Document:

Exhibit 10.20

Exhibit 10.20

EMPLOYMENT AGREEMENT

THIS AGREEMENT made effective as of the 1st day of October 2009

BETWEEN:

Ivanhoe Energy Inc. a corporation continued under the laws of the Yukon
Territory, having its principal executive office at Suite 654 – 999
Canada Place, Vancouver, British Columbia and having an office at 19th
Floor, 101-6th Avenue SW, Calgary, Alberta T2P 3P4

(the “Company”)

AND:

David A. Dyck

31261 Coyote Valley Road

Calgary, Alberta

T3L 2R1

(the “Executive”)

WHEREAS:

	(A)	 	the Company is in the business of oil and gas development and production using
proprietary upgrading technology;

	 
	(B)	 	the Company wishes to engage the Executive as President and CEO of Ivanhoe Canada Inc. (“IE
Canada”);

	 
	(C)	 	the parties hereto wish to enter into this Agreement for the purpose of fixing the
compensation and terms applicable to the employment of the Executive during the period

hereinafter set out.

NOW THEREFORE THIS AGREEMENT WITNESSES that the parties hereto, in consideration of the
respective covenants and agreements on the part of each of them herein contained do hereby covenant
and agree as follows:

	1.	 	Definitions and Interpretations

	1.1	In this Agreement, the following terms shall have the meanings ascribed thereto:

“Agreement” means this agreement and all amendments made to it by written agreement
between the Company and the Executive;

“Board” means the board of directors of the Company;

“Business Day” means a day other than Saturday, Sunday or statutory holiday in British
Columbia;

“Business” means the HTLTM business of the company or a company affiliate
and/or any other business in the company or a company affiliate is engaged from time
to time

 

 

 

“Change of Control” means an event occurring after the Commencement Date pursuant to
which:

(a) a merger, amalgamation, arrangement, consolidation, reorganization or transfer
takes place in which securities of the Company having more than 50% of the total
combined voting power of the Company’s outstanding voting securities are acquired by a
person or persons different from the persons holding those voting securities
immediately prior to such event, and the composition of the Board following such event
is such that the directors of the Company prior to the transaction constitute less
than 50% of the Board membership following the event; or

(b) any person, or any combination of persons acting jointly or in concert by virtue
of an agreement, arrangement, commitment, or understanding acquires, directly or
indirectly, 50% or more of the voting rights attached to all outstanding voting
securities; or

(c) any person or any combination of persons acting jointly or in concert by virtue of
an agreement, arrangement commitment or understanding acquires, directly or
indirectly, the right to appoint a majority of the directors of the Company; or

(d) the Company sells, transfers or otherwise disposes of all or substantially all of
its assets, except that no Change of Control will be deemed to occur if such sale or
disposition is made to a subsidiary or subsidiaries of the Company;

“Affiliate” means one or more entities that directly or indirectly control the
Company, are under common control with the Company, or are Subsidiaries of the
Company;

“Company Affiliate” means each Affiliate and Subsidiary of the Company;

“Compensation Committee” means the Compensation and Benefits Committee of the Company;

“Disability” means a physical or mental incapacity of the Executive that has prevented
the Executive from performing the duties customarily assigned to the Executive for one
hundred and eighty (180) days, whether or not consecutive, out of any twelve (12)
consecutive months and that in the opinion of the Board is likely to continue;

“HTLTM Business” means the upgrading of heavy oil or bitumen by the use of the
Company’s patented HTLTM technology, in a field, refinery or research and development
setting so as to improve the quality of heavy oil, bitumen or refinery feed stocks;

“Subsidiary” means an entity that is directly or indirectly controlled by the Company.

	1.2	 	For the purposes of this Agreement, except as otherwise expressly provided:

	 	(a)	 	“this Agreement” means this Agreement, including any schedules hereto, and not
any particular part, section or other portion hereof, and includes any agreement,
document or instrument entered into, made or delivered pursuant to the terms hereof, as
the same may, from time to time, be supplemented or amended and in effect;

	 	(b)	 	all references in this Agreement to a designated “part”, “section” or other
subdivision or to a schedule are references to the designated part, section or other
subdivision of, or schedule to, this Agreement;

	 	(c)	 	the words “hereof”, “herein”, “hereto” and “hereunder” and other words of similar
import
refer to this Agreement as a whole and not to any particular part, section or other
subdivision or schedule unless the context or subject matter otherwise requires;

 

 

 

	 	(d)	 	the division of this Agreement into parts, sections and other portions and the
insertion of headings are for convenience of reference only and are not intended to
interpret, define or limit the scope, extent or intent of this Agreement or any
provision hereof;

	 	(e)	 	unless otherwise provided herein, all reference to currency in this Agreement are
to lawful money of Canada and al amounts to be calculated or paid pursuant to this
Agreement are to be calculated in lawful money of Canada;

	 	(f)	 	the singular of any term includes the plural and vice versa, and the use of any
term is generally applicable to any gender and, where applicable, a body corporate, firm
or other entity, and the word “or” is not exclusive and the word “including” is not
limiting whether or not non-limiting language (such as “without limitation” or “but not
limited to” or words of similar import) is used with reference thereto; and

	 	(g)	 	all references to “approval”, “authorization”, “consent”, or “direction” in this
Agreement means written approval, authorization consent or direction.

	2.	 	Employment

The Company hereby employs the Executive and the Executive shall perform services on behalf
of the Company as its employee as provided herein during the Period of Active Employment (as
defined hereinafter defined).

	3.	 	Period of Active Employment

In this Agreement, “Period of Active Employment” shall mean the period beginning on October
1, 2009 and terminating on the date on which the first of the following occurs:

	 	(a)	 	the termination of the Executive’s employment by the Company for cause as
provided in Section 15.1 hereof;

	 
	 	(b)	 	the resignation by the Executive pursuant to Section 15.2;

	 
	 	(c)	 	the termination of this Agreement pursuant to Section 15.3 or 15.4;

	 
	 	(d)	 	the Disablility of the Executive; or

	 
	 	(e)	 	the death of the Executive.

	4.	 	Capacity and Services

The Company shall employ the Executive as President and CEO of IE Canada (the “IE Canada
President”), with such appointment to commence as of October 1, 2009 (the “Commencement
Date”). As such, the Executive shall be subject to the supervision of the President and CEO
of the Company and shall perform such duties and have such authority as may from time to time
be assigned, delegated or limited by the President and CEO of the Company. The Executive
shall perform these duties in accordance with the charter documents and by-laws and the rules
and policies of each stock exchange upon which securities of the Company may be listed from
time to time and applicable securities laws. The Executive agrees to comply with the terms
and the spirit
of the Code of Business Conduct and Ethics and Corporate Securities Trading
Policy of the Company, as well as the other policies and codes of the Company in effect from
time to time. A copy of the current policy is included with this Agreement. Subject to any
amendment to these duties by the President and CEO of the Company and/or the Board or
applicable Board
committee, the duties and responsibilities of the IE Canada President shall include those
duties and responsibilities that are customarily carried out by persons holding similar
positions in other oil

 

 

 

and gas companies comparable in size to the Company, including, but
not limited to, the following:

	 	•	 	Responsible for the overall direction of the business of IE Canada and for achieving
maximum return on investment capital;

	 	•	 	Act as a key representative in the investment and financial community;

	 	•	 	Coordinate the efforts of other senior staff and work with them to develop and
achieve long term goals;

	 	•	 	Communicate and maintain contact with all segments of the investment community
including brokers, financial institutions, shareholders and investment managers with the
purpose of attracting equity capital and financing;

	 	•	 	Be mentored by the President and CEO of the Company for future succession planning
appointments within the Ivanhoe Energy entities;

	 	•	 	Provide direction and mentoring of staff in the execution of major projects;

In connection with the Company’s succession planning and performance reviews of the
Executive, the Executive will be considered by the Board for advancement within the Company
upon the Executive completing 12 months, and again upon completing 18 months, with the
Company, any such succession being in the discretion of Board.

	5.	 	Place of Employment

The Executive’s place of work will be the Company’s offices in Calgary, Canada or such other
location as mutually agreed to by the Executive and the President and CEO of the Company, but
the Company may require the Executive to work at any place throughout the world on a
temporary basis.

	6.	 	Full Time and Attention

The Executive shall devote one hundred percent (100%) of the Executive’s business time to the
Executive’s duties hereunder. The Executive may, however, serve as a member of the board of
directors of another company if the Board or an appropriate committee thereof, determines in
its sole discretion that such membership is not adverse to the interests of the Company.

	7.	 	Conflicts of Interest

The Executive agrees that he shall refer to the President and CEO of the Company all matters
and transactions in which a potential conflict of interest between the Executive and the
Company or a Company Affiliate may arise and shall not proceed with such matters or
transactions until the Board’s express approval thereof is obtained. For purposes of
clarification, this Section 7 is not intended to limit in any way the Executive’s other
fiduciary obligations, to the Company and Company Affiliates which may arise in law or
equity.

	8.	 	Base Salary

The Company will initially pay the Executive the sum of CAD $350,000 per year, payable in
semi-monthly installments, subject to standard payroll and tax deductions, (the “Base
Salary”). The Base Salary shall be subject to annual reviews and, as appropriate in
connection with performance reviews of the Executive, increases as determined by the Board in
its discretion on the advice of
the Compensation Committee of the Board.

 

 

 

	9.	 	Benefits

The Company will provide the Executive and his eligible dependent immediate family members
with the same comprehensive basic medical, extended health & dental, life and dependent life
insurance & long term disability insurance as are available to the other executive officers
of the Company, effective immediately on employment. Until such time as a standardized plan
offering a substantially equivalent benefit to the Executive is instituted by the Company,
the Company will also provide a Canadian Retirement Allowance by payment to the Executive of
CAD$21,000 per calendar year, prorated for the first partial year of employment and payable
to the Executive in semi-monthly installments.

