BRIDGE NOTE PURCHASE AGREEMENT

EXHIBIT 10.1

BRIDGE NOTE PURCHASE AGREEMENT

This Agreement is made as of December 31, 2004, by and among MedicalCV, Inc., a Minnesota corporation (“ MDCV ”), and each investor who becomes a signatory to this Agreement (each an “ Investor ” and collectively, the “ Investors ”).

AGREEMENT

SECTION 1 - PURCHASE AND SALE OF NOTES

1.1            MDCV hereby agrees to issue and sell to each Investor, and each Investor hereby agrees to purchase from MDCV on the Closing Date (hereinafter defined) a Convertible Promissory Note (each a “ Note ” and collectively, the “ Notes ”), in the principal amount set forth opposite such Investor’s name on Exhibit A , and a five-year warrant for the purchase of the number of shares of MDCV common stock set forth opposite such Investor’s name on Exhibit A (each a “ Bridge Warrant ” and collectively, the “ Bridge Warrants ”).  The Notes shall be in the form attached as Exhibit B .  The Bridge Warrants shall be in the form attached as Exhibit C .  Within 10 days of the issuance of Next Shares (as defined herein), each Investor will be required to elect one of the following two alternatives:  (1) convert the outstanding principal of, and accrued but unpaid interest on, the Note into a number of Next Shares equal to (a) the amount of the Note being converted divided by (b) 80% of the per share sales price or per unit sales price, as applicable, of the Next Shares (but not to exceed $1.49), and retain the Bridge Warrant (“Alternative 1”), or (2) surrender the Note and the Bridge Warrant to MDCV in exchange for the issuance of a number of Next Shares and any accompanying warrants issuable in connection with the Next Shares (the “Additional Warrants”), equal to the amount of such securities that could be purchased using the outstanding principal of, and accrued but unpaid interest on, the Note (“Alternative 2”).  MDCV will provide each Investor with written notice as soon as practicable following the issuance of Next Shares.  If any Investor fails to make his, her, or its election within 10 days of the issuance of the Next Shares, such Investor will be deemed to have elected Alternative 1.  The Notes, the Next Shares issuable upon conversion of the Notes, the Bridge Warrants, the shares issuable upon exercise of the Bridge Warrants, the Next Shares issuable upon exchange of the Notes, any Additional Warrants issuable upon exchange of the Notes, and the shares issuable upon exercise of any Additional Warrants are sometimes referred to herein as “ Securities .”  The term “ Next Shares ” mean the equity securities issuable by MDCV in connection with MDCV’s next round of equity financing subsequent to the date of this Agreement, subject to the terms and conditions set forth in the Note.

1.2            The closing of the purchase of the Notes and Bridge Warrants and delivery of the purchase price of the Notes shall take place at the offices of MedicalCV, Inc., 9725 South Robert Trail, Inver Grove Heights, MN 55077, at 10:30 a.m. on Friday, December 31, 2004 (the “Closing Date”).  At such closing, each Investor will deliver the purchase price to MDCV and MDCV will deliver to each Investor an executed original of the Note purchased hereunder and an executed original of the Bridge Warrant purchased hereunder.  All payments will be made in United States currency and remittance to MDCV shall be by cashier’s check or wire transfer.

SECTION 2 - REPRESENTATIONS AND WARRANTIES OF MDCV

To induce the Investors to purchase the Notes and Bridge Warrants hereunder, MDCV represents to each Investor as follows:

2.1            Existence of Company .  MDCV is a corporation duly organized, validly existing and in good standing under the laws of the State of Minnesota, and has the requisite corporate power and authority to own its properties and to carry on its business in all material respects as it is now being conducted.  MDCV is duly qualified or licensed as a foreign corporation in good standing in each jurisdiction wherein the nature of its activities or of its properties owned or leased makes such qualification or licensing necessary and failure to be so qualified or licensed would have a material adverse impact on its business.

2.2            Authority to Execute .  The execution, delivery and performance by MDCV of this Agreement and each Note and Bridge Warrant (collectively, the “ Loan Documents ”) to which it is a party are within MDCV’ s corporate powers, have been duly authorized by all necessary corporate action, do not and will not conflict with any provision of law or of the charter or by-laws of MDCV or, of any agreement or contractual restrictions binding upon or affecting MDCV or any of its property, and need no further shareholder or creditor consent.

2.3            Binding Obligation .  This Agreement is, and the Notes and Bridge Warrants when delivered hereunder will be, legal, valid, and binding obligations of MDCV enforceable against MDCV in accordance with their respective terms.

