Document:

EXHIBIT 10.20

 

AIA
Document A111-1997

 

Standard Form of
Agreement Between Owner and Contractor

 

where the basis for payment is the COST OF THE WORK
PLUS A FEE with a negotiated Guaranteed Maximum Price

 

AIA Document A201-1997, General
Conditions of the Contract for Construction, is adopted in this document by
reference. This document has been approved and endorsed by the Associated
General Contractors of America. AIA
Document A111 - 1997. Copyright
© 1920, 1925, 1951, 1958, 1961, 1963, 1967, 1974, 1978, 1987 and 1997 by The
American Institute of Architects. All rights reserved. WARNING: This AIA
Document is protected by US. Copyright Law and International Treaties. Unauthorized
reproduction or distribution of this AIA Document, or any portion of it may result
in severe civil and criminal penalties, end will be prosecuted to the maximum
extent possible under the law. This document was produced by AIA software at
17:50:26 on 10/17/05 under Order No.1000156558_1 which expires on 1/11/2006, and is not for resale.

 

AGREEMENT made as of the Tenth day of October in
the year Two Thousand and Five

 

BETWEEN the Owner:

 

Cytori Therapeutics

6740 Top Gun Street

San Diego, CA 92121

 

and the Contractor:

 

Rudolph and Sletten, Inc.

10955 Vista Sorrento Parkway

Suite 100

San Diego, CA 92130

 

The Project is:

 

Cytori Therapeutics

3030 Callan Road

San Diego, CA 92121

 

The Architect is:

 

Dowler-Gruman Architects

445 West Ash Street

San Diego, CA 92101

 

The Owner and Contractor
agree as follows.

 

ARTICLE 1                                THE
CONTRACT DOCUMENTS

 

The Contract Documents consist of this Agreement,
Conditions of the Contract (General, Supplementary and other

 

 

Conditions), Drawings, Specifications, Addenda issued
prior to execution of this Agreement, other documents listed in this Agreement
and Modifications issued after execution of this Agreement; these form the
Contract, and are as fully a part of
the Contract as if attached to
this Agreement or repeated herein. The Contract represents the entire and
integrated agreement between the parties hereto and supersedes prior
negotiations, representations or agreements, either written or oral. An
enumeration of the Contract Documents, other than Modifications, appears in Article 15.
If anything in the other Contract Documents is inconsistent with this Agreement,
this Agreement shall govern.

 

ARTICLE 2                                THE
WORK OF THIS CONTRACT

 

The Contractor shall fully execute the Work described
in the Contract Documents, except to the extent specifically indicated in the
Contract Documents to be the responsibility of others.

 

ARTICLE 3                                RELATIONSHIP
OF THE PARTIES

 

The Contractor accepts the relationship of trust and
confidence established by this Agreement and covenants with the Owner to
cooperate with the Architect and exercise the Contractor’s skill and judgment
in furthering the interests of the Owner; to furnish efficient business
administration and supervision; to furnish at all times an adequate supply of
workers and materials; and to perform the Work in an expeditious and
economical manner consistent with the Owner’s interests. The Owner agrees to furnish and
approve, in a timely manner, information required by the Contractor and to make
payments to the Contractor in accordance with the requirements of the Contract
Documents.

 

ARTICLE 4                                DATE
OF COMMENCEMENT AND SUBSTANTIAL COMPLETION

 

4.1                                 The
date of commencement of the Work shall be the date of this Agreement unless a
different date is stated below or provision is made for the date to be fixed in
a notice to proceed issued by the Owner.

 

The commencement date will be fixed in a notice to
proceed

 

If, prior to commencement of the Work, the Owner
requires time to file mortgages, mechanic’s liens and other security interests,
the Owner’s time requirement shall be as
follows:

 

4.2                                 The
Contract Time shall be measured from the date of commencement.

 

4.3                                 The
Contractor shall achieve Substantial Completion of the entire Work not later
than [blank] days from the date of commencement, or as follows:

 

Tenant Improvement Substantial Completion date: February 1, 2006, subject to adjustments of
this Contract Time as provided
in the Contract Documents.

 

ARTICLE 5                                BASIS
FOR PAYMENT

 

5.1                               CONTRACT
SUM

 

5.1.1                        The
Owner shall pay the Contractor the Contract Sum in current funds for the
Contractor’s performance of the Contract. The Contract Sum is the Cost of the
Work as defined in Article 7
plus the Contractor’s Fee.

 

5.1.2                        The
Contractor’s Fee is: Four percent (4%) of the cost of the Work. This same
percentage will be used for changes in the Work.

 

5.2                               GUARANTEED
MAXIMUM PRICE

 

5.2.1                        The
sum of the Cost of the Work and the Contractor’s Fee is guaranteed by the
Contractor not to exceed

 

 

Two Million Five Hundred Seventy Nine Thousand Two
Hundred and Sixty Two Dollars ($2,579,262),
subject to additions and deductions by Change Order as provided in the Contract
Documents. Such maximum sum is referred to in the Contract Documents as the
Guaranteed Maximum Price. Costs which would cause the Guaranteed Maximum Price
to be exceeded shall be paid by the Contractor without reimbursement by the
Owner.

