8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

DATE OF REPORT (Date of earliest event reported): November 5, 2008

001-33635

(Commission file number)

CARDIUM THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

Delaware	27-0075787
(State of incorporation)	(IRS Employer Identification No.)
12255 El Camino Real, Suite 250 San Diego, California 92130	(858) 436-1000
(Address of principal executive offices)	(Registrant’s telephone number)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

On November 10, 2008, Cardium Therapeutics, Inc., a Delaware corporation (“Cardium”), completed a secured debt financing pursuant to the terms of a Note and Warrant Purchase Agreement entered into by and among Cardium, InnerCool Therapies, Inc. (“InnerCool”) and Tissue Repair Company (“TRC”), each a wholly owned subsidiary of Cardium, and certain accredited investors. Under the terms of the purchase agreement, Cardium issued notes in the aggregate principal amount of $6 million to the investors, and five year warrants to purchase up to nine million shares of Cardium’s common stock, in the aggregate, at an exercise price of $2.00 per share (collectively, the “Financing”). The notes bear interest at a fixed rate of 12% per annum, payable monthly, have a one year term, are secured by all of the assets and intellectual property of Cardium, InnerCool and TRC, and are senior to, and have priority in right of payment over, any other indebtedness of Cardium. The notes may be prepaid, in whole or in part, at any time provided the investors receive an additional payment equal to the difference between the amount of interest they would have received through the maturity date of the notes and the amount of interest actually received as of the prepayment date. The warrants were fully exercisable when issued.

At the closing of the Financing, Cardium received gross proceeds of approximately $6 million (before placement agent fees and offering expenses and excluding any proceeds that Cardium may receive upon exercise of the warrants). Of this amount, (i) Christopher Reinhard, Cardium’s Chief Executive Officer, invested $479,000, all in the form of prior advances and salary deferrals he agreed to permanently forego in consideration of a note in such amount and a warrant to purchase 718,500 shares of Cardium’s common stock; (ii) Tyler Dylan, Cardium’s Chief Business Officer, invested $200,000, of which approximately $92,000 was in the form of salary deferrals, and received a warrant to purchase 300,000 shares of Cardium’s common stock; (iii) Gabor Rubanyi, Cardium’s Chief Scientific Officer, invested $200,000, of which approximately $46,000 was in the form of salary deferrals, and received a warrant to purchase 300,000 shares of Cardium’s common stock; and (iv) Robert Engler, a consultant and Cardium’s Chief Medical Advisor, invested $228,000, all in the form of prior advances and salary deferrals, and received a warrant to purchase 342,000 shares of Cardium’s common stock. The notes and warrants issued to Messrs. Reinhard, Dylan, Rubanyi and Engler were on substantially the same terms as those issued to the other investors in the Financing.

Empire Asset Management Company (“Empire”) served as placement agent for the Financing pursuant to the terms of a Placement Agency Agreement by and among Cardium, InnerCool, TRC and Empire and received from the gross proceeds of the Financing a commission equal to approximately $257,750, or 5.0% of the gross proceeds received by Cardium in the Financing, and a warrant, substantially on the same terms as the warrants issued to the investors in the Financing, to purchase 386,625 shares of Cardium’s common stock, or 5.0% of the number of shares underlying the warrants issued in the Financing, in each case excluding amounts and shares related to the $845,000 contributed by officers of Cardium in lieu of payment of prior advances and salary deferrals.

Pursuant to the terms of the warrants to be issued in the Financing, the exercise price and/or the number of shares issuable upon exercise of the warrants are subject to adjustment in the event of certain specified issuances of equity securities or rights, distributions, or transactions.

The foregoing description of the Note and Warrant Purchase Agreement, the notes, the warrants, the security, and the Placement Agency Agreement do not purport to be complete and are qualified in their entirety by the form of note attached hereto as Exhibit 4.1, the form of warrant attached hereto as Exhibit 4.2, the form of Note and Warrant Purchase Agreement attached hereto as Exhibit 10.1, the Security Agreement attached hereto as Exhibit 10.2, and the Placement Agency Agreement attached hereto as Exhibit 10.3, each of which are incorporated herein by reference. The closing of the Financing was previously disclosed in Cardium’s Quarterly Report on Form 10-Q for the period ended September 30, 2008 and filed with the Securities and Exchange Commission on November 10, 2008.

Item 2.02. Results of Operations and Financial Condition.

On November 10, 2008, Cardium issued a press release announcing financial results for the third quarter ended September 30, 2008. A copy of this press release is attached hereto as Exhibit 99.1.

The information in this report furnished pursuant to this Item 2.02 and Exhibit 99.1 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of such Section 18. The information in this report shall not be incorporated by reference into any filing made by Cardium with the United States Securities and Exchange Commission, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information provided in Item 1.01 above is hereby incorporated by reference into this Item 2.03.

Item 3.02 Unregistered Sales of Equity Securities.

The information set forth in Item 1.01 is hereby incorporated into this Item 3.02. The warrants to purchase common stock issued at the closing of the Financing and the shares of common stock underlying the warrants were offered and will be issued in reliance on the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated thereunder. Each purchaser represented to Cardium that it was an “accredited investor” as such term is defined under such Regulation D and the Financing did not involve any form of general solicitation or general advertising.

Item 8.01 Other Events.

On November 10, 2008, Cardium issued a press release announcing the Financing. A copy of the press release is attached hereto as Exhibit 99.2 and incorporated by reference herein.

In addition, on November 11, 2008, Cardium and its operating unit InnerCool Therapies, Inc. issued a press release announcing a new tissue-specific UroCool™ System for use in prostate surgeries. A copy of the press release is attached hereto as Exhibit 99.3 and incorporated by reference herein.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

4.1	Form of Senior Secured Promissory Note (a note in substantially this form was issued to the investors at the closing of the Financing)
4.2	Form of Common Stock Purchase Warrant (a warrant in substantially this form was issued to the investors and placement agent at the closing of the Financing)
10.1	Form of Note and Warrant Purchase Agreement, dated as of November 5, 2008, by and among Cardium, InnerCool, TRC and each investor (an agreement on substantially this form was signed by each investor in the Financing)
10.2	Security Agreement dated as of November 5, 2008, by and among Cardium, InnerCool, TRC and Robert Marvin as collateral agent
10.3	Placement Agency Agreement dated October 24, 2008, by and among Cardium, InnerCool, TRC and Empire
99.1	Press Release of Cardium issued on November 10, 2008 announcing third quarter financial results
99.2	Press Release of Cardium issued on November 10, 2008 announcing financing
99.3	Press Release of Cardium issued on November 11, 2008 announcing new UroCool System

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	CARDIUM THERAPEUTICS, INC.
Date: November 13, 2008	By:	/s/ Christopher J. Reinhard
		Christopher J. Reinhard
		Chief Executive Officer

EX-4.1

Exhibit 4.1

FORM OF SENIOR SECURED PROMISSORY NOTE

$	November 5, 2008
	San Diego, California

FOR VALUE RECEIVED, CARDIUM THERAPEUTICS, INC., INNERCOOL THERAPIES, INC. AND TISSUE REPAIR COMPANY, each Delaware corporations (individually a “Borrower and collectively, the “Borrowers”), jointly and severally promise to pay to the order of                     , or its registered assigns (“Holder”), the principal sum of                      dollars ($                    ) with interest on the outstanding principal amount at a rate of twelve percent (12%) per annum (computed on the basis of actual calendar days elapsed and a year of 365 days) or, if less, at the highest rate of interest then permitted under applicable law; provided, however, upon any nonpayment of any principal hereof, such unpaid amount shall bear interest from the date of nonpayment until such amount is paid in full at eighteen percent (18%) per annum (computed on the basis of actual calendar days elapsed and a year of 365 days) or, if less, at the highest rate permitted by applicable law (the “Default Rate”). Interest shall commence with the date hereof and shall continue on the outstanding principal of this Promissory Note (this “Note”) until paid in accordance with the provisions hereof.

1. Definitions. For purposes of this Note, the following terms shall have the following meanings (capitalized terms used herein but not otherwise defined shall have the meanings provided therefor in the Agreement (as defined below)):

“Affiliate” shall mean with respect to any Person, any other Person (i) which directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, such first Person, (ii) which beneficially owns or holds 10% or more of any class of the voting stock of such first Person, or (iii) whereby 10% or more of the voting stock (or in the case of a Person which is not a corporation, 10% or more of the equity interest) of such other Person is beneficially owned or held by such first Person or by a Subsidiary of such first Person.

“Business Day” means any day which is not a Saturday or Sunday or a legal holiday on which banks are authorized or required to be closed in San Diego, California.

“Collateral” means the property described in the Collateral Documents, and all other property now existing or hereafter acquired which may at any time be or become subject to a Lien in favor of the Investors (or any Collateral Agent on their behalf) pursuant to the Collateral Documents or otherwise, securing the payment and performance of the Obligations.

“Common Stock” means the common stock of the Company, par value $0.0001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed into.

“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

“Change of Control” means any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of 50% or more of the equity securities of the Company entitled to vote for members of the board of directors or equivalent governing body of the Company on a fully-diluted basis.

“Exchange Act” means the Securities Exchange Act of 1934.

“GAAP” means generally accepted principles of good accounting practice in the United States, consistently applied.

“Lien” shall mean any security interest, mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), claim or other priority or preferential arrangement of any kind or nature whatsoever (other than a financing statement filed by a lessor in respect of an operating lease not intended as security).

“Material Adverse Effect” shall mean an event, matter, condition or circumstance which (i) has or would reasonably be expected to have a material adverse effect on the business, properties, results of operations or financial condition of the Borrowers on a consolidated basis; (ii) would materially impair the ability of the Borrowers or any other Person to perform or observe its obligations under or in respect of the Transaction Documents; or (iii) affects the legality, validity, binding effect or enforceability of any of the Transaction Documents or the perfection or priority of any Lien granted to the Investors (or any Collateral Agent) under any of the Collateral Documents.

“Obligations” shall mean all obligations of the Company to Holder howsoever created, arising or evidenced, whether direct or indirect, joint or several, absolute or contingent, or now or hereafter existing, or due or to become due, which arise out of or in connection with this Note including, without limitation, all costs and expenses incurred by Holder in connection with the enforcement of this Note or the Collateral Documents.

“Organic Document” means, relative to any Person, its articles or certificate of incorporation, or certificate of limited partnership or formation, its bylaws, partnership or operating agreement or other organizational documents, and all stockholders agreements, voting trusts and similar arrangements applicable to any of its capital stock, partnership interests or other ownership interests.

“Person” shall mean an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

“Requisite Holders” mean holders of a majority of the aggregate principal amount of outstanding Notes as of a particular date.

“Subsidiary” shall mean, with respect to any Person (herein referred to as the “parent”), any corporation, limited liability company, partnership, association or other business entity (a) of which securities of other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or more than 50% of the general partnership interests are, at the time any determination is being made, owned, controlled or held by the parent, or (b) that is, at any time any determination is made, otherwise Controlled by, the parent or one or more Subsidiaries of the parent and one or more Subsidiaries of the parent.

2. Note and Warrant Purchase Agreement. This note (the “Note”) is issued pursuant to the terms of that certain Note and Warrant Purchase Agreement (the “Agreement”) dated as of November 5, 2008, by and among the Company and the investors set forth in the Schedule of Investors attached thereto as Exhibit A. This Note is one of a series of notes (the “Notes”) having like tenor and effect (except for variations necessary to express the name of the holder, the principal amount of each of the Notes and the date on which each Note is issued) issued or to be issued by the Company in accordance with the terms of the Agreement. The Notes shall rank equally without preference or priority of any kind over one another, and all payments on account of principal and interest with respect to any of the Notes shall be applied ratably and proportionately on the outstanding Notes on the basis of the principal amount of the outstanding indebtedness represented thereby.

3. Maturity. Unless sooner paid in accordance with the terms hereof, the entire unpaid principal amount and all unpaid accrued interest shall become fully due and payable on the earlier of (i) the one (1) year anniversary of the date hereof, or (ii) the acceleration of the maturity of this Note by the Holder upon the occurrence of an Event of Default (such earlier date, the “Maturity Date”).

4. Payments.

(a) Form of Payment. All payments of interest and principal shall be in lawful money of the United States of America to Holder, at the address specified in the Agreement, or at such other address as may be specified from time to time by Holder in a written notice delivered to the Company. Except as otherwise provided in the Collateral Documents, all payments shall be applied first to accrued interest, and thereafter to principal.

(b) Interest Payments. The Company shall pay to Holder accrued interest and unpaid interest on the last Business Day of each month commencing with November 30, 2008 and on the Maturity Date. Interest at the rate first set forth above shall accrue on any interest which has not been paid on the date on which it is payable until such time as payment therefor is actually delivered to Holder.

(c) Prepayment. The Company may at any time, without the consent of the Holder, prepay any amounts owing under this Note in whole or in part, provided that upon any such voluntary prepayment the Company must make an additional payment to the Holder in an amount equal to the difference between (i) the amount of interest that, but for the prepayment, would have been paid to the Holder under this Note from the date first set forth above through the Maturity Date and (ii) the amount of interest already paid to the Holder from the date first set forth above through the date of prepayment (“Make Whole Payment”).

(d) Collateral Documents. The Company’s obligations hereunder shall be secured pursuant to the Collateral Documents.

5. Default.

(a) Events of Default. For purposes of this Note, any of the following events which shall occur shall constitute an “Event of Default”:

(i) any indebtedness under this Note is not paid when and as the same shall become due and payable, whether at maturity, by acceleration, thirty-five (35) days following notice of prepayment or otherwise, and any such amount shall remain unpaid for a period of 2 Business Days after the due date thereof;

(ii) default shall occur in the observance or performance of (A) any covenant, obligation or agreement of the Company contained in this Note, the Agreement or any of the Collateral Documents and such default shall continue uncured for a period of 30 days after the Company knew of the event or circumstances giving rise to such default; or any “Event of Default” shall exist under any Collateral Document (as defined therein);

(iii) any representation, warranty or certification made by the Borrowers herein or in the Agreement or the Collateral Documents or in any certificate, report, document, agreement or instrument delivered pursuant to any provision hereof or thereof shall prove to have been false or incorrect in any material respect on the date or dates as of which made (any such falsity being a “Representation Default”) and, to the extent the event or circumstances giving rise to such Representation Default is amenable to being cured such that the Representation Default would no longer exist, such Representation Default shall continue uncured for a period of 30 days after the Borrowers knew or should have known, exercising reasonable diligence, of the event or circumstances giving rise to such Representation Default;

(iv) any Borrower shall (A) apply for or consent to the appointment of a receiver, trustee, custodian or liquidator of itself or any part of its property, (B) become subject to the appointment of a receiver, trustee, custodian or liquidator for itself or any part of its property if such appointment is not terminated or dismissed within sixty (60) days, (C) make an assignment for the benefit of creditors, (D) or fail generally or admit in writing to its inability to pay its debts as they become due, (E) institute any proceedings under the United States Bankruptcy Code or any other federal or state bankruptcy, reorganization, receivership, insolvency or other similar law affecting the rights of creditors generally, or file a petition or answer seeking reorganization or an arrangement with creditors to take advantage of any insolvency law, or file an answer admitting the material allegations of a bankruptcy, reorganization or insolvency petition filed against it, or (F) become subject to any involuntary proceedings under the United States Bankruptcy Code or any other federal or state bankruptcy, reorganization, receivership, insolvency or other similar law affecting the rights of creditors generally, which proceeding is not dismissed within sixty (60) days of filing, or have an order for relief entered against it in any proceeding under the United States Bankruptcy Code;

(v) any Borrower shall (i) liquidate, wind up or dissolve (or suffer any liquidation, wind-up or dissolution), (ii) suspend its operations other than in the ordinary course of business, or (iii) take any action to authorize any of the actions or events set forth above in this Section 5(a)(v); or

(vi) a Change of Control of the Company has occurred.

(b) Consequences of Events of Default.

(i) If any Event of Default shall occur for any reason, whether voluntary or involuntary, and be continuing, the Requisite Holders may, upon notice or demand, declare the outstanding indebtedness under this Note to be due and payable, whereupon the outstanding indebtedness under this Note shall be and become immediately due and payable, and the Borrowers shall immediately pay to Holder all such indebtedness. Upon the occurrence of an actual or deemed entry of an order for relief with respect to the Company under the United States Bankruptcy Code, then all indebtedness under this Note shall automatically be due immediately without notice of any kind. The Borrowers agree to pay Holder all out-of-pocket costs and expenses incurred by Holder in any effort to enforce, interpret, or collect indebtedness under, this Note, including attorneys’ and expert fees, and to pay interest at the lesser of (A) Default Rate hereunder and (B) the highest rate permitted by applicable law, on such costs and expenses to the extent not paid when demanded.

(ii) Holder shall also have any other rights which Holder may have been afforded under any contract or agreement at any time and any other rights which Holder may have pursuant to applicable law. Holder may exercise any and all of its remedies under the Collateral Documents and the other Transaction Documents contemporaneously or separately from the exercise of any other remedies hereunder or under applicable law.

6. Lost, Stolen, Destroyed or Mutilated Notes. In case any Note shall be mutilated, lost, stolen or destroyed, the Company shall issue a new Note of like date, tenor and denomination and deliver the same in exchange and substitution for and upon surrender and cancellation of any mutilated Note, or in lieu of any Note lost, stolen or destroyed, upon receipt of evidence satisfactory to the Company of the loss, theft or destruction of such Note.

7. Ranking. The indebtedness evidenced by this Note and the payment of the principal amount and interest hereof shall be Senior (as hereinafter defined) to, and have priority in right of payment over, all indebtedness of the Company. “Senior” shall be deemed to mean that, in the event of any default in the payment of the Obligations or of any liquidation, insolvency, bankruptcy, reorganization, or similar proceedings relating to the Company, all sums payable on this Note, shall first be paid in full, with interest, if any, before any payment is made upon any other indebtedness, now outstanding or hereinafter incurred, and, in any such event, any payment or distribution of any character which shall be made in respect of any other indebtedness of the Company, shall be paid over to the holder of this Note for application to the payment hereof, until the Obligations under this Note (which shall mean the principal amount and other obligations arising out of, premium, if any, interest on, and any costs and expenses payable under, this Note) shall have been paid and satisfied in full.

8. Governing Law. This Note is to be construed in accordance with and governed by the laws of the State of New York.

9. Amendment and Waiver. Any term of this Note and all Notes issued pursuant to the Agreement may be amended and the observance of any term of this Note and all Notes issued pursuant to the Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Requisite Holders. Any amendment or waiver effected in accordance with this Section shall be binding upon the Company, Holder and the holders of all Notes issued pursuant to the Agreement.

10. Notices. Except as may be otherwise provided herein, all notices, requests, waivers and other communications made pursuant to this Note shall be made in accordance with Section 5.6 of the Agreement.

11. Severability. If one or more provisions of this Note are held to be unenforceable under applicable law, such provision shall be excluded from this Note and the balance of the Note shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

12. Assignment. The Company shall not have the right to assign its rights and obligations hereunder or any interest herein.

13. Remedies Cumulative; Failure or Indulgence Not a Waiver. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note and any of the other Transaction Documents. No failure or delay on the part of Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

14. Payments. Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, such payment shall be made in lawful money of the United States of America by a check drawn on the account of the Company and sent via overnight courier service to such Person at such address as previously provided to the Company in writing (which address, in the case of Holder as of the date of issuance hereof, shall initially be the address for Holder as set forth in the Agreement); provided that Holder may elect to receive a payment of cash via wire transfer of immediately available funds by providing the Company with prior written notice setting out such request and Holder’s wire transfer instructions. Whenever any payment to be made shall otherwise be due on a day which is not a Business Day, such payment shall be made on the immediately succeeding Business Day and such extension of time shall be included in the computation of accrued interest.

