Document:

Unassociated Document

    

      

       

      Exhibit
        10.7

       

      AMENDMENT
        AND WAIVER TO CREDIT AGREEMENT

       

      Amendment
        and Waiver (this “Amendment”) entered into as of August 11, 2005 between
        FIND/SVP, INC., a New York corporation, (the “Borrower”), and BANK OF AMERICA,
        N.A., successor by merger to Fleet National Bank, a national banking association
        organized and existing under the laws of the United States of America (the
        “Bank”).

       

      WHEREAS,
        the Borrower and the Bank are parties to a Credit Agreement dated as of March
        31, 2005 (the “Agreement”);

       

      WHEREAS,
        the Borrower has defaulted under provisions of the Agreement which require
        that
        the Borrower (i) maintain minimum Consolidated EBITDA (as defined in the
        Agreement), (ii) maintain maximum Funded Debt to Consolidated EBITDA Ratio
        (as
        defined in the agreement), and (iii) not permit there to be a net loss on
        a
        consolidated basis (the “Covenant Defaults”); and

       

      WHEREAS,
        the Borrower has requested that the Bank waive, and the Bank has agreed to
        waive, the Covenant Defaults, provided that the Agreement is amended as set
        forth herein.

       

      NOW,
        THEREFORE, the parties hereto hereby agree as follows:

       

      1.  All
        capitalized terms used herein, unless otherwise defined herein, have the
        same
        meanings provided therefor in the Agreement.

       

      2.  The
        Agreement is amended: as follows:

       

      (a)  Section
        2.01(a) of the Agreement shall be amended by adding the following at the
        end of
        the first sentence thereof: 

       

      “;
        and
        provided further that, if the Borrower shall effect any Borrowing, as of
        the
        last day of each month during the fiscal quarter ending September 30, 2005
        the
        ratio of Total Outstandings to cash and Cash Equivalents of the Borrower
        shall
        not exceed 1.25 to 1.00.”

       

      (b)  A
        new
        Section 6.01(d) shall be added and shall read as follows: 

       

      “(d)
        as
        soon as available, but in any event no later than 20 days after the end of
        each
        of July 2005, August 2005 and September 2005, a consolidated and consolidating,
        company-prepared, unaudited monthly financial statement of the Borrower and
        its
        Subsidiaries as at the end of such calendar month, and the related consolidated
        and consolidating statements of income or operations, shareholders’ equity and
        cash flows for such calendar month and for the portion of the Borrower’s fiscal
        year then ended, setting forth in each case in comparative form the figures
        for
        the corresponding calendar month of the previous fiscal year and the
        corresponding portion of the previous fiscal year (except with respect to
        the
        statement of cash flows and shareholders equity), all in reasonable detail,
        such
        statements to be certified by a responsible officer of the Borrower and subject
        to normal and customary quarter-end review procedures.”

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (c)  Section
        7.11(e) of the Agreement is amended by adding the following to the end thereof:
        

       

      “or
        at
        the end of any of July 2005, August 2005 or September 2005.”

       

      3.  The
        Bank
        hereby agrees to waive compliance with the Section 7.11(b), (d) and (e) of
        the
        Agreement for the fiscal quarter ending June 30, 2005. Such waivers are made
        solely to the extent and with respect to the quarter ending June 30,
        2005.

       

      4.  The
        Borrower hereby represents and warrants to the Bank that:

       

      (a)  Each
        and
        every of the representations and warranties set forth in the Agreement and
        in
        the documents executed pursuant thereto or in connection therewith is true
        as of
        the date hereof and with the same effect as though made on the date hereof,
        and
        is hereby incorporated herein in full by reference as if fully restated herein
        in their entirety.

       

      (b)  After
        giving effect to the waivers contained herein, no Default or Event of Default
        now exists.

       

      (c)  The
        Borrower is duly indebted to the Bank under the Loan Documents, as applicable,
        without any claim for offset, defense or counterclaim of any kind whatsoever
        (any such claim as may exist being hereby irrevocably waived).

