Document:

Exhibit 10.42

 

TECHNICAL ASSISTANCE AGREEMENT

 

THIS TECHNICAL ASSISTANCE AGREEMENT (this “Agreement”) is made and entered into as of this 7th
day August of 2002 (the “Effective Date) by and between MedicalCV, Inc.
(“MedicalCV”), a Minnesota corporation with a business address at 9725 South
Robert Trail, Inver Grove Heights, Minnesota 55077, agreeing to have William F.
Northup III, M.D., and individual residing at 4702 Lakeview Drive, Edina,
Minnesota 55424 (together
with his personal representatives, heirs and assigns, “Dr.
Northrup”), serve as an independent contractor for MedicalCV, with reference to
the following:

 

RECITALS

 

Dr. Northrup desires to perform, and MedicalCV
desires to have Dr. Northrup perform, consulting services as an independent
contractor to MedicalCV.

 

AGREEMENT

 

NOW,
THEREFORE, the
parties agree as follows:

 

1.                                       Services and Relationship.  Dr. Northrup shall provide technical
assistance to MedicalCV relating to the Device, Intellectual Property,
Documentation, Know-how and any other present and proposed products of
MedicalCV (the “Services”).  The terms
“Device,” “Intellectual Property,” “Documentation” and “Know-how” shall have
the meanings set forth in that certain Assignment Agreement of even date
herewith by and between MedicalCV, SEGMED, INC. and Dr. Northrup (the
“Assignment Agreement”).  During the
term of this Agreement, Dr. Northrup shall be self-employed independent
contractor with respect to performing services for MedicalCV.  Nothing in this
Agreement shall be construed to create a joint venture, partnership, agency, or
other similar relationship of any type between Dr. Northrup and MedicalCV.  Dr. Northrup shall have
no authority to bind MedicalCV or to contract in its name or to create any
liability for MedicalCV.

 

2.                                       Independent Contactor.  
Acting as an independent contractor, Dr. Northrup shall perform the
Services at MedicalCV’s request, and shall report to MedicalCV’s Chief
Executive Officer or an individual designated by MedicalCV’s Chief Executive
Officer’s.  Dr. Northrup shall make
himself available to and provide the Services to MedicalCV on a
schedule to be determined by the parties on a periodic basis; provided,
however, that Dr. Northrup shall provide the Services to MedicalCV for a
minimum of three days each calendar quarter.

 

3.                                       Compensation.  For
the Services performed under this Agreement, as described abvove, Dr. Northrup
shall receive a consulting fee of $1,500 per day ($750 per one-half day);
provided, however, that MedicalCV shall pay Dr. Northrup a minimum fee of
$4,500 each calendar quarter during the Term of this Agreement.  Except as expressly set forth in this
Section 3, Dr. Northrup shall not be entitled to any payments,
reimbursements, or compensation of any kind from MedicalCV for services
rendered.

 

4.                                       Taxes.  Dr.
Northrup shall be solely responsible for payment of all self-employment taxes
and/or assessments imposed on the payment of compensation for the performance
of consulting services including without limitation, any unemployment insurance
or tax, any federal, state and foreign income taxes, and any federal social
security payments (FICA) or Minnesota disability taxes (and shall provide
evidence to MedicalCV that such have been paid).

 

 

5.                                       Expenses.  Dr.
Northrup is not authorized to incur any expenses on behalf of MedicalCV without
prior written consent of any authorized agent of MedicalCV, and all statements
submitted by Dr. Northrup for services and expenses shall be in the form
prescribed by MedicalCV and shall be approved by MedicalCV’s Chief Executive
Officer or an individual designated by MedicalCV’s Chief Executive Officer’s.

 

6.                                       Insurance.  Dr.
Northrup shall have in effect a comprehensive general liability insurance
covering Dr. Northrup and all aspects of Dr. Northrup’s provision of consulting
services, including, without limitation, if applicable, coverage for workers
compensation and Employers Liability in compliance with all applicable
statutory regulations.  Dr. Northrup
shall maintain such insurance with customary coverages in full force and effect
for so long as he provides consulting services to MedicalCV, and shall increase
the amounts of coverage under the Policy upon the reasonable request of
MedicalCV as made from time to time.

 

7.                                       Conduct.  Dr.
Northrup agrees to: (i) provide any documentation to MedicalCV and to execute
any documents when reasonably requested by MedicalCV which relate to Dr.
Northrup’s performance of services to MedicalCV during the term of this
Agreement or after; and (ii) honor all rules and regulations of MedicalCV and
refrain from committing any act or omission inconsistent with MedicalCV’s
standard of conduct.

 

8.                                       Non-Competition and Non-Disclosure.  Dr.
Northrup hereby acknowledges that he shall be bound by the obligations of
Non-Competition and Non-Disclosure set forth in Sections 3.8 and 3.9 of the
Assignment Agreement, notwithstanding any termination of this Agreement or the
Assignment Agreement.

 

9.                                       No  Solicitation.  Dr. Northrup agrees, for the Term of this
Agreement, and for a period of eighteen (18) months thereafter, to refrain from
soliciting, employing, contracting or interfering with any MedicalCV’s
relationships with, or enticing away from MedicalCV, any employee, customer,
license, distributor, vendor or other source of supply of MedicalCV.

