Appendix A

                               GSE SYSTEMS, INC.
                         1995 LONG-TERM INCENTIVE PLAN
               (As Amended and Restated Effective April  28, 2005)

1.      Restatement, Purpose and Types of Awards

     GSE Systems, Inc., a Delaware corporation (the "Corporation"), maintained
the GSE Systems, Inc. 1995 Long-Term Incentive Plan (As Amended through June 25,
2001) (the "Prior Plan"). The Prior Plan has been amended and restated, as set
forth herein, effective April 28, 2005, subject to the approval of the
shareholders of the Corporation within twelve months of such effective date (the
"Plan"). Notwithstanding anything herein to the contrary, nothing in this Plan
shall adversely affect the rights or obligations, under any Award granted under
the Prior Plan, of any grantee or holder of the Award without such person's
approval.

     The purpose of the Plan is to promote the long-term growth and
profitability of the Corporation by: (i) providing key people with incentives to
improve stockholder value and to contribute to the growth and financial success
of the Corporation; and (ii) enabling the Corporation to attract, retain and
reward the best-available persons.

     The Plan permits the granting of stock options (including incentive stock
options qualifying under Code section 422 and nonqualified stock options), stock
appreciation rights, restricted or unrestricted stock awards, phantom stock,
performance awards, or any combination of the foregoing.

2.      Definitions

     Under this Plan, except where the context otherwise indicates, the
following definitions apply:

        (a)     "Affiliate" shall mean any entity, whether now or hereafter
 existing, which controls, is controlled by, or is under common control with,
the Corporation (including, but not limited to, joint ventures, limited
liability companies, and partnerships).  For this purpose, "control" shall mean
ownership of 50% or more of the total combined voting power or value of all
classes of stock or interests of the entity.

        (b)     "Award" shall mean any stock option, stock appreciation right,
stock award, phantom stock award, or performance award.

        (c)     "Board" shall mean the Board of Directors of the Corporation.

        (d)     "Code" shall mean the Internal Revenue Code of 1986, as amended,
 and any regulations promulgated thereunder.

        (e)     "Common Stock" shall mean shares of common stock of the
Corporation, $.01 par value.

        (f)     "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.

        (g)     "Fair Market Value" of a share of the Corporation's Common Stock
for any purpose on a particular date shall mean the last reported sale price per
share of Common Stock, regular way, on such date or, in case no such sale takes
place on such date, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on a national securities exchange or included for quotation on the
American Stock Exchange, or if the Common Stock is not so listed or admitted to
trading or included for quotation, the last quoted price, or if the Common Stock
is not so quoted, the average of the high bid and low asked prices, regular way,
in the over-the-counter market, as reported by the American Stock Exchange or,
if such system is no longer in use, the principal other automated quotations
system that may then be in use or, if the Common Stock is not quoted by any such
organization, the average of the closing bid and asked prices, regular way, as
furnished by a professional market maker making a market in the Common Stock as
selected in good faith by the Administrator or by such other source or sources
as shall be selected in good faith by the Administrator.  If, as the case may
be, the relevant date is not a trading day, the determination shall be made as
of the next preceding trading day.  As used herein, the term "trading day" shall
mean a day on which public trading of securities occurs and is reported in the
principal consolidated reporting system referred to above, or if the Common
Stock is not listed or admitted to trading on a national securities exchange or
included for quotation on the American Stock Exchange, any business day.

        (h)     "Grant Agreement" shall mean a written document memorializing
the terms and conditions of an Award granted pursuant to the Plan and shall
incorporate the terms of the Plan.

        (i)     "Parent" shall mean a corporation, whether now or hereafter
existing, within the meaning of the definition of "parent corporation" provided
in Code section 424(e), or any successor thereto.

        (j)     "Subsidiary" and "subsidiaries" shall mean only a corporation
or corporations, whether now or hereafter existing, within the meaning of the
definition of "subsidiary corporation" provided in Section 424(f) of the Code,
or any successor thereto.

3.      Administration

        (a)     Administration of the Plan.  The Plan shall be administered by
the Board or by such committee or committees as may be appointed by the Board
from time to time (the Board, committee or committees hereinafter referred to
as the "Administrator").

        (b)     Powers of the Administrator.  The Administrator shall have all
the powers vested in it by the terms of the Plan, such powers to include
authority, in its sole and absolute discretion, to grant Awards under the Plan,
prescribe Grant Agreements evidencing such Awards and establish programs for
granting Awards.

