Document:

exv10w8

 

EXHIBIT 10.8

AmegyBank

1807 Ross Avenue, Suite 400

Dallas, Texas 75201

March 26, 2008

INFINITY ENERGY RESOURCES, INC.

633 Seventeenth Street, Suite 1800

Denver, Colorado 80202

	 	 	 	 	 
	 

	 	Re:
	 	Second Forbearance Agreement

Ladies and Gentlemen:

This letter (this “Agreement”) sets forth the second forbearance agreement among INFINITY
ENERGY RESOURCES, INC. (“Borrower”), a Delaware corporation; INFINITY OIL AND GAS OF TEXAS,
INC., a Delaware corporation, and INFINITY OIL & GAS OF WYOMING, INC., a Wyoming corporation
(collectively “Guarantors”); and AMEGY BANK NATIONAL ASSOCIATION (“Lender”).
Borrower, Guarantors, and Lender previously entered into a Forbearance Agreement (the “First
Forbearance Agreement”) dated August 31, 2007. Capitalized terms below have the meanings
assigned in the Loan Agreement dated January 9, 2007, among Borrower, Guarantors, and Lender, as
amended (the “Loan Agreement”).

     1. Forest Transactions. Borrower and Guarantors have consummated the following
transactions as contemplated by the First Forbearance Agreement:

          (a) The sale of certain oil and gas properties of Infinity Oil & Gas of Wyoming, Inc.
(“IOGWy”), excluding, however, an undivided 20% interest retained in all undeveloped
leasehold acreage, pursuant to an Asset Purchase and Sale Agreement dated December 26, 2007, but
effective October 1, 2007, between IOGWy, as seller, and FOREST OIL CORPORATION (“Forest”),
a New York corporation, as buyer; and

          (b) The farmout of certain undeveloped leasehold acreage of Infinity Oil and Gas of Texas,
Inc. (“IOGTx”), pursuant to a Farmout and Acquisition Agreement (the “Farmout
Agreement”) dated December 26, 2007, between IOGTx, as farmor, and Forest, as farmee.

 

 

     2. Borrowing Base. Effective as of the date of this Agreement, Lender has reduced the
Borrowing Base to $3,806,000.00, until reset by Lender in connection with the next redetermination
of the Borrowing Base. Lender reserves the right to make the next redetermination of the Borrowing
Base at any time.

     3. Borrowing Base Deficiency. The new Borrowing Base results in a Borrowing Base
deficiency in the amount of $7,097,468.29 (the “Deficiency”). On or before the end of the
Forbearance Period (as defined below), Borrower and Guarantors agree to cure the Deficiency by
selling assets, refinancing of the Revolving Loan, or raising capital on terms acceptable to
Lender.

     4. Events of Default. Borrower and Guarantors acknowledge that the following Events
of Default have occurred and remain outstanding (the “Existing Defaults”):

          (a) The Existing Defaults set forth in the First Forbearance Agreement;

          (b) Borrower and Guarantors breached the financial covenants set forth in Subsection (a) — (h)
of Section 8 of the Loan Agreement for the periods ended September 30 and December 31, 2007; and

          (c) Borrower and Guarantors breached the covenants set forth in Subsections (g), (h), (i), and
(m) of Section 7 of the Loan Agreement for the periods ended September 30, 2007 and December 31,
2007.

     5. Forbearance. Lender, Borrower, and Guarantors agree to a forbearance period
commencing as of December 1, 2007, and continuing through May 31, 2008, unless terminated earlier
by Lender due to a Default, as defined below (the “Forbearance Period”). During the
Forbearance Period, but subject to a Default, Lender will forebear from exercising any remedies
under the Loan Agreement, the Revolving Note, the Security Documents, the Guaranties, and the other
Loan Documents. Borrower and Guarantors agree that all statutes of limitation with respect to
enforcement of the Revolving Note, the Guaranties, and the Security Documents will be tolled during
the Forbearance Period and for ninety (90) days thereafter.

     6. Temporary Waiver. Borrower and Guarantors have requested that Lender temporarily
waive the Existing Defaults and additional defaults under the provisions covered by the Existing
Defaults, excluding, however, the following (the “Excluded Defaults”): (i) any additional
defaults under the additional debt prohibitions in Subsection (h) of Section 7 of the Loan
Agreement, and (ii) any additional defaults under the use of Free Operating Cash Flow prohibitions
in Subsection (h) of Section 8 of the Loan Agreement. Lender hereby waives the

 

 

Existing Defaults through the Forbearance Period only. This is a temporary and limited waiver, and
Lender reserves the right to require strict compliance with all covenants under the Loan Agreement,
including the covenants violated as set forth above, in the future. This waiver does not modify,
supplement, or alter any of the terms of the Loan Agreement or any other Loan Document. Further,
this waiver shall not be construed as a commitment by Lender to waive any future violation of the
same or any other term or condition of the Loan Agreement or any of the Loan Documents. Neither
the negotiation or execution of this Agreement will be an election of any right or remedy available
to Lender; and, except as specifically limited or postponed herein, Lender reserves all rights and
remedies.

     7. Interest. Borrower and Lender hereby agree that during the Forbearance Period
(including the Forbearance Period under the First Forbearance Agreement), the entire unpaid
principal balance owed on the Revolving Note shall accrue interest at the sum of the Stated Rate,
plus the Applicable Margin as set forth in the Revolving Note; provided, however, that Lender
reserves the right to impose the default rate of Stated Rate, plus six percent (6.0%) (the
“Default Rate”), as set forth in the Revolving Note, at any time after the termination of
the Forbearance Period, in the event that an Event of Default remains uncured and outstanding.
Further, in lieu of the additional interest accrued and unpaid under the First Forbearance
Agreement, calculated as the difference between the Default Rate and the sum of the Stated Rate,
plus the Applicable Margin, Borrower shall pay the Forbearance/Waiver Fee set forth below.

     8. Additional Collateral. In consideration of the forbearance under this Agreement,
Borrower agrees to sign and deliver a Commercial Security Agreement (the “Security
Agreement”) in Proper Form, granting a security interest in any future sale proceeds from the
sale of all or any part of the rights Borrower may have in the Tyra and Perlas Blocks, offshore
Nicaragua, as awarded to Borrower by the Republic of Nicaragua in 2003, as hereafter amended and
modified (the “Nicaragua Concessions”), and affected by Sentencia No. 92, Expediente No
591-06, rendered by the Supreme Court of Justice of the Republic of Nicaragua, Constitutional Hall,
dated May 2, 2006, in any future subsidiaries in which the rights with respect to the Nicaragua
Concessions are assigned, and in any proceeds or rights related to Borrower’s insurance policies
issued by the Overseas Private Investment Corporation (“OPIC”) related to the Nicaragua
Concessions (the “OPIC Policies”). Borrower and Guarantors agree to mortgage all oil and
gas properties and leasehold interests (excluding the Nicaragua Concessions) owned by Borrower or
Guarantors and not previously mortgaged to Lender as additional security for the Notes. Further,
Borrower and Guarantors agree to use their reasonable best efforts to obtain within thirty (30)
days of the date of this Agreement a waiver of the prohibition against liens from the lessors on
the Murray lease, Erath County, Texas, and thereafter to mortgage this lease. Lender agrees to
release without delay the Security Agreement in the event that the OPIC notifies Borrower of
payment of compensation for a claim made by Borrower under the OPIC Policies; provided, however
that if released the Security Agreement under such circumstances, Borrower agrees that the
compensation for a claim made by Borrower under the OPIC Policies shall still be paid to Lender for
application to the Revolving Loan.

 

 

     9. Lockbox. Section 8 of the First Forbearance Agreement regarding payment of all
production proceeds to the Lockbox Account shall remain in effect until all amounts lawfully due
and owing on the Revolving Note and the Hedge Liabilities are paid in full, except Subsection (f)
of Section 8 of the First Forbearance Agreement is modified to read as follows:

          “(f) Notwithstanding the provisions of Subsection (f) of Section 8 of the Loan
Agreement, beginning April 1, 2008, Borrower and Guarantors shall not permit cash general
and administrative expenses on a consolidated basis to exceed $75,000.00 per month during
term of this Agreement; provided, however, that general and administrative expenses in
excess of this monthly limit may be accrued and paid only after the Revolving Loan and
Hedge Liabilities have been paid in full.”

     10. Sale of Oil and Gas Properties. In order to cure the Deficiency, Borrower and
Guarantors agree to take the following actions:

          (a) Upon the written directive of Lender, to be exercised in Lender’s sole discretion, but
subject to shareholder approval to the extent required by applicable law, Borrower and Guarantors
shall proceed with (i) the sale and marketing of the interest retained in the oil and gas
properties of IOGWy (the “Rockies Properties”); and (ii) the sale and marketing of
interests in the Texas oil and gas properties of IOGTx (the “Texas Properties”). If
elected by Lender, Borrower and Guarantors shall devote their substantial efforts, time, talents,
and expertise to the sale and marketing of the Rockies Properties and the Texas Properties, will
take all lawful actions as will result in the prompt payment of the Deficiency, and will thereafter
accept any commercially reasonable offer to buy the Rockies Properties and the Texas Properties, or
any of them; provided no oil and gas property or leasehold interest which is mortgaged to Lender
shall be sold except on terms and price acceptable to Lender and with the prior written approval of
Lender.

          (b) Upon Lender’s election to proceed with the sale of the Rockies Properties and the Texas
Properties, or any of them, Borrower and Guarantors shall thereafter use their best efforts to
(i) promptly open a data room on the properties to be sold, (ii) to promptly obtain firm proposals
for the sale of the properties, (iii) to execute a definitive agreement or agreements, subject to
stockholder approval if required, for the sale of properties with proceeds sufficient to repay the
Deficiency, and (iv) seek stockholder approval, if required, and consummate the sale of the
properties as soon as practicable thereafter, but in no event later than the end of the Forbearance
Period.

          (c) Borrower and Guarantors shall promptly provide Lender with a copy of the agreement or
engagement letter with any oil and gas broker or consultant retained to assist with

 

 

sales under this Section; and thereafter Borrower and Guarantors shall provide a monthly report on
the first (1st) day of each month, to be prepared by the oil and gas broker or consultant engaged
by Borrower and Guarantors to facilitate the sale of the oil and gas properties and leasehold
interests, that includes any and all information pertaining to property bids, the current status of
any bids or sale discussions, and all marketing efforts employed to sell the Rockies Properties and
the Texas Properties. Notwithstanding any provision to the contrary, at least two business days
prior to the date on which Borrower proposes to pay such, Borrower shall deliver to Lender in usual
and customary form reasonably acceptable to Lender reasonable detail of all broker fees and other
transaction costs related to the sale of the properties proposed to be paid from proceeds in the
Lockbox Accounts, and thereafter Borrower may pay such fees and costs as are approved by Lender
(which approval shall not be unreasonably withheld, delayed, or denied).

          (d) No sale of any of the Rockies Properties and the Texas Properties, or any of them, will be
permitted to an affiliate of Borrower or Guarantors, unless Lender consents in writing.

          (e) Borrower and Guarantors will direct the net sale proceeds from the sale of any of the
Rockies Properties and the Texas Properties to be paid to Lender to be applied to the Revolving
Note and collection costs in such order as determined by Lender and shall take all lawful actions
to ensure that the proceeds of any such sales are contemporaneously with the closing thereof
applied to the Revolving Note and collection costs as herein provided.

     11. Nicaragua Concessions. So long as the Deficiency remains uncured or there is any
outstanding Event of Default, Borrower and Guarantors agree that:

          (a) They shall not sell, assign, transfer, or otherwise dispose of all or any interest in the
Nicaragua Concessions, without the prior written consent of Lender, except for (i) the sale of
hydrocarbons in the ordinary course of business, and (ii) the sale or transfer of equipment or
inventory in the ordinary course of business or that is no longer necessary for the business of
Borrower or that is obsolete or replaced by equipment of at least comparable value and use, and
(iii) the assignment or transfer required under Section 10.02 of the OPIC Policies after payment of
compensation for a claim made by Borrower under the OPIC Policies; and

          (b) They shall not mortgage, assign, hypothecate, pledge, or encumber, and not create, incur,
or assume any lien or security interest on or in, the Nicaragua Concessions (or any interest in the
Nicaragua Concessions), without the prior written consent of Lender, except for any security
interest in favor of Lender and the Permitted Encumbrances.

 

 

     12. Escrow Agreement. In connection with the Farmout Agreement with Forest, IOGTx,
Forest, Lender, and Amegy Bank National Association, as escrow agent, have entered into an Escrow
Agreement (the “Escrow Agreement”) dated December 27, 2007, providing for the payment of
certain liens and claims from funds held in escrow, in accordance with the terms therein.

     13. Lease Operating Expense. By March 31, 2008, Borrower and IOGTx shall provide
evidence to Lender that the lease operating expense on the Texas properties of IOGTx does not
exceed an average of $2,500 per well per month; and thereafter Borrower and IOGTx shall not permit
the lease operating expense on the Texas properties of IOGTx to exceed an average of $2,500 per
well per month.

     14. Hedge Transactions.

          (a) In connection with the sale of the Rockies oil and gas properties to Forest, Borrower and
Guarantors terminated all outstanding Hedge Transactions. A hedge termination fee in the amount of
$56,085.00 is owed by Borrower to Lender in connection with the termination of those Hedge
Transactions, and this hedge termination fee shall be payable on or before the Deferral Date (as
defined below).

          (b) Notwithstanding the terms of Section 4 of the Loan Agreement, Borrower and Guarantors
agree that during the Forbearance Period and so long thereafter as any Event of Default remains
outstanding and uncured, Borrower and Guarantors shall not enter into any Hedge Transaction without
the prior written consent of Lender. If Lender consents to any additional Hedge Transactions,
those Hedge Transactions must comply with the terms of Section 4 of the Loan Agreement.

     15. Audit and Inspections. (a) Borrower and Guarantors agree that Lender and its
auditors or accountants may, during the term of this Agreement, conduct an audit at Borrower’s and
Guarantors’ offices and examine, audit, and make and take away copies or reproductions of
Borrower’s and Guarantors’ books and records reasonably required by Lender, relating to (i) the
sources and uses of all funds advanced by Lender under the Revolving Note, and (ii) the sources and
uses of all production proceeds attributable to Borrower’s and Guarantors’ oil and gas properties.
Lender will provide Borrower and Guarantors with one business day written notice of its intention
to commence the audit. Borrower and Guarantors agree to cooperate with Lender and comply with all
reasonable requests in connection with the audit, and Borrower and Guarantors hereby consent to the
review and use by Lender’s auditors of Borrower’s third-party audit of the books and records of
Borrower, Guarantors, and any other subsidiaries, including the supporting documentation and work
papers of such independent auditors.

 

 

     16. Reporting Requirements. Until the Revolving Note and all other obligations and
liabilities of Borrower under the Revolving Note and the other loan documents are fully paid and
satisfied, Borrower and Guarantors will furnish to Lender the following in Proper Form:

          (a) On or before March 31, 2008, a 180-day operating/cash flow forecast for Borrower and
Guarantors and a pro-forma working capital balance for Borrower and Guarantors as of February 29,
2008.

          (b) Within ten (10) days of the end of each month, a pro-forma working capital balance for
Borrower and Guarantors as of the end of the prior month.

          (c) On or before March 31, 2008, a written plan to pay-down the pro forma Accounts Payable
balance.

          (d) As received and available, Borrower and Guarantors shall promptly provide to Lender all
information related in any way to their ability to raise additional capital.

          (e) As received and available, Borrower and Guarantors shall promptly provide to Lender copies
of any agreement or engagement letter with an oil and gas broker or consultant, all written
purchase bids, purchase agreements, and farm-in proposals related in any way to the prospective
sale of any of the Rockies Properties and the Texas Properties and shall promptly inform Lender of
any unwritten offers or bids.

          (f) As received and available, Borrower and Guarantors shall promptly provide to Lender copies
of any term sheets or financing proposals received that would result in the Deficiency being cured
or a refinance of the entire outstanding amount owed on the Revolving Note and Hedge Liabilities.

          (g) Notwithstanding the provisions of Subsection (h) of Section 9 of the Loan Agreement,
within fifty (50) days of the end of each month, a production report, on a lease-by-lease or unit
basis, showing the gross proceeds from the sale of oil, gas, and associated hydrocarbons produced
from the Properties, the quantity of oil, gas, and associated hydrocarbons sold, the severance,
gross production, occupation, or gathering taxes deducted from or paid out of the proceeds,
settlements of any Hedge Transactions, the cash lease operating expenses, including non-recurring
cash operating expenses, intangible drilling costs, and capital expenditures, general and
administrative expenses, the number of wells operated, drilled, or abandoned, the name, address,
telephone number, and contact of the first purchaser of production for all of the Properties, and
such other information as Lender may reasonably request;

 

 

          (h) Within ten (10) days of the release of any funds under the Escrow Agreement, evidence of
the payments made under the Escrow Agreement and lien releases in recordable form acceptable to
Lender, releasing any lien claims made with respect to those amount paid under the Escrow
Agreement;

          (i) On or before March 31, 2008, Borrower will provide Lender with a proposed budget of
recurring operating expenses, non-recurring operating expenses, general and administrative
expenses, and any capital expenditures for the oil and gas properties expected to be paid during
the Forbearance Period and supporting documentation for those expenses and expenditures; and

          (j) Such other information respecting the condition and the operations, financial or
otherwise, of Borrower, Guarantors, and the Properties as Lender may from time to time reasonably
request.

     17. Forbearance Fee. In consideration of the forbearance by Lender under this
Agreement and the waiver of the Existing Defaults and for other valuable consideration, the receipt
and sufficiency of which are acknowledged, Borrower agrees to pay to Lender a Forbearance/Waiver
Fee calculated as follows, and due on or before the earlier of the following (the “Deferral
Date”): (i) the termination of the Forbearance Period, (ii) the cure of the Deficiency, or
(iii) the refinance of the Revolving Note by another lender:

          (a) Forbearance/Waiver Fee under the First Forbearance Agreement in the amount of $220,000.00;
plus

          (b) Forbearance/Waiver Fee due because of the failure to pay the additional interest and the
original Forbearance/Waiver Fee under the First Forbearance Agreement in the amount of $333,666.67;
plus

          (c) Forbearance/Waiver Fee for December 2007 in the amount of $223,666.67; plus

          (d) Forbearance/Waiver Fee for each month from January 2008 through May 2008, inclusive,
calculated as one percent (1.0%) of the average daily outstanding principal balance on the
Revolving Note for the month as of the last day of each of those months (or as of the Deferral Date
if such occurs during any month).

 

 

The Forbearance/Waiver Fees and all other fees are non-refundable and earned by Lender upon
execution of this Agreement.

     18. Conditions Precedent. The obligation of Lender to enter into this Agreement and
to forbear with respect to the Existing Defaults is subject to Borrower’s satisfaction, in Lender’s
sole discretion, of the following conditions precedent:

          (a) Except for the Deficiency and the Existing Defaults, all representations and warranties
set forth in Section 6 of the Loan Agreement must be true as of the date of this Agreement, except
for Subsection (d) of Section 6 which is qualified by the lawsuits set forth in Schedule A
attached.

          (b) the negotiation, execution, and delivery of Loan Documents in Proper Form, including, but
not limited to, the following:

	 	(i)	 	this Agreement;
	 
	 	(ii)	 	the Security Agreement; and
	 
	 	(iii)	 	Borrower and Guarantors Resolutions.

          (c) there shall not have occurred a material adverse change in the business, assets,
liabilities (actual and contingent), operations, or financial condition of Borrower or in the facts
and information regarding such entities as represented to date.

     19. Default and Remedies.

          (a) As used in this Agreement, “Default” means (i) any breach by Borrower or
Guarantors of their obligations under this Agreement, (ii) any misrepresentation by Borrower or
Guarantors of the representations or warranties set forth in this Agreement, or (iii) any further
Event of Default under the Loan Agreement, other than additional defaults under the provisions
covered by the Existing Defaults, excluding the Excluded Defaults.

          (b) Upon a Default, Lender may terminate the Forbearance Period and exercise any and all
rights and remedies available to it, including, without limitation, those under the Loan Agreement,
the Revolving Note, the Security Documents, the Guaranties, the Loan Documents, this Agreement, and
any other instrument or agreement relating hereto, or any one or more of them. All rights and
remedies of Lender shall be cumulative and concurrent and, after a Default, may be pursued
separately, successively, or together as often as occasion therefore shall arise, at the sole
discretion of the Lender.

