Exhibit 10.1

 

RESTATED EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) effective May 30, 2006, by and
between MedicalCV, Inc., a corporation duly organized and existing under the
laws of the State of Minnesota, with a place of business at 9725 South Robert
Trail, Inver Grove Heights, Minnesota 55077 (hereinafter referred to as the
“Company”), and Eapen Chacko, a resident of the state of Minnesota (hereinafter
referred to as “Executive”).

 

BACKGROUND OF AGREEMENT

 

•                                          The Company desires to hire Executive
as its Vice President, Finance and Chief Financial Officer and Executive desires
to be employed by the Company.

 

•                                          The Company and Executive desire to
memorialize the terms and conditions of Executive’s employment, including
additional terms and conditions which have been approved by the Company’s Board
of Directors.

 

In consideration of the foregoing, the Company and Executive agree as follows:

 

ARTICLE 1

EMPLOYMENT

 

1.01  Subject to the terms of Articles 3 and 6, the Company hereby agrees to
employ Executive in the capacity of Executive Vice President Finance and Chief
Financial Officer, pursuant to the terms of this Agreement, and Executive agrees
to such employment. Upon the termination of the employment or responsibilities
of the Company’s current chief financial officer, presently anticipated to be on
or after July 31, 2006, Executive will also have the responsibilities and office
of principal financial officer and principal accounting officer. It is also the
Company’s intention to elect Executive its corporate secretary. Your
offices/titles will not be effective until your employment commences on June 21,
2006.

 

1.02  Executive shall generally have the authority, responsibilities, and such
duties as are customarily performed by the chief financial officer, principal
financial officer and principal accounting officer of a public company of
similar size and industry, specifically including, without limitation, the
following responsibilities:

 

(i)                                     working with senior management of the
Company and its Board of Directors (the “Board”) in formulating short and long
term goals and developing, implementing, and executing strategies to attain
Company objectives;

 

(ii)                                  endeavoring to establish and maintain a
relationship of trust and credibility with members of the senior management
team, the Board, its committees, outside auditors and legal counsel;

 

(iii)                               supervising the implementation of the
Company’s policies and business processes in order to meet the corporate
governance and internal control

 

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requirements established by the senior management team, the Board and relevant
laws, including, but not limited to:  (A) designing and implementing effective
disclosure controls and procedures that are necessary to insure accurate
financial reporting; (B) conducting periodic reviews and evaluations of the
effectiveness of the Company’s disclosure controls and procedures, including,
without limitation, interfacing with the senior management team and other
Company personnel, the Board, Audit Committee, outside auditors and legal
counsel to insure the effectiveness of the Company’s disclosure controls and
procedures and related matters; (C) accurately reporting the results of Company
operations and related matters to the Securities and Exchange Commission, Nasdaq
and other regulatory agencies; and (D) acting as a certifying officer of the
Company’s financial reporting under the Exchange Act and other regulatory
agencies;

 

(iv)                              managing and protecting the Company’s capital
and liquid assets and monitoring and advising management regarding the
availability of adequate capital at all times;

 

(v)                                 regularly and systematically appraising and
evaluating the Company’s performance results against the Company’s established
objectives; and

 

(vi)                              consistent with the foregoing, such other
finance functions as the Chief Executive Officer may assign to Executive from
time to time during his employment period.

 

Executive shall also render such additional services and duties within the scope
of Executive’s experience and expertise as may be reasonably requested of him
from time to time by the Board.

 

1.03  Executive shall report to the Chief Executive Officer and shall direct,
and shall generally be subject to direction, orders and advice of the Board.

 

1.04  In his capacity as Vice President, Finance and Chief Financial Officer,
Executive shall use his best energies and abilities in the performance of his
duties, services and responsibilities for the Company.

 

1.05  During the term of his employment, Executive shall devote substantially
all of his business time and attention to the business of the Company and its
subsidiaries and affiliates and shall not engage in any substantial activity
inconsistent with the foregoing, whether or not such activity shall be engaged
in for pecuniary gain, unless approved by the Board; provided, however, that, to
the extent such activities do not violate, or substantially interfere with his
performance of his duties, services and responsibilities under this Agreement,
Executive shall be permitted to serve on civic or charitable boards or
committees thereof.

