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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