Exhibit 10.10

PLEDGE AGREEMENT
 
THIS PLEDGE AGREEMENT (this “Agreement”), dated as of March 28, 2008, is made by
GSE Systems, Inc., a Delaware corporation (“GSE”), MSHI, Inc., a Virginia
corporation (“MSHI”), GSE Power Systems, Inc., a Delaware corporation (“GSE
Power”), and GSE Process Solutions, a Delaware corporation, (“GSE Process”)
(GSE, MSHI, GSE Power and GSE Process are individually referred to as "Pledgor"
and collectively referred to as “Pledgors”), in favor of Bank of America, N.A.,
a national banking association, in its capacity as Lender (the “Lender”).
 
Reference is made to that certain Loan Agreement (Ex-Im Bank-Guaranteed
Transaction Specific Revolving Line of Credit) (the “Ex-Im Loan Agreement”) and
that certain Loan Agreement (Domestic Revolving Line of Credit) (the “Domestic
Loan Agreement,” and together with the Ex-Im Loan Agreement, the “Loan
Agreement”), each dated as of March 28, 2008 among GSE and GSE Power (GSE and
GSE Power are individually referred to as “Borrower” and collectively referred
to as “Borrowers”) and the Lender.
 
The Lender has agreed to make a $3,500,000 Ex-Im Bank Guaranteed Transaction
Specific Revolving Line of Credit (the “Ex-Im Loan”) and a $1,500,000 Domestic
Revolving Line of Credit (the “Domestic Loan,” and together with the Ex-Im Loan,
the “Loan”) to the Borrowers, pursuant to, and upon the terms and subject to the
conditions specified in, the Loan Agreement.  The obligations of the Lender to
make the Loan is conditioned on, among other things, the execution and delivery
by the Pledgor of a Stock Pledge Agreement in the form hereof.  As consideration
therefor and in order to induce the Lender to make the Loan, the Pledgor is
willing to execute this Agreement.
 
ARTICLE 1
 
DEFINITIONS
 
SECTION 1.1                                Certain Terms.  The following terms
(whether or not underscored) when used in this Agreement, including its preamble
and recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
 
“Additional Pledged Shares” shall mean the Capital Stock more particularly
described in Schedule 2 hereto, as amended and supplemented from time to time.
 
“Agreement” shall mean this Pledge Agreement as originally in effect on the
Closing Date and as thereafter from time to time amended, supplemented, restated
or otherwise modified.
 
“Capital Stock” shall mean (a) in the case of a corporation, capital stock, (b)
in the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of capital
stock, (c) in the case of a partnership, partnership interests (whether general
or limited), (d) in the case of a limited liability company, membership
interests and (e) any other interest or participation that confers on a person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
 
“Collateral” shall mean, collectively, (a) the Pledged Shares; (b) all other
Pledged Property, whether now or hereafter delivered to the Lender in connection
with this Agreement; and (c) all proceeds of any of the foregoing.
 
 
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“Distributions” shall mean all dividends paid in stock, liquidating dividends,
shares of stock resulting from stock splits, reclassifications, warrants,
options, non-cash dividends and other distributions (whether similar or
dissimilar to the foregoing) on or with respect to any Pledged Shares or other
shares of Capital Stock constituting Collateral, but shall not mean Dividends.
 
“Dividends” shall mean cash dividends and cash distributions with respect to any
Pledged Shares made out of capital surplus.
 
“Event of Default” shall mean any event described in Section 5.1.
 
“Initial Pledged Shares” shall mean the Capital Stock more particularly
described in Schedule I hereto, as amended and supplemented from time to time.
 
“Loan Documents” shall means the Loan Agreement, each promissory note (if any)
and security agreement and guaranty executed in connection therewith, this
Agreement, and all other documents or instruments executed and delivered by the
parties hereto or thereto, as the case may be.
 
