Document:

EXHIBIT
10.4

 

AMENDMENT NO. 4 TO

FIRST AMENDED AND RESTATED

SUBORDINATION AND INTERCREDITOR AGREEMENT

 

THIS AMENDMENT
NO. 4 TO FIRST AMENDED AND RESTATED SUBORDINATION AND INTERCREDITOR AGREEMENT,
dated as of February 16, 2005, is by and between PETER L. HAUSER, a resident of
the State of Minnesota, and his successors heirs and permitted assigns (“Hauser”)
and PKM PROPERTIES, LLC, a Minnesota limited liability company, and its
endorsees, successors and assigns (“PKM”).

 

RECITALS:

 

(i)            Hauser,
PKM and Draft Co. are parties to that certain First Amended and Restated
Subordination and Intercreditor Agreement dated as of November 24, 2003;
Amendment No. 1 to First Amended and Restated Subordination and
Intercreditor Agreement dated as of January 29, 2004; Amendment No. 2 to
Amended and Restated Subordination and Intercreditor Agreement dated
April 16, 2004; and Amendment No. 3 to Amended and Restated Subordination
and Intercreditor Agreement (collectively, the “Amended Agreement”); and

 

(ii)           Medical
CV, Inc., a Minnesota corporation (the “Borrower”), is, or may hereafter
become, indebted to PKM as a result of the advance of monies and other
extensions of credit by PKM to the Borrower under a February 2005 Credit
Agreement dated as of February 16, 2005 (as the same may have been or may be
amended, restated or otherwise modified from time to time hereafter, the “February
2005 Credit Agreement”); and

 

(iii)          Hauser
and PKM have agreed to amend the Amended Agreement as provided herein, and on
the terms and conditions of this Agreement; and

 

(iv)          Borrower
agrees to accept and acknowledge the terms and conditions of this Agreement and
agrees to be bound by and comply with the provisions hereof.

 

AGREEMENTS:

 

NOW,
THEREFORE, for good and valuable consideration, receipt of which is
acknowledged by the parties, the parties agree as follows:

 

Section
2.              Definitions,
Rules of Construction.

 

(a)           Except as
otherwise defined in this Agreement, all capitalized terms used herein shall
have the definitions and be subject to the rules of construction provided in
the Amended Agreement.

 

(b)           The
following definition contained in Section 1(a) of the Amended Agreement is
hereby amended in its entirety to read as follows:

 

 

“Senior
Debt” shall mean all liabilities and obligations of the Borrower to PKM
howsoever created, arising or evidenced, whether direct or indirect, absolute
or contingent, due or to become due, now existing or hereafter arising or
incurred, including, without limitation, all of the Borrower’s obligations to
PKM under the January Credit Agreement, the May Credit Agreement, the November
Credit Agreement, the Lease, the April 2004 Discretionary Credit Agreement, the
October 2004 Credit Agreement, and the Discretionary Credit and Term Loan
Agreement and any note or notes executed by the Borrower thereunder, and all
other obligations under any other agreement between the Borrower and PKM now or
hereafter in effect, and also including, without limitation, any and all
interest accruing on any of the Senior Debt after the commencement of any
proceedings referred to in Section 5 below, notwithstanding any
provision or rule of law which might restrict the rights of PKM, as against the
Borrower or anyone else, to collect such interest; provided, however, that (1)
Senior Debt shall not include any obligations arising solely under the May
Discretionary Credit Note, (2) for purposes hereof, Senior Debt shall include
no more than $943,666 of principal under the January Discretionary Credit
Agreement, no more than $250,000 of principal under the April 2004
Discretionary Credit Agreement, no more than $500,000 under the October 2004
Credit Agreement, and no more than $500,000 of principal under the February
2005 Credit Agreement and (3) in order to be considered Senior Debt hereunder
as of any particular time, obligations with respect to the Lease must be due
and payable at such time (without acceleration).

 

Section
3.              Effect of
Amendment.

 

Except as
provided in this Agreement, the Amended Agreement shall remain in full force
and effect.

 

IN WITNESS
WHEREOF, this Amendment No. 4 to First
Amended and Restated Subordination and Intercreditor Agreement has been signed
as of the date first set forth above.

 

(The signature page follows.)

 

2

 

	
   

  	
   /s/ Peter
  L. Hauser

  	
   

  
	
   

  	
  PETER L.
  HAUSER

  
	
   

  	
   

  
	
   

  	
  Address for
  Notice:

  
	
   

  	
  16913 Kings
  Court

  
	
   

  	
  Lakeville,
  MN 55044

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PKM
  PROPERTIES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/
  Paul K. Miller

  	
   

  
	
   

  	
  Name:

  	
  Paul K.
  Miller

  
	
   

  	
  Its:

  	
  Chief
  Manager

  
	
   

  	
   

  
	
   

  	
  Address for
  Notice:

  
	
   

  	
  PKM
  Properties, LLC

  
	
   

  	
  c/o Gracon
  Contracting, Inc.

