GSE SYSTEMS INC (Form: 8-K, Received: 07/31/2015 16:58:28)

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): July 30, 2015

(Exact name of registrant as specified in its charter)

(State of incorporation)

(Commission File Number)

(I.R.S. Employer Identification Number)

1332 Londontown Blvd., Sykesville, MD 21784

(Address of principal executive offices and zip code)

Registrant's telephone number, including area code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation or the registrant under any of the following provisions (see General Instructions A.2 below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d - 2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e - 4 (c))

Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

Pursuant to the terms of a Separation Agreement and General Release between GSE Systems, Inc. ("GSE" or the "Corporation") and James A. Eberle, Chief Executive Officer, effective July 31, 2015, Mr. Eberle stepped downed as Chief Executive Officer and also resigned from the Board of Directors. The Corporation also entered into an Employment Agreement (the " Agreement ") with Kyle J. Loudermilk, who, effective August 3, 2015, will assume the role of Chief Executive Officer and President. Mr. Loudermilk was also appointed as a director to fill the unexpired portion of Mr. Eberle's term as a director, which ends at the Corporation's 2016 annual meeting of stockholders.

Mr. Loudermilk, age 48, joins GSE from MicroStrategy, Inc., a publicly-traded enterprise-analytics, mobile and security software company. He served as MicroStrategy's Vice President, Technology / Development Operations since 2013, and was Vice President Corporate Development from 2005 to 2009. From 2009 to 2012, he was Vice President Product Management at Datatel, Inc., a leading provider of software and services for higher-education institutions and technical schools. Datatel was a portfolio company of Hellman & Friedman LLC prior to Datatel's strategic combination with SunGard Higher Education, resulting in a successful transaction for investors. Mr. Loudermilk also held various senior management positions at Aspen Technology, Inc., a publicly traded, leading provider of enterprise-level software and services that enable energy and chemical companies to optimize their manufacturing operations performance. His positions at Aspen included Vice President Design and Simulation Business Unit, and Vice President Research and Development. Mr. Loudermilk began his career as a Process and Project Engineer for Mobil Oil Corporation. He earned BS and MS degrees in Chemical Engineering from Columbia University, and later attended Harvard University's General Management program.

GSE believes Mr. Loudermilk is qualified to serve on the board of directors because of his more than 25 years of experience in engineering, marketing, management, finance and operations and his extensive involvement in the building of highly successful technology enabled software businesses.

Loudermilk Employment Agreement

Mr. Loudermilk's employment agreement provides that he will serve as the Chief Executive Officer of the Corporation for a term ending on December 31, 2018. The term will automatically extend for an additional one year period on each December 31, starting December 31, 2017, unless either Mr. Loudermilk or the Corporation decides not to extend the term. The Corporation will pay Mr. Loudermilk a base salary of $350,000, and a bonus of $112,500, for 2015. $25,000 of the bonus will be paid to Mr. Loudermilk in August, 2015, and the remainder will be paid between January 1, 2016 and March 15, 2016, provided his employment doesn't terminate prior to the payment date for Cause or without Good Reason (each as defined below). Thereafter, Mr. Loudermilk is eligible for a bonus of up to 50% of his base salary, subject to achievement of annual performance goals. Mr. Loudermilk is entitled to participate in all employee benefits available to senior executives or employees of the company.

Mr. Loudermilk was also granted 850,000 performance-restricted stock units (" RSU's ") upon signing of the Agreement, the terms of which are described in a Restricted Share Unit Agreement (the " Grant "). The Grant provides that the RSUs are payable in shares of the Corporation's common stock, subject to vesting based on the volume weighted average price (" VWAP ") of the Corporation's common stock, calculated to two decimal places, using all trades completed on a trading day as reported by the NYSE MKT, as follows:

If 90 Consecutive Day VWAP Is

The Following Number of Shares will Vest

Any RSUs that have not vested on or before June 30, 2021 will expire. In addition, any unvested RSUs will terminate upon termination of Mr. Loudermilk's employment except as follows:

If employment is terminated other than due to death, disability, Cause or Good Reason within the following dates…

the indicated percentage of then unvested RSUs will vest as stated below:

On or before June 30, 2016

After June 30 2016, but before June 30, 2017

On or after June 30, 2017 but before June 30, 2018

If VWAP is greater than $2.50 for the ten trading day period ending immediately prior to the date of termination, 50%

If the Corporation undergoes a Change of Control (defined below) either (i) by reason of a change in the majority ownership of the Company's voting stock following which Mr. Loudermilk terminates his employment for Good Reason, or (ii) by reason of the approval by the Company's stockholders of a liquidation, or fundamental transaction, then, in lieu of the vesting described in the paragraph immediately above, Mr. Loudermilk's unvested RSU's will vest as follows:

If the Change of Control occurs within the following dates…

the indicated percentage of then unvested options will vest as stated below:

On or before June 30, 2018

On or after June 30, 2018

If VWAP is greater than $2.50 for the ten trading day period ending immediately prior to the date of termination, 50%

On or after June 30, 2018

If VWAP is less than or equal to$2.50 for the ten trading day period ending immediately prior to the date of termination, 0%

During each fiscal year of his employment, starting with fiscal year 2016, Mr. Loudermilk will have the potential to earn 75% of his salary in RSU's, non-qualified stock options or a combination thereof based upon established performance criteria.

Mr. Loudermilk's Agreement will terminate prior to the end of its term if certain events occur. If the Agreement terminates due to Mr. Loudermilk's death, disability or for "Cause", the Corporation will pay him through the date of termination. Termination for " Cause " includes: willful and continued failure by Mr. Loudermilk to perform his duties (other than as a result of disability) after 30 days' notice and opportunity to cure; his willful engaging in misconduct that materially adversely affects the Corporation's business or prospects; his felony conviction or plea of no contest to a crime of moral turpitude; abuse of alcohol or drugs affecting his performance; or material breach of the a material term of the Agreement.

If the Corporation terminates the Agreement for any reason other than death, disability or Cause, or if Mr. Loudermilk terminates the Agreement for "Good Reason", the Corporation will pay Mr. Loudermilk 12 months' salary, payable as and when salaries are generally paid to executive officers, and he will continue to be eligible to participate in all medical, dental, life insurance and 401(k) plan benefits for that 12 month period. He will also receive a prorated bonus to the extent he otherwise would have earned one had he remained employed through the end of the year of termination, payable within the first quarter of the following year. Mr. Loudermilk may terminate the Agreement for " Good Reason " if: his duties, responsibilities or authority are materially reduced without his consent; his base salary and bonus are reduced; his benefits are discontinued or materially reduced, in the aggregate; his primary office is moved more than fifty (50) miles from his current office; or material breach of the Agreement by the Corporation. In addition, he may treat the Corporation's election not to allow the term of the Agreement to automatically extend as "Good Reason" to terminate the Agreement.

Mr. Loudermilk's Agreement provides him with benefits in the event of a Change in Control that are different from those described above. Those benefits are triggered if he terminates his employment for Good Reason (defined above) within one year following the effective date of a Change of Control (defined below). Those benefits are payable in lieu of any other termination benefits and consist of the following: Mr. Loudermilk will receive his base salary and benefits for a period of twelve (12) months from the date of termination of his employment, payable as and when salaries are generally paid to executive officers of the Corporation, and he will also receive, on the date of termination, a lump sum equal to the average of the bonus amounts paid to him for the two years prior to the year in which the Change of Control takes place. A " Change of Control " occurs if either of the following events occur: (1) Any person not in control of the Corporation as of the date of the Agreement (other than an employee benefit plan of the Corporation, or a company owned directly or indirectly by the stockholders of the Corporation in substantially the same proportions as their ownership of voting securities of the Corporation) becomes the beneficial owner of a majority of the combined voting power of the Corporation; or (2) the stockholders of the Corporation approve: (x) a plan of complete liquidation of the Corporation; (y) an agreement for the sale or disposition of all or substantially all the Corporation's assets; or (z) a merger, consolidation, or reorganization of the Corporation with or involving any other corporation, other than a merger, consolidation, or reorganization that would result in the voting securities of the Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least a majority of the combined voting power of the voting securities of the Corporation (or such surviving entity) outstanding immediately after such merger, consolidation, or reorganization.

Mr. Loudermilk agreed during the term of his agreement, and for a one year period following termination of the Agreement, not to compete with Corporation or solicit employees or customers of the Corporation.

Eberle Separation Agreement

Mr. Eberle's Separation Agreement provides for a separation payment equal to twelve (12) months' salary, to be paid at such intervals as salaries are generally paid to executive officers of the Corporation. During that same period, the Corporation will allow Mr. Eberle to continue to participate in the Corporation's 401(K) plan. Mr. Eberle will also receive a one-time lump sum payment of $25,000. In exchange for the severance compensation, Mr. Eberle granted the Corporation a standard, broad release of claims against the Corporation. In addition, the non-solicitation, non-disparagement and confidentiality covenants in Mr. Eberle's employment agreement will continue following his separation for the duration stated in the employment agreement.

