Document:

exv4w9

 

Exhibit 4.9

HARRIS STRATEX NETWORKS, INC.

2007 STOCK EQUITY PLAN

 

 

Table
of Contents

	 	 	 	 	 	 	 
	1.

	 	Purpose
	 	 	1	 
	 
	 	 	 	 	 	 
	2.

	 	Definitions
	 	 	1	 
	 
	 	 	 	 	 	 
	3.

	 	Term of the Plan
	 	 	5	 
	 
	 	 	 	 	 	 
	4.

	 	Stock Subject to the Plan
	 	 	5	 
	 
	 	 	 	 	 	 
	5.

	 	Administration
	 	 	5	 
	 
	 	 	 	 	 	 
	6.

	 	Authorization of Grants
	 	 	6	 
	 
	 	 	 	 	 	 
	7.

	 	Specific Terms of Awards
	 	 	7	 
	 
	 	 	 	 	 	 
	8.

	 	Adjustment Provisions
	 	 	12	 
	 
	 	 	 	 	 	 
	9.

	 	Change of Control
	 	 	14	 
	 
	 	 	 	 	 	 
	10.

	 	Settlement of Awards
	 	 	14	 
	 
	 	 	 	 	 	 
	11.

	 	Reservation of Stock
	 	 	16	 
	 
	 	 	 	 	 	 
	12.

	 	Limitation of Rights in Stock; No Special Service Rights
	 	 	16	 
	 
	 	 	 	 	 	 
	13.

	 	Unfunded Status of Plan
	 	 	17	 
	 
	 	 	 	 	 	 
	14.

	 	Nonexclusivity of the Plan
	 	 	17	 
	 
	 	 	 	 	 	 
	15.

	 	Termination and Amendment of the Plan
	 	 	17	 
	 
	 	 	 	 	 	 
	16.

	 	Notices and Other Communications
	 	 	18	 
	 
	 	 	 	 	 	 
	17.

	 	Severability
	 	 	18	 
	 
	 	 	 	 	 	 
	18.

	 	Governing Law
	 	 	18	 

 

 

HARRIS STRATEX NETWORKS, INC.

2007 Stock Equity Plan

1. Purpose

     This Plan is intended to encourage ownership of Stock by employees, consultants and directors
of the Company and its Affiliates and to provide additional incentive for them to promote the
success of the Company’s business through the grant of Awards of or pertaining to shares of the
Company’s Stock. The Plan is intended to be an incentive stock option plan within the meaning of
Section 422 of the Code, but not all Awards are required to be Incentive Options.

2. Definitions

     As used in this Plan, the following terms shall have the following meanings:

     2.1. Accelerate, Accelerated, and Acceleration, means: (a) when used
with respect to an Option or Stock Appreciation Right, that as of the time of reference the Option
or Stock Appreciation Right will become exercisable with respect to some or all of the shares of
Stock for which it was not then otherwise exercisable by its terms; (b) when used with respect to
Restricted Stock or Restricted Stock Units, that the Risk of Forfeiture otherwise applicable to the
Stock or Units shall expire with respect to some or all of the shares of Restricted Stock or Units
then still otherwise subject to the Risk of Forfeiture; and (c) when used with respect to
Performance Units, that the applicable Performance Goals shall be deemed to have been met as to
some or all of the Units.

     2.2. Acquisition means a merger or consolidation of the Company into another person
(i.e., which merger or consolidation the Company does not survive) or the sale, transfer, or other
disposition of all or substantially all of the Company’s assets to one or more other persons in a
single transaction or series of related transactions.

     2.3. Affiliate means any corporation, partnership, limited liability company, business
trust, or other entity controlling, controlled by or under common control with the Company.

     2.4. Award means any grant or sale pursuant to the Plan of Options, Stock Appreciation
Rights, Performance Units, Restricted Stock, Restricted Stock Units, or Stock Grants.

     2.5. Award Agreement means an agreement between the Company and the recipient of an
Award, setting forth the terms and conditions of the Award.

     2.6. Board means the Company’s Board of Directors.

     2.7. Change of Control means the occurrence of any of the following unless both (i)
immediately prior to such occurrence Harris Corporation (“Harris”) owns more than 30% of the total
combined voting power of the Company’s outstanding securities and (ii) immediately after such
occurrence (and the exercise or lapse of any rights triggered by such occurrence) Harris owns a
majority of such total combined voting power of the outstanding capital stock of the Company:

 

 

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          (a) any merger, consolidation, share exchange or Acquisition, unless immediately following
such merger, consolidation, share exchange or Acquisition at least 50% of the total voting power
(in respect of the election of directors, or similar officials in the case of an entity other than
a corporation) of (i) the entity resulting from such merger, consolidation or share exchange, or
the entity which has acquired all or substantially all of the assets of the Company (in the case of
an asset sale that satisfies the criteria of an Acquisition) (in either case, the “Surviving
Entity”), or (ii) if applicable, the ultimate parent entity that directly or indirectly has
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50%
or more of the total voting power (in respect of the election of directors, or similar officials in
the case of an entity other than a corporation) of the Surviving Entity (the “Parent Entity”) is
represented by Company securities that were outstanding immediately prior to such merger,
consolidation, share exchange or Acquisition (or, if applicable, is represented by shares into
which such Company securities were converted pursuant to such merger, consolidation, share exchange
or Acquisition), or

          (b) any person or group of persons (within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended and in effect from time to time) directly or indirectly acquires
beneficial ownership (determined pursuant to Securities and Exchange Commission Rule 13d-3
promulgated under the said Exchange Act), other than through a merger, consolidation, share
exchange or Acquisition, of securities possessing more than 30% of the total combined voting power
of the Company’s outstanding securities other than (i) Harris, provided that this exclusion of
Harris shall no longer apply after such time, if any, as Harris beneficially owns less than 30% of
such total voting power, (ii) an employee benefit plan of the Company or any of its Affiliates
(other than Harris), (iii) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any of its Affiliates (other than Harris), or (iv) an underwriter
temporarily holding securities pursuant to an offering of such securities, or

          (c) over a period of 36 consecutive months or less, there is a change in the composition of
the Board such that a majority of the Board members (rounded up to the next whole number, if a
fraction) ceases, by reason of one or more proxy contests for the election of Board members, to be
composed of individuals each of whom meet one of the following criteria: (i) have been a Board
member continuously since the adoption of this Plan or the beginning of such 36 month period, (ii)
have been appointed by Harris Corporation, or (iii) have been elected or nominated during such 36
month period by at least a majority of the Board members that (x) belong to the same class of
director as such Board member and (y) satisfied the criteria of this subsection (c) when they were
elected or nominated, or

          (d) a majority of the Board determines that a Change of Control has occurred.

     2.8. Code means the Internal Revenue Code of 1986, as amended from time to time, or
any successor statute thereto, and any regulations issued from time to time thereunder.

     2.9. Committee means the Compensation Committee of the Board, or such other committee
of the Board to which such authority may be granted from time to time, which in general is
responsible for the administration of the Plan, as provided in Section 5 of the Plan. For any
period during which no such committee is in existence “Committee” shall mean the Board and all
authority and responsibility assigned to the Committee under the Plan shall be exercised, if at
all, by the Board.

 

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     2.10. Company means Harris Stratex Networks, Inc., a corporation organized under the
laws of the Delaware.

     2.11. Covered Employee means an employee who is a “covered employee” within the
meaning of Section 162(m) of the Code.

     2.12. Grant Date means the date as of which an Award is granted, as determined under
Section 7.1(a).

     2.13. Incentive Option means an Option which by its terms is to be treated as an
“incentive stock option” within the meaning of Section 422 of the Code.

     2.14. Market Value means the value of a share of Stock on a particular date determined
by such methods or procedures as may be established by the Committee. Unless otherwise determined
by the Committee, the Market Value of Stock as of any date is the closing price for the Stock as
reported on the NASDAQ Global Market (or on any other national securities exchange on which the
Stock is then listed) for that date or, if no closing price is reported for that date, the closing
price on the next preceding date for which a closing price was reported.

     2.15. Nonstatutory Option means any Option that is not an Incentive Option.

     2.16. Option means an option to purchase shares of Stock.

     2.17. Optionee means a Participant to whom an Option shall have been granted under the
Plan.

     2.18. Participant means any holder of an outstanding Award under the Plan.

     2.19. Performance Criteria means the criteria that the Committee selects for purposes
of establishing the Performance Goal or Performance Goals for a Participant for a Performance
Period. The Performance Criteria used to establish Performance Goals are limited to: (i) cash
flow (before or after dividends), (ii) earnings per share (including, without limitation, earnings
before interest, taxes, depreciation and amortization), (iii) stock price, (iv) return on equity,
(v) stockholder return or total stockholder return, (vi) return on capital (including, without
limitation, return on total capital or return on invested capital), (vii) return on investment,
(viii) return on assets or net assets, (ix) market capitalization, (x) economic value added, (xi)
debt leverage (debt to capital), (xii) revenue, (xiii) sales or net sales, (xiv) backlog, (xv)
income, pre-tax income or net income, (xvi) operating income or pre-tax profit, (xvii) operating
profit, net operating profit or economic profit, (xviii) gross margin, operating margin or profit
margin, (xix) return on operating revenue or return on operating assets, (xx) cash from operations,
(xxi) operating ratio, (xxii) operating revenue, (xxiii) market share improvement, (xxiv) general
and administrative expenses or (xxv) customer service.

     2.20. Performance Goals means, for a Performance Period, the written goal or goals
established by the Committee for the Performance Period based upon the Performance Criteria. The
Performance Goals may be expressed in terms of overall Company performance or the performance of a
division, business unit, subsidiary, or an individual, either individually, alternatively or in any
combination, applied to either the Company as a whole or to a business unit or Affiliate, either
individually, alternatively or in any combination, and measured either quarterly, annually or
cumulatively over a period of years, on an absolute basis or relative to a

 

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pre-established target, to previous years’ results or to a designated comparison group, in
each case as specified by the Committee. The Committee will, in the manner and within the time
prescribed by Section 162(m) of the Code in the case of Qualified Performance-Based Awards,
objectively define the manner of calculating the Performance Goal or Goals it selects to use for
such Performance Period for such Participant. To the extent consistent with Section 162(m) of the
Code, the Committee may appropriately adjust any evaluation of performance against a Performance
Goal to exclude any of the following events that occurs during a performance period: (i) asset
write-downs, (ii) litigation, claims, judgments or settlements, (iii) the effect of changes in tax
law, accounting principles or other such laws or provisions affecting reported results, (iv)
accruals for reorganization and restructuring programs and (v) any extraordinary, unusual,
non-recurring or non-comparable items (A) as described in Accounting Principles Board Opinion No.
30, (B) as described in management’s discussion and analysis of financial condition and results of
operations appearing in the Company’s Annual Report to stockholders for the applicable year, or (C)
publicly announced by the Company in a press release or conference call relating to the Company’s
results of operations or financial condition for a completed quarterly or annual fiscal period.

     2.21. Performance Period means the one or more periods of time, which may be of
varying and overlapping durations, selected by the Committee, over which the attainment of one or
more Performance Goals will be measured for purposes of determining a Participant’s right to, and
the payment of, a Performance Unit.

     2.22. Performance Unit means a right granted to a Participant under Section 7.5, to
receive cash, Stock or other Awards, the payment of which is contingent on achieving Performance
Goals established by the Committee.

     2.23. Plan means this 2007 Stock Equity Plan of the Company, as amended from time to
time, and including any attachments or addenda hereto.

     2.24. Qualified Performance-Based Awards means Awards intended to qualify as
“performance-based compensation” under Section 162(m) of the Code.

     2.25. Restricted Stock means a grant or sale of shares of Stock to a Participant
subject to a Risk of Forfeiture.

     2.26. Restricted Stock Units means rights to receive shares of Stock at the close of a
Restriction Period, subject to a Risk of Forfeiture.

     2.27. Restriction Period means the period of time, established by the Committee in
connection with an Award of Restricted Stock or Restricted Stock Units, during which the shares of
Restricted Stock are subject to a Risk of Forfeiture described in the applicable Award Agreement.

     2.28. Risk of Forfeiture means a limitation on the right of the Participant to retain
Restricted Stock or Restricted Stock Units, including a right in the Company to reacquire shares of
Restricted Stock at less than their then Market Value, arising because of the occurrence or
non-occurrence of specified events or conditions.

     2.29. Stock means Class A common stock, par value $0.01 per share, of the Company, and
such other securities as may be substituted for Stock pursuant to Section 8.

 

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     2.30. Stock Appreciation Right means a right to receive any excess in the Market Value
of shares of Stock (except as otherwise provided in Section 7.2(c)) over a specified exercise
price.

     2.31. Stock Grant means the grant of shares of Stock not subject to restrictions or
other forfeiture conditions.

     2.32. Ten Percent Owner means a person who owns, or is deemed within the meaning of
Section 422(b)(6) of the Code to own, stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company (or any parent or subsidiary corporations of the
Company, as defined in Sections 424(e) and (f), respectively, of the Code). Whether a person is a
Ten Percent Owner shall be determined with respect to an Option based on the facts existing
immediately prior to the Grant Date of the Option.

3. Term of the Plan

     Unless the Plan shall have been earlier terminated by the Board, Awards may be granted under
this Plan at any time in the period commencing on the date of approval of the Plan by the Board and
ending immediately prior to the seventh anniversary of the earlier of the adoption of the Plan by
the Board or approval of the Plan by the Company’s stockholders. Awards granted pursuant to the
Plan within that period shall not expire solely by reason of the termination of the Plan. Awards
of Incentive Options granted prior to stockholder approval of the Plan are expressly conditioned
upon such approval, but in the event of the failure of the stockholders to approve the Plan shall
thereafter and for all purposes be deemed to constitute Nonstatutory Options.

4. Stock Subject to the Plan

     At no time shall the number of shares of Stock issued pursuant to or subject to outstanding
Awards granted under the Plan (including pursuant to Incentive Options), nor the number of shares
of Stock issued pursuant to Incentive Options, exceed 5,000,000 shares of Stock, subject, however,
to the provisions of Section 8 of the Plan. For purposes of applying the foregoing limitation, (a)
if any Option or Stock Appreciation Right expires, terminates, or is cancelled for any reason
without having been exercised in full, or if any other Award is forfeited by the recipient or
repurchased at less than its Market Value, the shares not purchased by the Optionee or which are
forfeited by the recipient or repurchased shall again be available for Awards to be granted under
the Plan and (b) if any Option is exercised by delivering previously owned shares in payment of the
exercise price therefor, only the net number of shares, that is, the number of shares issued minus
the number received by the Company in payment of the exercise price, shall be considered to have
been issued pursuant to an Award granted under the Plan. In addition, settlement of any Award
shall not count against the foregoing limitations except to the extent settled in the form of
Stock. Shares of Stock issued pursuant to the Plan may be either authorized but unissued shares or
shares held by the Company in its treasury.

5. Administration

     The Plan shall be administered by the Committee; provided, however, that at any time and on
any one or more occasions the Board may itself exercise any of the powers and responsibilities
assigned the Committee under the Plan and when so acting shall have the benefit of all of the
provisions of the Plan pertaining to the Committee’s exercise of its authorities

 

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hereunder and provided further, however, that the Committee may delegate to an executive
officer or officers the authority to grant Awards hereunder to employees who are not officers, and
to consultants, in accordance with such guidelines as the Committee shall set forth at any time or
from time to time. Subject to the provisions of the Plan, the Committee shall have complete
authority, in its discretion, to make or to select the manner of making all determinations with
respect to each Award to be granted by the Company under the Plan including the employee,
consultant or director to receive the Award and the form of Award. In making such determinations,
the Committee may take into account the nature of the services rendered by the respective
employees, consultants, and directors, their present and potential contributions to the success of
the Company and its Affiliates, and such other factors as the Committee in its discretion shall
deem relevant. Subject to the provisions of the Plan, the Committee shall also have complete
authority to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to
it, to determine the terms and provisions of the respective Award Agreements (which need not be
identical), and to make all other determinations necessary or advisable for the administration of
the Plan. The Committee’s determinations made in good faith on matters referred to in the Plan
shall be final, binding and conclusive on all persons having or claiming any interest under the
Plan or an Award made pursuant hereto.

6. Authorization of Grants

     6.1.
Eligibility. The Committee may grant from time to time and at any time prior to the
termination of the Plan one or more Awards, either alone or in combination with any other Awards,
to any employee of or consultant to one or more of the Company and its Affiliates or to
non-employee member of the Board or of any board of directors (or similar governing authority) of
any Affiliate. However, only employees of the Company, and of any parent or subsidiary corporations
of the Company, as defined in Sections 424(e) and (f), respectively, of the Code, shall be eligible
for the grant of an Incentive Option. Further, in no event shall the number of shares of Stock
covered by Options or other Awards granted to any one person in any one calendar year exceed 10% of
the aggregate number of shares of Stock subject to the Plan.

     6.2. General Terms of Awards. Each grant of an Award shall be subject to all
applicable terms and conditions of the Plan (including but not limited to any specific terms and
conditions applicable to that type of Award set out in the following Section), and such other terms
and conditions, not inconsistent with the terms of the Plan, as the Committee may prescribe. No
prospective Participant shall have any rights with respect to an Award, unless and until such
Participant shall have complied with the applicable terms and conditions of such Award (including
if applicable delivering a fully executed copy of any agreement evidencing an Award to the
Company).

     6.3. Effect of Termination of Employment, Etc. Unless the Committee shall provide
otherwise with respect to any Award, if the Participant’s employment or other association with the
Company and its Affiliates ends for any reason, including because of the Participant’s employer
ceasing to be an Affiliate, (a) any outstanding Option or SAR of the Participant shall cease to be
exercisable in any respect not later than 3 months following that event and, for the period it
remains exercisable following that event, shall be exercisable only to the extent exercisable at
the date of that event, and (b) any other outstanding Award of the Participant shall be forfeited
or otherwise subject to return to or repurchase by the Company on the terms specified in the
applicable Award Agreement. Military or sick leave or other bona fide leave shall not be deemed a
termination of employment or other association, provided that it does not exceed the
longer of three (3) months or the period during which the absent Participant’s reemployment
rights, if any, are guaranteed by statute or by contract.

