Document:

EX-10.99

Exhibit 10.99

PURCHASE AGREEMENT

THIS PURCHASE AGREEMENT (“Agreement”) is made as of the 24th day of August, 2007 by
and among Meade Instruments Corp., a Delaware corporation (the “Company”), and the Investors set
forth on the signature pages affixed hereto (each an “Investor” and collectively the “Investors”).

Recitals

A. The Company and the Investors are executing and delivering this Agreement in reliance upon
the exemption from securities registration afforded by the provisions of Regulation D (“Regulation
D”), as promulgated by the U.S. Securities and Exchange Commission (the “SEC”) under the Securities
Act of 1933, as amended; and

B. The Investors wish to purchase from the Company, and the Company wishes to sell and issue
to the Investors, upon the terms and conditions stated in this Agreement, an aggregate of 3,157,895
shares (the “Shares”) of the Company’s Common Stock, par value $0.01 per share (together with any
securities into which such shares may be reclassified the “Common Stock”), at a purchase price of
$1.90 per share; provided that the purchase price for the Hummingbird Funds will be the greater of
(i) $1.90 and (ii) the closing bid price on Nasdaq immediately preceding the time the Company
enters into this Agreement; and

C. Contemporaneous with the sale of the Shares, the parties hereto will execute and deliver a
Registration Rights Agreement, in the form attached hereto as Exhibit A (the “Registration
Rights Agreement”), pursuant to which the Company will agree to provide certain registration rights
under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder,
and applicable state securities laws.

In consideration of the mutual promises made herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

1. Definitions. In addition to those terms defined above and elsewhere in this
Agreement, for the purposes of this Agreement, the following terms shall have the meanings set
forth below:

“Affiliate” means, with respect to any Person, any other Person which directly or
indirectly through one or more intermediaries Controls, is controlled by, or is under common
control with, such Person.

“Business Day” means a day, other than a Saturday or Sunday, on which banks in New
York City are open for the general transaction of business.

“Common Stock Equivalents” means any securities of the Company or the Subsidiaries
which would 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 exchangeable for, or otherwise entitles the holder thereof to receive,
Common Stock.

“Company’s Knowledge” means the actual knowledge of those Persons serving as of the
date hereof as the executive officers (as defined in Rule 405 under the 1933 Act) of the Company,
after due inquiry.

“Confidential Information” means trade secrets, confidential information and know-how
(including but not limited to ideas, formulae, compositions, processes, procedures and techniques,
research and development information, computer program code, performance specifications, support
documentation, drawings, specifications, designs, business and marketing plans, and customer and
supplier lists and related information).

“Control” (including the terms “controlling”, “controlled by” or “under common control
with”) means the possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.

“Effective Date” means the date on which the initial Registration Statement is
declared effective by the SEC.

“Effectiveness Deadline” means the date on which the initial Registration Statement is
required to be declared effective by the SEC under the terms of the Registration Rights Agreement.

“Hummingbird Funds” means collectively Hummingbird Concentrated Fund, L.P.,
Hummingbird Value Fund, L.P., and Hummingbird Microcap Value Fund, L.P.

“Intellectual Property” means all of the following: (i) patents, patent applications,
patent disclosures and inventions (whether or not patentable and whether or not reduced to
practice); (ii) trademarks, service marks, trade dress, trade names, corporate names, logos,
slogans and Internet domain names, together with all goodwill associated with each of the
foregoing; (iii) copyrights and copyrightable works; (iv) registrations, applications and renewals
for any of the foregoing; and (v) proprietary computer software (including but not limited to data,
data bases and documentation).

“Material Adverse Effect” means a material adverse effect on (i) the assets,
liabilities, results of operations, condition (financial or otherwise), business, or prospects of
the Company and its Subsidiaries taken as a whole, (ii) the ability of the Company to perform its
obligations under the Transaction Documents or (iii) the legality, validity or enforceability of
the transactions contemplated hereby.

“Nasdaq” means The Nasdaq Stock Market, Inc.

“Person” means an individual, corporation, partnership, limited liability company,
trust, business trust, association, joint stock company, joint venture, sole proprietorship,
unincorporated organization, governmental authority or any other form of entity not specifically
listed herein.

“Purchase Price” means $1.90, provided that the purchase price for the Hummingbird
Funds will be the greater of (i) $1.90 and (ii) the closing bid price on Nasdaq immediately
preceding the time the Company enters into this Agreement.

“Registration Statement” has the meaning set forth in the Registration Rights
Agreement.

“SEC Filings” has the meaning set forth in Section 4.6.

“Subsidiary” of any Person means another Person, an amount of the voting securities,
other voting ownership or voting partnership interests of which is sufficient to elect at least a
majority of its Board of Directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interests of which) is owned directly or indirectly by such
first Person.

“Transaction Documents” means this Agreement and the Registration Rights Agreement.

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

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

2. Purchase and Sale of the Shares. Subject to the terms and conditions of this
Agreement, on the Closing Date, each of the Investors shall severally, and not jointly, purchase,
and the Company shall sell and issue to the Investors, the Shares in the respective amounts set
forth opposite the Investors’ names on the signature pages attached hereto in exchange for the
Purchase Price as specified in Section 3 below.

3. Closing. Upon confirmation that the other conditions to closing specified herein
have been satisfied or duly waived by the Investors, the Company shall deliver to Lowenstein
Sandler PC, in trust, a certificate or certificates, registered in such name or names as the
Investors may designate, representing the Shares, with instructions that such certificates are to
be held for release to the Investors only upon payment in full of the Purchase Price to the Company
by all the Investors. Upon such receipt by Lowenstein Sandler PC of the certificates, each
Investor shall promptly, but no more than one Business Day thereafter, cause a wire transfer in
same day funds to be sent to the account of the Company as instructed in writing by the Company, in
an amount representing such Investor’s pro rata portion of the Purchase Price as set forth on the
signature pages to this Agreement. On the date (the “Closing Date”) the Company receives the
Purchase Price, the certificates evidencing the Shares shall be released to the Investors (the
“Closing”). The Closing of the purchase and sale of the Shares shall take place at the offices of
Lowenstein Sandler PC, 1251 Avenue of the Americas, 18th Floor, New York, New York 10020, or at
such other location and on such other date as the Company and the Investors shall mutually agree.

4. Representations and Warranties of the Company. The Disclosure Schedule attached
hereto as Exhibit 1 (the “Disclosure Schedule”) contains matters required to be disclosed pursuant
to this Section 4 that correspond to the numbered sections contained in this Section 4. The
Disclosure Schedule also lists exceptions to the following representations and warranties that
correspond to the numbered Sections contained in this Section 4. Except as set forth in the
Disclosure Schedule, the Company hereby represents and warrants to the Investors as follows:

4. 1 Organization, Good Standing and Qualification. Each of the Company and its
Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power and authority to
carry on its business as now conducted and to own its properties. Each of the Company and its
Subsidiaries is duly qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which the conduct of its business or its ownership or leasing of property
makes such qualification or leasing necessary unless the failure to so qualify has not had and
could not reasonably be expected to have a Material Adverse Effect. The Company’s Subsidiaries are
listed on Schedule 4.1 of the Disclosure Schedule.

4.2 Authorization. The Company has full power and authority and has taken all
requisite action on the part of the Company, its officers, directors and stockholders necessary for
(i) the authorization, execution and delivery of the Transaction Documents, (ii) the authorization
of the performance of all obligations of the Company hereunder or thereunder, and (iii) the
authorization, issuance (or reservation for issuance) and delivery of the Shares. The Transaction
Documents constitute the legal, valid and binding obligations of the Company, enforceable against
the Company in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability, relating to or affecting
creditors’ rights generally.

4.3 Capitalization. Schedule 4.3 of the Disclosure Schedule sets forth (a)
the authorized capital stock of the Company on the date hereof; (b) the number of shares of capital
stock issued and outstanding, exclusive of the Shares; (c) the number of shares of capital stock
issuable pursuant to the Company’s stock plans; and (d) the number of shares of capital stock
issuable and reserved for issuance pursuant to securities (other than the Shares) exercisable for,
or convertible into or exchangeable for any shares of capital stock of the Company. All of the
issued and outstanding shares of the Company’s capital stock have been duly authorized and validly
issued and are fully paid, nonassessable and free of pre-emptive rights and were issued in full
compliance with applicable state and federal securities law and any rights of third parties.
Except as described on Schedule 4.3, all of the issued and outstanding shares of capital
stock of each Subsidiary have been duly authorized and validly issued and are fully paid,
nonassessable and free of pre-emptive rights, were issued in full compliance with applicable state
and federal securities law and any rights of third parties and are owned by the Company,
beneficially and of record, subject to no lien, encumbrance or other adverse claim. Except as
described on Schedule 4.3, no Person is entitled to pre-emptive or similar statutory or
contractual rights with respect to any securities of the Company. Except as described on
Schedule 4.3, there are no outstanding warrants, options, convertible securities or other
rights, agreements or arrangements of any character under which the Company or any of its
Subsidiaries is or may be obligated to issue any equity securities of any kind and except as
contemplated by this Agreement, neither the Company nor any of its Subsidiaries is currently in
negotiations for the issuance of any equity securities of any kind. Except as described on
Schedule 4.3 and except for the Registration Rights Agreement, there are no voting
agreements, buy-sell agreements, option or right of first purchase agreements or other agreements
of any kind among the Company and any of the securityholders of the Company relating to the
securities of the Company held by them. Except as described on Schedule 4.3 and except as
provided in the Registration Rights Agreement, no Person has the right to require the Company to
register any securities of the Company under the 1933 Act, whether on a demand basis or in
connection with the registration of securities of the Company for its own account or for the
account of any other Person.

