SECURITIES PURCHASE AGREEMENT
 
This Securities Purchase Agreement (this “Agreement”) is dated as of June 15,
2007, by and among GSE Systems, Inc., a Delaware corporation (the “Company”),
and each purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser” and collectively, the “Purchasers”).
 
RECITALS
 
A. The Company and each Purchaser is executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Section
4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule
506 of Regulation D (“Regulation D”) as promulgated by the United States
Securities and Exchange Commission (the “Commission”) under the Securities Act.

B. Each Purchaser, severally and not jointly, wishes to purchase, and the
Company wishes to sell, upon the terms and conditions stated in this Agreement,
(i) that aggregate number of shares of the common stock, par value $0.01 per
share (the “Common Stock”), of the Company, set forth below such Purchaser’s
name on the signature page of this Agreement (which aggregate amount for all
Purchasers together shall be 1,666,667 shares of Common Stock and shall be
collectively referred to herein as the “Shares”) and (ii) warrants, in
substantially the form attached hereto as Exhibit A (the “Warrants”), to acquire
up to that number of additional shares of Common Stock equal to 10.0% of the
number of Shares purchased by such Purchaser (rounded up to the nearest whole
share) (the shares of Common Stock issuable upon exercise of or otherwise
pursuant to the Warrants collectively are referred to herein as the “Warrant
Shares”).

C. The Shares, the Warrants and the Warrant Shares collectively are referred to
herein as the “Securities”.

D. The Company has engaged Roth Capital Partners, LLC as its placement agent
(the “Placement Agent”) for the offering of the Securities on a “best efforts”
basis.

E. Contemporaneously with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement,
substantially in the form attached hereto as Exhibit B (the “Registration Rights
Agreement”), pursuant to which, among other things, the Company will agree to
provide certain registration rights with respect to the Shares and the Warrant
Shares under the Securities Act and the rules and regulations promulgated
thereunder and applicable state securities laws.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers hereby
agree as follows:
 
ARTICLE I  
 
DEFINITIONS
 
1.1  Definitions. In addition to the terms defined elsewhere in this Agreement,
for all purposes of this Agreement, the following terms shall have the meanings
indicated in this Section 1.1:
 
“Action” means any action, suit, inquiry, notice of violation, proceeding
(including any partial proceeding such as a deposition) or investigation, to the
Company’s Knowledge, pending or threatened in writing (or otherwise) against the
Company, any Subsidiary or any of their respective properties before or by any
federal, state, county, local or foreign court, arbitrator, governmental or
administrative agency, regulatory authority, stock market, stock exchange or
trading facility.
 
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“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, Controls, is controlled by or
is under common control with such Person, as such terms are used in and
construed under Rule 144. With respect to a Purchaser, any investment fund or
managed account that is managed on a discretionary basis by the same investment
manager as such Purchaser will be deemed to be an Affiliate of such Purchaser.
 
“Agreement” has the meaning ascribed to such term in the Preamble.
 
“Business Day” means a day, other than a Saturday or Sunday, on which banks in
New York City are open for the general transaction of business.
 
“Buy-In” has the meaning set forth in Section 4.1(f).
 
“Buy-In Price” has the meaning set forth in Section 4.1(f).
 
“Closing” means the closing of the purchase and sale of the Shares and the
Warrants pursuant to this Agreement.
 
“Closing Sales Price” means, for any security as of any date, the last trade
price for such security on the Principal Trading Market, as reported by
Bloomberg Financial Markets, or, if the Principal Trading Market begins to
operate on an extended hours basis and does not designate the last trade price
then the last trade price of such security prior to 4:00:00 p.m., New York City
Time, as reported by Bloomberg, Financial Markets, or if the foregoing do not
apply, the last trade price of such security in the over-the-counter market on
the electronic bulletin board for such security as reported by Bloomberg
Financial Markets, or, if no closing bid price is reported for such security by
Bloomberg Financial Markets, the average of the bid prices and asked prices of
any market makers for such security as reported in the “pink sheets” by Pink
Sheets LLC. If the Closing Sales Price cannot be calculated for a security on a
particular date on any of the foregoing bases, the Closing Sales Price of such
security on such date shall be the fair market value as mutually determined by
the Company and the holder. If the Company and the holder are unable to agree
upon the fair market value of such security, then such dispute shall be resolved
pursuant to Section 10 of the Warrants. All such determinations shall be
appropriately adjusted for any stock dividend, stock split, stock combination or
other similar transaction during the applicable calculation period.
 
“Closing Date” means the Trading Day when all of the Transaction Documents have
been executed and delivered by the applicable parties thereto, and all of the
conditions set forth in Sections 2.1, 2.2, 5.1 and 5.2 hereof are satisfied, or
such other date as the parties may agree.
 
“Commission” has the meaning set forth in the Recitals.
 
“Common Stock” has the meaning set forth in the Recitals, and also includes any
securities into which the Common Stock may hereafter be reclassified or changed.
 
“Common Stock Equivalents” means any securities of the Company or any Subsidiary
which would entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock or other securities that entitle the holder to receive, directly or
indirectly, Common Stock.
 
“Company” has the meaning ascribed to such term in the Preamble
 
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“Company Counsel” means Duane Morris LLP.

“Company Deliverables” has the meaning set forth in Section 2.2(a).
 
“Company Party” has the meaning set forth in Section 4.11(b).
 
   “Company’s Knowledge” means with respect to any statement made to the
knowledge of the Company, that the statement is based upon the actual knowledge
of the officers of the Company having responsibility for the matter or matters
that are the subject of the statement.

“Control” (including the terms “controlling”, “controlled by” or “under common
control with”) means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
 
“Deadline Date” has the meaning set forth in Section 4.1(f).
 
“Disclosure Materials” has the meaning set forth in Section 3.1(h).
 
“DTC” has the meaning set forth in Section 4.1(c).
 
“Effective Date” means the date on which the initial Registration Statement
required by Section 2(a) of the Registration Rights Agreement is first declared
effective by the Commission.
 
“Effectiveness Deadline” means the date on which the initial Registration
Statement is required to be declared effective by the Commission under the terms
of the Registration Rights Agreement.
 
“Engagement Letter” has the meaning set forth in Section 6.1.
 
“Environmental Laws” has the meaning set forth in Section 3.1(l).
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.
 
“GAAP” means U.S. generally accepted accounting principles, as applied by the
Company.
 
“Indemnified Person” has the meaning set forth in Section 4.11(c).
 
“Indemnifying Person” has the meaning set forth in Section 4.11(c).
 
“Intellectual Property” has the meaning set forth in Section 3.1(r).
 
“Irrevocable Transfer Agent Instructions” has the meaning set forth in Section
4.1(d).
 
“Legend Removal Date” has the meaning set forth in Section 4.1(c).
 
“Lien” means any lien, charge, claim, encumbrance, security interest, right of
first refusal, preemptive right or other restrictions of any kind.
 
“Losses” has the meaning set forth in Section 4.11(a).
 

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“Material Adverse Effect” means any of (i) a material and adverse effect on the
legality, validity or enforceability of any Transaction Document, (ii) a
material and adverse effect on the results of operations, assets, business or
financial condition of the Company and the Subsidiaries, taken as a whole, or
(iii) any material adverse impairment to the Company's ability to perform in any
material respect on a timely basis its obligations under any Transaction
Document.
 
“Material Contract” means any contract of the Company that was filed (or should
have been filed) as an exhibit to the SEC Reports pursuant to Item 601(b)(4) or
Item 601(b)(10) of Regulation S-K.

“Material Permits” has the meaning set forth in Section 3.1(p).
 
“New York Courts” means the state and federal courts sitting in the City of New
York, Borough of Manhattan.
 
“Outside Date” means July 14, 2007.
 
“Person” means an individual, corporation, partnership, limited liability
company, trust, business trust, association, joint stock company, joint venture,
sole proprietorship, unincorporated organization, governmental authority or any
other form of entity not specifically listed herein.
 
“Placement Agent” has the meaning set forth in the Recitals.
 
“Press Release” has the meaning set forth in Section 4.9.
 
“Principal Trading Market” means the Trading Market on which the Common Stock is
primarily listed on and quoted for trading, which, as of the date of this
Agreement and the Closing Date, shall be the American Stock Exchange.
 
“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
 
“Purchaser” has the meaning set forth in the Recitals.
 
“Purchase Price” means $6.00 per Share.
 
“Purchaser Deliverables” has the meaning set forth in Section 2.2(b).
 
“Purchaser Party” has the meaning set forth in Section 4.11(a).
 
“Registration Rights Agreement” has the meaning set forth in the Recitals.
 
“Registration Statement” means a registration statement meeting the requirements
set forth in the Registration Rights Agreement and covering the resale by the
Purchasers of the Registrable Securities (as defined in the Registration Rights
Agreement).
 
“Regulation D” has the meaning set forth in the Recitals.
 
“Required Approvals” has the meaning set forth in Section 3.1(e).
 
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
 
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“SEC Reports” has the meaning set forth in Section 3.1(h).
 
“Secretary’s Certificate” has the meaning set forth in Section 2.2(a)(vii).
 
“Securities” has the meaning set forth in the Recitals.
 
“Securities Act” has the meaning set forth in the Recitals.
 
“Shares” has the meaning set forth in the Recitals.
 
“Short Sales” include, without limitation, all “short sales” as defined in Rule
200 promulgated under Regulation SHO under the Exchange Act, whether or not
against the box, and all types of direct and indirect stock pledges, forward
sale contracts, options, puts, calls, short sales, swaps, “put equivalent
positions” (as defined in Rule 16a-1(h) under the Exchange Act) and similar
arrangements (including on a total return basis), and sales and other
transactions through non-U.S. broker dealers or foreign regulated brokers.
 
“Subscription Amount” means with respect to each Purchaser, the aggregate amount
to be paid for the Shares and the related Warrants purchased hereunder as
indicated on such Purchaser’s signature page to this Agreement next to the
heading “Aggregate Purchase Price (Subscription Amount)”. For the avoidance of
doubt, the Subscription Amount for each Purchaser shall equal: (i) the Purchase
Price; multiplied by (ii) the number of Shares to be purchased at the Closing by
such Purchaser.
 
“Subsidiary” means any “significant subsidiary” as defined in Rule 1-02(w) of
Regulation S-X promulgated by the Commission under the Exchange Act and any
other entity required to be disclosed in the SEC Reports pursuant to Item
601(b)(21) of Regulation S-K.
 
“Trading Affiliate” has the meaning set forth in Section 3.2(h).
 
“Trading Day” means (i) a day on which the Common Stock is listed or quoted and
traded on its Principal Trading Market (other than the OTC Bulletin Board), or
(ii) if the Common Stock is not listed on a Trading Market (other than the OTC
Bulletin Board), a day on which the Common Stock is traded in the
over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the
Common Stock is not quoted on any Trading Market, a day on which the Common
Stock is quoted in the over-the-counter market as reported in the “pink sheets”
by Pink Sheets LLC (or any similar organization or agency succeeding to its
functions of reporting prices); provided, that in the event that the Common
Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then
Trading Day shall mean a Business Day.
 
