Document:

ex10-64placementagencyagt.htm

    Exhibit
10.64

     

    
      

      4,771,174 Shares

      Warrants
to Purchase 6,679,644 Shares

      

      CYTORI
THERAPEUTICS, INC.

      

      Common
Stock

      

      PLACEMENT AGENCY
AGREEMENT

      

      March 9,
2009

      

      

      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 (each an “Investor” and, collectively,
the “Investors”), (i)
up to 4,771,174 shares (the “Shares”) of the Company’s
common stock, $0.001 par value per share (the “Common Stock”), and (ii)
warrants to purchase up to 6,679,644 shares of Common Stock (the “Warrants” and together with
the Shares, the “Securities”).  The
shares of Common Stock issuable upon exercise of the Warrants are hereinafter
referred to as the “Warrant
Shares”.  The Company desires to engage Piper Jaffray & Co.
as its exclusive placement agent (the “Placement Agent”) in
connection with such issuance and sale.  The Securities are more fully
described in the Registration Statement (as hereinafter defined).

      

      The
Company has prepared and filed in conformity with the requirements of the
Securities Act of 1933, as amended (the “Securities Act”), and the published
rules and regulations thereunder (the “Rules and Regulations”)
adopted by the Securities and Exchange Commission (the “Commission”) a Registration
Statement on Form S-3 (No. 333-157023), relating to the Securities and the
offering thereof from time to time in accordance with Rule 415 of the Rules and
Regulations, and such amendments thereof as may have been required. The
Registration Statement includes a base prospectus (the “Base Prospectus”). The
Company has filed with, or transmitted for filing to, or shall promptly
hereafter file with or transmit for filing to the Commission, a prospectus
supplement, including the Base Prospectus, relating to the Securities in
accordance with Rule 424(b) under the Act (the “Final Prospectus
Supplement”). The term “Registration Statement” as
used in this Agreement means the initial registration statement (including all
exhibits, financial schedules and all documents and information deemed to be a
part of the Registration Statement (through incorporation by reference or
otherwise)), as amended, at the time and on the date it became effective (the
“Effective Date”),
including the information (if any) contained in the form of final prospectus
filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations
and deemed to be part thereof at the time of effectiveness pursuant to Rule 430A
of the Rules and Regulations. The term “Prospectus” as used in this
Agreement means the Base Prospectus together with the Final Prospectus
Supplement. Any preliminary prospectus or prospectus subject to completion
included in the Registration Statement or filed with the Commission pursuant to
Rule 424 under the Securities Act is hereafter called a “Preliminary Prospectus.” As
used herein, the terms “Base 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Prospectus,”
“Prospectus,” “Registration Statement,” “Preliminary Prospectus” and “Final
Prospectus Supplement” shall include any documents incorporated by reference
therein; and any reference to any amendment or supplement to the Registration
Statement or the Prospectus shall be deemed to refer to and include any document
filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), after the
date of the Base Prospectus by the Company with the Commission and on or before
the last to occur of the Effective Date, the date of the Preliminary Prospectus,
or the date of the Prospectus; and any reference herein to the terms “amend,”
“amendment,” or “supplement” with respect to the Registration Statement, any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and include
the filing of any document under the Exchange Act before or after the Effective
Date, the date of such Preliminary Prospectus or the date of the Prospectus, as
the case may be, which is incorporated by reference into such amendment or
supplement, but excluding any documents or information furnished to the
Commission under Item 2.02 or Item 7.01 of any Current Report on Form
8-K.  If the Company has filed an abbreviated registration statement
to register additional Shares and Warrants pursuant to Rule 462(b) under the
Rules and Regulations (the “Rule 462(b) Registration
Statement”), then any reference herein to the term “Registration Statement” shall
also be deemed to include such Rule 462(b) Registration
Statement.  The Company hereby confirms that the Placement Agent,
in connection with its duties in such capacity, is authorized to distribute or
cause to be distributed the Prospectus (as from time to time amended or
supplemented if the Company furnishes amendments or supplements thereto to such
Placement Agent).

      

      All
references in this Agreement to financial statements and schedules and other
information which is “contained,” “included” or “stated” in the Registration
Statement or the Prospectus (or other references of like import) shall be deemed
to mean and include all such financial statements and schedules and other
information which is incorporated by reference in the Registration Statement or
the Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement or the Prospectus shall
be deemed to mean and include the filing of any document under the Exchange Act
on or before the Closing Date (as defined herein), which is incorporated by
reference in the Registration Statement or the Prospectus, as the case may
be.

       

      For purposes of this Agreement, all
references to the Registration Statement, the Rule 462(b) Registration
Statement, the Base Prospectus, any Preliminary 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”).    

       

      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 Securities 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 all or part of the Securities from the
Company upon the terms and conditions set forth in the Prospectus. The Company
expressly acknowledges and agrees that 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 Securities or otherwise provide any financing, and the
Placement Agent shall have no authority to bind (and agrees not to purport to
bind) the Company in respect of the sale of any Securities.

