Exhibit 10.34


1,005,212 Shares


CYTORI THERAPEUTICS, INC.


Common Stock


PLACEMENT AGENCY AGREEMENT


August 9, 2006


Piper
Jaffray & Co.


U.S.
Bancorp Center


800
Nicollet Mall


Minneapolis, Minnesota 
55402


Ladies and Gentlemen:


Cytori Therapeutics, Inc., a
Delaware corporation (the “Company”),
proposes, subject to the terms and conditions stated herein, to issue
and sell to certain investors located by
you or set forth on Schedule III attached hereto (each an “Investor” and, collectively, the “Investors”), up to an aggregate of
1,005,212 shares (the “Shares”)
of the Company’s common stock, $0.001 par value per share (the “Common Stock”).  The Company desires to engage Piper Jaffray
& Co. as its exclusive placement agent (the “Placement Agent”) in connection with such issuance and
sale.  The Shares are more fully
described in the Registration Statement (as hereinafter defined).


1.             Agreement
to Act as Placement Agent; Delivery and Payment.  On
the basis of the representations, warranties and agreements of the Company
herein contained, and subject to the terms and conditions set forth in this
Agreement:


(a)           The
Company hereby engages the Placement Agent to act as its exclusive placement
agent in connection with the issuance and sale, by the Company, of Shares to
the Investors and the Placement Agent hereby agrees, as an agent of the
Company, to use its best efforts to solicit offers to purchase the Shares from
the Company upon the terms and conditions set forth in the Prospectus (as
hereinafter defined).  Upon the
occurrence of the Closing (as hereinafter defined), the Company shall pay to
the Placement Agent, by wire transfer of immediately available funds payable to
the order of the Placement Agent, to an account designated by the Placement
Agent, an aggregate of six and one-half percent (6.5%) of the gross proceeds
received by the Company at Closing from its sale of the Shares, provided,
however, that with respect to up to 33.33% of the aggregate number of Shares
sold in the offering to those Investors whose names are set forth on Schedule
III attached hereto, the fee to be paid to the Placement Agent shall equal
three and one-quarter percent (3.25%) of the gross proceeds received by the
Company at Closing from its sale of such Shares to such Investors.  Prior to the earlier of (i) the date on which
this Agreement is terminated and (ii) the Closing Date (as hereinafter
defined), the Company shall not, without the prior written consent of the
Placement Agent, solicit or accept offers to purchase Shares of the Company
(other than pursuant to the exercise of options or warrants to purchase shares
of Common Stock that are outstanding at the date hereof) otherwise than through
the Placement Agent in accordance herewith.









 



(b)           The
Company expressly acknowledges and agrees that the Placement Agent’s
obligations hereunder are on a best efforts basis and this Agreement shall not
give rise to a commitment by the Placement Agent or any of its affiliates to
underwrite or purchase any of the Shares or otherwise provide any financing,
and the Placement Agent shall have no authority to (and agrees not to purport
to) bind the Company in respect of the sale of any Shares.  The sale of the Shares shall be made pursuant
to the subscription terms in the form included as Exhibit A hereto (the “Subscription Terms”). 
The Company shall have the sole right to accept offers to purchase the
Shares and may reject any such offer in whole or in part, and, except as set
forth in Section 4 hereof, in no event shall fees be payable on any proposed
purchase which is rejected for any reason or which otherwise does not close for
any reason.  Notwithstanding the
foregoing, it is understood and agreed that the Placement Agent or any of its
affiliates may, solely at their discretion and without any obligation to do so,
purchase Shares as principals; provided, however,
that any such purchases by the Placement Agent (or its affiliates) shall be
fully disclosed to the Company and approved by the Company in accordance with
the previous sentence.


(c)           Concurrently with the execution and delivery
of this Agreement, the Company, the Placement Agent and Lowenstein Sandler PC,
as escrow agent (the “Escrow
Agent”), shall enter into an
escrow agreement (the “Escrow
Agreement”), pursuant to
which an escrow account (the “Escrow
Account”) will be
established for the benefit of the Company and the Investors who desire to
settle their purchase through the facilities of The Depository Trust Company’s
DWAC system.  Prior to the Closing Date
(as hereinafter defined), each such Investor shall deposit into the Escrow
Account an amount equal to the product of (x) the number of Shares such
Investor has agreed to purchase and (y) the purchase price per share as set
forth on the cover page of the Prospectus 
(the “Purchase
Amount”).  The aggregate of all such Purchase Amounts is
herein referred to as the “Escrow
Funds.” On the Closing Date,
the Escrow Agent will disburse the Escrow Funds from the Escrow Account to the
Company and the Placement Agent as provided in the Escrow Agreement, and the
Company shall cause its transfer agent to deliver the Shares purchased by such
Investors, which delivery may be made through the facilities of The Depository Trust Company’s DWAC system.


(d)           Payment
of the purchase price for, and delivery of, the Shares shall be made at a
closing (the “Closing”) at the offices of
Heller Ehrman LLP, counsel for the Company, located at 4350 La Jolla Village
Drive, 7th Floor, San Diego, California, at 10:00 a.m., Pacific Daylight Time,
on the third or fourth business day (as permitted under Rule 15c6-1 under the
Securities Exchange Act of 1934, as amended (collectively with the rules and
regulations promulgated thereunder, the “Exchange Act”))
after the determination of the public offering price of the Shares (such date
of payment and delivery being herein called the “Closing Date”).  All such actions taken at the Closing shall
be deemed to have occurred simultaneously. 
No Shares which the Company has agreed to sell pursuant to this
Agreement and the Subscription Terms shall be deemed to have been purchased and
paid for, or sold by the Company, until such Shares shall have been delivered
to the Investor thereof against payment therefor by such Investor.  If the Company shall default in its
obligations to deliver Shares to an Investor whose offer it has accepted, the
Company shall indemnify and hold the Placement Agent harmless against any loss,
claim or damage arising from or as a result of such default by the Company.


(e)           Any Investor not settling its purchase of Shares
pursuant to Section 1(c) above shall deposit its respective Purchase
Amount into an account or accounts established with the Placement Agent.  On the Closing Date, the Placement Agent shall, with respect to each such Investor, cause the Purchase Amount
for such Shares to be wired from such accounts to an account designated by the
Company in exchange for the release of such Investor’s Shares.


2.             Representations
and Warranties of the Company.  The Company represents and warrants to
the Placement Agent and the Investors as follows:



 2
 






 



(a)           Registration Statement and Prospectus.   The
Company has prepared and filed with the Securities and Exchange Commission (the
“Commission”) a registration
statement on Form S-3 (File No. 333-134129) under the Securities Act of 1933,
as amended, and the rules and regulations (the “Rules and
Regulations”) of the Commission thereunder (collectively, the “Securities Act”), and such amendments to such registration
statement as may have been required to the date of this Agreement.  Such
registration statement has been declared effective by the Commission.  Such registration statement, at any given
time, including amendments thereto at such time, the exhibits and any schedules
thereto at such time, the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the Securities Act at such time and the documents
and information otherwise deemed to be a part thereof or included therein by
Rule 430A, 430B or 430C under the Securities Act or otherwise pursuant to the
Securities Act at such time, is herein called the “Registration Statement.” 
Any registration statement
filed by the Company pursuant to Rule 462(b) under the Securities Act is called
the “Rule 462(b) Registration
Statement” and, from and
after the date and time of filing of the Rule 462(b) Registration Statement,
the term “Registration Statement” shall include the Rule 462(b)
Registration Statement.


The Company proposes to file with the Commission
pursuant to Rule 424 under the Securities Act a final prospectus supplement
relating to the Shares to a form of prospectus included in the Registration
Statement relating to the Shares in the form heretofore delivered to the
Placement Agent.  Such prospectus
included in the Registration Statement at the time it was declared effective by
the Commission or in the form in which it has been most recently filed with the
Commission on or prior to the date of this Agreement is hereinafter called the “Base Prospectus.” 
Such supplemental form of prospectus, in the form in which it shall be
filed with the Commission pursuant to Rule 424(b)(including the Base Prospectus
as so supplemented) is hereinafter called the “Prospectus.”  Any reference herein to the Base Prospectus
or the Prospectus or to any amendment or supplement to any of the foregoing
shall be deemed to refer to and include any documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Securities Act as of the date
of such prospectus, and, in the case of any reference herein to the Prospectus,
also shall be deemed to include any documents incorporated by reference
therein, and any supplements or amendments thereto, filed with the Commission
after the date of filing of the Prospectus under Rule 424(b) under the
Securities Act, and prior to the termination of the offering of the Shares by
the Placement Agent.


For purposes of this Agreement, all references to the
Registration Statement, the Rule 462(b) Registration Statement, the Base
Prospectus, the Prospectus or any amendment or supplement to any of the
foregoing shall be deemed to include the copy filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval System (“EDGAR”).   Any
reference to the Prospectus shall be deemed to refer to and include any documents
incorporated by reference therein pursuant to Form S-3 under the Securities Act
as of the date of the Prospectus.  Any
reference to any amendment or supplement to the Prospectus shall be deemed to
refer to and include any document filed under the Exchange Act, after the date
of the Prospectus and before the date of such amendment or supplement and
incorporated by reference in the Prospectus; and any reference to any amendment
to the Registration Statement shall be deemed to include any annual report of the
Company on Form 10-K filed with the Commission pursuant to Section 13(a) or
15(d) of the Exchange Act after the Effective Date and before the date of such
amendment that is incorporated by reference in the Registration Statement.


The Company and the transactions contemplated by this
Agreement meet the requirements and comply with the conditions for the use of
Form S-3 under the Securities Act.  The
offering of the Shares by the Company complies with the applicable requirements
of Rule 415 under the Securities Act.   
The Company has complied to the
Commission’s satisfaction with all requests of the Commission for additional or
supplemental information. The Registration Statement has become
effective under the Securities Act.  No
stop order preventing or suspending use of the Registration Statement or the
Prospectus or the effectiveness of the Registration Statement, has been issued
by the Commission, and no



 3
 






 



proceedings
for such purpose have been instituted or are pending or, to the Company’s
knowledge, are contemplated or threatened by the Commission.


(b)           Compliance with Registration Requirements.  Each part of the Registration Statement and
any post-effective amendment thereto, at the time such part became effective (including each deemed effective date with
respect to the Placement Agent pursuant to Rule 430B under the Securities Act)
and as of the Closing Date, complied and will comply, in all material respects,
with the requirements of the Securities Act, the Rules and Regulations and the
Exchange Act and did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The Prospectus (or any
amendment or supplement to the Prospectus), at the time of filing or the time
of first use within the meaning of the Rules and Regulations and as of the
Closing Date, complied and will comply, in all material respects, with the
requirements of the Securities Act, the Rules and Regulations and the Exchange
Act and did not and will not contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, that the Company makes no
representations or warranty in this paragraph with respect to any Placement
Agent Information (as defined in Section 7).


(c)           Disclosure
Package.  As of the Time of
Sale (as hereinafter defined) and as of the Closing Date, neither (A) any
Issuer General Free Writing Prospectus(es)(as defined below) issued at or prior
to the Time of Sale, the Statutory Prospectus (as hereinafter defined) and the
information included on Exhibit F hereto (which information the
Placement Agent hereby agrees to convey orally to prospective purchasers at or
prior to confirming sales of the shares in the offering), all considered
together (collectively, the “Disclosure
Package”), nor (B) any individual Issuer Limited-Use Free Writing
Prospectus (as hereinafter defined), when considered together with the
Disclosure Package, included or will include any untrue statement of a material
fact or omitted or will omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, that
the Company makes no representations or warranty in this paragraph with respect
to any Placement Agent Information.  No
statement of material fact included in the Prospectus has been omitted from the
Disclosure Package and no statement of material fact included in the Disclosure
Package that is required to be included in the Prospectus has been omitted
therefrom. As used in this paragraph and elsewhere in this Agreement:


(1)          “Time of Sale” with
respect to any Investor, means 2:00 p.m. Pacific Daylight Time on the date of
this Agreement.


(2)          “Statutory Prospectus” as of any time means the prospectus that is
included in the Registration Statement immediately prior to the Time of Sale,
including any document incorporated by reference therein.  For purposes of this definition, information
contained in a form of prospectus that is deemed retroactively to be a part of
the Registration Statement pursuant to Rule 430B under the Securities Act shall
be considered to be included in the Statutory Prospectus as of the actual time
that form of prospectus is filed with the Commission pursuant to Rule 424(b)
under the Securities Act.


(3)          “Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as defined in Rule 433
under the Securities Act (“Rule 433”),
relating to the Shares in the form filed or required to be filed with the
Commission or, if not required to be filed, in the form retained in the Company’s
records pursuant to Rule 433(g) under the Securities Act.



 4
 






 



(4)          “Issuer General Free Writing
Prospectus” means any Issuer
Free Writing Prospectus that is intended for general distribution to
prospective investors as identified on Schedule I hereto, and does not
include a “bona fide electronic road show” as defined in Rule 433.


(5)          “Issuer Limited-Use Free Writing Prospectus” means any
Issuer Free Writing Prospectus that is not an Issuer General Free Writing
Prospectus, including any “bona fide electronic road show” as defined in Rule
433, that is made available without restriction pursuant to Rule 433(d)(8)(ii),
even though not required to be filed with the Commission.


(d)           Conflict with Registration Statement.    Each Issuer Free Writing Prospectus, as of
its issue date and at all subsequent times through the completion of the
offering and sale of the Shares or until any earlier date that the Company
notified or notifies the Placement Agent, did not, does not and will not
include any information that conflicted, conflicts or will conflict with the
information contained in the Registration Statement, any Statutory Prospectus
or the Prospectus including any document incorporated by reference therein and
any prospectus supplement deemed to be a part thereof that has not been
superseded or modified; provided, that the Company makes no representations or
warranty in this paragraph with respect to any Placement Agent Information.


