Document:

EXHIBIT 10.6

 

WARRANT

 

To Purchase 34,014 Shares of

Common Stock

of

MEDICALCV, INC.

 

 

This Warrant and the securities issuable upon exercise of this Warrant
have not been registered under the Securities Act of 1933 (the “Securities
Act”) or under any state securities or “Blue Sky” laws (“Blue Sky Laws”).  No transfer, sale, assignment, pledge,
hypothecation or other disposition of this Warrant or the securities issuable
upon exercise of this Warrant or any interest therein may be made except (a)
pursuant to an effective registration statement under the Securities Act and
any applicable Blue Sky Laws or (b) if the Company has been furnished with an
opinion of counsel for the holder, which opinion and counsel shall be
reasonably satisfactory to the Company, to the effect that no registration is
required because of the availability of an exemption from registration under
the Securities Act and applicable Blue Sky Laws.

 

THIS CERTIFIES
THAT, for good and valuable consideration, PKM PROPERTIES, LLC a Minnesota limited
liability company (“PKM Properties”) or its registered assigns, is
entitled to subscribe for and purchase from MedicalCV, Inc., a Minnesota
corporation (the “Company”), at any time to and including the date that
is ten (10) years after the date hereof Thirty-four Thousand Fourteen (34,014)
fully paid and nonassessable shares of the Common Stock of the Company at the
price equal to the lower of:  (i) $1.47
per share or (ii) the price per share at which the Company first sells its
Common Stock or units (a unit consisting of a share of Common Stock and a stock
purchase Warrant), in a private placement or public offering following the date
hereof, minus, in the case of the sale of units, the value of the Warrant
component thereof, determined at the date of such sale using the Black Scholes
formula (the “Exercise Price”), but in no event less than $1.00 per
share.  The Exercise Price shall also be
subject to the antidilution provisions of this Warrant.  The shares which may be acquired upon exercise
of this Warrant are referred to herein as the “Warrant Shares.”  As used herein, the term “Holder” means PKM
Properties, any party who acquires all or a part of this Warrant as a
registered transferee of PKM Properties, or any record holder or holders of the
Warrant Shares issued upon exercise, whether in whole or in part, of the
Warrant; the term “Common Stock” means the Company’s Common Stock, $.01 par
value.

 

This Warrant
is subject to the following provisions, terms and conditions:

 

1.             Exercise;
Conversion Right; Transferability

 

(a)           The
rights represented by this Warrant may be exercised by the Holder hereof at any
time, for a period of ten (10) years commencing on the date hereof, in whole or
in part (but not as to a fractional share of Common Stock), by written notice
of exercise (in the form attached hereto) delivered to the Company at the
principal office of the Company prior to the expiration of this Warrant and
accompanied or preceded by the surrender of this Warrant along with a check in
payment of the Exercise Price for such shares.

 

(b)           Subject
to the restrictions on transfer of this Warrant or the Warrant Shares set forth
herein, the Holder of this Warrant shall have the right to require the Company
to convert this Warrant (the “Conversion Right’) at any time after the
date hereof and prior to its expiration into shares of Common Stock as provided
for in Sections 1(b) through 1(d) hereof. 
Upon exercise of the Conversion Right, the 

 

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Company shall deliver to the
Holder (without payment by the Holder of any Exercise Price) that number of
shares of Company Common Stock equal to the quotient obtained by dividing (i)
the value of the Warrant at the time the Conversion Right is exercised
(determined by subtracting the aggregate Exercise Price for the Warrant Shares
in effect immediately prior to the exercise of the Conversion Right from the
aggregate Fair Market Value (as defined in Section 10 hereof) for the
Warrant Shares immediately prior to the exercise of the Conversion Right) by
(ii) the Fair Market Value of one share of Common Stock immediately prior to
the exercise of the Conversion Right.

 

(c)           The
Conversion Right may be exercised by the Holder, at any time or from time to
time, after the date hereof and prior to its expiration, on any business day by
delivering a written notice in the form attached hereto (the “Conversion
Notice”) to the Company at the offices of the Company exercising the
Conversion Right and specifying (i) the total number of shares of Common Stock
the Holder will purchase pursuant to such conversion and (ii) a place and date
not less than one or more than 20 business days from the date of the Conversion
Notice for the closing of such purchase.

 

(d)           At
any closing under Section 1(c) hereof, (i) the Holder will surrender the
Warrant, (ii) the Company will deliver to the Holder a certificate or
certificates for the number of shares of Common Stock issuable upon such
conversion, together with cash, in lieu of any fraction of a share, and (iii)
the Company will deliver to the Holder a new warrant representing the number of
shares, if any, with respect to which the Warrant shall not have been
exercised.

 

(e)           Subject
to the provisions of Section 7 hereof, this Warrant shall be fully
transferable, in whole or in part; provided that this Warrant shall be
transferable only on the books of the Company by the Holder in person, or by
duly authorized attorney, on surrender of the Warrant, properly assigned.

