EXHIBIT 10.2


 


EXECUTIVE EMPLOYMENT AGREEMENT


 


THIS EXECUTIVE EMPLOYMENT
AGREEMENT (“Agreement”) is made and entered into August 9, 2005, by and
between MedicalCV, Inc., a
corporation duly organized and existing under the laws of the State of
Minnesota, with a place of business at 9725 South Robert Trail, Inver Grove
Heights, Minnesota 55077 (hereinafter referred to as the “Company”),
and John H. Jungbauer, a resident
of the state of Minnesota (hereinafter referred to as “Executive”).


 


BACKGROUND OF AGREEMENT


 


•                       Executive is
currently the Vice President, Finance and Chief Financial Officer of the
Company and is employed on an at-will basis.


 


•                       The Company and
Executive desire to memorialize the terms and conditions of Executive’s
employment, including additional terms and conditions which have been approved
by the Company’s Board of Directors.


 


In consideration of the
foregoing, the Company and Executive agree as follows:


 


ARTICLE 1



EMPLOYMENT


 


1.01  Subject
to the terms of Articles 3 and 6, the Company hereby agrees to employ Executive
pursuant to the terms of this Agreement, and Executive agrees to such
employment.  Executive is currently
employed by the Company as its Vice President, Finance and Chief Financial
Officer and shall continue to hold such title under the terms of this
Agreement.


 


1.02  Executive
shall generally have the authority, responsibilities, and such duties as are
customarily performed by the chief financial officer and principal accounting
officer of a public company of similar size and industry, specifically
including, without limitation, the following responsibilities:


 


(i)                                     working with
senior management of the Company and its Board of Directors (the “Board”) in
formulating short and long term goals and developing, implementing, and executing
strategies to attain Company objectives;


 


(ii)                                  endeavoring to
establish and maintain a relationship of trust and credibility with members of
the senior management team, the Board, its committees, outside auditors and
legal counsel;


 


(iii)                               supervising the
implementation of the Company’s policies and business processes in order to
meet the corporate governance and internal control requirements established by
the senior management team, the Board and relevant laws, including, but not
limited to:  (A) designing and
implementing effective disclosure controls and procedures that are necessary to
insure accurate financial reporting; (B) conducting periodic reviews and
evaluations of the effectiveness of the Company’s disclosure controls and
procedures, including, without limitation,


 





















 


interfacing with the senior
management team and other Company personnel, the Board, Audit Committee,
outside auditors and legal counsel to insure the effectiveness of the Company’s
disclosure controls and procedures and related matters; (C) accurately
reporting the results of Company operations and related matters to the
Securities and Exchange Commission, Nasdaq and other regulatory agencies; and (D) acting
as a certifying officer of the Company’s financial reporting under the Exchange
Act and other regulatory agencies;


 


(iv)                              managing and
protecting the Company’s capital and liquid assets and monitoring and advising
management regarding the availability of adequate capital at all times;


 


(v)                                 regularly and
systematically appraising and evaluating the Company’s performance results
against the Company’s established objectives; and


 


(vi)                              consistent with
the foregoing, such other finance functions as the Chief Executive Officer may
assign to Executive from time to time during his employment period.


 


Executive shall also render
such additional services and duties within the scope of Executive’s experience
and expertise as may be reasonably requested of him from time to time by the
Board.


 


1.03 
Executive shall report to the Chief Executive Officer and shall direct,
and shall generally be subject to direction, orders and advice of the Board.


 


ARTICLE 2



BEST EFFORTS OF EXECUTIVE


 


2.01  In his
capacity as Vice President, Finance and Chief Financial Officer, Executive
shall use his best energies and abilities in the performance of his duties,
services and responsibilities for the Company.


 


2.02  During
the term of his employment, Executive shall devote substantially all of his
business time and attention to the business of the Company and its subsidiaries
and affiliates and shall not engage in any substantial activity inconsistent
with the foregoing, whether or not such activity shall be engaged in for
pecuniary gain, unless approved by the Board; provided, however, that, to the
extent such activities do not violate, or substantially interfere with his
performance of his duties, services and responsibilities under this Agreement,
Executive shall be permitted to serve on civic or charitable boards or
committees thereof.


 


ARTICLE 3



NATURE OF EMPLOYMENT


 


3.01 
Executive’s employment pursuant to this Agreement shall be on an at-will
basis, with either Executive or the Company having the right to terminate
Executive’s employment with or without cause on not less than sixty (60) days’
prior written notice, subject to the Company’s obligations to Executive
pursuant to Sections 6 and 7.  The terms
and conditions of this Agreement may be amended from time to time with the
consent of the Company and Executive. 
All such amendments shall be effective when memorialized by a written
agreement between the Company and Executive or by resolutions of the Board or
the Company’s Compensation Committee (the “Committee”).


