Document:

Exhibit 10.40

 

TECHNICAL ASSISTANCE AGREEMENT

 

THIS TECHNICAL ASSISTANCE AGREEMENT (this “Agreement”) is made and entered into as of this 15th
day of June 2003 (the “Effective Date) by and between MedicalCV, Inc.
(“MedicalCV”), a Minnesota corporation with a business address at 9725 South
Robert Trail, Inver Grove Heights, Minnesota 55077, agreeing to have Adel
Mikhail, Ph.D., (“Dr. Mikhail”) an individual residing at 2332 West 111th
Street, Bloomington Minnesota 55431 serve as an independent contractor for
MedicalCV, with reference to the following:

 

RECITALS

 

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

 

AGREEMENT

 

NOW,
THEREFORE, the
parties agree as follows:

 

1.                                       Services and Relationship.  Dr. Mikhail shall provide advise, counsel and
technical assistance to MedicalCV relating to business operations, regulatory
documentation, and technical planning and any other present and proposed
products of MedicalCV (the “Services”) as requested by the Board or CEO.  During the term of this Agreement, Dr. Mikhail shall
be self-employed independent contractor with respect to performing services for
MedicalCV.  Nothing
in this Agreement shall be construed to create a joint venture, partnership,
agency, or other similar relationship of any type between Dr. Mikhail and
MedicalCV.  Dr.
Mikhail shall have no authority to bind MedicalCV or to contract in its name or
to create any liability for MedicalCV.

 

2.                                       Independent Contactor.  
Acting as an independent contractor, Dr. Mikhail shall perform the
Services at MedicalCV’s request, and shall report to MedicalCV’s Chief
Executive Officer or an individual designated by MedicalCV’s Chief Executive
Officer’s.  Dr. Mikhail shall make
himself available to and provide the Services to MedicalCV on a
schedule to be determined by the parties on a periodic basis; provided,
however, that Dr. Mikhail shall provide the Services to MedicalCV for 40 hours
of consulting services per month.  Dr. Mikhail
agrees to complete any consulting or projects assigned to him at his own place
of business or such other location as the Company shall reasonably specify and
at his own discretion, will reasonably determine the number of hours required
and manner of performance.  Dr. Mikhail
may elect to render the consulting services directly or by contract through
Medica Nova, Inc., a corporation controlled by Dr. Mikhail.

 

3.                                       Compensation.  For
the Services performed under this Agreement, as described above, Dr. Mikhail
shall receive a consulting fee of $6.000 per month.  Consulting services beyond 40 hours per month must be prior
approved by the CEO or an individual designated by the CEO.  For additional service beyond 40 hours per
month, MedicalCV shall pay Dr. Mikhail $125 per hour up to a maximum of $1,000
per day.  The Company also agrees to
reimburse Dr. Mikhail for all reasonable travel, lodging, meals and other
expenses related to out-of-town travel or entertainment related to such
consulting services, in accordance with the Company’s standard reimbursement
policies.

 

4.                                       Taxes.  Dr.
Mikhail shall be solely responsible for payment of all self-employment taxes
and/or assessments imposed on the payment of compensation for the performance
of consulting services including without limitation, any unemployment insurance
or tax, any federal, state and foreign income

 

 

taxes, and any federal social security
payments (FICA) or Minnesota disability taxes (and shall provide evidence to
MedicalCV that such have been paid).

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

12.                                 Inventions/Patents.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(d)                                 Dr. Mikhail shall keep complete, accurate and
authentic accounts, notes, data and records of all Developments in the manner
and form requested by MedicalCV.  Such
accounts, notes, data and records shall be the property of MedicalCV, and, upon
its request, Dr. Mikhail shall promptly surrender same to it or, if not
previously surrendered upon its request or otherwise, Dr. Mikhail shall
surrender the same, and all copies thereof, to MedicalCV upon the termination
of this Agreement.

 

13.                                 Copyrights.  Dr.
Mikhail shall, without further consideration, assign all right, title and
interest in any copyrightable material created in connection with this
Agreement to MedicalCV and shall assist MedicalCV and its nominees in every
proper way, entirely at MedicalCV’s expense, to secure,

 

 

maintain and defend for MedicalCV’s own
benefit, copyrights and any extensions and renewals thereof on any and all such
material including translations thereof in any and all countries, such material
to be and to remain the property of MedicalCV whether copyrighted or not.  All materials produced by Dr. Mikhail under
this Agreement shall be considered work made for hire.