 

5.2.2                        The
Guaranteed Maximum Price is based on the following alternates, if any, which
are described in the Contract Documents and are hereby accepted by the Owner:

 

Insurance rate to be fixed at $0.95 / $1,000 coverage
(Article 16)

 

5.2.3                        Unit
prices, if any, are as follows:

 

	
  Description

  	
   

  	
  Units

  	
   

  	
  Price ($0.00)

  

 

5.2.4                        Allowances,
if any, are as follows

 

Allowance

To be included in subsequent Request for Authorization
letters

 

5.2.5                        Assumptions,
if any, on which the Guaranteed Maximum Price is based are as follows:

 

To be included in subsequent Request for Authorization
letters

 

5.2.6                        To
the extent that the Drawings and Specifications are anticipated to require
further development by the Architect, the Contractor has provided in the
Guaranteed Maximum Price for such further development consistent with the
Contract Documents and reasonably inferable therefrom. Such further development
does not include such things as changes in scope, systems, kinds and quality of materials,
finishes or equipment, all of which, if required, shall be incorporated by
Change Order.

 

ARTICLE 6                                CHANGES
IN THE WORK

 

6.1                                 Adjustments
to the Guaranteed Maximum Price on account of changes in the Work may be
determined by any of the methods listed in Section 7.3.3 of AIA Document
A201-1997.

 

6.2                                 In calculating adjustments to
subcontracts (except those awarded with the Owner’s prior consent on the basis
of cost plus a fee), the terms “cost” and “fee” as used in Section 7.3.3.3 of AIA Document A201-1997 and the terms “costs” and “a
reasonable allowance for overhead and profit” as used in Section 7.3.6 of AIA Document A201-1997 shall have the meanings
assigned to them in AIA Document A201-1997
and shall not be modified by Articles 5, 7 and 8 of this Agreement. Adjustments to subcontracts awarded
with the Owner’s prior consent on the basis of cost plus a fee shall be
calculated in accordance with the terms of those subcontracts.

 

6.3                                 In
calculating adjustments to the Guaranteed Maximum Price, the terms “cost” and “costs”
as used in the above-referenced provisions of AIA Document A201-1997 shall mean
the Cost of the Work as defined in Article 7 of this Agreement and the
terms “fee” and “a reasonable allowance for overhead and profit” shall mean the
Contractor’s Fee as defined in Section 5.1.2 of this Agreement.

 

6.4                                 If
no specific provision is made in Section 5.1 for adjustment of the
Contractor’s Fee in the case of changes in the Work, or if the extent of such
changes is such, in the aggregate, that application of the adjustment
provisions of Section 5.1 will cause substantial inequity to the Owner or
Contractor, the Contractor’s Fee shall be equitably adjusted on the basis of
the Fee established for the original Work, and the Guaranteed Maximum Price
shall be adjusted accordingly.

 

 

ARTICLE 7                                COSTS
TO BE REIMBURSED

 

7.1                               COST
OF THE WORK

 

The term Cost of the Work shall mean costs necessarily
incurred by the Contractor in the proper performance of the Work. Such costs
shall be at rates not higher than the standard paid at the place of the Project
except with prior consent of the Owner. The Cost of the Work shall include only
the items set forth in this Article 7.

 

7.2                               LABOR
COSTS

 

7.2.1                        Wages
of construction workers directly employed by the Contractor to perform the
construction of the Work at the site or, with the Owner’s approval, at off-site
workshops.

 

See Exhibit ”E” for Trade Labor Rates

 

7.2.2                        Wages
or salaries of the Contractor’s supervisory and administrative personnel when
stationed at the site with the Owner’s approval.

 

See Exhibit ”E” for Management Labor Rates

 

7.2.3                        Wages
and salaries of the Contractor’s supervisory or administrative personnel
engaged, at factories, workshops or on the road, in expediting the production
or transportation of materials or equipment required for the Work, but only for
that portion of their time required for the Work.

 

7.2.4                        Costs
paid or incurred by the Contractor for taxes, insurance, contributions,
assessments and benefits required by law or collective bargaining agreements
and, for personnel not covered by such agreements, customary benefits such as
sick leave, medical and health benefits, holidays, vacations and pensions,
provided such costs are based on wages and salaries included in the Cost of the
Work under Sections 7.2.1 through 7.2.3.

 

7.3                               SUBCONTRACT
COSTS

 

7.3.1                        Payments
made by the Contractor to Subcontractors in accordance with the requirements of
the subcontracts.

 

7.4                               COSTS
OF MATERIALS AND EQUIPMENT INCORPORATED IN THE COMPLETED CONSTRUCTION

 

7.4.1                        Costs,
including transportation and storage, of materials and equipment incorporated
or to be incorporated in the completed construction.