	10.	 	Incentive Stock Options

Subject to all requisite corporate and stock exchange approvals, the Executive will receive
an initial grant of incentive stock options exercisable to purchase up to a total of 500,000
common shares of the Company pursuant to the Company’s Executives’ and Directors’ Equity
Incentive Plan (the “Plan”) at a price per common share determined in accordance with the
terms of the Plan. The Executive’s incentive stock options will vest and become exercisable
in accordance with the following schedule:

(a) Options in respect of an initial 125,000 common shares will become exercisable as of the
first (1st) anniversary of the Commencement Date;

(b) Options in respect of an additional 375,000 common shares will become exercisable as to
125,000 common shares on the second through the fourth anniversaries of the Commencement Date
and;

(c) Subject to earlier termination pursuant to the terms of the Plan, any of the Executive’s
incentive stock options remaining unexercised as of the seventh (7th) anniversary
of the Commencement Date will expire and cease to be exercisable.

In addition to the incentive stock options referred to above, the Executive may also be
eligible to receive, as determined by the Board of Directors in its discretion on the advice
of its Compensation Committee, additional incentive stock option grants from time to time
when the Board’s compensation committee determines that it is appropriate to grant additional
incentive stock options to the Company’s senior executive officers. All such grants will be
made pursuant to, and in accordance with the terms of the Plan. In determining such further
grants to the Executive, the Board of Directors, and Compensation Committee shall consider,
among other things, the aggregate options then currently held by the Executive by virtue of
this Agreement or otherwise.

	11.	 	Short Term Incentive Plan

The Executive shall be eligible for an annual bonus award calculated as a percentage of Base
Salary in accordance with the Company’s compensation policy, such bonus award to be as
determined by the Board in its discretion on the advice of the President and CEO of the
Company and the Compensation Committee. The annual bonus award will be based on overall
performance rating and job specific criteria. The bonus award will be a combination of cash
and/or securities of the Company as determined by the Board on the advice of the Compensation
Committee of the Board, and would be payable after the end of the Company’s fiscal year.

	12.	 	Long Term Incentive Plan

The Executive shall be eligible for long term incentive plan awards of a further annual bonus
calculated as a percentage of Base Salary in accordance with the Company’s compensation
policy, such bonus award to be, as determined in connection with performance reviews of the
Executive by the Board in its discretion on the advice of the President and CEO of the
Company

 

 

 

and the Compensation Committee. Any such bonus awards would be payable in the form of
incentive stock options unless otherwise determined by the Board and would be payable at such
time as determined by the Board of Directors.

	13.	 	Expenses incidental to Employment

The Company will reimburse the Executive in accordance with its normal policies and practices
for the Executive’s travel and other expenses or disbursements reasonably and necessarily
incurred by the Executive in connection with the performance of his duties under this
Agreement. The Executive will furnish the Company with an itemized account of his expenses
in such form or forms as may reasonably be required by the Company and at such times or
intervals as may be required by the Company.

	14.	 	Vacation

The Executive will be entitled to a paid vacation of five (5) weeks per annum based on a
common anniversary date of January 1. The terms of this Agreement, will be calculated from
the date of commencement of employment set forth in Section 2 herein and prorated for the
first year of employment. This vacation must be taken on dates which do not adversely
compromise the Executive’s performance of his duties under this Agreement.

	15.	 	Termination

15.1 This Agreement and the Executive’s employment may be terminated by the Company summarily
and without notice, payment in lieu of notice, severance payments, benefits, damages or any
sums whatsoever, for any act or omission which constitutes cause under applicable law.
Without limiting the foregoing, any one or more of the following events shall constitute
cause:

(a) the Executive’s appropriation of corporate opportunities for his direct or indirect
benefit or his failure to disclose any material conflict of interest;

(b) the Executive’s failure to disclose material facts concerning his business interests
or employment by other than the Company;

(c) any of the following acts or circumstances of the Executive: fraud, illegality,
breach of statute or regulation, or gross incompetence;

(d) the Executive’s breach of fiduciary duty to the Company;

(e) the Executive’s material breach of this Agreement or gross negligence in carrying
out his duties under this Agreement;

(f) the failure of or refusal by the Executive to follow the reasonable and lawful
directions of the Board or to comply with the policies, rules and regulation of the Company,
(except to the extent that such policies, rules and regulation expressly conflict with the
provisions of this Agreement);

(g) any conduct which would materially impair or prevent the Executive from continuing
as an officer of the Company under applicable corporate or securities laws, or the rules and
policies of any stock exchange or securities market upon which the Company’s shares are
listed from time to time; or

(h) the Executive’s plea of guilty to or conviction of an offence punishable by
imprisonment.

In the event of the early termination of the Agreement pursuant to Section 15.1, the
Executive shall only be entitled to such compensation as would otherwise be payable to the
Executive

 

 

 

hereunder up to and including such date of termination, as the case may be. If the
Company terminates this Agreement for cause under this Section 15.1, all vested incentive
stock options will remain exercisable until the earlier of their respective expiry dates and
the date that is one (1) month from the date that the Executive’s employment terminates, and
all unvested incentive stock options will immediately terminate.

15.2 This Agreement and the Executive’s employment may be terminated on notice by the
Executive to the Company for any reason, or for no reason, upon 90 days written notice of
resignation to the Company. In such event, the Executive will be entitled to payment of Base
Salary and expenses until the date of termination after which notice was given. If the
Executive resigns the Executive’s employment and terminates this Agreement for any reason,
the Company shall have no further obligations or responsibilities hereunder to the Executive,
and nothing herein contained shall be construed to limit or restrict in any way the Company’s
ability to pursue any remedies it may have at law or equity pursuant to the provisions of
this Agreement. Notwithstanding the foregoing, all of the Executive’s vested incentive stock
options will remain exercisable until the earlier of their respective expiry dates and the
date that is one (1) month from the date that the Executive’s employment terminates, and all
unvested incentive stock options will immediately terminate.

15.3 The Company may terminate this Agreement at any time without cause or upon the
Disability of the Executive. Should the Company terminate the Executive without cause, the
Company will provide the Executive with a lump sum payment of an amount equal to twelve
months payments of the Executive’s Base Salary. The payments provided for in this Section
15.3 shall be inclusive of the Executive’s entitlement to notice and severance pay at common
law or by statute. The Company shall not be obligated to make any further payments under this
agreement, except for payment of any reasonable expense due and owing pursuant to Section 13.
Notwithstanding the foregoing, those of the Executive’s unvested stock options that would
have vested within one year from the date that the Executive’s employment terminates will be
deemed to have vested, and all of the Executive’s unexercised stock options that have vested
or are deemed to have vested will remain exercisable for a period of six (6) months from the
date that the Executive’s employment terminated unless any such options expire earlier in
accordance with their terms. All other unvested stock options will terminate on the date of
termination of the Executive.

15.4 If a Change of Control (as defined herein) occurs and this Agreement is terminated by
the Company within twelve months of such Change of Control, the Executive shall be entitled
to receive a lump sum payment in an amount equal to twelve monthly payments of the
Executive’s base salary. The payments provided in this section 15.4 shall be inclusive of
the Executive’s entitlement to notice and severance pay at common law or by statute. The
Company shall not be obligated to make any further payments under this agreement, except for
payment of any reasonable expense due and owing pursuant to Section 6. Notwithstanding the
foregoing, all of the Executive’s unexercised stock options, vested or unvested, will be
deemed to have vested and will remain exercisable for a period of six (6) months from the
date that the Executive’s employment terminates unless any such options expire earlier in
accordance with their terms.

15.5 If this agreement is terminated in accordance with Sections 15.3 or 15.4, the benefits
provided to the Executive shall continue for the amount of months of base salary the
Executive is entitled to following the termination of this Agreement or until the Executive
commences alternative employment, whichever occurs first. At the Company’s option, it may
satisfy this obligation by paying to the Executive the cost of providing such benefits, as
determined at the time of the termination of Employment.

15.6 Upon termination or resignation of the Executive’s employment pursuant to this
Agreement, this Agreement and the employment of the Executive shall be wholly terminated with
the exception of Sections 16 to 19 of this Agreement and any other the clauses specifically
contemplated to continue in full force and effect beyond the termination of this Agreement.
For

 

 

 

greater certainties
the payments or other compensation provided for on termination under
Sections 15.3, 15.4 and 15.5 are not cumulative and only one of such Sections will be
operative in the event of a termination.

15.7 The terms set out in this Agreement, provided that such terms are satisfied by the
Company, are in lieu of (and not in addition to) and in full satisfaction of any and all
other claims or entitlements which the Executive has or may have upon the termination of the
Executive’s employment pursuant to this Agreement and the compliance by the Company with
these terms will affect a full and complete release of the Company and its parent and their
respective affiliates, associates, subsidiaries and related companies from any and all claims
which the Executive may have for whatever reason or cause in connection with the Executive’s
employment and the termination of it, other than those obligations specifically set out in
this Agreement. In agreeing to the terms set out in this Agreement, the Executive
specifically agrees to execute a formal release document to that effect and will deliver upon
request appropriate resignations from all offices and positions with the Company and its
parent and their respective affiliated, associated subsidiary or affiliated companies if, as
and when requested by the Company upon termination of the Executive’s employment within the
circumstances contemplated by this Agreement.

	16.	 	Confidential Information

Except in the normal and proper course of the Executive’s duties hereunder, the Executive
will not use, for the Executive’s own account or disclose to anyone else, during or for a
period of three (3) years after the Period of Active Employment, any confidential or
proprietary information or material relating to the Business or the Company, its operations,
or the Business or operations of the Company Affiliates which the Executive obtains by virtue
of Executive’s employment with the Company. Confidential or proprietary information or
material includes, without limitation, the following types of information or material, both
existing and contemplated, regarding the Company or the Company Affiliates: corporate
information, plans, strategies, tactics, policies, resolutions, litigation or negotiations,
financial information, including debt arrangements, equity structure, investors and holdings,
operational and scientific information ,technical information and personnel information,
including personnel lists, resumes, personnel data, organization structure and performance
evaluations, trade secrets, inventions, products, designs, know-how, formulae, methods,
techniques, systems, processes, software, projects, planning data, financial results and any
other information (collectively “Confidential Information”). Any of the foregoing kinds of
information that belong to any other person or company but to which Executive has had access
solely by reason of this employment with the Company but which the Company or a Company
Affiliate has agreed to keep confidential are also Confidential Information.

