Exhibit 10.3

 

MEDICALCV, INC.

DIRECTOR STOCK OPTION AGREEMENT

PURSUANT TO 2005 DIRECTOR STOCK OPTION PLAN

 

Number of shares subject to option:

 

Date of grant:

 

OPTION AGREEMENT dated as of                            , by and between
MedicalCV, Inc., a Minnesota corporation (the “Company”), and
                            , an individual eligible to receive options under
the Plan (“Optionee”).  Unless otherwise defined herein, capitalized terms shall
have the meaning set forth in the Company’s 2005 Director Stock Option Plan.

 

1.             NON-QUALIFIED STOCK OPTION.  THE OPTION EVIDENCED BY THIS
AGREEMENT IS NOT INTENDED TO, AND DID NOT AT THE DATE OF GRANT, QUALIFY AS AN
“INCENTIVE STOCK OPTION” WITHIN THE MEANING OF SECTION 422 OF THE UNITED STATES
INTERNAL REVENUE CODE OF 1986, AS AMENDED.

 

2.             GRANT OF OPTION.  PURSUANT TO THE PROVISIONS OF THE PLAN, THE
COMPANY GRANTS TO THE OPTIONEE, SUBJECT TO THE TERMS AND CONDITIONS OF THE PLAN
AND THIS AGREEMENT, THE RIGHT AND OPTION TO PURCHASE FROM THE COMPANY ALL OR A
PART OF AN AGGREGATE OF                    SHARES OF COMMON STOCK (THE “SHARES”)
AT THE PURCHASE PRICE OF $                   PER SHARE (THE “OPTION”).

 

3.             TERMS AND CONDITIONS.  IT IS UNDERSTOOD AND AGREED THAT THE
OPTION EVIDENCED HEREBY IS SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS:

 

(A)           EXPIRATION DATE.  THE OPTION EXPIRES TEN YEARS AFTER THE DATE OF
GRANT SPECIFIED ABOVE.

 

(B)           EXERCISE OF OPTION.  SUBJECT TO THE PLAN AND THE OTHER TERMS OF
THIS AGREEMENT REGARDING THE EXERCISABILITY OF THE OPTION, THE OPTION SHALL BE
EXERCISABLE IN FULL BEGINNING ON THE EARLIER OF (1) THE FIRST ANNIVERSARY OF THE
DATE THE OPTION WAS GRANTED OR (2) THE OPTIONEE HAVING SERVED ONE TERM-YEAR AS A
MEMBER OF THE BOARD OF THE COMPANY SINCE THE DATE THE OPTION WAS GRANTED.  ANY
EXERCISE MUST BE ACCOMPANIED BY A WRITTEN NOTICE TO THE COMPANY SPECIFYING THE
NUMBER OF SHARES OF COMMON STOCK AS TO WHICH THE OPTION IS BEING EXERCISED.

 

(C)           PAYMENT OF PURCHASE PRICE UPON EXERCISE.  AT THE TIME OF ANY
EXERCISE, THE EXERCISE PRICE OF THE SHARES AS TO WHICH THE OPTION IS BEING
EXERCISED SHALL BE PAID IN UNITED STATES DOLLARS BY CERTIFIED CHECK OR BANK
DRAFT, BY TENDERING SHARES OF COMMON STOCK OWNED BY THE PERSON EXERCISING THE
OPTION AND HAVING A FAIR MARKET VALUE EQUAL TO THE CASH EXERCISE PRICE
APPLICABLE TO SUCH OPTION, OR BY A COMBINATION OF UNITED STATES DOLLARS AND
COMMON STOCK, ALL AS SET FORTH IN SECTION 5(E)(III) OF THE PLAN.

