Document:

Ex-10.1 Loan and Master Security Agreement

 

Exhibit 10.1

LOAN AND MASTER SECURITY AGREEMENT

Dated as of December 27, 2005 (“Agreement”)

     THIS AGREEMENT is between General Electric Capital Corporation (together with its
successors and assigns, if any, “Lender”) and Cyberkinetics Neurotechnology Systems, Inc.
(“Debtor”). Lender has an office at 83 Wooster Heights Road, Danbury, CT 06810. Debtor is a
corporation organized and existing under the laws of the state of Delaware (“the State”). Debtor’s
mailing address and chief place of business is 100 Foxborough Blvd., Suite 240, Foxborough, MA
02035. The parties agree as follows:

1. LOANS, NOTES AND WARRANTS.

     (a) Subject to the terms and conditions set forth herein, Lender will make an advance or
advances of up to $4,000,000 (“Tranche 1”) available to Debtor upon execution of this Agreement and
an additional $2,000,000 (“Tranche 2”) available to Debtor upon satisfaction of each of the
additional funding milestones. For purposes of this Agreement, satisfaction of the additional
funding milestones shall mean that: (i) Debtor has entered into a material research, development
and/or commercialization collaboration or alliance or asset acquisition, merger or other business
combination where Debtor is the surviving entity on terms reasonably satisfactory to Lender, (ii)
Debtor has listed its shares on either the NASDAQ National Market or American Stock Exchange, and
(iii) Debtor’s revenue related to Neuroport is reasonably expected to exceed $1,250,000 for the
fiscal year ended December 31, 2006; provided that, on and as of the date of funding under Tranche
2, the representations and warranties set forth in Section 3 of this Agreement shall be true and
correct in all material respects and no default under Section 8 shall have occurred and be
continuing.

     (b) To draw down on the available funds, Debtor will deliver notification together with a
promissory note or promissory notes to Lender in the form attached hereto as Exhibit A (each a
“Note” and, collectively, “Notes”) (i) by or before June 30, 2006 with respect to the funds in
Tranche 1 and (ii) by or before September 29, 2006 with respect to the funds in Tranche 2. Each
Note will bear interest at a per annum rate equal to 10.6% (the “Interest Rate”) over a period of
thirty-six consecutive months. Debtor will make payments for six months at interest only followed
by thirty months at 3.809099% (“Payment Factor”). The Interest Rate and Payment Factor will be
adjusted at the time of funding to reflect any increase in Lender’s cost of funds, which shall be
tied to the Federal Reserve’s Three (3) year Treasury Constant Maturities Rate (the “Index”). The
Interest Rate, and therefore the Payment Factor, assumes an Index of 4.20%.

     (c) Debtor shall grant Lender warrants substantially in the form attached hereto as Exhibit B
(a “Warrant”), pursuant to the following schedule:

     (i) upon execution of this Agreement, Debtor shall grant Lender a Warrant to purchase
71,301 shares of common stock of Debtor;

     (ii) as soon as practicable after Debtor borrows an aggregate principal amount of $4,000,000
under Tranche 1, Debtor shall grant Lender a Warrant to purchase the number of shares of common
stock of Debtor equal to $100,000 (which is 2.5% of the principal amount of Tranche 1) divided by
110% of the 10-day trailing average of Debtor’s stock price at issuance of the Warrant;

     (iii) as soon as practicable after (A) Debtor provides notice to Lender that Debtor has
satisfied the additional funding milestones set forth in Section 1(a) and (B) Lender acknowledges
that Debtor has achieved the additional funding milestones and makes the funds in Tranche 2
available for withdrawal by Debtor, Debtor shall grant Lender a Warrant to purchase the number of
shares of common stock of Debtor equal to $50,000 (which is 2.5% of the principal amount of Tranche
2) divided by 110% of the 10-day trailing average of Debtor’s stock price at issuance of the
Warrant; and

     (iv) as soon as practicable after Debtor borrows an aggregate principal amount of $2,000,000
under Tranche 2, Debtor shall grant Lender a Warrant to purchase the number of shares of common
stock of Debtor equal to $50,000 (which is 2.5% of the principal amount of Tranche 2) divided by
110% of the 10-day trailing average of Debtor’s stock price at issuance of the Warrant.

Debtor will grant each Warrant at a warrant price per share equal to 110% of the 10-day trailing
average of Debtor’s stock price at issuance of the applicable Warrant.

2. CREATION OF SECURITY INTEREST; NEGATIVE PLEDGE.

     (a) Subject to the terms and conditions set forth herein, Debtor grants to Lender, its
successors and assigns, a security interest in and against all property listed on the collateral
schedule attached hereto as Exhibit C or in the future annexed to

 

 

or made a part of this Agreement (“Collateral Schedule”), and in and against all additions, attachments, accessories and accessions
to such property, all substitutions, replacements or exchanges therefor, and all insurance and/or
other proceeds thereof (all such property is individually and collectively called the
“Collateral”). This security interest is given to secure the payment and performance of all debts,
obligations and liabilities of any kind whatsoever of Debtor to Lender, now existing or arising in
the future, including but not limited to the payment and performance of the Notes, and any
renewals, extensions and modifications of such debts, obligations and liabilities (such Notes,
debts, obligations and liabilities are called the “Indebtedness”). Lender’s security interest in
the Collateral shall continue until the payment in full and the satisfaction of all Indebtedness,
whereupon such security interest shall terminate. Lender shall, at Debtor’s sole cost and expense,
execute such further documents and take such further actions as may be necessary to effect the
release contemplated above, including duly executing and delivering termination statements for
filing in all relevant jurisdictions under the Uniform Commercial Code. THE PARTIES EXPLICITLY
ACKNOWLEDGE AND AGREE THAT COLLATERAL, AS USED HEREIN, SHALL NOT INCLUDE ANY INTELLECTUAL PROPERTY
OF DEBTOR.

For purposes of this Agreement, “Intellectual Property” means:

(i) any and all Copyrights;

(ii) any and all trade secrets, and any and all intellectual property rights in computer software
and computer software products now or hereafter existing, created, acquired or held;

(iii) any and all design rights that may be available to Debtor now or hereafter existing, created,
acquired or held;

(iv) all Mask Works or similar rights available for the protection of semiconductor chips;

(v) all Patents;

(vi) any Trademarks;

(viii) all licenses or other rights to use any of the Copyrights, Patents, Trademarks, or Mask
Works and all license fees and royalties arising from such use to the extent permitted by such
license or rights; and

(ix) all amendments, extensions, renewals and extensions of any of the Copyrights, Patents,
Trademarks or Mask Works.

“Copyrights” means any and all copyright rights, copyright applications, copyright registrations
and like protections in each work of authorship and derivative work thereof, whether published or
unpublished and whether or not the same also constitutes a trade secret, now or hereafter existing,
created, acquired or held.

“Mask Works” means all mask work or similar rights available for the protection of semiconductor
chips, now owned or hereafter acquired.

“Patents” means all patents, patent applications and like protections including without limitation
improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of
the same.

“Trademarks” means any trademark and service mark rights, whether registered or not, applications
to register and registrations of the same and like protections, and the entire goodwill of the
business of Debtor connected with and symbolized by such trademarks.

