Exhibit 10.20

STOCK OPTION EXTENSION AGREEMENT

This Stock Option Extension Agreement (“Agreement”) is entered into and
effective as of June 1, 2006, by and between Cytori Therapeutics, Inc., a
Delaware corporation located at 3020 Callan Road, San Diego, CA 92121 (the
“Company”), and Charles E. Galetto, an employee of the Company with a residence
address of 12445 Figtree Street, San Diego, CA 92131 (the “Optionee”).

WHEREAS, as of May 31, 2006 Optionee shall hold a combined total of 204,997
vested stock options to purchase shares of the Company’s common stock pursuant
to the Company’s 1997 Incentive Stock Option Plan (the “1997 Plan”) and the
Company’s 2004 Employee Stock Option Plan (the “2004 Plan”) (collectively the
“Plans”); and

WHEREAS, subject to certain restrictions and conditions on the sale of shares of
the Company’s common stock held by Optionee, the Company agrees to modify the
Plan agreements to extend the expiration dates for the exercise of stock options
under the Plans; and

NOW, THEREFORE, the Company and the Optionee agree as follows:

(a)  The right of the Optionee to exercise Two Hundred and Four Thousand, Nine
Hundred and Ninety Seven (204,997) fully vested Plan stock options (as specified
on Exhibit I) is hereby extended to December 31, 2007, irrespective of the date
that his services to the Company terminate.

(b)  The exercise extension provided for above is subject to the following
conditions and restrictions on Optionee’s right to sell shares of the company
stock:

(i) Immediately upon termination of Optionee’s employment by the Company as
provided for in the Part-Time Employment Agreement between the Company and
Optionee, Optionee shall execute and sign a full release of all claims against
the Company in the form attached as Exhibit II, which is that Company’s standard
employment related release of claims.

(ii) No shares of common stock of the Company owned by Optionee may be sold by
or on behalf of Optionee during the initial 90-day period from May 15, 2006
through August 12, 2006; (b) Optionee may sell up to 51,250 shares of common
stock owned by him beginning August 13, 2006; (c) and Optionee may sell an
additional 51,249 beginning on November 11th and each ninety days thereafter
until 100% of his shares of common stock by Optionee shall be fully tradable on
May 9, 2007, provided that the restrictions listed above shall be eliminated
once the per-share trading price of the Company’s common stock on the Nasdaq
exchange closes at or above $13 per share, or if the 30 day average daily stock
volume reaches 50,000 shares.

(c)  Except as specifically set forth herein to the contrary, all other terms
and conditions of the Plans and the Plan Agreements shall remain in full force
and effect.

IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto.

OPTIONEE:

 

COMPANY:

 

 

 

Charles E. Galetto

 

Cytori Therapeutics, Inc.

 

 

 

/s/ Charles E. Galetto

 

By:

/s/ Mark E. Saad

 

 

 

Name:  Mark E. Saad

Phone:  858-271-7988

 

Title:    Chief Financial Officer

Fax:      858-695-0781

 

Phone:  (858) 458-0900

E-Mail: galetto@san.rr.com

 

Fax:     (858) 458-0994

 

 

 

Date:  5/24/2006

 

Date:  5/23/2006

 

--------------------------------------------------------------------------------

EXHIBIT I

Participant Statement

As of May 31, 2006

Cytori Therapeutics, Inc.

Charles E. Galetto

Stock Class:  CYTX     |     Currency:  USD ($)

Plan:  1997 Stock Plan

Grant Date/
ID

 

Expiration
Date

 

Grant
Type

 

Shares
Granted

 

Exercise
Price

 

Shares
Outstanding

 

Shares
Exercisable

 

Future
Vesting
Increments

 

Future
Exercisability
Increments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Apr 24, 2000
000000041

 

Apr 24, 2010

 

ISO

 

33333.000

 

3.000

 

33333.000

 

33333.000

 

Fully Vested

 

Fully Exercisable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Apr 24, 2000
000000042

 

Apr 24, 2010

 

 

 

66667.000

 

3.000

 

66667.000

 

66667.000

 

Fully Vested

 

Fully Exercisable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jan 03, 2001
000000265

 

Jan 03, 2011

 

ISO

 

20000.000

 

7.060

 

20000.000

 

20000.000

 

Fully Vested

 

Fully Exercisable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Feb 08, 2002
000000364

 

Feb 08, 2012

 

ISO

 

30000.000

 

3.090

 

30000.000

 

30000.000

 

Fully Vested

 

Fully Exercisable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jan 28, 2003
000000421

 

Jan 28, 2013

 

ISO

 

35000.000

 

4.400

 

35000.000

 

29,166.000

 

729.000 on
Jun 28, 2006

 

729.000 on
Jun 28, 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

729.000 on
Jul 28, 2006

 

