**Exhibit10.41**

** **

**ASSIGNMENT AGREEMENT**

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THIS ASSIGNMENT AGREEMENT is entered into effectivethe 6th day of August, 2002, by and between Segmed, Inc., a Minnesotacorporation, whose business office is located at 4702 Lakeview Drive, Edina,Minnesota 55424 (together with its successors and assigns, “Segmed”), WilliamF. Northrup III, MD, a United States citizen living at 4702 Lakeview Drive,Edina, Minnesota 55424 (together with his personal representatives, heirs andassigns, “Dr. Northrup”) and MedicalCV, Inc., a Minnesota corporation, whosebusiness office is located at 9725 South Robert Trail, Inver Grove Heights,Minnesota 55077 (“MedicalCV”).  SEGMEDand Dr. Northrup are referred to herein collectively as the “ASSIGNORS”.

 

WITNESSETH:

 

WHEREAS, ASSIGNORS have developed the Device (asdefined below), which has related to it three patents issued in the UnitedStates, patents issued in Australia, Taiwan and South Africa, patentapplications pending in the United States, Canada, Europe and Japan, and aregistered trademark in the United States, as set forth in more detail below;and

 

WHEREAS, ASSIGNORS wish to assign to MedicalCV theirentire right, title and interest in and to the Device and the IntellectualProperty (as defined below); and

 

WHEREAS, MedicalCV desires to acquire all right,title and interest in and to the Device and the Intellectual Property, and anypatents to be granted pursuant to the Applications and/or additionalapplications to practice the Device and any other devices to be described therein;and

 

WHEREAS, Dr. Northrup is the Chief Executive Officerand a principal shareholder of Segmed; and

 

WHEREAS, Segmed proposes to acquire from MedicalCVwarrants to purchase common stock of MedicalCV in exchange for the sale,transfer, and assignment of the Device and the Intellectual Property;

 

NOW, THEREFORE, in consideration of the premises andthe mutual covenants contained in this Agreement, the parties hereto agree asfollows:

 

1.                                       Definitions.  The parties agree that thefollowing words, terms and phrases where written with an initial capital lettershall, unless the context otherwise indicates, have the following meanings forpurposes of this Agreement:

 

1.1                                 “Applications” shall mean any and all pendingpatent applications filed by ASSIGNORS relating to the Device and any apparatusand/or method for reducing, sizing and/or stabilizing the circumference of avascular or anatomical structure designed or used by ASSIGNORS, including, butnot limited to, the following:

 

(a)                                  In the United States, application No.09/733,224 entitled ANNULOPLASTY SYSTEM, filed December 8, 2000;

 

(b)                                 In Canada, application No. 2,197,069 entitledAPPARATUS FOR REDUCING THE CIRCUMFERENCE OF A VASCULAR STRUCTURE, filedAugust 10, 1995;

 

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(c)                                  In the European Region, application No.95929486.9 entitled APPARATUS FOR REDUCING THE CIRCUMFERENCE OF A VASCULARSTRUCTURE, filed August 10, 1995; and

 

(d)                                 In Japan, application No. 507532/1996entitled APPARATUS FOR REDUCING CIRCUMFERENCE OF VASCULAR STRUCTURE, filedAugust 10, 1995

 

andany and all patents and/or patent applications claiming priority thereto, andany and all patents or patent applications in which either Segmed or Dr.Northrup is an inventor, which relate to the Device and/or any apparatus and/ormethod for reducing, sizing and/or stabilizing the circumference of a vascularor anatomical structure, and any reissues, continuations, divisions,continuations-in-part or extensions thereof, any patents issuing therefrom;and/or any improvements thereto or enhancements thereof which are either whollyor in part owned, invented, controlled, acquired or otherwise assignable byeither or both of the ASSIGNORS, and any patent applications therefor and anypatents issuing therefrom.

 

1.2                                 “Conflicting Organization” shall mean any personor entity which engages in the development, manufacture, marketing or sale ofan apparatus or process which competes with the Device.

 

1.3                                 “Device” shall mean the apparatus and/ormethod for reducing, sizing and/or stabilizing the circumference of a vascularor anatomical structure (the “Field”) covered by the Intellectual Property andfully described in the Applications and applications relating to the Patents,and any and all improvements, modifications, derivations, enhancements,technology, Know-how and Documentation related thereto.

