**Exhibit10.45**

 

**AMENDMENTNO. 1 TO**

**FIRSTAMENDED AND RESTATED**

**SUBORDINATIONAND INTERCREDITOR AGREEMENT**

 

THIS AMENDMENT NO. 1 TO SUBORDINATION ANDINTERCREDITOR AGREEMENT, dated as of January 29, 2004, is by and betweenPETER L. HAUSER, a resident of the State of Minnesota, and his successors heirsand permitted assigns (“Hauser”), PKM PROPERTIES, LLC, a Minnesotalimited liability company, and its endorsees, successors and assigns (“PKM”),and DRAFT CO., a Minnesota limited liability partnership, and its endorsees,successors and assigns (“Draft”).

 

**RECITALS:**

 

A.                                   Hauser, PKM and Draft are parties to thatcertain First Amended and Restated Subordination and Intercreditor Agreementdated as of November 24, 2003 (the “Amended Agreement”); and

 

B.                                     At the request of Borrower, Hauser, PKM andDraft desire to amend the Amended Agreement as provided herein, and on theterms and conditions of this Agreement; and

 

C.                                     Borrower agrees to accept and acknowledge theterms and conditions of this Agreement and agrees to be bound by and complywith 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 1.  Definitions, Rules of Construction.**

 

Except as otherwise defined in this Agreement, allcapitalized terms used herein shall have the definitions and be subject to therules of construction provided in the Amended Agreement.

 

**Section 2.  Amendment of Intercreditor Agreements**.

 

Section 20(a) is hereby deleted in itsentirety.

 

**Section 3.  Extensionof Non-default maturity Date of Borrower’s Indebtedness to Hauser and PKM**.

 

Hauser and PKM agree as follows:

 

(a)                                  The non-default maturity date of indebtednessof Borrower to Hauser pursuant to the terms of the Hauser Subordinated Note ishereby extended to June 30, 2005. The Borrower agrees to execute and deliver such documents andinstruments as may be necessary or desirable, if any, in the judgment ofHauser, to provide for such new non-default maturity date.

 

(b)                                 The non-default maturity date of indebtednessof Borrower to PKM under the terms of the January Credit Agreement, theMay Credit Agreement and the November Credit Agreement is hereby extendedto June 30, 2005.  Borrower agreesto execute and deliver such

 

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documents and instruments asmay be necessary or desirable, if any, in the judgment of PKM, to provide forsuch new non-default maturity date.

 

The indebtedness of Borrower to Draft, except as amended by thisAgreement, shall remain unchanged and the non-default maturity date of theDraft Subordinated Note shall continue to be June 30, 2004.

 

**Section 4.  Issuanceof Additional Borrower Warrants**.

 

In consideration of the agreement of Hauserto extend the non-default maturity date of the Hauser Subordinated Note, andthe agreement of PKM to extend the non-default maturity date of theJanuary Credit Agreement, the May Credit Agreement and theNovember Credit Agreement, to June 30, 2005, Borrower agrees to issueto Hauser and PKM additional warrants to purchase common stock of Borrower, asfollows:

 

(a)                                  Borrower will issue warrants to purchase136,000 shares of common stock to Hauser (the “Additional Hauser Warrants”).

 

(b)                                 Borrower agrees to issue warrants to purchase330,933 shares of common stock to PKM (the “Additional PKM Warrants”).

 

(c)                                  The Additional Hauser Warrants and AdditionalPKM Warrants shall have a warrant exercise price of Two Dollars ($2.00) pershare.  Except for the number of shares,exercise price and exercise period, such warrants shall be in the form ofwarrants issued to Hauser and PKM for 380,357 shares and 320,178 shares,respectively, on July 1, 2003. Each of such warrants shall have a duration of 10 years.

 

**Section 5.  Effectof Amendment**.

 

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

 

**Section 6.**  **Conditions Precedent**

 

This parties’ obligations under thisagreement shall only be effective if: (1) the Company receives at least$485,000 in new equity proceeds on or before February 6, 2004, (2) thisAgreement is duly executed and delivered on behalf of each of PKM, Hauser andDraft, and (3) the Borrower’s obligations under this Agreement are approved bythe Borrower’s board of directors in compliance with Minn. Stat. § 302A.255,Subd. 1(c).

 

IN WITNESS WHEREOF, this Amendment No. 1 toFirst Amended and Restated Subordination and Intercreditor Agreement has beensigned as of the date first set forth above.

 

**(Thesignature page follows.)**

 

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|   | /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      |
|   |                                 |
|   |                                 |
|   | DRAFT  CO.                           |
|   |                                 |
|   |                                 |
|   | By:                                  | /s/  Ford J. Nicholson |
|   | Name:                                | Ford  J. Nicholson |
|   | Its:                                 | President |
|   |                                 |
|   | Address  for Notice:                 |
|   | Draft  Co.                           |
|   | 336  Robert Street North, Suite 1220 |
|   | St.  Paul, MN 55101                  |
|        |                                      |  |  |  |

 

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**ACCEPTANCEAND ACKNOWLEDGMENT**

** **

Borrower hereby accepts and acknowledges receipt ofa copy of, the foregoing Amendment No. 1 to First Amended and RestatedSubordination and Intercreditor Agreement and agrees to be bound by and complywith the provisions thereof, and reaffirms its Acceptance and Acknowledgementof the terms and conditions of the First Amended and Restated Subordination andIntercreditor Agreement.

 
|   | MEDICALCV, INC. |
|--------|-----------------|
|   |            |
|   |            |
|   | By:             | /s/ Jules L. Fisher |
|   | Name:           | Jules L. Fisher |
|   | Its:            | Chief Financial Officer |
|        |                 |  |  |

 

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