       

      5.  All
        obligations in connection with the Agreement (as amended hereby) and the
        other
        Loan Documents are and shall continue to be (i) secured by the Collateral
        and
        the Security Documents, and (ii) guaranteed by the Guarantors under the
        Guaranty.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      6.  Unless
        otherwise indicated, the waivers provided in this Amendment are effective
        only
        in this one instance, only with respect to the Covenant Defaults (for the
        fiscal
        quarter ended June 30, 2005). Furthermore, the amendment and the waivers
        set
        forth in this Amendment are limited precisely as written and shall not be
        deemed
        to (a) be a consent to or a waiver of any other term or condition of the
        Agreement or any of the documents referred to therein or (b) prejudice any
        right
        or rights which the Bank may now have or may have in the future under or
        in
        connection with the Agreement or any other Loan Documents. Whenever the
        Agreement is referred to in the Agreement or in any of the other Loan Documents,
        it shall be deemed to mean the Agreement as amended by this
        Amendment.

       

      7.  This
        Amendment shall be effective as of the date first above written; provided
        that
        this
        Amendment shall not be effective unless and until (i) the Bank shall have
        received counterparts of this Amendment duly signed by the Borrower and the
        Guarantors, (ii) the Borrower shall have paid all the fees and expenses of
        the
        Bank’s outside counsel in connection with the preparation and negotiation of
        this Amendment, as well as a waiver fee of $20,000 (to the Bank) in connection
        with the waiver of the Covenant Defaults, and (iii) the Bank shall have received
        evidence of such proper corporate (or equivalent) organization, existence,
        authority and appropriate corporate (or equivalent) proceedings with respect
        to
        the Borrower and the Guarantors and the matters addressed by this Amendment
        and
        the documents, instruments and agreements executed pursuant hereto or in
        connection herewith, and such other certificates, instruments, and documents
        as
        the Bank shall request.

       

      8.  This
        Amendment may be executed by the parties hereto individually or in any
        combination, in one or more counterparts, each of which shall be an original
        and
        all of which shall together constitute one and the same agreement.

       

      

      Remainder
        of page intentionally left blank

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      IN
        WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
        executed and delivered by their respective duly authorized officers as of
        the
        date first above written.

       

      
        	
                FIND/SVP,
                  INC.,

                a
                  New York corporation 

              	
                BANK
                  OF AMERICA, N.A., 

                successor
                  by merger to Fleet National Bank

              
	 	 
	
                By:
                  /s/ Peter
                  Stone            
                  

                Name:
                  Peter Stone

                Title:
                  CFO

                 

              	
                By:
                  /s/ Tanitha
                  Boonyam            
                  

                Name:
                  Tanitha Boonyam

                Title:
                  VP

                 

              

      

      Each
        of
        the undersigned Guarantors hereby consents to this Amendment and reaffirms
        its
        continuing liability under the Guaranty and the Security Agreement (as defined
        in the Agreement as amended hereby) and all other Loan Documents (as defined
        in
        the Agreement, as amended hereby), without any claim for offset, defense
        or
        counterclaim (any such claim as may exist being hereby irrevocably
        waived).

       

      
        	
                ATLANTIC
                  RESEARCH & CONSULTING, INC.

                 

              	
                SIGNIA
                  PARTNERS INCORPORATED

                 

              
	
                By:
                  /s/ Peter
                  Stone                 
                  

                Name:
                  Peter Stone

                Title:
                  VP

              	
                
                  By:
                    /s/ Peter
                    Stone                 
                    

                

                Name:
                  Peter Stone

                Title:
                  VP

                 

              
	
                TTECH
                  ACQUISITION CORP.

                 

              	
                GUIDELINE
                  RESEARCH CORP.

                 

              
	
                
                  By:
                    /s/ Peter
                    Stone                 
                    

                

                Name:
                  Peter Stone

                Title:
                  VP

                 

              	
                
                  By:
                    /s/ Peter
                    Stone                 
                    

                

                Name:
                  Peter Stone

                Title:
                  VP

                 

              
	
                GUIDELINE/CHICAGO,
                  INC.

                 

              	
                ADVANCED
                  ANALYTICS, INC.

                 

              
	
                
                  By:
                    /s/ Peter
                    Stone                 
                    

                

                Name:
                  Peter Stone

                Title:
                  VP

                 

              	
                
                  By:
                    /s/ Peter
                    Stone                 
                    

                

                Name:
                  Peter Stone

                Title:
                  VP

                 

              
	
                TABLINE
                  DATA SERVICES, INC.

