Control Agreement Regarding Limited Liability
Company Interests
AGREEMENT (as amended, modified, restated and/or supplemented from time to
time, this "Agreement"), dated as of March 7, 2006, among GSE Systems, Inc., a
Delaware corporation (the "Pledgor"), Laurus Master Fund, Ltd. (the "Pledgee"),
and GSE Services Company LLC, a Delaware limited liability company, as the
issuer of the Limited Liability Company Interests (as defined below) (the
"Issuer").
W I T N E S S E T H :
WHEREAS, the Pledgor, certain Subsidiaries of the Pledgor and the Pledgee
have entered into a Stock Pledge Agreement, dated as of March 7, 2006 (as
amended, modified, restated and/or supplemented from time to time, the "Pledge
Agreement"), under which, among other things, in order to secure the payment of
the Indebtedness (as defined in the Pledge Agreement), the Pledgor has or will
pledge to the Pledgee, and grant a security interest in favor of the Pledgee in,
all of the right, title and interest of the Pledgor in and to any and all equity
interests (including, without limitation, limited liability company interests
and membership interests) from time to time issued by the Issuer (collectively,
the "Limited Liability Company Interests"), whether now existing or hereafter
from time to time acquired by the Pledgor (with all of such Limited Liability
Company Interests being herein collectively called the "Issuer Pledged
Interests"); and
WHEREAS, the Pledgor desires the Issuer to enter into this Agreement in
order to perfect the security interest of the Pledgee under the Pledge Agreement
in the Issuer Pledged Interests, to vest in the Pledgee control of the Issuer
Pledge Interests and to provide for the rights of the parties under this
Agreement;
NOW THEREFORE, in consideration of the premises and the mutual promises and
agreements contained herein, and for other valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
1. The Pledgor hereby irrevocably authorizes and directs the Issuer, and
the Issuer hereby agrees, to comply with any and all instructions and orders
originated by the Pledgee (and its successors and assigns) regarding any and all
of the Issuer Pledged Interests without the further consent by the registered
owner (including the Pledgor), and, following its receipt of a notice from the
Pledgee stating that the Pledgee is exercising exclusive control of the Issuer
Pledged Interests in accordance with the Stock Pledge Agreement, not to comply
with any instructions or orders regarding any or all of the Issuer Pledged
Interests originated by any person or entity other than the Pledgee (and its
successors and assigns) or a court of competent jurisdiction.
2. The Issuer hereby certifies that (i) no notice of any security interest,
lien or other encumbrance or claim affecting the Issuer Pledged Interests (other
than the security interest of the Pledgee) has been received by it, and (ii) the
security interest of the Pledgee in the Issuer Pledged Interests has been
registered in the books and records of the Issuer.
3. The Issuer hereby represents and warrants that (i) the pledge by the
Pledgor of, and the granting by the Pledgor of a security interest in, the
Issuer Pledged Interests to the Pledgee, does not violate any agreement
governing the Issuer or the Issuer Pledged Interests.
4. All notices, statements of accounts, reports, prospectuses, financial
statements and other communications to be sent to the Pledgor by the Issuer in
respect of the Issuer will also be sent to the Pledgee at the following address:
Laurus Master Fund, Ltd.
c/o Laurus Capital Management, LLC
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Telephone No.: 000-000-0000
Telecopier No.: 000-000-0000
5. Following its receipt of a notice from the Pledgee stating that the
Pledgee is exercising exclusive control of the Issuer Pledged Interests
(pursuant to the notice requirements in Section 1 above) and until the Pledgee
shall have delivered written notice to the Issuer that all of the Obligations
have been paid in full and this Agreement is terminated, the Issuer will send
any and all redemptions, distributions, interest or other payments in respect of
the Issuer Pledged Interests from the Issuer for the account of the Pledgee only
by wire transfers to such account as the Pledgee shall instruct.
6. Except as expressly provided otherwise in Sections 4 and 5, all notices,
instructions, orders and communications hereunder shall be sent or delivered by
mail, telegraph, telex, telecopy, cable or overnight courier service and all
such notices and communications shall, when mailed, telexed, telecopied, cabled
or sent by overnight courier, be effective when deposited in the mails or
delivered to overnight courier, prepaid and properly addressed for delivery on
such or the next Business Day, or sent by telex or telecopier, except that
notices and communications to the Pledgee or the Issuer shall not be effective
until received. All notices and other communications shall be in writing and
addressed as follows:
(a) if to the Pledgor, at:
GSE Systems, Inc.
Attn: Xxxxxxx X. Xxxxx
0000 Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
With a copy to:
Kalbian Xxxxxxx LLP
Attn: Xxxxx X. Xxxxxxx, Esq.
000 00xx Xxxxxx, XX, Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Facsimile: (000) 000-0000
(b) if to the Pledgee, at the address given in Section 4 hereof;
(c) if to the Issuer, at:
c/o GSE Systems, Inc.
Attn: Xxxxxxx X. Xxxxx 0000
Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder. As used in this
Section 6, "Business Day" means any day other than a Saturday, Sunday, or other
day in which banks in New York are authorized to remain closed.
7. This Agreement shall be binding upon the successors and assigns of the
Pledgor and the Issuer and shall inure to the benefit of and be enforceable by
the Pledgee and its successors and assigns. This Agreement may be executed in
any number of counterparts, each of which shall be an original, but all of which
shall constitute one instrument. In the event that any provision of this
Agreement shall prove to be invalid or unenforceable, such provision shall be
deemed to be severable from the other provisions of this Agreement which shall
remain binding on all parties hereto. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
except in writing signed by the Pledgee, the Issuer and the Pledgor.
8. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without regard to its principles of conflict of
laws.
IN WITNESS WHEREOF, the Pledgor, the Pledgee and the Issuer have caused
this Agreement to be executed by their duly elected officers duly authorized as
of the date first above written.
GSE SYSTEMS, INC.,
as Pledgor
By_____________________________
Name: Xxxx X. Xxxxx
Title: Chief Executive
Officer LAURUS MASTER FUND, LTD.,
as Pledgee
By_____________________________
Name:
Title:
GSE SERVICES COMPANY LLC,
as Issuer
By_____________________________
Name: Xxxx X. Xxxxx
Title: Chief Executive Officer
