Document:

Exhibit 10.1

Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of May 18, 2011, by and among
Cereplast, Inc., a Nevada corporation with headquarters located at 300 N. Continental Boulevard,
Suite 100, El Segundo, California 90245 (the “Company”), and each investor identified on the
signature pages hereto (individually, an “Investor” and collectively, the “Investors”).

BACKGROUND

A. The Company and each Investor are executing and delivering this Agreement in reliance upon
the exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended
(the “Securities Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated by the United
States Securities and Exchange Commission (the “SEC”) under the Securities Act.

B. Each Investor, severally and not jointly, wishes to purchase, and the Company wishes to
sell, upon the terms and conditions stated in this Agreement, such principal amount of the
Company’s 7% Senior Subordinated Convertible Notes due June 1, 2016 (the “Notes”) set forth on
such Investor’s signature page to this Agreement (which aggregate amount for all Investors together
shall be an aggregate amount of up to $15,000,000). The Notes will be issued pursuant to an
Indenture, as supplemented by a supplemental indenture to be dated as of the Closing Date (defined
below) (collectively, the “Indenture”) between the Company and Wells Fargo Bank, National
Association, as trustee (the “Trustee”). Securities issued via Deposit/Withdrawal At Custodian will
be issued to Cede & Co., as nominee of The Depository Trust Company (“DTC”) pursuant to a letter of
representations (the “DTC Agreement”), between the Company and DTC. The Notes are convertible into
shares (the “Conversion Shares”) of the common stock, $0.001 par value per share (the “Common
Stock”), of the Company, in accordance with the terms of the Notes and the Indenture, at the
initial conversion rate specified in the Indenture and the Notes, under the circumstances and
subject to adjustment as set forth in the Indenture. The Notes and the Conversion Shares are
collectively referred to herein as the “Securities.”

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for
other good and valuable consideration the receipt and adequacy of which are hereby acknowledged,
the Company and the Investors agree as follows:

ARTICLE I

DEFINITIONS

1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, the
following terms have the meanings indicated:

“Additional Interest” has the meaning set forth in Section 6.1 hereof.

“Additional Interest Accrual Period” has the meaning set forth in Section 6.1 hereof.

 

 

 

“Additional Interest Amount” has the meaning set forth in Section 6.1 hereof.

“Additional Interest Payment Date” means each of June 1 or December 1.

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person, as such terms are used in
and construed under Rule 144 under the Securities Act.

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

“Best Efforts” means the efforts that a prudent person desirous of achieving a result would
use in similar circumstances to ensure that such result is achieved as expeditiously as practical;
provided, however, that an obligation to use Best Efforts under this Agreement does not require the
Company to dispose of or make any change to its business, expend any material funds or incur any
other material burden.

“Business Day” means any day other than Saturday, Sunday, any day which shall be a federal
legal holiday in the United States or any day on which banking institutions in The State of New
York are authorized or required by law or other governmental action to close.

“Closing” means the closing of the purchase and sale of the Securities pursuant to Section
2.1.

“Closing Date” means the date and time of the Closing and shall be on such date and time as is
mutually agreed to by the Company and each Investor.

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

“Company Counsel” means Sichenzia Ross Friedman Ference LLP, counsel to the Company.

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

“Common Stock Equivalents” means any securities of the Company or any Subsidiary which would
entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any
debt, preferred stock, right, option, warrant or other instrument that is at any time convertible
into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive,
Common Stock.

“Contingent Obligation” has the meaning set forth in Section 3.1(aa).

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

“Conversion Shares” has the meaning set forth in the Preamble.

“Debt Repayment Triggering Event” has the meaning set forth in Section 3.1(f).

 

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“Disclosure Materials” has the meaning set forth in Section 3.1(h).

“Effective Date” means the date that the Registration Statement is first declared effective by
the SEC.

“Effectiveness Period” means the period commencing on the date the Registration Statement is
declared effective and ending on the date that all Notes and Underlying Shares have ceased to be
Registrable Securities.

“8-K Filing” has the meaning set forth in Section 4.5.

“Eligible Market” means any of the New York Stock Exchange, the American Stock Exchange, the
NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or OTC Bulletin
Board.

“Environmental Laws” has the meaning set forth in Section 3.1(ee).

“Event” has the meaning set forth in Section 6.1(d).

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Excluded Events” has the meaning set forth in Section 6.1(d)(iii).

“Excluded Investors” means Lazard Capital Markets LLC, Roth Capital Partners and Ardour
Capital Investments LLC, and each of its and their Affiliates.

“Exempt Issuance” means the issuance of (a) shares of Common Stock or options to employees,
officers or directors of the Company pursuant to any stock or option plan duly adopted for such
purpose, by a majority of the non-employee members of the Board of Directors or a majority of the
members of a committee of non-employee directors established for such purpose, (b) shares of Common
Stock issued to employees, officers or directors of the Company in lieu of cash compensation for
services rendered to the Company, (c) securities issued upon the exercise or exchange of or
conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable
for or convertible into shares of Common Stock issued and outstanding on the date of this
Agreement, provided that such securities have not been amended since the date of this Agreement to
increase the number of such securities or to decrease the exercise price, exchange price or
conversion price of such securities, and (d) securities issued pursuant to acquisitions or
strategic transactions approved by a majority of the disinterested directors of the Company,
provided that any such issuance shall only be to a Person (or to the equityholders of a Person)
which is, itself or through its subsidiaries, an operating company or an owner of an asset in a
business synergistic with the business of the Company and shall provide to the Company additional
benefits in addition to the investment of funds, but shall not include a transaction in which the
Company is issuing securities primarily for the purpose of raising capital or to an entity whose
primary business is investing in securities.

“Filing Date” means the date that is thirty (30) days after the Closing Date or, if such date
is not a Business Day, the next date that is a Business Day.

 

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“GAAP” has the meaning set forth in Section 3.1(h).

“Hazardous Materials” has the meaning set forth in Section 3.1(ee).

“Holder” means a Person who owns, beneficially or otherwise, Registrable Securities.

“Indebtedness” has the meaning set forth in Section 3.1(bb).

“Indemnified Party” has the meaning set forth in Section 6.4(c).

“Indemnifying Party” has the meaning set forth in Section 6.4(c).

“Indenture” has the meaning set forth in the Preamble.

“Insolvent” has the meaning set forth in Section 3.1(i).

“Intellectual Property Rights” has the meaning set forth in Section 3.1(u).

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

“Lien” means any lien, charge, claim, security interest, encumbrance, right of first refusal
or other restriction.

“Losses” means any and all losses, claims, damages, liabilities, settlement costs and
expenses, including, without limitation, reasonable attorneys’ fees.

“Material Adverse Effect” means (i) a material adverse effect on the results of operations,
assets, business, prospects or financial condition of the Company and the Subsidiaries taken as a
whole on a consolidated basis or (ii) material and adverse impairment of the Company’s ability to
perform its obligations under any of the Transaction Documents, provided, that none of the
following alone shall be deemed, in and of itself, to constitute a Material Adverse Effect: (i) a
change in the market price or trading volume of the Common Stock or (ii) changes in general
economic conditions or changes affecting the industry in which the Company operates generally (as
opposed to Company-specific changes) so long as such changes do not have a disproportionate effect
on the Company and its Subsidiaries taken as a whole.

“Material Permits” has the meaning set forth in Section 3.1(w).

“Notes” has the meaning set forth in the Preamble.

“Options” means any outstanding rights, warrants or options to subscribe for or purchase
Common Stock or Convertible Securities.

“Person” has the meaning set forth in Section 3.1(bb).

“Placement Agents” has the meaning set forth in Section 3.1(m).

 

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“Proceeding” means an action, claim, suit, investigation or proceeding (including, without
limitation, a partial proceeding, such as a deposition), whether commenced or threatened in
writing.

“Prospectus” means the prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a prospectus filed
as part of an effective registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by the Registration Statement,
and all other amendments and supplements to the Prospectus including post-effective amendments, and
all material incorporated by reference or deemed to be incorporated by reference in such
Prospectus.

“Questionnaires” has the meaning set forth in Section 6.2(m).

“Record Holder” means with respect to any Additional Interest Payment Date relating to any
Notes as to which any Additional Interest Amount has accrued, the registered holder of such Note on
the May 15 immediately preceding an Additional Interest Payment Date occurring on a June 1, and on
the November 15 immediately preceding an Additional Interest Payment Date occurring on a December
1.

“Registrable Securities” means the Notes and the Underlying Shares issuable pursuant to the
Transaction Documents, together with any securities issued or issuable upon any stock split,
dividend or other distribution, recapitalization or similar event with respect to the foregoing,
until the earliest of (i) the effective registration under the Securities Act and the resale of the
Registrable Securities in accordance with the Registration Statement or pursuant to Rule 144 or any
similar provision then in force; (ii) the date on which the Registrable Security is distributed to
the public pursuant to Rule 144 or may be sold or transferred by a person who is not our affiliate
pursuant to Rule 144 (or any other similar provision then in force) without any volume or manner of
sale restrictions thereunder; and (iii) the date on which the Registrable Securities cease to be
outstanding.

“Registration Statement” means each registration statement required to be filed under Article
VI, including (in each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and
all material incorporated by reference or deemed to be incorporated by reference in such
registration statement.

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

“Required Effectiveness Date” means (i) if the Registration Statement does not become subject
to review by the SEC, the date which is the earliest of (a) ninety (90) days after the Closing Date
or (b) three (3) Trading Days after the Company receives notification from the SEC that the
Registration Statement will not become subject to review, or (ii) if the Registration Statement
becomes subject to review by the SEC, the date which is the earliest of (a) one hundred and fifty
(150) days after the Closing Date or (b) three (3) Trading Days after the Company receives
notification from the SEC that the SEC has no further comment to the Registration Statement.

 

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“Rule 144,” “Rule 415,” and “Rule 424” means Rule 144, Rule 415 and Rule 424, respectively,
promulgated by the SEC pursuant to the Securities Act, as such Rules may be amended from time to
time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same
effect as such Rule.

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

“SEC Reports” has the meaning set forth in Section 3.1(h).

“Securities” has the meaning set forth in the Preamble.

“Securities Act” has the meaning set forth in the Preamble.

“Shares” means shares of the Company’s Common Stock.

“Short Sales” has the meaning set forth in Section 3.2(i).

“Subsidiary” means any direct or indirect subsidiary of the Company.

“Subscription Amount” means, as to each Investor, the aggregate amount to be paid for the
Notes purchased hereunder as specified below such Investor’s name on the signature page of this
Agreement, in United States dollars and in immediately available funds.

“Trading Day” means (i) a day on which the Common Stock is traded on a Trading Market (other
than the OTC Bulletin Board), or (ii) if the Common Stock is not listed or quoted on a Trading
Market (other than the OTC Bulletin Board), a day on which the Common Stock is traded in the
over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock is not
listed or quoted on any Trading Market, a day on which the Common Stock is quoted in the
over-the-counter market as reported by the Pink Sheets LLC (or any similar organization or agency
succeeding to its functions of reporting prices); provided, that in the event that the Common Stock
is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a
Business Day.

“Trading Market” means whichever of the New York Stock Exchange, the American Stock Exchange,
the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or OTC
Bulletin Board on which the Common Stock is listed or quoted for trading on the date in question.

“Transaction” has the meaning set forth in Section 3.2(i).

“Transaction Documents” means this Agreement, the Notes and the schedules and exhibits
attached hereto.

“Transfer Agent” means Computershare, Inc, or any successor transfer agent for the Company.

“Trustee” has the meaning set forth in the Preamble.

 

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“Underlying Shares” means the shares of Common Stock issued and issuable upon conversion or
redemption of the Notes.

ARTICLE II

PURCHASE AND SALE

2.1 Closing. Subject to the terms and conditions set forth in this Agreement, at the
Closing the Company shall issue and sell to each Investor, and each Investor shall, severally and
not jointly, purchase from the Company, such aggregate principal amount of the Notes set forth on
such Investor’s signature page to this Agreement. The date and time of the Closing and shall be
11:00 a.m., New York City Time, on the Closing Date. The Closing shall take place at the offices
of the Company’s Counsel.

2.2 Closing Deliveries.

(a) At the Closing, the Company shall deliver or cause to be delivered to each Investor the
following:

(i) a Note with a principal amount equal to such Purchaser’s Subscription Amount, registered
in the name of such Purchase;

(ii) the Indenture duly executed by the Company and the Trustee;

(iii) a legal opinion of Company Counsel, in the form of Exhibit B, executed by such
counsel and delivered to the Investors and the Placement Agents;

(iv) a legal opinion of Skadden, Arps, Slate, Meagher & Flom LLP, in the form of Exhibit
C, executed by such counsel and delivered to the Investors and the Placement Agents;

(iv) a certificate of the Secretary of the Company, dated as of the Closing Date, (a)
certifying the resolutions adopted by the Board of Directors of the Company approving the
transactions contemplated by this Agreement and the other Transaction Documents and the issuance of
the Securities, (b) certifying the current versions of the certificate of incorporation, as amended
and by-laws of the Company and (c) certifying as to the signatures and authority of persons signing
the Transaction Documents and related documents on behalf of the Company; and

(v) a certificate of the Chief Executive Officer or Chief Financial Officer of the Company,
dated as of the Closing Date, certifying to the fulfillment of the conditions specified in
Section 5.1(a) and (b).

(b) At the Closing, each Investor shall deliver or cause to be delivered to the Company
such Investor’s Subscription Amount by wire transfer to an account designated in writing to such
Investor by the Company for such purpose.

 

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ARTICLE III

REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company. The Company hereby represents and
warrants to the Investors and the Placement Agents as follows (which representations and warranties
shall be deemed to apply, where appropriate, to each Subsidiary of the Company):

(a) Subsidiaries. The Company owns or controls, directly or indirectly, all of the
capital stock or comparable equity interests of each Subsidiary free and clear of any Lien, and
all issued and outstanding shares of capital stock or comparable equity interest of each
Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and
similar rights; and the Company owns or controls, directly or indirectly, only the following
corporations, partnerships, limited liability partnerships, limited liability companies,
associations or other entities: Cereplast International, S.A., a Luxembourg company, Cereplast
Europe S.A.S, a French Company and Cereplast Italia SpA, a company formed under the laws of
Italy, both of which are wholly owned subsidiaries of Cereplast International, S.A., (each, a
“Subsidiary”).

(b) Organization and Qualification. The Company and each Subsidiary is an entity
duly organized, validly existing and in good standing under the laws of the jurisdiction of its
incorporation, with the requisite legal authority to own and use its properties and assets and
to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in
violation of any of the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents. The Company and each Subsidiary is duly
qualified to do business and is in good standing as a foreign corporation or other entity in
each jurisdiction in which the nature of the business conducted or property owned by it makes
such qualification necessary, except where the failure to be so qualified or in good standing,
as the case may be, would not, individually or in the aggregate, have or reasonably be expected
to result in a Material Adverse Effect.

(c) Authorization; Enforcement. The Company has the corporate power and authority
to enter into this Agreement, the Indenture and the Notes, and to perform and to discharge its
obligations hereunder and thereunder; including, without limitation, the full right, power and
authority to issue, sell and deliver the Notes and the Conversion Shares; and each of this
Agreement has been duly authorized, executed and delivered by the Company, and constitutes a
valid and binding obligation of the Company enforceable against the Company in accordance with
its terms; and the Indenture, when executed and delivered by each of the Trustee and the
Company, and the Notes when executed and delivered by the Company, will have been duly
authorized, and will constitute a valid and binding obligation of the Company enforceable
against the Company in accordance with their terms, except (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors’ rights generally, (ii) as limited by
laws relating to the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be limited by
applicable law.

 

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(d) Authorization of Securities. Upon issuance and delivery of the Notes in
accordance with this Agreement, and the Indenture, the Notes will be convertible at the option
of
the holder thereof for the Conversion Shares in accordance with the terms of the Notes and
the Indenture; the Notes have been duly authorized, and, when executed and authenticated in
accordance with the provisions of the Indenture and delivered to and paid for by the Investors,
will have been duly executed and delivered by the Company and (assuming the due authorization,
execution and delivery of the Indenture by the Trustee) will constitute the legal, valid and
binding obligations of the Company entitled to the benefits of the Indenture; the Conversion
Shares issuable upon conversion of the Notes have been duly authorized and reserved for issuance
and, when issued upon conversion of the Notes in accordance with the terms of the Notes and the
Indenture, will be validly issued, fully paid and non-assessable and will conform to the
description thereof in the documents furnished to the Investors; and the issuance of any of the
Securities will not be subject to any pre-emptive or similar rights.

(e) Authorization of Indenture. The Indenture will be duly authorized by the
Company and will be duly qualified under the Trust Indenture Act of 1939, as amended (the “Trust
Indenture Act”) on the Closing Date and, when duly executed and delivered by the Company and the
Trustee, will constitute a valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting enforcement of creditors’
rights generally and except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at law).

(f) No Conflicts. The execution, delivery and performance of this Agreement, the
Indenture, the Securities and the DTC Agreement by the Company, the issuance and sale of the
Securities by the Company and the consummation of the transactions contemplated hereby and
thereby will not (with or without notice or lapse of time or both) conflict with or result in a
breach or violation of any of the terms or provisions of, constitute a default or Debt Repayment
Triggering Event (as defined below) under, give rise to any right of termination or other right
or the cancellation or acceleration of any right or obligation or loss of a benefit under, or
give rise to the creation or imposition of any lien, encumbrance, security interest, claim or
charge upon any property or assets of the Company or any subsidiary pursuant to, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound
or to which, to the Company’s knowledge, any of the property or assets of the Company or any of
its subsidiaries is subject (except where such breach, violation, default, right or encumbrance
would not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect), nor will such actions result in any violation of the provisions of the charter or
by-laws (or analogous governing instruments, as applicable) of the Company or any of its
subsidiaries or any law, statute, rule, regulation, judgment, order or decree of any court or
governmental agency or body, domestic or foreign, having jurisdiction over the Company or any of
its subsidiaries or any of their properties or assets. A “Debt Repayment Triggering Event” means
any event or condition that gives, or with the giving of notice or lapse of time would give the
holder of any note, debenture or other evidence of indebtedness (or any person acting on such
holder’s behalf) the right to require the repurchase, redemption or repayment of all or a
portion of such indebtedness by the Company or any of its subsidiaries.

 

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(g) Capitalization. The aggregate number of shares and type of all authorized,
issued and outstanding classes of capital stock, options and other securities of the Company
(whether or not presently convertible into or exercisable or exchangeable for shares of capital
stock of the Company) is set forth in Schedule 3.1(g) hereto. All outstanding shares of
capital stock are duly authorized, validly issued, fully paid and nonassessable and have been
issued in compliance in all material respects with all applicable securities laws. Except as
disclosed in Schedule 3.1(g) hereto, the Company did not have outstanding at December
31, 2010 any other Options, script rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into or exercisable or
exchangeable for, or entered into any agreement giving any Person any right to subscribe for or
acquire, any shares of Common Stock, or securities or rights convertible or exchangeable into
 shares of Common Stock. Except as set forth on Schedule 3.1(g) hereto, and except for
customary adjustments as a result of stock dividends, stock splits, combinations of shares,
reorganizations, recapitalizations, reclassifications or other similar events, there are no
anti-dilution or price adjustment provisions contained in any security issued by the Company (or
in any agreement providing rights to security holders) and the issuance and sale of the
Securities will not obligate the Company to issue shares of Common Stock or other securities to
any Person (other than the Investors) and will not result in a right of any holder of securities
to adjust the exercise, conversion, exchange or reset price under such securities. To the
knowledge of the Company, except as disclosed in the SEC Reports and any Schedules 13D or 13G
filed with the SEC pursuant to Rule 13d-1 of the Exchange Act by reporting persons or in
Schedule 3.1(g) hereto, no Person or group of related Persons beneficially owns (as
determined pursuant to Rule 13d-3 under the Exchange Act), or has the right to acquire, by
agreement with or by obligation binding upon the Company, beneficial ownership of in excess of
5% of the outstanding Common Stock.

(h) SEC Reports; Financial Statements. Except as set forth on Schedule
3.1(h), the Company has filed all reports required to be filed by it under the Exchange Act,
including pursuant to Section 13(a) or 15(d) thereof, for the 12 months
preceding the date hereof on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any such extension and has
filed all reports required to be filed by it under the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the two years preceding the date hereof. Such reports
required to be filed by the Company under the Exchange Act, including pursuant to Section 13(a)
or 15(d) thereof, together with any materials filed or furnished by the Company under the
Exchange Act, whether or not any such reports were required being collectively referred to
herein as the “SEC Reports” and, together with this Agreement and the Schedules to this
Agreement, the “Disclosure Materials”. As of their respective dates (or, if amended or
superseded by a filing prior to the Closing Date, then on the date of such filing), the SEC
Reports filed by the Company complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the SEC promulgated
thereunder, and none of the SEC Reports, when filed (or, if amended or superseded by a filing
prior to the Closing Date, then on the date of such filing) by the Company, contained any untrue
statement of a material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The financial statements of the Company included in the
SEC Reports comply in all material respects with applicable accounting requirements and the
rules and regulations of the SEC with respect thereto as in
effect at the time of filing (or, if amended or superseded by a filing prior to the Closing
Date, then on the date of such filing). Such financial statements have been prepared in
accordance with United States generally accepted accounting principles applied on a consistent
basis during the periods involved (“GAAP”), except as may be otherwise specified in such
financial statements, the notes thereto and except that unaudited financial statements may not
contain all footnotes required by GAAP or may be condensed or summary statements, and fairly
present in all material respects the consolidated financial position of the Company and its
consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash
flows for the periods then ended, subject, in the case of unaudited statements, to normal,
year-end audit adjustments. All material agreements to which the Company or any Subsidiary is a
party or to which the property or assets of the Company or any Subsidiary are subject are
included as part of or identified in the SEC Reports, to the extent such agreements are required
to be included or identified pursuant to the rules and regulations of the SEC.

