Document:

exv10w2

 

EXHIBIT 10.2

STEELCASE INC. INCENTIVE COMPENSATION PLAN

ARTICLE 1. Establishment, Objectives, and
Duration

     
1.1 Establishment of the Plan. Steelcase Inc., a
Michigan corporation (hereinafter referred to as the
“Company”), hereby establishes an incentive
compensation plan to be known as the “Steelcase Inc.
Incentive Compensation Plan” (hereinafter referred to as
the “Plan”), as set forth in this document. The Plan
permits the grant of Nonqualified Stock Options, Incentive Stock
Options, Stock Appreciation Rights, Restricted Stock,
Performance Shares, Performance Units, Cash-Based Awards,
Phantom Shares and Share-Based Awards. Notwithstanding any
provision in the Plan, to the extent that any Award would be
subject to Section 409A of the Code, no such Award may be
granted if it would fail to comply with the requirements set
forth in Section 409A of the Code and any regulations or
guidance promulgated thereunder.

     
The Plan as hereby amended and restated is effective as of
February 24, 2007 (the “Effective Date”);
provided, however, that the Plan as amended and
restated and any Award which is designed to qualify for the
Performance-Based Exception with respect to any Performance
Period ending after the annual meeting for the stockholders of
the Company held in 2007 (the “2007 Meeting”) shall be
subject to the approval by stockholders of the Plan at such 2007
Meeting.

     
1.2 Objectives of the Plan. The objectives of the
Plan are to optimize the profitability and growth of the Company
through annual and long-term incentives which are consistent
with the Company’s goals and which link the personal
interests of Participants to those of the Company’s
stockholders; to provide Participants with an incentive for
excellence in individual performance; and to promote teamwork
among Participants. The Plan is further intended to provide
flexibility to the Company in its ability to motivate, attract,
and retain the services of Participants who make significant
contributions to the Company’s success and to allow
Participants to share in the success of the Company.

     
1.3 Duration of the Plan. The Plan shall commence on
the Effective Date, as described in Section 1.1 hereof, and
shall remain in effect, subject to the right of the Board of
Directors to amend or terminate the Plan at any time pursuant to
Article 18 hereof, until all Shares subject to it shall
have been purchased or acquired according to the Plan’s
provisions under Awards denominated in Shares, and with respect
to all Awards, in no event may an Award be granted under the
Plan on or after the tenth anniversary of the Effective Date.

ARTICLE 2. Definitions

     
Whenever used in the Plan, the following terms shall have the
meanings set forth below, and when the meaning is intended, the
initial letter of the word shall be capitalized:

     
2.1 “Affiliate” shall have the meaning
ascribed to such term in
Rule 12b-2 of the
General Rules and Regulations of the Exchange Act.

     
2.2 “Award” means, individually or
collectively, a grant under this Plan of Nonqualified Stock
Options, Incentive Stock Options, Stock Appreciation Rights,
Restricted Stock, Performance Shares, Performance Units,
Cash-Based Awards, Phantom Shares or Share-Based Awards.

     
2.3 “Award Agreement” means an agreement
entered into by the Company and each Participant setting forth
the terms and provisions applicable to Awards granted under this
Plan.

     
2.4 “Beneficial Owner” or
“Beneficial Ownership” shall have the meaning
ascribed to such term in
Rule 13d-3 of the
General Rules and Regulations under the Exchange Act.

     
2.5 “Board” or “Board of
Directors” means the Board of Directors of the Company.

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2.6 “Cash-Based Award” means an Award
granted to a Participant, as described in Article 9 herein.

     
2.7 “Change in Control” of the Company
shall be deemed to have occurred if the event set forth in any
one of the following paragraphs shall have occurred:

			
	 	(a)  	
    any Person (other than any Initial Holder or Permitted
    Transferee) (i) is or becomes the Beneficial Owner,
    directly or indirectly, of securities of the Company
    representing thirty percent (30%) or more of the combined voting
    power of the Company’s then outstanding securities,
    excluding any Person who becomes such a Beneficial Owner in
    connection with a transaction described in clause (i) of
    paragraph (c) below, and (ii) the combined voting
    power of the securities of the Company that are Beneficially
    Owned by such Person exceeds the combined voting power of the
    securities of the Company that are Beneficially Owned by all
    Initial Holders and Permitted Transferees at the time of such
    acquisition by such Person or at any time thereafter; or

			
	 	(b)  	
    the following individuals cease for any reason to constitute a
    majority of the number of Directors then serving: individuals
    who, on the date hereof, constitute the Board and any new
    Director (other than a Director whose initial assumption of
    office is in connection with an actual or threatened election
    contest, including but not limited to a consent solicitation,
    relating to the election of Directors of the Company) whose
    appointment or election by the Board or nomination for election
    by the Company’s shareholders was approved or recommended
    by a vote of at least two-thirds (2/3) of the Directors then
    still in office who either were Directors on the date hereof or
    whose appointment, election or nomination for election was
    previously so approved or recommended; or

			
	 	(c)  	
    there is consummated a merger or consolidation of the Company or
    any direct or indirect subsidiary of the Company with or
    involving any other corporation, other than (i) a merger or
    consolidation which would result in the voting securities of the
    Company outstanding immediately prior thereto continuing to
    represent (either by remaining outstanding or by being converted
    into voting securities of the surviving entity or any parent
    thereto), at least fifty-five percent (55%) of the combined
    voting power of the securities of the Company or such surviving
    entity or any parent thereof outstanding immediately after such
    merger or consolidation, or (ii) a merger or consolidation
    effected to implement a recapitalization of the Company (or
    similar transaction) in which no Person (other than an Initial
    Holder or Permitted Transferee) is or becomes the Beneficial
    Owner, directly or indirectly, of securities of the Company (not
    including in the securities Beneficially Owned by such Person
    any securities acquired directly from the Company or its
    Affiliates) representing thirty percent (30%) or more of the
    combined voting power of the Company’s then outstanding
    securities; or

			
	 	(d)  	
    the shareholders of the Company approve a plan of complete
    liquidation or dissolution of the Company or there is
    consummated an agreement for the sale or disposition by the
    Company of all or substantially all of the Company’s
    assets, other than a sale or disposition by the Company of all
    or substantially all of the Company’s assets to an entity,
    at least fifty-five percent (55%) of the combined voting power
    of the voting securities of which are owned by shareholders of
    the Company in substantially the same proportions as their
    ownership of the Company immediately prior to such sale.

     
However, in no event shall a Change in Control be deemed to have
occurred, with respect to a Participant, if the Participant is
part of a purchasing group which consummates the Change in
Control transaction. A Participant shall be deemed “part of
a purchasing group” for purposes of the preceding sentence
if the Participant is an equity participant in the purchasing
company or group (except for: (i) passive ownership of less
than three percent (3%) of the stock of the purchasing company;
or (ii) ownership of equity participant in the purchasing
company or group which is

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otherwise not significant, as determined prior to the Change in
Control by a majority of the non-employee continuing Directors).

     
Notwithstanding the foregoing, a Change in Control shall not be
deemed to have occurred by virtue of the consummation of any
transaction or series of integrated transactions immediately
following which the record holders of the common stock of the
Company immediately prior to such transaction or series of
transactions continue to have substantially the same
proportionate ownership, directly or indirectly, in an entity
which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions.

     
2.8 “Code” means the Internal Revenue Code
of 1986, as amended from time to time.

     
2.9 “Committee” means the Compensation
Committee of the Board and shall be comprised entirely of
Directors who are considered “outside directors” under
Section 162(m) of the Code.

     
2.10 “Company” means Steelcase Inc., a
Michigan corporation, including any and all Subsidiaries and
Affiliates, and any successor thereto as provided in
Article 22 herein.

     
2.11 “Competition” means directly or
indirectly engaging in competition with the Company or any
subdivision, subsidiary, or affiliate of the Company
(collectively, the “Company Group”) at any time during
employment with the Company Group or during the three
(3) year period following termination of employment with
the Company Group, without prior approval of the administrative
Committee. A Plan Participant engages in competition if that
person participates directly or indirectly in the manufacture,
design or distribution of any products of the same type as those
of the Company Group, including, but not limited to, office
furniture, office systems or architectural products, or the
providing of any related services, for or on behalf of any
person or entity other than the Company and its authorized
dealers, at any location within or without the United States of
America. It is intended that this definition shall be enforced
to the fullest extent permitted by law. If any part of this
definition shall be construed to be invalid or unenforceable, in
whole or in part, then such definition shall be construed in a
manner so as to permit its enforceability to the fullest extent
permitted by law.

     
2.12 “Covered Employee” shall have the
meaning set forth in Section 162(m)(3) of the Code.

     
2.13 “Director” means any individual who
is a member of the Board; provided, however, that
any Director who is employed by the Company or any Subsidiary or
Affiliate shall be considered an Employee under this Plan and,
except for purposes of the definition of “Change in
Control” under this Plan, shall not be considered a
Director.

     
2.14 “Effective Date” shall have the
meaning ascribed to such term in Section 1.1 hereof.

     
2.15 “Employee” means any employee of the
Company or its Subsidiaries or Affiliates. Except for purposes
of the definition of “Change in Control” under this
Plan, Directors who are employed by the Company shall be
considered Employees under this Plan.

     
2.16 “Exchange Act” means the Securities
Exchange Act of 1934, as amended from time to time, or any
successor act thereto.

     
2.17 “Fair Market Value” shall be the
closing sales price per Share for the date of grant on the
principal securities exchange on which the Shares are traded or,
if there is no such sale on the relevant date, then on the last
previous day on which a sale was reported; if the security is
not listed for trading on a national securities exchange, the
fair market value of a security as determined in good faith by
the Board.

     
2.18 “Freestanding SAR” means an SAR that
is granted independently of any Options, as described in
Article 7 herein.

     
2.19 “Incentive Stock Option” or
“ISO” means an option to purchase Shares
granted under Article 6 herein and which is designated as
an Incentive Stock Option and which is intended to meet the
requirements of Code Section 422.

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2.20 “Initial Holder” shall have the
meaning set forth in the Second Restated Articles of
Incorporation of the Company.

     
2.21 “Insider” shall mean an individual
who is, on the relevant date, an officer, director or more than
ten percent (10%) beneficial owner of any class of the
Company’s equity securities that is registered pursuant to
Section 12 of the Exchange Act, all as defined under
Section 16 of the Exchange Act.

     
2.22 “Nonqualified Stock Option” or
“NQSO” means an option to purchase Shares
granted under Article 6 herein and which is not intended to
meet the requirements of Code Section 422.

     
2.23 “Option” means an Incentive Stock
Option or a Nonqualified Stock Option, as described in
Article 6 herein.

     
2.24 “Option Price” means the price at
which a Share may be purchased by a Participant pursuant to an
Option.

     
2.25 “Participant” means an Employee,
Director, or other individual designated by the Board who has
been selected to receive an Award or who has an outstanding
Award granted under the Plan.

     
2.26 “Performance-Based Exception” means
the performance-based exception from the tax deductibility
limitations of Code Section 162(m).

     
2.27 “Performance Period” shall have the
meaning set forth in Article 8 herein.

     
2.28 “Performance Share” means an Award
granted to a Participant, as described in Article 9 herein.

     
2.29 “Performance Unit” means an Award
granted to a Participant, as described in Article 9 herein.

     
2.30 “Period of Restriction” means the
period during which the transfer of Shares of Restricted Stock
is limited in some way (based on the passage of time, the
achievement of performance goals, or upon the occurrence of
other events as determined by the Board, at its discretion), and
the Shares are subject to a substantial risk of forfeiture, as
provided in Article 8 herein.

     
2.31 “Permitted Transferee” shall have the
meaning set forth in the Second Restated Articles of
Incorporation of the Company and include a Permitted Trustee
solely in its capacity as a trustee of a Permitted Trust.

     
2.32 “Permitted Trust” shall have the
meaning set forth in the Second Restated Articles of
Incorporation of the Company.

     
2.33 “Permitted Trustee” shall have the
meaning set forth in the Second Restated Articles of
Incorporation of the Company.

     
2.34 “Person” shall have the meaning
ascribed to such term in Section 3(a)(9) of the Exchange
Act, as modified and used in Sections 13(d) and 14(d)
thereof, including a “group” as defined in
Section 13(d) thereof, except that such term shall not
include (i) the Company or any of its subsidiaries,
(ii) a trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any of its
Affiliates, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or
(iv) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.

     
2.35 “Phantom Shares” means an Award
granted to a Participant pursuant to Article 10 herein.

     
2.36 “Restricted Stock” means an Award
granted to a Participant pursuant to Article 8 herein.

     
2.37 “Share-Based Award” means an Award
granted to a Participant pursuant to Article 11 herein.

