Document:

Exhibit 10.1

  

  

  
    PAYCHECK PROTECTION NOTE

    

    

    VIRGINIA BORROWERS: THIS INSTRUMENT CONTAINS A CONFESSION OF JUDGMENT PROVISION WHICH CONSTITUTES A WAIVER OF IMPORTANT RIGHTS YOU MAY HAVE AS A DEBTOR AND
      ALLOWS THE CREDITOR TO OBTAIN A JUDGMENT AGAINST YOU WITHOUT FURTHER NOTICE.

    

    

    	
            SBA Loan #

          	
            82984971-08

          
	
            SBA Loan Name

          	
            GSE Systems Inc

          
	
            Date

          	
            4/20/2020

          
	
            Loan Amount

          	
            $10,000,000.00

          
	
            Fixed Interest Rate

          	
            1.0%

          
	
            Borrower

          	
            GSE Systems Inc

          
	
            Lender

          	
            Citizens Bank N.A. 1 Citizens Plaza

            Providence, RI 02903

          

    

    

    

    

    
      	
              1.

            	
              PROMISE TO PAY:

            

    

    In return for the Loan, Borrower promises to pay to the order of Lender the amount of 10,000,000.00 Dollars,

    interest on the unpaid principal balance, and all other amounts required by this Note.

    

    

    
      	
              2.

            	
              DEFINITIONS:

            

    

    “Forgiveness Period” means the 8-week period beginning on the date of first disbursement of the Loan. “Loan” means the loan evidenced by this Note.

    “Loan Documents” means the documents related to this loan signed by Borrower.

    “Program” means the Paycheck Protection Program created by the Coronavirus Aid, Relief, and Economic Security Act, also known as the “CARES Act” (P.L. 116-136).

    “SBA” means the Small Business Administration, an Agency of the United States of America.

    

    

    
      	
              3.

            	
              LOAN FORGIVENESS; PAYMENT TERMS:

            

    

    
      	
              A.

            	
              Loan Forgiveness: Borrower may apply to Lender for forgiveness of the amount due on the Loan in an amount equal to the sum of the following costs
                incurred by Borrower during the 8- week period beginning on the date of first disbursement of the Loan:

            

    

    
      	
              i.

            	
              Payroll costs

            

    

    
      	
              ii.

            	
              Any payment of interest on a covered mortgage obligation (which shall not include any prepayment of or payment of principal on a covered mortgage obligation)

            

    

    
      	
              iii.

            	
              Any payment on a covered rent obligation

            

    

    

    

    

    

    Information Classification: EXTERNAL

    4/23/20

    
      1

      
        

    

    

    

    

    

    
      	
              iv.

            	
              Any covered utility payment

            

    

    The amount of loan forgiveness shall be calculated (and may be reduced) in accordance with the requirements of the Program, including the provisions of
      Section 1106 of the CARES Act. Not more than 25% of the amount forgiven can be attributable to non-payroll costs. If Borrower has received an SBA Economic Injury Disaster Loan (“EIDL”) during the period between January 1, 2020 and April 4, 2020 and
      used the proceeds of that EIDL for payroll costs, that amount shall be subtracted from the loan forgiveness amount.

    Forgiveness will be subject to Borrower’s submission to Lender of information and documentation as required by the SBA and Lender.

    
      	
              B.

            	
              Submission of Information and Documents: Forgiveness will be subject to Borrower’s submission to Lender of information and
                documentation as required by the SBA and Lender. Not before July 1, 2020 and by August 15, 2020, Borrower shall provide Lender with information, in form and substance acceptable to Lender, specifying the amount of forgiveness Borrower
                requests, together with all documentation required by the CARES Act, the SBA and/or Lender to evidence and/or verify such information. Required information shall include, without limitation:

            

    

    
      	
              (i)

            	
              the total dollar amount of payroll costs during the Forgiveness Period and the dollar amounts of covered mortgage interest payments, covered rent payments and covered utilities for the
                Forgiveness Period to the extent Borrower seeks forgiveness for these costs.

            

    

    
      	
              (ii)

            	
              the average number of full-time equivalent employees of Borrower per month during (a) the period from February 15, 2020 through June 30, 2020 (the “Covered Period”); (b) the same period in
                2019, and (c) if the average number of full-time equivalent employees is lower than the average number for the period described in subsection (ii)(b) above, the period from January 1, 2020 through February 29, 2020;

            

    

    
      	
              (iii)

            	
              number of full-time equivalent employees of Borrower as of February 15, 2020, April 26, 2020 and June 30, 2020;

            

    

    
      	
              (iv)

            	
              the total amount of salary and wages during the Covered Period and during the fourth calendar quarter of 2019 of each employee who had the amount or rate of such salary and wages reduced
                by more than 25% during the Covered Period from the amount or rate in the fourth quarter of 2019 (each, a “Lowered Employee”);

            

    

    
      	
              (v)

            	
              the rate of salary and wages of each Lowered Employee as of February 15, 2020, April 26, 2020 and June 30, 2020; and

            

    

    (v)      such further information and documents as Lender or the SBA shall require.

    
      	
              C.

            	
              Initial Deferment Period: No payments are due on the Loan for 6 months from the date of first disbursement of the Loan. Interest will continue to
                accrue during the deferment period.

            

    

    
      	
              D.

            	
              Maturity: This Note will mature two years from date of first disbursement of the Loan.

            

    

    
      	
              E.

            	
              Payments from End of Deferment Period through Maturity Date: To the extent the Loan is not forgiven during the deferment period or thereafter, the
                outstanding balance of the Loan, and interest thereon, shall be repaid in eighteen substantially equal monthly payments of principal and interest, commencing on the first business day after the end of the deferment period.

            

    

    
      	
              F.

            	
              Payment Authorization: Borrower hereby authorizes Lender to initiate payments from Borrower’s bank account, by wire or ACH transfer, for each monthly
                or other payment required hereunder.

            

    

    
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    In the event any such payment is unsuccessful, Borrower shall remain liable for such payment and shall take all steps required to make such payment.

    
      	
              G.

            	
              Interest Computation; Repayment Terms: The interest rate on this Note is one percent per year. The interest rate is fixed and will not be changed
                during the life of the Loan. Interest will be calculated based upon actual days over a 365-day year.

            

    

    
      	
              H.

            	
              Payment Allocation: Lender will apply each installment payment first to pay interest accrued to the day Lender received the payment,  then to bring
                principal current, and will apply any remaining balance to reduce principal.

            

    

    
      	
              I.

            	
              Loan Prepayment: Notwithstanding any provision in this Note to the contrary, Borrower may prepay this Note at any time without penalty. Borrower
                may prepay 20 percent or less of the unpaid principal balance at any time without notice. If Borrower prepays more than 20 percent and the Loan has been sold on the secondary market, Borrower must: (i) give Lender written notice; (ii) pay
                all accrued interest; and (iii) if the prepayment is received less than 21 days from the date Lender received the notice, pay an amount equal to 21 days interest from the date Lender received the notice, less any interest accrued during the
                21 days and paid under (ii) of this paragraph. If Borrower does not prepay within 30 days from the date Lender received the notice, Borrower must give Lender a new notice.

            

    

    

    

    
      	
              4.

            	
              NON-RECOURSE: Lender and SBA shall have no recourse against any individual shareholder, member or partner of Borrower for non-payment of the loan, except to the extent that such shareholder, member or partner
                uses the loan proceeds for an unauthorized purpose.

            

    

    

    

    
      	
              5.

            	
              USE OF PROCEEDS:

            

    

    

    

    Borrower represents and warrants that all proceeds of the Loan will be used for the following eligible business purposes, as required by the CARES Act: (I) payroll costs; (II)
      costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums; (III) employee salaries, commissions, or similar compensations; (IV) payments of interest on any mortgage
      obligation (which shall not include any prepayment of or payment of principal on a mortgage obligation); (V) rent (including rent under a lease agreement); (VI) utilities; and (VII) interest on any other debt obligations that were incurred before
      February 15, 2020, provided that not less than 75% of expended Loan proceeds shall be devoted to items (I)-(III) above.

    

    

    
      	
              6.

            	
              DEFAULT:

            

    

    Borrower is in default under this Note if Borrower does not make a payment when due under this Note, or if Borrower:

    
      	
              A.

            	
              Fails to do anything required by this Note and other Loan Documents;

            

    

    
      	
              B.

            	
              Does not disclose, or anyone acting on its behalf does not disclose, any material fact to Lender or SBA;

            

    

    
      	
              C.

            	
              Makes, or anyone acting on its behalf makes, a materially false or misleading representation to Lender or SBA;

            

    

    
      	
              D.

            	
              Reorganizes, merges, consolidates, or otherwise changes ownership or business structure without Lender’s prior written consent;

            

    

    
      	
              E.