 

2.             Exchange
and Replacement.  Subject to Sections
1 and 7 hereof, this Warrant is exchangeable upon the surrender hereof by the
Holder to the Company at its office for new Warrants of like tenor and date
representing in the aggregate the right to purchase the number of Warrant
Shares purchasable hereunder, each of such new Warrants to represent the right
to purchase such number of Warrant Shares (not to exceed the aggregate total
number purchasable hereunder) as shall be designated by the Holder at the time
of such surrender.  Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction, or mutilation of this Warrant, and, in case of loss, theft or
destruction, of indemnity reasonably satisfactory to it, and upon surrender and
cancellation of this Warrant, if mutilated, the Company will make and deliver a
new Warrant of like tenor, in lieu of this Warrant.  This Warrant shall be promptly canceled by
the Company upon the surrender hereof in connection with any exchange or replacement.  The Company shall pay all expenses, taxes
(other than stock transfer taxes), and other charges incurred by it in
connection with the preparation, execution, and delivery of Warrants pursuant
to this Section 2.

 

3.             Issuance
of the Warrant Shares.

 

(a)           The
Company agrees that the shares of Common Stock purchased upon exercise of this
Warrant shall be and are deemed to be issued to the Holder as of the close of
business on the date on which this Warrant shall have been surrendered and the
payment made for such Warrant Shares as aforesaid.  Subject to the provisions of paragraph (b) of
this Section 3, certificates for the Warrant Shares so purchased shall be
delivered to the Holder within a reasonable time, not exceeding fifteen (15)
days after the rights represented by this Warrant shall have been so exercised,
and, unless this Warrant has expired, a new Warrant representing the right to
purchase the number of Warrant Shares, if any, with respect to which this
Warrant shall not then have been exercised shall also be delivered to the Holder
within such time.

 

2

 

(b)           Notwithstanding
the foregoing, the Company shall not be required to deliver any certificate for
Warrant Shares upon exercise of this Warrant except in accordance with
exemptions from the applicable securities registration requirements or
registrations under applicable securities laws. 
Nothing herein, however, shall obligate the Company to effect
registrations under federal or state securities laws, except as provided in
Section 9.  If registrations are not in
effect and if exemptions are not available when the Holder seeks to exercise
the Warrant, the Warrant exercise period will be extended, if need be, to
prevent the Warrant from expiring, until such time as either registrations become
effective or exemptions are available, and the Warrant shall then remain
exercisable for a period of at least 30 calendar days from the date the Company
delivers to the Holder written notice of the availability of such registrations
or exemptions.  The Holder agrees to
execute such documents and make such representations, warranties, and
agreements as may be required solely to comply with the exemptions relied upon
by the Company, or the registrations made, for the issuance of the Warrant
Shares.

 

4.             Covenants
of the Company.  The Company
covenants and agrees that all Warrant Shares will, upon issuance, be duly
authorized and issued, fully paid, nonassessable, and free from all taxes,
liens, and charges with respect to the issuance thereof.  The Company further covenants and agrees that
during the period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized and reserved for the
purpose of issue or transfer upon exercise of the subscription rights evidenced
by this Warrant a sufficient number of shares of Common Stock to provide for
the exercise of the rights represented by this Warrant.

 

5.             Antidilution
Adjustments.  The provisions of this
Warrant are subject to adjustment as provided in this Section 5; provided that
no adjustment shall be made pursuant to this Section 5 which has the
effect of duplicating any adjustment made pursuant to the initial paragraph of
this Warrant.

 

(a)           The
Exercise Price shall be subject to adjustment from time to time as hereinafter
provided.  Upon each adjustment of the
Exercise Price the holder of this Warrant shall thereafter be entitled to
purchase the number of shares of Common Stock of the Company obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment
by the number of shares issuable pursuant to exercise immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting
from such adjustment.

 

(b)           Except
for (i) options, warrants or other rights to purchase securities outstanding on
the date of the issuance of this Warrant (provided there is no adjustment to
the terms of such options, warrants or other securities on or after the date of
issuance of this Warrant); (ii) options to purchase shares of Common Stock and
the issuance of awards of Common Stock pursuant to stock option or employee
stock purchase plans adopted by the Company and shares of Common Stock issued
upon the exercise of such options granted pursuant to such plans (provided there
is no adjustment to the terms of such options, awards or other securities on or
after the date of issuance of this Warrant) (appropriately adjusted to reflect
stock splits, combinations, stock dividends, reorganizations, consolidations
and similar changes); (iii) up to four separate issues or sales by the Company
during any twelve month period, none of which shall exceed 25,000 shares of
Common Stock or securities convertible into or exercisable for the purchase of
Common Stock; and (iv) Common Stock or securities convertible into or
exercisable for the purchase of Common Stock issued in connection with any
merger or acquisition of any business or tangible or intangible assets which is
approved by the Company’s Board of Directors; if and whenever the Company shall
issue or sell any additional securities, warrants or rights or any security
convertible or exchangeable into equity, securities, warrants or rights
(collectively, “Convertible Securities”) for a consideration per share less
than the Exercise Price in effect immediately prior to the time of such issue
or sale, then, forthwith upon such issue or sale, the Exercise Price shall be
adjusted to a price determined by multiplying such Exercise Price by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issuance plus the number of shares of
Common 

