Document:

Exhibit
10.5

 

LETTER AMENDMENT NO. 1

TO

THIRD AMENDED AND RESTATED MASTER SHELF AGREEMENT

 

As of April 24, 2003

 

The Prudential Insurance
Company of America.

Pruco Life Insurance
Company

Prudential Investment
Management, Inc.

ING Life Insurance &
Annuity Company

c/o Prudential Capital
Group

2200 Ross Avenue, Suite
4200E

Dallas, Texas 75201

 

Ladies and Gentlemen:

 

We refer to the
Third Amended and Restated Master Shelf Agreement dated as of December 19, 1991
(Effective as of January 13, 2003) (the “Agreement”), among you and Western Gas
Resources, Inc., a Delaware corporation (the “Company”).  Unless otherwise defined in this Letter
Amendment No. 1 to Third Amended and Restated Master Shelf Agreement (this “Amendment”),
the terms defined in the Agreement shall be used herein as therein defined.

 

The Company has
requested and, subject to the terms and conditions specified herein, the
undersigned holders of the Notes are willing to make, certain amendments to the
Agreement, all as more particularly set forth herein.

 

1.             Amendments to the Agreement.  Subject to the accuracy of the
representations and warranties set forth in paragraph 2 hereof and satisfaction
of the conditions set forth in paragraph 3(c) hereof, the undersigned holders
of the Notes hereby agree with the Company to amend, effective as of the date
first above written, the Agreement as follows:

 

(a)           Paragraph 3A.  Conditions of Closing.  Paragraph 3A(6) of the Agreement is deleted in its entirety and
the following is inserted in lieu thereof:

 

“3A(6).  Amendment of Credit Agreements.  The NCNB
Agreement shall not require (or if so required, such conditions shall
simultaneously terminate) (i) the grant of a Lien on any property of the
Company or any Subsidiary (other than, so long as the Intercreditor Agreement
is in effect, the Collateral) or (ii) the delivery of any security
agreement (other than, so long as the Intercreditor Agreement is in effect, the
Security Documents) or the guaranty or agreement to provide guaranties of the
obligations of the Company under such agreements other than any Bank Guaranty
which is subject to the Intercreditor Agreement and for which the Purchaser
shall have received a Guaranty from such Guarantor.  In addition,

 

1

 

such agreements
shall not require that any lenders party thereto, or an agent or representative
thereof (other than, so long as the Intercreditor Agreement is in effect, the
Collateral Agent), be named as beneficiary or loss payee on any insurance
policy and no insurance policy of the Company or any Subsidiary shall so name
any lender or agent (other than, so long as the Intercreditor Agreement is in
effect, the Collateral Agent) as beneficiary or loss payee.”

 

(b)           Paragraph 5.  Affirmative Covenants.

 

(I)            Paragraph
5A of the Agreement is amended to (A) delete the word “and” from the end of the
existing clause (vii), (B) renumber the existing clause (viii) to become clause
(xi), and (C) insert new clauses (viii), (ix) and (x) that read as follows:

 

“(viii)      by January 30th of
each year after the occurrence of a Debt Rating Downgrade, an Engineering
Report concerning the oil and gas reserves of the Company and its Subsidiaries
as of the preceding December 31st, which report shall (A) be prepared by
independent petroleum engineers chosen by the Company and acceptable to
Prudential, (B) contain sufficient information to enable the Company to meet
the reporting requirements concerning oil and gas reserves contained in
Regulations S-K and S-X promulgated by the Securities and Exchange Commission,
(C) distinguish (or be delivered together with a certificate from an
appropriate officer of the Company which distinguishes) those properties
covered by the report which are Collateral from those properties covered by the
report which are not Collateral, and (D) otherwise be in form satisfactory to
Prudential;

 

(ix)           by August 31 of
each year after the occurrence of a Debt Rating Downgrade, an Engineering
Report prepared as of the preceding July 1 by petroleum engineers who are employees
of the Company (or by the independent engineers named above), together with an
accompanying report on property sales, property purchases and changes in
categories, both of which reports shall be in the same form and scope as the
reports described in clause (viii) above;

 

(x)            concurrently with
the reports described in clauses (viii) and (ix), a report describing material
gas imbalances and curtailments of production for the Oil and Gas Collateral;
and”

 

(II)           Paragraph
5E of the Agreement is amended to add a new sentence to the end thereof that
reads as follows:

 

“The Company shall also notify Prudential immediately of any
announcement by Moody’s or S&P of any downward change or possible downward
change in a Debt Rating of which any officer has knowledge.”

 

(III)         Paragraph
5 of the Agreement is amended to add new paragraphs 5P, 5Q, 5R, 5S, 5T, 5U and
5V that read as follows:

 

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“5P. Covenant to Pledge Stock. The Company shall, and shall cause
its Subsidiaries to (i) promptly (and in any event within 30 days after
acquiring such equity interests) pledge to the Collateral Agent the equity
interests in each Domestic Subsidiary Guarantor that is now owned or hereafter
acquired by it, in each case pursuant to such documents as the Collateral Agent
shall deem appropriate for such purpose and (ii) concurrently with each such
pledge, deliver to the Collateral Agent documents of the types referred to in
clauses (ii) through (vii) of paragraph 3A(1) and favorable opinions of counsel
to such Person (which shall cover, among other things, the legality, validity,
binding effect and enforceability of the documentation referred to in clause
(i) above), all in form, content and scope reasonably satisfactory to the
Collateral Agent; provided, that, no PUC Subsidiary shall be required to
execute and deliver any Security Document pursuant to this paragraph 5P or
paragraph 5Q unless all required regulatory approvals shall have been obtained
for such Security Document from each applicable PUC and, to the extent
applicable, FERC.  The Company shall
cause each PUC Subsidiary required to deliver a Security Document pursuant to
paragraph 5P or paragraph 5Q to use its best efforts to obtain the approval of
the applicable PUC and, to the extent applicable, FERC for such Security
Document.  In the event that the any PUC
or FERC shall require that the equity interests of a PUC Subsidiary be released
from the Lien in favor of the Collateral Agent, the Collateral Agent shall so
release such equity interests; provided that all equity interests of a
replacement Subsidiary acceptable to Prudential shall have been pledged to
Collateral Agent for the benefit of the holders of the Notes unless all
potential replacement Subsidiaries are PUC Subsidiaries and are prohibited by
the applicable PUCs or FERC from having their equity interests pledged to the
Collateral Agent.”

 

5Q.          Agreement to Deliver Mortgages.  At all times after a Debt Rating Downgrade,
the Notes and other obligations under this Agreement shall be secured by first
and prior Liens (subject only to Liens permitted by paragraph 6C(1)) covering
and encumbering 75% of the total present value (utilizing the Collateral
Agent’s usual and customary pricing and discount rates for oil and gas loans,
as in effect from time to time) of all oil and gas properties covered by the
reserve reports most recently delivered to the Collateral Agent (the “Oil and Gas
Collateral”).  Subject to the
limitations in paragraph 5P, the Company agrees to deliver and to cause each of
its Subsidiaries, to the extent the Company or such Subsidiary, as the case may
be, owns Oil and Gas Collateral, to deliver to secure the Notes and other
obligations under this Agreement, deeds of trust, mortgages, chattel mortgages,
security agreements and other Security Documents, which shall be in
substantially the form of Exhibit I attached hereto, for the
purpose of granting, confirming, and perfecting first and prior liens or
security interests in the Oil and Gas Collateral.  Such Security Documents shall be delivered to the Collateral
Agent  on
or before July 23, 2003, but shall not be recorded until a Debt Rating
Downgrade occurs.  To the extent
necessary to comply with the requirements of the first sentence of this
paragraph 5Q, within 60 days after the delivery of each Engineering Report
pursuant to clause (viii) or (ix) of paragraph

 

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5A, the Company
shall, and shall cause its Subsidiaries that own Oil and Gas Collateral to,
execute and deliver to the Collateral Agent, for the ratable benefit of each
holder of the Notes, supplements to the Security Documents or new Security
Documents substantially in the form of Exhibit I hereto, duly executed
by the Company and any such Subsidiary (as applicable), together with such
other assignments conveyances, amendments, agreements and other writings (each
duly authorized and executed) as the Collateral Agent or Prudential shall deem
reasonably necessary to grant, evidence and perfect the Liens required by this
paragraph 5Q.

 

5R.          Title Review.  After a Debt Rating Downgrade and from time
to time when additional Oil and Gas Collateral is required to be delivered
pursuant to paragraph 5Q, the Company agrees that the Collateral Agent’s
counsel shall be entitled to review the lease files and existing title reports
and title opinions covering such additional Oil and Gas Collateral.  Based upon such review and in order to
confirm title of the Company and its Subsidiaries to such Oil and Gas
Collateral, the Collateral Agent may request, and the Company agrees to
deliver, within 90 days after any Debt Ratings Downgrade, such additional
favorable reports and/or title opinions which either the Collateral Agent or
Prudential determines in their reasonable judgments are necessary from Persons
acceptable to the Collateral Agent and Prudential with respect to any such Oil
and Gas Collateral to confirm that the Company and/or its Subsidiaries own such
Oil and Gas Collateral free and clear of all Liens except Liens permitted by
paragraph 6C(1).

 

5S.           Perfection and Protection of Security
Interests and Liens.  The
Company will from time to time deliver, and will cause each of its Subsidiaries
from time to time to deliver, to the Collateral Agent any authorizations to file
financing statements, extension agreements and other documents, properly
completed and executed (and acknowledged when required) in form and substance
reasonably satisfactory to the Collateral Agent, which the Collateral Agent
requests for the purpose of perfecting, confirming, or protecting any Liens or
other rights in Collateral securing the Notes and other obligations hereunder.

 

5T.          Production Proceeds.  Notwithstanding that, by the terms of the
Security Documents which may be delivered to the Collateral Agent pursuant to
paragraph 5Q, one or more Subsidiaries of the Company will, after a Debt Rating
Downgrade, assign the Collateral Agent all of the “Production Proceeds” (as
defined in Exhibit I attached hereto) accruing to the property covered
thereby, so long as no Default has occurred such Subsidiaries may continue to
receive from the purchases of production all such Production Proceeds, subject,
however, to the Liens created under the Security Documents, which Liens are
hereby affirmed and ratified.  Upon the
occurrence of a Default, the Collateral Agent may exercise all rights and
remedies granted under the Security Documents, including the right to obtain
possession of all Production Proceeds then held by the Subsidiaries or to
receive directly from the purchasers of production all other Production
Proceeds.

 

4

 

In no case shall
any failure, whether intentional or inadvertent, by the Collateral Agent to
collect directly any such Production Proceeds constitute in any way a waiver,
remission or release of any of rights hereunder or under the Security
Documents, nor shall any release of any Production Proceeds by the Collateral
Agent to the Subsidiaries constitute a waiver, remission, or release of any other
Production Proceeds or of any rights of the Collateral Agent to collect other
Production Proceeds thereafter.

 

5U.          Sale or Disposal or Property.  Notwithstanding that dispositions of Oil and
Gas Collateral may be prohibited by the terms of the Security Documents, so
long as no Default has occurred, the Subsidiaries that are parties to the
Security Documents may make dispositions of Oil and Gas Collateral that are
permitted by paragraph 6C(5).

 

5V.          Limitation on Effectiveness.  Notwithstanding anything to the contrary
contained herein or in any Mortgage, none of the Mortgages will be effective or
enforceable in any manner whatsoever at any time prior to the occurrence of a
Debt Rating Downgrade.  Without
limitation of the foregoing, the Collateral Agent shall not be entitled to any
of the rights or remedies available to it solely under the Mortgages prior to
the occurrence of a Debt Rating Downgrade. 
It is not the intent of the parties hereto that the provisions of this
paragraph 5V violate any applicable law regarding the rule against
perpetuities, the suspension of the absolute power of alienation, or other
rules regarding the vesting or duration of estates.  The provisions of this paragraph 5V shall be construed as not
violating any such rule to the extent the same can be so construed consistent
with the intent of the parties.  In the
event that the provisions of this paragraph 5V are determined to violate any
such rule, then this paragraph 5V shall nevertheless be effective only for the
maximum period (but not longer than the maximum period) permitted by such rule
that will result in no violation.  At
such time as this paragraph 5V is no longer effective, neither will the
Mortgage be effective or enforceable. 
To the extent the maximum period is permitted to be determined by
reference to “lives in being,” the parties hereto agree that “lives in being”
shall refer to the lifetime of the last to die of the living lineal descendants
of the late Joseph P. Kennedy (father of the late President of the United States
of America).”

 

(c)           Negative Covenants.

 

(I)            Paragraph
6A(3) of the Agreement is amended by deleting the percentage “35%” in such
paragraph and inserting the percentage “40%” in lieu thereof; provided,
that, if the NCNB Agreement is subsequently amended to decrease the percentage
contained in a covenant similar to paragraph 6A(3), the Company shall promptly
notify Prudential of such amendment and promptly enter into an amendment to the
Agreement to decrease the percentage in paragraph 6A(3) to the percentage
contained in the NCNB Agreement.