“Obligations” shall mean (a) the due and punctual payment of  (i) the principal
of and premium, if any, and interest (including interest accruing during the
pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loan when and as due, whether at maturity, by acceleration, upon one or more
dates set for prepayment or otherwise, (ii) each payment required to be made by
the Borrowers under the Loan Agreement, when and as due, including payments in
respect of reimbursement or disbursements, interest thereon and obligations to
provide cash collateral, and (iii) all other monetary obligations, including
fees, costs, expenses and indemnities, whether primary, secondary, direct,
contingent, fixed or otherwise (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), of
the Borrowers to the Lender under the Loan Agreement and the other Loan
Documents, and (b) the due and punctual performance of all covenants,
agreements, obligations and liabilities of the Borrowers under or pursuant to
the Loan Agreement and the other Loan Documents.
 
"Person" shall mean any individual, partnership, firm, corporation, association,
joint venture, limited liability company, trust or other entity, or any
governmental authority.
 
“Pledged Property” shall mean all Pledged Shares and the certificates evidencing
the Pledged Shares, and all Dividends, Distributions, securities, cash,
instruments, interest payments and other property and proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the Pledged Shares.
 
“Pledged Shares” shall mean the Initial Pledged Shares, the Additional Pledged
Shares and all other shares of Capital Stock which are pledged by the Pledgor to
the Lender as Pledged Property hereunder.
 
“Secured Obligations” means, collectively, the obligations of the Pledgor under
this Agreement, and of the Borrowers under the Loan Agreement and the other Loan
Documents, including, without limitation, the Obligations.
 
 
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“U.C.C.” means the Uniform Commercial Code as in effect in the State of Maryland
from time to time.
 
SECTION 1.2.                                Loan Credit Agreement Definitions,
Cross-References.  Capitalized terms used herein and not otherwise defined
(including the preamble and recitals hereof) shall have the meanings assigned to
them in the Loan Agreement, unless the context otherwise requires or unless
otherwise defined herein.  References in this Agreement to any Section, unless
otherwise specified, are references to such Section of this Agreement, and
references in such Section to any subsection or clause, unless otherwise
specified, are references to such subsection or clause of such Section.
 
SECTION 1.3.                                U.C.C. Definitions.  Unless
otherwise defined herein or the context otherwise requires, terms for which
meanings are provided in the U.C.C. are used in this Agreement, including its
preamble and recitals, with such meanings.
 
ARTICLE 2
 
PLEDGE
 
SECTION 2.1.                                Grant of Security Interest.  The
Pledgor hereby pledges, assigns, delivers, sets over, conveys and transfers to
the Lender, for its benefit, and hereby grants to the Lender, for its benefit, a
continuing security interest in and to, all of the Collateral.
 
SECTION 2.2.                                Security for Secured
Obligations.  This Agreement and the Collateral secure the payment in full and
performance of all Secured Obligations.
 
SECTION 2.3.                                Delivery of Pledged Property upon
Event of Default; Stock Powers; Registration of Pledge; Transfer.  All
certificates and instruments representing or evidencing any Collateral,
including all Pledged Shares, shall be delivered to the Lender and shall be held
by the Lender, shall be in suitable form for transfer by delivery, and shall be
accompanied by all necessary instruments of transfer or assignment, duly
executed in blank and, if the Lender shall so request, with signatures
guaranteed by a member of a registered national securities exchange or the
National Association of Securities Dealers, Inc. or by a commercial bank or
trust company having an office or correspondent in the United States.  The
Lender shall have the right, upon the occurrence and during the continuation of
an Event of Default, and without notice to the Pledgor, to transfer to, or to
register in the name of, the Lender or any of its nominees, any or all of the
Pledged Shares, subject only to Section 2.5(b) and Section 4.6.  The Lender will
promptly give notice to Pledgor of any such transfer or registration with
respect to the Pledged Shares, but in no event will the failure of the Lender to
give notice limit its rights to take possession of the shares or otherwise
result in liability hereunder.  In addition, the Lender shall have the right at
any time to request that the Pledgor exchange certificates or instruments
representing or evidencing any Pledged Shares for certificates or instruments of
smaller or larger denominations.
 