In connection with the hiring of Mr. Loudermilk, the Corporation engaged Caldwell Partners, a leading international executive search firm. In recognition of the efforts of Mr. Christopher J. Sorrells in connection with all aspects of the search and hiring process, the Board of Directors granted Mr. Sorrells options to purchase 10,000 shares of the Corporation's common stock and approved the issuance to Mr. Sorrells of 10,000 shares of the Corporation's common stock. The options are exercisable until July 28, 2022 at a price equal to the closing price of the Corporation's common stock on the NYSE MKT on Monday, August 3, 2015, and will vest as follows: 40% on July 28, 2016, 70% on July 28, 2017 and 100% on July 28, 2018.

Item 9.01

Financial Statements and Exhibits

10.1

Employment Agreement of Kyle Loudermilk, dated as of July 1, 2015

10.2

Restricted Share Unit Agreement, dated as of July 1, 2015

10.3

Severance Agreement of James A. Eberle, dated July 29, 2015

99.1

Press Release, dated July 30, 2015

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

By:/s/ Lawrence M. Gordon

Senior Vice President and General Counsel

Exhibit No. Description

10.1

Employment Agreement of Kyle Loudermilk, dated as of July 1, 2015

10.2

RSU Agreement Unit Agreement, dated as of July 1, 2015

10.3

Severance Agreement of James A. Eberle, dated as of July 29, 2015

99.1	Press Release, dated July 30, 2015

Exhibit 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement, dated as of July 1, 2015, by and between GSE Systems, Inc., a Delaware corporation with principal executive offices at 1332 Londontown Blvd., Sykesville, MD 21784 (the " Company "), and Kyle Loudermilk, residing at 3525 Woodbine Street Chevy Chase, MD 20815 (" Executive "). The date on which the Executive commences work under the terms of this Employment Agreement shall not be later than 30 days after the date hereof and shall be referred to as the effective date (the " Effective Date ").

BACKGROUND

The Company and the Executive desire that the Executive be employed by the Company and have entered into this Employment Agreement to set forth the terms and conditions on which the Executive shall be employed by the Company.

NOW, THEREFORE, in consideration of the premises, the mutual promises, covenants, and conditions herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto intending to be legally bound hereby agree as follows:

1. Employmen t. The Company hereby agrees to employ Executive, and Executive hereby agrees to be employed by the Company, upon the terms and subject to the conditions set forth in this Agreement.

2. Capacity and Duties . Executive shall be employed in the capacity of President and Chief Executive Officer of the Company and shall have the duties, responsibilities and authorities normally undertaken by the President and Chief Executive Officer of a company as well as such other duties, responsibilities, and authorities as are assigned to him by the Board of Directors of the Company (the " Board "), including, but not limited to, those duties set forth on Exhibit A to this Employment Agreement, so long as such additional duties, responsibilities and authorities are consistent with Executive's position as President and Chief Executive Officer of the Company. The Executive shall devote substantially all of his business time and attention to the performance of his duties hereunder and will not engage in any other business, profession or occupation for compensation or otherwise without the prior written consent of the Board. Executive will spend substantially all of his working time for the Company, when not traveling on Company business, at the Company's headquarters. The Executive will be permitted to act or serve as a director, trustee, or committee member of any type of civic or charitable organization as long as such activities do not materially interfere with the performance of the Executive's duties and responsibilities to the Company as provided hereunder. Within 10 days of the date of Executive's execution of this Agreement, the Board will appoint the Executive as a director, to serve for a term ending at the next annual meeting of the stockholders of Company and until his successor is elected and qualifies. So long as Executive remains the Chief Executive Officer of the Company, the Board will continue to nominate and recommend him to the stockholders for election as a director. However, Executive shall have no right to serve as a director unless he shall be so elected by the stockholders of the Company. No failure of the stockholders of the Company to elect the Executive to the Board shall be deemed a breach of this agreement, or entitle Executive to terminate this Agreement for Good Reason (as defined below). Upon termination of Executive's employment as Chief Executive Officer, Executive shall immediately resign his position as a member of the Board of Directors of the Company.

3. Term of Employment . The term of this Agreement shall commence on the Effective Date and continue through December 31, 2018 (the " Initial Term "). The Initial Term shall be automatically extended for an additional one year period on December 31 of each year, beginning December 31, 2017, unless either party provides written notice to the other of its intention not to extend at least 60 days' prior to such date (as so extended, the " Term ").

4. Compensation . During the Term, subject to all the terms and conditions of this Agreement, and as compensation for all services to be rendered by Executive under this Agreement, the Company shall pay to or provide Executive with the following:

a. Base Salary . The Company shall pay to Executive an annual base salary (the " Base Salary ") of Three Hundred Fifty Thousand Dollars ($350,000). The Executive's Base Salary shall be reviewed at least annually with the Compensation Committee of the Board of Directors of the Company (the " Compensation Committee "), and the Compensation Committee may, but shall not be required to, increase (but not decrease) the Base Salary during the Term based upon changes in cost of living, the Executive's performance and other factors deemed relevant by the Compensation Committee. The Base Salary will be payable at such intervals as salaries are paid generally to other executive officers of the Company.

b. Bonus .

For the year ending December 31, 2015, if the Effective Date is on or prior to July 15, 2015, the Executive will receive a cash bonus of $112,500, payable as follows: $25,000 will be paid in the first regular pay period after the Executive commences work, and the remaining $87,500 will be paid between January 1, 2016 and March 15, 2016, in each case provided that the Executive's employment has not been terminated prior to the payment date (i) by the Company for Cause (defined below), or (ii) by the Employee for any reason other than Good Reason (defined below). If the Effective Date is after July 15, 2015, the cash bonus for 2015 shall be prorated.

ii.

For each fiscal year of the Term, beginning with fiscal year 2016, the Executive shall be eligible to earn an annual bonus award (the " Bonus ") of up to 50% of Base Salary, based upon the achievement of annual performance goals established with the Compensation Committee in consultation with the Executive and approved by the Board of Directors prior to the beginning of each fiscal year. The amount of Bonus to be paid to Executive for any year of this Agreement may, at the sole discretion of the Board of Directors of the Company, be (i) prorated for the number of months which Executive was employed by the Company during such year and (ii) paid on or prior to March 15 of the following year.

c. Restricted Stock Units .

Upon execution of this Agreement, the Executive will be granted 850,000 performance-restricted stock units (" RSUs "), subject to vesting and all other terms and conditions set forth in the Company's 1995 Long Term Incentive Plan and in a written grant agreement issued to Executive in connection with the grant of such RSUs.

ii.

For each fiscal year during the Initial Term, commencing with fiscal year 2016, the Executive will have the potential to earn 75% of his Base Salary in RSUs, non-qualified stock options or a combination thereof, based upon metrics, such as performance against budget, profitability and stock price performance, as determined by Compensation Committee in consultation with the Executive and approved by the Board of Directors prior to the beginning of each fiscal year. All such grants shall be made via a written grant agreement.

d. Benefits . Executive shall be entitled to participate in all employee benefit plans maintained by the Company for its senior executives or employees including, without limitation, the Company's medical, 401(k) and life insurance plans and the following benefits:

i.	Vacation . Executive shall be entitled to vacation in accordance with the Company's policy for its senior executives.

ii.	Automobile . The Company shall pay the maintenance, gas, and insurance expenses in connection with Executive's automobile in accordance with the written policy and guidelines established by the Company for executive officers.

iii.	Medical and Dental Insurance . The Company shall pay Executive's monthly Medical and Dental Insurance premiums in association with Company provided health insurance plans.

5. Business Expenses . The Company shall reimburse Executive for all reasonable expenses (including, but not limited to, continuing education, business travel, and customer entertainment expenses) incurred by him in connection with his employment hereunder in accordance with the written policy and guidelines established by the Company for executive officers.

