Contract
Exhibit 10.10
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.
000 Xxxxx Xxxxxxx Xxxxxx, 0xx
Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
10
To the
Pledgor: GSE
Systems, Inc.
0000 Xxxxxxxxxx Xxxx, Xxxxx
000
Xxxxxxxxx, Xxxxxxxx 00000
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.
11
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 XXX 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]
12
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/ Xxxxx
Xxxxx
Xxxxx
Xxxxx
Senior
Vice President
|
"PLEDGOR"
GSE
SYSTEMS, INC., a Delaware corporation
By: /s/ Xxxxxxx
Xxxxx (Seal)
Xxxxxxx
Xxxxx
Chief
Financial Officer
|
|
MSHI,
INC., a Virginia corporation
By: /s/ Xxxxxxx
Xxxxx (Seal)
Xxxxxxx
Xxxxx
Chief
Financial Officer
|
|
|
GSE
POWER SYSTEMS, INC., a Delaware corporation
By: /s/ Xxxxxxx
Xxxxx (Seal)
Xxxxxxx
Xxxxx
Chief
Financial Officer
|
|
|
GSE
PROCESS SOLUTIONS, INC., a Delaware corporation
By: /s/ Xxxxxxx
Xxxxx (Seal)
Xxxxxxx
Xxxxx
Chief
Financial Officer
|
13
Exhibit
A
Subsidiaries
[See
attached]
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
|
SCHEDULE
II
ADDITIONAL PLEDGED
SHARES
|
Pledgor
|
Issuer
|
Class of Stock
|
Certificate Numbers
|
Number of Shares Issued and
Pledged
|
#
5165014_v3
