Document:

Exhibit 10.17.2

 

CONFIDENTIAL

 

December 31, 2009

 

Mr. George R.
Richmond

16243 Highway 216

Brookwood, Alabama 35444

 

Dear George:

 

The terms of your
employment with Walter Energy, Inc. (the “Company”) are currently governed
by a letter agreement dated March 13, 2006, as amended December 22,
2008 (the “Letter Agreement”). We are pleased that you have accepted the
position of President and Chief Operating Officer of the Company effective September 8,
2009. In connection with your new position, we are amending the terms of our
Letter Agreement as set forth below. To the extent the terms contained below are
inconsistent with the terms of the Letter Agreement, the terms of this Agreement
will control.

 

1.               Section 1 of the Letter Agreement is deleted in
its entirety and replaced with the following:

 

1.               As the President and Chief Operating Officer of the Company and a member of the Board of
Directors, you will report to and serve at the direction of the Chief Executive
Officer of the Company and the Board of Directors. In your capacity as
President and Chief Operating Officer of the Company, you will be responsible
for managing all aspects of the business including financial and strategic
issues of the business.

 

2.               Section 2(a) of the Letter Agreement is
deleted in its entirety and replaced with the following:

 

(a)                                  Your annualized base salary will be
$600,000 per year, which will be subject to review and adjustment by the
Compensation and Human Resources Committee of the Board of Directors of the Company and paid in accordance with the payroll
practices of the Company, as they may change from time to time.

 

 

3.               A new Section 2(e) is inserted as follows:

 

(e)                                  You will be eligible for participation in
the Company’s Amended and Restated 2002 Long-Term Incentive Award Plan. In
connection with your acceptance of this position, you will receive a one-time equity
award having an economic value of $250,000 in the form of 50% non-qualified
stock options and 50% restricted stock units, subject to vesting one-third per
year over a three year period.  The
equity award will be priced as of September 8, 2009.

 

4.               Section 11 of the Letter Agreement is deleted in
its entirety.

 

5.               This Agreement records the final, complete, and
exclusive understanding among the parties regarding the amendment of the Letter
Agreement.  As amended, the Letter
Agreement is ratified and remains in full force and effect in accordance with
its terms and shall supersede all prior agreements, discussions, understandings
and proposals (written or oral) relating to your employment with the Company,
with the exception of the Executive Change in Control Severance Agreement dated
March 2, 2004, as amended, entered into between you and the Company.

 

George, we are delighted
that you have accepted this opportunity. If the terms contained within this
letter are acceptable, please sign one of the enclosed copies and return it to
me in the envelope provided and retain one copy for your records.

 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  Walter
  Energy, Inc.

  
	
   

  	
   

  
	
   

  	
  /s/ Victor P. Patrick

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: Victor P. Patrick

  
	
   

  	
  Its: Chief Executive
  Officer

  

 

 

ACCEPTANCE

 

I have read the
foregoing, have been advised to consult with counsel of my choice concerning
the same, and I fully understand the same. 
I approve and accept the terms set forth above as governing my
employment relationship with the Company.

 

	
  Signature
  

  	
  /s/
  George R. Richmond

  	
   

  	
  Date 

  	
  12/31/2009

  

 

2Exhibit 10.1

 

 

GP STRATEGIES
CORPORATION

 

SECURITIES
PURCHASE AGREEMENT

 

December 30,
2009

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  PURCHASE AND SALE OF COMMON STOCK

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (A)

  	
  COMMON STOCK

  	
  1

  
	
   

  	
  (B)

  	
  CLOSING

  	
  1

  
	
   

  	
  (C)

  	
  PURCHASE PRICE

  	
  1

  
	
   

  	
  (D)

  	
  FORM OF PAYMENT

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  INVESTOR’S REPRESENTATIONS AND WARRANTIES

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (A)

  	
  ORGANIZATION; AUTHORITY

  	
  2

  
	
   

  	
  (B)

  	
  NO PUBLIC SALE OR DISTRIBUTION

  	
  2

  
	
   

  	
  (C)

  	
  ACCREDITED INVESTOR STATUS

  	
  2

  
	
   

  	
  (D)

  	
  RELIANCE ON EXEMPTIONS

  	
  2

  
	
   

  	
  (E)

  	
  INFORMATION

  	
  2

  
	
   

  	
  (F)

  	
  NO GOVERNMENTAL REVIEW

  	
  3

  
	
   

  	
  (G)

  	
  TRANSFER OR RESALE

  	
  3

  
	
   

  	
  (H)

  	
  LEGENDS

  	
  4

  
	
   

  	
  (I)

  	
  VALIDITY; ENFORCEMENT

  	
  4

  
	
   

  	
  (J)

  	
  NO CONFLICTS

  	
  4

  
	
   

  	
  (K)

  	
  RESIDENCY

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (A)

  	
  ORGANIZATION AND QUALIFICATION OF THE COMPANY AND ITS SIGNIFICANT
  SUBSIDIARIES

  	
  5

  
	
   

  	
  (B)

  	
  AUTHORIZATION; ENFORCEMENT; VALIDITY

  	
  5

  
	
   

  	
  (C)

  	
  ISSUANCE OF PURCHASED SHARES; NO RESTRICTIONS ON TRANSFER

  	
  5

  
	
   

  	
  (D)

  	
  NO CONFLICTS

  	
  5

  
	
   

  	
  (E)

  	
  CONSENTS

  	
  6

  
	
   

  	
  (F)

  	
  NO GENERAL SOLICITATION; PLACEMENT AGENT’S FEES

  	
  6

  
	
   

  	
  (G)

  	
  NO INTEGRATED OFFERING

  	
  6

  
	
   

  	
  (H)

  	
  APPLICATION OF TAKEOVER AND OTHER PROTECTIONS; RIGHTS AGREEMENT

  	
  7

  
	
   

  	
  (I)

  	
  SEC DOCUMENTS; FINANCIAL STATEMENTS

  	
  7

  
	
   

  	
  (J)

  	
  ACCURACY OF INFORMATION

  	
  8

  
	
   

  	
  (K)

  	
  ABSENCE OF CERTAIN CHANGES

  	
  8

  
	
   

  	
  (L)

  	
  NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR CIRCUMSTANCES

  	
  9

  
	
   

  	
  (M)

  	
  CONDUCT OF BUSINESS; REGULATORY PERMITS

  	
  9

  
	
   

  	
  (N)

  	
  FOREIGN CORRUPT PRACTICES AND/OR OTHER PAYMENTS

  	
  10

  
	
   

  	
  (O)

  	
  SARBANES-OXLEY ACT

  	
  10

  
	
   

  	
  (P)

  	
  TRANSACTIONS WITH AFFILIATES

  	
  11

  
	
   

  	
  (Q)

  	
  EQUITY CAPITALIZATION

  	
  11

  
	
   

  	
  (R)

  	
  INDEBTEDNESS AND OTHER CONTRACTS

  	
  12

  
	
   

  	
  (S)

  	
  ABSENCE OF LITIGATION

  	
  12

  
	
   

  	
  (T)

  	
  INSURANCE

  	
  12

  

 

i

 

	
   

  	
  (U)

  	
  EMPLOYEE RELATIONS

  	
  12

  
	
   

  	
  (V)

  	
  COMPANY BENEFIT PLANS

  	
  13

  
	
   

  	
  (W)

  	
  TITLE

  	
  14

  
	
   

  	
  (X)

  	
  INTELLECTUAL PROPERTY RIGHTS

  	
  14

  
	
   

  	
  (Y)

  	
  ENVIRONMENTAL LAWS

  	
  15

  
	
   

  	
  (Z)

  	
  SUBSIDIARIES

  	
  15

  
	
   

  	
  (AA)

  	
  TAX STATUS

  	
  16

  
	
   

  	
  (BB)

  	
  INTERNAL ACCOUNTING AND DISCLOSURE CONTROLS

  	
  16

  
	
   

  	
  (CC)

  	
  OFF BALANCE SHEET ARRANGEMENTS

  	
  17

  
	
   

  	
  (DD)

  	
  INVESTMENT COMPANY STATUS

  	
  17

  
	
   

  	
  (EE)

  	
  MANIPULATION OF PRICE

  	
  17

  
	
   

  	
  (FF)

  	
  SHELL COMPANY STATUS

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  COVENANTS

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (A)

  	
  FORM D AND BLUE SKY

  	
  17

  
	
   

  	
  (B)

  	
  REPORTING STATUS

  	
  18

  
	
   

  	
  (C)

  	
  USE OF PROCEEDS

  	
  18

  
	
   

  	
  (D)

  	
  FINANCIAL INFORMATION; ACCESS

  	
  18

  
	
   

  	
  (E)

  	
  LISTING

  	
  19

  
	
   

  	
  (F)

  	
  FEES

  	
  19

  
	
   

  	
  (G)

  	
  PLEDGE OF PURCHASED SHARES

  	
  19

  
	
   

  	
  (H)

  	
  INTEGRATION

  	
  20

  
	
   

  	
  (I)

  	
  DISCLOSURE OF TRANSACTIONS AND OTHER MATERIAL INFORMATION

  	
  20

  
	
   

  	
  (J)

  	
  ADDITIONAL REGISTRATION STATEMENTS

  	
  20

  
	
   

  	
  (K)

  	
  ACTIONS REGARDING ANTI-TAKEOVER AND OTHER PROTECTIONS; RIGHTS
  AMENDMENT

  	
  20

  
	
   

  	
  (L)

  	
  PREEMPTIVE RIGHTS - ADDITIONAL ISSUANCES OF PURCHASED SHARES

  	
  21

  
	
   

  	
  (M)

  	
  BOARD MATTERS

  	
  25

  
	
   

  	
  (N)

  	
  OBSERVER RIGHTS

  	
  27

  
	
   

  	
  (O)

  	
  STANDSTILL

  	
  28

  
	
   

  	
  (P)

  	
  LEGENDS

  	
  30

  
	
   

  	
  (Q)

  	
  TRANSFER TAXES

  	
  31

  
	
   

  	
  (R)

  	
  FORM W-9

  	
  31

  
	
   

  	
  (S)

  	
  NO SHORT SALES, ETC. IN VIOLATION OF THE 1933 ACT

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  INVESTOR CLOSING DELIVERABLES

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  COMPANY CLOSING DELIVERABLES

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  TERMINATION

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (A)

  	
  TERMINATION

  	
  34

  
	
   

  	
  (B)

  	
  EFFECTS OF TERMINATION

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  MISCELLANEOUS

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (A)

  	
  DEFINITIONS

  	
  34

  
	
   

  	
  (B)

  	
  GOVERNING LAW; JURISDICTION; JURY TRIAL

  	
  39

  
	
   

  	
  (C)

  	
  COUNTERPARTS

  	
  40

  

 

ii

 

	
   

  	
  (D)

  	
  HEADINGS

  	
  40

  
	
   

  	
  (E)

  	
  SEVERABILITY

  	
  40

  
	
   

  	
  (F)

  	
  ENTIRE AGREEMENT; AMENDMENTS

  	
  40

  
	
   

  	
  (G)

  	
  NOTICES

  	
  40

  
	
   

  	
  (H)

  	
  SUCCESSORS AND ASSIGNS

  	
  42

  
	
   

  	
  (I)

  	
  NO THIRD PARTY BENEFICIARIES

  	
  42

  
	
   

  	
  (J)

  	
  SURVIVAL

  	
  42

  
	
   

  	
  (K)

  	
  FURTHER ASSURANCES

  	
  42

  
	
   

  	
  (L)

  	
  NO STRICT CONSTRUCTION

  	
  42

  
	
   

  	
  (M)

  	
  REMEDIES

  	
  42

  
	
   

  	
  (N)

  	
  ACKNOWLEDGMENT
  REGARDING INVESTOR’S PURCHASED SHARES

  	
  43

  

 

EXHIBITS

	
  Exhibit A

  	
  -

  	
  Form of
  Registration Rights Agreement

  
	
  Exhibit B

  	
  -

  	
  Form of
  Investor Officer’s Certificate

  
	
  Exhibit C

  	
  -

  	
  Form of
  Director Indemnification Agreement

  
	
  Exhibit D

  	
  -

  	
  Form of
  Company Secretary’s Certificate

  
	
  Exhibit E

  	
  -

  	
  Form of
  Company Officer’s Certificate

  

 

iii

 

SECURITIES
PURCHASE AGREEMENT

 

SECURITIES PURCHASE AGREEMENT (the “Agreement”),
dated as of December 30, 2009, by and among GP Strategies Corporation, a
Delaware corporation, with headquarters located at 6095 Marshalee Drive, Suite 300,
Elkridge, MD 21075 (the “Company”), and Sagard Capital Partners, L.P., a
Delaware limited partnership (the “Investor”).  Certain defined terms used herein are listed
in Section 8(a).

 

WHEREAS:

 

A.            Each of the Company and the Investor 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 “1933 Act”), and Rule 506 of
Regulation D (“Regulation D”) as promulgated by the United States
Securities and Exchange Commission (the “SEC”) under the 1933 Act.

 

B.            The Investor wishes to purchase, and the
Company wishes to sell, upon the terms and conditions stated in this Agreement,
2,857,143 shares (the “Purchased Shares”) of the Company’s common stock,
par value $0.01 per share (the “Common Stock”).

 

C.            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 A
(the “Registration Rights Agreement”), pursuant to which the Company has
agreed to provide certain registration rights with respect to the Registrable
Securities (as defined in the Registration Rights Agreement), under the 1933
Act and the rules and regulations promulgated thereunder, and applicable
state securities Laws.

 

NOW, THEREFORE, the Company and the Investor
hereby agree as follows:

 

1.             PURCHASE AND SALE OF COMMON
STOCK.

 

(a)           Common Stock.  Subject to the receipt (or waiver) of the
deliverables set forth in Sections 5 and 6 below, the
Company shall issue and sell to the Investor, and the Investor agrees to
purchase from the Company on the Closing Date, the Purchased Shares.

 

(b)           Closing.  The closing (the “Closing”) of the
purchase of the Purchased Shares by the Investor shall occur at the offices of
Finn Dixon & Herling LLP, 177 Broad Street, Stamford, Connecticut
06901.  The date and time of the Closing
(the “Closing Date”) shall be 10:00 a.m., New York City Time, on
the first Business Day on which the conditions to the Closing set forth in Sections 5
and 6 below have been satisfied or waived (or such other date and
time as is mutually agreed to by the Company and the Investor).

 

(c)           Purchase Price.  The aggregate purchase price for the
Purchased Shares to be purchased by the Investor (the “Purchase Price”)
shall be $20,000,001.00.  The Investor
shall pay $7.00 for each share of Common Stock to be purchased by the Investor
at the Closing.

 

(d)           Form of Payment.  On the Closing Date, (i) the Investor
shall pay the Purchase Price to the Company for the Purchased Shares to be
issued and sold to the Investor at the 

 

 

Closing, by wire transfer of
immediately available funds in accordance with the Company’s written wire
instructions, minus amounts withheld pursuant to Section 4(f)(i) and
the Company shall deliver to the Investor the Purchased Shares, evidenced by
one or more stock certificates, free and clear of all restrictive legends
(except as expressly provided in Section 4(p) hereof).