     (b) Subject to the terms and conditions set forth herein, and until the payment in full and
the satisfaction of all Indebtedness, Debtor shall not (a) sell, transfer, assign, mortgage,
pledge, lease, grant a security interest in, or encumber any of its Intellectual Property, or (b)
enter into any agreement with any third party that would prohibit the pledge or grant to Lender of
a security interest in Debtor’s Intellectual Property (parts (a) and (b) collectively, the
“Negative Pledge”); provided that the Negative Pledge shall not include (i) Permitted Liens (as
defined below), (ii) the transfer of inventory, worn out equipment and other transactions and
business decisions in the ordinary course of business (including, without limitation, the decision
to abandon the prosecution or maintenance of any patent or patent application), (iii) licenses to
Debtor’s Intellectual Property (including, without limitation, any license granted by Debtor as
part of a research and development project, strategic alliance or similar arrangement) for fair
consideration as approved by Debtor’s Board of Directors, and (iv) any other transaction or
business relationship that is in Debtor’s ordinary course of business and not material to the
financial condition or results of operations of the Company.

3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTOR.

     Debtor represents, warrants and covenants as of the date of this Agreement and as of the date
of each Collateral Schedule that:

     (a) Debtor’s exact legal name is as set forth in the preamble of this Agreement and Debtor is,
and will remain, duly organized, existing and in good standing under the laws of the State set
forth in the preamble of this Agreement, has its chief executive offices at the location specified
in the preamble, and is, and will remain, duly qualified in every jurisdiction

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necessary to carry on its business and operations, except where the failure to qualify would not have a material
adverse effect on Debtor’s business;

     (b) Debtor has adequate power and capacity to enter into, and to perform its obligations under
this Agreement, each Note and any other documents evidencing, or given in connection with, any of
the Indebtedness (all of the foregoing are called the “Debt Documents”);

     (c) This Agreement and the other Debt Documents have been duly authorized, executed and
delivered by Debtor and constitute legal, valid and binding agreements enforceable in accordance
with their terms, except to the extent that the enforcement of remedies may be limited under
applicable bankruptcy and insolvency laws;

     (d) No approval, consent or withholding of objections is required from any governmental
authority or instrumentality with respect to the entry into, or performance by Debtor of any of the
Debt Documents, except any already obtained;

     (e) The entry into, and performance by, Debtor of the Debt Documents will not (i) violate any
of the organizational documents of Debtor or any judgment, order, law or regulation applicable to
Debtor, or (ii) result in any breach of or constitute a default under any contract to which Debtor
is a party, or result in the creation of any lien, claim or encumbrance on any of Debtor’s property
(except for liens in favor of Lender or Permitted Liens) pursuant to any indenture, mortgage, deed
of trust, bank loan, credit agreement, or other agreement or instrument to which Debtor is a party;

     (f) There are no suits or proceedings pending in court or before any commission, board or
other administrative agency against or affecting Debtor which Debtor reasonably expects
could, in the aggregate, have a material adverse effect on Debtor, its business or operations, or
its ability to perform its obligations under the Debt Documents, nor does Debtor have reason to
believe that any such suits or proceedings are threatened;

     (g) All financial statements delivered to Lender in connection with the Indebtedness have been
prepared in accordance with generally accepted accounting principles, and since the date of the
most recent financial statement, there has been no material adverse change in Debtors financial
condition;

     (h) The Collateral is not, and will not be, used by Debtor for personal, family or household
purposes;

     (i) The Collateral is, and will remain, in good operating order and repair, normal wear and
tear excepted, and Debtor will not be negligent in its care and use;

     (j) Debtor is, and will remain, the sole and lawful owner, and in possession of, the
Collateral, and has the sole right and lawful authority to grant the security interest described in
this Agreement;

     (k) The Collateral is, and will remain, free and clear of all liens, claims and encumbrances
of any kind whatsoever, except for (i) liens in favor of Lender, (ii) liens for taxes not yet due
or for taxes being contested in good faith and which do not involve, in the reasonable judgment of
Lender, any risk of the sale, forfeiture or loss of any of the Collateral, (iii) inchoate
materialmen’s, mechanic’s, repairmen’s and similar liens arising by operation of law in the normal
course of business for amounts which are not delinquent and (iv) liens, claims and encumbrances
related to the Existing Line of Credit, as defined below (all of such liens are called “Permitted
Liens”); provided that, before delivering notification to draw down on the available funds under
Tranche 1 as described in Section 1, Debtor shall pay all amounts outstanding and otherwise due to
terminate the loan facility described in the existing Loan and Security Agreement between Debtor
and Silicon Valley Bank (the “Existing Line of Credit”) and fully satisfy and discharge any liens,
claims and encumbrances on the Collateral and Intellectual Property arising from the Existing Line
of Credit; Debtor shall provide Lender with evidence of such termination and release prior to the
initial funding under Tranche 1;

     (l) Debtor is and will remain in full compliance with all laws and regulations applicable to
it including, without limitation, (i) ensuring that no person who owns a controlling interest in or
otherwise controls Debtor is or shall be (Y) listed on the Specially Designated Nationals and
Blocked Person List maintained by the Office of Foreign Assets Control (“OFAC”), Department of the
Treasury, and/or any other similar lists maintained by OFAC pursuant to any authorizing statute,
Executive Order or regulation or (Z) a person designated under Section 1(b), (c) or (d) of
Executive Order No. 13224 (September 23, 2001), any related enabling legislation or any other similar Executive Orders,
and (ii) compliance with all applicable Bank Secrecy Act (“BSA”) laws, regulations and government
guidance on BSA compliance and on the prevention and detection of money laundering violations; and

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     (m) Other than the Permitted Liens and agreements that have expired or been terminated prior
to the date of this Agreement, Debtor has not and will not enter into any other agreement or
financing arrangement in which it granted a general negative pledge in Debtor’s Intellectual
Property to any other party.

4. COLLATERAL.

     (a) Until the declaration of any default, Debtor shall remain in possession of the Collateral;
except that Lender shall have the right to possess (i) any chattel paper or instrument that
constitutes a part of the Collateral, and (ii) any other Collateral in which Lender’s security
interest may be perfected only by possession. Lender may inspect any of the Collateral during
normal business hours after giving Debtor reasonable prior notice. If Lender asks, Debtor will
promptly notify Lender in writing of the location of any Collateral.

     (b) Debtor shall (i) use the Collateral only in its trade or business, (ii) maintain all of
the Collateral in good operating order and repair, normal wear and tear excepted and except as
permitted herein, (iii) use and maintain the Collateral only in compliance with manufacturers
recommendations and all applicable laws, and (iv) keep all of the Collateral free and clear of all
liens, claims and encumbrances (except for Permitted Liens).

     (c) Lender does not authorize and Debtor agrees it shall not, except in the ordinary course of
business (i) part with possession of any of the Collateral (except to Lender or for maintenance
and repair), (ii) remove any of the Collateral from the continental United States, or (iii) sell,
rent, lease, mortgage, license, grant a security interest in or otherwise transfer or encumber
(except for Permitted Liens) any of the Collateral.