 

5

 

(II)           Paragraph
6A(4) of the Agreement is deleted in its entirety and the following is inserted
in lieu thereof:

 

“6A(4).  Total Fixed Charge Coverage Ratio.  For each fiscal quarter of the Company, the
ratio of (i) the sum of (a) the Consolidated Net Earnings of the Company for
the four immediately preceding fiscal quarters of the Company, plus (b)
the Company’s consolidated interest expense and provision for income taxes,
depreciation and amortization for the four immediately preceding fiscal
quarters of the Company that were taken into account for determining such
Consolidated Net Earnings to (ii) the Company’s consolidated accrued
interest expense for the four immediately preceding fiscal quarters to be less
than the ratio set forth below opposite such fiscal quarter:

 

	
  Four Fiscal Quarters Ending

  	
   

  	
  Minimum
  Ratio

  
	
  Effective Date through
  December 30, 2002

  	
   

  	
  2.50 to 1.00

  
	
  December 31, 2002
  through December 31, 2003

  	
   

  	
  3.25 to 1.00

  
	
  March 31, 2004 through
  December 31, 2004

  	
   

  	
  3.75 to 1.00

  
	
  March 31, 2005 and
  thereafter

  	
   

  	
  4.25 to 1.0

  

 

(III)         Paragraph
6C(1) of the Agreement is amended by deleting the existing clause (viii) and
inserting the following in lieu thereof:

 

“(viii) Liens created by the Security Documents and, if the
Intercreditor Agreement is in effect, Liens created by the Bank Pledge
Agreements (as defined in the Intercreditor Agreement), and”

 

(IV)         Paragraph
6F is amended by deleting the existing definition of “Hedging Transactions” set
forth therein and inserting the following in lieu thereof:

 

“Hedging
Transactions” shall mean, with respect to the Company and its
Subsidiaries, any commodity basis swap, forward commodity transaction,
commodity swap, commodity option, commodity index swap, commodity cap
transaction, commodity floor transaction, commodity collar transaction, and any
similar transaction that relate to commodities (including any option with
respect to the foregoing transactions but excluding any commodity floor
transactions with regard to which the Company and its Subsidiaries do not have
any liabilities (whether contingent, matured or otherwise) to third parties
other than the initial purchase price paid by the Company or such Subsidiary
with respect to the acquisition of such commodity floor transaction) or any
combination of the foregoing transactions.

 

6

 

(d)           Events of Default.

 

(I)            Paragraph 7A of the
Agreement is amended by deleting the existing clauses (iv), (v), (xvi) and
(xvii) and inserting the following in lieu thereof:

 

“(iv)  any representation or
warranty made by the Company herein or in any Security Document to which it is
a party, by any Guarantor in any Guaranty or in any Security Document to which
it is a party, or by the Company, any Guarantor or any of their respective
officers in any writing furnished in connection with or pursuant to this
Agreement, any Guaranty or any Security Document shall be false in any material
respect on the date as of which made; or

 

(v)  the Company fails to
perform or observe any term, covenant or agreement contained in (x) the
final sentence of paragraph 5E (y) paragraph 5M, 5N, 5P or 5Q or
(z) paragraph 6; or

 

(xvi)  any Guaranty, for any
reason other than as specified therein or, with regard to PUC Subsidiaries, in
accordance with the limitations set forth in paragraph 5P, ceases to be in full
force and effect or is declared null and void, or the validity or
enforceability thereof is contested or the Guarantor denies that it has any
further liability under the Guaranty, or the Guarantor shall default in the
performance or observance of any of its obligations under the Guaranty, and
such default shall not have been remedied within 30 days; or

 

(xvii)  any Security Document,
for any reason other than as specified therein or, with regard to PUC
Subsidiaries, in accordance with the limitations set forth in paragraph 5P,
ceases to be in full force and effect or is declared null and void or shall
cease to create a valid first priority mortgage or deed of trust lien, as
applicable, on any of the collateral purported to be covered thereby that
constitutes real property of fixtures or shall cease to create a valid and
perfected first priority security interest in any of collateral purported to be
covered thereby, or the validity or enforceability thereof is contested or the
Company or the Guarantor party thereto or if any such Person denies that it has
any further liability thereunder, or if any such Person shall default in the
performance or observance of any of its obligations thereunder and such default
shall not have been remedied within 30 days;”

 

(II)           Paragraph 7D of the
Agreement is amended by adding the following to the end thereof:

 

“All amounts
recovered as the result of the exercise of such remedies or from distributions
or other payments under the Intercreditor Agreement shall be applied in
accordance with the following priorities (with all partial payments of amounts
owing within each category being allocated ratably in accordance with the
amounts so owing to each holder of Notes): first, to the payment of all
fees,

 

7

 

indemnities, costs
and expenses then owing under this Agreement, the Notes, the Guaranties, the Security
Documents and any other instruments or agreements executed in connection
herewith or therewith; second, after payment in full of the amounts set
forth in clause first above, to the payment of the Make-Whole Amount, if
any, then owing; third, after payment in full of the amounts set forth
in clause second above, to the payment of all accrued and unpaid
interest then owing under the Notes; fourth, after payment in full of
the amounts set forth in clause third above, to the payment of principal
then outstanding under the Notes; and fifth, after payment in full of
the amounts set forth in clause fourth above, to the Company or
whomsoever shall be lawfully entitled to receive the same or as a court of
competent jurisdiction shall direct.”

 

(e)           Covenants.
Paragraphs 9C(1), 9(C)(2) and 9C(3) of the Agreement are deleted in their
entirety and the following are inserted in lieu thereof:

 

“9(C)(1).  Appointment of  Collateral
Agent.  Each holder of any
Note that is not a signatory to the Intercreditor Agreement, by acceptance of a
Note, hereby irrevocably appoints and authorizes NCNB, together with its
successors in such capacity under the Intercreditor Agreement, to act as
Collateral Agent with such powers and discretions as are specifically delegated
to the Collateral Agent under the Intercreditor Agreement.  Promptly upon the request of Prudential,
each such holder shall execute and deliver a counterpart of the Intercreditor
Agreement or a joinder agreement in form and substance satisfactory to
Prudential in order to further evidence such appointment.

 

9(C)(2).  Acceptance of Intercreditor Provisions.  Each holder of any Note that is not a
signatory to the Intercreditor Agreement, by its acceptance of a Note, agrees
to all of the terms, covenants, agreements and indemnifications that are
binding on the holders of the “Prudential Notes” under the Intercreditor
Agreement.  Promptly upon the request of
Prudential, each such holder shall execute and deliver a counterpart of the
Intercreditor Agreement or a joinder agreement in form and substance
satisfactory to Prudential in order to further evidence such agreement.

 

9(C)(3)      [Intentionally Deleted].”

 

(f)            Definitions.

 

(I)            Paragraph
10B of the Agreement is amended by deleting the existing definitions of
“Collateral”, “Collateral Agent”, “Intercreditor Agreement”, “NCNB Agreement”
and “Prudential” and inserting the following definitions in lieu thereof:

 

“Collateral”
shall mean (i) all of the “Collateral” as defined in each Pledge Agreement, and
(ii) all of the other real or personal property of the Company, MIGC or any
other Person in which a lien or security interest is granted pursuant to the
Mortgages or any other Security Document.

 

8

 

“Collateral
Agent” shall mean NCNB, in its capacity as Collateral Agent under
the Intercreditor Agreement and any successors thereunder.

 

“Intercreditor
Agreement” shall mean the Intercreditor dated as of April 24, 2003,
among Prudential, the holders of the Notes, the banks party to the NCNB
Agreement, and Bank of America, as collateral agent, as the provisions thereof
may from time to time be amended or waived in compliance with the terms
thereof.

 

“NCNB
Agreement” shall mean that certain Credit Agreement dated as of
April 24, 2003, among the Company, Bank of America, as Administrative Agent and
L/C Issuer, Bank One, NA and Fleet National Bank, as Co-Syndication Agents, The
Royal Bank of Scotland plc and Wachovia Bank, National Association, as
Co-Documentation Agents, and the lenders party thereto, as the provisions
thereof may from time to time be amended or waived in compliance with paragraph
6E.

 

“Prudential”
shall mean Prudential Investment Management, Inc.

 

(II)           The
following definitions are inserted in paragraph 10B in the appropriate
alphabetical positions therein:

 

“Debt
Rating” shall mean, as of any date of determination, the rating as
determined by either S&P or Moody’s of the Company’s Debt under the NCNB
Agreement or any replacement credit facility therefor; provided that if
a Debt Rating is issued by each of the foregoing rating agencies, then the
lower of such Debt Ratings shall apply.

 

“Debt
Rating Downgrade” shall mean that (i) a Debt Rating is not issued by
S&P on or before September 30, 2003, or (ii) a Debt Rating is not issued by
Moody’s on or before September 30, 2003, or (iii) the Debt Rating by S & P
is issued at a rating less than BB or is subsequently reduced to BB – or lower,
or (iv) the Debt Rating by Moody’s is issued at a rating less than Ba2 or is
subsequently reduced to Ba3 or lower, or (v) either the Debt Rating by S&P
or the Debt Rating by Moody’s is withdrawn; provided that if either of
such Debt Ratings is withdrawn due to a condition or event that is not caused
by or attributable to Company or Company’s financial condition and/or
operations, such withdrawal shall not constitute a Debt Rating Downgrade if (A)
within 90 days after the date on which such Debt Rating is withdrawn, the
Required Holder(s) have approved a Replacement Rating Agency selected by Company
and Prudential  in accordance with the terms of paragraph 11R, and (B) such
Replacement Rating Agency has issued a Debt Rating acceptable to Required
Holder(s) within a reasonable period of time after such Replacement Rating
Agency is approved by Required Holder(s), such reasonable time period to be
determined by Required Holder(s).

 

9

 

“Domestic
Subsidiary Guarantor” means any Subsidiary that is (i) organized
under the laws of any political subdivision of the United States, and (ii)
required to execute and deliver a Guaranty pursuant to paragraph 5M of this
Agreement.

 

“FERC”
shall mean the Federal Energy Regulatory Commission and successor or successors
to all or any part of its functions or jurisdictions.

 

“Mortgage”
shall mean, collectively, any Mortgage, Assignment, Security Agreement, Fixture
Filing, and Financing Statement or similar agreement delivered by any one or
more Subsidiary of the Company with regard to the Oil and Gas Collateral
pursuant to paragraph 5Q.

 

“Oil
and Gas Collateral” shall have the meaning specified in paragraph
5Q.

 

“PUC”
shall mean any applicable public utilities commission for any state or other
jurisdiction in which the Company or any Subsidiary conducts business and any
successor or successors to all or any part of its functions or jurisdictions.

 

“PUC
Subsidiary” shall mean any Subsidiary that is required to be
regulated as a public utility or a natural gas company under applicable law and
that is prohibited under such applicable law from incurring a Guaranty and/or
granting Liens or security interests in any Collateral, in each case without
the approval of the applicable public utility commission having regulatory
authority over such PUC Subsidiary or FERC (to the extent regulated by FERC).

 

“Replacement
Ratings Agency” shall have the meaning specified in paragraph 11R.

 

“Security
Documents” shall mean all security agreements, deeds of trust,
mortgages, chattel mortgages, pledges, guaranties, financing statements,
continuation statements, extension agreements and other agreements or
instruments now, heretofore, or hereafter delivered by the Company or any
Subsidiary to Prudential, the holders of the Notes or the Collateral Agent in
connection with this Agreement or any transaction contemplated hereby to secure
or guarantee the payment of any part of the obligations hereunder or under the
Notes or the performance of the other duties and obligations of the Company or
any Subsidiary under this Agreement, including, without limitation, the
Mortgages and the Pledge Agreements.

 

(g)           Miscellaneous. The Agreement is amended to add a new paragraph
11R that reads as follows:

 

“11R.      Replacement
Rating Agency.  If a Debt
Rating Downgrade occurs under clause (v) of the definition of Debt Rating
Downgrade due to a condition or event that is not caused by or attributable to
Company or Company’s financial condition and/or

 

10

 

operations, Prudential and the Company shall select a proposed
replacement for the rating agency that has withdrawn its Debt Rating.  Promptly thereafter, Prudential shall submit
the name of such proposed replacement rating agency to the holders of the Notes
for approval, together with such information regarding such rating agency as it
deems necessary.  Within 10 Business
Days of its receipt of such notice, each holder shall advise Prudential in
writing as to whether it approves such proposed replacement rating agency.  If any holder does not respond in writing to
Prudential within such 10-Business Day period, such holder shall be deemed to
have approved the proposed replacement rating agency.  If such proposed replacement rating agency is approved (or deemed
approved) by Required Holder(s), it shall be the “Replacement Rating Agency.”

 

(h)           Exhibit
I.  A
new Exhibit I is added to the Agreement in the form attached as Exhibit
I hereto.

 

3.             Representations and Warranties.
In order to induce each of you to enter into this Amendment, the Intercreditor
Agreement (as defined in paragraph 1(f)(I) hereof) and the Pledge Agreement
Amendments (as defined in paragraph 4(c)(IV) hereof), the Company hereby
represents and warrants as follows:

 

(a)           Due
Authorization; Noncontravention.  The execution, delivery and performance by
the Company and each Guarantor of this Amendment, the Intercreditor Agreement
and the Pledge Agreement Amendments have been duly authorized by all necessary
corporate or limited liability company action, as applicable, and do not and
will not (i) contravene the terms of the charter and by-laws or other
organizational documents of the Company or any Guarantor, (ii) conflict
with or result in any breach or contravention of, or the creation of any Lien
(other than the Liens created by the Security Documents) under, any document
evidencing any contractual obligation to which any such Person is a party or
any order, injunction, writ or decree of any governmental authority binding on
any such Person or its property, or (iii) violate any applicable law
binding on or affecting any such Person.

 

(b)           Binding
Effect. 
This Amendment, the Intercreditor Agreement and the Security Documents
(as defined in paragraph 1(f)(II)), as amended by the Pledge Agreement
Amendments, constitute the legal, valid and binding obligations of the Company and
the Guarantors, enforceable against such Persons in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors’
rights generally or by equitable principles of general applicability.

 

(c)           Representations
and Warranties.  The representations and warranties of the Company and the
Guarantors set forth in the Agreement, the Guaranties and the Security
Documents are true and correct on and as of the date hereof, both before and
after giving effect to the effectiveness of this Amendment (except to the
extent such representations and warranties expressly are limited to an earlier
date, in which such representations and warranties are true and correct on and
as of such earlier date).

 

(d)           No
Defaults. 
No Default or Event of Default exists under the Agreement, the Notes,
any Guaranty, any Security Document or any other agreement or instrument
executed in connection therewith and no default or event of default exists
under the NCNB Agreement, any

 

11

 

agreement or instrument
executed in connection therewith or any other material contract or agreement to
which the Company or any of the Guarantors is a party, and, to the Company’s
knowledge, no such default or event of default is imminent.

 

4.     Miscellaneous.

 

(a)           Effect
on Agreement.  On and after
the effective date of this Amendment, each reference in the Agreement to “this
Agreement”, “hereunder”, “hereof”, or words of like import referring to the
Agreement and each reference in the Notes and all other documents executed in
connection with the Agreement to “the Agreement”, “thereunder”, “thereof”, or
words of like import referring to the Agreement shall mean the Agreement as
amended by this Amendment. The Agreement, as amended by this Amendment, is and
shall continue to be in full force and effect and is hereby in all respects
ratified and confirmed.