 

 

     20. Other Representations. Borrower and Guarantors hereby represent to Lender as
follows:

          (a) The execution, delivery, and performance of this Agreement by Borrower and Guarantors have
been duly authorized by Borrower’s and Guarantors’ respective boards of directors and this
Agreement constitutes their legal, valid, and binding obligations, enforceable in accordance with
their respective terms; and

          (b) Except as set forth on Schedule A hereto, there are no actions, suits, or
proceedings pending or threatened against or affecting Borrower, Guarantors, or the Properties,
before any court or governmental department, commission, or board, which, if determined adversely,
would have a material adverse effect on any of the Properties or the operations or financial
condition of any of Borrower or Guarantors.

     21. Confirmations.

          (a) Borrower and Guarantors agree that the following amounts are due and outstanding with
respect to the Revolving Note as of March 12, 2008:

	 	 	 	 	 
	Principal
	 	$	10,903,468.29	 
	Interest
	 	$	21,655.50	 
	 
	 	 	 
	 
	 	 	 	 
	Total
	 	$	10,925,123.79	 

Borrower and Guarantors agree that there is no set off or defense to payment of the Revolving Note
or the Hedge Liabilities.

          (b) As security for the Notes, Borrower and Guarantors previously executed the Security
Documents. Borrower and Guarantors ratify and confirm the Security Documents, acknowledge that
they are valid, subsisting, and binding, and agree that the Security Documents secure payment of
the Notes (including the Revolving Note) and the Loans (including the Revolving Loan).

          (c) In connection with the Revolving Note, Guarantors executed the Guaranties. Guarantors
ratify and confirm the Guaranties, acknowledge that the Guaranties are valid, subsisting, and
binding upon Guarantors, and agree that the Guaranties guarantee payment of the Revolving Note.
Guarantors agree that there is no defense to payment under the Guaranties.

          (d) Borrower and Guarantors hereby represent to Lender that all representations and warranties
set forth in Section 6 of the Loan Agreement are true and correct

 

 

as of the date of execution of this Agreement, except for Subsection (d) of Section 6 which is
qualified by the lawsuits set forth in Schedule A attached; and that, except for the
Existing Defaults, Borrower and Guarantors are in compliance as of the date of execution of this
Agreement with all covenants set forth in Section 7 of the Loan Agreement, all financial covenants
set forth in Section 8 of the Loan Agreement, and all reporting requirements set forth in Section 9
of the Loan Agreement.

     22. Validity and Defaults. The Loan Agreement remains in full force and effect.
Borrower and Guarantors acknowledge that the Loan Agreement, the Revolving Note, the Security
Documents, the Guaranties, and the other Loan Documents are valid, subsisting, and binding upon
Borrower and Guarantors; no uncured breaches or defaults exist under the Loan Agreement, except for
the Existing Defaults; and no other event has occurred or circumstance exists which, with the
passing of time or giving of notice, will constitute a default or breach under the Loan Agreement.
Borrower and Guarantors ratify the Loan Agreement.

     23. Release. For valuable consideration, the receipt and sufficiency of which are
acknowledged, Borrower and Guarantors hereby RELEASE AND FOREVER DISCHARGE Lender and its officers,
directors, employees, agents, representatives, attorneys, subsidiaries, and affiliates
(collectively “Released Parties”), from any and all claims, counterclaims, demands,
damages, debts, suits, obligations, liabilities, offsets, rights, actions, and causes of action of
any nature whatsoever (collectively “Claims”), caused by, because of, as a result of,
arising from, or related in any way to the Loan Agreement, the Revolving Note, the Security
Documents, the Loan Documents, this Agreement, any other transaction between Lender and Borrower,
or any act, omission, communication, transaction, occurrence, representation, promise, breach,
fraud, violation of any statute or law, or any other matter whatsoever or thing done, omitted, or
suffered by any of the Released Parties, whether those Claims are now or hereafter accrued or
possessed, whether known or unknown, direct or indirect, liquidated or unliquidated, absolute or
contingent, foreseen or unforeseen, at law or in equity, and now or hereafter asserted, including,
without limitation, claims for contribution or indemnity, claims of control, fraud, duress,
mistake, tortuous interference, usury, negligence, or violations of the Texas Consumer Protection
and Deceptive Trade Practices Act.

     24. Advice from Counsel. Borrower and Guarantors understand that this Agreement is
legally binding and represent to Lender that each has obtained independent legal counsel from the
attorney of their choice regarding the meaning and legal significance of this Agreement. The
parties agree that no provision of this Agreement shall be interpreted or construed against a party
because that party prepared the provision, it being agreed that all parties have participated in
the drafting of this Agreement and have had legal counsel of their choice.

 

 

     25. Governing Law and Venue. THIS AGREEMENT, THE LOAN AGREEMENT, THE REVOLVING NOTE,
AND ALL LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS AND SHALL BE PERFORMED IN DALLAS COUNTY, TEXAS. BORROWER, GUARANTORS, AND LENDER
IRREVOCABLY AGREE THAT VENUE FOR ANY ACTION OR CLAIM RELATED TO THIS AGREEMENT, THE LOAN AGREEMENT,
THE REVOLVING NOTE, OR ANY LOAN DOCUMENTS SHALL BE IN DALLAS COUNTY, TEXAS.

     26. Savings Clause. Regardless of any provision contained in the Loan Agreement, the
Revolving Note, the Security Documents, the other Loan Documents, or this Agreement, it is the
express intent of the parties that at no time shall Borrower or Guarantors pay interest in excess
of the maximum lawful rate (or any other interest amount which might in any way be deemed
usurious), and Lender will never be considered to have contracted for or to be entitled to charge,
receive, collect, or apply as interest on the Revolving Note, any amount in excess of the maximum
lawful rate (or any other interest amount which might in any way be deemed usurious), and, in the
event that Lender ever receives, collects, or applies as interest any such excess, the amount which
would be excessive interest will be applied to the reduction of the principal balance of the
Revolving Note, and, if the principal balance of the Revolving Note is paid in full, any remaining
excess shall forthwith be paid to Borrower. In determining whether the interest paid or payable
exceeds the maximum lawful rate (or any other interest amount which might in any way be deemed
usurious), Borrower and Lender shall, to the maximum extent permitted under applicable law, spread
the total amount of interest throughout the entire contemplated term of the Revolving Note so that
the interest rate is uniform throughout the term.

     27. Fax Provision. This Agreement and the related Loan Documents may be executed in
counterparts, and Lender is authorized to attach the signature pages from the counterparts to
copies for Lender and Borrower. At Lender’s option, this Agreement and the related Loan Documents
may also be executed by Borrower and Guarantors in remote locations with signature pages faxed to
Lender. Borrower and Guarantors agree that the faxed signatures are binding upon Borrower and
Guarantors, and Borrower and Guarantors further agree to promptly deliver the original signatures
for this Agreement and the related Loan Documents by overnight mail or expedited delivery. It will
be an Event of Default if Borrower or Guarantors fail to promptly deliver all required original
signatures.

     28. Captions. Captions are for convenience only and should not be used in
interpreting this Agreement.

 

 

     29. Final Agreement.

          (a) In connection with the Loans, Borrower, Guarantors, and Lender have executed and delivered
this Agreement, the Loan Agreement, and the Loan Documents (collectively the “Written Loan
Agreement”).

          (b) It is the intention of Borrower, Guarantors, and Lender that this paragraph be
incorporated by reference into each of the Loan Documents. Borrower, Guarantors, and Lender each
warrant and represent that their entire agreement with respect to the Loans is contained within the
Written Loan Agreement, and that no agreements or promises have been made by, or exist by or among,
Borrower, Guarantors, and Lender that are not reflected in the Written Loan Agreement.

          (c) THE LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.

If the foregoing correctly sets forth your understanding of our agreement, please sign and return
one copy of this letter. Notwithstanding any provision to the contrary, this Agreement shall only
be effective if Borrower and Guarantors sign and return to Lender by 3 p.m., Houston, Texas time,
on Thursday, March 27, 2008.

	 	 	 	 	 
	 	Yours very truly,

AMEGY BANK NATIONAL ASSOCIATION

 	 
	 	By:  	/s/ A. Stephen Kennedy
 	 
	 	 	A. Stephen Kennedy, 	 
	 	 	Senior Vice President/

Manager - Energy Group 	 

 

 

	 	 	 	 	 

Accepted and agreed to

this 27th day of March, 2008:

BORROWER:

	 	 	 	 	 
	INFINITY ENERGY RESOURCES, INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Stanton E. Ross
 

Stanton E. Ross, Chairman
	 	 
	 

	 	and Chief Executive Officer	 	 

	 	 	 	 	 
	GUARANTORS:	 	 
	 
	 	 	 	 
	INFINITY OIL AND GAS OF TEXAS, INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Stanton E. Ross
 

Stanton E. Ross, President
	 	 

	 	 	 	 	 
	INFINITY OIL & GAS OF WYOMING, INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Stanton E. Ross
 

Stanton E. Ross, President
	 	 

Exhibits and Schedules:

Schedule A – Lawsuitsexv10w41

 

Exhibit 10.41

Execution
Copy

COMMON STOCK PURCHASE AGREEMENT

Dated March 31, 2008

by and between

ALEXZA PHARMACEUTICALS, INC.

and

AZIMUTH OPPORTUNITY LTD.

 

 

TABLE OF CONTENTS

	 	 	 
	 	 	Page
	 
	 	 
	Article I PURCHASE AND SALE OF COMMON STOCK
	 	1
	Section 1.1 Purchase and Sale of Stock
	 	1
	Section 1.2 Effective Date; Settlement Dates
	 	1
	Section 1.3 The Shares
	 	2
	Section 1.4 Current Report; Prospectus Supplement
	 	2
	 
	 	 
	Article II FIXED REQUEST TERMS; OPTIONAL AMOUNT
	 	2
	Section 2.1 Fixed Request Notice
	 	2
	Section 2.2 Fixed Requests
	 	3
	Section 2.3 Share Calculation
	 	4
	Section 2.4 Limitation of Fixed Requests
	 	4
	Section 2.5 Reduction of Commitment
	 	4
	Section 2.6 Below Threshold Price
	 	4
	Section 2.7 Settlement
	 	5
	Section 2.8 Reduction of Pricing Period
	 	5
	Section 2.9 Optional Amount
	 	6
	Section 2.10 Calculation of Optional Amount Shares
	 	6
	Section 2.11 Exercise of Optional Amount
	 	7
	Section 2.12 Aggregate Limit
	 	7
	 
	 	 
	Article III REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
	 	8
	Section 3.1 Organization and Standing of the Investor
	 	8
	Section 3.2 Authorization and Power
	 	8
	Section 3.3 No Conflicts
	 	9
	Section 3.4 Information
	 	9
	 
	 	 
	Article IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY
	 	9
	Section 4.1 Organization, Good Standing and Power
	 	9
	Section 4.2 Authorization, Enforcement
	 	10
	Section 4.3 Capitalization
	 	10
	Section 4.4 Issuance of Shares
	 	11
	Section 4.5 No Conflicts
	 	11
	Section 4.6 Commission Documents, Financial Statements
	 	11
	Section 4.7 Subsidiaries
	 	13
	Section 4.8 No Material Adverse Effect
	 	13
	Section 4.9 Indebtedness
	 	13
	Section 4.10 Title To Assets
	 	13
	Section 4.11 Actions Pending
	 	13
	Section 4.12 Compliance With Law
	 	14
	Section 4.13 Certain Fees
	 	14
	Section 4.14 Operation of Business
	 	14

i

 

	 	 	 
	 	 	Page
	Section 4.15 Environmental Compliance
	 	16
	Section 4.16 Material Agreements
	 	17
	Section 4.17 Transactions With Affiliates
	 	17
	Section 4.18 Securities Act
	 	17
	Section 4.19 Employees
	 	19
	Section 4.20 Use of Proceeds
	 	19
	Section 4.21 Public Utility Holding Company Act and Investment Company Act Status
	 	19
	Section 4.22 ERISA
	 	20
	Section 4.23 Taxes
	 	20
	Section 4.24 Insurance
	 	20
	Section 4.25 Acknowledgement Regarding Investor’s Purchase of Shares
	 	20
	 
	 	 
	Article V COVENANTS
	 	21
	Section 5.1 Securities Compliance; FINRA Filing
	 	21
	Section 5.2 Registration and Listing
	 	22
	Section 5.3 Compliance with Laws
	 	22
	Section 5.4 Keeping of Records and Books of Account; Foreign Corrupt Practices Act
	 	22
	Section 5.5 Limitations on Holdings and Issuances
	 	23
	Section 5.6 Other Agreements and Other Financings
	 	24
	Section 5.7 Stop Orders
	 	25
	Section 5.8 Amendments to the Registration Statement; Prospectus Supplements; Free
Writing Prospectuses
	 	25
	Section 5.9 Prospectus Delivery
	 	26
	Section 5.10 Selling Restrictions
	 	27
	Section 5.11 Effective Registration Statement
	 	28
	Section 5.12 Non-Public Information
	 	28
	Section 5.13 Broker/Dealer
	 	28
	Section 5.14 Update of Disclosure Schedule
	 	28
	 
	 	 
	Article VI OPINION OF COUNSEL AND CERTIFICATE; CONDITIONS TO THE SALE AND PURCHASE OF THE SHARES
	 	28
	Section 6.1 Opinion of Counsel and Certificate
	 	28
	Section 6.2 Conditions Precedent to the Obligation of the Company
	 	28
	Section 6.3 Conditions Precedent to the Obligation of the Investor
	 	30
	 
	 	 	 	 
	Article VII TERMINATION
	 	32
	Section 7.1 Term, Termination by Mutual Consent
	 	32
	Section 7.2 Other Termination
	 	33
	Section 7.3 Effect of Termination
	 	34
	 
	 	 
	Article VIII INDEMNIFICATION
	 	34
	Section 8.1 General Indemnity
	 	34
	Section 8.2 Indemnification Procedures
	 	35
	 
	 	 
	Article IX MISCELLANEOUS
	 	37
	Section 9.1 Fees and Expenses
	 	37
	Section 9.2 Specific Enforcement, Consent to Jurisdiction, Waiver of Jury Trial
	 	37

ii

 

	 	 	 
	 	 	Page
	Section 9.3 Entire Agreement; Amendment
	 	38
	Section 9.4 Notices
	 	38
	Section 9.5 Waivers
	 	39
	Section 9.6 Headings
	 	39
	Section 9.7 Successors and Assigns
	 	39
	Section 9.8 Governing Law
	 	40
	Section 9.9 Survival
	 	40
	Section 9.10 Counterparts
	 	40
	Section 9.11 Publicity
	 	40
	Section 9.12 Severability
	 	40
	Section 9.13 Further Assurances
	 	40
	 
	 	 
	Annex A. Definitions
	 	 

iii

 

COMMON STOCK PURCHASE AGREEMENT

     This COMMON STOCK PURCHASE AGREEMENT, made and entered into on this 31st day of
March 2008 (this “Agreement”), by and between Azimuth Opportunity Ltd., an international
business company incorporated under the laws of the British Virgin Islands (the
“Investor”), and Alexza Pharmaceuticals, Inc., a corporation organized and existing under
the laws of the State of Delaware (the “Company”).

RECITALS

     WHEREAS, the parties desire that, upon the terms and subject to the conditions contained
herein, the Company may issue and sell to the Investor and the Investor shall thereupon purchase
from the Company up to $50,000,000 worth of newly issued shares of the Company’s common stock,
$0.0001 par value (“Common Stock”), subject, in all cases, to the Trading Market Limit; and

     WHEREAS, the offer and sale of the shares of Common Stock hereunder have been registered by
the Company in the Registration Statement, which has been declared effective by order of the
Commission under the Securities Act.

     NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE I

PURCHASE AND SALE OF COMMON STOCK

     Section 1.1 Purchase and Sale of Stock. Upon the terms and subject to the conditions of
this Agreement, during the Investment Period the Company in its discretion may issue and sell to
the Investor up to $50,000,000 (the “Total Commitment”) worth of duly authorized, validly
issued, fully paid and non-assessable shares of Common Stock (subject in all cases to the Trading
Market Limit, the “Aggregate Limit”), by (i) the delivery to the Investor of not more than
24 separate Fixed Request Notices (unless the Investor and the Company mutually agree that a
different number of Fixed Request Notices may be delivered) as provided in Article II hereof and
(ii) the exercise by the Investor of Optional Amounts, which the Company may in its discretion
grant to the Investor and which may be exercised by the Investor, in whole or in part, as provided
in Article II hereof. The aggregate of all Fixed Request Amounts and Optional Amount Dollar
Amounts shall not exceed the Aggregate Limit.

     Section 1.2 Effective Date; Settlement Dates. This Agreement shall become effective and
binding upon delivery of counterpart signature pages of this Agreement executed by each of the
parties hereto, and by delivery of an opinion of counsel and a certificate of the Company as
provided in Section 6.1 hereof, to the offices of Greenberg Traurig, LLP, 200 Park Avenue, New
York, New York 10166, at l0:00 a.m., New York time, on the Effective Date. In consideration of and
in express reliance upon the representations, warranties and covenants, and otherwise upon the
terms and subject to the
conditions, of this Agreement, from and after the Effective Date and during the Investment Period
(i) the Company shall issue and sell to the Investor, and the Investor agrees to purchase from the
Company, the Shares in respect of each Fixed Request and (ii) the Investor may in its discretion
elect to purchase Shares in respect of

 

 

each Optional Amount. The issuance and sale of Shares to
the Investor pursuant to any Fixed Request or Optional Amount shall occur on the applicable
Settlement Date in accordance with Sections 2.7 and 2.9 (or on such Trading Day in accordance with
Section 2.8, as applicable), provided in each case that all of the conditions precedent thereto set
forth in Article VI theretofore shall have been fulfilled or (to the extent permitted by applicable
law) waived.

     Section 1.3 The Shares. The Company has duly authorized and reserved for issuance,
and covenants to continue to reserve for issuance, free of all preemptive and other similar rights,
at all times during the Investment Period, the requisite aggregate number of authorized but
unissued shares of its Common Stock to timely effect the issuance, sale and delivery in full to the
Investor of all Shares to be issued in respect of all Fixed Requests and Optional Amounts under
this Agreement.

     Section 1.4 Current Report; Prospectus Supplement. As soon as practicable, but in any
event not later than 5:30 p.m. (New York time) on the first Trading Day immediately following the
Effective Date, the Company shall file with the Commission a report on Form 8-K relating to the
transactions contemplated by, and describing the material terms and conditions of, this Agreement
and disclosing all information relating to the transactions contemplated hereby required to be
disclosed in the Registration Statement and the Base Prospectus (but which permissibly has been
omitted therefrom in accordance with the Securities Act), including, without limitation,
information required to be disclosed in the section captioned “Plan of Distribution” in the Base
Prospectus (the “Current Report”). The Current Report shall include a copy of this
Agreement as an exhibit. To the extent applicable, the Current Report shall be incorporated by
reference in the Registration Statement in accordance with the provisions of Rule 430B under the
Securities Act. The Company heretofore has provided the Investor a reasonable opportunity to
comment on a draft of such Current Report and has given due consideration to such comments. The
Company shall file a final Base Prospectus pursuant to Rule 424(b) under the Securities Act on or
prior to the second Trading Day immediately following the Effective Date. Pursuant to Section 5.9
and subject to the provisions of Section 5.8, on the first Trading Day immediately following the
last Trading Day of each Pricing Period, the Company shall file with the Commission a Prospectus
Supplement pursuant to Rule 424(b) under the Securities Act disclosing the number of Shares to be
issued and sold to the Investor thereunder, the total purchase price therefor and the net proceeds
to be received by the Company therefrom and, to the extent required by the Securities Act,
identifying the Current Report.

ARTICLE II

FIXED REQUEST TERMS; OPTIONAL AMOUNT

     Subject to the satisfaction of the conditions set forth in this Agreement, the parties agree
(unless otherwise mutually agreed upon by the parties in writing) as follows:

     Section 2.1 Fixed Request Notice. Upon two Trading Days’ prior written notice to the
Investor, the Company may, from time to time in its sole discretion, provide a notice to the
Investor of a Fixed Request before 9:30 a.m. (New York time) on the first Trading Day of the
Pricing Period (the “Fixed Request Notice”), substantially in the form attached hereto as
Exhibit A. The Fixed Request Notice shall specify the Fixed Amount Requested, establish
the Threshold Price for such Fixed Request, designate the first Trading Day of the Pricing Period
and specify

2

 

the Optional Amount, if any, that the Company elects to grant to the Investor during
the Pricing Period and the applicable Threshold Price for such Optional Amount (the “Optional
Amount Threshold Price”). The Threshold Price and the Optional Amount Threshold Price
established by the Company in a Fixed Request Notice may be the same or different, in the Company’s
sole discretion. Upon the terms and subject to the conditions of this Agreement, the Investor is
obligated to accept each Fixed Request Notice prepared and delivered in accordance with the
provisions of this Agreement.

