIMITATION OF LIABILITY
In providing services hereunder, GP shall have a duty to act, and to
cause its agents to act, in a reasonably prudent manner, but neither GP nor any
officer, director, employee or agent of GP shall be liable to GSE for any error
of judgment or mistake of law or for any loss incurred by GSE in connection with
the matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of GP or from
GP's disregard of obligations and duties under this Agreement.
ARTICLE VIII. - indemnificatIon
GSE shall indemnify and hold harmless GP, its subsidiaries (other than
GSE and its subsidiaries) and their respective stockholders, officers, directors
and employees from and against any and all losses, liabilities, claims, damages,
costs and expenses (including reasonable attorneys' fees and other expenses of
litigation) to which such party may become subject arising out of the provision
by GP to GSE of services under this Agreement, but such indemnity shall not
protect any person against any liability to which such person would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
disregard of obligations and duties hereunder. Notwithstanding the foregoing, in
no event shall GSE be liable for any consequential damages.
ARTOC;E IX - ARBITRATION
In the event the parties hereto shall not be able to agree as to the
amount of any services rendered or expenses incurred under this Agreement, or as
to any other matter relating to this Agreement, the matter shall be settled by
arbitration in New York in accordance with the Commercial Arbitration Rules of
the American Arbitration Association and the award rendered by such
arbitrator(s) shall not be subject to appeal and may be entered in any court
having jurisdiction thereof.
ARTICLE X. - TERM
The term of this Agreement shall commence on the date hereof and shall
continue for a period of one (1) year, subject to earlier termination only upon
the mutual consent of the parties hereto or at the election of one of the
parties upon default by the other in performance of its obligations hereunder,
provided that this Agreement may be renewed by GSE for successive one-year terms
upon notifying GP in writing at least three (3) months prior to the end of the
initial term of this Agreement or any renewal thereof. After the initial term,
and only for any renewal period, GSE may terminate the Agreement at any time for
its own convenience upon providing GP with at least sixty (60) days prior
written notice.
ARTOC;E XI. - OTHER PROVISIONS
1. Any notice provided for herein shall be in writing and shall be
deemed to have been given if and when delivered personally or otherwise actually
received after it is (i) deposited in the United States mail, certified, return
receipt requested, postage prepaid, (ii) hand delivered by a recognized courier
service or otherwise, or (iii) faxed (with receipt confirmed) to the recipient
addressed as follows:
If to GP:
777 Westchester Ave, 4th Floor
White Plains, New York 10604
Attn: Scott Greenberg, President
Fax: (914) 249-9745
If to GSE:
9189 Red Branch Road
Columbia, Maryland 21045
Attn: Jerry Jen
Fax: (410) 772-3599
Or addressed to any such party at any such other address as such party shall
have furnished by written notice to the other.
2. This Agreement contains the entire agreement between the parties
with respect to the transactions contemplated herein and supersedes all previous
written or oral negotiations, commitments and writings with respect to such
transactions.
3. Neither this Agreement nor any term hereof may be changed, amended,
modified, waived, discharged or terminated other than by an agreement in writing
signed by the parties hereto, and the waiver of any provision of this Agreement
shall not constitute a general waiver or a waiver of any other provision hereof.
4. In the event any provision of this Agreement is declared to be
invalid or unenforceable the remainder of this Agreement shall be considered
valid and enforceable in accordance with its terms, and the parties shall
endeavor to replace the invalid or unenforceable provision with a new provision
as close as possible to the original that is valid and enforceable.
5. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
6. This Agreement shall be governed by the laws of the State of New
York and inure to the benefit of the successors and assigns of the parties
hereto, provided that this Agreement may not be assigned by either of the
parties hereto without the prior written consent of the other party hereto.
7. This Agreement is subject to the prior approval of GSE's independent
directors.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
GP STRATEGIES CORPORATION GSE SYSTEMS, INC.
By: By: ________________________
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