 

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     6.4. Non-Transferability of Awards. Except as otherwise provided in this Section 6.4,
Awards shall not be transferable, and no Award or interest therein may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution. All of a Participant’s rights in any Award may be exercised during the
life of the Participant only by the Participant or the Participant’s legal representative.
However, the Committee may, at or after the grant of an Award of a Nonstatutory Option, or shares
of Restricted Stock, provide that such Award may be transferred by the recipient to a family
member; provided, however, that any such transfer is without payment of any consideration
whatsoever and that no transfer shall be valid unless first approved by the Committee, acting in
its sole discretion. For this purpose, “family member” means any child, stepchild, grandchild,
parent, stepparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships,
any person sharing the employee’s household (other than a tenant or employee), a trust in which the
foregoing persons have more than fifty (50) percent of the beneficial interests, a foundation in
which the foregoing persons (or the Participant) control the management of assets, and any other
entity in which these persons (or the Participant) own more than fifty (50) percent of the voting
interests.

7. Specific Terms of Awards

     7.1. Options.

          (a) Date of Grant. The granting of an Option shall take place at the time specified
in the Award Agreement. Only if expressly so provided in the applicable Award Agreement shall the
Grant Date be the date on which the Award Agreement shall have been duly executed and delivered by
the Company and the Optionee.

          (b) Exercise Price. The price at which shares of Stock may be acquired under each
Incentive Option shall be not less than 100% of the Market Value of Stock on the Grant Date, or not
less than 110% of the Market Value of Stock on the Grant Date if the Optionee is a Ten Percent
Owner. The price at which shares may be acquired under each Nonstatutory Option shall be not less
than 100% of the Market Value of Stock on the Grant Date.

          (c) Option Period. No Incentive Option may be exercised on or after the seventh
anniversary of the Grant Date, or on or after the fifth anniversary of the Grant Date if the
Optionee is a Ten Percent Owner. No Nonstatutory Option may be exercised on or after the seventh
anniversary of the Grant Date.

          (d) Exercisability. An Option may be immediately exercisable or become exercisable in such
installments, cumulative or non-cumulative, as the Committee may determine. In the case of an
Option not otherwise immediately exercisable in full, the Committee may Accelerate such Option in
whole or in part at any time; provided, however, that in the case of an Incentive Option, any such
Acceleration of the Option would not cause the Option to fail to comply with the provisions of
Section 422 of the Code or the Optionee consents to the Acceleration.

 

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          (e) Method of Exercise. An Option may be exercised by the Optionee giving written
notice, in the manner provided in Section 16, specifying the number of shares with respect to which
the Option is then being exercised. The notice shall be accompanied by payment in the form of cash
or check payable to the order of the Company in an amount equal to the exercise price of the shares
to be purchased or, subject in each instance to the Committee’s approval, acting in its sole
discretion, and to such conditions, if any, as the Committee may deem necessary to avoid adverse
accounting effects to the Company, by delivery to the Company shares of Stock having a Market Value
equal to the exercise price of the shares to be purchased.

If the Stock is traded on an established market, payment of any exercise price may also be made
through and under the terms and conditions of any formal cashless exercise program authorized by
the Company entailing the sale of the Stock subject to an Option in a brokered transaction (other
than to the Company). Receipt by the Company of such notice and payment in any authorized or
combination of authorized means shall constitute the exercise of the Option. Within thirty (30)
days thereafter but subject to the remaining provisions of the Plan, the Company shall deliver or
cause to be delivered to the Optionee or his agent the number of shares then being purchased. Such
shares shall be fully paid and nonassessable.

          (f) Limit on Incentive Option Characterization. An Incentive Option shall be
considered to be an Incentive Option only to the extent that the number of shares of Stock for
which the Option first becomes exercisable in a calendar year do not have an aggregate Market Value
(as of the date of the grant of the Option) in excess of the “current limit”. The current limit
for any Optionee for any calendar year shall be $100,000 minus the aggregate Market Value at the
date of grant of the number of shares of Stock available for purchase for the first time in the
same year under each other Incentive Option previously granted to the Optionee under the Plan, and
under each other incentive stock option previously granted to the Optionee under any other
incentive stock option plan of the Company and its Affiliates, after December 31, 1986. Any shares
of Stock which would cause the foregoing limit to be violated shall be deemed to have been granted
under a separate Nonstatutory Option, otherwise identical in its terms to those of the Incentive
Option.

          (g) Notification of Disposition. Each person exercising any Incentive Option granted
under the Plan shall be deemed to have covenanted with the Company to report to the Company any
disposition of such shares prior to the expiration of the holding periods specified by Section
422(a)(1) of the Code and, if and to the extent that the realization of income in such a
disposition imposes upon the Company federal, state, local or other withholding tax requirements,
or any such withholding is required to secure for the Company an otherwise available tax deduction,
to remit to the Company an amount in cash sufficient to satisfy those requirements.

     7.2. Stock Appreciation Rights.

          (a) Tandem or Stand-Alone. Stock Appreciation Rights may be granted in tandem with an
Option (at or, in the case of a Nonstatutory Option, after, the award of the Option), or alone and
unrelated to an Option. Stock Appreciation Rights in tandem with an Option shall terminate to the
extent that the related Option is exercised, and the related Option shall terminate to the extent
that the tandem Stock Appreciation Rights are exercised.

          (b) Exercise Price. Stock Appreciation Rights shall have an exercise price of not
less than one hundred percent (100%) of the Market Value of the Stock on the date of award,
or in the case of Stock Appreciation Rights in tandem with Options, the exercise price of the
related Option.

 

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          (c) Other Terms. Except as the Committee may deem inappropriate or inapplicable in
the circumstances, Stock Appreciation Rights shall be subject to terms and conditions substantially
similar to those applicable to a Nonstatutory Option.

     7.3. Restricted Stock.

          (a) Purchase Price. Shares of Restricted Stock shall be issued under the Plan for
such consideration, in cash, other property or services, or any combination thereof, as is
determined by the Committee.

          (b) Issuance of Shares. Shares of Restricted Stock awarded pursuant to a Restricted
Stock Award shall be issued as certificates or recorded in book-entry form, subject to subsection
(c) below. Such shares shall be registered in the name of the Participant. Any certificates so
issued shall be printed with an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Award as determined or authorized in the sole discretion of the
Committee. Shares recorded in book-entry form shall be recorded with a notation referring to the
terms, conditions, and restrictions applicable to such Award as determined or authorized in the
sole discretion of the Committee.

          (c) Escrow of Shares. The Committee may require that the stock certificates or
book-entry registrations evidencing shares of Restricted Stock be held in custody by a designated
escrow agent (which may but need not be the Company) until the restrictions thereon shall have
lapsed, and that the Participant deliver a stock power, endorsed in blank, relating to the Stock
covered by such Award.

          (d) Restrictions and Restriction Period. During the Restriction Period applicable to
shares of Restricted Stock, such shares shall be subject to limitations on transferability and a
Risk of Forfeiture arising on the basis of such conditions related to the performance of services,
Company or Affiliate performance or otherwise as the Committee may determine and provide for in the
applicable Award Agreement. Any such Risk of Forfeiture may be waived or terminated, or the
Restriction Period shortened, at any time by the Committee on such basis as it deems appropriate.

          (e) Rights Pending Lapse of Risk of Forfeiture or Forfeiture of Award. Except as
otherwise provided in the Plan or the applicable Award Agreement, at all times prior to lapse of
any Risk of Forfeiture applicable to, or forfeiture of, an Award of Restricted Stock, the
Participant shall have all of the rights of a stockholder of the Company, including the right to
vote, and the right to receive any dividends with respect to, the shares of Restricted Stock. The
Committee, as determined at the time of Award, may permit or require the payment of cash dividends
to be deferred and, if the Committee so determines, reinvested in additional Restricted Stock to
the extent shares are available under Section 4.

          (f) Lapse of Restrictions. If and when the Restriction Period expires without a prior
forfeiture of the Restricted Stock, any certificates for such shares shall be delivered to the
Participant promptly if not theretofore so delivered, and the restrictive legends shall be promptly
removed from any book-entry registrations for such shares.

 

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     7.4. Restricted Stock Units.

          (a) Character. Each Restricted Stock Unit shall entitle the recipient to a share of Stock at
a close of such Restriction Period as the Committee may establish and subject to a Risk of
Forfeiture arising on the basis of such conditions relating to the performance of services, Company
or Affiliate performance or otherwise as the Committee may determine and provide for in the
applicable Award Agreement. Any such Risk of Forfeiture may be waived or terminated, or the
Restriction Period shortened, at any time by the Committee on such basis as it deems appropriate.

          (b) Form and Timing of Payment. Payment of earned Restricted Stock Units shall be
made in a single lump sum following the close of the applicable Restriction Period. At the
discretion of the Committee, Participants may be entitled to receive payments equivalent to any
dividends declared with respect to Stock referenced in grants of Restricted Stock Units but only
following the close of the applicable Restriction Period and then only if the underlying Stock
shall have been earned. Unless the Committee shall provide otherwise, any such dividend
equivalents shall be paid, if at all, without interest or other earnings.

     7.5. Performance Units.

          (a) Character. Each Performance Unit shall entitle the recipient to the value of a specified
number of shares of Stock, over the initial value for such number of shares, if any, established by
the Committee at the time of grant, at the close of a specified Performance Period to the extent
specified Performance Goals shall have been achieved.

          (b) Earning of Performance Units. The Committee shall set Performance Goals in its
discretion which, depending on the extent to which they are met within the applicable Performance
Period, will determine the number and value of Performance Units that will be paid out to the
Participant. After the applicable Performance Period has ended, the holder of Performance Units
shall be entitled to receive payout on the number and value of Performance Units earned by the
Participant over the Performance Period, to be determined as a function of the extent to which the
corresponding Performance Goals have been achieved.

          (c) Form and Timing of Payment. Payment of earned Performance Units shall be made in
a single lump sum following the close of the applicable Performance Period. At the discretion of
the Committee, Participants may be entitled to receive any dividends declared with respect to Stock
which have been earned in connection with grants of Performance Units which have been earned, but
not yet distributed to Participants. The Committee may permit or, if it so provides at grant
require, a Participant to defer such Participant’s receipt of the payment of cash or the delivery
of Stock that would otherwise be due to such Participant by virtue of the satisfaction of any
requirements or goals with respect to Performance Units. If any such deferral election is required
or permitted, the Committee shall establish rules and procedures for such payment deferrals.

     7.6. Stock Grants. Stock Grants shall be awarded solely in recognition of significant
contributions to the success of the Company or its Affiliates, in lieu of compensation otherwise
already due and in such other limited circumstances as the Committee deems appropriate. Stock
Grants shall be made without forfeiture conditions of any kind.

 

 - 11 - 

     7.7. Qualified Performance-Based Awards.

          (a) Purpose. The purpose of this Section 7.7 is to provide the Committee the ability
to qualify Awards as “performance-based compensation” under Section 162(m) of the Code. If the
Committee, in its discretion, decides to grant an Award as a Qualified Performance-Based Award, the
provisions of this Section 7.7 will control over any contrary provision contained in the Plan. In
the course of granting any Award, the Committee may specifically designate the Award as intended to
qualify as a Qualified Performance-Based Award. However, no Award shall be considered to have
failed to qualify as a Qualified Performance-Based Award solely because the Award is not expressly
designated as a Qualified Performance-Based Award, if the Award otherwise satisfies the provisions
of this Section 7.7 and the requirements of Section 162(m) of the Code and the regulations
promulgated thereunder applicable to “performance-based compensation.”

          (b) Authority. All grants of Awards intended to qualify as Qualified Performance-Based Awards
and determination of terms applicable thereto shall be made by the Committee or, if not all of the
members thereof qualify as “outside directors” within the meaning of applicable IRS regulations
under Section 162 of the Code, a subcommittee of the Committee consisting of such of the members of
the Committee as do so qualify. Any action by such a subcommittee shall be considered the action
of the Committee for purposes of the Plan.

          (c) Applicability. This Section 7.7 will apply only to those Covered Employees, or to
those persons who the Committee determines are reasonably likely to become Covered Employees in the
period covered by an Award, selected by the Committee to receive Qualified Performance-Based
Awards. The Committee may, in its discretion, grant Awards to Covered Employees that do not
satisfy the requirements of this Section 7.7.

          (d) Discretion of Committee with Respect to Qualified Performance-Based Awards.
Options may be granted as Qualified Performance-Based Awards in accordance with Section 7.1, except
that the exercise price of any Option intended to qualify as a Qualified Performance-Based Award
shall in no event be less that the Market Value of the Stock on the date of grant. With regard to
other Awards intended to qualify as Qualified Performance-Based Awards, such as Restricted Stock,
Restricted Stock Units, or Performance Units, the Committee will have full discretion to select the
length of any applicable Restriction Period or Performance Period, the kind and/or level of the
applicable Performance Goal, and whether the Performance Goal is to apply to the Company, a
Subsidiary or any division or business unit or to the individual. Any Performance Goal or Goals
applicable to Qualified Performance-Based Awards shall be objective, shall be established not later
than three (3) months after the beginning of any applicable Performance Period (or at such other
date as may be required or permitted for “performance-based compensation” under Section 162(m) of
the Code) and shall otherwise meet the requirements of Section 162(m) of the Code, including the
requirement that the outcome of the Performance Goal or Goals be substantially uncertain (as
defined in the regulations under Section 162(m) of the Code) at the time established.

          (e) Payment of Qualified Performance-Based Awards. A Participant will be eligible to
receive payment under a Qualified Performance-Based Award which is subject to achievement of a
Performance Goal or Goals only if the applicable Performance Goal or Goals period are achieved
within the applicable Performance Period, as determined by the Committee. In determining the
actual size of an individual Qualified Performance-Based Award, the Committee may reduce or
eliminate the amount of the Qualified Performance-Based Award
earned for the Performance Period, if in its sole and absolute discretion, such reduction or
elimination is appropriate.

 

 - 12 - 

          (f) Maximum Award Payable. The maximum Qualified Performance-Based Award payment to
any one Participant under the Plan for a Performance Period is the number of shares of Stock set
forth in Section 4 above, or if the Qualified Performance-Based Award is paid in cash, that number
of shares multiplied by the Market Value of the Stock as of the date the Qualified
Performance-Based Award is granted.

          (g) Limitation on Adjustments for Certain Events. No adjustment of any Qualified
Performance-Based Award pursuant to Section 8 shall be made except on such basis, if any, as will
not cause such Award to provide other than “performance-based compensation” within the meaning of
Section 162(m) of the Code.

     7.8. Awards to Participants Outside the United States. The Committee may modify the
terms of any Award under the Plan granted to a Participant who is, at the time of grant or during
the term of the Award, resident or primarily employed outside of the United States in any manner
deemed by the Committee to be necessary or appropriate in order that the Award shall conform to
laws, regulations, and customs of the country in which the Participant is then resident or
primarily employed, or so that the value and other benefits of the Award to the Participant, as
affected by foreign tax laws and other restrictions applicable as a result of the Participant’s
residence or employment abroad, shall be comparable to the value of such an Award to a Participant
who is resident or primarily employed in the United States. The Committee may establish
supplements to, or amendments, restatements, or alternative versions of the Plan for the purpose of
granting and administrating any such modified Award. No such modification, supplement, amendment,
restatement or alternative version may increase the share limit of Section 4.

8. Adjustment Provisions

     8.1. Adjustment for Corporate Actions. All of the share numbers set forth in the Plan
reflect the capital structure of the Company as of the Closing Date (as defined in the Amended and
Restated Formation, Contribution and Merger Agreement, dated as of December 18, 2006 (the
“Formation Agreement”), between Harris and Stratex Networks, Inc. Subject to Section 8.2, if
subsequent to that date the outstanding shares of Stock (or any other securities covered by the
Plan by reason of the prior application of this Section) are increased, decreased, or exchanged for
a different number or kind of shares or other securities, or if additional shares or new or
different shares or other securities are distributed with respect to shares of Stock, through
merger, consolidation, sale of all or substantially all the property of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock
split, or other similar distribution with respect to such shares of Stock, an appropriate and
proportionate adjustment will be made in (i) the maximum numbers and kinds of shares provided in
Section 4, (ii) the numbers and kinds of shares or other securities subject to the then outstanding
Awards, (iii) the exercise price for each share or other unit of any other securities subject to
then outstanding Options and Stock Appreciation Rights (without change in the aggregate purchase
price as to which such Options or Rights remain exercisable), and (iv) the repurchase price of each
share of Restricted Stock then subject to a Risk of Forfeiture in the form of a Company repurchase
right.

 

 - 13 - 

     8.2. Treatment in Certain Acquisitions. Subject to any provisions of then outstanding
Awards granting greater rights to the holders thereof, in the event of an Acquisition in which
outstanding Awards are not Accelerated in full pursuant to Section 9, any then outstanding
Awards shall nevertheless Accelerate in full to the extent not assumed or replaced by comparable
Awards referencing shares of the capital stock of the successor or acquiring entity or parent
thereof, and thereafter (or after a reasonable period following the Acquisition, as determined by
the Committee) terminate. As to any one or more outstanding Awards which are not otherwise
Accelerated in full by reason of such Acquisition, the Committee may also, either in advance of an
Acquisition or at the time thereof and upon such terms as it may deem appropriate, provide for the
Acceleration of such outstanding Awards in the event that the employment of the Participants should
subsequently terminate following the Acquisition. Each outstanding Award that is assumed in
connection with an Acquisition, or is otherwise to continue in effect subsequent to the
Acquisition, will be appropriately adjusted, immediately after the Acquisition, as to the number
and class of securities and other relevant terms in accordance with Section 8.1.  

     8.3. Cancellation and Termination of Awards. The Committee may, in connection
with any merger, consolidation, share exchange or other transaction entered into by the Company in
good faith, determine that any outstanding Awards granted under the Plan, whether or not vested,
will be canceled and terminated and that in connection with such cancellation and termination the
holder of such Award may receive for each share of Common Stock subject to such Award a cash
payment (or the delivery of shares of stock, other securities or a combination of cash, stock and
securities equivalent to such cash payment) equal to the difference, if any, between the amount
determined by the Committee to be the fair market value of the Common Stock and the purchase price
per share (if any) under the Award multiplied by the number of shares of Common Stock subject to
such Award; provided that if such product is zero or less or to the extent that the Award is not
then exercisable, the Award will be canceled and terminated without payment therefor.

     8.4. Dissolution or Liquidation. Upon dissolution or liquidation of the Company,
other than as part of an Acquisition or similar transaction, each outstanding Option and SAR shall
terminate, but the Optionee or SAR holder (if at the time in the employ of or otherwise associated
with the Company or any of its Affiliates) shall have the right, immediately prior to the
dissolution or liquidation, to exercise the Option or SAR to the extent exercisable on the date of
dissolution or liquidation.