The obligations of Executive under this section will survive the termination of Executive’s
engagement for any reason or no reason, will be applicable regardless of any actual or
alleged breach of this Agreement by Company, and will continue for a period of three (3)
years from the end of the Period of Active Employment. The obligations of Executive under
this section are in addition to, and not in limitation of or preemption of, all other
obligations of confidentiality which Executive may have to Company or Company Affiliate under
applicable law, including but not limited to the application of the fiduciary duties of
Executive.

Notwithstanding the preceding, “Confidential Information” shall not include information which
is or becomes publicly known, except for any such information that becomes publicly known
because of disclosure by the Executive in violation of this Agreement. It shall not be a
breach of the confidentiality obligations hereof for Executive to disclose Confidential
Information where, but only to the extent that, such disclosure is required by law or
applicable legal process, provided in such case the Executive shall (i) give the earliest
notice possible to Company that such disclosure is or may be required, and (ii) cooperate in
protecting such confidential or proprietary nature of the
Information which must so be disclosed.

 

 

 

	17.	 	Return of Property and Documents

The Executive agrees that all documents or property of any nature pertaining to activities of
the Company and to the Company Affiliates, including Confidential Information, in the
Executive’s possession now or at any time during the Period of Active Employment, are and
shall be the property of the Company and/or a Company Affiliate, and that all such documents
and all copies of them shall be surrendered to the Company whenever requested by the Company.
This provision shall survive termination of this Agreement.

	18.	 	Business Opportunities and Company Related Developments

	18.1	 	Any business opportunities related to the business of the Company which become known to the
Executive during the Period of Active Employment hereunder must be fully disclosed and made
available to the Board by the Executive and the Executive agrees not to take or omit to take
any action if the result would be to divert from the Company any opportunity which is within
the scope of its Business as known to the Executive from time to time.

	18.2	 	Executive will promptly disclose and assign, in writing, to the Company any inventions,
improvements, or discoveries, methods, developments, software, and works of authorship,
whether patentable or not, which are made, conceived, or improved by Executive, solely or
jointly with others, during Executive’s employment hereunder, either during normal working
hours, or outside of normal working hours (“Company Related Developments”) that (A) use
equipment, supplies, facilities, trade secret information, or other Confidential Information
of Company or any Company Affiliate, or (B) directly relate, at the time of conception,
development, reduction to practice, or use, to the Rapid Thermal Pyrolysis
(“RTPTM”) technology of the Company or a Company Affiliate (the “Technology”), or
to actual research or development related to the Technology, or to the Company or a Company
Affiliate, or (C) that result directly from any work performed by Executive for Company or a
Company Affiliate.

	18.3	 	Upon request, the Executive will assist the Company and its nominees in every proper way at
Company’s expense (and without additional compensation to Executive), both during Executive’s
employment by the Company and thereafter, to obtain and retain for Company’s sole benefit
patent protection for any and all Company Related Developments, which will remain the property
of Company, its successors, assigns, or nominees, whether patented or not, and, for that
purpose, upon written request by and at the expense of Company, Executive will within thirty
(30) days following a request therefore execute any and all documents relating thereto that
are deemed necessary by Company to the extent such request is reasonable. All such Company
Related Developments will be subject to the provision of section 16 (regarding Confidential
Information). Notwithstanding the foregoing, in the event that, after termination of
Executive’s engagement, Executive incurs expenses, provides services, or otherwise assists
Company or its nominees at such Party’s request, Company shall compensate Executive therefor,
with such compensation to be reasonably agreed upon by Executive and Company. The obligations
of Executive and Company under this Section 18.3 will survive the termination of Executive’s
engagement for any reason or no reason, will be applicable regardless of any actual or alleged
breach of this Agreement by Company, and will continue indefinitely.

	19	 	Acknowledgements regarding Enforceability of Agreement Terms

	19.1	 	The Executive acknowledges that, in connection with the Executive’s employment by the
Company, the Executive will receive or will become eligible to receive substantial benefits
and compensation. The Executive acknowledges that the Executive’s employment by the Company
and all compensation and benefits and potential compensation and benefits to the Executive
from such employment shall be conferred by the Company upon the Executive only because and on
condition of the Executive’s willingness to commit the Executive’s best efforts and loyalty
to the Company, including protecting the Company’s right to have its Confidential Information
protected

 

 

 

and abiding by the confidentiality, non-competition and other provisions herein.

	19.2	 	The Executive understands the Executive’s duties and obligations as set forth in this
Agreement and agrees that such duties and obligations would not unduly restrict or curtail the
Executive’s legitimate efforts to earn a livelihood following any termination of the
Executive’s employment with the Company. The executive agrees that the restrictions contained
in this Agreement are reasonable and valid and all defenses to the strict enforcement thereof
by the Company are waived by the Executive. The Executive further acknowledges that
irreparable damage would result to the Company if the restrictive covenants in this Agreement
are not specifically enforced, and agrees that the Company shall be entitled to any
appropriate legal, equitable, or other remedy, including injunctive relief, in respect of any
failure or continuing failure to comply with the restrictive provisions contained in this
Agreement.

	19.3	 	If any court determines that any provision contained in this Agreement including, without
limitation, a restrictive covenant or any part thereof is unenforceable because of the
duration or geographical scope of the provision or for any other reason, the duration or scope
of the provision, as the case may be, shall be reduced so that the provision becomes
enforceable and, in its reduced form, the provision shall then be enforceable and shall be
enforced.

	19.4	 	The Executive acknowledges that damages would be an insufficient remedy for a breach by him
of this Agreement and agrees that the Company may apply for and obtain any relief available to
it in a court of law or equity, including injunctive relief, to restrain breach or threat of
breach of this Agreement by the Executive or to enforce the covenants contained therein and,
in particular, the covenants contained in Sections 16, 17, and 18 of this Agreement, in
addition to rights the Company may have to damages arising from said breach or threat of
breach.

	20.	 	Representations and Warranties

	20.1	 	The Executive represents and warrants to the Company that the execution and performance of
this Agreement will not result in or constitute a default, breach, or violation, or an event
that, with notice or lapse of time or both, would be a default, breach, or violation, of any
understanding, agreement or commitment, written or oral, express or implied, to which the
Executive is currently a party or by which the Executive or Executive’s property is currently
bound.

	20.2	 	The Executive shall defend, indemnify and hold the Company harmless from any liability,
expense, or claim (including solicitor’s fees incurred in respect thereof) by any person in
any way arising out of, relating to, or in connection with any incorrectness or breach of the
representations and warranties in Section 20.1.

	20.3	 	The Executive acknowledges that a breach of Section 20.1 by the Executive shall entitle the
Company to terminate the Executive’s employment and this Agreement for cause.

	20.4	 	The Company shall defend, indemnify and hold the Executive harmless from any liability,
expense or claim (including solicitor’s fees incurred in respect thereof) in any way arising
out of, relating to, or in connection with his performance of services for the Company, to the
fullest extent permitted by applicable law. The Company shall make reasonable efforts to
ensure that the Executive shall fully participate as a covered insured under the Company’s
directors’ and officers’ liability insurance policy with respect to the Period of Active
Employment.

	21.	 	Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the Province
of British Columbia and the laws of Canada applicable in that Province and shall be treated,
in all respects, as a British Columbia contract.

	22.	 	Entire Agreement

 

 

 

This Agreement constitutes the entire agreement between the parties hereto with respect to
the relationship between the Company and the Executive and supersedes all prior arrangements
and agreements, whether oral or in writing between the parties hereto with respect to the
subject matter hereof. there are no conditions, warranties, representation or other
agreements between the parties in connection with the subject matter of this Agreement
(whether oral or written, express or implied, statutory or otherwise) except as specifically
set out in this Agreement.

	23.	 	Amendments

No amendment to or variation of the terms of this Agreement will be effective or binding upon
the parties hereto unless made in writing and signed by both of the parties hereto.

	24.	 	Assignment

This Agreement is not assignable by the Executive. This Agreement is assignable by the
Company to any other company which controls, is controlled by, or is under common control
with the Company. The Company shall also have the right to assign this Agreement to any
successor (whether direct or indirect, by purchase amalgamation, arrangement, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company provided only that the Company must first require the successor to expressly assume
and agree to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place. The Executive
by the Executive’s signature hereto expressly consents to such assignment. This Agreement
shall inure to the benefit of and be binding upon the Company and its successors and
permitted assigns and the Executive and his heirs, executors and administrators.

	25.	 	Severability

Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction
shall, as to that jurisdiction, be ineffective to the extent of the prohibition or
unenforceability and shall be severed from the balance of this Agreement, all without
affecting the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.

	26.	 	Headings

The division of this Agreement into Sections and the insertion of headings are for
convenience or reference only and shall not affect the construction or interpretation of this
Agreement.

	27.	 	Time of Essence

Time shall be of the essence in all respects of this Agreement.

	28.	 	Rights and Waivers

	28.1	 	All rights and remedies of the parties are separate and cumulative, and none of them, whether
exercised or not, shall be deemed to be to the exclusion of any other rights or remedies or
shall be deemed to limit or prejudice any other legal or equitable rights or remedies or shall
be deemed to limit or prejudice any other legal or equitable rights or remedies which either
of the parties may have.

	28.2	 	Any purported waiver of any default, breach or non-compliance under this Agreement is not
effective unless in writing and signed by the party to be bound by the waiver. No waiver
shall be
inferred from or implied by any failure to act or delay in acting by a party in respect of
any default, breach or non-observance or by anything done or omitted to be done by the other
party. The

 

 

 

waiver by a party of any default, breach or non-compliance under this Agreement
shall not operate as a waiver of that party’s rights under the Agreement in respect of any
continuing or subsequent default, breach or non-observance (whether of the same or any other
nature).

