NOTE AND WARRANT PURCHASE AGREEMENT

Exhibit 10.1

NOTE AND WARRANT PURCHASE AGREEMENT

THIS NOTE AND WARRANT PURCHASE AGREEMENT (this “Agreement”) is made as of February 27, 2009 by and among InnerCool Therapies, Inc., a Delaware corporation (“InnerCool”), Tissue Repair Company, a Delaware corporation (“TRC”) and Cardium Therapeutics, Inc., a Delaware corporation (“Cardium” or the “Company” and, together with InnerCool and TRC, individually, a “Borrower,” and collectively, the “Borrowers”), and the investors listed on Schedule A hereto, each of which is herein referred to as an “Investor.”

THE PARTIES HEREBY AGREE AS FOLLOWS:

SECTION 1

ISSUANCE OF NOTES AND WARRANTS

1.1 Issuance of Notes . Subject to the terms and conditions of this Agreement, at each Closing (as defined below), the Borrowers shall issue and sell to each Investor participating in such Closing a senior subordinated secured promissory note (each such note, a “Note” and collectively, the “Notes”) in the principal amount (the “Principal Amount”) equal to the amount set forth below Investor’s name on the signature page of this Agreement and on Schedule A attached hereto, against payment by such Investor to the Company of the Principal Amount. The Notes shall each be in the form of Exhibit A attached hereto and shall be subordinate to the Senior Notes (as defined in Section 2.3(b) below) in accordance with Section 7 thereof. Capitalized but otherwise undefined terms used herein shall have the meanings provided therefor in the Notes.

1.2 Issuance of Warrants . Subject to the terms and conditions of this Agreement, at each Closing, the Company shall issue to each Investor that has purchased a Note hereunder, with respect to each such Note, a warrant (the “Warrants”), in the form of Exhibit B attached hereto, representing the right to purchase up to that number of shares of Common Stock of the Company (the “Warrant Shares”) (as adjusted for stock splits, recapitalizations or other similar events) calculated as follows:

The Warrants shall, unless sooner terminated as provided therein, have a term of five years from the date of issuance and shall be exercisable at an exercise price (subject to adjustment as set forth in the Warrants) equal to the Stock Purchase Price.

1.3 Stock Purchase Price . For purposes of this Agreement, “Stock Purchase Price” shall mean $2.00 per share.

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SECTION 2

CLOSINGS

2.1 Initial Closing . The initial closing of the purchase and sale of Notes hereunder (the “Initial Closing”) shall be held at the offices of Bell, Boyd & Lloyd, LLP, 3580 Carmel Mountain Road, Suite 200, San Diego, California or remotely by facsimile transmission or other electronic means, on the date of this Agreement. Notwithstanding anything to the contrary in this Agreement, a minimum of $2,500,000 principal amount of Notes must be issued and sold at the Initial Closing.

2.2 Subsequent Closings . The Borrowers may issue and sell Notes in the aggregate principal amount of up to $3,500,000 hereunder. Subsequent to the Initial Closing and subject to the foregoing limitation, the Borrowers may issue and sell additional Notes to such additional investors as they shall select in their sole and absolute discretion. Any such additional investor shall execute and deliver a counterpart signature page to this Agreement, and thereby become a party to and be deemed an Investor hereunder. All additional Investors and all additional Principal Amounts invested hereunder shall be reflected on Schedule A , which shall be automatically amended without any further action by any party hereto. The closing of the purchase and sale of such additional Notes hereunder shall be held at the offices of Bell, Boyd & Lloyd, LLP, 3580 Carmel Mountain Road, Suite 200, San Diego, California or remotely by facsimile transmission or other electronic means; provided that such closing occurs on or before March 31, 2009 (which closing, together with the Initial Closing, are designated as a “Closing”).

2.3 Conditions . The several obligations of the Investors to purchase the Notes on the date of the Initial Closing shall be subject to the prior or concurrent satisfaction of each of the conditions precedent set forth in this Section 2.3 .