     8.5. Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring
Events. In the event of any corporate action not specifically covered by the preceding
Sections, including but not limited to an extraordinary cash distribution on Stock, a corporate
separation or other reorganization or liquidation, the Committee may make such adjustment of
outstanding Awards and their terms, if any, as it, in its sole discretion, may deem equitable and
appropriate in the circumstances. The Committee may make adjustments in the terms and conditions
of, and the criteria included in, Awards in recognition of unusual or nonrecurring events
(including, without limitation, the events described in this Section) affecting the Company or the
financial statements of the Company or of changes in applicable laws, regulations, or accounting
principles, whenever the Committee determines that such adjustments are appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended to be made available
under the Plan.

     8.6. Related Matters. Any adjustment in Awards made pursuant to this Section 8 shall
be determined and made, if at all, by the Committee and shall include any correlative modification
of terms, including of Option exercise prices, rates of vesting or exercisability, Risks of
Forfeiture, applicable repurchase prices for Restricted Stock, and Performance Goals and other
financial objectives which the Committee may deem necessary or appropriate so as to ensure the
rights of the Participants in their respective Awards are not substantially diminished nor enlarged

 

 - 14 - 

as a result of the adjustment and corporate action other than as expressly contemplated in
this Section 8. No fraction of a share shall be purchasable or deliverable upon exercise, but in
the event any adjustment hereunder of the number of shares covered by an Award shall cause such
number to include a fraction of a share, such number of shares shall be adjusted to the nearest
smaller whole number of shares. No adjustment of an Option exercise price per share pursuant to
this Section 8 shall result in an exercise price which is less than the par value of the Stock.

9. Change of Control

     Upon the occurrence of a Change of Control:

          (a) any and all Options and Stock Appreciation Rights not already exercisable in full shall
Accelerate if and to the extent so provided in the Award Agreement or so determined by the
Committee;

          (b) any Risk of Forfeiture applicable to Restricted Stock and Restricted Stock Units which is
not based on achievement of Performance Goals shall lapse if and to the extent so provided in the
Award Agreement or so determined by the Committee; and

          (c) all outstanding Awards of Restricted Stock and Restricted Stock Units conditioned on the
achievement of Performance Goals and the target payout opportunities attainable under outstanding
Performance Units shall be deemed to have been satisfied as of the effective date of the Change of
Control if and to the extent so provided in the Award Agreement or so determined by the Committee;

None of the foregoing shall apply, however, (i) in the case of a Qualified Performance-Based Award
specifically designated as such by the Committee at the time of grant (except to the extent allowed
by Section 162(m) of the Code), (ii) in the case of any Award pursuant to an Award Agreement
requiring other or additional terms upon a Change of Control (or similar event), or (iii) if
specifically prohibited under applicable laws, or by the rules and regulations of any governing
governmental agencies or national securities exchanges.

10. Settlement of Awards

     10.1. In General. Options and Restricted Stock shall be settled in accordance with
their terms. All other Awards may be settled in cash, Stock, or other Awards, or a combination
thereof, as determined by the Committee at or after grant and subject to any contrary Award
Agreement. The Committee may not require settlement of any Award in Stock pursuant to the
immediately preceding sentence to the extent issuance of such Stock would be prohibited or
unreasonably delayed by reason of any other provision of the Plan.

     10.2. Violation of Law. Notwithstanding any other provision of the Plan or the
relevant Award Agreement, if, at any time, in the reasonable opinion of the Company, the issuance
of shares of Stock covered by an Award may constitute a violation of law, then the Company may
delay such issuance and the delivery of such shares until (i) approval shall have been obtained
from such governmental agencies, other than the Securities and Exchange Commission, as may be
required under any applicable law, rule, or regulation and (ii) in the case where such issuance
would constitute a violation of a law administered by or a regulation of the Securities and
Exchange Commission, one of the following conditions shall have been satisfied:

 

 - 15 - 

          (a) the shares are at the time of the issue of such shares effectively registered under the
Securities Act of 1933; or

          (b) the Company shall have determined, on such basis as it deems appropriate (including an
opinion of counsel in form and substance satisfactory to the Company) that the sale, transfer,
assignment, pledge, encumbrance or other disposition of such shares or such beneficial interest, as
the case may be, does not require registration under the Securities Act of 1933, as amended or any
applicable State securities laws.

The Company shall make all reasonable efforts to bring about the occurrence of said events.

     10.3. Corporate Restrictions on Rights in Stock. Any Stock to be issued pursuant to
Awards granted under the Plan shall be subject to all restrictions upon the transfer thereof which
may be now or hereafter imposed by the charter, certificate or articles, and by-laws, of the
Company.

     10.4. Investment Representations. The Company shall be under no obligation to issue
any shares covered by any Award unless the shares to be issued pursuant to Awards granted under the
Plan have been effectively registered under the Securities Act of 1933, as amended, or the
Participant shall have made such written representations to the Company (upon which the Company
believes it may reasonably rely) as the Company may deem necessary or appropriate for purposes of
confirming that the issuance of such shares will be exempt from the registration requirements of
that Act and any applicable state securities laws and otherwise in compliance with all applicable
laws, rules and regulations, including but not limited to that the Participant is acquiring the
shares for his or her own account for the purpose of investment and not with a view to, or for sale
in connection with, the distribution of any such shares.

     10.5. Registration. If the Company shall deem it necessary or desirable to register under the
Securities Act of 1933, as amended or other applicable statutes any shares of Stock issued or to be
issued pursuant to Awards granted under the Plan, or to qualify any such shares of Stock for
exemption from the Securities Act of 1933, as amended or other applicable statutes, then the
Company shall take such action at its own expense. The Company may require from each recipient of
an Award, or each holder of shares of Stock acquired pursuant to the Plan, such information in
writing for use in any registration statement, prospectus, preliminary prospectus or offering
circular as is reasonably necessary for that purpose and may require reasonable indemnity to the
Company and its officers and directors from that holder against all losses, claims, damage and
liabilities arising from use of the information so furnished and caused by any untrue statement of
any material fact therein or caused by the omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light of the
circumstances under which they were made. In addition, the Company may require of any such person
that he or she agree that, without the prior written consent of the Company or the managing
underwriter in any public offering of shares of Stock, he or she will not sell, make any short sale
of, loan, grant any option for the purchase of, pledge or otherwise encumber, or otherwise dispose
of, any shares of Stock during the 180 day period commencing on the effective date of the
registration statement relating to the underwritten public offering of securities. Without limiting
the generality of the foregoing provisions of this Section 10.5, if in connection with any
underwritten public offering of securities of the Company the managing underwriter of such offering
requires that the Company’s directors and officers enter into a lock-up agreement containing
provisions that are more restrictive than the provisions set forth in the preceding sentence, then
(a) each holder of shares of Stock acquired pursuant to the Plan (regardless of

 

 - 16 - 

whether such person has complied or complies with the provisions of clause (b) below) shall be
bound by, and shall be deemed to have agreed to, the same lock-up terms as those to which the
Company’s directors and officers are required to adhere; and (b) at the request of the Company or
such managing underwriter, each such person shall execute and deliver a lock-up agreement in form
and substance equivalent to that which is required to be executed by the Company’s directors and
officers.

     10.6. Placement of Legends; Stop Orders; etc. Each share of Stock to be issued
pursuant to Awards granted under the Plan may bear a reference to the investment representation
made in accordance with Section 10.4 in addition to any other applicable restriction under the
Plan, the terms of the Award and to the fact that no registration statement has been filed with the
Securities and Exchange Commission in respect to such shares of Stock. All shares of Stock or
other securities delivered under the Plan shall be subject to such stock transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations, and other
requirements of any stock exchange upon which the Stock is then listed, and any applicable federal
or state securities law, and the Committee may cause a legend or legends to be put on any
certificates or recorded in connection with book-entry accounts representing the shares to make
appropriate reference to such restrictions.

     10.7. Tax Withholding. Whenever shares of Stock are issued or to be issued pursuant to
Awards granted under the Plan, the Company shall have the right to require the recipient to remit
to the Company an amount sufficient to satisfy federal, state, local or other withholding tax
requirements if, when, and to the extent required by law (whether so required to secure for the
Company an otherwise available tax deduction or otherwise) prior to the delivery of any such
shares. The obligations of the Company under the Plan shall be conditional on satisfaction of all
such withholding obligations and the Company shall, to the extent permitted by law, have the right
to deduct any such taxes from any payment of any kind otherwise due to the recipient of an Award.
However, in such cases Participants may elect, subject to the approval of the Committee, acting in
its sole discretion, to satisfy an applicable withholding requirement, in whole or in part, by
having the Company withhold shares to satisfy their tax obligations. Participants may only elect
to have Shares withheld having a Market Value on the date the tax is to be determined equal to the
minimum statutory total tax which could be imposed on the transaction. All elections shall be
irrevocable, made in writing, signed by the Participant, and shall be subject to any restrictions
or limitations that the Committee deems appropriate.

11. Reservation of Stock

     The Company shall at all times during the term of the Plan and any outstanding Awards granted
hereunder reserve or otherwise keep available such number of shares of Stock as will be sufficient
to satisfy the requirements of the Plan (if then in effect) and the Awards and shall pay all fees
and expenses necessarily incurred by the Company in connection therewith.

12. Limitation of Rights in Stock; No Special Service Rights

     A Participant shall not be deemed for any purpose to be a stockholder of the Company with
respect to any of the shares of Stock subject to an Award, unless and until shares shall have been
issued therefor and delivered to the Participant or his agent. Any Stock to be issued pursuant to
Awards granted under the Plan shall be subject to all restrictions upon the transfer thereof which
may be now or hereafter imposed by the Certificate of Incorporation and the By-laws of the Company.
Nothing contained in the Plan or in any Award Agreement shall confer

 

 - 17 - 

upon any recipient of an Award any right with respect to the continuation of his or her
employment or other association with the Company (or any Affiliate), or interfere in any way with
the right of the Company (or any Affiliate), subject to the terms of any separate employment or
consulting agreement or provision of law or corporate articles or by-laws to the contrary, at any
time to terminate such employment or consulting agreement or to increase or decrease, or otherwise
adjust, the other terms and conditions of the recipient’s employment or other association with the
Company and its Affiliates.

13. Unfunded Status of Plan

     The Plan is intended to constitute an “unfunded” plan for incentive compensation, and the Plan
is not intended to constitute a plan subject to the provisions of the Employee Retirement Income
Security Act of 1974, as amended. With respect to any payments not yet made to a Participant by
the Company, nothing contained herein shall give any such Participant any rights that are greater
than those of a general creditor of the Company. In its sole discretion, the Committee may
authorize the creation of trusts or other arrangements to meet the obligations created under the
Plan to deliver Stock or payments with respect to Options, Stock Appreciation Rights and other
Awards hereunder, provided, however, that the existence of such trusts or other arrangements is
consistent with the unfunded status of the Plan.

14. Nonexclusivity of the Plan

     Neither the adoption of the Plan by the Board nor the submission of the Plan to the
stockholders of the Company shall be construed as creating any limitations on the power of the
Board to adopt such other incentive arrangements as it may deem desirable, including without
limitation, the granting of stock options and restricted stock other than under the Plan, and such
arrangements may be either applicable generally or only in specific cases.

15. Termination and Amendment of the Plan

     The Board may at any time terminate the Plan or make such modifications of the Plan as it
shall deem advisable. Unless the Board otherwise expressly provides, no amendment of the Plan
shall affect the terms of any Award outstanding on the date of such amendment.

     The Committee may amend the terms of any Award theretofore granted, prospectively or
retroactively, provided that the Award as amended is consistent with the terms of the Plan.
Notwithstanding the foregoing, the Company will not reprice, or cancel and regrant any outstanding
award without shareholder approval.

     No amendment or modification of the Plan by the Board, or of an outstanding Award by the
Committee, shall impair the rights of the recipient of any Award outstanding on the date of such
amendment or modification or such Award, as the case may be, without the Participant’s consent;
provided, however, that no such consent shall be required if (i) the Board or Committee, as the
case may be, determines in its sole discretion and prior to the date of any Change of Control that
such amendment or alteration either is required or advisable in order for the Company, the Plan or
the Award to satisfy any law or regulation, including without limitation the provisions of Section
409A of the Code or to meet the requirements of or avoid adverse financial accounting consequences
under any accounting standard, or (ii) the Board or Committee, as the case may be, determines in
its sole discretion that such amendment or alteration is not reasonably
likely to significantly diminish the benefits provided under the Award, or that any such
diminution has been adequately compensated.

 

 - 18 - 

16. Notices and Other Communications

     Any notice, demand, request or other communication hereunder to any party shall be deemed to
be sufficient if contained in a written instrument delivered in person or duly sent by first class
registered, certified or overnight mail, postage prepaid, or telecopied with a confirmation copy by
regular, certified or overnight mail, addressed or telecopied, as the case may be, (i) if to the
recipient of an Award, at his or her residence address last filed with the Company and (ii) if to
the Company, at its principal place of business, addressed to the attention of its Treasurer, or to
such other address or telecopier number, as the case may be, as the addressee may have designated
by notice to the addressor. All such notices, requests, demands and other communications shall be
deemed to have been received: (i) in the case of personal delivery, on the date of such delivery;
(ii) in the case of mailing, when received by the addressee; and (iii) in the case of facsimile
transmission, when confirmed by facsimile machine report.

17. Severability

     If any one or more of the provisions contained in this Agreement shall be invalid, illegal or
unenforceable in any respect under any applicable law, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be affected or impaired thereby.

18. Governing Law

     The Plan and all Award Agreements and actions taken thereunder shall be governed, interpreted
and enforced in accordance with the laws of the state of Delaware, without regard to the conflict
of laws principles thereof.exv10w1

 

Exhibit 10.1

Execution Copy

COMMON STOCK PURCHASE AGREEMENT

by and between

KINGSBRIDGE CAPITAL LIMITED

and

CELL GENESYS, INC.

dated as of February 5, 2007

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	ARTICLE I          DEFINITIONS	 	 	2	 
	 
	     Section 1.01.

	 	“Agreement”
	 	 	2	 
	     Section 1.02.

	 	“Blackout Amount”
	 	 	2	 
	     Section 1.03.

	 	“Blackout Shares”
	 	 	2	 
	     Section 1.04.

	 	“Business Day”
	 	 	2	 
	     Section 1.05.

	 	“Bylaws”
	 	 	2	 
	     Section 1.06.

	 	“Certificate”
	 	 	2	 
	     Section 1.07.

	 	“Closing”
	 	 	2	 
	     Section 1.08.

	 	“Closing Date”
	 	 	2	 
	     Section 1.09.

	 	“Closing Price”
	 	 	2	 
	     Section 1.10.

	 	“Commission”
	 	 	2	 
	     Section 1.11.

	 	“Commission Documents”
	 	 	2	 
	     Section 1.12.

	 	“Commitment Period”
	 	 	2	 
	     Section 1.13.

	 	“Common Stock”
	 	 	2	 
	     Section 1.14.

	 	“Company”
	 	 	2	 
	     Section 1.15.

	 	“Company Indemnified Party”
	 	 	2	 
	     Section 1.16.

	 	“Company Indemnity Payment”
	 	 	3	 
	     Section 1.17.

	 	“Condition Satisfaction Date”
	 	 	3	 
	     Section 1.18.

	 	“Consolidated Subsidiary”
	 	 	3	 
	     Section 1.19.

	 	“Convertible Security”
	 	 	3	 
	     Section 1.20.

	 	“Conversion Price”
	 	 	3	 
	     Section 1.21.

	 	“Damages”
	 	 	3	 
	     Section 1.22.

	 	“Draw Down”
	 	 	3	 
	     Section 1.23.

	 	“Draw Down Amount”
	 	 	3	 
	     Section 1.24.

	 	“Draw Down Discount Price”
	 	 	3	 
	     Section 1.25.

	 	“Draw Down Notice”
	 	 	3	 
	     Section 1.26.

	 	“Draw Down Pricing Period”
	 	 	3	 
	     Section 1.27.

	 	“DTC”
	 	 	3	 
	     Section 1.28.

	 	“Effective Date”
	 	 	3	 
	     Section 1.29.

	 	“Exchange Act”
	 	 	3	 
	     Section 1.30.

	 	“Excluded Merger or Sale”
	 	 	3	 
	     Section 1.31.

	 	“GAAP”
	 	 	4	 
	     Section 1.32.

	 	“Indemnified Party”
	 	 	4	 
	     Section 1.33.

	 	“Indemnifying Party”
	 	 	4	 
	     Section 1.34.

	 	“Investor”
	 	 	4	 

 

 

TABLE OF CONTENTS
(Continued)

	 	 	 	 	 	 	 
	 	 	 	 	Page
	     Section 1.35.

	 	“Investor Indemnified Party”
	 	 	4	 
	     Section 1.36.

	 	“Investor Indemnity Payment”
	 	 	4	 
	     Section 1.37.

	 	“Knowledge”
	 	 	4	 
	     Section 1.38.

	 	“LIBOR”
	 	 	4	 
	     Section 1.39.

	 	“Make Whole Amount”
	 	 	4	 
	     Section 1.40.

	 	“Market Capitalization”
	 	 	4	 
	     Section 1.41.

	 	“Material Adverse Effect”
	 	 	4	 
	     Section 1.42.

	 	“Maximum Commitment Amount”
	 	 	5	 
	     Section 1.43.

	 	“Maximum Draw Down Amount”
	 	 	5	 
	     Section 1.44.

	 	“NASD”
	 	 	5	 
	     Section 1.45.

	 	“Permitted Transaction”
	 	 	5	 
	     Section 1.46.

	 	“Person”
	 	 	5	 
	     Section 1.47.

	 	“Principal Market”
	 	 	5	 
	     Section 1.48.

	 	“Prohibited Transaction”
	 	 	5	 
	     Section 1.49.

	 	“Prospectus”
	 	 	5	 
	     Section 1.50.

	 	“Registrable Securities”
	 	 	5	 
	     Section 1.51.

	 	“Registration Rights Agreement”
	 	 	6	 
	     Section 1.52.

	 	“Registration Statement”
	 	 	6	 
	     Section 1.53.

	 	“Regulation D”
	 	 	6	 
	     Section 1.54.

	 	“Section 4(2)”
	 	 	6	 
	     Section 1.55.

	 	“Securities Act”
	 	 	6	 
	     Section 1.56.

	 	“Settlement Date”
	 	 	6	 
	     Section 1.57.

	 	“Shares”
	 	 	6	 
	     Section 1.58.

	 	“Trading Day”
	 	 	6	 
	     Section 1.59.

	 	“VWAP”
	 	 	6	 
	     Section 1.60.

	 	“Warrant”
	 	 	6	 
	     Section 1.61.

	 	“Warrant Shares”
	 	 	6	 
	 
	 	 	 	 	 	 
	ARTICLE II          PURCHASE AND SALE OF COMMON STOCK	 	 	6	 
	 
	     Section 2.01.

