EXHIBIT 10

 

SETTLEMENT AGREEMENT AND RELEASE

 

THIS SETTLEMENT AGREEMENT (“Settlement Agreement”) is made and entered into this
19th day of October 2007 (the “Execution Date”), by and between J Giordano
Securities LLC d/b/a J Giordano Securities Group (“JGSG”), a Delaware limited
liability company, and MedicalCV, Inc. (“MedicalCV”), a Minnesota corporation
(JGSG and MedicalCV are collectively referred to as the “Parties”).

 

WHEREAS, the Parties entered into an engagement agreement dated December 21,
2004, as amended on March 21, 2005 (as amended, the “Engagement Agreement”),
pursuant to which JGSG agreed, among other obligations, to raise capital for
MedicalCV through a private placement of MedicalCV securities (the “Private
Placement”) in exchange for certain payments and certain rights. The Engagement
Agreement is attached hereto as Exhibit A and incorporated by reference;

 

WHEREAS, the Private Placement closed on April 1, 2005, raising $13.6 million
for MedicalCV, of which $9.55 million was raised from JGSG;

 

WHEREAS, MedicalCV paid JGSG cash commissions of $573,000 and issued JGSG a
warrant for the purchase of 114,600 shares of common stock (on a post-reverse
split adjusted basis) as compensation under the Engagement Agreement in
connection with the Private Placement;

 

WHEREAS, JGSG filed a complaint for breach of the Engagement Agreement against
MedicalCV in the United States District Court for the District of Connecticut,
captioned J Giordano Securities LLC v. MedicalCV, Inc., Docket No.
3:06-CV-465(SRU) (the “Federal Action”), alleging that JGSG was entitled to
additional compensation pursuant to certain financing activities by MedicalCV
that occurred in December 2005, January 2006, and October 2006, as well as
certain compensation relating to registration of the shares underlying the
warrants issued to JGSG as compensation in connection with the Private
Placement;

 

WHEREAS, MedicalCV moved to dismiss or stay the Federal Action and to compel
arbitration before the National Association of Securities Dealers. The federal
court granted the Motion, stayed the Federal Action and compelled arbitration;

 

WHEREAS, after the motion to compel arbitration was granted, JGSG filed a
Statement of Claim in arbitration in the case captioned FINRA No. 06-03568 (the
“Arbitration”). The Statement of Claim is attached hereto as Exhibit B and
incorporated by reference;

 

WHEREAS, MedicalCV filed a Counterclaim in the Arbitration, alleging breach of
the Engagement Agreement and fraud in the inducement. The Counterclaim is
attached hereto as Exhibit C and incorporated by reference;

 

WHEREAS, JGSG filed an Amended Statement of Claim in the Arbitration. The
Amended Statement of Claim is attached hereto as Exhibit D and incorporated by
reference;

 

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WHEREAS, without admission of any liability or wrongdoing, which is expressly
denied by both Parties to this Agreement, the Parties desire to fully and
finally settle and resolve all disputes, claims and matters in controversy among
them; and

 

WHEREAS, it is understood and agreed that this Settlement Agreement is a
compromise of disputed claims by and between the Parties hereto, it is further
understood and agreed that neither this Settlement Agreement nor any of its
terms shall be construed as an admission of fault or wrongdoing of any nature
whatsoever in that any and all allegations of fault or wrongdoing have been and
are expressly denied, and the Parties have entered into this Settlement
Agreement solely to avoid the costs, uncertainty, and inconvenience associated
with adversary proceedings;

 

NOW THEREFORE, in consideration of the foregoing and the mutual promises herein
contained, and for valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Parties hereto, intending to be legally bound,
hereby represent and agree as follows:

 

TERMS AND CONDITIONS

 

1.             Settlement Payment.

 

a.             In consideration of and in return for the withdrawals and
dismissals with prejudice in Section 2 hereof and the releases of Section 3
hereof, MedicalCV agrees to pay to JGSG $750,000 on or before October 22, 2007.

 

b.             The foregoing payment (the “Payment”) shall be made by:

 

 

 

wiring funds to                                     

 

 

ABA Route#:                                       

 

 

Account Name:                                    

 

 

Account #:                                            

 

2.             Withdrawals and Dismissals With Prejudice.  Upon the receipt of
the Settlement Payment, (i) JGSG shall file a stipulation for dismissal of the
Federal Action with prejudice, substantially in the form attached as Exhibit E,
and (ii) the Parties shall file a stipulation withdrawing the Arbitration and
dismissing the same with prejudice, substantially in the Form attached as
Exhibit F.