 


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ARTICLE 4



COMPENSATION AND BENEFITS


 


4.01  During
the term of employment hereunder, Executive shall be paid a base salary at the
rate of Two Hundred Thousand ($200,000) per year (“Base Salary”), payable in
bi-weekly installments in accordance with the Company’s established pay
periods, reduced by all deductions and withholdings required by law and as
otherwise specified by Executive.  The
Company shall cause the Committee to review Executive’s performance and Base
Salary level each calendar year during the Term, commencing, 2006.  Executive’s Base Salary may be increased (but
not decreased), in the sole discretion of the Board.  In the event Executive’s employment shall,
for any reason, terminate during the Term, Executive’s final monthly Base
Salary payment shall be made on a pro-rated basis as of the last day of the
month in which such employment terminated.


 


4.02  During
the term of employment, in addition to payments of Base Salary set forth above,
Executive shall be eligible to participate in any performance-based cash bonus
plan for senior executives based upon achievement of goals established with
respect to each fiscal year by the Board or Committee after reasonable
consultation with Executive, but Executive’s participation and performance
goals therein shall remain within the discretion of the Board or Committee.


 


4.03  During
the term of employment, Executive shall be entitled to participate in employee
benefit plans, policies, programs, perquisites and arrangements, as the same
may be provided and amended from time to time, that are provided generally to
similarly situated executive employees of the Company, to the extent Executive
meets the eligibility requirements for any such plan, policy, program,
perquisite or arrangement.


 


4.04  The
Company shall reimburse Executive for all reasonable business expenses incurred
by Executive in carrying out Executive’s duties, services, and responsibilities
under this Agreement.  Executive shall
comply with generally applicable policies, practices and procedures of the
Company with respect to reimbursement for, and submission of expense reports,
receipts or similar documentation of, such expenses.


 


4.05  If the
Company, based upon an opinion of legal counsel or a judicial determination,
determines that Section 304 of the Sarbanes-Oxley Act of 2002 is applicable
to Executive, to the extent that the Company is required to prepare an
accounting restatement due to the material noncompliance of the Company, as a
result of misconduct, with any financial reporting requirement under the
securities laws, Executive shall reimburse the Company for any bonus or other
incentive or equity-based compensation received from the Company during the 12-month
period following the first public issuance or filing with the Securities and
Exchange Commission (whichever first occurs) of the financial document
embodying such financial reporting requirement and any profits received from
the sale of the Company’s securities during that 12-month period.  In the event Executive fails to make prompt
reimbursement of any such amount, the Company may, to the extent permitted by
applicable law, deduct the amount required to be reimbursed from Executive’s
compensation otherwise due under this Agreement.


 


ARTICLE 5



VACATION AND LEAVE OF ABSENCE


 


5.01 
Executive shall be entitled to three (3) weeks of paid vacation per
year, in addition to the Company’s normal holidays.  Vacation time will be scheduled taking into
account the Executive’s duties and obligations at the Company.  Unused paid vacation time shall not
accumulate from year to year,


 


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unless otherwise approved in writing by the Board or Committee.  Sick leave and all other leaves of absence
will be in accordance with the Company’s stated personnel policies.


 


ARTICLE 6



TERMINATION


 


6.01  The
Company may terminate Executive’s employment without Cause by giving Executive
at least sixty (60) days written notice thereof.  In the event of such termination, Executive
shall receive only the severance compensation set forth in Article 7.01
and Executive shall also be entitled to all or a portion of any bonus due
Executive pursuant to any bonus plan or arrangement established or mutually
agreed-upon prior to termination, to the extent earned or performed through the
date of termination, based upon the requirements or criteria of such bonus plan
or arrangement, as the Board shall in good faith determine.  Such pro-rated bonus, shall be payable at the
time and in the manner payable to other executives of the Company who
participate in such plan or arrangement.


 


6.02 
Executive’s employment will be deemed terminated as of the date of the
death of the Executive.  In the event of
such termination, there shall be payable to Executive’s estate compensation
earned through the date of death together with a pro-rata portion of any bonus
due Executive pursuant to any bonus plan or arrangement established or mutually
agreed-upon prior to termination, to the extent earned or performed based upon
the requirements or criteria of such plan or arrangement, as the Board shall in
good faith determine.  Such pro-rated
bonus, shall be payable at the time and in the manner payable to other
executives of the Company who participate in such plan or arrangement.


