Document:

EXHIBIT 10.6

 

PROMISSORY
NOTE

$60,000

Inver
Grove Heights, Minnesota

December 11, 2002

FOR VALUE RECEIVED, MedicalCV, Inc., a Minnesota
corporation (“Maker”), promises to pay to the order of Allan R. Seck (“Lender”), at
9408 Olympia Drive, Eden Prairie, Minnesota, 55347, any other place
subsequently designated in writing by the holder hereof, the principal sum of SIXTY THOUSAND DOLLARS ($60,000) together
with interest on the unpaid principal balance from the date hereof at a fixed
rate per annum of six percent (6%) (computed on the basis of actual days
elapsed in a year of 360 days).

THE ENTIRE UNPAID PRINCIPAL BALANCE OF THIS NOTE, PLUS ALL ACCRUED
INTEREST HEREON, SHALL BE DUE AND PAYABLE IN FULL UPON FOURTEEN DAYS AFTER THE
DATE HEREOF.

Maker may prepay this Note in whole or in part without premium or
penalty.  Payments on this Note shall
first be applied to accrued interest and thereafter in reduction of principal.

Maker hereby waives demand, presentment for payment, notice of
non-payment, protest and notice of protest hereon, agrees that when or at any
time after this Note becomes due, the holder hereof may offset or charge this
Note against any account maintained by Maker with the holder hereof, and agrees
to pay, in the event of a default hereon, all costs of collection, including
reasonable attorneys’ fees, whether or not suit is commenced.

This Note shall be governed by, interpreted,
construed and enforced in accordance with the internal laws of the State of
Minnesota.

	
  MAKER:

  	
  MedicalCV,
  Inc., a Minnesota corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Blair P. Mowery

  
	
   

  	
   

  	
  Blair P. Mowery

  President and Chief Executive

  OfficerEXHIBIT 10.7

 

CHANGE IN TERMS AGREEMENT

 

	
  Principal $2,500,000.00

  	
  Loan Date 

  11-23-2002

  	
  Maturity 

  02-23-2003

  	
  Loan No. 

  9001

  	
  Call/Coll

  	
  Account 

  5297745

  	
  Officer 

  M3Y

  	
  Initials

  
	
  References
  in the shaded area are for Lender’s use only and do not limit the applicability
  of this document to any particular loan or item.  Any item above containing “* * *” has been omitted due to text
  length limitations.

  

 

	
  Borrower:

  	
  MEDICAL
  CV, INC. 

  9724 S ROBERT TRL 

  INVER GROVE HEIGHTS, MN 55077

  	
   

  	
  Lender:

  	
  ASSOCIATED
  BANK MINNESOTA, 

  NATIONAL ASSOCIATION 

  1801 RIVERSIDE AVENUE 

  MINNEAPOLIS, MN 55454

  	
   

  

 

 

 

Principal
Amount:  $2,500,000.00       Interest
Rate:  6.500%       Date of
Agreement:  November 23, 2002

DESCRIPTION OF EXISTING INDEBTEDNESS.  PROMISSORY NOTE DATED NOVEMBER 23, 1999
IN THE ORIGINAL AMOUNT OF $2,500,000.00.

DESCRIPTION OF CHANGE IN
TERMS.  EXTEND MATURITY DATE.

PROMISE TO PAY, MEDICAL CV, INC. (“Borrower”)
promises to pay to ASSOCIATED BANK MINNESOTA, NATIONAL ASSOCIATION (“Lender”),
or order, in lawful money of the United States of America, the principal amount
of Two Million Five Hundred Thousand & 00/100 Dollars ($2,500,000.00) or so
much as may be outstanding, together with interest at the rate of 6.500% per
annum on the unpaid outstanding principal balance of each advance.  Interest shall be calculated from the date
of each advance until repayment of each advance.

PAYMENT.  Borrower will pay this loan in one payment
of all outstanding principal plus all accrued unpaid interest on
February 23, 2003.  In addition, Borrower
will pay regular monthly payments of all accrued unpaid interest due as of each
payment date, beginning December 23, 2002, with all subsequent interest
payments to be due on the same day of each month after that.  Interest on this Agreement is computed on a
365/360 simple interest basis; that is, by applying the ratio of the annual
interest rate over a year of 360 days, multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal
balance is outstanding.  Borrower will
pay Lender at Lender’s address shown above or at such other place as Lender may
designate in writing.

PREPAYMENT.  Borrower agrees that all loan fees and other
prepaid finance charges are earned fully as of the date of the loan and will
not be subject to refund upon early payment (whether voluntary or as a result
of default), except as otherwise required by law.  Except for the foregoing, Borrower may pay without penalty all or
a portion of the amount owed earlier than it is due.  Earlier payments will not, unless agreed to by Lender in writing,
relieve Borrower or Borrower’s obligation to continue to make payments of
accrued unpaid interest.  Rather, early
payments will reduce the principal balance due.  Borrower agrees not to send Lender payments marked “paid in
full,” “without recourse,” or similar language.  If Borrower sends such a payment, Lender may accept it without
losing any of Lender’s rights under this Agreement, and Borrower will remain
obligated to pay any further amount owed to Lender.  All written communications concerning disputed amount, including
Borrower will remain obligated to pay any further amount owed to Lender.  All written communications concerning
disputed amounts, including any check or other payment instrument that indicates
that the payment constitutes “payment in full” of the amount owed or that is
tendered with other conditions or limitations or as full satisfaction of a
disputed amount must be mailed or delivered to:  ASSOCIATED BANK MINNESOTA, NATIONAL ASSOCIATION,
1801 RIVERSIDE AVENUE, MINNEAPOLIS, MN 
55454.