	 	Purchase and Sale of Stock
	 	 	6	 
	     Section 2.02.

	 	Closing
	 	 	7	 
	     Section 2.03.

	 	Registration Statement and Prospectus
	 	 	7	 
	     Section 2.04.

	 	Warrant
	 	 	7	 
	     Section 2.05.

	 	Blackout Shares
	 	 	7	 
	 
	 	 	 	 	 	 
	ARTICLE III          DRAW DOWN TERMS	 	 	7	 

ii

 

TABLE OF CONTENTS
(Continued)

	 	 	 	 	 	 	 
	 	 	 	 	Page
	     Section 3.01.

	 	Draw Down Notice
	 	 	7	 
	     Section 3.02.

	 	Number of Shares
	 	 	7	 
	     Section 3.03.

	 	Limitation on Draw Downs
	 	 	8	 
	     Section 3.04.

	 	Trading Cushion
	 	 	8	 
	     Section 3.05.

	 	Settlement
	 	 	8	 
	     Section 3.06.

	 	Delivery of Shares; Payment of Draw Down Amount
	 	 	8	 
	     Section 3.07.

	 	Failure to Deliver Shares
	 	 	8	 
	 
	 	 	 	 	 	 
	ARTICLE IV          REPRESENTATIONS AND WARRANTIES OF THE COMPANY	 	 	9	 
	 
	     Section 4.01.

	 	Organization, Good Standing and Power
	 	 	9	 
	     Section 4.02.

	 	Authorization; Enforcement
	 	 	9	 
	     Section 4.03.

	 	Capitalization
	 	 	10	 
	     Section 4.04.

	 	Issuance of Shares
	 	 	10	 
	     Section 4.05.

	 	No Conflicts
	 	 	10	 
	     Section 4.06.

	 	Commission Documents, Financial Statements
	 	 	11	 
	     Section 4.07.

	 	No Material Adverse Change
	 	 	12	 
	     Section 4.08.

	 	No Undisclosed Liabilities
	 	 	12	 
	     Section 4.09.

	 	No Undisclosed Events or Circumstances
	 	 	12	 
	     Section 4.10.

	 	Actions Pending
	 	 	12	 
	     Section 4.11.

	 	Compliance with Law
	 	 	12	 
	     Section 4.12.

	 	Certain Fees
	 	 	13	 
	     Section 4.13.

	 	Disclosure
	 	 	13	 
	     Section 4.14.

	 	Material Non-Public Information
	 	 	13	 
	     Section 4.15.

	 	Exemption from Registration; Valid Issuances
	 	 	13	 
	     Section 4.16.

	 	No General Solicitation or Advertising in Regard to this Transaction
	 	 	13	 
	     Section 4.17.

	 	Acknowledgment Regarding Investor’s Purchase of Shares
	 	 	14	 
	 
	 	 	 	 	 	 
	ARTICLE V          REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR	 	 	14	 
	 
	     Section 5.01.

	 	Organization and Standing of the Investor
	 	 	14	 
	     Section 5.02.

	 	Authorization and Power
	 	 	14	 
	     Section 5.03.

	 	No Conflicts
	 	 	14	 
	     Section 5.04.

	 	Financial Capability
	 	 	15	 
	     Section 5.05.

	 	Information
	 	 	15	 
	     Section 5.06.

	 	Selling Restrictions
	 	 	15	 
	     Section 5.07.

	 	Statutory Underwriter Status
	 	 	15	 

iii

 

TABLE OF CONTENTS
(Continued)

	 	 	 	 	 	 	 
	 	 	 	 	Page
	     Section 5.08.

	 	Not an Affiliate
	 	 	15	 
	     Section 5.09.

	 	Manner of Sale
	 	 	15	 
	     Section 5.10.

	 	Prospectus Delivery
	 	 	16	 
	 
	 	 	 	 	 	 
	ARTICLE VI          COVENANTS OF THE COMPANY	 	 	16	 
	 
	     Section 6.01.

	 	Securities
	 	 	16	 
	     Section 6.02.

	 	Reservation of Common Stock
	 	 	16	 
	     Section 6.03.

	 	Registration and Listing
	 	 	16	 
	     Section 6.04.

	 	Registration Statement
	 	 	17	 
	     Section 6.05.

	 	Compliance with Laws
	 	 	17	 
	     Section 6.06.

	 	Other Financing
	 	 	17	 
	     Section 6.07.

	 	Prohibited Transactions
	 	 	18	 
	     Section 6.08.

	 	Corporate Existence
	 	 	18	 
	     Section 6.09.

	 	Non-Disclosure of Non-Public Information
	 	 	19	 
	     Section 6.10.

	 	Notice of Certain Events Affecting Registration; Suspension of Right to Request a Draw Down
	 	 	19	 
	     Section 6.11.

	 	Amendments to the Registration Statement
	 	 	19	 
	     Section 6.12.

	 	Prospectus Delivery
	 	 	19	 
	 
	 	 	 	 	 	 
	ARTICLE VII          CONDITIONS TO THE OBLIGATION OF THE INVESTOR TO ACCEPT A DRAW DOWN	 	 	20	 
	 
	     Section 7.01.

	 	Accuracy of the Company’s Representations and Warranties
	 	 	20	 
	     Section 7.02.

	 	Performance by the Company
	 	 	20	 
	     Section 7.03.

	 	Compliance with Law
	 	 	20	 
	     Section 7.04.

	 	Effective Registration Statement
	 	 	20	 
	     Section 7.05.

	 	No Knowledge
	 	 	20	 
	     Section 7.06.

	 	No Suspension
	 	 	20	 
	     Section 7.07.

	 	No Injunction
	 	 	21	 
	     Section 7.08.

	 	No Proceedings or Litigation
	 	 	21	 
	     Section 7.09.

	 	Sufficient Shares Registered for Resale
	 	 	21	 
	     Section 7.10.

	 	Warrant
	 	 	21	 
	     Section 7.11.

	 	Opinion of Counsel
	 	 	21	 
	     Section 7.12.

	 	Accuracy of Investor’s Representation and Warranties
	 	 	21	 
	     Section 7.13.

	 	Payment of Fees
	 	 	21	 
	 
	 	 	 	 	 	 
	ARTICLE VIII          TERMINATION	 	 	21	 
	 
	     Section 8.01.

	 	Term
	 	 	21	 

iv

 

TABLE OF CONTENTS
(Continued)

	 	 	 	 	 	 	 
	     Section 8.02.

	 	Other Termination
	 	 	21	 
	     Section 8.03.

	 	Effect of Termination
	 	 	22	 
	 
	 	 	 	 	 	 
	ARTICLE IX          INDEMNIFICATION	 	 	23	 
	 
	     Section 9.01.

	 	Indemnification
	 	 	23	 
	     Section 9.02.

	 	Notification of Claims for Indemnification
	 	 	24	 
	 
	 	 	 	 	 	 
	ARTICLE X          MISCELLANEOUS	 	 	25	 
	 
	     Section 10.01.

	 	Fees and Expenses
	 	 	25	 
	     Section 10.02.

	 	Reporting Entity for the Common Stock
	 	 	26	 
	     Section 10.03.

	 	Brokerage
	 	 	26	 
	     Section 10.04.

	 	Notices
	 	 	26	 
	     Section 10.05.

	 	Assignment
	 	 	27	 
	     Section 10.06.

	 	Amendment; No Waiver
	 	 	27	 
	     Section 10.07.

	 	Entire Agreement
	 	 	28	 
	     Section 10.08.

	 	Severability
	 	 	28	 
	     Section 10.09.

	 	Title and Subtitles
	 	 	28	 
	 
	     Section 10.10.

	 	Counterparts
	 	 	28	 
	     Section 10.11.

	 	Choice of Law
	 	 	28	 
	     Section 10.12.

	 	Specific Enforcement, Consent to Jurisdiction
	 	 	28	 
	     Section 10.13.

	 	Survival
	 	 	29	 
	     Section 10.14.

	 	Publicity
	 	 	29	 
	     Section 10.15.

	 	Further Assurances
	 	 	29	 
	     Section 10.16.

	 	Absence of Presumption
	 	 	29	 

v

 

COMMON STOCK PURCHASE AGREEMENT

by and between

KINGSBRIDGE CAPITAL LIMITED

and

CELL GENESYS, INC.

dated as
February 5, 2007

     This
COMMON STOCK PURCHASE AGREEMENT (the “Agreement”) is
entered into as of the 5th day of February, 2007 by and between Kingsbridge Capital Limited, an entity organized and
existing under the laws of the British Virgin Islands, whose registered address is Palm Grove
House, 2nd Floor, Road Town, Tortola, British Virgin Islands (the “Investor”) and Cell
Genesys, Inc., a corporation organized and existing under the laws of the State of Delaware (the
“Company”).

     WHEREAS, the parties desire that, upon the terms and subject to the conditions and limitations
set forth herein, the Company may issue and sell to the Investor, from time to time as provided
herein, and the Investor shall purchase from the Company, up to $75,000,000 worth of shares of
Common Stock (as hereinafter defined); and

     WHEREAS, such investments will be made in reliance upon the provisions of Section 4(2)
(“Section 4(2)”) and Regulation D (“Regulation D”) of the United States Securities
Act of 1933, as amended and the rules and regulations promulgated thereunder (the “Securities
Act”), and/or upon such other exemption from the registration requirements of the Securities
Act as may be available with respect to any or all of the investments in Common Stock to be made
hereunder; and

     WHEREAS, the parties hereto are concurrently entering into a Registration Rights Agreement in
the form of Exhibit A hereto (the “Registration Rights Agreement”) pursuant to
which the Company shall register the Common Stock issued and sold to the Investor under this
Agreement and under the Warrant (as hereinafter defined), upon the terms and subject to the
conditions and limitations set forth therein; and

     WHEREAS, in consideration for the Investor’s execution and delivery of, and its performance of
its obligations under, this Agreement, the Company is concurrently issuing to the Investor a
warrant in the form of Exhibit B hereto (the “Warrant”) pursuant to which the
Investor may purchase from the Company up to 421,918 shares of Common Stock, upon the terms and
subject to the conditions and limitations set forth therein;

     NOW, THEREFORE, the parties hereto agree as follows:

 

 

ARTICLE I

DEFINITIONS

     Section 1.01. “Agreement” shall have the meaning assigned to such term in the recitals
of this Agreement.

     Section 1.02. “Blackout Amount” shall have the meaning assigned to such term in the
Registration Rights Agreement.

     Section 1.03. “Blackout Shares” shall have the meaning assigned to such term in the
Registration Rights Agreement.

     Section 1.04. “Business Day” shall mean any day other than a Saturday, a Sunday or a
day on which banks in New York City, New York are authorized or obligated by executive order to
close.

     Section 1.05. “Bylaws” shall have the meaning assigned to such term in Section 4.03
hereof.

     Section 1.06. “Certificate” shall have the meaning assigned to such term in Section
4.03 hereof.

     Section 1.07. “Closing” shall have the meaning assigned to such term in Section 2.02
hereof.

     Section 1.08. “Closing Date” means the date on which this Agreement is executed and
delivered by the Company and the Investor.

     Section 1.09. “Closing Price” means the closing price per share of Common Stock at
4:00 PM New York time as reported by Bloomberg L.P. on such day.

     Section 1.10. “Commission” means the United States Securities and Exchange Commission.

     Section 1.11. “Commission Documents” shall have the meaning assigned to such term in
Section 4.06 hereof.

     Section 1.12. “Commitment Period” means the period commencing on the Effective Date
and expiring on the earliest to occur of (i) the date on which the Investor shall have purchased
Shares pursuant to this Agreement for an aggregate purchase price equal to the Maximum Commitment
Amount, (ii) the date this Agreement is terminated pursuant to Article VIII hereof, and (iii) the
date occurring thirty-six (36) months from the Effective Date.

     Section 1.13. “Common Stock” means the common stock of the Company, par value $0.001
per share.

     Section 1.14. “Company” shall have the meaning assigned to such term in the recitals
of this Agreement.

     Section 1.15. “Company Indemnified Party” shall have the meaning assigned to such term
in Section 9.01(b) hereof.

2

 

     Section 1.16. “Company Indemnity Payment” shall have the meaning assigned to such term
in Section 9.01(a) hereof.

     Section 1.17. “Condition Satisfaction Date” shall have the meaning assigned to such
term in Article VII hereof.

     Section 1.18. “Consolidated Subsidiary” means any subsidiary that the Company
consolidates in the preparation of its audited consolidated financial statements, and for greater
certainty, does not include Ceregene, Inc.

     Section 1.19. “Convertible Security” shall have the meaning assigned to such term in
Section 6.07 hereof.

     Section 1.20. “Conversion Price” shall have the meaning assigned to such term in
Section 6.07 hereof.

     Section 1.21. “Damages” means any loss, claim, damage, liability, costs and expenses
(including, without limitation, reasonable attorneys’ fees and expenses and costs and reasonable
expenses of expert witnesses and investigation).

     Section 1.22. “Draw Down” shall have the meaning assigned to such term in Section 3.01
hereof.

     Section 1.23. “Draw Down Amount” means the actual amount of a Draw Down paid to the
Company.

     Section 1.24. “Draw Down Discount Price” means (i) 90% of the VWAP on any Trading Day
during a Draw Down Pricing Period when the VWAP equals or exceeds $1.75 but is less than or equal
to $3.50, (ii) 92% of the VWAP on any Trading Day during a Draw Down Pricing Period when the VWAP
equals or exceeds $3.50 but is less than or equal to $7.50, or (iii) 94% of the VWAP on any Trading
Day during a Draw Down Pricing Period when the VWAP exceeds $7.50.

     Section 1.25. “Draw Down Notice” shall have the meaning assigned to such term in
Section 3.01 hereof.

     Section 1.26. “Draw Down Pricing Period” shall mean, with respect to each Draw Down, a
period of eight (8) consecutive Trading Days beginning on the first Trading Day specified in a Draw
Down Notice.

     Section 1.27. “DTC” shall mean the Depository Trust Company, or any successor thereto.

     Section 1.28. “Effective Date” means the first Trading Day immediately following the
date on which the Registration Statement is declared effective by the Commission.

     Section 1.29. “Exchange Act” means the U.S. Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

     Section 1.30. “Excluded Merger or Sale” shall have the meaning assigned to such term
in the Warrant.

3

 

     Section 1.31. “GAAP” shall have the meaning assigned to such term in Section 4.06
hereof.

     Section 1.32. “Indemnified Party” shall have the meaning assigned to such term in
Section 9.02 hereof.

     Section 1.33. “Indemnifying Party” shall have the meaning assigned to such term in
Section 9.02 hereof.

     Section 1.34. “Investor” shall have the meaning assigned to such term in the recitals
of this Agreement.

     Section 1.35. “Investor Indemnified Party” shall have the meaning assigned to such
term in Section 9.01(a) hereof.

     Section 1.36. “Investor Indemnity Payment” shall have the meaning assigned to such
term in Section 9.01(b) hereof.

     Section 1.37. “Knowledge” with respect to the Company means the actual knowledge of
the Company’s Chief Executive Officer; President and Chief Operating Officer; Senior Vice President
and Chief Financial Officer; Senior Vice President - Medical Affairs; Vice President - Regulatory
Affairs and Portfolio Management; Senior Vice President - Human Resources; Senior Vice President -
Operations; Senior Vice President - Corporate Development; Senior Vice President - Research and
Development; and Vice President - Clinical Research.

     Section 1.38. “LIBOR” means the offered rate for twelve-month U.S. dollar deposits
that appears on Moneyline Telerate Page 3750 (or such other page as may replace such Moneyline
Telerate Page 3750 for the purpose of displaying comparable rates), as of 11:00 a.m. (London time)
two (2) Business Days prior to the beginning of the relevant period.

     Section 1.39. “Make Whole Amount” shall have the meaning specified in Section 3.07.

     Section 1.40. “Market Capitalization” means, as of any Trading Day, the product of (i)
the closing sale price of the Common Stock as reported by Bloomberg L.P. using the AQR function and
(ii) the number of outstanding shares of Common Stock of the Company as reported by Bloomberg L.P.
using the DES function.

     Section 1.41. “Material Adverse Effect” means any effect that is not negated,
corrected, cured or otherwise remedied within a reasonable period of time on the business,
operations, properties or financial condition of the Company and its Consolidated Subsidiaries that
is material and adverse to the Company and such subsidiaries, taken as a whole, and/or any
condition, circumstance, or situation that would prohibit or otherwise interfere with the ability
of the Company to perform any of its obligations under this Agreement, the Registration Rights
Agreement or the Warrant in any material respect; provided, however, that none of
the following shall constitute a “Material Adverse Effect”: (i) the effects of conditions or
events that are generally applicable to the capital, financial, banking or currency markets or the
biotechnology or pharmaceutical industries; (ii) the effects of conditions or events that are
reasonably expected to occur in the Company’s ordinary course of business (such as, by way of
example only, failed clinical trials, serious adverse events involving the Company’s product
candidates, delays in product development, unfavorable regulatory determinations, difficulties
involving collaborators or intellectual property disputes), except for purposes of Section 4.09 herein; (iii) any changes or

4

 

effects resulting from the announcement or consummation of the transactions contemplated by this
Agreement, including, without limitation, any changes or effects associated with any particular
Draw Down, and (iv) changes in the market price of the Common Stock.

     Section 1.42. “Maximum Commitment Amount” means the lesser of (i) $75,000,000 in
aggregate Draw Down Amounts or (ii) 11,572,610 shares of Common Stock (as adjusted for stock
splits, stock combinations, stock dividends, recapitalizations and the like that occur on or after
the date of this Agreement minus the number of Blackout Shares, if any, delivered to the Investor
under the Registration Rights Agreement); provided, however, that the Maximum Commitment Amount
shall not exceed that number of shares of Common Stock which the Company may issue pursuant to the
Agreement and the transactions contemplated herein, without breaching the Company’s obligations
under the rules and regulations of the Principal Market.

     Section 1.43. “Maximum Draw Down Amount” means the lesser of:

     (a) $15,000,000, or

     (b) 2.5% of the Company’s Market Capitalization at the time of the delivery of the applicable
Draw Down Notice; provided, however, that once in each of the Company’s fiscal quarters, the
Maximum Draw Down amount may equal to 3.5% of the Company’s Market Capitalization at the time of
the delivery of the applicable Draw Down Notice.

     Section 1.44. “NASD” means the National Association of Securities Dealers, Inc.

     Section 1.45. “Permitted Transaction” shall have the meaning assigned to such term in
Section 6.06 hereof.

