Exhibit 10.5


 


	
  

  	
   

  	
  

  

  

  1234 SUMMER STREET, STAMFORD, CT. 06905

  JGIORDANO.COM / TEL 203 975 1330 / FAX 203 541
  8917

  



 


December 21, 2004


 


Marc
P. Flores


MedicalCV, Inc.


9725
South Robert Trail


Inver
Grove Heights, MN  55077


 


Dear
Mr. Flores:


 


This
letter confirms the terms upon which MedicalCV, a Minnesota Corporation
(the “Company”) engages J Giordano Securities
Group (“JGSG”) to act
as placement agent in connection with the private placement (the “Private
Placement”) defined herein.  Giordano is
a validly registered or licensed broker-dealer, duly authorized to act as an
agent in the sales of securities issued under federal and a state securities
laws and regulations and it is a member in good standing of the NASD.


 


1.                                      Scope
of engagement.


 


The Company hereby engages JGSG as its
nonexclusive agent in the private placements of securities of the Company in
one or more related transactions to one or more investors in the form of
convertible preferred stock, convertible debt securities, equity-linked
securities or other equity or equity-linked arrangements, including debt
securities with warrants.


 


2.                                      Offering
Process. 


 


In connection with the Private Placements:


 


•                  JGSG will familiarize itself to the extent it deems
appropriate with the business, operations, financial condition and prospects of the Company;


 


•                  The
Company, with JGSG’s assistance, will prepare a Confidential Offering Memorandum
(the “Confidential Memorandum”), which will contain (a) a description of
the Company, its business, assets, prospects and management; (b) the terms
and conditions of the Private Placements and of the securities offered; and (c) certain
financial information.  The Confidential
Memorandum will incorporate or include the Company’s filings with the
Securities and Exchange Commission (“SEC”) including the Company’s reports on
Forms 10-KSB, 10-QSB, 8-K and the 2004 Proxy Statement.  If necessary, the Company will update the
Confidential Memorandum prior to completion of the Private Placements;


 


•                  JGSG will identify possible accredited investors, which
might have an interest in receiving the Confidential Memorandum and evaluating
participation in the Private Placements.


 


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•                  Upon
authorization from the Company, JGSG will
contact one or more of such possible accredited investors and distribute the
Confidential Memorandum;


 


•                  JGSG will assist the Company and its Board of Directors in
evaluating proposals received from possible investors;


 


•                  JGSG will assist the Company and its counsel in negotiations
relating to the Private Placements; and


 


•                  If
requested, JGSG will participate in meetings
of the Board of Directors of the Company (either in person or by telephone, as
appropriate) at which time the Private Placements are to be considered and will
report to the Board on the Private Placements.


 


•                  The
securities offered in the Private Placements will be sold pursuant to forms of
purchase agreements that are reasonably satisfactory to JGSG and
the Company containing terms and conditions customary for private placement
transactions.


 


•                  JGSG will be registered as a broker-dealer in all states in
which the Company offers its securities.


 


3.                                      Company
Responsibilities, Representations and Warranties.


 


In connection
with the Private Placements:


 


•                  The
Company agrees to cooperate with JGSG and will
furnish to JGSG all information and data
concerning the Company (“the “Information”) which JGSG
reasonably deems appropriate for purposes of the Confidential Memorandum or the
Private Placements, and will provide JGSG access to
its officers, directors, employees and advisors.


 


•                  The
Company represents and warrants to JGSG that all
Information included or incorporated by reference in the Confidential
Memorandum or otherwise made available to JGSG by the
Company to be communicated to possible investors in connection with the Private
Placement: (a) will be complete and correct and does not and will not
knowingly contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading; and (b) any
projected financial information or other forward-looking information which the
Company provides to JGSG will be
made by the Company in good faith, based on management’s best estimates at the
time and based on facts and assumptions which the Company believes are
reasonable;


 


•                  The
Company agrees to promptly notify JGSG if the
Company believes that any Information that was previously provided to JGSG has become materially misleading; and


 


•                  The
Company acknowledges and agrees that, in rendering its services hereunder, JGSG will be using and relying on the Information (and
information available from public sources and other sources deemed reliable by JGSG) without independent


 


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investigation
or verification thereof or independent appraisal or evaluation of the Company
or its business or assets, or any other party to the transaction.  JGSG does not
assume responsibility for the accuracy or completeness of the Information, the
Confidential Memorandum or any other information regarding the Company.


 


The references in this Section to the
Company will, when appropriate, be deemed also to include its subsidiaries or
other affiliates.


 


Any advice rendered by JGSG
during the Private Placement process or in meetings of the Board of Directors
of the Company, as well as any written materials provided by JGSG, are intended solely for the benefit and confidential
use of the Board of Directors and will not be reproduced, summarized, described
or referred to or given to any other person for any purpose without JGSG’s prior
written consent.


