<PAGE>

Exhibit 2.4

                                ESCROW AGREEMENT

     THIS ESCROW AGREEMENT (this "Escrow Agreement"), effective as of September
29, 2006, is entered into by and among ATS Medical, Inc., a Minnesota
corporation ("Parent"), Boyd D. Cox, an individual resident of the state of
Arkansas (the "Stockholder Representative"), as representative of the holders of
the capital stock of 3F Therapeutics, Inc., a Delaware corporation (the
"Company", the holders of the Company Capital Stock are the "Stockholders", who
are listed on Schedule A, attached hereto), and Wells Fargo Bank, N.A., a
national banking association principally located in Minneapolis, Minnesota (the
"Escrow Agent"). Parent and the Stockholder Representative are sometimes
together referred to herein as the "Parties" and each individually as a "Party."

     WHEREAS, pursuant to the Agreement and Plan of Merger, dated as of January
23, 2006, as amended by Amendment No.1 to Agreement and Plan of Merger, dated as
of June 13, 2006, and as amended by Amendment No. 2 to Agreement and Plan of
Merger, dated as of August 10, 2006, each entered into by and among Parent,
Seabiscuit Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Merger Subsidiary"), the Company and the Stockholder
Representative (the "Merger Agreement"), Merger Subsidiary will be merged with
and into the Company (the "Merger") and each share of the Company common stock,
$0.001 par value (the "Company Common Stock"), and the Company Preferred Stock
(the Company Common Stock and the Company Preferred Stock may be collectively
referred to as the "Company Capital Stock") issued and outstanding immediately
prior to the Effective Time will be converted into the right to receive that
number of shares of the common stock of the Parent, $0.01 par value per share
(the "Parent Common Stock"), as is determined in accordance with the terms and
subject to the conditions of the Merger Agreement (all such shares of Parent
Common Stock, collectively, the "Merger Consideration");

     WHEREAS, Section 2.1(b) of the Merger Agreement provides that if one or
more of certain milestones are achieved, Parent will pay the Stockholders
additional shares of Parent Common Stock (constituting a portion of the Merger
Consideration), assuming there are no outstanding indemnification claims or
rights of set off by Parent at that time;

     WHEREAS, Article 9 of the Merger Agreement provides that, in certain
circumstances, shares of Parent Common Stock that would otherwise be required to
be issued by Parent to the Stockholders from time to time after the Merger upon
the achievement of one or more milestones (known as "Milestone Shares" under the
Merger Agreement) may instead be deposited by Parent with the Escrow Agent (the
"Set-Off Shares") and held by the Escrow Agent in escrow for the purpose
described herein;

     WHEREAS, the Merger Agreement provides that a portion of the Merger
Consideration, equal to the number of shares of Merger Consideration to which
all holders of Outstanding Options would have been entitled had such holders
exercised such Outstanding Options prior to the date that was 10 days before the
Effective Time (the "Reserved Shares"), is to be reserved for issuance when and
if such Outstanding Options are exercised, but as of the date of this Agreement,
the Parties acknowledge and agree that no Reserved Shares are needed because the


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records of the Company indicate that all Outstanding Options were in fact
exercised or terminated prior to the Effective Time;

     WHEREAS, pursuant to the terms of the Merger Agreement and as part of the
transactions contemplated thereby, the Parties agreed to enter into this Escrow
Agreement and deposit with the Escrow Agent for the purposes set forth in the
Merger Agreement a portion of the (a) Initial Merger Consideration consisting of
1,400,000 fully paid and nonassessable shares of Parent Common Stock (the
"Escrow Shares") and Distributions (as defined below) related thereto and (b)
Milestone Shares as Set-Off Shares and Distributions related thereto (both
groups of shares and Distributions related thereto may be collectively referred
to as the "Escrow Fund");

     WHEREAS, pursuant to the terms of the Merger Agreement, the Parties agreed
that the Escrow Shares and the Set-Off Shares shall provide security for Parent
and consideration for satisfaction of any (a) pending indemnification claims
that Parent may have against the Stockholders pursuant to the terms of the
Merger Agreement; (b) payment obligations of Stockholders required to satisfy
Parent's right to a net operating assets adjustment under Section 2.3 of the
Merger Agreement; and (c) set-off rights of Parent arising under Section 5.21 of
the Merger Agreement regarding recovery of the Edwards Holdback Amount.

     WHEREAS, pursuant to Section 12.13 of the Merger Agreement, the Stockholder
Representative has authority to do, on behalf of the Stockholders, but is not
limited to doing, the following after the Effective Time: (a) amend this Escrow
Agreement or the Merger Agreement; (b) execute and deliver all documents and
instruments which may be executed and delivered pursuant to this Escrow
Agreement or the Merger Agreement; (c) make and receive notices and other
communications pursuant to this Escrow Agreement or the Merger Agreement; (d)
settle and dispute, any claim, action, suit or proceeding arising out of or
related to this Escrow Agreement or the Merger Agreement; and (e) pay expenses
incurred or which may be incurred on behalf of the Stockholders;

     WHEREAS, pursuant to the terms of the Merger Agreement, the Parties agreed
that Parent shall deposit Escrow Shares and Set-Off Shares, if any, with the
Escrow Agent to hold until instructed otherwise in accordance with the terms
hereof and the Merger Agreement, and that the Escrow Shares and Escrow Share
Distributions related thereto or Set-Off Shares and Set-Off Share Distributions
related thereto shall be distributed only in accordance with the terms of this
Agreement and the Merger Agreement;

     WHEREAS, the Parties and the Escrow Agent desire to more specifically set
forth their rights and obligations with respect to the Escrow Shares and Escrow
Share Distributions related thereto and the Set-Off Shares and Set-Off Share
Distributions related thereto and the distribution and release thereof;

     WHEREAS, Parent, the Company, and Wells Fargo Bank, N.A., have entered into
a separate agreement, dated as of the date hereof, pursuant to which Wells Fargo
Bank, N.A., acting in its capacity as exchange agent thereunder ("Exchange
Agent"), will, among other things, distribute to the Stockholders any Escrow
Shares and Escrow Share Distributions related thereto and any Set-Off Shares and
Set-Off Distributions related thereto that the Stockholders


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become entitled to receive under the Merger Agreement or this Escrow Agreement
(the "Exchange Agreement"); and

     WHEREAS, the execution and delivery of this Escrow Agreement is a condition
precedent to the closing of the Merger under the Merger Agreement.

     NOW, THEREFORE, in consideration of the premises and covenants contained
herein, and for other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

     1. Appointment of and Acceptance by the Escrow Agent. The Escrow Agent is
hereby appointed by the Parties as the Escrow Agent in accordance with the
instructions set forth herein. The Escrow Agent hereby accepts such appointment.