SECTION 2.4.                                No Duty to Lender.  The powers
conferred on the Lender hereunder are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise any such
powers.  Beyond reasonable care in the custody of any Collateral in its
possession from time to time and the accounting for moneys actually received by
it hereunder, the Lender shall have no duty as to any Collateral or as to the
taking of any necessary steps to preserve rights against prior parties or any
other rights pertaining to any Collateral.  The Lender shall not be liable or
responsible (a) for any diminution in the value of the Collateral or (b) for any
loss or damage to any of the Collateral by reason of the act or omission of any
carrier, forwarding agency, or other agent selected by the Lender in good faith.
 
 
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SECTION 2.5.                                Continuing Security Interest;
Transfer of Secured Obligation.  This Agreement shall:
 
(a)           create a continuing security interest in the Collateral;
 
(b)           remain in full force and effect until the payment in full and
performance of all Secured Obligations;
 
(c)           be binding upon the Pledgor, its legal representatives,
successors, transferees and assigns, provided, however, that the Pledgor may not
assign any of its rights or obligations hereunder without the prior written
consent of the Lender; and
 
(d)           inure to the benefit of the Lender and its respective legal
representatives, successors, transferees and assigns.
 
Without limitation to the foregoing, Lender may assign or otherwise transfer any
note, Loan or other Secured Obligation, held by it to any other Person, in
accordance with the terms of the Loan Agreement, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted herein
or otherwise.  Upon the occurrence of the event described in Section 2.5(b)
above, the security interest granted herein shall terminate and all rights to
the Collateral shall revert to the Pledgor.  Upon any such termination, the
Lender will, at the Pledgor’s expense, execute and deliver to the Pledgor such
documents as the Pledgor shall reasonably request to evidence such termination,
without recourse or warranty to the Lender.
 
ARTICLE 3
 
REPRESENTATIONS AND WARRANTIES
 
SECTION 3.1.                                Representations and Warranties.  The
Pledgor represents and warrants as follows:
 
(a)           The Pledgor is and at all times will be the legal and beneficial
owner of, and has and will have at all times good and marketable title to, all
Collateral, free and clear of all liens or other charges or encumbrances, except
the lien granted pursuant hereto in favor of the Lender.
 
(b)           The Pledgor has and will at all times have the requisite power and
authority to enter into this Agreement and to pledge and assign the Collateral
to the Lender in accordance with the terms of this Agreement.
 
(c)           The delivery of the Collateral to the Lender is effective to
create a valid, perfected, first priority security interest in such Collateral
and all proceeds thereof, securing the Secured Obligations, except that the
filing of a financing statement, the taking of possession or some other action
may be required under Section 9-306 of the former U.C.C. and Section 9-315 of
the revised U.C.C. to perfect a security interest in certain proceeds of the
Collateral that do not constitute Pledged Shares or other securities or
instruments.
 
 
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(d)           The Initial Pledged Shares have been duly authorized and validly
issued, and are fully paid, and nonassessable.
 
(e)           As of the date hereof, (i) the Initial Pledged Shares constitute,
and at all times hereafter the Pledged Shares will constitute, 100% of all of
the issued and outstanding shares of Capital Stock of the entities whose Capital
Stock is pledged hereunder owned or controlled by the Pledgor, and (ii) there
are no outstanding warrants, stock options of any nature or other instruments
convertible into shares of any class of stock of any of such entities.
 
(f)           There are no restrictions on transfer of the Initial Pledged
Shares contained in the certificate of incorporation or by-laws (or equivalent
organizational documents) of the entities whose Capital Stock is pledged
hereunder or otherwise which have not otherwise been enforceably and legally
waived by the necessary parties.
 
(g)           No authorization, approval, or other action by, and no notice to
or filing with, any Governmental Authority not already taken or made by the
Pledgor is or will be required either:
 
(i)           for the pledge by the Pledgor of any Collateral pursuant to this
Agreement or for the execution, delivery, or performance of this Agreement by
the Pledgor (except with respect to the Pledged Shares, any amendments required
to be made to existing filed reports to disclose such pledge which will be filed
when due), or
 
(ii)           for the exercise by the Lender of the voting or other rights
provided for in and in accordance with the terms of this Agreement or the
remedies in respect of the Collateral pursuant to this Agreement.
 
