Document:

exv4w2

 

Exhibit 4.2

REGISTRATION RIGHTS AGREEMENT

     This Registration Rights Agreement (this “Agreement”) is made and entered into as of November
29, 2005, by and among MicroMed Cardiovascular, Inc., a Delaware corporation (the “Company”), on
the one hand and the purchasers signatory hereto (each such purchaser, a “Purchaser” and
collectively, the “Purchasers”) and Hunter World Markets, Inc., on the other hand.

     This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date
hereof among the Company and the Purchasers (the “Purchase Agreement”) and the Placement Agency
Agreement between the Company and Hunter World Markets, Inc. (the “Agency Agreement”).

     The Company, Hunter and the Purchasers hereby agree as follows:

     1. Definitions. Capitalized terms used and not otherwise defined herein that are
defined in the Purchase Agreement shall have the meanings given such terms in the Purchase
Agreement or the Agency Agreement. As used in this Agreement, the following terms shall have the
following meanings:

               “Advice” shall have the meaning set forth in Section 6(d).

               “Closing” means the closing of the transactions contemplated by the Purchase
Agreement.

               “Effectiveness Date” means, with respect to the Registration Statement required to be
filed hereunder, the earlier of (a) the 120th calendar day following the date of the Closing, and
(b) the fifth Trading Day following the date on which the Company is notified by the Commission
that the Registration Statement will not be reviewed or is no longer subject to further review and
comments.

               “Effectiveness Period” shall have the meaning set forth in Section 2(a).

               “Event” shall have the meaning set forth in Section 2(b).

               “Event Date” shall have the meaning set forth in Section 2(b).

               “Filing Date” means, with respect to the Registration Statement required to be filed
hereunder, the 30th calendar day following the date of the date of the Closing.

               “Holder” or “Holders” means the holder or holders, as the case may be, from
time to time, of Registrable Securities.

               “Indemnified Party” shall have the meaning set forth in Section 5(c).

               “Indemnifying Party” shall have the meaning set forth in Section 5(c).

               “Losses” shall have the meaning set forth in Section 5(a).

 

 

               “Plan of Distribution” shall have the meaning set forth in Section 2(a).

               “Proceeding” means an action, claim, suit, investigation or proceeding (including,
without limitation, an investigation or partial proceeding, such as a deposition), whether
commenced or threatened.

               “Prospectus” means the prospectus included in the Registration Statement (including,
without limitation, a prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A promulgated under
the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the
terms of the offering of any portion of the Registrable Securities covered by the Registration
Statement, and all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.

               “Registrable Securities” means, as to this Agreement only, all of the Shares, 598,490
Anti-Dilution Shares (as defined in the Purchase Agreement) issuable pursuant to the August 2005
Purchase Agreement (as defined in the Purchase Agreement) and the Shares of Common Stock issuable
pursuant to the Placement Agent Warrants, together with any shares of Common Stock issued or
issuable upon any stock split, dividend or other distribution, recapitalization or similar event
with respect to the foregoing.

               “Registration Statement” means the registration statements required to be filed
hereunder, including (in each case) the Prospectus, amendments and supplements to the registration
statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and
all material incorporated by reference or deemed to be incorporated by reference in the
registration statement.

               “Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same purpose and effect as such Rule.

               “Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same purpose and effect as such Rule.

               “Selling Shareholder Questionnaire” shall have the meaning set forth in Section 3(a).

     2. Registration.

               (a) On or prior to the Filing Date, the Company shall prepare and file with the Commission the
Registration Statement covering the resale of all of the Registrable Securities for an offering to
be made on a continuous basis pursuant to Rule 415. The Registration Statement required hereunder
shall be on Form SB-2 (except if the Company is not then eligible to register for resale the
Registrable Securities on Form SB-2, in which case the Registration

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shall be on another appropriate form in accordance herewith). The Registration Statement
required hereunder shall contain (except if otherwise directed by the Holders) substantially the
“Plan of Distribution” attached hereto as Annex A. Subject to the terms of this Agreement, the
Company shall use its best efforts to cause the Registration Statement to be declared effective
under the Securities Act as promptly as possible after the filing thereof, but in any event not
later than the Effectiveness Date, and shall use its best efforts to keep the Registration
Statement continuously effective under the Securities Act until the date when all Registrable
Securities covered by the Registration Statement have been sold or may be sold without volume
restrictions pursuant to Rule 144(k) as determined by the counsel to the Company pursuant to a
written opinion letter to such effect, addressed and acceptable to the Company’s transfer agent and
the affected Holders (the “Effectiveness Period”).

               (b) If: (i) a Registration Statement is not filed on or prior to the Filing Date (if the
Company files a Registration Statement without affording the Holder the opportunity to review and
comment on the same as required by Section 3(a), the Company shall not be deemed to have satisfied
this clause (i)), or (ii) the Company fails to file with the Commission a request for acceleration
in accordance with Rule 461 promulgated under the Securities Act, within five Trading Days of the
date that the Company is notified (orally or in writing, whichever is earlier) by the Commission
that a Registration Statement will not be “reviewed,” or is not subject to further review, or (iii)
a Registration Statement filed or required to be filed hereunder is not declared effective by the
Commission on or before the Effectiveness Date, or (iv) after a Registration Statement is first
declared effective by the Commission, it ceases for any reason to remain continuously effective as
to all Registrable Securities for which it is required to be effective, or the Holders are not
permitted to utilize the Prospectus therein to resell such Registrable Securities, for in any such
case 10 consecutive calendar days but no more than an aggregate of 15 calendar days during any 12
month period (which need not be consecutive Trading Days) (any such failure or breach being
referred to as an “Event,” and for purposes of clause (i) or (iv) the date on which such Event
occurs, or for purposes of clause (ii) the date on which such five Trading Day period is exceeded,
or for purposes of clause (v) the date on which such 10 or 15 calendar day period, as applicable,
is exceeded being referred to as “Event Date”), then in addition to any other rights the Holders
may have hereunder or under applicable law, then, on each such Event Date and on each monthly
anniversary of each such Event Date (if the applicable Event shall not have been cured by such
date) until the applicable Event is cured, the Company shall pay to each Holder an amount in cash,
as partial liquidated damages and not as a penalty, equal to 1.5% of the aggregate purchase price
paid by such Holder pursuant to the Purchase Agreement for any Registrable Securities then held by
such Holder based on the per Unit based on the per Unit Purchase Price. If the Company fails to
pay any partial liquidated damages pursuant to this Section in full within seven days after the
date payable, the Company will pay interest thereon at a rate of 12% per annum (or such lesser
maximum amount that is permitted to be paid by applicable law) to the Holder, accruing daily from
the date such partial liquidated damages are due until such amounts, plus all such interest
thereon, are paid in full. The partial liquidated damages pursuant to the terms hereof shall apply
on a daily pro-rata basis for any portion of a month prior to the cure of an Event. Notwithstanding
anything herein to the contrary, if an Event or the continuation of an Event is caused solely as a
result of an act or omission by a Holder, the Company shall not be liable to pay liquidated damages
to such Holder that otherwise would result on account of such Event or continuation of an Event.

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     3. Registration Procedures.

               In connection with the Company’s registration obligations hereunder, the Company shall:

               (a) Not less than five Trading Days prior to the filing of the Registration Statement or any
related Prospectus or any amendment or supplement thereto, the Company shall, (i) furnish to the
Holders copies of any disclosure relating to the Holders, including but not limited to the entire
Selling Stockholder and Plan of Distribution sections which sections shall be subject to the review
of such Holders, and (ii) cause its officers and directors, counsel and independent certified
public accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of
respective counsel to conduct a reasonable investigation within the meaning of the Securities Act.
The Company shall not file the Registration Statement or any such Prospectus or any amendments or
supplements thereto to which the Holders of a majority of the Registrable Securities shall
reasonably object in good faith, provided that the Company is notified of such objection in writing
no later than two Trading Days after the Holders have been so furnished copies of such documents.
Prior to any filing relating to the Registration Statement, each Holder agrees to furnish to the
Company a completed Questionnaire in the form attached to this Agreement as Annex B (a “Selling
Shareholder Questionnaire”) within five Trading Days of written request by the Company.

               (b) (i) Prepare and file with the Commission such amendments, including post-effective
amendments, to the Registration Statement and the Prospectus used in connection therewith as may be
necessary to keep the Registration Statement continuously effective as to the applicable
Registrable Securities for the Effectiveness Period and prepare and file with the Commission such
additional Registration Statements in order to register for resale under the Securities Act all of
the Registrable Securities; (ii) cause the related Prospectus to be amended or supplemented by any
required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424;
(iii) respond as promptly as reasonably practicable to any comments received from the Commission
with respect to the Registration Statement or any amendment thereto and, as promptly as reasonably
practicable, upon request, provide the Holders upon request true and complete copies of all
correspondence from and to the Commission relating to the Registration Statement; and (iv) comply
in all material respects with the provisions of the Securities Act and the Exchange Act with
respect to the disposition of all Registrable Securities covered by the Registration Statement
during the applicable period in accordance with the intended methods of disposition by the Holders
thereof set forth in the Registration Statement as so amended or in such Prospectus as so
supplemented.

               (c) Notify the Holders of Registrable Securities to be sold as promptly as reasonably
practicable and (if requested by any such Person) confirm such notice in writing promptly following
the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to the
Registration Statement is proposed to be filed; (B) when the Commission notifies the Company
whether there will be a “review” of the Registration Statement and whenever the Commission comments
in writing on the Registration Statement (the Company shall upon request provide true and complete
copies thereof and all written responses thereto to each of the Holders); and (C) with respect to
the Registration Statement or any post-effective amendment, when the same has become effective;
(ii) of any request by the

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Commission or any other Federal or state governmental authority during the period of
effectiveness of the Registration Statement for amendments or supplements to the Registration
Statement or Prospectus or for additional information; (iii) of the issuance by the Commission or
any other federal or state governmental authority of any stop order suspending the effectiveness of
the Registration Statement covering any or all of the Registrable Securities or the initiation of
any Proceedings for that purpose; (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose; and (v) of the occurrence of any event or passage of time that makes
the financial statements included in the Registration Statement ineligible for inclusion therein or
any statement made in the Registration Statement or Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or that requires any
revisions to the Registration Statement, Prospectus or other documents so that, in the case of the
Registration Statement or the Prospectus, as the case may be, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which they were made,
not misleading.