 

1.4                                 “Documentation” shall mean those elements ofKnow-how and other items of relevant information which are in writing or othertangible form including, without limitation, drawings, diagrams, lab books,blueprints, works of authorship, mask works, information, materials, tools,computer programs, technical publications, manuals, designs, and artwork whichrelate to the manufacture, inspection, quality control, installation,maintenance, testing and operation of the Device or any apparatus and/or methodfor reducing, sizing and/or stabilizing the circumference of a vascular oranatomical structure.

 

1.5                                 “Intellectual Property” shall meancollectively the Patents, Trademark, Applications and all other rights in andto the Device, together with all Know-how and Documentation related thereto.

 

1.6                                 “Know-how” shall mean all trade secrets,confidential information, including any apparatus, device, intellectualproperty, discoveries, improvements, modifications, and enhancements,techniques, concepts, data, technical information, identification of materialsand specifications (including engineering, testing and manufacturingspecifications), diagrams, schematics, charts and lists owned, controlled,acquired or otherwise licensable by ASSIGNORS relating to the Device or anyapparatus and/or method for reducing, sizing and/or stabilizing thecircumference of a vascular or anatomical structure.  Know-how shall specifically include written descriptions anddocumentation of the method(s) of manufacture of the Device and any aspects orparts thereof.

 

1.7                                 “Net Sales Price” shall mean the priceinvoiced by MedicalCV or its licensees for sales, leases or other dispositionsof the Device, less (i) all trade, quantity and cash discounts actuallyallowed; (ii) all credits and allowances actually granted on account ofrejection, returns, billing errors and retroactive price reductions; (iii)excise, sales and use taxes, tariffs or equivalent taxes levied on or measuredby the invoiced amount; (iv) duties; and (v) insurance and shippingexpenses.  Net Sales shall be determinedin accordance with Generally Accepted Accounting Principles

 

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1.8                                 “Patents” shall mean the following patentsissued to Assignors in the United States, Australia, Taiwan and South Africa:

 

(a)                                  In the United States, U.S. Patent No.5,593,424 entitled APPARATUS AND METHOD FOR REDUCING AND STABILIZING THECIRCUMFERENCE OF A VASCULAR STRUCTURE, issued January 14, 1997, U.S.Patent No. 5,709,695 entitled APPARATUS FOR REDUCING THE CIRCUMFERENCE OF AVASCULAR STRUCTURE, issued January 20, 1998, and U.S. Patent No. 5,961,539entitled METHOD AND APPARATUS FOR SIZING, STABILIZING AND/OR REDUCING THECIRCUMFERENCE OF AN ANATOMICAL STRUCTURE, issued October 5, 1999;

 

(b)                                 In Australia, patent No. 700530 entitledAPPARATUS FOR REDUCING CIRCUMFERENCE OF VASCULAR STRUCTURE, filedAugust 10, 1995;

 

(c)                                  In Taiwan, patent No. 096871 entitledAPPARATUS FOR REDUCING THE CIRCUMFERENCE OF A BODILY STRUCTURE, filedAugust 11, 1995; and

 

(d)                                 In South Africa patent No. 95/6672 entitledAPPARATUS AND METHOD FOR REDUCING THE CIRCUMFERENCE OF A VASCULAR STRUCTURE,filed August 10, 1995,

 

andany and all patents and/or patent applications claiming priority thereto, andany and all patents or patent applications in which ASSIGNORS are an inventor,which relate to the Device and/or any apparatus or method for reducing, sizingand/or stabilizing the circumference of a vascular or anatomical structure, andany reissues, continuations, divisions, continuations-in-part or extensionsthereof, any patents issuing therefrom, and/or any improvements thereto orenhancements thereof which are either wholly or in part owned, invented,controlled, acquired or otherwise assignable by ASSIGNORS, and any patentapplications therefor and any patents issuing therefrom.

 

1.9                                 “Trademark” shall mean the mark representedby United States Registration No. 2,108,883 for the “SEGMENT” mark filedSeptember 12, 1996, together with all goodwill and common law and otherrights relating to such mark.

