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                                                                    EXHIBIT 10.1


                                  CONFIDENTIAL

                        SEPARATION AGREEMENT AND RELEASE

         This Separation Agreement and Release ("Agreement") is entered into as
of the 1st day of November, 2000, by and between Medical CV, Inc. ("MCV" or
"Company") and Adel A. Mikhail, Ph.D. ("Mikhail").

                                    RECITALS

         Mikhail is currently employed by the Company as its Chief Executive
Office ("CEO"), pursuant to the terms of an employment agreement with the
Company dated January 1, 1995 (the "Employment Agreement").

         Mikhail desires to retire as CEO. The purpose of this Agreement is to
set forth the terms and conditions under which Mikhail will retire and terminate
his employment relationship.

         NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties agree as follows:

         1. SEPARATION. Mikhail's employment with the Company shall terminate
effective on a date specified by the Company following approval by the board of
directors of the Company of the hiring of a new chief executive officer (the
"Termination Date"). Except as provided in Section 13 of this Agreement, the
Employment Agreement is hereby terminated in all respects.

         2. SEVERANCE COMPENSATION. In consideration of the termination of the
Employment Agreement, the Company shall pay Mikhail an amount equal to his base
salary currently in effect as follows: (a) Seventy-Two Thousand Dollars
($72,000), and (b) $72,000 payable in six equal monthly installments commencing
February 1, 2001 and on the first day of each month thereafter until paid in
full. Mikhail hereby acknowledges that other than accrued vacation pay, he is
not owed or entitled to any compensation for work already performed prior to the
date of this Agreement. Mikhail shall also be paid for his unused vacation
benefits through the date of termination of his employment as chief executive
officer of MCV. The provisions of this Section 2 supersede Sections 3.3 and 3.4
of the Employment Agreement.

         3. CONTINUATION AS CEO AND MEMBER OF BOARD OF DIRECTORS. Unless Mikhail
terminates his employment earlier, Mikhail agrees to continue his duties as
interim CEO of the Company until a new CEO is employed by the Company. During
such period, Mikhail shall receive salary and benefits at the same level paid to
him during the year 2000. After his retirement as CEO, Mikhail will continue to
fulfill his duties on the MCV Board of Directors ("Board") and as its Chairman,
subject to the right of the Board to appoint a chairman from time to time after
2001.

         4. VESTED UNEXERCISED STOCK OPTIONS.

                  (a) Mikhail currently has vested stock options to purchase up
         to 420,000 shares of MCV common stock (the "Option") at an exercise
         price of $1.375 per share, expiring on February 2, 2001. The Option
         shall be treated as follows:


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                           (i) Mikhail agrees to exercise 30,000 shares of the
                  Option at an exercise price of $1.375 per share;

                           (ii) Mikhail will surrender the Option to the extent
                  of 240,000 shares;

                           (iii) Mikhail agrees to exercise the remainder of the
                  Option (150,000 shares) on a cashless basis on or before
                  February 2, 2001 in accordance with the following formula:

                  X = 150,000(A-$1.375)/A

                  Where: X = the number of shares to be issued to Mikhail
         pursuant to the cashless exercise; and

                  A = $2.50, the value of one share of common stock as of the
          date of this Agreement, determined in good faith by the Board.

                  (b) MCV shall issue to Mikhail, in consideration of the
         surrendered options, and as an incentive for future services as an
         independent consultant following his retirement as CEO, a warrant in
         the form of Exhibit A to purchase 240,000 shares of MCV common stock
         (the "Warrant") exercisable from and after the date hereof, but prior
         to February 1, 2006 at an exercise price of $2.125 per share. The
         Warrant shall be deemed earned as of the date of this Agreement
         (provided that Mikhail does not rescind or repudiate this Agreement in
         any way) and shall not be subject to revocation or termination if the
         consulting agreement described below is terminated for any reason, or
         if Mikhail is unable to consult due to death or disability.

