8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported): August 28, 2003

HYPERTENSION DIAGNOSTICS, INC.

(Exact name of Registrant as specified in its charter)

Minnesota	0-24635	41-1618036
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
2915 Waters Road, Suite 108 Eagan, Minnesota		55121
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: 651-687-9999

Items 2 through 6 and 8 through 12 are not applicable and therefore omitted.

ITEM 1. CHANGES IN CONTROL OF REGISTRANT.

On August 28, 2003 (“Effective Date” or the “Closing”), Hypertension Diagnostics, Inc. (“HDI”) concluded an offering (the “Offering”) of units (the “Units”) to accredited investors, with each Unit consisting of shares of HDI’s common stock (the “Common Stock”), Series A Convertible Preferred Stock (the “Series A Preferred Stock”), and a series of six (6) purchase warrants, three (3) of which entitle the holder to acquire Series A Preferred Stock and three (3) of which entitle the holder to acquire Common Stock (the “Warrants”). Among the investors were Alan Stern, Larry Leitner, Steven B. Gerber and Mark N. Schwartz (the “Schwartz Group”).

Pursuant to the Offering, HDI sold $2.3 million of Units, comprised of 9,318,866 shares of Common Stock, 585,980 shares of Series A Preferred Stock, warrants to purchase an additional 23,297,213 shares of Common Stock and warrants to purchase an additional 1,464,975 shares of Series A Preferred Stock (exercisable at various times and at various strike prices).   Each share of Series A Preferred Stock is initially convertible into twelve (12) shares of Common Stock

Concurrent with the closing of the Offering, HDI concluded a transaction with the holders of its 8% convertible notes (the “Notes”) pursuant to which the noteholders tendered the Notes and the accrued interest thereon totaling together $529,980 to HDI in exchange for 3,238,767 shares of Common Stock.  The tendering noteholders granted Mark N. Schwartz an irrevocable proxy to vote their shares in favor of an increase in HDI’s authorized Common Stock to accommodate the conversion of the Series A Preferred Stock and the exercise of the Warrants sold pursuant to the Offering (the “Proposal”).

The Offering resulted in a change in control.  In connection with the Offering, Mark N. Schwartz was granted an irrevocable proxy for a period of 48 months to vote all of the shares previously owned and acquired by the investors through the Offering (the “Investor Proxy”).  Further, immediately upon conclusion of the Offering, Mark N. Schwartz was elected Chairman of the Board of Directors (the “Board”) of HDI and its Chief Executive Officer.  Additionally, Alan Stern and Larry Leitner were appointed to the Board.  Dr. Jay N. Cohn, Kenneth W. Brimmer, and Greg H. Guettler will continue to serve on the Board.  Dr. Steven B. Gerber has also been appointed to the Board, and will take office

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following the Company’s compliance with the requirements of Section 14 of the Securities Exchange Act of 1934.

The Offering resulted in Mark N. Schwartz obtaining voting control (through his ownership of shares of Common Stock, Series A Preferred Stock, and pursuant to the Investor Proxy) of approximately 56 percent of HDI’s voting securities.

Further, in connection with the Offering, the investors in the Offering entered into a Voting Agreement, providing that for a period terminating upon the earlier of (i) the date such investors no longer own any shares of stock, or (ii) forty-eight (48) months from the Closing, such investors shall vote all of their shares of stock as follows: (a) to cause the Board to consist of seven (7) members, (b) to cause the election to the Board of four (4) nominees nominated by Mark N. Schwartz, with the initial nominees being Mark N. Schwartz, Alan Stern, Larry Leitner and Dr. Steven B.  Gerber, (c) at the meeting of shareholders at which the Proposal is presented to cause the election of Greg H. Guettler to the Board, (d) to elect Dr. Jay N. Cohn to the Board at such meeting at which Cohn is nominated to the Board, (e) in favor of Greg H. Guettler, Dr. Jay N. Cohn and Kenneth W. Brimmer as directors for the remainder of their current respective terms, and (f) in favor of the Proposal.

ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.

(c) Exhibits

The following are filed as Exhibits to this Report:

Exhibit No.	Description of Exhibit
4.1	Certificate of Designation, Preferences and Rights of Series A Convertible Preferred Stock.
4.2	Form of Securities Purchase Agreement dated as of August 28, 2003 among Hypertension Diagnostics, Inc. and the Unit Investor parties thereto.
4.3	Voting Agreement dated as of August 28, 2003 by and among the holders of Hypertension Diagnostics, Inc. Series A Convertible Preferred Stock
4.4	Registration Rights Agreement dated as of August 28, 2003 among Hypertension Diagnostics, Inc. and the Purchaser parties thereto.
4.5	Shareholders’ Agreement dated as of August 28, 2003 by and among Hypertension Diagnostics, Inc. and the holders of Hypertension Diagnostics, Inc. Series A Convertible Preferred Stock.
4.6	Form of Preferred Stock Purchase Warrant originally issued August 28, 2003.
4.7	Form of Common Stock Purchase Warrant originally issued August 28, 2003.
4.8	Form of Irrevocable Proxy executed in connection with the Securities Purchase Agreement dated as of August 28, 2003.
4.9	Reservation Agreement dated as of August 4, 2003 by and among Hypertension Diagnostics, Inc., Kenneth W. Brimmer, Charles F. Chesney, Jay N. Cohn, Greg H. Guettler and James S. Murphy.
4.10	Form of Irrevocable Proxy dated August 4, 2003 executed by Messrs. Brimmer, Cohn, Guettler, Murphy and Chesney.
4.11	Conversion and Voting Agreement, dated as of August 1, 2003, between Hypertension Diagnostics, Inc., Alpha Capital Aktiengesellschaft, Stonestreet Limited Partnership and Ellis Enterprises Ltd.
4.12	Form of Irrevocable Proxy dated August 1, 2003, executed by holders of 8% Convertible Notes.
99.1	Press Release issued September 4, 2003.

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SIGNATURE

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

	HYPERTENSION DIAGNOSTICS, INC.
	By	/s/ Mark N. Schwartz
		Its Chairman of the Board and
Dated: September 5, 2003		Chief Executive Officer

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EX-4.1

Exhibit 4.1

HYPERTENSION DIAGNOSTICS, INC.

CERTIFICATE OF DESIGNATION, PREFERENCES

AND RIGHTS OF

SERIES A

CONVERTIBLE PREFERRED STOCK

Pursuant to Section 302A.401 of the Minnesota Business Corporation Act:

I, the undersigned officer of Hypertension Diagnostics, Inc., a Minnesota corporation (the “Company”), in accordance with the provisions of Section 302A.401, DO HEREBY CERTIFY:

That pursuant to the authority conferred upon the Board of Directors of the Company (the “Board”) by the Articles of Incorporation of the Company (the “Articles”), the Board, on August 27, 2003, adopted the following resolution creating a series of four million, one hundred seventy-seven thousand, two hundred and seventy-five (4,177,275) shares of preferred stock designated as Series A Convertible Preferred Stock:

RESOLVED, that pursuant to the authority vested in the Board in accordance with the provisions of its Articles, a series of preferred stock known as “Series A Convertible Preferred Stock” be, and hereby is, created and that the designation and amount thereof and the rights and preferences of the shares of such preferred stock are as follows:

Section 1.               Designation, Amount and Par Value.  The series of preferred stock shall be designated as Series A Convertible Preferred Stock (the “Series A Preferred Stock”), and the number of shares so designated shall be four million, one hundred seventy-seven thousand, two hundred and seventy-five (4,177,275).  Each share of Series A Preferred Stock shall have a par value of $.01 per share and a stated value of $1.68 per share (the “Stated Value”).

Section 2.               Dividends.

(a)           The Series A Preferred Stock shall accrue a cumulative and compounding dividend equal to eleven percent (11%) per annum (the “Trigger Event Dividend”).  The Trigger Event Dividend shall compound annually from the Original Issue Date (as defined in Section 7) until full payment thereof and be payable by the Company, in arrears, commencing one (1) year from the Original Issue Date, only upon the occurrence of the Trigger Event (as defined in Section 7), in cash or through the issuance of additional shares of Series A Preferred Stock, or a combination thereof, at the option of the Company. Notwithstanding the Company’s obligations with respect to the Trigger Event Dividend, in the event the Company declares or pays any dividends or any other distribution with respect to any class or series of Junior Securities (as defined in Section 7), the Company shall also declare and pay to the holders of Series A Preferred Stock as of the record date established by the Board for such dividend or distribution on the Junior Securities, a cumulative and compounding dividend equal to eleven percent (11%) per annum (the “Preferred Dividend,” and together with the Trigger Event Dividend, the “Dividends”).  The Preferred Dividend shall accrue and compound annually from the Original Issue Date until payment in full thereof.  In addition to the Dividends, each share of Series A Preferred Stock shall be entitled to participate in dividends declared or paid on any Junior Securities, and, for the purposes of such dividend(s), each share of Series A Preferred Stock shall

be entitled to such dividend as would have been declared and paid with respect to the Common Stock (as defined in Section 7) issuable upon conversion of the Series A Preferred Stock in accordance with Section 5 hereof had all of the outstanding Series A Preferred Stock been converted immediately prior to the record date for such dividend, or if no record date is fixed, the date as of which the record holders of Common Stock entitled to such dividends are to be determined.  The Dividends shall be payable on the Series A Preferred Stock out of funds legally available for the declaration of dividends only if and when declared by the Board. For purposes hereof, the term “dividends” shall include any pro rata distribution by the Company of cash, property, securities (including, but not limited to, rights, warrants or options) or other property or assets to the holders of the Company’s securities, whether or not paid out of capital, surplus or earnings, other than a distribution upon liquidation of the Company in accordance with Section 4 hereof.

(b)           No dividend shall be paid or declared on or with respect to any class or series of Junior Securities unless a dividend, payable in the same consideration and manner, is simultaneously declared and paid, as the case may be, on each share of Series A Preferred Stock in an amount determined as set forth above.

Section 3.               Voting Rights.

(a)           Voting As If Converted.  Except as otherwise provided herein and as otherwise required by law, each share of Series A Preferred Stock shall entitle the holder thereof to vote, in person or by proxy, at any special or annual meeting of the shareholders of the Company on all matters voted on by holders of Common Stock.  With respect to any such vote, each share of Series A Preferred Stock shall entitle the holder thereof to such number of votes per share on each such action equal to the Conversion Ratio on the record date for determining stockholders of the Company eligible to vote on any such matters.

(b)           Class Voting.  In addition to such other voting rights specified herein, in the Articles and under the Minnesota Business Corporation Act, so long as any shares of Series A Preferred Stock are outstanding, the Company shall not, without the affirmative vote of the Majority Holders (as defined in Section 7): (i) alter or adversely change the powers, preferences or rights given to the Series A Preferred Stock; (ii) alter or amend this Certificate of Designation in a manner adverse to the holders of Series A Preferred Stock; (iii) authorize or issue (by reclassification or otherwise) any class of equity security having any right, preference or privilege senior to or pari passu with the Series A Preferred Stock with respect to voting, dividend, redemption, conversion or liquidation, or any other rights; (iv) amend the Articles, bylaws or other charter documents of the Company in a manner adverse to the Series A Preferred Stock; (v) increase the authorized number of shares of Series A Preferred Stock; (vi) declare or cause any dividend to be paid to the holders of the Company’s Common Stock; (vii) consummate a Sale Transaction (as defined in Section 7); or (viii) authorize or cause the repurchase of any of the Company’s equity securities.

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Section 4.               Liquidation.  Upon any Liquidation (as defined in Section 7), the holders of the Series A Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any kind, including without limitation any assets or surplus funds of the Company to the holders of any of the Company’s Junior Securities, out of the assets of the Company, whether such assets are capital or surplus, for each share of Series A Preferred Stock, an amount equal to two and three-tenths (2.3) times the Stated Value (the “Adjusted Stated Value”), plus the amount of any accrued but unpaid dividends on the Series A Preferred Stock, together with such additional amount as is necessary to provide an internal rate of return on the Adjusted Stated Value equal to twenty percent (20%), before any distribution or payment shall be made to the holders of any Junior Securities (the “Liquidation Preference”).  If, upon any Liquidation, the assets of the Company are insufficient to pay the full amount of the Liquidation Preference payable to holders of Series A Preferred Stock, all amounts available for distribution shall be distributed pro rata to the holders of the Series A Preferred Stock in proportion to the full amounts to which they would otherwise be respectively entitled to receive pursuant to the foregoing provision.  Following payment of the Liquidation Preference to the holders of the Series A Preferred Stock, the holders of any Junior Securities and the holders of the Series A Preferred Stock shall then be entitled to share ratably in all of the assets of the Company thereafter remaining.  For purposes of this joint distribution of assets to the holders of any Junior Securities and the holders of Series A Preferred Stock, the holders of Series A Preferred Stock shall be regarded as owning that number of shares of Common Stock into which the Series A Preferred Stock would then be convertibleirrespective of whether there is sufficient authorized shares of the class of stock into which the Series A Preferred Stock would convert.  The Company shall mail written notice of any such Liquidation not less than thirty (30) days prior to the payment date stated therein to each record holder of the Series A Preferred Stock. Any securities or other property to be delivered to the holders of the Series A Preferred Stock pursuant to this Section 4 as a consequence of a Liquidation shall be valued at their Fair Market Value; provided, however, that unlisted securities shall be valued at zero (0) for purposes of the foregoing valuation.

Section 5.               Conversion.

(a)           Optional and Automatic Conversion.  If and only if the Proposal (as defined in Section 7) is approved, then thereafter:

(i)            Optional Conversion.  Each share of Series A Preferred Stock is convertible by the holder thereof into shares of Common Stock at the then applicable Conversion Ratio (as defined in Section 7) as of the Holder Conversion Date (as defined below) at the option of the holder, in whole or in part, at any time after the Original Issue Date.  The holder shall effect conversion(s) by surrendering the certificate or certificates representing the shares of Series A Preferred Stock to be converted to the Company, together with the form of conversion notice attached hereto as Exhibit A (the “Holder Conversion Notice”), a copy of which, notwithstanding anything herein to the contrary, for convenience purposes only, shall also be promptly sent by the holder to the Company’s transfer agent and the Company’s counsel.  Each Holder Conversion Notice shall specify the number of shares of Series A Preferred Stock to be converted and the date on which such conversion is to be effected (the “Holder Conversion Date”), which date may not be prior to the date on which the holder delivers such Conversion Notice.  If no Holder Conversion Date is specified in a Holder Conversion Notice, the Holder

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Conversion Date shall be the date that the Holder Conversion Notice is deemed delivered pursuant to Section 6(a).  If the holder is converting less than all shares of the Series A Preferred Stock represented by the certificate or certificates tendered by the holder with the Holder Conversion Notice, or if a conversion hereunder cannot be effected in full for any reason, the Company shall promptly deliver to such holder (in the manner and within the time set forth in Section 5(b)) a certificate for such number of shares as have not been converted.

(ii)           Automatic Conversion.  All, but not less than all, of the then outstanding and unconverted shares of the Series A Preferred Stock shall automatically be converted, at the then applicable Conversion Ratio, on the date of the closing of a Sale Transaction (the “Sale Transaction Conversion Date”).  Nothing contained herein shall limit a holder’s right pursuant to Section 5(a)(i) to convert any or all of the Series A Preferred Stock held by it prior to the Sale Transaction Conversion Date.  The Company shall deliver a notice in the form attached hereto as Exhibit B (the “Company Conversion Notice”) to the holders of the Series A Preferred Stock not less than ten (10) Business Days prior to the Sale Transaction Conversion Date.

A Holder Conversion Date and a Sale Transaction Conversion Date are sometimes referred to herein as a “Conversion Date” and a Holder Conversion Notice and a Company Conversion Notice are sometimes referred to as a “Conversion Notice.”

(b)           Mechanics of Conversion.  Not later than ten (10) Business Days after the Conversion Date and receipt by the Company of an original share certificate representing the shares of the Series A Preferred Stock to be converted, the Company will deliver to the holder: (i) a certificate or certificates which shall be free of restrictive legends and trading restrictions (other than those required by the Purchase Agreement and Shareholders’ Agreement or otherwise appearing on the certificate(s) of the shares of Series A Preferred Stock being converted) representing the number of shares of Common Stock being acquired upon the conversion of shares of the Series A Preferred Stock; and (ii) one or more certificates representing the number of shares of the Series A Preferred Stock not converted; provided, however, that the Company shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon conversion of any shares of the Series A Preferred Stock until certificates evidencing such shares of the Series A Preferred Stock are delivered for conversion to either the Company or the Company’s transfer agent, or the holder of such shares of the Series A Preferred Stock notifies the Company that such certificates have been lost, stolen or destroyed and provides a bond (or other adequate security) reasonably satisfactory to the Company to indemnify the Company from any loss incurred by it in connection therewith.

(c)           Conversion Price and Adjustment to Conversion Price.

(i)            Conversion Price.  The conversion price for each share of the Series A Preferred Stock (the “Conversion Price”) on any Conversion Date shall be $0.14, as adjusted from time to time as provided in this Section 5(c).

(ii)           Adjustments to Conversion Price for Dividends, Reclassifications, etc.  If the Company, at any time while any shares of the Series A Preferred Stock are outstanding, shall (A) pay a stock dividend or otherwise make a distribution or distributions on shares of its Junior

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Securities payable in shares of Common Stock, (B) subdivide outstanding shares of Common Stock into a larger number of shares, (C) combine outstanding shares of Common Stock into a smaller number of shares, (D) issue by reclassification of shares of Common Stock any shares of capital stock of the Company, or (E) consolidate or merge into another Person (where the Company is not the surviving entity or where there is a change in, or distribution with respect to, the Common Stock), then the new Conversion Price shall be determined by multiplying the Conversion Price in effect immediately prior to such event by a fraction of which the numerator shall be the number of shares of Common Stock outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event.  Any adjustment made pursuant to this Section 5(c)(ii) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination, reclassification or merger.

(iii)          Adjustments to Conversion Price for Certain Distributions.  If the Company, at any time while any shares of the Series A Preferred Stock are outstanding, shall distribute to all holders of Common Stock (and not to holders of the Series A Preferred Stock) evidences of its indebtedness or assets or other rights (excluding those referred to in Section 5(c)(ii) above), then in each such case the Conversion Price at which each share of the Series A Preferred Stock shall thereafter be convertible shall be determined by multiplying the Conversion Price in effect immediately prior to the record date fixed for determination of shareholders entitled to receive such distribution by a fraction of which the denominator shall be the Fair Market Value of Common Stock determined as of the record date mentioned above, and of which the numerator shall be such Fair Market Value of the Common Stock on such record date less the then Fair Market Value at such record date of the portion of such assets or evidences of indebtedness so distributed applicable to one (1) outstanding share of Common Stock. Such adjustments shall be described in a statement provided to the holders of the Series A Preferred Stock of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock.  Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

(iv)          Adjustments to Conversion Price for Other Issuances.  If and whenever the Company, at any time while any shares of the Series A Preferred Stock are outstanding, shall issue or sell any shares of Common Stock for a consideration per share less than the Conversion Price then in effect (other than any transaction described in Sections 5(c)(ii)-(iii) above), or shall issue any options, warrants, other convertible securities or other rights for the purchase of shares of Common Stock for a consideration per share (as determined in accordance with this Section 5(c)(iv)) less than the Conversion Price then in effect on the date of, and immediately prior to, such issue, then, immediately upon such issuance or sale of such securities, the Conversion Price in effect immediately prior to such issuance or sale shall be reduced such that Conversion Price shall equal the Restated Price.  “Restated Price” shall equal the Stated Value, divided by (a) the total consideration set forth in the Purchase Agreement between the holder of the Series A Preferred Stock and the Company as of the Original Issue Date, divided by the Issuance Price (as hereinafter defined), less (b) the number of shares of Common Stock set forth in Section 1(B) of the Purchase Agreement, the result of which shall be divided by (c) the number of shares of

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Preferred Stock set forth in Section 1(A) of the Purchase Agreement. Stated as a formula, the foregoing should be read as:

Restated Price =	Stated Value
	(a)-(b)
	(c)

“Issuance Price” shall mean (x) for issuances of Common Stock, the price at which such shares of Common Stock were sold, and (y) for issuances of options, warrants, other convertible securities or other purchase rights, the price per share for which Common Stock is issuable, as determined by sub-section 5(c)(iv)(A), 5(c)(iv)(B), or 5(c)(iv)(C) as applicable.

(A)          Issuances of Rights or Options.  If the Company in any manner grants or sells any options or warrants to purchase Common Stock or convertible securities for which Common Stock is issuable and the price per share for which Common Stock is issuable upon the exercise of such options or warrants, or upon conversion or exchange of any convertible securities issuable upon exercise of such options or warrants, is less than the Conversion Price in effect immediately prior to the time of the granting or sale of such options or warrants, then the total maximum number of shares of Common Stock issuable upon the exercise of such options or warrants or upon conversion or exchange of the total maximum amount of such convertible securities issuable upon the exercise of such options or warrants shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such options or warrants for such price per share.  For purposes of this subsection, the “price per share for which Common Stock is issuable” shall be determined by dividing (x) the total amount, if any, received or receivable by the Company as consideration for the granting or sale of such options or warrants, plus the minimum aggregate amount of additional consideration payable to the Company upon exercise of all such options or warrants, plus in the case of such options or warrants which relate to convertible securities, the minimum aggregate amount of additional consideration, if any, payable to the Company upon the issuance or sale of such convertible securities and the conversion or exchange thereof, by (y) the total maximum number of shares of Common Stock issuable upon the exercise of such options or warrants or upon the conversion or exchange of all such convertible securities issuable upon the exercise of such options or warrants.  No further adjustment of the Conversion Price shall be made when convertible securities are actually issued upon the exercise of such options or warrants or when Common Stock is actually issued upon the exercise of such options or warrants or the conversion or exchange of such convertible securities.

(B)           Issuance of Convertible Securities.  If the Company in any manner issues or sells any securities convertible or exchangeable for Common Stock and the price per share for which Common Stock is issuable upon conversion or exchange thereof is less than the Conversion Price in effect immediately prior to the time of such issue or sale, then the maximum number of shares of Common Stock issuable upon conversion or exchange of such convertible securities shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such convertible securities for such price per share.  For the

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purposes of this Section, the “price per share for which Common Stock is issuable” shall be determined by dividing (x) the total amount received or receivable by the Company as consideration for the issue or sale of such convertible securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the conversion or exchange thereof, by (y) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such convertible securities.  No further adjustment of the Conversion Price shall be made when Common Stock is actually issued upon the conversion or exchange of such convertible securities, and if any such issue or sale of such convertible securities is made upon exercise of any options or warrants for which adjustments of the Conversion Price had been or are to be made pursuant to other provisions of this Section 5, no further adjustment of the Conversion Price pursuant to this paragraph shall be made by reason of such issue or sale.

(C)           Change in Option Price or Conversion Rate.  If there is any change at any time in (x) the purchase price provided for in any options or warrants; (y) in the additional consideration, if any, payable upon the conversion or exchange of any convertible securities; or (z) or the rate at which any convertible securities are convertible into or exchangeable for Common Stock, then the Conversion Price in effect at the time of such change shall be immediately adjusted to the Conversion Price which would have been in effect at such time had such options or warrants or convertible securities still outstanding provided for such changed purchase price, additional consideration or conversion rate, as the case may be, at the time initially granted, issued or sold.