 

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(i) Material Changes; Undisclosed Events, Liabilities or Developments; Solvency.
Since the date of the latest audited financial statements included within the SEC Reports,
except as disclosed in the SEC Reports or in Schedule 3.1(i) hereto, (i) there has been
no event, occurrence or development that, individually or in the aggregate, has had or that
would result in a Material Adverse Effect, (ii) the Company has not incurred any material
liabilities other than (A) trade payables and accrued expenses incurred in the ordinary course
of business consistent with past practice and (B) liabilities not required to be reflected in
the Company’s financial statements pursuant to GAAP or required to be disclosed in filings made
with the SEC, (iii) the Company has not altered its method of accounting or changed its
auditors, except as disclosed in its SEC Reports, (iv) the Company has not declared or made any
dividend or distribution of cash or other property to its stockholders, in their capacities as
such, or purchased, redeemed or made any agreements to purchase or redeem any shares of its
capital stock, and (v) the Company has not issued any equity securities to any officer, director
or Affiliate, except pursuant to existing Company stock-based plans. The Company has not taken
any steps to seek protection pursuant to any bankruptcy law nor does the Company have any
knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy
proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so.
The Company is not as of the date hereof, and after giving effect to the transactions
contemplated hereby to occur at the applicable Closing, will not be Insolvent (as defined
below). For purposes of this Section 3.1(i), “Insolvent” means (i) the present fair
saleable value of the Company’s assets is less than the amount required to pay the Company’s
total Indebtedness (as defined in Section 3.1(bb)), (ii) the Company is unable to pay
its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities
become absolute and matured, (iii) the Company intends to incur or believes that it will incur
debts that would be beyond its ability to pay as such debts mature or (iv) the Company has
unreasonably small capital with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be conducted.

(j) Absence of Litigation. Except as disclosed in the SEC Reports, there is no
action, suit, claim, or Proceeding, or, to the Company’s knowledge, inquiry or investigation,
before or by any court, public board, government agency, self-regulatory organization or body
pending or, to the knowledge of the Company, threatened against or affecting the Company or any
Subsidiary that could, individually or in the aggregate, to have a Material Adverse Effect.

 

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(k) Compliance. Except as would not, individually or in the aggregate, reasonably
be expected to have or result in a Material Adverse Effect, (i) neither the Company nor any
Subsidiary is in default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by the Company or
any Subsidiary under), nor has the Company or any Subsidiary received written notice of a claim
that it is in default under or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by which it or any of
its properties is bound (whether or not such default or violation has been waived), (ii) neither
the Company nor any Subsidiary is in violation of any order of any court, arbitrator or
governmental body, or (iii) neither the Company nor any Subsidiary is or has been in violation
of any statute, rule or regulation of any governmental authority.

(l) Title to Assets. Neither the Company nor any Subsidiary owns real property.
The Company and each Subsidiary has good and marketable title in all personal property owned by
them that is material to the business of the Company and each Subsidiary, in each case free and
clear of all Liens, except for Liens that do not, individually or in the aggregate, have or
result in a Material Adverse Effect. Any real property and facilities held under lease by the
Company or any Subsidiary is held by it under valid, subsisting and enforceable leases of which
the Company and each Subsidiary is in material compliance.

(m) No General Solicitation; Placement Agents’ Fees. Neither the Company, nor any
of its Affiliates, nor any Person acting on its or their behalf, has engaged in any form of
general solicitation or general advertising (within the meaning of Regulation D) in connection
with the offer or sale of the Securities. The Company shall be responsible for the payment of
any placement agent’s fees, financial advisory fees, or brokers’ commission (other than for
persons engaged by any Investor or its investment advisor) relating to or arising out of the
issuance of the Securities pursuant to this Agreement. The Company shall pay, and hold each
Investor harmless against, any liability, loss or expense (including, without limitation,
reasonable attorney’s fees and out-of-pocket expenses) arising in connection with any such claim
for fees arising out of the issuance of the Securities pursuant to this Agreement. The Company
acknowledges that is has engaged Lazard Capital Markets LLC as its lead placement agent with
Roth Capital Partners and Ardour Capital Investments, LLC as co-placement agents (the “Placement
Agents”) in connection with the sale of the Securities. Other than the Placement Agents, the
Company has not engaged any placement agent or other agent in connection with the sale of the
Securities.

(n) Private Placement; Investment Company; U.S. Real Property Holding Corporation.
Neither the Company nor any of its Affiliates nor, any Person acting on the Company’s behalf
has, directly or indirectly, at any time within the past six months, made any offer or sale of
any security or solicitation of any offer to buy any security under circumstances that would (i)
eliminate the availability of the exemption from registration under Regulation D under the
Securities Act in connection with the offer and sale by the Company of the Securities as
contemplated hereby or (ii) cause the offering of the Securities pursuant to the Transaction
Documents to be integrated with prior offerings by the Company for purposes of any applicable
law, regulation or stockholder approval provisions, including, without limitation, under the
rules and regulations of any Trading Market. Assuming the accuracy of the representations and
warranties of the Investors set forth in Section 3.2, no registration under the
Securities Act is required for the offer and sale of the Securities by the Company to the
Investors as contemplated hereby. The sale and issuance of the Securities hereunder does not
contravene the rules and regulations of any Trading Market on which the Common Stock is listed
or quoted. The Company is not required to be registered as, and is not an Affiliate of, an
“investment company” within the meaning of the Investment Company Act of 1940, as amended. The
Company is not required to be registered as a United States real property holding corporation
within the meaning of the Foreign Investment in Real Property Tax Act of 1980.

 

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(o) Form S-3 Eligibility. The Company is eligible to register the Securities for
resale by the Investors using Form S-3 promulgated under the Securities Act.

(p) Listing and Maintenance Requirements. The Company has not, in the twelve
months preceding the date hereof, received notice (written or oral) from any Trading Market on
which the Common Stock is or has been listed or quoted to the effect that the Company is not in
compliance with the listing or maintenance requirements of such Trading Market. The Company is,
and has no reason to believe that it will not in the foreseeable future continue to be, in
compliance with all such listing and maintenance requirements.

(q) Registration Rights. The Company has not granted or agreed to grant to any
Person any rights (including “piggy-back” registration rights) to have any securities of the
Company registered with the SEC or any other governmental authority that have not expired or
been satisfied or waived.

(r) Application of Takeover Protections. The Company and its Board of Directors
have taken all necessary action, if any, to render inapplicable any control share acquisition,
business combination, poison pill (including any distribution under a rights agreement) or other
similar anti-takeover provision under the Company’s charter documents or the laws of its state
of incorporation that is or could become applicable to any of the Investors as a result of the
Investors and the Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including, without limitation, as a result of the Company’s issuance of
the Securities and the Investors’ ownership of the Securities.

(s) Disclosure. The Company confirms that neither it nor any officers, directors
or Affiliates, has provided any of the Investors (other than Excluded Investors [or those
certain investors who signed a confidentiality agreement with the Company]) or their agents or
counsel with any information that constitutes or might constitute material, nonpublic
information (other than the existence and terms of the issuance of Securities, as contemplated
by this Agreement). The Company understands and confirms that each of the Investors (other than
Excluded Investors [or those certain investors who signed a confidentiality agreement with the
Company]) will rely on the foregoing representations in effecting transactions in securities of
the Company. All disclosure provided by the Company to the Investors regarding the Company, its
business and the transactions contemplated hereby, including the Schedules to this Agreement
furnished by or on behalf of the Company, are true and correct in all material respects and do
not contain any untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances under which they
were made,
not misleading. To the Company’s knowledge, except for the transactions contemplated by
this Agreement, no event or circumstance has occurred or information exists with respect to the
Company or any Subsidiary or their businesses, properties, operations or financial condition,
which, under applicable law, rule or regulation, requires public disclosure or announcement by
the Company but which has not been so publicly announced or disclosed. The Company acknowledges
and agrees that no Investor (other than Excluded Investors) makes or has made any
representations or warranties with respect to the transactions contemplated hereby other than
those set forth in the Transaction Documents.

 

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(t) Acknowledgment Regarding Investors’ Purchase of Securities. Based upon the
assumption that the transactions contemplated by this Agreement are consummated in all material
respects in conformity with the Transaction Documents, the Company acknowledges and agrees that
each of the Investors (other than Excluded Investors) is acting solely in the capacity of an
arm’s length purchaser with respect to the Transaction Documents and the transactions
contemplated hereby and thereby. The Company further acknowledges that no Investor (other than
Excluded Investors) is acting as a financial advisor or fiduciary of the Company (or in any
similar capacity) with respect to this Agreement and the transactions contemplated hereby and
any advice given by any Investor (other than Excluded Investors) or any of their respective
representatives or agents in connection with the Transaction Documents and the transactions
contemplated hereby and thereby is merely incidental to the Investors’ purchase of the
Securities. The Company further represents to each Investor that the Company’s decision to
enter into this Agreement has been based solely on the independent evaluation of the
transactions contemplated hereby by the Company and its advisors and representatives.

(u) Patents and Trademarks. The Company and each Subsidiary owns, or possesses
adequate rights or licenses to use, all trademarks, trade names, service marks, service mark
registrations, service names, patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and other intellectual property rights
(“Intellectual Property Rights”) necessary to conduct their respective businesses as now
conducted. None of the Company’s or any Subsidiary’s Intellectual Property Rights have expired
or terminated, or are expected to expire or terminate within three years from the date of this
Agreement. The Company does not have any knowledge of any infringement by the Company or any
Subsidiary of Intellectual Property Rights of others. Except as disclosed in the SEC Reports,
there is no claim, action or proceeding being made or brought, or to the knowledge of the
Company, being threatened, against the Company or any Subsidiary regarding its Intellectual
Property Rights.

(v) Insurance. The Company and each Subsidiary is insured by insurers of
recognized financial responsibility against such losses and risks and in such amounts as are
prudent and customary in the businesses and locations in which the Company and each Subsidiary
is engaged.

(w) Regulatory Permits. The Company and each Subsidiary possesses all
certificates, authorizations and permits issued by the appropriate federal, state, local or
foreign regulatory authorities necessary to conduct their respective businesses as presently
conducted and described in the SEC Reports (“Material Permits”), except where the failure to
possess
such permits does not, individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect, and neither the Company nor any Subsidiary has received any
written notice of proceedings relating to the revocation or modification of any Material Permit.

 

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(x) Transactions With Affiliates and Employees. Except as set forth or
incorporated by reference in the Company’s SEC Reports, none of the officers, directors or
employees of the Company is presently a party to any transaction with the Company that would be
required to be reported on Form 10-K (other than for ordinary course services as employees,
officers or directors), including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any such officer, director or employee or, to the
Company’s knowledge, any corporation, partnership, trust or other entity in which any such
officer, director, or employee has a substantial interest or is an officer, director, trustee or
partner.

(y) Internal Accounting Controls. The Company and each Subsidiary maintains a
system of internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect to any differences.

(z) Sarbanes-Oxley Act. The Company is in compliance in all material respects with
applicable requirements of the Sarbanes-Oxley Act of 2002 and applicable rules and regulations
promulgated by the SEC thereunder, except where such noncompliance would not have, individually
or in the aggregate, a Material Adverse Effect.

(aa) Foreign Corrupt Practices. Neither the Company nor any Subsidiary nor, to the
knowledge of the Company, any director, officer, agent, employee or other Person acting on
behalf of the Company or any Subsidiary has, in the course of its actions for, or on behalf of,
the Company (i) used any corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expenses relating to political activity; (ii) made any direct or indirect
unlawful payment to any foreign or domestic government official or employee or to any foreign or
domestic political parties or campaigns from corporate funds; (iii) violated or is in violation
in any material respect of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or employee.

 

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(bb) Indebtedness. Except as disclosed in the SEC Reports, neither the Company nor
any Subsidiary (i) has any outstanding Indebtedness (as defined below), (ii) is in violation of
any term of or is in default under any contract, agreement or instrument relating to any
Indebtedness, except where such violations and defaults would not result, individually or in the
aggregate, in a Material Adverse Effect, and (iii) is a party to any contract, agreement or
instrument relating to any Indebtedness, the performance of which, in the judgment of the
Company’s officers, has or is expected to have a Material Adverse Effect. For purposes
of this Agreement: (x) “Indebtedness” of any Person means, without duplication (A) all
indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the
deferred purchase price of property or services (other than trade payables entered into in the
ordinary course of business), (C) all reimbursement or payment obligations with respect to
letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by
notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses, (E) all indebtedness created
or arising under any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to any property or assets acquired with the proceeds of
such indebtedness (even though the rights and remedies of the seller or bank under such
agreement in the event of default are limited to repossession or sale of such property), (F) all
monetary obligations under any leasing or similar arrangement which, in connection with
generally accepted accounting principles, consistently applied for the periods covered thereby,
is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F)
above secured by (or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other
encumbrance upon or in any property or assets (including accounts and contract rights) owned by
any Person, even though the Person which owns such assets or property has not assumed or become
liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of
indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above;
(y) “Contingent Obligation” means, as to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or
other obligation of another Person if the primary purpose or intent of the Person incurring such
liability, or the primary effect thereof, is to provide assurance to the obligee of such
liability that such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be protected (in whole
or in part) against loss with respect thereto; and (z) “Person” means an individual, a limited
liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated
organization, a government or any department or agency thereof and any other legal entity.

(cc) Employee Relations. Neither the Company nor any Subsidiary is a party to any
collective bargaining agreement or employs any member of a union. The Company believes that its
relations with its employees are as disclosed in the SEC Reports. Except as disclosed in the
SEC Reports, during the period covered by the SEC Reports, no executive officer of the Company
or any Subsidiary has notified the Company or any Subsidiary that such officer intends to leave
the Company or a Subsidiary, as applicable, or otherwise terminate such officer’s employment
with the Company or a Subsidiary, as applicable. To the knowledge of the Company or any
Subsidiary, no executive officer of the Company or any Subsidiary is in violation of any
material term of any employment contract, confidentiality, disclosure or proprietary information
agreement, non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each such executive officer does not subject the
Company or any Subsidiary to any liability with respect to any of the foregoing matters.

 

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(dd) Labor Matters. The Company and each Subsidiary is in compliance in all
material respects with all federal, state, local and foreign laws and regulations respecting
labor, employment and employment practices and benefits, terms and conditions of employment and
wages and hours, except where failure to be in compliance would not, either individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect.

(ee) Environmental Laws. The Company and each Subsidiary (i) is in compliance in
all material respects with any and all Environmental Laws (as hereinafter defined), (ii) has
received all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) is in compliance in all
material respects with all terms and conditions of any such permit, license or approval where,
in each of the foregoing clauses (i), (ii) and (iii), the failure to so comply would be
reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. The
term “Environmental Laws” means all federal, state, local or foreign laws relating to pollution
or protection of human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of chemicals,
pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous
Materials”) into the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued,
entered, promulgated or approved thereunder.

(ff) Subsidiary Rights. The Company or one of its Subsidiaries has the
unrestricted right to vote, and (subject to limitations imposed by applicable law) to receive
dividends and distributions on, all capital securities of its Subsidiaries as owned by the
Company or such Subsidiary.

(gg) Tax Status. The Company and each Subsidiary (i) has made or filed all
foreign, federal and state income and all other tax returns, reports and declarations required
by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith and (iii) has set
aside on its books provision reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis for any such claim.

 

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3.2 Representations and Warranties of the Investors. Each Investor hereby, as to
itself only and for no other Investor, represents and warrants to the Company as follows:

(a) Organization; Authority. Such Investor is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its organization with the
requisite corporate, partnership or other power and authority to enter into and to consummate
the transactions contemplated by the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. The purchase by such Investor of the Securities
hereunder has been duly authorized by all necessary corporate, partnership or other action on
the part of such Investor. This Agreement has been duly executed and delivered by such Investor
and constitutes the valid and binding obligation of such Investor, enforceable against it in
accordance with its terms, except (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable remedies and (iii)
insofar as indemnification and contribution provisions may be limited by applicable law.

(b) No Public Sale or Distribution. Such Investor is acquiring the Securities and
the Conversion Shares upon conversion of the Notes, in the ordinary course of business for its
own account and not with a view towards, or for resale in connection with, the public sale or
distribution thereof, except pursuant to sales registered under the Securities Act or under an
exemption from such registration and in compliance with applicable federal and state securities
laws, and such Investor does not have a present arrangement to effect any distribution of the
Notes to or through any person or entity; provided, however, that by making the
representations herein, such Investor does not agree to hold any of the Securities for any
minimum or other specific term and reserves the right to dispose of the Securities at any time
in accordance with or pursuant to a registration statement or an exemption under the Securities
Act.

(c) Investor Status. At the time such Investor was offered the Notes, it was, at
the date hereof it is a “qualified institutional buyer” as defined in Rule 144A(a) under the
Securities Act. Such Investor is not a registered broker dealer registered under Section 15(a)
of the Exchange Act, or a member of FINRA, Inc. or an entity engaged in the business of being a
broker dealer. Except as otherwise disclosed in writing to the Company on Exhibit A-2
(attached hereto) on or prior to the date of this Agreement, such Investor is not affiliated
with any broker dealer registered under Section 15(a) of the Exchange Act, or a member of FINRA
Inc. or an entity engaged in the business of being a broker dealer.

(d) General Solicitation. Such Investor is not purchasing the Securities as a
result of any advertisement, article, notice or other communication regarding the Securities
published in any newspaper, magazine or similar media, broadcast over television or radio,
disseminated over the Internet or presented at any seminar or any other general solicitation or
general advertisement.

(e) Experience of Such Investor. Such Investor, either alone or together with its
representatives has such knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of the prospective investment in
the Securities, and has so evaluated the merits and risks of such investment. Such Investor
understands that it must bear the economic risk of this investment in the Securities
indefinitely, and is able to bear such risk and is able to afford a complete loss of such
investment.

 

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(f) Access to Information. Such Investor acknowledges that it has reviewed the
Disclosure Materials and has been afforded: (i) the opportunity to ask such questions as it has
deemed necessary of, and to receive answers from, representatives of the Company concerning
the terms and conditions of the offering of the Securities and the merits and risks of
investing in the Securities; (ii) access to information (other than material non-public
information [for those certain investors who did not enter into a confidentiality agreement with
the Company]) about the Company and each Subsidiary and their respective financial condition,
results of operations, business, properties, management and prospects sufficient to enable it to
evaluate its investment; and (iii) the opportunity to obtain such additional information that
the Company possesses or can acquire without unreasonable effort or expense that is necessary to
make an informed investment decision with respect to the investment. Neither such inquiries nor
any other investigation conducted by or on behalf of such Investor or its representatives or
counsel shall modify, amend or affect such Investor’s right to rely on the truth, accuracy and
completeness of the Disclosure Materials and the Company’s representations and warranties
contained in the Transaction Documents. Such Investor acknowledges receipt of copies of the SEC
Reports.

(g) No Governmental Review. Such 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 Securities or the fairness or suitability of the investment
in the Securities nor have such authorities passed upon or endorsed the merits of the offering
of the Securities.

(h) No Conflicts. The execution, delivery and performance by such Investor of this
Agreement and the consummation by such Investor of the transactions contemplated hereby will not
(i) result in a violation of the organizational documents of such Investor or (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which such Investor is a party, or
(iii) result in a violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws) applicable to such Investor, except in the case of clauses
(ii) and (iii) above, for such that are not material and do not otherwise affect the ability of
such Investor to consummate the transactions contemplated hereby.

(i) Prohibited Transactions; Confidentiality. No Investor, directly or indirectly,
and no Person acting on behalf of or pursuant to any understanding with any Investor, has
engaged in any purchases or sales in the securities, including derivatives, of the Company
(including, without limitation, any Short Sales (a “Transaction”) involving any of the Company’s
securities) since the time that such Investor was first contacted by the Company, any of the
Placement Agents or any other Person regarding an investment in the Company. Such Investor
covenants that neither it nor any Person acting on its behalf or pursuant to any understanding
with such Investor will engage, directly or indirectly, in any Transactions in the securities of
the Company (including Short Sales) prior to the time the transactions contemplated by this
Agreement are publicly disclosed. “Short Sales” include, without limitation, all “short sales”
as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act and all types of
direct and indirect stock pledges, forward sale contracts, options, puts, calls, short sales,
swaps, derivatives and similar arrangements (including on a total return basis), and sales and
other transactions through non-U.S. broker-dealers or foreign regulated brokers.

 

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(j) Restricted Securities. The Investors understand that the Securities are
characterized as “restricted securities” under the U.S. federal securities laws inasmuch as they
are being acquired from the Company in a transaction not involving a public offering and that
under such laws and applicable regulations such securities may be resold without registration
under the Securities Act only in certain limited circumstances.

(k) Legends. It is understood that, except as provided in Section 4.1(b) of
this Agreement, certificates evidencing such Securities may bear the legend set forth in
Section 4.1(b).

(l) No Legal, Tax or Investment Advice. Such Investor understands that nothing in
this Agreement or any other materials presented by or on behalf of the Company to the Investor
in connection with the purchase of the Securities constitutes legal, tax or investment advice.
Such 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
Securities. Such Investor understands that the Placement Agents have acted solely as the agents
of the Company in this placement of the Securities, and that the Placement Agents make no
representation or warranty with regard to the merits of this transaction or as to the accuracy
of any information such Investor may have received in connection therewith. Such Investor
acknowledges that he has not relied on any information or advice furnished by or on behalf of
the Placement Agents.

ARTICLE IV

OTHER AGREEMENTS OF THE PARTIES

4.1 Transfer Restrictions.

(a) The Investors covenant that the Securities will only be disposed of pursuant to an
effective registration statement under, and in compliance with the requirements of, the
Securities Act or pursuant to an available exemption from the registration requirements of the
Securities Act, and in compliance with any applicable state securities laws. In connection with
any transfer of the Securities other than pursuant to an effective registration statement or to
the Company, or pursuant to Rule 144, the Company may require the transferor to provide to the
Company an opinion of counsel selected by the transferor, the form and substance of which
opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does
not require registration under the Securities Act. Notwithstanding the foregoing, the Company
hereby consents to and agrees to register on the books of the Company and with its Transfer
Agent, without any such legal opinion, except to the extent that the transfer agent requests
such legal opinion, any transfer of Securities by an Investor to an Affiliate of such Investor,
provided that the transferee certifies to the Company that it is an “accredited investor” as
defined in Rule 501(a) under the Securities Act and provided that such Affiliate does not
request any removal of any existing legends on any certificate evidencing the Securities.

 

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(b) The Investors agree to the imprinting, until no longer required by this Section
4.1(b), of the following legend on any certificate evidencing any of the Securities:

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE
HAS BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE
SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE
SECURITIES LAWS OR BLUE SKY LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON
CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION
THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT
OR OTHER LOAN SECURED BY SUCH SECURITIES.