     Section 1.46. “Person” means any individual, corporation, partnership, limited
liability company, association, trust or other entity or organization, including any government or
political subdivision or an agency or instrumentality thereof.

     Section 1.47. “Principal Market” means the NASDAQ Global Select Market, the NASDAQ
Global Market, the NASDAQ Capital Market, the American Stock Exchange or the New York Stock
Exchange, whichever is at the time the principal trading exchange or market for the Common Stock.

     Section 1.48. “Prohibited Transaction” shall have the meaning assigned to such term in
Section 6.07 hereof.

     Section 1.49. “Prospectus” as used in this Agreement means the prospectus in the form
included in the Registration Statement, as supplemented from time to time pursuant to Rule 424(b)
of the Securities Act (including, without limitation, any information that may have been omitted
from such prospectus pursuant to Rule 430A(a), Rule 430A(b) and Rule 430A(c) of the Securities
Act).

     Section 1.50. “Registrable Securities” means (i) the Shares, (ii) the Warrant Shares,
and (iii) any securities issued or issuable with respect to any of the foregoing by way of
exchange, stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise. As to any particular
Registrable Securities, once issued such securities shall cease to be Registrable Securities when (w) the Registration
Statement has been declared effective by the Commission and such Registrable

5

 

Securities have been disposed of pursuant to the Registration Statement, (x) such Registrable Securities have been sold
under circumstances under which all of the applicable conditions of Rule 144 (or any similar
provision then in force) under the Securities Act (“Rule 144”) are met, (y) such time as
such Registrable Securities have been otherwise transferred to holders who may trade such shares
without restriction under the Securities Act, and the Company has delivered a new certificate or
other evidence of ownership for such securities not bearing a restrictive legend or (z) in the
opinion of outside counsel to the Company such Registrable Securities may be sold without
registration and without any time, volume or manner limitations pursuant to Rule 144(k) (or any
similar provision then in effect) under the Securities Act.

     Section 1.51. “Registration Rights Agreement” shall have the meaning assigned to such
term in the recitals of this Agreement.

     Section 1.52. “Registration Statement” shall have the meaning assigned to such term in
the Registration Rights Agreement.

     Section 1.53. “Regulation D” shall have the meaning assigned to such term in the
recitals of this Agreement.

     Section 1.54. “Section 4(2)” shall have the meaning assigned to such term in the
recitals of this Agreement.

     Section 1.55. “Securities Act” shall have the meaning assigned to such term in the
recitals of this Agreement.

     Section 1.56. “Settlement Date” shall have the meaning assigned to such term in
Section 3.05 hereof.

     Section 1.57. “Shares” means the shares of Common Stock that are and/or may be
purchased hereunder.

     Section 1.58. “Trading Day” means any day other than a Saturday or a Sunday on which
the Principal Market is open for trading in equity securities.

     Section 1.59. “VWAP” means the volume weighted average price (the aggregate sales
price of all trades of Common Stock during each Trading Day divided by the total number of shares
of Common Stock traded during such Trading Day) of the Common Stock during any Trading Day as
reported by Bloomberg, L.P. using the AQR function.

     Section 1.60. “Warrant” shall have the meaning assigned to such term in the recitals
of this Agreement.

     Section 1.61. “Warrant Shares” means the shares of Common Stock issuable to the
Investor upon exercise of the Warrant.

ARTICLE II

PURCHASE AND SALE OF COMMON STOCK

     Section 2.01. Purchase and Sale of Stock. Upon the terms and subject to the
conditions set forth in this Agreement, the Company shall, to the extent it elects to make Draw

6

 

Downs in accordance with Article III hereof, issue and sell to the Investor and the Investor shall
purchase from the Company Common Stock for an aggregate in Draw Down Amounts of up to the Maximum
Commitment Amount, consisting of purchases based on the Company making Draw Downs in accordance
with Article III hereof.

     Section 2.02. Closing. In consideration of and in express reliance upon the
representations, warranties, covenants, and upon the terms and subject to the conditions of this
Agreement, the Company agrees to issue and sell to the Investor, and the Investor agrees to
purchase from the Company, that number of Shares to be issued in connection with each Draw Down.
The execution and delivery of this Agreement (the
“Closing”) shall take place on February 5, 2007 (the “Closing Date”). Each party shall deliver at or prior to the Closing all
documents, instruments and writings required to be delivered at the Closing by such party pursuant
to this Agreement.

     Section 2.03. Registration Statement and Prospectus. The Company shall prepare and
file with the Commission the Registration Statement (including the Prospectus) in accordance with
the provisions of the Securities Act and the Registration Rights Agreement.

     Section 2.04. Warrant. On the Closing Date, the Company shall issue and deliver the
Warrant to the Investor.

     Section 2.05. Blackout Shares. The Company shall deliver any Blackout Amount or issue
and deliver any Blackout Shares to the Investor in accordance with Section 1.1(e) of the
Registration Rights Agreement.

ARTICLE III

DRAW DOWN TERMS

     Subject to the satisfaction of the conditions hereinafter set forth in this Agreement, the
parties agree as follows:

     Section 3.01. Draw Down Notice. During the Commitment Period, the Company may, in its
sole discretion, issue a Draw Down Notice (as hereinafter defined), which shall specify the dollar
amount of Shares the Company elects to sell to the Investor (each such election a “Draw
Down”) up to a Draw Down Amount equal to the Maximum Draw Down Amount, which Draw Down the
Investor shall be obligated to accept. The Company shall inform the Investor in writing by sending
a duly completed Draw Down Notice (as hereinafter defined) in the form of Exhibit C hereto
by e-mail to the addresses set forth in Section 10.04 and by facsimile transmission to the number
set forth in Section 10.04, with a copy to the Investor’s counsel, as to such Draw Down Amount
before commencement of trading on the first Trading Day of the related Draw Down Pricing Period
(the “Draw Down Notice”). In addition to the Draw Down Amount, each Draw Down Notice shall
designate the first Trading Day of the Draw Down Pricing Period. In no event shall any Draw Down
Amount exceed the Maximum Draw Down Amount. Each Draw Down Notice shall be accompanied by a
certificate, signed by the Chief Executive Officer or Chief Financial Officer and dated as of the date of such Draw Down Notice, in the form of
Exhibit D hereof.

     Section 3.02. Number of Shares. Subject to Section 3.06(b), the number of Shares to
be issued in connection with each Draw Down shall be equal to the sum of the number of shares
issuable on each Trading Day of the Draw Down Pricing Period. Subject to Section 3.06(b), the

7

 

number of Shares issuable on a Trading Day during a Draw Down Pricing Period shall be equal to the
quotient of one eighth (1/8th) of the Draw Down Amount divided by the Draw Down Discount
Price for such Trading Day.

     Section 3.03. Limitation on Draw Downs. Only one Draw Down shall be permitted for
each Draw Down Pricing Period.

     Section 3.04. Trading Cushion. Unless the parties agree in writing otherwise, there
shall be a minimum of three (3) Trading Days between the expiration of any Draw Down Pricing Period
and the beginning of the next succeeding Draw Down Pricing Period.

     Section 3.05. Settlement. Subject to Section 3.06(b), the number of Shares purchased
by the Investor in any Draw Down shall be determined and settled on two separate dates. Shares
purchased by the Investor during the first four Trading Days of any Draw Down Pricing Period shall
be determined and settled no later than the sixth Trading Day of such Draw Down Pricing Period.
Shares purchased by the Investor during the second four Trading Days of any Draw Down Pricing
Period shall be determined and settled no later than the second Trading Day after the last Trading
Day of such Draw Down Pricing Period. Each date on which settlement of the purchase and sale of
Shares occurs hereunder is referred to herein as a “Settlement Date.” The Investor shall
provide the Company with delivery instructions for the Shares to be issued at each Settlement Date
at least two Trading Days in advance of such Settlement Date. The number of Shares actually issued
shall be rounded to the nearest whole number of Shares.

     Section 3.06. Delivery of Shares; Payment of Draw Down Amount.

     (a) On each Settlement Date, the Company shall deliver the Shares purchased by the Investor to
the Investor or its designees exclusively via book-entry through the DTC to an account designated
by the Investor, and upon receipt of the Shares, the Investor shall cause payment therefor to be
made to the Company’s designated account by wire transfer of immediately available funds, if the
Shares are received by the Investor no later than 12:00 p.m. (Eastern Time), or next day available
funds, if the Shares are received thereafter.

     (b) For each Trading Day during a Draw Down Pricing Period that the VWAP is less than the
greater of (i) 85% of the Closing Price of the Common Stock on the Trading Day immediately
preceding the commencement of such Draw Down Pricing Period, or (ii) $1.75, such Trading Day shall
not be used in calculating the number of Shares to be issued in connection with such Draw Down, and
the Draw Down Amount in respect of such Draw Down Pricing Period shall be reduced by one eighth
(1/8th) of the initial Draw Down Amount specified in the Draw Down Notice. If trading
in the Company’s Common Stock is suspended for any reason for more than three (3) consecutive or
non-consecutive hours during any Trading Day during a Draw Down Pricing Period, such Trading Day
shall not be used in calculating the number of Shares to be issued in connection with such Draw
Down, and the Draw Down Amount in respect of such Draw Down Pricing Period shall be reduced by one
eighth (1/8th) of the initial Draw Down Amount specified in the Draw Down Notice.

     Section 3.07. Failure to Deliver Shares. If the Company fails, on any Settlement
Date, to take all actions within its reasonable control to cause the delivery of the Shares
purchased by the Investor, and such failure is not cured within two (2) Trading Days following such
Settlement Date, the Company shall pay to the Investor on demand in cash by wire transfer of
immediately available funds to an account designated by the Investor the Make Whole Amount (as
hereinafter defined); provided, however, that in the event that the Company is
prevented from delivering

8

 

Shares in respect of any such Settlement Date in a timely manner by any
fact or circumstance that is reasonably within the control of, or directly attributable to, the
Investor, then such two (2) Trading Day period shall be automatically extended until such time as
such fact or circumstance is cured. As used herein, the “Make Whole Amount” shall be an
amount equal to the sum of (i) the Draw Down Amount actually paid by the Investor in respect of
such Shares plus (ii) an amount equal to the actual loss suffered by the Investor in respect of
sales to subsequent purchasers, pursuant to transactions entered into before the Settlement Date,
of the Shares that were required to be delivered by the Company, which shall be based upon
documentation reasonably satisfactory to the Company demonstrating the difference (if greater than
zero) between (A) the price per share paid by the Investor to purchase such number of shares of
Common Stock necessary for the Investor to meet its share delivery obligations to such subsequent
purchasers minus (B) the average Draw Down Discount Price during the applicable Draw Down Pricing
Period. In the event that the Make Whole Amount is not paid within two (2) Trading Days following
a demand therefor from the Investor, the Make Whole Amount shall accrue interest compounded daily
at a rate of LIBOR plus 300 basis points per annum, up to and including the date on which the Make
Whole Amount is actually paid. Notwithstanding anything to the contrary set forth in this
Agreement, in the event that the Company pays the Make Whole Amount (plus interest, if applicable)
in respect of any Settlement Date in accordance with this Section 3.07, such payment shall be the
Investor’s sole remedy in respect of the Company’s failure to deliver Shares in respect of such
Settlement Date, and the Company shall not be obligated to deliver such Shares.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company hereby makes the following representations and warranties to the Investor:

     Section 4.01. Organization, Good Standing and Power. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the State of Delaware and
has all requisite power and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Except as set forth in the Commission Documents (as defined
below), as of the date hereof the Company does not own more than fifty percent (50%) of the
outstanding capital stock of or control any other business entity, other than any wholly-owned
subsidiary that is not “significant” within the meaning of Regulation S-X promulgated by the
Commission. The Company is duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which the nature of the business conducted or property owned by
it makes such qualification necessary, other than those in which the failure so to qualify or be in
good standing would not have a Material Adverse Effect.

     Section 4.02. Authorization; Enforcement. (i) The Company has the requisite corporate
power and authority to enter into and perform its obligations under this Agreement, the
Registration Rights Agreement and the Warrant and to issue the Shares, the Warrant, the Warrant
Shares and any Blackout Shares (except to the extent that the number of Blackout Shares required to
be issued exceeds the number of authorized shares of Common Stock under the Certificate); (ii) the
execution and delivery of this Agreement and the Registration Rights Agreement, and the execution,
issuance and delivery of the Warrant, by the Company and the consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action and no further consent or
authorization of the Company or its Board of Directors or stockholders is required (other than as
contemplated by Section 6.05); and (iii) each of this Agreement and the Registration Rights
Agreement has been duly executed and delivered, and the

9

 

Warrant has been duly executed, issued and delivered, by the Company and constitutes a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, securities, insolvency, or similar laws relating to, or affecting generally
the enforcement of, creditors’ rights and remedies, or indemnification or by other equitable
principles of general application.

     Section 4.03. Capitalization. The authorized capital stock of the Company and the
shares thereof issued and outstanding as of September 30, 2006 are set forth in the Commission
Documents. All of the outstanding shares of the Common Stock as of September 30, 2006 have been
duly and validly authorized and issued, and are fully paid and non-assessable. Except as set forth
in this Agreement or in the Commission Documents, as of September 30, 2006 no shares of Common
Stock were entitled to preemptive rights or registration rights, and there were no outstanding
options, warrants, scrip, rights issued by the Company to subscribe to, call or commitments of any
character whatsoever issued by the Company relating to, or securities or rights convertible into or
exchangeable for or giving any right to subscribe for, any shares of capital stock of the Company.
Except as set forth in this Agreement or in the Commission Documents, as of September 30, 2006
there were no contracts, commitments, understandings, or arrangements by which the Company is or
may become bound to issue additional shares of the capital stock of the Company or options,
securities or rights convertible into or exchangeable for or giving any right to subscribe for any
shares of capital stock of the Company. Except as described in the Commission Documents, as of the
date hereof the Company is not a party to any agreement granting registration rights to any Person
with respect to any of its equity or debt securities. Except as set forth in the Commission
Documents or as previously disclosed to the Investor in writing, as of the date hereof the Company
is not a party to, and it has no Knowledge of, any agreement restricting the voting or transfer of
any shares of the capital stock of the Company. The offer and sale of all capital stock,
convertible securities, rights, warrants, or options of the Company issued during the twelve month
period immediately prior to the Closing complied in all material respects with all applicable
federal and state securities laws, and no stockholder has a right of rescission or damages with
respect thereto that could reasonably be expected to have a Material Adverse Effect. The Company
has furnished or made available to the Investor true and correct copies of the Restated Certificate
of Incorporation of the Company, as amended, as in effect on the date hereof (the
“Certificate”), and the Bylaws of the Company, as amended, as in effect on the date hereof
(the “Bylaws”).

     Section 4.04. Issuance of Shares. Subject to Section 6.05, the Shares, the Warrant
and the Warrant Shares have been, and any Blackout Shares will be, duly authorized by all necessary
corporate action (except to the extent that the number of Blackout Shares required to be issued
exceeds the number of authorized shares of Common Stock under the Certificate) and, when issued and
paid for in accordance with the terms of this Agreement, the Registration Rights Agreement and the
Warrant, and subject to, and in reliance on, the representations, warranties and covenants made
herein by the Investor, the Shares and the Warrant Shares shall be validly issued and outstanding,
fully paid and non-assessable, and the Investor shall be entitled to all rights accorded to a
holder of shares of Common Stock.

     Section 4.05. No Conflicts. The execution, delivery and performance of this
Agreement, the Registration Rights Agreement, the Warrant and any other document or instrument
contemplated hereby or thereby, by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby do not: (i) violate any provision of the Certificate
or Bylaws, (ii)conflict with, or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination, amendment, acceleration
or cancellation of, any material agreement, mortgage, deed

10

 

of trust, indenture, note, bond,license, lease agreement, instrument or obligation to which the Company is a party where such
default or conflict would constitute a Material Adverse Effect, (iii) create or impose a lien,
charge or encumbrance on any property of the Company under any agreement or any commitment to which
the Company is a party or by which the Company is bound or by which any of its respective
properties or assets are bound which would constitute a Material Adverse Effect, (iv) result in a
violation of any federal, state, local or foreign statute, rule, regulation, order, writ, judgment
or decree (including federal and state securities laws and regulations) applicable to the Company
or any of its Consolidated Subsidiaries or by which any property or asset of the Company or any of
its Consolidated Subsidiaries are bound or affected where such violation would constitute a
Material Adverse Effect, or (v) require any consent of any third party that has not been obtained
pursuant to any material contract to which the Company is subject or to which any of its assets,
operations or management may be subject where the failure to obtain any such consent would
constitute a Material Adverse Effect. The Company is not required under federal, state or local
law, rule or regulation to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute, deliver or perform
any of its obligations under this Agreement, the Registration Rights Agreement or the Warrant, or
issue and sell the Shares, the Warrant Shares or the Blackout Shares (except to the extent that the
number of Blackout Shares required to be issued exceeds the number of authorized shares of Common
Stock under the Certificate) in accordance with the terms hereof and thereof (other than any
filings that may be required to be made by the Company with the Commission, the NASD/Nasdaq or
state securities commissions subsequent to the Closing, and, any registration statement (including
any amendment or supplement thereto) or any other filing or consent which may be filed pursuant to
this Agreement, the Registration Rights Agreement or the Warrant); provided that, for
purposes of the representation made in this sentence, the Company is assuming and relying upon the
accuracy of the relevant representations and agreements of the Investor herein.

     Section 4.06. Commission Documents, Financial Statements. The Common Stock is
registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and since December 31, 2003, the
Company has timely filed all reports, schedules, forms, statements and other documents required to
be filed by it with the Commission pursuant to the reporting requirements of the Exchange Act,
including material filed pursuant to Section 13(a) or 15(d) of the Exchange Act (all of the
foregoing, including any such reports, schedules, forms, statements and other documents filed with
the Commission after the date hereof, including filings incorporated by reference in any such
filings, being referred to herein as the “Commission Documents”). Except as previously
disclosed to the Investor in writing, since September 30, 2006, the Company has maintained all
requirements for the continued listing or quotation of its Common Stock, and such Common Stock is
currently listed or quoted on the Nasdaq Global Market. To the extent not available on the
Commission’s EDGAR filing system, the Company has made available to the Investor true and complete
copies of the Commission Documents filed with the Commission since September 30, 2006, and prior to
the Closing Date. The Company has not provided to the Investor any information which, according to
applicable law, rule or regulation, should have been disclosed publicly by the Company but which
has not been so disclosed, other than with respect to the transactions contemplated by this
Agreement. As of its date, the Company’s Form 10-K for the year ended December 31, 2005 complied
in all material respects with the requirements of the Exchange Act and the rules and regulations of
the Commission promulgated thereunder applicable to such document, and, as of its date, after
giving effect to the information disclosed and incorporated by reference therein, such Form 10-K
did not contain any untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, to the Company’s Knowledge, in
light of the circumstances under which they were made, not misleading. As of their respective
dates, to the Company’s

11

 

Knowledge the financial statements of the Company included in the
Commission Documents filed with the Commission since December 31, 2003, complied as to form and
substance in all material respects with applicable accounting requirements and the published rules
and regulations of the Commission or other applicable rules and regulations with respect thereto.
Such financial statements have been prepared in accordance with generally accepted accounting
principles (“GAAP”) applied on a consistent basis during the periods involved (except (i)
as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or may be condensed
or summary statements), and fairly present in all material respects the financial position of the
Company and its Consolidated Subsidiaries as of the dates thereof and the results of operations and
cash flows for the periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).