(a) Representations and Warranties Correct; Performance of Obligations . The representations and warranties made by each Borrower contained herein shall be true and correct in all material respects (except for those representations and warranties which are qualified as to materiality, in which case such representations and warranties shall be true and correct in all respects), and each Borrower shall have performed, satisfied and complied with all covenants, agreements and conditions herein required to be performed, satisfied or complied with by it at or prior to the Closing.

(b) Consents and Waivers . Each Borrower shall have obtained any and all consents (including all governmental or regulatory consents, approvals or authorizations required in connection with the valid execution and delivery of this Agreement), permits and waivers necessary or appropriate for consummation of the transactions contemplated by this Agreement, including but not limited to the consent of the holders of a majority of the aggregate principal amount of outstanding Senior Secured Promissory Notes of the Company dated November 5, 2008 and November 10, 2008 (the “Senior Notes”) issued pursuant to that certain Note and Warrant Purchase Agreement dated November 5, 2008 (the “Senior Note Purchase Agreement”) among the Borrowers and the lenders named therein (the “Senior Lenders”) to the granting to the Lenders of a security interest pursuant to the Security Agreement.

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(c) Judgments . No judgment, writ, order, injunction, award or decree of or by any court, or judge, justice or magistrate, including any bankruptcy court or judge, or any order of or by any governmental authority, shall have been issued, and no action or proceeding shall have been instituted by any governmental authority, enjoining or preventing the consummation of the transactions contemplated in this Agreement.

(d) Stop Orders . No stop order or suspension of trading shall have been imposed by the SEC or any other governmental or regulatory body with respect to public trading in the Company’s Common Stock.

(e) CEO/CFO Certificate . Each Borrower shall have delivered a Certificate, executed on behalf of each Borrower by its Chief Executive Officer or its Chief Financial Officer, dated as of the Closing Date, certifying to the fulfillment of the conditions specified in subsections (a), (b), (c) and (d) above. This item shall be applicable for all Subsequent Closings as well.

(f) Opinion of Borrowers’ Counsel . Investor shall have received from Bell, Boyd & Lloyd, LLP, counsel to the Borrowers an opinion dated the Closing Date and in substantially the form attached hereto as Schedule B . This item shall be applicable for all Subsequent Closings as well.

(g) Security Agreement . The Investors shall have received, each executed and delivered by the Borrowers and the Investors (or any Collateral Agent on their behalf) a security agreement in the form attached hereto as Exhibit C (the “Security Agreement”) under which each Borrower grants to the Collateral Agent (as defined in Section 7.1(a) hereto), as agent for the Investors, a security interest in the Collateral.

(h) [RESERVED]

(i) Resolutions, etc . The Investors shall have received (i) a certificate, dated the Closing Date, of an authorized signatory of each Borrower as of the date of the Initial Closing certifying (A) copies of the resolutions and other actions taken or adopted by the Borrowers authorizing the execution, delivery and performance of the Transaction Documents (as defined below) to which the Borrower is a party, and (B) the Organic Documents (as defined in the Note) of the Borrowers (which shall also be certified by the Secretary of State (or other appropriate Governmental Authority) of the state in which the Borrower is organized or formed (to the extent available)), (ii) a good standing certificate with respect to the Borrowers as of a date within 5 days of the Initial Closing from the Secretary of the State (or other appropriate Governmental Authority) of the state in which the Borrower is organized or formed, and (iii) evidence of qualification of the Borrowers to do business in California. As used herein, the “Transaction Documents” means this Agreement, the Collateral Documents, the Notes, the Warrants and any other and all other certificates, documents, agreements and instruments delivered to the Investors under or in connection with this Agreement.

