Exhibit 10.1
GSE SYSTEMS, INC.
1995 LONG-TERM INCENTIVE PLAN
(As Amended and Restated Effective April 5, 1999)
1. Restatement, Purpose and Types of Awards GSE Systems, Inc., a
Delaware corporation (the "Corporation"), maintained the GSE Systems, Inc.
1995 Long-Term Incentive Plan (As Amended through November 20, 1998) (the
"Prior Plan"). The Prior Plan has been amended and restated, as set forth
herein, effective April 5, 1999, subject to the approval of the
shareholders of the Corporation within twelve months of such effective date
(the "Plan"). Notwithstanding anything herein to the contrary, nothing in
this Plan shall adversely affect the rights or obligations, under any Award
granted under the Prior Plan, of any grantee or holder of the Award without
such person's approval.
The purpose of the Plan is to promote the long-term growth and
profitability of the Corporation by: (i) providing key people with
incentives to improve stockholder value and to contribute to the growth and
financial success of the Corporation; and (ii) enabling the Corporation to
attract, retain and reward the best-available persons. The Plan permits the
granting of stock options (including incentive stock options qualifying
under Code section 422 and nonqualified stock options), stock appreciation
rights, restricted or unrestricted stock awards, phantom stock, performance
awards, or any combination of the foregoing.
2. Definitions
Under this Plan, except where the context otherwise indicates, the
following definitions apply:
(a) "Affiliate" shall mean any entity, whether now or hereafter existing, which
controls, is controlled by, or is under common control with, the
Corporation (including, but not limited to, joint ventures, limited
liability companies, and partnerships). For this purpose, "control" shall
mean ownership of 50% or more of the total combined voting power or value
of all classes of stock or interests of the entity.
(b) "Award" shall mean any stock option, stock appreciation right, stock award,
phantom stock award, or performance award.
(c) "Board" shall mean the Board of Directors of the Corporation.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder.
(e) "Common Stock" shall mean shares of common stock of the Corporation, $.01
par value.
(f) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
(g) "Fair Market Value" of a share of the Corporation's Common Stock for any
purpose on a particular date shall mean the last reported sale price per
share of Common Stock, regular way, on such date or, in case no such sale
takes place on such date, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted
to trading on a national securities exchange or included for quotation on
the American Stock Exchange, or if the Common Stock is not so listed or
admitted to trading or included for quotation, the last quoted price, or if
the Common Stock is not so quoted, the average of the high bid and low
asked prices, regular way, in the over-the-counter market, as reported by
the American Stock Exchange or, if such system is no longer in use, the
principal other automated quotations system that may then be in use or, if
the Common Stock is not quoted by any such organization, the average of the
closing bid and asked prices, regular way, as furnished by a professional
market maker making a market in the Common Stock as selected in good faith
by the Administrator or by such other source or sources as shall be
selected in good faith by the Administrator. If, as the case may be, the
relevant date is not a trading day, the determination shall be made as of
the next preceding trading day. As used herein, the term "trading day"
shall mean a day on which public trading of securities occurs and is
reported in the principal consolidated reporting system referred to above,
or if the Common Stock is not listed or admitted to trading on a national
securities exchange or included for quotation on the American Stock
Exchange, any business day.
(h) "Grant Agreement" shall mean a written document memorializing the terms and
conditions of an Award granted pursuant to the Plan and shall incorporate
the terms of the Plan.
(i) "Parent" shall mean a corporation, whether now or hereafter existing,
within the meaning of the definition of "parent corporation" provided in
Code section 424(e), or any successor thereto.
(j) "Subsidiary" and "subsidiaries" shall mean only a corporation or
corporations, whether now or hereafter existing, within the meaning of the
definition of "subsidiary corporation" provided in Section 424(f) of the
Code, or any successor thereto.
3. Administration
(a) Administration of the Plan. The Plan shall be administered by the Board or
by such committee or committees as may be appointed by the Board from time
to time (the Board, committee or committees hereinafter referred to as the
"Administrator").
(b) Powers of the Administrator. The Administrator shall have all the powers
vested in it by the terms of the Plan, such powers to include authority, in
its sole and absolute discretion, to grant Awards under the Plan, prescribe
Grant Agreements evidencing such Awards and establish programs for granting
Awards.