 

(b)           Counterparts.
This Amendment may be executed in any number of counterparts (including those
transmitted by facsimile) and by any combination of the parties hereto in
separate counterparts, each of which counterparts shall be an original and all
of which taken together shall constitute one and the same Amendment.  Delivery of this Amendment may be made by
facsimile transmission of a duly executed counterpart copy hereof.

 

(c)           Effectiveness.
This Amendment shall become effective as of the date first above written when
and if each of the conditions set forth in this subparagraph (c) shall have
been satisfied.

 

(I)            Amendment. Counterparts of this Amendment shall have been executed by the Company,
each Guarantor and the Required Holder(s) and shall have been delivered to
Prudential.

 

(II)           NCNB
Loan Documents.  The Loan
Documents (as defined in the NCNB Agreement) shall have been executed by all
parties thereto, a final copy and execution pages thereof shall have been
delivered to Prudential and all of such Loan Documents shall be in form and
substance satisfactory to Prudential and in full force and effect.

 

(III)         Intercreditor
Agreement.  The Intercreditor
Agreement (as defined in paragraph 1(k)) shall have been executed by all
parties thereto, a counterpart thereof shall have been delivered to Prudential
and such Intercreditor Agreement shall be in form and substance satisfactory to
Prudential and in full force and effect.

 

(IV)         Pledge
Agreement Amendments.  Each
of the Amendments No. 2 to Pledge Agreement in the forms attached as Exhibits
A-1 and A-2, respectively (collectively, the “Pledge Agreement Amendments”),
shall have been executed by all parties thereto, a counterpart thereof shall
have been delivered to Prudential and each such Pledge Agreement Amendment
shall be in full force and effect.

 

(V)           Representations
and Warranties.  Each of the
representations and warranties made in this Amendment shall be true and correct
on and as of the date hereof as if made on and as of such date, both before and
after giving effect to this Amendment.

 

12

 

(VI)         Fees
and Expenses of Counsel.  The
Company shall have paid the estimated fees, costs and out-of-pocket expenses
incurred by external counsel to Prudential in connection with the preparation,
negotiation, execution and delivery of this Amendment, the Intercreditor
Agreement, the Pledge Agreement Amendments and all transaction contemplated
hereby and thereby.

 

(d)           Expenses.  The Company confirms its agreement, pursuant
to paragraph 11B of the Agreement, to pay promptly all expenses of the
undersigned holders of Notes related to the preparation, reproduction,
execution and delivery of this Amendment, the Intercreditor Agreement, the
Pledge Agreement Amendments and all matters contemplated hereby and thereby,
including without limitation all fees and expenses of counsel to such parties.

 

(c)           Governing Law.   THIS AMENDMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED
BY, THE LAW OF THE STATE OF NEW YORK.

 

(f)            Affirmation
of Obligations and Liens. 
Notwithstanding that such consent is not required thereunder, each of
the Guarantors consents to the execution and delivery of this Amendment by the
parties hereto, the Intercreditor Agreement by the parties thereto and the
Pledge Agreement Amendments by the parties thereto. As a material inducement to
the undersigned to amend the Agreement and to enter into the Intercreditor
Agreement and the Pledge Agreement Amendments, each of the Guarantors
respectively (i) acknowledges and confirms the continuing existence,
validity and effectiveness of the Guaranty and Pledge Agreement, if any, to
which it is a party, and any Liens granted thereunder, and (ii) agrees
that the execution, delivery and performance of this Amendment, the Intercreditor
Agreement and the Pledge Agreement Amendments shall not in any way release,
diminish, impair, reduce or otherwise affect its obligations under any such
Guaranty or Pledge Agreement or any Liens granted thereunder.

 

(g)           FINAL AGREEMENT.  THIS AMENDMENT, TOGETHER WITH THE
INTERCREDITOR AGREEMENT, THE AGREEMENT, THE PLEDGE AGREEMENTS AND THE PLEDGE
AGREEMENT AMENDMENTS, REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

 

[Remainder of page is intentionally left blank; signature
pages follow]

 

13

 

If you agree to the terms
and provisions hereof, please evidence your agreement by executing and
returning a counterpart of this Amendment to Western Gas Resources, Inc., 1099
18th Street, Suite 1200, Denver, CO 80202, Attention: General Counsel.

 

 

	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WESTERN GAS RESOURCES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William J.
  Krysiak

  
	
   

  	
   

  	
  William J. Krysiak

  
	
   

  	
   

  	
  Executive Vice President- CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Agreed as of the date
  first above written:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Ric E. Abel

  	
   

  
	
   

  	
  Ric E. Abel

  	
   

  
	
   

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PRUCO LIFE INSURANCE COMPANY

  
	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Ric E. Abel

  	
   

  
	
   

  	
  Ric E. Abel

  	
   

  
	
   

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PRUDENTIAL INVESTMENT MANAGEMENT, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Ric E. Abel

  	
   

  
	
   

  	
  Ric E. Abel

  	
   

  
	
   

  	
  Vice President

  	
   

  
						

 

14

 

	
  ING LIFE INSURANCE & ANNUITY COMPANY

  
	
   

  	
   

  	
   

  
	
  By:

  	
  Prudential Private Placement Investors, L.P. (as
  Investment Advisor)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Prudential Private Placement Investors, Inc.,
  General Partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Ric E. Abel

  	
   

  	
   

  
	
   

  	
   

  	
  Ric E. Abel

  	
   

  	
   

  
	
   

  	
   

  	
  Vice President

  	
   

  	
   

  
							

 

15

 

Agreed and acknowledged
by each of the undersigned for

the purposes set forth in
paragraph 4(f).

 

 

	
   

  	
  MIGC, INC.

  
	
   

  	
  MGTC, INC.

  
	
   

  	
  WESTERN GAS RESOURCES-TEXAS, INC.

  
	
   

  	
  MOUNTAIN GAS RESOURCES, INC.

  
	
   

  	
  LANCE OIL & GAS COMPANY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William J. Krysiak

  	
   

  
	
   

  	
   

  	
  William J. Krysiak

  
	
   

  	
   

  	
  Executive Vice President- CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WESTERN GAS WYOMING, L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Western Gas Resources, Inc., its sole member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William J. Krysiak

  	
   

  
	
   

  	
   

  	
  William J. Krysiak

  
	
   

  	
   

  	
  Executive Vice President- CFO

  
								

 

16

 

EXHIBIT A-1

 

[FORM OF AMENDMENT NO. 2 TO PLEDGE AGREEMENT]

 

To be attached.

 

 

EXHIBIT A-2

 

[FORM OF AMENDMENT NO. 2 TO PLEDGE AGREEMENT]

 

To be attached.

 

 

EXHIBIT I

 

[FORM OF MORTGAGE]

 

To be attached.Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

SECURITIES
PURCHASE AGREEMENT (this “Agreement”), dated as of May 12, 2003,
between Cambridge Heart, Inc., a corporation organized under the laws of the
State of Delaware (the “Company”), and the Purchasers listed on Schedule
I attached hereto (each, a “Purchaser” and collectively, the “Purchasers”).

 

WHEREAS:

 

A.                                   The Company and the
Purchasers are executing and delivering this Agreement in reliance upon the
exemption from securities registration afforded by the provisions of
Regulation D (“Regulation D”),
as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as
amended (the “Securities Act”).

 

B.                                     The Company
desires to sell, and the Purchasers desire to purchase, upon the terms and
conditions stated in this Agreement, shares of the Company’s Series A
Convertible Preferred Stock, par value $.001 per share (“Series A
Preferred”), and warrants to purchase shares of Series A Preferred
(the “Warrants”).  The shares of Series A Preferred issuable
pursuant to this Agreement are referred to herein as the “Shares.” 
The shares of Series A Preferred issuable upon exercise of the Warrants
are referred to herein as the “Warrant Shares.”  The Shares, the Warrants, the Warrant Shares
and the shares of the Company’s common stock, par value $.001 per share (the “Common Stock”), issuable upon conversion of the Shares or
the Warrant Shares (the “Conversion Shares”)
are referred to herein as the “Securities.”

 

C.                                     Contemporaneous
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a Registration Rights Agreement, in the form attached
hereto as Exhibit A (the “Registration
Rights Agreement”), pursuant to which the Company has agreed to
provide certain registration rights under the Securities Act and the rules and
regulations promulgated thereunder, and applicable state securities laws.

 

D.                                    All references
herein to monetary denominations shall refer to lawful money of the United States
of America.

 

NOW,
THEREFORE, the Company and the Purchasers hereby agree as follows:

 

1.                                       PURCHASE
AND SALE.

 

(a)           Purchase of Shares.  On the Closing Date (as defined below),
subject to the satisfaction (or waiver) of the conditions set forth in Section
6 and Section 7 below, the Company shall issue and sell to the Purchasers, and
each Purchaser severally agrees to purchase from the Company, that number of
Shares at a purchase price of $4.42 per Share (the “Purchase Price”) as set forth opposite such Purchaser’s name
on Schedule I hereto, for the aggregate purchase price and consideration
set forth opposite such Purchaser’s name thereon.

 

(b)           Short-Term Warrants.  On the Closing Date, subject to the
satisfaction (or waiver) of the conditions set forth in Section 6 and Section 7
below, the Company shall issue to

 

 

each of the Purchasers, other
than Medtronic, Inc. (“Medtronic”),
six Warrants in the form of Exhibit B hereto.  Each Warrant issued to a Purchaser pursuant to this Section 1(b)
shall be exercisable for one-sixth of the aggregate number of Warrant Shares
set forth opposite such Purchaser’s name on Schedule I hereto.  The Warrants issued to each Purchaser
pursuant to this Section 1(b) shall have the following initial expiration
dates:  September 1, 2003, October 1,
2003, November 1, 2003, December 1, 2003, January 1, 2004 and February 1,
2004.  Notwithstanding the foregoing,
the Company may, in its sole discretion, upon written notice given to the
Purchasers prior to the expiration date of any tranche of Warrants issued to
the Purchasers pursuant to this Section 1(b), extend the expiration date of
each Warrant within such tranche of Warrants to (i) March 1, 2004 for the first
tranche of Warrants so extended, (ii) April 1, 2004 for the second tranche of
Warrants so extended, and (iii) May 1, 2004 for the third tranche of Warrants
so extended, provided, however, that the Company may extend the
expiration date of any tranche of Warrants only once and, provided, further,
that the Company may not extend the expiration date of more than three tranches
of Warrants.

 

(c)           Medtronic Warrant.  On the Closing Date, subject to the
satisfaction (or waiver) of the conditions set forth in Section 6 and Section 7
below, the Company shall issue to Medtronic a Warrant in the form of Exhibit
C hereto for the purchase of 67,873 Warrant Shares at an exercise price per
Warrant Share equal to the Purchase Price. 
The Warrant issued to Medtronic pursuant to this Section 1(c) shall
expire on January 1, 2009.

 

(d)           Deliveries.  At the Closing, the Company shall deliver to
each Purchaser, other than Medtronic and The Tail Wind Fund Ltd. (“Tail Wind”), (i) a duly executed certificate or
certificates, (ii) duly executed Warrant agreements (in such denominations as
such Purchaser may reasonably request) representing that number of Shares and
Warrant Shares set forth opposite such Purchaser’s name on Schedule I
and (iii) duly executed Warrant agreements (in such denominations as such
Purchaser may reasonably request) pursuant to Section 1(f) below, against
payment of the purchase price therefor by wire transfer, in accordance with the
Company’s written wiring instructions. 
At the Closing, the Company shall deliver to Medtronic (i) a duly executed
certificate or certificates (in such denominations as Medtronic may reasonably
request) representing that number of Shares set forth opposite Medtronic’s name
on Schedule I and (ii) duly executed Warrant agreements (in such
denominations as Medtronic may reasonably request) for the purchase of that
number of Warrant Shares provided in Section 1(c) above, against payment of the
purchase price therefor by wire transfer, in accordance with the Company’s
written wiring instructions.  At the
Closing, the Company shall deliver to Tail Wind (i) duly executed Warrant
agreements (in such denominations as such Purchaser may reasonably request)
representing that number of Warrant Shares set forth opposite such Purchaser’s
name on Schedule I and (ii) duly executed Warrant agreements (in such
denominations as Tail Wind may reasonably request) pursuant to Section 1(g)
below.

 

(e)           Closing Date.  The issuance, sale and purchase of the
Shares and the Warrants pursuant to Sections 1(a), 1(b) and 1(c) above shall
take place at a Closing (the “Closing”).  Subject to the satisfaction (or waiver) of
the conditions thereto set forth in Section 6 and Section 7 below, the Closing
shall be held at the offices of Hale and Dorr LLP, 60 State Street, Boston,
MA  02109 on the second Business Day
following the date of this Agreement, or such other date and place as may be
mutually agreed upon by the Company and the Purchasers.  The date on which the Closing actually
occurs is referred to herein as the “Closing
Date.”

 

2

 

(f)            Long-Term Warrants.  At the Closing, the Company shall issue to
each of the Purchasers, other than Medtronic and Tail Wind, an additional
Warrant in the form of Exhibit D hereto for the purchase of a
number of Warrant Shares equal to 30% of the aggregate number of (i) Shares
purchased at the Closing and (ii) Warrant Shares purchased pursuant to the
exercise of Warrants issued pursuant to Section 1(b) above.  The Warrants issued to each Purchaser
pursuant to this Section 1(f) shall expire on January 1, 2009.  The Warrants issued pursuant to this Section
1(f) shall have an exercise price per Warrant Share equal to $5.525.

 

(g)           Tail Wind Long-Term Warrants.  At the Closing, the Company shall issue to
Tail Wind an additional Warrant in the form of Exhibit D hereto for the
purchase of a number of Warrant Shares equal to 75% of the aggregate number of
Warrant Shares purchased pursuant to the exercise of Warrants issued pursuant
to Section 1(b) above.  The Warrant
issued to Tail Wind pursuant to this Section 1(g) shall expire on January 1,
2009.  The Warrants issued pursuant to
this Section 1(g) shall have an exercise price per Warrant Share equal to
$5.525.

