**Exhibit 10.1**

 

**WARRANT**

 

**ToPurchase 60,179 Shares ofCommon StockofMEDICALCV, INC.**

 

*This Warrant and the securities issuable upon exercise of this Warranthave not been registered under the Securities Act of 1933 (the “SecuritiesAct”) or under any state securities or “Blue Sky” laws (“Blue Sky Laws”). Notransfer, sale, assignment, pledge, hypothecation or other disposition of thisWarrant or the securities issuable upon exercise of this Warrant or anyinterest therein may be made except (a) pursuant to an effective registrationstatement under the Securities Act and any applicable Blue Sky Laws or (b) ifthe Company has been furnished with an opinion of counsel for the holder, whichopinion and counsel shall be reasonably satisfactory to the Company, to theeffect that no registration is required because of the availability of anexemption from registration under the Securities Act and applicable Blue SkyLaws.*

 

THIS CERTIFIES THAT, for good and valuable consideration, PKMPROPERTIES, LLC a Minnesota limited liability company (“PKM Properties”)or its registered assigns, is entitled to subscribe for and purchase fromMedicalCV, Inc., a Minnesota corporation (the “Company”), at any time toand including the date that is ten (10) years after the date hereof.  Sixty thousand, one hundred seventy-nine(60,179) fully paid and nonassessable shares of the Common Stock of the Companyat the price of $0.70 per share (the “Warrant Exercise Price”), subjectto the antidilution provisions of this Warrant.  The shares which may be acquired upon exercise of this Warrantare referred to herein as the “Warrant Shares.” As used herein, the term“Holder” means PKM Properties, any party who acquires all or a part of thisWarrant as a registered transferee of PKM Properties, or any record holder orholders of the Warrant Shares issued upon exercise, whether in whole or inpart, of the Warrant; the term “Common Stock” means the Company’s Common Stock,$.01 par value.

 

This Warrant is subject to the following provisions, terms and conditions:

 

1.                                       Exercise; Conversion Right; Transferability

 

(a)                                  The rights represented by this Warrant may beexercised by the Holder hereof at any time, for a period of ten (10) yearscommencing on the date hereof, in whole or in part (but not as to a fractionalshare of Common Stock), by written notice of exercise (in the form attachedhereto)

 

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delivered to the Company at theprincipal office of the Company prior to the expiration of this Warrant andaccompanied or preceded by the surrender of this Warrant along with a check inpayment of the Warrant Exercise Price for such shares.

 

(b)                                 Subjectto the restrictions on transfer of this Warrant or the Warrant Shares set forthherein, the Holder of this Warrant shall have the right to require the Companyto convert this Warrant (the “Conversion Right’) at any time after thedate hereof and prior to its expiration into shares of Common Stock as providedfor in 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 in Section 10hereof) for the Warrant Shares immediately prior to the exercise of theConversion Right) by (ii) the Fair Market Value of one share of Common Stockimmediately prior to the exercise of the Conversion Right.

 

(c)                                  TheConversion Right may be exercised by the Holder, at any time or from time totime, after the date hereof and prior to its expiration, on any business day bydelivering a written notice in the form attached hereto (the “ConversionNotice”) to the Company at the offices of the Company exercising theConversion Right and specifying (i) the total number of shares of Common Stockthe Holder will purchase pursuant to such conversion and (ii) a place and datenot less than one or more than 20 business days from the date of the ConversionNotice for the closing of such purchase.

 

(d)                                 Atany closing under Section 1(c) hereof, (i) the Holder will surrender theWarrant, (ii) the Company will deliver to the Holder a certificate orcertificates for the number of shares of Common Stock issuable upon such conversion,together with cash, in lieu of any fraction of a share, and (iii) the Companywill deliver to the Holder a new warrant representing the number of shares, ifany, with respect to which the Warrant shall not have been exercised.