       

      (b) Concurrently with the execution and
delivery of this Agreement, the Company, the Placement Agent and JP Morgan
Chase, as escrow agent (the “Escrow Agent”), shall enter
into an escrow agreement, dated as of the date hereof (the “Escrow Agreement”) pursuant
to which an escrow account will be established, at the Company's expense, for
the benefit of the Company and the Investors 

       

      
        
          
          

        

        
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      who
desire to settle their purchase through the facilities of The Depository Trust
Company’s DWAC system (the “Escrow Account”). Prior to
the Closing Date, (i) each such Investor will deposit in the Escrow Account an
amount equal to $2.10 per unit (with each unit consisting of one (1) Share and
one and four-tenths (1.4) Warrants) multiplied by the number of units to be
purchased by such Investor (the “Purchase Amount”), and (ii)
the Escrow Agent will notify the Company and the Placement Agent in writing of
the amount of funds deposited in the Escrow Account.

       

      (c)            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 percent (6.0%) of the gross proceeds received by the
Company from its sale of the Securities at such Closing (the “Agency Fee”).

       

      (d) Payment of the purchase price for, and
delivery of, the Securities shall be made at a closing (the “Closing”) at the offices of
DLA Piper US LLP, counsel for the Company, located at 4365 Executive Drive,
Suite 1100, San Diego, California at 10:00 a.m., local time, on March 13, 2009
or at such other time and date as the Placement Agent and the Company determine
pursuant to Rule 15c6-1(a) under the Exchange Act (such date of payment and
delivery being herein referred to as the “Closing Date”), and upon
satisfaction of the conditions set forth in this Agreement and the Subscription
Agreements (as defined below), the Company shall deliver the Securities, which
shall be registered in the name or names and shall be in such denominations as
the Placement Agent may request at least one business day before the Closing
Date, to the Investors, which delivery, with respect to the Shares, may be made
through the facilities of the Depository Trust Company, and the Escrow Agent
will disburse the aggregate funds in the Escrow Account to the Company reduced
by an amount equal to the sum of the aggregate Agency Fee payable to the
Placement Agent and the Placement Agent’s bona fide estimate of the amount, if
any, of expenses for which the Placement Agent is entitled to reimbursement
pursuant hereto, with such amounts being delivered to the Placement Agent, by
wire in federal (same day) funds, as provided in the Escrow Agreement. All such
actions taken at the Closing shall be deemed to have occurred
simultaneously.  Each of the Company and the Placement Agent hereby
agree to deliver to the Escrow Agent a Closing Notice in the form attached as
Exhibit C to the Escrow Agreement at least one day prior to the Closing
Date.  At least one day prior to the Closing Date, the Placement Agent
shall submit to the Company its bona fide estimate of the amount, if any, of
expenses for which such Placement Agent is entitled to reimbursement pursuant
hereto. If the Company shall default in its obligations to deliver Securities 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) The sale of the Securities shall be
made pursuant to subscription agreements in the form included as Exhibit A hereto (the
“Subscription
Agreements”). The Company shall have the sole right to accept offers to
purchase the Securities 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.

       

      (f)            Prior
to the earlier of (i) the date on which this Agreement is terminated and (ii)
the Closing Date, the Company shall not, without the prior written consent of
the Placement Agent, solicit or accept offers to purchase Securities 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.

       

      
        
          
          

        

        
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      2. Representations and Warranties of
the Company.  The Company represents and warrants to the
Placement Agent as of the date hereof and as of the Closing Date, and agrees
with the Placement Agent, as follows:

      

      (a) Registration Statement and
Prospectus.  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 Securities 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 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 Use Free Writing
Prospectus(es)(as defined below), if any, issued at or prior to the Time of
Sale, the Statutory Prospectus (as hereinafter defined), and the information
included on Schedule
II hereto, 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
statements in or omissions from the Disclosure Package in reliance upon, and in
conformity with 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 6:00 p.m. New York City time on the date of
      this Agreement.

              

      

      

      
        	
                 
      

              	
                (2)

              	
                “Statutory Prospectus”
      means the Preliminary Prospectus, if any, and  the Base
      Prospectus, each as amended and supplemented as of immediately prior to
      the Time of Sale, including any document incorporated by reference therein
      and any prospectus supplement deemed to be a part thereof.  For
      purposes of this definition,
information

              

      

       

      
        
          
          

        

        
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                  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 Securities 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)

              	
                “Issuer General Use 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 Securities 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 or included or would include an untrue statement of a material fact
or omitted or would omit to state a material fact required to be stated therein
or necessary in order to make the statements therein not misleading; provided,
that the Company makes no representations or warranty in this paragraph with
respect to any Placement Agent Information.

      

      (e) Distributed Materials. 
he 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 Securities 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 3 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 Securities
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 Securities 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 

       

      
        
          
          

        

        
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      of Rules
164 and 433 under the Securities Act with respect to the offering of the
Securities 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 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
(i) 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 or (ii) would not impair in any material respect the ability of the
Company to perform its obligations under this Agreement or to consummate any
transactions contemplated by this Agreement, the Disclosure Package or the
Prospectus (any such effect as described in clauses (i) or (ii), 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.