     (d) Debtor shall pay promptly when due all taxes, license fees, assessments and public and
private charges levied or assessed on any of the Collateral, on its use, or on this Agreement or
any of the other Debt Documents. At its option, Lender may discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on the Collateral (except for
Permitted Liens) and may pay for the maintenance, insurance and preservation of the Collateral and
effect compliance with the terms of this Agreement or any of the other Debt Documents. Debtor
agrees to reimburse Lender, on demand, all costs and expenses incurred by Lender in connection with
such payment or performance and agrees that such reimbursement obligation shall constitute
Indebtedness.

     (e) Debtor shall, at all times, keep accurate and complete records of the Collateral, and
Lender shall have the right to inspect and make copies of all of Debtor’s books and records
relating to the Collateral during normal business hours, after giving Debtor reasonable prior
notice, subject to the terms of the Confidential Disclosure Agreement between Debtor and Lender, a
copy of which has been attached hereto as Exhibit D (the “Confidential Disclosure Agreement”).

     (f) Debtor agrees and acknowledges that, except as otherwise described herein, any third
person who may at any time possess all or any portion of the Collateral shall be deemed to hold,
and shall hold, the Collateral as the agent of, and as pledge holder for, Lender. Lender may at
any time give notice to any third person described in the preceding sentence that such third person
is holding the Collateral as the agent of, and as pledge holder for, the Lender.

5. INSURANCE.

     (a) Debtor shall at all times bear the entire risk of any loss, theft, damage to, or
destruction of, any of the Collateral from any cause whatsoever.

     (b) Debtor agrees to keep the Collateral insured against loss or damage by fire and extended
coverage perils, theft, burglary, and for any or all Collateral which are vehicles, for risk of
loss by collision, and if requested by Lender, against such other risks as Lender may reasonably
require. The insurance coverage shall be in an amount no less than the full replacement value of
the Collateral, and deductible amounts, insurers and policies shall be reasonably acceptable to
Lender. Debtor shall deliver to Lender policies or certificates of insurance evidencing such
coverage. Each policy shall name Lender as a loss payee, shall provide for coverage to Lender
regardless of the breach by Debtor of any warranty or representation made therein, shall not
be subject to co-insurance, and shall provide that coverage may not be canceled or altered
by the insurer except upon thirty (30) days prior written notice to Lender. Debtor appoints Lender
as its attorney-in-fact to make proof of loss, claim for insurance and adjustments with insurers,
and to receive payment of and execute or

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endorse all documents, checks or drafts in connection
with insurance payments. Lender shall not act as Debtor’s attorney-in-fact unless Debtor is in
default. Proceeds of insurance shall be applied, at the option of Lender, to repair or replace the
Collateral or to reduce any of the Indebtedness.

6. REPORTS.

     (a) Debtor shall promptly notify Lender of (i) any change in the name of Debtor, (ii) any
change in the state of its incorporation, organization or registration, (iii) any relocation of
its chief executive offices, (iv) any relocation of any of the Collateral, (v) any of the
Collateral being lost, stolen, missing, destroyed, materially damaged or worn out, or (vi) any
lien, claim or encumbrance other than Permitted Liens attaching to or being made against any of the
Collateral.

     (b) Debtor will deliver to Lender financial statements as follows. If Debtor is a privately
held company, then Debtor agrees to provide monthly financial statements, certified by Debtor’s
president or chief financial officer including a balance sheet, statement of operations and cash
flow statement within 30 days of each month end and its complete audited annual financial
statements, certified by a recognized firm of certified public accountants, within 120 days of
fiscal year end or at such time as Debtor’s Board of Directors receives the audit. If Debtor is a
publicly held company, then Debtor agrees to provide quarterly unaudited statements and annual
audited statements, certified by a recognized firm of certified public accountants, within 10 days
after the statements are provided to the Securities and Exchange Commission (“SEC”). All such
statements are to be prepared using generally accepted accounting principles (“GAAP”) and, if
Debtor is a publicly held company, are to be in compliance with SEC requirements.

7. FURTHER ASSURANCES.

     (a) Debtor shall, upon request of Lender, furnish to Lender such further information, execute
and deliver to Lender such documents and instruments (including, without limitation, Uniform
Commercial Code financing statements) and shall do such other acts and things as Lender may at any
time reasonably request relating to the perfection or protection of the security interest created
by this Agreement or for the purpose of carrying out the intent of this Agreement. Without
limiting the foregoing, Debtor shall cooperate and do all acts deemed necessary or advisable by
Lender to continue in Lender a perfected first security interest in the Collateral, and shall
obtain and furnish to Lender any subordinations, releases, landlord waivers, lessor waivers,
mortgagee waivers, or control agreements, and similar documents as may be from time to time
requested by, and in form and substance satisfactory to, Lender.

     (b) Debtor authorizes Lender to file a financing statement and amendments thereto describing
the Collateral and containing any other information required by the applicable Uniform Commercial
Code. Debtor irrevocably grants to Lender the power to sign Debtor’s name and generally to act on
behalf of Debtor to execute and file applications for title, transfers of title, financing
statements, notices of lien and other documents pertaining to any or all of the Collateral; this
power is coupled with Lender’s interest in the Collateral. Debtor shall, if any certificate of
title be required or permitted by law for any of the Collateral, obtain and promptly deliver to
Lender such certificate showing the lien of this Agreement with respect to the Collateral. Debtor
ratifies its prior authorization for Lender to file financing statements and amendments thereto
describing the Collateral and containing any other information required by the Uniform Commercial
Code if filed prior to the date hereof.

     (c) Debtor shall indemnify and defend the Lender, its successors and assigns, and their
respective directors, officers and employees, from and against all claims, actions and suits
(including, without limitation, related attorneys’ fees) of any kind whatsoever arising, directly
or indirectly, in connection with any of the Collateral.

8. DEFAULT AND REMEDIES.

     (a) Debtor shall be in default under this Agreement and each of the other Debt Documents
(other than the Warrant and the Confidential Disclosure Agreement) if:

          (i) Debtor breaches its obligation to pay when due any installment or other amount due or
coming due under any of the Debt Documents and fails to cure the breach within ten (10) days;
(provided that such delay is not caused by Lender’s

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failure to automatically debit such payment from immediately available funds of Debtor pursuant to the authorization provided by Debtor to
Lender);

          (ii) Debtor, without the prior written consent of Lender, attempts to or does sell, rent,
lease, license, mortgage, grant a security interest in, or otherwise transfer or encumber (except
for Permitted Liens and transfers of inventory in the ordinary course of business) any of the
Collateral;

          (iii) Debtor breaches any of its insurance obligations under Section 5;

          (iv) Debtor breaches any of its other obligations under any of the Debt Documents and fails to
cure that breach within thirty (30) days after written notice from Lender;

          (v) Any warranty, representation or statement made by Debtor in any of the Debt Documents or
otherwise in connection with any of the Indebtedness shall be false or misleading in any material
respect;

          (vi) Any of the Collateral is subjected to attachment, execution, levy, seizure or
confiscation in any legal proceeding or otherwise, or if any legal or administrative proceeding is
commenced against Debtor or any of the Collateral, which in the good faith judgment of Lender
subjects any of the Collateral to a material risk of attachment, execution, levy, seizure or
confiscation and no bond is posted or protective order obtained to negate such risk;

          (vii) Debtor breaches or is in default under any other agreement between Debtor and Lender;