            	
              Does any of the following after Lender makes a determination (an “Adverse Forgiveness Determination”) that the Loan is not entitled to full forgiveness (or in such other period as specified
                below):

            

    

    
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              (i)

            	
              Defaults on any other loan with Lender;

            

    

    

    

    
      	
              (ii)

            	
              Defaults on any loan or agreement with another creditor, if Lender believes the default may materially affect Borrower’s ability to pay this Note;

            

    

    

    

    
      	
              (iii)

            	
              Fails to pay any taxes when due;

            

    

    

    

    
      	
              (iv)

            	
              Becomes the subject of a proceeding under any bankruptcy or insolvency law;

            

    

    

    

    
      	
              (v)

            	
              Has a receiver or liquidator appointed for any part of their business or property;

            

    

    

    

    
      	
              (vi)

            	
              Makes an assignment for the benefit of creditors;

            

    

    

    

    
      	
              (vii)

            	
              Has any adverse change in financial condition or business operation from the date of this Note that continues after the Adverse Forgiveness Determination and that Lender believes may materially affect
                Borrower’s ability to pay this Note; or

            

    

    

    

    
      	
              (viii)

            	
              Becomes the subject of a civil or criminal action from the date of this Note that continues after the Adverse Forgiveness Determination and that Lender believes may materially affect Borrower’s ability to pay
                this Note.

            

    

    

    

    
      	
              7.

            	
              LENDER’S RIGHTS IF THERE IS A DEFAULT:

            

    

    Upon a default by Borrower, without notice or demand and without giving up any of its rights, Lender may:

    
      	
              A.

            	
              Require immediate payment of all amounts owing under this Note; or

            

    

    
      	
              B.

            	
              File suit and obtain judgment.

            

    

    

    

    
      	
              8.

            	
              LENDER’S GENERAL POWERS:

            

    

    Without notice and without Borrower’s consent, Lender may:

    
      	
              A.

            	
              Incur expenses to collect amounts due under this Note and enforce the terms of this Note or any other Loan Document. Among other things, the expenses may include reasonable attorney’s fees
                and costs. If Lender incurs such expenses, it may demand immediate repayment from Borrower or add the expenses to the principal balance; and

            

    

    
      	
              B.

            	
              Take any action necessary to collect amounts owing on this Note.

            

    

    

    

    
      	
              9.

            	
              WHEN FEDERAL LAW APPLIES:

            

    

    When SBA is the holder, this Note will be interpreted and enforced under federal law, including SBA regulations. Lender or SBA may use state or local
      procedures for filing papers, recording documents, giving notice, foreclosing liens, and other purposes. By using such procedures, SBA does not waive any federal immunity from state or local control, penalty, tax, or liability. As to this Note,
      Borrower may not claim or assert against SBA any local or state law to deny any obligation, defeat any claim of SBA, or preempt federal law.

    

    

    
      	
              10.

            	
              SUCCESSORS AND ASSIGNS:

            

    

    Under this Note, Borrower includes the original Borrower’s successors, and Lender includes the original Lender’s successors and assigns.

    

    

    
      	
              11.

            	
              GENERAL PROVISIONS:

            

    

    
      	
              A.

            	
              All individuals and entities signing this Note are jointly and severally liable.

            

    

    
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              B.

            	
              Borrower waives all suretyship defenses.

            

    

    
      	
              C.

            	
              Borrower must sign all documents necessary at any time to comply with the Loan Documents.

            

    

    
      	
              D.

            	
              Lender may exercise any of its rights separately or together, as many times and in any order it chooses. Lender may delay or forgo enforcing any of its rights without giving up any of them.

            

    

    
      	
              E.

            	
              Borrower may not use an oral statement of Lender or SBA to contradict or alter the written terms of this Note.

            

    

    
      	
              F.

            	
              If any part of this Note is unenforceable, all other parts remain in effect.

            

    

    
      	
              G.

            	
              To the extent allowed by law, Borrower waives all demands and notices in connection with this Note, including presentment, demand, protest, and notice of dishonor. Borrower also waives any
                defenses based upon any claim that Lender did not obtain any guarantee or collateral.

            

    

    

    

    
      	
              12.

            	
              STATE-SPECIFIC PROVISIONS:

            

    

    
      	
              A.

            	
              If Borrower’s principal place of business is in Delaware, the following provision applies:

            

    

    CONFESSION OF JUDGMENT. BORROWER HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY-AT-LAW, AFTER THE OCCURRENCE OF A DEFAULT, TO
      APPEAR IN ANY COURT OF RECORD AND TO CONFESS JUDGMENT AGAINST BORROWER FOR THE UNPAID AMOUNT OF THIS NOTE, AND TO RELEASE ALL ERRORS, AND WAIVE ALL RIGHTS OF APPEAL. IF A COPY OF THIS NOTE, VERIFIED BY AN AFFIDAVIT, SHALL HAVE BEEN FILED IN THE
      PROCEEDING, IT WILL NOT BE NECESSARY TO FILE THE ORIGINAL AS A WARRANT OF ATTORNEY. BORROWER WAIVES THE RIGHT TO ANY STAY OF EXECUTION AND THE BENEFIT OF ALL EXEMPTION LAWS NOW OR HEREAFTER IN EFFECT. NO SINGLE EXERCISE OF THE FOREGOING WARRANT AND
      POWER TO CONFESS JUDGMENT WILL BE DEEMED TO EXHAUST THE POWER, WHETHER OR NOT ANY SUCH EXERCISE SHALL BE HELD BY ANY COURT TO BE INVALID, VOIDABLE, OR VOID; BUT THE POWER WILL CONTINUE UNDIMINISHED AND MAY BE EXERCISED FROM TIME TO TIME AS LENDER MAY
      ELECT UNTIL ALL AMOUNTS OWING ON THIS NOTE HAVE BEEN PAID IN FULL.

    
      	
              B.

            	
              If Borrower’s principal place of business is in Maryland, the following provision applies:

            

    

    POWER TO CONFESS JUDGMENT. BORROWER HEREBY EMPOWERS ANY ATTORNEY OF ANY COURT OF RECORD, AFTER THE OCCURRENCE OF A DEFAULT HEREUNDER, TO
      APPEAR FOR BORROWER AND, WITH OR WITHOUT COMPLAINT FILED, CONFESS JUDGMENT, OR A SERIES OF JUDGMENTS, AGAINST BORROWER IN FAVOR OF LENDER OR ANY HOLDER HEREOF FOR THE ENTIRE PRINCIPAL BALANCE OF THIS NOTE, ALL ACCRUED INTEREST AND ALL OTHER AMOUNTS
      DUE HEREUNDER, AND FOR DOING SO, THIS NOTE OR A COPY VERIFIED BY AFFIDAVIT SHALL BE A SUFFICIENT WARRANT. BORROWER HEREBY FOREVER WAIVES AND RELEASES ALL ERRORS IN SAID PROCEEDINGS AND ALL RIGHTS OF APPEAL AND ALL RELIEF FROM ANY AND ALL
      APPRAISEMENT, STAY OR EXEMPTION LAWS OF ANY STATE NOW IN FORCE OR HEREAFTER ENACTED. BORROWER ACKNOWLEDGES AND AGREES THAT, PURSUANT TO THE FOREGOING POWER TO CONFESS JUDGMENT GRANTED TO LENDER, BORROWER IS VOLUNTARILY AND KNOWINGLY WAIVING ITS RIGHT
      TO NOTICE AND A HEARING PRIOR TO THE ENTRY OF A JUDGMENT BY LENDER AGAINST BORROWER. NO SINGLE EXERCISE OF THE FOREGOING POWER TO CONFESS JUDGMENT, OR A SERIES OF JUDGMENTS, SHALL BE DEEMED TO EXHAUST THE POWER, WHETHER OR NOT ANY SUCH EXERCISE SHALL
      BE HELD BY ANY COURT TO BE INVALID, VOIDABLE, OR VOID, BUT THE POWER SHALL CONTINUE UNDIMINISHED AND IT MAY BE EXERCISED FROM TIME TO TIME AS OFTEN AS

    LENDER SHALL ELECT UNTIL SUCH TIME AS LENDER SHALL HAVE RECEIVED PAYMENT UNTIL ALL AMOUNTS OWING ON THIS NOTE HAVE BEEN PAID IN FULL.

    
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              C.

            	
              If Borrower’s principal place of business is in Missouri, the following provision applies:

            

    

    Oral or unexecuted agreements or commitments to loan money, extend credit or to forbear from enforcing repayment of a debt including promises
      to extend or renew such debt are not enforceable, regardless of the legal theory upon which it is based that is in any way related to the credit agreement. To protect you (Borrowers(s)) and us (Creditor) from misunderstanding or disappointment, any
      agreements we reach covering such matters are contained in this writing, which is the complete and exclusive statement of the agreement between us, except as we may later agree in writing to modify it.

    

    

    
      	
              D.

            	
              If Borrower’s principal place of business is in Oregon, the following provision applies:

            

    

    UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY [BENEFICIARY]/US CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE
      NOT FOR PERSONAL, FAMILY, OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY GRANTOR'S/BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY [AN AUTHORIZED REPRESENTATIVE OF BENEFICIARY]/US TO BE ENFORCEABLE.

    

    

    
      	
              E.