Except as described on Schedule 4.3, the issuance and sale of the Shares hereunder
will not obligate the Company to issue shares of Common Stock or other securities to any other
Person (other than the Investors) and will not result in the adjustment of the exercise,
conversion, exchange or reset price of any outstanding security.

Except as described on Schedule 4.3, the Company does not have outstanding stockholder
purchase rights or “poison pill” or any similar arrangement in effect giving any Person the right
to purchase any equity interest in the Company upon the occurrence of certain events.

4.4 Valid Issuance. The Shares have been duly and validly authorized and, when issued
and paid for pursuant to this Agreement, will be validly issued, fully paid and nonassessable, and
shall be free and clear of all encumbrances and restrictions (other than those created by the
Investors), except for restrictions on transfer set forth in the Transaction Documents or imposed
by applicable securities laws.

4.5 Consents. The execution, delivery and performance by the Company of the
Transaction Documents and the offer, issuance and sale of the Shares require no consent of, action
by or in respect of, or filing with, any Person, governmental body, agency, or official other than
filings that have been made pursuant to applicable state securities laws and post-sale filings
pursuant to applicable state and federal securities laws which the Company undertakes to file
within the applicable time periods. Subject to the accuracy of the representations and warranties
of each Investor set forth in Section 5 hereof, the Company has taken all action necessary to
exempt (i) the issuance and sale of the Shares, and (ii) the other transactions contemplated by the
Transaction Documents from the provisions of any stockholder rights plan or other “poison pill”
arrangement, any anti-takeover, business combination or control share law or statute binding on the
Company or to which the Company or any of its assets and properties may be subject and any
provision of the Company’s Certificate of Incorporation or Bylaws that is or could reasonably be
expected to become applicable to the Investors as a result of the transactions contemplated hereby,
including without limitation, the issuance of the Shares and the ownership, disposition or voting
of the Shares by the Investors or the exercise of any right granted to the Investors pursuant to
this Agreement or the other Transaction Documents.

4.6 Delivery of SEC Filings; Business. The Company has made available to the
Investors through the EDGAR system, true and complete copies of the Company’s most recent Annual
Report on Form 10-K for the fiscal year ended February 28, 2007 (the “10-K”), and all other reports
filed by the Company pursuant to the 1934 Act since the filing of the 10-K and prior to the date
hereof (collectively, the “SEC Filings”). The SEC Filings are the only filings required of the
Company pursuant to the 1934 Act for such period. The Company and its Subsidiaries are engaged in
all material respects only in the business described in the SEC Filings and the SEC Filings contain
a complete and accurate description in all material respects of the business of the Company and its
Subsidiaries, taken as a whole.

4.7 Use of Proceeds. The net proceeds of the sale of the Shares hereunder shall be
used by the Company for working capital and general corporate purposes.

4.8 No Material Adverse Change. Since February 28, 2007, except as identified and
described in the SEC Filings or as described on Schedule 4.8, there has not been:

(i) any change in the consolidated assets, liabilities, financial condition or operating
results of the Company from that reflected in the financial statements included in the Company’s
Quarterly Report on Form 10-Q for the quarter ended May 31, 2007, except for changes in the
ordinary course of business which have not had and could not reasonably be expected to have a
Material Adverse Effect, individually or in the aggregate;

(ii) any declaration or payment of any dividend, or any authorization or payment of any
distribution, on any of the capital stock of the Company, or any redemption or repurchase of any
securities of the Company;

(iii) any material damage, destruction or loss, whether or not covered by insurance to any
assets or properties of the Company or its Subsidiaries;

(iv) any waiver, not in the ordinary course of business, by the Company or any Subsidiary of a
material right or of a material debt owed to it;

(v) any satisfaction or discharge of any lien, claim or encumbrance or payment of any
obligation by the Company or a Subsidiary, except in the ordinary course of business or which is
not material to the assets, properties, financial condition, operating results or business of the
Company and its Subsidiaries taken as a whole (as such business is presently conducted and as it is
proposed to be conducted);

(vi) any change or amendment to the Company’s Certificate of Incorporation or Bylaws, or
material change to any material contract or arrangement by which the Company or any Subsidiary is
bound or to which any of their respective assets or properties is subject;

(vii) any material labor difficulties or labor union organizing activities with respect to
employees of the Company or any Subsidiary;

(viii) any material transaction entered into by the Company or a Subsidiary other than in the
ordinary course of business;

(ix) the loss of the services of any key employee, or material change in the composition or
duties of the senior management of the Company or any Subsidiary;

(x) the loss of any customer which has had or could reasonably be expected to have a Material
Adverse Effect; or

(xi) any other event or condition of any character that has had or could reasonably be
expected to have a Material Adverse Effect.

4.9 SEC Filings.

(a) At the time of filing thereof, the SEC Filings complied as to form in all material
respects with the requirements of the 1934 Act and did not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not misleading.

(b) Each registration statement and any amendment thereto filed by the Company since January
1, 2004 pursuant to the 1933 Act and the rules and regulations thereunder, as of the date such
statement or amendment became effective, complied as to form in all material respects with the 1933
Act and did not contain any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements made therein not
misleading; and each prospectus filed pursuant to Rule 424(b) under the 1933 Act, as of its issue
date and as of the closing of any sale of securities pursuant thereto did not contain any untrue
statement of a material fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the circumstances under
which they were made, not misleading.

4.10 No Conflict, Breach, Violation or Default. The execution, delivery and
performance of the Transaction Documents by the Company and the issuance and sale of the Shares
will not conflict with or result in a breach or violation of any of the terms and provisions of, or
constitute a default under or otherwise accelerate any rights pursuant to (i) the Company’s
Certificate of Incorporation or the Company’s Bylaws, both as in effect on the date hereof (true
and complete copies of which have been made available to the Investors through the EDGAR system),
or (ii)(a) any statute, rule, regulation or order of any governmental agency or body or any court,
domestic or foreign, having jurisdiction over the Company, any Subsidiary or any of their
respective assets or properties, or (b) any agreement or instrument to which the Company or any
Subsidiary is a party or by which the Company or a Subsidiary is bound or to which any of their
respective assets or properties is subject, except, in the case of clause (ii) only, for such
conflicts, breaches or violations as have not had and could not reasonably be expected to have a
Material Adverse Effect, individually or in the aggregate.

4.11 Tax Matters. The Company and each Subsidiary has timely prepared and filed all
tax returns required to have been filed by the Company or such Subsidiary with all appropriate
governmental agencies and timely paid all taxes shown thereon or otherwise owed by it. The
charges, accruals and reserves on the books of the Company in respect of taxes for all fiscal
periods are adequate in all material respects, and there are no material unpaid assessments against
the Company or any Subsidiary nor, to the Company’s Knowledge, any basis for the assessment of any
additional taxes, penalties or interest for any fiscal period or audits by any federal, state or
local taxing authority except for any assessment which is not material to the Company and its
Subsidiaries, taken as a whole. All taxes and other assessments and levies that the Company or any
Subsidiary is required to withhold or to collect for payment have been duly withheld and collected
and paid to the proper governmental entity or third party when due. There are no tax liens or
claims pending or, to the Company’s Knowledge, threatened against the Company or any Subsidiary or
any of their respective assets or property. Except as described on Schedule 4.11, there
are no outstanding tax sharing agreements or other such arrangements between the Company and any
Subsidiary or other corporation or entity.

4.12 Title to Properties. Except as disclosed in the SEC Filings, the Company and
each Subsidiary has good and marketable title to all real properties and all other properties and
assets owned by it, in each case free from liens, encumbrances and defects that would materially
affect the value thereof or materially interfere with the use made or currently planned to be made
thereof by them; and except as disclosed in the SEC Filings, the Company and each Subsidiary holds
any leased real or personal property under valid and enforceable leases with no exceptions that
would materially interfere with the use made or currently planned to be made thereof by them.

4.13 Certificates, Authorities and Permits. The Company and each Subsidiary possess
adequate certificates, authorities or permits issued by appropriate governmental agencies or bodies
necessary to conduct the business now operated by it, and neither the Company nor any Subsidiary
has received any notice of proceedings relating to the revocation or modification of any such
certificate, authority or permit that, if determined adversely to the Company or such Subsidiary,
could reasonably be expected to have a Material Adverse Effect, individually or in the aggregate.

4.14 Labor Matters.

(a) Except as set forth on Schedule 4.14 of the Disclosure Schedule, the Company is
not a party to or bound by any collective bargaining agreements or other agreements with labor
organizations. The Company has not violated in any material respect any laws, regulations, orders
or contract terms, affecting the collective bargaining rights of employees, labor organizations or
any laws, regulations or orders affecting employment discrimination, equal opportunity employment,
or employees’ health, safety, welfare, wages and hours.