 

2.                                       Assignment.

 

2.1                                 ASSIGNORS hereby sell, assign, and transferexclusively to MedicalCV, upon and subject to all of the terms and conditionsof this Agreement, their entire right, title, and interest in and to the Deviceand the Intellectual Property. ASSIGNORS agree to cooperate and to execute all papers and documentsnecessary to evidence, record and perfect the foregoing transfer and to vestcomplete ownership of the Device and the Intellectual Property, along with anypatents, domestic or foreign, issuing from the Applications, in MedicalCV,including, but not limited to, assignments of the foregoing for filing with theappropriate patent and trademark offices in the United States andelsewhere.  ASSIGNORS hereby authorizeMedicalCV to execute any documents on their behalf, as their attorney-in-fact,in the event MedicalCV is unable for any reason whatsoever to secure theASSIGNORS’ signature to any document it is entitled to under thisSection 2.1

 

2.2                                 Security Interest. Segmed shall retain a priority security interest in the Device until thecash consideration set forth in Section 3.1(a) is fully paid by MedicalCV,at which time the security interest shall terminate.  MedicalCV agrees to cooperate and to execute all papers anddocuments necessary to evidence, record and perfect the foregoing securityinterest.

 

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2.3                                 Documentation. ASSIGNORS will provide to MedicalCV, at the closing, all Know-how andDocumentation relating to the Device and the Intellectual Property.

 

2.4                                 Technical Assistance. ASSIGNORS agree to provide technical assistance to MedicalCV asreasonably requested by it, for the purposes of practicing the Know-how, use ofthe Intellectual Property and Documentation and development, marketing and saleof the Device by MedicalCV, pursuant to a separate agreement (the “TechnicalAssistance Agreement”) to be entered into contemporaneous with the closingcontemplated by this Agreement between MedicalCV and Dr. Northrup.  Performance of the Technical AssistanceAgreement by Dr. Northrup, acting as an independent contractor in accordancewith the terms of the Technical Assistance Agreement, shall fulfill Segmed’sobligations under this Section 2.4.

 

2.5                                 Government Licenses and Approvals andThird-Party Consents.  ASSIGNORS shall provide reasonableassistance to MedicalCV in obtaining U.S. Food and Drug Administration (FDA)clearance or approval, or other U.S. or foreign governmental licenses, permitsor approvals, and any third-party consents, which may be required for the manufacture,use or sale of the Device.

 

3.                                       Consideration.

 

3.1                                 ASSIGNORS acknowledge and agree that the fullconsideration for this Assignment shall be:

 

(a)                                  payment of the aggregate sum of $500,000 dueand payable to Segmed by MedicalCV as follows:

 

(i)                                     $50,000 payable upon the closing of thetransaction contemplated by this Agreement;

 

(ii)                                  $100,000 upon completion of the first humanimplant of the Device following FDA 510(k) clearance for the Device; and

 

(iii)                               $350,000 upon MedicalCV achieving gross revenues of $1,320,000 fromsales of the Device during any 12-month period; and

 

(b)                                 issuance of a warrant (the “Warrant”) topurchase an aggregate of 100,000 shares of MedicalCV common stock, exercisablefor seven years following the issuance thereof, at an exercise price of $2.95per share in the form attached hereto as Exhibit A, subject to vesting asfollows:

 

(i)                                     to the extent of 25,000 shares upon theclosing of the transaction contemplated by this Agreement;

 

(ii)                                  to the extent of an additional 25,000 sharesupon MedicalCV receiving the CE Mark for the Device;

 

(iii)                               to the extent of an additional 25,000 shares upon MedicalCV receivingFDA 510(k) clearance for the Device; and

 

(iv)                              to the extent of the remaining 25,000 shares upon the first commercialsale of the Device by MedicalCV (other than to a wholly owned subsidiary ofMedicalCV or to the ASSIGNORS); and

 

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(c)                                  payment of the royalties payable pursuant toSection 3.2 of this Agreement.

 

3.2                                 Royalties.  For so long as any of thePatents or any patents issued pursuant to the Applications remain enforceableagainst others, MedicalCV shall pay to Segmed royalties at the rate of:

 

(a)                                  six percent (6%) of the Net Sales Price ofDevices in countries in which the Patents are enforceable; and

 

(b)                                 two percent (2%) of the Net Sales Price ofDevices in countries in which the Patents are not enforceable;

 

provided,however, that commencing with the fifth year following public release of theDevice after FDA clearance or approval of the Device, MedicalCV shall pay toSegmed the minimum annual royalties set forth on Exhibit B in installments ofone-fourth of the applicable minimum annual royalty payable on or before thefifth business day following each calendar quarter.  The minimum annual royalty payments required herein shall beconsidered advance payments against and deducted from earned royalties payablepursuant to Section 3.3 (a) and (b) for the year in which each minimumannual royalty payment is made.  In noevent shall the payment of the minimum annual royalty payment excuse MedicalCVfrom its obligations to meet the reporting and payment requirements otherwisespecified.