15. Excessive Interest. Notwithstanding any other provision herein to the contrary, this Note is hereby expressly limited so that the interest rate charged hereunder shall at no time exceed the maximum rate permitted by applicable law. If, for any circumstance whatsoever, the interest rate charged exceeds the maximum rate permitted by applicable law, the interest rate shall be reduced to the maximum rate permitted, and if Holder shall have received an amount that would cause the interest rate charged to be in excess of the maximum rate permitted, such amount that would be excessive interest shall be applied to the reduction of the principal amount owing hereunder (without charge for prepayment) and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal, such excess shall be refunded to the Company.

16. Waiver of Notice. To the extent permitted by law, the Company hereby waives demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Transaction Documents.

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by its officers, thereunto duly authorized as of the date first above written.

CARDIUM THERAPEUTICS, INC.
By:
	Tyler Dylan
	Chief Business Officer, General Counsel,
	Executive Vice President and Secretary

INNERCOOL THERAPIES, INC.
By:
	Tyler Dylan
	Chief Business Officer and Secretary

TISSUE REPAIR COMPANY
By:
	Tyler Dylan
	Chief Business Officer and Secretary

EX-4.2

Exhibit 4.2

COMMON STOCK PURCHASE WARRANT

CARDIUM THERAPEUTICS, INC.

Warrant Shares:                      Initial Exercise Date: November 5, 2008

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received,                      (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to the close of business on the fifth year anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Cardium Therapeutics, Inc., a Delaware corporation (the “Company”), up to                      shares (the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

Section 1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Note and Warrant Purchase Agreement (the “Purchase Agreement”), dated November 5, 2008, among the Company and the purchasers signatory thereto. In addition to the terms defined elsewhere in this Warrant, for all purposes of this Warrant, the following terms have the meanings set forth in this Section 1:

“Common Stock” means the common stock of the Company, par value $0.0001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed into.

“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

“Exempt Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers or directors of, or consultants or advisors to, the Company pursuant to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of the Initial Closing, provided that such securities have not been amended since date of the Initial Closing to increase the number of such securities or to decrease the exercise, exchange or conversion price of such securities, (c) securities issued in connection with acquisitions, sponsored research, collaborations, technology license, development, marketing or other similar agreements or strategic transactions approved by a majority of the disinterested directors of the Company (the primary purpose of which is not to raise equity capital), (d) shares of Common Stock by

reason of a stock split, combination or dividend, (e) securities issued to banks, equipment lessors or other financial institutions in connection with loans made to the Company, and (f) securities issued to suppliers or third party service providers in connection with the provision of goods or services (the primary purpose of which is not to raise equity capital).

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Trading Day” means a day on which the American Stock Exchange is open for trading.

“Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange.

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted for trading as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time); (b) if the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink Sheets, LLC (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Shares then outstanding and reasonably acceptable to the Company, the reasonable fees and expenses of which shall be paid by the Company.

Section 2. Exercise.

a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company); and, within 3 Trading Days of the date said Notice of Exercise is delivered to the Company, the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank. Notwithstanding anything herein to the contrary, the Holder shall not be required

to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within 3 Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within 1 Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

b) Exercise Price. The exercise price per share of the Common Stock under this Warrant shall be $2.00, subject to adjustment hereunder (the “Exercise Price”).

c) Payment for Shares. The aggregate purchase price for Warrant Shares being purchased hereunder may be paid either (i) by cash or wire transfer of immediately available funds, (ii) by surrender of a number of Warrant Shares which have a fair market value equal to the aggregate purchase price of the Warrant Shares being purchased (“Net Issuance”) as determined herein, or (iii) any combination of the foregoing. If the Holder elects the Net Issuance method of payment, the Company shall issue to Holder upon exercise a number of shares of Warrant Shares determined in accordance with the following formula:

X=	Y(A-B)
	A

where:	(X) =	the number of Warrant Shares to be issued to the Holder;
	(A) =	the VWAP on the Trading Day immediately preceding the date of such election;
	(B) =	the Exercise Price of this Warrant, as adjusted; and
	(X) =	the number of Warrant Shares issuable upon exercise of this Warrant in accordance with the terms of this Warrant by means of a cash exercise rather than a cashless exercise.

Notwithstanding anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).

d) Exercise Limitations.

i) Holder’s Restrictions. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other person or entity acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its affiliates. Except as set forth in the preceding sentence, for purposes of this Section 2(d)(i), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(d)(i) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable, in each case subject the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(d)(i), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Company’s Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the

number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Beneficial Ownership Limitation provisions of this Section 2(d)(i) may be waived by the Holder upon prior notice to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(d)(i) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

e. Mechanics of Exercise.

i. Delivery of Certificates Upon Exercise. Certificates for shares purchased hereunder shall be transmitted by the transfer agent of the Company to the Holder by crediting the account of the Holder’s prime broker with the Depository Trust Company through its Deposit Withdrawal Agent Commission (“DWAC”) system if the Company is a participant in such system and either (A) there is an effective Registration Statement for the issuance or permitting the resale of the Warrant Shares by the Holder or this Warrant is being exercised via cashless exercise, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise within three (3) Trading Days from the delivery to the Company of the Notice of Exercise Form, surrender of this Warrant (if required) and payment of the aggregate Exercise Price as set forth above (“Warrant Share Delivery Date”). This Warrant shall be deemed to have been exercised on the date the Exercise Price is received by the Company. The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price (or by cashless exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(e)(vi) prior to the issuance of such shares, have been paid. If the Company fails for any reason to deliver to the Holder certificates evidencing the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such certificates are delivered.

ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

iii. Rescission Rights. If the Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Shares pursuant to Section 2(e)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

iv. Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, 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 (1) pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide

the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. 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.

v. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

vi. Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

vii. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

Section 3. Certain Adjustments.

a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (A) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant or any other warrant or option issued by the Company), (B) subdivides outstanding shares of Common Stock into a larger number of shares, (C) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price

shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

b) Subsequent Equity Sales. Until the three year anniversary of the Closing Date, if the Company or any Subsidiary thereof, as applicable, at any time while this Warrant is outstanding, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents (a “Subsequent Equity Sale”) entitling any Person to acquire shares of Common Stock, at an effective price per share less than the then Exercise Price (such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”) (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share which is less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance), then the Exercise Price shall be reduced and only reduced to equal the Base Share Price. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustments shall be made, paid or issued under this Section 3(b) in respect of an Exempt Issuance. The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this Section 3(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance, after the date of such Dilutive Issuance the Holder is entitled to exercise this Warrant at the Base Share Price regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise.

c) Subsequent Rights Offerings. If the Company, at any time while the Warrant is outstanding, shall issue rights, options or warrants to all holders of Common Stock (and not to Holders) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the VWAP at the record date mentioned below, then the Exercise Price shall be multiplied by a fraction, of which the denominator shall be the number of shares of the Common Stock outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the numerator shall be the number of shares of the

Common Stock outstanding on the date of issuance of such rights or warrants plus the number of shares which the aggregate offering price of the total number of shares so offered (assuming receipt by the Company in full of all consideration payable upon exercise of such rights, options or warrants) would purchase at such VWAP. Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such rights, options or warrants.

d) Pro Rata Distributions. If the Company, at any time while this Warrant is outstanding, shall distribute to all holders of Common Stock (and not to Holders of the Warrants) evidences of its indebtedness or assets (including cash and cash dividends other than regular cash dividends paid out of earnings or earned surplus, determined in accordance with GAAP) or rights or warrants to subscribe for or purchase any security other than the Common Stock), then in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date less the then per share fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith. In either case the adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

e) Fundamental Transaction. If, at any time while this Warrant is outstanding, (A) the Company effects any merger or consolidation of the Company with or into another Person, (B) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (C) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (D) 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 “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such merger, consolidation or disposition of assets by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a

reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and evidencing the Holder’s right to exercise such warrant into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 3(e) and insuring that this Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction that is (1) an all cash transaction, (2) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Securities Exchange Act of 1934, as amended, or (3) a Fundamental Transaction involving a person or entity not traded on a national securities exchange, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market, the Company or any successor entity shall pay at the Holder’s option, exercisable at any time concurrently with or within 30 days after the consummation of the Fundamental Transaction, an amount of cash equal to the value of this Warrant as determined in accordance with the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg L.P. using (i) a price per share of Common Stock equal to the VWAP of the Common Stock for the Trading Day immediately preceding the date of consummation of the applicable Fundamental Transaction, (ii) 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 the date of consummation of the applicable Fundamental Transaction and (iii) an expected volatility equal to the 100 day volatility obtained from the “HVT” function on Bloomberg L.P. determined as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction.

f) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

g) Notice to Holder.

i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. If the Company enters into a Variable Rate Transaction (as defined in the Purchase Agreement), despite the prohibition thereon in the Purchase Agreement, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion or exercise price at which such securities may be converted or exercised.

ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock; (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock; (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; (D) the approval of any stockholders of a Fundamental Transaction; (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company; then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification or Fundamental Transaction is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. The Holder is entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice.

h) [Floor Price. THIS PROVISION TO BE INCLUDED IN INSIDER WARRANTS] Unless and until such time as the Company receives a stockholder approval providing for the issuance of all of the Securities (as defined in the Securities Purchase Agreement) as described in the Transaction Documents (as defined in the Securities Purchase Agreement) in accordance with applicable law and the rules and regulations of the NYSE Alternext US, LLC in order to allow the Exercise Price to be less than the Exercise Floor Price (as defined below), no adjustment pursuant to Section 3(b) shall cause the Exercise Price to be less than $0.90, as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction (the “Exercise Floor Price”).]

Section 4. Transfer of Warrant.

a) Transferability. Subject to compliance with applicable federal and state securities laws and the transfer restrictions set forth in the Purchase Agreement, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the original Issue Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

c) Warrant Register. 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 hereof 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.

Section 5. Miscellaneous.

a) No Rights as Shareholder Until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof as set forth in Section 2(e)(i).

b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall include the posting of a bond if reasonably required by the Company), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

d) Authorized Shares.

The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

e) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.

f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

h) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.

i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

j) Remedies. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any the Holder or holder of Warrant Shares.

l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

********************

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

CARDIUM THERAPEUTICS, INC.
By:
	Tyler Dylan
	Chief Business Officer, General Counsel, Executive Vice President and Secretary

[Signature Page to Warrant]

NOTICE OF EXERCISE

TO:                                                  

(1) The undersigned hereby elects to purchase                      Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

(2) Payment shall take the form of (check applicable box):

¨ in lawful money of the United States; or

¨ the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

(3) Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

(4) The undersigned represents that it is acquiring such securities for its own account for investment and not with a view to or for sale in connection with any distribution thereof and in order to induce the issuance of such securities makes to the Company, as of the date hereof, the representations and warranties set forth in Section 3 of the Note and Warrant Purchase Agreement, dated as of November 5, 2008, by and among the Company and the investors listed on Exhibit A thereto.

The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to:

Signed:                                                          

Name of Individual Holder:                                                                                                                                                                             

Name of Entity Holder:                                                                                                                                                                                   

Name of Authorized Signatory:                                                                                                                                                                      

Title of Authorized Signatory:                                                                                                                                                                        

Date:                         

ASSIGNMENT FORM

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, [    ] all of or                              shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to:

                                                                                                                           whose address is:

Dated:                             ,             

Holder’s Signature:                                                          

Holder’s Address:                                                           

Signature Guaranteed:                                                                                                           

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

EX-10.1

Exhibit 10.1

NOTE AND WARRANT PURCHASE AGREEMENT

THIS NOTE AND WARRANT PURCHASE AGREEMENT (this “Agreement”) is made as of November 5, 2008 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 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. 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 (as adjusted for stock splits, recapitalizations or other similar events) calculated as follows:

number of shares of Common Stock issuable upon exercise of the Initial Warrant	=	(Principal Amount of the Note) x (3)
		the Stock Purchase Price (as defined below)

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 Morrison & Foerster LLP, 12531 High Bluff Drive, 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 $5,000,000 principal amount of Notes must be issued and sold at the Initial Closing which shall take place no later than November 7, 2008.

2.2 Subsequent Closings. The Borrowers may issue and sell Notes in the aggregate principal amount of up to $6,000,000 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 Morrison & Foerster LLP, 12531 High Bluff Drive, San Diego, California or remotely by facsimile transmission or other electronic means, provided that such closing occurs on or before December 31, 2008 (which closing date, 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.

(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.

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(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 Morrison Foerster 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) Lead Investor Enhanced Security. Any Investor who purchases $2,000,000 or more of principal amount of Notes (“Lead Investor”) shall also receive, each executed and delivered by Christopher J. Reinhard, the Chief Executive Officer of the Company, a personal guarantee of the Borrowers’ obligations under the Notes (the “Guarantee”) issued to such Lead Investor and which guarantee is secured by (i) a second mortgage on his principal residence (the “Mortgage”) and (ii) a pledge and security interest in 2,791,924 shares of the Company owned by Mr. Reinhard (the “Pledge Agreement”). The Guarantee, Mortgage and Pledge Agreement shall be in form and substance acceptable to the Lead Investor(s).

(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 in the reasonable opinion of the Lead Investor 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.

(k) Minimum Participation by Affiliates, etc. The Borrowers’ Officers, directors, and Affiliates, as well as acquaintances of such officers directors and Affiliates, shall have purchased at least $1,100,000 in principal amount of Notes at the Initial Closing; provided that such amount shalls be inclusive of $845,000 of funds either (i) previously advanced to the Company or (ii) in the form of salary deferrals, which certain officers have agreed to forego in consideration of Note and Warrant issuances hereunder.

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: 1501126353 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.

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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.

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.

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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

(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 could not result in 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. 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

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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. 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

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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.

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

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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.

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 and other than with respect to funds that will be invested in the Initial Closing, 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.

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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 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;

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

(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 the Company’s presently outstanding securities or any of its securities that may hereafter be issued. Except as set forth on in the SEC Reports, to each Borrower’s knowledge, no stockholder of the Company has entered into any agreement with respect to the voting of equity securities of the Company.

4.19 Environmental and Safety Laws. No Borrower is in violation of any applicable statute, law or regulation relating to the environment or occupational health and safety, and to its knowledge, no material expenditures are or will be required in order to comply with any such existing statute, law or regulation except for such violations that individually, or in the aggregate, have not had, or could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. No Hazardous Materials (as defined below) are used or have been used, stored, or disposed of by any Borrower or, to each Borrower’s knowledge, by any other person or entity on any property owned, leased or used by any Borrower. For the purposes of the preceding sentence, “Hazardous Materials” shall mean:

(a) materials which are listed or otherwise defined as “hazardous” or “toxic” under any applicable local, state, federal and/or foreign laws and regulations that govern the existence and/or remedy of contamination on property, the protection of the environment from contamination, the control of hazardous wastes, or other activities involving hazardous substances, including building materials; or

(b) any petroleum products or nuclear materials.

4.20. No Integrated Offering. No Borrower or its Affiliates, nor to each Borrower’s knowledge any person acting on its or their behalf, has directly or indirectly made any offers or sales of any security or solicited any offers to buy any security under circumstances that would cause the offering of the Securities pursuant to this Agreement to be integrated with prior offerings by the Company for purposes of the Securities Act which would prevent the Company

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from selling the Securities pursuant to Rule 506 under the Securities Act, or any applicable exchange-related stockholder approval provisions, nor will any Borrower or any of its Affiliates take any action or steps that would cause the offering of the Securities to be integrated with other offerings.

4.21 Disclosure. No representation, warranty or other statement made by any Borrower herein or in any certificate or written statement furnished to the Investors contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein, in light of the circumstances under which they were made, not misleading, it being recognized by the Investors that any projections and forecasts provided by Borrowers in good faith and based upon reasonable assumptions are not to be viewed as facts and that actual results during the period or periods covered by any such projections and forecasts may differ from the projected or forecasted results. The Company confirms that neither it nor any other Person acting on its behalf has provided the Investors or their agents or counsel with any information that constitutes or might constitute material, nonpublic information.

SECTION 5

COVENANTS

5.1 Affirmative Covenants.

(a) Notice to Investors. Borrowers shall give prompt notice to Investors of (i) any change or event that is, or could reasonably be expected to result in, a violation of any of Borrowers’ covenants contained herein, (ii) any change in the accuracy in any material respect of any of the representations and warranties provided in Section 4 above, or (iii) the occurrence of an Event of Default or event which, with the giving of notice and/or lapse of time would become an Event of Default. The Company will also advise the Investors, promptly after it receives notice of issuance by the Securities and Exchange Commission, any state securities commission or any other regulatory authority of any stop order or of any order preventing or suspending any offering of any securities of the Company, or of the suspension of the qualification of the Common Stock of the Company for offering or sale in any jurisdiction, or the initiation of any proceeding for any such purpose.

(b) Insurance. The Borrowers will jointly and severally bear the full risk of loss from any loss of any nature whatsoever with respect to the Collateral as security for its obligations hereunder. Borrowers, at their expense, shall keep the Collateral insured at all times, with insurers reasonably satisfactory to Investors against loss or damage and in an amount no less than the full replacement value of the Collateral, with deductible amounts and other terms of the kind and nature that the same or similar businesses would maintain. Upon Investors’s request, Borrowers shall deliver to Investors policies or certificates of insurance evidencing such coverage. Each policy shall name Collateral Agent (on behalf of all Investors) as a loss payee, shall provide for coverage to Investors regardless of the breach by an insured of any warranty or representation made therein, shall not be subject to co-insurance, and shall provide that coverage may not be canceled or altered by the insurer except upon 30 days’ prior written notice to Investors. Borrowers appoint the Collateral Agent (on behalf of all Investors) as their attorney-

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in-fact to make proof of loss, claim for insurance and adjustments with insurers, and to receive payment of and execute or endorse all documents, checks or drafts in connection with insurance payments, at any time that an Event of Default exists. If an Event of Default has occurred and is continuing, the proceeds of insurance received by any Borrower shall be applied, at the option of the Collateral Agent, to repair or replace the Collateral or to reduce any of the Obligations.

(c) Agreement with Landlord. Borrowers shall use commercially reasonable efforts to obtain and maintain such landlord consents with respect to any real property on which material Collateral is located as Collateral Agent (on behalf of all Investors) may reasonably require.

(d) Protection of Intellectual Property. Borrowers shall take all necessary actions in the exercise of their reasonable business judgment to: (a) protect, defend and maintain the validity and enforceability of their material Intellectual Property, (b) promptly advise Investors in writing of any infringement of their Intellectual Property and, should the Intellectual Property be material to a Borrower’s business, promptly sue for infringement, misappropriation or dilution and to recover any and all damages for such infringement, misappropriation or dilution, (c) not allow any Intellectual Property material to a Borrower’s business to be abandoned, forfeited or dedicated to the public without Collateral Agent’s (on behalf of all Investors) written consent, and (d) notify Investors immediately if a Borrower knows or has reason to know that any application or registration relating to any material patent, trademark or copyright (now or hereafter existing) may become abandoned or dedicated, or of any materially adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any court) regarding a Borrower’s ownership of any Intellectual Property, its right to register the same, or to keep and maintain the same.

(e) Access to Facilities. Each Borrower will permit any representatives designated by the Lead Investor (or any successor of the Lead Investor), upon reasonable notice and during normal business hours, at such person’s expense and accompanied by a representative of the Company, to:

(1) visit and inspect any of the properties of the Company or any other Borrower;

(2) examine the corporate and financial records of the Company or any other Borrower (unless such examination is not permitted by federal, state or local law or by contract) and make copies thereof or extracts therefrom; and

(3) discuss the affairs, finances and accounts of the Company or any other Borrower with the directors, officers and independent accountants of the Company and the other Borrowers.

Notwithstanding the foregoing, neither the Company nor any other Borrower will provide any material, non-public information to the Lead Investor unless the Lead Investor signs a confidentiality agreement acceptable to the Borrowers and otherwise complies with Regulation FD, under the federal securities laws.

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(f) Taxes. Each of the Company and each of its Subsidiaries will promptly pay and discharge, or cause to be paid and discharged, when due and payable, all lawful taxes, assessments and governmental charges or levies imposed upon the income, profits, property or business of the Company and its Subsidiaries; provided, however, that any such tax, assessment, charge or levy need not be paid if the validity thereof shall currently be contested in good faith by appropriate proceedings and if the Company and/or such Subsidiary shall have set aside on its books adequate reserves with respect thereto, and provided, further, that the Company and its Subsidiaries will pay all such taxes, assessments, charges or levies forthwith upon the commencement of proceedings to foreclose any lien which may have attached as security therefor.