6. Non-Competition, Non-Solicitation, Non-Disparagement .

a. Acknowledgement s. The Executive acknowledges and agrees that the services to be rendered by the Executive to the Company are of a special and unique character; that the Executive will obtain knowledge and skill relevant to the Company's industry, methods of doing business and marketing and investment strategies by virtue of the Executive's employment; and that the restrictive covenants and other terms and conditions of this Agreement are reasonable and reasonably necessary to protect the legitimate business interest of the Company. The Executive further acknowledges that: the amount of the Executive's compensation reflects, in part, the Executive's obligations and the Company's rights under this Agreement; that the Executive has no expectation of any additional compensation, royalties or other payment of any kind not otherwise referenced herein in connection herewith; and that the Executive will not be subject to undue hardship by reason of his full compliance with the terms and conditions of this Agreement or the Company's enforcement thereof.

b. Non-Competition. Because of the Company's legitimate business interest as described herein and the good and valuable consideration offered to the Executive, during the Term and for the 12-month period beginning on the last day of the Executive's employment with the Company, the Executive agrees and covenants not to engage in Prohibited Activity within the United States. For purposes of this Section 6, " Prohibited Activity " means any activity to which the Executive contributes his knowledge, directly or indirectly, in whole or in part, as an employee, employer, owner, operator, manager, advisor, consultant, agent, employee, partner, director, stockholder, officer, volunteer, intern or any other similar capacity to an entity engaged in the same or similar business as the Company anywhere in the world. Nothing herein shall prohibit the Executive from purchasing or owning less than five percent (5%) of the publicly traded securities of any corporation, provided that such ownership represents a passive investment and that the Executive is not a controlling person of, or a member of a group that controls, such corporation.

c. Non-solicitation of Employees . The Executive agrees and covenants not to directly or indirectly solicit, hire, recruit, attempt to hire or recruit, or induce the termination of employment of any employee of the Company during the Term and the 12-month period beginning on the last day of the Executive's employment with the Company.

d. Non-solicitation of Customers . The Executive understands and acknowledges that because of the Executive's experience with and relationship to the Company, he will have access to and learn about much or all of the Company's customer information. " Customer Information " includes, but is not limited to, names, phone numbers, addresses, e-mail addresses, order history, order preferences, chain of command, pricing information and other information identifying facts and circumstances specific to the customer. The Executive understands and acknowledges that loss of this customer relationship and/or goodwill will cause significant and irreparable harm to the Company. The Executive agrees and covenants, during the Term and for the 12-month period following the effective date of termination of this Agreement for any reason, not to directly or indirectly solicit, contact (including but not limited to e-mail, regular mail, express mail, telephone, fax, and instant message), attempt to contact or meet with the Company's current customers for purposes of offering or accepting goods or services similar to or competitive with those offered by the Company or for purposes of inducing any such customer to terminate its relationship with the Company.

e. Confidential Information . All Confidential Information which Executive may now possess, may obtain during the Term, or may create prior to the end of the Term relating to the business of the Company or of any of its customers or suppliers shall not be published, disclosed, or made accessible by him to any other person, firm, or corporation either during or after the termination of his employment or used by him except during the Term in the business and for the benefit of the Company, in each case without prior written permission of the Company. Executive shall return all tangible evidence of any Confidential Information to the Company prior to or at the termination of his employment. For purposes of this Agreement, " Confidential Information " means any and all information related to the Company or any of its subsidiaries that is not generally known by others with whom they compete or do business.

f. Enforcement . Executive acknowledges and agrees that the covenants contained herein are fair and reasonable in light of the consideration paid hereunder, and that damages alone shall not be an adequate remedy for any breach by Executive of his covenants which then apply and accordingly expressly agrees that, in addition to any other remedies which the Company may have, the Company shall be entitled to injunctive relief in any court of competent jurisdiction for any breach or threatened breach of any such covenants by Executive. Nothing contained herein shall prevent or delay the Company from seeking, in any court of competent jurisdiction, specific performance or other equitable remedies in the event of any breach or intended breach by Executive of any of his obligations hereunder.

g. Tolling . The period of time applicable to any covenant in this Section 6 will be extended by the duration of any violation by Executive of such covenant.

h. Reformation . If any covenant in this Section 6 is held to be unreasonable, arbitrary, or against public policy, such covenant will be considered to be divisible with respect to scope, time, and geographic area, and such lesser scope, time, or geographic area, or all of them, as a court of competent jurisdiction may determine to be reasonable, not arbitrary, and not against public policy, will be effective, binding, and enforceable against Executive.

7. Patents . Any interest in patents, patent applications, inventions, copyrights, developments, know-how and processes (" Inventions ") which Executive now or hereafter during the period he is employed by the Company under this Agreement may own or develop relating to the fields in which the Company or any of its subsidiaries may then be engaged shall belong to the Company; and forthwith upon request of the Company, Executive shall execute all such assignments and other documents and take all such other action as the Company may reasonably request in order to vest in the Company all his right, title, and interest in and to all Inventions, free and clear of all liens, charges, and encumbrances.

8. Termination . Executive's employment hereunder may be terminated prior to the expiration of the Term under the following circumstances:

a. Death . Executive's employment hereunder shall terminate upon his death.

b. Disability . If, as a result of Executive's incapacity due to physical or mental illness, Executive shall have been unable to perform his duties hereunder on a full-time basis for a period of three (3) consecutive months, or for 180 days in any 12 month period (a " Disability "), the Company may, on 30 days written Notice of Termination (defined in Section 8(e)), terminate Executive's employment if Executive fails to return to the performance of his duties hereunder on a full-time basis within said period.

c. Cause . The Company may terminate Executive's employment hereunder for Cause. For purposes of this Agreement, the Company shall have " Cause " to terminate Executive's employment upon the occurrence of any of the following:

the willful and continued failure by Executive to substantially perform his material duties or obligations hereunder (other than any such failure resulting from Executive's incapacity due to physical or mental illness), after written demand for substantial performance is delivered by the Company that specifically identifies the manner in which the Company believes Executive has not substantially performed his duties or obligations, and provides the Executive with at least 30 days to effect a cure;

ii.	the willful engaging by Executive in misconduct which, in the reasonable opinion of the Board, will have a material adverse effect on the reputation, operations, prospects or business relations of the Company;

iii.	the conviction of Executive of any felony or the entry by Executive of any plea of nolo contendere in response to an indictment for a crime involving moral turpitude;

iv.	Executive abuses alcohol, illegal drugs or other controlled substances which impact Executive's performance of his duties;

v.	the material breach by Executive of a material term or condition of this Agreement.

For purposes of this Section 8(c), no act, or failure to act, on Executive's part shall be considered "willful" if it was done, or omitted to be done, by him in good faith and with the reasonable belief that his action or omission was in the best interest of the Company. Notwithstanding the foregoing, Executive's employment shall not be deemed to have been terminated for Cause without the following: (i) reasonable notice to Executive setting forth the reasons for the Company's intention to terminate his employment for Cause, (ii) an opportunity for Executive, together with his counsel, to be heard before the Board, and (iii) delivery to Executive of a Notice of Termination in accordance with Section 8(e).

d. Termination Without Cause . The Executive's employment hereunder may be terminated without cause by either the Company or the Executive at any time upon at least 30 days' prior written notice. The giving by the Company of notice of its intent not to extend the Term pursuant to Section 3 shall be deemed, at the option of the Executive, to be a termination of his employment without cause (" Deemed Termination "). Executive may exercise that option by giving written notice thereof to the Company within 30 days of his receipt of the notice of non-renewal.

e. Notice of Termination . Any termination of Executive's employment (other than termination pursuant to Section 8(a)) shall be communicated by a Notice of Termination given by the terminating party to the other party hereto. For purposes of this Agreement, a " Notice of Termination " shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive's employment under the provision so indicated.

f. Date of Termination . " Date of Termination " shall mean (i) if Executive's employment is terminated by his death, the date of his death, (ii) if Executive's employment is terminated pursuant to Section 8(b), 30 days after Notice of Termination is given (provided that Executive shall not have returned to the performance of his duties on a full-time basis during such 30-day period), (iii) if a Deemed Termination occurs, upon the date of Executive's notice to the Company of exercise of his option to treat such event as a termination without Cause, and (iv) if Executive's employment is terminated for any other reason, the date specified in the Notice of Termination, which shall not be earlier than the date on which the Notice of Termination is given.