                 

              	 
	
                
                  By:
                    /s/ Peter
                    Stone                 
                    

                

                Name:
                  Peter Stone

                Title:
                  VPExhibit 4.1

                                     WARRANT

THE WARRANT EVIDENCED OR CONSTITUTED HEREBY, AND ALL SHARES OF COMMON STOCK
DELIVERABLE UPON EXERCISE HEREUNDER, HAVE BEEN AND WILL BE ISSUED WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("THE ACT") AND MAY
NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT
REGISTRATION UNDER THE ACT UNLESS EITHER (A) THE COMPANY HAS RECEIVED AN OPINION
OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO THE
EFFECT THAT REGISTRATION IS NOT REQUIRED IN CONNECTION WITH SUCH DISPOSITION OR
(B) THE SALE OF SUCH SECURITIES IS MADE PURSUANT TO SECURITIES AND EXCHANGE
COMMISSION RULE 144.

Date: August ____, 2005

                        WARRANT TO PURCHASE COMMON STOCK

                                       OF

                              SALMON EXPRESS, INC.

                             (Subject to Adjustment)

      THIS CERTIFIES THAT, for value received, _______________ ("Holder"), is
entitled, subject to the terms and conditions of this Warrant, at any time or
from time to time after one year from the date hereof (the "Effective Date"), to
purchase up to _________________ shares of common stock, par value $0.001 per
share (the "Common Stock"), from Salmon Express, Inc., a Nevada corporation (the
"Company"), at an exercise price per share equal to One Dollar and Thirty Three
Cents ($1.33) (the "Purchase Price). This Warrant shall expire at 5:00 p.m.
Pacific time on that date which is eighty-four (84) months from the date of this
Warrant (the "Expiration Date"). Both the number of shares of Common Stock
purchasable upon exercise of this Warrant (the "Warrant Shares") and the
Purchase Price are subject to adjustment and change as provided herein. This
Warrant is issued in connection with that certain Placement Agent Agreement
executed by and among the Company, MicroMed Technology, Inc. and Holder.

      1. CERTAIN DEFINITIONS. As used in this Warrant the following terms shall
have the following respective meanings:

      "1933 Act" shall mean the Securities Act of 1933, as amended. --------

      "Common Stock" shall mean the Common Stock of the Company and any other
securities at any time receivable or issuable upon exercise of this Warrant.

<PAGE>

      "Fair Market Value" or "FMV" of a share of Common Stock as of a particular
date shall mean:

            (a) If traded on a securities exchange, the Nasdaq National Market
or the Nasdaq Small Cap Market, the Fair Market Value shall be deemed to be the
average of the closing prices of the Common Stock of the Company on such
exchange or market over the five (5) business days ending immediately prior to
the applicable date of valuation;

            (b) If actively traded over-the-counter, the Fair Market Value shall
be deemed to be the average of the closing bid prices over the 30-day period
ending immediately prior to the applicable date of valuation; and

            (c) If there is no active public market, the Fair Market Value shall
be the value as determined in good faith by the Company's Board of Directors
upon a review of relevant factors, including due consideration of the Registered
Holders' determination of the value of the Company.

      "SEC" shall mean the Securities and Exchange Commission.

      2. EXERCISE OF WARRANT

            2.1 Payment. Subject to compliance with the terms and conditions of
this Warrant and applicable securities laws, this Warrant may be exercised, in
whole or in part at any time or from time to time, on or before the Expiration
Date by the delivery (including, without limitation, delivery by facsimile) of
the form of Notice of Exercise attached hereto as Exhibit 1 (the "Notice of
Exercise"), duly executed by the Holder, at the address of the Company as set
forth herein, and as soon as practicable after such date,

                  (a) surrendering this Warrant at the address of the Company,
and either

                  (b) providing payment, by check or by wire transfer, of an
amount equal to the product obtained by multiplying the number of shares of
Common Stock being purchased upon such exercise by the then effective Purchase
Price (the "Exercise Amount"),

                  (c) electing, by written notice to the Company on the Notice
of Exercise duly executed by the Holder, to receive a number of Warrant Shares,
determined in accordance with the formula set forth below (the "Election"), in
which event the Company shall issue to the Holder a number of Warrant Shares
computed using the following formula:

                                       2
<PAGE>

                                    X= Y(A-B)
                                       -----
                                         A

Where X = The number of Warrant Shares to be issued to the Holder upon an
          Election.