     The Administrator shall have full power and authority to take all other
actions necessary to carry out the purpose and intent of the Plan, including,
but not limited to, the authority to: (i) determine the eligible persons to
whom, and the time or times at which Awards shall be granted; (ii) determine the
types of Awards to be granted; (iii) determine the number of shares to be
covered by or used for reference purposes for each Award; (iv) impose such
terms, limitations, restrictions and conditions upon any such Award as the
Administrator shall deem appropriate; (v) modify, amend, extend or renew
outstanding Awards, or accept the surrender of outstanding Awards and substitute
new Awards (provided however, that, except as provided in Section 7(d) of the
Plan, any modification that would materially adversely affect any outstanding
Award shall not be made without the consent of the holder); (vi) accelerate or
otherwise change the time in which an Award may be exercised or becomes payable
and to waive or accel erate the lapse, in whole or in part, of any restriction
or condition with respect to such Award, including, but not limited to, any
restriction or condition with respect to the vesting or exercisability of an
Award following termination of any grantee's employment or other relationship
with the Corporation; and (vii) establish objectives and conditions, if any, for
earning Awards and determining whether Awards will be paid after the end of a
performance period.

     The Administrator shall have full power and authority, in its sole and
absolute discretion, to administer and interpret the Plan and to adopt and
interpret such rules, regulations, agreements, guidelines and instruments for
the administration of the Plan and for the conduct of its business as the
Administrator deems necessary or advisable.

        (c)     Non-Uniform Determinations.  The Administrator's determinations
under the Plan (including without limitation, determinations of the persons to
receive Awards, the form, amount and timing of such Awards, the terms and
provisions of such Awards and the Grant Agreements evidencing such Awards) need
not be uniform and may be made by the Administrator selectively among persons
who receive, or are eligible to receive, Awards under the Plan, whether or not
such persons are similarly situated.

        (d)     Limited Liability.  To the maximum extent permitted by law, no
member of the Administrator shall be liable for any action taken or decision
made in good faith relating to the Plan or any Award thereunder.

        (e)     Indemnification.  To the maximum extent permitted by law and by
the Corporation's charter and by-laws, the members of the Administrator shall
be indemnified by the Corporation in respect of all their activities under the
Plan.

        (f)     Effect of Administrator's Decision.  All actions taken and
decisions and determinations made by the Administrator on all matters relating
to the Plan pursuant to the powers vested in it hereunder shall be in the
Administrator's sole and absolute discretion and shall be conclusive and binding
on all parties concerned, including the Corporation, its stockholders, any
participants in the Plan and any other employee, consultant, or director of the
Corporation, and their respective successors in interest.

4.      Shares Available for the Plan; Maximum Awards

     Subject to adjustments as provided in Section 7(d), the shares of Common
Stock that may be issued with respect to Awards granted under the Plan
(including, for purposes of this Section 4, the Prior Plan) shall not exceed an
aggregate of 2,500,000 shares of Common Stock. The Corporation shall reserve
such number of shares for Awards under the Plan, subject to adjustments as
provided in Section 7(d). If any Award, or portion of an Award, under the Plan
expires or terminates unexercised, becomes unexercisable or is forfeited or
otherwise terminated, surrendered or canceled as to any shares, or if any shares
of Common Stock are surrendered to the Corporation in connection with any Award
(whether or not such surrendered shares were acquired pursuant to any Award),
the shares subject to such Award and the surrendered shares shall thereafter be
available for further Awards under the Plan; provided, however, that any such
shares that are surrendered to the Corporation in connection with any Award or
that are otherwise forfeited after issuance shall not be available for purchase
pursuant to incentive stock options intended to qualify under Code section 422.

     Subject to adjustments as provided in Section 7(d), the maximum number of
shares of Common Stock subject to Awards of any combination that may be granted
during any one fiscal year of the Corporation to any one individual under this
Plan shall be limited to 400,000. Such per-individual limit shall not be
adjusted to effect a restoration of shares of Common Stock with respect to which
the related Award is terminated, surrendered or canceled.

5.      Participation

     Participation in the Plan shall be open to all employees, officers,
directors, and consultants of the Corporation, or of any Affiliate of the
Corporation, as may be selected by the Administrator from time to time.

6.      Awards

     The Administrator, in its sole discretion, establishes the terms of all
Awards granted under the Plan. Awards may be granted individually or in tandem
with other types of Awards. All Awards are subject to the terms and conditions
provided in the Grant Agreement.

