EIGHTH AMENDMENT AND REAFFIRMATION AGREEMENT

THIS EIGHTH AMENDMENT AND REAFFIRMATION AGREEMENT is
dated as of June 29, 2020 (this “Agreement”), by and among GSE SYSTEMS, INC., a
Delaware corporation (“Parent”), GSE PERFORMANCE SOLUTIONS, INC., a Delaware
corporation (“GSE Performance” and collectively with Parent, the “Borrowers” and
each a “Borrower”), GSE TRUE NORTH CONSULTING, LLC, a Delaware limited liability
company (“True North”), HYPERSPRING, LLC, a Delaware limited liability company
(“Hyperspring”), ABSOLUTE CONSULTING, INC., a Delaware corporation (“Absolute”
and together with True North and Hyperspring collectively, the “Original
Guarantors” and each an “Original Guarantor”), DP ENGINEERING, LLC, formerly DP
Engineering Ltd. Co., a Delaware limited liability company (“DP Engineering” and
together with the Original Guarantors collectively, the “Guarantors” and each a
“Guarantor” and together with the Borrowers collectively, the “Loan Parties” and
each a “Loan Party”), and CITIZENS BANK, NATIONAL ASSOCIATION (the “Bank”).
Capitalized terms used herein but not otherwise defined herein shall have the
meanings ascribed to such terms in the Credit Agreement (as defined below) or
the Guaranty (as defined below), as applicable.

WHEREAS, pursuant to the terms of that certain Credit and Security Agreement,
dated as of December 29, 2016 (as the same may have been amended, renewed,
replaced, or supplemented from time to time prior to the Closing Date (as
defined in the Credit Agreement), the “Original Credit Agreement”), by and among
Borrowers and Bank, the Bank agreed to provide a revolving line of credit to
Borrowers in an amount not to exceed $5,000,000 pursuant to a revolving line of
credit note dated as of the Initial Closing Date (as defined in the Credit
Agreement) of the Borrowers payable to the order of the Bank (the “RLOC Note”);

WHEREAS, Hyperspring executed and delivered a Guaranty and Suretyship Agreement
(as the same may have been amended, restated or modified from time to time, the
“Hyperspring Guaranty”) dated as of December 29, 2016 in favor of Bank in
connection with Borrower entering into the Original Credit Agreement;

WHEREAS, Absolute executed and delivered a Guaranty and Suretyship Agreement (as
the same may have been amended, restated or modified from time to time, the
“Absolute Guaranty”) dated as of September 20, 2017 in favor of Bank in
connection with the Original Credit Agreement;

WHEREAS, True North executed and delivered a Guaranty and Suretyship Agreement
(as the same may have been amended, restated or modified from time to time, the
“True North Guaranty”) dated as of May 11, 2018 in favor of Bank in connection
with the Credit Agreement;

WHEREAS, GSE Performance executed and delivered a Pledge Agreement (as the same
may have been amended, restated or modified from time to time, the
“GSE Performance Pledge Agreement”) dated as of September 20, 2017 in favor of
Bank in connection with the Original Credit Agreement;
#109307045 v9

--------------------------------------------------------------------------------

WHEREAS, Borrowers and Bank entered into that certain Amended and Restated
Credit Agreement (as the same may have been amended, restated or modified from
time to time, the “Credit Agreement”) dated as of May 11, 2018 to continue the
RLOC and to provide for a Term Loan Facility in a principal amount up to
$25,000,000;

WHEREAS, Original Guarantors and Bank entered into that certain Security
Agreement (as the same may have been amended, restated or modified from time to
time, the “Security Agreement”) dated as of May 11, 2018;

WHEREAS, pursuant to that certain Amendment and Reaffirmation Agreement dated as
of May 11, 2018, the Borrowers, the Original Guarantors and the Bank agreed to
amend the terms and conditions of the RLOC Note and the GSE Performance Pledge
Agreement;

WHEREAS, pursuant to that certain Second Amendment and Reaffirmation Agreement
dated as of May 25, 2018, the Borrowers, the Original Guarantors and the Bank
agreed to amend certain terms and conditions of the Credit Documents to reflect
the conversion of True North to a Delaware limited liability company;

WHEREAS, on February 15, 2019, (i) GSE Performance acquired all of the
membership interests of DP Engineering, (ii) the Borrowers, the Guarantors and
the Bank executed that certain Third Amendment and Reaffirmation Agreement dated
as of such date and
(iii)
DP Engineering executed and delivered a (a) Guaranty and Suretyship Agreement
(the “DP Engineering Guaranty” and together with the True North Guaranty, the
Hyperspring Guaranty and Absolute Guaranty collectively, the “Guaranty”) in
favor of Bank in connection with the Credit Agreement and (b) Pledge Agreement
in favor of Bank in connection with the Credit Agreement;

WHEREAS, pursuant to that certain Fourth Amendment and Reaffirmation Agreement
dated as of March 20, 2019, the Borrowers, the Guarantors and the Bank agreed to
amend certain terms and conditions of the Credit Documents to reflect the
conversion of DP Engineering to a Delaware limited liability company;

