**Exhibit10.1**

** **

**WARRANT**

 

**To Purchase 77,381 Shares of**

**Common Stock**

**of**

**MEDICALCV, INC.**

 

*ThisWarrant and the securities issuable upon exercise of this Warrant have not beenregistered under the Securities Act of 1933 (the “Securities Act”) or under anystate securities or “Blue Sky” laws (“Blue Sky Laws”). No transfer, sale,assignment, pledge, hypothecation or other disposition of this Warrant or thesecurities issuable upon exercise of this Warrant or any interest therein maybe made except (a) pursuant to an effective registration statement under theSecurities Act and any applicable Blue Sky Laws or (b) if the Company has beenfurnished with an opinion of counsel for the holder, which opinion and counselshall be reasonably satisfactory to the Company, to the effect that noregistration is required because of the availability of an exemption fromregistration under the Securities Act and applicable Blue Sky Laws.*

 

THISCERTIFIES THAT, for good and valuable consideration, PKM PROPERTIES, LLC aMinnesota limited liability company (“PKM Properties”) or its registeredassigns, is entitled to subscribe for and purchase from MedicalCV, Inc., aMinnesota corporation (the “Company”), at any time to and including thedate that is ten (10) years after the date hereof.  Seventy-Seven Thousand Three Hundred Eighty-One (77,381) fullypaid and nonassessable shares of the Common Stock of the Company at the priceof $1.68 per share (the “Warrant Exercise Price”), subject to theantidilution provisions of this Warrant. The shares which may be acquired upon exercise of this Warrant arereferred to herein as the “Warrant Shares.” As used herein, the term “Holder”means PKM Properties, any party who acquires all or a part of this Warrant as aregistered transferee of PKM Properties, or any record holder or holders of theWarrant Shares issued upon exercise, whether in whole or in part, of theWarrant; the term “Common Stock” means the Company’s Common Stock, $.01 parvalue.

 

ThisWarrant is subject to the following provisions, terms and conditions:

 

1.             Exercise; Conversion Right;Transferability

 

(a)           The rights represented by thisWarrant may be exercised by the Holder hereof at any time, for a period of ten(10) years commencing on the date hereof, in whole or in part (but not as to afractional share of Common Stock), by written notice of exercise (in the formattached hereto) delivered to the Company at the principal office of theCompany prior to the expiration of this Warrant and accompanied or preceded bythe surrender of this Warrant along with a check in payment of the WarrantExercise Price for such shares.

 

(b)           Subject to the restrictions on transfer of this Warrant orthe Warrant Shares set forth herein, the Holder of this Warrant shall have theright to require the Company to convert this Warrant (the “Conversion Right’)at any time after the date hereofand prior to its expiration

 

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into shares of Common Stock as provided forin Sections 1(b) through 1(d) hereof. Upon exercise of the Conversion Right, the Company shall deliver to theHolder (without payment by the Holder of any Warrant Exercise Price) thatnumber of shares of Company Common Stock equal to the quotient obtained bydividing (i) the value of the Warrant at the time the Conversion Right isexercised (determined by subtracting the aggregate Warrant Exercise Price forthe Warrant Shares in effect immediately prior to the exercise of theConversion Right from the aggregate Fair Market Value (as defined inSection 10 hereof) for the Warrant Shares immediately prior to theexercise of the Conversion Right) by (ii) the Fair Market Value of one share ofCommon Stock immediately prior to the exercise of the Conversion Right.

 

(c)           The Conversion Right may be exercised by the Holder, atany time or from time to time, after the date hereof and prior to itsexpiration, on any business day by delivering a written notice in the formattached hereto (the “Conversion Notice”) to the Company at the officesof the Company exercising the Conversion Right and specifying (i) the totalnumber of shares of Common Stock theHolder will purchase pursuant to such conversion and (ii) a place and date notless than one or more than 20 business days from the date of the ConversionNotice for the closing of such purchase.

 

(d)           At any closing under Section 1(c) hereof, (i) the Holderwill surrender the Warrant, (ii) the Company will deliver to the Holder a certificate or certificates for the numberof shares of Common Stock issuable upon such conversion, together with cash, inlieu of any fraction of a share, and (iii) the Company will deliver to theHolder a new warrant representing the number of shares, if any, with respect towhich the Warrant shall not have been exercised.