     2. Establishment of Escrow. On the date hereof, in consideration of the
transactions contemplated by the Merger Agreement, and in order to induce Parent
to consummate the transactions contemplated by the Merger Agreement, and in
order to secure the indemnification and payment obligations of the Stockholders
and the set-off rights of Parent as provided for under Sections 2.3 and 5.21 of
the Merger Agreement, Parent shall deposit or cause to be deposited into escrow
by issuing to the Escrow Agent, in the name of the Escrow Agent, a certificate
representing the Escrow Shares. Parent may also deposit or cause to be deposited
into escrow by issuing to the Escrow Agent, in the name of the Escrow Agent, a
certificate or certificates representing the Set-Off Shares pursuant to this
Escrow Agreement. As so deposited, the Escrow Shares and Set-Off Shares shall be
referred to as the "Deposited Shares" and shall include any dividends,
distributions, income, property or other rights distributed (including, without
limitation, upon a stock split, stock dividend or other recapitalization of
Parent) with respect to or in exchange for, or otherwise attaching or related
to, the Escrow Shares (which have not been released from the escrow established
by this Escrow Agreement) or the Set-Off Shares (which have not been released
from the escrow established by this Escrow Agreement) (the "Escrow Share
Distributions" and the "Set-Off Share Distributions", respectively; the Escrow
Share Distributions and the Set-Off Share Distributions may be collectively
referred to as the "Distributions"). The Deposited Shares, together with any
Distributions, shall be held by the Escrow Agent, for the account of Parent, in
order to satisfy any pending claims for indemnification made by Parent pursuant
to Article 9 of the Merger Agreement, to satisfy Parent's rights regarding the
Abbey Claims under Section 9(b) hereof, to satisfy Parent's right to a Net
Operating Assets Adjustment, if any, pursuant to Section 2.3 of the Merger
Agreement and to satisfy Parent's set off rights under Section 5.21 of the
Merger Agreement regarding recovery of the Edwards Holdback Amount, if any. The
Escrow Agent agrees to accept delivery of the Deposited Shares and the
Distributions, and to hold the Escrow Fund in escrow subject to the terms and
conditions of this Agreement. The Escrow Shares and the Escrow Share
Distributions shall be held by the Escrow Agent (the "Escrow Shares Account"),
and the Set-Off Shares and the Set-Off Share Distributions shall be held by the
Escrow Agent (the "Set-Off Shares Account" and, together with the Escrow Shares
Account (the "Escrow Accounts")). No portion of the Escrow Fund shall be subject
to any consensual lien, attachment, trustee process, or other judicial process
of any kind whatsoever of any creditor of any of the parties hereto.


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     3. Investment of Cash Distributions.

          (a) The Escrow Agent shall be permitted to deposit, transfer, hold,
and invest any cash Distributions received by the Escrow Agent pursuant to this
Agreement in one or more Wells Fargo Advantage Money Market Funds (the "Wells
Fargo Advantage Funds") upon the completion by Parent of the Agency and Custody
Account Direction for Cash Balances, a form of which is attached hereto as
Appendix A. In the absence of written instructions from Parent, the Escrow Agent
is hereby directed to invest cash Distributions in the Wells Fargo Advantage
100% Treasury Money Market Fund, Service Class Shares. The investments in the
Wells Fargo Advantage Funds are not obligations of, or endorsed or guaranteed
by, the Escrow Agent or its affiliates and are not insured by the Federal
Deposit Insurance Corporation. All income earned on invested funds, if any,
shall be distributed to the Exchange Agent for distribution to the Stockholders
or to Parent, as the case may be, concurrently with the release of the related
shares held in the Escrow Fund.

          (b) The Escrow Agent shall be entitled to sell or redeem any such
investments as is necessary to make any distributions required under this
Agreement. The Escrow Agent shall have no responsibility or liability for any
loss which may result from any investment made pursuant to this Agreement, or
for any loss resulting from the sale of such investment. The Parties acknowledge
that the Escrow Agent is not providing investment supervision, recommendations,
or advice.

     4. Separate Accounts. The Escrow Agent shall keep a separate accounting for
the Escrow Shares and the Set-Off Shares such that, in the event Parent or the
Stockholders, as the case may be, become entitled to the Escrow Shares and
Escrow Share Distributions related thereto or Set-Off Shares and Set-Off Share
Distributions related thereto pursuant to the Merger Agreement, the appropriate
number of Escrow Shares or Set-Off Shares will be available for distribution, in
addition to the appropriate Distributions related thereto.

     5. Information Regarding Company Stockholders. Schedule A attached hereto
is a complete and correct list of the Stockholders as of the Effective Time,
including their respective holdings of Company Capital Stock, their percentage
interest in the outstanding shares of Company Capital Stock as of the Effective
Time, and their respective mailing addresses. Schedule A may be revised from
time to time by Parent to reflect any updates to information contained on such
schedules. At the time of such revision, a copy or copies of the revised
schedule(s) shall be provided by Parent to the Stockholder Representative.

     6. Company Stockholders' Escrow Account Interest. At the time any
distribution of all or any portion of the Escrow Shares and Escrow Share
Distributions related thereto or Set-Off Shares and Set-Off Share Distributions
related thereto is to be made by the Escrow Agent to the Exchange Agent for
distribution to the Stockholders, the Stockholders shall each be entitled to its
percentage interest of the Escrow Shares or Set-Off Shares or Distributions or
other property related thereto being so distributed in proportion to the ratio
by which the number of shares of Company Capital Stock held by each Company
Stockholder at time of any such distribution bears to the aggregate number of
outstanding shares of Company Capital Stock at time of any such distribution
(the "Escrow Account Interest" or collectively the "Escrow Account Interests").

     7. Distributions, Voting and Rights of Ownership regarding Escrow Shares
and Set-Off Shares. Any Distributions with respect to the Escrow Shares or the
Set-Off Shares will be


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<PAGE>

issued or distributed by Parent to the Escrow Fund as an additional contribution
to the Escrow Fund by the Parent with such dividends or distributions retained
by the Escrow Agent pursuant to the terms of this Escrow Agreement. The
Stockholders, the Stockholder Representative, and the Escrow Agent shall not
have any voting rights with respect to the Escrow Shares and Escrow Share
Distributions related thereto, or the Set-Off Shares and the Set-Off Share
Distributions related thereto while such shares or Distributions related thereto
are held in escrow by the Escrow Agent. The Stockholders and the Stockholder
Representative have disclaimed any right to such voting rights and agreed not to
attempt to exercise or claim a right to exercise any such voting rights with
respect to such Escrow Shares and Escrow Share Distributions related thereto, or
Set-Off Shares and Set-Off Share Distributions related thereto. Unless and until
distributed to the Stockholders through the Exchange Agent, or distributed to
Parent, as the case may be, in accordance with the provisions hereof, the Escrow
Shares and Escrow Share Distributions related thereto and the Set-Off Shares and
the Set-Off Share Distributions related thereto shall be registered in the name
of Wells Fargo Bank, N.A., in its sole capacity as Escrow Agent. Except for
distributions of the Escrow Shares to Parent or to the Exchange Agent for
distribution to the Stockholders as herein required, the Escrow Agent shall not
sell, transfer, pledge, assign, encumber, or otherwise attempt to dispose or
transfer any (i) Escrow Shares and Escrow Share Distributions related thereto or
(ii) Set-Off Shares and Set-Off Share Distributions related thereto held
pursuant to this Escrow Agreement.

     8. No Transfer of Escrow Shares and Set-Off Shares. Each Stockholder shall
not sell, transfer, pledge, assign, encumber, or otherwise attempt to dispose or
transfer of their Escrow Account Interest, or the underlying shares or property
related thereto, any portion thereof, or any interest therein, unless and until
such Escrow Account Interest or the underlying shares or property related
thereto, portion thereof, or interest therein is delivered by the Exchange Agent
to such Stockholder pursuant to the terms of the Exchange Agreement. Each
Stockholder shall not allow its Escrow Account Interest or the underlying shares
or property related thereto, a portion thereof, or any interest therein to be
taken or reached by any legal or equitable process in satisfaction of any debt
or other liability of the Stockholder unless and until such Escrow Account
Interest or the underlying shares or property related thereto, portion thereof,
or interest therein is delivered by the Exchange Agent to such Stockholder
pursuant to the terms of the Exchange Agreement. Any purported transfer in
violation of any of the foregoing restrictions in this Section 8 shall be null,
void and of no force or effect and the Escrow Agent shall not recognize any
request for such purported transfer.