	29.	 	Executive Acknowledgements

The Executive acknowledges that agrees that he has had, or has had the opportunity to
obtain, independent legal advice concerning the interpretation and effect of this Agreement
in connection with the execution of this Agreement and has read this Agreement in its
entirety, understands its contents and is signing this Agreement freely and voluntarily,
without duress or undue influence from any party. The Executive has received a fully executed
counterpart copy of this Agreement.

	30.	 	Notice

Any notice required or permitted to be made or given under this Agreement to either party
shall be in writing and shall be sufficiently given if delivered personally, by electronic
transmission, or if sent by prepaid registered mail to the intended recipient of such notice
at their respective addresses set forth below or to such other address as may, from time to
time, be designated by notice given in the manner provided in this Section:

in the case of Company:

19th Floor, 101-6th Avenue SW

Calgary, Alberta

T2P 3P4

Attention: Vice President, Human Resources

with a copy to:

Suite 654 – 999 Canada Place

Vancouver, British Columbia Canada V6C 3E1

Attention: Corporate Secretary

in the case of the Executive:

Mr. David A. Dyck

31261 Coyote Valley Road

Calgary, Alberta T3L 2R1

Any notice delivered to the party to whom it is addressed shall be deemed to have been given
and received on the day it is so delivered or, if such day is not a business day, then on the
next business day following any such day. Any notice mailed shall be deemed to have been
given and received on the 10th business day following the date of mailing. In the case of
facsimile transmission, notice is deemed to have been given or served on the party to whom it
was sent at the time of dispatch if, following transmission, the sender receives a
transmission confirmation report or, if the sender’s facsimile machine is not equipped to
issue a transmission confirmation report, the recipient confirms in writing that the notice
has been received. In the case of e-mail transmission, notice is deemed to have been given or
served on the party to whom it was sent at the time of dispatch if, following transmission,
the recipient confirms in writing that the notice has been received.

This Agreement may be executed in counterparts and shall become operative when each party has
executed and delivered at least one counterpart.

 

 

 

IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day and year
first above written.

SIGNED on behalf of Ivanhoe Energy Inc. on November 10, 2009

	 	 	 	 	 
	/s/ Robert Friedland
 

Robert Friedland

	 	/s/ Howard Balloch
 

Howard Balloch
	 	 
	Executive Co Chairman, President

	 	Director	 	 
	& Chief Executive Officer

	 	Chairman Compensation and Benefits Committee	 	 

SIGNED by the Executive on October 20, 2009:

	 	 	 
	/s/ David Dyck
 

David A. DyckExhibit 10.64

Exhibit 10.64

SECURITIES PURCHASE AND REGISTRATION RIGHTS AGREEMENT

Between

STAR SCIENTIFIC, INC.,

as Issuer,

And

The Investors Set Forth on Schedule I hereto

March 9, 2010

 

 

 

This SECURITIES PURCHASE AND REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is
entered into and effective as of March 9, 2010, between Star Scientific, Inc., a Delaware
corporation (the “Company”), and the several investors set forth on Schedule I
hereto (each an “Investor” and collectively, the “Investors”).

WHEREAS, each Investor has previously entered into a securities purchase and registration
rights agreement with the Company whereby the Company sold to each Investor and each Investor
purchased from the Company a warrant (in each case a “Prior Warrant” and collectively, the
“Prior Warrants”), to purchase the amount of shares of the Company’s common stock, par
value $0.0001 per share (“Common Stock”), set forth opposite each Investor’s name under the
heading “Warrant Shares” on Schedule I (in each case, the “Warrant Shares”), having
a per share exercise price set forth opposite each Investor’s name under the heading “Prior
Exercise Price” on Schedule I hereto;

WHEREAS, the Company and each Investor desire that upon the terms and conditions set forth
herein that: (i) the Investor will purchase from the Company and the Company will issue and sell to
the Investor the aggregate amount of shares of Common Stock opposite to the Investor’s name under
the heading “Shares” on Schedule I hereto (in each case, the “Shares”) and, in
exchange therefor, the Investor will pay the Company the aggregate consideration set forth opposite
the Investor’s name under the heading “Aggregate Consideration” on Schedule I hereto; and
(ii) the Company will reduce the exercise price of the Investor’s Prior Warrants to the exercise
price set forth opposite the Investor’s name under the heading “New Exercise Price” on Schedule
I hereto (the Prior Warrant reflecting the New Exercise Price, the “Adjusted Warrant”);

WHEREAS, each Investor acknowledges that as an inducement for the Company to enter into this
Agreement, the Investor has waived its rights under Section 12 of its Prior Warrants, with regard
to the transactions contemplated hereby; and

WHEREAS, each Investor will have registration rights with respect to the Shares and other
Registrable Securities (as defined herein) pursuant to the terms of this Agreement.

NOW, THEREFORE, in consideration of the foregoing premises and the covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

1. Agreement to Sell and Purchase the Shares and Adjusted Warrant. At the Closing (as
defined herein), the Company will sell to each Investor, and each Investor will purchase from the
Company, upon the terms and subject to the conditions hereinafter set forth, its Shares and the
Adjusted Warrant for the aggregate purchase price set forth opposite each Investor’s name under the
heading “Aggregate Consideration” on Schedule I hereto.

2. Delivery of the Shares and Adjusted Warrant at Closing. The completion of the
purchase, sale and issuance of the Shares and the delivery of the Adjusted Warrant (the
“Closing”) shall occur on the date of this Agreement (the “Closing Date”) (or upon
such other date as the Company and each Investor shall agree), at the offices of the Company’s
counsel. At the Closing, the Company shall issue to each Investor as indicated on Schedule
I hereto (i) one or more stock certificates, registered in the Investor’s name and address as
set forth on Schedule I hereto, representing the Shares and (ii) the Adjusted Warrant
issued in the name of the Investor. The Company’s obligation to issue the Shares and deliver the
Adjusted Warrant to each Investor shall be

 

1

 

subject to the following conditions, any one or more of which may be waived by the Company: (i)
receipt by the Company of a wire transfer of immediately available funds to an account designated
in writing by the Company, in the full amount of the total purchase price payable by the Investor
for the Shares and Adjusted Warrant that the Investor is hereby agreeing to purchase set forth
opposite the name of such Investor under the heading “Aggregate Consideration” on Schedule
I hereto; and (ii) the accuracy, in all material respects, of the representations and
warranties made by the Investor and the fulfillment, in all material respects, of those
undertakings of the Investor to be fulfilled prior to the Closing. Each Investor’s obligation to
purchase the Shares shall be subject to the following conditions, any one or more of which may be
waived by an Investor (provided that no such waiver shall be deemed given unless in writing and
executed by the Investor): (i) receipt by the Investor of a counter-signed copy of this Agreement
executed by the Company; (ii) receipt by the Investor of a copy of the Adjusted Warrant; and (iii)
the accuracy, in all material respects, of the representations and warranties made by the Company
and the fulfillment, in all material respects, of those undertakings of the Company to be fulfilled
prior to the Closing.

3. Representations, Warranties and Covenants of the Company. The Company hereby
represents and warrants to, and covenants with each Investor, as follows:

3.1 Organization. Each of the Company and its Subsidiaries (as defined in Rule 405
under the Securities Act of 1933, as amended (the “Securities Act”)) is duly organized and
validly existing in good standing under the laws of the jurisdiction of its organization. Each of
the Company and its Subsidiaries has full power and authority to own, operate and occupy its
properties and to conduct its business as presently conducted and is registered or qualified to do
business and in good standing in each jurisdiction in which it owns or leases property or transacts
business and where the failure to be so qualified would have a material adverse effect upon the
financial condition or business, operations, assets or prospects of the Company and its
Subsidiaries, taken as a whole (a “Material Adverse Effect”).

3.2 Due Authorization. The Company has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement and the Adjusted Warrant, and has taken
all necessary corporate action to enter into and perform this Agreement, to issue the Shares in
accordance with the terms of this Agreement, to enter into and perform the Adjusted Warrant, and to
issue the Warrant Shares in accordance with the terms of the Adjusted Warrant. This Agreement has
been, and upon the Closing in accordance with the terms of the Agreement, the Adjusted Warrant will
be, duly authorized, validly executed and delivered by the Company and constitutes, or will
constitute, a legal, valid and binding agreement of the Company enforceable against the Company in
accordance with their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ and
contracting parties’ rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in a proceeding in
equity or at law). Upon their issuance in accordance with the terms of this Agreement and the
Shares will be duly authorized, validly issued, fully paid and non-assessable, the Adjusted Warrant
will be duly authorized and validly issued, and the Warrant Shares, upon exercise of the Adjusted
Warrant in accordance with its terms, will be duly authorized.

3.3 Non-Contravention. Except as would not reasonably be expected to have a Material
Adverse Effect, the execution and delivery of this Agreement, the issuance and sale of the Shares
and the Adjusted Warrant under this Agreement, the fulfillment of the terms of this

 

2

 

Agreement and
the consummation of the transactions contemplated hereby will not (i) conflict with or constitute a
violation of, or default (with or without the giving of notice or the passage of time or both)
under, (A) any material bond, debenture, note or other evidence of indebtedness, or under any
material lease, indenture, mortgage, deed of trust, loan agreement, joint venture or other
agreement or instrument to which the Company or any Subsidiary is a party or by which it or any of
its Subsidiaries or their respective properties are bound, (B) the charter, by-laws or other
organizational documents of the Company or any Subsidiary, or (C) any law, administrative
regulation, ordinance or order of any court or governmental agency, arbitration panel or authority
applicable to the Company or any Subsidiary or their respective properties, or (ii) result in the
creation or imposition of any lien, encumbrance, claim, security interest or restriction whatsoever
upon any of the material properties or assets of the Company or any Subsidiary or an acceleration
of indebtedness pursuant to any obligation, agreement or condition contained in any material bond,
debenture, note or any other evidence of indebtedness or any material indenture, mortgage, deed of
trust or any other agreement or instrument to which the Company or any Subsidiary is a party or by
which any of them is bound or to which any of the property or assets of the Company or any
Subsidiary is subject. No consent, approval, authorization or other order of, or registration,
qualification or filing with, any regulatory body, administrative agency, self-regulatory
organization, stock exchange or market, or other governmental body in the United States is required
for the execution and delivery of this Agreement, the valid issuance and sale of the Shares and
Adjusted Warrant pursuant to this Agreement, other than such as have been or will be made or
obtained prior to the Closing Date, and except for any securities filings required to be made under
federal or state securities laws.