 

(e)                                  Subject to the provisions of Section 7hereof, this Warrant shall be fully transferable, in whole or in part; providedthat this Warrant shall be transferable only on the books of the Company by theHolder in person, or by duly authorized attorney, on surrender of the Warrant,properly assigned.

 

2.                                       Exchange and Replacement.  Subjectto Sections 1 and 7 hereof, this Warrant is exchangeable upon the surrenderhereof by the Holder to the Company at its office for new Warrants of liketenor and date representing in the aggregate the right to purchase the numberof Warrant Shares purchasable hereunder, each of such new Warrants to representthe right to purchase such number of Warrant Shares (not to exceed theaggregate total number purchasable hereunder) as shall be designated by theHolder at the time of such surrender. Upon receipt by the Company of evidence reasonably satisfactory to it ofthe loss, theft, destruction, or mutilation of this Warrant, and, in case ofloss, theft or destruction, of indemnity reasonably satisfactory to it, andupon surrender and cancellation of this Warrant, if mutilated, the Company willmake and deliver a new Warrant of like tenor, in lieu of this Warrant.  This Warrant shall be promptly canceled bythe

 

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Company upon the surrenderhereof in connection with any exchange or replacement.  The Company shall pay all expenses, taxes(other than stock transfer taxes), and other charges incurred by it inconnection with the preparation, execution, and delivery of Warrants pursuantto this Section 2.

 

3.                                       Issuance of the Warrant Shares.

 

(a)                                  The Company agrees that the shares of CommonStock purchased upon exercise of this Warrant shall be and are deemed to beissued 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, the Company shallnot be required to deliver any certificate for Warrant Shares upon exercise ofthis Warrant except in accordance with exemptions from the applicablesecurities registration requirements or registrations under applicablesecurities laws.  Nothing herein,however, shall obligate the Company to effect registrations under federal orstate 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.                                       Covenants of the Company.  TheCompany covenants and agrees that all Warrant Shares will, upon issuance, beduly authorized 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.  The provisions of thisWarrant are subject to adjustment as provided in this Section 5; provided thatno adjustment shall be made pursuant to this Section 5 which has the effect ofduplicating any adjustment made pursuant to the Articles of Incorporation of theCompany or any certificate of designation thereto, if any.

 

(a)                                  TheWarrant Exercise Price shall be subject to adjustment from time to time ashereinafter provided.  Upon eachadjustment of the Warrant Exercise Price the holder of this

 

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Warrant shall thereafter beentitled to purchase the number of shares of Common Stock of the Companyobtained by multiplying the Warrant Exercise Price in effect immediately priorto such adjustment by the number of shares issuable pursuant to exerciseimmediately prior to such adjustment and dividing the product thereof by theWarrant Exercise Price resulting from such adjustment.

 

