Document:

exv10w1

Exhibit 10.1

Penford Corporation

Third Amendment to Second Amended and Restated Credit Agreement 

     This Third Amendment to Second Amended and Restated Credit Agreement (herein, the “Amendment”)
is dated July 9, 2009, by and among Penford Corporation, a Washington corporation (the
“Borrower”), the direct and indirect Subsidiaries of the Borrower from time to time party to the
Credit Agreement, as Guarantors, the several financial institutions signing this Amendment as
Lenders, and Bank of Montreal, a Canadian chartered bank, acting through its Chicago branch, as
Administrative Agent.

Preliminary Statements

     A. The Borrower, the Guarantors, the Lenders and the Administrative Agent are parties to that
certain Second Amended and Restated Credit Agreement dated as of October 5, 2006, as previously
amended (the “Credit Agreement”). All capitalized terms used herein without definition shall have
the same meanings herein as such terms have in the Credit Agreement.

     B. The Borrower and the Lenders have agreed to make certain amendments to the Credit
Agreement, in each case under the terms and conditions set forth in this Amendment.

     Now, Therefore, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:

Section 1. Amendments to the Credit Agreement.

     Subject to the satisfaction of the conditions precedent set forth in Section 2 hereof, the
Credit Agreement shall be and hereby is amended as follows:

     1.1. Sections 1.8(a) and (b) of the Credit Agreement shall be amended to read as follows:

     Section 1.8. Maturity of Loans. (a) Scheduled Payments of Term Loans. The Borrower
shall repay the entire outstanding principal amount of the Term Loans, together with accrued
and unpaid interest thereon, on December 15, 2009.

     (b) Scheduled Payments of Capital Expansion Loans. The Borrower shall make principal
payments on the Capital Expansion Loans on a pro rata basis in installments on each date set
forth in Column A below, commencing September 30, 2009, with the amount of each such
principal installment to equal the U.S. Dollar Equivalent set forth in Column B below shown
opposite of the relevant due date as set forth in Column A below:

 

 

	 	 	 	 	 	 	 	 	 
		 	 	 	Column B
	 	 	 	 	 	 	Scheduled Principal
	Column A	 	 	 	Payment on Capital 
	Payment Date	 	 	 	Expansion Loans
	 	09/30/09	 	 	 
	 	$	1,000,000	 
	 	12/15/09	 	 	 
	 	$	9,625,000	 
	 	12/31/09	 	 	 
	 	$	1,000,000	 
	 	03/31/10	 	 	 
	 	$	2,000,000	 
	 	06/30/10	 	 	 
	 	$	2,000,000	 
	 	09/30/10	 	 	 
	 	$	2,000,000	 

it being agreed that the final payment of both principal and interest not sooner paid on the
Capital Expansion Loans shall be due and payable on November 30, 2010, the final maturity thereof.
Each such principal payment shall be allocated to the Lenders holding the Capital Expansion Loans
pro rata based upon their Capital Expansion Loan Percentages.

     1.2. Sections 1.9(b)(i), (ii), (iii) and (iv) of the Credit Agreement shall be amended to read
as follows:

     (b) Mandatory. (i) (aa) If the Borrower or any Subsidiary shall at any time or from
time to time make or agree to make a Disposition resulting in Net Cash Proceeds in excess of
$500,000 (or the U.S. Dollar Equivalent thereof, if applicable) individually or on a
cumulative basis in any fiscal year of the Borrower or if the Borrower shall suffer an Event
of Loss, the Borrower shall promptly notify the Administrative Agent of such proposed
Disposition or Event of Loss (including the amount of the estimated Net Cash Proceeds to be
received by the Borrower or such Subsidiary in respect thereof).

     (bb) Promptly upon receipt by the Borrower or such Subsidiary of the Net Cash
Proceeds of any Disposition, the Borrower shall prepay first, the Term Loans and the
principal installment of the Capital Expansion Loans due on December 15, 2009, in
each case until the Term Loans and such principal installment of the Capital
Expansion Loans are paid in full, second to the remaining principal installments on
the Capital Expansion Loans in the inverse order of maturity until paid in full, and
then the Revolving Loans, Swing Loans and L/C Obligations (or all outstanding Loans
and L/C Obligations if an Event of Default exists) in an aggregate amount equal to
100% of the amount of all such Net Cash Proceeds, subject to working capital
adjustments acceptable to the Administrative Agent. The amount of each such
prepayment shall be applied on a ratable basis among the relevant outstanding
Obligations based on the principal amounts (in U.S. Dollar Equivalent) thereof.

     (cc) Promptly upon receipt by the Borrower or such Subsidiary of the Net Cash
Proceeds of any Event of Loss, other than any Net Cash Proceeds

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required to be used to prepay the indebtedness permitted by Section 8.7(g) hereof, the Borrower shall
prepay first, the Term Loans, the principal installment of the Capital Expansion
Loans due on December 15, 2009, and all other principal installments due on the
Capital Expansion Loans in the inverse order of maturity, in each case until the
Term Loans and the Capital Expansion Loans are paid in full, and then the Revolving
Loans, Swing Loans and L/C Obligations (or all outstanding Loans and L/C Obligations
if an Event of Default exists) in an aggregate amount equal to 100% of the amount of
all such Net Cash Proceeds. The amount of each such prepayment shall be applied on a
ratable basis among the relevant outstanding Obligations based on the principal
amounts (in the U.S. Dollar Equivalent) thereof.

     (ii) If after the Closing Date the Borrower or any Subsidiary shall issue new equity
securities (whether common or preferred stock or otherwise), other than equity securities
issued in connection with the Borrower’s 2006 Long-Term Incentive Plan or the exercise of
employee stock options, the Borrower shall promptly notify the Administrative Agent of the
estimated Net Cash Proceeds of such issuance to be received by or for the account of the
Borrower or such Subsidiary in respect thereof. Promptly upon receipt by the Borrower or
such Subsidiary of Net Cash Proceeds of such issuance, the Borrower shall prepay first, the
Term Loans and the principal installment of the Capital Expansion Loans due on December 15,
2009, until the Term Loans and such principal installment of the Capital Expansion Loans
are paid in full, second to the remaining principal installments on the Capital Expansion
Loans in the inverse order of maturity until paid in full, and then the Revolving Loans,
Swing Loans and L/C Obligations (or all outstanding Loans and L/C Obligations if an Event of
Default exists), in an aggregate amount equal to 100% of the amount of such Net Cash
Proceeds. The amount of each such prepayment shall be applied on a ratable basis among the
relevant outstanding Obligations based on the principal amounts (in U.S. Dollar Equivalent)
thereof. The Borrower acknowledges that its performance hereunder shall not limit the
rights and remedies of the Lenders for any breach of Section 8.11 (Maintenance of
Subsidiaries) or Section 9.1(i) (Change of Control) hereof or any other terms of the Loan
Documents.

     (iii) If after the Closing Date the Borrower or any Subsidiary shall issue any
Indebtedness for Borrowed Money, other than Indebtedness for Borrowed Money permitted by
Sections 8.7(a) through (f), (h) and (i) hereof, the Borrower shall promptly notify the
Administrative Agent of the estimated Net Cash Proceeds of such issuance to be received by
or for the account of the Borrower or such Subsidiary in respect thereof. Promptly upon
receipt by the Borrower or such Subsidiary of Net Cash Proceeds of such issuance, the
Borrower shall prepay first, the Term Loans and the principal installment of the Capital
Expansion Loans due on December 15, 2009, until the Term Loans and such principal
installment of the Capital Expansion Loans are paid in full, second to the remaining
principal installments on the Capital Expansion Loans until paid in full, and then the
Revolving Loans, Swing Loans and L/C Obligations (or all outstanding Loans
and L/C Obligations if an Event of Default exists), in an aggregate amount equal to 100% of
the amount of such Net Cash Proceeds, provided that any prepayment made with Net

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Cash Proceeds of any Indebtedness for Borrowed Money permitted by Section 8.7(g) shall be applied
to the remaining amortization payments on the Capital Expansion Loans in the reverse order
of maturity. The amount of each such prepayment shall be applied on a ratable basis among
the relevant outstanding Obligations based on the principal amounts (in U.S. Dollar
Equivalent) thereof. The Borrower acknowledges that its performance hereunder shall not
limit the rights and remedies of the Lenders for any breach of Section 8.7 hereof or any
other terms of the Loan Documents.

     (iv) Within 90 days after the close of each fiscal year of the Borrower, beginning with
the fiscal year ending August 31, 2009, the Borrower shall prepay first, the Capital
Expansion Loans until the Capital Expansion Loans are paid in full and then the Revolving
Loans, Swing Loans and L/C Obligations (or all outstanding Loans and L/C Obligations if an
Event of Default exists), by an amount equal to 75% of Excess Cash Flow of the Borrower and
its Subsidiaries for fiscal year. The amount of each such prepayment shall be applied on a
ratable basis among the relevant outstanding Obligations based on the principal amounts (in
U.S. Dollar Equivalent) thereof. Each prepayment of the Capital Expansion Loans made
pursuant to this subsection (iv) shall be applied to the principal installments of the
Capital Expansion Loans in the inverse order of maturity.

     1.3. Section 1.9(e) of the Credit Agreement shall be amended to read as follows:

     (e) Intentionally omitted.

     1.4. The definitions of the following terms appearing in Section 5.1 of the Credit Agreement
shall be amended to read as follows:

     “EBITDA” means, with reference to any period, Net Income for such period plus the sum
of all amounts deducted in arriving at such Net Income amount in respect of (a) Interest
Expense for such period, (b) federal, state, and local income taxes for such period, (c)
depreciation of fixed assets and amortization of intangible assets for such period, plus
(minus) any non-cash losses (gains) but only to the extent such losses (gains) have not
become a cash loss (or gain), plus non-cash stock compensation charges incurred in such
period, minus (d) the aggregate amount of all insurance proceeds, including business
interruption insurance proceeds, received by the Borrower and its Subsidiaries during such
fiscal quarter as a result of the flooding of the Borrower’s facilities in Cedar Rapids,
that commenced during the month of June 2008 (the “June 2008 Flood”) to the extent included
in Net Income, plus (e) the aggregate amount of all severance charges incurred by the
Borrower in such fiscal quarters, provided the aggregate amount of such charges that are
added to EBITDA pursuant to this clause (e) shall not exceed $2,500,000 during the term of
this Agreement, plus (f) the amount of all non-cash charges incurred as a result of the
accounting treatment of interest rate hedging arrangements, minus (g) the amount of all
non-cash gains resulting from the accounting treatment of interest rate hedging
arrangements.

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     “Fixed Charges” means, with reference to any period, the sum of (a) all scheduled
payments of principal (excluding the scheduled principal installments on the Capital
Expansion Loans and the Term Loans due on December 15, 2009) paid in cash during such
period with respect to Indebtedness for Borrowed Money of the Borrower and its Subsidiaries
plus (b) Interest Expense paid in cash for such period plus (c) all Restricted Payments made
by the Borrower during such period in cash, plus (d) federal, state, and local income taxes
paid or payable by the Borrower and its Subsidiaries in cash during such period, minus (d)
all federal, state, and local income tax refunds received by the Borrower and its
Subsidiaries in cash during such period.

     “L/C Sublimit” means $1,500,000 as reduced pursuant to the terms hereof; provided,
however that the L/C Sublimit may not be used for Letters of Credit issued for the benefit
of Subsidiaries organized under the laws of the Commonwealth of Australia.

     “Revolving Credit Termination Date” means November 30, 2010, or such earlier date on
which the Revolving Credit Commitments are terminated in whole pursuant to Section 1.13, 9.2
or 9.3 hereof.