      Y = The number of Warrant Shares in respect of which this
          Warrant is being exercised as adjusted to the date of the
          Election.

      A = The FMV of one Warrant Share on the date that the relevant
          Notice of Exercise is received by the Company.

      B = The Purchase Price (as adjusted to the date of the Election) in
          accordance with Section 4 hereof

            2.2 Common Stock Certificates; Fractional Shares. As soon as
practicable on or after the date of an exercise of this Warrant, the Company
shall deliver to the person or persons entitled to receive the same a
certificate or certificates for the number of whole shares of Common Stock
issuable upon such exercise. No fractional shares or scrip representing
fractional shares of Common Stock shall be issued upon an exercise of this
Warrant.

            2.3 Partial Exercise: Effective Date of Exercise. In case of any
partial exercise of this Warrant, the Holder and the Company shall cancel this
Warrant upon surrender hereof and shall execute and deliver a new Warrant of
like tenor and date for the balance of the shares of Common Stock purchasable
hereunder. This Warrant shall be deemed to have been exercised immediately prior
to the close of business on the date of its surrender for exercise as provided
above. The Company acknowledges that the person entitled to receive the shares
of Common Stock issuable upon exercise of this Warrant shall be treated for all
purposes as the holder of record of such shares as of the close of business on
the date the Holder is deemed to have exercised this Warrant.

      3. TAXES. The Company shall pay all taxes and other governmental charges
that may be imposed in respect of the delivery of shares upon exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax or other charge imposed in connection with any transfer involved in the
delivery of any certificate for shares of Common Stock in any name other than
that of the Holder of this Warrant, and in such case the Company shall not be
required to deliver any stock certificate until such tax or other charge has
been paid, or it has been established to the Company's reasonable satisfaction
that no tax or other charge is due.

      4. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF COMMON STOCK. The number of
shares of Common Stock deliverable upon exercise of this Warrant (or any shares
of stock or other securities or property receivable upon exercise of this
Warrant) and the Purchase Price are subject to adjustment upon occurrence of the
following events:

            4.1 Adjustment for Stock Splits. Stock Subdivisions or Combinations
of Shares of Common Stock. The Purchase Price of this Warrant shall be
proportionally decreased and the number of shares of Common Stock deliverable
upon exercise of this Warrant (or any shares of stock or other securities at the
time deliverable upon exercise of this Warrant) shall be proportionally
increased to reflect any stock split or subdivision of the Company's Common
Stock. The Purchase Price of this Warrant shall be proportionally increased and
the number of shares of Common Stock deliverable upon exercise of this Warrant
(or any shares of stock or other securities at the time deliverable upon
exercise of this Warrant) shall be proportionally decreased to reflect any
combination of the Company's Common Stock.

                                       3
<PAGE>

            4.2 Adjustment for Dividends or Distributions of Stock or Other
Securities or Property. In case the Company shall make or issue, or shall fix a
record date for the determination of eligible holders entitled to receive, a
dividend or other distribution with respect to the Common Stock (or any shares
of stock or other securities at the time issuable upon exercise of the Warrant)
payable in (a) securities of the Company or (b) assets (excluding cash dividends
paid or payable solely out of retained earnings), then, in each such case, the
Registered Holder of this Warrant on exercise hereof at any time after the
consummation, effective date or record date of such dividend or other
distribution, shall receive, in addition to the shares of Common Stock (or such
other stock or securities) issuable on such exercise prior to such date, and
without the payment of additional consideration therefor, the securities or such
other assets of the Company to which such Holder would have been entitled upon
such date if such Holder had exercised this Warrant on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and/or all other additional stock available
by it as aforesaid during such period giving effect to all adjustments called
for by this Section 4.