 

2.             PURCHASERS’ REPRESENTATIONS AND
WARRANTIES.

 

Each Purchaser
hereby severally represents and warrants to the Company as follows:

 

(a)           Purchase for Own Account, Etc.  Each Purchaser is purchasing the Securities
for such Purchaser’s own account for investment purposes only and not with a
present view towards the public sale or distribution thereof, except pursuant to
sales that are exempt from the registration requirements of the Securities Act
and/or pursuant to sales duly registered under the Securities Act.  Each Purchaser understands that it must bear
the economic risk of this investment indefinitely, unless the Securities are
registered pursuant to the Securities Act and any applicable state securities
or blue sky laws or an exemption from such registration is available, and that
the Company has no present intention of registering the resale of the
Securities other than as contemplated by the Registration Rights
Agreement.  Notwithstanding anything in
this Section 2(a) to the contrary, by making the representations herein, the
Purchasers do not agree to hold the Securities for any minimum or other
specific term and reserve the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an available
exemption from the registration requirements under the Securities Act.

 

(b)           Accredited Investor Status.  Each Purchaser is an “Accredited Investor” as that term is
defined in Rule 501(a) of Regulation D, and was not organized for the purpose
of this investment.

 

(c)           Reliance on Exemptions.  Each Purchaser understands that the
Securities are being offered and sold to such Purchaser in reliance upon
specific exemptions from the registration requirements of United States federal
and state securities laws and that the Company is relying upon the truth and
accuracy of, and such Purchaser’s compliance with, the representations, warranties,
agreements, acknowledgments and understandings of such Purchaser set forth
herein in order to determine the availability of such exemptions and the
eligibility of such Purchaser to acquire the Securities.

 

(d)           Information.  Each Purchaser and its counsel, if any, have
been furnished all materials relating to the business, finances and operations
of the Company and materials

 

3

 

relating to the offer and sale
of the Securities which have been specifically requested by such Purchaser or
its counsel.  Each Purchaser and its
counsel have been afforded the opportunity to ask questions of the Company and
have received what each Purchaser believes to be satisfactory answers to any
such inquiries.  Neither such inquiries
nor any other investigation conducted by the Purchasers or its counsel or any
of its representatives shall modify, amend or affect the Purchasers’ right to
rely on the Company’s representations and warranties contained in Section 3
below.  Each Purchaser understands that
the Purchaser’s investment in the Securities involves a high degree of risk.

 

(e)           Governmental Review.  Each Purchaser understands that no United
States federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities.

 

(f)            Transfer or Resale.  Each Purchaser understands that (i) except
as provided in the Registration Rights Agreement, the sale or resale of the
Securities have not been and are not being registered under the Securities Act
or any state securities laws, and the Securities may not be transferred unless
(A) the resale of the Securities has been registered thereunder; or (B) the
Purchaser shall have delivered to the Company an opinion of counsel (which
opinion shall be in form, substance and scope customary for opinions of counsel
in comparable transactions) to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration; or (C) the Securities are sold under and in compliance with Rule
144 promulgated under the Securities Act (or a successor rule) (“Rule 144”); or (D) the Securities are sold
or transferred to an affiliate of the Purchaser or, in the case of the Warrants,
to another Purchaser, who agrees to sell or otherwise transfer the Securities
only in accordance with the provisions of this Section 2(f) and who is an
Accredited Investor; and (ii) neither the Company nor any other person is under
any obligation to register such Securities under the Securities Act or any
state securities laws other than pursuant to the Registration Rights
Agreement.  Notwithstanding the
foregoing or anything else contained herein to the contrary, the Securities may
be pledged as collateral in connection with a bona fide margin account or other
lending arrangement, provided such pledge is consistent with applicable laws,
rules and regulations, including all applicable securities laws.

 

(g)           Legends.  Each Purchaser understands that until such
time as the Securities have been registered under the Securities Act (including
registration pursuant to Rule 416 thereunder) or otherwise may be sold by the
Purchaser under Rule 144(k), certificates for the Securities may bear a
restrictive legend in substantially the following form:

 

The securities
represented by this certificate have not been registered under the Securities
Act of 1933, as amended, or the securities laws of any state of the United
States or in any other jurisdiction. 
The securities represented hereby may not be offered, sold or
transferred in the absence of an effective registration statement for the
securities under applicable securities laws unless offered, sold or transferred
pursuant to an available exemption from the registration requirements of those
laws.

 

4

 

The Company agrees that it
shall, promptly after the Registration Statement (as defined in the
Registration Rights Agreement) has been declared effective, deliver to its transfer
agent an opinion letter of counsel, opining that at any time the Registration
Statement is effective, the Shares and Warrant Shares may be sold pursuant to
the prospectus contained in the Registration Statement.  Upon receipt of such opinion, the Company
shall cause the transfer agent to confirm, for the benefit of the holders, that
no further opinion of counsel is required at the time of transfer in order to
issue such shares without such restrictive legend.

 

The legend set forth above
shall be removed and the Company shall issue (or instruct the transfer agent to
issue) a certificate without such legend to the holder of any Shares  or Warrant Shares upon which it is stamped,
if, unless otherwise required by state securities laws, (a) such holder provides
the Company with an opinion of counsel, in form, substance and scope customary
for opinions of counsel in comparable transactions, to the effect that a public
sale or transfer of such Shares or Warrant Shares may be made without
registration under the Securities Act; or (b) such holder provides the Company
with reasonable assurances that such Shares or Warrant Shares can be sold under
Rule 144(k).

 

(h)                                 Residency.  Each Purchaser is a resident of the
jurisdiction set forth under such Purchaser’s name on Schedule I hereto.

 

(i)                                     Authorization;
Enforcement.  Each Purchaser has
full power and authority to enter into this Agreement and the Registration
Rights Agreement.  This Agreement and
the Registration Rights Agreement have been duly and validly authorized,
executed and delivered on behalf of each Purchaser and are valid and binding
agreement of each Purchaser enforceable against each Purchaser in accordance
with their terms; except as such enforceability may be limited by bankruptcy
laws and other similar laws affecting creditors’ rights generally and general
principles of equity.

 

The
Purchasers’ representations and warranties made in Sections 2(a) through (h)
are made solely for the purpose of permitting the Company to make a
determination that the offer and sale of the Securities pursuant to this
Agreement complies with applicable U.S. federal and state securities laws and
not for any other purpose.  Accordingly,
the Company hereby agrees not to rely on or utilize such representations and
warranties for any other purpose.

 

3.                                       REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.

 

The Company represents and warrants to each
Purchaser as follows, in each case, except as set forth in the Disclosure
Schedule prepared by the Company and delivered concurrently herewith (which
Disclosure Schedule identifies the subsection(s) of this Section 3 to which
each disclosure made therein relates, and each such disclosure shall be deemed
to relate only to such identified subsection(s) of this Section 3 and to such
other subsections to which the applicability of such disclosure is reasonably
apparent):

 

(a)                                  Organization
and Qualification.  The Company is a
corporation duly organized and existing in good standing under the laws of the
jurisdiction in which it is incorporated, and has the requisite corporate power
to own its properties and to carry on its business as now being conducted and
as now proposed to be conducted.  The
Company has

 

5

 

sufficient licenses, permits
and other governmental authorizations currently required for the conduct of its
business or ownership of properties and is in all material respects complying
therewith.  The Company has no subsidiaries.  The Company is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in
which the nature of the business conducted by it makes such qualification
necessary and where the failure so to qualify could have a Material Adverse
Effect.  “Material Adverse Effect”
means any material adverse effect on (i) the ability of the Company to perform
its obligations under this Agreement, the Warrants or the Registration Rights
Agreement or (ii) the business, operations, properties or financial
condition of the Company.

 

(b)           Authorization; Enforcement.  The Company has the requisite corporate
power and authority to enter into and perform its obligations under this
Agreement, the Warrants and the Registration Rights Agreement, to issue and
sell the Shares in accordance with the terms hereof, to issue the Warrant
Shares upon exercise of the Warrant and to issue the Conversion Shares upon
conversion of the Shares and the Warrant Shares.  The execution, delivery and performance of this Agreement, the
Warrants and the Registration Rights Agreement by the Company and the
consummation by it of the transactions contemplated hereby and thereby
(including, without limitation, the issuance of the Securities) have been duly
authorized by the Company’s Board of Directors and no further consent or
authorization of the Company, its Board of Directors, any committee of the
Board of Directors or the Company’s stockholders is required.  This Agreement constitutes, and, upon
execution and delivery by the Company of the Registration Rights Agreement and
the Warrants, such agreements will constitute, valid and binding obligations of
the Company enforceable against the Company in accordance with their terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or moratorium laws or other similar laws affecting creditors’
rights generally and general principles of equity.

 

(c)           Stockholder Authorization.  Neither the execution, delivery or
performance by the Company of its obligations under this Agreement, the
Warrants or the Registration Rights Agreement, nor the consummation by it of
the transactions contemplated hereby or thereby (including, without limitation,
the issuance of the Securities) requires any consent or authorization of the
Company’s stockholders.

 

(d)           Capitalization.  The capitalization of the Company as of the
date hereof, including the authorized capital stock, the number of shares
issued and outstanding, the number of shares issuable and reserved for issuance
pursuant to the Company’s stock option plans and the number of shares issuable
and reserved for issuance pursuant to securities exercisable or exchangeable
for, or convertible into, any shares of capital stock, is set forth on Schedule
3(d).  All shares of the Company’s
capital stock have been, or upon issuance, will be, duly authorized, validly
issued, fully paid, non-assessable and issued in compliance with all applicable
federal and state securities laws.  No
shares of capital stock of the Company (including the Shares, the Warrant
Shares and the Conversion Shares) are subject to preemptive rights or any other
similar statutory or contractual rights of the stockholders of the Company or
any liens or encumbrances.  Except for
the Securities and as set forth on Schedule 3(d), as of the date of this
Agreement, (i) there are no outstanding options, warrants, scrip, rights
to subscribe to, calls or commitments of any character whatsoever relating to,
or securities or rights convertible into or exercisable or exchangeable for,
any shares of capital stock of the Company or arrangements by which the

 

6

 

Company is or may become bound
to issue additional shares of capital stock of the Company nor, other than in
the ordinary course pursuant to the Company’s existing employee stock option
plan, are any such issuances or arrangements contemplated, and (ii) except as
set forth on Schedule 3(d), there are no agreements or arrangements
under which the Company is obligated to register the sale of any of its
securities under the Securities Act (other than the Registration Rights
Agreement).  None of the anti-dilution
or similar provisions contained in any of the Company’s issued and outstanding
securities or instruments will be triggered by the issuance of the Securities
in accordance with the terms of this Agreement and the Warrants.  The Company has made available to the
Purchasers true and correct copies of the Company’s Certificate of
Incorporation as in effect on the date hereof (“Certificate of Incorporation”),
and the Company’s Bylaws as in effect on the date hereof (the “Bylaws”).

 

(e)           Issuance of Shares.  The Securities have been duly reserved for
issuance and, when issued, will be duly authorized, validly issued, fully paid
and non-assessable, with no personal liability attaching to the ownership
thereof, and will be free and clear of all taxes, liens, claims and
encumbrances.  The issuance, sale and
delivery of the Securities is not subject to any preemptive right of
stockholders of the Company or lenders to the Company or any other third party,
or to any right of first refusal, co-sale or other similar right in favor of
any party, including stockholders of the Company, that has not been fully
complied with or duly waived.

 

(f)            No Conflicts.  The execution, delivery and performance by
the Company of this Agreement, the Warrants and the Registration Rights
Agreement and the consummation of the transactions contemplated hereby and
thereby (including, without limitation, the issuance of the Securities) will
not (i) result in a violation of the Certificate of Incorporation or Bylaws or
(ii) conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment (including, without limitation, the triggering
of any anti-dilution provisions), acceleration or cancellation of, any
agreement, indenture or instrument to which the Company is a party, or (iii)
result in a violation of any law, rule, regulation, order, judgment or decree (including
United States federal and state securities laws and regulations and rules or
regulations of any self-regulatory organizations to which the Company or its
securities are subject) applicable to the Company or by which any property or
asset of the Company is bound or affected. 
The Company is not in violation of its Certificate of Incorporation,
Bylaws or other organizational documents and, except as could not have a
Material Adverse Effect, the Company is not in default (and no event has
occurred which, with notice or lapse of time or both, would put the Company in
default) under, nor has there occurred any event giving others (with notice or
lapse of time or both) any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company is
a party.  The Company has no knowledge
of any breach or anticipated breach by the Company or any other party to any
contract or commitment to which the Company is a party, except as would not
reasonably be expected to have a Material Adverse Effect.  The Company has complied with all laws,
rules, regulations and orders applicable to its business, operations,
properties, assets, products and services, except for any failure to so comply
as would not reasonably be expected to have a Material Adverse Effect.  The Company has all necessary permits,
licenses and other authorizations required to conduct its business as
conducted, and has no reason to believe that it will not obtain the same with
respect to its business as proposed to be conducted, which, if not obtained,
would have, either individually or in the aggregate, a Material Adverse
Effect.  The Company has timely filed or

 

7

 

otherwise provided all
registrations, reports, data, and other information and applications with
respect to its medical device, pharmaceutical, consumer, health care, and other
governmentally regulated products (the “Regulated
Products”) required to be filed with or otherwise provided to the
United States Food and Drug Administration (“FDA”)
or any other federal, state, local, or foreign governmental or regulatory body
or authority (each, a “Governmental Body”)
with jurisdiction over the testing, manufacture, use, marketing or sale of the
Regulated Products, has complied with all applicable requirements of the FDA or
other Governmental Body with respect to the Regulated Products, and all
regulatory licenses or approvals in respect thereof are in full force and
effect.  All documentation, correspondence,
reports, data, analyses and certifications relating to or regarding any medical
devices of the Company, filed or delivered by or on behalf of the Company to
any Governmental Body was true and accurate when so filed or delivered, and
remains true and accurate in all material respects.  Except as specifically contemplated by this Agreement, the
Warrants, the Registration Rights Agreement, the Company is not required to
obtain any consent, approval, authorization or order of, or make any filing or registration
with, any court or governmental agency or any regulatory or self regulatory
agency or other third party in order for it to execute, deliver or perform any
of its obligations under this Agreement, the Warrants or the Registration
Rights Agreement in accordance with the terms hereof or thereof.

