Document:

Exhibit 10.4

CYTORI
THERAPEUTICS, INC.

WARRANT

 

	
   

  	
   

  	
   

  
	
  Warrant No.                       

  	
   

  	
  Original Issue Date:
  February        , 2007

  

Cytori Therapeutics,
Inc., a Delaware corporation (the “Company”),
hereby certifies that, for value received,                
or its permitted registered assigns (the “Holder”),
is entitled to purchase from the Company up to a total of                 
shares of common stock, $0.001 par value per share (the “Common Stock”), of the Company (each such
share, a “Warrant Share” and all such shares, the “Warrant Shares”) at an exercise price equal to $6.25 per share (as adjusted
from time to time as provided herein, the “Exercise
Price”), at any time and from time to time on or after the date
hereof (the “Original Exercisability Date”)
and through and including February        ,
2012 (the “Expiration Date”), and subject to the following terms and conditions:

This Warrant is being
issued pursuant to that certain Subscription Agreement, dated February 23,
2007, by and between the Company and the purchaser identified therein (the “Purchase Agreement”).  The original issuance of the Warrant by the
Company pursuant to the Purchase Agreement has been registered pursuant to a
Registration Statement on Form S-3 (File No. 333-134129) (the “Registration Statement”).

1.             Definitions. In addition to
the terms defined elsewhere in this Warrant, capitalized terms that are not
otherwise defined herein have the meanings given to such terms in the Purchase
Agreement.

2.               List of Warrant Holders.  The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the “Warrant
Register”), in the name
of the record Holder (which shall include the initial Holder or, as the case
may be, any registered assignee to which this Warrant is permissibly assigned
hereunder from time to time).  The
Company may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any distribution
to the Holder, and for all other purposes, absent actual notice to the
contrary.

3.             List of Transfers; Restrictions
on Transfer. The Company shall register any such transfer of all or any
portion of this Warrant in the Warrant Register, upon surrender of this
Warrant, with the Form of Assignment attached hereto duly completed and signed,
to the Company at its address specified herein. Upon any such registration or
transfer, a new Warrant to purchase Common Stock, in substantially the form of
this Warrant (any such new Warrant, a “New Warrant”), evidencing the portion of this Warrant so transferred
shall be issued to the transferee and a New Warrant evidencing the remaining
portion of this Warrant not so transferred, if any, shall be issued to the 

transferring Holder. The
acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance by such transferee of all of the rights and obligations in respect
of the New Warrant that the Holder has in respect of this Warrant.

4.             Exercise and Duration of Warrant.

 (a)          All or any part of this Warrant shall
be exercisable by the registered Holder in any manner permitted by
Section 10 of this Warrant at any time and from time to time on or after
the Original Exercisability Date and through and including the Expiration Date.
Subject to Section 11 hereof, at 5:00 p.m., New York City time, on the
Expiration Date, the portion of this Warrant not exercised prior thereto shall
be and become void and of no value and this Warrant shall be terminated and no
longer outstanding.

(b)           The Holder may exercise this Warrant
by delivering to the Company (i) an exercise notice, in the form attached
hereto (the “Exercise Notice”),
completed and duly signed, and (ii) if such Holder is not utilizing the
cashless exercise provisions set forth in this Warrant, payment of the Exercise
Price for the number of Warrant Shares as to which this Warrant is being
exercised.  The date such items are
delivered to the Company (as determined in accordance with the notice provisions
hereof) is an “Exercise Date.” The
Holder shall not be required to deliver the original Warrant in order to effect
an exercise hereunder, but if it is not so delivered then such exercise shall
constitute an agreement by the Holder to deliver the original Warrant to the
Company as soon as practicable thereafter. 
Execution and delivery of the Exercise Notice shall have the same effect
as cancellation of the original Warrant and issuance of a New Warrant
evidencing the right to purchase the remaining number of Warrant Shares.