3.4 SEC Filings. Since January 1, 2009, the Company and its Subsidiaries have filed
all reports, schedules, forms, statements and other documents required to be filed by it with the
Securities and Exchange Commission (the “Commission”) pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (such
reports, including exhibits thereto and documents incorporated by reference therein collectively,
the “SEC Documents”). To the best of the Company’s knowledge, as of their respective filing
dates, none of the SEC Documents contained an untrue statement of material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the statements made
therein, in the light and circumstances under which they were made, not misleading, except to the
extent corrected by subsequently filed SEC Documents.

3.5 Absence of Certain Change. Except as disclosed in the SEC Documents, since
September 30, 2009, there has been no adverse change or adverse development in the business,
properties, assets, operations, financial condition, prospects, liabilities or results of
operations of the Company or its Subsidiaries which to the knowledge of the Company would
reasonably be expected to have a Material Adverse Effect.

3.6 Capitalization. As of March 1, 2010, the authorized capital stock of the Company
consists of (i) 170,000,000 shares of Common Stock, of which 107,676,768 shares are issued and
outstanding and 26,084,214 shares are issuable and reserved for issuance pursuant to the Company’s
stock option plans or securities exercisable or exchangeable for, or convertible into, shares of
Common Stock, and (ii) 100,000 shares of preferred stock, of which as of the date hereof
no shares are issued. All of such outstanding shares have been, or upon issuance will be, validly
issued, fully paid and nonassessable. Except as disclosed in the SEC Documents, as of the date
hereof, (i) no shares of the Company’s capital stock are subject to preemptive rights or any other
similar rights or any liens or encumbrances suffered or permitted by the Company, (ii) there are no

 

3

 

outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, any shares of capital stock of
the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements
by which the Company or any of its Subsidiaries is or may become bound to issue additional shares
of capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its Subsidiaries, (iii)
there are no outstanding securities of the Company or any of its Subsidiaries which contain any
redemption or similar provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a
security of the Company or any of its Subsidiaries, and (iv) the Company does not have any stock
appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement. The
Company disclosed in its SEC Documents or has furnished to Investor true and correct copies of the
Company’s Certificate of Incorporation, as amended and as in effect on the date hereof (the
“Certificate of Incorporation”), and the Company’s By-laws, as in effect on the date hereof
(the “By-laws”).

4. Representations, Warranties and Covenants of Investor. Each Investor severally for
itself, and not jointly with the other Investors, represents and warrants to, and covenants with
the Company, as follows:

4.1 Due Authorization; Organization. Investor has all requisite power, authority and
capacity to execute, deliver and perform its obligations under this Agreement, and has taken all
necessary corporate, company, partnership or individual action as the case may be to enter and
perform this Agreement. This Agreement has been duly authorized and validly executed and delivered
by Investor and constitutes a legal, valid and binding agreement of Investor enforceable against
Investor in accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ and
contracting parties’ rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in a proceeding in
equity or at law). Any individual retirement account (“IRA”) to which the Shares, the
Adjusted Warrant or Warrant Shares may be issued and delivered on behalf of the Investor, if
applicable, is duly organized and validly existing in good standing under the laws of the
jurisdiction of its organization. Such IRA has full power and authority to own, operate and occupy
its properties and to conduct its business as presently conducted and is registered or qualified to
do business and in good standing in each jurisdiction in which it owns or leases property or
transacts business and where the failure to be so qualified would have a material adverse effect on
the financial condition of Investor or such IRA.

4.2 Non-Contravention. The execution and delivery of this Agreement, the purchase of
the Shares and the Adjusted Warrant under this Agreement, the fulfillment of the terms of this
Agreement and the consummation of the transactions contemplated hereby will not (i) conflict with
or constitute a violation of, or default (with or without the giving of notice or the passage of
time or both) under, (A) any material bond, debenture, note or other evidence of indebtedness, or
under any material lease, indenture, mortgage, deed of trust, loan agreement, joint venture or
other agreement or instrument to which Investor is a party, (B) the charter, by-laws or
other organizational documents of Investor, as applicable, or (C) any law, administrative
regulation, ordinance or order of any court or governmental agency, arbitration panel or authority
applicable to

 

4

 

Investor or its property, or (ii) result in the creation or imposition of any lien, encumbrance,
claim, security interest or restriction whatsoever upon any of the material properties or assets of
Investor or an acceleration of indebtedness pursuant to any obligation, agreement or condition
contained in any material bond, debenture, note or any other evidence of indebtedness or any
material indenture, mortgage, deed of trust or any other agreement or instrument to which Investor
is a party or by which any of them is bound or to which any of the property or assets of Investor
is subject. No consent, approval, authorization or other order of, or registration, qualification
or filing with, any regulatory body, administrative agency, self-regulatory organization, stock
exchange or market, or other governmental body in the United States is required for the execution
and delivery of this Agreement and the purchase of the Shares and the Adjusted Warrant by Investor,
other than such as have been made or obtained.

4.3 Private Placement. Investor represents and warrants to, and covenants with, the
Company that Investor is acquiring the Shares and the Adjusted Warrant for its own account for
investment only and with no present intention of distributing any of the Shares, the Adjusted
Warrant or the Warrant Shares in violation of the applicable securities laws, or any arrangement or
understanding with any other persons regarding the distribution of the Shares, Adjusted Warrant or
Warrant Shares. Investor has been advised and understands that neither the Shares nor the Adjusted
Warrant have been registered under the Securities Act or under the “blue sky” or similar laws of
any jurisdiction and may be resold only if registered pursuant to the provisions of the Securities
Act and such other laws, if applicable, or, subject to the terms and conditions of this Agreement,
if an exemption from registration is available. Investor has been advised and understands that the
Company, in issuing the Shares and the Adjusted Warrant, is relying upon, among other things, the
representations and warranties of Investor herein in concluding that such issuance is a “private
offering” and is exempt from the registration provisions of the Securities Act.

4.4 Certain Trading Activities. Neither Investor nor any of its affiliates has
directly or indirectly, nor has any person acting on behalf of or pursuant to any understanding
with such Investor, engaged in any purchase or sale of Common Stock (including, without limitation,
any Short Sales (as defined below) involving the Company’s securities) since the date that such
Investor was presented with draft documentation relating to the transactions proposed hereby. For
the purposes of this Section 4.4, “Short Sales” include, without limitation, all “short
sales” as defined in Rule 200 of Regulation SHO adopted under the Exchange Act and all types of
direct and indirect stock pledges, forward sales contracts, options, puts, calls, short sales and
other transaction through non-US broker-dealers or foreign regulated brokers having the effect of
hedging the securities of the Company or the investment contemplated under this Agreement. Such
Investor covenants that neither it, nor any person acting on its behalf or pursuant to any
understanding with it, will engage in any transaction in the securities of the Company (including
short sales) prior to the filing of a Current Report on Form 8-K, Annual Report on Form 10-K,
press release, or other applicable Exchange Act report reporting this transaction.

4.5 No Advice. Investor understands that nothing in this Agreement or any other
materials presented to Investor in connection with the purchase and sale of the Shares and the
Adjusted Warrant constitutes legal, tax or investment advice. Investor has consulted such legal,
tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of the Shares and the Adjusted Warrant.

 

5

 

4.6 Accredited Investor. Investor is an “accredited investor” as that term is defined
in Rule 501(a) of Regulation D under the Securities Act and is able to bear the risk of its
investment in the Shares, Adjusted Warrant, and Warrant Shares. Investor has such knowledge and
experience in financial and business matters that it is capable of evaluating the merits and risks
of the purchase of the Shares, Adjusted Warrant and Warrant Shares.

4.7 Limited Representations. Investor and its advisors, if any, have been furnished
with all materials relating to the business, finances and operations of the Company and its
Subsidiaries which have been requested and materials relating to the offer and sale of the Shares,
Adjusted Warrant, and Warrant Shares, which have been requested by Investor. Investor and its
advisors, if any, have been afforded the opportunity to ask such questions of the Company as they
deem appropriate for purposes of the investment contemplated hereby. Investor acknowledges and
agrees that the most recent disclosure of the Company’s results is for the three and nine month
periods ended on, and the most recent disclosure of the Company’s financial condition is at,
September 30, 2009, as reported on the Company’s quarterly report on Form 10-Q, filed with the
Commission on November 11, 2009, and that, except as disclosed in the SEC documents, no information
more recent than such date has been provided to Investor as to the Company’s results, operations,
financial condition, business or prospects. Investor understands that its purchase of the Shares,
Adjusted Warrant and, if applicable, Warrant Shares involves a high degree of risk and that
Investor may lose its entire investment in the Shares, Adjusted Warrant and, if applicable, Warrant
Shares, and that Investor can afford to do so without material adverse consequences to its
financial condition. Investor is not relying on any information provided by the Company and its
Subsidiaries, except to the extent provided in Section 3 herein.

4.8 No Recommendation. Investor understands that no United States federal or state
agency or any other government or governmental agency has passed on or made any recommendation or
endorsement of the Shares, Adjusted Warrant or Warrant Shares or the fairness or suitability of an
investment in the Shares, Adjusted Warrant or Warrant Shares nor have such authorities passed upon
or endorsed the merits thereof.

