11. Long-Term Debt

At June 30, 2016, and December 31, 2015, the Company had no long-term debt.

Lines of Credit

BB&T Bank

At June 30, 2016, the Company had a Master Loan and Security Agreement (the "Loan Agreement") and Revolving Credit Note with BB&T Bank. The Company and its subsidiary, GSE Performance Solutions, Inc., were jointly and severally liable as co-borrowers. The Loan Agreement provides a $7.5 million revolving line of credit for the purpose of (i) issuing stand-by letters of credit and (ii) providing working capital. Working capital advances bear interest at a rate equal to the Wall Street Journal Prime Rate of Interest, floating with a floor of 4.5%.

The agreement would have expired on June 30, 2016, but on June 17, 2016, the Company and BB&T Bank amended the Loan Agreement to extend the expiration date until September 30, 2016. All other terms and conditions remained the same.

As collateral for the Company's obligations, the Company granted a first lien and security interest in all of the assets of the Company, including but not limited to, contract receivables, intangible assets, equipment, software and leasehold improvements.

The Company is to maintain a segregated cash collateral account at BB&T Bank equal to the greater of (i) $3.0 million or (ii) the aggregate principal amounts of all loans outstanding under the revolving credit facility (including any issued and outstanding letters of credit, working capital advances, and negative foreign exchange positions) as security for the Company's obligations. Under this amendment, BB&T Bank has complete and unconditional control over the cash collateral account.

At June 30, 2016, and December 31, 2015, the cash collateral account totaled $3.4 million and $3.5 million, respectively. The balances were classified as restricted cash on the consolidated balance sheets.

The Loan Agreement contains certain restrictive covenants regarding future acquisitions and incurrence of debt. In addition, the Loan Agreement contains financial covenants with respect to the Company's minimum tangible capital base and quick ratio.

		As of
	Covenant	June 30, 2016

Minimum tangible capital base	Must exceed $10.5 million	$11.9 million
Quick ratio	Must exceed 1.00 : 1.00	1.55 : 1.00

As of June 30, 2016, the Company was in compliance with its financial covenants as defined above.

IberiaBank

At June 30, 2016, Hyperspring, LLC has a $1.0 million working capital line of credit with IberiaBank. Under the this line of credit, interest is payable monthly at the rate of 1.00 percentage point over the prime rate of interest as published in the money rate section of the Wall Street Journal, resulting in an effective interest rate of 4.25%. The line is secured by all accounts of Hyperspring and guaranteed by GSE Systems, Inc. The line of credit expired on July 6, 2016, and the Company is in the process of extending the line. At June 30, 2016, the Company had no outstanding amounts under the line of credit.

Letters of Credit and Bonds

As of June 30, 2016, the Company has nine standby letters of credit totaling $3.4 million which represent advance payment and performance bonds on eight contracts. The Company has deposited the full value of nine standby letters of credit in escrow accounts, amounting to $3.4 million, which have been restricted in that the Company does not have access to these funds until the related letters of credit have expired. The cash has been recorded on the Company's consolidated balance sheets at June 30, 2016, as restricted cash, $1.7 million categorized as current restricted cash and $1.7 million categorized as long-term restricted cash.