Document:

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                                                                    EXHIBIT 10.1

                                 BLUE NILE, INC.

                 2004 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

                ADOPTED BY THE BOARD OF DIRECTORS: MARCH 9, 2004
                    APPROVED BY STOCKHOLDERS: APRIL 27, 2004
                      AMENDED AND RESTATED: APRIL 27, 2004
                     AMENDED AND RESTATED: JUNE 19, 2006(1)

1. PURPOSES.

      (a) ELIGIBLE OPTION RECIPIENTS. The persons eligible to receive Options
are the Non-Employee Directors of the Company.

      (b) AVAILABLE OPTIONS. The purpose of the Plan is to provide a means by
which Non-Employee Directors may be given an opportunity to benefit from
increases in value of the Common Stock through the granting of Nonstatutory
Stock Options.

      (c) GENERAL PURPOSE. The Company, by means of the Plan, seeks to retain
the services of its Non-Employee Directors, to secure and retain the services of
new Non-Employee Directors and to provide incentives for such persons to exert
maximum efforts for the success of the Company and its Affiliates.

2. DEFINITIONS.

      (a) "ACCOUNTANT" means the independent public accountants of the Company.

      (b) "AFFILIATE" means any parent corporation or subsidiary corporation of
the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.

      (c) "AMENDMENT EFFECTIVE DATE" shall mean July 1, 2006.

      (d) "ANNUAL GRANT" means an Option granted annually to all Non-Employee
Directors who meet the specified criteria pursuant to Section 6(c).

      (e) "ANNUAL MEETING" means the annual meeting of the stockholders of the
Company.

      (f) "BOARD" means the Board of Directors of the Company.

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(1)   All share numbers contained herein as of the date of this amendment and
      restatement give effect to a 1 for 2.5 reverse split of the Company's
      Common Stock effective April 30, 2004.

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      (g) "CAPITALIZATION ADJUSTMENT" has the meaning ascribed to that term in
Section 11(a).

      (h) "CHANGE IN CONTROL" means the occurrence, in a single transaction or
in a series of related transactions, of any one or more of the following events:

            (i) any Exchange Act Person becomes the Owner, directly or
indirectly, of securities of the Company representing more than fifty percent
(50%) of the combined voting power of the Company's then outstanding securities
other than by virtue of a merger, consolidation or similar transaction.
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because the level of Ownership held by any Exchange Act Person (the
"Subject Person") exceeds the designated percentage threshold of the outstanding
voting securities as a result of a repurchase or other acquisition of voting
securities by the Company reducing the number of shares outstanding, provided
that if a Change in Control would occur (but for the operation of this sentence)
as a result of the acquisition of voting securities by the Company, and after
such share acquisition, the Subject Person becomes the Owner of any additional
voting securities that, assuming the repurchase or other acquisition had not
occurred, increases the percentage of the then outstanding voting securities
Owned by the Subject Person over the designated percentage threshold, then a
Change in Control shall be deemed to occur;

            (ii) there is consummated a merger, consolidation or similar
transaction involving (directly or indirectly) the Company and, immediately
after the consummation of such merger, consolidation or similar transaction, the
stockholders of the Company immediately prior thereto do not Own, directly or
indirectly, outstanding voting securities representing more than fifty percent
(50%) of the combined outstanding voting power of the surviving Entity in such
merger, consolidation or similar transaction or more than fifty percent (50%) of
the combined outstanding voting power of the parent of the surviving Entity in
such merger, consolidation or similar transaction;

            (iii) the stockholders of the Company approve or the Board approves
a plan of complete dissolution or liquidation of the Company, or a complete
dissolution or liquidation of the Company shall otherwise occur;

            (iv) there is consummated a sale, lease, license or other
disposition of all or substantially all of the consolidated assets of the
Company and its Subsidiaries, other than a sale, lease, license or other
disposition of all or substantially all of the consolidated assets of the
Company and its Subsidiaries to an Entity, more than fifty percent (50%) of the
combined voting power of the voting securities of which are Owned by
stockholders of the Company in substantially the same proportions as their
Ownership of the Company immediately prior to such sale, lease, license or other
disposition; or

            (v) individuals who, on the date this Plan is adopted by the Board,
are members of the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the members of the Board; (provided, however,
that if the appointment or election (or nomination for election) of any new
Board member was approved or

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recommended by a majority vote of the members of the Incumbent Board then still
in office, such new member shall, for purposes of this Plan, be considered as a
member of the Incumbent Board).

      (i) "CODE" means the Internal Revenue Code of 1986, as amended.

      (j) "COMMON STOCK" means the common stock of the Company.

      (k) "COMPANY" means Blue Nile, Inc., a Delaware corporation.