9. Compensation upon Termination or During Disability .

a. Disability . During any period that Executive fails to perform his duties hereunder as a result of incapacity due to physical or mental illness (" disability period "), Executive shall continue to receive his full salary at the rate then in effect for such period until his employment is terminated pursuant to Section 8(b), provided that payments so made to Executive during the disability period shall be reduced by the sum of the amounts, if any, payable to Executive at or prior to the time of any such payment under disability benefit plans of the Company and which were not previously applied to reduce any such payment, and the Company shall have no further obligation to the Executive.

b. For Cause . If Executive's employment is terminated for Cause, the Company shall pay Executive his full salary through the Date of Termination at the rate in effect at the time Notice of Termination is given, and the Company shall have no further obligation to the Executive.

c. Any other Reason . If Executive's employment shall be terminated by the Company for a reason other than Death, Disability or Cause, or if Executive terminates his employment for Good Reason (defined below), upon Executive's execution of a release of claims in favor of the Company, its affiliates and their respective officers and directors in a form provided by the Company (the " Release ") and such Release becoming effective within 21 days following the Termination Date:

i.	the Company will continue to pay the Executive his Base Salary for a period of 12 months, payable at such intervals as salaries are paid generally to other executive officers of the Company;

ii.

the Executive shall continue to be eligible to participate in all medical, dental, life insurance benefits and 401(k) plan benefits, including company match (collectively, " Benefits "), on the same terms and at the same level of participation and company contribution to the cost thereof, as in effect at the time of termination of employment for a period of 12 months following termination to the extent Executive remains eligible under the applicable employee benefit plans and to the extent Executive's eligibility is not contrary to, or does not negate, the tax favored status of the plans or of the benefits payable under the plan. If Executive is unable to continue to participate in any employee benefit plan or program provided for under this Agreement, Executive shall be compensated in respect of such inability to participate through payment by GSE to Executive, in advance, of an amount equal to the annual cost that would have been incurred by GSE if the Executive were able to participate in such plan or program.

iii.

Executive shall receive a prorated Bonus equal to the product of (I) the Bonus, if any, that the Executive would have earned for the calendar year in which the Date of Termination occurred had he been employed as of the last day of such year, based on the Company's actual results of operations for such year and (II) a fraction, the numerator of which is the number of days the Executive was employed by the Company during the year of termination and the denominator of which is the number of days in such year. The prorated Bonus shall be paid on the date that annual bonuses are paid to similarly situated employees, but in no event later than the date which not later than two and one-half (2 ½) months following the end of the calendar year in which the Date of Termination occurs.

d. " Good Reason " shall mean the occurrence of any of the following: (a) Executive's duties, responsibilities or authority are materially reduced as compared to those of Executive's current position without his consent; (b) Executive's Base Salary (as the same may be increased at any time hereafter) or Bonus are reduced; (c) Executive's Benefits are either discontinued or materially reduced, in the aggregate; (d) Executive's primary office or location is moved more than fifty (50) miles from Executive's current office or location; or (e) either the Company or any successor company materially breaches this Agreement.

10. Change of Control .

a. If Executive terminates his employment for Good Reason within one year following the effective date of a Change of Control, Executive shall, in lieu of any benefits provided for in Section 9, continue to receive the Base Salary and Benefits that Executive is receiving as of the effective date of the Change of Control for a period of twelve (12) months from the date of termination of his employment. Such Base Salary and Benefits shall be paid at such intervals as salaries are paid generally to other executive officers of the Company.

b. In addition, the Executive shall also be entitled to receive, on the Date of Termination, an amount, payable in one lump sum, equal to the average of the Bonus amounts paid to Executive for the two years prior to the year in which the Change of Control takes place.

c. In the event of Executive's decision to terminate employment for Good Reason, Executive must give notice to Company of the existence of the conditions giving rising to the termination for Good Reason within ninety (90) days of the initial existence of the conditions. Upon such notice, Company shall have a period of thirty (30) days during which it may remedy the conditions (" Cure Period "). If the Company fails to cure the conditions constituting the Good Reason during the Cure Period to Executive's reasonable satisfaction, Executive's termination of employment must occur within a period of ninety (90) days following the expiration of the Cure Period in order for the termination to constitute a termination pursuant to Good Reason for purposes of this Agreement.

d. For purposes of this Agreement, a " Change in Control " of the Company shall be deemed to have occurred as of the first day that any one or more of the following conditions shall have been satisfied:

Any Person (other than a Person in control of the Company as of the date of this Agreement, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or a company owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of voting securities of the Company) becomes the beneficial owner, directly or indirectly, of securities of the Company representing a majority of the combined voting power of the Company's then outstanding securities; or

ii.

The stockholders of the Company approve: (x) a plan of complete liquidation of the Company (which includes a termination and liquidation of all Executive's rights under any arrangement governed by Section 409A of the Internal Revenue Code of 1986, as amended (" Code "); or (y) an agreement for the sale or disposition of all or substantially all the Company's assets; or (z) a merger, consolidation, or reorganization of the Company with or involving any other corporation, other than a merger, consolidation, or reorganization that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least a majority of the combined voting power of the voting securities of the Company (or such surviving entity) outstanding immediately after such merger, consolidation, or reorganization.

iii.

For purposes of this definition of Change in Control, " Person " shall have the meaning ascribed to such term in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the " 1934 Act "), and used in Section 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d) thereof, and " Beneficial Owner " shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and regulations under the 1934 Act.

11. Successors; Binding Agreement . This Agreement is personal to the Executive and shall not be assigned by the Executive. Any purported assignment by the Executive shall be null and void from the initial date of the purported assignment. The Company may assign this Agreement to any successor or assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company, including the restrictive covenants provided for in Section 6, which Executive agrees shall be enforceable by any such successor or assign. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance reasonably satisfactory to Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. This Agreement shall inure to the benefit of the Company and permitted successors and assigns.

12. No Third Party Beneficiaries . This Agreement does not create, and shall not be construed as creating, any rights enforceable by any person not a party to this Agreement.

13. Fees and Expenses .

a. The Company shall reimburse the Executive for up to $5,000 for fees associated with his retaining professional counsel in connection with the review and preparation of this Agreement, and up to $1,000 for fees associated with his retaining professional tax counsel regarding tax matters related to the Agreement. Except as provided in the foregoing sentence, each party shall bear the cost incurred by him or it in connection with the preparation, review, negotiation and execution of this Agreement.

b. The Company shall pay all reasonable legal fees and related expenses (including the costs of experts, evidence, and reasonable attorney's fees) incurred by Executive as a result of a contest or dispute relating to this Agreement if such contest or dispute is settled or adjudicated on terms that are substantially in favor of Executive. In addition, the Company shall pay Executive interest, at the prevailing prime rate, on any amounts that are determined to be payable to Executive hereunder that are not paid when due.

14. Representations and Warranties of Executive . Executive represents and warrants to the Company that (a) Executive is under no contractual or other restriction or obligation which is inconsistent with the execution of this Agreement, the performance of his duties hereunder, or the other rights of the Company hereunder and (b) Executive is under no physical or mental disability that would hinder his performance of duties under this Agreement.

15. Life Insurance . If requested by the Company, Executive shall submit to such physical examinations and otherwise take such actions and execute and deliver such documents as may be reasonably necessary to enable the Company, at its expense and for its own benefit, to obtain life insurance on the life of Executive. Executive has no reason to believe that his life is not insurable with a reputable insurance company at rates now prevailing in the City of Baltimore for healthy men of his age.

16. Modification . This Agreement sets forth the entire understanding of the parties with respect to the subject matter hereof, supersedes all existing agreements between them concerning such subject matter, and may be modified only by a written instrument duly executed by each party.

17. Notices . Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be mailed by certified mail, return receipt requested, or delivered against receipt to the party to whom it is to be given at the address of such party set forth in the preamble to this Agreement (or to such other address as the party shall have furnished in writing in accordance with the provisions of this Section).

18. Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland, without giving effect to conflict of laws. Any action or proceeding by either of the parties to enforce this Agreement shall be brought only in a state or federal court located in the state of Maryland. The parties hereby irrevocably submit to the exclusive jurisdiction of such courts and waive the defense of inconvenient forum to the maintenance of any such action or proceeding in such venue.

19. 409A . This Agreement is intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the " Code "), and any exemption from Section 409A of the Code, and shall in all respects be administered in accordance with and interpreted to ensure compliance with Section 409A of the Code. Executive's termination of employment under this Agreement shall be interpreted in a manner consistent with the separation from service rules under Section 409A of the Code. For purposes of Section 409A of the Code, each payment made under this Agreement shall be treated as a separate payment and the right to a series of payments under this Agreement shall be treat as a right to a series of separate payments. In no event shall Executive, directly or indirectly, designate the calendar year of the payment. Furthermore, if, at the time of termination of employment with the Company, Company has stock which is publicly traded on an established securities market and Executive is a "specified employee" (as defined in Section 409A of the Code) and it is necessary to postpone the commencement of any payments or benefits otherwise payable pursuant to this Agreement as a result of such termination of employment to prevent any accelerated or additional tax under Section 409A of the Code, then Company shall postpone the commencement of the payment of such payment or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to Executive) that are not otherwise paid within the short-deferral exception under Section 409A of the Code and are in excess of the lessor of two (2) times (i) Executive's then annual compensation or (ii) the limit on compensation then set forth in Section 401(a)(17) of the Code, until the first payroll date that occurs after the date that is six months following Executive's separation from service with the Company (within the meaning of Section 409A of the Code). The accumulated postponed amount shall be paid in a lump sum payment within ten days after the end of the six month period. Notwithstanding any provision of this Agreement to the contrary, in no event shall the timing of the Executive's execution of the Release, directly or indirectly, result in the Executive designating the calendar year of payment, and if a payment that is subject to execution of the release could be made in more than one taxable year, payment shall be made in the later taxable year.

