Exhibit 10.2
FIRST AMENDMENT TO LOAN AGREEMENT
 
(Ex-Im Bank-Guaranteed Transaction Specific Revolving Line of Credit)
 
            This First Amendment to Loan Agreement (this “Amendment”) dated as
of May 5, 2009 is between Bank of America, N.A. (the “Bank”) and GSE Systems,
Inc., a Delaware corporation (“GSE”), and GSE Power Systems, Inc., a Delaware
corporation (“Power”), as co-borrowers (GSE and Power are referred to
collectively as, the “Borrower”).
 
BACKGROUND
 
A. The Borrower and the Bank entered into that certain Loan Agreement (Ex-Im
Bank-Guaranteed Transaction Specific Revolving Line of Credit) dated as of March
28, 2008 ( the “Original Loan Agreement”).
 
B. The Borrower has requested that the Bank modify the revolving line of credit
established by the Original Loan Agreement, and the Bank has agreed to do so,
upon the terms and conditions set forth in this Amendment.
 
C. The purpose of the modification is to amend certain definitions of the
following financial covenants effective as of March 31, 2009:  (i) Debt Service
Coverage Ratio and (ii) Funded Debt to EBITDA Ratio.
 
AGREEMENT
 
            Now, therefore, in consideration of the premises and the mutual
agreements contained herein, the parties hereby amend the Original Loan
Agreement on the following terms and conditions:
 
SECTION 1.    DEFINITIONS.  All capitalized terms used herein that are not
defined herein shall have the meanings ascribed to them in the Original Loan
Agreement, unless the context specifically requires otherwise.
 
SECTION 2.    AMENDMENTS TO ORIGINAL LOAN AGREEMENT.  The following amendments
are hereby made to the Original Loan Agreement:
 
            (A)       Section 9.5 of the Original Loan Agreement is hereby
amended and restated in its entirety effective as of March 31, 2009 to read as
follows:
 
“9.5     Debt Service Coverage Ratio.
 
            To maintain, with respect to GSE on a consolidated basis, a Debt
Service Coverage Ratio of at least 1.25:1.00.
 
“Debt Service Coverage Ratio” means the ratio of Cash Flow to Debt Service. This
ratio will be calculated at the end of each reporting period for which the Bank
requires financial statements, using the results of the twelve-month period
ending with that reporting period. 
 
“Cash Flow” is defined as (a) net income, after income tax, (b) less income or
plus loss from discontinued operations and extraordinary items, (c) plus
depreciation, depletion, amortization, (d) plus interest expense on all
obligations, (e) plus non-cash charges related to foreign exchange, (f) minus
dividends, withdrawals, and other distributions, and (g) minus any unfinanced
capital expenditures. 
 
 
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“Debt Service” is defined as all regularly scheduled principal and interest
payments, during the twelve-month period ending with the last day of the
calculation period, on all indebtedness.”
 
            (B)       Section 9.6 of the Original Loan Agreement is hereby
amended and restated in its entirety effective as of March 31, 2009 to read as
follows:
 
“9.6     Funded Debt to EBITDA Ratio.
 
To maintain, with respect to GSE on a consolidated basis, a ratio of Funded Debt
to EBITDA not exceeding 2.50:1.00.
“Funded Debt” means all outstanding liabilities for borrowed money and other
interest-bearing liabilities, including current and long term debt, and
including the stated amount of any Letter of Credit (other than a Letter of
Credit that is cash-secured) issued for the account of the Borrower or any
reimbursement obligation owing by the Borrower with respect to any Letter of
Credit (other than a Letter of Credit that is cash-secured).
“EBITDA” means net income, less income or plus loss from discontinued operations
and extraordinary items, plus income taxes, plus interest expense, plus
depreciation, depletion, and amortization. 
This ratio will be calculated at the end of each reporting period for which the
Bank requires financial statements, using the results of the twelve-month period
ending with that reporting period.”
 
            SECTION 3.    CONDITIONS PRECEDENT. This Amendment shall become
effective upon (a) the execution and delivery of (i) this Amendment by the
Borrower and the Bank and (ii) the Ratification of Guaranty of even date
herewith, by MSHI, Inc. and GSE Process Solutions, Inc. in favor of the Bank;
(b) the Bank’s receipt from the Borrower of the reasonable fees and expenses of
the Bank's counsel; and (c) all proceedings required to be taken by the Borrower
in connection with the transactions contemplated by this Amendment having been
taken in form and substance satisfactory to the Bank and its counsel, and the
Bank having received all such counterpart originals of this Amendment executed
by all parties listed on the signature page(s) and originals, certified or other
copies of such other documents as the Bank may reasonably request.
 