               (d) Use commercially reasonable efforts to avoid the issuance of, or, if issued, obtain the
withdrawal of (i) any order suspending the effectiveness of the Registration Statement, or (ii) any
suspension of the qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable moment.

               (e) Furnish to each Holder, without charge and upon request, at least one conformed copy of
the Registration Statement and each amendment thereto, including financial statements and
schedules, all documents incorporated or deemed to be incorporated therein by reference to the
extent requested by such Person, and all exhibits to the extent requested by such Person (including
those previously furnished or incorporated by reference) promptly after the filing of such
documents with the Commission.

               (f) Promptly deliver to each Holder, without charge and upon request, as many copies of the
Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement
thereto as such Persons may reasonably request in connection with resales by the Holder of
Registrable Securities. Subject to the terms of this Agreement, the Company hereby consents to the
use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in
connection with the offering and sale of the Registrable Securities covered by such Prospectus and
any amendment or supplement thereto, except after the giving on any notice pursuant to Section
3(c).

               (g) Prior to any resale of Registrable Securities by a Holder, use its commercially reasonable
efforts to register or qualify or cooperate with the selling Holders in connection with the
registration or qualification (or exemption from the Registration or qualification) of such
Registrable Securities for the resale by the Holder under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder reasonably requests in writing, to keep the
Registration or qualification (or exemption therefrom) effective during the Effectiveness Period
and to do any and all other acts or things reasonably necessary to enable the disposition in such
jurisdictions of the Registrable Securities covered by the Registration

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Statement; provided, that the Company shall not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified, subject the Company to any tax in
any such jurisdiction where it is not then so subject or file a general consent to service of
process in any such jurisdiction.

               (h) If requested by the Holders, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to be delivered to a
transferee pursuant to the Registration Statement, which certificates shall be free, to the extent
permitted by the Purchase Agreement, of all restrictive legends, and to enable such Registrable
Securities to be in such denominations and registered in such names as any such Holders may
request.

               (i) Upon the occurrence of any event contemplated by Section 3(c)(v), as promptly as
reasonably possible, prepare a supplement or amendment, including a post-effective amendment, to
the Registration Statement or a supplement to the related Prospectus or any document incorporated
or deemed to be incorporated therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus will contain an untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which they were made,
not misleading. If the Company notifies the Holders in accordance with clauses (ii) through (v) of
Section 3(c) above to suspend the use of any Prospectus until the requisite changes to such
Prospectus have been made, then the Holders shall suspend use of such Prospectus. The Company will
use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as is
practicable. The Company shall be entitled to exercise its right under this Section 3(i) to suspend
the availability of a Registration Statement and Prospectus, subject to the payment of partial
liquidated damages pursuant to Section 2(b), for a period not to exceed 60 days (which need not be
consecutive days) in any 12 month period.

               (j) Comply with all applicable rules and regulations of the Commission.

               (k) The Company may require each selling Holder to furnish to the Company a certified
statement as to the number of shares of Common Stock beneficially owned by such Holder and, if
required by the Commission, the person thereof that has voting and dispositive control over the
Shares. During any periods that the Company is unable to meet its obligations hereunder with
respect to the registration of the Registrable Securities solely because any Holder fails to
furnish such information within three Trading Days of the Company’s request, any liquidated damages
that are accruing at such time as to such Holder only shall be tolled and any Event that may
otherwise occur solely because of such delay shall be suspended as to such Holder only, until such
information is delivered to the Company.

     4. Registration Expenses. All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company whether or not any
Registrable Securities are sold pursuant to the Registration Statement. The fees and expenses
referred to in the foregoing sentence shall include, without limitation, (i) all registration and
filing fees (including, without limitation, fees and expenses with respect to filings required to
be made with the Trading Market on which the Common Stock is then listed for trading, (ii) printing
expenses (including, without limitation, expenses of printing certificates for Registrable

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Securities and of printing prospectuses if the printing of prospectuses is reasonably
requested by the holders of a majority of the Registrable Securities included in the Registration
Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) Securities Act liability insurance, if the Company so desires such
insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection
with the consummation of the transactions contemplated by this Agreement. In addition, the Company
shall be responsible for all of its internal expenses incurred in connection with the consummation
of the transactions contemplated by this Agreement (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties), the expense of any
annual audit and the fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder. In no event shall the Company be
responsible for any broker or similar commissions or, except to the extent provided for in the
Transaction Documents, any legal fees or other costs of the Holders.

     5. Indemnification.

               (a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors,
agents and employees of each of them, each Person who controls any such Holder (within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors,
agents and employees of each such controlling Person, to the fullest extent permitted by applicable
law, from and against any and all losses, claims, damages, liabilities, costs (including, without
limitation, reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising
out of or relating to any untrue or alleged untrue statement of a material fact contained in the
Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make the statements
therein (in the case of any Prospectus or form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading, except to the extent, but only to the
extent, that (i) such untrue statements or omissions are based solely upon information regarding
such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the
extent that such information relates to such Holder or such Holder’s proposed method of
distribution of Registrable Securities and was reviewed and expressly approved in writing by such
Holder expressly for use in the Registration Statement, such Prospectus or such form of Prospectus
or in any amendment or supplement thereto (it being understood that the Holder has approved Annex A
hereto for this purpose) or (ii) in the case of an occurrence of an event of the type specified in
Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus after the
Company has notified such Holder in writing that the Prospectus is outdated or defective and prior
to the receipt by such Holder of the Advice contemplated in Section 6(d). The Company shall notify
the Holders promptly of the institution, threat or assertion of any Proceeding of which the Company
is aware in connection with the transactions contemplated by this Agreement.

               (b) Indemnification by Holders. Each Holder shall, severally and not jointly,
indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person
who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of
the Exchange Act), and the directors, officers, agents or employees of such

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controlling Persons, to the fullest extent permitted by applicable law, from and against all
Losses, as incurred, to the extent arising out of or based solely upon: (x) such Holder’s failure
to comply with the prospectus delivery requirements of the Securities Act or (y) any untrue or
alleged untrue statement of a material fact contained in any Registration Statement, any
Prospectus, or any form of prospectus, or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements therein not
misleading (i) to the extent, but only to the extent, that such untrue statement or omission is
contained in any information so furnished in writing by such Holder to the Company specifically for
inclusion in the Registration Statement or such Prospectus or (ii) to the extent that (1) such
untrue statements or omissions are based solely upon information regarding such Holder furnished in
writing to the Company by such Holder expressly for use therein, or to the extent that such
information relates to such Holder or such Holder’s proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder expressly for use in
the Registration Statement (it being understood that the Holder has approved Annex A hereto for
this purpose), such Prospectus or such form of Prospectus or in any amendment or supplement thereto
or (2) in the case of an occurrence of an event of the type specified in Section 3(c)(ii)-(v), the
use by such Holder of an outdated or defective Prospectus after the Company has notified such
Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such
Holder of the Advice contemplated in Section 6(e). In no event shall the liability of any selling
Holder hereunder be greater in amount than the dollar amount of the net proceeds received by such
Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation.

               (c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or
asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such
Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying
Party”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof,
including the employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof; provided, that the
failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of
its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it
shall be finally determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have prejudiced the Indemnifying
Party.

     An Indemnified Party shall have the right to employ separate counsel in any such Proceeding
and to participate in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such Proceeding
(including any impleaded parties) include both such Indemnified Party and the Indemnifying Party,
and such Indemnified Party shall reasonably believe that a material conflict of interest is likely
to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party
(in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects
to employ separate counsel at the expense of the Indemnifying Party, the

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Indemnifying Party shall not have the right to assume the defense thereof and the reasonable
fees and expenses of one separate counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without
its written consent, which consent shall not be unreasonably withheld. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims that are the subject
matter of such Proceeding.

     Subject to the terms of this Agreement, all reasonable fees and expenses of the Indemnified
Party (including reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within ten Trading Days of written
notice thereof to the Indemnifying Party; provided, that the Indemnified Party shall promptly
reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such
actions for which such Indemnified Party is not entitled to indemnification hereunder, determined
based upon the relative faults of the parties.

               (d) Contribution. If a claim for indemnification under Section 5(a) or 5(b) is
unavailable to an Indemnified Party (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in
connection with the actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact or omission or
alleged omission of a material fact, has been taken or made by, or relates to information supplied
by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such action, statement or omission. The
amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to
the limitations set forth in this Agreement, any reasonable attorneys’ or other reasonable fees or
expenses incurred by such party in connection with any Proceeding to the extent such party would
have been indemnified for such fees or expenses if the indemnification provided for in this Section
was available to such party in accordance with its terms.

     The parties hereto agree that it would not be just and equitable if contribution pursuant to
this Section 5(d) were determined by pro rata allocation or by any other method of allocation that
does not take into account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 5(d), no Holder shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the proceeds actually
received by such Holder from the sale of the Registrable Securities subject to the Proceeding
exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission, except in the case of
fraud by such Holder.

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     The indemnity and contribution agreements contained in this Section are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties.

     6. Miscellaneous.

               (a) Remedies. In the event of a breach by the Company or by a Holder, of any of their
obligations under this Agreement, each Holder or the Company, as the case may be, in addition to
being entitled to exercise all rights granted by law and under this Agreement, including recovery
of damages, will be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not provide adequate compensation for any
losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby
further agrees that, in the event of any action for specific performance in respect of such breach,
it shall waive the defense that a remedy at law would be adequate.