            4.3 Reclassification. If the Company, by reclassification of
securities or otherwise, shall change any of the securities as to which purchase
rights under this Warrant exist into the same or a different number of
securities of any other class or classes, this Warrant shall thereafter
represent the right to acquire such number and kind of securities as would have
been issuable as the result of such change `with respect to the securities that
were subject to the purchase rights under this Warrant immediately prior to such
reclassification or other change and the Purchase Price therefore shall be
appropriately adjusted, all subject to further adjustment as provided in this
Section 4. No adjustment shall be made pursuant to this Section 4.3 upon any
conversion or redemption of the Common Stock which is the subject of Section
4.5.

            4.4 Adjustment for Capital Reorganization. Merger or Consolidation.
In case of any capital reorganization of the capital stock of the Company (other
than a combination, reclassification, exchange or subdivision of shares
otherwise provided for herein), or any merger or consolidation of the Company
with or into another corporation, or the sale of all or substantially all the
assets of the Company then, and in each such case, as a part of such
reorganization, merger, consolidation, sale or transfer, lawful provision shall
be made so that the Holder of this Warrant shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified herein and
upon payment of the Purchase Price then in effect, the number of shares of stock
or other securities or property of the successor corporation resulting from such
reorganization, merger, consolidation, sale or transfer that a holder of the
shares deliverable upon exercise of this Warrant would have been entitled to
receive in such reorganization, consolidation, merger, sale or transfer if this
Warrant had been exercised immediately before such reorganization, merger,
consolidation, sale or transfer, all subject to further adjustment as provided
in this Section 4. The foregoing provisions of this Section 4.4 shall similarly
apply to successive reorganizations, consolidations, mergers, sales and
transfers and to the stock or securities of any other corporation that are at
the time receivable upon the exercise of this Warrant. If the per-share
consideration payable to the Holder hereof for shares in connection with any
such transaction is in a form other than cash or marketable securities, then the
value of such consideration shall be determined in good faith by the Company's
Board of Directors. In all events, appropriate adjustment (as determined in good
faith by the Company's Board of Directors) shall be made in the application of
the provisions of this Warrant with respect to the rights and interests of the
Holder after the transaction, to the end that the provisions of this Warrant
shall be applicable after that event, as near as reasonably may be, in relation
to any shares or other property deliverable after that event upon exercise of
this Warrant.

                                       4
<PAGE>

            4.5 Conversion of Common Stock. In case all or any portion of the
authorized and outstanding shares of Common Stock of the Company are redeemed or
converted or reclassified into other securities or property pursuant to the
Company's Certificate of Incorporation or otherwise, or the Common Stock
otherwise ceases to exist, then, in such case, the Registered Holder of this
Warrant, upon exercise hereof at any time after the date on which the Common
Stock is so redeemed or converted, reclassified or ceases to exist (the
"Termination Date"), shall receive, in lieu of the number of shares of Common
Stock that would have been deliverable upon such exercise immediately prior to
the Termination Date, the securities or property that would have been received
if this Warrant had been exercised in full and the Common Stock received
thereupon had been simultaneously converted immediately prior to the Termination
Date, all subject to further adjustment as provided in this Warrant.
Additionally, the Purchase Price shall be immediately adjusted to equal the
quotient obtained by dividing (x) the aggregate Purchase Price of the maximum
number of shares of Common Stock for which this Warrant was exercisable
immediately prior to the Termination Date by (y) the number of shares of Common
Stock of the Company for which this Warrant is exercisable immediately after the
Termination Date, all subject to further adjustment as provided herein.