(e)           Distributed Materials.        The Company
has not, directly or indirectly, distributed and will not distribute any
prospectus or other offering material in connection with the offering and sale
of the Shares other than the Disclosure Package or the Prospectus, and other
materials, if any, permitted under the Securities Act to be distributed and
consistent with Section 4(d) below. The Company will file with the
Commission all Issuer Free Writing Prospectuses required to be filed in the
time required under Rule 433(d) under the Securities Act. The Company has
satisfied or will satisfy the conditions in Rule 433 under the Securities Act
to avoid a requirement to file with the Commission any electronic road show.
The parties hereto agree and understand that the content of any and all “road
shows” related to the offering of the Shares contemplated hereby is solely the
property of the Company.


(f)            Not an Ineligible Issuer. 
(1) At the earliest time after the filing of the Registration Statement
that the Company or another offering participant made a bona fide offer (within
the meaning of Rule 164(h)(2) under the Securities Act) of the Shares and (2)
at the date hereof, the Company was not and is not an “ineligible issuer,” as
defined in Rule 405 under the Securities Act, without taking account of any
determination by the Commission pursuant to Rule 405 that it is not necessary that
the Company be considered an ineligible issuer, including, without limitation,
for purposes of Rules 164 and 433 under the Securities Act with respect to the
offering of the Shares as contemplated by the Registration Statement.


(g)           Incorporated Documents. 
The documents incorporated by reference in the Disclosure Package and in
the Prospectus, when they became effective or were filed with the Commission,
as the case may be, conformed in all material respects to the requirements of
the Securities Act or the Exchange Act, as applicable, and were filed on a
timely basis with the Commission and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.


(h)           Due Incorporation. 
The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation, with the corporate power and authority to own its properties and
to conduct its business as currently being carried on and as described in the
Registration Statement, the Disclosure Package and the Prospectus and is duly



 5
 






 



qualified to transact business as a foreign
corporation in good standing under the laws of each other jurisdiction in which
its ownership or leasing of property or the conduct of its business requires
such qualification, except where the failure to be so qualified and in good
standing would not, individually or in the aggregate, result in any material
adverse effect upon, or change in, the general affairs, business, operations,
prospects, properties, financial condition, or results of operations of the
Company taken as a whole (a “Material
Adverse Effect”).


(i)            Capitalization.  All
of the issued and outstanding shares of capital stock of the Company, including
the outstanding shares of Common Stock, have been duly authorized and validly
issued and are fully paid and nonassessable, have been issued in compliance
with all federal and state securities laws, were not issued in violation of or
subject to any preemptive rights or other rights to subscribe for or purchase
or acquire any securities of the Company that have not been waived in writing;
and the holders thereof are not subject to personal liability by reason of
being such holders.


(j)            The Shares.  The
Shares have been duly and validly authorized by the Company and, when issued,
delivered and paid for in accordance with the terms of this Agreement and the
Subscription Terms, will have been duly and validly issued and will be fully
paid and nonassessable and will not be subject to any statutory or contractual
preemptive rights or other rights to subscribe for or purchase or acquire any
shares of Common Stock of the Company, which have not been waived or complied
with.


(k)           Description of Capital Stock.           The
capital stock of the Company, including the Common Stock, conforms as to legal
matters to the description thereof, if any, contained in the Registration Statement,
the Statutory Prospectus and the Prospectus, and as of the date thereof, the
Company had authorized capital stock as set forth therein.  The Shares are in due and proper form and the
holders of the Shares will not be subject to personal liability by reason of
being such holders.


(l)            No Registration Rights. 
Except as otherwise described in the Registration Statement, the
Disclosure Package and in the Prospectus, there are no preemptive rights or
other rights to subscribe for or to purchase, or any restriction upon the
voting of transfer of, any shares of Common Stock pursuant to the Company’s
charter, by-laws or any agreement or other instrument to which the Company is a
party or by which the Company is bound. 
There are no contracts, agreements or understandings between the Company
and any person granting such person the right (other than rights which have
been waived in writing in connection with the transactions contemplated by this
Agreement or otherwise satisfied) to require the Company to file a registration
statement under the Securities Act with respect to any securities of the
Company owned or to be owned by such person or to require the Company to
include such securities in the securities registered pursuant to the
Registration Statement or in any securities being registered pursuant to any
other registration statement filed by the Company under the Securities Act.


(m)          Subsidiaries. The Company has no significant subsidiaries
(as such term is defined in Rule 1-02(w) of Regulation S-X promulgated by the
Commission).


(n)           Due Authorization and Enforceability.    Each of this Agreement and the
individualized Subscription Terms has been duly authorized, executed and
delivered by the Company, and constitutes a valid, legal and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except as rights to indemnity hereunder may be limited by federal or state
securities laws and except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity.



 6














 


(o)           No Conflict.  The
execution, delivery and performance by the Company of this Agreement and the
individualized Subscription Terms and the consummation of the transactions
herein contemplated, including the issuance and sale by the Company of the
Shares, will not conflict with or result in a breach or violation of, or
constitute a default under (nor constitute any event which with notice, lapse
of time or both would result in any breach or violation of or constitute a
default under) (i) the provisions of the charter or by-laws of the Company,
(ii) any material indenture, mortgage, deed of trust, bank loan or credit
agreement or other evidence of indebtedness, or any license, lease, contract or
other agreement or instrument to which the Company is a party or by which it or
any of its properties may be bound or affected, or (iii) any federal,
state, local or foreign law, regulation or rule or any decree, judgment or
order applicable to the Company.


(p)           No Consents Required. 
No approval, authorization, consent or order of or filing with any
federal, state, local or foreign governmental or regulatory commission, board,
body, authority or agency, or of or with any self-regulatory organization or
other non-governmental regulatory authority (including, without limitation, the
National Association of Securities Dealers Automated Quotation (“Nasdaq”) Global Market, or approval of the stockholders of
the Company (including such as may be required pursuant to Rule 4350 of the
Nasdaq Marketplace Rules), is required in connection with the issuance and sale
of the Shares or the consummation by the Company of the transactions
contemplated hereby other than (i) as may be required under the Securities
Act, (ii) any necessary qualification of the Shares under the securities
or blue sky laws of the various jurisdictions in which the Shares are being
offered by the Placement Agent and (iii) under the rules and regulations
of the National Association of Securities Dealers, Inc. (“NASD”).  The Company
has full power and authority to enter into this Agreement and the
individualized Subscription Terms and to authorize, issue and sell the Shares
as contemplated by this Agreement and the individualized Subscription Terms.


(q)           No Violation.  The
Company is not in breach or violation of or in default (nor has any event
occurred which with notice, lapse of time or both would result in any breach or
violation of, or constitute a default) (i) under the provisions of its charter
or bylaws or (ii) in the performance or observance of any term, covenant,
obligation, agreement or condition contained in any indenture, mortgage, deed
of trust, bank loan or credit agreement or other evidence of indebtedness, or
any license, lease, contract or other agreement or instrument to which the
Company is a party or by which it or any of its properties may be bound or
affected, or (iii) in the performance or observance of any statute, law, rule,
regulation, ordinance, judgment, order or decree of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or any of its properties, as applicable
(including, without limitation, those administered by the Food and Drug
Administration of the U.S. Department of Health and Human Services (the “FDA”) or by any foreign, federal, state or local
governmental or regulatory authority performing functions similar to those
performed by the FDA), except, with respect to clauses (ii) and (iii) above, to
the extent any such contravention has been waived or would not result in a
Material Adverse Effect.


(r)            Absence of Material Changes. Subsequent to the respective
dates as of which information is given in the Disclosure Package (and taking
into account any updates included within the Disclosure Package), (a) the Company has not sustained any loss
or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, (b) the Company has not incurred any material liability or obligation,
direct or contingent, or entered into any material transaction not in the
ordinary course of business; (c) the Company has not purchased any of the
Company’s outstanding capital stock, or declared, paid or otherwise made any
dividend or distribution of any kind on the Company’s capital stock; and (d)
there has not been any change in the capital stock (other than a change in the
number of outstanding shares of Common Stock due to the issuance of shares upon
the exercise of outstanding options or



 7
 






 



warrants or the conversion of convertible indebtedness), or material
change in the short-term debt or long-term debt of the Company
(other than upon conversion of convertible indebtedness) or any issue of
options, warrants, convertible securities or other rights to purchase the
capital stock (other than grants of stock options under the Company’s stock
option plans existing on the date hereof) of the Company, or any Material
Adverse Effect.


(s)           Permits.  The Company
possesses, and is operating in compliance in all material respects with, all
necessary franchises, licenses, grants, permits, easements, authorizations,
consents, certificates and orders of any governmental or self-regulatory body
required for the conduct of its business and all such franchises, licenses,
grants, permits, easements, authorizations, consents, certificates and orders
are valid and in full force and effect. 
The Company has made all necessary filings required under any federal,
state, local or foreign law, regulation or rule (including, without limitation, those from the FDA, and any other
foreign, federal, state or local government or regulatory authorities
performing functions similar to those performed by the FDA), in order to
conduct its business.  The Company has
not received notice of any proceedings relating to revocation or modification
of, any such franchise, license, grant, permit, easement, authorization,
consent, certificate and order except where such violation, default or
proceeding would not, individually or in the aggregate, have a Material Adverse
Effect.


(t)            Legal Proceedings. There are no legal or governmental
proceedings pending or, to the Company’s knowledge, threatened or contemplated
to which the Company is or would be a party or of which any of its properties
is or would be subject at law or in equity, before or by any federal, state,
local or foreign governmental or regulatory commission, board, body, authority
or agency, or before or by any self-regulatory organization or other
non-governmental regulatory authority (including, without limitation, Nasdaq),
except (i) as described in the Registration Statement, the Prospectus, and the
Disclosure Package, (ii) any such proceeding, which if resolved adversely to
the Company, would not result in a judgment, decree or order having,
individually or in the aggregate, a Material Adverse Effect or (iii) any such
proceeding that would not prevent or materially and adversely affect the
ability of the Company to consummate the transactions contemplated hereby. The
Disclosure Package contains in all material respects the same description of
the foregoing matters contained in the Prospectus.


(u)           Statutes; Contracts. 
There are no statutes or regulations applicable to the Company or
contracts or other documents of the Company which are required to be described
in the Registration Statement, the Disclosure Package or the Prospectus or
filed as exhibits to the Registration Statement by the Securities Act or by the
Rules and Regulations which have not been so described or filed.


(v)           Good Title to Property. 
The Company has good and valid title to all property (whether real or
personal) described in the Registration Statement, the Disclosure Package and
the Prospectus as being owned by it, in each case free and clear of all liens,
claims, security interests, other encumbrances or defects except such as are
described in the Registration Statement, the Disclosure Package and the
Prospectus and those that would not, individually or in the aggregate materially
affect the value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company.  All of the property described in the
Registration Statement, the Disclosure Package and the Prospectus as being held
under lease by the Company is held thereby under valid, subsisting and
enforceable leases, without any liens, restrictions, encumbrances or claims,
except those that, individually or in the aggregate, are not material and
do not materially interfere with the use made and proposed to be made of such
property by the Company.


(w)          Intellectual Property Rights.  The Company owns, or has obtained valid and
enforceable licenses for, or other rights to use, the inventions, patent
applications, patents, trademarks (both registered and unregistered),
tradenames, copyrights, trade secrets and other proprietary information



 8
 






 



described in the Registration Statement, the
Disclosure Package and the Prospectus as being owned or licensed by it or which
are necessary for the conduct of its business, except where the failure to own,
license or have such rights would not, individually or in the aggregate, result
in a Material Adverse Effect (collectively, “Intellectual Property”); except as described in the
Registration Statement, the Disclosure Package and the Prospectus
(i) there are no third parties who have or, to the Company’s knowledge,
will be able to establish rights to any Intellectual Property, except for the
ownership rights of the owners of the Intellectual Property which is licensed
to the Company; (ii) to the Company’s knowledge, there is no infringement
by third parties of any Intellectual Property; (iii) there is no pending
or, to the Company’s knowledge, threatened action, suit, proceeding or claim by
others challenging the Company’s rights in or to, or the validity,
enforceability, or scope of, any Intellectual Property owned by or licensed to
the Company, and the Company is unaware of any facts which could form a
reasonable basis for any such claim; (iv) there is no pending or, to the
Company’s knowledge, threatened action, suit, proceeding or claim by others
that the Company infringes or otherwise violates any patent, trademark,
copyright, trade secret or other proprietary rights of others, and the Company
is unaware of any facts which could form a reasonable basis for any such claim;
(v) to the Company’s knowledge, there is no patent or patent application
that contains claims that interfere with the issued or pending claims of any of
the Intellectual Property; and (vi) to the Company’s knowledge, each
issued patent was validly issued under the laws of the country that issued it.


(x)            Financial Statements.  The
financial statements of the Company, together with the related schedules and
notes thereto, set forth or incorporated by reference in the Registration
Statement, the Disclosure Package and the Prospectus comply in all material
respects with the applicable requirements of the Securities Act and the
Exchange Act, as applicable, and present fairly in all material respects (i)
the financial condition of the Company, taken as a whole, as of the dates
indicated and (ii) the consolidated results of operations, stockholders’ equity
and changes in cash flows of the Company, taken as a whole, for the periods therein
specified; and such financial statements and related schedules and notes
thereto have been prepared in conformity with United States generally accepted
accounting principles, consistently applied throughout the periods involved
(except as otherwise stated therein and subject, in the case of unaudited
financial statements, to the absence of footnotes and normal year-end
adjustments).  There are no other
financial statements (historical or pro forma) that are required to be included
in the Registration Statement, the Disclosure Package and the Prospectus; and
the Company does not have any material liabilities or obligations, direct or
contingent (including any off-balance sheet obligations), not disclosed in the
Registration Statement, the Disclosure Package and the Prospectus; and all
disclosures contained in the Registration Statement, the Disclosure Package and
the Prospectus regarding “non-GAAP financial measures” (as such term is defined
by the rules and regulations of the Commission) comply with Regulation G
of the Exchange Act and Item 10(e) of Regulation S-K of the
Commission, to the extent applicable, and present fairly the information shown
therein and the Company’s basis for using such measures.


(y)           Independent Accountants. 
To the Company’s knowledge, KPMG LLP, who have certified certain of the
financial statements of the Company, is (i) an independent public accounting firm within the meaning of the Securities Act
and the Rules and Regulations, (ii) a registered public accounting firm (as
defined in Section 2(a)(12) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”)), and (iii) not in violation of the auditor
independence requirements of the Sarbanes-Oxley Act.