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2.38 “Shares” means the shares of
Class A Common Stock of the Company.

     
2.39 “Stock Appreciation Right” or
“SAR” means an Award, granted alone or in
connection with a related Option, designated as a SAR, pursuant
to the terms of Article 7 herein.

     
2.40 “Subsidiary” means any corporation,
partnership, joint venture, or other entity in which the Company
has a fifty percent (50%) or greater voting interest.

     
2.41 “Tandem SAR” means a SAR that is
granted in connection with a related Option pursuant to
Article 7 herein, the exercise of which shall require
forfeiture of the right to purchase a Share under the related
Option (and when a Share is purchased under the Option, the
Tandem SAR shall similarly be canceled).

ARTICLE 3. Administration

     
3.1 General. The Plan shall be administered by the
Board and the Board may delegate its responsibility to the
Committee. The members of the Committee shall be appointed from
time to time by, and shall serve at the discretion of, the Board
of Directors. The Board may delegate to the Committee any or all
of the administration of the Plan; provided,
however, that the administration of the Plan with respect
to Awards granted to Directors may not be so delegated. To the
extent that the Board has delegated to the Committee any
authority and responsibility under the Plan, all applicable
references to the Board in the Plan shall be to the Committee.
The Committee shall have the authority to delegate
administrative duties to Employees, officers or Directors of the
Company or any other committee approved by the Committee.

     
3.2 Authority of the Board. Except as limited by law
or by the Certificate of Incorporation or Bylaws of the Company,
and subject to the provisions herein, the Board shall have full
power to select Employees and Directors and other individuals
who shall participate in the Plan; determine the sizes and types
of Awards; determine the terms and conditions of Awards in a
manner consistent with the Plan; construe and interpret the Plan
and any agreement or instrument entered into under the Plan;
establish, amend, or waive rules and regulations for the
Plan’s administration; and (subject to the provisions of
Article 18 herein) amend the terms and conditions of any
outstanding Award as provided in the Plan. Further, the Board
shall make all other determinations which may be necessary or
advisable for the administration of the Plan. As permitted by
law (and subject to Section 3.1 herein), the Board may
delegate its authority as identified herein.

     
3.3 Decisions Binding. All determinations and
decisions made by the Board or the Committee pursuant to the
provisions of the Plan and all related orders and resolutions of
the Board or the Committee shall be final, conclusive and
binding on all persons, including the Company, its stockholders,
Directors, Employees, Participants, and their estates and
beneficiaries.

ARTICLE 4. Shares Subject to the Plan and Maximum
Awards

     
4.1 Number of Shares Available for Grants. Subject
to adjustment as provided in Article 17 herein, the number
of Shares hereby reserved for issuance to Participants under the
Plan shall be 21,000,000 Shares; no more than 3,000,000 of
which may be granted in the form of Restricted Shares. Shares
available under the Plan shall be now or hereafter issued or
authorized but unissued. In addition, subject to obtaining the
stockholder approval of the Plan at the 2007 Meeting, an
additional 4,000,000 Shares shall be reserved for issuance
under the Plan; no more than 3,000,000 of which may be granted
in the form of Restricted Shares. The Board shall determine the
appropriate methodology for calculating the number of shares
issued in pursuance of the Plan. Unless and until the Board
determines that an Award shall not qualify for the
Performance-Based Exception, the following rules shall apply to
grants of such Awards under the Plan:

			
	 	(a)  	
    Stock Options: The maximum aggregate number of Shares
    that may be granted in the form of Stock Options, pursuant to
    any Award granted in any one fiscal year to any one single
    Participant shall be five hundred thousand (500,000).

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	 	(b)  	
    SARs: The maximum aggregate number of Shares that may be
    granted in the form of Stock Appreciation Rights, pursuant to
    any Award granted in any one fiscal year to any one single
    Participant shall be five hundred thousand (500,000).

			
	 	(c)  	
    Restricted Stock: The maximum aggregate grant with
    respect to Awards of Restricted Stock granted in any one fiscal
    year to any one Participant shall be two hundred thousand
    (200,000).

			
	 	(d)  	
    Performance Shares/ Performance Units and Cash-Based
    Awards: The maximum aggregate payout (determined as of the
    end of the applicable Performance Period) with respect to
    Cash-Based Awards or Awards of Performance Shares or Performance
    Units granted in any one fiscal year to any one Participant
    shall be equal to the value of two hundred fifty thousand
    (250,000) Shares.
	 
	 	(e)  	
    Phantom Shares: The maximum aggregate payout (determine
    at the end of the applicable Performance Period) with respect to
    Phantom Shares granted in any one fiscal year to any one
    Participant shall be equal to the value of two hundred fifty
    thousand (250,000) Shares.

			
	 	(f)  	
    Other Share-Based Awards: The maximum aggregate number of
    Shares that may be granted in the form of other Share-Based
    Awards, pursuant to any Award granted in any one fiscal year to
    one single Participant shall be two hundred thousand (200,000).

ARTICLE 5. Eligibility and Participation

     
5.1 Eligibility. Persons eligible to participate in
this Plan include all Employees, Directors, and other
individuals designated by the Board.

     
5.2 Actual Participation. Subject to the provisions
of the Plan, the Board may, from time to time, select from all
eligible Employees, Directors, and other individuals designated
by the Board, those to whom Awards shall be granted and shall
determine the nature and amount of each Award.

ARTICLE 6. Stock Options

     
6.1 Grant of Options. Subject to the terms and
provisions of the Plan, Options may be granted to Participants
in such number, and upon such terms, and at any time and from
time to time as shall be determined by the Board;
provided, however, (a) that no Director shall
be granted any ISO and (b) that any Option designed to
qualify for the Performance-Based Exception shall be granted
only by the Committee.

     
6.2 Award Agreement. Each Option grant shall be
evidenced by an Award Agreement that shall specify the Option
Price, the duration of the Option, the number of Shares to which
the Option pertains, termination and transferability rights, and
such other provisions as the Board shall determine. The Award
Agreement also shall specify whether the Option is intended to
be an ISO within the meaning of Code Section 422, or an
NQSO whose grant is intended not to fall under the provisions of
Code Section 422.

     
6.3 Option Price. The Option Price for each grant of
an Option under this Plan shall be at least equal to one hundred
percent (100%) of the Fair Market Value of a Share on the date
the Option is granted.

     
6.4 Duration of Options. Each Option granted to a
Participant shall expire at such time as the Board shall
determine at the time of grant; provided, however,
that no Option shall be exercisable later than the tenth (10th)
anniversary date of its grant.

     
6.5 Exercise of Options. Options granted under this
Article 6 shall be exercisable at such times and be subject
to such restrictions and conditions as the Board shall in each
instance approve, which need not be the same for each grant or
for each Participant.

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6.6 Payment. Unless otherwise determined by the
Board, Options granted under this Article 6 shall be
exercised by the delivery of a written notice of exercise to the
Company, setting forth the number of Shares with respect to
which the Option is to be exercised, accompanied by full payment
for the Shares.

     
The Option Price upon exercise of any Option shall be payable to
the Company in full in one of the following manners: (a) in
cash or its equivalent, or (b) to the extent so provided by
the Board, by tendering previously acquired Shares having an
aggregate Fair Market Value at the time of exercise equal to the
total Option Price or by withholding from issuance upon exercise
the Shares with an aggregate Fair Market Value equal to the
total Option Price, or (c) by a combination of (a) and
(b).

     
The Board also may allow cashless exercise as permitted under
Federal Reserve Board’s Regulation T, subject to
applicable securities law restrictions, or by any other means
which the Board determines to be consistent with the Plan’s
purpose and applicable law.

     
Subject to any governing rules or regulations, as soon as
practicable after receipt of a written notification of exercise
and full payment, the Company shall deliver to the Participant,
in the Participant’s name, Share certificates in an
appropriate amount based upon the number of Shares purchased
under the Option(s) or other appropriate documentation of
acquisition of such Shares.

     
6.7 Restrictions on Share Transferability. The Board
may impose such restrictions on any Shares acquired pursuant to
the exercise of an Option granted under this Article 6 as
it may deem advisable, including, without limitation,
restrictions under applicable federal securities laws, under the
requirements of any stock exchange or market upon which such
Shares are then listed and/or traded, and under any blue sky or
state securities laws applicable to such Shares.

ARTICLE 7. Stock Appreciation Rights

     
7.1 Grant of SARs. Subject to the terms and
conditions of the Plan, SARs may be granted to Participants at
any time and from time to time as shall be determined by the
Board. The Board may grant Freestanding SARs, Tandem SARs, or
any combination of these forms of SAR.

     
The Board shall have complete discretion in determining the
number of SARs granted to each Participant (subject to
Article 4 herein) and, consistent with the provisions of
the Plan, in determining the terms and conditions pertaining to
such SARs.

     
The grant price of a Freestanding SAR shall be at least equal to
one hundred percent (100%) of the Fair Market Value of a Share
on the date of grant of the SAR. The grant price of Tandem SARs
shall equal the Option Price of the related Option.

     
7.2 Exercise of Tandem SARs. Tandem SARs may be
exercised for all or part of the Shares subject to the related
Option upon the surrender of the right to exercise the
equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related
Option is then exercisable.

     
Notwithstanding any other provision of this Plan to the
contrary, with respect to a Tandem SAR granted in connection
with an ISO: (a) the Tandem SAR will expire no later than
the expiration of the underlying ISO; (b) the value of the
payout with respect to the Tandem SAR may be for no more than
one hundred percent (100%) of the difference between the Option
Price of the underlying ISO and the Fair Market Value of the
Shares subject to the underlying ISO at the time the Tandem SAR
is exercised; and (c) the Tandem SAR may be exercised only
when the Fair Market Value of the Shares subject to the ISO
exceeds the Option Price of the ISO.

     
7.3 Exercise of Freestanding SARs. Freestanding SARs
may be exercised upon whatever terms and conditions the Board,
in its sole discretion, imposes upon them.

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7.4 SAR Agreement. Each SAR grant shall be evidenced
by an Award Agreement that shall specify the grant price, the
term of the SAR, and such other provisions as the Board shall
determine.

     
7.5 Term of SARs. The term of a SAR granted under
the Plan shall be determined by the Board, in its sole
discretion; provided, however, that such term
shall not exceed ten (10) years.

     
7.6 Payment of SAR Amount. Upon exercise of a SAR, a
Participant shall be entitled to receive payment from the
Company in an amount determined by multiplying:

			
	 	(a)  	
    the difference between the Fair Market Value of a Share on the
    date of exercise over the grant price; by

			
	 	(b)  	
    the number of Shares with respect to which the SAR is exercised.

     
At the discretion of the Board, the payment upon SAR exercise
may be in cash, in Shares of equivalent value, or in some
combination thereof. The Board’s determination regarding
the form of SAR payout shall be set forth in the Award Agreement
pertaining to the grant of the SAR.

ARTICLE 8. Restricted Stock

     
8.1 Grant of Restricted Stock. Subject to the terms
and provisions of the Plan, the Board, at any time and from time
to time, may grant Shares of Restricted Stock to Participants in
such amounts as the Board shall determine; provided,
however, that Shares of Restricted Stock designed to
qualify for the Performance-Based Exception shall be granted
only by the Committee.

     
8.2 Restricted Stock Agreement. Each Restricted
Stock grant shall be evidenced by a Restricted Stock Award
Agreement that shall specify the Period(s) of Restriction, the
number of Shares of Restricted Stock granted, and such other
provisions as the Board shall determine.

     
8.3 Other Restrictions. The Board shall impose such
other conditions and/or restrictions on any Shares of Restricted
Stock granted pursuant to the Plan as it may deem advisable
including, without limitation, a requirement that Participants
pay a stipulated purchase price for each Share of Restricted
Stock, restrictions based upon the achievement of specific
performance goals (Company-wide, divisional, and/or individual),
time-based restrictions on vesting following the attainment of
the performance goals, and/or restrictions under applicable
federal or state securities laws. The time period during which
the performance goals must be met shall be called a
“Performance Period.” The performance goals with
respect to Awards designed to qualify for the Performance-Based
Exception shall be established in writing by the Committee prior
to the earlier of (a) ninety (90) days after the
commencement of the Performance Period or (b) the date on
which 25% of the Performance Period will elapse,
provided, that in either case, achievement of the
performance goals is substantially uncertain on such date.

     
The Company may retain the certificates representing Shares of
Restricted Stock in the Company’s possession until such
time as all conditions and/or restrictions applicable to such
Shares have been satisfied; provided, however,
that Shares shall not be delivered with respect to Awards
designed to qualify for the Performance-Based Exception prior to
the Committee’s certification, in writing, that the
performance goals relating to such Awards have been satisfied.