 

2.             INVESTOR’S REPRESENTATIONS AND
WARRANTIES.

 

As of the date hereof, the Investor
represents and warrants that:

 

(a)           Organization; Authority.  The Investor is a limited partnership duly
organized, validly existing and in good standing under the Laws of the
jurisdiction of its organization with the requisite limited partnership power
and authority to enter into and to consummate the transactions contemplated by
the Transaction Documents to which it is a party and otherwise to carry out its
obligations hereunder and thereunder.

 

(b)           No Public Sale or Distribution.  The Investor is acquiring the Purchased
Shares for its own account and not with a view towards, or for resale in
connection with, the public sale or distribution thereof, except pursuant to
sales registered or exempted under the 1933 Act; provided, however,
that by making the representations herein, the Investor does not agree to hold
any of the Purchased Shares for any minimum or other specific term and reserves
the right to dispose of the Purchased Shares at any time in accordance with or
pursuant to a registration statement or an exemption under the 1933 Act.  The Investor is acquiring the Purchased
Shares hereunder in the ordinary course of its business.  The Investor does not presently have any
agreement or understanding, directly or indirectly, with any Person to
distribute any of the Purchased Shares in violation of the 1933 Act.

 

(c)           Accredited Investor Status.  The Investor is an “accredited investor” as
that term is defined in Rule 501(a) of Regulation D.

 

(d)           Reliance on Exemptions.  The Investor understands that the Purchased
Shares are 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 the Investor’s compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Investor set forth herein
in order to determine the availability of such exemptions and the eligibility
of the Investor to acquire the Purchased Shares.

 

(e)           Information.  The Investor and its advisors, if any, have
been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Purchased Shares which have been requested by the Investor.  The Investor and its advisors, if any, have
been afforded the opportunity to ask questions of the Company.  Neither such inquiries nor any other due
diligence investigations conducted by the Investor or its advisors or
representatives, nor any other statement in this Section 2, shall
modify, amend or affect the Company’s representations and warranties contained herein
or the Investor’s right to rely thereon. 
The Investor understands that its investment in the Purchased Shares
involve a high degree of risk.  The
Investor has sought such accounting, legal and tax advice as it 

 

2

 

has considered necessary to
make an informed investment decision with respect to its acquisition of the
Purchased Shares.

 

(f)            No Governmental Review.  The Investor 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 Purchased Shares
or the fairness or suitability of the investment in the Purchased Shares nor
have such authorities passed upon or endorsed the merits of the offering of the
Purchased Shares.

 

(g)           Transfer or Resale.  The Investor understands that except as
provided in the Registration Rights Agreement:

 

(i)            the Purchased Shares have not
been and are not being registered under the 1933 Act or any state securities Laws,
and may not be offered for sale, sold, assigned or transferred unless (A) subsequently
registered thereunder, (B) the Investor shall have delivered to the
Company an opinion of counsel, in a generally acceptable form, to the effect
that such Purchased Shares to be sold, assigned or transferred may be sold,
assigned or transferred pursuant to an exemption from such registration, or (C) the
Investor provides the Company with reasonable assurance that such Purchased
Shares can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A
promulgated under the 1933 Act, as amended, (or a successor rule thereto)
(collectively, “Rule 144”);

 

(ii)           any sale of the Purchased Shares made in reliance on Rule 144
may be made only in accordance with the terms of Rule 144 and, further, if
Rule 144 is not applicable, any resale of the Purchased Shares under
circumstances in which the seller (or the Person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the 1933 Act) may
require compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and

 

(iii)          neither the Company nor any other Person is under any
obligation to register the Purchased Shares under the 1933 Act or any state
securities Laws or to comply with the terms and conditions of any exemption
thereunder.

 

The Purchased Shares may be pledged in
connection with a bona fide margin account or other loan or financing
arrangement secured by the Purchased Shares and such pledge of Purchased Shares
shall not be deemed to be a transfer, sale or assignment of the Purchased
Shares hereunder, and the Investor shall not be required to provide the Company
with any notice thereof or otherwise make any delivery to the Company pursuant
to this Agreement or any other Transaction Document, including, without
limitation, this Section 2(g), in connection with such a pledge.

 

Investor has not, in anticipation of this
Agreement and its acquisition of and investment in the Purchased Shares, and in
any case during forty-five (45) days prior to the date hereof, effected any
“short” sales with respect to the Common Stock or entered into any swap or any
other agreement, transaction or series of transactions that hedges or
transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether 

 

3

 

any such transaction, swap or series of
transactions is to be settled by delivery of securities, in cash or otherwise.

 

(h)           Legends.  The Investor understands that, until such
time as the resale of the Purchased Shares has been registered under the 1933
Act as contemplated by the Registration Rights Agreement, the stock certificate(s) representing
the Purchased Shares, except as set forth in Section 4(p), shall
bear any legend as required by the “blue sky” Laws of any state and a
restrictive legend in substantially the form set forth in Section 4(p) (and
a stop-transfer order may be placed against transfer of such stock
certificates).

 

(i)            Validity; Enforcement.  This Agreement and the Registration Rights
Agreement have been duly and validly authorized, executed and delivered on
behalf of the Investor and shall constitute the legal, valid and binding
obligations of the Investor enforceable against the Investor in accordance with
their respective terms, except as such enforceability may be limited by general
principles of equity or to applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation and other similar Laws relating to, or affecting
generally, the enforcement of applicable creditors’ rights and remedies.

 

(j)            No Conflicts.  The execution, delivery and performance by
the Investor of this Agreement and the Registration Rights Agreement and the
consummation by the Investor of the transactions contemplated hereby and
thereby will not (i) result in a violation of the organizational documents
of the Investor or (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 the Investor
is a party, or (iii) result in a violation of any Law (including federal
and state securities Laws) applicable to the Investor, 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 the Investor to perform its
obligations hereunder.

 

(k)           Residency.  The Investor’s principal office is located in
the State of Connecticut.

 

3.             REPRESENTATIONS AND WARRANTIES
OF THE COMPANY.

 

The Company represents and warrants to the
Investor as of the date hereof that, except as otherwise disclosed or
incorporated by reference in: (i) the Company’s Annual Report on Form 10-K
for the year ended December 31, 2008, or its other reports and forms filed
with or furnished to the SEC under Sections 12, 13, 14 or 15(d) of the
Securities Exchange Act of 1934, as amended (the “1934 Act”), after December 31,
2008 and before the date of this Agreement (including any amendments or
supplements thereto, but excluding risk factors and/or any other disclosures of
risks included in any forward-looking statement disclaimers or other statements
that are similarly nonspecific and are predictive and forward-looking in
nature) (all such reports covered by this clause (i), collectively, the “SEC
Reports”); or (ii) as set forth in the disclosure letter dated as of
the date hereof provided to the Investor separately (the “Disclosure Letter”),
specifically identifying the relevant subparagraph(s) hereof (provided,
that disclosure in any subparagraph of such disclosure letter shall apply to
any section or subparagraph hereof to the 

 

4

 

extent it is reasonably apparent on its face
that such disclosure is relevant to such section or subparagraph of this
Agreement):

 

(a)           Organization and Qualification of the
Company and its Significant Subsidiaries. 
The Company and General Physics Corporation, a Delaware corporation, are
entities duly organized and validly existing and in good standing under the
Laws of the jurisdiction in which they are formed, and have the requisite power
and authority to own their properties and to carry on their business as now
being conducted.  General Physics (UK)
Ltd, a United Kingdom limited company, is an entity duly organized and validly
existing under the Laws of the jurisdiction in which it is formed, and has the
requisite power and authority to own its properties and to carry on its
business as now being conducted.  Each of
the Company and its Significant Subsidiaries is duly qualified as a foreign
entity to do business and is in good standing in every jurisdiction in which
its ownership of property or the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not reasonably be expected to have a
Material Adverse Effect.

 

(b)           Authorization; Enforcement; Validity.  The Company has the requisite power and
authority to enter into and perform its obligations under this Agreement, the
Registration Rights Agreement, the Confidentiality Agreement and each of the
other agreements entered into by the Company in connection with the
transactions contemplated by this Agreement (collectively, the “Transaction
Documents”) and, in the case of the Company, to issue the Purchased Shares
in accordance with the terms hereof and thereof.  The execution and delivery of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby, including, without limitation, the issuance of
the Purchased Shares, have been duly authorized by the Company’s board of
directors (the “Board of Directors”). 
No further corporate consent, or authorization is required by the
Company, the Board of Directors or the Company’s stockholders in connection
with the execution and delivery of this Agreement and the other Transaction
Documents to which it is a party and the performance of the Company’s
obligations hereunder and thereunder. 
This Agreement and the other Transaction Documents of even date herewith
have been duly executed and delivered by the Company, and constitute the legal,
valid and binding obligations of the Company, enforceable against the Company
in accordance with their respective terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar Laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and remedies.

 

(c)           Issuance of Purchased Shares; No
Restrictions on Transfer.  The
issuance of the Purchased Shares has been duly authorized by all necessary
corporate action and, upon issuance in accordance with this Agreement, such
Purchased Shares will be validly issued, fully paid and nonassessable, and free
and clear of all liens and/or restrictions on transfer (other than restrictions
on transfer provided for by applicable federal and state securities Laws) and
will not be subject to preemptive rights of any other stockholder of the
Company.  Subject to the representations
and warranties of the Investor in this Agreement, the offer and issuance by the
Company of the Purchased Shares are exempt from registration under the 1933
Act.

 

(d)           No Conflicts.  Except as set forth on Section 3(d) of
the Disclosure Letter, the execution, delivery and performance of the
Transaction Documents by the Company and the 

 

5

 

consummation by the Company of
the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Purchased Shares) will not (i) violate the
Certificate of Incorporation or any certificate of incorporation, certificate
of formation, or any certificate of designations or other constituent document
of any of its Subsidiaries, or the Bylaws or any of its Subsidiaries’ bylaws, (ii) violate,
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 the Company or any of its Subsidiaries is a
party, (iii) assuming the filing of a Form D and state securities Law
filings, result in a violation of any Law (including federal and state
securities Laws and the rules and regulations of the New York Stock
Exchange or such other Eligible Market on which the Company may list the Common
Stock from time to time (such Eligible Market, the “Principal Market”))
applicable to the Company or any of its Subsidiaries or by which any property
or asset of the Company or any of its Subsidiaries is bound or affected or (iv) result
in or require the creation or imposition of any lien upon or with respect to any
of the properties or assets of the Company or any of its Subsidiaries, except
in the case of clauses (ii), (iii) and (iv), as would
not reasonably be expected to have a Material Adverse Effect.

 

(e)           Consents.  Other than the filing with the SEC of a Form D
and one or more Registration Statements in accordance with the requirements of
the Registration Rights Agreement and any other filings as may be required by
any state securities agencies, except as set forth on Section 3(e) of
the Disclosure Letter, neither the Company nor any of its Subsidiaries is
required to obtain any consent, authorization or order of, or make any filing
or registration with, any court, governmental agency or any regulatory or
self-regulatory agency (including the Principal Market) or any other Person in
order for it to execute, deliver or perform any of its obligations under or
contemplated by the Transaction Documents, in each case in accordance with the
terms hereof or thereof.  All consents,
authorizations, orders, filings and registrations which the Company or any such
Subsidiary is required to obtain pursuant to the preceding sentence will be
obtained or effected on or prior to the Closing Date, and the Company and its
Subsidiaries are unaware of any facts or circumstances which might prevent the
Company from obtaining or effecting any of the registration, application or
filings pursuant to the preceding sentence except as set forth on Section 3(c) of
the Disclosure Letter.  The Company is
not in violation of the requirements of the Principal Market and has no
Knowledge of any facts which would reasonably be expected to lead to delisting
or suspension of the Common Stock in the foreseeable future.

 

(f)            No General Solicitation; Placement
Agent’s Fees.  Neither the Company,
nor any of its Subsidiaries or Affiliates, nor any Person acting on its or
their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with the offer
or sale of the Purchased Shares.  The
Company shall be responsible for the payment of any placement agent’s fees,
financial advisory fees, or brokers’ commissions (other than for Persons
engaged by the Investor or any Person acting or claiming to act on behalf of
the Investor) relating to or arising out of the transactions contemplated
hereby.  Neither the Company nor any of
its Subsidiaries has engaged any placement agent or other agent in connection
with the sale of the Purchased Shares.

 

(g)           No Integrated Offering.  None of the Company, its Subsidiaries, any of
their Affiliates, and any Person acting on their behalf has, directly or
indirectly, made any offers or

 

6

 

sales of any security or
solicited any offers to buy any security, under circumstances that would
require registration of any of the Purchased Shares under the 1933 Act or cause
this offering of the Purchased Shares to be integrated with prior offerings by
the Company for purposes of the 1933 Act or any applicable stockholder approval
provisions, including, without limitation, under the rules and regulations
of the Principal Market or any exchange or automated quotation system on which
any of the securities of the Company are listed or designated.  None of the Company or its Subsidiaries or
any Person acting on their behalf will take any action or steps referred to in
the preceding sentence that would require registration of any of the Purchased
Shares under the 1933 Act (except as contemplated by the Registration Rights
Agreement) or cause the offering of the Purchased Shares to be integrated with
other offerings.

 

(h)                                 Application of Takeover and Other Protections; Rights
Agreement.

 

(i)                                     Except as set forth on Section 3(h) of the
Disclosure Letter, the Company does not have in place a stockholder rights plan
or similar arrangement relating to accumulations of beneficial ownership of
Common Stock or a change in control of the Company.

 

(ii)                                  The Board of Directors has irrevocably waived, on behalf of
the Company, any rights under Article Thirteenth with respect to (A) 18,700
shares of Common Stock presently held by the Investor, (B) the Purchased
Shares, (C) any additional securities acquired pursuant to Section 4(l) and
(D) any other securities permitted to be acquired by the Investor under Section 4(o)(i)(A) hereof.

 

(iii)                               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
Certificate of Incorporation or any certificates of designations or the laws of
the jurisdiction of its formation or incorporation, or any other jurisdiction,
which is or would reasonably be expected to become applicable to the Investor
as a result of (i) the transactions contemplated by this Agreement,
including, without limitation, the Company’s issuance of the Purchased Shares
and the Investor’s ownership of the Purchased Shares, (ii) the Investor’s
purchase of securities pursuant to Section 4(l) and (iii) any
shares of Common Stock permitted to be acquired by the Investor under Section 4(o)(iv) hereof.

 

(i)                                     SEC Documents; Financial Statements.

 

(i)                                     Except as set forth on Section 3(i) of the
Disclosure Letter, since December 31, 2006, the Company has timely filed
all reports, schedules, forms, statements and other documents required to be
filed by it with the SEC pursuant to the reporting requirements of the 1934 Act
(all of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements, notes and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the “SEC
Documents”).  The Company has
delivered to the Investor or its representatives true, correct and complete
copies of any such SEC Documents which are not available on the EDGAR system
that have been requested by the Investor. 
As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed 

 

7

 

with
the SEC, 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 the light of the circumstances under which they were
made, not misleading.  There are no
outstanding comments from the SEC with respect to any SEC Document.