5.             Delivery of Warrant Shares.

(a)           Upon exercise of this Warrant, the
Company shall promptly (but in no event later than three Trading Days after the
Exercise Date) issue or cause to be issued and cause to be delivered to or upon
the written order of the Holder and in such name or names as the Holder may
designate, a certificate for the Warrant Shares issuable upon such exercise,
free of restrictive legends. The Holder, or any Person permissibly so
designated by the Holder to receive Warrant Shares, shall be deemed to have
become the holder of record of such Warrant Shares as of the Exercise
Date.  The Company shall, upon the
written request of the Holder, use its best efforts to deliver, or cause to be
delivered, Warrant Shares hereunder electronically through the Depository Trust
and Clearing Corporation or another established clearing corporation performing
similar functions, if available; provided, that, the Company may, but will not
be required to, change its transfer agent if its current transfer agent cannot
deliver Warrant Shares electronically through the Depository Trust and Clearing
Corporation.  If as of the time of
exercise the Warrant Shares constitute restricted or control securities, the
Holder, by exercising, agrees not to resell them except in compliance with all
applicable securities laws.

(b)
           If by the close of the third Trading Day after
delivery of an Exercise Notice and the payment of the aggregate exercise price
in any manner permitted by Section 10 of this Warrant, the Company fails to
deliver to the Holder a certificate representing the required number of Warrant
Shares in the manner required pursuant to Section 5(a), and if after such third
Trading Day and prior to the receipt of such Warrant Shares, the Holder
purchases (in an open market transaction or otherwise) shares of Common Stock
to deliver in satisfaction of a sale by the Holder of the Warrant Shares which
the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall, within
three Trading Days after the Holder’s request and in the Holder’s sole
discretion, either (i) pay in cash to the Holder an amount equal to the Holder’s
total purchase price (including brokerage commissions, if any) for the shares
of Common Stock so purchased (the “Buy-In
Price”), at which point the Company’s obligation to deliver such
certificate (and to issue such Warrant Shares) shall terminate or (ii) promptly
honor its obligation to deliver to the Holder a certificate or certificates
representing  such Warrant Shares and pay
cash to the Holder in an amount equal to the excess (if any) of the Buy-In
Price over the product of (A) such number of Warrant Shares, times (B) the
closing bid price on the date of the event giving rise to the Company’s
obligation to deliver such certificate.

(c)           To the extent permitted by law, the
Company’s obligations to issue and deliver Warrant Shares in accordance with
the terms hereof are absolute and unconditional, irrespective of any action or
inaction by the Holder to enforce the same, any waiver or consent with respect
to any provision hereof, the recovery of any judgment against any Person or any
action to enforce the same, or any setoff, counterclaim, recoupment, limitation
or termination, or any breach or alleged breach by the Holder or any other
Person of any obligation to the Company or any violation or alleged violation
of law by the Holder or any other Person, and irrespective of any other
circumstance that might otherwise limit such obligation of the Company to the
Holder in connection with the issuance of Warrant Shares. Nothing herein shall
limit a Holder’s right to pursue any other remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company’s failure to
timely deliver certificates representing shares of Common Stock upon exercise
of the Warrant as required pursuant to the terms hereof.

6.             Charges, Taxes and Expenses.
Issuance and delivery of certificates for shares of Common Stock upon exercise
of this Warrant shall be made without charge to the Holder for any issue or
transfer tax, withholding tax, transfer agent fee or other incidental tax or
expense in respect of the issuance of such certificates, all of which taxes and
expenses shall be paid by the Company; provided,
however, that the Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the registration of any
certificates for Warrant Shares or the Warrants in a name other than that of the
Holder. The Holder shall be responsible for all other tax liability that may
arise as a result of holding or transferring this Warrant or receiving Warrant
Shares upon exercise hereof.

7.             Replacement of Warrant.  If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for 

and upon cancellation
hereof, or in lieu of and substitution for this Warrant, a New Warrant, but
only upon receipt of evidence reasonably satisfactory to the Company of such
loss, theft or destruction and customary and reasonable indemnity, if
requested. Applicants for a New Warrant under such circumstances shall also
comply with such other reasonable regulations and procedures and pay such other
reasonable third-party costs as the Company may prescribe. If a New Warrant is
requested as a result of a mutilation of this Warrant, then the Holder shall
deliver such mutilated Warrant to the Company as a condition precedent to the
Company’s obligation to issue the New Warrant.

