Document:

EXHIBIT 4.1

DEBENTURE EXCHANGE AGREEMENT

          DEBENTURE
EXCHANGE AGREEMENT, dated as of December 29, 2009, among Vycor Medical, Inc., a
Delaware corporation (“Vycor” or the “Company”) and Fountainhead Capital
Management Limited, an entity registered in Jersey (C.I.) (“FHCM”). Vycor and
FHCM are hereinafter referred to collectively as the “Parties” and individually
as a “Party”).

          WHEREAS,
FHCM is currently the holder of $598,000 face value of Debentures issued at
various dated by Vycor (collectively, the “FHCM Debentures”), together with
accrued interest in the amount of $73,362 as of November 30, 2009.

          WHEREAS,
as a part of a restructuring (the “Restructuring”) of Vycor’s outstanding
obligations to FHCM and Regent Private Capital, LLC (“Regent”), FHCM has
offered to exchange FHCM Debentures with an aggregate value (including face
amount and accrued interest) of $300,000 into a number of shares of a newly
designated series of Vycor Preferred Stock (“New Preferred Shares”) which shall
be convertible into the equivalent of 85% of the total pro-forma, fully-diluted
share capital of Vycor at Closing.

          WHEREAS,
conditioned upon the completion of the Restructuring and FHCM’s commitment to
fund or procure funding for the operations of Vycor for a period of 9 months in
accordance with the terms and conditions of the Restructuring, Vycor is willing
to enter into this Debenture Exchange Agreement on the terms and conditions
stated herein. at the Closing. 

          WHREAS,
the Parties have entered into a letter agreement dated as of December 29, 2009
detailing the terms and conditions of the Restructuring and the various
definitive agreements between the various Parties with respect thereto. 

          WHEREAS,
as a condition to the completion of the Restructuring, FHCM will, in fact,
exchange FCHM Debentures with an aggregate value (including face amount and
accrued interest) of $300,000 into a number of shares of Vycor’s New Preferred
Shares which shall be convertible into the equivalent of 85% of the total
pro-forma, fully-diluted share capital of Vycor at Closing.

          WHEREAS,
the Parties believe that the Restructuring and the debenture exchange detailed
in this Debenture Exchange Agreement is in the best interests of all Parties and
all Parties concur with such assessment and acknowledge and agree that the
exchange rate set forth in this Debenture Exchange Agreement is fair and
reasonable.

          WHEREAS,
FHMC is and Vycor are both willing to complete the debenture exchange for Vycor
New Preferred Shares in accordance with the terms of this Debenture Exchange
Agreement.

-1-

          NOW,
THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the parties hereto, intending
to be legally bound, hereby agree as follows: 

1.
DEBENTURE EXCHANGE

On or before December 29, 2009, FHCM agrees to
exchange FHCM Debentures with an aggregate value (including face amount and
accrued interest) of $300,000 into a number of shares of a newly designated
series of Vycor Preferred Stock (“New Preferred Shares”) which shall be
convertible into the equivalent of 85% of the total pro-forma, fully-diluted
share capital of Vycor at Closing.

2.
EFFECTIVE DATE 

The effective date of the exchange of the FHCM
Debentures shall be December 29, 2009.

3.
EXCHANGE METHODOLOGY

               (a)
FHCM agrees that on December 29, 2009, Vycor shall cancel an aggregate value
(including face amount and accrued interest) of $300,000 of FHCM Debentures in
the books and records of the Company and, regardless of whether said FHCM
Debentures are physically tendered to the Company, such FHCM Debentures shall
be deemed surrendered and cancelled as of such date. Such action shall have no
impact whatsoever on the remaining FHCM Debentures, which together with accrued
interest to November 30, 2009 total $371,362, which are not being tendered to
Vycor in connection with the Restructuring.

               (b)
Concurrent with the cancellation of tendered FHCM Debentures, Vycor shall cause
to be issued and recorded in the books and records of the Company a number of
shares of its Series A Preferred Stock which, when converted to Vycor Common
Shares will be the equivalent of 85% of the total pro-forma, fully-diluted
share capital of Vycor.

4.
DESIGNATIONS, RIGHTS AND PREFERENCES OF VYCOR SERIES A PREFERRED STOCK

               (a)
Prior to the completion of the debenture exchange, Vycor shall designate at
least 1,000,000 shares of Series A Preferred Stock in the form attached hereto
as Schedule A which shall, at a minimum, have the following rights and
preferences:

                    (i)
Voting. The shares of Series A Preferred Stock shall have the right to
vote on all matters together with the holders of Vycor’s Common Shares in a
manner where the holders of the Series A Preferred Stock shall be entitled to
cast eighty-five percent (85%) of the votes entitled to be cast on any matter
presented to Vycor’s stockholders.