     “Swing Line Sublimit” means $1,000,000, as reduced pursuant to the terms hereof.

     1.5. The table appearing in the definition of the term “Applicable Margin” appearing in
Section 5.1 of the Credit Agreement shall be replaced with the following table:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Applicable Margin for 	 	Applicable Margin for 	 	Applicable Margin 
	 	 	 	 	Total Funded Debt	 	Base Rate Loans and 	 	Eurocurrency Loans 	 	for Revolving Credit 
	 	 	 	 	 Ratio for Such 	 	Reimbursement 	 	and Letter of credit Fee 	 	Commitment Fee 
	Level	 	Pricing Date	 	Obligations shall be:	 	Shall Be:	 	Shall Be:
	III	 	Greater than 4.00 to 1.0
	 	 	4.00	%	 	 	5.00	%	 	 	0.75	%
	II	 	Less than or equal to
4.00 to 1.0, but greater
than 3.00 to 1.0
	 	 	3.50	%	 	 	4.50	%	 	 	0.75	%
	 	I	 	 	Less than or equal to 3.0
	 	 	3.00	%	 	 	4.00	%	 	 	0.50	%

Until the date on which the Administrative Agent is in receipt of the Borrower’s financial
statements for the fiscal quarter ending August 31, 2009, the Applicable Margin shall be the rates
per annum shown opposite Level III in the table above.

     1.6. Section 7.1 of the Credit Agreement shall be amended by replacing the period appearing at
the end of subsection (f) thereof with “; and” and by adding the following provision thereto as
subsection (g) thereof:

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     (g) in the case of a Borrowing of Revolving Loans that would cause the aggregate
principal amount of all outstanding Revolving Loans and L/C Obligations to exceed
$52,500,000, the Required Lenders shall have given their prior written consent to such
Borrowing.

     1.7. Section 8.5 of the Credit Agreement shall be amended by replacing the period appearing at
the end of subsection (l) thereof with a semi-colon and by adding the following provisions thereto
as subsections (m), (n), (o) and (p) thereof:

     (m) as soon as available, and in any event within twenty (20) days after the close of
each of month that is not the last month of a fiscal quarter of the Borrower, a copy of the
management-prepared consolidated and consolidating balance sheet of the Borrower and its
Subsidiaries as of the last day of such month and the consolidated and consolidating
statements of income, retained earnings, and cash flows of the Borrower and its Subsidiaries
for the month and for the fiscal year to date period then ended, each in reasonable detail
showing in comparative form the figures for the corresponding date and period in the
previous fiscal year, prepared by the Borrower in accordance with GAAP (subject to the
absence of footnote disclosures and year end audit adjustments) and certified to by its
chief financial officer or another officer of the Borrower acceptable to the Administrative
Agent;

     (n) as soon as available, and in any event within thirty (30) days after the close of
each fiscal quarter of the Borrower other than the final fiscal quarter of the Borrower’s
fiscal year, a copy of the management-prepared consolidated and consolidating balance sheet
of the Borrower and its Subsidiaries as of the last day of such fiscal quarter and the
consolidated and consolidating statements of income, retained earnings, and cash flows of
the Borrower and its Subsidiaries for the fiscal quarter and for the fiscal year to date
period then ended, each in reasonable detail showing in comparative form the figures for the
corresponding date and period in the previous fiscal year, prepared by the Borrower in
accordance with GAAP (subject to the absence of footnote disclosures and year end audit
adjustments) and certified to by its chief financial officer or another officer of the
Borrower acceptable to the Administrative Agent;

     (o) as soon as available, and in any event within forty-five (45) days after the close
of the Borrower’s fiscal year, a copy of the management-prepared consolidated and
consolidating balance sheet of the Borrower and its Subsidiaries as of the last day of such
fiscal year and the consolidated and consolidating statements of income, retained earnings,
and cash flows of the Borrower and its Subsidiaries for the fiscal year then ended, each in
reasonable detail showing in comparative form the figures for the corresponding date and
period in the previous fiscal year, prepared by the Borrower in accordance with GAAP
(subject to the absence of footnote disclosures and year end audit adjustments) and
certified to by its chief financial officer or another officer of the Borrower acceptable to
the Administrative Agent; and

     (p) no later than the third Business Day of each week (beginning July 15, 2009), the
Borrower shall provide to the Administrative Agent and the Lenders a

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13-week cash flow
forecast showing projected cash receipts and cash disbursements of the Borrower over the
following 13-week period, together with a reconciliation of actual cash receipts and cash
disbursements of the Borrower from the prior week against the cash flow forecast previously
furnished to the Administrative Agent and the Lenders (and showing any deviations on a
cumulative basis), prepared by the Borrower and in form and substance, and with such detail,
as the Administrative Agent may request.

     1.8. Section 8.7 of the Credit Agreement shall be amended to read as follows:

Section 8.7. Borrowings and Guaranties. The Borrower shall not, nor shall it permit any
Subsidiary to, issue, incur, assume, create or have outstanding any Indebtedness for
Borrowed Money, or be or become liable as endorser, guarantor, surety or otherwise for any
debt, obligation or undertaking of any other Person, or otherwise agree to provide funds for
payment of the obligations of another, or supply funds thereto or invest therein or
otherwise assure a creditor of another against loss, or apply for or become liable to the
issuer of a letter of credit which supports an obligation of another, or subordinate any
claim or demand it may have to the claim or demand of any other Person; provided, however,
that the foregoing shall not restrict nor operate to prevent:

     (a) the Obligations, Hedging Liability, and Funds Transfer and Deposit Account
Liability of the Borrower and its Subsidiaries owing to the Administrative Agent or
the Lenders (and their Affiliates);

     (b) purchase money indebtedness and Capitalized Lease Obligations of the
Borrower and its Subsidiaries in an amount not to exceed $2,000,000 (or the
Australian Dollar Equivalent or NZ Dollar Equivalent) in the aggregate at any one
time outstanding;

     (c) obligations of the Borrower arising out of interest rate and foreign
currency, hedging agreements entered into with financial institutions in the
ordinary course of business and not for speculative purposes;

     (d) endorsement of items for deposit or collection of commercial paper received
in the ordinary course of business;

     (e) indebtedness from time to time owing by Penford Holdings and its
Subsidiaries to the Borrower in an aggregate principal amount not to exceed
US$9,600,000 and indebtedness from time to time owing by Penford Holdings and its
Subsidiaries to the Borrower in an aggregate principal amount not to exceed
AUS$32,000,000;

     (f) indebtedness from time to time owing by any Subsidiary other than Penford
Holdings and its Subsidiaries to the Borrower (the “Intercompany Indebtedness”);

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     (g) unsecured indebtedness of the Borrower’s Subsidiaries to the Iowa
Department of Economic Development in an amount not to exceed $2,000,000 in the
aggregate at any one time outstanding;

     (h) unsecured indebtedness of the Borrower not otherwise permitted by this
Section in an amount not to exceed $500,000 in the aggregate at any one time
outstanding; and

     (i) unsecured indebtedness of the Borrower’s Foreign Subsidiaries in an
aggregate principal amount not to exceed $3,000,000 (or the Australian Dollar
Equivalent thereof or New Zealand Dollar Equivalent thereof) at any time.

     1.9. Section 8.9(g)(ii) of the Credit Agreement shall be amended by replacing the figure
“$25,000,000” appearing therein with the figure “$100,000”.

     1.10. Section 8.9(h) of the Credit Agreement shall be amended to read as follows:

     (h) intentionally omitted;

     1.11. Section 8.9(j) of the Credit Agreement shall be amended by replacing the figure
“$20,000,000” appearing therein with the figure “$15,000,000”.

     1.12. Section 8.12 of the Credit Agreement shall be amended to read as follows:

     Section 8.12. Dividends and Certain Other Restricted Payments. The Borrower shall not,
nor shall it permit any Subsidiary to, (a) declare or pay any dividends on or make any other
distributions in respect of any class or series of its capital stock or other equity
interests or (b) directly or indirectly purchase, redeem, or otherwise acquire or retire any
of its capital stock or other equity interests or any warrants, options, or similar
instruments to acquire the same (collectively, the “Restricted Payments”); provided,
however, that the foregoing shall not operate to prevent the making of dividends or
distributions by any Wholly-owned Subsidiary of the Borrower to its parent corporation.

     1.13. Effective as of May 31, 2009, Section 8.22 of the Credit Agreement has been amended to
read as follows:

     Section 8.22. Financial Covenants. (a) Intentionally omitted.

     (b) Fixed Charge Coverage Ratio. As of the last day of each period specified below,
the Borrower shall maintain a ratio of (a) EBITDA for each period specified below to (b)
Fixed Charges for the same period of not less than the ratio set forth below opposite such
period:

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	 	 	Fixed Charge Coverage
	 	 	Ratio shall not be Less
	Period	 	than
	Three months ending November 30, 2009
	 	 	1.25 to 1.0	 
	 
	 	 	 	 
	Six months ending February 28, 2010
	 	 	1.25 to 1.0	 
	 
	 	 	 	 
	Nine months ending May 31, 2010
	 	 	1.35 to 1.0	 
	 
	 	 	 	 
	Twelve moths ending August 31, 2010
	 	 	1.50 to 1.0	 

     (c) Tangible Net Worth. The Borrower shall maintain at all times Tangible Net Worth in
an amount not less than $97,000,000 minus an amount acceptable to the Administrative Agent
to reflect any reduction in the Borrower’s Tangible Net Worth attributable to the sale or
other disposition of the capital stock or assets of Penford Holdings or any of its
Subsidiaries.

     (d) Capital Expenditures. The Borrower shall not, nor shall it permit any of its
Domestic Subsidiaries to, incur Capital Expenditures (but excluding Capital Expenditures
incurred on or prior to August 31, 2009, in connection with the repair, restoration or
replacement of Property damaged or destroyed as a result of the flooding of the Borrower’s
facilities in Cedar Rapids, Iowa during the month of June, 2008, that the Borrower
reasonably believes are covered by insurance, for which at the time such expenditure is
incurred the Borrower has made or reasonably expects to make a written claim under the
applicable insurance policy and which claim has not been denied by the insurer) in excess of
the aggregate amount of $6,500,000 in any fiscal year of the Borrower. The Borrower shall
not permit Penford Holdings and its Subsidiaries to incur Capital Expenditures in excess of
the aggregate amount of $1,500,000 (or the Australian Dollar Equivalent or NZ Dollar
Equivalent) in any fiscal year of the Borrower,

     (e) Minimum EBITDA. The Borrower shall have EBITDA for each period described below in
an amount not less than the amount set forth below opposite such period:

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	 	 	EBITDA shall not be Less 
	Period	 	than
	Three months ended May 31, 2009
	 	-$	5,000,000	 
	 
	 	 	 	 
	Three months ending August 31, 2009
	 	$	1,000,000	 
	 
	 	 	 	 
	Six months ending November 30, 2009
	 	$	6,000,000	 
	 
	 	 	 	 
	Nine months ending February 28, 2010
	 	$	10,000,000	 
	 
	 	 	 	 
	Twelve moths ending May 31, 2010
	 	$	16,000,000	 
	 
	 	 	 	 
	Twelve moths ending August 31, 2010
	 	$	23,000,000	 

     1.14. Schedule I attached to the form of Compliance Certificate attached to the Credit
Agreement as Exhibit E shall be replaced by Schedule I attached to this Amendment.