      

      (j) The
Securities.  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 Agreements, 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 and will conform in all material respects to
the description thereof contained in the Disclosure Package and the Prospectus
and such description conforms in all material respects to the rights set forth
in the instruments defining the same.  The Warrants conform, or when
issued will conform, to the description thereof contained in the Disclosure
Package and the Prospectus and have been duly and validly authorized by the
Company and upon delivery to the Investors at the Closing Date will be valid and
binding obligations of the Company, enforceable in accordance with their terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights and remedies of
creditors generally or subject to general principles of equity. The Warrant
Shares initially issuable upon exercise of the Warrants conform, or when issued
will conform, to the description thereof contained in the Disclosure Package and
the Prospectus and have been duly authorized and reserved for issuance and when
issued in accordance with the terms thereof will be validly issued, fully paid
and nonassessable.

      

      (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 

       

      
        
          
          

        

        
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      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 Securities are in due and proper form and the holders of
the Securities will not be subject to personal liability by reason of being such
holders.

      

      (l) No Registration
Rights.  Except as otherwise described in the Disclosure
Package, 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.    The Company has the full right,
power and authority to enter into this Agreement, each of the Subscription
Agreements and the Escrow Agreement, and to perform and discharge its
obligations hereunder and thereunder; and each of this Agreement, the Escrow
Agreement and each Subscription Agreement 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.

       

      (o) No Conflict.  The
execution, delivery and performance by the Company of this Agreement each
Subscription Agreement and the Escrow Agreement and the consummation of the
transactions herein contemplated, including the issuance and sale by the Company
of the Securities and the issuance of the Warrant Shares upon due exercise of
the Warrants in accordance with their terms, 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 execution, delivery and performance of this Agreement, the
Subscription Agreements and the Escrow Agreement by the Company, the issuance
and sale of the Securities and the issuance of the Warrant Shares upon due
exercise of the Warrants in accordance with their terms, or the consummation by
the Company of the transactions contemplated hereby other than (i) as may
be required under the Securities 

       

      
        
          
          

        

        
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      Act,
(ii) any necessary qualification of the Securities under the securities or
blue sky laws of the various jurisdictions in which the Securities are being
offered by the Placement Agent and (iii) under the rules and regulations of
the Financial Industry Regulatory Authority (“FINRA”).

      

      (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 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 

       

      
        
          
          

        

        
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      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
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 

       

      
        
          
          

        

        
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      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 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 FINRA 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 and Warrant 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 

       

      
        
          
          

        

        
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      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) Minute Books.  The
minute books of the Company and each Subsidiary have been made available to the
Placement Agent and counsel for the Placement Agent, and such books
(i) contain a complete summary of all meetings and actions of the board of
directors (including each board committee) and shareholders of the Company (or
analogous governing bodies and interest holders, as applicable), and each
Subsidiary since the time of its respective incorporation or organization
through the date of the latest meeting and action, and (ii) accurately in
all material respects reflect all transactions referred to in such
minutes.

       

       

      (ff) Not an Investment
Company.  The Company is not, nor after giving effect to the
offering and sale of the Securities 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 thereunder or (ii) a
“business development company” (as defined in Section 2(a)(48) of the
Investment Company Act).

       

      (gg) 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.

      

      (hh) 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
Securities.

       

      
        
          
          

        

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

       

      (jj) 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.

      

      (kk)            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.

      

      (ll) 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 Securities.

      

      (mm) 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.

      

      (nn) 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 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.

      

      (oo) FINRA
Affiliations.  To the Company’s knowledge, there are no
affiliations or associations between (i) any member of the FINRA 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.

      

      (pp) 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 

       

      
        
          
          

        

        
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      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.

      

      (qq) 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.

      

      (rr) 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.

      

      (ss) 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.

      

      (tt) 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 

       

      
        
          
          

        

        
          -13-

          
            

          

        

        
          
          

        

      

       

      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 Securities 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) prepare the Prospectus in a
form approved by the Placement Agent containing information previously omitted
at the time of effectiveness of the Registration Statement in reliance on Rules
430A, 430B and 430C and to file such 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) not file any amendment to the Registration
Statement or distribute an amendment or supplement to the Disclosure Package or
the Prospectus or document incorporated by reference therein of which the
Placement Agent shall not previously have been advised and furnished with a copy
or to which the Placement Agent shall have reasonably objected in writing or
which is not in compliance with the Rules and Regulations and (iii) promptly
file 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”).

      

      (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., Washington, D.C. 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.

      

      (c) Issuer Free Writing
Prospectuses.  The Company will (i) not make any offer relating
to the Securities that would constitute an Issuer Free Writing Prospectus 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 I 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 

       

      
        
          
          

        

        
          -14-

          
            

          

        

        
          
          

        

      

       

      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.

      

      (d) [Reserved.]