4.9 Restrictive Legend. The Company shall issue the Adjusted Warrant and certificates
for the Shares and, if applicable, Warrant Shares to Investor with a legend as described in
Section 6 below. Investor covenants that, in connection with any transfer of any Shares or
Warrant Shares pursuant to the registration statement registering the resale of the Warrant Shares
or registration statement contemplated by Section 5 hereof, as applicable, including the
prospectuses contained therein, Investor will comply with the applicable prospectus delivery
requirements of the Securities Act, provided that copies of a current prospectus relating to such
effective registration statements are available to Investor.

4.10 Residence. Investor is a resident or organized under the laws of the
jurisdiction set forth next to Investor’s name on Schedule I hereto.

4.11 No Market. Investor understands that the Shares are restricted securities and
that there is no public trading market for the Adjusted Warrant, that none is expected to develop,
and that the Shares and Adjusted Warrant must be held indefinitely unless and until the resale of
such Shares or Adjusted Warrant is registered under the Securities Act or subject to the terms and
conditions of this Agreement and the applicable securities laws, an exemption from registration
is

 

6

 

available. Investor has been advised or is aware of the provisions of Rule 144 promulgated
under the Securities Act.

4.12 No Commissions. Investor has taken no action which would give rise to any claim
by any person for brokerage commissions, finder’s fees or similar payments by the Company or
Investor relating to this Agreement or the transactions contemplated hereby.

4.13 Transactional Exemption. Investor understands that the Shares, Adjusted Warrant
and Warrant Shares are being offered and sold in reliance on a transactional exemption from the
registration requirements of federal and state securities laws and that the Company is relying upon
the truth and accuracy of the representations, warranties, agreements, acknowledgments and
understandings of Investor set forth herein in order to determine the applicability of such
exemptions and the suitability of Investor to acquire the Shares, Adjusted Warrant and Warrant
Shares.

4.14. Investor Undertaking. Investor covenants that it will not sell, transfer,
assign, hypothecate or pledge in any way any of the Shares unless the resale of the Shares has been
registered for resale under the Securities Act and in compliance with applicable prospectus
delivery requirements, if any, or otherwise in compliance with the requirements of an available
exemption from registration under the Securities Act and the rules and regulations promulgated
thereunder.

5. Registration Rights.

5.1 Certain Definitions

“Holder” and “Holders” shall include Investor and any transferee or transferees of Registrable
Securities to whom the registration rights conferred by this Agreement and the Prior Purchase
Agreement, have been transferred in compliance with this Agreement and the Prior Purchase
Agreement.

The terms “register,” “registered” and “registration” shall refer to a registration effected
by preparing and filing a registration statement in compliance with the Securities Act and
applicable rules and regulations thereunder, and the declaration or ordering of the effectiveness
of such registration statement.

“Registrable Securities” shall mean: (i) the Shares issued or issuable to each Holder (A)
upon any distribution with respect to, any exchange for or any replacement of such Shares, or (B)
upon any conversion, exercise or exchange of any securities issued in connection with any such
distribution, exchange or replacement; (ii) securities issued or issuable upon any stock split,
stock dividend, recapitalization or similar event with respect to the foregoing; and (iii) any
other security issued as a dividend or other distribution with respect to, in exchange for or in
replacement of the securities referred to in the preceding clauses, except that any such Shares, or
other securities shall cease to be Registrable Securities when (C) they have been sold to the
public or (D) they may be sold by the Holder thereof without restriction pursuant to Rule 144.

“Registration Expenses” shall mean all expenses to be incurred by the Company in connection
with each Holder’s registration rights under this Agreement (such amount not to exceed $5,000 in
the aggregate), including, without limitation, all registration and filing fees, printing expenses,
fees and disbursements of counsel for the Company, and blue sky fees and expenses,

 

7

 

reasonable fees
and disbursements of counsel to Holders (using a single counsel selected by a majority in interest
of the Holders) for a review of the Registration Statement (as defined herein) and related
documents, and the expense of any special audits incident to or required by any such registration
(but excluding the compensation of regular employees of the Company, which shall be paid in any
event by the Company).

“Selling Expenses” shall mean all underwriting discounts, selling commissions and transfer
taxes applicable to the sale of Registrable Securities and all fees and disbursements of counsel
for Holders not included within “Registration Expenses.”

5.2 Registration Requirements. The Company shall use its reasonable best efforts to
effect the registration of the resale of the Registrable Securities (including, without limitation,
the execution of an undertaking to file post-effective amendments, appropriate qualification under
applicable blue sky or other state securities laws and appropriate compliance with applicable
regulations issued under the Securities Act) as would permit or facilitate the resale of all the
Registrable Securities in the manner (including manner of sale) and in all states reasonably
requested by the Holder. Such reasonable best efforts by the Company shall include, without
limitation, the following:

(a) The Company shall, as expeditiously as possible:

(i) But in any event within 60 days of the Closing, prepare and file a
registration statement with the Commission pursuant to Rule 415 under the Securities
Act on Form S-3 under the Securities Act (or in the event that the Company is
ineligible to use such form, such other form as the Company is eligible to use under
the Securities Act provided that such other form shall be converted into a Form S-3
promptly after Form S-3 becomes available to the Company) covering resales by the
Holders as selling stockholders (not underwriters) of the Shares (the
“Registration Statement”). The Company shall use its reasonable best efforts
to cause such Registration Statement and other filings to be declared effective as
soon as possible, and in any event prior to 120 days (or, if the Commission elects to
review the Registration Statement, 180 days) following the Closing.

(ii) Without limiting the foregoing, the Company will promptly respond to all
Commission comments, inquiries and requests, and shall request acceleration of
effectiveness of the Registration Statement at the earliest possible date. The
Company shall provide the Holders reasonable opportunity to review the portions of
any such Registration Statement or amendment or supplement thereto containing
disclosure regarding the Holders prior to filing.

(iv) Prepare and file with the Commission such amendments and supplements to
such Registration Statement and the prospectus used in connection with such
Registration Statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such Registration Statement and notify the Holders of the filing and effectiveness of such
Registration Statement and any amendments or supplements.

 

8

 

(v) Furnish or otherwise make available to each Holder copies of a current
prospectus included in the Registration Statement conforming with the requirements of
the Securities Act, copies of the Registration Statement, any amendment or supplement
thereto and any documents incorporated by reference therein and such other documents
as such Holder may reasonably require in order to facilitate the disposition of
Registrable Securities owned by such Holder.

(vi) Register and qualify the securities covered by the Registration Statement
under the securities or “blue sky” laws of all domestic jurisdictions, to the extent
required; provided that the Company shall not be required in connection therewith or
as a condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.

(vii) Notify each Holder immediately of the happening of any event (but not the
substance or details of any such events unless specifically requested by a Holder) as
a result of which the prospectus (including any supplements thereto or thereof)
included in such Registration Statement, as then in effect, includes an untrue
statement of material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of the
circumstances then existing, and use its reasonable best efforts to promptly update
and/or correct such prospectus.

(viii) Notify each Holder immediately of the issuance by the Commission or any
state securities commission or agency of any stop order suspending the effectiveness
of the Registration Statement or the threat or initiation of any proceedings for that
purpose. The Company shall use its reasonable best efforts to prevent the issuance
of any stop order and, if any stop order is issued, to obtain the lifting thereof at
the earliest possible time.

(ix) Permit counsel to the Holders to review the Registration Statement and all
amendments and supplements thereto within a reasonable period of time (but not less
than two (2) full days on which there is trading on the Nasdaq Global Market (the
“Principal Market”) or such other market or exchange on which the Common
Stock is then principally traded) prior to each filing and will not request
acceleration of the Registration Statement without prior notice to such counsel.

(x) Qualify the Registrable Securities covered by such Registration Statement
for listing on the Principal Market or the principal securities exchange and/or
market on which the Common Stock is then listed, including the preparation and filing
of any required filings with such principal market or exchange.

(b) In the event that the Registration Statement has been declared effective by the Commission
and, afterwards, any Holder’s ability to sell Registrable Securities registered for resale under
the Registration Statement is suspended for more than (i) 45 days in any 90-day period or (ii) 90
days in any calendar year, including without limitation by reason of any suspension or stop order
with respect to the Registration Statement or the fact that an event has occurred as a result of
which the prospectus (including any supplements thereto) included in the Registration Statement
then in effect includes an untrue statement of material fact or omits to state a material fact

 

9

 

required to be stated therein or necessary to make the statements therein not misleading in light
of the circumstances then existing, then the Company shall take such action as may be necessary to
amend or supplement the Registration Statement or the prospectus (including any supplements
thereto) included in the Registration Statement, such that the Registration Statement or the
prospectus, as so amended, shall not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the statements not
misleading.

(c) If the Holder(s) intend to distribute the Registrable Securities by means of an
underwriting, the Holder(s) shall so advise the Company. Any such underwriting may only be
administered by nationally or regionally recognized investment bankers reasonably satisfactory to
the Company.

(d) Subject to Section 5.2(c) above, the Company shall enter into such customary
agreements (including an underwriting agreement containing such representations and warranties by
the Company and such other terms and provisions, as are customarily contained in underwriting
agreements for comparable offerings and are reasonably satisfactory to the Company) and take all
such other actions as the Holder or the underwriters participating in such offering and sale may
reasonably request in order to expedite or facilitate such offering and sale other than such
actions which are disruptive to the Company or require significant management availability.

(e) The Company shall make available for inspection by the Holders, representative(s) of all
the Holders together, any underwriter participating in any disposition pursuant to the Registration
Statement, and any attorney or accountant retained by any Holder or underwriter, all financial and
other records customary for purposes of the Holders’ due diligence examination of the Company and
review of the Registration Statement, all documents filed with the Commission subsequent to the
Closing, pertinent corporate documents and properties of the Company, and cause the Company’s
officers, directors and employees to supply all information reasonably requested by any such
representative, underwriter, attorney or accountant in connection with the Registration Statement,
provided that such parties agree to keep such information confidential. Notwithstanding the
foregoing, the foregoing right shall not extend to any Holder (i) who is not a financial investor
or entity or (ii) who, itself or through any affiliate, has any strategic business interest that
would reasonably be expected to be in conflict with any business of the Company or its
Subsidiaries.