8.             Reservation of Warrant Shares.
The Company covenants that it will at all times reserve and keep available out
of the aggregate of its authorized but unissued and otherwise unreserved Common
Stock, solely for the purpose of enabling it to issue Warrant Shares upon
exercise of this Warrant as herein provided, the number of Warrant Shares that
are then issuable and deliverable upon the exercise of this entire Warrant,
free from preemptive rights or any other contingent purchase rights of persons
other than the Holder (taking into account the adjustments and restrictions of
Section 9). The Company covenants that all Warrant Shares so issuable and
deliverable shall, upon issuance and the payment of the applicable Exercise
Price in accordance with the terms hereof, be duly and validly authorized,
issued and fully paid and nonassessable.

9.             Certain Adjustments. The
Exercise Price and number of Warrant Shares issuable upon exercise of this
Warrant are subject to adjustment from time to time as set forth in this
Section 9.

(a)             Stock Dividends and Splits.
If the Company, at any time while this Warrant is outstanding, (i) pays a stock
dividend on its Common Stock or otherwise makes a distribution on any class of
capital stock that is payable in shares of Common Stock, (ii) subdivides
outstanding shares of Common Stock into a larger number of shares, or (iii)
combines outstanding shares of Common Stock into a smaller number of shares,
then in each such case the Exercise Price shall be multiplied by a fraction of
which the numerator shall be the number of shares of Common Stock outstanding
immediately before such event and of which the denominator shall be the number
of shares of Common Stock outstanding immediately after such event. Any
adjustment made pursuant to clause (i) of this paragraph shall become effective
immediately after the record date for the determination of stockholders
entitled to receive such dividend or distribution, and any adjustment pursuant
to clause (ii) or (iii) of this paragraph shall become effective immediately
after the effective date of such subdivision or combination.

(b)           Pro Rata Distributions.  If the Company, at any time while this
Warrant is outstanding, distributes to all holders of Common Stock for no
consideration (i) evidences of its indebtedness, (ii) any security (other than
a distribution of Common Stock covered by the preceding paragraph), (iii)
rights or warrants to subscribe for or purchase any security, or (iv) any other
asset besides cash (in each case, “Distributed
Property”), then, upon any exercise of this Warrant that occurs
after the record date fixed for determination of stockholders entitled to
receive such distribution, the Holder shall be entitled to receive, in addition
to the Warrant Shares otherwise issuable upon such 

exercise (if
applicable), the Distributed Property that such Holder would have been entitled
to receive in respect of such number of Warrant Shares had the Holder been the
record holder of such Warrant Shares immediately prior to such record date.