 

(e)           Subject to the provisions ofSection 7 hereof, this Warrant shall be fully transferable, in whole or inpart; provided that this Warrant shall be transferable only on the books of theCompany by the Holder in person, or by duly authorized attorney, on surrenderof the Warrant, properly assigned.

 

2.             Exchange and Replacement.  Subject to Sections 1 and 7 hereof, thisWarrant is exchangeable upon the surrender hereof by the Holder to the Companyat its office for new Warrants of like tenor and date representing in theaggregate the right to purchase the number of Warrant Shares purchasablehereunder, each of such new Warrants to represent the right to purchase suchnumber of Warrant Shares (not to exceed the aggregate total number purchasablehereunder) as shall be designated by the Holder at the time of such surrender.  Upon receipt by the Company of evidencereasonably satisfactory to it of the loss, theft, destruction, or mutilation ofthis Warrant, and, in case of loss, theft or destruction, of indemnityreasonably satisfactory to it, and upon surrender and cancellation of thisWarrant, if mutilated, the Company will make and deliver a new Warrant of liketenor, in lieu of this Warrant.  ThisWarrant shall be promptly canceled by the Company upon the surrender hereof inconnection with any exchange or replacement. The Company shall pay all expenses, taxes (other than stock transfertaxes), and other charges incurred by it in connection with the preparation,execution, and delivery of Warrants pursuant to this Section 2.

 

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3.             Issuanceof the Warrant Shares.

 

(a)           The Company agrees that the shares ofCommon Stock purchased upon exercise of this Warrant shall be and are deemed tobe issued to the Holder as of the close of business on the date on which thisWarrant shall have been surrendered and the payment made for such WarrantShares as aforesaid.  Subject to theprovisions of paragraph (b) of this Section 3, certificates for the WarrantShares so purchased shall be delivered to the Holder within a reasonable time,not exceeding fifteen (15) days after the rights represented by this Warrantshall have been so exercised, and, unless this Warrant has expired, a newWarrant representing the right to purchase the number of Warrant Shares, ifany, with respect to which this Warrant shall not then have been exercisedshall also be delivered to the Holder within such time.

 

(b)           Notwithstanding the foregoing, theCompany shall not be required to deliver any certificate for Warrant Sharesupon exercise of this Warrant except in accordance with exemptions from theapplicable securities registration requirements or registrations underapplicable securities laws.  Nothingherein, however, shall obligate the Company to effect registrations underfederal or state securities laws, except as provided in Section 9.  If registrations are not in effect and ifexemptions are not available when the Holder seeks to exercise the Warrant, theWarrant exercise period will be extended, if need be, to prevent the Warrantfrom expiring, until such time as either registrations become effective orexemptions are available, and the Warrant shall then remain exercisable for aperiod of at least 30 calendar days from the date the Company delivers to theHolder written notice of the availability of such registrations orexemptions.  The Holder agrees toexecute such documents and make such representations, warranties, andagreements as may be required solely to comply with the exemptions relied uponby the Company, or the registrations made, for the issuance of the WarrantShares.

 

                4.             Covenantsof the Company.  The Companycovenants and agrees that all Warrant Shares will, upon issuance, be dulyauthorized and issued, fully paid, nonassessable, and free from all taxes,liens, and charges with respect to the issuance thereof.  The Company further covenants and agreesthat during the period within which the rights represented by this Warrant maybe exercised, the Company will at all times have authorized and reserved forthe purpose of issue or transfer upon exercise of the subscription rightsevidenced by this Warrant a sufficient number of shares of Common Stock toprovide for the exercise of the rights represented by this Warrant.

 

                5.             AntidilutionAdjustments.  Theprovisions of this Warrant are subject to adjustment as provided in thisSection 5; provided that no adjustment shall be made pursuant to thisSection 5 which has the effect of duplicating any adjustment made pursuantto the Articles of Incorporation of the Company or any certificate of designationthereto, if any.

 

(a)           The Warrant Exercise Price shall besubject to adjustment from time to time as hereinafter provided.  Upon each adjustment of the Warrant ExercisePrice the holder of this Warrant shall thereafter be entitled to purchase thenumber of shares of Common Stock of the Company obtained by multiplying theWarrant Exercise Price in effect immediately prior to such adjustment by thenumber of shares issuable pursuant to exercise immediately prior to suchadjustment and dividing the product thereof by the Warrant Exercise Priceresulting from such adjustment.