     1.15. No later than September 15, 2009 (or such later date as may be acceptable to the
Administrative Agent) the Borrower shall deliver, or cause to be delivered, to the Administrative
Agent a date-down endorsement to each of the title insurance policies insuring the Mortgages which
shall be acceptable in form and substance to the Administrative Agent, as soon as practicable.
The Borrower agrees that its failure to comply with the requirements of this Section will
constitute an Event of Default under Section 9.1(b) of the Credit Agreement.

Section 2. Conditions Precedent.

     The effectiveness of this Amendment is subject to the satisfaction of all of the following
conditions precedent:

     2.1. The Borrower, the Guarantors, the Lenders and the Administrative Agent shall have
executed and delivered this Amendment.

     2.2. Each of the representations and warranties set forth in Section 6 of the Credit Agreement
shall be true and correct in all material respects, except that the representations and warranties
made (a) with respect to the Credit Agreement, shall be deemed to refer to the Credit Agreement as
amended by this Amendment and (b) under Section 6.5 of the Credit Agreement, shall be deemed to
refer to the most recent financial statements of the Borrower delivered to the Lenders.

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     2.3. Upon giving effect to this Amendment, (a) the Borrower shall be in full compliance with
all of the terms and conditions of the Loan Documents and (b) no Default or Event of Default shall
have occurred and be continuing thereunder or shall result after giving effect to this Amendment.

     2.4. The Administrative Agent shall have received from the Borrower all fees that the Borrower
has agreed to pay to the Administrative Agent for its own account and for the account of the
Lenders, including Bank of Montreal.

     2.5. The Borrower shall have paid, or reimbursed the Administrative Agent, for all legal fees
and expenses incurred by the Administrative Agent in connection with this Amendment and the
transactions contemplated hereby for which an invoice has been submitted.

     2.6. The Administrative Agent shall have received a copy of the Borrower’s 2006 Long-Term
Incentive Plan, and all amendments thereto, certified as true, correct and complete by the
Borrower’s secretary or assistant secretary.

Section 3. Representations.

     In order to induce the Lenders to execute and deliver this Amendment, the Borrower hereby
represents to the Lenders that as of the date hereof, and after giving effect to the amendments
called for hereby, the representations and warranties set forth in Section 6 of the Credit
Agreement are and shall be and remain true and correct in all material respects (except that for
purposes of this paragraph the representations contained in Section 6.5 shall be deemed to refer to
the most recent financial statements of the Borrower delivered to the Lenders) and after giving
effect to this Amendment (a) the Borrower is in compliance with all of the terms and conditions of
the Loan Documents and (b) no Default or Event of Default exists under the Credit Agreement or
shall result after giving effect to this Amendment.

Section 4. Miscellaneous.

     4.1. The Borrower and the Guarantors heretofore executed and delivered to the Administrative
Agent and the Lenders the Collateral Documents to which it is a party. Each of the Borrower and
the Guarantors hereby acknowledges and agrees that the Liens created and provided for by the
Collateral Documents to which it is a party continue to secure, among other things, the
indebtedness, obligations and liabilities described therein; and the Collateral Documents to which
it is a party and the rights and remedies of the Administrative Agent and the Lenders thereunder,
the obligations of the Borrower and the Guarantors thereunder, and the Liens created and provided
for thereunder remain in full force and effect and shall not be affected, impaired or discharged
hereby. Nothing herein contained shall in any manner affect or impair the priority of the Liens
created and provided for by the Collateral Documents to which it is a party as to the indebtedness,
obligations and liabilities which would be secured thereby prior to giving effect to this
Amendment.

     4.2. Except as specifically amended herein or waived hereby, the Credit Agreement shall
continue in full force and effect in accordance with its original terms. Reference to this

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specific
Amendment need not be made in the Credit Agreement, the other Loan Documents, or any other
instrument or document executed in connection therewith, or in any certificate, letter or
communication issued or made pursuant to or with respect to the Credit Agreement, any reference in
any of such items to the Credit Agreement being sufficient to refer to the Credit Agreement as
amended hereby.

     4.3. This Amendment may be executed in any number of counterparts, and by the different
parties on different counterpart signature pages, all of which taken together shall constitute one
and the same agreement. Any of the parties hereto may execute this Amendment by signing any such
counterpart and each of such counterparts shall for all purposes be deemed to be an original. This
Amendment shall be governed by the internal laws of the State of Illinois.

     4.4. The Borrower agrees to pay all reasonable out-of-pocket costs and expenses incurred by
the Administrative Agent in connection with the credit facilities and the preparation, execution
and delivery of this Amendment, and the documents and transactions contemplated hereby, including
the reasonable fees and expenses of counsel for the Administrative Agent with respect to the
foregoing.

[Remainder of Page Intentionally Left Blank]

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This Third Amendment to Second Amended and Restated Credit Agreement is entered into as of the
date and year first above written.

	 	 	 	 	 
	 	“Borrower”

Penford Corporation

 	 
	 	By  	 	 
	 	 	Name 	 	 
	 	 	Title 	 	 
	 
	 	“Guarantors”

Penford Products Co.

 	 
	 	By  	 	 
	 	 	Name 	 	 
	 	 	Title 	 	 
	 

Penford Corporation

Signature Page to Third Amendment

to Second Amended and Restated Credit Agreement

 

Accepted and agreed to as of the date and year last above written.

	 	 	 	 	 
	 	“Lenders”

Bank of Montreal, in
its individual capacity as a 
    Lender, as
L/C Issuer, and as Administrative Agent
 	 
	 	By  	 	 
	 	 	Name 	 	 
	 	 	Title 	 	 
	 
	 	U.S. Bank National Association
 	 
	 	By  	 	 
	 	 	Name 	 	 
	 	 	Title 	 	 
	 
	 	Bank of America National Association, as

   Successor By Merger to LaSalle Bank National

   Association
 	 
	 	By  	 	 
	 	 	Name 	 	 
	 	 	Title 	 	 
	 

Penford Corporation

Signature Page to Third Amendment

to Second Amended and Restated Credit Agreement

 

	 	 	 	 	 
	 	Cooperative Centrale

   Raiffeisen-Boerenleenbank B.A., 

   “Rabobank
Nederland,” New York Branch

 	 
	 	By  	 	 
	 	 	Name 	 	 
	 	 	Title 	 	 
	 
	 	 	 
	 	By  	
 	 
	 	 	Name 	 	 
	 	 	Title 	 	 
	 
	 	Australia and New Zealand Banking Group

   Limited

 	 
	 	By  	 	 
	 	 	Name 	 	 
	 	 	Title 	 	 
	 

Penford Corporation

Signature Page to Third Amendment

to Second Amended and Restated Credit Agreement

 

Schedule I

to Compliance Certificate

Penford Corporation

Compliance Calculations

for Second Amended and Restated Credit Agreement

dated as of October 5, 2006, as amended

Calculations as of                                         ,                     

	 	 	 	 	 	 	 	 	 
	A.	 	Fixed Charge Coverage Ratio (Section 8.22(b))	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	1.	 	Net Income for past ___ quarters
	 	$	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	2.	 	Interest Expense for past ___ quarters
	 	$	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	3.	 	Income taxes for past ___ quarters
	 	$	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	4.	 	Depreciation and Amortization Expense for past
quarters
	 	$	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	5.	 	Non-cash Loss (Gain) realized on sale/disposition of
assets for past ___ quarters [Loss shall be identified by a
positive number; Gains shall be identified by a negative
number]
	 	$	 	 
	 	 	 	 	 
	 		 	 
	 	 	 	 	 
	 	 	 	 
	 	 	6.	 	Non-cash stock compensation charges for past ___ quarters
	 	$	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	7.	 	Severance charges for past ___ quarters
	 	$	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	8.	 	Non-cash interest rate hedge charges for past ___
quarters
	 	$	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	9.	 	Non-cash interest rate hedge gains for past ___ quarters
	 	$	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	10.	 	Sum of Lines A1, A2, A3, A4, A5, A6, A7 and A8 minus
Line A9
	 	$	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	11.	 	Flood-related insurance proceeds received (applies only
after November 30, 2008) for past ___ quarters
	 	$	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	12.	 	Line A10 minus A11 (“EBITDA”)
	 	$	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	13.	 	Principal payments made in cash
	 	$	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	14.	 	Interest Expense paid in cash
	 	$	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	15.	 	Restricted Payments made in cash
	 	$	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	16.	 	Income taxes paid in cash
	 	$	 	 
	 	 	 	 	 
	 	 	 	 

 

	 	 	 	 	 	 	 	 	 
	 	 	17.	 	Income tax refunds received in cash
	 	$	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	18.	 	Sum of Lines A13, A14, A15 and A16 minus Line A17
	 	$	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	19.	 	Ratio of Line A12 to Line A18
	 	 	        :1.0	 
	 	 	 	 	 
	 	 	 	 
	 	 	20.	 	Line A19 ratio must not be less than
	 	 	        :1.0	 
	 	 	 	 	 
	 	 	 	 
	 	 	21.	 	The Borrower is in compliance (circle yes or no)
	 	yes/no
	 	 	 	 	 
	 	 	 	 
	C.	 	Tangible Net Worth (Section 8.22(c))	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	1.	 	Net Worth
	 	$	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	2.	 	Intangible Assets
	 	$	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	3.	 	Write-up of assets
	 	$	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	4.	 	Adjustment for sale of Penford Holdings
	 	$	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	5.	 	Line C1 minus the sum of Lines C2, C3 and C4
	 	$	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	6.	 	Line C5 must not be less than
	 	$	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	7.	 	The Borrower is in compliance (circle yes or no)
	 	yes/no
	 	 	 	 	 
	 	 	 	 
	D.	 	Capital Expenditures (Section 8.22(d))	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	1.	 	Year-to-date Capital Expenditures of the Borrower and
its Domestic Subsidiaries (net of permitted exclusions)
	 	$	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	2.	 	Maximum permitted amount
	 	$	6,500,000	 
	 	 	 	 	 
	 	 	 	 
	 	 	3.	 	The Borrower is in compliance (circle yes or no)
	 	yes/no
	 	 	 	 	 
	 	 	 	 
	 	 	4.	 	Year-to-date Capital Expenditures of Penford Holdings
and its Subsidiaries
	 	$	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	5.	 	Maximum permitted amount
	 	$	1,500,000	 
	 	 	 	 	 
	 	 	 	 
	 	 	6.	 	The Borrower is in compliance (circle yes or no)
	 	yes/no
	 	 	 	 	 
	 	 	 	 
	E.	 	Minimum EBITDA(Section 8.22(e))	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	1.	 	EBITDA for _-month period ended
	 	$	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	2.	 	Minimum required amount
	 	$	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	3.	 	The Borrower is in compliance (circle yes or no)
	 	yes/no
	 	 	 	 	 
	 	 	 	 
	F.	 	Pricing Grid	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	1.	 	Total Funded Debt Ratio
	 	        to 1
	 	 	 	 	 
	 	 	 	 
	 	 	2.	 	Pricing Level
	 	 	 	 
	 	 	 	 	 
	 	 	 	 

-2-exv10w1

Exhibit 10.1

STOCK PURCHASE AGREEMENT

     This STOCK PURCHASE AGREEMENT (this “Agreement”) is made as of June 30, 2009, by and
among Echo Therapeutics, Inc., a Delaware corporation (the “Company”), and each of the
purchasers of the Series B Preferred Stock of the Company whose names are set forth on Exhibit
A attached hereto (each a “Purchaser” and collectively, the “Purchasers”).

     WHEREAS, the Company is issuing Series B Preferred Stock and detachable shares of Common Stock
of the Company in exchange for cash or the extinguishment of outstanding promissory notes, as
further set forth below.