(z)            Taxes.  The Company
has timely filed all federal, state, local and foreign income and franchise tax
returns (or timely filed applicable extensions therefore) that have been
required to be filed and are not in default in the payment of any taxes which
were payable pursuant to said returns or any assessments with respect thereto,
other than any which the Company is contesting in good faith and for which
adequate reserves have been provided and reflected in the Company’s financial
statements included in the Registration Statement, the Disclosure Package and
the Prospectus.  The Company does



 9
 






 



not have any tax deficiency that has been or,
to the knowledge of the Company, might be asserted or threatened against it
that would result in a Material Adverse Effect.


(aa)         Nasdaq; Exchange Act Registration.  The Common Stock  is registered pursuant to Section 12(b) or
12(g) of the Exchange Act and is accepted for quotation on the Nasdaq Global
Market, and the Company has taken no action designed to, or likely to have the
effect of, termination the registration of the Common Stock under the Exchange
Act or delisting the Common Stock from the Nasdaq Global Market, nor has the
Company received any notification that the Commission or the NASD is
contemplating terminating such registration or listing. The Company has
complied in all material respects with the applicable requirements of the
Nasdaq Global Market for maintenance of inclusion of the Common Stock
thereon.  The Company has filed an
application to include the Shares on the Nasdaq Global Market.


(bb)         Accounting Controls. 
The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management’s general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared
with existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.  Except as described in the Registration
Statement, in the Disclosure Package and in the Prospectus, since the most
recent audit of the effectiveness of the Company’s internal control over
financial reporting, there has been (i) no material weakness in the Company’s
internal control over financial reporting (whether or not remediated) and (ii)
no change in the Company’s internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting.


(cc)         Disclosure Controls. 
The Company has established, maintains and evaluates “disclosure
controls and procedures” (as such term is defined in Rule 13a-15(e) and
15d-15(e) under the Exchange Act), which (i) are designed to ensure that
material information relating to the Company is made known to the Company’s
principal executive officer and its principal financial officer by others
within those entities, particularly during the periods in which the periodic
reports required under the Exchange Act are being prepared, (ii) have been
evaluated for effectiveness as of the end of the last fiscal period covered by
the Registration Statement; and (iii) such disclosure controls and procedures
are effective to perform the functions for which they were established. There
are no significant deficiencies and material weaknesses in the design or
operation of internal controls which could adversely affect the Company’s
ability to record, process, summarize, and report financial data to management
and the Board of Directors. The Company is not aware of any fraud, whether
or not material, that involves management or other employees who have a role in
the Company’s internal controls; and since the date of the most recent
evaluation of such disclosure controls and procedures, there have been no
significant changes in internal controls or in other factors that could
significantly affect internal controls, including any corrective actions with
regard to significant deficiencies and material weaknesses.


(dd)         Sarbanes-Oxley Act. 
The Company, and to its knowledge after due inquiry, all of the Company’s
directors or officers, in their capacities as such, is in compliance in all
material respects with all applicable effective provisions of the
Sarbanes-Oxley Act and any related rules and regulations promulgated by the
Commission.


(ee)         Not an
Investment Company.  The
Company is not, nor after giving effect to the offering and sale of the Shares
and the application of the proceeds thereof as described in the Prospectus,
will be, (i) required to register as an “investment company” as defined in the
Investment Company Act of 1940, as amended (the “ Investment Company Act “), and the rules and regulations of
the Commission



 10
 






 



thereunder or (ii) a “business development company” (as defined in
Section 2(a)(48) of the Investment Company Act).


(ff)           Insurance.  The Company
maintains insurance in such amounts and covering such risks as is reasonably
considered to be adequate for the conduct of its business and the value of its
properties and as is customary for companies engaged in similar businesses in
similar industries.  All such insurance
is fully in force on the date hereof and will be fully in force as of the
Closing Date.  The Company has no reason
to believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that would not
have a Material Adverse Effect.


(gg)         Brokers Fees.  The
Company is not a party to any contract, agreement or understanding with any
person (other than this Agreement) that would give rise to a valid claim
against the Company or the Placement Agent for a brokerage commission, finder’s
fee or other like payment in connection with the offering and sale of the
Shares.


(hh)         Integration.          The Company has not sold or issued any
securities that would be integrated with the offering of the Shares
contemplated by this Agreement pursuant to the Securities Act, the Rules and
Regulations or the interpretations thereof by the Commission.


(ii)           Corrupt Practices. 
Neither the Company nor, to the Company’s knowledge, any other person
associated with or acting on behalf of the Company, including without
limitation any director, officer, agent or employee of the Company has,
directly or indirectly, while acting on behalf of the Company (i) used any
corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns from corporate funds, (iii) violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended or (iv)
made any other unlawful payment.


(jj)           Critical Accounting Policies.           The
section entitled “Management’s Discussion and Analysis of Financial Condition
and Results of Operations—Critical Accounting Policies” in the Company’s most
recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q accurately
and fully describes (A) the accounting policies that the Company believes
are the most important in the portrayal of the Company’s financial condition
and results of operations and that require management’s most difficult,
subjective or complex judgments (“Critical Accounting
Policies”); and (B) the judgments and uncertainties affecting
the application of Critical Accounting Policies.


(kk)         No Price Stabilization. 
Neither the Company nor, to the Company’s knowledge, any of its
officers, directors, affiliates or controlling persons has taken or will take,
directly or indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.


(ll)           No Undisclosed Relationships.  No relationship, direct or indirect, exists
between or among the Company on the one hand and the directors, officers,
stockholders, customers or suppliers of the Company on the other hand which is
required to be described in the Registration Statement, the Disclosure Package
and the Prospectus which has not been so described.


(mm)       Exchange Act Requirements. The Company has filed in a timely
manner all reports required to be filed pursuant to Sections 13(a), 13(e),
14 and 15(d) of the Exchange Act during the preceding 12 months (except to the
extent that Section 15(d) requires reports to be filed pursuant to
Sections 13(d) and 13(g) of the Exchange Act, which shall be governed by
the next clause of this



 11
 






 



sentence); and the Company has filed in a
timely manner all reports required to be filed pursuant to Sections 13(d)
and 13(g) of the Exchange Act since January 1, 2003, except where the failure
to timely file could not reasonably be expected individually or in the
aggregate to have a Material Adverse Effect.


(nn)         NASD Affiliations.  To
the Company’s knowledge, there are no affiliations or associations between (i)
any member of the NASD and (ii) the Company or any of the Company’s officers,
directors or 5% or greater securityholders (other than Neil Gagnon and Gagnon
Securities LLC) or any beneficial owner of the Company’s unregistered equity
securities that were acquired from the Company at any time on or after the one
hundred eightieth (180th) day immediately preceding the date the Registration
Statement was initially filed with the Commission, except as set forth in the
Registration Statement, the Disclosure Package and the Prospectus.


(oo)         Compliance with Environmental Laws.  The
Company (a) is in compliance with any and all applicable foreign, federal,
state and local laws, orders, rules, regulations, directives, decrees and
judgments relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (“Environmental
Laws”), (b) has received all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct its business and (c) is in compliance with all
terms and conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals would not, individually or in the
aggregate, result in a Material Adverse Effect. 
There are no costs or liabilities associated with Environmental Laws
(including, without limitation, any capital or operating expenditures required
for clean-up, closure of properties or compliance with Environmental Laws or
any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties) which would,
individually or in the aggregate, result in a Material Adverse Effect.


(pp)         No Labor Disputes. 
The Company is not engaged in any unfair labor practice; except for
matters that would not, individually or in the aggregate, result in a Material
Adverse Effect  (i) there is
(A) no unfair labor practice complaint pending or, to the Company’s
knowledge after due inquiry, threatened against the Company before the National
Labor Relations Board, and no grievance or arbitration proceeding arising out
of or under collective bargaining agreements is pending or threatened,
(B) no strike, labor dispute, slowdown or stoppage pending or, to the
Company’s knowledge after due inquiry, threatened against the Company and
(C) no union representation dispute currently existing concerning the
employees of the Company, and (ii) to the Company’s knowledge (A) no
union organizing activities are currently taking place concerning the employees
of the Company and (B) there has been no violation of any federal, state,
local or foreign law relating to discrimination in the hiring, promotion or pay
of employees or any applicable wage or hour laws concerning the employees of
the Company.


(qq)         ERISA.  The Company is
in compliance in all material respects with all presently applicable provisions
of the Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder (“ERISA”);
no “reportable event” (as defined in ERISA) has occurred with respect to any “pension
plan” (as defined in ERISA) for which the Company would have any liability; the
Company has not incurred and does not expect to incur liability under (i) Title
IV of ERISA with respect to termination of, or withdrawal from, any “pension
plan” or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as
amended, including the regulations and published interpretations thereunder
(the “Code”); and each “pension plan” for
which the Company would have any liability that is intended to be qualified
under Section 401(a) of the Code is so qualified in all material respects and
nothing has occurred, whether by action or by failure to act, which would cause
the loss of such qualification.



 12
 






 



(rr)           Statistical or Market-Related Data.  Any statistical, industry-related and
market-related data included or incorporated by reference in the Registration
Statement, the Disclosure Package and the Prospectus, are based on or derived
from sources that the Company reasonably and in good faith believes to be
reliable and accurate, and such data agree with the sources from which they are
derived.


(ss)         Clinical Studies.  The
clinical, pre-clinical and other studies and tests conducted by or on behalf of
or sponsored by the Company or in which the Company or products or product
candidates have participated that are described in the Registration Statement,
the Disclosure Package and the Prospectus were and, if still pending, are being
conducted in accordance in all material respects with all statutes, laws, rules
and regulations, as applicable (including, without limitation, those
administered by the FDA or by any foreign, federal, state or local governmental
or regulatory authority performing functions similar to those performed by the
FDA) and with standard medical and scientific research procedures.  The descriptions in the Registration Statement,
the Disclosure Package and the Prospectus of the results of such studies and
tests are accurate and complete in all material respects and fairly present the
published data derived from such studies and tests.  The Company has not received any notices or
other correspondence from the FDA or any other foreign, federal, state or local
governmental or regulatory authority performing functions similar to those
performed by the FDA with respect to any ongoing clinical or pre-clinical
studies or tests requiring the termination, suspension or material modification
of such studies or tests, which such termination, suspension or material
modification would reasonably be expected to result in a Material Adverse
Effect.  The Company is in compliance
with all applicable federal, state, local and foreign laws, regulations, orders
and decrees governing its business as prescribed by the FDA, or any other
federal, state or foreign agencies or bodies, including those bodies and
agencies engaged in the regulation of pharmaceuticals or biohazardous substances
or materials, except where noncompliance would not, singly or in the aggregate,
result in a Material Adverse Effect.


Any
certificate signed by any officer of the Company and delivered to the Placement
Agent or to counsel for the Placement Agent in connection with the offering of
the Shares shall be deemed a representation and warranty by the Company to the
Placement Agent and the Investors as to the matters covered thereby.


3.             Covenants.            The Company covenants
and agrees with the Placement Agent as follows:


(a)           Reporting Obligations; Exchange
Act Compliance.  The Company will (i) file the Prospectus with
the Commission within the time periods specified by Rule 424(b) and Rules 430A
and 430B, as applicable under the Securities Act, (ii) file any Issuer Free Writing
Prospectus to the extent required by Rule 433 under the Securities Act, if
applicable, (iii) file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of the Prospectus and during such period as the Prospectus
would be required by law to be delivered 
(whether physically or through compliance with Rule 172 under the
Securities Act or any similar rule) (the “Prospectus Delivery Period”), and (iv) furnish copies of each Issuer Free
Writing Prospectus, if any, (to the extent not previously delivered) to the
Placement Agent prior to 10:00 a.m. Pacific Daylight Time, on the business day
next succeeding the date of this Agreement in such quantities as the Placement
Agent shall reasonably request.


(b)           Abbreviated Registration Statement.  If the Company elects to rely upon Rule
462(b) under the Securities Act, the Company shall file a registration statement
under Rule 462(b) with the Commission in compliance with Rule 462(b) by
8:00 a.m., Eastern Daylight Time, on the business day next succeeding the
date of this Agreement, and the Company shall at the time of filing either pay
to the Commission the filing fee for such Rule 462(b) registration statement or
give irrevocable instructions for the payment of such fee pursuant to the Rules
and Regulations.



 13














 


(c)           Amendments or Supplements. 
The Company will not, during the Prospectus Delivery
Period in connection with the offering contemplated by this Agreement, file any
amendment or supplement to the Registration Statement or the Prospectus unless
a copy thereof shall first have been submitted to the Placement Agent within a
reasonable period of time prior to the filing thereof and the Placement Agent
shall not have reasonably objected thereto in good faith.


(d)           Issuer Free Writing Prospectuses.  The Company will (i) not make any offer
relating to the Shares that would constitute an “issuer free writing prospectus”
(as defined in Rule 433) or that would otherwise constitute a “free writing
prospectus” (as defined in Rule 405 under the Securities Act) required to be
filed by the Company with the Commission under Rule 433 under the Securities
Act unless the Placement Agent approves its use in writing prior to first use
(each, a “Permitted Free Writing Prospectus”);
provided that the prior written consent of the Placement Agent hereto shall be
deemed to have been given in respect of the Issuer Free Writing Prospectus(es)
included in Schedule II hereto, (ii) treat each Permitted Free Writing
Prospectus as an Issuer Free Writing Prospectus, (iii) comply with the requirements
of Rules 164 and 433 under the Securities Act applicable to any Issuer Free
Writing Prospectus, including the requirements relating to timely filing with
the Commission, legending and record keeping and (iv) not take any action that
would result in a Placement Agent or the Company being required to file with
the Commission pursuant to Rule 433(d) under the Securities Act a free writing
prospectus prepared by or on behalf of such Placement Agent that such Placement
Agent otherwise would not have been required to file thereunder. The Company
will satisfy the conditions in Rule 433 under the Securities Act to avoid a
requirement to file with the Commission any electronic road show.