 


6.03  Any
other provision of this Agreement notwithstanding, the Company may terminate
Executive’s employment upon written notice specifying a termination date based
on any of the following events that constitute Cause:


 


(a)               Any commission
or nolo contendere plea by Executive to a felony, gross misdemeanor or misdemeanor
involving moral turpitude, or any public conduct by Executive that has or can
reasonably be expected to have a detrimental effect on the Company;


 


(b)              Any act of
material misconduct, willful and gross negligence, or breach of duty to the
Company, including, but not limited to, embezzlement, fraud, dishonesty,
nonpayment of an obligation owed to the Company, or willful breach of fiduciary
duty to the Company which results in a material loss, damage, or injury to the
Company;


 


(c)               Any material
breach of any material provision of this Agreement or of the Company’s
announced rules, codes or polices, which remains uncured or uncorrected for a
period of thirty (30) days following written notice thereof to Executive
specifying such breach;


 


(d)              Any act of
insubordination by Executive; however, an act of insubordination by Executive
shall not constitute Cause if Executive cures or remedies such insubordination
within thirty (30) days after written notice to Executive, without material
harm or loss to the Company, unless such insubordination is a part of a pattern
of chronic insubordination, which may be evidenced by reports or warning
letters given by the Company to Executive, in which case such insubordination
is deemed not curable.


 


(e)               Any
unauthorized disclosure of any Company trade secret or confidential
information, or conduct constituting unfair competition with respect to the
Company, including inducing a party to breach a contract with the Company; or


 


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(f)                 A willful
violation of federal or state securities laws or regulations.


 


In making such determination, the Board shall
act in good faith and give Executive a reasonably detailed written notice and a
reasonable opportunity to be heard on the issues at a Board or Committee
meeting.  For purposes of this Agreement,
no act or failure by the Executive shall be considered “willful” if such act is
done by Executive in good faith in the belief that such act is or was lawful
and in the best interest of the Company or one or more of its businesses.  Nothing in this paragraph 6.03 shall be
construed to prevent Executive from contesting the Board or Committee’s
determination that Cause exists.  In the
event of such termination, and not withstanding any contrary provision
otherwise stated, Executive shall receive only his Base Salary earned through
the date of termination.


 


6.04  The
employment of the Executive shall in no event be considered to have been
terminated for Cause if the termination of his employment took place:


 


(a)                             as a result of
an act or omission which occurred more than 360 days prior to the Executive’s
having been given notice of the termination of his employment for such act or
omission, unless the commission of such act or such omission could not at the
time of such commission or omission have been known to a member of the Board
(other than the Executive, if he is then a member of the Board), in which case
there shall not be termination for Cause if notice of termination took place
more than 360 days from the date that the commission of such act or such
omission was or could reasonably have been so known; or


 


(b)                            as a result of
a continuing course of action which commenced and was or reasonably could have
been known to a member of the Board (other than the Executive) more than 360
days prior to notice having been given to the Executive of the termination of
his employment.


 


6.05 
Executive may terminate his employment upon sixty (60) days prior
written notice to the Company for “Good Reason.”  For purposes of this Agreement, “Good Reason”
means any of the following actions taken by the Company without Cause:


 


(a)                             the Company or
any of its subsidiaries reduces Executive’s Base Salary or current equity
compensation plan opportunities (participation in any such plans or programs
remaining in the discretion of the Board or Committee), or benefit plans (other
than company-wide changes to benefit plans covering all full-time eligible
employees);


 


(b)                            without
Executive’s express written consent, the Company or any of its subsidiaries
significantly reduces Executive’s job authority and responsibility over
financial accounting of the Company as contemplated by Article 1;


 


(c)                             without
Executive’s express written consent, the Company or any of its subsidiaries
requires Executive to change the location of Executive’s job or office, so that
Executive will be based at a location more than fifty (50) miles from the
location of Executive’s job or office immediately preceding notice of such
requirement.


 


(d)                            a successor
company fails or refuses to assume the Company’s obligations under this
Agreement; or


 


(e)                             the Company or
any successor company breaches any of the material provisions of this
Agreement; provided, however, that Executive shall provide detailed information
to the


 


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Company in such written
notice and such grounds for Good Reason are not remedied or continue for a
period of thirty (30) days or more following receipt of such notice.