     The parties hereto agree as follows:

ARTICLE I

PURCHASE AND SALE OF STOCK

          Section 1.1 Purchase and Sale of Series B Preferred Stock.

          (a) Upon the following terms and conditions, the Company shall issue and sell to the
Purchasers, and the Purchasers shall, severally and not jointly, purchase from the Company up to
three hundred (300) shares of Series B Preferred Stock and Common Stock (defined below) with the
terms set forth in that certain Certificate of Designation, Preferences and Rights of Series B
Preferred Stock of the Company (the “Series B Preferred Stock”). The Company and the
Purchasers are executing and delivering this Agreement in accordance with and in reliance upon the
exemption from securities registration afforded by Section 4(2) of the U.S. Securities Act of 1933,
as amended, and the rules and regulations promulgated thereunder (the “Securities Act”),
including Regulation D (“Regulation D”), and/or upon such other exemption from the
registration requirements of the Securities Act as may be available with respect to any or all of
the investments to be made hereunder.

          (b) Upon the following terms and conditions, the Purchasers shall be issued, on a pro rata
basis, (i) five hundred thousand (500,000) restricted shares of the Company’s common stock, par
value $0.01 per share (the “Common Stock”) for each one million dollars ($1,000,000) of
Series B Preferred Stock stated value purchased hereunder and (ii) an additional two hundred two
thousand (202,000) restricted shares of the Company’s Common Stock shall be issued to any Purchaser
who purchases at least two million dollars ($2,000,000) of Series B Preferred Stock stated value
hereunder; provided, however, if as a result of the foregoing, any Purchaser or any of its
affiliates, individually or in the aggregate would beneficially own (as determined in accordance
with Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules thereunder)
more than 9.99% of the Company’s issued and outstanding Common Stock (“Threshold Amount”),
the Holder will receive Common Stock rounded to the nearest whole share, up to the Threshold
Amount, and the remaining Common Stock would be exchanged for Series C Preferred Stock convertible
into the number of shares of Common Stock equal to the difference between the aggregate number of
shares of Common Stock to be issued to the Holder and the actual number of shares of Common Stock issued in accordance with this

 

 

paragraph. The Certificate of Designation of the Relative Rights and Preferences of the Series C
Preferred Stock is attached to this Agreement as Exhibit E. As of the date of this
Agreement, each share of Common Stock (or as-converted share of Series C Stock) shall be deemed to
have a purchase price of $1.51 per share.

          Section 1.2 Purchase Price and Closing. Subject to the terms and conditions hereof,
the Company agrees to issue and sell to the Purchasers and, in consideration of and in express
reliance upon the representations, warranties, covenants, terms and conditions of this Agreement,
the Purchasers, severally but not jointly, agree to purchase the Series B Preferred Stock, Common
Stock and Series C Preferred Stock for an aggregate purchase price equal to the aggregate amount
set forth in Exhibit A (the “Purchase Price”). The sale of the Series B Preferred
Stock, Common Stock and Series C Preferred Stock to the Purchasers shall take place through a
closing or series of closings under this Agreement (each referred to as the “Closing”), the
first of which shall take place on or before June 30, 2009 in an aggregate amount of at least two
million dollars ($2,000,000) and the remainder of which shall take place on or before July 15, 2009
(each such date referred to as the “Closing Date”). Exhibit A to this Agreement
shall be amended from time to time to reflect any additional Closings, without any further action
of the parties hereto. Each Closing of the purchase and sale of the Series B Preferred Stock to be
acquired by the Purchasers from the Company under this Agreement shall take place at the offices of
the Company, 10 Forge Parkway, Franklin, Massachusetts 02038, 10:00 a.m. New York time;
provided, that all of the conditions set forth in Article IV hereof and applicable to the
Closing shall have been fulfilled or waived in accordance herewith. Subject to the terms and
conditions of this Agreement, at the Closing, upon payment of the Purchase Price, the Company shall
deliver or cause to be delivered to each Purchaser (x) the number of shares of Series B Preferred
Stock set forth opposite the name of such Purchaser on Exhibit A hereto and (y) the number
of shares of Common Stock (and Series C Preferred Stock, if applicable) set forth opposite the name
of such Purchaser on Exhibit A hereto. At the Closing, each Purchaser shall deliver its
Purchase Price. The Series B Preferred Stock, the Common Stock and the Series C Preferred Stock
are sometimes collectively referred to herein as the “Securities.”

ARTICLE II

REPRESENTATIONS AND WARRANTIES

          Section 2.1 Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchasers, as of the date hereof and the Closing Date (except as
set forth on the Schedule of Exceptions attached hereto with each numbered Schedule corresponding
to the section number herein), as follows:

          (a) Organization, Good Standing and Power. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State of Delaware and has
the requisite corporate power to own, lease and operate its properties and assets and to conduct
its business as it is now being conducted. The Company does not have any direct or indirect
Subsidiaries (as defined in Section 2.1(g)) or own securities of any kind in any other entity
except as set forth on Schedule 2.1(g) hereto. The Company and each such Subsidiary (as
defined in Section 2.1(g)) is duly qualified as a foreign corporation to do business and is in
good

2

 

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(s) (alone or in the aggregate)
in which the failure to be so qualified will not have a Material Adverse Effect. For the purposes
of this Agreement, “Material Adverse Effect” means any material adverse effect on the
business, operations, properties, prospects, or financial condition of the Company and its
Subsidiaries and/or any condition, circumstance, or situation that would prohibit or otherwise
materially interfere with the ability of the Company to perform any of its obligations under this
Agreement or any of the Transaction Documents in any material respect.

          (b) Authorization; Enforcement. The Company has the requisite corporate power and
authority to enter into and perform this Agreement, the Officer’s Certificate to be delivered by
the Company, dated as of the Closing Date, substantially in the form of Exhibit B attached
hereto (the “Officer’s Certificate”) and the Irrevocable Transfer Agent Instructions (as
defined in Section 3.16 hereof) (collectively, the “Transaction Documents”) and to issue
and sell the Securities in accordance with the terms hereof. The execution, delivery and
performance of the Transaction Documents by the Company and the consummation by it of the
transactions contemplated thereby have been duly and validly authorized by all necessary corporate
action, and, except as set forth on Schedule 2.1(b), no further consent or authorization of
the Company, its Board of Directors or stockholders is required. When executed and delivered by
the Company, each of the Transaction Documents shall constitute 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, 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.

          (c) Capitalization. The authorized capital stock and the issued and outstanding
shares of capital stock of the Company as of the Closing Date is set forth on Schedule
2.1(c) hereto. All of the outstanding shares of the Common Stock and any other outstanding
security of the Company have been duly and validly authorized. Except as set forth in this
Agreement, the Commission Documents (as defined in Section 2.1(f)) or as set forth on Schedule
2.1(c) hereto, no shares of Common Stock or any other security of the Company are entitled to
preemptive rights or registration rights and there are no outstanding options, warrants, scrip,
rights to subscribe to, call or commitments of any character whatsoever relating to, or securities
or rights convertible into, any shares of capital stock of the Company. Furthermore, except as set
forth in this Agreement and as set forth on Schedule 2.1(c) hereto, there are 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 shares of capital stock of the Company. Except for customary transfer restrictions contained
in agreements entered into by the Company in order to sell restricted securities or as provided on
Schedule 2.1(c) hereto, the Company is not a party to or bound by any agreement or
understanding granting registration or anti-dilution rights to any person with respect to any of
its equity or debt securities. Except as set forth on Schedule 2.1(c), the Company is not
a party to, and it has no knowledge of, any agreement or understanding restricting the voting or
transfer of any shares of the capital stock of the Company.

          (d) Issuance of Securities. The Series B Preferred Stock, the Common Stock and the
Series C Preferred Stock to be issued at the Closing have been duly authorized by all

3

 

necessary corporate action. When the Series B Preferred Stock, Common Stock and Series C Preferred Stock are
issued and paid for in accordance with the terms of this Agreement and as set forth in the
Certificate of Designation, Preferences and Rights of the Series B Preferred Stock and the
Certificate of Designation, Preferences and Rights of the Series C Preferred Stock, such shares
will be duly authorized by all necessary corporate action and validly issued and outstanding, fully
paid and nonassessable, free and clear of all liens, encumbrances and rights of refusal of any kind
and the holders shall be entitled to, in the case of the Series B Preferred Stock, all rights set
forth in the Certificate of Designation, Preferences and Rights of the Series B Preferred Stock, in
the case of the Series C Preferred Stock, all rights set forth in the Certificate of Designation,
Preferences and Rights of the Series C Preferred Stock, and with respect to the Common Stock, all
rights accorded to a holder of Common Stock. When the shares issued upon conversion of the Series
C Preferred Stock are issued upon conversion of the Series C Preferred Stock, such shares will be
duly authorized by all necessary corporate action and validly issued and outstanding, fully paid
and nonassessable, free and clear of all taxes, liens, encumbrances and rights of refusal of any
kind and the holders shall be entitled to all rights accorded to a holder of Common Stock.

          (e) No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company and the Subsidiaries, the consummation by the Company and the Subsidiaries
of the transactions contemplated hereby and thereby, and the issuance of the Securities as
contemplated hereby, do not and will not (i) violate or conflict with any provision of the
Company’s Articles of Incorporation (the “Articles”) or Bylaws (the “Bylaws”), each
as amended to date, or any Subsidiary’s comparable charter documents, (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond, license, lease
agreement, instrument or obligation to which the Company or any of its Subsidiaries is a party or
by which the Company or any of its Subsidiaries’ respective properties or assets are bound, (iii)
result in a violation of any federal, state, local or foreign statute, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations) 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, or (iv) create or impose a lien, mortgage, security interest,
charge or encumbrance of any nature on any property or asset of the Company or its Subsidiaries
under any agreement or any commitment to which the Company or any of its Subsidiaries is a party or
by which the Company or any of its Subsidiaries is bound or by which any of their respective
properties or assets are bound, except, in all cases, for such conflicts, defaults, terminations,
amendments, acceleration, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect (other than violations pursuant to clauses (i) or (iii)).
Neither the Company nor any of its Subsidiaries is required under federal, state, foreign or local
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 the Transaction Documents or issue and sell the Securities in
accordance with the terms hereof and the terms of the Series B Preferred Stock, the Series C
Preferred Stock and the Common Stock (other than any filings, consents and approvals which may be
required to be made by the Company under applicable state and federal securities laws,
rules or regulations). The business of the Company and its Subsidiaries is not being
conducted in violation of any laws, ordinances or regulations of any governmental entity.

4

 

          (f) Commission Documents, Financial Statements. The Common Stock of the Company is
registered pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), and the Company has filed all reports, schedules, forms, statements
and other documents required to be filed by it with the Commission pursuant to the reporting
requirements of the Exchange Act (all of the foregoing including filings incorporated by reference
therein being referred to herein as the “Commission Documents”). At the times of their
respective filings, the Form 10-Q for the fiscal quarter ended March 31, 2009 (“Form 10-Q”)
and the Form 10-K for the fiscal year ended December 31, 2008 (“Form 10-K”) complied in all
material respects with the requirements of the Exchange Act and the rules and regulations of the
Commission promulgated thereunder and other federal, state and local laws, rules and regulations
applicable to such documents, and the Form 10-Q and Form 10-K 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. As of their respective dates, the financial statements of the Company included in the
Commission Documents complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission or other applicable rules
and regulations with respect thereto. Such financial statements have been prepared in accordance
with generally accepted accounting principles (“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 position of the Company and its 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).

