Document:

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Exhibit 10.43

                          MARKETING SERVICES AGREEMENT

     This Marketing Services Agreement (the "Agreement"), effective the 21st day
of July, 2005 ("Effective Date"), is by and between Alabama Tissue Center, Inc.,
also known as Regeneration Technologies, Inc. - Cardiovascular ("ATC"), an
Alabama corporation, having its principal place of business at 201 London
Parkway, Suite 300, Birmingham, Alabama, 35211 and ATS Medical, Inc. ("ATS
MEDICAL"), a Minnesota corporation, having its principal place of business at
3905 Annapolis Lane, Suite 105, Minneapolis, Minnesota 55447.

     WHEREAS, ATC owns and uses valuable proprietary processes, methods, trade
secrets and other intellectual properties related to human donor tissue
processing, and distributes the resulting human cardiovascular allograft tissue
("Cardiovascular Tissue") for use by physicians in implant procedures around the
world;

     WHEREAS, ATS MEDICAL wishes to provide marketing services for ATC's
Cardiovascular Tissue for use by physicians for implant procedures;

     WHEREAS, ATC desires to appoint ATS MEDICAL, and ATS MEDICAL wishes to
accept appointment, as the exclusive marketing services representative of the
Cardiovascular Tissues within a defined territory and field of use as set forth
herein;

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the receipt and sufficiency of which is hereby acknowledged,
the parties agree as follows:

I.   DEFINITIONS

The following definitions shall apply throughout this Agreement:

     1.1 "Cardiovascular Tissue" shall mean allograft tissues for use in the
Field of Use.

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     1.2 "Field of Use" shall mean any cardiovascular procedures for
cardiovascular surgery or vascular surgical procedures.

     1.3 "Territory" shall mean North America.

     1.4 "Customers" shall mean patients, doctors, hospitals and clinics within
the Territory and Field of Use.

     1.5 "Processed Tissue" shall mean Cardiovascular Tissue processed by ATC
for marketing by ATS MEDICAL to customers in the Territory and Field of Use, as
identified on Exhibit "A" attached hereto.

     1.6 "Fee" shall mean a reimbursement paid to ATC by the Customers for
processing, research/development, manufacturing, quality assurance, quality
control, storage, handling and maintenance, and transportation charges of
Processed Tissue, as identified on Exhibit "A" attached hereto.

     1.7 "Net Invoice Amount" shall mean the total Fee billed to Customers per
shipment, less transportation charges and discount.

     1.8 "Service Compensation" shall mean compensation to be paid to ATS
MEDICAL by ATC, and computed as a percentage of the Net Invoice Amount.

     1.9 "Minimum Performance Level" shall mean total orders received by ATC for
Processed Tissue that are at least ninety percent (90%) of the aggregate
standard list price of Processed Tissue existing in ATC's inventory on the last
day of the quarter.

     1.10 "Quarterly Order Performance Level" shall mean the total orders
received from Customers for Processed Tissue to be computed on the last day of
each quarterly period.

     1.11 "ATC Intellectual Property" shall mean ATC's confidential and
proprietary process, methods, patents, pending patents, trademarks, copyrights,
trade secrets, know-how,

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techniques, data, training materials, or other intellectual properties
developed, used, or owned by ATC.

     1.12 "Confidential Information" shall mean ATC Intellectual Property, as
well know-how, trade secrets, and other proprietary or confidential information
of either party, including, in the case of ATS MEDICAL, names of physicians,
hospitals or other health care providers solicited by ATS MEDICAL on behalf of
ATC, excluding information which:

          (a) was already in the possession of receiving party prior to its
receipt from the disclosing party (provided that the receiving party is able to
provide the disclosing party with reasonable documentary proof thereof);

          (b) is or becomes part of the public domain by reason of acts not
attributable to the receiving party;

          (c) is or becomes available to receiving party from a source other
than the disclosing party which source, to the best of receiving party's
knowledge, has rightfully obtained such information and has no obligation of
non-disclosure or confidentiality to the disclosure party with respect thereto;

          (d) is made available by the disclosing party to a third party
unaffiliated with the disclosing party on an unrestricted basis;

          (e) is independently developed by the receiving party completely
without reference to any Confidential Information of the disclosing party, as
evidenced by the receiving party's written records; or

          (f) has been or must be publicly disclosed by reason of legal
accounting or regulatory requirements beyond the reasonable control, and despite
the reasonable efforts of the receiving party.

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     1.13 "FDA" shall mean the United Stated Department of Health and Human
Services, Food and Drug Administration, or any successor agency.

     1.14 "NOTA" shall mean the National Organ Transplant Act (42 U.S.C. Section
273 et seq.), as amended.

     1.15 "AATB" shall mean American Association of Tissue Banks.

II.  RIGHTS GRANTED

     2.1 Subject to the terms and conditions contained herein, ATC hereby grants
ATS MEDICAL the exclusive right to market the Processed Tissue within the Field
of Use and Territory.

     2.2 Nothing contained herein shall prevent or prohibit ATC or a third party
designated by ATC from marketing or distributing the Processed Tissue outside
the Territory or Field of Use.

     2.3 The exclusive rights granted to ATS MEDICAL hereunder are contingent
upon ATC receiving firm orders for Processed Tissue at or above the Minimum
Performance Level to be measured on a quarterly basis throughout the term of
this Agreement.

     2.4 Notwithstanding the foregoing, and on the last day of any quarterly
period during the term of this Agreement, if ATS MEDICAL's Quarterly Order
Performance Level is below the Minimum Performance Level, ATC will deliver a
letter of warning to ATS MEDICAL.

     2.5 In the event ATS MEDICAL fails to fulfill orders at or above the
Minimum Performance Level for two (2) consecutive quarters, ATC will notify ATS
MEDICAL in writing of such failure. In such event, and if ATC delivers all of
the foregoing notices to ATS MEDICAL, ATC shall have the right to declare this
Agreement non-exclusive or terminate it in accordance with Section VIII herein.