 


6.06  During
the term of his employment and for 24 months after the date of Executive’s
termination of employment, (i) Executive shall not, directly or
indirectly, make or publish any disparaging statements (whether written or
oral) regarding the Company or any of its affiliated companies or businesses,
or the affiliates, directors, officers, agents, principal shareholders or
customers of any of them and (ii) neither the Company or any of its
affiliated companies or businesses or their affiliates, directors, or officers
shall directly or indirectly, make or publish any disparaging statements
(whether written or oral) regarding Executive. 
Information which the Company or Executive is required to make or
disclose regarding the other to comply with laws or regulations, or makes in a
pleading on the advice of litigation counsel, shall not constitute a
disparaging statement.


 


6.07  Upon any
termination of Executive’s employment with the Company, Executive shall be
deemed to have resigned from all other positions he then holds as an officer,
employee or director or other independent contactor of the Company or any of
its subsidiaries or affiliates, unless otherwise agreed by the Company and
Executive.


 


ARTICLE 7



SEVERANCE PAYMENTS


 


7.01  The
Company, its successors or assigns, will pay Executive as severance pay a lump
sum amount equal to six (6) months of the Executive’s monthly Base Salary
for full-time employment at the time of Executive’s termination (the “Severance
Payment”) if the employment of Executive is terminated by the Company without cause
or by Executive for Good Reason.


 


(a)                        If Executive
becomes entitled to a Severance Payment under this Agreement, and Executive is
eligible to and elects to continue medical coverage as provided by law
(commonly referred to as the COBRA continuation period), then the Company will
pay the cost of premiums for COBRA coverage for Executive and his eligible
dependents for a period of six months following termination, or if sooner,
until Executive is no longer eligible for COBRA coverage.  Executive must be eligible for COBRA
coverage, elect COBRA during the COBRA election period, and comply with all
requirements to obtain such coverage, to be eligible for coverage and for this
benefit.


 


(b)                       If, on the six (6) month
anniversary of the Severance Payment pursuant to Section 7.01, Executive
is unemployed and is not rendering services as an independent contractor,
Executive shall be entitled to continue to receive monthly payments of Base
Salary and COBRA coverage for the period ending on the earlier of (a) the
date Executive is reemployed; (b) commences rendering services as an
independent contractor; or (c) is covered by another medical plan;
provided, however, that such payments shall in no event continue for more than
an additional six (6) months. 
Executive shall report to the Company in writing his reemployment or
engagement as a consultant.


 


(c)                        Nothing in this
Subsection 7.01 shall limit the authority of the Committee or Board to
terminate Executive’s employment in accordance with Section 6.03.  Payment of severance payments pursuant to Section 7.01,
less customary withholdings, shall be made in one lump sum within thirty (30)
days of the Executive’s termination or resignation.


 


7.02  In
addition to the Severance Payment pursuant to Section 7.01, the Company
will pay


 


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Executive a pro-rata portion of any bonus earned by Executive as of the
date of termination, as provided by Sections 6.01 and 6.02.  The payments to Executive pursuant to
Sections 6.01, 6.02 or 7.01 are not intended to be cumulative or duplicative
and an amount payable as a payment of Base Salary or pro-rata bonus under any
one of such sections shall be reduced to the extent of similar payments made
under another of such sections.  In
addition, the severance payment of Base Salary shall be reduced by the amount
of cash severance-type benefits to which Executive may be entitled pursuant to
any other cash severance plan, agreement, policy or program of the Company or
any of its subsidiaries; including any payment for post-employment
restrictions, provided that if the amount of cash severance benefits
payable under such other severance plan, agreement, policy or program is
greater than the amount payable pursuant to this Agreement, Executive will be entitled
to receive the amounts payable under such other plan, agreement, policy or
program which exceeds the Base Salary severance payment.  Without limiting other payments which would
not constitute “cash severance-type benefits” hereunder, any cash settlement of
stock options, accelerated vesting of stock options and retirement, pension and
other similar benefits shall not constitute “cash severance-type benefits” for
purposes of this Section 7.02.


 


7.03 
Notwithstanding any other provision of this Agreement, the Company and
Executive intend that any payments, benefits or other provisions applicable to
this Agreement comply with the payout and other limitations and restrictions
imposed under Section 409A of the Code (“Section 409A”), as clarified
or modified by guidance from the U.S. Department of Treasury or the Internal
Revenue Service – in each case if and to the extent Section 409A is
otherwise applicable to this Agreement and such compliance is necessary to
avoid the penalties otherwise imposed under Section 409A.  In this connection, the Company and Executive
agree that the payments, benefits and other provisions applicable to this
Agreement, and the terms of any deferral and other rights regarding this
Agreement, shall be deemed modified if and to the extent necessary to comply
with the payout and other limitations and restrictions imposed under Section 409A,
as clarified or supplemented by guidance from the U.S. Department of Treasury
or the Internal Revenue Service – in each case if and to the extent Section 409A
is otherwise applicable to this Agreement and such compliance is necessary to
avoid the penalties otherwise imposed under Section 409A.