            	
              If Borrower’s principal place of business is in Pennsylvania, the following provision applies:

            

    

    CONFESSION OF JUDGMENT. BORROWER HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR THE PROTHONOTARY OR CLERK OF ANY COURT IN THE
      COMMONWEALTH OF PENNSYLVANIA,  OR ELSEWHERE,  TO APPEAR AT ANY TIME FOR BORROWER AFTER A DEFAULT UNDER THIS NOTE AND WITH OR WITHOUT COMPLAINT FILED, CONFESS OR ENTER JUDGMENT AGAINST BORROWER FOR THE ENTIRE PRINCIPAL BALANCE OF THIS NOTE AND ALL
      ACCRUED INTEREST, ON WHICH JUDGMENT OR JUDGMENTS ONE OR MORE EXECUTIONS MAY ISSUE IMMEDIATELY; AND FOR SO DOING, THIS NOTE OR A COPY OF THIS NOTE VERIFIED BY AFFIDAVIT SHALL BE SUFFICIENT WARRANT. THE AUTHORITY GRANTED IN THIS NOTE TO CONFESS
      JUDGMENT AGAINST BORROWER SHALL NOT BE EXHAUSTED BY ANY EXERCISE OF THAT AUTHORITY, BUT SHALL CONTINUE FROM TIME TO TIME AND AT ALL TIMES UNTIL PAYMENT IN FULL OF ALL AMOUNTS DUE UNDER THIS NOTE. BORROWER HEREBY WAIVES ANY RIGHT BORROWER MAY HAVE TO
      NOTICE OR TO A HEARING IN CONNECTION WITH ANY SUCH CONFESSION OF JUDGMENT AND STATES THAT EITHER A REPRESENTATIVE OF LENDER SPECIFICALLY CALLED THIS CONFESSION OF JUDGMENT PROVISION TO BORROWER'S ATTENTION OR BORROWER HAS BEEN REPRESENTED BY
      INDEPENDENT LEGAL COUNSEL.

    
      	
              F.

            	
              If Borrower’s principal place of business is in Virginia, the following provision applies:

            

    

    Upon any default under this Note Borrower authorizes the clerk of any court and any attorney admitted to practice before any court of record
      in the United States, on behalf of Borrower, to then confess judgment against the Borrower in favor of Lender in the full amount due on this Note. For the purpose of allowing the Lender to file a confession of judgment in the Commonwealth of
      Virginia, the Borrower hereby duly constitutes and appoints , its true and lawful attorney-in-fact, to confess judgment against it in any court of record in the Commonwealth of Virginia, and Borrower further consents to the jurisdiction of and agrees
      that venue shall be proper in the Circuit Court of any county or city of the Commonwealth of Virginia and/or in any other court of record in the Commonwealth of Virginia. Borrower waives all errors, defects and imperfections in the entry of judgment
      as aforesaid or in any proceeding pursuant thereto and the benefit of any and every statute, ordinance or rule of court which may be lawfully waived conferring upon Borrower any right or privilege of exemption, stay of execution, or supplementary
      proceedings, or other relief from the  enforcement or immediate enforcement of a judgment or related proceedings on a judgment. The authority and power to appear for and to enter judgment against Borrower shall not be extinguished by any judgment
      entered pursuant thereto; such authority and power may be exercised on one or more occasions from time to time, in the same or different courts or jurisdictions, as often as Lender shall deem necessary or advisable until all sums due under this Note
      have been paid in full.

    
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              G.

            	
              If Borrower’s principal place of business is in Washington, the following provision applies:

            

    

    Oral agreements or oral commitments to loan money, extend credit, or to forbear from enforcing repayment of a debt are not enforceable under
      Washington law.

    
      	
              H.

            	
              If Borrower is an individual residing in Wisconsin, the following provision applies:

            

    

    Each Borrower who is married represents that this obligation is incurred in the interest of his or her marriage or family.

    

    

    
      	
              13.

            	
              ARBITRATION CLAUSE:

            

    

    Borrower agrees to the Arbitration Clause attached as Exhibit A. Lender also agrees to the Arbitration Clause.

    

    

    
      	
              14.

            	
              BORROWER’S NAME AND SIGNATURE:

            

    

    By signing below, each individual or entity becomes obligated under this Note as Borrower.

    

    

    

    

    BORROWER: GSE Systems Inc

    

    

    

    

    
            

    

    

    

    Emmett Pepe, Authorized Signer

    
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    ARBITRATION CLAUSE (EXHIBIT A).

    

    

    Lender (together with its “Related Parties,” as defined below, “we,” “us” and “our”) has put this Clause in question and answer form to make it easier to understand. However,
      this Clause is part of this Agreement and is legally binding on Borrower (“you” and “your”).

    

    

    

    

    	
             

            Question.

          	
            Short Answer.

          	
             

            Further Detail.

          
	
            Background and Scope.

          
	
            What is arbitration?

          	
            An alternative to a court case.

          	
            In arbitration, a third party arbitrator (“TPA”) solves Claims in a hearing. It is less formal than a court case.

          
	
            Is it different from court and jury trials?

          	
            Yes.

          	
            The hearing is private. There is no jury. It is usually less formal, faster and less expensive than a lawsuit. Pre-hearing fact finding (called “discovery”) is limited. Appeals are limited.
              Courts rarely overturn arbitration awards.

          
	
            What is this Clause about?

          	
            The parties' agreement to arbitrate Claims.

          	
            You and we agree that any party may elect to arbitrate or require arbitration of any "Claim" as defined below.

          
	
            Who does the Clause cover?

          	
            You and us, including certain "Related Parties".

          	
            This Clause governs you and us, including our "Related Parties": (1) any parent, subsidiary or affiliate of ours; (2) our employees, directors, officers, shareholders, members and
              representatives; and (3) any person or company (but not the SBA) that is involved in a Claim you pursue at the same time you pursue a related Claim with us.

          
	
            What Claims does the Clause cover?

          	
            All Claims (except certain Claims about this Clause).

          	
            This Clause governs all “Claims” that would usually be decided in court and are between you and us. In this Clause, the word “Claims” has the broadest reasonable meaning. It includes
              contract and tort (including intentional tort) claims and claims under constitutions, statutes, ordinances, rules and regulations. It includes all claims even indirectly related to your application and/or supplemental application for the
              Loan, this Note, the Loan or our relationship with you. It includes claims related to any decisions we have made or subsequently make concerning your Loan, including decisions regarding the Loan forgiveness to which you are or are not
              entitled. It includes claims related to collections, privacy and customer information. It includes claims related to the validity in general of this Note. However, it does not include disputes about the
                validity, coverage or scope of this Clause or any part of this Clause. All such disputes are for a court and not the TPA to decide.

          
	
            Who handles the arbitration?

          	
            Usually AAA or JAMS.

          	
            Arbitrations are conducted under this Clause and the rules of the arbitration administrator in effect at the time the arbitration is commenced. However, arbitration rules that conflict with
              this Clause do not apply. The arbitration administrator will be either:

            • The American Arbitration Association ("AAA"), 1633 Broadway, 10th Floor, New
              York, NY 10019, www.adr.org.

            • JAMS, 620 Eighth Avenue, 34th Floor, New York, NY 10018,

          

    

    

    Information Classification: EXTERNAL

    4/23/20

    
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            Question.

          	
            Short Answer.

          	
             

            Further Detail.

          
	 	 	
            www.jamsadr.org

            • Any other company picked by agreement of the parties.

            If all the above options are unavailable, a court will pick the administrator. No arbitration brought on a class basis may be administered without our
                consent by any administrator that would permit class arbitration under this Clause.

             

            The TPA will be selected under the administrator's rules. However, the TPA must be a lawyer with at least ten years of experience or a retired judge unless you and we otherwise agree.

          
	
            Can Claims be brought in court?

          	
            Sometimes.

          	
            Either party may bring a lawsuit if the other party does not demand arbitration. We will not demand arbitration of any lawsuit you bring as an individual action in small claims court.
              However, we may demand arbitration of any appeal of a small-claims decision or any small-claims action brought on a class basis.

          
	
            Are you giving up any rights?

          	
            Yes.

          	
            For Claims subject to this Clause, you give up your right to:

             

            1. Have juries decide
                Claims.

            2. Have
                courts, other than small-claims courts, decide Claims.

            3. Serve
                as a private attorney general or in a representative capacity.

            4. Join a
                Claim you have with a dispute by other consumers.

            5. Bring
                or be a class member in a class action or class arbitration.

             

            We also give up the right to a jury trial and to have courts decide Claims you wish to arbitrate.

          
	
            Can you or another business start class arbitration?

          	
            No.

          	
            The TPA is not allowed to handle any Claim on a class or
                representative basis. All Claims subject to this Clause must be decided in an individual arbitration or an individual small-claims action. This Clause will be void if a court rules that the
              TPA can decide a Claim on a class basis and the court's ruling is not reversed on appeal.

          
	
            What happens if part of this Clause cannot be enforced?

          	
            It depends.

          	
            If any portion of this Clause cannot be enforced, the rest of this Clause will continue to apply, except that:

             

            (A) If a court rules that the TPA can decide a Claim on a class or other representative basis
              and the court's ruling is not reversed on appeal, only this sentence will apply and the remainder of this Clause will be void. AND

             

            (B) If a party brings a Claim seeking public injunctive relief and a court determines that the
              restrictions in this Clause prohibiting the TPA from awarding relief on behalf of third parties are unenforceable with respect to such Claim (and that determination becomes final after all appeals have been exhausted), the Claim for public
              injunctive relief will be determined in court and any individual Claims seeking monetary relief will be arbitrated. In such a case the parties agree to request that the court stay the Claim for public injunctive relief until the arbitration
              award pertaining to individual relief has been entered in court.