 


The Company represents to JGSG that to the knowledge of the Company, it has not engaged
in any public or private offering of securities or taken or failed to take any
action that would cause the Private Placements not to qualify for an applicable
exemption from registration under the Securities Act of 1933, as amended (the “Act”).  Further the Company agrees not to solicit any
offerees or take any action, which might jeopardize the availability of
exemption under the Act.  JGSG will conduct all sales and solicitation efforts in a
manner requested by the Company consistent with the Company’s intent that the
Private Placements be an exempt transaction pursuant to the Act.


 


The Company has disclosed to JGSG the existence of a finder, Tower Finance, Ltd., whose
exclusive agreement expires December 31, 2004.  Tower Finance, Ltd. has not completed any
transactions for the bridge loan financing as of December 20, 2004.


 


4.                                      Fees.


 


a. Retainer
Fee. The Company agrees to pay JGSG
an advisory retainer fee equal to US$30,000 (the “Retainer Fee”) to cover the
term of this engagement, in the form of $15,000 nonrefundable cash and 15,000
shares of the Company’s tradeable Common stock priced at $1.00 per share, upon
the execution of this agreement. It is understood that the Company shall be
entitled to a credit of the retainer against the placement fees, which is
described below.


 


b. Placement
Fee. Upon the consummation of any sale of debt or equity
securities of the Company in connection with the Private Placements the Company
will pay JGSG a fee (the “Placement Fee”) equal
to 6.0% of the total equity and debt consideration received by the Company in
connection with the Private Placements (the “Transaction Consideration”).  


 


As used above, the term “Transaction
Consideration” will mean the total amount of cash and the fair market value of
the other property paid or payable directly or indirectly to the Company, any
of its security holders or any of its directors or executive officers in
connection with the Private Placements.


 


The Placement Fee will be payable in full
upon the closing of any Private Placement individually; provided,
however, that if the Transaction Consideration includes
consideration the receipt of which is contingent upon the passage of time or
the occurrence of some future event or circumstance (“Contingent Value”), the
portion of the


 


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Placement Fee attributable to such Contingent
Value will be paid to JGSG at the
earlier of the date on which payment of such Contingent Value is due or the
time that such Contingent Value can be determined or reasonably estimated, but
in no event will the Placement Fee be due until the Company receives the
contingent Transaction Consideration in connection with the Private Placements.


 


b. Warrants.
In addition to the Placement Fee, upon the closing of the sale of securities in
connection with the Private Placements, the Company shall issue to JGSG warrants to purchase shares of common stock of the
Company (the “Warrants”) in an amount equal to 6% of the Total Consideration to
be priced on the same terms as the Investors in the Private Placements.  The Warrants shall expire five years from the
date of issuance.  The Warrants shall
carry the same registration rights and anti-dilution provisions as the
securities sold in the Private Placements.


 


c. Follow-on
Transaction. If sales of securities in connection with the
Private Placements has been consummated, and one or more additional securities
issuance transactions are consummated by the Company with investors introduced
by JGSG within 12 months after the closing
date of the initial transaction, with any party (i) which JGSG has identified, (ii) with which, due to JGSG efforts, the Company has directly or indirectly held
discussions or furnished information regarding the Company (each a “JGSG-Identified Party”), including investors in the original
transaction, JGSG shall be entitled to receive
fees and warrants as set forth in Section 4.a. and 4.b. above with respect
to such transaction.


 


5.                                      Expenses.  The Company will reimburse JGSG for out-of-pocket expenses including fees and expenses
of its due diligence team and counsel reasonably incurred by it in connection
with its engagement hereunder, whether or not the Private Placements are
consummated, up to US$5,000.  It will be
the obligation of the Company to create any legal documentation relating to the
contemplated financing, which will be subject to review by JGSG counsel.  Any expenses in excess of US$100.00 will be
submitted to the Company for pre-approval, which shall not be unreasonably
withheld. Such reimbursement will be payable promptly upon submission by JGSG of statements to the Company.


 


6.                                      Indemnification.  JGSG and the
Company have entered into a separate indemnity agreement, dated the date hereof
(the “Indemnity Agreement”), providing among other things for the
indemnification of JGSG by the
Company in connection with Losses and Expenses (as defined in the Indemnity
Agreement) in connection with JGSG’s engagement hereunder.  The terms of the Indemnity Agreement are
incorporated by reference into this letter agreement.