 

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Stock that the aggregate
consideration received by the Company for such issuance would purchase at such
Exercise Price; and the denominator of which shall be the number of shares of
such additional Common Stock and the number of shares of Common Stock
outstanding prior to such issuance.  For
the purpose of the above calculation, the number of shares of Common Stock
immediately prior to such issuance shall be calculated on a fully-diluted
basis, as if this Warrant and any other outstanding warrants, options or other
rights for the purchase of shares of stock or Convertible Securities had been
fully exercised as of such date.  Except
as provided in Section 5(e) below, no further adjustments of the Exercise
Price shall be made upon the actual issuance of Common Stock or of any
Convertible Securities upon the exercise of such rights or options or upon the
actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities.

 

(c)           For
purposes of this Section 5, in case any shares of Common Stock or
Convertible Securities or any rights or options to purchase any such Common
Stock or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received by
the Company therefor, without deducting therefrom any expenses incurred or any
underwriting commissions, discounts or concessions paid or allowed by the
Company in connection therewith.  In case
any shares of Common Stock or Convertible Securities or any rights or options
to purchase any such Common Stock or Convertible Securities shall be issued or
sold for a consideration other than cash, the amount of the consideration other
than cash received by the Company shall be deemed to be the fair value of such
consideration as determined by the Board of Directors of the Company, without
deducting therefrom any expenses incurred or any underwriting commissions,
discounts or concessions paid or allowed by the Company in connection
therewith.  In case any shares of Common
Stock or Convertible Securities or any rights or options to purchase such
Common Stock or Convertible Securities shall be issued in connection with any
merger or consolidation in which the Company is the surviving corporation, the
amount of consideration therefor shall be deemed to be the fair value as
determined by the Board of Directors of the Company of such portion of the
assets and business of the non-surviving corporation or corporations as
such Board shall determine to be attributable to such Common Stock, Convertible
Securities, rights or options, as the case may be.  In the event of any consolidation or merger
of the Company in which the Company is not the surviving corporation or in the
event of any sale of all or substantially all of the assets of the Company for
stock or other securities of any other corporation, the Company shall be deemed
to have issued a number of shares of its Common Stock for stock or securities
of the other corporation computed on the basis of the actual exchange ratio on
which the transaction was predicated and for a consideration equal to the fair
market value on the date of such transaction of such stock or securities of the
other corporation, and if any such calculation results in adjustment of the
Exercise Price, the determination of the number of shares of Common Stock
issuable upon exercise immediately prior to such merger, conversion or sale,
for purposes of Section 5(f) below, shall be made after giving effect to
such adjustment of the Exercise Price.

 

(d)           In
case the Company shall at any time subdivide its outstanding shares of Common
Stock into a greater number of shares, the Exercise Price in effect immediately
prior to such subdivision shall be proportionately reduced, and conversely, in
case the outstanding shares of Common Stock of the Company shall be combined
into a smaller number of shares, the Exercise Price in effect immediately prior
to such combination shall be proportionately increased.

 

(e)           If
(i) the purchase price provided for in any right or option referred to in
Section 5(b), or (ii) the additional consideration, if any, payable upon
the conversion or exchange of Convertible Securities, or (iii) the rate at
which any Convertible Securities are convertible into or exchangeable for
Common Stock, shall change at any time (other than under or by reason of
provisions designed to protect against dilution), or any Convertible Securities
shall terminate, expire or cease to be outstanding without exercise thereof,
the Exercise Price then in effect hereunder shall forthwith be increased or
decreased to such Exercise Price as would have applied had the adjustments made
upon the issuance of such rights, 

 

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options or Convertible
Securities been made upon the basis of (a) the issuance of the number of
shares of Common Stock theretofore actually delivered upon the exercise of such
options or rights or upon the conversion or exchange of such Convertible
Securities, and the total consideration received therefor, and (b) the
issuance at the time of such change of any such options, rights, or Convertible
Securities then still outstanding for the consideration, if any, received by
the Company therefor and to be received on the basis of such changed price; and
on the expiration of any such option or right or the termination of any such
right to convert or exchange such Convertible Securities, the Exercise Price
then in effect hereunder shall forthwith be increased to such Exercise Price as
would have been obtained had the adjustments made upon the issuance of such
rights or options or Convertible Securities been made upon the basis of the
issuance of the shares of Common Stock theretofore actually delivered (and the
total consideration received therefor) upon the exercise of such rights or
options or upon the conversion or exchange of such Convertible Securities.  If the purchase price provided for in any
right or option referred to in Section 5(b), or the rate at which any
Convertible Securities referred to in Section 5(b) are convertible into or
exchangeable for Common Stock, shall decrease at any time under or by reason of
provisions with respect thereto designed to protect against dilution, then in
case of the delivery of Common Stock upon the exercise of any such right or
option or upon conversion or exchange of any such Convertible Security, the
Exercise Price then in effect hereunder shall forthwith be decreased to such
Exercise Price as would have applied had the adjustments made upon the issuance
of such right, option or Convertible Security been made upon the basis of the
issuance of (and the total consideration received for) the shares of Common
Stock delivered as aforesaid.