     
Except as otherwise provided in this Article 8 or otherwise
determined by the Board, Shares of Restricted Stock covered by
each Restricted Stock grant made under the Plan shall become
freely transferable by the Participant after the last day of the
applicable Period of Restriction.

     
8.4 Voting Rights. Participants holding Shares of
Restricted Stock granted hereunder may be granted the right to
exercise full voting rights with respect to those Shares during
the Period of Restriction.

     
8.5 Dividends and Other Distributions. During the
Period of Restriction, Participants holding Shares of Restricted
Stock granted hereunder may be credited with regular cash
dividends paid with respect to the Shares while they are so
held. The Board may apply any restrictions to the dividends

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that the Board deems appropriate. Without limiting the
generality of the preceding sentence, if the grant or vesting of
Restricted Shares is intended to comply with the requirements of
the Performance-Based Exception, the Board may apply any
restrictions it deems appropriate to the payment of dividends
declared with respect to such Restricted Shares, including,
without limitation, that the dividends and/or the Restricted
Shares maintain eligibility for the Performance-Based Exception.

ARTICLE 9. Performance Units, Performance Shares,
and Cash-Based Awards

     
9.1 Grant of Performance Units/ Shares and Cash-Based
Awards. Subject to the terms of the Plan, Performance Units,
Performance Shares and/or Cash-Based Awards may be granted at
any time or from time to time, as shall be determined by the
Board; provided, however, that Performance Units,
Performance Shares and/or Cash-Based Awards designed to qualify
for the Performance-Based Exception shall be granted only by the
Committee.

     
9.2 Award Agreement. Each Performance Unit,
Performance Share and/or Cash-Based Awards grant shall be
evidenced by an Award Agreement that shall specify the
Performance Period(s) and such other provisions as the Board
shall determine.

     
9.3 Value of Performance Units/ Shares and Cash-Based
Awards. Each Performance Unit shall have an initial value
that is established by the Board at the time of grant. Each
Performance Share shall have an initial value equal to the Fair
Market Value of a Share on the date of grant. Each Cash-Based
Award shall have a value as may be determined by the Board. The
Board shall set performance goals in its discretion which,
depending on the extent to which they are met, will determine
the number and/or value of Performance Units/ Shares and
Cash-Based Award that will be paid out to the Participant. The
performance goals with respect to Awards designed to qualify for
the Performance-Based Exception shall be established in writing
by the Committee prior to the earlier of (a) ninety
(90) days after the commencement of the Performance Period
or (b) the date on which 25% of the Performance Period will
elapse, provided, that in either case, achievement of the
performance goals is substantially uncertain on such date.

     
9.4 Earning of Performance Units/ Shares and Cash-Based
Awards. Subject to the terms of this Plan, after the
applicable Performance Period has ended, the holder of
Performance Units/ Shares and Cash-Based Awards shall be
entitled to receive payment with respect to the number and value
of Performance Units/ Shares and of Cash-Based Awards earned by
the Participant over the Performance Period, to be determined as
a function of the extent to which the corresponding performance
goals have been achieved.

     
9.5 Form and Timing of Payment of Performance Units/
Shares and Cash-Based Awards. Payment of earned Performance
Units/ Shares and Cash-Based Awards shall be made in lump-sum
payments at such time or times designated by the Board following
the close of the applicable Performance Period. Subject to the
terms of this Plan, the Board, in its sole discretion, may pay
earned Performance Units/ Shares and Cash-Based Awards in the
form of cash or in Shares (or in a combination thereof) which
have an aggregate Fair Market Value equal to the value of the
earned Performance Units/ Shares and Cash-Based Awards at the
close of the applicable Performance Period plus or minus any
investment return from the close of the Performance Period to
the date of payment as determined by the Board in its
discretion; provided, however, that payment shall
not be made with respect to Awards designed to qualify for the
Performance-Based Exception prior to the Committee’s
certification, in writing, that the performance goals relating
to such Awards have been satisfied. Such Shares may be granted
subject to any restrictions deemed appropriate by the Board. The
determination of the Board with respect to the form and timing
of payout of such Awards shall be set forth in the Award
Agreement pertaining to the grant of the Award.

     
At the discretion of the Board and subject to the requirements
of Section 409A of the Code, Participants may be entitled
to receive any dividends declared with respect to Shares which
have been earned in connection with grants of Performance Units
and/or Performance Shares which have been earned, but not yet
distributed to Participants (such dividends shall be subject to
the same

9

 

accrual, forfeiture, and payout restrictions as those that apply
to dividends earned with respect to Shares of Restricted Stock,
as set forth in Section 8.5 herein). In addition,
Participants may, at the discretion of the Board, be entitled to
exercise their voting rights with respect to such Shares.

ARTICLE 10. Phantom Shares

     
10.1 Grant of Phantom Shares. Subject to the terms
of the Plan, Phantom Shares may be granted to Participants in
such amounts and upon such terms, and at any time and from time
to time, as shall be determined by the Board; provided,
however, that Phantom Shares designed to qualify for the
Performance-Based Exception shall be granted only by the
Committee.

     
10.2 Award Agreement. Each Phantom Share grant shall
be evidenced by an Award Agreement that shall specify the terms
and conditions of such Award and such other provisions as the
Board shall determine

     
10.3 Value of Phantom Shares. Each Phantom Share
shall have an initial value equal to the Fair Market Value of a
Share on the date of grant. The Board shall establish the terms
and conditions of such Award, including any vesting provisions
and performance goals. The performance goals with respect to
Awards designed to qualify for the Performance-Based Exception
shall be established in writing by the Committee prior to the
earlier of (a) ninety (90) days after the commencement
of the Performance Period or (b) the date on which 25% of
the Performance Period will elapse, provided, that in
either case, achievement of the performance goals is
substantially uncertain on such date.

     
10.4 Earning of Phantom Shares. Subject to the terms
of this Plan, the holder of any vested Phantom Shares shall be
entitled to receive payout on the number and value of Phantom
Shares earned by the Participant over the Performance Period, to
be determined by the extent to which the corresponding
performance goals have been achieved.

     
10.5 Form and Timing of Payment of Phantom Shares.
Payment of earned Phantom Shares shall be made in a single lump
sum at such time as designated by the Board. Subject to the
terms of this Plan, the Board, in its sole discretion, may pay
earned Phantom Shares in the form of cash or in Shares (or in a
combination thereof) which have an aggregate Fair Market Value
equal to the value of the earned Phantom Shares at such time as
designated by the Board; provided, however, that
payment shall not be made with respect to Awards designed to
qualify for the Performance-Based Exception prior to the
Committee’s certification, in writing, that the performance
goals relating to such Awards have been satisfied. Such Shares
may be granted subject to any restrictions deemed appropriate by
the Board. The determination of the Board with respect to the
form of payout of such Awards shall be set forth in the Award
Agreement pertaining to the grant of the Award.

     
At the discretion of the Board and subject to the requirements
of Section 409A of the Code, Participants may be entitled
to receive any dividends declared with respect to Shares which
have been earned in connection with grants of Phantom Shares
which have been earned, but not yet distributed to Participants
(such dividends shall be subject to the same accrual,
forfeiture, and payout restrictions as those that apply to
dividends earned with respect to Shares of Restricted Stock, as
set forth in Section 8.5 herein).

ARTICLE 11. Other Share-Based Awards

     
Subject to the terms of the Plan, the Board may grant other
Share-Based Awards under this Plan, including without
limitation, those Awards pursuant to which Shares are acquired
or may in the future be acquired and including Awards of
dividend equivalents. The Board, in its sole discretion, shall
determine the terms and conditions of such other Share-Based
Awards.

ARTICLE 12. Performance Measures

     
Unless and until the Board proposes for shareholder vote and
shareholders approve a change in the general performance
measures set forth in this Article 12, the attainment of
which may determine

10

 

the degree of payout and/or vesting with respect to Awards which
are designed to qualify for the Performance-Based Exception, the
performance measure(s) to be used for purposes of such grants
shall be based on one or more of the following criteria:

			
	 	(a)	
    earnings per share;
	 
	 	(b)	
    net income (before or after taxes);
	 
	 	(c)	
    return measures (including, but not limited to, return on
    assets, equity, or sales);
	 
	 	(d)	
    cash flow (including, but not limited to, operating cash flow,
    free cash flow, cash flow return on investment (discounted or
    otherwise), or cumulative cash flow per share;
	 
	 	(e)	
    earnings before or after taxes;
	 
	 	(f)	
    gross revenues;
	 
	 	(g)	
    operating profit;
	 
	 	(h)	
    operating expenses;
	 
	 	(i)	
    share price (including, but not limited to, growth measures and
    total shareholder return);
	 
	 	(j)	
    economic value added
	 
	 	(k)	
    implementation or completion of critical projects or processes;
	 
	 	(l)	
    strategic business criteria, consisting of one or more
    objectives based on meeting specified market share, market
    penetration, geographic business expansion, customer
    satisfaction, employee satisfaction, human resources management,
    supervision of litigation, information technology, and goals
    relating to acquisitions, divestitures, joint ventures and
    similar transactions, and budget comparisons;
	 
	 	(m)	
    personal professional objectives, including any of the foregoing
    performance goals, the implementation of policies and plans, the
    negotiation of transactions, the development of long-term
    business goals, formation of joint ventures, research or
    development collaborations, and the completion of other
    corporate transactions; and
	 
	 	(n)	
    any combination of, or a specified increase in, any of the
    foregoing.

     
Where applicable, the performance goals may be expressed in
terms of attaining a specified level of the particular criteria
or the attainment of a percentage increase or decrease in the
particular criteria, and may be applied to one or more of the
Company, a Subsidiary or Affiliate, or a division or strategic
business unit of the Company, or may be applied to the
performance of the Company relative to a market index, a group
of other companies or a combination thereof, all as determined
by the Committee.

     
The Board (or the Committee with respect to Awards designed to
qualify for the Performance-Based Exception) shall have the
discretion to adjust the determinations of the degree of
attainment of the preestablished performance goals;
provided, however, that Awards which are designed
to qualify for the Performance-Based Exception, may not be
adjusted upward (the Committee shall retain the discretion to
adjust such Awards downward). Nevertheless, the Board (or the
Committee with respect to Awards designed to qualify for the
Performance-Based Exception) shall have the authority to make
appropriate adjustments in the performance goals under an Award
to reflect the impact of the following extraordinary items not
reflected in such goals: (1) any profit or loss
attributable to acquisitions or dispositions of stock or assets,
(2) any changes in accounting standards that may be
required or permitted by the Financial Accounting Standards
Board or adopted by the Company after the goal is established,
(3) all items of gain, loss or expense for the year related
to restructuring charges for the Company, (4) all items of
gain, loss or expense for the year determined to be
extraordinary or unusual in nature of infrequent in occurrence
or related to the disposal of a segment of a business,
(5) all items of gain, loss or expense for the year related
to discontinued operations

11

 

that do not qualify as a segment of a business as defined in APB
Opinion No. 30, and (6) such other items as may be
prescribed by Section 162(m) of the Code and the Treasury
regulations thereunder as may be in effect from time to time,
and any amendments, revisions or successor provisions and any
changes thereto. The Board (or the Committee with respect to
Awards designed to qualify for the Performance-Based Exception)
shall have full authority and discretion to, from time to time,
as the Board deems necessary or appropriate, modify the
accounting principles and components applied in the
determination of the degree of attainment of the preestablished
performance goals with respect to all Awards.

     
In the event that applicable tax and/or securities laws change
to permit Board discretion to alter the governing performance
measures without obtaining shareholder approval of such changes,
the Board shall have sole discretion to make such changes
without obtaining shareholder approval. In addition, in the
event that the Board determines that it is advisable to grant
Awards which shall not qualify for the Performance-Based
Exception, the Board may make such grants without satisfying the
requirements of Code Section 162(m).

ARTICLE 13. Beneficiary Designation

     
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the Plan is to be paid
in case of his or her death before he or she receives any or all
of such benefit. Each such designation shall revoke all prior
designations by the same Participant, shall be in a form
prescribed by the Company, and will be effective only when filed
by the Participant in writing with the Company during the
Participant’s lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant’s
death shall be paid to the Participant’s estate.

ARTICLE 14. Deferrals

     
The Board may permit or require a Participant to defer such
Participant’s receipt of the payment of cash or the
delivery of Shares that would otherwise be due to such
Participant by virtue of the exercise of an Option or SAR, the
lapse or waiver of restrictions with respect to Restricted
Stock, or the satisfaction of any requirements or goals with
respect to Performance Units/ Shares. If any such deferral
election is required or permitted, the Board shall, in its sole
discretion, establish rules and procedures for such payment
deferrals and such deferrals shall comply with Section 409A
of the Code and any regulations or guidance promulgated
thereunder.

