Document:

Exhibit 10.1

 

PREFERRED STOCK ACQUISITION AGREEMENT

 

PREFERRED
STOCK ACQUISITION AGREEMENT made and entered into this      
day of December, 2005, by and between MedicalCV, Inc., a Minnesota
corporation (the “Company”) and the undersigned Holder (“Holder”) of the
Company’s 5% Series A Convertible Preferred Stock (the “Preferred Stock”).

 

WHEREAS,
the Company and Holder are parties to a Securities
Purchase Agreement dated March 31, 2005 (the “SPA”), pursuant to which
Holder acquired the Preferred Stock and warrants to purchase the Company’s
Common Stock; and

 

WHEREAS,
the Company desires to acquire, and the undersigned desires to sell and assign
the number of shares of Preferred Stock owned by the undersigned as set forth
below (the “Shares”), in consideration of the issuance to Holder of 3,077
shares of the Company’s Common Stock, for each share of Preferred Stock so
acquired.

 

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

 

1.                                       Acquisition
of Shares.  The Company agrees to
acquire, and the undersigned agrees to sell, assign and transfer to the
Company, the undersigned’s Shares for the consideration and on the terms
hereinafter set forth.

 

2.                                       Consideration.  The Company shall issue 3,077 shares of its
Common Stock for each Share acquired.

 

3.                                       Registration
Rights.  Because the shares of Common
Stock to be issued pursuant to this Agreement represent “restricted securities,”
the Company will file a Registration Statement covering the Common Stock to be
issued by the Company pursuant to this Agreement, as provided in the
Registration Rights Agreement attached hereto as Exhibit A and
incorporated herein by reference (the “Registration Rights Agreement”).

 

4.                                       Company
Representations.

 

(a)                                  The
Company has the requisite corporate power and authority to enter into and to
compensate the transactions contemplated by this Agreement.  The execution and delivery of this Agreement
and the consummation of the transactions contemplated thereby have been duly
authorized by all necessary action on the part of the Company.  This Agreement constitutes the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of, creditors’ rights and
remedies or by other equitable principles of general application.

 

(b)                                 The
Company has obtained the affirmative vote of the holders of a majority of the
Preferred Stock outstanding to acquire the Shares for the consideration stated
herein.

 

 

(c)                                  The
Common Stock, when issued to Holder in consideration of the Company’s acquisition
of the Shares, will be duly and validly issued, full paid and non-assessable ,
free and clear of any liens.

 

(d)                                 The
Company has engaged C.E. Unterberg Towbin (“CEUT”) as its financial advisor in
connection with its acquisition of the Shares, and will pay a fee and expenses
to CEUT upon completion of the transaction contemplated by this Agreement.

 

(e)                                  Except
(1) as otherwise specified herein, (2) in documents filed by the
Company with the U.S. Securities and Exchange Commission between March 31,
2005 and the date hereof, or (3) for representations made as of a
particular date or set forth on schedules to Section 3.1 of the SPA, which
such representations shall be true and correct in all material respects as of
such date, the Company reaffirms the representations provided to the Holder in Section 3.1
of the SPA as if the same were made to the Holder on the date hereof.

 

5.                                       Representations
of Holder.  Holder hereby makes and
confirms the representations made by Holder in the Securities Purchase Agreement,
Sections 3.2(a) Organization; Authority; (b) Investment Intent; (c) Investor
Status; (d) General Solicitation; (e) Access To Information; and (h) Independent
Investment Decision.  The Company
acknowledges that Holder has not made any representations or warranties with
respect to the transactions contemplated hereby other than those specifically
set forth in this Section 5 and the following Sections 5(a) and (b).

 

(a)                                  Holder
is the owner of the Shares, free and clear of all security interest or liens, and
has the right and authority to enter into this Agreement and consummate the
transactions contemplated hereby.  The
execution and delivery by the Holder of, and the performance by the Holder of
its obligations under, this Agreement, will not contravene any provision of
applicable law, any agreement or other instrument binding upon the Holder or
any judgment, order or decree of any governmental body, agency or court having
jurisdiction over the Holder.

 

(b)                                 Holder
agrees to deliver the Shares to the Company duly endorsed for transfer on or
before the Closing Date set forth in Section 6.  Upon payment for the Shares to be sold by the
Holder pursuant to this Agreement, delivery of the Shares to be sold by the
Holder will pass valid title to such Shares, free and clear of any adverse
claim within the meaning of Section 8-102 of the New York Uniform
Commercial Code, to the Company.

 

6.                                       Closing;
Delivery of Shares.  The Closing of
this transaction (the “Closing”) shall take place at the executive offices of
the Company on December 29, 2005, or on such later date as the Company
shall specify, but in all events on or before February 3, 2006 (the “Closing
Date”).

 

(a)                                  At
the Closing Holder shall deliver or cause to be delivered to the Company one or
more stock certificates evidencing the Shares, duly endorsed or assigned to the
Company by Holder, together with such other documentation as the Company shall
reasonably request to effect the transfer of the Shares to the Company.

 

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(b)                                 At
the Closing, the Company shall deliver or cause to be delivered to Holder, (i) a
certificate or certificates representing 3,077 shares of Common Stock of the
Company for each Share sold and, assigned to the Company by Holder; and (ii) this
Agreement and the Registration Rights Agreement duly executed by the Company.

 

7.                                       Miscellaneous.

 

(a)                                  This
Agreement, together with the Registration Rights Agreement, contains the entire
understanding of the Parties with respect to the subject matter hereof and
supersedes all prior agreements, understandings, discussions and
representations, oral or written, with respect to such matters.

 

(b)                                 This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. 
The Company may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Holder.  Any Holder may assign any or all of its
rights under this Agreement to any person to whom such Holder assigns or transfers
any of its Preferred Stock, provided such transferee (i) makes the
representations of the assigning Holder under the Agreement, and (ii) agrees
in writing to be bound, with respect to the transferred Preferred Stock, by the
provisions hereof that apply to the Holder.