         5. INDEPENDENT CONSULTANT RELATIONSHIP.

                  (a) Following the termination of his employment as CEO, MCV
         agrees to retain Mikhail as an independent consultant to provide
         advice, counsel and technical expertise with respect to MCV's business
         operations to MCV as requested by the Board or CEO. At all times during
         the consulting relationship, Mikhail shall be an independent contractor
         and not an employee, principal, agent, partner or joint venturer of
         MCV. MCV shall retain Mikhail as a consultant for a period of two years
         following the date on which Mikhail ceases to serve as CEO of MCV.
         During this term, Mikhail shall provide up to 40 hours of consulting
         services per month as requested by the Board or CEO. Mikhail agrees to
         be reasonably available from time to time in a manner consistent with
         Mikhail's advisory and consultant role hereunder. Mikhail may elect to
         render the consulting services directly, or by contract through Medica
         Nova, Inc., a corporation controlled by Mikhail. Following the
         termination of his employment, MCV will give Mikhail an appropriate
         honorary (emeritus) title.

                  (b) Mikhail may terminate the consulting relationship upon at
         least three months written notice to MCV. MCV shall not terminate the
         independent contractor relationship before December 31, 2002, unless
         Mikhail is for any reason unable to perform his duties under this
         agreement for 90 (ninety) consecutive calendar days; or unless it
         provides 90 days' advance written notice to Mikhail and pays him a
         severance of consulting payment equal to the lesser of $72,000 or
         $6,000 per month for each month remaining prior to December 31, 2002.
         After December 31, 2002, the independent consulting relationship shall
         be on an at-will basis.

                  (c) In consideration for Mikhail's consulting services, MCV
         shall pay Mikhail a retainer of $6,000 per month. If additional service
         beyond 40 hours per month is requested by the

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         Board or CEO, MCV shall pay Mikhail an additional $125 per hour, up
         to a maximum of $1,000 per day. The Company also agrees to reimburse
         Mikhail for all reasonable travel, lodging, meals and other expenses
         related to out-of-town travel or entertainment related to such
         consulting services, in accordance with the Company's standard
         reimbursement policies.

                  (d) The Company and Mikhail agree that following the
         termination of his employment and the commencement of his services as
         an independent consultant, Mikhail shall be an independent contractor
         and not an employee of the Company and will not be entitled to any
         compensation or employee benefits, except as specifically provided in
         this Section 5. Mikhail shall be responsible for all federal, state and
         local income and/or other tax obligations relating to all payments made
         by the Company to him, and agrees to indemnify and hold the Company
         harmless from all such obligations, including principal, interest, and
         penalties. Except as authorized by the Company in writing, Mikhail
         shall not be authorized to contractually bind the Company. The parties
         acknowledge that Mikhail will be responsible for maintaining all
         insurance that Mikhail determines may be necessary in connection with
         the consulting services contemplated by this Section 5 and will provide
         the Company with documentary evidence of such on the Company's
         reasonable request. Mikhail is free to engage in all other business and
         professional activities without the consent of, or prior notice to the
         Company, provided that such activities do not directly conflict with
         Mikhail's contractual obligations herein.

                  (e) The Company shall specify the areas of consulting in
         regard to its business and products and Mikhail agrees to complete any
         consulting or projects assigned to him at his own place of business or
         such other location as the Company shall reasonably specify, and at his
         own discretion, will reasonably determine the number of hours required
         and manner of performance.

                  (f) The Company will indemnify Mikhail against any claims,
         damages or liabilities to which Mikhail may become subject as a result
         of the performance by Mikhail of the services contemplated by this
         Agreement, other than claims, damages or liabilities arising out of
         Mikhail's bad faith or willful negligence. The Company also agrees that
         Mikhail shall not have any liability to the Company arising out of the
         performance by Mikhail of the services contemplated by this Agreement,
         except to the extent that any claim, damage or liability is found by a
         court to have resulted from Mikhail's bad faith or willful negligence.
         In addition, with respect to Mikhail's continued service on the board
         of directors of the Company, the Company will indemnify Mikhail to the
         full extent provided in the Company's bylaws and Minnesota Business
         Corporation Act, Section 302A.551.