          (viii) Debtor or any guarantor or other obligor for any of the Indebtedness (collectively
“Guarantor”) dissolves, terminates its existence, becomes insolvent or ceases to do business as a
going concern;

          (ix) If Debtor or any Guarantor is a natural person, Debtor or any such Guarantor dies or
becomes incompetent;

          (x) A receiver is appointed for all or of any part of the property of Debtor or any Guarantor,
or Debtor or any Guarantor makes any assignment for the benefit of creditors;

          (xi) Debtor or any Guarantor files a petition under any bankruptcy, insolvency or similar law,
or any such petition is filed against Debtor or any Guarantor and is not dismissed within
forty-five (45) days;

          (xii) Debtor’s improper filing of an amendment or termination statement relating to a filed
financing statement describing the Collateral;

          (xiii) There is a material adverse change in Debtor’s financial condition as determined solely
by Lender acting in good faith;

          (xiv) Any Guarantor revokes or attempts to revoke its guaranty of any of the Indebtedness or
fails to observe or perform any covenant, condition or agreement to be performed under any guaranty
or other related document to which it is a party;

          (xv) Debtor defaults under any other material obligation for (A) borrowed money, (B) the
deferred purchase price of property or (C) payments due under any lease agreement;

          (xvi) At any time during the term of this Agreement, without Lender’s prior written consent,
(A) Debtor sells all or substantially all of its assets or (B) a change in the composition of
Debtor’s stockholders as of the date of this Agreement occurs resulting in a stockholder or
investor group acquiring more than 50% of any class of Debtor’s equity securities; or

          (xvii) Except for Permitted Liens or as otherwise permitted herein, Debtor sells, transfers,
assigns, mortgages, pledges, leases, grants a security interest in or encumbers all of Debtor’s
Intellectual Property now existing or hereafter acquired in violation of the Negative Pledge. For
purposes of this paragraph xvii, licenses or sublicenses by Debtor of its Intellectual Property as
part of a research and development or similar arrangement shall be excluded. Debtor shall provide
Lender with a listing of licenses and sublicenses granted to third parties within ten (10)
days of receipt of reasonable written request for such information.

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     (b) If Debtor is in default, the Lender, at its option, may declare any or all of the
Indebtedness to be immediately due and payable, by notice to Debtor. The accelerated obligations
and liabilities shall bear interest (both before and after any judgment) until paid in full at the
lower of eighteen percent (18%) per annum or the maximum rate not prohibited by applicable law.

     (c) After the occurrence of a default, described in this Section 8, Lender shall have all of
the rights and remedies of a Lender under the Uniform Commercial Code, and under any other
applicable law. Without limiting the foregoing, after default Lender shall have the right to (i)
notify any account debtor of Debtor or any obligor on any instrument which constitutes part of the
Collateral to make payment to the Lender, (ii) with or without legal process, enter any premises
where the Collateral may be and take possession of and remove the Collateral from the premises or
store it on the premises, (iii) sell the Collateral at public or private sale, in whole or in
part, and have the right to bid and purchase at said sale, or (iv) lease or otherwise dispose of
all or part of the Collateral, applying proceeds from such disposition to the obligations then in
default. If requested by Lender, Debtor shall promptly assemble the Collateral and make it
available to Lender at a place to be designated by Lender which is reasonably convenient to both
parties. Lender may also render any or all of the Collateral unusable at Debtor’s premises and may
dispose of such Collateral on such premises without liability for rent or costs. Any notice that
Lender is required to give to Debtor under the Uniform Commercial Code of the time and place of any
public sale or the time after which any private sale or other intended disposition of the
Collateral is to be made shall be deemed to constitute reasonable notice if such notice is given to
the last known address of Debtor at least five (5) days prior to such action.

     (d) Proceeds from any sale or lease or other disposition shall be applied: first, to all costs
of repossession, storage, and disposition including without limitation attorneys’, appraisers’, and
auctioneers’ fees; second, to discharge the obligations then in default; third, to discharge any
other Indebtedness of Debtor to Lender, whether as obligor, endorser, guarantor, surety or
indemnitor; fourth, to expenses incurred in paying or settling liens and claims against the
Collateral; and lastly, to Debtor, if there exists any surplus. Debtor shall remain fully liable
for any deficiency.

     (e) Debtor agrees to pay all reasonable attorneys’ fees and other costs incurred by Lender in
connection with the enforcement, assertion, defense or preservation of Lender’s rights and remedies
under this Agreement, or if prohibited by law, such lesser sum as may be permitted. Debtor further
agrees that such fees and costs shall constitute Indebtedness.

     (f) Lender’s rights and remedies under this Agreement or otherwise arising are cumulative and
may be exercised singularly or concurrently. Neither the failure nor any delay on the part of the
Lender to exercise any right, power or privilege under this Agreement shall operate as a waiver,
nor shall any single or partial exercise of any right, power or privilege preclude any other or
further exercise of that or any other right, power or privilege. SECURED PARTY SHALL NOT BE DEEMED
TO HAVE WAIVED ANY OF ITS RIGHTS UNDER THIS AGREEMENT OR UNDER ANY OTHER AGREEMENT, INSTRUMENT OR
PAPER SIGNED BY DEBTOR UNLESS SUCH WAIVER IS EXPRESSED IN WRITING AND SIGNED BY SECURED PARTY. A
waiver on any one occasion shall not be construed as a bar to or waiver of any right or remedy on
any future occasion.

     (g) DEBTOR AND SECURED PARTY UNCONDITIONALLY WAIVE THEIR RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER DEBT DOCUMENTS,
ANY OF THE INDEBTEDNESS SECURED HEREBY, ANY DEALINGS BETWEEN DEBTOR AND SECURED PARTY RELATING TO
THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS
BEING ESTABLISHED BETWEEN DEBTOR AND SECURED PARTY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL
ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT. THIS WAIVER IS IRREVOCABLE.
THIS WAIVER MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING. THE WAIVER ALSO SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY OTHER DEBT
DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

9. MISCELLANEOUS.

     (a) This Agreement, any Note and/or any of the other Debt Documents may be assigned, in whole
or in part, by Lender without notice to Debtor, and Debtor agrees not to assert against any such
assignee, or assignee’s assigns, any defense, set-

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off, recoupment claim or counterclaim which Debtor has or may at any time have against Lender for any reason whatsoever. Debtor agrees that if
Debtor receives written notice of an assignment from Lender, Debtor will pay all amounts payable
under any assigned Debt Documents to such assignee or as instructed by Lender. Debtor also agrees
to confirm in writing receipt of the notice of assignment as may be reasonably requested by Lender
or assignee. Notwithstanding any assignment by Lender of its rights under this Agreement, no
assignee of such rights shall have any right to request or receive any confidential information of
Debtor unless such assignee first executes and delivers to Debtor a confidential disclosure
agreement substantially in the form of the Confidential Disclosure Agreement between Debtor and
Lender. Notwithstanding any contrary provision in any of the Debt Documents, Lender and any
assignee shall not have any right to assign or otherwise transfer any Debt Document to: (A) any
person or entity organized or domiciled outside the United States; (B) any person or entity with a
primary business activity involving the life sciences or the research, development or sale of
pharmaceutical or medical device products; or (C) any person or entity whose primary business
purpose is the buy-out or acquisition of operating companies.