 

10.                                 No  Breach.  Dr. Northrup’s entering into this Agreement
and performing the obligations hereunder shall not result in any breach,
default or violation of any agreement, charter, instrument or other document to
which Dr. Northrup is a party of otherwise bound.

 

11.                                 Return  of
Materials.  If requested by MedicalCV during the Term of
this Agreement or thereafter, Dr. Northrup shall promptly return any and all
tangible MedicalCV property that has come into Dr. Northrup’s possession.  Upon termination of this Agreement for nay
reason, Dr. Northrup shall, within ten (10) days of such termination and in
accordance with any instructions provided by MedicalCV, return to MedicalCV and
all tangible MedicalCV property that has come into Dr. Northrup’s possession,
including all copies thereof and any notes, memoranda, and other documents or
other media relating thereto.  Dr.
Northrup shall not remove any MedicalCV property from MedicalCV premises
without written authorization from MedicalCV. 
The product of all work performed under this Agreement, including trade
secrets, confidential information, any apparatus, device, intellectual
property, discoveries, improvements, modifications, and enhancements,
techniques, concepts, data, technical information, specifications (including
engineering, testing and manufacturing specifications), diagrams, schematics,
charts and lists, drawings, lab books, blueprints, works of authorship, mask
works, information, materials, tools, computer programs, technical
publications, manuals, designs, artwork, devices or models, shall be property
of MedicalCV or its nominees, and MedicalCV or its nominees shall have the sole
right to use, sell, license, publish or otherwise disseminate or transfer
rights of such work products.

 

 

12.                                 Material Inside Information.  In
the course of performing the obligations hereunder, Dr. Northrup recognizes
that he may receive certain information that is considered material nonpublic
information within the meaning and intent of the Federal and State securities
laws, rules and regulations.  Dr.
Northrup hereby agrees not to engage in any securities trading transactions
based upon such information nor disclose any such information to any third
party that may or could engage in transactions involving the securities of MedicalCV.

 

13.                                 Equitable  Relief.  Dr. Northrup agrees that any breach of the
provisions listed in paragraphs 10, 11 and 12 of this Agreement shall result in
irreparable harm to MedicalCV.  Dr.
Northrup therefore agrees that MedicalCV shall have the right to an injunction
or other equitable relief to enforce those provisions without prejudice to any
others rights and remedies MedicalCV may have.

 

14.                                 Inventions/Patents.

 

(a)                                  Dr. Northrup shall promptly disclose in
writing to MedicalCV complete information concerning each and every invention,
discovery, improvement, device, design, apparatus, practice, process, method or
product, whether patentable or not, made, developed, perfected, devised,
conceived or first reduced to practice by Dr. Northrup, either solely or in
collaboration with others, during the term of this Agreement and for a period
of twelve (12) months thereafter, whether or not during regular working hours,
relating either directly or indirectly to the business, products, practices or
techniques of MedicalCV (hereinafter referred to as “Developments”).  Dr. Northrup, to the extent that he has the
legal right to do so, hereby acknowledges that any and all of such Developments
are the property of MedicalCV and hereby assigns and agrees to assign to MedicalCV
any and all of Dr. Northrup’s right, title and interest in and to any and all
of such Developments.

 

(b)                                 The provisions of Section 14(a) shall
not apply to any Development meeting the following conditions:

 

(i)                                     such Development was developed entirely on
Dr. Northrup’s own time;

 

(ii)                                  such Development was made without the use of
any Company equipment, supplies, facility or trade secret information;

 

(iii)                               such Development does not relate (i) directly to the business of
MedicalCV, or (ii) to MedicalCV’s actual or demonstrably anticipated research
or development; and

 

(iv)                              such Development does not result from any work performed by Dr.
Northrup for MedicalCV.

 

(c)                                  Upon request and without further compensation
therefor, but at no expense to Dr. Northrup, and whether during the term of
this Agreement or thereafter, Dr. Northrup shall do all lawful acts, including,
but not limited to, the execution of papers and lawful oaths and the giving of
testimony, that in the opinion of MedicalCV, its successors and assigns, may be
necessary or desirable in obtaining, sustaining, reissuing, extending and
enforcing United States and foreign letters patent, including, but not limited
to, design patents, on any and all of such Developments, and for perfecting,
affirming and recording MedicalCV’s complete ownership and title thereto, and
to cooperate otherwise in all proceedings and matters relating thereto.

 

(d)                                 Dr. Northrup shall keep complete, accurate
and authentic accounts, notes, data and records of all Developments in the
manner and form requested by MedicalCV. 
Such accounts, notes, data

 

 

and records shall be the property of MedicalCV, and, upon its request,
Dr. Northrup shall promptly surrender same to it or, if not previously
surrendered upon its request or otherwise, Dr. Northrup shall surrender the
same, and all copies thereof, to MedicalCV upon the termination of this
Agreement.

