EXHIBIT 10.3


 


FORM OF DEBT CONVERSION AGREEMENT


 


DEBT CONVERSION AGREEMENT,
dated effective the 29th day of March, 2005, by and between MedicalCV, Inc.,
a Minnesota corporation (the “Company”), and                                 
(the “Lender”).


 


RECITALS


 


1.                                       Lender
has previously made available to the Company certain loans described in Exhibit A
attached hereto and made a part hereof (collectively, the “Loans”).


 


2.                                       Under
the Loans, the Company is indebted to Lender in the principal amount of $                 ,
plus accrued interest thereon
through the effective time of the conversion effected hereby, if any
(collectively the “Loan Balance”).


 


3.                                       The
Company seeks to complete a private placement (the “Private Placement”) of its
5% Series A Convertible Preferred Stock (the “Preferred Stock”) and Common
Stock Purchase Warrants (the “Warrants”
and together with the Preferred Stock collectively, the “Securities”)
and has requested that Lender convert the Loans into the Securities, to be
purchased pursuant to the terms and conditions of that certain Securities
Purchase Agreement in the form attached hereto as Exhibit B and
made a part hereof (the “Securities Purchase Agreement”).


 


4.                                       Lender
has reviewed the Securities Purchase Agreement and the documents appended
thereto (collectively the “Private Placement Documents”) to be entered into
among the Company and the investors to be named therein and has agreed to the
terms thereof and the conversion of the Loan Balance and to become an investor
in the Private Placement, in
each case subject to the conditions and according to the terms in this
Agreement.


 


NOW, THEREFORE, in
consideration of the foregoing and the mutual covenants set forth herein, the
parties agree as follows:


 


1.                                       Conversion
of Loans.


 


1.1                                 Subject
to the terms and conditions of this Agreement and the
Private Placement Documents, Lender agrees to convert the Company’s obligation
to pay the Loan Balance to Lender into the Securities by entering into the
Private Placement Documents with the Company and having the Company’s
obligation to pay the Loan Balance converted into Lender’s payment of its “Investment
Amount” under a Securities Purchase Agreement between the Company and the
Lender.  The Company agrees that upon the
effective time of the conversion, such conversion will satisfy the Lender’s
obligation to pay its “Investment Amount” under the Securities Purchase
Agreement between the Company and the Lender.


 


1.2                                 The
conversion of the Loan Balance shall be deemed to occur upon: (1) the
satisfaction of all conditions precedent to such conversion set forth in this
Agreement, and (2) the


 


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satisfaction or
waiver of all conditions precedent to the obligations of Lender to purchase
Securities as provided in the Securities Purchase Agreement between Lender and
the Company.


 


1.3                                 The
Company agrees to execute and deliver (or cause to be executed and delivered,
as the case may be) to the Lender at the date and time of the closing of the
Company’s Private Placement (the “Closing”) each of the Private Placement
Documents required to be given by the Company to the “Investors” as defined in
the Securities Purchase Agreement, each in form reasonably acceptable to the
Lender, including, without limitation, a Securities Purchase Agreement, a
Registration Rights Agreement (as defined in the Securities Purchase
Agreement), the Warrants, one or more certificates evidencing the correct
number of shares of Preferred Stock, and certain other opinions and
certificates.  Lender agrees to execute
and deliver to the Company at the Closing each of the Private Placement
Documents requiring the signature of an investor.


 


2.                                       Conditions
Precedent.  The effectiveness of the
conversion described in Section 1.1 above and any of the Lender’s obligations
under any Private Placement Documents entered into in connection therewith is
expressly conditioned upon the prior or simultaneous satisfaction of the
following conditions precedent:


 


2.1                                 The
Company must receive gross cash proceeds in the Private Placement of at least
$10,000,000, excluding conversion of the Loan Balance.


 


2.2                                 The
Company must execute and deliver a Securities Purchase Agreement to the Lender
and satisfy all of the conditions precedent to the obligations of Lender to
purchase Securities as provided in such Securities Purchase Agreement with
respect to Lender in its capacity “Investor” under such agreement.