Certificates evidencing the Underlying Shares shall not be required to contain such legend or
any other legend (i) while a registration statement (including the Registration Statement)
covering the resale of the Underlying Shares and is effective under the Securities Act, (ii)
following any sale of any such Underlying Shares pursuant to Rule 144 if the holder provides
the Company with a legal opinion (and the documents upon which the legal opinion is based)
reasonably acceptable to the Company to the effect that the Underlying Shares can be sold under
Rule 144, (iii) if the Underlying Shares are eligible for sale under Rule 144, or (iv) if the
holder provides the Company with a legal opinion (and the documents upon which the legal
opinion is based) reasonably acceptable to the Company to the effect that the legend is not
required under applicable requirements of the Securities Act (including controlling judicial
interpretations and pronouncements issued by the Staff of the SEC). Following the Effective
Date and provided the registration statement referred to in clause (i) above is then in effect,
or at such earlier time as a legend is no longer required for certain Securities, the Company
will no later than three Trading Days following the delivery by an Investor to the Company or
the Transfer Agent (if delivery is made to the Transfer Agent a copy shall be contemporaneously
delivered to the Company) of (i) a legended certificate representing such Securities (and, in
the case of a requested transfer, endorsed or with stock powers attached, signatures
guaranteed, and otherwise in form necessary to affect transfer), and (ii) an opinion of counsel
to the extent required by Section 4.1(a), deliver or cause to be delivered to such
Investor a certificate representing such Securities that is free from all restrictive and other
legends. The Company may not make any notation on its records or give instructions to the
Transfer Agent that enlarge the restrictions on transfer set forth in this Section.

 

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If within three Trading Days after receipt by the Company or its Transfer Agent of a
legended certificate and the other documents as specified in Clauses (i) and (ii) of the
paragraph immediately above, the Company shall fail to cause to be issued and delivered to such
Investor a certificate representing such Underlying Shares that is free from all restrictive
and other legends,
and if on or after such Trading Day the Investor purchases (in an open market transaction
or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Investor of
shares of Common Stock that the Investor anticipated receiving from the Company without any
restrictive legend (the “Covering Shares”), then the Company shall, within three Trading Days
after the Investor’s request, pay cash to the Investor in an amount equal to the excess (if
any) of the Investor’s total purchase price (including brokerage commissions, if any) for the
Covering Shares, over the product of (A) the number of Covering Shares, times (B) the closing
bid price on the date of delivery of such certificate and the other documents as specified in
Clauses (i) and (ii) of the paragraph immediately above.

(c) The Company will not object to and shall permit (except as prohibited by law) an Investor
to pledge or grant a security interest in some or all of the Securities in connection with a bona
fide margin agreement with a registered broker-dealer or grant a security interest in some or all
of the Securities to a financial institution that is an “accredited investor” as defined in Rule
501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement, and
if required under the terms of such arrangement, the Company will not object to and shall permit
(except as prohibited by law) such Investor to transfer pledged or secured Securities to the
pledgees or secured parties. Except as required by law, such a pledge or transfer would not be
subject to approval of the Company, no legal opinion of the pledgee, secured party or pledgor shall
be required in connection therewith (but such legal opinion shall be required in connection with a
subsequent transfer or foreclosure following default by the Purchaser transferee of the pledge),
and no notice shall be required of such pledge. Each Investor acknowledges that the Company shall
not be responsible for any pledges relating to, or the grant of any security interest in, any of
the Securities or for any agreement, understanding or arrangement between any Investor and its
pledgee or secured party. At the appropriate Investor’s expense, the Company will execute and
deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably
request in connection with a pledge or transfer of the Securities, including the preparation and
filing of any required prospectus supplement under Rule 424(b)(3) of the Securities Act or other
applicable provision of the Securities Act to appropriately amend the list of selling
securityholders thereunder. Provided that the Company is in compliance with the terms of this
Section 4.1(c), the Company’s indemnification obligations pursuant to Section 6.4
shall not extend to any Proceeding or Losses arising out of or related to this Section
4.1(c).

4.2 Furnishing of Information. Until the date that any Investor owning the Underlying
Shares may sell all of them under Rule 144 of the Securities Act (or any successor provision), the
Company covenants to use its commercially reasonable efforts to timely file (or obtain extensions
in respect thereof and file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to the Exchange Act. The Company further covenants that
it will take such further action as any holder of Securities may reasonably request to satisfy the
provisions of this Section 4.2.

4.3 Integration. The Company shall not, and shall use its commercially reasonable
efforts to ensure that no Affiliate thereof shall, sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that
would be integrated with the offer or sale of the Securities in a manner that would require the
registration under the Securities
Act of the sale of the Securities to the Investors or that would be integrated with the offer
or sale of the Securities for purposes of the rules and regulations of any Trading Market.

 

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4.4 Reservation of Securities. The Company shall maintain a reserve from its duly
authorized shares of Common Stock for issuance pursuant to the Transaction Documents in such amount
as may be required to fulfill its obligations to issue the Underlying Shares under the Transaction
Documents. In the event that at any time the then authorized shares of Common Stock are
insufficient for the Company to satisfy its obligations to issue such Underlying Shares under the
Transaction Documents, the Company shall promptly take such actions as may be required to increase
the number of authorized shares.

4.5 Securities Laws Disclosure; Publicity. The Company shall, at or before 9:00 a.m.,
New York time, on the first Trading Day following execution of this Agreement, issue a press
release disclosing all material terms of the transactions contemplated hereby. On the Closing
Date, the Company shall file a Current Report on Form 8-K with the SEC (the “8-K Filing”)
describing the terms of the transactions contemplated by the Transaction Documents and including as
exhibits to such Current Report on Form 8-K the Transaction Documents (including the schedules and
the names, and addresses of the Investors and the amount(s) of Notes respectively purchased), in
the form required by the Exchange Act. Thereafter, the Company shall timely file any filings and
notices required by the SEC or applicable law with respect to the transactions contemplated hereby
and provide copies thereof to the Investors promptly after filing. Except as herein provided,
neither the Company nor any Subsidiary shall publicly disclose the name of any Investor, or include
the name of any Investor in any press release without the prior written consent of such Investor
(which consent shall not be unreasonably withheld or delayed), unless otherwise required by law,
regulatory authority or Trading Market. Neither the Company nor any Subsidiary shall, nor shall
any of their respective officers, directors, employees and agents, provide any Investor with any
material nonpublic information regarding the Company or any Subsidiary from and after the issuance
of the above referenced press release without the express written consent of such Investor.

4.6 Use of Proceeds. The Company intends to use the net proceeds from the sale of the
Securities for working capital and general corporate purposes. The Company also may use a portion
of the net proceeds, currently intended for general corporate purposes, to acquire or invest in
technologies, products or services that complement its business, although the Company has no
present plans or commitments and is not currently engaged in any material negotiations with respect
to these types of transactions. Pending these uses, the Company intends to invest the net proceeds
from this offering in short-term, interest-bearing, investment-grade securities, or as otherwise
pursuant to the Company’s customary investment policies.

4.7 Subsequent Equity Sales.

(a) From the date hereof until the later of (i) 90 days after the Closing Date or (ii) 30 days
after the Registration Statement (or in the event the Company is required to file more than one
registration statements pursuant to Section 6.1(a), the initial Registration Statement that is
filed) is declared effective, neither the Company nor any Subsidiary shall issue, enter into any
agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or
Common Stock Equivalents.

 

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(b) From the date hereof until such time as no Investor holds any of the Notes, the Company
shall be prohibited from effecting or entering into an agreement to effect any issuance by the
Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents for cash
consideration (or a combination of units hereof) involving a Variable Rate Transaction.
“Variable Rate Transaction” means a transaction in which the Company (i) issues or sells
any debt or equity securities that are convertible into, exchangeable or exercisable for, or
include the right to receive additional shares of Common Stock either (A) at a conversion price,
exercise price or exchange rate or other price that is based upon and/or varies with the trading
prices of or quotations for the shares of Common Stock at any time after the initial issuance of
such debt or equity securities, or (B) with a conversion, exercise or exchange price that is
subject to being reset at some future date after the initial issuance of such debt or equity
security or upon the occurrence of specified or contingent events directly or indirectly related to
the business of the Company or the market for the Common Stock or (ii) enters into any agreement,
including, but not limited to, an equity line of credit, whereby the Company may sell securities at
a future determined price. Any Investor shall be entitled to obtain injunctive relief against the
Company to preclude any such issuance, which remedy shall be in addition to any right to collect
damages.

(c) Notwithstanding the foregoing, this Section 4.7 shall not apply in respect of an Exempt
Issuance, except that no Variable Rate Transaction shall be an Exempt Issuance.

ARTICLE V

CONDITIONS

5.1 Conditions Precedent to the Obligations of the Investors. The obligation of each
Investor to acquire Securities at the Closing is subject to the satisfaction or waiver by such
Investor, at or before the Closing, of each of the following conditions:

(a) Representations and Warranties. The representations and warranties of the
Company contained herein shall be true and correct in all material respects as of the date when
made and as of the Closing as though made on and as of such date; and

(b) Performance. The Company and each other Investor shall have performed,
satisfied and complied in all material respects with all covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied with by it at or
prior to the Closing.

(c) No Suspensions of Trading in Common Stock; Listing. Trading in the Common Stock
shall not have been suspended by the SEC or any Trading Market (except for any suspensions of
trading of not more than one Trading Day solely to permit dissemination of material information
regarding the Company) at any time since the date of execution of this Agreement, and the Common
Stock shall have been at all times since such date listed for trading on a Trading Market.

 

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(d) Absence of Litigation. No action, suit or proceeding by or before any court or
any governmental body or authority, against the Company or any Subsidiary or pertaining to the
transactions contemplated by this Agreement or their consummation, shall have been instituted on
or before the Closing Date, which action, suit or proceeding would, if determined adversely,
have a Material Adverse Effect.

5.2 Conditions Precedent to the Obligations of the Company. The obligation of the
Company to sell the Securities at the Closing is subject to the satisfaction or waiver by the
Company, at or before the Closing, of each of the following conditions:

(a) Representations and Warranties. The representations and warranties of the
Investors contained herein shall be true and correct in all material respects as of the date
when made and as of the Closing Date as though made on and as of such date; and

(b) Performance. The Investors shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by the Investors at or prior to the
Closing.

ARTICLE VI

REGISTRATION RIGHTS

6.1 Registration Statement.

(a) As promptly as possible, and in any event on or prior to the Filing Date, the Company
shall prepare and file with the SEC a Registration Statement covering the resale of all
Registrable Securities for an offering to be made on a continuous basis pursuant to Rule 415;
provided, however, that if at any time the SEC takes the position that the offering of some or
all of the Registrable Shares in a Registration Statement is not eligible to be made on a
delayed or continuous basis under the provisions of Rule 415 as a result of a characterization
by the SEC of the transaction described by the Registration Statement as a primary offering by
the Company, the Company shall use its Best Efforts to persuade the SEC that the offering
contemplated by the Registration Statement is a valid secondary offering and not an offering “by
or on behalf of the issuer” as defined in Rule 415. In the event that, despite the Company’s
Best Efforts and compliance with the terms of this Section 6.1(a) the SEC refuses to
alter its position, the Company shall, upon obtaining consent of the Investors, (i) remove from
the Registration Statement such portion of the Registrable Shares (the “Cut Back Shares”) and/or
(ii) agree to such restrictions and limitations on the registration and resale of the
Registrable Shares as the SEC may require to assure the Company’s compliance with the
requirements of Rule 415. Any Registrable Shares not able to be included in the Registration
Statement shall reduce the number of Registrable Shares of each Investor covered by such
Registration Statement on a pro-rata basis based on the number of Registrable Shares purchased
by each Investor and the Company shall have no liability to any Investor pursuant to Section
6.1(d) or otherwise as a result of the Registration Statement covering less than all of the
Registrable Shares under the circumstances described in this proviso. Within nine (9) months,
or such earlier time as permitted by the SEC, of the initial registration filed hereunder being
declared effective, the Company shall file an
additional registration statement containing the Cut Back Shares. With regard to the new
Registration Statement, all of the provisions of this Section 6.1 shall again be
applicable to the Cut Back Shares. The Registration Statement shall be on Form S-3 (except if
the Company is not then eligible to register for resale the Registrable Securities on Form S-3,
in which case such registration shall be on another appropriate form in accordance with the
Securities Act and the Exchange Act) and shall contain (except if otherwise directed by the
Investors or requested by the SEC) the “Plan of Distribution” section in substantially the form
attached hereto as Exhibit C.

 

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(b) The Company shall use its commercially reasonable efforts to cause the Registration
Statement to be declared effective by the SEC as promptly as possible after the filing thereof,
but in any event prior to the Required Effectiveness Date, and shall use its commercially
reasonable efforts to keep the Registration Statement continuously effective during the
Effectiveness Period; provided that, upon notification by the SEC that a Registration Statement
will not be reviewed or is no longer subject to further review and comments, the Company shall
request acceleration of such Registration Statement within five (5) Trading Days after receipt
of such notice and request that it become effective on 4:00 p.m. New York City time on the
Effective Date and file a prospectus supplement for any Registration Statement, whether or not
required under Rule 424 (or otherwise), by 9:00 a.m. New York City time the day after the
Effective Date.

(c) The Company shall notify the Investors in writing promptly (and in any event within two
Trading Days) after receiving notification from the SEC that the Registration Statement has been
declared effective.

(d) Subject to Section 6.1(a) above, commencing on (and including) any date that an
Event (as defined below) has begun and ending on (but excluding) the next date on which there
are no Events that have occurred and are continuing (an “Additional Interest Accrual Period”),
the Company shall pay, as additional interest (“Additional Interest) and not as a penalty to the
Record Holders of Registrable Securities that are Notes an amount (the “Additional Interest
Amount”) accruing, for each day in the Additional Interest Accrual Period, in respect of any
Note at a rate per annum equal to 0.25% of the outstanding principal amount thereof for the
first 90 days after the occurrence of the Event and 0.50% of the outstanding principal amount
thereof after the first 90 days; provided that, subject to DTC requirements for book-entry
procedures, such Additional Interest Amount shall be paid only to the Holders (as set forth in
the succeeding paragraph) that have delivered Questionnaires to the Company and only with
respect to such Holder’s Registrable Securities. Notwithstanding the foregoing, no Additional
Interest Amount shall accrue as to any Registrable Security from and after the earlier of (x)
the date such security is no longer a Registrable Security and (y) expiration of the
Effectiveness Period. The rate of accrual of the Additional Interest Amount with respect to any
period shall not exceed the rate provided for in this paragraph notwithstanding the occurrence
of multiple concurrent Events.

 

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The Additional Interest Amount shall accrue from the first day of the applicable Additional
Interest Accrual Period, and shall be payable on each Additional Interest Payment Date during
the Additional Interest Accrual Period (and, without duplication, on the Additional
Interest Payment Date next succeeding the end of the Additional Interest Accrual Period if
the Additional Interest Accrual Period does not end on an Additional Interest Payment Date) to
the Record Holders of the Registrable Securities that are Notes entitled thereto; provided that
any Additional Interest Amount accrued with respect to any Note or portion thereof redeemed by
the Company on a redemption date or purchased by the Company on a repurchase date prior to the
Additional Interest Payment Date, shall, in any such event, be paid instead to the Holder who
submitted such Note or portion thereof for redemption or repurchase on the applicable redemption
date or repurchase date, as the case may be, on such date; provided further, that, subject to
DTC requirements for book-entry procedures, such Additional Interest Amount shall be paid only
to the Holders entitled thereto that have delivered Questionnaires to the Company, by check
mailed to the address set forth in the Questionnaire delivered by such Holder. If a Holder has
converted some or all of its Notes, the Holder will not be entitled to receive any Additional
Interest Amount with respect to any Underlying Shares received upon conversion or the principal
amount of the Notes that have been so converted. In addition, in no event will any Additional
Interest Amount be payable in connection with an Event relating to a failure to register the
Underlying Shares, if any, deliverable upon conversion of the Notes. For avoidance of doubt, if
the Company fails to register both the Notes and the Underlying Shares deliverable upon
conversion of the Notes, then any Additional Interest Amount will be payable in connection with
the Event relating to the failure to register the Notes. The Trustee shall be entitled, on
behalf of Holders of Notes or Underlying Shares, to seek any available remedy for the
enforcement of this Agreement, including, with respect to the Notes, for the payment of such
Additional Interest Amount. Notwithstanding the foregoing, the parties agree that the sole
damages payable for a violation of the terms of this Agreement with respect to which an
Additional Interest Amount is expressly provided shall be such Additional Interest Amount.
Nothing shall preclude any Holder from pursuing or obtaining specific performance or other
equitable relief with respect to this Agreement.

All of the Company’s obligations set forth in this Section 6.2 that are outstanding with
respect to any Registrable Security at the time such security ceases to be a Registrable
Security shall survive until such time as all such obligations with respect to such security
have been satisfied in full.

The parties hereto agree that the Additional Interest Amount provided for in this Section
6.1 constitutes a reasonable estimate of the damages that may be incurred by Holders of Notes by
reason of the failure of the Registration Statement to be filed or declared effective or
available for effecting resales of Notes in accordance with the provisions hereof.

For such purposes, each of the following shall constitute an “Event”:

(i) the Registration Statement is not filed on or prior to the Filing Date;

(ii) the Registration Statement is not declared effective on or prior to the Required
Effectiveness Date; and

(iii) except as provided for in Section 6.1(e) (the “Excluded Events”), after the
Effective Date and during the Effectiveness Period, an Investor is not permitted to sell
Registrable Securities under the Registration Statement (or a subsequent Registration
Statement filed in replacement thereof) for any reason (other than the fault of such Investor)
for an aggregate of thirty (30) days for all suspensions in any three-month period or an
aggregate of ninety (90) days for all suspensions in any 12-month period.

 

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(e) Notwithstanding anything in this Agreement to the contrary, after 60 consecutive
Trading Days of continuous effectiveness of the initial Registration Statement filed and
declared effective pursuant to this Agreement, the Company may, by written notice to the
Investors, suspend sales under a Registration Statement after the Effective Date thereof and/or
require that the Investors immediately cease the sale of shares of Common Stock pursuant thereto
and/or defer the filing of any subsequent Registration Statement if the Company is engaged in a
material merger, acquisition or sale and the Board of Directors determines in good faith, by
appropriate resolutions, that, as a result of such activity, (A) it would be materially
detrimental to the Company (other than as relating solely to the price of the Common Stock) to
maintain a Registration Statement at such time or (B) it is in the best interests of the Company
to suspend sales under such registration at such time. Upon receipt of such notice, each
Investor shall immediately discontinue any sales of Registrable Securities pursuant to such
registration until such Investor is advised in writing by the Company that the current
Prospectus or amended Prospectus, as applicable, may be used. In no event, however, shall this
right be exercised to suspend sales beyond the period during which (in the good faith
determination of the Company’s Board of Directors) the failure to require such suspension would
be materially detrimental to the Company. The Company’s rights under this Section 6(e)
may be exercised for a period of up to sixty (60) days at a time in any three month period,
without such suspension being considered as part of an Additional Interest determination.
Immediately after the end of any suspension period under this Section 6(e), the Company
shall take all necessary actions (including filing any required supplemental prospectus) to
restore the effectiveness of the applicable Registration Statement and the ability of the
Investors to publicly resell their Registrable Securities pursuant to such effective
Registration Statement.

(f) The Company shall not, from the date hereof until the Effective Date of the
Registration Statement, prepare and file with the SEC a registration statement relating to an
offering for its own account or the account of others under the Securities Act of any of its
equity securities, other than any registration statement or post-effective amendment to a
registration statement (or supplement thereto) relating to the Company’s employee benefit plans
registered on Form S-8.

6.2 Registration Procedures. In connection with the Company’s registration
obligations hereunder, the Company shall:

(a) Give notice to all Holders of the filing and effectiveness of the Registration
Statement by issuing a press release through Business Wire or PR Newswire. In addition, the
Company may at its option prior to the filing of a Registration Statement or any related
Prospectus or any amendment or supplement thereto, furnish via email to those Investors who have
supplied the Company with email addresses copies of all such documents proposed to be filed,
which documents (other than any document that is incorporated or deemed to be incorporated by
reference therein) will be subject to the review of such Investors. The Company
shall reflect in each such document when so filed with the SEC such comments regarding the
Investors and the plan of distribution as the Investors may reasonably and promptly propose no
later than two Trading Days after the Investors have been so furnished with copies of such
documents as aforesaid.

 

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(b) (i) Subject to Section 6.1(e), prepare and file with the SEC such amendments,
including post-effective amendments, to each Registration Statement and the Prospectus used in
connection therewith as may be necessary to keep the Registration Statement continuously
effective, as to the applicable Registrable Securities for the Effectiveness Period and prepare
and file with the SEC such additional Registration Statements in order to register for resale
under the Securities Act all of the Registrable Securities; (ii) cause the related Prospectus to
be amended or supplemented by any required Prospectus supplement, and as so supplemented or
amended to be filed pursuant to Rule 424; (iii) respond as promptly as reasonably possible, and
in any event within twelve (12) Trading Days (except to the extent that the Company reasonably
requires additional time to respond to accounting comments), to any comments received from the
SEC with respect to the Registration Statement or any amendment thereto; and (iv) comply in all
material respects with the provisions of the Securities Act and the Exchange Act with respect to
the disposition of all Registrable Securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of disposition by the Investors
thereof set forth in the Registration Statement as so amended or in such Prospectus as so
supplemented.

(c) Notify the Investors as promptly as reasonably possible, and (if requested by the
Investors confirm such notice in writing no later than two Trading Days thereafter, of any of
the following events: (i) the SEC notifies the Company whether there will be a “review” of any
Registration Statement; (ii) the SEC comments in writing on any Registration Statement; (iii)
any Registration Statement or any post-effective amendment is declared effective; (iv) the SEC
or any other Federal or state governmental authority requests any amendment or supplement to any
Registration Statement or Prospectus or requests additional information related thereto; (v) the
SEC issues any stop order suspending the effectiveness of any Registration Statement or
initiates any Proceedings for that purpose; (vi) the Company receives notice of any suspension
of the qualification or exemption from qualification of any Registrable Securities for sale in
any jurisdiction, or the initiation or threat of any Proceeding for such purpose; or (vii) the
financial statements included in any Registration Statement become ineligible for inclusion
therein or any Registration Statement or Prospectus or other document contains any untrue
statement of a material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances under which they
were made, not misleading.