SECTION 4.    REAFFIRMATION.  Except as modified hereby, all of the terms,
covenants and conditions of the Original Loan Agreement, are ratified,
reaffirmed and confirmed and shall continue in full force and effect as therein
written.  In addition, all representations and warranties made in the Original
Loan Agreement are true and correct in all material respects as of the date
hereof and are hereby reaffirmed.  Nothing hereunder is intended, or shall be
construed, to be a novation or an accord and satisfaction of any other
obligation or liability of the Borrower to the Bank.  The Borrower and any
Guarantor do not now have, nor had at any prior time, any defenses (including,
without limitation, the defense of usury), claims, counterclaims, cross-actions
or equities or rights of rescission, setoff, abatement or diminution, with
respect to the Original Loan Agreement or any other document executed in
connection therewith, or the enforcement of Bank's rights thereunder, and the
Borrower and any Guarantor further waive and release any and all such defenses,
claims, counterclaims, cross-actions and equities, and rights of rescission,
set-off, abatement and diminution with respect thereto.
 
 
 
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SECTION 5.    REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The Borrower
represents and warrants to, and agrees with the Bank, that this Amendment (and
any other document executed by the Borrower in connection with this Amendment)
has been duly authorized by all necessary company action on the part of the
Borrower, has been duly executed by a duly authorized officer (or officers) of
the Borrower and constitutes the valid and binding obligation of the Borrower,
enforceable against the Borrower in accordance with the terms hereof (and
thereof).  The Borrower hereby certifies that the representations and warranties
contained in the Original Loan Agreement continue to be true and correct and
that no event of default and no event has occurred that with notice, lapse of
time or both would become an event of default.   The Borrower further certifies
that the financial statements supplied to the Bank truly and completely disclose
the Borrower's financial condition as of the date of the statement, and there
has been no material adverse change in the Borrower's financial condition except
as disclosed in such financial statements.
 
SECTION 6.    BINDING EFFECT.  This Amendment shall be binding upon the Borrower
and the Bank and their respective successors and assigns, and shall inure to the
benefit of the Borrower and the Bank and their respective successors and
assigns.
 
SECTION 7.    COUNTERPARTS.  This Amendment may be executed in any number of
counterparts and by the different parties on separate counterparts.  Each such
counterpart shall be deemed to be an original, but all such counterparts shall
together constitute one and the same agreement. 
 
SECTION 8.    AMENDMENT AND WAIVER.  No amendment of this Amendment, and no
waiver of any one or more of the provisions hereof shall be effective unless set
forth in a writing and signed by the parties hereto.
 
SECTION 9.    GOVERNING LAW.  This Amendment and the rights and obligations of
the Borrower and the Bank shall be governed by and construed according to the
laws of the State of Maryland without regard to conflicts of laws principles and
the laws of the United States as the same may be applicable.
 
SECTION 10.  SEVERABILITY.  Any provision of this Amendment that is held to be
inoperative, unenforceable, voidable or invalid in any jurisdiction shall, as to
that jurisdiction, be ineffective, unenforceable, void or invalid without
affecting the remaining provisions in that or any other jurisdiction, and to
this end the provisions of this Amendment are declared to be severable.
 
[Signatures on next page]
 
 
 
 
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered by their proper and duly authorized officers on the date
first above written, intending to create an instrument executed under seal.
 
 
The “Bank”:
 
 
 
BANK OF AMERICA, N.A.
 
 
 
By:                                                      
 
          Kevin Mahon
 
Senior Vice President
 
The “Borrower”:
 
 
 
GSE SYSTEMS, INC.
 
 
 
By:                                                       (Seal)
 
            Jeffery Hough
 
 Chief Financial Officer
 
 
 
 
GSE POWER SYSTEMS, INC.
 
 
 
 
By:                                                       (Seal)
 
            Jeffery Hough
 
 Chief Financial Officer
 
 

 
 
Federal law requires all financial institutions to obtain, verify and record
information that identifies each person who opens an account or obtains a loan. 
The Bank will ask for the Borrower’s legal name, address, tax ID number or
social security number and other identifying information.  The Bank may also ask
for additional information or documentation or take other actions reasonably
necessary to verify the identity of the Borrower, guarantors or other related
persons.
 
 
 
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