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(j) Collateral Matters . The Borrowers shall have delivered to the Investors (or any Collateral Agent on their behalf) confirmation that all UCC-1 financing statements and other filings necessary or appropriate to perfect the security interests of the Investors (or any Collateral Agent on their behalf) in the Collateral have been accepted for filing. As used herein, the “Collateral Documents” means, collectively, the Security Agreement and any other agreement pursuant to which the Borrowers or any other Person provides a Lien on its assets in favor of the Investors (or any Collateral Agent on their behalf), and all filings, documents and agreements made or delivered pursuant thereto.

2.4 Delivery . At each Closing (i) each Investor participating in such Closing shall deliver a check or wire transfer of immediately available funds in the amount of such Investor’s Principal Amount of Notes purchased with respect to such Closing payable to the escrow account as follows: Signature Bank, as escrow agent to Cardium Therapeutics, Inc., ABA Number : 026013576, Account Number : 1501162406 and (ii) the Borrowers shall execute and deliver to each such Investor a Note reflecting the name of the Investor, a Principal Amount equal to such Investor’s principal amount and the date of such Closing, and the Company shall execute and deliver to each such Investor a Warrant as contemplated by Section 1.2 . Each such Note shall be a binding obligation of the Borrowers upon execution thereof by the Borrowers and delivery thereof to an Investor. Each such Warrant shall be a binding obligation of the Company upon execution thereof by the Company and delivery thereof to an Investor.

SECTION 3

REPRESENTATIONS AND WARRANTIES OF INVESTORS

Each Investor hereby severally represents, warrants and covenants to the Borrowers as follows:

3.1 Purchase for Own Account . Such Investor is acquiring the Notes, the Warrants and the Common Stock issuable upon exercise of the Warrants (collectively, the “Securities”) solely for investment for such Investor’s own account not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and such Investor has no present intention of selling, granting any participation in, or otherwise distributing the same. The acquisition by such Investor of any of the Securities shall constitute confirmation of the representation by such Investor that such Investor does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Securities.

3.2 Disclosure of Information . Such Investor has (i) received all the information it considers necessary or appropriate for deciding whether to acquire the Securities, and (ii) reviewed the documents filed by the Company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), from the end of its most recently completed fiscal year through the date hereof including, without limitation, its most recent reports on Form 10-K and Form 10-Q (together with all exhibits thereto) which are available for viewing on the SEC’s EDGAR website located at http://www.sec.gov or were furnished by the Company upon request. Such Investor further represents that it has had an opportunity to ask questions and receive answers from the Borrowers regarding the terms and conditions of the offering of the Securities and the business, properties, prospects and financial condition of the Borrowers.

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3.3 Investment Experience . Either (i) such Investor or its officers, directors, managers or controlling persons has a preexisting personal or business relationship with the Company or its officers, directors or controlling persons or with Empire Asset Management Company (sometimes referred to herein as the “Placement Agent”), or (ii) such Investor, by reason of its own business and financial experience, has the capacity to protect its own interests in connection with the investment contemplated hereby. Such Investor represents that it is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, can bear the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Securities. Such Investor acknowledges that any investment in the Securities involves a high degree of risk, and represents that it is able, without materially impairing its financial condition, to hold the Securities for an indefinite period of time and to suffer a complete loss of its investment. Such Investor further represents that it has reviewed the Risk Factors which are attached to this Agreement as Exhibit D hereto.

3.4 Accredited Investor . Such Investor represents that it is an “accredited investor” within the meaning of Securities and Exchange Commission (“SEC”) Rule 501 of Regulation D, as presently in effect and, for the purpose of Section 25102(f) of the California Corporations Code, he or she is excluded from the count of “purchasers” pursuant to Rule 260.102.13 thereunder.