 


7.04  The
Company may withhold from any amounts payable under this Agreement all federal,
state, city or other taxes required by applicable law to be withheld by the
Company.


 


7.05  The
provisions of this Article 7 will be deemed to survive the termination of
this Agreement for the purposes of satisfying the obligations of the Company
and Executive thereunder.


 


ARTICLE 8



NONDISCLOSURE AND INVENTIONS


 


8.01  Except
as permitted or directed by the Company or as may be required in the proper
discharge of Executive’s employment hereunder, Executive shall not, during his
employment or at any time thereafter, divulge, furnish or make accessible to
anyone or use in any way any Confidential Information of the Company.  “Confidential Information” means any
information or compilation of information that the Executive learns or develops
during the course of his employment that is not generally known, that is
proprietary to or within the unique knowledge of the Company, from which it
derives economic value (whether or not conceived, originated, discovered, or
developed in whole or in part by Executive). 
Confidential Information includes but is not limited to, the following
types of information and other information of a similar nature (whether or not
reduced to writing), all of which Executive agrees constitutes the valuable
trade secrets of the Company: research, designs, development, know how,
computer programs and processes, marketing plans and techniques, existing and
contemplated products and services, customer and product names and related
information, prices sales, inventory,


 


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personnel, computer programs and related documentation, technical and
strategic plans, and finances. 
Confidential Information also includes any information of the foregoing
nature that the Company treats as proprietary or designates as Confidential
Information, whether or not owned or developed by the Company.  “Confidential Information” does not include
information that (a) is or becomes generally available to the public
through no fault of Executive, (b) was known to Executive prior to its
disclosure by the Company, as demonstrated by files in existence at the time of
the disclosure, (c) becomes known to Executive, without restriction, from
a source other than the Company, without breach of this Agreement by Executive
and otherwise not in violation of the Company’s rights, or (d) is
explicitly approved for release by written authorization of the Company.


 


8.02 
Executive acknowledges that new and valuable proprietary concepts,
methods, processes, discoveries, trade secrets (as defined in the Minnesota
Uniform Trade Secrets Act), improvements, adaptations, or ideas (herein
individually and collectively referred to as “Inventions”) may be developed,
originated, authorized, conceived, invented, or made by Executive, either alone
or jointly with others, in the course of Executive’s employment by the
Company.  All such Inventions shall be
the exclusive property of the Company, whether or not be patentable or
copyrightable, and they may or may not be shown or described in writing or
reduced to practice.  With respect to all
such Inventions developed, originated, authored, conceived, or invented, or
made by Executive (whether in whole or in part) during Executive’s employment
by the Company, Executive shall:


 


(i)                                     keep accurate,
complete and timely records all such Inventions, which records shall be the
Company’s property and be retained on the Company’s premises;


 


(ii)                                  promptly and
fully disclose and describe all such Inventions to the Company;


 


(iii)                               assign (and
Executive hereby does assign) to the Company all of Executive’s rights to such
Inventions and to applications for letters patent or copyrights in all
countries and to letters patent or copyrights granted with respect to such
Inventions in all countries; and


 


(iv)                              acknowledge and
deliver promptly to the Company (without charge to the Company but at the
expense of the Company) such written instruments and cooperate and do such
other acts as may be necessary in the opinion of the Company to preserve
property rights to such Inventions against forfeiture, abandonment, or loss and
to obtain and maintain letters patent or copyrights and to vest the entire
right and title thereto exclusively in the Company.


 


(b)                                 If Executive is
needed, at any time, to give testimony, evidence, or opinions in any litigation
or proceeding involving any patents or copyrights or applications for patents
or copyrights, both domestic and foreign, relating to inventions, improvements
discoveries, software, writings or other works of authorship conceived,
developed or reduced to practice by Executive, Executive agrees to do so.  With respect to any obligations performed by
the Executive under this Section following termination of Executive’s
employment, the Company will pay or reimburse all reasonable out-of-pocket
expenses.