(b) (i) There are no labor disputes existing, or to the Company’s Knowledge, threatened,
involving strikes, slow-downs, work stoppages, job actions, disputes, lockouts or any other
disruptions of or by the Company’s employees, (ii) there are no unfair labor practices or petitions
for election pending or, to the Company’s Knowledge, threatened before the National Labor Relations
Board or any other federal, state or local labor commission relating to the Company’s employees,
(iii) no demand for recognition or certification heretofore made by any labor organization or group
of employees is pending with respect to the Company and (iv) to the Company’s Knowledge, the
Company enjoys good labor and employee relations with its employees and labor organizations.

(c) The Company is, and at all times has been, in compliance in all material respects with all
applicable laws respecting employment (including laws relating to classification of employees and
independent contractors) and employment practices, terms and conditions of employment, wages and
hours, and immigration and naturalization. There are no claims pending against the Company before
the Equal Employment Opportunity Commission or any other administrative body or in any court
asserting any violation of Title VII of the Civil Rights Act of 1964, the Age Discrimination Act of
1967, 42 U.S.C. §§ 1981 or 1983 or any other federal, state or local Law, statute or ordinance
barring discrimination in employment.

(d) Except as disclosed in the SEC Filings or as described on Schedule 4.14, the
Company is not a party to, or bound by, any employment or other contract or agreement that contains
any severance, termination pay or change of control liability or obligation, including, without
limitation, any “excess parachute payment,” as defined in Section 280G(b) of the Internal Revenue
Code.

(e) Except as specified in Schedule 4.14, each of the Company’s employees is a Person
who is either a United States citizen or a permanent resident entitled to work in the United
States. To the Company’s Knowledge, the Company has no liability for the improper classification
by the Company of such employees as independent contractors or leased employees prior to the
Closing.

4.15 Intellectual Property. Except as described in Schedule 4.15:

(a) All Intellectual Property of the Company and its Subsidiaries is currently in compliance
with all legal requirements (including timely filings, proofs and payments of fees) and is valid
and enforceable. No Intellectual Property of the Company or its Subsidiaries which is necessary
for the conduct of Company’s and each of its Subsidiaries’ respective businesses as currently
conducted has been or is now involved in any cancellation, dispute or litigation, and, to the
Company’s Knowledge, no such action is threatened. No patent of the Company or its Subsidiaries
has been or is now involved in any interference, reissue, re-examination or opposition proceeding.

(b) All of the material licenses and material sublicenses and material consent, royalty or
other agreements concerning Intellectual Property which are necessary for the conduct of the
Company’s and each of its Subsidiaries’ respective businesses as currently conducted to which the
Company or any Subsidiary is a party or by which any of their assets are bound (other than
 generally commercially available, non-custom, off-the-shelf software application programs having a
retail acquisition price of less than $10,000 per license) (collectively, “License Agreements”) are
valid and binding obligations of the Company or its Subsidiaries that are parties thereto and, to
the Company’s Knowledge, the other parties thereto, enforceable in accordance with their terms,
except to the extent that enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement
of creditors’ rights generally, and there exists no event or condition which will result in a
material violation or breach of or constitute (with or without due notice or lapse of time or both)
a default by the Company or any of its Subsidiaries under any such License Agreement.

(c) The Company and its Subsidiaries own or have the valid right to use all of the
Intellectual Property that is necessary for the conduct of the Company’s and each of its
Subsidiaries’ respective businesses as currently conducted and for the ownership, maintenance and
operation of the Company’s and its Subsidiaries’ properties and assets, free and clear of all
liens, encumbrances, adverse claims or obligations to license all such owned Intellectual Property
and Confidential Information, other than licenses entered into in the ordinary course of the
Company’s and its Subsidiaries’ businesses. The Company and its Subsidiaries have a valid and
enforceable right to use all third party Intellectual Property and Confidential Information used or
held for use in the respective businesses of the Company and its Subsidiaries.

(d) The conduct of the Company’s and its Subsidiaries’ businesses as currently conducted does
not infringe or otherwise impair or conflict with (collectively, “Infringe”) any Intellectual
Property rights of any third party or any confidentiality obligation owed to a third party, and, to
the Company’s Knowledge, the Intellectual Property and Confidential Information of the Company and
its Subsidiaries which are necessary for the conduct of Company’s and each of its Subsidiaries’
respective businesses as currently conducted are not being Infringed by any third party. Except as
set forth in the SEC Filings, there is no litigation or order pending or outstanding or, to the
Company’s Knowledge, threatened or imminent, that seeks to limit or challenge or that concerns the
ownership, use, validity or enforceability of any Intellectual Property or Confidential Information
of the Company and its Subsidiaries and the Company’s and its Subsidiaries’ use of any Intellectual
Property or Confidential Information owned by a third party, and, to the Company’s Knowledge, there
is no valid basis for the same.

(e) The consummation of the transactions contemplated hereby and by the other Transaction
Documents will not result in the alteration, loss, impairment of or restriction on the Company’s or
any of its Subsidiaries’ ownership or right to use any of the Intellectual Property or Confidential
Information which is necessary for the conduct of Company’s and each of its Subsidiaries’
respective businesses as currently conducted.

(f) The Company and its Subsidiaries have taken reasonable steps to protect the Company’s and
its Subsidiaries’ rights in their Intellectual Property and Confidential Information. Each
employee, consultant and contractor who has had access to Confidential Information which is
necessary for the conduct of Company’s and each of its Subsidiaries’ respective businesses as
currently conducted has executed an agreement to maintain the confidentiality of such Confidential
Information and has executed appropriate agreements that are substantially consistent with the
Company’s standard forms thereof. Except under confidentiality obligations, there has been no
material disclosure of any of the Company’s or its Subsidiaries’ Confidential Information to any
third party.

4.16 Environmental Matters. Neither the Company nor any Subsidiary is in violation of
any statute, rule, regulation, decision or order of any governmental agency or body or any court,
domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or
relating to the protection or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, “Environmental Laws”), owns or operates any real property
contaminated with any substance that is subject to any Environmental Laws, is liable for any
off-site disposal or contamination pursuant to any Environmental Laws, or is subject to any claim
relating to any Environmental Laws, which violation, contamination, liability or claim has had or
could reasonably be expected to have a Material Adverse Effect, individually or in the aggregate;
and there is no pending or, to the Company’s Knowledge, threatened investigation that might lead to
such a claim.

4.17 Litigation. Except as set forth in the SEC Filings or as described on Schedule
4.17, there are no pending actions, suits or proceedings against or affecting the Company, its
Subsidiaries or any of its or their properties; and to the Company’s Knowledge, no such actions,
suits or proceedings are threatened or contemplated. Neither the Company nor any Subsidiary, nor
any director or officer thereof, is or since January 1, 2002 has been the subject of any action
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 Company’s Knowledge, there is not pending
or contemplated, any investigation by the SEC involving the Company or any current or former
director or officer of the Company. The SEC 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 1933 Act or the 1934 Act.

4.18 Financial Statements. The financial statements included in each SEC Filing
present fairly, in all material respects, the consolidated financial position of the Company as of
the dates shown and its consolidated results of operations and cash flows for the periods shown,
and such financial statements have been prepared in conformity with United States generally
accepted accounting principles applied on a consistent basis (“GAAP”) (except as may be disclosed
therein or in the notes thereto, and, in the case of quarterly financial statements, as permitted
by Form 10-Q under the 1934 Act). Except as set forth in the financial statements of the Company
included in the SEC Filings filed prior to the date hereof or as described on Schedule 4.18
of the Disclosure Schedule, neither the Company nor any of its Subsidiaries has incurred any
liabilities, contingent or otherwise, except those incurred in the ordinary course of business,
consistent (as to amount and nature) with past practices since the date of such financial
statements, none of which, individually or in the aggregate, have had or could reasonably be
expected to have a Material Adverse Effect.

4.19 Insurance Coverage. The Company and each Subsidiary maintains in full force and
effect insurance coverage that is customary for comparably situated companies for the business
being conducted and properties owned or leased by the Company and each Subsidiary, and the Company
reasonably believes such insurance coverage to be adequate against all liabilities, claims and
risks against which it is customary for comparably situated companies to insure.

4.20 Compliance with Nasdaq Continued Listing Requirements. The Company is in
compliance with applicable Nasdaq continued listing requirements. Except as described in
Schedule 4.20, there are no proceedings pending or, to the Company’s Knowledge, threatened
against the Company relating to the continued listing of the Common Stock on Nasdaq and the Company
has not received any notice of, nor to the Company’s Knowledge is there any basis for, the
delisting of the Common Stock from Nasdaq.

4.21 Brokers and Finders. No Person will have, as a result of the transactions
contemplated by the Transaction Documents, any valid right, interest or claim against or upon the
Company, any Subsidiary or an Investor for any commission, fee or other compensation pursuant to
any agreement, arrangement or understanding entered into by or on behalf of the Company, other than
as described in Schedule 4.21 of the Disclosure Schedule.

4.22 No Directed Selling Efforts or General Solicitation. Neither the Company nor any
Person acting on its behalf has conducted any general solicitation or general advertising (as those
terms are used in Regulation D) in connection with the offer or sale of any of the Shares.