 

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

 

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

 

16.                                 Indemnity.  Dr.
Mikhail shall indemnify and hold harmless MedicalCV from and against:

 

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

 

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

 

17.                                 Term; Termination.  This
Agreement  shall continue on a
month-to-month basis for a period of 12 months (the “Term”). from the date of
acceptance by both parties.  However,
MedicalCV or Dr. Mikhail  may terminate
this Agreement at any time with 60 days written notification

 

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

 

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

 

 

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

 

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

 

	
  For Dr. Mikhail:

  	
  For MedicalCV:

  
	
   

  	
   

  
	
  2332 West 111th
  Street

  	
  Attn:  Chief Executive Officer

  
	
  Bloomington, Minnesota
  55431

  	
  9725 South Robert Trail

  
	
   

  	
  Inver Grove Heights,
  Minnesota 55077

  

 

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

 

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

 

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

 

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

 

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

 

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

 

28.                                 Entire Agreement.  This Agreement and the
Assignment Agreement contain the entire agreement with respect to the subject
matter hereof and, except as expressly provided to the contrary, supersedes all
prior oral or written agreements, communications and dealings between Dr.
Mikhail and MedicalCV with respect to the subject matter hereof, all of which
are hereby merged into this Agreement.

 

 

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

 

 

	
   

  	
  MedicalCV,
  Inc.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Blair P. Mowery

  	
   

  	
  /s/ Adel A. Mikhail, Ph.D.

  	
   

  
	
   

  	
  By:  Blair P. Mowery

  	
  Adel A. Mikhail, Ph.D.

  
	
   

  	
  Its:  Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Social Security NumberExhibit
10.41

 

ASSIGNMENT AGREEMENT

 

THIS ASSIGNMENT AGREEMENT is entered into effective
the 6th day of August, 2002, by and between Segmed, Inc., a Minnesota
corporation, whose business office is located at 4702 Lakeview Drive, Edina,
Minnesota 55424 (together with its successors and assigns, “Segmed”), William
F. Northrup III, MD, a United States citizen living at 4702 Lakeview Drive,
Edina, Minnesota 55424 (together with his personal representatives, heirs and
assigns, “Dr. Northrup”) and MedicalCV, Inc., a Minnesota corporation, whose
business office is located at 9725 South Robert Trail, Inver Grove Heights,
Minnesota 55077 (“MedicalCV”).  SEGMED
and Dr. Northrup are referred to herein collectively as the “ASSIGNORS”.

 

WITNESSETH:

 

WHEREAS, ASSIGNORS have developed the Device (as
defined below), which has related to it three patents issued in the United
States, patents issued in Australia, Taiwan and South Africa, patent
applications pending in the United States, Canada, Europe and Japan, and a
registered trademark in the United States, as set forth in more detail below;
and

 

WHEREAS, ASSIGNORS wish to assign to MedicalCV their
entire right, title and interest in and to the Device and the Intellectual
Property (as defined below); and

 

WHEREAS, MedicalCV desires to acquire all right,
title and interest in and to the Device and the Intellectual Property, and any
patents to be granted pursuant to the Applications and/or additional
applications to practice the Device and any other devices to be described therein;
and

 

WHEREAS, Dr. Northrup is the Chief Executive Officer
and a principal shareholder of Segmed; and

 

WHEREAS, Segmed proposes to acquire from MedicalCV
warrants to purchase common stock of MedicalCV in exchange for the sale,
transfer, and assignment of the Device and the Intellectual Property;

 

NOW, THEREFORE, in consideration of the premises and
the mutual covenants contained in this Agreement, the parties hereto agree as
follows:

 

1.                                       Definitions.  The parties agree that the
following words, terms and phrases where written with an initial capital letter
shall, unless the context otherwise indicates, have the following meanings for
purposes of this Agreement:

 

1.1                                 “Applications” shall mean any and all pending
patent applications filed by ASSIGNORS relating to the Device and any apparatus
and/or method for reducing, sizing and/or stabilizing the circumference of a
vascular or anatomical structure designed or used by ASSIGNORS, including, but
not limited to, the following:

 

(a)                                  In the United States, application No.
09/733,224 entitled ANNULOPLASTY SYSTEM, filed December 8, 2000;

 

(b)                                 In Canada, application No. 2,197,069 entitled
APPARATUS FOR REDUCING THE CIRCUMFERENCE OF A VASCULAR STRUCTURE, filed
August 10, 1995;

 

 