 


2.3                                 The
representations and warranties in Section 4 below must be true and
correct.


 


3.                                       Termination.


 


3.1                                 In
the event a Closing does not occur on or before April 5, 2005, this
Agreement (and any Private Placement Documents entered into by the Lender)
shall be null and void and of no further force or effect.


 


3.2                                 The
Company may terminate this Agreement upon written notice to Lender if the
Company determines to abandon or materially modify the terms of the Private
Placement.


 


3.3                                 Any
termination pursuant to this Section 3 shall be without liability by any
party to the other.


 


4.                                       Representations
and Warranties.  To induce the Lender
to enter into this Agreement, the Company represents and warrants to the Lender
that:


 


4.1                                 The
execution, delivery and performance by the Company of this Agreement has been
duly authorized by all necessary corporate action by the Company, and this
Agreement constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
limitations as to enforceability which might


 


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result from bankruptcy,
insolvency, moratorium and other similar laws affecting creditors’ rights
generally and subject to limitations on the availability of equitable remedies.


 


5.                                       Miscellaneous.


 


5.1                                 This
Agreement contains the entire understanding of the parties with respect to the
subject matter hereof and supersedes all prior agreements, understandings,
discussions and representations, oral or written, with respect to the
conversion of the Loans.


 


5.2                                 Any
and all notices or communications required or permitted shall be in writing and
shall be sent by manual delivery, telegram, telex, facsimile transmission,
overnight courier or United States mail (postage prepaid) addressed to such
party at the address specified on the signature page hereof, or at such
other address as such party shall hereafter specify to the other party hereto
in writing.


 


5.3                                 This
Agreement shall be binding on the Company and the Lender and their respective
successors and assigns, and shall inure to the benefit of the Company and the
Lender, and their successors and assigns. 
The Company shall not assign its rights or duties hereunder without the
written consent of the Lender.


 


5.4                                 Any
provision of the Agreement which is prohibited or unenforceable in any
jurisdiction shall, in such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof or affecting the validity or enforceability of such provision in any
other jurisdiction.


 


5.5                                 The
captions or headings herein are for convenience only and in no way define,
limit or describe the scope or intent of any provision of this Agreement.


 


5.6                                 This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument, and either of the
parties hereto may execute this Agreement by signing any such counterpart.


 


5.7                                 The
validity, construction and enforceability of this Agreement shall be governed
by the internal laws of the State of Minnesota, without giving effect to
conflict of laws principles thereof.


 


[Signatures contained on
following page]


 


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THE PARTIES HERETO have caused this Agreement to be executed as of the
date first above written.


 


	
   

  	
   

  	
  MEDICALCV,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: John
  H. Jungbauer

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9725 South
  Robert Trail

  
	
   

  	
   

  	
  Inver Grove
  Heights, MN 55077

  
	
   

  	
   

  	
  Attention:
  Chief Executive Officer

  
	
   

  	
   

  	
  Telephone:
  (651) 452-3000

  
	
   

  	
   

  	
  Fax: (651)
  452-4948

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
   

  	
  Avron L.
  Gordon, Esq.

  
	
   

  	
   

  	
  Briggs and
  Morgan, P.A.

  
	
   

  	
   

  	
  2200 IDS
  Center

  
	
   

  	
   

  	
  80 South
  Eighth Street

  
	
   

  	
   

  	
  Minneapolis,
  MN 55402

  
	
   

  	
   

  	
  Telephone:
  (612) 977-8455

  
	
   

  	
   

  	
  Fax (612) 977-8650

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LENDER

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [ADDRESS]

  
						



 


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EXHIBIT A


 


[DESCRIPTION OF INDEBTEDNESS BEING CONVERTED]


 


A-1





















 


EXHIBIT B


 


[PRIVATE PLACEMENT DOCUMENTS]


 


B-1