 

7.4.2                        Costs
of materials described in the preceding Section 7.4.1 in excess of those
actually installed to allow for reasonable waste and spoilage. Unused excess
materials, if any, shall become the Owner’s property at the completion of the
Work or, at the Owner’s option, shall be sold by the Contractor. Any amounts
realized from such sales shall be credited to the Owner as a deduction from the
Cost of the Work.

 

7.5                                 COSTS OF OTHER MATERIALS AND EQUIPMENT,
TEMPORARY FACILITIES AND RELATED ITEMS

 

7.5.1                        Costs,
including transportation and storage, installation, maintenance, dismantling
and removal of materials, supplies, temporary facilities, machinery, equipment,
and hand tools not customarily owned by construction workers, that are provided by the Contractor at the
site and fully consumed in the performance of the Work; and cost (less salvage
value) of such items if not fully consumed, whether sold to others or retained
by the

 

 

Contractor. Cost for items previously used by the
Contractor shall mean fair market value.

 

7.5.2                        Rental
charges for temporary facilities, machinery, equipment, and hand tools not
customarily owned by construction workers that are provided by the Contractor
at the site, whether rented from the Contractor or others, and costs of
transportation, installation, minor repairs and replacements, dismantling and
removal thereof. Rates and quantities of equipment rented shall be subject to
the Owner’s prior approval.

 

7.5.3                        Costs
of removal of debris from the site.

 

7.5.4                        Costs
of document reproductions, facsimile transmissions and long-distance telephone
calls, postage and parcel delivery charges, telephone service at the site and
reasonable petty cash expenses of the site office.

 

7.5.5                        That
portion of the reasonable expenses of the Contractor’s personnel incurred while
traveling in discharge of duties connected with the Work.

 

7.5.6                        Costs
of materials and equipment suitably stored off the site at a mutually
acceptable location, if approved in advance by the Owner.

 

7.6                               MISCELLANEOUS
COSTS

 

7.6.1                        That
portion of insurance and bond premiums that can be directly attributed to this
Contract:

 

Liability Insurance cost shall be $.95 per $1,000.00
of Contract value.

 

7.6.2                        Sales,
use or similar taxes imposed by a governmental authority that are dated to the
Work.

 

7.6.3                        Fees
and assessments for the building permit and for other permits, licenses and
inspections for which the Contractor is required by the Contract Documents to
pay.

 

7.6.4                        Fees
of laboratories for tests required by the Contract Documents, except those
related to defective or nonconforming Work for which reimbursement is excluded
by Section 13.5.3 of AZA Document
A201-1997 or other provisions of the Contract Documents, and which do not fall
within the scope of Section 7.7.3.

 

7.6.5                        [reserved]

 

7.6.6                        Data
processing costs related to the Work.

 

7.6.7                        Deposits
lost for causes other than the Contractor’s negligence or failure to fulfill a specific responsibility to the Owner as set forth in the Contract
Documents.

 

7.6.8                        [reserved]

 

7.6.9                        Expenses
incurred in accordance with the Contractor’s standard personnel policy for
relocation and temporary living allowances of personnel required for the Work if approved by the Owner.

 

7.7                               OTHER
COSTS AND EMERGENCIES

 

7.7.1                        Other
costs incurred in the performance of the Work if and to the extent approved in
advance in writing by the Owner.

 

7.7.2                        Costs
due to emergencies incurred in
taking action to prevent threatened damage, injury or loss in case of

 

 

an emergency affecting the safety of persons and
property, as provided in Section 10.6
of AIA Document A201-1997.

 

ARTICLE 8                                COSTS
NOT TO BE REIMBURSED

 

8.1                                 The
Cost of the Work shall not include:

 

8.1.1                        Salaries
and other compensation of the Contractor’s personnel stationed at the
Contractor’s principal office or offices other than the site office, except as
specifically provided in Sections 7.2.2
and 7.2.3 or as may be
provided in Article 14.

 

8.1.2                        Expenses
of the Contractor’s principal office and offices other than the site office.

 

8.1.3                        Overhead
and general expenses, except as may be expressly included in Article 7.

 

8.1.4                        The
Contractor’s capital expenses, including interest on the Contractor’s capital
employed for the Work.

 

8.1.5 Rental costs of
machinery and equipment, except as specifically provided in Section 7.5.2.

 

8.1.6 Except as
provided in Section 7.7.3 of
this Agreement, costs due to the negligence or failure to fulfill a specific responsibility of the
Contractor, Subcontractors and suppliers or anyone directly or indirectly
employed by any of them or for whose acts any of them may be liable.

 

8.1.7 Any cost not
specifically and expressly described in Article 7.

 

8.1.8 Costs, other
than costs included in Change Orders approved by the Owner, that would cause
the Guaranteed Maximum Price to be exceeded.

 

ARTICLE 9                                DISCOUNTS,
REBATES AND REFUNDS

 

9.1 Cash discounts
obtained on payments made by the Contractor shall accrue to the Owner if (1) before making the payment,
the Contractor included them in an Application for Payment and received payment
therefor from the Owner, or (2) the
Owner has deposited funds with the Contractor with which to make payments;
otherwise, cash discounts shall accrue to the Contractor. Trade discounts,
rebates, refunds and amounts received from sales of surplus materials and
equipment shall accrue to the Owner, and the Contractor shall make provisions
so that they can be secured.