(b)                                 Exceptfor (i) options, warrants or other rights to purchase securities outstanding onthe date of the issuance of this Warrant (provided there is no adjustment tothe terms of such options, warrants or other securities on or after the date ofissuance of this Warrant); (ii) options to purchase shares of Common Stock andthe issuance of awards of Common Stock pursuant to stock option or employeestock purchase plans adopted by the Company and shares of Common Stock issuedupon the exercise of such options granted pursuant to such plans (providedthere is no adjustment to the terms of such options, awards or other securitieson or after the date of issuance of this Warrant) (appropriately adjusted toreflect stock splits, combinations, stock dividends, reorganizations,consolidations and similar changes); (iii) up to four separate issues or salesby the Company during any twelve month period, none of which shall exceed25,000 shares of Common Stock or securities convertible into or exercisable forthe purchase of Common Stock; and (iv) Common Stock or securities convertibleinto or exercisable for the purchase of Common Stock issued in connection withany merger or acquisition of any business or tangible or intangible assetswhich is approved by the Company’s Board of Directors; if and whenever theCompany shall issue or sell any additional securities, warrants or rights orany security convertible or exchangeable into equity, securities, warrants orrights (collectively, “Convertible Securities”) for a consideration per shareless than the Warrant Exercise Price in effect immediately prior to the time ofsuch issue or sale, then, forthwith upon such issue or sale, the WarrantExercise Price shall be adjusted to a price determined by multiplying suchWarrant Exercise Price by a fraction, the numerator of which shall be thenumber of shares of Common Stock outstanding immediately prior to such issuanceplus the number of shares of Common Stock that the aggregate considerationreceived by the Company for such issuance would purchase at such WarrantExercise Price; and the denominator of which shall be the number of shares ofsuch additional Common Stock and the number of shares of Common Stockoutstanding prior to such issuance.  Forthe purpose of the above calculation, the number of shares of Common Stockimmediately prior to such issuance shall be calculated on a fully-dilutedbasis, as if this Warrant and any other outstanding warrants, options or otherrights for the purchase of shares of stock or Convertible Securities had beenfully exercised as of such date.  Exceptas provided in Section 5(e) below, no further adjustments of the WarrantExercise Price shall be made upon the actual issuance of Common Stock or of anyConvertible Securities upon the exercise of such rights or options or upon theactual issue of such Common Stock upon conversion or exchange of suchConvertible Securities.

 

(c)                                  Forpurposes of this Section 5, in case any shares of Common Stock orConvertible Securities or any rights or options to purchase any such CommonStock or Convertible Securities shall be issued or sold for cash, theconsideration received therefor shall be deemed to be the amount received bythe Company therefor, without deducting therefrom any expenses incurred or anyunderwriting commissions, discounts or concessions paid or allowed by theCompany in connection therewith.  Incase any shares of Common Stock or Convertible Securities or any rights oroptions to purchase any such Common Stock or Convertible Securities

 

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shall be issued or sold for aconsideration other than cash, the amount of the consideration other than cashreceived 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 such CommonStock or Convertible Securities shall be issued in connection with any mergeror consolidation in which the Company is the surviving corporation, the amountof consideration therefor shall be deemed to be the fair value as determined bythe Board of Directors of the Company of such portion of the assets andbusiness of the non-surviving corporation or corporations as such Board shalldetermine to be attributable to such Common Stock, Convertible Securities,rights or options, as the case may be. In the event of any consolidation or merger of the Company in which theCompany is not the surviving corporation or in the event of any sale of all orsubstantially all of the assets of the Company for stock or other securities ofany other corporation, the Company shall be deemed to have issued a number ofshares of its Common Stock for stock or securities of the other corporationcomputed on the basis of the actual exchange ratio on which the transaction waspredicated and for a consideration equal to the fair market value on the dateof such transaction of such stock or securities of the other corporation, andif any such calculation results in adjustment of the Warrant Exercise Price,the determination of the number of shares of Common Stock issuable uponexercise immediately prior to such merger, conversion or sale, for purposes ofSection 5(f) below, shall be made after giving effect to such adjustmentof the Warrant Exercise Price.

 

(d)                                 Incase the Company shall at any time subdivide its outstanding shares of CommonStock into a greater number of shares, the Warrant Exercise Price in effectimmediately prior to such subdivision shall be proportionately reduced, andconversely, in case the outstanding shares of Common Stock of the Company shallbe combined into a smaller number of shares, the Warrant Exercise Price ineffect immediately prior to such combination shall be proportionatelyincreased.