“Trading Market” means whichever of the New York Stock Exchange, the American
Stock Exchange, the Nasdaq Global Select Market, the Nasdaq Global Market, the
Nasdaq Capital Market or the OTC Bulletin Board on which the Common Stock is
listed or quoted for trading on the date in question.
 
“Transaction Documents” means this Agreement, the schedules and exhibits
attached hereto, the Warrants, the Registration Rights Agreement, the
Irrevocable Transfer Agent Instructions and any other documents or agreements
executed in connection with the transactions contemplated hereunder.
 
“Transfer Agent” means Continental Stock Transfer & Trust Company, or any
successor transfer agent for the Company.
 
“Warrants” has the meaning set forth in the Recitals to this Agreement;
provided, however that the term “Warrants” shall be deemed to include any
Liquidated Damages Warrants (as such term is defined in the Registration Rights
Agreement) issued under the Registration Rights Agreement.
 
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“Warrant Shares” has the meaning set forth in the Recitals to this Agreement;
provided, however that the term “Warrant Shares” shall be deemed to include the
any shares of Common Stock issuable upon exercise of any Liquidated Damages
Warrants issued under the Registration Rights Agreement.
 
ARTICLE II 
PURCHASE AND SALE
 
2.1  Closing.
 
(a)  Amount. Subject to the terms and conditions set forth in this Agreement, at
the Closing, the Company shall issue and sell to each Purchaser, and each
Purchaser shall, severally and not jointly, purchase from the Company, such
number of shares of Common Stock for the aggregate purchase price, as indicated
below such Purchaser’s name on the signature page of this Agreement (the
“Subscription Amount”). In addition, each Purchaser shall receive a Warrant to
purchase a number of Warrant Shares equal to 10.0% of the number of Shares
purchased by such Purchaser, as indicated below such Purchaser’s name on the
signature page to this Agreement. The Warrants shall have an exercise price
equal to $6.00 per Warrant Share.
 
(b)  Closing. The Closing of the purchase and sale of the Shares and Warrants
shall take place at the offices of Lowenstein Sandler PC, 1251 Avenue of the
Americas, New York, New York on the Closing Date or at such other locations or
remotely by facsimile transmission or other electronic means as the parties may
mutually agree.
 
(c)  Form of Payment. On the Closing Date, (i) each Purchaser shall pay its
respective Subscription Amount to the Company for the Shares and the Warrants to
be issued and sold to such Purchaser at the Closing, by wire transfer of
immediately available funds in accordance with the Company's written wire
instructions as previously provided by the Company, (ii) the Company shall
irrevocably instruct the Transfer Agent to deliver to each Purchaser by delivery
of one or more stock certificates, free and clear of all restrictive and other
legends (except as expressly provided in Section 4.1(b) hereof) evidencing, the
number of Shares such Purchaser is purchasing as is set forth on such
Purchaser’s signature page to this Agreement next to the heading “Number of
Shares to be Acquired”, within three (3) calendar days after the Closing and
(iii) the Company shall issue to each Purchaser a Warrant pursuant to which such
Purchaser shall have the right to acquire such number of Warrant Shares as is
set forth on such Purchaser’s signature page to this Agreement next to the
heading “Underlying Shares Subject to Warrant”, in the case of clauses (ii) and
(iii), duly executed on behalf of the Company and registered in the name of such
Purchaser.
 
2.2  Closing Deliveries.   (a) On or prior to the Closing, the Company shall
issue, deliver or cause to be delivered to each Purchaser the following (the
“Company Deliverables”):
 
(i)  this Agreement, duly executed by the Company;
 
(ii)  a copy of a duly executed instructions to the Transfer Agent instructing
it to issue one or more stock certificates, free and clear of all restrictive
and other legends (except as provided in Section 4.1(b) hereof), evidencing the
Shares subscribed for by Purchaser hereunder, as indicated below such
Purchaser’s name on the applicable signature page hereto, registered in the name
of such Purchaser as set forth on the Stock Certificate Questionnaire included
as Exhibit C-2 hereto;
 
(iii)  a Warrant, executed by the Company and registered in the name of such
Purchaser as set forth on the Stock Certificate Questionnaire included as
Exhibit C-2 hereto, pursuant to which such Purchaser shall have the right to
acquire such number of Warrant Shares, as indicated below such Purchaser’s name
on the applicable signature page hereto, on the terms set forth therein;
 
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(iv)  a legal opinion of Company Counsel, in the form attached hereto as Exhibit
D, executed by such counsel and addressed to the Purchasers and the Placement
Agent;
 
(v)  the Registration Rights Agreement, duly executed by the Company;
 
(vi)  duly executed Irrevocable Transfer Agent Instructions acknowledged in
writing by the Transfer Agent;
 
(vii)  a certificate of the Secretary of the Company (the “Secretary’s
Certificate”), dated as of the Closing Date, (a) certifying the resolutions
adopted by the Board of Directors of the Company approving the transactions
contemplated by this Agreement and the other Transaction Documents and the
issuance of the Securities, (b) certifying the current versions of the
certificate or articles of incorporation, as amended, and by-laws of the Company
and (c) certifying as to the signatures and authority of persons signing the
Transaction Documents and related documents on behalf of the Company, in the
form attached hereto as Exhibit F;
 
(viii)  the Compliance Certificate referred to in Section 5.1(h);
 
(ix)  a certificate evidencing the formation and good standing of the Company in
such entity’s jurisdiction of formation issued by the Secretary of State (or
comparable office) of such jurisdiction, as of a date within thirty (30) days of
the Closing Date;
 
(x)  a certificate evidencing the Company’s qualification as a foreign
corporation and good standing issued by the Secretary of State (or comparable
office) of each jurisdiction in which the Company is qualified to do business as
a foreign corporation, as of a date within thirty (30) days of the Closing Date;
and
 
(xi)  a certified copy of the Certificate of Incorporation of the Company, as
certified by the Secretary of State of the State (or comparable office) of such
entity’s jurisdiction of formation, as of a date within thirty (30) days of the
Closing Date.
 
(b)  On or prior to the Closing, each Purchaser shall deliver or cause to be
delivered to the Company the following (the “Purchaser Deliverables”):
 
(i)  this Agreement, duly executed by such Purchaser;
 
(ii)  its Subscription Amount, in United States dollars and in immediately
available funds, in the amount set forth as the “Purchase Price (Subscription
Amount)” indicated below such Purchaser’s name on the applicable signature page
hereto by wire transfer to an account previously designated in writing by the
Company for such purpose;
 
(iii)  the Registration Rights Agreement, duly executed by such Purchaser;
 
(iv)  a fully completed and duly executed Selling Stockholder Questionnaire in
the form attached as Annex B to the Registration Rights Agreement; and
 
(v)  a fully completed and duly executed Accredited Investor Questionnaire and
Stock Certificate Questionnaire in the forms attached hereto as Exhibits C-1 and
C-2, respectively.
 
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ARTICLE III  
REPRESENTATIONS AND WARRANTIES
 
3.1  Representations and Warranties of the Company. The Company hereby
represents and warrants as of the date hereof and the Closing Date (except for
the representations and warranties that speak as of a specific date, which shall
be made as of such date), to each of the Purchasers and to the Placement Agent
that, except as set forth in the Schedules delivered herewith:
 
(a)  Subsidiaries. The Company has no direct or indirect Subsidiaries other than
those listed in the SEC Reports. Except as disclosed in the SEC Reports or
Schedule 3.1(a) hereto, the Company owns, directly or indirectly, all of the
capital stock or comparable equity interests of each Subsidiary free and clear
of any and all Liens, and all the issued and outstanding shares of capital stock
or comparable equity interest of each Subsidiary are validly issued and are
fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.
 
(b)  Organization and Qualification. The Company and each of its Subsidiaries is
an entity duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
(as applicable), with the requisite power and authority to own or lease and use
its properties and assets and to carry on its business as currently conducted.
Neither the Company nor any Subsidiary is in violation of any of the provisions
of its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. The Company and each of its Subsidiaries is
duly qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary,
except where the failure to be so qualified or in good standing, as the case may
be, could not have or reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, and, to the Company’s Knowledge no
Proceeding has been instituted, is pending, or, is threatened in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification.
 
(c)  Authorization; Enforcement; Validity. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents to which it is a party and
otherwise to carry out its obligations hereunder and thereunder. The execution
and delivery by the Company of each of the Transaction Documents to which it is
a party and the consummation by it of the transactions contemplated hereby and
thereby (including, but not limited to, the sale and delivery of the Shares and
the Warrants and the reservation for issuance and the subsequent issuance of the
Warrant Shares upon exercise of the Warrants) have been duly authorized by all
necessary corporate action on the part of the Company, and no further corporate
action is required by the Company, its Board of Directors or its shareholders in
connection therewith other than in connection with the Required Approvals. Each
of the Transaction Documents to which it is a party has been (or upon delivery
will have been) duly executed by the Company and is, or when delivered in
accordance with the terms hereof, will constitute the legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application. There are no shareholder
agreements, voting agreements, or other similar arrangements with respect to the
Company’s capital stock to which the Company is a party or, to the Company’s
Knowledge, between or among any of the Company’s shareholders.
 
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(d)  No Conflicts. The execution, delivery and performance by the Company of the
Transaction Documents to which it is a party and the consummation by the Company
of the transactions contemplated hereby or thereby (including, without
limitation, the issuance of the Shares and Warrants and the reservation for
issuance and issuance of the Warrant Shares) do not and will not (i) conflict
with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter
documents, (ii) except as set forth on Schedule 3.1(d), conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, result in the creation of any Lien upon any of
the properties or assets of the Company or any Subsidiary or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any
property or asset of the Company or any Subsidiary is bound, or affected, or
(iii) subject to the Required Approvals, conflict with or result in a violation
of any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Company or a
Subsidiary is subject (including federal and state securities laws and
regulations and the rules and regulations, assuming the correctness of the
representations and warranties made by the Purchasers herein, of any
self-regulatory organization to which the Company or its securities are subject,
including all applicable Trading Markets), or by which any property or asset of
the Company or a Subsidiary is bound or affected, except in the case of clauses
(ii) and (iii) such as would not, individually or in the aggregate, have or
reasonably be expected to have a Material Adverse Effect.
 