     9. Procedure for Making Claims Against the Escrow Shares or Set-Off Shares.

          (a) General. If Parent makes a claim or sends an Indemnification
Notice (as defined in Section 9.4(a) of the Merger Agreement) pursuant to the
terms of the Merger Agreement, Parent, either on behalf of itself or on behalf
of Company, or its agent, may make, by delivering to the Stockholder
Representative with a copy provided to the Escrow Agent, a written notice of an
indemnification claim and each such Indemnification Notice (a "Claim Notice"),
one or more claims (each such claim in a Claim Notice and each such claim
described in an Indemnification Notice, a "Claim") against either: (a) the
Escrow Shares or Distributions related thereto up to eighteen (18) months after
the Effective Date (the "Escrow Shares Cut-Off Period"), or (b) the Set-Off
Shares or Distributions related thereto (including any Escrow Shares remaining
in the Escrow Fund that have not been previously distributed to Parent or to the


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<PAGE>

Exchange Agent for distribution to the Stockholders pursuant to the terms of the
Exchange Agreement) until the earlier of: (i) the date on which all Milestone
Consideration has been issued or paid or set-off against to create Set-Off
Shares as provided in the Merger Agreement, or (ii) the expiration of the
Contingent Period (the "Final Cut-Off Period"). Each Claim Notice, a form of
which is attached hereto as Exhibit A, shall (i) describe in reasonable detail
the basis of each Claim asserted by Parent, (ii) provide an estimate of the
total amount of the Claim(s) described in the Claim Notice, and (iii) state that
a copy of the Claim Notice has been provided by Parent to the Stockholder
Representative in a timely manner and in accordance with the Escrow Agreement.
It is expressly agreed that Claims shall include indemnification claims brought
by Parent during the applicable periods against either the Escrow Shares or the
Set-Off Shares. As contemplated in the Merger Agreement, Parent, either on
behalf of itself or on behalf of Company, or its agent, may make one or more
Claims using (Escrow Shares, if not distributed prior thereto in accordance with
the terms and conditions of this Escrow Agreement) or Set-Off Shares or
Distributions related thereto prior to December 31, 2013 or the final Milestone
Date, whichever occurs first, so long as the Claim Notice was delivered to the
Stockholder Representative by the end of the Final Cut-Off Period. Parent may
make any such Claims before or after the certificates representing Escrow Shares
and Escrow Share Distributions related thereto are delivered to the Escrow
Agent, but Parent must make any such Claims before the certificates representing
the Set-Off Shares and Set-Off Share Distributions related thereto are delivered
to the Escrow Agent (which would follow achievement of Milestones, if any). If
on March 29, 2008, and subject to Section 9(b) of this Escrow Agreement, Parent
has no then pending Claim and Parent has not given notice to the Escrow Agent
directing the Escrow Agent not to distribute the Escrow Shares and the Escrow
Distributions, the parties agree that the Escrow Agent shall distribute all of
the then remaining Escrow Shares and Escrow Distributions to the Exchange Agent
for distribution to the Stockholders. Nothing herein shall be deemed to modify,
supersede, or amend the provisions of the Merger Agreement as to the time
periods, limits, methodology, or the like of making Claims for which
indemnification may be sought.

          (b) Acknowledgment of Bona Fide Indemnification Claim Resulting from
Breach Concerning Abbey Claims. The Parties hereto acknowledge receipt of a copy
of that certain Indemnification Notice (or Claim) dated September 12, 2006 from
Parent to the Company (the "September 12, 2006 Claim Notice"). In consideration
of the acknowledgement by the Company and the Stockholder Representative that
the existence of the Abbey Claims constitutes a breach by the Company of certain
of its representations and warranties under Article 3 of the Merger Agreement,
including without limitation Section 3.20 (Litigation), as provided in Section
2(o) of Amendment No. 1 to the Merger Agreement, and that, notwithstanding
Section 5.9 of the Merger Agreement and the disclosure of the Abbey Claims on
the Company's Supplement and Amendment to the Disclosure Schedule, the Company
and the Stockholder Representative have acknowledged that the Parent's Claim
with respect to the Abbey Claims is a bona fide indemnification claim under the
Merger Agreement, the Company and the Stockholder Representative agree that
Damages incurred by the Indemnified Parties (as defined under the September 12,
2006 Claim Notice) arising from the acknowledged breach are the responsibility
of the Indemnifying Parties (as defined under the September 12, 2006 Claim
Notice), regardless of when such Damages (if any) are actually incurred. Within
a reasonably prompt time after Damages are actually incurred by the Indemnified
Parties, Parent may send an additional Claim Notice specifying the final amount
of Damages incurred, and thereafter the Stockholder Representative, pursuant to
Section 10 hereof, may dispute or object to the final


                                        6

<PAGE>

amount of such Claim, or the Payment of Claims provision in Section 11 hereof
may be implemented, as the case may be. In order to confirm the arrangements
concerning the Escrow Shares (and the Set-Off Shares, as the case may be) as
security for the Stockholders' indemnification obligation for the acknowledged
breach, and notwithstanding Section 5.9 of the Merger Agreement and the
disclosure of the Abbey Claims on the Company's Supplement and Amendment to the
Disclosure Schedule, each of the Company, the Stockholder Representative and the
Parent hereby acknowledges and agrees that the Stockholders' indemnification
obligation under the Merger Agreement for Damages by reason of or resulting from
the acknowledged breach extends through the time of final resolution of the
Abbey Claims, subject to the agreement of Parent and the Stockholder
Representative to endeavor, consistent with Section 2.2 of the Merger Agreement,
beginning March 29, 2008, at such times as definitive material developments
involving the Abbey Claims occur, in good faith to determine a reasonable
estimate of the maximum amount of Damages relating to such Claim, so that the
Parent and Stockholder Representative may agree on the number of Escrow Shares
and Set-Off Shares that will continue to be retained in the Escrow Fund (or
established as Set-Off Shares to be deposited into the Escrow Fund) to cover
such reasonable estimate of the maximum amount of Damages relating to such
Claim. The Stockholder Representative confirms that it has no dispute and has no
objection with respect to the September 12, 2006 Claim Notice, it being
understood that no specific Claim for immediate payment of Damages incurred by
Parent or its Indemnified Parties has been made in such Claim Notice, but may be
made by the Indemnified Parties when such Damages (if any) are incurred, subject
to the terms hereof.

     10. Disputed Claims. Within ten (10) business days of the Stockholder
Representative receiving a Claim Notice, the Stockholder Representative, acting
on behalf of the Stockholders, may dispute or object to any Claim, in whole or
in part, by delivering to the Escrow Agent a copy of Parent's Claim Notice and a
written notice of objection, a form of which is attached hereto as Exhibit B,
(an "Objection Notice") stating:

          (a) that the Stockholder Representative disputes or objects to such
Claim;

          (b) that the Stockholder Representative has delivered a copy of the
Objection Notice to Parent in a timely manner and in accordance with this Escrow
Agreement; and

          (c) the portion of the Claim set forth in the Claim Notice, if any,
that is not disputed or objected to.

     If an Objection Notice is not delivered in a timely manner in accordance
with this Section 10, the Stockholder Representative shall be deemed to have
given its consent to the entire amount of the Claim. In that case, both Parent
and the Stockholder Representative authorize the Escrow Agent to release
promptly to Parent the number of Deposited Shares required to satisfy the Claim.
The number of Deposited Shares to be released shall be calculated in accordance
with this Escrow Agreement.

     Parent and the Stockholder Representative agree that all disputed Claims
shall be resolved in accordance with the procedures set forth in Article 10 of
the Merger Agreement.


