Document:

Exhibit 4.5

WHEN RECORDED

MAIL TO:

Gerald L. Waters

Union Electric Company

1901 Chouteau Avenue

St. Louis, MO  61303

Executed in 21 Counterparts, No.      
..

SUPPLEMENTAL INDENTURE

DATED JUNE 1, 2007

UNION ELECTRIC COMPANY

TO

THE BANK OF NEW YORK,

AS TRUSTEE

(SUPPLEMENTAL TO THE
INDENTURE OF MORTGAGE AND DEED OF TRUST DATED JUNE 15, 1937, AS AMENDED,
EXECUTED BY UNION ELECTRIC COMPANY TO THE BANK OF NEW YORK, AS TRUSTEE)

First Mortgage Bonds, Senior Notes

Series KK

This instrument was
prepared by Steven R. Sullivan, Esq., Senior Vice President, General Counsel
and Secretary of Union Electric Company, 1901 Chouteau Avenue, St. Louis,
Missouri  63103, (314) 554-2098.

SUPPLEMENTAL INDENTURE, dated the 1st day of June, Two thousand and
seven (2007) made by and between UNION ELECTRIC COMPANY, a corporation
organized and existing under the laws of the State of Missouri (hereinafter
called the “Company”), party of the first part, and The Bank of New York
(successor trustee to Bank of America, National Association, formerly Boatmen’s
Trust Company), a bank existing under the laws of the State of New York
(hereinafter called the “Trustee”), as Trustee under the Indenture of Mortgage
and Deed of Trust dated June 15, 1937, hereinafter mentioned, party of the
second part:

WHEREAS, the Company has
heretofore executed and delivered to the Trustee its Indenture of Mortgage and
Deed of Trust, dated June 15, 1937, as amended May 1, 1941, April 1, 1971,
February 1, 1974, July 7, 1980, February 1, 2000 and August 15, 2002 (said
Indenture of Mortgage and Deed of Trust as so amended, being hereinafter
referred to as the “Original Indenture”), to secure the payment of the
principal of and the interest (and premium, if any) on all bonds at any time
issued and outstanding thereunder, and indentures supplemental thereto dated
June 15, 1937, May 1, 1941, March 17, 1942, April 13, 1945, April 27, 1945,
October 1, 1945, April 11, 1947, April 13, 1949, September 13, 1950, December
1, 1950, September 20, 1951, May 1, 1952, March 1, 1954, May 1, 1955, August
31, 1955, April 1, 1956, July 1, 1956, August 1, 1957, February 1, 1958, March
1, 1958, November 5, 1958, March 16, 1959, June 24, 1959, December 11, 1959,
August 17, 1960, September 1, 1960, October 24, 1960, June 30, 1961, July 1,
1961, August 9, 1962, September 30, 1963, November 1, 1963, March 12, 1965,
April 1, 1965, April 14, 1966, May 1, 1966, February 17, 1967, March 1, 1967,
February 19, 1968, March 15, 1968, August 21, 1968, April 7, 1969, May 1, 1969,
September 12, 1969, October 1, 1969, March 26, 1970, April 1, 1970, June 12,
1970, January 1, 1971, April 1, 1971, September 15, 1971, December 3, 1973,
February 1, 1974, April 25, 1974, February 3, 1975, March 1, 1975, June 11,
1975, May 12, 1976, August 16, 1976, April 26, 1977, October 15, 1977, November
7, 1977, December 1, 1977, August 1, 1978, October 12, 1979, November 1, 1979,
July 7, 1980, August 1, 1980, August 20, 1980, February 1, 1981, October 8,
1981, August 27, 1982, September 1, 1982, December 15, 1982, March 1, 1983,
June 21, 1984, December 12, 1984, June 11, 1985, March 1, 1986, May 1, 1986,
May 1, 1990, December 1, 1991, December 4, 1991, January 1, 1992, September 30,
1992, October 1, 1992, December 1, 1992, February 1, 1993, February 18, 1993,
May 1, 1993, August 1, 1993, October 1, 1993, January 1, 1994, February 1,
2000, August 15, 2002, March 5, 2003, April 1, 2003, July 15, 2003, October 1,
2003, February 1, 2004 (eight separate indentures supplemental thereto), May 1,
2004, September 1, 2004, January 1, 2005, July 1, 2005 and December 1, 2005,
respectively, have heretofore been entered into between the Company and the
Trustee; and

WHEREAS, Bonds have heretofore
been issued by the Company under the Original Indenture as follows:

(1)           $80,000,000
principal amount of First Mortgage and Collateral Trust Bonds, 3 3/4% Series
due 1962, all of which have been redeemed prior to the date of the execution
hereof;

(2)           $90,000,000
principal amount of First Mortgage and Collateral Trust Bonds, 3 3/8% Series
due 1971, which are described in the Supplemental Indenture dated May 1, 1941
(hereinafter called the “Supplemental Indenture of May 1, 1941”), all of which
have been paid at maturity prior to the date of the execution hereof;

(3)           $13,000,000
principal amount of First Mortgage and Collateral Trust Bonds, 2 3/4% Series
due 1975 (herein called the “Bonds of 1975 Series”), which are described in the
Supplemental Indenture dated October 1, 1945 (hereinafter called the “Supplemental
Indenture of October 1, 1945”), all of which have been paid at maturity prior
to the date of the execution hereof;

(4)           $25,000,000
principal amount of First Mortgage and Collateral Trust Bonds, 2 7/8% Series due
1980 (herein called the “Bonds of 1980 Series”), which are described in the
Supplemental Indenture dated December 1, 1950 (hereinafter called the “Supplemental
Indenture of December 1, 1950”), all of which have been paid at maturity prior
to the date of the execution hereof;

(5)           $30,000,000
principal amount of First Mortgage and Collateral Trust Bonds, 3 1/4% Series
due 1982 (herein called the “Bonds of 1982 Series”), which are described in the
Supplemental Indenture dated May 1, 1952 (hereinafter called the “Supplemental
Indenture of May 1, 1952”), all of which have been paid at maturity prior to
the date of the execution hereof;

(6)           $40,000,000
principal amount of First Mortgage Bonds, 3 3/4% Series due 1986 (herein called
the “Bonds of 1986 Series”), which are described in the Supplemental Indenture
dated July 1, 1956 (hereinafter called the “Supplemental Indenture of July 1,
1956”), all of which have been paid at maturity prior to the date of the
execution hereof;

(7)           $35,000,000
principal amount of First Mortgage Bonds, 4 3/8% Series due 1988 (herein called
the “Bonds of 1988 Series”), which are described in the Supplemental Indenture
dated March 1, 1958 (hereinafter called the “Supplemental Indenture of March 1,
1958”), all of which have been paid at maturity prior to the date of the
execution hereof;

(8)           $50,000,000
principal amount of First Mortgage Bonds, 4 3/4% Series due 1990 (herein called
the “Bonds of 1990 Series”), which are described in the Supplemental Indenture
dated September 1, 1960 (hereinafter called the “Supplemental Indenture of
September 1, 1960”), all of which have been paid at maturity prior to the date
of the execution hereof;

(9)           $30,000,000
principal amount of First Mortgage Bonds, 4 3/4% Series due 1991 (herein called
the “Bonds of 1991 Series”), which are described in the Supplemental Indenture
dated July 1, 1961 (hereinafter called the “Supplemental Indenture of July 1,
1961”), all of which have been paid at maturity prior to the date of the
execution hereof;

(10)         $30,000,000
principal amount of First Mortgage Bonds, 4 1/2% Series due 1993 (herein called
the “Bonds of 1993 Series”), which are described in the Supplemental Indenture
dated November 1, 1963 (hereinafter called the “Supplemental Indenture of
November 1, 1963”), all of which have been redeemed prior to the date of the
execution hereof;

(11)         $35,000,000
principal amount of First Mortgage Bonds, 4 1/2% Series due 1995 (herein called
the “Bonds of 1995 Series”), which are described in the Supplemental Indenture
dated April 1, 1965 (hereinafter called the “Supplemental Indenture of April 1,
1965”), all of which have been paid at maturity prior to the date of the
execution hereof;

 2
 

(12)         $30,000,000
principal amount of First Mortgage Bonds, 5 1/2% Series due 1996 (herein called
the “Bonds of 1996 Series”), which are described in the Supplemental Indenture
dated May 1, 1966 (hereinafter called the “Supplemental Indenture of May 1,
1966”), all of which have been paid at maturity prior to the date of the
execution hereof;

(13)         $40,000,000
principal amount of First Mortgage Bonds, 5 1/2% Series due 1997 (herein called
the “Bonds of 1997 Series”), which are described in the Supplemental Indenture
dated March 1, 1967 (hereinafter called the “Supplemental Indenture of March 1,
1967”), all of which have been paid at maturity prior to the date of the
execution hereof;

(14)         $50,000,000
principal amount of First Mortgage Bonds, 7% Series due 1998 (herein called the
“Bonds of 1998 Series”), which are described in the Supplemental Indenture dated
March 15, 1968 (hereinafter called the “Supplemental Indenture of March 15,
1968”), all of which have been redeemed prior to the date of the execution
hereof;

(15)         $35,000,000
principal amount of First Mortgage Bonds, 7 3/8% Series due 1999 (herein called
the “Bonds of May 1999 Series”), which are described in the Supplemental
Indenture dated May 1, 1969 (hereinafter called the “Supplemental Indenture of
May 1, 1969”), all of which have been redeemed prior to the date of the
execution hereof;

(16)         $40,000,000
principal amount of First Mortgage Bonds, 8 1/4% Series due 1999 (herein called
the “Bonds of October 1999 Series”), which are described in the Supplemental
Indenture dated October 1, 1969 (hereinafter called the “Supplemental Indenture
of October 1, 1969”), all of which have been redeemed prior to the date of the
execution hereof;

(17)         $100,000,000
principal amount of First Mortgage Bonds, 9.95% Series due 1999 (herein called
the “Bonds of November 1999 Series”), which are described in the Supplemental
Indenture dated November 1, 1979 (hereinafter called the “Supplemental
Indenture of November 1, 1979”), all of which have been redeemed prior to the
date of the execution hereof;

(18)         $60,000,000
principal amount of First Mortgage Bonds, 9% Series due 2000 (herein called the
“Bonds of 2000 Series”), which are described in the Supplemental Indenture
dated April 1, 1970 (hereinafter called the “Supplemental Indenture of April 1,
1970”), all of which have been redeemed prior to the date of the execution hereof;

(19)         $50,000,000
principal amount of First Mortgage Bonds, 7 7/8% Series due 2001 (herein called
the “Bonds of January 2001 Series”), which are described in the Supplemental
Indenture dated January 1, 1971 (hereinafter called the “Supplemental Indenture
of January 1, 1971”), all of which have been redeemed prior to the date of the
execution hereof;

(20)         $50,000,000
principal amount of First Mortgage Bonds, 7 5/8% Series due 2001 (herein called
the “Bonds of April 2001 Series”), which are described in the Supplemental
Indenture dated April 1, 1971 (hereinafter called the “Supplemental

 3
 

Indenture of April 1, 1971”), all of which have been
redeemed prior to the date of the execution hereof;

(21)         $60,000,000
principal amount of First Mortgage Bonds, 8 1/8% Series due 2001 (herein called
the “Bonds of October 2001 Series”), which are described in the Supplemental
Indenture dated September 15, 1971 (hereinafter called the “Supplemental Indenture
of September 15, 1971”), all of which have been redeemed prior to the date of
the execution hereof;

(22)         $70,000,000
principal amount of First Mortgage Bonds, 8 3/8% Series due 2004 (herein called
the “Bonds of 2004 Series”), which are described in the Supplemental Indenture
dated February 1, 1974 (hereinafter called the “Supplemental Indenture of
February 1, 1974”), all of which have been redeemed prior to the date of the
execution hereof;

(23)         $70,000,000
principal amount of First Mortgage Bonds, 10 1/2% Series due 2005 (herein
called the “Bonds of 2005 Series”), which are described in the Supplemental
Indenture dated March 1, 1975 (hereinafter called the “Supplemental Indenture
of March 1, 1975”), all of which have been redeemed prior to the date of the
execution hereof;

(24)         $70,000,000
principal amount of First Mortgage Bonds, 8 7/8% Series due 2006 (herein called
the “Bonds of 2006 Series”), which are described in the Supplemental Indenture
dated August 16, 1976 (hereinafter called the “Supplemental Indenture of August
16, 1976”), all of which have been redeemed prior to the date of the execution
hereof;

(25)         $27,085,000
principal amount of First Mortgage Bonds, 5.80% Environmental Improvement
Series 1977, which are described in the Supplemental Indenture dated October
15, 1977 (hereinafter called the “Supplemental Indenture of October 15, 1977”),
all of which have been redeemed prior to the date of the execution hereof;

(26)         $60,000,000
principal amount of First Mortgage Bonds, 8 5/8% Series due 2007 (herein called
the “Bonds of 2007 Series”), which are described in the Supplemental Indenture
dated December 1, 1977 (hereinafter called the “Supplemental Indenture of
December 1, 1977”), all of which have been redeemed prior to the date of the
execution hereof;

(27)         $55,000,000
principal amount of First Mortgage Bonds, 9.35% Series due 2008 (herein called
the “Bonds of 2008 Series”), which are described in the Supplemental Indenture
dated August 1, 1978 (hereinafter called the “Supplemental Indenture of August
1, 1978”), all of which have been redeemed prior to the date of the execution
hereof;

(28)         $60,000,000
principal amount of First Mortgage Bonds, Environmental Improvement Series
1980, which are described in the Supplemental Indenture dated August 1, 1980
(hereinafter called the “Supplemental Indenture of August 1, 1980”), all of
which have been redeemed prior to the date of the execution hereof;

 4
 

(29)         $150,000,000
principal amount of First Mortgage Bonds, 15 3/8% Series due 1991 (herein
called the “Bonds of February 1991 Series”), which are described in the
Supplemental Indenture dated February 1, 1981 (hereinafter called the “Supplemental
Indenture of February 1, 1981”), all of which have been redeemed prior to the
date of the execution hereof;

(30)         $125,000,000
principal amount of First Mortgage Bonds, 15% Series due 1992 (herein called
the “Bonds of 1992 Series”), which are described in the Supplemental Indenture
dated September 1, 1982 (hereinafter called the “Supplemental Indenture of
September 1, 1982”), all of which have been redeemed prior to the date of the execution
hereof;

(31)         $100,000,000
principal amount of First Mortgage Bonds, 13% Series due 2013 (herein called
the “Bonds of 2013 Series”), which are described in the Supplemental Indenture
dated March 1, 1983 (hereinafter called the “Supplemental Indenture of March 1,
1983”), all of which have been redeemed prior to the date of the execution
hereof;

(32)         $100,000,000
principal amount of First Mortgage Bonds, 9 3/8% Series due 2016 (herein called
the “Bonds of 2016 Series”), which are described in the Supplemental Indenture
dated March 1, 1986 (hereinafter called the “Supplemental Indenture of March 1,
1986”), all of which have been redeemed prior to the date of the execution
hereof;

(33)         $100,000,000
principal amount of First Mortgage Bonds, 8 7/8% Series due 1996 (herein called
the “Bonds of 1996 Series”), which are described in the Supplemental Indenture
dated May 1, 1986 (hereinafter called the “Supplemental Indenture of May 1,
1986”), all of which have been redeemed prior to the date of the execution hereof;

(34)         $60,000,000
principal amount of First Mortgage Bonds, Environmental Improvement Series
1990A, which are described in the Supplemental Indenture dated May 1, 1990
(hereinafter called the “Supplemental Indenture of May 1, 1990”), all of which
have been redeemed prior to the date of the execution hereof;

(35)         $125,000,000
principal amount of First Mortgage Bonds, 8 3/4% Series due 2021 (herein called
the “Bonds of 2021 Series”), which are described in the Supplemental Indenture
dated December 1, 1991 (hereinafter called the “Supplemental Indenture of
December 1, 1991”), all of which have been redeemed prior to the date of the
execution hereof;

(36)         $75,000,000
principal amount of First Mortgage Bonds, 8.33% Series due 2002 (herein called
the “Bonds of 2002 Series”), which are described in the Supplemental Indenture
dated December 4, 1991 (hereinafter called the “Supplemental Indenture of
December 4, 1991”), all of which have been paid at maturity prior to the date
of the execution hereof;

(37)         $100,000,000
principal amount of First Mortgage Bonds, 7.65% Series due 2003 (herein called
the “Bonds of 2003 Series”), which are described in the Supplemental Indenture
dated January 1, 1992 (hereinafter called the “Supplemental

 5
 

Indenture of January 1, 1992”), all of which have been
paid at maturity prior to the date of the execution hereof;

(38)         $204,000,000
aggregate principal amount of First Mortgage Bonds, consisting of $100,000,000
principal amount of 6 3/4% Series due 1999 and $104,000,000 principal amount of
8 1/4% Series due 2022 (herein called the “Bonds of 1999 Series” and “Bonds of
2022 Series”, respectively), which are described in the Supplemental Indenture
dated October 1, 1992 (hereinafter called the “Supplemental Indenture of
October 1, 1992”), of which the Bonds of 1999 Series have been paid at maturity
prior to the date of execution hereof and the Bonds of 2022 Series have been
redeemed prior to the date of the execution hereof;

(39)         $170,000,000
aggregate principal amount of First Mortgage Bonds, consisting of $85,000,000
principal amount of 7 3/8% Series due 2004 and $85,000,000 principal amount of
8% Series due 2022 (herein called the “Bonds of December 2004 Series” and “Bonds
of December 2022 Series”, respectively, which are described in the Supplemental
Indenture dated December 1, 1992, (hereinafter called the “Supplemental
Indenture of December 1, 1992”), of which the Bonds of December 2022 Series
have been redeemed prior to the date of the execution hereof and the Bonds of
December 2004 Series have been paid at maturity prior to the date of the
execution hereof;

(40)         $188,000,000
principal amount of First Mortgage Bonds, 6 7/8% Series due 2004 (herein called
the “Bonds of August 2004 Series”), which are described in the Supplemental
Indenture dated February 1, 1993 (hereinafter called the “Supplemental
Indenture of February 1, 1993”), all of which have been paid at maturity prior
to the date of the execution hereof;

(41)         $148,000,000
principal amount of First Mortgage Bonds, 6 3/4% Series due 2008 (herein called
the “Bonds of May 2008 Series”), which are described in the Supplemental
Indenture dated May 1, 1993 (hereinafter called the “Supplemental Indenture of
May 1, 1993”), all of which are outstanding at the date of the execution
hereof;

(42)         $75,000,000
principal amount of First Mortgage Bonds, 7.15% Series due 2023 (herein called
the “Bonds of 2023 Series”), which are described in the Supplemental Indenture
dated August 1, 1993 (hereinafter called the “Supplemental Indenture of August
1, 1993”), all of which have been redeemed prior to the date of the execution
hereof;

(43)         $44,000,000
principal amount of First Mortgage Bonds, Environmental Improvement Series 1993
(herein called the “Bonds of 2028 Series”), which are described in the Supplemental
Indenture dated October 1, 1993 (hereinafter called the “Supplemental Indenture
of October 1, 1993”), all of which are outstanding at the date of the execution
hereof;

(44)         $100,000,000
principal amount of First Mortgage Bonds, 7% Series due 2024 (herein called the
“Bonds of 2024 Series”), which are described in the Supplemental Indenture
dated January 1, 1994 (hereinafter called the “Supplemental Indenture of
January 1, 1994”), all of which have been redeemed prior to the date of the
execution hereof;

 6
 

(45)         $173,000,000
principal amount of First Mortgage Bonds, Senior Notes Series AA (herein called
the “Bonds of 2012 Series”), which are described in the Supplemental Indenture
dated August 15, 2002 (hereinafter called the “Supplemental Indenture of August
15, 2002”), all of which are outstanding at the date of the execution hereof;

(46)         $184,000,000
principal amount of First Mortgage Bonds, Senior Notes Series BB (herein called
the “Bonds of 2034 Series”), which are described in the Supplemental Indenture
dated March 5, 2003 (hereinafter called the “Supplemental Indenture of March 5,
2003”), all of which are outstanding at the date of the execution hereof;

(47)         $114,000,000
principal amount of First Mortgage Bonds, Senior Notes Series CC (herein called
the “Bonds of 2015 Series”), which are described in the Supplemental Indenture
dated April 1, 2003 (hereinafter called the “Supplemental Indenture of April 1,
2003”), all of which are outstanding at the date of the execution hereof;

(48)         $200,000,000
principal amount of First Mortgage Bonds, Senior Notes Series DD (herein called
the “Bonds of 2018 Series”), which are described in the Supplemental Indenture
dated July 15, 2003 (hereinafter called the “Supplemental Indenture of July 15,
2003”), all of which are outstanding at the date of the execution hereof;

(49)         $200,000,000
principal amount of First Mortgage Bonds, Senior Notes Series EE (herein called
the “Bonds of 2013 Series”), which are described in the Supplemental Indenture
dated October 1, 2003 (hereinafter called the “Supplemental Indenture of
October 1, 2003”), all of which are outstanding at the date of the execution
hereof;

(50)         $60,000,000
principal amount of First Mortgage Bonds, Environmental Improvement Series
2004A, which are described in the Supplemental Indenture dated February 1, 2004
(hereinafter called the “Series 2004A Supplemental Indenture of February 1,
2004”), all of which are outstanding at the date of the execution hereof;

(51)         $50,000,000
principal amount of First Mortgage Bonds, Environmental Improvement Series
2004B, which are described in the Supplemental Indenture dated February 1, 2004
(hereinafter called the “Series 2004B Supplemental Indenture of February 1,
2004”), all of which are outstanding at the date of the execution hereof;

(52)         $50,000,000
principal amount of First Mortgage Bonds, Environmental Improvement Series
2004C, which are described in the Supplemental Indenture dated February 1, 2004
(hereinafter called the “Series 2004C Supplemental Indenture of February 1, 2004”),
all of which are outstanding at the date of the execution hereof;

(53)         $63,000,000
principal amount of First Mortgage Bonds, Environmental Improvement Series
2004D, which are described in the Supplemental Indenture dated February 1, 2004
(hereinafter called the “Series 2004D Supplemental Indenture of February 1,
2004”), all of which are outstanding at the date of the execution hereof;

 7
 

(54)         $63,500,000
principal amount of First Mortgage Bonds, Environmental Improvement Series
2004E, which are described in the Supplemental Indenture dated February 1, 2004
(hereinafter called the “Series 2004E Supplemental Indenture of February 1,
2004”), all of which are outstanding at the date of the execution hereof;

(55)         $60,000,000
principal amount of First Mortgage Bonds, Environmental Improvement Series
2004F, which are described in the Supplemental Indenture dated February 1, 2004
(hereinafter called the “Series 2004F Supplemental Indenture of February 1,
2004”), all of which are outstanding at the date of the execution hereof;

(56)         $42,585,000
principal amount of First Mortgage Bonds, Environmental Improvement Series
2004G, which are described in the Supplemental Indenture dated February 1, 2004
(hereinafter called the “Series 2004G Supplemental Indenture of February 1,
2004”), all of which are outstanding at the date of the execution hereof;

(57)         $47,500,000
principal amount of First Mortgage Bonds, Environmental Improvement Series
2004H, which are described in the Supplemental Indenture dated February 1, 2004
(hereinafter called the “Series 2004H Supplemental Indenture of February 1,
2004”), all of which are outstanding at the date of the execution hereof;

(58)         $104,000,000
principal amount of First Mortgage Bonds, Senior Notes Series FF (herein called
the “Bonds of 2014 Series”), which are described in the Supplemental Indenture
dated May 1, 2004 (hereinafter called the “Supplemental Indenture of May 1,
2004”), all of which are outstanding at the date of the execution hereof;

(59)         $300,000,000
principal amount of First Mortgage Bonds, Senior Notes Series GG (herein called
the “Bonds of 2019 Series”), which are described in the Supplemental Indenture
dated September 1, 2004 (hereinafter called the “Supplemental Indenture of
September 1, 2004”), all of which are outstanding at the date of the execution
hereof;

(60)         $85,000,000
principal amount of First Mortgage Bonds, Senior Notes Series HH (herein called
the “Bonds of 2020 Series”), which are described in the Supplemental Indenture
dated January 1, 2005 (hereinafter called the “Supplemental Indenture of
January 1, 2005”), all of which are outstanding at the date of the execution
hereof;

(61)         $300,000,000
principal amount of First Mortgage Bonds, Senior Notes Series II (herein called
the “Bonds of 2037 Series”), which are described in the Supplemental Indenture
dated July 1, 2005 (hereinafter called the “Supplemental Indenture of July 1,
2005”), all of which are outstanding at the date of the execution hereof; and

(62)         $260,000,000
principal amount of First Mortgage Bonds, Senior Notes Series JJ (herein called
the “Bonds of 2016 Series”), which are described in the Supplemental Indenture
dated December 1, 2005 (hereinafter called the “Supplemental Indenture of
December 1, 2005”), all of which are outstanding at the date of the execution
hereof;

 8
 

and

WHEREAS, the Company on August
31, 1955 acquired all of the properties of Union Electric Power Company, the
Subsidiary as defined in Article I of the Original Indenture, upon the
dissolution of the Subsidiary; the Company, by Supplemental Indenture dated
August 31, 1955, conveyed all of the properties so acquired (other than
property of the character defined as excepted property in the granting clauses
of the Original Indenture) to the Trustee upon the terms and trusts in the Original
Indenture and the indentures supplemental thereto set forth for the equal and
proportionate benefit and security of all present and future holders of the
Bonds and coupons issued and to be issued thereunder, all the shares of stock
of the Subsidiary were released from the lien of the Original Indenture; and
the Company became entitled to change the general designation of the Bonds so
as to omit the words “and Collateral Trust”; and

WHEREAS, the Articles of
Incorporation of the Company were duly amended on April 23, 1956, to change its
corporate name from “Union Electric Company of Missouri” to “Union Electric
Company”; and

WHEREAS, the Articles of
Agreement of the Trustee were duly amended effective on January 4, 1982 to
change its corporate name from “St. Louis Union Trust Company” to “Centerre
Trust Company of St. Louis”, and further amended on December 9, 1988, to change
its corporate name from “Centerre Trust Company of St. Louis” to “Boatmen’s
Trust Company”; and

WHEREAS, that on March 13, 1998,
Boatmen’s Trust Company merged into NationsBank, National Association and
effective July 5, 1999, changed its name to Bank of America, National
Association; and

WHEREAS, that on February 1,
2000, The Bank of New York, as transferee of the corporate trust business of
Bank of America, National Association (formerly known as Boatmen’s Trust
Company), Trustee under the Original Indenture, became successor Trustee under
the Original Indenture; and

WHEREAS, the Company is entitled
at this time to have authenticated and delivered additional Bonds on the basis
of “property additions” upon compliance with and pursuant to the provisions of
Section 4 of Article III of the Original Indenture; and

WHEREAS, the Company has entered
into an Indenture dated as of August 15, 2002 (the “Senior Note Indenture”)
with The Bank of New York, as trustee (the “Senior Note Trustee”) providing for
the issuance from time to time of senior notes thereunder; and

WHEREAS, the Company desires by
this Supplemental Indenture to provide for the creation of, and the issuance to
the Senior Note Trustee of, a new series of Bonds under the Original Indenture
as security for $425,000,000 aggregate principal amount of the Company’s 6.40%
Senior Secured Notes due 2017 (the “Senior Notes”) to be issued under the
Senior Note Indenture, to have the designation provided in Article I, Section 1
hereof (herein called the “New Bonds”), and the Original Indenture provides
that certain terms and provisions, as determined by the Board of Directors of
the Company, of the Bonds of any particular series may be expressed in and
provided by the execution of an appropriate supplemental indenture; and

 9
 

WHEREAS, the Original Indenture
provides that the Company and the Trustee may enter into indentures
supplemental to the Original Indenture specifically to convey, transfer and
assign to the Trustee and to subject to the lien of the Original Indenture
additional properties acquired by the Company; and

WHEREAS, the Company, in the
exercise of the powers and authority conferred upon and reserved to it under
the provisions of the Original Indenture and pursuant to appropriate
resolutions of the Board of Directors, has duly resolved and determined to
make, execute and deliver to the Trustee a Supplemental Indenture in the form hereof
for the purposes herein provided; and

WHEREAS, all conditions and
requirements necessary to make this Supplemental Indenture a valid, binding and
legal instrument have been done, performed and fulfilled and the execution and
delivery hereof have been in all respects duly authorized;

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

That, in consideration of the premises and of the mutual covenants
herein contained and of the acceptance of this trust by the Trustee and of the
sum of One Dollar duly paid by the Trustee to the Company at or before the time
of the execution of this Supplemental Indenture, and of other valuable
considerations, the receipt whereof is hereby acknowledged, and in order
further to secure the payment of the principal of and interest (and premium, if
any) on all Bonds at any time issued and outstanding under the Original
Indenture, according to their tenor and effect, and to secure the Senior Notes,
the Company has executed and delivered this Supplemental Indenture and has
granted, bargained, sold, warranted, aliened, remised, released, conveyed,
assigned, transferred, mortgaged, pledged, set over and confirmed and by these
presents does grant, bargain, sell, warrant, alien, remise, release, convey,
assign, transfer, mortgage, pledge, set over and confirm unto The Bank of New
York, as Trustee, and to its successors in trust under the Original Indenture
forever, all and singular the following described properties (in addition to
all other properties heretofore subjected to the lien of the Original Indenture
and not heretofore released from the lien thereof) - that is to say:

FIRST.

ALL power houses, plants, buildings and other structures, dams, dam
sites, substations, heating plants, gas works, holders and tanks, together with
all and singular the electric, heating, gas and mechanical appliances
appurtenant thereto of every nature whatsoever, now owned by the Company,
including all and singular the machinery, engines, boilers, furnaces,
generators, dynamos, turbines and motors, and all and every character of
mechanical appliance for generating or producing electricity, steam, gas and
other agencies for light, heat, cold, or power or other purposes, and all
transmission and distribution systems used for the transmission and
distribution of electricity, steam, gas and other agencies for light, heat,
cold or power or any other purpose whatsoever, whether underground or overhead,
surface or otherwise, now owned by the Company, including all poles, towers,
posts, wires, cables, conduits, manholes, mains, pipes, tubes, drains,
furnaces, switchboards, transformers, conductors, insulators, supports, meters,
lamps, fuses, junction boxes, regulator stations, and other electric, steam and
gas fixtures and apparatus; all of the aforementioned property being located in
the City of St. Louis, the counties of Adair, Audrain, Benton, Bollinger,
Boone, Butler, Caldwell, Callaway, Camden, Cape Girardeau, Clark, Clay,
Clinton, Cole, Cooper, Crawford, Daviess, Dunklin, Franklin, Gasconade, Howard,
Iron, Jefferson, Knox, Lewis, Lincoln, Livingston, Macon, Madison,

 10
 

Maries, Marion, Miller, Mississippi, Moniteau,
Montgomery, Morgan, New Madrid, Osage, Pemiscot, Perry, Pettis, Phelps, Pike,
Pulaski, Ralls, Randolph, Ray, Reynolds, Ripley, St. Charles, St. Francois,
Ste. Genevieve, St. Louis, Saline, Schuyler, Scott, Stoddard, Warren,
Washington, and Wayne, Missouri, the counties of Clay, Hancock, Henderson,
Madison, Marion, Perry, Piatt and St. Clair, Illinois, and the counties of Des
Moines, Henry, Johnson, Lee, and Washington, Iowa, upon real estate owned by
the Company, or occupied by it under rights to so occupy, which real estate is
described in, or added through the provisions of, the Indenture of Mortgage and
Deed of Trust dated June 15, 1937, the Supplemental Indentures dated May 1,
1941, March 17, 1942, April 13, 1945, April 27, 1945, October 1, 1945, April
11, 1947, April 13, 1949, September 13, 1950, December 1, 1950, September 20,
1951, May 1, 1952, March 1, 1954, May 1, 1955, August 31, 1955, April 1, 1956,
July 1, 1956, August 1, 1957, February 1, 1958, March 1, 1958, November 5,
1958, March 16, 1959, June 24, 1959, December 11, 1959, August 17, 1960,
September 1, 1960, October 24, 1960, June 30, 1961, July 1, 1961, August 9,
1962, September 30, 1963, November 1, 1963, March 12, 1965, April 1, 1965,
April 14, 1966, May 1, 1966, February 17, 1967, March 1, 1967, February 19,
1968, March 15, 1968, August 21, 1968, April 7, 1969, May 1, 1969, September
12, 1969, October 1, 1969, March 26, 1970, April 1, 1970, June 12, 1970,
January 1, 1971, April 1, 1971, September 15, 1971, December 3, 1973, February
1, 1974, April 25, 1974, February 3, 1975, March 1, 1975, June 11, 1975, May
12, 1976, August 16, 1976, April 26, 1977, October 15, 1977, November 7, 1977,
December 1, 1977, August 1, 1978, October 12, 1979, November 1, 1979, July 7,
1980, August 1, 1980, August 20, 1980, February 1, 1981, October 8, 1981,
August 27, 1982, September 1, 1982, December 15, 1982, March 1, 1983, June 21,
1984, December 12, 1984, June 11, 1985, March 1, 1986, May 1, 1986, May 1,
1990, December 1, 1991, December 4, 1991, January 1, 1992, September 30, 1992,
October 1, 1992, December 1, 1992, February 1, 1993, February 18, 1993, May 1,
1993, August 1, 1993, October 1, 1993, January 1, 1994, February 1, 2000,
August 15, 2002, March 5, 2003, April 1, 2003, July 15, 2003, October 1, 2003,
February 1, 2004 (eight separate supplemental indentures), May 1, 2004,
September 1, 2004, January 1, 2005, July 1, 2005, December 1, 2005 and this
Supplemental Indenture, or attached to or connected with such real estate or
transmission or distribution systems of the Company leading from or into such
real estate.