            4.6 Redemption at Company's Election. The Company may, at its
option, by at least thirty-days' ("Notice Period") written notice to the Holder
(the "Redemption Notice"), redeem this Warrant, in whole or part, at any time
after the Effective Date, provided that (i) the closing price of the shares of
Common Stock for twenty (20) of the preceding (30) thirty consecutive trading
days immediately preceding the Redemption Notice ("Pricing Period") is equal to
or greater than $3.99 (as may be adjusted for any stock splits, etc.), (ii) all
of the Warrant Shares underlying this Warrant to be redeemed are then registered
under an effective registration statement, (iii) sufficient Common Stock of the
Company are authorized and reserved for issuance upon the full exercise of this
Warrant, (iv) all of the Warrant Shares issuable upon exercise of this Warrant
are then listed on either the OTC Bulletin Board, Nasdaq Small Cap Market,
Nasdaq National Market System, American Stock Exchange or New York Stock
Exchange, as the case may be, and (v) the average daily dollar volume of the
trading of the Company's shares of Common Stock during the Pricing Period is no
less than $200,000.00. The Redemption Notice shall set forth a date, not less
than thirty (30) days after the date of the Redemption Notice, on which the
redemption of this Warrant shall occur (the "Redemption Date"). On the
Redemption Date, (i) the Company shall pay the Holder by certified check an
amount equal to the product of (x) $0.05 (as adjusted in proportion to any
adjustment Common Stock pursuant to the provisions of this Warrant) multiplied
by (y) the number of Warrant Shares so redeemed; and (ii) the Holder shall
deliver the original copy of this Warrant marked "REDEEMED" to the Company. If
the Company shall redeem this Warrant in part, the Company shall, at the
Redemption Date, provided that the Holder shall have delivered the original copy
of this Warrant marked "REDEEMED" to the Company, deliver to the Holder a new
Warrant evidencing the rights of the Holder to purchase the unredeemed Common
Stock called for by this Warrant, which new Warrant shall in all other respects
be identical with this Warrant. Nothing in this Section 4.6 shall prevent the
exercise of the Warrants at any time prior to the expiration of the Notice
Period.

                                       5
<PAGE>

      5. LOSS OR MUTILATION. Upon receipt of evidence reasonably satisfactory
the Company of the ownership of and the loss, theft, destruction or mutilation
of this Warrant, and of indemnity reasonably satisfactory to him, and (in the
case of mutilation) upon surrender and cancellation of this Warrant, the Company
will cause to be executed and delivered in lieu thereof a new Warrant of like
tenor as the lost, stolen, destroyed or mutilated Warrant.

      6. REPRESENTATION. The Company hereby covenants that all shares issuable
upon exercise of this Warrant, when delivered upon such exercise, shall be free
and clear of all liens, security interests, charges and other encumbrances or
restrictions on sale and free and clear of all preemptive rights, except
encumbrances or restrictions arising under federal or state securities laws.
Further, the Company hereby covenants to reserve such number of authorized but
unissued shares of Common Stock for issuance upon exercise of this Warrant.

      7. TRANSFER. This Warrant may not be transferred by the Holder without the
prior written consent of the Company, which consent may not be unreasonably
withheld. In the event of a transfer to which the Company has previously
consented in writing, this Warrant and all rights hereunder may be transferred
by the Holder upon delivery of the form of Assignment attached hereto as Exhibit
2 (the "Assignment"), duly executed by the Holder, surrender of this Warrant
properly endorsed at the address of the Company and payment of any necessary
transfer tax or other governmental charge imposed upon such transfer. Upon any
partial transfer, the Holder and Company will cause to be issued and delivered
to the Holder a new Warrant or Warrants with respect to the portion of this
Warrant not so transferred. Each taker and holder of this Warrant, by taking or
holding the same, consents and agrees that when this Warrant shall have been so
endorsed, the person in possession of this Warrant may be treated by the
Company, and all other persons dealing with this Warrant, as the absolute owner
hereof for any purpose and as the person entitled to exercise the rights
represented hereby, any notice to the contrary notwithstanding; provided,
however that until a transfer of this Warrant is duly registered on the books of
the Company, the Company may treat the Holder hereof as the owner for all
purposes.

      8. REGISTRATION. The Company shall register the Common Stock issued or
issuable upon exercise hereof under the 1933 Act concurrently with the
securities issued further to the Private Placement.

      9. RESTRICTIONS ON TRANSFER. The Holder, by acceptance hereof, agrees
that, absent an effective registration statement filed with the SEC under the
1933 Act, covering the disposition or sale of this Warrant or the Common Stock
issued or issuable upon exercise hereof or the Common Stock issuable upon
conversion thereof, as the case may be, and registration or qualification under
applicable state securities laws, such Holder will not sell, transfer, pledge,
or hypothecate any or all such Warrants or Common Stock, as the case may be,
unless either (i) the Company has received an opinion of counsel, in form and
substance reasonably satisfactory to the Company, to the effect that such
registration is not required in connection with such disposition or (ii) the
sale of such securities is made pursuant to SEC Rule 144.