 

(f)            If
any capital reorganization or reclassification of the capital stock of the
Company, or consolidation or merger of the Company with another corporation, or
the sale of all or substantially all of its assets to another corporation shall
be effected in such a way that holders of Common Stock shall be entitled to
receive stock, securities or assets with respect to or in exchange for Common
Stock, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, and except as otherwise provided herein, lawful
and adequate provision shall be made whereby the holder of this Warrant shall
thereafter have the right to receive upon the basis and upon the terms and
conditions specified herein and in lieu of the shares of the Common Stock of
the Company immediately theretofore receivable upon the exercise of this
Warrant, such shares of stock, securities or assets as may be issued or payable
with respect to or in exchange for a number of outstanding shares of such
Common Stock equal to the number of shares of such stock immediately
theretofore receivable upon the exercise of this Warrant had such
reorganization, reclassification, consolidation, merger or sale not taken
place, and in any such case appropriate provision shall be made with respect to
the rights and interests of the holder of this Warrant to the end that the
provisions hereof (including without limitation provisions for adjustments of
the Exercise Price and of the number of shares receivable upon the exercise
hereof) shall thereafter be applicable, as nearly as may be in relation to any
shares of stock, securities or assets thereafter receivable upon the exercise
of this Warrant.  The Company shall not
effect any such consolidation, merger or sale, unless prior to the consummation
thereof the successor corporation (if other than the Company) resulting from
such consolidation or merger or the corporation purchasing such assets shall
assume by written instrument executed and mailed to the registered holder of
this Warrant, at the last address of such holder appearing on the books of the
Company, the obligation to deliver to such holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such holder
may be entitled to receive.

 

(g)           Upon
any adjustment of the Exercise Price, the Company shall give written notice
thereof, by first-class mail, postage prepaid, addressed to the
registered holder of this Warrant, as shown on the books of the Company, which
notice shall state the Exercise Price resulting from such adjustment and the
increase or decrease, if any, in the number of shares purchasable at such price
upon the exercise of this Warrant, setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based.  No adjustment to the Exercise Price shall be
required unless such adjustment would 

 

5

 

require an increase or decrease
of at least five cents ($0.05); provided, however, that any adjustments which
by reason of this Section 5(g) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment; and,
provided further, that adjustment shall be required and made in accordance with
the provisions of this Section 5 (other than this Section 5(g)) not
later than such time as may be required in order to preserve the tax-free
nature of a distribution to the holders of shares of Common Stock.  All calculations under this Section 5
shall be made to the nearest cent or to the nearest one-hundredth of a share,
as the case may be.  Anything in this
Section 5 to the contrary notwithstanding, the Company shall be entitled to
make such increases in the conversion rate in addition to those required by
this Section 5 as it in its discretion shall determine to be advisable in order
that any stock dividends, subdivisions of shares, distribution of rights to
purchase stock or securities, or distribution of securities convertible into or
exchangeable for stock hereafter made by the Company to its stockholders shall
not be taxable.

 

(h)           In
case at any time: (i) there shall be any capital reorganization, or
reclassification of the capital stock of the Company, or consolidation or
merger of the Company with, or sale of all or substantially all of its assets
to, another corporation; or (ii) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company; then, in any one or more
of said cases, the Company shall give written notice, by first-class
mail, postage prepaid, addressed to the registered holder of this Warrant at
the address of such holder as shown on the books of the Company, of the date on
which (a) the books of the Company shall close or a record shall be taken
for such dividend, distribution or subscription rights, or (b) such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up shall take place, as the case may be.  Such notice shall also specify the date as of
which the holders of Common Stock of record shall participate in such dividend,
distribution or subscription rights, or shall be entitled to exchange their
Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, or winding up, as the case may be. 
Such written notice shall be given at least twenty (20) days prior to
the action in question and not less than twenty (20) days prior to the record
date or the date on which the Company’s transfer books are closed in respect
thereto.

 

(i)            If
any event occurs as to which in the opinion of the Board of Directors of the
Company the other provisions of this Section 5 are not strictly applicable or
if strictly applicable would not fairly protect the rights of the holder of
this Warrant in accordance with the essential intent and principles of such
provisions, then the Board of Directors shall make an adjustment in the
application of such provisions, in accordance with such essential intent and
principles, so as to protect such rights as aforesaid.