      (l) "CONSULTANT" means any person, including an advisor, (i) engaged by
the Company or an Affiliate to render consulting or advisory services and who is
compensated for such services or (ii) serving as a member of the Board of
Directors of an Affiliate. However, the term "Consultant" shall not include
either Directors of the Company who are not compensated by the Company for their
services as Directors or Directors of the Company who are merely paid a
director's fee by the Company for their services as Directors.

      (m) "CONTINUOUS SERVICE" means that the Optionholder's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. The Optionholder's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Optionholder renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Optionholder
renders such service, provided that there is no interruption or termination of
the Optionholder's Continuous Service. For example, a change in status from a
Non-Employee Director of the Company to a Consultant of an Affiliate or an
Employee of the Company will not constitute an interruption of Continuous
Service. The Board or the chief executive officer of the Company, in that
party's sole discretion, may determine whether Continuous Service shall be
considered interrupted in the case of any leave of absence approved by that
party, including sick leave, military leave or any other personal leave.

      (n) "CORPORATE TRANSACTION" means the occurrence, in a single transaction
or in a series of related transactions, of any one or more of the following
events:

            (i) a sale or other disposition of all or substantially all, as
determined by the Board in its discretion, of the consolidated assets of the
Company and its Subsidiaries;

            (ii) a sale or other disposition of at least ninety percent (90%) of
the outstanding securities of the Company;

            (iii) a merger, consolidation or similar transaction following which
the Company is not the surviving corporation; or

            (iv) a merger, consolidation or similar transaction following which
the Company is the surviving corporation but the shares of Common Stock
outstanding immediately preceding the merger, consolidation or similar
transaction are converted or

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exchanged by virtue of the merger, consolidation or similar transaction into
other property, whether in the form of securities, cash or otherwise.

      (o) "DIRECTOR" means a member of the Board of Directors of the Company.

      (p) "DISABILITY" means the inability of a person, in the opinion of a
qualified physician acceptable to the Company, to perform the major duties of
that person's position with the Company or an Affiliate of the Company because
of the sickness or injury of the person.

      (q) "EMPLOYEE" means any person employed by the Company or an Affiliate.
Service as a Director or payment of a director's fee by the Company or an
Affiliate shall not be sufficient to constitute "employment" by the Company or
an Affiliate.

      (r) "ENTITY" means a corporation, partnership or other entity.

      (s) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

      (t) "EXCHANGE ACT PERSON" means any natural person, Entity or "group"
(within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that
"Exchange Act Person" shall not include (A) the Company or any Subsidiary of the
Company, (B) any employee benefit plan of the Company or any Subsidiary of the
Company or any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any Subsidiary of the Company, (C) an underwriter
temporarily holding securities pursuant to an offering of such securities, or
(D) an Entity Owned, directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their Ownership of stock of the
Company.

      (u) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock determined as follows:

            (i) If the Common Stock is listed on any established stock exchange
or traded on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair
Market Value of a share of Common Stock shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or market (or the exchange or market with the greatest volume of
trading in the Common Stock) on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable.

            (ii) In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.

      (v) "INITIAL GRANT" means an Option granted to a Non-Employee Director who
meets the specified criteria pursuant to Section 6(a).

      (w) "IPO DATE" means the date on which the registration statement in
connection with the Company's initial public offering is declared effective.

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      (x) "NON-EMPLOYEE DIRECTOR" means a Director who is not an Employee.

      (y) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

      (z) "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

      (aa) "OPTION" means a Nonstatutory Stock Option granted pursuant to the
Plan.

      (bb) "OPTION AGREEMENT" means a written agreement between the Company and
an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.

      (cc) "OPTIONHOLDER" means a person to whom an Option is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding
Option.

      (dd) "OWN," "OWNED," "OWNER," "OWNERSHIP" A person or Entity shall be
deemed to "Own," to have "Owned," to be the "Owner" of, or to have acquired
"Ownership" of securities if such person or Entity, directly or indirectly,
through any contract, arrangement, understanding, relationship or otherwise, has
or shares voting power, which includes the power to vote or to direct the
voting, with respect to such securities.

      (ee) "PLAN" means this Blue Nile, Inc. 2004 Non-Employee Directors' Stock
Option Plan.

      (ff) "RELOAD GRANT" means an Option granted to a Non-Employee Director who
meets the specified criteria pursuant to Section 6(b).

      (gg) "RULE 16b-3" means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.

      (hh) "SECURITIES ACT" means the Securities Act of 1933, as amended.

      (ii) "SUBSIDIARY" means, with respect to the Company, (i) any corporation
of which more than fifty percent (50%) of the outstanding capital stock having
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether, at the time, stock of any other class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time, directly or indirectly, Owned
by the Company, and (ii) any partnership in which the Company has a direct or
indirect interest (whether in the form of voting or participation in profits or
capital contribution) of more than fifty percent (50%).

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3. ADMINISTRATION.

      (a) ADMINISTRATION BY BOARD. The Board shall administer the Plan. The
Board may not delegate administration of the Plan to a committee.