SECOND.

ALSO, (except as in the Original
Indenture expressly excepted) all franchises and all permits, ordinances,
easements, privileges, immunities and licenses, all rights to construct,
maintain and operate overhead, surface and underground systems for the
distribution and transmission of electricity, steam, gas or other agencies for
the supply to itself or others of light, heat, cold or power, all
rights-of-way, all waters, water rights and flowage rights and all grants and
consents, now owned or, subject to the provisions of Article XII of the
Original Indenture, which it may hereafter acquire.

ALSO, (except as in the Original
Indenture expressly excepted) all inventions, patent rights and licenses of
every kind now owned by the Company or, subject to the provisions of Article
XII of the Original Indenture, which it may hereafter acquire.

THIRD.

ALSO, subject to the provisions
of Article XII of the Original Indenture, all other property, real, personal
and mixed (except as therein or herein expressly excepted) of every nature and
kind and wheresoever situated now or hereafter possessed by or belonging to the

 11
 

Company, or to which it is now, or may at any time
hereafter be, in any manner entitled at law or in equity.

TO HAVE AND TO HOLD all said
properties, real, personal and mixed, mortgaged, pledged and conveyed by the
Company as aforesaid, or intended so to be, unto the Trustee and its successors
and assigns forever;

SUBJECT, HOWEVER, to the
exceptions and reservations and matters hereinabove recited, to existing
leases, to existing liens upon rights of way for transmission or distribution
line purposes, as defined in Article I of the Original Indenture, and any
extensions thereof, and subject to existing easements for streets, alleys,
highways, rights-of-way and railroad purposes over, upon and across certain of
the property hereinbefore described, and subject also to all the terms,
conditions, agreements, covenants, exceptions and reservations expressed or
provided in the deeds or other instruments respectively under and by virtue of
which the Company acquired the properties hereinabove described, and to undetermined
liens and charges, if any, incidental to construction or other existing
permitted liens as defined in Article I of the Original Indenture;

IN TRUST, NEVERTHELESS, upon the
terms and trusts in the Original Indenture and the indentures supplemental
thereto, including this Supplemental Indenture, set forth, for the equal and
proportionate benefit and security of all present and future holders of the
Bonds and coupons issued and to be issued thereunder, or any of them, without
preference of any of said Bonds and coupons of any particular series over the
Bonds and coupons of any other series, by reason of priority in the time of the
issue, sale or negotiation thereof, or by reason of the purpose of issue or
otherwise howsoever, except as otherwise provided in Section 2 of Article IV of
the Original Indenture.

AND IT IS HEREBY COVENANTED, DECLARED AND AGREED,
by and between the parties hereto, for the benefit of those who shall hold the
Bonds and coupons, or any of them to be issued under the Original Indenture, as
follows:

ARTICLE I

DESCRIPTION OF THE
NEW BONDS

Section 1.               There is
hereby created a new series of Bonds to be executed, authenticated and
delivered under and secured by the Original Indenture which shall, subject to
the provisions of Section 1 of Article II of the Original Indenture, be
designated as “First Mortgage Bonds, Senior Notes Series KK” (the “New Bonds”)
of the Company.  The New Bonds shall be
executed, authenticated and delivered in accordance with the provisions of, and
shall in all respects be subject to all of the terms, conditions and covenants
of, the Original Indenture and shall be issued to, and registered in the name
of, the Senior Note Trustee under the Senior Note Indenture to secure any and
all obligations of the Company under the Senior Notes and any other series of
senior notes from time to time outstanding under the Senior Note Indenture.

The New Bonds shall mature on June 15, 2017, and shall bear interest at
the rate per annum set forth in the form of the New Bond contained in Section 3
of this Article I, payable semi-annually on the 15th day of June and the 15th
day of December in each year, commencing on December 15, 2007, and at
maturity.  The New Bonds shall be payable
as to principal and interest in any coin or currency of the United States of
America which at the time of payment is

 12
 

legal tender for public and private debts, and shall
be payable, in immediately available funds, at the office of the Senior Note
Trustee.

Section 2.               The New
Bonds shall not be assignable or transferable except as permitted or required
by Section 4.04 of the Senior Note Indenture. 
Any such transfer shall be effected at the principal office or place of
business of the Trustee under the Original Indenture.  The New Bonds are exchangeable for the New
Bonds of other denominations, as in the Original Indenture provided, except
that payment of a service charge therefor will not be required by the Company.

Notwithstanding the provisions of Section 6 of Article II of the
Original Indenture, the New Bonds shall be dated the date of authentication and
shall bear interest from the interest payment date to which interest on the New
Bonds has been paid next preceding the date thereof, unless such date is an
interest payment date to which interest has been paid, in which case they shall
bear interest from the date thereof, or unless the date thereof is prior to
December 15, 2007, in which case they shall bear interest from June 15, 2007;
provided, however, that, subject to the provisions of this Section with respect
to failure by the Company to pay any interest on an interest payment date, the
holder of any New Bond dated after a record date (as hereinafter defined) for
the payment of interest and prior to the date of payment of such interest shall
not be entitled to payment of such interest and shall have no claim against the
Company with respect thereto.

The person in whose name any New Bond is registered at the close of
business on any record date with respect to any interest payment date shall be
entitled to receive the interest payable on such interest payment date
notwithstanding the cancellation of such Bond upon any transfer or exchange
thereof subsequent to the record date and prior to such interest payment date,
except if and to the extent the Company shall default in the payment of the
interest due on such interest payment date, in which case such defaulted
interest shall be paid to the person in whose name such Bond is registered on
the date of payment of such defaulted interest or on a subsequent record date
for such payment if one shall have been established as hereinafter
provided.  A subsequent record date may
be established by the Company by notice mailed to the holders of the New Bonds
not less than ten days preceding such record date, which record date shall be
not more than thirty days prior to the subsequent interest payment date.  The term “record date” as used in this
Section with respect to any regular interest payment date shall mean the June 1
or December 1, as the case may be, next preceding such interest payment date,
or, if such June 1 or December 1 shall be a legal holiday in the State of New
York or in the State of Missouri or a day on which banking institutions in the
Borough of Manhattan, The City of New York, or the City of St. Louis, Missouri,
are authorized by law to close, the next preceding day which shall not be a
legal holiday or a day on which such institutions are so authorized to close.

Upon any payment of the principal of, premium, if
any, and interest on, all or any portion of the Senior Notes, whether at
maturity or prior to maturity by redemption or otherwise or upon provision for
the payment thereof having been made in accordance with Section 5.01(a) of the
Senior Note Indenture, the New Bonds in a principal amount equal to the
principal amount of such Senior Notes shall, to the extent of such payment of
principal, premium, if any, and interest, be deemed paid and the obligation of
the Company thereunder to make such payment shall be discharged to such extent
and, in the case of the payment of principal (and premium, if any), such New
Bonds shall be surrendered to the Company for cancellation as provided in
Section 4.08 of the Senior Note Indenture. The Trustee may at any time and all
times conclusively assume that the obligation of the Company to make payments
with respect to the principal of, premium, if any, and interest on the Senior
Notes, so far as such payments at the time have become due, has been fully

 13
 

satisfied and discharged
pursuant to the foregoing sentence unless and until the Trustee shall have
received a written notice from the Senior Note Trustee signed by one of its
officers stating (i) the timely payment of principal, or premium, if any, or
interest on, the Senior Notes has not been made, (ii) that the Company is in
arrears as to the payments required to be made by it to the Senior Note Trustee
pursuant to the Senior Note Indenture, and (iii) the amount of the arrearage.

Section 3.               The New
Bonds and the Trustee’s certificate on the New Bonds shall be substantially in
the following forms respectively:

[FORM OF FACE OF NEW BOND]

	
  No.         

  	
   

  	
  $             

  

 

NOTWITHSTANDING ANY PROVISIONS HEREOF OR IN THE
ORIGINAL INDENTURE THIS BOND IS NOT ASSIGNABLE OR TRANSFERABLE EXCEPT AS
PERMITTED OR REQUIRED BY SECTION 4.04 OF THE INDENTURE DATED AS OF AUGUST 15,
2002, BETWEEN UNION ELECTRIC COMPANY AND THE BANK OF NEW YORK, AS TRUSTEE.

UNION ELECTRIC COMPANY

(Incorporated under the laws of the State of Missouri)

First Mortgage Bonds, Senior Notes Series KK

UNION ELECTRIC COMPANY, a
corporation organized and existing under the laws of the State of Missouri
(hereinafter called the “Company”, which term shall include any successor
corporation as defined in the Amended Indenture referred to on the reverse
hereof), for value received, hereby promises to pay to The Bank of New York, as
trustee under the Senior Note Indenture hereinafter referred to, or registered
assigns, the sum of                                                             
Dollars, on the 15th day of June, 2017 in any coin or currency of the United
States of America which at the time of payment is legal tender for public and
private debts, and to pay interest thereon, in like coin or currency, at the
rate of SIX AND FOUR TENTH per centum (6.40%) per annum, payable semi-annually,
on June 15 and December 15 in each year until maturity, commencing December 15,
2007, and at maturity or, if the Company shall default in the payment of the
principal hereof, until the Company’s obligation with respect to the payment of
such principal shall be discharged as provided in the Amended Indenture
referred to on the reverse hereof.  Such
interest shall be payable from the June 15 or December 15, as the case may be,
next preceding the date hereof to which interest has not been paid, unless the
date hereof is a June 15 or December 15 to which interest has been paid, in
which case from the date hereof, or unless the date hereof is prior to the
first payment of interest, in which case from June 15, 2007.  The interest so payable will be paid to the
person in whose name this Bond, or the Bond in exchange or substitution for
which this Bond shall have been issued, shall have been registered at the close
of business on the June 1 or December 1, as the case may be, next preceding the
date of payment, subject to certain exceptions set forth in the Amended
Indenture.  The principal of, premium, if any, and interest on, this
Bond are payable, in immediately available funds, at the office of the Senior
Note Trustee hereinafter referred to.

Under an Indenture dated as of August 15, 2002 (the “Senior Note
Indenture”) between the Company and The Bank of New York, as trustee (the “Senior
Note Trustee”), the Company will issue, concurrently with the issuance of this
Bond, an issue of notes under the Senior Note

 14
 

Indenture entitled “6.40% Senior Secured Notes due
2017” (the “Senior Notes”).  Pursuant to
Article IV of the Senior Note Indenture, this Bond is issued to the Senior Note
Trustee to secure any and all obligations of the Company under the Senior Notes
and any other series of senior notes from time to time outstanding under the
Senior Note Indenture.  Payment of
principal of, or premium, if any, or interest on, the Senior Notes shall
constitute payments on this Bond as further provided herein and in the
Supplemental Indenture dated June 1, 2007 pursuant to which this Bond has been
issued (the “Supplemental Indenture”).

Upon any payment of the principal of,
premium, if any, and interest on, all or any portion of the Senior
Notes, whether at maturity or prior to maturity by redemption or otherwise or
upon provision for the payment thereof having been made in accordance with
Section 5.01(a) of the Senior Note Indenture, a principal amount of this Bond
equal to the principal amount of such Senior Notes shall, to the extent of such
payment of principal, premium, if any, and interest, be deemed paid and the
obligation of the Company thereunder to make such payment shall be discharged
to such extent and, in the case of the payment of principal (and premium, if
any), such bonds shall be surrendered to the Company for cancellation as
provided in Section 4.08 of the Senior Note Indenture.  The Trustee (as hereinafter defined) may at any
time and all times conclusively assume that the obligation of the Company to
make payments with respect to the principal of,
premium, if any, and interest on, the Senior Notes, so far as such
payments at the time have become due, has been fully satisfied and discharged
pursuant to the foregoing sentence unless and until the Trustee shall have
received a written notice from the Senior Note Trustee signed by one of its
officers stating (i) that timely payment of principal of, premium, if any, or interest on, the
Senior Notes has not been made, (ii) that the Company is in arrears as to the
payments required to be made by it to the Senior Note Trustee pursuant to the
Senior Note Indenture, and (iii) the amount of the arrearage.

For purposes of Section 4.09 of the Senior Note
Indenture, this Bond shall be deemed to be the “Related Series of Senior Note
First Mortgage Bonds” in respect of the Senior Notes.

This Bond shall not be entitled to any benefit under the Amended
Indenture or any indenture supplemental thereto, or become valid or obligatory
for any purpose, until The Bank of New York, the Trustee under the Amended
Indenture, or a successor trustee thereto under the Amended Indenture, or an
agent therefor, shall have signed the form of certificate endorsed hereon.

The provisions of this Bond are continued on the reverse hereof and
such continued provisions shall for all purposes have the same effect as though
fully set forth at this place.

IN WITNESS WHEREOF, Union Electric Company has caused this Bond to be
signed in its name by its Chairman of the Board or President or a Vice
President by manual signature or a facsimile thereof, and its corporate seal
(or a facsimile thereof) to be hereto affixed and attested by its Secretary or
an Assistant Secretary by manual signature or a facsimile thereof.

 15

	
  

  	
  Dated,

  	
   

  
	
   

  	
   

  
	
   

  	
  UNION ELECTRIC COMPANY,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Vice President

  

 

[CORPORATE SEAL]

Attest:

Secretary

[FORM OF TRUSTEE’S CERTIFICATE]

This Bond is one of the Bonds, of the series
designated therein, described in the within-mentioned Amended Indenture and
Supplemental Indenture of June 1, 2007.

	
  

  	
  THE BANK OF NEW YORK, as

  
	
   

  	
  TRUSTEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Officer

  
					

[FORM OF REVERSE OF NEW
BOND]

This Bond is one of a
duly authorized issue of Bonds of the Company (herein called the “Bonds”), in
unlimited aggregate principal amount, of the series hereinafter specified, all
issued and to be issued under and equally secured by the Indenture of Mortgage
and Deed of Trust, dated June 15, 1937, executed by the Company to The Bank of
New York (successor trustee to Bank of America, National Association, formerly
Boatmen’s Trust Company), as trustee (herein called the “Trustee”), as amended
by indentures supplemental thereto dated May 1, 1941, April 1, 1971, February
1, 1974, July 7, 1980, February 1, 2000 and August 15, 2002, between the
Company and the Trustee (said mortgage and deed of trust, as so amended, being
herein called the “Amended Indenture”), to which Amended Indenture and all
indentures supplemental thereto reference is hereby made for a description of
the properties mortgaged and pledged, the nature and extent of the security,
the rights of the bearers or registered owners of the Bonds and of the Trustee
in respect thereto, and the terms and conditions upon which the Bonds are, and
are to be, secured.  To the extent
permitted by, and as provided in, the Amended Indenture, modifications or
alterations of the Amended Indenture, or of any indenture supplemental thereto,
and of the rights and obligations of the Company and of the holders of the
Bonds may be made with the consent of the Company by an affirmative vote of not
less than 60% in amount of the Bonds entitled to vote then outstanding, at a
meeting of Bondholders called and held as provided in the Amended Indenture,
and by an affirmative vote of not less than 60% in amount of the Bonds of any
series entitled to vote then outstanding and affected by such modification or
alteration, in case one or more but less than all of the series of Bonds then
outstanding under the Amended Indenture are so affected.  Additionally, the Company may amend the
Amended Indenture, as supplemented, by an appropriate written consent of not
less than 60% in aggregate principal

 16
 

amount of the Bonds outstanding (and, if the rights of
one or more, but less than all, series of Bonds then outstanding are to be
affected by action taken pursuant to such consent, then also by consent of the
holders of at least 60% in principal amount of each series of Bonds so to be
affected and outstanding hereunder) without a meeting of such Bondholders.  No such modification or alteration shall be
made which will affect the terms of payment of the principal of, or interest or
premium on, this Bond, which are unconditional. 
The Bonds may be issued in series, for various principal sums, may
mature at different times, may bear interest at different rates and may
otherwise vary as in the Amended Indenture provided.  This Bond is one of a series designated as
the “First Mortgage Bonds, Senior Notes Series KK” (herein called the “Bonds of
this Series”) of the Company, issued under and secured by the Amended Indenture
and described in the indenture (hereinafter called the “New Supplemental
Indenture”) dated June 1, 2007, between the Company and the Trustee,
supplemental to the Amended Indenture.

The Bonds of this Series are not entitled to the benefit of any
improvement, maintenance or analogous fund.

This Bond is not redeemable except on the date,
in the principal amount and for the redemption price that correspond to the
redemption date for, the principal amount to be redeemed of, and the redemption
price for, the Senior Notes, and except upon written demand of the Senior Note
Trustee following the occurrence of an event of default under the Senior Note
Indenture and the acceleration of the Senior Notes, as provided in Section 8.01
of the Senior Note Indenture.

In case an event of default, as defined in the Amended Indenture, shall
occur, the principal of all the Bonds at any such time outstanding under the
Amended Indenture may be declared or may become due and payable, upon the
conditions and in the manner and with the effect provided in the Amended
Indenture.  The Amended Indenture
provides that such declaration may in certain events be waived by the holders
of a majority in principal amount of the Bonds outstanding.

This Bond shall not be assignable or transferable except as permitted
or required by Section 4.04 of the Senior Note Indenture.  This Bond is exchangeable by the registered
owner hereof, in person or by duly authorized attorney, on the books of the
Company to be kept for that purpose at the office of the Company in the City of
St. Louis, Missouri, upon surrender and cancellation of this Bond and on
presentation of a duly executed written instrument of transfer, and thereupon a
new Bond or Bonds of the same series, of the same aggregate principal amount
and in authorized denominations will be issued to the transferee or transferees
in exchange herefor, without payment of any charge other than stamp taxes and
other governmental charges incident thereto; and this Bond with or without
others of like series, may in like manner be exchanged for one or more new
Bonds of the same series of other authorized denominations but of the same
aggregate principal amount; all subject to the terms and conditions set forth
in the Amended Indenture.

As provided in Section 4.11 of the Senior Note
Indenture, from and after the Release Date (as defined in the Senior Note
Indenture), the obligations of the Company with respect to this Bond shall be
deemed to be satisfied and discharged, this Bond shall cease to secure in any
manner any Senior Notes outstanding under the Senior Note Indenture, and,
pursuant to Section 4.08 of the Senior Note Indenture, the Senior Note Trustee
shall forthwith deliver this Bond to the Company for cancellation.

 17
 

No recourse shall be had for the payment of the principal of, premium, if any, or the interest on, this
Bond, or for any claim based hereon or on the Amended Indenture or any
indenture supplemental thereto, against any incorporator, or against any
stockholder, director or officer, past, present or future, of the Company, or
of any predecessor or successor corporation, either directly or through the
Company or any such predecessor or successor corporation, whether for amounts
unpaid on stock subscriptions or by virtue of any constitution, statute or rule
of law, or by the enforcement of any assessment or penalty or otherwise, all
such liability, whether at common law, in equity, by any constitution, statute
or otherwise, of incorporators, stockholders, directors or officers being
released by every owner hereof by the acceptance of this Bond and as part of
the consideration for the issue hereof, and being likewise released by the
terms of the Amended Indenture.

[END OF FORM OF REVERSE OF NEW BOND]

Section 4.               Until New
Bonds in definitive form are ready for delivery, the Company may execute, and
upon its request in writing the Trustee shall authenticate and deliver, in lieu
thereof, New Bonds in temporary form, as provided in Section 9 of Article II of
the Original Indenture.

ARTICLE II

ISSUE OF THE NEW
BONDS

Section 1.               The
principal amount of the New Bonds which may be authenticated and delivered
hereunder is limited to an amount equal to the principal amount of the Senior
Notes issued under the Senior Note Indenture and secured thereby and are
further subject to the limitations regarding the principal amount of Bonds
which may be issued under the Original Indenture set forth therein.

Section 2.               The New
Bonds in the aggregate principal amount of Four Hundred Twenty Five Million
Dollars ($425,000,000), being the initial issue of the New Bonds, may forthwith
at any time or from time to time be executed by the Company and delivered to
the Trustee and shall be authenticated by the Trustee and delivered (either
before or after the filing or recording hereof) to or upon the order of the
Company, upon compliance by the Company with the applicable provisions of
Article III and Article XVIII of the Original Indenture.

Section 3.               For
purposes of Section 4.09 of the Senior Note Indenture, the New Bonds shall be
deemed to be the “Related Series of Senior Notes First Mortgage Bonds” in
respect of the Senior Notes.

Section 4.               As
provided in Section 4.11 of the Senior Note Indenture, from and after the
Release Date (as defined in the Senior Note Indenture), the obligations of the
Company with respect to the New Bonds shall be deemed to be satisfied and
discharged, the New Bonds shall cease to secure in any manner any Senior Notes
outstanding under the Senior Note Indenture, and, pursuant to Section 4.08 of
the Senior Note Indenture, the Senior Note Trustee shall forthwith deliver the
New Bonds to the Company for cancellation.

 18
 

ARTICLE III

REDEMPTION OF THE
NEW BONDS

Section 1.               The New
Bonds are not redeemable except on the date, in the principal amount and for
the redemption price that correspond to the redemption date for, the principal
amount to be redeemed of, and the redemption price for, the Senior Notes, and
except as set forth in Section 2 of this Article III.

In the event that
the Company redeems any Senior Notes prior to maturity in accordance with the
provisions of the Senior Note Indenture, the Senior Note Trustee shall on the
same date deliver to the Company the New Bonds in principal amount
corresponding to the Senior Notes so redeemed, as provided in Section 4.08 of
the Senior Note Indenture.  The Company
agrees to give the Senior Note Trustee notice of any such redemption of the Senior
Notes on or before the date fixed for any such redemption.  There shall be no improvement, maintenance or
analogous fund for the New Bonds.

Section 2.               Upon the
occurrence of an Event of Default under the Senior Note Indenture and the
acceleration of the Senior Notes, the New Bonds shall be redeemable in whole
upon receipt by the Trustee of a written demand (hereinafter called a “Redemption
Demand”) from the Senior Note Trustee stating that there has occurred under the
Senior Note Indenture both an Event of Default and a declaration of
acceleration of payment of principal, accrued interest and premium, if any, on
the Senior Notes specifying the last date to which interest on such Senior
Notes has been paid (such date being hereinafter referred to as the “Initial
Interest Accrual Date”) and demanding redemption of the New Bonds.  The Company waives any right it may have to
prior notice of such redemption under the Original Indenture.  Upon surrender of the New Bonds by the Senior
Note Trustee to the Trustee, the New Bonds shall be redeemed at a redemption
price equal to the principal amount thereof plus accrued interest thereon from
the Initial Interest Accrual Date to the date of the Redemption Demand;
provided, however, that in the event of a rescission or annulment of
acceleration of the Senior Notes pursuant to the last paragraph of Section
8.01(a) of the Senior Note Indenture, then any Redemption Demand shall thereby
be deemed to be rescinded by the Senior Note Trustee although no such
rescission or annulment shall extend to or affect any subsequent default or
impair any right consequent thereon.

ARTICLE IV

COVENANTS

The Company hereby covenants, warrants and agrees;

Section 1.               That the
Company is lawfully seized and possessed of all of the mortgaged property
described in the granting clauses of this Supplemental Indenture; that it has
good right and lawful authority to mortgage the same as provided in this
Supplemental Indenture; and that such mortgaged property is, at the actual date
of the issue of the New Bonds, free and clear of any deed of trust, mortgage,
lien, charge or encumbrance thereon or affecting the title thereto prior to the
Original Indenture, except as set forth in the granting clauses of the Original
Indenture or this Supplemental Indenture.

 19
 

Section 2.               That, so
long as any of the New Bonds are outstanding, whenever any officers’
certificate is required to be filed or deposited with the Trustee pursuant to
Section 3(b) of Article III of the Original Indenture upon an application for
the authentication of additional Bonds pursuant to Article III of the Original
Indenture, such officers’ certificate shall include, in addition to the matters
required to be stated therein by said Section 3(b), the statement with respect
to the net earnings of the Company available for interest after property
retirement appropriations required by Section 2 of Article V of the
Supplemental Indenture of July 1, 1956.

Section 3.               That, so
long as any of the New Bonds are outstanding, the Company will not apply for the
authentication and delivery of additional Bonds pursuant to Section 4 of
Article III of the Original Indenture or the withdrawal of cash from the trust
estate or the reduction of the amount of cash required to be paid into the
trust estate or to satisfy the maintenance and improvement funds under any
provision of the Original Indenture or the Supplemental Indentures creating
prior series of Bonds, on the basis of the amount of $15,000,000 excluded from
net bondable value of property additions not subject to an unfunded prior lien
pursuant to Section 3 of Article V of the Supplemental Indenture of October 1,
1945, or on the basis of the amount of $7,500,000 excluded from net bondable
value of property additions not subject to an unfunded prior lien pursuant to
Section 3 of Article V of the Supplemental Indenture of July 1, 1956.

Section 4.               That, so
long as any of the New Bonds are outstanding, the Company will not issue or
permit to be issued any prior lien bonds secured by an unfunded prior lien in
addition to the prior lien bonds secured by such unfunded prior lien at the
time of first acquisition by the Company of property subject thereto (other
than in lieu of lost, stolen or mutilated bonds or on the exchange for bonds
already outstanding of an equal principal amount of other bonds of the same
issue and the same series, if any, and of the same maturity), except upon
compliance with the provisions of Section 16 of Article IV of the Original
Indenture, nor unless the net earnings of the Company available for interest
after property retirement appropriations (determined as provided in Section 2
of Article V of the Supplemental Indenture of July 1, 1956), for any twelve
consecutive calendar months during the period of fifteen calendar months
immediately preceding the first day of the month in which the additional prior
lien bonds are to be issued, have been, in the aggregate, equal to not less
than twice the annual interest charges on the indebtedness specified in
subparagraphs (i) and (ii) of paragraph (1) of Section 2(a) of said Article V;
provided that, if the application for the issue of such additional prior lien
bonds is upon the basis of payment at maturity of prior lien bonds theretofore
sold or otherwise disposed of or the redemption or purchase thereof after a
date two years prior to the date of maturity, the additional requirement
imposed by this Section 4 with respect to net earnings of the Company available
for interest after property retirement appropriations shall not apply.  Any officers’ certificate with respect to net
earnings of the Company, required to be filed with the Trustee as a condition
precedent to the issue of such additional prior lien bonds, shall include, in
addition to the matters otherwise required to be stated therein, the matters
required to be stated in an officers’ certificate pursuant to paragraphs (1)
and (2) of Section 2(a) of said Article V.

Section 5.               That, so
long as any of the New Bonds are outstanding, the Company will not acquire, by
purchase, merger or otherwise, any property subject to a lien or liens which
will on acquisition be an unfunded prior lien or prior liens, except upon
compliance with the provisions of Section 14 of Article IV of the Original
Indenture, nor unless the net earnings of such property available for interest
after property retirement appropriations (determined in the manner provided in
Section 2 of Article V of the Supplemental Indenture of July 1, 1956), for any
twelve consecutive calendar months during the period of fifteen calendar months

 20
 

immediately preceding the first day of the month in which the first
acquisition of property subject to such lien or liens occurs, have been, in the
aggregate, equal to not less than twice the amount of annual interest charges,
on all outstanding indebtedness secured by such lien or liens.  Any officers’ certificate with respect to net
earnings of such property, required to be filed with the Trustee as a condition
precedent to the acquisition of such property, shall include, in addition to
the matters otherwise required to be stated therein, the matters required to be
stated in an officers’ certificate pursuant to Section 2 of said Article V
applicable, however, only to the net earnings of such property and to the
indebtedness secured by such liens to which such property is subject.

ARTICLE
V

THE
TRUSTEE

The Trustee hereby accepts the trusts hereby declared and provided, and
agrees to perform the same upon the terms and conditions in the Original
Indenture and in this Supplemental Indenture set forth, and upon the following
terms and conditions:

The Trustee shall not be responsible in any manner whatsoever for or in
respect of the validity or sufficiency of this Supplemental Indenture or the
due execution hereof by the Company or for or in respect of the recitals contained
herein, all of which recitals are made by the Company solely.

ARTICLE
VI

MISCELLANEOUS
PROVISIONS.

Section 1.               Except as
otherwise defined herein, all terms contained in this Supplemental Indenture
shall, for all purposes thereof, have the meanings given to such terms in
Article I of the Original Indenture.

Section 2.               This
Supplemental Indenture may be simultaneously executed in any number of
counterparts, each of which when so executed shall be deemed to be an original;
but such counterparts shall together constitute but one and the same
instrument.

 21
 

IN WITNESS WHEREOF, said Union Electric Company has caused this
Supplemental Indenture to be executed on its behalf by its Chairman of the
Board or President or one of its Vice Presidents and its corporate seal to be
hereto affixed and said seal and this Supplemental Indenture to be attested by
its Secretary or one of its Assistant Secretaries; and said The Bank of New
York, in evidence of its acceptance of the trust hereby created, has caused
this Supplemental Indenture to be executed on its behalf by its President or
one of its Vice Presidents, and its corporate seal to be hereto affixed and
said seal and this Supplemental Indenture to be attested by its Secretary, or
one of its Assistant Secretaries; all as of the 1st day of June, Two thousand
and seven.

	
  Attested:

  	
   

  	
  UNION
  ELECTRIC COMPANY,

  
	
   

  	
   

  	
  1901 Chouteau
  Avenue

  
	
   

  	
   

  	
  St. Louis,
  Missouri 63103

  

 

	
  /s/ G.L. Waters

  	
   

  	
  By:

  	
  /s/ Jerre E. Birdsong

  	
   

  
	
   

  	
  G. L. Waters

  	
   

  	
  Name: Jerre E. Birdsong

  
	
   

  	
  Assistant Secretary

  	
   

  	
  Title: Vice President and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signed, sealed and delivered by

  	
   

  	
   

  
	
   

  	
  UNION ELECTRIC COMPANY

  	
   

  	
   

  
	
   

  	
  in the presence of:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Wayne Forbes

  	
   

  	
   

  
	
   

  	
  Wayne Forbes

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Carol A. Head

  	
   

  	
   

  
	
   

  	
  Carol A. Head

  	
   

  	
   

  
	
   

  	
  As Witnesses

  	
   

  	
   

  
							

 

 22
 

 

	
  Attested:

  	
   

  	
  THE BANK OF NEW YORK,

  
	
   

  	
   

  	
   

  

 

	
  /s/ Beata Hryniewicka

  	
   

  	
  By:

  	
  /s/ Robert A. Massimillo

  	
   

  
	
  Beata Hryniewicka

  	
   

  	
  Name: Robert A. Massimillo

  
	
  Assistant Vice President

  	
   

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signed, sealed and delivered by

  	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK

  	
   

  	
   

  
	
   

  	
  in the presence of:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Julie Salovitch-Miller

  	
   

  	
   

  
	
   

  	
  Julie Salovitch-Miller

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Jeremy Finkelstein

  	
   

  	
   

  
	
   

  	
  Jeremy Finkelstein

  	
   

  	
   

  
	
   

  	
  As Witnesses

  	
   

  	
   

  
							

 

 23
 

 

	
  STATE OF MISSOURI,

  	
  }

  
	
   

  	
  } SS.:

  
	
  CITY OF ST. LOUIS,

  	
  }

  

 

On this 12th day of June 2007, before me appeared JERRE E.
BIRDSONG, to me personally known, who, being by me duly sworn, did
say that he is a Vice President and Treasurer of UNION
ELECTRIC COMPANY, a corporation, and that the seal affixed to the
foregoing instrument is the corporate seal of said corporation, and that said
instrument was signed and sealed in behalf of said corporation by authority of
its Board of Directors, and said JERRE E. BIRDSONG
acknowledged said instrument to be the free act and deed of said corporation.

IN TESTIMONY WHEREOF, I have
hereto set my hand and affixed my official seal at my office, in the City and
State aforesaid, the day and year last above written.

	
  

  	
   

  	
                     /s/
  Donna S. Bilkey

  
	
   

  	
   

  	
  Donna S Bilkey –
  Notary Public

  
	
   

  	
   

  	
  Notary Seal,
  State of

  
	
   

  	
   

  	
  Missouri,
  Jefferson County

  
	
   

  	
   

  	
  Commission
  #06900096

  
	
   

  	
   

  	
  My Commission
  Expires 6/13/2010

  

 

 24
 

 

	
  STATE OF NEW YORK,

  	
  }

  
	
   

  	
  } SS.:

  
	
  CITY OF NEW YORK,

  	
  }

  

 

On this 12th day of June 2007, before me appeared ROBERT A.
MASSIMILLO, to me personally known, who, being by me duly sworn, did
say that he is a Vice President of THE BANK OF NEW YORK,
a corporation, and that the seal affixed to the foregoing instrument is the
corporate seal of said corporation, and that said instrument was signed and
sealed in behalf of said corporation, as the trustee thereunder by authority of
its Board of Directors, and said ROBERT A. MASSIMILLO, acknowledged
said instrument to be the free act and deed of said corporation as the trustee
under said instrument.

IN TESTIMONY WHEREOF, I have
hereto set my hand and affixed my official seal at my office, in the City and
State aforesaid, the day and year last above written.

	
  

  	
   

  	
                       /s/
  Cheryl L. Clarke

  	
   

  
	
   

  	
   

  	
  CHERYL L. CLARKE

  	
   

  
	
   

  	
   

  	
  Notary Public,
  State of New York

  	
   

  
	
   

  	
   

  	
  No. 01CL5057121

  	
   

  
	
   

  	
   

  	
  Qualified in New
  York County

  	
   

  
	
   

  	
   

  	
  Certificate
  Filed in New York County

  	
   

  
	
   

  	
   

  	
  Commission
  Expires May 11, 2010

  	
   

  

 

 25Exhibit
4.1

MEDICALCV,
INC.