 

9.2 Amounts that
accrue to the Owner in accordance with the provisions of Section 9.1 shall be credited to the Owner as
a deduction from the Cost of the Work.

 

ARTICLE 10                         SUBCONTRACTS
AND OTHER AGREEMENTS

 

10.1                           Those
portions of the Work that the Contractor does not customarily perform with
the Contractor’s own personnel shall be performed under subcontracts or by
other appropriate agreements with the Contractor. The Owner may designate
specific persons or entities from whom the Contractor shall obtain bids. The
Contractor shall obtain bids from Subcontractors and from suppliers of
materials or equipment fabricated especially for the Work and shall deliver
such bids to the Architect. The Owner shall then determine, with the advice of
the Contractor and the Architect, which bids will be accepted. The Contractor
shall not be required to contract with anyone to whom the Contractor has
reasonable objection.

 

10.2                           If
a specific bidder among those whose bids are delivered by the Contractor to the
Architect (1) is
recommended to the Owner by the Contractor; (2) is qualified to perform that portion of the Work;
and (3) has

 

 

submitted a bid that conforms to the requirements of
the Contract Documents without reservations or exceptions, but the Owner
requires that another bid be accepted, then the Contractor may require
that a Change Order be issued to adjust the Guaranteed Maximum Price by the
difference between the bid of the person or entity recommended to the Owner by
the Contractor and the amount of the subcontract or other agreement actually
signed with the person or entity
designated by the Owner.

 

10.3                           Subcontracts
or other agreements shall conform to the applicable payment provisions of
this Agreement, and shall not be awarded on the basis of cost plus a fee
without the prior consent of the Owner.

 

ARTICLE 11                         ACCOUNTING
RECORDS

 

The Contractor shall keep full and detailed accounts
and exercise such controls as may be necessary for proper financial
management under this Contract, and the accounting and control systems shall be
satisfactory to the Owner. The Owner and the Owner’s accountants shall be
afforded access to, and shall be permitted to audit and copy, the Contractor’s
records, books, correspondence, instructions, drawings, receipts, subcontracts,
purchase orders, vouchers, memoranda and other data relating to this Contract,
and the Contractor shall preserve these for a period of three years after final
payment, or for such longer period as may be required by law.

 

ARTICLE 12                         PAYMENTS

 

12.1                        PROGRESS
PAYMENTS

 

12.1.1                  Based
upon Applications for Payment submitted to the Architect by the Contractor and Certificates for
Payment issued by the Architect, the Owner shall make progress payments on
account of the Contract Sum to the Contractor as provided below and elsewhere
in the Contract Documents.

 

12.1.2 The period
covered by each Application for Payment shall be one calendar month ending on
the last day of the month, or as follows:

 

12.1.3                  Provided
that an Application for Payment is received by the Architect not later than the
first (1st) day of a month, the Owner shall make payment via wire transfer to
the bank designated by the Contractor to the Contractor not later than the thirtieth (30th) day of the same
month. If an Application for Payment is received by the Architect after the
application date fixed above, payment shall be made by the Owner not later than
twenty (20) days after the Architect receives the Application for Payment.

 

12.1.4                  With
each Application for Payment, the Contractor shall submit whatever evidence is
reasonable to demonstrate that cash disbursements already made by the
Contractor on account of the Cost of the
Work equal or exceed (1) progress payments already received by the
Contractor; less (2) that portion of those payments attributable to the
Contractor’s Fee; plus (3) payrolls for the period covered by the present
Application for Payment.

 

12.1.5                  Each
Application for Payment shall be based on the most recent schedule of
values submitted by the Contractor in accordance with the Contract Documents.
The schedule of values shall allocate the entire Guaranteed Maximum Price
among the various portions of the Work, except that the Contractor’s Fee shall be shown as a single separate item. The
schedule of values shall be prepared in such form and supported by
such data to substantiate its accuracy as the Architect may require. This schedule, unless objected to
by the Architect, shall be used as a basis for reviewing the Contractor’s
Applications for Payment.

 

12.1.6                  Applications
for Payment shall show the percentage of completion of each portion of the Work
as of the end of the period covered by the Application for Payment. The
percentage of completion shall be the lesser of (1) the percentage of that
portion of the Work which has actually been completed; or (2) the
percentage obtained by dividing (a) the expense that has actually been
incurred by the Contractor on account of that portion of the Work for which the
Contractor has made or intends to make actual payment prior to the next Application for Payment by (b) the
share of the Guaranteed Maximum Price allocated to that portion of the Work in
the schedule of values.

 

 

12.1.7                  Subject
to other provisions of the Contract Documents, the amount of each progress
payment shall be computed as follows:

 

.1                                       take
that portion of the Guaranteed Maximum Price properly allocable to completed
Work as determined by multiplying the percentage of completion of each portion
of the Work by the share of the Guaranteed
Maximum Price allocated to that portion of the Work in the schedule of
values.