 

15.                                 Copyrights.  Dr.
Northrup shall, without further consideration, assign all right, title and
interest in any copyrightable material created in connection with this
Agreement to MedicalCV and shall assist MedicalCV and its nominees in every
proper way, entirely at MedicalCV’s expense, to secure, maintain and defend for
MedicalCV’s own benefit, copyrights and any extensions and renewals thereof on
any and all such material including translations thereof in any and all
countries, such material to be and to remain the property of MedicalCV whether
copyrighted or not.  All materials
produced by Dr. Northrup under this Agreement shall be considered work made for
hire.

 

16.                                 Warranty/License.  With respect to all subject matter including
ideas, processes, designs and methods which Dr. Northrup shall disclose or use
in the performance of this Agreement: (i) as an independent contractor, Dr. Northrup
warrants to MedicalCV that Dr. Northrup has the right to make disclosure and
use thereof without liability to others and that all work performed under this
Agreement shall be original work and none of the Services or any development,
use, production, distribution or exploitation thereof will infringe,
misappropriate or violate any intellectual property or other right of any
person or entity; (ii) to the extent that Dr. Northrup has patent applications,
patents or other rights in the subject matter, Dr. Northrup herby grants
MedicalCV, its subsidiaries and affiliates a royalty-free, irrevocable,
world-wide, non-exclusive license to make, have made, sell, use and disclose
such subject matter; and (iii) Dr. Northrup agrees to hold MedicalCV harmless for
use of subject matter which Dr. Northrup knows or reasonably should know others
have rights in, except, however, for subject matter and the identity of others
having rights in subject matter that Dr. Northrup discloses to MedicalCV in
writing before MedicalCV uses the subject matter.

 

17.                                 Prevention  of
Damage.  Dr. Northrup further agrees that as to
MedicalCV’s protection in connection with the Services, Dr. Northrup shall take
such steps as may be reasonably necessary to prevent personal injury or property
damage during any work hereunder that may be performed by any employees,
agents, or subcontractors of Dr. Northrup at the location and take all
reasonable and necessary actions to ensure that no governmental agency or law,
rule or ordinance has been or may be violated in either the manufacture or sale
of products or the performance of services covered by this Agreement and shall
defend and hold MedicalCV harmless from loss, cost or damages as a result of
any such actual or alleged violation.

 

18.                                 Indemnity.  Dr.
Northrup shall indemnify and hold harmless MedicalCV from and against:

 

(a)                                  any and all claims, losses, liability,
damages (including legal fees and costs), diminution in value and the like
arising from any breach or non-fulfillment of Dr. Northrup’s covenants in this
Agreement; and

 

(b)                                 any and all loss, liability, and damages
arising from or caused directly or indirectly by any act or omission of Dr.
Northrup and/or any agents, employees or subcontractors of Dr. Northrup.

 

19.                                 Term; Termination.  This
Agreement shall continue for two (2) years and thereafter shall continue on a
month-to-month basis (the “Term”). 
MedicalCV may terminate this Agreement immediately (i) if MedicalCV
shall determine not to pursue commercialization of the Device.  Notwithstanding the foregoing, this
Agreement automatically shall terminate upon termination of the Assignment
Agreement, subject to the survival of certain provisions as set forth in
Section 29 below.

 

 

20.                                 Controlling Law.  This Agreement is made under
and shall be construed according to the laws of the State of Minnesota
applicable to any contract entered into and wholly performed therein except for
that body of laws that relates to conflict of law principles.

 

21.                                 Personal Jurisdiction.  In any judicial proceeding
involving a dispute arising from or with respect to this Agreement, Dr.
Northrup agrees to submit to personal jurisdiction of state and federal courts
located in the County of Hennepin, State of Minnesota.

 

22.                                 No Assignment.  Dr. Northrup agrees not to assign or
transfer any rights or obligations under this Agreement or any interest herein,
voluntarily or involuntarily, without the prior written consent of MedicalCV,
which consent may be withheld by MedicalCV in the sole exercise of its discretion,
and any such assignment shall be void and of no effect.  MedicalCV shall be free to assign or
transfer any of its rights or obligations or any interest herein without Dr.
Northrup’s prior consent.  This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective permitted successors and assigns.

 

23.                                 Invoices/Notices/etc.  All invoices, notices,
requests, payments, demands or communications required hereunder shall be in
writing and delivered personally or sent by certified mail, return receipt
requested, or by an overnight courier service having a reputation for
dependability (as of the Effective Date) to the parties at the following
addresses:

 

	
  For Dr. Northrup:

  	
  For MedicalCV:

  
	
   

  	
   

  
	
  4702 Lakeview Drive

  	
  Attn:  Chief Executive Officer

  
	
  Edina, Minnesota 55424

  	
  9725 South Robert Trail

  
	
   

  	
  Inver Grove Heights,
  Minnesota 55077

  

 

24.                                 Severability.  If any provision of this Agreement shall be
unlawful, void, or for any reason unenforceable, it shall be deemed severable from,
and in no way shall affect the validity or enforceability of, the remaining
provisions of this Agreement.

 

25.                                 Amendment.  This Agreement can only be amended or
modified in a written document signed by Dr. Northrup and MedicalCV.

 

26.                                 Legal Fees.  Except as expressly provided herein to the
contrary, each party shall be responsible for its own legal fees and costs in
connection with the transactions described herein.