 


(c)                                  The obligations
of this paragraph shall continue beyond the termination of employment with
respect to Inventions conceived or made by Executive during the period of his
employment and shall be binding upon assigns, executors, administrators and
other legal representatives.  For
purposes of this Agreement, any Invention relating to the business of the
Company on which Executive files or claims a copyright, or files a patent
application,


 


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within one (1) year
after termination of employment with the Company, shall be presumed to cover
Inventions conceived by Executive during the term of his employment with the
Company, subject to proof to the contrary by good faith, written and duly
corroborated records establishing that such Invention was conceived and made
following termination of employment.


 


NOTICE:  The
Company hereby notifies Executive that the foregoing does not apply to
inventions or ideas for which no equipment, supplies, facility, or trade secret
information of the Company was used and that was developed entirely on
Executive’s own time, and (1) which does not relate (a) directly to
the business of the Company and (b) to the Company’s actual or
demonstrably anticipated research or development, or (2) which does not
result from any work performed by Executive for the Company.


 


8.03  In the
event of a breach or threatened breach by Executive of the provisions of this Article 8,
the Company shall be entitled to an injunction restraining Executive from
directly or indirectly disclosing, disseminating, lecturing upon, publishing or
using such confidential, trade secret or proprietary information (whether in
whole or in part) and restraining Executive from rendering any services or
participating with any person, firm, corporation, association or other entity
to whom such knowledge or information (whether in whole or in part) has been
disclosed, without the posting of a bond or other security.  Nothing herein shall be construed as
prohibiting the Company from pursuing any other equitable or legal remedies
available to it for such breach or threatened breach, including the recovery of
damages from Executive.


 


8.04 
Executive agrees not to directly or indirectly use or disclose
Confidential Information for the benefit of anyone other than the Company,
either during or after employment with the Company and during the term of his
employment and at all times thereafter, agrees:


 


(a)                        to receive,
maintain, and use Confidential Information in the strictest confidence and,
except with the consent of the Company, not to directly or indirectly reveal,
report, publish, disclose, or transfer, any Confidential Information to any
person, firm, corporation, or other entity or utilize any Confidential
Information for Executive’s own benefit or intended benefit or for the benefit
or intended benefit of any other person, firm, corporation or other entity; and


 


(b)                       not to put into
issue the confidentiality of any of the Confidential Information, Company’s
ownership thereof, or its status as valuable trade secrets of Company.


 


Executive acknowledges that all notes, data,
reference materials, documents, business plans, the Company business and
financial records, computer programs, and other materials that in any way
incorporate, embody, or reflect any of the Confidential Information, whether
prepared by Executive or others, are the exclusive property of the Company, and
Executive agrees to forthwith deliver to the Company all such materials,
including all copies or memorializations thereof, in Executive’s possession or
control, whenever requested to do so by the Company, and in any event, upon
termination of Executive’s employment with the Company.


 


8.05  The
Executive understands and agrees that any violation of this Article 8
while employed by the Company may result in immediate disciplinary action by
the Company, including termination of employment for Cause.


 


8.06  The
provisions of this Article 8 shall survive termination of this Agreement
indefinitely.


 


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ARTICLE 9



NONCOMPETITION AND NON-RECRUITMENT


 


9.01 
Executive agrees that during the term of his employment and for a period
of one (1) year after termination of employment (the “Restricted Period”)
he will not directly or indirectly render service (including services in
research) to any person or entity in connection with the design, development,
manufacture, marketing, or sale of a Competitive Product that is sold or
intended for use or sale in any geographic area in which the Company actively
markets a Company Product or has planned to actively market a Company Product
of the same general type or function. 
This territory currently includes North America, Europe and Japan.


 


(a)                                  Without
limiting the generality of the above, Executive expressly agrees that during
the Restriction Period discussed above, he will not directly or indirectly (on
his own behalf or on behalf of another person or entity) sell competitive
Products to, attempt to sell such products to, or otherwise solicit purchases
of such services or products from, the following:


 


(i)                                     any customer
with whom Executive (or any other Executive or representative under Executive’s
supervision) has had direct or indirect contact or to whom Executive (or any
other Executive or representative under Executive’s supervision) has directly
or indirectly sold such services or products during the period of Executive’s
employment; or


 


(ii)                                  any prospective
customer who has been directly or indirectly solicited by Company, or who has
approached Company, and with whom Executive (or any other Executive or
representative under the Executive’s supervision) has had direct or indirect
contact or to whom Executive (or any other Executive or representative under
Executive’s supervision) has directly or indirectly attempted to sell such
services or products during the term of Executive’s employment.


 


(b)                                 Executive
further agrees that during the Restriction Period he will not directly or
indirectly (i) in any way interfere or attempt to interfere with the
Company’s relationships with any of its current or potential customers, or (ii) employ
or attempt to employ any of the Company’s then Executives on behalf of any
other entity, whether or not such entity competes with the Company.