 

Pending final determination of cost to the Owner of
changes in the Work, amounts not in dispute shall be included as provided in Section 7.3.8 of AIA Document A201-1997;

 

.2                                       add
that portion of the Guaranteed Maximum Price properly allocable to materials
and equipment delivered and suitably stored at the site for subsequent
incorporation in the Work, or if approved in advance by the Owner, suitably
stored off the site at a location agreed upon in writing;

 

.3                                       add
the Contractor’s Fee, less retainage of ten percent ( 10% ).The Contractor’s Fee shall be computed upon the Cost of the
Work described in the two preceding Clauses at the rate stated in Section 5.1.2 or, if the Contractor’s Fee is
stated as a fixed sum in that Subparagraph, shall be an amount that bears the
same ratio to that fixed-sum fee as the Cost of the Work in the two preceding
clauses bears to a reasonable estimate of the probable Cost of the Work upon
its completion;

 

.4                                       subtract
the aggregate of previous payments made by the Owner;

 

.5                                       subtract
the shortfall, if any, indicated by the Contractor in the documentation
required by Section 12.1.4 to
substantiate prior Applications for Payment, or resulting from errors
subsequently discovered by the Owner’s accountants in such documentation; and

 

.6                                       subtract
amounts, if any, for which the Architect has withheld or nullified a
Certificate for Payment as provided in Section 9.5 of AIA Document
A201-1997.

 

12.1.8                  Except
with the Owner’s prior approval, payments to Subcontractors shall be subject to
retainage of not less than ten percent (10).
The Owner and the Contractor shall agree upon a mutually acceptable procedure
for review and approval of payments and retention for Subcontractors.

 

12.1.9                  In
taking action on the Contractor’s Applications for Payment, the Architect shall
be entitled to rely on the accuracy and completeness of the information
furnished by the Contractor and shall not be deemed to represent that the
Architect has made a detailed examination, audit or arithmetic verification of
the documentation submitted in accordance with Section 12.1.4 or other supporting data; that
the Architect has made exhaustive or continuous onsite inspections or that the
Architect has made examinations to ascertain how or for what purposes the
Contractor has used amounts previously paid on account of the Contract. Such
examinations, audits and verifications, if required by the Owner, will be
performed by the Owner’s accountants acting in the sole interest of the Owner.

 

12.2                        FINAL
PAYMENT

 

12.2.1                  Final
payment, constituting the entire unpaid balance of the Contract Sum, shall be
made by the Owner to the Contractor when:

 

.1                                       the
Contractor has fully performed the Contract except for the Contractor’s
responsibility to correct Work as provided in Section 12.2.2 of AIA Document A201-1997, and
to satisfy other requirements, if any, which extend beyond final payment; and

 

 

.2                                       a
final Certificate for Payment has been issued by the Architect.

 

12.2.2                  The
Owner’s final payment to the Contractor shall be made no later than 30 days after the issuance of the
Architect’s final Certificate for Payment, or as follows:

 

12.2.3                  The
Owner’s accountants will review and report in writing on the Contractor’s final
accounting within 30 days after
delivery of the final accounting to the Architect by the Contractor. Based upon
such Cost of the Work as the Owner’s accountants report to be substantiated by
the Contractor’s final accounting, and provided the other conditions of Section 12.2.1 have been met, the Architect
will, within seven days after receipt of the written report of the Owner’s
accountants, either issue to the Owner a final Certificate for Payment with a
copy to the Contractor, or notify the Contractor and Owner in writing of the
Architect’s reasons for withholding a certificate as provided in Section 9.5.1 of the AIA Document A201-1997. The
time periods stated in this Section 12.2.3 supersede those stated in Section 9.4.1 of the AIA Document A201-1997.

 

12.2.4                  If
the Owner’s accountants report the Cost of the Work as substantiated by the Contractor’s
final accounting to be less than claimed by the Contractor, the Contractor
shall be entitled to demand arbitration of the disputed amount without a
further decision of the Architect. Such demand for arbitration shall be made by
the Contractor within 30 days after the Contractor’s receipt of a copy of the
Architect’s final Certificate for Payment; failure to demand arbitration within
this 30-day period shall result in the substantiated amount reported by the
Owner’s accountants becoming binding on the Contractor. Pending a final
resolution by arbitration, the Owner shall pay the Contractor the amount
certified in the Architect’s final Certificate for Payment.

 

12.2.5                  If,
subsequent to final payment and at the Owner’s request, the Contractor incurs costs
described in Article 7 and not excluded by Article 8 to correct
defective or nonconforming Work, the Owner shall reimburse the Contractor such
costs and the Contractor’s Fee applicable thereto on the same basis as if such
costs had been incurred prior to final payment, but not in excess of the
Guaranteed Maximum Price. If the Contractor has participated in savings as
provided in Section 5.2, the amount of such savings shall be recalculated
and appropriate credit given to the Owner in determining the net amount to be
paid by the Owner to the Contractor.