 

(g)           SEC Documents, Financial
Statements.  Since January 1, 2001,
the Company has timely filed (within applicable extension periods) each annual,
quarterly, current and other report, registration statement, proxy statement,
schedule, form, and other document required to be filed or furnished by it with
the SEC pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the Securities Act (all
of the foregoing filed or furnished prior to the date hereof and all exhibits
included therein and financial statements and schedules thereto and documents
incorporated by reference therein, being hereinafter referred to herein as the
“SEC Documents”).  As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the Exchange Act or
the Securities Act, as the case may be, and the rules and regulations of the
SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed or furnished with the SEC, 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 light of the circumstances under which they were made, not
misleading.  None of the statements made
in any such SEC Documents is, or has been, required to be amended or updated
under applicable law (except for such statements as have been amended or
updated in subsequent filings made prior to the date hereof).  As of their respective dates, the financial
statements of the Company included in the SEC Documents complied in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC applicable with respect thereto.  Such financial statements have been prepared
in accordance with U.S. generally accepted accounting principles (“GAAP”), consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed or
summary statements) and fairly present the financial position of the Company as
of the dates thereof and the results of operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to immaterial
year-end audit adjustments).  Except as
set forth in the financial statements of the Company included in the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2002 filed
with the SEC on March 31, 2002 (the “2002 Form 10-K”), the Company has no
liabilities, contingent or otherwise, other than (i) liabilities

 

8

 

incurred in the ordinary course
of business subsequent to the date of such financial statements and (ii)
obligations under contracts and commitments incurred in the ordinary course of
business and not required under GAAP to be reflected in such financial
statements, which liabilities and obligations referred to in clauses (i) and
(ii), individually or in the aggregate, are not material to the financial
condition or operating results of the Company.

 

(h)           Absence of Certain Changes.  Since December 31, 2002, there has been no
change or development in the business, properties, operations, financial
condition or results of operations of the Company which could have a Material
Adverse Effect, except as disclosed in the 2002 Form 10-K.

 

(i)            Absence of Litigation.  Except as specifically disclosed in the 2002
Form 10-K, there is no action, suit, proceeding, inquiry or investigation
before or by any court, public board, arbitrator, government agency,
self-regulatory organization or body, including, without limitation, the SEC,
pending or, to the knowledge of the Company, threatened against or affecting
the Company, or any of its directors or officers in their capacities as
such.  To the knowledge of the Company,
there are no facts which, if known by a potential claimant or governmental
authority, could give rise to a claim or proceeding which, if asserted or
conducted could have a Material Adverse Effect on the Company.

 

(j)            Intellectual Property.  The Company owns or is licensed to use all
patents, patent applications, trademarks, trademark applications, trade names,
service marks, copyrights, copyright applications, licenses, permits,
inventions, discoveries, processes, scientific, technical, engineering and
marketing data, object and source codes, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures) and other similar rights and proprietary knowledge
necessary for or used in the conduct of its business as now being conducted
(collectively, the “Intangibles”),
free and clear of any liens.  To the
knowledge of the Company, the Company’s operations do not infringe and are not
in conflict with any right of any other person with respect to any patent,
trade secret, know-how or other intellectual property.  The Company has not received written notice
of any pending conflict with or infringement upon intellectual property rights
of any other person.  Except as
specifically disclosed in the 2002 Form 10-K, the Company has not entered into
any consent agreement, indemnification agreement, forbearance to sue or
settlement agreement with respect to the validity of the Company’s ownership or
right to use the Intangibles and, to the knowledge of the Company, there is no
reasonable basis for any such claim to be successful.  The Intangibles are valid and enforceable and no registration
relating thereto has lapsed, expired or been abandoned or canceled or is the
subject of cancellation or other adversarial proceedings, and all applications
therefor are pending and in good standing. 
The Company has complied, in all material respects, with its contractual
obligations relating to the protection of the Intangibles used pursuant to
licenses.  To the knowledge of the
Company, no person, nor such person’s business or operations, is infringing on
or violating the Intangibles.  The
Company has made all required filings, if any, to record its interests in the
Intangibles and taken reasonable actions to protect its right in the
Intangibles.  All employees and
consultants of the Company have signed a confidentiality and assignment of
inventions agreement in a form previously made available to the Purchasers,
and, to the knowledge of the Company, each such agreement is the legal, binding
and enforceable obligation of such employee or consultant, except as may be
limited by bankruptcy, insolvency, reorganization or moratorium laws or other
similar laws affecting

 

9

 

creditors’ rights generally or
by judicial limitations on the right to specific performance or other equitable
remedies.  All proprietary technical
information developed by and belonging to the Company which has not been
patented has been kept confidential.

 

(k)           Foreign Corrupt Practices. The
Company has not, and to the knowledge of the Company, no director, officer,
agent, employee or other person acting on behalf of the Company has, in the
course of his actions for, or on behalf of, the Company, used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful
expenses relating to political activity; made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.

 

(l)            Disclosure.  All information relating to or concerning the
Company set forth in this Agreement or provided to the Purchasers in connection
with the transactions contemplated hereby is true and correct in all material
respects and the Company has not omitted to state any material fact necessary
in order to make the statements made herein or therein, in light of the
circumstances under which they were made, not misleading.  No event or circumstance has occurred or
exists with respect to the Company or its business, properties, operations or
financial condition, which has not been publicly disclosed but, under
applicable law, rule or regulation, would be required to be disclosed by the
Company under the Exchange Act.

 

(m)          Acknowledgment Regarding
Purchasers’ Purchase of the Securities. 
The Company acknowledges and agrees that the Purchasers are not acting
as a financial advisor or fiduciary of the Company (or in any similar capacity)
with respect to this Agreement or the transactions contemplated hereby, the
relationship between the Company and the Purchasers is “arms-length” and,
except for the Purchasers’ representations and warranties in Section 2 hereof,
any statement made by any Purchaser or any of their representatives or agents
in connection with this Agreement and the transactions contemplated hereby is
merely incidental to the Purchasers’ purchase of the Securities and has not
been relied upon by the Company, its officers or directors in any way.  The Company further acknowledges that the
Company’s decision to enter into this Agreement has been based solely on an
independent evaluation by the Company and its representatives.

 

(n)           Intentionally Omitted.

 

(o)           No General Solicitation.  Neither the Company nor any distributor
participating on the Company’s behalf in the transactions contemplated hereby
(if any) nor any person acting for the Company, or any such distributor, has
conducted any “general solicitation,” as such term is defined in Regulation D,
with respect to any of the Securities being offered hereby.

 

(p)           No Integrated Offering.  Neither the Company, nor any of its
affiliates, nor 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 require

 

10

 

registration of the Securities
being offered hereby under the Securities Act or cause the offering of
Securities to be integrated with any prior offering of securities of the
Company for purposes of the Securities Act, the result of such integration
which would require registration under the Securities Act, or any applicable
stockholder approval provisions.

 

(q)           No Brokers.  The Company has taken no action that would
give rise to any claim by any person for brokerage commissions, finder’s fees
or similar payments by the Purchaser relating to this Agreement or the
transactions contemplated hereby.

 

(r)            Intentionally Omitted.

 

(s)           Title.  The Company owns no real property.  The Company has good and merchantable title
to all personal property and other assets reflected in the 2002 Form 10-K free
and clear of all liens, encumbrances and defects except such as do not
materially affect the value of such property and assets and do not materially
interfere with the use made and proposed to be made of such property by the
Company.  Any real property and
facilities held under lease by the Company are held by it under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not materially interfere with the use made and proposed to be made of such
real property and facilities by the Company.

 

(t)            Tax Status.  The Company has timely made or filed all
foreign, U.S. federal, state and local income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject
and has paid all taxes and other governmental assessments and charges, shown or
determined to be due on such returns, reports and declarations, as well as any
other taxes and other governmental assessments and charges which have become
due or payable, except those being contested in good faith, and has set aside
on its books provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or
declarations apply.  There are no unpaid
taxes, assessments, charges or penalties claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know of no basis
for any such claim.  The Company has not
executed a waiver with respect to any statute of limitations relating to the
assessment or collection of any federal, state or local tax.  None of the Company’s tax returns are
presently being audited by any taxing authority.

 

(u)           Key Employees.  Each of the Company’s directors, officers
and any Key Employee (as defined below) is currently serving the Company in the
capacity disclosed in the SEC Documents. 
To the Company’s knowledge, no employee is in violation of any material
term of any employment contract, confidentiality, disclosure or proprietary
information agreement, non-competition agreement, or any other contract or
agreement or any restrictive covenant, and the continued employment of each
employee does not subject the Company to any material liability with respect to
any of the foregoing matters.  No Key
Employee has, to the  knowledge of the
Company, any intention to terminate or limit his employment with, or services
to, the Company, nor is any such Key Employee subject to any constraints which
would cause such employee to be unable to devote his full time and attention to
such employment or services.  “Key Employee” means the persons listed on Schedule
3(u).

 

(v)           Insurance.  The Company has in force fire, casualty,
product liability and other insurance policies, with extended coverage, sufficient
in amount to allow it to replace any

 

11

 

of its material properties or
assets which might be damaged or destroyed and sufficient to cover liabilities
to which the Company may reasonably become subject, and such types and amounts
of other insurance with respect to its business and properties as are
customarily carried by persons engaged in the same or similar business as the
Company.  No event has occurred that
could give rise to a material default under any such policy.

 

(w)          Environmental Matters.  There is no environmental litigation or
other environmental proceeding pending or threatened by any governmental
regulatory authority or others with respect to the current or any former
business of the Company or any partnership or joint venture currently or at any
time affiliated with the Company.  No
state of facts exists as to environmental matters or Hazardous Substances (as
defined below) that could involve a material capital expenditure by the Company
or that could otherwise have a Material Adverse Effect.  No Hazardous Substances have been treated,
stored or disposed of, or otherwise deposited, in or on the properties owned or
leased by the Company or by any partnership or joint venture currently or at
any time affiliated with the Company in violation of any applicable
environmental laws.  The environmental
compliance programs and activities of the Company comply in all material
respects with all environmental laws, whether federal, state or local, currently
in effect.  As used herein, “Hazardous Substances” means any substance,
waste, contaminant, pollutant or material that has been determined by any
governmental authority to be capable of posing a risk of injury to health,
safety, property or the environment.

 

(x)            Investment Company.  The Company is not, and is not controlled by
or under common control with an affiliate of an “investment company” within the
meaning of the Investment Company Act of 1940, as amended.

 

(y)           Internal Accounting Controls.  The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with United States generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management’s general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.

 

(z)            Application to Takeover
Protection.  The Company and its
Board of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination or other
similar anti-takeover provision under the Certificate of Incorporation, Bylaws
or the laws of the state of incorporation which is or could become applicable
to the Purchasers as a result of the transactions contemplated by this
Agreement, the Warrants or the Registration Rights Agreement.  None of the transactions contemplated by this
Agreement, the Warrants or the Registration Rights Agreement will trigger any
“poison pill” provisions of any of the Company’s stockholders’ rights plans or
similar arrangements.

 

4.             COVENANTS.

 

(a)           Best Efforts.  The parties shall use their best efforts
timely to satisfy each of the conditions described in Section 6 and Section 7
of this Agreement.

 

12

 

(b)           Form D: Blue Sky Laws.  The Company shall file with the SEC a Form D
with respect to the Securities as required under Regulation D and provide a
copy thereof to the Purchasers promptly after such filing.  The Company shall, on or before the Closing
Date, take such action as the Company shall reasonably determine is necessary
to qualify the Securities for sale to the Purchasers pursuant to this Agreement
under applicable securities or “blue sky” laws of the states of the United
States or obtain exemption therefrom, and shall provide evidence of any such
action so taken to the Purchasers on or prior to the Closing Date.  Within ten (10) days after the Closing Date,
the Company shall file a Current Report on Form 8-K concerning this Agreement
and the transactions contemplated hereby and attach this Agreement as an
exhibit thereto.

 

(c)           Reporting Status.  So long as any Purchaser beneficially owns any
of the Securities, the Company shall timely file all reports required to be
filed with the SEC, and furnish such other documents required to be furnished
by the SEC, pursuant to the Exchange Act, and the Company shall not terminate
its status as an issuer required to file reports under the Exchange Act even if
the Exchange Act or the rules and regulations thereunder would permit such
termination.

 

(d)           Use of Proceeds.  The Company shall use the proceeds from the
sale of the Securities as set forth in Schedule 4(d).

 

(e)           MASTER Study.  If the Company, at any time during the
thirty (30) months following the Closing Date (the “MASTER Study Term”), effects or agrees to effect any sale of
the Company to any person or entity by means of a consolidation, merger, sale
of all or substantially all of its assets or any similar transaction or series
of related transactions, then the Company or the successor entity shall
immediately prior to the consummation thereof pay to Medtronic in immediately
available funds the sum of Two Million Five Hundred Thousand Dollars
($2,500,000), unless the successor entity agrees by written instrument
reasonably satisfactory to Medtronic to provide, for the duration of the MASTER
Study Term, support for the Microvolt T-Wave Alternans Testing for Risk
Stratification of Post MI Patients clinical study in substantially the same
manner and at the same level as provided by the Company prior to the
consummation of such transaction.  Such
support shall include continued technical support, clinician training and
supply of Company products at prices and on terms consistent with the Heartwave
Price Schedule provided to Medtronic with respect to such study prior to the
date hereof.

 

(f)            Expenses.  The Company shall pay to Belmont Capital (“Belmont Capital”) at the Closing up to $10,000 for the
reasonable out-of-pocket expenses incurred by Belmont Capital and its advisors
in connection with the negotiation, execution and delivery of this Agreement
and the other agreements to be executed in connection herewith (“Expense Payment”); provided, however, that
Belmont Capital shall be permitted to deduct the Expense Payment from the
purchase price payable by Belmont Capital hereunder.  The Company shall pay to legal counsel to Medtronic at the Closing
Thirty Thousand Dollars ($30,000) for fees and expenses associated with
Medtronic’s investment in, and other proposed transactions with, the
Company.  If any action at law or in
equity is necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorney’s fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.