 

ARTICLE 2

COMMENCEMENT OF TERM

 

2.01  Executive’s employment shall commence on June 21, 2006.

 

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ARTICLE 3

NATURE OF EMPLOYMENT

 

3.01  Executive’s employment pursuant to this Agreement shall be on an at-will
basis, with either Executive or the Company having the right to terminate
Executive’s employment with or without cause on not less than sixty (60) days’
prior written notice, subject to the Company’s obligations to Executive pursuant
to Sections 6 and 7. The terms and conditions of this Agreement may be amended
from time to time with the consent of the Company and Executive. All such
amendments shall be effective when memorialized by a written agreement between
the Company and Executive or by resolutions of the Board or the Company’s
Compensation Committee (the “Committee”).

 

ARTICLE 4

COMPENSATION AND BENEFITS

 

4.01  During the term of employment hereunder, Executive shall be paid a base
salary at the rate of Two Hundred Thousand ($200,000) per year (“Base Salary”),
payable in installments in accordance with the Company’s established pay
periods, reduced by all deductions and withholdings required by law and as
otherwise specified by Executive. The Company shall cause the Committee to
review Executive’s performance and Base Salary level each calendar year during
the Term, commencing, 2007. Executive’s Base Salary may be increased (but not
decreased), in the sole discretion of the Board. In the event Executive’s
employment shall, for any reason, terminate during the Term, Executive’s final
monthly Base Salary payment shall be made on a pro-rated basis as of the last
day of the month in which such employment terminated.

 

4.02  During the term of employment, in addition to payments of Base Salary set
forth above, Executive shall be eligible to participate in any performance-based
cash bonus plan for senior executives based upon achievement of goals
established with respect to each fiscal year by the Board or Committee after
reasonable consultation with Executive, but Executive’s participation and
performance goals therein shall remain within the discretion of the Board or
Committee.

 

4.03  Executive will be awarded a stock option for 912,296 shares of common
stock as provided in his employment offer letter dated May 30, 2006.

 

4.04  During the term of employment, Executive shall be entitled to participate
in employee benefit plans, policies, programs, perquisites and arrangements, as
the same may be provided and amended from time to time, that are provided
generally to similarly situated executive employees of the Company, to the
extent Executive meets the eligibility requirements for any such plan, policy,
program, perquisite or arrangement.

 

4.05  The Company shall reimburse Executive for all reasonable business expenses
incurred by Executive in carrying out Executive’s duties, services, and
responsibilities under this Agreement. Executive shall comply with generally
applicable policies, practices and procedures of the Company with respect to
reimbursement for, and submission of expense reports, receipts

 

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or similar documentation of, such expenses.

 

4.06  If the Company, based upon an opinion of legal counsel or a judicial
determination, determines that Section 304 of the Sarbanes-Oxley Act of 2002 is
applicable to Executive, to the extent that the Company is required to prepare
an accounting restatement due to the material noncompliance of the Company, as a
result of misconduct, with any financial reporting requirement under the
securities laws, Executive shall reimburse the Company for any bonus or other
incentive or equity-based compensation received from the Company during the
12-month period following the first public issuance or filing with the
Securities and Exchange Commission (whichever first occurs) of the financial
document embodying such financial reporting requirement and any profits received
from the sale of the Company’s securities during that 12-month period. In the
event Executive fails to make prompt reimbursement of any such amount, the
Company may, to the extent permitted by applicable law, deduct the amount
required to be reimbursed from Executive’s compensation otherwise due under this
Agreement.

 

ARTICLE 5

VACATION AND LEAVE OF ABSENCE

 

5.01  Executive shall be entitled to three (3) weeks of paid vacation per year,
in addition to the Company’s normal holidays. Vacation time will be scheduled
taking into account the Executive’s duties and obligations at the Company.
Unused paid vacation time shall not accumulate from year to year, unless
otherwise approved in writing by the Board or Committee. Sick leave and all
other leaves of absence will be in accordance with the Company’s stated
personnel policies.

 

ARTICLE 6

TERMINATION

 

6.01  The Company may terminate Executive’s employment without Cause by giving
Executive at least sixty (60) days written notice thereof. In the event of such
termination, Executive shall receive only the severance compensation set forth
in Article 7.01 and Executive shall also be entitled to all or a portion of any
bonus due Executive pursuant to any bonus plan or arrangement established or
mutually agreed-upon prior to termination, to the extent earned or performed
through the date of termination, based upon the requirements or criteria of such
bonus plan or arrangement, as the Board shall in good faith determine. Such
pro-rated bonus, shall be payable at the time and in the manner payable to other
executives of the Company who participate in such plan or arrangement.