               (b) No Piggyback on Registrations. Except as set forth on Schedule 6(b) attached
hereto, neither the Company nor any of its security holders (other than the Holders in such
capacity pursuant hereto) may include securities of the Company in a Registration Statement other
than the Registrable Securities. The Company shall not file any other registration statement until
after the Effective Date (other than registration statements on Form S-8).

               (c) Compliance. Each Holder covenants and agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to the Registration Statement.

               (d) Discontinued Disposition. Each Holder agrees by its acquisition of such
Registrable Securities that, upon receipt of a notice from the Company of the occurrence of any
event of the kind described in Section 3(c), such Holder will forthwith discontinue disposition of
such Registrable Securities under the Registration Statement until such Holder’s receipt of the
copies of the supplemented Prospectus and/or amended Registration Statement or until it is advised
in writing (the “Advice”) by the Company that the use of the applicable Prospectus may be resumed,
and, in either case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or Registration
Statement. The Company will use its best efforts to ensure that the use of the Prospectus may be
resumed as promptly as it practicable. The Company agrees and acknowledges that any periods during
which the Holder is required to discontinue the disposition of the Registrable Securities hereunder
shall be subject to the provisions of Section 2(b).

               (e) Piggy-Back Registrations. If at any time during the Effectiveness Period there is not
an effective Registration Statement covering all of the Registrable Securities and the Company
shall determine to prepare and file with the Commission a registration statement relating to an
offering for its own account under the Securities Act of any of its equity securities, other than
on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents
relating to equity securities to be issued solely in connection with any acquisition of any entity
or business or equity securities issuable in connection with the stock option or other employee
benefit plans, then the Company shall send to each Holder a written notice of such determination
and, if within fifteen days after the date of such notice, any such Holder shall so

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request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such Holder requests to be registered, subject to customary underwriter cutbacks applicable to all holders of registration rights.

          (f) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and Holders of at least 66% of the then outstanding Registrable Securities.

          (g) Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be made in accordance with the provisions of the Purchase Agreement.

          (h) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder. Each Holder may assign their respective rights hereunder in the manner and to the Persons as permitted under the Purchase Agreement.

          (i) Execution and Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof.

          (j) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be determined with the provisions of the Purchase Agreement.

          (k) Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any remedies provided by law.

          (l) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

          (m) Headings. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.

11

 

          (n) Independent Nature of Holders’ Obligations and Rights. The obligations of each
Holder hereunder are several and not joint with the obligations of any other Holder hereunder, and
no Holder shall be responsible in any way for the performance of the obligations of any other
Holder hereunder. Nothing contained herein or in any other agreement or document delivered at any
closing, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to
constitute the Holders as a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Holders are in any way acting in concert with respect to
such obligations or the transactions contemplated by this Agreement. Each Holder shall be entitled
to protect and enforce its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Holder to be joined as an additional party
in any proceeding for such purpose.

[SIGNATURE PAGES FOLLOW]

12

 

     IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the
date first written above.

	 	 	 	 	 	 	 
	 	 	MICROMED CARDIOVASCULAR, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Travis E. Baugh	 	 
	 

	 	 	 	Name: Travis E. Baugh	 	 
	 

	 	 	 	Title: President and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	HUNTER WORLD MARKETS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Todd M. Ficeto	 	 
	 

	 	 	 	Name: Todd M. Ficeto	 	 
	 

	 	 	 	Title: President	 	 

[SIGNATURE PAGES CONTINUE]

13

 

[PURCHASER’S SIGNATURE PAGE TO MICROMED CARDIOVASCULAR, INC.

REGISTRATION RIGHTS AGREEMENT]

	 	 	 	 	 	 	 
	 	 	INVESTING ENTITY	 	 
	 
	 	 	 	 	 	 
	 	 	ABSOLUTE RETURN EUROPE FUND	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Florian Homm	 	 
	 

	 	 	 	Name: Florian Homm	 	 
	 

	 	 	 	Title: Investment Advisor	 	 

[SIGNATURE PAGES CONTINUE]

14

 

[PURCHASER’S SIGNATURE PAGE TO MICROMED CARDIOVASCULAR, INC.

REGISTRATION RIGHTS AGREEMENT]

	 	 	 	 	 	 	 
	 	 	INVESTING ENTITY	 	 
	 
	 	 	 	 	 	 
	 	 	EUROPEAN CATALYST FUND	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Florian Homm	 	 
	 

	 	 	 	Name: Florian Homm	 	 
	 

	 	 	 	     Title: Investment Advisor	 	 

[SIGNATURE PAGES CONTINUE]

15

 

[PURCHASER’S SIGNATURE PAGE TO MICROMED CARDIOVASCULAR, INC.

REGISTRATION RIGHTS AGREEMENT]

	 	 	 	 	 	 	 
	 	 	INVESTING ENTITY	 	 
	 
	 	 	 	 	 	 
	 	 	ABSOLUTE OCTANE FUND	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Florian Homm	 	 
	 

	 	 	 	Name: Florian Homm	 	 
	 

	 	 	 	     Title: Investment Advisor	 	 

[SIGNATURE PAGES CONTINUE]

16

 

[PURCHASER’S SIGNATURE PAGE TO MICROMED CARDIOVASCULAR, INC.

REGISTRATION RIGHTS AGREEMENT]

	 	 	 	 	 	 	 
	 	 	INVESTING ENTITY	 	 
	 
	 	 	 	 	 	 
	 	 	ABSOLUTE GERMAN FUND	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Florian Homm	 	 
	 

	 	 	 	Name: Florian Homm	 	 
	 

	 	 	 	Title: Investment Advisor	 	 

[SIGNATURE PAGES CONTINUE]

17

 

[PURCHASER’S SIGNATURE PAGE TO MICROMED CARDIOVASCULAR, INC.

REGISTRATION RIGHTS AGREEMENT]

	 	 	 	 	 	 	 
	 	 	INVESTING ENTITY	 	 
	 
	 	 	 	 	 	 
	 	 	HUNTER FUND LTD.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Todd M. Ficeto	 	 
	 

	 	 	 	Name: Todd M. Ficeto	 	 
	 

	 	 	 	Title: Investment Advisor	 	 

18

 

ANNEX A

PLAN OF DISTRIBUTION

     The Selling Stockholders (the “Selling Stockholders”) of the common stock (“Common
Stock”) of MicroMed Cardiovascular, Inc., a Delaware corporation (the “Company”) and
any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all
of their shares of Common Stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The
Selling Stockholders may use any one or more of the following methods when selling shares:

	 	•	 	ordinary brokerage transactions and transactions in which the broker-dealer solicits
purchasers;
	 
	 	•	 	block trades in which the broker-dealer will attempt to sell the shares as agent but
may position and resell a portion of the block as principal to facilitate the
transaction;
	 
	 	•	 	purchases by a broker-dealer as principal and resale by the broker-dealer for its
account;
	 
	 	•	 	an exchange distribution in accordance with the rules of the applicable exchange;
	 
	 	•	 	privately negotiated transactions;
	 
	 	•	 	settlement of short sales entered into after the date of this prospectus;
	 
	 	•	 	broker-dealers may agree with the Selling Stockholders to sell a specified number of
such shares at a stipulated price per share;
	 
	 	•	 	a combination of any such methods of sale;
	 
	 	•	 	through the writing or settlement of options or other hedging transactions, whether
through an options exchange or otherwise; or
	 
	 	•	 	any other method permitted pursuant to applicable law.

     The Selling Stockholders may also sell shares under Rule 144 under the Securities Act of 1933,
as amended (the “Securities Act”), if available, rather than under this prospectus.

     Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from the Selling
Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the
purchaser) in amounts to be negotiated. Each Selling Stockholder does not expect these commissions
and discounts relating to its sales of shares to exceed what is customary in the types of
transactions involved.

19

 

     In connection with the sale of our common stock or interests therein, the Selling Stockholders
may enter into hedging transactions with broker-dealers or other financial institutions, which may
in turn engage in short sales of the common stock in the course of hedging the positions they
assume. The Selling Stockholders may also sell shares of our common stock short and deliver these
securities to close out their short positions, or loan or pledge the common stock to broker-dealers
that in turn may sell these securities. The Selling Stockholders may also enter into option or
other transactions with broker-dealers or other financial institutions or the creation of one or
more derivative securities which require the delivery to such broker-dealer or other financial
institution of shares offered by this prospectus, which shares such broker-dealer or other
financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect
such transaction).

     The Selling Stockholders and any broker-dealers or agents that are involved in selling the
shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection
with such sales. In such event, any commissions received by such broker-dealers or agents and any
profit on the resale of the shares purchased by them may be deemed to be underwriting commissions
or discounts under the Securities Act. Each Selling Stockholder has informed the Company that it
does not have any agreement or understanding, directly or indirectly, with any person to distribute
the Common Stock.

     The Company is required to pay certain fees and expenses incurred by the Company incident to
the registration of the shares. The Company has agreed to indemnify the Selling Stockholders
against certain losses, claims, damages and liabilities, including liabilities under the Securities
Act.

     Because Selling Stockholders may be deemed to be “underwriters” within the meaning of the
Securities Act, they will be subject to the prospectus delivery requirements of the Securities Act.
In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144
under the Securities Act may be sold under Rule 144 rather than under this prospectus. Each Selling
Stockholder has advised us that they have not entered into any agreements, understandings or
arrangements with any underwriter or broker-dealer regarding the sale of the resale shares. There
is no underwriter or coordinating broker acting in connection with the proposed sale of the resale
shares by the Selling Stockholders.

     We agreed to keep this prospectus effective until the earlier of (i) the date on which the
shares may be resold by the Selling Stockholders without registration and without regard to any
volume limitations by reason of Rule 144(k) under the Securities Act or any other rule of similar
effect or (ii) all of the shares have been sold pursuant to the prospectus or Rule 144 under the
Securities Act or any other rule of similar effect. The resale shares will be sold only through
registered or licensed brokers or dealers if required under applicable state securities laws. In
addition, in certain states, the resale shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.