 

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(b)           Except for (i) options, warrants orother rights to purchase securities outstanding on the date of the issuance ofthis Warrant (provided there is no adjustment to the terms of such options,warrants or other securities on or after the date of issuance of this Warrant);(ii) options to purchase shares of Common Stock and the issuance of awards ofCommon Stock pursuant to stock option or employee stock purchase plans adoptedby the Company and shares of Common Stock issued upon the exercise of suchoptions granted pursuant to such plans (provided there is no adjustment to theterms of such options, awards or other securities on or after the date ofissuance of this Warrant) (appropriately adjusted to reflect stock splits,combinations, stock dividends, reorganizations, consolidations and similarchanges); (iii) up to four separate issues or sales by the Company during anytwelve month period, none of which shall exceed 25,000 shares of Common Stockor securities convertible into or exercisable for the purchase of Common Stock;and (iv) Common Stock or securities convertible into or exercisable for thepurchase of Common Stock issued in connection with any merger or acquisition ofany business or tangible or intangible assets which is approved by theCompany’s Board of Directors; if and whenever the Company shall issue or sellany additional securities, warrants or rights or any security convertible orexchangeable into equity, securities, warrants or rights (collectively,“Convertible Securities”) for a consideration per share less than the WarrantExercise Price in effect immediately prior to the time of such issue or sale,then, forthwith upon such issue or sale, the Warrant Exercise Price shall beadjusted to a price determined by multiplying such Warrant Exercise Price by afraction, the numerator of which shall be the number of shares of Common Stockoutstanding immediately prior to such issuance plus the number of shares of CommonStock that the aggregate consideration received by the Company for suchissuance would purchase at such Warrant Exercise Price; and the denominator ofwhich shall be the number of shares of such additional Common Stock and thenumber of shares of Common Stock outstanding prior to such issuance.  For the purpose of the above calculation,the number of shares of Common Stock immediately prior to such issuance shallbe calculated on a fully-diluted basis, as if this Warrant and any otheroutstanding warrants, options or other rights for the purchase of shares ofstock or Convertible Securities had been fully exercised as of such date.  Except as provided in Section 5(e)below, no further adjustments of the Warrant Exercise Price shall be made uponthe actual issuance of Common Stock or of any Convertible Securities upon theexercise of such rights or options or upon the actual issue of such CommonStock upon conversion or exchange of such Convertible Securities.

 

(c)           For purposes of this Section 5,in case any shares of Common Stock or Convertible Securities or any rights oroptions to purchase any such Common Stock or Convertible Securities shall beissued or sold for cash, the consideration received therefor shall be deemed tobe the amount received by the Company therefor, without deducting therefrom anyexpenses incurred or any underwriting commissions, discounts or concessionspaid or allowed by the Company in connection therewith.  In case any shares of Common Stock orConvertible 

 

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Securities or any rights or options topurchase any such Common Stock or Convertible Securities shall be issued orsold for a consideration other than cash, the amount of the consideration otherthan cash received by the Company shall be deemed to be the fair value of suchconsideration as determined by the Board of Directors of the Company, withoutdeducting therefrom any expenses incurred or any underwriting commissions,discounts or concessions paid or allowed by the Company in connectiontherewith.  In case any shares of CommonStock or Convertible Securities or any rights or options to purchase suchCommon Stock or Convertible Securities shall be issued in connection with anymerger or consolidation in which the Company is the surviving corporation, theamount of consideration therefor shall be deemed to be the fair value asdetermined by the Board of Directors of the Company of such portion of theassets and business of the non-surviving corporation or corporations assuch Board shall determine to be attributable to such Common Stock, ConvertibleSecurities, rights or options, as the case may be.  In the event of any consolidation or merger of the Company inwhich the Company is not the surviving corporation or in the event of any saleof all or substantially all of the assets of the Company for stock or othersecurities of any other corporation, the Company shall be deemed to have issueda number of shares of its Common Stock for stock or securities of the othercorporation computed on the basis of the actual exchange ratio on which thetransaction was predicated and for a consideration equal to the fair marketvalue on the date of such transaction of such stock or securities of the othercorporation, and if any such calculation results in adjustment of the WarrantExercise Price, the determination of the number of shares of Common Stockissuable upon exercise immediately prior to such merger, conversion or sale,for purposes of Section 5(f) below, shall be made after giving effect tosuch adjustment of the Warrant Exercise Price.

