EXHIBIT 10.5


 


WARRANT


 


To Purchase 380,357 Shares
of


Common Stock


of


MEDICALCV, INC.


 


This Warrant and the securities
issuable upon exercise of this Warrant have not been registered under the
Securities Act of 1933 (the “Securities Act”) or under any state securities or
“Blue Sky” laws (“Blue Sky Laws”).  No
transfer, sale, assignment, pledge, hypothecation or other disposition of this
Warrant or the securities issuable upon exercise of this Warrant or any
interest therein may be made except (a) pursuant to an effective registration
statement under the Securities Act and any applicable Blue Sky Laws or (b) if
the Company has been furnished with an opinion of counsel for the holder, which
opinion and counsel shall be reasonably satisfactory to the Company, to the
effect that no registration is required because of the availability of an
exemption from registration under the Securities Act and applicable Blue Sky
Laws.


 


THIS CERTIFIES THAT, for
good and valuable consideration, PETER LUDWIG HAUSER or his registered assigns,
is entitled to subscribe for and purchase from MedicalCV, Inc., a Minnesota
corporation (the “Company”), at any time to and including the date that
is ten (10) years after the date hereof, Three Hundred Eighty Thousand Three
Hundred Fifty-Seven (380,357) fully paid and nonassessable shares of the Common
Stock of the Company at the price of Seventy Cents ($0.70) per share (the “Warrant
Exercise Price”), subject to the antidilution provisions of this
Warrant.  The shares which may be
acquired upon exercise of this Warrant are referred to herein as the “Warrant
Shares.”  As used herein, the term
“Holder” means Hauser, any party who acquires all or a part of this Warrant as
a registered transferee of Hauser, or any record holder or holders of the Warrant
Shares issued upon exercise, whether in whole or in part, 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 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 a fractional share of Common
Stock), by written notice of exercise (in the form attached hereto) delivered
to the Company at the principal office of the Company prior to the expiration
of this Warrant and accompanied or preceded by the surrender of this Warrant
along with a check in payment of the Warrant Exercise Price for such shares.


 


(b)           Subject to the restrictions on transfer of this Warrant or
the Warrant Shares set forth herein, the Holder of this Warrant shall have the
right to require the Company to convert this Warrant (the “Conversion Right”)
at any time after the date hereof and prior to its expiration into shares of
Common Stock as provided for in Sections 1(b) through 1(d) hereof.  Upon


 


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exercise of the Conversion Right, the Company
shall deliver to the Holder (without payment by the Holder of any Warrant
Exercise Price) that number of shares of Company Common Stock equal to the
quotient obtained by dividing (i) the value of the Warrant at the time the
Conversion Right is exercised (determined by subtracting the aggregate Warrant
Exercise Price for the Warrant Shares in effect immediately prior to the
exercise of the Conversion Right from the aggregate Fair Market Value (as
defined in Section 10 hereof) for the Warrant Shares immediately prior to the
exercise of the Conversion Right) by (ii) the Fair Market Value of one share of
Common Stock immediately prior to the exercise of the Conversion Right.


 


(c)           The Conversion Right may be exercised by the Holder, at
any time or from time to time, after the date hereof and prior to its
expiration, on any business day by delivering a written notice in the form
attached hereto (the “Conversion Notice”) to the Company at the offices
of the Company exercising the Conversion Right and specifying (i) the total
number of shares of Common Stock the Holder will purchase pursuant to such
conversion and (ii) a place and date not less than one or more than 20 business
days from the date of the Conversion Notice for the closing of such purchase.


 


(d)           At any closing under Section 1(c) hereof, (i) the Holder
will surrender the Warrant, (ii) the Company will deliver to the Holder a
certificate or certificates 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 Company will deliver to the Holder a new warrant representing the
number of shares, if any, with respect to which the Warrant shall not have been
exercised.