729.000 on
Jul 28, 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

729.000 on
Aug 28, 2006

 

729.000 on
Aug 28, 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

729.000 on
Sep 28, 2006

 

729.000 on
Sep 28, 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

729.000 on
Oct 28, 2006

 

729.000 on
Oct 28, 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

There are future increments past this date

 

There are future increments past this date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jun 02, 2004
000000453

 

Jun 02, 2014

 

ISO

 

22603.000

 

4.160

 

22603.000

 

9581.000

 

521.000 on
Jun 02, 2006

 

521.000 on
Jun 02, 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

521.000 on
Jul 02, 2006

 

521.000 on
Jul 02, 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

521.000 on
Aug 02, 2006

 

729.000 on
Aug 02, 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

521.000 on
Sep 02, 2006

 

729.000 on Sep 02, 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

521.000 on
Oct 02, 2006

 

729.000 on
Oct 02, 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

There are future increments past this date

 

There are future increments past this date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jun 02, 2004
000000454

 

Jun 02, 2014

 

 

 

2397.000

 

4.160

 

2397.000

 

2397.000

 

Fully Vested

 

Fully Exercisable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals for Plan:  1997 Stock Plan

 

 

 

 

 

210000.000

 

 

 

210000.000

 

191144.000

 

 

 

 

 

 

--------------------------------------------------------------------------------

EXHIBIT I

Participant Statement

As of May 31, 2006

Cytori Therapeutics, Inc.

Charles E. Galetto

Stock Class:  CYTX     |     Currency:  USD ($)

Plan:  2004 Equity Incentive Plan

Grant Date/
ID

 

Expiration
Date

 

Grant
Type

 

Shares
Granted

 

Exercise
Price

 

Shares
Outstanding

 

Shares
Exercisable

 

Future
Vesting
Increments

 

Future
Exercisability
Increments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Feb 02, 2005
000000481

 

Feb 02, 2015

 

NQSO

 

35000.000

 

3.120

 

35000.000

 

10937.000

 

729.000 on
Jun 02, 2006

 

729.000 on
Jun 02, 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

729.000 on
Jul 02, 2006

 

729.000 on
Jul 02, 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

729.000 on
Aug 02, 2006

 

729.000 on
Aug 02, 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

729.000 on
Sep 02, 2006

 

729.000 on
Sep 02, 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

730.000 on
Oct 02, 2006

 

730.000 on
Oct 02, 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

There are future increments past this date

 

There are future increments past this date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jan 24, 2006
0000.120

 

Jan 24, 2016

 

NQSO

 

35000.000

 

7.040

 

35000.000

 

2916.000

 

729.000 on
Jun 24, 2006

 

729.000 on
Jun 24, 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

729.000 on
Jul 24, 2006

 

729.000 on
Jul 24, 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

730.000 on
Aug 24, 2006

 

730.000 on
Aug 24, 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

729.000 on
Sep 24, 2006

 

729.000 on
Sep 24, 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

729.000 on
Oct 24, 2006

 

729.000 on
Oct 24, 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

There are future increments past this date

 

There are future increments past this date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals for Plan:  2004 Equity Incentive Plan

 

 

 

70000.000

 

 

 

70000.000

 

13853.000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals for CYTX

 

 

 

 

 

280000.000

 

 

 

280000.000

 

204997.000

 

 

 

 

 

 

--------------------------------------------------------------------------------

EXHIBIT II

GENERAL RELEASE AGREEMENT

This General Release Agreement (the “Agreement”) is made and entered into by and
between CYTORI THERAPEUTICS, INC. (Company) and CHARLES E. GALETTO.

WHEREAS, CHARLES E. GALETTO has been employed by CYTORI THERAPEUTICS, INC. as
Senior Vice President, Finance and Administration / Treasurer since April 2000;

WHEREAS, for sound business reasons and in the best interests of CHARLES E.
GALETTO and the Company,  the Company and CHARLES E. GALETTO have agreed to end
CHARLES E. GALETTO’s employment with the Company effective December 15, 2006.

WHEREAS, CHARLES E. GALETTO and the Company do not anticipate that there will be
any disputes between them or legal claims arising out of CHARLES E. GALETTO’s
separation from the Company, the parties nevertheless desire to ensure a
completely amicable parting and to settle fully and finally any and all
differences or claims that might otherwise arise out of CHARLES E. GALETTO’s
employment with the Company relative to the termination of his employment;

NOW, THEREFORE, in consideration of the mutual promises contained herein, it is
agreed as follows:

1.                                       Separation from Employment
Relationship.  The employment relationship shall terminate and cease as of
December 15, 2006 (Separation Date).

2.                                       Consideration.     In consideration of
CHARLES E. GALETTO entering into this General Release Agreement, CYTORI agreed
to the terms of the Stock Option Extension Agreement effective June 1, 2006.

