EXHIBIT 10.3

UNCONDITIONAL GUARANTY

This continuing Unconditional Guaranty (“Guaranty”) is entered into as of
February 29, 2008, by each of the following parties (each, jointly and
severally, a “Guarantor”), in favor of Silicon Valley Bank (“Bank”): 3F
Therapeutics, Inc., a Delaware corporation, and ATS Acquisition Corp., a
Minnesota corporation.

Recitals

A. Bank and ATS Medical, Inc. (“Borrower”) have entered into that certain Loan
and Security Agreement dated as of July 28, 2004 (as amended, restated, or
otherwise modified from time to time, the “Loan Agreement”) pursuant to which
Bank has agreed to make certain advances of money and to extend certain
financial accommodations to Borrower (collectively, the “Loans”), subject to the
terms and conditions set forth therein. Capitalized terms used but not otherwise
defined herein shall have the meanings given them in the Loan Agreement.

B. In consideration of the Amendment to Loan and Security Agreement dated
June 18, 2007 between Bank and Borrower, and the agreement of Bank to make the
Loans to Borrower under the Loan Agreement, each Guarantor is willing to
guaranty the full payment and performance by Borrower of all of its obligations
thereunder and under the other Loan Documents, all as further set forth herein.

C. Guarantors are affiliates of Borrower and will obtain substantial direct and
indirect benefit from the Loans made by Bank to Borrower under the Loan
Agreement.

Now, Therefore, for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, and intending to be legally bound, each Guarantor
hereby represents, warrants, covenants and agrees as follows:

Section 1. Guaranty.

1.1 Unconditional Guaranty of Payment. In consideration of the foregoing, each
Guarantor hereby irrevocably, absolutely and unconditionally guarantees to Bank
the prompt and complete payment and performance when due (whether at stated
maturity, by acceleration or otherwise) of all Obligations. Each Guarantor
agrees that it shall execute such other documents or agreements and take such
action as Bank shall reasonably request to effect the purposes of this Guaranty.

1.2 Separate Obligations. These obligations are independent of Borrower’s
obligations and separate actions may be brought against each or any number of
the Guarantors (whether action is brought against Borrower or whether Borrower
is joined in the action).

Section 2. Representations and Warranties.

Each Guarantor hereby represents and warrants that:

(a) Such Guarantor (i) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its formation; (ii) is duly
qualified to do business and is in good standing in every jurisdiction where the
nature of its business requires it to be so qualified (except where the failure
to so qualify would not have a material adverse effect on Guarantor’s condition,
financial or otherwise, or on Guarantor’s ability to pay or perform the
obligations hereunder); and (iii) has all requisite power and authority to
execute and deliver this Guaranty and each Loan Document executed and delivered
by Guarantor pursuant to the Loan Agreement or this Guaranty and to perform its
obligations thereunder and hereunder.

(b) The execution, delivery and performance by such Guarantor of this Guaranty
(i) are within Guarantor’s powers and have been duly authorized by all necessary
action; (ii) do not contravene Guarantor’s charter documents or any law or any
contractual restriction binding on or affecting Guarantor or by which
Guarantor’s property may be affected; (iii) do not require any authorization or
approval or other action by, or any notice to or filing with, any governmental
authority or any other Person under any indenture, mortgage, deed of trust,
lease, agreement or other instrument to which Guarantor is a party or by which
Guarantor or any of its property is bound, except such as have been obtained or
made; and (iv) do not result in the imposition or creation of any Lien upon any
property of Guarantor.

(c) This Guaranty is a valid and binding obligation of such Guarantor,
enforceable against Guarantor in accordance with its terms, except as the
enforceability thereof may be subject to or limited by bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws relating to or
affecting the rights of creditors generally.

(d) There is no action, suit or proceeding affecting such Guarantor pending or
threatened before any court, arbitrator, or governmental authority, domestic or
foreign, which may have a material adverse effect on the ability of Guarantor to
perform its obligations under this Guaranty.

(e) Such Guarantor’s obligations hereunder are not subject to any offset or
defense against Bank or Borrower of any kind.

(f) To ensure the legality, validity, enforceability or admissability into
evidence of this Guaranty in each of the jurisdictions in which such Guarantor
is incorporated or organized and any jurisdiction in which such Guarantor
conducts business, it is not necessary that (i) this Guaranty be filed or
recorded with any court or other authority in such jurisdiction, (ii) any other
filings, notices, authorizations, approvals be obtained or other actions taken,
or (iii) any stamp or similar tax be paid on or with respect to this Guaranty,
or, if any of the foregoing actions are necessary, they have been duly taken.