 

(j)            As
used in this Section 5 the term “Common Stock” shall mean and include the
Company’s presently authorized Common Stock and any additional Common Stock
that may be authorized by due action of the Company’s Board of Directors and
shareholders entitled to vote thereon.

 

6.             No
Voting Rights.  This Warrant shall
not entitle the Holder to any voting rights or other rights as a shareholder of
the Company.

 

7.             Notice
of Transfer of Warrant or Resale of the Warrant Shares.

 

(a)           The
Holder, by acceptance hereof, agrees to give written notice to the Company
before transferring this Warrant or transferring any Warrant Shares of such
Holder’s intention to do so, describing briefly the manner of any proposed
transfer.  Promptly upon receiving such
written notice, the Company shall present copies thereof to the Company’s
counsel and to counsel to the original purchaser of this Warrant.  If in the opinion of each such counsel the
proposed transfer may be effected without registration or qualification (under
any federal or state securities laws), the Company, as promptly as 

 

6

 

practicable, shall notify the
Holder of such opinion, whereupon the Holder shall be entitled to transfer this
Warrant or to dispose of Warrant Shares received upon the previous exercise of
this Warrant, all in accordance with the terms of the notice delivered by the
Holder to the Company; provided that an appropriate legend may be endorsed on
this Warrant or the certificates for such Warrant Shares respecting
restrictions upon transfer thereof necessary or advisable in the opinion of
counsel and satisfactory to the Company to prevent further transfers which
would be in violation of Section 5 of the Securities Act of 1933, as amended
(the “Securities Act”) and applicable state securities laws; and provided
further that the prospective transferee or purchaser shall execute such
documents and make such representations, warranties, and agreements as may be
required solely to comply with the exemptions relied upon by the Company for
the transfer or disposition of the Warrant or Warrant Shares.

 

(b)           If
in the opinion of either of the counsel referred to in this Section 7, the proposed
transfer or disposition of this Warrant or such Warrant Shares described in the
written notice given pursuant to this Section 7 may not be effected without
registration or qualification of this Warrant or such Warrant Shares the
Company shall promptly give written notice thereof to the Holder, and the
Holder will limit its activities in respect to such transfer or disposition as,
in the opinion of both such counsel, are permitted by law.

 

8.             Fractional
Shares.  Fractional shares shall not
be issued upon the exercise of this Warrant, but in any case where the Holder
would, except for the provisions of this Section, be entitled under the terms
hereof to receive a fractional share, the Company shall, upon the exercise of
this Warrant for the largest number of whole shares then called for, pay a sum
in cash equal to the sum of (a) the excess, if any, of the Fair Market Value of
such fractional share over the proportional part of the Exercise Price
represented by such fractional share, plus (b) the proportional part of the
Exercise Price, if paid by the Holder, represented by such fractional share.

 

9.             Registration
Rights.

 

(a)           If
the Company at any time until two (2) years after complete exercise or
expiration of this Warrant proposes to register under the Securities Act
(except by a Form S-4 or Form S-8 Registration Statement or any
successor forms thereto) any of its equity securities, it will give written
notice to all Holders of this Warrant, any Warrants issued pursuant to Section
2 and/or Section 3(a) hereof, and any Warrant Shares of its intention to do so
and, on the written request of any such Holder given within twenty (20) days
after receipt of any such notice (which request shall specify the Warrant
Shares intended to be sold or disposed of by such Holder and describe the
nature of any proposed sale or other disposition thereof), the Company will use
its best efforts to cause all such Warrant Shares, the Holders of which shall
have requested the registration or qualification thereof, to be included in
such registration statement proposed to be filed by the Company; provided that:

 

(i)            if a
greater number of Warrant Shares is offered for participation in the proposed
offering than in the reasonable opinion of the managing underwriter of the
proposed offering can be accommodated without adversely affecting the proposed
offering, then the amount of Warrant Shares proposed to be offered by such
Holders for registration, as well as the number of securities of any other
selling shareholders participating in the registration, shall be
proportionately reduced to a number deemed satisfactory by the managing
underwriter

 

(ii)           the
Company may, at its sole discretion and without the consent of any holder of
the Warrant Shares, withdraw such registration statement and abandon the
proposed offering in which any such holder had requested to participate;

 

7

 

(iii)          if
the offering to which the registration statement relates is to be distributed
by or through an underwriter, each holder of the Warrant Shares shall agree, as
a condition to the inclusion of such holder’s securities in such registration,
to sell securities held by such holder through such underwriter on the same
terms and conditions as the underwriter agrees to sell securities on behalf of
the Company and not to sell, transfer, pledge, assign or otherwise dispose of
the Warrant Shares of the Company not sold by such holder in such offering for
such period (up to 180 days after the effective date of the registration
statement) as may be required by the underwriter;

 

(iv)          the Company
shall not be obligated to include any Warrant Shares in any such registration
for any Holder who is able to sell all of the Warrant Shares in a single
transaction pursuant to Rule 144 under the Securities Act (or any other similar
rule or regulation) during the three-month period beginning on the date
such notice is received by such holder, calculated as of the date of such
receipt.