     (b) All notices to be given in connection with this Agreement shall be in writing, shall be
addressed to the parties at their respective addresses set forth in this Agreement (unless and
until a different address may be specified in a written notice to the other party), and shall be
deemed given (i) on the date of receipt if delivered in hand or by facsimile transmission, (ii)
on the next business day after being sent by express mail, and (iii) on the fourth business day
after being sent by regular, registered or certified mail. As used herein, the term “business day”
shall mean and include any day other than Saturdays, Sundays, or other days on which commercial
banks in Boston, Massachusetts are required or authorized to be closed.

     (c) Lender may fill in all blanks associated with dates in this Agreement or in any
Collateral Schedule consistent with the agreement of the parties.

     (d) Time is of the essence of this Agreement. This Agreement shall be binding, jointly and
severally, upon all parties described as the “Debtor” and their respective heirs, executors,
representatives, successors and assigns, and shall inure to the benefit of Lender, its successors
and assigns.

     (e) This Agreement, its Collateral Schedules and the other Debt Documents constitute the
entire agreement between the parties with respect to the subject matter of this Agreement and
supersede all prior understandings (whether written, verbal or implied) with respect to such
subject matter. THIS AGREEMENT AND ITS COLLATERAL SCHEDULES SHALL NOT BE CHANGED OR TERMINATED
ORALLY OR BY COURSE OF CONDUCT, BUT ONLY BY A WRITING SIGNED BY BOTH PARTIES. Section headings
contained in this Agreement have been included for convenience only, and shall not affect the
construction or interpretation of this Agreement.

     (f) This Agreement shall continue in full force and effect until all of the Indebtedness has
been indefeasibly paid in full to Lender or its assignee. The surrender, upon payment or
otherwise, of any Note or any of the other documents evidencing any of the Indebtedness shall not
affect the right of Lender to retain the Collateral for such other Indebtedness as may then exist
or as it may be reasonably contemplated will exist in the future. This Agreement shall
automatically be reinstated if Lender is ever required to return or restore the payment of all or
any portion of the Indebtedness (all as though such payment had never been made).

     (g) Debtor authorizes Lender to use its name, logo and/or trademark without notice to or
consent by Debtor, in connection with certain promotional materials that Lender may disseminate to
the public. The promotional materials may include, but are not limited to, brochures, video tape,
internet website, press releases, advertising in newspaper and/or other periodicals, lucites, and
any other materials relating the fact that Lender has a financing relationship with Debtor and such
materials may be developed, disseminated and used without Debtor’s review. Nothing herein
obligates Lender to use Debtor’s name, logo and/or trademark, in any promotional materials of
Lender.

     (h) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO
THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE
COLLATERAL.

8

 

IN WITNESS WHEREOF, Debtor and Lender, intending to be legally bound
hereby, have duly executed this Agreement in one or more counterparts, each of
which shall be deemed to be an original, as of the day and year first
aforesaid.

	 	 	 	 	 	 	 
	SECURED PARTY:	 	DEBTOR:
	 
	 	 	 	 	 	 
	General Electric Capital Corporation	 	Cyberkinetics Neurotechnology Systems, Inc.
	 
	 	 	 	 	 	 
	By:

	 	/s/ Diane Earle	 	By:	 	/s/ Timothy R. Surgenor
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Name:

	 	Diane Earle	 	Name:	 	Timothy R. Surgenor
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Title:

	 	Senior Vice President	 	Title:	 	President and Chief Executive
Officer
	 

	 	 
	 	 	 	 
	 

	 	 	 	 	 	(Duly Authorized Officer)
	 

	 	 	 	 	 	 

LIST OF EXHIBITS:

Exhibit A — Form of Note

Exhibit B — Form of Warrant

Exhibit C — Collateral Schedule

Exhibit D — Confidential Disclosure AgreementEx-10.2 Warrant to Purchase Shares of Common Stock

 

Exhibit 10.2

NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE OR DISPOSITION MAY BE EFFECTED
EXCEPT IN COMPLIANCE WITH RULE 144 UNDER SAID ACT OR WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE ACT OR RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND
EXCHANGE COMMISSION.

WARRANT TO PURCHASE 71,301 SHARES OF COMMON STOCK

December 27, 2005

THIS CERTIFIES THAT, for value received, General Electric Capital Corporation (“Holder”) is
entitled to subscribe for and purchase Seventy-One Thousand Three Hundred One (71,301) shares of the fully paid and
nonassessable Common Stock (the “Shares” or the “Stock”) of Cyberkinetics Neurotechnology Systems,
Inc., a Delaware corporation (the “Company”), at the Warrant Price (as hereinafter defined),
subject to the provisions and upon the terms and conditions hereinafter set forth.

1. Warrant Price. The Warrant Price shall initially be
one dollar and 40/100 dollars ($1.40) per share, subject to adjustment as provided in Section 7 below.

2. Conditions to Exercise. The purchase right represented by this Warrant may be exercised
at any time, or from time to time, in whole or in part during the term commencing on the date
hereof and ending at 5:00 P.M. Eastern time on the tenth anniversary of the date of this Warrant.

3. Method of Exercise; Payment; Issuance of Shares; Issuance of New Warrant.

(a) Cash Exercise. Subject to Section 2 hereof, the purchase right represented by this
Warrant may be exercised by the Holder hereof, in whole or in part, by the surrender of this
Warrant (with a duly executed Notice of Exercise in the form attached hereto) at the principal
office of the Company (as set forth in Section 18 below) and by payment to the Company, by check,
of an amount equal to the then applicable Warrant Price per share multiplied by the number of
shares then being purchased. In the event of any exercise of the rights represented by this
Warrant, certificates for the shares of stock so purchased shall be in the name of, and delivered
to, the Holder hereof, or as such Holder may direct (subject to the terms of transfer contained
herein and upon payment by such Holder hereof of any applicable transfer taxes). Such delivery
shall be made within 30 days after exercise of the Warrant and at the Company’s expense and, unless
this Warrant has been fully exercised or expired, a new Warrant having terms and conditions
substantially identical to this Warrant and representing the portion of the Shares, if any, with
respect to which this Warrant shall not have been exercised, shall also be issued to the Holder
hereof within 30 days after exercise of the Warrant.

(b) Net Issue Exercise. Holder may also elect to receive shares equal to the value of
this Warrant (or of any portion thereof remaining unexercised) by surrender of this Warrant at the

 

 

principal office of the Company together with notice of such election, in which event the Company
shall issue to Holder the number of shares of the Company’s Common Stock computed using the
following formula:

			
	        X =	 	Y (A-B)
     A

Where X = the number of shares of Stock to be issued to Holder.

Y = the number of shares of Stock purchasable under this Warrant (at the date of
such calculation).

A = the Fair Market Value of one share of the Company’s Common Stock (at the date
of such calculation).

B = Warrant Price (as adjusted to the date of such calculation).