-2-

                    (ii)
Conversion. The Series A Preferred Stock shall be convertible, at any
time and at the option of the holder, into the equivalent of 85% of the total
pro-forma, fully-diluted share capital of Vycor as of the closing date of the
Restructuring.

                    (iii)
Liquidation Preference. The holders of Series A Preferred Stock shall
have a liquidation preference over all holders of Vycor’s Common Shares.

                    (iv)
Availability of Common Shares for Conversion. Vycor shall undertake to
maintain at all times while the shares of Series A Preferred Stock are
outstanding sufficient authorized Common Shares to satisfy the full conversion
of the Series A Preferred Shares. If at any time Vycor does not have sufficient
Common Shares authorized for this purpose it shall then promptly cause its
shareholders to take action to authorize sufficient additional Common Shares to
facilitate the full conversion of all of the shares of Series A Preferred Stock
issued to FHCM into Vycor’s Common Shares. 

5. FHCM
REPRESENTATIONS AND WARRANTIES

FHCM represents and warrants that (a) it is the owner
of the FHCM Debentures being tendered for exchange in connection with this
Debenture Exchange Agreement; (b) none of such FHCM Debentures have been sold
or hypothecated in any manner; (c) such FHCM Debentures are free and clear of
any liens or third-party claims; (d) FHCM is duly authorized to enter
into this Debenture Exchange Agreement and (e) the exchange of FHCM Debentures
for Vycor Series A Preferred Stock does not violate any laws or agreements or
commitments to which FHCM is subject. The representations, warranties,
covenants and agreements of FHCM contained herein shall be deemed and construed
to be continuing representations, warranties, covenants and agreements and
shall survive the debenture exchange and the Restructuring.

6. FHCM
ACKNOWLEDGEMENT, WAIVER AND RELEASE

FHCM acknowledges that it is willingly entering into
this Debenture Exchange Agreement in order to facilitate the Restructuring and
fully understands the consequences thereof. FHCM has been given the opportunity
to discuss the terms of the Restructuring and Debenture Exchange with
management of the Company. It is further acknowledged by FHCM that there is no
reliable established value for any of the Common or Preferred shares of the
Company and that the value of the Series A Preferred Shares issued in exchange
for the tendered FHCM Debentures is not necessarily indicative of the value
thereof. 

FHCM, for itself, its affiliates,
subsidiaries, successors or assigns, fully and forever, to the maximum extent
permitted by law, releases, discharges, and dismisses all claims, demands,
actions, causes of action, liens and rights, in law or in equity (known,
unknown, contingent, accrued, inchoate or otherwise), that it may have now or
in the future against Vycor, its officers, directors, stockholders, employees
and its successors or assigns, which relate to or arise out of the debenture
exchange set forth in this Debenture Exchange Agreement.

-3-

7.
CONDITIONS PRECEDENT

               (a)
Approval of the Restructuring and this Agreement by Vycor’s Board of Directors.

               (b)
Completion of the Restructuring transaction by and among FHCM, Regent and
Vycor, including but not limited to FHCM’s funding commitment to Vycor in
accordance with the terms and conditions thereof.

               (c)
Approval by Vycor’s Board of Directors of the Certificate of Designation for
Vycor’s Series A Preferred Stock and the filing of such Certificate of
Designation with the Delaware Secretary of State.

8.
ADDITIONAL AGREEMENTS

               (a)
Governing Law 

               This
Agreement has been negotiated, executed and delivered in the State of New York,
and shall be governed in accordance with the laws of such State. 

               (b)
Notices 

               All
notices, requests, demands and other communications hereunder shall be in
writing, and shall be deemed to have been duly given if delivered personally or
mailed, registered or certified mail, postage prepaid, return receipt requested
at the then current address of the relevant Party.

               (c)
Further Assurances 

               Each
Party agrees, from time to time, at the reasonable request of the other Party,
to deliver such further instruments or take such other actions as the other may
reasonably require to effect the purposes and intent of this Debenture Exchange
Agreement and to effect the terms and provisions contained therein. 

               (d)
Wavier of Breach 

               If,
at any time, a Party hereto waives any rights it may assert due to a breach by
the other party hereto of any provision of this Debenture Exchange Agreement,
such waiver shall not be construed as a continuing waiver of other breaches of
the same or other provisions of this Debenture Exchange Agreement. 