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     2.6 From time to time and upon the request by ATC, the Parties shall meet
to discuss the status of ATC's Inventory and mutually develop strategies to
reduce such inventory.

     2.7 ATC will provide ATS MEDICAL with data at the end of each month
reporting the level of inventory available for distribution for the following
month. In the event any Processed Tissue remains in inventory for a period of
six (6) months, ATS MEDICAL and ATC will mutually agree on reducing the Fee for
those respective Processed Tissue or ATC may be allowed to use the Processed
Tissue in research if applicable.

     2.8 If ATC processes any new Cardiovascular Tissue after the date of this
Agreement, it shall promptly notify ATS MEDICAL of such new Cardiovascular
Tissue and the associated Fee. ATS MEDICAL will have the right to add such new
Cardiovascular Tissue to this Agreement by giving written notice to ATC within
thirty (30) days, and Exhibit A shall be appropriately amended.

     2.9 If ATC decides to pursue the marketing of Processed Tissue, whether
directly or through a third party, in any geographic area outside of the
Territory, ATC shall promptly notify ATS MEDICAL of the geographic area that ATC
intends to pursue. ATS MEDICAL will have the right to negotiate for the addition
of such geographic area to this Agreement by giving written notice to ATC within
thirty (30) days. ATC shall not grant any third party the right to market
Processed Tissue outside the Territory without first complying with this Section
2.9.

III. TERMS OF MARKETING SERVICES

     3.1 Processed Tissue shall be marketed pursuant to this Agreement and,
except as otherwise expressly agreed by ATC in advance and in writing, this
Agreement shall control all aspects of the dealings between ATC and ATS MEDICAL
with respect to the Processed Tissue.

     3.2 ATC shall use commercially reasonably efforts to promptly ship
Processed Tissue

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directly to Customers as instructed by ATS MEDICAL, subject to the availability
of Cardiovascular and Processed Tissue. All orders, however, are subject to
acceptance by ATC, and ATC shall be under no obligation to accept such order
received.

     3.3 ATS MEDICAL will provide ATC with the name, address and contact
information for the customers to which ATC is directed to ship and invoice
Processed Tissue.

     3.4 ATC shall be responsible for all billing and collections. ATC shall
promptly invoice the Customer for the applicable Fee of the Processed Tissue
ordered, payable net thirty (30) days.

     3.5 The Fee Schedule, attached hereto as Exhibit "A", is subject to change
at the sole discretion of ATC, provided that ATC provides ATS MEDICAL at least
thirty (30) days advance written notice.

     3.6 ATS MEDICAL shall be paid a Service Compensation for all Processed
Tissue orders invoiced by ATC prior to the termination date of this Agreement,
in accordance with the terms hereunder.

          3.6.1 Service Compensation shall be paid at the rate of ***** (*****%)
of the ***** during the initial year of this Agreement; ***** percent (*****%)
of the ***** during the second year; and ***** percent (*****%) of the *****
during the third year and any subsequent renewal year of this Agreement.

          3.6.2 Service Compensation shall be paid monthly as set forth in
Section III herein, but shall only be considered "earned" by ATS MEDICAL upon
ATC's receipt of the Fee due for the respective Processed Tissue Shipment.

----------
***** Denotes confidential information that has been omitted from the exhibit
     and filed separately, accompanied by a confidential treatment request, with
     the Securities and Exchange commission pursuant to Rule 24B-2 of the
     Securities Exchange Act of 1934.

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     3.7 ATC shall provide a listing of all past due accounts to ATS MEDICAL at
the end of each month, and ATS MEDICAL shall use reasonable efforts to assist
ATC in the collection of all past due accounts.

          3.7.1 In the event that ATC is unable to collect a Fee from a Customer
within ninety (90) days of the respective Processed Tissue shipment, ATC shall
deduct the amount of such Service Compensation originally paid to ATS MEDICAL
from the Service Compensation next or currently due to ATS MEDICAL.

          3.7.2 In the event, and only in such event, that within twelve (12)
months from the original ship date of such unpaid Processed Tissue shipment, the
respective payment is collected, ATC shall reissue the respective Service
Compensation to ATS MEDICAL.

     3.8 ATC shall provide ATS MEDICAL with a monthly statement of ATS MEDICAL
activity for all Processed Tissue shipped in the previous month, within thirty
(30) days after the end of such month. Such statement shall include an
itemization of shipments as to Processed Tissue type, quantities shipped and
invoiced amounts, by Customer, and the calculated Service Compensation due.
Payment for the Service Compensation reflected on such statement shall be made
in conjunction with transmission of the statement.

     3.9 The Parties shall conduct weekly status calls to coordinate and
maximize marketing and distribution of Processed Tissue.

IV.  GENERAL DUTIES OF ATC

     4.1 For the term of this Agreement, ATC shall maintain any and all AATB and
local, state, federal, and other governmental licenses, certifications and
registrations required for processing and distributing the Processed Tissue.

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     4.2 ATC shall at all times conduct itself and all activities performed
under this Agreement in full compliance with all applicable federal, state and
local laws, rules, regulations and standards relating to the processing and
marketing of human tissue including, as applicable, regulations promulgated by
the FDA, NOTA, as amended from time to time, and AATB standards.

     4.3 ATC or an affiliate of ATC will obtain all required consents from
tissue donors for Processed Tissue. ATC will ensure that donors processed are
screened according to suitability criteria as set forth by the AATB and
applicable Federal regulations. ATC will perform serologic, bacterial and
microbiological testing on all donor tissue processed in accordance with AATB
standards and/or applicable U.S. federal regulations.

     4.4 ATC will cooperate with ATS MEDICAL in providing for effective training
and education to ATS MEDICAL and Customers with respect to the Processed Tissue
throughout the Territory and Field of Use.