(g) Neither such Guarantor nor its property has any immunity from jurisdiction
of any court or from any legal process (whether through service or notice,
attachment prior to judgment, attachment in aid of execution, execution or
otherwise) under applicable law.

(h) The incurrence of such Guarantor’s obligations under this Guaranty will not
cause Guarantor to (i) become insolvent; (ii) be left with unreasonably small
capital for any business or transaction in which Guarantor is presently engaged
or plans to be engaged; or (iii) be unable to pay its debts as such debts
mature.

(i) Such Guarantor covenants, warrants, and represents to Bank that all
representations and warranties contained in this Guaranty shall be true at the
time of Guarantor’s execution of this Guaranty, and shall continue to be true so
long as this Guaranty remains in effect. Such Guarantor expressly agrees that
any misrepresentation or breach of any warranty whatsoever contained in this
Guaranty shall be deemed material.

Section 3. General Waivers. Each Guarantor waives:

(a) Any right to require Bank to (i) proceed against Borrower or any other
person; (ii) proceed against or exhaust any security or (iii) pursue any other
remedy. Bank may exercise or not exercise any right or remedy it has against
Borrower or any security it holds (including the right to foreclose by judicial
or nonjudicial sale) without affecting Guarantor’s liability hereunder.

(b) Any defenses from disability or other defense of Borrower or from the
cessation of Borrowers liabilities.

(c) Any setoff, defense or counterclaim against Bank.

(d) Any defense from the absence, impairment or loss of any right of
reimbursement or subrogation or any other rights against Borrower. Until
Borrower’s obligations to Bank have been paid, Guarantor has no right of
subrogation or reimbursement or other rights against Borrower.

(e) Any right to enforce any remedy that Bank has against Borrower.

(f) Any rights to participate in any security held by Bank.

(g) Any demands for performance, notices of nonperformance or of new or
additional indebtedness incurred by Borrower to Bank. Guarantor is responsible
for being and keeping itself informed of Borrower’s financial condition.

(h) The benefit of any act or omission by Bank which directly or indirectly
results in or aids the discharge of Borrower from any of the Obligations by
operation of law or otherwise.

(i) The benefit of California Civil Code Section 2815 permitting the revocation
of this Guaranty as to future transactions and the benefit of California Civil
Code Sections 2809, 2810, 2819, 2839, 2845, 2848, 2849, 2850, 2899 and 1432 with
respect to certain suretyship defenses.

Section 4. Real Property Security Waiver. Each Guarantor acknowledges that, to
the extent such Guarantor has or may have rights of subrogation or reimbursement
against Borrower for claims arising out of this Guaranty, those rights may be
impaired or destroyed if Bank elects to proceed against any real property
security of Borrower by non-judicial foreclosure. That impairment or destruction
could, under certain judicial cases and based on equitable principles of
estoppel, give rise to a defense by Guarantor against its obligations under this
Guaranty. Each Guarantor waives that defense and any others arising from Bank’s
election to pursue non-judicial foreclosure. Without limiting the generality of
the foregoing, each Guarantor expressly waives all rights, benefits and
defenses, if any, applicable or available to Guarantor under either California
Code of Civil Procedure Sections 580a or 726, which provide, among other things,
that the amount of any deficiency judgment which may be recovered following
either a judicial or nonjudicial foreclosure sale is limited to the difference
between the amount of any indebtedness owed and the greater of the fair value of
the security or the amount for which the security was actually sold. Without
limiting the generality of the foregoing, each Guarantor further expressly
waives all rights, benefits and defenses, if any, applicable or available to
Guarantor under either California Code of Civil Procedure Sections 580b,
providing that no deficiency may be recovered on a real property purchase money
obligation, or 580d, providing that no deficiency may be recovered on a note
secured by a deed of trust on real property if the real property is sold under a
power of sale contained in the deed of trust.

Section 5. Reinstatement. Notwithstanding any provision of the Loan Agreement to
the contrary, the liability of each Guarantor hereunder shall be reinstated and
revived and the rights of Bank shall continue if and to the extent that for any
reason any payment by or on behalf of any Guarantor or Borrower is rescinded or
must be otherwise restored by Bank, whether as a result of any proceedings in
bankruptcy or reorganization or otherwise, all as though such amount had not
been paid. The determination as to whether any such payment must be rescinded or
restored shall be made by Bank in its sole discretion; provided, however, that
if Bank chooses to contest any such matter at the request of any Guarantor, each
Guarantor agrees to indemnify and hold harmless Bank from all costs and expenses
(including, without limitation, reasonable attorneys’ fees) of such litigation.
To the extent any payment is rescinded or restored, each Guarantor’s obligations
hereunder shall be revived in full force and effect without reduction or
discharge for that payment.

