**Exhibit10.18**

 

**MEDICALCV,INC.**

**1997STOCK OPTION PLAN**

**(AsApproved by Shareholders December 13, 1997)**

 

**NON-QUALIFIEDSTOCK OPTION AGREEMENT**

 
| Option No: E-024 |   | Date of Grant:  November 18, 2004 |
|------------------|--------|-----------------------------------|

 

**THISAGREEMENT,**entered into as of November 18, 2004 (the “GrantDate”), is by and between John H.Jungbauer, (the “Optionee”) and MedicalCV, Inc. (the “Company”).

 

**WHEREAS,**theCompany has established and maintains the MedicalCV, Inc. 1997 Stock OptionPlan (the “Plan”), which is incorporated into and forms a part of thisAgreement.

 

**WHEREAS,**theCompany has determined that the Optionee is an Eligible Individual and wishesto grant the Optionee n Award pursuant to the terms of the Plan.

 

**NOW,THEREFORE, IT IS AGREED,**by and between the Company and theOptionee, as follows:

 

1.             Award of Stock Option.  The Company hereby grants to the Optionee anon-qualified stock option (the “Option”) to purchase 81,416 (eighty-onethouand, four hundred sixteen) shares of Common Stock of the Company (the “CoveredShares”) at an exercise price of $2.00 per share (the “Exercise Price”).

 

2.             Non-Qualified Option.  The Option granted hereunder is aNon-Qualified Option.  It is not intendedto be an “incentive stock option” as that term is described in Section 422(b)of the Internal Revenue Code.

 

3.             Vesting.  TheOption shall vest 25 percent on the first four anniversaries and be fullyexercisable in accordance with the terms of this Agreement and the Plan throughthe Expiration Date.

 

4.             Expiration. Subject to earlier termination as hereinafter provided, and theprovisions of Section 11 of the Plan, this option shall expire on November 18,2014.

 

5.             Termination. This Option shall terminate:

 

(a)                                  upontermination of Optionee’s relationship for cause, as determined by the Board ofdirectors of the Company;

 

(b)                                 three(3) months following the termination of Optionee’s relationship with theCompany; provided, however, that if Optionee shall die within three (3) monthsafter such termination, this Option may be exercised by the person who is legally

 

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entitled to exercise thisOption for a period of nine (9) months following the earlier of the date ofdeath or the expiration date of the Option;

 

(c)                                  theearlier of the one (1) year following the date of Optionee’s death or theexpiration date of this Option in accordance with the terms of Section 11.2.2of the Plan; or

 

(d)                                 theearlier of one (1) year following Optionee’s disability or the expiration dateof the Option, in accordance with the terms of Section 11.2.1 of the Plan.

 

For all events, Optioneemay only exercise this Option to the extent it was exercisable on the date oftermination, disability or death.

 

6.             Exercising the Option.

 

(a)                                  Notice.   Subject to the terms of this Agreement and thePlan, the Option may be exercised in while or in part by filing written noticewith the Secretary of the Company at its corporate headquarters prior to theExpiration Date.  Such notice shallspecify the number of Covered Shares which the Optionee elects to purchase, andshall be accompanied by payment in full of the Exercise Price for such CoveredShares, together with payment of or provision for any withholding requirementsas specified in Section 7.

 

(b)                                 Paymentof Exercise Price.  Payment of theExercise Price shall be by cash or by cashier’s check payable to theCompany.  Except as otherwise provided bythe Committee before the Option is exercised: (i) all or a portion of theExercise Price may be paid by the Optionee by delivery of shares or by attestationof Stock owned buy the Optionee and acceptable to the Committee having anaggregated Fair Market Value (valued as of the date of exercise) that is equalto the amount if cash that would otherwise be required, and (ii) the Optioneemay pay the Exercise Price by irrevocably authorizing a third party to sellshares of Stock (or a sufficient portion of the shares) acquired upon exerciseof the Option and remit to the Company a sufficient portion of the saleproceeds to pay the entire Exercise Price and any tax withholding resultingfrom such exercise.

 

(c)                                  Notationon Schedule I.  Notation of anypartial exercise shall be made by the Company on Schedule I attached hereto.

 

(d)                                 Compliancewith Securities Laws.  The Optionshall not be exercisable if and to the extent the Company determines that suchexercise would violate applicable state or Federal securities laws or the rulesand regulations of any securities exchange on which the Stock is traded.  If the Company makes such a determination, itshall use all reasonable efforts to Obtain compliance with such laws, rules orregulations.  In making any determinationhereunder, the Company may rely on the opinion of counsel for the Company.

 

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7.             Withholding. All deliveries and distributions under this Agreement are subject towithholding of all applicable taxes.  Atthe election of the Optionee, and subject to such rules and limitations as maybe established by the Committee from time to time, such withholding obligationsmay be satisfied through cash payment by the Optionee, through the surrender ofshares of Stock which the Optionee already owns, or through the surrender ofshares of Stock to which the Optionee is otherwise entitled pursuant to theexercise of the Option.

 

8.             Transferability. Except as otherwise provided in this Section 8, the Option is nottransferable other than as designated by the Optionee by will or by the laws ofdescent and distribution, and during the Optionee’s life, may be exercised onlyby the Optionee.