 

3.3                                 Payment of Royalties. Royalties shall be payable based upon the Net Sales Price of Devicesduring each calendar quarter.  Royalties(other than installments of the minimum royalty) shall be due and payable toSegmed within sixty (60) days after the end of the calendar quarter during theterm of this Agreement.  All paymentsshall be made in United States dollars. If any royalty payments required or as amended by this Agreement shallnot be paid within five (5) business days following its due date, the unpaidamount shall bear interest at a per annum rate equal to the U.S. prime rate aspublished in the *Wall Street Journal*.

 

3.4                                 Discontinuation of Royalties.  IfMedicalCV determines to discontinue pursuing commercialization of the Device,or shall determine to discontinue marketing the Device, then MedicalCV shall,upon request of Segmed, provide Segmed with an exclusive license permittingSegmed to market and sell the Device, or will assign all of its rights in theIntellectual Property to Segmed, and thereafter, all of MedicalCV’s paymentobligations under Section 3 of this Agreement shall cease (other thanpayment of amounts due or accrued through the date of such discontinuance).

 

3.5                                 Reductions.  MedicalCV shall not have anyobligation under this Agreement to enforce the Patents or the Trademark againstany third parties who infringe the Patents or the Trademark, or to procure aright or license or pay any fee or royalty should the Device or use of theDevice be determined to infringe rights of third parties; but if it shalldetermine to do so, or if it determines to defend claims that the Deviceinfringes patents of others, it may offset against and deduct from royaltiesdue Segmed, the cost of procuring any right or license, including any royaltiesor fees, the cost of defense or enforcement, including reasonable attorneysfees, judgments, award and any damages or settlements insofar as the same arereasonably determined to arise out of the alleged infringement of the Patents,or the infringement or alleged infringement by MedicalCV of rights of thirdparties.  For purposes of the offset anddeduction from future royalties due Segmed pursuant hereto, the followinglimitations shall apply:  (a) no morethan one-half of the cost or expense related to the procurement of a right orlicense (exclusive of royalties based upon a percentage of sales) or thepayment of attorneys fees, costs, judgments, awards, damages, settlements orother expenses (exclusive of royalties) can be charged to Segmed and deductedfrom royalties, and such amount may in no event exceed the lesser oftwenty-five percent (25%) thereof, or $250,000, of which amount no more thantwenty percent (20%) may be deducted from royalties due Segmed in any 12-monthperiod; and (b) no more than one-half of the royalty

 

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based on sales payable to a third party forthe procurement of a right or license may be deducted from royalties due Segmedpursuant to this Agreement.  In theevent MedicalCV shall receive amounts by way of award or settlement inconnection with enforcement or any actions relating to the foregoing, MedicalCVshall credit to Segmed the royalty payment under Section 3.2 relating toany such amounts actually received by MedicalCV which are based upon a numberof units determined to infringe upon MedicalCV’s rights and which exceedMedicalCV’s costs and expenses associated with the same.

 

3.6                                 Reports.  No later than sixty (60) daysafter the close of each calendar quarter in which there are net sales of theDevice, MedicalCV shall provide ASSIGNORS with a report relating to the priorquarter setting forth not less than the following information:

 

(a)                                  All units manufactured and sold,

 

(b)                                 Total invoices/billings for units sold,

 

(c)                                  Accounting for all sales of the Device byMedicalCV’s licensees, if any;

 

(d)                                 Any and all deductions,

 

(e)                                  Total royalties due to Segmed,

 

(f)                                    Names and addresses of all licensees ofMedicalCV,

 

The reports provided for hereunder shall becertified by an authorized representative of Medical CV.