 

(c)                                  This
Agreement shall be governed by and construed and enforced in accordance with
the internal laws of the State of New York, except with respect to matters
governed by the corporate law of the State of Minnesota, without regard to
principles of conflicts of law.

 

(d)                                 This
Agreement may be signed in any number of counterparts, which together will be
one and the same instrument.

 

3

 

IN
WITNESS WHEREOF, the Company and Holder have caused
this Agreement to be duly executed by their respective authorized officers or
persons as of the date first indicated above.

 

 

	
   

  	
  MEDICALCV, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Marc P.
  Flores

  	
   

  
	
   

  	
  Chief
  Executive Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HOLDER

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Full Name
  of Holder)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Number of
  Preferred Shares:

  	
   

  	
   

  
						

 

 

EXHIBIT A

 

REGISTRATION RIGHTS AGREEMENT

 

This
Registration Rights Agreement (this “Agreement”) is made and entered into as of
December        , 2005, by and among
MedicalCV, Inc., a Minnesota corporation (the “Company”), and the Holders
signatory hereto (each a “Holder” and collectively, the “Holders”).

 

This Agreement
is made pursuant to the Preferred Stock Acquisition Agreement, dated as of the
date hereof among the Company and the Holders (the “Acquisition Agreement”).

 

The Company
and the Holders hereby agree as follows:

 

1.                                       Definitions.  Capitalized terms used and not otherwise
defined herein that are defined in the Acquisition Agreement will have the
meanings given such terms in the Acquisition Agreement.  As used in this Agreement, the following
terms have the respective meanings set forth in this Section 1:

 

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

 

“Common Stock”
means the common stock, $0.01 par value per share, of the Company.

 

“Effective
Date” means the date that the initial Registration Statement filed pursuant to Section 2(a) is
first declared effective by the Commission.

 

“Effectiveness
Date” means the earlier of: (a)(i) the 120th day following the
Closing Date; provided, that, if the Commission reviews and has written
comments to the filed Registration Statement that would require the filing with
the Commission of a pre-effective amendment or written supplemental response
from the Company and the Company files each such pre-effective amendment and
such supplemental response responsive to the Commission’s comments within seven
days of each receipt of such comments (and provides the Holders satisfactory
evidence of such timely response without providing any of them with material,
non-public information), the Effectiveness Date under this clause (a)(i) shall
be the 150th day following the Closing Date, and (ii) the third
day following the date on which the Company is notified by the Commission that
the initial Registration Statement will not be reviewed or is no longer subject
to further review and comments.

 

“Effectiveness
Period” has the meaning set forth in Section 2(a).

 

“Exchange Act”
means the Securities Exchange Act of 1934, as amended.

 

“Filing Date”
means  the 30th day following
the Closing.

 

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“Holder” or “Holders”
means the holder or holders, as the case may be, from time to time of
Registrable Securities.

 

“Indemnified
Party” has the meaning set forth in Section 5(c).

 

“Indemnifying
Party” has the meaning set forth in Section 5(c).

 

“Losses” has
the meaning set forth in Section 5(a).

 

“New York
Courts” means the state and federal courts sitting in the City of New York,
Borough of Manhattan.

 

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

 

“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.

 

“Prospectus”
means the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a prospectus filed as part of an effective registration statement in reliance
upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by a Registration
Statement, and all other amendments and supplements to the Prospectus,
including post-effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such Prospectus.

 

“Registrable
Securities” means the Common Stock issued or issuable pursuant to the
Acquisition Agreement, together with any securities issued or issuable upon any
stock split, dividend or other distribution, recapitalization or similar event,
or any conversion or exercise price adjustments with respect to any such
securities.

 

“Registration
Statement” means the registration statement required to be filed in accordance
with Section 2(a) and including the Prospectus, amendments and
supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.

 

“Rule 144”
means Rule 144 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.

 

“Rule 415”
means Rule 415 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.

 

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“Rule 424”
means Rule 424 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.

 

“Securities
Act” means the Securities Act of 1933, as amended.

 

“Securities
Purchase Agreement” means the Securities Purchase Agreement, dated as of March 31,
2005, among the Company and the investors named as signatories thereto.

 

“Shares” means
the shares of Common Stock issued or issuable pursuant to the Acquisition
Agreement.

 

“Trading Day”
means (i) a day on which the Common Stock is traded on an Trading Market,
or (ii) if the Common Stock is not quoted on a Trading Market, a day on
which the Common Stock is quoted in the over-the-counter market as reported by
the Pink Sheets LLC (or any similar organization or agency succeeding to its
functions of reporting prices); provided, that in the event that the Common
Stock is not listed or quoted as set forth in (i) and (ii) hereof,
then Trading Day shall mean a Business Day.

 

“Trading
Market” means whichever of the New York Stock Exchange, the American Stock
Exchange, the NASDAQ National Market, the NASDAQ Capital Market or OTC Bulletin
Board on which the Common Stock is listed or quoted for trading on the date in
question.

 

“Warrants”
means the Common Stock purchase warrants issued or issuable pursuant to the
Securities Purchase Agreement.