(h)           The Pledgor is incorporated in or organized under the laws of the
state specified on such signature page.  The Pledgor shall give the Bank at
least thirty (30) days notice before changing its state of incorporation or
organization.
 
SECTION 3.2.  Warranties upon Pledge of Additional Collateral.  The Pledgor
shall be deemed to restate each representation and warranty set forth in Section
3.1 as at the date of each pledge hereunder by the Pledgor to the Lender of any
Collateral with respect to such additional Collateral.
 
ARTICLE 4
 
COVENANTS
 
SECTION 4.1.                                Protect Collateral; Further
Assurances.  The Pledgor will not sell, assign, transfer, pledge or encumber in
any other manner the Collateral (except in favor of the Lender hereunder).  The
Pledgor will warrant and defend the right, title and security interest herein
granted to the Lender in and to the Collateral (and all right, title and
interest represented by the Collateral) against the claims and demands of all
Persons whomsoever.  The Pledgor agrees that at any time, and from time to time,
at the expense of the Pledgor, the Pledgor will promptly execute and deliver all
further instruments, and take all further action, that may be necessary, or that
the Lender may reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the Lender to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral.
 
 
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SECTION 4.2.                                Issuance of Stock.  The Pledgor will
not, subsequent to the date of this Agreement, without the prior written consent
of the Lender, cause or permit the entities whose Capital Stock is pledged
hereunder to issue or grant any warrants, stock options of any nature or other
instruments convertible into shares of any class of stock or issue any
additional shares of stock or sell or transfer any treasury stock, except that
such entities may issue shares of stock to the Pledgor that are or become
contemporaneously with such issuance, Pledged Shares that are pledged hereunder
and become a part of the Collateral.
 
SECTION 4.3.                                Taxes.  The Pledgor will pay all
taxes, assessments and charges levied, assessed or imposed upon the Collateral
before the same become delinquent or become Liens upon any of the Collateral
except where the same may be contested in good faith by appropriate measures and
as to which adequate reserves have been provided and there is no immediate risk
of loss of the Collateral from non-payment.
 
SECTION 4.4.                                Stock Powers.  The Pledgor agrees
that all Pledged Shares (and all other shares of Stock constituting Collateral)
delivered by the Pledgor to the Lender pursuant to this Agreement will be
accompanied by the instruments of transfer or assignment described in Section
2.3.  Thereafter, the Pledgor will, upon the request of the Lender, promptly
deliver to the Lender such stock powers, instruments and similar documents,
satisfactory in form and substance to the Lender, with respect to the Collateral
as the Lender may reasonably request and will, from time to time upon the
request of the Lender, promptly transfer any Pledged Shares or other shares of
Capital Stock, including all Distributions, constituting Collateral into the
name of the Lender or any nominee designated by the Lender.
 
SECTION 4.5.                                Continuous Pledge.  The Pledgor will
at all times keep pledged to the Lender pursuant hereto all Pledged Shares, all
Dividends received after a Default or an Event of Default and Distributions with
respect thereto, and all other Collateral.
 
SECTION 4.6.                                Voting Rights; Dividends.  In
addition, the Pledgor agrees that:
 
(a)           after any Event of Default shall have occurred and be continuing
or if any Default or Event of Default shall occur as a result thereof, promptly
upon receipt thereof by the Pledgor and without any request therefor by the
Lender, the Pledgor shall deliver (properly endorsed where required hereby or
requested by the Lender) to the Lender all Dividends, other than permitted tax
distributions, all of which shall be held by the Lender as additional Collateral
for use in accordance with Section 5.5;
 
(b)           after any Event of Default shall have occurred and be continuing,
upon notice to the Pledgor by the Lender, all rights of the Pledgor to exercise
or refrain from exercising voting or other consensual rights in respect of the
Collateral shall cease and all such rights shall thereupon become vested in the
Lender who shall thereupon have the sole right to exercise or refrain from
exercising such voting and other consensual rights; and
 
(c)           after any Event of Default shall have occurred and be continuing,
promptly upon request of the Lender, the Pledgor shall deliver to the Lender
such proxies and other documents as may be necessary to allow the Lender to
exercise the voting and other consensual rights with respect to any Collateral.
 