(c)                                  In the European Region, application No.
95929486.9 entitled APPARATUS FOR REDUCING THE CIRCUMFERENCE OF A VASCULAR
STRUCTURE, filed August 10, 1995; and

 

(d)                                 In Japan, application No. 507532/1996
entitled APPARATUS FOR REDUCING CIRCUMFERENCE OF VASCULAR STRUCTURE, filed
August 10, 1995

 

and
any and all patents and/or patent applications claiming priority thereto, and
any and all patents or patent applications in which either Segmed or Dr.
Northrup is an inventor, which relate to the Device and/or any apparatus and/or
method for reducing, sizing and/or stabilizing the circumference of a vascular
or anatomical structure, and any reissues, continuations, divisions,
continuations-in-part or extensions thereof, any patents issuing therefrom;
and/or any improvements thereto or enhancements thereof which are either wholly
or in part owned, invented, controlled, acquired or otherwise assignable by
either or both of the ASSIGNORS, and any patent applications therefor and any
patents issuing therefrom.

 

1.2                                 “Conflicting Organization” shall mean any person
or entity which engages in the development, manufacture, marketing or sale of
an apparatus or process which competes with the Device.

 

1.3                                 “Device” shall mean the apparatus and/or
method for reducing, sizing and/or stabilizing the circumference of a vascular
or anatomical structure (the “Field”) covered by the Intellectual Property and
fully described in the Applications and applications relating to the Patents,
and any and all improvements, modifications, derivations, enhancements,
technology, Know-how and Documentation related thereto.

 

1.4                                 “Documentation” shall mean those elements of
Know-how and other items of relevant information which are in writing or other
tangible form including, without limitation, drawings, diagrams, lab books,
blueprints, works of authorship, mask works, information, materials, tools,
computer programs, technical publications, manuals, designs, and artwork which
relate to the manufacture, inspection, quality control, installation,
maintenance, testing and operation of the Device or any apparatus and/or method
for reducing, sizing and/or stabilizing the circumference of a vascular or
anatomical structure.

 

1.5                                 “Intellectual Property” shall mean
collectively the Patents, Trademark, Applications and all other rights in and
to the Device, together with all Know-how and Documentation related thereto.

 

1.6                                 “Know-how” shall mean all trade secrets,
confidential information, including any apparatus, device, intellectual
property, discoveries, improvements, modifications, and enhancements,
techniques, concepts, data, technical information, identification of materials
and specifications (including engineering, testing and manufacturing
specifications), diagrams, schematics, charts and lists owned, controlled,
acquired or otherwise licensable by ASSIGNORS relating to the Device or any
apparatus and/or method for reducing, sizing and/or stabilizing the
circumference of a vascular or anatomical structure.  Know-how shall specifically include written descriptions and
documentation of the method(s) of manufacture of the Device and any aspects or
parts thereof.

 

1.7                                 “Net Sales Price” shall mean the price
invoiced by MedicalCV or its licensees for sales, leases or other dispositions
of the Device, less (i) all trade, quantity and cash discounts actually
allowed; (ii) all credits and allowances actually granted on account of
rejection, returns, billing errors and retroactive price reductions; (iii)
excise, sales and use taxes, tariffs or equivalent taxes levied on or measured
by the invoiced amount; (iv) duties; and (v) insurance and shipping
expenses.  Net Sales shall be determined
in accordance with Generally Accepted Accounting Principles

 

 

1.8                                 “Patents” shall mean the following patents
issued to Assignors in the United States, Australia, Taiwan and South Africa:

 

(a)                                  In the United States, U.S. Patent No.
5,593,424 entitled APPARATUS AND METHOD FOR REDUCING AND STABILIZING THE
CIRCUMFERENCE OF A VASCULAR STRUCTURE, issued January 14, 1997, U.S.
Patent No. 5,709,695 entitled APPARATUS FOR REDUCING THE CIRCUMFERENCE OF A
VASCULAR STRUCTURE, issued January 20, 1998, and U.S. Patent No. 5,961,539
entitled METHOD AND APPARATUS FOR SIZING, STABILIZING AND/OR REDUCING THE
CIRCUMFERENCE OF AN ANATOMICAL STRUCTURE, issued October 5, 1999;

 

(b)                                 In Australia, patent No. 700530 entitled
APPARATUS FOR REDUCING CIRCUMFERENCE OF VASCULAR STRUCTURE, filed
August 10, 1995;

 

(c)                                  In Taiwan, patent No. 096871 entitled
APPARATUS FOR REDUCING THE CIRCUMFERENCE OF A BODILY STRUCTURE, filed
August 11, 1995; and