      (b) POWERS OF BOARD. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:

            (i) To determine the provisions of each Option to the extent not
specified in the Plan.

            (ii) To construe and interpret the Plan and Options granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Option Agreement, in a
manner and to the extent it shall deem necessary or expedient to make the Plan
fully effective.

            (iii) To amend the Plan or an Option as provided in Section 12.

            (iv) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company and that are not in conflict with the provisions of the Plan.

      (c) EFFECT OF BOARD'S DECISION. All determinations, interpretations and
constructions made by the Board in good faith shall not be subject to review by
any person and shall be final, binding and conclusive on all persons.

4. SHARES SUBJECT TO THE PLAN.

      (a) SHARE RESERVE. Subject to the provisions of Section 11 relating to
adjustments upon changes in the Common Stock, the Common Stock that may be
issued pursuant to Options shall not exceed in the aggregate Four Hundred
Thousand (400,000) shares of Common Stock, plus an annual increase for ten years
beginning on January 1, 2005 and ending on (and including) January 1, 2014 equal
to the number of shares subject to Options granted during the prior calendar
year. Notwithstanding the foregoing, the Board may act, prior to the first day
of any fiscal year of the Company, to increase the share reserve by such number
of shares of Common Stock as the Board shall determine, which number shall be
less than the amount described in the foregoing sentence.

      (b) REVERSION OF SHARES TO THE SHARE RESERVE. If any Option shall for any
reason expire or otherwise terminate, in whole or in part, without having been
exercised in full, the shares of Common Stock not acquired under such Option
shall revert to and again become available for issuance under the Plan.

      (c) SOURCE OF SHARES. The shares of Common Stock subject to the Plan may
be unissued shares or reacquired shares, bought on the market or otherwise.

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5. ELIGIBILITY.

      The Options, as set forth in Section 6, automatically shall be granted
under the Plan to all Non-Employee Directors who meet the criteria specified in
Section 6.

6. NON-DISCRETIONARY GRANTS.

      (a) INITIAL GRANTS. Without any further action of the Board, (i) each
person who after the IPO Date and prior to the Amendment Effective Date is
elected or appointed for the first time to be a Non-Employee Director
automatically shall, upon the date of his or her initial election or appointment
to be a Non-Employee Director, be granted an Initial Grant to purchase Twenty
Thousand (20,000) shares of Common Stock on the terms and conditions set forth
herein; and (ii) each person who on or after the Amendment Effective Date is
elected or appointed for the first time to be a Non-Employee Director
automatically shall, upon the date of his or her initial election or appointment
to be a Non-Employee Director, be granted an Initial Grant to purchase Eleven
Thousand Two Hundred and Fifty (11,250) shares of Common Stock on the terms and
conditions set forth herein.

      (b) RELOAD GRANTS. Without any further action of the Board, (i) each
Non-Employee Director who was granted a nonstatutory stock option on April 27,
2004 to purchase Twenty Thousand (20,000) shares of Common Stock under the
Company's 2004 Equity Incentive Plan ("EIP Option") and each person who receives
an Initial Grant pursuant to Section 6(a) automatically shall, upon the date
that such EIP Option or Initial Grant, as applicable, becomes fully vested in
accordance with the terms of such EIP Option or Section 7(e), as applicable, be
granted a Reload Grant to purchase Nine Thousand (9,000) shares of Common Stock
on the terms and conditions set forth herein, provided that such person is a
Non-Employee Director on the date of such Reload Grant; and (ii) each
Non-Employee Director who receives a Reload Grant in accordance with the
foregoing automatically shall be granted a Reload Grant upon the date that any
previously granted Reload Grant becomes fully vested in accordance with Section
7(e), provided that such person is a Non-Employee Director on such date.

      (c) ANNUAL GRANTS. Without any further action of the Board, (i) on the day
following each Annual Meeting prior to the Amendment Effective Date, commencing
with the Annual Meeting in 2005, each person who is then a Non-Employee Director
automatically shall be granted an Annual Grant to purchase Four Thousand (4,000)
shares of Common Stock on the terms and conditions set forth herein; and (ii) on
the day following each Annual Meeting on or following the Amendment Effective
Date, each person who is then a Non-Employee Director automatically shall be
granted an Annual Grant to purchase Two Thousand Two Hundred and Fifty (2,250)
shares of Common Stock on the terms and conditions set forth herein; provided,
however, that, in each case, if the person has not been serving as a
Non-Employee Director for the entire period since the preceding Annual Meeting,
then the number of shares subject to such Annual Grant shall be reduced pro rata
for each full quarter prior to the date of grant during which such person did
not serve as a Non- Employee Director.

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7. OPTION PROVISIONS.

      Each Option shall be in such form and shall contain such terms and
conditions as required by the Plan. Each Option shall contain such additional
terms and conditions, not inconsistent with the Plan, as the Board shall deem
appropriate. Each Option shall include (through incorporation of provisions
hereof by reference in the Option or otherwise) the substance of each of the
following provisions:

      (a) TERM. No Option shall be exercisable after the expiration of ten (10)
years from the date it was granted.