 

(e)                                  If(i) the purchase price provided for in any right or option referred to inSection 5(b), or (ii) the additional consideration, if any, payable uponthe conversion or exchange of Convertible Securities, or (iii) the rate atwhich any Convertible Securities are convertible into or exchangeable forCommon Stock, shall change at any time (other than under or by reason ofprovisions designed to protect against dilution), or any Convertible Securitiesshall terminate, expire or cease to be outstanding without exercise thereof,the Warrant Exercise Price then in effect hereunder shall forthwith beincreased or decreased to such Warrant Exercise Price as would have applied hadthe adjustments made upon the issuance of such rights, options or ConvertibleSecurities been made upon the basis of (a) the issuance of the number ofshares of Common Stock theretofore actually delivered upon the exercise of suchoptions or rights or upon the conversion or exchange of such ConvertibleSecurities, and the total consideration received therefor, and (b) theissuance at the time of such change of any such options, rights, or ConvertibleSecurities then still outstanding for the consideration, if any, received bythe Company therefor and to be received on the basis of such changed price; andon the expiration of any such option or right or the termination of any suchright to convert or exchange such Convertible Securities, the Warrant ExercisePrice then in effect hereunder shall forthwith be

 

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increased to such WarrantExercise Price as would have been obtained had the adjustments made upon theissuance of such rights or options or Convertible Securities been made upon thebasis of the issuance of the shares of Common Stock theretofore actuallydelivered (and the total consideration received therefor) upon the exercise ofsuch rights or options or upon the conversion or exchange of such ConvertibleSecurities.  If the purchase priceprovided for in any right or option referred to in Section 5(b), or therate at which any Convertible Securities referred to in Section 5(b) are convertibleinto or exchangeable for Common Stock, shall decrease at any time under or byreason of provisions with respect thereto designed to protect against dilution,then in case of the delivery of Common Stock upon the exercise of any suchright or option or upon conversion or exchange of any such ConvertibleSecurity, the Warrant Exercise Price then in effect hereunder shall forthwithbe decreased to such Warrant Exercise Price as would have applied had theadjustments made upon the issuance of such right, option or ConvertibleSecurity been made upon the basis of the issuance of (and the totalconsideration received for) the shares of Common Stock delivered as aforesaid.

 

(f)                                    Ifany capital reorganization or reclassification of the capital stock of theCompany, or consolidation or merger of the Company with another corporation, orthe sale of all or substantially all of its assets to another corporation shallbe effected in such a way that holders of Common Stock shall be entitled toreceive stock, securities or assets with respect to or in exchange for CommonStock, then, as a condition of such reorganization, reclassification,consolidation, merger or sale, and except as otherwise provided herein, lawfuland adequate provision shall be made whereby the holder of this Warrant shallthereafter have the right to receive upon the basis and upon the terms andconditions specified herein and in lieu of the shares of the Common Stock ofthe Company immediately theretofore receivable upon the exercise of thisWarrant, such shares of stock, securities or assets as may be issued or payablewith respect to or in exchange for a number of outstanding shares of suchCommon Stock equal to the number of shares of such stock immediatelytheretofore receivable upon the exercise of this Warrant had suchreorganization, reclassification, consolidation, merger or sale not takenplace, and in any such case appropriate provision shall be made with respect tothe rights and interests of the holder of this Warrant to the end that theprovisions hereof (including without limitation provisions for adjustments ofthe Warrant Exercise Price and of the number of shares receivable upon theexercise hereof) shall thereafter be applicable, as nearly as may be inrelation to any shares of stock, securities or assets thereafter receivable uponthe exercise of this Warrant.  TheCompany shall not effect any such consolidation, merger or sale, unless priorto the consummation thereof the successor corporation (if other than theCompany) resulting from such consolidation or merger or the corporationpurchasing such assets shall assume by written instrument executed and mailedto the registered holder of this Warrant, at the last address of such holderappearing on the books of the Company, the obligation to deliver to such holdersuch shares of stock, securities or assets as, in accordance with the foregoingprovisions, such holder may be entitled to receive.