     Under applicable rules and regulations under the Exchange Act, any person engaged in the
distribution of the resale shares may not simultaneously engage in market making activities with
respect to our common stock for a period of two business days prior to the commencement

20

 

of the distribution. In addition, the Selling Stockholders will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M,
which may limit the timing of purchases and sales of shares of our common stock by the Selling
Stockholders or any other person. We will make copies of this prospectus available to the Selling
Stockholders and have informed them of the need to deliver a copy of this prospectus to each
purchaser at or prior to the time of the sale.

21

 

ANNEX B

MicroMed Cardiovascular, Inc.

SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE

     The undersigned beneficial owner of common stock, par value $0.001 per share (the “Common
Stock”), of MicroMed Cardiovascular, Inc., a Delaware corporation (the “Company”), (the
“Registrable Securities”) understands that the Company has filed or intends to file with
the Securities and Exchange Commission (the “Commission”) a registration statement on Form
SB-2 (the “Registration Statement”) for the registration and resale under Rule 415 of the
Securities Act of 1933, as amended (the “Securities Act”), of the Registrable Securities,
in accordance with the terms of the Registration Rights Agreement, dated as of November 29, 2005
(the “Registration Rights Agreement”), among the Company and the Purchasers named therein.
A copy of the Registration Rights Agreement is available from the Company upon request at the
address set forth below. All capitalized terms not otherwise defined herein shall have the meanings
ascribed thereto in the Registration Rights Agreement.

     Certain legal consequences arise from being named as a selling securityholder in the
Registration Statement and the related prospectus. Accordingly, holders and beneficial owners of
Registrable Securities are advised to consult their own securities law counsel regarding the
consequences of being named or not being named as a selling securityholder in the Registration
Statement and the related prospectus.

NOTICE

     The undersigned beneficial owner (the “Selling Securityholder”) of Registrable
Securities hereby elects to include the Registrable Securities owned by it and listed below in Item
3 (unless otherwise specified under such Item 3) in the Registration Statement.

22

 

QUESTIONNAIRE

          The undersigned hereby provides the following information to the Company and represents and
warrants that such information is accurate:

	 	 	 	 	 
	1.

	 	Name.	 	 
	 
	 	 	 	 
	 

	 	(a)
	 	Full Legal Name of Selling Securityholder
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	(b)
	 	Full Legal Name of Registered Holder (if not the same as (a) above) through which
Registrable Securities Listed in Item 3 below are held:
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	(c)
	 	Full Legal Name of Natural Control Person (which means a natural person who
directly you indirectly alone or with others has power to vote or dispose of the
securities covered by the questionnaire):
	 
	 	 	 	 
	 

	 	 	 	 

	 	 	 	 	 	 	 	 	 
	2.	 	Address for Notices to Selling Securityholder:
	 
	 	 	 	 	 	 	 	 
	 	 	Telephone:	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Fax:	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Contact Person:	 	 
	 

	 	 	 	 	 	 	 	 

	 	 	 	 	 
	3.	 	Beneficial Ownership of Registrable Securities:
	 
	 	 	 	 
	 

	 	(a)
	 	Type and Number of Registrable Securities beneficially owned:
	 
	 	 	 	 
	 
	 
	 	 	 	 
	 
	 
	 	 	 	 
	 
	 	 	 	 
	4.	 	Broker-Dealer Status:
	 
	 	 	 	 
	 

	 	(a)
	 	Are you a broker-dealer?
	 
	 	 	 	 
	 

	 	 	 	Yes   o                No    o
	 
	 	 	 	 
	 

	 	 	 	Note: If yes, the Commission’s staff has indicated that you should be identified
as an underwriter in the Registration Statement.

23

 

	 	 	 	 	 
	 

	 	(b)
	 	Are you an affiliate of a broker-dealer?
	 
	 	 	 	 
	 

	 	 	 	Yes   o                No    o
	 
	 	 	 	 
	 

	 	(c)
	 	If you are an affiliate of a broker-dealer, do you certify that you bought the
Registrable Securities in the ordinary course of business, and at the time of the
purchase of the Registrable Securities to be resold, you had no agreements or
understandings, directly or indirectly, with any person to distribute the
Registrable Securities?
	 
	 	 	 	 
	 

	 	 	 	Yes   o                No    o
	 
	 	 	 	 
	5.

	 	 	 	Beneficial Ownership of Other Securities of the Company Owned by the Selling
Securityholder.
	 
	 	 	 	 
	 

	 	 	 	Except as set forth below in this Item 5, the undersigned is not the beneficial
or registered owner of any securities of the Company other than the Registrable
Securities listed above in Item 3.
	 
	 	 	 	 
	 

	 	(a)
	 	Type and Amount of Other Securities beneficially owned by the Selling
Securityholder:
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	6.

	 	 	 	Relationship with the Company:
	 
	 	 	 	 
	 

	 	 	 	Except as set forth below, neither the undersigned nor any of its affiliates,
officers, directors or principal equity holders (owners of 5% of more of the
equity securities of the undersigned) has held any position or office or has had
any other material relationship with the Company (or its predecessors or
affiliates) during the past three years. State any exceptions here:
	 
	 	 	 	 
	 

	 	 	 	State any exceptions here:
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

           The undersigned agrees to promptly notify the Company of any inaccuracies or changes in the
information provided herein that may occur subsequent to the date hereof at any time while the
Registration Statement remains effective.

24

 

     By signing below, the undersigned consents to the disclosure of the information contained
herein in its answers to Items 1 through 6 and the inclusion of such information in the
Registration Statement and the related prospectus. The undersigned understands that such
information will be relied upon by the Company in connection with the preparation or amendment of
the Registration Statement and the related prospectus.

     IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and
Questionnaire to be executed and delivered either in person or by its duly authorized agent.

	 	 	 	 	 	 	 	 	 
	Dated:                                         	 	Beneficial Owner	 	 
	 
	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	Title:
	 	 

	 	 
	 

	 	 	 	 	 	 

	 	 

PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND

QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

25exv10w1

 

Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

     This Securities Purchase Agreement (this “Agreement”) is dated as of November 29, 2005, among
MicroMed Cardiovascular, Inc., a Delaware corporation (the “Company”), on the one hand, and each
purchaser identified on the signature pages hereto (each, including its successors and assigns, a
“Purchaser” and collectively the “Purchasers”) on the other hand;

     WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to
Section 4(2) of the Securities Act (as defined below), and Rule 506 promulgated thereunder, the
Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly,
desires to purchase from the Company in the aggregate, up to $5,150,000 of shares of Common Stock
on the Closing Date.

     NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for
other good and valuable consideration the receipt and adequacy of which are hereby acknowledged,
the Company and each Purchaser agrees as follows:

ARTICLE I

DEFINITIONS

     1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, for
all purposes of this Agreement, the following terms have the meanings indicated in this Section
1.1:

          “Action” shall have the meaning ascribed to such term in Section 3.1(i).

          “Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a Person as such terms
are used in and construed under Rule 144. With respect to a Purchaser, any investment fund or
managed account that is managed on a discretionary basis by the same investment manager as such
Purchaser will be deemed to be an Affiliate of such Purchaser.

          “Anti-Dilution Shares” means any Shares issued further to Section 4.9 hereof or
further to Section 4.9 of the August 2005 Securities Purchase Agreement.

          “August 2005 Purchase Agreement” means that Securities Purchase Agreement dated as of
August 9, 2005 by and among the Company and certain purchasers named therein.

          “Closing” means the closing of the purchase and sale of the Shares and the Placement
Agent Warrants pursuant to Section 2.1.

          “Closing Date” means the date when all of the Transaction Documents have been executed
and delivered by the applicable parties thereto, and all conditions precedent to (i) the
Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s obligations to
deliver the Shares have been satisfied or waived.

          “Commission” means the Securities and Exchange Commission.

 

 

          “Common Stock” means the common stock of the Company, par value $0.001 per share, and
any securities into which such common stock may hereafter be reclassified.

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

          “Disclosure Schedules” means the Disclosure Schedules of the Company delivered
concurrently herewith.

          “Effective Date” means the date that the Registration Statement is first declared
effective by the Commission.

          “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          “Exempt Issuance” means the issuance of (a) shares of Common Stock or options to
employees, officers or directors of the Company pursuant to any stock or option plan duly adopted
by a majority of the non-employee members of the Board of Directors of the Company or a majority of
the members of a committee of non-employee directors established for such purpose, (b) securities
upon the exercise of or conversion of any securities issued hereunder, or convertible securities,
options or warrants issued and outstanding on the date of this Agreement, provided that such
securities have not been amended since the date of this Agreement to increase the number of such
securities, (c) securities issued pursuant to strategic transactions with an operating company in a
business synergistic with the business of the Company and in which the Company receives benefits in
addition to the investment of funds or pursuant to acquisitions, but shall not include a
transaction in which the Company is issuing securities primarily for the purpose of raising capital
or to an entity whose primary business is investing in securities; and (d) securities issued to
consultants for services rendered to the Company in non-capital raising transactions in an amount
per individual issuance not to exceed 30,000 shares for particular services rendered.

          “GAAP” shall have the meaning ascribed to such term in Section 3.1(h).

          “Hunter” means Hunter World Markets, Inc.

          “Intellectual Property Rights” shall have the meaning ascribed to such term in Section
3.1(k).

          “Legend Removal Date” shall have the meaning ascribed to such term in Section 4.1(c).

          “Liens” means a lien, charge, security interest, encumbrance, right of first refusal,
preemptive right or other restriction.

          “Material Adverse Effect” shall have the meaning ascribed to such term in Section
3.1(b).

2

 

          “Material Permits” shall have the meaning ascribed to such term in Section 3.1(i).

          “Per Share Purchase Price” equals $0.75, subject to adjustment for reverse and forward
stock splits, stock dividends, stock combinations and other similar transactions of the Common
Stock that occur after the date of this Agreement.

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

          “Placement Agent Agreement” means that certain Placement Agent Agreement between the
Company and Hunter.