 

27.                                 No Presumption.  No presumption shall arise as
a result of any party’s involvement in the drafting of this Agreement.

 

28.                                 No Waiver.  The waiver of either party hereto of a
breach of any provisions of this Agreement by the other shall not operate or be
construed as a waiver of any subsequent breach of the same provision or any
other provision of this Agreement.

 

29.                                 Survival.  Dr. Northrup agrees that the provisions of
Sections 3, 4, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 20, 21, 27, 28,
29 and 30 hereof shall survive termination of this Agreement and shall be fully
enforceable thereafter.

 

30.                                 Entire Agreement.  This Agreement and the
Assignment Agreement contain the entire agreement with respect to the subject
matter hereof and, except as expressly provided to the contrary,

 

 

supersedes all prior oral or written
agreements, communications and dealings between Dr. Northrup and MedicalCV with
respect to the subject matter hereof, all of which are hereby merged into this
Agreement.

 

IN WITNESS WHEREOF, the parties have executed this Agreement by
their duly authorized officers or agents on the date and year first above
written.

 

 

	
   

  	
  MedicalCV,
  Inc.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Blair P. Mowery

  	
   

  	
  /s/ William F. Northrup III, M.D.

  	
   

  
	
   

  	
  By:  Blair P. Mowery

  	
  William F. Northrup III, M.D.

  
	
   

  	
  Its:  Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Social Security NumberExhibit
10.43

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE “1933 ACT”) OR UNDER THE SECURITIES LAWS
OF ANY OTHER STATE AND MAY NOT BE TRANSFERRED WITHOUT (A) THE OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH TRANSFER MAY LAWFULLY BE MADE
WITHOUT REGISTRATION UNDER THE 1933 ACT OR THE SECURITIES LAWS OF ANY
APPLICABLE STATE; OR (B) SUCH REGISTRATION.

 

WARRANT

 

To Purchase Shares of Common Stock of MedicalCV,
Inc.

 

August 7, 2002

 

This certifies that, for valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Segmed, Inc., a Minnesota corporation, is
entitled to subscribe for and purchase from the Company at any time commencing
on the date hereof and continuing until August 7, 2009 (the “Expiration
Date”) up to a number of shares of the Company’s common stock as described
herein, and at the Purchase Price set forth herein, subject to adjustment as
hereinafter set forth.

 

1.                                       Definitions. For the purposes of this Warrant, the
following terms shall have the following meanings:

 

“Commission” shall mean the
Securities and Exchange Commission, or any other federal agency then
administering the Securities Act.

 

“Company” shall include
MedicalCV, Inc., a Minnesota corporation, and any corporation which shall
succeed to, or assume, the obligations of said corporation hereunder.

 

“Common Stock” shall mean the
shares of common stock of the Company, $0.01 par value.

 

“Fair Market Value” with respect to a share of Common Stock
as of a particular date (the “Determination Date”) shall mean (i) if the Common
Stock is traded on an exchange or is quoted 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, (ii) if the Common Stock is not traded on an exchange or
quoted on the Nasdaq National Market or the Nasdaq SmallCap Market, then the
average closing bid and asked prices reported by the OTC Bulletin Board for the
ten (10) business days immediately preceding the Determination Date, or (iii)
if the Common Stock is not traded on an exchange or quoted on the Nasdaq
National Market or the Nasdaq SmallCap Market or reported on the OTC Bulletin
Board, then as determined in good faith by the Board of Directors of the
Company.

 

“Purchase Price” shall mean
$2.95 per share of Common Stock, subject to adjustment as hereinafter provided.

 

 

“Securities Act” shall mean
the Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder, as in effect at the time.

 

“Subscription Form” shall
mean the subscription forms attached hereto.

 

“Transfer” shall mean any
sale, assignment, pledge, or other disposition of any Warrants and/or Warrant
Shares, or of any interest in either thereof, which would constitute a sale
thereof within the meaning of Section 2(3) of the Securities Act.

 

“Warrant Shares” shall mean
that number of shares of Common Stock purchased or purchasable by the
Warrantholder upon the exercise of the Warrants pursuant to Section 2(a)
hereof.

 

“Warrantholder” shall include
Segmed, Inc. and the holder or holders of the Warrants or any related Warrant
Shares.

 

“Warrant” shall mean this
Warrant and all Warrants issued in exchange, transfer or replacement thereof.

 

Capitalized terms not otherwise defined in this Warrant shall have the
meanings set forth  in that certain
Assignment Agreement of even date herewith by and between the Company, Segmed,
Inc. and William F. Northrup III, M.D. (the “Assignment Agreement”).

 

2.                                       Vesting, Exercise of Warrant, Issuance of
Certificate, and Payment for Warrant Shares.

 

(a)                                  This Warrant shall be exercisable and vest as
follows:

 

(i)                                     to the extent of 25,000 shares immediately;

 

(ii)                                  to the extent of an additional 25,000 shares
upon the Company receiving the CE Mark for the Device;

 

(iii)                               to the extent of an additional 25,000 shares
upon the Company receiving FDA 510(k) clearance for the Device; and

 

(iv)                              to the extent of the remaining 25,000 shares
upon the first commercial sale of the Device by the Company to a party
unrelated to the Company or the ASSIGNORS.