SECURED
NOTE PURCHASE AGREEMENT

June 15, 2007

Tabel of Contents

	
  

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  SECTION 1. AGREEMENT TO SELL AND PURCHASE

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
   

  	
  1.1 Authorization of Notes and Warrants

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.2 Sale and Purchase

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2. CLOSING, DELIVERY AND PAYMENT

  	
   

  	
  2

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1 The Closing

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.2 Closing Deliveries

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3. WARRANT RIGHTS

  	
   

  	
  2

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1 Issuance of Warrants

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4. SECURITY AND EVENTS OF DEFAULT

  	
   

  	
  3

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1 Security

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.2 Events of Default

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.3 Rights and Remedies

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE
  COMPANY

  	
   

  	
  4

  
	
   

  	
   

  	
   

  
	
   

  	
  5.1 Organization and Standing

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.2 Corporate Power; Authority

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.3 Subsidiaries

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.4 Capitalization

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.5 SEC Reporting

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.6 Financial Statements

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.7 Changes

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.8 Material Obligations

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.9 Intellectual Property Rights

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.10 Title to Properties and Assets

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.11 No Defaults

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.12 No Conflict

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.13 Litigation

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.14 Tax Returns and Payments

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.15 Transactions with Affiliates and Employees

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.16 Sarbanes-Oxley; Internal Accounting Controls

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.17 Environmental and Safety Laws

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.18 Condition of Collateral

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.19 Licenses

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.20 Insurance

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.21 Labor Relations

  	
   

  	
  11

  

 

 i
 

 

	
  

  	
  5.22 Consent

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.23 Offering

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.24 Brokers or Finders

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.25 Registration and Listing Requirements

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.26 Correctness of Representations

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.27 Disclosure

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6. REPRESENTATIONS AND WARRANTIES OF
  THE HOLDERS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  6.1 Organization; Authority

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.2 Investment Representations

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.3 Correctness of Representations

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7. CONDITIONS TO CLOSING

  	
   

  	
  14

  
	
   

  	
   

  	
   

  
	
   

  	
  7.1 Conditions to Holders’ Obligations at the
  Closing

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.2 Conditions to Obligations of the Company

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8. REGISTRATION RIGHTS

  	
   

  	
  15

  
	
   

  	
   

  	
   

  
	
   

  	
  8.1 Registration Rights

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.2 Registration Procedures

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.3 Discontinued Disposition

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.4 Non-Registration Event

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.5 Registration Expenses

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.6 Indemnification

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.7 Information from Holder

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.8 Rule 144 Reporting

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9. MISCELLANEOUS

  	
   

  	
  19

  
	
   

  	
   

  	
   

  
	
   

  	
  9.1 Payment of Fees

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.2 Governing Law; Venue

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.3 Survival

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.4 Successors and Assigns

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.5 Entire Agreement

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.6 Severability

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.7 Amendment and Waiver

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.8 Delays or Omissions

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.9 Notices

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.10 Titles and Subtitles; Counterparts

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.11 Exculpation among Holders

  	
   

  	
  21

  
					

 

 ii

SECURED NOTE PURCHASE AGREEMENT

THIS SECURED NOTE PURCHASE
AGREEMENT (the “Agreement”) is
entered into effective as of the 15th day of June, 2007 (the “Effective Date”), by
and among MedicalCV, Inc., a
Minnesota corporation (the “Company”)
and the holders listed under “Second Closing” on Schedule 1.0 hereto (each a “Holder”
and collectively the “Holders”),
as part of the second closing of the 2007 Secured Notes.

RECITALS:

WHEREAS,
the Company has
issued and sold to Whitebox Ready Ltd. (“Whitebox”)
a Note in the principal amount set forth opposite Whitebox’s name under “First
Closing” on Schedule 1.0, pursuant to a Secured Note Purchase Agreement dated
April 20, 2007 (the “First Closing”); and

WHEREAS, the Company proposes to authorize the sale
and issuance of Secured Promissory Notes in the form attached hereto as Exhibit
A (each a “Note”
and collectively the “Notes”);
and

WHEREAS, the
Holders desire to purchase, severally and not jointly, the Notes and the
Company desires to issue and sell such Notes to the Holders, on the terms and
conditions set forth herein; and

WHEREAS, in connection with the sale and issuance of the Notes, the Company also
proposes to issue to the Holders thereof warrants to purchase shares of the
Company’s Common Stock, par value $0.01 per share (each a “Warrant” and
collectively the “Warrants”).

NOW, THEREFORE, in consideration of the foregoing recitals
and the mutual promises hereinafter set forth, the parties hereto agree as
follows:

SECTION 1.                            AGREEMENT
TO SELL AND PURCHASE

1.1                          Authorization of Notes and
Warrants

On
or prior to the closing under this Agreement (the “Closing”), the Company shall have
authorized the sale and issuance of the Notes and Warrants to the Holders.  The Notes will be of one series designated
the “2007 Secured Notes.”

1.2                        Sale and Purchase

(a) 
Closing.  Subject to the terms and conditions hereof,
at the Closing, the Company agrees to issue and sell to each Holder, severally
and not jointly, and each Holder agrees to purchase from the Company, severally
and not jointly, a Note in the Principal Amount set forth opposite each Holder’s
name under “Second Closing” on Schedule 1.0 (for each Holder, the “Principal Amount”).

(b) 
Restrictive Covenant.  The Company covenants and agrees with the
Holders that it will not issue more than an aggregate of $12,500,000 principal
amount of 2007 Secured Notes, which shall include the stated Principal Amount
of all Notes under this Agreement and the stated Principal Amount of all Notes
issued to Whitebox pursuant to the Secured Note Purchase Agreement dated April
20, 2007, and provided that such Notes may not be issued on terms and
conditions more favorable than set forth in this Agreement.  The Company further agrees to provide Whitebox
with a minimum of two 

 1
 

(2) business days prior written notice of any such issuance of 2007
Secured Notes.

SECTION 2.                            CLOSING,
DELIVERY AND PAYMENT

2.1                            The Closing

The Closing shall take place at 10:00 a.m.
local time on the date hereof, at the offices of Fulbright &
Jaworski L.L.P. in Minneapolis, Minnesota, or at such other time or place
as the Company and the Holders may mutually agree.

2.2                            Closing Deliveries

At the Closing, subject to the terms and conditions
hereof, the Company and the Holders, as applicable, shall execute this
Agreement and the Company shall deliver to each Holder a Note in the form of Exhibit
A attached hereto against delivery to the Company by such Holder of the
stated principal amount of such Holder’s Note, payable to the Company by wire
transfer of immediately available funds to the bank account designated in wire
transfer instructions provided by the Company. 
At that time, the parties shall also execute (i) the Security Agreement
and the related UCC Financing Statement in the forms attached hereto as Exhibit
C (the “Security
Documents”); and (ii) the Closing Warrant described in Section
3.1(a) below. Collectively with this Agreement, the Security Documents, Notes,
and Warrants, together with the exhibits, Schedules (as defined below), and all
other documents required to be delivered in connection herewith and therewith,
shall be referred to collectively as the “Transaction Agreements.”

SECTION 3.                            
WARRANT RIGHTS

3.1                            Issuance of Warrants

(a)  At the Closing, the Company will issue to the
each Holder purchasing Notes in such Closing a warrant in the form attached
hereto as Exhibit B1 entitling the Holder to purchase such number of shares of
the Company’s Common Stock that is equal to the quotient obtained by dividing
(i) 60% of the stated Principal Amount of such Holder’s Note by (ii) $4.00 (the
“Closing Warrants”).

(b)  During the initial twelve (12) months
following the Effective Date, interest on the Notes will accrue and be added to
the Principal Amount of the Notes. 
Within thirty (30) days following the end of such 12-month period, the
Company shall issue to each Holder a warrant in the form attached hereto as
Exhibit B2 entitling such Holder to purchase such number of shares of the
Company’s Common Stock that is equal to the quotient obtained by dividing (i)
60% of the accrued interest on such Holder’s Note for the initial 12-month
period by (ii) $4.00 (the “Initial
Interest Warrant”).

(c)  Following the initial 12-month period, the
Company will have the option to (i) pay the accrued interest on the Notes
quarterly in arrears or (ii) allow the interest for such quarter to continue to
accrue and be added to the Principal Amount of the Note.  Any payment of accrued interest must be made
to the Holders on or before the 15th day following
the end of such quarter.  If the Company
elects to have the quarterly interest added to the Principal Amount of the
Notes, then the Company shall issue to each Holder, within thirty (30) days
following the end of such quarter, a warrant in the form attached hereto as
Exhibit B2 entitling such Holder to purchase such number of shares of the
Company’s Common Stock that is equal to the quotient obtained by dividing (i)
60% of the accrued interest on such Holder’s Note for the quarter by (ii) $4.00
(the “Quarterly Interest
Warrants”).  In each instance,
the option elected by the Company under this Section 3.1(c) shall apply equally
to all the Notes outstanding at the time of such election.

 2
 

SECTION 4.                            SECURITY
AND EVENTS OF DEFAULT

4.1                          Security

In accordance with the terms and conditions set forth in the Security
Agreement attached hereto as Exhibit C (the “Security Agreement”),
the Notes and payment of all principal, interest and other sums thereunder,
shall be secured by a first priority security interest.  The security interest granted pursuant to
this Agreement and the Security Agreement, shall be in all of the Company’s
right, title and interest in and to all of the Company’s assets, as more
particularly described in the Security Agreement, whether now owned or
hereafter acquired while any of the Notes are outstanding (the “Collateral”).

The Collateral shall include (i) all substitutes and replacements for
and proceeds of any and all of the Collateral, and in the case of all tangible
Collateral, all accessions, accessories, attachments, parts, equipment and
repairs now or hereafter attached or affixed to or use in connection with any
such goods and (ii) all warehouse receipts, bills of lading and other documents
of title now or hereafter covering such goods. receipts, bills of lading and
other documents of title now or hereafter covering such goods.

4.2                          Events of Default

Each of the following will
constitute an “Event of
Default” under the Notes:

(a)                                  Failure of the Company to pay the principal
or interest on any of the Notes when due and continuation of such failure for a
period of five (5) days following written notice from any of the Holders;

(b)                                  Failure of the Company to perform or observe
any material covenant or agreement as required by the Transaction Agreements
and continuation of such failure for a period of ten (10) days following
written notice from any of the Holders;

(c)                                  If any of the representations and warranties
of the Company made in this Agreement are proven not to have been true and
correct in any material respect as of the date of this Agreement;

(d)                                  The Company shall (i) apply for or
consent to the appointment of a receiver, trustee, liquidator or custodian of
itself or of all or a substantial part of its property, (ii) be unable, or
admit in writing its inability, to pay its debts generally as they mature,
(iii) make a general assignment for the benefit of its or any of its
creditors, (iv) be dissolved or liquidated in full or in part,
(v) commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
consent to any such relief or to the appointment of or taking possession of its
property by any official in an involuntary case or other proceeding commenced
against it or (vi) take any action for the purpose of effecting any of the
foregoing; or

(e)                                  Proceedings for the appointment of a
receiver, trustee, liquidator or custodian of the Company or of all or a
substantial part of the property thereof, or an involuntary case or other
proceedings seeking liquidation, reorganization or other relief with respect to
the Company or its debts under any bankruptcy, insolvency or other similar law
or hereafter in effect shall be commenced and an order for relief entered or
such proceeding shall not be dismissed or discharged within thirty (30) days of
commencement.

 3
 

4.3                          Rights and Remedies 

If any Event of Default occurs, subject to the terms and conditions of
the Security Agreement, any or all of the Holders may exercise any or all of
the following rights and remedies, which shall be cumulative:

(a)                                  Declare such Holder’s Note and all
accrued but unpaid interest thereon to be immediately due and payable, and upon
such declaration such Note and interest thereon shall immediately be due and
payable, without presentment, demand, protest or any notice of any kind, all of
which are expressly waived; and

(b)                                  Exercise any and all other rights and
remedies available to such Holder under the Note, the Security Agreement, and
otherwise available to the Holder at law and in equity.

SECTION 5.                            REPRESENTATIONS
AND WARRANTIES OF THE COMPANY

Except
as set forth on the schedules delivered separately to the Holders in connection
with this Agreement (the “Schedules”),
the Company represents and warrants to each Holder as of the Closing Date as
follows:

5.1                             Organization and Standing

The Company is a corporation duly organized and existing under, and by
virtue of, the laws of the State of Minnesota and is in good standing under
such laws.  The Company has the requisite
corporate power and authority to own and operate the Company’s properties and
assets, and to carry on the Company’s business as presently conducted.  The Company is presently qualified to do
business as a foreign corporation in each jurisdiction where the failure to be
so qualified would have a Material Adverse Effect. No proceeding has been
instituted in any jurisdiction revoking, limiting or curtailing, or seeking to
revoke, limit or curtail, such power and authority or qualification.  “Material Adverse Effect” shall mean any
event, happening, occurrence or development that, individually or in the
aggregate, whether or not arising in the ordinary course of business, could
reasonably be expected to have a material adverse effect on the Company’s
business, operations, properties, prospects, assets, liabilities or condition
(financial or otherwise).

5.2                               Corporate Power; Authority

The Company has all requisite legal and corporate power and authority
to execute and deliver the Transaction Agreements, to sell and issue the Notes
and Warrants in accordance with this Agreement, to issue shares of Common Stock
issuable upon exercise of the Warrants ( the “Warrant Shares”), and to carry
out and perform the Company’s obligations under the terms of the Transaction
Agreements.  Each Transaction Agreement
to which it is a party has been duly executed by the Company, and when
delivered by the Company in accordance with the terms hereof, will constitute
the valid and legally binding obligation of the Company, enforceable against it
in accordance with its terms, except (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’
rights generally, (ii) as limited by laws relating to the availability of
specific performance, injunctive relief or other equitable remedies and (iii)
insofar as indemnification and contribution provisions may be limited by
applicable law.

 4
 

5.3                               Subsidiaries

The Company does not own or control, directly or indirectly, any
interest in any corporation, partnership, limited liability company,
association or other business entity.

5.4                               Capitalization

(a)  The
authorized and issued capital stock of the Company, immediately prior to the
Second Closing, is set forth in the attached Schedule 5.4(a).  All issued and outstanding shares of the
Company’s capital stock (i) have been duly authorized and validly issued, (ii)
are fully paid and nonassessable and (iii) were issued in compliance with all
applicable state and federal laws concerning the issuance of securities.

(b)                                Schedule 5.4(b) sets forth all of the Company’s capital
stock that, as of the date of the Second Closing, has been reserved for
issuance pursuant to any agreement, option plan or otherwise, which, when
issued, will have been duly authorized, validly issued, fully paid and
nonassessable, and will be issued in compliance with all applicable state and
federal laws concerning the issuance of securities.

(c)                                  The Warrant Shares issuable upon exercise of
the Warrants have been duly and validly reserved and, when issued in compliance
with the provisions of this Agreement, the Warrant, and applicable law, will be
validly issued, fully paid, and non-assessable. 
The Warrant Shares will be free of any liens or encumbrances, other than
any liens or encumbrances created by or imposed upon a Holder with respect to
such Holder’s Warrant Shares; provided, however, that the Warrant Shares are
subject to transfer restrictions under state and/or federal securities laws and
as set forth in the Transaction Agreements. 
Except as set forth on Schedule 5.4(c), the Warrants and Warrant
Shares are not subject to any preemptive rights or first refusal rights.   Except
as set forth on Schedule 5.4(c), neither the offer nor issuance of the
Warrants or the Warrant Shares constitutes an event under any anti-dilution
provisions of any securities issued or issuable by the Company which will
either increase the number of shares issuable pursuant to such provisions or
decrease the consideration per share to be received by the Company pursuant to
such provisions.

(d)                                  Except as set forth on Schedule 5.4(d),
there are no outstanding agreements or preemptive or similar rights affecting
the Company’s capital stock and no outstanding rights, warrants or options to
acquire, or instruments convertible into or exchangeable for, or agreements or
understandings with respect to the sale or issuance of any shares of capital
stock of the Company.

(e)                                Except as set forth on Schedule 5.4(e),
there are no shareholder agreements, voting agreements, proxy rights or other
similar agreements with respect to the Company’s capital stock to which the
Company is a party or, to the Company’s knowledge, between or among any of the
Company’s shareholders.

5.5                               SEC Reporting

The Company has timely filed all reports, forms, statements, schedules,
exhibits and other documents, and any amendments thereto, as required to be
filed by it under the Securities Act of 1933, as amended (the “Securities Act”) and
the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
including pursuant to Section 13(a) or 15(d) thereof, for the 12 months
preceding the date of this Agreement (collectively, together with any and all
documents incorporated by reference therein, the “SEC Filings”), or has requested and
obtained a valid extension of such time of filing and subsequently filed any
such SEC Filing prior to the expiration of such extension.  As of their
respective filing dates, the 

 5
 

SEC
Filings complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations promulgated
by the Securities and Exchange Commission (the “Commission”) thereunder, as applicable,
and none of the SEC Filings contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.

5.6                             Financial Statements

(a)                                  The Company’s: (i) Annual Report on
Form 10-KSB for the year ended April 30, 2006; and (ii) Quarterly
Reports on Form 10-QSB for the quarters ended July 31, 2006, October 31, 2006
and January 31, 2007 (with January 31, 2007 being referred to herein as (the “Balance Sheet
Date”) (collectively,
the “Financial
Statements”)), present
fairly the financial position of the Company as of such dates and the results
of operations for the periods covered thereby (subject, in the case of the
interim financial statements, to year-end audit adjustments) and have been
prepared in accordance with generally accepted accounting principles
consistently applied (“GAAP”),
except as may be otherwise specified in such Financial Statements or the notes
thereto.  Specifically, but not by way of
limitation, (x) the balance sheets or notes thereto disclose all of the debts,
liabilities and obligations of any nature of the Company properly accrued  at each of the Annual and Quarterly Report
dates and at the Balance Sheet Date which, individually or in the aggregate,
are material and which in accordance with GAAP would be required to be
disclosed in such balance sheets, and the omission of which would, in the
aggregate, have a Material Adverse Effect on the Company; (y) except as set
forth on Schedule 5.6(a), the Company does not have any off-balance
sheet arrangements or transactions; and (z) the Financial Statements include
appropriate reserves for all taxes and other liabilities accrued at such date
but not yet payable.

5.7                               Changes.

Except as set forth on Schedule 5.7 or disclosed in an
appropriate SEC Filing, since the Balance Sheet Date, the Company has not:

(a)                                  suffered any change in  the Company’s assets, liabilities, financial
condition, or operating results, except for changes in the ordinary course of
business, none of which individually or in the aggregate, have had or are
likely to result in a Material Adverse Effect;

(b)                                  suffered any damage, destruction, or loss
(whether or not covered by insurance) that, in any case or in the aggregate,
have had a Material Adverse Effect;

(c)                                  agreed to waive or actually waived any
valuable right or any material debt owed to the Company;

(d)                                  suffered any change or amendment to any
agreement by which the Company or any of the Company’s assets or properties are
bound or subject, except to the extent that any such change or amendment has
not had, or will not likely have, a Material Adverse Effect;

(e)                                  made any loans to the Company’s employees,
officers or directors, or to any members of their respective immediate
families, other than travel advances and other advances made in the ordinary
course of the Company’s business;

(f)                                    received any Company officer’s resignation or
terminated any Company officer;

 6
 

(g)                                 made any material change in any compensation
arrangement or agreement with any employee;

(h)                                 made any declaration or payment of any
dividend or other distribution;

(i)                                    received notice or become aware that the
Company has lost a customer or that any Company customer has canceled a
material order, which loss or cancellation would constitute a Material Adverse
Effect; or

(j)                                    suffered any change or amendment to any
agreement relating to a change in the contingent obligations of the Company;

(k)                                received notice of any labor organization
activity related to the Company;

(l)                                    incurred any debt obligation or liability,
including any debts assumed or guaranteed by the Company, except those for
immaterial amounts and for current liabilities incurred in the ordinary course
of business;

(m)                              made any sale, assignment or transfer of any
patents, trademarks, copyrights, trade secrets or other intangible assets;

(n)                                 issued or sold any shares of capital stock or
other securities or granted any options, warrants or other purchase rights with
respect thereto other than as contemplated by this Agreement;

(o)                                  suffered any other event or condition of any
character that has had, or could be reasonably expected to have, a Material
Adverse Effect; or

(p)                                made any arrangement or commitment by the
Company to do any of the acts described in paragraphs (a) through (o) above.

5.8                               Material Obligations

The Company has no liabilities or obligations (whether absolute,
accrued, contingent or otherwise), except for such liabilities or obligations
specifically reflected in balance sheets or notes thereto in the Financial
Statements and current liabilities incurred in the ordinary course of business
since the Balance Sheet Date, which are not, either in any individual case or
in the aggregate, material to the Company.

5.9                               Intellectual Property Rights.

(a)                                  The Company owns or possesses sufficient
legal rights to all patents, patent rights, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, trade secrets,
inventions, know-how, information, processes, licenses and other similar
proprietary rights necessary or material for use in connection with its
business as described in its SEC Filings (the “Intellectual Property Rights”) and which the failure to so possess could
have a Material Adverse Effect.  Except
as disclosed in the Company’s SEC Filings, the Company has no knowledge nor has
it received notice that the conduct of the Company’s business as presently
conducted materially conflicts with or infringes upon the Intellectual Property
Rights of any other person or entity. 
The Company is not obligated to make any payments by way of royalties,
fees, or otherwise to any owner of, licensor of, or claimant to any
Intellectual Property Rights with respect to the use of such Intellectual
Property Rights in 

 7
 

connection with the conduct of the Company’s business as presently
conducted.  Except as disclosed in the
Company’s SEC Filings, there are no material agreements, understandings, instruments,
contracts, judgments, orders, or decrees to which the Company is a party or by
which the Company is bound that involve indemnification by the Company with
respect to infringement of Intellectual Property Rights (other than
indemnification obligations arising from purchase or sale of goods and services
or license and other agreements entered into in the ordinary course of
business).

(b)                                  With respect to the Company’s Intellectual
Property Rights, each Company employee having access to or knowledge of the
Company Intellectual Property Rights has executed a confidentiality,
non-competition and invention assignment agreement, substantially in the
form(s) made available to the Holders (each, a “Confidentiality Agreement”).  No
employee has excluded from such employee’s Confidentiality Agreement any works
or inventions that were made by such employee before such person’s employment
or engagement with the Company and that are also relevant to the Company’s
business as currently conducted or as proposed to be conducted.  Each Company consultant who has had access to
the Company’s Intellectual Property Rights has entered into an agreement
containing appropriate confidentiality, non-competition and invention
assignment provisions.

5.10                        Title to Properties and Assets

The Company has good and marketable title to all of the Company’s
properties and assets, and the Company has good title to all of the Company’s
leasehold interests, in each case subject to no material mortgage, pledge,
lien, lease, or encumbrance, except for (a) a first priority security interest
in and to all of the Company’s assets granted in favor of Whitebox pursuant to
that certain Security Agreement dated April 20, 2007, (b) liens for
current taxes not yet due and payable, (c) liens imposed by law and
incurred in the ordinary course of business for obligations not past due,
(d) liens in respect of pledges or deposits under workers’ compensation
laws or similar legislation, and (e) possible minor liens, encumbrances,
and title defects that do not in any case have a Material Adverse Effect on the
value of the property subject thereto or have a Material Adverse Effect on the
Company’s operations and that have not arisen other than in the ordinary course
of the Company’s business.

5.11                        No Defaults

The Company is not in violation of its Articles of Incorporation or
Bylaws, each amended as to date.  The
Company is not (i) in default under or in violation of any other agreement or
instrument to which it is a party or by which it or any of its properties are
bound or affected, which default or violation would have a Material Adverse
Effect on the Company, (ii) in default with respect to any order of any court,
arbitrator or governmental body or subject to or party to any order of any
court or governmental authority arising out of any action, suit or proceeding
under any statute or other law respecting antitrust, monopoly, restraint of
trade, unfair competition or similar matters, or (iii) in violation of any
statute, rule or regulation of any governmental authority which violation would
have a Material Adverse Effect on the Company.

5.12                        No Conflict

The execution, delivery and performance of the Transaction Agreements
by the Company, the issuance and sale of the Notes, Warrants and Warrant
Shares, if issued, and the consummation by the Company of the other
transactions contemplated hereby and thereby do not and will not (i) conflict
with or violate any provision of the Company’s articles of incorporation,
bylaws or other organizational or charter documents, or (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, result in the creation of any lien upon any of
the properties or assets of the Company or any Subsidiary, or give to others any
rights of termination, amendment, 

 8
 

acceleration
or cancellation (with or without notice, lapse of time or both) of, any
agreement, credit facility, debt or other instrument (evidencing a Company debt
or otherwise) or other understanding to which the Company is a party or by
which any property or asset of the Company is bound or affected, or (iii)
conflict with or result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company is subject (including federal and state
securities laws and regulations), or by which any property or asset of the
Company is bound or affected; except in the case of each of clauses (ii) and
(iii), such as could not have or reasonably be expected to result in a Material
Adverse Effect.

5.13                        Litigation

Except as disclosed in the Company’s SEC Filings, there is no action,
suit, proceeding or investigation pending or currently threatened in writing
against the Company that questions the Company’s Intellectual Property Rights,
any Material Contracts or the right of the Company to enter into any of such
contracts, or to consummate the transactions contemplated by the Transaction
Agreements, or which could be expected to result, either individually or in the
aggregate, in any Material Adverse Effect or any change in the current equity
ownership of the Company, nor is the Company aware that there is any basis for
any of the foregoing.  The foregoing includes,
without limitation, actions pending or threatened, either verbally or in
writing, involving the prior employment of any of the Company’s employees,
their use in connection with the Company’s business of any information or
techniques allegedly proprietary to any of their former employers, or their
obligations under any agreements with prior employers.  The Company is not a party or subject to the
provisions of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality. 
There is no material action, suit, proceeding or investigation by the
Company currently pending or which the Company intends to initiate.

5.14                        Tax Returns and Payments

The Company has filed with appropriate federal, state, and local
governmental agencies all tax returns that the Company is required to
file.  All taxes shown to be due and
payable on such returns, any assessments imposed, and all other taxes due and
payable by the Company have been paid or will be paid before the time they
become delinquent.  The Company has not
been advised in writing or otherwise become aware (a) that any of the
Company’s tax returns have been or are being audited as of the Effective Date
or (b) of any deficiency in assessment or proposed judgment with respect
to the Company’s federal, state, or local taxes.

5.15                        Transactions with Affiliates and
Employees

Except as disclosed in the Company’s SEC Filings, none of its officers
or directors and, to the knowledge of the Company, none of the employees of the
Company is presently a party to any transaction with the Company (other than
for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any
such employee has a substantial interest or is an officer, director, trustee or
partner, in each case in excess of $60,000 other than (i) for payment of salary
or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) for other employee benefits,
including stock option agreements under any stock option plan or equity
incentive plan of the Company.

 9
 

5.16                        Sarbanes-Oxley; Internal
Accounting Controls

The Company is in material compliance with all provisions of the
Sarbanes-Oxley Act of 2002 and any rules or regulations promulgated thereunder
by the Commission that are applicable to it as of the Effective Date.  The
Company maintains a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.  The Company has established disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and designed such disclosure controls and procedures
to ensure that information required to be disclosed by the Company in the
reports it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Commission’s
rules and forms.  The Company’s certifying officers have evaluated the
effectiveness of the Company’s disclosure controls and procedures as of the end
of the period covered by the Company’s most recently filed periodic report
under the Exchange Act (such date, the “Evaluation Date”) and concluded that such
controls were ineffective as of the Evaluation Date.   The Company
presented in its most recently filed periodic report under the Exchange Act
such conclusion of the certifying officers about the effectiveness of the
disclosure controls and procedures based on their evaluations as of the
Evaluation Date.  Since the Evaluation Date, there have been no changes in
the Company’s internal control over financial reporting (as such term is
defined in the Exchange Act) that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial
reporting, and no significant deficiencies or material weakness in internal
controls over financial reporting, other than as disclosed in the Company’s SEC
Filings, have been identified.

5.17                        Environmental and Safety Laws

The Company is not in violation of any applicable statute, law or
regulation relating to the environment or occupational health and safety, and
no expenditures are or are reasonably anticipated to be required in order to
comply with any such existing statute, law or regulation.  During the period that the Company has owned
or leased its properties and facilities, (i) there have been no disposals,
releases or threatened releases of Hazardous Materials (as defined below) by
the Company on, from or under such properties or facilities, and
(ii) other than normal office products and cleaning supplies, it has not
used, generated, manufactured or stored on, under or about such properties or
facilities or transported to or from such properties or facilities any
Hazardous Materials.  For purposes of
this Section, the terms “disposal,” “release” and “threatened release” shall
have the definitions assigned thereto by the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601, et seq. as amended (“CERCLA”).  For the purposes of this Section, “Hazardous Materials”
shall mean any hazardous or toxic substance, material or waste, which is
regulated under, or defined as a “hazardous substance,” “pollutant,” “contaminant,”  “toxic 
chemical,”  “hazardous  material,” “toxic substance” or “hazardous
chemical” under (1) CERCLA; (2) the Emergency Planning and Community
Right-to-Know Act, 42 U.S.C. Section 11001, et
seq.; (3) the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, et seq.; (4) the
Toxic Substance Control Act, 15 U.S.C. Section 2601, et seq.; (5) the Occupational Safety and Health Act of
1970, 29 U.S.C. Section 651, et seq.; (6) regulations
promulgated under any of the above statutes; or (7) any applicable state
or local statute, ordinance, rule or regulation that has a scope or purpose
similar to those statutes identified above.

 10
 

5.18                        Condition of Collateral

The Collateral has been kept in reasonable condition and repair in the
ordinary course of business, and is reasonably fit and suitable for the
purposes for which they it is being used and, to the extent applicable, is
believed by the Company to conform in all material respects with applicable
ordinances, regulations and laws.

5.19                        Licenses

The Company possesses from the appropriate regulatory agency,
commission, board, government body and authority, whether state, local, federal
or foreign, all licenses, permits, certifications, authorizations, approvals,
franchises and rights which (i) are necessary for it to engage in the
business currently conducted by it, and (ii) if not possessed by the
Company, would have a Material Adverse Effect. 
A list of all material licenses, permits, approvals and similar rights
currently in effect is set forth on Schedule 5.19.

5.20                        Insurance

The Company has in full force and effect fire and casualty insurance
policies and insurance against other hazards, risks, and liabilities to persons
and property to the extent and in the manner customary for similarly situated
companies in similar businesses, and such insurance policies have been issued
by financially sound, duly licensed and reputable insurers.

5.21                        Labor Relations

No material labor dispute exists or, to the knowledge of the Company,
is imminent with respect to any of the employees of the Company which could
reasonably be expected to result in a Material Adverse Effect.

5.22                        Consent

Other than the declaration of effectiveness by the Commission of any
Registration Statement required to be filed pursuant to this Agreement, no
consent, approval, authorization or order of any court, governmental agency or
body or arbitrator having jurisdiction over the Company, or any of its
affiliates, the NASD, the OTC Bulletin Board or the Company’s shareholders is
required for execution of the Transaction Agreements, including, without
limitation the issuance and sale of the Notes, Warrants and Warrant Shares and
the performance of the Company’s obligations under the Transaction
Agreements.  The Company has obtained all
required waivers of preemption rights in connection with the issuance of the
Notes and Warrants.

5.23                        Offering

Subject in part to the accuracy of the Holders’ representations and
warranties in Section 6, the offer, sale, and issuance of the Notes and
Warrants in compliance with the terms of this Agreement constitute transactions
exempt from the registration requirements of Section 5 of the Securities
Act and all applicable state securities laws. 
Neither the Company nor any agent on its behalf has solicited or will
solicit any offers to sell or has offered to sell or will offer to sell all or
any part of the Notes or Warrants to any person or persons so as to bring the
sale of such Notes and Warrants by the Company within the registration
provisions of the Securities Act or any applicable state securities laws.

 11

5.24        Brokers or Finders

With the exception of Craig-Hallum Capital Group LLC, the Company has
not engaged any brokers, finders, or agents. 
The Holders have not incurred, and will not incur, directly or
indirectly, as a result of any action taken by the Company, any liability for
brokerage or finders’ fees or agents’ commissions or any similar charges in
connection with the Transaction Agreements.

5.25        Registration and Listing Requirements

The Company’s Common Stock is registered pursuant to Section 12(b) or
12(g) of the Exchange Act and quoted on the OTC Bulletin Board under the symbol
“MCVI.OB.”  The Company has taken no
action designed to, or which to its knowledge is likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act nor has
the Company received any notification that the Commission is contemplating
terminating such registration, nor has the Company received any oral or written
notice that its Common Stock will cease to be quoted on the OTC Bulletin Board.  The Company is not aware of any event or
circumstance that will or may cause the Company Common Stock to cease to be
quoted on the OTC Bulletin Board.

5.26        Correctness of Representations

The Company represents that the foregoing representations and warranties
are true and correct as of the date hereof, and, unless the Company otherwise
notifies the Holders in writing prior to the Effective Date, shall be true and
correct as of the Effective Date.

5.27        Disclosure

The Company has made available to the Holders all the information that
the Holders have requested in connection with their decisions as to whether to
purchase the Notes and Warrants pursuant to this Agreement.  Neither the Transaction Agreements nor any
other exhibits, schedules, documents or certificates delivered in connection
with the Transaction Agreements, which shall include the Company’s SEC Filings,
when taken as a whole, contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained
herein or therein not misleading in light of the circumstances under which they
were made.