 

 

 

LATE CHARGE.  If a payment is 10 days or more late,
Borrower will be charged 5.000% of the unpaid portion of the regularly
scheduled payment.

INTEREST AFTER DEFAULT.  Upon default, including failure to pay upon
final maturity, Lender, at its option, may, if permitted under applicable law,
increase the interest rate on this Agreement 5.000 percentage points.  The interest rate will not exceed the
maximum rate permitted by applicable law.

DEFAULT.  Each of the following shall constitute an
Event of Default under this Agreement:

Payment Default.  Borrower fails to make any payment when due
under the Indebtedness.

Other Defaults.  Borrower fails to comply with or to perform
any other term, obligation, covenant or condition contained in this Agreement
or in any of the Related Documents or to comply with or to perform any term,
obligation, covenant or condition contained in any other agreement between
Lender and Borrower.

Default in Favor of Third Parties.  Borrower defaults under any loan, extension
of credit, security agreement, purchase or sales agreement, or any other
agreement, in favor of any other creditor or person that may materially affect
any of Borrower’s property or Borrower’s ability to perform Borrower’s
obligations under this Agreement or any of the Related Documents.

False Statements.  Any warranty, representation or statement
made or furnished to Lender by Borrower or on Borrower’s behalf under this
Agreement or the Related Documents is false or misleading in any material
respect, either now or at the time made or furnished or becomes false or
misleading at any time thereafter.

Insolvency.  The dissolution or termination of Borrower’s
existence as a going business, the insolvency of Borrower, the appointment of a
receiver for any part of Borrower’s property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any proceeding
under any bankruptcy or insolvency laws by or against Borrower.

Creditor or Forfeiture Proceedings.  Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Borrower or by any governmental agency against
any collateral securing the Indebtedness. 
This includes a garnishment of any of Borrower’s accounts, including
deposit accounts, with Lender.  However,
this Event of Default shall not apply if there is a good faith dispute by
Borrower as to the validity or reasonableness of the claim which is the basis
of the creditor or forfeiture proceeding and if Borrower gives Lender written
notice of the creditor or forfeiture proceeding and deposits with Lender monies
or a surety bond for the creditor or forfeiture proceeding, in an amount
determined by Lender, in its sole discretion, as being an adequate reserve or
bond for the dispute.

Events Affecting Guarantor.  Any of the preceding events occurs with
respect to any Guarantor of any of the Indebtedness or any Guarantor dies or
becomes incompetent, or revokes or disputes the validity of, or liability
under, any Guaranty of the Indebtedness evidenced by this Note.  In the event of a death, Lender, at its
option, may, but shall not be required to, permit the Guarantor’s estate to
assume unconditionally the obligations arising under the guaranty in a manner
satisfactory to Lender, and, in doing so, cure any Event of Default.

 

 

 

Change in Ownership.  Any change in ownership of twenty-five
percent (25%) or more of the common stock of Borrower.

Adverse Change.  A material adverse change occurs in
Borrower’s financial condition, or Lender believes the prospect of payment or
performance of the Indebtedness is impaired.

Cure Provisions.  If any default, other than a default in
payment is curable and if Borrower has not been given a notice of a breach of
the same provision of this Agreement within the preceding twelve (12) months,
it may be cured (and no event of default will have occurred) if Borrower, after
receiving written notice from Lender demanding cure of such default:  (1) cures the default within thirty
(30) days; or (2) if the cure requires more than thirty (30) days,
immediately initiates steps which Lender deems in Lender’s sole discretion to
be sufficient to cure the default and thereafter continues and completes all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practical.

LENDER’S RIGHTS.  Upon default, Lender may declare the entire
unpaid principal balance on this Agreement and all accrued unpaid interest immediately
due, and then Borrower will pay that amount.

ATTORNEYS’ FEES; EXPENSES.  Lender may hire or pay someone else to help
collect this Agreement if Borrower does not pay.  Borrower will pay Lender that amount.  This includes, subject to any limits under applicable law,
Lender’s reasonable attorneys’ fees and Lender’s legal expenses, whether or not
there is a lawsuit, including reasonable attorneys’ fees, expenses for
bankruptcy proceedings (including efforts to modify or vacate any automatic
stay or injunction), and appeals.  If
not prohibited by applicable law, Borrower also will pay any court costs, in
addition to all other sums provided by law.