(e)           Notice to Placement Agent. 
The Company will notify the Placement Agent promptly, and will, if
requested, confirm such notification in writing: (i) of the receipt of any
comments of, or requests for additional or supplemental information from, the
Commission; (ii) of the time and date of any filing of any post-effective amendment
to the Registration Statement or any amendment or supplement to the Disclosure
Package or the Prospectus, (iii) the time and date when any post-effective
amendment to the Registration Statement becomes effective, but only during the
Prospectus Delivery Period; (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement, or any
post-effective amendment thereto or any order preventing or suspending the use
of the Disclosure Package, the Prospectus or any Issuer Free Writing
Prospectus, or the initiation of any proceedings for that purpose or the threat
thereof, but only during the Prospectus Delivery Period; (v) of receipt by
the Company of any notification with respect to any suspension or the approval
of the Shares from any securities exchange upon which it is listed for trading
or included or designated for quotation, or the initiation or threatening of
any proceeding for such purpose.   The
Company will use its reasonable best efforts to prevent the issuance or
invocation of any such stop order or suspension by the Commission and, if any
such stop order or suspension is so issued or invoked, to obtain as soon as
possible the withdrawal or removal thereof.


(f)            Filing of Amendments or Supplements. If, during the
Prospectus Delivery Period, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus (or, if
the Prospectus is not yet available to prospective purchasers, the Disclosure
Package) in order to make the statements therein, in the light of the
circumstances when the Prospectus (or, if the Prospectus is not yet available
to prospective purchasers, the Disclosure Package) is delivered to an Investor,
not misleading, or if, in the opinion of counsel for the Placement Agent, it is
necessary to amend or supplement the Prospectus (or, if the Prospectus is not
yet available to prospective purchasers, the Disclosure Package) to comply with
applicable law, forthwith to prepare, file with the Commission and furnish, at
its own expense, to the Placement Agent, either amendments or supplements to
the Prospectus (or, if the Prospectus is not yet available to prospective
purchasers, the Disclosure Package) so that the statements in the Prospectus
(or, if the Prospectus is not yet available to prospective purchasers, the



 14
 






 



Disclosure Package) as so amended or
supplemented will not, in the light of the circumstances when the Prospectus
(or, if the Prospectus is not yet available to prospective purchasers, the
Disclosure Package) is delivered to an Investor, be misleading or so that the
Prospectus (or, if the Prospectus is not yet available to prospective
purchasers, the Disclosure Package), as amended or supplemented, will comply
with law.


(g)           Conflicting Issuer Free Writing Prospectus.  If at any time following issuance of an
Issuer Free Writing Prospectus there occurred or occurs an event or development
as a result of which such Issuer Free Writing Prospectus conflicted or would
conflict with the information contained in the Registration Statement relating
to the Shares or included or would include an untrue statement of a material
fact or omitted or would omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances prevailing at
that subsequent time, not misleading, the Company promptly will notify the
Placement Agent and will promptly amend or supplement, at its own expense, such
Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue
statement or omission.


(h)           Delivery of Copies. 
The Company will deliver promptly to the Placement Agent and its counsel
such number of the following documents as the Placement Agent shall reasonably
request:  (i) conformed copies of the
Registration Statement as originally filed with the Commission and each
amendment thereto (in each case excluding exhibits), (ii) copies of any Issuer
Free Writing Prospectus, (iii) during the Prospectus Delivery Period, copies of
the Prospectus (or any amendments or supplements thereto); (iii) any document
incorporated by reference in the Prospectus (other than any such document that
is filed with the Commission electronically via EDGAR or any successor system)
and (iv) all correspondence to and from, and all documents issued to and by,
the Commission in connection with the registration of the Shares under the
Securities Act.


(i)            Blue Sky Laws.  The
Company will promptly take or cause to be taken, from time to time, such
actions as the Placement Agent may reasonably request to qualify the Shares for
offering and sale under the state securities, or blue sky, laws of such states
or other jurisdictions as the Placement Agent may reasonably request and to
maintain such qualifications in effect so long as the Placement Agent may
request for the distribution of the Shares, provided, that
in no event shall the Company be obligated to qualify as a foreign corporation
in any jurisdiction in which it is not so qualified or to file a general
consent to service of process in any jurisdiction or subject itself to taxation
as doing business in any jurisdiction. 
The Company will advise the Placement Agent promptly of the suspension
of the qualification or registration of (or any exemption relating to) the
Shares for offering, sale or trading in any jurisdiction or any initiation or
threat of any proceeding for any such purpose, and in the event of the issuance
of any order suspending such qualification, registration or exemption, the
Company shall use its best efforts to obtain the withdrawal thereof at the
earliest possible moment.


(j)            Earnings Statement.           As soon as practicable,
but in any event not later than 15 months after the end of the Company’s
current fiscal quarter, the Company will make generally available to holders of
its securities and deliver to the Placement Agent, an earnings statement of the
Company (which need not be audited) that will satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 of the Rules and Regulations.


(k)           Use of Proceeds.  The
Company will apply the net proceeds from the sale of the Shares in the manner
set forth in the Disclosure Package and the Prospectus under the heading “Use
of Proceeds”.


(l)            Lock-Up Period. 
Beginning on the date hereof and continuing for a period of 90 days after the date of the Prospectus (the “Lock-Up Period”), the Company will not (1) offer to
sell, hypothecate, pledge, announce the intention to sell, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase or



 15
 






 



otherwise transfer or dispose of, directly or
indirectly, or establish or increase a put equivalent position or liquidate or
decrease a call equivalent position within the meaning of Section 16 of the
Exchange Act, with respect to, any shares of Common Stock, any securities
convertible into or exercisable or exchangeable for Common Stock; (2) file
or cause to become effective a registration statement under the Securities Act
relating to the offer and sale of any shares of Common Stock or securities
convertible into or exercisable or exchangeable for Common Stock or (3) enter
into any swap or other agreement that transfers, in whole or in part, any of
the economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i), (ii) or (iii) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise,
without the prior written consent of the Placement Agent (which consent may be
withheld in its sole discretion), other than (i) the Shares to be sold
hereunder, (ii) the issuance of employee stock options pursuant to stock
option plans described in the Registration Statement (excluding the exhibits
thereto), the Disclosure Package and the Prospectus, (iii) issuances of Common
Stock upon the exercise of options or warrants (either upon current terms
thereof or upon subsequently amended terms but excluding a general repricing)
disclosed as outstanding in the Registration Statement (excluding the exhibits
thereto), the Disclosure Package and the Prospectus or upon the conversion or
exchange of convertible or exchangeable securities outstanding as of the date
of this Agreement; (iv) the issuance of 100,000 shares to the Regents of the
University of California in connection with a potential amended license
agreement between the Company and the Regents; (v)  the issuance by the Company of any shares of
Common Stock as consideration for mergers, acquisitions, other business
combinations, or strategic alliances, occurring after the date of this
Agreement; provided that
each recipient of shares pursuant to this clause (v) agrees that all such
shares remain subject to restrictions substantially similar to those contained
in this Section 3(l); or (vi) the purchase or sale of the Company’s
securities pursuant to a plan, contract or instruction that satisfies all of
the requirements of Rule 10b5-1(c)(1)(i)(B) that was in effect prior to the
date hereof (including reinstatement of the Rule 10b5-1(c) contract that had
been in effect for Mr. Christopher J. Calhoun prior to the date hereof).  Notwithstanding the foregoing, for the
purpose of allowing the Placement Agent to comply with NASD Rule 2711(f)(4), if
(1) during the last 17 days of the Lock-Up Period, the Company releases
earnings results or publicly announces other material news or a material event
relating to the Company occurs or (2) prior to the expiration of the Lock-Up
Period, the Company announces that it will release earnings results during the
16 day period beginning on the last day of the Lock-Up Period, then in each
case the Lock-Up Period will be extended until the expiration of the 18 day
period beginning on the date of release of the earnings results or the public
announcement regarding the material news or the occurrence of the material
event, as applicable, unless the Placement Agent waives, in writing, such
extension.  The Company agrees not to
accelerate the vesting of any option or warrant or the lapse of any repurchase
right prior to the expiration of the Lock-Up Period.


(m)          Lock-Up Agreements.  The
Company will cause each of its executive officers and directors whose names are
set forth on Exhibit C hereto to furnish to the Placement Agent, on the
date hereof, a letter, substantially in the form of Exhibit B hereto
(the “Lock-Up Agreement”).  The Company will enforce the terms of each
Lock-Up Agreement and issue stop transfer instructions to the transfer agent
for the Common Stock with respect to any transaction or contemplated
transaction that would constitute a breach or default under the applicable
Lock-Up Agreement.


(n)           Public Communications. 
Prior to the Closing Date, the Company will not issue any press release
or other communication directly or indirectly or hold any press conference with
respect to the Company, its condition, financial or otherwise, or its earnings,
business, operations or prospects, or the offering of the Shares, without the
prior consent of the Placement Agent, unless in the reasonable judgment of the
Company and its counsel, and after notification to the Placement Agent, such
press release or communication is required by law or by Nasdaq rules, in which
case the Company shall use its reasonable best efforts to allow the Placement
Agent reasonable time to comment on such release or other communication in
advance of such issuance.



 16
 






 



(o)           Stabilization.       The Company will not take,
directly or indirectly, any action designed, or that might reasonably be
expected to cause or result in, or that will constitute, stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
any of the Shares.


(p)           Transfer Agent.  The
Company shall engage and maintain, at its expense, a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a registrar
for the Shares.


(q)           Listing.  The Company
shall use its commercially reasonable efforts to cause the Shares to be listed
for quotation on the Nasdaq Global Market and to maintain such listing.


(r)            Investment Company Act. 
The Company shall not invest, or otherwise use the proceeds received by
the Company from its sale of the Shares in such a manner as would require the
Company to register as an investment company under the Investment Company Act.


(s)           Broker’s Fee. The Company will not incur any liability for
any finder’s or broker’s fee or agent’s commission in connection with the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby (other than as set forth in this Agreement).


4.             Costs and Expenses. 
The Company, whether or not the transactions contemplated hereunder are
consummated or this Agreement is terminated, will pay or reimburse if paid by
the Placement Agent all reasonable costs and expenses incident to the
performance of the obligations of the Company under this Agreement and in
connection with the transactions contemplated hereby, including but not limited
to costs and expenses of or relating to (i) the preparation, printing, filing,
delivery and shipping of the Registration Statement, any Issuer Free Writing
Prospectus, the Disclosure Package and the Prospectus, and any amendment or
supplement to any of the foregoing and the printing and furnishing of copies of
each thereof to the Placement Agent and dealers (including costs of mailing and
shipment), (ii) the registration, issue, sale and delivery of the Shares
including any stock or transfer taxes and stamp or similar duties payable upon
the sale, issuance or delivery of the Shares and the printing, delivery, and
shipping of the certificates representing the Shares, (iii) the registration or
qualification of the Shares for offer and sale under the securities or Blue Sky
laws of such jurisdictions designated pursuant to Section 3(i),
(including the reasonable legal fees and filing fees, and other disbursements
of counsel in connection therewith), and, if reasonably requested by the
Placement Agent, the preparation and printing and furnishing of copies of any
blue sky surveys to the Placement Agent and to dealers,  (iv) the fees and expenses of any transfer
agent or registrar for the Shares, (v) any filings required to be made by the
Placement Agent or the Company with the NASD, and the reasonable fees,
disbursements and other charges of counsel for the Placement Agent in connection
with the NASD’s review and approval of the Placement Agent’s participation in
the offering (including all COBRADesk fees), (vi) fees, disbursements and other
charges of counsel to the Company, (vii) listing fees, if any, for the listing
or quotation of the Shares on the Nasdaq Global Market, (viii) fees and
disbursements of the Company’s auditor incurred in delivering the letter(s)
described in Section 5(i) of this Agreement, (ix) fees, disbursements
and other charges of counsel to the Placement Agent (in addition to (iii) and
(v) above) in an amount not to exceed $75,000, and (x) the costs and expenses
of the Company and the Placement Agent in connection with the marketing of the
offering and the sale of the Shares to prospective investors including, but not
limited to, those related to any presentations or meetings undertaken in
connection therewith including, without limitation, expenses associated with
the production of road show slides and graphics, fees and expenses of any
consultants engaged with the written consent of the Company in connection with
the road show presentations, travel, lodging and other expenses incurred by the
officers of the Company and any such



 17
 






 



consultants, and
the cost of any aircraft or other transportation chartered in connection with
the road show.  If (1) this Agreement
shall be terminated by the Placement Agent pursuant to Section 8 hereof,
the Company will, in addition to paying the amounts described in Section 4
hereof, reimburse the Placement Agent for all of its reasonable out-of-pocket
disbursements (including, but not limited to, the fees and disbursements of its
counsel) incurred by the Placement Agent in connection with its investigation,
preparing to market and marketing of the Shares or in contemplation of performing
its obligations hereunder.


5.             Conditions
of Placement Agent’s Obligations.  The obligations of the Placement Agent
hereunder are subject to the following conditions:


(a)           Filings with the Commission. 
The Prospectus and any Issuer Free Writing Prospectus required to be
filed under the Securities Act or the Rules and Regulations shall have been
filed with the Commission pursuant to Rule 424(b) or Rule 164, as the case may
be, in the manner and within the time period so required.


(b)           Abbreviated Registration Statement.  If the Company has elected to rely upon Rule
462(b), the registration statement filed under Rule 462(b) shall have become
effective under the Securities Act by 8:00 a.m., Eastern Standard Time, on the
business day next succeeding the date of this Agreement.


(c)           No Stop Orders.  Prior
to the Closing: (i) no stop order suspending the effectiveness of the
Registration Statement or any part thereof, nor suspending or preventing the
use of the Disclosure Package, the Prospectus or any Issuer Free Writing
Prospectus shall have been issued under the Securities Act and no proceedings
initiated under Section 8(d) or 8(e) of the Securities Act for that purpose
shall be pending or threatened by the Commission, (ii) no order suspending the
qualification or registration of the Shares under the securities or blue sky
laws of any jurisdiction shall be in effect and (iii) any request for
additional information on the part of the Commission (to be included in the
Registration Statement, the Disclosure Package, the Prospectus or any Issuer
Free Writing Prospectus or otherwise) shall have been complied with to the
reasonable satisfaction of the Placement Agent.