V.   GENERAL DUTIES OF ATS MEDICAL

     5.1 ATS MEDICAL shall use commercially reasonable efforts to promote,
market and solicit orders for Processed Tissue to Customers in the Territory in
the Field of Use including generation of necessary marketing materials and
literature, with the content of such marketing materials and literature being
subject to the final approval of ATC.

     5.2 ATS MEDICAL will engage in marketing and distribution promotion
activities in which Processed Tissue shall be designated by their correct names
and identified as Cardiovascular Tissue processed by ATC being marketed by ATS
MEDICAL.

     5.3 ATS MEDICAL will maintain a qualified marketing organization for the
Processed Tissue in the Territory.

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     5.4 For the term of this Agreement, ATS MEDICAL shall maintain any and all
local, state, federal, and other governmental licenses, certifications and
registrations required for marketing the Processed Tissue.

     5.5 ATS MEDICAL shall at all times conduct itself and all activities
performed under this Agreement in full compliance with all applicable federal,
state and local laws, rules, regulations and standards relating to the marketing
of Cardiovascular Tissue including those of any jurisdiction where ATS MEDICAL
may be engaged in activities pursuant to this Agreement and including, as
applicable, regulations promulgated by the FDA, as well as NOTA and AATB
standards.

     5.6 ATS MEDICAL personnel and representatives shall make commercially
reasonable efforts to be adequately trained regarding the Processed Tissue.

     5.7 ATS MEDICAL agrees to participate in a training session at a mutually
agreed location within one month of the Effective Date herein, or at a mutually
agreed upon time. ATS MEDICAL and ATC will jointly agree on the timing, location
and content of any supplemental training and education sessions that may be
necessary or appropriate for ATS MEDICAL'S representatives related to the
marketing of Processed Tissue.

     5.8 ATS MEDICAL shall provide ATC with a written, non-binding, annual
orders forecast, broken down by quarter, as requested by ATC.

     5.9 ATS MEDICAL shall not alter, modify, create, publish or distribute any
advertisement or literature of any kind which represents an ATC Processed Tissue
or which bears the ATC logo without prior review and written approval by the
General Manager of ATC or their designate. ATS MEDICAL agrees to permit ATC to
review all of ATS MEDICAL's promotion and advertising material for the Processed
Tissue prior to use. ATS MEDICAL shall

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not use and shall withdraw and retract any promotion or advertising that ATC
finds unsuitable for any reason, or would otherwise cause a breach of the terms
of this Agreement.

     5.10 ATS MEDICAL will assist ATC in assessing customer requirements for
Cardiovascular Tissue and in developing modifications and improvements of the
Processed Tissue, with a view towards maximizing the potential market for
Processed Tissue in the Territory. ATS MEDICAL will keep ATC fully informed of
all governmental, commercial, and competitive activities or plans that could or
do affect the market for Processed Tissue in the Territory.

     5.11 ATS MEDICAL will refer to ATC for direct action with respect to any
orders or inquiries for Processed Tissue from Customers outside of the Territory
or which involve non-standard versions of the Processed Tissue.

     5.12 ATS MEDICAL shall be responsible for all expenses incurred by it in
connection with the implementation and performance of its duties and obligations
under this Agreement including, but not limited to, costs and expenses
associated with establishing and maintaining its sales and marketing
organization and offices, advertising and promotion expenses, and any and all
taxes, duties, tariffs or charges which may be imposed on ATS MEDICAL.

     5.13 ATS MEDICAL shall diligently endeavor to train and educate Customers
with respect to the Processed Tissue in conformity with ATC's established
training and education policies and programs. ATS MEDICAL agrees to provide
appropriate educational services to Customers and potential Customers,
including, but not limited to, surgeons, hospital personnel, customer support
staff and potential recipient or customer groups, regarding applications of
Processed Tissue within the Field of Use in the Territory. Such services shall
include education on Processed Tissue design and use, as well as ordering,
delivery and stocking procedures.

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     5.14 ATS MEDICAL shall assist ATC through their contacts at healthcare
facilities and medical institutions, in identifying potential new sources of
recovered Cardiovascular Tissue. ATS MEDICAL will work cooperatively with ATC to
develop programs at healthcare facilities and medical institutions to increase
cardiovascular tissue recovery opportunities.

     5.15 ATS MEDICAL will assist ATC in responding to Donor family information
requests.

     5.16 ATS MEDICAL shall not make any contracts or commitments on behalf of
ATC nor make any warranties or other representations regarding the Processed
Tissue other than those authorized herein or by the General Manager of ATC in a
separate writing.

     5.17 ATS MEDICAL shall conduct its business in a manner that will reflect
favorably on ATC and shall not engage in any deceptive, misleading, illegal or
unethical business practices.

VI.  NOTICE OF CUSTOMER COMPLAINTS OR REJECTION POLICIES

     6.1 ATS MEDICAL shall instruct Customers to comply with the "Return
Instructions" set forth in Exhibit B attached hereto and agrees that its Service
Compensation under this Agreement may be affected by customer returns controlled
by the Return Instructions.

     6.2 ATS MEDICAL also agrees to promptly notify ATC of any alleged defects
in the Processed Tissue of which ATS MEDICAL becomes aware and to instruct
Customers to return such defective Processed Tissue to ATC in accordance with
Exhibit B attached hereto.

     6.3 Upon ATC's confirmation that such alleged defects existed at the time
ATC shipped such Processed Tissue, ATC shall reimburse the Customer for the
return shipment expense and, at ATC's sole option, either replace the Processed
Tissue or make an appropriate adjustment to the Customer's invoice.

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     6.4 ATS MEDICAL shall promptly notify ATC of any known Customer complaints
or reports of alleged adverse reactions regarding Processed Tissue.