(e)  Filings, Consents and Approvals. Neither the Company nor any of its
Subsidiaries is required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with, any court or
other federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents (including the issuance of the Securities), other than (i)
the filing with the Commission of one or more Registration Statements in
accordance with the requirements of the Registration Rights Agreement, (ii)
filings required by applicable state securities laws, (iii) the filing of a
Notice of Sale of Securities on Form D with the Commission under Regulation D of
the Securities Act, (iv) the filing of any requisite notices and/or
application(s) to the Principal Trading Market for the issuance and sale of the
Common Stock and the Warrants and the listing of the Common Stock for trading or
quotation, as the case may be, thereon in the time and manner required thereby,
(v) the filings required in accordance with Section 4.9 of this Agreement and
(vi) those that have been made or obtained prior to the date of this Agreement
(collectively, the “Required Approvals”).
 
(f)  Issuance of the Securities. The Shares have been duly authorized and, when
issued and paid for in accordance with the terms of the Transaction Documents,
will be duly and validly issued, fully paid and nonassessable and free and clear
of all Liens, other than restrictions on transfer provided for in the
Transaction Documents or imposed by applicable securities laws, and shall not be
subject to preemptive or similar rights. The Warrants have been duly authorized
and, when issued and paid for in accordance with the terms of the Transaction
Documents, will be duly and validly issued, free and clear of all Liens, other
than restrictions on transfer provided for in the Transaction Documents or
imposed by applicable securities laws, and shall not be subject to preemptive or
similar rights of shareholders. The Warrant Shares issuable upon exercise of the
Warrants have been duly authorized and, when issued and paid for in accordance
with the terms of the Transaction Documents and the Warrants will be duly and
validly issued, fully paid and nonassessable, free and clear of all Liens, other
than restrictions on transfer provided for in the Transaction Documents or
imposed by applicable securities laws, and shall not be subject to preemptive or
similar rights of shareholders. Assuming the accuracy of the representations and
warranties of the Purchasers in this Agreement, the Shares and the Warrant
Shares will be issued in compliance with all applicable federal and state
securities laws. As of the Closing Date, the Company shall have reserved from
its duly authorized capital stock not less than 100% of the maximum number of
shares of Common Stock issuable upon exercise of the Warrants (without taking
into account any limitations on the exercise of the Warrants set forth in the
Warrants). The Company shall, so long as any of the Warrants are outstanding,
take all action necessary to reserve and keep available out of its authorized
and unissued capital stock, solely for the purpose of effecting the exercise of
the Warrants, 100% of the number of shares of Common Stock issuable upon
exercise of the Warrants (without taking into account any limitations on the
exercise of the Warrants set forth in the Warrants).
 
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(g)  Capitalization. The number of shares and type of all authorized, issued and
outstanding capital stock, options and other securities of the Company (whether
or not presently convertible into or exercisable or exchangeable for shares of
capital stock of the Company) has been set forth in the SEC Reports and has
changed since the date of such SEC Reports only to reflect stock option and
warrant exercises that do not, individually or in the aggregate, have a material
affect on the issued and outstanding capital stock, options and other
securities. All of the outstanding shares of capital stock of the Company are
duly authorized, validly issued, fully paid and non-assessable, have been issued
in compliance in all material respects with all applicable federal and state
securities laws, and none of such outstanding shares was issued in violation of
any preemptive rights or similar rights to subscribe for or purchase any capital
stock of the Company. Except as specified in the SEC Reports or Schedule 3.1(g):
(i) no shares of the Company's capital stock are subject to preemptive rights or
any other similar rights or any liens or encumbrances suffered or permitted by
the Company; (ii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
shares of capital stock of the Company, or contracts, commitments,
understandings or arrangements by which the Company is or may become bound to
issue additional shares of capital stock of the Company or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any shares of capital stock of the Company; (iii) there are no
outstanding debt securities, notes, credit agreements, credit facilities or
other agreements, documents or instruments evidencing indebtedness of the
Company or by which the Company is or may become bound; (iv) there are no
financing statements securing obligations in any material amounts, either singly
or in the aggregate, filed in connection with the Company; (v) there are no
agreements or arrangements under which the Company is obligated to register the
sale of any of their securities under the Securities Act (except the
Registration Rights Agreement); (vi) there are no outstanding securities or
instruments of the Company or which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company is or may become bound to redeem a security of
the Company; (vii) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities; (viii) the Company does not have any stock appreciation rights
or “phantom stock” plans or agreements or any similar plan or agreement; and
(ix) the Company has no liabilities or obligations required to be disclosed in
the SEC Reports (as defined herein) but not so disclosed in the SEC Reports,
other than those incurred in the ordinary course of the Company's businesses and
which, individually or in the aggregate, do not or could not have or reasonably
be expected to have a Material Adverse Effect.
 
(h)  SEC Reports. The Company has filed all reports, schedules, forms,
statements and other documents required to be filed by it under the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof (or such shorter period as the Company was required by
law or regulation to file such material) (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein, being
collectively referred to herein as the “SEC Reports” and together with this
Agreement and the Schedules to this Agreement (if any), the “Disclosure
Materials”), on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any such
extension. As of the date hereof, the Company is not aware of any event
occurring on or prior to the Closing Date (other than the transactions
contemplated by the Transaction Documents) that requires the filing of a Form
8-K after the Closing. As of their respective dates, or to the extent corrected
by a subsequent restatement, the SEC Reports complied in all material respects
with the requirements of the Securities Act and the Exchange Act and the rules
and regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. All material Contracts to which the Company or
any Subsidiary is a party or to which the property or assets of the Company or
any of its Subsidiaries are subject are included as part of or specifically
identified in the SEC Reports.
 
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(i)  Financial Statements.The financial statements of the Company included in
the SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing (or to the extent corrected by a
subsequent restatement). Such financial statements have been prepared in
accordance with GAAP applied on a consistent basis during the periods involved,
except as may be otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not contain all
footnotes required by GAAP, and fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries taken as a
whole as of and for the dates thereof and the results of operations and cash
flows for the periods then ended, subject, in the case of unaudited statements,
to normal, year-end audit adjustments.
 
(j)  Tax Matters. The Company and each of its Subsidiaries (i) has accurately
and timely prepared and filed all foreign, federal and state income and all
other tax returns, reports and declarations required by any jurisdiction to
which it is subject, (ii) has paid all taxes and other governmental assessments
and charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith,
with respect to which adequate reserves have been set aside on the books of the
Company and (iii) has set aside on its books provisions reasonably adequate for
the payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply, except, in the case of clauses (i) and
(ii) above, where the failure to so pay or file any such tax, assessment, charge
or return would not have a Material Adverse Effect. There are no unpaid taxes in
any material amount claimed to be due by the Company or any of its Subsidiaries
by the taxing authority of any jurisdiction.
 
(k)  Material Changes. Since the date of the latest audited financial statements
included within the SEC Reports, except as specifically disclosed in the SEC
Reports or as set forth in Schedule 3.1(k) hereto, (i) there have been no
events, occurrences or developments that have had or could reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect, (ii) the Company has not incurred any material liabilities (contingent
or otherwise) other than (A) trade payables, accrued expenses and other
liabilities incurred in the ordinary course of business consistent with past
practice and (B) liabilities not required to be reflected in the Company's
financial statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, (iii) the Company has not altered its method of
accounting or the manner in which it keeps its accounting books and records,
(iv) the Company has not declared or made any dividend or distribution of cash
or other property to its shareholders or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock (other than in
connection with repurchases of unvested stock issued to employees of the
Company), (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except Common Stock issued in the ordinary course as
dividends on outstanding preferred stock or pursuant to existing Company stock
option or stock purchase plans or executive and director corporate arrangements
disclosed in the SEC Reports and (vi) there has not been any material change or
amendment to, or any waiver of any material right under, any Material Contract
under which the Company, any of its Subsidiaries, or any of their respective
assets is bound or subject. Except for the issuance of the Securities
contemplated by this Agreement or as set forth in Schedule 3.1(k) hereto, no
event, liability or development has occurred or exists with respect to the
Company or its Subsidiaries or their respective business, properties, operations
or financial condition that would be required to be disclosed by the Company
under applicable securities laws at the time this representation is made that
has not been publicly disclosed at least one Trading Day prior to the date that
this representation is made.
 
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(l)  Environmental Matters. To the Company’s Knowledge, neither the Company nor
any of its Subsidiaries (i) is in violation of any statute, rule, regulation,
decision or order of any governmental agency or body or any court, domestic or
foreign, relating to the use, disposal or release of hazardous or toxic
substances or relating to the protection or restoration of the environment or
human exposure to hazardous or toxic substances (collectively, “Environmental
Laws”), (ii) owns or operates any real property contaminated with any substance
that is in violation of any Environmental Laws, (iii) is liable for any off-site
disposal or contamination pursuant to any Environmental Laws, or (iv) is subject
to any claim relating to any Environmental Laws; which violation, contamination,
liability or claim has had or could reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect; and, to the Company’s Knowledge,
there is no pending or threatened investigation that might lead to such a claim.
 
(m)  Litigation. There is no Action which (i) adversely affects or challenges
the legality, validity or enforceability of any of the Transaction Documents or
the Securities or (ii) except as specifically disclosed in the SEC Reports,
could, if there were an unfavorable decision, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any of its Subsidiaries, nor, to the Company’s Knowledge, any current
director or officer thereof (in his or her capacity thereof), is or has been
during the five-year period prior to the Closing Date the subject of any Action
involving a claim of violation of or liability under federal or state securities
laws or a claim of breach of fiduciary duty. To the Company’s Knowledge, there
has not been, there is not pending or there is not contemplated, any
investigation by the Commission involving the Company or, to the Company’s
Knowledge, any current or former director or officer of the Company (in his or
her capacity as such). The Commission has not issued any stop order or other
order suspending the effectiveness of any registration statement filed by the
Company or any of its Subsidiaries under the Exchange Act or the Securities Act.
 
(n)  Employment Matters. No material labor dispute exists or, to the Company’s
Knowledge, is imminent with respect to any of the employees of the Company which
could reasonably be expected to have a Material Adverse Effect. Except as set
forth on Schedule 3.1(n), none of the Company’s or any Subsidiary’s employees is
a member of a union that relates to such employee’s relationship with the
Company, and neither the Company nor any of its Subsidiaries is a party to a
collective bargaining agreement, and the Company and each Subsidiary believes
that its relationship with its employees is good. No executive officer of the
Company (as defined in Rule 501(f) of the 1933 Act) has notified the Company or
any Subsidiary that such officer intends to leave the Company or any such
Subsidiary or otherwise terminate such officer's employment with the Company or
any such Subsidiary. No executive officer, to the Company’s Knowledge, is in
violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement or non-competition agreement, or
any other contract or agreement or any restrictive covenant, and the continued
employment of each such executive officer does not subject the Company or any
Subsidiary to any liability with respect to any of the foregoing matters. The
Company and its Subsidiaries are in compliance with all U.S. federal, state,
local and foreign laws and regulations relating to employment and employment
practices, terms and conditions of employment and wages and hours, except where
the failure to be in compliance would not, individually or in the aggregate,
have or reasonably be expected to have a Material Adverse Effect.
 