(d)           Action Preventing Issuance. 
No action shall have been taken and no statute, rule, regulation or order
shall have been enacted, adopted or issued by any governmental agency or body
which would, as of the Closing Date, prevent the issuance or sale of the
Shares; and no injunction, restraining order or order of any other nature by
any federal or state court of competent jurisdiction shall have been issued as
of the Closing Date which would prevent the issuance or sale of the Shares.


(e)           Objection of Placement Agent.  No Prospectus or amendment or supplement to
the Registration Statement shall have been filed to which the Placement Agent
shall have objected in writing, which objection shall not be unreasonable.  The Placement Agent shall not have in good
faith advised the Company that the Registration Statement, the Disclosure
Package or the Prospectus, or any amendment thereof or supplement thereto, or
any Issuer Free Writing Prospectus contains an untrue statement of fact which,
in its opinion, is material, or omits to state a fact which, in its opinion, is
material and is required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.


(f)            No Material Adverse Change. 
Prior to the Closing, there shall not have occurred any change, or any
development involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business, operations or prospects of the
Company, taken as a whole, from that set
forth in the Disclosure Package and the Prospectus that, in the Placement Agent’s
judgment, is material and



 18
 






 



adverse and that makes it, in the Placement Agent’s judgment,
impracticable to market the Shares on the terms and in the manner contemplated
in the Disclosure Package.


(g)           Representations and Warranties.  Each of the representations and warranties of
the Company contained herein shall be true and correct in all material respects
(except for those representations and warranties which are qualified by
materiality, in which case such representations and warranties shall be true
and correct in all respects) when made and on and as of the Closing Date, as if
made on such date (except that those representations and warranties that
address matters only as of a particular date shall remain true and correct in
all material respects (except for those representations and warranties which
are qualified by materiality, in which case such representations and warranties
shall be true and correct in all respects) as of such date), and all covenants
and agreements herein contained to be performed on the part of the Company and
all conditions herein contained to be fulfilled or complied with by the Company
at or prior to the Closing Date shall have been duly performed, fulfilled or
complied with in all material respects.


(h)           Opinion of Counsel to the Company.  The Placement Agent shall have received from
Heller Ehrman LLP, counsel to the Company, such counsel’s written opinion,
addressed to the Placement Agent and the Investors and dated the Closing Date,
in form and substance as is set forth on Exhibit D attached hereto.  Such counsel shall also have furnished to the
Placement Agent a written statement, addressed to the Placement Agent and dated
the Closing Date, in form and substance as set forth in Exhibit E
attached hereto.


(i)            Opinion of Counsel to the Placement Agent.  The Placement Agent shall have received from
Lowenstein Sandler PC, such opinion or opinions, dated the Closing Date and
addressed to the Placement Agent, covering such matters as are customarily
covered in transactions of this type.


(j)            Accountant’s Comfort Letter.  The
Placement Agent shall have received on the date of the Time of Sale, a letter
dated the date hereof, (the “Original Letter”),
addressed to the Placement Agent and in form and substance reasonably
satisfactory to the Placement Agent and its counsel, from KPMG LLP, which
letter shall cover, without limitation, the various financial disclosures, if
any, contained in the Disclosure Package and shall contain statements and
information of the type customarily included in accountants’ “comfort letters”
to underwriters, delivered according to Statement of Auditing Standards No. 72
and Statement of Auditing Standard No. 100 (or successor bulletins), with
respect to the audited and unaudited financial statements and certain financial
information contained in or incorporated by reference into the Registration
Statement, the Disclosure Package and the Prospectus.  At the Closing
Date, the Placement Agent shall have received from KPMG LLP a letter, dated the
Closing Date, which shall confirm, on the basis of a review in accordance with
the procedures set forth in the Original Letter, that nothing has come to their
attention during the period from the date of the Original Letter referred to in
the prior sentence to a date (specified in the letter) not more than three days
prior to the Closing Date which would require any change in the Original Letter
if it were required to be dated and delivered at the Closing Date.


(k)           Officer’s Certificate. 
The Placement Agent shall have received on the Closing Date a certificate,
addressed to the Placement Agent and dated the Closing Date, of the chief
executive or chief operating officer and the chief financial officer or chief
accounting officer of the Company to the effect that:


(i)            each
of the representations, warranties and agreements of the Company in this
Agreement were true and correct in all material respects (except for those
representations and warranties which are qualified by materiality, in which
case such representations and warranties shall be true and correct in all
respects) when originally made and are true and correct in all material
respects



 19
 






 



(except for those representations and
warranties which are qualified by materiality, in which case such
representations and warranties shall be true and correct in all respects) as of
the Time of Sale and the Closing Date; and the Company has complied in all
material respects with all agreements and satisfied all the conditions on its
part required under this Agreement to be performed or satisfied at or prior to the
Closing Date;


(ii)           subsequent
to the respective dates as of which information is given in the Disclosure
Package (taking into account any updates included within the Disclosure
Package), there has not been (A) a material adverse change or any development
involving a prospective material adverse change in the general affairs,
business, prospects, properties, management, financial condition or results of
operations of the Company, taken as a whole, (B) any transaction that is
material to the Company, taken as a whole, except transactions entered into in
the ordinary course of business, (C) any obligation, direct or contingent, that
is material to the Company, taken as a whole, incurred by the Company, except
obligations incurred in the ordinary course of business, (D) any change in the
capital stock (other than a change in the number of outstanding shares of
Common Stock due to the issuance of shares upon the exercise of outstanding
options or warrants) or any material change in the short term or long term indebtedness
of the Company, taken as a whole, (E) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company or (F) any loss or
damage (whether or not insured) to the property of the Company which has been
sustained or will have been sustained which has had or is reasonably likely to
result in a Material Adverse Effect.


(iii)          no
stop order suspending the effectiveness of the Registration Statement or any
part thereof or any amendment thereof or the qualification of the Shares for
offering or sale, nor suspending or preventing the use of the Disclosure
Package, the Prospectus or any Issuer Free Writing Prospectus shall have been
issued, and no proceedings for that purpose shall be pending or to their
knowledge, threatened by the Commission or any state or regulatory body; and


(iv)          the signers of said certificate have reviewed the
Registration Statement, the Disclosure Package and the Prospectus, and any
amendments thereof or supplements thereto (and any documents filed under the
Exchange Act and deemed to be incorporated by reference into the Disclosure
Package and the Prospectus), and (A) (i) each part of the Registration
Statement and any amendment thereof do not and did not contain when the
Registration Statement (or such amendment) became effective, any untrue
statement of a material fact or omit to state, and did not omit to state when
the Registration Statement (or such amendment) became effective, any material
fact required to be stated therein or necessary to make the statements therein
not misleading, (ii) as of the Time of Sale, neither the Disclosure Package nor
any individual Issuer Free Writing Prospectus, when considered together with
the Disclosure Package, contained any untrue statement of material fact or omits
to state any material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading and (iii) the
Prospectus, as amended or supplemented, does not and did not contain, as of its
issue date, any untrue statement of material fact or omit to state and did not
omit to state as of such date, a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (B) since the Time of Sale, there has occurred no event
required to be set forth in an amendment or supplement to the Registration
Statement, the Disclosure Package or the Prospectus which has not been so set
forth and there has been no document required to be filed under the Exchange
Act that upon such filing would be deemed to be incorporated by reference in to
the Disclosure Package and into the Prospectus that has not been so filed.


(l)            Secretary’s Certificate. 
On the Closing Date, the Company shall have furnished to the Placement
Agent a Secretary’s Certificate of the Company.


(m)          The Nasdaq Global Market.  The Shares shall have been listed and
authorized for trading on the Nasdaq Global Market.



 20














 


(n)           Other
Filings with the Commission.  The Company shall have prepared a Current
Report on Form 8-K with respect to the transactions contemplated hereby, to be
filed immediately after the Closing.


(o)           No NASD Objection. 
The NASD shall not have raised any unresolved objection with respect to
the fairness and reasonableness of the placement agency terms and arrangements
relating to the issuance and sale of the Shares.


(p)           Lock-Up Agreements. 
The Placement Agent shall have received copies of the executed Lock-Up
Agreements executed by each person listed on Exhibit B hereto, and such
Lock-Up Agreements shall be in full force and effect on the Closing Date.


(q)           Additional Documents. 
Prior to the Closing Date, the Company shall have furnished to the
Placement Agent such further information, certificates or documents as the
Placement Agent shall have reasonably requested for the purpose of enabling it
to pass upon the issuance and sale of the Shares as contemplated herein, or in
order to evidence the accuracy of any of the representations and warranties, or
the satisfaction of any of the conditions or agreements, herein contained (it
being understood that the Placement Agent’s customary due diligence has already
been completed prior to the execution of this Agreement).


All opinions,
letters, evidence and certificates mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only
if they are in form and substance reasonably satisfactory to counsel for the
Placement Agent.


6.             Indemnification and
Contribution.


(a)           Indemnification of the Placement
Agent.  The Company agrees to indemnify,
defend and hold harmless the Placement Agent, its directors and officers, and
each person, if any, who controls the Placement Agent within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange
Act, and the successors and assigns of all of the foregoing persons, from and
against any loss, damage, claim or liability, which, jointly or severally, the
Placement Agent or any such person may become subject under the Securities Act,
the Exchange Act, or other federal or state statutory law or regulation, the
common law or otherwise, (including in settlement of any litigation, if such
settlement is effected with the written consent of the Company), insofar as
such loss, damage, claim or liability (or actions in respect thereof as
contemplated below) arises out of or is based upon: (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, or any amendment thereto
(including the information deemed to be a part of the Registration Statement at
the time of effectiveness and at any subsequent time pursuant to Rules 430A and
430B of the Rules and Regulations, if applicable) or the omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; (ii) any untrue statement or alleged untrue statement of a material
fact contained in the Disclosure Package, the Prospectus (or any amendment or
supplement thereto including any documents filed under the Exchange Act and
deemed to be incorporated by reference into the Prospectus), any Issuer Free
Writing Prospectus or in any materials or
information provided to investors by, or with the approval of, the Company in
connection with the marketing of the offering of the Common Stock (“Marketing Materials”), including any
roadshow or investor presentations made to investors by the Company (whether in
person or electronically) or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading; and, in the case of (i) and (ii) above, to reimburse the
Placement Agent and each such controlling person for any and all reasonable
expenses (including reasonable fees and disbursements of counsel) as such
expenses are



 21
 






 



incurred by the Placement Agent
or such controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action, (iii) any untrue statement or alleged untrue statement
made by the Company in Section 3 hereof or the failure by the
Company to perform when and as required any agreement or covenant contained
herein or (iv) any untrue statement or alleged untrue statement of any
material fact contained in any audio or visual materials provided to Investors
by or with the approval of the Company or based upon written information
furnished by or on behalf of the Company including, without limitation, slides,
videos, films or tape recordings used in any road show or investor
presentations made to investors by the Company (whether in person or
electronically) or in connection with the marketing of the Shares; provided, however, that the foregoing indemnity shall not
apply to any loss, claim, damage, liability or expense to the extent, but only
to the extent, it arises out of or is based upon any untrue statement or
alleged untrue statement of a material fact contained in or omitted from the Registration Statement, the Disclosure Package,
the Prospectus, or any such amendment or supplement, any Issuer Free Writing
Prospectus or in any Marketing Materials, in reliance upon and in
conformity with information concerning the Placement Agent furnished in writing
by or on behalf of the Placement Agent to the Company expressly for use
therein, which information the parties hereto agree is limited to the Placement
Agent Information.


(b)           Indemnification of the Company.  The Placement Agent agrees to indemnify,
defend and hold harmless the Company, its directors and officers, and any
person, if any, who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act,
and the successors and assigns of all of the foregoing persons, from and
against any loss, claim, damage, liability or expense, as incurred to which,
jointly or severally, the Company or any such person may become subject under
the Securities Act, the Exchange Act, or other federal or state statutory law
or regulation, the common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Placement Agent), insofar as such loss, claim, damage, liability or expense (or
actions in respect thereof as contemplated below) arises out of or is based
upon (i) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, or any amendment thereto, or the omission or alleged omission
therefrom to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; (ii) any untrue statement or alleged untrue statement of a material
fact contained in the Disclosure Package, the Prospectus, or any amendment or
supplement thereto or any Issuer Free Writing Prospectus, or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading, in the case of each of (i) and (ii)
above, to the extent but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the Registration
Statement, the Disclosure Package, the Prospectus (or any amendment or
supplement thereto) or any Issuer Free Writing Prospectus in reliance upon and
in conformity with information concerning the Placement Agent furnished in
writing by or on behalf of the Placement Agent to the Company expressly for use
therein, and to reimburse the Company, or any such director, officer or
controlling person for any legal and other expense reasonably incurred by the
Company, or any such director, officer or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided,
that the parties hereto hereby agree that such written information provided by
the Placement Agent consists solely of the Placement Agent Information.  Notwithstanding the provisions of this Section
6(b), in no event shall any indemnity by the Placement Agent under this Section
6(b) exceed the total compensation received by such Placement Agent in
accordance with Section 1(b).