 

6.02  Executive’s employment will be deemed terminated as of the date of the
death of the Executive. In the event of such termination, there shall be payable
to Executive’s estate compensation earned through the date of death together
with a pro-rata portion of any bonus due Executive pursuant to any bonus plan or
arrangement established or mutually agreed-upon prior to termination, to the
extent earned or performed based upon the requirements or criteria of such plan
or arrangement, as the Board shall in good faith determine. Such pro-rated
bonus, shall be

 

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payable at the time and in the manner payable to other executives of the Company
who participate in such plan or arrangement.

 

6.03  Any other provision of this Agreement notwithstanding, the Company may
terminate Executive’s employment upon written notice specifying a termination
date based on any of the following events that constitute Cause:

 

(a)                                  Any commission or nolo contendere plea by
Executive to a felony, gross misdemeanor or misdemeanor involving moral
turpitude, or any public conduct by Executive that has or can reasonably be
expected to have a detrimental effect on the Company;

 

(b)                                 Any act of material misconduct, willful and
gross negligence, or breach of duty to the Company, including, but not limited
to, embezzlement, fraud, dishonesty, nonpayment of an obligation owed to the
Company, or willful breach of fiduciary duty to the Company which results in a
material loss, damage, or injury to the Company;

 

(c)                                  Any material breach of any material
provision of this Agreement or of the Company’s announced rules, codes or
polices, which remains uncured or uncorrected for a period of thirty (30) days
following written notice thereof to Executive specifying such breach;

 

(d)                                 Any act of insubordination by Executive;
however, an act of insubordination by Executive shall not constitute Cause if
Executive cures or remedies such insubordination within thirty (30) days after
written notice to Executive, without material harm or loss to the Company,
unless such insubordination is a part of a pattern of chronic insubordination,
which may be evidenced by reports or warning letters given by the Company to
Executive, in which case such insubordination is deemed not curable.

 

(e)                                  Any unauthorized disclosure of any Company
trade secret or confidential information, or conduct constituting unfair
competition with respect to the Company, including inducing a party to breach a
contract with the Company; or

 

(f)                                    A willful violation of federal or state
securities laws or regulations.

 

In making such determination, the Board shall act in good faith and give
Executive a reasonably detailed written notice and a reasonable opportunity to
be heard on the issues at a Board or Committee meeting. For purposes of this
Agreement, no act or failure by the Executive shall be considered “willful” if
such act is done by Executive in good faith in the belief that such act is or
was lawful and in the best interest of the Company or one or more of its
businesses. Nothing in this paragraph 6.03 shall be construed to prevent
Executive from contesting the Board or Committee’s determination that Cause
exists. In the event of such termination, and not withstanding any contrary
provision otherwise stated, Executive shall receive only his Base Salary earned
through the date of termination.

 

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6.04  The employment of the Executive shall in no event be considered to have
been terminated for Cause if the termination of his employment took place:

 

(a)                                  as a result of an act or omission which
occurred more than 360 days prior to the Executive’s having been given notice of
the termination of his employment for such act or omission, unless the
commission of such act or such omission could not at the time of such commission
or omission have been known to a member of the Board (other than the Executive,
if he is then a member of the Board), in which case there shall not be
termination for Cause if notice of termination took place more than 360 days
from the date that the commission of such act or such omission was or could
reasonably have been so known; or

 

(b)                                 as a result of a continuing course of action
which commenced and was or reasonably could have been known to a member of the
Board (other than the Executive) more than 360 days prior to notice having been
given to the Executive of the termination of his employment.

 

6.05  Executive may terminate his employment upon sixty (60) days prior written
notice to the Company for “Good Reason.”  For purposes of this Agreement, “Good
Reason” means any of the following actions taken by the Company without Cause:

 

(a)                                  the Company or any of its subsidiaries
reduces Executive’s Base Salary or current equity compensation plan
opportunities (participation in any such plans or programs remaining in the
discretion of the Board or Committee), or benefit plans (other than company-wide
changes to benefit plans covering all full-time eligible employees);

 

(b)                                 without Executive’s express written consent,
the Company or any of its subsidiaries significantly reduces Executive’s job
authority and responsibility over quality assurance at the Company as
contemplated by Article 1;

 

(c)                                  without Executive’s express written
consent, the Company or any of its subsidiaries requires Executive to change the
location of Executive’s job or office, so that Executive will be based at a
location more than fifty (50) miles from the location of Executive’s job or
office immediately preceding notice of such requirement.

 

(d)                                 a successor company fails or refuses to
assume the Company’s obligations under this Agreement; or

 

(e)                                  the Company or any successor company
breaches any of the material provisions of this Agreement; provided, however,
that Executive shall provide detailed information to the Company in such written
notice and such grounds for Good Reason are not remedied or continue for a
period of thirty (30) days or more following receipt of such notice.