5.2 Negative Covenants. Without the prior written consent of the Requisite Holders:

(a) Liens. Borrowers shall not create, incur, assume or permit to exist any lien on any of their assets, including, without limitation, their Intellectual Property. No Borrower shall enter into any other agreement or financing arrangement with any Person pursuant to which such Borrower agrees that it will not grant any Lien on or in its Intellectual Property, except for Permitted Liens. For purposes of this Agreement, “Permitted Liens” means (i) any Lien for taxes not yet due or delinquent or being contested in good faith; (ii) any statutory Lien arising in the ordinary course of business by operation of law with respect to a liability that is not yet due or delinquent; (iii) any Lien created by operation of law, such as materialmen’s liens, mechanics’ liens and other similar liens, arising in the ordinary course of business; (iv) Liens upon or in any equipment acquired or held by the Borrower to secure the purchase price of such equipment or indebtedness incurred for the purpose of financing the acquisition or lease of such equipment (and any Liens incurred in connection with the extension, renewal or refinancing of any such indebtedness); (v) leases or subleases and licenses and sublicenses granted to others in the ordinary course of business; and (vi) Liens securing the Company’s obligations under the Notes.

(b) Dispositions. Borrowers shall not convey, sell, lease, transfer or otherwise dispose of all or any part of the Collateral without the prior written consent of the Requisite Holders.

(c) Change in Name, Location, Executive Office, or Executive Management; Change in Business; Change in Fiscal Year. No Borrower shall (i) change its name or state of incorporation, (ii) relocate its chief executive office without 30 days’ prior written notification to Lender, (iii) engage in any business other than or reasonably related or incidental to the businesses currently engaged in by such Borrower or (iv) change its fiscal year end.

(d) Dividends. The Company shall not pay any dividends or make any distribution or payment in respect of, or redeem, retire or purchase any of its capital stock or other equity interests, provided that : (i) the Company may declare and make dividends or other distributions payable solely in the common stock or other common equity interests of such

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Person; and (ii) the Company may repurchase the stock of former employees, in an aggregate amount not to exceed $100,000 in any calendar year, and may repurchase stock deemed to occur upon exercise of stock options, warrants or other convertible securities to the extent the shares of such stock represent a portion of the exercise price of such options, warrants or convertible securities.

(e) Sale of Equity. The Company shall not sell, transfer or distribute any equity securities of InnerCool or TRC. Neither InnerCool nor TRC shall issue any equity securities to any Person other than the Company.

(f) Transactions with Affiliates. Borrowers shall not directly or indirectly enter into or permit to exist any material transaction with any Affiliate of a Borrower, except for transactions that are in the ordinary course of business, upon fair and reasonable terms that are no more favorable to such Affiliate than would be obtained in an arm’s-length transaction with an unrelated third party.

(g) Compliance. No Borrower shall become an “investment company” or be controlled by an “investment company,” within the meaning of the Investment Company Act of 1940, or fail to comply with any of the other laws and regulations described in Section 4.11 herein.

SECTION 6

REGISTRATION RIGHTS

6.1 Company Registration. If (but without any obligation to do so) the Company proposes to register any of its stock or other securities under the Act, whether for its own account or for the account of another stockholder (other than a registration relating solely to the sale of securities to participants in a Company stock plan for employees, consultants or directors on Form S-8, a registration relating to a corporate reorganization or other transaction under Rule 145, the Company shall, at such time, promptly give each Investor written notice of such registration. Upon the written request of an Investor given within twenty (20) days after mailing of such notice by the Company in accordance with Section 8.6, the Company shall, subject to the provisions of this Section 6, use commercially reasonable efforts to cause to be registered under the Act all of the Registrable Securities that an Investor has requested to be registered.

(a) The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 6 prior to the effectiveness of such registration whether or not Investor has elected to include securities in such registration.

(b) In connection with any offering involving an underwriting of shares of the Company’s capital stock, the Company shall not be required under this Section 6 to include any of Investor’s securities in such underwriting unless they accept the terms of the underwriting as agreed upon between the Company and the underwriters selected by it and enter into an underwriting agreement in customary form with an underwriter or underwriters selected by the Company, and then only in such quantity as the underwriters determine in their sole discretion will not jeopardize the success of the offering by the Company. If the total amount of

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securities, including Registrable Securities, requested by stockholders of the Company to be included in such offering exceeds the amount of securities sold other than by the Company that the underwriters determine in their sole discretion is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, that the underwriters determine in their sole discretion will not jeopardize the success of the offering (the securities so included to be allocated first, to the Company, and second, pro rata among the selling stockholders of the Company according to the total amount of securities held by such selling stockholders entitled to be included therein pursuant to registration rights held by such selling stockholders or in such other proportions as shall mutually be agreed to by such selling stockholders). For purposes of the preceding parenthetical concerning apportionment, for any selling stockholder that is a partnership or corporation, the partners, retired partners and stockholders of such selling stockholder, or the estates and family members of any such partners and retired partners and any trusts for the benefit of any of the foregoing persons shall be deemed to be a single “selling stockholder,” and any pro rata reduction with respect to such “selling stockholder” shall be based upon the aggregate amount of Registrable Securities owned by all such related entities and individuals. Notwithstanding any provision hereof to the contrary, as a condition to the reduction or exclusion of any such Investor securities in an offering, no securities held by or on account of any officer, director or Affiliate of the Company shall be included in such offering.

(c) Except as disclosed in the SEC Reports, the Company has not granted any registration rights other than as contemplated herein.

6.2 Furnish Information. It will be a condition precedent to the obligations of the Company to take any action pursuant to Section 6.1 hereof that Investors will furnish to the Company such information regarding themselves, the Registrable Securities held by them, and the intended method of disposition of such securities as will be required to effect the registration of their Registrable Securities.

6.3 Indemnification. In the event any Registrable Securities are included in a registration statement under Section 6.1 hereof:

(a) To the extent permitted by law, the Company will indemnify and hold harmless Investor, the partners, stockholders, officers and directors of Investor, any underwriter (as defined in the Act) for Investor and each Affiliate of Investor or underwriter against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon a Violation, and the Company will reimburse Investor, partner, stockholder, officer or director, underwriter or Affiliate thereof for any legal or other expenses reasonably incurred by them, as incurred, in connection with investigating or defending any such loss, claim, damage, liability or action; provided however, that the indemnity agreement contained in this Section 6.3(a) will not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent will not be unreasonably withheld, delayed or conditioned), nor will the Company be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation which occurs solely in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by Investor or partner, stockholder, officer, director, underwriter or controlling person of Investor.

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(b) To the extent permitted by law, Investor will indemnify and hold harmless the Company, each of its directors, each of its officers who have signed the registration statement, each Affiliate of the Company, any underwriter and any other investor purchasing shares of Common Stock and warrants to purchase shares of Common Stock at the Closing that is selling securities under such registration statement or any of such other investor’s partners, directors, officers, stockholders or any person who controls such investor within the meaning of the Act or the Exchange Act, against any losses, claims, damages or liabilities (joint or several) to which the Company or any such director, officer, controlling person, underwriter or other such investor, partner or director, officer, stockholder or controlling person of such other investor may become subject under the Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation that arises solely as a result of written information furnished by Investor expressly for use in connection with such registration; and Investor will reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, controlling person, underwriter or other investor, partner, officer, director, stockholder or controlling person of such other investor in connection with investigating or defending any such loss, claim, damage, liability or action: provided, however, that the indemnity agreement contained in this Section 6.3(b) will not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of Investor, which consent will not be unreasonably withheld, delayed or conditioned; and provided further, that the total amounts payable in indemnity by Investor under this Section 6.3(b) in respect of any Violation will not exceed the aggregate net proceeds received by Investor upon the sale of the Registrable Securities.

(c) Promptly after receipt by an indemnified party under this Section 6.3 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 6.3, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party will have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party will have the right to retain its own counsel, with the fees and expenses to be paid by the indemnifying party, if (i) representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding or (ii) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to the indemnified party. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action will relieve such indemnifying party of liability, but only to the extent that the failure to give notice shall materially adversely affect the indemnifying party in the defense of such claim.

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(d) If the indemnification provided for in Sections 6.3(a) or 6.3(b) hereof shall be unavailable to hold harmless an indemnified party in respect of any liability under the Act, then, and in each such case, the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statement or omission that resulted in such loss, liability, claim, damage or expense as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; provided that in no event shall any contribution under this subsection (d) by Investor exceed the dollar amount of the proceeds (net of all expenses paid by such holder in connection with any claim relating to this Section 6.3) received by it upon the sale of the Registrable Securities giving rise to such contribution. No person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) will be entitled to contribution from any person or entity that was not guilty of such fraudulent misrepresentation.

(e) The obligations of the Company and Investor under this Section 6.3 will survive the completion of any offering of Registrable Securities in a registration statement, and otherwise.

6.4 Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the SEC which may at any time permit the sale of the Registrable Securities to the public without registration, while a public market exists for the Common Stock of the Company, the Company will:

(a) Make and keep public information available, as those terms are understood and defined in Rule 144, at all times while Registrable Securities are outstanding;

(b) Use its commercially reasonable efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Act and the Exchange Act (at any time it is subject to such reporting requirements); and

(c) So long as Investor owns any Registrable Securities, furnish to Investor forthwith upon request a written statement by Investor to the Company as to its compliance with the reporting requirements of Rule 144, and of the Act and the Exchange Act (at any time it is subject to the reporting requirements of the Exchange Act), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company as Investor may reasonably request in availing itself of any rule or regulation of the SEC allowing Investor to sell any such securities without registration (at any time the Company is subject to the reporting requirements of the Exchange Act).

6.5 Expenses. All fees and expenses (other than discounts and commissions) incident to the performance of or compliance with this Section 6 by the Company shall be borne by the Company whether or not any Registrable Securities are sold by Investor pursuant to a registration statement. The fees and expenses referred to in the foregoing sentence shall include,

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without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with the Trading Market on which the Common Stock is then listed for trading, and (B) in compliance with applicable state securities or Blue Sky laws, (ii) printing expenses, (iii) messenger, telephone and delivery expenses, and (iv) fees and disbursements of counsel and independent public accountants for the Company, (v) fees and disbursements of one counsel to the Investors not to exceed $15,000 and (vi) filing fees and counsel fees of the Placement Agent (counsel fees not to exceed $5,000) if a determination is made that a FINRA Rule 2710 filing is required to be made with respect to such registration statement.

6.6 Default Event. If at any time during the period beginning on the six month anniversary of the Closing Date and ending on such date that all Registrable Securities held by Investor may be resold under Rule 144(b)(1)(i) without the requirements of paragraph (c)(1) of Rule 144 applying to such sale or otherwise without restriction or limitation pursuant to Rule 144 (the “Holding Period”), if the Company shall fail for any reason to satisfy the current public information requirements under Rule 144(c) (a “Default Event”) causing Investor to be unable to utilize Rule 144 for resales of Registrable Securities for a period of ten (10) consecutive calendar days (the date on which such 10-day period is exceeded being referred to as an “Event Date”), then the Company shall pay to Investor an amount in cash, as partial liquidated damages and not as a penalty, equal to two percent (2.0%) of the aggregated Purchase Price paid by Investor pursuant to this Agreement (and cash exercise price actually paid by Investor with respect to Warrants) for any Registrable Securities then held by Investor for each thirty (30) calendar day period following the applicable Event Date (prorated for any period of less than thirty calendar days) until the applicable Default Event is cured; provided, that the Company shall not incur liquidated damages under this Section 6.6 if such Default Event occurs after the expiration of the Holding Period; provided, further, that notwithstanding anything to the contrary in this Agreement, the Company shall not incur liquidated damages under this Section 6.6 in excess of twelve percent (12%) of the aggregate Purchase Price paid by Investor pursuant to this Agreement. Payments of such amounts pursuant to this Section 6.6 shall be made in immediately available funds within five (5) business days after the end of each period that gives rise to such obligation, provided that if any such period extends for more than thirty (30) days payments shall be made at the end of each thirty-day period.

6.7 Definitions. The following definition shall be applicable to section 6.

“Registrable Securities” shall mean the Warrant Shares; provided, that, a security shall cease to be a Registrable Security upon (A) sale pursuant to a Registration Statement or Rule 144 under the Act, or (B) such security becoming eligible for sale by the Investors pursuant to Rule 144 without any restrictions.

“Rule 144” means Rule 144 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same effect as such Rule.

“Trading Market” means whichever of the New York Stock Exchange, the American Stock Exchange, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market or the OTC Bulletin Board on which the Common Stock is listed or quoted for trading on the date in question.

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“Violations” means (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto; (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any federal or state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any federal or state securities law in connection with the offering covered by such registration statement.

SECTION 7

COLLATERAL AGENT

7.1 Appointment of Collateral Agent.

(a) Each Investor hereby authorizes Robert Marvin (“Robert Marvin “) to act as collateral agent (“Collateral Agent”) on behalf of the Investor and any other Investors of the Notes, and in such capacity to enter into the Security Agreement and to exercise for the benefit of the Investor all rights, powers and remedies provided to it, under or pursuant to the Security Agreement including, without limitation, those available upon an Event of Default (as defined in the Notes), subject always to the terms, conditions, limitations and restrictions provided in the Security Agreement. Except with respect to actions as to which the Collateral Agent is expressly required to act under the terms of the Security Agreement, the Investor hereby agrees that the Collateral Agent may act or refrain from acting thereunder with the consent, in writing of the Requisite Holders, and that the Requisite Holders shall have the right to direct the time, method and place of conducting any proceeding for any right or remedy available to the Collateral Agent; provided, however, that such direction shall not be in conflict with any rule of law or expose the Collateral Agent to personal liability, such direction shall not be unduly prejudicial to the rights of any non-consenting holder, and the Collateral Agent may take any action deemed proper by the Collateral Agent, in its discretion, that is not inconsistent with such direction or the terms of the Security Agreement. The Investor agrees that the duties of the Collateral Agent are only such as are specifically provided in the Security Agreement, and the Collateral Agent shall have no other duties, implied or otherwise. The appointment of Robert Marvin as Collateral Agent shall be deemed accepted by Robert Marvin, and it shall be and become obligated to the extent provided in the Security Agreement, only upon the execution and delivery of the Security Agreement by Robert Marvin and the Borrowers.

(b) Each Investor agrees that the Collateral Agent may consult with counsel of its choice and shall not be responsible or liable for any action taken, suffered or omitted to be taken by it in good faith in accordance with the advice of such counsel (subject to the exceptions set forth in the next two sentences). The Investor further agrees that the Collateral Agent shall not incur liability for any action or omission to act by it unless the Collateral Agent’s conduct constitutes willful misconduct or gross negligence. During the continuance of an Event of Default, the Collateral Agent shall be required to use the same degree of care and skill in its exercise of its powers and performance of its duties as a prudent person would exercise under the circumstances in the conduct of such person’s own affairs.

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(c) None of the provisions of this Agreement or the Security Agreement shall be construed to require the Collateral Agent to expend or risk its own funds or otherwise to incur any liability (financial or otherwise) in the performance of any of its duties hereunder or thereunder, or in the exercise of any of its rights or powers unless it shall be satisfied that one or more of the Debtor (as defined in the Security Agreement) and the Investors are at the time obligated and in a financial position to pay the Collateral Agent’s reasonably anticipated fees for its services and its out-of-pocket expenses (including fees of its counsel) in the performance of such duties or the exercise of any of such rights or powers and to indemnify it against such risk or liability. In no event shall the Collateral Agent be liable for (i) any consequential, punitive or special damages or (ii) the acts or omissions of its nominees, correspondents, designees, subagents or subcustodians. The Collateral Agent shall not incur any liability for not performing any act or fulfilling any duty, obligation or responsibility hereunder or thereunder by reason of any occurrence beyond the control of the Collateral Agent (including, but not limited to, any act or provision of any present or future law or regulation or governmental authority, any act of God or war, or the unavailability of the Federal Reserve Bank wire or telex or other wire or communication facility).

(d) Each Investor agrees that the Collateral Agent shall not be required or bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, entitlement order, approval or other paper or document. The Collateral Agent may execute any of the powers under this Agreement or the Security Agreement or perform any duties hereunder or thereunder either directly or by or through agents, attorneys, custodians or nominees appointed with due care, and shall not be responsible or liable for the acts or omissions, including any willful misconduct or gross negligence, on the part of any agent, attorney, custodian or nominee so appointed.

(e) The Borrowers covenant and agree, for the benefit of the Investor and any other purchasers of the Notes, and as an additional obligation secured under the Security Agreement, to be responsible to pay to the Collateral Agent from time to time, and the Collateral Agent shall be entitled to, fees and expenses as provided in the Security Agreement.

(f) The Borrowers agree, for the benefit of the Investors, and as an additional obligation secured under the Security Agreement, to be responsible to indemnify and hold the Collateral Agent and its directors, employees, officers, agents, successors and assigns harmless from and against any and all losses, claims, damages, liabilities and expenses, including, without limitation, reasonable costs of investigation and reasonable counsel fees and expenses that may be imposed on the Collateral Agent or incurred by it in connection with its acceptance of its appointment as the Collateral Agent hereunder or under the Security Agreement or the performance of its duties thereunder, except as a result of the Collateral Agent’s gross negligence or willful misconduct. Such indemnity includes, without limitation, all losses, damages, liabilities and expenses (including reasonable counsel fees and expenses) incurred in connection with any litigation (whether at the trial or appellate levels) arising from this Agreement or the Security Agreement or involving the subject matter hereof or thereof.

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(g) The Investors agree that Robert Marvin or any successor may at any time resign as Collateral Agent by giving written notice thereof to the Company at least 20 business days prior to the date of such proposed resignation. Upon receiving such notice of resignation, the Investors shall promptly appoint a successor collateral agent by written instrument executed by the Requisite Holders a copy of which shall be delivered to the resigning Collateral Agent and a copy to the successor collateral agent. If an instrument of acceptance by a successor collateral agent shall not have been delivered to the Collateral Agent within 20 business days after giving such notice of resignation, the resigning Collateral Agent may petition any court of competent jurisdiction for the appointment of a successor collateral agent. Such court may thereupon, after such notice, if any, as it may deem proper, appoint a successor collateral agent. The Collateral Agent may be removed at any time by written action by the Requisite Holders, delivered to the Collateral Agent and to the Company. If the Collateral Agent shall be so removed, the Requisite Holders shall promptly appoint a successor collateral agent in accordance with the procedures set forth in this Section 7.1(g).

SECTION 8

MISCELLANEOUS

8.1 Survival of Representations, Warranties and Covenants. The warranties, representations and covenants of the Borrowers and Investors contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and all Closings and shall in no way be affected by any investigation of the subject matter thereof made by or on behalf of the Investors or the Borrowers.

8.2 Successors and Assigns. Except as otherwise provided therein, the terms and conditions of this Agreement and the other Transaction Documents shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of any Securities). The Securities shall be transferable upon obtaining the prior written consent of the Company and subject to compliance with applicable securities laws and Section 3. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

8.3 Governing Law; Venue; Jury Trial Waiver. This Agreement is to be construed in accordance with and governed by the laws of the State of New York. The Company hereby agrees that any legal action or proceeding against it with respect to this Agreement or any of the other Transaction Documents may be brought in the courts of the State of New York or of the United States of America for the Southern District of New York as any Investor may elect, and, by execution and delivery hereof, the Company accepts and consents for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts and agrees that such jurisdiction shall be exclusive, unless waived by the Requisite Holders in writing, with respect to any action or proceeding brought by the Company against the Investors. The Company irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court

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and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. Nothing herein shall affect the right of any Investor to bring proceedings against the Company in the courts of any other jurisdiction. EACH OF THE INVESTORS AND THE COMPANY HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE INVESTORS ENTERING INTO THIS AGREEMENT.