 

(d)                                 In South Africa patent No. 95/6672 entitled
APPARATUS AND METHOD FOR REDUCING THE CIRCUMFERENCE OF A VASCULAR STRUCTURE,
filed August 10, 1995,

 

and
any and all patents and/or patent applications claiming priority thereto, and
any and all patents or patent applications in which ASSIGNORS are an inventor,
which relate to the Device and/or any apparatus or method for reducing, sizing
and/or stabilizing the circumference of a vascular or anatomical structure, and
any reissues, continuations, divisions, continuations-in-part or extensions
thereof, any patents issuing therefrom, and/or any improvements thereto or
enhancements thereof which are either wholly or in part owned, invented,
controlled, acquired or otherwise assignable by ASSIGNORS, and any patent
applications therefor and any patents issuing therefrom.

 

1.9                                 “Trademark” shall mean the mark represented
by United States Registration No. 2,108,883 for the “SEGMENT” mark filed
September 12, 1996, together with all goodwill and common law and other
rights relating to such mark.

 

2.                                       Assignment.

 

2.1                                 ASSIGNORS hereby sell, assign, and transfer
exclusively to MedicalCV, upon and subject to all of the terms and conditions
of this Agreement, their entire right, title, and interest in and to the Device
and the Intellectual Property. 
ASSIGNORS agree to cooperate and to execute all papers and documents
necessary to evidence, record and perfect the foregoing transfer and to vest
complete ownership of the Device and the Intellectual Property, along with any
patents, domestic or foreign, issuing from the Applications, in MedicalCV,
including, but not limited to, assignments of the foregoing for filing with the
appropriate patent and trademark offices in the United States and
elsewhere.  ASSIGNORS hereby authorize
MedicalCV to execute any documents on their behalf, as their attorney-in-fact,
in the event MedicalCV is unable for any reason whatsoever to secure the
ASSIGNORS’ signature to any document it is entitled to under this
Section 2.1

 

2.2                                 Security Interest. 
Segmed shall retain a priority security interest in the Device until the
cash consideration set forth in Section 3.1(a) is fully paid by MedicalCV,
at which time the security interest shall terminate.  MedicalCV agrees to cooperate and to execute all papers and
documents necessary to evidence, record and perfect the foregoing security
interest.

 

 

2.3                                 Documentation. 
ASSIGNORS will provide to MedicalCV, at the closing, all Know-how and
Documentation relating to the Device and the Intellectual Property.

 

2.4                                 Technical Assistance. 
ASSIGNORS agree to provide technical assistance to MedicalCV as
reasonably requested by it, for the purposes of practicing the Know-how, use of
the Intellectual Property and Documentation and development, marketing and sale
of the Device by MedicalCV, pursuant to a separate agreement (the “Technical
Assistance Agreement”) to be entered into contemporaneous with the closing
contemplated by this Agreement between MedicalCV and Dr. Northrup.  Performance of the Technical Assistance
Agreement by Dr. Northrup, acting as an independent contractor in accordance
with the terms of the Technical Assistance Agreement, shall fulfill Segmed’s
obligations under this Section 2.4.

 

2.5                                 Government Licenses and Approvals and
Third-Party Consents.  ASSIGNORS shall provide reasonable
assistance to MedicalCV in obtaining U.S. Food and Drug Administration (FDA)
clearance or approval, or other U.S. or foreign governmental licenses, permits
or approvals, and any third-party consents, which may be required for the manufacture,
use or sale of the Device.

 

3.                                       Consideration.

 

3.1                                 ASSIGNORS acknowledge and agree that the full
consideration for this Assignment shall be:

 

(a)                                  payment of the aggregate sum of $500,000 due
and payable to Segmed by MedicalCV as follows:

 

(i)                                     $50,000 payable upon the closing of the
transaction contemplated by this Agreement;

 

(ii)                                  $100,000 upon completion of the first human
implant of the Device following FDA 510(k) clearance for the Device; and

 

(iii)                               $350,000 upon MedicalCV achieving gross revenues of $1,320,000 from
sales of the Device during any 12-month period; and

 

(b)                                 issuance of a warrant (the “Warrant”) to
purchase an aggregate of 100,000 shares of MedicalCV common stock, exercisable
for seven years following the issuance thereof, at an exercise price of $2.95
per share in the form attached hereto as Exhibit A, subject to vesting as
follows:

 

(i)                                     to the extent of 25,000 shares upon the
closing of the transaction contemplated by this Agreement;

 

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

 

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

 

(iv)                              to the extent of the remaining 25,000 shares upon the first commercial
sale of the Device by MedicalCV (other than to a wholly owned subsidiary of
MedicalCV or to the ASSIGNORS); and

 

 

(c)                                  payment of the royalties payable pursuant to
Section 3.2 of this Agreement.