 

6.06  During the term of his employment and for 24 months after the date of
Executive’s termination of employment, (i) Executive shall not, directly or
indirectly, make or publish any

 

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disparaging statements (whether written or oral) regarding the Company or any of
its affiliated companies or businesses, or the affiliates, directors, officers,
agents, principal shareholders or customers of any of them and (ii) neither the
Company or any of its affiliated companies or businesses or their affiliates,
directors, or officers shall directly or indirectly, make or publish any
disparaging statements (whether written or oral) regarding Executive.
Information  which the Company or Executive is required to make or disclose
regarding the other to comply with laws or regulations, or makes in a pleading
on the advice of litigation counsel, shall not constitute a disparaging
statement.

 

6.07  Upon any termination of Executive’s employment with the Company, Executive
shall be deemed to have resigned from all other positions he then holds as an
officer, employee or director or other independent contactor of the Company or
any of its subsidiaries or affiliates, unless otherwise agreed by the Company
and Executive.

 

ARTICLE 7

SEVERANCE PAYMENTS

 

7.01  The Company, its successors or assigns, will pay Executive as severance
pay a lump sum amount equal to six (6) months of the Executive’s monthly Base
Salary for full-time employment at the time of Executive’s termination (the
“Severance Payment”) if the employment of Executive is terminated by the Company
without cause or by Executive for Good Reason.

 

(a)                                  If Executive becomes entitled to a
Severance Payment under this Agreement, and Executive is eligible to and elects
to continue medical coverage as provided by law (commonly referred to as the
COBRA continuation period), then the Company will pay the cost of premiums for
COBRA coverage for Executive and his eligible dependents for a period of six
months following termination, or if sooner, until Executive is no longer
eligible for COBRA coverage. Executive must be eligible for COBRA coverage,
elect COBRA during the COBRA election period, and comply with all requirements
to obtain such coverage, to be eligible for coverage and for this benefit.

 

(b)                                 If, on the six (6) month anniversary of the
Severance Payment pursuant to Section 7.01, Executive is unemployed and is not
rendering services as an independent contractor, Executive shall be entitled to
continue to receive monthly payments of Base Salary and COBRA coverage for the
period ending on the earlier of (a) the date Executive is reemployed; (b)
commences rendering services as an independent contractor; or (c) is covered by
another medical plan provided by Executive’s new employer; provided, however,
that such payments shall in no event continue for more than an additional six
(6) months. Executive shall report to the Company in writing his reemployment or
engagement as a consultant.

 

(c)                                  Nothing in this Subsection 7.01 shall limit
the authority of the Committee or Board to terminate Executive’s employment in
accordance with Section 6.03. Payment of severance payments pursuant to Section
7.01, less customary

 

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withholdings, shall be made in one lump sum within thirty (30) days of the
Executive’s termination or resignation.

 

7.02  In addition to the Severance Payment pursuant to Section 7.01, the Company
will pay Executive a pro-rata portion of any bonus earned by Executive as of the
date of termination, as provided by Sections 6.01 and 6.02. The payments to
Executive pursuant to Sections 6.01, 6.02 or 7.01 are not intended to be
cumulative or duplicative and an amount payable as a payment of Base Salary or
pro-rata bonus under any one of such sections shall be reduced to the extent of
similar payments made under another of such sections. In addition, the severance
payment of Base Salary shall be reduced by the amount of cash severance-type
benefits to which Executive may be entitled pursuant to any other cash severance
plan, agreement, policy or program of the Company or any of its subsidiaries;
including any payment for post-employment restrictions, provided that if the
amount of cash severance benefits payable under such other severance plan,
agreement, policy or program is greater than the amount payable pursuant to this
Agreement, Executive will be entitled to receive the amounts payable under such
other plan, agreement, policy or program which exceeds the Base Salary severance
payment. Without limiting other payments which would not constitute “cash
severance-type benefits” hereunder, any cash settlement of stock options,
accelerated vesting of stock options and retirement, pension and other similar
benefits shall not constitute “cash severance-type benefits” for purposes of
this Section 7.02.