 

9.             Heirs and Successors.  This Agreement shall be binding upon, andinure to the benefit of, the Company and its successors and assigns, and uponany person acquiring, whether by merger, consolidation, purchase of assets orotherwise, all or substantially all the Company’s assets and business.  If any rights exercisable by the Optionee orbenefits deliverable to the Optionee under this Agreement have not beenexercised or delivered, respectively, at the time of the Optionee’s death, suchrights shall be exercisable by the Designated Beneficiary, and such benefitsshall be delivered to the Designated Beneficiary, in accordance with theprovisions of this Agreement and the Plan. The “Designated Beneficiary” shall be the beneficiary or beneficiariesdesignated by the Optionee in a writing filed with the Committee in such formand at such time as the Committee shall require.  If a deceased Optionee fails to designate abeneficiary, or if the designated Beneficiary does not survive the Optionee,any rights that would have been exercisable by the Optionee and any benefitsdistributable to the Optionee shall be exercised by or distributed to the legalrepresentative of the estate of the Optionee. If a deceased Optionee designates a beneficiary but the DesignatedBeneficiary dies before the Designated Beneficiary’s exercise of all rightsunder this Agreement or before the complete distribution of benefits to theDesignated Beneficiary under this Agreement, then any rights that would havebeen exercisable by the Designated Beneficiary shall be exercised by the legalrepresentative of the estate of the Designated Beneficiary, and any benefitsdistributable to the Designated Beneficiary shall be distributed to the legalrepresentative of the estate of the Designated Beneficiary.

 

10.           Administration.  The authority to manage and control theoperation and administration of the Agreement shall be vested in the Committee,and the Committee shall have all powers with respect to this Agreement as ithas with respect to the Plan.  Anyinterpretation of the Agreement by the Committee and any decision made by itwith respect to the Agreement is final and binding on all persons.

 

11.           Plan Governs.  Notwithstanding anything in this Agreement tothe contrary, the terms of this Agreement and the Option shall be subject tothe terms of the Plan, a copy of which may be obtained by the Optionee from theoffice of the Secretary of the Company. This Agreement is subject to all interpretations, amendments, rules andregulations promulgated by the Committee from time to time pursuant to thePlan.

 

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12.           No Right to Continued Employment. The Option will not confer on theOptionee any right with respect to continuance of employment or other servicewith the Company or any Subsidiary, nor will it interfere in any way with anyright the Company or any Subsidiary would otherwise have to terminate or modifythe terms of such Optionee’s employment or other service at any time.

 

13.           Notices.  Any written notices provided for in thisAgreement or the Plan shall be in writing and shall be deemed sufficient ifdelivered by hand, or sent by fax, overnight courier, or by postage paid firstclass mail.  Notices sent by mail shallbe deemed received three business days after mailed but in no event later thanthe date of actual receipt.  Noticesshall be directed, if to the Optionee, at the Optionee’s address indicated bythe Company’s records, or if to the Company, at the Company’s principalexecutive office.

 

14.           Fractional Shares.  In lieu of issuing a fraction of a share uponany exercise of the Option, resulting from an adjustment of the Option pursuantto Section 12.3 of the Plan or otherwise, the Company will be entitled to payto the Optionee an amount equal to the Fair Market Value of such fractionalshare.

 

15.           No Rights As Shareholder.  The Optionee shall not have any rights of ashareholder with respect to the shares subject to the Option, until a stockcertificate has been duly issued following exercise of the Option as providedherein.  The Optionee shall have novoting rights and shall not receive any dividends paid or any dividendequivalent payments before the stock certificate is issued.

 

16.           Amendment.  This Agreement may be amended by writtenagreement of the Optionee and the Company, without the consent of any otherperson.

 

17.           Definitions  Defined terms not otherwise set forth anddefined herein shall have the meaning ascribed them in the Plan.

 

**INWITNESS WHEREOF,** the Optionee has executed this Agreement,and the Company has caused these presents to be executed in its name and on itsbehalf, all as of the Grant Date.

 
| **OPTIONEE**                | **MedicalCV, Inc.** |
|-----------------------------|---------------------|
|                        |                |
|                        |                |
| /s/ John H. Jungbauer       | ** **          | By: | /s/ Marc P. Flores |
| John  H. Jungbauer          | Marc  P. Flores     |
| 12122 Everton Avenue  North | President  and CEO  |
| White Bear Lake, MN  55110  |                |
|                             |                     |  |  |

 

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SCHEDULE I -NOTATIONS AS TO PARTIAL EXERCISE

 
| **Date of Exercise** | ** ** | **Number of  Purchased  Shares** | ** ** | **Balance of Shares  on Option** | ** ** | **Authorized  Signature** | ** ** | **Notation Date** |
|----------------------|------------|----------------------------------|------------|----------------------------------|------------|---------------------------|------------|-------------------|
| ** **           | ** ** | ** **                       | ** ** | ** **                       | ** ** | ** **                | ** ** | ** **        |
| ** **           | ** ** | ** **                       | ** ** | ** **                       | ** ** | ** **                | ** ** | ** **        |
| ** **           | ** ** | ** **                       | ** ** | ** **                       | ** ** | ** **                | ** ** | ** **        |

 

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