Item 1.01. Entry into a Material Definitive Agreement

On December 30, 2019, GSE Performance Solutions, Inc., GSE Systems, Inc. and their subsidiaries and affiliates (collectively, "GSE"), on the one hand, and Christopher A. Davenport ("Davenport") and Steven L. Pellerin ("Pellerin"), on the other hand, entered into a Settlement and Release Agreement (the "DP Settlement Agreement") resolving all disputes between the parties pertaining that certain membership interest purchase agreement, dated February 15, 2019 (the "DP Engineering Purchase Agreement"), by and among GSE, DP Engineering Co. Ltd., Pellerin, and Davenport, pursuant to which GSE acquired from Pellerin and Davenport 100% of the membership interests in DP Engineering for $13.5 million payable at closing (subject to customary pre- and post-closing working capital adjustments) plus additional earn-out consideration.

In August 2019, GSE had alleged that Davenport and Pellerin had breached certain representations and warranties in the DP Engineering Purchase Agreement and GSE made an indemnification demand in accordance with the foregoing agreement. Davenport and Pellerin had rejected the indemnification demand.

As a result of the DP Settlement Agreement, Davenport and Pellerin agreed to cause the entire amount of the Escrow Fund (as defined in the DP Engineering Purchase Agreement), One Million Seven Hundred Eight Thousand Seven Hundred Thirty and 68/100 Dollars ($1,708,730.68), to be released to GSE. Davenport and Pellerin further agreed to pay to GSE the sum of Three Hundred Sixteen Thousand Two Hundred Sixty-Nine and 32/100 Dollars ($316,269.32 ). GSE agreed to pay a certain state tax refund for tax year 2018 to Davenport and Pellerin. In exchange for the foregoing payments, the parties exchanged mutual releases including, but not limited to, the release by GSE of all claims, demands, damages, defects and deficiencies arising out of or in connection with the DP Engineering Purchase Agreement (whether known or unknown).

The foregoing description of the DP Settlement Agreement does not purport to be complete and is qualified in its entirety by reference to the DP Settlement Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

10.1 Settlement and Release Agreement, dated December 30, 2019, by, among and


      between GSE Performance Solutions, Inc., Christopher A. Davenport and Steven
      L. Pellerin.

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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.

GSE SYSTEMS, INC.

By:

/s/ Daniel Pugh
Daniel Pugh
Secretary, Chief Legal and Risk Officer
January 6, 2020

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