 
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Except as set forth in the immediately preceding sentence, the Pledgor shall be
entitled to exercise, in its reasonable judgment, but in a manner not
inconsistent with the terms of the Loan Agreement or any other Loan Document
(including this Agreement), the voting powers and all other incidental rights of
ownership with respect to any Pledged Shares or other shares of Capital Stock
constituting Collateral (subject to the Pledgor’s obligation to deliver to the
Lender such Pledged Shares and other shares in pledge hereunder) and to the
receipt of all Dividends.  All Dividends, Distributions, cash payments and
proceeds, which the Pledgor is then obligated to deliver to the Lender, shall,
until delivery to the Lender, be held by the Pledgor separate and apart from its
other property in trust for the Lender.  The Lender agrees that unless an Event
of Default shall have occurred and be continuing, the Lender shall, upon the
written request of the Pledgor, promptly deliver such proxies and other
documents, if any, as shall be reasonably requested by the Pledgor which are
necessary to allow the Pledgor to exercise voting power with respect to any
share of stock (including Pledged Shares) constituting Collateral; provided,
however, that no vote shall be cast, or consent, waiver or ratification given,
or action taken by the Pledgor that would impair in any material respect any
Collateral or be inconsistent with or violate any provision of the Loan
Agreement or any other Loan Document (including this Agreement).
 
SECTION 4.7.                                Additional Information.  The Pledgor
will furnish to the Lender written notice of the occurrence of any event which
would make any representation contained in Article 3 untrue at such time.
 
SECTION 4.8.                                Delivery of Collateral to
Lender.  The Pledgor acknowledges and agrees that if an Event of Default has
occurred, the Lender shall be entitled to have sole possession and control of
the Collateral and to exercise all of the rights and remedies with respect to
such Collateral provided by Section 5.2.
 
ARTICLE 5
 
EVENTS OF DEFAULT; REMEDIES
 
SECTION 5.1.                                Events of Default.  Each of the
following shall constitute an “Event of Default” hereunder:
 
(a)           if there shall occur any Event of Default under the Loan Agreement
or any other Loan Document;
 
(b)           if any of the Collateral shall be attached or levied upon or
seized in any legal proceeding, or held by virtue of any lien or distress; or
 
(c)           if any representation or warranty of the Pledgor set forth herein
shall be untrue in any material respect or if the Pledgor shall default in the
due performance and observance of any covenant contained herein and such default
shall continue unremedied for a period of ten (10) days.
 
SECTION 5.2.                                Actions upon Event of Default.  In
addition to its rights and remedies provided hereunder, whenever an Event of
Default shall have occurred and be continuing, the Lender shall have all rights
and remedies of a secured party upon default under the U.C.C. or other
applicable law.  Any notification required by law of any intended disposition by
the Lender of any of the Collateral shall be deemed reasonably and properly
given if given at least ten (10) days before such disposition.  Without
limitation of the above, the Lender may whenever an Event of Default shall have
occurred, take all or any of the following actions after giving at least ten
(10) days prior notice to the Pledgor:
 
 
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(a)           transfer all or any part of the Collateral into the name of the
Lender or its nominee, without disclosing that such Collateral is subject to the
Lien hereunder;
 
(b)           take control of any proceeds of the Collateral; and
 
(c)           execute (in the name, place and stead of the Pledgor)
endorsements, assignments, stock powers and other instruments of conveyance or
transfer with respect to all or any of the Collateral.
 
SECTION 5.3.                                Attorney-in-Fact.  The Pledgor
hereby irrevocably appoints the Lender Pledgor's true and lawful
attorney-in-fact, with full power of substitution, in the name of the Pledgor,
the Lender or otherwise, for the sole use and benefit of the Lender, but at the
Pledgor’s expense, upon the occurrence of an Event of Default to take any action
and to execute any instrument which the Lender may deem reasonably necessary or
advisable to enable the Lender to realize the benefit of the security interest
provided for in this Agreement.
 
SECTION 5.4.                                Private Sales.
 