(o)  Compliance. Neither the Company nor any of its Subsidiaries (i) is in
default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company or any of its Subsidiaries under), nor has the Company or any of its
Subsidiaries received notice of a claim that it is in default under or that it
is in violation of, any indenture, loan or credit agreement or any other
agreement or instrument to which it is a party or by which it or any of its
properties is bound (whether or not such default or violation has been waived),
(ii) is in violation of any order of any court, arbitrator or governmental body
having jurisdiction over the Company or its properties or assets, or (iii) is or
has been in violation of, or in receipt of notice that it is in violation of,
any statute, rule or regulation of any governmental authority applicable to the
Company, except in each case as would not, individually or in the aggregate,
have or reasonably be expected to have a Material Adverse Effect.
 
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(p)  Regulatory Permits. The Company and each of its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct its
respective business as described in the SEC Reports, except where the failure to
possess such permits, individually or in the aggregate, has not and could not
reasonably be expected to have a Material Adverse Effect (“Material Permits”),
and (i) neither the Company nor any of its Subsidiaries has received any notice
of proceedings relating to the revocation or modification of any such Material
Permits and (ii) the Company is unaware of any facts or circumstances that the
Company would reasonably expect to give rise to the revocation or modification
of any Material Permits.
 
(q)  Title to Assets. Neither the Company nor any of its Subsidiaries owns any
real property. The Company and its Subsidiaries have good and marketable title
to all personal property owned by them which is material to the business of the
Company and its Subsidiaries, taken as whole, in each case free and clear of all
Liens, except as disclosed in the SEC Reports or Schedule 3.1q or such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and any of its
Subsidiaries. Any real property and facilities held under lease by the Company
and any of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and its Subsidiaries.
 
(r)  Patents and Trademarks. The Company and its Subsidiaries own, possess,
license or have other rights to use all foreign and domestic patents, patent
applications, trade and service marks, trade and service mark registrations,
trade names, copyrights, licenses, inventions, trade secrets, technology,
Internet domain names, know-how and other intellectual property (collectively,
the “Intellectual Property”) necessary for the conduct of their respective
businesses as now conducted. Except as set forth in the SEC Reports and except
where such violations or infringements could not reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect, (a) there
are no rights of third parties to any such Intellectual Property; (b) to the
Company’s Knowledge, there is no infringement by third parties of any such
Intellectual Property; (c) to the Company’s Knowledge, there is no pending or
threatened action, suit, proceeding or claim by others challenging the Company’s
and its Subsidiaries’ rights in or to any such Intellectual Property, and the
Company is unaware of any facts which would form a reasonable basis for any such
claim; (d) to the Company’s Knowledge, there is no pending or threatened action,
suit, proceeding or claim by others challenging the validity or scope of any
such Intellectual Property; and (e) to the Company’s Knowledge, there is no
pending or threatened action, suit, proceeding or claim by others that the
Company and/or any Subsidiary infringes or otherwise violates any patent,
trademark, copyright, trade secret or other proprietary rights of others, and
the Company is unaware of any other fact which would form a reasonable basis for
any such claim.
 
(s)  Insurance. The Company and each of the Subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as the Company believes to be prudent and customary in the businesses
and locations in which the Company and such Subsidiaries are engaged. Neither
the Company nor any of its Subsidiaries has received any notice of cancellation
of any such insurance, nor does the Company or any Subsidiary have any knowledge
that it will be unable to renew its existing insurance coverage for the Company
and such Subsidiaries as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business
without a significant increase in cost.
 
(t)  Transactions With Affiliates and Employees. Except as set forth in the SEC
Reports on on Schedule 3(t), none of the officers or directors of the Company
and, to the Company’s Knowledge, none of the employees of the Company is
presently a party to any transaction with the Company or to a presently
contemplated transaction (other than for services as employees, officers and
directors) that would be required to be disclosed pursuant to Item 404 of
Regulation S-K promulgated under the Securities Act.
 
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(u)  Internal Accounting Controls. The Company and each of its Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset and liability accountability, (iii) access to assets
or incurrence of liabilities is permitted only in accordance with management's
general or specific authorization, and (iv) the recorded accountability for
assets and liabilities is compared with the existing assets and liabilities at
reasonable intervals and appropriate action is taken with respect to any
differences.
 
(v)  Sarbanes-Oxley; Disclosure Controls. The Company is in compliance in all
material respects with all of the provisions of the Sarbanes-Oxley Act of 2002
which are applicable to it, except where such noncompliance has not had and
could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. The Company maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the
Exchange Act) that are effective in ensuring that information required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the rules and forms of the Commission, including, without
limitation, controls and procedures designed in to ensure that information
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act is accumulated and communicated to the Company's
management, including its principal executive officer or officers and its
principal financial officer or officers, as appropriate, to allow timely
decisions regarding required disclosure.
 
(w)  Certain Fees. No person or entity will have, as a result of the
transactions contemplated by this Agreement, any valid right, interest or claim
against or upon the Company or a Purchaser for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of the Company, other than the Placement Agent with respect
to the offer and sale of the Securities (which placement agent fees are being
paid by the Company). The Company shall indemnify, pay, and hold each Purchaser
harmless against, any liability, loss or expense (including, without limitation,
attorneys’ fees and out-of-pocket expenses) arising in connection with any such
right, interest or claim.
 
(x)  Private Placement. Assuming the accuracy of the Purchasers’ representations
and warranties set forth in Section 3.2 of this Agreement, no registration under
the Securities Act is required for the offer and sale of the Securities by the
Company to the Purchasers under the Transaction Documents.
 
(y)  Registration Rights.Other than each of the Purchasers or as set forth in
Schedule 3.1(y) hereto, no Person has any right to cause the Company to effect
the registration under the Securities Act of any securities of the Company other
than those securities which are currently registered on an effective
registration statement on file with the Commission.
 
(z)  No Directed Selling Efforts or General Solicitation. Neither the Company,
nor any of its Affiliates, nor any Person acting on its or their behalf has
conducted any “general solicitation” or “general advertising” (as those terms
are used in Regulation D) in connection with the offer or sale of any of the
Securities.
 
(aa)  No Integrated Offering. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, none of the Company,
its Subsidiaries nor any of their Affiliates, nor any Person acting on its or
their behalf has, directly or indirectly, at any time within the past six
months, made any offers or sales of any Company security or solicited any offers
to buy any security under circumstances that would (i) eliminate the
availability of the exemption from registration under Regulation D under the
Securities Act in connection with the offer and sale by the Company of the
Securities as contemplated hereby or (ii) cause the offering of the Securities
pursuant to the Transaction Documents to be integrated with prior offerings by
the Company for purposes of any applicable law, regulation or shareholder
approval provisions, including, without limitation, under the rules and
regulations of any Trading Market on which any of the securities of the Company
are listed or designated.
 
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(bb)  Listing and Maintenance Requirements. The Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has
taken no action designed to terminate (or which would reasonably be expected to
have the effect of terminating) the registration of the Common Stock under the
Exchange Act nor has the Company received any notification that the Commission
is contemplating terminating such registration. Except as specified in the SEC
Reports, the Company has not, in the 12 months preceding the date hereof,
received written notice from any Trading Market on which the Common Stock is or
has been listed or quoted to the effect that the Company is not in compliance
with the listing or maintenance requirements of such Trading Market. The Company
is, and has no reason to believe that it will not in the foreseeable future
continue to be, in compliance in all material respects with the listing and
maintenance requirements for continued trading of the Common Stock on the
Principal Trading Market.
 
(cc)  Investment Company. Neither the Company nor any of its Subsidiaries is
required to be registered as, and is not an Affiliate of, and immediately
following the Closing will not be required to register as, an “investment
company” within the meaning of the Investment Company Act of 1940, as amended.
 
(dd)  Questionable Payments. Neither the Company nor any of its Subsidiaries,
nor, to the Company’s Knowledge, any directors, officers, employees, agents or
other Persons acting on behalf of the Company or any of its Subsidiaries has, in
the course of its actions for, or on behalf of, the Company: (a) directly or
indirectly, used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to foreign or domestic
political activity; (b) made any direct or indirect unlawful payments to any
foreign or domestic governmental officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds; (c) violated in
any material respect any provision of the Foreign Corrupt Practices Act of 1977,
as amended, or (d) made any other unlawful bribe, rebate, payoff, influence
payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.
 
(ee)  Application of Takeover Protections; Rights Agreements. The Company and
its board of directors have taken all necessary action, if any, in order to
render inapplicable any control share acquisition, business combination, poison
pill (including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company's charter documents or the laws of its
state of incorporation that is or could reasonably be expected to become
applicable to any of the Purchasers as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including, without limitation, the Company's issuance of
the Securities and the Purchasers' ownership of the Securities. The Company has
not adopted a stockholder rights plan or similar arrangement relating to
accumulations of beneficial ownership of Common Stock or a change in control of
the Company.
 
(ff)  Disclosure. The Company confirms that neither it nor any of its officers
or directors nor any other Person acting on its or their behalf has provided,
and it has not authorized the Placement Agent to provide, any Purchaser or its
respective agents or counsel with any information that it believes constitutes
or could reasonably be expected to constitute material, non-public information
except insofar as the existence, provisions and terms of the Transaction
Documents and the proposed transactions hereunder may constitute such
information, all of which will be disclosed by the Company in the Form 8-K as
contemplated by Section 4.9 hereof. The Company understands and confirms that
the Purchasers will rely on the foregoing representations in effecting
transactions in securities of the Company. All disclosure provided to the
Purchasers regarding the Company, its business and the transactions contemplated
hereby furnished by the Company or authorized by the Company and furnished by
the Placement Agent on behalf of the Company prior to the date hereof
 
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(including the Company’s representations and warranties set forth in this
Agreement) are true and correct in all material respects and do not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading. No event or circumstance has
occurred or information exists with respect to the Company or any of its
Subsidiaries or its or their business, properties, operations or financial
conditions, which, under applicable law, rule or regulation, requires public
disclosure or announcement by the Company but which has not been so publicly
announced or disclosed (assuming for this purpose that the Company’s reports
filed under the Exchange Act are being incorporated into an effective
registration statement filed by the Company under the Securities Act), except
for the announcement of this Agreement and related transactions.
 
(gg)  Off Balance Sheet Arrangements. There is no transaction, arrangement, or
other relationship between the Company (or any Subsidiary) and an unconsolidated
or other off balance sheet entity that is required to be disclosed by the
Company in its Exchange Act filings and is not so disclosed or that otherwise
would be reasonably be likely to have a Material Adverse Effect.
 