 

(ii)           As
of their respective dates, the financial statements of the Company included in
the SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto as in effect as of the time of filing.  Such financial statements have been prepared
in accordance with generally accepted accounting principles, consistently
applied, during the periods involved (except (A) as may be otherwise
indicated in such financial statements or the notes thereto, or (B) in the
case of unaudited interim statements, to the extent they may exclude footnotes
or may be condensed or summary statements) and fairly present in all material
respects the financial position of the Company as of the dates thereof and the
results of its operations, changes in stockholders’ equity and cash flows for
the periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).

 

(j)            Accuracy of
Information.  All factual
information, taken as a whole, furnished by or on behalf of the Company and its
Subsidiaries in writing to the Investor on or prior to the date of this
Agreement, for purposes of this Agreement and all other such factual
information, taken as a whole, furnished by the Company on behalf of itself and
its Subsidiaries in writing to the Investor pursuant to the terms of this
Agreement does 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 the light of the circumstances under which they were made, not misleading
when considered with respect to the Company and/or its Subsidiaries, taken as a
whole; provided, however, that with respect to any projected
financial information or forward-looking statements, business assumptions,
strategic plans or similar information, the Company represents only that such
information was prepared in good faith based upon assumptions, and subject to
such qualifications, believed to be reasonable at the time.  The Company
understands and confirms that the Investor will rely on the representations and
warranties contained in this Section 3 for purposes of purchasing
the Purchased Shares pursuant to this Agreement.

 

(k)           Absence of
Certain Changes.  Except as
disclosed in Section 3(k) of the Disclosure Letter, since December 31,
2008, no event or events have occurred that, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect.

 

(i)            Without
limiting the generality of the foregoing and except as set forth in Section 3(k) of
the Disclosure Letter, since December 31, 2008:

 

(A)          neither the
Company nor any Subsidiary has issued any note, bond, or other debt security or
created, incurred, assumed, or guaranteed any Indebtedness for borrowed money
or capitalized lease obligation, individually or in the aggregate, in excess of
$250,000;

 

(B)           neither the
Company nor any Subsidiary has (x) acquired any other Person (or any
significant business, portion or division thereof), whether by merger,
consolidation or reorganization or by purchase of such Person’s assets or
capital stock or 

 

8

 

otherwise and/or (y) terminated and/or
made material modifications to any material provisions of any agreements
evidencing or relating to the transactions described in the preceding clause (x);

 

(C)                                neither the
Company nor any Significant Subsidiary has made material changes in management
personnel or entered into, or materially modified, any employment, severance or
similar contract with any officer or management level employee;

 

(D)                               neither the
Company nor any Significant Subsidiary has incurred any material penalty as a
result of underperformance under, or alleged breach of, any contracts or
agreements with any customer;

 

(E)                                 neither the
Company nor any Subsidiary has accelerated, terminated, made material
modifications to, or cancelled, any of the Material Contracts, nor has any
counterparty to any such Material Contracts taken any of the foregoing actions
in this clause (E) with respect to any Material Contract;

 

(F)                                 neither the
Company nor any Subsidiary has entered into, accelerated, terminated, made
material modifications to, or cancelled, any contract or agreement, which
involves more than $250,000, relating to or involving any earnout payment or
the deferred purchase price of property or services other than accounts payable
incurred and payable on terms customary in the business of the Company or its
Subsidiaries;

 

(G)                                neither the
Company nor any Significant Subsidiary has committed to any of the matters
described in clauses (C) and/or (D) above; and

 

(H)                               neither the
Company nor any Subsidiary has committed to any of the matters described in clauses (A),
(B), (E) and/or (F) above.

 

(ii)                                  Neither the Company nor any of its Significant Subsidiaries
has taken any steps to seek protection pursuant to any bankruptcy Law nor does
the Company have any Knowledge or reason to believe that its creditors intend
to initiate involuntary bankruptcy proceedings or any actual Knowledge of any
fact which would reasonably lead a creditor to do so.  The Company and its Significant Subsidiaries,
individually and on a consolidated basis, are not as of the date hereof, and
after giving effect to the transactions contemplated hereby to occur at the
Closing will not be, Insolvent (as defined below).

 

(l)                                     No Undisclosed
Events, Liabilities, Developments or Circumstances.  Neither the Company nor any of the Company’s
Subsidiaries has any liabilities or obligations of any nature (absolute,
accrued, contingent or otherwise) which are not properly reflected or reserved
against in the Company’s financial statements included in the SEC Documents to
the extent required to be so reflected or reserved against in accordance with
generally accepted accounting principles in the United States, except for (i) liabilities
that have arisen in the ordinary course of business consistent with past
practice and that have not had a Material Adverse Effect, and (ii) liabilities
that have not had and would not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.

 

(m)                               Conduct of
Business; Regulatory Permits.  Except as set forth on Section 3(m) of
the Disclosure Letter:

 

9

 

(i)                                     Neither the Company nor any of its Significant Subsidiaries
is in violation of any term of its Certificate of Incorporation, any
certificate of designation, preferences or rights of any outstanding series of
preferred stock of the Company or Bylaws or their organizational documents or
certificate of incorporation or bylaws, respectively.  Since December 31, 2008, each of the
Company and each Subsidiary has complied in all material respects with all
applicable Laws, other than such noncompliance that would not reasonably be
expected to, either individually or in the aggregate, result in a Material
Adverse Effect.

 

(ii)                                  Without limiting the generality of the foregoing, the
Company is not in violation of any of the rules, regulations or requirements of
the Principal Market and has no Knowledge of any facts or circumstances that
would reasonably lead to delisting or suspension of the Common Stock by the
Principal Market in the foreseeable future. 
Since January 1, 2006, (A) the Common Stock has been
designated for quotation on the Principal Market, (B) trading in the
Common Stock has not been suspended by the SEC or the Principal Market and (C) the
Company has received no communication, written or oral, from the SEC or the
Principal Market advising of or threatening the suspension or delisting of the
Common Stock from the Principal Market.

 

(iii)                               (x) The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate regulatory
authorities necessary to conduct their respective businesses, and (y) neither
the Company nor any such Subsidiary has received any notice of proceedings
relating to the revocation or modification of any such certificate,
authorization or permit, except in the case of (x) and (y) where such
failure or receipt of notice of proceedings, as the case may be, would not
reasonably be expected to, either individually or in the aggregate, result in a
Material Adverse Effect.

 

(n)                                 Foreign Corrupt
Practices and/or Other Payments.  Neither the Company nor, to the Knowledge of
the Company, any of its Subsidiaries nor any director, officer, agent, employee
or other Person 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 or any of its
Subsidiaries (i) made any unlawful contribution, gift, entertainment or
other unlawful expenses relating to political activity; (ii) made any
direct or indirect unlawful payment to any foreign or domestic government
official or employee; (iii) violated or is in violation of any provision
of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or any other
anti-bribery or anti-corruption Laws applicable to the Company or any of its
Subsidiaries; (iv) made any unlawful bribe, rebate, payoff, influence
payment, kickback or other unlawful payment to any foreign or domestic
government official or employee; or (v) made any bribe, rebate, payoff,
influence payment, kickback or other payment to, for the benefit of, or at the
request of, any employee of any customer of the Company or any Subsidiary which
might reasonably be expected to result in such customer modifying its purchases
of services and/or products from the Company.

 

(o)                                 Sarbanes-Oxley
Act.  The Company is in material
compliance with (x) any and all applicable requirements of the
Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and (y) any
and all applicable rules and regulations promulgated by the SEC thereunder
that are effective as of the date hereof, in the case of (x) and (y), when
taken as a whole.

 

10

 

(p)                                 Transactions
With Affiliates.  Except as
set forth in the SEC Documents filed at least ten (10) days prior to the
date hereof and other than the outstanding stock options and/or restricted
stock disclosed on Section 3(p) of the Disclosure Letter, none
of the officers, directors or employees of the Company or any of its
Significant Subsidiaries is presently a party to any transaction with the
Company or any of its Significant Subsidiaries (other than for ordinary course
services as employees, officers or directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from, any such officer, director or employee or, to
the Knowledge of the Company or any of its Significant Subsidiaries, any
corporation, partnership, trust or other entity in which any such officer,
director, or employee has a substantial interest or is an officer, director,
trustee or partner.

 

(q)                                 Equity
Capitalization.  As of the
date hereof, the authorized capital stock of the Company consists of (i) 35,000,000
shares of Common Stock, of which as of the date hereof, 15,723,767 are issued
and outstanding and 1,250,682 shares are reserved for issuance pursuant to
securities exercisable or exchangeable for, or convertible into, shares of
Common Stock and (ii) 10,000,000 shares of preferred stock of which, as of
the date hereof, none are issued and outstanding.  All of such outstanding shares have been, or
upon issuance will be, validly issued and are fully paid and
nonassessable.  Except as set forth on Section 3(q) of
the Disclosure Letter, (i) none of the Company’s capital stock is 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 capital stock of the Company or any of its
Significant Subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its Significant Subsidiaries is or
may become bound to issue additional capital stock of the Company or any of its
Significant Subsidiaries 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 capital stock
of the Company or any of its Significant Subsidiaries; (iii) there are no
agreements or arrangements under which the Company or any of its Subsidiaries
is obligated to register the sale of any of their securities, whether presently
outstanding or securities that may be issued subsequently, under the 1933 Act
(except pursuant to the Registration Rights Agreement); (iv) there are no
outstanding securities or instruments of the Company or any of its Significant
Subsidiaries which contain any redemption or similar provisions, and there are
no contracts, commitments, understandings or arrangements by which the Company
or any of its Significant Subsidiaries is or may become bound to redeem a
security of the Company or any of its Significant Subsidiaries; (v) there
are no securities or instruments containing anti-dilution or similar provisions
that will be triggered by the issuance of the Purchased Shares; and (vi) the
Company does not have any stock appreciation rights or “phantom stock” plans or
agreements or any similar plan or agreement. 
To the Company’s Knowledge, no stockholder of the Company has entered
into any agreement with respect to the voting of equity securities of the
Company.  The Company has furnished to
the Investor true, correct and complete copies of the Company’s Certificate of
Incorporation, as amended and as in effect on the date hereof (the “Certificate
of Incorporation”), and the Company’s Bylaws, as amended and as in effect
on the date hereof (the “Bylaws”), and the terms of all securities
convertible into, or exercisable or exchangeable for, shares of Common Stock
and the material rights of the holders thereof in respect thereto.  Section 3(q) of the
Disclosure Letter sets forth 

 

11

 

the shares of Common Stock
owned beneficially or of record and Common Stock Equivalents (as defined below)
held by each director and executive officer.

 

(r)                                    Indebtedness
and Other Contracts.  Except as
set forth in Section 3(r) of the Disclosure Letter: (i) neither
the Company nor any of its Significant Subsidiaries has any outstanding
Indebtedness (as defined below), (ii) neither the Company nor any of its
Subsidiaries is a party to any contract, agreement or instrument, the violation
of which, or default under which, by the other party(ies) to such contract,
agreement or instrument would reasonably be expected to result in a Material
Adverse Effect, or (iii) neither the Company nor any of its Significant
Subsidiaries is in material violation of any term of or in material default
under any material contract, agreement or instrument relating to any
Indebtedness.  The Company has provided
the Investor with a true, correct and complete list of: (i) all presently
existing contracts or agreements (or series of related contracts or agreements)
to which the Company or its Subsidiaries are party or by which they are bound
involving payments in excess of $250,000 in calendar year 2009 and (ii) all
contracts or agreements with the top ten (10) customers of the Company and
its Significant Subsidiaries (based on total purchases, in dollars) during the
fiscal year ended December 31, 2008 and current year-to-date
(collectively, the “Material Contracts,” and each a “Material
Contract”).

 

(s)                                  Absence of
Litigation.  Except as
set forth in Section 3(s) of the Disclosure Letter, there is
no action, suit, proceeding, inquiry or investigation before or by the
Principal Market, any court, public board, government agency, self-regulatory
organization or body pending or, to the Knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries, or, to the Company’s
Knowledge, any of the Company’s or its Subsidiaries’ officers or directors,
that (i) is reasonably likely to have a Material Adverse Effect, (ii) purports
to affect the legality, validity or enforceability of this Agreement or any
other Transaction Document or the consummation of the transactions contemplated
by this Agreement or by any of the other Transaction Documents or (iii) alleges
criminal conduct.

 

(t)                                    Insurance.  The Company and each of its Significant
Subsidiaries are insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as management of the Company
believes to be prudent and customary in the businesses in which the Company and
its Significant Subsidiaries are engaged. 
Except as set forth on Section 3(t) of the Disclosure
Letter, the Company does not engage in any self-insurance arrangements.  Neither the Company nor any such Significant
Subsidiary has been refused any insurance coverage sought or applied for and
neither the Company nor any such Significant Subsidiary has any reason to
believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that would not
reasonably be expected to result in a Material Adverse Effect.  The Company has provided the Investor with a
true, correct and complete list of all existing insurance policies, including
their respective retention amounts and/or deductibles.

 

(u)                                 Employee Relations.

 

(i)                                     Except as set forth on Section 3(u) of the
Disclosure Letter, neither the Company nor any of its Subsidiaries is a party
to any collective bargaining agreement or to the Knowledge of the Company,
employs any member of a union.  To the
Knowledge of the 

 

12

 

Company, no executive officer (as defined in
Rule 501(f) of the 1933 Act) of the Company or any of its Significant
Subsidiaries has notified the Company or any such Significant Subsidiary that
such officer intends to leave the Company or any such Significant Subsidiary or
otherwise terminate such officer’s employment with the Company or any such
Significant Subsidiary.  To the Knowledge
of the Company, no executive officer of the Company or any of its Significant
Subsidiaries is, or is now expected to be, in violation of any material term of
any employment contract, confidentiality, disclosure or proprietary information
agreement, 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 of its Significant Subsidiaries to any
liability with respect to any of the foregoing matters.

 

(ii)                                  The Company and its Subsidiaries have complied with all
federal, state, local and foreign Laws and regulations respecting labor,
employment and employment practices and benefits, terms and conditions of
employment and wages and hours, except where failure to be in compliance would
not, either individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.  All
persons classified by the Company or its Subsidiaries as independent
contractors, consultants or as self-employed do satisfy and have satisfied the
requirements of any applicable Law to be so classified, except where failure to
be in compliance would not, either individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect.

 

(v)                                 Company Benefit Plans.

 

(i)                                     Set forth on Section 3(v) of the Disclosure
Letter is a complete and correct list of (A) all Benefit Plans that are
presently maintained or contributed to by the Company or any Subsidiary or with
respect to which the Company or any Subsidiary has any material liability, (B) all
“employee pension benefit plans” (as defined in ERISA §3(2)) that have been
maintained or contributed to in the last six (6) years by the Company or
any Subsidiary and (C) all plans presently maintained in a jurisdiction
other than the U.S. which relate to pension or retirement benefits provided to
employees that would be “employee pension benefit plans” (as defined in ERISA
§3(2)) if such plans were subject to ERISA that have been maintained or
contributed to in the last six (6) years by the Company or any Subsidiary,
in each case (A), (B) or (C) which provide
benefits to any current or former director, officer, employee or service
provider of the Company or any Subsidiary, or the dependents of any thereof
(each plan in this clause (i), a “Plan,” and collectively,
the “Plans”).