          “Placement Agent Warrants” means those warrants to be issued to Hunter further to the
Placement Agent Agreement.

          “Proceeding” means an action, claim, suit, investigation or proceeding (including,
without limitation, an investigation or partial proceeding, such as a deposition), whether
commenced or threatened.

          “Registration Rights Agreement” means the Registration Rights Agreement, dated as of
the date of this Agreement, among the Company and each Purchaser, providing for the registration of
the Shares in the form of Exhibit A attached hereto.

          “Registration Statement” means a registration statement meeting the requirements set
forth in the Registration Rights Agreement and covering the resale by the Purchasers of the Shares.

          “Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e).

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

          “Securities Act” means the Securities Act of 1933, as amended.

          “Shares” means the shares of the Company’s Common Stock issued or issuable to each
Purchaser pursuant to this Agreement.

          “Subscription Amount” means, as to each Purchaser, the amounts set forth below such
Purchaser’s signature block on the signature page hereto, in United States dollars and in
immediately available funds.

          “Subsidiary” shall mean the subsidiaries of the Company, if any, set forth on Schedule
3.1(a).

3

 

          “Trading Day” means a day on which the Common Stock is traded on a Trading Market.

          “Trading Market” means the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: the American Stock Exchange, the New York
Stock Exchange, the Nasdaq National Market, the Nasdaq SmallCap Market or the OTC Bulletin Board.

          “Transaction Documents” means this Agreement, the Registration Rights Agreement, the
Placement Agent Warrants and any other documents or agreements executed in connection with the
transactions contemplated hereunder.

ARTICLE II

PURCHASE AND SALE

     2.1 Closing. On the Closing Date, each Purchaser shall purchase from the Company,
severally and not jointly with the other Purchasers, and the Company shall issue and sell to each
Purchaser, a number of Shares equal to such Purchaser’s Subscription Amount divided by the Per
Share Purchase Price. Upon satisfaction of the conditions set forth in Section 2.3, the Closing
shall occur at the offices of Troy & Gould, located at 1801 Century Park East, 16th
Floor, Los Angeles, California 90067, or such other location as the parties shall mutually agree.
The aggregate Subscription Amounts for the Shares sold hereunder shall be up to $5,150,000.
Notwithstanding the foregoing, the payment of the aggregate Subscription Amounts and disbursement
of funds shall be through an escrow with Wells Fargo Bank, Los Angeles, California or such other
escrow agent as Hunter approves (the “Escrow Agent”). The Company and each Purchaser acknowledge
and agree that $150,000 of the Subscription Amount for the Shares results from the conversion of
the issuance of that certain Term Note in the principal amount of $150,000 by and between the
Company as Borrower and The Hunter Fund Limited as payee pursuant to that certain Term Credit
Agreement dated October 13, 2005 by and between the Company and The Hunter Fund Limited.

     2.2 Deliveries.

          (a) On the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser
or Hunter, as the case may be the following:

               (i) this Agreement duly executed by the Company;

               (ii) a copy of the irrevocable instructions to the Company’s transfer agent instructing the
transfer agent to deliver, on an expedited basis, a certificate evidencing a number of Common
Shares equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase Price,
registered in the name of such Purchaser;

               (iii) the Placement Agent Warrants;

               (iv) the Registration Rights Agreement duly executed by the Company; and

4

 

               (v) an executed Lock-Up Agreement in the form attached hereto as Annex B from each of
Richard From and Peyton, Chandler & Sullivan, Inc.

          (b) On the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company
the following:

               (i) this Agreement duly executed by such Purchaser;

               (ii) such Purchaser’s Subscription Amount by wire transfer of same day funds to the account as
specified in writing by the Escrow Agent; and

               (iii) the Registration Rights Agreement duly executed by such Purchaser.

     2.3 Closing Conditions.

          (a) The obligations of the Company hereunder in connection with the Closing are subject to the
following conditions being met:

               (i) the accuracy in all material respects when made and on the Closing Date of the
representations and warranties of the Purchasers contained herein;

               (ii) all obligations, covenants and agreements of the Purchasers required to be performed at
or prior to the Closing Date shall have been performed; and

               (iii) the delivery by the Purchasers of the items set forth in Section 2.2(b) of this
Agreement.

          (b) The respective obligations of the Purchasers hereunder in connection with the Closing are
subject to the following conditions being met:

               (i) the accuracy in all material respects on the Closing Date of the representations and
warranties of the Company contained herein;

               (ii) all obligations, covenants and agreements of the Company required to be performed at or
prior to the Closing Date shall have been performed;

               (iii) the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;

               (iv) there shall have been no Material Adverse Effect with respect to the Company since the
date hereof;

               (v) the Company shall have in force a Lock-Up Agreement in the form attached hereto as
Annex B from each of Richard From and Peyton, Chandler & Sullivan, Inc.; and

               (vi) The Purchasers shall have received an opinion of counsel to the Company in form and
substance reasonably satisfactory to the Purchasers.

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ARTICLE III

REPRESENTATIONS AND WARRANTIES

     3.1 Representations and Warranties of the Company. Except as set forth under the
corresponding section of the Disclosure Schedules which Disclosure Schedules shall be deemed a part
hereof, the Company hereby makes the representations and warranties set forth below to each
Purchaser:

          (a) Subsidiaries. All of the direct and indirect subsidiaries of the Company, if any,
are set forth on Schedule 3.1(a). The Company owns, directly or indirectly, all of the capital
stock or other equity interests of each Subsidiary free and clear of any Liens, and all the issued
and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.
If the Company has no subsidiaries, then references in the Transaction Documents to the
Subsidiaries will be disregarded.

          (b) Organization and Qualification. Each of the Company and the Subsidiaries is an
entity duly incorporated or otherwise organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite
power and authority to own and use its properties and assets and to carry on its business as
currently conducted. Neither the Company nor any Subsidiary is in violation or default of any of
the provisions of its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to
conduct business and is in good standing as a foreign corporation or other entity in each
jurisdiction in which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good standing, as the
case may be, could not have or reasonably be expected to result in (i) a material adverse effect on
the legality, validity or enforceability of any Transaction Documents, (ii) a material adverse
effect on the results of operations, assets, business, prospects or financial condition of the
Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s
ability to perform in any material respect on a timely basis its obligations under any Transaction
Documents (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been
instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification.

          (c) Authorization; Enforcement. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each of the Transaction
Documents and otherwise to carry out its obligations thereunder. The execution and delivery of
each of the Transaction Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the part of the Company
and no further action is required by the Company in connection therewith other than in connection
with the Required Approvals. Each of the Transaction Documents has been (or upon delivery will
have been) duly executed by the Company and, when delivered in accordance with the terms hereof,
will constitute the valid and binding obligation of the Company enforceable against the Company in
accordance with its terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting enforcement of
creditors’ rights generally, (ii) as limited by laws relating to

6

 

the availability of specific performance, injunctive relief or other equitable remedies and
(iii) insofar as indemnification and contribution provisions may be limited by applicable law.

          (d) No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company, the issuance and sale of the Shares and the consummation by the Company
of the other transactions contemplated thereby do not and will not (i) conflict with or violate any
provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or
other organizational or charter documents, 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, result in the
creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give
to others any rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company
or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is
bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a
violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of
any court or governmental authority to which the Company or a Subsidiary is subject (including
federal and state securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii),
such as could not have or reasonably be expected to result in a Material Adverse Effect.

          (e) Filings, Consents and Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any filing or registration
with, any court or other federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the Transaction
Documents, other than (i) filings required pursuant to Section 4.4 of this Agreement, (ii) the
filing with the Commission of the Registration Statement, (iii) application(s) to each applicable
Trading Market for the listing of the Common Shares for trading thereon in the time and manner
required thereby, and (iv) the filing of Form D with the Commission and such filings as are
required to be made under applicable state securities laws (collectively, the “Required
Approvals”).

          (f) Issuance of the Securities. The Shares are duly authorized and, when issued and
paid for in accordance with the Transaction Documents, will be duly and validly issued, fully paid
and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on
transfer provided for in the Transaction Documents. The Company has reserved from its duly
authorized capital stock the maximum number of shares of Common Stock issuable pursuant to this
Agreement.

          (g) Capitalization. The authorized capital stock of the Company consists of
100,000,000 shares of common stock, $.001 par value per share, and 50,000,000 shares of preferred
stock, $.001 par value per share. As of the date hereof, there were 18,611,361 shares of common
stock outstanding, 36,978 shares held as Treasury Stock and 1,500,000 shares held in escrow and no
shares of preferred stock outstanding. In addition, there were outstanding options and warrants to
purchase 4,299,823 shares of common stock and an option to purchase 588,428 shares issuable
pursuant to the exercise of anti-dilution rights granted to purchasers in the August

7

 

2005 Securities Purchase Agreement. All of the outstanding shares of capital stock of the
Company are validly issued, fully paid and nonassessable, have been issued in compliance with all
federal and state securities laws, and none of such outstanding shares was issued in violation of
any preemptive rights or similar rights to subscribe for or purchase securities. No further
approval or authorization of any stockholder, the Board of Directors of the Company or others is
required for the issuance and sale of the Shares. There are no stockholders agreements, voting
agreements or other similar agreements with respect to the Company’s capital stock to which the
Company is a party or, to the knowledge of the Company, between or among any of the Company’s
stockholders.

          (h) Material Changes. Since September 30, 2005, (i) the Company has not incurred any
liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred
in the ordinary course of business consistent with past practice and (B) liabilities not required
to be reflected in the Financial Statements (as defined below) pursuant to GAAP, and (C) a bridge
loan to the Company in the amount of $150,000 from Hunter (ii) the Company has not altered its
method of accounting, and (iii) the Company has not declared or made any dividend or distribution
of cash or other property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock.