      (b) EXERCISE PRICE. The exercise price of each Option shall be one hundred
percent (100%) of the Fair Market Value of the stock subject to the Option on
the date the Option is granted.

      (c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option may be paid, to the extent permitted by applicable law, in any
combination of (i) cash or check, (ii) delivery to the Company of other Common
Stock or (iii) pursuant to a program developed under Regulation T as promulgated
by the Federal Reserve Board that, prior to the issuance of Common Stock,
results in either the receipt of cash (or check) by the Company or the receipt
of irrevocable instructions to pay the aggregate exercise price to the Company
from the sales proceeds. The purchase price of Common Stock acquired pursuant to
an Option that is paid by delivery to the Company of other Common Stock
acquired, directly or indirectly from the Company, shall be paid only by shares
of the Common Stock of the Company that have been held for more than six (6)
months (or such longer or shorter period of time required to avoid a charge to
earnings for financial accounting purposes).

      (d) TRANSFERABILITY. Except as otherwise provided for in this Section, an
Option is transferable only by will or by the laws of descent and distribution
and exercisable only by the Optionholder during the life of the Optionholder.
However, an Option may be transferred for no consideration upon written consent
of the Board (i) if, at the time of transfer, a Form S-8 registration statement
under the Securities Act is available for the issuance of shares by the Company
upon the exercise of such transferred Option or (ii) the transfer is to the
Optionholder's employer at the time of transfer or an affiliate of the
Optionholder's employer at the time of transfer. Any such transfer is subject to
such limits as the Board may establish, and subject to the transferee agreeing
to remain subject to all the terms and conditions applicable to the Option prior
to such transfer. The forgoing right to transfer the Option shall apply to the
right to consent to amendments to the Stock Option Agreement for such Option. In
addition, until the Optionholder transfers the Option, an Optionholder may, by
delivering written notice to the Company, in a form provided by or otherwise
satisfactory to the Company, designate a third party who, in the event of the
death of the Optionholder, shall thereafter be entitled to exercise the Option.

      (e) VESTING. Options shall vest as follows:

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            (i) Initial Grants: 1/30th of the shares shall vest monthly from the
date of grant for one (1) year and 1/60th of the shares shall vest monthly
thereafter over the next three (3) years.

            (ii) Reload Grants: 1/48th of the shares shall vest monthly from the
date of grant for four (4) years.

            (iii) Annual Grants: 1/12th of the shares shall vest monthly from
the date of grant for one (1) year.

      (f) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionholder may elect at any time before the Optionholder's
Continuous Service terminates to exercise the Option as to any part or all of
the shares of Common Stock subject to the Option prior to the full vesting of
the Option. Any unvested shared of Common Stock so purchased may be subject to a
repurchase option in favor of the Company or to any other restriction the Board
determines to be appropriate. The Company will not exercise its repurchase
option until at least six (6) months (or such longer or shorter period of time
required to avoid a charge to earnings for financial accounting purposes) have
elapsed following exercise of the Option unless the Board otherwise specifically
provides in the Option.

      (g) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionholder's
Continuous Service terminates (other than upon the Optionholder's death or
Disability), (i) the Optionholder may exercise his or her Option granted prior
to the Amendment Effective Date (to the extent that the Optionholder was
entitled to exercise it as of the date of termination) but only within such
period of time ending on the earlier of (A) the date three (3) months following
the termination of the Optionholder's Continuous Service, or (B) the expiration
of the term of the Option as set forth in the Option Agreement; and (ii) the
Optionholder may exercise his or her Option granted on or after the Amendment
Effective Date (to the extent that the Optionholder was entitled to exercise it
as of the date of termination) but only within such period of time ending on the
earlier of (A) the date twelve (12) months following the termination of the
Optionholder's Continuous Service, or (B) the expiration of the term of the
Option as set forth in the Option Agreement. If the Optionholder's Continuous
Service terminates in a manner described in Section 11(d), then the Optionholder
may exercise his or her Option (to the extent that the Optionholder was entitled
to exercise it as of the date of termination) but only within such period of
time ending on the earlier of (i) the date twelve (12) months following the
termination of the Optionholder's Continuous Service, or (ii) the expiration of
the term of the Option as set forth in the Option Agreement. If, after
termination, the Optionholder does not exercise his or her Option within the
time specified in the Option Agreement, the Option shall terminate.