(a) The Pledgor recognizes that the Lender may be unable, after the occurrence
of any Event of Default, to effect a public sale of any or all the Pledged
Shares by reason of certain prohi­bitions contained in the Securities Act of
1933, as amended (the “Securities Act”) and applicable state securities law or
otherwise, and may be compelled to resort to one or more private sales thereof
to a restricted group of purchasers that will be obligated to agree, among other
things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof.  The Pledgor acknowledges and
agrees that any such private sale may result in prices and other terms less
favorable than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner.  The Lender shall be under no
obligation to delay sale of any of the Pledged Shares for the period of time
necessary to permit any entity to register such securities for public sale under
the Securities Act, or under applicable state securities law, even if such
entity would agree to do so.
 
(b)           The Pledgor further agrees to use Pledgor's reasonable best
efforts, after the occurrence of an Event of Default, to do or cause to be done
all such acts as may be necessary to make such sale or sales of all or any
portion of the Pledged Shares pursuant to this Section 5.4 valid and binding and
in compliance with any and all requirements of applicable law.
 
SECTION 5.5.                                Application of Proceeds.  All cash
proceeds received by the Lender in respect of any sale of, collection from, or
other realization upon, all or any part of the Collateral may, in the discretion
of the Lender, be held by the Lender as additional collateral security for, or
then or at any time thereafter be applied (after payment of any amounts payable
to the Lender pursuant to the Loan Agreement and Section 5.6 of this Agreement)
in whole or in part by the Lender against, all or any part of the Secured
Obligations in the order and manner as the Bank in its discretion may determine.
Any surplus of such cash or cash proceeds held by the Lender and remaining after
payment in full of all the Secured Obligations shall be paid over to the Pledgor
or to whomsoever may be lawfully entitled to receive such surplus.
 
 
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SECTION 5.6.                                Indemnity and Expenses.  The Pledgor
hereby indemnifies and holds harmless the Lender from and against any and all
claims, losses, and liabilities growing out of or resulting from this Agreement
(including enforcement of this Agreement), to the same extent as set forth in
the Loan Agreement.  Upon demand, the Pledgor will pay, or cause to be paid, to
the Lender the amount of any and all reasonable expenses actually incurred,
including the reasonable fees and disbursements of its counsel and of any
experts and agents actually incurred, which the Lender incurs in connection
with:
 
(a)           the administration of this Agreement;
 
(b)           the custody, preservation, use, or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral, including
without limitation, any fees owing to the Lender;
 
(c)           the exercise or enforcement of any of the rights of the Lender
hereunder and any action taken by the Lender under Section 6.4; and
 
(d)           the failure by the Pledgor to perform or observe any of the
provisions hereof.
 
SECTION 5.7.                                Sale of Pledged Shares.  If the
Lender shall determine to exercise its right to sell any of the Pledged Shares
pursuant to Section 5.2 and/or Section 5.4 or under applicable law, the Pledgor
agrees that, upon request of the Lender, as soon as practicable, the Pledgor
will, at its own expense:
 
(a)           produce and deliver, and cause each issuer of the Pledged Shares
and the directors and officers thereof to produce and deliver, all financial and
other information pertaining to such issuer, and do or cause to be done all such
other acts and things, as may be necessary or, in the opinion of the Lender,
advisable to sell or otherwise dispose of such Pledged Shares in a private sale
in conformity with the requirements of all applicable federal and state
securities laws, rules and regulations;
 
(b)           do or cause to be done all such other acts and things as may be
necessary to make such sale of the Pledged Shares or any part thereof valid and
binding and in compliance with applicable law.
 
The Pledgor further acknowledges the impossibility of ascertaining the amount of
damages which would be suffered by the Lender by reason of the failure of the
Pledgor to perform any of the covenants contained in this Section and,
consequently, agrees that the remedy of specific performance may be granted to
require the Pledgor to comply with the covenants contained in this Section, at
any time after the Lender shall demand compliance with this Section.
 

 
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ARTICLE 6
 
MISCELLANEOUS
 
SECTION 6.1.                                Loan Document.  This Agreement is a
Loan Document executed pursuant to the Loan Agreement and shall (unless
otherwise expressly indicated herein) be construed, administered and applied in
accordance with the terms and provisions thereof.
 