The Administrator shall have full power and authority to take allother
Actions necessary to carry out the purpose and intent of the Plan,
including, but not limited to, the authority to: (i) determine the
eligible persons to whom, and the time or times at which Awards shall
be granted; (ii) determine the types of Awards to be granted;
(iii) determine the number of shares to be covered by or used for
reference purposes for each Award; (iv) impose such terms,
limitations, restrictions and conditions upon any such Award as the
Administrator shall deem appropriate; (v) modify, amend, extend or
renew outstanding Awards, or accept the surrender of outstanding
wards and substitute new Awards (provided however, that, except as
provided in Section 7(d) of the Plan, any modification that would
materially adversely affect any outstanding Award shall not be made
without the consent of the holder); (vi) accelerate or otherwise
change the time in which an Award may be exercised or becomes payable
and to waive or accelerate the lapse, in whole or in part, of any
restriction or condition with respect to such Award, including, but
not limited to, any restriction or condition with respect to the
vesting or exercisability of an Award following termination of any
grantee's employment or other relationship with the Corporation; and
(vii) establish objectives and conditions, if any, for earning Awards
and determining whether Awards will be paid after the end of a
performance period. The Administrator shall have full power and
authority, in its sole and absolute discretion, to administer and
interpret the Plan and to adopt and interpret such rules, regulations,
agreements, guidelines and instruments for the administration of the
Plan and for the conduct of its business as the Administrator deems
necessary or advisable.
(c) Non-Uniform Determinations. The Administrator's determinations under the
Plan (including without limitation, determinations of the persons to
receive Awards, the form, amount and timing of such Awards, the terms and
provisions of such Awards and the Grant Agreements evidencing such Awards)
need not be uniform and may be made by the Administrator selectively among
persons who receive, or are eligible to receive, Awards under the Plan,
whether or not such persons are similarly situated.
(d) Limited Liability. To the maximum extent permitted by law, no member of the
Administrator shall be liable for any action taken or decision made in good
faith relating to the Plan or any Award thereunder.
(e) Indemnification. To the maximum extent permitted by law and by the
Corporation's charter and by-laws, the members of the Administrator shall
be indemnified by the Corporation in respect of all their activities under
the Plan.
(f) Effect of Administrator's Decision. All actions taken and decisions and
determinations made by the Administrator on all matters relating to the
Plan pursuant to the powers vested in it hereunder shall be in the
Administrator's sole and absolute discretion and shall be conclusive and
binding on all parties concerned, including the Corporation, its
stockholders, any participants in the Plan and any other employee,
consultant, or director of the Corporation, and their respective successors
in interest.
4. Shares Available for the Plan; Maximum Awards
Subject to adjustments as provided in Section 7(d), the shares of Common
Stock that may be issued with respect to Awards granted under the Plan
(including, for purposes of this Section 4, the Prior Plan) shall not
exceed an aggregate of 1,175,000 shares of Common Stock. The Corporation
shall reserve such number of shares for Awards under the Plan, subject to
adjustments as provided in Section 7(d). If any Award, or portion of an
Award, under the Plan expires or terminates unexercised, becomes
unexercisable or is forfeited or otherwise terminated, surrendered or
canceled as to any shares, or if any shares of Common Stock are surrendered
to the Corporation in connection with any Award (whether or not such
surrendered shares were acquired pursuant to any Award), the shares subject
to such Award and the surrendered shares shall thereafter be available for
further Awards under the Plan; provided, however, that any such shares that
are surrendered to the Corporation in connection with any Award or that are
otherwise forfeited after issuance shall not be available for purchase
pursuant to incentive stock options intended to qualify under Code section
422.
Subject to adjustments as provided in Section 7(d), the
maximum number of shares of Common Stock subject to Awards of any
combination that may be granted during any one fiscal year of the
Corporation to any one individual under this Plan shall be
limited to 400,000. Such per-individual limit shall not be
adjusted to effect a restoration of shares of Common Stock with
respect to which the related Award is terminated, surrendered or
canceled. 5. Participation
Participation in the Plan shall be open to all employees, officers,
directors, and consultants of the Corporation, or of any Affiliate of
the Corporation, as may be selected by the Administrator from time to
time.
6. Awards
The Administrator, in its sole discretion, establishes the terms of
all Awards granted under the Plan. Awards may be granted individually
or in tandem with other types of Awards. All Awards are subject to the
terms and conditions provided in the Grant Agreement.