 

(ii)                                  Neither the Company nor any ERISA Affiliate contributes to,
has, or in the last six (6) years has had, any obligation to contribute
to, or has any material liability under or with respect to any Employee Pension
Benefit Plan that is a “defined benefit plan” (as defined in ERISA §3(35)).

 

(iii)                               Neither the Company nor any ERISA Affiliate contributes to,
or has any obligation to contribute to, or has any material liability
(including withdrawal liability as defined in ERISA §4201) under or with
respect to any Multiemployer Plan.

 

(iv)                              Except as set forth on Section 3(v) of the
Disclosure Letter, (A) neither the execution and delivery of this
Agreement, nor the consummation of the transactions 

 

13

 

contemplated
hereby will (1) result in any payment (including severance, unemployment
compensation, “excess parachute payment” (within the meaning of Section 280G
of the Code), forgiveness of indebtedness or otherwise) becoming due to any
current or former employee, officer or director of the Company or any of its
Subsidiaries from the Company or any of its Subsidiaries under any Plan or
otherwise, (2) increase any benefits otherwise payable under any Plan, (3) result
in any acceleration of the time of payment or vesting of any such benefits, (4) require
the funding or increase in the funding of any such benefits or (5) result
in any limitation on the right of the Company or any of its Subsidiaries to
amend, merge, terminate or receive a reversion of assets from any Plan or
related trust and (B) neither the Company nor any of its Subsidiaries has
taken, or permitted to be taken, any action that required, and no circumstances
exist that will require the funding, or increase in the funding, of any
benefits or resulted, or will result, in any limitation on the right of the
Company or any of its Subsidiaries to amend, merge, terminate or receive a
reversion of assets from any Plan or related trust.

 

(v)                                 No action, suit, proceeding, hearing or investigation with
respect to any Plan or the administration or the investment of the assets
thereof (other than routine claims for benefits) is pending or, to the best
Knowledge of the Company, threatened; the Company has no Knowledge of any basis
for any such action, suit, proceeding, hearing, or investigation.

 

Except for the representations and warranties of the
Company expressly set forth in this Section 3(v), the Company makes
no other express or implied representation or warranty with respect to the
Plans, or the matters covered by the representations and warranties contained in
this Section 3(v), and none of the other representations and
warranties contained in this Agreement shall be deemed to be given in relation
to the Plans.

 

(w)                               Title.  Except as set forth on Section 3(w) of
the Disclosure Letter, the Company and its Subsidiaries have good and
marketable fee simple title to, or a valid leasehold interest in, all of the
real property owned or leased by the Company, and good and marketable title to,
or valid leasehold interests in, all of their personal property, except where
the failure to hold such title or leasehold interests, individually or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect.  The Company and its Subsidiaries
enjoy peaceful and undisturbed possession under all of their respective leases
except where the failure to enjoy such peaceful and undisturbed possession,
individually or in the aggregate, would not reasonably be expected to result in
a Material Adverse Effect.

 

(x)                                   Intellectual
Property Rights.  The Company
and its Subsidiaries own or possess adequate rights or licenses to use all
trademarks, trade names, service marks, service mark registrations, service
names, patents, patent rights, copyrights, inventions, original works of
authorship, trade secrets and other intellectual property rights and all
applications related thereto necessary to conduct their respective businesses
as now conducted, except where the failure to so own or possess would not,
either individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect (collectively, “Intellectual Property Rights”).  None of the patents, patent applications,
trademark and service mark registrations and applications, or copyright
registrations and applications owned by the Company and its Subsidiaries and
included in the Intellectual Property Rights (collectively, the “Registered
Intellectual Property”) has expired, terminated or been abandoned, or are
expected to expire, terminate or be abandoned, within three years from the date
of this Agreement, except where such expiration, termination or 

 

14

 

abandonment, individually or
in the aggregate, would not reasonably be expected to result in a Material
Adverse Effect.  The Company does not have
any Knowledge of any infringement by the Company or any of its Subsidiaries of
Intellectual Property Rights of third parties that would, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect.  There is no claim, action or proceeding
pending, or to the Knowledge of the Company, threatened, against the Company or
any of its Subsidiaries challenging the validity, enforceability, ownership or
use of any item of the Registered Intellectual Property that could, individually
or in the aggregate, reasonably be expected to result in a Material Adverse
Effect.  The Company and its Significant
Subsidiaries use commercially reasonable efforts to protect the secrecy,
confidentiality and value of all of their Intellectual Property Rights.

 

(y)                                 Environmental
Laws.  The Company and its
Subsidiaries (i) have complied in all material respects with any and all
applicable Environmental Laws (as hereinafter defined), (ii) have received
all permits, licenses or other approvals currently required of them under
applicable Environmental Laws to conduct their respective businesses and (iii) have
complied in all material respects with all terms and conditions of any such
permit, license or approval where, in each of the foregoing clauses (i),
(ii) and (iii), the failure to so comply or have received
such permits, licenses or approvals would be reasonably expected to result in,
individually or in the aggregate, a Material Adverse Effect.  The term “Environmental Laws” means
all federal, state, local or foreign Laws relating to pollution or protection
of human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata), including,
without limitation, Laws relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, “Hazardous Materials”)
into the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials.  Except for the
representations and warranties of the Company expressly set forth in this Section 3(y),
the Company makes no other express or implied representation or warranty with
respect to matters covered by the representations and warranties contained in
this Section 3(y), and none of the other representations and
warranties contained in this Agreement shall be deemed to be given in relation
to the matters covered by the representations and warranties contained in this Section 3(y).

 

(z)                                   Subsidiaries.  Section 3(z) of the
Disclosure Letter sets forth a complete and accurate list of all active direct
and indirect Subsidiaries of the Company, showing, in each case, as of the date
of this Agreement (as to each such Subsidiary) the jurisdiction of its
formation, and, with respect to each non-wholly owned Subsidiary, the number of
shares, membership interests or partnership interests (as applicable) of each
class of its equity interests authorized, and the number outstanding, on the
date of this Agreement and the percentage of each such class of its equity
interests owned (directly or indirectly) by the Company, and the number of
shares covered by all outstanding options, warrants, rights of conversion or
purchase and similar rights as of the date of this Agreement.  All of the outstanding equity interests in
each of the Subsidiaries of the Company have been validly issued, are fully
paid and non-assessable and are owned by the Company or one or more of its
subsidiaries, free and clear of all liens. 
Except as set forth in Schedule 3(z), the Company or one of
its Subsidiaries has the unrestricted right to vote, and (subject to
limitations imposed by applicable Law) to receive dividends and distributions
on, all capital securities of its Subsidiaries as owned by the Company or such
Subsidiary.  Except for the Significant
Subsidiaries, the Company has no direct or indirect 

 

15

 

Subsidiaries which,
individually or if considered in the aggregate as a single subsidiary, would
satisfy the criteria for being a “significant subsidiary” as such term is
defined in Rule 1-02(w) of Regulation S-X under the 1934 Act.

 

(aa)                            Tax Status.  Each of the Company and its Subsidiaries (i) has
timely made or filed all foreign, federal and state income and all other
material tax returns, reports and declarations required by any jurisdiction to
which it is subject, and (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 or where the failure to file such returns, reports or declarations
or pay such taxes, assessments or charges would not, individually or in the
aggregate, have or be reasonably likely to have a Material Adverse Effect.  All such returns were complete and correct in
all material respects, except for any deficiency that would not, individually
or in the aggregate, have or be reasonably expected to have a Material Adverse
Effect.  The Company has no Knowledge of
a material tax deficiency which has been asserted or threatened in writing
against the Company or any of its Subsidiaries which would, individually or in
the aggregate, be reasonably expected to result in a Material Adverse
Effect.  The Company has set aside on its
books provision which is reasonably adequate (as determined with respect to the
date with respect to which such provision was made) for the payment of all
taxes for periods subsequent to the periods to which such returns, reports or
declarations apply through the date of such books, except for a deficiency that
would not, individually or in the aggregate, have or be reasonably likely to
have a Material Adverse Effect.  Except
as set forth on Section 3(aa) of the Disclosure Letter, neither the
Company nor any of its Subsidiaries is under audit by any taxing authority for
which a material amount of taxes might be asserted.

 

(bb)                          Internal
Accounting and Disclosure Controls.  The Company and its Subsidiaries, taken as a
whole, 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 generally accepted accounting principles 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 difference.  The Company maintains disclosure controls and
procedures (as such term is defined in Rule 13a-14 under the 1934 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 1934 Act is recorded,
processed, summarized and reported, within the time periods specified in the rules and
forms of the SEC, 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 1934 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.  Except as set forth in Section 3(bb)
of the Disclosure Letter, during the twelve (12) months prior to the date
hereof neither the Company nor any of its Subsidiaries have received any notice
or correspondence from any accountant relating to any potential material
weakness in any part of the system of internal accounting controls of the
Company or any of its Subsidiaries.

 

16

 

(cc)                            Off Balance
Sheet Arrangements.  There is no
material transaction, arrangement, or other relationship between the Company
and an unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company in its 1934 Act filings and is not so disclosed.

 

(dd)                          Investment
Company Status.  The Company
is not, and upon consummation of the sale of the Purchased Shares will not be,
an “investment company,” a company controlled by an “investment company” or an “affiliated
person” of, or “promoter” or “principal underwriter” for, an “investment
company” as such terms are defined in the Investment Company Act of 1940, as
amended.

 

(ee)                            Manipulation of
Price.  The Company has not, and to
its 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 Purchased Shares, (ii) sold, bid for, purchased,
or paid any compensation for soliciting purchases of, any of the Purchased
Shares, or (iii) paid or agreed to pay to any Person any compensation for
soliciting another to purchase any other securities of the Company.

 

(ff)                                Shell Company
Status.  The Company is not, and during
the last three (3) years has not been, an issuer of the type described in
paragraph (i) of Rule 144 under the 1933 Act.

 

Except for the
representations and warranties expressly set forth in this Agreement, Investor
acknowledges that none of the Company or any of its respective Subsidiaries and
Affiliates or any other Person makes any representation or warranty, express or
implied, at law or in equity, with respect to the Company or any of its
respective Subsidiaries or Affiliates, the Common Stock or any of the assets or
liabilities of the Company and its respective Subsidiaries and Affiliates, or
with respect to any other information provided to Investor, whether on behalf
of the Company or such other Persons, including as to the probable success or
profitability of the Company after the Closing. 
Neither the Company nor any other Person will have or be subject to any
Liability or indemnification obligation to Investor or any other Person
resulting from the distribution to Investor, or Investor’s use of, any such
information, including any information, document or material made available to
Investor in certain “data rooms,” management presentations or in any other form
in expectation or contemplation of the transactions contemplated by this Agreement.

 

4.                                       COVENANTS.

 

(a)                                  Form D and
Blue Sky.  The Company
agrees to file a Form D with respect to the Purchased Shares as required
under Regulation D and to provide a copy thereof to the Investor promptly after
such filing.  The Company shall, on or
before the Closing Date, take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for or to qualify the
Purchased Shares for sale to the Investor 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), and shall
provide evidence of any such action so taken to the Investor on or prior to the
Closing Date.  The Company shall make all
filings and reports relating to the offer and sale of the Purchased Shares
required under applicable securities or “Blue Sky” Laws of the states of the
United States following the Closing Date.

 

17

 

(b)                                 Reporting
Status.  Until the date on which the
Investor shall have sold all the Purchased Shares (the “Reporting Period”),
the Company shall timely file all reports required to be filed with the SEC
pursuant to the 1934 Act, and the Company shall not terminate its status as an
issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would no longer require or otherwise permit such
termination.  The Company shall take all
actions necessary to maintain its eligibility to register the Purchased Shares
for resale by the Investor on Form S-3.

 

(c)                                  Use of Proceeds.  The Company will use the proceeds from the
sale of the Purchased Shares for general corporate purposes; provided, however,
that such proceeds shall not be used to pay dividends or other distributions
(as opposed to share repurchase programs which, for the avoidance of doubt,
shall be permitted).

 

(d)                                 Financial Information; Access.

 

(i)                                     The Company agrees to send the following to the Investor
during the Reporting Period (A) unless the following are filed with the
SEC through EDGAR and are available to the public through the EDGAR system,
within one (1) Business Day after the filing thereof with the SEC, a copy
of its Annual Reports and Quarterly Reports on Form 10-K, 10-KSB, 10-Q or
10-QSB, any interim reports or any consolidated balance sheets, income
statements, stockholders’ equity statements and/or cash flow statements for any
period other than annual, any Current Reports on Form 8-K and any
registration statements (other than on Form S-8) or amendments filed
pursuant to the 1933 Act and (B) copies of any notices and other
information made available or given to the stockholders of the Company
generally, contemporaneously with the making available or giving thereof to the
stockholders.  As used herein “Business
Day” means any day other than a Saturday, Sunday or other day on which
commercial banks in The City of New York are authorized or required by Law to
remain closed.

 

(ii)                                  During the Reporting Period, the Company shall permit any
authorized representatives designated by the Investor reasonable access during
normal business hours and upon reasonable notice to visit and inspect any of
the properties of the Company or any of its Subsidiaries, including their respective
books of account, and to discuss their respective affairs, finances and
accounts with their respective officers, all at such times as the Investor may
reasonably request; provided, however, that the Company shall not
be obligated pursuant to this paragraph to provide access to any information
that it reasonably and in good faith, after receiving the advice of Company
counsel, determines that such exclusion is necessary (A) in order to
preserve the Company’s attorney-client privilege, (B) to prevent the disclosure
of third party confidential information where the Company is under a
contractual duty to preserve the confidentiality of such information in
connection with any transaction or arrangement between the Company and such
third party, (C) because there exists, or is reasonably expected to exist,
a direct or potential conflict of interest between the Investor and the Company
with respect to a transaction or arrangement, (D) to prevent the
disclosure of a Company trade secret or confidential information (unless
covered by an enforceable confidentiality agreement, in form acceptable to the
Company) or (E) any information that is classified by the United States
government or otherwise subject to restrictions pursuant to duly authorized
resolutions of the Board of Directors or the board of directors of any
Subsidiary as a result of such information 

 

18

 

being
deemed classified by the Board of Directors or the board of directors of any
Subsidiary, in each case acting in good faith.

 

(e)                                  Listing.  The Company shall promptly secure the listing
of all of the Registrable Securities (as defined in the Registration Rights
Agreement) upon the Principal Market and shall maintain such listing of all
Registrable Securities from time to time issuable under the terms of the
Transaction Documents.  Neither the
Company nor any of its Subsidiaries shall take any action which would be
reasonably expected to result in the delisting or suspension of the Common
Stock on the Principal Market.  The
Company shall pay all fees and expenses in connection with satisfying its
obligations under this Section 4(e).

 

(f)                                    Fees.

 

(i)                                     Upon the Closing of the transactions contemplated by this
Agreement, the Company shall promptly assume and pay, or reimburse the Investor
and its designee(s) for, all documented reasonable out-of-pocket fees and
expenses incurred by or on behalf of the Investor in connection with the
transactions contemplated by this Agreement (including all legal, investment
banking, accounting, due diligence, and other fees and expenses), up to a
maximum aggregate amount of $125,000.