 

2.                                       Registration.

 

(a)                                  On
or prior to the Filing Date, the Company shall prepare and file with the
Commission a Registration Statement covering the resale of all Registrable
Securities not already covered by an existing and effective Registration
Statement for an offering to be made on a continuous basis pursuant to Rule 415,
on Form SB-2 (except if the Company is not then eligible to register for
resale the Registrable Securities on Form SB-2, in which case such
registration shall be on another appropriate form for such purpose).  Such Registration Statement shall contain
(except if otherwise required pursuant to written comments received from the
Commission upon a review of such Registration Statement) the “Plan of
Distribution” attached hereto as Annex A. 
The Company shall cause such Registration Statement to be declared
effective under the Securities Act as soon as possible but, in any event, no
later than its Effectiveness Date, and shall use its reasonable best efforts to
keep the Registration Statement continuously effective under the Securities Act
until the date which is the earlier of (i) five years after its Effective
Date, (ii) such time as all of the Registrable Securities covered by such
Registration Statement have been publicly sold by the Holders, or (iii) such
time as all of the Registrable Securities covered by such Registration
Statement may be sold by the Holders pursuant to Rule 144(k) as determined
by the counsel to the Company pursuant to a written opinion letter to such
effect, addressed and acceptable to the Company’s transfer agent and the
affected Holders (the “Effectiveness Period”).

 

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(b)                                 If:
(i) a Registration Statement is not filed on or prior to its Filing Date
(if the Company files a Registration Statement without affording the Holders
the opportunity to review and comment on the same as required by Section 3(a) hereof,
the Company shall not be deemed to have satisfied this clause (i)), or (ii) a
Registration Statement is not declared effective by the Commission on or prior
to its required Effectiveness Date, or (iii) after its Effective Date,
without regard for the reason thereunder or efforts therefor, such Registration
Statement ceases for any reason to be effective and available to the Holders as
to all Registrable Securities to which it is required to cover at any time
prior to the expiration of its Effectiveness Period for more than an aggregate
of 40 Trading Days in any consecutive 12 month period (any such failure or
breach being referred to as an “Event,” and for purposes of clauses (i) or
(ii) the date on which such Event occurs, or for purposes of clause (iii) the
date which such 40 Trading Day-period is exceeded, being referred to as “Event
Date”), then in addition to any other rights the Holders may have hereunder or
under applicable law: for each calendar month from the applicable Event Date
the Company shall pay to each Holder an amount in cash, as partial liquidated
damages and not as a penalty, equal to 1.5% of the aggregate Investment Amount
(as defined in the Securities Purchase Agreement) paid by such Holder, until
the applicable Event is cured.  The
parties agree that the Company will not be liable for liquidated damages under
this Section in respect of the Warrants. 
If the Company fails to pay any partial liquidated damages pursuant to
this Section in full within seven days after the date payable, the Company
will pay interest thereon at a rate of 10% per annum (or such lesser maximum
amount that is permitted to be paid by applicable law) to the Holder, accruing
daily from the date such partial liquidated damages are due until such amounts,
plus all such interest thereon, are paid in full.  The partial liquidated damages pursuant to
the terms hereof shall apply on a daily pro-rata basis for any portion of a
calendar month prior to the cure of an Event.

 

(c)                                  Each
Holder agrees to furnish to the Company a completed Questionnaire in the form
attached to this Agreement as Annex B (a “Selling Holder Questionnaire”).  The Company shall not be required to include
the Registrable Securities of a Holder in a Registration Statement and shall
not be required to pay any liquidated or other damages under Section 2(c) to
any Holder who fails to furnish to the Company a fully completed Selling Holder
Questionnaire at least two Trading Days prior to the Filing Date (subject to
the requirements set forth in Section 3(a)).

 

3.                                       Registration
Procedures.

 

In connection
with the Company’s registration obligations hereunder, the Company shall:

 

(a)                                  Not
less than four Trading Days prior to the filing of a Registration Statement or
any related Prospectus or any amendment or supplement thereto, the Company
shall furnish to each Holder copies of the “Selling Shareholders” section of
such document, the “Plan of Distribution” and any risk factor contained in such
document that addresses specifically this transaction or the Selling
Shareholders, as proposed to be filed which documents will be subject to the
review of such Holder.  The Company shall
not file a Registration Statement, any Prospectus or any amendments or
supplements thereto in which the “Selling Shareholder” section thereof
differs from the disclosure received from a Holder in its Selling Holder
Questionnaire (as amended or supplemented).

 

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(b)                                 (i) 
Prepare and file with the Commission such amendments, including post-effective
amendments, to each Registration Statement and the Prospectus used in
connection therewith as may be necessary to keep such Registration Statement continuously
effective as to the applicable Registrable Securities for its Effectiveness
Period and prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act all of the
Registrable Securities; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so supplemented or
amended to be filed pursuant to Rule 424; (iii) respond as promptly
as reasonably possible to any comments received from the Commission with
respect to each Registration Statement or any amendment thereto and, as
promptly as reasonably possible provide the Holders true and complete copies of
all correspondence from and to the Commission relating to such Registration Statement
that would not result in the disclosure to the Holders of material and
non-public information concerning the Company; and (iv) comply in all
material respects with the provisions of the Securities Act and the Exchange
Act with respect to the Registration Statements and the disposition of all
Registrable Securities covered by each Registration Statement.

 

(c)                                  Notify
the Holders as promptly as reasonably possible (and, in the case of (i)(A) below,
not less than three Trading Days prior to such filing) and (if requested by any
such Person) confirm such notice in writing no later than one Trading Day
following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to a Registration Statement is proposed to be filed; (B) when
the Commission notifies the Company whether there will be a “review” of such
Registration Statement and whenever the Commission comments in writing on such
Registration Statement (the Company shall provide true and complete copies
thereof and all written responses thereto to each of the Holders that pertain
to the Holders as a Selling Shareholder or to the Plan of Distribution, but not
information which the Company believes would constitute material and non-public
information); and (C) with respect to each Registration Statement or any
post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other federal or state governmental authority
for amendments or supplements to a Registration Statement or Prospectus or for
additional information; (iii) of the issuance by the Commission of any
stop order suspending the effectiveness of a Registration Statement covering
any or all of the Registrable Securities or the initiation of any Proceedings
for that purpose; (iv) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (v) of the occurrence of any event or passage of time that
makes the financial statements included in a Registration Statement ineligible
for inclusion therein or any statement made in such Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to such
Registration Statement, Prospectus or other documents so that, in the case of
such Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.