 

(d)           In case the Company shall at any timesubdivide its outstanding shares of Common Stock into a greater number ofshares, the Warrant Exercise Price in effect immediately prior to suchsubdivision shall be proportionately reduced, and conversely, in case theoutstanding shares of Common Stock of the Company shall be combined into asmaller number of shares, the Warrant Exercise Price in effect immediatelyprior to such combination shall be proportionately increased.

 

(e)           If (i) the purchase price providedfor in any right or option referred to in Section 5(b), or (ii) theadditional consideration, if any, payable upon the conversion or exchange ofConvertible Securities, or (iii) the rate at which any Convertible Securitiesare convertible into or exchangeable for Common Stock, shall change at any time(other than under or by reason of provisions designed to protect againstdilution), or any Convertible Securities shall terminate, expire or cease to beoutstanding without exercise thereof, the Warrant Exercise Price then in effecthereunder shall forthwith be increased or decreased to such Warrant ExercisePrice as would have applied had the adjustments made upon the issuance of suchrights, options or Convertible Securities been made upon the basis of(a) the issuance of the number of shares of Common Stock theretoforeactually delivered upon the exercise of such options or rights or upon theconversion or exchange of such Convertible Securities, and the totalconsideration received therefor, and (b) the issuance at the time of suchchange of any such options, rights, or Convertible Securities then stilloutstanding for the consideration, if any, received by the Company therefor andto be received on the basis of such changed price; and on the expiration of anysuch option or right or the termination of any such right to convert orexchange such Convertible Securities, the Warrant Exercise Price then in effecthereunder shall forthwith be increased to such Warrant Exercise Price as wouldhave been obtained had the adjustments made upon the issuance of such rights oroptions or Convertible Securities been made upon the basis of the issuance ofthe shares of Common Stock theretofore actually delivered (and the totalconsideration received therefor) upon the exercise of such rights or options orupon the conversion or exchange of such Convertible Securities.  If the purchase price provided for in any

 

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right or option referred to inSection 5(b), or the rate at which any Convertible Securities referred toin Section 5(b) are convertible into or exchangeable for Common Stock,shall decrease at any time under or by reason of provisions with respectthereto designed to protect against dilution, then in case of the delivery ofCommon Stock upon the exercise of any such right or option or upon conversionor exchange of any such Convertible Security, the Warrant Exercise Price thenin effect hereunder shall forthwith be decreased to such Warrant Exercise Priceas would have applied had the adjustments made upon the issuance of such right,option or Convertible Security been made upon the basis of the issuance of (andthe total consideration received for) the shares of Common Stock delivered asaforesaid.

 

(f)            If any capital reorganization orreclassification of the capital stock of the Company, or consolidation ormerger of the Company with another corporation, or the sale of all orsubstantially all of its assets to another corporation shall be effected insuch a way that holders of Common Stock shall be entitled to receive stock,securities or assets with respect to or in exchange for Common Stock, then, asa condition of such reorganization, reclassification, consolidation, merger orsale, and except as otherwise provided herein, lawful and adequate provisionshall be made whereby the holder of this Warrant shall thereafter have theright to receive upon the basis and upon the terms and conditions specifiedherein and in lieu of the shares of the Common Stock of the Company immediatelytheretofore receivable upon the exercise of this Warrant, such shares of stock,securities or assets as may be issued or payable with respect to or in exchangefor a number of outstanding shares of such Common Stock equal to the number ofshares of such stock immediately theretofore receivable upon the exercise ofthis Warrant had such reorganization, reclassification, consolidation, mergeror sale not taken place, and in any such case appropriate provision shall bemade with respect to the rights and interests of the holder of this Warrant tothe end that the provisions hereof (including without limitation provisions foradjustments of the Warrant Exercise Price and of the number of sharesreceivable upon the exercise hereof) shall thereafter be applicable, as nearlyas may be in relation to any shares of stock, securities or assets thereafterreceivable upon the exercise of this Warrant. The Company shall not effect any such consolidation, merger or sale,unless prior to the consummation thereof the successor corporation (if otherthan the Company) resulting from such consolidation or merger or thecorporation purchasing such assets shall assume by written instrument executedand mailed to the registered holder of this Warrant, at the last address ofsuch holder appearing on the books of the Company, the obligation to deliver tosuch holder such shares of stock, securities or assets as, in accordance withthe foregoing provisions, such holder may be entitled to receive.