     6.5 ATS MEDICAL shall provide reasonable assistance in complaint
investigation as requested by ATC.

VII. INTELLECTUAL PROPERTY RIGHTS, CONFIDENTIALITY AND RESTRICTIVE COVENANTS

     7.1 In connection with the performance of this Agreement, ATS MEDICAL will
have access to ATC Intellectual Property. ATS MEDICAL agrees that all ATC
Intellectual Property will remain the exclusive property of ATC and any
improvements, modifications, advancements to, and any invention, product, or
process based upon or derived from the ATC Intellectual Property or any other
ATC confidential or proprietary information disclosed to ATS MEDICAL shall be
the sole and exclusive property of ATC, and ATS MEDICAL expressly disclaims any
right, title and interest in same.

     7.2 If ATS MEDICAL learns of the infringement or likely infringement of any
ATC patent or pending application, which relates to the Processed Tissue, ATS
MEDICAL shall promptly provide ATC with written notice within ten (10) days of
such discovery of infringement or likely infringement along with reasonable
evidence of the same.

     7.3 Nothing in this Agreement shall be construed as (i) a warranty or
representation by ATC as to the validity, enforceability or scope of any ATC
patent; (ii) a warranty or representation that anything made, used, distributed,
or otherwise disposed of pursuant to this Agreement is or will be free from
infringement of patents or other intangible rights of third parties; (iii) a
requirement that ATC shall file any patent application, secure any patent, or
maintain any patent in force; (iv) an obligation on ATC to bring or prosecute
actions or suits against third parties for infringement of ATC patents; (v) an
obligation to furnish any technical

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information except as specifically provided herein; or (vi) a granting by
implication, estoppel or otherwise, any license or rights under patents, trade
secrets, know-how, copyrights, or other intangible rights of ATC other than
those specifically set forth herein; provided, however, that the foregoing
disclaimer shall not limit ATC's obligations under Section 10.1.

     7.4 Each party agrees, during the term of this Agreement and for a period
of five (5) years thereafter, not to use any Confidential Information for any
purpose other than as permitted or required for performance by such party under
this Agreement and not to disclose or provide any Confidential Information to
any third party and to take all reasonably necessary measures to prevent any
such disclosure by its employees, agents, contractors or consultants. Upon
request of the other party or expiration or termination of this Agreement, each
party shall return all such Confidential Information to the other party.

     7.5 So long as ATS MEDICAL'S rights under this Agreement are exclusive in
the Territory, ATS MEDICAL will not, directly or indirectly, distribute, market,
or distribute or market on behalf of, or be financially involved with, any
business engaged in the procurement, processing, or marketing of allograft
tissue in the Field of Use.

     7.6 During the term of this Agreement and for a period of one (1) year
after expiration or termination of this Agreement, neither party will, directly
or indirectly, solicit for employment any person who was employed by the other
party during the preceding one-year period; provided, however, that this
provision shall not prevent (a) hiring any such person who responds to a media
advertisement or to a non-directed executive search inquiry; or (b)
solicitations by general advertisement and other solicitations not specifically
directed toward employees of the other party.

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     7.7 ATS MEDICAL will not use, authorize or permit the use of, the name
"Alabama Tissue Center, Inc.", "ATC", Regeneration Technologies, Inc. -
Cardiovascular", "RTI-CV", or any other trademark or trade name owned by ATC or
its corporate or business name in any way without the prior written approval of
ATC. ATS MEDICAL shall not contest the right of ATC to exclusive use of any
trademark or trade name used or claimed by ATC. ATC will not use, authorize or
permit the use of, the name "ATS Medical, Inc.", "ATS" or any other trademark or
trade name owned by ATS MEDICAL or its corporate or business name in any way
without the prior written approval of ATS MEDICAL. ATC shall not contest the
right of ATS MEDICAL to exclusive use of any trademark or trade name used or
claimed by ATS MEDICAL.

VIII. TERM AND TERMINATION

     8.1 The term of this Agreement shall commence on the Effective Date herein
and terminate on June 30, 2008, unless otherwise terminated as provided herein.
This Agreement shall automatically renew for terms of one (1) year until June
30, 2010, unless either party delivers written notice of its intent not to renew
the Agreement with such notice delivered to the other party no less than six (6)
months prior to renewal date.

     8.2 This Agreement may be terminated:

          (a) by either party due to a material breach by the other party of any
of its obligations or covenants herein upon thirty (30) calendar days written
notice to the breaching party, but only if the breaching party fails to remedy
said breach within thirty (30) calendar days of such written notice;

          (b) by either party promptly upon the insolvency or filing for
receivership or bankruptcy by the other party;

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          (c) by ATS MEDICAL if ATC elects to convert ATS MEDICAL's right to
non-exclusive rights pursuant to Section 2.5; or

          (d) upon mutual written consent of the parties.

     8.3 On termination of this Agreement, ATS MEDICAL shall cease to be an
authorized marketing representative for the Processed Tissue. Service
Compensation shall be paid for Processed Tissue orders billed by ATC by such
termination date within ninety (90) days of termination, subject to the
provisions of Section III herein.

     8.4 Following termination of this Agreement:

          (a) ATS MEDICAL will not use the trade name or logo of ATC including,
but not limited to the "Alabama Tissue Center, Inc.", "ATC", "Regeneration
Technologies, Inc.-Cardiovascular", or "RTI-CV", in any advertising or other
printed matter in its possession, under its control, or in any manner; and

          (b) ATC will not use the trade name or logo of ATS MEDICAL including,
but not limited to the "ATS Medical, Inc." or "ATS" in any advertising or other
printed matter in its possession, under its control, or in any manner.

IX.  REPRESENTATIONS AND WARRANTIES

     9.1 Each of the parties represents and warrants that (i) its is fully
authorized to enter into this Agreement; (ii) its entering into and performance
under this Agreement does not violate or breach its corporate documents or any
agreement or contract to which it is a party; (iii) there is no claim, demand,
action, suite or proceeding or investigation pending or currently threatened
against it or any of its affiliates which, if adversely determined, would
restrict it from entering into this Agreement and carrying out its obligation
under this Agreement; (iv) it has no legal obligation to, and no agreement with,
any third party that would prevent this Agreement from

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being fully implemented in accordance with its terms; and (v) it has not
previously granted and will not grant any rights in conflict with the rights
granted herein.