     Section 4.07. No Material Adverse Change. Except as disclosed in the Commission
Documents, since September 30, 2006 no event or series of events has or have occurred that would,
individually or in the aggregate, have a Material Adverse Effect on the Company.

     Section 4.08. No Undisclosed Liabilities. To the Company’s Knowledge, neither the
Company nor any of its Consolidated Subsidiaries has any liabilities, obligations, claims or losses
(whether liquidated or unliquidated, secured or unsecured, absolute, accrued, contingent or
otherwise) that would be required to be disclosed on a balance sheet of the Company or any
Consolidated Subsidiary (including the notes thereto) in conformity with GAAP and are not disclosed
in the Commission Documents, other than those incurred in the ordinary course of the Company’s or
its Consolidated Subsidiaries respective businesses since September 30, 2006, or which,
individually or in the aggregate, do not or would not have a Material Adverse Effect on the
Company.

     Section 4.09. No Undisclosed Events or Circumstances. To the Company’s Knowledge, no
event or circumstance has occurred or exists with respect to the Company or its Consolidated
Subsidiaries or their respective businesses, properties, operations or financial condition, which,
under applicable law, rule or regulation, requires public disclosure or announcement by the Company
but which has not been so publicly announced or disclosed and which, individually or in the
aggregate, would have a Material Adverse Effect on the Company.

     Section 4.10. Actions Pending. There is no action, suit, claim, investigation or
proceeding pending or, to the Knowledge of the Company, threatened against the Company or any
Consolidated Subsidiary which questions the validity of this Agreement or the transactions
contemplated hereby or any action taken or to be taken pursuant hereto or thereto. Except as set
forth in the Commission Documents, there is no action, suit, claim, investigation or proceeding
pending or, to the Knowledge of the Company, threatened against or involving the Company, any
Consolidated Subsidiary or any of their respective properties or assets that could be reasonably
expected to have a Material Adverse Effect on the Company. Except as set forth in the Commission
Documents or as previously disclosed to the Investor in writing, no judgment, order, writ,
injunction or decree or award has been issued by or, to the Knowledge of the Company, requested of
any court, arbitrator or governmental agency which could be reasonably expected to result in a
Material Adverse Effect.

     Section 4.11. Compliance with Law. The businesses of the Company and its Consolidated
Subsidiaries have been and are presently being conducted in accordance with all applicable federal,
state and local governmental laws, rules, regulations and ordinances, except as set forth in the
Commission Documents or such that would not reasonably be expected to cause a

12

 

Material Adverse Effect. Except as set forth in the Commission Documents, the Company and each of its Consolidated
Subsidiaries have all franchises, permits, licenses, consents and other governmental or regulatory
authorizations and approvals necessary for the conduct of its business as now being conducted by
it, except for such franchises, permits, licenses, consents and other governmental or regulatory
authorizations and approvals, the failure to possess which, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.

     Section 4.12. Certain Fees. Except as expressly set forth in this Agreement, no
brokers, finders or financial advisory fees or commissions will be payable by the Company or any of
its Consolidated Subsidiaries in respect of the transactions contemplated by this Agreement.

     Section 4.13. Disclosure. To the Company’s Knowledge, neither this Agreement nor any
other documents, certificates or instruments filed with the Commission or furnished to the Investor
by or on behalf of the Company or any Consolidated Subsidiary in connection with the transactions
contemplated by this Agreement, the Registration Rights Agreement or the Warrant contain any untrue
statement of a material fact or omit to state a material fact necessary in order to make the
statements made herein or therein, in the light of the circumstances under which they were made
herein or therein, not misleading.

     Section 4.14. Material Non-Public Information. Except for this Agreement and the
transactions contemplated hereby, neither the Company, nor its employees nor its agents have
disclosed to the Investor, any material non-public information that, according to applicable law,
rule or regulation, should have been disclosed publicly by the Company prior to the date hereof but
which has not been so disclosed.

     Section 4.15. Exemption from Registration; Valid Issuances. Subject to, in reliance
upon and on the basis of the terms of this Agreement and the representations, warranties and
covenants made herein by the Investor, the Shares, the Warrant, the Warrant Shares and any Blackout
Shares may and shall be properly issued pursuant to Section 4(2), Regulation D and/or any other
applicable federal and state securities laws; provided, however, that at the
request of and with the express agreement of the Investor, the Shares and, under certain
circumstances, the Warrant Shares, shall be delivered to the Investor via book entry through DTC
and shall not bear legends noting restrictions as to resale of such shares under federal and state
securities laws, nor shall such shares be subject to stop transfer instructions. Neither the sales
of the Shares, the Warrant, the Warrant Shares or any Blackout Shares pursuant to, nor the
Company’s performance of its obligations under, this Agreement, the Registration Rights Agreement
or the Warrant shall (i) result in the creation or imposition of any liens, charges, claims or
other encumbrances upon the Shares, the Warrant Shares, any Blackout Shares or any of the assets of
the Company, or (ii) except as previously disclosed to the Investor in writing, entitle the holders
of any outstanding shares of capital stock of the Company to preemptive or other rights to
subscribe to or acquire the shares of Common Stock or other securities of the Company.

     Section 4.16. No General Solicitation or Advertising in Regard to this Transaction.
Except for the Registration Statement, neither the Company nor any of its affiliates or any person
acting on its or their behalf (i) has conducted any general solicitation (as that term is used in
Rule 502(c) of Regulation D) or general advertising with respect to any of the Shares, the Warrant,
the Warrant Shares or any Blackout Shares or (ii) has made any offers or sales of any security or
solicited any offers to buy any security under any circumstances that would require registration of
the Shares under the Securities Act.

13

 

     Section 4.17. Acknowledgment Regarding Investor’s Purchase of Shares. The Company
acknowledges and agrees that the Investor is acting solely in the capacity of an arm’s length
investor with respect to this Agreement and the transactions contemplated hereunder. The Company
further acknowledges that the Investor is not acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to this Agreement and the transactions
contemplated hereunder, and that any advice given by the Investor or any of its representatives or
agents in connection with this Agreement and the transactions contemplated hereunder is merely
incidental to the Investor’s purchase of the Shares.

ARTICLE V

REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR

     The Investor hereby makes the following representations, warranties and covenants to the
Company:

     Section 5.01. Organization and Standing of the Investor. The Investor is a company
duly organized, validly existing and in good standing under the laws of the British Virgin Islands.

     Section 5.02. Authorization and Power. The Investor has the requisite power and
authority to enter into and perform its obligations under this Agreement, the Registration Rights
Agreement and the Warrant and to purchase the Shares, the Blackout Shares, the Warrant and the
Warrant Shares in accordance with the terms hereof and thereof. The execution, delivery and
performance of this Agreement and the Registration Rights Agreement by the Investor and the
consummation by it of the transactions contemplated hereby or thereby have been duly authorized by
all necessary corporate action, and no further consent or authorization of the Investor, its Board
of Directors or stockholders is required. Each of this Agreement and the Registration Rights
Agreement has been duly executed and delivered by the Investor and constitutes a valid and binding
obligation of the Investor enforceable against the Investor in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation, conservatorship, receivership, or similar laws relating to, or affecting
generally the enforcement of creditor’s rights and remedies or by other equitable principles of
general application.

     Section 5.03. No Conflicts. The execution, delivery and performance of this
Agreement, the Warrant, the Registration Rights Agreement and any other document or instrument
contemplated hereby by the Investor and the consummation of the transactions contemplated hereby do
not (i) violate any provision of the Investor’s charter documents or bylaws, (ii) conflict with, or
constitute a default (or an event which, with notice or lapse of time or both, would become a
default) under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, mortgage, deed of trust, indenture, note, bond, license,
lease agreement, instrument or obligation to which the Investor is a party, (iii) create or impose
a lien, charge or encumbrance on any property of the Investor under any agreement or any commitment
to which the Investor is a party or by which the Investor is bound or by which any of its
respective properties or assets are bound, (iv) result in a violation of any federal, state, local
or foreign statute, rule, regulation, order, writ, judgment or decree (including federal and state
securities laws and regulations) applicable to the Investor or by which any property or asset of
the Investor are bound or affected, or (v) require the consent of any third-party that has not been
obtained pursuant to any material contract to which Investor is subject or to which any of its
assets, operations or management may be subject. The Investor is not required under federal,
state, foreign or local law, rule or regulation to obtain any consent, authorization or

14

 

order of,or make any filing or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this Agreement or to purchase the Shares or the Warrant in accordance with the terms hereof,
provided that, for purposes of the representation made in this sentence, the Investor is
assuming and relying upon the accuracy of the relevant representations and agreements of the
Company herein.

     Section 5.04. Financial Capability. The Investor has the financial capability to
perform all of its obligations under this Agreement, including the capability to purchase the
Shares, the Warrant and the Warrant Shares in accordance with the terms hereof. The Investor has
such knowledge and experience in business and financial matters that it is capable of evaluating
the merits and risks of an investment in Common Stock and the Warrant. The Investor is an
“accredited investor” as defined in Regulation D. The Investor is a “sophisticated investor” as
described in Rule 506(b)(2)(ii) of Regulation D. The Investor acknowledges that an investment in
the Common Stock and the Warrant is speculative and involves a high degree of risk.

     Section 5.05. Information. The Investor and its advisors, if any, have been furnished
with all materials relating to the business, finances and operations of the Company and materials
relating to the offer and sale of the Shares, the Blackout Shares, the Warrant and the Warrant
Shares which have been requested by the Investor. The Investor has reviewed or received copies of
the Commission Documents. The Investor and its advisors, if any, have been afforded the opportunity
to ask questions of the Company. The Investor has sought such accounting, legal and tax advice as
it has considered necessary to make an informed investment decision with respect to its acquisition
of the Shares, the Warrant and the Warrant Shares. Except for this Agreement and the transactions
contemplated hereby, neither the Company not its employees have disclosed to the Investor, any
material non-public information that, according to applicable law, rule or regulation, should have
been disclosed publicly by the Company prior to the date hereof but which has not been so
disclosed. The Investor understands that it (and not the Company) shall be responsible for its own
tax liabilities that may arise as a result of this investment or the transactions contemplated by
this Agreement.

     Section 5.06. Selling Restrictions. The Investor covenants that during the Commitment
Period, neither the Investor nor any of its affiliates nor any entity managed or controlled by the
Investor will ever enter into or execute or cause any Person to enter into or execute any “short
sale” (as such term is defined in Rule 200 of Regulation SHO promulgated by the Commission under
the Exchange Act or any successor regulation) of any shares of Common Stock.

     Section 5.07. Statutory Underwriter Status. The Investor acknowledges that, pursuant
to the Commission’s current interpretations of the Securities Act, the Investor shall be disclosed
as an “underwriter” within the meaning of the Securities Act in the Registration Statement (and
amendments thereto) and in any Prospectus contained therein to the extent required by applicable
law. The Company acknowledges that the Investor does not necessarily agree with such
characterization.

     Section 5.08. Not an Affiliate. The Investor is not an officer, director or
“affiliate” (as defined in Rule 405 of the Securities Act) of the Company.

     Section 5.09. Manner of Sale. At no time was Investor presented with or solicited by
or through any leaflet, public promotional meeting, television advertisement or any other form of
general solicitation or advertising by or on behalf of the Company.

15

 

     Section 5.10. Prospectus Delivery. The Investor agrees that unless the Shares, the
Warrant Shares and the Blackout Shares are eligible for resale pursuant to all the conditions of
Rule 144, it shall resell the Shares, the Warrant Shares and the Blackout Shares only pursuant to
the Registration Statement, in a manner described under the caption “Plan of Distribution” in the Registration
Statement, and in a manner in compliance with all applicable securities laws, including, without
limitation, the insider trading restrictions of the Exchange Act and the prospectus delivery
requirements of the Securities Act, if any, as applicable to it in connection with sales of
Registrable Securities pursuant to the Registration Statement, and the Investor shall have
delivered a current prospectus in connection with such sale or shall have confirmed that a current
prospectus is deemed to be delivered in connection with such sale, or relied on an exemption from
such prospectus delivery requirements. The Investor, acknowledges that the delivery of the Shares,
the Warrant Shares or the Blackout Shares through DTC is predicated upon the Company’s reliance
that the Investor shall sell any Shares, Warrant Shares or Blackout Shares pursuant to either (i)
the registration requirements of the Securities Act, or (ii) an exemption therefrom. The Investor
further acknowledges and agrees that the Company shall be under no obligation to supplement the
Prospectus to reflect the issuance of any Shares pursuant to a Draw Down at any time prior to the
day following the Settlement Date with respect to such Shares.

ARTICLE VI

COVENANTS OF THE COMPANY

     The Company covenants with the Investor as follows, which covenants are for the benefit of the
Investor and its permitted assignees (as defined herein):

     Section 6.01. Securities. The Company shall notify the Commission and the Principal
Market, if and as applicable, in accordance with their rules and regulations, of the transactions
contemplated by this Agreement, and shall use commercially reasonable efforts to take all other
necessary action and proceedings as may be required and permitted by applicable law, rule and
regulation, for the legal and valid issuance of the Shares, the Warrant Shares and the Blackout
Shares, if any, to the Investor; provided, that in no event shall the Company be under any
obligation to supplement the Prospectus to reflect the issuance of any Shares pursuant to a Draw
Down at any time prior to the day following the Settlement Date with respect to such Shares.

     Section 6.02. Reservation of Common Stock. As of the date hereof, the Company has
available and the Company shall reserve and keep available at all times, free of preemptive rights
and other similar contractual rights of stockholders, shares of Common Stock for the purpose of
enabling the Company to satisfy any obligation to issue Shares in connection with all Draw Downs
contemplated hereunder and the Warrant Shares. The number of shares so reserved from time to time,
as theretofore increased or reduced as hereinafter provided, may be reduced by the number of shares
actually delivered hereunder.

     Section 6.03. Registration and Listing. During the Commitment Period, the Company
shall use commercially reasonable efforts: (i) to take all action necessary to cause its Common
Stock to continue to be registered under Section 12(b) or 12(g) of the Exchange Act, (ii) to comply
in all respects with its reporting and filing obligations under the Exchange Act, (iii) to prevent
the termination or suspension of such registration, or the termination or suspension of its
reporting and filing obligations under the Exchange Act or Securities Act (except as expressly
permitted herein). The Company shall use commercially reasonable efforts to maintain the listing
and trading of its Common Stock and the listing of the Shares purchased by Investor hereunder on

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the Principal Market (including, without limitation, maintaining sufficient net tangible assets)
and shall comply in all material respects with the Company’s reporting, filing and other
obligations under the bylaws or rules of the NASD and the Principal Market. The Company shall not
be required to carry out any action pursuant to this Agreement, the Registration Rights Agreement or the Warrant that would adversely impact the listing of the Company’s
securities on the Principal Market as now in effect or as subsequently modified by applicable rules
and regulations.

     Section 6.04. Registration Statement. Without the prior written consent of the
Investor, the Registration Statement shall be used solely in connection with the transactions
between the Company and the Investor contemplated hereby.

     Section 6.05. Compliance with Laws.

     (a) The Company shall comply, and cause each Consolidated Subsidiary to comply, with all
applicable laws, rules, regulations and orders, noncompliance with which could reasonably be
expected to have a Material Adverse Effect.

     (b) Without the consent of its stockholders in accordance with NASD rules, the Company shall
not be obligated to issue, and the Investor shall not be obligated to purchase, any Shares or
Blackout Shares which would result in the issuance under this Agreement, the Warrant and the
Registration Rights Agreement of Shares, Warrant Shares and Blackout Shares (collectively)
representing more than the applicable percentage under the rules of the NASD, including, without
limitation, NASD Rule 4350(i), that would require stockholder approval of the issuance thereof.
Nothing herein shall compel the Company to seek such consent of its stockholders.

     Section 6.06. Other Financing. Nothing in this Agreement shall be construed to
restrict the right of the Company to offer, sell and/or issue securities of any kind whatsoever,
provided that such transaction is not a Prohibited Transaction (as defined below) (any such
transaction that is not a Prohibited Transaction is referred to in this Agreement as a
“Permitted Transaction”). Without limiting the generality of the preceding sentence, the
Company may, without the prior written consent of the Investor, (i) establish stock option,
restricted stock, stock purchase or other equity incentive or award plans or agreements (for
directors, employees, consultants and/or advisors), and issue securities thereunder, and amend such
plans or agreements, including increasing the number of shares available thereunder, (ii) issue
equity securities to finance, or otherwise in connection with, the acquisition, license or sale of
one or more other companies, equipment, technologies or lines of business, (iii) issue shares of
Common Stock and/or Preferred Stock in connection with the Company’s option, restricted stock or
other equity incentive or award plans, stock purchase plans, rights plans, warrants, options or the
Convertible Senior Notes Due 2011, (iv) issue shares of Common Stock and/or Preferred Stock in
connection with the acquisition of products, licenses, equipment or other assets and strategic
partnerships or joint ventures; (v) issue shares of Common and/or Preferred Stock to consultants
and/or advisors as consideration for services rendered or to be rendered, (vi) issue and sell
equity or debt securities in a public offering, (vii) issue and sell any equity or debt securities
in a private placement (other than in connection with any Prohibited Transaction), (viii) issue
equity securities to equipment lessors, equipment vendors, banks or similar lending institutions in
connection with leases or loans, or in connection with strategic commercial or licensing
transactions, (ix) issue securities in connection with any stock split, stock dividend,
recapitalization, reclassification or similar event by the Company, and (x) issue shares of Common
Stock to the Investor under any other agreement entered into between the Investor and the Company.