(c)           Fundamental Transactions. If,
at any time while this Warrant is outstanding 
(i) the Company effects (A) any merger of the Company with (but not
into) another Person, in which the shareholders of the Company immediately
prior to the transaction own less than a majority of the outstanding stock of
the surviving entity, or (B) any merger or consolidation of the Company into
another Person, (ii) the Company effects any sale of all or substantially all
of its assets in one or a series of related transactions, (iii) any tender
offer or exchange offer approved or authorized by the Company’s Board of
Directors is completed pursuant to which holders of at least a majority of the
outstanding Common Stock tender or exchange their shares for other securities,
cash or property, or (iv) the Company effects any reclassification of the
Common Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other securities, cash or
property (each, a “Fundamental Transaction”),
then the Holder shall have the right thereafter to receive, upon exercise of
this Warrant, the same amount and kind of securities, cash or property as it
would have been entitled to receive upon the occurrence of such Fundamental
Transaction if it had been, immediately prior to such Fundamental Transaction,
the holder of the number of Warrant Shares then issuable upon exercise in full
of this Warrant without regard to any limitations on exercise contained herein
(the “Alternate Consideration”),
and the Holder shall no longer have the right to receive Warrant Shares upon
exercise of this Warrant.  The Company
shall not effect any such Fundamental Transaction unless prior to or
simultaneously with the consummation thereof, any successor to the Company,
surviving entity or the corporation purchasing or otherwise acquiring such
assets or other appropriate corporation or entity shall assume the obligation
to deliver to the Holder, such Alternate Consideration as, in accordance with
the foregoing provisions, the Holder may be entitled to receive, and the other
obligations under this Warrant.  The
provisions of this paragraph (c) shall similarly apply to subsequent
transactions of a Fundamental Transaction type. 
Notwithstanding the foregoing, in the event of a Fundamental Transaction
in which the consideration consists of substantially all cash or securities of
a private company, at the request of the Holder delivered before the 20th day
after such Fundamental Transaction, the Company (or the successor entity) shall
purchase this Warrant from the Holder by paying to the Holder, within five
Business Days after such request (or, if later, on the effective date of the
Fundamental Transaction), cash in an amount equal to the Black Scholes Value (as
defined below) of the remaining unexercised portion of this Warrant on the date
of such Fundamental Transaction.  For
purposes hereof, “Black Scholes Value”
means the value of this Warrant based on the Black and Scholes Option Pricing
Model obtained from the “OV” function on Bloomberg  Financial Markets (“Bloomberg”) determined as of the day
immediately following the public announcement of the applicable Fundamental
Transaction and reflecting (i) a risk-free interest rate corresponding to the
U.S. Treasury rate for a period equal to the remaining term of this Warrant as
of such date of request and (ii) an expected volatility equal to the greater of
50% and the 100 day volatility obtained from the HVT function on Bloomberg.

(d)           Number of Warrant Shares.
Simultaneously with any adjustment to the Exercise Price pursuant to paragraph
(a) of this Section 9, the number of Warrant Shares that may be purchased upon
exercise of this Warrant shall be increased or decreased proportionately, so
that after such adjustment the aggregate Exercise Price payable hereunder for
the adjusted number of Warrant Shares shall be the same as the aggregate
Exercise Price in effect immediately prior to such adjustment.

(e)
          [Reserved.]

(f)            Calculations. All calculations
under this Section 9 shall be made to the nearest cent or the nearest 1/100th of a share, as
applicable. The number of shares of Common Stock outstanding at any given time
shall not include shares owned or held by or for the account of the Company,
and the disposition of any such shares shall be considered an issue or sale of
Common Stock.

(g)           Notice of Adjustments. Upon the
occurrence of each adjustment pursuant to this Section 9, the Company at its
expense will, at the written request of the Holder, promptly compute such
adjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment, in good faith, including a statement
of the adjusted Exercise Price and adjusted number or type of Warrant Shares or
other securities issuable upon exercise of this Warrant (as applicable),
describing the transactions giving rise to such adjustments and showing in
detail the facts upon which such adjustment is based. Upon written request, the
Company will promptly deliver a copy of each such certificate to the Holder and
to the Company’s Transfer Agent.

(h)           Notice of Corporate Events. If,
while this Warrant is outstanding, the Company (i) declares a dividend or any
other distribution of cash, securities or other property in respect of its
Common Stock, including without limitation any granting of rights or warrants
to subscribe for or purchase any capital stock of the Company or any
Subsidiary, (ii) authorizes or approves, enters into any agreement
contemplating or solicits stockholder approval for any Fundamental Transaction
or (iii) authorizes the voluntary dissolution, liquidation or winding up of the
affairs of the Company, then, except if such notice and the contents thereof
shall be deemed to constitute material non-public information, the Company
shall deliver to the Holder a notice describing the material terms and
conditions of such transaction at least 10 Trading Days prior to the applicable
record or effective date on which a Person would need to hold Common Stock in
order to participate in or vote with respect to such transaction, and the
Company will take all reasonable steps to give Holder the practical opportunity
to exercise this Warrant prior to such time; provided,
however, that the failure to deliver such notice or any defect
therein shall not affect the validity of the corporate action required to be
described in such notice.