             

            In no event will a Claim for class relief or public injunctive relief be

          

    
      9

      
        

    

    

    

    

    

    

    

    	
             

            Question.

          	
            Short Answer.

          	
             

            Further Detail.

          
	 	 	
            arbitrated.

          
	
            What law applies?

          	
            The Federal Arbitration Act (“FAA”).

          	
            This Agreement and related sale involve interstate commerce. Thus, the FAA governs this Clause. The TPA must apply substantive law consistent with the FAA. The TPA must honor statutes of
              limitation and privilege rights. Punitive damages are governed by the constitutional standards that apply in judicial proceedings.

          
	
            Will anything I do make this Clause ineffective?

          	
            No.

          	
            This Clause stays in force even if you: (1) cancel this Note; (2) default, renew, prepay or pay the Loan in full; or (3) go into or through bankruptcy.

          
	
            Process.

          
	
            What must a party do before starting a lawsuit or arbitration?

          	
            Send a written Claim notice and work to resolve the Claim.

          	
            Before starting a lawsuit or arbitration, the complaining party must give the other party written notice of the Claim. The notice must explain in reasonable detail the nature of the Claim
              and any supporting facts. If you are the complaining party, you must send the notice in writing (and not electronically) to our Legal Department, at our normal notice address. You or an attorney you have personally hired must sign the notice
              and must provide your full name and a phone number where you (or your attorney) can be reached.

            Once a Claim notice is sent, the complaining party must give the other party a reasonable opportunity over the next 30 days to resolve the Claim on an individual basis.

          
	
            How does arbitration start?

          	
            Mailing a notice.

          	
            If the parties do not reach an agreement to resolve the Claim within 30 days after notice of the Claim is received, the complaining party may commence a lawsuit or arbitration, subject to
              the terms of this Clause. To start arbitration, the complaining party picks the administrator and follows the administrator's rules. If one party begins or threatens a lawsuit, the other party can demand arbitration. This demand can be made
              in court papers. It can be made if a party begins a lawsuit on an individual basis and then tries to pursue a class action. Once an arbitration demand is made, no lawsuit may be brought and any existing lawsuit must stop.

          
	
            Will any hearing be held nearby?

          	
            Yes.

          	
            The TPA may decide that an in-person hearing is unnecessary and that he or she can resolve a Claim based on written filings and/or a conference call.

            However, any in-person arbitration hearing must be held at a place reasonably convenient to you.

          
	
            What about appeals?

          	
            Very limited.

          	
            Appeal rights under the FAA are very limited. Except for FAA appeal rights and except for Claims involving more than $50,000 (including Claims involving requests for injunctive relief that
              could cost more than $50,000), the TPA's award will be final and binding. For Claims involving more than

            $50,000, any party may appeal the award to a three-TPA panel appointed by the administrator, which will reconsider from the start anything in the initial award that is appealed. The panel's
              decision will be final and binding, except for any FAA appeal right. Any appropriate court may enter judgment upon the TPA's award.

          

    
      10

      
        

    

    

    

    

    

    

    

    	
             

            Question.

          	
            Short Answer.

          	
             

            Further Detail.

          
	
            Do arbitration awards affect other disputes?

          	
            No.

          	
            No arbitration award involving the parties will have any impact as to issues or claims in any dispute involving anyone who is not a party to the arbitration, nor will an arbitration award
              in prior disputes involving other parties have any impact in an arbitration between the parties to this Clause.

          
	
            Arbitration Fees and Awards.

          
	
            Who bears arbitration fees?

          	
            Usually, we do.

          	
            We will pay all filing, administrative, hearing and TPA’s fees if you act in good faith, cannot get a waiver of such fees and ask us to pay.

          
	
            When will we cover your legal fees and costs?

          	
            If you win.

          	
            If you win an arbitration, we will pay your reasonable fees and costs for attorneys, experts and witnesses. We will also pay these amounts if required under applicable law or the
              administrator's rules or if payment is required to enforce this Clause. The TPA shall not limit his or her award of these amounts because your Claim is for a small amount.

          
	
            Will you ever owe us for arbitration or attorneys' fees?

          	
            Only for bad faith.

          	
            The TPA can require you to pay our fees if (and only if): (1) the TPA finds that you have acted in bad faith (as measured by the standards set forth in Federal Rule of Civil Procedure
              11(b)); and (2) this power does not make this Clause invalid.

          
	
            Can an award be explained?

          	
            Yes.

          	
            A party may request details from the TPA, within 14 days of the ruling. Upon such request, the TPA will explain the ruling in writing.

          

    

    

    

    

    By signing below, we agree to this Arbitration Clause.

    

    

    LENDER: CITIZENS BANK, N.A.

    

    

    

    

    

    Shannon L Moniz Vice President

    Loan Operations Manager

    
      11

      
        

    

    

    

    

    

    

    

    

    

    AUTHORIZATION

    (SBA Paycheck Protection Program Express Loan)

    

    

    	
            SBA Loan# 82984971-08

          
	
            U.S. Small Business Administration

          	
            Lender:

          
	
            LITTLE ROCK COMMERCIAL LOAN SERVICING CENTER OFFICE OF FINANCIAL PROGRAM OPERATIONS

          	
            Citizens Bank N.A.

          
	
            2120 Riverfront Drive

          	
            1 Citizens Plaza

          
	
            Little Rock, AR 72202

          	
            Providence, RI 02903

          

    

    

    

    

    Lender is issuing this SBA Paycheck Protection Program Express Loan Authorization for SBA to guarantee 100% of a loan in the amount of $10,000,000.00
      to be made by Lender to assist:

    

    

    Borrower: GSE Systems Inc, 1332 Londontown Blvd 200, Sykesville, MD 21784

    

    

    Lender must have a valid SBA Loan Guarantee Agreement (SBA Form 750 and a valid SBA Express Supplemental Loan Guaranty Agreement (SBA Form 2424).

    

    

    Lender’s issuance is in accordance with the SBA Express Supplemental Loan Guaranty Agreement between Lender and SBA for an SBA Express Loan and the Paycheck Protection Program created by the
      Coronavirus Aid, Relief, and Economic Security Act, also known as the “CARES Act” (H.R. 748).

    

    

    Lender must comply with all SBA Loan Program Requirements, as defined in 13 CFR 120.10, all of which may be amended from time to time.

    

    

    This Authorization is subject to the application (including SBA Form 2483) submitted by Borrower to the Lender, the Lender’s representations to SBA, and the following terms and conditions:

    

    

    
      	
              15.

            	
              Lender must make complete disbursement of the loan no later than 24 months from the date of this Authorization.

            

    

    

    

    
      	
              16.

            	
              The SBA Guarantee Fee is $0.

            

    

    

    

    
      	
              17.

            	
              Lender must have Borrower execute a Note containing the following repayment terms:

            

    

    
      	
              A.

            	
              At the request of the Borrower and on receipt of information and documentation as required by the SBA, Lender will forgive repayment of such portion of the Loan, and interest thereon, as and to the extent
                required by the CARES Act for loans under the Program. The amount of forgiveness shall not exceed the principal amount of this Note.

            

    

    
      	
              B.

            	
              At any time as requested by the Lender, but not later than 90 days after Borrower receives funds pursuant to this Note, Borrower will provide Lender with information, in form and substance acceptable to
                Lender, specifying the amount of forgiveness Borrower requests, together with all documentation required by the CARES Act, the SBA and/or Lender to evidence and/or verify the information in such report. Required information shall include,
                without limitation, (i) the number of full-time equivalent employees of Borrower and the dollar amount of payroll costs during all relevant periods (including the Forgiveness Period), as well as (ii) the dollar amounts of covered mortgage
                interest

            

    

    

    

    

    

    

    

    Information Classification: EXTERNAL

    4/23/20

    
      12

      
        

    

    
      

      

      

      

      

      

      

      

      payments, covered rent payments and covered utilities for the Forgiveness Period to the extent Borrower seeks forgiveness for these costs.

      
        	
                C.

              	
                To the extent the Loan is not forgiven, the outstanding balance of the Loan, and interest thereon, shall be repaid in eighteen substantially equal monthly payments of principal and interest, commencing six
                  (6) months after the date of this Loan and ending two (2) years after the date of this Loan. Borrower hereby authorizes Lender to initiate payments from Borrower’s bank account, by wire or ACH transfer, for each monthly or other payment
                  required hereunder. In the event any such payment is unsuccessful, Borrower shall remain liable for such payment and shall take all steps required to make such payment.

              

      

      D. Interest will be calculated based upon actual days
          over a 365-day year.

      

      

      

      

      
        	
                18.

              	
                Lender must develop and maintain evidence of a system or process to reasonably ensure that loan proceeds were used for the following eligible business purposes: (I) payroll costs; (II) costs related to the continuation of group health
                  care benefits during periods of paid sick, medical, or family leave, and insurance premiums; (III) employee salaries, commissions, or similar compensations; (IV) payments of interest on any mortgage obligation (which shall not include any
                  prepayment of or payment of principal on a mortgage obligation); (V) rent (including rent under a lease agreement); (VI) utilities; and (VII) interest on any other debt obligations that were incurred before February 15, 2020.

              

      

      

      

      
        	
                19.