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     Notwithstanding the foregoing, other than in the ordinary course of the Company’s business,
the Company shall not engage in any Permitted Transaction involving the issuance, sale, disposition
or other transaction in the capital markets (whether public or private) involving the Common Stock
or any other capital or debt securities of the Company during any Draw Down Pricing Period.
Notwithstanding the foregoing, during any Draw Down Pricing Period, the Company shall have the
right to issue stock options and/or shares of Common Stock and/or Preferred Stock in connection with the Company’s option,
restricted stock or other equity incentive or award plans, stock purchase plans, rights plans or
upon the exercise of warrants or options in the ordinary course of the Company’s business.

     Section 6.07. Prohibited Transactions. During the term of this Agreement, the Company
shall not enter into any Prohibited Transaction without the prior written consent of the Investor,
which consent may be withheld in the sole and absolute discretion of the Investor. For the purposes
of this Agreement, the term “Prohibited Transaction” shall refer to: (i) the issuance by
the Company of any rights, warrants or options to subscribe for or purchase Common Stock, or any
other securities directly or indirectly convertible into or exchangeable or exercisable for Common
Stock, at an effective conversion, exchange or exercise price that varies or may vary with or is
otherwise issuable in relation to the market price of Common Stock, including by way of one or more
resets to any fixed price; (ii) any “at-the-market offering” (as defined in Rule 415(a)(4) under
the Securities Act or any successor rule thereto) of the Company’s securities by or on behalf of
the Company; and (iii) any equity line or other form of financing that is substantially similar to
the financing provided for under this Agreement, provided that any future issuance by the Company
of a convertible security (“Convertible Security”) that contains provisions that adjust the
conversion price of such Convertible Security (“Conversion Price”) in the event of stock
splits, dividends, distributions or similar events or pursuant to anti-dilution provisions shall
not be a Prohibited Transaction for purposes of this Section 6.07 so long as such Convertible
Security does not contain a provision that adjusts the Conversion Price as a result of any decline
in the market price of the Common Stock after the issue date of the Convertible Security, other
than a decline resulting directly from stock splits, dividends, distributions or similar events
including, without limitation, the type of conversion price adjustments customarily found in a firm
commitment Rule 144A offering to qualified institutional buyers; provided, further,
that nothing in this Section 6.07 shall prevent the Company from restructuring, or consummating an
exchange offer for, its 3.125% Convertible Senior Notes Due 2011. For the avoidance of confusion,
the term “Prohibited Transaction” shall not include (i) a customary, firm-commitment
underwritten public offering of the Company’s securities or (ii) a registered direct public
offering or an unregistered private placement of the Company’s securities where the price per share
of such securities is fixed concurrently with the execution of definitive documentation relating to
the offering or placement, as applicable.

     Section 6.08. Corporate Existence. The Company shall take all steps necessary to
preserve and continue the corporate existence of the Company; provided, however,
that nothing in this Agreement shall be deemed to prohibit the Company from engaging in any
Excluded Merger or Sale with another Person provided that in the event of an Excluded Merger or
Sale, if the surviving, successor or purchasing Person does not agree to assume the obligations
under the Warrant, then the Company shall deliver a notice to the Investor at least ten (10) days
before the consummation of such Excluded Merger or Sale (provided that, to the extent that such
transaction has not been publicly disclosed, then the Investor agrees to maintain the
confidentiality of such information and to use such information only in connection with a decision
to exercise the Warrant), the Investor may exercise the Warrant at any time before the consummation
of such Excluded Merger or Sale (and such exercise may be made contingent upon the consummation of
such Excluded Merger or Sale), and any portion of the Warrant that has not been exercised before
consummation of such Excluded Merger or Sale shall terminate and expire, and shall no longer be
outstanding.

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     Section 6.09. Non-Disclosure of Non-Public Information. Except as otherwise expressly
provided in this Agreement, the Registration Rights Agreement or the Warrant, none of the Company,
its officers, directors, employees nor agents shall disclose material non-public information to the
Investor, its advisors or representatives.

     Section 6.10. Notice of Certain Events Affecting Registration; Suspension of Right to
Request a Draw Down. The Company shall promptly notify the Investor upon the occurrence of any
of the following events in respect of the Registration Statement or the Prospectus related to the
offer, issuance and sale of the Shares and the Warrant Shares hereunder: (i) receipt of any
request for additional information by the Commission or any other federal or state governmental
authority during the period of effectiveness of the Registration Statement for amendments or
supplements to the Registration Statement or the Prospectus; (ii) the issuance by the Commission or
any other federal or state governmental authority of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that purpose; and (iii) receipt
of any notification with respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose. The Company shall not be required to disclose
to the Investor the substance or specific reasons of any of the events set forth in clauses (i)
through (iii) of the previous sentence, only that the event has occurred. The Company shall not
request a Draw Down during the continuation of any of the foregoing events and, in relation to any
stop order described in clause (ii) above, shall take commercially reasonable actions to prevent
the entry of such stop order or to have such stop order lifted, as the case may be.

     Section 6.11. Amendments to the Registration Statement. Once the Registration
Statement is declared effective by the Commission: (i) the Company shall not file any amendment to
the Registration Statement or make any amendment or supplement to the Prospectus of which the
Investor shall not previously have been advised or to which the Investor shall reasonably object in
writing after being so advised and (ii) so long as, in the reasonable opinion of counsel for the
Investor, a Prospectus is required to be delivered in connection with sales of the Shares by the
Investor, if the Company files any information, documents or reports that are incorporated by
reference in the Registration Statement pursuant to the Exchange Act, the Company shall, if
requested in writing by the Investor, deliver a copy of such information, documents or reports to
the Investor promptly following such filing.

     Section 6.12. Prospectus Delivery. From time to time for such period as in the
reasonable opinion of counsel for the Investor the Prospectus is required by the Securities Act to
be delivered in connection with sales by the Investor, the Company shall expeditiously deliver to
the Investor, without charge, as many copies of the Prospectus (and of any amendment or supplement
thereto) as the Investor may reasonably request. The Company consents to the use of the Prospectus
(and of any amendment or supplement thereto) in accordance with the provisions of the Securities
Act and state securities laws in connection with the offering and sale of the Shares and the
Warrant Shares and for such period of time thereafter as the Prospectus is required by the
Securities Act to be delivered in connection with sales of the Shares and the Warrant Shares.
Notwithstanding the foregoing, in no event shall the Company be under any obligation to supplement
the Prospectus or to reflect the issuance of any Shares pursuant to a Draw Down or deliver any
Prospectus as so supplemented at any time prior to the Trading Day following the Settlement Date
with respect to such Shares.

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ARTICLE VII

CONDITIONS TO THE OBLIGATION OF THE INVESTOR TO ACCEPT A DRAW DOWN

     The obligation of the Investor hereunder to accept a Draw Down Notice and to acquire and pay
for the Shares in accordance therewith is subject to the satisfaction or waiver, at each Condition
Satisfaction Date, of each of the conditions set forth below. Other than those conditions set
forth in Section 7.12 which are for the Company’s sole benefit and may be waived by the Company at
any time in
its sole discretion, the conditions are for the Investor’s sole benefit and may be waived by
the Investor at any time in its sole discretion. As used in this Agreement, the term
“Condition Satisfaction Date” shall mean, with respect to each Draw Down, the date on which
the applicable Draw Down Notice is delivered to the Investor and each Settlement Date in respect of
the applicable Draw Down Pricing Period.

     Section 7.01. Accuracy of the Company’s Representations and Warranties. Each of the
representations and warranties of the Company shall be true and correct in all material respects as
of the date when made as though made at that time except for representations and warranties that
are expressly made as of a particular date.

     Section 7.02. Performance by the Company. The Company shall have, in all material
respects, performed, satisfied and complied with all covenants, agreements and conditions required
by this Agreement, the Registration Rights Agreement and the Warrant to be performed, satisfied or
complied with by the Company.

     Section 7.03. Compliance with Law. The Company shall have complied in all respects
with all applicable federal, state and local governmental laws, rules, regulations and ordinances
in connection with the execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby except for any failures to so comply which could not
reasonably be expected to have a Material Adverse Effect.

     Section 7.04. Effective Registration Statement. Upon the terms and subject to the
conditions set forth in the Registration Rights Agreement, the Registration Statement shall have
previously become effective and shall remain effective and (i) neither the Company nor the Investor
shall have received notice that the Commission has issued or intends to issue a stop order with
respect to the Registration Statement or that the Commission otherwise has suspended or withdrawn
the effectiveness of the Registration Statement, either temporarily or permanently, or intends or
has threatened to do so (unless the Commission’s concerns have been addressed and the Investor is
reasonably satisfied that the Commission no longer is considering or intends to take such action),
and (ii) no other suspension of the use or withdrawal of the effectiveness of the Registration
Statement or the Prospectus shall exist.

     Section 7.05. No Knowledge. The Company shall have no Knowledge of any event that
could reasonably be expected to have the effect of causing the Registration Statement with respect
to the resale of the Registrable Securities by the Investor to be suspended or otherwise
ineffective (which event is more likely than not to occur within eight Trading Days following the
Trading Day on which a Draw Down Notice is delivered).

     Section 7.06. No Suspension. Trading in the Company’s Common Stock shall not have
been suspended by the Commission, the Principal Market or the NASD and trading in
securities generally as reported on the Principal Market shall not have been suspended or limited as of the
Condition Satisfaction Date.

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     Section 7.07. No Injunction. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or
governmental authority of competent jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement.

     Section 7.08. No Proceedings or Litigation. No action, suit or proceeding before any
arbitrator or any governmental authority shall have been commenced, and, to the Knowledge of the
Company, no investigation by any governmental authority shall have been threatened, against
the Company or any subsidiary, or any of the officers, directors or affiliates of the Company or
any subsidiary seeking to enjoin, prevent or change the transactions contemplated by this
Agreement.

     Section 7.09. Sufficient Shares Registered for Resale. The Company shall have
sufficient Shares, calculated using the Closing Price of the Common Stock as of the Trading Day
immediately preceding such Draw Down Notice, registered under the Registration Statement to issue
and sell such Shares in accordance with such Draw Down Notice.

     Section 7.10. Warrant. The Warrant shall have been duly executed, delivered and
issued to the Investor, and the Company shall not be in default in any material respect under any
of the provisions thereof, provided that any refusal by or failure of the Company to issue and
deliver Warrant Shares in respect of any exercise (in whole or in part) thereof shall be deemed to
be material for the purposes of this Section 7.10.

     Section 7.11. Opinion of Counsel. The Investor shall have received an opinion of
counsel to the Company, dated as of the Effective Date, in the form reasonably agreed to by the
Investor and its counsel prior to the date hereof.

     Section 7.12. Accuracy of Investor’s Representation and Warranties. The
representations and warranties of the Investor shall be true and correct in all material respects
as of the date when made as though made at that time except for representations and warranties that
are made as of a particular date.

     Section 7.13. Payment of Fees. The Company shall be current on all undisputed expense
invoices that the Company is required to pay pursuant to Section 10.01.

ARTICLE VIII

TERMINATION

     Section 8.01. Term. Unless otherwise terminated in accordance with Section 8.02
below, this Agreement shall terminate upon the earlier to occur of (i) the expiration of the
Commitment Period or (ii) the issuance of Shares pursuant to this Agreement in an amount equal to
the Maximum Commitment Amount.

     Section 8.02. Other Termination.

     (a) The Investor may terminate this Agreement upon (x) one (1) Business Day’s notice to the
Company if the Company enters into any Prohibited Transaction as set forth in Section

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6.07 without the Investor’s prior written consent or (y) one (1) Business Day’s notice to the Company within ten
(10) Business Days after the Investor obtains actual knowledge that an event resulting in a
Material Adverse Effect has occurred.

     (b) The Investor may terminate this Agreement upon one (1) Business Day’s notice to the
Company at any time in the event that the Registration Statement is not first declared effective in
accordance with the Registration Rights Agreement; provided, however, that in the
event the Registration Statement is declared effective prior to the delivery of such notice, the
Investor shall thereafter have no right to terminate this Agreement pursuant to this Section
8.02(b).

     (c) The Investor may terminate this Agreement upon one (1) Business Day’s notice to the
Company at any time in the event that following the first twelve (12) month period of the term of
this Agreement, the Company fails to make cumulative Draw Downs of at least $1.25 million during
any consecutive twelve (12) month period during the term of this Agreement. For the avoidance of
doubt, this provision shall not entitle the Investor to terminate this Agreement prior to the end
of the twenty-fourth (24th) month of the term of this Agreement.

     (d) The Company may terminate this Agreement upon one (1) Business Day’s notice to the
Investor; provided, however, that the Company shall not terminate this Agreement
pursuant to this Section 8.02(d) during any Draw Down Pricing
Period; provided further, that, in
the event of any termination of this Agreement by the Company hereunder, so long as the Investor
owns Shares purchased hereunder and/or Warrant Shares, unless all of such shares of Common Stock
may be resold by the Investor without registration and without any time, volume or manner
limitations pursuant to Rule 144(k) (or any similar provision then in effect) under the Securities
Act, the Company shall not suspend, except as provided in the Registration Rights Agreement and
subject to the conditions and limitations set forth therein, or withdraw the Registration Statement
or otherwise cause the Registration Statement to become ineffective, or voluntarily delist the
Common Stock from, the Principal Market without listing the Common Stock on another Principal
Market.

     (e) Each of the parties hereto may terminate this Agreement upon one (1) Business Day’s notice
to the other party if the other party has breached a material representation, warranty or covenant
to this Agreement and such breach is not remedied within ten (10) Business Days after notice of
such breach is delivered to the breaching party.

     (f) The obligation of the Investor to purchase shares of Common Stock shall terminate
permanently in the event that the Commission issues any stop order concerning, or suspends the
effectiveness of, the Registration Statement for an aggregate of sixty (60) calendar days during
the Commitment Period.

     Section 8.03. Effect of Termination. In the event of termination by the Company or
the Investor, written notice thereof shall forthwith be given to the other party and the
transactions contemplated by this Agreement shall be terminated without further action by either
party. If this Agreement is terminated as provided in Section 8.01 or 8.02 herein, this Agreement
shall become void and of no further force and effect, except as provided in Section 10.13. Nothing
in this Section 8.03 shall be deemed to release the Company or the Investor from any liability for
any breach under this Agreement occurring prior to such termination, or to impair the rights of the
Company and the Investor to compel specific performance by the other party of its obligations under
this Agreement arising prior to such termination.

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ARTICLE IX

INDEMNIFICATION

     Section 9.01. Indemnification.

     (a) Except as otherwise provided in this Article IX, unless disputed as set forth in Section
9.02, the Company agrees to indemnify, defend and hold harmless the Investor and its affiliates and
their respective officers, directors, agents, employees, subsidiaries, partners, members and
controlling persons (each, an “Investor Indemnified Party”), to the fullest extent
permitted by law from and against any and all Damages directly resulting from or directly arising out of any breach of any
representation or warranty, covenant or agreement by the Company in this Agreement, the
Registration Rights Agreement or the Warrant; provided, however, that the Company
shall not be liable under this Article IX to an Investor Indemnified Party to the extent that such
Damages resulted or arose from the breach by an Investor Indemnified Party of any representation,
warranty, covenant or agreement of an Investor Indemnified Party contained in this Agreement, the
Registration Rights Agreement or the Warrant or the gross negligence, recklessness, willful
misconduct or bad faith of an Investor Indemnified Party. The parties intend that any Damages
subject to indemnification pursuant to this Article IX shall be net of insurance proceeds (which
the Investor Indemnified Party agrees to use commercially reasonable efforts to recover).
Accordingly, the amount which the Company is required to pay to any Investor Indemnified Party
hereunder (a “Company Indemnity Payment”) shall be reduced by any insurance proceeds
actually recovered by or on behalf of any Investor Indemnified Party in reduction of the related
Damages. In addition, if an Investor Indemnified Party receives a Company Indemnity Payment
required by this Article IX in respect of any Damages and subsequently receives any such insurance
proceeds, then the Investor Indemnified Party shall pay to the Company an amount equal to the
Company Indemnity Payment received less the amount of the Company Indemnity Payment that would have
been due if the insurance proceeds had been received, realized or recovered before the Company
Indemnity Payment was made.

     (b) Except as otherwise provided in this Article IX, unless disputed as set forth in Section
9.02, the Investor agrees to indemnify, defend and hold harmless the Company and its affiliates and
their respective officers, directors, agents, employees, subsidiaries, partners, members and
controlling persons (each, a “Company Indemnified Party”), to the fullest extent permitted
by law from and against any and all Damages directly resulting from or directly arising out of any
breach of any representation or warranty, covenant or agreement by the Investor in this Agreement,
the Registration Rights Agreement or the Warrant; provided, however, that the
Investor shall not be liable under this Article IX to a Company Indemnified Party to the extent
that such Damages resulted or arose from the breach by a Company Indemnified Party of any
representation, warranty, covenant or agreement of a Company Indemnified Party contained in this
Agreement, the Registration Rights Agreement or the Warrant or gross negligence, recklessness,
willful misconduct or bad faith of a Company Indemnified Party. The parties intend that any
Damages subject to indemnification pursuant to this Article IX shall be net of insurance proceeds
(which the Company agrees to use commercially reasonable efforts to recover). Accordingly, the
amount which the Investor is required to pay to any Company Indemnified Party hereunder (an
“Investor Indemnity Payment”) shall be reduced by any insurance proceeds theretofore
actually recovered by or on behalf of any Company Indemnified Party in reduction of the related
Damages. In addition, if a Company Indemnified Party receives an Investor Indemnity Payment
required by this Article IX in respect of any Damages and subsequently receives any such insurance
proceeds, then the Company Indemnified Party shall pay to the Investor an amount equal to the
Investor Indemnity Payment received less the amount of the

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Investor Indemnity Payment that would have been due if the insurance proceeds had been received, realized or recovered before the
Investor Indemnity Payment was made.

     Section 9.02. Notification of Claims for Indemnification. Each party entitled to
indemnification under this Article IX (an “Indemnified Party”) shall, promptly after the
receipt of notice of the commencement of any claim against such Indemnified Party in respect of
which indemnity may be sought from the party obligated to indemnify such Indemnified Party under
this Article IX (the “Indemnifying Party”), notify the Indemnifying Party in writing of the
commencement thereof. Any such notice shall describe the claim in reasonable detail. The failure
of any Indemnified Party to so notify the Indemnifying Party of any such action shall not relieve
the Indemnifying Party from any liability which it may have to such Indemnified Party (a) other
than pursuant to this Article IX or (b) under this Article IX unless, and only to the extent that, such failure results in the Indemnifying Party’s
forfeiture of substantive rights or defenses or the Indemnifying Party is prejudiced by such delay.
The procedures listed below shall govern the procedures for the handling of indemnification
claims.