10.           Payment of Exercise Price. The
Holder may pay the Exercise Price in one of the following manners:

(a)           Cash Exercise. If an Exercise
Notice is delivered at a time when the Registration Statement is effective,
then the Holder shall deliver immediately available funds; or

(b)           Cashless Exercise. If an
Exercise Notice is delivered at a time when the Registration Statement is not
then effective, then the Holder shall notify the Company in an Exercise Notice
of its election to utilize cashless exercise, in which event the Company shall
issue to the Holder the number of Warrant Shares determined as follows:

X
= Y [(A-B)/A]

where:

X
= the number of Warrant Shares to be issued to the Holder.

Y = the number of Warrant Shares with respect to
which this Warrant is being exercised.

A = the closing price on
the Trading Day immediately prior to the Exercise Date.

B = the Exercise Price then in effect.

                11.           Limitations on Exercise. (a)     Notwithstanding
anything to the contrary contained herein, the number of Warrant Shares that
may be acquired by the Holder upon any exercise of this Warrant (or otherwise
in respect hereof) shall be limited to the extent necessary to ensure that,
following such exercise (or other issuance), the total number of shares of
Common Stock then beneficially owned by the Holder and its Affiliates and any
other Persons whose beneficial ownership of Common Stock would be aggregated
with the Holder’s for purposes of Section 13(d) of the Exchange Act, does not
exceed 4.999% of the total number of issued and outstanding shares of Common
Stock (including for such purpose the shares of Common Stock issuable upon such
exercise). For such purposes, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. Each delivery of an Exercise Notice by the Holder will
constitute a representation by the Holder that it has evaluated the limitation
set forth in this Section and determined that issuance of the full number of
Warrant Shares requested in such Exercise Notice is permitted under this
Section.  The Company’s obligation to
issue shares of Common Stock in excess of the limitation referred to in this
Section shall be suspended (and, except as provided below, shall not terminate
or expire notwithstanding any contrary provisions hereof) until such time, if
any, as such shares of Common Stock may be issued in compliance with such
limitation; provided, that, if, as of 5:00 P.M., New York City time, on the
Expiration Date, the Company has not received written notice that the shares of
Common Stock may be issued in compliance with such limitation, the Company’s
obligation to issue such shares shall terminate.  This provision shall not restrict the number
of shares of Common Stock which a Holder may receive or beneficially own in
order to determine the amount 

of securities or other
consideration that such Holder may receive in the event of a Fundamental
Transaction as contemplated in Section 9 of this Warrant.  By written notice to the Company, the Holder
may waive the provisions of this Section but any such waiver will not be effective
until the 61st day after such notice is delivered to the
Company, nor will any such waiver affect any other Holder.

                (b)           Notwithstanding anything to the contrary contained herein,
the number of Warrant Shares that may be acquired by the Holder upon any
exercise of this Warrant (or otherwise in respect hereof) shall be limited to
the extent necessary to ensure that, following such exercise (or other
issuance), the total number of shares of Common Stock then beneficially owned
by such Holder and its Affiliates and any other Persons whose beneficial
ownership of Common Stock would be aggregated with the Holder’s for purposes of
Section 13(d) of the Exchange Act, does not exceed 9.999% of the total number
of issued and outstanding shares of Common Stock (including for such purpose
the shares of Common Stock issuable upon such exercise). For such purposes,
beneficial ownership shall be determined in accordance with Section 13(d) of
the Exchange Act and the rules and regulations promulgated thereunder. Each
delivery of an Exercise Notice hereunder will constitute a representation by
the Holder that it has evaluated the limitation set forth in this Section and
determined that issuance of the full number of Warrant Shares requested in such
Exercise Notice is permitted under this Section.  The Company’s obligation to issue shares of
Common Stock in excess of the limitation referred to in this Section shall be
suspended (and, except as provided below, shall not terminate or expire
notwithstanding any contrary provisions hereof) until such time, if any, as
such shares of Common Stock may be issued in compliance with such limitation; provided, that, if, as of 5:00 P.M., New
York City time, on the Expiration Date, the Company has not received written
notice that the shares of Common Stock may be issued in compliance with such
limitation, the Company’s obligation to issue such shares shall terminate.  This provision shall not restrict the number
of shares of Common Stock which a Holder may receive or beneficially own in
order to determine the amount of securities or other consideration that such
Holder may receive in the event of a Fundamental Transaction as contemplated in
Section 9 of this Warrant.  This
restriction may not be waived.