      (h) EXTENSION OF TERMINATION DATE. If the exercise of the Option following
the termination of the Optionholder's Continuous Service (other than upon the
Optionholder's death or Disability) would be prohibited at any time solely
because the issuance of shares would violate the registration requirements under
the Securities Act, then (i) an Option granted prior to the Amendment Effective
Date shall terminate on the

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earlier of (A) the expiration of the term of the Option as set forth in the
Option Agreement or (B) the expiration of a period of three (3) months after the
termination of the Optionholder's Continuous Service during which the exercise
of the Option would not be in violation of such registration requirements; and
(ii) an Option granted on or after the Amendment Effective Date shall terminate
on the earlier of (A) the expiration of the term of the Option as set forth in
the Option Agreement or (B) the expiration of a period of twelve (12) months
after the termination of the Optionholder's Continuous Service during which the
exercise of the Option would not be in violation of such registration
requirements.

      (i) DISABILITY OF OPTIONHOLDER. In the event an Optionholder's Continuous
Service terminates as a result of the Optionholder's Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise it as of the date of termination), but only within such
period of time ending on the earlier of (i) the date twelve (12) months
following such termination or (ii) the expiration of the term of the Option as
set forth in the Option Agreement. If, after termination, the Optionholder does
not exercise his or her Option within the time specified herein, the Option
shall terminate.

      (j) DEATH OF OPTIONHOLDER. In the event (i) an Optionholder's Continuous
Service terminates as a result of the Optionholder's death or (ii) the
Optionholder dies within the three-month period after the termination of the
Optionholder's Continuous Service for a reason other than death, then the Option
may be exercised (to the extent the Optionholder was entitled to exercise the
Option as of the date of death) by the Optionholder's estate, by a person who
acquired the right to exercise the Option by bequest or inheritance or by a
person designated to exercise the Option upon the Optionholder's death, but only
within the period ending on the earlier of (1) the date eighteen (18) months
following the date of death or (2) the expiration of the term of such Option as
set forth in the Option Agreement. If, after death, the Option is not exercised
within the time specified herein, the Option shall terminate.

8. SECURITIES LAW COMPLIANCE.

      The Company shall seek to obtain from each regulatory commission or agency
having jurisdiction over the Plan such authority as may be required to grant
Options and to issue and sell shares of Common Stock upon exercise of the
Options; provided, however, that this undertaking shall not require the Company
to register under the Securities Act the Plan, any Option or any stock issued or
issuable pursuant to any such Option. If, after reasonable efforts, the Company
is unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale
of stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such Options unless and until
such authority is obtained.

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9. USE OF PROCEEDS FROM STOCK.

      Proceeds from the sale of stock pursuant to Options shall constitute
general funds of the Company.

10. MISCELLANEOUS.

      (a) STOCKHOLDER RIGHTS. No Optionholder shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares subject
to such Option unless and until such Optionholder has satisfied all requirements
for exercise of the Option pursuant to its terms.

      (b) NO SERVICE RIGHTS. Nothing in the Plan or any instrument executed or
Option granted pursuant thereto shall confer upon any Optionholder any right to
continue to serve the Company as a Non-Employee Director or shall affect the
right of the Company or an Affiliate to terminate (i) the employment of an
Employee with or without notice and with or without cause, (ii) the service of a
Consultant pursuant to the terms of such Consultant's agreement with the Company
or an Affiliate or (iii) the service of a Director pursuant to the Bylaws of the
Company or an Affiliate, and any applicable provisions of the corporate law of
the state in which the Company or the Affiliate is incorporated, as the case may
be.

      (c) INVESTMENT ASSURANCES. The Company may require an Optionholder, as a
condition of exercising or acquiring stock under any Option, (i) to give written
assurances satisfactory to the Company as to the Optionholder's knowledge and
experience in financial and business matters and/or to employ a purchaser
representative reasonably satisfactory to the Company who is knowledgeable and
experienced in financial and business matters and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits and
risks of exercising the Option; and (ii) to give written assurances satisfactory
to the Company stating that the Optionholder is acquiring the stock subject to
the Option for the Optionholder's own account and not with any present intention
of selling or otherwise distributing the stock. The foregoing requirements, and
any assurances given pursuant to such requirements, shall be inoperative if (1)
the issuance of the shares upon the exercise or acquisition of stock under the
Option has been registered under a then currently effective registration
statement under the Securities Act or (2) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the stock.

      (d) WITHHOLDING OBLIGATIONS. The Optionholder may satisfy any federal,
state or local tax withholding obligation relating to the exercise or
acquisition of stock under an Option by any of the following means (in addition
to the Company's right to withhold from any compensation paid to the
Optionholder by the Company) or by a combination of such means: (i) tendering a
cash payment; (ii) authorizing the Company

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to withhold shares from the shares of the Common Stock otherwise issuable to the
Optionholder as a result of the exercise or acquisition of stock under the
Option; provided, however, that no shares of Common Stock are withheld with a
value exceeding the minimum amount of tax required to be withheld by law; or
(iii) delivering to the Company owned and unencumbered shares of the Common
Stock.