 

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(D)           NONTRANSFERABILITY.  THE OPTION SHALL NOT BE TRANSFERABLE OTHER
THAN BY WILL OR BY THE LAWS OF DESCENT AND DISTRIBUTION.  DURING THE LIFETIME OF
THE OPTIONEE, THE OPTION SHALL BE EXERCISABLE ONLY BY THE OPTIONEE.  NO TRANSFER
OF THE OPTION BY THE OPTIONEE BY WILL OR BY THE LAWS OF DESCENT AND DISTRIBUTION
SHALL BE EFFECTIVE TO BIND THE COMPANY UNLESS THE COMPANY IS FURNISHED WITH
WRITTEN NOTICE THEREOF AND A COPY OF THE WILL OR SUCH OTHER EVIDENCE AS THE
BOARD MAY DETERMINE NECESSARY TO ESTABLISH THE VALIDITY OF THE TRANSFER.

 

(E)           NO RIGHTS AS SHAREHOLDER.  THE OPTIONEE SHALL HAVE NO RIGHTS AS A
SHAREHOLDER OF THE COMPANY WITH RESPECT TO ANY SHARES PRIOR TO THE DATE OF
ISSUANCE TO THE OPTIONEE OF A CERTIFICATE FOR SUCH SHARES.

 

(F)            COMPLIANCE WITH LAW AND REGULATIONS.  THE OPTION AND THE
OBLIGATION OF THE COMPANY TO SELL AND DELIVER SHARES HEREUNDER ARE SUBJECT TO
ALL APPLICABLE LAWS, RULES AND REGULATIONS AND TO SUCH APPROVALS BY ANY
GOVERNMENT OR REGULATORY AGENCY AS MAY BE REQUIRED.  THE OPTION SHALL NOT BE
EXERCISABLE, AND THE COMPANY SHALL NOT BE REQUIRED TO ISSUE OR DELIVER ANY
CERTIFICATES FOR SHARES PRIOR TO THE COMPLETION OF ANY REGISTRATION OR
QUALIFICATION OF THE SHARES UNDER ANY FEDERAL OR STATE LAW, OR ANY RULE OR
REGULATION OF ANY GOVERNMENT BODY WHICH THE COMPANY SHALL, IN ITS SOLE
DISCRETION, DETERMINE TO BE NECESSARY OR ADVISABLE.  MOREOVER, THE OPTION MAY
NOT BE EXERCISED IF ITS EXERCISE OR THE RECEIPT OF SHARES PURSUANT THERETO WOULD
BE CONTRARY TO APPLICABLE LAW.

 

(G)           INCOME TAXES.  THE OPTIONEE UNDERSTANDS THAT, UPON EXERCISE OF
THIS OPTION, OPTIONEE WILL RECOGNIZE INCOME FOR TAX PURPOSES IN AN AMOUNT EQUAL
TO THE EXCESS OF THE THEN FAIR MARKET VALUE OF THE SHARES OVER THE EXERCISE
PRICE.  THE OPTIONEE IS WHOLLY RESPONSIBLE FOR THE PAYMENT OF ANY TAXES INCURRED
AS A CONSEQUENCE OF THE EXERCISE OF THIS OPTION AND ANY SUBSEQUENT SALE OF THE
SHARES.

 

4.             TERMINATION OF STATUS AS A DIRECTOR.  UPON THE TERMINATION OF
OPTIONEE’S STATUS AS A DIRECTOR FOR ANY REASON PRIOR TO THE EXPIRATION OF THE
OPTION, THE OPTION MAY BE EXERCISED, TO THE EXTENT THAT THE OPTIONEE SHALL HAVE
BEEN ENTITLED TO DO SO ON THE DATE OF HIS OR HER TERMINATION, AT ANY TIME OR
FROM TIME TO TIME, BUT NOT LATER THAN THE EXPIRATION OF THE OPTION OR ONE YEAR
AFTER THE OPTIONEE’S TERMINATION, WHICHEVER DATE IS EARLIER.