3.5 Restrictions on Transfer . Such Investor understands that the Securities are characterized as “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Borrowers in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act of 1933, as amended (the “Act”), only in certain limited circumstances. In this connection, such Investor represents that it is familiar with SEC Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Act. SUCH INVESTOR UNDERSTANDS AND ACKNOWLEDGES HEREIN THAT AN INVESTMENT IN THE COMPANY’S SECURITIES INVOLVES AN EXTREMELY HIGH DEGREE OF RISK AND MAY RESULT IN A COMPLETE LOSS OF HIS, HER OR ITS INVESTMENT. Such Investor understands that the Securities have not been and will not be registered under the Act and have not been and will not be registered or qualified in any state in which they are offered, and thus the Investor will not be able to resell or otherwise transfer his, her or its Securities unless they are registered under the Act and registered or qualified under applicable state securities laws, or an exemption from such registration or qualification is available. Such Investor has no immediate need for liquidity in connection with this investment and does not anticipate that it will need to sell his, her or its Securities in the foreseeable future.

3.6 Further Limitations on Disposition . Without in any way limiting the representations set forth above, such Investor further agrees not to make any disposition of all or any portion of the Securities unless and until the transferee has agreed in writing for the benefit of the Company to be bound by this Section 3 and any other agreement which the holders of Common Stock are required to execute and deliver, and:

(a) there is then in effect a registration statement under the Act covering such proposed disposition and such disposition is made in accordance with such registration statement; or

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(b) (i) such Investor shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and (ii) if reasonably requested by the Company, such Investor shall have furnished the Company with an opinion of counsel reasonably satisfactory to the Company that such disposition will not require registration of such shares under the Act. It is agreed that the Company will not require opinions of counsel for transactions made pursuant to Rule 144 except in unusual circumstances.

(c) Notwithstanding the provisions of subsections (a) and (b) above, no such registration statement or opinion of counsel shall be necessary for a transfer by an Investor that is a partnership or limited liability company to a partner of such partnership or a member of such limited liability company or a retired partner of such partnership who retires after the date hereof or a retired member of such limited liability company who retires after the date hereof, or to the estate of any such partner, retired partner, member or retired member or the transfer by gift, will or intestate succession by any partner or member to his or her spouse or to the siblings, lineal descendants or ancestors of such partner or member or his or her spouse, if the transferee agrees in writing to be subject to the terms hereof to the same extent as if he or she were an original Investor hereunder.

3.7 Certain Trading Activities . Other than with respect to this Agreement and the purchase or sales contemplated herein, since the time that such Investor was first contacted by the Company or the Placement Agent, neither such Investor nor any Affiliate (as defined by Rule 405 promulgated pursuant to the Act) of such Investor which (x) had knowledge of the transactions contemplated hereby, (y) has or shares discretion relating to such Investor’s investments and trading or information concerning such Investor’s investments and (z) is subject to such Investor’s review or input concerning such Affiliate’s investments or trading (collectively, “Trading Affiliates”) has directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Investor or Trading Affiliate, effected or agreed to effect any purchases or sales of securities of the Company. Such Investor hereby covenants and agrees not to, and shall cause its Trading Affiliates not to, engage, directly or indirectly, in any purchases or sales of securities of the Company during the period from the date hereof until such time as the transactions contemplated by this Agreement are first publicly announced.

3.8 Brokers and Finders . No Investor will have, as a result of the transactions contemplated by the Transaction Documents, any valid right, interest or claim against or upon the Borrowers or any other Investor for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of such Investor. Investor acknowledges the fees payable by the Company to Empire Asset Management Company in connection with the transactions contemplated herein as described in Section 8.16.

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SECTION 4

REPRESENTATIONS AND WARRANTIES OF THE BORROWERS

Each Borrower hereby jointly and severally represents, warrants and covenants to each Investor that:

4.1 Organization, Good Standing and Qualification; Licenses . Each Borrower is duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to own and hold under lease its property and to carry on its business as currently conducted (and further with respect to the Company as described in the documents filed by the Company under the Exchange Act), except where the failure to hold any such licenses, permits, registrations and other approvals would not reasonably be expected to have a Material Adverse Effect (as defined in the Note). Each of the Borrowers is qualified to do business and is in good standing in the State of California and in each jurisdiction in which it conducts business other than such jurisdictions where the failure to be so qualified would not reasonably be expected to have a Material Adverse Effect.