      

      (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 any Preliminary Prospectus, 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 any Preliminary Prospectus, the Disclosure Package, the Prospectus or any
Issuer Free Writing Prospectus, or the initiation of any proceedings for that
purpose or pursuant to Section 8A of the Securities Act 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 and Warrant 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, in the judgment of the Company or
in the reasonable opinion of the Placement Agent, it becomes 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 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
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
Securities 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.

       

      
        
          
          

        

        
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      (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 each
Preliminary Prospectus, if any; (iii) any Issuer Free Writing Prospectus, (iv)
during the Prospectus Delivery Period, copies of the Prospectus (or any
amendments or supplements thereto); (v) 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 (vi) all
correspondence to and from, and all documents issued to and by, the Commission
in connection with the registration of the Securities 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 Securities 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 Securities, 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 Securities 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 18 months after the
effective date of the Registration Statement (as defined in Rule 158(c) under
the Securities Act), 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 Securities 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 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 except for a registration statement on Form S-8
relating to employee benefit plans 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 Securities 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 

       

      
        
          
          

        

        
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      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 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 (iv) agrees that all such shares remain
subject to restrictions substantially similar to those contained in this Section 3(l); or (v)
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.  Notwithstanding the
foregoing, for the purpose of allowing the Placement Agent to comply with FINRA
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 Securities, without the prior written 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.

      

      (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 Securities.

      

      (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 and Warrant Shares.

      

      (q) Listing.  The
Company shall use its commercially reasonable efforts to cause the Shares and
Warrant Shares to be listed for quotation on the Nasdaq Global Market at the
Closing Date and to maintain such listing.  In addition, the Company shall
use its commercially reasonable efforts to cause the Warrants to be listed for
quotation on the Nasdaq Global Market as soon as practicable and to

      
         

        
          
            
            

          

          
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maintain
such listing until the earlier to occur of (i) the expiration date of the
Warrants and (ii) such time as all of the Warrants have been exercised in
full.

         

      

      (r) Investment Company
Act.  The Company shall not invest, or otherwise use the
proceeds received by the Company from its sale of the Securities 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).

       

      (t) Interim Financial Statements.
Prior to the Closing Date, the Company will furnish to the Placement Agent, as
soon as practicable after they have been prepared, copies of any unaudited
interim consolidated financial statements of the Company for any periods
subsequent to the periods covered by the financial statements appearing in the
Registration Statement and the Prospectus.

       

      (u) Reservation of Warrant
Shares.  The Company shall reserve and keep available at all
times a sufficient number of shares of Common Stock for the purpose of enabling
the Company to issue the Warrant Shares.

       

      (v) Performance. The Company
shall use its best efforts to do and perform all things required to be done or
performed under this Agreement by the Company prior to the Closing Date and to
satisfy all conditions precedent to the delivery of the Securities.

       

      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, each Preliminary 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 Securities including any stock or
transfer taxes and stamp or similar duties payable upon the sale, issuance or
delivery of the Securities and the printing, delivery, and shipping of the
certificates representing the Securities, (iii) the registration or
qualification of the Securities 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 to the Placement Agent 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 and Warrant Shares, (v) any filings required to be made
by the Placement Agent or the Company with FINRA, and the reasonable fees,
disbursements and other charges of counsel for the Placement Agent in connection
with the FINRA’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, Warrants and Warrant Shares on the Nasdaq
Global Market, (viii) fees and disbursements of the Company’s auditor incurred
in delivering the letter(s) described in Sections 5(j) and
(k) of this
Agreement, (ix) fees of the Escrow Agent, (x) fees, disbursements and other
charges of counsel to the Placement Agent (in addition to (iii) and (v) above),
and (xi) the costs and expenses of the Company and the Placement Agent in
connection with the marketing of the offering and the sale of the Securities to
prospective investors 

      
         

         

        
          
            
            

          

          
            -18-

            
              

            

          

          
            
            

          

        

         

        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 consultants,
and the cost of any aircraft or other transportation chartered in connection
with the road show.  If 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 Securities or in contemplation of
performing its obligations hereunder.

      

      

      5. Conditions of Placement Agent’s
Obligations.  The obligations of the Placement Agent hereunder
and the Investors under the Subscription Agreements are subject to the following
conditions:

      

      (a) Filings with the
Commission.  The Preliminary Prospectus (if any), 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., Washington, D.C. 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, preventing or
suspending the use of any Base Prospectus, any Preliminary Prospectus, the
Prospectus or Permitted Free Writing Prospectus or any part thereof shall have
been issued under the Securities Act and no proceedings for that purpose or
pursuant to Section 8A under the Securities Act shall have been initiated or
threatened by the Commission, (ii) no order suspending the qualification or
registration of the Securities under the securities or blue sky laws of any
jurisdiction shall be in effect and (iii) all requests for additional
information on the part of the Commission (to be included or incorporated by
reference 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 Securities or materially and adversely affect or
reasonably be believed to potentially materially and adversely affect the
business or operations of the Company; 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 Securities or materially and adversely affect or
reasonably be believed to potentially materially and adversely affect the
business or operations of the Company.