8.4 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

8.5 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

8.6 Notices. Except as may be otherwise provided herein, all notices, requests, waivers and other communications made pursuant to this Agreement shall be in writing and shall be conclusively deemed to have been duly given (a) when hand delivered to the other party; (b) when sent by facsimile to the number set forth below a party’s name on the signature pages hereof if sent between 8:00 a.m. and 5:00 p.m. recipient’s local time on a Business Day, or on the next Business Day if sent by facsimile to the number set forth below a party’s name on the signature pages hereof if sent other than between 8:00 a.m. and 5:00 p.m. recipient’s local time on a Business Day; (c) three Business Days after deposit in the U.S. mail with first class or certified mail receipt requested postage prepaid and addressed to the other party at the address set forth below a party’s name on the signature pages hereof; or (d) the next Business Day after deposit with a national overnight delivery service, postage prepaid, addressed to the parties as set forth below a party’s name on the signature pages hereof with next Business Day delivery guaranteed, provided that the sending party receives a confirmation of delivery from the delivery service provider. Each Person making a communication hereunder by facsimile shall promptly confirm by telephone to the Person to whom such communication was addressed each communication made by it by facsimile pursuant hereto but the absence of such confirmation shall not affect the validity of any such communication. A party may change or supplement the addresses set forth below such party’s name on the signature pages hereof, or designate additional addresses, for purposes of this Section 8.6 by giving the other party written notice of the new address in the manner set forth above.

8.7 Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only if such amendment, modification or waiver is in writing and only with the written consent of the Company and the Requisite Holders. Any amendment or waiver effected in accordance with this section shall be binding upon each holder of any Securities acquired under this Agreement at the time outstanding (including securities into which such Securities are convertible), each future holder of all such Securities, and the Company. In addition, the Company may at any time prior to the Initial Closing modify the anti-dilution provisions contained in the Warrants to satisfy any requirements that the

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American Stock Exchange may impose under its rules without first obtaining the prior written consent of the Investors. However, in such event, potential investors will be provided notice of any of such changes prior to the Initial Closing and, if such changes are material, potential investors may withdraw from the Initial Closing.

8.8 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

8.9 Corporate Securities Law. THE SALE OF THE SECURITIES THAT ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.

8.10 Expenses. Each party shall pay all of its own costs and expenses (including attorneys’ fees and disbursements) that it incurs with respect to the negotiation, execution and delivery of this Agreement. Notwithstanding the foregoing, irrespective of whether the Initial Closing is effected, the Company shall pay all documented attorneys fees, costs and expenses of counsel to the Lead Investor. If the Initial Closing is effected, the Company shall, at the Closing, pay all documented attorneys fees, costs and expenses of counsel to the Lead Investor.

8.11 Interpretation. In this Agreement and the other Transaction Documents, except to the extent the context otherwise requires: (i) any reference in this Agreement or other Transaction Document to a Section, a Schedule or an Exhibit is a reference to a Section thereof, a schedule thereto or an exhibit thereto, respectively, and to a subsection thereof or a clause thereof is, unless otherwise stated, a reference to a subsection or a clause of the Section or subsection in which the reference appears; (ii) the words “hereof,” “herein,” “hereto,” “hereunder” and the like mean and refer to this Agreement or other Transaction Document as a whole and not merely to the specific Section, subsection, paragraph or clause in which the respective word appears; (iii) the meaning of defined terms shall be equally applicable to both the singular and plural forms of the terms defined; (iv) references to agreements and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto; (v) references to statutes or regulations are to be construed as including all statutory and regulatory provisions consolidating, amending or replacing the statute or regulation referred to; and (vi) the captions and headings are for convenience of reference only and shall not affect the construction of this Agreement or other Transaction Document.

8.12 Further Assurances. Each party agrees to cooperate fully with the other parties and to execute such further instruments, documents and agreements and to give such further written assurance as may be reasonably requested by any other party to evidence and reflect the transactions described in this Agreement and the other Transaction Documents and contemplated hereby and thereby and to carry into effect the intents and purposes of this Agreement and the other Transaction Documents.

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8.13 Independent Nature of Investors. The obligations of each Investor under any Transaction Document are several and not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under any Transaction Document. Each Investor shall be responsible only for its own representations, warranties, agreements and covenants hereunder. The decision of each Investor to purchase Securities pursuant to this Agreement has been made by such Investor independently of any other Investor and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition (financial or otherwise) or prospects of the Company or any of its Subsidiaries which may have been made or given by any other Investor or by any agent or employee of any other Investor, and no Investor or any of its agents or employees shall have any liability to any other Investor (or any other person) relating to or arising from any such information, materials, statements or opinions. Nothing contained herein or in any other Transaction Document, and no action taken by any Investor pursuant hereto or thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Except as otherwise provided in any Transaction Document, each Investor shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Investor to be joined as an additional party in any proceeding for such purpose.

8.14 Confidentiality. The Investors shall hold all non-public, proprietary or confidential information with respect to the Company obtained pursuant to or in connection with this Agreement in strict confidence. Notwithstanding the foregoing, such obligation of confidentiality shall not apply if the information or substantially similar information is or becomes part of the public domain other than as the result of a violation of this Section 5.14.

8.15 Entire Agreement. This Agreement and the documents referred to herein constitute the entire agreement among the parties with respect to the subject matter hereof and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein.

8.16 Brokers. Each Investor acknowledges that it is aware that Empire Asset Management Company (the “Placement Agent”) will receive from the Company, in consideration of its services as placement agent in respect of the transactions contemplated hereby, (i) a success fee of 5% of the aggregate Purchase Price of the Securities sold at each closing, payable in cash, (ii) a warrant to purchase a number of shares of Common Stock equal to 5% of the shares of Common Stock initially issuable upon exercise of the Warrants sold at each closing at an exercise price of $2.00 per share, and (iii) reimbursement of reasonable documented out-of-pocket expenses.

8.17 Attorneys’ Fees. In the event that any suit or action is instituted to enforce any provision in this Agreement, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Agreement, including, without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals.

*    *    *

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written.

INVESTOR
		Principal Amount of Note Subscribed: $
(Print Name of Individual or Entity)
By:		By:
(Signature)			(Signature of Co-Investor)
Name:		Name:
			(Co-Investor)
Title:
Address:
Social Security/Tax ID:
BORROWERS:
CARDIUM THERAPEUTICS, INC.		Principal Amount of Note Issued:
By:		Warrants Issued:
	Tyler Dylan, Chief Business Officer, General Counsel, Executive Vice President and Secretary

Address:

12255 El Camino Real; Suite 250

San Diego, California 92130

Attn: Tyler Dylan, Chief Business Officer

[Signature Page to Note and Warrant Purchase Agreement]

INNERCOOL THERAPIES, INC.
By:
	Tyler Dylan
	Chief Business Officer and Secretary
Address: 12255 El Camino Real; Suite 250 San Diego, California 92130 Attn: Tyler Dylan, Chief Business Officer
TISSUE REPAIR COMPANY
By:
	Tyler Dylan
	Chief Business Officer and Secretary
Address: 12255 El Camino Real; Suite 250 San Diego, California 92130 Attn: Tyler Dylan, Chief Business Officer

[Signature Page to Note and Warrant Purchase Agreement]

AS TO SECTION 7 ONLY:
COLLATERAL AGENT
By:
	Robert Marvin
Address:		802 State Ave N.
		P.O. Box 100
		Warroad, MN 56763

[Signature Page to Note and Warrant Purchase Agreement]

EX-10.2

Exhibit 10.2

SECURITY AGREEMENT

THIS SECURITY AGREEMENT (this “Agreement”), dated as of November 5, 2008, is made by and between 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 “Grantor,” and collectively, the “Grantors”) and Robert Marvin, in its capacity as collateral agent (the “Collateral Agent”) for the benefit of the holders of those certain notes described below in the aggregate principal amount of up to $6,000,000 (each an “Investor” and collectively, the “Investors”) to be issued by Grantors from time to time on and after the date hereof, pursuant to that certain Note and Warrant Purchase Agreement of even date by and among Grantors and each of the Investors (the “Purchase Agreement”).

W I T N E S S E T H:

WHEREAS, from time to time on and after the date hereof, Grantors may issue up to $6,000,000 of their senior secured promissory notes (as each may be at any time amended, extended, restated, renewed or modified, each a “Note,” and collectively, the “Notes”) to the Investors;

WHEREAS, pursuant to the Purchase Agreement, each Investor has appointed and authorized the Collateral Agent to act as collateral agent under this Agreement;

WHEREAS, it is a condition precedent to the obligation of each of the Investors to purchase a Note that Grantors shall have granted to the Collateral Agent a security interest for the benefit of the Investors in the Collateral (as hereinafter defined) as contemplated by this Agreement; and

WHEREAS, Grantors expect to realize direct and indirect benefits as a result of the sale of the Notes to the subscribers and desires to grant the Collateral Agent a security interest for the benefit of the Investors in the Collateral as contemplated by this Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:

ARTICLE I – DEFINITIONS

1.1 This Agreement is the Security Agreement referred to in the Purchase Agreement and the Notes. As used in this Agreement, the following terms shall have the meanings respectively set forth below:

“Accounts” shall mean all “accounts” as defined in the UCC now owned or hereafter acquired by Grantors.

“Agreement” means this Security Agreement, and any extensions, modifications, renewals, restatements, supplements or amendments hereof.

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“Bankruptcy Code” means Chapter 11 of Title 11 of the United States Code, as amended from time to time, and any successor statute and all rules and regulations promulgated thereunder.

“Collateral” means all of Grantors’ now owned or hereafter acquired right, title and interest in and to the General Assets, the Trademarks, the Patents and the Licenses.

“Equipment” shall mean all “equipment” as defined in the UCC, now or hereafter used or acquired for use in the business of Grantors.

“General Assets” shall have the meaning set forth in Section 2.1 hereof.

“General Intangibles” shall mean all “general intangibles” as defined in the UCC now owned or hereafter acquired by Grantors.

“Investment Collateral” shall have the meaning set forth in Section 7.1 hereof.

“Licenses” shall have the meaning set forth in Section 2.4 hereof.

“Obligations” means any and all present and future obligations of Grantors arising under or relating to the Notes, the Purchase Agreement or this Agreement, whether due or to become due, matured or unmatured, or liquidated or unliquidated, including interest that accrues after the commencement of any bankruptcy or insolvency proceeding by or against the Grantors. For the avoidance of doubt, the Obligations shall include the obligations of the Grantors to pay the costs and expenses of the Collateral Agent and to provide indemnity to the Collateral Agent pursuant to Article XIII hereof.

“Patents” shall have the meaning set forth in Section 2.3 hereof.

“Trademarks” shall have the meaning set forth in Section 2.2 hereof.

ARTICLE II - SECURITY INTERESTS

2.1 Grant of Security Interest in General Assets. To secure the complete and timely payment, performance and satisfaction of all of the Obligations, each Grantor hereby grants to the Collateral Agent, for the ratable benefit of the Investors, a first lien on, and priority security interest in, all of the Grantor’s right, title and interest in and to the Grantor’s now owned or otherwise existing and hereafter acquired or arising:

(a) Accounts, contract rights and all other forms of obligations owing to the Grantor arising out of the sale or lease of goods or the rendition of services by the Grantor, irrespective of whether earned by performance, and any and all credit insurance, guarantees or security therefor;

(b) books and records, including ledgers; records indicating, summarizing or evidencing the Grantor’s properties or assets or liabilities; all information relating to the Grantor’s business operations or financial condition; and all other computer programs, disk or tape files, printouts, runs or other computer prepared information;

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(c) deposit accounts (as that term is defined from time to time in the Uniform Commercial Code as in effect in the State of Delaware);

(d) all of the Grantor’s General Intangibles and other personal property (including contract rights, rights arising under common law, statutes or regulations, choses or things in action, commercial tort claims, blueprints, drawings, purchase orders, customer lists, monies due or recoverable from pension funds, route lists, computer programs, information contained in computer disks or tapes, literature, reports, catalogs, insurance premium rebates, tax refunds and tax refund claims);

(e) goods (as that term is defined from time to time in the Uniform Commercial Code as in effect in the State of Delaware), including (i) all inventory, including Equipment held for lease, whether raw materials, in process or finished, all material or Equipment usable in processing the same and all documents of title covering any inventory, (ii) all Equipment employed in connection with the Grantor’s business, together with all present and future additions, attachments and accessions thereto and all substitutions therefor and replacements thereof and (iii) all vehicles;

(f) instruments and other investment property (as such terms are defined from time to time in the Uniform Commercial Code as in effect in the State of Delaware);

(g) negotiable collateral, including all of the Grantor’s right, title and interest with respect to any letters of credit, letter of credit rights, instruments, drafts, documents and chattel paper (as each term is defined from time to time in the Uniform Commercial Code as in effect in the State of Delaware), and any and all supporting obligations in respect thereof;

(h) money or other assets of the Grantor that now or hereafter come into the possession, custody or control of the Grantor;

(i) the proceeds and products, whether tangible or intangible, of any of the foregoing, including proceeds of insurance covering any or all of the foregoing, and any and all of the foregoing, or other tangible or intangible property resulting from the sale, exchange, collection or other disposition of any of the foregoing, or any portion thereof or interest therein, and the proceeds thereof; and

(j) all of the Grantor’s right, title and market in and to any shares of capital stock of any of its subsidiaries and the certificates representing any such shares. All of the items described in clauses (a)-(j) in this Section 2.1 are hereinafter individually and/or collectively referred to as the “General Assets.”

Notwithstanding anything herein contained to the contrary, each Grantor shall be free to enter into agreements: (i) relating to capital leases, and (ii) resulting in purchase money security interests, both of which are hereinafter referred to as “Permitted Liens.”

2.2 Grant of Security Interest in Trademarks. To secure the complete and timely payment, performance and satisfaction of all of the Obligations, each Grantor hereby grants to the Collateral Agent, for the benefit of the Investors, a first priority security interest, in all of the Grantor’s right, title and interest in and to the Grantor’s now owned or otherwise existing and

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hereafter acquired or arising: (a) trademarks, trade names, registered trademarks, trademark applications, service marks, registered service marks and service mark applications and (b) all renewals thereof, all income, royalties, damages and payments now and hereafter due and/or payable under and with respect thereto, including, without limitation, payments under all licenses entered into in connection therewith and damages and payments for past or future infringements or dilutions thereof, the right to sue for past, present and future infringements and dilutions thereof, the goodwill of the Grantor’s business symbolized by the foregoing and connected therewith and all of the Grantor’s rights corresponding thereto throughout the world (all of the foregoing items described in the foregoing clauses (a) and (b) in this Section 2.2, are hereinafter individually and/or collectively referred to as the “Trademarks”); and (c) all proceeds of any and all of the foregoing, including, without limitation, license royalties and proceeds of the infringement suits.

2.3 Grant of Security Interest in Patents. To secure the complete and timely payment, performance and satisfaction of all of the Obligations, each Grantor hereby grants to the Collateral Agent, for the benefit of the Investors, a first priority security interest in all of the Grantor’s right, title and interest in and to the Grantor’s now owned or otherwise existing and hereafter acquired or arising: (a) rights under patents and patent applications, and (b) all renewals thereof, all income, royalties, damages and payments now and hereafter due and/or payable under and with respect to any of the foregoing, including, without limitation, payments under all licenses entered into in connection therewith and damages and payments for past or future infringements or dilutions thereof, the right to sue for past, present and future infringements and dilutions thereof, the goodwill of the Grantor’s business symbolized by the foregoing and connected therewith and all of the Grantor’s rights corresponding thereto throughout the world (all of the foregoing items described in the foregoing clauses (a) and (b) in this Section 2.3, are hereinafter individually and/or collectively referred to as the “Patents”); and all proceeds of any and all of the foregoing, including license royalties and proceeds of the infringement suits.

2.4 Grant of Security Interest in Trademark and Patent Licenses. To secure the complete and timely payment, performance and satisfaction of all of the Obligations, each Grantor hereby grants to the Collateral Agent, for the benefit of the Investors, a first priority security interest in all of the Grantor’s right, title and interest in and to the Grantor’s now owned or otherwise existing and hereafter acquired or arising: rights under or interests in any license agreements with any other party, regardless whether the Grantor is a licensee or licensor under any such license agreement, and the right to use the foregoing in connection with the enforcement of the Investors’ rights under the Notes, including the right to prepare for sale and sell any and all inventory now or hereafter owned by the Grantor and now or hereafter covered by such licenses (all of the foregoing are hereinafter referred to collectively as the “Licenses”).

2.5 Title: Other Liens. Except with respect to the security interest granted to the Collateral Agent pursuant to this Agreement, the Grantors own each of their respective General Assets, Trademarks, Patents and Licenses free and clear of any and all liens, claims, mortgages, encumbrances or security or adverse interests of any nature whatsoever.

2.6 Interests of Investors. The interest of any Investor in the Collateral shall be on a parity with the interests of all other Investors, and the interest of each Investor in the Collateral shall be ratable in the proportion that the aggregate indebtedness then outstanding and unpaid under the Note(s) held by such Investor bears to the aggregate indebtedness then outstanding and unpaid under the Notes held by all Investors (except to the extent the Investors agree to any other ratable interest therein).

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ARTICLE III - FURTHER ASSURANCES

3.1 At any time and from time to time at the request of the Collateral Agent, the Grantors shall execute and deliver to the Collateral Agent all such financing statements and other instruments and documents in form and substance reasonably satisfactory to the Collateral Agent as shall be necessary or desirable to fully perfect, when filed and/or recorded, the security interest granted to the Collateral Agent for the benefit of the Investors pursuant to Article II of this Agreement. Each Grantor hereby authorizes the Collateral Agent, without prior notice to the Grantor, to file any financing statement and amendments thereof or continuations thereof, naming the Grantor as debtor and the Collateral Agent as the creditor. At any time and from time to time, the Collateral Agent shall be entitled to file and/or record any or all such financing statements, instruments and documents held by it, and any or all such further financing statements, documents and instruments, and to take all such other actions, as the Collateral Agent may deem appropriate to perfect and to maintain perfected the security interest granted to it for the benefit of the Investors in Article II of this Agreement. Before and after the occurrence of any default under the Notes, at the Collateral Agent’s request, the Grantor shall execute all such further financing statements, instruments and documents, and shall do all such further acts and things, as may be deemed necessary or desirable by the Collateral Agent to create and perfect, and to continue and preserve, the security interest in the Collateral in favor of the Collateral Agent for the benefit of the Investors or the priority thereof, including causing any such financing statements to be filed and/or recorded in the applicable jurisdiction.

ARTICLE IV - SECURITY AGREEMENT

4.1 This Agreement secures the payment of all of the Obligations of the Grantors now or hereafter existing under the Notes, whether for principal, interest, fees, expenses or otherwise, and all of the Obligations of the Grantors now or hereafter existing under this Agreement and provides for the application of proceeds from the Collateral, upon the occurrence of an Event of Default, to satisfy the Obligations, including the irrevocable right of the Collateral Agent to apply proceeds from Collateral to the payment of any and all amounts owing to the Collateral Agent pursuant to any of the provisions of Article X or Article XIII of this Agreement prior to making any payment to any or all of the Investors.

ARTICLE V - EVENTS OF DEFAULT

5.1 There shall be an Event of Default (as defined in the Notes) hereunder upon the occurrence and during the continuance of an Event of Default under any of the Notes. The Grantors shall promptly notify the Collateral Agent in writing of any occurrence of an Event of Default.