(d) Use its commercially reasonable efforts to avoid the issuance of or, if issued, obtain
the withdrawal of (i) any order suspending the effectiveness of any Registration Statement, or
(ii) any suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction, as soon as possible.

(e) If requested by an Investor, provide such Investor without charge, at least one
conformed copy of each Registration Statement and each amendment thereto, including financial
statements and schedules, and all exhibits to the extent requested by such Person (including
those
previously furnished or incorporated by reference) promptly after the filing of such
documents with the SEC.

 

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(f) Promptly deliver to each Investor, without charge, as many copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or supplement thereto as
such Persons may reasonably request. The Company hereby consents to the use of such Prospectus
and each amendment or supplement thereto by each of the selling Investors in connection with the
offering and sale of the Registrable Securities covered by such Prospectus and any amendment or
supplement thereto to the extent permitted by federal and state securities laws and regulations.

(g) (i) In the time and manner required by each Trading Market, prepare and file with such
Trading Market an additional shares listing application covering all of the Registrable
Securities; (ii) take all steps necessary to cause such Underlying Shares to be approved for
listing on each Trading Market as soon as possible thereafter; (iii) provide to each Investor
evidence of such listing; and (iv) except as a result of the Excluded Events, during the
Effectiveness Period, maintain the listing of such Underlying Shares on each such Trading Market
or another Eligible Market.

(h) Prior to any public offering of Registrable Securities, use its Best Efforts to
register or qualify or cooperate with the selling Investors in connection with the registration
or qualification (or exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions within
the United States as any Investor requests in writing, to keep each such registration or
qualification (or exemption therefrom) effective for so long as required, but not to exceed the
duration of the Effectiveness Period, and to do any and all other acts or things reasonably
necessary or advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by a Registration Statement; provided, however, that the
Company shall not be obligated to file any general consent to service of process or to qualify
as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so
qualified or to subject itself to taxation in respect of doing business in any jurisdiction in
which it is not otherwise so subject.

(i) Cooperate with the Investors to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be delivered to a transferee pursuant to a
Registration Statement, which certificates shall be free, to the extent permitted by this
Agreement and under law, of all restrictive legends, and to enable such certificates to be in
such denominations and registered in such names as any such Investors may reasonably request.

(j) Upon the occurrence of any event described in Section 6.2(c)(vii), as promptly
as reasonably possible, prepare a supplement or amendment, including a post-effective amendment,
to the Registration Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file any other required
document so that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

 

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(k) Cooperate with any reasonable due diligence investigation undertaken by the Investors
in connection with the sale of Registrable Securities, including, without limitation, by making
available documents and information; provided that the Company will not deliver or make
available to any Investor material, nonpublic information unless such Investor requests in
advance in writing to receive material, nonpublic information and agrees to keep such
information confidential.

(l) Comply with all rules and regulations of the SEC applicable to the registration of the
Securities.

(m) It shall be a condition precedent to the obligations of the Company to complete the
registration pursuant to this Agreement with respect to the Registrable Securities of any
particular Investor or to make any payment of Additional Interests set forth in Section
6.1(c) to such Investor that such Investor furnish to the Company the information specified
in Exhibits A-1, A-2 and A-3 (the “Questionaires”) hereto and such other information regarding
itself, the Registrable Securities and other shares of Common Stock held by it and the intended
method of disposition of the Registrable Securities held by it (if different from the Plan of
Distribution set forth on Exhibit C hereto) as shall be reasonably required to effect
the registration of such Registrable Securities and shall complete and execute such documents in
connection with such registration as the Company may reasonably request.

(n) The Company shall comply with all applicable rules and regulations of the SEC under the
Securities Act and the Exchange Act, including, without limitation, Rule 172 under the
Securities Act, file any final Prospectus, including any supplement or amendment thereof, with
the SEC pursuant to Rule 424 under the Securities Act, promptly inform the Investors in writing
if, at any time during the Effectiveness Period, the Company does not satisfy the conditions
specified in Rule 172 and, as a result thereof, the Investors are required to make available a
Prospectus in connection with any disposition of Registrable Securities and take such other
actions as may be reasonably necessary to facilitate the registration of the Registrable
Securities hereunder.

6.3 Registration Expenses. The Company shall pay all fees and expenses incident to
the performance of or compliance with Article VI of this Agreement by the Company, including
without limitation (a) all registration and filing fees and expenses, including without limitation
those related to filings with the SEC, any Trading Market and in connection with applicable state
securities or Blue Sky laws, (b) printing expenses (including without limitation expenses of
printing certificates for Registrable Securities), (c) messenger, telephone and delivery expenses,
(d) fees and disbursements of counsel for the Company, (e) fees and expenses of all other Persons
retained by the Company in connection with the consummation of the transactions contemplated by
this Agreement, and (f) all listing fees to be paid by the Company to the Trading Market.

 

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6.4 Indemnification

(a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Investor, the officers,
directors, partners, members, agents and employees of each of them, each Person who controls
any such Investor (within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act) and the officers, directors, partners, members, agents and employees of each
such controlling Person, to the fullest extent permitted by applicable law, from and against any
and all Losses, as incurred, arising out of or relating to (i) any misrepresentation or breach
of any representation or warranty made by the Company in the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, (ii) any breach of any
covenant, agreement or obligation of the Company contained in the Transaction Documents or any
other certificate, instrument or document contemplated hereby or thereby, (iii) any cause of
action, suit or claim brought or made against such Indemnified Party (as defined in Section
6.4(c) below) by a third party (including for these purposes a derivative action brought on
behalf of the Company), arising out of or resulting from (x) the execution, delivery,
performance or enforcement of the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (y) any transaction financed or to be financed in whole
or in part, directly or indirectly, with the proceeds of the issuance of the Securities, or (z)
the status of Indemnified Party as holder of the Securities (unless, and only to the extent
that, such action, suit or claim is based, including in part, upon a breach of such Investor’s
representations, warranties or covenants under the Transaction Documents or any conduct by such
Investor that constitutes fraud, gross negligence or willful misconduct) or (iv) any untrue or
alleged untrue statement of a material fact contained in the Registration Statement, any
Prospectus or any form of Company prospectus or in any amendment or supplement thereto or in any
Company preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make the statements
therein (in the case of any Prospectus or form of prospectus or supplement thereto, in the light
of the circumstances under which they were made) not misleading, except to the extent, but only
to the extent, that (A) such untrue statements, alleged untrue statements, omissions or alleged
omissions are based solely upon information regarding such Investor furnished in writing to the
Company by such Investor for use therein, or to the extent that such information relates to
such Investor or such Investor’s proposed method of distribution of Registrable Securities and
was reviewed and expressly approved by such Investor in writing expressly for use in the
Registration Statement, or (B) with respect to any prospectus, if the untrue statement or
omission of material fact contained in such prospectus was corrected on a timely basis in the
prospectus, as then amended or supplemented, if such corrected prospectus was timely made
available by the Company to the Investor, and the Investor seeking indemnity hereunder was
advised in writing not to use the incorrect prospectus prior to the use giving rise to Losses.

(b) Indemnification by Investors. Each Investor shall, severally and not jointly,
indemnify and hold harmless the Company and its directors, officers, agents and employees to the
fullest extent permitted by applicable law, from and against all Losses (as determined by a
court of competent jurisdiction in a final judgment not subject to appeal or review) arising
solely out of any untrue statement of a material fact contained in the Registration Statement,
any Prospectus, or any form of prospectus, or in any amendment or supplement thereto, or arising
out of or relating to any omission of a material fact required to be stated therein or necessary
to make the statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in the light of the circumstances under which they were made) not
misleading, but only to the extent that (i) such untrue statements or omissions are based solely
upon information regarding such Investor furnished to the Company by such Investor in writing
expressly for use therein, or
to the extent that such information relates to such Investor or such Investor’s proposed
method of distribution of Registrable Securities and was reviewed and expressly approved in
writing by such Investor expressly for use in the Registration Statement (it being understood
that the information provided by the Investor to the Company in Exhibits A-1,
A-2 and A-3 and the Plan of Distribution set forth on Exhibit C, as the
same may be modified by such Investor and other information provided by the Investor to the
Company in or pursuant to the Transaction Documents constitutes information reviewed and
expressly approved by such Investor in writing expressly for use in the Registration Statement),
such Prospectus or such form of prospectus or in any amendment or supplement thereto. In no
event shall the liability of any selling Investor hereunder be greater in amount than the dollar
amount of the net proceeds received by such Investor upon the sale of the Registrable Securities
giving rise to such indemnification obligation.

 

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(c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or
asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such
Indemnified Party shall promptly notify the Person from whom indemnity is sought (the
“Indemnifying Party”) in writing, and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof; provided, that the
failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of
its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that
it shall be finally determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately and materially
adversely prejudiced the Indemnifying Party.

An Indemnified Party shall have the right to employ separate counsel in any such Proceeding
and to participate in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed
in writing to pay such fees and expenses; or (ii) the Indemnifying Party shall have failed
promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory
to such Indemnified Party in any such Proceeding; or (iii) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party and the
Indemnifying Party, and such Indemnified Party shall have been advised by counsel that a
conflict of interest is likely to exist if the same counsel were to represent such Indemnified
Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense
thereof and the reasonable fees and expenses of separate counsel shall be at the expense of the
Indemnifying Party). It shall be understood, however, that the Indemnifying Party shall not, in
connection with any one such Proceeding (including separate Proceedings that have been or will
be consolidated before a single judge) be liable for the fees and expenses of more than one
separate firm of attorneys at any time for all Indemnified Parties, which firm shall be
appointed by a majority of the Indemnified Parties. The Indemnifying Party shall not be liable
for any settlement of any such Proceeding effected without its written consent, which consent
shall not be unreasonably withheld. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of
which any Indemnified
Party is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of such Proceeding.

 

-33-

 

All reasonable fees and expenses of the Indemnified Party (including reasonable fees and
expenses to the extent incurred in connection with investigating or preparing to defend such
Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified
Party, as incurred, within 20 Trading Days of written notice thereof to the Indemnifying Party
(regardless of whether it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that the Indemnifying Party may require such Indemnified
Party to undertake to reimburse all such fees and expenses to the extent it is finally
judicially determined that such Indemnified Party is not entitled to indemnification hereunder).

(d) Contribution. If a claim for indemnification under Section 6.4(a) or
(b) is unavailable to an Indemnified Party (by reason of public policy or otherwise),
then each 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, in such
proportion as is appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that resulted in such
Losses as well as any other relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission of a material fact, has been taken or made by, or
relates to information supplied by, such Indemnifying Party or Indemnified Party, and the
parties’ relative intent, knowledge, access to information and opportunity to correct or prevent
such action, statement or omission. The amount paid or payable by a party as a result of any
Losses shall be deemed to include, subject to the limitations set forth in Section
6.4(c), any reasonable attorneys’ or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have been indemnified for
such fees or expenses if the indemnification provided for in this Section was available to such
party in accordance with its terms.

The parties hereto agree that it would not be just and equitable if contribution pursuant
to this Section 6.4(d) were determined by pro rata allocation or by any other method of
allocation that does not take into account the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this Section 6.4(d),
no Investor shall be required to contribute, in the aggregate, any amount in excess of the
amount by which the net proceeds actually received by such Investor from the sale of the
Registrable Securities subject to the Proceeding exceed the amount of any damages that such
Investor 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.

The indemnity and contribution agreements contained in this Section are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties.

 

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6.5 Dispositions. Each Investor agrees that it will comply with the prospectus
delivery requirements of the Securities Act as applicable to it in connection with sales of
Registrable Securities pursuant to the Registration Statement and shall sell its Registrable
Securities in accordance with the Plan of Distribution set forth in the Prospectus. Each Investor
further agrees that, upon receipt of a notice from the Company of the occurrence of any event of
the kind described in Sections 6.2(c)(v), (vi) or (vii), such Investor will
discontinue disposition of such Registrable Securities under the Registration Statement until such
Investor is advised in writing by the Company that the use of the Prospectus, or amended
Prospectus, as applicable, may be resumed. The Company may provide appropriate stop orders to
enforce the provisions of this paragraph. Each Investor, severally and not jointly with the other
Investors, agrees that the removal of the restrictive legend from certificates representing
Securities as set forth in this Section 4.1 is predicated upon the Company’s reliance that
the Investor will comply with the provisions of this subsection. Both the Company and the Transfer
Agent, and their respective directors, officers, employees and agents, may rely on this subsection.

6.6 No Piggyback on Registrations. Neither the Company nor any of its security
holders (other than the Investors in such capacity pursuant hereto and the Excluded Investors) may
include securities of the Company in the Registration Statement other than the Registrable
Securities.

6.7 Piggy-Back Registrations. If at any time during the Effectiveness Period there is
not an effective Registration Statement covering all of the Registrable Securities and the Company
shall determine to prepare and file with the SEC a registration statement relating to an offering
for its own account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or
their then equivalents relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in connection with stock option
or other employee benefit plans, then the Company shall send to each Investor not then eligible to
sell all of their Registrable Securities under Rule 144 in a three-month period, written notice of
such determination and if, within ten days after receipt of such notice, any such Investor shall so
request in writing, the Company shall include in such registration statement all or any part of
such Registrable Securities such Investor requests to be registered. Notwithstanding the
foregoing, in the event that, in connection with any underwritten public offering, the managing
underwriter(s) thereof shall impose a limitation on the number of shares of Common Stock which may
be included in the Registration Statement because, in such underwriter(s)’ judgment, marketing or
other factors dictate such limitation is necessary to facilitate public distribution, then the
Company shall be obligated to include in such Registration Statement only such limited portion of
the Registrable Securities with respect to which such Investor has requested inclusion hereunder as
the underwriter shall permit; provided, however, that (i) the Company shall not exclude any
Registrable Securities unless the Company has first excluded all outstanding securities, the
holders of which are not contractually entitled to inclusion of such securities in such
Registration Statement or are not contractually entitled to pro rata inclusion with the Registrable
Securities and (ii) after giving effect to the immediately preceding proviso, any such exclusion of
Registrable Securities shall be made pro rata among the Investors seeking to include Registrable
Securities and the holders of other securities having the contractual right to inclusion of their
securities in such Registration Statement by reason of demand registration rights, in proportion to
the number of Registrable Securities or other securities, as applicable, sought to be included by
each such Investor or other holder. If an offering in connection with which an Investor is
entitled to
registration under this Section 6.7 is an underwritten offering, then each Investor
whose Registrable Securities are included in such Registration Statement shall, unless otherwise
agreed by the Company, offer and sell such Registrable Securities in an underwritten offering using
the same underwriter or underwriters and, subject to the provisions of this Agreement, on the same
terms and conditions as other shares of Common Stock included in such underwritten offering and
shall enter into an underwriting agreement in a form and substance reasonably satisfactory to the
Company and the underwriter or underwriters. Upon the effectiveness the registration statement for
which piggy-back registration has been provided in this Section 6.7, any Additional
Interests payable to an Investor whose Securities are included in such registration statement shall
terminate and no longer be payable.

 

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ARTICLE VII

MISCELLANEOUS

7.1 Termination. This Agreement may be terminated by the Company or any Investor, by
written notice to the other parties, if the Closing has not been consummated by the third Trading
Day following the date of this Agreement; provided that no such termination will affect the right
of any party to sue for any breach by the other party (or parties).

7.2 Fees and Expenses. Except as expressly set forth in the Transaction Documents to
the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and
other experts, if any, and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company shall pay all
Transfer Agent fees, stamp taxes and other taxes and duties levied in connection with the sale and
issuance of the applicable Securities.

7.3 Entire Agreement. The Transaction Documents, together with the Exhibits and
Schedules thereto, contain the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such documents, exhibits and
schedules. At or after the Closing, and without further consideration, the Company will execute
and deliver to the Investors such further documents as may be reasonably requested in order to give
practical effect to the intention of the parties under the Transaction Documents.

7.4 Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed given and effective on
the earliest of (a) the date of transmission, if such notice or communication is delivered via
facsimile or email at the facsimile number or email address specified in this Section prior to
6:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile or email at the facsimile
number or email address specified in this Section on a day that is not a Trading Day or later than
6:30 p.m. (New York City time) on any Trading Day, (c) the Trading Day following the date of
deposit with a nationally recognized overnight courier service, or (d) upon actual receipt by the
party to whom such notice is required to be given. The addresses, facsimile numbers and email
addresses for such notices and communications are those set forth on the signature pages hereof, or
such other address or facsimile number as may be designated in writing hereafter, in the same
manner, by any such Person.

 

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7.5 Amendments; Waivers. No provision of this Agreement may be waived or amended
except in a written instrument signed, in the case of an amendment, by the Company and each of the
Investors or, in the case of a waiver, by the party against whom enforcement of any such waiver is
sought. No waiver of any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or
omission of any party to exercise any right hereunder in any manner impair the exercise of any such
right. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof
with respect to a matter that relates exclusively to the rights of Investors under Article
VI may be given by Investors holding at least a majority of the Registrable Securities to which
such waiver or consent relates.

7.6 Construction. The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.
The language used in this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied against any party.

7.7 Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns. The Company may not assign this
Agreement or any rights or obligations hereunder without the prior written consent of the
Investors. Any Investor may assign its rights under this Agreement to any Person to whom such
Investor assigns or transfers any Securities, provided (i) such transferor agrees in writing with
the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the
Company after such assignment, (ii) the Company is furnished with written notice of (x) the name
and address of such transferee or assignee and (y) the Registrable Securities with respect to which
such registration rights are being transferred or assigned, (iii) following such transfer or
assignment, the further disposition of such securities by the transferee or assignee is restricted
under the Securities Act and applicable state securities laws, (iv) such transferee agrees in
writing to be bound, with respect to the transferred Securities, by the provisions hereof that
apply to the “Investors” and (v) such transfer shall have been made in accordance with the
applicable requirements of this Agreement and with all laws applicable thereto.

7.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is not for the benefit of,
nor may any provision hereof be enforced by, any other Person, except that (a) each Indemnified
Party is an intended third party beneficiary of Section 6.4 and (in each case) may enforce
the provisions of such Section directly against the parties with obligations thereunder, and (b)
each of the Placement Agents is an intended third party beneficiary of the closing deliveries
required by Sections 2.2(a)(iii) and (iv), and the representations and warranties of the Company
in Article II.

 

-37-

 

7.9 Governing Law; Venue; Waiver of Jury Trial. ALL QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE COMPANY AND INVESTORS HEREBY
IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE
CITY OF NEW YORK, BOROUGH OF MANHATTAN
FOR THE ADJUDICATION OF ANY DISPUTE BROUGHT BY THE COMPANY OR ANY INVESTOR HEREUNDER, IN
CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH
RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVE, AND
AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE COMPANY OR ANY INVESTOR, ANY
CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT,
ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS
AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY
THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH
PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE
SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED
HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY
LAW. THE COMPANY AND INVESTORS HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.

7.10 Survival. The representations and warranties, agreements and covenants contained
herein shall survive the Closing.

7.11 Execution. This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart. In the event that any signature
is delivered by facsimile transmission or email attachment, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is executed) with the
same force and effect as if such facsimile or email-attached signature page were an original
thereof.

7.12 Severability. If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt
to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon
so agreeing, shall incorporate such substitute provision in this Agreement.

7.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) the Transaction Documents, whenever
any Investor exercises a right, election, demand or option owed to such Investor by the Company
under a Transaction Document and the Company does not timely perform its related obligations within
the periods therein provided, then, prior to the performance by the Company of the Company’s
related obligation, such Investor may rescind or withdraw, in its sole discretion from time to time
upon written notice to the Company, any relevant notice, demand or election in whole or in part
without prejudice to its future actions and rights.

7.14 Replacement of Securities. If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued
in exchange and
substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new
certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company
of such loss, theft or destruction and the execution by the holder thereof of a customary lost
certificate affidavit of that fact and an agreement to indemnify and hold harmless the Company for
any losses in connection therewith. The applicants for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs associated with the issuance of such
replacement Securities.

 

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7.15 Remedies. In addition to being entitled to exercise all rights provided herein
or granted by law, including recovery of damages, each of the Investors and the Company will be
entitled to seek specific performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agree to waive in any action for
specific performance of any such obligation (other than in connection with any action for a
temporary restraining order) the defense that a remedy at law would be adequate.

7.16 Payment Set Aside. To the extent that the Company makes a payment or payments to
any Investor hereunder or any Investor enforces or exercises its rights hereunder, and such payment
or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or
are required to be refunded, repaid or otherwise restored to the Company by a trustee, receiver or
any other person under any law (including, without limitation, any bankruptcy law, state or federal
law, common law or equitable cause of action), then to the extent of any such restoration the
obligation or part thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement or setoff had not
occurred.

7.17 Adjustments in Share Numbers and Prices. In the event of any stock split,
subdivision, dividend or distribution payable in shares of Common Stock (or other securities or
rights convertible into, or entitling the holder thereof to receive directly or indirectly shares
of Common Stock), combination or other similar recapitalization or event occurring after the date
hereof, each reference in any Transaction Document to a number of shares or a price per share shall
be amended to appropriately account for such event.

 

-39-

 

7.18 Independent Nature of Investors’ Obligations and Rights. The obligations of each
Investor under any Transaction Document 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 any Transaction Documents. The decision of each Investor to purchase
Securities pursuant to this Agreement has been made by such Investor independently of any other
Investor and independently of any information, materials, statements or opinions as to the
business, affairs, operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company which may have been made or given by any other
Investor or by any agent or employee of any other Investor, and no Investor or any of its agents or
employees shall have any liability to any other Investor (or any other person) relating to or
arising from any such information, materials, statements or opinions. Nothing contained herein or
in any Transaction Document, and no action taken by any Investor pursuant thereto, 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 the Transaction Document. Each Investor
acknowledges that no other Investor has acted as agent for such Investor in connection with making
its investment hereunder and that no other Investor will be acting as agent of such Investor in
connection with monitoring its investment hereunder. Each Investor shall be entitled to
independently protect and enforce its rights, including without limitation the rights arising out
of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any
other Investor to be joined as an additional party in any Proceeding for such purpose.

[SIGNATURE PAGES TO FOLLOW]

 

-40-

 

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

	 	 	 	 	 
	 	CEREPLAST, INC.

