EXHIBIT 10.2

 

SUBORDINATED NOTE

 

$1,000,000.00

 

July 1, 2003

 

 

Minneapolis, Minnesota

 

For value received, the undersigned, MedicalCV, Inc., a Minnesota corporation
(“Maker”), hereby promises to pay to the order of Peter Ludwig Hauser
(“Lender”), at 16913 Kings Court, Lakeville, Minnesota 55044, or at any other
place designated at any time in writing by the holder hereof, in lawful money of
the United States of America, the principal sum of One Million and 00/100
dollars ($1,000,000.00), together with interest (calculated on the basis of
actual days elapsed in a 360-day year) on the unpaid principal hereof, from the
date immediately available funds representing the principal sum are credited to
the account of the Maker until this Note is fully paid, at a rate equal to ten
percent (10%) per annum (the “Applicable Rate”).  As used herein, “due date”
means June 30, 2004.  The Maker shall prepay its obligations hereunder as
provided in that certain Subordination and Intercreditor Agreement between
Lender and PKM Properties, LLC (“PKM”) dated the date hereof as it may be
amended, modified, supplemented, restated or replaced from time to time (the
“Subordination and Intercreditor Agreement”).

 

Interest shall be payable monthly, on the last day of each month commencing July
31, 2003, and on the last day of each succeeding month thereafter until this
Note is paid in full on or prior to the due date.

 

This Note shall be payable in lawful money of the United States of America in
immediately available funds.  All payments on this Note shall be applied to the
payment of accrued interest before being applied to the payment of principal. 
Any payment which is required to be made on a day which is not a banking
business day for the Lender shall be payable on the next succeeding banking
business day and such additional time shall be included in the computation of
interest.  The principal amount of this Note may be prepaid in whole or in part
at any time without prior notice, premium, or penalty so long as such prepayment
is accompanied by payment of all interest accrued on the amount prepaid.

 

Payment of the principal amount of the indebtedness represented by this Note is
subordinate and junior to payment of certain indebtedness of Maker to PKM
existing prior to the date of this Note, as set forth in the Subordination and
Intercreditor Agreement.

 

In case any principal of or interest on this Note is not paid when due or
mandatorily prepayable, the outstanding unpaid principal balance of this Note
and the accrued interest thereon shall automatically become immediately due and
payable and Maker shall be liable for all costs of enforcement and collection of
this Note incurred by Lender or any other holder of this Note, including but not
limited to reasonable attorneys’ fees, disbursements, and court costs.  In the
event of a default hereunder, Maker shall pay all reasonable attorneys’ fees and
disbursements incurred by Lender in obtaining advice as to its rights and
remedies in connection with such default.

 

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Maker waives presentment, notice of dishonor, protest, and notice of protest,
and any or all other notices or demands (other than demand for payment) in
connection with the delivery, acceptance, performance, default, endorsement, or
guaranty of this Note.  The liability of Maker hereunder shall be unconditional
and shall not be in any manner affected by any indulgence whatsoever granted or
consented to by the holder hereof, including but not limited to any extension of
time, renewal, waiver, or other modification.  Any failure of the holder to
exercise any right hereunder shall not be construed as a waiver of the right to
exercise the same or any other right at any time and from time to time
thereafter.  Lender or any holder may accept late payments, or partial payments,
even though marked “payment in full” or containing words of similar import or
other conditions, without waiving any of its rights.  No amendment,
modification, or waiver of any provision of this Note nor consent to any
departure by Maker therefrom shall be effective, irrespective of any course of
dealing, unless the same shall be in writing and signed by Lender, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.  This Note cannot be changed or terminated
orally or by estoppel or waiver or by any alleged oral modification regardless
of any claimed partial performance referable thereto.

 

Any notice from Lender to Maker shall be deemed given when delivered to Maker by
hand or when deposited in the U.S. mail and addressed to Maker at the last
address of Maker appearing on Lender’s records.

 

This Note shall be governed by and construed in accordance with the laws of the
State of Minnesota applicable to instruments made and to be performed wholly
within that state.  If any provision of this Note is held to be illegal or
unenforceable for any reason whatsoever, such illegality or unenforceability
shall not affect the validity of any other provision hereof.

 

MAKER AGREES THAT ANY ACTION, SUIT, OR PROCEEDING IN RESPECT OF OR ARISING OUT
OF THIS NOTE MAY BE INITIATED AND PROSECUTED IN THE STATE OR FEDERAL COURTS, AS
THE CASE MAY BE, LOCATED IN HENNEPIN COUNTY, MINNESOTA.  MAKER CONSENTS TO AND
SUBMITS TO THE EXERCISE OF JURISDICTION OVER ITS PERSON BY ANY SUCH COURT HAVING
JURISDICTION OVER THE SUBJECT MATTER, WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY
REGISTERED MAIL DIRECTED TO MAKER AT ITS ADDRESS SET FORTH BELOW OR TO ANY OTHER
ADDRESS AS MAY APPEAR IN LENDER’S RECORDS AS THE ADDRESS OF MAKER.

 

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IN ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS NOTE,
LENDER AND MAKER BOTH WAIVE TRIAL BY JURY, AND MAKER ALSO WAIVES (i) THE RIGHT
TO INTERPOSE ANY SETOFF OR COUNTERCLAIM OF ANY NATURE OR DESCRIPTION; (ii) ANY
OBJECTION BASED ON FORUM NON CONVENIENS OR VENUE; AND (iii) ANY CLAIM FOR
CONSEQUENTIAL, PUNITIVE, OR SPECIAL DAMAGES.

 

 

MEDICALCV, INC.,

 

a Minnesota corporation

 

 

 

 

 

By:

/s/ Jules L. Fisher

 

 

 

 Jules L. Fisher

 

 

 Its: Chief Financial Officer

 

ADDRESS OF THE MAKER:

 

9725 South Robert Trail

Inver Grove Heights, MN  55077

 

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