     Section 2.2 Fixed Requests. From time to time during the Investment Period, the Company
may in its sole discretion deliver to the Investor a Fixed Request Notice for a specified Fixed
Amount Requested, and the applicable discount price (the “Discount Price”) shall be
determined, in accordance with the price and share amount parameters as set forth below or such
other parameters mutually agreed upon by the Investor and the Company, and upon the terms and
subject to the conditions of this Agreement, the Investor shall purchase from the Company the
Shares subject to such Fixed Request Notice; provided, however, that (i) if an
ex-dividend date is established by the Trading Market in respect of the Common Stock on or between
the first Trading Day of the applicable Pricing Period and the applicable Settlement Date, the
Discount Price shall be reduced by the per share dividend amount and (ii) the Company may not
deliver any single Fixed Request Notice for a Fixed Amount Requested in excess of the lesser of (a)
the amount in the applicable Fixed Amount Requested column below and (b) 2.5% of the Market
Capitalization:

	 	 	 	 	 
	Threshold Price	 	Fixed Amount Requested	 	Discount Price
	Equal to or greater than $18.00
	 	Not to exceed $7,250,000	 	95.85% of the VWAP
	Equal to or greater than $17.00 and less than $18.00
	 	Not to exceed $6,750,000	 	95.85% of the VWAP
	Equal to or greater than $16.00 and less than $17.00
	 	Not to exceed $6,500,000	 	95.75% of the VWAP
	Equal to or greater than $15.00 and less than $16.00
	 	Not to exceed $6,000,000	 	95.50% of the VWAP
	Equal to or greater than $14.00 and less than $15.00
	 	Not to exceed $5,500,000	 	95.50% of the VWAP
	Equal to or greater than $13.00 and less than $14.00
	 	Not to exceed $5,250,000	 	95.25% of the VWAP
	Equal to or greater than $12.00 and less than $13.00
	 	Not to exceed $4,750,000	 	95.00% of the VWAP
	Equal to or greater than $11.00 and less than $12.00
	 	Not to exceed $4,500,000	 	95.00% of the VWAP
	Equal to or greater than $10.00 and less than $11.00
	 	Not to exceed $4,000,000	 	94.75% of the VWAP
	Equal to or greater than $9.00 and less than $10.00
	 	Not to exceed $3,500,000	 	94.50% of the VWAP
	Equal to or greater than $8.00 and less than $9.00
	 	Not to exceed $3,250,000	 	94.50% of the VWAP
	Equal to or greater than $7.00 and less than $8.00
	 	Not to exceed $2,750,000	 	94.25% of the VWAP
	Equal to or greater than $6.00 and less than $7.00
	 	Not to exceed $2,500,000	 	94.00% of the VWAP
	Equal to or greater than $5.00 and less than $6.00
	 	Not to exceed $2,000,000	 	94.00% of the VWAP

3

 

     Anything to the contrary in this Agreement notwithstanding, at no time shall the Investor be
required to purchase more than $7,250,000 worth of Common Stock in respect of any Pricing Period
(not including Common Stock subject to any Optional Amount). The date on which the Company
delivers any Fixed Request Notice in accordance with this Section 2.2 hereinafter shall be referred
to as a “Fixed Request Exercise Date”.

     Section 2.3 Share Calculation. Subject to Section 2.6, the number of Shares to be issued
by the Company to the Investor pursuant to a Fixed Request shall equal the aggregate sum of each
quotient (calculated for each Trading Day during the applicable Pricing Period for which the VWAP
equals or exceeds the Threshold Price) determined pursuant to the following equation (rounded to
the nearest whole Share):

	N =	 	 (A x B)/C, where:
	 
	N =	 	 the number of Shares to be issued by the Company to the Investor in respect of a Trading
Day during the applicable Pricing Period for which the VWAP equals or exceeds the Threshold
Price,
	 
	A =	 	 0.10 (the “Multiplier”); provided, however, that if the number of
Trading Days constituting a Pricing Period is decreased as set forth in Section 2.8 hereof,
then the Multiplier correspondingly shall be increased to equal the decimal equivalent (in
10-millionths) of a fraction, the numerator of which is one and the denominator of which
equals the number of Trading Days in the Pricing Period as so decreased,
	 
	B =	 	 the Fixed Amount Requested, and
	 
	C =	 	 the applicable Discount Price.

     Section 2.4 Limitation of Fixed Requests. The Company shall not make more than one Fixed
Request in each Pricing Period. Not less than five Trading Days shall elapse between the end of
one Pricing Period and the commencement of any other Pricing Period during the Investment Period.
There shall be permitted a maximum of 24 Fixed Requests during the Investment Period. Each Fixed
Request automatically shall expire immediately following the last Trading Day of each Pricing
Period.

     Section 2.5 Reduction of Commitment. On the last Trading Day of each Pricing Period, the Investor’s Total Commitment under this
Agreement automatically (and without the need for any amendment to this Agreement) shall be
reduced, on a dollar-for-dollar basis, by the total amount of the Fixed Request Amount and the
Optional Amount Dollar Amount, if any, for such Pricing Period paid to the Company at the
Settlement Date.

     Section 2.6 Below Threshold Price. If the VWAP on any Trading Day in a Pricing Period is
lower than the Threshold Price, then for each such Trading Day the total amount of the Fixed Amount
Requested shall be reduced, on a dollar-for-dollar basis, by an amount equal to the product of (x)
the Multiplier and (y) the original Fixed Amount Requested, and no Shares

4

 

shall be purchased or
sold with respect to such Trading Day, except as provided below. If trading in the Common Stock on
NASDAQ (or any national securities exchange on which the Common Stock is then listed) is suspended
for any reason for more than three hours on any Trading Day, the Investor may at its option deem
the price of the Common Stock to be lower than the Threshold Price for such Trading Day and, for
each such Trading Day, the total amount of the Fixed Amount Requested shall be reduced as provided
in the immediately preceding sentence, and no Shares shall be purchased or sold with respect to
such Trading Day, except as provided below. For each Trading Day during a Pricing Period on which
the VWAP is (or is deemed to be) lower than the Threshold Price, the Investor may in its sole
discretion elect to purchase such U.S. dollar amount of Shares equal to the amount by which the
Fixed Amount Requested has been reduced in accordance with this Section 2.6, at the Threshold Price
multiplied by the applicable percentage determined in accordance with the price and share amount
parameters set forth in Section 2.2. The Investor shall inform the Company via facsimile
transmission not later than 8:00 p.m. (New York time) on the last Trading Day of such Pricing
Period as to the number of Shares, if any, the Investor elects to purchase as provided in this
Section 2.6.

     Section 2.7 Settlement. The payment for, against simultaneous delivery of, Shares in
respect of each Fixed Request shall be settled on the second Trading Day next following the last
Trading Day of each Pricing Period, or on such earlier date as the parties may mutually agree (the
“Settlement Date”). On each Settlement Date, the Company shall deliver the Shares
purchased by the Investor to the Investor or its designees via DTC’s Deposit Withdrawal Agent
Commission (DWAC) system, against simultaneous payment therefor to the Company’s designated account
by wire transfer of immediately available funds, provided that if the Shares are received by the
Investor later than 1:00 p.m. (New York time), payment therefor shall be made with next day funds.
As set forth in Section 9.1(ii), a failure by the Company to deliver such Shares shall result in
the payment of liquidated damages by the Company to the Investor.

     Section 2.8 Reduction of Pricing Period. If during a Pricing Period the Company elects to
reduce the number of Trading Days in such Pricing Period (and thereby amend its previously
delivered Fixed Request Notice), the Company shall so notify the Investor before 9:00 a.m. (New
York time) on any Trading Day during a Pricing Period (a “Reduction Notice”) and the last
Trading Day of such Pricing Period shall be
the Trading Day immediately preceding the Trading Day on which the Investor received such Reduction
Notice; provided, however, that if the Company delivers the Reduction Notice later
than 9:00 a.m. (New York time) on a Trading Day during a Pricing Period, then the last Trading Day
of such Pricing Period instead shall be the Trading Day on which the Investor received such
Reduction Notice.

     Upon receipt of a Reduction Notice, the Investor (i) shall purchase the Shares in respect of
each Trading Day in such reduced Pricing Period for which the VWAP equals or exceeds the Threshold
Price in accordance with Section 2.3 hereof; (ii) may elect to purchase the Shares in respect of
any Trading Day in such reduced Pricing Period for which the VWAP is (or is deemed to be) lower
than the Threshold Price in accordance with Section 2.6 hereof; and (iii) may elect to exercise all
or any portion of an Optional Amount on any Trading Day during such reduced Pricing Period in
accordance with Sections 2.10 and 2.11 hereof.

5

 

     In addition, upon receipt of a Reduction Notice, the Investor may elect to purchase such U.S.
dollar amount of additional Shares equal to the quotient determined pursuant to the following
equation:

	 	 	 
	D =

	 	(A/B) x (B – C), where:
	 
	 	 
	D =

	 	the U.S. dollar amount of additional Shares to be purchased,
	 
	 	 
	A =

	 	the Fixed Amount Requested,
	 
	 	 
	B =

	 	10 or, for purposes of this Section 2.8, such lesser number of Trading Days as the parties
may mutually agree to, and
	 
	 	 
	C =

	 	the number of Trading Days in the reduced Pricing Period,

at a per Share price equal to (x) the Fixed Amount Requested attributable to the reduced Pricing
Period divided by (y) the number of Shares to be purchased during such reduced Pricing Period
pursuant to clauses (i) and (ii) (as applicable) of the immediately preceding paragraph.

     The Investor may also elect to exercise any portion of the applicable Optional Amount which
was unexercised during the reduced Pricing Period by issuing an Optional Amount Notice to the
Company not later than 10:00 a.m. (New York time) on the first Trading Day next following the last
Trading Day of the reduced Pricing Period. The number of Shares to be issued upon exercise of such
Optional Amount shall be calculated pursuant to the equation set forth in Section 2.10 hereof,
except that “C” shall equal the greater of (i) the VWAP for the Common Stock on the last Trading
Day of the reduced Pricing Period or (ii) the Optional Amount Threshold Price.

     The payment for, against simultaneous delivery of, Shares to be purchased and sold in
accordance with this Section 2.8 shall be settled on the second Trading Day next following the
Trading Day on which the Investor receives a Reduction Notice.

     Section 2.9 Optional Amount. With respect to any Pricing Period, the Company may in its
sole discretion grant to the Investor the right to exercise, from time to time during the Pricing
Period (but not more than once on any Trading Day), all or any portion of an Optional Amount. The
maximum Optional Amount Dollar Amount and the Optional Amount Threshold Price shall be set forth in
the Fixed Request Notice. If an ex-dividend date is established by the Trading Market in respect
of the Common Stock on or between the first Trading Day of the applicable Pricing Period and the
applicable Settlement Date, the applicable exercise price in respect of the Optional Amount shall
be reduced by the per share dividend amount. Each daily Optional Amount exercise shall be
aggregated during the Pricing Period and settled on the next Settlement Date. The Optional Amount
Threshold Price designated by the Company in its Fixed Request Notice shall apply to each Optional
Amount during the applicable Pricing Period.

     Section 2.10 Calculation of Optional Amount Shares. The number of shares of Common Stock
to be issued in connection with the exercise of an Optional Amount shall be the quotient determined
pursuant to the following equation (rounded to the nearest whole Share):

6

 

	 	 	 
	O =

	 	A/(B x C), where:
	 
	 	 
	O =

	 	the number of shares of Common Stock to be issued in connection with such Optional Amount
exercise,
	 
	 	 
	A =

	 	the Optional Amount Dollar Amount with respect to which the Investor has delivered an
Optional Amount Notice,
	 
	 	 
	B =

	 	the applicable percentage determined in accordance with the price and shares amount
parameters set forth in Section 2.2 (with the Optional Amount Threshold Price serving as the
Threshold Price for such purposes), and
	 
	 	 
	C =

	 	the greater of (i) the VWAP for the Common Stock on the day the Investor delivers the
Optional Amount Notice or (ii) the Optional Amount Threshold Price.

     Section 2.11 Exercise of Optional Amount. If granted by the Company to the Investor with
respect to a Pricing Period, all or any portion of the Optional Amount may be exercised by the
Investor on any Trading Day during the Pricing Period, subject to the limitations set forth in
Section 2.9. As a condition to each exercise of an Optional Amount pursuant to this Section 2.11,
the Investor shall issue an Optional Amount Notice to the Company no later than 8:00 p.m. (New York
time) on the day of such Optional Amount exercise. If the Investor does not exercise an Optional
Amount in full by 8:00 p.m. (New York time) on the last Trading Day of the applicable Pricing
Period, such unexercised portion of the Investor’s Optional Amount with respect to that Pricing
Period automatically shall lapse and terminate.

     Section 2.12 Aggregate Limit. Notwithstanding anything to the contrary contained in this
Agreement, in no event may the Company issue a Fixed Request Notice or grant an Optional Amount to
the extent that the sale of Shares pursuant thereto and pursuant to all prior Fixed Request Notices
and Optional Amounts issued hereunder, and as liquidated damages pursuant to Section 9.1(ii), would
cause the Company to sell or the Investor to purchase Shares which in the aggregate are in excess
of the Aggregate Limit. If the Company issues a Fixed Request Notice or Optional Amount that
otherwise would permit the Investor to purchase shares of Common Stock which would cause the
aggregate purchases by Investor hereunder to exceed the Aggregate Limit, such Fixed Request Notice
or Optional Amount shall be void ab initio to the extent of the amount by which the dollar value of
shares or number of shares, as the case may be, of Common Stock otherwise issuable pursuant to such
Fixed Request Notice or Optional Amount together with the dollar value of shares or number of
shares, as the case may be, of all other Common Stock purchased by the Investor pursuant hereto, or
issued as liquidated damages pursuant to Section 9.1(ii), would exceed the Aggregate Limit. The
Company hereby represents, warrants and covenants that neither it nor any of its Subsidiaries (i)
has effected any transaction or series of transactions, (ii) is a party to any pending transaction
or series of transactions or (iii) shall enter into any contract, agreement,
agreement-in-principle, arrangement or understanding with respect to, or shall effect, any Other
Financing which, in any of such cases, may be integrated with the transactions contemplated by this
Agreement for purposes of determining whether approval of the Company’s stockholders is required
under any bylaw, listed securities maintenance standards or other rules of the Trading Market;
provided, however, that the

7

 

Company shall be permitted to take any action referred to in clause (iii) above if the Company has
timely provided the Investor with an Integration Notice as provided in Section 5.6(ii) hereof.

     At the Company’s sole discretion, and effective automatically upon receipt by the Investor of
notice thereof from the Company, this Agreement may be amended by the Company from time to time to
reduce the Aggregate Limit by a specified dollar amount of Common Stock which shall be no greater
than is required to enable the Company to utilize the Registration Statement to consummate an
underwritten public offering of Common Stock or a registered direct public offering of Common Stock
during the Investment Period; provided, however, that any such amendment of this
Agreement (and any such purported amendment) shall be void and of no force and effect if the effect
thereof would restrict, materially delay, conflict with or impair the ability or right of the
Company to perform its obligations under this Agreement, including, without limitation, the
obligation of the Company to deliver Shares to the Investor in respect of a Fixed Request or
Optional Amount on the applicable Settlement Date. In the event the Company shall have elected to
reduce the Aggregate Limit as provided in the immediately preceding sentence, at the Company’s sole
discretion, and effective automatically upon receipt by the Investor of notice thereof from the
Company, the Company may subsequently amend this Agreement to increase the Aggregate Limit up to
$50,000,000; provided, however, that in no event shall the Company be entitled to
issue Fixed Requests and grant Optional Amounts during the remainder of the Investment Period for
an aggregate amount greater than the amount obtained by subtracting (x) the aggregate of all Fixed
Request Amounts and Optional Amount Dollar Amounts (including any amounts paid as liquidated
damages pursuant to Section 9.1(ii) hereunder) covered by all Fixed Requests and Optional Amounts
theretofore issued or granted by the Company in respect of which a settlement has occurred pursuant
to Section 2.7 from (y) $50,000,000, subject in all cases to the Trading Market Limit.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

     The Investor hereby makes the following representations and warranties to the Company:

     Section 3.1 Organization and Standing of the Investor. The Investor is an international
business company duly organized, validly existing and in good standing under the laws of the
British Virgin Islands.

     Section 3.2 Authorization and Power. The Investor has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement and to purchase the Shares
in accordance with the terms hereof. The execution, delivery and performance of this Agreement by
the Investor and the consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate action, and no further consent or authorization of the
Investor, its Board of Directors or stockholders is required. This Agreement has been duly
executed and delivered by the Investor. This Agreement constitutes a valid and binding obligation
of the Investor enforceable against it in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership, or similar laws relating to, or affecting generally the enforcement
of, creditor’s rights and remedies or by other equitable principles of general application.

8

 

     Section 3.3 No Conflicts. The execution, delivery and performance by the Investor of this
Agreement and the consummation by the Investor of the transactions contemplated herein do not and
shall not (i) result in a violation of such Investor’s charter documents, bylaws or other
applicable organizational instruments, (ii) conflict with, constitute a default (or an event which,
with notice or lapse of time or both, would become a default) under, or give rise to any rights of
termination, amendment, acceleration or cancellation of, any material agreement, mortgage, deed of
trust, indenture, note, bond, license, lease agreement, instrument or obligation to which the
Investor is a party or is bound, (iii) create or impose any lien, charge or encumbrance on any
property of the Investor under any agreement or any commitment to which the Investor is party or
under which the Investor is bound or under which any of its properties or assets are bound, or (iv)
result in a violation of any federal, state, local or foreign statute, rule, or regulation, or any
order, judgment or decree of any court or governmental agency applicable to the Investor or by
which any of its properties or assets are bound or affected, except, in the case of clauses (ii),
(iii) and (iv), for such conflicts, defaults, terminations, amendments, acceleration, cancellations
and violations as would not, individually or in the aggregate, prohibit or otherwise interfere with
the ability of the Investor to enter into and perform its obligations under this Agreement in any
material respect. The Investor is not required under federal, state, local or foreign law, rule or
regulation to obtain any consent, authorization or order of, or make any filing or registration
with, any court or governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement or to purchase the Shares in accordance with the terms hereof.

     Section 3.4 Information. All materials relating to the business, financial condition,
management and operations of the Company and materials relating to the offer and sale of the Shares
which have been requested by the Investor have been made available to the Investor or its advisors.
The Investor and its advisors have been afforded the opportunity to ask questions of
representatives of the Company. The Investor has sought such accounting, legal and tax advice as
it has considered necessary to make an informed investment decision with respect to its acquisition
of the Shares. The Investor understands that it (and not the Company) shall be responsible for its
own tax liabilities that may arise as a result of this investment or the transactions contemplated
by this Agreement.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     Except as set forth in the disclosure schedule delivered by the Company to the Investor (which
is hereby incorporated by reference in, and constitutes an integral part of, this Agreement) (the
“Disclosure Schedule”), the Company hereby makes the following representations and
warranties to the Investor:

     Section 4.1 Organization, Good Standing and Power. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of Delaware and has
the requisite corporate power and authority to own, lease and operate its properties and assets and
to conduct its business as it is now being conducted. The Company and each Subsidiary is duly
qualified as a foreign corporation to do business and is in good standing in every jurisdiction in
which the nature of the business conducted or property owned by it makes such qualification
necessary, except for any jurisdiction in which the failure to be so qualified would not have a
Material Adverse Effect.

9

 

     Section 4.2 Authorization, Enforcement. The Company has the requisite corporate power and
authority to enter into and perform this Agreement and to issue and sell the Shares in accordance
with the terms hereof. Except for approvals of the Company’s Board of Directors or a committee
thereof as may be required in connection with any issuance and sale of Shares to the Investor
hereunder (which approvals shall be obtained prior to the delivery of any Fixed Request Notice),
the execution, delivery and performance by the Company of this Agreement and the consummation by it
of the transactions contemplated hereby have been duly and validly authorized by all necessary
corporate action and no further consent or authorization of the Company or its Board of Directors
or stockholders is required. This Agreement has been duly executed and delivered by the Company
and constitutes a valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, conservatorship, receivership or similar laws
relating to, or affecting generally the enforcement of, creditor’s rights and remedies or by other
equitable principles of general application.