-4-

               (e)
Costs and Fees

In the event any dispute shall arise with respect to
this Agreement, the prevailing Party shall be entitled to recover its
out-of-pocket expenses incurred in connection therewith, including reasonable
attorneys fees.

               (f)
Successors and Assigns 

               This
Debenture Exchange Agreement shall be binding upon and shall inure to the
benefit of the Parties hereto and their respective successors, assigns,
trustees and legal representatives. Neither this Debenture Exchange Agreement
nor any of the rights, interest or obligations hereunder shall be assigned by
either Party hereto without the prior written consent of the other Party. In
the event that this Agreement is assigned by either Party, the assignee shall assume
all rights and obligations of the assignor under this Agreement. 

               (g)
Complete Agreement 

               This
Debenture Exchange Agreement contains the entire agreement and understanding of
the Parties with respect to its subject matter and supersedes all prior
agreements and understandings between the Parties, both written and oral, with
respect to its subject matter. 

               (h)
Headings 

               The
Section headings contained in this Debenture Exchange Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

               (i)
Amendment 

               This
Debenture Exchange Agreement may be amended, modified or supplemented by the
Parties only by written instrument signed by or on behalf of each of the
Parties hereto.

               (j)
Severability 

               In
the event that any covenant, condition, term, or restriction contained in this
Agreement shall be held to be invalid, illegal or unenforceable in any respect,
in whole or in part, the validity of the remaining covenants, conditions, terms
and provisions contained in this Debenture Exchange Agreement, and the validity
of the remaining part of any term or provision 

-5-

held to be partially invalid, illegal, or
unenforceable shall in no way be affected, prejudiced or disturbed thereby. 

               (k)
Counterparts 

               This
Debenture Exchange Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which when taken together
shall constitute one and the same instrument. 

          IN
WITNESS WHEREOF, each of the undersigned has duly executed
this Debenture Exchange Agreement the date first above written. 

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 VYCOR
 MEDICAL, INC.

 
	
  

 	
  

 	
 A
 Delaware Corporation

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 /s/
 Heather Vinas

 
	
  

 	
  

 	
 /s/
 Kenneth T. Coviello

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  

 
	
  

 	
  

 	 
 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 FOUNTAINHEAD
 CAPITAL MANAGEMENT LIMITED

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 /s/
 Gisele Le Miere

 
	
  

 	
  

 	
 /s/
 Carole Dodge

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  

 
	
  

 	
  

 	 

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  

 
	
  

 	
  

 	 

 

-6-

SCHEDULE A 

CERTIFICATE OF
DESIGNATION

VYCOR MEDICAL, INC.

SERIES A PREFERRED SHARES 

 [intentionally omitted] 

-7-EXHIBIT 4.2

THIS SECURITY HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE
SECURITIES LAWS OF ANY STATE, AND IS BEING OFFERED AND SOLD PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH
LAWS. THIS SECURITY MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR
SUCH OTHER LAWS.

FIRST AMENDED AND RESTATED

6% SENIOR CONVERTIBLE DEBENTURE

 (This Debenture amends and restates in its
entirety that certain Senior Convertible Debenture No. 005 issued to
Fountainhead Capital Management Limited dated as of December 29, 2009

	
  

 	
  

 
	
 No. 005

 	
 US$371,362

 

VYCOR MEDICAL, INC.

SENIOR CONVERTIBLE DEBENTURE

DUE AUGUST 31, 2010

          FOR VALUE
RECEIVED, Vycor Medical, Inc. (the
“Company”) promises to pay to Fountainhead
Capital Management Limited, or any other registered holder(s) hereof
and its or their authorized successors and permitted assigns (“ Holder”), the
aggregate principal face amount of US$371,362 on or before August 31, 2010
(“Maturity Date”), together with interest thereon at six percent (6%) per
annum. Accrued interest shall be paid to the person in whose name this
Debenture is registered on the records of the Company regarding registration
and transfers of the Debenture (“Debenture Register”); provided, however, that
the Company’s obligation to a transferee of this Debenture arises only if such
transfer, sale or other disposition is made in accordance with the terms hereof
and duly entered in the Debenture Register. The principal amount of this
Debenture is payable at the address last appearing on the Debenture Register of
the Company as designated in writing by the Holder hereof from time to time.
The Holder’s address initially provided to the Company is as set forth in
Section 16(b) below. The Company will pay the outstanding principal and accrued
interest due upon this Debenture before or on the Maturity Date, less any
amounts required by law to be deducted or withheld, to the Holder of this
Debenture by check if paid more than 10 days prior to the Maturity Date or by
wire transfer and addressed to such Holder at the last address appearing on the
Debenture Register. The forwarding of such check or wire transfer shall
constitute a payment of outstanding principal hereunder and shall satisfy and 

1

discharge the liability for principal on this Debenture to the extent
of the sum represented by such check or wire transfer. 