         6. REDEMPTION OF STOCK. The provisions of Section 6 of the Employment
Agreement with respect to the redemption of Mikhail's stock following
termination of employment are hereby waived.

         7. CONSIDERATION. Mikhail acknowledges and agrees that MCV's payments
to him and all other promises of MCV to him set forth in this Agreement
constitute full and adequate consideration for this Agreement and that, if
Mikhail does not sign this Agreement or if he rescinds pursuant to paragraph 11,
or otherwise challenges the effectiveness of all or any part of this Agreement
at any time, or breaches any of his obligations contained in this Agreement at
any time, the Company shall have no obligation to provide any portion of the
consideration specified.

         8. RELEASE. In exchange for the consideration stated and acknowledged
herein, and except as provided herein, Mikhail, including anyone who has or
obtains any legal rights or claims through or from Mikhail, hereby
unconditionally releases and discharges MCV, its affiliates and related
entities, predecessors, successors, any MCV pension, welfare or other employee
benefit plan, and any and all past and present: owners, officers, directors,
shareholders, partners, employees, agents, consultants,

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representatives, attorneys, trustees, administrators affiliated with any of
the foregoing (jointly referred to as "Released Parties" or in the singular
as a "Released Party") from any and all past or present claims, demands,
obligations, actions, causes of action, damages, costs, debts, liabilities,
expenses and compensation of any nature, whether for compensatory or punitive
damages, and whether based on statute or ordinance, in tort, contract,
quasi-contract or other theory of recovery (collectively the "Claims" and
individually a "Claim"), including but not limited to any Claims arising
under the Age Discrimination in Employment Act, as amended; Title VII of the
Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991; the
Americans with Disabilities Act; the Employee Retirement Income Security Act
of 1974 (ERISA); the Age Discrimination in Employment Act, or any other
federal, state or local discrimination law including but not limited to the
Minnesota Human Rights Act; and those claims based on wrongful discharge,
breach of an implied or express contract, promissory estoppel, emotional
distress, defamation, misrepresentation, fraud, public policy, common law,
good faith and fair dealing, negligence or any other Claim that Mikhail now
has or may have arising out of the relationship between the parties to date,
including this termination of Mikhail's employment, whether such Claims are
known or unknown, foreseen or unforeseen, at the time of executing this
Agreement. The foregoing unconditional release and discharge shall not be
construed to constitute a release of any claims which Mikhail may have now or
in the future against Principal Financial Group as asset custodian,
administrator or trustee of the Company's 401-K retirement plan.

         Mikhail further represents that he has not, and agrees to not,
institute any individual lawsuit or claims against any Released Party, and to
not pursue any claims against any Released Party or otherwise sue the Company or
any Released Party based on any claim relating in any way to Mikhail's
relationship with MCV up to the time of executing this Agreement. In the event
that any such claim or action has been or is asserted by Mikhail or anyone
acting directly or indirectly on his behalf, Mikhail agrees that this release
shall act as a total and complete bar to any recovery or relief by him or any
party acting directly or indirectly on his behalf. The foregoing release by
Mikhail shall not apply to and shall not affect Mikhail's right to enforce the
terms of this Agreement or to seek remedy for the breach of this Agreement nor
to subsequently assert any claim arising from acts occurring after the effective
date of this Agreement.

         9. RETURN OF PROPERTY. Upon termination of Mikhail's engagement as an
independent consultant, Mikhail agrees to return promptly all files, documents,
manuals or property of any kind in his possession or control relating to, or
constituting the property of, the MCV, its affiliates or customers including,
but not limited to, all office keys, keys to MCV vehicles, credit cards,
security cards, office equipment, cellular phones, computer hardware, software
products, MCV products or prototypes. Mikhail acknowledges that this obligation
is continuing and agrees to promptly return to the MCV any subsequently
discovered property as described above. Mikhail further agrees to make his
personal computer available for review of information, data, records and files
stored therein, and to allow MCV to retrieve or delete, at MCV's discretion, any
and all such information, data, records or files constituting the property of
MCV.