 	 
	 	By:  	/s/ Frederic Scheer
 	 
	 	 	Name:  	Frederic Scheer 	 
	 	 	Title:  	Chief Executive Officer 	 

Address for Notice:

300 N. Continental Blvd.

Suite 300

El Segundo, CA 90245

Tel: 310-676-5000

Fax: 310-615-9800

Attn: Heather Sheehan, CFO

With a copy to:

Sichenzia Ross Friedman Ference LLP

61 Broadway, 32nd Floor

New York, NY 10006

Tel: 212-930-9700

Fax: 212-930-9725

Attn: Gregory Sichenzia, Esq.

COMPANY SIGNATURE PAGE

 

 

 

Investor Signature Page

By its execution and delivery of this signature page, the undersigned Investor hereby joins in
and agrees to be bound by the terms and conditions of the Securities Purchase Agreement dated as of
May 18, 2011 (the “Purchase Agreement”) by and among Cereplast, Inc. and the Investors (as defined
therein), as to the principal dollar amount of Notes set forth below, and authorizes this signature
page to be attached to the Purchase Agreement or counterparts thereof.

	 	 	 
	Name of Investor:
	 
	 	 
	 
	 
	 	 
	By:
	 	 
	 

	 	 
	 

	 	Name:
	 

	 	Title:

	 	 	 
	Address:
	 	 
	 

	 	 
	 
	 	 
	 
	 
	 	 
	 

	 	 	 
	Telephone No.: 
	 	 
	 

	 	 

	 	 	 
	Facsimile No.:
	 	 
	 

	 	 

	 	 	 
	Email Address:
	 	 
	 

	 	 

	 	 	 
	Principal Amount of Notes:
	 	 
	 

	 	 

	 	 	 
	Prime Broker:
	 	 
	 

	 	 

	 	 	 
	DTC Participant No.:
	 	 
	 

	 	 

Delivery Instructions (if different than above):

	 	 	 
	c/o:
	 	 
	 

	 	 

	 	 	 
	Address:
	 	 
	 

	 	 
	 
	 	 
	 
	 	 
	 

	 	 

	 	 	 
	Telephone No.:
	 	 
	 

	 	 

	 	 	 
	Facsimile No.:
	 	 
	 

	 	 

	 	 	 
	Other Special Instructions:
	 	 
	 

	 	 

 

 

 

Exhibits:

	A	 	
 Instruction Sheet for Investors

	 
	B	 	
Opinion of Company Corporate Counsel

	 
	C	 	
Plan of Distribution

 

-2-

 

Exhibit A

INSTRUCTION SHEET FOR INVESTOR

(to be read in conjunction with the entire Securities Purchase Agreement)

	A.	 	Complete the following items in the Securities Purchase Agreement:

	 	1.	 	Complete and execute the Investor Signature Page. The Agreement must be
executed by an individual authorized to bind the Investor.

	 
	 	2.	 	Exhibit A-1 — Note Certificate Questionnaire:

Provide the information requested by the Note Certificate Questionnaire;

	 	3.	 	Exhibit A-2 — Registration Statement Questionnaire:

Provide the information requested by the Registration Statement Questionnaire.

	 	4.	 	Exhibit A-3 — Investor Certificate:

Provide the information requested by the Investor Certificate.

	 	5.	 	Return, via facsimile, the signed Securities Purchase Agreement including the
properly completed Exhibits A-1 through A-3, to:

Facsimile:

Telephone:

Attn:

	 	6.	 	After completing instruction number five (5) above, deliver the original signed
Securities Purchase Agreement including the properly completed Exhibits A-1 through
A-3 to:

Address:

	B.	 	Instructions regarding the wire transfer of funds for the purchase of the Securities will be
telecopied to the Investor by the Company at a later date.

 

 

 

Exhibit A-1

Cereplast, Inc.

NOTE CERTIFICATE QUESTIONNAIRE

	 	 	 	 	 
	 

	 	Please provide us with the following information:	 	 
	 
	 	 	 	 
	1.

	 	The exact name that the Securities are to be registered in
(this is the name that will appear on the Note(s)). You may
use a nominee name if appropriate:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	2.

	 	The relationship between the Investor of the Securities and
the Registered Holder listed in response to item 1 above:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	3.

	 	The mailing address, telephone and telecopy number and email
address of the Registered Holder listed in response to item 1
above:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	4.

	 	The Tax Identification Number of the Registered Holder listed
in response to item 1 above:	 	 
	 

	 	 	 	 

 

 

 

Exhibit A-2

Cereplast, Inc.

REGISTRATION STATEMENT QUESTIONNAIRE

In connection with the Registration Statement, please provide us with the following
information regarding the Investor.

1. Please state your organization’s name exactly as it should appear in the Registration
Statement:

 

Except as set forth below, your organization does not hold any equity securities of the
Company on behalf of another person or entity.

State any exceptions here:

 

If the Investor is not a natural person, please identify the natural person or persons who
will have voting and investment control over the Securities owned by the Investor:

 

2. Address of your organization:

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Telephone:
	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Fax:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Contact Person:	 	 	 	 
	 

	 	 	 	 	 	 

 

 

 

3. Have you or your organization had any position, office or other material relationship within
the past three years with the Company or its affiliates? (Include any relationships involving you
or any
of your affiliates, officers, directors, or principal equity holders (5% or more) that has held any
position or office or has had any other material relationship with the Company (or its predecessors
or affiliates) during the past three years.)

o Yes                 o No

If yes, please indicate the nature of any such relationship below:

4. Are you the beneficial owner of any other securities of the Company? (Include any equity
securities that you beneficially own or have a right to acquire within 60 days after the date
hereof, and as to which you have sole voting power, shared voting power, sole investment power or
shared investment power.)

o Yes                 o No

If yes, please describe the nature and amount of such ownership as of a recent date.

5. Except as set forth below, you wish that all the Registrable Securities beneficially owned by
you or that you have the right to acquire from the Company be offered for your account in the
Registration Statement.

State any exceptions here:

6. Have you made or are you aware of any arrangements relating to the distribution of the
Registrable Securities of the Company pursuant to the Registration Statement?

o Yes                 o No

If yes, please describe the nature and amount of such arrangements.

 

-2-

 

7. FINRA Matters

(a) State below whether (i) you or any associate or affiliate of yours are a member of FINRA,
a controlling shareholder of a FINRA member, a person associated with a member, a direct or
indirect affiliate of a member, or an underwriter or related person with respect to the proposed
offering; (ii) you or any associate or affiliate of yours owns any stock or other securities of any
FINRA member not purchased in the open market; or (iii) you or any associate or affiliate of yours
has made any outstanding subordinated loans to any FINRA member. If you are a general or limited
partnership, a no answer asserts that no such relationship exists for you as well as for each of
your general or limited partners.

	 	 	 	 	 	 	 
	 
	 	Yes: o
	 	No: o
	 	 

If “yes,” please identify the FINRA member and describe your relationship, including, in the
case of a general or limited partner, the name of the partner:

If you answer “no” to Question 7(a), you need not respond to Question 7(b).

(b) State below whether you or any associate or affiliate of yours has been an underwriter,
or a controlling person or member of any investment banking or brokerage firm which has been or
might be an underwriter for securities of the Corporation or any affiliate thereof including,
but not limited to, the common stock now being registered.

	 	 	 	 	 	 	 
	 
	 	Yes: o
	 	No: o
	 	 

If “yes,” please identify the FINRA member and describe your relationship, including, in the
case of a general or limited partner, the name of the partner.

 

-3-

 

ACKNOWLEDGEMENT

The undersigned hereby agrees to notify the Company promptly of any changes in the foregoing
information which should be made as a result of any developments, including the passage of time.
The undersigned also agrees to provide the Company and the Company’s counsel any and all such
further information regarding the undersigned promptly upon request in connection with the
preparation, filing, amending, and supplementing of the Registration Statement (or any prospectus
contained therein). The undersigned hereby consents to the use of all such information in the
Registration Statement.

The undersigned understands and acknowledges that the Company will rely on the information set
forth herein for purposes of the preparation and filing of the Registration Statement.

The undersigned understands that the undersigned may be subject to serious civil and criminal
liabilities if the Registration Statement, when it becomes effective, either contains an untrue
statement of a material fact or omits to state a material fact required to be stated in the
Registration Statement or necessary to make the statements in the Registration Statement not
misleading. The undersigned represents and warrants that all information it provides to the
Company and its counsel is currently accurate and complete and will be accurate and complete at the
time the Registration Statement becomes effective and at all times subsequent thereto, and agrees
during the Effectiveness Period and any additional period in which the undersigned is making sales
of Registrable Securities under and pursuant to the Registration Statement, and agrees during such
periods to notify the Company immediately of any misstatement of a material fact in the
Registration Statement, and of the omission of any material fact necessary to make the statements
contained therein not misleading.

Dated:
 _____ 

	 	 	 	 	 
	 

	 	 	 	 
	 

	 	Name
	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	Signature	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	Name and Title of Signatory	 	 

 

-4-

 

Exhibit A-3

Cereplast, Inc.

CERTIFICATE FOR CORPORATE, PARTNERSHIP, LIMITED LIABILITY COMPANY,

TRUST, FOUNDATION AND JOINT INVESTORS

If the Investor is a corporation, partnership, limited liability company, trust, pension plan,
foundation, joint Investor (other than a married couple) or other entity, an authorized officer,
partner, or trustee must complete, date and sign this Certificate.

CERTIFICATE

The undersigned certifies that the representations and responses below are true and accurate:

(a) The Investor has been duly formed and is validly existing and has full power and authority
to invest in the Company. The person signing on behalf of the undersigned has the authority to
execute and deliver the Securities Purchase Agreement on behalf of the Investor and to take other
actions with respect thereto.

(b) Indicate the form of entity of the undersigned:

 _____ 
Limited Partnership

 _____ 
General Partnership

 _____ 
Limited Liability Company

 _____ 
Corporation

 _____ 
Revocable Trust (identify each grantor and indicate under what circumstances the trust is
revocable by the grantor):

 

(Continue on a separate piece of paper, if necessary.)

 _____ 
Other type of Trust (indicate type of trust and, for trusts other than pension trusts,
name the grantors and beneficiaries):                 
                
                
                
                
                
                
                
                
                
                
     

 

(Continue on a separate piece of paper, if necessary.)

 _____ 
Other form of organization (indicate form of organization (                 
               
               
               
               
   

	 	 	 	 	 
	 

	 	 	).	 
	 
	 	 

(c) Indicate the approximate date the undersigned entity was formed:
 _____.

 

-5-

 

(d) In order for the Company to offer and sell the Securities in conformance with state and
federal securities laws, the following information must be obtained regarding your investor status.
Please initial each category applicable to you as an investor in the Company.

	 	___	 	1. A bank as defined in Section 3(a)(2) of the Securities Act, or any savings
and loan association or other institution as defined in Section 3(a)(5)(A) of the
Securities Act whether acting in its individual or fiduciary capacity;

	 
	 	___	 	2. A broker or dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934;

	 
	 	___	 	3. An insurance company as defined in Section 2(13) of the Securities Act;

	 
	 	___	 	4. An investment company registered under the Investment Company Act of 1940 or
a business development company as defined in Section 2(a)(48) of that Act;

	 
	 	___	 	5. A Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act of
1958;

	 
	 	___	 	6. A plan established and maintained by a state, its political subdivisions, or
any agency or instrumentality of a state or its political subdivisions, for the benefit
of its employees, if such plan has total assets in excess of $5,000,000;

	 
	 	___	 	7. An employee benefit plan within the meaning of the Employee Retirement
Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as
defined in Section 3(21) of such Act, which is either a bank, savings and loan
association, insurance company, or registered investment advisor, or if the employee
benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are accredited investors;

	 
	 	___	 	8. A private business development company as defined in Section 202(a)(22) of
the Investment Advisers Act of 1940;

	 
	 	___	 	9. Any partnership or corporation or any organization described in Section
501(c)(3) of the Internal Revenue Code or similar business trust, not formed for the
specific purpose of acquiring the Shares, with total assets in excess of $5,000,000;

	 
	 	___	 	10. A trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the Shares, whose purchase is directed by a sophisticated
person as described in Rule 506(b)(2)(ii) of the Exchange Act;

	 
	 	___	 	11. An entity in which all of the equity owners qualify under any of the above
subparagraphs. If the undersigned belongs to this investor category only, list the
equity owners of the undersigned, and the investor category which each such equity
owner satisfies:
 _____________________ 

 

-6-

 

 

(Continue on a separate piece of paper, if necessary.)

Please set forth in the space provided below the (i) states, if any, in the U.S. in which you
maintained your principal office during the past two years and the dates during which you
maintained your office in each state, (ii) state(s), if any, in which you are incorporated or
otherwise organized and (iii) state(s), if any, in which you pay income taxes.

 

 

 

Dated:__________________________, 2011

	 	 	 
	 
	 	 
	 	 	 
	Print Name of Investor

	 	 
	 
	 	 
	 
	 	 
	 	 	 
	Name:
	 	 
	Title:
	 	 
	(Signature and title of authorized officer, partner or trustee)
	 	 

 

-7-

 

Exhibit B

OPINION OF COMPANY COUNSEL

[To be addressed to Investors and Placement Agents]

 

 

 

EXHIBIT A

Officers’ Certificate of the Company

 

 

 

Exhibit C

PLAN OF DISTRIBUTION

The selling securityholders may, from time to time, sell any or all of their shares of common stock
on any stock exchange, market or trading facility on which the shares are traded or in private
transactions. These sales may be at fixed or negotiated prices. The selling securityholders may
use any one or more of the following methods when selling shares:

	•	 	ordinary brokerage transactions and transactions in which the broker-dealer solicits
purchasers;

	•	 	block trades in which the broker-dealer will attempt to sell the shares as agent but may
position and resell a portion of the block as principal to facilitate the transaction;

	•	 	purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

	•	 	an exchange distribution in accordance with the rules of the applicable exchange;

	•	 	privately negotiated transactions;

	•	 	short sales;

	•	 	broker-dealers may agree with the selling securityholders to sell a specified number of
such shares at a stipulated price per share;

	•	 	a combination of any such methods of sale; and

	•	 	any other method permitted pursuant to applicable law.

The selling securityholders may also sell shares under Rule 144 under the Securities Act, if
available, rather than under this prospectus.

Broker-dealers engaged by the selling securityholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from the selling
securityholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the
purchaser) in amounts to be negotiated. The selling securityholders do not expect these
commissions and discounts to exceed what is customary in the types of transactions involved. Any
profits on the resale of shares of common stock by a broker-dealer acting as principal might be
deemed to be underwriting discounts or commissions under the Securities Act. Discounts,
concessions, commissions and similar selling expenses, if any, attributable to the sale of shares
will be borne by a selling securityholder. The selling securityholders may agree to indemnify any
agent, dealer or broker-dealer that participates in transactions involving sales of the shares if
liabilities are imposed on that person under the Securities Act.

 

 

 

The selling securityholders may from time to time pledge or grant a security interest in some
or all of the shares of common stock owned by them and, if they default in the performance of their
secured obligations, the pledgees or secured parties may offer and sell the shares of common stock
from time to time under this prospectus after we have filed a supplement to this prospectus under
Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 supplementing or
amending the list of selling securityholders to include the pledgee, transferee or other successors
in interest as selling securityholders under this prospectus.

The selling securityholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in interest will be the
selling beneficial owners for purposes of this prospectus and may sell the shares of common stock
from time to time under this prospectus after we have filed a supplement to this prospectus under
Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 supplementing or
amending the list of selling securityholders to include the pledgee, transferee or other successors
in interest as selling securityholders under this prospectus.

The selling securityholders and any broker-dealers or agents that are involved in selling the
shares of common stock may be deemed to be “underwriters” within the meaning of the Securities Act
in connection with such sales. In such event, any commissions received by such broker-dealers or
agents and any profit on the resale of the shares of common stock purchased by them may be deemed
to be underwriting commissions or discounts under the Securities Act.

We are required to pay all fees and expenses incident to the registration of the shares of
common stock. We have agreed to indemnify the selling securityholders against certain losses,
claims, damages and liabilities, including liabilities under the Securities Act.

The selling securityholders have advised us that they have not entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers regarding the sale of their
shares of common stock, nor is there an underwriter or coordinating broker acting in connection
with a proposed sale of shares of common stock by any selling securityholder. If we are notified
by any selling securityholder that any material arrangement has been entered into with a
broker-dealer for the sale of shares of common stock, if required, we will file a supplement to
this prospectus. If the selling securityholders use this prospectus for any sale of the shares of
common stock, they will be subject to the prospectus delivery requirements of the Securities Act.

The anti-manipulation rules of Regulation M under the Securities Exchange Act of 1934 may
apply to sales of our common stock and activities of the selling securityholders.

 

-2-

 

Schedule 3.1(g)

CAPITALIZATION

The Company is authorized to issue (i) 495,000,000 shares of common stock of which 15,757,305 are
presently issued and outstanding, and (ii) 5,000,000 shares of preferred stock of which 0 are
presently issued and outstanding.

As of the date hereof, the Company has warrants and options outstanding to purchase 1,887,078 and
371,250 shares of common stock of the Company, respectively.

Frederic Scheer beneficially owns 2,903,784 or 18.4% of the outstanding shares of common Stock of
the Company jointly with his wife, Jocelyne Scheer and through the Jocelyne and Frederic Scheer
Foundation.

 

 

 

Schedule 3.1(h)

SEC REPORTS

None

 

-2-

 

Schedule 3.1(i)

MATERIAL CHANGES

None

 

-3-

 

Schedule 3.1(q)

REGISTRATION RIGHTS

None

 

-4-Exhibit 10.34

Exhibit 10.34

$300,000,000

Brigham Exploration Company

6 7/8% Senior Notes due 2019

PURCHASE AGREEMENT

May 16, 2011

Merrill Lynch, Pierce, Fenner & Smith
Incorporated

Credit Suisse Securities (USA) LLC,

As Representatives of the Several Purchasers,

c/o Merrill Lynch, Pierce, Fenner & Smith,
Incorporated

One Bryant Park, 10th Floor

New York, New York 10036

Ladies and Gentlemen:

1. Introductory. Brigham Exploration Company, a Delaware corporation (the “Company”), agrees
with Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill Lynch”) and Credit Suisse
Securities (USA) LLC (“Credit Suisse”), as representatives (the “Representatives”) of the several
initial purchasers named on Schedule A hereto (the “Purchasers”) subject to the terms and
conditions stated herein, to issue and sell to the Purchasers U.S. $300,000,000 aggregate principal
amount of its 6 7/8% Senior Notes due 2019 (“Offered Securities”) to be issued under an indenture
(the “Indenture”) to be dated as of the Closing Date (as defined herein) by and among the Company,
the Guarantors (as defined herein) and Wells Fargo Bank, N.A., as Trustee (herein so called). The
Offered Securities will be unconditionally guaranteed as to the payment of principal and interest
(the “Guarantees”) by Brigham, Inc., a Nevada corporation, and Brigham Oil & Gas, L.P., a Delaware
limited partnership (each a “Guarantor” and, together, the “Guarantors”).

The holders of the Offered Securities will be entitled to the benefits of a Registration
Rights Agreement to be dated as of the Closing Date by and among the Company, the Guarantors and
the Purchasers (the “Registration Rights Agreement”), pursuant to which the Company and the
Guarantors will agree to file with the Commission (a) a registration statement under the Securities
Act (as defined herein) relating to a new series of notes and related guarantees (collectively, the
“Exchange Securities”), which shall be substantially identical to the Offered Securities and the
Guarantees (except that the Exchange Securities shall have been registered pursuant to such
registration statement and will not be subject to restrictions on transfer or contain additional
interest provisions), to be offered in exchange for the Offered Securities and the Guarantees (such
offer to exchange being referred to as the “Exchange Offer”), and/or (b) under certain
circumstances, a shelf registration statement pursuant to Rule 415 under the Securities Act (the
“Shelf Registration Statement”) relating to the resale by certain holders of the Offered
Securities. If the Company or the Guarantors fail to satisfy their obligations under the
Registration Rights Agreement, they will be required to pay additional interest to the holders of
the Offered Securities under certain circumstances, as described therein.

Each of the Company and the Guarantors hereby agrees with the Purchasers as follows:

2. Representations and Warranties of the Company and the Guarantors. Each of the Company and
the Guarantors represents and warrants to, and agrees with, the Purchasers that:

(a) Offering Memorandums; Certain Defined Terms. The Company has prepared or will
prepare a Preliminary Offering Memorandum and a Final Offering Memorandum.

 

 

 

For purposes of this Agreement:

“Applicable Time” means 4:00 p.m. (New York time) on the date of this Agreement.

“Closing Date” has the meaning set forth in Section 3 hereof.

“Commission” means the U.S. Securities and Exchange Commission.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, including
the Rules and Regulations promulgated thereunder.

“Final Offering Memorandum” means the final offering memorandum relating to
the Offered Securities prepared by or on behalf of the Company for use by the Purchasers
that discloses the offering price and other final terms of the Offered Securities and is
dated as of the date of this Agreement (even if finalized and issued subsequent to the date
of this Agreement).

“Free Writing Communication” means a written communication (as such term is defined in
Rule 405) that constitutes an offer to sell or a solicitation of an offer to buy the
Offered Securities and is made by means other than the Preliminary Offering Memorandum or
the Final Offering Memorandum.

“General Disclosure Package” means the Preliminary Offering Memorandum together with
any Issuer Free Writing Communication existing at the Applicable Time and the information
in which is intended for general distribution to prospective investors, as evidenced by its
being specified on Schedule B hereto.

“Issuer Free Writing Communication” means a Free Writing Communication prepared by or
on behalf of the Company for use by the Purchasers, used or referred to by the Company or
containing a description of the final terms of the Offered Securities or of their offering,
in the form retained in the Company’s records.

“Preliminary Offering Memorandum” means the preliminary offering memorandum relating
to the Offered Securities prepared by or on behalf of the Company for use by the Purchasers
and dated May 16, 2011.

“Rules and Regulations” means the rules and regulations of the Commission.

“Securities Act” means the U.S. Securities Act of 1933, as amended, including the
Rules and Regulations promulgated thereunder.

“Securities Laws” means, collectively, the Sarbanes-Oxley Act of 2002
(“Sarbanes-Oxley”), the Securities Act, the Exchange Act, the Rules and Regulations, the
auditing principles, rules, standards and practices applicable to auditors of “issuers” (as
defined in Sarbanes-Oxley) promulgated or approved by the Public Company Accounting
Oversight Board and, as applicable, the rules of the New York Stock Exchange and the NASDAQ
Stock Market (“Exchange Rules”).