WHEREAS, pursuant to that certain Fifth Amendment and Reaffirmation Agreement
dated as of June 28, 2019, the Borrowers, the Guarantors and the Bank agreed to
amend certain financial covenants in the Credit Agreement;

WHEREAS, pursuant to that certain Sixth Amendment and Reaffirmation Agreement
dated December 31, 2019, the Borrowers, the Guarantors and the Bank agreed to
amend certain financial covenants in the Credit Agreement;

WHEREAS, pursuant to that certain Seventh Amendment and Reaffirmation Agreement
dated March 31, 2020, the Borrowers, the Guarantors, and the Bank agreed to
amend certain financial covenants, definitions, and other provisions in the
Credit Agreement; and

WHEREAS, the parties hereto intend to amend certain financial covenants,
definitions, and other provisions in the Credit Agreement as set forth herein.
-2-

#109307045 v9

--------------------------------------------------------------------------------

NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree, under seal, as follows:

ARTICLE I

Section 1.01. Amendments to Credit Agreement. The Credit Agreement is hereby
amended as follows:

(a)
The Bank hereby waives the Excess Cash Flow payment due under Section

2.2.4 of the Credit Agreement by Borrowers to Bank for the fiscal year ending on
December 31, 2020.

(b)
Notwithstanding anything set forth in Section 2.6 of the Credit Agreement to the
contrary, upon the earlier of (i) the receipt by Borrowers of funds from GSE
Power Systems AB or (ii) September 30, 2020, Borrowers shall prepay the Loans in
an aggregate principal amount equal to $3,000,000 (the “Loan Repayment”), which
shall be made in accordance with Section 2.7 of the Agreement. The Loan
Repayment shall be applied to prepay the Delayed Draw Term Loans in full, and
the remaining balance of the Loan Repayment shall be applied to prepay the RLOC.
For the avoidance of doubt, the Loan Repayment applied to prepay the RLOC may be
reborrowed by the Borrowers. Failure by the Borrowers to make the Loan Repayment
shall result in an immediate Event of Default.

(c)
Section 7.1 of the Credit Agreement is hereby deleted and replaced with the
following new Section 7.1:

“Section 7.1 Fixed Charge Coverage Ratio. Borrower and its Subsidiaries shall
maintain a minimum Fixed Charge Coverage Ratio of 1.00 to 1.00, to be tested
quarterly as of the last day of each quarter beginning with the quarter ending
December 31, 2021, on rolling four-quarter basis, calculated based on the
financial statements received by the Bank in accordance with the terms of this
Agreement. Notwithstanding the foregoing, the Borrower’s liabilities and
expenses under the PPP Loan shall be excluded in the calculation of Fixed Charge
Coverage Ratio for any period of time of determination unless, until and only to
the extent it has been finally determined that 10% or more of the Borrower’s PPP
Loan will not be forgiven pursuant to Section 1106 of the CARES Act.”

(d)
Section 7.2 of the Credit Agreement is hereby deleted and replaced with the
following new Section 7.2:

“Section 7.2. Leverage Ratio. Borrower and its Subsidiaries shall not exceed a
maximum Leverage Ratio, to be tested quarterly as of the last day of each
quarter beginning with the quarter ending March 31, 2021, on a rolling
four-quarter basis, calculated based on the financial statements received by the
Bank in accordance with the terms of this Agreement, as follows: (i) 3.00 to
1.00 for the period ending on March 31, 2021, (ii) 2.75 to 1.00 for the period
ending on June 30,
2021, (iii) 2.50 to 1.00 for the period ending on September 30, 2021, and (iv)
2.00
-3-

#109307045 v9

--------------------------------------------------------------------------------

to 1.00 for the period ending on December 31, 2021 and for the periods ending on
each December 31st, March 31st, June 30th and September 30th thereafter.
Notwithstanding the foregoing, the Borrower’s liabilities and expenses under the
PPP Loan shall be excluded in the calculation of Leverage Ratio for any period
of time of determination unless, until and only to the extent it has been
finally determined that 10% or more of the Borrower’s PPP Loan will not be
forgiven pursuant to Section 1106 of the CARES Act.”

(e)
Section 7.4 of the Credit Agreement is hereby deleted and replaced with the
following new Section 7.4:

“Section 7.4 [Reserved].”

(f)
Section 7.5 of the Credit Agreement is hereby deleted and replaced with the
following new Section 7.5:

“Section 7.5 Minimum USA Liquidity. Borrower and its Subsidiaries shall maintain
a minimum USA Liquidity of at least $3,500,000.00 in the aggregate, to be tested
bi-weekly as of the fifteenth (15th) and the last day of each month beginning on
September 15, 2020 and thereafter and to be reported by Borrower to Bank within
five (5) Business Days of such measurement date.”