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ARTICLE VI - RIGHTS UPON EVENT OF DEFAULT

6.1 Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent shall have, in any jurisdiction where enforcement hereof is sought, in addition to all other rights and remedies that the Collateral Agent may have under applicable law or in equity or under this Agreement, all rights and remedies of a secured party under the Uniform Commercial Code as enacted in any such jurisdiction. Without limiting the foregoing, the Collateral Agent, on behalf of the Investors, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law) to or upon the Grantors or any other person (all of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances collect, receive, appropriate and realize upon any or all of the Collateral, and/or may sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver any or all of the Collateral (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s board or office or elsewhere upon such terms and conditions as the Collateral Agent may deem advisable, for cash or on credit or for future delivery without assumption of any credit risk. The Collateral Agent, on behalf of the Investors, shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase all or any part of the Collateral so sold, free of any right or equity of redemption in the Grantors, which right or equity is hereby waived or released. The Collateral Agent, on behalf of the Investors, shall apply the net proceeds of any such collection, recovery, receipt, appropriation, realization or sale, after deducting all reasonable expenses incurred therein or in connection with the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Investors under this Agreement (including, without limitation, reasonable attorneys’ fees and expenses) to the payment in whole or in part of the Obligations, and only after such application and after the payment by the Collateral Agent of any other amount required by any provision of law, need the Collateral Agent account for the surplus, if any, to the Grantors. To the extent permitted by applicable law, the Grantors waive all claims, damages and demands they may acquire against the Collateral Agent arising out of the exercise by the Collateral Agent of any of its rights hereunder. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least ten (10) days before such sale or other disposition. The Grantors shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay the Obligations and the reasonable fees and disbursements of any attorneys employed by the Collateral Agent to collect such deficiency.

ARTICLE VII - VOTING RIGHTS; DIVIDENDS; ETC.

7.1 With respect to Grantors’ right, title and interest to any Collateral consisting of securities, partnership interests, joint venture interests, investments or the like (referred to collectively and individually in this Article VII and in Article VIII hereof as the “Investment Collateral”), so long as no Event of Default occurs and remains continuing:

(a) the Grantors shall be entitled to exercise any and all voting and other consensual rights pertaining to the Investment Collateral, or any part thereof, for any purpose not inconsistent with the terms of this Agreement or the Notes; and

(b) the Grantors shall be entitled to receive and to retain and use any and all dividends or distributions paid in respect of the Investment Collateral.

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ARTICLE VIII - RIGHTS DURING EVENT OF DEFAULT – INVESTMENT COLLATERAL

8.1 With respect to any Investment Collateral in the possession of the Grantors, so long as an Event of Default has occurred and is continuing:

(a) at the option of the Collateral Agent, all rights of the Grantors to exercise the voting and other consensual rights which it would otherwise be entitled to exercise pursuant to Section 7.1(a) of Article VII hereof, and to receive the dividends and distributions which it would otherwise be authorized to receive and retain pursuant to Section 7.1(b) of Article VII hereof, shall cease, and all such rights thereupon shall become vested in the Collateral Agent for the benefit of the Investors which thereupon shall have the sole right to exercise such voting and other consensual rights and to receive and to hold as pledged Investment Collateral such dividends and distributions; and

(b) all dividends and other distributions that are received by the Grantors contrary to the provisions of this Agreement shall be held in trust for the benefit of the Collateral Agent on behalf of the Investors, shall be segregated from other funds of the Grantors and forthwith shall be paid over to Collateral Agent for the benefit of the Investors as pledged Collateral in the same form as so received (with any necessary endorsements).

ARTICLE IX - GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS

9.1 Each Grantor represents, warrants and covenants, which representations, warranties and covenants shall survive execution and delivery of this Agreement, as follows:

(a) except for the security interest granted to the Collateral Agent for the benefit of the Investors herein, the Grantor is, and as to Collateral acquired from time to time after the date hereof, the Grantor will be, the owner of all the Collateral free from any lien, security interest, encumbrance or other right, title or interest of any person, and the Grantor shall defend the Collateral against all claims and demands of all persons at any time claiming the same or any interest therein adverse to the Collateral Agent for the benefit of the Investors, except as such may apply to any Permitted Liens.

(b) except with respect to Permitted Liens, there is no financing statement (or similar statement or instrument of registration under the law of any jurisdiction) now on file or registered in any public office covering any interest of any kind in the Collateral, or intended to cover any such interest that has not been terminated or released by the secured party named therein, and so long as any Notes remain outstanding or any of the Obligations of the Grantor remain unpaid, the Grantor will not execute and there will not be on file in any public office any financing statement (or similar statement or instrument of registration under the law of any jurisdiction) or statements relating to the Collateral, except financing statements filed or to be filed in respect of and covering the security interest hereby granted to the Collateral Agent for the benefit of the Investors;

(c) at the Grantor’s own expense, the Grantor will keep the Collateral (i) in good condition at all times (normal wear and tear excepted) and maintain same in accordance with all manufacturer’s specifications and requirements, and (ii) free and clear of all liens and encumbrances, except for the liens granted hereby and Permitted Liens; and without the consent of the Collateral Agent, the Grantor will not sell, transfer, change the registration, if any, dispose of, attempt to dispose of, substantially modify or abandon the Collateral or any part thereof other than sales of inventory in the ordinary course of business and the disposition of obsolete or worn-out equipment in the ordinary course of business; and

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(d) the chief office and chief place of business of Grantor is located at 12255 El Camino Real, Suite 250, San Diego, CA 92130. The Grantor will not move its chief executive office and chief place of business until (i) it shall have given to the Collateral Agent not less than 30 days’ prior written notice of its intention to do so, clearly describing such new location and providing such other information in connection therewith as the Collateral Agent may reasonably request, and (ii) with respect to such new location, it shall have taken such action, satisfactory to the Collateral Agent, to maintain the security interest of the Collateral Agent, in favor of the Investors, in the Collateral.

ARTICLE X - COSTS AND EXPENSES

10.1 Each Grantor agrees to jointly and severally pay to the Collateral Agent all costs and expenses (including reasonable attorneys’ fees and disbursements) incurred by the Collateral Agent in the making or the enforcement or attempted enforcement of this Agreement, whether or not an action is filed in connection therewith, and in connection with any waiver or amendment of any term or provision hereof. All such fees and all advances, charges, costs and expenses, including reasonable attorneys’ fees and disbursements, incurred or paid by the Collateral Agent in exercising any right, privilege, power or remedy conferred by this Agreement or in the enforcement or attempted enforcement thereof, shall be secured hereby and shall become a part of the Obligations and shall be paid to the Collateral Agent by the Grantor, immediately upon demand, together with interest thereon from the date of demand at a rate of 18% per annum.

ARTICLE XI - CONTINUING EFFECT

11.1 This Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against any Grantor for liquidation or reorganization, should the Grantor become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Grantor’s assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by the Collateral Agent, whether as a “voidable preference,” “fraudulent conveyance” or otherwise, all as though such payment or performance had not been made. In the event that any payment or any part thereof is rescinded, reduced, restored or returned, the Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

ARTICLE XII - TERMINATION; RELEASE OF THE GRANTORS

12.1 This Agreement shall be terminated and all Obligations of the Grantors hereunder shall be released when all Obligations of the Grantors have been paid in full or upon such release of the Obligations hereunder or, with respect to any Note, when such Note shall no longer be outstanding. Upon such termination, the Collateral Agent shall return any pledged Collateral to the Grantors, or to the person or persons legally entitled thereto, and shall endorse, execute, deliver, record and file all instruments and documents, and do all other acts and things reasonably required for the return of the Collateral to the Grantors, or to the person or persons legally entitled thereto, and to evidence or document the release of the Collateral Agent’s interests arising for the benefit of the Investors under this Agreement, all as reasonably requested by, and at the sole expense of, the Grantors.

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ARTICLE XIII - COLLATERAL AGENT

13.1 By their execution of the Purchase Agreement, the Investors have authorized the Collateral Agent to exercise for the pro rata pari passu benefit of the Investors all rights, powers and remedies provided to it under or pursuant to this Agreement, including all rights, powers and remedies upon an Event of Default, subject always to the terms, conditions, limitations and restrictions provided in this Agreement. Except with respect to those matters as to which the Collateral Agent is expressly required to act under the terms of this Article XIII, the Collateral Agent may act or refrain from acting with the written consent of holders of a majority of the aggregate principal amount of outstanding Notes as of the date of such consent (the “Requisite Holders”), which Requisite Holders shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Collateral Agent; provided, however, that such direction shall not be in conflict with any rule of law or expose the Collateral Agent to personal liability, such direction shall not be unduly prejudicial to the rights of any non-consenting holder, and the Collateral Agent may take any action deemed proper by the Collateral Agent, in its discretion, which is not inconsistent with such direction or the terms of this Agreement. It is agreed that the duties of the Collateral Agent are only such as are herein specifically provided, and the Collateral Agent shall have no other duties, implied or otherwise.

13.2 Anything herein to the contrary notwithstanding, none of the provisions of this Agreement shall be construed to require the Collateral Agent to expend or risk its own funds or otherwise incur any liability (financial or otherwise) in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, unless it shall be satisfied that one or more Grantors, the Investors, are at the time obligated and in a financial position to pay the Collateral Agent’s reasonably anticipated fees for its services and its out-of-pocket expenses (including fees of its counsel) in the performance of such duties or the exercise of any of such rights or powers and to indemnify it against any such risk or liability. In no event shall the Collateral Agent be liable (i) for any consequential, punitive or special damages or (ii) for the acts or omissions of its nominees, correspondents, designees, subagents or subcustodians. The Collateral Agent shall not incur any liability for not performing any act or fulfilling any duty, obligation or responsibility hereunder by reason of any occurrence beyond the control of the Collateral Agent (including any act or provision of any present or future law or regulation or governmental authority, any act of God or war, or the unavailability of the Federal Reserve Bank wire or telex or other wire or communication facility).

13.3 The Collateral Agent shall not be required or bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, entitlement order, approval or other paper or document. The Collateral Agent may execute any of the powers under the Security Agreement or perform any duties hereunder either directly or by or through agents, attorneys, custodians or nominees appointed with due care, and shall not be responsible or liable for the acts or omissions, including any willful misconduct or gross negligence, on the part of any agent, attorney, custodian or nominee so appointed.

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13.4 Each Grantor hereby agrees to indemnify on a joint and several basis the Collateral Agent, each Investor, any affiliate thereof, and their respective directors, officers, employees, agents, counsel and other advisors (each an “Indemnified Person”) against, and hold each of them harmless from, any and all liabilities, obligations, losses, claims, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever, including the reasonable fees and disbursements of counsel to an Indemnified Person, which may be imposed on or incurred by any Indemnified Person, or asserted against any Indemnified Person by any third party or by Grantor, in any way relating to or arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder or thereunder, the transactions contemplated hereby or the Collateral, or (ii) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by Grantor (the “Indemnified Liabilities”); provided that Grantor shall not be liable to any Indemnified Person for any portion of such Indemnified Liabilities to the extent they are found by a final decision of a court of competent jurisdiction to have resulted from such Indemnified Person’s gross negligence or willful misconduct. If and to the extent that the foregoing indemnification is for any reason held unenforceable, Grantor agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. The indemnification provisions contained in this Section 13.4 are in addition to any other rights any of the indemnified parties may have by law or otherwise and shall survive the termination of this Agreement or the resignation or removal of the Collateral Agent.

13.5 Any corporation or other entity whatsoever into which the Collateral Agent may be merged or converted or with which it may be consolidated, any corporation or other entity whatsoever resulting from any merger, conversion or consolidation to which the Collateral Agent shall be a party or any corporation or other entity whatsoever succeeding to the business of the Collateral Agent shall be the successor of the Collateral Agent hereunder without the execution or filing of any paper with any party hereto except where an instrument of transfer or assignment is required by law to effect such succession.

13.6 The Collateral Agent shall transmit by overnight mail to the Investors, or their successors or permitted assigns, as the names and addresses appear in a register of Investors maintained by Cardium, notice of an Event of Default.

13.7 The Collateral Agent may at any time resign by giving written notice thereof to Cardium at least 20 business days prior to the date of such proposed resignation. Upon receiving such notice of resignation, the Requisite Holders shall promptly appoint a successor collateral agent by written instrument executed by authority of its board of directors, a copy of which shall be delivered to the resigning Collateral Agent and a copy to the successor collateral agent. If an instrument of acceptance by a successor collateral agent shall not have been delivered to the Collateral Agent within 20 business days after giving such notice of resignation, the resigning Collateral Agent may petition any court of competent jurisdiction for the appointment of a successor collateral agent. Such court may thereupon, after such notice, if any, as it may deem proper, appoint a successor collateral agent. The Collateral Agent may be removed at any time by written action by the Requisite Holders delivered to the Collateral Agent and to Cardium. If the Collateral Agent shall be so removed, the Requisite Holders shall promptly appoint a successor collateral agent in accordance with the procedures in this Article XIII.

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ARTICLE XIV - COLLATERAL AGENT’S APPOINTMENT AS ATTORNEY-IN-FACT

14.1 Powers. Each Grantor hereby appoints the Collateral Agent, and any officer or agent of the Collateral Agent, with full power of substitution, as its attorney-in-fact with full irrevocable power and authority in the place of the Grantor and in the name of the Grantor or in its own name, from time to time in the Collateral Agent’s discretion, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute and file any instrument which may be necessary or desirable to accomplish the purposes of this Agreement. Except with respect to those matters as to which the Collateral Agent is expressly required to act under the terms of this Article XIV, the Collateral Agent may act or refrain from acting with the written consent of the Requisite Holders, which Requisite Holders shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Collateral Agent; provided, however, that such direction shall not be in conflict with any rule of law or expose the Collateral Agent to personal liability and the Collateral Agent may take any action deemed proper by the Collateral Agent, in its discretion, which is not inconsistent with such direction or the terms of this Agreement. It is agreed that the duties of the Collateral Agent are only such as are herein specifically provided and as set forth in the Purchase Agreement, and the Collateral Agent shall have no other duties, implied or otherwise. Each Grantor hereby ratifies whatever actions the Collateral Agent shall lawfully do or cause to be done in accordance with this Article XIV. The Collateral Agent agrees that, except upon the occurrence and during the continuance of an Event of Default, it shall not exercise the power of attorney, or any rights granted to Collateral Agent under this Article XIV. This power of attorney shall be a power coupled with an interest and shall be irrevocable so long as the Obligations have not been paid and performed in full.

14.2 No Duty on Collateral Agent’s Part. The powers conferred on the Collateral Agent by this Article XIV are solely to protect the Investors’ interests in the Collateral and shall not impose any duty upon the Collateral Agent to exercise any such powers. The Collateral Agent shall be accountable only for amounts that it actually receives, on the Investor’s behalf, as a result of the exercise of such powers, and neither the Collateral Agent nor any of its officers, directors, employees or agents shall, in the absence of willful misconduct or gross negligence, be responsible to the Grantor for any act or failure to act pursuant to this Article XIV.

ARTICLE XV - GOVERNING LAW

THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS TO BE PERFORMED WHOLLY WITHIN SUCH JURISDICTION.

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ARTICLE XVI - ASSIGNMENT

16.1 This Agreement shall create a continuing security interest in the Collateral and shall be binding upon the Grantors and the Grantors’ successors and permitted assigns; inure, together with the rights and remedies of the Collateral Agent hereunder, in favor of the Investors and their successors, transferees and assigns; and be severable in the event that one or more of the provisions herein is determined to be illegal or unenforceable. Without limiting the generality of the foregoing, the Investors may assign or otherwise transfer any portion of the Obligations to any other person or entity, and such other person or entity shall thereupon become vested with all the benefits and obligations in respect thereof granted to the Investors (including the beneficial interest in the rights and benefits granted to the Collateral Agent for the benefit of the Investors) herein or otherwise.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the undersigned have executed this Security Agreement by its duly authorized officer as of the date first written above.

CARDIUM THERAPEUTICS, INC.
By:	/s/ Tyler Dylan
	Tyler Dylan
	Chief Business Officer, General Counsel, Executive Vice President and Secretary

INNERCOOL THERAPIES, INC.
By:	/s/ Tyler Dylan
	Tyler Dylan
	Chief Business Officer and Secretary

TISSUE REPAIR COMPANY
By:	/s/ Tyler Dylan
	Tyler Dylan
	Chief Business Officer and Secretary
By:	/s/ Robert Marvin
	Robert Marvin, as Collateral Agent

[Signature Page to Security Agreement]

EX-10.3

Exhibit 10.3

Empire Asset Management Company

2 Rector Street, 15th Floor

New York, NY 10006

October 24, 2008

Cardium Therapeutics, Inc.

InnerCool Therapies, Inc.

Tissue Repair Company

12255 El Camino Real, Suite 250

San Diego, CA 92130

Re:     Placement Agency Agreement

Gentlemen:

The undersigned, Cardium Therapeutics, Inc., a Delaware corporation (the “Cardium”), together with its wholly-owned subsidiaries InnerCool Therapies, Inc. and Tissue Repair Company (collectively, the “Subsidiaries” and together with Cardium, the “Borrowers”) desire to offer for sale (the “Offering”) to certain “accredited investors” (each, an “Investor” and, collectively, the “Investors”) through Empire Asset Management Company (“Empire” or the “Placement Agent”) a minimum of $5,000,000 of principal amount of Senior Secured Promissory Notes (the “Minimum Amount”) and up to a maximum of $6,000,000 of principal amount of Senior Secured Promissory Notes (the “Maximum Amount”). Each Senior Secured Promissory Note is sometimes referred to as a “Note” and collectively as the “Notes”). In connection with its investment, Cardium will issue to the Investors warrants to purchase shares of its common stock, par value $0.0001 per share (the “Common Stock”) equal to Three Hundred Percent (300%) of the Principal Amount of Notes purchased divided by the initial exercise price of $2.00 per share (each, a “Warrant” and collectively, the “Warrants”), subject to adjustment as further described in the Warrants. The Notes and Warrants are hereinafter collectively referred to as the “Securities.”

The offering of the Securities will be made by the Borrowers pursuant to that certain Note and Warrant Purchase Agreement, inclusive of all exhibits and schedules thereto, and all amendments, supplements and appendices thereto (the “Transaction Documents/Offering Materials”). Unless otherwise defined, each term used in this Agreement will have the same meaning as set forth in the Note and Warrant Purchase Agreement.

1. Agreement to Act as Placement Agent. The Borrowers hereby appoint Empire to act as their exclusive placement agent in connection with the Offering. Empire hereby agrees, as agent of the Borrowers, to solicit offers to purchase the Securities on a “reasonable efforts” basis. The Offering will commence on the date hereof and will continue until November 28, 2008, unless extended by the Borrowers and the Placement

Empire Asset Management Company

October 24, 2008

Page 2 of 14

Agent until December 31, 2008 or terminated earlier as provided herein (the “Offering Period”). The date on which the Offering shall terminate shall be referred to as the “Termination Date.” Prior to the Termination Date, the Borrowers shall not, without the prior written consent of the Placement Agent, solicit or accept offers to purchase the Securities otherwise than through the Placement Agent in accordance herewith.

2. Representations and Warranties of the Borrowers. Each Borrower represents and warrants to the Placement Agent as follows:

(a) With respect to actions taken by any Borrower, the Securities will be offered and sold pursuant to the registration exemption provided by Regulation D (“Regulation D”) as promulgated under Section 4(2) of the Securities Act of 1933, as amended (the “Act”) and Section 4(2) and/or Section 4(6) of the Act as a transaction not involving a public offering and the requirements of any other applicable state securities laws and the respective rules and regulations thereunder in those jurisdictions in which the Placement Agent notifies Cardium that the Securities are being offered for sale. None of the Borrowers have taken nor will it take any action which conflicts with the conditions and requirements of, or which would make unavailable with respect to the Offering, the exemption(s) from registration available pursuant to Regulation D or Section 4(2) and/or Section 4(6) of the Act, and knows of no reason why any such exemption would be otherwise unavailable to it. No Borrower has been subject to any order, judgment or decree of any court of competent jurisdiction temporarily, preliminarily or permanently enjoining it for failing to comply with Section 503 of Regulation D.

(b) None of the statements, documents, certificates or other items prepared or supplied by the Borrowers with respect to the transactions contemplated hereby contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements contained therein not misleading in light of the circumstances in which they were made. Through the Transaction Documents/Offering Materials, the Borrowers have disclosed to potential investors all facts of which the Borrowers is aware which materially and adversely affects or could reasonably be expected to materially and adversely affect the business prospects, financial condition, operations, property or affairs of the Borrowers taken as a whole.