“Supplemental Marketing Material” means any Issuer Free Writing Communication other
than any Issuer Free Writing Communication specified on Schedule B hereto.
Supplemental Marketing Materials include, but are not limited to, the electronic
Bloomberg roadshow slides and the accompanying audio recording.

“Trust Indenture Act of 1939” means the U.S. Trust Indenture Act of 1939, as amended,
including the Rules and Regulations promulgated thereunder.

 

 

 

Unless otherwise specified, a reference to a “rule” is to the indicated rule under the
Securities Act.

Unless otherwise specified, all references herein to the terms “General Disclosure
Package” and “Final Offering Memorandum” shall be deemed to mean and include all
information filed under the Exchange Act prior to the Applicable Time and incorporated by
reference in the General Disclosure Package (including the Preliminary Offering Memorandum)
or the Final Offering Memorandum, as the case may be, and all references herein to the
terms “amend,” “amendment” or “supplement” with respect to the Final Offering Memorandum
shall be deemed to mean and include all information filed under the Exchange Act after the
Applicable Time and incorporated by reference in the Final Offering Memorandum.

(b) Disclosure. As of the date of this Agreement, the Final Offering Memorandum does
not, and as of the Closing Date, the Final Offering Memorandum will not, include any untrue
statement of a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were made, not
misleading. At the Applicable Time, and as of the Closing Date, neither (i) the General
Disclosure Package, nor (ii) any individual Supplemental Marketing Material, when
considered together with the General Disclosure Package, included, or will include, any
untrue statement of a material fact or omitted, or will omit, to state any material fact
necessary in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The preceding two sentences do not apply to
statements in or omissions from the Preliminary or Final Offering Memorandum, the General
Disclosure Package or any Supplemental Marketing Material based upon written information
furnished to the Company by the Purchasers specifically for use therein, it being
understood and agreed that the only such information is that described as such in Section
8(b) hereof. Except as disclosed in the General Disclosure Package, on the date of this
Agreement, the Company’s Annual Report on Form 10-K most recently filed with the Commission
and all subsequent reports (collectively, the “Exchange Act Reports”) which have been filed
by the Company with the Commission or sent to stockholders pursuant to the Exchange Act and
incorporated by reference in the Preliminary or Final Offering Memorandum do not include
any untrue statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they were made,
not misleading. Such documents, when they were filed with the Commission, conformed in all
material respects to the requirements of the Exchange Act and the Rules and Regulations.

(c) Good Standing of the Company. The Company has been duly incorporated and is
existing and in good standing under the laws of the State of Delaware, with power and
authority (corporate and other) to own its properties and conduct its business as described
in the General Disclosure Package; and the Company is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions in which its ownership or
lease of property or the conduct of its business requires such qualification, except for
any jurisdiction where the failure to be so qualified would not, individually or in the
aggregate, have a material adverse effect on the condition (financial or other), business,
properties, prospects or results of operations of the Company and its subsidiaries taken as
a whole (“Material Adverse Effect”).

(d) Subsidiaries. Each subsidiary of the Company has been duly incorporated or
organized and is existing and in good standing under the laws of the jurisdiction of its
incorporation or formation, with power and authority (corporate and other) to own its
properties and conduct its business as described in the General Disclosure Package; and
each subsidiary of the Company is duly qualified to do business as a foreign corporation or
limited partnership in good standing in all other jurisdictions in which its ownership or
lease of property or the conduct of its business requires such qualification, except for
any such jurisdiction where the failure to be so qualified would not have a Material
Adverse Effect; all of the issued and outstanding equity interests of each subsidiary of
the Company have been duly authorized and validly issued and are fully paid and
nonassessable; and the capital stock or other equity securities of each subsidiary owned by
the Company, directly or through subsidiaries, is owned free from liens, encumbrances
and defects, except as disclosed in the General Disclosure Package or pledged in connection
with the Company’s senior credit agreement. The Company has no subsidiaries other than the
Guarantors.

 

 

 

(e) Indenture; Security Interests. Each of the Indenture and the Offered Securities
has been duly authorized; and, when the Offered Securities are delivered and paid for
pursuant to this Agreement on the Closing Date, (i) the Indenture will have been duly
executed and delivered, (ii) such Offered Securities will have been duly executed,
authenticated, issued and delivered, (iii) the Indenture and such Offered Securities will
conform to the information in the General Disclosure Package relating thereto and such
Offered Securities will conform to the description of the Offered Securities contained in
the Final Offering Memorandum and the Indenture, (iv) the Indenture will
constitute valid and legally binding obligations of the Company and the Guarantors,
enforceable against the Company and the Guarantors in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors’ rights and to general equity
principles; and (v) the Offered Securities will constitute valid and legally binding
obligations of the Company, enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors’ rights and to general equity
principles, and entitled to the benefits and security provided by the Indenture.

(f) Trust Indenture Act. On the Closing Date, the Indenture will conform in all
material respects to the requirements of the Trust Indenture Act, and the Rules and
Regulations applicable to an indenture which is qualified thereunder.

(g) No Finder’s Fee. Except as disclosed in the General Disclosure Package, there
are no contracts, agreements or understandings between the Company and any person that
would give rise to a valid claim against the Company or any Purchaser for a brokerage
commission, finder’s fee or other like payment.

(h) Registration Rights Agreement. The Registration Rights Agreement has been duly
authorized by the Company and the Guarantors; and, when the Offered Securities are
delivered and paid for pursuant to this Agreement on the Closing Date, the Registration
Rights Agreement will have been duly executed and delivered by, and will constitute valid
and legally binding obligations of, the Company and the Guarantors, enforceable in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to or
affecting creditors’ rights and to general equity principles.

(i) Exchange Securities. On the Closing Date, the Exchange Securities will have been
duly authorized by the Company and the Guarantors; and when the Exchange Securities are
issued, executed and authenticated in accordance with the terms of the Exchange Offer and
the Indenture, the Exchange Securities will be entitled to the benefits of the Indenture
and will constitute valid and legally binding obligations of the Company and the
Guarantors, enforceable in accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors’ rights and to general equity principles.

(j) Guarantee. The Guarantee to be endorsed on the Offered Securities by each
Guarantor has been duly authorized by such Guarantor; and, when the Offered Securities are
delivered and paid for pursuant to this Agreement on the Closing Date and issued, executed
and authenticated in accordance with the terms of the Indenture, the Guarantee of each
Guarantor endorsed thereon will have been duly executed and delivered by each such
Guarantor, will conform to the description thereof contained in the Final Offering
Memorandum and will constitute valid and legally binding obligations of such Guarantor,
enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights and to
general equity principles. The Guarantee to be endorsed on the Exchange Securities by each
Guarantor has been duly authorized by such Guarantor; and, when issued, will have been duly
executed and delivered by each such Guarantor and will conform to the description thereof
contained in the Final Offering Memorandum. When the Exchange Securities have been issued,
executed and authenticated in accordance with the terms of the Exchange Offer and the
Indenture, the Guarantee of each Guarantor endorsed thereon will constitute valid and
legally binding obligations of such Guarantor, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights and to
general equity principles.

 

 

 

(k) No Registration Rights. Other than the Registration Rights Agreement, there are
no contracts, agreements or understandings between the Company or any Guarantor and any
person granting such person the right to require the Company or such Guarantor to file a
registration statement under the Securities Act with respect to any securities of the
Company or such Guarantor or to require the Company or such Guarantor to include such
securities with the Securities and Guarantees registered pursuant to any Registration
Statement (collectively, “registration rights”).

(l) Absence of Further Requirements. No consent, approval, authorization, or order
of, or filing or registration with, any person (including any governmental agency or body
or any court) is required for the consummation of the transactions contemplated by this
Agreement, the Indenture and the Registration Rights Agreement in connection with the
offering, issuance and sale of the Offered Securities and the Guarantees by the Company and
the Guarantors except for (i) such as have been obtained, (ii) the effective registration
required under the Exchange Offer Registration Statement or, if required, the Shelf
Registration Statement, or (iii) the qualification of the Indenture under the Trust
Indenture Act, in connection with any registered issuance of the Exchange Notes.

(m) Title to Property. Except as disclosed in the General Disclosure Package, the
Company and its subsidiaries have (i) defensible title to all their interests in the oil
and gas properties described in the General Disclosure Package as being owned or leased by
them, title investigations having been carried out by the Company in accordance with
customary practice in the oil and gas industry, and (ii) good and marketable title to all
other real property and all personal property described in the General Disclosure Package
as being owned by them, in each case (except as encumbered under the Company’s senior
credit agreement) free and clear of any security interests, mortgages, liens, encumbrances,
equities, claims and other title defects, except such as do not materially and adversely
affect the value of such property and do not materially interfere with the use made or
proposed to be made of such property by the Company or its subsidiaries. Except as
disclosed in the General Disclosure Package, the Company and its subsidiaries do not hold
any leased real or personal property under valid and enforceable leases with terms or
provisions that would materially interfere with the use made or to be made thereof by them.

(n) Absence of Defaults and Conflicts Resulting from Transaction. The execution,
delivery and performance of the Indenture, this Agreement and the Registration Rights
Agreement, and the issuance and sale of the Offered Securities and Guarantees and
compliance with the terms and provisions thereof will not result in a breach or violation
of any of the terms and provisions of, or constitute a default or a Debt Repayment
Triggering Event (as defined below) under, or result in the imposition of any lien, charge
or encumbrance upon any property or assets of the Company or the Guarantors pursuant to (i)
the charter or by-laws of the Company or the Guarantors,(ii) any statute, any rule,
regulation or order of any governmental agency or body or any court, domestic or foreign,
having jurisdiction over the Company or the Guarantors or any of their properties, or (iii)
any agreement or instrument to which the Company or the Guarantors is a party or by which
the Company or the Guarantors is bound or to which any of the properties of the Company or
the Guarantors is subject, except (in the case of (ii) and (iii)) for breaches or
violations which would not have a Material Adverse Effect; a “Debt Repayment Triggering
Event” means any event or condition that gives, or with the giving of notice or lapse of
time would give, the holder of any note, debenture, or other evidence of indebtedness (or
any person acting on such holder’s behalf) the right to require the repurchase, redemption
or repayment of all or a portion of such indebtedness by the Company or the Guarantors.

 

 

 

(o) Absence of Existing Defaults and Conflicts. None of the Company or the
Guarantors is in violation of its respective charter or by-laws or in default (or with the
giving of notice or lapse of time would be in default) under any existing obligation
agreement, covenant or condition contained in any indenture, loan agreement, mortgage,
lease or other agreement or instrument to which any of them is a party or by which any of
them is bound or to which any of the properties of any of them is subject, except such
defaults that would not, individually or in the aggregate, result in a Material Adverse
Effect.

(p) Authorization of Agreement. This Agreement has been duly authorized, executed
and delivered by the Company and the Guarantors.

(q) Possession of Licenses and Permits. The Company and the Guarantors possess, and
are in compliance with the terms of, all adequate certificates, authorizations, franchises,
licenses and permits (“Licenses”) necessary or material to the conduct of the business now
conducted or proposed in the General Disclosure Package to be conducted by them and have
not received any notice of proceedings relating to the revocation or modification of any
Licenses that, if determined adversely to the Company or the Guarantors, would individually
or in the aggregate have a Material Adverse Effect.

(r) Absence of Labor Dispute. No labor dispute with the employees of the Company or
the Guarantors exists or, to the knowledge of the Company or the Guarantors, is imminent
that could have a Material Adverse Effect.

(s) Possession of Intellectual Property. The Company and the Guarantors own, possess
or can acquire on reasonable terms, adequate trademarks, trade names and other rights to
inventions, know how, patents, copyrights, confidential information and other intellectual
property (collectively, “intellectual property rights”) necessary to conduct the business
now operated by them, or presently employed by them, and have not received any notice of
infringement of or conflict with asserted rights of others with respect to any intellectual
property rights that, if determined adversely to the Company or the Guarantors, would
individually or in the aggregate have a Material Adverse Effect.

(t) Environmental Laws. Except as disclosed in the General Disclosure Package, none
of the Company or the Guarantors is in violation of any statute, any rule, regulation,
decision or order of any governmental agency or body or any court, domestic or foreign,
relating to the use, disposal or release of hazardous or toxic substances or relating to
the protection or restoration of the environment or human exposure to hazardous or toxic
substances (collectively, “environmental laws”), owns or operates any real property
contaminated with any substance that is subject to any environmental laws, is liable for
any off site disposal or contamination pursuant to any environmental laws, or is subject to
any claim relating to any environmental laws, which violation, contamination, liability or
claim would individually or in the aggregate have a Material Adverse Effect; and the
Company is not aware of any pending investigation which might lead to such a claim.

(u) Accurate Disclosure. The statements in the General Disclosure Package and the
Final Offering Memorandum under the headings “Certain United States Federal Income Tax
Considerations,” “Description of the Notes” and “Description of other Indebtedness” insofar
as such statements summarize legal matters, agreements, documents or proceedings discussed
therein, are accurate and fair summaries of such legal matters, agreements, documents or
proceedings and present the information required to be shown.

 

 

 

(v) Absence of Manipulation. None of the Company, the Guarantors and their respective
affiliates has, either alone or with one or more other persons, bid for or purchased for
any account in which it or any of its affiliates had a beneficial interest in any Offered
Securities or attempted to induce any person to purchase any Offered Securities.

(w) Statistical and Market-Related Data. Any third-party statistical and
market-related data included in a Preliminary Offering Memorandum, a Final Offering
Memorandum, or any Issuer Free Writing Communication are based on or derived from sources
that the Company and the Guarantors believe to be reliable and accurate.

(x) Internal Controls and Compliance with the Sarbanes-Oxley Act. Except as set
forth in the General Disclosure Package, the Company and the Guarantors and the Company’s
Board of Directors (the “Board”) are in compliance with Sarbanes-Oxley and all applicable
Exchange Rules. The Company and each Guarantor maintains a system of internal controls,
including, but not limited to, disclosure controls and procedures, internal controls over
accounting matters and financial reporting, and legal and regulatory compliance controls
(collectively, “Internal Controls”), that comply with the Securities Laws and are
sufficient to provide reasonable assurances that (i) transactions are executed in
accordance with management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in conformity with U.S.
Generally Accepted Accounting Principles and to maintain accountability for assets, (iii)
access to assets is permitted only in accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect to any
differences. The Internal Controls are, or, upon consummation of the offering of the
Offered Securities will be, overseen by the Audit Committee (the “Audit Committee”) of the
Board in accordance with Exchange Rules. Neither the Company nor the Guarantors have
publicly disclosed or reported to the Audit Committee or the Board, and within the next 90
days neither the Company nor the Guarantors reasonably expect to publicly disclose or
report to the Audit Committee or the Board, a significant deficiency, material weakness,
change in Internal Controls or fraud involving management or other employees who have a
significant role in Internal Controls (each, an “Internal Control Event”), any violation
of, or failure to comply with, the Securities Laws, or any matter which, if determined
adversely, would have a Material Adverse Effect.

(y) Disclosure Controls and Procedures. The Company maintains disclosure controls
and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) that
comply with the requirements of the Exchange Act; such disclosure controls and procedures
have been designed to ensure that material information relating to the Company and its
subsidiaries is made known to the Company’s principal executive officer and principal
financial officer by others within those entities; and such disclosure controls and
procedures are effective.

(z) Absence of Accounting Issues. Except as set forth in the General Disclosure
Package, the Audit Committee is not reviewing or investigating, and neither the Company’s
independent auditors nor its internal auditors have recommended that the Audit Committee
review or investigate, (i) adding to, deleting, changing the application of, or changing
the Company’s disclosure with respect to, any of the Company’s material accounting
policies; (ii) any matter which could result in a restatement of the Company’s financial
statements for any annual or interim period during the current or prior three fiscal years;
or (iii) any Internal Control Event.

(aa) Litigation. Except as disclosed in the General Disclosure Package, there are no
pending actions, suits or proceedings (including any inquiries or investigations by any
court or governmental agency or body, domestic or foreign) against or affecting the
Company, the Guarantors, or any of their respective properties that, if determined
adversely to the Company or the Guarantors, would individually or in the aggregate have a
Material Adverse Effect, or would materially and adversely affect the ability of the
Company or the Guarantors to perform their
obligations under the Indenture, this Agreement, or the Registration Rights Agreement, or
which are otherwise material in the context of the sale of the Offered Securities and the
Guarantees; and no such actions, suits or proceedings (including any inquiries or
investigations by any court or governmental agency or body, domestic or foreign) are
threatened or, to the Company’s or the Guarantors’ knowledge, contemplated.

 

 

 

(bb) Financial Statements. The financial statements included in the General
Disclosure Package present fairly in all material respects the financial position of the
Company and its consolidated subsidiaries as of the dates shown and their results of
operations and cash flows for the periods shown, and such financial statements have been
prepared in conformity with the generally accepted accounting principles in the United
States applied on a consistent basis.

(cc) No Material Adverse Change in Business. Except as disclosed in the General
Disclosure Package, since the end of the period covered by the latest audited financial
statements included in the General Disclosure Package (i) there has been no change, nor any
development or event involving a prospective change, in the condition (financial or
otherwise), results of operations, business, properties or prospects of the Company and the
Guarantors, taken as a whole, that is material and adverse; (ii) except as
disclosed in or contemplated by the General Disclosure Package, there has been no dividend
or distribution of any kind declared, paid or made by the Company or the Guarantors on any
class of their capital stock and (iii) except as disclosed in or contemplated by the
General Disclosure Package, there has been no material adverse change in the capital stock,
short-term indebtedness, long-term indebtedness, net current assets or net assets of the
Company and the Guarantors.

(dd) Reserve Engineers. Cawley, Gillespie & Associates, a petroleum engineering firm
from whose reserve reports information (the “Reserve Information”) is set forth in the
General Disclosure Package, are independent petroleum engineers with respect to the
Company. Other than (i) the production of reserves in the ordinary course of business (ii)
intervening price fluctuations or (iii) as described in the General Disclosure Package, the
Company is not aware of any facts or circumstances that would result in a material adverse
change in its proved reserves in the aggregate, or the aggregate present value of estimated
future net revenues of the Company or the standardized measure of discounted future net
cash flows therefrom, as described in the General Disclosure Package and reflected in the
Reserve Information as of the respective dates such information is given. Estimates of the
proved reserves and the present value of the estimated future net revenues and the
discounted future net cash flows derived therefrom as described in the General Disclosure
Package and reflected in the Reserve Information comply in all material respects to the
applicable requirements of the Act.

(ee) Solvency. All indebtedness represented by the Offered Securities is being
incurred for the purposes set forth in the General Disclosure Package under the heading
“Use of Proceeds.” On the Closing Date, the Company will be solvent. As used in this
paragraph, “solvent” means, with respect to a particular date, that on such date (i) the
present fair market value (present fair saleable value) of the assets of the Company and
each of its subsidiaries is not less than the total amount required to pay the probable
liabilities of the Company and each of such subsidiaries on its total existing debts and
liabilities (including contingent liabilities) as they become absolute and matured, (ii)
the Company and each of its subsidiaries are able to realize upon their assets and pay
their debts and other liabilities, contingent obligations and commitments as they mature
and become due in the normal course of business, (iii) assuming the sale of the Offered
Securities as contemplated by this Agreement and the General Disclosure Package, each of
the Company and the subsidiaries is not incurring debts or liabilities beyond its ability
to pay such debts and liabilities as they mature, and (iv) each of the Company and its
subsidiaries is not engaged in any business or transaction, and is not about to engage in
any business or transaction, for which its property would constitute unreasonably small
capital after giving due consideration to the prevailing practice in the industry in which
each of the Company and such subsidiaries is engaged. In computing the amount of such
contingent liabilities at any time, it is intended that such liabilities will be computed
at the amount that, in the light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to become
an actual or matured liability.

 

 

 

(ff) Investment Company Act.—  Neither the Company nor any Guarantor is and, after
giving effect to the offering and sale of the Offered Securities and the application of the
proceeds thereof as described in the General Disclosure Package, will not be an “investment
company” as defined in the Investment Company Act of 1940 (the “Investment Company Act”).

(gg) Ratings. No “nationally recognized statistical rating organization” as such
term is defined for purposes of Rule 436(g)(2) (i) has imposed (or has informed the Company
or any Guarantor that it is considering imposing) any condition (financial or otherwise) on
the Company’s or any Guarantor’s retaining any rating assigned to the Company or any
Guarantor or any securities of the Company or any Guarantor or (ii) has indicated to the
Company or any Guarantor that it is considering any of the actions described in Section
7(b)(ii) hereof.

(hh) Regulations T, U, X. Neither the Company nor any Guarantor nor any agent
thereof acting on their behalf has taken, and none of them will take, any action that might
cause this Agreement or the issuance or sale of the Offered Securities to violate
Regulation T, Regulation U or Regulation X of the Board of Governors of the Federal Reserve
System.

(ii) Class of Securities Not Listed. The Offered Securities are eligible for resale
pursuant to Rule 144A under the Securities Act (“Rule 144A”), and no securities of the same
class (within the meaning of Rule 144A(d)(3)) as the Offered Securities are listed on any
national securities exchange registered under Section 6 of the Exchange Act or quoted in a
U.S. automated inter-dealer quotation system.

(jj) No Registration. The offer and sale of the Offered Securities in the manner
contemplated by this Agreement will be exempt from the registration requirements of the
Securities Act by reason of Section 4(2) thereof, Regulation D (“Regulation D”) thereunder
and Regulation S (“Regulation S”) thereunder; and it is not necessary to qualify the
Indenture under the Trust Indenture Act.

(kk) No General Solicitation; No Directed Selling Efforts. Neither the Company, nor
any Guarantor, nor any of their respective affiliates, nor any person acting on its or
their behalf (i) has, within the six-month period prior to the date hereof, offered or sold
in the United States or to any U.S. person (as such terms are defined in Regulation S) the
Offered Securities or any security of the same class or series as the Offered Securities or
(ii) has offered or will offer or sell the Offered Securities (A) in the United States by
means of any form of general solicitation or general advertising within the meaning of Rule
502(c) or (B) with respect to any such securities sold in reliance on Rule 903 of
Regulation S, by means of any directed selling efforts within the meaning of Rule 902(c) of
Regulation S. The Company, the Guarantors, their respective affiliates and any person
acting on its or their behalf have complied and will comply with the offering restrictions
requirement of Regulation S. Neither the Company nor any Guarantor has entered and neither
the Company nor any Guarantor will enter into any contractual arrangement with respect to
the distribution of the Offered Securities except for this Agreement.