20. Survival . Upon the expiration or other termination of this Agreement, the respective rights and obligations of the parties hereto shall survive such expiration or other termination to the extent necessary to carry out the intentions of the parties under this Agreement.

21. Acknowledgment of Full Understanding . THE EXECUTIVE ACKNOWLEDGES AND AGREES THAT HE HAS FULLY READ, UNDERSTANDS AND VOLUNTARILY ENTERS INTO THIS AGREEMENT. THE EXECUTIVE ACKNOWLEDGES AND AGREES THAT HE HAS HAD AN OPPORTUNITY TO ASK QUESTIONS AND CONSULT WITH AN ATTORNEY OF HIS CHOICE BEFORE SIGNING THIS AGREEMENT.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.

	GSE SYSTEMS, INC.
By:	/s/ Lawrence Gordon
	Lawrence Gordon

	/s/ Kyle Loudermilk
	Kyle Loudermilk, Executive

Exhibit A – Duties of the Chief Executive Officer

·	On or before October 15, 2015, the Chief Executive Officer will provide the Board of Directors with an initial assessment of the state of the Company and the senior management team.

·	Oversee all other executives and staff within the Company.

·	Collaborate with the Board of Directors to develop the policies for the direction of the Company.

·	Develop and implement strategic vision for the Company, including an acquisition strategy.

·	Interact with and maintain credibility with the Company's stockholders – both current and prospective.

·	Ensure members of the Board of Directors have the information necessary to perform their fiduciary duties and other governance responsibilities.

Restricted Share Unit Agreement

This Restricted Share Unit Agreement (this " Agreement ") is made and entered into as of July 1, 2015 (the " Grant Date ") by and between GSE Systems, Inc., a Delaware corporation, (the " Company ") and Kyle Loudermilk (the " Grantee ").

WHEREAS , the Company has adopted the GSE Systems, Inc. 1995 Long-Term Incentive Plan, as amended and restated effective March 6, 2014 (the " Plan "), pursuant to which Restricted Share Units may be granted;

WHEREAS , as of the date hereof, the Company and the Grantee have entered into an employment agreement (the "Employment Agreement") pursuant to which Grantee shall be employed as the Company's President and Chief Executive Officer; and

WHEREAS , the Company has determined that it is in the best interests of the Company and its stockholders to grant the award of Restricted Share Units provided for herein.

NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows:

1. Grant of Performance Restricted Share Units . Pursuant to Section 6 of the Plan, the Company hereby grants to the Grantee an Award for a target number of Restricted Share Units. Each Restricted Share Unit (" R SU ") represents the right to receive one share of Common Stock (as defined in Exhibit 1 ), subject to the terms and conditions set forth in this Agreement and the Plan. The number of RSUs that actually vest for the Performance Period will be determined by the level of achievement of the Performance Goals in accordance with Exhibit 1 attached hereto. Capitalized terms that are used but not defined herein have the meanings ascribed to them in the Plan.

2. Performance Period . For purposes of this Agreement, the term " Performance Period " shall be the period commencing on the date the Grantee signs his Employment Agreement with the Company and ending on June 30, 2021.

3. Performance Goals .

3.1 The number of RSUs vested will be determined based on the level of achievement of the Performance Goals in accordance with Exhibit 1 . All determinations of whether Performance Goals have been achieved, the number of RSUs vested, and all other matters related to this Section 3 shall be made by the Board of Directors, in their sole discretion.

3.2 Promptly following completion of a Performance Goal, the Board of Directors will review and certify in writing (a) whether, when and to what extent, the Performance Goal has been achieved, and (b) the number of RSUs that vest, if any, subject to compliance with the requirements of Section 4. Such certification shall be final, conclusive and binding on the Grantee, and on all other persons, to the maximum extent permitted by law.

4. Vesting of RSUs . The RSUs are subject to forfeiture until they vest. Except as otherwise provided herein, the RSUs will vest and become nonforfeitable as of the day the Performance Goal is satisfied as certified by the Board of Directors in accordance with Section 3.2. The number of RSUs that vest and become payable under this Agreement shall be determined by the Board of Directors based on the level of achievement of the Performance Goals set forth in Exhibit 1 . Notwithstanding anything herein to the contrary, any unvested RSUs will expire on June 30, 2021.

5. Termination of Employment .

5.1 Except as otherwise expressly provided in this Agreement or the Employment Agreement, if the Grantee's employment under the terms of his Employment Agreement terminates for any reason at any time before all of his or her RSUs have vested, the Grantee's unvested RSUs shall be automatically forfeited upon such termination of employment, and neither the Company nor any Affiliate shall have any further obligations to the Grantee under this Agreement.

5.2 Notwithstanding Section 5.1, if the Grantee's employment is terminated on or before June 30, 2016 (i) by the Company for any reason other than death, Disability (as defined in the Employment Agreement) or Cause (as defined in the Employment Agreement) or (ii) by the Grantee for Good Reason (as defined in the Employment Agreement), then 75% of the unvested RSUs shall vest.

5.3 Notwithstanding Section 5.1, if the Grantee's employment is terminated on or after June 30, 2016 but before June 30, 2017 (i) by the Company for any reason other than death, Disability or Cause or (ii) by the Grantee for Good Reason, then 65% of the unvested RSUs shall vest.

5.4 Notwithstanding Section 5.1, if the Grantee's employment terminates on or before June 30, 2018 (ii) by the Company for any reason other than death, Disability or Cause or (ii) by the Grantee for Good Reason; and if the VWAP (as defined in Exhibit 1 ) of the Common Stock is greater than $2.50 for the ten trading day period ending on the trading day immediately prior to the date of the aforementioned termination of employment, then 50% of the unvested RSUs shall vest.

6. Effect of a Change in Control . If there is a Change in Control (as defined in the Employment Agreement), this Section 6 shall determine the vesting of any unvested RSUs.

6.1 If a Change in Control described in Section 10(d)(ii) of the Employment Agreement occurs (a " 10(d)(ii) Event ") or if a Change in Control described in Section 10(d)(i) of the Employment Agreement occurs and is followed by a termination by the Grantee of his employment for Good Reason pursuant to the Employment Agreement (a " 10(d)(i) Event "), then the Grantee's RSU's shall vest as follows:

(a) If the Change of Control occurred prior to June 30, 2018, all unvested RSUs shall vest on the effective date of the Change in Control with respect to a 10(d)(ii) Event, or on the effective date of termination for Good Reason with respect to a 10(d)(i) Event.

(b) If the Change of Control occurred on or after June 30, 2018, and if the VWAP of the Common Stock is greater than $2.50 for the ten trading day period ending on the trading day immediately prior to the effective date of the Change in Control, 50% of the unvested RSUs shall vest on the effective date of the Change in Control with respect to a 10(d)(ii) Event, or on the effective date of termination for Good Reason with respect to a 10(d)(i) Event.

(c) If the Change of Control occurred on or after June 30, 2018, and if the VWAP of the Common Stock is less than or equal to $2.50 for the ten trading day period ending on the trading day immediately prior to the effective date of the Change in Control, none of the unvested RSUs shall vest.

6.2 If any other Change in Control event occurs, vesting of RSUs shall be determined solely in accordance with Section 5.

7. Payment of RSUs . Payment in respect of the RSUs vested for the Performance Period shall be made in shares of Common Stock and shall be issued to the Grantee as soon as practicable following the vesting date and, in any event, within 30 days following the vesting date. The Company shall (a) issue and deliver to the Grantee the number of shares of Common Stock equal to the number of vested RSUs, and (b) enter the Grantee's name on the books of the Company as the stockholder of record with respect to the shares of Common Stock delivered to the Grantee.

8. Transferability . Subject to any exceptions set forth in this Agreement or the Plan, the RSUs or the rights relating thereto may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Grantee.

9. Rights as Stockholder; Dividend Equivalents .

9.1 The Grantee shall not have any rights of a stockholder with respect to the shares of Common Stock underlying the RSUs, including, but not limited to, voting rights and the right to receive or accrue dividends or dividend equivalents.

9.2 Upon and following the vesting of the RSUs and the issuance of shares, the Grantee shall be the record owner of the shares of Common Stock underlying the RSUs unless and until such shares are sold or otherwise disposed of, and as record owner shall be entitled to all rights of a stockholder of the Company (including voting and dividend rights).

9.3 Grantee is aware that the Company has a policy governing the trades of its insiders and, in accordance therewith, Grantee acknowledges that he has been advised to consider execution of a Rule 10b5-1 plan to provide for any future transactions in the Company's securities that he may desire to make in order to meet his personal planning needs. The Company will assist the Grantee in the preparation of a Rule 10b-5-1 plan, at the Company's expense, upon Grantee's request.

