Document:

Exhibit 10.5

 

THE OPTION REPRESENTED
HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY
TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

 

MEDICALCV, INC.

 

NON-QUALIFIED STOCK OPTION AGREEMENT

 

	
  No. of shares
  subject to option:

  	
   

  	
  Option No.: NQO-

  
	
  Date of grant:

  	
   

  	
   

  

 

THIS OPTION
AGREEMENT is entered into by and between MedicalCV, Inc., a Minnesota
corporation (the “Company”), and
                          
(the “Optionee”).

 

W I T N E S S E T
H:

 

WHEREAS, in connection with his/her employment, the
Company has agreed to grant Optionee an option to purchase shares of its common
stock outside the Company’s stock option plans; and

 

WHEREAS, the Compensation Committee of the Company (“Committee”)
has authorized and approved the grant of the following option (“Option”) on the
terms set forth in this Agreement,

 

NOW, THEREFORE, in consideration of the mutual
covenants hereinafter set forth and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto have agreed, and do hereby agree, as follows:

 

1.             Nature
of the Option.  This Option is not
intended to qualify as an Incentive Stock Option within the meaning of Section 422
of the United States Internal Revenue Code of 1986, as amended.  This Option is not granted pursuant to the
Company’s Amended and Restated 2001 Equity Incentive Plan.

 

2.             Grant
of Option.  The Company grants to the
Optionee, subject to the terms and conditions of this Agreement, the right and
option to purchase from the Company all or a part of an aggregate of
                
(                                    )
shares of Stock (the “Shares”) at the purchase price of
$         per share, such Option to be
exercised as hereinafter provided.  The
exercise price is not less than the fair market value of the stock on the date
of the grant.

 

3.             Terms
and Conditions.  It is understood and
agreed that the Option evidenced hereby is subject to the following terms and
conditions:

 

(a)           Expiration
Date.  This Option shall expire ten
years after the date of grant specified above. 
Notwithstanding the foregoing, if the Optionee’s employment or
relationship with the Company or Related Company is terminated by reason of
death, Disability or Retirement, this 

 

 

Option shall
expire on the one-year anniversary of the termination date.  If the Optionee’s employment or relationship
with the Company or Related Company is terminated by reasons for other than
death, Disability or Retirement, this Option shall, subject to the other terms
of this Agreement regarding the exercisability of this Option, expire on the three-month
anniversary of the termination date.

 

(b)           Exercise
of Option.  Subject to the other
terms of this Agreement regarding the exercisability of this Option, this
Option shall be exercisable cumulatively, to the extent it is vested, as set
forth in Exhibit A.  Any exercise
shall be accompanied by a written notice to the Company specifying the number
of shares of Stock as to which the Option is being exercised.  Notation of any partial exercise shall be
made by the Company on Schedule I hereto. 
This Option may not be exercised for a fraction of a Share, and must be
exercised for no fewer than one hundred (100) shares of Stock, or such lesser
number of shares as may be vested.

 

(c)           Payment
of Purchase Price Upon Exercise.  At
the time of any exercise, the Exercise Price of the Shares as to which this
Option is exercised shall be paid in cash to the Company, unless the Board
shall permit or require payment of the purchase price in another manner.  This Option does not include any feature for
the deferral of compensation following its exercise.

 

(d)           Nontransferability.  This Option shall not be transferable other
than by will or by the laws of descent and distribution.  During the lifetime of the Optionee, this
Option shall be exercisable only by the Optionee or by the Optionee’s guardian
or legal representative.  No transfer of
this Option by the Optionee by will or by the laws of descent and distribution
shall be effective to bind the Company unless the Company is furnished with
written notice thereof and a copy of the will and/or such other evidence as the
Board may determine necessary to establish the validity of the transfer.