(D)          Treatment of Expired Options and Unexercised Convertible Securities.  If any options, warrants, other convertible securities or other purchase rights that are taken into account in any such adjustment of the Conversion Price subsequently expire or terminate without exercise or conversion, the Conversion Price shall immediately be readjusted to such Conversion Price as would have obtained had the adjustment made upon the issuance of such options, warrants, other convertible securities or other purchase rights been made upon the basis of the issuance of only the number of shares of Common Stock actually issued upon the exercise of such remaining options, warrants, other convertible securities or other purchase rights.  If the Conversion Price is adjusted as the result of and at the time of the issuance of any options, warrants, other convertible securities or other purchase rights, no further adjustment of the Conversion Price shall be made at the time of the exercise or conversion of such options, warrants, other convertible securities or other purchase rights.

(d)           Calculation of Consideration Received.  All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.  If any Common Stock, option or convertible security is issued or sold or deemed to have been issued or sold for cash, the consideration paid therefor shall be deemed to be the aggregate gross consideration paid by the purchasers therefor before deducting any discounts, commissions or other expenses in connection with the issuance and sale thereof.  If any Common Stock, option or convertible security is issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Company shall be the Fair Market Value of such consideration.  If any Common Stock, option or convertible security is issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving corporation, the amount of consideration therefor shall be deemed to be the Fair Market Value of such portion of

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the net assets and business of the non-surviving entity as is attributable to such Common Stock, option or convertible security, as the case may be.

(e)           Notices of Adjustment and Other Notices.

(i)            Notice of Adjustments to Conversion Price.  Whenever the Conversion Price is adjusted pursuant to Section 5(c), the Company shall promptly mail to each holder of Series A Preferred Stock, a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

(ii)           Other Notices.  In the event (A) the Company shall declare a dividend (or any other distribution) on its Common Stock; or (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of its Common Stock; or (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; or (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock of the Company, any Sale Transaction or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of the Series A Preferred Stock, and shall cause to be mailed to the holders of the Series A Preferred Stock at their last addresses as they shall appear upon the stock books of the Company, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (1) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, redemption, rights or warrants are to be determined or (2) the date on which such reclassification, Sale Transaction or share exchange is expected to become effective or close, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, Sale Transaction or share exchange; provided, however, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice.

(f)            Reservation of Stock Issuable upon Conversion.  At such time and only at such time as the Proposal (as defined in Section 7) is approved, then and only then will the Company reserve and keep available out of its authorized and unissued Common Stock solely for the purpose of issuance upon conversion of the Series A Preferred Stock, free from preemptive rights or any other actual or contingent purchase rights of persons other than the holders of the Series A Preferred Stock, not less than such number of shares of Common Stock as shall be issuable upon the conversion of all outstanding shares of the Series A Preferred Stock.  All shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued and fully paid and nonassessable.

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(g)           Fractional Shares.  Unless the holder of shares of Series A Preferred Stock being converted specifies otherwise, the Company shall issue fractional shares of Common Stock (carried out to three (3) decimal places) upon conversion of shares of Series A Preferred Stock.  If more than one share of Series A Preferred Stock shall be surrendered for conversion at one time by the same holder, the number of full shares of Common Stock to be issued shall be computed on the basis of the aggregate number of shares of Series A Preferred Stock so surrendered.  At the option of the holder, the holder may require that the Company, instead of issuing any fractional shares of Common Stock which would otherwise be issuable upon conversion of any shares of Series A Preferred Stock, pay a cash adjustment in respect of such fractional share in an amount equal to the product of such fraction multiplied by the Fair Market Value of one share of Common Stock on the Conversion Date.

(h)           Certificates.  The issuance of certificates for shares of Common Stock on conversion of the Series A Preferred Stock shall be made without charge to the holders thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the holder of such shares of the Series A Preferred Stock so converted and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.  Shares of the Series A Preferred Stock converted into Common Stock shall be canceled and shall have the status of authorized but unissued shares of undesignated stock.

Section 6.               Miscellaneous

(a)           Notices.  Any and all notices or other communications or deliveries to be provided by the holders of the Series A Preferred Stock hereunder shall be in writing and delivered personally, by facsimile, sent by a nationally recognized overnight courier service or sent by certified or registered mail, postage prepaid, addressed to the attention of the Secretary of the Company at the facsimile telephone number or address of the principal place of business of the Company as set forth in the Purchase Agreement.  Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile, sent by a nationally recognized overnight courier service or sent by certified or registered mail, postage prepaid, addressed to each holder of the Series A Preferred Stock at the facsimile telephone number or address of such holder appearing on the books of the Company, or if no such facsimile telephone number or address appears, at the principal place of business of the holder.  Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of: (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 11:59 p.m. (Central Time) on such date of transmission; (ii) four days after deposit in the United States mails; (iii) the Business Day following the date of mailing, if sent by a nationally recognized overnight courier service; or (iv) upon actual receipt by the party to whom such notice is required to be given.

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(b)           Severability of Provisions.  If any voting powers, preferences and relative, participating, optional and other special rights of the Series A Preferred Stock and qualifications, limitations and restrictions thereof set forth herein (as the same may be amended from time to time) are determined to be invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other voting powers, preferences and relative, participating, optional and other special rights of the Series A Preferred Stock and qualifications, limitations and restrictions thereof set forth in this resolution (as so amended) which can be given effect without the invalid, unlawful or unenforceable voting powers, preferences and relative, participating, optional and other special rights of the Series A Preferred Stock and qualifications, limitations and restrictions thereof shall, nevertheless, remain in full force and effect, and no voting powers, preferences and relative, participating, optional or other special rights of the Series A Preferred Stock and qualifications, limitations and restrictions thereof herein set forth shall be deemed dependent upon any other such voting powers, preferences and relative, participating, optional or other special rights of the Series A Preferred Stock and qualifications, limitations and restrictions thereof unless so expressed herein.

(c)           Information Rights.  For as long as any Series A Preferred Stock shall be issued and outstanding, the Company shall provide to the holders of the Series A Preferred Stock unaudited quarterly and audited annual financial statements of the Company.  The Company agrees to provide quarterly financial statements on or prior to forty-five (45) days following the close of the applicable quarter, and annual financial statements on or prior to ninety (90) days following the close of the applicable fiscal year.

Section 7.               Definitions.  For the purposes hereof, the following terms shall have the following meanings:

“Appraisal Procedure” means the following procedure to determine the fair market value, as to any security, for purposes of the definition of “Fair Market Value” or the fair market value, as to any other property (in either case, the “Valuation Amount”).  The Valuation Amount shall be determined in good faith jointly by the Board and the Majority Holders; provided, however, that if such parties are not able to agree on the Valuation Amount within a reasonable period of time (not to exceed twenty (20) days), the Valuation Amount shall be determined by an investment banking firm of national recognition, which firm shall be reasonably acceptable to the Board and the Majority Holders.  If the Board and the Majority Holders are unable to agree upon an acceptable investment banking firm within ten (10) days after the date either party proposes that one be selected, the investment banking firm will be selected by an arbitrator located in Los Angeles County, California, selected by the American Arbitration Association (or if such organization ceases to exist, the arbitrator shall be chosen by a court of competent jurisdiction). The arbitrator shall select the investment banking firm (within ten (10) days of his appointment) from a list, jointly prepared by the Board and the Majority Holders, of not more than six (6) investment banking firms of national standing in the United States, of which no more than three (3) may be named by the Board and no more than three (3) may be named by the Majority Holders. The arbitrator may consider, within the ten-day period allotted, arguments from the parties regarding which investment banking firm to choose, but the selection by the arbitrator shall be made in his or her sole discretion from the list of six. The Board and the Majority Holders shall submit their respective valuations and other relevant data to the investment

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banking firm, and the investment banking firm shall, within thirty (30) days of its appointment, make its own determination of the Valuation Amount. The final Valuation Amount for purposes hereof shall be the average of the two Valuation Amounts closest together, as determined by the investment banking firm, from among the Valuation Amounts submitted by the Company and the Majority Holders and the Valuation Amount calculated by the investment banking firm. The determination of the final Valuation Amount by such investment-banking firm shall be final and binding upon the parties.  The Company shall pay all of the fees and expenses of the investment banking firm and arbitrator (if any) used to determine the Valuation Amount. If required by any such investment banking firm or arbitrator, the Company shall execute a retainer and engagement letter containing reasonable terms and conditions, including, without limitation, customary provisions concerning the rights of indemnification and contribution by the Company in favor of such investment banking firm or arbitrator and its officers, directors, partners, employees, agents and affiliates.

“Business Day” means a day other than a Saturday, Sunday or day on which banking institutions in New York are authorized or required to remain closed.

“Common Stock” means the common stock, $0.01 par value per share, of the Company and stock of any other class into which such shares may hereafter have been reclassified or changed.

“Conversion Ratio” with respect to a share of the Series A Preferred Stock means, at any time, a fraction, of which the numerator is the Stated Value of such share, and of which the denominator is the Conversion Price at such time. Initially, each share of Series A Preferred Stock shall convert into twelve (12) shares of Common Stock.

“Fair Market Value” means, as to any security, the twenty (20) day average of the closing prices of such security’s sales on all domestic securities exchanges on which such security may at the time be listed, or, if there have been no sales on any such exchange on any day, the average of the highest bid and lowest ask prices on all such exchanges at the end of such day, or, if on any day such security is not so listed, the average of the representative bid and ask prices quoted in the NASDAQ National Market System, or the Nasdaq SmallCap Market, as of 4:00 P.M., New York City time, on such day, or, if on any day such security is not quoted in the NASDAQ National Market System or the Nasdaq SmallCap Market, the average of the highest bid and lowest ask prices on such day in the domestic over-the-counter market as reported by the National Quotation Bureau, Incorporated, or any similar or successor organization (and in each such case excluding any trades that are not bona fide, arm’s length transactions).  If at any time such security is not listed on any domestic securities exchange or quoted in the NASDAQ National Market System or the domestic over-the-counter market, the “Fair Market Value” of such security shall be the fair market value thereof as determined in accordance with the Appraisal Procedure, using any appropriate valuation method, assuming an arms-length sale to an independent party.  In determining the Fair Market Value of any class or series of Common Stock, a sale of all of the issued and outstanding Common Stock will be assumed, without giving regard to the lack of liquidity of such stock due to any restrictions (contractual or otherwise) applicable thereto or any discount for minority interests and assuming the conversion or exchange of all securities then outstanding that are convertible into or exchangeable for Common

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Stock and the exercise of all rights and warrants then outstanding and exercisable to purchase Common Stock or securities convertible into or exchangeable for shares of Common Stock; provided, however that such assumption will not include those securities, rights and warrants convertible into Common Stock where the conversion, exchange or exercise price per share is greater than the Fair Market Value; provided, further, however, that Fair Market Value shall be determined with regard to the relative priority of each class or series of Common Stock (if more than one class or series exists).  “Fair Market Value” means with respect to property other than securities, the “fair market value” determined in accordance with the Appraisal Procedure.

“Junior Securities” means the Common Stock of the Company and any other class or series of stock or other equity securities of the Company heretofore authorized, ranking junior to the Series A Preferred Stock in respect of rights on liquidation, dissolution and winding up of the affairs of the Company.

“Liquidation” shall be deemed to have occurred if the Company shall (i) commence a voluntary case under the United States bankruptcy laws (as now or hereafter in effect) or any applicable bankruptcy, insolvency or similar law of any other country, or (ii) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of all or substantially all of its property, or (iii) make a general assignment for the benefit of creditors, or (iv) admit in writing its inability, or be generally unable, to pay its debts as they become due, or (v) be adjudicated as bankrupt or insolvent, or (vi) file a petition or take advantage of any other law providing for the relief of debtors, or (vii) acquiesce to, or fail to have dismissed within thirty (30) days, any petition filed against it in any involuntary case under the United States bankruptcy laws, or any applicable bankruptcy, insolvency or similar law of any other country or (viii) take any action for the purpose of effecting any of the foregoing. A Sale Transaction shall not be treated as a Liquidation, but instead shall be subject to the provisions of Section 3 and Section 5.

“Majority Holders” means the holders of more than fifty percent (50%) of the issued and outstanding shares of Series A Preferred Stock.

“Original Issue Date” means the date of the first issuance of any shares of the Series A Preferred Stock regardless of the number of transfers of any particular shares of the Series A Preferred Stock and regardless of the number of certificates which may be issued to evidence such shares of the Series A Preferred Stock.

“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.

“Proposal” means a proposal presented to the holders of the Company’s voting securities at a meeting called for such purpose, among other purposes, for approval of an increase the number of shares of Common Stock authorized to at least 150,000,000, or such other number as may be sufficient to allow for the reservation for issuance of all shares of Common Stock underlying each outstanding security convertible or exercisable for, or exchangeable into, Common Stock.

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“Purchase Agreement” means the Securities Purchase Agreement relating to the Company’s private placement of its securities pursuant to that certain Confidential Private Placement Memorandum dated August 4, 2003 entered into among the Company and the original holders of the Series A Preferred Stock.

“Sale Transaction” means a sale, conveyance or disposition of all or substantially all of the assets of the Company; or the effectuation by the Company of a transaction or series of related transactions in which more than fifty percent (50%) of the voting power of the Company is disposed of or transferred, including without limitation the acquisition by any person or group (as such term is defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) of persons of more than fifty percent (50%) of the voting power of the Company; or a consolidation or merger of the Company with or into any other Person following which the stockholders of the Company immediately prior to such consolidation or merger own less than fifty percent (50%) of the capital stock of the surviving entity immediately after such consolidation of merger.

“Trigger Event” means the failure of the Proposal to be duly approved within 120 days of the final closing of the Company’s private placement of its securities pursuant to that certain Confidential Private Placement Memorandum dated August 4, 2003, provided that each holder of the Series A Preferred Stock as of the record date relating to the Proposal votes in favor of the Proposal.

IN WITNESS WHEREOF, I have executed and subscribed this Certificate and do affirm the foregoing as true under the penalties of perjury this 28th day of August, 2003.

HYPERTENSION DIAGNOSTICS, INC.
By:
Name:	Greg H. Guettler
Its:	President

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EXHIBIT A

NOTICE OF CONVERSION

AT THE ELECTION OF HOLDER

(To be Executed by the Registered Holder
in order to Convert Shares of the Series A Preferred Stock)

The undersigned hereby elects to convert the number of shares of Series A Convertible Preferred Stock (the “Series A Preferred Stock”) indicated below, into the number of shares of Common Stock, par value $.01 per share (the “Common Stock”), of Hypertension Diagnostics, Inc. (the “Company”) indicated below, as of the date written below.  If shares are to be issued in the name of a person other than undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith.  No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.

Conversion calculations:
	Date to Effect Conversion
	Number of shares of Series A Preferred Stock to be Converted
	Number of shares of Common Stock to be Issued
	Applicable Conversion Price
	Signature
	Name of Holder
	Address of Holder

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EXHIBIT B

NOTICE OF CONVERSION AT
THE ELECTION OF THE COMPANY

Hypertension Diagnostics, Inc. (the “Company”) hereby represents and warrants that the conditions precedent to a Company Conversion pursuant to Section 5(a)(ii) of the Certificate of Designation, Preferences and Rights of the Series A Convertible Preferred Stock have been satisfied and therefore hereby notifies the addressee hereof that the Company hereby elects to exercise its right to convert [   ] shares of its Series A Convertible Preferred Stock (the “Series A Preferred Stock”) held by the Holder into shares of Common Stock, par value $.01 per share (the “Common Stock”) of the Company according to the terms hereof, as of the date written below.  No fee will be charged to the Holder for any conversion hereunder, except for such transfer taxes, if any, which may be incurred by the Company if shares are to be issued in the name of a person other than the person to whom this notice is addressed.

Conversion calculations:
	Date to Effect Conversion
	Number of shares of Series A Preferred Stock to be Converted
	Number of shares of Common Stock to be Issued
	Applicable Conversion Price
	Name of Holder
	Address of Holder

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EX-4.2

Exhibit 4.2

SECURITIES PURCHASE AGREEMENT

THIS AGREEMENT is made as of this           day of         , 2003 by and among Hypertension Diagnostics, Inc., a Minnesota corporation (the “Company”) and                                      (“Purchaser”).

RECITALS

WHEREAS, the Company wishes to raise a minimum of One Million Three Hundred Thousand Dollars ($1,300,000) and a maximum of Two Million Three Hundred Thousand Dollars ($2,300,000) in the aggregate from the offer and sale (the “Offering”) of units (each, a “Unit”) to accredited investors as described in the Confidential Private Placement Memorandum dated August 4, 2003 (the “PPM”);

WHEREAS, each Unit has a purchase price of $3.9064 and consists of one (1) share of Series A Convertible Preferred Stock (the “Series A Preferred Stock”), 15.903 shares of Common Stock (the “Common Shares”), and a series of six (6) Purchase Warrants, three (3) of which entitle the holder to acquire Series A Preferred Stock and three (3) of which entitle the holder to acquire Common Stock, forms of which are attached as Exhibit B to this Agreement (the “Warrants”);

WHEREAS, the Warrants are allocated as follows:

A.One nine-month preferred stock purchase warrant permitting the holder to purchase up to one share of the Series A Preferred Stock at an exercise price of $2.04 per share (“Warrant A-1”);

B.One nine-month common stock purchase warrant permitting the holder to purchase up to the number of shares of common stock initially included in the Unit at an exercise price of $0.17 per share (“Warrant A-2”);

C.One eighteen-month preferred stock purchase warrant permitting the holder to purchase up to 80% of one share of the Series A Preferred Stock at an exercise price of $2.64 per share (“Warrant B-1”);

D.One eighteen-month common stock purchase warrant permitting the holder to purchase up to 80% of the number of shares of common stock initially included in the Unit at an exercise price of $0.22 per share (“Warrant B-2”);

E.One sixty-month preferred stock purchase warrant permitting the holder to purchase 70% up to of one share of the Series A Preferred Stock at an exercise price of $3.60 per share (“Warrant C-1”); and

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F.One sixty-month common stock purchase warrant permitting the holder to purchase up to 70% of the number of shares of common stock initially included in the Unit at an exercise price of $0.30 per share (“Warrant C-2”).

WHEREAS, the Company and Purchaser wish to specify in this Agreement the terms on which Purchaser is purchasing the Units;

WHEREAS, in this Agreement, the shares of the Company’s common stock issuable upon conversion of the Series A Preferred Stock are referred to as the “Conversion Shares,” the shares of common stock issuable upon exercise of the Warrants A-2, B-2 and C-2 are referred to as the “Warrant Shares,” the shares of the Series A Preferred Stock issuable upon exercise of the Warrants A-1, B-1 and C-1 are referred to as the “Series A Warrant Shares” (which when properly converted shall result in additional Conversion Shares) and the Conversion Shares, the Warrant Shares and the Series A Warrant Shares are collectively referred to as the “Underlying Shares.”  The Common Shares, Unit, the Series A Preferred Stock, the Warrant, the Conversion Shares, the Warrant Shares and the Series A Warrant Shares are collectively referred to herein as the “Equity Securities.”

NOW, THEREFORE, in consideration of the foregoing and the mutual promises set forth below and for other good and valuable consideration, the parties agree as follows:

1.Sale and Purchase.  Subject to the terms and conditions hereof, the Company agrees to sell to Purchaser, and Purchaser agrees to purchase from the Company at a purchase price of $3.9064 per Unit for a total for all Units purchased of $                   (the “Purchase Price”),                     Units (calculated by dividing the Purchase Price by $3.9064) consisting of:

A.	shares of Series A Preferred Stock**
	**(equal to number of Units purchased)
B.	Common Shares**
	**(equal to 15.903 x shares of Series A Preferred Stock in A above)

C.Warrants as follows:

Warrant A-1 to purchase                                 shares of Series A Preferred Stock**

**(equal to the number of shares of Series A Preferred Stock indicated in A above)

Warrant A-2 to purchase                                 shares of common stock**

**(equal to the number of shares of common shares indicated in B above)

Warrant B-1 to purchase                                 shares of Series A Preferred Stock**

**(equal to 80% of the number of shares of Series A Preferred Stock indicated in A above)

Warrant B-2 to purchase                                 shares of common stock**

**(equal to 80% of the number of shares of common shares indicated in B above)

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Warrant C-1 to purchase                                 shares of Series A Preferred Stock**

**(equal to 70% of the number of shares of Series A Preferred Stock indicated in A above)

Warrant C-2 to purchase                                 shares of common stock

**(equal to 70% of the number of shares of common shares indicated in B above)

2.Closing.  The closing of the sale and purchase of the Units (the “Closing”) by Purchaser shall occur at the date and time that this Agreement is executed by the Company and Purchaser, or on such other date and time as Purchaser and the Company shall agree upon (the “Closing Date”).  At the Closing, the Company shall deliver a stock certificate representing the Common Shares, the Series A Preferred Stock and a proportionate number of the Warrants, and Purchaser shall deliver to the Company a cashier’s check or other immediately available funds for payment of the Purchase Price.

3.Representations and Warranties by Company.  The Company represents and warrants to Purchaser that, as of the date hereof:

3.1Organization, Standing, etc.  The Company, and each of its subsidiaries, if any, is a corporation duly organized, validly existing and in good standing under the laws of the State of Minnesota, and has the requisite corporate power and authority (corporate and other) to own and operate its properties and assets and to carry on its business in all material respects as it is now being conducted.  Except as set forth in Section 5, the Company has the requisite corporate power and authority to issue the Equity Securities and to otherwise perform its obligations under this Agreement.  The Company is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which its ownership or use of property or the nature of the business conducted by it makes such qualification necessary.

3.2Corporate Acts and Proceedings.  The Company has all requisite corporate power and authority to (i) file and perform its obligations under that certain certificate of designation, preferences and rights of the Series A Preferred Stock (the “Certificate of Designation”), (ii) enter into and perform its obligations under that certain registration rights agreement between Purchaser and the Company of even date herewith (the “Registration Rights Agreement”) and this Agreement, the Registration Rights Agreement and the Warrants and (iii) consummate the transactions contemplated hereby and thereby and to issue the Equity Securities, in accordance with the terms hereof and thereof; provided, however, with respect to the foregoing representation the Company cannot issue the Common Shares pursuant to (a) the exercise of the Warrants A-2, B-2 and C-2, or (b) the conversion of the Series A Preferred Stock, until the Proposal (as defined in Section 5) is approved. The execution and delivery of this Agreement, the Registration Rights Agreement and the Warrants by the Company and the consummation by it of the transactions contemplated hereby and thereby (including without limitation, the issuance of the Common Shares, the Series A Preferred Stock and the Warrants and the issuance and reservation for issuance of the Series A Warrant Shares and the Warrant Shares) have been duly authorized by the Company’s board of directors (the “Board”) and no further consent or authorization of the Company (other than the Proposal with respect to the Warrant Shares), its Board, or its shareholders is required. This Agreement has been duly

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executed and delivered by the Company. Upon execution and delivery by the Company of this Agreement, the Registration Rights Agreement and the Warrants and upon execution and filing of the Certificate of Designation, each of such agreements and instruments will constitute a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms except as the enforceability thereof may be limited by the Company’s lack of authorized common stock, bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting the enforcement of creditors’ rights generally, and except for judicial limitations on the enforcement of the remedy of specific enforcement and other equitable remedies.