(hh)  Acknowledgment Regarding Purchasers’ Purchase of Securities.  The Company
acknowledges and agrees that each of the Purchasers is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents
and the transactions contemplated hereby and thereby.  The Company further
acknowledges that no Purchaser is acting as a financial advisor or fiduciary of
the Company (or in any similar capacity) with respect to the Transaction
Documents and the transactions contemplated thereby and any advice given by any
Purchaser or any of their respective representatives or agents in connection
with the Transaction Documents and the transactions contemplated thereby is
merely incidental to the Purchasers’ purchase of the Securities.  The Company
further represents to each Purchaser that the Company’s decision to enter into
this Agreement and the other Transaction Documents has been based solely on the
independent evaluation of the transactions contemplated hereby by the Company
and its representatives.
 
(ii)  Regulation M Compliance.  The Company has not, and to the Company’s
Knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
any of the Securities, (ii) sold, bid for, purchased, or paid any compensation
for soliciting purchases of, any of the securities of the Company or (iii) paid
or agreed to pay to any Person any compensation for soliciting another to
purchase any other securities of the Company, other than, in the case of clauses
(ii) and (iii), compensation paid to the Placement Agent in connection with the
placement of the Securities
 
(jj)  No Additional Agreements.The Company does not have any agreement or
understanding with any Purchaser with respect to the transactions contemplated
by the Transaction Documents other than as specified in the Transaction
Documents.
 
(kk)  Form S-3 Eligibility. As of the date hereof, the Company meets the
eligibility requirements contained in Section I.A. and in Section I.B.3 of the
General Instructions to Form S-3 to register the resale of its securities by
selling securityholders with the Commission on a registration statement on Form
S-3 under the Securities Act, subject to any limitations or restrictions that
may be imposed by the Commission on the Company’s use of a registration
statement on Form S-3 as a result of its interpretation of Rule 415 under the
Securities Act.
 
3.2  Representations and Warranties of the Purchasers. Each Purchaser hereby,
for itself and for no other Purchaser, represents and warrants as of the date
hereof and as of the Closing Date to the Company as follows:
 
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(a)  Organization; Authority. Such Purchaser is an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization with the requisite corporate or partnership power and authority to
enter into and to consummate the transactions contemplated by the applicable
Transaction Documents and otherwise to carry out its obligations hereunder and
thereunder. The execution, delivery and performance by such Purchaser of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate or, if such Purchaser is not a corporation, such
partnership, limited liability company or other applicable like action, on the
part of such Purchaser. Each of this Agreement and the Registration Rights
Agreement has been duly executed by such Purchaser, and when delivered by such
Purchaser in accordance with the terms hereof, will constitute the valid and
legally binding obligation of such Purchaser, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general application.
 
(b)  No Conflicts. The execution, delivery and performance by such Purchaser of
this Agreement and the Registration Rights Agreement and the consummation by
such Purchaser of the transactions contemplated hereby and thereby will not (i)
result in a violation of the organizational documents of such Purchaser, (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which such Purchaser is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws) applicable to such Purchaser, except in the
case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or
violations which would not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the ability of such Purchaser to
perform its obligations hereunder.
 
(c)  Investment Intent. Such Purchaser understands that the Securities are
“restricted securities” and have not been registered under the Securities Act or
any applicable state securities law and is acquiring the Securities and, upon
exercise of the Warrants, will acquire the Warrant Shares issuable upon exercise
thereof as principal for its own account and not with a view to, or for
distributing or reselling such Securities or any part thereof in violation of
the Securities Act or any applicable state securities laws; provided, however,
that by making the representations herein, such Purchaser does not agree to hold
any of the Securities for any minimum period of time and reserves the right,
subject to the provisions of this Agreement and the Registration Rights
Agreement, at all times to sell or otherwise dispose of all or any part of such
Securities or Warrant Shares pursuant to an effective registration statement
under the Securities Act or under an exemption from such registration and in
compliance with applicable federal and state securities laws. Such Purchaser is
acquiring the Securities hereunder in the ordinary course of its business. Such
Purchaser does not presently have any agreement, plan or understanding, directly
or indirectly, with any Person to distribute or effect any distribution of any
of the Securities (or any securities which are derivatives thereof) to or
through any person or entity; such Purchaser is not a registered broker-dealer
under Section 15 of the Exchange Act or an entity engaged in a business that
would require it to be so registered as a broker-dealer.
 
(d)  Purchaser Status. At the time such Purchaser was offered the Securities, it
was, and at the date hereof it is, and on each date on which it exercises the
Warrants it will be, an “accredited investor” as defined in Rule 501(a) under
the Securities Act.
 
(e)  Residency. Such Purchaser has, if an entity, its principal place of
business or, if an individual, its primary residence in the jurisdiction set
forth immediately below such Purchaser’s name on the signature pages hereto
 
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(f)  General Solicitation.Such Purchaser is not purchasing the Securities as a
result of any advertisement, article, notice or other communication regarding
the Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general advertisement.
 
(g)  Experience of Such Purchaser. Such Purchaser, either alone or together with
its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so evaluated the
merits and risks of such investment. Such Purchaser is able to bear the economic
risk of an investment in the Securities and, at the present time, is able to
afford a complete loss of such investment.
 
(h)  Access to Information. Such Purchaser acknowledges that it has had the
opportunity to review the Disclosure Materials and has been afforded (i) the
opportunity to ask such questions as it has deemed necessary of, and to receive
answers from, representatives of the Company concerning the terms and conditions
of the offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Subsidiaries
and their respective financial condition, results of operations, business,
properties, management and prospects (other than material non-public
information) sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information that the Company possesses or
can acquire without unreasonable effort or expense that is necessary to make an
informed investment decision with respect to the investment. Neither such
inquiries nor any other investigation conducted by or on behalf of such
Purchaser or its representatives or counsel shall modify, amend or affect such
Purchaser's right to rely on the truth, accuracy and completeness of the
Disclosure Materials and the Company's representations and warranties contained
in the Transaction Documents. Such Purchaser has sought such accounting, legal
and tax advice as it has considered necessary to make an informed decision with
respect to its acquisition of the Securities.
 
(i)  Certain Trading Activities. Other than with respect to the transactions
contemplated herein, since the earlier to occur of (1) the time that such
Purchaser was first contacted by the Company, the Placement Agent or any other
Person regarding the transactions contemplated hereby and (2) the tenth (10th)
day prior to the date of this Agreement, neither the Purchaser nor any Affiliate
of such Purchaser which (x) had knowledge of the transactions contemplated
hereby, (y) has or shares discretion relating to such Purchaser’s investments or
trading or information concerning such Purchaser’s investments, including in
respect of the Securities, and (z) is subject to such Purchaser’s review or
input concerning such Affiliate’s investments or trading (collectively, “Trading
Affiliates”) has directly or indirectly, nor has any Person acting on behalf of
or pursuant to any understanding with such Purchaser or Trading Affiliate,
effected or agreed to effect any transactions in the securities of the Company
(including, without limitation, any Short Sales involving the Company’s
securities). Notwithstanding the foregoing, in the case of a Purchaser and/or
Trading Affiliate that is, individually or collectively, a multi-managed
investment vehicle whereby separate portfolio managers manage separate portions
of such Purchaser's or Trading Affiliate’s assets and the portfolio managers
have no direct knowledge of the investment decisions made by the portfolio
managers managing other portions of such Purchaser's or Trading Affiliate’s
assets, the representation set forth above shall apply only with respect to the
portion of assets managed by the portfolio manager that have knowledge about the
financing transaction contemplated by this Agreement. Other than to other
Persons party to this Agreement, such Purchaser has maintained the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction).
Notwithstanding the foregoing, no Purchaser makes any representation, warranty
or covenant hereby that it will not engage in Short Sales in the securities of
the Company after the earlier to occur of (i) sixty (60) days following the
Closing Date and (ii) the Effective Date.
 
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(j)  Brokers and Finders. No Person (other than the Placement Agent) will have,
as a result of the transactions contemplated by this Agreement, any valid right,
interest or claim against or upon the Company or any Purchaser for any
commission, fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of the Purchaser.
 
(k)  Independent Investment Decision. Such Purchaser has independently evaluated
the merits of its decision to purchase Securities pursuant to the Transaction
Documents, and such Purchaser confirms that it has not relied on the advice of
any other Purchaser’s business and/or legal counsel in making such decision.
Such Purchaser understands that nothing in this Agreement or any other materials
presented by or on behalf of the Company to the Purchaser in connection with the
purchase of the Securities constitutes legal, tax or investment advice. Such
Purchaser has consulted such legal, tax and investment advisors as it, in its
sole discretion, has deemed necessary or appropriate in connection with its
purchase of the Securities. Such Purchaser understands that the Placement Agent
has acted solely as the agent of the Company in this placement of the Securities
and such Purchaser has not relied on the business or legal advice of the
Placement Agent or any of its agents, counsel or Affiliates in making its
investment decision hereunder, and confirms that none of such Persons has made
any representations or warranties to such Purchaser in connection with the
transactions contemplated by the Transaction Documents.
 
(l)  Reliance on Exemptions. Such Purchaser understands that the Securities
being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of, and such
Purchaser’s compliance with, the representations, warranties, agreements,
acknowledgements and understandings of such Purchaser set forth herein in order
to determine the availability of such exemptions and the eligibility of such
Purchaser to acquire the Securities.
 
(m)  No Governmental Review.Such Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
 
(n)  Regulation M.Such Purchaser is aware that the anti-manipulation rules of
Regulation M under the Exchange Act may apply to sales of Common Stock and other
activities with respect to the Common Stock by the Purchasers.
 
(o)  Beneficial Ownership. Such Purchaser shall not, by reason of its purchase
of the Shares, become a beneficial owner (as defined under the Section 13(d) of
the Exchange Act) of 20% or more of the Common Stock.
 
The Company and each of the Purchasers acknowledge and agree that no party to
this Agreement has made or makes any representations or warranties with respect
to the transactions contemplated hereby other than those specifically set forth
in this Article III and the other Transaction Documents.
 
ARTICLE IV  
OTHER AGREEMENTS OF THE PARTIES
 
4.1  Transfer Restrictions.
 
(a)  Compliance with Laws. Notwithstanding any other provision of this Article
IV, each Purchaser covenants that the Securities may be disposed of only
pursuant to an effective registration statement under, and in compliance with
the requirements of, the Securities Act, or pursuant to an available exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act, and in compliance with any applicable state and federal
securities laws. In connection with any transfer of the Securities other than
(i) pursuant to an effective registration statement, (ii) to the Company, (iii)
pursuant to Rule 144(k) following the applicable holding period or (iv) in
connection with a bona fide pledge as contemplated in Section 4.1(b), the
Company may require the transferor thereof to provide to the Company an opinion
of counsel selected by the transferor and reasonably acceptable to the Company,
the form and substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration of such
transferred Securities under the Securities Act. As a condition of transfer, any
such transferee shall agree in writing to be bound by the terms of this
Agreement and shall have the rights of a Purchaser under this Agreement and the
Registration Rights Agreement.
 