 

3.7                                 Books and Records. MedicalCV shall keep accurate books and records as may be necessary forthe purpose of determining the amounts of royalties payable to ASSIGNORSpursuant to Article 3.2 above. MedicalCV shall make such books and records available to ASSIGNORS ortheir accountants or other representatives upon written request by ASSIGNORSduring normal business hours throughout the term of this Agreement and for aperiod of three (3)  years after thedate of origination of any such books or records for the limited purpose ofverifying MedicalCV’s determination of royalties paid or payable pursuant tothis Agreement.

 

3.8                                 Non-Competition.  Solong as the Patents or any patent issued pursuant to the Applications remainenforceable against others that make, sell or use the Device withoutauthorization of MedicalCV, ASSIGNORS will not, without the written consent ofMedicalCV authorized by MedicalCV’s board of directors:

 

(a)                                  directly or indirectly engage in thedevelopment, manufacture or sale of any apparatus, intellectual property orprocess which would, if sold or used, compete in the Field with Medical CV, or

 

(b)                                 render services to a Conflicting Organizationwhich engages in the activities described in clause (a).

 

3.9                                 Non-Disclosure.  Solong as the Patents or any patent issued pursuant to the Applications remainenforceable against others that make, sell or use the Device withoutauthorization of MedicalCV, ASSIGNORS will not, without the written consent ofMedicalCV:

 

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(a)                                  directly or indirectly, divulge to anyunauthorized person any information designated as secret or confidential byMedicalCV;

 

(b)                                 disclose to anyone other than an employee of MedicalCVor its attorneys or use in any way other than in the course of the performanceof this Agreement or the Technical Assistance Agreement, any informationregarding the Device, the Intellectual Property or any other product developed,produced, manufactured, marketed or sold by MedicalCV, including any know-hownot known to the general public or recognized as standard practice, whetheracquired or developed by either ASSIGNOR during the performance of thisAgreement or the Technical Assistance Agreement or obtained from MedicalCVemployees, except to the extent such information (i) has been publiclydisclosed or authorized for disclosure by MedicalCV or (ii) has been publiclydisclosed by parties, not in violation of this Agreement; or

 

(c)                                  directly or indirectly publish any suchinformation.

 

4.                                       Representations, Warranties and Obligations.

 

4.1                                 ASSIGNORS represent, warrant and acknowledgethat:

 

(a)                                  This Agreement and the transactioncontemplated herein have been approved by the Board of Directors andshareholders of Segmed;

 

(b)                                 ASSIGNORS possess requisite power andauthority to enter into this Agreement and consummate the transactionscontemplated hereby, including, but not limited to, the approval of Segmed’sboard of directors and shareholders;

 

(c)                                  ASSIGNORS are the owners of the entire right,title and interest in and to the Device and the Intellectual Property and havethe right and authority to sell, assign and transfer the Device and theIntellectual Property free and clear of any encumbrances, claims, securityinterests or claims of any third parties;

 

(d)                                 ASSIGNORS have not assigned, transferred,licensed, pledged or otherwise encumbered the Device, the Intellectual Propertyor any interest therein, and there are no other agreements with any other partyin conflict with this Agreement, and, except as cited in the Applications, theyknow of no prior act which would invalidate, or prevent the issuance of, thepatents issued or sought to be issued thereon;

 

(e)                                  To the best of their knowledge, after dueinquiry, ASSIGNORS are not aware of, and have not received notice of, anyrights of third parties in any apparatus or method that would, if manufacturedor sold, infringe the Patents;

 

(f)                                    To the best of their knowledge, after dueinquiry, MedicalCV’s manufacture, use, sale or license of the Device or theIntellectual Property will not violate, infringe, or misappropriate any rightsof any third party, and there are no actions for infringement against ASSIGNORSwith respect to the Device or the Intellectual Property;

 

(g)                                 they are acquiring the Warrants pursuant toSection 3.1(b) for investment purposes and not with a view todistribution, and consent that sale or transfer of the Warrants shall berestricted and a legend may be placed upon certificates representing theWarrants, and any shares issued upon exercise of the Warrants, consistent withASSIGNORS’ investment representations;

 

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(h)                                 the Warrants, and any shares issuable uponexercise of the Warrants, have not been registered under the Securities Act of1933, as amended, or Minnesota Securities laws and must be held indefinitelyuntil registered or until the ASSIGNORS sell or dispose of the same in a mannerexempt from registration under federal and state securities law;

 

(i)                                     ASSIGNORS been given information concerningthe business and financial condition of MedicalCV and are familiar with itsbusiness and financial condition and prospects, and have been given access tocorporate and financial information, have had the opportunity to discuss investmentwith officers or founders of MedicalCV, and do not require any furtherinformation from MedicalCV;

 

(j)                                     investment in MedicalCV involves a highdegree of risk.