      

      (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 on or prior to the Closing Date that the Registration
Statement or any amendment thereof or supplement thereto 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 

      
         

        
          
            
            

          

          
            -19-

            
              

            

          

          
            
            

          

        

         

      

      the
statements therein not misleading, or that the Disclosure Package or any Issuer
Free Writing Prospectus or the Prospectus or any amendment thereof or supplement
thereto 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 adverse
and that makes it, in the Placement Agent’s judgment, impracticable to market
the Securities 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 DLA
Piper US 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 (“Negative
Assurance”), 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 Goodwin
Procter LLP, counsel to the Placement Agent, such opinion or opinions (including
Negative Assurance), 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. 

      

      (k)            Bring-Down Letter.  At
the Closing Date, the Placement Agent shall have received from KPMG LLP a letter
(the “Bring-Down
Letter”), dated the Closing Date, addressed to the Placement Agent, which
shall confirm, as of the date of the Bring-Down Letter (or, with respect to
matters involving changes or developments since the respective dates as of which
specified financial 

      
         

        
          
            
            

          

          
            -20-

            
              

            

          

          
            
            

          

        

         

      

      information
is given in the Disclosure Package and the Prospectus, as the case may be, as of
a date nor more than three (3) business days prior to the date of the Bring-Down
Letter) that 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.

      

      (l) 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 (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 Securities 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 or pursuant to Section 8A under the Securities Act 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, any Permitted Free
Writing Prospectus 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 

      
         

        
          
            
            

          

          
            -21-

            
              

            

          

          
            
            

          

        

         

      

      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
contain, as of the Closing Date, 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.

      

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

      

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

      

      (o) Other Filings with the
Commission.  The Company shall have prepared and filed with the
Commission a Current Report on Form 8-K with respect to the transactions
contemplated hereby, and filed with the Commission including as an exhibit
thereto this Agreement and any other material documents relating
thereto.

      

      (p) No FINRA
Objection.  FINRA 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
Securities.

      

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

       

      (r) Subscription
Agreements.  The Placement Agent shall have entered into the
Subscription Agreements with each of the Investors, and such agreements shall be
in full force and effect on the Closing Date.

       

      (s) Escrow
Agreement.  The Placement Agent shall have entered into the
Escrow Agreement, and such agreement shall be in full force and effect on the
Closing Date.

       

      (t) 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.

      

      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 

      
         

        
          
            
            

          

          
            -22-

            
              

            

          

          
            
            

          

        

         

      

      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 Base Prospectus, any Preliminary
Prospectus, any Issuer Free Writing Prospectus, any “issuer information” filed
or required to be filed pursuant to Rule 433(d) of the Rules and Regulations or
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), 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 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 Securities; 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 Base Prospectus, any Preliminary
Prospectus, the Prospectus, or any such amendment or supplement, any Issuer Free
Writing Prospectus, any “issuer information” filed or required to be filed
pursuant to Rule 433(d) of the Rules and Regulations 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 

      
         

        
          
            
            

          

          
            -23-

            
              

            

          

          
            
            

          

        

         

        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 any Preliminary Prospectus, 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, which
information the parties hereto agree is limited to the Placement Agent
Information and shall 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.  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(c).

      

      

      (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
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
one or more legal 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 

      
         

        
          
            
            

          

          
            -24-

            
              

            

          

          
            
            

          

        

         

      

      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 indemnifying party or parties on the one hand and the
indemnified party or parties on the other from the offering of the Securities 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 Securities (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
Securities.  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,
omission, act or failure to act; provided that the parties hereto agree that the
written information furnished to the Company by the Placement Agent for use in
any Preliminary Prospectus, any Registration Statement or the Prospectus, or in
any amendment or supplement thereto, consists solely of the Placement Agent
Information.  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(c).  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, 

      
         

        
          
            
            

          

          
            -25-

            
              

            

          

          
            
            

          

        

         

      

      agreements,
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
Securities. 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 Securities, 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 third sentence of the sixth 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 Securities (A) trading in securities
generally shall have been suspended on or by the New York Stock Exchange, the
NYSE Alternext (formerly known as the American Stock Exchange), the Nasdaq
Global Market or in the over-the-counter 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 or a material disruption shall
have occurred in commercial banking or securities settlement or clearance
services in the United States, (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 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 Securities 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 or
incorporated by reference therein, there has been any Material Adverse Effect or
the Company shall have sustained a loss or interference with its business by
strike, fire, flood, earthquake, accident or other calamity, whether or not
covered by insurance, 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
Securities 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
Subscription Agreement, 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:

       

      
        
          
          

        

        
          -26-

          
            

          

        

        
          
          

        

      

       

      (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:

       

      Goodwin
Procter LLP

      The New
York Times Building

      620
Eighth Avenue

      New York,
New York 10018

      Attention:
Michael D. Maline, Esq.