 

(e)           Acceleration
of Option Upon Change in Control.  In
the event of a Change in Control, as defined below, the provisions of Section 3(b) and
Exhibit A hereof pertaining to vesting shall cease to apply and this
Option shall become immediately vested and fully exercisable with respect to
all Shares; provided, however, that the provisions of this Subsection 3(e) shall
not apply unless the Optionee has been employed by the Company for a period
equal to or exceeding one calendar year. 
No acceleration of vesting shall occur under this Subsection 3(e) in
the event a surviving corporation or its parent assumes this Option or in the
event the surviving corporation or its parent substitutes an option agreement
with substantially the same terms as provided in this Agreement.  Nothing in this Subsection 3(e) shall
limit the Committee’s authority to cancel this Option in accordance with Section 6.  For purposes of this Agreement, the term “Change
in Control” shall mean:

 

(i)            the acquisition by
any person or group deemed a person under Sections 3(a)(9) and 13(d)(3) of
the Exchange Act (other than the Company and its subsidiaries as determined
immediately prior to that date) of beneficial ownership, directly or indirectly
(with beneficial ownership determined as provided in Rule 13d-3, or any
successor rule, under the Exchange Act), of a majority of the total combined
voting power of all classes of Stock of the Company having the right under
ordinary circumstances to vote at an election of the Board, provided that a
Change in Control shall not occur if a person acquires the majority described
above by virtue of any acquisition of Stock directly from the Company;

 

2

 

(ii)           the date of
approval by the shareholders of the Company of an agreement providing for the
merger or consolidation of the Company with another corporation or other entity
where (x) shareholders of the Company immediately prior to such merger or
consolidation would not beneficially own following such merger or consolidation
shares entitling such shareholders to a majority of all votes (without
consolidation of the rights of any class of stock to elect directors by a
separate class vote) to which all shareholders of the surviving corporation
would be entitled in the election of directors, or (y) where the members
of the Board, immediately prior to such merger or consolidation, would not, immediately
after such merger or consolidation, constitute a majority of the board of
directors of the surviving corporation; or

 

(iii)          the sale of all or
substantially all of the assets of the Company.

 

(f)            Subject
to Lock Up.  Optionee understands
that the Company at a future date may file a registration or offering statement
(the “Registration Statement”) with the Securities and Exchange Commission to
facilitate an underwritten public offering of its securities.  The Optionee agrees, for the benefit of the Company,
that should such an underwritten public offering be made and should the
managing underwriter of such offering require, the undersigned will not,
without the prior written consent of the Company and such underwriter, during
the Lock Up Period as defined herein: sell, transfer or otherwise dispose of,
or agree to sell, transfer or otherwise dispose of this Option or any of the
Shares acquired upon exercise of this Option during the Lock Up Period; or sell
or grant, or agree to sell or grant, options, rights or warrants with respect
to any of the Shares acquired upon exercise of this Option.  The foregoing does not prohibit gifts to
donees or transfers by will or the laws of descent to heirs or beneficiaries
provided that such donees, heirs and beneficiaries shall be bound by the
restrictions set forth herein.  The term “Lock
Up Period” shall mean the lesser of (x) 180 days or (y) the period
during which Company officers and directors are restricted by the managing
underwriter from effecting any sales or transfers of the Shares.  The Lock Up Period shall commence on the
effective date of the Registration Statement.

 

(g)           Not
An Employment Contract.  The Option
will not confer on the Optionee any right with respect to continuance of
employment or other service with the Company or any Subsidiary, nor will it
interfere in any way with any right the Company or any Subsidiary would
otherwise have to terminate or modify the terms of such Optionee’s employment
or other service at any time.

 

(h)           No
Rights as Shareholder.  The Optionee
shall have no rights as a shareholder of the Company with respect to any Shares
prior to the date of issuance to the Optionee of a certificate for such Shares.

 

(i)            Compliance
with Law and Regulations.  This
Option and the obligation of the Company to sell and deliver Shares hereunder
shall be subject to all applicable laws, rules and regulations (including,
but not limited to, federal securities laws) and to such approvals by any
government or regulatory agency as may be required.  This Option shall not be exercisable, and the
Company shall not be required to issue or deliver any certificates for Shares
of Stock prior to the completion of any registration or qualification of such
Shares under any federal or state law, or any rule or regulation of any
government body which the Company shall, in its sole discretion, determine to
be necessary or advisable.  Moreover,
this Option may not be exercised if its exercise or the receipt of Shares of
Stock pursuant thereto would be contrary to applicable law.