 

(b)           Further,
on a one-time basis only, at any time until two (2) years after complete
exercise or expiration of this Warrant, upon request by the Holder or Holders
of a majority in interest of this Warrant, of any Warrants issued pursuant to
Section 2 and/or Section 3(a) hereof, and of any Warrant Shares, the Company
will promptly take all necessary steps to register or qualify, under the
Securities Act and the securities laws of such states as the Holders may
reasonably request, such number of Warrant Shares issued and to be issued upon
conversion of the Warrants requested by such Holders in their request to the
Company; provided that the Company shall not be obligated to include any
Warrant Shares in any such registration for any Holder who is able to sell all
of the Warrant Shares in a single transaction pursuant to Rule 144 under the
Securities Act (or any other similar rule or regulation) during the three-month
period beginning on the date such notice is received by such holder, calculated
as of the date of such receipt.  The
Company shall keep effective and maintain any registration, qualification,
notification, or approval specified in this Paragraph (b) for such period as
may be reasonably necessary for such Holder or Holders of such Warrant Shares
to dispose thereof and from time to time shall amend or supplement the
prospectus used in connection therewith to the extent necessary in order to
comply with applicable law.

 

(c)           Upon
the exercise of registration rights pursuant to this Section 9, Holder agrees
to supply the Company with such information as may be required by the Company
to register or qualify the shares to be registered.

 

(d)           With
respect to each inclusion of securities in a registration statement pursuant to
this Section 9, the Company shall bear the following fees, costs, and expenses:
all registration, filing and NASD fees, printing expenses, fees and
disbursements of counsel and accountants for the Company, fees and
disbursements of counsel for the underwriter or underwriters of such securities
(if the Company is required to bear such fees and disbursements), all internal
expenses, and legal fees and disbursements and other expenses of complying with
state securities laws of any jurisdictions in which the securities to be
offered are to be registered or qualified. 
Fees and disbursements of special counsel and accountants for the
selling Holders, underwriting discounts and commissions, and transfer taxes for
selling Holders and any other expenses relating to the sale of securities by
the selling Holders not expressly included above shall be borne by the selling
Holders.

 

(e)           The
Company hereby indemnifies each of the Holders of this Warrant and of any
Warrant Shares, and the officers and directors, if any, who control such
Holders, within the meaning of Section 15 of the Securities Act, against all
losses, claims, damages, and liabilities caused by (i) any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or Prospectus (and as amended or supplemented if the Company shall
have furnished any amendments thereof or 

 

8

 

supplements thereto), any
Preliminary Prospectus or any state securities law filings; (ii) any omission
or alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading except insofar as
such losses, claims, damages, or liabilities are caused by any untrue statement
or omission contained in information furnished in writing to the Company by
such Holder expressly for use therein; and each such Holder by its acceptance
hereof severally agrees that it will indemnify and hold harmless the Company,
each of its officers who signs such Registration Statement, each underwriter of
the Common Stock so registered, and each person, if any, who controls the
Company or such underwriter, within the meaning of Section 15 of the Securities
Act, with respect to losses, claims, damages, or liabilities which are caused
by any untrue statement or omission contained in information furnished in
writing to the Company by such Holder expressly for use therein.

 

10.           Fair
Market Value.  Fair Market Value of a
share of Common Stock as of a particular date (the “Determination Date”) shall
mean:

 

(a)           If
the Company’s Common Stock is traded on an exchange or is listed on the Nasdaq
National Market or the Nasdaq SmallCap Market, then the average closing or last
sale prices, respectively, reported for the ten (10) business days immediately
preceding the Determination Date; or

 

(b)           If
the Company’s Common Stock is not traded on an exchange or listed on the Nasdaq
National Market or the Nasdaq SmallCap Market but is listed on the OTC Bulletin
Board, the National Quotation Bureau, or any comparable reporting service, then
the average of the closing bid and ask prices reported for the ten (10)
business days immediately preceding the Determination Date; or

 

(c)           If
the Company’s Common Stock is not listed on an exchange, on the Nasdaq National
Market, the Nasdaq SmallCap Market, the OTC Bulletin Board, the National
Quotation Bureau, or any comparable reporting service, then the fair market
value as determined in good faith by the Board of Directors of the Company.

 

[signature page follows]

 

9

 

IN WITNESS WHEREOF,
MedicalCV, Inc. has caused this Warrant to be signed by its duly authorized
officer and this Warrant this 17th day of November, 2004.

 

	
   

  	
  MEDICALCV,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
    /s/ John H. Jungbauer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
    Its

  	
    Vice President, Finance

  	
   

  
					

 

10

 

NOTICE OF EXERCISE OF WARRANT

 

(To be signed upon the exercise of the
Warrant)

 

The
undersigned hereby irrevocably elects to exercise the attached Warrant to
purchase, for cash,
                       
of the shares of Common Stock issuable upon the exercise of such Warrant, and
requests that certificates for the shares of Common Stock (together with a new
Warrant to purchase the number of shares, if any, with respect to which this
Warrant is not exercised) be issued in the name and address set forth below.