              	
                Lender must satisfy the following collateral conditions: None LENDER

              

      

      

      

    

    

    

    By:                                  Date: 4/20/2020   

      

    

    Shannon L Moniz Vice President

    Loan Operations Manager

    

    

    

    

    

    

  

  13Exhibit 4.5

 

THIS
DEED OF SETTLEMENT is made this 11th day of March 2019

 

		AMONG:	

 

		(1)	Splendid Days Limited, a company with limited liability incorporated under the laws of the
British Virgin Islands (“SDL”);

 

		(2)	The9 Limited, an exempted company with limited liability incorporated under the laws of
the Cayman Islands (the “Company”);

 

		(3)	China The9 Interactive Limited, a company incorporated under the laws of the Hong Kong SAR
( “HKCo 1”);

 

		(4)	GameNow.net (Hong Kong) Limited, a company incorporated under the laws of the Hong Kong
SAR ( “HKCo 2”);

 

		(5)	China The9 Interactive (Shanghai) Limited (九城互动信息技术(上海)有限公司),
a company incorporated under the laws of the PRC, with its registered address at Room 301, No. 3 Building, No. 690 Bibo Road, Pudong
New District, Shanghai, the PRC (“WFOE 1”);

 

		(6)	The9 Computer Technology Consulting (Shanghai) Co., Ltd. (第九城市计算机技术咨询(上海)有限公司),
a company incorporated under the laws of the PRC, with its registered address at Room 103, No. 3 Building, No. 690 Bibo Road, Pudong
New District, Shanghai, the PRC (“WFOE 2”); and

 

		(7)	Shanghai The9 Information Technology Co., Ltd. (上海第九城市信息技术有限公司),
a company incorporated under the laws of the PRC, with its registered address at Room 201, No. 3 Building, No. 690 Bibo Road, Pudong
New District, Shanghai, the PRC (“Operating Company”).

 

SDL, the Company, HKCo 1, HKCo 2, WFOE
1, WFOE 2, and the Operating Company are collectively referred to as the “Parties” and each of them as a “Party”.

 

		WHEREAS	

 

		A.	The Parties entered into a convertible note and warrant purchase agreement, dated as of November
24, 2015 (the “CB Agreement”), pursuant to which the Company sold to SDL certain convertible notes (the “Notes”)
in the aggregate principal amount of US$40,050,000 (the “CB Principal”);

 

		B.	SDL, HKCo 1, and WFOE 1 entered into the equity pledge agreement dated as of December 2, 2015 (the
 “Equity Pledge Agreement 1”), pursuant to which HKCo 1 pledged 100% of the equity interest of WFOE 1 to SDL
as security for the Notes;

 

		C.	SDL, HKCo 2, and WFOE 2 entered into the equity pledge agreement dated as of November 15, 2015
(the “Equity Pledge Agreement 2” collectively with Equity Pledge Agreement 1, the “Equity Pledge Agreements”),
pursuant to which HKCo 2 pledged 100% of the equity interest of WFOE 2 to SDL as security for the Notes;

 

		D.	SDL, Quality Event Limited (“QEL”), and Ark Pacific Investment Management Limited
entered into a participation agreement dated as of December 4, 2015 (the “Participation Agreement”), pursuant
to which SDL granted to QEL a participation interest in certain portion of the Notes;

 

    	1

     

    

 

		E.	China Merchant Bank Shanghai branch (the “Entrustment Bank”) and WFOE 2 entered
into an entrusted loan agreement dated as of December 11, 2015 (the “Onshore Loan Agreement”), pursuant to which
Shanghai Shengye Equity Investment Fund Limited (“Shengye”), through the Entrustment Bank, extended an entrusted
loan in the amount of RMB31,624,560 (approximately US$4.95 million) to WFOE 2 (the “Onshore Loan”);

 

		F.	The Entrustment Bank entered into mortgage agreements with each of WFOE 1, WFOE 2 and the Operating
Company, each dated as of December 11, 2015 (collectively, the “Mortgage Agreements”), pursuant to which WFOE
1, WFOE 2 and the Operating Company granted a first priority mortgage over certain properties located at No. 3 Building, No. 690
Bibo Road, Pudong New District, Shanghai, the PRC (the “Mortgaged Properties”) in favour of the Entrustment
Bank, as security for the Onshore Loan;

 

		G.	SDL and QEL entered into a control agreement dated as of December 11, 2015 (the “Control
Agreement”), pursuant to which QEL procured Shengye to (or instruct the Entrustment Bank to) not release, assign or otherwise
dispose of any portion or all of the Mortgaged Properties without the prior written agreement of SDL, unless such release, assignment
or other disposal is instructed by SDL;

 

		H.	The CB Principal and the accrued interest thereon under the Notes were due to be repaid to SDL
on December 11, 2018 (the “Maturity Date”), but the Company has failed to repay any such amounts to SDL as of
the date of this deed (the “Default”); and

 

		I.	The Parties are willing to assist the Company to restructure its assets and to use the proceeds
thereof to fulfil all or part of its payment obligations under the Relevant Documents in accordance with the terms and conditions
hereof.

 

NOW, THEREFORE, in consideration
of the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt of which is
hereby acknowledged, the Parties to this deed hereby agree as follows:

 

IT IS
AGREED:

 

		1.	Definitions and
Interpretation

 

		1.1	Definitions

 

Unless otherwise
defined in this deed, capitalized terms used herein shall have the meanings assigned to them in the CB Agreement.

 

	
        “CB
Agreement”
	has the meaning ascribed to it in the Recitals.
	 	 
	“CB Principal”	has the meaning ascribed to it in the Recitals.
	 	 
	“CB Principal Repayment Date”	has the meaning ascribed to it in Clause 2.3(a)(ii).
	 	 
	“Company”	has the meaning ascribed to it in the Preamble.
	 	 
	“Contribution”	has the meaning ascribed to it in Clause 2.1(k).
	 	 
	“Control Agreement”	has the meaning ascribed to it in the Recitals.

 

    	2

     

    

 

	“Default”	has the meaning ascribed to it in the Recitals.
	 	 
	“Deferred Repayment”	has the meaning ascribed to it in Clause 2.3(a)(iii).
	 	 
	“Distribution Waterfall”	has the meaning ascribed to it in Clause 2.3(a).
	 	 
	“Entrustment Bank”	has the meaning ascribed to it in the Recitals.
	 	 
	“Equity Pledge Agreements”	has the meaning ascribed to it in the Recitals.
	 	 
	“Equity Sale Agreements”	has the meaning ascribed to it in Clause 2.2(b).
	 	 
	“Existing Mortgage”	has the meaning ascribed to it in Clause 2.1(l).
	 	 
	“Group Company”	means each of the Company and its Subsidiaries.
	 	 
	“HKCo 1”	has the meaning ascribed to it in the Preamble.
	 	 
	“HKCo 2”	has the meaning ascribed to it in the Preamble.
	 	 
	“Liquidated Damage Amount”	has the meaning ascribed to it in Clause 5.1.
	 	 
	“Maturity Date”	has the meaning ascribed to it in the Recitals.
	 	 
	“Mortgage Agreements”	has the meaning ascribed to it in the Recitals.
	 	 
	“Mortgaged Properties”	has the meaning ascribed to it in the Recitals. 
	 	 
	“NewCo 1”	has the meaning ascribed to it in Clause 2.1(f).
	 	 
	“NewCo 2”	has the meaning ascribed to it in Clause 2.1(g).
	 	 
	“NewCo 3”	has the meaning ascribed to it in Clause 2.1(h).
	 	 
	“New Office”	has the meaning ascribed to it in Appendix 1.
	 	 
	“Notes”	has the meaning ascribed to it in the Recitals.
	 	 
	“Office Purchase”	has the meaning ascribed to it in Clause 2.3(a)(iii).
	 	 
	“Onshore Loan”	has the meaning ascribed to it in the Recitals.
	 	 
	“Onshore Loan Agreement”	has the meaning ascribed to it in the Recitals.
	 	 
	“Operating Company”	has the meaning ascribed to it in the Preamble.
	 	 
	“Outstanding Amount”	has the meaning ascribed to it in Clause 2.3(b).
	 	 
	“Participation Agreement”	has the meaning ascribed to it in the Recitals.
	 	 
	“PRC”	means the People’s Republic of China excluding, for the purposes of this deed, the Hong Kong Special Administrative Region, the Macau Special Administrative Region, and Taiwan.

 

    	3

     

    

 

	“QEL”	has the meaning ascribed to it in the Recitals.
	 	 
	“Relevant Documents” 	mean the CB Agreement, the Notes, the Equity Pledge Agreements, the Onshore Loan Agreement, and the Mortgage Agreements.
	 	 
	“Reorganization”	means the reorganization of the holding structure of the Mortgaged Properties pursuant to Clause 2.1.
	 	 
	“Replacement Mortgage”	has the meaning ascribed to it in Clause 2.1(l).
	 	 
	“RMB”	means Renminbi, the lawful currency of the PRC.
	 	 
	“Sale”	means the sale of the shares of WFOE 1, WFOE 2, and NewCo 3 pursuant to Clause 2.2.
	 	 
	“Sale Proceeds”	has the meaning ascribed to it in Clause 2.3(a).
	 	 
	“SDL”	has the meaning ascribed to it in the Preamble.
	 	 
	“Security Providers”	mean HKCo 1, HKCo 2, WFOE 1, WFOE 2, and the Operating Company.
	 	 