 

3

 

(j)            Withholding.  All deliveries and distributions under this
Agreement are subject to withholding of all applicable taxes.  The Company is entitled to (a) withhold
and deduct from future wages of the Optionee (or from other amounts that may be
due and owing to the Optionee from the Company), or make other arrangements for
the collection of, all legally required amounts necessary to satisfy any
federal, state or local withholding and employment-related tax requirements
attributable to the Option, or (b) require the Optionee promptly to remit
the amount of such withholding to the Company before acting on the Optionee’s
notice of exercise of this Option.  At
the election of the Optionee, and subject to such rules and limitations as
may be established by the Committee from time to time, such withholding
obligations may be satisfied through the surrender of shares of Stock which the
Optionee already owns, or to which the Optionee is otherwise entitled under
this Agreement.

 

(k)           Adjustments.  In the event of any reorganization, merger,
consolidation, recapitalization, liquidation, reclassification, stock dividend,
stock split, combination of shares, rights offering, divestiture or
extraordinary dividend (including a spin off), or any other similar change in
the corporate structure or shares of the Company, the Committee (or, if the
Company is not the surviving corporation in any such transaction, the board of
directors of the surviving corporation), in order to prevent dilution or
enlargement of the rights of the Optionee, will make appropriate adjustment
(which determination will be conclusive) as to the number and kind of
securities or other property (including cash) subject to, and the exercise price
of, this Option.  No such adjustment
shall result in the value of the Option exceeding the aggregate value of this
Option prior to such adjustment.  The
Committee or Board may make such other adjustments as it deems
appropriate.  No other issuance by the Company
of shares of stock or any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of common stock subject to the
Option.

 

4.             Termination
of Employment.  Upon the termination
of the employment of Optionee prior to the expiration of the Option, the
following provisions shall apply:

 

(a)           Upon
the involuntary termination of Optionee’s employment or the voluntary
termination or resignation of Optionee’s employment, the Optionee may exercise
the Option to the extent the Optionee was vested in and entitled to exercise
the Option at the date of such employment termination for a period of three (3) months
after the date of such employment termination, or until the term of the Option
has expired, whichever date is earlier. 
To the extent the Optionee was not entitled to exercise this Option at
the date of such employment termination, or if Optionee does not exercise this
Option within the time specified herein, this Option shall terminate.

 

(b)           If
the employment of an Optionee is terminated by the Company for cause, then the
Board or the Committee shall have the right to cancel the Option.

 

5.             Death,
Disability or Retirement of Optionee. 
Upon the death, Disability or Retirement, as defined herein, of Optionee
prior to the expiration of the Option, the following provisions shall apply:

 

(a)           If
the Optionee is at the time of his Disability employed by the Company or a
Subsidiary and has been in continuous employment (as determined by the
Committee in its sole discretion) since the Date of Grant of the Option, then
the Option may be exercised by the Optionee 

 

4

 

for one (1) year
following the date of such Disability or until the expiration date of the
Option, whichever date is earlier, but only to the extent the Optionee was
vested in and entitled to exercise the Option at the time of his
Disability.  For purposes of this Section 5,
the term “Disability” shall mean that the Optionee is unable, by reason of a
medically determinable physical or mental impairment, to substantially perform
the principal duties of employment with the Company, which condition, in the
opinion of a physician selected by the Board, is expected to have a duration of
not less than 120 days, unless the Optionee is employed by the Company, a
Parent, a Subsidiary or an Affiliate, pursuant to an employment agreement which
contains a definition of “Disability,” in which case such definition shall
control.  The Committee, in its sole
discretion, shall determine whether an Optionee has a Disability and the date
of such Disability.

 

(b)           If
the Optionee is at the time of his death employed by the Company or a
Subsidiary and has been in continuous employment (as determined by the
Committee in its sole discretion) since the Date of Grant of the Option, then
the Option may be exercised by the Optionee’s estate or by a person who
acquired the right to exercise the Option by will or the laws of descent and
distribution, for one (1) year following the date of the Optionee’s death
or until the expiration date of the Option, whichever date is earlier, but only
to the extent the Optionee was vested in and entitled to exercise the Option at
the time of death.

 

(c)           If
the Optionee is at the time of his Retirement employed by the Company or a
Subsidiary and has been in continuous employment (as determined by the
Committee in its sole discretion) since the Date of Grant of the Option, then
the Option may be exercised by the Optionee for one (1) year following the
date of the Optionee’s Retirement or until the expiration date of the Option,
whichever date is earlier, but only to the extent the Optionee was vested in
and entitled to exercise the Option at the time of Retirement.  For purposes of this Section 5,
Retirement of the Optionee shall mean, with the approval of the Committee, the
occurrence of the Optionee’s Date of Termination on or after the date the
Optionee attains age 55.