          This
Debenture is secured pursuant to the terms of a Security Agreement dated as of
[date], as amended (“Security Agreement”). 

          This
Debenture is subject to the following additional provisions:

          1. Issuance.
The Debenture may be
exchanged for an equal aggregate principal amount of Debentures of different
authorized denominations, as requested by the Holders surrendering the same. No
service charge will be made for such registration or transfer or exchange,
except that Holder shall pay any tax or other governmental charges payable in
connection therewith. The Company shall be entitled to withhold from all
payments any amounts required to be withheld under the applicable laws.

          2. Loss, Theft,
Destruction of Debenture. Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of this Debenture and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security reasonably satisfactory to
the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Debenture, the Company shall make, issue and deliver, in
lieu of such lost, stolen, destroyed or mutilated Debenture, a new Debenture of
like tenor and unpaid principal amount dated as of the date hereof (which shall
accrue interest from the most recent interest payment date on which an interest
payment was made in full). 

          3. Transfer.
This Debenture may be
transferred or exchanged only in compliance with the Securities Act of 1933, as
amended (the “Act”) and applicable state securities laws. Prior to due
presentment for transfer of this Debenture, the Company and any agent of the
Company may treat the person in whose name this Debenture is duly registered on
the Company’s Debenture Register as the Holder hereof for all other purposes,
whether or not this Debenture be overdue, and neither the Company nor any such
agent shall be affected or bound by notice to the contrary. Any Holder of this
Debenture, electing to exercise the right of conversion set forth in Section
4(a) hereof, in addition to the requirements set forth in Section 4(a), and any
prospective transferee of this Debenture, are also required to give the Company
written confirmation that the Debenture is being converted (“Notice of
Conversion”) in the form annexed hereto as Exhibit I. The date of receipt
(including receipt by telecopy) of such Notice of Conversion shall be the
Conversion Date.

          4. Conversion
The Holder is entitled, at
its option, to convert all or any amount of the principal face amount of this
Debenture then outstanding into shares of common stock of the Company at a
Conversion Price of $0.0125 per share, subject to adjustment as provided herein.
If the number of resultant Conversion Shares would as a matter of law or
pursuant to regulatory authority require the Company to seek member approval of
such issuance, the Company has, prior to the issuance hereof, taken the
necessary steps to obtain such approval. Such conversion shall be effectuated,
by the Company delivering the Conversion Shares to the Holder within 10 days of
receipt by the Company of the Notice of Conversion. Once the Holder has
received such Conversion Shares, the Holder shall surrender the Debenture (or
portion thereof) to be converted to the Company, executed by the Holder of this
Debenture evidencing such Holder’s intention to convert this Debenture or a 

2

specified portion hereof, and accompanied by proper assignment hereof
in blank. If the Company shall fail to deliver the Conversion Shares to the
Holder within such 10 day period, the Conversion Price shall be automatically
reduced by ten percent (10%), and shall be reduced an additional five percent
(5%) for each additional 10 day period (or portion thereof) thereafter. In the
event of a partial conversion of the Debenture, the Company will immediately
issue a replacement Debenture covering the unconverted portion.

          Notwithstanding
any other provision of this Debenture, no conversion shall be permitted if the
net result of such conversion would that the Holder became a record holder of a
number of the Company’s Common Shares exceeding 4.9% of the then total issued
and outstanding Company Common Shares. 

          To the
fullest extent permitted by law, the Holder shall be entitled to exercise its
conversion privilege notwithstanding the commencement of any case under the
Bankruptcy Code. In the event the Company is a debtor under the Bankruptcy
Code, the Company hereby waives to the fullest extent permitted any rights to
relief it may have under 11 U.S.C. § 362 in respect of the Holder’s conversion
privilege. The Company hereby waives to the fullest extent permitted any rights
to relief it may have under 11 U.S.C. § 362 in respect of the conversion of
this Debenture. The Company agrees, without cost or expense to the Holder, to
take or consent to any and all action necessary to effectuate relief under 11
U.S.C. § 362.