GOVERNING LAW.  This agreement will be governed by,
construed and enforced in accordance with federal law and the laws of the State
of Minnesota.  This Agreement has been
accepted by Lender in the State of Minnesota.

RIGHT OF SETOFF.  To the extent permitted by applicable law,
Lender reserves a right of setoff in all Borrower’s accounts with Lender
(whether checking, savings, or some other account).  This includes all accounts Borrower holds jointly with someone
else and all accounts Borrower may open in the future.  However, this does not include any IRA or
Keogh accounts, or any trust accounts for which setoff would be prohibited by
law.  Borrower authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
Indebtedness against any and all such accounts, and, at Lender’s option, to
administratively freeze all such accounts to allow Lender to protect Lender’s
charge and setoff rights provided in this paragraph.

LINE OF CREDIT.  This Agreement evidences a revolving line of
credit.  Advances under this Agreement,
as well as directors for payment from Borrower’s accounts, may be requested
orally or in writing by Borrower or by a authorized person.  Lender may, but need not, require that all
oral requests be confirmed in writing. 
Borrower agrees to be liable for all sums either:  (A) advanced in accordance with the
instructions of an authorized person or (B) credited to any of Borrower’s
accounts with Lender.  The unpaid
principal balance owing on this Agreement at any time may be evidenced by
endorsements on this Agreement or by Lender’s internal records, including daily
computer print-outs.  Lender will have
no obligation to advance funds under this Agreement if:  (A) Borrower or any guarantor is in
default under the terms of this Agreement or any agreement  that Borrower or any guarantor has with
Lender, including any agreement made in connection with the signing of this
Agreement; (B) Borrower or any guarantor ceased doing business or is
insolvent; (C) any guarantor seeks, claims or otherwise attempts to limit,
modify or revoke such guarantor’s guarantee of this Agreement or any other loan
with Lender; (D) Borrower has applied funds provided pursuant to this
Agreement for purposes other than those authorized by Lender; or
(E) Lender in good faith believes itself insecure.

 

 

 

CONTINUING VALIDITY.  Except as expressly changed by this
Agreement, the terms of the original obligation or obligations, including all
agreements evidenced or securing the obligation(s), remain unchanged and in
full force and effect.  Consent by
Lender to this Agreement does not waive Lender’s right to strict performance of
the obligation(s) as changed, nor obligate Lender to make any future change in
terms.  Nothing in this Agreement will
constitute a satisfaction of the obligation(s).  It is the intention of Lender to retain as liable parties all
makers and endorsers of the original obligation(s), including accommodate
parties, unless a party is expressly released by Lender in writing.  Any maker or endorser, including
accommodation makers, will not be released by virtue of this Agreement.  If any person who signed the original
obligation does not sign this Agreement below, then all persons signing below
acknowledge that this Agreement is given conditionally, based on the
representation to Lender that the non-signing party consents to the changes and
provisions of this Agreement or otherwise will not be released by it.  This waiver applies not only to any initial
extension, modification or release, but also to all such subsequent actions.

LOAN AGREEMENT.  An exhibit, titled “Loan Agreement,” is
attached to this note and by this reference is made a part of this note just as
if all the provisions, terms and conditions of the Loan Agreement had been
fully set forth in this note.

SUCCESSORS AND ASSIGNS.  Subject to any limitations stated in this
Agreement on transfer of Borrower’s interest, this Agreement shall be binding
upon and inure to the benefit of the parties, their successors and
assigns.  If ownership of the Collateral
becomes vested in a person other than Borrower, Lender, without notice to
Borrower, may deal with Borrower’s successors with reference to this Agreement
and the Indebtedness by way of forbearance or extension without releasing
Borrower form the obligations of this Agreement or liability under the
Indebtedness.

MISCELLANEOUS PROVISIONS.  Lender may delay or forgo enforcing any of
its rights or remedies under this Agreement without losing them.  Borrower and any other person who signs,
guarantees or endorses this Agreement, to the extent allowed by law, waive
presentment, demand for payment, and notice of dishonor.  Upon any change in the terms of this
Agreement, and unless otherwise expressly stated in writing, no party who signs
this Agreement whether as maker, guarantor, accommodation maker or endorser,
shall be released from liability.  All
such parties agree that Lender may renew or extend (repeatedly and for any
length of time) this loan or release any party or guarantor or collateral; or
impair, fail to realize upon or perfect Lender’s security interest in the
collateral; and take any other action deemed necessary by Lender without the
consent of or notice to anyone.  All
such parties also agree that Lender may modify this loan without the consent of
or notice to anyone other than the party with whom the modification is
made.  The obligations under this
Agreement are joint and several.

SECTION DISCLOSURE.  This loan is made under Minnesota Statutes,
Section 47.59.

 

 

 

 

PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD
ALL THE PROVISIONS OF THIS AGREEMENT. 
BORROWER AGREES TO THE TERMS OF THIS AGREEMENT.

BORROWER:

 

	
  By

  	
    /s/
  Jules Fisher

  
	
   

  	
  JULES FISHER, CFO of MEDICAL CV,
  INC.

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