3.                                       Confidentiality.    The parties
understand and agree that this Agreement, and the matters discussed in
negotiating its terms, are entirely confidential.  It is therefore expressly
understood and agreed that CHARLES E. GALETTO will not reveal, discuss, publish
or in any way communicate any of the terms, amount or fact of this Agreement to
any person, organization or other entity, except as may be required by law and
except to Employee’s immediate family members and professional representatives,
who shall be informed of and bound by this confidentiality clause. It is also
agreed and understood that Company may make any disclosure of the terms of the
Agreement as may be required by law.

4.                                       RELEASE OF CLAIMS.              
CHARLES E. GALETTO, FOR HIMSELF AND HIS HEIRS, SUCCESSORS AND ASSIGNS, DOES
HEREBY AGREE TO WAIVE, RELEASE, ACQUIT AND FOREVER DISCHARGE COMPANY, AND
COMPANY’S PARENTS, SUBSIDIARIES, AFFILIATES, AND RELATED ENTITIES OR COMPANIES,
AND ALL PAST AND PRESENT OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES, AGENTS,
PARTNERS, ATTORNEYS, HEIRS, SUCCESSORS, AND ASSIGNS, (HEREINAFTER “RELEASED
PARTIES”) FROM ANY AND ALL CLAIMS, ACTIONS, CHARGES, COMPLAINTS AND CAUSES OF
ACTION (HEREINAFTER COLLECTIVELY REFERRED TO AS “CLAIMS”), OF WHATEVER NATURE,
WHETHER KNOWN OR UNKNOWN, WHICH EXIST OR MAY EXIST ON CHARLES E. GALETTO’S
BEHALF AGAINST RELEASED PARTIES AS OF THE DATE OF THIS AGREEMENT, INCLUDING BUT
NOT LIMITED TO ANY AND ALL TORT CLAIMS, CONTRACT CLAIMS, WAGE CLAIMS, COMMISSION
CLAIMS, BONUS CLAIMS, OVERTIME CLAIMS, WRONGFUL TERMINATION CLAIMS, PUBLIC
POLICY CLAIMS, RETALIATION CLAIMS, STATUTORY CLAIMS, PERSONAL INJURY CLAIMS,
EMOTIONAL DISTRESS CLAIMS, PRIVACY CLAIMS, DEFAMATION CLAIMS, FRAUD CLAIMS, AND
ANY AND ALL CLAIMS ARISING UNDER ANY FEDERAL, STATE OR OTHER GOVERNMENTAL
STATUTE, LAW, REGULATION OR ORDINANCE RELATING TO EMPLOYMENT, INCLUDING BUT NOT
LIMITED TO TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, AS AMENDED, THE AMERICANS
WITH DISABILITIES ACT, THE AGE DISCRIMINATION IN EMPLOYMENT ACT, THE FAMILY AND
MEDICAL LEAVE ACT, THE FAIR LABOR STANDARDS ACT, THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT, THE CALIFORNIA LABOR CODE, AND THE CALIFORNIA FAIR EMPLOYMENT AND
HOUSING ACT COVERING DISCRIMINATION IN EMPLOYMENT, INCLUDING RACE, COLOR,
RELIGIOUS CREED, NATIONAL ORIGIN, ANCESTRY, PHYSICAL OR MENTAL DISABILITY,
MEDICAL CONDITION, MARITAL STATUS, MILITARY STATUS, FAMILY CARE LEAVE,
PREGNANCY, SEX, SEXUAL ORIENTATION, AGE, AND HARASSMENT OR RETALIATION.

5.                                       Waiver of Rights Under Section 1542. 
It is further understood and agreed that CHARLES E. GALETTO hereby expressly
waives and relinquishes any and all claims, rights or benefits that he may have
under California Civil Code section 1542, which provides as follows:

“A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release which if
known by his must have materially affected his settlement with the debtor.”

In connection with such waiver and relinquishment, CHARLES E. GALETTO
acknowledges that he may hereafter discover claims or facts in addition to or
different from those which he now knows or believes to exist with respect to the
matters released herein, and he expressly agrees to fully, finally and forever
settle and release any and all claims, known or unknown, suspected or
unsuspected, which exist or may exist on his behalf against the Released Parties
at the time of execution of this

--------------------------------------------------------------------------------

Agreement, including, but not limited to, any and all claims relating to or
arising from his employment with Company or the termination of that employment.