(c) Except as set forth in the Transaction Documents/Offering Materials, the Borrowers is not obligated to pay, and has not obligated the Placement Agent to pay, a finder’s or origination fee in connection with the Offering to anyone other than the Placement Agent and hereby agrees to indemnify the Placement Agent from any such claim made by any other person. The Borrowers have not offered for sale or solicited offers to purchase the Securities except for negotiations with the Placement Agent. No other person has any right to participate in any offer, sale or distribution of the Borrowers’s securities to which the Placement Agent’s rights, described herein, shall apply.

(d) Immediately prior to the Closing, the Agent’s Warrants (as defined in Section 3(e) hereof) will have been duly authorized. No holder of any of the Agent’s Warrants will be subject to personal liability solely by reason of being such a holder. None

Empire Asset Management Company

October 24, 2008

Page 3 of 14

of the Agent’s Warrants are subject to preemptive or similar rights of any stockholder or security holder of Cardium or an adjustment under the antidilution or exercise rights of any holders of any outstanding shares of capital stock, options, warrants or other rights to acquire any securities of Cardium. Immediately prior to the Closing, a sufficient number of authorized but unissued shares of Cardium’s Common Stock will have been reserved for issuance upon the exercise of the Agent’s Warrants.

(e) The Borrowers have all requisite corporate power and authority to (i) enter into and perform its obligations under this Agreement and (ii) issue, sell and deliver the Securities and the Agent’s Warrants. This Agreement has been duly authorized, executed and delivered and constitutes valid and binding obligations of the Borrowers, enforceable against the Borrowers in accordance with its terms (i) except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect related to laws affecting creditors’ rights generally, including the effect of statutory and other laws regarding fraudulent conveyances and preferential transfers, and except that no representation is made herein regarding the enforceability of the Borrowers’ obligations to provide indemnification and contribution remedies under the securities laws and (ii) subject to the limitations imposed by general equitable principles (regardless of whether such enforceability is considered in a proceeding at law or in equity).

(f) For the benefit of the Placement Agent, the Borrowers hereby incorporate by reference all of their representations and warranties as set forth in Section 4 of the Note and Warrant Purchase Agreement with the same force and effect as if specifically set forth herein.

3. Closing; Fees.

(a) Closing. Each prospective purchaser of Securities will be required to complete and execute one original of the Note and Warrant Purchase Agreement and the Investor Questionnaire in the forms provided to investors. All funds for subscriptions received from the Offering will be promptly forwarded by the Placement Agent, if received by it, to and deposited into the escrow account (the “Escrow Account”) established for such purpose with Signature Bank, a New York State chartered bank, 261 Madison Avenue, New York NY 10016 (the “Escrow Agent”). All such funds for purchase of Securities will be held in the Escrow Account pursuant to the terms of the Escrow Agreement among Cardium, the Placement Agent and the Escrow Agent. The Borrowers will either accept or reject subscriptions for the purchase of Securities in a timely fashion and at each closing of the purchase and sale of the Securities (each, a “Closing”) will countersign the Transaction Documents and provide duplicate copies of such Transaction Documents (originals in the case of the Notes and Warrants) to the Placement Agent for distribution to the subscribers. If the Borrowers and Placement Agent has received and accepted subscriptions for the Minimum Amount prior to the Termination Date and is satisfied that the funds for such Securities have been collected and all of the conditions set forth elsewhere in this Agreement and in the Note and Warrant Purchase Agreement are

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fulfilled, a Closing shall be held promptly with respect to the Securities sold. Thereafter, the remaining Securities will continue to be offered and sold until the Termination Date. Additional Closings may from time to time be conducted at times mutually agreeable with respect to additional Securities sold. The final Closing (the “Final Closing”) shall occur within ten (10) days from the earlier of the Termination Date or the Borrowers’ acceptance of subscriptions for all Securities offered. Delivery of payment for the accepted subscriptions for Securities from the funds received in respect of such sales will be made at each Closing at such place as may be mutually agreed upon between Cardium and the Placement Agent against delivery of the Securities by the Borrowers. If subscriptions for the Minimum Amount have not been received and accepted by the Borrowers on or before the Termination Date, the Offering may be terminated by the Placement Agent and the Borrowers and no Securities will be sold, and the Escrow Agent will, at the request of the Placement Agent and Cardium, cause all monies received from purchasers for the Securities to be promptly returned to such purchasers without interest, penalty, expense or deduction.

(b) Agents Fee. Cardium will pay a cash placement fee (the “Agent’s Fee”) to the Placement Agent at each Closing equal to five percent (5%) of the aggregate gross proceeds from the sale of all Securities sold in the Offering. Notwithstanding the foregoing, no Agent’s Fee will be paid on $845,000 of funds either (i) previously advanced to the Company or (ii) in the form of salary deferrals, which certain officers have agreed to forego in consideration of Note and Warrant issuances pursuant to the Note and Warrant Purchase Agreement.

(c) Agent’s Warrants. As additional compensation hereunder, at each Closing, Cardium will issue to the Placement Agent or its designees, warrants (the “Agent’s Warrants”) to purchase such number of shares of Common Stock equal to five percent (5%) of the shares of Common Stock initially issuable upon exercise of the Warrants issued at such Closing. Notwithstanding the foregoing, no Agent’s Warrants will be issued on $845,000 of funds either (i) previously advanced to the Company or (ii) in the form of salary deferrals, which certain officers have agreed to forego in consideration of Note and Warrant issuances pursuant to the Note and Warrant Purchase Agreement. The Agent’s Warrants shall have an exercise price equal to the exercise price contained in the Warrants and shall contain the same provisions (including adjustment provisions) as those contained in the Warrants. At the Placement Agent’s election, Cardium may issue the Agent’s Warrants all at once at the Final Closing. For the benefit of the Placement Agent, Cardium hereby incorporates by reference the registration rights provisions as set forth in Section 6 of the Purchase Agreement with the same force and effect as if specifically set forth in the Agent’s Warrants. The Agent’s Warrants and the Agent’s Fee are sometimes collectively referred to herein as the “Agent’s Compensation.”

(d) Expenses. The Borrowers shall bear all of their respective expenses in connection with the Offering as further described in section 4(a) below. Whether or not the Offering is successfully completed for any reason, Empire will be entitled, upon presentation of a written accounting therefor in reasonable detail, to prompt reimbursement

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of its actual, out-of-pocket expenses related to the Offering, including but not limited to fees and expenses of Empire’s legal counsel, travel expenses, and due diligence related expenditures (the “Agent Expense Reimbursement”); provided, however, that any travel expenses over five hundred dollars ($500) shall be pre-approved by Cardium prior to being incurred. The provisions of this paragraph shall survive the Final Closing and any termination of the Offering.

(e) EI Investors Tail. Cardium shall also pay and issue to the Placement Agent the Agent’s Compensation calculated according to the percentages set forth in Sections 3(b) and (c) of this Agreement, if any person or entity to whom the Placement Agent has introduced (directly or indirectly) to Cardium during the term of this Agreement (“EI Investors”) makes a private investment in Cardium at any time prior to the date that is twelve (12) months after the termination or expiration of this Agreement regardless of whether such EI Investor purchased Securities in the Offering.

4. Covenants.

(a) Borrowers’ Expenses. Cardium shall pay all reasonable expenses incurred in connection with the preparation and printing of all necessary offering documents and instruments related to the Offering, the issuance of the Securities and will also pay Cardium’s own expenses for accounting fees, legal fees, escrow account fees and other costs involved with the Offering, including the printing costs, if any, of the Offering documentation. Cardium will provide at its own expense such quantities of the Transaction Documents/Offering Materials and other documents and instruments relating to the Offering as the Placement Agent may reasonably request. Further, as promptly as practicable after the Final Closing Date, Cardium shall prepare, at its own expense, no more than four “velobound volumes” relating to the Offering and will distribute such volumes to the individuals designated by counsel to the Placement Agent.

(b) Blue Sky. Cardium will qualify the Securities for sale under the securities laws of such jurisdictions as may be mutually agreed to by Cardium and the Placement Agent, and Cardium will make such applications and furnish information as may be required for such purposes, provided, that Cardium will not be required or obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take any action which would subject it to service of process in suits, other than those arising out of the offering or sale of the Securities.

Cardium or its counsel will provide counsel for the Placement Agent with copies of all correspondence or other documentation filed with or received from any jurisdiction where the Securities are to be registered or qualified or offered (including, without limitation, Form D filing with the SEC). In addition, upon receipt of notification by Cardium of the qualification, registration or exemption of the Securities by an applicable jurisdiction, Cardium will promptly notify counsel for the Placement Agent in writing of such action.

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In each jurisdiction where the Securities have been registered or qualified or are offered in an exempt transaction as provided above, Cardium will make and file such statements, documents, materials, and reports as are or may be required to be made or filed by Cardium by the laws of such jurisdiction.

Cardium will promptly provide to the Placement Agent for delivery to all offerees and investors and their representatives any additional information, documents and instruments which the Placement Agent or Cardium reasonably deem necessary to comply with the rules, regulations and judicial and administrative interpretations respecting compliance with such exemptions or qualifications and registrations in those states where the Securities are to be offered or sold.

Cardium shall place a legend on the certificates representing the Securities issued to Investors and the Agent’s Warrants stating that the securities evidenced thereby have not been registered under the Act or applicable state securities laws, setting forth or referring to the applicable restrictions on transferability and sale of such securities under the Act and applicable state laws.

(c) Amendments and Supplements. If, at any time prior to the Final Closing, any event shall occur which does or may materially affect the Borrowers (as a whole) or as a result of which it might become necessary to amend or supplement the Transaction Documents/Offering Materials so that the representations and warranties herein remain true, or in case it shall, in the opinion of the Placement Agent and its counsel or counsel to Cardium, be necessary to amend or supplement the Transaction Documents/Offering Materials to comply with Regulation D or any other applicable securities laws or regulations, Cardium will promptly notify the Placement Agent and shall prepare and furnish to the Placement Agent a reasonable number of copies of appropriate amendments and/or supplements in form and substance satisfactory to the Placement Agent and its counsel.

(d) Use of Proceeds. The net proceeds of the Offering will be used by Borrowers for working capital purposes only.

(e) Legal Opinion and Closing Certificates. There shall have been delivered to the Placement Agent and the Investors a signed opinion of Morrison & Foerster LLP, counsel to Borrowers (“Company Counsel”), dated as of each Closing Date, in form and substance reasonably satisfactory to counsel to the Placement Agent. In addition, the Placement Agent shall be entitled to receive copies of the closing certificates required to be delivered pursuant to Section 2.3 of the Note and Warrant Purchase Agreement.

(f) Financial Advisory Relationship. Reference is hereby made to section 5 of that certain placement agency agreement dated July 17, 2008 between the Placement Agent and the Company pursuant to which the Placement Agent was retained to act as the Company’s principal investment advisor and banking firm for the period through

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December 31, 2008. The foregoing terms shall be amended upon consummation of the initial Closing as follows. The Company hereby retains Empire to serve as its exclusive investment banking firm commencing upon consummation of the initial Closing through April 30, 2009. In such capacity, the Company agrees to consult with Empire with respect to all of its financing needs. The Company agrees not to initiate contact or otherwise consult directly or indirectly with third party sources of capital with respect to financing matters without first consulting with Empire and obtaining Empire’s written consent to proceed with such discussions. Empire’s services with respect to the foregoing may include the following: (i) identifying and developing a list of potential offerees, including institutional investors to be contacted by Empire in connection with soliciting interest in the financing transaction (“Offeree List”); (ii) contacting and seeking to elicit interest from one or more parties on the Offeree List to participate in the financing transaction; (iii) coordinating inquiries from potential offerees, and assisting in the preparation of additional documents and due diligence as may be requested by potential offerees; (iv) assisting in evaluating and negotiating the terms and conditions of any transaction and (v) assistance with respect to negotiating documents and facilitation in closing the financing transaction. The Company and Empire shall negotiate in good faith to determine a mutually acceptable level of compensation with respect to the applicable financing transaction.

5. Indemnification.

(a) Each of the Borrowers will jointly and severally (i) indemnify and hold harmless the Placement Agent, its sub-agents and their respective officers, directors, employees and each person, if any, who controls the Placement Agent within the meaning of the Act and such selected dealers (each an “Indemnitee”) against, and pay or reimburse each Indemnitee for, any and all losses, claims, damages, liabilities or expenses whatsoever (or actions or proceedings or investigations in respect thereof), joint or several (which will, for all purposes of this Agreement, include, but not be limited to, all reasonable costs of defense and investigation and all reasonable attorneys’ fees and disbursements, including appeals), to which any Indemnitee may become subject (x) under the Act or otherwise, in connection with the offer and sale of the Securities and (y) as a result of the breach of any representation, warranty or covenant made by the Borrowers herein, regardless of whether such losses, claims, damages, liabilities or expenses shall result from any claim of any Indemnitee or any third party; and (ii) reimburse each Indemnitee for any legal or other expenses reasonably incurred in connection with investigating or defending against any such loss, claim, action, damage or liability; provided, however, that the Borrowers will not be liable in any such case to the extent that any such claim, damage or liability results from (A) an untrue statement or alleged untrue statement of a material fact made in the Transaction Documents/Offering Materials or an omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, made solely in reliance upon and in conformity with written information furnished to Cardium by the Placement Agent specifically for use in the preparation thereof, or (B) any violations by the Placement Agent of any federal or state securities laws or rules and regulations thereunder or any self-regulatory organization that does is unrelated to any violation thereof by the Borrowers or any of their respective

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affiliates. In addition to the foregoing agreement to indemnify and reimburse, the Borrowers will jointly and severally indemnify and hold harmless each Indemnitee from and against any and all losses, claims, damages, liabilities or expenses whatsoever (or actions or proceedings or investigations in respect thereof), joint or several (which shall for all purposes of this Agreement, include, but not be limited to, all costs of defense and investigation and all reasonable attorneys’ fees, including appeals) to which any Indemnitee may become subject insofar as such costs, expenses, losses, claims, damages or liabilities arise out of or are based upon the claim of any person or entity that he or it is entitled to broker’s or finder’s fees from any Indemnitee in connection with the Offering. The foregoing indemnity agreements will be in addition to any liability which the Borrowers may otherwise have.

(b) The Placement Agent will indemnify and hold harmless each Borrower, its officers, directors, employees and each person, if any, who controls the Borrower within the meaning of the Act against, and pay or reimburse any such person for, any and all losses, claims, damages or liabilities or expenses whatsoever (or actions, proceedings or investigations in respect thereof) to which the Borrower or any such person may become subject under the Act or otherwise, whether such losses, claims, damages, liabilities or expenses shall result from any claim of the Borrower, any of its officers, directors, employees, agents, or any person who controls the Borrower within the meaning of the Act or any third party, but only to the extent that such losses, claims, damages or liabilities are based upon any untrue statement or alleged untrue statement of any material fact contained in the Transaction Documents/Offering Materials made in reliance upon and in conformity with information contained in the Transaction Documents/Offering Materials relating to the Placement Agent, or an omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in either case, if made or omitted in reliance upon and in conformity with written information furnished to Cardium by the Placement Agent, specifically for use in the preparation thereof. The Placement Agent will reimburse the Borrowers or any such person for any legal or other expenses reasonably incurred in connection with investigating or defending against any such loss, claim, damage, liability or action, proceeding or investigation to which such indemnity obligation applies. The foregoing indemnity agreements will be in addition to any liability which the Placement Agent may otherwise have.

(c) Promptly after receipt by an indemnified party under this Section 5 of notice of the commencement of any action, claim, proceeding or investigation (the “Action”), such indemnified party, if a claim in respect thereof is to be made against the indemnifying party under this Section 5, will notify the indemnifying party of the commencement thereof, but the omission to so notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party under this Section 5 except to the extent that the indemnifying party has been actually prejudiced by such omission. The indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with any other indemnifying party, to assume the defense thereof subject to the provisions herein stated, with counsel reasonably satisfactory to such indemnified party. The indemnified party will have the right to employ separate counsel in any such

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Action and to participate in the defense thereof, but the fees and expenses of such counsel will not be at the expense of the indemnifying party if the indemnifying party has assumed the defense of the Action with counsel reasonably satisfactory to the indemnified party, provided, however, that if the indemnified party shall be requested by the indemnifying party to participate in the defense thereof or shall have concluded in good faith and specifically notified the indemnifying party either that there may be specific defenses available to it which are different from or additional to those available to the indemnifying party or that such Action involves or could have a material adverse effect upon it with respect to matters beyond the scope of the indemnity agreements contained in this Agreement, then the counsel representing it, to the extent made necessary by such defenses, shall have the right to direct such defenses of such Action on its behalf and in such case the reasonable fees and expenses of such counsel in connection with any such participation or defenses shall be paid by the indemnifying party. No settlement of any Action against an indemnified party will be made without the consent of the indemnifying party and the indemnified party, which consent shall not be unreasonably withheld or delayed in light of all factors of importance to such party and no indemnifying party shall be liable to indemnify any person for any settlement of any such claim effected without such indemnifying party’s consent.

6. Contribution. To provide for just and equitable contribution, if (i) an indemnified party makes a claim for indemnification pursuant to Section 5 hereof and it is finally determined, by a judgment, order or decree not subject to further appeal that such claims for indemnification may not be enforced, even though this Agreement expressly provides for indemnification in such case; or (ii) any indemnified or indemnifying party seeks contribution under the Act, the Securities Exchange Act of 1934, as amended (the “1934 Act”) or otherwise, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Borrowers on the one hand and the Placement Agent on the other in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or expenses (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Borrowers on the one hand and the Placement Agent on the other shall be deemed to be in the same proportion as the total net proceeds from the Offering (before deducting expenses) received by the Borrowers bear to the total commissions and fees actually received by the Placement Agent. The relative fault, in the case of an untrue statement, alleged untrue statement, omission or alleged omission will be determined by, among other things, whether such statement, alleged statement, omission or alleged omission relates to information supplied by the Borrowers or by the Placement Agent, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement, alleged statement, omission or alleged omission. The Borrowers and the Placement Agent agree that it would be unjust and inequitable if the respective obligations of the Borrowers and the Placement Agent for contribution were determined by pro rata allocation of the aggregate losses, liabilities, claims, damages and expenses or by any other method or allocation that does not reflect the equitable considerations referred to in this Section 6. No person guilty of a fraudulent misrepresentation (within the meaning of

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Section 11(f) of the Act) will be entitled to contribution from any person who is not guilty of such fraudulent misrepresentation. For purposes of this Section 6, each person, if any, who controls the Placement Agent within the meaning of the Act will have the same rights to contribution as the Placement Agent, and each person, if any, who controls the Borrowers within the meaning of the Act will have the same rights to contribution as the Borrowers, subject in each case to the provisions of this Section 6. Anything in this Section 6 to the contrary notwithstanding, no party will be liable for contribution with respect to the settlement of any claim or action effected without its written consent. This Section 6 is intended to supersede, to the extent permitted by law, any right to contribution under the Act, the 1934 Act or otherwise available.

7. Due Diligence and Company Cooperation. The Borrowers shall make members of management and other employees, advisors and agents available to Empire as Empire shall reasonably request. The Borrowers shall cooperate with the Placement Agent in connection with, and shall make available to the Placement Agent, historic, current and prospective information concerning the business, assets, prospects, operations and financial condition of the Borrowers and such documents and other information as the Placement Agent shall reasonably request in connection with the services to be performed by it under this Agreement. The Borrowers recognize and confirm that the Placement Agent will use and rely, without investigation as to accuracy and completeness, on the documents and information (written and oral) provided by the Borrowers and on information available from generally recognized public sources in performing the services contemplated by this Agreement and that the Placement Agent does not assume nor have responsibility for the accuracy or completeness of such documents or information. Further, the Placement Agent does not assume any obligation to make any solvency determination or to conduct any appraisal of assets or liabilities of the Borrowers.