 

(d)                                 Use
its reasonable best efforts to avoid the issuance of, or, if issued, obtain the
withdrawal of (i) any order suspending the effectiveness of a Registration
Statement, or

 

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(ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.

 

(e)                                  Furnish
to each Holder, without charge, at least one conformed copy of each Registration
Statement and each amendment thereto and all exhibits to the extent requested
by such Person (including those previously furnished) promptly after the filing
of such documents with the Commission.

 

(f)                                    Upon
notification by the Commission that a Registration Statement will not be
reviewed or is no longer subject to further review and comments, the Company
shall request acceleration of such Registration Statement such that it becomes
effective at 5:00 p.m. (New York City time) on such Effective Date.

 

(g)                                 Deliver
to each Holder, by 9:00 a.m. (New York City time) on the day following the
Effective Date, without charge, an electronic copy of each Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto.  The Company hereby
consents to the use of such Prospectus and each amendment or supplement thereto
by each of the selling Holders in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment or supplement
thereto.

 

(h)                                 Prior
to any public offering of Registrable Securities, to register or qualify or
cooperate with the selling Holders in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of the jurisdictions within the United States reasonably requested by such
Holders, to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all
other acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by the Registration
Statements.

 

(i)                                     Cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be delivered to a
transferee pursuant to the Registration Statements, which certificates shall be
free, to the extent permitted by the Acquisition Agreement, of all restrictive
legends, and to enable such Registrable Securities to be in such denominations
and registered in such names as any such Holders may request.

 

(j)                                     Upon
the occurrence of any event contemplated by Section 3(c)(v), as promptly
as reasonably possible, prepare a supplement or amendment, including a post-effective
amendment, to the affected Registration Statements or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, no Registration Statement nor any Prospectus will contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.

 

4.                                       Registration
Expenses.  All fees and expenses
incident to the performance of or compliance with this Agreement by the Company
shall be borne by the Company whether or not any Registrable Securities are
sold pursuant to a Registration Statement. 
The fees and expenses

 

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referred to in the foregoing sentence shall include,
without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required
to be made with any Trading Market on which the Common Stock is then listed for
trading, and (B) in compliance with applicable state securities or blue
sky laws), (ii) printing expenses (including, without limitation, expenses
of printing certificates for Registrable Securities and of printing
prospectuses if the printing of prospectuses is reasonably requested by the
holders of a majority of the Registrable Securities included in the
Registration Statement), (iii) messenger, telephone and delivery expenses,
(iv) fees and disbursements of counsel for the Company, (v) Securities
Act liability insurance, if the Company so desires such insurance, and (vi) fees
and expenses of all other Persons retained by the Company in connection with
the consummation of the transactions contemplated by this Agreement.  In addition, the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation
of the transactions contemplated by this Agreement (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit and the fees and
expenses incurred in connection with the listing of the Registrable Securities
on any securities exchange as required hereunder.

 

5.                                       Indemnification.

 

(a)                                  Indemnification
by the Company.  The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents, investment advisors, partners,
members and employees of each of them, each Person who controls any such Holder
(within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act) and the officers, directors, agents and employees of each
such controlling Person, to the fullest extent permitted by applicable law,
from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, reasonable costs of preparation and reasonable
attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising
out of or relating to any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, any Prospectus or any form of
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission
of a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading, except to the extent, but only to the extent, that (1) such
untrue statements or omissions are based solely upon information regarding such
Holder furnished in writing to the Company by such Holder expressly for use
therein, or to the extent that such information relates to such Holder or such
Holder’s proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for use in
the Registration Statement, such Prospectus or such form of Prospectus or in
any amendment or supplement thereto (it being understood that the Holder has
approved Annex A hereto for this purpose) or (2) in the case of an
occurrence of an event of the type specified in Section 3(c)(ii)-(v), the
use by such Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated or defective
and prior to the receipt by such Holder of an Advice or an amended or
supplemented Prospectus, but only if and to the extent that following the
receipt of the Advice or the amended or supplemented Prospectus the
misstatement or omission giving rise to such Loss would have been
corrected.  The Company shall notify the
Holders promptly of the institution,

 

A-7

 

threat or assertion of any Proceeding of which the
Company is aware in connection with the transactions contemplated by this
Agreement.

 

(b)                                 Indemnification
by Holders.  Each Holder shall,
severally and not jointly, indemnify and hold harmless the Company, its
directors, officers, agents and employees, each Person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20
of the Exchange Act), and the directors, officers, agents or employees of such
controlling Persons, to the fullest extent permitted by applicable law, from
and against all Losses, as incurred, arising solely out of or based solely
upon: (x) such Holder’s failure to comply with the prospectus delivery
requirements of the Securities Act or (y) any untrue statement of a material
fact contained in any Registration Statement, any Prospectus, or any form of
prospectus, or in any amendment or supplement thereto, or arising solely out of
or based solely upon any omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading to the
extent, but only to the extent that, (1) such untrue statements or
omissions are based solely upon information regarding such Holder furnished in
writing to the Company by such Holder expressly for use therein, or to the
extent that such information relates to such Holder or such Holder’s proposed
method of distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Holder expressly for use in the Registration
Statement (it being understood that the Holder has approved Annex A hereto for
this purpose), such Prospectus or such form of Prospectus or in any amendment
or supplement thereto or (2) in the case of an occurrence of an event of
the type specified in Section 3(c)(ii)-(v), the use by such Holder of an
outdated or defective Prospectus after the Company has notified such Holder in
writing that the Prospectus is outdated or 
defective and prior to the receipt by such Holder of an Advice or an
amended or supplemented Prospectus, but only if and to the extent that
following the receipt of the Advice or the amended or supplemented Prospectus
the misstatement or omission giving rise to such Loss would have been
corrected.  In no event shall the
liability of any selling Holder hereunder be greater in amount than the dollar
amount of the net proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation.