 


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


 


2.             Exchange and Replacement.  Subject to Sections 1 and 7 hereof, this
Warrant is exchangeable upon the surrender hereof by the Holder to the Company
at its office for new Warrants of like tenor and date representing in the
aggregate the right to purchase the number of Warrant Shares purchasable
hereunder, each of such new Warrants to represent the right to purchase such
number of Warrant Shares (not to exceed the aggregate total number purchasable
hereunder) as shall be designated by the Holder at the time of such surrender.  Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction, or mutilation of
this Warrant, and, in case of loss, theft or destruction, of indemnity
reasonably satisfactory to it, and upon surrender and cancellation of this
Warrant, if mutilated, the Company will make and deliver a new Warrant of like
tenor, in lieu of this Warrant.  This
Warrant shall be promptly canceled by the Company upon the surrender hereof 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 in connection with the preparation,
execution, and delivery of Warrants pursuant to this Section 2.


 


3.             Issuance of the Warrant Shares.


 


(a)           The Company agrees that the shares of Common Stock
purchased upon exercise of this Warrant shall be and are deemed to be issued to
the Holder as of the close of business on


 


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the date on which this Warrant shall have
been surrendered and the payment made for such Warrant Shares as
aforesaid.  Subject to the provisions of
paragraph (b) of this Section 3, certificates for the Warrant Shares so
purchased shall be delivered to the Holder within a reasonable time, not
exceeding fifteen (15) days after the rights represented by this Warrant shall
have been so exercised, and, unless this Warrant has expired, a new Warrant
representing the right to purchase the number of Warrant Shares, if any, with
respect to which this Warrant shall not then have been exercised shall also be
delivered to the Holder within such time.


 


(b)           Notwithstanding the foregoing, the Company shall not be
required to deliver any certificate for Warrant Shares upon exercise of this
Warrant except in accordance with exemptions from the applicable securities
registration requirements or registrations under applicable securities
laws.  Nothing herein, however, shall
obligate the Company to effect registrations under federal or state securities
laws, except as provided in Section 9. 
If registrations are not in effect and if exemptions are not available
when the Holder seeks to exercise the Warrant, the Warrant exercise period will
be extended, if need be, to prevent the Warrant from expiring, until such time
as either registrations become effective or exemptions are available, and the
Warrant shall then remain exercisable for a period of at least 30 calendar days
from the date the Company delivers to the Holder written notice of the
availability of such registrations or exemptions.  The Holder agrees to execute such documents and make such
representations, warranties, and agreements as may be required solely to comply
with the exemptions relied upon by the Company, or the registrations made, for
the issuance of the Warrant Shares.


 


4.             Covenants of the Company.  The Company covenants and agrees that all
Warrant Shares will, upon issuance, be duly 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 agrees that during the period within which the rights represented
by this Warrant may be exercised, the Company will at all times have authorized
and reserved for the purpose of issue or transfer upon exercise of the
subscription rights evidenced by this Warrant a sufficient number of shares of
Common Stock to provide for the exercise of the rights represented by this
Warrant.


 


5.             Antidilution Adjustments.  The provisions of this Warrant are subject to
adjustment as provided in this Section 5; provided that no adjustment shall be
made pursuant to this Section 5 which has the effect of duplicating any
adjustment made pursuant to the Articles of Incorporation of the Company or any
certificate of designation thereto, if any.


 


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


 


(b)           Except for (i) options, warrants or other rights to
purchase securities outstanding on the date of the issuance of this Warrant
(provided there is no adjustment to the terms of such


 


3

















 