	“Shengye”	has the meaning ascribed to it in the Recitals.
	 	 
	“SPV”	has the meaning ascribed to it in Appendix 1.
	 	 
	“SPV Pledge”	has the meaning ascribed to it in Clause 2.3(c).
	 	 
	“Transaction”	has the meaning ascribed to it in Clause 2.5.
	 	 
	“WFOE 1”	has the meaning ascribed to it in the Preamble.
	 	 
	“WFOE 2”	has the meaning ascribed to it in the Preamble.

 

		1.2	Interpretation

 

The following rules of interpretation
shall apply to this deed:

 

		(a)	headings are used for convenience only and do not affect interpretation;

 

		(b)	words importing the singular include the plural and vice versa, words importing a gender include
every gender and references to persons include bodies corporate or unincorporated;

 

		(c)	where a word or phrase is defined, its other grammatical forms have a corresponding meaning;

 

		(d)	a reference to a Clause, Section or Appendix is to a clause, section or appendix, respectively,
of this deed;

 

		(e)	a reference to any Party to this deed or any other agreement or document includes that Party's
successors and permitted assigns;

 

		(f)	no provision of this deed will be construed adversely to a Party solely on the ground that the
Party was responsible for the preparation of this deed or that provision;

 

    	4

     

    

 

		(g)	where the consent or approval of a Party to this deed is required hereunder to any act, matter
or thing such requirement shall in the absence of any express stipulation to the contrary herein mean the prior written consent
or approval (as the case may be) in the absolute and unfettered discretion of such Party;

 

		(h)	references to writing shall include typewriting, printing, lithography, photography and other modes
of reproducing words in a legible and non-transitory form;

 

		(i)	references to any statute or statutory provision include, unless inconsistent with the context,
a reference to that statute or statutory provision as modified, re-enacted or consolidated and in force from time to time, whether
before or after the date of this deed and any subordinate legislation made pursuant to it whether before or after the date of this
deed provided that, as between the Parties, no such modification, re-enactment or consolidation after the date of this deed will
apply to the extent it substantively changes any provision which is relevant to this deed; and

 

		(j)	references to a person includes any individual, firm, company, corporation or other body corporate,
government, state or agency of a state or any unincorporated association, joint venture or partnership (whether or not having a
separate legal personality) and references to a person includes references to that person’s legal personal representatives
and permitted assigns and reference to Parties will be construed accordingly.

 

		2.	Settlement Consideration

 

As consideration for SDL’s
waiver and release as set out in Clause 3 below, the Company hereby agrees to undertake the following actions.

 

		2.1	Reorganization of the Holding Structure of the Mortgaged
Properties

 

As soon as practicable, the Company
and the Security Providers shall effect a reorganization of the holding structure of the Mortgaged Properties as follows, subject
to any alternation to the steps as may be requested in writing by SDL from time to time (the “Reorganization”):

 

		(a)	SDL will release the pledge over 100% of the equity interest of WFOE 1 pursuant to the terms of
the Equity Pledge Agreement 1;

 

		(b)	The Operating Company, WFOE 1 and certain Group Companies will enter into certain intercompany
payable assignment and assumption agreement(s) pursuant to which the Operating Company assumes the obligation of WFOE 1 to pay
such Group Companies the amounts due and payable owed by WFOE 1 to them in exchange for the share subscription pursuant to Clause
2.1(c);

 

		(c)	HKCo 1 and the Operating Company will enter into certain shareholder agreement of WFOE 1, pursuant
to which the Operating Company subscribes for new shares of WFOE 1 in exchange for its assumption of WFOE’s debt obligations
described in Clause 2.1(b);

 

		(d)	Simultaneously with the step set forth in Clause 2.1(c), WFOE 1 will amend its articles
of association and file a company change registration with State Administration for Industry & Commerce in the PRC, reflecting
the addition of the Operating Company as a shareholder and its shareholding;

 

    	5

     

    

 

 

		(e)	Simultaneously with the steps set forth in Clauses 2.1(c) and 2.1(d), HKCo 1, the
Operating Company and SDL will enter into an equity pledge agreement, pursuant to which each of HKCo 1 and the Operating Company
will pledge its respective equity interest in WFOE 1 in favor of SDL upon the completion of company change registration referred
to in Clause 2.1(d);

 

		(f)	HKCo 1 will form a wholly owned limited liability company in accordance with the PRC laws (“NewCo
1”);

 

		(g)	HKCo 2 will form a wholly owned limited liability company in accordance with the PRC laws (“NewCo
2”);

 

		(h)	The Operating Company will form a wholly owned limited liability company in accordance with the
PRC laws (“NewCo 3”);

 

		(i)	WFOE 1 will transfer all of its assets except for the real estate properties to NewCo 1;

 

		(j)	WFOE 2 will transfer all of its assets except for the real estate properties to NewCo 2;

 

		(k)	The Operating Company will contribute all of its real estate properties to NewCo 3 (the “Contribution”);

 

		(l)	Immediately prior to the Contribution, SDL will procure QEL to instruct the Entrustment Bank to
release the mortgage over the Mortgaged Properties listed in items nos. 47 to 50 on Appendix 2 hereto (the “Existing
Mortgage”), pursuant to the Control Agreement; provided that, the Operating Company and NewCo 3 will simultaneously execute
and deliver to SDL any and all agreements and other instruments necessary and desirable to substitute the Existing Mortgage with
a replacement mortgage granted by NewCo 3 over the said Mortgage Properties in favor of the Entrustment Bank to secure the obligations
of WFOE 2 under the Onshore Loan Agreement (the “Replacement Mortgage”), to be dated and take effect as of the
date of the Contribution. Without prejudice to the foregoing, upon SDL’s request, the NewCo 3 shall promptly (x) remove its
then legal representative from such office and appoint the person designated by SDL as the new legal representative, and (y) enter
into any custody arrangement with respect to the corporate chops or seals, bank mandates, books and records of NewCo 3 as requested
by SDL. Immediately upon the Contribution, the Parties agree to take any and all actions required to perfect the Replacement Mortgage.

 

		2.2	Sale of the Equity Interest of Onshore Entities

 

		(a)	Upon completion of the Reorganization, (a) HKCo 1 shall sell and transfer all its equity in WFOE
1, (b) HKCo 2 shall sell and transfer all its equity in WFOE 2; and (c) the Operating Company shall sell and transfer all its equity
in NewCo 3 to the third party buyer pursuant to Clause 2.2(b) (the “Sale”);

 

    	6

     

    

 

		(b)	The Company, HKCo 1, HKCo 2 and the Operating Company shall take the following actions to effect
the Sale on a confidential basis:

 

		i.	solicit interest from third parties to acquire all or a portion of the equity interest in WFOE
1, WFOE 2 and NewCo 3;

 

		ii.	in consultation with SDL, select a third party to enter into a term sheet for the Sale on or before
February 28, 2019, or a later date as agreed to by SDL in writing;

 

		iii.	negotiate, finalize and execute the definitive purchase agreements (“Equity Sale Agreements”)
with the third party buyer on or before April 30, 2019 or a later date as agreed to by SDL in writing; provided that, the economic
and other material terms of such agreements, including the consideration for the equity interest in WFOE 1, WFOE 2 and NewCo 3,
as applicable, the closing date and closing conditions for the transactions contemplated thereunder, shall be subject to the approval
by SDL in its absolute discretion prior to execution to the Equity Sale Agreements and any other agreements related to the Sale
and prior to the amendment or supplementation of the Equity Sale Agreements or any other agreements related to the Sale;

 

		iv.	consummate the transactions contemplated under the Equity Sale Agreements, including procuring
payment of the applicable consideration from the third party buyer to SDL in full by May 31, 2019; and

 

		v.	upon SDL’s request, promptly provide SDL with progress updates with respect to the actions
in Clauses (i) to (iv) above.

 

		(c)	The Company shall procure the third party buyer to pay the consideration for the equity interest
in WFOE 1, WFOE 2 and NewCo 3 directly to SDL in US Dollars by remitting such fund to a bank account outside of the PRC as designated
by SDL, unless SDL otherwise instructs the Company to direct the remittance of all or a portion of such fund to a designated party
appointed and approved by SDL in such currency as designated by SDL.

 

		2.3	Distribution of Sale Proceeds

 

		(a)	Upon receipt by SDL or any other designated entities of any sale proceeds from the Sale in Clause
2.2 above (the “Sale Proceeds”), any such proceeds shall be distributed in the following order of priority
(the “Distribution Waterfall”) in US Dollars, or in the sole discretion of SDL, in its equivalent amount in
RMB:

 

		i.	First, up to US$10,000,000 (or its equivalent amount in RMB) or another amount as approved by SDL
in writing to the Company as reserve for tax liability and fees in connection with the Reorganization, the Sale, and the distribution
of Sale Proceeds in accordance with the Distribution Waterfall; provided that, (x) the actual amount of the portion reserved for
tax liability shall be verified by Ernst & Young or another tax advisor approved by SDL, and approved by SDL, and (y) the actual
amount of the portion reserved for fees shall be approved by SDL;

 

    	7

     

    

 

		ii.	Second, to the extent there is any available cash remaining after the payment pursuant to sub-clause
(i) above, US$45,000,000 (or its equivalent amount in RMB) to SDL as repayment of the CB Principal (the date on which the Company
fully repays the CB Principal shall be referred to as the “CB Principal Repayment Date”);

 

		iii.	Third, to the extent there is any available cash remaining after the payment pursuant to sub-clause
(ii) above, up to US$6,000,000 (or its equivalent amount in RMB) to SDL to withhold on behalf of the Company (the “Deferred
Repayment”), which payment shall only be applied to purchase a new office for the Company in accordance with the terms
and conditions set forth in Appendix 1 (“Office Purchase”);and

 

		iv.	Fourth, to the extent there is any available cash remaining after the payment pursuant to sub-clause
(iii) above, the balance of the Sale Proceeds shall be distributed to SDL to repay the interest for the CB Principal pursuant to
the CB Agreement and the Notes.