Section 6. No Waiver; Amendments. No failure on the part of Bank to exercise, no
delay in exercising and no course of dealing with respect to, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law. This Guaranty may not be
amended or modified except by written agreement between Guarantor and Bank, and
no consent or waiver hereunder shall be valid unless in writing and signed by
Bank.

Section 7. Compromise and Settlement. No compromise, settlement, release,
renewal, extension, indulgence, change in, waiver or modification of any of the
Obligations or the release or discharge of Borrower from the performance of any
of the Obligations shall release or discharge any Guarantor from this Guaranty
or the performance of the obligations hereunder.

Section 8. Notice. Any notice or other communication herein required or
permitted to be given shall be in writing and may be delivered in person or sent
by facsimile transmission, overnight courier, or by United States mail,
registered or certified, return receipt requested, postage prepaid and addressed
as follows:

         
If to any or all Guarantors:
  c/o ATS Medical, Inc.
 
  3905 Annapolis Lane, Suite 105
 
  Plymouth, MN 55447
 
  Attention: ____________
 
  Fax: ________________
 
  (A notice or communication to ATS Medical, Inc.
 
  shall be deemed a notice or
 
  communication to all Guarantors)
If to Bank:
  Silicon Valley Bank
 
  301 Carlson Parkway, Suite 255
 
  Minnetonka, MN 55305
 
  Attn: Mr. Jay McNeil
 
  Fax: 952.475.8471
with copies to:
  Levy, Small & Lallas
 
  815 Moraga Drive
 
  Los Angeles, CA 90049-1633
 
  Attn: William Wippich
 
  Fax: 310.471.7990

or at such other address as may be substituted by notice given as herein
provided. Every notice, demand, request, consent, approval, declaration or other
communication hereunder shall be deemed to have been duly given or served on the
date on which personally delivered or sent by facsimile transmission or three
(3) Business Days after the same shall have been deposited in the United States
mail. If sent by overnight courier service, the date of delivery shall be deemed
to be the next Business Day after deposited with such service.

Section 9. Entire Agreement. This Guaranty and the Security Agreement
concurrently being entered into among Bank and the Guarantors constitute and
contain the entire agreement of the parties and supersede any and all prior and
contemporaneous agreements, negotiations, correspondence, understandings and
communications between each Guarantor and Bank, whether written or oral,
respecting the subject matter hereof.

Section 10. Severability. If any provision of this Guaranty is held to be
unenforceable under applicable law for any reason, it shall be adjusted, if
possible, rather than voided in order to achieve the intent of Guarantors and
Bank to the extent possible. In any event, all other provisions of this Guaranty
shall be deemed valid and enforceable to the full extent possible under
applicable law.

Section 11. Subordination of Indebtedness. Any indebtedness or other obligation
of Borrower now or hereafter held by or owing to any Guarantor is hereby
subordinated in time and right of payment to all obligations of Borrower to
Bank, except as such indebtedness or other obligation is expressly permitted to
be paid under the Credit Agreement; and such indebtedness of Borrower to such
Guarantor is assigned to Bank as security for this Guaranty, and if Bank so
requests shall be collected, enforced and received by such Guarantor in trust
for Bank and to be paid over to Bank on account of the Obligations of Borrower
to Bank, but without reducing or affecting in any manner the liability of any
Guarantor under the other provisions of this Guaranty. Any notes now or
hereafter evidencing such indebtedness of Borrower to such Guarantor shall be
marked with a legend that the same are subject to this Guaranty.

Section 12. Payment of Expenses. Each Guarantor shall pay, promptly on demand,
all Expenses incurred by Bank in defending and/or enforcing this Guaranty. For
purposes hereof, “Expenses” shall mean costs and expenses (including reasonable
fees and disbursements of any law firm or other external counsel and the
allocated cost of internal legal services and all disbursements of internal
counsel) for defending and/or enforcing this Guaranty (including those incurred
in connection with appeals or proceedings by or against any Guarantor under the
United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief).

Section 13. Assignment; Governing Law. This Guaranty shall be binding upon and
inure to the benefit of each Guarantor and Bank and their respective successors
and assigns, except that no Guarantor shall have the right to assign its rights
hereunder or any interest herein without the prior written consent of Bank,
which may be granted or withheld in Bank’s sole discretion. Any such purported
assignment by any Guarantor without Bank’s written consent shall be void. This
Guaranty shall be governed by, and construed in accordance with, the laws of the
State of California without regard to principles thereof regarding conflict of
laws.