11. ADJUSTMENTS UPON CHANGES IN COMMON STOCK.

      (a) CAPITALIZATION ADJUSTMENTS. If, on or after the date the Plan is
adopted by the Board, any change is made in, or other events occur with respect
to, the stock subject to the Plan, or subject to any Option, without the receipt
of consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company (each a "Capitalization Adjustment")),
the Plan will be appropriately adjusted in the class(es) and maximum number of
securities subject both to the Plan pursuant to Section 4 and to the
nondiscretionary Options specified in Section 6, and the outstanding Options
will be appropriately adjusted in the class(es) and number of securities and
price per share of stock subject to such outstanding Options. The Board shall
make such adjustments, and its determination shall be final, binding and
conclusive. (The conversion of any convertible securities of the Company shall
not be treated as a transaction "without receipt of consideration" by the
Company.)

      (b) DISSOLUTION OR LIQUIDATION. In the event of a dissolution or
liquidation of the Company, then all outstanding Options shall terminate
immediately prior to the completion of such dissolution or liquidation.

      (c) CORPORATE TRANSACTION. In the event of a Corporate Transaction, any
surviving corporation or acquiring corporation may assume any or all Options
outstanding under the Plan or may substitute similar stock options for Options
outstanding under the Plan (it being understood that similar stock options
include, but are not limited to, options to acquire the same consideration paid
to the stockholders or the Company, as the case may be, pursuant to the
Corporate Transaction). In the event that any surviving corporation or acquiring
corporation does not assume any or all such outstanding Options or substitute
similar stock options for such outstanding Options, then with respect to Options
that have been neither assumed nor substituted and that are held by
Optionholders whose Continuous Service has not terminated prior to the effective
time of the Corporate Transaction, the vesting of such Options (and, if
applicable, the time at which such Options may be exercised) shall (contingent
upon the effectiveness of the Corporate Transaction) be accelerated in full to a
date prior to the effective time of such Corporate Transaction as the Board
shall determine (or, if the Board shall not determine such a date, to the date
that is five (5) days prior to the effective time of the Corporate Transaction),
and the Options shall terminate if not exercised (if applicable) at or prior to
such effective time. With respect to any other Options outstanding under the
Plan that have been neither assumed nor substituted, the vesting of such Options
(and, if applicable, the time at which such Options may be exercised) shall not
be accelerated

<PAGE>

unless otherwise provided in Section 11(d) or in a written agreement between the
Company or any Affiliate and the holder of such Options, and such Options shall
terminate if not exercised (if applicable) prior to the effective time of the
Corporate Transaction.

      (d) CHANGE IN CONTROL. If a Change in Control occurs, then, immediately
prior to such Change in Control, the Optionholder's Options shall become fully
vested and exercisable.

      (e) PARACHUTE PAYMENTS. If the acceleration of the vesting and
exercisability of Options provided for in Section 11(c) or (d), together with
payments and other benefits of an Optionholder, (collectively, the "Payment")
(i) constitute a "parachute payment" within the meaning of Section 280G of the
Code, or any comparable successor provisions, and (ii) but for this Section
11(e) would be subject to the excise tax imposed by Section 4999 of the Code, or
any comparable successor provisions (the "Excise Tax"), then such Payment shall
be either (1) provided to such Optionholder in full, or (2) provided to such
Optionholder as to such lesser extent that would result in no portion of such
Payment being subject to the Excise Tax, whichever of the foregoing amounts,
when taking into account applicable federal, state, local and foreign income and
employment taxes, the Excise Tax, and any other applicable taxes, results in the
receipt by such Optionholder, on an after-tax basis, of the greatest amount of
the Payment, notwithstanding that all or some portion of the Payment may be
subject to the Excise Tax.

            Unless the Company and such Optionholder otherwise agree in writing,
any determination required under this Section 11(e) shall be made in writing in
good faith by the Accountant. If a reduction in the Payment is to be made as
provided above, reductions shall occur in the following order unless the
Optionholder elects in writing a different order (provided, however, that such
election shall be subject to Company approval if made on or after the date that
triggers the Payment or a portion thereof): reduction of cash payments;
cancellation of accelerated vesting of Options; reduction of employee benefits.
If acceleration of vesting of Options is to be reduced, such acceleration of
vesting shall be cancelled in the reverse order of date of grant of Options
(i.e., earliest granted Option cancelled last) unless the Optionholder elects in
writing a different order for cancellation.

            For purposes of making the calculations required by this Section
11(e), the Accountant may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of the Code and other applicable
legal authority. The Company and the Optionholder shall furnish to the
Accountant such information and documents as the Accountant may reasonably
request in order to make such a determination. The Company shall bear all costs
the Accountant may reasonably incur in connection with any calculations
contemplated by this Section 11(e).