     9.2 ATC represents and warrants that it has obtained all certifications or
authorizations required by the AATB to process and market Cardiovascular Tissue.

     9.3 The parties hereby acknowledge that NOTA prohibits the acquisition,
receipt and transfer of "human organs" (which includes allograft tissue) for
"valuable consideration." As used in NOTA, the term "valuable consideration"
does not include reasonable costs associated with the removal storage and
transportation of a human organ or tissue. The parties agree that any fees and
other consideration set forth herein are reasonable amounts with respect to the
parties' reasonable costs associated with the services provided pursuant to this
Agreement.

     9.4 OTHER THAN ANY WARRANTY EXPRESSLY MADE IN THIS AGREEMENT, ATC MAKES NO
REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY, NON-INFRINGEMENT OR FITNESS
FOR A PARTICULAR PURPOSE.

X.   INDEMNIFICATION

     10.1 ATC shall indemnify and hold ATS MEDICAL, its directors, officers,
agents and employees, harmless from and against any and all losses, damages,
liabilities, costs and expenses, including reasonable attorney and court costs,
that may result from (a) any demand, claim or litigation brought by a third
party and relating to, resulting from or arising out of ATC's breach of any
duty, obligation, representation, warranty or covenant herein, (b) the
negligence, willful misconduct or fraud of ATC or its personnel in connection
with the performance of this Agreement, (c) personal injury (including disease
transmission and death) incident to the use of

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any Processed Tissue, or (d) any claim that processing or marketing of the
Processed Tissue infringes intellectual property rights of any third party.

     10.2 ATS MEDICAL shall indemnify and hold ATC, its directors, officers,
agents and employees, harmless from and against any and all losses, damages,
liabilities, costs and expenses, including reasonable attorney and court costs,
that may result from (a) any demand, claim or litigation brought by a third
party and relating to, resulting from or arising out of ATS MEDICAL's breach of
any duty, obligation, representation, warranty or covenant herein, (b) the
negligence, willful misconduct or fraud of ATS MEDICAL or its personnel in
connection with the performance of this Agreement, or (c) any statement made
verbally or in writing by representatives or agents of ATS MEDICAL with respect
to the Processed Tissue that expands upon or is inconsistent with the
promotional materials reviewed by ATC or other information furnished by ATC or
packaged with the Processed Tissue.

     10.3 To receive the foregoing indemnities, the party seeking
indemnification must promptly notify the other in writing of a claim or suit and
provide reasonable cooperation (at the indemnifying party's expense) and full
authority to defend or settle the claim or suit; provided, however, that the
failure of an indemnified party to provide prompt notice shall not relieve an
indemnifying party of any of its obligations under this Section X except to the
extent such indemnifying party is prejudiced by such omission and shall not
relieve the indemnifying party from any other obligation or liability that it
may have to any indemnified party under this Agreement. The indemnifying party
shall have no obligation to indemnify the indemnified party under any settlement
made without the indemnifying party's written consent.

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XI.  MISCELLANEOUS

     11.1 Relationship. The parties each acknowledge that they are independent
contractors with regard to the subject matter hereof. ATS MEDICAL, its agents
and employees shall, under no circumstances, be deemed employees, agents or
representatives of ATC. Neither ATS MEDICAL nor ATC shall have any right to
enter into any contract or commitment in the name of, or on behalf of the other,
or to bind the other in any respect whatsoever.

     11.2 Representations/Entire Agreement. Each party acknowledges that no
other representation, statement, understanding or agreement, has been made, or
exists between the parties, and that neither party has relied on anything done
or said or on any presumption in fact or in law, (i) with respect to this
Agreement, or to the duration, termination or renewal of this Agreement, or with
respect to the relationship between the parties, other than as expressly set
forth in this Agreement; (ii) that in any way tends to change or modify the
terms, or any of them, of this Agreement or to prevent this Agreement becoming
effective; or (iii) that in any way affects or relates to the subject matter
hereof. This Agreement, including exhibits, constitutes the entire Agreement of
the parties with respect to the subject matter herein, and supercedes all prior
discussions, negotiations, understandings and agreements between the parties
concerning the subject matter hereof, including, but not limited to, the
Parties' term sheet dated January 6, 2005.

     11.3 Amendments. Except as otherwise provided herein, this Agreement may be
amended only if in writing and signed by both parties.

     11.4 Assignment. Neither party may assign or otherwise transfer its rights
and obligations under this Agreement without the prior written consent of the
other party, except that either party may assign this Agreement to its successor
in connection with a Change in Control of such party or to any affiliate. For
purposes of this Agreement, "Change in Control" shall

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mean (a) the sale of all or substantially all of the assets of a party or the
business to which this Agreement relates, (b) a merger of a party into another
entity in which the shareholders of such party immediately prior to the merger
do not own at least 50% of the voting capital stock of the surviving corporation
immediately after the merger, or (c) the acquisition after the Effective Date by
another entity or person, or persons, other than an Affiliate, of at least 50%
of the outstanding voting capital stock of such party. Any prohibited assignment
shall be null and void. All terms and conditions of this Agreement shall be
binding on and inure to the benefit of the successors and permitted assigns of
the parties.

     11.5 Waiver. Except as expressly provided in this Agreement, waiver by
either party, or failure by either party to claim a default, of any provision of
this Agreement shall not be a waiver of any subsequent default.