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 of Common Stock pursuant to stock option
or employee stock purchase plans adopted by the Company and shares of Common
Stock issued upon the exercise of such options granted pursuant to such plans
(provided there is no adjustment to the terms of such options, awards or other
securities on or after the date of issuance of this Warrant) (appropriately
adjusted to reflect stock splits, combinations, stock dividends,
reorganizations, consolidations and similar changes); (iii) up to four separate
issues or sales by the Company during any twelve month period, none of which
shall exceed 25,000 shares of Common Stock or securities convertible into or
exercisable for the purchase of Common Stock; (iv) Common Stock or securities
convertible into or exercisable for the purchase of Common Stock issued in connection
with any merger or acquisition of any business or tangible or intangible assets
which is approved by the Company’s Board of Directors; and (v) warrants to
purchase shares of Common Stock and shares of Common Stock issued upon exercise
of such warrants granted to Tower Finance, Ltd. (“Tower”) pursuant
to that certain consulting agreement by and between the Company and
Tower; if and whenever the Company shall issue or sell any additional
securities, warrants or rights or any security convertible or exchangeable into
equity, securities, warrants or rights (collectively, “Convertible Securities”)
for a consideration per share less than the Warrant Exercise 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 be adjusted to a price
determined by multiplying such Warrant Exercise Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issuance plus the number of shares of Common Stock
that the aggregate consideration received by the Company for such issuance
would purchase at such Warrant Exercise Price; and the denominator of which
shall be the number of shares of such additional Common Stock and the number 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 shall
be calculated on a fully-diluted basis, as if this Warrant and any other
outstanding warrants, options or other rights for the purchase of shares of
stock 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 upon
the actual issuance of Common Stock or of any Convertible Securities upon the
exercise of such rights or options or upon the actual issue of such Common
Stock 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 or options to purchase any
such Common Stock or Convertible Securities shall be issued or sold for cash,
the consideration received therefor shall be deemed to be the amount received
by the Company therefor, without deducting therefrom any expenses incurred or
any underwriting commissions, discounts or concessions paid or allowed by the
Company in connection therewith.  In case
any shares of Common Stock or Convertible Securities or any rights or options
to purchase any such Common Stock or Convertible Securities shall be issued or
sold for a consideration other than cash, the amount of the consideration other
than cash received by the Company shall be deemed to be the fair value of such
consideration as determined by the Board of Directors of the Company, without
deducting therefrom any expenses incurred or any underwriting commissions,
discounts or concessions paid or allowed by the Company in connection therewith.  In case any shares of Common Stock or
Convertible Securities or any rights or options to purchase such Common Stock
or Convertible Securities


 


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shall be issued in connection with any merger
or consolidation in which the Company is the surviving corporation, the amount
of consideration therefor shall be deemed to be the fair value as determined by
the Board of Directors of the Company of such portion of the assets and
business of the non-surviving corporation or corporations as such Board shall
determine 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 the
Company is not the surviving corporation or in the event of any sale of all or
substantially all of the assets of the Company for stock or other securities of
any other corporation, the Company shall be deemed to have issued a number of
shares of its Common Stock for stock or securities of the other corporation
computed on the basis of the actual exchange ratio on which the transaction was
predicated and for a consideration equal to the fair market value on the date
of such transaction of such stock or securities of the other corporation, and
if any such calculation results in adjustment of the Warrant Exercise Price,
the determination of the number of shares of Common Stock issuable upon
exercise immediately prior to such merger, conversion or sale, for purposes of
Section 5(f) below, shall be made after giving effect to such adjustment
of the Warrant Exercise Price.


 


(d)           In case the Company shall at any time subdivide its
outstanding shares of Common Stock into a greater number of shares, the Warrant
Exercise Price in effect immediately prior to such subdivision shall be
proportionately reduced, and conversely, in case the outstanding shares of
Common Stock of the Company shall be combined into a smaller number of shares,
the Warrant Exercise Price in effect immediately prior to such combination
shall be proportionately increased.


 


(e)           If (i) the purchase price provided for in any right or
option referred to in Section 5(b), or (ii) the additional consideration,
if any, payable upon the conversion or exchange of Convertible Securities, or
(iii) the rate at which any Convertible Securities are convertible into or
exchangeable for Common Stock, shall change at any time (other than under or by
reason of provisions designed to protect against dilution), or any Convertible
Securities shall terminate, expire or cease to be outstanding without exercise
thereof, the Warrant Exercise Price then in effect hereunder shall forthwith be
increased or decreased to such Warrant Exercise Price as would have applied had
the adjustments made upon the issuance of such rights, options or Convertible
Securities been made upon the basis of (a) the issuance of the number of
shares of Common Stock theretofore actually delivered upon the exercise of such
options or rights or upon the conversion or exchange of such Convertible
Securities, and the total consideration received therefor, and (b) the
issuance at the time of such change of any such options, rights, or Convertible
Securities then still outstanding for the consideration, if any, received by
the Company therefor and to be received on the basis of such changed price; and
on the expiration of any such option or right or the termination of any such
right to convert or exchange such Convertible Securities, the Warrant Exercise
Price then in effect hereunder shall forthwith be increased to such Warrant
Exercise Price as would have been obtained had the adjustments made upon the
issuance of such rights or options or Convertible Securities been made upon the
basis of the issuance of the shares of Common Stock theretofore actually
delivered (and the total consideration received therefor) upon the exercise of
such rights or options or upon the conversion or exchange of such Convertible
Securities.  If the purchase price
provided for in any right or option referred to in Section 5(b), or the
rate at which any Convertible Securities referred to in Section 5(b) are
convertible into or exchangeable for Common Stock, shall decrease at any


 


5

















 


time under or by reason of provisions with
respect thereto designed to protect against dilution, then in case of the
delivery of Common Stock upon the exercise of any such right or option or upon
conversion or exchange of any such Convertible Security, the Warrant Exercise
Price then in effect hereunder shall forthwith be decreased to such Warrant
Exercise Price as 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 (and the total consideration received for) the shares of Common
Stock delivered as aforesaid.