ARTICLE 15. Rights of Employees/ Directors

     
15.1 Employment. Nothing in the Plan shall interfere
with or limit in any way the right of the Company to terminate
any Participant’s employment at any time, nor confer upon
any Participant any right to continue in the employ of the
Company.

     
15.2 Participation. No Employee or Director shall
have the right to be selected to receive an Award under this
Plan, or, having been so selected, to be selected to receive a
future Award.

     
15.3 Termination of Employment/ Directorship/
Relationship. Each Participant’s Award Agreement shall
set forth the extent to which the Participant shall have the
right to exercise and/or receive payment for any Award following
termination of the Participant’s employment or directorship
with the Company, or termination of relationship with the
Company. Such provisions shall be determined in the sole
discretion of the Board, shall be included in the Award
Agreement entered into with each Participant, need not be
uniform among Awards and may reflect distinctions based on the
reasons for termination.

     
15.4 Competition. In the event the Participant
engages in any Competition with the Company, the Participant
immediately and permanently forfeits the right to exercise
and/or receive payment for any Award, whether or not vested. The
Participant must return to the Company the Participant’s
gain

12

 

resulting from options exercised at any time within the
twelve-month period preceding the date the Participant became
engaged in competition with the Company.

     
15.5 Nontransferability. Except as otherwise
provided in a Participant’s Award Agreement or determined
by the Board, Awards may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by
will or by the laws of decent and distribution. Further, except
as otherwise provided in a Participant’s Award Agreement or
determined by the Board, a Participant’s rights under the
Plan shall be exercisable during the Participant’s lifetime
only by the Participant or the Participant’s legal
representative.

ARTICLE 16. Change in Control

     
16.1 Treatment of Outstanding Awards.

			
	 	(a)  	
    Vesting on Change in Control. Upon the occurrence of a
    Change in Control, unless otherwise specifically prohibited
    under applicable laws, or by the rules and regulations of any
    governing governmental agencies or national securities exchanges:

			
	 	(i)  	
    Any and all Options and SARs granted hereunder shall become
    immediately exercisable, and shall remain exercisable throughout
    their entire term;

			
	 	(ii)  	
    Any restriction periods and restrictions imposed on Restricted
    Shares which are not performance-based shall lapse;

			
	 	(iii)  	
    The target payout opportunities attainable under all outstanding
    Awards of performance-based Restricted Stock, Performance Units,
    Performance Shares, and Cash-Based Awards and Share-Based Awards
    shall be deemed to have been fully earned for the entire
    Performance Period(s) as of the effective date of the Change in
    Control. The vesting of all Awards denominated in Shares shall
    be accelerated as of the effective date of the Change in
    Control, and there shall be paid out to Participants within
    thirty (30) days following the effective date of the Change
    in Control a pro rata number of shares based upon an assumed
    achievement of all relevant targeted performance goals and upon
    the length of time within the Performance Period which has
    elapsed prior to the Change in Control. Awards denominated in
    cash shall be paid pro rata to participants in cash within
    thirty (30) days following the effective date of the Change
    in Control, with the proration determined as a function of the
    length of time within the Performance Period which has elapsed
    prior to the Change in Control, and based on an assumed
    achievement of all relevant targeted performance goals. All
    payments will only be made to the extent that the acceleration
    of such payments would not cause any Award to result in deferred
    compensation that is subject to additional tax under
    Section 409A of the Code.

			
	 	(b)  	
    Cashout of Awards. Notwithstanding any other provision of
    the Plan, in the event of a Change in Control in which the
    consideration paid to the holders of Shares is solely cash, the
    Board may, in its discretion, provide that each Award shall,
    upon the occurrence of a Change in Control, be cancelled in
    exchange for a payment in an amount equal to (i) the excess
    of the consideration paid per Share in the Change in Control
    over the exercise or purchase price (if any) per Share subject
    to the Award multiplied by (ii) the number of Shares
    granted under the Award.

          16.2 Termination,
Amendment, and Modifications of Change in Control Provisions

     
Notwithstanding any other provision of this Plan (but subject to
the limitations of Section 18.3 hereof) or any Award
Agreement provision, the provisions of this Article 16 may
not be terminated, amended, or modified on or after the date of
a Change in Control to affect adversely any Award theretofore
granted under the Plan without the prior written consent of the
Participant with respect to

13

 

said Participant’s outstanding Awards; provided,
however, the Board may terminate, amend, or modify this
Article 16 at any time and from time to time prior to the
date of a Change in Control.

ARTICLE 17. Change in Capitalization

     
In the event of any change in corporate capitalization, such as
a stock split, or a corporate transaction, such as any merger,
consolidation, separation, including a spin off, or other
distribution of stock or property of the Company, any
reorganization (whether or not such reorganization comes within
the definition of such term in Code Section 368) or any
partial or complete liquidation of the Company, the Board shall
make such adjustment in the number and class of Shares which may
be delivered under Section 4.1, in the number and class of
and/or price of Shares subject to outstanding Awards granted
under the Plan, and in the Award limits set forth in
Section 4.1 as it determines to be appropriate and
equitable, in its sole discretion, to prevent dilution or
enlargement of rights; provided, however, that the
number of Shares subject to any Award shall always be a whole
number; provided, further, that no such adjustment shall
cause any Award hereunder which is or becomes subject to
Section 409A of the Code to fail to comply with the
requirements of such section.

ARTICLE 18. Amendment, Modification, and
Termination

     
18.1 Amendment, Modification, and Termination.
Subject to Sections 18.3 and 18.4, the Board may at any
time and from time to time, alter, amend, suspend or terminate
the Plan in whole or in part; provided, that no amendment
shall be made without shareholder approval if such approval is
necessary to comply with any applicable tax or regulatory
requirements. Prior to such approval, Awards may be made under
the Plan expressly subject to such approval.

     
18.2 Adjustment of Awards. The Board (or its
delegate) may make adjustments in the terms and conditions of,
and the criteria included in, any Award in any situation it
deems appropriate, as long as the adjustment of such Award does
not adversely affect the holder; provided, that no such
adjustment shall be authorized to the extent that such authority
would be inconsistent with the Plan’s meeting the
requirements of Section 162(m) or 409A of the Code.

     
18.3 Awards Previously Granted. Notwithstanding any
other provision of the Plan to the contrary (but subject to
Article 17 hereof), no termination, amendment, or
modification of the Plan shall adversely affect in any material
way any Award previously granted under the Plan, without the
written consent of the Participant holding such Award.

     
18.4 Compliance with Code Section 162(m). At
all times when Code Section 162(m) is applicable, all
Awards granted under this Plan shall comply with the
requirements of Code Section 162(m); provided,
however, that in the event the Board determines that such
compliance is not desired with respect to any Award or Awards
available for grant under the Plan, then compliance with Code
Section 162(m) will not be required. In addition, in the
event that changes are made to Code Section 162(m) to
permit greater flexibility with respect to any Award or Awards
available under the Plan, the Board may, subject to this
Article 18, make any adjustments it deems appropriate.

ARTICLE 19. Clawback

     
If the Company’s financial results are materially restated,
the Committee may review the circumstances surrounding the
restatement and determine whether and which Participants will be
required to forfeit the right to receive any future Awards or
other equity based incentive compensation under the Plan and/or
repay any Awards or cash payments determined by the Committee to
have been inappropriately received by the Participant. If the
Company’s financial results are restated due to fraud, any
Participant who the Committee determines participated in or is
responsible for the fraud causing the need for the restatement,
forfeits the right to receive any future Awards or other equity
based incentive compensation under the Plan and must repay any
Awards or cash payments in excess of the amounts that would have
been received based on the restated financial results. Any
repayments required under this Article 19 must be made by
the Participant within ten (10) days

14

 

following written demand from the Company. This Article 19
applies only to Participants in the Plan who also participate in
the Steelcase Inc. Executive Severance Plan.

ARTICLE 20. Withholding

     
20.1 Tax Withholding. The Company shall have the
power and the right to deduct or withhold, or require a
Participant to remit to the Company, an amount sufficient to
satisfy federal, state, and local taxes, domestic or foreign,
required by law or regulation to be withheld with respect to any
taxable event arising as a result of this Plan.

     
20.2 Share Withholding. With respect to withholding
required upon the exercise of Options or SARs, upon the lapse of
restrictions on Restricted Stock, or upon any other taxable
event arising as a result of Awards granted hereunder,
Participants may elect, subject to the approval of the Board, to
satisfy the withholding requirement, in whole or in part, by
having the Company withhold Shares having a Fair Market Value on
the date the tax is to be determined equal to the minimum
statutory total tax which could be imposed on the transaction.
All such elections shall be irrevocable, made in writing, signed
by the Participant, and shall be subject to any restrictions or
limitations that the Board, in its sole discretion, deems
appropriate.

ARTICLE 21. Indemnification

     
Each person who is or shall have been a member of the Committee,
or of the Board, shall be indemnified and held harmless by the
Company against and from any loss, cost, liability, or expense
that may be imposed upon or reasonably incurred by him or her in
connection with or resulting from any claim, action, suit, or
proceeding to which he or she may be a party or in which he or
she may be involved by reason of any action taken or failure to
act under the Plan and against and from any and all amounts paid
by him or her in settlement thereof, with the Company’s
approval, or paid by him or her in satisfaction of any judgment
in any such action, suit, or proceeding against him or her,
provided he or she shall give the Company an opportunity, at its
own expense, to handle and defend the same before he or she
undertakes to handle and defend it on his or her own behalf. The
foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be
entitled under the Company’s Articles of Incorporation of
Bylaws, as a matter of law, or otherwise, or any power that the
Company may have to indemnify them or hold them harmless.

ARTICLE 22. Successors

     
All obligations of the Company under the Plan with respect to
Awards granted hereunder shall be binding on any successor to
the Company, whether the existence of such successor is the
result of a direct or indirect purchase, merger, consolidation,
or otherwise, of all or substantially all of the business and/or
assets of the Company.

ARTICLE 23. Legal Construction

     
23.1 Gender and Number. Except where otherwise
indicated by the context, any masculine term used herein also
shall include the feminine; the plural shall include the
singular and the singular shall include the plural.

     
23.2 Severability. In the event any provision of the
Plan shall be held illegal or invalid for any reason, the
illegality or invalidity shall not affect the remaining parts of
the Plan, and the Plan shall be construed and enforced as if the
illegal or invalid provision had not been included.

     
23.3 Requirements of Law. The granting of Awards and
the issuance of Shares under the Plan shall be subject to all
applicable laws, rules, and regulations, and to such approvals
by any governmental agencies or national securities exchanges as
may be required.

     
23.4 Securities Law Compliance. With respect to
Insiders, transactions under this Plan are intended to comply
with all applicable conditions or Rule 16b — 3 or
its successors under the

15

 

1934 Act. To the extent any provision of the plan or action
by the Board fails to so comply, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the
Board.

     
23.5 Section 409A. It is intended that the Plan
and Awards issued hereunder will comply with Section 409A
of the Code (and any regulations and guidelines issued
thereunder) to the extent the Awards are subject thereto, and
the Plan and such Awards shall be interpreted on a basis
consistent with such intent. The Plan and any Award Agreements
issued thereunder may be amended in any respect deemed by the
Board or the Committee to be necessary in order to preserve
compliance with Section 409A of the Code.

     
23.6 Governing Law. To the extent not preempted by
federal law, the Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the
State of Michigan.

ARTICLE 24. Execution

     
IN WITNESS WHEREOF, Steelcase Inc. has caused this Plan,
captioned “Steelcase Inc. Incentive Compensation
Plan,” as amended and restated effective as of
February 24, 2007, to be executed by its duly authorized
officer this 30th day of April, 2007.

		
	 	
    STEELCASE INC.

			
	 	By: 	
    /s/ Nancy W. Hickey

		
	 	
     

			
	 	Its: 	
    Senior Vice President,

		
	 	
    Chief Administrative Officer and Secretary

16exv10w1

 

Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

     This Securities Purchase Agreement (this “Agreement”) is dated as of June 19,
2007, between Micromet, Inc., a Delaware corporation (the “Company”), and each purchaser
identified on the signature pages hereto (each, including its successors and assigns, a
“Purchaser” and collectively the “Purchasers”).

     WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to
Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506
promulgated thereunder, the Company desires to issue and sell to each Purchaser, and each
Purchaser, severally and not jointly, desires to purchase from the Company, securities of the
Company as more fully described in this Agreement.

     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 each Purchaser agree as follows:

ARTICLE I.

DEFINITIONS

     1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, for
all purposes of this Agreement, the following terms have the meanings set forth in this Section
1.1:

     “Action” shall have the meaning ascribed to such term in Section 3.1(j).

     “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 405 under the Securities Act. With respect to a Purchaser,
any investment fund or managed account that is managed on a discretionary basis by the same
investment manager as such Purchaser will be deemed to be an Affiliate of such Purchaser.