 


7.                                      Termination.  JGSG’s engagement hereunder may be
terminated by either the Company or JGSG at any
time, with or without cause, upon written notice to the other party; provided,
however, that (a) no such termination will affect JGSG’s right to expense reimbursement
under Section 5, the payment of any accrued and unpaid fees pursuant to Section 4
or the indemnification contemplated by Section 6 or the Indemnity
Agreement referred to therein and (b) if the Company, directly or
indirectly, consummates an issuance of its securities within twelve months
following such termination with a JGSG-Identified Party, then JGSG will be entitled to the full amount of the fees and
warrants contemplated by Sections 4.a. and 4.b.


 


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8.                                      Additional
Services, Fees and Expenses.  In
the event that, within 24 months of the closing of a Private Placement, the
Company shall file a registration statement with the Securities and Exchange
Commission for a secondary offering of common stock or debt of the Company, the
Company will use its best efforts to engage JGSG
as a co-managing underwriter or member of the under writing group of the
offering of the Company, on terms which are reasonable and customary for an
offerings of such nature and JGSG shall
participate in such offering on terms equivalent to the other managing
underwriters or underwriters, as the case may be (unless JGSG,
in its discretion, declines such engagement). 
If the managing underwriter is a firm other that JGSG,
such managing underwriters must agree to JGSG acting as
a co-managing underwriter.


 


9.                                      Governing
Law; Jurisdiction; Waiver of Jury Trial.   This letter agreement and the Indemnity
Agreement will be governed by the laws of the State of Connecticut.  The Company and JGSG
agree that except with respect to actions brought by third parties, they
irrevocably submit to the jurisdiction of any court of the State of Connecticut
or the United States District Court of Connecticut Second Circuit the purpose
of any suit, action or other proceeding arising out of this letter agreement or
the Indemnity Agreement, or any of the agreements or transactions contemplated
hereby, which is brought by or against the Company.  Each of the Company (and, to the extent
permitted by law, on behalf of the Company’s equity holders and creditors) and JGSG hereby knowingly, voluntarily and irrevocably waives
any right it may have to a trial by jury in respect of any claim based upon,
arising out of or in connection with the Indemnity Agreement, this letter
agreement and the transactions contemplated hereby (including, without
limitation, any Private Placement).


 


10.                               No
Rights in Equityholders, Creditors. 
This letter agreement does not create, and will not be construed as
creating, rights enforceable by any person or entity not a party hereto, except
those entitled thereto by virtue of the Indemnity Agreement.  The Company acknowledges and agrees that (a) JGSG will act as an independent contractor and is being
retained solely to assist the Company in its efforts to effect a Private
Placement and that, JGSG is not
being retained to advise the Company on, or to express any opinion as to, the
wisdom, desirability or prudence of consummating the Private Placements, (b) JGSG is not and will not be construed as a fiduciary of the
Company or any affiliate thereof and will have no duties or liabilities to the
equityholders or creditors of the Company, any affiliate of the Company or any
other person by virtue of this letter agreement and the retention of JGSG hereunder, all of which duties and liabilities are
hereby expressly waived and (c) nothing contained herein shall be
construed to obligate JGSG to
purchase, as principal, any of the securities offered by the Company in the
Private Placements.  Neither equity
holders nor creditors of the Company are intended beneficiaries hereunder.  The Company confirms that it will rely on its
own counsel, accountants and other similar expert advisors for legal,
accounting, tax and other similar advice.


 


11.                               JGSG;
Other activities.  It is
understood and agreed that JGSG may, from
time to time, make a market in, have a long or short position, buy and sell or
otherwise affect transactions for customer accounts and for their own accounts
in the securities of, or perform investment banking or other services for, the
Company and other entities which are or may be the subject of the engagement
contemplated by this letter agreement. 
This is to confirm that possible investors identified or contacted by JGSG could include entities in respect of which JGSG may have rendered or may in the future render services.


 


12.                               Other.  This letter agreement may not be modified or
amended except in writing executed in counterparts, each of which will be
deemed an original and all of which will constitute one and the same
instrument.


 


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If the foregoing correctly sets forth our agreement, please so indicate
by signing below and returning an executed copy to the J Giordano Securities
Group, Attention:  James Giordano.  We look forward to working with you.


 


ACCEPTED AND AGREED AS OF:


THE DATE FIRST ABOVE WRITTEN


 


 


	
  By:

  	
  /s/ Marc P. Flores

  	
   

  
	
  Name: Marc
  P. Flores

  
	
  Title:
  Chief Executive Officer

  
	
  MedicalCV, Inc.

  
	
   

  
	
   

  
	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  J Giordano Securities Group

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Chris Jordan

  	
   

  
	
   

  	
  Name: Chris
  Jordan

  
	
   

  	
  Title: Managing
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James R. Giordano

  	
   

  
	
   

  	
  Name: James
  R. Giordano

  
	
   

  	
  Title: Chief
  Executive Officer

  
							



 


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