Document:

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                                                                    EXHIBIT 10.6

[WACHOVIA LOGO]

      August 4, 2005

      General Physics Corporation
      6095 Marshalee Drive
      Suite 300
Elkridge, Maryland 21075

Attention: Sharon Esposito-Mayer

                        Re:   Financing and Security Agreement dated as of
                              August 13, 2003 (as amended, modified,
                              substituted, extended, and renewed from time to
                              time, collectively, the "Financing Agreement") by
                              and between General Physics Corporation,
                              Skillright, Inc., GSE Systems, Inc., GSE Power
                              Systems, Inc., and MSHI, Inc. (the "Borrowers"),
                              jointly and severally, and Wachovia Bank, National
                              Association (the "Lender")

Ladies and Gentlemen:

      Reference is made to the Financing Agreement for the meaning of
capitalized terms not otherwise defined herein. This letter shall be deemed one
of the Financing Documents as defined in the Financing Agreement.

      The Borrowers have advised the Lender that GSE failed to comply with the
financial covenant contained in Section 7.1.23(b) (Debt Service Coverage Ratio)
as of June 30, 2005 (the "Event of Default"). The Borrowers acknowledge and
agree that the Lender is entitled to exercise any and all of its rights and
remedies provided in the Financing Agreement, any other Financing Documents or
otherwise available by contract, at law or in equity.

      The Borrowers have requested that the Lender forebear from exercising its
remedies in response to the Event of Default from the date this Agreement
becomes effective until delivery of the financial statements of GSE for the
period ending December 31, 2005 (the "Forbearance Period").

      The Lender has agreed, subject to (a) the payment of a fee in the amount
of $2,500 and (b) the terms hereof, to forbear from exercising its rights and
remedies under the Financing Agreement and all other Financing Documents arising
from the Event of Default for the Forbearance Period; provided, however, the
Borrowers expressly agree that this forbearance shall automatically terminate
and the Lender shall have no obligation to continue to forebear hereunder in the
event that any other Event of Default or Default occurs under the Note, the
Financing Agreement or any other Financing Document. The Lender further agrees
that General Physics shall not be deemed to be in default as a result of the
Event of Default during the Forbearance Period.

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      The Borrowers acknowledge and agree that the Lender's agreement to forbear
from exercising available rights and remedies during the Forbearance Period and
to waive the Event of Default as to General Physics during the Forbearance
Period, subject to the terms of this letter agreement, is not intended to (a)
operate as a release or waiver of the rights and remedies available to the
Lender pursuant to the Financing Agreement or other Financing Documents (except
as to General Physics), including without limitation, any right against any
person or entity not a party to this letter agreement, nor as a waiver of the
Event of Default (except as to General Physics) or any other Event of Default or
Default now or hereafter existing under the terms of the Financing Agreement or
the other Financing Documents or (b) indicate an agreement on the Lender's part
to forbear from exercising its rights and remedies in the future. Every right or
remedy contained in the Financing Documents or now or hereafter existing in law
or in equity, or by statute or otherwise, shall be cumulative.

      In consideration of the foregoing, each of the Borrowers, by its signature
below, hereby RELEASES AND DISCHARGES the Lender and its predecessors,
successors, assigns, officers, managers, directors, shareholders, employees,
agents, attorneys, representatives, parent corporations, subsidiaries, and
affiliates (collectively referred to as the "Affiliates"), and does hereby
indemnify and hold harmless the Lender from any and all claims, counterclaims,
demands, damages, debts, agreements, covenants, suits, contracts, obligations,
liabilities, accounts, offsets, rights, actions and causes of action of any
nature whatsoever, including, without limitation, all claims, demands, and
causes of action for contribution and indemnity, whether arising at law or in
equity (including without limitation, claims of fraud, duress, mistake, tortious
interference or usury), whether presently possessed or possessed in the future,
whether known or unknown, whether liability be direct or indirect, liquidated or
unliquidated, whether presently accrued or to accrue hereafter, whether or not
heretofore asserted, for or because of or as a result of any act, omission,
communication, transaction, occurrence, representation, promise, damage, breach
of contract, fraud, violation of any statute or law, commission of any tort, or
any other matter whatsoever or thing done, omitted or suffered to be done by the
Lender or the Affiliates, INSOFAR AS THE SAME ARISE OUT OF OR RELATE TO THE
OBLIGATIONS, THE FINANCING AGREEMENT AND/OR THE OTHER FINANCING DOCUMENTS, which
have occurred in whole or in part, or were initiated at any time up to and
through the execution of this letter agreement.

      This letter agreement is not intended by the parties to be a novation of
the Note or any of the Financing Documents. The parties hereto agree that except
as expressly modified hereby, all terms and conditions of the Financing
Agreement and the other Financing Documents are hereby reaffirmed and shall
otherwise remain in full force and effect and that such terms and conditions
shall be strictly adhered to.

      This letter agreement shall become effective only upon its execution and
delivery by the Lender and the Borrowers and shall be deemed to be effective as
of the date first written above.

      Except for the Lender and the Borrowers, no person or entity is intended
to be a beneficiary of this letter agreement and no other person or entity shall
be authorized to rely upon the contents of this letter agreement.

