Exhibit 10.1


 


RESTATED EXECUTIVE EMPLOYMENT AGREEMENT


 


THIS EXECUTIVE
EMPLOYMENT AGREEMENT (“Agreement”) effective May 30, 2006, by and between MedicalCV, Inc., a corporation duly
organized and existing under the laws of the State of Minnesota, with a place
of business at 9725 South Robert Trail, Inver Grove Heights, Minnesota 55077
(hereinafter referred to as the “Company”), and Eapen Chacko, a resident of the state of Minnesota
(hereinafter referred to as “Executive”).


 


BACKGROUND OF AGREEMENT


 


•                                          The Company
desires to hire Executive as its Vice President, Finance and Chief Financial
Officer and Executive desires to be employed by the Company.


 


•                                          The Company
and Executive desire to memorialize the terms and conditions of Executive’s
employment, including additional terms and conditions which have been approved
by the Company’s Board of Directors.


 


In
consideration of the foregoing, the Company and Executive agree as follows:


 


ARTICLE 1



EMPLOYMENT


 


1.01  Subject to the terms of Articles 3 and 6, the
Company hereby agrees to employ Executive in the capacity of Executive Vice
President Finance and Chief Financial Officer, pursuant to the terms of this
Agreement, and Executive agrees to such employment. Upon the termination of the
employment or responsibilities of the Company’s current chief financial
officer, presently anticipated to be on or after July 31, 2006, Executive will
also have the responsibilities and office of principal financial officer and
principal accounting officer. It is also the Company’s intention to elect
Executive its corporate secretary. Your offices/titles will not be effective
until your employment commences on June 21, 2006.


 


1.02  Executive shall generally have the authority,
responsibilities, and such duties as are customarily performed by the chief
financial officer, principal financial officer and principal accounting officer
of a public company of similar size and industry, specifically including,
without limitation, the following responsibilities:


 


(i)                                     working
with senior management of the Company and its Board of Directors (the “Board”)
in formulating short and long term goals and developing, implementing, and
executing strategies to attain Company objectives;


 


(ii)                                  endeavoring
to establish and maintain a relationship of trust and credibility with members
of the senior management team, the Board, its committees, outside auditors and
legal counsel;


 


(iii)                               supervising the
implementation of the Company’s policies and business processes in order to
meet the corporate governance and internal control


 

















 


requirements
established by the senior management team, the Board and relevant laws,
including, but not limited to:  (A)
designing and implementing effective disclosure controls and procedures that
are necessary to insure accurate financial reporting; (B) conducting periodic
reviews and evaluations of the effectiveness of the Company’s disclosure
controls and procedures, including, without limitation, interfacing with the
senior management team and other Company personnel, the Board, Audit Committee,
outside auditors and legal counsel to insure the effectiveness of the Company’s
disclosure controls and procedures and related matters; (C) accurately
reporting the results of Company operations and related matters to the
Securities and Exchange Commission, Nasdaq and other regulatory agencies; and
(D) acting as a certifying officer of the Company’s financial reporting under
the Exchange Act and other regulatory agencies;


 


(iv)                              managing
and protecting the Company’s capital and liquid assets and monitoring and
advising management regarding the availability of adequate capital at all
times;


 


(v)                                 regularly
and systematically appraising and evaluating the Company’s performance results
against the Company’s established objectives; and


 


(vi)                              consistent
with the foregoing, such other finance functions as the Chief Executive Officer
may assign to Executive from time to time during his employment period.


 


Executive shall also render such additional services and duties within
the scope of Executive’s experience and expertise as may be reasonably
requested of him from time to time by the Board.


 


1.03  Executive shall report to the Chief Executive
Officer and shall direct, and shall generally be subject to direction, orders
and advice of the Board.


 


1.04  In his capacity as Vice President, Finance
and Chief Financial Officer, Executive shall use his best energies and
abilities in the performance of his duties, services and responsibilities for
the Company.


 


1.05  During the term of his employment, Executive
shall devote substantially all of his business time and attention to the
business of the Company and its subsidiaries and affiliates and shall not
engage in any substantial activity inconsistent with the foregoing, whether or
not such activity shall be engaged in for pecuniary gain, unless approved by
the Board; provided, however, that, to the extent such activities do not
violate, or substantially interfere with his performance of his duties,
services and responsibilities under this Agreement, Executive shall be
permitted to serve on civic or charitable boards or committees thereof.