4.23 No Integrated Offering. 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
Company security or solicited any offers to buy any security, under circumstances that would
adversely affect reliance by the Company on Section 4(2) for the exemption from registration for
the transactions contemplated hereby or would require registration of the Shares under the 1933
Act.

4.24 Private Placement. Assuming the accuracy of the representations and warranties
made by the Investors set forth in Section 5 hereof, the offer and sale of the Shares to the
Investors as contemplated hereby is exempt from the registration requirements of the 1933 Act.

4.25 Questionable Payments. Neither the Company nor any of its Subsidiaries nor, to
the Company’s Knowledge, any of their respective current or former stockholders, directors,
officers, employees, agents or other Persons acting on behalf of the Company or any Subsidiary, has
on behalf of the Company or any Subsidiary or in connection with their respective businesses: (a)
used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity; (b) made any direct or indirect unlawful payments to any
governmental officials or employees from corporate funds; (c) established or maintained any
unlawful or unrecorded fund of corporate monies or other assets; (d) made any false or fictitious
entries on the books and records of the Company or any Subsidiary; or (e) made any unlawful bribe,
rebate, payoff, influence payment, kickback or other unlawful payment of any nature.

4.26 Transactions with Affiliates. Except as disclosed in the SEC Filings or as
disclosed on Schedule 4.26 of the Disclosure Schedule, none of the officers or directors of
the Company and, to the Company’s Knowledge, none of the employees of the Company is presently a
party to any transaction with the Company or any Subsidiary (other than as holders of stock options
and/or warrants, and 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 of real or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the Company’s Knowledge, any entity in which any officer,
director, or any such employee has a substantial interest or is an officer, director, trustee or
partner.

4.27 Internal Controls. Except as disclosed in Schedule 4.27, the Company is
in material compliance with the provisions of the Sarbanes-Oxley Act of 2002 currently applicable
to the Company. 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 1934 Act
Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures
to ensure that material information relating to the Company, including the Subsidiaries, is made
known to the certifying officers by others within those entities, particularly during the period in
which the Company’s most recently filed periodic report under the 1934 Act, as the case may be, is
being prepared. The Company’s certifying officers have evaluated the effectiveness of the
Company’s controls and procedures as of the end of the period covered by the most recently filed
periodic report under the 1934 Act (such date, the “Evaluation Date”). The Company presented in
its most recently filed periodic report under the 1934 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 significant
changes in the Company’s internal controls (as such term is defined in Item 308 of Regulation S-K)
or, to the Company’s Knowledge, in other factors that could significantly affect the Company’s
internal controls. The Company maintains and will continue to maintain a standard system of
accounting established and administered in accordance with GAAP and the applicable requirements of
the 1934 Act.

4.28 Disclosures. Except as described on Schedule 4.28 of the Disclosure
Schedule, neither the Company nor any Person acting on its behalf has provided the Investors or
their agents or counsel with any information that constitutes or might constitute material,
non-public information, other than the terms of the transactions contemplated hereby. The written
materials delivered to the Investors in connection with the transactions contemplated by the
Transaction Documents do not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.

5. Representations and Warranties of the Investors. Each of the Investors hereby
severally, and not jointly, represents and warrants to the Company that:

5.1 Organization and Existence. Such Investor is a validly existing corporation,
limited partnership or limited liability company and has all requisite corporate, partnership or
limited liability company power and authority to invest in the Shares pursuant to this Agreement.

5.2 Authorization. The execution, delivery and performance by such Investor of the
Transaction Documents to which such Investor is a party have been duly authorized and each will
constitute the legal, valid and binding obligations of such Investor, enforceable against such
Investor in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability, relating to or affecting
creditors’ rights generally.

5.3 Purchase Entirely for Own Account. The Shares to be received by such Investor
hereunder will be acquired for such Investor’s own account, not as nominee or agent, and not with a
view to the resale or distribution of any part thereof in violation of the 1933 Act, and such
Investor has no present intention of selling, granting any participation in, or otherwise
distributing the same in violation of the 1933 Act without prejudice, however, to such Investor’s
right at all times to sell or otherwise dispose of all or any part of such Shares in compliance
with applicable federal and state securities laws. Nothing contained herein shall be deemed a
representation or warranty by such Investor to hold the Shares for any period of time. Such
Investor is not a broker-dealer registered with the SEC under the 1934 Act or an entity engaged in
a business that would require it to be so registered.

5.4 Investment Experience. Such Investor acknowledges that it can bear the economic
risk and complete loss of its investment in the Shares and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and risks of the
investment contemplated hereby.

5.5 Disclosure of Information. Such Investor has had an opportunity to receive all
information related to the Company requested by it and to ask questions of and receive answers from
the Company regarding the Company, its business and the terms and conditions of the offering of the
Shares. Such Investor acknowledges receipt of copies of the SEC Filings. Neither such inquiries
nor any other due diligence investigation conducted by such Investor shall modify, limit or
otherwise affect such Investor’s right to rely on the Company’s representations and warranties
contained in this Agreement. The parties agree that each Investor may determine that it wants to
limit the type of information that it receives and, consequently, each Investor shall have the
ability to perform its due diligence investigation in the manner it determines is appropriate and
may request not to receive any material non-public information relating to the Company.

5.6 Restricted Securities. Such Investor understands that the Shares are
characterized as “restricted securities” under the U.S. federal securities laws inasmuch as they
are being acquired from the Company in a transaction not involving a public offering and that under
such laws and applicable regulations such securities may be resold without registration under the
1933 Act only in certain limited circumstances.

5.7 Legends. It is understood that, except as provided below, certificates evidencing
the Shares may bear the following or any similar legend:

(a) “The securities represented hereby have not been registered under the Securities Act of
1933 or any applicable state securities laws and may not be transferred unless (i) such securities
have been registered for sale pursuant to the Securities Act of 1933, as amended, (ii) such
securities may be sold pursuant to Rule 144(k), or (iii) the Company has received an opinion of
counsel reasonably satisfactory to it that such transfer may lawfully be made without registration
under the Securities Act of 1933 or qualification under applicable state securities laws.”

(b) If required by the authorities of any state in connection with the issuance of sale of the
Shares, the legend required by such state authority.

(c) The Company acknowledges and agrees that an Investor may from time to time pledge, and/or
grant a security interest in, some or all of the legended Shares in connection with applicable
securities laws, pursuant to a bona fide margin agreement in compliance with a bona fide margin
loan. Such a pledge would not be subject to approval or consent of the Company and no legal
opinion of legal counsel to the pledge, secured party or pledgor shall be required in connection
with the pledge, but such legal opinion shall be required in connection with a subsequent transfer
or foreclosure following default by the transferee of the pledge. No notice shall be required of
such pledge, but Investor’s transferee shall promptly notify the Company of any such subsequent
transfer or foreclosure. Each Investor acknowledges that the Company shall not be responsible for
any pledges relating to, or the grant of any security interest in, any of the Shares or for any
agreement, understanding or arrangement between any Investor and its pledgee or secured party. At
the appropriate Investor’s expense, the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of Shares may reasonably request in connection with a
pledge or transfer of the Shares, including the preparation and filing of any required prospectus
supplement under Rule 424(b)(3) of the Securities Act or other applicable provision of the
Securities Act to appropriately amend the list of Selling Stockholders thereunder. Each Investor
acknowledges and agrees that, except as otherwise provided in Section 7.2, any Shares subject to a
pledge or security interest as contemplated by this Section 5.7 shall continue to bear the legend
set forth in this Section 5.7 and be subject to the restrictions on transfer set forth in this
Agreement.

5.8 Accredited Investor. Such Investor is an accredited investor as defined in Rule
501(a) of Regulation D, as amended, under the 1933 Act.

5.9 No General Solicitation. Such Investor did not learn of the investment in the
Shares as a result of any general solicitation or general advertising.

5.10 Brokers and Finders. No Person will have, as a result of the transactions
contemplated by the Transaction Documents, any valid right, interest or claim against or upon the
Company, any Subsidiary or an Investor for any commission, fee or other compensation pursuant to
any agreement, arrangement or understanding entered into by or on behalf of such Investor.

5.11 Prohibited Transactions. During the last thirty (30) days prior to the date
hereof, neither such Investor nor any Affiliate of such Investor which (x) had knowledge of the
transactions contemplated hereby, (y) has or shares discretion relating to such Investor’s
investments or trading or information concerning such Investor’s investments, including in respect
of the Shares, or (z) is subject to such Investor’s review or input concerning such Affiliate’s
investments or trading (collectively, “Trading Affiliates”) has, directly or indirectly, effected
or agreed to effect any short sale, whether or not against the box, established any “put equivalent
position” (as defined in Rule 16a-1(h) under the 1934 Act) with respect to the Common Stock,
granted any other right (including, without limitation, any put or call option) with respect to the
Common Stock or with respect to any security that includes, relates to or derived any significant
part of its value from the Common Stock or otherwise sought to hedge its position in the Shares
(each, a “Prohibited Transaction”). Prior to the earliest to occur of (i) the termination of this
Agreement, (ii) the Effective Date or (iii) the Effectiveness Deadline, such Investor shall not,
and shall cause its Trading Affiliates not to, engage, directly or indirectly, in a Prohibited
Transaction. Such Investor acknowledges that the representations, warranties and covenants
contained in this Section 5.11 are being made for the benefit of the Investors as well as the
Company and that each of the other Investors shall have an independent right to assert any claims
against such Investor arising out of any breach or violation of the provisions of this Section
5.11.