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<PAGE>

     11. Payment of Claims. If the Escrow Agent receives from the Stockholder
Representative written notice of consent or agreement to all or part of a Claim,
or receives notice of a Final Decision (as defined in Section 12(a) below) with
respect to a Claim in favor of Parent, the Escrow Agent shall thereupon promptly
deliver to Parent from the Deposited Shares a number of Deposited Shares having
a value equal to the aggregate amount of such Claim as specified in such written
notice of consent or agreement from the Stockholder Representative or in the
Final Decision, as the case may be, such value to be determined as hereinafter
prescribed. If the Deposited Shares are not sufficient to satisfy in full such
Claim (as consented or agreed to by Stockholder Representative or as finally
determined by a Final Decision), the Escrow Agent shall deliver to Parent such
Deposited Shares as are available and satisfy the remainder of such Claim from
Distributions (to the extent of such Distributions) and/or from any future
Set-Off Shares, to the extent such will be or have been deposited. To the extent
the Deposited Shares are not sufficient to satisfy in full any such Claim, but
the Final Cut-Off Period has not yet occurred, a pending excess Claim will be
recorded by the Parties hereto until future Set-Off Shares, if any, are to be
deposited (resulting from future achievement of Milestones, if any). Claims
satisfied by payment in the form of Deposited Shares shall be satisfied by
returning to Parent from the Deposited Shares the number of whole shares of
Parent Common Stock equal to the quotient of the aggregate Claim(s) being so
satisfied divided by the Average Market Price (as defined below), so adjusted,
if appropriate, in the event that there occurs any stock dividend, stock split,
or similar event with respect to the Parent Common Stock after the Effective
Time. "Average Market Price" means (i) with respect to Escrow Shares, the
average of the closing sale price (such closing price as reported by The NASDAQ
Stock Market at the end of regular trading) of one share of Parent Common Stock
on the NASDAQ National Market System (or such other national securities trading
system as Parent Common Stock is approved and listed for trading) on each of the
sixty (60) trading days ending on (and including) the Distribution Date, and
(ii) with respect to Set-Off Shares, the Parent Milestone Share Price. Such
Average Market Price and the number of Deposited Shares to satisfy such Claim
shall be provided in writing to the Escrow Agent by Parent and the Stockholder
Representative, which notice shall be provided promptly following consent or
agreement by the Stockholder Representative of the Claim or the Final Decision,
as the case may be.

     12. Distribution of Escrow Fund to Exchange Agent for Distribution to
Stockholders.

          (a) After the expiration of the Escrow Shares Cut-Off Period or Final
Cut-Off Period, as the case may be and which date shall be provided in writing
to the Escrow Agent by Parent, but only after disbursements have been made to
Parent with respect to all resolved Claims and only after resolution of all
pending unresolved Claims made prior to expiration of the Escrow Shares Cut-Off
Period or the Final Cut-Off Period, as the case may be, and subject to Section
15 and Section 16 of this Agreement, the Escrow Agent shall, after taking the
actions described in this Section 12, remit the balance of the Escrow Fund
(excluding any shares that are returned, or required to be returned, back to
Parent pursuant to the terms of this Escrow Agreement) then remaining to the
Exchange Agent for distribution to the Stockholders. In addition, prior to such
proposed distribution to the Exchange Agent, the Escrow Agent shall notify
Parent and the Stockholder Representative of the pending distribution(s) and the
proposed number of Deposited Shares to be remitted to the Exchange Agent for
distribution to the Stockholders. In the event that there exists as of the date
of the proposed distribution any Claim that has not been satisfied in full or if
Parent has provided written notice to the Escrow Agent


                                        8

<PAGE>

and to the Stockholder Representative that states the reasons why pursuant to
the Merger Agreement or by law that the Escrow Agent should not distribute all
or any portion of the Escrow Fund to the Exchange Agent for distribution to the
Stockholders, Parent and the Stockholder Representative shall endeavor in good
faith to determine a reasonable estimate of the maximum amount of such Claim and
shall jointly instruct the Escrow Agent to deliver any excess amount in the
Escrow Fund to the Exchange Agent for distribution to the Stockholders. The
Escrow Agent shall continue to hold such portion of the Escrow Fund in dispute
until the Escrow Agent receives written instructions signed by each of Parent
and the Stockholder Representative directing the Escrow Agent to deliver the
Escrow Fund (or any portion thereof) or until there is a Final Decision (as
hereinafter defined) with respect to a disputed Claim directing delivery of the
Escrow Fund (or any portion thereof), in which case the Escrow Agent shall
deliver the Escrow Fund (or such portion thereof) in accordance with the Final
Decision. "Final Decision" means a decision, order, judgment or decree of an
arbitrator or court having jurisdiction that is either not subject to appeal or
as to which notice of appeal has not been timely filed or served. Upon the
issuance of a Final Decision, an authorized representative of Parent and
Stockholders Representative agree to provide a joint written instruction to the
Escrow Agent directing the Escrow Agent to deliver the Escrow Fund (or such
portion thereof) in accordance with the Final Decision. Notwithstanding anything
herein to the contrary, the Escrow Agent is authorized to take any action with
respect to the Escrow Fund upon receipt of a joint instructions notice signed by
an authorized representative of Parent and the Stockholder Representative,
provided the Escrow Agent has prior to such time received an incumbency
certificate satisfactory to it for such representative of Parent.

          (b) Deposited Shares issued to the Stockholders shall be bifurcated
into shares deemed to represent Merger Consideration and shares deemed to
represent imputed interest, with separate share certificates with respect to
Merger Consideration and imputed interest issued to each Stockholder. If the
Stockholder Representative agrees to such allocation of Deposited Shares then
remaining in the applicable Escrow Account, the Stockholder Representative shall
so notify Parent and Parent shall provide the Escrow Agent with such necessary
stock certificates in the name of each such Stockholder (with separate
certificates for the Merger Consideration and the imputed interest) representing
such number of Deposited Shares, and the Escrow Agent shall remit such number of
Deposited Shares to the Exchange Agent for distribution to each such
Stockholder.

     13. Duration of Escrow. The Escrow Agent shall hold all Escrow Shares and
Set-Off Shares and other property constituting a part thereof until the Escrow
Shares or Set-Off Shares, or other property constituting a part thereof that
corresponds to the Distribution(s), is delivered to the Exchange Agent for
distribution to the Stockholders or to Parent, as the case may be, pursuant to
the terms of this Escrow Agreement.

     14. Fractional Shares. Notwithstanding any other provision of this Escrow
Agreement to the contrary, no certificates representing fractional shares of
Parent Common Stock shall be remitted to the Exchange Agent for conveyance to
the Stockholders upon distribution from the Escrow Shares and Escrow Share
Distributions related thereto or Set-Off Shares and Set-Off Share Distributions
related thereto. In lieu of any fractional shares of Parent Common Stock to
which any Stockholder may be entitled or which would otherwise be held as shares
in escrow, Parent shall remit to the Exchange Agent for payment to such
Stockholder or to


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<PAGE>

the escrow account an amount of cash (without interest) determined by
multiplying the fair market value of one share of Parent Common Stock on the
Final Escrow Distribution Date (as defined below) by the fractional share
interest to which such Stockholder would otherwise be entitled or which would
otherwise be delivered to the escrow account (determined after taking into
account all shares of Company Common Stock held by each such Stockholder
immediately prior to the Effective Time). Parent will make available to the
Escrow Agent all cash necessary for this purpose. If Parent becomes entitled to
receive from each Stockholder any fraction of a share of Parent Common Stock
from any Stockholder pursuant hereto, then Parent will receive the next higher
whole number of shares and pay to such Stockholder an amount of cash (without
interest) determined by multiplying the Average Market Price by the fractional
share interest received by Parent as a result of the rounding up of the shares
transferred by the Stockholder(s).