 


ARTICLE 2



COMMENCEMENT OF TERM


 


2.01  Executive’s employment shall commence on June
21, 2006.


 


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ARTICLE 3



NATURE OF EMPLOYMENT


 


3.01  Executive’s employment pursuant to this
Agreement shall be on an at-will basis, with either Executive or the Company
having the right to terminate Executive’s employment with or without cause on
not less than sixty (60) days’ prior written notice, subject to the Company’s
obligations to Executive pursuant to Sections 6 and 7. The terms and conditions
of this Agreement may be amended from time to time with the consent of the
Company and Executive. All such amendments shall be effective when memorialized
by a written agreement between the Company and Executive or by resolutions of
the Board or the Company’s Compensation Committee (the “Committee”).


 


ARTICLE 4



COMPENSATION AND BENEFITS


 


4.01  During the term of employment hereunder,
Executive shall be paid a base salary at the rate of Two Hundred Thousand ($200,000)
per year (“Base Salary”), payable in installments in accordance with the
Company’s established pay periods, reduced by all deductions and withholdings
required by law and as otherwise specified by Executive. The Company shall
cause the Committee to review Executive’s performance and Base Salary level
each calendar year during the Term, commencing, 2007. Executive’s Base Salary
may be increased (but not decreased), in the sole discretion of the Board. In
the event Executive’s employment shall, for any reason, terminate during the
Term, Executive’s final monthly Base Salary payment shall be made on a
pro-rated basis as of the last day of the month in which such employment
terminated.


 


4.02  During the term of employment, in addition to
payments of Base Salary set forth above, Executive shall be eligible to
participate in any performance-based cash bonus plan for senior executives
based upon achievement of goals established with respect to each fiscal year by
the Board or Committee after reasonable consultation with Executive, but
Executive’s participation and performance goals therein shall remain within the
discretion of the Board or Committee.


 


4.03  Executive will be awarded a stock option for
912,296 shares of common stock as provided in his employment offer letter dated
May 30, 2006.


 


4.04  During the term of employment, Executive
shall be entitled to participate in employee benefit plans, policies, programs,
perquisites and arrangements, as the same may be provided and amended from time
to time, that are provided generally to similarly situated executive employees
of the Company, to the extent Executive meets the eligibility requirements for
any such plan, policy, program, perquisite or arrangement.


 


4.05  The Company shall reimburse Executive for all
reasonable business expenses incurred by Executive in carrying out Executive’s
duties, services, and responsibilities under this Agreement. Executive shall
comply with generally applicable policies, practices and procedures of the
Company with respect to reimbursement for, and submission of expense reports,
receipts


 


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or similar documentation of, such expenses.


 


4.06  If the Company, based upon an opinion of
legal counsel or a judicial determination, determines that Section 304 of the
Sarbanes-Oxley Act of 2002 is applicable to Executive, to the extent that the
Company is required to prepare an accounting restatement due to the material
noncompliance of the Company, as a result of misconduct, with any financial
reporting requirement under the securities laws, Executive shall reimburse the
Company for any bonus or other incentive or equity-based compensation received
from the Company during the 12-month period following the first public issuance
or filing with the Securities and Exchange Commission (whichever first occurs)
of the financial document embodying such financial reporting requirement and
any profits received from the sale of the Company’s securities during that
12-month period. In the event Executive fails to make prompt reimbursement of
any such amount, the Company may, to the extent permitted by applicable law,
deduct the amount required to be reimbursed from Executive’s compensation
otherwise due under this Agreement.


 


ARTICLE 5



VACATION AND LEAVE OF ABSENCE


 


5.01  Executive shall be entitled to three (3)
weeks of paid vacation per year, in addition to the Company’s normal holidays. Vacation
time will be scheduled taking into account the Executive’s duties and
obligations at the Company. Unused paid vacation time shall not accumulate from
year to year, unless otherwise approved in writing by the Board or Committee. Sick
leave and all other leaves of absence will be in accordance with the Company’s
stated personnel policies.


 


ARTICLE 6



TERMINATION


 


6.01  The Company may terminate Executive’s
employment without Cause by giving Executive at least sixty (60) days written
notice thereof. In the event of such termination, Executive shall receive only
the severance compensation set forth in Article 7.01 and Executive shall also
be entitled to all or a portion of any bonus due Executive pursuant to any
bonus plan or arrangement established or mutually agreed-upon prior to
termination, to the extent earned or performed through the date of termination,
based upon the requirements or criteria of such bonus plan or arrangement, as
the Board shall in good faith determine. Such pro-rated bonus, shall be payable
at the time and in the manner payable to other executives of the Company who
participate in such plan or arrangement.