          (i) Litigation. There is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, threatened against or affecting the
Company, any Subsidiary or any of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality,
validity or enforceability of any of the Transaction Documents or the Shares or (ii) could, if
there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse
Effect. Neither the Company nor any Subsidiary, nor any current director or officer thereof, is or
has been the subject of any Action involving a claim of violation of or liability under federal or
state securities laws or a claim of breach of fiduciary duty. There has not been, and to the
knowledge of the Company, there is not pending or contemplated, any investigation by the Commission
involving the Company or any current director or officer of the Company.

          (j) Permits. The Company and the Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses, except where the failure to possess
such permits could not have or reasonably be expected to result in a Material Adverse Effect
(“Material Permits”), and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material Permit.

          (k) Patents and Trademarks. The Company and the Subsidiaries have, or have rights to
use, all patents, patent applications, trademarks, trademark applications, service marks, trade
names, copyrights, licenses and other similar rights necessary or material for use in connection
with their respective businesses and which the failure to so have could have a Material Adverse
Effect (collectively, the “Intellectual Property Rights”). Neither the Company nor any Subsidiary
has received a written notice that the Intellectual Property Rights used by the Company or any
Subsidiary violates or infringes upon the rights of any Person. To the

8

 

knowledge of the Company, all such Intellectual Property Rights are enforceable and there is
no existing infringement by another Person of any of the Intellectual Property Rights of others.

          (l) Certain Fees. Except for placement agent fees to Hunter, no brokerage or finder’s
fees or commissions are or will be payable by the Company to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or other Person with respect to the
transactions contemplated by this Agreement. The Purchasers shall have no obligation with respect
to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type
contemplated in this Section that may be due in connection with the transactions contemplated by
this Agreement.

          (m) Private Placement. Assuming the accuracy of the Purchasers’ representations and
warranties set forth in Section 3.2, no registration under the Securities Act is required for the
offer and sale of the Shares by the Company to the Purchasers as contemplated hereby. Neither the
Company nor any person acting on behalf of the Company has offered or sold any of the Shares by any
form of general solicitation or general advertising. The Company has offered the Shares for sale
only to the Purchasers and certain other “accredited investors” within the meaning of Rule 501
under the Securities Act.

          (n) Investment Company. The Company is not, and is not an Affiliate of, and
immediately after receipt of payment for the Shares, will not be or be an Affiliate of, an
“investment company” within the meaning of the Investment Company Act of 1940, as amended. The
Company shall conduct its business in a manner so that it will not become subject to the Investment
Company Act.

          (o) Registration Rights. No Person has any right to cause the Company to effect the
registration under the Securities Act of any securities of the Company.

          (p) Financial Statements. The Company has made available to the Purchasers its (a)
audited balance sheets as at December 31, 2003 and 2004 and related statements of operations,
changes in stockholders equity and cash flows for the years ended December 31, 2004 and 2003, and
(b) unaudited balance sheets as at September 30, 2005 and the related statement of operations,
changes in stockholders equity and cash flows for the nine months ended September 30, 2005
(collectively, the “Financial Statements”). The Financial Statements (i) were in accordance with
the books and records of the Company, (ii) are correct and complete, (iii) fairly present the
financial position and results of operations of the Company as of the dates indicated, and (iv) are
prepared in accordance with U.S. GAAP (except that (x) unaudited financial statements may not be in
accordance with GAAP because of the absence of footnotes normally contained therein, and (y)
interim (unaudited) financials are subject to normal year-end audit adjustments that in the
aggregate will not have a material adverse effect on the Company or its business, financial
conditions or results of operations).

     3.2 Representations and Warranties of the Purchasers. Each Purchaser hereby, for
itself and for no other Purchaser, represents and warrants as of the date hereof and as of the
Closing Date to the Company as follows:

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          (a) Organization; Authority. Such Purchaser is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its organization with full
right, corporate or partnership power and authority to enter into and to consummate the
transactions contemplated by the Transaction Documents and otherwise to carry out its obligations
thereunder. The execution, delivery and performance by such Purchaser of the transactions
contemplated by this Agreement have been duly authorized by all necessary corporate or similar
action on the part of such Purchaser. Each of the Transaction Documents to which it is a party has
been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the
terms hereof, will constitute the valid and legally binding obligation of such Purchaser,
enforceable against it in accordance with its terms, except (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other equitable remedies
and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

          (b) Investment Intent. Such Purchaser understands that the Shares are “restricted
securities” and have not been registered under the Securities Act or any applicable state
securities law and is acquiring the Shares as principal for its own account and not with a view to
or for distributing or reselling such Shares or any part thereof, has no present intention of
distributing any of such Shares and has no arrangement or understanding with any other persons
regarding the distribution of such Shares (this representation and warranty not limiting such
Purchaser’s right to sell the Shares pursuant to the Registration Statement or otherwise in
compliance with applicable federal and state securities laws). Such Purchaser is acquiring the
Shares hereunder in the ordinary course of its business. Such Purchaser does not have any
agreement or understanding, directly or indirectly, with any Person to distribute any of the
Shares.

          (c) Purchaser Status. At the time such Purchaser was offered the Shares, it was, and
at the date hereof it is, (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2),
(a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as
defined in Rule 144A(a) under the Securities Act. Such Purchaser is not required to be registered
as a broker-dealer under Section 15 of the Exchange Act.

          (d) Experience of Such Purchaser. Such Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of the prospective investment in the
Shares, and has so evaluated the merits and risks of such investment. Such Purchaser is able to
bear the economic risk of an investment in the Shares and, at the present time, is able to afford a
complete loss of such investment.

          (e) General Solicitation. Such Purchaser is not purchasing the Shares as a result of
any advertisement, article, notice or other communication regarding the Shares published in any
newspaper, magazine or similar media or broadcast over television or radio or presented at any
seminar or any other general solicitation or general advertisement.

10

 

ARTICLE IV

OTHER AGREEMENTS OF THE PARTIES

     4.1 Transfer Restrictions.

          (a) The Shares may only be disposed of in compliance with state and federal securities laws.
In connection with any transfer of the Securities other than pursuant to an effective registration
statement or Rule 144, to the Company or to an affiliate of a Purchaser or in connection with a
pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide
to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the
Company, the form and substance of which opinion shall be reasonably satisfactory to the Company,
to the effect that such transfer does not require registration of such transferred Securities under
the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be
bound by the terms of this Agreement and shall have the rights of a Purchaser under this Agreement
and the Registration Rights Agreement.

          (b) The Purchasers agree to the imprinting, so long as is required by this Section 4.1(b), of
a legend on any of the Shares in the following form:

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THESE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER
LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS
DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.

     The Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to
a bona fide margin agreement with a registered broker-dealer or grant a security interest in some
or all of the Shares to a financial institution that is an “accredited investor” as defined in Rule
501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement and
the Registration Rights Agreement and, if required under the terms of such arrangement, such
Purchaser may transfer pledged or secured Shares to the pledgees or secured parties. Such a pledge
or transfer would not be subject to approval of the Company and no legal

11

 

opinion of legal counsel of the pledgee, secured party or pledgor shall be required in
connection therewith. Further, no notice shall be required of such pledge. At the appropriate
Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a
pledgee or secured party of Shares may reasonably request in connection with a pledge or transfer
of the Shares, including, if the Shares are subject to registration pursuant to the Registration
Rights Agreement, the preparation and filing of any required prospectus supplement under Rule
424(b)(3) under the Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of Selling Stockholders thereunder.

          (c) Certificates evidencing the Shares shall not contain any legend (including the legend set
forth in Section 4.1(b)), (i) while a registration statement (including the Registration Statement)
covering the resale of such security is effective under the Securities Act provided that at the
time a Purchaser requests a removal of the legend on any certificate evidencing all or any portion
of any of the Shares, such Purchaser (or a broker acting on such Purchaser’s behalf) provides to
the Company (or to the transfer agent on the Company’s behalf), a representation that any of the
Shares, sold or to be sold by such Purchaser have been, or will be, sold in accordance with the
plan of distribution set forth in the Prospectus and in compliance with the prospectus delivery
requirements under the Securities Act, or (ii) following any sale of such Shares pursuant to Rule
144, or (iii) if such Shares are eligible for sale under Rule 144(k), or (iv) if such legend is not
required under applicable requirements of the Securities Act (including judicial interpretations
and pronouncements issued by the Staff of the Commission). The Company agrees that following the
Effective Date or at such time as such legend is no longer required under this Section 4.1(c), it
will, no later than three Trading Days following the delivery by a Purchaser to the Company or the
Company’s transfer agent of a certificate representing Shares issued with a restrictive legend
(such date, the “Legend Removal Date”), deliver or cause to be delivered to such Purchaser a
certificate representing such Shares that is free from all restrictive and other legends. The
Company may not make any notation on its records or give instructions to any transfer agent of the
Company that enlarge the restrictions on transfer set forth in this Section.

          (d) Each Purchaser, severally and not jointly with the other Purchasers, agrees that the
removal of the restrictive legend from certificates representing Shares as set forth in this
Section 4.1 is predicated upon the Company’s reliance that the Purchaser will sell any Shares
pursuant to either the registration requirements of the Securities Act, including any applicable
prospectus delivery requirements, or an exemption therefrom.

     4.2 Furnishing of Information. As long as any Purchaser owns Shares, the Company will
use best efforts to timely file (or obtain extensions in respect thereof and file within the
applicable grace period) all reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act. As long as any Purchaser owns Shares, if the Company is not required
to file reports pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and
make publicly available in accordance with Rule 144(c) such information as is required for the
Purchasers to sell the Shares under Rule 144. The Company further covenants that it will take such
further action as any holder of Shares may reasonably request, all to the extent required from time
to time to enable such Person to sell such Shares without registration under the Securities Act
within the limitation of the exemptions provided by Rule 144.

12

 

     4.3 Integration. The Company shall not sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act)
that would be integrated with the offer or sale of the Shares in a manner that would require the
registration under the Securities Act of the sale of the Shares to the Purchasers or that would be
integrated with the offer or sale of the Shares for purposes of the rules and regulations of any
Trading Market such that it would require shareholder approval prior to the closing of such other
transaction unless shareholder approval is obtained before the closing of such subsequent
transaction.