     11.6 Notice. All notices hereunder shall be in writing and given to a party
at its respective address or facsimile number specified below. Notice shall be
deemed to have been duly given if delivered personally, one day after delivery
to a nationally recognized overnight delivery service, charges prepaid, three
days after being sent by registered or certified mail, postage prepaid, or when
receipt is electronically confirmed if by facsimile or other telegraphic means
to the party for whom intended at the address below:

     ATC:                                  ATS MEDICAL, Inc.:

     General Manager                       Vice President of Marketing and
     Alabama Tissue Center, Inc.,          Business Development
     Also known as Regeneration            ATS Medical, Inc.
     Technologies, Inc. - Cardiovascular   3905 Annapolis Lane, Suite 105
     201 London Parkway, Suite 300         Minneapolis, Minnesota 55447
     Birmingham, Alabama 35211             Facsimile: (763) 553-0052
     Facsimile: (205) 934-9219

                                       19

<PAGE>

     With a copy to:
     General Counsel
     Regeneration Technologies, Inc.
     P.O. Box 2650
     11621 Research Circle
     Alachua, Florida 32616-2650
     Facsimile: (386) 418-3608

     Either party may change its address for purposes of this Agreement by
giving the other party written notice of such as provided herein.

     11.9 Governing Law/Arbitration. This Agreement shall be construed and
enforced in accordance with the laws of the State of Florida. Any dispute
between the parties arising out of or relating to this Agreement or its breach
that cannot be resolved within sixty (60) days of written notice of the
existence of a dispute will be resolved in binding arbitration administered by
the American Arbitration Association under its Commercial Arbitration Rules and
Procedures for Large Complex Commercial Disputes. Unless otherwise agreed to in
writing by the parties, a single neutral arbitrator agreeable to both parties
will conduct such arbitration, and the arbitrator shall have the authority to
award reasonable attorneys' fees and expenses in his or her discretion. Unless
otherwise agreed by the parties, such arbitration shall be held in the State of
Florida if initiated by ATS MEDICAL and shall be held in the State of Minnesota
if initiated by ATC. Judgment upon any arbitration award may be entered in any
court of competent jurisdiction. Nothing herein shall preclude a party from
seeking an injunction or order requiring performance from any court of competent
jurisdiction. Should any part or provision of this Agreement be held
unenforceable or in conflict with the law of any jurisdiction, the validity of
the remaining parts or provisions shall not be affected by such holding. In the
event a part or provision of this Agreement is held unenforceable or in conflict
with the law affecting consideration to either

                                       20

<PAGE>

party, the parties agree to negotiate in good faith the amendment of such part
or provision in a manner consistent with the intention of the parties as
expressed in this Agreement.

     11.10 Headings. Headings used in this Agreement are provided for
convenience only and shall not be used to construe meaning or intent.

     11.11 Insurance. For the term of this Agreement, ATS MEDICAL and ATC will
each maintain current comprehensive liability insurance appropriate to the risk
involved in the amount of not less than $1,000,000 per occurrence and
$10,000,000 aggregate, or in amounts as required by law. Evidence of such
coverage will be provided upon request. Written notice of any change or
cancellation of such insurance coverage will be provided to the other party
within thirty (30) calendar days of said change or cancellation.

     11.12 Force Majeure. The parties shall be excused from performing their
obligations under this Agreement if performance is delayed or prevented by any
event beyond such Party's reasonable control and without the fault or negligence
of the Party seeking to excuse performance, including, but not limited to, acts
of God, fire, terrorism, explosion, weather, plague, war, insurrection, civil
strife or riots, provided, however, such performance shall be excused only to
the extent of and during such disability and such Party makes commercially
reasonable efforts to remove the disability. Any Party seeking to excuse or
delay performance under this section shall provide detailed written notice to
the other Party of the nature and anticipated duration of the delay.

     11.13 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, and all of which shall constitute but
one and the same instrument. This Agreement may be executed and delivered via
facsimile.

                                       21

<PAGE>

     11.14 Confidentiality. Neither party shall disclose the terms of this
Agreement without the consent of the either party, except as required by
applicable law or regulation or rule of a national securities exchange.

                                       22

<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
written below.

ATS MEDICAL, INC.                       ALABAMA TISSUE CENTER, INC.

By:                                     By:
    ---------------------------------       ------------------------------------
Name: Michael Dale                      Name:
Title: President and CEO                      ----------------------------------
                                        Title:
Date:                                          ---------------------------------
      -------------------------------   Date:
                                              ----------------------------------

Exhibits Attached:

Exhibit A Processed Tissue and Applicable Fees
Exhibit B Return Policy

                                       23

<PAGE>

       EXHIBIT "A" TO MARKETING SERVICES AGREEMENT - PROCESSED TISSUE AND
                                 APPLICABLE FEES

<TABLE>
<S>         <C>                                                <C>       <C>
 CARDIAC    VALVED AND NON-VALVED CONDUITS
 581006        Aortic Valves - 6MM to 10MM                               $*****
 581011        Aortic Valves - 11MM to 15MM                              $*****
 581016        Aortic Valves - 16MM to 17MM                              $*****
 581021        Aortic Valves - 18MM to 20MM                              $*****
 581023        Aortic Valves - 21MM to 22MM                              $*****
 581023        Aortic Valves - 23MM to 34MM                              $*****
 583001        Aortic Patch - ALL                                        $*****
 582006        Pulmonic Valve - 6MM to 19MM                              $*****
 582020        Pulmonic Valve - 20MM to 21MM                             $*****
 582022        Pulmonic Valve - 22MM to 25MM                             $*****
 582026        Pulmonic Valve - 26MM to 28MM                             $*****
 582029        Pulmonic Valve - 29MM to 30MM                             $*****
 582031        Pulmonic Valve - 31MM to 34MM                             $*****
 583000        Pulmonic Patch - ALL                                      $*****
 581200        Descending Aorta - ALL                                    $*****
 581100        Aortic Non-Valve Conduit - ALL                            $*****
 584000        Pulmonic Non-Valve Conduit w/ LPA & RPA - ALL             $*****
 584010        Pulmonary Hemi Arteries - RT w/ cusp                      $*****
 584020        Pulmonary Hemi Arteries - RT w/o cusp                     $*****
 584011        Pulmonary Hemi Arteries - LF w/ cusp                      $*****
 584012        Pulmonary Hemi Arteries - LF w/o cusp                     $*****