 

 

 

(ll) Compliance with Anti-Bribery Laws, Anti-Money Laundering Laws and Laws and
Regulations Imposing U.S. Economic Sanctions. Each of the Company and the Guarantors and
their affiliates and their respective officers, directors, supervisors, managers, agents,
or employees, have not violated, the Company’s participation in the offering will not
violate, and the Company has instituted and maintains policies and procedures designed to
ensure continued compliance with: (i) any applicable anti-bribery laws, rules or
regulations of any locality, including, but not limited to, any law, rule, or regulation
promulgated to implement the OECD Convention on Combating Bribery of Foreign Public
Officials in International Business Transactions, signed December 17, 1997, the U.S.
Foreign Corrupt Practices Act of
1977 or any other law, rule or regulation of similar purpose and scope; (ii)
applicable federal, state, international, foreign or other anti-money laundering laws,
regulations or government guidance regarding anti-money laundering, including, but not
limited to, Title 18 U.S. Code section 1956 and 1957, the Patriot Act, the Bank Secrecy
Act, and international anti-money laundering principals or procedures by an
intergovernmental group or organization, such as the Financial Action Task Force on Money
Laundering, of which the United States is a member and with which designation the United
States representative to the group or organization continues to concur, all as amended, and
any Executive Order, directive, or regulation pursuant to the authority of any of the
foregoing, or any orders or licenses issued thereunder; or (iii) laws and regulations
imposing U.S. economic sanctions measures, including, but not limited to, the International
Emergency Economic Powers Act, the Trading with the Enemy Act, the United Nations
Participation Act, and the Syria Accountability and Lebanese Sovereignty Act, all as
amended, and any Executive Order, directive, or regulation pursuant to the authority of any
of the foregoing, including the regulations of the U.S. Treasury Department set forth under
31 CFR, Subtitle B, Chapter V, as amended, or any orders or licenses issued thereunder.

3. Purchase, Sale and Delivery of Offered Securities. On the basis of the representations,
warranties and agreements and subject to the terms and conditions set forth herein, the Company
agrees to sell to the several Purchasers and each of the Purchasers agrees, severally and not
jointly, to purchase from the Company, at a purchase price of 98.125% of the principal amount
thereof, the respective principal amounts of Offered Securities set forth opposite the names of the
several Purchasers on Schedule A hereto.

The Company will deliver against payment of the purchase price the Offered Securities to be
offered and sold by the Purchasers in reliance on Regulation S (the “Regulation S Securities”) in
the form of one or more permanent global notes in registered form without interest coupons (the
“Offered Regulation S Global securities”) which will be deposited with the Trustee as custodian for
The Depository Trust Company (“DTC”) for the respective accounts of the DTC participants for Morgan
Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear System
(“Euroclear”), and Clearstream Banking, société anonyme (“Clearstream, Luxembourg”) and registered
in the name of Cede & Co., as nominee for DTC. The Company will deliver against payment of the
purchase price the Offered Securities to be purchased by each Purchaser hereunder and to be offered
and sold by each Purchaser in reliance on Rule 144A (the “144A Securities”) in the form of one or
more permanent global notes in definitive form without interest coupons (the “Restricted Global
Securities”) deposited with the Trustee as custodian for DTC and registered in the name of Cede &
Co., as nominee for DTC. The Regulation S Global Securities and the Restricted Global Securities
shall be assigned separate CUSIP numbers. The Restricted Global Securities shall include the legend
regarding restrictions on transfer set forth under “Transfer Restrictions” in the Final Offering
Memorandum. Until the termination of the distribution compliance period (as defined in Regulation
S) with respect to the offering of the Offered Securities, interests in the Regulation S Global
Securities may only be held by the DTC participants for Euroclear and Clearstream, Luxembourg.
Interests in any permanent global notes will be held only in book-entry form through Euroclear,
Clearstream, Luxembourg or DTC, as the case may be, except in the limited circumstances described
in the Final Offering Memorandum.

Payment for the Regulation S Securities and the 144A Securities shall be made by the
Purchasers in Federal (same day) funds by wire transfer to the account specified in writing by the
Company two days prior to the Closing Date at the office of Vinson & Elkins, L.L.P., 2500 First
City Tower, 1001 Fannin Street, Houston, Texas 77002 at 10:00 A.M., (New York time), on May 19,
2011 or at such other time thereafter as the Representatives and the Company determine, such time
being herein referred to as the “Closing Date,” against delivery to the Trustee as custodian for
DTC of (i) the Regulation S Global Securities representing all of the Regulation S Securities for
the respective accounts of the DTC participants for Euroclear and Clearstream, Luxembourg and (ii)
the Restricted Global Securities representing all of the Offered 144A Securities. The Regulation S
Global Securities and the Restricted Global Securities will be made available for checking at the
above office of Vinson & Elkins, LLP at least 24 hours prior to the Closing Date.

 

 

 

4. Representations by Purchasers; Resale by Purchasers.

(a) Each Purchaser severally represents and warrants to the Company and the
Guarantors that it is a “qualified institutional buyer” (a “QIB”) within the meaning of
Rule 144A and an “accredited investor” within the meaning of Regulation D.

(b) Each Purchaser severally acknowledges that the Offered Securities have not been
registered under the Securities Act and may not be offered or sold within the United States
or to, or for the account or benefit of, U.S. persons except in accordance with Regulation
S or pursuant to an exemption from the registration requirements of the Securities Act.
Each Purchaser severally represents and agrees that it has offered and sold the Offered
Securities, and will offer and sell the Offered Securities (i) as part of its distribution
at any time and (ii) otherwise until 40 days after the later of the commencement of the
offering and the Closing Date, only in accordance with Rule 903 or Rule 144A. Accordingly,
neither such Purchaser nor its affiliates, nor any persons acting on its or their behalf,
have engaged or will engage in any directed selling efforts with respect to the Offered
Securities, and such Purchaser, its affiliates and all persons acting on its or their
behalf have complied and will comply with the offering restrictions requirement of
Regulation S. Each Purchaser severally agrees that, at or prior to confirmation of sale of
the Offered Securities, other than a sale pursuant to Rule 144A, such Purchaser will have
sent to each distributor, dealer or person receiving a selling concession, fee or other
remuneration that purchases the Offered Securities from it during the restricted period a
confirmation or notice to substantially the following effect:

“The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933 (the “Securities Act”) and may not be offered or
sold within the United States or to, or for the account or benefit of,
U.S. persons (i) as part of their distribution at any time or (ii)
otherwise until 40 days after the later of the date of the commencement of
the offering and the closing date, except in either case in accordance
with Regulation S (or Rule 144A if available) under the Securities Act.
Terms used above have the meanings given to them by Regulation S.”

Terms used in this subsection (b) have the meanings given to them by Regulation S.

(c) Each Purchaser severally agrees that it and each of its affiliates has not
entered and will not enter into any contractual arrangement with respect to the
distribution of the Offered Securities except for any such arrangements with the other
Purchasers or affiliates of the other Purchasers or with the prior written consent of the
Company.

(d) Each Purchaser severally agrees that it and each of its affiliates will not
offer or sell the Offered Securities in the United States by means of any form of general
solicitation or general advertising within the meaning of Rule 502(c), including, but not
limited to (i) any advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, or (ii) any
seminar or meeting whose attendees have been invited by any general solicitation or general
advertising. Each Purchaser severally agrees, with respect to resales made in reliance on
Rule 144A of any of the Offered Securities, to deliver either with the confirmation of such
resale or otherwise prior to settlement of such resale a notice to the effect that the
resale of such Offered Securities has been made in reliance upon the exemption from the
registration requirements of the Securities Act provided by Rule 144A.

 

 

 

(e) In relation to each Member State of the European Economic Area which
has implemented the Prospectus Directive (each, a “Relevant Member State”), each of the
Purchasers severally represents and agrees that with effect from and including the date on
which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant
Implementation Date”) it has not made and will not make an offer of Offered Securities to
the public in that Relevant Member State prior to the publication of a prospectus in
relation to the Offered Securities which has been approved by the competent authority in
that Relevant Member
State or, where appropriate, approved in another Relevant Member State and notified to the
competent authority in that Relevant Member State, all in accordance with the Prospectus
Directive, except that it may, with effect from and including the Relevant Implementation
Date, make an offer of Offered Securities to the public in that Relevant Member State at
any time: 

(i) to legal entities which are authorized or regulated to operate in the
financial markets or, if not so authorized or regulated, whose corporate purpose is
solely to invest in securities;

(ii) to any legal entity which has two or more of (A) an average of at least
250 employees during the last financial year; (B) a total balance sheet of more
than €43,000,000 and (C) an annual net turnover of more than €50,000,000, as shown
in its last annual or consolidated accounts; or

(iii) in any other circumstances which do not require the publication by the
Company of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of Offered Securities to
the public” in relation to any Offered Securities in any Relevant Member State means the
communication in any form and by any means of sufficient information on the terms of the
offer and the Offered Securities to be offered so as to enable an investor to decide to
purchase or subscribe the Offered Securities, as the same may be varied in that Member
State by any measure implementing the Prospectus Directive in that Member State and the
expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant
implementing measure in each Relevant Member State.

(f) Each of the Purchasers severally represents and agrees that:

(i) it has only communicated or caused to be communicated and will only
communicate or cause to be communicated an invitation or inducement to engage in
investment activity (within the meaning of Section 21 of the Financial Services and
Markets Act 2000 (the “FSMA”)) to persons who have professional experience in
matters relating to investments falling within Article 19(5) of the FSMA or in
circumstances in which Section 21(1) of the FSMA does not apply to the Company or
the Guarantors; and

(ii) it has complied and will comply with all applicable provisions of the
FSMA with respect to anything done by it in relation to the Offered Securities in,
from or otherwise involving the United Kingdom.

5. Certain Agreements of the Company and each Guarantor. The Company and each Guarantor
agree with the several Purchasers that:

(a) Amendments and Supplements to Offering Memorandums. The Company and the
Guarantors will promptly advise the Representatives of any proposal to amend or supplement
the Preliminary or Final Offering Memorandum and will not effect such amendment or
supplementation without the Representatives’ consent. If, at any time prior to the
completion of the resale of the Offered Securities by the Purchasers, there occurs an event
or development as a result of which any document included in the Preliminary or Final
Offering Memorandum, the General Disclosure Package or any Supplemental Marketing Material,
if republished immediately following such event or development, included or would include
an untrue statement of a material fact or omitted or would omit to state any material fact
necessary in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, the Company and the Guarantors promptly will notify
the Representatives of such event and promptly will prepare and furnish, at its own
expense, to the Purchasers and the dealers and to any other dealers at the request of the
Representatives, an amendment or supplement which will correct such
statement or omission. Neither the Representatives’ consent to, nor its delivery to
offerees or investors of, any such amendment or supplement shall constitute a waiver of any
of the conditions set forth in Section 7.

 

 

 

(b) Furnishing of Offering Memorandums. The Company and the Guarantors will furnish
to the Representatives copies of the Preliminary Offering Memorandum, each other document
comprising a part of the General Disclosure Package, the Final Offering Memorandum, all
amendments and supplements to such documents and each item of Supplemental Marketing
Material, in each case as soon as available and in such quantities as the Representatives
request. At any time when the Company is not subject to Section 13 or 15(d), the Company
and the Guarantors will promptly furnish or cause to be furnished to the Representatives
(and, upon request, to each of the other Purchasers) and, upon request of holders and
prospective purchasers of the Offered Securities, to such holders and purchasers, copies of
the information required to be delivered to holders and prospective purchasers of the
Offered Securities pursuant to Rule 144A(d)(4) (or any successor provision thereto) in
order to permit compliance with Rule 144A in connection with resales by such holders of the
Offered Securities. The Company will pay the expenses of printing and distributing to the
Purchasers all such documents.

(c) Blue Sky Qualifications. The Company and the Guarantors will arrange for the
qualification of the Offered Securities for sale and the determination of their eligibility
for investment under the laws of such jurisdictions in the United States and
Canada as the Representatives designate and will continue such qualifications in effect so
long as required for the resale of the Offered Securities by the Purchasers, provided that
the Company will not be required to qualify as a foreign corporation or to file a general
consent to service of process in any such state.

(d) Reporting Requirements. For so long as the Offered Securities remain
outstanding, the Company will furnish to the Representatives and, upon request, to each of
the other Purchasers, as soon as practicable after the end of each fiscal year, a copy of
the Company’s annual report to stockholders for such year; and the Company will furnish to
the Representatives and, upon request, to each of the other Purchasers (i) as soon as
available, a copy of each report and any definitive proxy statement of the Company filed
with the Commission under the Exchange Act or mailed to stockholders, and (ii) from time to
time, such other information concerning the Company and the Guarantors as the
Representatives may reasonably request. However, so long as the Company is subject to the
reporting requirements of either Section 13 or Section 15(d) of the Exchange Act and is
timely filing reports with the Commission on its Electronic Data Gathering, Analysis and
Retrieval system (“EDGAR”), it is not required to furnish such reports or statements to the
Purchasers.

(e) Transfer Restrictions. During the period of one year after the Closing Date, the
Company will, upon request, furnish to the Representatives, each of the other Purchasers
and any holder of Offered Securities a copy of the restrictions on transfer applicable to
the Offered Securities.

(f) No General Solicitation. The Company and the Guarantors will not engage and will
cause its other affiliates and any person acting on their behalf (other than, in any case,
the Purchasers and any of their affiliates, as to whom the Company and the Guarantors make
no covenant) not to engage, in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with any offer or sale of the Offered
Securities in the United States.

(g) No Directed Selling. The Company and the Guarantors will not engage and will
cause its other affiliates and any person acting on their behalf (other than, in any case,
the Purchasers and any of their affiliates, as to whom the Company and the Guarantors make
no covenant) not to engage, in any directed selling effort with respect to the Offered
Securities, and will comply, and will cause its other affiliates and any person acting on
their
behalf (other than, in any case, the Purchasers and any of their affiliates, as to
whom the Company and the Guarantors make no covenant) to comply, with the offering
restrictions requirement of Regulation S. Terms used in this Section 5(g) have the
meanings given to them by Regulation S.

 

 

 

(h) No Resales by Affiliates. During the period of one year after the Closing Date,
the Company will not, and will not permit any of its affiliates (as defined in Rule 144)
to, resell any of the Offered Securities that have been reacquired by any of them.

(i) Investment Company. During the period of one year after the Closing Date,
neither the Company nor any Guarantor will be or become, an open-end investment company,
unit investment trust or face-amount certificate company that is or is required to be
registered under Section 8 of the Investment Company Act.

(j) Payment of Expenses. The Company and the Guarantors will pay all expenses
incidental to the performance of their respective obligations under this Agreement, the
Indenture and the Registration Rights Agreement, including but not limited to (i) the fees
and expenses of the Trustee and its professional advisers; (ii) all expenses in connection
with the execution, issue, authentication, packaging and initial delivery of the Offered
Securities and, as applicable, the Exchange Securities, the preparation and printing of
this Agreement, the Registration Rights Agreement, the Offered Securities, the Indenture,
the Preliminary Offering Memorandum, any other documents comprising any part of the General
Disclosure Package, the Final Offering Memorandum, all amendments and supplements thereto,
each item of Supplemental Marketing Material and any other document relating to the
issuance, offer, sale and delivery of the Offered Securities and as applicable, the
Exchange Securities; (iii) all fees and expenses (including fees and expenses of counsel)
of the Company in connection with approval of the Offered Securities by DTC for
“book-entry” transfer; (iv) any expenses (including fees and disbursements of counsel to
the Purchasers) incurred in connection with qualification of the Offered Securities or the
Exchange Securities for sale under the laws of such jurisdictions in the United States and
Canada as the Representatives designate and the preparation and printing of memoranda
relating thereto (v) any fees charged by investment rating agencies for the rating of the
Securities or the Exchange Securities, and (vi) expenses incurred in distributing the
Preliminary Offering Memorandum, any other documents comprising any part of the General
Disclosure Package, the Final Offering Memorandum (including any amendments and supplements
thereto) and any Supplemental Marketing Material to the Purchasers. The Company and the
Guarantors will also pay or reimburse the Purchasers (to the extent incurred by them) for
costs and expenses of the Company’s officers and employees and any other expenses of the
Company and the Guarantors relating to investor presentations on any “road show” in
connection with the offering and sale of the Offered Securities including, without
limitation, any travel expenses of the Company’s and the Guarantors’ officers and employees
and any other expenses of the Company and the Guarantors; provided that, except as provided
in this Section 5(j) and in Sections 8 and 10 hereof, the Purchasers shall pay their own
costs and expenses, including the costs and expenses of their counsel.

(k) Use of Proceeds. The Company will use the net proceeds received in connection
with this offering in the manner described in the “Use of Proceeds” section of the General
Disclosure Package and, except as disclosed in the General Disclosure Package, the Company
does not intend to use any of the proceeds from the sale of the Offered Securities
hereunder to repay any outstanding debt owed to any affiliate of any Purchaser.

(l) Absence of Manipulation. In connection with the offering, until Merrill Lynch
shall have notified the Company and the other Purchasers of the completion of the resale of
the Offered Securities, neither the Company, the Guarantors, nor any of their affiliates
will, either alone or with one or more other persons, bid for or purchase for any account
in which it or any of its affiliates has a beneficial interest any Offered Securities or
attempt to induce any person to purchase any Offered Securities; and neither it nor any of
their affiliates will make bids or purchases for the purpose of creating actual, or
apparent, active trading in, or of raising the price
of, the Offered Securities.

 

 

 

(m) Restriction on Sale of Securities. For a period of 120 days after the date
hereof, neither the Company nor any Guarantor will, directly or indirectly, take any of the
following actions with respect to any U.S. dollar-denominated debt securities issued or
guaranteed by the Company or such Guarantor and having a maturity of more than one year
from the date of issue or any securities convertible into or exchangeable or exercisable
for any of its Securities (“Lock-Up Securities”): (i) offer, sell, issue, contract or grant
any option, right or warrant to sell, pledge, transfer or otherwise dispose of Lock-Up
Securities, (ii) offer, sell, issue, contract or grant any option to sell, contract or
grant any option, right or warrant to purchase Lock-Up Securities, (iii) enter into any
swap, hedge, open “put equivalent position” within the meaning of Rule 16a-1 under the
Exchange Act or any other agreement that transfers, in whole or in part, the economic
consequences of ownership of Lock-Up Securities, (iv) establish or increase a put
equivalent position or liquidate or decrease a call equivalent position in Lock-Up
Securities within the meaning of Section 16 of the Exchange Act or (v) announce the
offering of, or file with the Commission a registration statement under the Securities Act
relating to Lock-Up Securities or publicly disclose the intention to take any such action,
without the prior written consent of Merrill Lynch and Credit Suisse (which consent may be
withheld at the sole discretion of Merrill Lynch and Credit Suisse). Neither the Company
nor any Guarantor will at any time directly or indirectly, take any action referred to in
clauses (i) through (v) above with respect to any securities under circumstances where such
offer, sale, pledge, contract or disposition would cause the exemption afforded by Section
4(2) of the Securities Act or the safe harbor of Regulation S thereunder to cease to be
applicable to the offer and sale of the Offered Securities.

6. Free Writing Communications.

(a) Issuer Free Writing Communications. The Company and each Guarantor represents
and agrees that, unless it obtains the prior consent of the Representatives, and each
Purchaser represents and agrees that, unless it obtains the prior consent of the Company
and the Representatives, it has not made and will not make any offer relating to the
Offered Securities that would constitute an Issuer Free Writing Communication.

(b) Term Sheets. The Company consents to the use by any Purchaser of a Free Writing
Communication that (i) contains only (A) information describing the preliminary terms of
the Offered Securities or their offering or (B) information that describes the final terms
of the Offered Securities or their offering and that is included in or is subsequently
included in the Final Offering Memorandum, including by means of a pricing term sheet in
the form of Exhibit 1 to Schedule B hereto, or (ii) does not contain any
material information about the Company or any Guarantor or their securities that was
provided by or on behalf of the Company or any Guarantor, it being understood and agreed
that the Company and each Guarantor shall not be responsible to any Purchaser for liability
arising from any inaccuracy in such Free Writing Communications referred to in clause (i)
or (ii) as compared with the information in the Preliminary Offering Memorandum, the Final
Offering Memorandum or the General Disclosure Package.

7. Conditions of the Obligations of the Purchasers. The obligations of the several
Purchasers to purchase and pay for the Offered Securities will be subject to the accuracy of the
representations and warranties of the Company and the Guarantors herein (as though made on the
Closing Date), to the accuracy of the statements of officers of the Company and the Guarantors made
pursuant to the provisions hereof, to the performance by the Company and the Guarantors of their
obligations hereunder and to the following additional conditions precedent:

(a) Accountants’ Comfort Letter. The Purchasers shall have received a “comfort
letter” from KPMG LLP dated the date hereof on the General Disclosure Package in form and
substance satisfactory to the Purchasers concerning certain financial and accounting
information set forth in the General Disclosure Package. In addition, the Purchasers shall
have received a “bring down comfort letter” from KPMG LLP dated as of the Closing Date,
addressing the matters in the
“comfort letter” delivered on the date hereof pursuant to the preceding sentence, except
that (i) each “bring-down comfort letter” shall cover the financial and accounting
information in the Final Offering Memorandum and any amendment or supplement thereto and
(ii) procedures shall be brought down to a date no more than 2 days prior to the Closing
Date, and otherwise in form and substance satisfactory to the Purchasers.

 

 

 

(b) Reserve Engineer Comfort Letter. The Purchasers shall have received letters,
dated the date hereof, of Cawley, Gillespie & Associates, an independent petroleum
engineers firm for the Company, and in form and substance satisfactory to the
Representatives and the Representatives’ counsel, with respect to the estimated quantities
of the Company’s reserves, the future net revenues from those reserves and their present
value as set forth in the General Disclosure Package and the Final Offering Memorandum and
such related matters as the Representatives shall reasonably request.