(f) The Company may suspend the use of any prospectus used in connection with the Registration
Statement only in the event, and for such period of time as, (i) such a suspension is required by
the rules and regulations of the Commission or (ii) it is determined in good faith by the Board of
Directors of the Company that because of valid business reasons (not including the avoidance of the
Company’s obligations hereunder), it is in the best interests of the Company to suspend such use,
and prior to suspending such use in accordance with this clause (f)(ii) the Company provides the
Holders with written notice of such suspension, which notice need not specify the nature of the
event giving rise to such suspension. The Company will use reasonable best efforts to cause such
suspension to terminate at the earliest possible date.

(g) The Company shall prepare and file with the Commission such amendments (including
post-effective amendments) and supplements to the Registration Statement and the prospectus used in
connection with the Registration Statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the Securities Act, as may be necessary to keep the

 

10

 

 Registration Statement
effective at all times during the Registration Period (as defined below), and, during such period,
comply with the provisions of the Securities Act with respect to the disposition of all Registrable
Securities of the Company covered by the Registration Statement. In the case of amendments and
supplements to the Registration Statement which are required to be filed pursuant to this Agreement
(including pursuant to this Section 5.2(g)) by reason of the Company filing a report on
Form 10-K, Form 10-Q or Form 8-K or any analogous report under the Exchange Act, the Company shall
have incorporated such report by reference into the Registration Statement, if applicable, or shall
file such amendments or supplements with the Commission on the same day on which the Exchange Act
report is filed which created the requirement for the Company to amend or supplement the
Registration Statement.

(h) Each Holder agrees by its acquisition of the Registrable Securities that, upon receipt of
a notice from the Company of the occurrence of any event of the kind described in Sections
5.2(a)(vii) or 5.2(a)(viii), and upon notice of any suspension under Section 5.2(f),
such Holder will forthwith discontinue disposition of such Registrable Securities under the
Registration Statement until such Holder’s receipt of the copies of the supplemented prospectus
and/or amendment to the Registration Statement contemplated by this Section 5.2, or until
it is advised in writing by the Company that the use of the applicable prospectus may be resumed,
and, in either case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such prospectus or the Registration
Statement. The Company may provide appropriate stop orders to enforce the provisions of this
paragraph.

(i) If requested by a Holder, the Company shall (i) as soon as practicable incorporate in a
prospectus supplement or post-effective amendment such information as a Holder reasonably requests
to be included therein relating to the sale and distribution of Registrable Securities, including,
without limitation, information with respect to the number of Registrable Securities being offered
or sold, the purchase price being paid therefor and any other terms of the offering of the
Registrable Securities to be sold in such offering, (ii) as soon as practicable make all required
filings of such prospectus supplement or post-effective amendment after being notified of the
matters to be incorporated in such prospectus supplement or post-effective amendment, and (iii) as
soon as practicable, supplement or make amendments to the Registration Statement if reasonably
requested by a Holder holding any Registrable Securities.

5.3 Expenses of Registration. All Registration Expenses in connection with any
registration, qualification or compliance with registration pursuant to this Agreement shall be
borne by the Company, and all Selling Expenses of a Holder shall be borne by such Holder.

5.4 Registration on Form S-3. The Company shall use its reasonable best efforts to
remain qualified for registration on Form S-3 or any comparable or successor form or forms, or in
the event that the Company is ineligible to use such form, such form as the Company is eligible to
use under the Securities Act, provided that if such other form is used, the Company shall convert
such other form to a Form S-3 promptly after the Company becomes so eligible, provided that the
Company shall maintain the effectiveness of the Registration Statement then in effect until such
time as the Registration Statement covering the Registrable Securities has been declared
effective by the Commission.

5.5 Registration Period. In the case of the registration effected by the Company
pursuant to this Agreement, the Company shall keep such registration effective from the date on
which the

 

11

 

Registration Statement initially became effective until the earlier of (i) the date on
which all the Holders have completed the sales or distribution described in the Registration
Statement relating to the Registrable Securities registered for resale thereunder or, (ii) until
such Registrable Securities may be sold by the Holders without restriction pursuant to Rule 144 (or
any successor thereto) (provided that the Company’s transfer agent has accepted an instruction from
the Company to such effect) (the “Registration Period”). Thereafter, the Company shall be
entitled to withdraw such Registration Statement and the Holders shall have no further right to
offer or sell any of the Registrable Securities registered for resale thereon pursuant to the
Registration Statement (or any prospectus relating thereto).

5.6 Indemnification.

(a) Company Indemnity. The Company will indemnify and hold harmless each Holder, each
of its officers, directors, agents and partners, and each person controlling each of the foregoing,
within the meaning of Section 15 of the Securities Act and the rules and regulations thereunder
with respect to which registration, qualification or compliance has been effected pursuant to this
Agreement, and each underwriter, if any, and each person who controls, within the meaning of
Section 15 of the Securities Act and the rules and regulations thereunder, any underwriter, against
all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact contained in any
prospectus, offering circular or other document (including any related registration statement,
notification or the like) incident to any such registration, qualification or compliance, or based
on any omission (or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of the circumstances
under which they were made, or any violation by the Company of the Securities Act or any state
securities law or in either case, any rule or regulation thereunder applicable to the Company and
relating to action or inaction required of the Company in connection with any such registration,
qualification or compliance, and will reimburse each Holder, each of its officers, directors,
agents and partners, and each person controlling each of the foregoing, each such underwriter and
each person who controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating and defending any such claim, loss, damage, liability or
action, provided that the Company will not be liable in any such case to a Holder to the extent
that any such claim, loss, damage, liability or expense arises out of or is based (i) on any untrue
statement or omission based upon written information furnished to the Company by a Holder or the
underwriter (if any) therefore, (ii) the failure of a Holder to deliver at or prior to the written
confirmation of sale, the most recent prospectus, as amended or supplemented, or (iii) the failure
of a Holder otherwise to comply with this Agreement. The indemnity agreement contained in this
Section 5.6(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent of the Company
(which consent will not be unreasonably withheld).

(b) Holder Indemnity. Each Holder will, severally and not jointly, if Registrable
Securities held by it are included in the securities as to which such registration, qualification
or compliance is being effected, indemnify and hold harmless the Company, each of its directors,
officers, agents and partners, and each underwriter, if any, of the Company’s securities covered by
such a registration statement, each person who controls the Company or such underwriter within
the meaning of Section 15 of the Securities Act and the rules and regulations thereunder, each
other Holder (if any), and each of their officers, directors and partners, and each person
controlling such

 

12

 

other Holder(s) against all claims, losses, damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering circular or other document, or
any omission (or alleged omission) to state therein a material fact required to be stated therein
or necessary to make a statement therein not misleading in light of the circumstances under which
they were made, and will reimburse the Company and such other Holder(s) and their directors,
officers and partners, underwriters or control persons for any legal or any other expenses
reasonably incurred in connection with investigating and defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that such untrue statement
(or alleged untrue statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and in conformity with
written information furnished to the Company by such Holder and stated to be specifically for use
therein, and provided that the maximum amount for which such Holder shall be liable under this
indemnity shall not exceed the net proceeds received by such Holder from the sale of the
Registrable Securities pursuant to the registration statement in question. The indemnity agreement
contained in this Section 5.6(b) shall not apply to amounts paid in settlement of any such
claims, losses, damages or liabilities if such settlement is effected without the consent of such
Holder (which consent shall not be unreasonably withheld).

(c) Procedure. Each party entitled to indemnification under this Section 5.6
(the “Indemnified Party”) shall give notice to the party required to provide
indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party
to assume the defense of any such claim in any litigation resulting therefrom, provided that
counsel for the Indemnifying Party, who shall conduct the defense of such claim or any litigation
resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party may participate in such defense at its own
expense, and provided further that the failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations under this Section 5.6
except to the extent that the Indemnifying Party is materially and adversely affected by such
failure to provide notice. No Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such
claim or litigation. Each Indemnified Party shall furnish such non-privileged information
regarding itself or the claim in question as an Indemnifying Party may reasonably request in
writing and as shall be reasonably required in connection with the defense of such claim and
litigation resulting therefrom.

5.7 Contribution. If the indemnification provided for in Section 5.6 herein
is unavailable to the Indemnified Parties in respect of any losses, claims, damages or liabilities
referred to herein (other than by reason of the exceptions provided therein), then each such
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such losses, claims, damages or
liabilities as between the Company on the one hand and any Holder on the other, in such proportion
as is appropriate to reflect the relative fault of the Company and of such Holder in connection
with the statements or omissions which resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative fault of the Company on the one
hand and of any Holder on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue

 

13

 

statement of a material fact or omission or alleged omission to state a material fact relates to
information supplied by the Company or by such Holder.

In no event shall the obligation of any Indemnifying Party to contribute under this
Section 5.7 exceed the amount that such Indemnifying Party would have been obligated to pay
by way of indemnification if the indemnification provided for under Sections 5.6(a) or
5.6(b) hereof had been available under the circumstances.

The Company and the Holders agree that it would not be just and equitable if contribution
pursuant to this Section 5.7 were determined by pro rata allocation (even if the Holders or
the underwriters were treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in the immediately
preceding paragraphs. The amount paid or payable by an Indemnified Party as a result of the
losses, claims, damages and liabilities referred to in the immediately preceding paragraphs shall
be deemed to include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this section, no Holder or underwriter
shall be required to contribute any amount in excess of the amount by which (i) in the case of any
Holder, the net proceeds received by such Holder from the sale of Registrable Securities pursuant
to the registration statement in question or (ii) in the case of an underwriter, the total price at
which the Registrable Securities purchased by it and distributed to the public were offered to the
public exceeds, in any such case, the amount of any damages that such Holder or underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.