     Section 4.3 Capitalization. The authorized capital stock of the Company and the shares
thereof issued and outstanding are as set forth in the Commission Documents as of the dates
reflected therein. All of the outstanding shares of Common Stock have been duly authorized and
validly issued, and are fully paid and nonassessable. Except as set forth in the Commission
Documents, as of the Effective Date, no shares of Common Stock were entitled to preemptive rights
or registration rights and there were no outstanding options, warrants, scrip, rights to subscribe
to, call or commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, any shares of capital stock of the Company. Except as set
forth in the Commission Documents, there were no contracts, commitments, understandings, or
arrangements by which the Company is or may become bound to issue additional shares of the capital
stock of the Company or options, securities or rights convertible into or exchangeable for any
shares of capital stock of the Company. Except for customary transfer restrictions contained in
agreements entered into by the Company to sell restricted securities or as set forth in the
Commission Documents, as of the Effective Date, the Company was not a party to, and it had no
knowledge of, any agreement restricting the voting or transfer of any shares of the capital stock
of the Company. Except as set forth in the Commission Documents, the offer and sale of all capital
stock, convertible or exchangeable securities, rights, warrants or options of the Company issued
prior to the Effective Date complied with all applicable federal and state securities laws, and no
stockholder has any right of rescission or damages or any “put” or similar right with respect
thereto which would have a Material Adverse Effect. The Company has furnished or made available to
the Investor via the Commission’s Electronic Data Gathering, Analysis and Retrieval System
(“EDGAR”) true and correct copies of the Company’s Certificate of Incorporation as in
effect on the Effective Date (the “Charter”), and the Company’s Bylaws as in effect on the
Effective Date (the “Bylaws”), and true and correct copies (redacted as appropriate) of all
executed resolutions of the Company’s Board of Directors (and committees thereof) relating to the
capital stock of the Company (and transactions in respect thereof) since December 31, 2006 (except
with respect to issuances of shares of capital stock of the Company to directors or employees of
the Company as fees or compensation that were duly approved by the Company’s Board of Directors or
a committee thereof).

10

 

     Section 4.4 Issuance of Shares. The Shares to be issued under this Agreement have been or
will be duly authorized by all necessary corporate action and, when paid for or issued in
accordance with the terms hereof, the Shares shall be validly issued and outstanding, fully paid
and nonassessable, and, when the Shares have been issued to the Investor, the Investor shall be
entitled to all rights accorded to a holder and beneficial owner of Common Stock.

     Section 4.5 No Conflicts. The execution, delivery and performance by the Company of this
Agreement and the consummation by the Company of the transactions contemplated herein do not and
shall not (i) result in a violation of any provision of the Company’s Charter or Bylaws, (ii)
conflict with, constitute a default (or an event which, with notice or lapse of time or both, would
become a default) under, or give rise to any rights of termination, amendment, acceleration or
cancellation of, any material agreement, mortgage, deed of trust, indenture, note, bond, license,
lease agreement, instrument or obligation to which the Company or any of its Significant
Subsidiaries is a party or is bound (including, without limitation, any listing agreement with the
Trading Market), (iii) create or impose a lien, charge or encumbrance on any property of the
Company or any of its Significant Subsidiaries under any agreement or any commitment to which the
Company or any of its Significant Subsidiaries is a party or under which the Company or any of its
Significant Subsidiaries is bound or under which any of their respective properties or assets are
bound, or (iv) result in a violation of any federal, state, local or foreign statute, rule,
regulation, order, judgment or decree applicable to the Company or any of its Subsidiaries or by
which any property or asset of the Company or any of its Subsidiaries are bound or affected,
except, in the case of clauses (ii), (iii) and (iv), for such conflicts, defaults, terminations,
amendments, acceleration, cancellations, liens, charges, encumbrances and violations as would not,
individually or in the aggregate, have a Material Adverse Effect. The Company is not required
under federal, state, local or foreign law, rule or regulation to obtain any consent, authorization
or order of, or make any filing or registration with, any court or governmental agency in order for
it to execute, deliver or perform any of its obligations under this Agreement, or to issue and sell
the Shares to the Investor in accordance with the terms hereof (other than any filings which may be
required to be made by the Company with the Commission, the Financial Industry Regulatory Authority
(the “FINRA”) or the Trading Market subsequent to the Effective Date, including but not
limited to a Prospectus Supplement under Sections 1.4 and 5.9 of this Agreement, the FINRA Filing
under Section 5.1 of this Agreement and any registration statement, prospectus or prospectus
supplement which has been or may be filed pursuant to this Agreement).

     Section 4.6 Commission Documents, Financial Statements. (a) The Common Stock is
registered pursuant to Section 12(b) or 12(g) of the Exchange Act and, except as disclosed in the
Commission Documents, as of the Effective Date the Company had timely filed (giving effect to
permissible extensions in accordance with Rule 12b-25 under the Exchange Act) all Commission
Documents. The Company has delivered or made available to the Investor via EDGAR or otherwise true
and complete copies of the Commission Documents filed with the Commission prior to the Effective
Date (including, without limitation, the 2007 Form 10-K) and has delivered or made available to the
Investor via EDGAR or otherwise true and complete copies of all of the Commission Documents
heretofore incorporated by reference in the Registration Statement and the Prospectus. The Company
has not provided to the Investor any information which, according to applicable law, rule or
regulation, should have been disclosed publicly by the Company but which has not been so disclosed,
other than with respect to the

11

 

transactions contemplated by this Agreement. As of its filing date, each Commission Document filed
with the Commission and incorporated by reference in the Registration Statement and the Prospectus
(including, without limitation, the 2007 Form 10-K) complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as applicable, and other federal, state and
local laws, rules and regulations applicable to it, and, as of its filing date, such Commission
Document did not contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each Commission Document to be filed
with the Commission after the Effective Date and incorporated by reference in the Registration
Statement, the Prospectus and any Prospectus Supplement required to be filed pursuant to Sections
1.4 and 5.9 hereof during the Investment Period (including, without limitation, the Current
Report), when such document becomes effective or is filed with the Commission, as the case may be,
shall comply in all material respects with the requirements of the Securities Act or the Exchange
Act, as applicable, and other federal, state and local laws, rules and regulations applicable to
it, and shall not contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.

          (b) The financial statements, together with the related notes and schedules, of the Company
included in the Commission Documents comply as to form in all material respects with all applicable
accounting requirements and the published rules and regulations of the Commission and all other
applicable rules and regulations with respect thereto. Such financial statements, together with
the related notes and schedules, have been prepared in accordance with GAAP applied on a consistent
basis during the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim statements, to the extent
they may not include footnotes or may be condensed or summary statements), and fairly present in
all material respects the financial condition of the Company and its consolidated Subsidiaries as
of the dates thereof and the results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit adjustments).

          (c) The Company has timely filed with the Commission and made available to the Investor via
EDGAR or otherwise all certifications and statements required by (x) Rule 13a-14 or Rule 15d-14
under the Exchange Act or (y) 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002
(“SOXA”)) with respect to all relevant Commission Documents. The Company is in compliance
in all material respects with the provisions of SOXA applicable to it as of the date hereof. The
Company maintains disclosure controls and procedures required by Rule 13a-15 or Rule 15d-15 under
the Exchange Act; such controls and procedures are effective to ensure that all material
information concerning the Company and its Subsidiaries is made known on a timely basis to the
individuals responsible for the timely and accurate preparation of the Company’s Commission filings
and other public disclosure documents. As used in this Section 4.6(c), the term “file” shall be
broadly construed to include any manner in which a document or information is furnished, supplied
or otherwise made available to the Commission.

          (d) Ernst & Young LLP, who have expressed their opinions on the audited financial statements
and related schedules included or incorporated by reference in the

12

 

Registration Statement and the Base Prospectus are, with respect to the Company, independent
public accountants as required by the Securities Act and is an independent registered public
accounting firm within the meaning of SOXA as required by the rules of the Public Company
Accounting Oversight Board.

     Section 4.7 Subsidiaries. The Company does not have any Subsidiaries as of the Effective
Date.

     Section 4.8 No Material Adverse Effect. Since December 31, 2007, the Company has not
experienced or suffered any Material Adverse Effect, and there exists no current state of facts,
condition or event which would have a Material Adverse Effect, except (i) as disclosed in any
Commission Documents filed since December 31, 2007 or (ii) continued losses from operations.

     Section 4.9 Indebtedness. The 2007 Form 10-K sets forth, as of December 31, 2007, all
outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the
Company or any Subsidiary has commitments through such date. For the purposes of this Agreement,
“Indebtedness” shall mean (a) any liabilities for borrowed money or amounts owed in excess
of $1,000,000 (other than trade accounts payable incurred in the ordinary course of business), (b)
all guaranties, endorsements, indemnities and other contingent obligations in respect of
Indebtedness of others in excess of $1,000,000, whether or not the same are or should be reflected
in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement of
negotiable instruments for deposit or collection or similar transactions in the ordinary course of
business; and (c) the present value of any lease payments in excess of $1,000,000 due under leases
required to be capitalized in accordance with GAAP. There is no existing or continuing default or
event of default in respect of any Indebtedness of the Company or any of its Subsidiaries.

     Section 4.10 Title To Assets. Each of the Company and its Subsidiaries has good and
marketable title to all of their respective real and personal property reflected in the Commission
Documents, free of mortgages, pledges, charges, liens, security interests or other encumbrances,
except for those indicated in the Commission Documents or those that would not have a Material
Adverse Effect. All real property leases of the Company are valid and subsisting and in full force
and effect in all material respects.

     Section 4.11 Actions Pending. There is no action, suit, claim, investigation or proceeding
pending, or to the knowledge of the Company threatened in writing, against the Company or any
Subsidiary which questions the validity of this Agreement or the transactions contemplated hereby
or any action taken or to be taken pursuant hereto or thereto. Except as set forth in the
Commission Documents, there is no action, suit, claim, investigation or proceeding pending, or to
the knowledge of the Company threatened in writing, against or involving the Company, any
Subsidiary or any of their respective properties or assets, or involving any officers or directors
of the Company or any of its Subsidiaries, including, without limitation, any securities class
action lawsuit or stockholder derivative lawsuit, in each case which, if determined adversely to
the Company, its Subsidiary or any officer or director of the Company or its Subsidiaries, would
have a Material Adverse Effect.

13

 

     Section 4.12 Compliance With Law. The business of the Company and the Subsidiaries has
been and is presently being conducted in compliance with all applicable federal, state, local and
foreign governmental laws, rules, regulations and ordinances, except as set forth in the Commission
Documents and except for such non-compliance which, individually or in the aggregate, would not
have a Material Adverse Effect.

     Section 4.13 Certain Fees. Except for the placement fee payable by the Company to Reedland
Capital Partners, an Institutional Division of Financial West Group, member FINRA/SIPC
(“Reedland”), which shall be set forth in a separate placement agency agreement between the
Company and Reedland (a true and complete fully executed copy of which has heretofore been provided
to the Investor), no brokers, finders or financial advisory fees or commissions shall be payable by
the Company or any Subsidiary (or any of their respective affiliates) with respect to the
transactions contemplated by this Agreement. Except as set forth in this Section 4.13 or as
disclosed in Section 4.13 of the Disclosure Schedule or in the Registration Statement, the
Prospectus or the Current Report, there are no contracts, agreements or understandings between the
Company and any person that would give rise to a valid claim against the Company, the Investor or
the Broker-Dealer for a brokerage commission, finder’s fee or other like payment in connection with
the transactions contemplated by this Agreement or, to the Company’s knowledge, any arrangements,
agreements, understandings, payments or issuance with respect to the Company or any of its
officers, directors, stockholders, partners, employees, Subsidiaries or affiliates that may affect
the FINRA’s determination of the amount of compensation to be received by any FINRA member
(including, without limitation, those FINRA members set forth on Section 4.13 of the Disclosure
Schedule) or person associated with any FINRA member in connection with the transactions
contemplated by this Agreement. Except as set forth in this Section 4.13 or as disclosed in
Section 4.13 of the Disclosure Schedule or in the Registration Statement, the Prospectus or the
Current Report, no “items of value” (within the meaning of Rule 2710 of the NASD Conduct Rules)
have been received, and no arrangements have been entered into for the future receipt of any items
of value, from the Company or any of its officers, directors, stockholders, partners, employees,
Subsidiaries or affiliates by any FINRA member (including, without limitation, those FINRA members
set forth on Section 4.13 of the Disclosure Schedule) or person associated with any FINRA member,
during the period commencing 180 days immediately preceding the Effective Date and ending on the
date this Agreement is terminated in accordance with Article VII, that may affect the FINRA’s
determination of the amount of compensation to be received by any FINRA member or person associated
with any FINRA member in connection with the transactions contemplated by this Agreement. The
Company hereby acknowledges and agrees that the Investor may rely on the representations and
warranties contained in this Section 4.13 and elsewhere in this Agreement in connection with its
preparation of the FINRA Filing.

     Section 4.14 Operation of Business. (a) The Company or one or more of its Subsidiaries
possesses such permits, licenses, approvals, consents and other authorizations (including licenses,
accreditation and other similar documentation or approvals of any local health departments)
(collectively, “Governmental Licenses”) issued by the appropriate federal, state, local or
foreign regulatory agencies or bodies, including, without limitation, the United States Food and
Drug Administration (“FDA”), necessary to conduct the business now operated by it, except
where the failure to possess such Governmental Licenses, individually or in the aggregate, would
not have a Material Adverse Effect. The Company and its Subsidiaries are in

14

 

compliance with the terms and conditions of all such Governmental Licenses and all applicable FDA
rules and regulations, guidelines and policies, and all applicable rules and regulations,
guidelines and policies of any governmental authority exercising authority comparable to that of
the FDA (including any non-governmental authority whose approval or authorization is required under
foreign law comparable to that administered by the FDA), except where the failure to so comply,
individually or in the aggregate, would not have a Material Adverse Effect. All of the
Governmental Licenses are valid and in full force and effect, except where the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be in full force and effect,
individually or in the aggregate, would not have a Material Adverse Effect. As to each product
that is subject to FDA regulation or similar legal provisions in any foreign jurisdiction that is
developed, manufactured, tested, packaged, labeled, marketed, sold, distributed and/or
commercialized by the Company or any of its Subsidiaries, each such product is being developed,
manufactured, tested, packaged, labeled, marketed, sold, distributed and/or commercialized in
compliance with all applicable requirements of the FDA (and any non-governmental authority whose
approval or authorization is required under foreign law comparable to that administered by the
FDA), including, but not limited to, those relating to investigational use, investigational device
exemption, premarket notification, premarket approval, good clinical practices, good manufacturing
practices, record keeping, filing of reports, and patient privacy and medical record security,
except where such non-compliance, individually or in the aggregate, would not have a Material
Adverse Effect. As to each product or product candidate of the Company or any of its Subsidiaries
subject to FDA regulation or similar legal provision in any foreign jurisdiction, all manufacturing
facilities of the Company and its Subsidiaries are operated in compliance with the FDA’s Quality
System Regulation requirements at 21 C.F.R. Part 820, as applicable, except where such
non-compliance, individually or in the aggregate, would not have a Material Adverse Effect. Except
as set forth in the Commission Documents or the Registration Statement, neither the Company nor any
of its Subsidiaries has received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses or relating to a potential violation of, failure to
comply with, or request to produce additional information under, any FDA rules and regulations,
guidelines or policies which, if the subject of any unfavorable decision, ruling or finding,
individually or in the aggregate, would have a Material Adverse Effect. Except as set forth in the
Commission Documents or the Registration Statement, neither the Company nor any of its Subsidiaries
has received any correspondence, notice or request from the FDA, including, without limitation,
notice that any one or more products or product candidates of the Company or any of its
Subsidiaries failed to receive approval from the FDA for use for any one or more indications, and
neither the Company nor any of its Subsidiaries knows of any basis therefor. This Section 4.14
does not relate to environmental matters, such items being the subject of Section 4.15.

          (b) To the Company’s knowledge, the Company or one or more of its Subsidiaries owns or
possesses adequate patents, patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks, trade names, trade dress, logos, copyrights and
other intellectual property, including, without limitation, all of the intellectual property
described in the Commission Documents as being owned or licensed by the Company (collectively,
“Intellectual Property”), necessary to carry on the business now operated by it. Except as
set forth in the Commission Documents, there are no actions, suits or judicial proceedings pending,
or to the Company’s knowledge threatened in writing, relating to patents or

15

 

proprietary information to which the Company or any of its Subsidiaries is a party or of which
any property of the Company or any of its Subsidiaries is subject, and neither the Company nor any
of its Subsidiaries has received any notice or is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any Intellectual Property or of any facts
or circumstances which would render any Intellectual Property invalid or inadequate to protect the
interest of the Company and its Subsidiaries therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or invalidity or inadequacy, individually
or in the aggregate, would have a Material Adverse Effect.

          (c) All pre-clinical and clinical trials conducted by, or on behalf of, the Company or any of
its Subsidiaries, or in which the Company or any of its Subsidiaries has participated that are
described in the Registration Statement or the Commission Documents, or the results of which are
referred to in the Registration Statement or the Commission Documents, if any, are the only
pre-clinical and clinical trials currently being conducted by or on behalf of the Company and its
Subsidiaries. All such pre-clinical and clinical trials conducted, supervised or monitored by, or
on behalf of, the Company or any of its Subsidiaries have been conducted in compliance with all
applicable federal, state, local and foreign laws, and the regulations and requirements of any
applicable governmental entity, including, but not limited to, FDA good clinical practice and good
laboratory practice requirements. Except as set forth in the Registration Statement or the
Commission Documents, neither the Company nor any of its Subsidiaries has received any notices or
correspondence from the FDA or any other governmental agency requiring the termination, suspension,
delay or modification of any pre-clinical or clinical trials conducted by, or on behalf of, the
Company or any of its Subsidiaries or in which the Company or any of its Subsidiaries has
participated that are described in the Registration Statement or the Commission Documents, if any,
or the results of which are referred to in the Registration Statement or the Commission Documents.
All pre-clinical and clinical trials previously conducted by, or on behalf of, the Company or any
of its Subsidiaries while conducted by or on behalf of the Company or any of its Subsidiaries, were
conducted in compliance with all applicable federal, state, local and foreign laws, and the
regulations and requirements of any applicable governmental entity, including, but not limited to,
FDA good clinical practice and good laboratory practice requirements.

     Section 4.15 Environmental Compliance. Except as disclosed in the Commission Documents,
the Company and each of its Subsidiaries have obtained all material approvals, authorization,
certificates, consents, licenses, orders and permits or other similar authorizations of all
governmental authorities, or from any other person, that are required under any Environmental Laws,
except for any approvals, authorization, certificates, consents, licenses, orders and permits or
other similar authorizations the failure of which to obtain does not or would not have a Material
Adverse Effect. “Environmental Laws” shall mean all applicable laws relating to the
protection of the environment including, without limitation, all requirements pertaining to
reporting, licensing, permitting, controlling, investigating or remediating emissions, discharges,
releases or threatened releases of hazardous substances, chemical substances, pollutants,
contaminants or toxic substances, materials or wastes, whether solid, liquid or gaseous in nature,
into the air, surface water, groundwater or land, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of hazardous substances,
chemical substances, pollutants, contaminants or toxic substances, material or wastes, whether
solid, liquid or gaseous in nature. Except for such instances as would not,

16

 

individually or in the aggregate, have a Material Adverse Effect, to the best of the Company’s
knowledge, there are no past or present events, conditions, circumstances, incidents, actions or
omissions relating to or in any way affecting the Company or its Subsidiaries that violate or would
reasonably be expected to violate any Environmental Law after the Effective Date or that would
reasonably be expected to give rise to any environmental liability, or otherwise form the basis of
any claim, action, demand, suit, proceeding, hearing, study or investigation (i) under any
Environmental Law, or (ii) based on or related to the manufacture, processing, distribution, use,
treatment, storage (including without limitation underground storage tanks), disposal, transport or
handling, or the emission, discharge, release or threatened release of any hazardous substance.

     Section 4.16 Material Agreements. Except as set forth in the Commission Documents, neither
the Company nor any Subsidiary of the Company is a party to any written or oral contract,
instrument, agreement commitment, obligation, plan or arrangement, a copy of which would be
required to be filed with the Commission as an exhibit to an annual report on Form 10-K
(collectively, “Material Agreements”). The Company and each of its Subsidiaries have
performed in all material respects all the obligations required to be performed by them under the
Material Agreements, have received no notice of default or an event of default by the Company or
any of its Subsidiaries thereunder and are not aware of any basis for the assertion thereof, and
neither the Company or any of its Subsidiaries nor, to the best knowledge of the Company, any other
contracting party thereto are in default under any Material Agreement now in effect, the result of
which would have a Material Adverse Effect. Each of the Material Agreements is in full force and
effect, and constitutes a legal, valid and binding obligation enforceable in accordance with its
terms against the Company and/or any of its Subsidiaries and, to the best knowledge of the Company,
each other contracting party thereto, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship, receivership or
similar laws relating to, or affecting generally the enforcement of, creditor’s rights and remedies
or by other equitable principles of general application.