        (a)     Stock Options.  The Administrator may from time to time grant to
eligible participants Awards of incentive stock options as that term is defined
in Code section 422 or nonqualified stock options; provided, however, that
Awards of incentive stock options shall be limited to employees of the
Corporation or of any Parent or Subsidiary of the Corporation.  Options intended
to qualify as incentive stock options under Code section 422 must have an
exercise price at least equal to Fair Market Value on the date of grant, but
nonqualified stock options may be granted with an exercise price less than Fair
Market Value.  No stock option shall be an incentive stock option unless so
designated by the Administrator at the time of grant or in the Grant Agreement
evidencing such stock option.

        (b)     Stock Appreciation Rights.  The Administrator may from time to
time grant to eligible participants Awards of Stock Appreciation Rights ('SAR").
An SAR entitles the grantee to receive, subject to the provisions of the Plan
and the Grant Agreement, a payment having an aggregate value equal to the
product of (i) the excess of (A) the Fair Market Value on the exercise date of
one share of Common Stock over (B) the base price per share specified in the
Grant Agreement, times (ii) the number of shares specified by the SAR, or
portion thereof, which is exercised.  Payment by the Corporation of the amount
receivable upon any exercise of an SAR may be made by the delivery of Common
Stock or cash, or any combination of Common Stock and cash, as determined in the
sole discretion of the Administrator.  If upon settlement of the exercise of an
SAR a grantee is to receive a portion of such payment in shares of Common Stock,
the number of shares shall be determined by dividing such portion by the Fair
Market Value of a share of Common Stock on the exercise date.  No fractional
shares shall be used for such payment and the Administrator shall determine
whether cash shall be given in lieu of such fractional shares or whether such
fractional shares shall be eliminated.

        (c)     Stock Awards.  The Administrator may from time to time grant
restricted or unrestricted stock Awards to eligible participants in such
amounts, on such terms and conditions, and for such consideration, including no
consideration or such minimum consideration as may be required by law, as it
shall determine.  A stock Award may be paid in Common Stock, in cash, or in a
combination of Common Stock and cash, as determined in the sole discretion of
the Administrator.

        (d)     Phantom Stock.  The Administrator may from time to time grant
Awards to eligible participants denominated in stock-equivalent units
("phantom stock") in such amounts and on such terms and conditions as it shall
determine.  Phantom stock units granted to a participant shall be credited to a
bookkeeping reserve account solely for accounting purposes and shall not require
a segregation of any of the Corporation's assets.  An Award of phantom stock may
be settled in Common Stock, in cash, or in a combination of Common Stock and
cash, as determined in the sole discretion of the Administrator. Except as
otherwise provided in the applicable Grant Agreement, the grantee shall not have
the rights of a stockholder with respect to any shares of Common Stock
represented by a phantom stock unit solely as a result of the grant of a phantom
stock unit to the grantee.

        (e)     Performance Awards.  The Administrator may, in its discretion,
grant performance awards which become payable on account of attainment of one or
more performance goals established by the Administrator.  Performance awards may
be paid by the delivery of Common Stock or cash, or any combination of Common
Stock and cash, as determined in the sole discretion of the Administrator.
Performance goals established by the Administrator may be based on the
Corporation's or an Affiliate's operating income or one or more other business
criteria selected by the Administrator that apply to an individual or group of
individuals, a business unit, or the Corporation or an Affiliate as a whole,
over such performance period as the Administrator may designate.

7.      Miscellaneous

        (a)     Withholding of Taxes.  Grantees and holders of Awards shall pay
to the Corporation or its Affiliate, or make provision satisfactory to the
Administrator for payment of, any taxes required to be withheld in respect of
Awards under the Plan no later than the date of the event creating the tax
liability. The Corporation or its Affiliate may, to the extent permitted by law,
deduct any such tax obligations from any payment of any kind otherwise due to
the grantee or holder of an Award.  In the event that payment to the Corporation
or its Affiliate of such tax obligations is made in shares of Common Stock, such
shares shall be valued at Fair Market Value on the applicable date for such
purposes.

        (b)     Loans.  The Corporation or its Affiliate may make or guarantee
loans to grantees to assist grantees in exercising Awards and satisfying any
withholding tax obligations.

