** **

**Exhibit10.1**

 

**AMENDMENT NO. 2 TO****FIRST AMENDED AND RESTATED****SUBORDINATION AND INTERCREDITOR AGREEMENT**

 

 

 

THIS AMENDMENT NO. 2 TOSUBORDINATION AND INTERCREDITOR AGREEMENT, dated as of April 16, 2004, is byand between PETER L. HAUSER, a resident of the State of Minnesota, and hissuccessors heirs and permitted assigns (“Hauser”), PKM PROPERTIES, LLC,a Minnesota limited liability company, and its endorsees, successors andassigns (“PKM”), and DRAFT CO., a Minnesota limited liabilitypartnership, and its endorsees, successors and assigns (“Draft”).

 

**RECITALS:**

 

A.            Hauser, PKM and Draft are parties to that certain FirstAmended and Restated Subordination and Intercreditor Agreement dated as ofNovember 24, 2003, as amended by that certain Amendment No. 1 to First Amendedand Restated Subordination and Intercreditor Agreement dated as of January 29,2004 (the “Amended Agreement”); and

 

B.  Medical CV, Inc., a Minnesota corporation(the “Borrower”) is, or may hereafter become, indebted to PKM as aresult of the advance of monies and other extensions of credit by PKM to theBorrower under a Discretionary Credit Agreement dated as of April 16, 2004 (asthe same may have been or may be amended, restated or otherwise modified fromtime to time hereafter, the “April 2004 Discretionary Credit Agreement”).

 

C.            Hauser, PKM and Draft desire to amend the AmendedAgreement as provided herein, and on the terms and conditions of thisAgreement; and

 

**AGREEMENTS:**

 

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

 

**Section 1.  Definitions, Rules of Construction.**

 

Except as otherwise definedin this Agreement, all capitalized terms used herein shall have the definitionsand be subject to the rules of construction provided in the Amended Agreement.

 

**Section2. **The following definitioncontained in Section 1(a) of the Amended Agreement is hereby amended in itsentirety to read as follows:

 

“Senior Debt” shall mean all liabilities and obligations of theBorrower to PKM howsoever created, arising or evidenced, whether direct orindirect, absolute or contingent, due or to become due, now existing orhereafter arising or incurred, including, without limitation, all of theBorrower’s obligations to PKM under the January Credit Agreement, the MayCredit Agreement, the November Credit Agreement, the Lease, the April 2004Discretionary Credit Agreement, and any note or notes executed by the Borrowerthereunder, and all other obligations under any other agreement between theBorrower and PKM now or hereafter in effect, and also including, withoutlimitation, any and all interest accruing on any of the Senior Debt after thecommencement of any 

 

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proceedings referred to in Section 5below, notwithstanding any provision or rule of law which might restrict therights of PKM, as against the Borrower or anyone else, to collect suchinterest; provided, however, that (1) Senior Debt shall not include anyobligations arising solely under the May Discretionary Credit Note, theNovember Discretionary Credit Note, or any other instrument given by theBorrower in favor of PKM after the date hereof to the extent it is not anamendment, modification, supplement, restatement or replacement of anotherinstrument evidencing then currently existing Senior Debt, (2) for purposeshereof, Senior Debt shall include no more than $943,666 of principal under theJanuary Discretionary Credit Agreement and no more than $250,000 of principalunder the April 2004 Discretionary Credit Agreement, and (3) in order to beconsidered Senior Debt hereunder as of any particular time, obligations withrespect to the Lease must be due and payable at such time (withoutacceleration).

 

**Section 3.  Effect ofAmendment**.

 

 

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

 

 

**(The signature page follows.)**

 

 

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IN WITNESS WHEREOF, this Amendment No. 2 to First Amended and RestatedSubordination and Intercreditor Agreement has been signed as of the date firstset forth above.

 

 

 

 

 
|   | /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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**ACCEPTANCE AND ACKNOWLEDGMENT**

 

 

Borrower hereby accepts andacknowledges receipt of a copy of, the foregoing Amendment No. 2 to FirstAmended and Restated Subordination and Intercreditor Agreement and agrees to bebound by and comply with the provisions thereof, and reaffirms its Acceptanceand Acknowledgement of the terms and conditions of the First Amended andRestated Subordination and Intercreditor Agreement.

 

 

 
|   | MEDICALCV,  INC. |
|--------|------------------|
|   |             |
|   |             |
|   | By:              |   | /s/  Blair P. Mowery |
|   | Name:            | Blair  P. Mowery |
|   | Title:           | President |
|        |                  |  |  |  |

 

 

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