 

(g)                                 Uponany adjustment of the Warrant Exercise Price, the Company shall give writtennotice thereof, by first-class mail, postage prepaid, addressed to theregistered holder of this Warrant, as shown on the books of the Company, whichnotice shall state the Warrant Exercise Price resulting from such adjustmentand the increase or decrease, if any, in the number of shares purchasable at suchprice upon the exercise of this Warrant, setting forth in reasonable

 

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detail the method ofcalculation and the facts upon which such calculation is based.  No adjustment to the Warrant Exercise Priceshall be required unless such adjustment would require an increase or decreaseof at least five cents ($0.05); provided, however, that any adjustments whichby reason of this Section 5(g) are not required to be made shall becarried forward and taken into account in any subsequent adjustment; and,provided further, that adjustment shall be required and made in accordance withthe provisions of this Section 5 (other than this Section 5(g)) notlater than such time as may be required in order to preserve the tax-freenature of a distribution 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)                                 Incase at any time: (i) there shall be any capital reorganization, orreclassification of the capital stock of the Company, or consolidation ormerger of the Company with, or sale of all or substantially all of its assetsto, another corporation; or (ii) there shall be a voluntary or involuntarydissolution, liquidation or winding up of the Company; then, in any one or moreof said cases, the Company shall give written notice, by first-class mail,postage prepaid, addressed to the registered holder of this Warrant at theaddress of such holder as shown on the books of the Company, of the date onwhich (a) the books of the Company shall close or a record shall be takenfor such dividend, distribution or subscription rights, or (b) suchreorganization, reclassification, consolidation, merger, sale, dissolution,liquidation or winding up shall take place, as the case may be.  Such notice shall also specify the date asof which the holders of Common Stock of record shall participate in suchdividend, distribution or subscription rights, or shall be entitled to exchangetheir Common Stock for securities or other property deliverable upon suchreorganization, reclassification, consolidation, merger, sale, dissolution,liquidation, or winding up, as the case may be.  Such written notice shall be given at least twenty (20) daysprior to the action in question and not less than twenty (20) days prior to therecord date or the date on which the Company’s transfer books are closed inrespect thereto.

 

(i)                                     Ifany event occurs as to which in the opinion of the Board of Directors of theCompany the other provisions of this Section 5 are not strictly applicable orif strictly applicable would not fairly protect the rights of the holder ofthis Warrant in accordance with the essential intent and principles of suchprovisions, then the Board of Directors shall make an adjustment in theapplication of such provisions, in accordance with such essential intent andprinciples, so as to protect such rights as aforesaid.

 

(j)                                     Asused in this Section 5 the term “Common Stock” shall mean and include theCompany’s presently authorized Common Stock and any additional Common Stockthat may be authorized by due action of the Company’s Board of Directors andshareholders entitled to vote thereon.

 

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6.                                       No Voting Rights.  ThisWarrant shall not entitle the Holder to any voting rights or other rights as ashareholder of the Company.

 

7.                                       Noticeof Transfer of Warrant or Resale of the Warrant Shares.

 

(a)                                  The Holder, by acceptance hereof, agrees to givewritten notice to the Company before transferring this Warrant or transferringany Warrant Shares of such Holder’s intention to do so, describing briefly themanner of any proposed transfer. Promptly upon receiving such written notice, the Company shall presentcopies thereof to the Company’s counsel and to counsel to the originalpurchaser of this Warrant.  If in theopinion of each such counsel the proposed transfer may be effected withoutregistration or qualification (under any federal or state securities laws), theCompany, as promptly as practicable, shall notify the Holder of such opinion,whereupon the Holder shall be entitled to transfer this Warrant or to disposeof Warrant Shares received upon the previous exercise of this Warrant, all in accordancewith the terms of the notice delivered by the Holder to the Company; providedthat an appropriate legend may be endorsed on this Warrant or the certificatesfor such Warrant Shares respecting restrictions upon transfer thereof necessaryor advisable in the opinion of counsel and satisfactory to the Company toprevent further transfers which would be in violation of Section 5 of theSecurities Act of 1933, as amended (the “Securities Act”) and applicable statesecurities laws; and provided further that the prospective transferee orpurchaser shall execute such documents and make such representations,warranties, and agreements as may be required solely to comply with theexemptions relied upon by the Company for the transfer or disposition of the Warrantor Warrant Shares.