     4.4 Publicity. The Company, and each Purchaser shall consult with each other in
issuing any other press releases with respect to the transactions contemplated hereby, and neither
the Company, nor any Purchaser shall issue any such press release or otherwise make any such public
statement without the prior consent of the Company, with respect to any press release of any
Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the
Company, which consent shall not unreasonably be withheld, except if such disclosure is required by
law, in which case the disclosing party shall promptly provide the other party with prior notice of
such public statement or communication. Notwithstanding the foregoing, neither the Company shall
publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing
with the Commission or any regulatory agency or Trading Market, without the prior written consent
of such Purchaser, except (i) as required by federal securities law and (ii) to the extent such
disclosure is required by law or Trading Market regulations.

     4.5 Reservation of Common Stock. As of the date hereof, each of the Company has
reserved and the Company shall continue to reserve and keep available at all times, free of
preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the
Company to issue the Shares pursuant to this Agreement.

     4.6 Equal Treatment of Purchasers. No consideration shall be offered or paid to any
person to amend or consent to a waiver or modification of any provision of any of the Transaction
Documents unless the same consideration is also offered to all of the parties to the Transaction
Documents. For clarification purposes, this provision constitutes a separate right granted to each
Purchaser by the Company and negotiated separately by each Purchaser, and is intended to treat for
the Company the Purchasers as a class and shall not in any way be construed as the Purchasers
acting in concert or as a group with respect to the purchase, disposition or voting of Shares or
otherwise.

     4.7 Subsequent Equity Sales. Except for Exempt Issuances, from the date hereof until
the Effective Date, neither the Company nor any Subsidiary shall issue shares of Common Stock or
Common Stock Equivalents.

     4.8 Delivery of Shares After Closing. The Company shall deliver, or cause to be
delivered, the respective Shares purchased by each Purchaser to such Purchaser within three Trading
Days of the Closing Date.

     4.9 Most Favored Nations. If, at any time and from time to time during the period
commencing on the Closing Date and ending on the first anniversary of the Effective Date, the
Company issues additional shares of Common Stock or Common Stock Equivalents, excluding

13

 

any Anti-Dilution Shares (the “Additional Shares”) at a price or exercise price per share of
Common Stock (the “Effective Price”) less than Per Share Purchase Price (as adjusted hereunder to
such date), then the Company shall provide notice thereof to the Purchasers, and, within twenty
business days from receipt of such notice, the Purchasers or any of them shall have the right to
purchase additional shares of Common Stock (the “Purchase Shares”) at a purchase price equal to the
par value thereof (the “Purchase Share Price”) in accordance with the following: (a) There shall be
calculated a per share price (the “Adjusted Price”) determined by a fraction, the numerator of
which shall be 19,397,020 PLUS the product of the number of Additional Shares multiplied by the
Effective Price PLUS any prior products of previously issued Additional Shares multiplied by the
applicable Effective Price(s) with respect to such issuances, and the denominator of which shall be
25,862,694 PLUS the number of Additional Shares PLUS any previously issued Additional Shares. (b)
Each Purchaser shall be entitled to purchase that number of Purchase Shares at the Purchase Price
equal to the difference between the product of the total dollars paid by Purchaser for shares of
common stock hereunder (the “Purchaser Amount”) divided by the Adjusted Price LESS the product of
the Purchaser Amount divided by the Per Share Purchase Price. By way of example only, if the
Company issued 4,000,000 Additional Shares at an Effective Price of $.50 per share, and there had
been no previous adjustments further to this Section 4.9, the Adjusted Price would be $.7165
(19,397,020 PLUS 2,000,000 divided by 25,862,694 PLUS 4,000,000). If the Purchaser purchased
$1,000,000 of Common Stock further to this Agreement, he/she/it would be entitled to purchase
62,340 Purchase Shares (1,000,000 divided by .7165 or 1,395,673 shares LESS 1,000,000 divided by
..75 or 1,333,333 shares). Notwithstanding the foregoing, no adjustment will be made in respect of
Exempt Issuances.

     4.10 Board Nominee. At each of the next two annual meetings of stockholders where
directors are elected, the Company agrees to place Hunter’s designee on the slate of directors for
nomination to the Board at each such meeting. In addition, the Company agrees to cause a proposal
to be put in front of the Board for its consideration at its next regular meeting in the month of
November 2005 to elect Todd Ficeto to a vacancy presently existing as of the date hereof on the
Board.

ARTICLE V

MISCELLANEOUS

     5.1 Termination. This Agreement may be terminated by any Purchaser, by written notice
to the other parties, if the Closing has not been consummated on or before December 31, 2005;
provided that no such termination will affect the right of any party to sue for any breach by the
other party (or parties).

     5.2 Fees and Expenses. The Company shall deliver, prior to the Closing, a completed
and executed copy of the Closing Statement, attached hereto as Annex A. Except as otherwise set
forth in this Agreement or in the Placement Agent Agreement, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement. The Company shall pay all stamp and other taxes and duties levied
in connection with the sale of the Shares.

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     5.3 Entire Agreement. The Transaction Documents, together with the exhibits and
schedules thereto, contain the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such documents, exhibits and
schedules.

     5.4 Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed given and effective on
the earliest of (a) the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number set forth on the signature pages attached hereto prior to 6:30
p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the facsimile number
set forth on the signature pages attached hereto on a day that is not a Trading Day or later than
6:30 p.m. (New York City time) on any Trading Day, (c) the second Trading Day following the date
of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual
receipt by the party to whom such notice is required to be given. The address for such notices and
communications shall be as set forth on the signature pages attached hereto.

     5.5 Amendments; Waivers. No provision of this Agreement may be waived or amended
except in a written instrument signed, in the case of an amendment, by the Company and Purchasers
holding at least 66% of the Shares at such time or, in the case of a waiver, by the party against
whom enforcement of any such waiver is sought. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in
the future or a waiver of any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder
in any manner impair the exercise of any such right.

     5.6 Construction. The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.
The language used in this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied against any party.

     5.7 Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns. The Company may not assign this
Agreement or any rights or obligations hereunder without the prior written consent of each
Purchaser. Any Purchaser may assign any or all of its rights under this Agreement to any Person to
whom such Purchaser assigns or transfers any Shares, provided such transferee agrees in writing to
be bound, with respect to the transferred Shares, by the provisions hereof that apply to the
“Purchasers”.

     5.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is not for the benefit of,
nor may any provision hereof be enforced by, any other Person.

     5.9 Governing Law. All questions concerning the construction, validity, enforcement
and interpretation of the Transaction Documents shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware, without regard to the

15

 

principles of conflicts of law thereof. Each party agrees that all legal proceedings
concerning the interpretations, enforcement and defense of the transactions contemplated by this
Agreement and any other Transaction Documents (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of Los Angeles. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the
City of Los Angeles, for the adjudication of any dispute hereunder or in connection herewith or
with any transaction contemplated hereby or discussed herein (including with respect to the
enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is improper or inconvenient
venue for such proceeding. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by mailing a copy thereof
via registered or certified mail or overnight delivery (with evidence of delivery) to such party at
the address in effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner permitted by law. The
parties hereby waive all rights to a trial by jury. If either party shall commence an action or
proceeding to enforce any provisions of the Transaction Documents, then the prevailing party in
such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other
costs and expenses incurred with the investigation, preparation and prosecution of such action or
proceeding.

     5.10 Survival. The representations and warranties herein shall survive the Closing
and delivery of the Shares for two years from the date hereof.

     5.11 Execution. This Agreement may be executed in two or more counterparts, all of
which when taken together 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, it being
understood that both parties need not sign the same counterpart. In the event that any signature
is delivered by facsimile transmission, such signature shall create a valid and binding obligation
of the party executing (or on whose behalf such signature is executed) with the same force and
effect as if such facsimile signature page were an original thereof.

     5.12 Severability. If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt
to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon
so agreeing, shall incorporate such substitute provision in this Agreement.

     5.13 Replacement of Shares. If any certificate evidencing any Shares is mutilated,
lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new
certificate, but only upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction and customary and reasonable indemnity, if requested. The applicants for a
new certificate under such circumstances shall also pay any reasonable third-party costs associated
with the issuance of such replacement Shares.

16

 

     5.14 Remedies. In addition to being entitled to exercise all rights provided herein
or granted by law, including recovery of damages, each of the Purchasers and the Company will be
entitled to specific performance under the Transaction Documents. The parties agree that monetary
damages may not be adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in any action for
specific performance of any such obligation the defense that a remedy at law would be adequate.

(Signature Pages Follows)

     IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be
duly executed by their respective authorized signatories as of the date first indicated above.

	 	 	 	 	 	 	 
	 	 	MICROMED CARDIOVASCULAR, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Travis E. Baugh	 	 
	 

	 	Name:
	 	Travis E. Baugh	 	 
	 

	 	Title:
	 	President and Chief Executive Officer
	 	 
	 
	 	 	 	 	 	 
	 	 	Address for Notice	 	 
	 
	 	 	 	 	 	 
	 	 	8965 Interchange Drive	 	 
	 	 	Houston TX 77054	 	 

with a copy to (which shall not constitute notice):

Thomas J. Poletti, Esq.

Kirkpatrick & Lockhart Nicholson Graham LLP

10100 Santa Monica Boulevard

Seventh Floor

Los Angeles, CA 90067

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGES FOR PURCHASERS FOLLOW]

17

 

[PURCHASER SIGNATURE PAGES TO MICROMED CARDIOVASCULAR, INC.

SECURITIES PURCHASE AGREEMENT PURCHASE AGREEMENT]

     IN WITNESS WHEREOF, the undersigned have caused this Common Stock Purchase Agreement to be
duly executed by their respective authorized signatories as of the date first indicated above.