SECTION 6.         REPRESENTATIONS
AND WARRANTIES OF THE HOLDERS

Each Holder, severally and not jointly, hereby
represents and warrants to the Company as of the date hereof and as of the
Closing Date with respect to each purchase of Notes by such Holder as follows
(such representations and warranties do not lessen or obviate the
representations and warranties of the Company set forth in this Agreement):

6.1          Organization; Authority

Holder is an entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization
with full right, corporate or partnership power and authority to enter into and
to consummate the transactions contemplated by the Transaction Agreements and
otherwise to carry out its obligations hereunder and thereunder.  The
execution, delivery and performance by Holder of the transactions contemplated
by the Transaction Agreements have been duly authorized by all necessary
corporate or similar action on the part of such Holder.  Each Transaction
Agreement to which it is a party has been duly executed by Holder, and when
delivered by Holder in accordance with the terms hereof,

 12
 

will constitute the valid and legally binding obligation of the Holder,
enforceable against it in accordance with its terms, except (i) as limited by
general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting enforcement
of creditors’ rights generally, (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may
be limited by applicable law.

6.2          Investment Representations

(a)            Information about the Company.  The Holder has had access to and has been
furnished with information relating to the business, operations and financial
condition of the Company as well as this Agreement and the transactions
contemplated hereby, and has had an adequate opportunity to ask such questions
of, and receive answers from, the Company or an agent or representative of the
Company, regarding the Company and its business to the extent deemed necessary
by the Holder in order to form a decision concerning an investment in the
Company.

(b)           Holder
Bears Economic Risk.  Holder has substantial experience in
evaluating and investing in highly speculative securities and as such is
capable of evaluating the merits and risks of its investment in the
Company.  Holder understands that the
Company has no present intention of registering the Notes, Warrants or any of
the Warrant Shares, excepts as provided in Section 8 of this Agreement.  Holder also understands that there is no
assurance that any exemption from registration under the Securities Act will be
available and that, even if available, such exemption may not allow Holder to
transfer all or any portion of the Notes, Warrants or the Warrant Shares under
the circumstances, in the amounts or at the times Holder might propose.

(c)           Acquisition
for Own Account.  Holder is acquiring the Notes and Warrants,
and will acquire the Warrant Shares, for Holder’s own account for investment
only, and not with a view towards their public distribution.

(d)           Holder
Can Protect Its Interest.  Holder represents that by
reason of its, or of its management’s, business or financial experience, Holder
has the capacity to protect its own interests in connection with the
transactions contemplated in this Agreement and the Security Documents.  Further, Holder is aware of no publication of
any advertisement in connection with the transactions contemplated in the
Agreement.

(e)           Accredited
Holder.  Holder represents that it is an accredited
Holder within the meaning of Regulation D of the Securities Act.

(f)            Residence.  Each
Holder is a bona fide resident of, or entity duly formed pursuant to the laws
of, and is domiciled in, the state or country set forth in his, her or its
address as provided below.

6.3          Correctness of Representations

Holder represents that the foregoing representations and warranties are
true and correct as of the date hereof, and, unless Holder otherwise notifies
the Company in writing prior to the Effective Date, shall be true and correct
as of the Effective Date.

 13
 

SECTION 7.         CONDITIONS
TO CLOSING

7.1          Conditions to Holders’ Obligations
at the Closing

Holders’ obligations under this Agreement are
subject to the satisfaction, at or prior to the respective Closing, of the
following conditions:

(a)           Representations
and Warranties True; Performance of Obligations.  The
representations and warranties made by the Company in Section 5 shall be true
and correct in all material respects as of the Effective Date, and the Company
shall have performed all obligations and conditions herein required to be
performed or observed by it on or prior to such Closing.

(b)           Consents,
Permits, and Waivers.  The Company shall have obtained any and all
consents, permits and waivers necessary or appropriate for consummation of the
transactions contemplated by the Transaction Agreements (except for such as may
be properly obtained subsequent to the Closing).

(c)           Corporate
Documents.  The Company shall have delivered to Holders
or their counsel copies of all corporate documents of the Company as Holders
shall reasonably request.

(d)           Proceedings
and Documents.  All corporate and other proceedings in
connection with the transactions contemplated at the Closing hereby and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Holders and their counsel, and the
Holders and their counsel shall have received all such counterpart originals or
certified or other copies of such documents as they may reasonably request.

(e)           Payment
of Fees.  All fees required to be paid at the Closing
under Section 9.1 shall have been paid.

(f)            Compliance
Certificate.  The Company will have delivered to counsel
for each Holder a certificate, executed on the Company’s behalf by the Company’s
Chief Executive Officer, in substantially the form attached as Exhibit D,
certifying the satisfaction of the closing conditions listed in this
Section 7.1.

(g)           Legal Opinion.  The
Holders will have received from the Company’s legal counsel a legal opinion,
dated as of the Effective Date, in substantially the form attached as Exhibit E.

(h)           Secretary’s Certificate.  The Company will have delivered to
counsel for each Holder a certificate, executed on the Company’s behalf by the
Company’s Secretary, in substantially the form attached as Exhibit F.

7.2          Conditions to Obligations of the
Company

The Company’s obligations under this Agreement are
subject to the satisfaction, on or prior to the respective Closing, of the
following conditions:

(a)           Representations
and Warranties True; Performance of Obligations.  The
representations and warranties made by Holders in Section 6 shall be true and
correct in all material respects as of the Effective Date, and the Holders
shall have performed and complied with all agreements and conditions herein
required to be performed or complied with by Holders.

 14
 

SECTION 8.         REGISTRATION
RIGHTS

8.1            Registration Rights 

The
Company agrees to prepare and file with the Commission, no later than fifteen
(15) days following the date on which the Company’s Annual Report on Form
10-KSB is due for the fiscal year ending April 30, 2007 (the “Filing Date”), a
registration statement on Form SB-2, Form S-3
or such other form of registration statement as may be required by
the Securities Act or as may be deemed appropriate by the Company (the “Registration Statement”)
to enable the resale of the Warrant Shares underlying the Closing Warrants (the
“Registrable Securities”)
by the Holders from time to time on the OTC Bulletin Board or in privately-negotiated
transactions.  The Registration Statement
is intended to register Registrable Securities issued pursuant to this
Agreement as well as Registrable Securities issued in the First Closing.  The term “Registrable Securities” does not
include (1) the Warrant Shares underlying the Initial Interest Warrants or any
Quarterly Interest Warrants issued to the Holders or (2) any Warrant Shares
underlying the Closing Warrants that may not be included in the Registration
Statement as a result of an interpretation by the Commission that Securities
Act Rule 415 prohibits such registration. 
To the extent that Warrant Shares must be excluded from the Registration
Statement pursuant to clause (2) of the immediately preceding sentence, the
number of Warrant Shares included in the Registration Statement will be reduced
on a pro-rata basis.

8.2          Registration Procedures

The Company will keep each Holder advised in writing as to the status
of the Registration Statement as set forth herein.  At the Company’s expense, the Company will:

(a)         use commercially reasonable efforts to cause
the Registration Statement to be declared effective by the Commission within
forty-five (45) days of the Filing Date (in the case of no review of the
Registration Statement by the Commission) or ninety (90) days of the Filing
Date (in the case of a review of the Registration Statement by the Commission)
(as applicable, the “Required
Effective Date”);

(b)         promptly and without delay prepare and file
with the Commission, and concurrently provide copies to the Holder, such
amendments and supplements to the Registration Statement and the prospectus
used in connection therewith as may be necessary to keep the Registration
Statement current, effective and free from any material misstatement or omission
to state a material fact for a period not exceeding, with respect to each
Holder’s Registrable Securities, the earlier of the (i) second anniversary of
the effective date of the Registration Statement, (ii) the date on which the
Holder may sell all Registrable Securities then held by the Holder without
restriction by the volume limitations of Rule 144(e) of the Securities Act, or
(iii) such time as all Registrable Securities have been sold pursuant to a
Registration Statement;

(c)         furnish such number of prospectuses and
other documents incident to such prospectus, including any prospectus amendment
or prospectus supplement, as a Holder from time to time may reasonably request;

(d)         use commercially reasonable efforts to
register and qualify the Registrable Securities under such other securities or
blue sky laws of such jurisdictions as will be reasonably requested by the
Holders; provided, that the Company will not be required, in connection with
any such registration and qualification or as a condition to any such
registration and qualification, to qualify to do business or to file a general
consent to service of process in any such states or jurisdictions;

 15
 

(e)         notify each Holder of Registrable Securities
covered by such Registration Statement at any time when a prospectus relating
to such Registration Statement is required to be delivered under the Securities
Act of the occurrence of any event as a result of which the prospectus included
in such Registration Statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing;

(f)         notify each Holder, 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;

(g)        at the request of any such Holder, furnish:
(i) at the sole expense of the Company, an opinion dated as of the
effective date of the Registration Statement the counsel representing the
Company for the purposes of such registration, addressed to the underwriters,
if any, and to the Holder or Holders making such request, covering such matters
as such underwriters and Holder or Holders may reasonably request; and
(ii) letters dated as of the effective date of the Registration Statement
and as of the closing date, from the independent certified public accountants
of the Company, addressed to the underwriters, if any, and to the Holder or
Holders making such request, covering such matters as such underwriters and
Holder or Holders may reasonably request;

(h)        if requested by the Holders, cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing the Registrable Securities to be delivered to a
transferee pursuant to a Registration Statement, which certificates shall be
free, to the extent permitted by this Agreement, of all restrictive legends,
and to enable such Registrable Securities to be in such denominations and
registered in such names as any such Holders may request; and

(i)            at any time after the Registrable Securities are covered
by an effective Registration Statement, the Company may deliver to the Holders
of such Registrable Securities a certificate (the “Suspension Certificate”) approved by
the Chief Executive Officer of the Company and signed by an officer of the
Company stating that the effectiveness of and sales of Registrable Securities
under the Registration Statement would:

(A) 
materially interfere with any transaction that would require the Company
to prepare financial statements under the Securities Act that the Company would
otherwise not be required to prepare in order to comply with its obligations
under the Exchange Act, or

(B) 
require public disclosure of any transaction of the type discussed in
Section 8.2(i)(A) prior to the time such disclosure might otherwise be
required;

Beginning five (5) Business Days after the receipt of a Suspension
Certificate by Holders of Registrable Securities, the Company may, in its
discretion, require such Holders of Registrable Securities to refrain from
selling or otherwise transferring or disposing of any Registrable Securities or
other Company securities then held by such Holders for a specified period of time
that is customary under the circumstances (not to exceed 30 days during
any 12-month period).  The Company may
impose stop transfer instructions to enforce any required agreement of the
Holders under this Section 8.2(i).

8.3          Discontinued Disposition

Each Holder agrees that, upon receipt of a notice from the Company
of the occurrence of any

 16
 

event
of the kind described in Section 8.2(e) or Section 8.2(f), such Holder
will forthwith discontinue disposition of such Registrable Securities
under the Registration Statement until such Holder’s receipt of the copies
of the supplemented Prospectus and/or amended Registration Statement or until
it is advised in writing (the “Advice”) by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement.  The Company will use commercially
reasonable efforts to ensure that the use of the Prospectus may be resumed
as promptly as it practicable.

8.4          Non-Registration Event

The Company acknowledges and agrees that the Holders
will suffer material damages if the Registration Statement is not declared
effective by the Commission by the Required Effective Date and maintained in
the manner and within the time periods contemplated by Section 8.2 hereof, and
it would not be feasible to ascertain the extent of such damages with
precision.  Accordingly, if the
Registration Statement is not declared effective by the Commission on or prior
to the Required Effective Date (the “Non-Registration Event”), then, for so long
as the Non-Registration Event shall continue, the Company shall pay to each
Holder as liquidated damages for each month during the pendency of such
Non-Registration Event an amount equal to one (1%) percent per month (pro rated
for any portion thereof) of the aggregate value of the Warrant Shares
underlying the Holder’s Closing Warrants then held by such Holder (which shall
be measured at $4.00 per share); provided, however, that no amount in
liquidated damages shall be paid to any Holder pursuant to this Section 8.4 for
the Company’s failure to register the Warrant Shares if such failure is as a
result of an interpretation by the Commission that Securities Act Rule 415
prohibits such registration. Payments to be made pursuant to this Section 8.4
shall be due and payable to the Holders in immediately available funds within
ten (10) business days after receipt of written demand from a Holder.

8.5          Registration Expenses

The Company will be responsible for all expenses incurred by it in
connection with the preparation and filing of the Registration Statement,
regardless of whether any Registrable Securities are sold pursuant to such Registration
Statement.  All selling expenses incurred
by any Holder in connection with the Registration Statement or the Registrable
Securities, including broker or similar commissions, will be borne by such
Holder.

8.6          Indemnification

(a)           Indemnification
by Company.  The Company will indemnify each Holder, and
each Holder’s officers, directors, members, governors, employees, partners,
legal counsel, and accountants, and each person controlling such Holder within
the meaning of Section 15 of the Securities Act with respect to any
registration, qualification, or compliance effected pursuant to this
Section 8, and each underwriter, if any, and each person who controls,
within the meaning of Section 15 of the Securities Act, any underwriter,
against all expenses, claims, losses, damages, and liabilities (or actions,
proceedings, or settlements in respect of such expenses, claims, losses,
damages, and liabilities) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any prospectus,
offering circular, or other document (including any related registration
statement, notification, or similar document) incident to any such
registration, qualification, or compliance, or based on any omission (or
alleged omission) to state in such document a material fact required to be
stated in such document or necessary to make the statements in such document
not misleading, or any violation by the Company of the Securities Act and any
applicable state securities laws or any rule or regulation under the Securities
Act or state securities laws applicable to the Company and relating to action
or inaction

 17
 

required of the Company in
connection with any such registration, qualification, or compliance, and will
reimburse each such Holder, and each of such Holder’s officers, directors,
partners, legal counsel, and accountants, and each person controlling such
Holder, and each such underwriter, and each person who controls any such
underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating and defending or settling any such claim, loss,
damage, liability, or action; provided that the Company will not be liable in
any such case to the extent that any such claim, loss, damage, liability, or
expense arises out of or is based on any untrue statement or omission based
upon written information furnished to the Company by such Holder or underwriter
and stated to be specifically for use in such document.  The Parties expressly agree and acknowledge
that the indemnity agreement contained in this Section 8.6(a) will not
apply to amounts paid in settlement of any such loss, claim, damage, liability,
or action if such settlement is effected without the Company’s consent (which
consent will not be unreasonably withheld, delayed or conditioned).

(b)           Indemnification
by Holder.  Each Holder will, if Registrable Securities
held by such Holder are included in the securities as to which such
registration, qualification, or compliance is being effected, indemnify the Company,
and each of the Company’s directors, officers, legal counsel, and accountants,
and each underwriter, if any, of the Company’s securities covered by such a
registration statement, and each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, and
each other such Holder, and each of their respective officers, directors, and
partners, and each person controlling such Holder or other Company stockholder,
against all claims, losses, damages, and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular, or other document, or any omission (or alleged
omission) to state in such document a material fact required to be stated in
such document or necessary to make the statements in such document not
misleading, and will reimburse the Company, and such Holders, and directors,
officers, legal counsel, and accountants, and underwriters, and control persons
for any legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability, or action,
in each case to the extent, but only to the extent, that such untrue statement
(or alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular, or other document in
reliance upon and in conformity with written information furnished to the
Company by such Holder and stated to be specifically for use in such document;
provided that such Holder’s obligations under this Section 8.6(b) will not
apply to amounts paid in settlement of any such claims, losses, damages, or
liabilities (or actions in respect of such claims, losses, damages, or
liabilities) if such settlement is effected without such Holder’s consent
(which consent will not be unreasonably withheld, delayed or conditioned); and
provided further that in no event will any indemnity under this
Section 8.6(b) exceed the net proceeds. 
For purposes of this Section 8.6(b) and Section 8.6(d), the
term “net proceeds,” with respect to any particular Holder, means the proceeds
from the offering received by such Holder after deducting underwriters’
commissions, discounts, and expenses attributable to the Registrable Securities
sold by such Holder.

(c)           Indemnification
Procedures.  Each party entitled to indemnification under
this Section 8.6 (the “Indemnified Party”) will give
notice to the party required to provide indemnification (the “Indemnifying Party”)
promptly after such Indemnified Party has actual knowledge of any claim as to
which indemnity may be sought, and will permit the Indemnifying Party to assume
the defense of such claim or any litigation resulting from such claim; provided
that counsel for the Indemnifying Party who will conduct the defense of such
claim or any litigation resulting from such claim, will be approved by the
Indemnified Party (whose approval will not be unreasonably withheld), and the
Indemnified Party may participate in such defense at such Indemnified Party’s
expense.  Notwithstanding the foregoing,
any Indemnified Party’s failure to give notice as provided in this
Section 8.6(c) will not relieve the Indemnifying Party of the Indemnifying
Party’s obligations under this Section 8.6 to the extent such failure is
not prejudicial.  No Indemnifying Party,
in the defense of any such claim or litigation, will,

 18
 

except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term of such judgment or
such settlement the claimant’s or plaintiff’s release of such Indemnified Party
from all liability in respect to such claim or litigation.  Each Indemnified Party will furnish such
information regarding such Indemnified Party or the claim in question as an
Indemnifying Party may reasonably request in writing and as will be reasonably
required in connection with defense of such claim and litigation resulting from
such claim.

(d)           Indemnification
Unavailability.  If the indemnification provided for in this
Section 8.6 is held by a court of competent jurisdiction to be unavailable
to an Indemnified Party with respect to any loss, liability, claim, damage, or
expense referred to in this Section 8.6, then the Indemnifying Party,
instead of indemnifying such Indemnified Party under Section 8.6(a) or
Section 8.6(b), will contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party, on the one hand, and of the Indemnified Party, on the
other hand, in connection with the statements or omissions that resulted in
such loss, liability, claim, damage, or expense as well as any other relevant
equitable considerations; provided, however, that in no event will any
contribution by a Holder under this Section 8.6(d) exceed the net proceeds
(as defined in Section 8.6(b)).  The
relative fault of the Indemnifying Party and of the Indemnified Party will be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact relates
to information supplied by the Indemnifying Party or by the Indemnified Party
and the Parties’ relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.

8.7          Information from Holder

Each Holder will furnish to the Company such information regarding such
Holder and the distribution proposed by such Holder as the Company may
reasonably request in writing and as will be reasonably required in connection
with any registration, qualification, or compliance referred to in this
Section 8.

8.8          Rule 144 Reporting

With a view to making available the benefits of certain Commission
rules and regulations that may permit the sale of the Warrant Shares underlying
the Initial Interest Warrant and the Quarterly Interest Warrant, if exercised
(the “Restricted
Securities”), to the public without registration, the Company
agrees to:

(a)           file with the Commission in a timely manner
all reports and other documents required of the Company under the Securities
Act and the Exchange Act; and

(b)           so long as a Holder owns any Restricted
Securities, furnish to the Holder, promptly upon the Holder’s written request,
a written statement by the Company as to the Company’s compliance with the
reporting requirements of Rule 144 and the Exchange Act.

SECTION 9.         MISCELLANEOUS

9.1          Payment of Fees

The Company shall pay to Whitebox all reasonable
expenses, including the fees of its legal counsel, incurred by Whitebox and its
advisor, Whitebox Advisors, LLC, in connection with entry into

 19
 

this Agreement and the other Transaction Agreements including but not
limited to any and all fees and expenses related to due diligence or other
matters relating to or arising out of any of the foregoing.

9.2          Governing Law; Venue

This Agreement shall be governed by the laws of the
State of Minnesota without regard to the conflicts of law principles of any
jurisdiction.  With respect to any
disputes arising out of or related to this Agreement or to any other Transaction
Agreement, the parties consent to the exclusive jurisdiction of, and venue in,
the state courts in Hennepin County, Minnesota (or, in the event of exclusive
federal jurisdiction, the federal courts of the District of Minnesota).

9.3          Survival 

The representations, warranties, covenants and agreements
made herein shall survive the closing of the transactions contemplated
hereby.  All statements as to factual
matters contained in any certificate or other instrument delivered by or on
behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.

9.4          Successors and Assigns

This Agreement, and any and all rights, duties, and
obligations under this Agreement, will not be assigned, transferred, delegated,
or sublicensed by any party without the other party’s prior written
consent.  Any attempt by any party
without such prior written consent to assign, transfer, delegate, or sublicense
any rights, duties, or obligations that arise under this Agreement will be
void.  Subject to the foregoing and
except as otherwise provided in this Agreement, the provisions of this
Agreement will inure to the benefit of, and be binding upon, the parties’ respective
successors, assigns, heirs, executors, and administrators.

9.5          Entire Agreement 

The Transaction Agreements and all the other
documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof, and no party shall be liable or bound to any other in any
manner by any representations, warranties, covenants and agreements except as
specifically set forth herein and therein.

9.6          Severability

In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

9.7          Amendment and Waiver

This Agreement may be amended or modified only upon
the written consent of the Company and the Holders holding a
majority-in-interest of the Principal Amount of the Notes.

9.8          Delays or Omissions 

It is agreed that no delay or omission to exercise
any right, power or remedy accruing to any party, upon any breach, default or
noncompliance by another party under any of the Transaction

 20
 

Agreements shall impair any such right, power or remedy, nor shall it
be construed to be a waiver of any such breach, default or noncompliance, or
any acquiescence therein, or of or in any similar breach, default or
noncompliance thereafter occurring.  It
is further agreed that any waiver, permit, consent or approval of any kind or
character on any Holder’s part of any breach, default or noncompliance under
any of the Transaction Agreements or any waiver on such party’s part of any
provisions or conditions of any of the Transaction Agreements must be in
writing and shall be effective only to the extent specifically set forth in
such writing.  All remedies under the
Transaction Agreements or as otherwise afforded to any party shall be
cumulative and not alternative.

9.9          Notices

All notices required or permitted hereunder shall be
in writing and shall be deemed effectively given: (i) upon personal
delivery to the party to be notified; (ii) when sent by confirmed telex or
facsimile if sent during normal business hours of the recipient, if not, then
on the next business day; (iii) three (3) business days after having been
sent by registered or certified mail, return receipt requested, postage
prepaid; or (iv) one (1) day after deposit with a nationally recognized
overnight courier, specifying next day delivery, with written verification of
receipt.  All communications shall be
sent to the Company at its address on the first page hereof and to the Holders
at their respective addresses set forth on the signature page hereof or at such
other address as the Company or an Holder may designate by ten (10) days
advance written notice to the other parties hereto.

9.10        Titles and Subtitles; Counterparts

The titles of the sections and subsections of this
Agreement are for convenience of reference only and are not to be considered in
construing this Agreement.  This
Agreement may be delivered via facsimile and may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.

9.11        Exculpation among Holders 

Each Holder acknowledges that it is not relying upon
any representation or warranty of any person, firm, or corporation, other than
the Company, in making its investment or decision to invest in the
Company.  Each Holder agrees that none of
the other Holders or the respective controlling persons, officers, directors,
partners, agents, or employees of any other Holder shall be liable for any
action heretofore or hereafter taken or omitted to be taken by any of them in
connection with the transactions contemplated hereby.

IN WITNESS WHEREOF, the undersigned have hereunto affixed their
signatures.

	
  

  	
   

  	
  MEDICALCV, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ Marc P. Flores

  
	
   

  	
   

  	
   

  	
  Marc P. Flores

  
	
   

  	
   

  	
   

  	
  President and Chief
  Executive Officer

  

 

[Separate Holder Signature Pages Follow]

 21

HOLDERS:

 

WHITEBOX READY LTD.

	
  BY:

  	
  /s/ JONATHAN D. WOOD

  	
   

  
	
   

  	
  JONATHAN D. WOOD

  	
   

  
	
   

  	
  CHIEF FINANCIAL OFFICER

  	
   

  
	
   

  	
   

  	
   

  
	
  ADDRESS:

  	
   

  
	
   

  	
   

  
	
  3033 EXCELSIOR BOULEVARD

  	
   

  
	
  SUITE 300

  	
   

  
	
  MINNEAPOLIS, MN 55416

  	
   

  
	
   

  	
   

  
	
         

  	
   

  	
   

  
	
  TAX I.D./SOCIAL SECURITY NO.

  	
   

  
				

 

 

	
  CRAIG-HALLUM PARTNERS LP

  	
   

  	
   

  
	
            

  	
   

  	
   

  
	
  By:

  	
  /s/ KEVIN P. HARRIS

  	
   

  	
   

  
	
  Its:

  	
  MANAGING MEMBER OF CRAIG-HALLUM MANAGEMENT, MANAGING PARTNER

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  222 S. 9th ST., STE. 350

  	
   

  	
   

  
	
   

  	
  MINNEAPOLIS, MN 55402

  	
   

  	
   

  
	
   

  	
                   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Tax I.D./Social Security No.

  	
   

  	
   

  
						

 

 2
 

 

	
  ASA
  OPPORTUNITY FUND L.P.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ ROBERT D. FURST
  JR

  	
   

  	
   

  
	
  Its:

  	
  MANAGING MEMBER OF ASA OF ADVISORS LLC, GENERAL PARTNER

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  601 CARLSON PARKWAY

  	
   

  	
   

  
	
   

  	
  SUITE 610

  	
   

  	
   

  
	
   

  	
  MINNETONKA, MN 55305

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Tax I.D./Social Security No.

  	
   

  	
   

  
							

 3
 

 

	
  BURGUETE
  INVESTMENT PARTNERSHIP, LP

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ JAMES J. TIAMPO, PRESIDENT
  OF VERBIER MANAGEMENT CORP.

  	
   

  
	
  Its:

  	
  GENERAL PARTNER

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  435 MARTIN STREET

  	
   

  	
   

  
	
   

  	
  SUITE 3090

  	
   

  	
   

  
	
   

  	
  BLAINE, WA 98230

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Tax I.D./Social Security No.

  	
   

  	
   

  
						

 

 4
 

 

	
  POTOMAC
  CAPITAL PARTNERS LP

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ KENNETH BERKOW

  	
   

  
	
  Its:

  	
  C.F.O.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C/O POTOMAC CAPITAL MANAGEMENT

  	
   

  
	
   

  	
  825 THIRD AVE, 33RD FLOOR

  	
   

  	
   

  
	
   

  	
  NEW YORK, NY 10022

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Tax I.D./Social Security No.

  	
   

  	
   

  
						

 

 5
 

 

	
  POTOMAC
  CAPITAL INTERNATIONAL LTD.

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ KENNETH BERKOW

  	
   

  
	
  Its:

  	
  C.F.O.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C/O POTOMAC CAPITAL MANAGEMENT

  	
   

  
	
   

  	
  825 THIRD AVE, 33RD FLOOR

  	
   

  	
   

  
	
   

  	
  NEW YORK, NY 10022

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Tax I.D./Social Security No.

  	
   

  	
   

  
						

 

 6
 

 

	
  PLEIADES
  INVESTMENT PARTNERS-R LP

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ KENNETH BERKOW

  	
   

  
	
  Its:

  	
  C.F.O.

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C/O POTOMAC CAPITAL MANAGEMENT

  	
   

  
	
   

  	
  825 THIRD AVE, 33RD FLOOR

  	
   

  	
   

  
	
   

  	
  NEW YORK, NY 10022

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Tax I.D./Social Security No.

  	
   

  	
   

  
						

 

 7
 

SCHEDULE 1.0

LIST OF HOLDERS

First Closing: April 20, 2007

	
  Holder

  	
   

  	
  Note Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Whitebox Ready
  Ltd.

  	
   

  	
  $

  	
  8,000,000

  	
   

  
					

 

Second Closing: June 15, 2007

	
  Holder

  	
   

  	
  Note Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Whitebox Ready
  Ltd.

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  Craig-Hallum Partners
  LP

  	
   

  	
  $

  	
  200,000

  	
   

  
	
  ASA Opportunity Fund,
  L.P.

  	
   

  	
  $

  	
  300,000

  	
   

  
	
  Burguete Investment
  Partnership LP

  	
   

  	
  $

  	
  500,000

  	
   

  
	
  Potomac Capital
  Partners LP

  	
   

  	
  $

  	
  624,459

  	
   

  
	
  Potomac Capital
  International Ltd.

  	
   

  	
  $

  	
  431,537

  	
   

  
	
  Pleiades Investment
  Partners-R LP

  	
   

  	
  $

  	
  444,004

  	
   

  

 

 8

MedicalCV, Inc.

Schedule 5.4(a) - Authorized and
Issued Capital Stock

As of June 11, 2007

 

	
  

  	
   

  	
  Authorized

  	
   

  	
  Issued and Outstanding

  	
   

  	
  Available for Issuance

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5% Series A
  Redeemable Convertible Preferred Stock;

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $0.01 par value; stated value $10,000 per share

  	
   

  	
  1,900

  	
   

  	
  0

  	
   

  	
  1,900

  	
   

  
	
  Preferred Stock;
  $0.01 par value

  	
   

  	
  998,100

  	
   

  	
  0

  	
   

  	
  998,100

  	
   

  
	
  Common Stock;
  $0.01 par value

  	
   

  	
  24,000,000

  	
   

  	
  9,837,224

  	
   

  	
  14,162,776

  	
   

  
	
  Capital
  Stock

  	
   

  	
  25,000,000

  	
   

  	
  9,837,224

  	
   

  	
  15,162,776

  	
   

  

 

MedicalCV,
Inc.

Schedule
5.4(b) - Capital Stock Reserved for Issuance

As
of June 11, 2007

 

	
  

  	
   

  	
  Capital Stock 

  Reserved for 

  Issuance

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1992 Stock
  Option Plan

  	
   

  	
  50,000

  	
   

  
	
  1993 Director
  Stock Option Plan

  	
   

  	
  30,000

  	
   

  
	
  1997 Stock
  Option Plan

  	
   

  	
  50,000

  	
   

  
	
  2001 Equity
  Incentive Plan

  	
   

  	
  600,000

  	
   

  
	
  2005 Director
  Stock Option Plan

  	
   

  	
  100,000

  	
   

  
	
  Capital stock
  reserved for stock options issued outside of shareholder approved plans

  	
   

  	
  513,715

  	
   

  
	
  Capital stock
  reserved for warrants (1)

  	
   

  	
  2,498,075

  	
   

  
	
  Capital
  Stock Reserved for Issuance

  	
   

  	
  3,841,790

  	
   

  

 

(1)  Excludes
“interest accrual” warrants to be issued in connection with the Secured
Promissory Note dated April 20, 2007.

MedicalCV, Inc.

Schedule 5.4(c) - Securities Issued
or Issuable with Anti-Dilution Provisions Potentially Impacted by Issuance of
Warrants in this Transaction, including participation rights

As of June 11, 2007

 

	
  Dated

  Issued

  	
   

  	
  Expiration

  Date

  	
   

  	
  Pre-Event #

  of Shares

  	
   

  	
  Pre-Event 

  Exercise

  Price

  	
   

  	
  Pre-Event 

  Extended 

  Value

  	
   

  	
  Post-Event

   # of Shares

  	
   

  	
  Post-Event 

  Exercise 

  Price

  	
   

  	
  Post-Event

  Extended

   Value

  	
   

  	
  Holder Name

  	
   

  	
  Warrant 

  Type

  	
   

  	
  Anti-

  Dilution

  Type

  	
   

  	
  Anti-

  Dilution 

  Expiration

  	
   

  	
  Right of

  Participation

  	
   

  
	
  2/3/2004

  	
   

  	
  2/3/2014

  	
   

  	
  145,145

  	
   

  	
  $

  	
  4.56

  	
   

  	
  661,861

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  PKM Properties, LLC

  	
   

  	
  Regular

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  2/3/2004

  	
   

  	
  2/3/2014

  	
   

  	
  59,649

  	
   

  	
  $

  	
  4.56

  	
   

  	
  271,999

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  Peter L. Hauser

  	
   

  	
  Regular

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  5/21/2004

  	
   

  	
  5/21/2009

  	
   

  	
  8,352

  	
   

  	
  $

  	
  4.56

  	
   

  	
  38,085

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  Nicholas P. Hauser

  	
   

  	
  Unit

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  5/21/2004

  	
   

  	
  5/21/2009

  	
   

  	
  15,872

  	
   

  	
  $

  	
  4.56

  	
   

  	
  72,376

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  John C. Feltl

  	
   

  	
  Unit

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  5/21/2004

  	
   

  	
  5/21/2009

  	
   

  	
  6,927

  	
   

  	
  $

  	
  4.56

  	
   

  	
  31,587

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  Mary Joanne Feltl

  	
   

  	
  Unit

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  5/21/2004

  	
   

  	
  5/21/2009

  	
   

  	
  815

  	
   

  	
  $

  	
  4.56

  	
   

  	
  3,716

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  Alan Frailich

  	
   

  	
  Unit

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  5/21/2004

  	
   

  	
  5/21/2009

  	
   

  	
  2,192

  	
   

  	
  $

  	
  4.56

  	
   

  	
  9,996

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  John Ryden

  	
   

  	
  Unit

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  5/21/2004

  	
   

  	
  5/21/2009

  	
   

  	
  797

  	
   

  	
  $

  	
  4.56

  	
   

  	
  3,634

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  Berthel Fisher & Co.
  Financial Services, Inc.