VASCULAR    SAPHENOUS - FEMORALS AND ILIACS
 581401        Veins <17CM - A                                           $*****
 581402        Veins <17CM - B                                           $*****
 581403        Veins <17CM - AB                                          $*****
 581404        Veins <17CM - O                                           $*****
 581501        Veins 17-29CM - A                                         $*****
 581502        Veins 17-29CM - B                                         $*****
 581503        Veins 17-29CM - AB                                        $*****
 581504        Veins 17-29CM - O                                         $*****
 581601        Veins 30-49CM - A                                         $*****
 581602        Veins 30-49CM - B                                         $*****
 581603        Veins 30-49CM - AB                                        $*****
 581604        Veins 30-49CM - O                                         $*****
 581701        Veins 50-68CM - A                                         $*****
 581702        Veins 50-68CM - B                                         $*****
 581703        Veins 50-68CM - AB                                        $*****
 581704        Veins 50-68CM - O                                         $*****
 581801        Veins > 69CM - A                                          $*****
 581802        Veins > 69CM - B                                          $*****
 581803        Veins > 69CM - AB                                         $*****
 581804        Veins > 69CM - O                                          $*****
 584000        Femoral Veins - All                             <19CM     $*****
 584000        Femoral Veins - All                             20-30CM   $*****
</TABLE>

----------
***** Denotes confidential information that has been omitted from the exhibit
     and filed separately, accompanied by a confidential treatment request, with
     the Securities and Exchange commission pursuant to Rule 24b-2 of the
     Securities Exchange Act of 1934.

                                       24

<PAGE>

<TABLE>
<S>         <C>                                                <C>       <C>
 584100        Femoral Arteries - ALL                          <19CM     $*****
 584100        Femoral Arteries - ALL                          20-30CM   $*****
 585000        Aorto Illiac - ALL                                        $*****
</TABLE>

                      SHIPPING COST TO BE ADDED TO INVOICE

----------
***** Denotes confidential information that has been omitted from the exhibit
     and filed separately, accompanied by a confidential treatment request, with
     the Securities and Exchange commission pursuant to Rule 24b-2 of the
     Securities Exchange Act of 1934.

                                       25

<PAGE>

                   Exhibit "B" to Marketing Services Agreement

                                  Return Policy

1.0  Authorization by ATC's Customer Service Department is required for all
     returns.

2.0  A Return Authorization Number ("RA Number") issued by ATC's Customer
     Service Department is required to be referenced on all returned packages.

3.0  Returns will be authorized and an RA Number issued only under the following
     conditions:

     3.1  Return is scheduled by the Customer within time necessary to assure
          arrival at ATC within shipper validation parameters; and

     3.2  The shipper seal is intact; or

     3.3  The graft is subject of a Customer's complaint including product
          quality and/or order/shipping error.

4.0  A restocking fee will apply to all non-complaint returns unless waived by
     ATC prior to issuance of the RA Number.

5.0  An RA Number is valid for five (5) days only for non-complaint returns.

                                       26<PAGE>
EXHIBIT 10.44

            EXCLUSIVE DEVELOPMENT, SUPPLY AND DISTRIBUTION AGREEMENT

     THIS EXCLUSIVE DEVELOPMENT, SUPPLY AND DISTRIBUTION AGREEMENT ("Agreement")
is made and entered into effective as of June 23, 2005 (the "Effective Date") by
and between Genesee BioMedical, Inc., a corporation organized under the laws of
the state of Colorado ("GBI"), with an address at 1308 South Jason Street,
Denver, Colorado 80223, and ATS Medical, Inc., a Minnesota corporation ("ATS"),
with an address at 3905 Annapolis Lane, Minneapolis, Minnesota 55447,
(hereinafter sometimes individually or collectively referred to as a "Party" or
the "Parties," respectively).

                                    RECITALS

A.   ATS and GBI are engaged in the design, development, manufacture and sale of
     products for use in cardiac surgery.

B.   GBI has special knowledge and expertise relating to the design, development
     and manufacture of cardiac surgical products, including annuloplasty repair
     rings, c-rings and accessories, and ATS has a distribution network that is
     capable of marketing and selling such products.

C.   ATS and GBI previously agreed in principal to certain non-binding terms and
     conditions regarding the development of the Products (the "Term Sheet") and
     after executing the Term Sheet market input data generated by the Parties'
     investigations have affected certain commercial considerations reflected in
     the Term Sheet.

D.   GBI desires to manufacture the Products for ATS and to supply such
     quantities of Products as ATS desires, and ATS desires to obtain from GBI a
     supply of the Products after it has complied with the necessary FDA
     requirements so that ATS can exclusively distribute the Products worldwide.

E.   ATS and GBI desire to formalize their relationship by entering into this
     Exclusive Development, Supply and Distribution Agreement for the purpose of
     developing, manufacturing, supplying and distributing the Products, on the
     terms set forth in this Agreement.

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
representations, warranties, covenants and agreements contained herein, the
Parties hereto agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

1.1. Act shall mean the United States Food, Drug and Cosmetic Act and the
     regulations promulgated thereunder, as amended from time to time.

<PAGE>

1.2. Additional Product shall mean all improvements to, modifications of or
     subsequent generations of the Products that do not affect the form, fit or
     function of the Product and any support product(s) developed by GBI during
     the term of this Agreement.

1.3. Affiliates shall mean, with respect to either Party, those entities
     controlled by, in control of, or under common control with such person. For
     the purposes of this definition, "control" means ownership or control,
     direct or indirect, of more than fifty percent (50%) of the voting capital
     or equity participation of an entity.

1.4. ATS Confidential Information shall mean any non-public information about
     ATS, its development of intellectual property and its operations including,
     but not limited to, any non-public information or scientific or technical
     data, know-how, or expertise of ATS relating to the Products, existing as
     of the Effective Date or developed during the term of this Agreement
     (excluding Joint Inventions) and non-public information that relates to its
     financial statements, marketing or finances, market research, customers,
     markets, product plans, business plans, services, software, developments,
     inventions, processes, procedures, methods, know-how, designs, data,
     programs, drawings, and engineering information.