 

(g)           Upon any adjustment of the WarrantExercise Price, the Company shall give written notice thereof, by first-classmail, postage prepaid, addressed to the registered holder of this Warrant, asshown on the books of the Company, which notice shall state the WarrantExercise Price resulting from such adjustment and the increase or decrease, ifany, in the number of shares purchasable at such price upon the exercise ofthis Warrant, setting forth in reasonable detail the method of calculation andthe facts upon which such calculation is based.  No adjustment to the Warrant Exercise Price shall be requiredunless such adjustment would require an increase or decrease of at least fivecents ($0.05); provided, however, that any adjustments which by reason of thisSection 5(g) are not required to be made shall be carried forward andtaken into account in any subsequent adjustment; and, provided further, thatadjustment shall be

 

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required and made in accordance with theprovisions of this Section 5 (other than this Section 5(g)) not laterthan such time as may be required in order to preserve the tax-free nature of adistribution to the holders of shares of Common Stock.  All calculations under this Section 5shall be made to the nearest cent or to the nearest one-hundredth of a share,as the case may be.  Anything in thisSection 5 to the contrary notwithstanding, the Company shall be entitled tomake such increases in the conversion rate in addition to those required bythis Section 5 as it in its discretion shall determine to be advisable in orderthat any stock dividends, subdivisions of shares, distribution of rights topurchase stock or securities, or distribution of securities convertible into orexchangeable for stock hereafter made by the Company to its stockholders shallnot be taxable.

 

(h)  In case at any time: (i) there shall be anycapital reorganization, or reclassification of the capital stock of theCompany, or consolidation or merger of the Company with, or sale of all orsubstantially all of its assets to, another corporation; or (ii) there shall bea voluntary or involuntary dissolution, liquidation or winding up of theCompany; then, in any one or more of said cases, the Company shall give writtennotice, by first-class mail, postage prepaid, addressed to the registeredholder of this Warrant at the address of such holder as shown on the books ofthe Company, of the date on which (a) the books of the Company shall closeor a record shall be taken for such dividend, distribution or subscriptionrights, or (b) such reorganization, reclassification, consolidation, merger,sale, dissolution, liquidation or winding up shall take place, as the case maybe.  Such notice shall also specify thedate as of which the holders of Common Stock of record shall participate insuch dividend, distribution or subscription rights, or shall be entitled toexchange their Common Stock for securities or other property deliverable uponsuch reorganization, reclassification, consolidation, merger, sale,dissolution, liquidation, or winding up, as the case may be.  Such written notice shall be given at leasttwenty (20) days prior to the action in question and not less than twenty (20)days prior to the record date or the date on which the Company’s transfer booksare closed in respect thereto.

 

(i)            If any event occurs as to which inthe opinion of the Board of Directors of the Company the other provisions ofthis Section 5 are not strictly applicable or if strictly applicable would notfairly protect the rights of the holder of this Warrant in accordance with theessential intent and principles of such provisions, then the Board of Directorsshall make an adjustment in the application of such provisions, in accordancewith such essential intent and principles, so as to protect such rights asaforesaid.

 

                (j)            As used in this Section 5 the term“Common Stock” shall mean and include the Company’s presently authorized CommonStock and any additional Common Stock that may be authorized by due action ofthe Company’s Board of Directors and shareholders entitled to vote thereon.

 

                6.             NoVoting Rights.  This Warrant shallnot entitle the Holder to any voting rights or other rights as a shareholder ofthe Company.

 

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                7.             Notice of Transfer of Warrant or Resale of theWarrant Shares.