     (a) Any claim for indemnification for Damages that do not result from a Third Party Claim as
defined in the following paragraph, shall be asserted by written notice given by the Indemnified
Party to the Indemnifying Party. Such Indemnifying Party shall have a period of thirty (30) days
after the receipt of such notice within which to respond thereto. If such Indemnifying Party does
not respond within such thirty (30) day period, such Indemnifying Party shall be deemed to have
refused to accept responsibility to make payment as set forth in Section 9.01. If such
Indemnifying Party does not respond within such thirty (30) day period or rejects such claim in
whole or in part, the Indemnified Party shall be free to pursue such remedies as specified in this
Agreement.

     (b) If an Indemnified Party shall receive notice or otherwise learn of the assertion by a
person or entity not a party to this Agreement of any threatened legal action or claim
(collectively a “Third Party Claim”), with respect to which an Indemnifying Party may be
obligated to provide indemnification, the Indemnified Party shall give such Indemnifying Party
written notice thereof within twenty (20) days after becoming aware of such Third Party Claim.

     (c) An Indemnifying Party may elect to defend (and, unless the Indemnifying Party has
specified any reservations or exceptions, to seek to settle or compromise) at such Indemnifying
Party’s own expense and by such Indemnifying Party’s own counsel, any Third Party Claim. Within
thirty (30) days after the receipt of notice from an Indemnified Party (or sooner if the nature of
such Third Party Claim so requires), the Indemnifying Party shall notify the Indemnified Party
whether the Indemnifying Party shall assume responsibility for defending such Third Party Claim,
which election shall specify any reservations or exceptions. If such Indemnifying Party does not
respond within such thirty (30) day period or rejects such claim in whole or in part, the
Indemnified Party shall be free to pursue such remedies as specified in this Agreement. In case
any such Third Party Claim shall be brought against any Indemnified Party, and it shall notify the
Indemnifying Party of the commencement thereof, the Indemnifying Party shall be entitled to assume
the defense thereof at its own expense, with counsel satisfactory to such Indemnified Party in its
reasonable judgment; provided, however, that any Indemnified Party may, at its own expense, retain
separate counsel to participate in such defense at its own expense. Notwithstanding the foregoing,
in any Third Party Claim in which both the Indemnifying Party, on the one hand, and an Indemnified
Party, on the other hand, are, or are reasonably likely to become, a party, such Indemnified Party
shall have the right to employ separate counsel and to control its own defense of such claim if, in
the reasonable opinion of counsel to such Indemnified Party, either (x) one or more significant
defenses are available to the Indemnified Party that are not available to the

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Indemnified Party that are not available to the Indemnifying Party or (y) a conflict
or potential conflict exists between the Indemnifying Party, on the one hand, and such Indemnified
Party, on the other hand, that would make such separate representation advisable; provided,
however, that in such circumstances the Indemnifying Party (i) shall not be liable for the
fees and expenses of more than one counsel to all Indemnified Parties and (ii) shall reimburse the
Indemnified Parties for such reasonable fees and expenses of such counsel incurred in any such
Third Party Claim, as such expenses are incurred, provided that the Indemnified Parties agree to
repay such amounts if it is ultimately determined that the Indemnifying Party was not obligated to
provide indemnification under this Article IX. The Indemnifying Party agrees that it shall not,
without the prior written consent of the Indemnified Party, settle, compromise or consent to the
entry of any judgment in any pending or threatened claim relating to the matters contemplated
hereby (if any Indemnified Party is a party thereto or has been actually threatened to be made a
party thereto) unless such settlement, compromise or consent includes an unconditional release of
such Indemnified Party from all liability arising or that may arise out of such claim. The
Indemnifying Party shall not be liable for any settlement of any claim effected against an
Indemnified Party without the Indemnifying Party’s written consent, which consent shall not be
unreasonably withheld, conditioned or delayed. The rights accorded to an Indemnified Party
hereunder shall be in addition to any rights that any Indemnified Party may have at common law, by
separate agreement or otherwise; provided, however, that notwithstanding the
foregoing or anything to the contrary contained in this Agreement, nothing in this Article IX shall
restrict or limit any rights that any Indemnified Party may have to seek equitable relief.

ARTICLE II

MISCELLANEOUS

     Section 10.01. Fees and Expenses.

     (a) Each of the Company and the Investor agrees to pay its own expenses incident to the
performance of its obligations hereunder, except that the Company shall be solely responsible for
(i) all reasonable attorneys fees and expenses incurred by the Investor in connection with (A) the
preparation, negotiation, execution and delivery of this Agreement, the Registration Rights
Agreement and the Warrant, and (B) the review and assistance in preparation of the Registration
Statement, correspondence with the Commission and amendments and supplements to the Registration
Statement and Prospectus, (ii) all reasonable fees and expenses incurred by the Investor in
connection with any amendments, modifications or waivers of this Agreement, including, without
limitation, all reasonable attorneys fees and expenses, (iii) all reasonable fees and expenses
incurred in connection with the Investor’s enforcement of this Agreement, including, without
limitation, all reasonable attorneys fees and expenses, (iv) all stamp or other similar taxes and
duties, if any, levied in connection with issuance of the Shares pursuant hereto; provided,
however, that in each of the above instances the Investor shall provide customary
supporting invoices or similar documentation in reasonable detail describing such expenses
(however, the Investor shall not be obligated to provide detailed time sheets); provided
further that the maximum aggregate amount payable by the Company pursuant to clause (i) and
(ii) above shall be $75,000 and the Investor shall bear all fees and expenses in excess of $75,000
incurred in connection with the events described under clauses (i) and (ii) above.

     (b) If any action at law or in equity is necessary to enforce or interpret the terms of this
Agreement, the Registration Rights Agreement or the Warrant, the prevailing party shall be
entitled to reasonable fees, costs and necessary disbursements in addition to any other relief
to which such party may be entitled.

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     Section 10.02. Reporting Entity for the Common Stock. The reporting entity relied upon
for the determination of the trading price or trading volume of the Common Stock on any given
Trading Day for the purposes of this Agreement shall be Bloomberg, L.P. or any successor thereto.
The written mutual consent of the Investor and the Company shall be required to employ any other
reporting entity.

     Section 10.03. Brokerage. Each of the parties hereto represents that it has had no
dealings in connection with this transaction with any finder or broker who shall demand payment of
any fee or commission from the other party. The Company, on the one hand, and the Investor, on the
other hand, agree to indemnify the other against and hold the other harmless from any and all
liabilities to any Persons claiming brokerage commissions or finder’s fees on account of services
purported to have been rendered on behalf of the indemnifying party in connection with this
Agreement or the transactions contemplated hereby.

     Section 10.04. Notices. All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless otherwise specified
herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below
or to such other address as such party shall have specified most recently by written notice given
in accordance herewith, in each case with a copy to the e-mail address set forth beside the
facsimile number for the addressee below. Any notice or other communication required or permitted
to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile,
with accurate confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a Business Day during normal business hours where such
notice is to be received), or the first Business Day following such delivery (if delivered other
than on a Business Day during normal business hours where such notice is to be received) or (b) on
the second Business Day following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.
The addresses for such communications shall be:

If to the Company:

	 	 	 
	 

	 	Cell Genesys, Inc.
	 

	 	500 Forbes Blvd.
	 

	 	South San Francisco, CA 94080
	 

	 	Facsimile: (650) 266-2930
	 

	 	Attention: Sharon Tetlow, Senior Vice President and Chief Financial Officer
	 

	 	Email: Sharon.Tetlow@cellgenesys.com

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

	 	 	 	 	 	 	 
	 	 	Wilson Sonsini Goodrich & Rosati
	 	 	650 Page Mill Road
	 	 	Palo Alto, CA 94304
	 	 	Facsimile: (650) 493-9300
	 

	 	Attention:
	 	Herbert P. Fockler, Esq.	 	 
	 

	 	E-mail:
	 	hfockler@wsgr.com	 	 

26

 

If to the Investor:

	 	 	 
	 

	 	Kingsbridge Capital Limited
	 

	 	Attention: Mr. Tony Hillman
	 

	 	PO Box 1075
	 

	 	Elizabeth House
	 

	 	9 Castle Street
	 

	 	St Helier
	 

	 	Jersey
	 

	 	JE42QP
	 

	 	Channel Islands
	 

	 	Tel: 011-44-1534-636-041
	 

	 	Fax: 011-44-1534-636-042
	 

	 	Email: admin@kingsbridgecap.com

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

	 	 	 	 	 	 	 
	 	 	Kingsbridge Corporate Services
	 	 	Kingsbridge House
	 	 	New Abbey
	 	 	Kilcullen
	 	 	Co.Kildare
	 	 	Ireland
	 	 	Tel: 011-353-45-481-811
	 	 	Fax: 011-353-45-482-003
	 	 	Email: adamgurney@kingsbridge.ie;
	 

	 	 	 	emmagalway@kingsbridge.ie, and	 	 
	 

	 	 	 	pwhelan@kingsbridge.ie	 	 

And another copy (which shall not constitute notice) to:

	 	 	 	 	 	 	 
	 	 	Clifford Chance US LLP
	 	 	31 West 52nd Street
	 	 	New York, NY 10019
	 

	 	Telephone:
	 	(212) 878-8000	 	 
	 

	 	Facsimile:
	 	(212) 878-8375	 	 
	 

	 	Attention:
	 	Earl Zimmerman, Esq.	 	 
	 

	 	 	 	Philippe Y. Blanchard, Esq.	 	 
	 

	 	 	 	Mina J. Ando, Esq.	 	 
	 

	 	E-mail:
	 	earl.zimmerman@cliffordchance.com,	 	 
	 

	 	 	 	philippe.blanchard@cliffordchance.com,	 	 

Either party hereto may from time to time change its address or facsimile number for notices under
this Section by giving at least ten (10) days’ prior written notice of such changed address or
facsimile number to the other party hereto.

     Section 10.05. Assignment. Neither this Agreement nor any rights of the Investor or
the Company hereunder may be assigned by either party to any other Person.

     Section 10.06. Amendment; No Waiver. No party shall be liable or bound to any other
party in any manner by any warranties, representations or covenants except as specifically set
forth in this Agreement, the Warrant and the Registration Rights Agreement. Except as expressly
provided in this Agreement, neither this Agreement nor any term hereof may be amended, modified,
supplemented, waived, discharged or terminated other than by a written instrument

27

 

signed by both
parties hereto. No course of dealing between the parties hereto shall be deemed effective to
amend, modify, supplement waive, discharge or terminate any part of this Agreement or any rights or
obligations of any person under or by reason of this Agreement. The failure of either party to
insist on strict compliance with this Agreement, or to exercise any right or remedy under this
Agreement, shall not constitute a waiver of any rights provided under this Agreement, nor estop the
parties from thereafter demanding full and complete compliance nor prevent the parties from
exercising such a right or remedy in the future.

     Section 10.07. Entire Agreement. This Agreement, the Registration Rights Agreement and
the Warrant set forth the entire agreement and understanding of the parties relating to the subject
matter hereof and supersede all prior and contemporaneous discussions, negotiations, agreements,
negotiations and understandings between the parties, both oral and written, relating to the subject
matter hereof.

     Section 10.08. Severability. In the event that any provision of this Agreement becomes
or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this
Agreement shall continue in full force and effect without said provision; provided that, if
the severance of such provision materially changes the economic benefits of this Agreement to
either party as such benefits are anticipated as of the date hereof, then such party may terminate
this Agreement on five (5) Business Days prior written notice to the other party. In such event,
the Registration Rights Agreement shall terminate simultaneously with the termination of this
Agreement; provided that in the event that this Agreement is terminated by the Company in
accordance with this Section 10.08 and the Warrant Shares either have not been registered for
resale by the Investor in accordance with the Registration Rights Agreement or are otherwise not
freely tradable (if and when issued) in accordance with applicable law, then the Registration
Rights Agreement in respect of the registration of the Warrant Shares shall remain in full force
and effect.

     Section 10.09. Title and Subtitles. The titles and subtitles used in this Agreement
are used for the convenience of reference and are not to be considered in construing or
interpreting this Agreement.

     Section 10.10. Counterparts. This Agreement may be executed in multiple counterparts,
each of which may be executed by less than all of the parties and shall be deemed to be an original
instrument which shall be enforceable against the parties actually executing such counterparts and
all of which together shall constitute one and the same instrument.

     Section 10.11. Choice of Law. This Agreement shall be construed under the laws of the
State of New York.

     Section 10.12. Specific Enforcement, Consent to Jurisdiction.

     (a) The Company and the Investor acknowledge and agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement and to enforce specifically the terms and provisions hereof or
thereof, this being in addition to any other remedy to which any of them may be entitled by law or
equity.

28

 

     (b) Subject to Section 9.03, each of the Company and the Investor (i) hereby irrevocably
submits to the jurisdiction of the United States District Court and other courts of the United
States sitting in the State of New York for the purposes of any suit, action or proceeding arising
out of or relating to this Agreement and (ii) hereby waives, and agrees not to assert in any such
suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such
court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. Each of the Company and the Investor consents to
process being served in any such suit, action or proceeding by mailing a copy thereof to such party
at the address in effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing in this Section
shall affect or limit any right to serve process in any other manner permitted by law.

     Section 10.13. Survival. The representations and warranties of the Company and the
Investor contained in Articles IV and V of this Agreement and the covenants contained in Articles
V, VI and X of this Agreement shall survive the execution and delivery hereof and the Closing until
the termination of this Agreement, and the agreements and covenants set forth in Article VIII and
Article IX of this Agreement shall survive the execution and delivery hereof and the Closing
hereunder.

     Section 10.14. Publicity. Except as otherwise required by applicable law or
regulation, or Nasdaq rule or judicial process, prior to the Closing, neither the Company nor the
Investor shall issue any press release or otherwise make any public statement or announcement with
respect to this Agreement or the transactions contemplated hereby or the existence of this
Agreement. In the event the Company is required by law, regulation, Nasdaq rule or judicial
process, based upon reasonable advice of the Company’s inside or outside counsel, to issue a press
release or otherwise make a public statement or announcement with respect to this Agreement prior
to the Closing, the Company shall consult with the Investor on the form and substance of such press
release, statement or announcement. Promptly after the Closing, each party may issue a press
release or otherwise make a public statement or announcement with respect to this Agreement or the
transactions contemplated hereby or the existence of this Agreement; provided that, prior
to issuing any such press release, making any such public statement or announcement, the party
wishing to make such release, statement or announcement consults and cooperates in good faith with
the other party in order to formulate such press release, public statement or announcement in form
and substance reasonably acceptable to both parties.

     Section 10.15. Further Assurances. From and after the date of this Agreement, upon the
request of the Investor or the Company, each of the Company and the Investor shall execute and
deliver such instruments, documents and other writings and take such action as may be reasonably
necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of
this Agreement and the transactions contemplated hereby.

     Section 10.16. Absence of Presumption. This Agreement shall be construed without
regard to any presumption or rule requiring construction or interpretation against the party
drafting or causing any instrument to be drafted.

[Remainder of this page intentionally left blank]

29

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
respective authorized officers as of the date first written.

	 	 	 	 	 	 	 
	 	 	KINGSBRIDGE CAPITAL LIMITED
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Maria O’Donoghue	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Maria O’Donoghue	 	 
	 

	 	 	 	Director	 	 
	 
	 	 	 	 	 	 
	 	 	CELL GENESYS, INC.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Stephen A. Sherwin	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Stephen A. Sherwin, M.D.

Chief Executive Officer	 	 

SIGNATURE PAGE — COMMON STOCK PURCHASE AGREEMENT

 

 

Exhibit A

Form of Registration Rights Agreement

 

 

Exhibit B

Warrant

 

 

Exhibit C

Form of Draw Down Notice

Kingsbridge Capital Limited

Attention: Mr. Tony Hillman

PO Box 1075

Elizabeth House

9 Castle Street

St Helier

Jersey

JE42QP

Channel Islands

Fax: 011-44-1534-636-042

Email: admin@kingsbridgecap.com

Kingsbridge Corporate Services

Kingsbridge House

New Abbey

Kilcullen

Co.Kildare

Ireland

Fax: 011-353-45-482-003

Email: adamgurney@kingsbridge.ie; and pwhelan@kingsbridge.ie

Clifford Chance US LLP

31 West 52nd Street

New York, NY 10019

Facsimile: (212) 878-8375

Attention: Earl Zimmerman, Esq.

          Philippe Y. Blanchard, Esq.

E-mail: earl.zimmerman@cliffordchance.com and philippe.blanchard@cliffordchance.com

Reference is hereby made to that certain Common Stock Purchase Agreement dated as of February 5,
2007 (the “Agreement”) by and between Cell Genesys, Inc., a corporation organized and existing
under the laws of the State of Delaware (the “Company”), and Kingsbridge Capital Limited, an entity
organized and existing under the laws of the British Virgin Islands (the “Investor”). Capitalized
terms used and not otherwise defined herein shall have the meanings given such terms in the
Agreement.

In accordance with and pursuant to Section 3.01 of the Agreement, the Company hereby issues this
Draw Down Notice to the Investor pursuant to the terms set forth below.

Draw Down Amount: $                    ; and

First Trading Day of Draw Down Pricing Period:                     , 200[_].

 

 

	 	 	 	 	 	 	 
	Dated:                     , 200[_]
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	CELL GENESYS, INC.
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 

 

 

Exhibit D

Officer Certificate

     I, [NAME OF OFFICER], do hereby certify to Kingsbridge Capital Limited (the “Investor”), with
respect to the common stock of Cell Genesys, Inc. (the “Company”) issuable in connection with the
Draw Down Notice, dated ______(the “Notice”) attached hereto and delivered pursuant to
Article III of the Common Stock Purchase Agreement, dated as of February 5, 2007 (the
“Agreement”), by and between the Company and the Investor, as follows (capitalized terms used but
undefined herein have the meanings given to such terms in the Agreement):

     1. I am the duly elected [OFFICER] of the Company.

     2. The representations and warranties of the Company set forth in Article IV of the Agreement
are true and correct in all material respects as though made on and as of the date hereof (except
for such representations and warranties that are made as of a particular date).

     3. The Company has performed in all material respects all covenants and agreements to be
performed by the Company on or prior to the date hereof related to the Notice and has satisfied
each of the conditions to the obligation of the Investor set forth in Article VII of the Agreement.

     4. The Shares issuable in respect of the Notice will be delivered without restrictive legend
via book entry through the Depositary Trust Company to an account designated by the Investor.

     The undersigned has executed this Certificate this                      day of                     , 200[_].

	 	 	 
	 

	 	 
	 

	 	Name:
	 

	 	Title:

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