     Section 4.17 Transactions With Affiliates. Except as set forth in the Commission
Documents, there are no loans, leases, agreements, contracts, royalty agreements, management
contracts, service arrangements or other continuing transactions exceeding $120,000 between (a) the
Company or any Subsidiary, on the one hand, and (b) any person or entity who would be covered by
Item 404(a) of Regulation S-K, on the other hand. Except as disclosed in the Commission Documents,
there are no outstanding amounts payable to or receivable from, or advances by the Company or any
of its Subsidiaries to, and neither the Company nor any of its Subsidiaries is otherwise a creditor
of or debtor to, any beneficial owner of more than 5% of the outstanding shares of Common Stock, or
any director, employee or affiliate of the Company or any of its Subsidiaries, other than (i)
reimbursement for reasonable expenses incurred on behalf of the Company or any of its Subsidiaries
or (ii) as part of the normal and customary terms of such persons’ employment or service as a
director with the Company or any of its Subsidiaries.

     Section 4.18 Securities Act. The Company has complied with all applicable federal and
state securities laws in connection with the offer, issuance and sale of the Shares hereunder.

          (i) The Company has prepared and filed with the Commission in accordance with the provisions
of the Securities Act the Registration Statement, including a base prospectus

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relating to the Shares. The Registration Statement was declared effective by order of the
Commission on April 16, 2007. As of the date hereof, no stop order suspending the effectiveness of
the Registration Statement has been issued by the Commission or is continuing in effect under the
Securities Act and no proceedings therefor are pending before or, to the Company’s knowledge,
threatened by the Commission. No order preventing or suspending the use of the Prospectus or any
Permitted Free Writing Prospectus has been issued by the Commission.

          (ii) The Company meets the requirements for the use of Form S-3 under the Securities Act. The
Commission has not notified the Company of any objection to the use of the form of the Registration
Statement. The Registration Statement complied in all material respects on the date on which it
was declared effective by the Commission and on the Effective Date of this Agreement, and will
comply in all material respects on each applicable Fixed Request Exercise Date and on each
applicable Settlement Date, with the requirements of the Securities Act and the Registration
Statement (including the documents incorporated by reference therein) did not on the date it was
declared effective by the Commission and on the Effective Date of this Agreement and shall not on
each applicable Fixed Request Exercise Date and on each applicable Settlement Date contain an
untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; provided that this
representation and warranty does not apply to statements in or omissions from the Registration
Statement made in reliance upon and in conformity with information relating to the Investor
furnished to the Company in writing by or on behalf of the Investor expressly for use therein. The
Registration Statement, as of the Effective Date, meets the requirements set forth in Rule
415(a)(1)(x) under the Securities Act. The Base Prospectus complied in all material respects on
its date and on the Effective Date, and will comply in all material respects on each applicable
Fixed Request Exercise Date and, when taken together with the applicable Prospectus Supplement, on
each applicable Settlement Date, with the requirements of the Securities Act and did not on its
date and on the Effective Date and shall not on each applicable Fixed Request Exercise Date and,
when taken together with the applicable Prospectus Supplement, on each applicable Settlement Date
contain an untrue statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided that this representation and warranty does
not apply to statements in or omissions from the Base Prospectus made in reliance upon and in
conformity with information relating to the Investor furnished to the Company in writing by or on
behalf of the Investor expressly for use therein.

          (iii) Each Prospectus Supplement required to be filed pursuant to Sections 1.4 and 5.9 hereof,
when taken together with the Base Prospectus, on its date and on the applicable Settlement Date,
shall comply in all material respects with the provisions of the Securities Act and shall not on
its date and on the applicable Settlement Date contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they are made, not misleading, except that
this representation and warranty does not apply to statements in or omissions from any Prospectus
Supplement made in reliance upon and in conformity with information relating to the Investor
furnished to the Company in writing by or on behalf of the Investor expressly for use therein.

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          (iv) At the earliest time after the filing of the Registration Statement that the Company or
another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) under the
Securities Act) relating to the Shares, the Company was not and is not an Ineligible Issuer (as
defined in Rule 405 under the Securities Act), without taking account of any determination by the
Commission pursuant to Rule 405 that it is not necessary that the Company be considered an
Ineligible Issuer. Each Permitted Free Writing Prospectus (a) shall conform in all material
respects to the requirements of the Securities Act on the date of its first use, (b) when
considered together with the Prospectus on each applicable Fixed Request Exercise Date and on each
applicable Settlement Date, shall not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they are made, not misleading, and (c) shall not include
any information that conflicts with the information contained in the Registration Statement,
including any document incorporated by reference therein and any Prospectus Supplement deemed to be
a part thereof that has not been superseded or modified. The immediately preceding sentence does
not apply to statements in or omissions from any Permitted Free Writing Prospectus made in reliance
upon and in conformity with information relating to the Investor furnished to the Company in
writing by or on behalf of the Investor expressly for use therein.

          (v) Prior to the Effective Date, the Company has not distributed any offering material in
connection with the offering and sale of the Shares. From and after the Effective Date and prior
to the completion of the distribution of the Shares, the Company shall not distribute any offering
material in connection with the offering and sale of the Shares, other than the Registration
Statement, the Base Prospectus as supplemented by any Prospectus Supplement or a Permitted Free
Writing Prospectus.

     Section 4.19 Employees. As of the Effective Date, neither the Company nor any
Subsidiary of the Company has any collective bargaining arrangements or agreements covering any of
its employees, except as set forth in the Commission Documents. As of the Effective Date, except
as disclosed in the Registration Statement or the Commission Documents, no officer, consultant or
key employee of the Company or any Subsidiary whose termination, either individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect, has terminated or, to
the knowledge of the Company, has any present intention of terminating his or her employment or
engagement with the Company or any Subsidiary.

     Section 4.20 Use of Proceeds. The proceeds from the sale of the Shares shall be used by
the Company and its Subsidiaries as set forth in the Base Prospectus and any Prospectus Supplement
filed pursuant to Sections 1.4 and 5.9.

     Section 4.21 Public Utility Holding Company Act and Investment Company Act Status. The
Company is not a “holding company” or a “public utility company” as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended. The Company is not, and as a result of the
consummation of the transactions contemplated by this Agreement and the application of the proceeds
from the sale of the Shares as set forth in the Base Prospectus and any Prospectus Supplement shall
not be, an “investment company” or a company “controlled” by an “investment company,” within the
meaning of the Investment Company Act of 1940, as amended.

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     Section 4.22 ERISA. No liability to the Pension Benefit Guaranty Corporation has been
incurred with respect to any Plan by the Company or any of its Subsidiaries which has had or would
have a Material Adverse Effect. No “prohibited transaction” (as defined in Section 406 of ERISA or
Section 4975 of the Code) or “accumulated funding deficiency” (as defined in Section 203 of ERISA)
or any of the events set forth in Section 4043(b) of ERISA has occurred with respect to any Plan
which has had or would have a Material Adverse Effect, and the execution and delivery of this
Agreement and the issuance and sale of the Shares hereunder shall not result in any of the
foregoing events. Each Plan is in compliance in all material respects with applicable law,
including ERISA and the Code; the Company has not incurred and does not expect to incur liability
under Title IV of ERISA with respect to the termination of, or withdrawal from, any Plan; and each
Plan for which the Company would have any liability that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects and nothing has occurred, whether by
action or failure to act, which would cause the loss of such qualifications. As used in this
Section 4.22, the term “Plan” shall mean an “employee pension benefit plan” (as
defined in Section 3 of ERISA) which is or has been established or maintained, or to which
contributions are or have been made, by the Company or any Subsidiary or by any trade or business,
whether or not incorporated, which, together with the Company or any Subsidiary, is under common
control, as described in Section 414(b) or (c) of the Code.

     Section 4.23 Taxes. The Company (i) has filed all necessary federal, state and foreign
income and franchise tax returns or has duly requested extensions thereof, except for those the
failure of which to file would not have a Material Adverse Effect, (ii) has paid all federal,
state, local and foreign taxes due and payable for which it is liable, except to the extent that
any such taxes are being contested in good faith and by appropriate proceedings, except for such
taxes the failure of which to pay would not have a Material Adverse Effect, and (iii) does not have
any tax deficiency or claims outstanding or assessed or, to the best of the Company’s knowledge,
proposed against it which would have a Material Adverse Effect.

     Section 4.24 Insurance. The Company carries, or is covered by, insurance in such amounts
and covering such risks as the Company reasonably deems adequate for the conduct of its and its
Subsidiaries’ businesses and the value of their respective properties and as is customary for
companies engaged in similar businesses in similar industries.

     Section 4.25 Acknowledgement Regarding Investor’s Purchase of Shares. The Company
acknowledges and agrees that the Investor is acting solely in the capacity of an arm’s length
purchaser with respect to this Agreement and the transactions contemplated hereunder. The Company
further acknowledges that the Investor is not acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to this Agreement and the transactions
contemplated hereunder, and any advice given by the Investor or any of its representatives or
agents in connection with this Agreement and the transactions contemplated hereunder is merely
incidental to the Investor’s purchase of the Shares.

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ARTICLE V

COVENANTS

     The Company covenants with the Investor, and the Investor covenants with the Company, as
follows, which covenants of one party are for the benefit of the other party, during the Investment
Period:

     Section 5.1 Securities Compliance; FINRA Filing.

          (i) The Company shall notify the Commission and the Trading Market, as applicable, in
accordance with their respective rules and regulations, of the transactions contemplated by this
Agreement, and shall take all necessary action, undertake all proceedings and obtain all
registrations, permits, consents and approvals for the legal and valid issuance of the Shares to
the Investor in accordance with the terms of this Agreement.

          (ii) As promptly as practicable, the Company shall (with the Investor’s assistance) prepare
and, no later than 24 hours after the Effective Date, file with the FINRA’s Corporate Financing
Department via CobraDesk all documents and information required to be filed with the FINRA pursuant
to NASD Conduct Rule 2710 of the FINRA with regard to the transactions contemplated by this
Agreement (the “FINRA Filing”). In connection therewith, on the Effective Date, the
Company shall pay to the FINRA by wire transfer of immediately available funds the applicable
filing fee with respect to the FINRA Filing, and the Company shall be solely responsible for
payment of such fee. The parties hereby agree to provide each other all requisite information and
otherwise to assist each other in a timely fashion in order for the Company to complete the
preparation and submission of the FINRA Filing in accordance with this Section 5.1(ii) and to
promptly respond to any inquiries or requests from FINRA or its staff. Each party hereto shall (A)
promptly notify the other party of any communication to that party or its affiliates from the
FINRA, including, without limitation, any request from the FINRA or its staff for amendments or
supplements to or additional information in respect of the FINRA Filing and permit the other party
to review in advance any proposed written communication to the FINRA and (B) furnish the other
party with copies of all written correspondence, filings and communications between them and their
affiliates and their respective representatives and advisors, on the one hand, and the FINRA or
members of its staff, on the other hand, with respect to this Agreement or the transactions
contemplated hereby. Each of the parties hereto agrees to use its commercially reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other party in doing, all things necessary, proper or advisable to obtain as
promptly as practicable (but in no event later than 60 days after the Effective Date) written
confirmation from the FINRA to the effect that the FINRA’s Corporate Financing Department has
determined not to raise any objection with respect to the fairness and reasonableness of the terms
of this Agreement or the transactions contemplated hereby; provided, however, that
the Investor shall have no responsibility for the compliance or non-compliance of any Broker-Dealer
with NASD Rule 2710 and shall not be required to (x) disclose to the FINRA or to any other
governmental agency, person or entity any business, financial or other information that the
Investor deems, in its sole and absolute discretion, to be proprietary, confidential or otherwise
sensitive information, (y) amend, modify or change any of the terms or conditions of this Agreement
or (z) otherwise take any other action, including, without limitation, modifying the Discount Price
thresholds referred to in Section 2.2 or the

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amount of fees and commissions to be paid to the Broker-Dealer in connection with the
transactions contemplated by this Agreement, in each case, in such a manner that would, in the
Investor’s sole and absolute discretion, render the terms and conditions of this Agreement and the
transactions contemplated hereby to be no longer advisable to the Investor. Notwithstanding
anything to the contrary contained in this Agreement, the Company shall not be permitted to deliver
any Fixed Request Notice to the Investor, and the Investor shall not be obligated to purchase any
Shares pursuant to a Fixed Request Notice, unless and until the parties hereto shall have received
written confirmation from the FINRA to the effect that the FINRA’s Corporate Financing Department
has determined not to raise any objection with respect to the fairness and reasonableness of the
terms of this Agreement or the transactions contemplated hereby.

     Section 5.2 Registration and Listing. The Company shall take all action necessary to cause
the Common Stock to continue to be registered as a class of securities under Sections 12(b) or
12(g) of the Exchange Act, shall comply with its reporting and filing obligations under the
Exchange Act, and shall not take any action or file any document (whether or not permitted by the
Securities Act) to terminate or suspend such registration or to terminate or suspend its reporting
and filing obligations under the Exchange Act or Securities Act, except as permitted herein. The
Company shall take all action necessary to continue the listing and trading of its Common Stock and
the listing of the Shares purchased by Investor hereunder on the Trading Market, and shall comply
with the Company’s reporting, filing and other obligations under the bylaws, listed securities
maintenance standards and other rules of the Trading Market.

     Section 5.3 Compliance with Laws.

          (i) The Company shall comply, and cause each Subsidiary to comply, (a) with all laws, rules,
regulations and orders applicable to the business and operations of the Company and its
Subsidiaries except as would not have a Material Adverse Effect and (b) with all applicable
provisions of the Securities Act, the Exchange Act, the rules and regulations of the FINRA and the
listing standards of the Trading Market. Without limiting the generality of the foregoing, neither
the Company nor any of its officers, directors or affiliates has taken or will take, directly or
indirectly, any action designed or intended to stabilize or manipulate the price of any security of
the Company, or which caused or resulted in, or which would in the future reasonably be expected to
cause or result in, stabilization or manipulation of the price of any security of the Company.

          (ii) The Investor shall comply with all laws, rules, regulations and orders applicable to the
performance by it of its obligations under this Agreement and its investment in the Shares, except
as would not, individually or in the aggregate, prohibit or otherwise interfere with the ability of
the Investor to enter into and perform its obligations under this Agreement in any material
respect. Without limiting the foregoing, the Investor shall comply with all applicable provisions
of the Securities Act and the Exchange Act.

     Section 5.4 Keeping of Records and Books of Account; Foreign Corrupt Practices Act.

          (i) The Company shall keep and cause each Subsidiary to keep adequate records and books of
account, in which complete entries shall be made in accordance with

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GAAP consistently applied, reflecting all financial transactions of the Company and its
Subsidiaries, and in which, for each fiscal year, all proper reserves for depreciation, depletion,
obsolescence, amortization, taxes, bad debts and other purposes in connection with its business
shall be made. The Company shall maintain a system of internal accounting controls which are
sufficient to provide reasonable assurance that (a) transactions are executed with management’s
authorization; (b) transactions are recorded as necessary to permit preparation of the consolidated
financial statements of the Company and to maintain accountability for the Company’s consolidated
assets; (c) access to the Company’s assets is permitted only in accordance with management’s
authorization; and (d) the reporting of the Company’s assets is compared with existing assets at
regular intervals.

          (ii) Neither the Company, nor any of its Subsidiaries, nor to the knowledge of the Company,
any of their respective directors, officers, agents, employees or any other persons acting on their
behalf shall, in connection with the operation of the Company’s and its Subsidiaries’ respective
businesses, (a) use any corporate funds for unlawful contributions, payments, gifts or
entertainment or to make any unlawful expenditures relating to political activity to government
officials, candidates or members of political parties or organizations, (b) pay, accept or receive
any unlawful contributions, payments, expenditures or gifts, or (c) violate or operate in
noncompliance with any export restrictions, anti-boycott regulations, embargo regulations or other
applicable domestic or foreign laws and regulations.

          (iii) Subject to the requirements of Section 5.12 of this Agreement, from time to time from
and after the period beginning with the third Trading Day immediately preceding each Fixed Request
Exercise Date through and including the applicable Settlement Date, the Company shall make
available for inspection and review by the Investor, customary documentation allowing the Investor
and/or its appointed counsel or advisors to conduct due diligence.

     Section 5.5 Limitations on Holdings and Issuances. At no time during the term of this
Agreement shall the Investor directly or indirectly own more than 9.9% of the then issued and
outstanding shares of Common Stock. The Company shall not be obligated to issue and the Investor
shall not be obligated to purchase any shares of Common Stock which would result in the issuance
under this Agreement to the Investor at any time of Shares which, when aggregated with all other
shares of Common Stock then owned beneficially by the Investor, would result in the beneficial
ownership by the Investor of more than 9.9% of the then issued and outstanding shares of the Common
Stock.

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     Section 5.6 Other Agreements and Other Financings.

          (i) The Company shall not enter into, announce or recommend to its stockholders any agreement,
plan, arrangement or transaction in or of which the terms thereof would restrict, materially delay,
conflict with or impair the ability or right of the Company or any Subsidiary to perform its
obligations under this Agreement, including, without limitation, the obligation of the Company to
deliver Shares to the Investor in respect of a Fixed Request or Optional Amount on the applicable
Settlement Date.

          (ii) The Company shall notify the Investor, within 48 hours, if it enters into any agreement,
plan, arrangement or transaction with a third party, the principal purpose of which is to obtain
during a Pricing Period an Other Financing not constituting an Acceptable Financing (an “Other
Financing Notice”); provided, however, that the Company shall notify the
Investor immediately (an “Integration Notice”) if it enters into any agreement, plan,
arrangement or transaction with a third party, the principal purpose of which is to obtain at any
time during the Investment Period an Other Financing which may be integrated with the transactions
contemplated by this Agreement for purposes of determining whether approval of the Company’s
stockholders is required under any bylaw, listed securities maintenance standards or other rules of
the Trading Market and, if required under applicable law, including, without limitation, Regulation
FD promulgated by the Commission, or under the applicable rules and regulations of the Trading
Market, the Company shall simultaneously publicly disclose such information in accordance with
Regulation FD and the applicable rules and regulations of the Trading Market. For purposes of this
Section 5.6(ii), any press release issued by, or Commission Document filed by, the Company shall
constitute sufficient notice, provided that it is issued or filed, as the case may be, within the
time requirements set forth in the first sentence of this Section 5.6(ii) for an Other Financing
Notice or an Integration Notice, as applicable. During any Pricing Period in which the Company is
required to provide an Other Financing Notice pursuant to the first sentence of this Section
5.6(ii), the Investor shall (i) have the option to purchase the Shares subject to the Fixed Request
at (x) the price therefor in accordance with the terms of this Agreement or (y) the third party’s
per share purchase price in connection with the Other Financing, net of such third party’s
discounts, Warrant Value and fees, or (ii) the Investor may elect to not purchase any Shares
subject to the Fixed Request for that Pricing Period. An “Other Financing” shall mean (x)
the issuance of Common Stock for a purchase price less than, or the issuance of securities
convertible into or exchangeable for Common Stock at an exercise or conversion price (as the case
may be) less than, the then Current Market Price of the Common Stock (in each case, after all fees,
discounts, Warrant Value and commissions associated with the transaction) (a “Below Market
Offering”); (y) the implementation by the Company of any mechanism in respect of any securities
convertible into or exchangeable for Common Stock for the reset of the purchase price of the Common
Stock to below the then Current Market Price of the Common Stock (including, without limitation,
any antidilution or similar adjustment provisions in respect of any Company securities, but
specifically excluding customary adjustments for stock splits, stock dividends, stock combinations
and similar events); or (z) the issuance of options, warrants or similar rights of subscription in
each case not constituting an Acceptable Financing. “Acceptable Financing” shall mean the
issuance by the Company of: (1) shares of Common Stock or securities convertible into or
exchangeable for Common Stock other than in connection with a Below Market Offering; (2) shares of
Common Stock or securities convertible into or exchangeable for Common Stock in connection with
awards under the

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Company’s benefit and equity plans and arrangements and the issuance of shares of Common Stock
upon the conversion, exercise or exchange thereof; (3) shares of Common Stock issuable upon the
conversion or exchange of equity awards or convertible or exchangeable securities outstanding as of
the Effective Date; (4) shares of Common Stock or securities convertible into or exchangeable for
Common Stock or similar rights to subscribe for the purchase of shares of Common Stock in
connection with technology sharing, licensing, research and joint development agreements (or
amendments thereto) with third parties, and the issuance of shares of Common Stock upon the
conversion, exercise or exchange thereof; and (5) shares of Common Stock and/or warrants or similar
rights to subscribe for the purchase of shares of Common Stock issued in connection with equipment
loan or leasing arrangements and/or real property leasing arrangements and the issuance of shares
of Common Stock upon the exercise thereof.