 

                (a)           TheHolder, by acceptance hereof, agrees to give written notice to the Companybefore transferring this Warrant or transferring any Warrant Shares of suchHolder’s intention to do so, describing briefly the manner of any proposedtransfer.  Promptly upon receiving suchwritten notice, the Company shall present copies thereof to the Company’scounsel and to counsel to the original purchaser of this Warrant.  If in the opinion of each such counsel theproposed transfer may be effected without registration or qualification (underany federal or state securities laws), the Company, as promptly as practicable,shall notify the Holder of such opinion, whereupon the Holder shall be entitledto transfer this Warrant or to dispose of Warrant Shares received upon theprevious exercise of this Warrant, all in accordance with the terms of thenotice delivered by the Holder to the Company; provided that an appropriatelegend may be endorsed on this Warrant or the certificates for such WarrantShares respecting restrictions upon transfer thereof necessary or advisable inthe opinion of counsel and satisfactory to the Company to prevent furthertransfers which would be in violation of Section 5 of the Securities Act of1933, as amended (the “Securities Act”) and applicable state securities laws;and provided further that the prospective transferee or purchaser shall executesuch documents and make such representations, warranties, and agreements as maybe required solely to comply with the exemptions relied upon by the Company forthe transfer or disposition of the Warrant or Warrant Shares.

 

                (b)           Ifin the opinion of either of the counsel referred to in this Section 7, theproposed transfer or disposition of this Warrant or such Warrant Sharesdescribed in the written notice given pursuant to this Section 7 may not beeffected without registration or qualification of this Warrant or such WarrantShares the Company shall promptly give written notice thereof to the Holder,and the Holder will limit its activities in respect to such transfer ordisposition as, in the opinion of both such counsel, are permitted by law.

 

                8.             FractionalShares.  Fractional shares shall notbe issued upon the exercise of this Warrant, but in any case where the Holderwould, except for the provisions of this Section, be entitled under the termshereof to receive a fractional share, the Company shall, upon the exercise ofthis Warrant for the largest number of whole shares then called for, pay a sumin cash equal to the sum of (a) the excess, if any, of the Fair Market Value ofsuch fractional share over the proportional part of the Warrant Exercise Pricerepresented by such fractional share, plus (b) the proportional part of theWarrant Exercise Price, if paid by the Holder, represented by such fractionalshare.

 

                9.             Registration Rights.

 

                (a)           Ifthe Company at any time until two (2) years after complete exercise orexpiration of this Warrant proposes to register under the Securities Act(except by a Form S-4 or Form S-8 Registration Statement or anysuccessor forms thereto) any of its equity securities, it will give writtennotice to all Holders of this Warrant, any Warrants issued pursuant to Section2 and/or Section 3(a) hereof, and any Warrant Shares of its intention to do soand, on the written request of any such Holder given within twenty (20) days afterreceipt of any such notice (which request shall specify the Warrant Sharesintended to be sold or disposed of by such Holder and describe the nature ofany proposed sale or other disposition thereof), the Company will use its bestefforts to cause all such Warrant Shares, the Holders of which shall haverequested the registration or

 

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qualification thereof,to be included in such registration statement proposed to be filed by theCompany; provided that:

 

                (i)            if a greater number of Warrant Shares is offered forparticipation in the proposed offering than in the reasonable opinion of themanaging underwriter of the proposed offering can be accommodated withoutadversely affecting the proposed offering, then the amount of Warrant Sharesproposed to be offered by such Holders for registration, as well as the numberof securities of any other selling shareholders participating in theregistration, shall be proportionately reduced to a number deemed satisfactoryby the managing underwriter

 

                (ii)           the Company may, at its sole discretion and without theconsent of any holder of the Warrant Shares, withdraw such registrationstatement and abandon the proposed offering in which any such holder hadrequested to participate;

 

                (iii)          if the offering to which the registration statement relatesis to be distributed by or through an underwriter, each holder of the WarrantShares shall agree, as a condition to the inclusion of such holder’s securitiesin such registration, to sell securities held by such holder through suchunderwriter on the same terms and conditions as the underwriter agrees to sellsecurities on behalf of the Company and not to sell, transfer, pledge, assignor otherwise dispose of the Warrant Shares of the Company not sold by suchholder in such offering for such period (up to 180 days after the effectivedate of the registration statement) as may be required by the underwriter;

 

                (iv)          the Company shall not be obligated to include any WarrantShares in any such registration for any Holder who is able to sell all of theWarrant Shares in a single transaction pursuant to Rule 144 under theSecurities Act (or any other similar rule or regulation) during the three-monthperiod beginning on the date such notice is received by such holder, calculatedas of the date of such receipt.