2.4            Disclosure .  MDCV has delivered to each Investor a Confidential Private Placement Memorandum, dated December 21, 2004 (the “PPM”), which describes the business of MDCV.

2.5            Defaults .  MDCV is not in default in the payment of principal or interest on any indebtedness and is not in default under any instrument or agreement to which it is a party, and no event has occurred and is continuing which, with or without the lapse of time or the giving of notice, or both, constitutes or would constitute an event of default under any such instrument or agreement or under this Agreement.

2.6            Litigation .  No litigation or governmental proceeding is pending or threatened against MDCV that may, alone or together with all other such matters, have a materially adverse effect on the financial condition, operations, or prospects of MDCV, and no basis therefore exists.

2.7            Securities Laws .  Based in part upon the representations and warranties contained in Section 3 hereof, no consent, authorization, approval, permit or order of or filing with any governmental or regulatory authority, other than a Current Report on Form 8-K which will be filed with the U.S. Securities and Exchange Commission within 4 business days of the Closing Date and a Form D which will be filed with the U.S. Securities and Exchange Commission within 15 days of the Closing Date, is required under current laws and regulations in connection with the execution and delivery of the Loan Documents or the offer, issuance, sale or delivery of the Notes and Bridge Warrants.  Under the circumstances contemplated hereby, the offer, issuance, sale and delivery of the Notes and Bridge Warrants will not under current laws and regulations require compliance with the prospectus delivery or registration requirements of the Securities Act of 1933, as amended (the ” Act ”).

SECTION 3 - REPRESENTATIONS OF THE INVESTOR

3.1            Each Investor, severally and not jointly, hereby represents to MDCV:

a)              Investor has full power and authority to enter into this Agreement and this Agreement and each other Loan Document to which it is a party constitutes a valid and legally binding obligation of the Investor, enforceable in accordance with its terms, subject, as to

enforcement of remedies, to applicable bankruptcy, insolvency, moratorium, reorganization and similar laws affecting creditors’ rights generally and to general equitable principles.

b)             Investor has had the opportunity to ask questions of, and receive answers from, executive officers of MDCV concerning the terms and conditions of the investment and the business and affairs of MDCV, and to obtain any additional information necessary to verify such information as the Investor considers necessary or advisable in order to form a decision concerning an investment in MDCV.  Investor also acknowledges that he has received and has carefully reviewed the PPM.

c)              The Securities are being acquired for investment for the Investor’s own account and not with the view to, or for resale in connection with, any distribution or public offering thereof.  Investor understands that the Securities have not been registered under the Act, or any state securities laws, by reason of the contemplated issuance in a transaction exempt from the registration requirements of the Act and applicable state securities laws and that the reliance of MDCV upon these exemptions is predicated in part upon these representations by the Investor.  Investor further understands that the Securities may not be transferred or resold without registration under the Act and any applicable state securities laws, or an exemption from the requirements of the Act and applicable state securities laws.

d)             Investor is able to bear the loss of his investment in the Securities without any material adverse effect on the Investor’s financial position or prospects, and Investor has such knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of the investment to be made pursuant to this Agreement.  Without limiting the foregoing, Investor understands that the Securities are highly speculative, involve a high degree of risk, and should be purchased only by persons who can afford the loss of their entire investment.  The Investor has carefully considered the risks described under the caption “Risk Factors” in the PPM.

e)              Investor is (i) a natural person whose individual net worth (assets less liabilities), or joint net worth with his or her spouse, exceeds $1,000,000, or (ii) a natural person whose individual income was in excess of $200,000, or whose joint income with his or her spouse was in excess of $300,000, in each of the two most recent years, and who has a reasonable expectation of reaching the same income level for the current year.

f)              This Agreement has been duly authorized by all necessary action on the part of the Investor, has been duly executed and delivered by the Investor, and is a valid and binding agreement of the Investor.

g)             Investor is NOT subject to backup withholding provisions of Section 3406(a)(i)(C) of the Internal Revenue Code of 1986, as amended (note: you are subject to backup withholding if (i) you fail to furnish your Social Security number or taxpayer identification number herein; (ii) the Internal Revenue Service notifies MDCV that you furnished an incorrect Social Security number or taxpayer identification number, (iii) you are notified that you are subject to backup withholding; or (iv) you fail to certify that you are not subject to backup withholding or fail to certify your Social Security number or taxpayer identification number).

h)             It is understood that the certificates evidencing the Securities may bear legends required by applicable federal and state securities laws as well as the following legend:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE.  THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS.