5.12 Regulation M. Such Investor is aware that the anti-manipulation rules of
Regulation M under the 1934 Act may apply to sales of Common Stock and other activities with
respect to the Common Stock by the Investors.

5.13 Residency. Such Investor’s principal executive offices are in the jurisdiction
set forth in the address for notice for such Investor on the applicable signature page attached
hereto.

6. Conditions to Closing.

6.1 Conditions to the Investors’ Obligations. The obligation of each Investor to
purchase the Shares at the Closing is subject to the fulfillment to such Investor’s satisfaction,
on or prior to the Closing Date, of the following conditions, any of which may be waived by such
Investor (as to itself only):

(a) The representations and warranties made by the Company in Section 4 hereof qualified as to
materiality shall be true and correct at all times prior to and on the Closing Date, except to the
extent any such representation or warranty expressly speaks as of an earlier date, in which case
such representation or warranty shall be true and correct as of such earlier date, and, the
representations and warranties made by the Company in Section 4 hereof not qualified as to
materiality shall be true and correct in all material respects at all times prior to and on the
Closing Date, except to the extent any such representation or warranty expressly speaks as of an
earlier date, in which case such representation or warranty shall be true and correct in all
material respects as of such earlier date. The Company shall have performed in all material
respects all obligations and covenants herein required to be performed by it on or prior to the
Closing Date.

(b) The Company shall have obtained any and all consents, permits, approvals, registrations
and waivers necessary or appropriate for consummation of the purchase and sale of the Shares and
the consummation of the other transactions contemplated by the Transaction Documents, all of which
shall be in full force and effect.

(c) The Company shall have executed and delivered the Registration Rights Agreement.

(d) The Company shall have filed with Nasdaq a Notification Form: Listing of Additional Shares
for the inclusion of the Shares in the Nasdaq Capital Market, a copy of which shall have been
provided to the Investors.

(e) No judgment, writ, order, injunction, award or decree of or by any court, or judge,
justice or magistrate, including any bankruptcy court or judge, or any order of or by any
governmental authority, shall have been issued, and no action or proceeding shall have been
instituted by any governmental authority, enjoining or preventing the consummation of the
transactions contemplated hereby or in the other Transaction Documents.

(f) The Company shall have delivered a Certificate, executed on behalf of the Company by its
Chief Executive Officer or its Chief Financial Officer, dated as of the Closing Date, certifying to
the fulfillment of the conditions specified in subsections (a), (b), (d), (e) and (i) of this
Section 6.1.

(g) The Company shall have delivered a Certificate, executed on behalf of the Company by its
Secretary, dated as of the Closing Date, certifying the resolutions adopted by the Board of
Directors of the Company approving the transactions contemplated by this Agreement and the other
Transaction Documents and the issuance of the Shares, certifying the current versions of the
Certificate of Incorporation and Bylaws of the Company and certifying as to the signatures and
authority of persons signing the Transaction Documents and related documents on behalf of the
Company.

(h) The Investors shall have received an opinion from Hewitt & O’Neil LLP, the Company’s
counsel, dated as of the Closing Date, in form and substance reasonably acceptable to the Investors
and addressing such legal matters as the Investors may reasonably request.

(i) No stop order or suspension of trading shall have been imposed by Nasdaq, the SEC or any
other governmental or regulatory body with respect to public trading in the Common Stock.

6.2 Conditions to Obligations of the Company. The Company’s obligation to sell and
issue the Shares at the Closing is subject to the fulfillment to the satisfaction of the Company on
or prior to the Closing Date of the following conditions, any of which may be waived by the
Company:

(a) The representations and warranties made by the Investors in Section 5 hereof, other than
the representations and warranties contained in Sections 5.3, 5.4, 5.5, 5.6, 5.7, 5.8 and 5.9 (the
“Investment Representations”), shall be true and correct in all material respects when made, and
shall be true and correct in all material respects on the Closing Date with the same force and
effect as if they had been made on and as of said date. The Investment Representations shall be
true and correct in all respects when made, and shall be true and correct in all respects on the
Closing Date with the same force and effect as if they had been made on and as of said date. The
Investors shall have performed in all material respects all obligations and covenants herein
required to be performed by them on or prior to the Closing Date.

(b) The Investors shall have executed and delivered the Registration Rights Agreement.

(c) The Investors shall have delivered the Purchase Price to the Company.

6.3 Termination of Obligations to Effect Closing; Effects.

(a) The obligations of the Company, on the one hand, and the Investors, on the other hand, to
effect the Closing shall terminate as follows:

(i) Upon the mutual written consent of the Company and the Investors;

(ii) By the Company if any of the conditions set forth in Section 6.2 shall have become
incapable of fulfillment, and shall not have been waived by the Company;

(iii) By an Investor (with respect to itself only) if any of the conditions set forth in
Section 6.1 shall have become incapable of fulfillment, and shall not have been waived by the
Investor; or

(iv) By either the Company or any Investor (with respect to itself only) if the Closing has
not occurred on or prior to August 31, 2007;

provided, however, that, except in the case of clause (i) above, the party seeking to terminate its
obligation to effect the Closing shall not then be in breach of any of its representations,
warranties, covenants or agreements contained in this Agreement or the other Transaction Documents
if such breach has resulted in the circumstances giving rise to such party’s seeking to terminate
its obligation to effect the Closing.

(b) In the event of termination by the Company or any Investor of its obligations to effect
the Closing pursuant to this Section 6.3, written notice thereof shall forthwith be given to the
other Investors by the Company and the other Investors shall have the right to terminate their
obligations to effect the Closing upon written notice to the Company and the other Investors.
Nothing in this Section 6.3 shall be deemed to release any party from any liability for any breach
by such party of the terms and provisions of this Agreement or the other Transaction Documents or
to impair the right of any party to compel specific performance by any other party of its
obligations under this Agreement or the other Transaction Documents.

7. Covenants and Agreements of the Company.

7.1 No Conflicting Agreements. The Company will not take any action, enter into any
agreement or make any commitment that would conflict in any material respect with the Company’s
obligations to the Investors under the Transaction Documents. The provisions of this Section 7.1
shall terminate and be of no further force and effect on the date on which the Company’s
obligations under the Registration Rights Agreement to register or maintain the effectiveness of
any registration covering the Registrable Securities (as such term is defined in the Registration
Rights Agreement) shall terminate.

7.2 Listing of the Shares and Related Matters. Promptly following the date hereof,
the Company shall take all necessary action to cause the Shares to be listed on the Nasdaq Capital
Market as promptly as practicable after the Closing Date. Further, if the Company applies to have
its Common Stock or other securities traded on any other principal stock exchange or market, it
shall include in such application the Shares and will take such other action as is necessary to
cause such Common Stock to be so listed. The Company will use commercially reasonable efforts to
continue the listing and trading of its Common Stock on the Nasdaq Capital Market and, in
accordance, therewith, will use commercially reasonable efforts to comply in all respects with the
Company’s reporting, filing and other obligations under the bylaws or rules of such market or
exchange, as applicable.

7.3 Removal of Legends. Upon the earlier of (i) registration for resale pursuant to
the Registration Rights Agreement or (ii) Rule 144(k) becoming available the Company shall promptly
(A) deliver to the transfer agent for the Common Stock (the “Transfer Agent”) irrevocable
instructions that the Transfer Agent shall reissue a certificate representing shares of Common
Stock without legends upon receipt by such Transfer Agent of the legended certificates for such
shares, together with either (1) a customary representation by the Investor that Rule 144(k)
applies to the shares of Common Stock represented thereby or (2) a statement by the Investor that
such Investor has sold the shares of Common Stock represented thereby in accordance with the Plan
of Distribution contained in the Registration Statement, and (B) cause its counsel to deliver to
the Transfer Agent one or more blanket opinions to the effect that the removal of such legends in
such circumstances may be effected under the 1933 Act. From and after the earlier of such dates,
upon an Investor’s written request, the Company shall promptly cause certificates evidencing the
Investor’s Shares to be replaced with certificates which do not bear such restrictive legends.
When the Company is required to cause an unlegended certificate to replace a previously issued
legended certificate, if: (1) the unlegended certificate is not delivered to an Investor within
three (3) Business Days of submission by that Investor of a legended certificate and supporting
documentation to the Transfer Agent as provided above (with a copy to the Company) and (2) prior to
the time such unlegended certificate is received by the Investor, the Investor, or any third party
on behalf of such Investor or for the Investor’s account, purchases (in an open market transaction
or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Investor of shares
represented by such certificate (a “Buy-In”), then the Company shall pay in cash to the Investor
(for costs incurred either directly by such Purchaser or on behalf of a third party) the amount by
which the total purchase price paid for Common Stock as a result of the Buy-In (including brokerage
commissions, if any) exceeds the proceeds received by such Investor as a result of the sale to
which such Buy-In relates. The Investor shall provide the Company written notice indicating the
amounts payable to the Investor in respect of the Buy-In.