     15. Release and Return of Deposit Shares to Parent for Recovery of Edwards
Holdback Amount. Pursuant to Section 5.21 of the Merger Agreement, Parent shall
be entitled to all or any portion of the Edwards Holdback Amount not received on
or prior to January 15, 2007 by Parent or the Surviving Corporation, which may
be the entire Edwards Holdback Amount of Two Million Dollars ($2,000,000). If
the Edwards Holdback Amount is not paid in full by January 15, 2007, then in
accordance with Section 5.21 of the Merger Agreement, Parent shall have the
right to, in its sole and absolute discretion, immediately notify the Escrow
Agent in writing to return to Parent the number of Escrow Shares as provided
herein or, in its sole and absolute discretion, the number of Set-Off Shares
from shares of Parent Common Stock that may be issued to the Stockholders as
Milestone Shares. The number of such Escrow Shares (or Set-Off Shares, as the
case may be) that shall be used to satisfy the Edwards Holdback Amount that was
not paid to Parent or the Surviving Corporation shall be equal to: (a) the
portion of the Edwards Holdback Amount (which may be the entire amount) not
received on or prior to January 15, 2007, divided by (b) the average of the
closing sale prices (such closing price as reported by the Nasdaq Stock Market
at the end of regular trading) of one share of Parent Common Stock on the NASDAQ
National Market System (or such other national securities trading system as the
Parent Common Stock is approved and listed for trading) on each of the sixty
(60) trading days ending on (and including) January 15, 2007. If Parent
exercises its right to set-off pursuant to Section 5.21 of the Merger Agreement
and so notifies the Escrow Agent to return the applicable number of Escrow
Shares (or Set-Off Shares, as the case may be) to Parent as recovery of the
Edwards Holdback Amount, such shares will automatically return to the status of
authorized and unissued common stock of the Parent.

     16. Release and Return of Escrow Shares to Parent for Net Operating Assets
Adjustment. Upon final resolution of an Adjustment Amount, if any, pursuant to
Section 2.3 of the Merger Agreement requiring shares to be returned to Parent,
Parent shall give written notice thereof to the Escrow Agent and the Stockholder
Representative of the exercising of Parent's right to withdraw Escrow Shares in
order to give effect to the Net Operating Assets Adjustment as provided in
Section 2.3 of the Merger Agreement, specifying therein (a) the number of Escrow
Shares to be so withdrawn and (b) evidence of calculation or other rationale
providing for the withdrawal of such number of Escrow Shares.


                                       10

<PAGE>

     17. Termination. This Escrow Agreement shall terminate as follows:

          (a) At the close of business on December 31, 2014, or one year after
the final Milestone Date (but in any case not before March 29, 2008), whichever
occurs first (the "Final Escrow Distribution Date"), provided that there are no
claims then pending against the Escrow Shares and Escrow Share Distributions
related thereto or the Set-Off Shares and Set-Off Share Distributions related
thereto that were made by proper delivery of a Notice of Claim on or prior to
such date, in which event the Escrow Agent shall promptly thereafter deliver any
remaining Escrow Shares and Escrow Share Distributions related thereto, or
Set-Off Shares and Set-Off Share Distributions related thereto, to the Exchange
Agent for distribution to the Stockholders; or

          (b) Upon Final Decision of any claims of Parent that are pending
against the Escrow Shares and Escrow Share Distributions related thereto, or the
Set-Off Shares and Set-Off Share Distributions related thereto on the Final
Escrow Distribution Date, provided that such claims were made by proper delivery
of Notices of Claims on or before the Final Escrow Distribution Date, in which
event the remaining Escrow Shares and Escrow Share Distributions related
thereto, or the Set-Off Shares and Set-Off Share Distributions related thereto
shall be distributed by the Escrow Agent to the Exchange Agent for distribution
to the Stockholders in accordance with the Exchange Agreement; or

          (c) Upon the mutual written agreement to terminate this Escrow
Agreement executed by Parent and the Stockholder Representative.

     18. Authority of Escrow Agent. Parent and the Stockholder Representative,
by execution and delivery of this Escrow Agreement, constitute and appoint the
Escrow Agent as their true and lawful agent and attorney-in-fact to assign and
transfer the Escrow Shares and Escrow Share Distributions related thereto and
the Set-Off Shares and the Set-Off Share Distributions related thereto, for and
on behalf of Parent and the Stockholder Representative, respectively, and in the
name, place and stead of Parent and the Stockholder Representative,
respectively, as fully and to all the same extent as Parent or the Stockholder
Representative, respectively, could do on their own behalf, as shall from time
to time be required in accordance with the provisions of this Escrow Agreement.
In furtherance of the foregoing and not in limitation thereof, the Escrow Agent
is specifically authorized to forward any of the Escrow Shares, the Set-Off
Shares, any Distributions related thereto, or any other property constituting a
part of the Escrow Shares and the Set-Off Shares pursuant to this Escrow
Agreement to (i) Parent in satisfaction of the Stockholders' indemnification
obligations in the Merger Agreement, and/or payment obligations of the
Stockholders in the Merger Agreement and under Section 9(b) hereof, and/or in
satisfaction of Parent's set-off rights to recovery for the Edwards Holdback
Amount pursuant to Section 5.21 of the Merger Agreement, and/or in satisfaction
of Parent's right to give effect to a Net Operating Assets Adjustment pursuant
to Section 2.3 of the Merger Agreement, if any, and as may be necessary to
accomplish the intent and purposes of this Escrow Agreement, or (ii) provided
Parent has no outstanding claims for indemnification, the Exchange Agent for
purposes of having any such consideration or other property delivered to the
respective Stockholders in accordance with the terms of the Exchange Agreement.
Such authority of the Escrow Agent shall not be affected by the subsequent
bankruptcy, insolvency, death, disability or incompetence of Parent or the
Stockholder Representative, respectively.


                                       11

<PAGE>

     19. Successors, General Duties, Reporting, Liability, Resignation, Removal
and Indemnification of Escrow Agent.

          (a) Any corporation into which the Escrow Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Escrow Agent will be a
party, or any corporation to which substantially all the corporate trust
business of the Escrow Agent may be transferred, shall be the Escrow Agent under
this Escrow Agreement without further act.

          (b) The duties and responsibilities of the Escrow Agent shall be
limited to those expressly set forth in this Escrow Agreement and the Escrow
Agent shall not be obligated to recognize any other agreement between any of the
parties hereto, including the Merger Agreement, even though reference thereto
may be made herein and whether or not the Escrow Agent has knowledge thereof.
All references in this Escrow Agreement to any other agreement are for the
convenience of the parties hereto other than the Escrow Agent, and the Escrow
Agent has no duties or obligations with respect thereto. The Escrow Agent will
hold and administer the Escrow Shares and Set-Off Shares, together with all
Distributions related thereto, in accordance with the provisions of this Escrow
Agreement.

          (c) Each quarter during the term of this Escrow Agreement, the Escrow
Agent shall prepare and send to the Parent and Stockholder Representative a
report describing in reasonable detail a summary of receipts and disbursements
from each Escrow Account. The Escrow Agent will maintain complete and accurate
records concerning all receipts and distributions to and from each Escrow
Account, including, but not limited to, the date and amount of each distribution
made to Parent or to the Exchange Agent for distribution to the Stockholders.
The Escrow Agent will be deemed in compliance with this Section 19(c) if it
maintains copies of all reports delivered from time to time pursuant to this
Section 19(c). In the event that the Escrow Agent seeks indemnification pursuant
to the terms of this Escrow Agreement, the Escrow Agent shall, in addition to
the report required pursuant to this Section 19(c), prepare and send to Parent
and the Stockholder Representative on a monthly basis a detailed summary of the
Escrow Agent's fees and expenses, which shall include legal fees and expenses.