 

(b)                                 If in the opinion of either of the counselreferred to in this Section 7, the proposed transfer or disposition of thisWarrant or such Warrant Shares described in the written notice given pursuantto this Section 7 may not be effected without registration or qualification ofthis Warrant or such Warrant Shares the Company shall promptly give writtennotice thereof to the Holder, and the Holder will limit its activities inrespect to such transfer or disposition as, in the opinion of both suchcounsel, are permitted by law.

 

8.                                       Fractional Shares. Fractional shares shall not be issued upon the exercise of this Warrant,but in any case where the Holder would, except for the provisions of thisSection, be entitled under the terms hereof to receive a fractional share, theCompany shall, upon the exercise of this Warrant for the largest number ofwhole shares then called for, pay a sum in cash equal to the sum of (a) theexcess, if any, of the Fair Market Value of such fractional share over theproportional part of the Warrant Exercise Price represented by such fractionalshare, plus (b) the proportional part of the Warrant Exercise Price, if paid bythe Holder, represented by such fractional share.

 

9.                                       RegistrationRights.

 

(a)                                  If the Company at any time until two (2) yearsafter complete exercise or expiration of this Warrant proposes to registerunder the Securities Act (except by a Form S-4 or Form S-8 RegistrationStatement or any successor forms thereto) any of its equity securities, it willgive written notice to all Holders of this Warrant, any Warrants issuedpursuant to Section 2 and/or Section 3(a) hereof, and any Warrant Shares of itsintention to do so and, on the written request of any such Holder given withintwenty (20) days after receipt of any such notice (which request shall

 

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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 qualification thereof, to be included in suchregistration statement proposed to be filed by the Company; provided that:

 

(i)                                     if a greater number of Warrant Shares is offeredfor participation in the proposed offering than in the reasonable opinion ofthe managing 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 andwithout the consent of any holder of the Warrant Shares, withdraw suchregistration statement and abandon the proposed offering in which any suchholder had requested to participate;

 

(iii)                               if the offering to which the registrationstatement relates is to be distributed by or through an underwriter, eachholder of the Warrant Shares shall agree, as a condition to the inclusion ofsuch holder’s securities in such registration, to sell securities held by suchholder through such underwriter on the same terms and conditions as theunderwriter agrees to sell securities on behalf of the Company and not to sell,transfer, pledge, assign or otherwise dispose of the Warrant Shares of theCompany not sold by such holder in such offering for such period (up to 180days after the effective date of the registration statement) as may be requiredby the underwriter;

 

(iv)                              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.

 

(b)                                 Further, on a one-time basis only, at any timeuntil two (2) years after complete exercise or expiration of this Warrant, uponrequest by the Holder or Holders of a majority in interest of this Warrant, ofany Warrants issued pursuant to Section 2 and/or Section 3(a) hereof, and ofany Warrant Shares, the Company will promptly take all necessary steps toregister or qualify, under the Securities Act and the securities laws of suchstates as the Holders may reasonably request, such number of Warrant Sharesissued and to be issued upon conversion of the Warrants requested by suchHolders in their request to the Company; provided that the Company shall not beobligated to include any Warrant Shares in any such registration for any Holderwho is able to sell all of the Warrant Shares in a single transaction pursuantto Rule 144 under the Securities Act (or any other similar rule or regulation)during the three-month period beginning on the date such notice is received bysuch holder, calculated as of the date of such receipt.  The Company shall keep effective andmaintain any registration, qualification, notification, or approval specifiedin this Paragraph (b) for such period as may be reasonably necessary for suchHolder or

 

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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.

 

(c)                                  Upon the exercise of registration rights pursuantto this Section 9, Holder agrees to supply the Company with such information asmay be required by the Company to register or qualify the shares to be registered.