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(b) Legends. Certificates evidencing the Securities shall bear any legend as
required by the “blue sky” laws of any state and a restrictive legend in
substantially the following form, until such time as they are not required under
Section 4.1(c):
 
[NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES HAVE BEEN REGISTERED] [THESE SECURITIES HAVE NOT BEEN REGISTERED]
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY OR (II) UNLESS SOLD PURSUANT TO RULE 144
UNDER SAID ACT.
 
The Company acknowledges and agrees that a Purchaser may from time to time
pledge, and/or grant a security interest in, some or all of the legended
Securities in connection with applicable securities laws, pursuant to a bona
fide margin agreement in compliance with a bona fide margin loan. Such a pledge
would not be subject to approval or consent of the Company and no legal opinion
of legal counsel to the pledgee, secured party or pledgor shall be required in
connection with the pledge, but such legal opinion shall be required in
connection with a subsequent transfer or foreclosure following default by the
Purchaser transferee of the pledge. No notice shall be required of such pledge,
but Purchaser’s transferee shall promptly notify the Company of any such
subsequent transfer or foreclosure. Each Purchaser acknowledges that the Company
shall not be responsible for any pledges relating to, or the grant of any
security interest in, any of the Securities or for any agreement, understanding
or arrangement between any Purchaser and its pledgee or secured party. At the
appropriate Purchaser’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Shares may reasonably
request in connection with a pledge or transfer of the Shares, including the
preparation and filing of any required prospectus supplement under Rule
424(b)(3) of the Securities Act or other applicable provision of the Securities
Act to appropriately amend the list of Selling Stockholders thereunder. Each
Purchaser acknowledges and agrees that, except as otherwise provided in Section
4.1(c), any Shares subject to a pledge or security interest as contemplated by
this Section 4.1(b) shall continue to bear the legend set forth in this Section
4.1(b) and be subject to the restrictions on transfer set forth in Section
4.1(a).
 
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(c) Removal of Legends. The legend set forth in Section 4.1(b) above shall be
removed and the Company shall issue a certificate without such legend or any
other “restrictive” legend to the holder of the applicable Securities upon which
it is stamped or issue to such holder by electronic delivery at the applicable
balance account at the Depository Trust Company (“DTC”), if (i) such Securities
are registered for resale under the Securities Act pursuant to an effective
registration statement, (ii) such Securities are sold or transferred pursuant to
Rule 144 (assuming the transferor is not an Affiliate of the Company), or (iii)
such Securities are eligible for sale under Rule 144(k). The Company shall cause
Company Counsel to issue the legal opinion referred to in the Irrevocable
Transfer Agent Instructions to the Company’s transfer agent on the Effective
Date. Any fees (with respect to the Transfer Agent, Company Counsel or
otherwise) associated with the issuance of such opinion or the removal of such
legend shall be borne by the Company. If any portion of the Warrant is exercised
at a time when there is an effective registration statement to cover the resale
of the Warrant Shares, or if such Warrant Shares may be sold under Rule 144(k),
then such Warrant Shares shall be issued free of all legends. Following the
Effective Date, or at such earlier time as a legend is no longer required for
certain Securities, the Company will no later than three (3) Trading Days
following the delivery by a Purchaser to the Company or the Transfer Agent (with
notice to the Company) of (i) a legended certificate representing such Shares or
Warrant Shares (endorsed or with stock powers attached, signatures guaranteed,
and otherwise in form necessary to affect the reissuance and/or transfer or (ii)
an Exercise Notice in the manner stated in the Warrants to effect the exercise
of such Warrant in accordance with its terms and an opinion of counsel to the
extent required by Section 4.1(a), (such third Trading Day, the “Legend Removal
Date”), to deliver or cause to be delivered to such Purchaser a certificate
representing such Securities that is free from all restrictive and other
legends. The Company may not make any notation on its records or give
instructions to the Transfer Agent that enlarge the restrictions on transfer set
forth in this Section. Certificates for Shares or Warrant Shares subject to
legend removal hereunder shall be transmitted by the Transfer Agent to the
Purchasers by crediting the account of the Purchaser’s prime broker with DTC.

(d) Irrevocable Transfer Agent Instructions.  The Company shall issue
irrevocable instructions to its transfer agent, and any subsequent transfer
agent, to issue certificates or credit shares to the applicable balance accounts
at DTC, registered in the name of each Purchaser or its respective nominee(s),
for the Shares and the Warrant Shares in such amounts as specified from time to
time by each Purchaser to the Company in the form of Exhibit E attached hereto
(the “Irrevocable Transfer Agent Instructions”). The Company represents and
warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 4.1(d) will be given by the Company to
its transfer agent in connection with this Agreement, and that the Securities
shall otherwise be freely transferable on the books and records of the Company
as and to the extent provided in this Agreement and the other Transaction
Documents. The Company acknowledges that a breach by it of its obligations under
this Section 4.1(d) will cause irreparable harm to a Purchaser. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Section 4.1(d) will be inadequate and agrees, in the event of a
breach or threatened breach by the Company of the provisions of this Section
4.1(d), that a Purchaser shall be entitled, in addition to all other available
remedies, to an order and/or injunction restraining any breach and requiring
immediate issuance and transfer, without the necessity of showing economic loss
and without any bond or other security being required.

(e) Acknowledgement. Each Purchaser hereunder acknowledges (i) that the
Company’s agreement hereunder to remove any legends from the Shares or the
Warrant Shares is not an affirmative statement or representation that such
Shares or the Warrant Shares are freely tradable and (ii) its primary
responsibilities under the Securities Act and accordingly will not sell the
Shares, the Warrant Shares or any interest therein without complying with the
requirements of the Securities Act. While the above-referenced registration
statement remains effective, each Purchaser hereunder may sell the shares in
accordance with the plan of distribution contained in the registration statement
and if it does so it will comply therewith and with the related prospectus
delivery requirements unless an exemption therefrom is available. Each
Purchaser, severally and not jointly with the other Purchasers, agrees that if
it is notified by the Company in writing at any time after the date any legend
is removed pursuant to Section 4.1(c) hereof that the registration statement
registering the resale of the Shares or the Warrant Shares is not effective or
that the prospectus included in such registration statement no longer complies
with the requirements of Section 10 of the Securities Act, the Purchaser will
refrain from selling such Shares and Warrant Shares until such time as the
Purchaser is notified by the Company that such registration statement is
effective or such prospectus is compliant with Section 10 of the Exchange Act,
unless such Purchaser is able to, and does, sell such Shares or Warrant Shares
pursuant to an available exemption from the registration requirements of Section
5 of the Securities Act. Both the Company and its Transfer Agent, and their
respective directors, officers, employees and agents, may rely on this
subsection (e) and each Purchaser hereunder will indemnify and hold harmless
each of such persons from any breaches or violations of this paragraph.

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(f) Buy-In. If the Company shall fail for any reason or for no reason to issue
to a Purchaser unlegended certificates within three (3) Trading Days of receipt
of documents necessary for the removal of the legend set forth above (the
“Deadline Date”), then, in addition to all other remedies available to such
Purchaser, if on or after the Trading Day immediately following such three (3)
Trading Day period, such Purchaser purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
holder of shares of Common Stock that such Purchaser anticipated receiving from
the Company without any restrictive legend (a “Buy-In”), then the Company shall,
within three (3) Trading Days after such Purchaser’s request and in such
Purchaser’s sole discretion, either (i) pay cash to the Purchaser in an amount
equal to such Purchaser’s total purchase price (including brokerage commissions,
if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at
which point the Company’s obligation to deliver such certificate (and to issue
such shares of Common Stock) shall terminate, or (ii) promptly honor its
obligation to deliver to such Purchaser a certificate or certificates
representing such shares of Common Stock and pay cash to the Purchaser in an
amount equal to the excess (if any) of the Buy-In Price over the product of (a)
such number of shares of Common Stock, times (b) the Closing Sales Price on the
Deadline Date.

4.2  Acknowledgment of Dilution.  The Company acknowledges that the issuance of
the Securities may result in dilution of the outstanding shares of Common Stock,
which dilution may be substantial under certain market conditions.  The Company
further acknowledges that its obligations under the Transaction Documents,
including without limitation its obligation to issue the Shares and the Warrant
Shares pursuant to the Transaction Documents, are unconditional and absolute and
not subject to any right of set off, counterclaim, delay or reduction,
regardless of the effect of any such dilution or any claim the Company may have
against any Purchaser and regardless of the dilutive effect that such issuance
may have on the ownership of the other shareholders of the Company.
 
4.3  Reservation of Common Stock. The Company shall take all action necessary to
at all times have authorized, and reserved for the purpose of issuance from and
after the Closing Date, no less than 100% of the maximum number of shares of
Common Stock issuable upon exercise of the Warrants issued at the Closing
(without taking into account any limitations on exercise of the Warrants set
forth in the Warrants).
 
4.4  Furnishing of Information. In order to enable the Purchasers to sell the
Securities under Rule 144 of the Securities Act, for a period of two years from
the Closing (or such shorter period that the Purchaser can sell under Rule 144
without regard to volume limitations), the Company shall use its commercially
reasonable efforts to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act. During such period,
if the Company is not required to file reports pursuant to such laws, it will
prepare and furnish to the Purchasers and make publicly available in accordance
with Rule 144(c) such information as is required for the Purchasers to sell the
Shares and Warrant Shares under Rule 144. The Company further covenants that it
will take such further action as any holder of Securities may reasonably
request, all to the extent required from time to time to enable such Person to
sell the Shares and Warrant Shares without registration under the Securities Act
within the limitation of the exemptions provided by Rule 144.
 
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4.5  Reporting Status. Other than in connection with a Fundamental Transaction
(as such term is defined in the Warrant), during the two year period from and
after the Effective Date, the Company shall not terminate its status as an
issuer required to file reports under the Exchange Act even if the Exchange Act
or the rules and regulations thereunder would otherwise permit such termination.
 
4.6  Form D and Blue Sky. The Company agrees to timely file a Form D with
respect to the Securities as required under Regulation D. The Company shall take
such action and make all filings and reports relating to the offer and sale of
the Securities as the Company shall reasonably determine is necessary in order
to obtain an exemption for or to qualify the Securities for sale to the
Purchasers at the Closing pursuant to this Agreement under applicable securities
or “Blue Sky” laws of the states of the United States (or to obtain an exemption
from such qualification).
 
4.7  No Integration. The Company shall not, and shall use its best efforts to
ensure that no Affiliate of the Company shall, sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that will be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the sale of the Securities to the Purchasers, or that will be
integrated with the offer or sale of the Securities for purposes of the rules
and regulations of any Trading Market such that it would require shareholder
approval prior to the closing of such other transaction unless shareholder
approval is obtained before the closing of such subsequent transaction.
 