 

4.2                                 ASSIGNORS hereby agree to cooperate withMedicalCV in executing such further documents and instruments as MedicalCV mayreasonably require to carry out the purposes of this Agreement and to providereasonable assistance in prosecuting or defending any infringement or allegedinfringement of MedicalCV’s rights in the Device and Intellectual Propertytransferred pursuant to Section 2.1 without fee or charges.

 

5.                                       The Closing.  The closing of thetransaction contemplated by this Agreement (the “Closing”), shall take place atthe offices of Briggs and Morgan, Professional Association located at 2400 IDSCenter, 80 South 8th Street, Minneapolis, Minnesota 55402, at 9:00A.M. local time on August 7, 2002, or on such other date as the partiesmay mutually agree.

 

5.1                                 At the Closing, MedicalCV shall:

 

(a)                                  execute and deliver to Dr. Northrup the TechnicalAssistance Agreement pursuant to Section 2.4;

 

(b)                                 deliver to Segmed payment of $50,000 pursuantto Section 3.1(a)(i); and

 

(c)                                  issue and deliver to Segmed the Warrantpursuant to Section 3.1(b).

 

5.2                                 At the Closing, ASSIGNORS shall execute anddeliver to MedicalCV the following:

 

(a)                                  any and all documents and other instrumentsthat MedicalCV or its counsel deem reasonable or necessary to fully assign andvest ownership of the Device, Patents, Applications and Trademark withMedicalCV, together with any and all documents, instruments and other itemsconstituting or representing the Device, Patents, Applications and Trademarkpursuant to Section 2.1; and

 

(b)                                 all Know-how and Documentation pursuant toSections 2.1 and 2.3.

 

5.3                                 At the Closing, Dr. Northrup shall executeand deliver to MedicalCV the Technical Assistance Agreement pursuant toSection 2.4.

 

5.4                                 At the Closing, Segmed and/or Dr. Northrupshall execute and deliver all other documents and instruments that MedicalCV orits counsel deem reasonably necessary to complete the transaction contemplatedby this Agreement.

 

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6.                                       Termination; Survival.

 

6.1                                 MedicalCV may terminate this Agreement at anytime during the development and commercialization of the Device, at its solediscretion, by giving written notice to Segmed.  In the event that MedicalCV terminates this Agreement, then:

 

(a)                                  MedicalCV shall assign to Segmed its rightsin the Device and the Intellectual Property assigned to MedicalCV pursuant tothis Agreement;

 

(b)                                 Segmed shall be entitled to retain allconsideration paid to Segmed under Section 3.1(a) and Section 3.2through the date of such termination;

 

(c)                                  the Warrant issued pursuant toSection 3.1(b) shall be considered cancelled to the extent of unvestedshares as of the date of such termination; and

 

(d)                                 the Non-Competition provisions ofSection 3.8 shall be considered cancelled and shall no longer apply;

 

provided,however, that if an arbitrator shall determine that the reason for terminationwas properly based upon a breach or default of a representation or obligationof either ASSIGNOR under this Agreement, clauses (a) through (d) of thisSection shall be inapplicable and the rights and remedies of MedicalCVagainst ASSIGNORS shall survive such termination.

 

Inthe event MedicalCV shall fail to meet the minimum sales thresholds set forthon Exhibit C, then MedicalCV will, upon Segmed’s request, grant MedicalCV anon-exclusive, royalty-free license (with the right to sublicense) to exploitthe Patents and any patents resulting from the Applications.  In such event, however, the balance of thisAgreement shall remain in full force and effect, until otherwise terminatedpursuant to the provisions hereof.  As acondition to any such license or sublicense, Segmed or any such sublicenseeshall furnish to MedicalCV a written agreement undertaking to indemnify andhold harmless MedicalCV for all losses, liabilities, costs, damages, judgmentsor expenses, including reasonable attorney’s fees, arising out of the sale bythem of any device or product covered by such patents or the claims therein.