          No
fractional shares or scrip representing fractional shares shall be delivered
upon conversion of this Debenture. Instead of any fractional Conversion Shares
which otherwise would be delivered upon conversion of this Debenture, the
Company shall pay a cash adjustment in respect of such fraction in an amount
equal to the same fraction multiplied by the Conversion Price on the date of
Conversion. No cash payment of less than $1.00 shall be required to be given
unless specifically requested by the Holder.

          5. Priority;
Security. The obligation evidenced
by this Debenture shall be senior to all other obligations of the Company other
than obligations specifically approved by the Holder; provided that the
obligation evidenced by this Debenture shall be of equal priority for all
purposes with the following obligations of the Company (“Pari Passu Obligations”): 

1) A convertible debenture of even date herewith payable to Regent
Private Capital, LLC in the original face amount of $790,000.

2) Any further amounts advanced to the Company by Fountainhead Capital
Management Limited or its designees.

The obligation evidenced by this Debenture is secured by a first
priority security interest (equal in priority to the Pari Passu Obligations) in
all of the assets of the Company other than liens specifically approved by the
Holder. 

Notwithstanding, to the extent additional advances by Fountainhead
Capital Management Limited (or its designees) taken together with this and all
other Pari
Passu Obligations exceed the aggregate sum $1,800,000 (including
accrued interest thereon), the excess over 

3

$1,800,000 shall for all purposes be deemed to be subordinate to the Pari Passu
Obligations
and shall be secured by a second priority security interest in all of the
assets of the Company

          6. Anti-dilution
Adjustments. The number
of shares issuable upon conversion of this Debenture and the Conversion Price
shall be subject to adjustment as follows:

                    (a)
In case the Company shall (i) pay a dividend or make a distribution on its
common stock in additional shares or other securities, (ii) subdivide its
outstanding common stock into a greater number of shares, (iii) combine its
outstanding shares into a smaller number of shares or (iv) issue, by
reclassification of its shares, any other securities of the Company (including
any such reclassification in connection with a consolidation or merger in which
the Company is the continuing entity), the number of share issuable upon
conversion of this Debenture immediately prior thereto shall be adjusted so that
the Holder shall be entitled to receive the kind and number of Conversion
Shares, and other securities of the Company which such Holder would have owned
or would have been entitled to receive immediately after the happening of any
of the events described above, had the Debenture been converted immediately
prior to the happening of such event or any record date with respect thereto.
Any adjustment made pursuant to this subsection 6(a) shall become effective
immediately after the effective date of such event.

                    (b)
In case the Company shall issue rights, options, warrants or convertible
securities to holders of its shares, for no consideration, containing the right
to subscribe for or purchase shares of common stock, the number of Conversion
Shares thereafter issuable upon the conversion of this Debenture shall be
determined by multiplying the number of Conversion Shares theretofore issuable
upon conversion of this Debenture by a fraction, of which the numerator shall
be the number of shares outstanding immediately prior to the issuance of such
rights, options, warrants or convertible securities plus the number of
additional shares offered for subscription or purchase, and of which the
denominator shall be the number of shares outstanding immediately prior to the
issuance of such rights, options, warrants or convertible securities. Such
adjustment shall be made whenever such rights, options, warrants or convertible
securities are issued, and shall become effective immediately upon issuance of
such rights, options, warrants or convertible securities. In the event of such
adjustment, corresponding adjustments shall be made to the Conversion Price. 

                    (c)
In case the Company shall distribute to holders of its common shares evidences
of its indebtedness or assets (excluding cash dividends or distributions out of
current earnings made in the ordinary course of business consistent with past
practices), then in each case the number of Conversion Shares thereafter
issuable upon the conversion of this Debenture shall be determined by
multiplying the number of Conversion Shares theretofore issuable upon
conversion of this Debenture by a fraction, of which the numerator shall be the
then Market Price (as defined below) on the date of such distribution, and of
which the denominator shall be such Market Price on such date minus the then
fair value (determined as provided in subsection 6(f) below) of the portion of
the assets or evidences of indebtedness so distributed applicable to one share.
Such adjustment shall be made whenever any such distribution is made and shall
become effective on the date of distribution. In the event of any such
adjustment, the number of Conversion Shares shall also be adjusted and shall be
that number determined by multiplying the number of shares 

4

issuable upon exercise before the adjustment by a fraction, the
numerator of which shall be the Conversion Price in effect immediately before
the adjustment and the denominator of which shall be the Conversion Price as so
adjusted.