      Facsimile
No.: 212-355-3333

       

      (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: DLA Piper US LLP, 4365 Executive Drive,
Suite 1100, San Diego, California 92121-2133, Attention:  Jeff Baglio,
Esq., (Facsimile No.: 858-677-1401). Any such statements, requests, notices or
agreements 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.  Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person other than the
persons mentioned in the preceding sentence, any legal or equitable right,
remedy or claim under or in respect of this Agreement, or any provisions herein
contained, except that (i) the representations, warranties, covenants,
agreements and indemnities of the Company contained in this Agreement shall also
be for the benefit of the controlling persons, officers and directors referred
to in Section
6(a) and the indemnities of the Placement Agent shall also be for the
benefit of the controlling persons, officers and directors referred to in Section
6(b)  and (ii) the Investors are relying on the representations
made by the Company under, and are intended third party beneficiaries of, this
Agreement..  The term “successors and assigns” as herein used shall
not include any purchaser of the Securities 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 and agrees 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 

      
         

        
          
            
            

          

          
            -27-

            
              

            

          

          
            
            

          

        

         

      

      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 price of the Securities set forth in this Agreement was
established by the Company following discussions and arms-length negotiations
with the Investors and the Placement Agent, and the Company is capable of
evaluating and understanding, and understands and accepts, the terms, risks and
conditions of the transactions contemplated by this Agreement.  The
Company has been advised that the Placement Agent and its affiliates are engaged
in a broad range of transactions which may involve interests that differ from
those of the Company and that the Placement Agent has no obligation to disclose
such interests and transactions to the Company by virtue of any fiduciary,
advisory or agency relationship.  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
and agrees that the Placement Agent shall have no liability (whether direct or
indirect) to the Company in respect of such a fiduciary duty claim to any person
asserting a fiduciary duty claim on behalf of the Company.

      

      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. Amendments and
Waivers.    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.

      

      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 

      
         

        
          
            
            

          

          
            -28-

            
              

            

          

          
            
            

          

        

         

      

      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.

      

      18. Entire Agreement. This
Agreement constitutes the entire agreement of the parties to this Agreement and
supersedes all prior written or oral and all contemporaneous oral agreements,
understandings and negotiations with respect to the subject matter
hereof.

      

      19. Partial Unenforceability. The
invalidity or unenforceability of any section, paragraph, clause or provision of
this Agreement shall not affect the validity or enforceability of any other
section, paragraph, clause or provision hereof.

      

      

      [Signature
Page Follows]

      

      
        
           

        

        
          -29-

          
            

          

        

        
           

        

      

      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/ Christopher J. Calhoun    

      Name:  Christopher J.
Calhoun

      Title:  Chief Executive
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:

                	Permitted Free Writing
Prospectuses

        

        

          

          
            	
                    Schedule
      II:

                  	Pricing Information

          

          

            

            
              	
                      Exhibit
      A:

                    	Form of Subscription
Agreement

            

            

              

              
                	
                        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

                    

                    

                      
                        
                           

                        

                        
                           

                          
                            

                          

                        

                        
                           

                        

                      

                  

                

              

            

          

        

      

      Schedule
I

      

      Permitted
Free Writing Prospectuses

      

      None.

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Schedule
II

      

      Pricing
Information

      

      

      Number of
Shares to be Issued:   4,771,174

      

      Number of
Warrants to be Issued:  6,679,644

      

      Offering
Price:   $2.10 per unit

      

      Warrant
Exercise Price:  $2.59 per share

       

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Exhibit
A

      

      

      Form
of Subscription Agreement

      

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      Exhibit
B

      

      

      Form
of Lock-Up Agreement

      

       

      ___________,
2009

       

      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”), and
warrants to purchase shares of Common Stock (the “Warrants”), 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 and Warrants, (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 and Warrants 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 FINRA 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 and Warrants 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
C

      

      List
of Directors and Executive Officers

      Executing
Lock-Up Agreements

      

      Richard
J. Hawkins

      Christopher
J. Calhoun

      Marc H.
Hedrick, MD

      Mark E.
Saad

      Bruce A.
Reuter

      Seijiro
Shirahama

      Douglas
Arm, Ph.D.

      Alexander
M. Milstein, MD

      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
DLA Piper US 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
DLA Piper US LLP at ClosingExhibit 10.1

 

 

The TriMas 

Incentive Compensation
Plan

 

TriMas Corporation is committed to ensuring
that our total compensation program is consistent with market competitive pay
practices, while providing opportunities to attract and retain excellent performers
essential to our business success. As a component of your total compensation,
the Incentive Compensation Plan (“ICP” or the “Plan”), a discretionary bonus
plan, works to support our overall business objectives by aligning individual
goals with the goals of shareholders and focusing attention on the key measures
of success.  This plan is designed to
reward achievement of key business goals and individual performance based on
your contributions.

 

Participation

 

The ICP Committee identifies the specific positions that are eligible
for participation in the plan.  The ICP
Committee consists of the CEO, CFO and Corporate HR Director of TriMas.  In general, the Committee will award
eligibility to SBU leadership, facility leadership and their direct reports (depending
on size of the operation), in addition to corporate leadership.