 

3.             JGSG Release of MedicalCV.  Subject to receipt by JGSG of the
Settlement Payment, JGSG and its past, present and future agents,
representatives, members, shareholders, principals, attorneys, affiliates,
parent corporations, subsidiaries, officers, directors, employees, predecessors,
successors, licensees and assigns hereby release MedicalCV, and its past,
present and future agents, representatives, shareholders, principals, attorneys,
affiliates, parent corporations, subsidiaries, officers, directors, employees,
predecessors, successors, licensees and assigns, from any and all claims,
demands, and causes of action, suits, debts or liabilities of any kind, from the
beginning of the world to and including the Execution Date, whether known or
unknown, which were or could have been asserted in the Federal Action or
Arbitration; provided, however, that nothing herein shall release or discharge
MedicalCV from its obligations under this Agreement, including the specific
payment obligations of MedicalCV as set forth in Section 1 hereof.

 

4.             MedicalCV Release of JGSG.  MedicalCV and its past, present and
future agents, representatives, members, shareholders, principals, attorneys,
affiliates, parent corporations, subsidiaries, officers, directors, employees,
predecessors, successors, licensees and assigns hereby release JGSG, and its
past,

 

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present and future agents, representatives, shareholders, principals, attorneys,
affiliates, parent corporations, subsidiaries, officers, directors, employees,
predecessors, successors, licensees and assigns, from any and all claims,
demands, and causes of action, suits, debts or liabilities of any kind, from the
beginning of the world to and including the Execution Date, whether known or
unknown, which were or could have been asserted in the Federal Action or
Arbitration; provided, however, that nothing herein shall release or discharge
JGSG from its obligations under this Agreement.

 

5.             Non-Disparagement.  Except as otherwise required by law, the
Parties hereto agree and covenant that they shall not make any statement,
written or oral, in any forum or medium, or take any action in disparagement of
the other party to the general public and/or any third party including their
employees, and the potential customers of the other party. Notwithstanding the
foregoing, and consistent with Section 7(viii) of this Agreement, each Party may
continue to state that they believe that the other Party’s claims or
counterclaims in the Federal Action or Arbitration were without merit.

 

6.             Costs.  Each of the Parties shall be responsible for its own
costs, including but not limited to attorney’s fees and costs, associated with
the Federal Action, the Arbitration and the negotiation and preparation of this
Agreement. Nonetheless, in the event that legal action becomes necessary to
enforce any provision of this Agreement, the prevailing party in that action
shall be entitled to recover reasonable attorneys’ fees, plus all other
reasonable costs incurred in connection with that enforcement action, from all
Parties whose conduct led to the initiation of the enforcement action.

 

7.             Warranties, Representations and Acknowledgments.

 

a.             Each signatory hereto hereby covenants, warrants and represents
as follows:

 

i.              Such person has the full authority and has been duly authorized
to bind the Party or Parties for whom such person acts, and that his/her
signature hereon and agreement hereto constitutes, evidences and creates a
binding obligation of the Party on whose behalf said signatory has executed this
Agreement;

 

ii.             All the provisions of this Agreement have been carefully read
and are fully understood;

 

iii.            Such person is entering into this Agreement knowingly and
voluntarily and that the Agreement is a product of good faith negotiations
between the Parties;

 

iv.            Such person is executing this Agreement freely after having
consulted with, or having had the opportunity to consult with, the attorneys of
such person’s choice;

 

v.             In executing this Agreement, no reliance has been placed on any
inducements, promises, or representations made by any other Party or that
Party’s counsel, regarding the terms, effect, purpose or consequence of this
Agreement.

 

vi.            Execution, delivery and performance of this Agreement has been
duly and properly authorized by all necessary internal action of each of the
Parties hereto;

 

vii.           The claims, suits, rights, and/or interests which are the subject
matter of this Agreement, the Federal Action and the Arbitration are owned or
controlled solely by the Party asserting same, and have not been assigned,
conveyed, transferred or sold, and are free of encumbrance;

 

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viii.          This Agreement is a compromise of disputed claims by and between
the Parties hereto. Neither this Agreement nor any of its terms shall be
construed as an admission of fault or wrongdoing of any nature whatsoever in
that any and all allegations of fault or wrongdoing have been and are expressly
denied. The Parties have entered into this Settlement Agreement solely to avoid
the costs, uncertainty, and inconvenience associated with adversary proceedings;

 

8.             Assignability.  This Agreement is not assignable in part or in
whole without the prior written consent of all other Parties.