10. No Right to Continued Service . Neither the Plan nor this Agreement shall confer upon the Grantee any right to be retained in any position, as an Employee, Consultant or Director of the Company. Further, nothing in the Plan or this Agreement shall be construed to limit the discretion of the Company to terminate the Grantee's employment at any time, with or without Cause.

11. Adjustments . If any change is made to the outstanding Common Stock or the capital structure of the Company, if required, the RSUs shall be adjusted or terminated in any manner as contemplated by Section 7 of the Plan.

12. Tax Liability and Withholding .

12.1 The Grantee shall be required to pay to the Company, and the Company shall have the right to deduct from any compensation paid to the Grantee pursuant to the Plan, the amount of any required withholding taxes in respect of the RSUs and to take all such other action as the Board of Directors deems reasonably necessary to satisfy all obligations for the payment of such withholding taxes. The Board of Directors may permit the Grantee to satisfy any federal, state or local tax withholding obligation by any of the following means, or by a combination of such means:

(a) tendering a cash payment;

(b) authorizing the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable or deliverable to the Grantee as a result of the vesting of the RSUs; provided, however , that no shares of Common Stock shall be withheld with a value exceeding the minimum amount of tax required to be withheld by law; or

12.2 Notwithstanding any action the Company takes with respect to any or all income tax, social insurance, payroll tax, or other tax-related withholding (" Tax-Related Items "), the ultimate liability for all Tax-Related Items is and remains the Grantee's responsibility, and the Company (a) makes no representation or undertakings regarding the treatment of any Tax-Related Items in connection with the grant, vesting or settlement of the RSUs or the subsequent sale of any shares, and (b) does not commit to structure the RSUs to reduce or eliminate the Grantee's liability for Tax-Related Items. Within 5 days of any vesting date of an RSU, the Company has the right, but not the obligation, to purchase from Grantee a number of the vested shares of common stock underlying such vested RSU equal to 33% of the value of the vested common stock, using the VWAP of the Common Stock for the five trading day period, ending on the trading date prior to the vesting event, as reported on the NYSE MKT or, if the Company's common stock is not then listed on the NYSE MKT, as reported by such other exchange as shall then have the Company's common stock listed.

13. Compliance with Law . The issuance and transfer of shares of Common Stock in connection with the RSUs shall be subject to compliance by the Company and the Grantee with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Company's shares of Common Stock may be listed. No shares of Common Stock shall be transferred unless and until any then applicable requirements of state and federal laws and regulatory agencies have been fully complied with to the satisfaction of the Company and its counsel. The Company will ensure that a sufficient number of shares of its common stock are registered on Form S-8 prior to the vesting of any RSU.

14. Notices . Any notice required to be delivered to the Company under this Agreement shall be in writing and addressed to the Senior Vice President and General Counsel of the Company at the Company's principal corporate offices. Any notice required to be delivered to the Grantee under this Agreement shall be in writing and addressed to the Grantee at the Grantee's address as shown in the records of the Company. Either party may designate another address in writing (or by such other method approved by the Company) from time to time.

15. Governing Law . This Agreement will be construed and interpreted in accordance with the laws of the State of Maryland without regard to conflict of law principles.

16. Interpretation . Any dispute regarding the interpretation of this Agreement shall be submitted by the Grantee or the Company to the Board of Directors for review. The resolution of such dispute by the Board of Directors shall be final and binding on the Grantee and the Company.

17. RSUs Subject to Plan . This Agreement is subject to the Plan as approved by the Company's stockholders. The terms and provisions of the Plan as it may be amended from time to time are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.

18. Successors and Assigns . The Company may assign any of its rights under this Agreement. This Agreement will be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement will be binding upon the Grantee and the Grantee's beneficiaries, executors and administrators.

19. Severability . The invalidity or unenforceability of any provision of the Plan or this Agreement shall not affect the validity or enforceability of any other provision of the Plan or this Agreement, and each provision of the Plan and this Agreement shall be severable and enforceable to the extent permitted by law.

20. Discretionary Nature of Plan . The Plan is discretionary and may be amended, cancelled or terminated by the Company at any time, in its discretion. The grant of the RSUs in this Agreement does not create any contractual right or other right to receive any RSUs or other Awards in the future. Future Awards, if any, will be at the sole discretion of the Board of Directors of the Company. Any amendment, modification, or termination of the Plan shall not constitute a change or impairment of the terms and conditions of the Grantee's employment with the Company.

21. Amendment . The Board of Directors has the right to amend, alter, suspend, discontinue or cancel the RSUs, prospectively or retroactively; provided, that , no such amendment shall adversely affect the Grantee's material rights under this Agreement without the Grantee's consent.

22. Section 162(m) . All payments under this Agreement are intended to constitute "qualified performance-based compensation" within the meaning of Section 162(m) of the Code. This Award shall be construed and administered in a manner consistent with such intent.

23. Section 409A . This Agreement is intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the " Code "), and any exemption from Section 409A of the Code, and shall in all respects be administered in accordance with and interpreted to ensure compliance with Section 409A of the Code. Grantee's termination of employment events under this Agreement shall be interpreted in a manner consistent with the separation from service rules under Section 409A of the Code. Furthermore, if, at the time of termination of employment with the Company, Company has stock which is publicly traded on an established securities market and Grantee is a "specified employee" (as defined in Section 409A of the Code) and it is necessary to postpone the vesting or distribution of Common Stock otherwise payable pursuant to this Agreement as a result of such termination of employment to prevent any accelerated or additional tax under Section 409A of the Code, then Company shall postpone the commencement of the payment of such payment or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to Grantee) that are not otherwise paid within the short-deferral exception under Section 409A of the Code and are in excess of the lessor of two (2) times (i) Grantee's then annual compensation or (ii) the limit on compensation then set forth in Section 401(a)(17) of the Code, until the first payroll date that occurs after the date that is six months following Grantee's separation from service with the Company (within the meaning of Section 409A of the Code). The accumulated postponed distribution of shares of Common Stock shall be made within ten days after the end of the six month period.

24. No Impact on Other Benefits . The value of the Grantee's RSUs is not part of his or her normal or expected compensation for purposes of calculating any severance, retirement, welfare, insurance or similar employee benefit.

25. Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.

26. Acceptance . The Grantee hereby acknowledges receipt of a copy of the Plan and this Agreement. The Grantee has read and understands the terms and provisions thereof, and accepts the RSUs subject to all of the terms and conditions of the Plan and this Agreement. The Grantee acknowledges that there may be adverse tax consequences upon the vesting or settlement of the RSUs or disposition of the underlying shares and that the Grantee has been advised to consult a tax advisor prior to such vesting, settlement or disposition.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

By: /s/ Lawrence M. Gordon
Name: Lawrence M. Gordon
Title: Senior Vice President and General Counsel

/s/ Kyle Loudermilk
Kyle Loudermilk

The Performance Period shall be the period commencing on the date the Grantee signs his Employment Agreement with the Company and ending on June 30, 2021.

Performance Measures

The number of RSUs vested shall be determined by reference to the Volume Weighted Average Price (" VWAP ") of the Company's common stock, calculated to two decimal places, using all trades completed on a trading day as reported by the NYSE MKT or, if the Company's common stock is not then listed on the NYSE MKT, by such other exchange on which the Company lists its common stock. For example, if the Company's common stock traded three times on a single trading date in the following amounts (20 shares traded at $2.50, 55 shares traded at $2.51 and 100 shares traded at $2.48), the VWAP for that day would be $2.49.

Determining RSUs Earned

Except as otherwise provided in the Plan or the Agreement, upon execution of his Employment Agreement, the CEO will receive 850,000 RSUs which will vest as follows:

1. 200,000 RSUs will vest if the VWAP of the Common Stock as quoted on the NYSE MKT exceeds $2.50 for a 90 consecutive trading day period.

3. An additional 200,000 RSUs will vest if the VWAP of the Common Stock as quoted on the NYSE MKT exceeds $3.25 for a 90 consecutive trading day period.

4. An additional 200,000 RSUs will vest if the VWAP of the Common Stock as quoted on the NYSE MKT exceeds $4.25 for a 90 consecutive trading day period.

5. The remaining 250,000 RSUs will vest if the VWAP of the Common Stock as quoted on the NYSE MKT exceeds $6.00 for a 90 consecutive trading day period.

Exhibit 10.3

SEPARATION AGREEMENT AND GENERAL RELEASE

This SEPARATION AGREEMENT AND GENERAL RELEASE (hereinafter the "Agreement") is entered into on the date first set forth below by and between James A. Eberle (hereinafter referred to as "Employee") and GSE Systems, Inc. (hereinafter referred to as the "Company") (collectively referred to as the "Parties").