 

(ii)                                  From and after the Closing, the Company shall be responsible
for the payment of any fees incurred by or on behalf of the Investor and its
designees in connection with any waivers, amendments or modifications to the
Transaction Documents.

 

(iii)                               If either party shall commence an action or proceeding to
enforce any provisions of the Transaction Documents, then the prevailing party
in such action or proceeding shall be reimbursed by the other party for its
reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.

 

(iv)                              The Company shall be responsible for the payment of any
placement agent’s fees, financial advisory fees, or broker’s commissions (other
than for Persons engaged by the Investor or any Person acting or claiming to
act on behalf of the Investor) relating to or arising out of the transactions
contemplated hereby.  The Company shall
pay, and hold the Investor harmless against, any liability, loss or expense
(including, without limitation, reasonable attorneys’ fees and out-of-pocket
expenses) arising in connection with any claim relating to any such payment.

 

(g)                                 Pledge of
Purchased Shares.  The Company
acknowledges and agrees that the Purchased Shares may be pledged by an Investor
(as defined in the Registration Rights Agreement) in connection with a bona
fide margin agreement or other loan or financing arrangement that is secured by
the Purchased Shares.  The pledge of
Purchased Shares shall not be deemed to be a transfer, sale or assignment of
the Purchased Shares hereunder, and no Investor effecting a pledge of Purchased
Shares shall be required to provide the Company with any notice thereof or
otherwise make any delivery to the Company pursuant to this Agreement or any
other Transaction Document.  The Company
hereby agrees to execute and deliver such 

 

19

 

documentation as a pledgee of the Purchased Shares may reasonably
request in connection with a pledge of the Purchased Shares to such pledgee by
an Investor.

 

(h)                                 Integration.  The Company shall not sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the 1933 Act) that would be integrated with the
offer or sale of the Purchased Shares for purposes of the rules and
regulations of any of the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: NYSE Amex, The
NASDAQ Capital Market, The NASDAQ Global Market, The NASDAQ Global Select
Market or the New York Stock Exchange, such that it would require stockholder
approval before the closing of such other transaction, unless stockholder
approval is obtained before the closing of such subsequent transaction.

 

(i)                                     Disclosure of
Transactions and Other Material Information.  On or before 8:30 a.m., New York City
time, on the third (3rd) Business Day
following the date of this Agreement, the Company shall issue a press release
and file a current report on Form 8-K describing the terms of the
transactions contemplated by the Transaction Documents in the form required by
the 1934 Act and attaching the material Transaction Documents (including,
without limitation, this Agreement, and the form of the Registration Rights
Agreement) as exhibits to such filing (including all attachments, the “8-K
Filing”).  Subject to the foregoing,
none of the Company, its Subsidiaries or the Investor shall issue any press
releases or any other public statements with respect to the transactions
contemplated hereby; provided, however, that (i) the Company
shall be entitled, without the prior approval of the Investor, to make any
press release or other public disclosure with respect to such transactions in
substantial conformity with the 8-K Filing and contemporaneously therewith
(provided that the Company shall consult with the Investor in connection with
any such press release or other public disclosure prior to its release) and (ii) either
party may make such disclosure as is required by applicable Law.

 

(j)                                     Additional
Registration Statements. 
Until the Effective Date (as defined in the Registration Rights
Agreement), the Company shall not file a registration statement under the 1933
Act relating to securities held by any selling security holder other than the
Investor.

 

(k)                                  Actions
Regarding Anti-Takeover and Other Protections; Rights Amendment.  The Company and the Board of Directors shall
take all necessary action, if any, in order to render inapplicable Article Thirteenth
and 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 certificate of incorporation (or similar charter documents)
or other agreements or the laws of its state of incorporation (including,
without limitation, Section 203 of the Delaware General Corporation Law)
that is or could become applicable to the Investor as a result of, or with
respect to, (A) the 18,700 shares of Common Stock presently held by the
Investor, (B) the Purchased Shares, (C) any additional securities
acquired pursuant to Section 4(l) and (D) any other securities
permitted to be acquired by the Investor under Section 4(o)(iv) hereof.

 

20

 

(l)            Preemptive
Rights - Additional Issuances of Purchased Shares.

 

(i)            The
Company and the Investor hereby agree that the Investor shall be entitled to
two independent preemptive rights under this Section 4(l):

 

(1)           During the
Regular Preemptive Period, the Investor shall have the right (the “Regular
Preemptive Right”) to purchase its Pro Rata Percentage of Offered
Securities in accordance with the terms and conditions of this Section 4(l).

 

(2)           During the
Special Preemptive Period, the Investor shall have the right (the “Special
Preemptive Right”) to purchase Offered Securities in one or more Subsequent
Placements in accordance with the terms and conditions of this Section 4(l),
independent of, and without any limitation due to, the Investor’s
then-applicable Pro Rata Percentage; provided that the maximum aggregate
purchase price payable for all Offered Securities purchased by the Investor
upon all exercises of its Special Preemptive Right shall not exceed
$5,000,000.  If the Investor desires to
purchase Offered Securities upon exercise of its Special Preemptive Right, the
Investor may purchase as much as 100% of the Offered Securities proposed to be
issued in the applicable Subsequent Placement, subject to the foregoing
$5,000,000 aggregate purchase price cap. 
Offered Securities purchased upon exercise of the Regular Preemptive
Right shall not be counted towards the $5,000,000 aggregate cap.

 

(ii)           For
purposes of this Section 4(l), the following definitions shall
apply.

 

(1)           “Common
Stock Equivalents” means, collectively, Options and Convertible Securities.

 

(2)           “Convertible
Securities” means any stock or securities (other than Options) convertible
into or exercisable or exchangeable for shares of Common Stock.

 

(3)           “Options”
means any rights, warrants or options to subscribe for or purchase shares of
Common Stock or Convertible Securities.

 

(4)           “Pro Rata
Percentage” means a ratio equal to (i) the sum of the number of shares
of the Company’s Common Stock held by the Investor immediately prior to the
issuance of the Offered Securities, calculated on a Fully-Diluted Basis, divided
by (ii) the total number of shares of the Company’s Common Stock then
outstanding, calculated on a Fully-Diluted Basis.  If, in connection with a Subsequent
Placement, the Investor will purchase Offered Securities pursuant to its
Special Preemptive Right, and if the Investor also desires to exercise its Regular
Preemptive Right in such Subsequent Placement, then the Offered Securities to
be purchased upon exercise of the Special Preemptive Right shall be taken into
account for purposes of calculating the numerator in clause (i) above
and the denominator in clause (ii) above when calculating the
number of Offered Securities purchasable upon exercise of the Regular
Preemptive Right in connection with such Subsequent Placement.

 

(5)           “Regular
Preemptive Period” means the period beginning on the Closing Date and ending
on a Regular Termination Event.

 

21

 

(6)                                  “Regular
Termination Event” means the earlier to occur of (i) such time as the
Investor and/or its Affiliates no longer beneficially own, in the aggregate, at
least fifty percent (50%) of the Purchased Shares (i.e., 1,428,571 shares of
Common Stock) (adjusted to take into account any stock splits, reverse stock
splits, stock dividends, recapitalizations, conversions and the like) and (ii) such
time as the Investor and/or its Affiliates no longer beneficially own, in the
aggregate, securities representing beneficial ownership of at least eight
percent (8%) of the shares of Common Stock, calculated on a Fully-Diluted Basis
(but excluding from the denominator, solely for purposes of this clause (ii),
any securities issued after the date hereof and on or prior to the date of
calculation as consideration in any acquisition by the Company or any of its
Subsidiaries of another business entity (or a division or material portion of
the assets thereof), whether by merger, acquisition of equity, stock or assets,
consolidation, reorganization or otherwise).

 

(7)                                  “Special
Preemptive Period” means the period beginning on the Closing Date and
ending on a Special Termination Event.

 

(8)                                  “Special
Termination Event” means the earliest to occur of (i) such time as the
Investor has purchased Offered Securities upon exercise(s) of its Special
Preemptive Right with an aggregate purchase price of $5,000,000; (ii) the
second anniversary of the date hereof; and (iii) such time as the Investor
and/or its Affiliates no longer beneficially own, in the aggregate, at least
seventy-five percent (75%) of the Purchased Shares (i.e., 2,142,857 shares of
Common Stock) (adjusted to take into account any stock splits, reverse stock
splits, stock dividends, recapitalizations, conversions and the like).

 

(9)                                  “Subsequent
Placement” means any action to offer, sell, grant any option to purchase,
or otherwise dispose of (or announce any offer, sale, grant or any option to
purchase or other disposition of) any of the equity or equity equivalent
securities of the Company or its Subsidiaries, including without limitation any
debt, preferred stock or other instrument or security that is, at any time
during its life and under any circumstances, convertible into or exchangeable
or exercisable for shares of Common Stock or Common Stock Equivalents.

 

(iii)                               So long as either the Regular Preemptive Period and/or the
Special Preemptive Period is in effect, the Company will not, directly or
indirectly, effect any Subsequent Placement unless the Company shall have first
complied with this Section 4(l) in order to enable the
Investor to exercise the Regular Preemptive Right and/or Special Preemptive
Right, as applicable.

 

(1)                                  Prior to making
any Subsequent Placement, the Company shall deliver to the Investor a written
notice (the “Offer Notice”) of any proposed or intended issuance or sale
or exchange (the “Offer”) of the securities being offered (the “Offered
Securities”) in such Subsequent Placement, which Offer Notice shall (w) identify
and describe the Offered Securities, (x) describe the price and other
terms upon which they are to be issued, sold or exchanged, and the number or
amount of the Offered Securities to be issued, sold or exchanged, (y) identify
the persons or entities (if known) to which or 

 

22

 

with which the Offered Securities are to be
offered, issued, sold or exchanged and (z) offer to issue and sell to or
exchange with the Investor the number of Offered Securities which it is
entitled to purchase under this Section 4(l).

 

(2)                                  To accept an
Offer, in whole or in part, the Investor must deliver a written notice to the
Company prior to the end of the tenth (10th) Business Day after the Investor’s receipt of the
Offer Notice (the “Offer Period”), setting forth the portion of such
Offered Securities that the Investor elects to purchase (the “Notice of
Acceptance”).  Such notice shall
constitute a non-binding indication of interest of the Investor to purchase the
amount of Offered Securities so specified (or, in the case of the exercise of
the Regular Preemptive Right, a proportionately lesser amount if the amount of
Offered Securities to be offered in such Offer is subsequently reduced) at the
price (or range of prices) and other terms set forth in the Company’s
notice.  The failure to respond in such
ten (10) Business Day period shall constitute a waiver of preemptive
rights in respect of such offering.  Any
notice provided by the Company pursuant to this Section 4(l), and
any information provided to the Investor otherwise in connection with such
Offer, shall be subject to the terms of the Confidentiality Agreement
applicable to “Evaluation Material” thereunder until the ninetieth (90th) day following the
consummation of any such Offer, regardless of any termination thereof.  Notwithstanding the foregoing, if the Company
desires to modify or amend the terms and conditions of the Offer prior to the expiration
of the Offer Period, the Company shall deliver to the Investor a new Offer
Notice and the Offer Period shall expire on the fifth (5th) Business Day after the
Investor’s receipt of such new Offer Notice.

 

(3)                                  The Company
shall have forty-five (45) days from the expiration of the Offer Period above
to offer, issue, sell or exchange all or any part of such Offered Securities as
to which a Notice of Acceptance has not been given by the Investor (the “Refused
Securities”) pursuant to a definitive agreement(s) (the “Subsequent
Placement Agreement”), but only upon terms and conditions that are not more
favorable to the acquiring person or persons or less favorable to the Company
than those set forth in the Offer Notice.

 

(4)                                  If the Company
shall propose to sell less than all the Refused Securities (any such sale to be
in the manner and on the terms specified in Section 4(l)(iii)(3) above),
then the Investor may, at its sole option and in its sole discretion, reduce
the number or amount of the Offered Securities specified in its Notice of
Acceptance to an amount that shall be not less than the number or amount of the
Offered Securities that the Investor elected to purchase pursuant to Section 4(l)(iii)(2) above
multiplied by a fraction, (i) the numerator of which shall be the number
or amount of Offered Securities the Company actually proposes to issue, sell or
exchange (including Offered Securities to be issued or sold to the Investor
pursuant to Section 4(l)(iii)(3) above prior to such
reduction) and (ii) the denominator of which shall be the original amount
of the Offered Securities.  If the
Investor so elects to reduce the number or amount of Offered Securities
specified in its Notice of Acceptance, the Company may not issue, sell or exchange
more than the reduced number or amount of the Offered Securities unless and
until such securities have again been offered to the Investor in accordance
with Section 4(l)(iii)(1) above.

 

23

 

(5)                                  Upon the
closing of the issuance, sale or exchange of all or less than all of the
Refused Securities, the Investor shall acquire from the Company, and the
Company shall issue to the Investor, the number or amount of Offered Securities
specified in the Notices of Acceptance, as reduced pursuant to Section 4(l)(iii)(4) above
if the Investor has so elected, upon the terms and conditions specified in the
Offer.  The purchase by the Investor of
any Offered Securities is subject in all cases to the preparation, execution
and delivery by the Company and the Investor of a purchase agreement relating
to such Offered Securities reasonably satisfactory in form and substance to the
Investor and its counsel.

 

(6)                                  Any Offered
Securities not acquired by the Investor or other persons in accordance with Section 4(l)(iii)(3) above
may not be issued, sold or exchanged until they are again offered to the
Investor under the procedures specified in this Agreement.

 

(7)                                  The Company and
the Investor agree that if the Investor elects to participate in the Offer, (x) neither
the Subsequent Placement Agreement with respect to such Offer nor any other
transaction documents related thereto (collectively, the “Subsequent
Placement Documents”) shall include any term or provisions whereby the
Investor shall be required to agree to any restrictions in trading as to any
securities of the Company owned by the Investor prior to such Subsequent
Placement, and (y) the Investor shall be entitled to registration rights
in such Subsequent Placement Documents which are at least as favorable to the
Investor as the registration rights contained in the Registration Rights
Agreement.

 

(8)                                  Notwithstanding
the foregoing, the rights of the Investor contained in this Section 4(l) shall
not apply to the issuance of:  (A) Purchased
Shares issued pursuant to this Agreement; (B) securities issued to
employees, consultants, officers and directors of the Company, pursuant to
equity compensation plans approved by the Board of Directors or grants of
options outside of such plans approved by the Board of Directors; (C) securities
issued or issuable pursuant to any rights or agreements, including, without
limitation, convertible securities, options and warrants, provided that either (x) the
Company shall have complied with the purchase right established by this Section with
respect to the initial sale or grant by the Company of such rights or
agreements, or (y) such rights or agreements existed on the date hereof
and are disclosed in this Agreement or the schedules hereto (it being
understood that any modification or amendment to any such pre-existing right or
agreement subsequent to the date of this Agreement with the effect of
increasing the percentage of the Company’s fully-diluted securities underlying
such rights agreement shall not be included in this clause (C)(y));
(D) securities issued in connection with any stock split, stock dividend,
subdivision, combination, reclassification, exchange, recapitalization or
similar transactions by the Company; (E) any securities issued after the
date hereof as consideration in any acquisition by the Company or any of its
Subsidiaries of another business entity (or a division or a material portion of
the assets thereof), whether by merger, acquisition of equity, stock or assets,
consolidation, reorganization or otherwise; (F) securities issued in
connection with sponsored research, collaboration, technology license,
development, original equipment manufacturer, marketing, joint venture
investment or other similar 

 

24

 

agreements, strategic alliances or strategic
transactions approved by the Board of Directors; (G) capital stock issued
in satisfaction of indebtedness or other liability or in exchange for
indebtedness; and/or (H) any right, option, or warrant to acquire any
security convertible into the securities excluded from the restrictions
contained in this Section 4(l) pursuant to clauses (A) through
(G) above.