7.4 Subsequent Equity Sales.

(a) From the date hereof until ninety (90) days after the Effective Date, without the consent
of the Investors, neither the Company nor any Subsidiary shall issue shares of Common Stock or
Common Stock Equivalents (a “Subsequent Financing”); provided, however, that the provisions of this
Section 7.4(a) shall not apply to the issuance of (A) capital stock or Common Stock Equivalents
issued to directors, officers, employees or consultants of the Company in connection with their
service as directors of the Company, their employment by the Company or their retention as
consultants by the Company pursuant to an equity compensation program approved by the Board of
Directors of the Company or the compensation committee of the Board of Directors of the Company,
(B) shares of Common Stock issued upon the conversion or exercise of Common Stock Equivalents
issued prior to the date hereof, provided such securities are not amended after the date hereof to
increase the number of shares of Common Stock issuable thereunder or to lower the exercise or
conversion price thereof, and (C) shares of Common Stock issued or issuable by reason of a
dividend, stock split or other distribution on shares of Common Stock.

(b) From the date hereof until such time as the Investors no longer beneficially own at least
10% of the Shares in the aggregate, the Company shall be prohibited from effecting or entering into
an agreement to effect any Subsequent Financing involving a “Variable Rate Transaction”. The term
“Variable Rate Transaction” shall mean a transaction in which the Company issues or sells (i) 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 or (ii) enters into any agreement, including, but not
limited to, an equity line of credit, whereby the Company may sell securities at a future
determined price.

7.5 Equal Treatment of Investors. 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
Investor by the Company and negotiated separately by each Investor, and is intended for the Company
to treat the Investors as a class and shall not in any way be construed as the Investors acting in
concert or as a group with respect to the purchase, disposition or voting of Shares or otherwise.

8. Survival and Indemnification.

8.1 Survival. The representations, warranties, covenants and agreements contained in
this Agreement shall survive the Closing of the transactions contemplated by this Agreement.

8.2 Indemnification. The Company agrees to indemnify and hold harmless each Investor
and its Affiliates and their respective directors, officers, employees and agents from and against
any and all losses, claims, damages, liabilities and expenses (including without limitation
reasonable attorney fees and disbursements and other expenses incurred in connection with
investigating, preparing, defending or otherwise directly involving any action, claim or
proceeding, pending or threatened and the costs of enforcement thereof) (collectively, “Losses”) to
which such Person may become subject as a result of any breach of representation, warranty,
covenant or agreement made by or to be performed on the part of the Company under the Transaction
Documents, and will reimburse any such Person for all such amounts as they are incurred by such
Person.

8.3 Conduct of Indemnification Proceedings. Promptly after receipt by any Person
(the “Indemnified Person”) of notice of any demand, claim or circumstances which would or might
give rise to a claim or the commencement of any action, proceeding or investigation in respect of
which indemnity may be sought pursuant to Section 8.2, such Indemnified Person shall promptly
notify the Company in writing and the Company shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to such Indemnified Person, and shall assume the
payment of all fees and expenses; provided, however, that the failure of any
Indemnified Person so to notify the Company shall not relieve the Company of its obligations
hereunder except to the extent that the Company is materially prejudiced by such failure to notify.
In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but
the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless:
(i) the Company and the Indemnified Person shall have mutually agreed to the retention of such
counsel; or (ii) in the reasonable judgment of counsel to such Indemnified Person representation of
both parties by the same counsel would be inappropriate due to actual or potential differing
interests between them. The Company shall not be liable for any settlement of any proceeding
effected without its written consent, which consent shall not be unreasonably withheld, but if
settled with such consent, or if there be a final judgment for the plaintiff, the Company shall
indemnify and hold harmless such Indemnified Person from and against any loss or liability (to the
extent stated above) by reason of such settlement or judgment. Without the prior written consent
of the Indemnified Person, which consent shall not be unreasonably withheld, the Company shall not
effect any settlement of any pending or threatened proceeding in respect of which any Indemnified
Person is or could have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of such Indemnified
Person from all liability arising out of such proceeding.

9. Miscellaneous.

9.1 Successors and Assigns. This Agreement may not be assigned by a party hereto
without the prior written consent of the Company or the Investors, as applicable, provided,
however, that an Investor may assign its rights and delegate its duties hereunder in whole or in
part to an Affiliate or to a third party acquiring some or all of its Shares in a transaction
complying with applicable securities laws without the prior written consent of the Company or the
other Investors. The provisions of this Agreement shall inure to the benefit of and be binding
upon the respective permitted successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or liabilities under or by
reason of this Agreement, except as expressly provided in this Agreement.

9.2 Counterparts; Faxes. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall constitute one and the
same instrument. This Agreement may also be executed via facsimile, which shall be deemed an
original.

9.3 Titles and Subtitles. The titles and subtitles used in this Agreement are used
for convenience only and are not to be considered in construing or interpreting this Agreement.

9.4 Notices. Unless otherwise provided, any notice required or permitted under this
Agreement shall be given in writing and shall be deemed effectively given as hereinafter described
(i) if given by personal delivery, then such notice shall be deemed given upon such delivery, (ii)
if given by telex or telecopier, then such notice shall be deemed given upon receipt of
confirmation of complete transmittal, (iii) if given by mail, then such notice shall be deemed
given upon the earlier of (A) receipt of such notice by the recipient or (B) three days after such
notice is deposited in first class mail, postage prepaid, and (iv) if given by an internationally
recognized overnight air courier, then such notice shall be deemed given one Business Day after
delivery to such carrier. All notices shall be addressed to the party to be notified at the
address as follows, or at such other address as such party may designate by ten days’ advance
written notice to the other party:

If to the Company:

Meade Instruments Corp.

6001 Oak Canyon

Irvine, California 92618-5200

Attention:

Fax:

With a copy to:

Hewitt & O’Neil LLP

19900 MacArthur Boulevard, Suite 1050

Irvine, California 92612

Attention: John D. Hudson, Esq.

Fax: (949) 798-0511

If to the Investors:

to the addresses set forth on the signature pages hereto.

9.5 Expenses. The parties hereto shall pay their own costs and expenses in connection
herewith, except that the Company shall pay the reasonable fees and expenses of Lowenstein Sandler
PC not to exceed $40,000; it being understood that Lowenstein Sandler PC has only rendered legal
advice to Special Situations Fund III QP, L.P. and not to the Company or any other Investor in
connection with the transactions contemplated hereby, and that each of the Company and each
Investor has relied for such matters on the advice of its own respective counsel. In addition, the
Company shall pay the reasonable legal fees and expenses (but not more than $5,000) incurred by
Oshan Grundhman Frome Rosenzweig & Wolosky LLP in connection with its legal services provided to
the Hummingbird Funds with respect to the Transaction Documents. Such expenses shall be paid not
later than the Closing. The Company shall reimburse the Investors upon demand for all reasonable
out-of-pocket expenses incurred by the Investors, including without limitation reimbursement of
attorneys’ fees and disbursements, in connection with any amendment, modification or waiver of this
Agreement or the other Transaction Documents. In the event that legal proceedings are commenced by
any party to this Agreement against another party to this Agreement in connection with this
Agreement or the other Transaction Documents, the party or parties which do not prevail in such
proceedings shall pay the reasonable attorneys’ fees and other reasonable out-of-pocket costs and
expenses incurred by the prevailing party in such proceedings.

9.6 Amendments and Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written consent of the Company
and the Investors. Any amendment or waiver effected in accordance with this paragraph shall be
binding upon each holder of any Shares purchased under this Agreement at the time outstanding, each
future holder of all such Shares, and the Company.

9.7 Publicity. Except as set forth below, no public release or announcement
concerning the transactions contemplated hereby shall be issued by the Company or the Investors
without the prior consent of the Company (in the case of a release or announcement by the
Investors) or Special Situations Funds (in the case of a release or announcement by the Company)
(which consents shall not be unreasonably withheld), except as such release or announcement may be
required by law or the applicable rules or regulations of any securities exchange or securities
market, in which case the Company or the Investors, as the case may be, shall allow the Investors
or the Company, as applicable, to the extent reasonably practicable in the circumstances,
reasonable time to comment on such release or announcement in advance of such issuance. By 8:30
a.m. (New York City time) on the trading day immediately following the Closing Date, the Company
shall issue a press release disclosing the consummation of the transactions contemplated by this
Agreement. No later than the fourth trading day following the Closing Date, the Company will file
a Current Report on Form 8-K attaching the press release described in the foregoing sentence as
well as copies of the Transaction Documents. In addition, the Company will make such other filings
and notices in the manner and time required by the SEC or Nasdaq. No press release issued by the
Company shall reference any Investor without such Investors consent, which consent shall not be
unreasonably withheld.

9.8 Severability. Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions hereof but shall be
interpreted as if it were written so as to be enforceable to the maximum extent permitted by
applicable law, and any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereby waive any provision of law which renders any
provision hereof prohibited or unenforceable in any respect.

9.9 Entire Agreement. This Agreement, including the Exhibits and the Disclosure
Schedule, and the other Transaction Documents constitute the entire agreement among the parties
hereof with respect to the subject matter hereof and thereof and supersede all prior agreements and
understandings, both oral and written, between the parties with respect to the subject matter
hereof and thereof.

9.10 Further Assurances. The parties shall execute and deliver all such further
instruments and documents and take all such other actions as may reasonably be required to carry
out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein
contained.