BACKGROUND

WHEREAS, Employee and the Company entered into an Employment Agreement dated as of January 1, 2015 (the "Employment Agreement");

WHEREAS , the Employee's employment will terminate as of July 31, 2015;

WHEREAS, the Employment Agreement provides that certain benefits shall be paid by the Company to Employee contingent upon Employee's execution of a termination agreement, including, but not limited to, a general release of claims;

NOW THEREFORE , in consideration of the retention benefits, and for other good and valuable consideration provided by the Company, Employee and the Company agree as follows:

SECTION ONE

DEFINITIONS

For purposes of this Agreement, the term "Releasees" shall mean the Company, and its subsidiaries and affiliates, and all of the foregoing's respective directors, officers, shareholders, employees, representatives, agents, attorneys, insurers, successors and assigns. The term "Releasors" means the Employee and his respective heirs, executors, administrators and assigns.

SECTION TWO

CONSIDERATION FOR THE AGREEMENT

(a)

Separation Payment . In consideration of the releases herein given by Releasors and the warranties and representations of Employee, subject to the terms and conditions set forth below, the Company agrees to provide Employee an amount constituting twelve (12) months of his annual base salary as in effect at the time of his termination, less all applicable taxes and withholdings (the "Separation Payment"). The total sum encompassing the Separation Payment shall be paid to Employee at such intervals as salaries are paid generally to other executive officers of the Company and shall commence as soon as is practicable after Employee has signed, and does not timely revoke as set forth in Section Eleven of this Separation Agreement. In addition, for a one-year period commencing as soon as is practicable after Employee has signed, and does not timely revoke this Separation Agreement , the Employee may continue participating in the Company's 401(k) plan and will be entitled to receive the Company match.

(b)	Transition Payment. On December 15, 2015, in consideration of Employee's help in effectuating a smooth transition, the Company shall pay the Employee a lump sum payment in the amount of $25,000.

(c)

Options. All options to purchase the Company's common stock granted to Employee under the Company's 1995 Long Term Incentive Compensation Plan shall immediately become fully vested and shall terminate on such date as they would have terminated if Employee's employment by the Company had not terminated.

(d)	Expenses. The Company shall reimburse Employee for all reasonable business expenses incurred by him prior to July 31, 2015, in connection with his employment in accordance with the written policy and guidelines established by the Company for executive officers.

SECTION THREE

NO OTHER BENEFITS

Employee understands and agrees that he is not entitled to the benefits set forth in Section Two, above, unless he executes and does not revoke this Agreement. Employee shall have no right to receive any further payment or benefit arising from his employment relationship with the Company except those required by law and any convertible insurance programs as described in a policy of insurance.

SECTION FOUR

ADEQUATE CONSIDERATION

Employee agrees that (i) the consideration and payments made to him by the Company pursuant to this Agreement represent the sole and exclusive payments and undertakings to be provided to him; (ii) said payments include any and all outstanding and accrued compensation, wages, and benefits that may be due and owing Employee; (iii) that the Company has no further obligation to provide Employee with any compensation of any sort, or any non-monetary or monetary benefits in addition to that which is set forth in Section Two, above; and (iv) the aforementioned payments would not otherwise be due and payable to Employee under the Employment Agreement but for the execution of, and failure to revoke, this Agreement by Employee, and constitutes good and sufficient consideration for this Agreement.

SECTION FIVE

RELEASES

For and in consideration of Company's promise to cause the payment and benefits to be made as set forth in Section Two, above, Releasors do hereby RELEASE AND FOREVER DISCHARGE the Releasees of and from any and all manner of actions and causes of action, suits, debts, liabilities, losses, damages, claims and demands whatsoever (which are otherwise subject to waiver) that they or any of them had, has or may have against any of the Releasees, whether sounding in contract, any form of tort or otherwise; whether at law or in equity; whether known or unknown; from prior to the commencement of Employee's employment with any of the Releasees to the date of this Agreement. The releases herein include, but are not limited to, any waivable claims that were asserted or could have been asserted up to the date of this Agreement and/or that could be asserted in the future under any federal, state or local laws, regulations, orders or ordinances including but not limited to:

• Title VII of the Civil Rights Act of 1964, as amended;

• Employee Order 11246;

• the Rehabilitation Act of 1973;

• the Americans with Disabilities Act of 1990 as amended (ADAAA);

•	the Employee Retirement Income Security Act (ERISA) (except as to claims for vested benefits);

• the Family Medical Leave Act;

• the Pennsylvania Human Relations Act;

• the Annotated Code of Maryland;

• the Howard County, Maryland Code;

• any state or local laws similar to the above;

• any unjust or wrongful termination theory;

• any claim for breach of contract, fraud or material misrepresentation;

• any negligent retention, hiring, or supervision theory;

• any right or claim based on an alleged privacy violation;

• any claims for defamation or slander; or

other employment tort or common law claims now or hereafter recognized and any derivative claim any of the Releasors may have arising thereunder, and all claims for counsel fees and costs. Releasors specifically acknowledge that they are releasing all Releasees from any claims for attorneys' fees and costs.

SECTION SIX

WARRANTIES AND COVENANTS OF EMPLOYEE

Employee warrants and covenants that he has not filed a lawsuit or otherwise initiated adversarial proceedings against the Company or any of the Releasees based upon, or related in any way to, any act, omission or event occurring prior to Employee's execution of this Agreement. Employee further warrants that he will not assert any claim for recall or reemployment with the Company and will not in the future seek employment in any capacity with Company.

Employee agrees that he will not disparage the name, business reputation or business practices of the Company or any Releasee. The Company agrees to provide a neutral reference if contacted for a job reference, including name, dates of employment, and position held as well as final rate of pay.

SECTION SEVEN

DISCLOSURE

Employee acknowledges and warrants that he is not aware of, or that he has fully disclosed to the Company, any matters for which Employee was responsible, or which came to Employee's attention as an employee of the Company, that might give rise to, evidence, or support any claim of illegal conduct, regulatory violation, unlawful discrimination, or other cause of action against the Company.

SECTION EIGHT

SURVIVAL OF PROVISIONS OF THE CONFIDENTIALITY, NON-COMPETITION AND NON-SOLICITATION AGREEMENT

Employee acknowledges and agrees that the Employment Agreement contains provisions related to (i) Non-Competition, (ii) Non-Solicitation of Employees, (iii) Non-Solicitation of Customers, (iv) Non-Disparagement and (v) Confidentiality (collectively referred to as the "Employee Covenants"). Employee understands and agrees that the provisions of the Employee Covenants, and the remedies for breach of those provisions, survive the cessation of his employment with the Company and remain in full force and effect for the duration set forth in the Employment Agreement. Employee further acknowledges that his compliance with the provisions of the Employee Covenants is a term and condition of Employee's entitlement to benefits under this Agreement.

SECTION NINE

RETURN OF COMPANY PROPERTY

Employee certifies that, if he has not done so already, he will return all Company property in his possession, custody and control to the Company, including, but not limited to any confidential information without retaining any copies, either in tangible or intangible form. This certification includes the fact that he will purge all files and information from his home computer or laptop and return all photocopies of materials which relate to the Releasees or their business. Notwithstanding anything to the contrary contained herein, the Employee may retain his Company laptop.

SECTION TEN

[not used]

SECTION ELEVEN

RELEASE UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT (ADEA)

Employee understands and agrees that, in full compliance with the Older Workers Benefit Protection Act (OWBPA) of 1990:

A. Employee enters into this Agreement freely and knowingly, and after due consideration, intending to waive, settle and release all waivable claims that Employee has or may have against the Company up to the date of the execution of this Agreement, including claims under the Age Discrimination in Employment Act;

B. Employee has been advised to consult an attorney before signing this Agreement;

C. Employee has been provided with the opportunity to consider this Agreement for twenty-one (21) days. Material and immaterial changes to this Agreement will not temporarily stop the twenty-one (21) day period for Employee to consider this Agreement. If Employee agrees to enter into this Agreement, he must sign and return the Agreement to Lawrence M. Gordon, Senior Vice President and General Counsel, prior to the 21st day;

D. Employee understands that he has seven (7) days after he signs the Agreement to revoke the Agreement by delivering a written notice of revocation to Lawrence M. Gordon, Senior Vice President and General Counsel, by 5:00 p.m. Eastern Standard Time on the seventh day. In the event Employee revokes this Agreement, the Company shall have no obligation to Employee under the Agreement. After this revocation period has expired, the Agreement will become effective, enforceable and irrevocable.