3.3Issuance of Shares. The Units are duly authorized and, upon issuance in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Company other than those set forth in that certain shareholders agreement of even date herewith (the “Shareholders’ Agreement”) and the Certificate of Designation. The Series A Warrant Shares are duly authorized and reserved for issuance and, upon proper exercise of the Warrants therefor, will be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances and will not be subject to preemptive rights or other similar rights of shareholders of the Company other than as set forth in the Shareholders’ Agreement and the Certificate of Designation.  At such time, if ever, as the Company’s shareholders approve an amendment to the Company’s Articles of Incorporation to increase the number of shares of the Company’s common stock authorized for issuance to a number sufficient to allow for the reservation of all Conversion Shares and the Warrant Shares, the Conversion Shares and the Warrant Shares shall be duly authorized and reserved for issuance upon conversion of the Series A Preferred Stock and/or exercise of the Warrants A-2, B-2, or C-2 in accordance with the respective terms thereof, and upon issuance upon proper conversion or exercise, respectively, of the Series A Preferred Stock and the Warrants, the Conversion Shares and Warrant Shares, will be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances and will not be subject to preemptive rights or other similar rights of shareholders of the Company except as set forth in the Shareholders’ Agreement and the Certificate of Designation.

3.4Acknowledgment of Dilution. The Company understands and acknowledges the potentially dilutive effect to the Common Stock upon the issuance of the Series A Preferred Stock, the Conversion Shares upon conversion of or otherwise pursuant to the Series A Preferred Stock and upon issuance of the Series A Warrant Shares and the Warrant Shares upon exercise of or otherwise pursuant to the Warrants. The Company further acknowledges that its obligation to issue Conversion Shares upon conversion of or otherwise pursuant to the Series A Preferred Stock and Series A Warrant Shares and Warrant Shares upon exercise of or otherwise pursuant to the Warrants in accordance with this Agreement, the Certificate of Designation and the Warrants, is absolute, subject only to the terms and conditions set forth in this Agreement, the Warrant and the Certificate of Designation, regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.

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3.5No Conflicts; Governmental Consents. The execution, delivery and performance of this Agreement, the Registration Rights Agreement and the Warrants by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the filing of the Certificate of Designation and the issuance and reservation for issuance, as applicable, of the Common Shares, Series A Preferred Stock, Conversion Shares (subject to the approval of the Proposal), Series A Warrant Shares and Warrant Shares (subject to the approval of the Proposal) will not (i) conflict with or result in a violation of any provision of the Articles of Incorporation or By-laws, (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license, trademark, trademark license or instrument to which the Company, or any of its subsidiaries, if any, is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to the Company or any of its subsidiaries, if any, or by which any property or asset of the Company or any of its subsidiaries, if any, is bound or affected that if not remedied would have a material adverse effect on the Company.  Neither the Company nor any of its subsidiaries, if any, is in violation of its Articles of Incorporation or By-laws. Other than defaults relating to the Company’s 8% Convertible Notes due March 27, 2005, which defaults shall be waived upon the Closing of that certain Conversion and Voting Agreement dated as of August 1, 2003 (as the term “Closing” is defined therein), neither the Company nor any of its subsidiaries, if any, is in default (and no event has occurred which with notice or lapse of time or both could put the Company or any of its subsidiaries in default) under, and neither the Company nor any of its subsidiaries has taken any action or failed to take any action that would give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its subsidiaries is a party or by which any property or assets of the Company or any of its subsidiaries is bound or affected. The businesses of the Company and its subsidiaries, if any, are not and have not been conducted in violation of any law, ordinance or regulation of any governmental entity that if not remedied would have a material adverse effect on the Company. Except as specifically contemplated by this Agreement and as required under the 1933 Act and any applicable state securities laws, the Company is not required to obtain any consent, approval, qualification, authorization or order of, or registration, designation, declaration or make any filing or registration with, any court, governmental agency, regulatory agency, self regulatory organization or stock market or any third party in order for it to execute, deliver or perform any of its obligations under this Agreement, the Registration Rights Agreement or the Warrants in accordance with the terms hereof or thereof or to issue and sell the Units in accordance with the terms hereof, except the approval of the holders of the Company’s voting securities to amend the Company’s Articles of Incorporation to increase the number of shares of common stock authorized.  Except as required under the 1933 Act, the 1934 Act and for the approval of the holders of the Company’s voting securities to amend the Company’s Articles of Incorporation to increase the number of shares of common stock authorized and the filing of related amended Articles of Incorporation, all consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof. The Company is not in violation of the listing requirements of the OTC Bulletin Board and does not reasonably anticipate that the

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Common Stock will be delisted by the OTC Bulletin Board in the foreseeable future. The Company is unaware of any facts or circumstances that might give rise to any of the foregoing.

3.6Absence of Certain Changes. Since the date of the PPM and except as set forth in any report or filing with the U.S. Securities and Exchange Commission (the “SEC Filings”) or as set forth in the PPM, there has not been:

(a)any material adverse change in the assets, liabilities, financial condition or operating results of the Company except changes in the ordinary course of business, that have not been and are not expected to be, individually or in the aggregate, materially adverse;

(b)any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting the business, properties, or financial condition of the Company (as such business is presently conducted);

(c)any waiver or compromise by the Company of a valuable right or of a material debt owed to it;

(d)any satisfaction or discharge of any lien, claim, or encumbrance or payment of any obligation by the Company, except in the ordinary course of business and that is not material to the business, properties, or financial condition of the Company (as such business is presently conducted);

(e)any material change to a material contract or arrangement by which the Company or any of its assets is bound or subject;

(f) any sale, assignment or transfer of any material patents, trademarks, copyrights, trade secrets or other intangible assets;

(g)receipt of notice that there has been a loss of, or material order cancellation by, any major customer of the Company;

(h)any mortgage, pledge, transfer of a security interest in, or lien, created by the Company, with respect to any of its material properties or assets, except liens for taxes not yet due or payable;

(i)any material loans or guarantees made by the Company to or for the benefit of its employees, holders of Common Stock, officers, or directors, or any members of their immediate families;

(j)any declaration, setting aside, or payment of any dividend or other distribution of the Company’s assets in respect of the Company’s Common Stock, or any direct or indirect redemption, purchase, or other acquisition of any Common Stock by the Company;

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(k)to the best of the Company’s knowledge, any other event or condition of any character that is reasonably likely to materially and adversely affect the business, properties, prospects, or financial condition of the Company (as such business is presently conducted and as it is proposed to be conducted), excluding events or conditions having general effect on businesses in the general economy; or

(l)any arrangement or commitment by the Company to do any of the things described in this subsection 3.6.

4.Representations and Warranties of Purchaser.  Purchaser represents and warrants that:

4.1Lack of Authorized Shares.  Purchaser acknowledges and understands that as a result of the sale and issuance of the Units in the Offering, the Company may not have sufficient authorized shares of common stock to issue the Warrant Shares and Conversion Shares.  Purchaser further acknowledges and understands that the Company will not reserve for issuance or issue the Conversion Shares or the Warrant Shares until such time, if ever, as the Company’s shareholders approve an amendment to the Company’s Articles of Incorporation to increase the number of shares of the Company’s common stock authorized for issuance.  Purchaser hereby waives any claim it may have against the Company that the Units, or any security component thereof, was not validly issued as a result of the Company having insufficient authorized shares of common stock to allow for the issuance of the Warrant Shares and Conversion Shares.

4.2Investment Intent.  The Units being acquired by Purchaser hereunder are being purchased for Purchaser’s own account and not with the view to, or for resale in connection with, any distribution or public offering thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).  Purchaser understands that the Equity Securities have not been registered under the Securities Act or any applicable state laws by reason of their issuance or contemplated issuance in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act and such laws, and that the reliance of the Company and others upon this exemption is predicated in part upon these representations and warranties.  Purchaser further understands that none of the Equity Securities may be transferred or resold without (a) registration under the Securities Act and any applicable state securities laws, or (b) an exemption from the requirements of the Securities Act and applicable state securities laws.

4.3Access to Information; Suitability.

(a)Purchaser has received, has fully reviewed, and is familiar with the PPM, and all exhibits attached thereto;

(b)Purchaser has been provided access by the U.S. Securities and Exchange Commission EDGAR system or by request to the Company for copies of each document incorporated by reference in the PPM and that Purchaser has obtained such documents or requested such copies to the extent such Purchaser desired;

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(c)Purchaser is in a financial position to hold the Units for an indefinite period of time and is able to bear the economic risk and withstand a complete loss of Purchaser ‘s investment in the Units;

(d)Purchaser, either alone or with the assistance of Purchaser’s own professional advisors, has such knowledge and experience in financial and business matters that Purchaser is capable of reading and interpreting financial statements and evaluating the merits and risks of the prospective investment in the Units;

(e)Purchaser has obtained, to the extent Purchaser deems necessary, professional investment advice with respect to the risks inherent in an investment in the Units, and the suitability of an investment in the Units in light of Purchaser’s financial condition and investment needs;

(f)Purchaser believes that the investment in the Units is suitable for Purchaser based upon Purchaser’s investment objectives and financial needs, and Purchaser has adequate means for providing for his or her or its current financial needs and personal contingencies and has no need for liquidity of the investment with respect to the Units;

(g)Purchaser recognizes that: the Company does not have any material revenues; its securities are traded on the OTC Bulletin Board and are subject to the rules relating to “penny stocks”; that the Company has inadequate shares of common stock authorized to allow for the reservation and issuance of the Warrant Shares and Conversion Shares; and that an investment in the Units is not secured by any assets or property of the Company;

(h)Purchaser recognizes that an investment in the Units is highly speculative, illiquid and involves a high degree of risk, including, but not limited to, the risk of inability to successfully market the Company’s product, and the risk of economic losses from operations of the Company, any of which risk could result in the loss of Purchaser’s investment in the Company; and

(i)Purchaser certifies, under penalties of perjury, that the undersigned is NOT subject to the backup withholding provisions of Section 3406(a)(i)(C) of the Internal Revenue Code of 1986, as amended.  (Note: You are subject to backup withholding if: (i) you fail to furnish your Social Security Number or taxpayer identification number herein; (ii) the Internal Revenue Service notifies the Company that you furnished an incorrect Social Security Number or taxpayer identification number; (iii) you are notified that you are subject to backup withholding; or (iv) you fail to certify that you are not subject to backup withholding or you fail to certify your Social Security Number or taxpayer identification number).

4.4Location of Principal Office and Qualification as Accredited Investor.  The state in which Purchaser’s principal office (or domicile, if Purchaser is an individual) is located is as set forth below Purchaser’s name at the end of this Agreement.  Purchaser qualifies

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as an accredited investor within the meaning of Rule 501 under the Securities Act and has completed Exhibit A attached hereto evidencing such status as an accredited investor.  Purchaser has sufficient knowledge and experience in financial and business matters such that Purchaser is capable of evaluating the merits and risks of the investment to be made hereunder by Purchaser.  Purchaser has and has had access to all of the Company’s material books and records, and access to the Company’s executive officers has been provided to Purchaser or to Purchaser’s qualified agents. Further, Purchaser has had an opportunity to ask questions of, and receive answers from, the Company or an agent of the Company concerning the terms and conditions of the purchase of the Units and the business and affairs of the Company, and to obtain any additional information necessary to verify such information as Purchaser considers necessary or advisable in order to form a decision concerning an investment in the Company.

4.5Acts and Proceedings.  This Agreement has been duly authorized by all necessary action on the part of Purchaser, has been duly executed and delivered by Purchaser, and is a valid and binding agreement of Purchaser.

4.6No Brokers or Finders.  No person, firm or corporation has or will have, as a result of any act or omission by Purchaser, any right, interest or valid claim against the Company for any commission, fee or other compensation as a finder or broker, or in any similar capacity, in connection with the transactions contemplated by this Agreement.  Purchaser will indemnify and hold the Company harmless against any and all liability with respect to any such commission, fee or other compensation which may be payable or determined to be payable as a result of the actions of Purchaser in connection with the transactions contemplated by this Agreement.

5.Authorized Common Stock; Meeting of Security Holders.  The Company hereby covenants and agrees to hold a meeting of the holders of its voting securities (the “Meeting”) and solicit proxies for the use at the Meeting for the purpose of allowing the holders of the Company’s voting securities to approve an amendment to the Company’s Articles of Incorporation to increase the number of shares of common stock, $.01 par value, authorized to at least 150,000,000 shares (or such other number as may be sufficient to allow for the reservation for issuance of all shares of Common Stock underlying each outstanding security convertible or exercisable for, or exchangeable into, Common Stock) (the “Proposal”).  The Company may put forth any other proposal at the Meeting as it deems advisable, provided that such other proposal is not incompatible with the Proposal.  The Company and its Board shall recommend approval of the Proposal to the holders of those securities entitled to vote thereon.  The Company shall use its commercially reasonable best efforts to cause the Proposal to be duly and properly approved no later than one hundred and twenty (120) days after the Series A Closing.  Upon approval of the Proposal, the Company shall take all corporate action as is necessary for the due reservation of the Warrant Shares and Conversion Shares.  The Company hereby agrees that if any shares of its authorized common stock remain unsold in the Offering, such shares of authorized common stock shall be reserved for issuance as Conversion Shares.  To the extent the number of shares of authorized common stock unsold are insufficient to allow for the reservation for issuance of all Conversion Shares, the shares of authorized common stock remaining unsold shall be allocated as Conversion Shares pro-rata among the holders of the Series A Preferred Stock in proportion to the full amounts to which the Company would otherwise be required to reserve and then, if any

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shares of authorized common stock remain unallocated, to the holders of the Series A Warrant Shares in proportion to the full amounts to which the Company would otherwise be required to reserve.

6.Notices.  All notices, requests, consents and other communications required or permitted hereunder shall be in writing and shall be personally delivered, mailed first-class postage prepaid, registered or certified mail, or delivered by a nationally recognized overnight courier:

if to the Company:

Hypertension Diagnostics, Inc.

2915 Waters Road, Suite 108

Eagan, MN  55121-1562

Attn:  President

with a copy to:

Lindquist & Vennum P.L.L.P.

4200 IDS Center

80 South Eighth Street

Minneapolis, MN 55402

Attn:  Girard P. Miller

if to Purchaser, to the address set forth under Purchaser’s signature to this Agreement; or to such other address as the Company or Purchaser may specify to the other by written notice, and such notices and other communications shall be treated as being effective or having been given when delivered, if personally delivered, or when received, if sent by mail or courier.

7.Further Agreements of the Parties.   The Company and Purchaser agree to execute and deliver such other documents and take such other acts, as the other party may reasonably request, for the purpose of carrying out the intent of this Agreement.

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

9.Invalidity of Particular Provisions.   The Company and Purchaser agree that the unenforceability or invalidity of any provision or provisions of this Agreement shall not render any other provision or provisions herein contained unenforceable or invalid.

10.Entire Agreement.   This Agreement, including the Exhibits attached hereto and the exhibits to the PPM referenced herein, constitutes the entire agreement of the parties relative to the subject matter hereof and supersedes any and all other agreements and understandings, whether written or oral, relative to the matters discussed herein.

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11.Conflicts.   In the event that there are any inconsistencies between the terms of this

Agreement and the Certificate of Designation, Preferences and Rights of the Series A Preferred Stock or the Warrants, the terms contained in the Certificate of Designation or the Warrants, as the case may be, will control.

12.Miscellaneous.   No provision of this Agreement shall be modified or waived other than by a written instrument that refers to this Agreement and is signed by the party against whom enforcement of the modification or waiver is charged.

13.Representations to Survive Delivery.   The representations, warranties and agreements of the Company and of Purchaser contained in this Agreement will remain operative and in full force and effect and will survive the closing.

14.Governing Law.   This Agreement shall be governed by the internal laws of the State of Minnesota without giving application to the choice of law provisions of that jurisdiction.  Any and all actions brought by one party against any another party concerning the terms and provisions of this Agreement shall be venued in State Court in Hennepin County, Minnesota or Federal Court located in Minneapolis, Minnesota and all parties agree to submit to the jurisdiction of such courts and waive any claim or defense that such forums are inconvenient.

[Signature Page to Securities Purchase Agreement to Follow]

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[Signature Page to Securities Purchase Agreement]

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

HYPERTENSION DIAGNOSTICS, INC.

By

Greg H. Guettler, President

PURCHASER:

Signature

Name [typed or printed]

Address:

State of Domicile or Principal office

(if different than above)

Telephone Number

SSN or TIN:

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EXHIBIT A

STATUS AS AN ACCREDITED INVESTOR

Status as an “Accredited Investor”.  Purchaser is (check ALL that apply):

o(i)A natural person whose individual net worth (assets less liabilities), or joint net worth with his or her spouse, exceeds $1,000,000.

o(ii)A natural person whose individual income was in excess of $200,000, or whose joint income with his or her spouse was in excess of $300,000, in each of the two most recent years, and who has a reasonable expectation of reaching the same income level for the current year.

o(iii)A director or an executive officer of the Company.

o(iv)A bank, insurance company, registered investment business development company, small business investment company or employee benefit plan.

o(v)A savings and loan association, credit union, or similar financial institution, or a registered broker or dealer.

o(vi)A private business development company.

o(vii)An organization described in Section 501(c)(3) of the Internal Revenue Code with assets in excess of $5,000,000.

o(viii)A corporation, Massachusetts or similar business trust, or partnership with assets in excess of $5,000,000.

o(ix)A trust with assets in excess of $5,000,000.

o(x)An entity in which all of the equity owners are accredited investors.  Also check the item(s) [(i)-(ix)] that apply to the equity owners.  [This item is not available to an irrevocable trust.]

o(xi)A self-directed IRA, Keogh, or similar plan of which the individual directing the investments qualifies as an “accredited investor” in one or more of items (i)-(x) above.  Also check the item(s) [(i)-(x)] that apply to the individual.

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EXHIBIT B

Form of Common Stock Purchase Warrants and Form of Preferred Stock Purchase Warrant

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EX-4.3

Exhibit 4.3

VOTING AGREEMENT

THIS VOTING AGREEMENT (this “Agreement”), dated as of August     , 2003, is entered into by and among the holders of shares of the Company’s Series A Convertible Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”), identified as “Series A Investors” on Schedule A attached hereto, and or those persons who hereafter become parties to this Agreement in accordance with Section 3 (each, an “Investor, and collectively, the “Investors”), with respect to the Series A Convertible Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”) and common stock, par value $0.01 per share (the “Common Stock”) of Hypertension Diagnostics, Inc., a Minnesota corporation (the “Company”).

RECITALS

WHEREAS, as part of the transactions contemplated by the Securities Purchase Agreement, dated as of August      , 2003 (the “Securities Purchase Agreement”), by and among the Company and the Investors, the Investors are purchasing an aggregate of 588,773 shares of Series A Preferred Stock and 9,363,297 shares of Common Stock;

WHEREAS, the Investors desire to enter into this Agreement for the purpose of governing certain aspects of the Investors’ relationships with each other; and

WHEREAS, it is in the best interests of the Investors that such aspects of their relationships be so governed.

NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein and intending to be legally bound the parties hereto hereby agree as follows:

AGREEMENT

1.             Voting Agreement.

(a)           Number of Directors.  Whenever the holders of any class of Stock shall be entitled to Vote, each Investor shall Vote all shares of Stock held by such Investor to cause and maintain a board of directors (the “Board”) composed of seven (7) members. For purposes of this Agreement, “Vote” shall mean (i) to cast a ballot, or to otherwise indicate approval or disapproval of any matter at any meeting of holders of Stock and at any adjournment or postponement thereof and (ii) to act by written consent in lieu of any meeting of holders of Stock. “Stock” shall mean shares of Common Stock, preferred stock and any other class of equity securities of the Company and shall include any shares of Common Stock issuable upon exercise, exchange or conversion of securities exercisable or exchangeable for or convertible into shares of Common Stock.  Each share of Common Stock shall count as one share of Stock, each share of preferred stock shall count as a number of shares of Stock equal to the number of shares

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of Common Stock into which such share of preferred stock is then convertible and each share of any other class of equity securities of the Company constituting Stock shall count as a number of shares of Stock equal to the number of shares of Common Stock into which such share of Stock is then convertible, exchangeable or exercisable, as the case may be.

(b)           Composition of Board.  Whenever the holders of any class of Stock shall be entitled to Vote or will Vote shares of Stock for the election of directors, each Investor shall Vote all shares of Stock held by such Investor to cause and maintain the election to the Board the four (4) directors nominated by Mark N. Schwartz (the “Series A Directors”), one (1) of whom shall be designated by Mr. Schwartz as the Chairman of the Board of the Company.  The initial Series A Directors shall be Mark N. Schwartz, Larry Leitner, Alan Stern and Dr. Steven Gerber.  Mr. Schwartz initially shall be Chairman of the Board.  In addition, each Investor shall Vote all shares of Stock held by such Investor, at the meeting of shareholders at which the Capital Stock Proposal (as hereinafter defined) is first presented, to cause the election of Greg H. Guettler (“Guettler”) to the Board and shall continue to Vote such shares to cause Guettler to remain a member of the Board for the duration of his term. Furthermore, each Investor shall Vote all shares of Stock held by such Investor at such meeting at which Jay N. Cohn (“Cohn”) is nominated to the Board to cause the election of Cohn to the Board and shall continue to Vote such shares to cause Cohn to remain a member of the Board for the duration of his term.  Each Investor shall further Vote all shares of Stock held by such Investor to maintain the presence of Guettler, Cohn and Kenneth W. Brimmer (“Brimmer”) on the Board through the balance existing as of the date hereof of their respective terms.  Notwithstanding the foregoing, the Investors’ obligation to Vote their shares of Stock in favor of Guettler, Brimmer or Cohn as aforesaid shall terminate with respect to such person, if such person is convicted of any felony, any violation of any federal or state securities law, engages in intentional or grossly negligent conduct in the performance of his duties, or breaches his fiduciary duty to the Company as determined by seventy-five percent (75%) of the Board.

(c)           Removal.  Each director designated pursuant to this Section 1 may at any time be removed, with or without cause, by the party or parties that designated such director and shall be replaced by some other person designated by such party or parties.  Additionally, in the event a director resigns or otherwise vacates his or her seat on the Board, the party which designated such director may designate a new person to fill such vacancy.

(d)           Replacement.  If any incumbent director dies, becomes incapacitated from serving on the Board, or retires, resigns or is removed from the Board, each of the parties hereto agrees to vote his, her or its Stock and to take all necessary corporate and other action within his, her or its control to ensure that as soon as reasonably practical and, if necessary to give effect to this Section 1, prior to the next regularly scheduled meeting date of the Company’s shareholders, the number of members of the Board which the Investors have designated at all times corresponds to this Section 1.  Such corporate and other action may include, without limitation, either the removal of one (1) or more incumbent directors or the election of one or more additional directors.

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(e)           Increase in Authorized Capital Stock.  Whenever the holders of any class of Stock shall be entitled to Vote or will Vote shares of Stock for the amendment to the Company’s Articles of Incorporation to increase the number of shares of common stock authorized to at least 150,000,000  or such other number as may be sufficient to allow for the reservation for issuance of all shares of Common Stock underlying each outstanding security convertible or exercisable for, or exchangeable into, Common Stock (the “Capital Stock Proposal”), each Investor shall Vote all shares of Stock held by such Investor for the approval of the Capital Stock Proposal.

2.             Termination.  Notwithstanding anything herein to the contrary, this Agreement shall terminate upon the earlier of (i) the date the Investors no longer own any shares of Stock, or (ii) forty-eight (48) months from the date hereof.

3.             Transfers of Stock, Legends.  No Investor shall sell, convey, dispose, transfer or encumber any shares of Series A Preferred Stock or Common Stock unless the transferees thereof agree in writing to be bound by the terms of this Agreement.  Any attempted transfer in violation of this Section 3 shall be void ab initio, and shall be of no force or effect.  All certificates representing any shares of Common Stock and Series A Preferred Stock subject to the provisions of this Agreement shall have endorsed thereon a legend to substantially the following effect:

“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO, AND MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH, AN AGREEMENT DATED AS OF AUGUST     , 2003 AMONG THE HOLDER OF THESE SECURITIES AND CERTAIN OTHER HOLDERS OF THE COMPANY’S STOCK, WHICH INCLUDES RESTRICTIONS ON THE VOTING THEREOF, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.”