  	
   

  	
  Unit

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  5/21/2004

  	
   

  	
  5/21/2009

  	
   

  	
  797

  	
   

  	
  $

  	
  4.56

  	
   

  	
  3,634

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  Neil Engquist

  	
   

  	
  Unit

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  5/21/2004

  	
   

  	
  5/21/2009

  	
   

  	
  645

  	
   

  	
  $

  	
  4.56

  	
   

  	
  2,941

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  Okoboji Financial
  Services

  	
   

  	
  Unit

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  5/21/2004

  	
   

  	
  5/21/2009

  	
   

  	
  2,771

  	
   

  	
  $

  	
  4.56

  	
   

  	
  12,636

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  David Lantz

  	
   

  	
  Unit

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  5/21/2004

  	
   

  	
  5/21/2009

  	
   

  	
  129

  	
   

  	
  $

  	
  4.56

  	
   

  	
  588

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  G. Douglas Pritchard

  	
   

  	
  Unit

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  5/21/2004

  	
   

  	
  5/21/2009

  	
   

  	
  3,546

  	
   

  	
  $

  	
  4.56

  	
   

  	
  16,170

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  A. Gordon Schierman

  	
   

  	
  Unit

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  5/21/2004

  	
   

  	
  5/21/2009

  	
   

  	
  2,734

  	
   

  	
  $

  	
  4.56

  	
   

  	
  12,467

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  Donald Steinkamp

  	
   

  	
  Unit

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  5/21/2004

  	
   

  	
  5/21/2009

  	
   

  	
  644

  	
   

  	
  $

  	
  4.56

  	
   

  	
  2,937

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  William Freerks

  	
   

  	
  Unit

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  5/21/2004

  	
   

  	
  5/21/2009

  	
   

  	
  1,350

  	
   

  	
  $

  	
  4.56

  	
   

  	
  6,156

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  Chip A. Rice

  	
   

  	
  Unit

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  5/21/2004

  	
   

  	
  5/21/2009

  	
   

  	
  2,095

  	
   

  	
  $

  	
  4.56

  	
   

  	
  9,553

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  Nicholas H. Shermeta

  	
   

  	
  Unit

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  11/13/2003

  	
   

  	
  11/13/2013

  	
   

  	
  29,545

  	
   

  	
  $

  	
  4.40

  	
   

  	
  129,998

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  PKM Properties, LLC

  	
   

  	
  Regular

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  11/17/2004

  	
   

  	
  11/17/2014

  	
   

  	
  11,573

  	
   

  	
  $

  	
  4.32

  	
   

  	
  49,995

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  PKM Properties, LLC

  	
   

  	
  Regular

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  11/24/2003

  	
   

  	
  11/24/2013

  	
   

  	
  3,073

  	
   

  	
  $

  	
  4.23

  	
   

  	
  12,999

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  Richard H. Nicholson

  	
   

  	
  Regular

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  11/24/2003

  	
   

  	
  11/24/2013

  	
   

  	
  3,073

  	
   

  	
  $

  	
  4.23

  	
   

  	
  12,999

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  CPL Investments

  	
   

  	
  Regular

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  11/24/2003

  	
   

  	
  11/24/2013

  	
   

  	
  9,219

  	
   

  	
  $

  	
  4.23

  	
   

  	
  38,996

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  Nicholson Boys LP

  	
   

  	
  Regular

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  11/24/2003

  	
   

  	
  11/24/2013

  	
   

  	
  6,146

  	
   

  	
  $

  	
  4.23

  	
   

  	
  25,998

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  Raft Co.

  	
   

  	
  Regular

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  11/24/2003

  	
   

  	
  11/24/2013

  	
   

  	
  9,219

  	
   

  	
  $

  	
  4.23

  	
   

  	
  38,996

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  Draft Co.

  	
   

  	
  Regular

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  10/13/2006

  	
   

  	
  10/13/2011

  	
   

  	
  75,000

  	
   

  	
  $

  	
  4.00

  	
   

  	
  300,000

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  Potomac
  Capital Partners LP

  	
   

  	
  Regular

  	
   

  	
  Full
  Ratchet

  	
   

  	
  7/13/2007

  	
   

  	
  Yes

  	
   

  
	
  10/13/2006

  	
   

  	
  10/13/2011

  	
   

  	
  50,000

  	
   

  	
  $

  	
  4.00

  	
   

  	
  200,000

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  Potomac
  Capital International Ltd

  	
   

  	
  Regular

  	
   

  	
  Full
  Ratchet

  	
   

  	
  7/13/2007

  	
   

  	
  Yes

  	
   

  
	
  10/13/2006

  	
   

  	
  10/13/2011

  	
   

  	
  53,571

  	
   

  	
  $

  	
  4.00

  	
   

  	
  214,284

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  Pleiades
  Investment Partners - R LP

  	
   

  	
  Regular

  	
   

  	
  Full
  Ratchet

  	
   

  	
  7/13/2007

  	
   

  	
  Yes

  	
   

  
	
  4/20/2007

  	
   

  	
  4/20/2012

  	
   

  	
  1,200,000

  	
   

  	
  $

  	
  4.00

  	
   

  	
  4,800,000

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  Whitebox Ready Ltd.

  	
   

  	
  Regular

  	
   

  	
  Full
  Ratchet

  	
   

  	
  4/20/2008

  	
   

  	
   

  	
   

  
	
  4/4/2003

  	
   

  	
  4/4/2013

  	
   

  	
  60,932

  	
   

  	
  $

  	
  3.59

  	
   

  	
  218,746

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  PKM Properties, LLC

  	
   

  	
  Regular

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  7/1/2003

  	
   

  	
  7/1/2013

  	
   

  	
  62,429

  	
   

  	
  $

  	
  3.59

  	
   

  	
  224,120

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  PKM Properties, LLC

  	
   

  	
  Regular

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  7/1/2003

  	
   

  	
  7/1/2013

  	
   

  	
  74,164

  	
   

  	
  $

  	
  3.59

  	
   

  	
  266,249

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  Peter L. Hauser

  	
   

  	
  Regular

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  8/20/2003

  	
   

  	
  8/20/2013

  	
   

  	
  11,734

  	
   

  	
  $

  	
  3.59

  	
   

  	
  42,125

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  PKM Properties, LLC

  	
   

  	
  Regular

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  1/17/2003

  	
   

  	
  1/17/2013

  	
   

  	
  59,600

  	
   

  	
  $

  	
  3.50

  	
   

  	
  208,600

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  PKM Properties, LLC

  	
   

  	
  Regular

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  3/3/2005

  	
   

  	
  3/3/2015

  	
   

  	
  72,734

  	
   

  	
  $

  	
  3.40

  	
   

  	
  247,296

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  PKM Properties, LLC

  	
   

  	
  Regular

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  3/3/2005

  	
   

  	
  3/3/2015

  	
   

  	
  2,166

  	
   

  	
  $

  	
  3.40

  	
   

  	
  7,364

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  Robert G. Allison IRA

  	
   

  	
  Regular

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  3/3/2005

  	
   

  	
  3/3/2015

  	
   

  	
  2,746

  	
   

  	
  $

  	
  3.40

  	
   

  	
  9,336

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  Bradley A. Erickson IRA

  	
   

  	
  Regular

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  3/3/2005

  	
   

  	
  3/3/2015

  	
   

  	
  5,067

  	
   

  	
  $

  	
  3.40

  	
   

  	
  17,228

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  Dennis D. Gonyea

  	
   

  	
  Regular

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  3/3/2005

  	
   

  	
  3/3/2015

  	
   

  	
  2,166

  	
   

  	
  $

  	
  3.40

  	
   

  	
  7,364

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  John T. Potter

  	
   

  	
  Regular

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  3/3/2005

  	
   

  	
  3/3/2015

  	
   

  	
  2,166

  	
   

  	
  $

  	
  3.40

  	
   

  	
  7,364

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  Brust Limited
  Partnership

  	
   

  	
  Regular

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  3/3/2005

  	
   

  	
  3/3/2015

  	
   

  	
  1,005

  	
   

  	
  $

  	
  3.40

  	
   

  	
  3,417

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  Alan R. Reckner

  	
   

  	
  Regular

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  3/3/2005

  	
   

  	
  3/3/2015

  	
   

  	
  2,746

  	
   

  	
  $

  	
  3.40

  	
   

  	
  9,336

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  Carolyn Salon

  	
   

  	
  Regular

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  3/3/2005

  	
   

  	
  3/3/2015

  	
   

  	
  2,166

  	
   

  	
  $

  	
  3.40

  	
   

  	
  7,364

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  Joel Salon

  	
   

  	
  Regular

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  3/3/2005

  	
   

  	
  3/3/2015

  	
   

  	
  17,329

  	
   

  	
  $

  	
  3.40

  	
   

  	
  58,919

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  Robert
  Furst Pension Plan & Trust

  	
   

  	
  Regular

  	
   

  	
  Wtg.
  Avg.

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  4/1/2005

  	
   

  	
  4/1/2010

  	
   

  	
  10,996

  	
   

  	
  $

  	
  3.25

  	
   

  	
  35,737

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  Gary Kohler

  	
   

  	
  Regular

  	
   

  	
  Full
  Ratchet

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
  4/1/2005

  	
   

  	
  4/1/2010

  	
   

  	
  30,000

  	
   

  	
  $

  	
  3.25

  	
   

  	
  97,500

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  ASA Opportunity Fund LP

  	
   

  	
  Regular

  	
   

  	
  Full
  Ratchet

  	
   

  	
  Life

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  2,125,025

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Wtg. Avg.

  	
   

  	
  705,458

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Full Ratchet

  	
   

  	
  1,419,567

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  2,125,025

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Note: Excludes
“interest accrual” warrants to be issued in connection with the Secured
Promissory Note dated April 20, 2007.

MedicalCV, Inc.

Schedule 5.4(d) - Oustanding
Agreements for the Issuance of Capital Stock

As of June 11, 2007

 

	
   

  	
   

  	
  Outstanding 

  Agreements for

  the Issuance of

  Common Stock

  	
   

  	
  Available for

  Future Issuance

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1992 Stock Option Plan

  	
   

  	
  775

  	
   

  	
  0

  	
   

  
	
  1993 Director Stock
  Option Plan

  	
   

  	
  4,200

  	
   

  	
  0

  	
   

  
	
  1997 Stock Option Plan

  	
   

  	
  39,500

  	
   

  	
  10,500

  	
   

  
	
  2001 Equity Incentive
  Plan

  	
   

  	
  276,363

  	
   

  	
  322,637

  	
   

  
	
  2005 Director Stock
  Option Plan

  	
   

  	
  63,846

  	
   

  	
  36,154

  	
   

  
	
  Options outside of
  approved plans

  	
   

  	
  513,715

  	
   

  	
   

  	
   

  
	
  Common Shares
  Issuable under Stock Options

  	
   

  	
  898,399

  	
   

  	
  369,291

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Warrants (1)

  	
   

  	
  2,398,743

  	
   

  	
   

  	
   

  
	
  Unit Warrants

  	
   

  	
  49,666

  	
   

  	
   

  	
   

  
	
  Embedded Warrants

  	
   

  	
  49,666

  	
   

  	
   

  	
   

  
	
  Common Shares
  Issuable under Warrants (1)

  	
   

  	
  2,498,075

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AGREEMENTS OUTSTANDING FOR
  ISSUANCE OF COMMON STOCK (1)

  	
   

  	
  3,396,474

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AVAILABLE AND OUTSTANDING AGREEMENTS FOR
  ISSUANCE OF COMMON STOCK (1)

  	
   

  	
   

  	
   

  	
  3,765,765

  	
   

  

 

(1) Excludes
“interest accrual” warrants to be issued in connection with the Secured
Promissory Note dated April 20, 2007.

MedicalCV, Inc.

Schedule 5.4(e) - Shareholder
Agreements, Voting Agreements, Proxy Rights, etc.

As of
June 11, 2007

None

MedicalCV, Inc.

Schedule
5.6(a) - Form 10-KSB, Forms 10-QSB, and Off-Balance Sheet Arrangements or
Transactions

As
of June 11, 2007

 

	
  

  	
   

  	
  Remaining 

  Amount

  Payable

  	
   

  
	
  Operating Lease

  	
   

  	
  17,050

  	
   

  
	
  LightWave
  Royalty - minimum annual payments

  	
   

  	
  2,325,000

  	
   

  
	
  LightWave
  Royalty - milestone after $1.5M cumulative sales

  	
   

  	
  385,000

  	
   

  
	
  Total Off-Balance Sheet
  Obligations

  	
   

  	
  2,727,050

  	
   

  

 

MedicalCV, Inc.

Schedule
5.7 - Changes since Balance Sheet Date of January 31, 2007

As
of June 11, 2007

 

(n) Granted an option on
March 30, 2007 to purchase 1,000 shares of common stock to an employee; granted
an option on May 31, 2007 to purchase 2,000 to an employee; granted an option
on May 31, 2007 to purchase 1,500 shares of common stock to an employee; issued
warrants on March 14, 2007 for the purchase of 5,000 shares of common stock to
LightWave Ablation Systems for milestone achievements; and adjusted certain
warrants on April 20, 2007 to purchase an additional 4,437 shares of common
stock as a result of anti-dilution adjustments.

MedicalCV, Inc.

Schedule
5.19 - Material Licenses, Permits, Approvals

As
of June 11, 2007

 

	
   

  	
   

  	
  US FDA 510(K)

  	
   

  
	
   

  	
   

  	
  Device Classification Name

  	
   

  	
  510(K) Number

  	
   

  	
  Decision Date

  	
   

  
	
  SOLARTM Surgical
  Ablation System

  	
   

  	
  Laser
  Instrument, Surgical, Powered

  	
   

  	
  K061489

  	
   

  	
  3-16-07

  	
   

  
	
  ATRILAZETM Surgical
  Ablation System

  	
   

  	
  Laser
  Instrument, Surgical, Powered

  	
   

  	
  K060680

  	
   

  	
  4-11-06

  	
   

  
	
  ATRILAZETM Malleable S-2
  Disposable Probe

  	
   

  	
  Laser
  Instrument, Surgical, Powered

  	
   

  	
  K052495

  	
   

  	
  10-11-05

  	
   

  
	
  ATRILAZETM Soft Tissue
  Ablation System

  	
   

  	
  Laser
  Instrument, Surgical, Powered

  	
   

  	
  K040744

  	
   

  	
  11-30-04

  	
   

  

 

 

EXHIBIT A

FORM OF SECURED PROMISSORY NOTE

THIS
NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS.  IT MAY
NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS NOTE UNDER SUCH ACT OR STATE LAWS, OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION THEREUNDER IS NOT
REQUIRED.

SECURED
PROMISSORY NOTE

	
  $

  	
   

  	
  June    ,
  2007

  
	
   

  	
   

  	
  2007
  Secured Notes Series

  

 

FOR VALUE
RECEIVED, the
undersigned, MedicalCV, Inc., a Minnesota corporation (the “Borrower”), with its
principal executive office at 9725 South Robert Trail, Inver Grove Heights,
Minnesota 55077, hereby promises to pay to the order of                                                   (the
“Holder”),
or its assigns, the principal sum of $                                 ,
or such greater or lesser amount as shall then equal the outstanding principal
amount hereof (the “Principal Amount”), together
with interest from the date of this Secured Promissory Note (this “Note”)
on the outstanding principal balance at an annual rate equal to 11% per annum.
All payments of principal and interest shall be made in immediately available
funds in lawful money of the United States.

This Note is one of multiple
notes in the 2007 Secured Notes Series (collectively, the “Notes”) referred to
in that certain Secured Note Purchase Agreement dated June    ,
2007 by and among the Company, the Holder and certain other holders (the “Note Purchase
Agreement”).  The
Notes are secured by a first priority security interest in and to the Company’s
assets, as set forth in that certain Security Agreement June    ,
2007 by and among the Company, the Holder and certain other holders (the “Security Agreement”).  Capitalized
terms not otherwise defined in this Note have the meanings placed on them in
the Note Purchase Agreement and/or the Security Agreement.

1.             Payment of Principal and Interest

(a)   The entire unpaid principal
balance, together with any accrued but unpaid interest and other unpaid charges
or fees hereunder, shall be due and payable on the date that is thirty-six (36)
months following the Effective Date of the Note Purchase Agreement (the “Maturity Date”).

(b)   During the initial twelve
(12) month period following the Effective Date, interest on the Note will
accrue and be added to the Principal Amount of the Note.  Within thirty (30) days following the end of
such 12-month period, the Company shall issue to the Holder a five-year
Warrant, in substantially the form attached to the Note Purchase Agreement as Exhibit
B2, which shall entitle the Holder to purchase such number of shares of the
Company’s Common Stock that is equal to the quotient obtained by dividing (i)
60% of the accrued interest for the initial 12-month period by (ii) $4.00.

(c)   Following the initial
12-month period, the Company will have the right to (i) pay the accrued
interest on the Note quarterly in arrears or (ii) allow the interest for such
quarter continue to accrue and be added to the Principal Amount of the
Note.  Any payment of accrued interest
must be made to the Holder on or before the 15th day following
the end of such quarter.  If the Company
elects to have the quarterly interest added to the Principal Amount of the
Note, then the Company shall issue to the Holder, within thirty (30) days
following the end of such quarter, a five-year Warrant, in substantially the
form attached to the Note Purchase Agreement as Exhibit B2, entitling the
Holder to purchase such

number
of shares of the Company’s Common Stock that is equal to the quotient obtained
by dividing (i) 60% of the accrued interest for the quarter by (ii) $4.00.

(d)   The Borrower shall have the
right to prepay this Note, in part or in whole, at any time during the term of
this Note, subject to a premium payment (the “Premium Payment”) payable to the
Holder as follows:

(i)    8% of the Principal Amount if prepayment is made
within the first 12-month period following the Effective Date;

(ii)   6% of the Principal Amount if prepayment is made
within the second 12-month period following the Effective Date; and

(iii)  3% of the Principal Amount if prepayment is made
within the third 12-month period following the Effective Date.

The Prepayment Premium shall be paid to the Holder in immediately
available funds simultaneously with the Prepayment.  If the Borrower elects to prepay less than
the whole Principal Amount then outstanding, then the Prepayment Premium shall
apply only to such portion of the Principal Amount that is being prepaid at
that time.  The Prepayment Premium shall
not apply if the prepayment of the Note is a result of a change of control of
the Company.

(e)   Notwithstanding anything
herein to the contrary, if any payment of Principal Amount or interest (or,
pursuant to Section 1(b) or (c) above, a Warrant issuance) becomes due on a
Saturday, a Sunday or a day on which banks in the State of Minnesota are
authorized or required by law to close, the due date thereof shall be extended to
the immediately succeeding day which is not a Saturday, a Sunday or a day on
which the banks in the State of Minnesota are closed, and any applicable
interest thereon shall accrue during the period of such extension at the rate
provided for herein.

(f)    If the Principal Amount of
the Note is prepaid in full prior to the Maturity Date, the Company agrees to
issue to the Holder, at the time of the Prepayment, the Warrant that would
otherwise have been issuable pursuant to Section 1(b) or 1(c) for such period,
as applicable, calculated on a pro rata basis for that period.

2.             Warrant Rights.  The Holder shall be entitled to receive
Warrants to purchase shares of the Borrower’s common stock, as set forth in the
Note Purchase Agreement and in Sections 1(b) and 1(c) of this Note (without
duplication).

3.             Rights of Holder.  Upon an Event of Default, the rights and
remedies of the Holder are as set forth in the Note Purchase Agreement and the
Security Agreement, which, among other things, 
provide that the with respect to any action taken in connection with the
Note Purchase Agreement or the Security Agreement, the Holders of the 2007
Secured Note Series shall act in accordance with and under the directions of
the Holders holding a majority-in-interest of the outstanding Principal Amount
of the Notes, or a designee appointed by such Holders. 

4.             Security.  This Note and the payment of
all principal, interest and other sums hereunder is secured by a security
interest in the Collateral, pursuant to the Note Purchase Agreement and the
Security Agreement.

5.             Amendments.  Changes in or additions to this
Note may be made, or compliance with any term, covenant, agreement, condition
or provision set forth herein may be omitted or waived (either generally or in
a particular instance and either retroactively or prospectively), only in
writing.

6.             Waiver.  The failure of the Holder to
insist, in any one or more instances, on performance of any of the terms,
covenants and conditions hereof shall not be construed as a waiver or relinquishment
of any rights granted hereunder or of the future performance of any such terms,
covenants or conditions, but the obligation of the Borrower with respect
thereto shall continue to be in full force and effect.

7.             Benefits;
Assignment.  The rights and benefits of the Holder
hereunder shall inure to the benefit of its successors and assigns, and
Borrower acknowledges that Holder may pledge this Note to its Holders. The
Borrower may not assign any rights or obligations hereunder without the prior written
consent of the Holder, and any such attempted assignment shall be null and void
and of no force or effect.

8.             Notices.  All notices, requests and
demands to or upon the parties hereto shall be deemed to have been given or
made when deposited in the mail, certified or registered, postage prepaid,
addressed to the address of the party set forth in the Note Purchase Agreement
or such other address as any party may request by notice given as aforesaid.

9.             Collection.  The Borrower agrees to pay
any costs and expenses (including reasonable attorneys’ fees and disbursements)
incurred by the Holder in the collection of any and all amounts due under this
Note that are not paid when due and in the enforcement of the Holder’s rights
under this Note.

10.          Governing
Law. 
This Note shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the laws of the State of Minnesota,
without giving effect to the principles of conflict of laws thereof.

11.          Severability.  The holding of any provision
of this Note to be invalid or unenforceable by a court of competent
jurisdiction shall not affect any other provision hereof and all other
provisions hereof shall remain in full force and effect.

IN WITNESS WHEREOF, this Secured
Promissory Note has been executed and delivered on the date first above written
by the undersigned Borrower.

	
  

  	
   

  	
  MEDICALCV, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   Marc P. Flores

  
	
   

  	
   

  	
   

  	
   President and Chief Executive Officer

  

 

 

EXHIBIT B1

WARRANT TO BE ISSUED AT CLOSING

NEITHER THIS SECURITY NOR
THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. 
THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
SECURED BY SUCH SECURITIES.

COMMON STOCK PURCHASE
WARRANT

To Purchase                Shares
of Common Stock of

MEDICALCV, INC.

THIS COMMON STOCK PURCHASE WARRANT (the "Warrant")
certifies that, for value received,                               (the
"Holder"), is entitled, upon the terms and subject to the
limitations on exercise and the conditions hereinafter set forth, at any time
on or after the date hereof (the "Initial Exercise Date") and
on or prior to the close of business on the fifth (5th) anniversary of the Initial Exercise
Date (the "Termination Date") but not thereafter, to subscribe
for and purchase from MEDICALCV, INC., a Minnesota corporation (the "Company"),
up to             shares
(the "Warrant Shares") of Common Stock, par value $0.01 per
share, of the Company (the "Common Stock").  The purchase price of one share of Common
Stock under this Warrant shall be equal to the Exercise Price, as defined in
Section 2(b).  

Section 1.               Definitions.  In addition to the terms defined elsewhere in
this Warrant, for all purposes of this Warrant, the following terms have the
meanings indicated in this Section 1. 

"Business Day" means any day except Saturday, Sunday,
any day which shall be a federal legal holiday in the United States or any day
on which banking institutions in the State of New York are authorized or
required by law or other governmental action to close.

"Closing Date" means the Business Day when all of the
Transaction Documents have been executed and delivered by the applicable
parties thereto, and all conditions precedent to the parties' obligations
thereunder have been satisfied or waived.

"Person" means an individual or corporation,
partnership, trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.

"Securities" means the Warrants and the Warrant
Shares.

"Trading Day" means a day on which the Common Stock is
traded on a Trading Market.

"Trading Market" means the following markets or
exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq
Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or
the OTC Bulletin Board.

"Transaction Documents" means this Warrant, the
Secured Note Purchase Agreement dated June   , 2007 by and among
the Company, the Holder and certain other holders listed on Schedule 1.0
thereto (the "Purchase Agreement") and any other documents or
agreements executed in connection with the transactions contemplated
thereunder.

"VWAP" means, for any date, the price determined by
the first of the following clauses that applies: (a) if the Common Stock is
then listed or quoted on a Trading Market, the daily volume weighted average price
of the Common Stock for such date (or the nearest preceding date) on the
Trading Market on which the Common Stock is then listed or quoted for trading
as reported by Bloomberg Financial L.P. (based on a Trading Day from 9:30 a.m.
(New York City time) to 4:02 p.m. (New York City time)); (b)  if the OTC
Bulletin Board is not a Trading Market, the volume weighted average price of
the Common Stock for such date (or the nearest preceding date) on the OTC
Bulletin Board; (c) if the Common Stock is not then quoted for trading on the
OTC Bulletin Board and if prices for the Common Stock are then reported in the
"Pink Sheets" published by Pink Sheets, LLC (or a similar
organization or agency succeeding to its functions of reporting prices), the
most recent bid price per share of the Common Stock so reported; or (d) in
all other cases, the fair market value of a share of Common Stock as determined
by an independent appraiser selected in good faith by the investors who are
signatories to the Transaction Documents and reasonably acceptable to the
Company.  

Section 2.               Exercise.

a)             Exercise of
Warrant.  Exercise of the purchase
rights represented by this Warrant may be made, in whole or in part, at any
time or times on or after the Initial Exercise Date and on or before the
Termination Date by delivery to the Company of a duly executed facsimile or
".pdf" copy of the Notice of Exercise Form annexed hereto (or such
other office or agency of the Company as it may designate by notice in writing
to the registered Holder at the address of such Holder appearing on the books
of the Company); and, within 3 Trading Days of the date said Notice of Exercise
is delivered to the Company, the Company shall have received payment of the
aggregate Exercise Price of the shares thereby purchased by wire transfer or
cashier's check drawn on a United States bank, unless this Warrant is being
exercised pursuant to the cashless exercise

 2
 

provision set forth in
Section 2(c) below.  Notwithstanding
anything herein to the contrary, the Holder shall not be required to physically
surrender this Warrant to the Company until the Holder has purchased all of the
Warrant Shares available hereunder and the Warrant has been exercised in full,
in which case, the Holder shall surrender this Warrant to the Company for
cancellation within 3 Trading Days of the date the final Notice of Exercise is
delivered to the Company.  Partial
exercises of this Warrant resulting in purchases of a portion of the total
number of Warrant Shares available hereunder shall have the effect of lowering
the outstanding number of Warrant Shares purchasable hereunder in an amount
equal to the applicable number of Warrant Shares purchased.  The Holder and the Company shall maintain
records showing the number of Warrant Shares purchased and the date of such
purchases.  In the event of any dispute
or discrepancy, the records of the Company shall be controlling and
determinative in the absence of manifest error. 
The Holder and any assignee, by acceptance of this Warrant, acknowledge
and agree that, by reason of the provisions of this paragraph, following the
purchase of a portion of the Warrant Shares hereunder, the number of Warrant
Shares available for purchase hereunder at any given time may be less than the
amount stated on the face hereof.

b)            Exercise Price.  The exercise price per share of the Common
Stock under this Warrant shall be $4.00, subject to adjustment hereunder (the
"Exercise Price").

c)             Cashless Exercise.  The
Holder may also exercise this Warrant, only to the extent of any Warrant Shares
that may not be included in the registration statement required to be filed
with the Securities and Exchange Commission (the "Commission")
pursuant to the Purchase Agreement as a result of an interpretation by the
Commission that Securities Act Rule 415 prohibits such registration (the
"Excluded Warrant Shares"), by means of a "cashless
exercise" in which the Holder shall be entitled to receive a certificate
for the number of Warrant Shares equal to the quotient obtained by dividing
[(A-B) (X)] by (A), where:

(A) =                    the VWAP on
the Trading Day immediately preceding the date of such election;

(B) =                      the Exercise
Price of this Warrant, as adjusted; and 

(X) =                     the number of
Excluded Warrant Shares issuable upon exercise of this Warrant in accordance
with the terms of this Warrant by means of a cash exercise rather than a
cashless exercise.

d)            Mechanics of
Exercise.  

i.              Authorization of
Warrant Shares.  The Company
covenants that all Warrant Shares which may be issued upon the exercise of the
purchase rights represented by this Warrant will, upon exercise of the purchase
rights represented by this Warrant, be duly authorized, validly issued, fully
paid and nonassessable and free from all taxes, liens and charges created by
the Company in respect of the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).  

 3
 

ii.             Delivery of
Certificates Upon Exercise. 
Certificates for shares purchased hereunder shall be transmitted by the
transfer agent of the Company to the Holder by crediting the account of the
Holder's prime broker with the Depository Trust Company through its Deposit
Withdrawal Agent Commission ("DWAC") system if the Company is
a participant in such system, and otherwise by physical delivery to the address
specified by the Holder in the Notice of Exercise within 3 Trading Days from
the delivery to the Company of the Notice of Exercise Form, surrender of this
Warrant (if required) and payment of the aggregate Exercise Price as set forth
above ("Warrant Share Delivery Date").  This Warrant shall be deemed to have been
exercised on the date (a) the Exercise Price is received by the Company or (b)
notification to the Company that this Warrant is being exercised pursuant to a
cashless exercise provision set forth in Section 2(c) above.  The Warrant Shares shall be deemed to have
been issued, and Holder or any other person so designated to be named therein
shall be deemed to have become a holder of record of such shares for all
purposes, as of the date the Warrant has been exercised by payment to the
Company of the Exercise Price (or by cashless exercise, if permitted) and all
taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi)
prior to the issuance of such shares, have been paid.  

iii.            Delivery of New
Warrants Upon Exercise.  If this
Warrant shall have been exercised in part, the Company shall, at the request of
a Holder and upon surrender of this Warrant certificate, at the time of
delivery of the certificate or certificates representing Warrant Shares,
deliver to Holder a new Warrant evidencing the rights of Holder to purchase the
unpurchased Warrant Shares called for by this Warrant, which new Warrant shall
in all other respects be identical with this Warrant.

iv.            Rescission Rights.  If the Company fails to cause its transfer
agent to transmit to the Holder a certificate or certificates representing the
Warrant Shares pursuant to this Section 2(d) by the Warrant Share Delivery
Date, then the Holder will have the right to rescind such exercise.

v.             No Fractional
Shares or Scrip.  No fractional
shares or scrip representing fractional shares shall be issued upon the
exercise of this Warrant.  As to any
fraction of a share which Holder would otherwise be entitled to purchase upon
such exercise, the Company shall at its election, either pay a cash adjustment
in respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next whole share.

vi.            Charges, Taxes and
Expenses.  Issuance of certificates
for Warrant Shares shall be made without charge to the Holder for any issue or
transfer tax or other incidental expense in respect of the issuance of such
certificate, all of which taxes and expenses shall be paid by the Company, and
such certificates shall be issued in the name of the Holder or in such name or
names as may be directed by the Holder; provided, however, that
in the event certificates for Warrant Shares are to be issued in a name other
than the name of the Holder, this Warrant when surrendered for exercise shall
be accompanied by the Assignment Form attached

 4
 

hereto duly executed by
the Holder; and the Company may require, as a condition thereto, the payment of
a sum sufficient to reimburse it for any transfer tax incidental thereto.

vii.           Closing of Books.  The Company will not close its shareholder
books or records in any manner which prevents the timely exercise of this
Warrant, pursuant to the terms hereof.

e)             Restriction on
Exercise. No Holder shall have the right to exercise this Warrant, to the
extent that after giving effect to such exercise, the Holder (together with the
Holder's affiliates) would beneficially own in excess of 9.99% of the shares of
the Common Stock outstanding immediately after giving effect to such exercise.
For purposes of the foregoing sentence, the aggregate number of shares of
Common Stock beneficially owned by the Holder and its affiliates shall include
the number of shares of Common Stock issuable upon exercise of this Warrant
with respect to which the determination of such sentence is being made, but
shall exclude shares of Common Stock which would be issuable upon (i) exercise
of the remaining, unexercised portion of this Warrant beneficially owned by the
Holder and its affiliates and (ii) exercise or conversion of the unexercised or
unconverted portion of any other securities of the Company beneficially owned
by the Holder and its affiliates (including, without limitation, any
convertible notes or convertible preferred stock or warrants) subject to a
limitation on conversion or exercise analogous to the limitation contained
herein. Except as set forth in the preceding sentence, for purposes of this
paragraph, beneficial ownership shall be calculated in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended. For purposes of this
Warrant, in determining the number of outstanding shares of Common Stock, a
holder may rely on the number of outstanding shares of Common Stock as
reflected in (1) the Company's most recent Quarterly Report on Form 10-QSB,
Annual Report on Form 10-KSB or other public filing with the Commission, as the
case may be, (2) a more recent public announcement by the Company or (3) any
other notice by the Company or its transfer agent setting forth the number of
shares of Common Stock outstanding. For any reason at any time, upon the
written or oral request of the Holder, the Company shall, within three (3)
business days, confirm orally or in writing to the Holder the number of shares
of Common Stock then outstanding. In any case, the number of outstanding shares
of Common Stock shall be determined after giving effect to the conversion or
exercise of securities of the Company by the Holder and its affiliates since
the date as of which such number of outstanding shares of Common Stock was
reported. The restriction described in this Section 2(e) may not be revoked.

 

Section 3.               Certain
Adjustments.  

a)             Stock Dividends
and Splits.  If the Company, at any
time while this Warrant is outstanding: (A) pays a stock dividend or otherwise
make a distribution or distributions on shares of its Common Stock or any other
equity or equity equivalent securities payable in shares of Common Stock
(which, for avoidance of doubt, shall not include any shares of Common Stock
issued by the Company upon exercise of this

 5
 

Warrant, any other
warrant or any option), (B) subdivides outstanding shares of Common Stock into
a larger number of shares, (C) combines (including by way of reverse stock
split) outstanding shares of Common Stock into a smaller number of shares, or
(D) issues by reclassification of shares of the Common Stock any shares of
capital stock of the Company, then in each case the Exercise Price shall be
multiplied by a fraction of which the numerator shall be the number of shares
of Common Stock (excluding treasury shares, if any) outstanding immediately
before such event and of which the denominator shall be the number of shares of
Common Stock outstanding immediately after such event and the number of shares
issuable upon exercise of this Warrant shall be proportionately adjusted.  Any adjustment made pursuant to this Section
3(a) shall become effective immediately after the record date for the
determination of shareholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of
a subdivision, combination or re-classification.

b)            Adjustment for
Issuance of Shares of Common Stock Below Exercise Price.  From the date hereof until 12 months after
the Closing Date (the "Adjustment Period"), the Exercise Price
shall be subject to adjustment from time to time as provided in this Section
3(b).

i.              If during the
Adjustment Period, the Company issues or sells, or in accordance with this
Section 3(b) is deemed to have issued or sold, any shares of Common Stock
(excluding Excluded Securities) for a consideration per share (the "New Securities Issuance Price")
less than a price (the "Applicable
Price") equal to the Exercise Price in effect immediately prior
to such time, then immediately after such issue or sale, the Exercise Price
then in effect shall be reduced to an amount equal to the New Securities
Issuance Price.