          (g) Subsidiaries. Schedule 2.1(g) hereto sets forth each Subsidiary of the
Company, showing the jurisdiction of its incorporation or organization and showing the percentage
of each person’s ownership of the outstanding stock or other interests of such Subsidiary. For the
purposes of this Agreement, “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. All of the outstanding shares of capital stock of each Subsidiary have been
duly authorized and validly issued, and are fully paid and nonassessable. Except as set forth on
Schedule 2.1(g) hereto, there are no outstanding preemptive, conversion or other rights,
options, warrants or agreements granted or issued by or binding upon any Subsidiary for the
purchase or acquisition of any shares of capital stock of any Subsidiary or any other securities
convertible into, exchangeable for or evidencing the rights to subscribe for any shares of such
capital stock. Neither the Company nor any Subsidiary is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of the capital stock of any
Subsidiary or any convertible securities, rights, warrants or options of the type described in the
preceding sentence except as set forth on Schedule 2.1(g) hereto. Neither the
Company nor any Subsidiary is party to, nor has any knowledge of, any agreement restricting
the voting or transfer of any shares of the capital stock of any Subsidiary.

5

 

          (h) No Material Adverse Change. Since December 31, 2008, the Company has not
experienced or suffered any Material Adverse Effect, except as disclosed on Schedule 2.1(h)
hereto.

          (i) No Undisclosed Liabilities. Except as disclosed on Schedule 2.1(i)
hereto, neither the Company nor any of its Subsidiaries has incurred any liabilities, obligations,
claims or losses (whether liquidated or unliquidated, secured or unsecured, absolute, accrued,
contingent or otherwise) other than those incurred in the ordinary course of the Company’s or its
Subsidiaries respective businesses or which, individually or in the aggregate, are not reasonably
likely to have a Material Adverse Effect.

          (j) No Undisclosed Events or Circumstances. Since December 31, 2008, except as
disclosed on Schedule 2.1(j) hereto, no event or circumstance has occurred or exists with
respect to the Company or its Subsidiaries or their respective businesses, properties, prospects,
operations or financial condition, which, under applicable law, rule or regulation, requires public
disclosure or announcement by the Company but which has not been so publicly announced or
disclosed.

          (k) Indebtedness. Schedule 2.1(k) hereto sets forth as of the date hereof all
outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the
Company or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness”
shall mean (a) any liabilities for borrowed money or amounts owed in excess of $250,000 (other than
trade accounts payable incurred in the ordinary course of business), (b) all guaranties,
endorsements and other contingent obligations in respect of Indebtedness of others, 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 $100,000 due under leases required to be capitalized in accordance with GAAP. Neither
the Company nor any Subsidiary is in default with respect to any Indebtedness.

          (l) Title to Assets. Each of the Company and the Subsidiaries has good and valid
title to all of its real and personal property reflected in the Commission Documents, free and
clear of any mortgages, pledges, charges, liens, security interests or other encumbrances, except
for those indicated on Schedule 2.1(l) hereto or such that, individually or in the
aggregate, do not cause a Material Adverse Effect. Any leases of the Company and each of its
Subsidiaries are valid and subsisting and in full force and effect.

          (m) Actions Pending. There is no action, suit, claim, investigation, arbitration,
alternate dispute resolution proceeding or other proceeding pending or, to the knowledge of the
Company, threatened against the Company or any Subsidiary which questions the validity of this
Agreement or any of the other Transaction Documents or any of the transactions contemplated hereby
or thereby or any action taken or to be taken pursuant hereto or thereto. Except as set forth in
the Commission Documents or on Schedule 2.1(m) hereto, there is no action, suit, claim,
investigation, arbitration, alternate dispute resolution proceeding or other proceeding pending or,
to the knowledge of the Company, threatened against or involving the Company, any Subsidiary
or any of their respective properties or assets, which individually or in the aggregate, would
reasonably be expected, if adversely determined, to have a Material Adverse Effect. There are

6

 

no outstanding orders, judgments, injunctions, awards or decrees of any court, arbitrator or
governmental or regulatory body against the Company or any Subsidiary or any officers or directors
of the Company or Subsidiary in their capacities as such, which individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.

          (n) Compliance with Law. The business of the Company and the Subsidiaries has been
and is presently being conducted in accordance with all applicable federal, state and local
governmental laws, rules, regulations and ordinances, except such that, individually or in the
aggregate, the noncompliance therewith could not reasonably be expected to have a Material Adverse
Effect. The Company and each of its Subsidiaries have all franchises, permits, licenses, consents
and other governmental or regulatory authorizations and approvals necessary for the conduct of its
business as now being conducted by it unless the failure to possess such franchises, permits,
licenses, consents and other governmental or regulatory authorizations and approvals, individually
or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

          (o) Taxes. The Company and each of the Subsidiaries has accurately prepared and filed
all federal, state and other tax returns required by law to be filed by it, has paid or made
provisions for the payment of all taxes shown to be due and all additional assessments, and
adequate provisions have been and are reflected in the financial statements of the Company and the
Subsidiaries for all current taxes and other charges to which the Company or any Subsidiary is
subject and which are not currently due and payable. Except as disclosed on Schedule
2.1(o) hereto or in the Commission Documents, to the best of the Company’s knowledge, none of
the federal income tax returns of the Company or any Subsidiary have been audited by the Internal
Revenue Service. The Company has no knowledge of any additional assessments, adjustments or
contingent tax liability (whether federal or state) of any nature whatsoever, whether pending or
threatened against the Company or any Subsidiary for any period, nor of any basis for any such
assessment, adjustment or contingency.

          (p) Certain Fees. Except as set forth on Schedule 2.1(p) hereto, the Company
has not employed any broker or finder or incurred any liability for any brokerage or investment
banking fees, commissions, finders’ structuring fees, financial advisory fees or other similar fees
in connection with the Transaction Documents.

          (q) Disclosure. Except for the transactions contemplated by this Agreement, the
Company confirms that neither it nor any other person acting on its behalf has provided any of the
Purchasers or their agents or counsel with any information that constitutes or might constitute
material, nonpublic information. Neither this Agreement or the Schedules hereto nor any other
documents, certificates or instruments furnished to the Purchasers by or on behalf of the Company
or any Subsidiary in connection with the transactions contemplated by this Agreement contain any
untrue statement of a material fact or omit to state a material fact necessary in order to make the
statements made herein or therein, in the light of the circumstances under which they were made
herein or therein, not misleading.

          (r) Operation of Business. Except as set forth on Schedule 2.1(r) hereto, the
Company and each of the Subsidiaries owns or possesses the rights to all patents, trademarks,
domain names (whether or not registered) and any patentable improvements or copyrightable

7

 

derivative works thereof, websites and intellectual property rights relating thereto, service
marks, trade names, copyrights, licenses and authorizations which are necessary for the conduct of
its business as now conducted without any conflict with the rights of others.

          (s) Environmental Compliance. 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. “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. The Company has all necessary governmental
approvals required under all Environmental Laws as necessary for the Company’s business or the
business of any of its subsidiaries. To the best of the Company’s knowledge, the Company and each
of its subsidiaries are also in compliance with all other limitations, restrictions, conditions,
standards, requirements, schedules and timetables required or imposed under all Environmental Laws.
Except for such instances as would not individually or in the aggregate have a Material Adverse
Effect, 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 may
violate any Environmental Law after the Closing Date or that may 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.

          (t) Books and Records; Internal Accounting Controls. The records and documents of the
Company and its Subsidiaries accurately reflect in all material respects the information relating
to the business of the Company and the Subsidiaries, the location and collection of their assets,
and the nature of all transactions giving rise to the obligations or accounts receivable of the
Company or any Subsidiary. The Company is in material compliance with all provisions of the
Sarbanes-Oxley Act of 2002 which are applicable to it as of the Closing Date. The Company and its
subsidiary maintain a system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is
permitted only in accordance with management’s general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. The Company has established disclosure
controls and procedures (as defined in Exchange Act Rules 13B5(e) and 15d-15(e)) for the Company and designed such disclosure
controls and procedures to ensure that information required to be disclosed by the Company in the
reports it files or submits under the Exchange Act is recorded, processed, summarized and

8

 

reported, within the time periods specified in the Commission’s rules and forms. The Company’s certifying
officers have evaluated the effectiveness of the Company’s disclosure controls and procedures as of
the end of the period covered by the Company’s most recently filed periodic report under the
Exchange Act (such date, the “Evaluation Date”). The Company presented in its most recently
filed periodic report under the Exchange Act the conclusions of the certifying officers about the
effectiveness of the disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no changes in the Company’s internal
control over financial reporting (as such term is defined in the Exchange Act) that has materially
affected, or is reasonably likely to materially affect, the Company’s internal control over
financial reporting.

          (u) Material Agreements. Except as disclosed in the Commission Documents or as set
forth on Schedule 2.1(u) hereto, or as would not be reasonably likely to have a Material
Adverse Effect, (i) the Company and each of its Subsidiaries have performed all obligations
required to be performed by them to date under any written or oral contract, instrument, agreement,
commitment, obligation, plan or arrangement, filed or required to be filed with the Commission (the
“Material Agreements”), (ii) neither the Company nor any of its Subsidiaries has received
any notice of default under any Material Agreement and, (iii) to the best of the Company’s
knowledge, neither the Company nor any of its Subsidiaries is in default under any Material
Agreement now in effect.

          (v) Transactions with Affiliates. Except as set forth on Schedule 2.1(v)
hereto or in the Commission Documents or as contemplated by this Agreement, there are no loans,
leases, agreements, contracts, royalty agreements, management contracts or arrangements or other
continuing transactions between (a) the Company, any Subsidiary or any of their respective
customers or suppliers on the one hand, and (b) on the other hand, any officer, employee,
consultant or director of the Company, or any of its Subsidiaries, or any person owning at least
five percent (5%) of the outstanding capital stock of the Company or any Subsidiary or any member
of the immediate family of such officer, employee, consultant, director or stockholder or any
corporation or other entity controlled by such officer, employee, consultant, director or
stockholder, or a member of the immediate family of such officer, employee, consultant, director or
stockholder which, in each case, is required to be disclosed in the Commission Documents or in the
Company’s most recently filed definitive proxy statement on Schedule 14A, that is not so disclosed
in the Commission Documents or in such proxy statement.

          (w) Securities Act of 1933. The Company has complied and will comply with all
applicable federal and state securities laws in connection with the offer, issuance and sale of the
Securities hereunder. Neither the Company nor anyone acting on its behalf, directly or indirectly,
has or will sell, offer to sell or solicit offers to buy any of the Securities or similar
securities to, or solicit offers with respect thereto from, or enter into any negotiations relating
thereto with, any person, or has taken or will take any action so as to bring the issuance and sale
of any of the Securities under the registration provisions of the Securities Act and applicable
state securities laws, and neither the Company nor any of its affiliates, nor any person acting on
its or their behalf, has engaged in any form of general solicitation or general advertising (within
the meaning of Regulation D under the Securities Act) in connection with the offer or sale of
any of the Securities.

9

 

          (x) Employees. Neither the Company nor any Subsidiary has any collective bargaining
arrangements or agreements covering any of its employees, except as set forth on Schedule
2.1(x) hereto. Except as set forth on Schedule 2.1(x) hereto or in the Commission
Documents, neither the Company nor any Subsidiary has any employment contract, agreement regarding
proprietary information, non-competition agreement, non-solicitation agreement, confidentiality
agreement, or any other similar contract or restrictive covenant, relating to the right of any
officer, employee or consultant to be employed or engaged by the Company or such Subsidiary
required to be disclosed in the Commission Documents that is not so disclosed. No officer,
consultant or key employee of the Company or any Subsidiary whose termination, either individually
or in the aggregate, would be reasonably likely 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.