 

(c)                                  Conduct
of Indemnification Proceedings.  If
any Proceeding shall be brought or asserted against any Person entitled to
indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall
promptly notify the Person from whom indemnity is sought (the “Indemnifying
Party”) in writing, and the Indemnifying Party shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any Indemnified
Party to give such notice shall not relieve the Indemnifying Party of its obligations
or liabilities pursuant to this Agreement, except (and only) to the extent that
it shall be finally determined by a court of competent jurisdiction (which
determination is not subject to appeal or further review) that such failure
shall have proximately and materially adversely prejudiced the Indemnifying
Party.

 

An Indemnified
Party shall have the right to employ separate counsel in any such Proceeding
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party or Parties
unless:  (1) the Indemnifying Party
has agreed in writing to pay such fees and expenses; (2) the Indemnifying
Party shall have failed promptly to assume the defense of such Proceeding and
to employ counsel reasonably

 

A-8

 

satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any
such Proceeding (including any impleaded parties) include both such Indemnified
Party and the Indemnifying Party, and such Indemnified Party shall have been
advised by counsel that a conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the Indemnifying Party (in
which case, if such Indemnified Party notifies the Indemnifying Party in
writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense thereof and such counsel shall be at the expense of the
Indemnifying Party).  It being
understood, however, that the Indemnifying Party shall not, in connection with
any one such Proceeding be liable for the fees and expenses of more than one
separate firm of attorneys at any time for all Indemnified Parties, which firm
shall be appointed by the Indemnified Parties that hold a majority of the
Shares then outstanding.  The
Indemnifying Party shall not be liable for any settlement of any such
Proceeding effected without its written consent, which consent shall not be
unreasonably withheld.  No Indemnifying
Party shall, without the prior written consent of the Indemnified Party, effect
any settlement of any pending Proceeding in respect of which any Indemnified
Party is a party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability on claims that are the subject matter
of such Proceeding.

 

All fees and
expenses of the Indemnified Party payable by an Indemnifying Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten Trading Days of written notice thereof to the Indemnifying
Party (regardless of whether it is ultimately determined that an Indemnified
Party is not entitled to indemnification hereunder; provided, that the
Indemnifying Party may require such Indemnified Party to undertake to reimburse
all such fees and expenses to the extent it is finally judicially determined
that such Indemnified Party is not entitled to indemnification hereunder).

 

(d)                                 Contribution.  If a claim for indemnification under Section 5(a) or
5(b) is unavailable to an Indemnified Party (by reason of public policy or
otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable
considerations.  The relative fault of
such Indemnifying Party and Indemnified Party shall be determined by reference
to, among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of
a material fact, has been taken or made by, or relates to information supplied
by, such Indemnifying Party or Indemnified Party, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such action, statement or omission.  The
amount paid or payable by a party as a result of any Losses shall be deemed to
include, subject to the limitations set forth in Section 5(c), any
reasonable attorneys’ or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have
been indemnified for such fees or expenses if the indemnification provided for
in this Section was available to such party in accordance with its terms.

 

A-9

 

The parties
hereto agree that it would not be just and equitable if contribution pursuant
to this Section 5(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.  Notwithstanding the provisions of this Section 5(d),
no Holder shall be required to contribute, in the aggregate, any amount in
excess of the amount by which the proceeds actually received by such Holder
from the sale of the Registrable Securities subject to the Proceeding exceeds
the amount of any damages that such Holder has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission.

 

The indemnity
and contribution agreements contained in this Section are in addition to
any liability that the Indemnifying Parties may have to the Indemnified
Parties.

 

6.                                       Miscellaneous.

 

(a)                                  Remedies.  In the event of a breach by the Company or by
a Holder, of any of their obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement.  The Company and each Holder agree that
monetary damages would not provide adequate compensation for any losses
incurred by reason of a breach by it of any of the provisions of this Agreement
and hereby further agrees that, in the event of any action for specific
performance in respect of such breach, it shall waive the defense that a remedy
at law would be adequate.

 

(b)                                 [Not
applicable].

 

(c)                                  Compliance.  Each Holder covenants and agrees that it will
comply with the prospectus delivery requirements of the Securities Act as
applicable to it in connection with sales of Registrable Securities pursuant to
the Registration Statement.

 

(d)                                 Discontinued
Disposition.  Each Holder agrees by
its acquisition of such Registrable Securities that, upon receipt of a notice
from the Company of the occurrence of any event of the kind described in Section 3(c),
such Holder will forthwith discontinue disposition of such Registrable
Securities under the Registration Statement until such Holder’s receipt of the
copies of the supplemented Prospectus and/or amended Registration Statement or
until it is advised in writing (the “Advice”) by the Company that the use of
the applicable Prospectus may be resumed, and, in either case, has received
copies of any additional or supplemental filings that are incorporated or
deemed to be incorporated by reference in such Prospectus or Registration
Statement.  The Company may provide
appropriate stop orders to enforce the provisions of this paragraph.

 

(e)                                  Piggy-Back
Registrations.  If at any time during
the Effectiveness Period  there is not an
effective Registration Statement covering all of the Registrable Securities and
the Company shall determine to prepare and file with the Commission a
registration statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as promulgated under the

 

A-10

 

Securities Act) or their then equivalents relating to
equity securities to be issued solely in connection with any acquisition of any
entity or business or equity securities issuable in connection with stock
option or other employee benefit plans, then the Company shall send to each
Holder written notice of such determination and, if within fifteen days after
receipt of such notice, any such Holder shall so request in writing, the
Company shall include in such registration statement all or any part of such
Registrable Securities such holder requests to be registered, subject to
customary underwriter cutbacks applicable to all holders of registration
rights.