          (d) The Escrow Agent shall not be personally liable for any action
taken or omitted to be taken hereunder if taken or omitted to be taken by the
Escrow Agent in good faith or in the exercise by the Escrow Agent of its own
best judgment unless it acts grossly negligent or with willful misconduct. The
Escrow Agent shall also be fully protected in relying upon any written notice,
demand, certificate or document that the Escrow Agent in good faith believes to
be genuine unless it is grossly negligent or acts with willful misconduct.

          (e) Provided it acts in the absence of gross negligence, bad faith,
and willful misconduct; the Escrow Agent shall not be responsible for the
sufficiency or accuracy of the form, execution, validity or genuineness of
notices, documents or securities now or hereafter deposited or delivered under
this Escrow Agreement, or of any endorsement thereof, or for any lack of
endorsement thereof, or for any description therein, nor shall the Escrow Agent
be responsible or liable in any respect on account of the identity, authority or
rights of the persons


                                       12

<PAGE>

executing or delivering or purporting to execute or deliver this Escrow
Agreement or any such document, notice, security or endorsement.

          (f) The Escrow Agent may resign upon sixty (60) days' advance written
notice to the Parties hereto or be removed by the mutual consent of Parent and
the Stockholder Representative. No resignation or removal of the Escrow Agent
and no appointment of a successor Escrow Agent, however, shall be effective
until the acceptance of appointment by the successor Escrow Agent in the manner
herein provided. In the event of the resignation or removal of the Escrow Agent,
Parent and the Stockholder Representative shall agree upon a successor Escrow
Agent. Any successor Escrow Agent shall execute and deliver to the predecessor
Escrow Agent, Parent and the Stockholder Representative an instrument accepting
such appointment and the transfer of the Escrow Shares and the Set-Off Shares,
together with Distributions related thereto, and agreeing to the terms of this
Escrow Agreement, and thereupon such successor Escrow Agent shall, without
further act, become vested with all the estates, properties, rights, powers and
duties of the predecessor Escrow Agent as if originally named herein. In the
event Parent and the Stockholder Representative are unable to agree upon a
successor Escrow Agent within twenty (20) days of the creation of the vacancy,
Parent and the Stockholder Representative shall submit the dispute for
arbitration as provided in the Merger Agreement and the arbitrator shall select
a successor Escrow Agent within sixty (60) days of such arbitrator's
appointment.

          (g) Parent, the Stockholders, and the Stockholder Representative (but
in the case of the Stockholder Representative not to exceed the amount of cash
and Parent Common Stock held in the Representative's Escrow Account from time to
time), jointly and severally, hereby indemnify and hold harmless the Escrow
Agent from and against any and all loss, liability, cost, damage and expense,
including, without limitation, reasonable counsel fees, which the Escrow Agent
may suffer or incur by reason of any action, claim or proceeding brought against
the Escrow Agent arising out of or relating in any way to this Escrow Agreement
or any transaction to which this Escrow Agreement relates unless such action,
claim or proceeding is the result of the willful misconduct or gross negligence
of the Escrow Agent. The Escrow Agent may consult counsel in respect of any
question arising under this Escrow Agreement and the Escrow Agent shall not be
liable for any actions taken or omitted in good faith upon advice of such
counsel.

     20. Actions Relating to the Escrow Accounts. The Parties to this Agreement
acknowledge and agree that:

          (a) The Stockholder Representative may initiate any legal proceeding
against any party regarding, or defend any claim or action against or involving,
the Escrow Fund and may assert counterclaims in such claims or actions, pursuant
to the terms and conditions of the Merger Agreement. Pursuant to the terms and
conditions of the Merger Agreement, in any action taken by the Stockholder
Representative, the Stockholder Representative will be the sole and exclusive
representative of the Stockholders in connection with all matters arising under
the Merger Agreement and the agreements and transactions contemplated thereby
including without limitation, representing the Stockholders in the event of any
claim pursuant to Article 9 of the Merger Agreement, and will be deemed to
represent all of the Stockholders' interests in the Escrow Accounts, and no
Stockholder shall have the right independently to be a party to such


                                       13

<PAGE>

action, and the Stockholders will be bound by the action taken by the
Stockholder Representative hereunder. The Stockholder Representative is
authorized only to represent such Stockholders in their capacities as
Stockholders hereunder and as Stockholders under the Merger Agreement, and not
in any other capacity.

          (b) No Company Stockholder will be entitled to act independently with
respect to any actions required with respect to any claims for indemnification
asserted against or on behalf of the Stockholders pursuant to the Merger
Agreement or any other action relating to the Merger Agreement, the other
agreements and the transactions contemplated thereby and any such actions will
be taken solely by the Stockholder Representative. The Stockholder
Representative will have full power and authority to act on behalf of the
Stockholders with respect to such matters and the Stockholders will be bound by
any and all such actions. Boyd D. Cox is the Stockholder Representative for
purposes of this Escrow Agreement, the Merger Agreement, and all the agreements
and transactions contemplated thereby, and that until notice of a change in the
Stockholder Representative is given pursuant to Sections 22 and 23 of this
Escrow Agreement, Parent and the Escrow Agent will be entitled to rely upon the
power and authority of the Stockholder Representative to act on behalf of the
Stockholders and will be fully protected in acting on and relying upon any
notice, direction, request, waiver, consent, receipt or other paper or document
signed or presented by the Stockholder Representative.

          (c) In the event the Escrow Agent becomes a party to or otherwise
involved in an action regarding the Escrow Accounts, the Escrow Agent will
cooperate with the Stockholder Representative and Parent and participate in the
compromise, dismissal or settlement of such action only at the direction of, and
with the written consent of, the Stockholder Representative and Parent. The
Stockholder Representative and Parent may compromise, dismiss or settle any
action involving the Escrow Accounts without the written consent of any of the
Stockholders or the Escrow Agent, except in the case of the Escrow Agent, any
compromise, dismissal or settlement that adversely affects the Escrow Agent.

          (d) The Stockholder Representative will have the full power and
authority to file such proofs of claim and other papers as may be necessary or
appropriate in order to have the claims of the Stockholder Representative or the
Stockholders allowed in any judicial proceeding. Nothing contained in this
Section 20 will be deemed to authorize the Escrow Agent to consent to or accept,
on behalf of the Stockholder Representative or the Stockholders, any plan of
reorganization, arrangement or adjustment affecting the rights of the
Stockholder Representative or the Stockholders, or to authorize the Escrow Agent
to vote in respect of the claims of the Stockholder Representative or any
Stockholders in any such proceeding.

     21. Escrow Agent's Fee. The Escrow Agent shall be entitled to compensation
for its services as stated in the fee exhibit attached hereto as Appendix B. The
Escrow Agent shall send a copy of each invoice to both Parent and the
Stockholder Representative. Parent shall pay such compensation in cash upon
receipt of the Escrow Agent's invoice. The fee agreed upon for the services
rendered hereunder is intended as full compensation for the Escrow Agent's
services as contemplated by this Escrow Agreement; provided, however, that in
the event that the Escrow Agent renders any material service not contemplated in
this Escrow Agreement, or there is any assignment of interest in the subject
matter of this Escrow Agreement, or any material modification hereof, or if any
material controversy arises hereunder, or the Escrow Agent is


                                       14

<PAGE>

made a party to any litigation pertaining to this Escrow Agreement, or the
subject matter hereof, then the Escrow Agent shall be reasonably compensated for
such extraordinary services and reimbursed for all costs and expenses, including
reasonable attorney's fees (the "Extraordinary Expenses"), occasioned by any
delay, controversy, litigation or event. The Escrow Agent may recover such
Extraordinary Expenses from either Parent or the Stockholder Representative. The
Parties agree, that amongst themselves, the Extraordinary Expenses shall be
apportioned one-half (1/2) to Parent and one-half (1/2) to the Stockholder
Representative (or the Stockholders pro rata pursuant to their Escrow Account
Interest if the Stockholder Representative is unable to pay) upon receipt of the
Escrow Agent's invoice by each Party.