 

(b)                                 This Warrant shall be considered cancelled to
the extent of unvested Warrant Shares as of the date of any termination of the
Assignment Agreement by the Company pursuant to Section 5.1 of the
Assignment Agreement.

 

(c)                                  Subject to the provisions of Sections 2(a)
and 2(b) above, the rights represented by this Warrant may be exercised in
whole or in part (but not as to any fractional share of Common Stock) at any
time after the date hereof and prior to the Expiration Date, by the
Warrantholder, by:

 

(i)                                     delivery to the Company of a completed
Subscription Form;

 

 

(ii)                                  surrender to the Company of this Warrant
properly endorsed; and

 

(iii)                               delivery to the Company of a certified or
cashier’s check made payable to the Company in an amount equal to the aggregate
Purchase Price of the shares of Common Stock being purchased, at its principal
office in Minnesota (or such other office or agency of the Company as the
Company may designate by notice in writing to the Warrantholder).

 

The Company agrees and acknowledges that the
shares of Common Stock so purchased shall be deemed to be issued to the holder
hereof as the record owner of such shares as of the close of business on the
date on which this Warrant, properly endorsed, and the Subscription Form shall
have been surrendered and payment made for such shares as aforesaid.  Upon receipt thereof, the Company shall, as
promptly as practicable, and in any event within fifteen (15) days thereafter,
execute or cause to be executed and deliver to the Warrantholder a certificate
or certificates representing the aggregate number of shares of Common Stock
specified in said Subscription Form. 
Each stock certificate so delivered shall be in such denomination as may
be requested by the Warrantholder and shall be registered in the name of the
Warrantholder or such other name as shall be designated by the
Warrantholder.  If this Warrant shall have
been exercised only in part, the Company shall, at the time of delivery of said
stock certificate or certificates, deliver to the Warrantholder a new Warrant
evidencing the rights of such holder to purchase the remaining shares of Common
Stock covered by this Warrant.  The
Company shall pay all expenses, taxes, and other charges payable in connection
with the preparation, execution, and delivery of stock certificates pursuant to
this Section 2, except that, in case any such stock certificate or certificates
shall be registered in a name or names other than the name of the
Warrantholder, funds sufficient to pay all stock transfer taxes which shall be
payable upon the execution and delivery of such stock certificate or
certificates shall be paid by the Warrantholder to the Company at the time of
delivering this Warrant to the Company as mentioned above.

 

3.                                       Ownership of this Warrant.  The
Company may deem and treat the registered Warrantholder as the holder and owner
hereof (notwithstanding any notations of ownership or writing made hereon by
anyone other than the Company) for all purposes and shall not be affected by
any notice to the contrary, until presentation of this Warrant for transfer as
provided herein and then only if such transfer meets the requirements of
Section 5.

 

4.                                       Exchange, Transfer, and Replacement. 
Subject to Section 5 hereof, this Warrant is exchangeable upon the
surrender hereof by the Warrantholder to the Company at its office or agency
described in Section 2 hereof 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 shares (not to exceed the aggregate total number purchasable
hereunder) as shall be designated by the Warrantholder at the time of such
surrender.  Subject to Section 5
hereof, this Warrant and all rights hereunder are transferable, in whole or in
part, upon the books of the Company by the Warrantholder in person or by duly
authorized attorney, and a new Warrant of the same tenor and date as this
Warrant, but registered in the name of the transferee, shall be executed and
delivered by the Company upon surrender of this Warrant, duly endorsed, at such
office or agency of the Company.  Upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction, or mutilation of this Warrant, and, in the case of loss,
theft, or destruction, of indemnity or security reasonably satisfactory to it,
and upon surrender and cancellation of this Warrant, if mutilated, the

 

 

Company will make and
deliver a new Warrant of like tenor, in lieu of this Warrant.  This Warrant shall be promptly canceled by
the Company upon the surrender hereof in connection with any exchange,
transfer, or replacement.  The Company
shall pay all expenses, taxes (other than stock transfer taxes), and other
charges payable in connection with the preparation, execution, and delivery of
Warrants pursuant to this Section 4.

 

5.                                       Restrictions on Transfer. 
Notwithstanding any provisions contained in this Warrant to the
contrary, neither this Warrant nor the Warrant Shares shall be transferable
except upon the conditions specified in this Section 5, which conditions
are intended, among other things, to ensure compliance with the provisions of
the Securities Act in respect of the transfer of this Warrant or such Warrant
Shares.  The Warrantholder agrees that
he will not transfer this Warrant or the related Warrant Shares:

 

(a)                                  prior to delivery to the Company of an
opinion of counsel selected by the Warrantholder and reasonably satisfactory to
the Company, stating that such transfer is exempt from registration under the
Securities Act and applicable state securities laws, rules and regulations; or

 

(b)                                 until registration of such Warrants and/or
Warrant Shares under the Securities Act and applicable state securities laws
has become effective and continues to be effective at the time of such
transfer.

 

An appropriate legend may be endorsed on the Warrants and the
certificates of the Warrant Shares evidencing these restrictions.