 


6.02  Executive’s employment will be deemed
terminated as of the date of the death of the Executive. In the event of such
termination, there shall be payable to Executive’s estate compensation earned
through the date of death together with a pro-rata portion of any bonus due
Executive pursuant to any bonus plan or arrangement established or mutually
agreed-upon prior to termination, to the extent earned or performed based upon
the requirements or criteria of such plan or arrangement, as the Board shall in
good faith determine. Such pro-rated bonus, shall be


 


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payable at the time and in the
manner payable to other executives of the Company who participate in such plan
or arrangement.


 


6.03  Any other provision of this Agreement
notwithstanding, the Company may terminate Executive’s employment upon written
notice specifying a termination date based on any of the following events that
constitute Cause:


 


(a)                                  Any
commission or nolo contendere plea by Executive to a felony, gross misdemeanor
or misdemeanor involving moral turpitude, or any public conduct by Executive
that has or can reasonably be expected to have a detrimental effect on the Company;


 


(b)                                 Any
act of material misconduct, willful and gross negligence, or breach of duty to
the Company, including, but not limited to, embezzlement, fraud, dishonesty,
nonpayment of an obligation owed to the Company, or willful breach of fiduciary
duty to the Company which results in a material loss, damage, or injury to the
Company;


 


(c)                                  Any
material breach of any material provision of this Agreement or of the Company’s
announced rules, codes or polices, which remains uncured or uncorrected for a
period of thirty (30) days following written notice thereof to Executive
specifying such breach;


 


(d)                                 Any
act of insubordination by Executive; however, an act of insubordination by
Executive shall not constitute Cause if Executive cures or remedies such
insubordination within thirty (30) days after written notice to Executive,
without material harm or loss to the Company, unless such insubordination is a
part of a pattern of chronic insubordination, which may be evidenced by reports
or warning letters given by the Company to Executive, in which case such
insubordination is deemed not curable.


 


(e)                                  Any
unauthorized disclosure of any Company trade secret or confidential
information, or conduct constituting unfair competition with respect to the
Company, including inducing a party to breach a contract with the Company; or


 


(f)                                    A
willful violation of federal or state securities laws or regulations.


 


In making such determination, the Board shall act in good faith and
give Executive a reasonably detailed written notice and a reasonable
opportunity to be heard on the issues at a Board or Committee meeting. For
purposes of this Agreement, no act or failure by the Executive shall be
considered “willful” if such act is done by Executive in good faith in the
belief that such act is or was lawful and in the best interest of the Company
or one or more of its businesses. Nothing in this paragraph 6.03 shall be
construed to prevent Executive from contesting the Board or Committee’s
determination that Cause exists. In the event of such termination, and not
withstanding any contrary provision otherwise stated, Executive shall receive
only his Base Salary earned through the date of termination.


 


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6.04  The employment of the Executive shall in no
event be considered to have been terminated for Cause if the termination of his
employment took place:


 


(a)                                  as
a result of an act or omission which occurred more than 360 days prior to the
Executive’s having been given notice of the termination of his employment for
such act or omission, unless the commission of such act or such omission could
not at the time of such commission or omission have been known to a member of
the Board (other than the Executive, if he is then a member of the Board), in which
case there shall not be termination for Cause if notice of termination took
place more than 360 days from the date that the commission of such act or such
omission was or could reasonably have been so known; or


 


(b)                                 as
a result of a continuing course of action which commenced and was or reasonably
could have been known to a member of the Board (other than the Executive) more
than 360 days prior to notice having been given to the Executive of the
termination of his employment.


 


6.05  Executive may terminate his employment upon
sixty (60) days prior written notice to the Company for “Good Reason.”  For purposes of this Agreement, “Good Reason”
means any of the following actions taken by the Company without Cause:


 


(a)                                  the
Company or any of its subsidiaries reduces Executive’s Base Salary or current
equity compensation plan opportunities (participation in any such plans or
programs remaining in the discretion of the Board or Committee), or benefit
plans (other than company-wide changes to benefit plans covering all full-time
eligible employees);


 


(b)                                 without
Executive’s express written consent, the Company or any of its subsidiaries
significantly reduces Executive’s job authority and responsibility over quality
assurance at the Company as contemplated by Article 1;


 


(c)                                  without
Executive’s express written consent, the Company or any of its subsidiaries
requires Executive to change the location of Executive’s job or office, so that
Executive will be based at a location more than fifty (50) miles from the location
of Executive’s job or office immediately preceding notice of such requirement.