8. Securities Law Compliance. Each of the Borrowers and the Placement Agent agrees to conduct the Offering in a manner intended (a) to qualify as a private placement of the Securities in any jurisdiction in which the Securities are offered and (b) to comply with the requirements of Rule 506 of Regulation D under the Act. Assuming the accuracy of the representations and warranties given to the Borrowers by each investor to the extent relevant for such determination, the Offering will be exempt from the registration requirements of the Act. In connection with offers made in the U.S. pursuant to Regulation D, the Borrowers and the Placement Agent agree (i) to limit offers to sell, and solicitations of offers to buy, the Securities to persons reasonably believed by it to be “accredited investors” within the meaning of Rule 501(a) under the Act, and (ii) not to engage in any form of general solicitation or general advertising in connection with the Offering within the meaning of Rule 502 under the Act.

9. Termination. The Offering may be terminated by the Placement Agent at any time prior to the expiration of the Offering Period as contemplated in Section 1 hereof (the “Expiration Date”) in the event that (a) any of the representations or warranties of the Borrowers contained herein shall prove to have been false or misleading in any material respect when made or deemed made or (b) the Borrowers shall have failed to perform any

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of its material obligations hereunder. This Offering may be terminated by Cardium (on behalf of the Borrowers) at any time prior to the Expiration Date in the event that the Placement Agent shall have failed to perform any of its material obligations hereunder. In the event of any such termination under this Section 7, the Placement Agent shall be entitled to receive, in addition to other rights and remedies it may have hereunder, at law or otherwise, an amount equal to the sum of: (X) all Agent’s Fees earned through the Expiration Date, (Y) any accountable Agent’s Expense Reimbursement through the Expiration Date; and (Z) all amounts which may become payable in respect of EI Investors pursuant to Section 3(e) hereof.

10. Miscellaneous.

(a) Survival. Any termination of the Offering without consummation thereof, or any termination of this Agreement by Cardium or the Placement Agent, shall be without obligation on the part of any party except that the provisions of Sections 3(d), 3(e), 4(a), 5, 6 and 10 shall survive such termination.

(b) Representations, Warranties, Indemnities and Covenants to Survive Delivery. The representations, warranties, indemnities, agreements, covenants and other statements of the Borrowers contained herein shall survive the Final Closing, if any.

(c) No Other Beneficiaries. This Agreement is intended for the sole and exclusive benefit of the parties hereto and their respective successors, controlling persons and permitted assigns, and no other person, firm or corporation shall have any third party beneficiary or other rights hereunder.

(d) ARBITRATION, CHOICE OF LAW; COSTS. THE PARTIES HERETO AGREE TO SUBMIT ALL CONTROVERSIES TO ARBITRATION IN ACCORDANCE WITH THE PROVISIONS SET FORTH BELOW AND UNDERSTAND AND AGREE THAT (A) ARBITRATION IS FINAL AND BINDING ON THE PARTIES, (B) THE PARTIES ARE WAIVING THEIR RIGHTS TO SEEK REMEDIES IN COURT, INCLUDING THE RIGHT TO A JURY TRIAL, (C) PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED AND DIFFERENT FROM COURT PROCEEDINGS, (D) THE ARBITRATOR’S AWARD IS NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL REASONING AND ANY PARTY’S RIGHT TO APPEAL OR TO SEEK MODIFICATION OF RULINGS BY ARBITRATORS IS STRICTLY LIMITED, (E) THE PANEL OF FINANCIAL INDUSTRY REGULATORY AUTHORITY (“FINRA”) ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF ARBITRATORS WHO WERE OR ARE AFFILIATED WITH THE SECURITIES INDUSTRY, AND (F) ALL CONTROVERSIES WHICH MAY ARISE BETWEEN THE PARTIES CONCERNING THIS AGREEMENT SHALL BE DETERMINED BY ARBITRATION PURSUANT TO THE RULES THEN PERTAINING TO FINRA IN THE CITY OF NEW YORK, STATE OF NEW YORK. JUDGMENT ON ANY AWARD OF ANY SUCH ARBITRATION MAY BE

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ENTERED IN THE SUPREME COURT OF THE STATE OF NEW YORK OR IN ANY OTHER COURT HAVING JURISDICTION OVER THE PERSON OR PERSONS AGAINST WHOM SUCH AWARD IS RENDERED. THE PARTIES AGREE THAT THE DETERMINATION OF THE ARBITRATORS SHALL BE BINDING AND CONCLUSIVE UPON THEM. ANY NOTICE OF SUCH ARBITRATION OR FOR THE CONFIRMATION OF ANY AWARD IN ANY ARBITRATION SHALL BE SUFFICIENT IF GIVEN IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT. THE PREVAILING PARTY, AS DETERMINED BY SUCH ARBITRATORS IN AN ARBITRATION PROCEEDING SHALL BE ENTITLED TO COLLECT ANY COSTS, DISBURSEMENTS AND REASONABLE ATTORNEY’S FEES FROM THE OTHER PARTY.

(e) Notices. All notices, requests, demands and other communications which are required or may be given hereunder shall be in writing and shall be deemed to have been duly given (i) when delivered personally, receipt acknowledged, (ii) five (5) days after being sent by registered or certified mail, return receipt requested, postage prepaid or (iii) one (1) business day after being sent via a reputable nationwide overnight courier service guaranteeing next business day delivery. All notices shall be made to the parties at the addresses designated above or at such other or different addresses which a party may subsequently provide with notice thereof, and to their respective legal counsel, as follows:

If to Empire, to:

Empire Asset Management Company

2 Rector Street, 15th Floor,

New York, NY 10006

Attn: Gregg Zeoli

Fax: (212) 417-8229

With a copy to:

Littman Krooks LLP

655 Third Avenue, 20^th Floor

New York, NY 10017

Attn: Steven D. Uslaner, Esq.

Fax: (212) 490-2990

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or to such other person or address as Empire shall furnish to the Borrowers in writing.

If to the Borrowers, to:

Cardium Therapeutics, Inc.

12255 El Camino Real, Suite 250

San Diego, California 92130

Attn: Tyler Dylan, Chief Business Officer

Fax: (858) 436-1011

with a copy to:

Morrison & Foerster LLP

12531 High Bluff Drive

San Diego, California 92130

Attn: Nate Jensen, Esq.

Fax: (858) 523-2848

or to such other person or address as Cardium shall furnish to Empire in writing.

(f) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, and all of which taken together shall constitute one and the same agreement (and all signatures need not appear on anyone counterpart). In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof. This Agreement shall become effective when one or more counterparts has been signed and delivered by each of the parties hereto.

(g) Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof and supersede all prior and contemporaneous agreements, understandings, documents, negotiations and discussions, whether oral or written, of the parties hereto pertaining to the subject matter hereof.

[The remainder of this page has been intentionally left blank]

[Signature page follows]

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If you find the foregoing is in accordance with our understanding, kindly sign and return to us a counterpart hereof, whereupon this instrument along with all counterparts will become a binding agreement between us.

Dated: October 24, 2008

Very truly yours,
CARDIUM THERAPEUTICS, INC.
By:	/s/ Tyler Dylan
	Tyler Dylan
	Chief Business Officer

TISSUE REPAIR COMPANY
By:	/s/ Tyler Dylan
	Name: Tyler Dylan
	Title: Chief Business Officer

INNERCOOL THEREAPIES, INC.
By:	/s/ Tyler Dylan
	Name: Tyler Dylan
	Title: Chief Business Officer

ACCEPTED AND AGREED TO:
EMPIRE ASSET MANAGEMENT COMPANY
By:	/s/ Gregg Zeoli
	Gregg Zeoli
	President & CEO

EX-99.1

Exhibit 99.1

Press / Investor Contact:

Bonnie Ortega

Director, Investor/Public Relations

Cardium Therapeutics, Inc.

Tel: (858) 436-1018

Email: InvestorRelations@cardiumthx.com

CARDIUM REPORTS ON THIRD QUARTER 2008 FINANCIAL RESULTS

AND REVISED BUSINESS STRATEGIES FOR OPERATING UNITS

SAN DIEGO, CA – November 10, 2008 – Cardium Therapeutics (AMEX: CXM) today reported financial results and highlights for its third quarter ended September 30, 2008, and outlined revised business strategies for its three operating units: (1) InnerCool Therapies, (2) Tissue Repair Company, and (3) Cardium Biologics.

InnerCool Therapies, Inc.

The Company recently announced 510(k) clearance from the U.S. Food and Drug Administration (FDA) to market InnerCool’s new RapidBlue™ endovascular temperature modulation system. This new system automatically cools or warms patients, as necessary, to quickly and controllably achieve and then maintain a desired body temperature. The RapidBlue System provides rapid or gradual temperature control for all patient sizes and is powerful enough to quickly cool awake patients and may eliminate the need to use paralytic agents. During the quarter, the Company also announced CE mark approval and Underwriters Laboratories, Inc. (UL) certification for the RapidBlue which will allow InnerCool to begin marketing the RapidBlue System in Europe and many other countries that recognize these certifications.

InnerCool’s CoolBlue™ surface temperature modulation system, which includes a console and a disposable CoolBlue vest with upper thigh pads, is designed to provide a complementary tool for use in less acute patients or in clinical settings best suited to prolonged temperature management. The nurse-friendly and cost-effective CoolBlue System, launched in the U.S. in fourth quarter 2007, is also now available for sale in Europe and Australia through distributorship agreements.

Additionally, InnerCool is developing a new class of targeted organ-specific cooling applications, including the UroCool™ Targeted Tissue Cooling System, a pelvic cooling catheter system designed to induce localized cooling during surgery for prostate cancer. Researchers at the University of California, Irvine believe that therapeutic cooling during prostate surgery (which includes both traditional open surgical approaches and newer robotic-assisted techniques) can reduce tissue damage and inflammation and thereby provide a faster return of bladder control (continence) and possibly erectile function (potency). The specialized UroCool pelvic cooling catheter is being integrated with InnerCool’s current Celsius Control Console which has been marketed and sold since 2003 and a regulatory application for FDA 510(k) clearance of the UroCool^™ catheter is expected to be submitted in the first quarter of 2009.

InnerCool continues its sponsorship of a pilot study to evaluate the use of early and rapid cooling in heart attack patients, which is being co-sponsored and conducted by the interventional cardiology center at Lund University Hospital, Sweden. The ongoing clinical study, called RAPID MI-ICE (Rapid Intravascular Cooling in Myocardial Infarction as Adjunctive to Percutaneous Coronary Intervention), is expected to enroll approximately 20 patients who present within six hours of their heart attack and require angioplasty and stent procedures in order to restore blood flow to the heart. Preclinical and preliminary clinical data suggest that rapid patient cooling using intravenous cold saline in combination with endovascular hypothermia can be initiated without causing delay of reperfusion therapy and may have the potential to enable interventional cardiologists to dramatically reduce heart tissue damage following a heart attack. The Company expects to announce results of the RAPID MI-ICE clinical study in mid-2009.

Another co-sponsored study is the Intravascular Cooling in the Treatment of Stroke – Longer tPA window (ICTuS-L) study, which is a prospective, randomized, controlled, multi-center study, sponsored by the National Institute of Neurological Disorders and Stroke (NINDS). The study is evaluating the safety and feasibility of InnerCool’s endovascular temperature modulation therapy as an adjunctive treatment for acute ischemic stroke. The Company expects to announce results of this important safety study in 2009.

Cardium intends to advance InnerCool’s portfolio of therapeutic cooling and warming products into vertical partnering opportunities with established companies having existing sales and marketing organizations but with a continuing need for innovative, high-value content products. The Company believes this distribution strategy is more cost-effective than establishing InnerCool as a fully integrated manufacturing, sales and marketing organization. At the same time, as noted above, InnerCool will continue to develop new and innovative products and is one of the few companies in the industry that continues to initiate cost-effective, sponsor-supported research efforts to broaden the understanding of the potential benefits of therapeutic temperature modulation therapy for advanced injury and disease.

Tissue Repair Company

Based on the clinical development timetable and the status of the current Phase 2b clinical study, Tissue Repair Company’s product candidate, Excellarate™, which is a DNA-activated collagen gel for topical treatment formulated with an adenovector delivery carrier encoding human platelet-derived growth factor-BB (PDGF-BB), will be the central focus of Cardium’s near-term clinical development programs. Excellarate is initially being developed to be administered only once or twice for the potential treatment of non-healing diabetic foot ulcers, compared to other treatments that require daily applications for up to 20 weeks. The MATRIX Phase 2b clinical trial is evaluating the safety and efficacy of Excellarate for the potential treatment of non-healing diabetic foot ulcers and is expected to enroll up to approximately 210 patients at up to 30 U.S. sites. The Company expects to provide selected top-line data from the MATRIX study in the first quarter 2009.

Consistent with Cardium’s overall business strategy and concurrent with the conduct of the MATRIX clinical trial, the Company expects to pursue strategic discussions with respect to potential development, marketing and sales partnerships for Excellarate. With continued clinical advancement, Excellarate offers the potential to be commercially available in late 2011 or early 2012.

Cardium Biologics, Inc.

Cardium’s Generx™ product candidate (alferminogene tadenovec, Ad5FGF-4) is a DNA-based growth factor therapeutic being developed for potential use by interventional cardiologists as a one-time treatment to promote and stimulate the growth of collateral circulation in the hearts of patients with ischemic conditions such as recurrent angina. The current focus of Cardium’s

biologics program is to advance the Excellarate product candidate though its current Phase 2b MATRIX study. Following the near-term completion of enrollment in the MATRIX study, Cardium expects to be in a position to devote additional resources toward the Generx program, including a potentially reformulated composition that would allow the Generx study product to be stored under more convenient temperature conditions.

Cardium’s pre-clinical research at Emory University for its product candidate, Corgentin™ (Ad5IGF-1), is continuing with the support of an NIH Small Business Innovation Research (SBIR) grant, to further establish the therapeutic potential of Corgentin to preserve heart tissue and cardiac function following a heart attack (acute myocardial infarction). Corgentin is a DNA therapeutic based on the localized and sustained cardiac production of insulin-like growth factor-1 (IGF-1) following a one-time intracoronary administration in an acute care setting immediately after percutaneous coronary intervention in heart attack patients. Data from the pre-clinical study is expected to be announced in early 2009 and is designed to support the clinical potential of Corgentin. The long-term safety and efficacy of IGF-1 protein-based drugs that have already been approved by the FDA for the treatment of short stature children, are based on daily treatments for periods of a year or more. This data provides significant insights into the potential safety relating to a one-time DNA-based IGF-1 Corgentin treatment.

Commentary

“The recent FDA 510(k) clearance for our RapidBlue System, which we believe is the most powerful and easiest to use endovascular-based system in the world, represented a key milestone in completing Cardium’s turnaround and strategic reposition of the Company’s InnerCool investment,” stated Christopher J. Reinhard, Chairman and Chief Executive Officer of Cardium. “We are continuing to develop a portfolio of uniquely positioned medical device products based on our platform technology and expertise in the growing field of temperature modulation therapy. These new product opportunities, like our new UroCool Targeted Tissue Cooling System, are being developed for specific and defined vertical markets transactioned through strategic alignments, financings and other structured deals in keeping with our ongoing strategy to monetize InnerCool.”

Reinhard added, “During this difficult economic period, we believe we have established a balanced plan to move our businesses forward, with a principal focus on completion of near-term milestones including the MATRIX clinical study for Tissue Repair’s Excellarate candidate for non-healing diabetic wounds, and advancement of InnerCool’s portfolio of therapeutic hypothermia products, each of which represents substantial completion of our strategic development plans for these companies and provides potential partnering opportunities.”

Financial Report

Product revenue for third quarter 2008 was $585,000, an increase of 91 percent compared to $307,000 in the same period in 2007. Product revenue for the nine months ended September 30, 2008 totaled $1.5 million compared to $772,000 for the same period in 2007 representing a 92 percent increase. Total revenue for the third quarter of 2008 was $585,000, compared to $364,000 for the same quarter last year. For the nine months ended September 30, 2008, total revenue was $1.9 million compared to $903,000 for the same period in 2007. The increase in revenue was a result of an increase in InnerCool sales resulting from its expanded sales and marketing efforts. For the quarter ended September 30, 2008, the Company reported a net loss of $6.2 million, or $0.13 per share, compared to a net loss of $6.1 million, or $0.15 per share for third quarter 2007. Research and development costs totaled $2.9 million and selling, general and administrative expenses of $2.9 million, compared to $3.2 million and $2.9 million respectively for the same period last year. Non-cash charges relating to stock-based compensation, depreciation and

amortization for the third quarter of fiscal 2008 totaled $1,079,000, compared to $943,000 for the same period in 2007. Cash and cash equivalents as of September 30, 2008 were $127,000, compared to cash and cash equivalents of $4.1 million as of September 30, 2007. In July 2008, the Company completed a registered direct investment resulting in gross proceeds of approximately $3.34 million, before placement agent fees and offering expenses and excluding any future proceeds from the exercise of the warrants issued in the offering. In November 2008, the Company completed a secured debt financing resulting in gross proceeds of approximately $6.0 million, before placement agent fees and offering expenses and excluding any future proceeds from the exercise of the warrants issued in the financing.

About Cardium

Cardium Therapeutics, Inc. and its subsidiaries, InnerCool Therapies, Inc. and the Tissue Repair Company, are medical technology companies primarily focused on the development, manufacture and sale of innovative therapeutic products and devices for cardiovascular, ischemic and related indications.

Cardium’s InnerCool Therapies subsidiary is a San Diego-based medical technology company in the emerging field of temperature modulation therapy to rapidly and controllably cool the body in order to reduce cell death and damage following acute ischemic events such as cardiac arrest or stroke, and to potentially lessen or prevent associated injuries such as adverse neurological outcomes. For more information about Cardium’s InnerCool subsidiary and patient temperature modulation, including InnerCool’s new RapidBlue™ System, which just received FDA clearance, and its CoolBlue™ System, please visit www.innercool.com.

Cardium also has two biologic candidates in clinical development. Cardium’s Tissue Repair Company subsidiary (TRC) is focused on the development of growth factor therapeutics for the treatment of severe chronic diabetic wounds. TRC’s lead product candidate, Excellarate™, is a DNA-activated collagen gel for topical treatment formulated with an adenovector delivery carrier encoding human platelet-derived growth factor-BB (PDGF-BB). Excellarate™ is initially being developed to be administered once or twice for the potential treatment of non-healing diabetic foot ulcers. Other potential applications for TRC’s Gene Activated Matrix™ (GAM) technology include therapeutic angiogenesis (cardiovascular ischemia, peripheral arterial disease) and orthopedic products, including hard tissue (bone) and soft tissue (ligament, tendon, cartilage) repair. For more information about Cardium’s Tissue Repair Company subsidiary, please visit www.t-r-co.com.

Cardium’s Generx product candidate (alferminogene tadenovec, Ad5FGF-4) is a DNA-based growth factor therapeutic being developed for potential use by interventional cardiologists as a one-time treatment to promote and stimulate the growth of collateral circulation in the hearts of patients with ischemic conditions such as recurrent angina. For more information about Cardium Therapeutics and its businesses, products and therapeutic candidates, please visit www.cardiumthx.com or view its 2007 Annual Report at www.cardiumthx.com/flash/pdf/CardiumAR07_Book_FINAL.pdf.

Forward-Looking Statements

Except for statements of historical fact, the matters discussed in this press release are forward looking and reflect numerous assumptions and involve a variety of risks and uncertainties, many of which are beyond our control and may cause actual results to differ materially from stated expectations. For example, there can be no assurance that results or trends observed in one clinical study or procedure will be reproduced in subsequent studies or procedures, that human clinical trials can be conducted and completed in an efficient and successful manner, that FDA, CE Mark or other regulatory clearances or UL or other certifications, or partnering or other distribution

agreements or other commercialization efforts will be successful or will effectively accelerate the business or market, that product modifications or launches will be successful or that the resulting products will be favorably received in the marketplace, that our products or product candidates will prove to be sufficiently safe and effective, that necessary regulatory approvals will be obtained, that third parties on whom we depend will perform as anticipated, or that our products or product candidates will not be unfavorably compared to competitive products that may be regarded as safer, more effective, easier to use or less expensive. Actual results may also differ substantially from those described in or contemplated by this press release due to risks and uncertainties that exist in our operations and business environment, including, without limitation, risks and uncertainties that are inherent in the development of complex biologics and therapeutic hypothermia devices and in the conduct of human clinical trials, including the timing, costs and outcomes of such trials, our ability to obtain necessary funding, regulatory approvals and expected qualifications, our ability to successfully accelerate the commercialization of our therapeutic hypothermia devices and launch new devices within the timeframes contemplated, our dependence upon proprietary technology, our history of operating losses and accumulated deficits, our reliance on collaborative relationships and critical personnel, and current and future competition, as well as other risks described from time to time in filings we make with the Securities and Exchange Commission. We undertake no obligation to release publicly the results of any revisions to these forward-looking statements to reflect events or circumstances arising after the date hereof.