 

		(b)	After the full distribution of Sale Proceeds pursuant to Clause 2.3(a)(i), if the balance of the
Sale Proceeds is insufficient to complete the distributions pursuant to Clauses 2.3(a)(ii), 2.3(a)(iii) and 2.3(a)(iv), the amount
of any such outstanding payment (“Outstanding Amount”) will remain payable and carry interest at a rate equal to fourteen
percent (14%) per annum, and shall be computed on the basis of a 360-day year and actual days elapsed.  Interest on any Outstanding
Amount will start to accrue on the CB Principal Repayment Date.

 

		(c)	Upon the completion of the Office Purchase pursuant to Clause 2.3(a)(iii) above, if the
balance of the Sale Proceeds is insufficient to repay the distribution, the Company shall pledge its equity in the SPV in favor
of SDL (the “SPV Pledge”).

 

		(d)	SDL shall have the right to enforce the SPV Pledge if the Outstanding Amount is not fully repaid
by the Company within six months after the CB Principal Repayment Date (upon mutual agreement in writing in advance, such six-month
period may be extended by a further six-month period).

 

		2.4	Clause 2 Amendment

 

SDL may at any time amend, modify,
supplement, alter, waive or extend this Clause 2 for the purpose of effecting the Transactions and with the ultimate goal
of ensuring that the outstanding amounts under the CB Agreement is repaid to SDL, and any such amendment, modification, supplementation,
alteration, waiver or extension will be binding on each other Party to this deed.

 

		2.5	Cooperation

 

At its own expense, each of the
Company and Security Providers shall, and shall cause each of the Group Companies and its officers, employees, agents, affiliates
and attorneys to and use their best efforts to procure any relevant third party to, fully and promptly cooperate with SDL, its
officers, employees, agents, affiliates and attorneys in connection with the Reorganization, the Sale, the Distribution of Sale
Proceeds and any other transactions contemplated hereunder (the “Transactions”). Such cooperation shall include
but not limited to undertaking any or all of the following upon the request of SDL:

 

    	8

     

    

 

		(a)	granting power of attorney to SDL or any of its designated persons to take necessary actions to
effect the Transactions;

 

		(b)	entering into necessary mortgage, charge, pledge, account control or other arrangement over any
of its assets and properties in relation with the Transactions as SDL may require from time to time; and

 

		(c)	executing and delivering such documents and performing such acts as SDL may require from time to
time for the purpose of giving full effect to the Transactions.

 

		3.	Waiver and Release;
Covenant not to sue

 

		3.1	Upon the fulfillment of the obligations set out in Clause 2 above to SDL’s satisfaction
in its sole discretion, and subject to this Clause 3, SDL agrees to waive the Default.

 

		3.2	Except as specifically provided herein, nothing contained in this deed is intended to, or shall,
modify, diminish or otherwise alter any right of SDL under the Relevant Documents. This deed shall not operate as a waiver of any
other term, condition or covenant of the Relevant Documents or any default thereunder, or the rights and remedies under the Relevant
Documents, nor shall this deed affect the ability of SDL to exercise any of its rights and remedies in the future or obligate the
Group Companies or the Security Providers to waive or modify any other term, condition or covenant of the Relevant Documents or
waive any default thereunder.

 

		3.3	The Company and the Security Providers acknowledge and agree that
the terms of the foregoing release are understood and voluntarily accepted by them without duress or coercion, economic or otherwise,
and that the Company and the Security Providers have obtained sufficient information to intelligently exercise their own judgment
regarding the terms of the foregoing release before executing this deed.

 

		4.	Representations
and Covenants by the company

 

		4.1	Except as set forth in Appendix 2 hereto, as of the date hereof, each of the Security Providers,
as applicable, holds good, valid, legal, indefeasible and marketable title to the Mortgaged Properties to effect Reorganization
and the Sale, and no third party has any right or interest whatsoever, whether legal or equitable, in the Mortgaged Properties.

 

		4.2	Except for the Mortgage Agreements or as set forth in Appendix 2 hereto, the Mortgaged Properties
are not affected by any encumbrances, variances, or limitations of any nature which any Group Company or Security Provider is aware
of or could have ascertained on reasonable inquiry.

 

    	9

     

    

 

		4.3	Unless otherwise approved by SDL, (a) at any time prior to the completion of the Sale, NewCo 3
will not conduct property development or any other business other than holding the Mortgaged Properties contributed by the Operating
Company; (b) at any time after the completion of the Reorganization but prior to the completion of the Sale, WFOE 1 and WFOE 2
will not hold any assets other than the Mortgaged Properties, and all other assets, business, labor, employment or other arrangements,
and any rights, obligations and liabilities associated thereto, will be retained by, relocated or assigned to NewCo 1 and NewCo
2, as applicable.

 

		4.4	Upon and after the completion of the Reorganization but prior to the completion of the Sale, (a)
NewCo 1 will be severally and jointly liable for WFOE 1’s obligations and liabilities, whether actual or contingent; (b)
NewCo 2 will be severally and jointly liable for WFOE 2’s obligations and liabilities, whether actual or contingent; and
(c) NewCo 3 will not be liable for any obligations and liabilities of the Operating Company, whether actual or contingent. NewCo
1 shall indemnify and hold harmless WFOE 1 against all liabilities, damages, costs and expenses arising from the Reorganization.
NewCo 2 shall indemnify and hold harmless WFOE 2 against all liabilities, damages, costs and expenses arising from the Reorganization.
The Operating Company shall indemnify and hold harmless NewCo 3 against all liabilities, damages, costs and expenses arising from
the Reorganization.

 

		4.5	Each of the Group Companies and Security Providers has the right, power and authority, and has
taken all action necessary, to execute, deliver and exercise its rights, and perform its obligations, under this deed and any other
documents and/or instruments necessary to effect the Transactions.

 

		4.6	None of the Group Companies and Security Providers shall release, assign or otherwise dispose of
any portion or all of the Mortgaged Properties or request that any other person take any such action, in each case without the
prior consent of the Entrustment Bank and SDL.

 

		4.7	None of the Group Companies and Security Providers has granted or will grant any option or right
of first refusal to any person to acquire the Mortgaged Properties.

 

		4.8	None of the Mortgaged Properties is subject to any Encumbrance, except for those listed in Appendix
2 hereto. There are no civil, criminal, arbitration, administrative or other proceeding concerning the Mortgaged Properties
and, none are pending or threatened. There is no outstanding notice, judgment, order decree, arbitral award or decision of a court,
tribunal, arbitrator or governmental agency affecting the Mortgaged Properties.

 

		4.9	Each of the Group Companies and Security Providers has disclosed in writing any and all facts and
circumstances that materially affect the Mortgaged Properties or the construction, use, operation, management, leasing, occupancy,
status, condition and legal compliance of the Mortgaged Properties or any portion thereof.

 

		4.10	None of the Group Companies and Security Providers is involved in or the subject of, either on
its own account or vicariously, any legal proceeding, arbitration or tribunal proceeding, prosecution or any governmental or regulatory
investigation is pending or threatened, by or against such Group Company or Security Provider, and there are no circumstances which
may lead to any such legal proceeding, arbitration or tribunal proceeding, prosecution or governmental or regulatory investigation,
which may materially affect the Sale as contemplated under this deed.

 

    	10

     

    

 

		4.11	There are no insolvency proceedings of any character whatsoever, including, without limitation,
any insolvency resolution application, bankruptcy, receivership, reorganization, compromise, or an arrangement with creditors,
voluntary or involuntary, affecting any Group Company or Security Provider which have been filed are pending or have been threatened
in writing, and none of the Group Companies and Security Providers has made any assignment for the benefit of creditors. With respect
to any Group Company or Security Provider and/or its assets, no liquidator, provisional liquidator, receiver or administrator has
been appointed and, no proceedings have been filed under which such a liquidator, provisional liquidator, receiver or an administrative
receiver might be appointed. None of the Group Companies and Security Providers (x) is insolvent or unable pay its financial debts
as they fall due (other than the Default); or (y) will become insolvent or unable to pay its financial debts as they fall due after
the Reorganization.