 


(d)                                 a
successor company fails or refuses to assume the Company’s obligations under
this Agreement; or


 


(e)                                  the
Company or any successor company breaches any of the material provisions of
this Agreement; provided, however, that Executive shall provide detailed
information to the Company in such written notice and such grounds for Good
Reason are not remedied or continue for a period of thirty (30) days or more
following receipt of such notice.


 


6.06  During the term of his employment and for 24
months after the date of Executive’s termination of employment, (i) Executive
shall not, directly or indirectly, make or publish any


 


6

















 


disparaging statements (whether
written or oral) regarding the Company or any of its affiliated companies or
businesses, or the affiliates, directors, officers, agents, principal
shareholders or customers of any of them and (ii) neither the Company or any of
its affiliated companies or businesses or their affiliates, directors, or
officers shall directly or indirectly, make or publish any disparaging
statements (whether written or oral) regarding Executive. Information  which the Company or Executive is required to
make or disclose regarding the other to comply with laws or regulations, or
makes in a pleading on the advice of litigation counsel, shall not constitute a
disparaging statement.


 


6.07  Upon any termination of Executive’s
employment with the Company, Executive shall be deemed to have resigned from
all other positions he then holds as an officer, employee or director or other
independent contactor of the Company or any of its subsidiaries or affiliates,
unless otherwise agreed by the Company and Executive.


 


ARTICLE 7



SEVERANCE PAYMENTS


 


7.01  The Company, its successors or assigns, will
pay Executive as severance pay a lump sum amount equal to six (6) months of the
Executive’s monthly Base Salary for full-time employment at the time of
Executive’s termination (the “Severance Payment”) if the employment of
Executive is terminated by the Company without cause or by Executive for Good
Reason.


 


(a)                                  If
Executive becomes entitled to a Severance Payment under this Agreement, and
Executive is eligible to and elects to continue medical coverage as provided by
law (commonly referred to as the COBRA continuation period), then the Company
will pay the cost of premiums for COBRA coverage for Executive and his eligible
dependents for a period of six months following termination, or if sooner,
until Executive is no longer eligible for COBRA coverage. Executive must be
eligible for COBRA coverage, elect COBRA during the COBRA election period, and
comply with all requirements to obtain such coverage, to be eligible for
coverage and for this benefit.


 


(b)                                 If,
on the six (6) month anniversary of the Severance Payment pursuant to Section
7.01, Executive is unemployed and is not rendering services as an independent
contractor, Executive shall be entitled to continue to receive monthly payments
of Base Salary and COBRA coverage for the period ending on the earlier of (a)
the date Executive is reemployed; (b) commences rendering services as an
independent contractor; or (c) is covered by another medical plan provided by
Executive’s new employer; provided, however, that such payments shall in no
event continue for more than an additional six (6) months. Executive shall
report to the Company in writing his reemployment or engagement as a
consultant.


 


(c)                                  Nothing
in this Subsection 7.01 shall limit the authority of the Committee or Board to
terminate Executive’s employment in accordance with Section 6.03. Payment of
severance payments pursuant to Section 7.01, less customary


 


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withholdings,
shall be made in one lump sum within thirty (30) days of the Executive’s
termination or resignation.


 


7.02  In addition to the Severance Payment pursuant
to Section 7.01, the Company will pay Executive a pro-rata portion of any bonus
earned by Executive as of the date of termination, as provided by Sections 6.01
and 6.02. The payments to Executive pursuant to Sections 6.01, 6.02 or 7.01 are
not intended to be cumulative or duplicative and an amount payable as a payment
of Base Salary or pro-rata bonus under any one of such sections shall be
reduced to the extent of similar payments made under another of such sections. In
addition, the severance payment of Base Salary shall be reduced by the amount
of cash severance-type benefits to which Executive may be entitled pursuant to
any other cash severance plan, agreement, policy or program of the Company or
any of its subsidiaries; including any payment for post-employment
restrictions, provided that if the amount of cash severance benefits
payable under such other severance plan, agreement, policy or program is
greater than the amount payable pursuant to this Agreement, Executive will be
entitled to receive the amounts payable under such other plan, agreement,
policy or program which exceeds the Base Salary severance payment. Without
limiting other payments which would not constitute “cash severance-type
benefits” hereunder, any cash settlement of stock options, accelerated vesting
of stock options and retirement, pension and other similar benefits shall not
constitute “cash severance-type benefits” for purposes of this Section 7.02.