(c) Fair Market Value. For purposes of this Section 3, Fair Market Value of one share of
the Company’s Stock shall mean:

(i) In the event of an exercise in connection with an Initial Public Offering, the per share
Fair Market Value for the Stock shall be the Offering Price at which the underwriters
initially sell Common Stock to the public multiplied by the number of shares of Stock; or

(ii) The average of the closing bid and asked prices of Common Stock quoted in the
Over-The-Counter Market Summary, the last reported sale price quoted on the Nasdaq National
Market (“NNM”) or on any exchange on which the Common Stock is listed, whichever is
applicable, as published in the New York City Edition of the Wall Street Journal for
the ten (10) trading days prior to the date of determination of Fair Market Value,
multiplied by the number of shares of; or

(iii) In the event of an exercise in connection with a merger, acquisition or other
consolidation in which the Company is not the surviving entity, the per share Fair Market
Value for the Stock shall be the value to be received per share of Common Stock by all
holders of the Common Stock in such transaction as determined by the Board of Directors; or

(iv) In any other instance, the per share Fair Market Value for the Stock shall be as
determined in good faith by the Company’s Board of Directors.
In the event of 3(c)(iii) or 3(c)(iv), above, the Company’s Board of Directors shall prepare
a certificate, to be signed by an authorized officer of the Company, setting forth in
reasonable detail the basis for and method of determination of the per share Fair Market
Value of the Stock. The Board will also certify to the Holder that this per share Fair
Market Value will be applicable to all holders of the Company’s Common Stock. Such
certification must be made to Holder at least thirty (30) business days prior to the
proposed effective date of the merger, consolidation, sale, or other triggering event as
defined in 3(c)(iii) or 3(c)(iv).

(d) Automatic Exercise. To the extent this Warrant is not previously exercised, it shall
be automatically exercised in accordance with Sections 3(b) and 3(c) hereof (even if not
surrendered) immediately before its expiration, involuntary termination or cancellation.

4. Representations and Warranties of Holder and the Company 

-2-

 

(a) Representations and Warranties by Holder. The Holder represents and warrants to the Company
with respect to this purchase as follows:

(i) The Holder has substantial experience in evaluating and investing in private placement
transactions of securities of companies similar to the Company so that the Holder is capable
of evaluating the merits and risks of its investment in the Company and has the capacity to
protect its interests.

(ii) Except for transfers to a Holder’s affiliates, the Holder is acquiring the Warrant and
the Shares of Stock issuable upon exercise of the Warrant (collectively the “Securities”)
for investment for its own account and not with a view to, or for resale in connection with,
any distribution thereof. The Holder understands that the Securities have not been
registered under the Securities Act of 1933, as amended (the “Act”) by reason of a specific
exemption from the registration provisions of the Act which depends upon, among other
things, the bona fide nature of the investment intent as expressed herein.

(iii) The Holder acknowledges that the Securities must be held indefinitely unless
subsequently registered under the Act or an exemption from such registration is available.
The Holder is aware of the provisions of Rule 144 promulgated under the Act.

(iv) The Holder is an “accredited investor” within the meaning of Regulation D promulgated
under the Act.

(v) The Holder has had an opportunity to discuss the Company’s business, management and
financial affairs with its management and an opportunity to review the Company’s facilities.
The Holder understands that such discussions, as well as the written information issued by
the Company, were intended to describe the aspects of the Company’s business and prospects
which the Company believes to be material but were not necessarily a thorough or exhaustive
description.

(b) Company hereby represents and warrants to Holder that, [except as set forth in the schedule
attached to this Warrant as Exhibit A (the “Disclosure Schedule”)], the statements
in the following paragraphs of this Section 4(b) are true and correct (a) as of the date hereof and
(b) except where any such representation and warranty relates specifically to an earlier date, as
of the date of any exercise of this Warrant.

          ( i ) Corporate Organization and Authority. Company (a) is a corporation duly
organized, validly existing, and in good standing in its jurisdiction of incorporation, (b) has the
corporate power and authority to own and operate its properties and to carry on its business as now
conducted and as proposed to be conducted; and (c) is qualified as a foreign corporation in all
jurisdictions where such qualification is required, except where the failure to qualify would not
have a material adverse effect on the Company’s business.

          ( ii ) Corporate Power. Company has all requisite legal and corporate power and
authority to execute, issue and deliver the Warrant, to issue the Common Stock issuable upon
exercise or conversion of the Warrant, and to carry out and perform its obligations under the
Warrant and any related agreements.

-3-

 

          ( iii ) Authorization; Enforceability. All corporate action on the part of Company,
its officers, directors and shareholders necessary for the authorization, execution, delivery and
performance of its obligations under this Warrant and for the authorization, issuance and delivery
of the Warrant and Stock issuable upon exercise of the Warrant has been taken and this Warrant
constitutes the legally binding and valid obligation of Company enforceable in accordance with its
terms.

          ( iv ) Valid Issuance of Warrant and Common Stock. The Warrant has been validly
issued and is free of restrictions on transfer other than restrictions on transfer set forth herein
and under applicable state and federal securities laws. The Common Stock issuable upon conversion
of this Warrant, when issued, sold and delivered in accordance with the terms of this Warrant for
the consideration expressed herein, will be duly and validly issued, fully paid and nonassessable,
and will be free of restrictions on transfer other than restrictions on transfer under this Warrant
and under applicable state and federal securities laws. Subject to applicable restrictions on
transfer, the issuance and delivery of the Warrant and the Common Stock issuable upon conversion of
the Warrant are not subject to any preemptive or other similar rights or any liens or encumbrances
except as specifically set forth in Company’s Certificate of Incorporation or this Warrant. The
offer, sale and issuance of the Warrant and Common Stock, as contemplated by this Warrant, are
exempt from the prospectus and registration requirements of applicable United States federal and
state security laws, and neither Company nor any authorized agent acting on its behalf has or will
take any action hereafter that would cause the loss of such exemption.

          ( v ) No Conflict with Other Instruments. The execution, delivery, and performance
of this Warrant will not result in any violation of, be in conflict with, or constitute a default
under, with or without the passage of time or the giving of notice (a) any provision of Company’s
Certificate of Incorporation or by-laws; (b) any provision of any judgment, decree, or order to
which Company is a party or by which it is bound or an event which results in the creation of any
material lien, charge or encumbrance upon any material assets of Company; (c) any contract,
obligation, or commitment to which Company is a party or by which it is bound; or (d) any statute,
rule, or governmental regulation applicable to Company.

          ( vi ) Capitalization. As of recent date, the authorized capital stock of Company
consists of 100,000,000 shares of Common Stock,
$0.001 par value, of which 27,157,997 were issued
and 25,857,997 were outstanding, and 50,000,000 shares of
Preferred Stock, $0.0001 par value, of which no shares were
issued and outstanding. The outstanding shares have been duly authorized and validly issued
(including, without limitation, issued in compliance with applicable federal and state securities
laws), are fully paid and nonassessable. Company has reserved 71,301 shares of Common Stock for
issuance upon exercise of this Warrant. Except as set forth in Section 4(b) of the Disclosure
Schedule, there are no outstanding warrants, options, conversion privileges, preemptive rights or
other rights or agreements to purchase or otherwise acquire or issue any equity securities or
convertible Securities of Company, nor has the issuance of any of the aforesaid rights to acquire
securities of Company been authorized.