4.             Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective legal representatives, successors and assigns.

5.             Governing Law. This Agreement shall be governed by the laws of the State of California, without reference to conflict of laws principles.

6.             Notices. All notices, demands or other communications given hereunder shall be in writing and shall be deemed to have been delivered as of actual personal delivery or as of the third business day (excluding Saturdays) after mailing by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows (until otherwise changed pursuant to this Section 6):

If to the Investors, to:

See the Exhibits attached hereto for individual information pertaining to each Investor.

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with copies to:

Liner Yankelevitz Sunshine & Regenstreif

1100 Glendon Avenue

14^th Floor

Los Angeles, California  90024

Attn: Joshua Grode, Esq.

7.             Ownership.  Each of the Investors represents and warrants that (a) such Investor now owns the shares of Stock, as set forth on Schedule B, free and clear of liens or encumbrances, and has not, prior to or on the date of this Agreement, executed or delivered any proxy or entered into any other voting agreement or similar arrangement other than one which has expired or terminated prior to the date hereof, and (b) such Investor has full power and capacity to execute, deliver and perform this Agreement, which has been duly executed and delivered by, and evidences the valid and binding obligation of, such Investor enforceable in accordance with its terms.

8.             Further Action.  If and whenever any of the shares of Stock held by Investors are sold, the selling Investor or the personal representative of such Investor shall do all things and execute and deliver all documents and make all transfers, and cause any transferee of such Investor’s Stock to do all things and execute and deliver all documents, as may be necessary to consummate such sale consistent with this Agreement.

9.             Severability.  In the event that one or more of the provisions of this Agreement should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.

10.           Successors.  This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors, assigns, administrators, executors and other legal representatives.

11.           Additional Shares.  In the event that subsequent to the date of this Agreement any shares or other securities are issued on, or in exchange for, any of the Investor’s Stock by reason of any stock dividend, stock split, combination of shares, reclassification or the like, such shares or securities shall be deemed to be governed by this Agreement.

12.           Counterparts.  This Agreement may be executed in one or more counterparts, each of which will be deemed an original but all of which together shall constitute one and the same agreement.

13.           Waiver.  No waivers of any breach of this Agreement extended by any party hereto to any other party shall be construed as a waiver of any rights or remedies of any other party hereto or with respect to any subsequent breach.

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14.           Specific Performance.  It is agreed and understood that monetary damages would not adequately compensate an injured party for the breach of this Agreement by any other party, that this Agreement shall be specifically enforceable, and that any breach or threatened breach of this Agreement shall be the proper subject of a temporary or permanent injunction or restraining order.  Further, each party hereto waives any claim or defense that there is an adequate remedy at law for such breach or threatened breach.

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

16.           Entire Agreement.  This Agreement constitutes the full and entire understanding and agreement between the parties regarding the matters set forth herein, and supersedes any and all other written or oral agreements existing between the parties hereto, which agreements are expressly canceled.

IN WITNESS WHEREOF, and intending to be bound thereby, the parties hereto have executed this Agreement as of the date first written above.

INVESTORS:

5

Schedule A

Investors

6

Schedule B

Stock

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EX-4.4

Exhibit 4.4

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this “Agreement”) is made and entered into as of                          , 2003, among Hypertension Diagnostics, Inc., a Minnesota corporation (the “Company”), and each person executing a counterpart signature page hereto (referred to herein as a “Purchaser” and collectively as the “Purchasers”).

This Agreement is made pursuant to the Securities Purchase Agreements (the “Purchase Agreements”) between the Company and each Purchaser relating to the private placement offering (the “Offering”) described in the Company’s Confidential Private Placement Memorandum dated August 4, 2003.

The Company and the Purchasers hereby agree as follows:

1.Definitions

Capitalized terms used and not otherwise defined herein shall have the meanings given such terms in the Purchase Agreements.  As used in this Agreement, the following terms shall have the following meanings:

“Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls or is controlled by or under common control with such Person.  For the purposes of this definition, “control,” when used with respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms of “affiliated”, “controlling” and “controlled” have meanings correlative to the foregoing.

“Business Day” means a day other than a Saturday, Sunday or day on which banking institutions in New York are authorized or required to remain closed.

“Commission” means the U.S. Securities and Exchange Commission.

“Common Stock” means the common stock, $0.01 par value per share, of the Company issued to the Purchasers pursuant to the Purchase Agreements and stock of any other class into which such shares may hereafter have been reclassified or changed.

“Common Warrants” means the Company’s common stock purchase warrants issued to the Purchasers pursuant to the Purchase Agreements.

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

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

“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).

“Person” means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, incorporated organization, association, corporation, institution, public benefit corporation, government (whether federal, state, country, city, municipal or otherwise, including, without limitation, any instrumentality, division, agency, body or department thereof) or other entity any kind.

“Preferred Warrants” means the Company’s Series A Preferred Stock purchase warrants issued to the Purchasers pursuant to the Purchase Agreements.

“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 a prospectus or prospectuses included in a 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 a Registration Statement, and all other amendments and supplements to such prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such prospectus.

“Registrable Securities” means the Underlying Shares and the Common Stock.

“Registration Statement” means any registration statement filed by the Company with the Commission for a public offering and sale of the Registrable Securities (other than (i) a Registration Statement on Form S-8 or Form S-4, or their successors, or any other form for a similar limited purpose, or (ii) any registration statement covering only securities proposed to be issued in exchange for securities or assets of another corporation), including (in each such case) the Prospectus, amendments and supplements to such 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 such registration statement.

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule 144 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 144.

“Series A Preferred Stock” means the shares of Series A Convertible Preferred Stock, par value $0.01 per share, of the Company created pursuant to the Certificate of Designation, Preferences and Rights of the Series A Convertible Preferred Stock and issued to the Purchasers

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pursuant to the Purchase Agreements or issuable upon exercise of the Preferred Warrants, or issuable upon exercise of the Common Warrants in accordance with the terms thereof.

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

“Underlying Shares” means the shares of the Company’s common stock (a) issuable upon proper conversion of the Series A Preferred Stock (b) issuable upon proper exercise of the Common Warrants and (c) issuable upon proper conversion of the Series A Preferred Stock acquired through the proper exercise of the Preferred Warrants.

2.Registration.

(a)Commencing one hundred and twenty (120) days following the termination of the Offering and continuing for a period of forty-eight (48) consecutive months thereafter, the holders of a majority of the Series A Preferred Stock may demand on the same Registration Statement a registration under the Securities Act of all of the Registrable Securities.  The Company shall, as expeditiously as possible, prepare and file with the Commission a Registration Statement with respect to the Registrable Securities and use its best efforts to cause the Registration Statement to become effective and to remain effective for the Applicable Period (as defined below) to enable the resale of the Registrable Securities in accordance with the method or methods of distribution reasonably requested by Purchasers and disclosed in the Registration Statement (the “Demand Registration”).  The Company shall not include in any Demand Registration any securities which are not Registrable Securities without the written consent of the Holders of a majority of the Registrable Securities to be included in such registration; provided, however, that the Company may include in the Demand Registration (i) up to 300,000 shares of the Company’s common stock issued to HRI Consultants, a division of Homeowner’s Realty, Inc. (“HRI”) in connection with that certain Consulting Agreement (the “Consulting Agreement”), dated as of June 21, 2002, by and between the Company and HRI, and (ii) up to 37,500 shares of the company’s common stock issued or issuable in connection with the Common Stock Purchase Warrant, dated as of September 30, 2002, issued to HRI in connection with the Consulting Agreement, and (iii) up to 62,500 shares of the Company’s common stock issued or issuable in connection with the Common Stock Purchase Warrant, dated as of December 31, 2002, issued to HRI in connection with the Consulting Agreement.  A registration shall not count as the Demand Registration (A) until the Registration Statement filed in connection with such Demand Registration has become effective, and (B) if each of the Holders is not able to register and offer for sale all of the Registrable Securities requested by such Holders to be included in such registration.

(b)Whenever the Company proposes to file a Registration Statement, prior to such filing it shall give written notice to each Holder of its intention to do so, and upon the written request of any Holder given within twenty (20) days after the Company provides such notice (which request shall state the intended method of disposition of such Underlying Shares), the Company shall cause all Registrable Securities which the Company has been requested to register to be registered under the Securities Act to the extent necessary to permit their sale or other disposition in accordance with the reasonable intended methods of distribution specified in the request of such Holder(s) (the “Piggyback Registration”).  In connection with any Demand Registration or an offering under this Section 2(b), the Company shall not be required to include any Registrable

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Securities in such underwriting unless the holders thereof accept the terms of the underwriting as agreed upon between the Company and the underwriters and then only in such quantity as will not, in the opinion of the underwriters, jeopardize the success of the offering by the Company.  If in the opinion of the managing underwriter the registration of all, or part of, the Registrable Securities which the Holders have requested to be included would materially and adversely affect such public offering, then the Company shall be required to include in the underwriting subject to the priority provisions of Sections 2(c) or (d) as applicable, only that number of shares of Registrable Securities which the managing underwriter believes may be sold without causing such adverse effect.  In the event of such a reduction in the number of shares to be included in the underwriting, the Holders of who have requested registration shall participate in the underwriting pro rata based upon their total ownership of Registrable Securities (or in any other proportion as agreed upon by such Holders) and if any of such Holders would thus be entitled to include more shares than such Holder requested to be registered, the excess shall be allocated among such other requesting Holders pro rata based on their ownership of Registrable Securities.  No Holder shall be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regarding such Holder, such Holder’s Registrable Securities and such Holder’s intended method of distribution and any other representation required by law.  If any of the Registrable Securities covered by a Demand Registration is to be sold in an underwritten offering, the holders of a majority of the Registrable Securities shall have the right to select the managing underwriter(s) to administer the offering subject to the approval of the Company, which will not be unreasonably withheld.

(c)Priority on Primary Registrations.  If a Piggyback Registration is an underwritten primary registration on behalf of the Company, and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering and/or that the number of shares of Registrable Securities proposed to be included in any such registration would adversely affect the price per share of the Company’s equity securities to be sold in such offering, the Company shall include in such registration (i) first, the securities the Company proposes to sell, (ii) second, the Registrable Securities requested to be included therein by the Holders, pro rata among the Holders of such Registrable Securities on the basis of the number of shares requested to be registered by such Holders, and (iii) third, other securities requested to be included in such registration pro rata among the holders of such securities on the basis of the number of shares requested to be registered by such holders or as such holders may otherwise agree.

(d)Priority on Secondary Registrations.  If a Piggyback Registration is an underwritten secondary registration on behalf of a holder of the Company’s securities other than Underlying Shares, and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering and/or that the number of shares of Registrable Securities proposed to be included in any such registration would adversely affect the price per share of the Company’s equity securities to be sold in such offering, the Company shall include in such registration (i) first the securities requested to be included therein by the holders requesting such registration and the Registrable Securities requested to be included in such registration, pro rata among the holders of such securities on the basis of the number of shares requested to be registered by such holders, and (ii) second, other securities requested to be included in such registration pro

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rata among the holders of such securities on the basis of the number of shares requested to be registered by such holders or as such holders may otherwise agree.

(e)The Company shall not be obligated to register or to keep a Registration Statement effective with respect to any Registrable Securities:  (i) if a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such Registration Statement or, if earlier, when the Applicable Period shall have expired with respect to such securities; (ii) if counsel to the Company reasonably determines they are eligible to be distributed to the public pursuant to Rule 144(k) (or any successor provision) under the Securities Act and, if requested by the Company’s transfer agent in connection with any sale by a Holder of the Registrable Securities, provides a legal opinion to the Company’s transfer agent to such effect;  or (iii) when new certificates for the Registrable Securities not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent disposition of them shall not require registration or qualification of them under the Securities Act or any similar state law then in force. If the Company shall withdraw any Registration Statement (a “Withdrawn Registration Statement”), the Holders of the Underlying Shares remaining unsold and originally covered by such Withdrawn Registration Statement shall be entitled to an additional Demand Registration which (subject to the provisions of this Section 2) the Company shall use its best efforts to keep effective for a period commencing on the effective date of such Registration Statement and ending on the earlier to occur of the date (i) which is one hundred eighty (180) days from the effective date of such Registration Statement and (ii) on which all of the Registrable Securities covered by such Demand Registration has been sold.  Such additional Demand Registration otherwise shall be subject to all of the provisions of this Agreement.

3.Registration Procedures.  If and whenever the Company is required by the provisions of Section 2 to effect the registration of any Registrable Securities under the Securities Act, the Company will:

(a)prepare and file with the Commission a Registration Statement with respect to such securities, and to cause such Registration Statement to become and to use its best efforts to cause such Registration Statement to remain effective for such period as may be reasonably necessary to effect the sale of the Underlying Shares, not to exceed six (6) months with respect to the Registration Statement described in Section 2(b) and not to exceed two (2) years with respect to the Registration Statement described in Section 2(a) (respectively, the “Applicable Period”);

(b)prepare and file with the Commission such amendments to such Registration Statement and supplements to the prospectus contained therein as may be necessary to keep such Registration Statement effective for the Applicable Period:

(c)furnish to the Holders participating in such registration such reasonable number of copies of the Registration Statement, preliminary prospectus, final prospectus and such other documents as such Holders may reasonably request in order to facilitate the public offering of such securities;

(d)use its best efforts to register or qualify the securities covered by such

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Registration Statement under such state securities or blue sky laws of such jurisdictions as such participating Holders may reasonably request within 20 days following the original filing of such Registration Statement and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller; provided, that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph (d), (ii) subject itself to taxation in any such jurisdiction or (iii) consent to general service of process in any such jurisdiction;

(e)notify the Holders participating in such registration, promptly after it shall receive notice thereof, of the time when such Registration Statement has become effective or that a supplement to any prospectus forming a part of such Registration Statement has been filed;

(f)notify such Holders promptly of any request by the Commission for the amending or supplementing of such Registration Statement or prospectus or for additional information;

(g)prepare and file with the Commission, promptly upon the request of any Holder, any amendments or supplements to such Registration Statement or prospectus which, in the opinion of counsel for such Holder(s) and concurred in by counsel for the Company, is required under the Securities Act or the rules and regulations thereunder in connection with the distribution of the Registrable Securities by such Holder;

(h)prepare and promptly file with the Commission and promptly notify such Holders of the filing of such amendment or supplement to such Registration Statement or prospectus as may be necessary to correct any statements or omissions if, at the time when a prospectus relating to such securities is required to be delivered under the Securities Act, any event shall have occurred as the result of which any such prospectus or any other prospectus as then in effect would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading;

(i)advise such Holders, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceeding for that purpose and promptly use its commercially reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued;

(j)not file any amendment or supplement to such Registration Statement or prospectus to which a majority in interest of the Holders shall have reasonably objected on the grounds that such amendment or supplement does not comply in all material respects with the requirements of the Securities Act or the rules and regulations thereunder, after having been furnished with a copy thereof at least five (5) Business Days prior to the filing thereof, unless in the opinion of counsel for the Company the filing of such amendment or supplement is reasonably necessary to protect the Company from any liabilities under any applicable federal or state law and such filing will not violate applicable law; and

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(k) at the request of any Holder, furnish on the effective date of the Registration Statement: (i) opinions, dated such effective date, of counsel representing the Company for the purposes of such registration, addressed to the Holder or Holders making such request, covering such matters as such Holder or Holders may reasonably request, in which opinion such counsel shall state (without limiting the generality of the foregoing) that (A) the Registration Statement has become effective under the Securities Act; (B) to the best of such counsel’s knowledge, no stop order suspending the effectiveness thereof has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the Securities Act; (C) the Registration Statement complies as to form in all material respects with the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder (except that such counsel need express no opinion as to financial statements contained therein); (D) to the best of the knowledge of such counsel, the Registration Statement does not contain any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading (except that such counsel need express no opinion as to financial statements contained therein); (E) the description in the Registration Statement of legal and governmental proceedings and contracts are accurate and fairly present the information required to shown; and (F) such counsel does not know of any legal or governmental proceedings, pending or threatened, required to be described in the Registration Statement which are not described as required nor of any contracts or documents or instruments of the character required to be described in the Registration Statement or to be filed as exhibits to the Registration Statement, which are not described or filed as required; and (ii) letters, dated such effective date, from the independent certified public accountants of the Company, addressed to the Holder or Holders making such request, covering such matters as such Holder or Holders may reasonably request, in which letters such accountants shall state (without limiting the generality of the foregoing) that they are independent certified public accountants within the meaning of the Securities Act and that in the opinion of such accountants the financial statements and other financial data of the Company included in the Registration Statement complies in all material respects with the applicable accounting requirements of the Securities Act;

(l)in the case of an underwritten offering, enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the Holders of a majority of the Registrable Securities being sold or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities;

(m)use its best efforts to cause all such Registrable Securities to be listed on each securities exchange on which securities of the same class issued by the Company are then listed or, if no such similar securities are then listed, on Nasdaq or the OTCBB as selected by the Company;

(n)provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such Registration Statement;

(o)provide a CUSIP number for all Registrable Securities, not later than the effective date of such Registration Statement.

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4.Registration Expenses.  With respect to the inclusion of Registrable Securities in a Registration Statement pursuant to Section 2, the Company shall bear all of the fees and expenses including without limitation the following fees, costs and expenses: all registration, filing and NASD fees, printing expenses, prospectus and other information distribution costs, fees and disbursements of counsel and accountants for the Company, all internal Company expenses and all legal fees and disbursements and other expenses of complying with state securities or blue sky laws of any jurisdictions in which the securities to be offered are to be registered or qualified.  In addition, the Company shall pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance and the expenses and fees for listing the securities to be registered on each securities exchange on which they are to be listed. Fees and disbursements of counsel and accountants for the Holders, underwriting discounts and commissions and transfer taxes for Holders and any other expenses incurred by the Holders not expressly included above shall be borne by such Holders.  The obligation of the Company to bear the expenses described in this Section and to reimburse the Holders for the expenses described in this Section shall apply irrespective of whether a registration, once properly demanded, if applicable, becomes effective, is withdrawn or suspended, is converted to another form of registration and irrespective of when any of the foregoing shall occur.

5.Registration of Series A Preferred Stock.  If within one hundred and twenty (120) days following the termination of the Offering, the Company’s shareholders do not duly approve an increase in the number of authorized shares of Common Stock to one hundred and fifty million (150,000,000) or such other number as may be sufficient to allow for the reservation for issuance of all shares of Common Stock underlying each outstanding security convertible or exercisable for, or exchangeable into, Common Stock, then the definition in this Agreement of “Registrable Securities” shall automatically include for all purposes the Series A Preferred Stock.  In the event the Series A Preferred Stock receive the rights as set forth in this paragraph, the Holders of the Registrable Securities shall be entitled to one (1) additional Demand Registration pursuant to and in accordance with the terms of this Agreement including without limitation Section 3 and 4.

6.Indemnification.

(a)Indemnification by the Company.  The Company shall, notwithstanding any termination of this Agreement, defend, indemnify and hold harmless each Holder, the officers, directors, agents, investment advisors 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 any Registration Statement, any Prospectus or any form of prospectus covering the Registrable Securities or in any amendment or supplement thereto or in any preliminary prospectus covering the Registrable Securities, 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 such untrue or alleged untrue statement or omissions or alleged omission are

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based solely upon information regarding such Holder or such Holder’s proposed method of distribution of the Registrable Securities furnished to the Company by such Holder for use therein.  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 controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses (as determined by a court of competent jurisdiction in a final judgment not subject to appeal or review) arising out of or based upon any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, or any form of prospectus covering the Registrable Securities or in any amendment or supplement thereto or in any preliminary prospectus covering the Registrable Securities, or arising out of or based upon any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading to the extent, but only to the extent, that such untrue statement or omission is contained in any written information so furnished by such Holder to the Company for the express inclusion in such Registration Statement or such Prospectus and that such information was reasonably relied upon by the Company for use in such Registration Statement, such Prospectus or such form of prospectus. 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.

(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 promptly shall notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall 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 adversely 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; or (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 have been advised by counsel that a 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 Indemnifying Party shall not

9

have the right to assume the defense thereof and such counsel shall be at the expense of the Indemnifying Party); provided that if more than one Indemnified Party is seeking indemnification with respect to the same Proceeding, the Indemnifying Party shall not be required to pay for more than one separate counsel for all such Indemnified Parties as a group.  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.

(d)Contribution.  If a claim for indemnification under Section 6(a) or 6(b) is unavailable to an Indemnified Party because of a failure or refusal of a governmental authority to enforce such indemnification in accordance with its terms (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 Section 6(c), 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 6(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 6(d), the Purchaser shall not be required to contribute, in the aggregate, any amount in excess of the amount by which the proceeds actually received by the Purchaser from the sale of the Registrable Securities to the Proceeding exceeds the amount of any damages that the Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.  No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

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.

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7.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 any party of any of the provisions of this Agreement and hereby further agree that, in the event of any action for specific performance in respect of such breach, each of the Company and each Holder shall waive the defense that a remedy at law would be adequate.

(b)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 the Holders of a majority of the then outstanding shares of the Registrable Securities.  Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders and that does not directly or indirectly affect the rights of other Holders may be given by Holders of at least a majority of the Registrable Securities to which such waiver or consent relates; provided, however, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the immediately preceding sentence.

(c)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: (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 4:30 p.m. (Central Time) on a Business Day; (ii) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in the Purchase Agreements later than 4:30 p.m. (Central Time) on any date and earlier than 11:59 p.m. (Central Time) on such date; (iii) the Business Day following the date of mailing, if sent by nationally recognized overnight courier service; or (iv) upon actual receipt by the party to whom such notice is required to be given.

If to the Company:	Hypertension Diagnostics, Inc.
	2915 Waters Road, Suite 108
	Eagan, MN 55121-1562
	Attn:     President
	Fax:      (651) 687-0485

With copies to:	Lindquist & Vennum P.L.L.P.
	4200 IDS Center
	80 South Eighth Street
	Minneapolis, MN 55402
	Attn:     Girard P. Miller
	Fax:      (612) 371-3207

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If to the Purchasers: To the address of record for each

or such other address as may be designated in writing hereafter, in the same manner, by such Person.

(d)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.  The Company may not assign its rights or obligations hereunder without the prior written consent of each Holder.  A Purchaser may assign its rights or obligations hereunder only in accordance with Section 6(e).

(e)Assignment of Registration Rights.  The rights of each Purchaser hereunder, including the right to have the Company register for resale the Registrable Securities in accordance with the terms of this Agreement, shall be freely assignable by the Purchaser to any assignee or transferee of all or a portion of the shares of the Series A Preferred Stock or Registrable Securities , provided that no Series A Preferred Stock, Preferred Warrants, Common Warrants, Common Stock or Underlying Shares may be assigned or transferred without registration under the Securities Act and any applicable state securities laws, or an exemption from the requirements of the Securities Act and applicable state securities laws and further provided that: (i) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (A) the name and address of such transferee or assignee, and (B) the securities with respect to which such registration rights are being transferred or assigned; (ii) at or before the time the Company receives the written notice contemplated by clause (i) of this Section, the transferee or assignee agrees in writing with the Company to be bound by all of the provisions of this Agreement; and (v) such transfer shall have been made in accordance with the applicable requirements of the Purchase Agreements.  The rights to assignment shall apply to the Purchaser’s (and to subsequent) successors and assigns.