 


7.03  Notwithstanding any other provision of this
Agreement, the Company and Executive intend that any payments, benefits or
other provisions applicable to this Agreement comply with the payout and other
limitations and restrictions imposed under Section 409A of the Code (“Section
409A”), as clarified or modified by guidance from the U.S. Department of
Treasury or the Internal Revenue Service – in each case if and to the extent
Section 409A is otherwise applicable to this Agreement and such compliance is
necessary to avoid the penalties otherwise imposed under Section 409A. In this
connection, the Company and Executive agree that the payments, benefits and
other provisions applicable to this Agreement, and the terms of any deferral
and other rights regarding this Agreement, shall be deemed modified if and to
the extent necessary to comply with the payout and other limitations and
restrictions imposed under Section 409A, as clarified or supplemented by
guidance from the U.S. Department of Treasury or the Internal Revenue Service –
in each case if and to the extent Section 409A is otherwise applicable to this
Agreement and such compliance is necessary to avoid the penalties otherwise
imposed under Section 409A.


 


7.04  The Company may withhold from any amounts
payable under this Agreement all federal, state, city or other taxes required
by applicable law to be withheld by the Company.


 


7.05  The provisions of this Article 7 will be deemed
to survive the termination of this Agreement for the purposes of satisfying the
obligations of the Company and Executive thereunder.


 


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ARTICLE 8



NONDISCLOSURE AND INVENTIONS


 


8.01  Except as permitted or directed by the
Company or as may be required in the proper discharge of Executive’s employment
hereunder, Executive shall not, during his employment or at any time
thereafter, divulge, furnish or make accessible to anyone or use in any way any
Confidential Information of the Company. “Confidential Information” means any
information or compilation of information that the Executive learns or develops
during the course of his employment that is not generally known, that is
proprietary to or within the unique knowledge of the Company, from which it
derives economic value (whether or not conceived, originated, discovered, or
developed in whole or in part by Executive). Confidential Information includes
but is not limited to, the following types of information and other information
of a similar nature (whether or not reduced to writing), all of which Executive
agrees constitutes the valuable trade secrets of the Company: research,
designs, development, know how, computer programs and processes, marketing plans
and techniques, existing and contemplated products and services, customer and
product names and related information, prices sales, inventory, personnel,
computer programs and related documentation, technical and strategic plans, and
finances. Confidential Information also includes any information of the
foregoing nature that the Company treats as proprietary or designates as
Confidential Information, whether or not owned or developed by the Company. “Confidential
Information” does not include information that (a) is or becomes generally
available to the public through no fault of Executive, (b) was known to
Executive prior to its disclosure by the Company, as demonstrated by files in
existence at the time of the disclosure, (c) becomes known to Executive, without
restriction, from a source other than the Company, without breach of this
Agreement by Executive and otherwise not in violation of the Company’s rights,
or (d) is explicitly approved for release by written authorization of the
Company.


 


8.02  Executive acknowledges that new and valuable
proprietary concepts, methods, processes, discoveries, trade secrets (as
defined in the Minnesota Uniform Trade Secrets Act), improvements, adaptations,
or ideas (herein individually and collectively referred to as “Inventions”) may
be developed, originated, authorized, conceived, invented, or made by
Executive, either alone or jointly with others, in the course of Executive’s
employment by the Company. All such Inventions shall be the exclusive property
of the Company, whether or not be patentable or copyrightable, and they may or
may not be shown or described in writing or reduced to practice. With respect
to all such Inventions developed, originated, authored, conceived, or invented,
or made by Executive (whether in whole or in part) during Executive’s
employment by the Company, Executive shall:


 


(i)                                     keep
accurate, complete and timely records all such Inventions, which records shall
be the Company’s property and be retained on the Company’s premises;


 


(ii)                                  promptly
and fully disclose and describe all such Inventions to the Company;


 


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(iii)                               assign (and Executive
hereby does assign) to the Company all of Executive’s rights to such Inventions
and to applications for letters patent or copyrights in all countries and to
letters patent or copyrights granted with respect to such Inventions in all
countries; and


 


(iv)                              acknowledge
and deliver promptly to the Company (without charge to the Company but at the
expense of the Company) such written instruments and cooperate and do such
other acts as may be necessary in the opinion of the Company to preserve
property rights to such Inventions against forfeiture, abandonment, or loss and
to obtain and maintain letters patent or copyrights and to vest the entire
right and title thereto exclusively in the Company.


 


(a)                                  If
Executive is needed, at any time, to give testimony, evidence, or opinions in
any litigation or proceeding involving any patents or copyrights or
applications for patents or copyrights, both domestic and foreign, relating to
inventions, improvements discoveries, software, writings or other works of
authorship conceived, developed or reduced to practice by Executive, Executive
agrees to do so. With respect to any obligations performed by the Executive
under this Section following termination of Executive’s employment, the Company
will pay or reimburse all reasonable out-of-pocket expenses.