 

(f)                                    Amendments
and Waivers.  The provisions of this
Agreement, including the provisions of this Section 6(f), may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, unless the same shall be in writing and
signed by the Company and the Holders of no less than a majority in interest of
the then outstanding Registrable Securities. 
Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the
rights of certain Holders and that does not directly or indirectly affect the
rights of other Holders may be given by Holders of at least a majority of the
Registrable Securities to which such waiver or consent relates.

 

(g)                                 Notices.  Any and all notices or other communications
or deliveries required or permitted to be provided hereunder shall be in
writing and shall be deemed given and effective on the earliest of (a) the
date of transmission, if such notice or communication is delivered via
facsimile (provided the sender receives a machine-generated confirmation of
successful transmission) at the facsimile number specified in this Section prior
to 5:30 p.m. (New York City time) on a Trading Day, (b) the next
Trading Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number specified in this Section on
a day that is not a Trading Day or later than 5:30 p.m. (New York City
time) on any Trading Day, (c) the Trading Day following the date of
mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon
actual receipt by the party to whom such notice is required to be given.  The address for such notices and
communications shall be as follows:

 

	
  If to the
  Company:

  	
   

  	
  MedicalCV, Inc.

  
	
   

  	
   

  	
  9725 South
  Robert Trail

  
	
   

  	
   

  	
  Inver Grove
  Heights, Minnesota 55077

  
	
   

  	
   

  	
  Facsimile:
  (651) 452-4948

  
	
   

  	
   

  	
  Attention:
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
  With a copy
  to:

  	
   

  	
  Briggs and
  Morgan, P.A.

  
	
   

  	
   

  	
  2200 IDS
  Center

  
	
   

  	
   

  	
  80 South
  Eighth Street

  
	
   

  	
   

  	
  Minneapolis,
  Minnesota 55402

  
	
   

  	
   

  	
  Facsimile:
  (612) 977-8650

  
	
   

  	
   

  	
  Attention:
  Avron L. Gordon, Esq.

  
	
   

  	
   

  	
   

  
	
  If to an
  Holder:

  	
   

  	
  To the
  address set forth under such Holder’s name on the signature
  pages hereof;

  

 

A-11

 

	
  If to any
  other Person who is then the registered Holder:

  
	
   

  	
   

  	
  To the
  address of such Holder as it appears in the stock transfer books of the
  Company

  

 

or such other address as may be
designated in writing hereafter, in the same manner, by such Person.

 

(h)                                 Successors
and Assigns.  This Agreement shall
inure to the benefit of and be binding upon the successors and permitted
assigns of each of the parties and shall inure to the benefit of each
Holder.  The Company may not assign its
rights or obligations hereunder without the prior written consent of each
Holder.  Each Holder may assign their
respective rights hereunder in the manner and to the Persons as permitted under
the Securities Purchase Agreement.

 

(i)                                     Execution
and Counterparts.  This Agreement may
be executed in any number of counterparts, each of which when so executed shall
be deemed to be an original and, all of which taken together shall constitute
one and the same Agreement.  In the event
that any signature is delivered by facsimile transmission, such signature shall
create a valid binding obligation of the party executing (or on whose behalf
such signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof.

 

(j)                                     Governing
Law.  All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by and construed and enforced in accordance with the internal laws
of the State of New York, without regard to the principles of conflicts of law
thereof.  Each party agrees that all
Proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement (whether brought against a party
hereto or its respective Affiliates, employees or agents) will be commenced in
the New York Courts.  Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the New York Courts
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any Proceeding, any claim that it is not
personally subject to the jurisdiction of any New York Court, or that such
Proceeding has been commenced in an improper or inconvenient forum.  Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any such
Proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner
permitted by law.  Each party hereto
hereby irrevocably waives, to the fullest extent permitted by applicable law,
any and all right to trial by jury in any Proceeding arising out of or relating
to this Agreement or the transactions contemplated hereby.  If either party shall commence a Proceeding
to enforce any provisions of this Agreement, then the prevailing party in such
Proceeding shall be reimbursed by the other party for its attorney’s fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such Proceeding.  EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY

 

A-12

 

DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

(k)                                  Cumulative
Remedies.  The remedies provided
herein are cumulative and not exclusive of any remedies provided by law.

 

(l)                                     Severability.  If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction.  It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be hereafter declared invalid, illegal, void or unenforceable.

 

(m)                               Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

 

(n)                                 Independent
Nature of Holders’ Obligations and Rights. 
The obligations of each Holder under this Agreement are several and not
joint with the obligations of each other Holder, and no Holder shall be
responsible in any way for the performance of the obligations of any other
Holder under this Agreement.  Nothing
contained herein, and no action taken by any Holder pursuant thereto, shall be
deemed to constitute the Holders as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Holders
are in any way acting in concert or as a group with respect to such obligations
or the transactions contemplated by this Agreement.  Each Holder acknowledges that no other Holder
will be acting as agent of such Holder in enforcing its rights under this
Agreement.  Each Holder shall be entitled
to independently protect and enforce its rights, including without limitation
the rights arising out of this Agreement, and it shall not be necessary for any
other Holder to be joined as an additional party in any Proceeding for such
purpose.  The Company acknowledges that
each of the Holders has been provided with the same Registration Rights
Agreement for the purpose of closing a transaction with multiple Holders and
not because it was required or requested to do so by any Holder.

 

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK

SIGNATURE PAGES TO FOLLOW]

 

A-13

 

IN WITNESS
WHEREOF, the parties have executed this Registration Rights Agreement as of the
date first written above.

 

	
   

  	
  MEDICALCV,
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
    Name:

  
	
   

  	
   

  	
    Title:

  

 

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK

SIGNATURE PAGES OF HOLDERS TO FOLLOW]

 

A-14

 

IN WITNESS
WHEREOF, the parties have executed this Registration Rights Agreement as of the
date first written above.