SECTION TWELVE

ASSISTANCE IN LITIGATION

Employee shall upon reasonable notice, furnish such information and proper assistance to the Company as it may reasonably require in connection with any litigation in which it is, or may become, a party after Employee's employment with the Company.

SECTION THIRTEEN

SEVERABILITY

The covenants in this Agreement are severable. If any part or term of this Agreement is later held to be illegal, unenforceable or ineffective, the validity of the remaining provisions shall not be affected and the other obligations will be enforced as if the Agreement did not contain the part or term held to be invalid. With the exception of a challenge to the validity of the release of his ADEA claims, if Employee challenges the validity of, or attacks this Agreement in any court of competent jurisdiction, Employee unequivocally agrees to first return to the Company any and all monies or other consideration received by Employee under the terms of this Agreement.

SECTION FOURTEEN

ENTIRE AGREEMENT

This Agreement, including those provisions of the Employment Agreement set forth in Section Eight herein, expresses the entire Agreement between Employee and the Company regarding Employee's employment and separation from employment. This Agreement may not be amended or terminated except by a written agreement signed by both Employee and the Company. No representations made prior to or contemporaneously with this Agreement shall have any binding effect.

SECTION FIFTEEN

WAIVER

No waiver of any provision of this Agreement shall constitute a waiver of any other provisions of this Agreement.

SECTION SIXTEEN

FUTURE BENEFITS

The promises of Employee under this Agreement shall inure to the benefit of the Releasees and all other present or future subsidiaries and affiliates of the Releasees. All such entities shall be considered third party beneficiaries and may enforce any provision of this Agreement.

SECTION SEVENTEEN

SUCCESSORS AND ASSIGNS

This Agreement shall be binding upon the parties to this Agreement and their respective heirs, administrators, executors, successors and assigns. The Company has the right to assign this Agreement. Employee does not have the right to assign this Agreement.

SECTION EIGHTEEN

GOVERNING LAW AND JURISDICTION

The validity, legality, and construction of this Agreement or of any of its provisions shall be governed exclusively by the laws of the State of Maryland. In the event a dispute or claim should arise regarding this Agreement, jurisdiction and venue of any such action shall be in Howard County, Maryland. In the event that the Parties to this Agreement have diverse citizenship and/or the dispute at issue involves a federal question of law, then jurisdiction and venue may alternatively be in the United States District Court for the District of Maryland. Each of the parties expressly consents to the jurisdiction and venue set forth in this Section Seventeen.

SECTION NINETEEN

NO ADMISSION OF LIABILITY

Employee acknowledges that the Company admits no liability or wrongdoing in requesting or accepting this Release.

SECTION TWENTY

COUNTERPARTS

This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties hereto.

IN WITNESS WHEREOF , intending to be legally bound, Employee and the Company executed the foregoing Separation Agreement and General Release as of the date first written below.

	James A. Eberle	July 29, 2015
	/s/ James A. Eberle	Date
GSE Systems, Inc.
By:	/s/ Lawrence M. Gordon	July 29, 2015
	Lawrence M. Gordon	Date
	Senior Vice President and General Counsel

FOR IMMEDIATE RELEASE

GSE SYSTEMS APPOINTS KYLE J. LOUDERMILK AS CHIEF EXECUTIVE OFFICER AND PRESIDENT

SYKESVILLE, MD – July 30, 2015 - GSE Systems, Inc. ("GSE" or the "Company") (NYSE MKT: GVP) , a global energy industry performance improvement company, today announced the appointment of Kyle J. Loudermilk as Chief Executive Officer, President and a member of the Board of Directors. Mr. Loudermilk brings to GSE more than 25 years of experience in engineering, marketing, management, finance and operations and has been extensively involved in the building of highly successful technology enabled software businesses. Effective August 3, 2015, Mr. Loudermilk will succeed Jim Eberle, who is leaving GSE to pursue other opportunities.

Mr. Loudermilk joins GSE from MicroStrategy, Inc., a publicly-traded enterprise-analytics, mobile and security software company. He served as MicroStrategy's Vice President, Technology / Development Operations since 2013, and was Vice President Corporate Development from 2005 to 2009. From 2009 to 2012, he was Vice President Product Management at Datatel, Inc., a leading provider of software and services for higher-education institutions and technical schools. Datatel was a portfolio company of Hellman & Friedman LLC prior to Datatel's strategic combination with SunGard Higher Education, resulting in a successful transaction for investors. Mr. Loudermilk also held various senior management positions at Aspen Technology, Inc., a publicly traded, leading provider of enterprise-level software and services that enable energy and chemical companies to optimize their manufacturing operations performance. His positions at Aspen included Vice President Design and Simulation Business Unit, and Vice President Research and Development. Mr. Loudermilk began his career as a Process and Project Engineer for Mobil Oil Corporation. He earned BS and MS degrees in Chemical Engineering from Columbia University, and later attended Harvard University's General Management program.

Jerome I. Feldman, Chairman of the Board of GSE, said, "On behalf of the entire Board, I am pleased to welcome Kyle as GSE's new CEO. He brings an established track record of growing businesses, streamlining operations, implementing technology solutions and serving clients across a wide range of industries, including in the energy and process sectors. One of our primary areas of focus is evolving GSE's business model towards recurring, managed streams of revenue, with less reliance on project-based revenue. Given his background, we are confident in Kyle's ability to create a platform for enhanced shareholder value."

The selection of Mr. Loudermilk ends a search process facilitated by John Strackhouse of Caldwell Partners, a leading international executive search firm.

GSE Board member Christopher D. Sorrells, who led the CEO search on behalf of GSE, said, "After a thoughtful and comprehensive search process, the Board is pleased to have found an individual who we believe is well-suited to lead GSE into our next chapter of growth. Kyle has managed complex global operations, and understands how technology, products, people and strategy come together to transform an organization and create long-term shareholder value. A proven leader and successful technology executive, we are confident that Kyle can meaningfully and sustainably develop GSE's impressive intellectual, human and capital assets."

Mr. Loudermilk commented, "I am thrilled to join GSE at this pivotal time in its history and become part of the GSE team. GSE has terrific people, and impressive core solutions for the energy and process industries. I look forward to leading GSE as we evolve our products, services and business model."

Mr. Feldman concluded, "On behalf of everyone at GSE, I want to thank Jim for his more than five years of service to GSE. He played an important role in helping to manage GSE through one of the most difficult periods in its history, and established a solid foundation upon which we will continue to grow. We wish him nothing but the best in his future endeavors."

ABOUT GSE SYSTEMS, INC .

GSE Systems, Inc. provides performance improvement solutions to the energy and process industries. We improve human performance though turnkey training, unique visualization and simulation applications, and our staff of instructors, as well as plant improvement through our engineering expertise and use of technology to improve plant design, commissioning and operations. The Company has more than 350 employees and over four decades of experience as well as more than 1,100 installations and hundreds of customers in over 50 countries spanning the globe. GSE Systems is headquartered in Sykesville (Baltimore), Maryland, with offices in St. Marys, Georgia; Cary, North Carolina; Huntsville, Alabama; Chennai, India; Nyköping, Sweden; Stockton-on-Tees, UK; Glasgow, UK; Manama, Bahrain; and Beijing, China. Information about GSE Systems is available at www.gses.com .

FORWARD LOOKING STATEMENTS

We make statements in this press release that are considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. These statements reflect our current expectations concerning future events and results. We use words such as "expect," "intend," "believe," "may," "will," "should," "could," "anticipates," and similar expressions to identify forward-looking statements, but their absence does not mean a statement is not forward-looking. These statements are not guarantees of our future performance and are subject to risks, uncertainties, and other important factors that could cause our actual performance or achievements to be materially different from those we project. For a full discussion of these risks, uncertainties, and factors, we encourage you to read our documents on file with the Securities and Exchange Commission, including those set forth in our periodic reports under the forward-looking statements and risk factors sections. We do not intend to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

The Equity Group Inc.

Chief Executive Officer

Senior Vice President

dsullivan@equityny.com

Company Contact		The Equity Group Inc.
James A. Eberle Chief Executive Officer		Devin Sullivan Senior Vice President
GSE Systems, Inc.		(212) 836-9608
(410) 970-7950		dsullivan@equityny.com


		Kalle Ahl, CFA
		Senior Associate
		(212) 836-9614
		kahl@equityny.com

Delaware	001-14785	52-1868008
(State of incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)
1332 Londontown Blvd., Sykesville, MD 21784
(Address of principal executive offices and zip code)

If 90 Consecutive Day VWAP Is		The Following Number of Shares will Vest
$	2.50	200,000
$	3.25	200,000
$	4.25	200,000
$	6.00	250,000

		GSE SYSTEMS, INC.

Date: July 31, 2015		By:/s/ Lawrence M. Gordon
		Lawrence M. Gordon Senior Vice President and General Counsel