 

3.2                                 Royalties.  For so long as any of the
Patents or any patents issued pursuant to the Applications remain enforceable
against others, MedicalCV shall pay to Segmed royalties at the rate of:

 

(a)                                  six percent (6%) of the Net Sales Price of
Devices in countries in which the Patents are enforceable; and

 

(b)                                 two percent (2%) of the Net Sales Price of
Devices in countries in which the Patents are not enforceable;

 

provided,
however, that commencing with the fifth year following public release of the
Device after FDA clearance or approval of the Device, MedicalCV shall pay to
Segmed the minimum annual royalties set forth on Exhibit B in installments of
one-fourth of the applicable minimum annual royalty payable on or before the
fifth business day following each calendar quarter.  The minimum annual royalty payments required herein shall be
considered advance payments against and deducted from earned royalties payable
pursuant to Section 3.3 (a) and (b) for the year in which each minimum
annual royalty payment is made.  In no
event shall the payment of the minimum annual royalty payment excuse MedicalCV
from its obligations to meet the reporting and payment requirements otherwise
specified.

 

3.3                                 Payment of Royalties. 
Royalties shall be payable based upon the Net Sales Price of Devices
during each calendar quarter.  Royalties
(other than installments of the minimum royalty) shall be due and payable to
Segmed within sixty (60) days after the end of the calendar quarter during the
term of this Agreement.  All payments
shall be made in United States dollars. 
If any royalty payments required or as amended by this Agreement shall
not be paid within five (5) business days following its due date, the unpaid
amount shall bear interest at a per annum rate equal to the U.S. prime rate as
published in the Wall Street Journal.

 

3.4                                 Discontinuation of Royalties.  If
MedicalCV determines to discontinue pursuing commercialization of the Device,
or shall determine to discontinue marketing the Device, then MedicalCV shall,
upon request of Segmed, provide Segmed with an exclusive license permitting
Segmed to market and sell the Device, or will assign all of its rights in the
Intellectual Property to Segmed, and thereafter, all of MedicalCV’s payment
obligations under Section 3 of this Agreement shall cease (other than
payment of amounts due or accrued through the date of such discontinuance).

 

3.5                                 Reductions.  MedicalCV shall not have any
obligation under this Agreement to enforce the Patents or the Trademark against
any third parties who infringe the Patents or the Trademark, or to procure a
right or license or pay any fee or royalty should the Device or use of the
Device be determined to infringe rights of third parties; but if it shall
determine to do so, or if it determines to defend claims that the Device
infringes patents of others, it may offset against and deduct from royalties
due Segmed, the cost of procuring any right or license, including any royalties
or fees, the cost of defense or enforcement, including reasonable attorneys
fees, judgments, award and any damages or settlements insofar as the same are
reasonably determined to arise out of the alleged infringement of the Patents,
or the infringement or alleged infringement by MedicalCV of rights of third
parties.  For purposes of the offset and
deduction from future royalties due Segmed pursuant hereto, the following
limitations shall apply:  (a) no more
than one-half of the cost or expense related to the procurement of a right or
license (exclusive of royalties based upon a percentage of sales) or the
payment of attorneys fees, costs, judgments, awards, damages, settlements or
other expenses (exclusive of royalties) can be charged to Segmed and deducted
from royalties, and such amount may in no event exceed the lesser of
twenty-five percent (25%) thereof, or $250,000, of which amount no more than
twenty percent (20%) may be deducted from royalties due Segmed in any 12-month
period; and (b) no more than one-half of the royalty

 

 

based on sales payable to a third party for
the procurement of a right or license may be deducted from royalties due Segmed
pursuant to this Agreement.  In the
event MedicalCV shall receive amounts by way of award or settlement in
connection with enforcement or any actions relating to the foregoing, MedicalCV
shall credit to Segmed the royalty payment under Section 3.2 relating to
any such amounts actually received by MedicalCV which are based upon a number
of units determined to infringe upon MedicalCV’s rights and which exceed
MedicalCV’s costs and expenses associated with the same.