            If, notwithstanding any reduction described above, the Internal
Revenue Service (the "IRS") determines that the Optionholder is liable for the
Excise Tax as a result of the Payment, then the Optionholder shall be obligated
to pay back to the Company, within thirty (30) days after a final IRS

<PAGE>

determination or, in the event that the Optionholder challenges the final IRS
determination, a final judicial determination, a portion of the Payment equal to
the "Repayment Amount." The Repayment Amount with respect to the Payment shall
be the smallest such amount, if any, as shall be required to be paid to the
Company so that the Optionholder's net after-tax proceeds with respect to the
Payment (after taking into account the payment of the Excise Tax and all other
applicable taxes imposed on the Payment) shall be maximized. The Repayment
Amount with respect to the Payment shall be zero if a Repayment Amount of more
than zero would not result in the Optionholder's net after-tax proceeds with
respect to the Payment being maximized. If the Excise Tax is not eliminated
pursuant to this paragraph, the Optionholder shall pay the Excise Tax.

            Notwithstanding any other provision of this Section 11(e), if (i)
there is a reduction in the Payment as described above, (ii) the IRS later
determines that the Optionholder is liable for the Excise Tax, the payment of
which would result in the maximization of the Optionholder's net after-tax
proceeds of the Payment (calculated as if the Payment had not previously been
reduced), and (iii) the Optionholder pays the Excise Tax, then the Company shall
pay or otherwise provide to the Optionholder that portion of the Payment that
was reduced pursuant to this Section 11(e) contemporaneously or as soon as
administratively possible after the Optionholder pays the Excise Tax so that the
Optionholder's net after-tax proceeds with respect to the Payment are maximized.

            If the Optionholder either (i) brings any action to enforce rights
pursuant to this Section 11(e), or (ii) defends any legal challenge to his or
her rights under this Section 11(e), the Optionholder shall be entitled to
recover attorneys' fees and costs incurred in connection with such action,
regardless of the outcome of such action; provided, however, that if such action
is commenced by the Optionholder, the court finds that the action was brought in
good faith.

12. AMENDMENT OF THE PLAN AND OPTIONS.

      (a) AMENDMENT OF PLAN. The Board, at any time and from time to time, may
amend the Plan. However, except as provided in Section 11 relating to
adjustments upon changes in Common Stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent stockholder approval
is necessary to satisfy the requirements of applicable laws.

      (b) STOCKHOLDER APPROVAL. The Board, in its sole discretion, may submit
any other amendment to the Plan for stockholder approval.

      (c) NO IMPAIRMENT OF RIGHTS. Rights under any Option granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the Optionholder and (ii) the
Optionholder consents in writing.

      (d) AMENDMENT OF OPTIONS. The Board, at any time, and from time to time,
may amend the terms of any one or more Options; provided, however, that the
rights under any Option shall not be impaired by any such amendment unless (i)
the Company requests the consent of the Optionholder and (ii) the Optionholder
consents in writing.

13. TERMINATION OR SUSPENSION OF THE PLAN.

      (a) PLAN TERM. The Board may suspend or terminate the Plan at any time. No
Options may be granted under the Plan while the Plan is suspended or after it is
terminated.

<PAGE>

      (b) NO IMPAIRMENT OF RIGHTS. Suspension or termination of the Plan shall
not impair rights and obligations under any Option granted while the Plan is in
effect except with the written consent of the Optionholder.

14. EFFECTIVE DATE OF PLAN.

      The Plan shall become effective on the IPO Date, but no Option shall be
exercised unless and until the Plan has been approved by the stockholders of the
Company, which approval shall be within twelve (12) months before or after the
date the Plan is adopted by the Board.

15. CHOICE OF LAW.

      The law of the state of Delaware shall govern all questions concerning the
construction, validity and interpretation of this Plan, without regard to such
state's conflict of laws rules.exv4w1

 

Exhibit 4.1

WARRANT

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

Date: June 13, 2006

WARRANT TO PURCHASE COMMON STOCK

OF

MICROMED CARDIOVASCULAR, INC.

(Subject to Adjustment)

     THIS
CERTIFIES THAT, for value received,                                         
(“Holder”), is entitled,
subject to the terms and conditions of this Warrant, at any time or from time to time after the
date hereof (the “Effective Date”), to purchase up to                                         
(                    ) shares of common stock, par value
$0.001 per share (the “Warrant Shares”), from MicroMed Cardiovascular, Inc., a Delaware corporation
(the “Company”), at an exercise price per share equal to Three Dollar ($3.00) (the
“Purchase Price). This Warrant shall expire at 5:00 p.m. Pacific time on that date which is
thirty-six (36) months from the date of this Warrant (the “Expiration Date”). Both the
number of shares of Common Stock purchasable upon exercise of this Warrant (the “Warrant Shares”)
and the Purchase Price are subject to adjustment and change as provided herein. This Warrant is
issued in connection with that certain Securities Purchase Agreement executed by and among the
Company, Holder and other parties.

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

     “1933 Act” shall mean the Securities Act of 1933, as amended.

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

     “SEC” shall mean the Securities and Exchange Commission.