 

6.                                       Antidilution Provisions.  The
rights granted hereunder are subject to the following:

 

(a)                                  Stock Splits and Reverse Splits.  In
case at any time the Company shall subdivide its outstanding shares of Common
Stock into a greater number of shares, the Purchase Price in effect immediately
prior to such subdivision shall be proportionately reduced and the number of
Warrant Shares purchasable pursuant to this Warrant immediately prior to such
subdivision shall be proportionately increased, and conversely, in case at any
time the Company shall combine its outstanding shares of Common Stock into a
smaller number of shares, the Purchase Price in effect immediately prior to
such combination shall be proportionately increased and the number of Warrant
Shares purchasable upon the exercise of this Warrant immediately prior to such
combination shall be proportionately reduced.

 

(b)                                 Reorganization, Reclassification, Consolidation,
Merger, or Sale.  If any capital reorganization or
reclassification 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 shares of Common Stock shall be entitled
to receive Common Stock, other securities or assets with respect to or in
exchange for shares of Common Stock, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, lawful and adequate
provision shall be made whereby the Warrantholder shall thereafter have the
right to purchase and receive upon the basis and upon the terms and conditions
specified in the Warrants and in lieu of the shares of Common Stock of the
Company immediately theretofore purchasable and receivable upon the exercise of
the Warrants such shares of Common Stock, other securities or assets as may be
issued or payable with respect to or in exchange for a number of

 

 

outstanding
shares of Common Stock equal to the number of shares of Common Stock
immediately theretofore purchasable and receivable upon the exercise of the
Warrants 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 Warrantholder so that the
provisions of the Warrants (including, without limitation, provisions for
adjustment of the Purchase Price and the number of shares purchasable upon the
exercise of the Warrants) shall thereafter be applicable, as nearly as may be,
in relation to any shares of Common Stock, other securities or assets
thereafter deliverable upon the exercise of the Warrants.

 

7.                                       Special Agreements of the Company.

 

(a)                                  Will Reserve Shares.  The
Company will reserve and set apart and have at all times the number of shares
of authorized but unissued Common Stock deliverable upon the exercise of the
Warrants, and it will have at all times any other rights or privileges provided
for herein sufficient to enable it at any time to fulfill all of its
obligations hereunder.

 

(b)                                 Will Avoid Certain Actions.  The
Company will not, by amendment of its Articles of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, issue or sale of
securities or otherwise, avoid or take any action which would have the effect
of avoiding or delaying the observance or performance hereunder by the Company,
but will at all times in good faith assist in carrying out of all the
provisions of the Warrants and in taking all such actions as may be necessary
or appropriate in order to protect the rights of the Warrantholder against
dilution or other impairment.

 

8.                                       Provisions for Registration. 
Despite anything in this Warrant to the contrary, the Warrantholder
shall have the following rights regarding registration of Warrant Shares which
may be hereafter acquired upon exercise of this Warrant.  The following rights shall not apply in the
event of an underwritten initial public offering of the Company’s securities or
in the event of registrations on Form S-8 or Form S-4 or any successor forms
thereto.

 

(a)                                  Registration on Form S-3.  At any
time prior to the expiration of this Warrant, and provided that a registration
statement on Form S-3 (or any successor form thereto) is then available to the
Company (the “Registration Statement”), and on a one-time basis only, upon
request by the Warrantholder or Warrantholders of a majority in interest of any
securities originally issuable under this Warrant or any other Warrants issued
pursuant to Section 2 hereof, the Company will promptly take all necessary
steps to register or qualify for sale, under the 1933 Act all of the Warrant
Shares issued and to be issued upon exercise of the Warrants.  In addition, upon the receipt of such
request, the Company shall promptly give written notice to all other record
Warrantholders that such registration is to be effected.  The Company shall be obligated to prepare,
file and cause to become effective only one Registration Statement pursuant to
this Section 8(a) and to pay the costs and expenses associated with such
Registration Statement to the extent provided in Section 8(c).  Unless the registration shall be pursuant to
SEC Form S-3, the Company shall keep effective and maintain any registration,
qualification, notification, or approval specified in this Section 8(a)
for a period of ninety (90) days.

 

(b)                                 Registration Procedures. 
When the Company effects the registration of any Warrant Shares under
the Securities Act pursuant to Section 8(a), the Company will:

 

 

(i)                                     furnish to the security holders participating
in such registration and to the underwriters of the Warrant Shares being
registered such reasonable number of copies of the Registration Statement,
preliminary prospectus, final prospectus and such other documents as such
security holders and underwriters may reasonably request in order to facilitate
the public offering of such Warrant Shares;

 

(ii)                                  use its best efforts to register or qualify
the Warrant Shares covered by such Registration Statement under the securities
or blue sky laws of one jurisdiction as the Warrantholder may reasonably
request within ten (10) days following the original filing of such Registration
Statement, except that the Company shall not for any purpose be required to
execute a general consent to service of process or to qualify to do business as
a foreign corporation in any jurisdiction wherein it is not so qualified,
provided, that a consent to service of process on Form U-2 or similar successor
form shall not be considered to be a general consent to service of process for
such purpose;

 