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      If you would like to accept this offer of forbearance, please execute this
letter agreement in the place provided below and return the same to the
undersigned. This letter agreement shall be governed by the laws of the State of
Maryland and shall be binding upon the parties hereto and their successors and
assigns.

      This letter agreement shall not constitute a waiver, amendment or
modification of any provision of the Financing Agreement or any of the other
Financing Documents except as expressly set forth herein.

      Should you have any questions concerning your obligations under this
letter agreement or the other Financing Documents, please feel free to call the
undersigned at any time at (410) 332-5243.

                                             Wachovia Bank, National Association

                                             By: ________________
                                                 Lucy C. Campbell
                                                 Vice President

ACCEPTED AND AGREED this ____ DAY OF AUGUST, 2005. ENCLOSED IS OUR CHECK IN THE
AMOUNT OF $2,500 IN PAYMENT OF THE FEE DUE AND PAYABLE IN CONNECTION WITH THIS
LETTER AGREEMENT.

GENERAL PHYSICS CORPORATION

By: ______________________(SEAL)
    Name:
    Title:

SKILLRIGHT, INC.

By: ______________________(SEAL)
    Name:
    Title:

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GSE SYSTEMS, INC.

By: ______________________(SEAL)
    Name:
    Title:

GSE POWER SYSTEMS, INC.

By: ______________________(SEAL)
    Name:
    Title:

MSHI, INC.

By: ______________________(SEAL)
    Name:
    Title:

                                        4<PAGE>

                                                                    EXHIBIT 10.7

                                   Exhibit A-1

      This Exhibit A-1 amends and supersedes in its entirety Exhibit A to the
Management Agreement dated July 30, 2004, between GP Strategies Corporation
("GP") and National Patent Development Corporation ("NPDC").

1. Effective July 1, 2005, the Services to be provided by GP to NPDC shall
consist solely of the following:

      a. GP's in-house counsel shall provide NPDC and its subsidiaries with
legal advice concerning matters that do not require involvement of outside
counsel and with assistance in supervising matters that are referred to outside
counsel. All fees and expenses of outside counsel and other experts shall be
borne by NPDC.

         b. GP shall assist NPDC to comply with federal, state and local laws
and governmental regulations applicable to the business operations of NPDC and
its subsidiaries, including but not limited to preparation and filing of tax
returns, reports and other filings with public authorities. All taxes, filing
fees, penalties, interest and other out-of-pocket expenses shall be borne by
NPDC.

      c. GP shall provide NPDC with corporate secretarial administrative support
to maintain records of proceedings of NPDC's board of directors and
stockholders, stockholder and stock transfer records, stock registration with
the Securities & Exchange Commission, compliance with stock exchange/NASDAQ
listing/trading requirements, and similar secretarial functions.

      d. GP shall provide NPDC with executive management consulting and other
support to assist NPDC with business performance and development, including the
services of Jerome Feldman ("Feldman") as NPDC's Chief Executive Officer.

2. As compensation for the Services, beginning July 1, 2005, NPDC shall pay to
GP a yearly fee (the "Fee") of at least Nine Hundred Sixty-Nine Thousand Five
Hundred Two Dollars ($969,502.00) in equal monthly installments of Eighty
Thousand Seven Hundred Ninety-two Dollars ($80,792.00) each. The Fee includes
Six Hundred Ninety-Seven Thousand Eight Hundred Dollars ($697,800.00) for the
period July 1, 2005 - June 30, 2006, representing approximately 80% of the cost
of the compensation and benefits provided by GP to Feldman. The Fee shall be
increased by 80% of any increase in the cost of compensation and/or benefits
required to be provided to Feldman under his employment agreement with GP. For
the period July 1, 2006 - June 30, 2007, the Fee shall be increased by at least
Twenty Six Thousand Dollars ($26,000.00), representing 80% of the scheduled
annual salary increase under Feldman's employment agreement. If this Management
Agreement expires, terminates or is otherwise not extended through at least May
31, 2007, then NPDC shall remain liable for paying to GP 80% of the cost of the
compensation and benefits provided by GP to Feldman under his employment
agreement for any period following the end of the Management Agreement through
May 31, 2007. The Fee for other Services under this Management Agreement shall
be subject to change if the Services change. Any change in the Fee for such
other Services shall be evidenced by a written amendment to the Management
Agreement or this Exhibit A-1

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                                                                    EXHIBIT 10.7

and signed by representatives of GP and NPDC. NPDC shall pay GP the Fee in
installments on the first day of each calendar month without demand. A monthly
fee installment may be reduced by any mutually agreed charges relating to the
use of common facility space. The provisions of this Exhibit A-1 shall survive
the expiration or termination of the Management Agreement.

3. Except as modified by this Exhibit A-1, the Management Agreement shall remain
in effect as if this Exhibit A-1 had not been entered into.

IN WITNESS WHEREOF, GP and NPDC have caused this Exhibit A-1 to be executed by
their authorized representatives as of July 1, 2005.

GP Strategies Corporation                National Patent Development Corporation

By: ________________________             By: ______________________________
    Title:                                   Title:

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