     “Board of Directors” means the board of directors of the Company.

     “Business Day” means any day except any Saturday, any Sunday, any day which is 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 Trading Day when all of the Transaction Documents have been
executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the
Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s obligations to
deliver the Securities have been satisfied or waived.

     “Commission” means the Securities and Exchange Commission.

1.

 

     “Common Stock” means the common stock of the Company, par value $0.00004 per share,
and any other class of securities into which such securities may hereafter be reclassified or
changed into.

     “Common Stock Equivalents” means any securities of the Company or the Subsidiaries
which could entitle the holder thereof to acquire at any time Common Stock, including, without
limitation, any debt, preferred stock, rights, options, warrants 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.

     “Company Counsel” means Cooley Godward Kronish llp, with offices located at
One Freedom Square, Reston Town Center, 11951 Freedom Drive, Reston, VA 20190-5656

     “Disclosure Schedules” means the Disclosure Schedules of the Company delivered
concurrently herewith.

     “Effective Date” means the date that the Initial Registration Statement filed by the
Company pursuant to the Registration Rights Agreement is first declared effective by the
Commission.

     “Evaluation Date” shall have the meaning ascribed to such term in Section 3.1(r).

     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.

     “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
by the Board of Directors or a committee thereof established for such purpose, (b) securities 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, exchange or conversion price of such securities, and (c) securities issued
pursuant to acquisitions or strategic transactions approved by a majority of the disinterested
directors of the Company as determined under the DGCL, provided that any such issuance shall only
be to a Person which is, itself or through its subsidiaries, an operating company in a business
synergistic with the business of the Company and in which the Company receives 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.

     “FWS” means Feldman Weinstein & Smith LLP with offices located at 420 Lexington
Avenue, Suite 2620, New York, New York 10170-0002.

     “GAAP” shall have the meaning ascribed to such term in Section 3.1(h).

     “Intellectual Property Rights” shall have the meaning ascribed to such term in Section
3.1(o).

     “Legend Removal Date” shall have the meaning ascribed to such term in Section 4.1(c).

     “Liens” means a lien, charge, security interest, encumbrance, right of first refusal,
preemptive right or other restriction.

2.

 

     “Material Adverse Effect” shall have the meaning assigned to such term in Section
3.1(b).

     “Material Permits” shall have the meaning ascribed to such term in Section 3.1(m).

     “Per Unit Purchase Price” equals $2.7525 (which consists of $2.69, which is the
closing bid price of the Common Stock as reported on the Nasdaq Global Market as of 4:00 p.m.
Eastern Time on June 19, 2007, plus $0.0625, which represents a purchase price of the Warrants of
$0.125 per underlying Warrant Share), subject to adjustment for reverse and forward stock splits,
stock dividends, stock combinations and other similar transactions of the Common Stock that occur
after the date of this Agreement.

     “Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind.

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

     “Purchaser Party” shall have the meaning ascribed to such term in Section 4.8.

     “Registration Rights Agreement” means the Registration Rights Agreement, dated the
date hereof, among the Company and the Purchasers, in the form of Exhibit A attached
hereto.

     “Registration Statement” means a registration statement meeting the requirements set
forth in the Registration Rights Agreement and covering the resale by the Purchasers of the Shares
and the Warrant Shares.

     “Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e).

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

     “SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).

     “Securities” means the Shares, the Warrants and the Warrant Shares.

     “Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

     “Shares” means the shares of Common Stock issued or issuable to each Purchaser
pursuant to this Agreement.

     “Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under
the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable
shares of Common Stock).

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

3.

 

     “Subsidiary” means any subsidiary of the Company as set forth on Schedule
3.1(a), and shall, where applicable, include any subsidiary of the Company formed or acquired
after the date hereof.

     “Trading Day” means a day on which the Common Stock can be traded on a Trading Market.

     “Trading Market” means the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: the American Stock Exchange, the Nasdaq
Capital Market, the Nasdaq Global Market or the Nasdaq Global Select Market, the New York Stock
Exchange.

     “Transaction Documents” means this Agreement, the Warrants, the Registration Rights
Agreement and any other documents or agreements executed in connection with the transactions
contemplated hereunder.

     “Transfer Agent” means Mellon Institutional Services, the current transfer agent of
the Company, with a mailing address of 480 Washington Blvd., Jersey City, NJ 07310 and a facsimile
number of 213-553-9735, and any successor transfer agent of the Company.

     “VWAP” means, for any date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily
volume weighted average price of the Common Stock for such date (or the nearest preceding date) on
the Trading Market on which the Common Stock is then listed or quoted for trading as reported by
Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York
City time); (b) if the OTC Bulletin Board is not a Trading Market, the volume weighted average
price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board;
(c) if the Common Stock is not then quoted for trading on the OTC Bulletin Board and if prices for
the Common Stock are then reported in the “Pink Sheets” published by Pink Sheets, LLC (or a similar
organization or agency succeeding to its functions of reporting prices), the most recent bid price
per share of the Common Stock so reported; or (d) in all other cases, the fair market value of a
share of Common Stock as determined by an independent appraiser selected in good faith by the
Purchasers of a majority in interest of the Shares then outstanding and reasonably acceptable to
the Company, the fees and expenses of which shall be paid by the Company.

     “Warrants” means, collectively, the Common Stock purchase warrants delivered to the
Purchasers at the Closing in accordance with Section 2.2(a) hereof, which Warrants shall be
exercisable 180 days after the date hereof and have a term of exercise equal to 5 years, in the
form of Exhibit B -1 or Exhibit B-2, as applicable, attached hereto.

     “Warrant Shares” means the shares of Common Stock issuable upon exercise of the
Warrants.

4.

 

ARTICLE II.

PURCHASE AND SALE

     2.1 Closing. On the Closing Date, upon the terms and subject to the conditions set
forth herein, substantially concurrent with the execution and delivery of this Agreement by the
parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly, agree
to purchase, up to an aggregate of $25,000,000 of Shares and Warrants. Each Purchaser shall
deliver to the Company, via wire transfer or a certified check, immediately available funds equal
to its Subscription Amount and the Company shall deliver to each Purchaser its respective Shares
and a Warrant as determined pursuant to Section 2.2(a), and the Company and each Purchaser shall
deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of
the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the
offices of FWS or such other location as the parties shall mutually agree.

     2.2 Deliveries.

          (a) On or prior to the Closing Date, the Company shall deliver or cause to be delivered to
each Purchaser the following:

               (i) this Agreement duly executed by the Company;

               (ii) a legal opinion of Company Counsel, substantially in the form of Exhibit C
attached hereto;

               (iii) a copy of the irrevocable instructions to the Transfer Agent instructing the Transfer
Agent to deliver, on an expedited basis, a certificate evidencing a number of Shares equal to such
Purchaser’s Subscription Amount divided by the Per Unit Purchase Price, registered in the name of
such Purchaser;

               (iv) a Warrant registered in the name of such Purchaser to purchase up to a number of shares
of Common Stock equal to 50% of such Purchaser’s Shares issuable hereunder, with an exercise price
equal to $3.09, subject to adjustment therein (in the case of any Purchaser who provides the notice
referenced in Section 2.2(b)(iv), such Warrant shall be in the form of Exhibit B-2; in all
other cases, the Warrant shall be in the form of Exhibit B-1); and

               (v) the Registration Rights Agreement duly executed by the Company.

          (b) On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered
to the Company the following:

               (i) this Agreement duly executed by such Purchaser;

               (ii) such Purchaser’s Subscription Amount by wire transfer or certified check to the account
as specified in writing by the Company;

               (iii) the Registration Rights Agreement duly executed by such Purchaser; and

5.

 

               (iv) only in the case of any Purchaser electing to receive a Warrant in the form of
Exhibit B-2, a written notice of such election.

     2.3 Closing Conditions.

          (a) The obligations of the Company hereunder in connection with the Closing are subject to
the following conditions being met:

               (i) the accuracy in all material respects on the Closing Date of the representations and
warranties of the Purchasers contained herein;

               (ii) all obligations, covenants and agreements of each Purchaser required to be performed at
or prior to the Closing Date shall have been performed; and

               (iii) the delivery by each Purchaser of the items set forth in Section 2.2(b) of this
Agreement.

          (b) The respective obligations of the Purchasers hereunder in connection with the Closing
are subject to the following conditions being met:

               (i) the accuracy in all material respects on the Closing Date of the representations and
warranties of the Company contained herein;

               (ii) all obligations, covenants and agreements of the Company required to be performed at or
prior to the Closing Date shall have been performed;

               (iii) the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;

               (iv) there shall have been no Material Adverse Effect with respect to the Company since the
date hereof; and

               (v) from the date hereof to the Closing Date, trading in the Common Stock shall not have been
suspended by the Commission or the Company’s principal Trading Market (except for any suspension of
trading of limited duration agreed to by the Company, which suspension shall be terminated prior to
the Closing), and, at any time prior to the Closing Date, trading in securities generally as
reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not
have been established on securities whose trades are reported by such service, or on any Trading
Market, nor shall a banking moratorium have been declared either by the United States or New York
State authorities nor shall there have occurred any material outbreak or escalation of hostilities
or other national or international calamity of such magnitude in its effect on, or any material
adverse change in, any financial market which, in each case, in the reasonable judgment of each
Purchaser, makes it impracticable or inadvisable to purchase the Securities at the Closing.

6.

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

     3.1 Representations and Warranties of the Company. Except as set forth in the
Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof and shall qualify
any representation or otherwise made herein to the extent of the disclosure contained in the
corresponding section of the Disclosure Schedules, the Company hereby makes the following
representations and warranties to each Purchaser:

          (a) Subsidiaries. All of the direct and indirect subsidiaries of the Company are set
forth on Schedule 3.1(a). The Company owns, directly or indirectly, all of the capital stock or
other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and
outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.

          (b) Organization and Qualification. The Company and each of the subsidiaries is an
entity duly incorporated or otherwise organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite
power and 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 or default of any of
the provisions of its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to
conduct 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 have or reasonably be expected to result in (i) a material adverse effect on
the legality, validity or enforceability of any Transaction Document, (ii) a material adverse
effect on the results of operations, assets, business or condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s
ability to perform in any material respect on a timely basis its obligations under any Transaction
Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has
been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke,
limit or curtail such power and authority or qualification.

          (c) Authorization; Enforcement. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each of the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and
delivery of each of the Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all necessary action on
the part of the Company and no further action is required by the Company, the Board of Directors or
the Company’s stockholders in connection therewith other than in connection with the Required
Approvals. Each Transaction Document has been (or upon delivery will have been) duly executed by
the Company and, when delivered in accordance with the terms hereof and thereof, will constitute
the valid and binding obligation of the Company enforceable against the Company 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.

7.

 

          (d) No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company, the issuance and sale of the Securities and the consummation by the
Company of the other transactions contemplated hereby and thereby do not and will not (i) conflict
with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both would become a default)
under, result in the creation of any Lien upon any of the properties or assets of the Company or
any Subsidiary, or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility,
debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any property or asset
of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals,
conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which the Company or a
Subsidiary is subject (including federal and state securities laws and regulations), or by which
any property or asset of the Company or a Subsidiary is bound or affected; except in the case of
each of clauses (ii) and (iii), such as would not have or reasonably be expected to result in a
Material Adverse Effect.

          (e) Filings, Consents and Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any filing or registration
with, any court or other federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the Transaction
Documents, other than (i) filings required pursuant to Section 4.4 of this Agreement, (ii) the
filing with the Commission of the Registration Statement, (iii) application(s) to each applicable
Trading Market for the listing of the Securities for trading thereon in the time and manner
required thereby, and (iv) the filing of Form D with the Commission and such filings as are
required to be made under applicable state securities laws (collectively, the “Required
Approvals”).

          (f) Issuance of the Securities. The Securities are duly authorized and, when issued
and paid for in accordance with the applicable Transaction Documents, will be duly and validly
issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than
restrictions on transfer provided for in the Transaction Documents. The Warrant Shares, when
issued in accordance with the terms of the Transaction Documents, will be validly issued, fully
paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions
on transfer provided for in the Transaction Documents. The Company has reserved from its duly
authorized capital stock the maximum number of shares of Common Stock issuable pursuant to this
Agreement and the Warrants.

          (g) Capitalization. The capitalization of the Company is as set forth on Schedule
3.1(g). The Company has not issued any capital stock since its most recently filed periodic
report under the Exchange Act, other than pursuant to the exercise of employee stock options under
the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to
the Company’s employee stock purchase plans and pursuant to the conversion or exercise of Common
Stock Equivalents outstanding as of the date of the most recently filed periodic report under the
Exchange Act. No Person has any right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions contemplated by the Transaction Documents.
Except as a result of the purchase and sale of the Securities and as set forth in the Company’s SEC
Reports, there are no outstanding options, warrants, scrip rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or obligations
convertible into or

8.

