Why is WP automatically adding spaces to my code in HTML editor?

I have installed the Exec PHP plugin, which allows me to execute PHP script on specific pages or posts on my wordpress site.

However, it doesn’t work because when I type in a script like this:

<?php if (!is_paged()) { ?>
<img src=”http://theinternetmarketingtools.com/wordpress/wp-content/uploads/Internet-Marketing-Tools-Start.jpg”/&gt;
<?php } ?>

It automatically adds spaces and chances <?php blah balh balh into…
< ?php

How can I stop WordPress from auto adding these spaces, which obviously makes my PHP script not work?

I even deactivated all other plugins to see if there was a conflict, but WP still adds the spaces.