 

ARTICLE 13                         TERMINATION
OR SUSPENSION

 

13.1                           The
Contract may be terminated by the Contractor, or by the Owner for
convenience, as provided in Article 14 of AIA Document A201-1997. However, the amount to be paid to the
Contractor under Section 14.1.3 of AIA
Document A201-1997 shall not exceed the amount the Contractor would be
entitled to receive under Section 13.2 below, except that the Contractor’s
Fee shall be calculated as if the Work had been fully completed by the
Contractor, including a reasonable estimate of the Cost of the Work for Work
not actually completed.

 

13.2                           The
Contract may be terminated by the Owner for cause as provided in Article 14
of AL4 Document A201-1997. The
amount, if any, to be paid to the Contractor under Section 14.2.4 of AIA Document A201-1997 shall not cause
the Guaranteed Maximum Price to be exceeded, nor shall it exceed an amount
calculated as follows:

 

13.2.1                  Take
the Cost of the Work incurred by the Contractor to the date of termination;

 

13.2.2                  Add
the Contractor’s Fee computed upon the Cost of the Work to the date of
termination at the rate stated in Section 5.1.2 or, if the Contractor’s
Fee is stated as a fixed sum in that Section, an amount that bears the same
ratio to that fixed-sum Fee as the Cost of the Work at the time of termination bears to a
reasonable estimate of the probable Cost of the Work upon its completion; and

 

13.2.3                  Subtract
the aggregate of previous payments made by the Owner.

 

13.3                           The
Owner shall also pay the Contractor fair compensation, either by purchase or
rental at the election of the Owner, for any equipment owned by the Contractor
that the Owner elects to retain and that is not otherwise

 

 

included in the Cost of the Work under Section 13.2.1.
To the extent that the Owner elects to take legal assignment of subcontracts
and purchase orders (including rental agreements), the Contractor shall, as a
condition of receiving the payments referred to in this Article 13,
execute and deliver all such papers and take all such steps, including the
legal assignment of such subcontracts and other contractual rights of the
Contractor, as the Owner may require for the purpose of fully vesting in
the Owner the rights and benefits of the Contractor under such subcontracts or
purchase orders.

 

13.4                           The
Work may be suspended by the Owner as provided in Article 14 of AL4 Document A201-1997; in such case,
the Guaranteed Maximum Price and Contract Time shall be increased as provided
in Section 14.3.2 of AIA Document
A201-1997 except that the term “profit” shall be understood to mean the
Contractor’s Fee as described in Sections 5.1.2 and Section 6.4 of this
Agreement.

 

13.5                           Termination:

 

(a)                                  If
pursuant to any provision in the Contract Documents, the Contractor is granted
the right to terminate the Agreement, such right may be exercised by the
Contractor giving the owner fifteen (15) days written notice. Upon termination,
Owner will pay to the Contractor within thirty (30) days thereafter all amounts
to be paid by Owner pursuant to Article 13.

 

(b)                                 If
Owner terminates the Agreement pursuant to any right of termination within the
Contract Documents, Owner shall pay to Contractor within thirty (30) days
thereafter all amounts to be paid by Owner pursuant to Article 13 upon termination; provided,
however, that a termination of the Agreement by Owner for cause pursuant to 14.2 of the General Conditions shall
be governed in accordance with the terms of Paragraph 14.2 of the General Conditions.

 

ARTICLE 14                         MISCELLANEOUS
PROVISIONS

 

14.1                           Where
reference is made in this Agreement to a provision AIA Document A201-1997 or another Contract
Document, the reference refers to that provision as amended or supplemented by
other provisions of the Contract Documents.

 

14.2                           Payments
due and unpaid under the Contract shall bear interest from the date payment is
due at the rate stated below, or in the absence thereof, at the legal rate
prevailing from time to time at the place where the Project is located.

 

Prevailing prime rate of the Bank of America, NTSA

 

14.3                           The
Owner’s representative is:

 

N/A

 

14.4                           The
Contractor’s representative is:

 

N/A

 

14.5                           Neither
the Owner’s nor the Contractor’s representative shall be changed without ten
days’ written notice to the other party.

 

14.6                           Other
provisions:

 

14.6.1                  (a) In the event the Work herein be wholly
or partially damaged or destroyed from any causality or cause whatsoever,
before the final completion of said Work, the Contractor, upon written
instructions from the Owner,

 