6.                                       CONTINUING OBLIGATIONS REGARDING
CONFIDENTIAL OR PROPRIETARY INFORMATION. CHARLES E. GALETTO AGREES TO ABIDE BY
ALL THE SURVIVING PROVISIONS OF THE CONFIDENTIALITY AND ASSIGNMENT OF INVENTIONS
AGREEMENT WHICH HE EXECUTED ON APRIL 24, 2000 AND THE NONDISCLOSURE AGREEMENT
WHICH HE EXECUTED ON APRIL 24, 2000, INCLUDING BUT NOT LIMITED TO, PROMISES TO
PROTECT ALL CONFIDENTIAL AND PROPRIETARY INFORMATION OF COMPANY.

7.                                       Release Of Age Discrimination Claims. 
CHARLES E. GALETTO agrees to the release of all known and unknown claims,
including expressly the waiver of any rights or claims arising out of the
Federal Age Discrimination in Employment Act (“ADEA”) 29 U.S.C.  § 621, et seq.,
and in connection with such waiver:

a.             CHARLES E. GALETTO is hereby advised to consult with an attorney
prior to signing this Agreement.

b.             CHARLES E. GALETTO shall have a period of twenty-one (21) days
from the date of receipt of this Agreement in which to consider the terms of the
Agreement.  CHARLES E. GALETTO may at his option execute this Agreement at any
time during the 21-day period.

C.             CHARLES E. GALETTO MAY REVOKE THIS AGREEMENT AT ANY TIME DURING
THE FIRST SEVEN (7) DAYS FOLLOWING HIS EXECUTION OF THIS AGREEMENT, AND THIS
AGREEMENT SHALL NOT BE EFFECTIVE OR ENFORCEABLE UNTIL THE SEVEN-DAY PERIOD HAS
EXPIRED.

8.                                       Employer Property And Trade Secrets. 
CHARLES E. GALETTO will return to Company any and all of its property and
documents which he may have in his possession. Including but not limited to the
following:

·                  Any proprietary devices and equipment, cameras, computers,
video equipment etc.

·                  Any Company information, including electronic files, hard
copies etc.

CHARLES E. GALETTO further agrees never to disclose to any person or entity any
confidential or proprietary information of or about Company, except upon the
express authorization and consent of Company.

9.                                       Non-Disparagement.  CHARLES E. GALETTO
agrees that he will not at any time defame, disparage or impugn the reputation
of Company or any employees of Company in any future communications with any
third-party or entity.  “Disparage,” as used in this Agreement, means to make
any statement, written or oral, that casts the Company in a negative light of
any kind, or implies or attributes any negative quality to the Company.

10.                                 Ownership of Claims.  CHARLES E. GALETTO
represents and warrants that he is the sole and lawful owner of all rights,
title and interest in and to all released matters, claims and demands as herein
contained and that there has been no assignment or other transfer of any
interest of any claim or demand which he may have against Company.

11.                                 Successors and Assigns.  It is further
expressly understood and agreed by CHARLES E. GALETTO that this Agreement and
all of its terms shall be binding upon each party’s respective representatives,
heirs, executors, administrators, successors and assigns.

12.                               No Admission Of Wrongdoing. This Agreement
shall not in any way be construed as an admission by the released parties of any
acts of wrongdoing whatsoever against CHARLES E. GALETTO or any other person.

13.                               Entire Agreement. This General Release
Agreement sets forth the entire agreement between the parties hereto, and fully
supersedes any and all prior agreements or understandings between the parties
hereto pertaining to the subject matter hereof.

14.                               Venue. Any proceeding brought to enforce this
agreement shall be brought in San Diego Co., CA.

15.                                 Construction.  If any provision herein shall
be deemed void, invalid, unenforceable, or otherwise stricken, in whole or in
part, this Agreement shall be deemed amended to delete or modify, as necessary,
the offending provision or provisions and to alter the bounds thereof in order
to render it valid and enforceable. The parties hereby agree to substitute a
valid provision that will most closely approximate the economic/legal effect and
intent of the invalid provision. The parties agree to execute any additional
documents that may reasonably be necessary to effectuate the purposes of this
agreement.

I HAVE READ AND CAREFULLY CONSIDERED THIS SEPARATION AGREEMENT AND GENERAL
RELEASE, AND HAVE HAD A REASONABLE PERIOD OF TIME TO CONSIDER THIS AGREEMENT
PRIOR TO SIGNING.  COMPANY HAS INDICATED THAT I AM FREE TO DISCUSS THIS
AGREEMENT WITH MY FAMILY AND HAVE IT REVIEWED BY MY ATTORNEY PRIOR TO SIGNING IF
I SO DESIRE. I AM SIGNING THIS AGREEMENT FREELY AND VOLUNTARILY.

--------------------------------------------------------------------------------

 

Signed:

 

 

 

Date:

 

 

 

CHARLES E. GALETTO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CYTORI THERAPEUTICS, INC.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Signed:

 

 

 

Date:

 

 

 

MARK E. SAAD

 

 

 

 

 

CFO

 

 

 

 

 

--------------------------------------------------------------------------------