 


(f)            If any capital reorganization or reclassification of the
capital stock of the Company, or consolidation or merger of the Company with
another corporation, or the sale of all or substantially all of its assets to
another corporation shall be effected in such 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, as a condition of such reorganization,
reclassification, consolidation, merger or sale, and except as otherwise
provided herein, lawful and adequate provision shall be made whereby the holder
of this Warrant shall thereafter have the right to receive upon the basis and
upon the terms and conditions specified herein and in lieu of the shares of the
Common Stock of the Company immediately theretofore 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 exchange for a number of outstanding
shares of such Common Stock equal to the number of shares of such stock
immediately theretofore receivable upon the exercise of this Warrant had such
reorganization, reclassification, consolidation, merger or sale not taken place,
and in any such case appropriate provision shall be made with respect to the
rights and interests of the holder of this Warrant to the end that the
provisions hereof (including without limitation provisions for adjustments of
the Warrant Exercise Price and of the number of shares receivable upon the
exercise hereof) shall thereafter be applicable, as nearly as may be in
relation to any shares of stock, securities or assets thereafter receivable
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 other than the
Company) resulting from such consolidation or merger or the corporation
purchasing such assets shall assume by written instrument executed and mailed
to the registered holder of this Warrant, at the last address of such holder
appearing on the books of the Company, the obligation to deliver to such holder
such shares of stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to receive.


 


(g)           Upon any adjustment of the Warrant Exercise Price, the
Company shall give written notice thereof, by first-class mail, postage
prepaid, addressed to the registered holder of this Warrant, as shown on the
books of the Company, which notice shall state the Warrant Exercise Price
resulting from such adjustment and the increase or decrease, if any, in the
number of shares purchasable at such price upon the exercise of this Warrant,
setting forth in reasonable detail the method of calculation and the facts upon
which such calculation is based.  No
adjustment to the Warrant Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least five cents
($0.05); provided, however, that any adjustments which by reason of this
Section 5(g) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment; and, provided further, that
adjustment shall be required and made in accordance with the provisions of this
Section 5 (other than this Section 5(g)) not later than such time as
may be required in order to preserve the tax-free nature of a distribution to
the holders of shares of Common Stock. 
All calculations under this Section 5


 


6

















 


shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be.  Anything in this Section 5 to the contrary notwithstanding, the
Company shall be entitled to make such increases in the conversion rate in
addition to those required by this Section 5 as it in its discretion shall
determine to be advisable in order that any stock dividends, subdivisions of
shares, distribution of rights to purchase stock or securities, or distribution
of securities convertible into or exchangeable for stock hereafter made by the
Company to its stockholders shall not be taxable.


 


(h)           In case at any time: (i) there shall be any capital
reorganization, or reclassification of the capital stock of the Company, or
consolidation or merger of the Company with, or sale of all or substantially
all of its assets to, another corporation; or (ii) there shall be a voluntary
or involuntary dissolution, liquidation or winding up of the Company; then, in any
one or more of said cases, the Company shall give written notice, by
first-class mail, postage prepaid, addressed to the registered holder of this
Warrant at the address of such holder as shown on the books of the Company, of
the date on which (a) the books of the Company shall close or a record
shall be taken for such dividend, distribution or subscription rights, or (b)
such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up shall take place, as the case may
be.  Such notice shall also specify the
date as of which the holders of Common Stock of record shall participate in
such dividend, distribution or subscription rights, or shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation, or winding up, as the case may be.  Such written notice shall be given at least
twenty (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 books
are closed in respect thereto.


 


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


 


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


 


6.             No Voting Rights.  This Warrant shall not entitle the Holder to any voting rights or
other rights as a shareholder of the Company.