4.2 Authorization . Each of the Borrowers have taken all action necessary for the authorization, execution and delivery of this Agreement, the performance of their respective obligations hereunder, and the authorization, issuance (or reservation for issuance), sale and delivery of the Securities. Each of the Transaction Documents to which the Borrower is a party constitutes the valid and legally binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

4.3 Capitalization . The capitalization of the Company is as set forth on Schedule 4.3 as of the date specified therein. The Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plans and pursuant to the conversion or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act. Except as disclosed in the SEC Reports, no Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as a result of the purchase and sale of the Securities or as disclosed in the SEC Reports, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. Except as set forth on Schedule 4.3 attached hereto or as disclosed in the SEC Reports, the issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Investors) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities.

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All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the Securities. There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders. The Company owns, directly or indirectly, all of the capital stock or other equity interests of each of Innercool and TRC free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each of Innercool and TRC are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.

4.4 Litigation . Except as described in the reports filed by the Company pursuant to the Exchange Act, there is no action, suit, proceeding or investigation pending or, to the knowledge of the Borrower, currently threatened against the Borrower that questions the validity of this Agreement, the right of the Borrower to enter into this Agreement, or to consummate the transactions contemplated hereby, or that has or could reasonably be expected to result, either individually or in the aggregate, in any Material Adverse Effect. Except as disclosed in the SEC Reports, there is no action, suit, proceeding or investigation by any Borrower currently pending or which any Borrower intends to initiate.

4.5 Absence of Required Consents; No Violations . No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any Governmental Authority is required in connection with the execution, delivery and performance by, or enforcement against, any Borrower of the Transaction Documents, except for such filing(s) pursuant to applicable state securities laws as may be necessary, which filings will be timely effected after the relevant Closing, and except for recordings or filings in connection with the perfection of the Liens on the Collateral in favor of the Investors (or any Collateral Agent of their behalf). No Borrower is in violation or default (i) of any provision of its Organic Documents, or (ii) of any instrument, judgment, order, writ, decree or contract to which it is a party or by which it is bound, or, to the best of its knowledge, of any provision of any federal or state statute, rule or regulation which is, to the best of its knowledge, applicable to the Borrower, except in the case of this clause (ii) for such violations or defaults which do not, or could not reasonably be expected to result in a Material Adverse Effect. As of the Initial Closing, the execution, delivery and performance of the Transaction Documents and the consummation of the transactions contemplated thereby will not, result in any such violation or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any such provision, instrument, judgment, order, writ, decree or contract or an event that results in the creation of any Lien upon any material assets of any Borrower or the suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to any Borrower, its business or operations or any of its assets or properties, except for such results which could not reasonably be expected to result in a Material Adverse Effect.

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4.6 Offering . Subject in part to the truth and accuracy of each Investor’s representations set forth in Section 3 of this Agreement, the offer, sale and issuance of the Notes and Warrants as contemplated by this Agreement are exempt from the registration requirements of the Act and will not result in a violation of the qualification or registration requirements of the any applicable state securities laws.

4.7 Valid Issuance of Common Stock . The shares of Common Stock issuable upon exercise of the Warrants, when issued, sold and delivered in accordance with the terms of the Warrants for the consideration expressed therein, will be duly and validly issued, fully paid, and nonassessable, and will be free of restrictions on transfer other than restrictions on transfer under this Agreement.

4.8 SEC Reports . The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

4.9 Use of Proceeds . The proceeds of from the sale of the Notes shall be used only for general working capital purposes. Each of the Borrowers acknowledges that it will benefit directly and indirectly from the loan advanced to the Borrowers.