(iii)                               notify the security holders participating in
such registration, promptly after it shall receive notice thereof, of the time
when such Registration Statement has become effective or a supplement to any
prospectus forming a part of such Registration Statement has been filed;

 

(iv)                              notify such holders promptly of any request
by the Commission for the amending or supplementing of such Registration
Statement or prospectus or for additional information;

 

(v)                                 prepare and file with the Commission,
promptly upon the request of any such holders, any amendments or supplements to
such Registration Statement or prospectus which, in the opinion of counsel for
the Company, is required under the Securities Act or the rules and regulations
thereunder in connection with the distribution of the Warrant Shares by such
holder;

 

(vi)                              prepare and promptly file with the Commission
and promptly notify such holders of the filing of such amendment or supplement
to such Registration Statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Securities Act, any event
shall have occurred as the result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances in which they were made, not
misleading;

 

(vii)                           advise such holders, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any stop order
by the Commission suspending the effectiveness of such Registration Statement
or the initiation or threatening of any proceeding for that purpose and
promptly use its best efforts to prevent the issuance of any stop order or to
obtain its withdrawal if such stop order should be issued; and

 

 

(viii)                        not file any amendment or supplement to such
Registration Statement or prospectus to which a majority in interest of such
holders shall have reasonably objected on the grounds that such amendment or
supplement does not comply in all material respects with the requirements of the
Securities Act or the rules and regulations thereunder, after having been
furnished with a copy thereof at least five (5) business days prior to the
filing thereof, unless in the opinion of counsel for the Company the filing of
such amendment or supplement is reasonably necessary to protect the Company
from any liabilities under any applicable federal or state law and such filing
will not violate applicable law.

 

(c)                                  Expenses.  With respect to each
Registration Statement pursuant to Section 8(a), the Company shall bear
the following fees, costs and expenses, subject to the terms of
Section 8(b)(ii): 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 and/or selling security holders are required to bear
such fees and disbursements), all internal Company expenses, the premiums and
other costs of policies of insurance against liability arising out of the
public offering, and all legal fees and disbursements and other expenses of
complying with state securities or blue sky laws of any jurisdictions in which
the securities to be offered are to be registered or qualified.  Fees and disbursements of counsel and
accountants for the selling security holders, underwriting discounts and
commissions and transfer taxes for selling security holders and any other
expenses incurred by the selling security holders not expressly included above
shall be borne by the selling security holders.

 

(d)                                 Copies of Prospectus; Amendments of
Prospectus.  The Company will furnish the Warrantholder
with a reasonable number of copies of any prospectus or offering circular and
one copy of the Registration Statement included in such filings and will amend
or supplement the same as required following the effective date of the
Registration Statement.

 

(e)                                  Conditions of the Company’s Obligations.  It
shall be a condition of the Company’s obligation to register the Warrant Shares
hereunder that the Warrantholder agrees to cooperate with the Company in the
preparation and filing of any such Registration Statement, or in its efforts to
establish that the proposed sale is exempt under the Securities Act, as to any
proposed distribution.  It shall also be
a condition of the Company’s obligations under this Agreement that, in the case
of the filing of any Registration Statement, and to the extent permissible
under the Securities Act, and controlling precedent thereunder, the Company and
the Warrantholder provide cross-indemnification agreements to each other in
customary scope covering the accuracy and completeness of the information
furnished by each.  The Company shall
not be obligated to register any Warrant Shares which are eligible for sale
under SEC Rule 144 under the Securities Act, or any successor or similar rule
under the Securities Act which permits the exempt sale of the Warrant Shares.

 

9.                                       Market Hold-Back Provisions.  The
Warrantholder understands that the Company at a future date may file a
registration or offering statement (the “Registration Statement”) with the
Commission to facilitate a public offering of its securities.  The Warrantholder agrees, for the benefit of
the Company, that should such a public offering be made and should the managing
underwriter of such offering require, the Warrantholder will not,

 

 

without the prior written
consent on the Company and such underwriter, during the “Lock Up Period,” as
defined herein:

 

(a)                                  sell, transfer or otherwise dispose of, or
agree to sell, transfer or otherwise dispose of any of the Shares beneficially
held by the Warrantholder during the Lock Up Period;

 

(b)                                 sell, transfer or otherwise dispose of, or
agree to sell, transfer or otherwise dispose of any options, rights or warrants
to purchase any of the Shares beneficially held by the Warrantholder during the
Lock Up Period; or

 

(c)                                  sell or grant, or agree to sell or grant,
options, rights or warrants with respect to any of the Shares.

 

The foregoing does not prohibit gifts to donees or transfers by will or
the laws of descent or distribution to heirs or beneficiaries provided that
such donees, heirs and beneficiaries shall be bound by the restrictions set
forth herein.  The term “Lock Up Period”
shall  mean the lesser of (x) 180 days
or (y) the period during which Company officers and directors are restricted by
the managing underwriter in connection with such public offering from effecting
any sales or transfers of the Company’s Common Stock.  The Lock Up Period shall commence on the effective date of the
Registration Statement.