 

(9)                                  The Company and
the Board of Directors shall take all necessary action, if any, in order to
render inapplicable Article Thirteenth and 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
certificate of incorporation (or similar charter documents) or other agreements
or the laws of its state of incorporation (including, without limitation, Section 203
of the Delaware General Corporation Law) that is or could become applicable to
the Investor as a result of the Investor exercising its rights under this Section 4(l).

 

(10)                            Any failure to
exercise either the Regular Preemptive Right and/or Special Preemptive Right in
any one instance shall not limit or affect the Investor’s right to exercise
either or both of such rights in any other instance, subject to the terms of
this Section 4(l).

 

(m)                               Board Matters.

 

(i)                                     (A)                              The Company
will promptly cause one person to be nominated by the Investor to be elected or
appointed to the Board of Directors (the “Board Representative”),
effective as of the Closing.  The election
or appointment of the Board Representatives will be subject to satisfaction of
the “independent director” requirements as such term is defined in the rules and
regulations promulgated by the Principal Market, as well as all legal and
governance requirements regarding service as a director of the Company.  At or prior to Closing, the Company shall
take all corporate and other action necessary to cause the Board Representative
to be elected or appointed to the Board of Directors effective as of Closing
for an initial term ending at the next annual meeting of the shareholders of
the Company.  From and after the
expiration of such initial term until the termination of the Designated Period,
the Company shall reduce the size of the Board of Directors to seven (7) and
shall not increase the size of the Board of Directors to more than seven (7) directors,
without the prior written consent of the Investor.  As of the Closing, the Investor has
designated Daniel Friedberg as the Board Representative, and the Company
acknowledges that, based upon information regarding Mr. Friedberg provided to
the Company by the Investor as of the date of this Agreement, Mr. Friedberg
meets all the legal and governance requirements regarding service as a director
of the Company, as well as the “independent director” requirements as such term
is defined in the rules and regulations promulgated by the Principal
Market, as of such date.

 

(B)                                Any individual
other than Daniel Friedberg who is subsequently designated by the Investor as Board
Representative pursuant to this Section 4(m) must be
reasonably acceptable to the Company and shall be required to be “independent”
as such term is defined in the rules and regulations promulgated by the
Principal Market.  If the Board
Representative is not “independent”, the Board Representative shall not be
entitled to serve on the Board of Directors and shall immediately resign from
the Board of Directors.

 

25

 

(C)                                For so long as
the Investor has the right to designate the Board Representative pursuant to
this Section 4(m), if any person (excluding any resident or other
local director required to be appointed to the board of directors of any
Subsidiary pursuant to applicable Law) not employed by the Company and/or its
Subsidiaries is or becomes a member of the board of directors of any of the
Company’s Subsidiaries (whether a current Subsidiary or hereafter acquired),
the Board Representative shall also have the right to become a member of any
such Subsidiary’s board of directors and the Company, and each such Subsidiary,
shall cause the Board Representative to be elected as a director of each such
Subsidiary, but in no event shall the size of any Subsidiary’s board of
directors exceed seven (7).

 

(ii)                                  The Investor shall continue to have the right to designate
or nominate (as applicable) a Board Representative during the Designated
Period.  Following the termination of the
Designated Period, the Company shall have no obligation to cause any nominees
presented to the shareholders of the Company for election of the Board of
Directors to include any nominee of the Investor.

 

(iii)                               During the Designated Period, and subject at all times to
the last sentence of Section 4(m)(i)(A), the Company shall take
such action as is required under applicable Law, the rules and regulations
in effect at such time of the Principal Market or such other market on which
the Common Stock is then listed or quoted, the Company’s certificate of
incorporation and its bylaws to include on the Board of Directors or in the
slate of nominees recommended by the Board of Directors, such person nominated
by the Investor pursuant to Section 4(m)(i) and/or (ii).  The Company shall use its commercially
reasonable efforts to have the Board Representative elected as a director of
the Company and the Company shall solicit proxies for such person to the same
extent as it does for any of its other nominees to the Board of Directors.  During the Designated Period, and subject at
all times to the last sentence of Section 4(m)(i)(A), if a vacancy
is created at any time by the death, disability, retirement, resignation or
removal of the Board Representative, the Investor may designate or nominate, as
applicable, another individual to be elected to fill the vacancy created
thereby, and the Company hereby agrees to take, at any time and from time to
time, all actions necessary to accomplish the same.

 

(iv)                              All obligations of the Company pursuant to this Section 4(m) shall
terminate, and, upon request by the Board of Directors, the Investor shall
cause the Board Representative to resign promptly from the Board of Directors,
in each case upon the termination of the Designated Period.  Any vacancy created by such resignation may
be filled by the Board of Directors or the shareholders of the Company in
accordance with the Company’s articles of incorporation, the bylaws and
applicable Law.  The Company may
implement this provision by requiring the execution and delivery of a
resignation letter by the Board Representative subject to termination of
designation or nomination rights.

 

(v)                                 The Board Representative shall be entitled to serve on each
committee of the Board of Directors (except as prohibited by applicable Law or
any rule or regulation promulgated by the Principal Market).  In the event the Board Representative is not
a member of a committee of the Board of Directors, the Board Representative
shall have the right to attend and observe (but not vote at) each meeting of
such committee and to receive from the Company copies of all notices,
information and other material provided to members of such committee

 

26

 

(except
as prohibited by applicable Law and the rules and regulations promulgated by
the Principal Market).

 

(vi)          The
Board Representative shall be entitled to the same compensation, if any, the
same indemnification and the same director and officer insurance in connection
with his or her role as a director as the other members of the Board of
Directors, and the Board Representative shall be entitled to reimbursement for
documented, reasonable out-of-pocket expenses incurred in attending meetings of
the Board of Directors or any committees thereof, to the same extent as the
other members of the Board of Directors. 
The Company agrees that such indemnification arrangements will be the
primary source of indemnification and advancement of expenses in connection
with the matters covered thereby and payment thereon will be made before,
offset and reduce any other insurance, indemnity or expense advancement to
which the Board Representative may be entitled or which is actually paid in
connection with such matters, including as an employee of the Investor or any
of its Affiliates.  The covenants in this
Section 4(m)(vi) shall survive the Designated Period and any termination
of obligations under Section 8(j).

 

(vii)         The
Company shall notify the Board Representative of all regular and special
meetings of the Board of Directors and shall notify the Board Representative of
all regular and special meetings of any committee of the Board of Directors of
which the Board Representative is a member. 
The Company shall provide the Board Representative with copies of all
notices, minutes, consents and other materials provided to all other members of
the Board of Directors concurrently with the provision of such materials to the
other members of the Board of Directors. 
The Board Representative and the Observer will be permitted to share
information received from the Company with officers, directors, members,
employees and representatives of the Investor and its Affiliates (which, for
the avoidance of doubt, shall exclude Investor’s portfolio companies) and the
Investor and such Affiliates may use such information for internal purposes; provided,
that the Investor maintains reasonable procedures designed to prevent such
information from being used in connection with the purchase or sale of
securities of the Company in violation of applicable securities Laws and that
such information is not used to compete with the Company; provided, further,
that the Board Representative, the Observer, the Investor, its Affiliates and
each of their respective officers, directors, members, employees and
representatives shall keep all such information confidential and not disclose
any such information in any manner whatsoever except as permitted under the
Confidentiality Agreement.

 

(n)           Observer Rights.  In addition to the rights of the Investor
under Section 4(m), during the Designated Period, the Investor may
designate one additional Person to attend meetings of the Board of Directors,
the board of directors of any Subsidiary and each committee of any of the
foregoing as an observer (“Observer”). 
Following the termination of the Designated Period, the Company shall
have no obligation to permit any Person designated by the Investor to attend
meetings of the Board of Directors, the board of directors of any Subsidiary
and any committee of any of the foregoing or otherwise receive any information
under this Section 4(n).  The
Observer shall be entitled to receive notice of and have the right to attend
any and all meetings of the Board of Directors, the board of directors of any
Subsidiary and each committee of any of the foregoing in an observer capacity; provided,
however, that the Observer shall not have the right to attend any
meeting of (x) the board of directors of any Subsidiary or (y) any committee of
the Board of Directors or the board of directors of any Subsidiary, in either 

 

27

 

case (x) and/or (y), at which the Board Representative is present.  The Company shall provide the Observer with
copies of all notices, minutes, consents and other material in connection
therewith at the same time as such materials are distributed to members of the
Board of Directors, the board of directors of any Subsidiary and each committee
of any of the foregoing; provided, that (i) the Investor shall cause the
Observer to agree to, and shall be responsible for the Observer’s failure to,
hold in confidence and trust and to act in a fiduciary manner with respect to
all information provided to such Observer pursuant hereto and (ii) the Company,
the Board of Directors, the board of directors of any Subsidiary and each
committee of any of the foregoing shall have the right to withhold any
information and to exclude the Observer from any meeting or portion thereof (A)
if doing so is, in the opinion of counsel to the Company, advisable or
necessary to protect the attorney-client privilege between the Company and
counsel or (B) if the Board of Directors, the board of directors of any
Subsidiary or any committee of any of the foregoing determines in good faith,
after consultation with counsel, that fiduciary requirements under applicable
Law would make attendance by such Observer not advisable.  The Company may require the Board Observer to
enter into a confidentiality agreement, in a form reasonably satisfactory to
the Company and the Investor, as may be reasonably necessary to preserve the
confidentiality of any information provided to the Board Observer in connection
with the observation rights granted hereunder. 
The Observer shall have no right to vote on any matters presented to the
Board of Directors, the board of directors of any Subsidiary or any committee
of any of the foregoing.  All obligations
of the Company pursuant to this Section 4(n) shall terminate upon the
Investor ceasing to have the right to designate an Observer pursuant to this Section
4(n).  The Observer shall be entitled
to reimbursement for documented, reasonable out-of-pocket expenses incurred in
attending meetings of the Board of Directors, the board of directors of any
Subsidiary and each committee of any of the foregoing, to the same extent as
members of such boards or committees consistent with the Company’s past
reimbursement practice for board or committee members.

 

(o)           Standstill.  The Investor hereby agrees that during the
Designated Period, unless specifically invited in writing by the Company,
neither the Investor nor any entity or person which is controlled (as defined
in Rule 12b-2 under the 1934 Act) directly or indirectly by the Investor (but specifically
excluding, for the avoidance of doubt, any of the Investor’s portfolio
companies in which the Investor holds less than 25% of the outstanding voting
securities and where the Investor does not have representatives constituting a
majority of the board of directors thereof) (each, a “Investor Controlled
Entity”), will in any manner, directly or indirectly (including by
directing or causing any other Person that is not the Investor or a Investor
Controlled Entity):

 

(i)            effect
or seek, offer or propose (whether publicly or otherwise) to effect, or
announce any intention to effect or cause or participate in or in any way
assist, facilitate or encourage any other person to effect or seek, offer or
propose (whether publicly or otherwise) to effect or participate in, (A) any
acquisition of any assets, indebtedness or businesses of the Company or any of
its Subsidiaries or any affiliates controlled by the Company (“Company
Controlled Affiliates”), (B) any tender or exchange offer, merger or other
business combination involving the Company, any of the Subsidiaries or Company
Controlled Affiliates or assets of the Company or the Subsidiaries or Company
Controlled Affiliates constituting a significant portion of the consolidated
assets of the Company and its Subsidiaries, (C) any recapitalization,
restructuring, liquidation, dissolution or other extraordinary transaction with
respect to the 

 

28

 

Company
or any of its Subsidiaries or Company Controlled Affiliates, or (D) any
“solicitation” of “proxies” (as such terms are used in the proxy rules of the
SEC) or consents to vote any voting securities of the Company or any of its
Company Controlled Affiliates;

 

(ii)           form,
join or in any way participate in a “group” (as defined under the 1934 Act)
with third parties with respect to any of the matters described in this Section
4(o) or otherwise act in concert with third parties in respect of any of
the matters described in this Section 4(o);

 

(iii)          seek
the removal of any directors from the Board of Directors or a change in the
size or composition of the Board of Directors (it being understood that the
foregoing shall not prohibit the Investor or any subsequent holder of Purchased
Shares from voting any securities of the Company in any manner not otherwise
prohibited by this Section 4(o));

 

(iv)          effect
or seek, offer or propose (whether publicly or otherwise) to effect, or
announce any intention to effect or cause or participate in or in any way
assist, facilitate or encourage any other person to effect or seek, offer or
propose (whether publicly or otherwise) to effect or participate in, any
acquisition of any securities (or beneficial ownership thereof) or rights or
options to acquire any securities (or beneficial ownership thereof) of the
Company or any of its Subsidiaries or Company Controlled Affiliates if, after
giving effect to any such acquisition, the Investor and/or any Investor
Controlled Entity, either individually or in the aggregate, would beneficially
own more than (A) until the second anniversary of the date hereof, nineteen and
nine-tenths percent (19.9%) of the Common Stock (calculated on a Fully-Diluted
Basis, but excluding from any such calculation any securities issued to the
Investor as a result of its exercise of its Special Preemptive Rights, under Section
4(l)), or (B) after such second anniversary, twenty-three percent (23.0%)
of the Common Stock (calculated on a Fully-Diluted Basis);

 

(v)           take
any action which would or would reasonably be expected to force the Company to
make a public announcement regarding any of the types of matters set forth in clauses
(i) and/or (iv) above; or

 

(vi)          enter
into any discussions or arrangements with any third party with respect to any
of the foregoing; provided, however, that the foregoing shall not
restrict the ability of the Board Representative from exercising his fiduciary
duties.