 


(b)                                 The
obligations of this paragraph shall continue beyond the termination of employment
with respect to Inventions conceived or made by Executive during the period of
his employment and shall be binding upon assigns, executors, administrators and
other legal representatives. For purposes of this Agreement, any Invention
relating to the business of the Company on which Executive files or claims a
copyright, or files a patent application, within one (1) year after termination
of employment with the Company, shall be presumed to cover Inventions conceived
by Executive during the term of his employment with the Company, subject to
proof to the contrary by good faith, written and duly corroborated records
establishing that such Invention was conceived and made following termination
of employment.


 


NOTICE: 
The Company hereby notifies Executive that the foregoing does not apply
to inventions or ideas for which no equipment, supplies, facility, or trade
secret information of the Company was used and that was developed entirely on
Executive’s own time, and (1) which does not relate (a) directly to the
business of the Company and (b) to the Company’s actual or demonstrably
anticipated research or development, or (2) which does not result from any work
performed by Executive for the Company.


 


8.03  In the event of a breach or threatened breach
by Executive of the provisions of this Article 8, the Company shall be entitled
to an injunction restraining Executive from directly or indirectly disclosing,
disseminating, lecturing upon, publishing or using such confidential, trade
secret or proprietary information (whether in whole or in part) and restraining
Executive from rendering any services or participating with any person, firm,
corporation, association or other entity to whom such knowledge or information
(whether in whole or in part) has been disclosed,


 


10

















 


without the posting of a bond
or other security. Nothing herein shall be construed as prohibiting the Company
from pursuing any other equitable or legal remedies available to it for such
breach or threatened breach, including the recovery of damages from Executive.


 


8.04  Executive agrees not to directly or
indirectly use or disclose Confidential Information for the benefit of anyone
other than the Company, either during or after employment with the Company and
during the term of his employment and at all times thereafter, agrees:


 


(a)                                  to
receive, maintain, and use Confidential Information in the strictest confidence
and, except with the consent of the Company, not to directly or indirectly
reveal, report, publish, disclose, or transfer, any Confidential Information to
any person, firm, corporation, or other entity or utilize any Confidential
Information for Executive’s own benefit or intended benefit or for the benefit
or intended benefit of any other person, firm, corporation or other entity; and


 


(b)                                 not
to put into issue the confidentiality of any of the Confidential Information,
Company’s ownership thereof, or its status as valuable trade secrets of
Company.


 


Executive acknowledges that all notes, data, reference materials,
documents, business plans, the Company business and financial records, computer
programs, and other materials that in any way incorporate, embody, or reflect
any of the Confidential Information, whether prepared by Executive or others,
are the exclusive property of the Company, and Executive agrees to forthwith
deliver to the Company all such materials, including all copies or
memorializations thereof, in Executive’s possession or control, whenever
requested to do so by the Company, and in any event, upon termination of
Executive’s employment with the Company.


 


8.05  The Executive understands and agrees that any
violation of this Article 8 while employed by the Company may result in
immediate disciplinary action by the Company, including termination of
employment for Cause.


 


8.06  The provisions of this Article 8 shall
survive termination of this Agreement indefinitely.


 


ARTICLE 9



NONCOMPETITION AND NON-RECRUITMENT


 


9.01  Executive agrees that during the term of his
employment and for a period of one (1) year after termination of employment
(the “Restricted Period”) he will not directly or indirectly render service
(including services in research) to any person or entity in connection with the
design, development, manufacture, marketing, or sale of a Competitive Product
that is sold or intended for use or sale in any geographic area in which the
Company actively markets a Company Product or has planned to actively market a
Company Product of the same general type or function. This territory currently
includes North America, Europe and Japan.


 


(a)                                  Without
limiting the generality of the above, Executive expressly agrees that during
the Restriction Period discussed above, he will not directly or indirectly (on
his own behalf or on behalf of another person or entity) sell competitive


 


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Products
to, attempt to sell such products to, or otherwise solicit purchases of such
services or products from, the following:


 


(i)                                     any
customer with whom Executive (or any other Executive or representative under
Executive’s supervision) has had direct or indirect contact or to whom
Executive (or any other Executive or representative under Executive’s
supervision) has directly or indirectly sold such services or products during
the period of Executive’s employment; or


 


(ii)                                  any
prospective customer who has been directly or indirectly solicited by Company,
or who has approached Company, and with whom Executive (or any other Executive
or representative under the Executive’s supervision) has had direct or indirect
contact or to whom Executive (or any other Executive or representative under
Executive’s supervision) has directly or indirectly attempted to sell such
services or products during the term of Executive’s employment.