9.11 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This Agreement
shall be governed by, and construed in accordance with, the internal laws of the State of New York
without regard to the choice of law principles thereof. Each of the parties hereto irrevocably
submits to the exclusive jurisdiction of the courts of the State of New York located in New York
County and the United States District Court for the Southern District of New York for the purpose
of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the
transactions contemplated hereby. Service of process in connection with any such suit, action or
proceeding may be served on each party hereto anywhere in the world by the same methods as are
specified for the giving of notices under this Agreement. Each of the parties hereto irrevocably
consents to the jurisdiction of any such court in any such suit, action or proceeding and to the
laying of venue in such court. Each party hereto irrevocably waives any objection to the laying of
venue of any such suit, action or proceeding brought in such courts and irrevocably waives any
claim that any such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY
LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED
SPECIFICALLY AS TO THIS WAIVER.

9.12 Independent Nature of Investors’ Obligations and Rights. The obligations of each
Investor under any Transaction Document are several and not joint with the obligations of any other
Investor, and no Investor shall be responsible in any way for the performance of the obligations of
any other Investor under any Transaction Document. The decision of each Investor to purchase
Shares pursuant to the Transaction Documents has been made by such Investor independently of any
other Investor. Nothing contained herein or in any Transaction Document, and no action taken by
any Investor pursuant thereto, shall be deemed to constitute the Investors as a partnership, an
association, a joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents. Each Investor acknowledges that no other
Investor has acted as agent for such Investor in connection with making its investment hereunder
and that no Investor will be acting as agent of such Investor in connection with monitoring its
investment in the Shares or enforcing its rights under the Transaction Documents. Each Investor
shall be entitled to independently protect and enforce its rights, including, without limitation,
the rights arising out of this Agreement or out of the other Transaction Documents, and it shall
not be necessary for any other Investor to be joined as an additional party in any proceeding for
such purpose. The Company acknowledges that each of the Investors has been provided with the same
Transaction Documents for the purpose of closing a transaction with multiple Investors and not
because it was required or requested to do so by any Investor.

[signature page follows]

1

IN WITNESS WHEREOF, the parties have executed this Agreement or caused their duly authorized
officers to execute this Agreement as of the date first above written.

	 	 	 	 	 
	The Company:	 	MEADE INSTRUMENTS CORP.
	By: /s/ Paul E. Ross

	 	

	 	

	 
	 	 
	Name: Paul E. Ross

Title: Sr. Vice President, Finance – CFO

	 	

	 	

2

	 	 	 	 	 
	The Investors: SPECIAL SITUATIONS FUND II

	 	I QP, L.P.
	 	

	By: /s/ David M. Greenhouse

	 	

	 	

	 

	 	 
	 	 
	Name: David M. Greenhouse

Title: General Partner

	 	

	 	

	Aggregate Purchase Price: $3,999,999.70

Number of Shares: 2,105,263

	 	

	 	

	Address for Notice:

	 	

	 	

	
 
	 	527 Madison Avenue

Suite 2600

New York, NY 10022
	 	

	
 
	 	with a copy to:
	 	

	
 
	 	Lowenstein Sandler PC

65 Livingston Avenue

Roseland, NJ 07068

Attn: John D. Hogobo

Telephone:

Facsimile:
	 	

om, Esq.

973.597.2500

973.597.2400

3

MILLENNIUM PARTNERS, L.P.

By: Millennium Management, L.L.C.

By: /s/ Terry Feeney

Name: Terry Feeney

Title: Chief Operating Officer

Aggregate Purchase Price: $1,000,000.40

Number of Shares: 526,316

Address for Notice:

c/o Millennium Management, L.L.C.

666 Fifth Avenue, 8th Floor

New York, New York 10103

Attn: Terry Feeney

Tel: (212) 841-4100

Fax: (212) 841-4141

4

[Signature page for the August 2007 Meade Purchase Agreement]

HUMMINGBIRD CONCENTRATED FUND, L.P.

By: Hummingbird Capital, LLC,

Its general partner

By: /s/ Paul D. Sonkin

Name: Paul D. Sonkin

Title: Managing Member

Aggregate Purchase Price: $526,316

Number of Shares: 263,158

Address for Notice:

460 Park Avenue — 12th Floor

New York, New York 10022

Attention: Paul D. Sonkin

Telephone: 212-750-7117

Facsimile: 212-208-2456

with a copy to:

	 	 	 	 	 
	Olshan Grundman Frome Rosenzweig & Wolosky LLP

	Park Avenue Tower
65 East 55th Street
	 	 	 	 
	New York City, New York 10022

	Attn: Steve Wolosky, Esq.

	Telephone:
	 	 	212-451-2300	 
	Facsimile:
	 	 	212-451-2222	 

5

[Signature page for the August 2007 Meade Purchase Agreement]

HUMMINGBIRD VALUE FUND, L.P.

By: Hummingbird Capital, LLC,

Its general partner

By: /s/ Paul D. Sonkin

Name: Paul D. Sonkin

Title: Managing Member

Aggregate Purchase Price: $263,158

Number of Shares: 131,579

Address for Notice:

460 Park Avenue — 12th Floor

New York, New York 10022

Attention: Paul D. Sonkin

Telephone: 212-750-7117

Facsimile: 212-208-2456

with a copy to:

	 	 	 	 	 
	Olshan Grundman Frome Rosenzweig & Wolosky LLP

	Park Avenue Tower
65 East 55th Street
	 	 	 	 
	New York City, New York 10022

	Attn: Steve Wolosky, Esq.

	Telephone:
	 	 	212-451-2300	 
	Facsimile:
	 	 	212-451-2222	 

6

[Signature page for the August 2007 Meade Purchase Agreement]

HUMMINGBIRD MICROCAP VALUE FUND, L.P.

By: Hummingbird Capital, LLC,

Its general partner

By: /s/ Paul D. Sonkin

Name: Paul D. Sonkin

Title: Managing Member

Aggregate Purchase Price: $263,158

Number of Shares: 131,579

Address for Notice:

460 Park Avenue — 12th Floor

New York, New York 10022

Attention: Paul D. Sonkin

Telephone: 212-750-7117

Facsimile: 212-208-2456

with a copy to:

	 	 	 	 	 
	Olshan Grundman Frome Rosenzweig & Wolosky LLP

	Park Avenue Tower
65 East 55th Street
	 	 	 	 
	New York City, New York 10022

	Attn: Steve Wolosky, Esq.

	Telephone:
	 	 	212-451-2300	 
	Facsimile:
	 	 	212-451-2222	 

7EX-10.65

GE Commercial Finance

Healthcare Financial Services

Life Science Finance

2050 Martin Ave.

Santa Clara, CA 95050

408-986-6886 ph./ 408-980-7722 fax

May 15, 2007

Revised: June 19, 2007

Revised: August 10, 2007

Revised: August 24, 2007

CONFIDENTIAL LOAN PROPOSAL FOR:

	 	 	Cytokinetics, Inc.

	 	 	Submitted By: Barbara Kaiser

1

Mary Rogers

Director, Financial Planning and Analysis

Cytokinetics, Inc.

280 East Grand Avenue

South San Francisco, CA 94080

Dear Mary:

General Electric Capital Corporation (“GE Capital”) has reviewed the information provided by
you in connection with the requested financing for Cytokinetics, Inc. (referred to as
“Cytokinetics” or the “Company”). Based on the review to date and subject to the timely receipt of
a signed copy of this proposal letter as indicated below, GE Capital is pleased to consider
arranging and providing a $3,000,000 financing (the “Financing”) as outlined in the attached Term
Sheet incorporated herein by reference, subject to the general terms and conditions in this
proposal letter and the Term Sheet.

GE Capital is one of the largest and most diversified financial services companies in the
world with assets exceeding $300 billion and operations in over 45 countries. We have been
actively providing equipment financing for Life Science companies for over a decade and it is our
privilege to be a financial partner to hundreds of Life Science companies.

This proposal letter, including the attached Term Sheet (together, the “Proposal”), is being
provided to the Company on a confidential basis and is merely an indication of interest regarding
the Financing transaction on the general terms and conditions outlined below and should not be
construed as a commitment. GE Capital may change the terms of this Proposal or cease future
consideration of the Financing at any time in its sole discretion. The attached Term Sheet
summarizes only the principal terms and conditions under which the proposed Financing will be
considered and does not purport to set forth all of the terms and conditions applicable to such
Financing, which terms and conditions will be fully contained in the final documentation.

The Company may not use this Proposal to solicit other offers or to modify, renegotiate or
otherwise improve the terms and conditions of any other offer heretofore or hereafter received by
the Company but is not restricted from making any disclosure or dissemination of the United States
federal income tax structure or aspects of the transactions contemplated by this proposal or any
documents executed pursuant to this Proposal. Further, each of GE Capital and the Company
acknowledges that it has no proprietary rights to any United States federal income tax elements or
structure of this Proposal. In addition, the Company shall not, except as required by law, use the
name of, or refer to GE Capital, in any correspondence, discussions, advertisement, press release
or disclosure made in connection with the Financing without the prior written consent of GE
Capital.