          ( vii) Governmental Consents. No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any federal, state or local
governmental authority on the part of Company is required in connection with the offer, sale or
issuance of the Warrant (and the Stock issuable upon the exercise of this Warrant), or the
consummation of any other transaction contemplated hereby, except for the following: (a) the

-4-

 

           filing of a notice on Form D under the Act and b) the compliance with other applicable state
securities laws, which compliance will have occurred within the appropriate time periods therefore.
The offer, sale and issuance of the Warrant and the shares of Stock in conformity with the terms
of this Warrant are exempt from the registration requirements of the Act and any applicable state
laws.

5. Legends.

(a) Each certificate representing the Securities shall be endorsed with the following legend:

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY
NOT BE TRANSFERRED UNLESS COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID
ACT, A “NO ACTION” LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION WITH RESPECT
TO SUCH TRANSFER, A TRANSFER MEETING THE REQUIREMENTS OF RULE 144 OF THE SECURITIES
AND EXCHANGE COMMISSION, OR (IF REASONABLY REQUIRED BY THE COMPANY) AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY SUCH TRANSFER IS EXEMPT
FROM SUCH REGISTRATION.

The Company need not enter into its stock records a transfer of Securities unless the conditions
specified in the foregoing legend are satisfied. The Company may also instruct its transfer agent
not to allow the transfer of any of the Shares unless the conditions specified in the foregoing
legend are satisfied.

(b) Removal of Legend and Transfer Restrictions. The legend relating to the Act endorsed
on a certificate pursuant to paragraph 5(a) of this Warrant shall be removed and the Company shall
issue a certificate without such legend to the Holder of the Securities if (i) the Securities are
registered under the Act and a prospectus meeting the requirements of Section 10 of the Act is
available or (ii) the Holder provides to the Company an opinion of counsel for the Holder
reasonably satisfactory to the Company, a no-action letter or interpretive opinion of the staff of
the SEC reasonably satisfactory to the Company, or other evidence reasonably satisfactory to the
Company, to the effect that public sale, transfer or assignment of the Securities may be made
without registration and without compliance with any restriction such as Rule 144.

6. Condition of Transfer or Exercise of Warrant. It shall be a condition to any
transfer or exercise of this Warrant that at the time of such transfer or exercise, the Holder
shall provide the Company with a representation in writing that the Holder or transferee is
acquiring this Warrant and the shares of Stock to be issued upon exercise for investment purposes
only and not with a view to any sale or distribution, or will provide the Company with a statement
of pertinent facts covering any proposed distribution. As a further condition to any transfer of
this Warrant or any or all of the shares of Stock issuable upon exercise of this Warrant, other
than a transfer registered under the Act, the Company may request a legal opinion, in form and
substance satisfactory to the Company and its counsel, reciting the pertinent circumstances
surrounding the proposed transfer and stating that such transfer is exempt from the registration
and prospectus delivery requirements of the Act. The Company shall not require Holder to provide
an opinion of counsel if the transfer is to an affiliate of Holder. Each certificate evidencing the
shares issued

-5-

 

upon exercise of the Warrant or upon any transfer of the shares (other than a transfer registered
under the Act or any subsequent transfer of shares so registered) shall, at the Company’s option,
if the Shares are not freely saleable under Rule 144(k) under the Act, contain a legend in form and
substance satisfactory to the Company and its counsel, restricting the transfer of the shares to
sales or other dispositions exempt from the requirements of the Act. As further condition to each
transfer, at the request of the Company, the Holder shall surrender this Warrant to the Company and
the transferee shall receive and accept a Warrant, of like tenor and date, executed by the Company.

Holder shall not have any right to transfer any portion of this Warrant to: (A) any person or
entity organized or domiciled outside the United States; (B) any person or entity with a primary
business activity involving the life sciences or the research, development or sale of
pharmaceutical or medical device products; or (C) any person or entity whose primary business
purpose is the buy-out or acquisition of operating companies.

7. Adjustment for Certain Events. The number and kind of securities purchasable upon the
exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time
upon the occurrence of certain events, as follows:

     (a) Reclassification or Merger. In case of any reclassification or change of
securities of the class issuable upon exercise of this Warrant (other than a change in par value,
or from par value to no par value, or from no par value to par value, or as a result of a
subdivision or combination), or in case of any merger of the Company with or into another
corporation (other than a merger with another corporation in which the Company is the acquiring and
the surviving corporation and which does not result in any reclassification or change of
outstanding securities issuable upon exercise of this Warrant), or in case of any sale of all or
substantially all of the assets of the Company, the Company, or such successor or purchasing
corporation, as the case may be, shall duly execute and deliver to the Holder a new Warrant (in
form and substance satisfactory to the Holder of this Warrant), or the Company shall make
appropriate provision without the issuance of a new Warrant, so that the Holder shall have the
right to receive, at a total purchase price not to exceed that payable upon the exercise of the
unexercised portion of this Warrant, and in lieu of the shares of Stock theretofore issuable upon
exercise of this Warrant, the kind and amount of shares of stock, other securities, money and
property receivable upon such reclassification, change, merger or sale by a Holder of the number of
shares of Stock then purchasable under this Warrant, or in the case of such a merger or sale in
which the consideration paid consists all or in part of assets other than securities of the
successor or purchasing corporation, at the option of the Holder, the securities of the successor
or purchasing corporation having a value at the time of the transaction equivalent to the value of
the Stock purchasable upon exercise of this Warrant at the time of the transaction. Any new
Warrant shall provide for adjustments that shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section 7. The provisions of this subparagraph (a) shall
similarly apply to successive reclassifications, changes, mergers and transfers.

     (b) Subdivision or Combination of Shares. If the Company at any time while this
Warrant remains outstanding and unexpired shall subdivide or combine its outstanding shares of
Common Stock, the Warrant Price shall be proportionately decreased and the number of Shares
issuable hereunder shall be proportionately increased in the case of a subdivision and the Warrant
Price shall be proportionately increased and the number of Shares issuable hereunder shall be
proportionately decreased in the case of a combination.

-6-

 

     (c) Stock Dividends and Other Distributions. If the Company at any time while this
Warrant is outstanding and unexpired shall (i) pay a dividend with respect to Common Stock payable
in Common Stock, then the Warrant Price shall be adjusted, from and after the date of determination
of shareholders entitled to receive such dividend or distribution, to that price determined by
multiplying the Warrant Price in effect immediately prior to such date of determination by a
fraction (A) the numerator of which shall be the total number of shares of Common Stock outstanding
immediately prior to such dividend or distribution, and (B) the denominator of which shall be the
total number of shares of Common Stock outstanding immediately after such dividend or distribution;
or (ii) make any other distribution with respect to Common Stock (except any distribution
specifically provided for in Sections 7(a) and 7(b)), then, in each such case, provision shall be
made by the Company such that the Holder of this Warrant shall receive upon exercise of this
Warrant a proportionate share of any such dividend or distribution as though it were the Holder of
the Common Stock as of the record date fixed for the determination of the shareholders of the
Company entitled to receive such dividend or distribution.

     (d) Adjustment of Number of Shares. Upon each adjustment in the Warrant Price, the
number of Shares purchasable hereunder shall be adjusted, to the nearest whole share, to the
product obtained by multiplying the number of Shares purchasable immediately prior to such
adjustment in the Warrant Price by a fraction, the numerator of which shall be the Warrant Price
immediately prior to such adjustment and the denominator of which shall be the Warrant Price
immediately thereafter.