  
	
   

  	
  606 24th
  Avenue South, Suite B12

  
	
   

  	
  Minneapolis,
  MN 55454

  
	
   

  	
  Attention:
  Paul K. Miller

  
						

 

3

 

ACCEPTANCE AND ACKNOWLEDGMENT

 

Borrower
hereby accepts and acknowledges receipt of a copy of, the foregoing Amendment
No. 4 to First Amended and Restated Subordination and Intercreditor Agreement
and agrees to be bound by and comply with the provisions thereof, and reaffirms
its Acceptance and Acknowledgement of the terms and conditions of the First
Amended and Restated Subordination and Intercreditor Agreement.

 

	
   

  	
  MEDICALCV,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John H.
  Jungbauer

  	
   

  
	
   

  	
  Name:

  	
  John H.
  Jungbauer

  
	
   

  	
  Its:

  	
  Chief
  Financial Officer

  
					

 

4Exhibit 10.14

 

Summary of
Compensation Arrangements for Executive Officers

 

The following table discloses compensation
received during the three fiscal years ended December 31, 2002-2004
by Mr. McKinnish, the Company’s Chief Executive Officer, and by each of
the four remaining most highly paid executive officers who served as executive
officers during 2004:

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Long-Term Compensation

  Awards

  	
   

  	
   

  	
   

  
	
  Name and

  Principal Position

  	
   

  	
  Year

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Restricted

  Stock

  Award(s) ($)

  	
   

  	
  Securities

  Underlying

  Options (#)

  	
   

  	
  All Other

  Compensation($) (2)

  	
   

  
	
  Annual compensation(1)

  
	
  Salary($)

  	
   

  	
  Bonus($)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Stephen P.
  Munn 

  	
   

  	
  2004

  	
   

  	
  $

  	
  480,000

  	
   

  	
  $

  	
  100,000

  	
   

  	
  —

  	
   

  	
  5,000

  	
   

  	
  $

  	
  8,667

  	
   

  
	
  Chairman

  	
   

  	
  2003

  	
   

  	
  480,000

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  9,333

  	
   

  
	
   

  	
   

  	
  2002

  	
   

  	
  462,250

  	
   

  	
  200,000

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  7,467

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Richmond D.
  McKinnish 

  	
   

  	
  2004

  	
   

  	
  $

  	
  800,000

  	
   

  	
  $

  	
  850,000

  	
   

  	
  —

  	
   

  	
  100,000

  	
   

  	
  $

  	
  10,667

  	
   

  
	
  President
  and Chief 

  	
   

  	
  2003

  	
   

  	
  725,000

  	
   

  	
  800,000

  	
   

  	
  —

  	
   

  	
  100,000

  	
   

  	
  9,333

  	
   

  
	
  Executive
  Officer

  	
   

  	
  2002

  	
   

  	
  685,000

  	
   

  	
  600,000

  	
   

  	
  —

  	
   

  	
  100,000

  	
   

  	
  7,467

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Carol P. Lowe(3) 

  	
   

  	
  2004

  	
   

  	
  $

  	
  188,333

  	
   

  	
  $

  	
  200,000

  	
   

  	
  $

  	
  91,665

  	
  (5)

  	
  12,000

  	
   

  	
  $

  	
  8,667

  	
   

  
	
  Vice
  President and 

  	
   

  	
  2003

  	
   

  	
  137,800

  	
   

  	
  75,000

  	
   

  	
  —

  	
   

  	
  2,000

  	
   

  	
  7,512

  	
   

  
	
  Chief
  Financial Officer

  	
   

  	
  2002

  	
   

  	
  125,583

  	
   

  	
  50,000

  	
   

  	
  —

  	
   

  	
  1,000

  	
   

  	
  6,800

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Kevin G.
  Forster 

  	
   

  	
  2004

  	
   

  	
  $

  	
  210,000

  	
   

  	
  $

  	
  200,000

  	
   

  	
  $

  	
  122,220

  	
  (5)

  	
  5,000

  	
   

  	
  $

  	
  10,667

  	
   

  
	
  President,
  Asia-Pacific

  	
   

  	
  2003

  	
   

  	
  187,000

  	
   

  	
  115,000

  	
   

  	
  —

  	
   

  	
  7,500

  	
   

  	
  9,333

  	
   

  
	
   

  	
   

  	
  2002

  	
   

  	
  177,000

  	
   

  	
  80,000

  	
   

  	
  —

  	
   

  	
  1,000

  	
   

  	
  17,662

  	
  (4)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Steven J.
  Ford

  	
   

  	
  2004

  	
   

  	
  $

  	
  230,000

  	
   

  	
  $

  	
  165,000

  	
   

  	
  $

  	
  152,775

  	
  (5)

  	
  5,000

  	
   

  	
  $

  	
  8,667

  	
   

  
	
  Vice
  President, Secretary

  	
   

  	
  2003

  	
   

  	
  200,000

  	
   

  	
  115,000

  	
   

  	
  —

  	
   

  	
  15,000

  	
   

  	
  8,000

  	
   

  
	
  and General
  Counsel

  	
   

  	
  2002

  	
   

  	
  190,000

  	
   

  	
  100,000

  	
   

  	
  —

  	
   

  	
  6,000

  	
   

  	
  6,800

  	
   

  

 

 

(1)          Includes amounts earned
in fiscal year.