 

9.             Modifications.  This Agreement may not be modified except in a
writing signed by all the Parties.

 

10.           Successors and Assigns.  All of the provisions in this Agreement
shall be binding upon the Parties hereto and their respective successors,
assigns, heirs and executors and shall inure to the benefit of, and shall be
enforceable by, the Parties and their respective successors, assigns, heirs and
executors.

 

11.           Construction.  Each of the Parties has participated in the
drafting and/or negotiation of this Agreement after consulting with counsel.
Therefore, the language of this Agreement shall not be presumptively construed
in favor of or against any of the Parties hereto.

 

12.           Headings.  The headings preceding the paragraphs and subparagraphs
herein are for convenience of reference only, and shall not be deemed a part of
this Agreement.

 

13.           Notices.  All notices or other communications to be sent to the
Parties shall be addressed and sent by (a) certified mail, return receipt
requested, postage prepaid, (b) overnight courier, (c) facsimile transmission
and first class mail, or (d) by hand, to the Parties’ counsel at the following
addresses, unless the other Parties hereto are notified, in writing, of a
different address:

 

As to JGSG:

 

Mr. Jimmy Giordano

J Giordano Securities Group

1234 Summer Street

Stamford, CT  06901

 

with a copy to:

 

Dreier LLP

One Landmark Square, 20th Floor

Stamford, CT 06901

Attention:  Joseph M. Pastore III, Esq.

 

As to MedicalCV:

 

Mr. Marc P. Flores

President and Chief Executive Officer

MedicalCV, Inc.

9725 South Robert Trail
Inver Grove Heights, MN 55077

 

with a copy to:

 

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Julie H. Firestone, Esq.

Briggs and Morgan, P.A.

2200 IDS Center

80 South 8th Street

Minneapolis, MN  55402-2156

 

14.           Additional Acts.  Each of the Parties shall, at its own expense,
execute and deliver all documents and perform all further acts that may be
reasonably necessary to effectuate the purposes and provisions of this
Agreement.

 

15.           GOVERNING LAW AND JURISDICTION.  THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF MINNESOTA,
WITHOUT REGARD TO MINNESOTA’S CONFLICT OF LAWS PROVISIONS. THE MINNESOTA STATE
AND FEDERAL COURTS SHALL HAVE EXCLUSIVE JURISDICTION OVER ANY CONTROVERSIES
REGARDING THIS AGREEMENT. THE PARTIES HEREIN CONSENT TO PERSONAL JURISDICTION IN
THE STATE OF MINNESOTA. NOTWITHSTANDING THE FOREGOING, ANY DISPUTE ARISING FOR
MEDICALCV’S FAILURE TO MAKE THE PAYMENT SET FORTH IN SECTION 1(B) HEREIN, SHALL
BE HEARD EXCLUSIVELY BY THE FEDERAL COURT IN THE DISTRICT OF CONNECTICUT.

 

16.           Counterparts.  This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement shall not
be effective or binding on any Party until fully signed by all Parties.

 

17.           Entire Agreement.  This Agreement sets forth the entire agreement
between the Parties with respect to the subject matter hereof. The “Whereas”
clauses above are incorporated by reference into the Terms and Conditions of
this Agreement. This Agreement supersedes any and all prior understandings and
agreements between the Parties and neither Party shall have any obligation
toward the other except as set forth in this Agreement.

 

IN WITNESS WHEREOF, the Parties have respectively signed these presents the day
and year first written above.

 

 

J GIORDANO SECURITIES LLC

MEDICALCV, INC

d/b/a J GIORDANO SECURITIES

 

GROUP

 

 

 

 

 

By:

/s/ David Kronenberg

 

By:

/s/ Marc P. Flores

 

Name: David Kronenberg

Name: Marc P. Flores

Title: Chief Financial Officer

Title: President and Chief Executive Officer

Dated:

October 19, 2007

 

Dated:

October 19, 2007

 

 

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