 

 

	
   

  	
  NAME OF
  HOLDER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ADDRESS FOR
  NOTICE

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  c/o:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Street:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  City/State/Zip:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Tel:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Fax:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Email:

  	
   

  	
   

  
									

 

A-15

 

Annex A

 

Plan of Distribution

 

The Selling
Shareholders and any of their pledgees, donees, transferees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of Common Stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. 
These sales may be at fixed or negotiated prices.  The Selling Shareholders may use any one or
more of the following methods when selling shares:

 

•                  ordinary
brokerage transactions and transactions in which the broker-dealer solicits
Holders;

 

•                  block trades in
which the broker-dealer will attempt to sell the shares as agent but may
position and resell a portion of the block as principal to facilitate the
transaction;

 

•                  purchases by a
broker-dealer as principal and resale by the broker-dealer for its account;

 

•                  an exchange
distribution in accordance with the rules of the applicable exchange;

 

•                  privately
negotiated transactions;

 

•                  to cover short
sales made after the date that this Registration Statement is declared
effective by the Commission;

 

•                  broker-dealers
may agree with the Selling Shareholders to sell a specified number of such
shares at a stipulated price per share;

 

•                  a combination of
any such methods of sale; and

 

•                  any other method
permitted pursuant to applicable law.

 

The Selling
Shareholders may also sell shares under Rule 144 under the Securities Act,
if available, rather than under this prospectus.

 

Broker-dealers
engaged by the Selling Shareholders may arrange for other brokers-dealers to
participate in sales.  Broker-dealers may
receive commissions or discounts from the Selling Shareholders (or, if any
broker-dealer acts as agent for the purchaser of shares, from the purchaser) in
amounts to be negotiated.  The Selling
Shareholders do not expect these commissions and discounts to exceed what is
customary in the types of transactions involved.

 

The Selling
Shareholders may from time to time pledge or grant a security interest in some
or all of the Shares owned by them and, if they default in the performance of
their secured obligations, the pledgees or secured parties may offer and sell
shares of Common Stock from time to time under this prospectus, or under an
amendment to this prospectus under Rule 424(b)(3) or other applicable
provision of the Securities Act of 1933 amending the list of selling
shareholders to include the pledgee, transferee or other successors in interest
as selling shareholders under this prospectus.

 

A-16

 

Upon the
Company being notified in writing by a Selling Shareholder that any material
arrangement has been entered into with a broker-dealer for the sale of Common
Stock through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplement to
this prospectus will be filed, if required, pursuant to Rule 424(b) under
the Securities Act, disclosing (i) the name of each such Selling
Shareholder and of the participating broker-dealer(s), (ii) the number of
shares involved, (iii) the price at which such the shares of Common Stock
were sold, (iv)the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not
conduct any investigation to verify the information set out or incorporated by
reference in this prospectus, and (vi) other facts material to the
transaction.  In addition, upon the
Company being notified in writing by a Selling Shareholder that a donee or
pledgee intends to sell more than 500 shares of Common Stock, a supplement to
this prospectus will be filed if then required in accordance with applicable
securities law.

 

The Selling
Shareholders also may transfer the shares of Common Stock in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this prospectus.

 

The Selling
Shareholders and any broker-dealers or agents that are involved in selling the
shares may be deemed to be “underwriters” within the meaning of the Securities
Act in connection with such sales.  In
such event, any commissions received by such broker-dealers or agents and any
profit on the resale of the shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.  Discounts, concessions, commissions and
similar selling expenses, if any, that can be attributed to the sale of
Securities will be paid by the Selling Shareholder and/or the purchasers.  Each Selling Shareholder has represented and
warranted to the Company that it acquired the securities subject to this registration
statement in the ordinary course of such Selling Shareholder’s business and, at
the time of its purchase of such securities such Selling Shareholder had no
agreements or understandings, directly or indirectly, with any person to
distribute any such securities.

 

The Company
has advised each Selling Shareholder that it may not use shares registered on
this Registration Statement to cover short sales of Common Stock made prior to
the date on which this Registration Statement shall have been declared effective
by the Commission.  If a Selling
Shareholder uses this prospectus for any sale of the Common Stock, it will be
subject to the prospectus delivery requirements of the Securities Act.  The Selling Shareholders will be responsible
to comply with the applicable provisions of the Securities Act and Exchange
Act, and the rules and regulations thereunder promulgated, including,
without limitation, Regulation M, as applicable to such Selling Shareholders in
connection with resales of their respective shares under this Registration
Statement.

 

The Company is
required to pay all fees and expenses incident to the registration of the
shares, but the Company will not receive any proceeds from the sale of the
Common Stock.  The Company and the
Selling Shareholders have agreed to indemnify each other against certain
losses, claims, damages and liabilities, including liabilities under the
Securities Act.  If the Selling
Shareholders use this prospectus for any sale of the Common Stock, they will be
subject to the prospectus delivery requirements of the Securities Act.

 

A-17

 

Annex B

 

MEDICALCV, INC.

 

Selling Securityholder Notice and Questionnaire

 

The undersigned beneficial
owner of common stock (the “Common Stock”), of MedicalCV, Inc. (the “Company”)
understands that the Company has filed or intends to file with the Securities
and Exchange Commission (the “Commission”) a Registration Statement for the
registration and resale of the Registrable Securities, in accordance with the
terms of the Registration Rights Agreement, dated as of December       ,
2005 (the “Registration Rights Agreement”), among the Company and the Holders
named therein.  A copy of the
Registration Rights Agreement is available from the Company upon request at the
address set forth below.  All capitalized
terms used and not otherwise defined herein shall have the meanings ascribed
thereto in the Registration Rights Agreement.