 

Dated:
                         

 

 

	
   

  	
   

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Name)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Address)

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Social
  Security or Tax Ident. No.)

  

 

*                                         The signature
on the Notice of Exercise of Warrant must correspond to the name as written
upon the face of the Warrant in every particular without alteration or
enlargement or any change whatsoever. 
When signing on behalf of a corporation, partnership, trust or other
entity, PLEASE indicate your position(s) and title(s) with such entity.

 

11

 

CONVERSION NOTICE

 

(To be signed
upon exercise of Warrant pursuant to Sections 1(b) through 1(d))

 

The
undersigned hereby irrevocably elects to exercise the Conversion Right provided
in Sections 1(b) through 1(d) of the within Warrant for, and to acquire
thereunder,
                  
shares of Common Stock.  If said number
of shares shall not be all the shares purchasable under the within Warrant, a
new Warrant is to be issued in the name of said undersigned for the balance
remaining of the shares purchasable thereunder rounded up to the next higher
number of shares.

 

Please issue a
certificate or certificates for the shares of Common Stock in the name set
forth below.

 

 

Dated:
                         

 

 

	
   

  	
   

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Name)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Address)

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Social
  Security or Tax Ident. No.)

  

 

*                                         The signature
on the Conversion Notice must correspond to the name as written upon the face
of the Warrant in every particular without alteration or enlargement or any
change whatsoever.  When signing on
behalf of a corporation, partnership, trust or other entity, PLEASE indicate
your position(s) and title(s) with such entity.

 

12

 

ASSIGNMENT OF WARRANT

 

(To be signed only upon authorized transfer
of the Warrant)

 

FOR VALUE
RECEIVED, the undersigned hereby sells, assigns, and transfers unto
                           
the right to purchase
              
shares of Common Stock of MedicalCV, Inc., to which the within Warrant relates
and appoints
                               ,
as attorney-in-fact, to transfer said right on the books of MedicalCV, Inc.
with full power of substitution in the premises.  By accepting such transfer, the transferee
has agreed to be bound in all respects by the terms and conditions of the
within Warrant.

 

Dated:
                         

 

 

	
   

  	
   

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Name)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Address)

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Social
  Security or Tax Ident. No.)

  

 

*                                         The signature
on the Assignment of Warrant must correspond to the name as written upon the
face of the Warrant in every particular without alteration or enlargement or
any change whatsoever.  When signing on
behalf of a corporation, partnership, trust or other entity, PLEASE indicate
your positions) and title(s) with such entity.

 

13Exhibit 10.3

 

LETTER AGREEMENT REGARDING
CLOSING BALANCE SHEET MATTERS

 

 

                Reference
is made to that certain Asset Purchase Agreement (the “Agreement”) dated April
16, 2004, by and among Boston Biomedica, Inc. (now known as Pressure
BioSciences, Inc. (“PBI”)), BBI Biotech Research Laboratories, Inc. (“BBI
Biotech”) and SeraCare Life Sciences, Inc. (“SeraCare”), as
amended by that certain Amendment No. 1 to Asset Purchase Agreement, dated July
20, 2004.  Capitalized terms used but not
defined herein shall have the meaning given such terms in the Agreement.

 

                Reference is also made
to the Closing Balance Sheet delivered by SeraCare to PBI on November 12, 2004,
a copy of which is attached hereto as Exhibit A.

 

                PBI has advised
SeraCare that, in accordance with Section 2.5(d) of the Agreement, it objects
to the Closing Balance Sheet.  PBI has
requested that (i) SeraCare defer until December 15, 2004, its right under
Section 2.5(d) of the Agreement to submit the dispute over the Closing Balance
Sheet to the Independent Accountant, (ii) SeraCare treat the dispute over
accounts receivable separately from the rest of the Closing Balance Sheet and
(iii) SeraCare agree that it will first look to the Escrowed Amount for recovery
of the amount, if any, by which the Target Net Asset Value exceeds the Closing
Net Asset Value.

 

                For good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, PBI, BBI Biotech and SeraCare agree as follows:

 

1.  With the exception of
disputes over accounts receivable on the Closing Balance Sheet, which disputes
will be resolved as provided in Section 2 below, all disputes over the Closing
Balance Sheet will be resolved in accordance with the dispute resolution
provisions specified in Section 2.5 of the Agreement, provided, however, that
the parties shall have until December 15, 2004 to resolve such disputes, after
which time either SeraCare or PBI may submit the disputes to the Independent
Accountant as provided in Section 2.5 of the Agreement.  The parties agree that any Adjustment Amount
due SeraCare will first be paid out of the Escrowed Amount, with any balance in
excess of the Escrowed Amount to be paid by PBI directly to SeraCare within
five business days of a written request from SeraCare.  PBI and BBI Biotech each agrees to sign and
deliver to the Escrow Agent any and all joint written instructions reasonably requested
by SeraCare to be delivered to the Escrow Agent (as such term is defined in the
Escrow Agreement) under the Escrow Agreement in order to effect the foregoing
payments.  The parties further agree that
any Adjustment Amount due PBI shall be payable by SeraCare to PBI within five
business days of the later of (i) the date on which the parties reach agreement
on the Adjustment Amount or (ii) the final determination made by the
Independent Accountant.

