exh10-3.htm


    Exhibit
10.3

    FIRST
AMENDMENT TO SECURITY AGREEMENT

     

    (Domestic
Revolving Line of Credit)

     

     

               
This First Amendment to Security 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”),
(GSE and Power are referred to collectively as, the “Pledgor”).


     

    BACKGROUND

     

     

    	The Bank, as
  lender, and the Pledgor, as co-borrowers, are parties to that certain Loan
  Agreement (Domestic Revolving Line of Credit) dated as of March 28, 2008 (the
  “Domestic
  Loan Agreement”), which loan agreement evidences a domestic revolving
  line of credit from the Bank to the Pledgor (the “Loan”).
  


     

    	In connection
  with the Domestic Loan Agreement, the Pledgor executed that certain Security
  Agreement dated as of March 28, 2008 (the “Original
  Security
  Agreement”),
  pursuant to which the Pledgor pledged to the Bank certain assets of the
  Pledgor as collateral to secure the Loan. 


     

    	Pledgor has
  requested that the Bank modify the Loan, and the Bank has agreed to do so,
  upon the terms and conditions set forth in this Amendment and that certain
  First Amendment to Loan Agreement (Domestic Revolving Line of Credit) of even
  date herewith. 


     

    	The purpose of
  this Amendment is to, among other things, amend the scope of the Collateral
  set forth in the Original Security Agreement in connection with the
  modification of the Loan. 


     

    AGREEMENT

     

     

               
Now, therefore, in consideration of the premises and the mutual agreements
contained herein, the parties hereby to amend the Original Security 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 Security
Agreement, unless the context specifically requires
otherwise.

     

    SECTION
2.    AMENDMENTS TO ORIGINAL SECURITY AGREEMENT.  The following
amendments are hereby made to the Original Security
Agreement:

     

    (A)      
Section 1(d) of the Original Security Agreement is hereby amended and restated
in its entirety to read as follows:

     

               
“(d)      All of the Pledgor’s deposit accounts
with the Bank, including, but not limited to, the specific deposit account
described on Exhibit B to this Agreement (the “Deposit
Account”). The Collateral shall include any renewals or rollovers of the
deposit accounts, any successor accounts, and any general intangibles and choses
in action arising therefrom or related thereto.”

     

               
(B)       Section 3(m) of the Original Security
Agreement is hereby amended and restated in its entirety to read as
follows:

     

     

    
      
         

      

      
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“(m)     The Pledgor shall not withdraw funds from the
Deposit Account without the Bank's prior written consent.  The Pledgor
agrees that, upon maturity of the Deposit Account, such Deposit Account shall be
renewed at the Bank’s then prevailing rate of interest for successive ninety
(90) day periods (or such other time period as may be agreed by the Bank and the
Pledgor).  Notwithstanding the Bank's security interest in the proceeds of
the Deposit Account, the Bank will continue to pay to the Pledgor interest
accruing thereunder until the occurrence of a default under this
Agreement.  Upon Bank’s request, Pledgor shall deliver any certificate
evidencing the Deposit Account to Bank, duly endorsed over to Bank, as
necessary.”

     

    (C)      
Exhibit B attached to this Amendment is hereby added as a new
Exhibit B to the Original Security Agreement.

     

    SECTION
3.    REAFFIRMATION.     The parties hereto agree
that Except as modified hereby, all of the terms, covenants and conditions of
the Original Security 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 Security Agreement are
true and correct in all material respects as of the date hereof and are hereby
reaffirmed.

     

    SECTION
4.    BINDING EFFECT.  This Amendment shall be binding upon the
Pledgor and the Bank and their respective successors and assigns, and shall
inure to the benefit of the Pledgor and the Bank and their respective successors
and assigns.

     

    SECTION
5.    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
6.    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
7.    GOVERNING LAW.  This Amendment and the rights and obligations
of the Pledgor 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 8.    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
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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
      “Pledgor”:

               

               

               

              GSE
      SYSTEMS, INC.

               

               

               

              By:                                                      
      (Seal)

               

                         
      Jeffery Hough

               

               Chief
      Financial Officer

               

               

            
	
               

               

            	
              GSE
      POWER SYSTEMS, INC.

               

               

               

              By:                                                      
      (Seal)

               

                         
      Jeffery Hough

               

               Chief
      Financial Officer

               

            


    

     

     

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    Exhibit
B

     

     

    Deposit
Account

     

     

     

    
      
        
          	
                  Original Principal
      Amount

                   

                	
                  Original Maturity
      Date

                   

                
	
                  $600,000.00

                   

                	
                  June 30,
      2010

                   

                


        

      

    

     

     

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