 

exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the
Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or
Common Stock Equivalents. 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 Purchasers) and will
not result in a right of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under any of such securities. All of the outstanding shares of capital
stock of the Company are validly issued, fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, and none of such outstanding shares was
issued in violation of any preemptive rights or similar rights to subscribe for or purchase
securities. No further approval or authorization of any stockholder, the Board of Directors or
others is required for the issuance and sale of the Securities. There are no stockholders
agreements, voting agreements or other similar agreements with respect to the Company’s capital
stock to which the Company is a party or, to the knowledge of the Company, between or among any of
the Company’s stockholders.

          (h) SEC Reports; Financial Statements. The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by the Company under the Securities Act
and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, since January 1, 2006
(the foregoing materials, including the exhibits thereto and documents incorporated by reference
therein, being collectively referred to herein as the “SEC Reports”) 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. As of their respective dates, the SEC Reports complied in
all material respects with the requirements of the Securities Act and the Exchange Act, as
applicable, and none of the SEC Reports, when filed, 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
Commission with respect thereto as in effect at the time of 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 or the notes thereto and except that unaudited financial
statements may not contain all footnotes required by GAAP, and fairly present in all material
respects the 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, immaterial, year-end audit adjustments.

               (i) Material Changes; Undisclosed Events, Liabilities or Developments. Since the date
of the latest audited financial statements included within the SEC Reports, except as specifically
disclosed in a subsequent SEC Report filed prior to the date hereof, (i) there has been no event,
occurrence or development that has had or that would reasonably be expected to result in a Material
Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) 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 disclosed in filings made with the Commission, (iii) the Company has
not altered its method of accounting, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders 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

9.

 

stock option plans. The Company does not have pending before the Commission any request for
confidential treatment of information. Except for the issuance of the Securities contemplated by
this Agreement or as set forth on Schedule 3.1(i), no event, liability or development has
occurred or exists with respect to the Company or its Subsidiaries or their respective business,
properties, operations or financial condition, that would be required to be disclosed by the
Company under applicable securities laws at the time this representation is made or deemed made
that has not been publicly disclosed at least 1 Trading Day prior to the date that this
representation is made.

          (j) Litigation. There is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, threatened against or affecting the
Company, any Subsidiary or any of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an “Action”) which (i) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii)
would, if there were an unfavorable decision, have or reasonably be expected to result in a
Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer
thereof, is or has been the subject of any Action which has resulted in a final judgement involving
a claim of violation of or liability under federal or state securities laws or a claim of breach of
fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or
contemplated, any investigation by the Commission involving the Company or any current or former
director or officer of the Company. The Commission has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by the Company or any Subsidiary
under the Exchange Act or the Securities Act.

          (k) Labor Relations. No material labor dispute exists or, to the knowledge of the
Company, is imminent with respect to any of the employees of the Company which would reasonably be
expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’
employees is a member of a union that relates to such employee’s relationship with the Company or
such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective
bargaining agreement, and the Company and its Subsidiaries believe that their relationships with
their employees are good. No executive officer, to the knowledge of the Company, is, or is now
expected to be, in violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement or non-competition agreement, or any other contract
or agreement or any restrictive covenant in favor of any third party, and the continued employment
of each such executive officer does not subject the Company or any of its Subsidiaries to any
liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in
compliance with all U.S. federal, state, local and foreign laws and regulations relating to
employment and employment practices, terms and conditions of employment and wages and hours, except
where the failure to be in compliance would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

          (l) Compliance. Neither the Company nor any Subsidiary (i) 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 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) is in violation of any order of any court, arbitrator or governmental body,
or (iii) is or has been in violation of any statute, rule or regulation of any governmental
authority, including
without limitation all foreign, federal, state and local laws applicable to its business and
all such laws that affect the environment, except in each case as would not have or reasonably be
expected to result in a Material Adverse Effect.

10.

 

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

          (n) Title to Assets. The Company and the Subsidiaries have good and marketable title
in all personal property owned by them that is material to the business of the Company and the
Subsidiaries, in each case free and clear of all Liens, except for Liens as do not materially
affect the value of such property and do not materially interfere with the use made and proposed to
be made of such property by the Company and the Subsidiaries and Liens for the payment of federal,
state or other taxes, the payment of which is neither delinquent nor subject to penalties. Any
real property and facilities held under lease by the Company and the Subsidiaries are held by them
under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in
compliance in all material respects.

          (o) Patents and Trademarks. The Company and the Subsidiaries have, or have rights to
use, all patents, patent applications, trademarks, trademark applications, service marks, trade
names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and
similar rights used in connection with their respective businesses as described in the SEC Reports
and which the failure to do so would have a Material Adverse Effect (collectively, the
“Intellectual Property Rights”). Neither the Company nor any Subsidiary has received a
notice (written or otherwise) that any of the Intellectual Property Rights used by the Company or
any Subsidiary violates or infringes upon the rights of any Person. To the knowledge of the
Company, all such Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property Rights. The Company and its
Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and
value of all of their intellectual properties, except where failure to do so would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

          (p) Insurance. The Company and the Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as are prudent and
customary in the businesses in which the Company and the Subsidiaries are engaged, including, but
not limited to, directors and officers insurance coverage at least equal to the aggregate
Subscription Amount. Neither the Company nor any Subsidiary has any reason to believe that it will
not be able to renew its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its business without a
significant increase in cost.

          (q) Transactions With Affiliates and Employees. Except as set forth in the SEC
Reports, none of the officers or directors of the Company and, to the knowledge of the Company,
none of the employees of the Company is presently a party to any transaction with the Company or
any Subsidiary (other than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of services to or by,
providing for rental

11.

 

of real or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any entity in which any
officer, director, or any such employee has a substantial interest or is an officer, director,
trustee or partner, in each case in excess of $120,000 other than for (i) payment of salary or
consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the
Company and (iii) other employee benefits, including stock option agreements under any stock option
plan of the Company.

          (r) Sarbanes-Oxley; Internal Accounting Controls. Except as set forth in the SEC
Reports, the Company is in material compliance with all provisions of the Sarbanes-Oxley Act of
2002 which are applicable to it as of the Closing Date. The Company and the Subsidiaries maintain
a system of internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial statements in conformity
with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. The Company has established disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company
and designed such disclosure controls and procedures to ensure that information required to be
disclosed by the Company in the reports it files or submits under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the Commission’s rules and
forms. The Company’s certifying officers have evaluated the effectiveness of the Company’s
disclosure controls and procedures as of the end of the period covered by the Company’s most
recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”).
The Company presented in its most recently filed periodic report under the Exchange Act the
conclusions of the certifying officers about the effectiveness of the disclosure controls and
procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there
have been no changes in the Company’s internal control over financial reporting (as such term is
defined in the Exchange Act) that has materially affected, or is reasonably likely to materially
affect, the Company’s internal control over financial reporting.

          (s) Certain Fees. No brokerage or finder’s fees or commissions are or will be payable
by the Company to any broker, financial advisor or consultant, finder, placement agent, investment
banker, bank or other Person with respect to the transactions contemplated by the Transaction
Documents . The Purchasers shall have no obligation with respect to any fees or with respect to
any claims made by or on behalf of other Persons for fees of a type contemplated in this Section
that may be due in connection with the transactions contemplated by the Transaction Documents.

          (t) Private Placement. Assuming the accuracy of the Purchasers representations and
warranties 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 Purchasers as contemplated hereby. The
issuance and sale of the Securities hereunder does not contravene the rules and regulations of the
Trading Market.

          (u) Investment Company. The Company is not, and is not an Affiliate of, and
immediately after receipt of payment for the Securities, will not be or be an Affiliate of, an
“investment company” within the meaning of the Investment Company Act of 1940, as amended.

12.

 

          (v) Registration Rights. Other than each of the Purchasers, no Person has any right
to cause the Company to effect the registration under the Securities Act of any securities of the
Company.

          (w) Listing and Maintenance Requirements. The Company’s Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action
designed to, or which to its knowledge is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act nor has the Company received any
notification that the Commission is contemplating terminating such registration. The Company has
not, in the 12 months preceding the date hereof, received notice 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.

          (x) Application of Takeover Protections. The Company and the Board of Directors have
taken all necessary action, if any, in order 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 certificate of incorporation (or similar
charter documents), bylaws or the laws of its state of incorporation that is or could become
applicable to the Purchasers as a result of the Purchasers 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 Purchasers’ ownership of
the Securities.

          (y) Disclosure. Except with respect to the material terms and conditions of the
transactions contemplated by the Transaction Documents, the Company confirms that neither it nor
any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel
with any information that it believes constitutes material, non-public information. The Company
understands and confirms that the Purchasers will rely on the foregoing representation in effecting
transactions in securities of the Company. All disclosure furnished by or on behalf of the Company
to the Purchasers regarding the Company, its business and the transactions contemplated hereby,
including the Disclosure Schedules to this Agreement, is true and correct and does 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 light of the circumstances under which they were made, not
misleading. The Company acknowledges and agrees that no Purchaser makes or has made any
representations or warranties with respect to the transactions contemplated hereby other than those
specifically set forth in Section 3.2 hereof.

          (z) No Integrated Offering. Assuming the accuracy of the Purchasers’ representations
and warranties set forth in Section 3.2, neither the Company, nor any of its Affiliates, nor any
Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under circumstances that could cause this
offering of the Securities to be integrated with prior offerings by the Company for purposes of (i)
the Securities Act which could require the registration of any such securities under the Securities
Act, or (ii) any applicable shareholder approval provisions of any Trading Market on which any of
the securities of the Company are listed or designated.

          (aa) No General Solicitation. Neither the Company nor any person acting on behalf of
the Company has offered or sold any of the Securities by any form of general solicitation or
general advertising. The Company has offered the Securities for sale only to the Purchasers
and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.

13.

 

          (bb) Foreign Corrupt Practices. Neither the Company, nor to the knowledge of the
Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly,
used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related
to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political parties or campaigns from
corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by
any person acting on its behalf of which the Company is aware) which is in violation of law, or
(iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977,
as amended.

          (cc) Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company
acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm’s
length purchaser with respect to the Transaction Documents and the transactions contemplated
thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and
the transactions contemplated thereby and any advice given by any Purchaser or any of their
respective representatives or agents in connection with the Transaction Documents and the
transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the
Securities. The Company further represents to each Purchaser that the Company’s decision to enter
into this Agreement and the other Transaction Documents has been based solely on the independent
evaluation of the transactions contemplated hereby by the Company and its representatives.

          (dd) Acknowledgement Regarding Purchaser’s Trading Activity. Anything in this
Agreement or elsewhere herein to the contrary notwithstanding (except for Sections 3.2(f) and 4.13
hereof), it is understood and acknowledged by the Company (i) that none of the Purchasers have been
asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling,
long and/or short, securities of the Company, or “derivative” securities based on securities issued
by the Company or to hold the Securities for any specified term; (ii) that past or future open
market or other transactions by any Purchaser, specifically including, without limitation, Short
Sales or “derivative” transactions, before or after the closing of this or future private placement
transactions, may negatively impact the market price of the Company’s publicly-traded securities;
(iii) that any Purchaser, and counter-parties in “derivative” transactions to which any such
Purchaser is a party, directly or indirectly, presently may have a “short” position in the Common
Stock, and (iv) that each Purchaser shall not be deemed to have any affiliation with or control
over any arm’s length counter-party in any “derivative” transaction. The Company further
understands and acknowledges that (a) one or more Purchasers may engage in hedging activities at
various times during the period that the Securities are outstanding, including, without limitation,
during the periods that the value of the Warrant Shares deliverable with respect to Securities are
being determined, and (b) such hedging activities (if any) could reduce the value of the existing
stockholders’ equity interests in the Company at and after the time that the hedging activities are
being conducted. The Company acknowledges that such aforementioned hedging activities do not
constitute a breach of any of the Transaction Documents.

          (ee) Regulation M Compliance. The Company has not, and to its knowledge no one
acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to
result in the stabilization or manipulation of the price of any security of the Company to
facilitate the sale

14.

 

or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation
for soliciting purchases of, any of the Securities in violation of Regulation M under the Exchange
Act, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to
purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii),
compensation paid to the Company’s placement agent in connection with the placement of the
Securities.

          (ff) Form S-3 Eligibility. The Company is eligible to register the resale of the
Securities for resale by the Purchaser on Form S-3 promulgated under the Securities Act.