 

The undersigned hereby provides
the following information to the Company and represents and warrants that such
information is accurate:

 

QUESTIONNAIRE

 

1.  Name.

 

(a)                                 Full Legal Name
of Selling Securityholder

 

 

 

(b)                                Full Legal Name
of Registered Holder (if not the same as (a) above) through which
Registrable Securities Listed in Item 3 below are held:

 

 

 

(c)                                 Full Legal Name
of Natural Control Person (which means a natural person who directly or
indirectly alone or with others has power to vote or dispose of the securities
covered by the questionnaire):

 

 

 

A-18

 

 

2.  Address for Notices to Selling
Securityholder:

 

	
   

  
	
   

  
	
  Telephone:

  
	
  Fax:

  
	
  Contact Person:

  

 

3.  Beneficial Ownership of Registrable
Securities:

 

Type
and Number of Registrable Securities beneficially owned:

 

 

 

4.  Broker-Dealer Status:

 

(a)                                 Are you a
broker-dealer?

 

Yes  o  No  o

 

Note:                  If yes, the Commission’s
staff has indicated that you should be identified as an underwriter in the
Registration Statement.

 

(b)                                Are you an
affiliate of a broker-dealer?

 

Yes  o  No  o

 

(c)                                 If you are an
affiliate of a broker-dealer, do you certify that you bought the Registrable
Securities in the ordinary course of business, and at the time of the purchase
of the Registrable Securities to be resold, you had no agreements or
understandings, directly or indirectly, with any person to distribute the
Registrable Securities?

 

Yes  o  No  o

 

Note:                  If no, the Commission’s
staff has indicated that you should be identified as an underwriter in the
Registration Statement.

 

A-19

 

5.  Beneficial Ownership of Other Securities of
the Company Owned by the Selling Securityholder.

 

Except as set forth below
in this Item 5, the undersigned is not the beneficial or registered owner of
any securities of the Company other than the Registrable Securities listed
above in Item 3.

 

Type
and Amount of Other Securities beneficially owned by the Selling
Securityholder:

 

 

 

6.  Relationships with the Company:

 

Except as set forth
below, neither the undersigned nor any of its affiliates, officers, directors
or principal equity holders (owners of 5% of more of the equity securities of
the undersigned) has held any position or office or has had any other material
relationship with the Company (or its predecessors or affiliates) during the
past three years.

 

State
any exceptions here:

 

 

 

The undersigned agrees to
promptly notify the Company of any inaccuracies or changes in the information
provided herein that may occur subsequent to the date hereof and prior to the
Effective Date for the Registration Statement.

 

By signing below, the
undersigned consents to the disclosure of the information contained herein in
its answers to Items 1 through 6 and the inclusion of such information in the
Registration Statement and the related prospectus.  The undersigned understands that such
information will be relied upon by the Company in connection with the
preparation or amendment of the Registration Statement and the related
prospectus.

 

A-20

 

IN WITNESS WHEREOF the
undersigned, by authority duly given, has caused this Notice and Questionnaire
to be executed and delivered either in person or by its duly authorized agent.

 

	
  Dated:

  	
  Beneficial
  Owner:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
						

 

PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND
QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

 

Briggs and
Morgan, P.A.

2200 IDS
Center

80 South
Eighth Street

Minneapolis,
Minnesota 55402

Facsimile:  (612) 977-8650

Attention:  Avron L. Gordon, Esq.

 

A-21Exhibit 10.2

 

AMENDMENT NO. 1 TO
SECURITIES PURCHASE AGREEMENT

 

AMENDMENT NO. 1, effective December     ,
2005 to that certain Securities Purchase Agreement, dated as of March 31, 2005,
by and among MEDICALCV, INC., a Minnesota corporation (the “Company”) and the
investors identified therein on the signature pages thereto (each and “Investor”
and, collectively, the “Investors”).

 

WHEREAS, the Company desires to amend Section
1.1 of the Securities Purchase Agreement dated March 31, 2005, and the
Securities Purchase Agreement provides that it may be amended by a written
instrument signed by the Company and the Required Investors; and

 

WHEREAS, the undersigned Investor has agreed
to consent to the amendment.

 

NOW, THEREFORE, in consideration of the
mutual covenants contained in this Agreement, and for other good and valuable
consideration the receipt and adequacy of which are hereby acknowledged, the
Company and Investor agree as follows:

 

1.                                       Definitions.

 

(a)                                  The
definition of “Transaction Documents” is hereby amended to read as follows:

 

“Transaction Documents” means
this Agreement, the Shares, the Certificate of Designation, the Registration
Rights Agreement, the Escrow Agreement, the Warrants and any other documents or
agreements executed in connection with the transactions contemplated hereunder,
in each case, as may be amended from time to time.

 

(b)                                 The
definition of “Warrants” is hereby amended to read as follows:

 

“Warrants” means the
Common Stock purchase warrants in the form of Exhibit C hereto, as may be
amended from time to time, issued or issuable to the Investors at the Closing.

 

2.                                       Miscellaneous.

 

(a)                                  Except
as provided above, the remaining terms and conditions of the Securities
Purchase Agreement shall remain in full force and effect.

 

(b)                                 This
Amendment No. 1 to Securities Purchase Agreement may be signed in any number of
counterparts, which together will be one and the same instrument.  This Amendment No. 1 to Securities Purchase
Agreement shall be effective upon the Company’s receipt of a written instrument
signed by one or more Investors representing greater than 50% of the aggregate
principal amount of all Shares then outstanding.

 

 

(c)                                  This
Amendment No. 1 to Securities Purchase Agreement shall be binding upon the
Company and Investor and their respective successors and assigns.

 

(d)                                 This
Amendment No. 1 to Securities Purchase Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof.

 

(e)                                  All
terms not otherwise defined herein shall have the meanings ascribed to them in
the Securities Purchase Agreement.

 

	
   

  	
  MEDICALCV,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Marc P. Flores, Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
  INVESTOR

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

2

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