     22. Removal; Successor Stockholder Representative. The Stockholder
Representative may resign at any time by giving five (5) Business Days' written
notice to the Stockholders, Parent and the Escrow Agent. Such resignation shall
take effect five (5) Business Days after the date of the receipt of such notice
by the Escrow Agent or at any later time specified therein, and if no time be
specified, at the time of its receipt by the Escrow Agent. The acceptance of a
resignation will not be necessary to make it effective, unless so specified
therein. Holders of a majority of the Escrow Account Interest will be entitled
to remove and replace the Stockholder Representative at any time and for any
reason upon sending written notice thereof to Parent. In the event of the death
or disability of the Stockholder Representative, the Alternative Stockholder
Representative shall automatically become the Stockholder Representative. In the
event of the resignation or removal of the Stockholder Representative, the
Alternative Stockholder Representative shall automatically become the
Stockholder Representative (unless the holders of a majority of the Escrow
Account Interest select a different Stockholder Representative). Parent shall
(i) forward, if received by Parent, a copy of the written notice received from
the holders of a majority of the Escrow Account Interest naming the new
Stockholder Representative in the case of removal or (ii) provide written notice
to the Escrow Agent informing the Escrow Agent as to whom the Escrow Agent shall
recognize as the Alternative Stockholder Representative in the case of death,
disability, or resignation of the Stockholder Representative. Parent and the
Escrow Agent, as the case may be, shall be entitled to rely upon all actions
authorized and all documents, certificates and instructions executed or issued
by the Stockholder Representative until such time as Parent and the Escrow
Agent, as the case may be, receive written notice of such resignation or removal
of the Stockholder Representative from the Stockholder Representative.

     23. Notice Provisions. All notices, requests, demands, and other
communications required or permitted hereunder shall be in writing. Any notice,
request, demand, or other communication hereunder shall be deemed duly given (a)
if personally delivered, when so delivered, (b) if mailed, two (2) Business Days
after having been sent by registered or certified mail, return receipt
requested, postage prepaid and addressed to the intended recipient as set forth
below, (c) if given by facsimile, once such notice or other communication is
transmitted to the facsimile number specified below and electronic confirmation
is received; provided, however, that such notice or other communication is
promptly thereafter mailed in accordance with the provisions of clause (b)
above, or (d) if sent through an overnight delivery service in circumstances to
which such service guarantees next day delivery, the day following being so
sent, and further provided, however that regardless of which method of notice
under Sections 23 (a), (b), (c) or (d) is utilized, then in every such case a
copy of such notice, request, demand or other communication hereunder shall also
be sent to the Stockholder Representative at


                                       15

<PAGE>

Boydcox@aol.com, and when so sent, once such notice or other communication is so
transmitted:

     If to the Company or to Parent or Merger Subsidiary:

          To: ATS Medical, Inc.
              3905 Annapolis Lane #105
              Minneapolis, Minnesota 55447
              Attn: Rick Curtis, Vice President Marketing and Business
                    Development
              Fax: (763) 553-1492

          With a copy to:

              Oppenheimer Wolff & Donnelly LLP
              3300 Plaza VII
              45 South Seventh Street
              Minneapolis, Minnesota 55402
              Attn: Thomas A. Letscher, Esq.
              Fax: (612) 607-7100

or to such other address as the Company, Parent, or Merger Subsidiary shall
furnish to the other parties hereto in writing in accordance with this
subsection.

     If to the Stockholder Representative:

          To: Boyd D. Cox
              P.O. Box 573
              Fayetteville, Arkansas 72702

              Or,

              Boyd D. Cox
              75 N. East Avenue
              Suite 506
              Fayetteville, Arkansas 72701
              (Fax) 479-521-4169

          With a copy to:

              Reed Smith LLP
              1901 Avenue of the Stars, Suite 700
              Los Angeles, California 90067
              Attn: Michael Sanders, Esq.
              Fax: (310) 734-5299

or to such other address as the Stockholder Representative shall furnish to the
other parties hereto in writing in accordance with this subsection.


                                       16

<PAGE>

     If to the Escrow Agent:

              Wells Fargo Bank, N.A., Corporate Trust
              Customized Fiduciary Services
              45 Broadway, 14th Floor
              New York, New York 10006
              Attn: Joseph H. Clark
              Fax: (212) 515-1589

or to such other address as the Escrow Agent shall furnish to the other parties
hereto in writing in accordance with this subsection.

     24. Tax Information.

          (a) Each of the Parties will complete and return to the Escrow Agent
any and all tax forms or reports required to be maintained or obtained by the
Escrow Agent in connection with its administration of this Escrow Agreement. The
Parties agree that, for tax reporting purposes, all income from the investment
of cash Distributions shall, as of the end of each calendar year, be reported as
having been earned by Parent.

          (b) With respect to the disbursement of any Distributions or Deposited
Shares pursuant to this Escrow Agreement, the Stockholder Representative shall
be responsible for determining any tax reporting and withholding relating to any
disbursement made to the Exchange Agent for disbursement to the Stockholders.
Parent shall be responsible for determining any tax reporting and withholding
relating to any such disbursement to Parent. The Stockholder Representative or
Parent, as the case may be, shall instruct the Escrow Agent with respect to any
and all tax reporting and withholding by (i) specifying in writing the amount of
any withholding prior to any disbursement, (ii) instructing the Escrow Agent in
writing as to the specific version of the tax form to be distributed, (iii)
furnishing any information required in such tax reporting forms that the Escrow
Agent may reasonably request, and (iv) furnishing any guidance or direction in
writing as may be reasonably requested by the Escrow Agent. The Escrow Agent
will, in accordance with written instruction given in accordance with this
Section 24, print and mail tax reporting forms to persons receiving
distributions pursuant to this Escrow Agreement and transmit withholding amounts
in accordance with its standard policies and procedures. The Escrow Agent shall
not be considered the payor with respect to any payments made under this
Agreement, and the Parties acknowledge that the Escrow Agent is not in a
position to characterize the nature of the payment made to recipients for tax
purposes. The Escrow Agent further shall not be considered the payor with
respect to any payments made to any non-resident aliens and, accordingly, is not
the "withholding agent" for purposes of any such payments as that term is
defined under the regulations of the Internal Revenue Service ("IRS"). Any tax
certifications received as a result of solicitations made by the Escrow Agent at
the request of any Party will be forwarded to such Party for its review and
analysis. The Escrow Agent shall not have any liability for any withholding,
interest, or penalties assessed by the IRS due to a failure to withhold or
report the proper amount of tax.


                                       17

<PAGE>

     25. General.

          (a) Execution in Counterparts. This Escrow Agreement may be executed
in one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same document.

          (b) Waivers. No waiver of any term, covenant or condition of this
Escrow Agreement shall be effective unless made in a written instrument duly
executed by or on behalf of the party against whom the waiver is to be
effective.

          (c) Amendments. The parties may agree to the amendment or modification
of this Escrow Agreement by an agreement in writing executed in the same manner
as this Escrow Agreement.