         10. CONSIDERATION OF AGREEMENT. Mikhail may consider this Agreement
prior to signing for up to 21 days from the date he receives it. The parties
agree that any changes in this Agreement made prior to signing, whether material
or not, do not restart the 21-day period for consideration. If Mikhail signs
this Agreement prior to expiration of the 21-day period, any right to further
consideration is forfeited and the rescission period described in Paragraph 11
of this Agreement begins immediately.

         11. RESCISSION. Mikhail may rescind and revoke this Agreement for
any reason within fifteen (15) calendar days after signing it. To be
effective, the rescission or revocation must be in writing and hand-delivered
or mailed to Nancy J. Wolf, Briggs and Morgan, W2200 First National Bank
Building, 332 Minnesota Street, St. Paul, Minnesota 55101-1396, within the
15-day period. If mailed, the rescission

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or revocation must be (a) postmarked within the 15-day period, (b) properly
addressed as set forth in the preceding sentence, and (c) sent by Certified
Mail, Return Receipt Requested. If delivered by hand, it must be given to
Nancy J. Wolf, within the 15-day period. This revocation period shall
include, and not be in addition to, the seven (7) day revocation period under
the Age Discrimination in Employment Act. Should Mikhail choose to rescind
this Agreement, all terms hereof are canceled and thereby ineffective.

         12. MERGER. This Agreement supersedes all prior oral and written
agreements and communications between the parties regarding their respective
subject matter, except for survival of the restrictive covenants as discussed in
paragraph 13, below.

         13. SURVIVAL OF CERTAIN PROVISIONS OF EMPLOYMENT AGREEMENT. The Company
and Mikhail acknowledge and agree that Sections 5, 6, 12 and 13 of the
Employment Agreement shall survive the termination thereof and shall also be
applicable to the consulting relationship between the Company and Mikhail
contemplated by this Agreement.

         14. SEVERABILITY. In case any one or more of the provisions of this
Agreement should be determined invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
in this Agreement will not in any way be affected or impaired thereby, except by
application of the provision of paragraph 18 below.

         15. ASSIGNMENT. No assignment of this Agreement shall be made by
Mikhail, and such purported assignment shall be null and void.

         16. GOVERNING LAW. This Agreement shall be construed and interpreted in
accordance with the internal laws of the State of Minnesota, without regard to
conflicts of laws provisions.

         17. SAVINGS CLAUSE. The parties agree that the scope and terms of this
Agreement are reasonable and that it is the parties' intent and desire that this
Agreement be enforced to the fullest extent permissible under the laws and
public policies applied in the jurisdiction in which enforcement is sought. If
any particular provision of this Agreement shall be adjudicated to be invalid or
unenforceable, the parties specifically authorize the tribunal making such
determination to replace the invalid or unenforceable provision to allow this
Agreement, and the provisions thereof, to be valid and enforceable to the
fullest extent allowed by law and/or public policy.

         18. VOLUNTARY AND KNOWING ACTION. Mikhail acknowledges that he has been
advised in writing hereby to consult an attorney regarding the terms of this
Agreement; that he has had the opportunity to be represented by his own personal
attorney; that he has read and understands the terms of this Agreement; and that
he is voluntarily and without duress entering into this Agreement with full
knowledge of its implications. Mikhail specifically states that he has not been
represented by any attorney associated with Briggs and Morgan, Professional
Association in the negotiation, preparation, or review of this Agreement.

         IN WITNESS WHEREOF, the parties have caused this Separation Agreement
and Release to be executed as of the date first above written.

                                                  MEDICALCV, INC.
Dated:  June 7, 2001                              By: /s/ Blair Mowery
                                                  Its: CEO - Elect

Dated:  June 7, 2001                              /s/ Adel Mikhail, Ph.D.

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