12.           No Fractional Shares. No
fractional Warrant Shares will be issued in connection with any exercise of
this Warrant. In lieu of any fractional shares that would otherwise be
issuable, the Company shall pay cash equal to the product of such fraction
multiplied by the closing price of one Warrant Share as reported by the applicable
Trading Market on the Exercise Date.

13.           Notices. Any and all notices or
other communications or deliveries hereunder (including, without limitation,
any Exercise Notice) shall be in writing and shall be deemed given and
effective on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Section at or prior to 5:00 p.m. (New York City time) on a Trading Day,
(ii) the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Section on a day that is not a Trading Day or later than 5:00 p.m. (New
York City time) on any Trading Day, (iii) the 

Trading Day following
the date of mailing, if sent by nationally recognized overnight courier
service, or (iv) upon actual receipt by the party to whom such notice is
required to be given. The addresses for such notices or communications shall
be:  if to the Company, to Cytori
Therapeutics, Inc., 3020 Callan Road, San Diego, California 92121, Attention:
Chief Executive Officer, (Facsimile No.: 858-458-0995) (or such other address
as the Company shall indicate in writing in accordance with this Section) or
(ii) if to the Holder, to the address or facsimile number appearing on the
Warrant Register (or such other address as the Holder shall indicate in writing
in accordance with this Section).

14.           Warrant Agent. The Company
shall serve as warrant agent under this Warrant. Upon 30 days’ notice to the
Holder, the Company may appoint a new warrant agent. Any corporation into which
the Company or any new warrant agent may be merged or any corporation resulting
from any consolidation to which the Company or any new warrant agent shall be a
party or any corporation to which the Company or any new warrant agent
transfers substantially all of its corporate trust or shareholders services
business shall be a successor warrant agent under this Warrant without any
further act. Any such successor warrant agent shall promptly cause notice of
its succession as warrant agent to be mailed (by first class mail, postage
prepaid) to the Holder at the Holder’s last address as shown on the Warrant
Register.

15.           Miscellaneous.

(a)           This Warrant shall be binding on and
inure to the benefit of the parties hereto and their respective successors and
assigns. Subject to the preceding sentence, nothing in this Warrant shall be
construed to give to any Person other than the Company and the Holder any legal
or equitable right, remedy or cause of action under this Warrant. This Warrant
may be amended only in writing signed by the Company and the Holder, or their
successors and assigns.

(b)           All questions concerning the
construction, validity, enforcement and interpretation of this Warrant shall be
governed by and construed and enforced in accordance with the internal laws of
the State of New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of this Warrant and the transactions herein
contemplated (“Proceedings”) (whether brought against a party hereto or its respective
Affiliates, employees or agents) shall be commenced exclusively in the New York
Courts. Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any Proceeding, any claim that it is not personally subject to the jurisdiction
of any New York Court, or that such Proceeding has been commenced in an
improper or inconvenient forum. Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any such
Proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Warrant and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall 

be deemed to limit in
any way any right to serve process in any manner permitted by law. Each party
hereto hereby irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any legal proceeding arising out of
or relating to this Warrant or the transactions contemplated hereby. If either
party shall commence a Proceeding to enforce any provisions of this Warrant,
then the prevailing party in such Proceeding shall be reimbursed by the other
party for its attorney’s fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such Proceeding.

(c)           The headings herein are for
convenience only, do not constitute a part of this Warrant and shall not be
deemed to limit or affect any of the provisions hereof.

(d)           In case any one or more of the
provisions of this Warrant shall be invalid or unenforceable in any respect,
the validity and enforceability of the remaining terms and provisions of this
Warrant shall not in any way be affected or impaired thereby and the parties
will attempt in good faith to agree upon a valid and enforceable provision
which shall be a commercially reasonable substitute therefore, and upon so
agreeing, shall incorporate such substitute provision in this Warrant.

(e)           Prior to exercise of this Warrant, the
Holder hereof shall not, by reason of by being a Holder, be entitled to any
rights of a stockholder with respect to the Warrant Shares.

