WAIVER AND CONSENT
This
WAIVER AND CONSENT (this “Waiver”),
dated
as
of June 14, 2007, is entered into by and between GSE SYSTEMS, INC., a Delaware
corporation (the “Company”), and LAURUS MASTER FUND, LTD., a Cayman Islands
company (“Laurus”), for the purpose of amending and restating and waiving
certain terms of (i) that certain Security Agreement dated as of March 7, 2006
by and among the Company, GSE Power Systems, Inc., a Delaware corporation
(“GSE
Power”),
(together with GSE, the “Companies”
and,
each a “Company”)
and
Laurus (as amended, modified or supplemented from time to time, the “Security
Agreement”), (ii) that certain Stock Pledge Agreement, dated March 7, 2006, by
and among Laurus, the Company GSE Power and certain other subsidiaries of the
Company (as amended, modified or supplemented from time to time, the “Stock
Pledge Agreement”) and the other Ancillary Agreements (as such term is defined
in the Security Agreement)(the Security Agreement and the Ancillary Agreements
together, the “Transaction Documents”). Capitalized terms use herein without
definition shall have the meanings ascribed to such terms in the Security
Agreement.
WHEREAS,
the Company intends to issue additional shares of its common stock and certain
warrants for the purchase of shares of its common stock pursuant to that certain
Securities Purchase Agreement (the “Purchase Agreement”), a copy of which is
attached as Exhibit
A
hereto,
by and among the Company and the investors signatory thereto (the “Purchasers”)
and all related documents, schedules and exhibits, relating to the assignment
and sale (the “Purchase Documents”);
WHEREAS,
the Company has requested that Laurus waive certain provisions of the
Transaction Documents that would otherwise prohibit the Company from entering
into the Purchase Agreement or otherwise grant Laurus a right of first refusal
with respect to the securities being sold pursuant to the Purchase Documents
;
WHEREAS,
the Company and Laurus have agreed to make certain changes to the Transaction
Documents as set forth herein, and that Laurus will waive certain provisions
of
the Transaction Documents.
NOW,
THEREFORE, in consideration of the above, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the
parties hereto agree as follows:
1. Laurus
hereby consents to consummation of the transactions contemplated by the Purchase
Agreement and waives its right of right of first refusal pursuant to Section
13(u) of the Security Agreement.
2. Nothing
in this Waiver shall be deemed to release or discharge Laurus’s security
interests, liens, pledges, mortgages and/or other charges or encumbrances
created on or with respect to any assets of the Company or the Company’s
Subsidiaries.
1
MISCELLANEOUS
1. Each
of
the Companies hereby represents and warrants to Laurus that after giving effect
to this Waiver (i) on the
date
hereof, all representations, warranties and covenants made by each of the
Companies in connection with the Security Agreement and the Ancillary Agreements
are true, correct and complete (ii) on the date hereof, all of the Companies’
covenant requirements set forth in the Security Agreement and the Ancillary
Agreement have been met, and (iii)
no Event
of Default exists under the
Security Agreement or under any of the Ancillary Agreements.
2. The
parties hereto understand that the Company has an affirmative obligation to
make
prompt public disclosure of material agreements and material amendments to
such
agreements. The Company acknowledges that it shall file a Form 8-K disclosing
this agreement within the time frame specified therefore by the Securities
and
Exchange Commission.
3. Each
consent set forth herein shall be effective on the date when (i) the Company
shall have executed and delivered to Laurus its respective counterpart to this
Consent and (ii) delivery has been made to Laurus of the Purchase Documents,
each duly executed and delivered by the parties thereto.
4. Except
as
specifically set forth in this Consent, there are no amendments, modifications
or waivers to the Transaction Documents, and all of the forms, terms and
provisions of the Transaction Documents remain in full force and
effect.
5. This
Waiver shall be binding upon the parties hereto and their respective successors
and permitted assigns and shall inure to the benefit of and be enforceable
by
each of the parties hereto and their respective successors and permitted
assigns. THIS
WAIVER SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE
LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAWS THEREOF.
This
Waiver and Consent may be executed in any number of counterparts, each of which
shall be an original, but all of which shall constitute one instrument.
[THE
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN
WITNESS WHEREOF,
each of
the Company and Laurus has caused this Waiver and Consent to be signed in its
name effective as of this 14th day of June 2007.
LAURUS
MASTER FUND, LTD.
By:
_/s/
Xxxxx Grin___________________
Name:
Xxxxx Grin
Title:
Director
Address:
ACKNOWLEDGED
AND AGREED:
GSE
SYSTEMS, INC.
By:
/s/
Xxxxxxx X. Xxxxx
Name:
Xxxxxxx X. Xxxxx
Title:
Senior Vice President and Chief Financial Officer
GSE
POWER
SYSTEMS, INC.
By: /s/
Xxxxxxx X. Xxxxx
Name:
Xxxxxxx X. Xxxxx
Title:
Senior Vice President and Chief Financial Officer
3
Exhibit
A
4