 

Notwithstanding the
foregoing, if (x) the Board of Directors decides, in its sole discretion, to
engage in a process that solicits third parties to determine their interest in
a potential transaction (a “Sale Process”) that is intended to, or would
reasonably be expected to, give rise to a Triggering Event, the Company shall
invite the Investor to participate in such Sale Process on the terms and
conditions generally made available to the other participants in such Sale
Process or (y) a Triggering Event shall occur without the Company conducting
such a Sale Process (either within a reasonable time period before or at any
time after such Triggering Event), nothing in this Section 4(o) shall
prohibit the Investor from submitting a proposal to the Board of Directors
which competes with the Triggering Event (provided that nothing in this clause
(y) shall entitle the Investor to any preferential treatment, compared to
other parties).  Nothing contained in
this Section 4(o) shall require the Board of Directors to engage in a
Sale 

 

29

 

Process
either before or after a Triggering Event. 
At the discretion of the Board of Directors, for the avoidance of doubt,
for so long as (and only for so long as) the Investor is participating in such
a process or is submitting a competing proposal, the Board of Directors may
require that the Board Representative resign and/or that the Observer rights in
Section 4(n) be suspended (provided that, thereafter, (1) the Investor’s
right to nominate a Board Observer under Section 4(m) shall be
reinstated and the Company shall reappoint a Board Observer to the Board of
Directors as soon as reasonably possible and (2) the Observer rights in Section
4(n) shall be reinstated).  For
purposes of this Agreement, (i) a “Triggering Event” shall mean (A) the
recommendation by the Board of Directors that stockholders tender their shares
of Common Stock into a tender offer conducted by any party other than the
Company or one of its Subsidiaries, which, if consummated, would result in a
Change of Control, (B) the public disclosure that securities representing
33-1/3% or more of the voting power of the Company’s voting equity securities
have been acquired, with the approval of the Board of Directors, by any Person
(including any group of Persons acting in concert) other than the Investor and
its Affiliates or (C) the Company publicly announces that it has entered into a
definitive agreement providing for a merger, consolidation, share exchange,
business combination, recapitalization, restructuring, liquidation, dissolution
or other extraordinary transaction, in each case involving a Change of Control
or any purchase of substantially all of the assets or business of the Company
and its Subsidiaries, taken as a whole, in each case conducted by any Person
(including any group of Persons acting in concert) other than the Investor and
its Affiliates, and (ii) “Change of Control” means the consummation of
any transaction or series of related transactions, the result of which is that
the stockholders of the Company as a group immediately prior thereto will have
beneficial ownership of less than 50.1% of the equity securities of the
surviving entity in such transaction immediately thereafter.

 

Furthermore, notwithstanding
the foregoing, the provisions of this Section 4(o) shall terminate in
the event of (x) the filing by the Company of a voluntary petition in
bankruptcy; (y) the entry of an order of relief in any bankruptcy or insolvency
proceeding in respect of the Company or the entry of an order that the Company
is a bankrupt or insolvent; or (z) any involuntary proceeding seeking
liquidation, reorganization or other relief against the Company under any
bankruptcy, insolvency or other similar law now or hereafter in effect that has
not been dismissed sixty (60) days after the commencement thereof.

 

The Investor also agrees
during such period not to request that the Company amend or waive any provision
of this Section 4(o) (including this sentence).

 

(p)           Legends.  The Investor agrees that the Company shall
affix the following legend to the certificate(s) delivered to the Investor at
Closing:

 

THE SECURITIES REPRESENTED BY THIS
CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
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 OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, 

 

30

 

THAT REGISTRATION IS NOT REQUIRED UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR (II) UNLESS SOLD
PURSUANT TO RULE 144 UNDER THE SECURITIES ACT. 
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED PURSUANT TO
AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE SECURITIES.

 

The legend set forth above
shall be removed and the Company shall issue a certificate without such legend
to the holder of the Purchased Shares upon which it is stamped, unless
otherwise required by state securities Laws, if (i) such Purchased Shares are
registered for resale under the 1933 Act, (ii) in connection with a sale,
assignment or other transfer, such holder provides the Company with an opinion
of counsel, in a generally acceptable form, to the effect that such sale,
assignment or transfer of the Purchased Shares may be made without registration
under the applicable requirements of the 1933 Act, or (iii) such holder
provides the Company with reasonable assurance that the Purchased Shares can be
sold, assigned or transferred pursuant to Rule 144(b)(1)(i).

 

(q)           Transfer Taxes.  Any stock transfer, stamp, registration or
other similar taxes or fees payable as a direct result of the sale and transfer
of the Purchased Shares to the Investor hereunder shall be paid by the
Company.  The party required by
applicable Law to file tax returns required in connection with such taxes and
fees shall file such tax returns.  Each
party hereto shall use its commercially reasonable efforts to minimize such
taxes and fees and to cooperate in the preparation, execution and filing of all
tax returns and other documents required in connection with such taxes and
fees.

 

(r)            Form W-9.  At the Closing, the Investor shall deliver to
the Company two duly completed and executed copies of Internal Revenue Service Form
W-9.

 

(s)           No Short Sales, Etc. in
Violation of the 1933 Act. 
Except in compliance with the 1933 Act and any applicable interpretations
of the SEC promulgated thereunder (including Interpretation A.65 of the SEC’s July
1997 Manual of Publicly Available Interpretations) the Investor will not effect
any “short” sales with respect to the Purchased Shares or enter into any swap or
any other agreement, transaction or series of transactions that hedges or
transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Purchased Shares, whether any such transaction,
swap or series of transactions is to be settled by delivery of securities, in
cash or otherwise.

 

5.             INVESTOR CLOSING DELIVERABLES.

 

The obligation of the
Company hereunder to issue and sell the Purchased Shares to the Investor at the
Closing is subject to the receipt at or before, or accuracy at, the Closing, as
the case may be, of each of the following; provided, that these
deliverables are for the Company’s sole benefit and may be waived by the
Company at any time in its sole discretion by providing the Investor with prior
written notice thereof:

 

31

 

(i)            The
Investor shall have delivered to the Company duly executed versions of each of
the Transaction Documents to which it is a party.

 

(ii)           The
Investor shall have delivered to the Company the Purchase Price for the
Purchased Shares by wire transfer of immediately available funds pursuant to
the wire instructions provided by the Company.

 

(iii)          The
representations and warranties of the Investor shall be true and correct in all
material respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which shall be true and
correct in all respects) as of the Closing Date (except for representations and
warranties that speak as of a specific date, which shall be true and correct in
all material respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which shall be true and
correct in all respects) as of such specified date).  The Company shall have received a certificate,
executed by the Chief Executive Officer of the Investor, dated as of the
Closing Date, to the foregoing effect and as to such other matters as may be
reasonably requested by the Investor in the form attached hereto as Exhibit B.

 

(iv)          The
Investor shall have obtained all governmental, regulatory or third party
consents and approvals, if any, necessary for the purchase of the Purchased
Shares.

 

(v)           The
Investor shall have delivered  to
the Company  an indemnification
agreement in the form of Exhibit C, duly executed by the Board
Representative, which indemnification agreement shall become effective upon the
Board Representative becoming a member of the Board of Directors.

 

(vi)          The
Investor shall have delivered to the Company such other documents relating to
the transactions contemplated by this Agreement as the Company or its counsel
may reasonably request.

 

6.             COMPANY CLOSING DELIVERABLES.

 

The obligation of the
Investor hereunder to purchase the Purchased Shares at the Closing is subject
to the receipt at or before, or accuracy at, the Closing, as the case may be,
of each of the following; provided that these deliverables are for the
Investor’s sole benefit and may be waived by the Investor at any time in its
sole discretion by providing the Company with prior written notice thereof:

 

(i)            The
Company shall have delivered to the Investor (A) duly executed versions of each
of the Transaction Documents to which it is a party and (B) the Purchased
Shares being purchased by the Investor at the Closing pursuant to this
Agreement.

 

(ii)           The
Investor shall have received the opinion of (i) Latham & Watkins LLP, the
Company’s outside counsel, and (ii) the Company’s general counsel, each dated
as of the Closing Date, in a form reasonably acceptable to the Investor and its
counsel.

 

(iii)          The
Purchased Shares shall have been approved for listing on the Principal Market.

 

32

 

(iv)          The
Company shall have delivered to the Investor a certificate evidencing the
formation and good standing of the Company and each of its Significant
Subsidiaries in each such entity’s jurisdiction of formation issued by the
Secretary of State (or equivalent) of such jurisdiction of formation as of a
date within ten (10) days of the Closing Date.

 

(v)           The
Company shall have delivered to the Investor 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 conducts business and is required to so qualify, as of a date within
ten (10)  days of the Closing Date.

 

(vi)          The
Company shall have delivered to the Investor a certified copy of the
Certificate of Incorporation as certified by the Secretary of State of the
State of Delaware within ten (10) days of the Closing Date.

 

(vii)         The
Company shall have delivered to the Investor a certificate, executed by the
Secretary of the Company and dated as of the Closing Date, as to (A) the resolutions
consistent with Section 3(b) as adopted by the Board of Directors, in a
form reasonably acceptable to the Investor, (B) the Certificate of
Incorporation and (C) the Bylaws, each as in effect at the Closing, in the form
attached hereto as Exhibit D.

 

(viii)        The
representations and warranties of the Company shall be true and correct in all
material respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which shall be true and
correct in all respects) as of the Closing Date (except for representations and
warranties that speak as of a specific date, which shall be true and correct in
all material respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which shall be true and
correct in all respects) as of such specified date).  The Investor shall have received a
certificate, executed by the Chief Executive Officer of the Company, dated as
of the Closing Date, to the foregoing effect and as to such other matters as
may be reasonably requested by the Investor in the form attached hereto as Exhibit
E.

 

(ix)           The
Company shall have delivered to the Investor a letter from the Company’s
transfer agent certifying the number of shares of Common Stock outstanding as
of a date within five (5) days of the Closing Date.

 

(x)            The
Common Stock (A) shall be designated for quotation or listed on the Principal
Market and (B) shall not have been suspended, as of the Closing Date, by the
SEC or the Principal Market from trading on the Principal Market nor shall
suspension by the SEC or the Principal Market have been threatened, as of the
Closing Date, either (x) in writing by the SEC or the Principal Market or (y) by
falling below the minimum listing maintenance requirements of the Principal
Market.

 

(xi)           The
Company shall have obtained all governmental, regulatory or third party
consents and approvals, if any, necessary for the sale of the Purchased Shares.

 

(xii)          The
Board of Directors shall have taken all actions necessary and appropriate to
cause the Board Representative to be appointed to the Board of Directors and to

 

33

 

each
committee of the Board of Directors, and the Board Representative shall have
been so elected and appointed concurrently with the Closing.

 

(xiii)         The
Company shall have delivered  an
indemnification agreement in the form of Exhibit C, duly executed by the
Company, which indemnification agreement shall become effective upon the Board
Representative becoming a member of the Board of Directors.

 

(xiv)        The
Company shall have delivered to the Investor such other documents relating to
the transactions contemplated by this Agreement as the Investor or its counsel
may reasonably request.

 

7.             TERMINATION.

 

(a)           Termination.  This Agreement may be terminated prior to the
Closing by mutual written agreement of the Company and the Investor.

 

(b)           Effects of Termination.  In the event of any termination of this
Agreement as provided in Section 7(a), this Agreement (other than this Section
7(b) and Section 8, which shall remain in full force and effect)
shall forthwith become wholly void and of no further force and effect; provided,
that nothing herein shall relieve any party from liability for intentional
breach of this Agreement or fraud.

 

8.             MISCELLANEOUS.

 

(a)           Definitions.

 

“8-K
Filing” has the meaning set forth in Section 4(i).

 

“1933
Act” has the meaning set forth in the preamble.

 

“1934
Act” has the meaning set forth in Section 3.

 

“Affiliate”
means any Person controlling, controlled by or under common control with any
other Person.  For purposes of this
definition, “control” (including “controlled by” and “under common control
with”) means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of securities, partnership or other ownership interests,
by contract or otherwise.

 

“Agreement”
has the meaning set forth in the preamble.

 

“Article
Thirteenth” means Article Thirteenth of the Certificate of Incorporation.

 

“Benefit
Plan” means any employee welfare benefit plan within the meaning of Section
3(1) of ERISA, any employee pension benefit plan within the meaning of Section 3(2)
of ERISA and any bonus, incentive, deferred compensation, vacation, stock
purchase, stock option, severance, employment, change of control, consulting or
fringe benefit plan, program, agreement or policy.

 

34

 

“Board
of Directors” has the meaning set forth in Section 3(b).

 

“Board Representative” has the meaning set forth in Section 4(m)(i)(A).

 

“Business
Day” has the meaning set forth in Section 4(d)(i).

 

“Bylaws”
has the meaning set forth in Section 3(p).

 

“Certificate
of Incorporation” has the meaning set forth in Section 3(p).

 

“Change
of Control” has the meaning set forth in Section 4(o).

 

“Closing”
has the meaning set forth in Section 1(b).

 

“Closing
Date” has the meaning set forth in Section 1(b).

 

“Code”
means the Internal Revenue Code of 1986, as amended.

 

“Common
Stock” has the meaning set forth in the preamble.

 

“Common
Stock Equivalents” has the meaning set forth in Section 4(l).

 

“Company”
has the meaning set forth in the preamble.

 

“Company
Controlled Affiliates” has the meaning set forth in Section 4(o)(i).

 

“Confidentiality
Agreement” shall mean that certain Confidentiality Agreement by and among
the Investor and its management company, Sagard Capital Partners Management
Corporation, and the Company, dated as of October 6, 2009.

 

“Contingent
Obligation” means, as to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to any indebtedness,
lease, dividend or other obligation of another Person if the primary purpose or
intent of the Person incurring such liability, or the primary effect thereof,
is to provide assurance to the obligee of such liability that such liability
will be paid or discharged, or that any agreements relating thereto will be
complied with, or that the holders of such liability will be protected (in
whole or in part) against loss with respect thereto.

 

“Convertible
Securities” has the meaning set forth in Section 4(l).

 

“Designated
Period” means the period from and after the Closing Date until the first
Business Day on which the Investor (and/or its Affiliates) cease(s) to
beneficially own, in the aggregate, at least 900,000 shares of Common Stock
(adjusted to take into account any stock splits, reverse stock splits, stock
dividends, recapitalizations, conversions and the like).

 

“Disclosure
Letter” has the meaning set forth in Section 3.

 

35

 

“Eligible
Market” means the NYSE Amex, The NASDAQ Capital Market, The NASDAQ Global
Market, The NASDAQ Global Select Market or the New York Stock Exchange (or any
successors to any of the foregoing).

 

“Employee
Pension Benefit Plan” has the meaning set forth in ERISA §3(2).

 

“Environmental
Laws” has the meaning set forth in Section 3(x).

 

“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended.

 

“ERISA
Affiliate” means each entity that is treated as a single employer with the
Company for purposes of Code §414.

 

“Fully-Diluted
Basis” means, in the case of any calculation of the number of shares of
Common Stock deemed outstanding, that effect is first given to (i) all shares
of Common Stock outstanding at the time of determination, (ii) all shares of
Common Stock issuable upon the exercise of any in-the-money or at-the-money
option, warrant or other right outstanding at the time of determination and (iii)
all shares of Common Stock issuable upon the exercise of any in-the-money or
at-the-money conversion or exchange right contained in any security outstanding
at the time of determination that is convertible into or exchangeable for
shares of Common Stock.

 

“Governmental
Entity” means any federal, state, local or foreign, court, governmental,
legislative, judicial, administrative or regulatory authority, agency,
commission, body or other governmental entity or self regulatory organization
or stock exchange.

 

“Hazardous
Materials” has the meaning set forth in Section 3(x).