SECTION 4 - DEFAULTS

4.1            Events of Default .  Each of the following events shall be an event of default (the ” Events of Default ”) for purposes of this Agreement and the Notes:

a)              Failure of MDCV to pay the principal or interest on the Notes when due;

b)             Failure of MDCV to perform or observe any covenant or agreement as required by the Loan Documents (other than payment obligations) and continuation of such failure for a period of 10 days following notice from one or more Investors;

c)              MDCV shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against MDCV seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, custodianship, protection, or relief of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, custodian trustee, or other similar official for it or for any substantial part of its property;

d)             The entry against MDCV of a final judgment, decree or order for the payment of money in the excess of $100,000 and the continuance of such judgment, decree or order unsatisfied for a period of 30 days without a stay of execution; or

e)              Any of the material representations or covenants of MDCV made in this Agreement or other Loan Documents are proven not to have been true and correct in any material respect as of the date of this Agreement.

4.2            Rights and Remedies .  If any Event of Default shall occur, the Investors holding Notes representing a majority of the aggregate principal amount of all of the Notes may elect to exercise any or all of the following rights and remedies:

a)              Declare the Notes, all interest thereon, and all other obligations under, or pursuant to, the Loan Documents to be immediately due and payable, and upon such declaration, such Notes, interest and other obligations shall immediately be due and payable, without presentment, demand, protest or any notice of any kind, all of which are expressly waived; and

b)             Exercise any and all other rights and remedies available to the Investors at law and in equity.

4.3            Notice of Defaults .  Within five days of the occurrence or existence of an Event of Default, MDCV shall give written notice thereof to each Investor.

4.4            Termination of Section 4 .  This Section 4 will terminate upon repayment of all principal and accrued interest on the Note or conversion or exchange of the Note in accordance with its terms, whichever occurs earlier.

SECTION 5 – SECURITIES REGISTRATION

MDCV will grant to Investors any securities registration rights it grants to purchasers of the Next Shares.

SECTION 6 - MISCELLANEOUS

6.1            No Waiver; Cumulative Remedies .  No failure or delay on the part of the Investors in exercising any right or remedy under, or pursuant to, any Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, remedy or power preclude other or further exercise thereof, or the exercise of any other right, remedy or power.  The remedies in the Loan Documents are cumulative and are not exclusive of any remedies provided by law.

6.2            Amendments and Waivers .  No amendment or waiver of any provisions of any Loan Document shall be effective unless such amendment or waiver is in writing signed by Investors holding Notes representing a majority of the aggregate principal amount of all Notes issued pursuant to this Agreement and such amendment or waiver shall be effective only in the specific instance and for the specific purpose for which it was given.

6.3            Notices, Etc .  All notices, requests, consents and other communications hereunder to any party shall be deemed to be sufficient if contained in a written instrument delivered in person, sent by facsimile transmission to the fax number set forth on the signature page hereof, or such other number as may hereinafter be designated in writing by the recipient to the sender, or duly sent by first class registered or certified mail, return receipt requested, postage prepaid, addressed to such party at the address set forth on the signature page hereof or such other address as may hereafter be designated in writing by the addressee to the addresser.  All such notices, requests, consents and communications shall be deemed to have been received (a) in the case of personal delivery, on the date of such delivery, (b) in the case of facsimile transmission, on the date of transmission if sent within normal business hours, otherwise on the following business day, and (c) in the case of mailing, on the third day after the posting thereof.

6.4            Governing Law .  All Loan Documents will be governed by and construed in accordance with the laws of the State of Minnesota, excluding that body of law relating to conflict of laws.

6.5            Severability .  If any term in this Agreement or other Loan Documents shall be held to be illegal or unenforceable, the remaining portions of this Agreement or other Loan Documents, as the case may be, shall not be affected, and this Agreement or other Loan Documents, as the case may be, shall be construed and enforced as if this Agreement or other Loan Documents, as the case may be, did not contain the term held to be illegal or unenforceable.

6.6            Binding Effect; Assignment .  All Loan Documents shall be binding upon and inure to the benefit of MDCV and the Investor and their respective successors and assigns.  MDCV may not assign its rights or interest under the Loan Documents without the prior written consent of the Investors.

6.7            Survival of Warranties .  Except as otherwise noted in this Agreement, the representations and warranties of contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement.

The undersigned hereby agrees to be bound by the terms and conditions of this Agreement.

COUNTERPART SIGNATURE PAGE

TO

NOTE PURCHASE AGREEMENT

The undersigned hereby agrees to be bound by the terms and conditions of this Agreement and acknowledges that the other parties listed on Exhibit A have executed this Agreement.

EXHIBIT A

TO

NOTE PURCHASE AGREEMENT

SCHEDULE OF NOTE PURCHASERS