          (d) Assignment. This Escrow Agreement may not be assigned by any of
the parties hereto except pursuant to written consent of each of the parties
hereto, which shall include the Escrow Agent.

          (e) Binding Effect. This Escrow Agreement shall be binding upon the
successors and assigns of the parties hereto.

          (f) Governing Law. This Escrow Agreement and the legal relations among
the parties hereto shall be governed by and construed in accordance with the
internal substantive laws of the State of Delaware (without regard to the laws
of conflict that might otherwise apply) as to all matters, including, without
limitations, matters of validity, construction, effect, performance and
remedies.

          (g) Captions. The captions of this Escrow Agreement are for
convenience of reference only and shall not affect in any manner any of the
terms, covenants or conditions hereof.

          (h) Definitions. Capitalized terms used in this Escrow Agreement but
not defined herein shall have the meanings ascribed thereto in the Merger
Agreement.

          (i) Injunctive Relief. It is expressly agreed among the parties hereto
that monetary damages would be inadequate to compensate a party hereto for any
breach by any other party of its covenants and agreements herein. Accordingly,
the parties agree and acknowledge that any such violation or threatened
violation will cause irreparable injury to the others and that, in addition to
any other remedies which may be available, such party will be entitled to
injunctive relief against the threatened breach hereof or the continuation of
any such breach without the necessity of proving actual damages and may seek to
specifically enforce the terms hereof.

                  [Remainder of Page Intentionally Left Blank]


                                       18

<PAGE>

     IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the day and year first above written.

PARENT:                                 ATS MEDICAL, INC.


                                        By: /s/ Richard A. Curtis
                                            ------------------------------------
                                        Name: Richard A. Curtis
                                        Title: Vice President


ESCROW AGENT:                           WELLS FARGO BANK, N.A.


                                        By: /s/ Joseph Clark
                                            ------------------------------------
                                        Name: Joseph Clark
                                        Title: Vice President


STOCKHOLDER REPRESENTATIVE:             /s/ Boyd D. Cox
                                        ----------------------------------------
                                        Boyd D. Cox

                      [SIGNATURE PAGE TO ESCROW AGREEMENT]

                                 SIGNATURE PAGE

ESCROW AGREEMENT

<PAGE>

                                   SCHEDULE A

   LIST OF COMPANY STOCKHOLDERS, MAILING ADDRESSES, AND CAPITAL STOCK HOLDINGS

                                  See Attached.

<PAGE>

                                    EXHIBIT A

          NOTICE OF CLAIM/INDEMNIFICATION NOTICE UNDER ESCROW AGREEMENT

______, 20__

[Escrow Agent]
[Address]

[Stockholder Representative]
[Address]

Ladies and Gentlemen:

This Notice of Claim/Indemnification Notice is being delivered pursuant to
Section 9 of the Escrow Agreement dated as of September 29, 2006 by and among
ATS Medical, Inc., a Minnesota corporation, the Stockholder Representative
_______________, as representative for the holders of the capital stock of 3F
Therapeutics, Inc., a Delaware corporation, and Wells Fargo Bank, N.A., as
escrow agent.

The basis for the claim(s) asserted by ATS Medical, Inc. under the Escrow
Agreement and the dollar amount(s) thereof are as follows: [specify claims in
reasonable detail]

ATS Medical, Inc. estimates the total amount of the claim(s) described in the
preceding paragraph is equal to $___________________________. The number of
Escrow Shares and Escrow Share Distributions related thereto or Set-Off Shares
and Set-Off Share Distributions related thereto necessary to discharge such
claim(s) is __________ based on a per share valuation of $________________ per
share of the Common Stock of ATS Medical, Inc., as determined in the manner
provided in the Escrow Agreement.

Parent has delivered to the Stockholder Representative a copy of this Claim
Notice/Notice of Indemnification in a timely manner and in accordance with the
terms of the Escrow Agreement.

Sincerely,

ATS MEDICAL, INC.


By:
    ---------------------------------
Name:
      -------------------------------
Title:
       ------------------------------

<PAGE>

                                    EXHIBIT B

                     OBJECTION NOTICE UNDER ESCROW AGREEMENT

______, 20___

[Escrow Agent]
[Address]

ATS Medical, Inc.
[preferred address]

Ladies and Gentlemen:

This Objection Notice is being delivered pursuant to Section 10 of the Escrow
Agreement dated as of September 29, 2006 by and among ATS Medical, Inc., a
Minnesota corporation, the Stockholder Representative _______________, as
representative for the holders of the capital stock of 3F Therapeutics, Inc., a
Delaware corporation, and Wells Fargo Bank, N.A., as escrow agent, to dispute,
to the extent described below, the claims of ATS Medical, Inc. asserted in its
Notice of Claim dated _______, 20___ (the "Notice of Claim").

The claim(s) asserted by ATS Medical, Inc. that are disputed by the Stockholder
Representative and the basis for such dispute(s) are as follows: [specify basis
for dispute(s) in reasonable detail] _________________. The Stockholder
Representative does not object to or dispute $________________ of the claim(s)
described in the Notice of Claim.

The Stockholder Representative delivered a copy of this Objection Notice to
Parent in a timely manner and in accordance with the terms of the Escrow
Agreement.

Sincerely,


-------------------------------------
Stockholder Representative

<PAGE>

                                   APPENDIX A

         FORM OF AGENCY AND CUSTODY ACCOUNT DIRECTION FOR CASH BALANCES

Direction to use Wells Fargo Advantage Funds for Cash Balances in the following
account(s):

Account Names: __________________

Account Number(s): ______________

You are hereby directed to invest, as indicated below or as I shall direct
further from time to time, all cash in the Account in the following money market
portfolio of Wells Fargo Advantage Funds (the "Fund") or another permitted
investment of my choice (Check One):

[ ]  Wells Fargo Advantage Funds, Cash Investment Money Market Fund

[ ]  Wells Fargo Advantage Funds, Treasury Plus Money Market Fund

[ ]  Wells Fargo Advantage Funds, 100% Treasury Money Market Fund

[ ]  Wells Fargo Advantage Funds, Government Money Market Fund

[ ]  Wells Fargo Advantage Funds, National Tax-Free Money Market Fund

I acknowledge that I have received, at my request, and reviewed the Fund's
prospectus and have determined that the Fund is an appropriate investment for
the Account.

I understand from reading the Fund's prospectus that Wells Fargo Funds
Management, LLC, ("Wells Fargo Bank") a wholly-owned subsidiary of Wells Fargo &
Company provides investment advisory and other administrative services for the
Wells Fargo Advantage Funds. Other affiliates of Wells Fargo & Company provide
sub-advisory and other services for the Funds. Boston Financial Data Services
serves as transfer agent for the Funds. The Funds are distributed by Stephens
Inc., Member NYSE/SIPC. Wells Fargo & Company and its affiliates are not
affiliated with Stephens Inc. I also understand that Wells Fargo & Company will
be paid, and its bank affiliates may be paid, fees for services to the Funds and
that those fees may include Processing Organization fees as described in the
Fund's prospectus.

I understand that you will not exclude amounts invested in the Fund from Account
assets subject to fees under the Account agreement between us.

I understand that investments in the Fund are not obligations of, or endorsed or
guaranteed by, Wells Fargo Bank or its affiliates and are not insured by the
Federal Deposit Insurance Corporation.

<PAGE>

I acknowledge that I have full power to direct investments of the Account.

I understand that I may change this direction at any time and that it shall
continue in effect until revoked or modified by me by written notice to you.

I understand that if I choose to communicate this investment direction solely
via facsimile, then the investment direction will be understood to be
enforceable and binding.


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Signature


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Date

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                                   APPENDIX B

                                Escrow Agent Fees

                                  See Attached.