 

7.03  Notwithstanding any other provision of this Agreement, the Company and
Executive intend that any payments, benefits or other provisions applicable to
this Agreement comply with the payout and other limitations and restrictions
imposed under Section 409A of the Code (“Section 409A”), as clarified or
modified by guidance from the U.S. Department of Treasury or the Internal
Revenue Service – in each case if and to the extent Section 409A is otherwise
applicable to this Agreement and such compliance is necessary to avoid the
penalties otherwise imposed under Section 409A. In this connection, the Company
and Executive agree that the payments, benefits and other provisions applicable
to this Agreement, and the terms of any deferral and other rights regarding this
Agreement, shall be deemed modified if and to the extent necessary to comply
with the payout and other limitations and restrictions imposed under Section
409A, as clarified or supplemented by guidance from the U.S. Department of
Treasury or the Internal Revenue Service – in each case if and to the extent
Section 409A is otherwise applicable to this Agreement and such compliance is
necessary to avoid the penalties otherwise imposed under Section 409A.

 

7.04  The Company may withhold from any amounts payable under this Agreement all
federal, state, city or other taxes required by applicable law to be withheld by
the Company.

 

7.05  The provisions of this Article 7 will be deemed to survive the termination
of this Agreement for the purposes of satisfying the obligations of the Company
and Executive thereunder.

 

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ARTICLE 8

NONDISCLOSURE AND INVENTIONS

 

8.01  Except as permitted or directed by the Company or as may be required in
the proper discharge of Executive’s employment hereunder, Executive shall not,
during his employment or at any time thereafter, divulge, furnish or make
accessible to anyone or use in any way any Confidential Information of the
Company. “Confidential Information” means any information or compilation of
information that the Executive learns or develops during the course of his
employment that is not generally known, that is proprietary to or within the
unique knowledge of the Company, from which it derives economic value (whether
or not conceived, originated, discovered, or developed in whole or in part by
Executive). Confidential Information includes but is not limited to, the
following types of information and other information of a similar nature
(whether or not reduced to writing), all of which Executive agrees constitutes
the valuable trade secrets of the Company: research, designs, development, know
how, computer programs and processes, marketing plans and techniques, existing
and contemplated products and services, customer and product names and related
information, prices sales, inventory, personnel, computer programs and related
documentation, technical and strategic plans, and finances. Confidential
Information also includes any information of the foregoing nature that the
Company treats as proprietary or designates as Confidential Information, whether
or not owned or developed by the Company. “Confidential Information” does not
include information that (a) is or becomes generally available to the public
through no fault of Executive, (b) was known to Executive prior to its
disclosure by the Company, as demonstrated by files in existence at the time of
the disclosure, (c) becomes known to Executive, without restriction, from a
source other than the Company, without breach of this Agreement by Executive and
otherwise not in violation of the Company’s rights, or (d) is explicitly
approved for release by written authorization of the Company.

 

8.02  Executive acknowledges that new and valuable proprietary concepts,
methods, processes, discoveries, trade secrets (as defined in the Minnesota
Uniform Trade Secrets Act), improvements, adaptations, or ideas (herein
individually and collectively referred to as “Inventions”) may be developed,
originated, authorized, conceived, invented, or made by Executive, either alone
or jointly with others, in the course of Executive’s employment by the Company.
All such Inventions shall be the exclusive property of the Company, whether or
not be patentable or copyrightable, and they may or may not be shown or
described in writing or reduced to practice. With respect to all such Inventions
developed, originated, authored, conceived, or invented, or made by Executive
(whether in whole or in part) during Executive’s employment by the Company,
Executive shall:

 

(i)                                     keep accurate, complete and timely
records all such Inventions, which records shall be the Company’s property and
be retained on the Company’s premises;

 

(ii)                                  promptly and fully disclose and describe
all such Inventions to the Company;

 

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(iii)                               assign (and Executive hereby does assign) to
the Company all of Executive’s rights to such Inventions and to applications for
letters patent or copyrights in all countries and to letters patent or
copyrights granted with respect to such Inventions in all countries; and

 

(iv)                              acknowledge and deliver promptly to the
Company (without charge to the Company but at the expense of the Company) such
written instruments and cooperate and do such other acts as may be necessary in
the opinion of the Company to preserve property rights to such Inventions
against forfeiture, abandonment, or loss and to obtain and maintain letters
patent or copyrights and to vest the entire right and title thereto exclusively
in the Company.

 

(a)                                  If Executive is needed, at any time, to
give testimony, evidence, or opinions in any litigation or proceeding involving
any patents or copyrights or applications for patents or copyrights, both
domestic and foreign, relating to inventions, improvements discoveries,
software, writings or other works of authorship conceived, developed or reduced
to practice by Executive, Executive agrees to do so. With respect to any
obligations performed by the Executive under this Section following termination
of Executive’s employment, the Company will pay or reimburse all reasonable
out-of-pocket expenses.