 

ii.             For purposes of
determining the adjusted Exercise Price under Section 3(b) hereof, the
following will be applicable:

 

(A)          Issuance of Rights or
Options. If the Company in any manner grants or sells any Options and the
lowest price per share for which one share of Common Stock is issuable upon the
exercise of any such Option or upon conversion, exchange or exercise of any
Convertible Securities issuable upon exercise of such Option is less than the
Applicable Price, then such share of Common Stock shall be deemed to be
outstanding and to have been issued and sold by the Company at the time of the
granting or sale of such Option for such price per share. For purposes of this
Section 3(b)(ii)(A), the "lowest price per share for which one share
of Common Stock is issuable upon the exercise of any such Option or upon
conversion, exchange or exercise of any Convertible Securities issuable upon
exercise of such Option" shall be equal to the sum of the lowest amounts
of consideration (if any) received or receivable by the Company with respect to
any one share of Common Stock upon granting or sale of the Option, upon
exercise of the Option and upon conversion, exchange or exercise of any
Convertible Security issuable upon exercise of such Option. No further
adjustment of the Exercise Price shall be made upon the actual issuance of such
Common Stock or of such Convertible Securities upon the exercise of such

 6
 

Options or upon the actual issuance of such Common
Stock upon conversion, exchange or exercise of such Convertible
Securities.  "Convertible
Securities" means any evidence of indebtedness, shares or securities,
in each case convertible into or exchangable for Common Stock.  "Options" means rights,
options or warrants to subscribe for, purchase or otherwise acquire shares of
Common Stock or Convertible Securities.

 

(B)           Issuance of
Convertible Securities. If the Company in any manner issues or sells any
Convertible Securities and the lowest price per share for which one share of
Common Stock is issuable upon such conversion, exchange or exercise thereof is
less than the Applicable Price, then such share of Common Stock shall be deemed
to be outstanding and to have been issued and sold by the Company at the time
of the issuance or sale of such Convertible Securities for such price per
share. For the purposes of this Section 3(b)(ii)(B), the "lowest price per
share for which one share of Common Stock is issuable upon such conversion,
exchange or exercise" shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with respect to
any one share of Common Stock upon the issuance or sale of the Convertible
Security and upon the conversion, exchange or exercise of such Convertible
Security. No further adjustment of the Exercise Price shall be made upon the
actual issuance of such Common Stock upon conversion, exchange or exercise of
such Convertible Securities, and if any such issue or sale of such Convertible
Securities is made upon exercise of any Options for which adjustment of the
Exercise Price had been or are to be made pursuant to other provisions of this
Section 3(b)(ii), no further adjustment of the Exercise Price shall be made by
reason of such issue or sale. 

 

(C)           Change in Option
Price or Conversion Rate. If the purchase or exercise price provided for in
any Options, or the additional consideration, if any, payable upon the issue,
conversion, exchange or exercise of any Convertible Securities, or the rate at
which any Convertible Securities are convertible into or exchangeable or
exercisable for Common Stock changes at any time, the Exercise Price in effect
at the time of such change shall be adjusted to the Exercise Price which would
have been in effect at such time had such Options or Convertible Securities
provided for such changed purchase price, additional consideration or changed
conversion rate, as the case may be, at the time initially granted, issued or
sold. For purposes of this Section 3(b)(ii)(C), if the terms of any Option or
Convertible Security that was outstanding as of the Closing Date are changed in
the manner described in the immediately preceding sentence, then such Option or
Convertible Security and the Common Stock deemed issuable upon exercise,
conversion or exchange thereof shall be deemed to have been issued as of the
date of such change. No adjustment shall be made if such adjustment would
result in an increase of the Exercise Price then in effect.  Notwithstanding the foregoing, no adjustment
shall be made to the Exercise Price of this Warrant due to anti-dilution
adjustments made to securities outstanding as of the Closing Date as a result
of the issuance of Securities pursuant to the Transaction Documents. 

 

 7
 

(D)          Calculation of
Consideration Received. In case any Option is issued in connection with the
issue or sale of other securities of the Company, together comprising one
integrated transaction in which no specific consideration is allocated to such
Options by the parties thereto, the Options will be deemed to have been issued
for a consideration of $0.01. If any Common Stock, Options or Convertible
Securities are issued or sold or deemed to have been issued or sold for cash,
the consideration received therefor will be deemed to be the gross amount
received by the Company therefor. If any Common Stock, Options or Convertible
Securities are issued or sold for a consideration other than cash, the amount
of the consideration other than cash received by the Company will be the fair
value of such consideration, except where such consideration consists of
marketable securities, in which case the amount of consideration received by
the Company will be the arithmetic average of the closing sale prices of such
securities during the ten (10) consecutive trading days ending on the date
of receipt of such securities. The fair value of any consideration other than
cash or securities will be determined jointly by the Company and the holders of
at least a majority in interest of the Warrants then outstanding. 

 

(E)           Exceptions to
Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment
will be made under this Section 3(b) in respect of Excluded Securities.  "Excluded Securities" means
the issuance of (a) shares of Common Stock or options to employees, officers or
directors of, or consultants to, the Company pursuant to any stock option
agreement, stock option plan or equity incentive plan duly adopted by a
majority of the non-employee members of the Board of Directors of the Company
or a majority of the members of a committee of non-employee directors  established for such purpose (for purposes of clarity, the
issuance of shares of Common Stock upon exercise of options granted pursuant to
a stock option agreement, stock option plan or equity incentive plan subsequent
to the date hereof shall also be Excluded Securities), (b) securities upon the
exercise or exchange of or conversion of (i) any Securities issued in
connection with the Purchase Agreement; (ii) securities to a registered
broker-dealer in connection with the transactions contemplated by the Purchase
Agreement; and/or (iii) other securities or rights exercisable or exchangeable
for or convertible into shares of Common Stock which are issued and outstanding
on the date of the Purchase Agreement, provided that such securities have not
been amended since the date of the Purchase Agreement (other than on a
non-discretionary basis pursuant to the pre-existing anti-dilution provisions
thereof) to increase the number of such securities or to decrease the exercise,
exchange or conversion price of any such securities, (c) securities issued
pursuant to acquisitions or strategic transactions approved by  a majority of the disinterested directors, provided any
such issuance shall only be to a Person which is, itself or through its
subsidiaries, an operating company in a business synergistic with the business
of the Company and in which the Company receives benefits in addition to the
investment of funds, but shall not include a transaction in which the Company
is issuing securities primarily for the purpose of raising capital or to an
entity whose primary business is investing in securities, (d) shares of Common
Stock or other securities issued in connection with any stock split, stock
dividend

 8
 

or
recapitalization of the Company (subject to Section 3(a) hereof), and (e)
shares of Common Stock or other securities issued in connection with any registered
primary public offering.

c)             Calculations.  All calculations under this Section 3 shall
be made to the nearest cent or the nearest 1/100th of a share, as the case may
be.  For purposes of this Section 3, the
number of shares of Common Stock deemed to be issued and outstanding as of a
given date shall be the sum of the number of shares of Common Stock (excluding
treasury shares, if any) issued and outstanding.

d)            Voluntary
Adjustment By Company.  The Company
may at any time during the term of this Warrant reduce the then current
Exercise Price to any amount and for any period of time deemed appropriate by
the Board of Directors of the Company.

e)             Notice to Holders.  

i.              Adjustment to
Exercise Price.  Whenever the
Exercise Price is adjusted pursuant to any provision of this Section 3, the
Company shall promptly mail to each Holder a notice setting forth the Exercise
Price after such adjustment and setting forth a brief statement of the facts
requiring such adjustment.  

ii.             Notice to Allow
Exercise by Holder.  If (A) the
Company shall declare a dividend (or any other distribution in whatever form)
on the Common Stock; (B) the Company shall declare a special nonrecurring cash
dividend on or a redemption of the Common Stock; (C) the Company shall
authorize the granting to all holders of the Common Stock rights or warrants to
subscribe for or purchase any shares of capital stock of any class or of any
rights; (D) the approval of any shareholders of the Company shall be required
in connection with any reclassification of the Common Stock, any consolidation
or merger to which the Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, of any compulsory share
exchange whereby the Common Stock is converted into other securities, cash or
property; (E) the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company; then, in
each case, the Company shall cause to be mailed to the Holder at its last
address as it shall appear upon the Warrant Register of the Company, at least
20 calendar days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, redemption, rights or warrants, or
if a record is not to be taken, the date as of which the holders of the Common
Stock of record to be entitled to such dividend, distributions, redemption,
rights or warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer or share exchange is
expected to become effective or close, and the date as of which it is expected
that holders of the Common Stock of record shall be entitled to exchange their
shares of the Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer or share
exchange; provided that the failure to mail such notice or any defect therein
or in the mailing thereof shall not affect the validity of the corporate action
required to be specified in such

 9
 

notice.  The Holder is entitled to exercise this
Warrant during the 20-day period commencing on the date of such notice to the
effective date of the event triggering such notice.

Section 4.               Transfer of
Warrant.

a)             Transferability.  Subject to compliance with any applicable
securities laws and the conditions set forth in Section 4(d) hereof, this
Warrant and all rights hereunder (including, without limitation, any
registration rights) are transferable, in whole or in part, upon surrender of
this Warrant at the principal office of the Company or its designated agent,
together with a written assignment of this Warrant substantially in the form
attached hereto duly executed by the Holder or its agent or attorney and funds
sufficient to pay any transfer taxes payable upon the making of such
transfer.  Upon such surrender and, if
required, such payment, the Company shall execute and deliver a new Warrant or
Warrants in the name of the assignee or assignees and in the denomination or
denominations specified in such instrument of assignment, and shall issue to
the assignor a new Warrant evidencing the portion of this Warrant not so
assigned, and this Warrant shall promptly be cancelled.  A Warrant, if properly assigned, may be
exercised by a new holder for the purchase of Warrant Shares without having a
new Warrant issued.  

b)            New Warrants.  This Warrant may be divided or combined with
other Warrants upon presentation hereof at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued, signed by the Holder or its agent or
attorney.  Subject to compliance with
Section 4(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice.

c)             Warrant Register.  The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Holder hereof from time to
time.  The Company may deem and treat the
registered Holder of this Warrant as the absolute owner hereof for the purpose
of any exercise hereof or any distribution to the Holder, and for all other
purposes, absent actual notice to the contrary.

d)            Transfer
Restrictions.  If, at the time of the
surrender of this Warrant in connection with any transfer of this Warrant, the
transfer of this Warrant shall not be registered pursuant to an effective
registration statement under the Securities Act and under applicable state
securities or blue sky laws, the Company may require, as a condition of
allowing such transfer (i) that the Holder or transferee of this Warrant, as
the case may be, furnish to the Company a written opinion of counsel (which
opinion shall be in form, substance and scope customary for opinions of counsel
in comparable transactions) to the effect that such transfer may be made
without registration under the Securities Act and under applicable state
securities or blue sky laws, (ii) that the Holder or transferee execute and
deliver to the Company an investment letter in form and substance acceptable to
the Company and (iii) that the transferee be an "accredited investor"
as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated
under

 10
 

the Securities Act or a “qualified institutional buyer” as defined in
Rule 144A(a) under the Securities Act.

Section 5.               Miscellaneous.

a)             No Rights as
Shareholder Until Exercise.  This
Warrant does not entitle the Holder to any voting rights or other rights as a
shareholder of the Company prior to the exercise hereof as set forth in Section
2(d)(ii).  

b)            Loss, Theft,
Destruction or Mutilation of Warrant. 
The Company covenants that upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant or any stock certificate relating to the Warrant Shares, and in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it (which, in the case of the Warrant, shall not include the
posting of any bond), and upon surrender and cancellation of such Warrant or
stock certificate, if mutilated, the Company will make and deliver a new
Warrant or stock certificate of like tenor and dated as of such cancellation,
in lieu of such Warrant or stock certificate.

c)             Saturdays,
Sundays, Holidays, etc.  If the last
or appointed day for the taking of any action or the expiration of any right
required or granted herein shall not be a Business Day, then such action may be
taken or such right may be exercised on the next succeeding Business Day.

d)            Authorized Shares.  

The Company covenants
that during the period the Warrant is outstanding, it will reserve from its
authorized and unissued Common Stock a sufficient number of shares to provide
for the issuance of the Warrant Shares upon the exercise of any purchase rights
under this Warrant.  The Company further
covenants that its issuance of this Warrant shall constitute full authority to
its officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Warrant Shares upon the exercise
of the purchase rights under this Warrant. 
The Company will take all such reasonable action as may be necessary to
assure that such Warrant Shares may be issued as provided herein without
violation of any applicable law or regulation, or of any requirements of the
Trading Market upon which the Common Stock may be listed.  

Except and to the extent
as waived or consented to by the Holder, the Company shall not by any action,
including, without limitation, amending its articles of incorporation or through
any reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate to
protect the rights of Holder as set forth in this Warrant against
impairment.  Without limiting the
generality of the foregoing, the Company will

 11
 

(a) not increase the par value of any Warrant Shares
above the amount payable therefor upon such exercise immediately prior to such
increase in par value, (b) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use
commercially reasonable efforts to obtain all such authorizations, exemptions
or consents from any public regulatory body having jurisdiction thereof as may
be necessary to enable the Company to perform its obligations under this
Warrant.

Before taking any action
which would result in an adjustment in the number of Warrant Shares for which
this Warrant is exercisable or in the Exercise Price, the Company shall obtain
all such authorizations or exemptions thereof, or consents thereto, as may be
necessary from any public regulatory body or bodies having jurisdiction
thereof.

e)             Jurisdiction.  All questions concerning the construction,
validity, enforcement and interpretation of this Warrant shall be determined in
accordance with the provisions of the Purchase Agreement.

f)             Restrictions.  The Holder acknowledges that the Warrant
Shares acquired upon the exercise of this Warrant, if not registered, will have
restrictions upon resale imposed by state and federal securities laws.

g)            Nonwaiver and
Expenses.  No course of dealing or
any delay or failure to exercise any right hereunder on the part of Holder
shall operate as a waiver of such right or otherwise prejudice the Company's or
the Holder's rights, powers or remedies, notwithstanding the fact that all
rights hereunder terminate on the Termination Date.  If the Company or a Holder willfully and knowingly
fails to comply with any provision of this Warrant, which results in any
material damages to the Holder or Company (as the case may be), the breaching
party shall pay to the other party such amounts as shall be sufficient to cover
any costs and expenses including, but not limited to, reasonable attorneys'
fees, including those of appellate proceedings, incurred by the non-breaching
party in collecting any amounts due pursuant hereto or in otherwise enforcing
any of its rights, powers or remedies hereunder.

h)            Notices.  Any notice, request or other document
required or permitted to be given or delivered to the Holder by the Company
shall be delivered in accordance with the notice provisions of the Purchase
Agreement.

i)              Limitation of
Liability.  No provision hereof, in
the absence of any affirmative action by Holder to exercise this Warrant to
purchase Warrant Shares, and no enumeration herein of the rights or privileges
of Holder, shall give rise to any liability of Holder for the purchase price of
any Common Stock or as a shareholder of the Company, whether such liability is
asserted by the Company or by creditors of the Company.

j)              Remedies.  Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to seek specific performance of its rights under this Warrant.  The Company agrees that monetary

 12
 

damages would not be
adequate compensation for any loss incurred by reason of a breach by it of the
provisions of this Warrant and hereby agrees to waive and not to assert the
defense in any action for specific performance that a remedy at law would be
adequate.

k)             Successors and
Assigns.  Subject to applicable
securities laws, this Warrant and the rights and obligations evidenced hereby
shall inure to the benefit of and be binding upon the successors of the Company
and the successors and permitted assigns of Holder.  The provisions of this Warrant are intended
to be for the benefit of all Holders from time to time of this Warrant and
shall be enforceable by any such Holder or holder of Warrant Shares.

l)              Amendment.  This Warrant may be modified or amended or
the provisions hereof waived with the written consent of the Company and the
Holder.

m)            Severability.  Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.

n)            Headings.  The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.

********************

 13
 

IN WITNESS WHEREOF, the
Company has caused this Warrant to be executed by its officer thereunto duly
authorized.

	
  Dated: June
     , 2007

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDICALCV, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Marc P. Flores

  
	
   

  	
   

  	
  Title:

  	
  President and Chief Executive

  
	
   

  	
   

  	
   

  	
   Officer

  

 

 14

NOTICE
OF EXERCISE

To:                                                                       

(1)           The undersigned hereby elects to purchase
               
Warrant Shares of the Company pursuant to the terms of the attached Warrant,
and tenders herewith payment of the exercise price in full, together with all
applicable transfer taxes, if any.

(2)           Payment shall take the form of (check
applicable box):

o in lawful money of the United States; or

o if permitted, the cancellation of such number of
Warrant Shares as is necessary, in accordance with the formula set forth in
subsection 2(c), to exercise this Warrant with respect to the maximum number of
Excluded Warrant Shares purchasable pursuant to the cashless exercise procedure
set forth in subsection 2(c).

(3)           Please issue a certificate or
certificates representing said Warrant Shares in the name of the undersigned or
in such other name as is specified below:

                                                             

The Warrant Shares shall be delivered to the following DWAC Account
Number or by physical delivery of a certificate to:

                                                             

                                                             

                                                             

(4)           Accredited Investor. 
The undersigned is an “accredited investor” as defined in Regulation D
promulgated under the Securities Act of 1933, as amended.

[SIGNATURE OF HOLDER]

	
  Name of Investing Entity:

  	
   

  
	
  Signature of Authorized Signatory of Investing
  Entity:

  	
   

  
	
  Name of Authorized Signatory:

  	
   

  
	
  Title of Authorized Signatory:

  	
   

  
	
  Date:

  	
   

  
						

 

ASSIGNMENT
FORM

(To assign the foregoing
warrant, execute

this form and supply required information. 

Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, [         ]
all of or [                ]
shares of the foregoing Warrant and all rights evidenced thereby are hereby
assigned to

                                                                                                     
whose address is

                                                                                                                                     .

                                                                                                                                     

	
  

  	
   

  	
  Dated: 

  	
                            

  	
  ,

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Holder’s
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Holder’s
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Signature Guaranteed:

  	
   

  	
   

  
												

 

 

NOTE:  The signature to this
Assignment Form must correspond with the name as it appears on the face of the
Warrant, without alteration or enlargement or any change whatsoever, and must
be guaranteed by a bank or trust company. 
Officers of corporations and those acting in a fiduciary or other
representative capacity should file proper evidence of authority to assign the
foregoing Warrant.

 

EXHIBIT B2

FORM OF WARRANT TO BE ISSUED WITH
ACCRUED INTEREST

NEITHER THIS SECURITY NOR
THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. 
THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
SECURED BY SUCH SECURITIES.

COMMON STOCK
PURCHASE WARRANT

To
Purchase                   Shares
of Common Stock of

MEDICALCV, INC.

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”)
certifies that, for value received,                            (the
“Holder”), is entitled, upon the terms and subject to the limitations on
exercise and the conditions hereinafter set forth, at any time on or after the
date hereof (the “Initial Exercise Date”) and on or prior to the close
of business on the fifth (5th) anniversary of the Initial Exercise Date (the “Termination
Date”) but not thereafter, to subscribe for and purchase from MEDICALCV,
INC., a Minnesota corporation (the “Company”), up to               shares
(the “Warrant Shares”) of Common Stock, par value $0.01 per share, of
the Company (the “Common Stock”). 
The purchase price of one share of Common Stock under this Warrant shall
be equal to the Exercise Price, as defined in Section 2(b).

Section 1.
                                         Definitions.  In addition to the terms defined elsewhere in
this Warrant, for all purposes of this Warrant, the following terms have the
meanings indicated in this Section 1.

“Business Day” means any day except Saturday, Sunday, any day
which shall be a federal legal holiday in the United States or any day on which
banking institutions in the State of New York are authorized or required by law
or other governmental action to close.

“Closing Date” means the Business Day when all of the
Transaction Documents have been executed and delivered by the applicable
parties thereto, and all conditions precedent to the parties’ obligations
thereunder have been satisfied or waived.

“Person” means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.

“Securities” means the Warrants and the Warrant Shares.

“Trading Day” means a day on which the Common Stock is traded on
a Trading Market.

“Trading Market” means the following markets or exchanges on
which the Common Stock is listed or quoted for trading on the date in question:
the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global
Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC
Bulletin Board.

“Transaction Documents” means this Warrant, the Secured Note
Purchase Agreement dated June __, 2007 by and among the Company, the Holder and
certain other holders listed on Schedule 1.0 thereto (the “Purchase Agreement”)
and any other documents or agreements executed in connection with the
transactions contemplated thereunder.

“VWAP” means, for any date, the price determined by the first of
the following clauses that applies: (a) if the Common Stock is then listed or
quoted on a Trading Market, the daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the Trading
Market on which the Common Stock is then listed or quoted for trading as
reported by Bloomberg Financial L.P. (based on a Trading Day from 9:30 a.m. (New
York City time) to 4:02 p.m. (New York City time); (b)  if the OTC
Bulletin Board is not a Trading Market, the volume weighted average price of
the Common Stock for such date (or the nearest preceding date) on the OTC
Bulletin Board; (c) if the Common Stock is not then quoted for trading on the
OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink
Sheets” published by Pink Sheets, LLC (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per
share of the Common Stock so reported; or (d) in all other cases, the fair
market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the investors who are signatories to the
Transaction Documents and reasonably acceptable to the Company.

Section 2.                                            Exercise.

a)                                                 Exercise
of Warrant.  Exercise of the purchase
rights represented by this Warrant may be made, in whole or in part, at any
time or times on or after the Initial Exercise Date and on or before the
Termination Date by delivery to the Company of a duly executed facsimile or “.pdf”
copy of the Notice of Exercise Form annexed hereto (or such other office or
agency of the Company as it may designate by notice in writing to the registered
Holder at the address of such Holder appearing on the books of the Company); and,
within 3 Trading Days of the date said Notice of Exercise is delivered to the
Company, the Company shall have received payment of the aggregate Exercise
Price of the shares thereby purchased by wire transfer or cashier’s check drawn
on a United States bank, unless this Warrant is being exercised pursuant to the
cashless exercise 

 2
 

provision set forth in
Section 2(c) below.  Notwithstanding
anything herein to the contrary, the Holder shall not be required to physically
surrender this Warrant to the Company until the Holder has purchased all of the
Warrant Shares available hereunder and the Warrant has been exercised in full,
in which case, the Holder shall surrender this Warrant to the Company for
cancellation within 3 Trading Days of the date the final Notice of Exercise is
delivered to the Company.  Partial
exercises of this Warrant resulting in purchases of a portion of the total
number of Warrant Shares available hereunder shall have the effect of lowering
the outstanding number of Warrant Shares purchasable hereunder in an amount
equal to the applicable number of Warrant Shares purchased.  The Holder and the Company shall maintain
records showing the number of Warrant Shares purchased and the date of such
purchases.  In the event of any dispute
or discrepancy, the records of the Company shall be controlling and
determinative in the absence of manifest error. 
The Holder and any assignee, by acceptance of this Warrant, acknowledge
and agree that, by reason of the provisions of this paragraph, following the
purchase of a portion of the Warrant Shares hereunder, the number of Warrant
Shares available for purchase hereunder at any given time may be less than the
amount stated on the face hereof.

b)                                     Exercise Price.  The exercise price per share of the Common
Stock under this Warrant shall be $4.00, subject to adjustment hereunder (the “Exercise
Price”).

c)                                      Cashless
Exercise.  This Warrant may be
exercised by means of a “cashless exercise” in which the Holder shall be
entitled to receive a certificate for the number of Warrant Shares equal to the
quotient obtained by dividing [(A-B) (X)] by (A), where:

(A) =                    the VWAP on
the Trading Day immediately preceding the date of such election;

(B) =                      the Exercise
Price of this Warrant, as adjusted; and

(X) =                     the number of
Warrant Shares issuable upon exercise of this Warrant in accordance with the
terms of this Warrant by means of a cash exercise rather than a cashless
exercise.

d)                                     Mechanics
of Exercise.

i.                                          Authorization
of Warrant Shares.  The Company
covenants that all Warrant Shares which may be issued upon the exercise of the
purchase rights represented by this Warrant will, upon exercise of the purchase
rights represented by this Warrant, be duly authorized, validly issued, fully
paid and nonassessable and free from all taxes, liens and charges created by
the Company in respect of the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).

ii.                                       Delivery
of Certificates Upon Exercise.  Certificates
for shares purchased hereunder shall be transmitted by the transfer agent of
the Company to the Holder by crediting the account of the Holder’s prime broker
with the 

 3
 

Depository Trust Company
through its Deposit Withdrawal Agent Commission (“DWAC”) system if the
Company is a participant in such system, and otherwise by physical delivery to
the address specified by the Holder in the Notice of Exercise within 3 Trading
Days from the delivery to the Company of the Notice of Exercise Form, surrender
of this Warrant (if required) and payment of the aggregate Exercise Price as
set forth above (“Warrant Share Delivery Date”).  This Warrant shall be deemed to have been
exercised on the date (a) the Exercise Price is received by the Company or (b)
notification to the Company that this Warrant is being exercised pursuant to
the cashless exercise provision set forth in Section 2(c) above.  The Warrant Shares shall be deemed to have
been issued, and Holder or any other person so designated to be named therein
shall be deemed to have become a holder of record of such shares for all
purposes, as of the date the Warrant has been exercised by payment to the
Company of the Exercise Price (or by cashless exercise) and all taxes required
to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the
issuance of such shares, have been paid.

iii.                                    Delivery
of New Warrants Upon Exercise.  If
this Warrant shall have been exercised in part, the Company shall, at the
request of a Holder and upon surrender of this Warrant certificate, at the time
of delivery of the certificate or certificates representing Warrant Shares,
deliver to Holder a new Warrant evidencing the rights of Holder to purchase the
unpurchased Warrant Shares called for by this Warrant, which new Warrant shall
in all other respects be identical with this Warrant.

iv.                                   Rescission
Rights.  If the Company fails to cause
its transfer agent to transmit to the Holder a certificate or certificates
representing the Warrant Shares pursuant to this Section 2(d) by the Warrant
Share Delivery Date, then the Holder will have the right to rescind such
exercise.

v.                                      No
Fractional Shares or Scrip.  No
fractional shares or scrip representing fractional shares shall be issued upon
the exercise of this Warrant.  As to any
fraction of a share which Holder would otherwise be entitled to purchase upon
such exercise, the Company shall at its election, either pay a cash adjustment
in respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next whole share.

vi.                                   Charges,
Taxes and Expenses.  Issuance of
certificates for Warrant Shares shall be made without charge to the Holder for
any issue or transfer tax or other incidental expense in respect of the
issuance of such certificate, all of which taxes and expenses shall be paid by
the Company, and such certificates shall be issued in the name of the Holder or
in such name or names as may be directed by the Holder; provided, however,
that in the event certificates for Warrant Shares are to be issued in a name
other than the name of the Holder, this Warrant when surrendered for exercise
shall be accompanied by the Assignment Form attached hereto duly executed by
the Holder; and the Company may require, as a condition thereto, the payment of
a sum sufficient to reimburse it for any transfer tax incidental thereto.

 4
 

vii.                                Closing
of Books.  The Company will not close
its shareholder books or records in any manner which prevents the timely
exercise of this Warrant, pursuant to the terms hereof.

e)                                      Restriction
on Exercise. No Holder shall have the right to exercise this Warrant, to
the extent that after giving effect to such exercise, the Holder (together with
the Holder’s affiliates) would beneficially own in excess of 9.99% of the
shares of the Common Stock outstanding immediately after giving effect to such
exercise. For purposes of the foregoing sentence, the aggregate number of
shares of Common Stock beneficially owned by the Holder and its affiliates
shall include the number of shares of Common Stock issuable upon exercise of
this Warrant with respect to which the determination of such sentence is being
made, but shall exclude shares of Common Stock which would be issuable upon (i)
exercise of the remaining, unexercised portion of this Warrant beneficially
owned by the Holder and its affiliates and (ii) exercise or conversion of the
unexercised or unconverted portion of any other securities of the Company
beneficially owned by the Holder and its affiliates (including, without
limitation, any convertible notes or convertible preferred stock or warrants)
subject to a limitation on conversion or exercise analogous to the limitation
contained herein. Except as set forth in the preceding sentence, for purposes
of this paragraph, beneficial ownership shall be calculated in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended. For purposes
of this Warrant, in determining the number of outstanding shares of Common
Stock, a holder may rely on the number of outstanding shares of Common Stock as
reflected in (1) the Company’s most recent Quarterly Report on Form 10-QSB,
Annual Report on Form 10-KSB or other public filing with the Securities and
Exchange Commission, as the case may be, (2) a more recent public announcement
by the Company or (3) any other notice by the Company or its transfer agent
setting forth the number of shares of Common Stock outstanding. For any reason
at any time, upon the written or oral request of the Holder, the Company shall,
within three (3) business days, confirm orally or in writing to the Holder the
number of shares of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving effect to
the conversion or exercise of securities of the Company by the Holder and its
affiliates since the date as of which such number of outstanding shares of
Common Stock was reported. The restriction described in this Section 2(e) may
not be revoked.

Section 3.                                            Certain
Adjustments.

a)                                      Stock
Dividends and Splits.  If the
Company, at any time while this Warrant is outstanding: (A) pays a stock
dividend or otherwise make a distribution or distributions on shares of its
Common Stock or any other equity or equity equivalent securities payable in
shares of Common Stock (which, for avoidance of doubt, shall not include any
shares of Common Stock issued by the Company upon exercise of this Warrant, any
other warrant or any option), (B) subdivides outstanding shares of Common Stock
into a larger number of shares, (C) combines (including by way of reverse stock
split) outstanding shares of Common Stock into a smaller number of shares, or
(D) issues by reclassification of shares of the Common Stock any shares of
capital stock of the Company, then in each case the Exercise Price shall be
multiplied by a fraction of which 

 5
 

the numerator shall be
the number of shares of Common Stock (excluding treasury shares, if any)
outstanding immediately before such event and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after such event
and the number of shares issuable upon exercise of this Warrant shall be
proportionately adjusted.  Any adjustment
made pursuant to this Section 3(a) shall become effective immediately after the
record date for the determination of shareholders entitled to receive such
dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re-classification.

b)                                     Adjustment
for Issuance of Shares of Common Stock Below Exercise Price.  From the date hereof until 12 months after
the date hereof (the “Adjustment Period”), the Exercise Price shall be
subject to adjustment from time to time as provided in this Section 3(b).

i.                                          If
during the Adjustment Period, the Company issues or sells, or in accordance
with this Section 3(b) is deemed to have issued or sold, any shares of
Common Stock (excluding Excluded Securities) for a consideration per share (the
“New Securities Issuance Price”)
less than a price (the “Applicable
Price”) equal to the Exercise Price in effect immediately prior to
such time, then immediately after such issue or sale, the Exercise Price then
in effect shall be reduced to an amount equal to the New Securities Issuance
Price.

ii.                                       For
purposes of determining the adjusted Exercise Price under Section 3(b) hereof,
the following will be applicable:

(A)                              Issuance
of Rights or Options. If the Company in any manner grants or sells any
Options and the lowest price per share for which one share of Common Stock is
issuable upon the exercise of any such Option or upon conversion, exchange or
exercise of any Convertible Securities issuable upon exercise of such Option is
less than the Applicable Price, then such share of Common Stock shall be deemed
to be outstanding and to have been issued and sold by the Company at the time
of the granting or sale of such Option for such price per share. For purposes
of this Section 3(b)(ii)(A), the “lowest price per share for which one
share of Common Stock is issuable upon the exercise of any such Option or upon
conversion, exchange or exercise of any Convertible Securities issuable upon
exercise of such Option” shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with respect to
any one share of Common Stock upon granting or sale of the Option, upon
exercise of the Option and upon conversion, exchange or exercise of any
Convertible Security issuable upon exercise of such Option. No further
adjustment of the Exercise Price shall be made upon the actual issuance of such
Common Stock or of such Convertible Securities upon the exercise of such
Options or upon the actual issuance of such Common Stock upon conversion,
exchange or exercise of such Convertible Securities.  “Convertible Securities” means any
evidence of indebtedness, shares or securities, in each case convertible into
or exchangable for Common Stock.  “Options”
means rights, options or 

 6
 

warrants to subscribe for, purchase or otherwise
acquire shares of Common Stock or Convertible Securities.

(B)                                Issuance
of Convertible Securities. If the Company in any manner issues or sells any
Convertible Securities and the lowest price per share for which one share of
Common Stock is issuable upon such conversion, exchange or exercise thereof is
less than the Applicable Price, then such share of Common Stock shall be deemed
to be outstanding and to have been issued and sold by the Company at the time
of the issuance or sale of such Convertible Securities for such price per
share. For the purposes of this Section 3(b)(ii)(B), the “lowest price per
share for which one share of Common Stock is issuable upon such conversion,
exchange or exercise” shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with respect to
any one share of Common Stock upon the issuance or sale of the Convertible
Security and upon the conversion, exchange or exercise of such Convertible
Security. No further adjustment of the Exercise Price shall be made upon the
actual issuance of such Common Stock upon conversion, exchange or exercise of
such Convertible Securities, and if any such issue or sale of such Convertible
Securities is made upon exercise of any Options for which adjustment of the
Exercise Price had been or are to be made pursuant to other provisions of this
Section 3(b)(ii), no further adjustment of the Exercise Price shall be made by
reason of such issue or sale.