 

13

 

(g)           Board Observation
Rights.

 

(i)            For so long as the Purchasers other
than Medtronic and Tail Wind (the “Belmont Group”) (together with its
affiliates) beneficially owns at least an aggregate of 2,000,000 shares of the
Company’s Common Stock (assuming exercise of the Warrants and conversion of Series
A Preferred to Common Stock), (A) the Company shall deliver to the Belmont
Group, at the same time and in the same manner as such information is supplied
to members of the Company’s Board of Directors, (1) written notice of all
meetings of the Company’s Board of Directors, including without limitation,
telephonic meetings, and all agendas and other information distributed in
connection with such meetings, (2) all written actions and consents prepared
for distribution to and consideration by the Company’s Board of Directors,
together with all information distributed in connection with such written
actions and consents, and (3) minutes of all meetings of the Company’s Board of
Directors, and (B) one representative designated by the Belmont Group shall be
permitted to attend, in a non-voting capacity, all meetings of the Company’s
Board of Directors.  The Company shall
make reasonable efforts to permit such representative to participate in
meetings by telephone if such representative is unable to attend in
person.  Notwithstanding the provisions
of this Section 4(g)(i), the Belmont Group representative shall be excluded
from such portions of the Board of Directors meeting that he or she is
attending if the Board of Directors so requests after determining in good faith
that such exclusion is necessary to preserve the attorney-client privilege, to
prevent a conflict of interest or to prevent such Belmont Group
representative’s participation in discussions relating to disputes with the
Belmont Group and/or its affiliates.

 

(ii)           For so long as Medtronic (together
with its affiliates) beneficially owns at least an aggregate of 2,000,000
shares of the Company’s Common Stock (assuming exercise of the Warrants and
conversion of Series A Preferred to Common Stock), (A) the Company shall
deliver to Medtronic, at the same time and in the same manner as such
information is supplied to members of the Company’s Board of Directors, (1)
written notice of all meetings of the Company’s Board of Directors, including
without limitation, telephonic meetings, and all agendas and other information
distributed in connection with such meetings, (2) all written actions and
consents prepared for distribution to and consideration by the Company’s Board
of Directors, together with all information distributed in connection with such
written actions and consents, and (3) minutes of all meetings of the Company’s
Board of Directors, and (B) one representative designated by Medtronic shall be
permitted to attend, in a non-voting capacity, all meetings of the Company’s
Board of Directors.  The Company shall
make reasonable efforts to permit such representative to participate in
meetings by telephone if such representative is unable to attend in person.  Notwithstanding the provisions of this Section
4(g)(ii), the Medtronic representative shall be excluded from such portions of
the Board of Directors meeting that he or she is attending if the Board of
Directors so requests after determining in good faith that such exclusion is
necessary to preserve the attorney-client privilege, to prevent a conflict of
interest or to prevent such Medtronic representative’s participation in
discussions relating to disputes with Medtronic and/or its affiliates.

 

(h)           Reservation of Shares.  The Company shall at all times have
authorized and reserved for issuance (i) a sufficient number of shares of
Series A Preferred to provide for the issuance of the Warrant Shares upon
exercise of the Warrants, and (ii) a sufficient number of

 

14

 

shares of Common Stock to
provide for the issuance of the Conversion Shares upon conversion of the Shares
and the Warrant Shares.

 

(i)            Listing. The Company will use
its commercially reasonable efforts to continue the listing and trading of its
Common Stock on the Nasdaq National Market (“NNM”), the Nasdaq SmallCap Market (“SmallCap”),
the New York Stock Exchange (“NYSE”),
the OTC Bulletin Board or successor entity (e.g., BBX Market) (“OTCBB”) or the American Stock Exchange (“AMEX”) and will comply in all respects with
the reporting, filing and other obligations under the bylaws or rules of the
NASD and such exchanges, as applicable. 
The Company shall promptly provide to each Purchaser copies of any notices
it receives regarding the continued eligibility of the Common Stock for trading
on OTCBB or, if applicable, any securities exchange or automated quotation
system on which securities of the same class or series issued by the Company
are then listed or quoted, if any.

 

(j)            Corporate Existence.  So long as any Purchaser beneficially owns
any Securities, the Company shall maintain its corporate existence, and in the
event of a merger, consolidation or sale of all or substantially all of the
Company’s assets, the Company shall ensure that the surviving or successor
entity in such transaction (i) assumes the Company’s obligations hereunder and
under the Warrants, the Registration Rights Agreement and the agreements and
instruments entered into in connection herewith and therewith and (ii) except
in the event of a merger, consolidation of the Company into any other
corporation, or the sale or conveyance of all or substantially all of the
assets of the Company where the consideration consists solely of cash, the
surviving or successor entity is a publicly traded corporation whose common
stock is listed for trading on NNM, the SmallCap, the NYSE, the OTCBB or the
AMEX.

 

(k)           No Integrated Offerings.  The Company shall not make any offers or
sales of any security under circumstances that would require registration of
the Securities being offered or sold hereunder under the Securities Act or
cause this offering of the Securities to be integrated with any other offering
of securities by the Company for purposes of any stockholder approval provision
applicable to the Company or its securities.

 

(l)            Legal Compliance.  The Company shall conduct its business in
material compliance with all laws, ordinances or regulations of governmental
entities applicable to such business.

 

(m)          Inspection of Properties and Books.  So long as any Purchaser shall hold any
Securities, such Purchasers and its representatives and agents (collectively,
the “Inspectors”) shall have the
right upon reasonable notice to the Company and during business hours, at the
Purchasers’ expense, to visit and inspect any of the properties of the Company,
to examine the books of account and records of the Company, to make or be
provided with copies and extracts therefrom, to discuss the affairs, finances
and accounts of the Company with, and to be advised as to the same by, its and
their officers, employees and independent public accountants (and by this
provision the Company authorizes such accountants to discuss such affairs,
finances and accounts, whether or not a representative of the Company is present)
all at such reasonable times and intervals and to such reasonable extent as the
Purchasers may desire; provided, however, that each Inspector
shall hold in confidence and shall not make any disclosure (except to the
Purchasers) of any such information which the Company determines in

 

15

 

good faith to be confidential,
and of which determination the Inspectors are so notified, unless (a) the
disclosure of such information is necessary to avoid or correct a misstatement
or omission in any Registration Statement filed pursuant to the Registration
Rights Agreement, (b) the release of such information is ordered pursuant to a
subpoena or other order from a court or government body of competent
jurisdiction, or (c) such information has been made generally available to the
public other than by disclosure in violation of this or any other agreement.

 

5.             TRANSFER AGENT INSTRUCTIONS.

 

(a)           The Company shall instruct its
transfer agent to issue certificates, registered in the name of each Purchaser
or its nominee, for the Shares and, upon exercise of the Warrants, the Warrant
Shares and, upon conversion of the Shares and Warrant Shares, the Conversion
Shares in such denominations as specified by such Purchaser to the Company.

 

(b)           The Company warrants that no
instruction other than the instructions referred to in this Agreement, will be
given by the Company to its transfer agent and that the Securities shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement and the Registration Rights Agreement.

 

(c)           If a Purchaser provides the Company
and the transfer agent with an opinion of counsel, which opinion of counsel
shall be in form, substance and scope customary for opinions of counsel in
comparable transactions, to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption from
registration, or a Purchaser provides the Company with reasonable assurances
that such Securities may be sold under Rule 144, the Company shall permit the
transfer.

 

6.             CONDITIONS TO THE COMPANY’S
OBLIGATION TO SELL.

 

The obligation
of the Company hereunder to issue and sell the Shares and the Warrants to the
Purchasers hereunder is subject to the satisfaction, at or before the Closing
of each of the following conditions, provided that these conditions are for the
Company’s sole benefit and may be waived in writing by the Company at any time
in its sole discretion:

 

(a)           Each of the Purchasers shall have
executed this Agreement and the Registration Rights Agreement, and delivered
executed original copies of the same to the Company.

 

(b)           Each Purchaser shall have delivered
the purchase price set forth opposite its name on Schedule I hereto for
the Shares and the Warrants being purchased by it at the Closing in accordance
with Section 1(b) above.

 

(c)           The representations and warranties of
each Purchaser shall be true and correct as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date, which representations and
warranties shall be true and correct as of such date), and each Purchaser shall
have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Purchasers at or prior to the
Closing.

 

16

 

(d)           No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority over the
matters contemplated hereby which questions the validity of, challenges or
prohibits the consummation of any of the transactions contemplated by this
Agreement.

 

7.                                       CONDITIONS
TO THE PURCHASERS’ OBLIGATION TO PURCHASE.

 

The obligation
of the Purchasers hereunder to purchase the Shares and the Warrants from the
Company hereunder is subject to the satisfaction, at or before the Closing of
each of the following conditions, provided that such conditions are for the
Purchasers’ sole benefit and may be waived in writing by the Purchasers at any
time in the Purchasers’ sole discretion:

 

(a)           The Company shall have executed this
Agreement and the Registration Rights Agreement, and delivered executed
original copies of the same to the Purchasers.

 

(b)           Each Purchaser shall have delivered
the aggregate purchase price set forth opposite its name on Schedule I
hereto for the Shares and the Warrants being purchased by it at the Closing in
accordance with Sections 1(a), 1(b) and 1(c) above and the Company shall have
delivered to the Purchasers duly executed certificates and duly executed
Warrant agreements (each in such denominations as each Purchaser shall
reasonably request) representing the Shares and the Warrants being so purchased
by the Purchasers at the Closing in accordance with Section 1(b) and Section
1(c) above.

 

(c)           The Common Stock shall be listed on
the OTCBB and trading in the Common Stock (or the OTCBB generally) shall not
have been suspended.

 

(d)           The representations and warranties of
the Company shall be true and correct as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date, which representations and
warranties shall be true and correct as of such date) and the Company shall
have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to the
Closing.  The Purchasers shall have
received a certificate, executed by the Chief Executive Officer of the Company
after reasonable investigation, dated as of the Closing Date to the foregoing
effect and as to such other matters as may reasonably be requested by the
Purchasers.

 

(e)           No statute, rule, regulation,
executive order, decree, ruling, injunction, action or proceeding shall have
been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction or any self-regulatory organization having
authority over the matters contemplated hereby which questions the validity of,
challenges or prohibits the consummation of, any of the transactions
contemplated by this Agreement.

 

(f)            The Purchasers shall have received
an opinion of Hale and Dorr LLP, dated as of the Closing Date in substantially
the form of Exhibit E attached hereto.

 

17

 

(g)           There shall have been no material
adverse changes and no material adverse developments in the business,
properties, operations, financial condition or results of operations of the
Company since the date hereof, and no information, of which the Purchasers are
not currently aware, shall have come to the attention of the Purchasers that is
materially adverse to the Company.

 

(h)           The Secretary of the Company shall
deliver to the Purchasers at the Closing a certificate stating that all Board
of Directors and stockholder approvals necessary to authorize the performance
by the Company of its obligations contemplated by this Agreement have been
obtained and attaching thereto: (i) a copy of the Certificate of Incorporation
(with any and all certificates of designation) and the Bylaws (as amended
through the date of the Closing), certified by the Secretary of the Company as
the true and correct copies thereof as of the Closing; and (ii) a copy of the
resolutions of the Board of Directors and, if required, the stockholders of the
Company, authorizing the execution and delivery of this Agreement and the
Registration Rights Agreement, the issuance of the Securities and other matters
contemplated hereby.

 

8.                                       GOVERNING
LAW; MISCELLANEOUS.

 

(a)           Governing Law; Jurisdiction.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in the State of Delaware.  The Company and the Purchasers irrevocably
consent to the jurisdiction of the United States federal courts and the state
courts located in the State of Delaware in any suit or proceeding based on or
arising under this Agreement and irrevocably agree that all claims in respect
of such suit or proceeding may be determined in such courts. The Company and
the Purchasers  irrevocably waive the
defense of an inconvenient forum to the maintenance of such suit or proceeding.
The parties further agree that service of process upon the other party mailed
by first class mail shall be deemed in every respect effective service of
process upon such party in any such suit or proceeding.  Nothing herein shall affect the right of the
parties to serve process in any other manner permitted by law.  The parties agree that a final
non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.

 

(b)           Counterparts.  This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party.  This
Agreement, once executed by a party, may be delivered to the other parties
hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.  In the event any signature is delivered by facsimile
transmission, the party using such means of delivery shall cause the manually
executed execution page or pages hereof to be physically delivered to the other
party within five (5) business days of the execution hereof, provided that the failure
to so deliver any manually executed execution page shall not affect the
validity or enforceability of this Agreement.

 

(c)           Headings.  The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the interpretation
of, this Agreement.

 

18

 

(d)           Severability.  If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction.

 

(e)           Entire Agreement; Amendments.  This Agreement and the agreements and
instruments referenced herein contain the entire understanding of the
Purchasers, the Company, their affiliates and persons acting on their behalf
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the
Purchasers make any representation, warranty, covenant or undertaking with
respect to such matters.  No provision
of this Agreement may be waived other than by an instrument in writing signed
by the party to be charged with enforcement and no provision of this Agreement
may be amended other than by an instrument in writing signed by the Company and
the Purchasers.

 

(f)            Notices.  Any notices required or permitted to be
given under the terms of this Agreement shall be sent by certified or
registered mail (return receipt requested) or delivered personally, by
responsible overnight carrier or by confirmed facsimile, and shall be effective
five (5) days after being placed in the mail, if mailed, or upon receipt or
refusal of receipt, if delivered personally or by responsible overnight carrier
or confirmed facsimile, in each case addressed to a party.  The addresses for such communications shall
be:

 

If to the
Company:

 

Cambridge
Heart, Inc.