 


(b)                                 Executive
further agrees that during the Restriction Period he will not directly or
indirectly (i) in any way interfere or attempt to interfere with the Company’s
relationships with any of its current or potential customers, or (ii) employ or
attempt to employ any of the Company’s then Executives on behalf of any other
entity, whether or not such entity competes with the Company.


 


(c)                                  For
the purposes of this Section 9.01,


 


(i)                                     “Competitive
Product” means any surgical product or research to develop information useful
in connection with a product or service that is being designed, developed,
manufactured, marketed or sold by anyone other than the Company and is of the
same general type, performs similar functions, or is used for the same purposes
as a Company Product on which the Employee worked, dealt with, or marketed
during the preceding two years of employment or about which he received or had
knowledge of Confidential Information; provided, however, that the term “surgical
product” shall not include non-invasive or percutaneous products; and


 


(ii)                                  “Company
Product” means any product, product line or service (including any component
thereof or research to develop information useful in connection with a product
or service) that is being designed, developed, manufactured, marketed or sold
by the Company or with respect to which the Company has acquired Confidential
Information which it intends to use in the design, development, manufacture,
marketing or sale of a product or service.


 


9.02  At its sole option, the Company may, by
express written notice to Executive, waive or limit the time and/or geographic
area in which Executive cannot engage in competitive activity or the scope of
such competitive activity.


 


9.03  Executive agrees that breach by him of the
provisions of this Article 9 will cause the Company irreparable harm that is
not fully remedied by monetary damages. In the event of a


 


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breach or threatened breach by
Executive of the provisions of this Article 9, the Company shall be entitled to
an injunction restraining Executive from directly or indirectly competing or
recruiting as prohibited herein, without posting a bond or other security. Nothing
herein shall be construed as prohibiting the Company from pursuing any other
equitable or legal remedies available to it for such breach or threatened
breach, including the recovery of damages from Executive.


 


9.04  The Executive understands and agrees that any
violation of this Article 9 while employed by the Company may result in
immediate disciplinary action by the Company, including termination of
employment for Cause.


 


9.05  The obligations contained in this Article 9
shall survive the termination of this Agreement indefinitely.


 


ARTICLE 10



MISCELLANEOUS


 


10.01  Governing Law. This Agreement shall be
governed and construed according to the laws of the State of Minnesota without
regard to conflicts of law provisions. The Company and Executive agree that if
any action is brought pursuant to this Agreement that is not otherwise resolved
by arbitration pursuant to Section 10.06, such dispute shall be resolved only
in the District Court of Hennepin County, Minnesota, or the United States
District Court for Minnesota, and each party hereto unconditionally (a) submits
for itself in any proceeding relating to this Agreement, or for recognition and
enforcement of any judgment in respect thereof, to the exclusive jurisdiction
of the Hennepin County, Minnesota District Courts or the United States Federal
District Court for Minnesota, and agrees that all claims in respect to any such
proceeding shall be heard and determined in Hennepin County, Minnesota,
Minnesota District Court or, to the extent permitted by law, in such federal
court, (b) consents that any such proceeding may and shall be brought in such
courts and waives any objection that it may now or thereafter have to the venue
or jurisdiction of any such proceeding in any such court or that such
proceeding was brought in an inconvenient court and agrees not to plead or
claim the same; waives all right to trial by jury in any proceeding (whether
based on contract, tort or otherwise) arising out of or relating to this
Agreement, or its performance under or the enforcement of this Agreement; (d)
agrees that service of process in any such proceeding may be effected by
mailing a copy of such process by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such party at its
address as provided in Section 10.06; and (e) agrees that nothing in this
Agreement shall affect the right to effect service of process in any other
manner permitted by the laws of the State of Minnesota.


 


10.02  Successors. This Agreement is personal
to Executive and Executive may not assign or transfer any part of his rights or
duties hereunder, or any compensation due to him hereunder, to any other person
or entity. This Agreement may be assigned by the Company and the Company. The
Company shall require any successor or assignee, whether direct or indirect, by
purchase, merger, consolidation or otherwise, to all or substantially all the
business or assets of the Company, expressly and unconditionally to assume and
agree to perform the Company’s obligations under this Agreement, in the same
manner and to the same extent that the Company


 


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would be required to perform if
no such succession or assignment had taken place. In such event, the term “Company,”
as used in this Agreement, shall mean the Company as defined above and any
successor or assignee to the business or assets which by reason hereof becomes
bound by the terms and provisions of this Agreement.