(C)                                Change
in Option Price or Conversion Rate. If the purchase or exercise price
provided for in any Options, or the additional consideration, if any, payable
upon the issue, conversion, exchange or exercise of any Convertible Securities,
or the rate at which any Convertible Securities are convertible into or
exchangeable or exercisable for Common Stock changes at any time, the Exercise
Price in effect at the time of such change shall be adjusted to the Exercise
Price which would have been in effect at such time had such Options or
Convertible Securities provided for such changed purchase price, additional
consideration or changed conversion rate, as the case may be, at the time
initially granted, issued or sold. For purposes of this Section 3(b)(ii)(C), if
the terms of any Option or Convertible Security that was outstanding as of the
Closing Date are changed in the manner described in the immediately preceding
sentence, then such Option or Convertible Security and the Common Stock deemed
issuable upon exercise, conversion or exchange thereof shall be deemed to have
been issued as of the date of such change. 
No adjustment shall be made if such adjustment would result in an
increase of the Exercise Price then in effect. 
Notwithstanding the foregoing, no adjustment shall be made to the
Exercise Price of this Warrant due to anti-dilution adjustments made to
securities outstanding as of the date hereof as a result of the issuance of
Securities pursuant to the Transaction Documents.

(D)                               Calculation
of Consideration Received. In case any Option is issued in connection with
the issue or sale of other securities of the Company, together comprising one
integrated transaction in which no specific consideration is allocated to such
Options by the parties thereto, the Options will be deemed to have been issued
for a consideration of $0.01. If any Common Stock, Options or 

 7
 

Convertible Securities are issued or sold or deemed to
have been issued or sold for cash, the consideration received therefor will be
deemed to be the gross amount received by the Company therefor. If any Common
Stock, Options or Convertible Securities are issued or sold for a consideration
other than cash, the amount of the consideration other than cash received by
the Company will be the fair value of such consideration, except where such
consideration consists of marketable securities, in which case the amount of
consideration received by the Company will be the arithmetic average of the
closing sale prices of such securities during the ten (10) consecutive trading
days ending on the date of receipt of such securities. The fair value of any
consideration other than cash or securities will be determined jointly by the
Company and the holders of at least a majority in interest of the Warrants then
outstanding.

(E)                                 Exceptions
to Adjustment of Exercise Price. Notwithstanding the foregoing, no
adjustment will be made under this Section 3(b) in respect of Excluded
Securities.   “Excluded Securities”
means the issuance of (a) shares of Common Stock or options to employees,
officers or directors of, or consultants to, the Company pursuant to any stock
option agreement, stock option plan or equity incentive plan duly adopted by a
majority of the non-employee members of the Board of Directors of the Company
or a majority of the members of a committee of non-employee directors  established for such purpose (for purposes of clarity, the
issuance of shares of Common Stock upon exercise of options granted pursuant to
a stock option agreement, stock option plan or equity incentive plan subsequent
to the date hereof shall also be Excluded Securities), (b) securities upon the
exercise or exchange of or conversion of (i) any Securities issued in
connection with the Purchase Agreement; (ii) securities to a registered
broker-dealer in connection with the transactions contemplated by the Purchase
Agreement; and/or (iii) other securities or rights exercisable or exchangeable
for or convertible into shares of Common Stock which are issued and outstanding
on the date of the Purchase Agreement, provided that such securities have not
been amended since the date of the Purchase Agreement (other than on a
non-discretionary basis pursuant to the pre-existing anti-dilution provisions
thereof) to increase the number of such securities or to decrease the exercise,
exchange or conversion price of any such securities, (c) securities issued
pursuant to acquisitions or strategic transactions approved by  a majority of the disinterested directors, provided any
such issuance shall only be to a Person which is, itself or through its
subsidiaries, an operating company in a business synergistic with the business
of the Company and in which the Company receives benefits in addition to the
investment of funds, but shall not include a transaction in which the Company
is issuing securities primarily for the purpose of raising capital or to an
entity whose primary business is investing in securities, (d) shares of Common
Stock or other securities issued in connection with any stock split, stock
dividend or recapitalization of the Company (subject to Section 3(a) hereof),
and (e) shares of Common Stock or other securities issued in connection with
any registered primary public offering.

 8
 

c)                                      Calculations.  All calculations under this Section 3 shall
be made to the nearest cent or the nearest 1/100th of a share, as the case may
be.  For purposes of this Section 3, the
number of shares of Common Stock deemed to be issued and outstanding as of a
given date shall be the sum of the number of shares of Common Stock (excluding
treasury shares, if any) issued and outstanding.

d)                                     Voluntary
Adjustment By Company.  The Company
may at any time during the term of this Warrant reduce the then current
Exercise Price to any amount and for any period of time deemed appropriate by
the Board of Directors of the Company.

e)                                      Notice
to Holders.

i.                                          Adjustment
to Exercise Price.  Whenever the
Exercise Price is adjusted pursuant to any provision of this Section 3, the
Company shall promptly mail to each Holder a notice setting forth the Exercise
Price after such adjustment and setting forth a brief statement of the facts
requiring such adjustment.

ii.                                       Notice
to Allow Exercise by Holder.  If (A)
the Company shall declare a dividend (or any other distribution in whatever
form) on the Common Stock; (B) the Company shall declare a special nonrecurring
cash dividend on or a redemption of the Common Stock; (C) the Company shall
authorize the granting to all holders of the Common Stock rights or warrants to
subscribe for or purchase any shares of capital stock of any class or of any
rights; (D) the approval of any shareholders of the Company shall be required
in connection with any reclassification of the Common Stock, any consolidation
or merger to which the Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, of any compulsory share
exchange whereby the Common Stock is converted into other securities, cash or
property; (E) the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company; then, in
each case, the Company shall cause to be mailed to the Holder at its last
address as it shall appear upon the Warrant Register of the Company, at least
20 calendar days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, redemption, rights or warrants, or
if a record is not to be taken, the date as of which the holders of the Common
Stock of record to be entitled to such dividend, distributions, redemption,
rights or warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer or share exchange is
expected to become effective or close, and the date as of which it is expected
that holders of the Common Stock of record shall be entitled to exchange their
shares of the Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer or share
exchange; provided that the failure to mail such notice or any defect therein
or in the mailing thereof shall not affect the validity of the corporate action
required to be specified in such notice. 
The Holder is entitled to exercise this Warrant during the 20-day period
commencing on the date of such notice to the effective date of the event
triggering such notice.

 9
 

Section 4.                                            Transfer
of Warrant.

a)                                      Transferability.  Subject to compliance with any applicable
securities laws and the conditions set forth in Section 4(d) hereof, this
Warrant and all rights hereunder (including, without limitation, any
registration rights) are transferable, in whole or in part, upon surrender of
this Warrant at the principal office of the Company or its designated agent,
together with a written assignment of this Warrant substantially in the form
attached hereto duly executed by the Holder or its agent or attorney and funds
sufficient to pay any transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, such
payment, the Company shall execute and deliver a new Warrant or Warrants in the
name of the assignee or assignees and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the assignor a
new Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be cancelled.  A
Warrant, if properly assigned, may be exercised by a new holder for the
purchase of Warrant Shares without having a new Warrant issued.

b)                                     New
Warrants.  This Warrant may be
divided or combined with other Warrants upon presentation hereof at the
aforesaid office of the Company, together with a written notice specifying the
names and denominations in which new Warrants are to be issued, signed by the
Holder or its agent or attorney.  Subject
to compliance with Section 4(a), as to any transfer which may be involved in
such division or combination, the Company shall execute and deliver a new
Warrant or Warrants in exchange for the Warrant or Warrants to be divided or
combined in accordance with such notice.

c)                                      Warrant
Register.  The Company shall register
this Warrant, upon records to be maintained by the Company for that purpose
(the “Warrant Register”), in the name of the record Holder hereof from
time to time.  The Company may deem and
treat the registered Holder of this Warrant as the absolute owner hereof for
the purpose of any exercise hereof or any distribution to the Holder, and for
all other purposes, absent actual notice to the contrary.

d)                                     Transfer
Restrictions.  If, at the time of the
surrender of this Warrant in connection with any transfer of this Warrant, the
transfer of this Warrant shall not be registered pursuant to an effective
registration statement under the Securities Act and under applicable state
securities or blue sky laws, the Company may require, as a condition of
allowing such transfer (i) that the Holder or transferee of this Warrant, as
the case may be, furnish to the Company a written opinion of counsel (which
opinion shall be in form, substance and scope customary for opinions of counsel
in comparable transactions) to the effect that such transfer may be made
without registration under the Securities Act and under applicable state
securities or blue sky laws, (ii) that the Holder or transferee execute and
deliver to the Company an investment letter in form and substance acceptable to
the Company and (iii) that the transferee be an “accredited investor” as
defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under
the Securities Act or a “qualified institutional buyer” as defined in Rule
144A(a) under the Securities Act.

 10
 

 

Section 5.                                            Miscellaneous.

a)                                      No
Rights as Shareholder Until Exercise. 
This Warrant does not entitle the Holder to any voting rights or other
rights as a shareholder of the Company prior to the exercise hereof as set
forth in Section 2(d)(ii).

b)                                     Loss,
Theft, Destruction or Mutilation of Warrant.  The Company covenants that upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant or any stock certificate relating to
the Warrant Shares, and in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it (which, in the case of the Warrant,
shall not include the posting of any bond), and upon surrender and cancellation
of such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.

c)                                      Saturdays,
Sundays, Holidays, etc.  If the last
or appointed day for the taking of any action or the expiration of any right
required or granted herein shall not be a Business Day, then such action may be
taken or such right may be exercised on the next succeeding Business Day.

d)                                     Authorized
Shares.

The Company covenants
that during the period the Warrant is outstanding, it will reserve from its
authorized and unissued Common Stock a sufficient number of shares to provide
for the issuance of the Warrant Shares upon the exercise of any purchase rights
under this Warrant.  The Company further
covenants that its issuance of this Warrant shall constitute full authority to
its officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant.  The Company will take all such reasonable
action as may be necessary to assure that such Warrant Shares may be issued as
provided herein without violation of any applicable law or regulation, or of
any requirements of the Trading Market upon which the Common Stock may be
listed.

Except and to the extent
as waived or consented to by the Holder, the Company shall not by any action,
including, without limitation, amending its articles of incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such actions as may be necessary or appropriate
to protect the rights of Holder as set forth in this Warrant against impairment.  Without limiting the generality of the
foregoing, the Company will (a) not increase the par value of any Warrant
Shares above the amount payable therefor upon such exercise immediately prior
to such increase in par value, (b) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use
commercially reasonable efforts to obtain 

 11
 

all such authorizations, exemptions or consents from
any public regulatory body having jurisdiction thereof as may be necessary to
enable the Company to perform its obligations under this Warrant.

Before taking any action
which would result in an adjustment in the number of Warrant Shares for which
this Warrant is exercisable or in the Exercise Price, the Company shall obtain
all such authorizations or exemptions thereof, or consents thereto, as may be
necessary from any public regulatory body or bodies having jurisdiction
thereof.

e)                                      Jurisdiction.  All questions concerning the construction,
validity, enforcement and interpretation of this Warrant shall be determined in
accordance with the provisions of the Purchase Agreement.

f)                                        Restrictions.  The Holder acknowledges that the Warrant
Shares acquired upon the exercise of this Warrant, if not registered, will have
restrictions upon resale imposed by state and federal securities laws.

g)                                     Nonwaiver
and Expenses.  No course of dealing
or any delay or failure to exercise any right hereunder on the part of Holder
shall operate as a waiver of such right or otherwise prejudice the Company’s or
the Holder’s rights, powers or remedies, notwithstanding the fact that all rights
hereunder terminate on the Termination Date. 
If the Company or a Holder willfully and knowingly fails to comply with
any provision of this Warrant, which results in any material damages to the
Holder or Company (as the case may be), the breaching party shall pay to the
other party such amounts as shall be sufficient to cover any costs and expenses
including, but not limited to, reasonable attorneys’ fees, including those of
appellate proceedings, incurred by the non-breaching party in collecting any amounts
due pursuant hereto or in otherwise enforcing any of its rights, powers or
remedies hereunder.

h)                                     Notices.  Any notice, request or other document
required or permitted to be given or delivered to the Holder by the Company
shall be delivered in accordance with the notice provisions of the Purchase
Agreement.

i)                                         Limitation
of Liability.  No provision hereof,
in the absence of any affirmative action by Holder to exercise this Warrant to
purchase Warrant Shares, and no enumeration herein of the rights or privileges
of Holder, shall give rise to any liability of Holder for the purchase price of
any Common Stock or as a shareholder of the Company, whether such liability is
asserted by the Company or by creditors of the Company.

j)                                         Remedies.  Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to seek specific performance of its rights under this Warrant.  The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of the provisions of this Warrant and hereby agrees to waive and not to
assert the defense in any action for specific performance that a remedy at law
would be adequate.

 12
 

k)                                      Successors
and Assigns.  Subject to applicable
securities laws, this Warrant and the rights and obligations evidenced hereby
shall inure to the benefit of and be binding upon the successors of the Company
and the successors and permitted assigns of Holder.  The provisions of this Warrant are intended
to be for the benefit of all Holders from time to time of this Warrant and
shall be enforceable by any such Holder or holder of Warrant Shares.

l)                                         Amendment.  This Warrant may be modified or amended or
the provisions hereof waived with the written consent of the Company and the
Holder.

m)                                   Severability.  Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.

n)                                     Headings.  The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.

********************

 13
 

IN WITNESS WHEREOF, the Company has caused this
Warrant to be executed by its officer thereunto duly authorized.

 

	
  Dated: June    ,
  2007

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MEDICALCV, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Marc P. Flores

  
	
   

  	
   

  	
  Title:

  	
  President and Chief Executive 

   Officer

  
					

 

 14

NOTICE
OF EXERCISE

To:                                                    

(1)           The undersigned hereby
elects to purchase                     
Warrant Shares of the Company pursuant to the terms of the attached Warrant,
and tenders herewith payment of the exercise price in full, together with all
applicable transfer taxes, if any.

(2)           Payment shall take the
form of (check applicable box):

o in lawful money of the United States; or

o if permitted, the cancellation of such number of
Warrant Shares as is necessary, in accordance with the formula set forth in
subsection 2(c), to exercise this Warrant with respect to the maximum number of
Excluded Warrant Shares purchasable pursuant to the cashless exercise procedure
set forth in subsection 2(c).

(3)           Please issue a certificate
or certificates representing said Warrant Shares in the name of the undersigned
or in such other name as is specified below:

                                                           

The
Warrant Shares shall be delivered to the following DWAC Account Number or by
physical delivery of a certificate to:

                                                           

                                                           

                                                           

(4)           Accredited Investor.  The undersigned is an “accredited investor”
as defined in Regulation D promulgated under the Securities Act of 1933, as
amended.

[SIGNATURE
OF HOLDER]

	
  Name of Investing Entity:

  	
   

  
	
  Signature
  of Authorized Signatory of Investing Entity:

  	
   

  
	
  Name of
  Authorized Signatory:

  	
   

  
	
  Title of
  Authorized Signatory:

  	
   

  
	
  Date:

  	
   

  
						

 

ASSIGNMENT
FORM

(To assign the foregoing warrant, execute

this form and supply required information. 

Do not use this form to exercise the warrant.)

FOR VALUE
RECEIVED, [           ]
all of or [               ]
shares of the foregoing Warrant and all rights evidenced thereby are hereby
assigned to

                                                                                                       
whose address is

                                                                                                                                  .

                                                                                                                                   

	
  

  	
  Dated:

  	
   

  	
  ,

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Holder’s Signature:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Holder’s Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature Guaranteed:

  	
   

  	
   

  
											

 

NOTE:  The signature to this Assignment Form must
correspond with the name as it appears on the face of the Warrant, without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank or trust company.  Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.

 

EXHIBIT C

 

FORMS
OF SECURITY AGREEMENT AND FORM OF UCC FINANCING STATEMENT

THIS SECURITY AGREEMENT (this “Agreement”) is entered into effective as of
June    , 2007 by MedicalCV, Inc., a Minnesota corporation
having its principal offices at 9725 South Robert Trail, Inver Grove Heights,
Minnesota 55077 (the “Debtor”),
in favor of the parties listed on Exhibit 1 attached hereto (the “Secured Parties”).

RECITALS:

WHEREAS, the Debtor previously entered into a Security
Agreement in favor of Whitebox Ready Ltd. (“Whitebox”), dated April 20, 2007
(the “Prior Security Agreement”); and

WHEREAS, Whitebox is also a Secured Party under this
Agreement; and

WHEREAS, the Debtor and Whitebox wish to amend the
Prior Security Agreement by entering into this Agreement in favor of the
Secured Parties under this Agreement.

NOW, THEREFORE, pursuant to the Secured Note Purchase
Agreement dated of even date herewith by and among the Debtor and the Secured
Parties (the “Note
Purchase Agreement”), and for good and valuable consideration,
Debtor hereby agrees for the benefit of the Secured Parties as follows:

1.             SECURITY
INTEREST AND COLLATERAL

Debtor hereby grants the Secured Parties a first
priority security interest in all of the Debtor’s right, title, and interest in
and to the property described below (collectively referred to as the “Security
Interest”) as a security for the payment and performance of certain Secured
Promissory Notes issued pursuant to the Note Purchase Agreement by Debtor in
favor of the Secured Parties, respectively (the “Notes”), together with accrued but
unpaid interest thereon, and costs of collection, including reasonable
attorneys’ fees, and all other obligations of Debtor to Secured Parties of any
nature whatsoever (all known collectively as the “Obligations”).  The Security Interest shall attach to all
assets of the Debtor of every kind and every description, whether now owned or
hereafter acquired, and all proceeds thereof (the “Collateral”),
which shall include without limitation the following:

General Intangibles: All general intangibles of the Debtor,
whether now owned or hereafter acquired, including without limitation all
present and future patents and patent applications in all jurisdictions and
territories (foreign and domestic), together with all divisions, reissues,
reexaminations, term extensions, and continuations associated therewith,
copyrights, trademarks, service marks, trade names, trade secrets, know-how,
processes, and all licenses or agreements of any kind or nature pursuant to
which the Debtor possesses, uses, or has authority to possess or use any of the
foregoing, customer or supplier lists and contracts, manuals, operating
instructions, permits, franchises, the right to use the Debtor’s name and the
goodwill of the Debtor’s business.

Inventory: All inventory of the Debtor, as that term is
defined in the Uniform Commercial Code, whether now owned or hereafter acquired
or in which the Debtor obtains rights, whether consisting of whole goods, spare
parts or components, supplies or materials whether acquired, held or furnished
for sale, for lease or under contracts or for manufacture or processing, and
wherever located;

Equipment: All equipment of the Debtor, whether now
owned or hereafter acquired, including all present and future machinery, vehicles,
furniture, fixtures, office and recordkeeping equipment, parts, 

tools, supplies and all other goods (except inventory) used or bought
for use by the Debtor for any business or enterprise and including specifically
(without limitation) all accessions thereto, all substitutions and replacements
thereof, and all like or similar property now owned or hereafter acquired by
the Debtor, and all of which is owned by the Debtor; and

Receivables: Each and every right of the Debtor to the
payment of money, whether such right to payment now exists or hereafter arises,
whether such right to payment arises out of a sale, lease or other disposition
of goods or other property, out of a rendering of services, or of a loan, out
of the overpayment of taxes or other liabilities, or any other transaction or
event, whether such right to payment is created, generated or earned by the
Debtor or by some other person who subsequently transfers his, her or its
interest to the Debtor, whether such right to payment is or is not already
earned by performance, and howsoever such right to payment may be evidenced,
together with all other rights and interests (including all liens and other
security interests) which the Debtor may at any time have by law or agreement
against any account debtor or other person obligated to make such payment or
against any property of such account debtor or other persons including, but not
limited to, all present and future accounts, contract rights, chattel paper,
bonds, notes and other debt instruments, and rights to payment in the nature of
general intangibles.

The Collateral shall include (i) all substitutes and
replacements for and proceeds of any and all of the foregoing property, and in
the case of all tangible Collateral, all accessions, accessories, attachments,
parts, equipment and repairs now or hereafter attached or affixed to or use in
connection with any such goods and (ii) all warehouse receipts, bills of lading
and other documents of title now or hereafter covering such goods.

2.             REPRESENTATIONS, WARRANTIES AND
COVENANTS

Debtor represents, warrants,
and covenants that:

(a)           Existence
and Authority.  Debtor is a corporation, duly organized,
validly existing and in good standing under the laws of the State of Minnesota,
having full power and authority to make and deliver this Agreement.  The correct name of the Debtor is set forth
at the beginning of this Agreement. 
Debtor’s principal place of business and president are located at the
address as set forth in the opening paragraph of this Agreement.  The Debtor covenants with the Secured Parties
that it will not change its name, principal executive office, its mailing
address, its registered agent or its type or jurisdiction of organization
without providing each Secured Party ten days prior written notice.

(b)           Title;  Maintenance. 
Debtor is and will be, the owner of the Collateral, free of all liens,
encumbrances and security interests except for the security interests created
hereby or any interest specifically consented to in writing by the Secured
Parties.  The Debtor will keep the Collateral in good order and repair.

(c)           Financing Statements.  The
Debtor authorizes the Secured Parties to file all financing statements,
documents or records, and any amendments thereto, in such form as the Secured
Parties deem necessary to perfect their Security Interest.

(d)           No Encumbrances.  The
debtor will not pledge, lien or in any way encumber the Collateral without the
prior written consent of the Secured Parties.

(e)           Negative Covenants.  Debtor will not at any time
without the Secured Parties’ prior written consent (i) other than in the
ordinary course of its business, sell, lease or otherwise dispose of or 

 2
 

transfer
any of the Collateral, (ii) merge or consolidate with another entity or (iii)
change its state of organization or location.

(f)            Inspections.  Debtor grants the Secured
Parties an irrevocable license to enter Debtor’s business location during
normal business hours upon giving reasonable notice to Debtor to (i) account
for and inspect all Collateral, (ii) verify Debtor’s compliance with this
Agreement and (iii) examine and copy Debtor’s books and records relating to the
Collateral.

3.             DEFAULT,
REMEDIES AND ACTIONS OF SECURED PARTIES

(a)           Defaults. 
Debtor shall be in default under this Agreement upon the happening of
any of the Events of Default as defined in the Note Purchase Agreement.

(b)           Remedies.  In the event of a default (i) the Secured
Parties shall have the right, at their option and without demand or notice, to
declare all or any part of the Obligations immediately due and payable (to the
extent that the Obligations are not already by their terms immediately due and
payable without any action on the part of the Secured Parties);  (ii) the Secured Parties may exercise, in
addition to the rights and remedies granted hereby, all of the rights and
remedies of a secured party under the Uniform Commercial Code as adopted in
Minnesota or under any other applicable law (the “UCC”); 
(iii) the Secured Parties may exercise their rights to possess, transfer
and dispose of the Collateral;  (iv) the
Secured Parties may request, and Debtor will agree, to segregate and keep the
Collateral in trust for the Secured Parties in good order and repair and will
immediately deliver the Collateral at a place specified by the Secured Parties
together with all related documents;  and
(v) Debtor agrees to pay all costs and expenses incurred by the Secured Parties
in the collection of any of the Obligations or the enforcement of any of the
Secured Parties’ rights.

(c)           Sale of Collateral.  Upon any default, Debtor agrees
that ten (10) or more calendar days prior written notice is commercially
reasonable notice of any public or private sale or transfer of Collateral by
the Secured Parties.  Upon any default,
Debtor irrevocably grants the Secured Parties a license to enter upon Debtor’s
premises without notice or judicial order to take possession of the
Collateral.  The Secured Parties are
hereby granted a license or other right to use, without charge, all of the
Debtor’s property, including, without limitation, all of the Debtor’s labels,
trademarks, copyrights, patents and advertising matter or any property of a
similar nature, as it pertains to the Collateral, in completing production of
advertising for sale and selling any Collateral, and Debtor’s rights under all
licenses shall inure to the Secured Parties’ benefit until the Obligations are
paid in full.

(d)           Power of
Attorney.  Debtor
grants the Secured Parties an irrevocable Power of Attorney to (i) execute or
endorse on Debtor’s behalf any checks, financing statements, instruments,
certificates of title and statements of origin pertaining to the
Collateral;  (ii) supply any omitted
information and correct errors in any documents between the Secured Parties and
Debtor;  (iii) initiate and settle any
insurance claims pertaining to the Collateral; and (iv) do anything to preserve
and protect the Collateral and the Secured Parties’ rights and interests
therein.

(e)           Costs and Expenses.  The
Debtor will pay or reimburse the Secured Parties on demand for all
out-of-pocket expenses (including in each case all filing, recording fees,
taxes and all reasonable fees and expenses of counsel and of any experts and
agents) incurred by the Secured Parties in connection with the creation,
perfection, protection, satisfaction or foreclosure of the Collateral and the
preparation, administration, continuance, amendment or enforcement of this
Agreement, and all such costs and expenses shall be part of the Obligations
secured by the Collateral.

 3
 

(f)            Defense.  The
Debtor will at its own expense, and using its commercially reasonable efforts
and sound business judgment, protect and defend the Collateral against all
claims or demands of all persons other than the Secured Parties that would
cause material harm to the Secured Parties.

(g)           Waiver of Notice and Hearing.  The Debtor hereby waives all
rights to a judicial hearing of any kind prior to the exercise by the Secured
Parties of their rights to possession of the Collateral without judicial process
or of their rights to replevin, attach or levy upon the Collateral without
prior notice or hearing.  In the event
that a pre-judgment order for replevin is obtained, Debtor waives any
requirement of the Secured Parties to post bond.  DEBTOR HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

(h)           Joint
Action of the Secured Parties.  With
respect to any action taken in connection with this Agreement, the Secured
Parties shall act in accordance with and under the directions of the Secured
Parties holding a majority-in-interest of the outstanding Principal Amount of
the Notes, or a designee appointed thereby. 
If the Secured Parties determine to act through a single Secured Party
or other designee, the Secured Parties shall so inform the Debtor in
writing.  Action thereafter taken by such
Secured Party or designee shall be deemed to be taken on behalf of all Secured
Parties.

4.             Miscellaneous.

(a)           No Waiver;  Cumulative Remedies.  No failure delay on the part of
the Secured Parties to exercise any right, power or remedy under this Agreement
shall operate as a waiver thereof.  In
addition, no single or partial exercise of any right, power or remedy shall
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy under this Agreement. 
The remedies provided for in this Agreement are cumulative and not
exclusive of any remedies provided by law.

(b)           Law Governing and Construction.  The validity, construction and
enforceability of this Agreement shall be governed by the laws of the State of
Minnesota, without giving effect to conflict of laws principles thereof.

(c)           Continuing Interest.  This Agreement shall create a continuing
security interest in the Collateral and shall remain in full force and effect
until the satisfaction in full of all of the Obligations.  At such time as Debtor shall completely
satisfy all of the Obligations, this Agreement shall terminate and the Secured
Parties shall execute and deliver to Debtor all instruments as may be necessary
to re-vest in Debtor full title to the Collateral or evidence such termination.

(d)           Severability.  The
provisions of this Agreement are severable. 
If any clause or provision is held invalid and unenforceable in whole or
in part in any jurisdiction, then such invalidity or unenforceability shall
affect only such clause or provision, or part thereof, in such jurisdiction,
and shall not in any manner affect such clause or provision in any other
jurisdiction, or any other clause or provision of this Agreement in any
jurisdiction.

(e)           Modifications.  Any
modifications or termination of this Agreement may be made only by a writing
signed by all of the parties.

(f)            Binding
Effect.  This Agreement and the Security Interest
granted hereby, is binding upon Debtor, its successors and assigns, and shall
inure to the benefit of and be enforceable by the Secured Parties and each of
their successors and assigns.

[Signature Pages Follow]

 4

IN WITNESS WHEREOF, the undersigned have executed this Security
Agreement as of the date first written above.

	
  

  	
  MEDICALCV,
  INC.  

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Marc P. Flores

  	 

	
   

  	
   

  	
  Its President and Chief Executive Officer

  	 

					

 

[Separate Secured Party Signature Pages Follow]

SIGNATURE PAGE TO SECURITY AGREEMENT

 

	
  SECURED PARTIES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
   

  	
   

  	
   

  	
   

  
	
    Its: 

  	
   

  	
   

  	
   

  	
   

  
							

 

	
  

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Tax I.D./Social Security No.

  	
   

  

 

SIGNATURE PAGE TO SECURITY AGREEMENT

Exhibit 1

Secured Parties

Whitebox
Ready Ltd.

Craig-Hallum Partners LP

ASA Opportunity Fund, L.P.

Burguete Investment Partnership LP

Potomac Capital Partners LP

Potomac Capital International Ltd.

Pleiades Investment Partners-R LP

 

UCC FINANCING STATEMENT AMENDMENT

FOLLOW INSTRUCTIONS (front and back) CAREFULLY

 

A. NAME & PHONE OF CONTACT AT FILER [optional]

 

B. SEND ACKNOWLEDGMENT TO: (Name and Address)

 

Fulbright & Jaworski
L.L.P.

80 South 8th Street, Suite 2100

Minneapolis, MN 55402

Attention: Catherine Herman

	
  

  	
  THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY

  
	
   

  	
  1b. o This FINANCING STATEMENT AMENDMENT is

  to be filed (for record) in the REAL ESTATE RECORDS.

  
	
  1a.

  	
  INITIAL FINANCING STATEMENT FILE #

  
	
   

  	
  200716457105; filed 04/20/2007

  
	
  2.

  	
  o TERMINATION: Effectiveness of the
  Financing Statement identified above is terminated with respect to security
  interest(s) of the Secured Party authorizing this Termination Statement.

  
	
   

  	
   

  
	
  3.

  	
  o CONTINUATION:  Effectiveness of the Financing Statement
  identified above with respect to security interest(s) of the Secured Party
  authorizing this Continuation Statement is continued for the additional
  period provided by applicable law.

  
	
   

  	
   

  
	
  4.

  	
  o ASSIGNMENT (full or partial): Give name
  of assignee in item 7a or 7b and address of assignee in item 7c; and also
  give name of assignor in item 9.

  
	
   

  	
   

  
	
  5.

  	
  AMENDMENT (PARTY INFORMATION): This Amendment affects
  o Debtor or x Secured Party of record. Check only one of
  these two boxes.

  Also check one of the following three boxes and provide
  appropriate information in items 6 and/or 7.

  
	
   

  	
  o

  	
  CHANGE name and/or address: Please refer to the
  detailed instructions in regards to changing the name/address of a party.

  	
  o

  	
  DELETE name: Give record name to be deleted in item
  6a or 6b.

  	
  x

  	
  ADD name: Complete item 7a or 7b, and also item 7c;
  also complete items 7e-7g (if applicable).

  
	
   

  	
   

  
	
  6.

  	
  CURRENT RECORD INFORMATION:

  
	
   

  	
  6a.

  	
  ORGANIZATION’S NAME

  
	
  OR

  	
   

  	
   

  
	
   

  	
  6b.

  	
  INDIVIDUAL’S LAST NAME

  	
  FIRST NAME

  	
  MIDDLE NAME 

  	
  SUFFIX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  CHANGED (NEW) OR ADDED INFORMATION:

  	
   

  	
   

  	
   

  
	
   

  	
  7a.

  	
  ORGANIZATION’S NAME

  Craig-Hallum Partners LP

  
	
  OR

  	
   

  	
   

  
	
   

  	
  7b.

  	
  INDIVIDUAL’S LAST NAME

  	
  FIRST NAME

  	
  MIDDLE NAME 

  	
  SUFFIX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7c.

  	
  MAILING ADDRESS

  222 South 9th Street, Suite 350

  	
  CITY

   Minneapolls 

  	
  STATE

    MN

  	
  POSTAL CODE

    55402

  	
  COUNTRY

    USA

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7d.

  	
  SEE INSTRUCTIONS

  	
  ADD’L INFO RE

  ORGANIZATION

  DEBTOR

  	
  7e. TYPE OF ORGANIZATION

  	
  7f. JURISDICTION OF ORGANIZATION

  	
  7g. ORGANIZATIONAL ID #, If any

  	
  o NONE

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  AMENDMENT (COLLATERAL CHANGE): check only one
  box.

  	
   

  
	
   

  	
  Describe collateral

  	
  o deleted or

  	
  o added, or give entire

  	
  x restated collateral description, or
  describe collateral

  	
  o assigned.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  See Exhibit A attached hereto and made a part
  hereof.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  NAME OF SECURED PARTY OF RECORD AUTHORIZING THIS
  AMENDMENT (name of assignor, if this is an Assignment). If this is an
  Amendment authorized by a Debtor which adds collateral or adds the
  authorizing Debtor, or if this is a Termination authorized by a Debtor, check
  here o and enter name of DEBTOR authorizing
  this Amendment.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9a.

  	
  ORGANIZATION’S NAME

  Whitebox Ready Ltd.

  	
   

  
	
  OR

  	
   

  	
   

  	
   

  
	
   

  	
  9b.

  	
  INDIVIDUAL’S LAST NAME

  	
  FIRST NAME

  	
  MIDDLE NAME 

  	
  SUFFIX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  OPTIONAL FILER REFERENCE DATA

  	
   

  	
   

  	
   

  
	
   

  	
          File
  with the Minnesota Secretary of State

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  International
  Association of Commercial Administrators (IACA)

  
	
  FILING OFFICE COPY — UCC FINANCING STATEMENT (FORM
  UCC3) (REV. 05/22/02)

  
																					

 

 

	
  UCC FINANCING STATEMENT AMENDMENT ADDITIONAL PARTY

  	
   

  	
   

  
	
  FOLLOW INSTRUCTIONS (front and back) CAREFULLY

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  14.

  	
  INITIAL FINANCING STATEMENT FILE # (same as item 1a
  on Amendment form)

  	
   

  	
   

  
	
  200716457105;
  filed 04/20/2007

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  15.