 

(d)           If
the Optionee dies within three (3) months after Termination of Optionee’s
employment with the Company or a Subsidiary the Option may be exercised for
nine (9) months following the date of Optionee’s death or the expiration
date of the Option, whichever date is earlier, by the Optionee’s estate or by a
person who acquires the right to exercise the Option by will or the laws of
descent or distribution, but only to the extent the Optionee was vested in and
entitled to exercise the Option at the time of Termination.

 

6.             Termination
of Relationship for Misconduct; Clawback. 
If the Board or the Committee reasonably believes that the Optionee has
committed an act of misconduct or breach of fiduciary duty, it may suspend the
Optionee’s right to exercise this option pending a determination by the Board
or the Committee.  If the Board or the
Committee determines that the Optionee has committed an act of  misconduct or has breached a duty to the
Company, neither the Optionee nor the Optionee’s estate shall be entitled to
exercise the Option.  For purposes of
this Section 6, an act of misconduct shall include embezzlement, fraud,
dishonesty, nonpayment of an obligation owed to the Company, breach of
fiduciary duty or deliberate disregard of the Company’s rules resulting in
loss, damage or injury to the Company, or if the Optionee makes an unauthorized
disclosure of any Company trade secret or confidential information, engages in
any conduct constituting unfair competition with respect to the Company, or
induces any party to breach a contract with the Company.  In making such determination, the Board or
the Committee shall act fairly and shall give 

 

5

 

the Optionee an
opportunity to appear and present evidence on the Optionee’s behalf at a
hearing before the Board or the Committee. 
For purposes of this Section 6, an act of misconduct or breach of
fiduciary duty to the Company shall be an event giving the Company the right to
terminate Optionee’s employment pursuant to Section             
of Optionee’s Employment Agreement with the Company dated
                                      ,
which Agreement is incorporated herein by reference.  In addition, misconduct shall include willful
violations of federal or state securities laws. 
In making such determination, the Board or the Committee shall act
fairly and shall give the Optionee an opportunity to appear and present
evidence on the Optionee’s behalf at a hearing before the Board or the
Committee.  In addition, if the Company,
based upon an opinion of legal counsel or a judicial determination, determines
that Section 304 of the Sarbanes-Oxley Act of 2002 is applicable to
Optionee hereunder, to the extent that the Company is required to prepare an
accounting restatement due to the material noncompliance of the Company, as a
result of misconduct, with any financial reporting requirement under the
securities laws, Optionee shall reimburse the Company for any compensation
received by Optionee from the Company during the 12-month period following the
first public issuance or filing with the Securities and Exchange Commission
(whichever first occurs) of the financial document embodying such financial
reporting requirement and any profits received from the sale of the Company’s
common stock or common stock equivalents, acquired pursuant to this Agreement.

 

7.             Restrictions on Transfer.

 

(a)           Securities Law
Restrictions.  Regardless of whether
the offering and sale of common stock under this Agreement have been registered
under the Securities Act of 1933 (the “Act”) or have been registered or
qualified under the securities laws of any state, the Company at its discretion
may impose restrictions upon
the sale, pledge or other transfer of such common stock (including the
placement of appropriate legends on stock certificates or the imposition of
stop-transfer instructions) if, in the judgment of the Company, such
restrictions are necessary or desirable in order to achieve compliance with the
Act, the securities laws of any state or any other law.

 

(b)           Investment Intent
at Grant.  Optionee represents and
agrees that the Shares to be acquired upon exercising this Agreement will be
acquired for investment, and not with a view to the sale or distribution
thereof.

 

(c)           Investment Intent
at Exercise.  In the event that
common stock issued under this Agreement is not registered under the Act but an
exemption is available which requires an investment representation or other
representation, Optionee shall represent and agree at the time of exercise that
the common stock being acquired upon exercising the Option is being acquired
for investment, and not with a view to the sale or distribution thereof, and
shall make such other representations as are deemed necessary or appropriate by
the Company and its counsel.