 


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


 


(a)           The Holder, by acceptance hereof, agrees to give written
notice to the Company before transferring this Warrant or transferring any
Warrant Shares of such Holder’s intention to do so, describing briefly the
manner of any proposed transfer. 
Promptly upon receiving such written notice, the Company shall present
copies thereof to the Company’s counsel and to counsel to the original
purchaser of this Warrant.  If in the


 


7

















 


opinion of each such counsel
the proposed transfer may be effected without registration or qualification
(under any federal or state securities laws), the Company, as promptly as
practicable, shall notify the Holder of such opinion, whereupon the Holder
shall be entitled to transfer this Warrant or to dispose of Warrant Shares
received upon the previous exercise of this Warrant, all in accordance with the
terms of the notice delivered by the Holder to the Company; provided that an
appropriate legend may be endorsed on this Warrant or the certificates for such
Warrant Shares respecting restrictions upon transfer thereof necessary or
advisable in the opinion of counsel and satisfactory to the Company to prevent
further transfers which would be in violation of Section 5 of the Securities
Act of 1933, as amended (the “Securities Act”) and applicable state securities
laws; and provided further that the prospective transferee or purchaser shall
execute such documents and make such representations, warranties, and
agreements as may be required solely to comply with the exemptions relied upon
by the Company for the transfer or disposition of the Warrant or Warrant
Shares.


 


(b)           If in the opinion of either of the counsel referred to in
this Section 7, the proposed transfer or disposition of this Warrant or such
Warrant Shares described in the written notice given pursuant to this Section 7
may not be effected without registration or qualification of this Warrant or
such Warrant Shares the Company shall promptly give written notice thereof to
the Holder, and the Holder will limit its activities in respect to such
transfer or disposition as, in the opinion of both such counsel, 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
this Section 8, be entitled under the terms hereof to receive a fractional
share, the Company shall, upon the exercise of this Warrant for the largest
number of whole shares then called for, pay a sum in cash equal to the sum of
(a) the excess, if any, of the Fair Market Value of such fractional share over
the proportional part of the Warrant Exercise Price represented by such
fractional share, plus (b) the proportional part of the Warrant Exercise Price,
if paid by the Holder, represented by such fractional share.


 


9.             Registration Rights.


 


(a)           If the Company at any time until two (2) years after
complete exercise or expiration of this Warrant proposes to register under the
Securities Act (except by a Form S-4 or Form S-8 Registration Statement or any
successor forms thereto) any of its equity securities, it will give written
notice to all Holders of this Warrant, any Warrants issued pursuant to Section
2 and/or Section 3(a) hereof, and any Warrant Shares of its intention to do so
and, on the written request of any such Holder given within twenty (20) days
after receipt of any such notice (which request shall specify the Warrant
Shares intended to be sold or disposed of by such Holder and describe the
nature of any proposed sale or other disposition thereof), the Company will use
its best efforts to cause all such Warrant Shares, the Holders of which shall have
requested the registration or qualification thereof, to be included in such
registration statement proposed to be filed by the Company; provided that:


 


(i)            if a greater number of Warrant
Shares is offered for participation in the proposed offering than in the
reasonable opinion of the managing underwriter of the


 


8

















 


proposed offering can be
accommodated without adversely affecting the proposed offering, then the amount
of Warrant Shares proposed to be offered by such Holders for registration, as
well as the number of securities of any other selling shareholders
participating in the registration, shall be proportionately reduced to a number
deemed satisfactory by the managing underwriter


 


(ii)           the Company may, at its sole
discretion and without the consent of any holder of the Warrant Shares,
withdraw such registration statement and abandon the proposed offering in which
any such holder had requested to participate;


 


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


 


(iv)          the Company shall not be obligated to
include any Warrant Shares in any such registration for any Holder who is able
to sell all of the Warrant Shares in a single transaction pursuant to 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 by such
holder, calculated as of the date of such receipt.