SECTION 6.2.                                Amendments.  No amendment or waiver
of any provision of this Agreement nor consent to any departures by the Pledgor
herefrom shall in any event be effective unless the same shall be in writing,
signed by the Lender, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it is given.
 
SECTION 6.3.                                Obligations Not Affected.  The
obligations of the Pledgor under this Agreement shall remain in full force and
effect without regard to, and shall not be impaired or affected by:
 
(a)           any amendment or modification or addition or supplement to the
Loan Agreement, any other Loan Document, any instrument delivered in connection
therewith or any assignment or transfer thereof;
 
(b)           any exercise, non-exercise or waiver by the Lender or Lender of
any right, remedy, power or privilege under or in respect of, or any release of
any guaranty or collateral provided pursuant to, this Agreement, the Loan
Agreement or any other Loan Document;
 
(c)           any waiver, consent, extension, indulgence or other action or
inaction in respect of this Agreement, the Loan Agreement or any other Loan
Document or any assignment or transfer of any thereof; or
 
(d)           any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like, of the Pledgor or any other
Person, whether or not the Pledgor shall have notice or knowledge of any of the
foregoing.
 
SECTION 6.4.                                Protection of Collateral.  Upon the
occurrence and continuation of an Event of Default, the Lender may from time to
time perform, at its option, any act which the Pledgor agrees hereunder to
perform and which the Pledgor shall fail to perform, and the Lender may from
time to time take any other action which the Lender reasonably deems necessary
for the maintenance, preservation or protection of any of the Collateral or of
its security interest therein.
 
SECTION 6.5.                                   Addresses for Notices.  All
communications, notices or demands provided for hereunder shall be sent by first
class mail, by courier, by hand or by certified mail as follows or to such other
address with respect to any party as such party shall notify the others in
writing:
 
To the Lender:                      Bank of America, N.A.
100 South Charles Street, 2nd Floor
Baltimore, Maryland 21201

 
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To the Pledgor:                     GSE Systems, Inc.
7133 Rutherford Road, Suite 200
Baltimore, Maryland 21244

Except as otherwise specifically set forth herein, each such communication,
notice or demand shall be deemed given:  (i) when deposited in the mail with
proper postage affixed if sent by mail; or (ii) when actually delivered to the
appropriate address if sent by courier or by hand.
SECTION 6.6.                                  Governing Law; Jurisdiction.
 
(a)           Subject to Section 6.11, this Agreement shall be construed in
accordance with and be governed by the law (without giving effect to the
conflict of law principles thereof) of the State of Maryland.
 
(b)           Subject to Section 6.11, the Pledgor hereby irrevocably and
unconditionally submits, for itself and its property, to the non-exclusive
jurisdiction of any state or federal court located Baltimore, Maryland and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby or thereby,
or for recognition or enforcement of any judgment, and each of the parties
hereto hereby irrevocably and unconditionally agrees that all claims in respect
of any such action or proceeding may be heard and determined in such state or
federal court to the extent permitted by applicable law. The Pledgor agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Lender may otherwise have to bring any action or proceeding relating to this
Agreement against the Pledgor or Pledgor's properties in the courts of any
jurisdiction.
 
(c)           Subject to Section 6.11, the Pledgor irrevocably and
unconditionally waives any objection which it may now or hereafter have to the
laying of venue of any such suit, action or proceeding described in paragraph
(b) of this Section and brought in any court referred to in the first sentence
of paragraph (b) of this Section 6.6.  The Pledgor irrevocably waives, to the
fullest extent permitted by applicable law, the defense of an inconvenient forum
to the maintenance of such action or proceeding in any such court.
 
(d)           Subject to Section 6.11, the Pledgor irrevocably consents to the
service of process in the manner provided for notices in Section 6.5 of this
Agreement.  Nothing in this Agreement or in any other Loan Document will affect
the right of any party hereto to serve process in any other manner permitted by
law.
 
SECTION 6.7.                                Waiver of Jury Trial.  SUBJECT TO
SECTION 6.11, THE PLEDGOR HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). THE PLEDGOR (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF LENDER HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE
WAIVERS AND CERTIFICATIONS IN THIS SECTION.
 