 


(c)                                  For the
purposes of this Section 9.01,


 


(i)                                     “Competitive
Product” means any surgical product or research to develop information useful
in connection with a product or service that is being designed, developed,
manufactured, marketed or sold by anyone other than the Company and is of the
same general type, performs similar functions, or is used for the same purposes
as a Company Product on which the Employee worked, dealt with, or marketed
during the preceding two years of employment or about which he received or had
knowledge of Confidential Information; provided, however, that the term “surgical
product” shall not include non-invasive or percutaneous products; and


 


(ii)                                  “Company
Product” means any product, product line or service (including any component
thereof or research to develop information useful in connection with a product
or service) that is being designed, developed, manufactured,


 


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marketed or sold by the
Company or with respect to which the Company has acquired Confidential Information
which it intends to use in the design, development, manufacture, marketing or
sale of a product or service.


 


9.02  At its
sole option, the Company may, by express written notice to Executive, waive or
limit the time and/or geographic area in which Executive cannot engage in
competitive activity or the scope of such competitive activity.


 


9.03 
Executive agrees that breach by him of the provisions of this Article 9
will cause the Company irreparable harm that is not fully remedied by monetary
damages.  In the event of a breach or
threatened breach by Executive of the provisions of this Article 9, the
Company shall be entitled to an injunction restraining Executive from directly
or indirectly competing or recruiting as prohibited herein, without posting a
bond or other security.  Nothing herein
shall be construed as prohibiting the Company from pursuing any other equitable
or legal remedies available to it for such breach or threatened breach,
including the recovery of damages from Executive.


 


9.04  The
Executive understands and agrees that any violation of this Article 9
while employed by the Company may result in immediate disciplinary action by
the Company, including termination of employment for Cause.


 


9.05  The
obligations contained in this Article 9 shall survive the termination of
this Agreement indefinitely.


 


ARTICLE 10


 


MISCELLANEOUS


 


10.01  Governing
Law.  This Agreement shall be
governed and construed according to the laws of the State of Minnesota without
regard to conflicts of law provisions. 
The Company and Executive agree that if any action is brought pursuant
to this Agreement that is not otherwise resolved by arbitration pursuant to Section 10.06,
such dispute shall be resolved only in the District Court of Hennepin County,
Minnesota, or the United States District Court for Minnesota, and each party
hereto unconditionally (a) submits for itself in any proceeding relating
to this Agreement, or for recognition and enforcement of any judgment in
respect thereof, to the exclusive jurisdiction of the Hennepin County,
Minnesota District Courts or the United States Federal District Court for
Minnesota, and agrees that all claims in respect to any such proceeding shall
be heard and determined in Hennepin County, Minnesota, Minnesota District Court
or, to the extent permitted by law, in such federal court, (b) consents
that any such proceeding may and shall be brought in such courts and waives any
objection that it may now or thereafter have to the venue or jurisdiction of
any such proceeding in any such court or that such proceeding was brought in an
inconvenient court and agrees not to plead or claim the same; waives all right
to trial by jury in any proceeding (whether based on contract, tort or
otherwise) arising out of or relating to this Agreement, or its performance
under or the enforcement of this Agreement; (d) agrees that service of
process in any such proceeding may be effected by mailing a copy of such
process by registered or certified mail (or any substantially similar form of
mail), postage prepaid, to such party at its address as provided in Section 10.06;
and (e) agrees that nothing in this Agreement shall affect the right to
effect service of process in any other manner permitted by the laws of the
State of Minnesota.


 


10.02  Successors.  This Agreement is personal to Executive and
Executive may not assign or transfer any part of his rights or duties
hereunder, or any compensation due to him hereunder, to any other person or
entity.  This Agreement may be assigned
by the Company and the Company.  The
Company shall require any successor or assignee, whether direct or indirect, by
purchase, merger, consolidation or


 


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otherwise, to all or substantially all the business or assets of the Company,
expressly and unconditionally to assume and agree to perform the Company’s
obligations under this Agreement, in the same manner and to the same extent
that the Company would be required to perform if no such succession or
assignment had taken place.  In such
event, the term “Company,” as used in this Agreement, shall mean the Company as
defined above and any successor or assignee to the business or assets which by
reason hereof becomes bound by the terms and provisions of this Agreement.


 


10.03  Waiver.  The waiver by the Company of the breach or
nonperformance of any provision of this Agreement by Executive will not operate
or be construed as a waiver of any future breach or nonperformance under any
such provision of this Agreement or any similar agreement with any other
Executive.