     2. EXERCISE OF WARRANT

1

 

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

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

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

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

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

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

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

          4.1 Adjustment for Stock Splits. Stock Subdivisions or Combinations of Shares of
Common Stock. The Purchase Price of this Warrant shall be proportionally decreased and the number
of shares of Common Stock deliverable upon exercise of this Warrant (or any

2

 

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

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

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

          4.4 Adjustment for Capital Reorganization. Merger or Consolidation. In case of any
capital reorganization of the capital stock of the Company (other than a combination,
reclassification, exchange or subdivision of shares otherwise provided for herein), or any merger
or consolidation of the Company with or into another corporation, or the sale of all or
substantially all the assets of the Company then, and in each such case, as a part of such
reorganization, merger, consolidation, sale or transfer, lawful provision shall be made so that the
Holder of this Warrant shall thereafter be entitled to receive upon exercise of this Warrant,
during the period specified herein and upon payment of the Purchase Price then in effect, the
number of shares of stock or other securities or property of the successor corporation resulting
from such reorganization, merger, consolidation, sale or transfer that a holder of the shares
deliverable upon exercise of this Warrant would have been entitled to receive in such
reorganization, consolidation, merger, sale or transfer if this Warrant had been exercised
immediately before such reorganization, merger, consolidation, sale or transfer, all subject to
further adjustment as provided in this Section 4. The foregoing provisions of this Section 4.4

3

 

shall similarly apply to successive reorganizations, consolidations, mergers, sales and
transfers and to the stock or securities of any other corporation that are at the time receivable
upon the exercise of this Warrant. If the per-share consideration payable to the Holder hereof for
shares in connection with any such transaction is in a form other than cash or marketable
securities, then the value of such consideration shall be determined in good faith by the Company’s
Board of Directors. In all events, appropriate adjustment (as determined in good faith by the
Company’s Board of Directors) shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the Holder after the transaction, to the end that the
provisions of this Warrant shall be applicable after that event, as near as reasonably may be, in
relation to any shares or other property deliverable after that event upon exercise of this
Warrant.

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

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

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

     7. TRANSFER. This Warrant may not be transferred by the Holder without the prior
written consent of the Company, which consent may not be unreasonably withheld. In the event of a
transfer to which the Company has previously consented in writing, this Warrant and all rights
hereunder may be transferred by the Holder upon delivery of the form of Assignment attached hereto
as Exhibit 2 (the “Assignment”), duly executed by the Holder, surrender of this Warrant
properly endorsed at the address of the Company and payment of any necessary transfer

4

 

tax or other governmental charge imposed upon such transfer. Upon any partial transfer, the
Holder and Company will cause to be issued and delivered to the Holder a new Warrant or Warrants
with respect to the portion of this Warrant not so transferred. Each taker and holder of this
Warrant, by taking or holding the same, consents and agrees that when this Warrant shall have been
so endorsed, the person in possession of this Warrant may be treated by the Company, and all other
persons dealing with this Warrant, as the absolute owner hereof for any purpose and as the person
entitled to exercise the rights represented hereby, any notice to the contrary notwithstanding;
provided, however that until a transfer of this Warrant is duly registered on the books of the
Company, the Company may treat the Holder hereof as the owner for all purposes.

     8. REGISTRATION. The Company has agreed to register the Warrant Shares pursuant to
the Registration Rights Agreement.

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

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

         THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS

5

 

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

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

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

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

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

6

 

     15. NOTICES OF RECORD DATE. In case:

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

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

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

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

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

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

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

[SIGNATURE PAGE TO FOLLOW]

7

 

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

	 	 	 	 	 	 	 	 	 
	MICROMED CARDIOVASCULAR, INC.	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 
	 

	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	Name:	 	 
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	Travis E. Baugh
	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 	 	 
	Title:

	 	 President and Chief Executive Officer	 	 	 	 	 	 

	 	 	 
	Address for Notices:

	 	Address for Notices:
	 
	 	 
	8965 Interchange Drive
	 	 
	 

	 	 
	Houston TX 77054
	 	 
	 

	 	 

SIGNATURE PAGE TO WARRANT

8

 

EXHIBIT 1

NOTICE OF EXERCISE

(To be executed upon exercise of Warrant)

			
	                                        
	 	WARRANT NO.                     

     The undersigned hereby irrevocably elects to exercise the right of purchase represented by the
within Warrant Certificate for, and to purchase thereunder, securities of MicroMed Cardiovascular,
Inc., as provided for therein, and tenders herewith payment of the exercise price in full in the
form of cash or a certified or official bank check in same-day funds in the amount of $                    
for                      such securities.

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

	 	 	 	 	 
	Name:

	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Address:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Signature:
	 	 	 	 
	 

	 	 	 	 

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

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

9

 

EXHIBIT 2

ASSIGNMENT

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

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

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

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

Dated:                                        ,
200                    

Signature:                                                            

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

10

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