4.10 Collateral . Borrowers are, and will remain, the sole and lawful owners, and in possession of, the Collateral, other than (a) inventory sold in the ordinary course of business (b) Collateral which is licensed by or to any Borrower and (c) assets maintained with third parties in the ordinary course of business. Borrowers have the sole right and lawful authority to grant the security interest described in this Agreement. The Collateral is, and will remain, free and clear of all Liens (other than Permitted Liens). All facilities, machinery, equipment, fixtures, vehicles and other properties owned, leased or used by the Borrowers are in good operating condition and repair and are reasonably fit and usable for the purposes for which they are being used. Borrowers are in compliance with all material terms of each lease to which it is a party or is otherwise bound except where such failure to be in compliance, either individually or in the aggregate has not had, or could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

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4.11 Compliance with Laws . Each Borrower is and will remain in compliance in all material respects with all laws, statutes, ordinances, rules and regulations applicable to it including, without limitation, (i) ensuring that no person who owns a controlling interest in or otherwise controls any Borrower is or shall be (a) listed on the Specially Designated Nationals and Blocked Person List maintained by the Office of Foreign Assets Control (“OFAC”), Department of Treasury, and/or any other similar lists maintained by OFAC pursuant to any authorizing statute, Executive Order or regulation or (b) a person designated under Section 1(b), (c) or (d) of Executive Order No. 13224 (September 23, 2001), any related enabling legislation or any other similar Executive Orders, and (ii) compliance with all applicable Bank Secrecy Act (“BSA”) laws, regulations and government guidance on BSA compliance and on the prevention and detection of money laundering violations. Each Borrower shall be in compliance with the minimum funding requirements of the Employee Retirement Income Security Act of l974, as amended from time to time (“ERISA”) with respect to any employee benefit plans subject to ERISA except to the extent that any such failure to comply does not, or could not, in the aggregate, reasonably be expected to result in a material adverse effect on the Borrowers’ business or financial condition, taken as a whole. No Borrower is an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, and no Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulations T, U and X of the Board of Governors of the Federal Reserve System). Each Borrower has all material franchises, permits, licenses and any similar authority necessary for the conduct of its business as now being conducted by it, the lack of which could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

4.12 Intellectual Property. The Borrowers have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights necessary or material for use in connection with their respective businesses as described in the SEC Reports and which the failure to so has, or could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). None of the Borrowers have received a notice (written or otherwise) that any of the Intellectual Property Rights used by any Borrower violates or infringes upon the rights of any Person, nor do they have any reason to believe there is a basis for any such claim. All such Intellectual Property Rights are enforceable, and to the knowledge of each Borrower there is no existing infringement by another Person of any of the Intellectual Property Rights. Borrowers do not believe it is or will be necessary to utilize any inventions, trade secrets or proprietary information of any of its employees made prior to their employment by Borrowers, except for inventions, trade secrets or proprietary information that have been rightfully assigned to Borrowers. Except as disclosed in the SEC Reports, there are no outstanding options, licenses or agreements of any kind relating to the Intellectual Property Rights, nor are the Borrowers bound by or a party to any options, licenses or agreements of any kind with respect to the patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information and other proprietary rights and processes of any other person or entity other than such licenses or agreements arising from the purchase of “off the shelf” or standard products. The Borrowers have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so does not or could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

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4.13 Liabilities . No Borrower has any material contingent liabilities, except current liabilities incurred in the ordinary course of business and liabilities disclosed in the SEC Reports.

4.14 Employees . No Borrower has any collective bargaining agreements with any of its employees. There is no labor union organizing activity pending or, to each Borrower’s knowledge, threatened with respect to any Borrower. Except as disclosed in the SEC Reports, no Borrower is a party to or bound by any currently effective employment contract, deferred compensation arrangement, bonus plan, incentive plan, profit sharing plan, retirement agreement or other employee compensation plan or agreement. To each Borrower’s knowledge, no employee any Borrower, nor any consultant with whom a Borrower has contracted, is in violation of any term of any employment contract, proprietary information agreement or any other agreement relating to the right of any such individual to be employed by, or to contract with, a Borrower because of the nature of the business to be conducted by the borrower; and to each Borrower’s knowledge the continued employment by the Borrower of their present employees, and the performance of Borrowers’ contracts with its independent contractors, will not result in any such violation. No Borrower is aware that any of its employees is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with their duties to the Borrowers. No Borrower has received any notice alleging that any such violation has occurred. Except for employees who have a current effective employment agreement with a Borrower, no employee of the Borrowers has been granted the right to continued employment or to any material compensation following termination of employment with a Borrower. The Borrowers are not aware that any officer, key employee or group of employees intends to terminate his, her or their employment with any Borrower, nor does any Borrower have a present intention to terminate the employment of any officer, key employee or group of employees.