(g)
In addition to each of the conditions set forth in Sections 6.3, 6.4, 6.6, 6.7,
6.9, 6.18, and 6.19, and notwithstanding any provision in those Sections to the
contrary, the Borrowers shall obtain the written consent of the Bank prior to
exercising its rights under such Sections or taking any actions described in
such Sections.

ARTICLE II

Reaffirmation Section 2.01. Reaffirmation.
(a)
Each Guarantor hereby: (i) affirms and confirms its guarantee and other
commitments and obligations, under the Guaranty, the Security Agreement and any
other Credit Documents executed by such Guarantor and (ii) confirms that each
guarantee and other commitments and obligations under the Guaranty, the Security
Agreement and any other Credit Documents executed by such Guarantor shall
continue to be in full force and effect and shall continue to accrue to the
benefit of the Bank notwithstanding the effectiveness of the Credit Agreement.

(b)
Each Borrower hereby affirms the execution and delivery to Bank of the Credit
Documents, and the Credit Documents are continued in full force and effect and
are in all respects hereby affirmed and ratified.

-4-

#109307045 v9

--------------------------------------------------------------------------------

ARTICLE III

Representations and Warranties

Each Loan Party, to the extent applicable, hereby represents and warrants, which
representations and warranties shall survive execution and delivery of this
Agreement, as follows:

Section 3.01. Organization. Each Loan Party is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization.

Section 3.02. Authority; Enforceability. Each Loan Party has the corporate or
limited liability company power to execute, deliver and carry out the terms and
provisions of this Agreement and has taken all necessary corporate and other
action, to authorize the execution, delivery and performance by it of this
Agreement. Each Loan Party has duly executed and delivered this Agreement, and
this Agreement constitutes a legal, valid and binding obligation of such Loan
Party, enforceable against it in accordance with the terms hereof.

Section 3.03. Credit Documents. The representations and warranties made by each
Loan Party and set forth in the Credit Documents are true and correct on and as
of the date hereof with the same effect as though made on and as of such date,
except to the extent such representations and warranties expressly relate to an
earlier date (in which case any such representation and warranty shall have been
true and correct as of such earlier date).

ARTICLE IV

Miscellaneous

Section 4.01.   Conditions to Effectiveness of Agreement.  The Bank’s
willingness to agree to the amendments set forth in this Agreement is subject to
(a) the execution and delivery to the Bank of (i) this Agreement by the
Borrowers and Guarantors and (ii) the Collateral Assignment Termination
Agreement by GSE Performance; and (b) the payment by Borrowers to the Bank of
(i) $7,000,000 to be applied first to the repayment of the Hedging Contract with
the Bank, and second to the repayment of the Term Loan Facility pursuant to the
Credit Agreement, (ii) a $10,000 amendment fee, and (iii) the reasonable fees
and expenses of the Bank’s outside and in-house counsel in connection with this
Agreement.

Section 4.02. Notices. All communications and notices hereunder shall be in
writing and given as provided in Section 10.9 of the Credit Agreement or Section
13 of the Guaranty, as applicable.

Section 4.03. Expenses. Each Loan Party acknowledges and agrees that the Bank
shall be entitled to reimbursement of expenses as provided in Section 10.2 of
the Credit Agreement and Section 10 of the Guaranty, as applicable.

Section 4.04. Credit Document. This Agreement is a “Credit Document” executed
pursuant to the Credit Agreement and shall be construed, administered and
applied in accordance with the terms and provisions thereof.
-5-

#109307045 v9

--------------------------------------------------------------------------------

Section 4.05. Successors and Assigns.  The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.

Section 4.06. No Novation. Nothing herein contained shall be construed as a
substitution or novation of the obligations outstanding under the Credit
Documents, which shall remain in full force and effect except as modified by
this Agreement and the Credit Agreement.

Section 4.07. Governing Law; Waiver of Jury Trial. This Agreement shall be
construed in accordance with and governed by the laws of the State of Delaware.
EACH LOAN PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT
TO A TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING BROUGHT OR INSTITUTED BY
ANY PARTY HERETO OR ANY SUCCESSOR OR ASSIGN OF ANY PARTY, ON OR WITH RESPECT TO
THIS AGREEMENT, ANY OF THE OTHER DOCUMENTS, THE COLLATERAL OR THE DEALINGS OF
THE PARTIES WITH RESPECT HERETO OR THERETO, WHETHER BY CLAIM OR COUNTERCLAIM.

Section 4.08. Remaining Force and Effect. Except as specifically amended hereby,
the Credit Documents remain in full force and effect in accordance with their
original terms and conditions.

[Remainder of Page Intentionally Left Blank]
-6-

#109307045 v9

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly executed under seal by its respective authorized officers as of the day and
year first above written.

 
BANK:
Witness/Attest:
CITIZENS BANK, NATIONAL ASSOCIATION
 
By: (SEAL)
Joseph R. Sileo Senior Vice President

[Signature Page to Eighth Amendment and Reaffirmation Agreement]

--------------------------------------------------------------------------------

[image00005.jpg]

--------------------------------------------------------------------------------

[image00006.jpg]