 

                (b)           Further,on a one-time basis only, at any time until two (2) years after completeexercise or expiration of this Warrant, upon request by the Holder or Holdersof a majority in interest of this Warrant, of any Warrants issued pursuant toSection 2 and/or Section 3(a) hereof, and of any Warrant Shares, the Companywill promptly take all necessary steps to register or qualify, under theSecurities Act and the securities laws of such states as the Holders mayreasonably request, such number of Warrant Shares issued and to be issued uponconversion of the Warrants requested by such Holders in their request to theCompany; provided that the Company shall not be obligated to include anyWarrant Shares in any such registration for any Holder who is able to sell allof the Warrant Shares in a single transaction pursuant to Rule 144 under theSecurities Act (or any other similar rule or regulation) during the three-monthperiod beginning on the date such notice is received by such holder, calculatedas of the date of such receipt.  TheCompany shall keep effective and maintain any registration, qualification,notification, or approval specified in this Paragraph (b) for such period asmay be reasonably necessary for such Holder or Holders of such Warrant Sharesto dispose thereof and from time to time shall amend or supplement theprospectus used in connection therewith to the extent necessary in order tocomply with applicable law.

 

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                (c)           Uponthe exercise of registration rights pursuant to this Section 9, Holder agreesto supply the Company with such information as may be required by the Companyto register or qualify the shares to be registered.

 

                (d)           Withrespect to each inclusion of securities in a registration statement pursuant tothis Section 9, the Company shall bear the following fees, costs, and expenses:all registration, filing and NASD fees, printing expenses, fees anddisbursements of counsel and accountants for the Company, fees anddisbursements of counsel for the underwriter or underwriters of such securities(if the Company is required to bear such fees and disbursements), all internalexpenses, and legal fees and disbursements and other expenses of complying withstate securities laws of any jurisdictions in which the securities to beoffered are to be registered or qualified. Fees and disbursements of special counsel and accountants for theselling Holders, underwriting discounts and commissions, and transfer taxes forselling Holders and any other expenses relating to the sale of securities bythe selling Holders not expressly included above shall be borne by the sellingHolders.

 

                (e)           The Company hereby indemnifies eachof the Holders of this Warrant and of any Warrant Shares, and the officers anddirectors, if any, who control such Holders, within the meaning of Section 15of the Securities Act, against all losses, claims, damages, and liabilitiescaused by (i) any untrue statement or alleged untrue statement of a materialfact contained in any Registration Statement or Prospectus (and as amended orsupplemented if the Company shall have furnished any amendments thereof orsupplements thereto), any Preliminary Prospectus or any state securities lawfilings; (ii) any omission or alleged omission to state therein a material factrequired to be stated therein or necessary to make the statements therein notmisleading except insofar as such losses, claims, damages, or liabilities arecaused by any untrue statement or omission contained in information furnishedin writing to the Company by such Holder expressly for use therein; and eachsuch Holder by its acceptance hereof severally agrees that it will indemnifyand hold harmless the Company, each of its officers who signs such RegistrationStatement, each underwriter of the Common Stock so registered, and each person,if any, who controls the Company or such underwriter, within the meaning ofSection 15 of the Securities Act, with respect to losses, claims, damages, orliabilities which are caused by any untrue statement or omission contained ininformation furnished in writing to the Company by such Holder expressly foruse therein.

 

                10.           Fair Market Value.  Fair Market Value of a share of Common Stockas of a particular date (the “Determination Date”) shall mean:

 

                (a)           If the Company’s Common Stock is traded on an exchange oris listed on the Nasdaq National Market or the Nasdaq SmallCap Market, then theaverage closing or last sale prices, respectively, reported for the ten (10)business days immediately preceding the Determination Date; or

 

                (b)           If the Company’s Common Stock is not traded on an exchangeor listed on the Nasdaq National Market or the Nasdaq SmallCap Market but islisted on the OTC Bulletin Board, the National Quotation Bureau, or anycomparable reporting service, then

 

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theaverage of the closing bid and ask prices reported for the ten (10) businessdays immediately preceding the Determination Date; or

 

                (c)           Ifthe Company’s Common Stock is not listed on an exchange, on the Nasdaq NationalMarket, the Nasdaq SmallCap Market, the OTC Bulletin Board, the NationalQuotation Bureau, or any comparable reporting service, then the fair marketvalue as determined in good faith by the Board of Directors of the Company.