  	
  NAME OF PARTY AUTHORIZING THIS AMENDMENT (same as
  item 9 on Amendment form)

  	
   

  	
   

  
	
   

  	
  15a. ORGANIZATION’S NAME

  	
   

  	
   

  
	
  OR

  	
  Whitebox Ready Ltd.

  	
   

  	
   

  
	
  15b.

  	
  INDIVIDUAL’S LAST NAME

  	
  FIRST NAME

  	
  MIDDLE NAME,SUFFIX

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  MISCELLANEOUS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY

  
	
  17.

  	
  ADDITIONAL DEBTOR’S EXACT FULL LEGAL NAME. Insert
  only one name (17a or 17b) - do not abbreviate or combine names

  
	
   

  	
  17a.

  	
  ORGANIZATION’S NAME

  
	
   

  	
   

  
	
  OR

  	
   

  
	
   

  	
  17b.

  	
  INDIVIDUAL’S LAST NAME

  	
  FIRST NAME

  	
  MIDDLE NAME

  	
  SUFFIX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17c.

  	
  MAILING ADDRESS

  	
  CITY

  	
  STATE

  	
  POSTAL CODE

  	
  COUNTRY

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17d.

  	
  SEEINSTRUCTIONS

  	
  ADD’L INFO RE

  	
  17e. TYPE OF ORGANIZATION

  	
  17f. JURISDICTION OF ORGANIZATION

  	
  17g. ORGANIZATIONAL ID #, if any

  
	
   

  	
   

  	
  ORGANIZATION

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DEBTOR

  	
   

  	
   

  	
   

  	
  oNONE

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
  ADDITIONAL DEBTOR’S EXACT FULL LEGAL NAME. Insert
  only one name (18a or 18b) - do not abbreviate or combine names

  
	
   

  	
  18a.

  	
  ORGANIZATION’S NAME

  
	
   

  	
   

  
	
  OR

  	
   

  
	
   

  	
  18b.

  	
  INDIVIDUAL’S LAST NAME

  	
  FIRST NAME

  	
  MIDDLE NAME

  	
  SUFFIX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18c.

  	
  MAILING ADDRESS

  	
  CITY

  	
  STATE

  	
  POSTAL CODE

  	
  COUNTRY

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18d.

  	
  SEEINSTRUTIONS

  	
  ADD’L INFO RE

  	
  18e. TYPE OF ORGANIZATION

  	
  18f. JURISDICTION OF ORGANIZATION

  	
  18g. ORGANIZATIONAL ID #, if any

  
	
   

  	
   

  	
  ORGANIZATION

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DEBTOR

  	
   

  	
   

  	
   

  	
  oNONE

  
	
  19.

  	
  ADDITIONAL DEBTOR’S EXACT FULL LEGAL NAME - Insert
  only one name (19a or 19b) - do not abbreviate or combine names

  
	
   

  	
  19a.

  	
  ORGANIZATION’S NAME

  
	
   

  	
   

  
	
  OR

  	
   

  
	
   

  	
  19b.

  	
  INDIVIDUAL’S LAST NAME

  	
  FIRST NAME

  	
  MIDDLE NAME

  	
  SUFFIX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19c.

  	
  MAILING ADDRESS

  	
  CITY

  	
  STATE

  	
  POSTAL CODE

  	
  COUNTRY

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19d.

  	
  SEEINSTRUCTIONS

  	
  ADD’L INFO RE

  	
  19e. TYPE OF ORGANIZATION

  	
  19f. JURISDICTION OF ORGANIZATION

  	
  19g. ORGANIZATIONAL ID #, if any

  
	
   

  	
   

  	
  ORGANIZATION

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DEBTOR

  	
   

  	
   

  	
   

  	
  oNONE

  
	
  20.

  	
  ADDITIONAL SECURED PARTY’S NAME. (or Name of TOTAL
  ASSIGNEE) - insert only one name (20a or 20b)

  
	
   

  	
  20a.

  	
  ORGANISATION’S NAME

  
	
   

  	
  ASA Opportunity Fund, L.P.

  
	
  OR

  	
   

  
	
   

  	
  20b.

  	
  INDIVIDUAL’S LAST NAME

  	
  FIRST NAME

  	
  MIDDLE NAME

  	
  SUFFIX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20c.

  	
  MAILING ADDRESS

  	
  CITY

  	
  STATE

  	
  POSTAL CODE

  	
  COUNTRY

  
	
   

  	
  601 Carlson Parkway, Suite 610

  	
    Minnetonka

  	
    MN

  	
    55305

  	
    USA

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21.

  	
  ADDITIONAL SECURED PARTY’S NAME. (or Name of TOTAL
  ASSIGNEE) - insert only one name (21a or 21b)

  
	
   

  	
  21a.

  	
  ORGANIZATION’S NAME

  
	
   

  	
  Burguete Investment Partnership LP

  
	
  OR

  	
   

  
	
   

  	
  21b.

  	
  INDIVIDUAL’S LAST NAME

  	
  FIRST NAME

  	
  MIDDLE NAME

  	
  SUFFIX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21c.

  	
  MAILING ADDRESS

  	
  CITY

  	
  STATE

  	
  POSTAL CODE

  	
  COUNTRY

  
	
   

  	
  435 Martin Street, Suite 3090

  	
    Blaine 

  	
    WA

  	
    98230

  	
    USA

  
	
   

  	
   

  	
  International
  Association of Commercial Administration (IACA)

  
	
   

  	
  FILING OFFICE COPY — UCC FINANCING STATEMENT
  AMENDMENT ADDITIONAL PARTY (FORM UCC3AP) (REV. 05/22/02)

  
																	

 

 

	
  UCC FINANCING STATEMENT AMENDMENT ADDITIONAL PARTY

  	
   

  	
   

  
	
  FOLLOW INSTRUCTIONS (front and back) CAREFULLY

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  14.

  	
  INITIAL FINANCING STATEMENT FILE # (same as item 1a
  on Amendment form)

  	
   

  	
   

  
	
  200716457105;
  filed 04/20/2007

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  15.

  	
  NAME OF PARTY AUTHORIZING THIS AMENDMENT (same as
  item 9 on Amendment form)

  	
   

  	
   

  
	
   

  	
  15a. 

  	
  ORGANISATION’S NAME

  	
   

  	
   

  
	
  OR

  	
  Whitebox Ready Ltd.

  	
   

  	
   

  
	
  15b.

  	
  INDIVIDUAL’S LAST NAME

  	
  FIRST NAME

  	
  MIDDLE NAME,SUFFIX

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  MISCELLANEOUS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY

  
	
  17.

  	
  ADDITIONAL DEBTOR’S EXACT FULL LEGAL NAME - Insert
  only one name (17a or 17b) - do not abbreviate or combine names

  
	
   

  	
  17a.

  	
  ORGANIZATION’S NAME

  
	
   

  	
   

  
	
  OR

  	
   

  
	
   

  	
  17b.

  	
  INDIVIDUAL’S LAST NAME

  	
  FIRST NAME

  	
  MIDDLE NAME

  	
  SUFFIX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17c.

  	
  MAILING ADDRESS

  	
  CITY

  	
  STATE

  	
  POSTAL CODE

  	
  COUNTRY

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17d.

  	
  SEEINSTRUTIONS

  	
  ADD’L INFO RE

  	
  17e. TYPE OF ORGANIZATION

  	
  17f. JURISDICTION OF ORGANIZATION

  	
  17g. ORGANIZATION ID #, if any

  
	
   

  	
   

  	
  ORGANIZATION

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DEBTOR

  	
   

  	
   

  	
   

  	
  oNONE

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
  ADDITIONAL DEBTOR’S EXACT FULL LEGAL NAME - Insert only
  one name (18a or 18b) - do not abbreviate or combine names

  
	
   

  	
  18a.

  	
  ORGANIZATION’S NAME

  
	
   

  	
   

  
	
  OR

  	
   

  
	
   

  	
  18b.

  	
  INDIVIDUAL’S LAST NAME

  	
  FIRST NAME

  	
  MIDDLE NAME

  	
  SUFFIX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18c.

  	
  MAILING ADDRESS

  	
  CITY

  	
  STATE

  	
  POSTAL CODE

  	
  COUNTRY

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18d.

  	
  SEEINSTRUTIONS

  	
  ADD’L INFO RE

  	
  18e. TYPE OF ORGANIZATION

  	
  18f. JURISDICTION OF ORGANIZATION

  	
  18g. ORGANIZATION ID #, if any

  
	
   

  	
   

  	
  ORGANIZATION

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DEBTOR

  	
   

  	
   

  	
   

  	
  oNONE

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
  ADDITIONAL DEBTOR’S EXACT FULL LEGAL NAME - Insert
  only one name (19a or 19b) - do not abbreviate or combine names

  
	
   

  	
  19a.

  	
  ORGANIZATION’S NAME

  
	
   

  	
   

  
	
  OR

  	
   

  
	
   

  	
  19b.

  	
  INDIVIDUAL’S LAST NAME

  	
  FIRST NAME

  	
  MIDDLE NAME

  	
  SUFFIX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19c.

  	
  MAILING ADDRESS

  	
  CITY

  	
  STATE

  	
  POSTAL CODE

  	
  COUNTRY

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19d.

  	
  SEEINSTRUTIONS

  	
  ADD’L INFO RE

  	
  19e. TYPE OF ORGANIZATION

  	
  19f. JURISDICTION OF ORGANIZATION

  	
  19g. ORGANIZATION ID #, if any

  
	
   

  	
   

  	
  ORGANIZATION

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DEBTOR

  	
   

  	
   

  	
   

  	
  oNONE

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20.

  	
  ADDITIONAL SECURED PARTY’S NAME. (or Name of TOTAL
  ASSIGNEE) - insert only one name (20a or 20b)

  
	
   

  	
  20a.

  	
  ORGANIZATION’S NAME

  
	
  OR

  	
    Potomac Capital International Ltd.

  
	
  20b.

  	
  INDIVIDUAL’S LAST NAME

  	
  FIRST NAME

  	
  MIDDLE NAME

  	
  SUFFIX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20c.

  	
  MAILING ADDRESS

  	
  CITY

  	
  STATE

  	
  POSTAL CODE

  	
  COUNTRY

  
	
   

  	
    825 Third Avenue, 33rd Floor

  	
  New York

  	
  NY

  	
  10022

  	
  USA

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21.

  	
  ADDITIONAL SECURED PARTY’S NAME. (or Name of TOTAL
  ASSIGNEE) - insert only one name (21a or 21b)

  
	
   

  	
  21a.

  	
  ORGANIZATION’S NAME

  
	
   

  	
    Pleiades Investment Partners-R LP

  	
  New York

  	
  NY

  	
  10022

  	
  USA

  
	
  OR

  	
   

  
	
   

  	
  21b.

  	
  INDIVIDUAL’S LAST NAME

  	
  FIRST NAME

  	
  MIDDLE NAME

  	
  SUFFIX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21c.

  	
  MAILING ADDRESS

  	
  CITY

  	
  STATE

  	
  POSTAL CODE

  	
  COUNTRY

  
	
   

  	
    825 Third Avenue, 33rd Floor

  	
  New York

  	
  NY

  	
  10022

  	
  USA

  
																

International Association
of Commercial Administratiors (IACA)

FILING OFFICE COPY — UCC FINANCING STATEMENT AMENDMENT ADDITIONAL PARTY
(FORM UCC3AP) (REV/ 05/22/02)

 

 

	
  UCC FINANCING STATEMENT AMENDMENT ADDITIONAL PARTY

  	
   

  	
   

  
	
  FOLLOW INSTRUCTIONS (front and back) CAREFULLY

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  14.

  	
  INITIAL FINANCING STATEMENT FILE # (same as item 1a
  on Amendment form)

  	
   

  	
   

  
	
  200716457105;
  filed 04/20/2007

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  15.

  	
  NAME OF PARTY AUTHORIZING THIS AMENDMENT (same as
  item 9 on Amendment form)

  	
   

  	
   

  
	
   

  	
  15a.

  	
  ORGANIZATION’S NAME

  	
   

  	
   

  
	
  OR

  	
  Whitebox Ready Ltd.

  	
   

  	
   

  
	
  15b.

  	
  INDIVIDUAL’S LAST NAME

  	
  FIRST NAME

  	
  MIDDLE NAME,SUFFIX

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  MISCELLANEOUS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY

  
	
  17.

  	
  ADDITIONAL DEBTOR’S EXACT FULL LEGAL NAME - Insert
  only one name (17a or 17b) - do not abbreviate or combine names

  
	
   

  	
  17a.

  	
  ORGANIZATION’S NAME

  
	
   

  	
   

  
	
  OR

  	
   

  
	
   

  	
  17b.

  	
  INDIVIDUAL’S LAST NAME

  	
  FIRST NAME

  	
  MIDDLE NAME

  	
  SUFFIX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17c.

  	
  MAILING ADDRESS

  	
  CITY

  	
  STATE

  	
  POSTAL CODE

  	
  COUNTRY

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17d.

  	
  SEEINSTRUTIONS

  	
  ADD’L INFO RE

  	
  17e. TYPE OF ORGANIZATION

  	
  17f. JURISDICTION OF ORGANIZATION

  	
  17g. ORGANIZATION ID #, if any

  
	
   

  	
   

  	
  ORGANIZATION

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DEBTOR

  	
   

  	
   

  	
   

  	
  oNONE

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
  ADDITIONAL DEBTOR’S EXACT FULL LEGAL NAME - Insert
  only one name (18a or 18b) - do not abbreviate or combine names

  
	
   

  	
  18a.

  	
  ORGANIZATION’S NAME

  
	
   

  	
   

  
	
  OR

  	
   

  
	
   

  	
  18b.

  	
  INDIVIDUAL’S LAST NAME

  	
  FIRST NAME

  	
  MIDDLE NAME

  	
  SUFFIX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18c.

  	
  MAILING ADDRESS

  	
  CITY

  	
  STATE

  	
  POSTAL CODE

  	
  COUNTRY

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18d.

  	
  SEEINSTRUTIONS

  	
  ADDL INFO RE

  	
  18e. TYPE OF ORGANIZATION

  	
  18f. JURISDICTION OF ORGANIZATION

  	
  18g. ORGANIZATION ID #, if any

  
	
   

  	
   

  	
  ORGANIZATION

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DEBTOR

  	
   

  	
   

  	
   

  	
  oNONE

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
  ADDITIONAL DEBTOR’S EXACT FULL LEGAL NAME. Insert
  only one name (19a or 19b) - do not abbreviate or combine names

  
	
   

  	
  19a.

  	
  ORGANIZATION’S NAME

  
	
   

  	
   

  
	
  OR

  	
   

  
	
   

  	
  19b.

  	
  INDIVIDUAL’S LAST NAME

  	
  FIRST NAME

  	
  MIDDLE NAME

  	
  SUFFIX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19c.

  	
  MAILING ADDRESS

  	
  CITY

  	
  STATE

  	
  POSTAL CODE

  	
  COUNTRY

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19d.

  	
  SEEINSTRUTIONS

  	
  ADDL INFO RE

  	
  19e. TYPE OF ORGANIZATION

  	
  19f. JURISDICTION OF ORGANIZATION

  	
  19g. ORGANIZATION ID #, if any

  
	
   

  	
   

  	
  ORGANIZATION

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DEBTOR

  	
   

  	
   

  	
   

  	
  oNONE

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20.

  	
  ADDITIONAL SECURED PARTY’S NAME. (or Name of TOTAL
  ASSIGNEE) - insert only one name (20a or 20b)

  
	
   

  	
  20a.

  	
  ORGANIZATION’S NAME

  
	
  OR

  	
    Potomac Capital Partners LP

  
	
  20b.

  	
  INDIVIDUAL’S LAST NAME

  	
  FIRST NAME

  	
  MIDDLE NAME

  	
  SUFFIX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20c.

  	
  MAILING ADDRESS

  	
  CITY

  	
  STATE

  	
  POSTAL CODE

  	
  COUNTRY

  
	
   

  	
    825 Third Avenue, 33rd Floor

  	
  New York

  	
  NY

  	
  10022

  	
  USA

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21.

  	
  ADDITIONAL SECURED PARTY’S NAME. (or Name of TOTAL
  ASSIGNEE) - insert only one name (21a or 21b)

  
	
   

  	
  21a.

  	
  ORGANIZATION’S NAME

  
	
   

  	
   

  
	
  OR

  	
   

  
	
   

  	
  21b.

  	
  INDIVIDUAL’S LAST NAME

  	
  FIRST NAME

  	
  MIDDLE NAME

  	
  SUFFIX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21c.

  	
  MAILING ADDRESS

  	
  CITY

  	
  STATE

  	
  POSTAL CODE

  	
  COUNTRY

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
																

International Association
of commercial Administratiors(IACA)

FILING OFFICE COPY — UCC FINANCING STATEMENT AMENDMENT ADDITIONAL PARTY
(FORM UCC3AP) (REV/ 05/22/02)

 

EXHIBIT
A TO

UCC FINANCING STATEMENT AMENDMENT

FILE NO. 200716457105

 

	
  Debtor:

  	
   

  	
  MedicalCV, Inc.

  
	
   

  	
   

  	
   

  
	
  Secured Parties:

  	
   

  	
  Whitebox Ready Ltd.

  
	
   

  	
   

  	
  Craig-Hallum Partners LP

  
	
   

  	
   

  	
  ASA Opportunity Fund, L.P.

  
	
   

  	
   

  	
  Burguete Investment Partnership LP

  
	
   

  	
   

  	
  Potomac Capital Partners LP

  
	
   

  	
   

  	
  Potomac Capital International Ltd.

  
	
   

  	
   

  	
  Pleiades Investment Partners-R LP

  

 

This FINANCING
STATEMENT is being filed pursuant to a Security Agreement dated April 20, 2007,
as amended June 15, 2007, between Debtor and the Secured Parties and covers all
assets of the Debtor of every kind and every description, whether now owned or
hereafter acquired, and all proceeds thereof, which shall include without
limitation the following (the “Collateral”):

General
Intangibles: All general intangibles of the Debtor, whether
now owned or hereafter acquired, including without limitation all present and
future patents and patent applications in all jurisdictions and territories
(foreign and domestic), together with all divisions, reissues, reexaminations,
term extensions, and continuations associated therewith, copyrights,
trademarks, service marks, trade names, trade secrets, know-how, processes, and
all licenses or agreements of any kind or nature pursuant to which the Debtor
possesses, uses, or has authority to possess or use any of the foregoing,
customer or supplier lists and contracts, manuals, operating instructions,
permits, franchises, the right to use the Debtor’s name and the goodwill of the
Debtor’s business.

Inventory:
All inventory of the Debtor, as that term is defined in the Uniform Commercial
Code, whether now owned or hereafter acquired or in which the Debtor obtains
rights, whether consisting of whole goods, spare parts or components, supplies
or materials whether acquired, held or furnished for sale, for lease or under
contracts or for manufacture or processing, and wherever located;

Equipment:
All equipment of the Debtor, whether now owned or hereafter
acquired, including all present and future machinery, vehicles, furniture,
fixtures, office and recordkeeping equipment, parts, tools, supplies and all
other goods (except inventory) used or bought for use by the Debtor for any
business or enterprise and including specifically (without limitation) all
accessions thereto, all substitutions and replacements thereof, and all like or
similar property now owned or hereafter acquired by the Debtor, and all of
which is owned by the Debtor; and

Receivables:
Each and every right of the Debtor to the payment of money,
whether such right to payment now exists or hereafter arises, whether such right
to payment arises out of a sale, lease or other disposition of goods or other
property, out of a rendering of services, or of a loan, out of the overpayment
of taxes or other liabilities, or any other transaction or event, whether such
right to payment is created, generated or earned by the Debtor or by some other
person who subsequently transfers his, her or its interest to the Debtor,
whether such right to payment is or is not already earned by performance, and
howsoever such right to payment may be evidenced, together with all other
rights and interests (including all liens and other security interests) which
the Debtor may at any time have by law or agreement against any account debtor
or other person obligated to make such payment or against any property of such
account debtor or other persons including, but not limited to, all present and
future accounts, contract rights, chattel paper, bonds, notes and other debt
instruments, and rights to payment in the nature of general intangibles.

The Collateral shall
include (i) all substitutes and replacements for and proceeds of any and all of
the foregoing property, and in the case of all tangible Collateral, all
accessions, accessories, attachments, parts, equipment and repairs now or
hereafter attached or affixed to or use in connection with any such goods and
(ii) all warehouse receipts, bills of lading and other documents of title now
or hereafter covering such goods.

EXHIBIT D

 

FORM OF COMPLIANCE CERTIFICATE

 

The undersigned officer
of MedicalCV, Inc., a Minnesota corporation (the "Company"), does
hereby certify pursuant to Section 7.1 of the Secured Note Purchase Agreement
dated June     , 2007 (the "Agreement") to the
holders listed on Schedule 1.0 of the Agreement (the "Holders") as
follows:

(1)           Representations and Warranties
True; Performance of Obligations. 
The representations and warranties made by the Company in the Agreement
are true and correct in all material respects as of the Effective Date, and the
Company has performed all obligations and conditions therein required to be
performed or observed by it on or prior to the Closing.

(2)           Consents, Permits, and Waivers.
 The Company has obtained any and all
consents, permits and waivers necessary or appropriate for consummation of the
transactions contemplated by the Transaction Agreements (except for such as may
be properly obtained subsequent to the Closing).

(3)           Proceedings and Documents.  All corporate and other proceedings in
connection with the transactions contemplated at the Closing have been taken.

The undersigned certifies that he has made or caused
to be made such investigations as are necessary in order to permit him to
verify the accuracy of the information set forth herein and, to the best of his
knowledge, this certificate does not misstate any material fact and does not
omit to state any fact necessary to make this certificate not misleading.

Capitalized terms not defined herein have the meanings
attributed to them in the Agreement. 

 

	
  Dated:

  	
  June    , 2007

  	
  MEDICALCV, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Marc P. Flores

  
	
   

  	
   

  	
   

  	
  Chief Executive
  Officer

  

 

EXHIBIT E

FORM OF LEGAL OPINION

June     , 2007

	
  To:

  	
   

  	
  Holders under the Secured Note Purchase
  Agreement

  
	
   

  	
   

  	
  dated June     , 2007

  

 

Ladies
and Gentlemen:

We have acted as counsel to MedicalCV, Inc., a Minnesota corporation
(the “Company”) in connection with a Secured Note Purchase Agreement (the “SNPA”)
dated as of June    , 2007 between the Company and                            (the
“Investors”).  This opinion letter is
delivered to you at the Company’s request under Section 7.1(g) of the
SNPA.  All capitalized terms used, and
not otherwise defined, in this opinion letter have the meanings given to them
in the SNPA.

In connection with this opinion, we have reviewed drafts of the
following documents (collectively, the “Transaction Agreements”), each of which
is dated as of June     , 2007, unless otherwise
described:

1.        the Secured Note
Purchase Agreement;

2.        the Secured Promissory
Note;

3.        the Security Agreement;
and

4.        the Closing Warrant.

For purposes of this opinion letter we have reviewed such documents and
made such other investigation as we have deemed appropriate.  As to certain matters of fact material to the
opinions expressed in this letter, we have relied on the representations made
in the Transaction Agreements and certificates of officers of the Company.  We have not independently established the
facts so relied on.

As used in this opinion letter, the term “Collateral” has the meaning
given in the Security Agreement. 
References in this opinion letter to the “UCC” mean the Uniform
Commercial Code as in effect in the State of Minnesota on the date hereof.  As used in this opinion letter, the phrases “to
our knowledge,” “known to us” or similar words mean the actual, conscious
awareness on the date of this letter of Briggs and Morgan, Professional
Association, the lawyers in our firm who have been actively involved in the
negotiation or preparation of the Transaction Agreements or this letter.

We assume with your permission and without investigation: (i) the due
authorization, execution and delivery of the Transaction Agreements by all
parties thereto other than the Company, (ii) the validity, binding effect and
enforceability under applicable law of the Transaction Agreements against the
parties thereto other than the Company, (iii) the authenticity of all documents
submitted to us as originals, (iv) the genuineness of all signatures; (v) the
legal capacity of natural persons, (vi) the conformity to originals of all
documents submitted to us as copies and the authenticity of the originals of
such copies, and (vii) that the Investors have given value and the Company has
rights in the Collateral, in each case within the meaning of Section 9 of the
UCC, and (viii) that the description of the Collateral reasonably identifies
what is described, within the meaning of Section 9 of the UCC.

Based upon the assumptions set forth above and the other limitations
and qualifications set forth below, we are of the opinion that:

1.        The
Company is duly incorporated and is validly existing as a corporation in good
standing under the laws of the State of Minnesota.

2.        The
Company has corporate power and authority to conduct its business as described
in the Company’s SEC Filings and to enter into and perform its obligations under
the Transaction Agreements.

3.        The
Company is duly qualified to transact business and is in good standing in any
jurisdiction in which it owns or leases substantial property or in which the
conduct of its business requires such qualification, except where the failure
to do so would not, individually or in the aggregate, have a material adverse
effect on the properties, assets, operations, business or condition (financial
or otherwise) of the Company.

4.        To
our knowledge, all of the outstanding shares of the Company’s capital stock
have been duly authorized and validly issued, are fully paid and nonassessable
and have been issued in compliance with the registration and qualification
requirements of federal and state securities laws or were issued pursuant to an
available exemption from the registration and qualification requirements of
applicable federal and state securities laws.

5.        Pursuant
to a Securities Purchase Agreement dated October 13, 2006, Potomac Capital
Partners LP, Potomac Capital International Ltd. and Pleiades Investment
Partners-R LP were granted participation rights in future financings of the
Company, which participation rights have been validly waived by said parties in
connection with the transaction contemplated by the Transaction Agreements.  Otherwise, to our knowledge, no stockholder
of the Company or any other person has any preemptive right, right of first
refusal or other similar right to subscribe for or purchase the Company’s
securities arising (a) by operation of the Articles of Incorporation or Bylaws
of the Company or the Minnesota Business Corporation Act or (b) otherwise.

6.        The
Transaction Agreements have been duly authorized, executed and delivered by,
and are valid and binding agreements of, the Company, enforceable in accordance
with their terms, except as rights to indemnification thereunder may be limited
by applicable law and except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors’ rights generally or by general equitable
principles.

7.        The
Notes, Warrants and Warrant Shares have been duly authorized for issuance and
sale pursuant to the Transaction Agreements and, when issued and delivered by
the Company pursuant to payment of the consideration set forth in the
Transaction Agreements, will be validly issued, fully paid and nonassessable.

8.        The
provisions of the Security Agreement are sufficient to create in favor of the
Investors the security interest, as described therein, in all right, title and
interest of the Company in those items and types of Collateral described in the
Security Agreement in which a security interest may be created under Section 9
of the UCC.  The filing of a UCC-1
financing statement (within the meaning of Section 9-502(a) of the UCC) with
the Office of the Secretary of State of the State of Minnesota is sufficient to
perfect a security interest in the Collateral, to the extent that a security
interest may be perfected by filing a financial statement under the UCC in such
office.

 2
 

9.        No
governmental approvals or filings are required for the execution and delivery
of the Transaction Agreements on behalf of the Company, the payment of the
Company’s obligations under the Transaction Agreements, or the creation by the
Company of the security interests created by the Transaction Agreements, except
for the filings necessary to perfect the liens granted under the Transaction
Agreements.

10.      To our
knowledge, the Company is not in violation of its Articles of Incorporation or
Bylaws or any law, administrative regulation or administrative or court decree
applicable to the Company and is not in default in the performance or
observance of any obligation, agreement, covenant or condition contained in any
material existing instrument or agreement.

11.      The
execution and delivery of the Transaction Agreements by the Company and the
performance by the Company of its obligations thereunder (a) will not result in
any violation of the provisions of the Articles of Incorporation or Bylaws of
the Company; (b) will not constitute a breach of, or a default under, or result
in the creation or imposition of, any lien, charge or encumbrance upon any
property or assets of the Company pursuant to, to our knowledge, any existing
instrument or agreement of the Company; and (c) to our knowledge, will not
result in any violation of any law, administrative regulation or administrative
or court decree applicable to the Company.

12.      The
Company is not, and, assuming the Company does not invest its assets in any “investment
securities” as defined in Section 3(a)(2) of the Investment Company Act of
1940, as amended (the “1940 Act”), will not become, as a result of the
consummation of the transactions contemplated by the Transaction Agreements and
the receipt of payment for the Notes, Warrants or, if issued upon exercise of
the Warrants, the Warrant Shares thereunder, an “investment company” as defined
in the 1940 Act, and the rules and regulations promulgated thereunder.

Our opinions are subject to the following additional qualifications:

(a)      Our
opinions are limited to the law of the State of Minnesota and the federal
securities laws of the United States of America.

(b)      The
enforceability of the Transaction Agreements is subject to and may be limited
by (i) the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights and remedies of creditors
generally, (ii) general principles of equity and (iii) applicable statutes of
limitation.

(c)      We
express no opinion with respect to the validity and enforceability of (i)
indemnification provisions, rights of contribution and exculpatory provisions
to the extent they may be limited on public policy grounds or subject to
securities laws; (ii) broadly stated powers of attorney; (iii) any remedies
insofar as any party exercising such remedies may take any action which is
arbitrary or capricious, unreasonable, not in good faith, or not commercially
reasonable; (iv) provisions to the effect that failure to exercise or delay in
exercising rights or remedies will not operate as a waiver of any such right or
remedy or which purport to render ineffective any waiver, modification or
amendment not in writing; (v) waivers of any statutory or constitutional rights
or remedies; (vi) provisions to the effect that remedies are cumulative or that
stated remedies are not exclusive; and (vii) any provision for late payment
fees, default interest, liquidated damages or other fees, charges or amounts
that may be construed as a penalty.

(d)      We
express no opinion with respect to the ability of any party to collect or be
reimbursed for costs and expenses, including attorneys’ fees, to the extent its
rights may be limited to reasonable fees and expenses as determined by a court,
or it is not the prevailing party in the action.

 3
 

(e)      We
express no opinion with respect to whether the Investors are required to file a
Notice of Business Activities Report under Minnesota Statutes Section
290.371.  Any party who is so required and
does not file such a report has no cause of action upon which it may bring suit
under Minnesota law, except for issues related to its Minnesota tax liability,
unless and until it pays all taxes, interest, and civil penalties due the State
of Minnesota for all periods, or provides for their payment by security or
bond.

(f)       We
express no opinion as to (i) the existence of or the Company’s title to any
Collateral; (ii) the creation or perfection of any security interest, except as
expressly set forth in paragraph 8; (iii) any security interest in commercial
tort claims; (iv) the priority of any security interest; or (v) the effect of
any security interest perfected prior to July 1, 2001 under the UCC or
otherwise.

(g)      We
express no opinion regarding laws or regulations relating to medical devices or
laws or regulations relating to reimbursement for medical devices or services.

(h)      We
express no opinion regarding patents or other intellectual property.

Our opinion is rendered solely in connection with the transaction
contemplated under the Transaction Agreements and may not be relied upon in any
manner by any Person other than the addressees hereof and any successor or
assignee of any addressee (collectively, the “Reliance Parties”), and may not
be relied upon by any Reliance Party for any other purpose.

No copies of this opinion may be delivered or furnished to any other
party other than a Reliance Party, nor may all or portions of this opinion be
quoted, circulated or referred to in any other document without our prior
written consent, except that copies of this opinion may be provided to any
regulatory agency having supervisory authority over a Reliance Party and except
that this opinion may be used in connection with the assertion of a defense as
to which this opinion is relevant and necessary or in response to a court order
or other legal process.

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  BRIGGS AND MORGAN,

  
	
   

  	
  PROFESSIONAL ASSOCIATION

  

 

 4

EXHIBIT F

FORM OF SECRETARY CERTIFICATE

I, Eapen Chacko, Chief Financial Officer and Secretary of MedicalCV,
Inc., a Minnesota corporation (the “Company”), do hereby certify hereby certify
pursuant to Section 7.1(h) of the Secured Note Purchase Agreement dated June      ,
2007 (the “Agreement”) to the holders listed on Schedule 1.0 of the Agreement
(the “Holders”) as follows:

(1)                   Attached hereto as Exhibit A is a true and
correct copy of the Articles of Incorporation of the Company, as amended as of
the date of this certificate, and there have been no changes or amendments to
the attached Articles of Incorporation of the Company, and no proceedings
pending or contemplated for: (i) the amendment of said Articles of
Incorporation, (ii) the merger, consolidation or dissolution of the Company, or
(iii) the sale of all or substantially all of the assets or business of the
Company have commenced since the date of the Agreement or are pending, and that
the Company is in good standing and has paid all of its corporate franchise
taxes due as of the date hereof.

(2)                   Attached hereto as Exhibit B is a true and
correct copy of the Bylaws of the Company, as amended to the date hereof, and
that there have been no changes or amendments to the attached Bylaws and there
are no proceedings pending or contemplated for the amendment of such Bylaws.

(3)                   Attached hereto as Exhibit C are true and
correct copies of the written consent actions of the Audit Committee and the
Board of Directors of the Company relating to the Agreement and the
transactions contemplated thereby; the resolutions set forth therein relating
to such matters have not been amended, modified or rescinded, and are in full
force and effect as of the date hereof and are the only resolutions adopted by
the Board of Directors of the Company relating to approval of the Agreement and
the transactions contemplated thereby.

(4)                   The following named individual is a duly
elected or appointed, qualified and acting officer of the Company who holds the
office set opposite his name:

Marc P. Flores                                      President and Chief Executive Officer

	
  Dated: June     , 2007

  	
  MEDICALCV, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Eapen Chacko

  
	
   

  	
   

  	
  Chief Financial Officer and

  
	
   

  	
   

  	
  Secretary

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00125-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00125-of-00352.parquet"}]]