By signing below, the Company acknowledges the terms and conditions of this Proposal. Upon
receipt of the executed Proposal, GE Capital will commence the investment and credit approval
process. Before funding can take place, all proper documentation of title and UCC releases from
other lenders will be in place and approved by GE Capital. We thank you for your consideration and
look forward to working with you toward completing this transaction.

I would appreciate the opportunity to discuss this proposal with you at your earliest
convenience. Please do not hesitate to contact me at 408/ 986-6886 if you have any questions or if
I may be of further assistance.

Sincerely,

/s/ Barbara Kaiser

8/28/07

Barbara Kaiser

SVP. Sales

PROPOSAL ACCEPTED BY:

Cytokinetics, Inc.:

	 	 	 	 	 
	Name:	 	
___/s/ Sharon Surrey-Barbari_____________		
	 	 	 
	
 
	 	Sharon Surrey-Barbari
	 	

	Title:	 	Sr. Vice President, Finance and Chief Financial Officer
	Date:

	 	     8/28/07     
	 	     
	
 
	 	 
	 	

Phone: (650) 624-3000

Federal Tax ID#: 94-3291317

2

Term Sheet 

	 	 	 
	Transaction:

Borrower:

Lenders:

Loan Amount:

Equipment:

	 	Equipment Loan (“Financing”)

Cytokinetics, Inc.

General Electric Capital Corporation, its affiliates, or

its assignee (“GE Capital”)

Up to $3,000,000.

Laboratory and scientific equipment, computer equipment,

FF&E, and soft cost, as detailed in the attached Addendum

A. All equipment is to be acceptable to Lender and to be

located at company owned or leased facilities within the

continental United States. All equipment will be free and

clear of all liens, claims, and encumbrances other than

Permitted Liens as defined in the Master Security Agreement

between GE Capital and Cytokinetics dated as of February 2,

2001, as amended (“MSA”).
	Term and Payment:

	 	Equipment:  60 payments of Principal and

Interest at 2.0186% of financed cost (Payment Factor),

paid monthly in arrears for each loan schedule, full

pay-out. (Yield of 7.81%.) (Spread of 274 bps over

60-month Ts.)

Soft Cost: 48 payments of Principal and Interest at 2.4315
% of financed cost (Payment Factor), paid monthly in arrears for each
loan schedule, full pay-out. (Yield of 7.79%.) (Spread of 274 bps
over imputed 48-month Ts.)

Borrower will provide Lender with a security deposit in the amount of
50% of the loan amount on each schedule at time of funding. This
deposit will be reduced to 50% of the outstanding principal balance on
January 1 and July 1 of each year until the loan expires. Interest on
the deposit will accrue at 3% simple and will be paid at each deposit
reduction.

	 	 	 
	Anticipated Funding Period:Through 9/30/08.

	Line Mechanics:

	 	Minimum fundings will be $75,000.

Equipment with invoice dates older than 90 days will be subject to
appropriate discount.

Amortization begins on the start date, which is the first of the month
following funding. Interim interest will be charged for any period
between the funding date and the start date.

	 	 	 
	Lien:

	 	First priority security interest in underlying

equipment only, subject to Permitted Liens.
	Covenants:

	 	None.
	“Success Fee”/ “Final

Payment”:

	 	

None

GENERAL TERMS AND CONDITIONS

Our proposal contains the following provisions and the Loan Payments we propose are specifically
based upon these provisions and our assumptions.

	1.	 	Maintenance and Insurance: All maintenance and insurance (fire and theft, extended
coverage and liability) are the responsibility of the Company. Company will be responsible
for maintaining in force all risk damage and liability insurance in amounts and coverages
satisfactory to Lender.

	2.	 	Documentation: Standard GE Capital Master Loan and Schedule Documentation for this
type of Loan (“Loan Documents”). Any changes to the Loan Documents must be approved by GE
Capital legal counsel. [Most of Cytokinetics’ master docs are already in place.]

	3.	 	Indexing: The Interest Rates, Payment Factors and corresponding Loan Payments are
based on the Federal Reserve’s imputed 48- and 60-month Treasury Constant Maturities Rates
(H.15/ “Treasury Rates”) of 5.05% and 5.07%, respectively, for 6/11/07 and will be adjusted
effective as of the date of funding of any Financing to reflect any increase or decrease in
the applicable Treasury Rate.

Transaction Costs: By execution and return of this proposal letter, regardless
of whether the Financing is approved or closes, the Company will be responsible for (i) all
of its closing costs, (ii) all out of pocket fees and expenses incurred by GE Capital in
connection with this Proposal Letter and the Financing (and the negotiation, documentation
and closing thereof) under consideration including, without limitation, actual out-of-pocket
expenses associated with engagement of outside counsel, UCC searches and filings costs,
inspection and appraisal fees and similar costs, and (iii) the Company waives any right to a
jury trial in any action or proceeding brought against GE Capital. The Company will
indemnify and hold harmless GE Capital and its affiliates, officers, directors, employees
and agents (each an “Indemnified Person”) against all claims, costs, damages, liabilities
and expenses (each a “Claim”) that may be incurred by or asserted against any of them in
connection with this Term Sheet and proposal or the matters contemplated herein, except to
the extent arising from the negligence, gross negligence, willful misconduct or failure to
comply with applicable law by any Indemnified Person. The foregoing indemnification
obligation is subject to the following: GE Capital will promptly notify the Company in
writing of any Claim in respect of which any Indemnified Person intends to claim such
indemnification. GE Capital will permit, and will cause each Indemnified Person seeking
indemnification hereunder to permit, the Company at its discretion to settle any such Claim,
and GE Capital agrees, on its own behalf and on behalf of each Indemnified Person, to the
complete control of such defense or settlement by the Company. Notwithstanding the
foregoing, the Company will not enter into any settlement that would adversely affect such
Indemnified Person’s rights hereunder or impose any obligations on such Indemnified Person
in addition to those set forth herein in order for it to exercise such rights without such
Indemnified Person’s prior written consent, which will not be unreasonably withheld or
delayed. No such action, claim or other matter will be settled without the prior written
consent of the Company, which will not be unreasonably withheld or delayed. Such Indemnified
Person will cooperate fully with the Company and its legal representatives in the
investigation and defense of any action, claim or other matter covered by the
indemnification obligations of this Section. The Indemnified Person will have the right,
but not the obligation, to be represented in such defense by counsel of its own selection
and at its own expense. The Company will not be responsible for any attorneys’ fees or
other costs incurred other than as provided herein.

	5.	 	Electronic Payment System: GE Capital’s standard payment collection method is
through an electronic payment system. An enrollment form will be provided with the Loan
Documents.

	6.	 	Confidentiality: This proposal letter is being provided to the Company on a
confidential basis. Except as required by law, neither this proposal nor its contents may be
disclosed except to individuals who are the Company’s officers, employees or advisors who have
a need to know of such matters and then only on the condition that such matters remain
confidential. In addition, none of such persons shall, except as required by law, use the
name of, or refer to GE Capital in any correspondence, discussions, advertisement, press
release or disclosure made in connection with the Financing without the prior written consent
of GE Capital.

	7.	 	Expiration: This proposal will expire 8/31/07 if not accepted prior to that date.

	8.	 	Other Conditions: GE Capital’s agreement to fund the proposed transaction remains
subject to and would be preceded by completion of a legal and business due diligence, as well
as collateral and credit review and analysis, all with results satisfactory to GE Capital and
the closing of an initial funding under such transaction would be conditioned upon the prior
execution and delivery of final Loan Documents and satisfaction of all conditions precedent
acceptable to GE Capital and its counsel and no Material Adverse Change (to be defined in the
definitive loan documentation) shall have occurred. For transactions that contemplate more
than one funding, GE Capital’s obligation to make each such subsequent funding would be
subject to confirmation that no default has occurred and is continuing under the Loan
Documents, that all representations and warranties of the Company in the Loan Documents
continue to be true and correct and that no Material Adverse Change has occurred since the
prior funding. GE Capital hereby agrees that solely for purposes of the event of default in
Section 7 (a) (xiii) of the MSA (and not for purposes of closing or subsequent fundings), the
term “Material Adverse Change” shall have the meaning set forth in Amendment No. 1 to the MSA,
dated as of January 1, 2005.

3

AUTHORIZATION FOR RELEASE OF INFORMATION

The undersigned hereby authorizes past and present depositing institutions, creditors, vendors and
suppliers of the undersigned to provide such information pertaining to any loans, leases, lines of
credit, account balances, and payment histories of the undersigned to General Electric Capital
Corporation as it may request.

Cytokinetics, Inc.

	 	 	 
	By:

	 	/s/ Sharon Surrey-Barbari
	
 
	 	 
	
 
	 	Sharon Surrey-Barbari

Title: Sr. Vice President, Finance and Chief Financial Officer

4

Addendum A — Expected Equipment Composition

	 	 	 	 	 	 	 	 	 
	Lab, scientific & manufactur-
ing equipment:
	 	 	3   $1,650,000	 	 		3       55	%
	Computer hardware & FF&E:
	 	 	£          450,000	 	 	 	£        15	%
	Soft cost (TIs, software, tax, freight,
& similar):
	 	 	£          900,000	 	 	 	£        30	%
	 
	 	 	 	 	 	 	 	 

$ 3,000,000 100%

• Better equipment may always be substituted for poorer equipment or soft cost

5

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