 

(d)           Legends.  All certificates evidencing
Shares issued under this Agreement in an unregistered transaction shall bear
the following legend (and such other restrictive legends as are required or
deemed advisable under the provisions of any applicable law):

 

“THE SHARES REPRESENTED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 

 

6

 

1933, AS AMENDED, AND MAY NOT
BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY
AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”

 

(e)           Removal
of Legends.  If, in the opinion of
the Company and its counsel, any legend placed on a stock certificate
representing Shares issued under this Agreement is no longer required, the
holder of such certificate shall be entitled to exchange such certificate for a
certificate representing the same number of shares of common stock but without
such legend.

 

(f)            Administration.  Any determination by the Company and its
counsel in connection with any of the matters set forth in this section shall
be conclusive and binding on Optionee and all other persons.

 

8.             Heirs
and Successors.  This Agreement shall
be binding upon, and inure to the benefit of, the Company and its successors
and assigns, and upon any person acquiring, whether by merger, consolidation,
purchase of assets or otherwise, all or substantially all of the Company’s
assets and business.  If any rights
exercisable by the Optionee or benefits deliverable to the Optionee under this
Agreement have not been exercised or delivered, respectively, at the time of
the Optionee’s death, such rights shall be exercisable by the Designated
Beneficiary, and such benefits shall be delivered to the Designated
Beneficiary, in accordance with the provisions of this Agreement.  The “Designated Beneficiary” shall be the
beneficiary or beneficiaries designated by the Optionee in a writing filed with
the Committee in such form and at such time as the Committee shall
require.  If a deceased Optionee fails to
designate a beneficiary, or if the Designated Beneficiary does not survive the
Optionee, any rights that would have been exercisable by the Optionee and any benefits
distributable to the Optionee shall be exercised by or distributed to the legal
representative of the estate of the Optionee. 
If a deceased Optionee designates a beneficiary and the Designated
Beneficiary survives the Optionee but dies before the Designated Beneficiary’s
exercise of all rights under this Agreement or before the complete distribution
of benefits to the Designated Beneficiary under this Agreement, then any rights
that would have been exercisable by the Designated Beneficiary shall be
exercised by the legal representative of the estate of the Designated
Beneficiary, and any benefits distributable to the Designated Beneficiary shall
be distributed to the legal representative of the estate of the Designated
Beneficiary.

 

9.             Notices.  Any notice hereunder to the Company shall be
addressed to it at its principal executive offices, located at 9725 South
Robert Trail, Inver Grove Heights, Minnesota 55077, Attention: Chief Executive
Officer; and any notice hereunder to the Optionee shall be addressed to the
Optionee at the address last appearing in the employment records of the
Company; subject to the right of either party to designate at any time
hereunder in writing some other address.

 

10.           Counterparts.  This Agreement may be executed in two
counterparts each of which shall constitute one and the same instrument.

 

7

 

11.           Governing
Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of
Minnesota, except to the extent preempted by federal law, without regard to the
principles of comity or the conflicts of law provisions of any other
jurisdiction.

 

IN WITNESS
WHEREOF, MedicalCV, Inc. has caused this Agreement to be executed by its
duly authorized officer and the Optionee has executed this Agreement, both as
of the day and year first above written.

 

	
   

  	
  MEDICALCV, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  OPTIONEE

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

8

 

EXHIBIT A

 

OPTION AND VESTING DATA

 

Name of Optionee:

 

Total Number of Shares
Subject to Option:

 

Date of Grant:

 

OPTION VESTING SCHEDULE

 

	
   

  	
   

  	
  NO. OF SHARES

  	
   

  
	
  DATE

  	
   

  	
  VESTED

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

The above vesting schedule assumes an ongoing
relationship with the Company.  Your
rights to exercise the unvested portion of your option will cease upon
termination of relationship with the Company, subject to Change in Control
provisions set forth in Section 3(e) of this Agreement.  Reference is made to the Plan and to relevant
sections of the Agreement between you and the Company for your rights to
exercise the vested portion of your option in the event of termination of your
relationship with the Company during lifetime or upon death.  The above vesting schedule is in all respects
subject to the terms of those documents.