                    (d)
Whenever the number of Conversion Shares issuable upon the conversion of this
Debenture is adjusted as provided in this Section 6, the Conversion Price shall
be adjusted by multiplying such Conversion Price immediately prior to such
adjustment by a fraction, the numerator of which shall be the number of
Conversion Shares issuable upon the conversion of this Debenture immediately
prior to such adjustment, and the denominator of which shall be the number of
Conversion Shares issuable immediately thereafter.

                    (e)
For the purpose of this Section 6, the term “shares” shall mean (i) the common
stock of the Company at the time of conversion, on a fully diluted basis. In
the event that at any time, as a result of an adjustment made pursuant to this
Section 6, a Debenture holder shall be entitled to convert such Debenture into
any securities of the Company other than common stock, (i) if the Debenture
holder’s right to convert is on any other basis than that available to all
holders of the Company’s common stock, the Company shall obtain an opinion of a
reputable investment banking firm valuing such other securities and (ii)
thereafter the number of such other securities so purchasable upon conversion
of a Debenture and the Conversion Price of such securities shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares contained in this
Section 6.

                    (f)
Upon the expiration of any rights, options, warrants or conversion privileges,
if such shall not have been exercised, the number of Conversion Shares issuable
upon conversion of the Debenture and the Conversion Price, to the extent the
Debenture has not then been converted, shall, upon such expiration, be
readjusted and shall thereafter be such number and such price as they would
have been had they been originally adjusted (or had the original adjustment not
been required, as the case may be) on the basis of (A) the fact that the only
shares issued in respect of such rights, options, warrants or conversion
privileges were the shares, if any, actually issued or sold upon the exercise
of such rights, options, warrants or conversion privileges, and (B) the fact
that such shares, if any, were issued or sold for the consideration actually
received by the Company upon such exercise plus the consideration, if any,
actually received by the Company for the issuance, sale or grant of all such
rights, options, warrants or conversion privileges whether or not exercised;
provided, however, that no such readjustment shall have the effect of
decreasing the numbers of Conversion Shares issuable upon conversion of the
Debenture or increasing the Conversion Price by an amount in excess of the
amount of the adjustment made in respect of the issuance, sale or grant of such
rights, options, warrants or conversion privileges.

                    (g)
Upon any adjustment of the Conversion Price and the number of Conversion Shares
issuable upon conversion of the Debenture, then and in each such case, the
Company shall give written notice thereof, by first-class mail, postage
prepaid, addressed to the Holder as shown on the books of the Company, which
notice shall state the Conversion Price resulting from such adjustment and the
increase or decrease, if any, in the number of shares issuable at such price
upon the conversion of the Debenture, setting forth in 

5

reasonable detail the method of calculation and the facts upon which
such calculation is based.

          7. Merger,
Reorganization or Consolidation. In
any case in which a transaction would result in a complete liquidation of the
Company or a merger, reorganization, or consolidation of the Company with any
other unrelated corporation or other entity in which the Company is not the
surviving corporation or the Company becomes a wholly-owned subsidiary of
another unrelated corporation or other entity (all such transactions being
referred to herein as a “Reorganization”), the surviving corporation or other
entity shall be required to assume the Debenture or to issue a substitute
Debenture in place thereof which substitute Debenture shall provide for terms
at least as favorable to the Holder as contained in this Debenture and shall provide
the Holder the right to acquire the kind and amount of common stock and other
securities and property which the Holder would have owned or been entitled to
receive had the Debenture been converted immediately prior to such
Reorganization. 

          8. No
Impairment. No provision of this
Debenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of this Debenture at the time,
place, and rate, and in the form, herein prescribed.

          9. Waiver of
Demand/Presentment. The
Company hereby expressly waives demand and presentment for payment, notice of
non-payment, protest, notice of protest, notice of dishonor, notice of
acceleration or intent to accelerate, and diligence in taking any action to
collect amounts called for hereunder and shall be directly and primarily liable
for the payment of all sums owing and to be owing hereto.

          10. Cost and
Fees. The Company agrees to
pay all costs and expenses, including reasonable attorneys’ fees, which may be
incurred by the Holder in collecting any amount due under this Debenture.