5.8 Survival. The indemnity and contribution agreements contained in Sections 5.6
and 5.7 and the representations and warranties of the Company referred to in Section
5.2(d) shall remain operative and in full force and effect regardless of (i) any termination of
this Agreement or any underwriting agreement, (ii) any investigation made by or on behalf of any
Indemnified Party or by or on behalf of the Company, and (iii) the consummation of the sale or
successive resales of the Registrable Securities.

5.9 Information by Holders. Each Holder shall promptly furnish to the Company such
information regarding such Holder and the distribution and/or sale proposed by such Holder as the
Company may from time to time reasonably request in writing in connection with any registration,
qualification or compliance referred to in this Agreement, and the Company may exclude from such
registration the Registrable Securities of any Holder who unreasonably fails to furnish such
information within a reasonable time after receiving such request. The intended method or methods
of disposition and/or sale of such securities as so provided by such purchaser shall be included
without alteration in the Registration Statement covering the Registrable Securities and shall not
be changed without written consent of such Holder. Each Holder agrees that, other than ordinary
course brokerage arrangements, in the event it enters into any arrangement with a broker dealer for
the sale of any Registrable Securities through a block trade, special offering, exchange
distribution or secondary distribution or a purchase by a broker or dealer, such Holder shall
promptly deliver to the Company in writing all applicable information required in order for the
Company to be able to timely file a supplement to the Prospectus pursuant to Rule 424(b), or take
any other action, under

 

14

 

the Securities Act, to the extent that such supplement or other action is legally required. Such
information shall include a description of (i) the name of such Holder and of the participating
broker dealer(s), (ii) the number of Registrable Securities involved, (iii) the price at which such
Registrable Securities were or are to be sold, and (iv) the commissions paid or to be paid or
discounts or concessions allowed or to be allowed to such broker dealer(s), where applicable.

6. Stock Legend.

6.1 Upon payment therefor as provided in this Agreement, the Company will issue the Shares in
the name of each Investor.

Any certificate representing Shares shall be stamped or otherwise imprinted with a legend in
substantially the following form:

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION AND MAY
NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, AND AFTER
RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED UNDER THE SECURITIES ACT OR THAT THE PROSPECTUS DELIVERY REQUIREMENTS HAVE BEEN
MET.

Any certificate representing the Warrant Shares issued by the Company shall also be stamped or
otherwise imprinted with a legend in substantially the following form:

THESE SECURITIES REPRESENTED HEREBY ARE ALSO SUBJECT TO RIGHTS AND OBLIGATIONS AS SET FORTH IN
A SECURITIES PURCHASE AND REGISTRATION RIGHTS AGREEMENTS DATED AS OF MARCH 13, 2009 AND MARCH 9,
2010, IN EACH CASE, BY AND AMONG STAR SCIENTIFIC, INC. AND THE SEVERAL INVESTORS PARTY THERETO AS
SUCH MAY BE AMENDED FROM TIME TO TIME.

The Adjusted Warrant shall be imprinted with the legends set forth in the Adjusted Warrant on
Exhibit A hereto.

The Company agrees to issue the Shares or Warrant Shares, issued upon exercise of the Adjusted
Warrant without the legends set forth above at such time as the Holder thereof is (i) permitted to
transfer such Shares or Warrant Shares, as applicable, without restriction pursuant to an available
exemption from registration under the Securities Act, and upon such transfer after delivery to the
Company of a customary representation satisfactory to the Company that such exemption has been met,
or (ii) at such time the Shares or Warrant Shares, as applicable, have been registered for resale
under the Securities Act, and upon such resale after delivery to the Company of a customary
representation that the Holder has complied with the plan of distribution in the applicable
prospectus contained in the registration statement and that the prospectus delivery requirements
have been met, if any.

 

15

 

7. Survival of Representations, Warranties and Agreements. Notwithstanding any
investigation made by any party to this Agreement, all covenants, agreements, representations and
warranties made by the Company and Investor herein shall survive the execution of this Agreement,
the delivery to Investor of the Shares and the Adjusted Warrant being purchased and the payment
therefor.

8. Notices. All notices, requests, consents and other communications hereunder shall
be in writing, shall be mailed (i) if within domestic United States by first-class registered or
certified airmail, or nationally recognized overnight express courier, postage prepaid, or by
facsimile, or (ii) if delivered from outside the United States, by International Federal Express or
facsimile, and shall be deemed given (A) if delivered by first-class registered or certified mail
domestic, three business days after so mailed, (B) if delivered by nationally recognized overnight
carrier, one business day after so mailed, (C) if delivered by International Federal Express, two
business days after so mailed, and (D) if delivered by facsimile, upon electric confirmation of
receipt and shall be delivered as addressed as follows:

(a) if to the Company, to:

Star Scientific, Inc.

4470 Cox Road

Glen Allen, Virginia 23060

Telephone: (804) 527-1970

Facsimile: (804) 527-1976

Attention: Chief Financial Officer

with copies to:

Star Scientific, Inc.

7475 Wisconsin Ave.

Bethesda, MD 20814

Attn: Robert E. Pokusa

General Counsel

Phone: (301) 654-8300

Telecopy: (301) 654-9308;

and

Latham & Watkins LLP

555 Eleventh Street, N.W.

Suite 1000

Washington, DC 20004

Attn: William P. O’Neill

Phone: (202) 637-2200

Telecopy: (202) 637-2201

(b) if to Investor, at its address set forth under its name on Schedule I hereto, or
at such other address or addresses as may have been furnished to the Company in writing.

 

16

 

9. Changes. This Agreement may not be modified or amended except pursuant to an
instrument in writing signed by the Company and the Investors.

10. Headings. The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of this Agreement.

11. Severability. In case any provision contained in this Agreement should be
invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or impaired thereby.

12. 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 the principles of
conflicts of law.

13. Entire Agreement. This Agreement constitutes the entire agreement between the
parties hereto pertaining to the subject matter hereof, and any and all other written or oral
agreements relating to such subject matter are expressly cancelled.

14. Finders Fees. Neither the Company nor Investor nor any affiliate thereof has
incurred any obligation which will result in the obligation of the other party to pay any finder’s
fee or commission in connection with this transaction.

15. Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall constitute an original, but all of which, when taken together, shall constitute but one
instrument, and shall become effective when one or more counterparts have been signed by each party
hereto and delivered to the other parties.

16. Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of the Company and Investor. Investor shall not
assign any rights or obligations under this Agreement other than, solely with respect to any
Shares, Adjusted Warrant or Warrant Shares transferred in accordance with this Agreement, including
the legends described herein, to any permitted transferee of such Shares, Adjusted Warrant or
Warrant Shares, provided, however, that no such assignment shall relieve Investor
of its obligations under this Agreement.

17. Expenses. Each of the Company and Investor shall bear its own expenses in
connection with the preparation and negotiation of the Agreement.

18. Independent Nature of Investors’ Obligations and Rights. The obligations of each
Investor under this Agreement are several and not joint with the obligations of any other Investor,
and no Investor shall be responsible in any way for the performance of the obligations of any other
Investor under this Agreement. Nothing contained herein, and no action taken by any Investor
pursuant hereto, shall be deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the Investors are in any
way acting in concert or as a group with respect to such obligations or the transactions
contemplated by this Agreement and the Company acknowledges that the Investors are not acting in
concert or as a group with respect to such obligations or the transactions contemplated by this
Agreement. Each Investor confirms that it has independently participated in the negotiation of the
transaction contemplated hereby with the advice of its own counsel and advisors. Each Investor shall be entitled to

 

17

 

independently protect and enforce its rights, including, without limitation, the rights arising out
of this Agreement, and it shall not be necessary for any other Investor to be joined as an
additional party in any proceeding for such purpose.

19. Pronouns. All pronouns or any variation thereof shall be deemed to refer to the
masculine, feminine or neuter, singular or plural, as the identity of the person, persons, entity
or entities may require.

20. Public Statements or Releases. The Company shall by 8:30 a.m. New York time on
the business day following the Closing Date, issue a press release or file a Current Report on Form
8-K disclosing the transactions contemplated hereby.

[Signature pages follow.]

 

18

 

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

	 	 	 	 	 
	 	STAR SCIENTIFIC, INC.

 	 
	 	By:  	/s/ Paul L. Perito
 	 
	 	 	Name:  	Paul L. Perito 	 
	 	 	Title:  	Chairman, President and 
Chief Operating Officer 	 

Signature Page to Securities Purchase and Registration Rights Agreement

 

 

 

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

	 	 	 	 	 
	 	Feehan Partners, LP

 	 
	 	By:  	/s/ Scott Peters
 	 
	 
	 	PV Partners, LP

 	 
	 	By:  	/s/ Scott Peters
 	 
	 
	 	Tradewinds Master Fund (BVI), Ltd

 	 
	 	By:  	/s/ Scott Peters
 	 

Signature Page to Securities Purchase and Registration Rights Agreement

 

 

 

SCHEDULE I

SCHEDULE OF INVESTORS

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Aggregate	 	 	Warrant	 	 	Prior Exercise	 	 	New Exercise	 
	Name and Address	 	Shares	 	 	Price Per Share	 	 	Consideration	 	 	Shares	 	 	Price	 	 	 Price	 
	Tradewinds Master Fund (BVI), Ltd
	 	 	1,004,386	 	 	$	1.14	 	 	$	1,145,000	 	 	 	1,004,386	 	 	$	2.00	 	 	$	1.50	 
	Feehan Partners, LP
	 	 	250,000	 	 	$	1.14	 	 	$	285,000	 	 	 	250,000	 	 	$	2.00	 	 	$	1.50	 
	(see above)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PV Partners, LP
	 	 	500,000	 	 	$	1.14	 	 	$	570,000	 	 	 	500,000	 	 	$	2.00	 	 	$	1.50	 
	(see above)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total:
	 	 	1,754,386	 	 	 	 	 	 	$	2,000,000.00

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