 

Performance Measures

 

Performance measures have been designed for each Strategic Business
Unit (SBU) and TriMas Corporate participants. 
Each SBU participant will be rewarded based on the participant’s SBU’s
specific performance in the areas of sales/profitability, cash flow from
operations, inventory turns and % of new products/market sales, as well as
achievement of personal objectives during the year.

 

TriMas
Corporate participants will be rewarded based on total TriMas performance in
measures related to sales/profitability, leverage/liquidity, earnings per
share, return on net tangible assets and personal objectives during the year.

 

Each
year, baseline performance levels for the measures will be established through
the business planning process and then adjusted to better reflect the upcoming
year’s goals and objectives.  Definitions
of the SBU and TriMas Corporate component performance measures are set forth in
the attached appendix.

 

1

 

ICP Steps – Beginning of the Year

 

At the beginning of each year, we go through the following five steps:

 

Beginning of Year – Step 1:  Determine Your Target Incentive Award

 

As part of the total compensation package, your Target Incentive Award
will be reviewed at the beginning of each TriMas fiscal year.  The centerpoint for your Target Incentive Award
is based on your position and scope of responsibility.  The centerpoint amount is subject to change
based on approval from the ICP Committee.

 

Beginning of Year – Step 2:  Determine Position and Related Components

 

The SBU ICP award will consist of five components:1)
Sales/Profitability, 2) Cashflow from Operations, 3) Inventory Turns, 4) % New
products/Market Sales and 5) Personal Objectives.

 

The
TriMas Corporate ICP award will consist of five components:  1) Sales/Profitability, 2)
Leverage/Liquidity, 3) Earnings per Share, 4) Return on Net Tangible Assets,
and 5) Personal Objectives.

 

Beginning of Year – Step 3:  Determine the Corresponding Component
Weighting

 

Each component of your ICP award has a “weighting” that indicates the
component’s relative importance to your overall Plan award, as stated in the
following chart:

 

	
  Strategic Business Unit (SBU)

  	
   

  	
  TriMas Corporate

  	
   

  
	
  Component

  	
   

  	
  Weight Factor

  	
   

  	
  Component

  	
   

  	
  Weight Factor

  	
   

  
	
  Sales/Profitability

  	
   

  	
  40

  	
  %

  	
  Sales/Profitability

  	
   

  	
  40

  	
  %

  
	
  Cashflow from Operations

  	
   

  	
  20

  	
  %

  	
  Leverage/Liquidity

  	
   

  	
  15

  	
  %

  
	
  Inventory Turns

  	
   

  	
  20

  	
  %

  	
  Earnings
  Per Share

  	
   

  	
  15

  	
  %

  
	
  New Products/Market Sales

  	
   

  	
  5

  	
  %

  	
  Return
  on Net Tangible Assets

  	
   

  	
  10

  	
  %

  
	
  Personal Objectives

  	
   

  	
  15

  	
  %

  	
  Personal
  Objectives

  	
   

  	
  20

  	
  %

  

 

Beginning of Year –Step
4:  Determine Target Performance for the
Year

 

The Plan’s financial targets are established through the annual
business planning process.   Each fiscal
year (the “Plan Year”), you will receive the target performance worksheet that
outlines the Target Incentive Award centerpoint for each performance measure
for the coming year.  The worksheet will
also provide you with detail relating to the overachievement or
underachievement of the various performance measures.

 

Beginning of Year – Step 5:  Set Your Individual Goals for the Year

 

Each Plan Year, you and your immediate supervisor will establish
measurable performance goals that are consistent with organizational
goals.  Your individual goals and
objectives must be approved by the next higher level of management.  Each year, there may be a corporate-wide focus
on some or all of the individual objectives.

 

ICP Steps – End of the Year

 

At the end of each Plan Year, ICP awards will be determined following
these three steps:

 

End of Year – Step
1:  Determine Actual Performance Result

 

At the end of each Plan Year, performance is measured based on final
fiscal year financial results.  The
results achieved for each performance measure are compared to the Target
Incentive Award centerpoints determined in the business planning process, while
personal objective results are compared to the goals set at the beginning of
the year (in each case, the results are called the “Performance Payment Factor”).

 

2

 

End of Year – Step
2:  Multiply by Component Weighting

 

After determining the applicable Performance Payment Factor for each
award component based on the actual results achieved for each performance
measure, each Performance Payment Factor is multiplied by the applicable
component weighting as determined at the beginning of the year.

 

End of Year – Step
3:  Sum of Weighted Payment Factors
Equals Actual Award

 

The third and final step to determine the actual ICP award is to sum
the weighted Performance Payment Factors for each component, and to multiply
this composite weighted performance payment factor by the Target Incentive Award
amount to determine the actual ICP award that will be paid.

 

Additional
Information

 

Discretion
of Payments

 

The ICP Committee reserves the right to defer, increase/reduce
or cancel any payments under the Plan at any time (including during the Plan
Year) based on the best interests of TriMas and its shareholders, including,
but not limited to, circumstances relating to: (1) individual performance;
(2) TriMas’ overall consolidated financial performance: or (3) TriMas’
future performance objectives.