(c) No Material Adverse Change. Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change, or any development or event
involving a prospective change, in the condition (financial or otherwise), results of
operations, business, properties or prospects of the Company and the Guarantors taken as a
whole which, in the judgment of the Representatives, is material and adverse and makes it
impractical or inadvisable to market the Offered Securities; (ii) any downgrading in the
rating of any debt securities of the Company by any “nationally recognized statistical
rating organization” (as defined for purposes of Rule 436(g)), or any public announcement
that any such organization has under surveillance or review its rating of any debt
securities of the Company other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading, of such rating) or any
announcement that the Company has been placed on negative outlook; (iii) any change in U.S.
or international financial, political or economic conditions or currency exchange rates or
exchange controls the effect of which is such as to make it, in the judgment of the
Representatives, impractical to market or to enforce contracts for the sale of the Offered
Securities, whether in the primary market or in respect of dealings in the secondary
market, (iv) any suspension or material limitation of trading in securities generally on
the New York Stock Exchange, or any setting of minimum or maximum prices for trading on
such exchange; (v) any suspension of trading of any securities of the Company on any
exchange or in the over-the-counter market; (vi) any banking moratorium declared by any
U.S. federal or New York authorities; (vii) any major disruption of settlements of
securities, payment, or clearance services in the United States or any other country where
such securities are listed or (viii) any attack on, outbreak or escalation of hostilities
or act of terrorism involving the United States, any declaration of war by Congress or any
other national or international calamity or emergency if, in the judgment of the
Representatives, the effect of any such attack, outbreak, escalation, act, declaration,
calamity or emergency is such as to make it in the judgment of the Representatives
impractical or inadvisable to market the Offered Securities or to enforce contracts for the
sale of the Offered Securities.

(d) Opinion of Counsel for Company. The Representatives shall have received an
opinion, dated such Closing Date, of Thompson & Knight LLP, counsel for the Company, with
respect to such matters as the Representatives may require.

(e) Opinion of General Counsel of the Company. The General Counsel of the Company
shall have furnished to the Representative her written opinion, as counsel to the Company,
dated the Closing Date with respect to such matters as the Representatives may require.

(f) Opinion of Counsel for Purchasers. The Purchasers shall have received from
Vinson & Elkins LLP, counsel for the Purchasers, such opinion or opinions, dated the
Closing Date with respect to such matters as the Representatives may require, and the
Company and the Guarantors shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass upon such matters.

 

 

 

(g) Officers’ Certificate. The Purchasers shall have received certificates, dated the
Closing Date, of an executive officer of the Company and the Guarantors and a principal
financial or accounting officer of the Company and the Guarantors in which such officers
shall state that the representations and warranties of the Company and the Guarantors in
this Agreement are true and correct as of the Closing Date, that the Company and the
Guarantors have complied with all agreements and satisfied all conditions on their part to
be performed or satisfied hereunder at or prior to the Closing Date, and that, subsequent
to the date of the most recent financial statements in the General Disclosure Package there
has been no material adverse change, nor any development or event involving a prospective
material adverse change, in the condition (financial or otherwise), results of operations,
business, properties or prospects of the Company, the Guarantors and their respective
subsidiaries taken as a whole except as set forth in the General Disclosure Package or as
described in such certificate.

The Company and the Guarantors will furnish the Purchasers with such conformed copies of such
opinions, certificates, letters and documents as the Purchasers reasonably request. Merrill Lynch
may in its sole discretion waive on behalf of the Purchasers compliance with any conditions to the
obligations of the Purchasers hereunder, whether in respect of an Optional Closing Date or
otherwise.

8. Indemnification and Contribution.

(a) Indemnification of Purchasers. The Company and the Guarantors will indemnify and
hold harmless each Purchaser, its officers, employees, agents, partners, members, directors
and its affiliates and each person, if any, who controls such Purchaser within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act (each, an
“Indemnified Party”), against any and all losses, claims, damages or liabilities, joint or
several, to which such Indemnified Party may become subject, under the Securities Act, the
Exchange Act, other Federal or state statutory law or regulation or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material fact
contained in the Preliminary Offering Memorandum or the Final Offering Memorandum, in each
case as amended or supplemented, or any Issuer Free Writing Communication (including with
limitation, any Supplemental Marketing Material), or the Exchange Act Reports, or arise out
of or are based upon the omission or alleged omission of a material fact necessary in order
to make the statements therein, in the light of the circumstances under which they were
made, not misleading; and will reimburse each Indemnified Party for any legal or other
expenses reasonably incurred by such Indemnified Party in connection with investigating,
preparing or defending against any loss, claim, damage, liability, action, litigation,
investigation or proceeding whatsoever (whether or not such Indemnified Party is a party
thereto) whether threatened or commenced and in connection with the enforcement of this
provision with respect to any of the above as such expenses are incurred; provided,
however, that the Company and the Guarantors will not be liable in any such case, to the
extent that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement in or omission or alleged omission from any of
such documents in reliance upon and in conformity with written information furnished to the
Company by any Purchaser through the Representatives specifically for use therein, it being
understood and agreed that the only such information consists of the information described
as such in subsection (b) below.

(b) Indemnification of Company. Each Purchaser will severally and not jointly
indemnify and hold harmless each of the Company, the Guarantors, each of their respective
directors and each of their respective officers and each person, if any, who controls the
Company or such Guarantor within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act (each, a “Purchaser Indemnified Party”), against any losses,
claims, damages or liabilities to which such Purchaser Indemnified Party may become
subject, under the Securities Act, the Exchange Act, other Federal or state statutory law
or regulation or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Preliminary Offering Memorandum or
the Final Offering Memorandum, in each case as amended or supplemented, or any Issuer Free

 

 

 

Writing
Communication or arise out of or are based upon the omission or the alleged omission of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not
misleading, in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the Company by such Purchaser through
the Representatives specifically for use therein, and will reimburse any legal or other
expenses reasonably incurred by such Purchaser Indemnified Party in connection with
investigating, preparing or defending against any such loss, claim, damage, liability,
action, litigation, investigation or proceeding whatsoever (whether or not such Purchaser
Indemnified Party is a party thereto) whether threatened or commenced based upon any such
untrue statement or omission, or any such alleged untrue statement or omission as such
expenses are incurred, it being understood and agreed that the only such information
furnished by any Purchaser consists of the following information in the Preliminary and
Final Offering Memorandum: the information under the sub-headings “Commissions and
Discounts” and “Short Positions” under the caption “Plan of Distribution;” provided,
however, that the Purchasers shall not be liable for any losses, claims, damages or
liabilities arising out of or based upon the Company’s failure to perform its obligations
under Section 5(a) of this Agreement.

(c) Actions against Parties; Notification. Promptly after receipt by an indemnified
party under this Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying party
under subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the failure to notify the indemnifying party shall not relieve it from any
liability that it may have under subsection (a) or (b) above except to the extent that it
has been materially prejudiced (through the forfeiture of substantive rights or defenses)
by such failure; and provided further that the failure to notify the indemnifying party
shall not relieve it from any liability that it may have to an indemnified party otherwise
than under subsection (a) or (b) above. In case any such action is brought against any
indemnified party and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not, except with
the consent of the indemnified party, be counsel to the indemnifying party), and after
notice from the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such indemnified party
under this Section 8 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened action in respect of
which any indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes (i) an
unconditional release of such indemnified party from all liability on any claims that are
the subject matter of such action and (ii) does not include a statement as to or an
admission of fault, culpability or failure to act by or on behalf of any indemnified party.

(d) Contribution. If the indemnification provided for in this Section 8 is
unavailable or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of the losses, claims, damages or liabilities referred
to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Purchasers on the other
from the offering of the Offered Securities or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company and the Guarantors on the one hand and the Purchasers on the
other 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
benefits received by the Company and the Guarantors on the one hand and the Purchasers on

 

 

 

the other shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting
 expenses) received by the Company bear to the total discounts and commissions received by
the Purchasers from the Company under this Agreement. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company and the Guarantors or the Purchasers and the
parties’ relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the first sentence of
this subsection (d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending any action
or claim which is the subject of this subsection (d). Notwithstanding the provisions of
this subsection (d), no Purchaser shall be required to contribute any amount in excess of
the amount by which the total price at which the Offered Securities purchased by it were
resold exceeds the amount of any damages which such Purchaser has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. The Purchasers’ obligations in this subsection (d) to contribute are several in
proportion to their respective purchase obligations and not joint. The Company, the
Guarantors and the Purchasers agree that it would not be just and equitable if contribution
pursuant to this Section 8(d) were determined by pro rata allocation (even if the
Purchasers 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 this
Section 8(d).

9. Default of Purchasers. If any Purchaser or Purchasers default in their obligations to
purchase Offered Securities hereunder and the aggregate principal amount of Offered Securities that
such defaulting Purchaser or Purchasers agreed but failed to purchase does not exceed 10% of the
total principal amount of Offered Securities, Merrill Lynch may make arrangements satisfactory to
the Company for the purchase of such Offered Securities by other persons, including any of the
Purchasers, but if no such arrangements are made by the Closing Date, the non-defaulting Purchasers
shall be obligated severally, in proportion to their respective commitments hereunder, to purchase
the Offered Securities that such defaulting Purchasers agreed but failed to purchase. If any
Purchaser or Purchasers so default and the aggregate principal amount of Offered Securities with
respect to which such default or defaults occur exceeds 10% of the total principal amount of
Offered Securities and arrangements satisfactory to Merrill Lynch and the Company for the purchase
of such Offered Securities by other persons are not made within 36 hours after such default, this
Agreement will terminate without liability on the part of any non-defaulting Purchaser or the
Company, except as provided in Section 10. As used in this Agreement, the term “Purchaser” includes
any person substituted for a Purchaser under this Section 9. Nothing herein will relieve a
defaulting Purchaser from liability for its default.

10. Survival of Certain Representations and Obligations. The respective indemnities,
agreements, representations, warranties and other statements of the Company, the Guarantors or
their respective officers and of the several Purchasers set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation, or statement as to
the results thereof, made by or on behalf of any Purchaser, the Company, the Guarantors or any of
their respective representatives, officers or directors or any controlling person, and will survive
delivery of and payment for the Offered Securities. If this Agreement is terminated pursuant to
Section 9 or if for any reason the purchase of the Offered Securities by the Purchasers is not
consummated, the Company and the Guarantors shall remain responsible for the expenses to be paid or
reimbursed by it pursuant to Section 5 and the respective obligations of the Company, the
Guarantors and the Purchasers pursuant to Section 8 shall remain in effect. If the purchase of the
Offered Securities by the Purchasers is not consummated for any reason other than solely because of
the termination of this Agreement pursuant to Section 9 or the occurrence of any event specified in
clause (iii), (iv), (vi), (vii) or (viii) of Section 7(b), the Company and the Guarantors will
reimburse the Purchasers for all out-of-pocket expenses (including fees and disbursements of
counsel) reasonably incurred by them in connection with the offering of the Offered Securities.

 

 

 

11. Notices. All communications hereunder will be in writing and, if sent to the Purchasers
will be mailed, delivered or telegraphed and confirmed to the Purchasers c/o Merrill Lynch, Pierce,
Fenner & Smith Incorporated, One Bryant Park, New York, New York 10036, Facsimile: (212) 901-7897,
Attention:
Legal Department; or, if sent to the Company or the Guarantors, will be mailed, delivered or
telegraphed and confirmed to it at Brigham Exploration Company, 6300 Bridge Point Parkway, Building
2, Suite 500, Austin, Texas 78730, Attention: Kari Potts, General Counsel; provided, however, that
any notice to a Purchaser pursuant to Section 8 will be mailed, delivered or telegraphed and
confirmed to such Purchaser.

12. Successors. This Agreement will inure to the benefit of and be binding upon the parties
hereto and their respective successors and the controlling persons referred to in Section 8, and no
other person will have any right or obligation hereunder, except that holders of Offered Securities
shall be entitled to enforce the agreements for their benefit contained in the second and third
sentences of Section 5(b) hereof against the Company as if such holders were parties thereto.

13. Representation of Purchasers. You will act for the several Purchasers in connection with
this purchase, and any action under this Agreement taken by you jointly or by Merrill Lynch will be
binding upon all the Purchasers.

14. Counterparts. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all such counterparts shall together constitute one
and the same Agreement.

15. Absence of Fiduciary Relationship. The Company and the Guarantors acknowledge and agree
that:

(a) No Other Relationship. The Representatives have been retained solely to act as
initial purchasers in connection with the initial purchase, offering and resale of the
Offered Securities and that no fiduciary, advisory or agency relationship between the
Company or the Guarantors and the Representatives has been created in respect of any of the
transactions contemplated by this Agreement or the Preliminary or Final Offering
Memorandum, irrespective of whether the Representatives have advised or is advising the
Company or the Guarantors on other matters;

(b) Arm’s-Length Negotiations. The purchase price of the Offered Securities set
forth in this Agreement was established by the Company and the Guarantors following
discussions and arms-length negotiations with the Representatives and the Company and the
Guarantors are capable of evaluating and understanding and understand and accept the terms,
risks and conditions of the transactions contemplated by this Agreement;

(c) Absence of Obligation to Disclose. The Company has and the Guarantors have been
advised that the Representatives and their affiliates are engaged in a broad range of
transactions which may involve interests that differ from those of the Company or the
Guarantors and that the Representatives have no obligation to disclose such interests and
transactions to Company or the Guarantors by virtue of any fiduciary, advisory or agency
relationship; and

(d) Waiver. The Company and the Guarantors waive, to the fullest extent permitted by
law, any claims it may have against the Representatives for breach of fiduciary duty or
alleged breach of fiduciary duty and agree that the Representatives shall have no liability
(whether direct or indirect) to the Company or the Guarantors in respect of such a
fiduciary duty claim or to any person asserting a fiduciary duty claim on behalf of or in
right of the Company, including stockholders, employees or creditors of the Company or the
Guarantors.

 

 

 

16. Applicable Law. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York.

The Company and the Guarantors hereby submit to the non-exclusive jurisdiction of the Federal
and state courts in the Borough of Manhattan in The City of New York in any suit or proceeding
arising out of or relating to this Agreement or the transactions contemplated hereby. The Company
and the Guarantors irrevocably and unconditionally waive any objection to the laying of venue of
any suit or proceeding
arising out of or relating to this Agreement or the transactions contemplated hereby in Federal and
state courts in the Borough of Manhattan in The City of New York and irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any such suit or
proceeding in any such court has been brought in an inconvenient forum.

[Remainder of Page Left Intentionally Blank — Signature Pages Follow]

 

 

 

Exhibit 10.34

If the foregoing is in accordance with the Purchasers’ understanding of our agreement, kindly
sign and return to us one of the counterparts hereof, whereupon it will become a binding agreement
between the Company, the Guarantors and the several Purchasers in accordance with its terms.

	 	 	 	 	 
	 	Very truly yours,

Brigham Exploration Company

 	 
	 	By:  	/s/ Eugene B. Shepherd, Jr.
 	 
	 	 	Name:  	Eugene B. Shepherd, Jr. 	 
	 	 	Title:  	Chief Financial Officer and

 Executive Vice President 	 

	 	 	 	 	 
	 	Brigham, Inc.

 	 
	 	By:  	/s/ Eugene B. Shepherd, Jr.
 	 
	 	 	Name:  	Eugene B. Shepherd, Jr. 	 
	 	 	Title:  	Chief Financial Officer and

 Executive Vice President 	 

	 	 	 	 	 
	 	Brigham Oil & Gas, L.P.
 	 
	 	By:  	                                   Brigham, Inc., its general partner
 	 
	 
	 	By:  	                                   /s/ Eugene B. Shepherd, Jr.
 	 
	 	 	Name:  	Eugene B. Shepherd, Jr. 	 
	 	 	Title:  	Chief Financial Officer and 
Executive Vice President 	 

Signature Page to Purchase Agreement

Brigham Exploration Company Senior Notes due 2019

 

 

 

The foregoing Purchase Agreement is hereby confirmed

and accepted as of the date first above written.

Acting on behalf of themselves and as the Representatives

of the several Purchasers.

	 	 	 	 	 
	By

	 	Merrill Lynch, Pierce, Fenner & Smith	 	 
	 

	 	 Incorporated	 	 
	 
	 	 	 	 
	By:

	 	/s/ J. Lex Maultsby	 	 
	 

	 	 

Name: J. Lex Maultsby
	 	 
	 

	 	Title: Managing Director	 	 
	 
	 	 	 	 
	By

	 	Credit Suisse Securities (USA) LLC	 	 
	 
	 	 	 	 
	By:

	 	/s/ Robert Hendricks	 	 
	 

	 	 

Name: Robert Hendricks
	 	 
	 

	 	Title: Director	 	 

Signature Page to Purchase Agreement

Brigham Exploration Company Senior Notes due 2019

 

 

 

Exhibit 10.34

SCHEDULE A

	 	 	 	 	 
	 	 	Principal Amount 

of	 
	Initial Purchasers	 	Offered Securities	 
	Merrill Lynch, Pierce, Fenner & Smith
Incorporated
	 	$	90,000,000	 
	Credit Suisse Securities (USA) LLC
	 	 	90,000,000	 
	RBC Capital Markets, LLC
	 	 	24,000,000	 
	BNP Paribas Securities Corp.
	 	 	15,750,000	 
	Capital One Southcoast, Inc.
	 	 	15,750,000	 
	Natixis Securities North America Inc.
	 	 	15,750,000	 
	RBS Securities Inc.
	 	 	15,750,000	 
	Banco Bilbao Vizcaya Agentaria, S.A.
	 	 	6,600,000	 
	Comerica Securities, Inc.
	 	 	6,600,000	 
	Lloyds Securities Inc.
	 	 	6,600,000	 
	Mitsubishi UFJ Securities (USA), Inc.
	 	 	6,600,000	 
	U.S. Bancorp Investments, Inc.
	 	 	6,600,000	 
	 
	 	 	 
	Total
	 	$	300,000,000	 
	 
	 	 	 

 

Schedule A-1

 

SCHEDULE B

 Issuer Free Writing Communications (included in the General Disclosure Package)

	1.	 	Final term sheet, dated May 16, 2011, a copy of which is attached hereto as Exhibit 1.

 

 

 

Exhibit 1

Pricing Supplement dated May 16, 2011 to the Preliminary Offering Memorandum dated May 16, 2011 of
Brigham Exploration Company. This Pricing Supplement is qualified in its entirety by reference to
the Preliminary Offering Memorandum. The information in this Pricing Supplement supplements the
Preliminary Offering Memorandum and supersedes the information in the Preliminary Offering
Memorandum to the extent it is inconsistent with the information in the Preliminary Offering
Memorandum. Capitalized terms used in this Pricing Supplement but not defined have the meanings
given them in the Preliminary Offering Memorandum.

Pricing Term Sheet

	 	 	 
	Issuer:

	 	Brigham Exploration Company
	Guarantors:

	 	The notes will be guaranteed on a senior unsecured
basis by the Issuer’s existing and future
subsidiaries, subject to certain exceptions.
	Security Description:

	 	6 7/8% Senior Notes due 2019
	Face:

	 	$300,000,000
	Maturity:

	 	June 1, 2019
	Coupon:

	 	6.875%
	Offering Price:

	 	100.000%
	Yield to Maturity:

	 	6.875%
	Interest Payment Dates:

	 	June 1 and December 1 of each year
	First Payment Date:

	 	December 1, 2011
	Record Dates:

	 	May 15 and November 15
	Gross Proceeds:

	 	$300,000,000
	Equity Clawback

	 	Up to 35% at 106.875% prior to June 1, 2014
	Optional Redemption:

	 	On or after June 1, 2015, at the following
redemption prices (expressed as a percentage of
principal amount), plus accrued and unpaid
interest, if any, on the Notes redeemed during the
twelve-month period indicated beginning on June 1
of the years indicated below:

	 	 	 	 	 
	Year	 	Price	 
	2015
	 	 	103.438	%
	2016
	 	 	101.719	%
	2017 and thereafter
	 	 	100.000	%

 

 

 

	 	 	 
	 

	 	If certain transactions that would constitute a
Change of Control occur prior to June 1, 2012, we
may redeem all, but not less than all, of the notes
at a redemption price equal to 110% of principal
amount plus accrued and unpaid interest.
	 
	 	 
	Make-Whole:

	 	Make-whole redemption at Treasury Rate + 50 bps
prior to June 1, 2015
	Change of Control:

	 	Put at 101% of principal plus accrued interest
	Trade Date:

	 	May 16, 2011
	Settlement Date:

	 	May 19, 2011
	CUSIP / ISIN:

	 	Rule 144A: 109178 AF0 / US109178AF08

Regulation S: U6224K AD1 / USU6224KAD10
	 
	 	 
	Increments:

	 	Minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof
	 
	 	 
	Joint Book-Running Managers:

	 	Merrill Lynch, Pierce, Fenner & Smith  Incorporated
Credit Suisse Securities (USA) LLC
	 
	 	 
	Co-Managers:

	 	RBC Capital Markets, LLC

BNP Paribas Securities Corp.

Capital One Southcoast, Inc.

Natixis Securities North America Inc.

RBS Securities Inc.

Banco Bilbao Vizcaya Agentaria, S.A.

Comerica Securities, Inc.

Lloyds Securities Inc.

Mitsubishi UFJ Securities (USA), Inc.

U.S. Bancorp Investments, Inc.
	 
	 	 
	Use of Proceeds:

	 	The Issuer estimates that the net proceeds from
this offering will be approximately $293.9 million
after deducting the initial purchasers’ discounts
and commissions and estimated offering expenses.
The Issuer intends to use the net proceeds from
this offering to fund portions of its 2011 and 2012
capital budgets and for general corporate purposes.
Pending these uses, the Issuer intends to pay down
outstanding borrowings under its senior credit
facility. Certain of the initial purchasers or
their affiliates are lenders under the senior
credit facility and accordingly may receive a
portion of the proceeds to the extent used to pay
down outstanding borrowings.

This material is strictly confidential and has been prepared by the Issuer solely for use in
connection with the proposed offering of the securities described in the Preliminary Offering
Memorandum. This material is personal to each offeree and does not constitute an offer to any other
person or the public generally to subscribe for or otherwise acquire the securities. Please refer
to the Preliminary Offering Memorandum for a complete description.

The securities have not been registered under the Securities Act of 1933, as amended (the
“Securities Act”), and are being offered only to (1) “qualified institutional buyers” as defined in
Rule 144A under the Securities Act and (2) outside the United States to non-U.S. persons in
compliance with Regulation S under the Securities Act, and this communication is only being
distributed to such persons.

This communication is not an offer to sell the securities and it is not a solicitation of an offer
to buy the securities in any jurisdiction to any person to whom it is unlawful to make such offer
or soliciation in such jurisdiction.

Any disclaimer or other notice that may appear below is not applicable to this communication and
should be disregarded. Such disclaimer or notice was automatically generated as a result of this
communication being sent by Bloomberg or another email system.

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