4.8  Subsequent Registrations. Other than pursuant to the Registration
Statement, prior to the date that is 60 days after the Effective Date, the
Company shall not file any registration statement (other than on Form S-8 or, in
connection with an acquisition, on Form S-4) with the Commission with respect to
any securities of the Company.
 
4.9  Securities Laws Disclosure; Publicity. By 9:00 a.m., New York City time, on
the Trading Day immediately following the execution of this Agreement, the
Company shall issue a press release (the “Press Release”) reasonably acceptable
to the Placement Agent. On or before 9:00 a.m., New York City time, on the
second Trading Day following the execution of this Agreement (or such earlier
time as required by law), the Company will file a Current Report on Form 8-K
with the Commission describing the terms of the Transaction Documents (and
including as exhibits to such Current Report on Form 8-K the material
Transaction Documents (including, without limitation, this Agreement, the form
of Warrant and the Registration Rights Agreement)). Notwithstanding the
foregoing, the Company shall not publicly disclose the name of any Purchaser or
an Affiliate of any Purchaser, or include the name of any Purchaser or an
Affiliate of any Purchaser in any press release or filing with the Commission
(other than the Registration Statement or the Form 8-K) or any regulatory agency
or Trading Market, without the prior written consent of such Purchaser, except
(i) as required by federal securities law in connection with (A) any
registration statement contemplated by the Registration Rights Agreement and (B)
the filing of final Transaction Documents (including signature pages thereto)
with the Commission and (ii) to the extent such disclosure is required by law,
request of the Staff of the Commission or Trading Market regulations, in which
case the Company shall provide the Purchasers with prior written notice of such
disclosure permitted under this subclause (ii). Each Purchaser, severally and
not jointly with the other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed by the
Company as described in this Section 4.9, such Purchaser will maintain the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction).
 
4.10  Non-Public Information. Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents, the
Company shall not, and shall cause each Subsidiary and each of their respective
officers, directors, employees and agents, not to, provide any Purchaser with
any material, non-public information regarding the Company or any of its
Subsidiaries from and after the filing of the Press Release without the express
written consent of such Purchaser, unless prior thereto such Purchaser shall
have executed a written agreement regarding the confidentiality and use of such
information.
 
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4.11  Indemnification.
 
(a)  Indemnification of Purchasers. In addition to the indemnity provided in the
Registration Rights Agreement, the Company will indemnify and hold each
Purchaser and its directors, officers, shareholders, members, partners,
employees and agents (and any other Persons with a functionally equivalent role
of a Person holding such titles notwithstanding a lack of such title or any
other title), each Person who controls such Purchaser (within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, shareholders, agents, members, partners or employees (and
any other Persons with a functionally equivalent role of a Person holding such
titles notwithstanding a lack of such title or any other title) of such
controlling person (each, a “Purchaser Party”) harmless from any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs and reasonable
attorneys’ fees and costs of investigation (collectively, “Losses”) that any
such Purchaser Party may suffer or incur as a result of or relating to third
party claims against such Purchaser relating to any breach of any of the
representations, warranties, covenants or agreements made by the Company in this
Agreement or in the other Transaction Documents.  The Company will not be liable
to any Purchaser Party under this Agreement to the extent, but only to the
extent that the Loss is attributable to any Purchaser Party’s breach of any of
the representations, warranties, covenants or agreements made by such Purchaser
Party in this Agreement or in the other Transaction Documents.
 
(b)  Conduct of Indemnification Proceedings. Promptly after receipt by any
Person (the “Indemnified Person”) of notice of any demand, claim or
circumstances which would or might give rise to a claim or the commencement of
any action, proceeding or investigation in respect of which indemnity may be
sought pursuant to Section 4.11(a), such Indemnified Person shall promptly
notify the Company in writing and the Company shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Person, and shall assume the payment of all fees and expenses; provided,
however, that the failure of any Indemnified Person so to notify the Company
shall not relieve the Company of its obligations hereunder except to the extent
that the Company is actually and materially prejudiced by such failure to
notify. In any such proceeding, any Indemnified Person shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Person unless: (i) the Company and the
Indemnified Person shall have mutually agreed to the retention of such counsel;
(ii) the Company shall have failed promptly to assume the defense of such
proceeding and to employ counsel reasonably satisfactory to such Indemnified
Person in such proceeding; or (iii) in the reasonable judgment of counsel to
such Indemnified Person, representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. The Company shall not be liable for any settlement of any proceeding
effected without its written consent, which consent shall not be unreasonably
withheld, delayed or conditioned. Without the prior written consent of the
Indemnified Person, which consent shall not be unreasonably withheld, delayed or
conditioned, the Company shall not effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Person from all liability arising out of such proceeding.
 
4.12  Listing of Securities. Prior to the execution of this Agreement or
promptly following the date hereof, the Company shall have taken or shall take
all necessary action to cause the Shares and the Warrant Shares to be listed
upon the Principal Trading Market, if any, upon which shares of Common Stock are
then listed (subject to official notice of issuance) and shall maintain, so long
as any other shares of Common Stock shall be so listed, such listing. Further,
if the Company applies to have its Common Stock or other securities listed on
any other Trading Market, it shall include in such application the Shares and
the Warrant Shares and will take such other action as is necessary to cause the
Shares, and the Warrant Shares to be listed on such other Trading Market as
promptly as practicable.
 
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4.13  Use of Proceeds. The Company intends to use the net proceeds from the sale
of the Securities hereunder for working capital and general corporate purposes
and not to redeem any Common Stock or Common Stock Equivalents or to settle any
outstanding Action.
 
4.14  Short Sales After The Date Hereof. Such Purchaser shall not, and shall
cause its Trading Affiliates not to, engage, directly or indirectly, in any
Short Sales involving the Company’s securities during the period from the date
hereof until the earlier to occur of (i) sixty (60) days following the Closing
Date and (ii) the Effective Date. Notwithstanding the foregoing, in the case of
a Purchaser that is a multi-managed investment vehicle whereby separate
portfolio managers manage separate portions of such Purchaser's assets and the
portfolio managers have no direct knowledge of the investment decisions made by
the portfolio managers managing other portions of such Purchaser's assets, the
representation set forth above shall apply only with respect to the portion of
assets managed by the portfolio manager that have knowledge about the financing
transaction contemplated by this Agreement. Each Purchaser understands and
acknowledges, severally and not jointly with any other Purchaser, that the
Commission currently takes the position that covering a short position
established prior to effectiveness of a resale registration statement with
shares included in such registration statement would be a violation of Section 5
of the Securities Act, as set forth in Item 65, Section 5 under Section A, of
the Manual of Publicly Available Telephone Interpretations, dated July 1997,
compiled by the Office of Chief Counsel, Division of Corporation Finance.
 
ARTICLE V  
CONDITIONS PRECEDENT TO CLOSING

5.1  Conditions Precedent to the Obligations of the Purchasers to Purchase
Securities. The obligation of each Purchaser to acquire Securities at the
Closing is subject to the fulfillment to such Purchaser’s satisfaction, on or
prior to the Closing Date, of each of the following conditions, any of which may
be waived by such Purchaser (as to itself only):
 
(a)  Representations and Warranties. The representations and warranties of the
Company contained herein shall be true and correct in all material respects
(except for those representations and warranties which are qualified as to
materiality, in which case such representations and warranties shall be true and
correct in all respects) as of the date when made and as of the Closing Date, as
though made on and as of such date, except for such representations and
warranties that speak as of a specific date.
 
(b)  Performance. The Company shall have performed, satisfied and complied in
all material respects with all covenants, agreements and conditions required by
the Transaction Documents to be performed, satisfied or complied with by it at
or prior to the Closing.
 
(c)  No Injunction. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction that prohibits
the consummation of any of the transactions contemplated by the Transaction
Documents.
 
(d)  Consents.The Company shall have obtained in a timely fashion any and all
consents, permits, approvals, registrations and waivers necessary or appropriate
for consummation of the purchase and sale of the Securities at the Closing
(including all Required Approvals), all of which shall be and remain so long as
necessary in full force and effect.
 
(e)  Adverse Changes. Since the date of execution of this Agreement, no event or
series of events shall have occurred that has had or would reasonably be
expected to have a Material Adverse Effect.
 
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(f)  No Suspensions of Trading in Common Stock; Listing. Trading in the Common
Stock shall not have been suspended by the Commission or the Principal Trading
Market (except for any suspensions of trading of not more than one Trading Day
solely to permit dissemination of material information regarding the Company) at
any time since the date of execution of this Agreement.
 
(g)  Company Deliverables. The Company shall have delivered the Company
Deliverables in accordance with Section 2.2(a).
 
(h)  Compliance Certificate. The Company shall have delivered to each Purchaser
a certificate, dated as of the Closing Date and signed by its Chief Executive
Officer or its Chief Financial Officer, dated as of the Closing Date, certifying
to the fulfillment of the conditions specified in Sections 5.1(a) and (b) in the
form attached hereto as Exhibit G.
 
(i)  Termination.This Agreement shall not have been terminated as to such
Purchaser in accordance with Section 6.17 herein.
 
5.2  Conditions Precedent to the Obligations of the Company to sell Securities.
The Company's obligation to sell and issue the Securities at the Closing is
subject to the fulfillment to the satisfaction of the Company on or prior to the
Closing Date of the following conditions, any of which may be waived by the
Company:
 
(a)  Representations and Warranties. The representations and warranties made by
the Purchasers in Section 3.2 hereof shall be true and correct in all material
respects as of the date when made, and as of the Closing Date as though made on
and as of such date, except for representations and warranties that speak as of
a specific date.
 
(b)  Performance. The Purchasers shall have performed, satisfied and complied in
all material respects with all covenants, agreements and conditions required by
the Transaction Documents to be performed, satisfied or complied with by the
Purchasers at or prior to the Closing Date.
 
(c)  No Injunction. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction that prohibits
the consummation of any of the transactions contemplated by the Transaction
Documents.
 
(d)  Consents. The Company shall have obtained in a timely fashion any and all
consents, permits, approvals, registrations and waivers necessary or appropriate
for consummation of the purchase and sale of the Securities, all of which shall
be and remain so long as necessary in full force and effect.
 
(e)  Purchasers Deliverables. Each Purchaser shall have delivered its Purchaser
Deliverables in accordance with Section 2.2(b).
 
(f)  Termination.This Agreement shall not have been terminated as to such
Purchaser in accordance with Section 6.17 herein.
 