 

3.6                                 Reports.  No later than sixty (60) days
after the close of each calendar quarter in which there are net sales of the
Device, MedicalCV shall provide ASSIGNORS with a report relating to the prior
quarter setting forth not less than the following information:

 

(a)                                  All units manufactured and sold,

 

(b)                                 Total invoices/billings for units sold,

 

(c)                                  Accounting for all sales of the Device by
MedicalCV’s licensees, if any;

 

(d)                                 Any and all deductions,

 

(e)                                  Total royalties due to Segmed,

 

(f)                                    Names and addresses of all licensees of
MedicalCV,

 

The reports provided for hereunder shall be
certified by an authorized representative of Medical CV.

 

3.7                                 Books and Records. 
MedicalCV shall keep accurate books and records as may be necessary for
the purpose of determining the amounts of royalties payable to ASSIGNORS
pursuant to Article 3.2 above. 
MedicalCV shall make such books and records available to ASSIGNORS or
their accountants or other representatives upon written request by ASSIGNORS
during normal business hours throughout the term of this Agreement and for a
period of three (3)  years after the
date of origination of any such books or records for the limited purpose of
verifying MedicalCV’s determination of royalties paid or payable pursuant to
this Agreement.

 

3.8                                 Non-Competition.  So
long as the Patents or any patent issued pursuant to the Applications remain
enforceable against others that make, sell or use the Device without
authorization of MedicalCV, ASSIGNORS will not, without the written consent of
MedicalCV authorized by MedicalCV’s board of directors:

 

(a)                                  directly or indirectly engage in the
development, manufacture or sale of any apparatus, intellectual property or
process which would, if sold or used, compete in the Field with Medical CV, or

 

(b)                                 render services to a Conflicting Organization
which engages in the activities described in clause (a).

 

3.9                                 Non-Disclosure.  So
long as the Patents or any patent issued pursuant to the Applications remain
enforceable against others that make, sell or use the Device without
authorization of MedicalCV, ASSIGNORS will not, without the written consent of
MedicalCV:

 

 

(a)                                  directly or indirectly, divulge to any
unauthorized person any information designated as secret or confidential by
MedicalCV;

 

(b)                                 disclose to anyone other than an employee of MedicalCV
or its attorneys or use in any way other than in the course of the performance
of this Agreement or the Technical Assistance Agreement, any information
regarding the Device, the Intellectual Property or any other product developed,
produced, manufactured, marketed or sold by MedicalCV, including any know-how
not known to the general public or recognized as standard practice, whether
acquired or developed by either ASSIGNOR during the performance of this
Agreement or the Technical Assistance Agreement or obtained from MedicalCV
employees, except to the extent such information (i) has been publicly
disclosed or authorized for disclosure by MedicalCV or (ii) has been publicly
disclosed by parties, not in violation of this Agreement; or

 

(c)                                  directly or indirectly publish any such
information.

 

4.                                       Representations, Warranties and Obligations.

 

4.1                                 ASSIGNORS represent, warrant and acknowledge
that:

 

(a)                                  This Agreement and the transaction
contemplated herein have been approved by the Board of Directors and
shareholders of Segmed;

 

(b)                                 ASSIGNORS possess requisite power and
authority to enter into this Agreement and consummate the transactions
contemplated hereby, including, but not limited to, the approval of Segmed’s
board of directors and shareholders;

 

(c)                                  ASSIGNORS are the owners of the entire right,
title and interest in and to the Device and the Intellectual Property and have
the right and authority to sell, assign and transfer the Device and the
Intellectual Property free and clear of any encumbrances, claims, security
interests or claims of any third parties;

 

(d)                                 ASSIGNORS have not assigned, transferred,
licensed, pledged or otherwise encumbered the Device, the Intellectual Property
or any interest therein, and there are no other agreements with any other party
in conflict with this Agreement, and, except as cited in the Applications, they
know of no prior act which would invalidate, or prevent the issuance of, the
patents issued or sought to be issued thereon;

 

(e)                                  To the best of their knowledge, after due
inquiry, ASSIGNORS are not aware of, and have not received notice of, any
rights of third parties in any apparatus or method that would, if manufactured
or sold, infringe the Patents;

 

(f)                                    To the best of their knowledge, after due
inquiry, MedicalCV’s manufacture, use, sale or license of the Device or the
Intellectual Property will not violate, infringe, or misappropriate any rights
of any third party, and there are no actions for infringement against ASSIGNORS
with respect to the Device or the Intellectual Property;

 