                                       6
<PAGE>

      10. COMPLIANCE WITH SECURITIES LAWS. By acceptance of this Warrant, the
Holder hereby represents, warrants and covenants that he/she/it is an
"accredited investor" as that term is defined under Rule 501 of Regulation D,
that any shares of stock purchased upon exercise of this Warrant or acquired
upon conversion thereof shall be acquired for investment only and not with a
view to, or for sale in connection with, any distribution thereof, that the
Holder has had such opportunity as such Holder has deemed adequate to obtain
from representatives of the Company such information as is necessary to permit
the Holder to evaluate the merits and risks of its investment in the Company;
that the Holder is able to bear the economic risk of holding such shares as may
be acquired pursuant to the exercise of this Warrant for an indefinite period;
that the Holder understands that the shares of stock acquired pursuant to the
exercise of this Warrant or acquired upon conversion thereof will not be
registered under the 1933 Act (unless otherwise required pursuant to exercise by
the Holder of the registration rights, if any, previously granted to the Holder)
and will be "restricted securities" within the meaning of Rule 144 under the
1933 Act and that the exemption from registration under Rule 144 will not be
available for at least one year from the date of exercise of this Warrant, and
even then will not be available unless a public market then exists for the
stock, adequate information concerning the Company is then available to the
public, and other terms and conditions of Rule 144 are complied with; and that
all stock certificates representing shares of stock issued to the Holder upon
exercise of this Warrant or upon conversion of such shares may have affixed
thereto a legend substantially in the following form:

            THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
            SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
            SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO
            RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
            TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND ANY
            APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
            EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
            REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
            INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY
            REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO
            THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN
            COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

      11. NO RIGHTS OR LIABILITIES AS STOCKHOLDERS. This Warrant shall not
entitle the Holder to any voting rights or other rights as a stockholder of the
Company. In the absence of affirmative action by such Holder to purchase Common
Stock by exercise of this Warrant, no provisions of this Warrant, and no
enumeration herein of the rights or privileges of the Holder hereof shall cause
such Holder hereof to be a holder of the Company for any purpose.

                                       7
<PAGE>

      12. NOTICES. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by registered or certified
mail, postage prepaid, return receipt requested, or by telecopier, or by email
or otherwise delivered by hand or by messenger, addressed or telecopied to the
person to whom such notice or communication is being given at its address set
forth after its signature hereto. In order to be effective, a copy of any notice
or communication sent by telecopier or email must be sent by registered or
certified mail, postage prepaid, return receipt requested, or delivered
personally to the person to whom such notice or communication is being at its
address set forth after its signature hereto. If notice is provided by mail,
notice shall be deemed to be given five (5) business days after proper deposit
with the United States mail or nationally recognized overnight courier, or
immediately upon personally delivery thereof, to person to whom such notice or
communication is being at such address. If notice is provided by telecopier,
notice shall be deemed to be given upon confirmation by the telecopier machine
of the receipt of such notice at the telecopier number provided above. If notice
is provided by email, notice shall be deemed to be given upon confirmation by
the sender's email program of the receipt of such notice at the email address
provided after the signature of the person to whom such notice or communication
is being. The addresses set forth after the signatures hereto may be changed by
written notice complying with the terms of this Section 12.

      13. HEADINGS. The headings in this Warrant are for purposes of convenience
in reference only, and shall not be deemed to constitute a part hereof.

      14. LAW GOVERNING. This Warrant shall be construed and enforced in
accordance with, and governed by, the laws of the State of Texas.