        (c)     Transferability.  Except as otherwise determined by the
Administrator, and in any event in the case of an incentive stock option or a
stock appreciation right granted with respect to an incentive stock option, no
Award granted under the Plan shall be transferable by a grantee otherwise than
by will or the laws of descent and distribution.  Unless otherwise determined by
the Administrator in accord with the provisions of the immediately preceding
sentence, an Award may be exercised during the lifetime of the grantee, only by
the grantee or, during the period the grantee is under a legal disability, by
the grantee's guardian or legal representative.

       (d)      Adjustments; Business Combinations.  In the event of changes in
the Common Stock of the Corporation by reason of any stock dividend, spin-off,
split-up, recapitalization, merger, consolidation, business combination or
exchange of shares and the like, the Administrator shall, in its discretion,
make appropriate adjustments to the maximum number and kind of shares reserved
for issuance or with respect to which Awards may be granted under the Plan as
provided in Section 4 of the Plan and to the number, kind and price of shares
covered by outstanding Awards, and shall, in its discretion and without the
consent of holders of Awards, make any other adjustments in outstanding Awards,
including but not limited to reducing the number of shares subject to Awards or
providing or mandating alternative settlement methods such as settlement of the
Awards in cash or in shares of Common Stock or other securities of the
Corporation or of any other entity, or in any other matters which relate to
Awards as the Administrator shall, in its sole discretion, determine to be
necessary or appropriate.

     Notwithstanding anything in the Plan to the contrary and without the
consent of holders of Awards, the Administrator, in its sole discretion, may
make any modifications to any Awards, including but not limited to cancellation,
forfeiture, surrender or other termination of the Awards in whole or in part
regardless of the vested status of the Award, in order to facilitate any
business combination that is authorized by the Board to comply with requirements
for treatment as a pooling of interests transaction for accounting purposes
under generally accepted accounting principles.

     The Administrator is authorized to make, in its discretion and without the
consent of holders of Awards, adjustments in the terms and conditions of, and
the criteria included in, Awards in recognition of unusual or nonrecurring
events affecting the Corporation, or the financial statements of the Corporation
or any Affiliate, or of changes in applicable laws, regulations, or accounting
principles, whenever the Administrator determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan.

        (e)     Substitution of Awards in Mergers and Acquisitions.  Awards may
be granted under the Plan from time to time in substitution for Awards held by
employees or directors of entities who become or are about to become employees
or directors of the Corporation or an Affiliate as the result of a merger or
consolidation of the employing entity with the Corporation or an Affiliate, or
the acquisition by the Corporation or an Affiliate of the assets or stock of the
employing entity.  The terms and conditions of any substitute Awards so granted
may vary from the terms and conditions set forth herein to the extent that the
Administrator deems appropriate at the time of grant to conform the substitute
Awards to the provisions of the awards for which they are substituted.

        (f)     Termination, Amendment and Modification of the Plan.  The Board
may terminate, amend or modify the Plan or any portion thereof at any time.

        (g)     Non-Guarantee of Employment or Service.  Nothing in the Plan or
in any Grant Agreement thereunder shall confer any right on an individual to
continue in the service of the Corporation or shall interfere in any way with
the right of the Corporation to terminate such service at any time with or
without cause or notice.

        (h)     No Trust or Fund Created.  Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Corporation and a grantee or any other
person.  To the extent that any grantee or other person acquires a right to
receive payments from the Corporation pursuant to an Award, such right shall be
no greater than the right of any unsecured general creditor of the Corporation.

        (i)     Governing Law.  The validity, construction and effect of the
Plan, of Grant Agreements entered into pursuant to the Plan, and of any rules,
regulations, determinations or decisions made by the Administrator relating to
the Plan or such Grant Agreements, and the rights of any and all persons having
or claiming to have any interest therein or thereunder, shall be determined
exclusively in accordance with applicable federal laws and the laws of the State
of Maryland without regard to its conflict of laws principles.

        (j)     Effective Date; Termination Date.  The Plan is effective as of
April 28, 2005, the date on which the Plan, as an amendment and restatement of
the Prior Plan, was approved by the Board, subject to the approval of the
stockholders of the Corporation within twelve months of such effective date.
No Award shall be granted under the Plan after the close of business on
June 30, 2008.  Subject to other applicable provisions of the Plan, all Awards
made under the Plan prior to such termination of the Plan shall remain in effect
until such Awards have been satisfied or terminated in accordance with the Plan
and the terms of such Awards.