 

Prorated Awards

 

If you move between business
units within the Plan Year, your award will be calculated on a pro-rata basis
to reflect the time spent in each unit based on full year SBU results.  If you move into or out of an ICP eligible
position, you will receive a prorated award based on your salary while in an
eligible position.

 

Payment of Awards

 

Payment
will be made no later than the March 15th after the prior Plan Year ended December 31st.

 

Termination of
Employment

 

If you terminate employment prior to the end of the Plan Year due to
death, retirement or disability, you will be eligible for a pro-rata share when
awards are paid.  If you terminate for
any other reasons prior to the plan payout, you forfeit your award for the Plan
Year.

 

Administration

 

The ICP Committee will administer the Plan.  In the event of any conflict between
authority granted to the ICP Committee and authority reserved to the TriMas
Compensation Committee, the TriMas Compensation Committee prevails.

 

Future
of the Plan

 

The ICP
Committee reserves the right to amend, interpret or cancel this discretionary
plan at any time based on the best interests of TriMas and its
shareholders.  This Plan supersedes all
prior documentation relating to the Annual Value Creation Plan (AVCP).

 

Questions

 

If you
have questions about the Incentive Compensation Plan described here, or about
any other aspect of your TriMas compensation program, contact your local Human
Resources representative.

 

Note:  At no time is this plan to be considered an
employment contract between the participants and TriMas or any of its
subsidiaries.  It does not guarantee
participants the right of continued employment. 
It does not affect a participant’s right to leave TriMas or TriMas’
right to discharge a participant.

 

3

 

Appendix I – Definitions

 

SBU Component Performance
Measures

 

Sales / Profitability – The recurring Operating Profit amount
excluding non-recurring charges (cash and non-cash) associated with business
restructuring, cost savings projects, and asset impairments (“Recurring
Operating Profit”), determined as a percentage of Net Sales.  Operating Profit is defined as earnings
before interest, taxes and other income /expense, all as reported in TriMas’ OutlookSoft
financial reporting system (the “Reporting System”).  For purposes of this computation, Net Sales
is defined as net trade sales excluding all intercompany activity.

 

Cashflow from Operations –Cashflow from Operations is the sum of
Recurring Operating Profit, plus / minus other income / expense, plus
depreciation and amortization, plus / minus the change in working capital, and
minus capital expenditures, all as reported in the Reporting System.

 

Inventory Turns – The number of Inventory Turns
is computed based on the annual Cost of Sales amount
as reported in the Reporting System divided by the arithmetic average of end of
month Inventory, Net amounts (i.e., the sum of end of month inventory balances
during the Plan year divided by 12).

 

% New Products / Markets
Sales – The % New Products / Markets
Sales is a computed amount based on the Net Sales amount for
specifically identified new products or new markets divided by Net Sales for
the SBU, each of which shall be agreed as part of the annual business planning process and
as reported in the Reporting System (in the case of Net Sales) and as reported
in an SBU’s subsidiary sales ledger (in the case of Net Sales for specifically
identified new products or new markets, as the case may be).

 

Component Performance Measures

 

Sales / Profitability – The consolidated recurring Operating Profit amount
excluding non-recurring charges (cash and non-cash) associated with business
restructuring, cost savings projects, and asset impairments,  determined as a percentage of consolidated Net Sales.  Operating
Profit is defined as earnings before interest, taxes and other income /expense,
all as reported in the Reporting System. 
For purposes of this computation, Net Sales is defined as net trade
sales excluding all intercompany activity.

 

Leverage / Liquidity – For each quarter within the Plan Year, the Average
Leverage Cushion is derived as follows: (1) subtracting TriMas’
Actual Leverage Ratio, as computed each fiscal quarter end and reported to
JPMorgan, from the Leverage Ratio covenant requirement for such quarter (as
defined in TriMas’ Amended and Restated Credit Agreement dated August 2,
2006 and as may be amended from time to time) to determine the Leverage Cushion; and (2) adding the Leverage Cushion
amounts computed for each quarter during the Plan Year  and dividing the sum by 4.

 

Earnings Per Share –Earnings Per Share is the earnings per
share – diluted amount (from continuing operations), as reported in TriMas’ Reports
on Form 10-Q and 10-K filed with the Securities and Exchange Commission,
adjusted to exclude the after-tax impact of non-recurring charges (cash and
non-cash) associated with business restructuring, cost savings projects, and
asset impairments.

 

Return on Net Tangible
Assets – The Return on Net Tangible
Assets % is a computed amount based on Recurring Operating Profit as
defined herein divided by Total Operating Tangible
Assets, each determined on a continuing operations basis.  Total Operating Tangible Assets is the sum of
Total Shareholders’ Equity less Goodwill, Net, less Intangible Assets, Net
(other than Goodwill, Net), less Other Adjustments, all as reported in the Reporting
System.  For purposes of this
computation, both the nature and amount of Other Adjustments shall
be agreed as part of the annual
business planning process and as to the actual reported amounts in the Reporting
System or other agreed-to subsidiary ledger reporting process.

 

4

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