IN WITNESS WHEREOF, the
Company has caused this Warrant to be duly executed by its authorized officer
as of the date first indicated above.

 

	
  

  	
  CYTORI THERAPEUTICS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

EXERCISE
NOTICE

CYTORI
THERAPEUTICS, INC.

WARRANT
NO.         DATED FEBRUARY        , 2007

Ladies and Gentlemen:

(1)           The undersigned hereby elects to
exercise the above-referenced Warrant with respect to                shares of
Common Stock.  Capitalized terms used
herein and not otherwise defined herein have the respective meanings set forth
in the Warrant.

(2)           The Holder intends that payment of
the Exercise Price shall be made as (check one):

              Cash Exercise under Section 10(a)

              Cashless Exercise under Section
10(b)

(3)           If the Holder has elected a Cash
Exercise, the holder shall pay the sum of $             to the
Company in accordance with the terms of the Warrant.

(4)           Pursuant to this Exercise Notice, the
Company shall deliver to the Holder the number of Warrant Shares determined in
accordance with the terms of the Warrant.

(5)           By its delivery of this Exercise
Notice, the undersigned represents and warrants to the Company that in giving
effect to the exercise evidenced hereby the Holder will not beneficially own in
excess of the number of shares of Common Stock (as determined in accordance
with Section 13(d) of the Securities Exchange Act of 1934) permitted to be
owned under Section 11 of this Warrant to which this notice relates.

	
  

  	
  HOLDER:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Print name)

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

WARRANT
ORIGINALLY ISSUED FEBRUARY        , 2007

WARRANT
NO.        

FORM OF
ASSIGNMENT

To be completed and
signed only upon transfer of Warrant

FOR VALUE RECEIVED, the
undersigned hereby sells, assigns and transfers unto                             
the right represented by the within Warrant to purchase                 
shares of Common Stock to which the within Warrant relates and appoints                             
attorney to transfer said right on the books of the Company with full power of
substitution in the premises.

	
  Dated: 

  	
   

  	
   

  	
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  In the presence
  of:Exhibit 10.1

A.                                    Performance
Criteria for Incentive Plan Awards for Year 2007 Pursuant to the 2003 Executive
Incentive Plan

1.                                    Awardees:

a.                                             Henry
J. Herrmann

b.                                            Michael
L. Avery

c.                                             Thomas
W. Butch

d.                                            Daniel
P. Connealy

e.                                             Daniel
C. Schulte

f.                                               Michael
D. Strohm

g.                                            John
E. Sundeen, Jr.

2.                                    Performance
Goal:

a.                                       The
aggregate Incentive Plan Award to the Awardees shall equal four percent of the
Adjusted 2007 Operating Income (defined below). 
The aggregate Incentive Plan Award shall be allocated among the Awardees
as follows:

	
  Awardee

  	
   

  	
  Portion
  of Aggregate 

  Incentive Plan Award

  
	
  Henry J.
  Herrmann

  	
   

  	
  30%

  
	
  Michael L. Avery

  	
   

  	
  15%

  
	
  Thomas W. Butch

  	
   

  	
  15%

  
	
  Daniel P.
  Connealy

  	
   

  	
  10%

  
	
  Daniel C.
  Schulte

  	
   

  	
  10%

  
	
  Michael D.
  Strohm

  	
   

  	
  10%

  
	
  John E. Sundeen,
  Jr.

  	
   

  	
  10%

  

Notwithstanding the
foregoing, the Compensation Committee may, in its sole discretion, elect to
award each Awardee less of the Incentive Plan Award for the 2007 Year than is
set forth above, provided that any such decrease in the Incentive Plan Award for
any one Awardee shall not increase the award for any other Awardee.

b.                                      The
term “Adjusted 2007 Operating Income” means the operating income of the
Company for its fiscal year ending December 31, 2007 (the “2007 Year”),
determined pursuant to generally accepted accounting principles, adjusted as
follows:  (i) such amount shall be
increased by the Company’s interest expense for the 2007 Year; (ii) such amount
shall be increased by the Company’s federal, state and local income taxes for
the 2007 Year; (iii) such amount shall be increased by bonuses paid under
Company executive compensation and deferred compensation plans for the 2007
Year; (iv) such amount shall be increased by losses from publicly-disclosed
transactions entered into during the 2007 Year that the 