 

(b)                                 The obligations of this paragraph shall
continue beyond the termination of employment with respect to Inventions
conceived or made by Executive during the period of his employment and shall be
binding upon assigns, executors, administrators and other legal representatives.
For purposes of this Agreement, any Invention relating to the business of the
Company on which Executive files or claims a copyright, or files a patent
application, within one (1) year after termination of employment with the
Company, shall be presumed to cover Inventions conceived by Executive during the
term of his employment with the Company, subject to proof to the contrary by
good faith, written and duly corroborated records establishing that such
Invention was conceived and made following termination of employment.

 

NOTICE:  The Company hereby notifies Executive that the foregoing does not apply
to inventions or ideas for which no equipment, supplies, facility, or trade
secret information of the Company was used and that was developed entirely on
Executive’s own time, and (1) which does not relate (a) directly to the business
of the Company and (b) to the Company’s actual or demonstrably anticipated
research or development, or (2) which does not result from any work performed by
Executive for the Company.

 

8.03  In the event of a breach or threatened breach by Executive of the
provisions of this Article 8, the Company shall be entitled to an injunction
restraining Executive from directly or indirectly disclosing, disseminating,
lecturing upon, publishing or using such confidential, trade secret or
proprietary information (whether in whole or in part) and restraining Executive
from rendering any services or participating with any person, firm, corporation,
association or other entity to whom such knowledge or information (whether in
whole or in part) has been disclosed,

 

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without the posting of a bond or other security. Nothing herein shall be
construed as prohibiting the Company from pursuing any other equitable or legal
remedies available to it for such breach or threatened breach, including the
recovery of damages from Executive.

 

8.04  Executive agrees not to directly or indirectly use or disclose
Confidential Information for the benefit of anyone other than the Company,
either during or after employment with the Company and during the term of his
employment and at all times thereafter, agrees:

 

(a)                                  to receive, maintain, and use Confidential
Information in the strictest confidence and, except with the consent of the
Company, not to directly or indirectly reveal, report, publish, disclose, or
transfer, any Confidential Information to any person, firm, corporation, or
other entity or utilize any Confidential Information for Executive’s own benefit
or intended benefit or for the benefit or intended benefit of any other person,
firm, corporation or other entity; and

 

(b)                                 not to put into issue the confidentiality of
any of the Confidential Information, Company’s ownership thereof, or its status
as valuable trade secrets of Company.

 

Executive acknowledges that all notes, data, reference materials, documents,
business plans, the Company business and financial records, computer programs,
and other materials that in any way incorporate, embody, or reflect any of the
Confidential Information, whether prepared by Executive or others, are the
exclusive property of the Company, and Executive agrees to forthwith deliver to
the Company all such materials, including all copies or memorializations
thereof, in Executive’s possession or control, whenever requested to do so by
the Company, and in any event, upon termination of Executive’s employment with
the Company.

 

8.05  The Executive understands and agrees that any violation of this Article 8
while employed by the Company may result in immediate disciplinary action by the
Company, including termination of employment for Cause.

 

8.06  The provisions of this Article 8 shall survive termination of this
Agreement indefinitely.

 

ARTICLE 9

NONCOMPETITION AND NON-RECRUITMENT

 

9.01  Executive agrees that during the term of his employment and for a period
of one (1) year after termination of employment (the “Restricted Period”) he
will not directly or indirectly render service (including services in research)
to any person or entity in connection with the design, development, manufacture,
marketing, or sale of a Competitive Product that is sold or intended for use or
sale in any geographic area in which the Company actively markets a Company
Product or has planned to actively market a Company Product of the same general
type or function. This territory currently includes North America, Europe and
Japan.

 

(a)                                  Without limiting the generality of the
above, Executive expressly agrees that during the Restriction Period discussed
above, he will not directly or indirectly (on his own behalf or on behalf of
another person or entity) sell competitive

 

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Products to, attempt to sell such products to, or otherwise solicit purchases of
such services or products from, the following:

 

(i)                                     any customer with whom Executive (or any
other Executive or representative under Executive’s supervision) has had direct
or indirect contact or to whom Executive (or any other Executive or
representative under Executive’s supervision) has directly or indirectly sold
such services or products during the period of Executive’s employment; or

 

(ii)                                  any prospective customer who has been
directly or indirectly solicited by Company, or who has approached Company, and
with whom Executive (or any other Executive or representative under the
Executive’s supervision) has had direct or indirect contact or to whom Executive
(or any other Executive or representative under Executive’s supervision) has
directly or indirectly attempted to sell such services or products during the
term of Executive’s employment.