 

2.  Attached hereto as Exhibit
B is a detailed listing of all of the accounts receivable (the “Accounts
Receivable List”) on the estimated Closing Balance Sheet delivered by PBI to
SeraCare pursuant to Section 2.5(c) of the Agreement.  The Accounts Receivable List specifies for
each account receivable on the list: (i) the name of the customer owing such
amount, (ii) the invoice number and date with respect to the account receivable
(if a balance relates to more than one invoice, then the account receivable is
detailed by invoice number for such customer), (iii)

 

 

 

the amount of such account receivable, and (iv) whether such account receivable
is a domestic (i.e. the customer has its principal place of business in the
United States of America) or international (i.e. the customer has its principal
place of business outside of the United States of America) receivable.  In lieu of the dispute resolution mechanism
contemplated by Section 2.5(d) of the Agreement, the parties hereby agree that
SeraCare will be entitled to recover directly against the Escrowed Amount the
amount of any account receivable on the Accounts Receivable List that has not
been collected within 90 days of the invoice date for domestic receivables and
180 days of the invoice date for international receivables.   In the event that the balance of the
Escrowed Amount is insufficient to satisfy a claim by SeraCare under this
Section 2, then SeraCare shall be entitled to proceed directly against PBI for
such payment, such payment to be made by PBI directly to SeraCare within five
business days of a written request from SeraCare.  PBI and BBI Biotech each agrees to sign and
deliver to the Escrow Agent any and all joint written instructions reasonably requested
by SeraCare to be delivered to the Escrow Agent under the Escrow Agreement in
order to effect the foregoing payments. 
In the event that SeraCare recovers the full amount of a receivable on
the Accounts Receivable List from the Escrowed Amount or from PBI under this
Section 2, then SeraCare shall be deemed to have transferred, to the extent of
the amount actually recovered by SeraCare under this Section 2, all of its
right, title and interest in the corresponding account receivable on the Accounts
Receivable List to PBI and shall remit to PBI (within five days of receipt by
SeraCare) any payment on such account receivable by or on behalf of the
underlying customer.  Consistent with the
foregoing, PBI shall be entitled to pursue the collection of any accounts
receivable that SeraCare is deemed to have transferred to PBI pursuant to this
Section 2.  SeraCare shall, at times and
locations reasonably convenient to PBI and SeraCare, make available to PBI, promptly
upon its reasonable request, information with respect to the invoice(s)
underlying any account receivable transferred by SeraCare to PBI hereunder,
including payment history of such customers. 
PBI agrees that for a request to be reasonable pursuant to the foregoing
sentence, the sole purpose of the request must be for PBI to collect on the
applicable account receivable for which it is seeking information and in no
event shall PBI use any such information for any other purpose.

 

3.  Concurrently with the
execution of this Agreement, PBI and SeraCare are executing each of (i) that
certain engagement letter, dated November 16, 2004 from Weinberg & Company
P.A. (“Weinberg”) to the Audit Committees of each of SeraCare and PBI (the “Engagement
Letter”), and (ii) that certain letter agreement (regarding the sharing of
costs and cooperation with requests from Weinberg under the Engagement Letter)
dated as of the date hereof between PBI and SeraCare (the “Side Letter”).  In the event that PBI does not, within two
business days of the execution of this Letter Agreement, sign each of the
Engagement Letter and the Side Letter, then this Letter Agreement shall
automatically terminate and be of no further force and effect, and the parties
will instead continue to negotiate over the Closing Balance Sheet as provided
in Section 2.5 of the Agreement as if this Letter Agreement was never executed.

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

 

Each of the parties hereto has caused this Letter
Agreement to be executed by its duly authorized officers as of this 22nd day of
November, 2004.

 

 

SERACARE
LIFE SCIENCES, INC.

 

 

	
  By:

  	
  /s/
  Tim Hart

  
	
  Name:

  	
  Tim
  Hart

  
	
  Its:

  	
  Chief
  Financial Officer

  
	
   

  	
   

  
	
  PRESSURE
  BIOSCIENCES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Richard T. Schumacher

  
	
  Name:

  	
  Richard
  T. Schumacher

  
	
  Its:

  	
  President
  and Chief Executive Officer

  
	
   

  	
   

  
	
  BBI
  BIOTECH RESEARCH LABORATORIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Richard T. Schumacher

  
	
  Name:

  	
  Richard
  T. Schumacher

  
	
  Its:

  	
  President

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