 

*[signature page follows]*

 

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                IN WITNESS WHEREOF, MedicalCV, Inc. has caused thisWarrant to be signed by its duly authorized officer and this Warrant to bedated November 13, 2003.

 

 
|   | MEDICALCV, INC. |
|--------|-----------------|
|   |            |
|   |            |
|   | By              | /s/ Jules L. Fisher |
|   |            | Jules L. Fisher |
|   |            | Chief Financial Officer |

 

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NOTICE OF EXERCISE OF WARRANT

 

(To be signed upon the exercise of the Warrant)

 

                Theundersigned hereby irrevocably elects to exercise the attached Warrant topurchase, forcash,                                 ofthe shares of Common Stock issuable upon the exercise of such Warrant, andrequests that certificates for the shares of Common Stock (together with a newWarrant to purchase the number of shares, if any, with respect to which thisWarrant is not exercised) be issued in the name and address set forth below.

 
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|   |   |   |                                 |   |
|   |   |   | (Social  Security or Tax Ident. No.) |   |

 
| * | The  signature on the Notice of Exercise of Warrant must correspond to the name as  written upon the face of the Warrant in every particular without alteration  or enlargement or any change whatsoever.   When signing on behalf of a corporation, partnership, trust or other  entity, PLEASE indicate your position(s) and title(s) with such entity. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

13

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CONVERSION NOTICE

 

(To be signed upon exercise of Warrant pursuant to Sections 1(b)through 1(d))

 

                Theundersigned hereby irrevocably elects to exercise the Conversion Right providedin Sections 1(b) through 1(d) of thewithin Warrant for, and to acquire thereunder,                 shares of Common Stock.  If said numberof shares shall not be all the shares purchasable under the within Warrant, anew Warrant is to be issued in the name of said undersigned for the balanceremaining of the shares purchasable thereunder rounded up to the next highernumber of shares.

 

                Pleaseissue a certificate or certificates for the shares of Common Stock in the nameset forth below.

 
| Dated: |   |   |                                 |   |
|--------|--------|--------|--------------------------------------|--------|
|   |   |   |                                 |   |
|   |   |   |                                 |   |
|   |   |   | (Signature)                          |   |
|   |   |   |                                 |   |
|   |   |   |                                 |   |
|   |   |   | (Name)                               |   |
|   |   |   |                                 |   |
|   |   |   |                                 |   |
|   |   |   | (Address)                            |   |
|   |   |   |                                 |   |
|   |   |   |                                 |   |
|   |   |   | (Social  Security or Tax Ident. No.) |   |

 
| * | The  signature on the Conversion Notice must correspond to the name as written  upon the face of the Warrant in every particular without alteration or  enlargement or any change whatsoever.   When signing on behalf of a corporation, partnership, trust or other  entity, PLEASE indicate your position(s) and title(s) with such entity. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

14

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ASSIGNMENT OF WARRANT

 

(To be signed only upon authorized transfer of the Warrant)

 

                FORVALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto                          the right to purchase                        shares of Common Stock of MedicalCV, Inc., to which the within Warrant relatesand appoints                           ,as attorney-in-fact, to transfer said right on the books ofMedicalCV, Inc. with full power of substitution in the premises.  By accepting such transfer, the transfereehas agreed to be bound in all respects by the terms and conditions of thewithin Warrant.

 
| Dated: |   |   |                                 |   |
|--------|--------|--------|--------------------------------------|--------|
|   |   |   |                                 |   |
|   |   |   |                                 |   |
|   |   |   | (Signature)                          |   |
|   |   |   |                                 |   |
|   |   |   |                                 |   |
|   |   |   | (Name)                               |   |
|   |   |   |                                 |   |
|   |   |   |                                 |   |
|   |   |   | (Address)                            |   |
|   |   |   |                                 |   |
|   |   |   |                                 |   |
|   |   |   | (Social  Security or Tax Ident. No.) |   |

 

 
| * | The  signature on the Assignment of Warrant must correspond to the name as written  upon the face of the Warrant in every particular without alteration or  enlargement or any change whatsoever.   When signing on behalf of a corporation, partnership, trust or other  entity, PLEASE indicate your positions) and title(s) with such entity. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 

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