EXHIBIT 10.6

Letter of Credit Agreement

This Letter of Credit Agreement (“Letter of Credit Agreement”) dated as of
April __, 2009 is entered into by and between Cell Genesys, Inc., a Delaware
corporation (“Company”) and [                    ] (“Employee”).

WHEREAS, in order to provide additional incentive to Employee to continue
providing services to Company, Company desires to enter into a letter agreement
(the “Retention Payment Agreement”) with Employee whereunder Employee is
entitled to receive a payment under the circumstances set forth therein; and

WHEREAS, Employee is willing to enter into the Retention Payment Agreement with
Company provided that Company provides security for its obligations thereunder
in the form of a irrevocable standby letter of credit.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties agree as follows:

 

1. Company shall use commercially reasonable efforts to cause to be delivered to
Employee an irrevocable, standby letter of credit issued in favor of Employee by
Wells Fargo Bank, N.A. (the “Bank”) substantially in the form attached hereto as
Exhibit A (the “Letter of Credit”); provided, however, that in the event Bank
does not issue such Letter of Credit or substantially in such form, Company
shall use commercially reasonable efforts to cause to be issued a standby letter
of credit agreement with such bank and in such form as Company and Employee
shall reasonably agree (in such cases references to “Bank” and “Letter of
Credit” in this Letter of Credit Agreement shall hereinafter refer to such
replacement bank or letter of credit). The Letter of Credit shall serve as
security for any and all of Company’s obligations to Employee, which may arise
under the terms of the aforementioned Retention Payment Agreement. Unless
otherwise defined herein or the context otherwise requires, each defined term
used herein shall have the meaning ascribed to it in the Retention Payment
Agreement, including Exhibit A thereto.

 

2. Company shall at all times maintain the Letter of Credit until all
obligations of Company have been satisfied in full by payment of the applicable
payment amount accrued to Employee under one of the three circumstances set
forth in the Retention Payment Agreement (the “Accrued Payment”) or until such
time as Employee is no longer eligible to receive any Accrued Payment under the
Retention Payment Agreement.

 

3. Provided that Company complies with paragraph 4 of this Letter of Credit
Agreement, Employee shall, on and after the thirtieth (30th) day following the
Entitlement Date (as such term is defined below in Section 4) be entitled to
draw on the Letter of Credit as follows: (1) if the Company has not paid
Employee the full amount of the Net Entitlement (as defined below) and has not
provided Employee reasonable documentation that any withholding obligations
related to the Accrued Payment have been satisfied, Employee shall be entitled
to draw on the Letter of Credit up to the amount of the Accrued Payment (to the
extent not theretofore paid by Company to the Employee) that Employee is
entitled to receive pursuant to the Retention Payment Agreement (“Gross
Entitlement”); or (2) if the Company has not paid Employee the Net Entitlement
but has remitted the withholding taxes related to the Accrued Payment to the
related taxing authorities, Employee shall be entitled to draw on the Letter of
Credit up to the Gross Entitlement (to the extent not theretofore paid by
Company to Employee) net of any withholding tax obligations (such Gross
Entitlement after deduction of any withholding tax obligations, the “Net
Entitlement”).

 

4. Within 5 business days of the date Employee first becomes entitled to payment
of the Accrued Payment pursuant to the terms of the Retention Payment Agreement
(such date of first entitlement, the “Entitlement Date”), Company shall provide
written notice to Employee, with a copy to Wells Fargo Bank, N.A., indicating
eligibility under the Retention Payment Agreement and the amount of the Net
Entitlement.

 

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5. If Company shall fail to provide the notice within the period specified in
paragraph 4, the Employee shall be entitled to draw on the Letter of Credit up
to the amount of the Gross Entitlement, provided that Employee has provided the
documentation required in the Letter of Credit.

 

6. If Employee’s employment with the Company is terminated and Employee is not
eligible for any payment under the Retention Payment Agreement, Employee agrees
to surrender the Letter of Credit, execute such documents and take such actions
as may be required to cause the Letter of Credit to be terminated as soon as
reasonably practicable.

 

7. In the event of a Change of Control, as defined in the Retention Payment
Agreement, this Letter of Credit Agreement, including without limitation the
Company’s obligation to provide Notice, will inure to and be binding upon the
Company’s successors. The Company will require any successor to agree in writing
to assume this Agreement.

 

8. The obligation of Company to provide the Letter of Credit shall terminate
when all obligations under the Retention Payment Agreement terminate.

 

9. The rights of Employee under this Letter of Credit Agreement shall not be
assignable by Employee without Company’s consent, which may be withheld in
Company’s sole discretion.

 

10. In no event shall the fact that Company established and/or maintains the
Letter of Credit or any renewal or replacement thereof be construed as an
employment or service commitment by Company (or any of its affiliates), affect
Employee’s status as an employee at will who is subject to termination without
cause at any time, or interfere in any way with Company’s right (or the right of
its affiliates) to change Employee’s compensation or other terms of employment
at any time.

 

11. Other than Company’s withholding of taxes as required by law, Employee shall
be solely responsible for his or her own tax liability with respect to amounts
payable to Employee pursuant to the Retention Payment Agreement, this Letter of
Credit Agreement and/or the Letter of Credit. To the extent Employee draws on
the Letter of Credit in excess of the Net Entitlement (i.e., such draw includes
amounts attributed to withholding obligations not satisfied by Company),
Employee agrees to timely remit all of Employee’s required taxes related to the
Accrued Payment (including amounts that otherwise should have been withheld by
Company) to the applicable taxing authorities.

 

12. Any failure of Company to perform any of its obligations hereunder shall be
a default under the Retention Payment Agreement.

 

13. Each of the parties acknowledge that, in light of the uniqueness of the
transactions contemplated by this Agreement, each party would not have an
adequate remedy at law for money damages in the event that this Agreement has
not been performed in accordance with its terms and therefore agrees that the
other party shall be entitled to specific performance of the terms hereof in
addition to any other remedy that it may be entitled, at law or in equity.

 

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14. Employee hereby acknowledges that knowingly making false statements for the
purpose of drawing on the Letter of Credit may be a violation of applicable law
in addition to a breach of this Agreement.

 

15. This Letter of Credit Agreement shall be governed by the laws of New York,
without regard to the principles of conflicts of laws.

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

 

CELL GENESYS, INC.

By

 

 

 

Title

 

 

EMPLOYEE

By

   

 

 

Title

 

 

 

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