          (gg) Except as set forth on Schedule 3.1(gg), the Company and each of its subsidiaries
has filed all Federal, state, local and foreign tax returns which are required to be filed through
the date hereof, which returns are true and correct in all material respects or has received timely
extensions thereof, and has paid all taxes shown on such returns and all assessments received by it
to the extent that the same are material and have become due. There are no tax audits or
investigations pending, which if adversely determined would have a Material Adverse Effect; nor, to
the Company’s knowledge, are there any material proposed additional tax assessments against the
Company or any of its subsidiaries.

          (hh) The operations of the Company and its subsidiaries are and have been conducted at all
times in compliance with applicable financial recordkeeping and reporting requirements of the
Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes
of all jurisdictions, the rules and regulations hereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any governmental agency
(collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any
court or governmental agency, authority or body or any arbitrator involving the Company or any of
it subsidiaries with respect to the Money Laundering Laws is pending, or to the best knowledge of
the Company, threatened.

     3.2 Representations and Warranties of the Purchasers. Each Purchaser, for itself and
for no other Purchaser, hereby represents and warrants as of the date hereof and as of the Closing
Date to the Company as follows:

          (a) Organization; Authority. Such Purchaser is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its organization with full
right, corporate or partnership 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 execution and delivery of the Transaction Documents and performance
by such Purchaser of the transactions contemplated by the Transaction Documents have been duly
authorized by all necessary corporate or similar action on the part of such Purchaser. Each
Transaction Document to which it is a party has been duly executed by such Purchaser, and when
delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and
legally binding obligation of such Purchaser, 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.

15.

 

          (b) Own Account. Such Purchaser understands that the Securities are “restricted
securities” and have not been registered under the Securities Act or any applicable state
securities law and is acquiring the Securities as principal for its own account and not with a view
to or for distributing or reselling such Securities or any part thereof in violation of the
Securities Act or any applicable state securities law, has no present intention of distributing any
of such Securities in violation of the Securities Act or any applicable state securities law and
has no direct or indirect arrangement or understandings with any other persons to distribute or
regarding the distribution of such Securities (this representation and warranty not limiting such
Purchaser’s right to sell the Securities pursuant to the Registration Statement or otherwise in
compliance with applicable federal and state securities laws) in violation of the Securities Act or
any applicable state securities law. Such Purchaser is acquiring the Securities hereunder in the
ordinary course of its business.

          (c) Purchaser Status. At the time such Purchaser was offered the Securities, it was,
and at the date hereof it is, and on each date on which it exercises any Warrants, it will be
either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8)
under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under
the Securities Act. Such Purchaser is not required to be registered as a broker-dealer under
Section 15 of the Exchange Act.

          (d) Experience of Such Purchaser. Such Purchaser, 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 Purchaser is able
to bear the economic risk of an investment in the Securities and, at the present time, is able to
afford a complete loss of such investment.

          (e) General Solicitation. Such Purchaser 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 or broadcast over television or radio or presented at any
seminar or any other general solicitation or general advertisement.

          (f) Short Sales and Confidentiality Prior to the Date Hereof. Other than consummating
the transactions contemplated hereunder, such Purchaser has not, nor has any Person acting on
behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed any
purchases or sales, including Short Sales, of the securities of the Company during the period
commencing from the time that such Purchaser was first contacted by RBC or the Company concerning
an investment in the Company until the date hereof (“Discussion Time”). Notwithstanding
the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby
separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio
managers have no direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser’s assets, the representation set forth above shall only
apply with respect to the portion of assets managed by the portfolio manager that made the
investment decision to purchase the Securities covered by this Agreement. Other than to other
Persons party to this Agreement, such Purchaser has maintained the confidentiality of all
disclosures made to it in connection with this transaction (including the existence and terms of
this transaction).

16.

 

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

     4.1 Transfer Restrictions.

          (a) The Securities may only be disposed of in compliance with state and federal securities
laws. In connection with any transfer of Securities other than pursuant to an effective
registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser or in
connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor
thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably
acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory
to the Company, to the effect that such transfer does not require registration of such transferred
Securities under the Securities Act. As a condition of transfer, any such transferee shall agree
in writing to be bound by the terms of this Agreement and shall have the rights of a Purchaser
under this Agreement and the Registration Rights Agreement.

          (b) The Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a
legend on any of the Securities in the following form:

THIS SECURITY HAS NOT 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”),
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 ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. 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.

     The Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to
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 the Registration Rights Agreement and, if required under the terms of such arrangement, such
Purchaser may transfer pledged or secured Securities to the pledgees or secured parties. Such a
pledge or transfer could not be subject to approval of the Company and no legal opinion of legal
counsel of the pledgee, secured party or pledgor shall be required in connection therewith.
Further, no notice shall be required of such pledge. At the appropriate Purchaser’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, if the Securities are subject to registration pursuant to the Registration Rights
Agreement, the preparation
and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act
or other applicable provision of the Securities Act to appropriately amend the list of Selling
Stockholders thereunder.

17.

 

          (c) Certificates evidencing the Shares and Warrant Shares shall not contain any legend
(including the legend set forth in Section 4.1(b)), (i) while a registration statement (including
the Registration Statement) covering the resale of such security is effective under the Securities
Act, or (ii) following any sale of such Shares or Warrant Shares pursuant to Rule 144, or (iii) if
such Shares or Warrant Shares are eligible for sale under Rule 144(k), or (iv) if such legend is
not required under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission). The Company shall cause
its counsel to issue a legal opinion to the Transfer Agent promptly after the Effective Date if
required by the Transfer Agent to effect the removal of the legend hereunder. If all or any
portion of a Warrant is exercised at a time when there is an effective registration statement to
cover the resale of the Warrant Shares, such Warrant Shares shall be issued free of all legends.
The Company agrees that following the Effective Date or at such time as such legend is no longer
required under this Section 4.1(c), it will, no later than four Trading Days following the delivery
by a Purchaser to the Company or the Transfer Agent of a certificate representing Shares or Warrant
Shares, as the case may be, issued with a restrictive legend (such third Trading Day, the
“Legend Removal Date”), deliver or cause to be delivered to such Purchaser a certificate
representing such shares 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. Certificates for Securities subject to legend
removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by crediting the
account of the Purchaser’s prime broker with the Depository Trust Company System as directed by
such Purchaser.

          (d) In addition to such Purchaser’s other available remedies, the Company shall pay to
a Purchaser, in cash, as partial liquidated damages and not as a penalty, for each $1,000 of Shares
or Warrant Shares (based on the VWAP of the Common Stock on the date such Securities are submitted
to the Transfer Agent) delivered for removal of the restrictive legend and subject to Section
4.1(c), $10 per Trading Day (increasing to $20 per Trading Day five (5) Trading Days after such
damages have begun to accrue) for each Trading Day commencing on the second Trading Day immediately
following the Legend Removal Date until such certificate is delivered without a legend. Nothing
herein shall limit such Purchaser’s right to pursue actual damages for the Company’s failure to
deliver certificates representing any Securities as required by the Transaction Documents, and such
Purchaser shall have the right to pursue all remedies available to it at law or in equity
including, without limitation, a decree of specific performance and/or injunctive relief.

          (e) Each Purchaser, severally and not jointly with the other Purchasers, agrees that such
Purchaser will sell any Securities pursuant to either the registration requirements of the
Securities Act, including any applicable prospectus delivery requirements, or an exemption
therefrom, and that if Securities are sold pursuant to a Registration Statement, they will be sold
in compliance with the plan of distribution set forth therein, and acknowledges 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 upon this understanding.

18.

 

     4.2 Furnishing of Information. Until the earliest of the time that (i) no Purchaser
owns Securities or (ii) the Warrants have expired, the Company covenants to use 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 even if the Company is not then subject to the reporting requirements
of the Exchange Act. As long as any Purchaser owns Securities, if the Company is not required to
file reports pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and make
publicly available in accordance with Rule 144(c) such information as is required for the
Purchasers to sell the Securities under Rule 144. The Company further covenants that it will take
such further action as any holder of Securities may reasonably request, to the extent required from
time to time to enable such Person to sell such Securities without registration under the
Securities Act within the requirements of the exemption provided by Rule 144.

     4.3 Integration. The Company shall not 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 could be integrated with the offer or sale of the Securities in a manner that could require
the registration under the Securities Act of the sale of the Securities to the Purchasers or that
could be integrated with the offer or sale of the Securities to the Purchasers for purposes of the
rules and regulations of any Trading Market such that it could require shareholder approval prior
to the closing of such other transaction unless shareholder approval is obtained before the closing
of such subsequent transaction.

     4.4 Securities Laws Disclosure; Publicity. The Company shall, by (i) 8:30 a.m. (New
York City time) on the Trading Day immediately following the date hereof issue a press release and
(ii) 8:30 a.m. (New York City time) on the second Trading Day immediately following the date
hereof, issue a Current Report on Form 8-K, in each case disclosing the material terms of the
transactions contemplated hereby, and (in the case of the Report on Form 8-K) filing the
Transaction Documents as exhibits thereto. The Company and each Purchaser shall consult with each
other in issuing any other press releases with respect to the transactions contemplated hereby, and
neither the Company nor any Purchaser shall issue any such press release or otherwise make any such
public statement without the prior consent of the Company, with respect to any press release of any
Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the
Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is
required by law, in which case the disclosing party shall promptly provide the other party with
prior notice of such public statement or communication. Notwithstanding the foregoing, the Company
shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any
filing with the Commission or any regulatory agency or Trading Market, without the prior written
consent of such Purchaser, except (i) as required by federal securities law in connection with (A)
any registration statement contemplated by the Registration Rights Agreement and (B) the filing of
final Transaction Documents (including signature pages thereto) with the Commission and (ii) to the
extent such disclosure is required by law or Trading Market regulations, in which case the Company
shall provide the Purchasers with prior notice of such disclosure permitted under this clause (ii).

     4.5 Shareholder Rights Plan. No claim will be made or enforced by the Company or,
with the consent of the Company, any other Person, that any Purchaser is an “Acquiring Person”
under any control share acquisition, business combination, poison pill (including any distribution
under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter
adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such
plan or
arrangement, by virtue of receiving Securities under the Transaction Documents or under any
other agreement between the Company and the Purchasers.

19.

 

     4.6 Non-Public Information. Except with respect to the material terms and conditions
of the transactions contemplated by the Transaction Documents, the Company covenants and agrees
that neither it nor any other Person acting on its behalf will provide any Purchaser or its agents
or counsel with any information that the Company believes constitutes material non-public
information, unless prior thereto such Purchaser shall have executed a written agreement regarding
the confidentiality and use of such information. The Company understands and confirms that each
Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the
Company.

     4.7 Use of Proceeds. Except as set forth on Schedule 4.7 attached hereto, the Company
shall use the net proceeds from the sale of the Securities hereunder for working capital purposes
and shall not use such proceeds for (a) the satisfaction of any portion of the Company’s debt
(other than payment of trade payables in the ordinary course of the Company’s business and prior
practices), (b) the redemption of any Common Stock or Common Stock Equivalents or (c) the
settlement of any outstanding litigation.

     4.8 Indemnification of Purchasers. Subject to the provisions of this Section 4.8, the
Company will indemnify and hold each Purchaser and its directors, officers, shareholders, members,
partners, employees and agents (and any other Persons with a functionally equivalent role of a
Person holding such titles notwithstanding a lack of such title or any other title), each Person
who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20
of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or
employees (and any other Persons with a functionally equivalent role of a Person holding such
titles notwithstanding a lack of such title or any other title) of such controlling persons (each,
a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements,
court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party
may suffer or incur as a result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in the other
Transaction Documents or (b) any action instituted against a Purchaser, or any of them or their
respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser,
with respect to any of the transactions contemplated by the Transaction Documents (unless such
action is based upon a breach of such Purchaser’s representations, warranties or covenants under
the Transaction Documents or any agreements or understandings such Purchaser may have with any such
stockholder or any violations by the Purchaser of state or federal securities laws or any conduct
by such Purchaser which constitutes fraud, gross negligence, willful misconduct or malfeasance).
If any action shall be brought against any Purchaser Party in respect of which indemnity may be
sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in
writing, and the Company shall have the right to assume the defense thereof with counsel of its own
choosing reasonably acceptable to the Purchaser Party, provided, that the failure of any Purchaser
Party to give such notice shall not relieve the Company of its obligations under 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 materially prejudiced the Company. Any Purchaser Party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that
(i) the employment thereof has been

20.

 

specifically authorized by the Company in writing, (ii) the Company has failed after a
reasonable period of time to assume such defense and to employ counsel or (iii) in such action
there is, in the reasonable opinion of such separate counsel, a material conflict on any material
issue between the position of the Company and the position of such Purchaser Party, in which case
the Company shall be responsible for the reasonable fees and expenses of no more than one such
separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (i)
for any settlement by a Purchaser Party effected without the Company’s prior written consent, which
shall not be unreasonably withheld or delayed; or (ii) to the extent, but only to the extent that a
loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the
representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement
or in the other Transaction Documents.