(a) Stock Options. The Administrator may from time to time grant to eligible
participants Awards of incentive stock options as that term is defined in
Code section 422 or nonqualified stock options; provided, however, that
Awards of incentive stock options shall be limited to employees of the
Corporation or of any Parent or Subsidiary of the Corporation. Options
intended to qualify as incentive stock options under Code section 422 must
have an exercise price at least equal to Fair Market Value on the date of
grant, but nonqualified stock options may be granted with an exercise price
less than Fair Market Value. No stock option shall be an incentive stock
option unless so designated by the Administrator at the time of grant or in
the Grant Agreement evidencing such stock option.
(b) Stock Appreciation Rights. The Administrator may from time to time grant to
eligible participants Awards of Stock Appreciation Rights ("SAR"). An SAR
entitles the grantee to receive, subject to the provisions of the Plan and
the Grant Agreement, a payment having an aggregate value equal to the
product of (i) the excess of (A) the Fair Market Value on the exercise date
of one share of Common Stock over (B) the base price per share specified in
the Grant Agreement, times (ii) the number of shares specified by the SAR,
or portion thereof, which is exercised. Payment by the Corporation of the
amount receivable upon any exercise of an SAR may be made by the delivery
of Common Stock or cash, or any combination of Common Stock and cash, as
determined in the sole discretion of the Administrator. If upon settlement
of the exercise of an SAR a grantee is to receive a portion of such payment
in shares of Common Stock, the number of shares shall be determined by
dividing such portion by the Fair Market Value of a share of Common Stock
on the exercise date. No fractional shares shall be used for such payment
and the Administrator shall determine whether cash shall be given in lieu
of such fractional shares or whether such fractional shares shall be
eliminated.
(c) Stock Awards. The Administrator may from time to time grant restricted or
unrestricted stock Awards to eligible participants in such amounts, on such
terms and conditions, and for such consideration, including no
consideration or such minimum consideration as may be required by law, as
it shall determine. A stock Award may be paid in Common Stock, in cash, or
in a combination of Common Stock and cash, as determined in the sole
discretion of the Administrator.
(d) Phantom Stock. The Administrator may from time to time grant Awards to
eligible participants denominated in stock-equivalent units ("phantom
stock") in such amounts and on such terms and conditions as it shall
determine. Phantom stock units granted to a participant shall be credited
to a bookkeeping reserve account solely for accounting purposes and shall
not require a segregation of any of the Corporation's assets. An Award of
phantom stock may be settled in Common Stock, in cash, or in a combination
of Common Stock and cash, as determined in the sole discretion of the
Administrator. Except as otherwise provided in the applicable Grant
Agreement, the grantee shall not have the rights of a stockholder with
respect to any shares of Common Stock represented by a phantom stock unit
solely as a result of the grant of a phantom stock unit to the grantee.
(e) Performance Awards. The Administrator may, in its discretion, grant
performance awards which become payable on account of attainment of one or
more performance goals established by the Administrator. Performance awards
may be paid by the delivery of Common Stock or cash, or any combination of
Common Stock and cash, as determined in the sole discretion of the
Administrator. Performance goals established by the Administrator may be
based on the Corporation's or an Affiliate's operating income or one or
more other business criteria selected by the Administrator that apply to an
individual or group of individuals, a business unit, or the Corporation or
an Affiliate as a whole, over such performance period as the Administrator
may designate.
7. Miscellaneous
(a) Withholding of Taxes. Grantees and holders of Awards shall pay to the
Corporation or its Affiliate, or make provision satisfactory to the
Administrator for payment of, any taxes required to be withheld in respect
of Awards under the Plan no later than the date of the event creating the
tax liability. The Corporation or its Affiliate may, to the extent
permitted by law, deduct any such tax obligations from any payment of any
kind otherwise due to the grantee or holder of an Award. In the event that
payment to the Corporation or its Affiliate of such tax obligations is made
in shares of Common Stock, such shares shall be valued at Fair Market Value
on the applicable date for such purposes.
(b) Loans. The Corporation or its Affiliate may make or guarantee loans to
grantees to assist grantees in exercising Awards and satisfying any
withholding tax obligations.