(f)Counterparts.  This Agreement may be executed in any number of counterparts, each of which when executed and delivered 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.

(g)Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota, without regard to principles of conflicts of law. Any and all actions brought by one party against any other party concerning the terms and provisions of this Agreement shall be solely venued in State Court in Hennepin County, Minnesota or Federal Court located in Minneapolis, Minnesota and all parties agree to submit to the jurisdiction of such courts and waive any claim or defense that such forums are inconvenient.

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

(i)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 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.

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

(k)Shares Held by The Company and its Affiliates.  Whenever the consent or approval of Holders of a specified percentage of the Registrable Securities is required hereunder, Registrable Securities held by the Company or its Affiliates (other than the Purchasers or transferees or successors or assigns thereof if such Persons are deemed to be Affiliates solely by reason of their holdings of such Registrable Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage.

(l)Stockholder Representations.  Each Holder represents and warrants that this Agreement has been duly authorized, executed and delivered by such Holder and constitutes the valid and binding obligation of such Holder, enforceable against such Holder in accordance with its terms, subject to bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium and other similar laws now or hereafter in effect relating to or affecting creditors’ rights generally and the rights of creditors of insurance companies generally.

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

HYPERTENSION DIAGNOSTICS, INC.
By:
Name:	Greg H. Guettler
Its:	President
PURCHASER:
Signature
Name [typed or printed]
Address:
State of Domicile or Principal office
(if different than above)
Telephone Number
SSN or TIN:

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EX-4.5

Exhibit 4.5

HYPERTENSION DIAGNOSTICS, INC.

SHAREHOLDERS’ AGREEMENT

THIS SHAREHOLDERS’ AGREEMENT (this “Agreement”), dated as of                  , 2003, is made by and among Hypertension Diagnostics, Inc., a Minnesota corporation (the “Company”), and the holders of shares of the Company’s Series A Convertible Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”), identified as “Series A Investors” on Schedule A attached hereto or those persons who hereafter become parties to this Agreement in accordance with Section 6 (each, an “Investor,” and collectively, the “Investors”).

RECITALS

WHEREAS, as part of the transactions contemplated by the Securities Purchase Agreement, dated as of                   , 2003 (the “Securities Purchase Agreement”), by and among the Company and the Investors, the Investors are participating in the offering by the Company of a minimum of $1,300,000 and a maximum of $2,300,000 of units, each consisting of one share of the Company’s Series A Convertible Preferred Stock (the “Series A Preferred Stock”), 15.903 shares of the Company’s common stock, $0.01 par value per share (the “Common Stock”) and a series of six (6) Purchase Warrants, three (3) of which entitle the holder to acquire Series A Preferred Stock and three (3) of which entitle the holder to acquire Common Stock;

WHEREAS, the Company and the Investors desire to enter into this Agreement for the purpose of governing certain aspects of the Investors’ relationships with each other and the Company; and

WHEREAS, it is in the best interests of the Company and the Investors that such aspects of their relationships be so governed.

NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein and intending to be legally bound the parties hereto hereby agree as follows:

AGREEMENT

Section 1.Definitions.  As used in this Agreement, the following terms shall have the meanings ascribed to them below.

(a)“Acceptance Period” shall have the meaning ascribed to it in Section 5(a).

(b)“Accepted Number” shall have the meaning ascribed to it in Section 5(b).

(c)“Accepting Investor” shall have the meaning ascribed to it in Section 5(c).

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

(e)“Affiliate” of any Person means any other Person which directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person.  The term “control” (including the terms “controlled by” and “under common control with”) as used with respect to any Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

(f)“Articles” means the Articles of Incorporation of the Company, including any amendments thereto.

(g)“Board of Directors” means the board of directors of the Company.

(h)“Certificate of Designation” means the Certificate of Designation, Preferences and Rights of Series A Convertible Preferred Stock.

(i)“Common Stock” shall have the meaning ascribed to it in the recitals.

(j)“Company Offered Securities” shall have the meaning ascribed to it in Section 4.

(k)“Competitor” shall mean any Person, or an Affiliate of any Person, which directly or indirectly engages in the type of business substantially similar to the type of business in which the Company is engaged

(l)“Excluded Stock” means: (i) any shares of Common Stock issuable upon conversion of shares of Series A Preferred Stock; (ii) options, warrants, Common Stock or other equity securities (x) issued or issuable in connection with the acquisition of another corporation, partnership, limited liability company or other entity or (y) issued or issuable in connection with a collaboration, co-marketing or similar agreement which, in the case of either clause (x) or clause (y), has been approved by the Board of Directors; (iii) Stock outstanding as of the date hereof; (iv) options, warrants, Common Stock or other equity securities issued to a financial institution or lessor in connection with a commercial credit arrangement or an equipment financing, which is approved by the Board of Directors; (v) shares of Common Stock issued or issuable upon exercise of any option or warrant issued to any Person under any management compensation, stock option, stock incentive, equity incentive or employee benefit plan; (vi) shares of Stock issued to the holders of the Company’s 8% Convertible Notes due March 27, 2005 pursuant to an arrangement approved by the Board of Directors; (vii) shares of Stock distributed pro rata to holders of any class of Stock as a class; and (viii) any Stock or any Stock Equivalent issued in an offering registered under the Act that has

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been approved by a majority of the Series A Directors (as hereinafter defined) in which the cash proceeds to the Company would be at least $5 million upon completion of such offering.

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

(n)“First Offer” shall have the meaning ascribed to it in Section 5(a).

(o)“Governmental Entity” means any national, federal, state, municipal, local, territorial, foreign or other government or any department, commission, board, bureau, agency, regulatory authority or instrumentality thereof, or any court, judicial, administrative or arbitral body or public or private tribunal.

(p)“Intellectual Property” means trademarks, service marks, trade names, Internet domain names, designs, logos, slogans, and general intangibles of like nature, together with all goodwill, registrations and applications related to the foregoing; patents and industrial designs (including any continuations, divisionals, continuations-in-part, renewals, reissues, and applications for any of the foregoing); copyrights (including any registrations and applications for any of the foregoing) and all content and information contained on any website; Software; “mask works” (as defined under 17 U.S.C. § 901) and any registrations and applications for “mask works;” technology, trade secrets and other confidential information, know-how, inventions, proprietary processes, formulae, algorithms, models, and methodologies; rights of publicity and privacy relating to the use of the names, likenesses, voices, signatures and biographical information of real persons; in each case used in or necessary for the conduct of the Company’s business as currently conducted or contemplated to be conducted.

(q) “Majority Holders” means the holders of more than fifty percent (50%) of the issued and outstanding shares of Series A Preferred Stock.

(r)“Minimum Threshold” shall mean fifty percent (50%) or more of the Series A Preferred Stock originally issued to the Investors as of the Closing Date (including shares of Common Stock issued upon the conversion thereof), as appropriately adjusted for any stock dividend, stock split, recapitalization or consolidation.

(s)“Non-Responding Holder” shall have the meaning ascribed to it in Section 4(b).

(t)“Offered Shares” shall have the meaning ascribed to it in Section 5(a).

(u)“Offeror” shall have the meaning ascribed to it in Section 5(a).

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(v)“Person” means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, incorporated organization, association, corporation, institution, public benefit corporation, government (whether federal, state, county, city, municipal or otherwise, including, without limitation, any instrumentality, division, agency, body or department thereof) or other entity.

(w)“Preemptive Rights Offer” shall have the meaning ascribed to it in Section 4(a).

(x)“Preemptive Rights Offer Notice” shall have the meaning ascribed to it in Section 4(a).

(y)“Preemptive Rights Transaction” shall have the meaning ascribed to it in Section 4(a).

(z)“Responding Holder” shall have the meaning ascribed to it in Section 4(b).

(aa)“Sale Transaction” means a sale, conveyance or disposition of all or substantially all of the assets of the Company; or the effectuation by the Company of a transaction or series of related transactions in which more than fifty percent (50%) of the voting power of the Company is disposed of or transferred, including without limitation the acquisition by any person or group (as such term is defined in Section 13(d)(3) of the Exchange Act) of persons of more than fifty percent (50%) of the voting power of the Company; or a consolidation or merger of the Company with or into any other Person following which the shareholders of the Company immediately prior to such consolidation or merger own less than fifty percent (50%) of the capital stock of the surviving entity immediately after such consolidation or merger.

(bb)“Securities Purchase Agreement” shall have the meaning ascribed to it in the recitals.

(cc)“Series A Preferred Stock” shall have the meaning ascribed to it in the recitals.

(dd)“Software” means any and all (a) computer programs, including any and all software implementation of algorithms, models and methodologies, whether in source code or object code form, (b) computerized databases and compilations, including any and all data and collections of data, and (c) all documentation, including user manuals and training materials, relating to any of the foregoing.

(ee)“Stock” shall mean shares of Common Stock, preferred stock and any other class of equity securities of the Company and shall include any shares of Common Stock issuable upon exercise, exchange or conversion of securities exercisable or exchangeable for or convertible into shares of Common Stock.  Each share of Common Stock shall count as one share of Stock, each share of preferred stock shall count as a number of shares of Stock equal to the number of shares of Common Stock

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into which such share of preferred stock is then convertible and each share of any other class of equity securities of the Company constituting Stock shall count as a number of shares of Stock equal to the number of shares of Common Stock into which such share of Stock is then convertible, exchangeable or exercisable, as the case may be.

(ff)“Stock Equivalents” means any right, warrant, option or security of the Company which is exercisable or exchangeable for or convertible into, or represents the right to otherwise acquire, directly or indirectly, Stock, whether at the time of issuance or upon the passage of time or the occurrence of some future event.  Each Stock Equivalent shall count as a number of shares of Stock equal to the number of shares of Common Stock into which such Stock Equivalent is then convertible, exchangeable or exercisable.

(gg)“Securities Purchase Agreement” shall have the meaning ascribed to it in the recitals.

(hh)“Subsidiary” means any corporation, association, partnership, limited liability company, joint venture or other business entity at least fifty percent (50%) of the outstanding voting securities of which are at the time owned or controlled, directly or indirectly, by the Company.

(ii)“Third Party” means any Person (other than the Company or an Investor or an Affiliate of an Investor) that is a prospective transferee of Stock from an Investor.

(jj)“Transfer” shall have the meaning ascribed to it in Section 5(a).

(kk)“Unsubscribed Securities” shall have the meaning ascribed to it in Section 4(b).

(ll)“Vote” shall mean (i) to cast a ballot, or to otherwise indicate approval or disapproval of any matter at any meeting of holders of Stock and at any adjournment or postponement thereof and (ii) to act by written consent in lieu of any meeting of holders of Stock.

Section 2.Intentionally Omitted.

Section 3.Preferred Shareholder Approval; Actions by the Company.

(a)So long as any shares of Series A Preferred Stock remain outstanding, the Company shall not, and shall not permit any of its Subsidiaries to, without first obtaining the affirmative Vote of the Majority Holders:

(i) alter or adversely change the powers, preferences or rights given to the Series A Preferred Stock;

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(ii)alter or amend the Certificate of Designation in a manner adverse to the holders of the Series A Preferred Stock;

(iii) authorize or issue (by reclassification or otherwise) any class of equity security having any right, preference or privilege senior to or pari passu with the Series A Preferred Stock with respect to voting, dividend, redemption, conversion or liquidation, or any other rights;

(iv) amend the Articles, bylaws or other charter documents of the Company in a manner adverse to the Series A Preferred Stock;

(v) increase the authorized number of shares of Series A Preferred Stock;

(vi) declare or cause any dividend to be paid to the holders of the Common Stock;

(vii) consummate a Sale Transaction; or

(viii) authorize or cause the repurchase of any of the Company’s equity securities.

(b)From and after the date hereof until the termination of this Agreement as provided herein, the Company covenants and agrees to:

(i)maintain and preserve its corporate existence and all rights, franchises, licenses, Intellectual Property and other authority reasonably deemed adequate by the Company for the conduct of its business; maintain its properties, equipment and facilities in good order and repair; and conduct its business in an orderly manner without voluntary interruption;

(ii)maintain in full force and effect a policy or policies of insurance, including, without limitation, a directors and officers liability insurance policy, issued by insurers of recognized responsibility, insuring it, its directors and officers, its properties and its business against such losses and risks, and in such amounts, as are customary in the case of corporations of established reputation engaged in the same or a similar business;

(iv)maintain a system of internal accounting controls administered in accordance with Section 13(b)(2) of the Exchange Act;

(v)conduct its business in material compliance with all applicable provisions of federal, state, local and foreign law;

(vi)perform and observe all of its obligations to the holders of all of its securities set forth in the Articles;

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(vii)reimburse all directors of the Company for their reasonable out-of-pocket expenses in connection with attending meetings of the Company’s Board of Directors and all committees thereof and all reasonable out-of-pocket expenses otherwise incurred in fulfilling their duties as directors; and

(viii)promptly provide to the Investors (or their respective counsel) copies of all filings made by the Company or any Affiliate with any Governmental Entity in connection with this Agreement, the Securities Purchase Agreement and the transactions contemplated hereby and thereby, except those filings which are made with the U.S. Securities and Exchange Commission via the EDGAR system.

Section 4.Preemptive Rights.

(a)Subject to Section 4(c), in case the Company proposes to issue or sell any Stock or Stock Equivalents of the Company, other than Excluded Stock (collectively, the “Company Offered Securities”) and if the Investors hold the Minimum Threshold, the Company shall, no later than twenty-five (25) days prior to the consummation of such transaction (a “Preemptive Rights Transaction”), give notice in writing of such Preemptive Rights Transaction (the “Preemptive Rights Offer Notice”) to each Investor.  The Preemptive Rights Offer Notice shall describe the proposed Preemptive Rights Transaction, identify the proposed purchaser, and contain an offer (the “Preemptive Rights Offer”) to sell to each Investor, at the same price and for the same consideration to be paid by the proposed purchaser (provided, that, in the event any of such consideration is non-cash consideration, at the election of such Investor to whom the Preemptive Rights Offer is made, such Investor may pay cash equal to the Fair Market Value of such non-cash consideration as determined in accordance with the Certificate of Designation), all or any part of such Investor’s pro rata portion of the Company Offered Securities (which shall be a fraction of the Company Offered Securities determined by dividing the number of shares of outstanding Series A Preferred Stock owned by such Investor by the total number of shares of Series A Preferred Stock issued and outstanding).

(b)If any Investor to whom a Preemptive Rights Offer is made fails to accept (a “Non-Responding Holder”) in writing the Preemptive Rights Offer by the fifteenth (15th) day after the Company’s delivery of the Preemptive Rights Offer Notice, such Non-Responding Holders shall have no further rights with respect to the proposed Preemptive Rights Transaction.  The Company shall then give notice to each Investor who has accepted the Offer (a “Responding Holder”) of the number of Company Offered Securities not subscribed for by the Non-Responding Holders (the “Unsubscribed Securities”) no later than nine (9) days prior to the consummation of the Preemptive Rights Transaction.  If any Responding Holder wishes to purchase the Unsubscribed Securities, such Responding Holder may do so on a pro-rata basis (calculated by dividing the number of shares of outstanding Series A Preferred Stock owned by the Non-Responding Holders by the total number of shares of outstanding Series A Preferred Stock owned by each of the Responding Holders wishing to purchase the Unsubscribed Securities) by indicating in writing to the Company no later than three (3) days prior to

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the consummation of the Preemptive Rights Transaction, the maximum number of Unsubscribed Securities they wish to purchase.  Prior to the consummation of the Preemptive Rights Transaction, the Company will calculate the pro rata portion of the Unsubscribed Securities each Responding Investor is entitled to and will provide notice of the result of the calculation to each Responding Investor.

(c)The rights under this Section 4 shall terminate after the consummation of two (2) Preemptive Rights Transactions, each resulting in net proceeds to the Company of at least Two Million Dollars ($2,000,000).

Section 5.Right of First Refusal.

(a)Subject to the restrictions set forth in Section 6 hereof, if at any time an Investor (the “Offeror”) proposes to sell, transfer or otherwise dispose of, whether voluntarily or involuntarily (a “Transfer”), any shares of Stock to any Third Party, the Offeror shall, before such Transfer, deliver to the Company (with a copy to each Investor) an offer (the “First Offer”) to Transfer such shares of Stock to the Company and the Investors upon the terms set forth in this Section 5.  The First Offer shall state that the Offeror proposes to Transfer shares of Stock and specify the number of shares of Stock (the “Offered Shares”) and the terms (including the purchase price, terms of payment, the identity of the Third Party purchasing such shares and the identity of any Affiliate of such Third Party) of the proposed Transfer.  The First Offer shall remain open and irrevocable for a period of thirty-five (35) days (the “Acceptance Period”) from the date of its receipt by the Company.

(b)The Company may accept the First Offer by delivering to the Offeror and all Investors written notice within fifteen (15) days of receipt of the First Offer, which notice shall state the number (the “Accepted Number”) of Offered Shares the Company desires to purchase.  The Company may exercise its right to purchase any or all of the Offered Shares pursuant to the First Offer.

(c)If the Company does not accept the First Offer or does not exercise its right to purchase all of the Offered Shares pursuant to the First Offer, then (i) the Company shall within fifteen (15) days provide written notice to each Investor specifying the number of shares of Offered Stock that were not subscribed for by the Company exercising its right of first refusal (the “Company Notice”), and (ii) the Investors may on a pro rata basis exercise their rights to purchase any or all of the Offered Shares not purchased by the Company (which shall be a fraction of the Offered Shares determined by dividing the number of shares of outstanding Series A Preferred Stock owned by such Investor by the total number of shares of issued and outstanding Series A Preferred Stock).  Each Investor may accept the First Offer by delivering to the Offeror, the Company and all the other Investors written notice within ten (10) days of receipt of the Company Notice, which notice shall state the maximum number of Offered Shares the Investor desires to purchase (the “Accepting Investor”).  If any Investor to whom a First Offer is made fails to accept in writing the First Offer within ten (10) days of receipt of the Company Notice, the Company shall then give notice to each Accepting Investor of the number of Offered Shares not subscribed for no later than seven (7) days

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prior to the end of the Acceptance Period.  If any Accepting Investor wishes to purchase such unsubscribed Offered Shares, such Accepting Investor may do so on a pro-rata basis (calculated by dividing the number of shares of outstanding Stock owned by such Investor by the total number of shares of Stock issued and outstanding Stock owned by each of the Accepting Investors wishing to purchase the unsubscribed Offered Shares) by indicating in writing to the Company no later than three (3) days prior to the end of the Acceptance Period the maximum number of unsubscribed Offered Shares it wishes to purchase. Prior to the end of the Acceptance Period, the Company will calculate the pro rata portion of the Offered Shares each Accepting Investor is entitled to and will provide notice of the result of the calculation to each Accepting Investor.

(d)The Transfer of Offered Shares to the Company and or the Accepting Investor(s), to the extent the Company and or the Accepting Investor(s) have exercised their rights under this Section 5, shall be made on a business day, as designated by the Offeror, not less than thirty (30) days nor more than sixty (60) days after expiration of the Acceptance Period on the terms and conditions specified in the First Offer, which terms and conditions shall be identical to the terms of the proposed Transfer to the Third Party, provided that if the First Offer provides for the payment of non-cash consideration, the Company or an Investor, as the case may be, at its option may pay the consideration in cash equal to the Board of Directors’ good faith estimate of the present fair market value of the non-cash consideration offered.

(e)If the number of Offered Shares exceeds the Offered Shares with respect to which the Company and or Accepting Investor(s) exercised their rights under this Section 5, the First Offer shall be deemed to be withdrawn with respect to such excess and the Offeror may Transfer such excess Offered Shares on the terms, conditions and purchase price specified in the First Offer (which shall be the same terms, conditions and purchase price available to the Company and or Accepting Investor(s) exercising rights pursuant to this Section 5) to any Third Party within ninety (90) days after expiration of the Acceptance Period, so long as such Third Party agrees in writing to become a party to this Agreement and be bound hereby.  If such Transfer is not made within such 90-day period, the restrictions provided for in this Section 5 shall again become effective.

(f)In the event an Offeror or such Third Party, as the case maybe, shall modify the terms of the proposed Transfer of Offered Shares in any way, the Offeror shall send an amended First Offer to the Company (with a copy to each Investor) and the Acceptance Period shall be extended fifteen (15) days.

(g)Notwithstanding this Section 5, an Investor may transfer Stock to an Affiliate, provided that all Stock owned by the transferring Investor is transferred to such Affiliate and that such Affiliate agrees in writing to be bound by all of the terms and conditions of this Agreement.

(h)Notwithstanding anything to the contrary contained in this Section 5, the right of first refusal contained in this Section 5 shall not apply to any Stock which is registered under the Act and is otherwise freely tradable.

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Section 6.Transfer Restrictions.  Notwithstanding any provision of this Agreement, no Stock shall or may be sold, exchanged, delivered, assigned, bequeathed or gifted, pledged, mortgaged, hypothecated or otherwise encumbered, transferred or permitted to be transferred, or otherwise disposed of, whether voluntarily, involuntarily or by operation of law (including, without limitation, the laws of bankruptcy, intestacy, descent and distribution and succession) (“Transferred”) (a) to a Competitor or (b) unless the Third Party or other person agrees to be bound to the provisions of this Agreement.  In the event that any party hereto should Transfer any Stock in contravention of this Section, such Transfer shall be void, and the Company shall not effect such a Transfer nor shall it treat any alleged Competitor as the holder of any such shares.  Notwithstanding anything to the contrary contained in this Section 6, the transfer restrictions contained in this Section 6 shall not apply to any Stock which is registered under the Act and are otherwise freely tradable.

Section 7.Legend.  Each certificate representing shares of Stock now or hereafter owned by the Investors or any other person who subsequently becomes a party to this Agreement shall be endorsed with the following legend:

“THE SECURITIES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED, PLEDGED, ENCUMBERED, OR OTHERWISE TRANSFERRED EXCEPT IN CONFORMITY WITH THE TERMS OF A SHAREHOLDERS’ AGREEMENT AMONG THE HOLDER (OR THE PREDECESSOR IN INTEREST TO THE HOLDER), THE COMPANY AND CERTAIN OTHER SHAREHOLDERS OF THE COMPANY.  THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE.”

The legend required under this Section 7 shall be removed upon termination of this Agreement in accordance with the provisions of Section 10.

Section 8.Company to Reserve Common Stock.  If and only at such time as the Company’s shareholder approve an amendment to the Company’s Articles of Incorporation to increase the number of shares of common stock authorized to at least 150,000,000 (or such other number as may be sufficient to allow for the reservation for issuance of all shares of Common Stock underlying each outstanding security convertible or exercisable for, or exchangeable into, Common Stock): (a) the Company will at all times reserve and keep available out of its authorized and unissued Common Stock solely for the purpose of issuance upon conversion of the Series A Preferred Stock, free from preemptive rights or any other actual or contingent purchase rights of persons other than the holders of the Series A Preferred Stock, not less than such number of shares of Common Stock as shall be issuable upon the conversion of all outstanding shares of the Series A Preferred Stock; and (b) all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued and fully paid and nonassessable.

Section 9.Amendments.  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 without the prior written consent of the Majority Holders; provided, however,

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that without an Investor’s written consent, no such amendment or waiver shall affect adversely such Investor’s rights hereunder in a discriminatory manner inconsistent with its adverse effects on rights of other Investors hereunder (other than as reflected by the different number of shares held by such Investor); provided, further, that the consent or agreement of the Company shall be required with regard to any termination, amendment, modification or supplement of, or waivers or consents to departures from, the terms hereof, which affect the Company’s obligations hereunder.