4.15. Obligations to Related Parties . Except as disclosed in the SEC Documents, no Borrower has any obligation to its officers, directors, stockholders or employees other than:

(a) for payment of salary for services rendered and for bonus payments;

(b) reimbursement for reasonable expenses incurred on behalf of the Borrower;

(c) for other standard employee benefits made generally available to all employees (including stock option agreements outstanding under any stock option plan approved by the Board of Directors of the Company); and

(d) obligations disclosed in any of its SEC Reports.

Except as disclosed in the SEC Documents, none of the officers, directors or, to the best of the Borrower’s knowledge, key employees or stockholders of the Company or any members of their immediate families, are indebted to a Borrower, individually or in the aggregate, in excess of $50,000 or have any direct or indirect ownership interest in any firm or corporation with which a

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Borrower is affiliated or with which its has a business relationship, or any firm or corporation which competes with the Borrower, other than passive investments in publicly traded companies (representing less than one percent (1%) of such company) which may compete with the Borrower. Except as described above, no officer, director or stockholder, or any member of their immediate families, is, directly or indirectly, interested in any material contract with the Borrower and no agreements, understandings or proposed transactions are contemplated between the Borrower and any such person. No Borrower is a guarantor or indemnitor of any indebtedness of any other person, firm or corporation.

4.16 Recent Events . Since December 31, 2007, except as disclosed in any SEC Report, there has not been:

(a) any change in the business, assets, liabilities, condition (financial or otherwise), properties, operations or prospects of any Borrower, which individually or in the aggregate has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

(b) any resignation or termination of any officer, key employee or group of employees of any Borrower;

(c) any material change, except in the ordinary course of business, in the contingent obligations of any Borrower by way of guaranty, endorsement, indemnity, warranty or otherwise;

(d) any damage, destruction or loss, whether or not covered by insurance, has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

(e) any waiver by any Borrower of a valuable right or of a material debt owed to it;

(f) any direct or indirect loans made by any Borrower to any stockholder, employee, officer or director of any Borrower, other than advances made in the ordinary course of business;

(g) any material change in any compensation arrangement or agreement with any employee, officer, director or stockholder of any Borrower;

(h) any declaration or payment of any dividend or other distribution of the assets of any Borrower;

(i) any labor organization activity related to any Borrower;

(j) any debt, obligation or liability incurred, assumed or guaranteed by any Borrower, except those for immaterial amounts and for current liabilities incurred in the ordinary course of business;

(k) any sale, assignment or transfer of any patents, trademarks, copyrights, trade secrets or other intangible assets owned by any Borrower;

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(l) any change in any material agreement to which any Borrower is a party or by which it is bound which either individually or in the aggregate has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

(m) any other event or condition of any character that, either individually or in the aggregate, has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; or

(n) any arrangement or commitment by any Borrower to do any of the acts described in subsection (a) through (m) above.

4.17 No Brokers . Except as set forth in Section 8.16, the Borrowers have taken no action which would give rise to any claim by any person for brokerage commissions, transaction fees or similar payments relating to this Agreement or the transactions contemplated hereby.

4.18. Registration Rights and Voting Rights . Except as disclosed in the SEC Reports, and except as contemplated by this Agreement, no Borrower is presently under any obligation, and has not granted any rights, to register any of t