      15. NOTICES OF RECORD DATE. In case:

            15.1 the Company shall take a record of the holders of its Common
Stock (or other stock or securities at the time receivable upon the exercise of
this Warrant), for the purpose of entitling them to receive any dividend or
other distribution, or any right to subscribe for or purchase any shares of
stock of any class or any other securities or to receive any other right; or

            15.2 of any consolidation or merger of the Company with or into
another corporation, any capital reorganization of the Company, any
reclassification of the capital stock of the Company, or any conveyance of all
or substantially all of the assets of the Company to another corporation in
which holders of the Company's stock are to receive stock, securities or
property of another corporation; or

            15.3 of any voluntary dissolution, liquidation or winding-up of the
Company; or

            15.4 of any redemption of any outstanding capital stock of the
Company; then, and in each such case, the Company will mail or cause to be
mailed to the Holder of this Warrant a notice specifying, as the case may be,
(i) the date on which a record is to be taken for the purpose of such dividend,
distribution or right, or (ii) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation,
winding-up, redemption or conversion is to take place, and the time, if any is
to be fixed, as of which the holders of record of Common Stock (or such stock or
securities as at the time are receivable upon the exercise of this Warrant)
shall be entitled to exchange their shares of Common Stock (or such other stock
or securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be delivered at least
thirty (30) days prior to the date therein specified.

                                       8
<PAGE>

      16. SEVERABILITY. If any term, provision, covenant or restriction of this
Warrant is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Warrant shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.

      17. COUNTERPARTS. For the convenience of the parties, any number of
counterparts of this Warrant may be executed by the parties hereto and each such
executed counterpart shall be, and shall be deemed to be, an original
instrument.

      18. SATURDAYS, SUNDAYS AND HOLIDAYS. If the Expiration Date falls on a
Saturday, Sunday or legal holiday, the Expiration Date shall automatically be
extended until 5:00 p.m. on the next business day.

                           [SIGNATURE PAGE TO FOLLOWI

                                       9
<PAGE>

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

MICROMED TECHNOLOGY, INC.

By:                                       By:
   ---------------------------------         -----------------------------------

Name:                                     Name:
     -------------------------------           ---------------------------------

Title:

Address for Notices:                      Address for Notices:

                            SIGNATURE PAGE TO WARRANT

                                       10
<PAGE>

                                    EXHIBIT 1

                               NOTICE OF EXERCISE

                    (To be executed upon exercise of Warrant)

_________________                                                WARRANT NO. ___

      The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant Certificate for, and to purchase
thereunder, securities of MicroMed Technology, Inc., as provided for therein,
and (check the applicable box):

      |_|   Tenders herewith payment of the exercise price in full in the form
            of cash or a~ certified or official bank check in same-day funds in
            the amount of$____________ for _________ such securities.

      |_|   Pursuant to the cashless exercise feature set forth in Section
            2.1(c).

      Please issue a certificate or certificates for such securities in the name
of, and pay any cash for any fractional share to (please print name, address and
social security number):

Name:
            ----------------------

Address:
            ----------------------

Signature:
            ----------------------

Note: The above signature should correspond exactly with the name on the first
page of this Warrant Certificate or with the name of the assignee appearing in
the assignment form below.

If said number of shares shall not be all the shares purchasable under the
within Warrant Certificate, a new Warrant Certificate is to be issued in the
name of said undersigned for the balance remaining of the shares purchasable
thereunder rounded up to the next higher whole number of shares.

                                       11
<PAGE>

                                    EXHIBIT 2

                                   ASSIGNMENT

(To be executed only upon assignment of Warrant Certificate)      WARRANT NO.-__

      For value received, hereby sells, assigns and transfers unto
________________________ the within Warrant Certificate, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint ______________________________ attorney, to transfer said Warrant
Certificate on the books of the within-named Company with respect to the number
of Warrants set forth below, with full power of substitution in the premises:

    Name(s) of Assignee(s)              Address                   # of Warrants
-----------------------------    -----------------------    --------------------

And if said number of Warrants shall not be all the Warrants represented by the
Warrant Certificate, a new Warrant Certificate is to be issued in the name of
said undersigned for the balance remaining of the Warrants registered by said
Warrant Certificate.

Dated:                                         , 200_
      -----------------------------------------

Signature:
          -------------------------------------------

Notice: The signature to the foregoing Assignment must correspond to the name as
written upon the face of this security in every particular, without alteration
or any change whatsoever; signature(s) must be guaranteed by an eligible
guarantor institution (banks, stock brokers, savings and loan associations and
credit unions with membership in an approved signature guarantee medallion
program) pursuant to Securities and Exchange Commission Rule l7Ad-15.

                                       12

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