          (y) Absence of Certain Developments. Except as set forth in the Commission Documents
or provided on Schedule 2.1(y) hereto, since March 31, 2009, neither the Company nor any
Subsidiary has:

               (i) issued any stock, bonds or other corporate securities or any right, options or warrants
with respect thereto;

               (ii) borrowed any amount in excess of $100,000 or incurred or become subject to any other
liabilities in excess of $100,000 (absolute or contingent) except current liabilities incurred in
the ordinary course of business which are comparable in nature and amount to the current
liabilities incurred in the ordinary course of business during the comparable portion of its prior
fiscal year, as adjusted to reflect the current nature and volume of the business of the Company
and its Subsidiaries;

               (iii) discharged or satisfied any lien or encumbrance in excess of $100,000 or paid any
obligation or liability (absolute or contingent) in excess of $100,000, other than current
liabilities paid in the ordinary course of business;

               (iv) declared or made any payment or distribution of cash or other property to stockholders
with respect to its stock, or purchased or redeemed, or made any agreements so to purchase or
redeem, any shares of its capital stock, in each case in excess of $50,000 individually or $100,000
in the aggregate;

               (v) sold, assigned or transferred any other tangible assets, or canceled any debts or claims,
in each case in excess of $100,000, except in the ordinary course of business;

               (vi) sold, assigned or transferred any patent rights, trademarks, trade names, copyrights,
trade secrets or other intangible assets or intellectual property rights in excess of $100,000, or
disclosed any proprietary confidential information to any person except to customers in the
ordinary course of business or to the Purchasers or their representatives;

10

 

               (vii) suffered any material losses or waived any rights of material value, whether or not in
the ordinary course of business, or suffered the loss of any material amount of prospective
business;

               (viii) made any changes in employee compensation except in the ordinary course of business and
consistent with past practices;

               (ix) made capital expenditures or commitments therefor that aggregate in excess of $100,000;

               (x) entered into any material transaction, whether or not in the ordinary course of business;

               (xi) made charitable contributions or pledges in excess of $10,000;

               (xii) suffered any material damage, destruction or casualty loss, whether or not covered by
insurance;

               (xiii) experienced any material problems with labor or management in connection with the terms
and conditions of their employment; or

               (xiv) entered into an agreement, written or otherwise, to take any of the foregoing actions.

          (z) Investment Company Act Status. The Company is not, and as a result of and
immediately upon the Closing will 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.

          (aa) 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 is or would be
materially adverse to the Company and its Subsidiaries. The execution and delivery of this
Agreement and the issuance and sale of the Securities will not involve any transaction which is
subject to the prohibitions of Section 406 of the Employee Retirement Income Security Act of 1974,
as amended (“ERISA”) or in connection with which a tax could be imposed pursuant to Section 4975 of
the Internal Revenue Code of 1986, as amended, provided that, if any of the Purchasers, or any
person or entity that owns a beneficial interest in any of the Purchasers, is an “employee pension
benefit plan” (within the meaning of Section 3(2) of ERISA) with respect to which the Company is a
“party in interest” (within the meaning of Section 3(14) of ERISA), the requirements of Sections
407(d)(5) and 408(e) of ERISA, if applicable, are met. As used in this Section 2.1(aa), 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.

11

 

          (bb) Independent Nature of Purchasers. The Company acknowledges that the obligations
of each Purchaser under the Transaction Documents are several and not joint with the obligations of
any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the
obligations of any other Purchaser under the Transaction Documents. The Company acknowledges that
the decision of each Purchaser to purchase Securities pursuant to this Agreement has been made by
such Purchaser independently of any other Purchaser and independently of any information,
materials, statements or opinions as to the business, affairs, operations, assets, properties,
liabilities, results of operations, condition (financial or otherwise) or prospects of the Company
or of its Subsidiaries which may have made or given by any other Purchaser or by any agent or
employee of any other Purchaser, and no Purchaser or any of its agents or employees shall have any
liability to any Purchaser (or any other person) relating to or arising from any such information,
materials, statements or opinions. The Company acknowledges that nothing contained herein, or in
any Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be
deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other
kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by the Transaction
Documents. The Company acknowledges that for reasons of administrative convenience only, the
Transaction Documents have been prepared by counsel for one of the Purchasers and such counsel does
not represent all of the Purchasers but only such Purchaser and the other Purchasers have retained
their own individual counsel with respect to the transactions contemplated hereby. The Company
acknowledges that it has elected to provide all Purchasers with the same terms and Transaction
Documents for the convenience of the Company and not because it was required or requested to do so
by the Purchasers. The Company acknowledges that such procedure with respect to the Transaction
Documents in no way creates a presumption that the Purchasers are in any way acting in concert or
as a group with respect to the Transaction Documents or the transactions contemplated hereby or
thereby. The Company acknowledges that each Purchaser shall be entitled to independently protect
and enforce its rights, including without limitation, the rights arising out of this Agreement or
out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be
joined as an additional party in any proceeding for such purpose.

          (cc) No Integrated Offering. Neither the Company, nor any of its affiliates, nor any
person acting on its or their behalf, has directly or indirectly made any offers or sales of any
security or solicited any offers to buy any security under circumstances that would cause the
offering of the Securities pursuant to this Agreement to be integrated with prior offerings by the
Company for purposes of the Securities Act which would prevent the Company from selling the
Securities pursuant to Regulation D and Rule 506 thereof under the Securities Act, or any
applicable exchange-related stockholder approval provisions, nor will the Company or any of its
affiliates or subsidiaries take any action or steps that would cause the offering of the Securities
to be integrated with other offerings. The Company does not have any registration statement
pending before the Commission or currently under the Commission’s review and except as set forth on
Schedule 2.1(cc) hereto, since January 1, 2009, the Company has not offered or sold any of
its equity securities or debt securities convertible into shares of Common Stock.

12

 

          (dd) [Reserved].

          (ee) DTC Status. Except as set forth on Schedule 2.1(ee) hereto, the
Company’s transfer agent is a participant in and the Common Stock is eligible for transfer pursuant
to the Depository Trust Company Automated Securities Transfer Program. The name, address,
telephone number, fax number, contact person and email of the Company transfer agent is set forth
on Schedule 2.1(ee) hereto.

          Section 2.2 Representations and Warranties of the Purchasers. Each of the Purchasers
hereby represents, warrants and covenants to the Company with respect solely to itself and not with
respect to any other Purchaser as follows as of the date hereof and as of the Closing Date:

          (a) Organization and Standing of the Purchasers. If the Purchaser is an entity, such
Purchaser is a corporation, limited liability company or partnership duly incorporated or
organized, validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization.

          (b) Authorization and Power. Each Purchaser has the requisite power and authority to
enter into and perform the Transaction Documents and to purchase the Securities being sold to it
hereunder. The execution, delivery and performance of the Transaction Documents by each Purchaser
and the consummation by it of the transactions contemplated hereby have been duly authorized by all
necessary corporate or partnership action, and no further consent or authorization of such
Purchaser or its Board of Directors, stockholders, members, or partners, as the case may be, is
required. When executed and delivered by the Purchasers, the other Transaction Documents shall
constitute valid and binding obligations of each Purchaser enforceable against such Purchaser in
accordance with their 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.

          (c) Acquisition for Investment. Each Purchaser is purchasing the Securities solely
for its own account and not with a view to or for sale in connection with distribution. Each
Purchaser does not have a present intention to sell any of the Securities, nor a present
arrangement (whether or not legally binding) or intention to effect any distribution of any of the
Securities to or through any person or entity; provided, however, that by making
the representations herein, such Purchaser does not agree to hold the Securities for any minimum or
other specific term and reserves the right to dispose of the Securities at any time in accordance
with Federal and state securities laws applicable to such disposition. Each Purchaser acknowledges
that it (i) has such knowledge and experience in financial and business matters such that Purchaser
is capable of evaluating the merits and risks of Purchaser’s investment in the Company, (ii) is
able to bear the financial risks associated with an investment in the Securities and (iii) has been
given full access to such records of the Company and the Subsidiaries and to the officers of the
Company and the Subsidiaries as it has deemed necessary or appropriate to conduct its due diligence
investigation.

          (d) Rule 144. Each Purchaser understands that the Securities must be held
indefinitely unless such Securities are registered under the Securities Act or an exemption from
registration is available. Each Purchaser acknowledges that such person is familiar with Rule

13

 

144 of the rules and regulations of the Commission, as amended, promulgated pursuant to the
Securities Act (“Rule 144”), and that such Purchaser has been advised that Rule 144 permits
resales only under certain circumstances. Each Purchaser understands that to the extent that Rule
144 is not available, such Purchaser will be unable to sell any Securities without either
registration under the Securities Act or the existence of another exemption from such registration
requirement.

          (e) General. Each Purchaser understands that the Securities are being offered and
sold in reliance on a transactional exemption from the registration requirements of federal and
state securities laws and the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of such Purchaser set
forth herein in order to determine the applicability of such exemptions and the suitability of such
Purchaser to acquire the Securities. Each Purchaser understands that no United States federal or
state agency or any government or governmental agency has passed upon or made any recommendation or
endorsement of the Securities. Commencing on the date that the Purchasers were initially contacted
regarding an investment in the Securities, none of the Purchasers has engaged in any short sale of
the Common Stock and will not engage (or instruct any third party to engage on the Purchaser’s
behalf) in any short sale of the Common Stock prior to Closing hereunder. Each Purchaser
covenants and agrees that (i) it will comply with its internal policies and procedures regarding
short sales of securities registered under the Exchange Act, and (ii) it will not engage in any
short sale of the Common Stock until after the public announcement of the Closing hereunder.

          (f) No General Solicitation. Each Purchaser acknowledges that the Securities were not
offered to such Purchaser by means of any form of general or public solicitation or general
advertising, or publicly disseminated advertisements or sales literature, including (i) any
advertisement, article, notice or other communication published in any newspaper, magazine, or
similar media, or broadcast over television or radio, or (ii) any seminar or meeting to which such
Purchaser was invited by any of the foregoing means of communications. Each Purchaser, in making
the decision to purchase the Securities, has relied upon independent investigation made by it and
has not relied on any information or representations made by third parties other than the Company
and its officers and directors.

          (g) Accredited Investor. Each Purchaser (i) is an “accredited investor” (as defined
in Rule 501 of Regulation D), (ii) has such experience in business and financial matters that it is
capable of evaluating the merits and risks of an investment in the Securities, and (iii) has
completed an accredited investor certification in the form attached as Exhibit C hereto.
Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange
Act and such Purchaser is not a broker-dealer. Each Purchaser acknowledges that an investment in
the Securities is speculative and involves a high degree of risk.

          (h) Independent Investment. No Purchaser has agreed to act with any other Purchaser
for the purpose of acquiring, holding, voting or disposing of the Securities purchased hereunder
for purposes of Section 13(d) under the Exchange Act, and each Purchaser is acting independently
with respect to its investment in the Securities.

14

 

ARTICLE III

COVENANTS

     The Company covenants with each Purchaser as follows, which covenants are for the benefit of
each Purchaser and their respective permitted assignees.

          Section 3.1 Securities Compliance. The Company shall notify the Commission in
accordance with its rules and regulations, of the transactions contemplated by any of the
Transaction Documents and shall take all other necessary action and proceedings as may be required
and permitted by applicable law, rule and regulation, for the legal and valid issuance of the
Securities to the Purchasers, or their respective subsequent holders.