     4.9 Reservation of Common Stock. As of the date hereof, the Company has reserved and
the Company shall continue to reserve and keep available at all times, free of preemptive rights, a
sufficient number of shares of Common Stock for the purpose of enabling the Company to issue Shares
pursuant to this Agreement and Warrant Shares pursuant to any exercise of the Warrants.

     4.10 Listing of Common Stock. The Company hereby agrees to commercially reasonable
best efforts to maintain the listing of the Common Stock on a Trading Market, and as soon as
reasonably practicable following the Closing (but not later than the earlier of the Effective Date
and the first anniversary of the Closing Date) to list all of the Shares and Warrant Shares on such
Trading Market. The Company further agrees, if the Company applies to have the Common Stock traded
on any other Trading Market, it will include in such application all of the Shares and Warrant
Shares, and will take such other action as is necessary to cause all of the Shares and Warrant
Shares to be listed on such other Trading Market as promptly as possible. The Company will take
all action reasonably necessary to continue the listing and trading of its Common Stock on a
Trading Market and will comply in all respects with the Company’s reporting, filing and other
obligations under the bylaws or rules of the Trading Market.

     4.11 Equal Treatment of Purchasers. No consideration shall be offered or paid to any
Person to amend or consent to a waiver or modification of any provision of any of the Transaction
Documents unless the same consideration is also offered to all of the parties to the Transaction
Documents. For clarification purposes, this provision constitutes a separate right granted to each
Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the
Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers
acting in concert or as a group with respect to the purchase, disposition or voting of Securities
or otherwise.

     4.12 Subsequent Equity Sales.

          (a) From the date hereof until 90 days after the Effective Date, neither the Company nor any
Subsidiary shall issue shares of Common Stock or Common Stock Equivalents; provided,
however, the 90 day period set forth in this Section 4.13 shall be extended for the number
of Trading Days during such period in which (i) trading in the Common Stock is suspended by any
Trading Market, or (ii) following the Effective Date, the Initial Registration Statement is not
effective or the prospectus included in the Registration Statement may not be used by the
Purchasers for the resale of the Shares and Warrant Shares.

21.

 

          (b) From the date hereof until such time as no Purchaser holds any of the Securities, the
Company shall be prohibited from effecting or entering into an agreement to effect any Subsequent
Financing involving a Variable Rate Transaction. “Variable Rate Transaction” means a
transaction in which the Company 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, exercise 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. Any
Purchaser 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 4.13 shall not apply in respect of an Exempt
Issuance, except that no Variable Rate Transaction shall be an Exempt Issuance.

     4.13 Short Sales and Confidentiality after the Date Hereof. Each Purchaser, severally
and not jointly with the other Purchasers, covenants that neither it nor any Affiliate acting on
its behalf or pursuant to any understanding with it will execute any Short Sales during the period
commencing at the Discussion Time and ending at the time that the transactions contemplated by this
Agreement are first publicly announced as described in Section 4.4. Each Purchaser, severally and
not jointly with the other Purchasers, covenants that until such time as the transactions
contemplated by this Agreement are publicly disclosed by the Company as described in Section 4.4,
such Purchaser will maintain the confidentiality of the existence and terms of this transaction and
the information included in the Disclosure Schedules. Each Purchaser severally and not jointly
with any other Purchaser, understands and acknowledges, and agrees, to act in a manner that will
not violate the positions of the Commission as set forth in Item 65, Section A, of the Manual of
Publicly Available Telephone Interpretations, dated July 1997, compiled by the Office of Chief
Counsel, Division of Corporation Finance. Notwithstanding the foregoing, no Purchaser makes any
representation, warranty or covenant hereby that it will not engage in Short Sales in the
securities of the Company after the time that the transactions contemplated by this Agreement are
first publicly announced as described in Section 4.4. Notwithstanding the foregoing, in the case
of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers
manage separate portions of such Purchaser’s assets and the portfolio managers have no direct
knowledge of the investment decisions made by the portfolio managers managing other portions of
such Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion
of assets managed by the portfolio manager that made the investment decision to purchase the
Securities covered by this Agreement.

     4.14 Delivery of Securities after Closing. The Company shall deliver, or cause to be
delivered, the respective Securities purchased by each Purchaser to such Purchaser within 3 Trading
Days of the Closing Date.

     4.15 Form D; Blue Sky Filings. The Company agrees to timely file a Form D with
respect to the Securities as required under Regulation D and to provide a copy thereof, promptly
upon request of any Purchaser. The Company shall take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale
to the Purchasers at the Closing under applicable securities or “Blue Sky” laws of the states of
the United States, and shall provide evidence of such actions promptly upon request of any
Purchaser.

22.

 

ARTICLE V.

MISCELLANEOUS

     5.1 Termination. This Agreement may be terminated by any Purchaser, as to such
Purchaser’s obligations hereunder only and without any effect whatsoever on the obligations between
the Company and the other Purchasers, by written notice to the other parties, if the Closing has
not been consummated on or before June 26, 2007; provided, however, that no such
termination will affect the right of any party to sue for any breach by the other party (or
parties).

     5.2 Fees and Expenses. The Company shall deliver, prior to the Closing, a completed
and executed copy of the Closing Statement, attached hereto as Annex A. 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, and in no event shall any Purchaser be responsible for the fees or
expenses incurred by any other Purchaser. The Company shall pay all Transfer Agent fees, stamp
taxes and other taxes and duties levied in connection with the delivery of any Securities to the
Purchasers.

     5.3 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.

     5.4 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 at the facsimile number set forth on the signature pages attached hereto prior to 5:30
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 at the facsimile number
set forth on the signature pages attached hereto on a day that is not a Trading Day or later than
5:30 p.m. (New York City time) on any Trading Day, (c) the 2nd Trading Day following the
date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon
actual receipt by the party to whom such notice is required to be given. The address for such
notices and communications shall be as set forth on the signature pages attached hereto.

     5.5 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 the
Purchasers of at least 85% of the Shares still held by the Purchasers or, in the case of a waiver,
by the party against whom enforcement of any such waived provision 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.

23.

 

     5.6 Headings. 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.

     5.7 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 each
Purchaser (other than by merger or sale of all or substantially all of the assets of the Company).
Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such
Purchaser assigns or transfers any Securities, provided such transferee agrees in writing to be
bound, with respect to the transferred Securities, by the provisions of the Transaction Documents
that apply to the “Purchasers.”

     5.8 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 as otherwise set forth in
Section 4.8.

     5.9 Governing Law. All questions concerning the construction, validity, enforcement
and interpretation of the Transaction Documents shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York, without regard to the principles of
conflicts of law thereof. Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by this Agreement and any
other Transaction Documents (whether brought against a party hereto or its respective affiliates,
directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state
and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of
Manhattan for the adjudication of any dispute hereunder or 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 waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any
such court, that such suit, action or proceeding is improper or is an inconvenient venue for such
proceeding. 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 other manner permitted by
law. If either party shall commence an action or proceeding to enforce any provisions of the
Transaction Documents, then the prevailing party in such action or proceeding shall be reimbursed
by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with
the investigation, preparation and prosecution of such action or proceeding.

24.

 

     5.10 Survival. The representations and warranties contained herein shall survive the
Closing and the delivery of the Shares and Warrant Shares for a period of three years.

     5.11 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 by e-mail delivery of a .“pdf” format data file, 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 .“pdf” signature
page were an original thereof.

     5.12 Severability. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the intention of the parties
that they could have executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

     5.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) any of the other Transaction
Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within the periods therein
provided, then such Purchaser 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; provided, however, in the case
of a rescission of an exercise of a Warrant, the Purchaser shall be required to return any shares
of Common Stock delivered in connection with any such rescinded exercise notice.

     5.14 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 (in the case of mutilation), or in
lieu of and substitution therefore, a new certificate or instrument, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant
for a new certificate or instrument under such circumstances shall also pay any reasonable
third-party costs (including customary indemnity) associated with the issuance of such replacement
Securities.

     5.15 Remedies. In addition to being entitled to exercise all rights provided herein
or granted by law, including recovery of damages, each of the Purchasers and the Company will be
entitled to 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 contained in the Transaction Documents and hereby agrees to waive and
not to assert in any action for specific performance of any such obligation the defense that a
remedy at law could be adequate.

25.

 

     5.16 Payment Set Aside. To the extent that the Company makes a payment or payments to
any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights
thereunder, 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, 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.

     5.17 Independent Nature of Purchasers’ Obligations and Rights. The obligations of
each Purchaser under any Transaction Document are several and not joint with the obligations of any
other Purchaser, and no Purchaser shall be responsible in any way for the performance or
non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing
contained herein or in any other Transaction Document, and no action taken by any Purchaser
pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the Purchasers are in any
way acting in concert or as a group with respect to such obligations or the transactions
contemplated by the Transaction Documents. Each Purchaser shall be entitled to independently
protect and enforce its rights, including without limitation, the rights arising out of this
Agreement or out of the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser
has been represented by its own separate legal counsel in their review and negotiation of the
Transaction Documents. For reasons of administrative convenience only, Purchasers and their
respective counsel have chosen to communicate with the Company through FWS. FWS does not represent
the Purchasers. The Company has elected to provide all Purchasers with the same terms and
Transaction Documents for the convenience of the Company and not because it was required or
requested to do so by the Purchasers.

     5.18 Liquidated Damages. The Company’s obligations to pay any partial liquidated
damages or other amounts owing under the Transaction Documents is a continuing obligation of the
Company and shall not terminate until all unpaid partial liquidated damages and other amounts have
been paid notwithstanding the fact that the instrument or security pursuant to which such partial
liquidated damages or other amounts are due and payable shall have been canceled.

     5.19 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking
of any action or the expiration of any right required or granted herein shall not be a Business
Day, then such action may be taken or such right may be exercised on the next succeeding Business
Day.

26.

 

     5.20 Construction. The parties agree that each of them and/or their respective counsel
has reviewed and had an opportunity to revise the Transaction Documents and, therefore, the
normal rule of construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of the Transaction Documents or any
amendments hereto.

     5.21 Waiver of Jury Trial. In any action, suit or proceeding in any jurisdiction
brought by any party against any other party, the parties each knowingly and intentionally, to the
greatest extent permitted by applicable law, hereby absolutely, unconditionally, irrevocably and
expressly waives forever trial by jury.

(Signature Pages Follow)

27.

 

     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.

	 	 	 	 	 	 	 
	MICROMET, INC.

	 	 	 	Address for Notice:
	 

	 	 	 	 	 	6707 Democracy Boulevard
	 

	 	 	 	 	 	Suite 505
	By:

	 	 	 	 	 	Bethesda, Maryland 20817
	 

	 	Name: Christian Itin, Ph.D.
Title:   President & CEO
	 	 	 	Attn: Matthias Alder
Fax: (240) 752-1425
	 

	 	 
	 	 	 	Tel: (240) 752-1431

With a copy to (which shall not constitute notice):

Christian E. Plaza, Esq.

Cooley Godward Kronish LLP

11951 Freedom Drive

Reston, VA 20190

Fax: (703) 456-8100

Tel: (703) 456-8000

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

28.

 

[PURCHASER SIGNATURE PAGES TO MITI SECURITIES PURCHASE AGREEMENT]

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

Name of Purchaser:                                                                                                    

Signature of Authorized Signatory of Purchaser:                                                             

Name of Authorized Signatory:                                                                                                    

Title of Authorized Signatory:                                                                                                    

Email Address of Purchaser:                                                                                                    

Fax Number of Purchaser:                                                                                                    

Address for Notice of Purchaser:

Address for Delivery of Securities for Purchaser (if not same as address for notice):

Subscription Amount: $                                        

Shares:                                         

Warrant Shares:                                         

EIN Number:

[SIGNATURE PAGES CONTINUE]

29.

 

Annex A

CLOSING STATEMENT

Pursuant to the attached Securities Purchase Agreement, dated as of the date hereto, the purchasers
shall purchase up to $                     of Common Stock and Warrants from Micromet, Inc. (the
“Company”). All funds will be wired into an account maintained by the Company. All funds
will be disbursed in accordance with this Closing Statement.

Disbursement Date: ________ ___, 2007

I. PURCHASE PRICE

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Gross Proceeds to be Received
	 	 	$	 
	 
	 	 	 	 	 	 
	II. DISBURSEMENTS
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	$	 
	 

	 	 	 	 	$	 
	 

	 	 	 	 	$	 
	 

	 	 	 	 	$	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	$	 
	Total Amount Disbursed:

	 	 	 	 	$	

WIRE INSTRUCTIONS:

To:                                         

To:                                         

30.

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