     Section 5.7 Stop Orders. The Company shall advise the Investor immediately and shall
confirm such advice in writing: (i) of the Company’s receipt of notice of any request by the
Commission for amendment of or a supplement to the Registration Statement, the Prospectus, any
Permitted Free Writing Prospectus or for any additional information; (ii) of the Company’s receipt
of notice of the issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or prohibiting or suspending the use of the Prospectus or any Prospectus
Supplement, or of the suspension of qualification of the Shares for offering or sale in any
jurisdiction, or the initiation or contemplated initiation of any proceeding for such purpose; and
(iii) of the Company becoming aware of the happening of any event, which makes any statement of a
material fact made in the Registration Statement, the Prospectus or any Permitted Free Writing
Prospectus untrue or which requires the making of any additions to or changes to the statements
then made in the Registration Statement, the Prospectus or any Permitted Free Writing Prospectus in
order to state a material fact required by the Securities Act to be stated therein or necessary in
order to make the statements then made therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading, or of the necessity to amend the
Registration Statement or supplement the Prospectus or any Permitted Free Writing Prospectus to
comply with the Securities Act or any other law. The Company shall not be required to disclose to
the Investor the substance or specific reasons of any of the events set forth in clauses (i)
through (iii) of the immediately preceding sentence, only that the event has occurred. The Company
shall not issue any Fixed Request during the continuation of any of the foregoing events. If at any
time the Commission shall issue any stop order suspending the effectiveness of the Registration
Statement or prohibiting or suspending the use of the Prospectus or any Prospectus Supplement, the
Company shall use commercially reasonable efforts to obtain the withdrawal of such order at the
earliest possible time. The Company shall also advise the Investor immediately and shall confirm
such advice in writing of the Company becoming aware of the happening of any event, which makes any
statement made in the FINRA Filing untrue or which requires the making of any additions to or
changes to the statements then made in the FINRA Filing in order to comply with NASD Conduct Rule
2710 of the FINRA.

     Section 5.8 Amendments to the Registration Statement; Prospectus Supplements; Free Writing
Prospectuses.

          (i) Except as provided in this Agreement and other than periodic reports required to be filed
pursuant to the Exchange Act, the Company shall not file with the Commission any amendment to the
Registration Statement that relates to the Investor, the

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Agreement or the transactions contemplated hereby or file with the Commission any Prospectus
Supplement that relates to the Investor, this Agreement or the transactions contemplated hereby
with respect to which (a) the Investor shall not previously have been advised, (b) the Company
shall not have given due consideration to any comments thereon received from the Investor or its
counsel, or (c) the Investor shall reasonably object after being so advised, unless it is necessary
to amend the Registration Statement or make any supplement to the Prospectus to comply with the
Securities Act or any other applicable law or regulation, in which case the Company shall
immediately so inform the Investor, the Investor shall be provided with a reasonable opportunity to
review and comment upon any disclosure relating to the Investor and the Company shall expeditiously
furnish to the Investor an electronic copy thereof. In addition, for so long as, in the reasonable
opinion of counsel for the Investor, the Prospectus (or in lieu thereof, the notice referred to in
Rule 173(a) under the Securities Act) is required to be delivered in connection with any purchase
of Shares by the Investor, the Company shall not file any Prospectus Supplement with respect to the
Shares without delivering or making available a copy of such Prospectus Supplement, together with
the Base Prospectus, to the Investor promptly.

          (ii) The Company agrees that, unless it obtains the prior written consent of the Investor, it
has not made and will not make an offer relating to the Shares that would constitute an Issuer Free
Writing Prospectus or that would otherwise constitute a Free Writing Prospectus required to be
filed by the Company or the Investor with the Commission or retained by the Company or the Investor
under Rule 433 under the Securities Act. The Investor agrees that, unless it obtains the prior
written consent of the Company, it has not made and will not make an offer relating to the Shares
that would constitute a Free Writing Prospectus required to be filed by the Company with the
Commission or retained by the Company under Rule 433 under the Securities Act. Any such Issuer
Free Writing Prospectus or other Free Writing Prospectus consented to by the Investor or the
Company is referred to in this Agreement as a “Permitted Free Writing Prospectus.” The
Company agrees that (x) it has treated and will treat, as the case may be, each Permitted Free
Writing Prospectus as an Issuer Free Writing Prospectus and (y) it has complied and will comply, as
the case may be, with the requirements of Rules 164 and 433 under the Securities Act applicable to
any Permitted Free Writing Prospectus, including in respect of timely filing with the Commission,
legending and record keeping.

     Section 5.9 Prospectus Delivery. The Company shall file with the Commission a Prospectus
Supplement pursuant to Rule 424(b) under the Securities Act on the first Trading Day immediately
following the last Trading Day of each Pricing Period. The Company shall provide the Investor a
reasonable opportunity to comment on a draft of each such Prospectus Supplement and any Issuer Free
Writing Prospectus, shall give due consideration to all such comments and, subject to the
provisions of Section 5.8 hereof, shall deliver or make available to the Investor, without charge,
an electronic copy of each form of Prospectus Supplement, together with the Base Prospectus, and
any Permitted Free Writing Prospectus on each applicable Settlement Date. The Company consents to
the use of the Prospectus (and of any Prospectus Supplement thereto) in accordance with the
provisions of the Securities Act and with the securities or “blue sky” laws of the jurisdictions in
which the Shares may be sold by the Investor, in connection with the offering and sale of the
Shares and for such period of time thereafter as the Prospectus (or in lieu thereof, the notice
referred to in Rule 173(a) under the Securities Act) is required by the Securities Act to be
delivered in connection with sales of the Shares. If during such period of time any event shall
occur that in the judgment of the Company and its counsel is required to be

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set forth in the Registration Statement or the Prospectus or any Permitted Free Writing Prospectus
or should be set forth therein in order to make the statements made therein (in the case of the
Prospectus, in light of the circumstances under which they were made) not misleading, or if it is
necessary to amend the Registration Statement or supplement or amend the Prospectus or any
Permitted Free Writing Prospectus to comply with the Securities Act or any other applicable law or
regulation, the Company shall forthwith prepare and, subject to Section 5.8 above, file with the
Commission an appropriate amendment to the Registration Statement or Prospectus Supplement to the
Prospectus (or supplement to the Permitted Free Writing Prospectus) and shall expeditiously furnish
or make available to the Investor an electronic copy thereof.

     Section 5.10 Selling Restrictions.

          (i) The Investor covenants that from and after the date hereof through and including the
90th day next following the termination of this Agreement (the “Restricted
Period”), neither the Investor nor any of its affiliates (within the meaning of the Exchange
Act) nor any entity managed or controlled by the Investor shall, directly or indirectly, sell any
securities of the Company, except the Shares that it owns or has the right to purchase as provided
in a Fixed Request Notice. During the Restricted Period, neither the Investor or any of its
affiliates nor any entity managed or controlled by the Investor shall sell any shares of Common
Stock of the Company it does not “own” or have the unconditional right to receive under the terms
of this Agreement (within the meaning of Rule 200 of Regulation SHO promulgated by the Commission
under the Exchange Act), including Shares in any account of the Investor or in any account directly
or indirectly managed or controlled by the Investor or any of its affiliates or any entity managed
or controlled by the Investor. Without limiting the generality of the foregoing, prior to and
during the Restricted Period, neither the Investor nor any of its affiliates nor any entity managed
or controlled by the Investor or any of its affiliates shall enter into a short position with
respect to shares of Common Stock of the Company, including in any account of the Investor’s or in
any account directly or indirectly managed or controlled by the Investor or any of its Affiliates
or any entity managed or controlled by the Investor, except that the Investor may sell Shares that
it is obligated to purchase under a pending Fixed Request Notice but has not yet taken possession
of so long as the Investor (or the Broker-Dealer, as applicable) covers any such sales with the
Shares purchased pursuant to such Fixed Request Notice; provided, however, that the
Investor (or the Broker-Dealer, as applicable) shall not be required to cover any such sales with
the Shares purchased pursuant to such Fixed Request Notice if (a) the Fixed Request is terminated
by mutual agreement of the Company and the Investor and, as a result of such termination, no Shares
are delivered to the Investor under this Agreement or (b) the Company otherwise fails to deliver
such Shares to the Investor on the applicable Settlement Date upon the terms and subject to the
provisions of this Agreement. Prior to and during the Restricted Period, the Investor shall not
grant any option to purchase or acquire any right to dispose or otherwise dispose for value of any
shares of Common Stock or any securities convertible into or exercisable or exchangeable for, or
warrants to purchase, any shares of Common Stock, or enter into any swap, hedge or other agreement
that transfers, in whole or in part, the economic risk of ownership of the Common Stock, except for
such sales expressly permitted by this Section 5.10(i).

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          (ii) In addition to the foregoing, in connection with any sale of the Company’s securities
(including any sale permitted by paragraph (i) above), the Investor shall comply in all respects
with all applicable laws, rules, regulations and orders, including, without limitation, the
requirements of the Securities Act and the Exchange Act.

     Section 5.11 Effective Registration Statement. During the Investment Period, the Company
shall use its best efforts to maintain the continuous effectiveness of the Registration Statement
under the Securities Act.

     Section 5.12 Non-Public Information. Neither the Company nor any of its directors,
officers or agents shall disclose any material non-public information about the Company to the
Investor, unless a simultaneous public announcement thereof is made by the Company in the manner
contemplated by Regulation FD.

     Section 5.13 Broker/Dealer. The Investor shall use one or more broker-dealers to
effectuate all sales, if any, of the Shares that it may purchase from the Company pursuant to this
Agreement which (or whom) shall be unaffiliated with the Investor and not then currently engaged or
used by the Company (collectively, the “Broker-Dealer”). The Investor shall provide the
Company with all information regarding the Broker-Dealer reasonably requested by the Company. The
Investor shall be solely responsible for all fees and commissions of the Broker-Dealer.

     Section 5.14 Update of Disclosure Schedule. During the Investment Period, the Company
shall from time to time update the Disclosure Schedule as may be required to satisfy the condition
set forth in Section 6.3(i). For purposes of this Section 5.14, any disclosure made in a schedule
to the Compliance Certificate substantially in the form attached hereto as Exhibit D shall
be deemed to be an update of the Disclosure Schedule. Notwithstanding anything in this Agreement
to the contrary, no update to the Disclosure Schedule pursuant to this Section 5.14 shall cure any
breach of a representation or warranty of the Company contained in this Agreement and shall not
affect any of the Investor’s rights or remedies with respect thereto.

ARTICLE VI

OPINION OF COUNSEL AND CERTIFICATE; CONDITIONS TO THE SALE AND

PURCHASE OF THE SHARES

     Section 6.1 Opinion of Counsel and Certificate. Simultaneously with the execution and
delivery of this Agreement, the Investor has received and relied upon (i) an opinion of outside
counsel to the Company, dated the Effective Date, in the form mutually agreed to by the parties
hereto, and (ii) a certificate from the Company, dated the Effective Date, in the form of
Exhibit C hereto.

     Section 6.2 Conditions Precedent to the Obligation of the Company. The obligation
hereunder of the Company to issue and sell the Shares to the Investor under any Fixed Request or
Optional Amount is subject to the satisfaction or (to the extent permitted by applicable law)
waiver of each of the conditions set forth below. These conditions are for the Company’s sole
benefit and (to the extent permitted by applicable law) may be waived by the Company at any time in
its sole discretion.

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          (i) Accuracy of the Investor’s Representations and Warranties. The representations
and warranties of the Investor contained in this Agreement (i) that are not qualified by
“materiality” shall have been true and correct in all material respects when made and shall be true
and correct in all material respects as of the applicable Fixed Request Exercise Date and the
applicable Settlement Date with the same force and effect as if made on such dates, except to the
extent such representations and warranties are as of another date, in which case, such
representations and warranties shall be true and correct in all material respects as of such other
date and (ii) that are qualified by “materiality” shall have been true and correct when made and
shall be true and correct as of the applicable Fixed Request Exercise Date and the applicable
Settlement Date with the same force and effect as if made on such dates, except to the extent such
representations and warranties are as of another date, in which case, such representations and
warranties shall be true and correct as of such other date.

          (ii) Registration Statement. The Registration Statement is effective and neither the
Company nor the Investor shall have received notice that the Commission has issued or intends to
issue a stop order with respect to the Registration Statement. The Company shall have a maximum
dollar amount certain of Shares registered under the Registration Statement which are in an amount
(A) as of the Effective Date, not less than the Total Commitment and (B) as of the applicable Fixed
Request Exercise Date, not less than the maximum dollar amount worth of Shares issuable pursuant to
the applicable Fixed Request Notice and applicable Optional Amount, if any. The Current Report
shall have been filed with the Commission, as required pursuant to Section 1.4, and all Prospectus
Supplements shall have been filed with the Commission, as required pursuant to Sections 1.4 and 5.9
hereof, to disclose the sale of the Shares prior to each Settlement Date, as applicable. Any other
material required to be filed by the Company or any other offering participant pursuant to Rule
433(d) under the Securities Act shall have been filed with the Commission within the applicable
time periods prescribed for such filings by Rule 433 under the Securities Act.

          (iii) Performance by the Investor. The Investor shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Investor at or prior to the applicable
Fixed Request Exercise Date and the applicable Settlement Date.

          (iv) No Injunction. No statute, regulation, order, decree, writ, ruling or injunction
shall have been enacted, entered, promulgated, threatened or endorsed by any court or governmental
authority of competent jurisdiction which prohibits the consummation of or which would materially
modify or delay any of the transactions contemplated by this Agreement.

          (v) No Suspension, Etc. Trading in the Common Stock shall not have been suspended by
the Commission or the Trading Market (except for any suspension of trading of limited duration
agreed to by the Company, which suspension shall be terminated prior to the applicable Fixed
Request Exercise Date and applicable Settlement Date), and, at any time prior to the applicable
Fixed Request Exercise Date and applicable Settlement Date, none of the events described in clauses
(i), (ii) and (iii) or the last sentence of Section 5.7 shall have occurred, trading in securities
generally as reported on the Trading Market shall not have been suspended or limited, nor shall a
banking moratorium have been declared either by the United States or New York State authorities,
nor shall there have occurred any material outbreak or escalation of

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hostilities or other national or international calamity or crisis of such magnitude in its
effect on, or any material adverse change in, any financial market which, in each case, in the
reasonable judgment of the Company, makes it impracticable or inadvisable to issue the Shares.

          (vi) No Proceedings or Litigation. No action, suit or proceeding before any
arbitrator or any court or governmental authority shall have been commenced or threatened, and no
inquiry or investigation by any governmental authority shall have been commenced or threatened,
against the Company or any Subsidiary, or any of the officers, directors or affiliates of the
Company or any Subsidiary, seeking to restrain, prevent or change the transactions contemplated by
this Agreement, or seeking damages in connection with such transactions.

          (vii) Aggregate Limit. The issuance and sale of the Shares issuable pursuant to such
Fixed Request Notice or Optional Amount shall not violate Sections 2.2, 2.12 and 5.5 hereof.

          (viii) No Unresolved FINRA Objection. There shall not exist any unresolved objection
raised by the FINRA’s Corporate Financing Department with respect to the fairness and
reasonableness of the terms of this Agreement or the transactions contemplated hereby, and the
parties hereto shall have obtained written confirmation thereof from the FINRA.

     Section 6.3 Conditions Precedent to the Obligation of the Investor. The obligation
hereunder of the Investor to accept a Fixed Request Notice or Optional Amount grant and to acquire
and pay for the Shares is subject to the satisfaction or (to the extent permitted by applicable
law) waiver, at or before each Fixed Request Exercise Date and each Settlement Date, of each of the
conditions set forth below. These conditions are for the Investor’s sole benefit and (to the extent
permitted by applicable law) may be waived by the Investor at any time in its sole discretion.

          (i) Accuracy of the Company’s Representations and Warranties. The representations and
warranties of the Company contained in this Agreement (i) that are not qualified by “materiality”
or “Material Adverse Effect” shall have been true and correct in all material respects when made
and shall be true and correct in all material respects as of the applicable Fixed Request Exercise
Date and the applicable Settlement Date with the same force and effect as if made on such dates,
except to the extent such representations and warranties are as of another date, in which case,
such representations and warranties shall be true and correct in all material respects as of such
other date and (ii) that are qualified by “materiality” or “Material Adverse Effect” shall have
been true and correct when made and shall be true and correct as of the applicable Fixed Request
Exercise Date and the applicable Settlement Date with the same force and effect as if made on such
dates, except to the extent such representations and warranties are as of another date, in which
case, such representations and warranties shall be true and correct as of such other date.

          (ii) Registration Statement. The Registration Statement is effective and neither the
Company nor the Investor shall have received notice that the Commission has issued or intends to
issue a stop order with respect to the Registration Statement. The Company shall have a maximum
dollar amount certain of Shares registered under the Registration Statement which are in an amount
(A) as of the Effective Date, not less than the Total Commitment and (B)

30

 

as of the applicable Fixed Request Exercise Date, not less than the maximum dollar amount
worth of Shares issuable pursuant to the applicable Fixed Request Notice and applicable Optional
Amount, if any. The Current Report shall have been filed with the Commission, as required pursuant
to Section 1.4, and all Prospectus Supplements shall have been filed with the Commission, as
required pursuant to Sections 1.4 and 5.9 hereof, to disclose the sale of the Shares prior to each
Settlement Date, as applicable, and an electronic copy of each such Prospectus Supplement together
with the Base Prospectus shall have been delivered or made available to the Investor in accordance
with Section 5.9 hereof. Any other material required to be filed by the Company or any other
offering participant pursuant to Rule 433(d) under the Securities Act shall have been filed with
the Commission within the applicable time periods prescribed for such filings by Rule 433 under the
Securities Act.

          (iii) No Suspension. Trading in the Common Stock shall not have been suspended by the
Commission or the Trading Market (except for any suspension of trading of limited duration agreed
to by the Company, which suspension shall be terminated prior to the applicable Fixed Request
Exercise Date and applicable Settlement Date), and, at any time prior to the applicable Fixed
Request Exercise Date and applicable Settlement Date, none of the events described in clauses (i),
(ii) and (iii) or the last sentence of Section 5.7 shall have occurred, trading in securities
generally as reported on the Trading Market shall not have been suspended or limited, nor shall a
banking moratorium have been declared either by the United States or New York State authorities,
nor shall there have occurred any material outbreak or escalation of hostilities or other national
or international calamity or crisis of such magnitude in its effect on, or any material adverse
change in, any financial market which, in each case, in the reasonable judgment of the Investor,
makes it impracticable or inadvisable to purchase the Shares.

          (iv) Performance of the Company. The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Company at or prior to the applicable
Fixed Request Exercise Date and the applicable Settlement Date and shall have delivered to the
Investor on the applicable Settlement Date the Compliance Certificate substantially in the form
attached hereto as Exhibit D.

          (v) No Injunction. No statute, rule, regulation, order, decree, writ, ruling or
injunction shall have been enacted, entered, promulgated, threatened or endorsed by any court or
governmental authority of competent jurisdiction which prohibits the consummation of or which would
materially modify or delay any of the transactions contemplated by this Agreement.

          (vi) No Proceedings or Litigation. No action, suit or proceeding before any
arbitrator or any court or governmental authority shall have been commenced or threatened, and no
inquiry or investigation by any governmental authority shall have been commenced or threatened,
against the Company or any Subsidiary, or any of the officers, directors or affiliates of the
Company or any Subsidiary, seeking to restrain, prevent or change the transactions contemplated by
this Agreement, or seeking damages in connection with such transactions.

          (vii) Aggregate Limit. The issuance and sale of the Shares issuable pursuant to such
Fixed Request Notice or Optional Amount shall not violate Sections 2.2, 2.12 and 5.5 hereof.

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          (viii) Shares Authorized. The Shares issuable pursuant to such Fixed Request Notice
or Optional Amount shall have been duly authorized by all necessary corporate action of the
Company.

          (ix) Notification of Listing of Shares. If required, the Company shall have submitted
to the Trading Market a notification form of listing of additional shares related to the Shares
issuable pursuant to such Fixed Request or Optional Amount in accordance with the bylaws, listed
securities maintenance standards and other rules of the Trading Market.

          (x) Opinions of Counsel; Bring-Down. Subsequent to the filing of the Current Report
pursuant to Section 1.4 and prior to the first Fixed Request Exercise Date, the Investor shall have
received an opinion from outside counsel to the Company in the form mutually agreed to by the
parties hereto. On each Settlement Date, the Investor shall have received an opinion “bring down”
from outside counsel to the Company in the form mutually agreed to by the parties hereto.

          (xi) No Unresolved FINRA Objection. There shall not exist any unresolved objection
raised by the FINRA’s Corporate Financing Department with respect to the fairness and
reasonableness of the terms of this Agreement or the transactions contemplated hereby, and the
parties hereto shall have obtained written confirmation thereof from the FINRA.