          Section 3.2 Registration and Listing. The Company shall cause its Common Stock to
continue to be registered under Sections 12(b) or 12(g) of the Exchange Act, to comply in all
respects with its reporting and filing obligations under the Exchange Act and to not take any
action or file any document (whether or not permitted by the Securities Act or the rules
promulgated thereunder) to terminate or suspend such registration or to terminate or suspend its
reporting and filing obligations under the Exchange Act, except as permitted herein. The Company
will take all action necessary to continue the listing or trading of its Common Stock on the OTC
Bulletin Board or other exchange or market on which the Common Stock is trading. If required, the
Company will promptly file the “Listing Application” for, or in connection with, the issuance and
delivery of the Common Stock. Subject to the terms of the Transaction Documents, the Company
further covenants that it will take such further action as the Purchasers may reasonably request,
all to the extent required from time to time to enable the Purchasers to sell the Securities
without registration under the Securities Act within the limitation of the exemptions provided by
Rule 144 promulgated under the Securities Act. Upon the request of the Purchasers, the Company
shall deliver to the Purchasers a written certification of a duly authorized officer as to whether
it has complied with such requirements.

          Section 3.3 Inspection Rights. Provided same would not be in violation of Regulation
FD, the Company shall permit, during normal business hours and upon reasonable request and
reasonable notice, each Purchaser or any employees, agents or representatives thereof, so long as
such Purchaser shall be obligated hereunder to purchase the Series B Preferred Stock, for purposes
reasonably related to such Purchaser’s interests as a stockholder, to examine the publicly
available, non-confidential records and books of account of, and visit and inspect the properties,
assets, operations and business of the Company and any Subsidiary, and to discuss the publicly
available, non-confidential affairs, finances and accounts of the Company and any Subsidiary with
any of its officers, consultants, directors, and key employees.

          Section 3.4 Compliance with Laws. The Company shall comply, and cause each Subsidiary
to comply, with all applicable laws, rules, regulations and orders, noncompliance with which would
be reasonably likely to have a Material Adverse Effect.

          Section 3.5 Keeping of Records and Books of Account. The Company shall keep and cause
each Subsidiary to keep adequate records and books of account, in which complete entries will be
made in accordance with GAAP consistently applied, reflecting all

15

 

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.

          Section 3.6 Reporting Requirements. If the Company ceases to file its periodic
reports with the Commission, or if the Commission ceases making these periodic reports available
via the Internet without charge, then the Company shall furnish the following to each Purchaser so
long as such Purchaser shall be obligated hereunder to purchase the Securities or shall
beneficially own Series B Preferred Stock:

          (a) Quarterly Reports filed with the Commission on Form 10-Q as soon as practical after the
document is filed with the Commission, and in any event within five (5) days after the document is
filed with the Commission;

          (b) Annual Reports filed with the Commission on Form 10-K as soon as practical after the
document is filed with the Commission, and in any event within five (5) days after the document is
filed with the Commission; and

          (c) Copies of all notices, information and proxy statements in connection with any meetings
that are, in each case, provided to holders of shares of Common Stock, contemporaneously with the
delivery of such notices or information to such holders of Common Stock.

          Section 3.7 Other Agreements. The Company shall not enter into any agreement in which
the terms of such agreement would restrict or impair the right or ability to perform of the Company
or any Subsidiary under any Transaction Document.

          Section 3.8 Use of Proceeds. The proceeds from the sale of the Securities hereunder
shall be used by the Company for working capital and general corporate purposes and may be used to
redeem certain outstanding securities.

          Section 3.9 Reporting Status. So long as a Purchaser beneficially owns any of the
Securities, the Company shall timely file all reports required to be filed with the Commission
pursuant to the Exchange Act, and the Company shall not terminate its status as an issuer required
to file reports under the Exchange Act even if the Exchange Act or the rules and regulations
thereunder would permit such termination.

          Section 3.10 Disclosure of Transaction. The Company shall file with the Commission a
Current Report on Form 8-K (the “Form 8-K”) describing the material terms of the
transactions contemplated hereby (and attaching as exhibits thereto this Agreement and the
Certificate of Designation, Preferences and Rights of the Series B Perpetual Preferred Stock) as
soon as practicable following the Closing Date but in no event more than four (4) Trading Days
following the Closing Date. “Trading Day” means any day during which the principal
exchange on which the Common Stock is traded shall be open for trading.

16

 

          Section 3.11 [Reserved]

          Section 3.12 Pledge of Securities. The Company acknowledges that the Securities may
be pledged by a Purchaser in connection with a bona fide margin agreement or other
loan or financing arrangement that is secured by the Securities. The pledge of Securities shall
not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Purchaser
effecting a pledge of the Securities shall be required to provide the Company with any notice
thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other
Transaction Document; provided that a Purchaser and its pledgee shall be required to comply with
the provisions of Article V hereof in order to effect a sale, transfer or assignment of Securities
to such pledgee. At the Purchasers’ expense, the Company hereby agrees to execute and deliver such
documentation as a pledgee of the Securities may reasonably request in connection with a pledge of
the Securities to such pledgee by a Purchaser.

          Section 3.13 Amendments. The Company shall not amend or waive any provision of the
Articles or Bylaws of the Company in any way that would adversely affect exercise rights, voting
rights, conversion rights, prepayment rights or redemption rights of the holder of the Series B
Preferred Stock, the Series C Preferred Stock or the Common Stock.

          Section 3.14 Distributions. Except as set forth on Schedule 3.14, so long as
any Series B Preferred Stock remains outstanding, the Company agrees that it shall not, and shall
not permit any Subsidiary to, (i) declare or pay any dividends or make any distributions to any
holder(s) of Common Stock (or security convertible into or exercisable for Common Stock) or the
Company’s preferred stock or (ii) purchase or otherwise acquire for value, directly or indirectly,
any Common Stock or other equity security of the Company.

          Section 3.15 Conversion Notices. The Company will honor all conversion notices
delivered pursuant to the terms of the Series C Preferred Stock.

          Section 3.16 Transfer Agent Instructions. The Company shall issue irrevocable
instructions to its transfer agent, and any subsequent transfer agent, to issue certificates,
registered in the name of each Purchaser or its respective nominee(s), for the Common Stock in the
form of Exhibit D attached hereto (the “Irrevocable Transfer Agent Instructions”).
Prior to registration of the Common Stock under the Securities Act, all such certificates shall
bear the restrictive legend specified in Section 5.1 of this Agreement. The Company warrants that
no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section
3.16 will be given by the Company to its transfer agent and that the Common Stock shall otherwise
be freely transferable on the books and records of the Company as and to the extent provided in
this Agreement. Nothing in this Section 3.16 shall affect in any way each Purchaser’s obligations
and agreements set forth in Section 5.1 to comply with all applicable prospectus delivery
requirements, if any, upon resale of the Common Stock. If a Purchaser provides the Company with an
opinion of counsel, in a generally acceptable form, to the effect that a public sale, assignment or
transfer of the Common Stock may be made without registration under the Securities Act or the
Purchaser provides the Company with reasonable assurances that the Common Stock can be sold
pursuant to Rule 144 without any restriction as to the number of securities acquired as of a
particular date that can then be immediately sold, the Company shall permit the transfer and
promptly instruct its transfer agent to issue one or more certificates in such name and in such
denominations as specified by such Purchaser and without any restrictive legend. The Company
acknowledges that a breach by it of its obligations under this Section 3.16

17

 

will cause irreparable harm to the Purchasers by vitiating the intent and
purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Section 3.16 will be inadequate and
agrees, in the event of a breach or threatened breach by the Company of the provisions of this
Section 3.16, that the Purchasers shall be entitled, in addition to all other available remedies,
to an order and/or injunction restraining any breach and requiring immediate issuance and transfer,
without the necessity of showing economic loss and without any bond or other security being
required.

          Section 3.17 Opinions. The Company will provide, at the Company’s expense, such legal
opinions in the future as are reasonably necessary for the issuance and resale of the Common Stock
and the shares issued upon conversion of the Series C Preferred Stock pursuant to an effective
registration statement, Rule 144 under the Securities Act or another exemption from registration.
In the event that Common Stock or the shares issued upon conversion of the Series C Preferred Stock
are sold in a manner that complies with an exemption from registration, the Company will promptly
instruct its counsel (at its expense) to issue to the transfer agent an opinion permitting removal
of the legend (indefinitely, if permitted pursuant to Rule 144 of the Securities Act, or otherwise
to permit sale of the shares pursuant to Rule 144 of the Securities Act).

          Section 3.18 Transactions with Affiliates. The Company shall not, and shall not
permit its subsidiaries to, engage in any transactions with any officer, director, employee or any
Affiliate of the Company, including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal property to or from, or
otherwise requiring payments to or from any officer, director or such employee or, to the knowledge
of the Company, any entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner, in each case in excess of $50,000, other
than (i) for payment of reasonable salary for services actually rendered, as approved by the Board
of Directors of the Company as fair in all respects to the Company, and (ii) reimbursement for
expenses incurred on behalf of the Company.

ARTICLE IV

CONDITIONS

          Section 4.1 Conditions Precedent to the Obligation of the Company to Close and to Sell the
Securities. The obligation hereunder of the Company to close and issue and sell the Securities
to the Purchasers at the Closing is subject to the satisfaction or waiver, at or before the Closing
of the conditions set forth below. These conditions are for the Company’s sole benefit and may be
waived by the Company at any time in its sole discretion.

          (a) Accuracy of the Purchasers’ Representations and Warranties. The representations
and warranties of each Purchaser shall be true and correct in all material respects as of the date
when made and as of the Closing Date as though made at that time, except for
representations and warranties that are expressly made as of a particular date, which shall be
true and correct in all material respects as of such date.

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          (b) Performance by the Purchasers. Each Purchaser 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 Purchasers at or prior to the Closing
Date.

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

          (d) Delivery of Purchase Price. The Purchase Price for the Securities shall have been
delivered to the Company on the Closing Date.

          (e) Delivery of Transaction Documents. The Transaction Documents shall have been duly
executed and delivered by the Purchasers to the Company.

          Section 4.2 Conditions Precedent to the Obligation of the Purchasers to Close and to
Purchase the Securities. The obligation hereunder of the Purchasers to purchase the Securities
and consummate the transactions contemplated by this Agreement is subject to the satisfaction or
waiver, at or before the Closing, of each of the conditions set forth below. These conditions are
for the Purchasers’ sole benefit and may be waived by the Purchasers at any time in their sole
discretion.

          (a) Accuracy of the Company’s Representations and Warranties. Each of the
representations and warranties of the Company in this Agreement and the other Transaction Documents
shall be true and correct in all material respects as of the Closing Date, except for
representations and warranties that speak as of a particular date, which shall be true and correct
in all material respects as of such date.

          (b) Performance by 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 Closing
Date.

          (c) No Suspension, Etc. Trading in the Common Stock shall not have been suspended by
the Commission or the OTC Bulletin Board, and, at any time prior to the Closing Date, trading in
securities generally as reported by Bloomberg Financial Markets (“Bloomberg”) shall not
have been suspended or limited, or minimum prices shall not have been established on securities
whose trades are reported by Bloomberg, or on the New York Stock Exchange, 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 judgment of such Purchaser, makes it
impracticable or inadvisable to purchase the Securities.

          (d) No Injunction. No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any court or

19

 

governmental
authority of competent jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement.

          (e) No Proceedings or Litigation. No action, suit or proceeding before any arbitrator
or any governmental authority shall have been commenced, and no investigation by any governmental
authority shall have been 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.