(g)                                 they are acquiring the Warrants pursuant to
Section 3.1(b) for investment purposes and not with a view to
distribution, and consent that sale or transfer of the Warrants shall be
restricted and a legend may be placed upon certificates representing the
Warrants, and any shares issued upon exercise of the Warrants, consistent with
ASSIGNORS’ investment representations;

 

 

(h)                                 the Warrants, and any shares issuable upon
exercise of the Warrants, have not been registered under the Securities Act of
1933, as amended, or Minnesota Securities laws and must be held indefinitely
until registered or until the ASSIGNORS sell or dispose of the same in a manner
exempt from registration under federal and state securities law;

 

(i)                                     ASSIGNORS been given information concerning
the business and financial condition of MedicalCV and are familiar with its
business and financial condition and prospects, and have been given access to
corporate and financial information, have had the opportunity to discuss investment
with officers or founders of MedicalCV, and do not require any further
information from MedicalCV;

 

(j)                                     investment in MedicalCV involves a high
degree of risk.

 

4.2                                 ASSIGNORS hereby agree to cooperate with
MedicalCV in executing such further documents and instruments as MedicalCV may
reasonably require to carry out the purposes of this Agreement and to provide
reasonable assistance in prosecuting or defending any infringement or alleged
infringement of MedicalCV’s rights in the Device and Intellectual Property
transferred pursuant to Section 2.1 without fee or charges.

 

5.                                       The Closing.  The closing of the
transaction contemplated by this Agreement (the “Closing”), shall take place at
the offices of Briggs and Morgan, Professional Association located at 2400 IDS
Center, 80 South 8th Street, Minneapolis, Minnesota 55402, at 9:00
A.M. local time on August 7, 2002, or on such other date as the parties
may mutually agree.

 

5.1                                 At the Closing, MedicalCV shall:

 

(a)                                  execute and deliver to Dr. Northrup the Technical
Assistance Agreement pursuant to Section 2.4;

 

(b)                                 deliver to Segmed payment of $50,000 pursuant
to Section 3.1(a)(i); and

 

(c)                                  issue and deliver to Segmed the Warrant
pursuant to Section 3.1(b).

 

5.2                                 At the Closing, ASSIGNORS shall execute and
deliver to MedicalCV the following:

 

(a)                                  any and all documents and other instruments
that MedicalCV or its counsel deem reasonable or necessary to fully assign and
vest ownership of the Device, Patents, Applications and Trademark with
MedicalCV, together with any and all documents, instruments and other items
constituting or representing the Device, Patents, Applications and Trademark
pursuant to Section 2.1; and

 

(b)                                 all Know-how and Documentation pursuant to
Sections 2.1 and 2.3.

 

5.3                                 At the Closing, Dr. Northrup shall execute
and deliver to MedicalCV the Technical Assistance Agreement pursuant to
Section 2.4.

 

5.4                                 At the Closing, Segmed and/or Dr. Northrup
shall execute and deliver all other documents and instruments that MedicalCV or
its counsel deem reasonably necessary to complete the transaction contemplated
by this Agreement.

 

 

6.                                       Termination; Survival.

 

6.1                                 MedicalCV may terminate this Agreement at any
time during the development and commercialization of the Device, at its sole
discretion, by giving written notice to Segmed.  In the event that MedicalCV terminates this Agreement, then:

 

(a)                                  MedicalCV shall assign to Segmed its rights
in the Device and the Intellectual Property assigned to MedicalCV pursuant to
this Agreement;

 

(b)                                 Segmed shall be entitled to retain all
consideration paid to Segmed under Section 3.1(a) and Section 3.2
through the date of such termination;

 

(c)                                  the Warrant issued pursuant to
Section 3.1(b) shall be considered cancelled to the extent of unvested
shares as of the date of such termination; and

 

(d)                                 the Non-Competition provisions of
Section 3.8 shall be considered cancelled and shall no longer apply;

 

provided,
however, that if an arbitrator shall determine that the reason for termination
was properly based upon a breach or default of a representation or obligation
of either ASSIGNOR under this Agreement, clauses (a) through (d) of this
Section shall be inapplicable and the rights and remedies of MedicalCV
against ASSIGNORS shall survive such termination.

 

In
the event MedicalCV shall fail to meet the minimum sales thresholds set forth
on Exhibit C, then MedicalCV will, upon Segmed’s request, grant MedicalCV a
non-exclusive, royalty-free license (with the right to sublicense) to exploit
the Patents and any patents resulting from the Applications.  In such event, however, the balance of this
Agreement shall remain in full force and effect, until otherwise terminated
pursuant to the provisions hereof.  As a
condition to any such license or sublicense, Segmed or any such sublicensee
shall furnish to MedicalCV a written agreement undertaking to indemnify and
hold harmless MedicalCV for all losses, liabilities, costs, damages, judgments
or expenses, including reasonable attorney’s fees, arising out of the sale by
them of any device or product covered by such patents or the claims therein.