1 Oak Park
Drive

Bedford,
MA  01730

Telephone:  (781) 271-1200

Facsimile:  (781) 271-8431

Attn:  President

 

with a copy
simultaneously transmitted by like means to:

 

Hale and Dorr
LLP

60 State
Street

Boston,
Massachusetts 02109

Telephone:  (617) 526-6000

Facsimile:  (617) 526-5000

Attn:  John A. Burgess, Esq.

 

If to a
Purchaser, as set forth on such Purchaser’s execution page hereto.

 

Each party
shall provide notice to the other party of any change in address.

 

(g)           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns.  The Company may not assign this Agreement or
any rights or obligations hereunder. 
The Purchasers may assign and transfer some or all of their rights
hereunder and some or all of the Securities without the prior consent of the 

 

19

 

Company.  Notwithstanding anything to the contrary
contained in this Agreement, the Warrants or the Registration Rights Agreement,
the Securities may be pledged and all rights of a Purchaser under this
Agreement or any other agreement or document related to the transactions
contemplated hereby may be assigned, without further consent of the Company, to
a bona fide pledgee in connection with such Purchaser’s margin or brokerage
account, subject to compliance with applicable laws, rules and regulations,
including all applicable securities laws.

 

(h)           Third Party Beneficiaries.  This Agreement is intended for the benefit
of the parties hereto and their respective permitted successors and assigns,
and is not for the benefit of, nor may any provision hereof be enforced by, any
other person.

 

(i)            Survival.  Except where a longer period is required
hereunder, the representations and warranties and the agreements and covenants
set forth in Sections 2, 3, 4, 5 and 8 hereof shall survive for two (2) years
following the Closing notwithstanding any due diligence investigation conducted
by or on behalf of the Purchasers. 
Moreover, none of the representations and warranties made by one party
herein shall act as a waiver of any rights or remedies the other party may have
under applicable U.S. federal or state securities laws.  The Company shall indemnify and hold
harmless the Purchasers and each of the Purchasers’ officers, directors,
employees, partners, members, agents and affiliates for all losses or damages
(including without limitation reasonable attorneys’ fees) arising as a result
of or related to any breach or alleged breach by the Company of any of its
representations or covenants set forth herein, including without limitation the
advancement of expenses as they are incurred. 
Except as otherwise set forth herein, the mechanics and procedures with
respect to the rights and obligations under this Section 8(i) shall be the same
as those set forth in Sections 6(a) and 6(c) of the Registration Rights
Agreement, including, without limitation, those procedures with respect to the
settlement of claims and the Company’s right to assume the defense of claims.

 

(j)            Publicity.  The Company, Medtronic and Belmont Capital
shall have the right to approve before issuance any press releases, Current
Reports filed on Form 8-K, or any other public statements with respect to the
transactions contemplated hereby; provided, however, that the Company shall
be entitled, without the prior approval of Medtronic or Belmont Capital, to
make any press release or Current Report filed on Form 8-K with respect to such
transactions as is required by applicable law and regulations (although the
Company shall use commercially reasonable efforts to consult with Medtronic and
Belmont Capital in connection with any such press release and filing prior to
its release and shall provide Medtronic and Belmont Capital with copies
thereof).  The Company shall issue a
press release announcing the closing of this transaction within three (3)
business days of the Closing Date.

 

(k)           Further Assurances.  Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

 

(l)            Termination.  In the event that the Closing shall not have
occurred on or before May 31, 2003 unless the parties agree otherwise, this
Agreement shall terminate at the close of business on such date.  Notwithstanding any termination of this
Agreement, any party

 

20

 

not in breach of this Agreement
shall preserve all rights and remedies it may have against another party hereto
for a breach of this Agreement prior to or relating to the termination hereof.

 

(m)          Joint Participation in Drafting.  Each party to this Agreement has
participated in the negotiation and drafting of this Agreement, the Warrants
and the Registration Rights Agreement. 
As such, the language used herein and therein shall be deemed to be the
language chosen by the parties hereto to express their mutual intent, and no
rule of strict construction will be applied against any party to this
Agreement.

 

(n)           Exculpation Among Purchasers.  Each Purchaser acknowledges that it is not
relying upon any person, firm or corporation, other than the Company and its
officers and directors, in making its investment decision to invest in the
Company.  Each Purchaser agrees that no
Purchaser nor the respective controlling persons, officers, directors,
partners, agents or employees of any Purchaser shall be liable to any other
Purchaser for any action heretofore or hereafter taken, or for any failure to
act, by any of them in connection with the purchase of the Securities.

 

(o)           For purposes hereof, “Business Day” means any day except
Saturday, Sunday or other day on which commercial banks in the City of New York
are authorized or required to close by law.

 

(p)           For purposes hereof, “knowledge of
the Company” means (i) the actual knowledge of David A. Chazanovitz,
Robert B. Palardy, Robert LaRoche, Kevin S. Librett or James W. Sheppard and
(ii) that knowledge which such persons could have obtained if they had made the
due inquiry and exercised the due diligence that a prudent business person
would have made or exercised with respect to the management of his or her
business affairs.

 

[Signature pages
follow]

 

21

 

IN WITNESS
WHEREOF, the undersigned Purchaser and the Company have caused this Agreement
to be duly executed as of the date first above written.

 

 

CAMBRIDGE HEART, INC.

 

 

	
  By:

  	
   /s/ David A. Chazanovitz

  	
   

  	
   

  
	
   

  	
  Name:  David A. Chazanovitz

  	
   

  
	
   

  	
  Title:
  President and Chief Executive Officer

  	
   

  

 

 

PURCHASER:

 

 

	
   /s/
  Robert P. Khederian

  	
   

  
	
  Robert P.
  Khederian

  
	
   

  	
   

  
	
  RESIDENCE:

  	
  Massachusetts

  
	
   

  	
   

  
	
  ADDRESS:

  	
  200 Pond
  Road

  
	
   

  	
  Wellesley,
  Massachusetts 02482

  
	
   

  	
  Telephone:

  
	
   

  	
  Telecopy:

  
	
   

  	
  Attention:  Robert P. Khederian

  
			

 

 

[Signature page to Securities Purchase
Agreement]

 

22

 

IN WITNESS
WHEREOF, the undersigned Purchaser and the Company have caused this Agreement
to be duly executed as of the date first above written.

 

 

 

CAMBRIDGE HEART, INC.

 

	
  By:

  	
   /s/ David A. Chazanovitz

  	
   

  	
   

  
	
   

  	
  Name:  David A. Chazanovitz

  	
   

  
	
   

  	
  Title:
  President and Chief Executive Officer

  	
   

  

 

 

PURCHASER:

 

MEDTRONIC, INC.

 

 

	
  By:

  	
   /s/
  Michael D. Ellwein

  	
   

  	
   

  
	
   

  	
  Name:
  Michael D. Ellwein

  	
   

  
	
   

  	
  Title: Vice
  President and Chief Development Officer

  	
   

  

 

STATE OF INCORPORATION:       Minnesota

 

	
  ADDRESS:

  	
   

  	
  World
  Headquarters

  
	
   

  	
   

  	
  710
  Medtronic Parkway

  
	
   

  	
   

  	
  Minneapolis,
  Minnesota 55432-5604

  
	
   

  	
   

  	
  Telephone:

  
	
   

  	
   

  	
  Telecopy:  763-572-5459

  
	
   

  	
   

  	
   

  
	
  With
  separate copies addressed to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  World
  Headquarters

  
	
   

  	
   

  	
  710
  Medtronic Parkway

  
	
   

  	
   

  	
  Minneapolis,
  Minnesota 55432-5604

  
	
   

  	
   

  	
  Telephone:

  
	
   

  	
   

  	
  Telecopy:  763-572-5459

  
	
   

  	
   

  	
  Attention:  General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  World
  Headquarters

  
	
   

  	
   

  	
  710
  Medtronic Parkway

  
	
   

  	
   

  	
  Minneapolis,
  Minnesota 55432-5604

  
	
   

  	
   

  	
  Telephone:

  
	
   

  	
   

  	
  Telecopy:  763-505-2542

  
	
   

  	
   

  	
  Attention:  Vice President and Chief Development
  Officer

  

 

 

[Signature page to Securities Purchase
Agreement]

 

23

 

IN WITNESS
WHEREOF, the undersigned Purchaser and the Company have caused this Agreement
to be duly executed as of the date first above written.

 

 

	
  CAMBRIDGE
  HEART, INC.

  
	
   

  
	
   

  
	
   

  	
  By:

  	
   /s/ David A. Chazanovitz

  	
   

  	
   

  
	
   

  	
   

  	
  Name:  David A. Chazanovitz

  	
   

  
	
   

  	
   

  	
  Title:
  President and Chief Executive Officer

  	
   

  

 

 

PURCHASER:

 

 

THE TAIL WIND FUND LTD.

 

 

	
   

  	
  By:

  	
  TAIL WIND
  ADVISORY AND MANAGEMENT

  	
   

  
	
   

  	
   

  	
  LTD., as
  investment manager

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ David
  Crook

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: David
  Crook

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
						

 

PLACE OF ORGANIZATION:  British Virgin Islands

 

	
  ADDRESS:

  	
   

  	
  The Tail
  Wind Fund Ltd.

  
	
   

  	
   

  	
  c/o Tail
  Wind Advisory and Management Ltd.

  
	
   

  	
   

  	
  1 Regent
  Street, 1st Floor

  
	
   

  	
   

  	
  London, SW1Y
  4NS UK

  
	
   

  	
   

  	
  Attn:

  	
  David Crook

  
	
   

  	
   

  	
  Telephone:  44-207-468-7660

  
	
   

  	
   

  	
  Telecopy:  44-207-468-7657

  
	
   

  	
   

  	
   

  
	
  With a copy
  to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Peter J.
  Weisman, P.C.

  
	
   

  	
   

  	
  444 East 82nd
  Street, Ste. 19C

  
	
   

  	
   

  	
  New York,
  New York 10028

  
	
   

  	
   

  	
  Attn:

  	
  Peter J.
  Weisman, Esq.

  
	
   

  	
   

  	
  Telephone:  212-535-7818

  
	
   

  	
   

  	
  Telecopy:

  

 

[Signature page to Securities Purchase
Agreement]

 

24

 

IN WITNESS
WHEREOF, the undersigned Purchaser and the Company have caused this Agreement
to be duly executed as of the date first above written.

 

 

	
  CAMBRIDGE
  HEART, INC.

  
	
   

  
	
   

  
	
   

  	
  By:

  	
   /s/ David A. Chazanovitz

  	
   

  	
   

  
	
   

  	
   

  	
  Name:  David A. Chazanovitz

  	
   

  
	
   

  	
   

  	
  Title:
  President and Chief Executive Officer

  	
   

  

 

 

PURCHASER:

 

	
  BLUMBERG
  LIFE SCIENCES FUND LTD.

  
	
   

  
	
   

  
	
   

  	
  By:

  	
   /s/ Laurence Blumberg

  	
   

  	
   

  
	
   

  	
   

  	
  Name:
  Laurence Blumberg

  	
   

  
	
   

  	
   

  	
  Title:
  President

  	
   

  

 

PLACE OF ORGANIZATION:  British Virgin Islands

 

	
  ADDRESS:

  	
   

  	
  Blumberg
  Life Sciences Fund Ltd.

  
	
   

  	
   

  	
  c/o Citco
  Fund Services Ltd.

  
	
   

  	
   

  	
  West Bay
  Road

  
	
   

  	
   

  	
  Grand Cayman
  Island

  
	
   

  	
   

  	
  Telephone:

  
	
   

  	
   

  	
  Telecopy:

  

 

 

[Signature page to Securities Purchase
Agreement]

 

25

 

IN WITNESS
WHEREOF, the undersigned Purchaser and the Company have caused this Agreement
to be duly executed as of the date first above written.

 

 

	
  CAMBRIDGE
  HEART, INC.

  
	
   

  
	
   

  
	
   

  	
  By:

  	
   /s/ David A. Chazanovitz

  	
   

  	
   

  
	
   

  	
   

  	
  Name:  David A. Chazanovitz

  	
   

  
	
   

  	
   

  	
  Title:
  President and Chief Executive Officer

  	
   

  

 

 

PURCHASER:

 

 

	
  BLUMBERG LIFE
  SCIENCES FUND LP

  
	
   

  
	
   

  
	
   

  	
  By:

  	
   /s/
  Laurence Blumberg

  	
   

  	
   

  
	
   

  	
   

  	
  Name:
  Laurence Blumberg

  	
   

  
	
   

  	
   

  	
  Title:
  President

  	
   

  

 

STATE OF INCORPORATION:  Delaware

 

	
  ADDRESS:

  	
  Blumberg
  Life Sciences Fund LP

  	
   

  
	
   

  	
  c/o Blumberg
  Capital Management LLC

  	
   

  
	
   

  	
  153 East
  53rd Street, 48th Floor

  	
   

  
	
   

  	
  New York,
  NY  10022

  	
   

  
	
   

  	
  Telephone:

  	
   

  
	
   

  	
  Telecopy:

  	
   

  

 

 

[Signature page to Securities Purchase
Agreement]

 

26

 

IN WITNESS
WHEREOF, the undersigned Purchaser and the Company have caused this Agreement
to be duly executed as of the date first above written.

 

 

	
  CAMBRIDGE
  HEART, INC.

  
	
   

  
	
   

  
	
   

  	
  By:

  	
   /s/ David A. Chazanovitz

  	
   

  	
   

  
	
   

  	
   

  	
  Name:  David A. Chazanovitz

  	
   

  
	
   

  	
   

  	
  Title:
  President and Chief Executive Officer

  	
   

  

 

 

PURCHASER:

 

 

 

	
   /s/
  Eric Hecht

  	
   

  	
   

  
	
  Eric Hecht

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  RESIDENCE:

  	
  Florida

  	
   

  
	
   

  	
   

  	
   

  
	
  ADDRESS:

  	
  300 South
  Pointe Drive

  	
   

  
	
   

  	
  Apt. 3402

  	
   

  
	
   

  	
  Miami Beach,
  FL  33139

  	
   

  
	
   

  	
  Telephone:

  	
   

  
	
   

  	
  Telecopy:

  	
   

  

 

 

[Signature page to Securities Purchase
Agreement]

 

27

 

IN WITNESS
WHEREOF, the undersigned Purchaser and the Company have caused this Agreement
to be duly executed as of the date first above written.