Section 10.Termination.  This Agreement shall terminate upon the first to occur of any of the following events:

(a)the consummation of a Sale Transaction;

(b)the execution by the Company of a general assignment for the benefit of creditors or the appointment of a receiver or trustee to take possession of the property and assets of the Company;

(c)the written agreement of the Company and the Majority Holders; or

(d)two (2) years from the date of this Agreement.

Section 11.No Inconsistent Agreement.  Neither the Company nor any Investor shall enter into any agreement with respect to the Stock or Stock Equivalents beneficially owned or held of record by it which is inconsistent with the rights granted to the Investors in this Agreement or otherwise conflicts with the provisions hereof.

Section 12.Notices.  All notices, requests, consents and other communications required or permitted hereunder shall be in writing and shall be hand delivered or mailed postage prepaid by registered or certified mail or transmitted by facsimile transmission (with immediate telephonic confirmation thereafter),

(a)If to the Investor, to the addresses or the facsimile set forth on the counterpart signature pages of this Agreement signed by such Investor:

with a copy to:

Liner Yankelevitz Sunshine & Regenstreif

1100 Glendon Avenue, 14^th Floor

Los Angeles, California  90024

Attn:   Joshua Grode, Esq.

Facsimile No.: (310) 500-3501

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or(b)If to the Company:

Hypertension Diagnostics, Inc.

2915 Waters Road, Suite 108

Eagan, Minnesota 55121-1562

Attn:    President

Facsimile No.: (651) 687-0485

With a copy to:

Lindquist & Vennum P.L.L.P.

4200 IDS Center

80 South Eighth Street

Minneapolis, Minnesota 55402

Attn:    Girard P. Miller

Facsimile No.: (612) 371-3207

or at such other address as the Company or the Investors each may specify by written notice to the others, and each such notice, request, consent and other communication shall for all purposes of this Agreement be treated as being effective or having been given when delivered if delivered personally, upon receipt of facsimile confirmation if transmitted by facsimile, or, if sent by mail, at the earlier of its receipt or seventy-two (72) hours after the same has been deposited in a regularly maintained receptacle for the deposit of United States mail, addressed and postage prepaid as aforesaid.

Section 13.Ownership of Stock.   The Company may treat the Person in whose name any of the Stock is registered on such register as the owner thereof and the Company shall not be affected by any notice to the contrary.  All references in this Agreement to a “holder” of Stock shall mean the Person in whose name such shares are at the time registered on such register.

Section 14.Replacement of Certificates.  Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any certificate representing Stock and, in the case of any such loss, theft or destruction, upon delivery of indemnity reasonably satisfactory to the Company in form and amount or, in the case of any such mutilation, upon surrender of such certificate for cancellation at the office of the Company, the Company at its expense will execute and deliver, in lieu thereof, a new certificate representing Stock of like tenor.

Section 15.Successors and Assigns.   All the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective parties hereto, the successors and permitted assigns of each party hereto and the respective successors of the Company, whether so expressed or not.

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Section 16.Counterparts; Effectiveness.  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, with the same effect as if all parties had signed the same document.  All such counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument.

Section 17.Headings.  The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

Section 18.Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota, without regard to principles of conflicts of law. Any and all actions brought by one party against any other party concerning the terms and provisions of this Agreement shall be solely venued in State Court in Hennepin County, Minnesota or Federal Court located in Minneapolis, Minnesota and all parties agree to submit to the jurisdiction of such courts and waive any claim or defense that such forums are inconvenient.

Section 19.Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.  Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

Section 20.Entire Agreement.  This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein.  This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

Section 21.Specific Performance.  Each party hereto, in addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Agreement.  Each party hereto hereby agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

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Section 22.Waiver of Jury Trial.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

IN WITNESS WHEREOF, this Shareholders’ Agreement has been duly executed by each of the parties hereto as of the date first written above.

HYPERTENSION DIAGNOSTICS, INC.:
By:
Name:	Greg H. Guettler
Title:	President
INVESTORS:

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EX-4.6

Exhibit 4.6

THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, OR APPLICABLE STATE SECURITIES LAW.  THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ASSIGNED OR OTHERWISE DISPOSED OF, AND NO TRANSFER OF THE SECURITIES WILL BE MADE BY THE COMPANY OR ITS TRANSFER AGENT, IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

HYPERTENSION DIAGNOSTICS, INC.,

A Minnesota corporation

PREFERRED STOCK PURCHASE WARRANT

Date of Grant:                  

Warrant No. [A/B/C]    

Hypertension Diagnostics, Inc., a Minnesota corporation (the “Company”), hereby agrees that, for value received,                                                           ,  or its permitted registered assigns (the “Holder”)is entitled, subject to the terms set forth below, to purchase from the Company at any time or from time to time after the date set forth above, and for the term set forth in Section 1 hereof,                               (           ) shares (the “Warrant Shares”) of the fully paid and nonassessable shares of Series A Convertible Preferred Stock, $0.01 par value per share, of the Company, subject to adjustment as provided herein (the “Series A Preferred Stock”) ,at the exercise price of [$2.04/$2.64/$3.60] per share, subject to adjustment as provided herein (the “Exercise Price”).  The term “Warrant” as used herein shall be deemed to include any warrant issued upon transfer or partial exercise of this warrant, unless the context clearly requires otherwise.  This Warrant is being issued pursuant to that certain Securities Purchase Agreement, of even date herewith between the Company and Holder (the “Securities Purchase Agreement”), and in connection with the Shareholders’ Agreement, dated as of August    , 2003, by and among the Company and holders of the Series A Preferred Stock (the “Shareholders’ Agreement”), and the Registration Rights Agreement, dated as of August    , 2003, by and among the Company and holders of the Series A Preferred Stock (the “Registration Rights Agreement”).

1.Term.

The purchase right represented by this Warrant is exercisable, in whole or in part, at any time and from time to time from the Date of Grant through and including the close of business on                           , 20      (the “Expiration Date”).

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2.Exercise of Warrant.

(a)Method of Exercise; Payment; Issuance of New Warrant.  The purchase right represented by this Warrant may be exercised by the Holder, in whole or in part and from time to time, by the surrender of this Warrant (with the notice of exercise form attached hereto as Exhibit A duly executed) at the principal office of the Company, and, except as otherwise provided for herein, by the payment to the Company of an amount equal to the then applicable Exercise Price multiplied by the number of Warrant Shares then being purchased.  The person or persons in whose name(s) any certificate(s) representing shares of Series A Preferred Stock shall be issuable upon exercise of this Warrant shall be deemed to have become the holder(s) of record of, and shall be treated for all purposes as the record holder(s) of, the shares represented thereby (and such shares shall be deemed to have been issued) immediately prior to the close of business on the date or dates upon which this Warrant is exercised if exercised prior to the close of business on such date;  otherwise, the date of record shall be the next business day.  In the event of any exercise of the rights represented by this Warrant, certificates for the shares of Series A Preferred Stock so purchased shall be delivered to the Holder as soon as possible and in any event within thirty (30) days after such exercise and, unless this Warrant has been fully exercised (including without limitation, exercise pursuant to Section 2(b) below), a new Warrant representing the portion of the Warrant Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be issued to the Holder as soon as possible and in any event within such thirty (30)-day period.

(b)Broker Assisted Cashless Right to Convert Warrant into Series A Preferred Stock.  In addition to and without limiting the rights of the Holder under the terms of this Warrant, the Holder shall have the right to convert this Warrant or any portion thereof (the “Conversion Right”) into shares of Series A Preferred Stock as provided in this Section 2(b) at any time or from time to time during the term of this Warrant, by delivering to a broker the notice of exercise form attached hereto as Exhibit A, duly executed, together with Holder’s irrevocable instructions to the Company to deliver the Warrant Shares being exercised (the “Converted Warrant Shares”) to the broker against the broker’s simultaneous payment to the Company of the Exercise Price.  Upon receipt of such documentation, the broker shall sell for Holder’s account such number of shares of stock necessary to satisfy the Exercise Price, including applicable tax and withholding obligations.  When the broker receives the cash proceeds from such sale, the broker will forward such proceeds to the Company against simultaneous delivery by the Company of the Converted Warrant Shares to the broker.

3.Adjustment of Exercise Price and Number of Shares.  The number and kind of securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time upon the occurrence of certain events, as follows:

(a)Adjustments to Exercise Price for Dividends, Reclassifications, etc.  If the Company, at any time while this Warrant is outstanding and unexpired, shall (A) pay a stock dividend or otherwise make a distribution or distributions on shares of its Series A Preferred Stock payable in shares of Series A Preferred Stock, (B) subdivide outstanding shares of Series A Preferred Stock into a larger number of shares, (C) combine outstanding shares of Series A Preferred Stock into a smaller number of shares, (D) issue by reclassification of shares of Series

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A Preferred Stock any shares of capital stock of the Company, or (E) consolidate or merge into another entity (where the Company is not the surviving entity or where there is a change in or distribution with respect to the Series A Preferred Stock), the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Series A Preferred Stock outstanding before such event and of which the denominator shall be the number of shares of Series A Preferred Stock outstanding after such event.  Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination, reclassification or merger.

(b)Notice of Adjustments.  Whenever the Exercise Price or the number of Warrant Shares purchasable hereunder shall be adjusted pursuant to Section 3 hereof, the Company shall make a certificate signed by its chief financial officer setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the Exercise Price and the number of Warrant Shares purchasable hereunder after giving effect to such adjustment, which shall be mailed to the Holder.

4.Fractional Shares.  Unless the Holder specifies otherwise, the Company shall issue fractional shares of Series A Preferred Stock (carried out to three (3) decimal places) upon exercise of this Warrant.  At the option of the Holder, the Holder may require that the Company, instead of issuing any fractional shares of Series A Preferred Stock which would otherwise be issuable upon exercise of this Warrant, pay a cash adjustment in respect of such fractional share in an amount equal to the product of such fraction multiplied by the Fair Market Value (as defined in the Certificate of Designation, Preferences and Rights of Series A Preferred Stock (the “Certificate of Designation”))  of one share of Series A Preferred Stock on the date of exercise.

5.Restrictions on Transferability; Transfer.

(a)Until this Warrant is duly transferred on the books of the Company, the Company may treat the registered holder of this Warrant as absolute owner hereof for all purposes without being affected by any notice to the contrary.

(b)Prior to making any disposition of the Warrant or of any Series A Preferred Stock purchased upon exercise of the Warrant, the Holder shall give written notice to the Company describing briefly the manner of any such proposed disposition.

(c)The Holder shall not make any such disposition until (i) the Company has notified the Holder that, in the opinion of its counsel, registration under the Securities Act of 1933, as amended (the “Act”) is not required with respect to such disposition, or (ii) a registration statement covering the proposed distribution has been filed by the Company and has become effective.  Notwithstanding the foregoing, the Holder may transfer the Warrant to holders of the Series A Preferred Stock.

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(d)The Company agrees that, upon receipt of written notice from the Holder with respect to a proposed disposition, it will use its best efforts, in consultation with the Holder’s counsel, to ascertain as promptly as possible whether or not registration is required, and will advise the Holder promptly with respect thereto, and the Holder will cooperate in providing the Company with information necessary to make such determination.

(e)Transfer of this Warrant is subject to the terms and conditions of the Shareholders’ Agreement and the Registration Rights Agreement. No transfer shall be effective unless the prospective transferee agrees to be bound by, and delivers to the Company an executed counterpart to, each of the Shareholders’ Agreement and the Registration Rights Agreement.

(f)Each successive holder of this Warrant, or of any portion of the rights represented thereby, shall be bound by the terms and conditions set forth herein.

6.Representations and Warranties.  The Company represents and warrants to the Holder as of the Date of Grant as follows:

(a)This Warrant has been duly authorized and executed by the Company and is a valid and binding obligation of the Company enforceable in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and the rules of law or principles at equity governing specific performance, injunctive relief and other equitable remedies;

(b)The rights, preferences, privileges and restrictions granted to or imposed upon the Series A Preferred Stock and the holders thereof are as set forth in the Articles of Incorporation of the Company, as amended to the Date of Grant, and the Certificate of Designation (as so amended, the “Articles”), a true and complete copy of which has been made available to the original holder of this Warrant;

(c)The execution and delivery of this Warrant are not, and the issuance of the Warrant Shares upon exercise of this Warrant in accordance with the terms hereof will not be, inconsistent with the Articles or by-laws of the Company, do not and will not contravene, in any material respect, any governmental rule or regulation, judgment or order applicable to the Company, and do not and will not conflict with or contravene any provision of, or constitute a default under, any indenture, mortgage, contract or other instrument of which the Company is a party or by which it is bound or require the consent or approval of, the giving of notice to, the registration or filing with or the taking of any action in respect of or by, any federal, state or local government authority or agency or other person, except for the filing of notices pursuant to federal and state securities laws, which filings will be effected by the time required thereby; and

(d)There are no actions, suits, audits, investigations or proceedings pending or, to the knowledge of the Company, threatened against the Company in any court or before any governmental commission, board or authority which, if adversely determined, will have a

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material adverse effect on the ability of the Company to perform its obligations under this Warrant.

7.Notices.

(a)All notices under this Warrant shall be in writing and shall be delivered by first class mail, postage prepaid.  Any notice addressed to the Holder shall be delivered to the address designated by the Holder in the Securities Purchase Agreement, as may be changed from time to time upon ten (10) days written notice by the Holder, and any notice addressed to the Company shall be delivered to its principal office.

(b)The Holder shall be entitled to receive a notice from the Company not less than ten (10) days prior to the date on which (a) a record will be taken for the purpose of determining the holders of Series A Preferred Stock entitled to dividends (other than cash dividends) or subscription rights, or (b) a record will be taken (or in lieu thereof, the transfer books will be closed) for the purpose of determining the holders of Series A Preferred Stock entitled to notice of and to vote at a meeting of shareholders at which any capital reorganization, reclassification of shares of Common Stock or Series A Preferred Stock, consolidation, merger, dissolution, liquidation, winding up or sale of substantially all of the Company’s assets shall be considered and acted upon.  The Holder shall also be entitled to receive such as otherwise provided in this Warrant.

8.Reservation of Preferred Stock.  All Warrant Shares that may be issued upon the exercise of the rights represented by this Warrant will, upon issuance pursuant to the terms and conditions herein, be fully paid and nonassessable, and free from all taxes, liens, charges, and pre-emptive rights with respect to the issue thereof.  The Company shall pay all transfer taxes, if any, attributable to the issuance of the Warrant Shares upon the exercise of this Warrant.  During the period within which this Warrant may be exercised, the Company will at all times have authorized, and reserved for the purpose of the issue upon exercise of the purchase rights evidenced by this Warrant, a sufficient number of shares of its Series A Preferred Stock to provide for the exercise of the rights represented by this Warrant.

9.Modification and Waiver.  This Warrant and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought.

10.Binding Effect on Successors.  This Warrant shall be binding upon any corporation succeeding the Company by merger, consolidation or acquisition of all or substantially all of the Company’s assets, and all of the obligations of the Company relating to the Series A Preferred Stock issuable upon the exercise or conversion of this Warrant shall survive the exercise, conversion and termination of this Warrant and all of the covenants and agreements of the Company shall inure to the benefit of the successors and assigns of the Holder.  The Company will, at the time of the exercise or conversion of this Warrant, in whole or in part, upon request of the Holder but at the Company’s expense, acknowledge in writing its continuing obligation to the Holder in respect of any rights to which the Holder shall continue to be entitled after such exercise or conversion in accordance with this Warrant; provided, that the failure of the Holder

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to make any such request shall not affect the continuing obligation of the Company to the Holder in respect of such rights.

11.Lost Warrants or Stock Certificates.  The Company covenants to the Holder that, upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant or any stock certificate and, in the case of any loss, theft or destruction, upon receipt of an executed lost securities bond or indemnity reasonably satisfactory to the Company, or in the case of any such mutilation upon surrender and cancellation of such Warrant or stock certificate, the Company will make and deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate.

12.Descriptive Headings.  The descriptive headings of the several paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant.

13.Governing Law.  The validity, interpretation and performance of this Warrant shall be governed by, and construed in accordance with, the laws of the State of Minnesota applicable to contracts made and to be performed entirely within such state, regardless of the law that might be applied under principles of conflicts of law.

14.Remedies.  In case any one (1) or more of the covenants and agreements contained in this Warrant shall have been breached, the Holder (in the case of a breach by the Company), or the Company (in the case of a breach by the Holder), may proceed to protect and enforce their or its rights either by suit in equity and or by action at law, including, but not limited to, an action for damages as a result of any such breach and or an action for specific performance of any such covenant or agreement contained in this Warrant.

15.No Impairment of Rights.  The Company will not, by amendment of its Articles or through any other means, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder against material impairment.

16.No Voting Rights.  Notwithstanding anything contained herein to the contrary, the Holder shall have no right to vote on any matters coming before the shareholders of the Company for any purpose whatsoever until and unless this Warrant is duly exercised.

IN WITNESS WHEREOF, this Warrant has been duly executed by Hypertension Diagnostics, Inc. as of the      day of                 , 2003.

Hypertension Diagnostics, Inc.
By:
	Greg H. Guettler, President

6

EXHIBIT A

WARRANT EXERCISE FORM

To be signed only upon exercise of Warrant.

The undersigned, the holder of the attached Preferred Stock Purchase Warrant (the “Warrant”), hereby irrevocably elects to exercise the purchase right represented by this Warrant for, and to purchase thereunder,                                            of the shares of Series A Preferred Stock of Hypertension Diagnostics, Inc. to which this Warrant relates and herewith makes payment of $                  therefor in cash or by certified check, and requests that such shares be issued and be delivered to,                                                         , the address for which is set forth below the signature of the undersigned.

Dated:
(Taxpayer’s I.D. Number)	(Signature)
	(Address)

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EX-4.7

Exhibit 4.7

THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, OR APPLICABLE STATE SECURITIES LAW.  THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ASSIGNED OR OTHERWISE DISPOSED OF, AND NO TRANSFER OF THE SECURITIES WILL BE MADE BY THE COMPANY OR ITS TRANSFER AGENT, IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

HYPERTENSION DIAGNOSTICS, INC.,

A Minnesota corporation

COMMON STOCK PURCHASE WARRANT

Date of Grant:              Warrant No.[A/B/C]      

Hypertension Diagnostics, Inc., a Minnesota corporation (the “Company”), hereby agrees that, for value received,                            ,  or its permitted registered assigns (the “Holder”)is entitled, subject to the terms set forth below, to purchase from the Company at any time or from time to time after the date set forth above (subject to the provisions set forth in Section 1 hereof), and for the term set forth in Section 1 hereof,                   (       ) shares (the “Warrant Shares”) of the fully paid and nonassessable shares of common stock, $0.01 par value per share, of the Company, subject to adjustment as provided herein (the “Common Stock”) at the exercise price of [$.17/$.22/$.30] per share, subject to adjustment as provided herein (the “Exercise Price”).  The term “Warrant” as used herein shall be deemed to include any warrant issued upon transfer or partial exercise of this warrant, unless the context clearly requires otherwise.  This Warrant is being issued pursuant to that certain Securities Purchase Agreement, of even date herewith between the Company and Holder (the “Securities Purchase Agreement”), and in connection with the Shareholders’ Agreement, dated as of August   , 2003, by and among the Company and holders of the Company’s Series A Convertible Preferred Stock (the “Series A Preferred Stock”) (the “Shareholders’ Agreement”), and the Registration Rights Agreement, dated as of August   , 2003, by and among the Company and holders of the Series A Preferred Stock (the “Registration Rights Agreement”).

1.Term.

The purchase right represented by this Warrant is exercisable, in whole or in part, at any time and from time to time from the Date of Grant through and including the close of business on                , 20     (the “Expiration Date”); provided, however, that Holder may not exercise this Warrant until such time as the Company’s shareholders approve an increase in the number of authorized shares of Common Stock to one hundred and fifty million (150,000,000) or such other number as may be sufficient to allow for the reservation for issuance of all shares of

1

Common Stock underlying each outstanding security convertible or exercisable for, or exchangeable into, Common Stock (the “Proposal”).

2.Exercise of Warrant.

(a)Method of Exercise; Payment; Issuance of New Warrant.  Subject to Section 1, the purchase right represented by this Warrant may be exercised by the Holder, in whole or in part and from time to time, by the surrender of this Warrant (with the notice of exercise form attached hereto as Exhibit A duly executed) at the principal office of the Company, and, except as otherwise provided for herein, by the payment to the Company of an amount equal to the then applicable Exercise Price multiplied by the number of Warrant Shares then being purchased.  The person or persons in whose name(s) any certificate(s) representing shares of Common Stock shall be issuable upon exercise of this Warrant shall be deemed to have become the holder(s) of record of, and shall be treated for all purposes as the record holder(s) of, the shares represented thereby (and such shares shall be deemed to have been issued) immediately prior to the close of business on the date or dates upon which this Warrant is exercised if exercised prior to the close of business on such date;  otherwise, the date of record shall be the next business day.  In the event of any exercise of the rights represented by this Warrant, certificates for the shares of Common Stock so purchased shall be delivered to the Holder as soon as possible and in any event within thirty (30) days after such exercise and, unless this Warrant has been fully exercised (including without limitation, exercise pursuant to Section 2(b) below), a new Warrant representing the portion of the Warrant Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be issued to the Holder as soon as possible and in any event within such thirty (30)-day period.

(b)Broker Assisted Cashless Right to Convert Warrant into Common Stock.  In addition to and without limiting the rights of the Holder under the terms of this Warrant, the Holder shall have the right to convert this Warrant or any portion thereof (the “Conversion Right”) into shares of Common Stock as provided in this Section 2(b) at any time or from time to time during the term of this Warrant, by delivering to a broker the notice of exercise form attached hereto as Exhibit A, duly executed, together with Holder’s irrevocable instructions to the Company to deliver the Warrant Shares being exercised (the “Converted Warrant Shares”) to the broker against the broker’s simultaneous payment to the Company of the Exercise Price.  Upon receipt of such documentation, the broker shall sell for Holder’s account such number of shares of stock necessary to satisfy the Exercise Price, including applicable tax and withholding obligations.  When the broker receives the cash proceeds from such sale, the broker will forward such proceeds to the Company against simultaneous delivery by the Company of the Converted Warrant Shares to the broker.

3.Adjustment of Exercise Price and Number of Shares.  The number and kind of securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time upon the occurrence of certain events, as follows:

(a)Adjustments to Exercise Price for Dividends, Reclassifications, etc.  If the Company, at any time while this Warrant is outstanding and unexpired, shall (A) pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock payable in shares of Common Stock, (B) subdivide outstanding shares of Common Stock into a larger number of shares, (C) combine outstanding shares of Common Stock into a smaller

2

number of shares, (D) issue by reclassification of shares of Common Stock any shares of capital stock of the Company, or (E) consolidate or merge into another entity (where the Company is not the surviving entity or where there is a change in or distribution with respect to the Common Stock), the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event.  Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination, reclassification or merger.

(b)Notice of Adjustments.  Whenever the Exercise Price or the number of Warrant Shares purchasable hereunder shall be adjusted pursuant to Section 3 hereof, the Company shall make a certificate signed by its chief financial officer setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the Exercise Price and the number of Warrant Shares purchasable hereunder after giving effect to such adjustment, which shall be mailed to the Holder.