(c)           Notice and Procedures. 
If any action, suit or proceeding (each, a “Proceeding”)
is brought against a person (an “indemnified party”)
in respect of which indemnity may be sought against the Company or the
Placement Agent (as applicable, the “indemnifying party”)
pursuant to subsection (a) or (b), respectively, of this Section 6,
such indemnified party shall promptly notify such indemnifying party in writing
of the institution of such Proceeding and such indemnifying party shall assume
the



 22
 






 



defense of such Proceeding,
including the employment of counsel reasonably satisfactory to such indemnified
party and payment of all fees and expenses; provided, however, that the omission to so notify such
indemnifying party shall not relieve such indemnifying party from any liability
which such indemnifying party may have to any indemnified party or otherwise,
except to the extent the indemnifying party does not otherwise learn of the
Proceeding and such failure results in the forfeiture by the indemnifying party
of substantial rights or defenses. The indemnified party or parties shall have
the right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless (i) the employment of such counsel shall have been authorized in
writing by the indemnifying party in connection with the defense of such
Proceeding, (ii) the indemnifying party shall not have, within a reasonable
period of time in light of the circumstances, employed counsel to defend such
Proceeding or (iii) such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them which are
different from, additional to or in conflict with those available to such
indemnifying party (in which case such indemnifying party shall not have the
right to direct the defense of such Proceeding on behalf of the indemnified
party or parties ), in any of which events such reasonable fees and expenses
shall be borne by such indemnifying party and paid as incurred (it being
understood, however, that such indemnifying party shall not be liable for the
expenses of more than one separate counsel (in addition to any local counsel)
in any one Proceeding or series of related Proceedings in the same jurisdiction
representing the indemnified parties who are parties to such Proceeding). An
indemnifying party shall not be liable for any settlement of any Proceeding
effected without its written consent but, if settled with its written consent
or if there be a final judgment for the plaintiff, such indemnifying party
agrees to indemnify and hold harmless the indemnified party or parties from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second sentence of this
Section 6(c), then the indemnifying party agrees that it shall be
liable for any settlement of any Proceeding effected without its written
consent if (i) such settlement is entered into more than 60 days after receipt
by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall not have fully reimbursed the indemnified party in
accordance with such request prior to the date of such settlement and
(iii) such indemnified party shall have given the indemnifying party at
least 30 days’ prior notice of its intention to settle. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement, compromise or consent to the entry of judgment in any pending
or threatened Proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such Proceeding and does not include an admission of fault or culpability or
a failure to act by or on behalf of such indemnified party.


(d)           Contribution.  If
the indemnification provided for in this Section 6 is unavailable
to an indemnified party under subsections (a) or (b) of
this Section 6 or insufficient to hold an indemnified party
harmless in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then each applicable
indemnifying party shall, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of the losses, claims, damages, liabilities or expenses referred to in subsection (a)
or (b) above, (i) in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and the Placement
Agent on the other from the offering of the Shares or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the indemnifying party or
parties on the one hand and the indemnified party or parties on the other hand
in connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations.  The relative
benefits received by the Company on the one hand and the Placement Agent on the
other hand shall be deemed to be in the same respective proportions as the
total net proceeds from the offering of the



 23
 






 



Shares
(before deducting expenses) received by the Company and the total placement
agent commissions received by the Placement Agent, in each case as set forth on
the cover of the Prospectus, bear to the aggregate public offering price of the
Shares.  The relative fault of the
Company on the one hand and the Placement Agent on the other hand shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company, on the one hand,
or by the Placement Agent, on the other hand, and the parties’ relevant intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission.  The
Company and the Placement Agent agree that it would not be just and equitable
if contribution pursuant to this subsection (d) were to be
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the first
sentence of this Section 6(d). 
The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities referred to in the first sentence of
this Section 6(d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending against any action or claim which is the subject of
this Section 6(d). 
Notwithstanding the provisions of this Section 6(d), the
Placement Agent shall not be required to contribute any amount in excess of the
total commissions received by such Placement Agent in accordance with Section
1(b).  No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.


(e)           Representations and
Agreements to Survive Delivery. 
The obligations of the Company under this Section 6 shall be
in addition to any liability which the Company may otherwise have.  The indemnity and contribution agreements
contained in this Section 6 and the covenants, warranties and
representations of the Company contained in this Agreement shall remain
operative and in full force and effect regardless of (i) any termination of
this Agreement, (ii) any investigation made by or on behalf of the Placement
Agent, any person who controls the Placement Agent within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act or
any affiliate of the Placement Agent, or by or on behalf of the Company, its
directors or officers or any person who controls the Company within the meaning
of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, and (iii) the issuance and delivery of the Shares. The Company
and the Placement Agent agree promptly to notify each other of the commencement
of any Proceeding against it and, in the case of the Company, against any of
the Company’s officers or directors in connection with the issuance and sale of
the Shares, or in connection with the Registration Statement, the Disclosure
Package or the Prospectus.


7.             Information Furnished by Placement Agent. The
Company acknowledges that the statements set forth in (a) the first sentence of
the fourth paragraph and (b) the tenth paragraph under the heading “Plan of
Distribution” in the Prospectus (the “Placement Agent
Information”) constitute the only information relating to the
Placement Agent furnished in writing to the Company by the Placement Agent as
such information is referred to in Sections 2 and 6 hereof.


8.             Termination.  (a)  The Placement Agent shall have the
right to terminate this Agreement by giving notice as hereinafter specified at
any time at or prior to the Closing Date, without liability on the part of the
Placement Agent to the Company, if (i) prior to delivery and payment for the
Shares (A) trading in securities generally shall have been suspended on or by
the New York Stock Exchange, the American Stock Exchange or the Nasdaq Global
Market, (each, a “Trading Market”),
(B) trading in the Common Stock of the Company shall have been suspended
on any such exchange, in the over-the-counter market or by the Commission,
(C) a general moratorium on commercial banking activities shall have been
declared by federal or New York state authorities, (D) there shall have
occurred any outbreak or material escalation of hostilities or acts of
terrorism involving the United States or there shall have been a declaration by
the United States of a national emergency or war, (E) there shall have occurred
any other calamity or crisis or any material change in general economic,
political or financial conditions in the



 24
 






 



United States or elsewhere, if the effect of any such event specified
in clause (D) or (E), in the judgment of the Placement Agent, is material and adverse
and makes it impractical or inadvisable to proceed with the completion of the
sale of and payment for the Shares on the Closing Date on the terms and in the
manner contemplated by this Agreement, the Disclosure Package and the
Prospectus, (ii) since the time of execution of this Agreement or the earlier
respective dates as of which information is given in the Disclosure Package,
there has been any Material Adverse Effect or the Company shall have sustained
a loss by strike, fire, flood, earthquake, accident or other calamity of such
character that in the judgment of the Placement Agent would, individually or in
the aggregate, result in a Material Adverse Effect and which would, in the
judgment of the Placement Agent, make it impracticable or inadvisable to
proceed with the offering or the delivery of the Shares on the terms and in the
manner contemplated in the Disclosure Package, (iii) the Company shall have
failed, refused or been unable to comply with the terms or perform any
agreement or obligation of this Agreement or any of the Subscription Terms,
other than by reason of a default by the Placement Agent, or (iv) any condition
of the Placement Agent’s obligations hereunder is not fulfilled.  Any such termination shall be without
liability of any party to any other party except that the provisions of Section 4,
Section 6, and Section 11 hereof shall at all times be
effective notwithstanding such termination.


9.             Notices.  All
statements, requests, notices and agreements hereunder shall be in writing or
by facsimile, and:


(a)           if
to the Placement Agent, shall be delivered or sent by mail or facsimile
transmission to :


Piper Jaffray & Co.


U.S. Bancorp Center


800 Nicollet Mall


Minneapolis, Minnesota 55402,


Attention: James Martin, Esq.


Facsimile No.: 612-303-1410


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


Lowenstein Sandler PC


1251 Avenue of the Americas


New York, New York 10020


Attention: Michael D. Maline, Esq.


Facsimile No.: 973-422-6873


(b)           if
to the Company shall be delivered or sent by mail or facsimile transmission to:
Cytori Therapeutics, Inc., 3020 Callan Road, San Diego, California 92121,
Attention: Chief Executive Officer, (Facsimile No.: 858-458-0995), with a copy
(which shall not constitute notice) to: Heller Ehrman LLP, 4350 La Jolla Village
Drive, 7th Floor, San Diego, California 92122, Attention:  Hayden J. Trubit, Esq., (Facsimile No.:
858-587-5903). Any such notice shall be effective only upon receipt.  Any party to this Agreement may change such
address for notices by sending to the parties to this Agreement written notice
of a new address for such purpose.


10.           Persons Entitled to Benefit
of Agreement.  This Agreement
shall inure to the benefit of and shall be binding upon the Placement Agent,
the Company and their respective successors and assigns and the controlling
persons, officers and directors referred to in Section 6.  Nothing in this Agreement is intended or
shall be construed to give to any other person, firm or corporation, other than
the persons, firms or corporations mentioned in the preceding sentence, any
legal or equitable remedy or claim under



 25
 






 



or in respect of this Agreement, or any provision herein
contained.  The term “successors and
assigns” as herein used shall not include any purchaser of the Shares by reason
merely of such purchase.


11.           Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to the conflicts of laws provisions thereof.


12.           No Fiduciary Relationship. The Company hereby acknowledges
that the Placement Agent is acting solely as a placement agent in connection
with the offering of the Company’s securities. The Company further acknowledges
that the Placement Agent is acting pursuant to a contractual relationship created
solely by this Agreement entered into on an arm’s length basis and in no event
do the parties intend that the Placement Agent act or be responsible as a
fiduciary to the Company, its management, stockholders, creditors or any other
person in connection with any activity that the Placement Agent may undertake
or has undertaken in furtherance of the offering of the Company’s securities,
either before or after the date hereof. The Placement Agent hereby expressly
disclaims any fiduciary or similar obligations to the Company, either in
connection with the transactions contemplated by this Agreement or any matters
leading up to such transactions, and the Company hereby confirms its
understanding and agreement to that effect. The Company and the Placement Agent
agree that they are each responsible for making their own independent judgments
with respect to any such transactions. The Company hereby waives and releases,
to the fullest extent permitted by law, any claims that the Company may have
against the Placement Agent with respect to any breach or alleged breach of any
fiduciary or similar duty to the Company in connection with the transactions
contemplated by this Agreement or any matters leading up to such transactions.


13.           Headings.  The Section
headings in this Agreement have been inserted as a matter of convenience of
reference and are not a part of this Agreement.


14.           Entire Agreement; Amendments and Waivers.  This Agreement, together with that certain
Engagement Letter, dated June 30, 2006, by and between the Company and you,
constitutes the entire agreement between the parties hereto pertaining to the
subject matter hereof and supersedes all prior and contemporaneous agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties, and there are no warranties, representations or other agreements among
the parties in connection with the subject matter hereof except as set forth
specifically herein or contemplated hereby. 
No supplement, modification or waiver of this Agreement shall be binding
unless executed in writing by the party to be bound thereby. The failure of a
party to exercise any right or remedy shall not be deemed or constitute a
waiver of such right or remedy in the future. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provision hereof (regardless of whether similar), nor shall any such
waiver constitute a continuing waiver unless otherwise expressly provided.


15.           Submission to Jurisdiction. Except as set forth below, no
Proceeding may be commenced, prosecuted or continued in any court other than
the courts of the State of New York located in the City and County of New York
or in the United States District Court for the Southern District of New York,
which courts shall have jurisdiction over the adjudication of such matters, and
the Company and the Placement Agent each hereby consents to the jurisdiction of
such courts and personal service with respect thereto. The Company hereby
waives all right to trial by jury in any Proceeding (whether based upon
contract, tort or otherwise) in any way arising out of or relating to this
Agreement. The Company agrees that a final and no-longer-appealable judgment in
any such Proceeding brought in any such court shall be conclusive and binding
upon the Company and may be enforced in any other courts in the jurisdiction of
which the Company is or may be subject, by suit upon such judgment.



 26
 






 



16.           Counterparts.  This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original and all such counterparts
shall together constitute one and the same instrument.  Delivery of an executed counterpart by
facsimile shall be effective as delivery of a manually executed counterpart
thereof.


17.           Research Analyst Independence. The Company acknowledges that
the Placement Agent’s research analysts and research department are required to
be independent from its investment banking division and is subject to certain
regulations and internal policies, and that such Placement Agent’s research
analysts may hold views and make statements or investment recommendations
and/or publish research reports with respect to the Company and/or the offering
that differ from the views of its investment banking division. The Company
hereby waives and releases, to the fullest extent permitted by law, any claims
that the Company may have against the Placement Agent with respect to any
conflict of interest that may arise from the fact that the views expressed by
its independent research analysts and research department may be different from
or inconsistent with the views or advice communicated to the Company by such
Placement Agent’s investment banking division. The Company acknowledges that
the Placement Agent is a full service securities firm and as such from time to
time, subject to applicable securities laws, rules and regulations, may effect
transactions for its own account or the account of its customers and hold long
or short positions in debt or equity securities of the Company; provided, however, that nothing in this Section 17
shall relieve the Placement Agent of any responsibility or liability that it
may otherwise bear in connection with activities in violation of applicable
securities laws, rules and regulations.


[Signature Page Follows]



 27














 


If
the foregoing is in accordance with your understanding of the agreement between
the Company and the Placement Agent, kindly indicate your acceptance in the
space provided for that purpose below.


	
  

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CYTORI THERAPEUTICS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark Saad

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Mark Saad

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Accepted as of

  	
   

  
	
  the date first above written:

  	
   

  
	
   

  	
   

  
	
  PIPER JAFFRAY & CO.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ David W.
  Stadinski

  	
   

  	
   

  
	
   

  	
  Name:

  	
  David W. Stadinski

  	
   

  
	
   

  	
  Title:

  	
  Managing Director

  	
   

  
								



 









 



 


Schedules
and Exhibits


Schedule I:                                     Issuer General
Free Writing Prospectuses


Schedule II:                                 Permitted Free Writing
Prospectuses


Schedule III:                             Certain Investors


Exhibit A:                                            Form of
Subscription Terms


Exhibit B:                                              Form of
Lock-Up Agreement


Exhibit C:                                              List of
Directors and Executive Officers Executing Lock-Up Agreements


Exhibit D:                                             Matters To
Be Covered In The Opinion Of Counsel To The Company


Exhibit E:                                               Form of
Written Statement of Corporate Counsel to the Company


Exhibit F:                                               Pricing
Information









 



Schedule
I


Issuer
General Free Writing Prospectuses


Form of Subscription
Terms









 



Schedule
II


Permitted
Free Writing Prospectuses


Company press release
announcing the offering.









 



Schedule
III


Certain
Investors


Gagnon Securities


CAM - Legg Mason


Wasatch Advisors


Kern Capital


Daiwa Securities


Quintiles Transnational - NovaQuest


MicroValue (Suter, Zulle)















 


Exhibit
A


Form
of Subscription Terms


Cytori Therapeutics, Inc.

3020 Callan Road

San Diego, California 92121


Ladies and Gentlemen:


The undersigned (the “Investor”) hereby confirms and agrees with
you as follows:


1.             The subscription terms set forth
herein (the “Subscription”) are
made as of the date set forth below between Cytori Therapeutics, Inc., a
Delaware corporation (the “Company”),
and the Investor.