ARTICLE VI  
MISCELLANEOUS
 
6.1  Fees and Expenses. At Closing, the Company shall reimburse the Placement
Agent for the reasonable fees and expenses in connection with the transactions
contemplated by this Agreement pursuant to its obligations under its engagement
letter with the Placement Agent (the “Engagement Letter”), which the Company
agrees shall include the reasonable fees and expenses of counsel to the
Placement Agent (which fees shall include, without limitation, the fees and
expenses associated with the negotiation, preparation and execution and delivery
of this Agreement and the other Transaction Documents and any amendments,
modifications or waivers thereto), subject to the consent of the Company for
fees and expenses in excess of $35,000. The Company and the Purchasers shall
each pay the fees and expenses of their respective advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party in connection with the negotiation, preparation, execution, delivery and
performance of this Agreement. The Company shall pay all Transfer Agent fees,
stamp taxes and other taxes and duties levied in connection with the sale and
issuance of the Securities to the Purchasers. Each party acknowledges that
Lowenstein Sandler PC has rendered legal advice to the Placement Agent and not
to such party in connection with the transactions contemplated hereby, and that
such party has relied for such matters on the advice of its own respective
counsel.
 
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6.2  Entire Agreement. The Transaction Documents, together with the Exhibits and
Schedules thereto, contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements, understandings,
discussions and representations, oral or written, with respect to such matters,
which the parties acknowledge have been merged into such documents, exhibits and
schedules. At or after the Closing, and without further consideration, the
Company and the Purchasers will execute and deliver to the other such further
documents as may be reasonably requested in order to give practical effect to
the intention of the parties under the Transaction Documents.
 
6.3  Notices. Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall be deemed
given and effective on the earliest of (a) the date of transmission, if such
notice or communication is delivered via facsimile (provided the sender receives
a machine-generated confirmation of successful transmission) at the facsimile
number specified in this Section prior to 5:00 p.m., New York City time, on a
Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
specified in this Section on a day that is not a Trading Day or later than 5:00
p.m., New York City time, on any Trading Day, (c) the Trading Day following the
date of mailing, if sent by U.S. nationally recognized overnight courier service
with next day delivery specified, or (d) upon actual receipt by the party to
whom such notice is required to be given. The address for such notices and
communications shall be as follows:
 
If to the Company: GSE Systems, Inc.
7133 Rutherford Rd, Suite 200
Baltimore, Maryland 21244
Telephone No.: (410) 277-3740
Facsimile No.: (410) 277-5287
Attention: Chief Financial Officer

With a copy to:  Duane Morris LLP
1540 Broadway
New York, NY 10036-4086
Telephone No.: (212) 692-1000
Facsimile No.: (212) 692-1020
Attention: Robert J. Hasday, Esq.

 
If to a Purchaser:

or such other address as may be designated in writing hereafter, in the same
manner, by such Person.

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6.4  Amendments; Waivers; No Additional Consideration. No provision of this
Agreement may be waived or amended except in a written instrument signed, in the
case of an amendment, by the Company and each of the Purchasers holding or
having the right to acquire a majority of the Shares and the Warrant Shares on a
fully-diluted basis at the time of such amendment or, in the case of a waiver,
by the party against whom enforcement of any such waiver is sought. No waiver of
any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right. No
consideration shall be offered or paid to any Purchaser to amend or consent to a
waiver or modification of any provision of any Transaction Document unless the
same consideration is also offered to all Purchasers who then hold Securities.
 
6.5  Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party. This Agreement
shall be construed as if drafted jointly by the parties, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement or any of the Transaction
Documents.
 
6.6  Successors and Assigns. The provisions of this Agreement shall inure to the
benefit of and be binding upon the parties and their successors and permitted
assigns. This Agreement, or any rights or obligations hereunder, may not be
assigned by the Company without the prior written consent of the Purchasers. Any
Purchaser may assign its rights hereunder in whole or in part to any Person to
whom such Purchaser assigns or transfers any Securities in compliance with the
Transaction Documents and applicable law, provided such transferee shall agree
in writing to be bound, with respect to the transferred Securities, by the terms
and conditions of this Agreement that apply to the “Purchasers”.
 
6.7   No Third-Party Beneficiaries. This Agreement is intended for the benefit
of the parties hereto and their respective successors and permitted assigns and
is not for the benefit of, nor may any provision hereof be enforced by, any
other Person, except (i) each Purchaser Party is an intended third party
beneficiary of Section 4.11, and (ii) the Placement Agent is an intended third
party beneficiary of Article III hereof, and each Purchaser Party or the
Placement Agent, as the case may be, may enforce the provisions of such Sections
directly against the parties with obligations thereunder.
 
6.8  Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each party
agrees that all Proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by this Agreement and any other
Transaction Documents (whether brought against a party hereto or its respective
Affiliates, employees or agents) shall be commenced exclusively in the New York
Courts. Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any Proceeding, any claim that it is not personally subject to the
jurisdiction of any such New York Court, or that such Proceeding has been
commenced in an improper or inconvenient forum. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 
 
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6.9  Survival. Subject to applicable statute of limitations, the
representations, warranties, agreements and covenants contained herein shall
survive the Closing and the delivery of the Securities.
 
6.10  Execution. This Agreement may be executed in two or more counterparts, all
of which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile signature page were an original thereof.
 
6.11  Severability. If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Agreement shall not in any way be affected or
impaired thereby and the parties will attempt to agree upon a valid and
enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
 
6.12  Replacement of Securities. If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company and the Transfer Agent of such loss, theft or destruction and the
execution by the holder thereof of a customary lost certificate affidavit of
that fact and an agreement to indemnify and hold harmless the Company and the
Transfer Agent for any losses in connection therewith or, if required by the
Company or the Transfer Agent, a bond in such form and amount as is reasonably
required by the Company or the Transfer Agent. The applicants for a new
certificate or instrument under such circumstances shall also pay any reasonable
third-party costs associated with the issuance of such replacement Securities.
If a replacement certificate or instrument evidencing any Securities is
requested due to a mutilation thereof, the Company may require delivery of such
mutilated certificate or instrument as a condition precedent to any issuance of
a replacement.
 
6.13  Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of the Purchasers
and the Company will be entitled to specific performance under the Transaction
Documents. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
described in the foregoing sentence and hereby agree to waive in any action for
specific performance of any such obligation (other than in connection with any
action for a temporary restraining order) the defense that a remedy at law would
be adequate.
 
6.14  Payment Set Aside. To the extent that the Company makes a payment or
payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
 
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6.15  Adjustments in Share Numbers and Prices. In the event of any stock split,
subdivision, dividend or distribution payable in shares of Common Stock (or
other securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly shares of Common Stock), combination or other
similar recapitalization or event occurring after the date hereof, each
reference in any Transaction Document to a number of shares or a price per share
shall be deemed to be amended to appropriately account for such event.
 
6.16  Independent Nature of Purchasers' Obligations and Rights. The obligations
of each Purchaser under any Transaction Document are several and not joint with
the obligations of any other Purchaser, and no Purchaser shall be responsible in
any way for the performance of the obligations of any other Purchaser under any
Transaction Document. The decision of each Purchaser to purchase Securities
pursuant to the Transaction Documents has been made by such Purchaser
independently of any other Purchaser and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company or any Subsidiary which may have been
made or given by any other Purchaser or by any agent or employee of any other
Purchaser, and no Purchaser and any of its agents or employees shall have any
liability to any other Purchaser (or any other Person) relating to or arising
from any such information, materials, statement or opinions. Nothing contained
herein or in any Transaction Document, and no action taken by any Purchaser
pursuant thereto, shall be deemed to constitute the Purchasers as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents. Each Purchaser acknowledges that no other Purchaser has
acted as agent for such Purchaser in connection with making its investment
hereunder and that no Purchaser will be acting as agent of such Purchaser in
connection with monitoring its investment in the Securities or enforcing its
rights under the Transaction Documents. Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose. The Company acknowledges
that each of the Purchasers has been provided with the same Transaction
Documents for the purpose of closing a transaction with multiple Purchasers and
not because it was required or requested to do so by any Purchaser. The
Company’s obligations to each Purchaser under this Agreement are identical to
its obligations to each other Purchaser other than such differences resulting
solely from the number of Securities purchased by such Purchaser, but regardless
of whether such obligations are memorialized herein or in another agreement
between the Company and a Purchaser.
 
6.17  Termination. This Agreement may be terminated and the sale and purchase of
the Shares and the Warrants abandoned at any time prior to the Closing by either
the Company or any Purchaser (with respect to itself only) upon written notice
to the other, if the Closing has not been consummated on or prior to 5:00 p.m.,
New York City time, on the Outside Date; provided, however, that the right to
terminate this Agreement under this Section 6.17 shall not be available to any
Person whose failure to comply with its obligations under this Agreement has
been the cause of or resulted in the failure of the Closing to occur on or
before such time. Nothing in this Section 6.17 shall be deemed to release any
party from any liability for any breach by such party of the terms and
provisions of this Agreement or the other Transaction Documents or to impair the
right of any party to compel specific performance by any other party of its
obligations under this Agreement or the other Transaction Documents. In the
event of a termination pursuant to this Section, the Company shall promptly
notify all non-terminating Purchasers. Upon a termination in accordance with
this Section, the Company and the terminating Purchaser(s) shall not have any
further obligation or liability (including arising from such termination) to the
other, and no Purchaser will have any liability to any other Purchaser under the
Transaction Documents as a result therefrom.

 
 

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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
 
GSE SYSTEMS, INC.
 
By:_/s/ John V. Moran______________________________ 
                                        Name:  John V. Moran
                                        Title:  Chief Executive Officer 
 

 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGES FOR PURCHASERS FOLLOW]
 

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NAME OF PURCHASER: ____________________________
 

By: 
Name:
Title:

 
Aggregate Purchase Price (Subscription Amount): $_____________
 

 
Number of Shares to be Acquired: ______________________
 

 
Underlying Shares Subject to Warrant: ________________
 
(10.0% of the number of Shares to be acquired) 
 
 
Tax ID No.: ____________________
 
Address (Primary Residence, if individual or Principal Place of Business, if
entity)
 
__________________________________
 
__________________________________
 
__________________________________
 

 
Address for Notice (if different than above):
 
__________________________________
                        __________________________________
                        __________________________________
 
Telephone No.: _______________________
 
Facsimile No.: ________________________ 
 
Attention: _______________________

Delivery Instructions:
(if different than above)

c/o _______________________________

Street: ____________________________

City/State/Zip: ______________________

Attention: __________________________

Telephone No.: ____________________________

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EXHIBITS:
 
A:  Form of Warrant
B:  Form of Registration Rights Agreement
C-1:  Accredited Investor Questionnaire
C-2: Stock Certificate Questionnaire
D:  Form of Opinion of Company Counsel
E:  Irrevocable Transfer Agent Instructions
F: Form of Secretary’s Certificate
G: Form of Officer’s Certificate

 
SCHEDULES:
 
3.1(a) Subsidiaries
3.1(d) Consents
3.1(g) Capitalization
3.1(k) Material Changes
3.1(n) Employment Matters
3.1(q) Title to Assets
3.1(t) Transactions with Affiliates and Employees
3.1(y) Registration Rights

 

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