 
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SECTION 6.8.                                  Limitation of Liability.  Subject
to Section 6.11, neither the Lender nor any subsidiary or affiliate thereof,
shall have any liability with respect to, and THE PLEDGOR HEREBY WAIVES,
RELEASES AND AGREES NOT TO SUE UPON, ANY CLAIM FOR ANY SPECIAL, INDIRECT,
PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES SUFFERED BY THE PLEDGOR IN
CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREIN OR ANY ACT, OMISSION OR EVENT OCCURRING IN
CONNECTION HEREWITH.
 
SECTION 6.9.                                 Counterparts, Effectiveness,
etc.  This Agreement may be executed by the parties hereto in several
counterparts, each of which shall be executed on behalf of the Pledgor and
Lender.
 
SECTION 6.10. Additional Pledged Shares.  The Pledgor hereby represents and
warrants that Exhibit A attached hereto contains the exclusive list of
subsidiaries of the Pledgor.  If the Pledgor at any time after the date hereof
becomes the owner of any additional Capital Stock of any entity, by acquisition
or otherwise, such additional Capital Stock shall constitute “Additional Pledged
Shares” for purposes of this Agreement, subject to all of the terms and
conditions hereof, and the Pledgor shall promptly execute and deliver to the
Lender a supplemental schedule in the form of Schedule II to this Agreement
describing such Additional Pledged Shares in the same manner as the Initial
Pledged Shares are described in Schedule I.
 
[Signatures on next page]
 

 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written, intending to create an instrument executed
under seal..
 
"LENDER"
 
BANK OF AMERICA, N.A.
 
 
By:           /s/ Kevin Mahon
Kevin Mahon
Senior Vice President
 
"PLEDGOR"
 
GSE SYSTEMS, INC., a Delaware corporation
 
 
By:           /s/ Jeffery
Hough                                                       (Seal)
Jeffery Hough
Chief Financial Officer
     
MSHI, INC., a Virginia corporation
 
 
By:           /s/ Jeffery
Hough                                                       (Seal)
Jeffery Hough
Chief Financial Officer
     
GSE POWER SYSTEMS, INC., a Delaware corporation
 
 
By:           /s/ Jeffery
Hough                                                       (Seal)
Jeffery Hough
Chief Financial Officer
     
GSE PROCESS SOLUTIONS, INC., a Delaware corporation
 
 
By:           /s/ Jeffery
Hough                                                       (Seal)
Jeffery Hough
Chief Financial Officer

 

 
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Exhibit A

Subsidiaries

[See attached]
 
 

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 SCHEDULE I

INITIAL PLEDGED SHARES

Stock Pledge Information

Pledgor
Issuer
Class of Stock
Certificate Numbers
Number of Shares Issued and Outstanding
GSE Systems, Inc.
MSHI, Inc.
Common
1
1,000
GSE Systems, Inc.
GSE Process Solutions, Inc.
Common
C 1
1,000
GSE Systems, Inc.
GSE Services Company, LLC
Membership Interests
None
N/A
GSE Systems, Inc.
GSE Erudite Software, Inc.
Common
C 1
1,000
GSE Systems, Inc.
GSE Power Systems AB
Common
1001-2950
1,950
GSE Systems, Inc.
GSE Engineering Systems (Bejing) Company, Ltd.
 
None
 
GSE Systems, Inc.
GSE Systems, Ltd.
Common
1
1
MSHI, Inc.
GSE Power Systems, Inc. (formerly Simulation, systems & Services Technologies
Company)
Common
3
100
GSE Power Systems, Inc.
GSE Government & Military Simulation Systems, Inc. (formerly GP International
Engineering & Simulation, Inc.)
Common
4
100
GSE Process Solutions, Inc.
GSE Process Solutions, BV
   
400

 
 

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SCHEDULE II

ADDITIONAL PLEDGED SHARES

Pledgor
Issuer
Class of Stock
Certificate Numbers
Number of Shares Issued and Pledged
         

 
# 5165014_v3

 
 

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