(c) Transferability. Except as otherwise determined by the Administrator, and
in any event in the case of an incentive stock option or a stock
appreciation right granted with respect to an incentive stock option, no
Award granted under the Plan shall be transferable by a grantee otherwise
than by will or the laws of descent and distribution. Unless otherwise
determined by the Administrator in accord with the provisions of the
immediately preceding sentence, an Award may be exercised during the
lifetime of the grantee, only by the grantee or, during the period the
grantee is under a legal disability, by the grantee's guardian or legal
representative.
(d) Adjustments; Business Combinations. In the event of changes in the Common
Stock of the Corporation by reason of any stock dividend, spin-off,
split-up, recapitalization, merger, consolidation, business combination or
exchange of shares and the like, the Administrator shall, in its
discretion, make appropriate adjustments to the maximum number and kind of
shares reserved for issuance or with respect to which Awards may be granted
under the Plan as provided in Section 4 of the Plan and to the number, kind
and price of shares covered by outstanding Awards, and shall, in its
discretion and without the consent of holders of Awards, make any other
adjustments in outstanding Awards, including but not limited to reducing
the number of shares subject to Awards or providing or mandating
alternative settlement methods such as settlement of the Awards in cash or
in shares of Common Stock or other securities of the Corporation or of any
other entity, or in any other matters which relate to Awards as the
Administrator shall, in its sole discretion, determine to be necessary or
appropriate.
Notwithstanding anything in the Plan to the contrary and without the
consent of Holders of Awards, the Administrator, in its sole
discretion, may make any modifications to any Awards, including but
not limited to cancellation, forfeiture, surrender or other
termination of the Awards in whole or in part regardless of the vested
status of the Award, in order to facilitate any business combination
that is authorized by the Board to comply with requirements for
treatment as a pooling of interests transaction for accounting
purposes under generally accepted accounting principles. The
Administrator is authorized to make, in its discretion and without the
consent of holders of Awards, adjustments in the terms and conditions
of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events affecting the Corporation, or the financial
statements of the Corporation or any Affiliate, or of changes in
applicable laws, regulations, or accounting principles, whenever the
Administrator determines that such adjustments are appropriate in
order to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan.
(e) Substitution of Awards in Mergers and Acquisitions. Awards may be granted
under the Plan from time to time in substitution for Awards held by
employees or directors of entities who become or are about to become
employees or directors of the Corporation or an Affiliate as the result of
a merger or consolidation of the employing entity with the Corporation or
an Affiliate, or the acquisition by the Corporation or an Affiliate of the
assets or stock of the employing entity. The terms and conditions of any
substitute Awards so granted may vary from the terms and conditions set
forth herein to the extent that the Administrator deems appropriate at the
time of grant to conform the substitute Awards to the provisions of the
awards for which they are substituted.
(f) Termination, Amendment and Modification of the Plan. The Board may
terminate, amend or modify the Plan or any portion thereof at any
time.
(g) Non-Guarantee of Employment or Service. Nothing in the Plan or in any
Grant Agreement thereunder shall confer any right on an individual to
continue in the service of the Corporation or shall interfere in any
way with the right of the Corporation to terminate such service at any
time with or without cause or notice.
(h) No Trust or Fund Created. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Corporation and a grantee or any
other person. To the extent that any grantee or other person acquires
a right to receive payments from the Corporation pursuant to an Award,
such right shall be no greater than the right of any unsecured general
creditor of the Corporation.
(i) Governing Law. The validity, construction and effect of the Plan, of
Grant Agreements entered into pursuant to the Plan, and of any rules,
regulations, determinations or decisions made by the Administrator
relating to the Plan or such Grant Agreements, and the rights of any
and all persons having or claiming to have any interest therein or
thereunder, shall be determined exclusively in accordance with
applicable federal laws and the laws of the State of Maryland without
regard to its conflict of laws principles.
(j) Effective Date; Termination Date. The Plan is effective as of April 5,
1999, the date on which the Plan, as an amendment and restatement of
the Prior Plan, was approved by the Board, subject to the approval of
the stockholders of the Corporation within twelve months of such
effective date. No Award shall be granted under the Plan after the
close of business on June 30, 2005. Subject to other applicable
provisions of the Plan, all Awards made under the Plan prior to such
termination of the Plan shall remain in effect until such Awards have
been satisfied or terminated in accordance with the Plan and the terms
of such Awards.
Date Approved by the Stockholders: May 27, 1999.