(2)          For the executive
officers other than Mr. Forster, includes only contributions by the
Company to the Company 401(k) plan.

(3)          Mrs. Lowe was
appointed Vice President and Chief Financial Officer, effective May 6,
2004.

(4)          Includes the following
contributions by the Company to the Company 401(k) plan: (i) 2002 -
$6,800, (ii) 2003 - $9,333, and (iii) 2004 - $10,667, and a $10,862
cost of living reimbursement attributable to overseas assignment in 2002.

(5)          Mrs. Lowe holds
1,500 restricted Shares which are valued at $97,300 on December 31,
2004.  Mr. Forster holds 2,000
restricted Shares which are valued at $129,840 on December 31, 2004.  Mr. Ford holds 2,500 restricted Shares
which are valued at $162,300 on December 31, 2004.  All of the restricted Shares were awarded on April 20,
2004 and vest on December 31, 2006. 
During the period these Shares remain restricted, Mrs. Lowe and Messrs. Forster
and Ford will receive any dividend declared on such Shares.

 

 

In addition, at its February 1, 2005 meeting, the
Compensation Committee approved the following annual salaries for 2005 for the
named executive officers:  (i) Stephen
P. Munn - $525,000, (ii) Richmond D. McKinnish - $850,000, (iii) Carol
P. Lowe - $250,000, (iv) Kevin G. Forster - $240,000, and (v) Steven
J. Ford - $245,000.  The Compensation
Committee also awarded the named executive officers options to acquire shares
of the Company’s common stock (the “Shares”) and restricted Shares as follows: (i) Stephen
P. Munn – 10,000 options, (ii) Richmond D. McKinnish – 70,000 options and
10,000 restricted Shares, (iii) Carol P. Lowe – 8,000 options and 1,000
restricted Shares, (iv) Kevin G. Forster – 8,000 options and 1,000
restricted Shares, and (v) Steven J. Ford – 8,000 options and 1,000
restricted Shares.  The options were
awarded at an option price of $64.18, which was equal to the closing market
price of the Shares on the date of grant. 
All options expire ten (10) years following the date of grant.  Each restricted Share was valued at $64.18,
which was equal to the closing market price of the Share on the date of
grant.  The restricted Shares vest on December 31,
2007.  During the period the Shares
remain restricted, and Mrs. Lowe and Messrs. McKinnish, Forster and
Ford will receive any dividend declared on such Shares.

 

The pension plans of the Company and its subsidiaries
provide defined benefits including a cash balance formula whereby participants
accumulate a cash balance benefit based upon a percentage of compensation
allocation made annually to the participants’ cash balance accounts.  The allocation percentage ranges from 2% to
7% and is determined on the basis of each participant’s years of service.  The cash balance account is further credited
with interest annually.  The interest
credit is based on the One Year Treasury Constant Maturities as published in
the Federal Reserve Statistical Release over the one year period ending on the December 31st
immediately preceding the applicable plan year (with a minimum of 4.00%).  The interest rate for the plan year ending December 31,
2004 was 4.00%.  Compensation covered by
the pension plan of the Company and its subsidiaries includes total cash
remuneration in the form of salaries and bonuses, including amounts deferred
under Sections 401(k) and 125 of the Internal Revenue Code of 1986, as amended
(the “Code”).

 

The annual annuity benefit payable starting
at normal retirement age (age 65 with five years of service) as accrued through
December 31, 2004 under the pension plans of the Company and its
subsidiaries for the executives named in the Summary Compensation table were as
follows:  Mr. Munn, $400,000; Mr. McKinnish,
$435,577; Mrs. Lowe, $3,588; Mr. Forster, $29,133; and Mr. Ford,
$21,141.

 

Section 401(a)(17) of the Code currently
places a limit of $205,000 on the amount of annual compensation covered under a
qualified pension plan such as the one maintained by the Company (the “Retirement
Plan”).  Under an unfunded supplemental
pension plan maintained by the Company, the Company will make payments as
permitted by the Code to plan participants in an amount equal to the
difference, if any, between the benefits that would have been payable under the
Retirement Plan without regard to the limitations imposed by the Code and the
actual benefits payable under the Retirement Plan as so limited.

 

Each named executive officer participates in
the Company’s executive severance program providing for benefits in the event
of a “change of control” (defined generally as an acquisition of twenty percent
(20%) or more of the outstanding voting shares of the Company or a change in
the majority of the Company’s Board of Directors).  In the event of a termination of the named
executive officer’s employment within three (3) years of a “change in
control,” the officer is entitled to three (3) years’ compensation,
including bonus, retirement benefits equal to the benefits the officer would
have received had the officer completed three additional years of employment,
continuation of all life, accident, health, savings and other fringe benefits
for three years, and relocation assistance. 
A copy of the Company’s form Executive Severance Agreement is on file as
an Exhibit to the Company’s Annual Report on Form 10-K for the
year-ended December 31, 1990 and is incorporated herein by reference.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00079-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00079-of-00352.parquet"}]]