 

5.             SUSPENSION OR TERMINATION OF OPTION FOR MISCONDUCT.  IF THE BOARD
REASONABLY BELIEVES THAT THE OPTIONEE HAS COMMITTED AN ACT OF MISCONDUCT, IT MAY
SUSPEND THE OPTIONEE’S RIGHT TO EXERCISE THE OPTION PENDING A DETERMINATION BY
THE BOARD.  IF THE BOARD DETERMINES THAT THE OPTIONEE HAS COMMITTED AN ACT OF
EMBEZZLEMENT, FRAUD, DISHONESTY, NONPAYMENT OF AN OBLIGATION OWED TO THE
COMPANY, BREACH OF FIDUCIARY DUTY OR DELIBERATE DISREGARD OF THE COMPANY’S
RULES RESULTING IN LOSS, DAMAGE OR INJURY TO THE COMPANY, OR IF THE OPTIONEE
MAKES AN UNAUTHORIZED DISCLOSURE OF ANY COMPANY TRADE SECRET OR CONFIDENTIAL
INFORMATION, ENGAGES IN ANY CONDUCT CONSTITUTING UNFAIR COMPETITION WITH RESPECT
TO THE COMPANY, OR INDUCES ANY PARTY TO BREACH A CONTRACT WITH THE COMPANY,
NEITHER THE OPTIONEE NOR THE OPTIONEE’S ESTATE SHALL BE ENTITLED TO EXERCISE ANY
OPTION WHATSOEVER.  IN MAKING SUCH DETERMINATION, THE BOARD SHALL ACT FAIRLY AND
SHALL GIVE THE OPTIONEE AN OPPORTUNITY TO APPEAR AND PRESENT EVIDENCE ON THE
OPTIONEE’S BEHALF AT A HEARING BEFORE THE BOARD.

 

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6.             OPTIONEE BOUND BY PLAN.  THE OPTIONEE HEREBY ACKNOWLEDGES RECEIPT
OF A COPY OF THE PLAN AND AGREES TO BE BOUND BY ALL THE TERMS AND PROVISIONS
THEREOF.  IN THE EVENT OF ANY QUESTION OR INCONSISTENCY BETWEEN THIS AGREEMENT
AND THE PLAN, THE TERMS AND CONDITIONS OF THE PLAN SHALL GOVERN.

 

7.             NOTICES.  ANY NOTICE HEREUNDER TO THE COMPANY SHALL BE ADDRESSED
TO IT AT ITS PRINCIPAL EXECUTIVE OFFICES, LOCATED AT MEDICALCV, INC., 9725 SOUTH
ROBERT TRAIL, INVER GROVE HEIGHTS, MN 55077, ATTENTION: CHIEF FINANCIAL OFFICER;
AND ANY NOTICE HEREUNDER TO THE OPTIONEE SHALL BE ADDRESSED TO THE OPTIONEE AT
THE ADDRESS LAST APPEARING IN THE RECORDS OF THE COMPANY; SUBJECT TO THE RIGHT
OF EITHER PARTY TO DESIGNATE AT ANY TIME HEREUNDER IN WRITING SOME OTHER
ADDRESS.

 

8.             COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED IN TWO COUNTERPARTS
EACH OF WHICH SHALL CONSTITUTE ONE AND THE SAME INSTRUMENT.

 

9.             GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA, EXCEPT TO THE EXTENT
PREEMPTED BY FEDERAL LAW, WITHOUT REGARD TO THE PRINCIPLES OF COMITY OR THE
CONFLICTS OF LAW PROVISIONS OF ANY OTHER JURISDICTION.

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by a
duly authorized officer and the Optionee has executed this Agreement, both as of
the day and year first above written.

 

 

MEDICALCV, INC.

 

 

 

 

 

By

 

 

Its

 

 

 

 

 

 

OPTIONEE

 

 

 

 

 

 

 

 

 

Name and address of Optionee (type or print):

 

 

 

 

 

 

 

 

 

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