Copyright 2008 Cardium Therapeutics, Inc. All rights reserved.

For Terms of Use Privacy Policy, please visit www.cardiumthx.com.

Cardium Therapeutics™ and Generx™ are trademarks of Cardium Therapeutics, Inc.

Tissue Repair™, Gene Activated Matrix™, GAM™ and Excellarate™

are trademarks of Tissue Repair Company.

InnerCool Therapies^®, InnerCool^®, Celsius Control System^®, RapidBlue™, CoolBlue™. Accutrol^®, Temperature Control Element^® and TCE^® and UroCool ™ are trademarks of InnerCool Therapies, Inc.

Selected Consolidated Operational Results (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2008			2007			2008			2007
Statements of Operations Data:
Total Revenues	$	585,421		$	364,330		$	1,858,264		$	903,133
Cost of goods sold		(514,243	)		(318,934	)		(1,199,193	)		(823,676	)
Gross profit		71,178			45,396			659,071			79,457
Research and development		2,947,997			3,243,008			10,289,883			9,901,087
Selling, general and administrative		2,886,089			2,838,949			8,968,214			8,356,498
Amortization - Intangibles		197,414			178,156			592,242			592,242
Loss from operations		(5,960,322	)		(6,214,717	)		(19,191,268	)		(18,770,370	)
Interest, Net		(191,193	)		146,748			(328,837	)		461,371
Net loss		(6,151,515	)		(6,067,969	)		(19,520,105	)		(18,308,999	)
Net loss per common share – basic and diluted		(0.13	)		(0.15	)		(0.44	)		(0.47	)
Weighted average shares outstanding – basic and diluted		46,603,700			40,928,219			44,322,663			38,759,118

	September 30, 2008		December 31, 2007 (audited)
Selected Consolidated Balance Sheet Data:
Cash and cash equivalents	$	126,575	$	7,722,816
Accounts receivable, net		119,849		565,613
Inventory		1,818,021		1,037,164
Prepaid expenses and other current assets		414,933		522,067
Property and equipment, net		1,798,529		1,650,632
Patented technology and intangibles, net		4,174,088		4,766,330
Other long-term assets		600,041		661,067
Total assets		9,052,036		16,925,689
Total current liabilities		7,382,955		5,255,392
Long-term liabilities		192,840		3,241,992
Stockholder’s equity		1,476,241		8,428,305
Total liabilities and Stockholder’s equity		9,052,036		16,925,689

EX-99.2

Exhibit 99.2

Press / Investor Contact:

Bonnie Ortega

Director, Investor/Public Relations

Cardium Therapeutics, Inc.

Tel: (858) 436-1018

Email: InvestorRelations@cardiumthx.com

CARDIUM COMPLETES $6.0 MILLION FINANCING

SAN DIEGO, CA – November 10, 2008 – Cardium Therapeutics (AMEX: CXM) today announced the completion of a $6.0 million financing in the form of secured debt with accompanying warrants to purchase shares of common stock, replacing a prior debt financing that was concluded and paid off last quarter. Empire Asset Management Company acted as financial advisor and sole placement agent for the transaction and the Barone Group acted as lead investor. The material terms of the financing agreement are described in more detail in the Company’s Current Report on Form 8-K, to be filed with the Securities and Exchange Commission.

“This financing is designed to provide proceeds to help advance the company to two very important business milestones for Cardium,” stated Christopher J. Reinhard, Chairman and Chief Executive Officer. “These key events include completion of the MATRIX clinical study for Tissue Repair’s Excellarate candidate for non-healing diabetic wounds, and advancement of InnerCool’s portfolio of therapeutic hypothermia products into vertical partnering opportunities with companies having existing sales and marketing organizations but a continuing need for innovative high-value products.”

About Cardium

Cardium Therapeutics, Inc. and its subsidiaries, InnerCool Therapies, Inc. and the Tissue Repair Company, are medical technology companies primarily focused on the development, manufacture and sale of innovative therapeutic products and devices for cardiovascular, ischemic and related indications.

Cardium’s InnerCool Therapies subsidiary is a San Diego-based medical technology company in the emerging field of temperature modulation therapy to rapidly and controllably cool the body in order to reduce cell death and damage following acute ischemic events such as cardiac arrest or stroke, and to potentially lessen or prevent associated injuries such as adverse neurological outcomes. For more information about Cardium’s InnerCool subsidiary and patient temperature modulation, including InnerCool’s new RapidBlue™ System, which just received FDA clearance, and its CoolBlue™ System, please visit www.innercool.com.

Cardium also has two biologic candidates in clinical development. Cardium’s Tissue Repair Company subsidiary (TRC) is focused on the development of growth factor therapeutics for the treatment of severe chronic diabetic wounds. TRC’s lead product candidate, Excellarate™, is a DNA-activated collagen gel for topical treatment formulated with an adenovector delivery carrier

encoding human platelet-derived growth factor-BB (PDGF-BB). Excellarate™ is initially being developed to be administered once or twice for the potential treatment of non-healing diabetic foot ulcers. Other potential applications for TRC’s Gene Activated Matrix™ (GAM) technology include therapeutic angiogenesis (cardiovascular ischemia, peripheral arterial disease) and orthopedic products, including hard tissue (bone) and soft tissue (ligament, tendon, cartilage) repair. For more information about Cardium’s Tissue Repair Company subsidiary, please visit www.t-r-co.com.

Cardium’s Generx product candidate (alferminogene tadenovec, Ad5FGF-4) is a DNA-based growth factor therapeutic being developed for potential use by interventional cardiologists as a one-time treatment to promote and stimulate the growth of collateral circulation in the hearts of patients with ischemic conditions such as recurrent angina. For more information about Cardium Therapeutics and its businesses, products and therapeutic candidates, please visit www.cardiumthx.com or view its 2007 Annual Report at http://www.cardiumthx.com/flash/pdf/CardiumAR07_Book_FINAL.pdf.

Forward-Looking Statements

Except for statements of historical fact, the matters discussed in this press release are forward looking and reflect numerous assumptions and involve a variety of risks and uncertainties, many of which are beyond our control and may cause actual results to differ materially from stated expectations. For example, there can be no assurance that human clinical trials can be conducted and completed in an efficient and successful manner, that partnering opportunities can be successfully achieved and that such opportunities will effectively and efficiently advance commercialization of our products, that product modifications or launches will be successful or that the resulting products will be favorably received in the marketplace, that results or trends observed in one clinical study will be reproduced in subsequent studies, that our products or product candidates will prove to be sufficiently safe and effective, that necessary regulatory approvals will be obtained, or that our products or product candidates will not be unfavorably compared to competitive products that may be regarded as safer, more effective, easier to use or less expensive. Actual results may also differ substantially from those described in or contemplated by this press release due to risks and uncertainties that exist in our operations and business environment, including, without limitation, risks and uncertainties that are inherent in the development of complex biologics and therapeutic hypothermia devices and in the conduct of human clinical trials, including the timing, costs and outcomes of such trials, our ability to obtain necessary funding, regulatory approvals and expected qualifications, our dependence upon proprietary technology, our history of operating losses and accumulated deficits, our reliance on collaborative relationships and critical personnel, and current and future competition, as well as other risks described from time to time in filings we make with the Securities and Exchange Commission. We undertake no obligation to release publicly the results of any revisions to these forward-looking statements to reflect events or circumstances arising after the date hereof.

Copyright 2008 Cardium Therapeutics, Inc. All rights reserved.

For Terms of Use Privacy Policy, please visit www.cardiumthx.com.

Cardium Therapeutics™ and Generx™ are trademarks of Cardium Therapeutics, Inc.

Tissue Repair™, Gene Activated Matrix™, GAM™ and Excellarate™

are trademarks of Tissue Repair Company.

InnerCool Therapies^®, InnerCool^®, RapidBlue™, CoolBlue™. Accutrol^®, Temperature Control Element^® and TCE^® are trademarks of InnerCool Therapies, Inc.

EX-99.3

Exhibit 99.3

Press / Investor Contact:

Bonnie Ortega

Director, Investor/Public Relations

Cardium Therapeutics, Inc.

Tel: (858) 436-1018

Email: InvestorRelations@cardiumthx.com

CARDIUM’S INNERCOOL ANNOUNCES NEW TISSUE-SPECIFIC UROCOOL™ SYSTEM

FOR USE IN PROSTATE SURGERIES

New Data Suggest Potential Benefits of Targeted Tissue Cooling During Prostate Surgery

SAN DIEGO, CA – November 11, 2008 – Cardium Therapeutics (AMEX: CXM) and its operating unit InnerCool Therapies, Inc., today announced that it has developed a pelvic cooling catheter system called UroCool™, which is designed to induce localized cooling during surgery for prostate cancer (radical prostatectomy). The new technology is being applied in collaboration with renowned prostate surgeon, Thomas E. Ahlering, M.D., Professor and Vice Chair of the Department of Urology at the University of California, Irvine and is the subject of an exclusive licensing agreement with the University of California. A regulatory application for FDA 510(k) clearance of InnerCool’s UroCool^™ catheter is expected to be submitted in the first quarter of 2009.

Dr. Ahlering and his colleague Dr. David S. Finley are conducting clinical studies designed to demonstrate safety and confirm the potential benefits of localized cooling during robotic-assisted prostatectomy, which is now the most common surgical technique for prostate cancer. The UroCool™ catheter is designed to be placed within the rectal cavity adjacent to the prostate during surgery. UroCool is used in conjunction with InnerCool’s Celsius Control Console which circulates cold saline in a closed loop within the catheter to allow for localized cooling. Drs. Ahlering and Finley believe that therapeutic cooling during prostate surgery (which includes both traditional open surgical approaches and the newer robotic-assisted technique) can reduce tissue damage and inflammation and thereby provide a faster return of bladder control (continence) and possibly erectile function (potency). From a practical viewpoint, they liken this concept to icing a severely sprained ankle in order to minimize tissue injury and shorten the recovery process.

InnerCool’s UroCool^™ catheter is being incorporated into ongoing clinical studies at the University of California, Irvine, which are designed to provide additional information regarding the safety and usefulness of cooling during robotic-assisted prostate surgery. Dr. Ahlering, who is conducting the clinical studies, is an expert in the field of prostate surgery, particularly in the rapidly expanding use of robotic-assisted prostatectomy systems such as the da Vinci^® system, which is a product of Intuitive Surgical, Inc.

“Our findings using localized cooling techniques during robotic-assisted radical prostatectomy surgery indicate that cooling resulted in a statistically significant faster recovery of urinary continence following surgery,” noted Dr. Ahlering. “In addition, based on my surgical experience with therapeutic cooling, I believe that our ongoing studies may offer the potential to

demonstrate improved post-operative erectile function for patients as well.” Drs. Ahlering and Finley’s clinical data on hypothermic radical prostatectomy was recently presented with an award at the European Robotic Urologic Symposium in Prague and their findings are now being published as a Rapid Review in the medical journal Urology (in press). Their data will also be presented at a number of U.S. and international urological meetings over the remainder of 2008 and early 2009.

“InnerCool has now developed a specialized tissue-specific cooling catheter that is being developed to work with InnerCool’s current Celsius Control Console which has been marketed and sold since 2003,” stated Christopher J. Reinhard, Chairman and Chief Executive Officer of Cardium Therapeutics and InnerCool Therapies. “The new UroCool system may provide an important opportunity to potentially enhance patient recovery of urinary control and erectile function following prostate surgery. These side effects of prostate surgery are serious, profound and frequent, and all too often patients defer proper surgical treatment because of these quality-of-life issues, underscoring the importance of new therapeutic approaches.”

“We are continuing to develop a portfolio of uniquely positioned medical devices employing our platform technology and expertise in the growing field of temperature modulation therapy,” added Reinhard. “These new products, like UroCool, are being developed for specific and defined vertical market opportunities for companies having established sales and marketing organizations, and we plan to structure these vertical market opportunities through strategic alignments, financings and other transactions in keeping with our ongoing strategy to leverage and monetize Cardium’s InnerCool investment.”

Prostate Cancer

According to the American Cancer Society, prostate cancer is the most common cancer in American men other than skin cancers. One in six men will develop prostate cancer in their lifetime, and in 2007 over 200,000 men were newly diagnosed with the disease. Fortunately, prostate cancer grows relatively slowly and 7 out of 10 men are diagnosed in the early stages of the disease before it has spread to other parts of their body, thus leading to significantly increased survival with proper treatment. While the underlying cause for the development of prostate cancer is still unknown, factors such as age, race, and lifestyle affect the probability of developing the disease. Of these, age is the strongest risk factor, and as life spans continue to increase, more men are surviving to an age at which prostate cancer is more prevalent. The chances of developing prostate cancer increases quickly after reaching age 50, and about 2 out of every 3 prostate cancers are found in men over the age of 65. The three treatment approaches to prostate cancer are ‘watchful waiting,’ radiation, or surgery, depending on patient age, and how advanced the disease is.

Radical Prostatectomy

Radical prostatectomy is an effective means of eradicating prostate cancer by surgically removing the entire prostate and surrounding tissue. It is a complex procedure because the prostate gland is located deep inside the pelvis and is intimately associated with delicate nerves that control erections and bladder control. Historically, radical prostatectomy has been performed as an open procedure requiring surgical precision to preserve these important functions. Robot-assisted laparoscopic radical prostatectomy emerged with the introduction of systems such as the da Vinci^® Surgical System (a product of Intuitive Surgical, Inc.), which is minimally invasive and enables a high degree of precision. Since 2000, over 900 of such systems have been installed in hospitals worldwide, of which more than 700 are located in North America. Estimates show that more than 90,000 radical prostatectomies were performed in 2007 in the United States. Currently it is estimated that more than 70% of radical prostatectomies are performed robotically.

Post-Operative Incontinence and Erectile Dysfunction

Urinary incontinence and erectile dysfunction are very common side effects following open or robotic radical prostatectomy. Temporary loss of bladder control occurs in most men. While most eventually regain full control, this can take up to a year. This extended lack of urinary control is the most bothersome patient-reported side effect of prostate surgery. In addition to incontinence, many men experience some degree of erectile dysfunction following radical prostatectomy, depending on a number of factors including how potent the patient was prior to surgery, patient age, tumor stage, and how the neurovascular bundles were preserved during surgery. This side-effect is a frustrating and inconvenient experience. In many cases, the recovery of sexual function can take up to 24 months.

Additional Targeted Tissue Cooling

In addition to use in radical prostatectomies, targeted tissue cooling as developed for the UroCool catheter has a number of potential future clinical applications for tissue cooling in the pelvic region. These include other urological procedures such as radical cystectomy, a common procedure used to treat bladder cancer that has spread into the bladder wall. There are also a number of gynecological and colorectal cooling opportunities, including radical hysterectomy, myomectomy for removing fibroids from the uterus, and various types of transvaginal surgery.

About Cardium

Cardium Therapeutics, Inc. and its subsidiaries, InnerCool Therapies, Inc. and the Tissue Repair Company, are medical technology companies primarily focused on the development, manufacture and sale of innovative therapeutic products and devices for cardiovascular, ischemic and related indications.

Cardium’s InnerCool Therapies subsidiary is a San Diego-based medical technology company in the emerging field of temperature modulation therapy to rapidly and controllably cool the body in order to reduce cell death and damage following acute ischemic events such as cardiac arrest or stroke, and to potentially lessen or prevent associated injuries such as adverse neurological outcomes. For more information about Cardium’s InnerCool subsidiary and patient temperature modulation, including InnerCool’s new RapidBlue™ System, which just received FDA clearance, and its CoolBlue™ System, please visit www.innercool.com.

Cardium also has two biologic candidates in clinical development. Cardium’s Tissue Repair Company subsidiary (TRC) is focused on the development of growth factor therapeutics for the treatment of severe chronic diabetic wounds. TRC’s lead product candidate, Excellarate™, is a DNA-activated collagen gel for topical treatment formulated with an adenovector delivery carrier encoding human platelet-derived growth factor-BB (PDGF-BB). Excellarate™ is initially being developed to be administered once or twice for the potential treatment of non-healing diabetic foot ulcers. Other potential applications for TRC’s Gene Activated Matrix™ (GAM) technology include therapeutic angiogenesis (cardiovascular ischemia, peripheral arterial disease) and orthopedic products, including hard tissue (bone) and soft tissue (ligament, tendon, cartilage) repair. For more information about Cardium’s Tissue Repair Company subsidiary, please visit www.t-r-co.com.

Cardium’s Generx product candidate (alferminogene tadenovec, Ad5FGF-4) is a DNA-based growth factor therapeutic being developed for potential use by interventional cardiologists as a one-time treatment to promote and stimulate the growth of collateral circulation in the hearts of patients with ischemic conditions such as recurrent angina. For more information about Cardium Therapeutics and its businesses, products and therapeutic candidates, please visit www.cardiumthx.com or view its 2007 Annual Report at http://www.cardiumthx.com/flash/pdf/CardiumAR07_Book_FINAL.pdf.

Forward-Looking Statements

Except for statements of historical fact, the matters discussed in this press release are forward looking and reflect numerous assumptions and involve a variety of risks and uncertainties, many of which are beyond our control and may cause actual results to differ materially from stated expectations. For example, there can be no assurance that results observed in one study or using one type of product or procedure will be replicated in subsequent studies or in studies using newly-developed products or procedures, that planned product development efforts and clinical studies can be performed in an efficient and effective manner, that regulatory approvals can be obtained in a timely manner or at all, that partnering, distribution or other commercialization efforts can be achieved and if so that they will effectively accelerate InnerCool’s patient temperature modulation business or market, that product modifications or launches will be successful or that the resulting products will be favorably received in the marketplace, that our products or proposed products will prove to be sufficiently safe and effective, that our products or product candidates will not be unfavorably compared to competitive products that may be regarded as safer, more effective, easier to use or less expensive, that results or trends observed in one clinical study will be reproduced in subsequent studies, that third parties on whom we depend will behave as anticipated, or that necessary regulatory approvals will be obtained. Actual results may also differ substantially from those described in or contemplated by this press release due to risks and uncertainties that exist in our operations and business environment, including, without limitation, risks and uncertainties that are inherent in the development, testing and marketing of therapeutic hypothermia devices and the conduct of human clinical trials, including the timing, costs and outcomes of such trials, whether our efforts to launch new devices and systems and expand our markets will be successful or completed within the time frames contemplated, our dependence upon proprietary technology, our ability to obtain necessary funding, regulatory approvals and qualifications, our history of operating losses and accumulated deficits, our reliance on collaborative relationships and critical personnel, and current and future competition, as well as other risks described from time to time in filings we make with the Securities and Exchange Commission. We undertake no obligation to release publicly the results of any revisions to these forward-looking statements to reflect events or circumstances arising after the date hereof.

Copyright 2008 Cardium Therapeutics, Inc. All rights reserved.

For Terms of Use Privacy Policy, please visit www.cardiumthx.com.

Cardium Therapeutics™ and Generx™ are trademarks of Cardium Therapeutics, Inc.

Tissue Repair™, Gene Activated Matrix™, GAM™ and Excellarate™

are trademarks of Tissue Repair Company.

InnerCool Therapies^®, InnerCool^®, Celsius Control System^®, RapidBlue™, CoolBlue™. Accutrol^®,

Temperature Control Element^® and TCE^® and UroCool™ are trademarks of InnerCool Therapies, Inc.

(other trademarks belong to their respective owners)