          11. Events of
Default. If one or more of
the following described “Events of Default” shall occur and continue for 30
days, unless a different time frame is noted below:

          (a) The
Company shall default in the payment of principal or interest on this
Debenture, and such failure shall continue for a period of five (5) days; or

          (b) The
Company shall fail to perform or observe, in any material respect, any other
covenant, term, provision, condition, agreement or obligation of the Company
under this Debenture and such failure shall continue uncured for a period of
thirty (30) days after notice from the Holder of such failure; or

          (c) The Company
shall (1) become insolvent; (2) admit in writing its inability to pay its debts
generally as they mature; (3) make an assignment for the benefit of creditors
or commence proceedings for its dissolution; (4) apply for or consent to the
appointment of a trustee, liquidator or receiver for its or for a substantial
part of its property or business; (5) file a petition for bankruptcy relief,
consent to the filing of such petition or have filed against 

6

it an involuntary petition for bankruptcy relief, all under federal or
state laws as applicable; or

          (d) A
trustee, liquidator or receiver shall be appointed for the Company or for a
substantial part of its property or business without its consent and shall not
be discharged within thirty (30) days after such appointment; or

          (e) Any
governmental agency or any court of competent jurisdiction at the instance of
any governmental agency shall assume custody or control of the whole or any
substantial portion of the properties or assets of the Company; or

          (f) Any
money judgment, writ or warrant of attachment, or similar process, in excess of
One Hundred Thousand ($100,000) Dollars in the aggregate shall be entered or
filed against the Company or any of its properties or other assets and shall
remain unpaid, unvacated, unbonded or unstayed for a period of fifteen (15)
days or in any event later than five (5) days prior to the date of any proposed
sale thereunder; or

          (g)
Bankruptcy, reorganization, insolvency or liquidation proceedings, or other
proceedings for relief under any bankruptcy law or any law for the relief of
debtors shall be instituted voluntarily by or involuntarily against the
Company; or

          (h) The
Company shall not deliver to the Holder the shares pursuant to paragraph 4
herein within 30 days of receipt of Notice of Conversion; or 

          (i) any of
the representations or warranties made by the Company herein, in the Purchase
Agreement or the Security Agreement or in any certificate or financial or other
written statements heretofore or hereafter furnished by or on behalf of the
Company in connection with the execution and delivery of this Debenture, the
Purchase Agreement or the Security Agreement shall be false or misleading in a
material respect on the Closing Date; or

          (j) If the
Company is then a “reporting company” it shall fail to make the required
filings or statements with the Securities Exchange Commission by the
appropriate deadlines.

Then, or at any time thereafter, unless cured, and in each and every
such case, unless such Event of Default shall have been waived in writing by
the Holder (which waiver shall not be deemed to be a waiver of any subsequent
default) at the option of the Holder and in the Holder’s sole discretion, the
Holder may consider this Debenture immediately due and payable, without
presentment, demand, protest or (further) notice of any kind (other than notice
of acceleration), all of which are hereby expressly waived, anything herein or
in any note or other instruments contained to the contrary notwithstanding, and
the Holder may immediately, and without expiration of any period of grace,
enforce any and all of the Holder’s rights and remedies provided herein or any
other rights or remedies afforded by law. Upon an Event of Default, interest
shall accrue on all amounts outstanding under this Debenture at the rate of 12%
per annum, until such Event of Default is cured or the principal and all
accrued interest under this Debenture is paid in full.

          12. Priority.
This Debenture represents a
prioritized obligation of the Company. However, no recourse shall be had for
the payment of the principal of this Debenture, or for 

7

any claim based hereon, or otherwise in respect hereof, against any
incorporator, shareholder, officer or director, as such, past, present or
future, of the Company or any successor corporation, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment
or penalty or otherwise, all such liability being by the acceptance hereof and
as part of the consideration for the issue hereof, expressly waived and
released.

          13.
Severability. In case any provision of
this Debenture is held by a court of competent jurisdiction to be excessive in
scope or otherwise invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, so that it is enforceable to the maximum
extent possible, and the validity and enforceability of the remaining
provisions of this Debenture will not in any way be affected or impaired
thereby.

          14. Entire
Agreement. This Debenture, the
Purchase Agreement, the Security Agreement and the agreements referred to in
this Debenture constitute the full and entire understanding and agreement
between the Company and the Holder with respect to the subject hereof. Neither
this Debenture nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the Company and the
Holder.

          15.Governing
Law. This Debenture shall be
governed by and construed in accordance with the laws of New York applicable to
contracts made and wholly to be performed within the State of New York and
shall be binding upon the successors and assigns of each party hereto. The
Holder and the Company hereby mutually waive trial by jury and consent to
exclusive jurisdiction and venue in the courts of the State of New York. At
Holder’s election, any dispute between the parties may be arbitrated rather
than litigated in the courts, before the American Arbitration Association in
New York City and pursuant to its rules. Upon demand made by the Holder to the
Company, the Company agrees to submit to and participate in such arbitration.
This Agreement may be executed in counterparts, and the facsimile transmission
of an executed counterpart to this Agreement shall be effective as an original.