 

“Indebtedness”
of any Person means, without duplication (i) all indebtedness (including
principal, interest, fees and charges) for borrowed money, (ii) all obligations
issued, undertaken or assumed as the deferred purchase price of property or
services (including, without limitation, “capital leases” in accordance with
generally accepted accounting principles) (other than trade payables entered
into in the ordinary course of business), (iii) all reimbursement or payment
obligations with respect to letters of credit, surety bonds and other similar
instruments, (iv) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses, (v) all indebtedness
created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to any
property or assets acquired with the proceeds of such indebtedness (even though
the rights and remedies of the seller or bank under such agreement in the event
of default are limited to repossession or sale of such property), (vi) all
monetary obligations under any leasing or similar arrangement which, in
connection with generally accepted accounting principles, consistently applied
for the periods covered thereby, is classified as a capital lease, (vii) all
indebtedness referred to in clauses (i) through (vi) above
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge,
security interest or other encumbrance upon or in any property or assets
(including accounts and contract rights) owned by any Person, even though the
Person which owns such assets or property has not

 

36

 

assumed
or become liable for the payment of such indebtedness, and (viii) all
Contingent Obligations in respect of indebtedness or obligations of others of
the kinds referred to in clauses (i) through (vii) above.

 

“Insolvent”
means, with respect to any Person (i) the present fair saleable value of such
Person’s assets is less than the amount required to pay such Person’s total
Indebtedness, (ii) such Person is unable to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured, (iii) such Person intends to incur or believes that it
will incur debts that would be beyond its ability to pay as such debts mature
or (iv) such Person has unreasonably small capital with which to conduct the
business in which it is engaged as such business is now conducted and is
proposed to be conducted.

 

“Intellectual
Property Rights” has the meaning set forth in Section 3(w).

 

“Investor”
has the meaning set forth in the preamble.

 

“Investor
Controlled Entity” has the meaning set forth in Section 4(o).

 

“Knowledge
of the Company” or phrases of similar effect, means the knowledge, after
reasonable investigation, of the individuals listed on Schedule 8(a) attached
hereto.

 

“Law”
means any statute, ordinance, license, rule, regulation, policy or guideline,
order, demand, writ, injunction, decree or judgment of any Governmental Entity,
including, without limitation, any of the foregoing which relate to government
contracts, national security, and protection of classified information.

 

“Material
Adverse Effect” means any material adverse effect on the business,
properties, assets, operations, results of operations or condition (financial
or otherwise) of the Company and/or its Subsidiaries, taken as a whole, or on
the transactions contemplated hereby or by the other Transaction Documents or
by the other agreements and instruments to be entered into in connection
herewith or therewith, or on the authority or ability of the Company to perform
its obligations under the Transaction Documents (as defined below), but shall
not include facts, circumstances, events or changes: (i) generally affecting
any of the industries in which the Company and its Subsidiaries operate; (ii) any
conditions in or changes affecting the United States general economy or the
general economy in any geographic area in which the Company or its Subsidiaries
operate or developments in the financial and securities markets in the United
States or elsewhere in the world; (iii) political conditions, including acts of
war (whether or not declared), armed hostilities and terrorism, or developments
or changes therein; (iv) any conditions resulting from natural disasters; (iv) resulting
from changes in applicable legal requirements or Generally Accepted Accounting
Principles or accounting standards; (vi) resulting from changes in the market
price or the trading volume in the Common Stock in and of itself (it being
understood that the underlying circumstances, event or reasons giving rise to
any such changes (to the extent provided for in this definition) can be taken
into account in determining whether a Material Adverse Effect has occurred or
would reasonably be expected to occur); or (vii) resulting from a failure to
meet securities analysts’ published revenue or earnings predictions for the
Company in and of itself (it being understood that the underlying
circumstances, event or reasons giving rise to any such failure (to the extent
provided for in this 

 

37

 

definition)
can be taken into account in determining whether a Material Adverse Effect has
occurred or would reasonably be expected to occur); provided, however,
that the facts, circumstances, events or changes set forth in clauses (i),
(ii), (iii) and (v) above may be taken into account in
determining whether there is or has been a Material Adverse Effect if and only
to the extent such act, development, occurrence, circumstance, event or change
has a disproportionate impact on the Company and/or its Subsidiaries, relative
to the other participants in the industries in which the Company and/or its
Subsidiaries operate.

 

“Material
Contract” and “Material Contracts” have the respective meanings set
forth in Section 3(q).

 

“Multiemployer
Plan” has the meaning set forth in ERISA §3(37).

 

“Notice
of Acceptance” has the meaning set forth in Section 4(l).

 

“Observer”
has the meaning set forth in Section 4(n).

 

“Offer”
has the meaning set forth in Section 4(l).

 

“Offer
Notice” has the meaning set forth in Section 4(l).

 

“Offer
Period” has the meaning set forth in Section 4(l).

 

“Offered
Securities” has the meaning set forth in Section 4(l).

 

“Options”
has the meaning set forth in Section 4(l).

 

“Person”
means an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.

 

“Plan”
and “Plans” has the meaning set forth in Section 3(v).

 

“Principal
Market” has the meaning set forth in Section 3(d).

 

“Pro
Rata Percentage” has the meaning set forth in Section 4(l).

 

“Purchase
Price” has the meaning set forth in Section 1(c).

 

“Purchased
Shares” has the meaning set forth in the preamble.

 

“Refused
Securities” has the meaning set forth in Section 4(l).

 

“Registration
Rights Agreement” has the meaning set forth in the preamble.

 

“Regular
Preemptive Period” has the meaning set forth in Section 4(l).

 

“Regular
Preemptive Right” has the meaning set forth in Section 4(l).

 

38

 

“Regular
Termination Event” has the meaning set forth in Section 4(l).

 

“Regulation
D” has the meaning set forth in the preamble.

 

“Reporting
Period” has the meaning set forth in Section 4(b).

 

“Rule
144” has the meaning set forth in Section 2(g)(i).

 

“SEC”
has the meaning set forth in the preamble.

 

“SEC
Documents” has the meaning set forth in Section 3(i)(i).

 

“SEC
Reports” has the meaning set forth in Section 3.

 

“Significant
Subsidiaries” means General Physics Corporation, a Delaware corporation,
and General Physics (UK) Ltd, a United Kingdom limited company.

 

“Special
Preemptive Period” has the meaning set forth in Section 4(l).

 

“Special
Preemptive Right” has the meaning set forth in Section 4(l).

 

“Special
Termination Event” has the meaning set forth in Section 4(l).

 

“Subsequent
Placement” has the meaning set forth in Section 4(l).

 

“Subsequent
Placement Agreement” has the meaning set forth in Section 4(l).

 

“Subsidiaries”
means any joint venture or any entity in which the Company, directly or
indirectly, owns capital stock or holds an equity or similar interest.

 

“Transaction
Documents” has the meaning set forth in Section 3(b).

 

“Volume-Weighted
Average Price” means the per share volume-weighted average price as
displayed under the heading “Bloomberg VWAP” on Bloomberg page “GPX
<equity> VWAP <go>” (or its equivalent successor if such page is
not available) in respect of the period from scheduled open of trading until
the scheduled close of trading of the primary trading session on the Business
Day immediately prior to the Closing Date (or if such volume-weighted average
price is unavailable, the market value of one share of the Common Stock on the
Business Day immediately prior to Closing Date determined, using a
volume-weighted average method, by a nationally recognized independent
investment banking firm retained for this purpose by the Company). The
Volume-Weighted Average Price will be determined without regard to after hours
trading or any other trading outside of the regular trading session trading
hours.

 

(b)           Governing Law; Jurisdiction;
Jury Trial.  All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal Laws of the State of New
York, without giving effect to any choice of law or conflict of law provision
or rule (whether of the State of New York or any other jurisdictions) that
would cause the application of the Laws of any jurisdictions other than the
State of New York.  Each 

 

39

 

party hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in The City of New York, Borough of Manhattan,
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit,
action or proceeding by mailing a copy thereof to such party at the address for
such 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
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH
OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

(c)           Counterparts.  This Agreement may be executed in two or more
identical counterparts, all of which 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; provided, that a facsimile or
electronic (i.e., “PDF”) signature shall be considered due execution and
shall be binding upon the signatory thereto with the same force and effect as
if the signature were an original.

 

(d)           Headings.  The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.

 

(e)           Severability.  If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.

 

(f)            Entire Agreement; Amendments.  This Agreement and the other Transaction
Documents supersede all other prior oral or written agreements between the
Investor, the Company, their Affiliates and Persons acting on their behalf with
respect to the matters discussed herein, and this Agreement, the other
Transaction Documents and the instruments referenced herein and therein contain
the entire understanding of the parties with respect to the matters covered
herein and therein and, except as specifically set forth herein or therein,
neither the Company nor the Investor makes any representation, warranty,
covenant or undertaking with respect to such matters.  No provision of this Agreement may be amended
other than by an instrument in writing signed by the Company and Sagard Capital
Partners, L.P. (or any single assignee thereof).  No provision hereof may be waived other than
by an instrument in writing signed by the party against whom enforcement is
sought.

 

(g)           Notices.  Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered:  (i) upon receipt, when delivered personally; (ii)
upon receipt, when sent 

 

40

 

by facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or (iii) one (1)
Business Day after deposit with an overnight courier service, in each case properly
addressed to the party to receive the same. 
The addresses and facsimile numbers for such communications shall be:

 

If to the Company:

 

	
  GP Strategies Corporation

  
	
  6095 Marshalee Drive

  
	
  Suite 300

  
	
  Elkridge, MD 21075

  
	
  Telephone:

  	
  (410) 379-3600

  
	
  Facsimile:

  	
  (410) 540-5302

  
	
  Attention:

  	
  Kenneth
  L. Crawford, General Counsel

  

 

with a copy (for
informational purposes only) to:

 

	
  Latham & Watkins LLP

  
	
  885 Third Avenue

  
	
  New York, NY 10022

  
	
  Telephone:

  	
  (212) 906-1200

  
	
  Facsimile:

  	
  (212) 751-4864

  
	
  Attention:

  	
  David M. Schwartzbaum,
  Esq.

  

 

If to the Investor:

 

	
  Sagard Capital Partners,
  L.P.

  
	
  325 Greenwich Avenue

  
	
  Greenwich, CT 06830

  
	
  Telephone:

  	
  (203) 629-6700

  
	
  Facsimile:

  	
  (203) 629-6721

  
	
  Attention:

  	
  Daniel Friedberg

  

 

with a copy (for
informational purposes only) to:

 

	
  Finn Dixon & Herling
  LLP

  
	
  177 Broad Street

  
	
  Stamford, CT 06901

  
	
  Telephone:

  	
  (203) 325-5000

  
	
  Facsimile:

  	
  (203) 325-5001

  
	
  Attention:

  	
  Charles J. Downey III,
  Esq.

  

 

or
to such other address and/or facsimile number and/or to the attention of such
other Person as the recipient party has specified by written notice given to
each other party pursuant to this Section. 
Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender’s facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by an overnight courier service shall be
rebuttable 

 

41

 

evidence of personal
service, receipt by facsimile or receipt from an overnight courier service in
accordance with clause (i), (ii) or (iii) above,
respectively.

 

(h)           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties and their respective permitted successors
and assigns.  Neither party shall assign
this Agreement or any rights or obligations hereunder without the prior written
consent of the other party, including by way of merger, consolidation or
otherwise.  Notwithstanding the
foregoing, the Investor may assign some or all of its rights hereunder to any
of its Affiliates in connection with transfer (including by merger,
consolidation or otherwise) of any of the Purchased Shares to such Affiliate without
the consent of the Company, in which event such Affiliate-assignee shall be
deemed to be the Investor hereunder with respect to such assigned rights;
provided, that the Investor shall nonetheless remain responsible for all of its
obligations hereunder.

 

(i)            No Third Party Beneficiaries.  This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and
is not for the benefit of, nor may any provision hereof be enforced by, any
other Person.

 

(j)            Survival.  The representations and warranties in this
agreement shall expire at the Closing and have no further force or effect; provided,
that (i) the representations and warranties in Sections 3(a) through 3(g)
shall survive until the first anniversary of the Closing and (ii) the
representations and warranties in Section 3(h) shall survive without
limitation.  The Investor may not first
bring a claim in respect of a representation or warranty after such
representation and warranty has expired or ceased to survive.  All statements of the parties hereto as to
factual matters contained any certificate or exhibit delivered by or on behalf
of such party pursuant to this Agreement shall be deemed to be representations and
warranties of such party hereunder as of the date of such certificate or
exhibit.  The agreements and covenants
set forth in Sections 4 and 8 shall survive the Closing and the
delivery and exercise of Purchased Shares, as applicable, in accordance with
their terms.  At such time that the Investor
(or the Investor’s Affiliates) no longer beneficially owns any of the Purchased
Shares, any remaining surviving provisions of this Agreement shall terminate,
other than Sections 4(f), 4(m)(vi) and this Section 8.  Nothing contained in this Section 8(j)
shall be deemed to limit any rights of the Investor under applicable federal
and state securities laws.

 

(k)           Further Assurances.  Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

 

(l)            No Strict Construction.  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.

 

(m)          Remedies.  The Investor shall have all rights and
remedies set forth in the Transaction Documents and all rights and remedies
which it has been granted at any time under any other agreement or contract and
all of the rights which such holders have under any Law.  

 

42

 

The Investor shall be entitled to enforce such rights specifically
(without posting a bond or other security), to recover damages by reason of any
breach of any provision of this Agreement and to exercise all other rights
granted by Law.  Furthermore, the Company
recognizes that in the event that it fails to perform, observe, or discharge
any or all of its obligations under the Transaction Documents, any remedy at
Law may prove to be inadequate relief to the Investor.  The Company therefore agrees that the
Investor shall be entitled to seek temporary and permanent injunctive relief in
any such case without the necessity of proving actual damages and without
posting a bond or other security. 
Notwithstanding anything to the contrary contained herein, the Investor
shall not be entitled to consequential, indirect or incidental damages
hereunder.  However, the foregoing shall
not in any way limit the Investor from being reimbursed for its costs, fees or
expenses, including, without limitation, reasonable attorneys’ fees and
disbursements in connection with any of its rights and remedies hereunder.

 

(n)           Acknowledgment Regarding
Investor’s Purchased Shares.  The Company acknowledges and agrees that the
Investor is acting solely in the capacity of arm’s length purchaser with
respect to the Transaction Documents and the transactions contemplated hereby
and thereby.  The Company further
acknowledges that the Investor is not acting as a financial advisor or
fiduciary of the Company or any of its Subsidiaries (or in any similar
capacity) with respect to the Transaction Documents and the transactions
contemplated hereby and thereby, and any advice given by the Investor or any of
its representatives or agents in connection with the Transaction Documents and
the transactions contemplated hereby and thereby is merely incidental to the
Investor’s purchase of the Purchased Shares. 
The Company further represents to the Investor that the Company’s decision
to enter into the Transaction Documents has been based solely on the
independent evaluation by the Company and its representatives.

 

[Signature Page
Follows]

 

43

 

IN WITNESS WHEREOF, the
Investor and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written
above.

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  GP STRATEGIES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott N. Greenberg

  
	
   

  	
  Name: Scott N. Greenberg

  
	
   

  	
  Title:   Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
  INVESTOR:

  
	
   

  	
   

  
	
   

  	
  SAGARD CAPITAL PARTNERS, L.P.

  
	
   

  	
  By:

  	
  Sagard Capital Partners GP, Inc.,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daniel Friedberg

  
	
   

  	
  Name: Daniel Friedberg

  
	
   

  	
  Title:   Chief Executive Officer

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00167-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00167-of-00352.parquet"}]]