Section 14. Joint and Several Liability. If more than one person has executed
this Guaranty, the term “Guarantor” as used herein shall be deemed to refer to
all and any one or more such persons and their obligations hereunder shall be
joint and several. Without limiting the generality of the foregoing, if more
than one person has executed this Guaranty, this Guaranty shall in all respects
be interpreted as though each person signing this Guaranty had signed a separate
Guaranty, and references herein to “other guarantors” or words of similar effect
shall include without limitation other persons signing this Guaranty.

Section 15. CHOICE OF LAW, VENUE, JURY TRIAL WAIVER AND JUDICIAL REFERENCE.
California law governs this Guaranty without regard to principles of conflicts
of law. Each Guarantor and Bank submit to the exclusive jurisdiction of the
State and Federal courts in Santa Clara County, California; provided, however,
that nothing in this Guaranty shall be deemed to operate to preclude Bank from
bringing suit or taking other legal action in any other jurisdiction to realize
on any collateral or any other security for the Obligations, or to enforce a
judgment or other court order in favor of Bank. Each Guarantor expressly submits
and consents in advance to such jurisdiction in any action or suit commenced in
any such court, and each Guarantor hereby waives any objection that it may have
based upon lack of personal jurisdiction, improper venue, or forum non
conveniens and hereby consents to the granting of such legal or equitable relief
as is deemed appropriate by such court. Each Guarantor hereby waives personal
service of the summons, complaints, and other process issued in such action or
suit and agrees that service of such summons, complaints, and other process may
be made by registered or certified mail addressed to such Guarantor at the
address set forth in Section 8 of this Guaranty and that service so made shall
be deemed completed upon the earlier to occur of such Guarantor’s actual receipt
thereof or three (3) days after deposit in the U.S. mails, proper postage
prepaid.

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH GUARANTOR AND BANK WAIVE
THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR
BASED UPON THIS GUARANTY OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT,
TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT
FOR BOTH PARTIES TO ENTER INTO THIS GUARANTY. EACH PARTY HAS REVIEWED THIS
WAIVER WITH ITS COUNSEL.

WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY, if the above waiver of the right to a trial
by jury is not enforceable, the parties hereto agree that any and all disputes
or controversies of any nature between them arising at any time shall be decided
by a reference to a private judge, mutually selected by the parties (or, if they
cannot agree, by the Presiding Judge of the Santa Clara County, California
Superior Court) appointed in accordance with California Code of Civil Procedure
Section 638 (or pursuant to comparable provisions of federal law if the dispute
falls within the exclusive jurisdiction of the federal courts), sitting without
a jury, in Santa Clara County, California; and the parties hereby submit to the
jurisdiction of such court. The reference proceedings shall be conducted
pursuant to and in accordance with the provisions of California Code of Civil
Procedure §§ 638 through 645.1, inclusive. The private judge shall have the
power, among others, to grant provisional relief, including without limitation,
entering temporary restraining orders, issuing preliminary and permanent
injunctions and appointing receivers. All such proceedings shall be closed to
the public and confidential and all records relating thereto shall be
permanently sealed. If during the course of any dispute, a party desires to seek
provisional relief, but a judge has not been appointed at that point pursuant to
the judicial reference procedures, then such party may apply to the Santa Clara
County, California Superior Court for such relief. The proceeding before the
private judge shall be conducted in the same manner as it would be before a
court under the rules of evidence applicable to judicial proceedings. The
parties shall be entitled to discovery which shall be conducted in the same
manner as it would be before a court under the rules of discovery applicable to
judicial proceedings. The private judge shall oversee discovery and may enforce
all discovery rules and order applicable to judicial proceedings in the same
manner as a trial court judge. The parties agree that the selected or appointed
private judge shall have the power to decide all issues in the action or
proceeding, whether of fact or of law, and shall report a statement of decision
thereon pursuant to the California Code of Civil Procedure § 644(a). Nothing in
this paragraph shall limit the right of any party at any time to exercise
self-help remedies, foreclose against collateral, or obtain provisional
remedies. The private judge shall also determine all issues relating to the
applicability, interpretation, and enforceability of this paragraph.

GUARANTORS:

     
3F THERAPEUTICS, INC.
By: /s/ Michael Dale
  ATS ACQUISITION CORP.
By: /s/ Michael Dale
 
   
Name: Michael Dale
  Name: Michael Dale
 
   
Title: CEO
  Title: CEO