	 	 	 	 	 	 	 
	 	 	INVESTING ENTITY	 	 
	 
	 	 	 	 	 	 
	 	 	ABSOLUTE RETURN EUROPE FUND	 	 
	 
	 	 	 	 	 	 
	 	 	By: /s/ Florian Homm	 	 
	 	 	Name: Florian Homm	 	 
	 

	 	 	 	Title: Investment Advisor	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Address for Notice of Investing Party:	 	 
	 

	 	 	 	c/o Todd Ficeto	 	 
	 

	 	 	 	Hunter World Markets, Inc.	 	 
	 

	 	 	 	9300 Wilshire Blvd.	 	 
	 

	 	 	 	Penthouse Suite	 	 
	 

	 	 	 	Beverly Hills, CA 90212	 	 

With a copy to (which shall not constitute
notice):

David L. Ficksman

Troy & Gould

1801 Century Park East, 16th Floor

Los Angeles, California 90067

Address for Delivery of Securities for

Investing Entity (if not same as above):

	 	 	 	 	 
	Subscription Amount:
	 	$2,000,000	 	 
	Shares:
	 	2,666,667 shares of Common Stock	 	 
	EIN Number:
	 	 	 	 
	 
	 	 	 

[SIGNATURE PAGES CONTINUE]

18

 

[PURCHASER SIGNATURE PAGES TO MICROMED CARDIOVASCULAR, INC.

SECURITIES PURCHASE AGREEMENT PURCHASE AGREEMENT]

     IN WITNESS WHEREOF, the undersigned have caused this Common Stock Purchase Agreement to be
duly executed by their respective authorized signatories as of the date first indicated above.

	 	 	 	 	 	 	 
	 	 	INVESTING ENTITY	 	 
	 
	 	 	 	 	 	 
	 	 	EUROPEAN CATALYST FUND	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Florian Homm	 	 
	 

	 	 	 	Name: Florian Homm	 	 
	 

	 	 	 	Title: Investment Advisor	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Address for Notice of Investing Party:	 	 
	 

	 	 	 	c/o Todd Ficeto	 	 
	 

	 	 	 	Hunter World Markets, Inc.	 	 
	 

	 	 	 	9300 Wilshire Blvd.	 	 
	 

	 	 	 	Penthouse Suite	 	 
	 

	 	 	 	Beverly Hills, CA 90212	 	 

With a copy to (which shall not constitute
notice):

David L. Ficksman

Troy & Gould

1801 Century Park East, 16th Floor

Los Angeles, California 90067

Address for Delivery of Securities for

Investing Entity (if not same as above):

	 	 	 	 	 
	Subscription Amount:
	 	$2,200,000	 	 
	Shares:
	 	2,933,333 shares of Common Stock	 	 
	EIN Number:
	 	 	 	 
	 
	 	 	 

[SIGNATURE PAGES CONTINUE]

19

 

[PURCHASER SIGNATURE PAGES TO MICROMED CARDIOVASCULAR, INC.

SECURITIES PURCHASE AGREEMENT PURCHASE AGREEMENT]

     IN WITNESS WHEREOF, the undersigned have caused this Common Stock Purchase Agreement to be
duly executed by their respective authorized signatories as of the date first indicated above.

	 	 	 	 	 	 	 
	 	 	INVESTING ENTITY	 	 
	 
	 	 	 	 	 	 
	 	 	ABSOLUTE OCTANE FUND	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Florian Homm	 	 
	 

	 	 	 	Name: Florian Homm	 	 
	 

	 	 	 	Title: Investment Advisor	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Address for Notice of Investing Party:	 	 
	 

	 	 	 	c/o Todd Ficeto	 	 
	 

	 	 	 	Hunter World Markets, Inc.	 	 
	 

	 	 	 	9300 Wilshire Blvd.	 	 
	 

	 	 	 	Penthouse Suite	 	 
	 

	 	 	 	Beverly Hills, CA 90212	 	 

With a copy to (which shall not constitute
notice):

David L. Ficksman

Troy & Gould

1801 Century Park East, 16th Floor

Los Angeles, California 90067

Address for Delivery of Securities for

Investing Entity (if not same as above):

	 	 	 	 	 
	Subscription Amount:
	 	$400,000	 	 
	Shares:
	 	533,333 shares of Common Stock	 	 
	EIN Number:
	 	 	 	 
	 
	 	 	 

[SIGNATURE PAGES CONTINUE]

20

 

[PURCHASER SIGNATURE PAGES TO MICROMED CARDIOVASCULAR, INC.

SECURITIES PURCHASE AGREEMENT PURCHASE AGREEMENT]

     IN WITNESS WHEREOF, the undersigned have caused this Common Stock Purchase Agreement to be
duly executed by their respective authorized signatories as of the date first indicated above.

	 	 	 	 	 	 	 
	 	 	INVESTING ENTITY	 	 
	 
	 	 	 	 	 	 
	 	 	ABSOLUTE GERMAN FUND	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Florian Homm	 	 
	 

	 	 	 	Name: Florian Homm	 	 
	 

	 	 	 	Title: Investment Advisor	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Address for Notice of Investing Party:	 	 
	 

	 	 	 	c/o Todd Ficeto	 	 
	 

	 	 	 	Hunter World Markets, Inc.	 	 
	 

	 	 	 	9300 Wilshire Blvd.	 	 
	 

	 	 	 	Penthouse Suite	 	 
	 

	 	 	 	Beverly Hills, CA 90212	 	 

With a copy to (which shall not constitute
notice):

David L. Ficksman

Troy & Gould

1801 Century Park East, 16th Floor

Los Angeles, California 90067

Address for Delivery of Securities for

Investing Entity (if not same as above):

	 	 	 	 	 
	Subscription Amount:
	 	$400,000	 	 
	Shares:
	 	533,333 shares of Common Stock	 	 
	EIN Number:
	 	 	 	 
	 
	 	 	 

[SIGNATURE PAGES CONTINUE]

21

 

[PURCHASER SIGNATURE PAGES TO MICROMED CARDIOVASCULAR, INC.

SECURITIES PURCHASE AGREEMENT PURCHASE AGREEMENT]

     IN WITNESS WHEREOF, the undersigned have caused this Common Stock Purchase Agreement to be
duly executed by their respective authorized signatories as of the date first indicated above.

	 	 	 	 	 	 	 
	 	 	INVESTING ENTITY	 	 
	 
	 	 	 	 	 	 
	 	 	THE HUNTER FUND LTD	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Todd M. Ficeto	 	 
	 

	 	 	 	Name: Todd Ficeto	 	 
	 

	 	 	 	Title:   Investment Advisor	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Email Address: tficeto@hwmarkets.com	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Address for Notice of Investing Party:	 	 
	 

	 	 	 	c/o Todd Ficeto	 	 
	 

	 	 	 	Hunter World Markets, Inc.	 	 
	 

	 	 	 	9300 Wilshire Blvd.	 	 
	 

	 	 	 	Penthouse Suite	 	 
	 

	 	 	 	Beverly Hills, CA 90212	 	 

With a copy to (which shall not constitute
notice):

David L. Ficksman

Troy & Gould

1801 Century Park East, 16th Floor

Los Angeles, California 90067

Address for Delivery of Securities for

Investing Entity (if not same as above):

	 	 	 	 	 
	Subscription Amount:
	 	$200,000	 	 
	Shares:
	 	150,000 shares of Common Stock	 	 
	EIN Number:
	 	 	 	 
	 
	 	 	 

22

 

ANNEX A

CLOSING STATEMENT

         Pursuant to the attached Securities Purchase Agreement, dated as of the date hereto, the
purchasers shall purchase up to $5,000,000 of Shares from MicroMed Cardiovascular, Inc., a Delaware
corporation (the “Company”). All funds will be wired into an escrow account. All funds will be
disbursed in accordance with this Closing Statement.

Disbursement Date: November 29, 2005

	 	 	 	 	 	 	 	 	 	 	 
	I.	 	PURCHASE PRICE	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Gross Proceeds to be Received in Trust
	 	$	5,000,000	 
	 
	 	 	 	 	 	 	 	 	 	 
	II.	 	DISBURSEMENTS	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	Payee:	 	MicroMed Cardiovascular, Inc.	 	$	4,465,000	 
	 	 	 	 	8965 Interchange Drive	 	 	 	 
	 	 	 	 	Houston TX 77054	 	 	 	 
	 	 	 	 	ABA#: 121140399	 	 	 	 
	 	 	 	 	Acct.#: 3300362576	 	 		 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	Payee:	 	Hunter World Markets, Inc.	 	$	525,000	 
	 	 	 	 	9300 Wilshire Blvd., Ste. Penthouse	 	 	 	 
	 	 	 	 	Beverly Hills, CA 90212	 	 	 	 
	 	 	 	 	ABA#: 122000496	 	 	 	 
	 	 	 	 	Acct.#: 20601 66768	 	 		 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	Payee:	 	Troy & Gould PC	 	$	10,000	 
	 	 	 	 	U.S. Bank	 	 	 	 
	 	 	 	 	9595 Wilshire Boulevard	 	 	 	 
	 	 	 	 	Beverly Hills, California 90212	 	 	 	 
	 	 	 	 	Troy & Gould Trust Account	 	 	 	 
	 	 	 	 	Routing No.: 1-222-35821	 	 	 	 
	 	 	 	 	Acct.#.:         164301242180	 	 		 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Total Amount Disbursed:
	 	$	5,000,000	 

23

 

Schedule of Purchasers

	 	 	 	 	 	 	 	 	 
	Purchaser’s Name	 	Share Amount	 	 	Purchase Amount	 
	Absolute Return Europe
	 	 	2,666,667	 	 	$	2,000,000	 
	European Catalyst Fund
	 	 	2,933,333	 	 	$	2,200,000	 
	Absolute Octane Fund
	 	 	533,333	 	 	$	400,000	 
	Absolute German Fund
	 	 	533,333	 	 	$	400,000	 
	The Hunter Fund Ltd.
	 	 	200,000	 	 	$	150,000	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	TOTAL:
	 	 	6,866,666	 	 	$	5,150,000	 

24

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