 


10.03  Waiver. The waiver by the Company of
the breach or nonperformance of any provision of this Agreement by Executive
will not operate or be construed as a waiver of any future breach or
nonperformance under any such provision of this Agreement or any similar
agreement with any other Executive.


 


10.04  Entire Agreement; Modification. This
Agreement supersedes, revokes and replaces any and all prior oral or written
understandings, if any, between the parties relating to the subject matter of
this Agreement. The parties agree that this Agreement: (a) is the entire
understanding and agreement between the parties; and (b) is the complete and
exclusive statement of the terms and conditions thereof, and there are no other
written or oral agreements in regard to the subject matter of this Agreement. Except
for modifications described in Article 3, this Agreement shall not be changed
or modified except by a written document signed by the parties hereto.


 


10.05  Severability and Blue Penciling. To
the extent that any provision of this Agreement shall be determined to be
invalid or unenforceable as written, the validity and enforceability of the
remainder of such provision and of this Agreement shall be unaffected. If any
particular provision of this Agreement shall be adjudicated to be invalid or
unenforceable, the Company and Executive specifically authorize the tribunal
making such determination to edit 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 or public policy.


 


10.06  Arbitration. Any dispute, claim or
controversy arising under this Agreement shall, at the request of any party
hereto be resolved by binding arbitration by a single arbitrator selected by
employer and Executive, with arbitration governed by The United States
Arbitration Act (Title 9, U.S. Code); provided, however, that a dispute, claim
or controversy shall be subject to adjudication by a court in any proceeding
against the Company or Executive involving third parties (in addition to the
Company or Executive). Such arbitrator shall be a disinterested person who is
either an attorney, retired judge or labor relations arbitrator. In the event
employer and Executive are unable to agree upon such arbitrator, the arbitrator
shall, upon petition by either the Company or Executive, be designated by a
judge of the Hennepin County District Court. The arbitrator shall have the
authority to make awards of damages as would any court in Minnesota having
jurisdiction over a dispute between employer and Executive, except that the
arbitrator may not make an award of exemplary damages or consequential damages.
In addition, the Company and Executive agree that all other matters arising out
of Executive’s employment relationship with the Company shall be arbitrable,
unless otherwise restricted by law.


 


(a)                                  In
any arbitration proceeding, each party shall pay the fees and expenses of its
or his own legal counsel.


 


(b)                                 The
arbitrator, in his or her discretion, shall award legal fees and expenses and
costs of the arbitration, including the arbitrator’s fee, to a party who
substantially


 


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prevails
in its claims in such proceeding.


 


(c)                                  Notwithstanding
this Section 10.06, in the event of noncompliance or violation, as the case may
be, of Sections 8 or 9 of this Agreement, the Company may alternatively apply
to a court of competent jurisdiction for a temporary restraining order,
injunctive and/or such other legal and equitable remedies as may be
appropriate, if it and such court reasonably determines that the Company would
have no adequate remedy at law for such violation or noncompliance.


 


10.07  Legal Fees. If any contest or dispute
shall arise between the Company and Executive regarding any provision of this
Agreement, and such dispute results in court proceedings or arbitration, a
party that prevails to a substantial extent with respect to a claim brought and
pursued in connection with such dispute, shall be entitled to recover its legal
fees and expenses reasonably incurred in connection with such dispute. Such
reimbursement shall be made as soon as practicable following the resolution of
the dispute (whether or not appealed) to the extent a party receives documented
evidence of such fees and expenses.


 


10.08  Notices. For purposes of this
Agreement, notices and all other communications provided for herein shall be in
writing and shall be deemed to have been duly given when personally delivered
or may send by certified mail, return receipt requested, postage prepaid,
addressed to Executive at his residence address appearing on the records of the
Company and to the Company at its then current executive offices to the
attention of the Board. All notices and communications shall be deemed to have
been received on the date of delivery thereof or on the third business day
after the mailing thereof, except that notice of change of address shall be
effective only upon actual receipt. No objection to the method of delivery may
be made if the written notice or other communication is actually received.


 


10.09  Survival. The provisions of this
Article 10 shall survive the termination of this Agreement, indefinitely.


 


IN WITNESS
WHEREOF the following parties have executed the above instrument the day and
year first above written.


 


	
   

  	
  MEDICALCV, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Marc P.
  Flores

  
	
   

  	
   

  	
  Marc P. Flores

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Eapen
  Chacko

  
	
   

  	
   

  	
  Eapen Chacko

  



 


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