 

shall proceed to replace and/or repair said Work in
accordance with the plans. In this event, the provisions of this Agreement
shall remain in full force and effect, except that the Guaranteed Maximum Cost
stated in Article 5 shall be increased by the total cost of removing
and/or replacing all damaged and/or destroyed work, the time for completion
shall be extended and the Contractor’s fee shall be increased. (b) In the
event of substantial damage or destruction to the Work by any cause the Owner
may, upon giving written notice to the Contractor, elect to terminate the
Agreement. In such case, the Owner shall pay the Contractor for all costs of
the Work and all obligations incurred by Contractor in connection with the Work
through the date of termination, and the Contractor’s fee earned upon the costs
and obligations. (c) Prior to commencement of the Work, Owner shall obtain
flood, tire, earthquake, and
extended coverage insurance, including “All
Risk” insurance for malicious mischief and vandalism and such other
additional insurance as Owner may desire to insure the Work and all
materials intended to become part of the Work, wherever located from the
causalities and causes as set forth in subparagraph (a), and Owner shall bear
the risk of loss not covered by such insurance. A copy of each policy shall be
submitted to Contractor for approval. Such policies shall include Waiver of
Subrogation and Permission to Occupy Endorsements, and shall name Contractor
and its subcontractors and suppliers (all tiers) as additional insureds.

 

14.62                     Owner
agrees to defend, indemnify and hold Contractor and Contractor’s directors,
officers, employees, agents and &dates harmless from any and all
claims, damages, costs or liabilities arising out of or related to any
hazardous materials that were present at, on or under the property prior to
commencement of the construction of the Work or that are thereafter introduced
to the site by persons other than Contractor or any of its subcontractors,
suppliers, or vendors, regardless of tier. The obligations specified in the previous sentence shall be
effective regardless of Contractor’s or its subcontractor or suppliers’ own
negligence or fault, so long as the claim, damage, cost or liability
indemnified against does not arise from the sole negligence or willful misconduct
of Contractor or its subcontractors or suppliers. Contractor shall not be
responsible and shall have no obligations to indemnify, defend or hold harmless
any person for claims, damages, costs or liabilities arising out of or related
to the conduct of Owner’s separate contractors or consultants. Notwithstanding
any of the provisions of the Contract Documents to the contrary, Contractor
shall not have any duty to indemnify any person, and shall not be liable to
Owner, its affiliates, or any other persons for any claims, damages, costs or
liabilities arising out of or related to: (1) Hazardous materials to the
extent that such materials were at, on
or under or about the project site prior to the commencement of the Work; (2) Hazardous
materials introduced to the site by persons other than Contractor or any of its
subcontractors, suppliers or vendors, regardless of tier, or by processes or
forces such as infiltration or migration from off the project, which are not
caused or controlled by Contractor, its subcontractors, or suppliers; or (3) Subsidence
not caused by Contractor. For purposes of this provision: (a) Hazardous
materials means any and all pollutants, toxic materials, gaseous emissions or
substances, or hazardous materials (including, without limitation, substances
such as lead, PCB’s, hydrocarbons, or asbestos). (b) Subsidence not caused
by Contractor means any subsidence, shifting, sliding, slippage, heaving,
liquefaction, raising, lowering, collapse, swelling, dislocation of any soils,
ground, rock or materials present at the project site, not constructed as part of
the Work, which was contributed
to or resulted from any cause or mechanism other than the active negligence of
Contractor or its subcontractors, suppliers or vendors, or from the failure by
any of them to fulfill obligations they owe under the Contract Documents.

 

14.6.3                  Owner
acknowledges that Contractor is acting as a licensed contractor, not as an
architect, engineer, or other design professional. If any other portion of the
Contract Documents specifically and clearly imposes a design/build requirement
on the Contractor, for which the services of an architect or engineer are
required, then Contractor will fulfill that
requirement by retaining appropriately licensed subconsultants. The services to
be performed by Contractor under the Contract Documents shall not constitute it
an Architect nor impose upon it the obligation to render to, assume, or perform on
behalf of Owner the professional
responsibilities, duties, services and activities of the Architect or any other
design professional. Contractor assumes no responsibility or liability in
connection with the design of the Project by Architect or the failure of the
Architect to provide designs or otherwise discharge Architect’s obligations.
Contractor’s performance of the Contract Documents does not relieve Architect
of its obligations to Owner. Contractor shall notify Owner and/or Architect
promptly in writing if it becomes aware the needed designs are lacking.

 

 

14.6.4                  Mediation: All reference in the Contract Documents, including in the
General Conditions, to the word arbitration are hereby deleted, and notwithstanding
any such reference the parties do hereby agree instead to submit to mediation
any such disputes in accordance with the following provisions:

 

If a dispute arises out of or relates to the Contract
Documents or the breach thereof, and if the dispute cannot be settled through
direct discussions, the parties agree to first endeavor in good faith to settle
the dispute within 45 days of submission to mediation under Construction
Industry Mediation Rules of the American Arbitration Association, before
having recourse to a judicial forum. The mediation shall be initiated by
written request of either party and shall be commenced within fifteen (15) days
of receipt of such notice.

 

The parties agree that if the mediation fails and the
dispute is submitted to a judicial forum, there shall be no right of appeal
from the judgment of the court of original jurisdiction, hereby waiving all
rights of appeal.