 

(b)                                 Executive further agrees that during the
Restriction Period he will not directly or indirectly (i) in any way interfere
or attempt to interfere with the Company’s relationships with any of its current
or potential customers, or (ii) employ or attempt to employ any of the Company’s
then Executives on behalf of any other entity, whether or not such entity
competes with the Company.

 

(c)                                  For the purposes of this Section 9.01,

 

(i)                                     “Competitive Product” means any surgical
product or research to develop information useful in connection with a product
or service that is being designed, developed, manufactured, marketed or sold by
anyone other than the Company and is of the same general type, performs similar
functions, or is used for the same purposes as a Company Product on which the
Employee worked, dealt with, or marketed during the preceding two years of
employment or about which he received or had knowledge of Confidential
Information; provided, however, that the term “surgical product” shall not
include non-invasive or percutaneous products; and

 

(ii)                                  “Company Product” means any product,
product line or service (including any component thereof or research to develop
information useful in connection with a product or service) that is being
designed, developed, manufactured, marketed or sold by the Company or with
respect to which the Company has acquired Confidential Information which it
intends to use in the design, development, manufacture, marketing or sale of a
product or service.

 

9.02  At its sole option, the Company may, by express written notice to
Executive, waive or limit the time and/or geographic area in which Executive
cannot engage in competitive activity or the scope of such competitive activity.

 

9.03  Executive agrees that breach by him of the provisions of this Article 9
will cause the Company irreparable harm that is not fully remedied by monetary
damages. In the event of a

 

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breach or threatened breach by Executive of the provisions of this Article 9,
the Company shall be entitled to an injunction restraining Executive from
directly or indirectly competing or recruiting as prohibited herein, without
posting a bond or other security. Nothing herein shall be construed as
prohibiting the Company from pursuing any other equitable or legal remedies
available to it for such breach or threatened breach, including the recovery of
damages from Executive.

 

9.04  The Executive understands and agrees that any violation of this Article 9
while employed by the Company may result in immediate disciplinary action by the
Company, including termination of employment for Cause.

 

9.05  The obligations contained in this Article 9 shall survive the termination
of this Agreement indefinitely.

 

ARTICLE 10

MISCELLANEOUS

 

10.01  Governing Law. This Agreement shall be governed and construed according
to the laws of the State of Minnesota without regard to conflicts of law
provisions. The Company and Executive agree that if any action is brought
pursuant to this Agreement that is not otherwise resolved by arbitration
pursuant to Section 10.06, such dispute shall be resolved only in the District
Court of Hennepin County, Minnesota, or the United States District Court for
Minnesota, and each party hereto unconditionally (a) submits for itself in any
proceeding relating to this Agreement, or for recognition and enforcement of any
judgment in respect thereof, to the exclusive jurisdiction of the Hennepin
County, Minnesota District Courts or the United States Federal District Court
for Minnesota, and agrees that all claims in respect to any such proceeding
shall be heard and determined in Hennepin County, Minnesota, Minnesota District
Court or, to the extent permitted by law, in such federal court, (b) consents
that any such proceeding may and shall be brought in such courts and waives any
objection that it may now or thereafter have to the venue or jurisdiction of any
such proceeding in any such court or that such proceeding was brought in an
inconvenient court and agrees not to plead or claim the same; waives all right
to trial by jury in any proceeding (whether based on contract, tort or
otherwise) arising out of or relating to this Agreement, or its performance
under or the enforcement of this Agreement; (d) agrees that service of process
in any such proceeding may be effected by mailing a copy of such process by
registered or certified mail (or any substantially similar form of mail),
postage prepaid, to such party at its address as provided in Section 10.06; and
(e) agrees that nothing in this Agreement shall affect the right to effect
service of process in any other manner permitted by the laws of the State of
Minnesota.

 

10.02  Successors. This Agreement is personal to Executive and Executive may not
assign or transfer any part of his rights or duties hereunder, or any
compensation due to him hereunder, to any other person or entity. This Agreement
may be assigned by the Company and the Company. The Company shall require any
successor or assignee, whether direct or indirect, by purchase, merger,
consolidation or otherwise, to all or substantially all the business or assets
of the Company, expressly and unconditionally to assume and agree to perform the
Company’s obligations under this Agreement, in the same manner and to the same
extent that the Company

 

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would be required to perform if no such succession or assignment had taken
place. In such event, the term “Company,” as used in this Agreement, shall mean
the Company as defined above and any successor or assignee to the business or
assets which by reason hereof becomes bound by the terms and provisions of this
Agreement.