 

10.                                 Notices.  Any notice or other document
required or permitted to be given or delivered to the Warrantholder shall be
delivered or sent by first class mail to the Warrantholder at the last address
shown on the books of the Company maintained for the registry and transfer of
Warrants or to such other address as to which the Warrantholder shall notify
the Company.  Any notice or other
document required or permitted to be given or delivered to the Company shall be
delivered or sent by certified or registered mail to the principal office of
the Company.

 

11.                                 No Rights as Shareholders; Limitation of
Liability.  This Warrant shall not entitle any holder
hereof to any of the rights of a shareholder of the Company.  No provisions hereof, in the absence of
affirmative action by the holder hereof to purchase shares of Common Stock, and
no mere enumeration herein of the rights or privileges of the holder hereof,
shall give rise to any liability of such holder for the Purchase Price or as a
shareholder of the Company whether such liability is asserted by the Company or
by creditors of the Company.

 

12.                                 Governing Law. 
This Warrant shall be governed by, and construed and enforced in
accordance with, the laws of the State of Minnesota, without regard to its
conflicts of laws principles.

 

13.                                 Miscellaneous.  The
provisions of this Warrant will be binding upon the Warrantholder and the
Company and their respective heirs, successors and assigns.  This Warrant and any provision hereof may be
changed, waived, discharged, or terminated only by an instrument in writing
signed by the party (or any predecessor in interest thereof) against which
enforcement of the same is sought.  The
headings in this Warrant are for purposes of reference only and shall not
affect the meaning or construction of any of the provisions hereof.

 

14.                                 Additional Right to Convert Warrant.  The
Warrantholder shall have the right to require the Company to convert this
Warrant (“Conversion Right”) at any time prior to its expiration into shares of
Common Stock as provided for in this Section 14.  Upon exercise of the Conversion Right, the Company will deliver
to the Warrantholder (without payment by the

 

 

Warrantholder of any
Purchase Price) that number of shares of 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 Purchase Price for
the Warrant Shares in effect immediately prior to the exercise of the
Conversion Right from the aggregate Fair Market Value 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.  The Conversion
Right may be exercised by the Warrantholder on any business day by delivering a
written notice in the form attached hereto to the Company at the offices of the
Company exercising the Conversion Right and specifying (a) the total number of
shares of Common Stock the Warrantholder will purchase pursuant to such
conversion and (b) a place and date not less than three nor more than ten
business days from the date of such notice for the closing of such purchase.  At any such closing, (x) the Warrantholder
will surrender the Warrant, (y) the Company will deliver to the Warrantholder 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 (z) the Company will deliver to the Warrantholder a new warrant
representing the number of shares, if any, with respect to which this Warrant
shall not have been exercised.

 

IN WITNESS
WHEREOF, the Company
has caused this Warrant to be signed by a duly authorized officer, on the day
and year first above written.

 

	
   

  	
  MedicalCV, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Blair P. Mowery

  	
   

  
	
   

  	
  Name:  Blair P. Mowery

  
	
   

  	
  Its:  Chief Executive Officer

  

 

 

FULL
SUBSCRIPTION FORM

 

To
Be Executed By the Registered Warrantholder if It/

She/He
Desires to Exercise in Full the Within Warrant

 

The undersigned hereby exercises the right to
purchase the
                          
shares of Common Stock covered by the within Warrant at the date of this
subscription and herewith makes payment of the sum of
$                                                        
representing the Purchase Price of
$                    
per share in effect at that date. 
Certificates for such shares shall be issued in the name of and
delivered to the undersigned, unless otherwise specified by written
instructions, signed by the undersigned and accompanying this subscription.

 

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  

 

 

PARTIAL SUBSCRIPTION FORM

 

To
be Executed by the Registered Warrantholder if It/She/He

Desires
to Exercise in Part Only the Within Warrant

 

The undersigned hereby exercises the right to
purchase
                    
shares of the total shares of Common Stock covered by the within Warrant at the
date of this subscription and herewith makes payment of the sum of
$                        
representing the Purchase Price of $                  
per share in effect at this date.

 

Certificates for such shares and a new Warrant of
like tenor and date for the balance of the shares not subscribed for (if any)
shall be issued in the name of and delivered to the undersigned, unless
otherwise specified by written instructions, signed by the undersigned and
accompanying this subscription.

 

(The following paragraph need be completed only if the Purchase Price
and number of shares of Common Stock specified in the within Warrant have been
adjusted pursuant to Section 6.)

 

The shares hereby subscribed for constitute
                            
shares of Common Stock (to the nearest whole share) resulting from adjustment
of
                            
shares of the total of                                     
shares of Common Stock covered by the within Warrant, as said shares were
constituted at the date of the Warrant.

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  

 

 

CONVERSION NOTICE

 

(to be signed upon exercise of the Warrant pursuant to Section 14)

 

The undersigned hereby irrevocably elects to
exercise the conversion right provided in Section 14 of the within Warrant
for, and to acquire thereunder,
                                                            
shares of Common Stock.  If said number
of shares is not all the shares purchasable under the within Warrant, a new
warrant is to be issued in the name of the undersigned for the balance remaining
of the shares purchasable thereunder rounded down to the next lower number of
shares.

 

The undersigned hereby requests that the
certificate of such shares be issued in the name and delivered to the address
set forth below.

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

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