 

 

	
  CAMBRIDGE
  HEART, INC.

  
	
   

  
	
   

  
	
   

  	
  By:

  	
   /s/ David A. Chazanovitz

  	
   

  	
   

  
	
   

  	
   

  	
  Name:  David A. Chazanovitz

  	
   

  
	
   

  	
   

  	
  Title:
  President and Chief Executive Officer

  	
   

  

 

 

PURCHASER:

 

 

 

	
   /s/ J.
  Leighton Read, M.D.

  	
   

  	
   

  
	
  J. Leighton
  Read, M.D.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  RESIDENCE:

  	
  California

  	
   

  
	
   

  	
   

  	
   

  
	
  ADDRESS:

  	
  c/o Alloy
  Ventures

  	
   

  
	
   

  	
  480 Cowper
  St., 2nd Floor

  	
   

  
	
   

  	
  Palo Alto,
  CA  94301

  	
   

  
	
   

  	
  Telephone:

  	
   

  
	
   

  	
  Telecopy:

  	
   

  
				

 

 

[Signature page to Securities Purchase Agreement]

 

28

 

IN WITNESS
WHEREOF, the undersigned Purchaser and the Company have caused this Agreement
to be duly executed as of the date first above written.

 

 

	
  CAMBRIDGE
  HEART, INC.

  
	
   

  
	
   

  
	
   

  	
  By:

  	
   /s/ David A. Chazanovitz

  	
   

  	
   

  
	
   

  	
   

  	
  Name:  David A. Chazanovitz

  	
   

  
	
   

  	
   

  	
  Title:
  President and Chief Executive Officer

  	
   

  

 

 

PURCHASER:

 

 

 

	
   /s/
  David C. Poole

  	
   

  
	
  David C.
  Poole

  	
   

  
	
   

  	
   

  
	
  RESIDENCE:

  	
  Massachusetts

  
	
   

  	
   

  
	
  ADDRESS:

  	
  47
  Carisbrooke Road

  
	
   

  	
  Wellesley,
  MA  02481

  
	
   

  	
  Telephone:

  
	
   

  	
  Telecopy:

  
			

 

 

[Signature page to Securities Purchase
Agreement]

 

29

 

IN WITNESS
WHEREOF, the undersigned Purchaser and the Company have caused this Agreement
to be duly executed as of the date first above written.

 

 

	
  CAMBRIDGE
  HEART, INC.

  
	
   

  
	
   

  
	
   

  	
  By:

  	
   /s/ David A. Chazanovitz

  	
   

  	
   

  
	
   

  	
   

  	
  Name:  David A. Chazanovitz

  	
   

  
	
   

  	
   

  	
  Title:
  President and Chief Executive Officer

  	
   

  

 

 

PURCHASER:

 

 

 

	
   /s/
  Brian Trumbore

  	
   

  	
   

  
	
  Brian
  Trumbore

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  RESIDENCE:

  	
  New Jersey

  	
   

  
	
   

  	
   

  	
   

  
	
  ADDRESS:

  	
  6 Murray
  Hill Manor

  	
   

  
	
   

  	
  New
  Providence, NJ 07974-1558

  	
   

  
	
   

  	
  Telephone:

  	
   

  
	
   

  	
  Telecopy:

  	
   

  
				

 

 

[Signature page to Securities Purchase
Agreement]

 

30

 

IN WITNESS
WHEREOF, the undersigned Purchaser and the Company have caused this Agreement
to be duly executed as of the date first above written.

 

 

	
  CAMBRIDGE
  HEART, INC.

  
	
   

  
	
   

  
	
   

  	
  By:

  	
   /s/ David A. Chazanovitz

  	
   

  	
   

  
	
   

  	
   

  	
  Name:  David A. Chazanovitz

  	
   

  
	
   

  	
   

  	
  Title:
  President and Chief Executive Officer

  	
   

  

 

 

PURCHASER:

 

T-WAVE INVESTORS, L.P.

 

 

 

	
   

  	
  By:

  	
   /s/ Mark
  Shapiro

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Mark
  Shapiro

  	
   

  
	
   

  	
   

  	
  Title:
  General Partner

  	
   

  

 

 

	
  STATE OF
  INCORPORATION:  Delaware

  
	
   

  	
   

  
	
  ADDRESS:

  	
  T-Wave
  Investors, L.P.

  
	
   

  	
  c/o
  Wardenclyffe Group, Inc.

  
	
   

  	
  370
  Lexington Avenue, 19th Floor

  
	
   

  	
  New York, NY
  10017

  
	
   

  	
  Telephone:

  
	
   

  	
  Telecopy:

  
	
   

  	
  Attention:  Mark Shapiro

  

 

 

[Signature page to Securities Purchase
Agreement]

 

31

 

IN WITNESS
WHEREOF, the undersigned Purchaser and the Company have caused this Agreement
to be duly executed as of the date first above written.

 

 

	
  CAMBRIDGE
  HEART, INC.

  
	
   

  
	
   

  
	
   

  	
  By:

  	
   /s/ David A. Chazanovitz

  	
   

  	
   

  
	
   

  	
   

  	
  Name:  David A. Chazanovitz

  	
   

  
	
   

  	
   

  	
  Title:
  President and Chief Executive Officer

  	
   

  

 

 

PURCHASER:

 

 

 

LEAF OFFSHORE INVESTMENT FUND LTD.

 

 

	
   

  	
  By:

  	
   /s/
  Seymour L. Goldblatt

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Seymour
  L. Goldblatt

  	
   

  
	
   

  	
   

  	
  Title:
  President, S Squared Technology

  	
   

  

 

PLACE OF ORGANIZATION:  Cayman Islands

 

	
  ADDRESS:

  	
   

  	
  Leaf
  Offshore Investment Fund Ltd.

  	
   

  
	
   

  	
   

  	
  S Squared
  Technology Corp.

  	
   

  
	
   

  	
   

  	
  515 Madison
  Avenue., 42nd Floor

  	
   

  
	
   

  	
   

  	
  New York,
  NY  10022

  	
   

  
	
   

  	
   

  	
  Telephone:

  	
   

  
	
   

  	
   

  	
  Telecopy:

  	
   

  

 

 

[Signature page to Securities Purchase
Agreement]

 

32

 

IN WITNESS
WHEREOF, the undersigned Purchaser and the Company have caused this Agreement
to be duly executed as of the date first above written.

 

 

	
  CAMBRIDGE
  HEART, INC.

  
	
   

  
	
   

  
	
   

  	
  By:

  	
   /s/ David A. Chazanovitz

  	
   

  	
   

  
	
   

  	
   

  	
  Name:  David A. Chazanovitz

  	
   

  
	
   

  	
   

  	
  Title:
  President and Chief Executive Officer

  	
   

  

 

 

PURCHASER:

 

THE AFB FUND, LLC

 

 

	
   

  	
  By:

  	
   /s/
  Louis Blumberg

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Louis
  Blumberg

  	
   

  
	
   

  	
   

  	
  Title: Manager

  	
   

  

 

 

STATE OF INCORPORATION:  New Jersey

 

 

	
  ADDRESS:

  	
   

  	
  The AFB
  Fund, LLC

  
	
   

  	
   

  	
  c/o Blumberg
  & Frelich Equities

  
	
   

  	
   

  	
  2050 Center
  Avenue

  
	
   

  	
   

  	
  Fort Lee,
  NJ  07024

  
	
   

  	
   

  	
  Telephone:

  
	
   

  	
   

  	
  Telecopy:

  

 

 

[Signature page to Securities Purchase
Agreement]

 

33

 

IN WITNESS
WHEREOF, the undersigned Purchaser and the Company have caused this Agreement
to be duly executed as of the date first above written.

 

	
  CAMBRIDGE
  HEART, INC.

  
	
   

  
	
   

  
	
   

  	
  By:

  	
   /s/ David A. Chazanovitz

  	
   

  	
   

  
	
   

  	
   

  	
  Name:  David A. Chazanovitz

  	
   

  
	
   

  	
   

  	
  Title:
  President and Chief Executive Officer

  	
   

  

 

PURCHASER:

 

PROMED PARTNERS, L.P.

 

 

	
   

  	
  By:

  	
   /s/ David B. Musket

  	
   

  	
   

  
	
   

  	
   

  	
  Name: David
  B. Musket

  	
   

  
	
   

  	
   

  	
  Title:
  Managing Member

  	
   

  

 

 

	
  STATE OF
  INCORPORATION:  Delaware

  
	
   

  	
   

  
	
  ADDRESS:

  	
  ProMed
  Partners, L.P.

  
	
   

  	
  c/o David B.
  Musket

  
	
   

  	
  ProMed
  Partners

  
	
   

  	
  125
  Cambridgepark Drive

  
	
   

  	
  Cambridge,
  MA  02140

  
	
   

  	
  Telephone:  (617) 441-0259

  
	
   

  	
  Telecopy:

  

 

 

[Signature page to Securities Purchase
Agreement]

 

34

 

IN WITNESS
WHEREOF, the undersigned Purchaser and the Company have caused this Agreement
to be duly executed as of the date first above written.

 

 

	
  CAMBRIDGE
  HEART, INC.

  
	
   

  
	
   

  
	
   

  	
  By:

  	
   /s/ David A. Chazanovitz

  	
   

  	
   

  
	
   

  	
   

  	
  Name:  David A. Chazanovitz

  	
   

  
	
   

  	
   

  	
  Title:
  President and Chief Executive Officer

  	
   

  

 

 

PURCHASER:

 

PROMED OFFSHORE FUND, LTD.

 

 

 

	
   

  	
  By:

  	
   /s/ David B. Musket

  	
   

  	
   

  
	
   

  	
   

  	
  Name: David
  B. Musket

  	
   

  
	
   

  	
   

  	
  Title:
  Managing Member

  	
   

  

 

 

PLACE OF ORGANIZATION:  

 

 

	
  ADDRESS:

  	
  ProMed
  Partners, L.P.

  
	
   

  	
  c/o David B.
  Musket

  
	
   

  	
  ProMed
  Partners

  
	
   

  	
  125
  Cambridgepark Drive

  
	
   

  	
  Cambridge,
  MA  02140

  
	
   

  	
  Telephone:  (617) 441-0259

  
	
   

  	
  Telecopy:

  

 

 

[Signature page to Securities Purchase
Agreement]

 

35

 

IN WITNESS
WHEREOF, the undersigned Purchaser and the Company have caused this Agreement
to be duly executed as of the date first above written.

 

 

	
  CAMBRIDGE
  HEART, INC.

  
	
   

  
	
   

  
	
   

  	
  By:

  	
   /s/ David A. Chazanovitz

  	
   

  	
   

  
	
   

  	
   

  	
  Name:  David A. Chazanovitz

  	
   

  
	
   

  	
   

  	
  Title:
  President and Chief Executive Officer

  	
   

  

 

 

PURCHASER:

 

 

 

	
   /s/
  David B. Musket

  	
   

  
	
  David B.
  Musket

  	
   

  
	
   

  	
   

  
	
  RESIDENCE:

  	
  Massachusetts

  
	
   

  	
   

  
	
  ADDRESS:

  	
  ProMed
  Partners

  
	
   

  	
  125
  Cambridgepark Drive

  
	
   

  	
  Cambridge,
  MA  02140

  
	
   

  	
  Telephone:  (617) 441-0259

  
	
   

  	
  Telecopy:

  
			

 

 

[Signature page to Securities Purchase
Agreement]

 

36

 

SCHEDULE I

 

	
  Purchaser

  	
   

  	
  Number of Shares

  Being Purchased

  	
   

  	
  Aggregate

  Purchase Price

  	
   

  	
  Aggregate

  Short-Term

  Warrant Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AFB Fund LLC

  	
   

  	
  90,497

  	
   

  	
  $

  	
  399,996.74

  	
   

  	
  135,744

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Blumberg Life Sciences Fund Ltd.

  	
   

  	
  3,243

  	
   

  	
  $

  	
  14,334.06

  	
   

  	
  4,860

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Blumberg Life Sciences Fund L.P.

  	
   

  	
  23,906

  	
   

  	
  $

  	
  105,664.52

  	
   

  	
  35,856

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Eric Hecht

  	
   

  	
  4,524

  	
   

  	
  $

  	
  19,996.08

  	
   

  	
  6,786

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  J. Leighton Read, M.D.

  	
   

  	
  4,524

  	
   

  	
  $

  	
  19,996.08

  	
   

  	
  6,786

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  David C. Poole

  	
   

  	
  22,624

  	
   

  	
  $

  	
  99,998.08

  	
   

  	
  33,936

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Brian Trumbore

  	
   

  	
  22,624

  	
   

  	
  $

  	
  99,998.08

  	
   

  	
  33,936

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  T-Wave Investors, L.P.

  	
   

  	
  90,497

  	
   

  	
  $

  	
  399,996.74

  	
   

  	
  135,744

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Leaf Offshore Investment Fund LTD

  	
   

  	
  45,248

  	
   

  	
  $

  	
  199,996.16

  	
   

  	
  67,872

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ProMed Partners, L.P.

  	
   

  	
  38,461

  	
   

  	
  $

  	
  169,997.62

  	
   

  	
  57,690

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ProMed Offshore Fund, Ltd.

  	
   

  	
  6,787

  	
   

  	
  $

  	
  29,998.54

  	
   

  	
  10,176

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  David B. Musket

  	
   

  	
  13,574

  	
   

  	
  $

  	
  59,997.08

  	
   

  	
  20,358

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Robert P. Khederian

  	
   

  	
  104,072

  	
   

  	
  $

  	
  459,998.24

  	
   

  	
  156,108

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Medtronic, Inc.

  	
   

  	
  226,244

  	
   

  	
  $

  	
  999,998.48

  	
   

  	
  Not Applicable

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The Tail Wind Fund Ltd.

  	
   

  	
  Not Applicable

  	
   

  	
  Not Applicable

  	
   

  	
  67,872

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL:

  	
   

  	
  696,825

  	
   

  	
  $

  	
  3,079,966.50

  	
   

  	
  773,724

  	
   

  

 

37

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00051-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00051-of-00352.parquet"}]]