 

10.03  Waiver. The waiver by the Company of the breach or nonperformance of any
provision of this Agreement by Executive will not operate or be construed as a
waiver of any future breach or nonperformance under any such provision of this
Agreement or any similar agreement with any other Executive.

 

10.04  Entire Agreement; Modification. This Agreement supersedes, revokes and
replaces any and all prior oral or written understandings, if any, between the
parties relating to the subject matter of this Agreement. The parties agree that
this Agreement: (a) is the entire understanding and agreement between the
parties; and (b) is the complete and exclusive statement of the terms and
conditions thereof, and there are no other written or oral agreements in regard
to the subject matter of this Agreement. Except for modifications described in
Article 3, this Agreement shall not be changed or modified except by a written
document signed by the parties hereto.

 

10.05  Severability and Blue Penciling. To the extent that any provision of this
Agreement shall be determined to be invalid or unenforceable as written, the
validity and enforceability of the remainder of such provision and of this
Agreement shall be unaffected. If any particular provision of this Agreement
shall be adjudicated to be invalid or unenforceable, the Company and Executive
specifically authorize the tribunal making such determination to edit the
invalid or unenforceable provision to allow this Agreement, and the provisions
thereof, to be valid and enforceable to the fullest extent allowed by law or
public policy.

 

10.06  Arbitration. Any dispute, claim or controversy arising under this
Agreement shall, at the request of any party hereto be resolved by binding
arbitration by a single arbitrator selected by employer and Executive, with
arbitration governed by The United States Arbitration Act (Title 9, U.S. Code);
provided, however, that a dispute, claim or controversy shall be subject to
adjudication by a court in any proceeding against the Company or Executive
involving third parties (in addition to the Company or Executive). Such
arbitrator shall be a disinterested person who is either an attorney, retired
judge or labor relations arbitrator. In the event employer and Executive are
unable to agree upon such arbitrator, the arbitrator shall, upon petition by
either the Company or Executive, be designated by a judge of the Hennepin County
District Court. The arbitrator shall have the authority to make awards of
damages as would any court in Minnesota having jurisdiction over a dispute
between employer and Executive, except that the arbitrator may not make an award
of exemplary damages or consequential damages. In addition, the Company and
Executive agree that all other matters arising out of Executive’s employment
relationship with the Company shall be arbitrable, unless otherwise restricted
by law.

 

(a)                                  In any arbitration proceeding, each party
shall pay the fees and expenses of its or his own legal counsel.

 

(b)                                 The arbitrator, in his or her discretion,
shall award legal fees and expenses and costs of the arbitration, including the
arbitrator’s fee, to a party who substantially

 

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prevails in its claims in such proceeding.

 

(c)                                  Notwithstanding this Section 10.06, in the
event of noncompliance or violation, as the case may be, of Sections 8 or 9 of
this Agreement, the Company may alternatively apply to a court of competent
jurisdiction for a temporary restraining order, injunctive and/or such other
legal and equitable remedies as may be appropriate, if it and such court
reasonably determines that the Company would have no adequate remedy at law for
such violation or noncompliance.

 

10.07  Legal Fees. If any contest or dispute shall arise between the Company and
Executive regarding any provision of this Agreement, and such dispute results in
court proceedings or arbitration, a party that prevails to a substantial extent
with respect to a claim brought and pursued in connection with such dispute,
shall be entitled to recover its legal fees and expenses reasonably incurred in
connection with such dispute. Such reimbursement shall be made as soon as
practicable following the resolution of the dispute (whether or not appealed) to
the extent a party receives documented evidence of such fees and expenses.

 

10.08  Notices. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or may send by certified mail,
return receipt requested, postage prepaid, addressed to Executive at his
residence address appearing on the records of the Company and to the Company at
its then current executive offices to the attention of the Board. All notices
and communications shall be deemed to have been received on the date of delivery
thereof or on the third business day after the mailing thereof, except that
notice of change of address shall be effective only upon actual receipt. No
objection to the method of delivery may be made if the written notice or other
communication is actually received.

 

10.09  Survival. The provisions of this Article 10 shall survive the termination
of this Agreement, indefinitely.

 

IN WITNESS WHEREOF the following parties have executed the above instrument the
day and year first above written.

 

 

MEDICALCV, INC.

 

 

 

 

 

By

/s/ Marc P. Flores

 

 

Marc P. Flores

 

 

 

 

 

EXECUTIVE

 

 

 

 

 

By

/s/ Eapen Chacko

 

 

Eapen Chacko

 

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