 


(b)           Further, on a one-time basis only, at any time until two
(2) years after complete exercise or expiration of this Warrant, upon request
by the Holder or Holders of a majority in interest of this Warrant, of any
Warrants issued pursuant to Section 2 and/or Section 3(a) hereof, and of any
Warrant Shares, the Company will promptly take all necessary steps to register
or qualify, under the Securities Act and the securities laws of such states as
the Holders may reasonably request, such number of Warrant Shares issued and to
be issued upon conversion of the Warrants requested by such Holders in their
request to the Company; provided that the Company shall not be obligated to
include any Warrant Shares in any such registration for any Holder who is able
to sell all of the Warrant Shares in a single transaction pursuant to 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 by such
holder, calculated as of the date of such receipt.  The Company shall keep effective and maintain any registration,
qualification, notification, or approval specified in this Paragraph (b) for
such period as may be reasonably necessary for such Holder or Holders of such
Warrant Shares to dispose thereof and from time to time shall amend or
supplement the prospectus used in connection therewith to the extent necessary
in order to comply with applicable law.


 


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


 


9

















 


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


 


(e)           The Company hereby indemnifies each of the Holders of this
Warrant and of any Warrant Shares, and the officers and directors, if any, who
control such Holders, within the meaning of Section 15 of the Securities Act,
against all losses, claims, damages, and liabilities caused by (i) any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus (and as amended or supplemented if the
Company shall have furnished any amendments thereof or supplements thereto),
any Preliminary Prospectus or any state securities law filings; (ii) any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading
except insofar as such losses, claims, damages, or liabilities are caused by
any untrue statement or omission contained in information furnished in writing
to the Company by such Holder expressly for use therein; and each such Holder
by its acceptance hereof severally agrees that it will indemnify and hold
harmless the Company, each of its officers who signs such Registration
Statement, each underwriter of the Common Stock so registered, and each person,
if any, who controls the Company or such underwriter, within the meaning of
Section 15 of the Securities Act, with respect to losses, claims, damages, or
liabilities which are caused by any untrue statement or omission contained in
information furnished in writing to the Company by such Holder expressly for
use therein.


 


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


 


(a)           If the Company’s Common Stock is traded on an exchange or
is listed on the Nasdaq National Market or the Nasdaq SmallCap Market, then the
average 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 exchange
or listed on the Nasdaq National Market or the Nasdaq SmallCap Market but is
listed on the OTC Bulletin Board, the National Quotation Bureau, or any
comparable reporting service, then the average of the closing bid and ask
prices reported for the ten (10) business days immediately preceding the
Determination Date; or


 


(c)           If the Company’s Common Stock is not listed on an
exchange, on the Nasdaq National Market, the Nasdaq SmallCap Market, the OTC
Bulletin Board, the National Quotation


 


10

















 


Bureau, or any comparable reporting service,
then the fair market value as determined in good faith by the Board of
Directors of the Company.


 


[signature
page follows]


 


11

















 


IN WITNESS WHEREOF,
MedicalCV, Inc. has caused this Warrant to be signed by its duly authorized
officer and this Warrant to be dated July 1, 2003.


 


 


	
   

  	
  MEDICALCV,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Jules L. Fisher

  
	
   

  	
   

  	
  Jules
  L. Fisher

  
	
   

  	
   

  	
  Chief
  Financial Officer

  



 


12

















 


NOTICE OF EXERCISE OF WARRANT


 


(To be signed upon the exercise of the Warrant)


 


The undersigned hereby
irrevocably elects to exercise the attached Warrant to purchase, for cash,
                
of the shares of Common Stock issuable upon the exercise of such Warrant, and
requests that certificates for the shares of Common Stock (together with a new
Warrant to purchase the number of shares, if any, with respect to which this
Warrant is not exercised) be issued in the name and address set forth below.


 


 


	
  Dated: 

  	
   

  	
   

  	
   

  
	
   

  
	
   

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Name)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Address)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (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

















 


CONVERSION NOTICE


 


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


 


The undersigned hereby
irrevocably elects to exercise the Conversion Right provided in Sections 1(b)
through 1(d) of the within Warrant for, and to acquire thereunder,
         shares of Common Stock.  If said number of shares shall not be all
the shares purchasable under the within Warrant, a new Warrant is to be issued
in the name of said undersigned for the balance remaining of the shares
purchasable thereunder rounded up to the next higher number of shares.


 


Please issue a certificate
or certificates for the shares of Common Stock in the name set 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

















 


ASSIGNMENT OF WARRANT


 


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


 


FOR VALUE 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 relates and
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 bound
in all respects by the terms and conditions of the within 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


 


15