 

		5.	Liquidated Damages.

 

		5.1	Each of the Company and the Security Providers acknowledges that SDL shall suffer from material
damages if any of the representations, warranties, covenants or agreements set forth in Clauses 2 and 4 is breached
(each, a “Material Breach”), including without limitation the payment to SDL of the amounts set forth in Clauses
2.3(a)(ii) and 2.3(a)(iv), and that the resulting damages may not be susceptible of precise determination. Each of
the Company and the Security Providers agrees to be jointly and severally liable for any Material Breach and further acknowledges
that the aggregate amount of the CB Principal then outstanding and any and all unpaid accrued interest thereon pursuant to the
CB Agreement (the “Liquidated Damage Amount”) is a reasonable approximation of the damages for a Material Breach,
and such amount shall be deemed to be liquidated damages and not a penalty. For the avoidance of doubt, in no circumstances, shall
the aggregate amount paid by the Company and the Security Providers exceed the Liquidated Damage Amount.

 

		6.	Miscellaneous.

 

		6.1	This deed shall inure to the benefit of, and be binding upon the Parties and their heirs and permitted
successors and assigns.

 

		6.2	This deed shall not be assignable by any Party without the prior written consent of each of the
other Parties, except as provided hereunder.

 

		6.3	Nothing in this deed shall constitute or be deemed to constitute a partnership between the Parties
or constitute one the agent of another and none of the Parties shall do or suffer anything to be done whereby it shall or may be
represented that it is the partner or agent of a Party hereto (save as aforesaid) unless such Party is appointed partner or agent
of that other Party with the consent in writing of that Party.

 

    	11

     

    

 

		6.4	The liabilities of the Company and the Security Providers under this deed shall be joint and several.

 

		6.5	This deed does not create, and shall not be construed as creating, any rights enforceable by any
Person not a party to this deed.

 

		6.6	Each of the Parties shall bear the expenses incurred by that Party incident to this deed, including
without limitation all fees and disbursements of counsel and accountants retained by such Party.

 

		6.7	This deed contains the entire understanding of the Parties with respect to the subject matter herein
contained and may be amended, modified, supplemented or altered only by a writing duly executed by all of the Parties (except with
respect to any Transactions contemplated under Clause 2 which, for the avoidance of doubt, may be amended, modified, supplemented
or altered by SDL as it deems necessary in its sole and absolute discretion), and any other prior agreements or understandings,
whether oral or written, are entirely superseded hereby.

 

		6.8	No modification, waiver or extension of any of the provisions of this deed shall be effective unless
such modification, waiver or extension shall be in writing and signed by each of the Parties (except with respect to any Transactions
contemplated under Clause 2 which, for the avoidance of doubt, may be modified, waived or extended by SDL as it deems necessary
in its sole and absolute discretion).

 

		6.9	A waiver of any term, provision or condition of, or consent granted under, this deed will be effective
only if given in writing and signed by the waiving or consenting Party and then only in the instance and for the purpose for which
it is given.

 

		6.10	No failure or delay on the part of any Party in exercising any right, power or privilege under
this deed will operate as a waiver thereof, nor will any single or partial exercise of any such right, power or privilege preclude
any other further exercise thereof or the exercise of any other right, power or privilege.

 

		6.11	To the maximum extent permissible by law, the rights and remedies herein provided are exclusive
of any rights or remedies provided by law.

 

		6.12	The captions of the various clauses and sections of this deed have been inserted for the purpose
of convenience of reference only, and such captions are not a part of this deed and shall not be deemed in any manner to modify,
explain, enlarge or restrict any of the provisions of this deed.

 

		6.13	This deed may be executed in any number of counterparts, each of which when executed will be an
original but together will constitute one and the same agreement.

 

		6.14	If any provision or provisions of this deed, or any portion of any provision hereof, shall be deemed
invalid or unenforceable pursuant to a final determination of any court of competent jurisdiction or as a result of future legislative
action, such determination or action shall be construed so as not to affect the validity or enforceability hereof and shall not
affect the validity or effect of any other portion hereof, unless, as a result of such determination or action, the consideration
to be received or enjoyed by any Party hereto would be materially impaired or reduced.

 

    	12

     

    

 

		6.15	The Parties agree that they will execute and deliver, or cause to be executed and delivered, to
each other such further instruments, and take such other action as may be necessary to effect the intent of this deed.

 

		6.16	The formation, existence, construction, performance, validity and all aspects whatsoever of this
deed or of any term of this deed will be governed by the laws of the State of New York without regard to any choice of laws or
conflict of laws provisions that would require the application of the laws of any other jurisdiction.

 

		6.17	Any dispute, controversy, difference, proceedings or claim arising out of or in relating to this
deed, including the existence, validity, interpretation, performance, breach or termination thereof or any dispute regarding non-contractual
obligations arising out of or relating to it shall be referred to and finally resolved by arbitration administered by the Hong
Kong International Arbitration Center under the Hong Kong International Arbitration Center Administered Arbitration rules in force
when the notice of arbitration is submitted.

 

		6.18	The seat of arbitration shall be Hong Kong. The number of arbitrators shall be three. The arbitration
proceedings shall be conducted in English. The arbitration decision issued in accordance with this clause shall be final and binding
on the parties.

 

[Signature pages to follow]

 

    	13

     

    

 

Execution

 

IN WITNESS WHEREOF the Parties have executed
this deed on the date first above written.

 

 

	Executed as a deed	)	 
	by affixing the common seal of 	)	 
	Splendid Days Limited	)	 
	in the presence of:	)	/s/ Authorized Signatory
	 	)	Name: Authorized Signatory
	 	)	Title: Director
	 	
        )

        )
	 
	/s/ Xinyuan Zhang	 	 
	Signature of witness	 	Name: 
	Name of witness:  Xinyuan Zhang	 	Title: Director/ Secretary

 

[Signature page to the Deed of Settlement]

 

     

     

    

 

IN WITNESS WHEREOF the Parties have executed
this deed on the date first above written.

 

	Executed as a deed 	)	 
	by affixing the common seal of 	)	 
	The9 Limited	)	 
	in the presence of:	)	/s/ George Lai
	 	)	Name: George Lai
	 	)	Title: Director
	 	
        )

        )
	 
	/s/ Yiqin Sun	 	 
	Signature of witness	 	Name: 
	Name of witness: Yiqin Sun	 	
        Title: Director/ Secretary

        

 

[Signature page to the Deed of Settlement]

 

     

     

    

 

IN WITNESS WHEREOF the Parties have executed
this deed on the date first above written.

 

	Executed as a deed 	)	 
	by affixing the common seal of 	)	 
	China The9 Interactive Limited	)	 
	in the presence of:	)	/s/ Yong Wang
	 	)	Name: Yong Wang
	 	)	Title: Director
	 	
        )

        )
	 
	/s/ Yiqin Sun	 	 
	Signature of witness	 	Name: 
	Name of witness: Yiqin Sun	 	
        Title: Director/ Secretary

        

 

[Signature page to the Deed of Settlement]

 

     

     

    

 

IN WITNESS WHEREOF the Parties have executed
this deed on the date first above written.

 

	Executed as a deed 	)	 
	by affixing the common seal of 	)	 
	China The9 Interactive (Shanghai) Ltd.	)	 
	九城互动信息技术(上海)有限公司	)	/s/ Yong Wang
	in the presence of:	)	Name: Yong Wang
	 	)	Title: Director
	 	
        )

        )
	 
	/s/ Yiqin Sun	 	 
	Signature of witness	 	Name: 
	Name of witness: Yiqin Sun	 	Title: Director/ Secretary

 

[Signature page to the Deed of Settlement]

 

     

     

    

 

IN WITNESS WHEREOF the Parties have executed
this deed on the date first above written.

 

	Executed as a deed 	)	 
	by affixing the common seal of 	)	 
	GameNow.net (Hong Kong) Limited	)	 
	in the presence of:	)	/s/ Authorized Signatory
	 	)	Name: Authorized Signatory
	 	)	Title: Director
	 	
        )

        )
	 
	/s/ Xinyuan Zhang	 	 
	Signature of witness	 	Name: 
	Name of witness: Xinyuan Zhang	 	Title: Director/ Secretary

 

[Signature page to the Deed of Settlement]

 

     

     

    

 

IN WITNESS WHEREOF the Parties have executed
this deed on the date first above written.

 

	Executed as a deed 	)	 
	by affixing the common seal of 	)	 
	The9 Computer Technology Consulting	)	 
	(Shanghai) Co., Ltd.	)	/s/ Authorized Signatory
	第九城市计算机技术咨询(上海)有限公司	)	Name: Authorized Signatory
	in the presence of:	)	Title: Director
	 	
        )

        )
	 
	/s/ Yiqin Sun	 	 
	Signature of witness	 	Name: 
	Name of witness: Yiqin Sun	 	Title: Director/ Secretary

 

[Signature page to the Deed of Settlement]

 

     

     

    

 

IN WITNESS WHEREOF the Parties have executed
this deed on the date first above written.

 

	Executed as a deed	)	 
	by affixing the common seal of	)	 
	Shanghai The9 	)	 
	Information Technology Co., Ltd.	)	/s/ Authorized
    Signatory
	上海第九城市信息技术有限公司	)	Name: Authorized Signatory
	in the presence of:	)	Title: Director
	 	)

        )
	 
	/s/ Yiqin Sun	 	 
	Signature of witness	 	Name:
	Name of witness: Yiqin Sun	 	Title: Director/ Secretary

 

[Signature page to the Deed of Settlement]

 

     

     

    

 

Appendix 1

 

    	Appendix 1 - 1

     

    

 

Appendix 2

 

    	Appendix 2 - 1

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