16. Miscellaneous.

          (a) Notice
of Certain Events. In the case of the occurrence of a Reorganization
described in Section 7 of this Debenture, the Company shall cause to be mailed
to the Holder of this Debenture at its last address as it appears in the
Company’s security registry, at least twenty (20) days prior to the applicable
record, effective or expiration date hereinafter specified (or, if such twenty
(20) days’ notice is not possible, at the earliest possible date prior to any
such record, effective or expiration date), a notice thereof, including, if
applicable, a statement of the date on which such Reorganization is expected to
become effective, and the date as of which it is expected that holders of
record of the shares will be entitled to exchange their shares for securities,
cash or other property deliverable upon such Reorganization.

          (b) Transmittal
of Notices. Except as may be otherwise provided herein, any notice or other
communication or delivery required or permitted hereunder shall be in writing
and shall be delivered personally, or sent by telecopier machine or by a
nationally recognized 

8

overnight courier service, and shall be deemed given when so delivered
personally, or by telecopier machine or overnight courier service as follows:

	
  

 	
  

 	
  

 
	
  

 	
 (1)

 	
 If to the
 Holder, to:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Fountainhead
 Capital Management Limited

 
	
  

 	
  

 	
 Portman
 House

 
	
  

 	
  

 	
 Hue Street,
 St. Helier

 
	
  

 	
  

 	
 Jersey JE4
 5RP

 
	
  

 	
  

 	
  

 
	
  

 	
 (2)

 	
 If to the
 Holder, to:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Vycor
 Medical, Inc.

 
	
  

 	
  

 	
 80 Orville
 Drive, Suite 100

 
	
  

 	
  

 	
 Bohemia, New
 York 11716

 
	
  

 	
  

 	
 Telephone:
 631-244-1435 

 
	
  

 	
  

 	
 Facsimile:
 631-244-1436

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 With a copy
 to:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Robert
 Diener

 
	
  

 	
  

 	
 Law Offices
 of Robert Diener

 
	
  

 	
  

 	
 122 Ocean
 Park Blvd. Suite 307

 
	
  

 	
  

 	
 Santa
 Monica, CA 90405

 
	
  

 	
  

 	
 Phone
 310-396-1691 

 
	
  

 	
  

 	
 Fax
 310-362-8887

 

Each of the Holder or the Company may change the foregoing address by
notice given pursuant to this Section 16(b).

          (c)
Attorneys’ Fees. Should any party hereto employ an attorney for the purpose of
enforcing or construing this Debenture, or any judgment based on this
Debenture, in any legal proceeding whatsoever, including insolvency,
bankruptcy, arbitration, declaratory relief or other litigation, the prevailing
party shall be entitled to receive from the other party or parties thereto
reimbursement for all reasonable attorneys’ fees and all reasonable costs,
including but not limited to service of process, filing fees, court and court
reporter costs, investigative costs, expert witness fees, and the cost of any
bonds, whether taxable or not, and that such reimbursement shall be included in
any judgment or final order issued in that proceeding. The “prevailing party”
means the party determined by the court to most nearly prevail and not
necessarily the one in whose favor a judgment is rendered.  

9

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

Dated: January
5, 2010

	
  

 	
  

 	
  

 
	
  

 	
 VYCOR MEDICAL, INC.

 
	
  

 	
  

 	
 /s/ Heather Vinas

 
	
  

 	
 By:

 	
  

 
	
  

 	
  

 	 

 
	
  

 	
 Name:

 	
Heather Vinas

 
	
  

 	
  

 	 

 
	
  

 	
 Title:

 	
 President

 
	
  

 	
  

 	 

 

10

EXHIBIT I

NOTICE OF CONVERSION

(To be executed by the Registered Holder in
order to Convert the Debenture)

The undersigned hereby irrevocably elects to convert $___________ of
the above Debenture No. _______ into shares of common stock of Vycor Medical,
Inc. according to the conditions set forth in such Debenture, as of the date
written below. If shares are to be issued in the name of a person other than
the undersigned, the undersigned will pay all transfer and other taxes and
charges payable with respect thereto.

Date of
Conversion

________________________

Applicable
Conversion Price

________________________

Signature

_______________________________________

[Print Name of Holder and Title of Signer]

Address:

_______________________________________

_______________________________________

SSN or EIN:

Shares are to be registered in the following name:

Name:

Address:

Tel:

Fax:

SSN or EIN:

Shares are to
be sent or delivered to the following account:

Account Name:

Address: 

11

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00167-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00167-of-00352.parquet"}]]