 

14.65                     Delay: Notwithstanding any provision
of the Contract Documents to the contrary, in the event that the project is
delayed or suspended, other than for the Contractor’s fault, for a period or
periods of time that in aggregate exceed twenty percent (20%) of the originally
specified time for performance, Contractor shall be entitled to an equitable
adjustment of General Conditions, Fee, and of the Guaranteed Maximum Price in
light of the delay or suspension.

 

ARTICLE 15                         ENUMERATION
OF CONTRACT DOCUMENTS

 

15.1                           The
Contract Documents, except for Modifications issued after execution of this
Agreement, are
enumerated as follows:

 

15.1.1                  The
Agreement is this executed 1997 edition of the Standard Form of Agreement
Between Owner and Contractor, AIA Document A111-1997.

 

15.1.2 The General
Conditions are the 1997 edition
of the General Conditions of the Contract for Construction, AIA Document A201-1997.

 

15.1.3                  The
Supplementary and other Conditions of the Contract are those contained in the Project Manual dated, and are as
follows:

 

	
  Document

  	
   

  	
  Title

  	
   

  	
  Pages

  

 

15.1.4                  The
Specifications are those contained in the Project Manual dated as in Section 15.1.3, and are as follows:

 

Title of Specifications exhibit:

 

15.1.5                  The
Drawings are as follows, and are
dated unless a different date is shown below:

 

Title of Drawings exhibit:

 

15.1.6                  The
Addenda, if any, are as follows:

 

	
  Number

  	
   

  	
  Date

  	
   

  	
  Pages

  

 

Portions of Addenda relating to bidding requirements
are not part of the Contract Documents unless the bidding requirements are also enumerated in this Article 15.

 

15.1.7                  Other
Documents, if any, forming part of the Contract Documents are as follows:

 

 

50% CD Estimate dated August 24, 2005

 

ARTICLE 16                         INSURANCE
AND BONDS

 

	
  Type of insurance

  	
   

  	
  Limit of Liability ($0.00)

  
	
  Insurance rate to be fixed at $0.95 /
  $1,000 coverage

  	
   

  	
   

  

 

This Agreement is entered into as of the day and year
first written above and is executed in at least three original copies, of which
one is to be delivered to the Contractor, one to the Architect for use in the
administration of the Contract, and the remainder to the Owner.

 

 

	
  /s/ Christopher J. Calhoun

  	
   

  	
  /s/ Martin Sisemore

  	
   

  
	
  OWNER

  	
  Cytori Therapeutics

  	
  CONTRACTOR

  	
  Rudolph and Sletten, Inc.

  
	
   

  	
   

  
	
  Christopher J. Calhoun,
  CEO

  	
   

  	
  Martin Sisemore, President
  and CEOEXHIBIT 10.26

 

November 15, 2005

 

John T. Ransom, Ph.D.

 

Dear Dr. Ransom:

 

We are pleased to offer
you the position of Vice-President of Research – Regenerative Cell Technology
at a salary of $15,000 per month (which, if computed on an annual basis, would be
equivalent to $180,000), payable semi-monthly. You will report to me, and your
start date will be as soon as possible. Please note that your status as an
officer of the Company (as referred to above) will be subject to the final
approval and appointment by the Board of Directors.

 

You will receive employee
benefits comparable to Cytori’s standard package, including PPO medical
insurance, group life insurance, group long-term disability insurance, and
participation in our flexible spending account and 401(k) plan. Your paid time
off will be four (4) weeks per year. You will also receive an auto
allowance of $800 per month.

 

We will recommend to the
Board of Directors that it grant to you, under our Amended and Restated 1997
Stock Option and Stock Purchase Plan, 50,000 stock options. These stock
options, if granted by the Board, would vest monthly over four years (subject
to a 1-year cliff) starting from your first day of employment. The exercise
price would be equal to 100% of the fair market value of our stock as of the
date the Board acts to grant the options. The options will be exercisable once
they vest, subject to your remaining an employee of the Company, as described
in the stock option agreement you will receive from the Company.

 

Beginning in 2006, you
will have a target annual bonus of 15% of your base salary. The bonus is
usually paid in the first quarter of each year, and is based upon your
achievement of mutually agreed-upon performance objectives during the preceding
year.

 

Employment with Cytori is
“at will” and may be terminated without cause by either party. This letter
describes a written offer of employment and does not constitute a contract.

 

Dr. Ransom, we would
be delighted to have someone of your caliber join our company. Please sign below
as acceptance of this offer and return a copy to me at your earliest
convenience.

 

We would be pleased for
you and your spouse to join us for our management retreat that will be held December 10
– 14 at the Princeville Hotel in Princeville, Kauai. Travel, accommodations and
meals will be paid by Cytori.

 

	
  Sincerely,

  
	
   

  
	
  /s/ Marc Hedrick

  	
   

  
	
  Marc Hedrick

  
	
  President

  
	
   

  
	
  Acceptance:

  
	
  I understand and accept
  the above offer.

  
	
   

  
	
  Signature:

  
	
   

  
	
  /s/ John T. Ransom

  	
   

  	
  11-18-05

  	
   

  
	
  John T. Ransom, Ph.D.

  	
  Date

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