          (xii) Payment of Investor’s Counsel Fees; Due Diligence Expenses. On the Effective
Date, the Company shall have paid by wire transfer of immediately available funds to an account
designated by the Investor’s counsel, the fees and expenses of the Investor’s counsel in accordance
with clause (B) of the proviso to the first sentence of Section 9.1(i) of this Agreement. On the
30th day of the third month in each calendar quarter during the Investment Period, the
Company shall have paid by wire transfer of immediately available funds to an account designated by
the Investor, the due diligence expenses incurred by the Investor in accordance with the provisions
of the second sentence of Section 9.1(i) of this Agreement.

ARTICLE VII

TERMINATION

     Section 7.1 Term, Termination by Mutual Consent. Unless earlier terminated as provided
hereunder, this Agreement shall terminate automatically on the earliest of (i) the first day of the
month next following the 24-month anniversary of the Effective Date (the “Investment
Period”), (ii) the date that the entire dollar amount of Shares registered under the
Registration Statement have been issued and sold and (iii) the date the Investor shall have
purchased the Total Commitment of shares of Common Stock (subject in all cases to the Trading
Market Limit). The Company may terminate this Agreement effective upon three Trading Days’ prior
written notice to the Investor under Section 9.4; provided, however, that such
termination shall not occur during a Pricing Period or prior to a Settlement Date. This Agreement
may be terminated at any time (A) by the mutual written consent of the parties, effective as of the
date of such mutual written consent unless otherwise provided in such written consent, it being
hereby acknowledged and agreed that the Investor may not consent to such termination during a
Pricing Period or prior to a Settlement Date in the event the Investor has instructed the
Broker-Dealer to effect an open-market sale of Shares which are subject to a pending Fixed Request
Notice but which have not

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yet been physically delivered by the Company (and/or credited by book-entry) to the Investor in
accordance with the terms and subject to the conditions of this Agreement, or (B) by either the
Company or the Investor effective upon written notice to the other party under Section 9.4, if the
FINRA’s Corporate Financing Department has raised any objection with respect to the fairness and
reasonableness of the terms of this Agreement or the transactions contemplated hereby, or has
otherwise failed to confirm in writing that it has determined not to raise any such objection, and
such objection shall not have been resolved, or such confirmation of no objection shall not have
been obtained, prior to (1) the 60th day immediately following the Effective Date, in
the case of an objection raised or confirmation failure occurring prior to the first Fixed Request
Exercise Date, or (2) prior to the 60th day immediately following the receipt by the
Company or the Investor of notice of such objection, in the case of an objection raised after the
first Fixed Request Exercise Date; provided however, that (x) the party seeking to
terminate this Agreement pursuant to this clause (B) of Section 7.1 shall have used its
commercially reasonable efforts to resolve such objection and/or to obtain such confirmation of no
objection in accordance with and subject to the provisions of Section 5.1(ii) of this Agreement and
(y) the right to terminate this Agreement pursuant to this clause (B) of Section 7.1 shall not be
available to any party whose action or failure to act has been a principal cause of, or has
resulted in, such objection or confirmation failure and such action or failure to act constitutes a
breach of this Agreement.

     Section 7.2 Other Termination. If the Company provides the Investor with an Other
Financing Notice (other than in respect of an underwritten public offering of equity securities of
the Company or a registered direct public offering of equity securities of the Company) or an
Integration Notice, in each case pursuant to Section 5.6(ii) of this Agreement, or if the Company
otherwise enters into any agreement, plan, arrangement or transaction with a third party, the
principal purpose of which is to obtain outside a Pricing Period, but otherwise during the
Investment Period, an Other Financing not constituting an Acceptable Financing (other than in
respect of an underwritten public offering of equity securities of the Company or a registered
direct public offering of equity securities of the Company), in which latter case the Company shall
so notify the Investor within 48 hours thereof, then in all such cases the Investor shall have the
right to terminate this Agreement within the subsequent 30-day period (the “Event Period”),
effective upon one Trading Day’s prior written notice delivered to the Company in accordance with
Section 9.4 at any time during the Event Period. The Company shall immediately notify the Investor
(and, if required under applicable law, including, without limitation, Regulation FD promulgated by
the Commission, or under the applicable rules and regulations of the Trading Market, the Company
shall simultaneously publicly disclose such information in accordance with Regulation FD and the
applicable rules and regulations of the Trading Market), and the Investor shall have the right to
terminate this Agreement at any time after receipt of such notification, if: (i) any condition,
occurrence, state of facts or event constituting a Material Adverse Effect has occurred; (ii) a
Material Change in Ownership has occurred or the Company enters into a definitive agreement
providing for a Material Change in Ownership; or (iii) a default or event of default has occurred
and is continuing under the terms of any agreement, contract, note or other instrument to which the
Company or any of its Subsidiaries is a party with respect to any indebtedness for borrowed money
representing more than 10% of the Company’s consolidated assets, in any such case, upon one Trading
Day’s prior written notice delivered to the Company in accordance with Section 9.4 hereof.

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     Section 7.3 Effect of Termination. In the event of termination by the Company or the
Investor, written notice thereof shall forthwith be given to the other party as provided in Section
9.4 and the transactions contemplated by this Agreement shall be terminated without further action
by either party. If this Agreement is terminated as provided in Section 7.1 or 7.2 herein, this
Agreement shall become void and of no further force and effect, except as provided in Section 9.9
hereof. Nothing in this Section 7.3 shall be deemed to release the Company or the Investor from any
liability for any breach under this Agreement, or to impair the rights of the Company and the
Investor to compel specific performance by the other party of its obligations under this Agreement.

ARTICLE VIII

INDEMNIFICATION

     Section 8.1 General Indemnity.

          (i) Indemnification by the Company. The Company shall indemnify and hold harmless the
Investor, the Broker-Dealer, each affiliate, employee, representative and advisor of and to the
Investor and the Broker-Dealer, and each person, if any, who controls the Investor or the
Broker-Dealer within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act from and against all losses, claims, damages, liabilities and expenses (including
reasonable costs of defense and investigation and all attorneys’ fees) to which the Investor, the
Broker-Dealer and each such other person may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages, liabilities and expenses (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material
fact contained, or incorporated by reference, in the Registration Statement or any amendment
thereto or any omission or alleged omission to state therein, or in any document incorporated by
reference therein, a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (ii) any untrue statement or alleged untrue statement of a
material fact contained, or incorporated by reference, in the Prospectus, any Issuer Free Writing
Prospectus, or in any amendment thereof or supplement thereto, or in any “issuer information” (as
defined in Rule 433 under the Securities Act) of the Company, which “issuer information” is
required to be, or is, filed with the Commission or otherwise contained in any Free Writing
Prospectus, or any amendment or supplement thereto, or any omission or alleged omission to state
therein, or in any document incorporated by reference therein, a material fact required to be
stated therein or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that (A) the Company shall
not be liable under this Section 8.1(i) to the extent that a court of competent jurisdiction shall
have determined by a final judgment (from which no further appeals are available) that such loss,
claim, damage, liability or expense resulting directly and solely from any such acts or failures to
act, undertaken or omitted to be taken by the Investor or such person through its bad faith or
willful misconduct, (B) the foregoing indemnity shall not apply to any loss, claim, damage,
liability or expense to the extent, but only to the extent, arising out of or based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company by the Investor expressly for use in
the Current Report or any Prospectus Supplement or Permitted Free Writing Prospectus, or any
amendment thereof or supplement thereto, and (C) with respect to the Prospectus, the foregoing
indemnity shall not inure to the benefit of the Investor or any

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such person from whom the person asserting any loss, claim, damage, liability or expense
purchased Common Stock, if copies of all Prospectus Supplements required to be filed pursuant to
Section 1.4 and 5.9, together with the Base Prospectus, were timely delivered or made available to
the Investor pursuant hereto and a copy of the Base Prospectus, together with a Prospectus
Supplement (as applicable), was not sent or given by or on behalf of the Investor or any such
person to such person, if required by law to have been delivered, at or prior to the written
confirmation of the sale of the Common Stock to such person, and if delivery of the Base
Prospectus, together with a Prospectus Supplement (as applicable), would have cured the defect
giving rise to such loss, claim, damage, liability or expense.

     The Company shall reimburse the Investor, the Broker-Dealer and each such controlling person
promptly upon demand (with accompanying presentation of documentary evidence) for all legal and
other costs and expenses reasonably incurred by the Investor, the Broker-Dealer or such indemnified
persons in investigating, defending against, or preparing to defend against any such claim, action,
suit or proceeding with respect to which it is entitled to indemnification.

          (ii) Indemnification by the Investor. The Investor shall indemnify and hold harmless
the Company, each of its directors and officers, and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act from
and against all losses, claims, damages, liabilities and expenses (including reasonable costs of
defense and investigation and all attorneys fees) to which the Company and each such other person
may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities and expenses (or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the Current Report or any
Prospectus Supplement or Permitted Free Writing Prospectus, or in any amendment thereof or
supplement thereto, or any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, in each case, to the extent, but only to the extent,
the untrue statement, alleged untrue statement, omission or alleged omission was made in reliance
upon, and in conformity with, written information furnished by the Investor to the Company
expressly for inclusion in the Current Report or such Prospectus Supplement or Permitted Free
Writing Prospectus, or any amendment thereof or supplement thereto.

     The Investor shall reimburse the Company and each such director, officer or controlling person
promptly upon demand for all legal and other costs and expenses reasonably incurred by the Company
or such indemnified persons in investigating, defending against, or preparing to defend against any
such claim, action, suit or proceeding with respect to which it is entitled to indemnification.

     Section 8.2 Indemnification Procedures. Promptly after a person receives notice of a claim
or the commencement of an action for which the person intends to seek indemnification under Section
8.1, the person will notify the indemnifying party in writing of the claim or commencement of the
action, suit or proceeding; provided, however, that failure to notify the
indemnifying party will not relieve the indemnifying party from liability under Section 8.1, except
to the extent it has been materially prejudiced by the failure to give notice. The indemnifying
party will be entitled to participate in the defense of any claim, action, suit or

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proceeding as to which indemnification is being sought, and if the indemnifying party acknowledges
in writing the obligation to indemnify the party against whom the claim or action is brought, the
indemnifying party may (but will not be required to) assume the defense against the claim, action,
suit or proceeding with counsel satisfactory to it. After an indemnifying party notifies an
indemnified party that the indemnifying party wishes to assume the defense of a claim, action, suit
or proceeding, the indemnifying party will not be liable for any legal or other expenses incurred
by the indemnified party in connection with the defense against the claim, action, suit or
proceeding except that if, in the opinion of counsel to the indemnifying party, one or more of the
indemnified parties should be separately represented in connection with a claim, action, suit or
proceeding, the indemnifying party will pay the reasonable fees and expenses of one separate
counsel for the indemnified parties. Each indemnified party, as a condition to receiving
indemnification as provided in Section 8.1, will cooperate in all reasonable respects with the
indemnifying party in the defense of any action or claim as to which indemnification is sought. No
indemnifying party will be liable for any settlement of any action effected without its prior
written consent. Notwithstanding the foregoing sentence, if at any time an indemnified party shall
have requested (by written notice provided in accordance with Section 9.4) an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees
that it shall be liable for any settlement of the nature contemplated hereby effected without its
written consent if (i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received
written notice of the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement. No indemnifying party will,
without the prior written consent of the indemnified party, effect any settlement of a pending or
threatened action with respect to which an indemnified party is, or is informed that it may be,
made a party and for which it would be entitled to indemnification, unless the settlement includes
an unconditional release of the indemnified party from all liability and claims which are the
subject matter of the pending or threatened action.

     If for any reason the indemnification provided for in this Agreement is not available to, or
is not sufficient to hold harmless, an indemnified party in respect of any loss or liability
referred to in Section 8.1 as to which such indemnified party is entitled to indemnification
thereunder, each indemnifying party shall, in lieu of indemnifying the indemnified party,
contribute to the amount paid or payable by the indemnified party as a result of such loss or
liability, (i) in the proportion which is appropriate to reflect the relative benefits received by
the indemnifying party, on the one hand, and by the indemnified party, on the other hand, from the
sale of Shares which is the subject of the claim, action, suit or proceeding which resulted in the
loss or liability or (ii) if the allocation provided by clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative benefits referred to in
clause (i) above, but also the relative fault of the indemnifying party, on the one hand, and the
indemnified party, on the other hand, with respect to the statements or omissions which are the
subject of the claim, action, suit or proceeding that resulted in the loss or liability, as well as
any other relevant equitable considerations.

     The remedies provided for in Section 8.1 and this Section 8.2 are not exclusive and shall not
limit any rights or remedies which may otherwise be available to any Indemnified Person at law or
in equity.

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ARTICLE IX

MISCELLANEOUS

     Section 9.1 Fees and Expenses.

          (i) Each party shall bear its own fees and expenses related to the transactions contemplated
by this Agreement; provided, however, that the Company shall pay, on the Effective
Date, by wire transfer of immediately available funds (A) to the FINRA, the applicable filing fee
with respect to the FINRA Filing and (B) to an account designated by the Investor’s counsel,
promptly following the receipt of an invoice therefor, all reasonable attorneys’ fees and expenses
(exclusive of disbursements and out-of-pocket expenses) incurred by the Investor, up to an
aggregate of $35,000, in connection with the preparation, negotiation, execution and delivery of
this Agreement, legal due diligence of the Company and review of the Registration Statement, the
Base Prospectus, the Current Report, any Permitted Free Writing Prospectus and all other related
transaction documentation. In addition, the Company shall pay, on the 30th day of the
third month in each calendar quarter during the Investment Period, promptly following the receipt
of an invoice therefor, up to an aggregate of $12,500, representing the due diligence expenses
incurred by the Investor during the Investment Period and expenses relating to the Investor’s
review of Prospectus Supplements, Permitted Free Writing Prospectuses, opinion “bring downs” and
all other related documents to be delivered by the Company and its counsel in connection with a
Fixed Request Exercise Date and the applicable Settlement Date. The Company shall pay all U.S.
federal, state and local stamp and other similar transfer and other taxes and duties levied in
connection with issuance of the Shares pursuant hereto.

          (ii) If the Company issues a Fixed Request Notice and fails to deliver the Shares to the
Investor on the applicable Settlement Date and such failure continues for 10 Trading Days, the
Company shall pay the Investor, in cash (or, at the option of the Investor, in shares of Common
Stock which have not been registered under the Securities Act), as liquidated damages for such
failure and not as a penalty, an amount equal to 2.0% of the payment required to be paid by the
Investor on such Settlement Date (i.e., the sum of the Fixed Amount Requested and the Optional
Amount Dollar Amount) for the initial 30 days following such Settlement Date until the Shares have
been delivered, and an additional 2.0% for each additional 30-day period thereafter until the
Shares have been delivered, which amount shall be prorated for such periods less than thirty 30
days (subject in all cases to the Trading Market Limit).

     Section 9.2 Specific Enforcement, Consent to Jurisdiction, Waiver of Jury Trial.

          (i) The Company and the Investor acknowledge and agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that either party shall be
entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this
Agreement by the other party and to enforce specifically the terms and provisions hereof this being
in addition to any other remedy to which either party may be entitled by law or equity.

          (ii) Each of the Company and the Investor (a) hereby irrevocably submits to the jurisdiction
of the United States District Court and other courts of the United States sitting in

37

 

the State of Delaware for the purposes of any suit, action or proceeding arising out of or
relating to this Agreement, and (b) hereby waives, and agrees not to assert in any such suit,
action or proceeding, any claim that it is not personally subject to the jurisdiction of such
court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. Each of the Company and the Investor consents to
process being served in any such suit, action or proceeding by mailing a copy thereof to such party
at the address in effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing in this Section 9.2
shall affect or limit any right to serve process in any other manner permitted by law.

          (iii) Each of the Company and the Investor hereby waives to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in respect to any litigation directly or
indirectly arising out of, under or in connection with this Agreement or the transactions
contemplated hereby or disputes relating hereto. Each of the Company and the Investor (a) certifies
that no representative, agent or attorney of any other party has represented, expressly or
otherwise, that such other party would not, in the event of litigation, seek to enforce the
foregoing waiver and (b) acknowledges that it and the other parties hereto have been induced to
enter into this Agreement by, among other things, the mutual waivers and certifications in this
Section 9.2.

     Section 9.3 Entire Agreement; Amendment. This Agreement, together with the exhibits
referred to herein and the Disclosure Schedule, represents the entire agreement of the parties with
respect to the subject matter hereof, and there are no promises, undertakings, representations or
warranties by either party relative to subject matter hereof not expressly set forth herein. No
provision of this Agreement may be amended other than by a written instrument signed by both
parties hereto. The Disclosure Schedule and all exhibits to this Agreement are hereby incorporated
by reference in, and made a part of, this Agreement as if set forth in full herein.

     Section 9.4 Notices. Any notice, demand, request, waiver or other communication required
or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand
delivery or facsimile (with facsimile machine confirmation of delivery received) at the address or
number designated below (if delivered on a business day during normal business hours where such
notice is to be received), or the first business day following such delivery (if delivered other
than on a business day during normal business hours where such notice is to be received) or (b) on
the second business day following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The
address for such communications shall be:

	 	 	 	 	 
	 

	 	If to the Company:
	 	Alexza Pharmaceuticals, Inc.
	 

	 	 	 	2091 Stierlin Court
	 

	 	 	 	Mountain View, California 94043
	 

	 	 	 	Telephone Number: (650) 944-7000
	 

	 	 	 	Fax: (650) 944-7988
	 

	 	 	 	Attention: August Moretti

38

 

	 	 	 	 	 
	 

	 	With copies to:
	 	Cooley Godward Kronish LLP
	 

	 	 	 	380 Interlocken Crescent, Suite 900
	 

	 	 	 	Broomfield, Colorado 80021
	 

	 	 	 	Telephone Number: (720) 566-4000
	 

	 	 	 	Fax: (720) 566-4099
	 

	 	 	 	Attention: James C.T. Linfield, Esq.
	 

	 	 	 	                   Brent D. Fassett, Esq.
	 
	 	 	 	 
	 

	 	If to the Investor:
	 	 Azimuth Opportunity Ltd.
	 

	 	 	 	c/o Fortis Prime Fund Solutions (BVI) Limited
	 

	 	 	 	P.O. Box 761, 1st Floor
	 

	 	 	 	James Frett Building
	 

	 	 	 	Road Town, Tortola
	 

	 	 	 	British Virgin Islands
	 

	 	 	 	Telephone Number: (284) 494-6046
	 

	 	 	 	Fax: (284) 494-6898
	 

	 	 	 	Attention: Becky McGinnis
	 
	 	 	 	 
	 

	 	With copies to:
	 	Greenberg Traurig, LLP
	 

	 	 	 	The MetLife Building
	 

	 	 	 	200 Park Avenue
	 

	 	 	 	New York, NY 10166
	 

	 	 	 	Telephone Number: (212) 801-9200

Fax: (212) 801-6400
	 

	 	 	 	Attention:  Clifford E. Neimeth, Esq.
	 

	 	 	 	                   Anthony J. Marsico, Esq.

Either party hereto may from time to time change its address for notices by giving at least 10 days
advance written notice of such changed address to the other party hereto.

     Section 9.5 Waivers. No waiver by either party of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in
the future or a waiver of any other provisions, condition or requirement hereof nor shall any delay
or omission of any party to exercise any right hereunder in any manner impair the exercise of any
such right accruing to it thereafter. No provision of this Agreement may be waived other than in a
written instrument signed by the party against whom enforcement of such waiver is sought.

     Section 9.6 Headings. The article, section and subsection headings in this Agreement are
for convenience only and shall not constitute a part of this Agreement for any other purpose and
shall not be deemed to limit or affect any of the provisions hereof.

     Section 9.7 Successors and Assigns. The Investor may not assign this Agreement to any
person without the prior consent of the Company, in the Company’s sole discretion. This Agreement
shall be binding upon and inure to the benefit of the parties and their successors and assigns. The
assignment by a party to this Agreement of any rights hereunder shall not affect the obligations of
such party under this Agreement.

39

 

     Section 9.8 Governing Law. This Agreement shall be governed by and construed in accordance
with the internal procedural and substantive laws of the State of Delaware, without giving effect
to the choice of law provisions of such state.

     Section 9.9 Survival. The representations and warranties of the Company and the Investor
contained in Articles III and IV and the covenants contained in Article V shall survive the
execution and delivery hereof until the termination of this Agreement, and the agreements and
covenants set forth in Article VIII of this Agreement shall survive the execution and delivery
hereof.

     Section 9.10 Counterparts. This Agreement may be executed in counterparts, all of which
taken together shall constitute one and the same original and binding instrument and shall become
effective when all counterparts have been signed by each party and delivered to the other parties
hereto, it being understood that all parties hereto need not sign the same counterpart. In the
event any signature is delivered by facsimile transmission, the party using such means of delivery
shall cause four additional executed signature pages to be physically delivered to the other
parties within five days of the execution and delivery hereof.