 

	
  OPTIONEE

  	
   

  	
  MEDICALCV, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name: 

  
	
   

  	
   

  	
  Title:

  

 

 

SCHEDULE I -
NOTATIONS AS TO PARTIAL EXERCISE

 

 

 

	
   

  	
   

  	
  Number of

  	
   

  	
  Balance of

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date of

  	
   

  	
  Purchased

  	
   

  	
  Shares on

  	
   

  	
  Authorized

  	
   

  	
  Notation

  	
   

  
	
  Exercise

  	
   

  	
  Shares

  	
   

  	
  Option

  	
   

  	
  Signature

  	
   

  	
  DateExhibit 10.6

 

RESTRICTED STOCK AWARD

 

RESTRICTED STOCK AWARD AGREEMENT dated as of
                                      ,
between MedicalCV, Inc., a Minnesota corporation (the “Corporation”), and
                          ,
an employee of the Corporation or one of its subsidiaries (the “Employee”).

 

WHEREAS, the Board of
Directors of the Corporation has established and the shareholders have approved
the Corporation’s Amended and Restated 2001 Equity Incentive Plan (the “Plan”);

 

WHEREAS, the Compensation
Committee of the Board of Directors of the Corporation (the “Committee”), in
accordance with the provisions of the Plan, has determined that the Employee is
entitled to a Restricted Stock Award under the Plan;

 

NOW, THEREFORE, in
consideration of the foregoing and the Employee’s acceptance of the terms and
conditions hereof, the parties hereto have agreed, and do hereby agree, as
follows:

 

1.             The Corporation
hereby grants to the Employee, as a matter of separate agreement and not in
lieu of salary or any other compensation for services,
                    
shares of Common Stock of the Corporation on the terms and conditions herein
set forth (the “Restricted Shares”).

 

2.             The certificates
representing the Restricted Shares shall be registered in the name of the
Employee and retained in the custody of the Corporation until such time as they
are delivered to the Employee or forfeited to the Corporation in accordance
with the terms hereof  (the “Restriction
Period”).  During the Restriction Period,
the Employee will be entitled to vote the Restricted Shares.  In addition, any dividends paid on the
Restricted Shares shall, at the option of the Corporation, either be (a) paid
to the Employee in cash as additional compensation, or (b) invested in
additional shares of Common Stock held in custody for the Employee, subject to
the same restrictions as the Restricted Shares, and to be delivered with the
Restricted Shares.  Such additional
shares of Common Stock shall be deemed to be included in the definition of “Restricted
Shares”.

 

3.             If the Employee shall
have been continuously in the employment of the Corporation for a period of
four years from the date of grant of this Restricted Stock Award, the
Corporation shall deliver to the Employee on or about the fourth anniversary
hereof a certificate, registered in the name of the Employee and free of
restrictions hereunder, representing the total number of Restricted Shares
granted to the Employee pursuant to this Agreement.  No payment shall be required from the
Employee in connection with any delivery to the Employee of shares hereunder.

 

4.             Except in the case of
the Employee’s death, if the Employee ceases to be an employee of the
Corporation during the Restriction Period, then the Restricted Shares to which
the Employee has not theretofore become entitled pursuant to Section 3
shall be forfeited, and all rights of the Employee in and to such Restricted
Shares shall lapse.  In addition, the
Committee shall from time to time determine in its sole discretion whether any
period of nonactive employment, including authorized leaves of absence, or
absence by reason of military or 

 

 

governmental service,
shall constitute termination of employment for the purposes of this
Section.  Upon the death of the Employee
during the Restriction Period, the Employee will be deemed to have been
employed continuously during the entire Restriction Period and the Employee’s
estate shall be entitled to all rights provided under the terms of this
Restricted Stock Award that the Employee would have been entitled to upon the
end of the Restriction Period.

 

5.             The granting of this
Restricted Stock Award shall not in any way prohibit or restrict the right of
the Corporation to terminate the Employee’s employment.  The Employee shall have no right to any
prorated portion of the Restricted Shares otherwise deliverable to the Employee
on the anniversary hereof next following a termination of employment (whether
voluntary or involuntary) in respect of a partial year of employment.

 

6.             Shares of Common
Stock held in custody for the Employee pursuant to this Agreement may not,
before being vested, be sold, transferred, pledged, exchanged, hypothecated or
disposed of by the Employee and shall not be subject to execution, attachment
or similar process.