2.             As of the Closing (as defined below)
and subject to the terms and conditions hereof, 
the Company and the Investor agree that the Investor will purchase from
the Company and the Company will issue and sell to the Investor such number of
shares of common stock, par value $0.001 per share, of the Company (the “Common Stock”) as is set forth on the
signature page hereto (the “Signature Page”)
for a purchase price of $5.75 per share (the “Shares”).  The Investor acknowledges that the offering
is not a firm commitment underwriting and that there is no minimum offering
amount.


3.             The completion of
the purchase and sale of the Shares shall occur at a closing (the “Closing”) which, in accordance with Rule
15c6-1 promulgated under the Securities Exchange Act of 1934, as amended, is
expected to occur on or about August
15, 2006.  At the Closing, (a) the
Company shall cause its transfer agent to release to the Investor the number of
Shares being purchased by the Investor and (b) the aggregate purchase price for
the Shares being purchased by the Investor will be delivered by or on behalf of
the Investor to the Company.  If the
Investor chooses to settle via DWAC (by checking the appropriate space on the
Signature Page hereto), the provisions set forth in Exhibit A hereto
shall be incorporated herein by reference as if set forth fully herein.


4.             The offering and sale of the Shares
are being made pursuant to the Registration Statement and the Prospectus (as
such terms are defined below).  The
Investor acknowledges that the Company intends to enter into subscriptions in
substantially the same form as this Subscription with certain other investors
and intends to offer and sell (the “Offering”)
up to an aggregate of 1,005,212 shares of Common Stock pursuant to the
Registration Statement and Prospectus. 
In addition, the Investor acknowledges that the Company intends to enter
into a common stock purchase agreement with Olympus Corporation whereby Olympus
Corporation will purchase $11,000,000 of Company Common Stock at a purchase
price per share equal to the purchase price per share to be paid by the
Investor.


5.             The Company has filed or shall file
with the Securities and Exchange Commission (the “Commission”) a prospectus (the “Base Prospectus”) and a final prospectus supplement
(collectively, the “Prospectus”)
with respect to the registration statement (File No. 333-134129) reflecting the
Offering, including all amendments thereto, the exhibits and any schedules
thereto, the documents otherwise deemed to be a part thereof or included
therein by the rules and regulations of the Commission (the “Rules and Regulations”) and any registration
statement relating to the Offering and filed pursuant to Rule 462(b) under the
Rules and Regulations (collectively, the “Registration
Statement”), in conformity with the Securities Act of 1933, as
amended (the “Securities Act”),
including Rule 424(b) thereunder.  The
Investor hereby confirms that it has had full access to the Base Prospectus and
the Company’s 









 



periodic reports and other information incorporated by
reference therein, and was able to read, review, download and print such
materials.


6.             The
Company has entered into a Placement Agency Agreement (the “Placement Agreement”), dated August 9,
2006 with Piper Jaffray & Co. (the “Placement
Agent”), which will act as the Company’s placement agent with
respect to the Offering and receive a fee in connection with the sale of the
Shares.  The Placement Agreement contains
certain representations and warranties of the Company.  The Company acknowledges and agrees that the
Investor may rely on the representations and warranties made by it to the Placement
Agent in Section 2 of the Placement Agreement to the same extent as if such
representations and warranties had been incorporated in full herein and made
directly to the Investor.  Capitalized
terms used, but not otherwise defined, herein shall have the meanings ascribed
to such terms in the Placement Agreement.


7.             The
obligations of the Company and the Investor to complete the transactions
contemplated by this Subscription shall be subject to the following:


a.             The Company’s obligation to issue
and sell the Shares to the Investor shall be subject to: (i) the receipt by the
Company of the purchase price for the Shares being purchased hereunder as set
forth on the Signature Page and (ii) the accuracy of the representations and
warranties made by the Investor and the fulfillment of those undertakings of
the Investor to be fulfilled prior to the Closing Date.


b.             The Investor’s obligation to
purchase the Shares will be subject to the condition that the Placement Agent
shall not have: (i) terminated the Placement Agreement pursuant to the terms
thereof or (ii) determined that the conditions to closing in the Placement
Agreement have not been satisfied.


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


a.             The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by this
Subscription and otherwise to carry out its obligations hereunder.  The execution and delivery of this
Subscription by the Company and the consummation by it of the transactions
contemplated hereunder have been duly authorized by all necessary action on the
part of the Company.  This Subscription
has been duly executed by the Company and, when delivered in accordance with
the terms hereof, will constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
may be limited by any bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws affecting the enforcement of
creditors’ rights generally or by general principles of equity.


b.             The Company shall (i) before the opening of trading on
the Nasdaq Global Market on the next trading day after the date hereof, issue a
press release, disclosing all material aspects of the transactions contemplated
hereby and (ii) make such other filings and notices in the manner and time
required by the Commission with respect to the transactions contemplated
hereby.  The Company shall not identify
the Investor by name in any press release or public filing, or otherwise
publicly disclose the Investor’s name, without the Investor’s prior written
consent, unless required by law or the rules and regulations of any
self-regulatory organization or exchange which the Company or its securities
are subject.


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









 



a.             The Investor represents that (i) it has had full access
to the Base Prospectus as well as the Company’s periodic reports and other
information incorporated by reference therein, prior to or in connection with
its receipt of this Subscription, (ii) it is knowledgeable, sophisticated and
experienced in making, and is qualified to make, decisions with respect to investments
in securities representing an investment decision like that involved in the
purchase of the Shares, and (iii) it does not have any agreement or
understanding, directly or indirectly, with any person or entity to distribute
any of the Shares.


b.             The Investor has the requisite power and authority to
enter into this Subscription and to consummate the transactions contemplated
hereby.   The execution and delivery of
this Subscription by the Investor and the consummation by it of the
transactions contemplated hereunder have been duly authorized by all necessary
action on the part of the Investor.  This
Subscription has been executed by the Investor and, when delivered in
accordance with the terms hereof, will constitute a valid and binding
obligation of the Investor enforceable against the Investor in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’ and
contracting parties’ rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).


c.             The Investor understands that nothing in this
Subscription or any other materials presented to the Investor in connection
with the purchase and sale of the Shares constitutes legal, tax or investment
advice.  The Investor has consulted such
legal, tax and investment advisors as it, in its sole discretion, has deemed
necessary or appropriate in connection with its purchase of Shares.


d.             Neither the Investor nor any Person acting on behalf of,
or pursuant to any understanding with or based upon any information received
from, the Investor has, directly or indirectly, engaged in any transactions in
the securities of the Company (including, without limitation, any Short Sales
involving the Company’s securities) since the earlier to occur of (i) the time
that the Investor was first contacted by the Placement Agent or the Company
with respect to the transactions contemplated hereby and (ii) the date that is
the tenth (10th)
trading day prior to the date of this Subscription.  “Short Sales” include, without limitation,
all “short sales” as defined in Rule 200 promulgated under Regulation SHO under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether or not against the
box, and all types of direct and indirect stock pledges, forward  sale contracts, options, puts, calls, short
sales, swaps, “put equivalent positions” (as defined in Rule 16a-1(h) under the
Exchange Act) and similar arrangements (including on a total return basis), and
sales and other transactions through non-U.S. broker dealers or foreign
regulated brokers.  The Investor
covenants that neither it, nor any Person acting on behalf of, or pursuant to
any understanding with or based upon any information received from, the
Investor will engage in any transactions in the securities of the Company
(including Short Sales) prior to the time that the transactions contemplated by
this Subscription are publicly disclosed.


e.             The Investor represents that, except as set forth below,
(i) it has had no position, office or other material relationship within the
past three years with the Company or persons known to it to be affiliates of
the Company, (ii) it is not a, and it has no direct or indirect affiliation or
association with any, NASD member or an Associated Person (as such term is
defined under the NASD Membership and Registration Rules Section 1011) as of
the date hereof, and (iii) neither it nor any group of investors (as identified
in a public filing made with the Commission) of which it is a member, acquired,
or obtained the right to acquire, 20% or more of the Common Stock (or
securities convertible or exercisable for Common Stock) or the voting power of
the Company on a post-transaction basis.   
Exceptions:






(If no exceptions,
write “none.” If left blank, response will be deemed to be “none.”)









 



10.          Notwithstanding any investigation made by
any party to this Subscription, all covenants, agreements, representations and
warranties made by the Company and the Investor herein will survive the
execution of this Subscription, the delivery to the Investor of the Shares
being purchased and the payment therefor.


11.            This Subscription may not be modified or
amended except pursuant to an instrument in writing signed by the Company and
the Investor.


12.            In case any provision contained in this
Subscription should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein will not in any way be affected or impaired thereby.


13.          This Subscription will be governed by,
and construed in accordance with, the internal laws of the State of New York,
without giving effect to the principles of conflicts of law that would require
the application of the laws of any other jurisdiction.


14.          This Subscription may be executed in one
or more counterparts, each of which will constitute an original, but all of
which, when taken together, will constitute but one instrument, and will become
effective when one or more counterparts have been signed by each party hereto
and delivered to the other parties.


15.          The Investor
acknowledges and agrees that such Investor’s receipt of the Company’s
counterpart to this Subscription shall constitute written confirmation of the
Company’s sale of Shares to such Investor.


16.          In the event that the Placement Agreement
is terminated by the Placement Agent pursuant to the terms thereof, this Subscription
shall terminate without any further action on the part of the parties hereto.









 



INVESTOR SIGNATURE PAGE


	
  Number of Shares:

  	
   

  	
   

  
	
   

  
	
  Purchase Price
  Per Share: $

  	
  5.75

  	
   

  
	
   

  
	
  Aggregate
  Purchase Price: $

  	
   

  	
   

  
				



 


Please confirm that the
foregoing correctly sets forth the agreement between us by signing in the space
provided below for that purpose.


Dated
as of:  August 9, 2006


	
  

  	
   

  	
   

  
	
  INVESTOR

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Print Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
	
  Name that Shares
  are to be registered:

  	
   

  	
   

  	
   

  
	
  Mailing Address:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Taxpayer
  Identification Number:

  	
   

  	
   

  	
   

  
	
  Manner of
  Settlement (check one):

  	
   

  
	
   

  	
  o 

  	
  DWAC (see Exhibit
  A for explanation and instructions)

  
	
   

  	
  o 

  	
  DVP (see Exhibit
  B for explanation and instructions)

  
	
   

  	
   

  
	
   

  	
   

  
	
  Agreed and
  Accepted this 9th day of August
  2006:

  
	
   

  	
   

  
	
   

  	
   

  
	
  CYTORI
  THERAPEUTICS, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
													



 


Sales of the Shares purchased
hereunder were made pursuant to a registration statement or in a transaction in
which a final prospectus would have been required to have been delivered in the
absence of Rule 172 promulgated under the Securities Act.


 









 



EXHIBIT A


TO BE COMPLETED BY INVESTOR


SETTLING VIA DWAC


Delivery by electronic
book-entry at The Depository Trust Company (“DTC”),
registered in the Investor’s name and address as set forth on the Signature
Page of the Subscription to which this Exhibit A is attached, and
released by ComputerShare Investor Services, the Company’s transfer agent (the “Transfer Agent”), to the Investor at the
Closing.


	
  

  	
  Name of DTC Participant
  (broker-dealer at

  which the account or accounts to be credited with 

  the Shares are maintained)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DTC Participant
  Number

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name of Account
  at DTC Participant being

  credited with the Shares

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Account Number
  at DTC Participant being

  credited with the Shares

  	
   

  



 


NO
LATER THAN ONE (1) BUSINESS DAY AFTER THE EXECUTION OF THE SUBSCRIPTION TO WHICH
THIS EXHIBIT A IS ATTACHED BY THE INVESTOR AND THE COMPANY, THE INVESTOR
SHALL:


(I)    DIRECT
THE BROKER-DEALER AT WHICH THE ACCOUNT OR ACCOUNTS TO BE CREDITED WITH THE
SHARES ARE MAINTAINED TO SET UP A DEPOSIT/WITHDRAWAL AT CUSTODIAN (“DWAC”) INSTRUCTING THE TRANSFER AGENT TO
CREDIT SUCH ACCOUNT OR ACCOUNTS WITH THE SHARES, AND


(II)   REMIT
BY WIRE TRANSFER THE AMOUNT OF FUNDS EQUAL TO THE AGGREGATE PURCHASE PRICE FOR
THE SHARES BEING PURCHASED BY THE INVESTOR TO THE FOLLOWING ACCOUNT:


PNC
Bank New Jersey

ABA#:    XXXXXXXXX

Account Name:  Lowenstein Sandler PC
Special Trust Account III

Account #: XXXXXXXXXX


Such funds shall
be held in escrow pursuant to an escrow agreement entered into between
Lowenstein Sandler PC (the “Escrow Agent”),
the Placement Agent and the Company (the “Escrow
Agreement”) until the Closing and delivered by the Escrow Agent on
behalf of the Investor to the Company upon the satisfaction, in the sole
judgment of the Placement Agent, of the conditions set forth in Section 7(b) of
the Subscription to which this Exhibit A is attached.  The
Company and the Investor agree to indemnify and hold the Escrow Agent harmless
from and against any and all losses, costs, damages, expenses and claims
(including, without limitation, court costs and reasonable attorneys fees) (“Losses”) with 









 



respect
to the funds held in escrow pursuant hereto or arising under the Escrow
Agreement, unless it is finally determined that such Losses resulted directly
from the willful misconduct or gross negligence of the Escrow Agent.  Anything in this paragraph to the contrary
notwithstanding, in no event shall the Escrow Agent be liable for any special,
indirect or consequential loss or damage of any kind whatsoever (including but
not limited to lost profits), even if the Escrow Agent has been advised of the
likelihood of such loss or damage and regardless of the form of action.


Investor
acknowledges that the Escrow Agent acts as counsel to the Placement Agent, and
shall have the right to continue to represent the Placement Agent, in any
action, proceeding, claim, litigation, dispute, arbitration or negotiation in
connection with the Offering, and Investor hereby consents thereto and waives
any objection to the continued representation of the Placement Agent by the
Escrow Agent in connection therewith based upon the services of the Escrow
Agent under the Escrow Agreement, without waiving any duty or obligation the
Escrow Agent may have to any other person.















