Document:

Exhibit
10.1

 

Loan No. E539T05

NON-REVOLVING CREDIT SUPPLEMENT

(Letters of Credit)

 

THIS SUPPLEMENT
to the Master Loan Agreement dated June 20, 2001 (the “MLA”), is entered into
as of October 28, 2003 [EFFECTIVE_DATE]
between CoBANK,
ACB (“CoBank”) and DAKOTA GROWERS PASTA COMPANY, INC., Carrington, North
Dakota (the “Company”)[SRESTATE1].

 

SECTION 1.         The Non-Revolving Credit Facility.  On
the terms and conditions set forth in the MLA and this Supplement, CoBank
agrees to make loans to the Company during the period set forth below in an
aggregate principal amount not to exceed $350,000.00 at any one time
outstanding (the “Commitment”).  Within
the limits of the Commitment, amounts borrowed and later repaid may not be reborrowed.  

 

SECTION 2.         Purpose.  The purpose of the Commitment
is to reimburse CoBank for any drafts that it may honor under letter(s) of
credit issued hereunder (“Letter of Credit”). 
If CoBank honors any such drafts submitted under a Letter of Credit,
Company hereby irrevocably authorizes CoBank to make a loan hereunder to
reimburse CoBank for such draft payments.

 

SECTION 3.         Term.  The term of the Commitment shall be [EFFECTIVE_DATE]from the date hereof,
up to and including September 30, 2005, or such later date as CoBank may, in
its sole discretion, authorize in writing.

 

SECTION 4.         Interest.  The Company agrees to pay
interest on the unpaid balance of the loan(s) in accordance with the following
interest rate:

 

CoBank Base Rate.  At a rate per annum equal at
all times to 2% above the rate of interest established by CoBank from time to
time as its “CoBank Base Rate”, which Rate is intended by CoBank to be a
reference rate and not its lowest rate. 
The CoBank Base Rate will change on the date established by CoBank as
the effective date of any change therein and CoBank agrees to notify the
Company of any such change.  Interest
shall be calculated on the actual number of days each loan is outstanding on
the basis of a year consisting of 360 days and shall be payable monthly in
arrears by the 20th day of the following month or on such other day in such
month as CoBank shall require in a written notice to the Company. 

 

SECTION 5.         Promissory Note.  The Company promises to repay
the unpaid principal balance of the loans on demand.  In addition to the above, the Company promises to pay interest on
the unpaid principal balance of the loans at the times and in accordance with
the provisions set forth in Section 4 hereof. 
[SRESTATE2]

 

SECTION 6.         Letters of Credit.  If agreeable to CoBank in its sole discretion in each instance, in
addition to loans, the Company may utilize the Commitment to open irrevocable
letters of credit for its account.  Each
letter of credit will be issued within a reasonable period of time after
receipt of a duly completed and executed copy of CoBank’s then current form of
application or, if applicable, in accordance with the terms of any CoTrade
Agreement between the parties, and shall reduce the amount available under the
Commitment by the maximum amount capable of being drawn thereunder.  Any draw under any letter of credit issued
hereunder shall be deemed an advance under the Commitment.  Each letter of credit must be in form and
content acceptable to CoBank and must expire no later than the maturity date of
the loans.

 

IN WITNESS WHEREOF, the parties have caused this Supplement to
be executed by their duly authorized officers as of the date shown above.

 

	
   

  	
  CoBANK, ACB

  	
  DAKOTA GROWERS PASTA COMPANY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
  By:

  	
  /s/ Thomas Friezen

  	
   

  	 

	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Assistant Corporate
  Secretary

  	
   

  	
  Title:

  	
  CFO

  	
   

  
										

 

1Exhibit 10.1

 

WARRANT

 

To
Purchase 60,179 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, PKM
PROPERTIES, LLC a Minnesota limited liability company (“PKM Properties”)
or its 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.  Sixty thousand, one hundred seventy-nine
(60,179) fully paid and nonassessable shares of the Common Stock of the Company
at the price of $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 PKM Properties, any party who acquires all or a part of this
Warrant as a registered transferee of PKM Properties, 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)

 

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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 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

 

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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 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

 

3

 

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 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; and (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; 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

 

4

 

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 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

 

5

 

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 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

 

6

 

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
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.

 

7

 

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
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, 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

 

8

 

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 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

 

9

 

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.

 

(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

 

10

 

(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 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 August 20,
2003.

 

 

	
   

  	
  MEDICALCV, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
  /s/  Blair P. Mowery

  
	
   

  	
   

  	
    Blair P. Mowery

  
	
   

  	
   

  	
    Its President & Chief Executive 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.

 

 

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.

 

 

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.

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