(c)Adjustment if Proposal is not Approved.  In the event that the Proposal is not approved by the Company’s shareholders on or prior to one hundred and twenty (120) days from the date of the final closing of the private placement which resulted in the issuance of this Warrant, then (i) this Warrant shall no longer be exercisable for Common Stock, but shall be exercisable instead for such number of shares of Series A Preferred Stock as is equal to the number of Warrant Shares divided by twelve (12) (and the term “Warrant Shares” shall be deemed to mean, for all purposes, the Series A Preferred Stock) and (ii) the Exercise Price for the purchase of such Series A Preferred Stock shall be multiplied by twelve (12).

4.Fractional Shares.  Unless the Holder specifies otherwise, the Company shall issue fractional shares of Common Stock (carried out to three (3) decimal places) upon exercise of this Warrant.  At the option of the Holder, the Holder may require that the Company, instead of issuing any fractional shares of Common Stock which would otherwise be issuable upon exercise of this Warrant, pay a cash adjustment in respect of such fractional share in an amount equal to the product of such fraction multiplied by the Fair Market Value (as defined in the Company’s Certificate of Designation, Preferences and Rights of Series A Preferred Stock) of one share of Common Stock on the date of exercise.

5.Restrictions on Transferability; Transfer.

(a)Until this Warrant is duly transferred on the books of the Company, the Company may treat the registered holder of this Warrant as absolute owner hereof for all purposes without being affected by any notice to the contrary.

(b)Prior to making any disposition of the Warrant or of any Common Stock purchased upon exercise of the Warrant, the Holder shall give written notice to the Company describing briefly the manner of any such proposed disposition.

(c)The Holder shall not make any such disposition until (i) the Company has notified the Holder that, in the opinion of its counsel, registration under the Securities Act of 1933, as

3

amended (the “Act”) is not required with respect to such disposition, or (ii) a registration statement covering the proposed distribution has been filed by the Company and has become effective.  Notwithstanding the foregoing, the Holder may transfer the Warrant to holders of the Series A Preferred Stock.

(d)The Company agrees that, upon receipt of written notice from the Holder with respect to a proposed disposition, it will use its best efforts, in consultation with the Holder’s counsel, to ascertain as promptly as possible whether or not registration is required, and will advise the Holder promptly with respect thereto, and the Holder will cooperate in providing the Company with information necessary to make such determination.

(e)Transfer of this Warrant is subject to the terms and conditions of the Shareholders’ Agreement and the Registration Rights Agreement. No transfer shall be effective unless the prospective transferee agrees to be bound by, and delivers to the Company an executed counterpart to, each of the Shareholders’ Agreement and the Registration Rights Agreement.

(f)Each successive holder of this Warrant, or of any portion of the rights represented thereby, shall be bound by the terms and conditions set forth herein.

6.Representations and Warranties.  The Company represents and warrants to the Holder as of the Date of Grant as follows:

(a)This Warrant has been duly authorized and executed by the Company and is a valid and binding obligation of the Company enforceable in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and the rules of law or principles at equity governing specific performance, injunctive relief and other equitable remedies;

(b)The rights, preferences, privileges and restrictions granted to or imposed upon the Common Stock and the holders thereof are as set forth in the Articles of Incorporation of the Company, as amended to the Date of Grant (as so amended, the “Articles”), a true and complete copy of which has been made available to the original holder of this Warrant;

(c)The execution and delivery of this Warrant are not, and, assuming approval of the Proposal and filing with the Minnesota Secretary of State of amended Articles reflecting such approval, the issuance of the Warrant Shares upon exercise of this Warrant in accordance with the terms hereof will not be, inconsistent with the Articles or by-laws of the Company, do not and will not contravene, in any material respect, any governmental rule or regulation, judgment or order applicable to the Company, and do not and will not conflict with or contravene any provision of, or constitute a default under, any indenture, mortgage, contract or other instrument of which the Company is a party or by which it is bound or require the consent or approval of, the giving of notice to, the registration or filing with or the taking of any action in respect of or by, any federal, state or local government authority or agency or other person, except for the filing of notices pursuant to federal and state securities laws, which filings will be effected by the time required thereby; and

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(d)There are no actions, suits, audits, investigations or proceedings pending or, to the knowledge of the Company, threatened against the Company in any court or before any governmental commission, board or authority which, if adversely determined, will have a material adverse effect on the ability of the Company to perform its obligations under this Warrant.

7.Notices.

(a)All notices under this Warrant shall be in writing and shall be delivered by first class mail, postage prepaid.  Any notice addressed to the Holder shall be delivered to the address designated by the Holder in the Securities Purchase Agreement, as may be changed from time to time upon ten (10) days written notice by the Holder, and any notice addressed to the Company shall be delivered to its principal office.

(b)The Holder shall be entitled to receive a notice from the Company not less than ten (10) days prior to the date on which (a) a record will be taken for the purpose of determining the holders of Common Stock entitled to dividends (other than cash dividends) or subscription rights, or (b) a record will be taken (or in lieu thereof, the transfer books will be closed) for the purpose of determining the holders of Common Stock entitled to notice of and to vote at a meeting of shareholders at which any capital reorganization, reclassification of shares of Common Stock, consolidation, merger, dissolution, liquidation, winding up or sale of substantially all of the Company’s assets shall be considered and acted upon.  The Holder shall also be entitled to receive such notices as otherwise provided in this Warrant.

8.Reservation of Common Stock.  All Warrant Shares that may be issued upon the exercise of the rights represented by this Warrant will, upon issuance pursuant to the terms and conditions herein, be fully paid and nonassessable, and free from all taxes, liens, charges, and pre-emptive rights with respect to the issue thereof.  The Company shall pay all transfer taxes, if any, attributable to the issuance of the Warrant Shares upon the exercise of this Warrant.  During the period within which this Warrant may be exercised for Common Stock, the Company will at all times have authorized, and reserved for the purpose of the issue upon exercise of the purchase rights evidenced by this Warrant, a sufficient number of shares of its Common Stock to provide for the exercise of the rights represented by this Warrant.

9.Modification and Waiver.  This Warrant and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought.

10.Binding Effect on Successors.  This Warrant shall be binding upon any corporation succeeding the Company by merger, consolidation or acquisition of all or substantially all of the Company’s assets, and all of the obligations of the Company relating to the Common Stock issuable upon the exercise or conversion of this Warrant shall survive the exercise, conversion and termination of this Warrant and all of the covenants and agreements of the Company shall inure to the benefit of the successors and assigns of the Holder.  The Company will, at the time of the exercise or conversion of this Warrant, in whole or in part, upon request of the Holder but at the Company’s expense, acknowledge in writing its continuing obligation to the Holder in respect of any rights to which the Holder shall continue to be entitled after such exercise or conversion in accordance with this Warrant; provided, that the failure of the Holder to make any

5

such request shall not affect the continuing obligation of the Company to the Holder in respect of such rights.

11.Lost Warrants or Stock Certificates.  The Company covenants to the Holder that, upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant or any stock certificate and, in the case of any loss, theft or destruction, upon receipt of an executed lost securities bond or indemnity reasonably satisfactory to the Company, or in the case of any such mutilation upon surrender and cancellation of such Warrant or stock certificate, the Company will make and deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate.

12.Descriptive Headings.  The descriptive headings of the several paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant.

13.Governing Law.  The validity, interpretation and performance of this Warrant shall be governed by, and construed in accordance with, the laws of the State of Minnesota applicable to contracts made and to be performed entirely within such state, regardless of the law that might be applied under principles of conflicts of law.

14.Remedies.  In case any one (1) or more of the covenants and agreements contained in this Warrant shall have been breached, the Holder (in the case of a breach by the Company), or the Company (in the case of a breach by the Holder), may proceed to protect and enforce their or its rights either by suit in equity and or by action at law, including, but not limited to, an action for damages as a result of any such breach and or an action for specific performance of any such covenant or agreement contained in this Warrant.

15.No Impairment of Rights.  The Company will not, by amendment of its Articles or through any other means, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder against material impairment.

16.No Voting Rights.  Notwithstanding anything contained herein to the contrary, the Holder shall have no right to vote on any matters coming before the shareholders of the Company for any purpose whatsoever until and unless this Warrant is duly exercised.

IN WITNESS WHEREOF, this Warrant has been duly executed by Hypertension Diagnostics, Inc. as of the     day of         , 2003.

Hypertension Diagnostics, Inc.

By:

Greg H. Guettler, President

6

EXHIBIT A

WARRANT EXERCISE FORM

To be signed only upon exercise of Warrant.

The undersigned, the holder of the attached Common Stock Purchase Warrant (the “Warrant”), hereby irrevocably elects to exercise the purchase right represented by this Warrant for, and to purchase thereunder,                    of the shares of Common Stock of Hypertension Diagnostics, Inc. to which this Warrant relates and herewith makes payment of $            therefor in cash or by certified check, and requests that such shares be issued and be delivered to,                          , the address for which is set forth below the signature of the undersigned.

Dated:
(Taxpayer’s I.D. Number)	(Signature)
	(Address)

7

EX-4.8

Exhibit 4.8

IRREVOCABLE PROXY

                WHEREAS,the undersigned is executing this Irrevocable Proxy in connection with that certain Securities Purchase Agreement dated as of August   , 2003 by and between Hypertension Diagnostics, Inc. (the “Company”) and certain investors, including the undersigned (the “Agreement”); and

                WHEREAS, capitalized terms not otherwise defined herein have the meaning ascribed to them in the Agreement.

                In consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the undersigned, the undersigned, intending to be legally bound, hereby irrevocably constitutes and appoints Mark Schwartz (“Schwartz”) with full power of substitution and revocation, as the undersigned’s true and lawful agent, attorney and proxy, for the undersigned and in the undersigned’s name, place and stead, giving and granting to each of said attorney all the powers the undersigned would possess if personally present, to vote all of the undersigned shares of capital stock, including common stock, par value $0.01 per share, and Series A Convertible Preferred Stock, par value $0.01 per share (collectively, the “Shares”), in connection with any matters, presented at any or all meetings, regular or special, of any holders of voting securities of the Company, or any adjournments or postponements thereof, in accordance with Schwartz’s sole and absolute discretion.

                Notwithstanding the foregoing, whenever the holders of any class of stock shall be entitled to vote or will vote shares of stock for the election of directors, Schwartz shall vote the undersigned’s Shares (i) to cause and maintain a board of directors (the “Board”) composed of seven (7) members, and (ii) in favor of the amendment to the Company’s Articles of Incorporation to increase the number of shares of common stock authorized to 150,000,000, or such other number as may be sufficient to allow for the reservation for issuance of all shares of common stock underlying each outstanding security convertible or exercisable for, or exchangeable into, common stock (the “Proposal”).  In addition, Schwartz shall vote the undersigned’s Shares, at the meeting of shareholders at which the Proposal is first presented, to cause the election of Greg H. Guettler (“Guettler”) to the Board and shall continue to vote such shares to cause Guettler to remain a member of the Board for the duration of his term. Furthermore, Schwartz shall vote the undersigned’s Shares at such meeting at which Jay N. Cohn (“Cohn”) is nominated to the Board to cause the election of Cohn to the Board and shall continue to vote such shares to cause Cohn to remain a member of the Board for the duration of his term.  Notwithstanding the foregoing, the obligation of Schwartz to vote the undersigned’s Shares in favor of Guettler and Cohn as aforesaid shall terminate with respect to Guettler, if Guettler is convicted of any felony, any violation of any federal or state securities law, engages in intentional or grossly negligent conduct in the performance of his duties, or breaches his fiduciary duty to the Company as determined by seventy-five percent (75%) of the Board and with respect to Cohn if Cohn is convicted of any felony, any violation of any federal or state securities law, engages in intentional or grossly negligent conduct in the performance of his duties, or breaches his fiduciary duty to the Company as determined by seventy-five percent (75%) of the Board.

                By executing this proxy, the undersigned hereby revokes all proxies heretofore made by the undersigned.  The undersigned acknowledges that this proxy is coupled with an interest in the Shares.

                This Irrevocable Proxy shall be irrevocable by the undersigned during its term which shall expire forty-eight (48) months from the date hereof.

Date:
	Name of Holder of Shares:
	By:
	Its:

EX-4.9

Exhibit 4.9

RESERVATION AGREEMENT

THIS AGREEMENT is made as of the 4th day of August, 2003, by and among Hypertension Diagnostics, Inc., a Minnesota corporation (the “Company”), Kenneth W. Brimmer (“Brimmer”), Charles F. Chesney (“Chesney”), Jay N. Cohn (“Cohn”), Greg H. Guettler (“Guettler”) and James S. Murphy (“Murphy”) (collectively, the “Insiders”).

WHEREAS, the Company’s Articles of Incorporation currently provide that the Company has 25,000,000 shares of common stock authorized;

WHEREAS, the Insiders collectively own and control options (the “Insider Options”) to purchase a total of 1,768,737 shares of the Company’s common stock, all of which have been reserved for issuance from the Company’s authorized but unissued shares;

WHEREAS, as of the date hereof, the Company currently has:

a.10,381,257 shares of common stock issued and outstanding;

b.under its 1995 and 1998 Stock Option Plans (collectively, the “Plan Options”), 178,700 shares reserved but unissued and 1,423,880 shares of common stock reserved for issuance upon exercise of options granted under the Stock Option Plans (including 1,169,480 shares of common stock reserved for issuance upon exercise of the Insider Options);

c.1,091,257 shares reserved for options outside the plans (includes 599,257 shares reserved for issuance upon exercise of Insider Options) (the “Non-Plan Options”);

d.1,270,278 shares of common stock reserved for exercise of warrants outstanding, including 453,018 shares reserved for exercise of the Company’s Redeemable Class B Warrants (the “Current Outstanding Warrants”);

e.3,238,767 shares required for issuance in full satisfaction of the Company’s 8% Convertible Notes due March 27, 2005; and

f.after deduction of the above from the total number of shares of common stock authorized, authorized shares remaining available for issuance of 9,363,298;

WHEREAS, the Company’s Board of Directors has approved the offer and sale (the “Offering”) of a minimum of $1,300,000 and a maximum of $2,300,000 of units, each consisting of one share of the Company’s Series A Convertible Preferred Stock (the “Preferred Stock”), 15.903 shares of the Company’s common stock and a series of six (6) Purchase Warrants, three (3) of which entitle the holder to acquire Series A Preferred Stock and three (3) of which entitle the holder to acquire common stock, as described in the Company’s Confidential Private Placement Memorandum dated August 4, 2003 (the “Memorandum”), which, if issued immediately prior to the execution of this Agreement, would exceed the total number of authorized shares of common stock available for issuance;

WHEREAS, because the Insiders would benefit from the Offering, each of the Insiders is willing to make the authorized shares of common stock issuable upon exercise of their respective Insider Options available for offer and sale pursuant to the Memorandum and to forebear from exercise of the same; and

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WHEREAS, pursuant to the transactions contemplated by the Memorandum, the Company will submit to its shareholders a proposal to approve an amendment to the Company’s Articles of Incorporation to increase the number of authorized shares of common stock to at least 150,000,000 shares (or such other number as may be sufficient to allow for the reservation for issuance of all shares of common stock underlying each outstanding security convertible or exercisable for, or exchangeable into, common stock).

NOW, THEREFORE, in consideration of the foregoing recitals, in consideration of the mutual promises and covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows:

1.             The Insiders each covenant and agree: (a) to make the shares of common stock underlying the Insider Options available for offer, sale and issuance in the Offering; (b) to release the Company with respect to any claim, cause of action, damage or loss related to the lack of shares of common stock reserved for exercise of the Insider Options and further agree that they shall not take any action, legal or equitable, against the Company for any breach of any provision of any document(s) and agreement(s) relating to the Insider Options relating to the lack of shares of common stock reserved for exercise of the Insider Options; (c) to forbear from any exercise, or demand for issuance of common stock upon exercise of, the Insider Options until after the termination of this Agreement as provided below; and (d) that the document(s) and agreement(s) evidencing the Insider Options are each hereby amended to include each of the agreements of the Insiders made in this paragraph.

2.             The Company hereby covenants and agrees to hold a meeting of the holders of its voting securities (the “Meeting”) and solicit proxies for the use at the Meeting for the purpose of allowing the holders of the Company’s voting securities to approve an amendment to the Company’s Articles of Incorporation to increase the authorized number of shares of common stock, $.01 par value, to at least 150,000,000 shares (or such other number as may be sufficient to allow for the reservation for issuance of all shares of common stock underlying each outstanding security convertible or exercisable for, or exchangeable into, common stock) (the “Proposal”).  The Company may put forth any other proposal at the Meeting as it deems advisable, provided that such other proposal is not incompatible with the Proposal.  The Company shall recommend approval of the Proposal to the holders of its voting securities.  The Company shall use its commercially reasonable best efforts to cause the Proposal to be duly and properly approved no later than one hundred and twenty (120) days after the final closing of the Offering.  Upon approval of the Proposal, the Company shall take all corporate action as is necessary for the due reservation of the shares of common stock underlying the Insider Options.

3.             This Agreement shall be binding on each of the parties hereto and their respective heirs, successors and assigns.

4.             This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota without regard to the conflicts of law provisions thereof.

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5.             Subject to applicable law, this Agreement may be amended, modified or supplemented only by written agreement signed by all of the parties hereto.

6.             This Agreement shall terminate and be of no further force or effect upon the earlier of: (a) approval of the Proposal or (b) termination of the Offering without obtaining the Minimum, as described in the Memorandum.

7.             The Company, Brimmer, Chesney, Cohn, Guettler and Murphy hereby expressly agree that the subscribers to the securities of the Offering are third party beneficiaries of this Agreement and are able to enforce its terms.

8.             This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which, taken together, shall constitute one and the same agreement.

[signatures next page]

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IN WITNESS WHEREOF, the parties have executed and entered into this Agreement as of the day and year first above written.

HYPERTENSION DIAGNOSTICS, INC.

By

Its 

Kenneth W. Brimmer

Charles F. Chesney

Jay N. Cohn

Greg H. Guettler

James S. Murphy

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EX-4.10

Exhibit 4.10

IRREVOCABLE PROXY

WHEREAS,the undersigned is executing this Irrevocable Proxy in connection with the private placement by Hypertension Diagnostics, Inc. (the “Company”) of it securities pursuant to a Confidential Private Placement Memorandum dated August 4, 2003 (the “Memorandum”).

The undersigned hereby irrevocably constitutes and appoints Kenneth W. Brimmer or Greg H. Guettler, or either of them, with full power of substitution and revocation, the undersigned’s true and lawful agent, attorney and proxy, for the undersigned and in the undersigned’s name, place and stead, giving and granting to each of said attorney all the powers the undersigned would possess if personally present, to vote all securities of the Company entitling the holder thereof to vote all voting securities held by the undersigned for: (a) the approval an amendment to the Company’s Articles of Incorporation to increase the number of authorized shares of common stock, $.01 par value, to at least 150,000,000 shares (or such other number as may be sufficient to allow for the reservation for issuance of all shares of common stock underlying each outstanding security convertible or exercisable for, or exchangeable into, common stock) (the “Proposal”); (b) to cause and maintain a board of directors (the “Board”) composed of seven (7) members; and (c) at the meeting at which the Proposal is voted upon, approval of the election to the Board of Directors of the four (4) persons nominated by Mark N. Schwartz and, once elected, the presence on the Board of Directors of such nominee during such nominee’s respective initial full term as a director, presented at any and all meetings, regular or special, of holders of voting securities of Hypertension Diagnostics, Inc., or any adjournments thereof.

Notwithstanding the foregoing, the obligation of the undersigned to vote the undersigned’s voting securities as aforesaid shall terminate with respect to any nominee of Mark N. Schwartz, if such nominee is convicted of any felony, any violation of any federal or state securities law, engages in intentional or grossly negligent conduct in the performance of his duties, or breaches his fiduciary duty to the Company as determined by seventy-five percent (75%) of the Board.

By executing this proxy, the undersigned hereby revoke all proxies heretofore made by the undersigned.  The undersigned acknowledge that this proxy is coupled with an interest in the common stock of Hypertension Diagnostics, Inc. and is irrevocable by the undersigned until the earlier of: (a) approval of the Proposal; (b) the date of a meeting at which four (4) persons are nominated by Mark N. Schwartz for election to the Board of Directors; or (c) termination of the Offering without obtaining the Minimum, as such terms are defined in, and as described in, the Memorandum.

Dated:  August 4, 2003.

Signature

Print Name

EX-4.11

Exhibit 4.11

CONVERSION AND VOTING AGREEMENT

THIS CONVERSION AND VOTING AGREEMENT (this “Agreement”), made effective as of the 1st day of August, 2003, is between Hypertension Diagnostics, Inc., a Minnesota corporation (the “Company”), and Alpha Capital Aktiengesellschaft, Stonestreet Limited Partnership and Ellis Enterprises Ltd., being the holders (each a “Holder” and collectively, the “Holders”) of (i) the Company’s 8% Convertible Notes due March 27, 2005, (the “Notes”) and (ii) warrants (the “Warrants”) to purchase shares of the Company’s common stock, $.01 par value per share (the “Common Stock”) issued on March 27, 2002 in connection with the Company’s sale of the Notes pursuant to that certain Subscription Agreement dated March 27, 2002 between the Company and the subscribers named therein (including all exhibits, schedules and ancillary agreements relating thereto, the “Subscription Agreement”).

W I T N E S S E T H

WHEREAS, as of the date hereof, the Company has outstanding $518,023.50 aggregate principal amount and as of July 10, 2003, $11,956.57 in accrued but unpaid interest on the Notes held by the Holders, and the Company has issued to the Holders Warrants to purchase 175,000 shares of Common Stock; and

WHEREAS, the Company and the Holders desire to provide for conversion of the aggregate principal and accrued but unpaid interest relating to the Notes as of the Closing Date, as defined in Section 3(a), at specified rates under the terms and conditions set forth in this Agreement, subject to certain restrictions on voting and disposition with respect to the shares received upon such conversion in full satisfaction of any and all obligations relating to the Notes, except as otherwise set forth herein.

NOW, THEREFORE, in consideration of the mutual promises contained herein, and other good and valuable consideration, the parties hereto agree as follows:

1.             Conversion Privilege.

a.             Notwithstanding anything in the Notes or the Subscription Agreement to the contrary, on the Closing Date, each Holder shall irrevocably convert (the “Conversion”), without delivery of any notice of or demand for conversion: (a) such portion of the outstanding principal and accrued but unpaid interest relating to the Notes as set forth on Exhibit A under the heading the “First Conversion Amount” into shares of the Company’s Common Stock at a rate of one (1) share of Common Stock for each $.12 of First Conversion Amount for a total of 1,472,168 shares of Common Stock, allocated among the Holders as set forth on Exhibit A (the “First Satisfaction Shares”) and (b) after reducing the Notes by the First Conversion Amount, such remaining portion of the outstanding principal and accrued but unpaid interest relating to the Notes as set forth on Exhibit A under the heading the “Second Conversion Amount” into shares of the Company’s Common Stock at a rate of one (1) share of Common Stock for each $.20 of Second Conversion Amount for a total of 1,766,599 shares of Common Stock, allocated among the Holders as set forth on Exhibit A (the “Second Satisfaction Shares”).  The First

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Conversion Amount and Second Conversion Amount shall be referred to collectively as the “Conversion Amounts” and the First Satisfaction Shares and the Second Satisfaction Shares shall be referred to collectively as the “Satisfaction Shares.”

b.             Effect Conversion.  The Holders acknowledge and agree that upon the Conversion of the Conversion Amounts, the Holders shall have no further rights with respect to the Conversion Amounts or the portion of the Notes reduced thereby, other than a right to the Satisfaction Shares and those rights of Section 4 of the Subscription Agreement, including no right to adjustment in the rate or time of conversion or securities issuable upon conversion.