 

7.             This Agreement and
each and every obligation of the Corporation relating to the Restricted Stock
Award hereunder are subject to the requirement that if at any time the
Corporation shall determine, upon advice of counsel, that the listing,
registration or qualification of the shares covered hereby upon any securities
exchange or under any state or Federal law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a condition of or in
connection with the granting hereof or the delivery of shares hereunder, then
the delivery of shares hereunder to the Employee may be postponed until such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Corporation.

 

8.             Any payment required
under this Agreement shall be subject to all requirements of the law with
regard to income and employment withholding taxes, filings, and making of
reports, and the Corporation and the Employee shall use their best efforts to
satisfy promptly all such requirements, as applicable.  In addition to amounts in respect of taxes
which the Corporation shall be required by law to deduct or withhold from any
dividend payments on the Restricted Shares covered hereby, the Corporation may
defer making any delivery of Restricted Shares under this Agreement until
completion of arrangements satisfactory to the Corporation for the payment of
any applicable taxes, whether through share withholding provided for by the
Plan or otherwise.

 

9.             In the event of a “Change
in Control”, as that term is defined in the Plan, then the Employee shall have
all the rights specified in Section 9 of the Plan, which, if the acquiring
or surviving company in the Change in Control does not assume this Restricted
Stock Award upon the Change in Control, shall include the immediate lapsing of
all restrictions on the Restricted Shares.

 

10.           Each capitalized word
used in this Agreement without definition shall have the same meaning set forth
in the Plan, the terms and conditions of which shall constitute an integral
part hereof.  For all purposes of this
Agreement, references to employment with the Corporation shall include
employment with any of the Corporation’s subsidiaries.

 

2

 

11.           Any notice which either
party hereto may be required or permitted to give the other shall be in writing
and may be delivered personally or by mail, postage prepaid, addressed to the
Vice President, Finance and Chief Financial Officer of the Corporation at its
principal office and to the Employee at his address as shown on the Corporation’s
payroll records, or to such other address as the Employee by notice to the
Corporation may designate in writing from time to time.

 

12.           Employee acknowledges
and understands that the Restricted Shares awarded hereunder constitute
restricted property pursuant to Section 83(a) of the Internal Revenue
Code of 1986, as amended (the “Code”). 
The value of the Restricted Shares shall be taxable to the Employee in
the year the Employee completes the Restriction Period, unless the Employee
timely and properly makes an election under Code Section 83(b) to
accelerate the date on which the Restricted Shares become taxable to the
Employee.  Employee acknowledges and
understands that the decision on whether to accelerate the date on which the
Restricted Shares become taxable, pursuant to an election under Code Section 83(b),
is an individual decision.  The Employee
shall seek timely advice from a competent tax advisor on whether such an
election is advisable in the Employee’s situation.  If the Employee makes such an election, the
Employee shall promptly advise the Corporation so that the Corporation may
properly report such income and make the necessary income tax withholding from
other compensation the Employee is entitled to receive from the Corporation in
the taxable year, if any.  Employee
acknowledges and understands that if the Employee makes an election under Code Section 83(b),
and any of the Restricted Shares are forfeited pursuant to the terms of this
Restricted Stock Award Agreement, Employee will not be entitled to a deduction
for such forfeited Restricted Shares.

 

13.           Nothing herein
contained shall confer on the Holder any right to continue in the employment of
the Corporation or interfere in any way with the right of the Corporation to
terminate the Holder’s employment; confer on the Holder any of the rights of a
shareholder, other than as set forth herein, with respect to any of the shares
subject to the Restricted Shares until such shares shall be issued once the
restrictions lapse; affect the Holder’s right to participate in and receive
benefits under and in accordance with the provisions of any pension,
profit-sharing, insurance, or other employee benefit plan or program of the
Corporation or any of its subsidiaries; or limit or otherwise affect the right
of the Board of Directors of the Corporation (subject to any required approval
by the shareholders) at any time or from time to time to alter, amend, suspend
or discontinue the Plan and the rules for its administration; provided,
however, that no termination or amendment of the Plan may, without the  consent of the Holder, adversely affect the Holder’s rights
under the Restricted Stock Award.

 

	
   

  	
  MEDICALCV, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  [name]

  
	
   

  	
   

  	
  [title]

  
	
   

  	
   

  	
   

  
	
  ACCEPTED:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Employee

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

3

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