 


10.04  Entire
Agreement; Modification.  This
Agreement supersedes, revokes and replaces any and all prior oral or written
understandings, if any, between the parties relating to the subject matter of
this Agreement.  The parties agree that
this Agreement: (a) is the entire understanding and agreement between the
parties; and (b) is the complete and exclusive statement of the terms and
conditions thereof, and there are no other written or oral agreements in regard
to the subject matter of this Agreement. 
Except for modifications described in Article 3, this Agreement
shall not be changed or modified except by a written document signed by the
parties hereto.


 


10.05  Severability
and Blue Penciling.  To the extent
that any provision of this Agreement shall be determined to be invalid or
unenforceable as written, the validity and enforceability of the remainder of
such provision and of this Agreement shall be unaffected.  If any particular provision of this Agreement
shall be adjudicated to be invalid or unenforceable, the Company and Executive
specifically authorize the tribunal making such determination to edit the
invalid or unenforceable provision to allow this Agreement, and the provisions
thereof, to be valid and enforceable to the fullest extent allowed by law or
public policy.


 


10.06  Arbitration.  Any dispute, claim or controversy arising
under this Agreement shall, at the request of any party hereto be resolved by
binding arbitration by a single arbitrator selected by employer and Executive,
with arbitration governed by The United States Arbitration Act (Title 9, U.S.
Code); provided, however, that a dispute, claim or controversy shall be subject
to adjudication by a court in any proceeding against the Company or Executive
involving third parties (in addition to the Company or Executive).  Such arbitrator shall be a disinterested
person who is either an attorney, retired judge or labor relations arbitrator.  In the event employer and Executive are
unable to agree upon such arbitrator, the arbitrator shall, upon petition by
either the Company or Executive, be designated by a judge of the Hennepin
County District Court.  The arbitrator
shall have the authority to make awards of damages as would any court in
Minnesota having jurisdiction over a dispute between employer and Executive,
except that the arbitrator may not make an award of exemplary damages or
consequential damages.  In addition, the
Company and Executive agree that all other matters arising out of Executive’s
employment relationship with the Company shall be arbitrable, unless otherwise
restricted by law.


 


(a)                        In any
arbitration proceeding, each party shall pay the fees and expenses of its or
his own legal counsel.


 


(b)                       The arbitrator,
in his or her discretion, shall award legal fees and expenses and costs of the
arbitration, including the arbitrator’s fee, to a party who substantially
prevails in its claims in such proceeding.


 


(c)                        Notwithstanding
this Section 10.06, in the event of noncompliance or violation, as the
case may be, of Sections 8 or 9 of this Agreement, the Company may
alternatively apply


 


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to a court of competent
jurisdiction for a temporary restraining order, injunctive and/or such other
legal and equitable remedies as may be appropriate, if it and such court
reasonably determines that the Company would have no adequate remedy at law for
such violation or noncompliance.


 


10.07  Legal
Fees.  If any contest or dispute
shall arise between the Company and Executive regarding any provision of this
Agreement, and such dispute results in court proceedings or arbitration, a
party that prevails to a substantial extent with respect to a claim brought and
pursued in connection with such dispute, shall be entitled to recover its legal
fees and expenses reasonably incurred in connection with such dispute.  Such reimbursement shall be made as soon as
practicable following the resolution of the dispute (whether or not appealed)
to the extent a party receives documented evidence of such fees and expenses.


 


10.08  Notices.  For purposes of this Agreement, notices and
all other communications provided for herein shall be in writing and shall be
deemed to have been duly given when personally delivered or may send by certified
mail, return receipt requested, postage prepaid, addressed to Executive at his
residence address appearing on the records of the Company and to the Company at
its then current executive offices to the attention of the Board.  All notices and communications shall be
deemed to have been received on the date of delivery thereof or on the third
business day after the mailing thereof, except that notice of change of address
shall be effective only upon actual receipt. 
No objection to the method of delivery may be made if the written notice
or other communication is actually received.


 


10.09  Survival.  The provisions of this Article 10 shall
survive the termination of this Agreement, indefinitely.


 


IN WITNESS WHEREOF the
following parties have executed the above instrument the day and year first
above written.


 


	
   

  	
  MEDICALCV,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Marc P.
  Flores

  	
   

  
	
   

  	
   

  	
  Marc P.
  Flores

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ John H.
  Jungbauer

  	
   

  
	
   

  	
   

  	
  John H.
  Jungbauer

  
						



 


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