 

(d)                                 With respect to each inclusion of securities in aregistration statement pursuant to this Section 9, the Company shall bear thefollowing fees, costs, and expenses: all registration, filing and NASD fees,printing expenses, fees and disbursements of counsel and accountants for theCompany, fees and disbursements of counsel for the underwriter or underwritersof such securities (if the Company is required to bear such fees anddisbursements), all internal expenses, and legal fees and disbursements andother expenses of complying with state securities laws of any jurisdictions inwhich the securities to be offered are to be registered or qualified.  Fees and disbursements of special counseland accountants for the selling Holders, underwriting discounts andcommissions, and transfer taxes for selling Holders and any other expensesrelating to the sale of securities by the selling Holders not expresslyincluded above shall be borne by the selling Holders.

 

(e)                                  The Company hereby indemnifies each of theHolders 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.                                 FairMarket Value.  Fair Market Value ofa share of Common Stock as of a particular date (the “Determination Date”)shall mean:

 

(a)                                  If the Company’s Common Stock is traded on anexchange or is listed on the Nasdaq National Market or the Nasdaq SmallCapMarket, then the average closing or last sale prices, respectively, reportedfor the ten (10) business days immediately preceding the Determination Date; or

 

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(b)                                 If the Company’s Common Stock is not traded on anexchange or listed on the Nasdaq National Market or the Nasdaq SmallCap Marketbut is listed on the OTC Bulletin Board, the National Quotation Bureau, or anycomparable reporting service, then the average of the closing bid and askprices reported for the ten (10) business days immediately preceding theDetermination Date; or

 

(c)                                  If the Company’sCommon Stock is not listed on an exchange, on the Nasdaq National Market, theNasdaq SmallCap Market, the OTC Bulletin Board, the National Quotation Bureau,or any comparable reporting service, then the fair market value as determinedin good faith by the Board of Directors of the Company.

 

*[signature page follows]*

 

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IN WITNESS WHEREOF, MedicalCV, Inc. has caused this Warrant to besigned by its duly authorized officer and this Warrant to be dated August 20,2003.

 

 
|   | MEDICALCV, INC. |
|--------|-----------------|
|   |            |   |
|   |            |   |
|   | By              |   | /s/  Blair P. Mowery |
|   |            |   Blair P. Mowery |
|   |            |   Its President & Chief Executive Officer |
|        |                 |  |  |

 

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NOTICE OF EXERCISE OF WARRANT

 

(To be signed upon the exercise of theWarrant)

 

The undersigned hereby irrevocably elects to exercise the attachedWarrant to purchase, for cash,                                         of the 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.) |

 

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*                                         The signature on the Notice of Exercise ofWarrant must correspond to the name as written upon the face of the Warrant inevery particular without alteration or enlargement or any changewhatsoever.  When signing on behalf of acorporation, partnership, trust or other entity, PLEASE indicate yourposition(s) and title(s) with such entity.

 

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CONVERSION NOTICE

 

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

 

The undersigned hereby irrevocably elects to exercise the ConversionRight provided in Sections 1(b) through 1(d) of the within Warrant for, and to acquirethereunder,                         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.

 

Please issue a certificate or certificates for the shares of CommonStock in the name set forth below.

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

 

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*                                         The signature on the Conversion Notice mustcorrespond to the name as written upon the face of the Warrant in everyparticular 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) andtitle(s) with such entity.

 

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ASSIGNMENT OF WARRANT

 

(To be signed only upon authorized transferof the Warrant)

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns, andtransfers 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 of MedicalCV, Inc.with full power of substitution in the premises.  By accepting such transfer, the transferee has agreed to be boundin all respects by the terms and conditions of the within Warrant.

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

 

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*                                         The signature on the Assignment of Warrant mustcorrespond to the name as written upon the face of the Warrant in everyparticular without alteration or enlargement or any change whatsoever.  When signing on behalf of a corporation,partnership, trust or other entity, PLEASE indicate your positions) andtitle(s) with such entity.

 

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