8. Notice of Adjustments. Whenever any Warrant Price or the kind or number of securities
issuable under this Warrant shall be adjusted pursuant to Section7 hereof, the Company shall
prepare a certificate signed by an officer of the Company setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the method by which such adjustment
was calculated, and the Warrant Price and number or kind of shares issuable upon exercise of the
Warrant after giving effect to such adjustment, and shall cause copies of such certificate to be
mailed (by certified or registered mail, return receipt required, postage prepaid) within thirty
(30) days of such adjustment to the Holder of this Warrant as set forth in Section 17 hereof.

9. Transferability of Warrant. This Warrant is transferable on the books of the Company
at its principal office by the registered Holder hereof upon surrender of this Warrant properly
endorsed, subject to compliance with Section 6 and applicable federal and state securities laws.
The Company shall issue and deliver to the transferee a new Warrant representing the Warrant so
transferred. Upon any partial transfer, the Company will issue and deliver to Holder a new Warrant
with respect to the Warrant not so transferred. Holder shall not have any right to transfer any
portion of this Warrant to any direct competitor of the Company.

10. Registration Rights. If at any time the Company determines to register under the
Securities Act of 1933, as amended, (including pursuant to a demand of any security holder of the
Company exercising registration rights), any of its Common Stock (except securities to be issued
solely in connection with any acquisition of any entity or business, shares issuable solely upon
exercise of stock options, shares issuable solely pursuant to employee benefit plans or shares to
be registered on any registration form that does not permit secondary sales), it must give Holder
written notice of such determination at least 30 days prior to each such filing. If, within 15
days after receipt of such notice, Holder so requests in writing, the Company must include in such

-7-

 

registration statement (to the extent permitted by applicable regulation) all or any part of
Holder’s warrants and shares of Common Stock (or other securities representing Common Stock)
purchasable or purchased from time to time under Holder’s warrants (collectively “Registrable
Securities”) that Holder requests to be registered. Any Registrable Securities that are included
in any underwritten offering under this Section 10 will be sold upon such terms as the managing
underwriters reasonably request, which may include without limitation a cutback in the Registrable
Securities to be registered. If Holder disapproves of the terms of such underwriting, Holder may
elect to withdraw from such underwriting by written notice to the Company and the underwriter.

11. No Fractional Shares. No fractional share of Common Stock will be issued in
connection with any exercise hereunder, but in lieu of such fractional share the Company shall make
a cash payment therefor upon the basis of the Warrant Price then in effect.

12. Charges, Taxes and Expenses. Issuance of certificates for shares of Common Stock upon
the exercise of this Warrant shall be made without charge to the Holder for any United States or
state of the United States documentary stamp tax or other incidental expense with respect to the
issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and
such certificates shall be issued in the name of the Holder.

13. No Shareholder Rights Until Exercise. This Warrant does not entitle the Holder hereof
to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof.

14. Registry of Warrant. The Company shall maintain a registry showing the name and
address of the registered Holder of this Warrant. This Warrant may be surrendered for exchange or
exercise, in accordance with its terms, at such office or agency of the Company, and the Company
and Holder shall be entitled to rely in all respects, prior to written notice to the contrary, upon
such registry.

15. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and, in the case of loss, theft, or destruction, of indemnity reasonably satisfactory to
it, and, if mutilated, upon surrender and cancellation of this Warrant, the Company will execute
and deliver a new Warrant, having terms and conditions substantially identical to this Warrant, in
lieu hereof.

16. Miscellaneous.

(a) Issue Date. The provisions of this Warrant shall be construed and shall be
given effect in all respect as if it had been issued and delivered by the Company on the
date hereof.

(b) Successors. This Warrant shall be binding upon any successors or assigns of the
Company.

(c) Governing Law. This Warrant shall be governed by and construed in accordance
with the laws of the State of Delaware.

(d) Headings. The headings used in this Warrant are used for convenience only and
are not to be considered in construing or interpreting this Warrant.

-8-

 

(e) Saturdays, Sundays, Holidays. If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall be a Saturday or
a Sunday or shall be a legal holiday in the Commonwealth of Massachusetts, then such action
may be taken or such right may be exercised on the next succeeding day not a legal holiday.

(f) Waiver of Jury Trial. Each of the parties hereto hereby waives to the fullest
extent permitted by applicable law, any right it may have to a trial by jury in respect of
any litigation directly or indirectly arising out of, under or in connection with this
Warrant or the Shares.

(g) Attorney’s Fees. In the event of any dispute between the parties concerning the
terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled
to collect from the other party all costs incurred in such dispute, including reasonable
attorney’s fees.

17. No Impairment. The Company will not, by amendment of its Certificate of Incorporation
or any other voluntary action, avoid or seek to avoid the observance or performance of any of the
terms of this Warrant, but will at all times in good faith assist in the carrying out of all such
terms and in the taking of all such action as may be necessary or appropriate in order to protect
the rights of the Holder hereof against impairment.

18. Addresses. Any notice required or permitted hereunder shall be in writing and shall
be mailed by overnight courier, registered or certified mail, return receipt required, and postage
prepaid, or otherwise delivered by hand or by messenger, addressed as set forth below, or at such
other address as the Company or the Holder hereof shall have furnished to the other party.

			
	                    If to the Company:	 	Cyberkinetics Neurotechnology Systems, Inc.

100 Foxborough Blvd., Suite 240

Foxborough, MA 02035

Attn: Chief Financial Officer

			
	                    If to the Holder:	 	General Electric Capital Corporation

83 Wooster Heights Road

Danbury, CT 06810

Attn: Stephen Festa, Credit Manager

Phone: (203) 205-5215

-9-

 

IN WITNESS WHEREOF, Cyberkinetics Neurotechnology Systems, Inc. has caused this Warrant to be
executed by its officers thereunto duly authorized.

Dated as
of December 27, 2005.

 

			
	By:	 	 /s/ Timothy R. Surgenor

 

			
	Name:	 	 Timothy R. Surgenor
 

			
	Title:	 	 President and CEO
 

-10-

 

NOTICE OF EXERCISE

TO:

     The undersigned Warrantholder (“Holder”) elects to acquire shares of Stock (the “Common
Stock”) of ___, (the “Company”), pursuant to the terms of the Warrant dated
___, 2005 (the “Warrant”).

	1.	 	The Holder exercises its rights under the Warrant as set forth below:

			
	                    (          )	 	The Holder elects to purchase                      shares of Common
Stock as provided in Section 3(a) and tenders herewith a check in
the amount of $                     as payment of the purchase price.

			
	                    (          )	 	The Holder elects to convert the purchase rights into shares of
Common Stock as provided in Section 3(b) of the Warrant.

	2.	 	The Holder surrenders the Warrant with this Notice of Exercise.

The Holder represents that it is acquiring the aforesaid shares of Common Stock for investment and
not with a view to or for resale in connection with distribution and that the Holder has no present
intention of distributing or reselling the shares.

Please issue a certificate representing the shares of the Common Stock in the name of the Holder or
in such other name as is specified below:

Name:

Address:
 

Taxpayer I.D.:

	 	 	 	 	 
	 	 	 
	 	 	(Holder)
	 
	 	 	 	 
	 

	 	By:
	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Date:	 	 
	 

	 	 	 	 

-11-

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