 


EXHIBIT B


TO BE COMPLETED BY INVESTOR


SETTLING VIA DVP


Delivery versus payment (“DVP”) through DTC (i.e., the Company shall deliver Shares
registered in the Investor’s name and address as set forth on the Signature
Page of the Subscription to which this Exhibit B is attached and
released by ComputerShare Investor Services, the Company’s transfer agent (the “Transfer Agent”), to the Investor at the
Closing directly to the account(s) at the Placement Agent identified by the
Investor and simultaneously therewith payment shall be made from such
account(s) to the Company through DTC).  NO LATER THAN ONE (1) BUSINESS DAY AFTER THE EXECUTION
OF THE SUBSCRIPTION TO WHICH THIS EXHIBIT B IS ATTACHED
BY THE INVESTOR AND THE COMPANY, THE INVESTOR SHALL:


(I)            NOTIFY THE PLACEMENT
AGENT OF THE ACCOUNT OR ACCOUNTS AT THE PLACEMENT AGENT TO BE CREDITED WITH THE
SHARES BEING PURCHASED BY SUCH INVESTOR, AND


(II)        CONFIRM THAT THE ACCOUNT
OR ACCOUNTS AT THE PLACEMENT AGENT TO BE CREDITED WITH THE SHARES BEING
PURCHASED BY THE INVESTOR HAVE A MINIMUM CASH BALANCE EQUAL TO THE AGGREGATE
PURCHASE PRICE FOR THE SHARES BEING PURCHASED BY THE INVESTOR.


If the Shares are to be
further credited to an account held elsewhere than at the Placement Agent,
please complete the information requested below in order to facilitate such
further credit:


	
  

  	
  Name of DTC Participant (broker-dealer at which
  the account or accounts to be credited with the Shares are maintained)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DTC Participant Number

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name of Account at DTC Participant being credited
  with the Shares

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Account Number at DTC Participant being credited
  with the Shares

  	
   

  



 









 



Exhibit
B-1


Form
of Lock-Up Agreement


                      ,
2006


Piper Jaffray & Co.

U.S. Bancorp Center

800 Nicollet Mall

Minneapolis, Minnesota  55402


Ladies and Gentlemen:


The undersigned
understands that you, as Placement Agent, propose to enter into the Placement
Agency Agreement (the “Placement Agreement”) with Cytori Therapeutics,
Inc., a Delaware corporation (the “Company”),
providing for the offering (the “Offering”) of shares (the “Shares”)
of common stock, par value $0.001 per share (the “Common Stock”), of the
Company. Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Placement Agreement.


In consideration of the
foregoing, and in order to induce you to participate in the Offering, and for
other good and valuable consideration receipt of which is hereby acknowledged,
the undersigned hereby agrees that, without your prior written consent (which
consent may be withheld in your sole discretion), the undersigned will not,
during the period (the “Lock-Up Period”) beginning on the date hereof
and ending on the date 90 days
after the date of the final prospectus (including the final prospectus
supplement) to be used in confirming the sale of the Shares, (1) offer,
pledge, announce the intention to sell, sell, contract to sell, sell any option
or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, or file (or participate in the filing of) a
registration statement with the Securities and Exchange Commission in respect
of, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock (including without limitation,
Common Stock which may be deemed to be beneficially owned by the undersigned in
accordance with the rules and regulations of the Securities and Exchange
Commission and securities which may be issued upon exercise of a stock option
or warrant), (2) enter into any swap or other agreement that transfers, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (1) or
(2) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise, (3) make any demand for or exercise any right
with respect to, the registration of any shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock, or (4)
publicly announce an intention to effect any transaction specific in clause
(1), (2) or (3) above.


Notwithstanding the
foregoing, the restrictions set forth in clause (1) and (2) above
shall not apply to (a) transfers (i) as a bona fide gift or gifts,
provided that the donee or donees thereof agree to be bound in writing by the
restrictions set forth herein, (ii) to any trust for the direct or
indirect benefit of the undersigned or the immediate family of the undersigned,
provided that the trustee of the trust agrees to be bound in writing by the
restrictions set forth herein, and provided further that any such transfer
shall not involve a disposition for value, (iii) with your prior written
consent or (iv) effected pursuant to any exchange of “underwater” options
with the Company, (b) the acquisition or exercise of any stock option
issued pursuant to the Company’s existing stock option plan, including any
exercise effected by the delivery of Shares of the Company held by the
undersigned, or (c) the purchase or sale of the Company’s 









 



securities pursuant to a plan, contract or instruction
that satisfies all of the requirements of
Rule 10b5-1(c)(1)(i)(B) that was in effect prior to the date
hereof.  For purposes of this Lock-Up Agreement, “immediate family” shall
mean any relationship by blood, marriage or adoption, not more remote than
first cousin.  None of the restrictions set forth in this Lock-Up
Agreement shall apply to Common Stock acquired in open market transactions.


For the purpose of
allowing you to comply with NASD Rule 2711(f)(4), if (1) during the last 17
days of the Lock-Up Period, the Company releases earnings results or publicly
announces other material news or a material event relating to the Company
occurs or (2) prior to the expiration of the Lock-Up Period, the Company
announces that it will release earnings results during the 16 day period
beginning on the last day of the Lock-Up Period, then in each case the Lock-Up
Period will be extended until the expiration of the 18 day period beginning on
the date of release of the earnings results or the public announcement
regarding the material news or the occurrence of the material event, as
applicable, unless you waive, in writing, such extension.  The
undersigned hereby acknowledges that the Company has agreed not to accelerate
the vesting of any option or warrant or the lapse of any repurchase right prior
to the expiration of the Lock-Up Period. 
In furtherance of the foregoing, the Company, and any duly
appointed transfer agent for the registration or transfer of the securities
described herein, are hereby authorized to decline to make any transfer of
securities if such transfer would constitute a violation or breach of this
Lock-Up Agreement.


The foregoing
restrictions are expressly agreed to preclude the undersigned from engaging in
any hedging or other transaction which is designed to or reasonably expected to
lead to or result in a sale or disposition of the Common Stock even if such
Common Stock would be disposed of by someone other than the undersigned.  Such prohibited hedging or other transactions
would include without limitation any short sale or any purchase, sale or grant
of any right (including without limitation any put option or put equivalent
position or call option or call equivalent position) with respect to any of the
Common Stock or with respect to any security that includes, relates to, or
derives any significant part of its value from such Common Stock.


The undersigned hereby
represents and warrants that the undersigned has full power and authority to
enter into this Lock-Up Agreement.  All authority herein conferred or
agreed to be conferred and any obligations of the undersigned shall be binding
upon the successors, assigns, heirs or personal representatives of the
undersigned.


The undersigned also
agrees and consents to the entry of stop transfer instructions with the Company’s
transfer agent and registrar against the transfer of the undersigned’s shares
of Common Stock except in compliance with the foregoing restrictions.


The undersigned
understands that, if the Placement Agreement does not become effective, or if
the Placement Agreement (other than the provisions thereof which survive termination)
shall terminate or be terminated prior to payment for and delivery of the
Shares to be sold thereunder, the undersigned shall be released from all
obligations under this Lock-Up Agreement.









 



This Lock-Up Agreement
shall be governed by and construed in accordance with the laws of the State of
New York, without regard to the conflict of laws principles thereof.


 


	
  

  	
  Very truly yours,

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Print Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Print Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  	
   

  
							



 









 



Exhibit
B-2


Form
of Lock-Up Agreement

(Christopher J. Calhoun)


                        ,
2006


Piper Jaffray & Co.

U.S. Bancorp Center

800 Nicollet Mall

Minneapolis, Minnesota  55402


Ladies and Gentlemen:


The undersigned
understands that you, as Placement Agent, propose to enter into the Placement
Agency Agreement (the “Placement Agreement”) with Cytori Therapeutics,
Inc., a Delaware corporation (the “Company”),
providing for the offering (the “Offering”) of shares (the “Shares”)
of common stock, par value $0.001 per share (the “Common Stock”), of the
Company. Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Placement Agreement.


In consideration of the
foregoing, and in order to induce you to participate in the Offering, and for
other good and valuable consideration receipt of which is hereby acknowledged,
the undersigned hereby agrees that, without your prior written consent (which
consent may be withheld in your sole discretion), the undersigned will not,
during the period (the “Lock-Up Period”) beginning on the date hereof
and ending on the date 90 days
after the date of the final prospectus (including the final prospectus
supplement) to be used in confirming the sale of the Shares, (1) offer,
pledge, announce the intention to sell, sell, contract to sell, sell any option
or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, or file (or participate in the filing of) a
registration statement with the Securities and Exchange Commission in respect
of, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock (including without limitation,
Common Stock which may be deemed to be beneficially owned by the undersigned in
accordance with the rules and regulations of the Securities and Exchange
Commission and securities which may be issued upon exercise of a stock option
or warrant), (2) enter into any swap or other agreement that transfers, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (1) or
(2) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise, (3) make any demand for or exercise any right
with respect to, the registration of any shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock, or (4)
publicly announce an intention to effect any transaction specific in clause
(1), (2) or (3) above.


Notwithstanding the
foregoing, the restrictions set forth in clause (1) and (2) above
shall not apply to (a) transfers (i) as a bona fide gift or gifts,
provided that the donee or donees thereof agree to be bound in writing by the
restrictions set forth herein, (ii) to any trust for the direct or
indirect benefit of the undersigned or the immediate family of the undersigned,
provided that the trustee of the trust agrees to be bound in writing by the restrictions
set forth herein, and provided further that any such transfer shall not involve
a disposition for value, (iii) with your prior written consent or
(iv) effected pursuant to any exchange of “underwater” options with the
Company, (b) the acquisition or exercise of any stock option issued
pursuant to the Company’s existing stock option plan, including any exercise
effected by the delivery of Shares of the Company held by the undersigned, or
(c) the purchase or sale of the Company’s 









 



securities pursuant to a plan, contract or instruction
that satisfies all of the requirements of Rule 10b5-1(c)(1)(i)(B) that was in
effect prior to the date hereof (including reinstatement of the Rule 10b5-1(c)
contract that had been in effect for the undersigned within a month prior to
the date hereof).  For purposes of this
Lock-Up Agreement, “immediate family” shall mean any relationship by blood,
marriage or adoption, not more remote than first cousin.  None of the
restrictions set forth in this Lock-Up Agreement shall apply to Common Stock
acquired in open market transactions.


For the purpose of
allowing you to comply with NASD Rule 2711(f)(4), if (1) during the last 17
days of the Lock-Up Period, the Company releases earnings results or publicly
announces other material news or a material event relating to the Company
occurs or (2) prior to the expiration of the Lock-Up Period, the Company
announces that it will release earnings results during the 16 day period
beginning on the last day of the Lock-Up Period, then in each case the Lock-Up
Period will be extended until the expiration of the 18 day period beginning on
the date of release of the earnings results or the public announcement
regarding the material news or the occurrence of the material event, as
applicable, unless you waive, in writing, such extension.  The
undersigned hereby acknowledges that the Company has agreed not to accelerate
the vesting of any option or warrant or the lapse of any repurchase right prior
to the expiration of the Lock-Up Period. 
In furtherance of the foregoing, the Company, and any duly
appointed transfer agent for the registration or transfer of the securities
described herein, are hereby authorized to decline to make any transfer of
securities if such transfer would constitute a violation or breach of this
Lock-Up Agreement.


The foregoing
restrictions are expressly agreed to preclude the undersigned from engaging in
any hedging or other transaction which is designed to or reasonably expected to
lead to or result in a sale or disposition of the Common Stock even if such
Common Stock would be disposed of by someone other than the undersigned.  Such prohibited hedging or other transactions
would include without limitation any short sale or any purchase, sale or grant
of any right (including without limitation any put option or put equivalent
position or call option or call equivalent position) with respect to any of the
Common Stock or with respect to any security that includes, relates to, or
derives any significant part of its value from such Common Stock.


The undersigned hereby
represents and warrants that the undersigned has full power and authority to
enter into this Lock-Up Agreement.  All authority herein conferred or
agreed to be conferred and any obligations of the undersigned shall be binding
upon the successors, assigns, heirs or personal representatives of the
undersigned.


The undersigned also
agrees and consents to the entry of stop transfer instructions with the Company’s
transfer agent and registrar against the transfer of the undersigned’s shares
of Common Stock except in compliance with the foregoing restrictions.


The undersigned
understands that, if the Placement Agreement does not become effective, or if
the Placement Agreement (other than the provisions thereof which survive termination)
shall terminate or be terminated prior to payment for and delivery of the
Shares to be sold thereunder, the undersigned shall be released from all
obligations under this Lock-Up Agreement.









 



This Lock-Up Agreement
shall be governed by and construed in accordance with the laws of the State of
New York, without regard to the conflict of laws principles thereof.


 


	
  

  	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Print Name: Christopher J. Calhoun

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Print Title: Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature:

  	
   

  



 















 


Exhibit
C


List
of Directors and Executive Officers

Executing Lock-Up Agreements


Marshall G. Cox

Christopher J. Calhoun

Marc H. Hedrick, MD

Mark E. Saad

Bruce A. Reuter


Elizabeth A. Scarbrough


Seijiro Shirahama


Douglas Arm, Ph.D.


Alexander M. Milstein, MD


John T. Ransom, Ph.D.


Paul W. Hawran


Ronald D. Henriksen


E. Carmack Holmes, MD


David M. Rickey









 



Exhibit
D


Matters
To Be Covered In The

Opinion Of Counsel To The Company


In form and
substance reasonably satisfactory to the Placement Agent and delivered by Heller
Ehrman LLP at Closing









 



Exhibit
E


Form
of Written Statement of

Corporate Counsel to the Company


In form and
substance reasonably satisfactory to the Placement Agent and delivered by
Heller Ehrman LLP at Closing









 



Exhibit
F


Pricing
Information


Number of Shares to be
Issued: 1,005,212


Offering Price: $5.75 per
Share


Aggregate Placement
Agency Fees: $353,173.37


Estimated Net Proceeds to
the Company (exclusive of estimated expenses of the Company): $5,426,795.63