          (f) Stock. At or prior to the Closing, the Company shall have delivered or caused to
be delivered to the Purchasers the shares of Series B Preferred Stock, Series C Preferred Stock and
the Common Stock (in such denominations as each Purchaser may request).

          (g) Secretary’s Certificate. The Company shall have delivered to the Purchasers a
secretary’s certificate, dated as of the Closing Date, as to (i) the resolutions adopted by the
Board of Directors approving the transactions contemplated hereby, (ii) the Articles, (iii) the
Bylaws, (iv) the Certificate of Designation, Preferences and Rights of the Series B Preferred
Stock, (v) the Certificate of Designation, Preferences and Rights of the Series C Preferred Stock,
each as in effect at the Closing, and (vi) the authority and incumbency of the officers of the
Company executing the Transaction Documents and any other documents required to be executed or
delivered in connection therewith.

          (h) Officer’s Certificate. On the Closing Date, the Company shall have delivered to
the Purchasers a certificate signed by an executive officer on behalf of the Company, dated as of
the Closing Date, confirming the accuracy of the Company’s representations, warranties and
covenants as of such Closing Date and confirming the compliance by the Company with the conditions
precedent set forth in paragraphs (a)-(e) and (i) of this Section 4.2 as of the Closing Date
(provided that, with respect to the matters in paragraphs (c) through (e) of this Section 4.2, such
confirmation shall be based on the knowledge of the executive officer after due inquiry).

          (i) Material Adverse Effect. No Material Adverse Effect shall have occurred.

          (j) Transfer Agent Instructions. The Irrevocable Transfer Agent Instructions, in the
form of Exhibit D attached hereto, shall have been delivered to and executed by the
Company’s transfer agent.

          (k) Delivery of Transaction Documents. The Transaction Documents shall have been duly
executed and delivered by the Company to the Purchasers.

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ARTICLE V

CERTIFICATE LEGEND

          Section 5.1 Legend. Each certificate representing the Securities shall be stamped or
otherwise imprinted with a legend substantially in the following form (in addition to any legend
required by applicable state securities or “blue sky” laws):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR
ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES
LAWS OR ECHO THERAPEUTICS, INC. SHALL HAVE RECEIVED AN OPINION OF COUNSEL THAT
REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

     The Company agrees to issue or reissue certificates representing the Common Stock without the
legend set forth above if at such time, prior to making any transfer of any such shares of Common
Stock, such holder thereof shall give written notice to the Company describing the manner and terms
of such transfer and removal as the Company may reasonably request, and (x) such shares of Common
Stock have been registered for sale under the Securities Act and the holder is selling such shares
and is complying with its prospectus delivery requirement under the Securities Act, (y) the holder
is selling such shares of Common Stock in compliance with the provisions of Rule 144 or (z) such
shares of Common Stock may be sold without restriction under Rule 144.

ARTICLE VI

INDEMNIFICATION

          Section 6.1 General Indemnity. The Company agrees to indemnify and hold harmless the
Purchasers (and their respective directors, officers, affiliates, agents, successors and assigns)
from and against any and all losses, liabilities, deficiencies, costs, damages and expenses
(including, without limitation, reasonable attorneys’ fees, charges and disbursements) incurred by
the Purchasers as a result of any inaccuracy in or breach of the representations, warranties or
covenants made by the Company herein.

          Section 6.2 Indemnification Procedure. Any party entitled to indemnification under
this Article VI (an “indemnified party”) will give written notice to the indemnifying party of any
matter giving rise to a claim for indemnification; provided, that the failure of any party entitled
to indemnification hereunder to give notice as provided herein shall not relieve the indemnifying
party of its obligations under this Article VI except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such action,

21

 

proceeding or claim is brought against an indemnified party in respect of which
indemnification is sought hereunder, the indemnifying party shall be entitled to participate in
and, unless in the reasonable judgment of the indemnifying party a conflict of interest between it
and the indemnified party exists with respect to such action, proceeding or claim (in which case
the indemnifying party shall be responsible for the reasonable fees and expenses of one separate
counsel for the indemnified parties), to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. In the event that the indemnifying party advises an
indemnified party that it will contest such a claim for indemnification hereunder, or fails, within
thirty (30) days of receipt of any indemnification notice to notify, in writing, such person of its
election to defend, settle or compromise, at its sole cost and expense, any action, proceeding or
claim (or discontinues its defense at any time after it commences such defense), then the
indemnified party may, at its option, defend, settle or otherwise compromise or pay such action or
claim. In any event, unless and until the indemnifying party elects in writing to assume and does
so assume the defense of any such claim, proceeding or action, the indemnified party’s costs and
expenses arising out of the defense, settlement or compromise of any such action, claim or
proceeding shall be losses subject to indemnification hereunder. The indemnified party shall
cooperate fully with the indemnifying party in connection with any negotiation or defense of any
such action or claim by the indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the indemnified party which relates to such action or claim.
The indemnifying party shall keep the indemnified party fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. If the indemnifying
party elects to defend any such action or claim, then the indemnified party shall be entitled to
participate in such defense with counsel of its choice at its sole cost and expense. The
indemnifying party shall not be liable for any settlement of any action, claim or proceeding
effected without its prior written consent. Notwithstanding anything in this Article VI to the
contrary, the indemnifying party shall not, without the indemnified party’s prior written consent,
settle or compromise any claim or consent to entry of any judgment in respect thereof which imposes
any future obligation on the indemnified party or which does not include, as an unconditional term
thereof, the giving by the claimant or the plaintiff to the indemnified party of a release from all
liability in respect of such claim. The indemnification obligations to defend the indemnified
party required by this Article VI shall be made by periodic payments of the amount thereof during
the course of investigation or defense, as and when bills are received or expense, loss, damage or
liability is incurred, so long as the indemnified party shall refund such moneys if it is
ultimately determined by a court of competent jurisdiction that such party was not entitled to
indemnification. The indemnity agreements contained herein shall be in addition to (a) any cause
of action or similar rights of the indemnified party against the indemnifying party or others, and
(b) any liabilities the indemnifying party may be subject to pursuant to the law.

ARTICLE VII

MISCELLANEOUS

          Section 7.1 Fees and Expenses. Each party shall pay the fees and expenses of its
advisors, counsel, accountants and other experts, if any, and all other expenses, incurred by such
party incident to the negotiation, preparation, execution, delivery and performance of this
Agreement; provided, however, that the Company shall pay the actual legal
expenses incurred by the Purchasers in connection with the negotiation and execution of this
Agreement, up to an aggregate of $5,000.

22

 

          Section 7.2 Specific Performance; Consent to Jurisdiction; Venue.

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

          (b) The parties agree that venue for any dispute arising under this Agreement will lie
exclusively in the state or federal courts located in New York County, New York, and the parties
irrevocably waive any right to raise forum non conveniens or any other argument that New York is
not the proper venue. The parties irrevocably consent to personal jurisdiction in the state and
federal courts of the state of New York. The Company and each Purchaser consent 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 7.2
shall affect or limit any right to serve process in any other manner permitted by law. The Company
and the Purchasers hereby agree that the prevailing party in any suit, action or proceeding arising
out of or relating to the Securities, this Agreement or the other Transaction Documents, shall be
entitled to reimbursement for reasonable legal fees from the non-prevailing party. The parties
hereby waive all rights to a trial by jury.

          Section 7.3 Entire Agreement; Amendment. This Agreement and the Transaction Documents
contain the entire understanding and agreement of the parties with respect to the matters covered
hereby and, except as specifically set forth herein or in the other Transaction Documents, neither
the Company nor any Purchaser make any representation, warranty, covenant or undertaking with
respect to such matters, and they supersede all prior understandings and agreements with respect to
said subject matter, all of which are merged herein. No provision of this Agreement may be waived
or amended other than by a written instrument signed by the Company and the Purchasers holding at
least a majority of the shares of Series B Preferred Stock then held by the Purchasers. Any
amendment or waiver effected in accordance with this Section 7.3 shall be binding upon each
Purchaser (and their permitted assigns) and the Company.

          Section 7.4 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 by telecopy or facsimile 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

23

 

such address, or upon actual receipt of such mailing, whichever shall first occur. The
addresses for such communications shall be:

	 	 	 
	If to the Company:

	 	Echo Therapeutics, Inc.

Attn: Chief Financial Officer

10 Forge Parkway

Franklin, MA 02038
	 
	 	 
	If to any Purchaser:

	 	At the address of such Purchaser
set forth on Exhibit A to this Agreement.

     Any party hereto may from time to time change its address for notices by giving written notice
of such changed address to the other party hereto.

          Section 7.5 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 provision, 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 consideration shall be offered or paid to any Purchaser
to amend or consent to a waiver or modification of any provision of any of the Transaction
Documents unless the same consideration is also offered to all of the parties to the Transaction
Documents. This provision constitutes a separate right granted to each Purchaser by the Company
and shall not in any way be construed as the Purchasers acting in concert or as a group with
respect to the purchase, disposition or voting of Securities or otherwise.

          Section 7.6 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 7.7 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and assigns. After the Closing, the assignment by
a party to this Agreement of any rights hereunder shall not affect the obligations of such party
under this Agreement. The Purchasers may assign the Securities and its rights under this Agreement
and the other Transaction Documents and any other rights hereto and thereto without the consent of
the Company.

          Section 7.8 No Third Party Beneficiaries. This Agreement is intended for the benefit
of the parties hereto and their respective permitted successors and assigns and is not for the
benefit of, nor may any provision hereof be enforced by, any other person.

          Section 7.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving effect to any of the
conflicts of law principles which would result in the application of the substantive law of another
jurisdiction. This Agreement shall not be interpreted or construed with any presumption against
the party causing this Agreement to be drafted.

24

 

          Section 7.10 Survival. The representations and warranties of the Company and the
Purchasers shall survive the execution and delivery hereof and the Closing until the third
anniversary of the Closing Date, except the agreements and covenants set forth in Articles I, III,
V, VI and VII of this Agreement shall survive the execution and delivery hereof and Closing
hereunder.

          Section 7.11 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same instrument and shall
become effective when counterparts have been signed by each party and delivered to the other
parties hereto, it being understood that all parties need not sign the same counterpart.

          Section 7.12 Publicity. The Company agrees that it will not disclose, and will not
include in any public announcement, the names of the Purchasers without the consent of the
Purchasers, which consent shall not be unreasonably withheld or delayed, or unless and until such
disclosure is required by law, rule or applicable regulation, and then only to the extent of such
requirement. Notwithstanding the foregoing, the Purchasers consent to being identified in any
filings the Company makes with the Commission to the extent required by law or the rules and
regulations of the Commission.

          Section 7.13 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 7.14 Further Assurances. From and after the date of this Agreement, upon the
request of the Purchasers or the Company, the Company and each Purchaser shall execute and deliver
such instruments, 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 and the
other Transaction Documents

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

25

 

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

	 	 	 	 	 
	 	ECHO THERAPEUTICS, INC.

 	 
	 	By:  	Patrick T. Mooney
 	 
	 	 	Name:  	Patrick T. Mooney, M.D. 	 
	 	 	Title:  	Chief Executive Officer 	 
	 

[Additional Signature Pages Follow]

 

 

	 	 	 	 	 
	 	Platinum Montaur Life Sciences, LLC

 	 
	 	By:  	Michael Goldberg
 	 
	 	 	Name:  	Michael Goldberg 	 
	 	 	Title:  	Portfolio Manager 	 
	 

[Signature Page to Stock Purchase Agreement]

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