 

6.2                                 The representations, warranties, andacknowledgments of ASSIGNORS set forth in Section 4 shall survive for aperiod of two years following the date of this Agreement; the agreements andobligations of ASSIGNORS contained in Sections 3.8 and 7.3 shall survive thetermination of this Agreement.

 

7.                                       Miscellaneous.

 

7.1                                 *Expenses*. Each party shall pay all of its own expenses, including, but not limitedto, legal and accounting fees, incurred in connection with the transactionscontemplated by this Agreement.

 

7.2                                 *Notices*.  Anynotice required to be given pursuant to this Agreement shall be in writing andshall be delivered by hand or mailed by certified or registered mail, returnreceipt requested or delivered by a national overnight express service, to aparty at the address set forth in the first paragraph of this Agreement.  Any party to this Agreement may change theaddress to which notice or payment is to be sent by written notice to the otherparty pursuant to the provisions of this Section 8.2.

 

7.3                                 *Jurisdiction and Disputes*. This Agreement shall be governed by the laws of the state of Minnesota.

 

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(a)                                  All disputes arising under this Agreementshall be resolved by arbitration by and in accordance with the rules of theAmerican Arbitration Association in the city of Minneapolis, by a singlearbitrator appointed by the American Arbitration Association and the decisionof such arbitrator shall be conclusive and binding upon the parties; provided, however,that a party shall not be obligated to arbitrate any dispute or controversywhich is brought by a third party in a federal or state court or in asserting athird party claim in any such action. In addition, a party shall not be obligated to arbitrate a claim againstanother party for equitable relief to enforce this Agreement, includingspecific performance.  The parties agreethat in any award by an arbitrator, or in any award by a court or othertribunal, no party shall be entitled to recover punitive damages.

 

(b)                                 Nothing in this Section shall prevent aparty from seeking equitable (injunctive) relief from a court of competentjurisdiction to prevent a breach, continuing breach, or wrongful termination ofthis Agreement, pending the outcome of an arbitration proceeding pursuant toSection 8.3(a).

 

7.4                                 *Assignment*. This Agreement may not be assigned or transferred by either partywithout the express written consent of the other party, which consent may notbe unreasonably withheld or delayed; provided, however, that if consent isgiven by MedicalCV in no event shall ASSIGNORS be relieved of theirresponsibilities set forth in Sections 2.4, 3.8 and 3.9 of this Agreement.

 

7.5                                 *Successors*. This Agreement shall be binding upon and inure to the benefit of theparties hereto, their respective heirs, administrators, personalrepresentatives, successors and permitted assigns.

 

7.6                                 *Waiver and Amendment*.  Nowaiver by either party of any default shall be deemed a waiver of any prior orsubsequent default of the same or other provisions of this Agreement.  This Agreement shall not be modified oramended except in a writing signed by the parties hereto and specificallyreferring to this Agreement.

 

7.7                                 *Severability*.  Ifany provision hereof is held invalid or unenforceable by a court of competentjurisdiction, such invalidity shall not affect the validity or operation of anyother provision of this Agreement and such invalid provision shall be deemed tobe severed from the Agreement.

 

7.8                                 *Integration*. This Agreement, together with a separate Warrant Subscription Agreementof even date, the Security Agreement of even date and the Technical AssistanceAgreement of even date constitutes the entire understanding of ASSIGNORS andMedicalCV concerning the subject matter hereof, and supercedes all prioragreements between them, and is intended as a final expression of theiragreement with respect to the subject matter hereof.

 

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IN WITNESS WHEREOF, the parties hereto have executedthis Agreement effective date first above written.

 
|   | ASSIGNORS           |
|--------|---------------------|
|   |                |
|   | **SEGMED,  INC.**   |
|   |                |
|   |                |
|   | By                  | /s/ William F.Northrup  III, MD |   |
|   |                |  William  F. Northrup III, MD |
|   |                |  Its  President |
|   |                |
|   |                |
|   | By                  | /s/ William F. Northrup  III, MD |   |
|   |                |  William F. Northrup  III, MD, Individually |
|   |                |
|   |                |
|   | **MEDICALCV, INC.** |
|   |                |
|   |                |
|   | By                  | /s/ Blair P. Mowery |   |
|   |                |  Blair P. Mowery, |
|   |                |  President and Chief Executive Officer |
|        |                     |  |  |  |

 

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