2.             Restriction on Transfer of Satisfaction Shares.  Each Holder hereby agrees that it will not offer, sell, assign, pledge, hypothecate or otherwise transfer the Satisfaction Shares from the Closing Date and to the earlier to occur of: (a) one (1) business day following the date the Company declares a record date for determination of shareholders entitled to receive notice of, and vote at, a meeting of shareholders with respect to the Proposal, as defined below; or (b) one hundred twenty (120) calendar days following the date of the Series A Closing, as defined in Section 3(a).  Each Holder agrees that each certificate representing the Satisfaction Shares shall be endorsed by the Company with a legend (in addition to the legend set forth in Section 9) reading as follows:

THE SHARES EVIDENCED HEREBY ARE SUBJECT TO A CONVERSION AND VOTING AGREEMENT BY AND BETWEEN THE COMPANY AND THE HOLDER HEREOF (A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY), AND NO TRANSFER OF THE SHARES EVIDENCED HEREBY SHALL BE EFFECTIVE EXCEPT IN COMPLIANCE WITH THE TERMS THEREOF.

The Company agrees to cause the certificates representing the Satisfaction Shares to be reissued without the legend set forth above at such time as the restriction on transfer of this Section 2 shall lapse.  The Company acknowledges and agrees that the rights of the Holder described in Section 4 of the Subscription Agreement shall apply to the Satisfaction Shares with respect to the above legend.

3.             Closing of the Conversion.

a.             Closings and Closing Dates.  The closing of the Conversion (the “Closing”) shall take place at the offices of Lindquist & Vennum, P.L.L.P., 80 South Eighth Street, Suite 4200, Minneapolis, Minnesota 55402, upon two (2) business days’ notice.  The Closing shall occur concurrently with the final closing (the “Series A Closing”) of a private placement of at least one million three hundred thousand dollars ($1,300,000) of the Company’s Common Stock and the Series A Convertible Preferred Stock (the “Series A Preferred Stock”) or at such other place or different time or day as may be mutually acceptable to the Holders, the purchasers of the Series A Preferred Stock and the Company (the “Closing Date”).

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b.             Closing Procedures.  At the Closing, the Holder shall deliver to the Company such Holder’s original Notes and an originally executed Proxy and upon receipt thereof, the Company will deliver to the Holders the Satisfaction Shares.  The Holder further acknowledges and agrees that the Holder’s delivery and surrender of the Notes is not effective until receipt thereof by the Company, properly completed and duly executed, together with all accompanying evidences of authority and any other required documents in form satisfactory to the Company.

c.             Closing Contingency.  Notwithstanding any provision of this Agreement to the contrary, no party shall be obligated to proceed with the Conversion and the Conversion shall be deemed abandoned, if the Series A Closing does not occur on or prior to August 30, 2003.  In the event of the termination of the Conversion pursuant to this paragraph, each and every representation, warranty or agreement made as of the Closing Date shall be deemed not made and shall have no binding effect on any party.  The parties hereby agree that the termination of the Conversion pursuant to this paragraph shall be without liability of any party (or any stockholder, director, officer, employee, agent, consultant or representative of such party) to any other party to this Agreement.  In the event of termination of the Conversion, nothing contained in this Agreement shall relieve any party from any liability or impair the rights of any party under the Subscription Agreement, Notes or Warrants.

d.             Forbearance Pending Closing.  From and after the date of this Agreement until the Closing Date, no Holder shall have the right to demand, and each Holder shall forbear from any demand for: (a) the conversion into Common Stock of the Company of any principal or interest relating to such Holder’s Note; (b) the exercise of the Warrant held by such Holder; or (c) payment by the Company of any principal, interest, penalties, assessments, fees or other amounts related to the Notes, Warrants or the Subscription Agreement, however described or denominated.

4.             Release as of the Closing Date.  Each Holder acknowledges and agrees that, upon the Closing: (a) the Company will have no further obligations under the Notes, including, but not limited to, the obligation to pay any principal, interest, penalties, assessments, fees or other amounts related to the Notes, however described or denominated; and (b) except for Warrant Rights, the Holder releases the Company, its employees, officers and directors of any and all losses, claims, damages, liabilities, demands, actions and causes of action that the Holder may have against the Company relating to the Notes, the Warrants or the Subscription Agreement as of and through the Closing Date.  The term “Warrant Rights” shall mean all rights of the Holder under the Warrants and, except as otherwise set forth herein, under the Subscription Agreement as such rights relate to the Warrants, but shall not include any registration rights made or granted to or for the benefit of the Holder.

5.             Voting of Common Stock.  Each Holder hereby covenants and agrees to vote: (a) all of the Satisfaction Shares acquired by it in favor of, and (b) any and all voting securities held by it as of the record date with respect to a meeting of the Company’s voting securities relating to the Proposal, as described below, in favor of the Proposal. The term “Proposal” shall mean a proposal presented to the holders of the Company’s voting securities to approve an amendment to the Company’s Articles of Incorporation to increase the number of shares of common stock,

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$.01 par value, authorized (the “Proposal”).  On the Closing Date, each Holder shall deliver to the Company an original of the Irrevocable Proxy with respect to the Satisfaction Shares attached hereto as Exhibit B and will grant and deliver to the Company or its designee, at the expense of the Company, any and all proxies necessary to give effect to the obligations of the Holder set forth in this Section.  The obligations of this Section shall terminate upon the earlier to occur of: (a) one (1) business day following the date the Company declares a record date for determination of shareholders entitled to receive notice of, and vote at, a meeting of shareholders with respect to the Proposal, as defined above or (b) one hundred twenty (120) calendar days following the date of the Series A Closing.

6.             Representations and Warranties of the Holder.  In consideration of the Company’s obligations in the Conversion, each Holder, for itself, hereby represents and warrants, as of the date hereof and through the Closing Date, to the Company as follows:

a.             Information About the Notes.  Such Holder is the registered holder of the Notes tendered for conversion, and the information described on Exhibit A hereto is true, accurate and complete.  The Notes described on Exhibit A hereto constitute all of the Notes held by such Holder.  Such Holder has good and unencumbered title thereto, free and clear of all liens, restrictions, charges, encumbrances and adverse claims.  Such Holder will, upon request, execute and deliver any additional documents reasonably requested by the Company as necessary or desirable to complete and give effect to the transactions contemplated hereby.

b.             Organization, Standing, etc.  Such Holder is an entity duly organized, validly existing and in good standing under the laws of its place of organization.  Such Holder has the requisite corporate power and authority to tender and convert the Notes and to otherwise perform its obligations under this Agreement.

c.             Corporate Acts and Proceedings.  This Agreement has been duly authorized by all necessary corporate action on behalf of such Holder, and has been duly executed and delivered by authorized officers of such Holder.  Each Holder is authorized to consummate the Conversion and accept in satisfaction of the Notes, the Satisfaction Shares.  This Agreement is a valid and binding obligation of such Holder, enforceable in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting the enforcement of creditors’ rights generally, and except for judicial limitations on the enforcement of the remedy of specific enforcement and other equitable remedies.

d.             Information about Holders; Accredited Investor. Such Holder is an “accredited investor”, as such term is defined in Regulation D of the Act, is experienced in investments and business matters, has made investments of a speculative nature and has purchased securities of United States publicly-owned companies in private placements in the past and, with its representatives, has such knowledge and experience in financial, tax and other business matters as to enable such Holder to utilize the information about the Company made available by the Company or by the U.S. Securities and Exchange Commission (the “Commission”) EDGAR system to evaluate the merits and risks of and to make an informed investment decision with respect to the Conversion.

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e.             Information About Satisfaction Shares; No Market; Restrictions on Transfer.   Such Holder acknowledges and agrees that: (i) there are substantial restrictions on the transfer of the Satisfaction Shares; (ii) the Company’s Common Stock is traded on the OTC Bulletin Board and subject to rules under the Securities Exchange Act of 1934 relating to “penny stocks”; and (iii) accordingly, for the above and other reasons, such Holder may not be able to liquidate an investment in the Satisfaction Shares, and may be required to bear the economic risk of such Holder’s investment in the Satisfaction Shares for an indefinite period.  Such Holder acknowledges and agrees that the Satisfaction Shares have not been registered for sale under the Act or applicable state securities laws (the “State Laws”), and may be sold only pursuant to registration under the Act and State Laws, or pursuant to an opinion of counsel acceptable to the Company that such registration is not required.  Such Holder acknowledges and agrees that the Company is not required to register the Satisfaction Shares or to make any exemption from registration available other than an exemption under Rule 144. Such Holder acknowledges that the Satisfaction Shares are being issued pursuant to exemptions from such laws and that the Company’s reliance upon such exemptions is predicated in part on such Holder’s representations to the Company as contained herein.

Such Holder understands such Holder may not sell any of the Satisfaction Shares pursuant to Rule l44 prior to the expiration of a one-year period after such Holder has acquired such securities which the Company acknowledges began on March 27, 2002 with the Acquisition of the Notes by virtue of the provisions of Rule 144(d)(3)(ii).  Such Holder understands that any sales of the Satisfaction Shares pursuant to Rule l44 can be made only in full compliance with the provisions of Rule l44.

f.              High Degree of Risk.  Such Holder realizes that an investment in shares of the Satisfaction Shares is highly speculative, illiquid and involves a high degree of risk, including the risks of receiving no return on the investment and of losing such Holder’s entire investment in the Company.  Such Holder has evaluated all of the risks of an investment in shares of the Satisfaction Shares.  Such Holder is able to bear the economic risk of an investment in shares of the Satisfaction Shares, including the total loss of such investment.

g.             Suitability.  Such Holder believes that the investment in shares of the Satisfaction Shares is suitable for the undersigned based upon such Holder’s investment objectives and financial needs, and such Holder has adequate means for providing for its current financial needs and personal contingencies and has no need for liquidity of investment with respect to the Satisfaction Shares.  Such Holder has obtained, to the extent such Holder deems necessary, its own professional advice with respect to the risks inherent in the investment in the Satisfaction Shares, and the suitability of the investment in the Satisfaction Shares in light of such Holder’s financial condition and investment needs.

h.             Investment Intent.  Such Holder represents and warrants that the Satisfaction Shares are being purchased for such Holder’s own account and for such Holder’s investment and without the present intention of reselling or redistributing the same, that such Holder has made no agreement with others regarding the Satisfaction Shares and that such Holder’s financial condition is such that it is not likely that it will be necessary to dispose of any

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of the Satisfaction Shares in the foreseeable future.  Such Holder is aware that, in the view of the Commission, an acquisition of the Satisfaction Shares with an intent to resell by reason of any foreseeable specific contingency or anticipated change in market values, or any change in the condition of the Company, or in connection with a contemplated liquidation or settlement of any loan obtained for the acquisition of the Satisfaction Shares and for which the Satisfaction Shares were pledged as security, would represent an intent inconsistent with the representations set forth above.

i.              Information About the Company.  Such Holder has had access to publicly available financial and other information on the business of the Company.  No material non-public information has been made available to Holder in connection with this Agreement.  Such Holder has had an opportunity to ask questions of, and receive answers from, the Company concerning the business, management and financial affairs of the Company and the terms and conditions of the Conversion and the Satisfaction Shares.  Such Holder has had an opportunity to obtain, and has received, any and all additional information deemed necessary by such Holder to verify such information in order to form a decision concerning whether or not to consummate the Conversion.

j.              Tax Liability.  Such Holder has reviewed with such Holder’s own tax advisors the federal, state, local and foreign tax consequences of the Conversion and the transactions contemplated by this Agreement, and has and will rely solely on such advisors and not on any statements or representations of the Company or any of its agents.  Such Holder understands that such Holder (and not the Company) shall be responsible for such Holder’s own tax liability that may arise as a result of the Conversion and the transactions contemplated by this Agreement.

7.             Representations of the Company.  In consideration of the Holders’ obligations in the Conversion, the Company hereby represents and warrants as of the date hereof and through the Closing Date to each of the Holders as follows:

a.             Organization, Standing, etc.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Minnesota, and has the requisite corporate power and authority to own its properties and to carry on its business in all material respects as it is now being conducted.  The Company has the requisite corporate power and authority to perform the Conversion, to issue the Satisfaction Shares and to otherwise perform its obligations under this Agreement.

b.             Corporate Acts and Proceedings.  This Agreement has been duly authorized by all necessary corporate action on behalf of the Company, and has been duly executed and delivered by authorized officers of the Company. This Agreement is a valid and binding obligation of the Company, enforceable in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting the enforcement of creditors’ rights generally, and except for judicial limitations on the enforcement of the remedy of specific enforcement and other equitable remedies.

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c.             Issuance of Satisfaction Shares.  All corporate action necessary to the authorization, issuance and delivery of the Satisfaction Shares has been taken on the part of the Company, or will be taken by the Company on or prior to the issuance of the Satisfaction Shares.  Upon issuance in accordance with the terms of this Agreement, the Satisfaction Shares will be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances with respect to the issue thereof, except as specifically set forth in Sections 2 and 5 of this Agreement.

d.             No Conflicts; Governmental Consents.  The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby will not: (i) conflict with or result in a violation of any provision of the Articles of Incorporation or By-laws of the Company; (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement or instrument to which the Company is a party; (iii) result in a material violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations) applicable to the Company.  Except for defaults under the Notes, the Company is not in default (and no event has occurred which with notice or lapse of time or both could put the Company in default) under, and the Company has not taken any action or failed to take any action that would give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company is a party or by which any property or assets of the Company is bound or affected.  Except as required under the Act and any applicable state securities laws, the Company is not required to obtain any consent, approval, qualification, authorization or order of, or make any filing or registration with, any court, governmental agency or any third party in order for it to execute, deliver or perform any of its obligations under this Agreement, or to issue the Satisfaction Shares in accordance with the terms of this Agreement.

8.             Restrictive Legend.  The Holder agrees that the Company shall place a restrictive legend on the Satisfaction Shares containing substantially the following language:

The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended (the “Act”), and have not been registered under any state securities laws.  These securities may not be sold, offered for sale or transferred without first obtaining (i) an opinion of counsel reasonably satisfactory to the Company that such sale or transfer lawfully is exempt from registration under the Act and under the applicable state securities laws or (ii) such registration.

The Company acknowledges and agrees that the rights of the Holder described in Section 4 of the Subscription Agreement shall apply to the Satisfaction Shares with respect to the above legend.

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9.             Miscellaneous.

a.             Fees of Counsel.  Concurrently with the execution of this Agreement, the Company shall pay for counsel to the Holders its fees of $5,000 for services rendered to the Holders in connection with this Agreement.

b.             Survival of Representations and Warranties; Indemnification.  Each Holder and the Company agree that the agreements, representations and warranties contained in this Agreement shall survive and remain in full force and effect after the execution hereof and after the Conversion.  Each Holder further agrees to indemnify and hold harmless the Company and each current and future officer, director, employee, agent and shareholder of the Company from and against any and all loss, damage or liability due to, or arising out of a breach of any agreement, representation or warranty of such Holder contained herein.  The Company further agrees to indemnify and hold harmless each Holder and each respective current and future officer, director, employee, agent and shareholder of such Holder from and against any and all loss, damage or liability due to, or arising out of, a breach of any agreement, representation or warranty of the Company contained herein.

c.             No Assignment; Binding Effect.  Neither this Agreement, nor any interest herein, shall be assignable by the Holders without prior written consent of the Company.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and assigns.

d.             Entire Agreement.  This Agreement, including the Exhibits attached hereto, constitutes the entire agreement of the parties relative to the subject matter hereof and supersedes any and all other agreements and understandings, whether written or oral, relative to the matters discussed herein.

e.             Governing Law.  This Agreement shall be governed by the internal laws of the State of New York without giving application to the choice of law provisions of that jurisdiction.  Any action brought by any party against the other concerning this Agreement shall be brought only in the state courts of New York or in the federal courts located in the state of New York.  Each of the Company and the Holders hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper.  Nothing in this paragraph shall affect or limit any right to serve process in any other manner permitted by law.

f.              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: (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 4:30 p.m. (Central Time) on a Business Day; (ii) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in Exhibit A later than 4:30 p.m. (Central Time) on any date and earlier than 11:59 p.m.

8

(Central Time) on such date or if such notice or transmission is delivered via facsimile on a day that is not a Business Day; (iii) the Business Day following the date of mailing, if sent by nationally recognized overnight courier service; or (iv) upon actual receipt by the party to whom such notice is required to be given.

If to the Company:	Hypertension Diagnostics, Inc.
	2915 Waters Road, Suite 108
	Eagan, MN 55121-1562
	Attn:	President
	Fax:	(651) 687-0485
With copies to:	Lindquist & Vennum P.L.L.P.
	4200 IDS Center
	80 South Eighth Street
	Minneapolis, MN 55402
	Attn:	Girard P. Miller
	Fax:	(612) 371-3207
If to the Holders:	To the address of set forth on Exhibit A with respect to each.
With copies to:	Grushko and Mittman, P.C.
	551 Fifth Avenue, Suite 1601
	New York, NY 10176
	Attn:	Barbara Mittman
	Fax:	(212) 697-3575

“Business Day” means a day other than a Saturday, Sunday or day on which banking institutions in New York are authorized or required to remain closed.

g.             Counterparts.  This Agreement may be executed concurrently in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  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) the same with the same force and effect as if such facsimile signature page were an original thereof.

[signatures next page]

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IN WITNESS WHEREOF, the parties hereto have entered into this CONVERSION AND VOTING AGREEMENT as of the date first above written.

The Holders:
ALPHA CAPITAL AKTIENGESELLSCHAFT
By:
Its:
STONESTREET LIMITED PARTNERSHIP
By:
Its:
ELLIS ENTERPRISES LTD.
By:
Its:
The Company:
HYPERTENSION DIAGNOSTICS, INC.
By:	Greg H. Guettler
Its:	President

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EXHIBIT A

INFORMATION REGARDING HOLDERS AND CONVERSION

Description of 8% Convertible Notes and the Holders			First Conversion Amount		First Satisfaction Shares	Second Conversion Amount		Second Satisfaction Shares
Names and Address of Registered Holder	Original Principal Amount
Alpha Capital Aktiengesellschaft Pradafant 7 9490 Furstentums Vaduz, Lichtenstein Fax: 011-42-32323196	$	700,000	$	105,620.82	880,174	$	211,241.65	1,056,208
Stonestreet Limited Partnership 320 Bay Street, Suite 1300 Toronto, ON M5H 4A6, Canada Fax:  416-956-8989	$	550,000	$	57,683.23	480,694	$	115,366.48	576,832
Ellis Enterprises Ltd. 42A Waterloo Road London, England NW2 7UF Fax:  011-441-014809004	$	150,000	$	13,355.96	111,300	$	26,711.93	133,559
TOTAL	$	1,400,000	$	176,660.01	1,472,168	$	353,320.06	1,766,599

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EXHIBIT B

IRREVOCABLE PROXY

EX-4.12

Exhibit 4.12

IRREVOCABLE PROXY

WHEREAS,the undersigned is executing this Irrevocable Proxy in connection with that certain Conversion and Voting Agreement dated as of August 1, 2003 by and between Hypertension Diagnostics, Inc. (the “Company”) and the undersigned (the “Agreement”);

WHEREAS, capitalized terms not otherwise defined herein have the meaning ascribed to them in the Agreement.

In consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the undersigned, the undersigned, intending to be legally bound, hereby irrevocably constitutes and appoints Mark Schwartz, with full power of substitution and revocation, as the undersigned’s true and lawful agent, attorney and proxy, for the undersigned and in the undersigned’s name, place and stead, giving and granting to said attorney all the powers the undersigned would possess if personally present, to vote all First Satisfaction Shares in favor of, and for the approval of, the Proposal and such other matters (provided such matters do not adversely effect the rights of the undersigned) as may be presented at any or all meetings, regular or special, of any holders of voting securities of the Company, or any adjournments or postponements thereof.

By executing this proxy, the undersigned hereby revokes all proxies heretofore made by the undersigned.  The undersigned acknowledges that this proxy is coupled with an interest in the First Satisfaction Shares.

This Irrevocable Proxy shall be irrevocable by the undersigned during its term which shall expire upon the earliest to occur of: (a) one (1) business day following the date the Company declares a record date for determination of shareholders entitled to receive notice of, and vote at, a meeting of shareholders with respect to the Proposal; or (b) one hundred twenty (120) calendar days following the date of the Series A Closing.

Date:
	Name of Holder of First Satisfaction Shares:
	By:
	Its:

EX-99.1

Exhibit 99.1

For Immediate Release

Contact:  Mark Schwartz, CEO

651-687-9999

Hypertension Diagnostics Completes $2.3 Million Equity Financing

ST. PAUL, MN – September 4, 2003 – Hypertension Diagnostics, Inc.  (OTCBB: HDII.OB), today announced that it has raised $2.3 million dollars from the sale of common stock, convertible preferred stock, and common and convertible preferred stock warrants of the Company (the “Securities”).

The private placement of Securities was completed on August 28, 2003 through the sale of approximately 9.3 million shares of the Company’s common stock and 586,000 shares of the Company’s newly created Series A Convertible Preferred Stock (the “Preferred Stock”) to private investors led by the Schwartz Group of Los Angeles.  The investors also received warrants to purchase up to an additional 23.3 million shares of common stock and up to an additional 1.5 million shares of Preferred Stock.

The common stock and the Preferred Stock have not been registered under the Securities Act of 1933, as amended (the “Act”), or state securities laws, and may not be offered or sold in the United States absent registration with the U.S. Securities and Exchange Commission under the Act, or an applicable exemption therefrom. The Company has granted certain registration rights covering all of the common stock and Preferred Stock sold in the offering to the investors.  Net proceeds from the offering will be used primarily for working capital purposes and to expand the Company’s sales and marketing efforts of its CardioVascular Profiling Systems.

Concurrent with the closing of this offering, the Company has elected Mark Schwartz Chairman of the Board of Directors (the “Board”) and Chief Executive Officer.  Alan Stern and Larry Leitner have been appointed as additional members to the Board.  Dr. Jay Cohn, Kenneth Brimmer, and Greg Guettler will continue to serve on the Board.  Dr. Steven Gerber will join the Board following the Company’s compliance with the requirements of Section 14(f) of the Securities Exchange Act of 1934, as amended.

Simultaneously with the closing of the offering, the Company closed a transaction with its 8% Convertible Noteholders pursuant to which they have tendered their notes to the Company along with accrued interest thereon totaling $529,980 for 3,238,767 shares of the Company’s common stock.

Hypertension Diagnostics, Inc. designs, develops, manufactures and markets proprietary cardiovascular profiling systems for medical applications and clinical research. These systems are marketed to physicians, other health care professionals and researchers by a direct sales force throughout the world.  In addition to providing blood pressure values, the systems non-invasively detect subtle changes in the compliance or elasticity of both large and small arteries, which is a unique feature of HDI’s technology.

Forward-looking statements in this press release are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company wishes to caution readers not to place undue reliance on any forward-looking statements and to recognize that the statements are not a prediction of actual future results. Actual results could differ materially from those presented and anticipated in the forward-looking statements due to the risks and uncertainties set forth in the Company’s 2002 Annual Report on Form 10-KSB, as amended, and subsequent Quarterly Reports on Form 10-QSB, all of which were filed with the U.S. Securities and Exchange Commission, as well as others not now anticipated.

CVProfilor is a registered trademark of Hypertension Diagnostics, Inc.

Hypertension Diagnostics, HDI/PulseWave, PulseWave and CVProfile are trademarks of Hypertension Diagnostics, Inc.  All rights reserved.

Website: www.hdii.com