 

6.2                                 The representations, warranties, and
acknowledgments of ASSIGNORS set forth in Section 4 shall survive for a
period of two years following the date of this Agreement; the agreements and
obligations of ASSIGNORS contained in Sections 3.8 and 7.3 shall survive the
termination of this Agreement.

 

7.                                       Miscellaneous.

 

7.1                                 Expenses. 
Each party shall pay all of its own expenses, including, but not limited
to, legal and accounting fees, incurred in connection with the transactions
contemplated by this Agreement.

 

7.2                                 Notices.  Any
notice required to be given pursuant to this Agreement shall be in writing and
shall be delivered by hand or mailed by certified or registered mail, return
receipt requested or delivered by a national overnight express service, to a
party at the address set forth in the first paragraph of this Agreement.  Any party to this Agreement may change the
address to which notice or payment is to be sent by written notice to the other
party pursuant to the provisions of this Section 8.2.

 

7.3                                 Jurisdiction and Disputes. 
This Agreement shall be governed by the laws of the state of Minnesota.

 

 

(a)                                  All disputes arising under this Agreement
shall be resolved by arbitration by and in accordance with the rules of the
American Arbitration Association in the city of Minneapolis, by a single
arbitrator appointed by the American Arbitration Association and the decision
of such arbitrator shall be conclusive and binding upon the parties; provided, however,
that a party shall not be obligated to arbitrate any dispute or controversy
which is brought by a third party in a federal or state court or in asserting a
third party claim in any such action. 
In addition, a party shall not be obligated to arbitrate a claim against
another party for equitable relief to enforce this Agreement, including
specific performance.  The parties agree
that in any award by an arbitrator, or in any award by a court or other
tribunal, no party shall be entitled to recover punitive damages.

 

(b)                                 Nothing in this Section shall prevent a
party from seeking equitable (injunctive) relief from a court of competent
jurisdiction to prevent a breach, continuing breach, or wrongful termination of
this Agreement, pending the outcome of an arbitration proceeding pursuant to
Section 8.3(a).

 

7.4                                 Assignment. 
This Agreement may not be assigned or transferred by either party
without the express written consent of the other party, which consent may not
be unreasonably withheld or delayed; provided, however, that if consent is
given by MedicalCV in no event shall ASSIGNORS be relieved of their
responsibilities set forth in Sections 2.4, 3.8 and 3.9 of this Agreement.

 

7.5                                 Successors. 
This Agreement shall be binding upon and inure to the benefit of the
parties hereto, their respective heirs, administrators, personal
representatives, successors and permitted assigns.

 

7.6                                 Waiver and Amendment.  No
waiver by either party of any default shall be deemed a waiver of any prior or
subsequent default of the same or other provisions of this Agreement.  This Agreement shall not be modified or
amended except in a writing signed by the parties hereto and specifically
referring to this Agreement.

 

7.7                                 Severability.  If
any provision hereof is held invalid or unenforceable by a court of competent
jurisdiction, such invalidity shall not affect the validity or operation of any
other provision of this Agreement and such invalid provision shall be deemed to
be severed from the Agreement.

 

7.8                                 Integration. 
This Agreement, together with a separate Warrant Subscription Agreement
of even date, the Security Agreement of even date and the Technical Assistance
Agreement of even date constitutes the entire understanding of ASSIGNORS and
MedicalCV concerning the subject matter hereof, and supercedes all prior
agreements between them, and is intended as a final expression of their
agreement with respect to the subject matter hereof.

 

 

IN WITNESS WHEREOF, the parties hereto have executed
this Agreement effective date first above written.

 

	
   

  	
  ASSIGNORS

  
	
   

  	
   

  
	
   

  	
  SEGMED,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ William F.Northrup
  III, MD

  	
   

  
	
   

  	
   

  	
   William
  F. Northrup III, MD

  
	
   

  	
   

  	
   Its
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ William F. Northrup
  III, MD

  	
   

  
	
   

  	
   

  	
   William F. Northrup
  III, MD, Individually

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDICALCV, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Blair P. Mowery

  	
   

  
	
   

  	
   

  	
   Blair P. Mowery,

  
	
   

  	
   

  	
   President and Chief Executive Officer

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