     Section 9.11 Publicity. On or after the Effective Date, the Company may issue a press
release or otherwise make a public statement or announcement with respect to this Agreement or the
transactions contemplated hereby or the existence of this Agreement (including, without limitation,
by filing a copy of this Agreement with the Commission); provided, however, that
prior to issuing any such press release, or making any such public statement or announcement, the
Company shall consult with the Investor on the form and substance of such press release or other
disclosure.

     Section 9.12 Severability. The provisions of this Agreement are severable and, in the
event that any court of competent jurisdiction shall determine that any one or more of the
provisions or part of the provisions contained in this Agreement shall, for any reason, be held to
be invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision or part of a provision of this Agreement, and
this Agreement shall be reformed and construed as if such invalid or illegal or unenforceable
provision, or part of such provision, had never been contained herein, so that such provisions
would be valid, legal and enforceable to the maximum extent possible.

     Section 9.13 Further Assurances. From and after the date of this Agreement, upon the
request of the Investor or the Company, each of the Company and the Investor shall execute and
deliver such instrument, documents and other writings as may be reasonably necessary or desirable
to confirm and carry out and to effectuate fully the intent and purposes of this Agreement.

[Signature Page Follows]

40

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
respective authorized officer as of the date first above written.

	 	 	 	 	 
	 	ALEXZA PHARMACEUTICALS, INC.:

 	 
	 	By:  	/s/ Thomas B. King
 	 
	 	 	Name:  	  Thomas B. King 	 
	 	 	Title:  	  President and Chief Executive Officer 	 
	 
	 	AZIMUTH OPPORTUNITY LTD.:

 	 
	 	By:  	/s/
Deirdre M. McCoy 	 
	 	 	Name:  	Deirdre M. McCoy 	 
	 	 	Title:  	Corporate Secretary 	 
	 

41

 

ANNEX A TO THE

COMMON STOCK PURCHASE AGREEMENT

DEFINITIONS

     (a) “Acceptable Financing” shall have the meaning assigned to such term in Section
5.6(ii) hereof.

     (b) “Aggregate Limit” shall have the meaning assigned to such term in Section 1.1
hereof.

     (c) “Base Prospectus” shall mean the Company’s prospectus, dated March 31, 2008, a
preliminary form of which is included in the Registration Statement, including the documents
incorporated by reference therein.

     (d) “Below Market Offering” shall have the meaning assigned to such term in Section
5.6(ii) hereof.

     (e) “Broker-Dealer” shall have the meaning assigned to such term in Section 5.13
hereof.

     (f) “Bylaws” shall have the meaning assigned to such term in Section 4.3 hereof.

     (g) “Charter” shall have the meaning assigned to such term in Section 4.3 hereof.

     (h) “Code” shall mean the Internal Revenue Code of 1986, as amended.

     (i) “Commission” shall mean the Securities and Exchange Commission or any successor
entity.

     (j) “Commission Documents” shall mean (1) all reports, schedules, registrations,
forms, statements, information and other documents filed by the Company with the Commission
pursuant to the reporting requirements of the Exchange Act, including all material filed pursuant
to Section 13(a) or 15(d) of the Exchange Act, which have been filed by the Company since December
31, 2007 and which hereafter shall be filed by the Company during the Investment Period, including,
without limitation, the Current Report and the Form 10-K filed by the Company for its fiscal year
ended December 31, 2007 (the “2007 Form 10-K”), (2) the Registration Statement, as the same
may be amended from time to time, the Prospectus and each Prospectus Supplement, and each Permitted
Free Writing Prospectus and (3) all information contained in such filings and all documents and
disclosures that have been and heretofore shall be incorporated by reference therein.

     (k) “Common Stock” shall have the meaning assigned to such term in the Recitals.

     (l) “Current Market Price” means, with respect to any particular measurement date, the
closing price of a share of Common Stock as reported on the Trading Market for the Trading Day
immediately preceding such measurement date.

 

 

     (m) “Current Report” shall have the meaning assigned to such term in Section 1.4
hereof.

     (n) “Discount Price” shall have the meaning assigned to such term in Section 2.2
hereof.

     (o) “EDGAR” shall have the meaning assigned to such term in Section 4.3 hereof.

     (p) “Effective Date” shall mean the date of this Agreement.

     (q) “Environmental Laws” shall have the meaning assigned to such term in Section 4.15
hereof.

     (r) “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended.

     (s) “Event Period” shall have the meaning assigned to such term in Section 7.2 hereof.

     (t) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission thereunder.

     (u) “FDA” shall have the meaning assigned to such term in Section 4.14(a) hereof.

     (v) “FINRA” shall have the meaning assigned to such term in Section 4.5 hereof.

     (w) “FINRA Filing” shall have the meaning assigned to such term in Section 5.1 hereof.

     (x) “Fixed Amount Requested” shall mean the amount of a Fixed Request requested by the
Company in a Fixed Request Notice delivered pursuant to Section 2.1 hereof.

     (y) “Fixed Request” means the transactions contemplated under Sections 2.1 through 2.8
of this Agreement.

     (z) “Fixed Request Amount” means the actual amount of proceeds received by the Company
pursuant to a Fixed Request under this Agreement.

     (aa) “Fixed Request Exercise Date” shall have the meaning assigned to such term in
Section 2.2 hereof.

     (bb) “Fixed Request Notice” shall have the meaning assigned to such term in Section
2.1 hereof.

     (cc) “Free Writing Prospectus” shall mean a “free writing prospectus” as defined in
Rule 405 promulgated under the Securities Act.

     (dd) “GAAP” shall mean generally accepted accounting principles in the United States
of America as applied by the Company.

 

 

     (ee) “Governmental Licenses” shall have the meaning assigned to such term in Section
4.14(a) hereof.

     (ff) “Indebtedness” shall have the meaning assigned to such term in Section 4.9
hereof.

     (gg) “Integration Notice” shall have the meaning assigned to such term in Section
5.6(ii) hereof.

     (hh) “Intellectual Property” shall have the meaning assigned to such term in Section
4.14(b) hereof.

     (ii) “Investment Period” shall have the meaning assigned to such term in Section 7.1
hereof.

     (jj) “Issuer Free Writing Prospectus” shall mean an “issuer free writing prospectus”
as defined in Rule 433 promulgated under the Securities Act.

     (kk) “Market Capitalization” shall be calculated on the Trading Day preceding the
applicable Pricing Period and shall be the product of (x) the number of shares of Common Stock
outstanding and (y) the closing bid price of the Common Stock, both as determined by Bloomberg
Financial LP using the DES and HP functions.

     (ll) “Material Adverse Effect” shall mean any condition, occurrence, state of facts or
event having, or insofar as reasonably can be foreseen would likely have, any effect on the
business, operations, properties or condition (financial or otherwise) of the Company that is
material and adverse to the Company and its Subsidiaries, taken as a whole, and/or any condition,
occurrence, state of facts or event that would prohibit or otherwise materially interfere with or
delay the ability of the Company to perform any of its obligations under this Agreement.

     (mm) “Material Agreements” shall have the meaning assigned to such term in Section
4.16 hereof.

     (nn) “Material Change in Ownership” shall mean the occurrence of any one or more of
the following: (i) the acquisition by any person, including any syndicate or group deemed to be a
“person” under Section 13(d)(3) of the Exchange Act, of beneficial ownership, directly or
indirectly, through a purchase, merger or other acquisition transaction or series of transactions,
of shares of capital stock or other securities of the Company entitling such person to exercise,
upon an event of default or default or otherwise, 50% or more of the total voting power of all
series and classes of capital stock and other securities of the Company entitled to vote generally
in the election of directors, other than any such acquisition by the Company, any Subsidiary of the
Company or any employee benefit plan of the Company; (ii) any consolidation or merger of the
Company with or into any other person, any merger of another person into the Company, or any
conveyance, transfer, sale, lease or other disposition of all or substantially all of the
properties and assets of the Company to another person, other than (a) any such transaction (x)
that does not result in any reclassification, conversion, exchange or cancellation of outstanding
shares of capital stock of the Company and (y) pursuant to which holders of capital stock of the
Company immediately prior to such transaction have the entitlement to exercise, directly or
indirectly, 50%

 

 

or more of the total voting power of all shares of capital stock of the Company entitled to
vote generally in the election of directors of the continuing or surviving person immediately after
such transaction or (b) any merger which is effected solely to change the jurisdiction of
incorporation of the Company and results in a reclassification, conversion or exchange of
outstanding shares of Common Stock solely into shares of common stock of the surviving entity;
(iii) during any consecutive two-year period, individuals who at the beginning of that two-year
period constituted the Board of Directors (together with any new directors whose election to the
Board of Directors, or whose nomination for election by the stockholders of the Company, was
approved by a vote of a majority of the directors then still in office who were either directors at
the beginning of such period or whose elections or nominations for election were previously so
approved) cease for any reason to constitute a majority of the Board of Directors then in office;
or (iv) the Company is liquidated or dissolved or a resolution is passed by the Company’s
stockholders approving a plan of liquidation or dissolution of the Company. Beneficial ownership
shall be determined in accordance with Rule 13d-3 promulgated by the SEC under the Exchange Act.
The term “person” shall include any syndicate or group which would be deemed to be a “person” under
Section 13(d)(3) of the Exchange Act.

     (oo) “Multiplier” shall have the meaning assigned to such term in Section 2.3 hereof.

     (pp) “NASDAQ” means the NASDAQ Global Market or any successor thereto.

     (qq) “Optional Amount” means the transactions contemplated under Sections 2.9 through
2.11 of this Agreement.

     (rr) “Optional Amount Dollar Amount” shall mean the actual amount of proceeds received
by the Company pursuant to the exercise of an Optional Amount under this Agreement.

     (ss) “Optional Amount Notice” shall mean a notice sent to the Company with regard to
the Investor’s election to exercise all or any portion of an Optional Amount, as provided in
Section 2.11 hereof and substantially in the form attached hereto as Exhibit B.

     (tt) “Optional Amount Threshold Price” shall have the meaning assigned to such term in
Section 2.1 hereof.

     (uu) “Other Financing” shall have the meaning assigned to such term in Section 5.6(ii)
hereof.

     (vv) “Other Financing Notice” shall have the meaning assigned to such term in Section
5.6(ii) hereof.

     (ww) “Permitted Free Writing Prospectus” shall have the meaning assigned to such term
in Section 5.8(ii) hereof.

     (xx) “Plan” shall have the meaning assigned to such term in Section 4.22 hereof.

     (yy) “Pricing Period shall mean a period of 10 consecutive Trading Days commencing on
the day of delivery of a Fixed Request Notice (or, if the Fixed Request Notice is delivered

 

 

after 9:30 a.m. (New York time), on the next Trading Day), or such other period mutually
agreed upon by the Investor and the Company.

     (zz) “Prospectus” shall mean the Base Prospectus, together with any final prospectus
filed with the Commission pursuant to Rule 424(b), as supplemented by any Prospectus Supplement,
including the documents incorporated by reference therein.

     (aaa) “Prospectus Supplement” shall mean any prospectus supplement to the Base
Prospectus filed with the Commission pursuant to Rule 424(b) under the Securities Act, including
the documents incorporated by reference therein.

     (bbb) “Reduction Notice” shall have the meaning assigned to such term in Section 2.8
hereof.

     (ccc) “Registration Statement” shall mean the registration statement on Form S-3,
Commission File Number 333-141739, filed by the Company with the Commission under the Securities
Act for the registration of the Shares, as such Registration Statement may be amended and
supplemented from time to time, including the documents incorporated by reference therein and the
information deemed to be a part thereof at the time of effectiveness pursuant to Rule 430A or Rule
430B under the Securities Act.

     (ddd) “Restricted Period” shall have the meaning assigned to such term in Section 5.10
hereof.

     (eee) “Securities Act” shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.

     (fff) “Settlement Date” shall have the meaning assigned to such term in Section 2.7
hereof.

     (ggg) “Shares” shall mean shares of Common Stock issuable to the Investor upon
exercise of a Fixed Request and shares of Common Stock issuable to the Investor upon exercise of an
Optional Amount.

     (hhh) “Significant Subsidiary” means any Subsidiary of the Company that would
constitute a Significant Subsidiary of the Company within the meaning of Rule 1-02 of Regulation
S-X of the Commission.

     (iii) “SOXA” shall have the meaning assigned to such term in Section 4.6(c) hereof.

     (jjj) “Subsidiary” shall mean any corporation or other entity of which at least a
majority of the securities or other ownership interest having ordinary voting power (absolutely or
contingently) for the election of directors or other persons performing similar functions are at
the time owned directly or indirectly by the Company and/or any of its other Subsidiaries.

     (kkk) “Threshold Price” is the lowest price (except to the extent otherwise provided
in Section 2.6) at which the Company may sell Shares during the applicable Pricing Period as set
forth in a Fixed Request Notice (not taking into account the applicable percentage discount

 

 

during such Pricing Period determined in accordance with Section 2.2); provided,
however, that at no time shall the Threshold Price be lower than $5.00 per share unless the
Company and the Investor mutually shall agree.

     (lll) “Total Commitment” shall have the meaning assigned to such term in Section 1.1
hereof.

     (mmm) “Trading Day” shall mean a full trading day (beginning at 9:30 a.m., New York
City time, and ending at 4:00 p.m., New York City time) on the NASDAQ.

     (nnn) “Trading Market” means the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the American Stock Exchange, the New
York Stock Exchange or the NASDAQ.

     (ooo) “Trading Market Limit” means that number of shares which is one less than 20.0%
of the issued and outstanding shares of the Company’s Common Stock as of the Effective Date.

     (ppp) “VWAP” shall mean the daily volume weighted average price (based on a Trading
Day from 9:30 p.m. to 4:00 p.m. (New York time)) of the Company on the NASDAQ as reported by
Bloomberg Financial L.P. using the AQR function.

     (qqq) “Warrant Value” shall mean the fair value of all warrants, options and other
similar rights issued to a third party in connection with an Other Financing, determined by using a
standard Black-Scholes option-pricing model using an expected volatility percentage as shall be
mutually agreed by the Investor and the Company. In the case of a dispute relating to such
expected volatility assumption, the Investor shall obtain applicable volatility data from three
investment banking firms of nationally recognized reputation, and the parties hereto shall use the
average thereof for purposes of determining the expected volatility percentage in connection with
the Black-Scholes calculation referred to in the immediately preceding sentence.

 

 

EXHIBIT A TO THE

COMMON STOCK PURCHASE AGREEMENT

FORM OF FIXED REQUEST NOTICE

     Reference is made to the Common Stock Purchase Agreement dated as of March 31, 2008, (the
“Purchase Agreement”) between Alexza Pharmaceuticals, Inc., a corporation organized and
existing under the laws of the State of Delaware (the “Company”), and Azimuth Opportunity
Ltd., an international business company incorporated under the laws of the British Virgin Islands.
Capitalized terms used and not otherwise defined herein shall have the meanings given such terms in
the Purchase Agreement.

     In accordance with and pursuant to Section 2.1 of the Purchase Agreement, the Company hereby
issues this Fixed Request Notice to exercise a Fixed Request for the Fixed Request Amount indicated
below.

	 	 	 	 	 	 	 
	Fixed Amount Requested:
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Optional Amount Dollar Amount:
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Pricing Period start date:
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Pricing Period end date:
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Settlement Date:
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Fixed Request Threshold Price:
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Optional Amount Threshold Price:
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Dollar Amount and Number of Shares of
Common Stock Currently Unissued under the
Registration Statement;
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Dollar Amount and Number of Shares of
Common Stock Currently Available under the
Aggregate Limit:
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Dated:                                         

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name	 	 	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Address:
	 	 	Facsimile No.

	 	 	 	 	 
	AGREED AND ACCEPTED
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Name	 	 
	 

	 	Title:	 	 

 

 

EXHIBIT B TO TILE

COMMON STOCK PURCHASE AGREEMENT

FORM OF OPTIONAL AMOUNT NOTICE

To:                                        

Fax#:                                        

     Reference is made to the Common Stock Purchase Agreement dated as of March 31, 2008 (the
“Purchase Agreement”) between Alexza Pharmaceuticals, Inc., a corporation organized and
existing under the laws of the State of Delaware (the “Company”), and Azimuth Opportunity
Ltd., an international business company incorporated under the laws of the British Virgin Islands
(the “Investor”). Capitalized terms used and not otherwise defined herein shall have the
meanings given such terms in the Purchase Agreement.

     In accordance with and pursuant to Section 2.1 of the Purchase Agreement, the Investor hereby
issues this Optional Amount Notice to exercise an Optional Amount for the Optional Amount Dollar
Amount indicated below.

	 	 	 	 	 	 	 
	Optional Amount Dollar Amount Exercised
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Number of Shares to be purchased
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	VWAP on the date hereof:
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Discount Price:
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Settlement Date:
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	Threshold Price:
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Dated:                                                            

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name	 	 	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Address:	 	 
	 	 	Facsimile No.

 

 

EXHIBIT C TO THE

COMMON STOCK PURCHASE AGREEMENT

CERTIFICATE OF THE COMPANY

CLOSING CERTIFICATE

                     200__

     The undersigned, the [                    ] of Alexza Pharmaceuticals, Inc., a corporation organized
and existing under the laws of the State of Delaware (the “Company”), delivers this
certificate in connection with the Common Stock Purchase Agreement, dated as of March 31, 2008 (the
“Agreement”), by and between the Company and Azimuth Opportunity Ltd., an international
business company incorporated under the laws of the British Virgin Islands (the
“Investor”), and hereby certifies on the date hereof that (capitalized terms used herein
without definition have the meanings assigned to them in the Agreement):

     1. Attached hereto as Exhibit A is a true, complete and correct copy of the Certificate of
Incorporation of the Company as filed with the Secretary of State of the State of Delaware. The
Certificate of Incorporation of the Company has not been further amended or restated, and no
document with respect to any amendment to the Certificate of Incorporation of the Company has been
filed in the office of the Secretary of State of the State of Delaware since the date shown on the
face of the state certification relating to the Company’s Certificate of Incorporation, which is in
full force and effect on the date hereof, and no action has been taken by the Company in
contemplation of any such amendment or the dissolution, merger or consolidation of the Company.

     2. Attached hereto as Exhibit B is a true and complete copy of the Bylaws of the Company, as
amended and restated through, and as in full force and effect on, the date hereof, and no proposal
for any amendment, repeal or other modification to the Bylaws of the Company has been taken or is
currently pending before the Board of Directors or stockholders of the Company.

     3. The Board of Directors of the Company has approved the transactions contemplated by the
Agreement; said approval has not been amended, rescinded or modified and remains in full force and
effect as of the date hereof.

     4. Each person who, as an officer of the Company, or as attorney-in-fact of an officer of the
Company, signed (i) the Agreement and (ii) any other document delivered prior hereto or on the date
hereof in connection with the transactions contemplated by the Agreement, was duly elected,
qualified and acting as such officer or duly appointed and acting as such attorney-in-fact, and the
signature of each such person appearing on any such document is his genuine signature.

     IN WITNESS WHEREOF, I have signed my name as of the date first above written.

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Title: 	 
	 	 	 	 
	 

 

 

EXHIBIT D TO THE

COMMON STOCK PURCHASE AGREEMENT

COMPLIANCE CERTIFICATE

     In connection with the issuance of shares of common stock of Alexza Pharmaceuticals, Inc., a
corporation organized and existing under the laws of the State of Delaware (the “Company”),
pursuant to the Fixed Request Notice, dated [                    ], delivered by the Company to Azimuth
Opportunity Ltd. (the “Investor”) pursuant to Article II of the Common Stock Purchase
Agreement, dated March 31, 2008, by and between the Company and the Investor (the
“Agreement”), the undersigned hereby certifies as follows:

     1. The undersigned is the duly elected [                    ] of the Company.

     2. Except as set forth in the attached Disclosure Schedule, the representations and warranties
of the Company set forth in Article IV of the Agreement (i) that are not qualified by “materiality”
or “Material Adverse Effect” are true and correct in all material respects as of [insert Fixed
Request Exercise Date] and as of the date hereof with the same force and effect as if made on such
dates, except to the extent such representations and warranties are as of another date, in which
case, such representations and warranties are true and correct in all material respects as of such
other date and (ii) that are qualified by “materiality” or “Material Adverse Effect” are true and
correct as of [insert Fixed Request Exercise Date] and as of the date hereof with the same force
and effect as if made on such dates, except to the extent such representations and warranties are
as of another date, in which case, such representations and warranties are true and correct as of
such other date.

     3. The Company has performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by the Agreement to be performed, satisfied or
complied with by the Company at or prior to [insert Fixed Request Exercise Date] and the date
hereof.

     Capitalized terms used but not otherwise defined herein shall have the meanings assigned to
them in the Agreement.

     The undersigned has executed this Certificate this [          ] day of [                    ], 200[___].

	 	 	 	 	 	 	 
	 

	 	By:
	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:

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