Compensation Committee considers to be extraordinary
or non-recurring; (v) such amount shall be decreased by gains from
publicly-disclosed transactions entered into during the 2007 Year that the
Compensation Committee considers to be extraordinary or non-recurring; (vi)
such amount shall be increased by any net losses during the 2007 Year from
entities, trades or businesses and lines of businesses acquired from unrelated
parties (“2007 Acquisitions”); and (vii) such amount shall be decreased
by any net profits during the 2007 Year from entities, trades or businesses and
lines of businesses acquired pursuant to 2007 Acquisitions.

B.                                    Performance
Criteria for Restricted Stock Awards for Year 2007 Pursuant to the 1998 Stock
Incentive Plan

1.                                    Awardees:

a.              Henry J. Herrmann

b.              Michael L. Avery

c.              Thomas W. Butch

d.              Daniel P. Connealy

e.              Daniel C. Schulte

f.               Michael D. Strohm

g.              John
E. Sundeen, Jr.

2.                                    Performance
Goal:

a.                                          The
aggregate Restricted Stock Award to the Awardees shall equal 420,000 shares of
Company common stock, provided that no such award shall be made unless the
Threshold Condition (defined below) is met. 
The aggregate Restricted Stock Plan Award shall be allocated among the
Awardees as follows:

	
  Awardee

  	
   

  	
  Portion
  of Aggregate 

  Incentive Plan Award

  
	
  Henry J.
  Herrmann

  	
   

  	
  30%

  
	
  Michael L. Avery

  	
   

  	
  15%

  
	
  Thomas W. Butch

  	
   

  	
  15%

  
	
  Daniel P.
  Connealy

  	
   

  	
  10%

  
	
  Daniel C.
  Schulte

  	
   

  	
  10%

  
	
  Michael. D.
  Strohm

  	
   

  	
  10%

  
	
  John E. Sundeen,
  Jr.

  	
   

  	
  10%

  

Notwithstanding the
foregoing, the Compensation Committee may, in its sole discretion, elect to
award each Awardee less of a Restricted Stock Plan Award for the 2007 Year than
is set forth above, provided that any such decrease in the Restricted Stock
Plan Award for any one Awardee

shall not increase the
award for any other Awardee.  These
awards, if any, are to be granted in December 2007.

b.                                      The
term “Threshold Condition” means that the quotient of (i) Adjusted 2007
Operating Income (defined in Section A), divided by (ii) Adjusted 2007 Equity
(defined below), equals or exceeds 0.40.

c.                                       The
term “Adjusted 2007 Equity” means the quotient of (i) the sum of
Beginning 2007 Equity (defined below) plus Adjusted Ending 2007 Equity (defined
below), divided by (ii) 2.0.

d.                                      The
term “Beginning 2007 Equity” means the shareholders equity of the
Company as of January 1, 2007, determined pursuant to generally accepted
accounting principles.

e.                                       The
term “Adjusted Ending 2007 Equity” means the shareholders equity of the
Company as of December 31, 2007, determined pursuant to generally accepted
accounting principles, adjusted as follows: 
(i) such amount shall be increased by bonuses paid under Company
executive compensation and deferred compensation plans for the 2007 Year; (ii)
such amount shall be increased by losses from publicly-disclosed transactions
entered into during the 2007 Year that the Compensation Committee considers
extraordinary or non-recurring; (iii) such amount shall be decreased by gains
from publicly-disclosed transactions entered into during the 2007 Year that the
Compensation Committee considers to be extraordinary or non-recurring; (iv)
such amount shall be increased by any net losses during the 2007 Year from
entities, trades or businesses and lines of businesses acquired pursuant to
2007 Acquisitions; and (v) such amount shall be decreased by any net profits
during the 2007 Year from entities, trades or businesses and lines of
businesses acquired pursuant to 2007 Acquisitions.

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