1.5. ATS Invention shall mean any invention (excluding Joint Inventions),
     whether or not patentable, conceived or developed without the use of any
     GBI Confidential Information by employees of ATS, alone or together with
     any third Party (including Affiliates, agents and consultants of ATS or a
     person or entity working in any fashion on behalf of ATS but excluding
     GBI), during the term of this Agreement, or prior to the Effective Date,
     specifically related to the development of the Product.

1.6. Change in Control shall mean (i) any consolidation or merger of either
     Party with or into any other corporation or other entity or person, or any
     other corporate reorganization, in which the stockholders of such Party
     immediately prior to such consolidation, merger or reorganization, own less
     than fifty percent (50%) of such Party's voting power immediately after
     such consolidation, merger or reorganization, or any transaction or series
     of related transactions to which either is a Party in which in excess of
     fifty percent (50%) of such Party's voting power is transferred; or (ii) a
     sale, lease or other disposition of all or substantially all the assets of
     either Party.

1.7. Demonstration Products shall have the meaning ascribed thereto in Section
     3.1.

1.8. Development Period shall mean the period commencing on the Effective date
     and ending upon passage of necessary notice periods with no further
     comments from the FDA under Section 510(k) of the Act, as more particularly
     set forth in the Development Plan.

1.9. Development Plan shall mean the description of development activities for
     the Products, the responsibilities of each of the Parties in developing the
     Products, and the schedule for performing such activities including timing,
     milestone schedules, scope of work, specifications, general quality and
     regulatory requirements and other relevant terms and information as more
     particularly set forth in Exhibit A attached hereto, which the Parties may
     amend from time to time by mutual written agreement.

                                        2

<PAGE>

1.10. Distribution Fee shall have the meaning ascribed thereto in Section 10.5.

1.11. FDA shall mean the Food and Drug Administration of the U.S. Department of
     Health and Human Services.

1.12. GBI Confidential Information shall mean any non-public information about
     GBI, its development of intellectual property, and its operations
     including, but not limited to, any non-public information or scientific or
     technical data, know-how, or expertise of GBI relating to the Products
     existing as of the Effective Date or developed during the term of this
     Agreement (excluding Joint Inventions) and non-public information that
     relates to its financial statements, marketing or finances, market
     research, customers, markets, product plans, business plans, services,
     software, developments, inventions, processes, procedures, methods,
     know-how, designs, data, programs, drawings, and engineering information.

1.13. GBI Invention(s) shall mean any invention (excluding Joint Inventions),
     whether or not patentable, conceived or developed without the use of any
     ATS Confidential Information by employees of GBI, alone or together with
     any third Party (including affiliates, agents or consultants of GBI or a
     person or entity working in any fashion on the behalf of GBI excluding
     ATS), during the term of this Agreement, or prior to the Effective Date,
     specifically related to the development of the Product.

1.14. GMP/QSR Regulations shall mean the Good Manufacturing Practices/Quality
     System Regulations set forth in 21 C.F.R. Section 820.

1.15. Joint Invention shall mean any invention, discovery or idea, whether or
     not patentable, conceived or developed jointly by both Parties, their
     employees, agents or consultants (i) in the course of performing work
     related to this Agreement but prior to the Effective Date; (ii) in the
     course of performing the work contemplated under this Agreement including
     performance of the Development Plan; (iii) arising out of the development
     of the Products whether before or after the Effective Date; or (iv) that
     utilizes, or is a modification of, derived from or based upon an GBI
     Invention, GBI Confidential Information, ATS Invention, or ATS Confidential
     Information. Joint Inventions shall include, but shall not be limited to,
     the four Products identified in Section 1.22(i)-(iv).

1.16. Manufacturer of Record shall mean the Party who owns the Premarket
     Notification and is responsible for compliance with conditions of approval
     of the Premarket Notification. For purposes of this Agreement, GBI shall be
     the Manufacturer of Record for all Products.

1.17. Net Sales means the aggregate amount of net sales reported by ATS or any
     of its Affiliates from the sales of the Products to third parties,
     recognized in accordance with GAAP by ATS in a manner consistent with its
     recognition of net sales across all similar product lines, in connection
     with the preparation of ATS' financial statements, as publicly-reported. In
     addition to the foregoing, the following shall apply:

                                        3

<PAGE>

          The term "Net Sales" shall not include revenue received by ATS (or any
          of its Affiliates) from transactions with an Affiliate of ATS unless
          such Affiliate is the end user of the Product.

1.18. New Product shall mean (i) any improvement to or modification of the
     Product that affects the form, fit or function and for which a new
     regulatory submission is required; and (ii) any and all products for heart
     valve repair.

1.19. Non-Product Joint Inventions shall have the meaning ascribed thereto in
     Section 6.2.

1.20. Preliminary Specifications shall mean the documents describing the form,
     fit, and function of the initial test quantities of Products as the case
     may be, at various milestones during the development process, and shall be
     superseded by the Specifications upon Premarket Notification to the FDA.

1.21. Premarket Notification shall mean the date on which a Product obtains FDA
     clearance of GBI's 510(k) Premarket Notification submission for the
     Products under Section 510(k) of the Act.

1.22. Product(s) shall mean annuloplasty repair rings, c-rings and accessories,
     including without limitation the following four annuloplasty repair
     products: (i) a flexible ring, (ii) a flexible c-ring, (iii) a semi-rigid
     ring, and (iv) a rigid ring, and related tools and accessories, as further
     developed by the Parties during the Development Period, and all
     improvements, modifications or subsequent generations of such products
     developed by GBI or jointly by the Parties during the term of this
     Agreement. "Accessories" include relevant sizers and sterilization trays.

1.23. Profit Sharing Payments shall have the meaning ascribed thereto in Section
     10.6.

1.24. Remedial Action shall have the meaning ascribed thereto in Section 4.5.

1.25. Specifications shall mean the documents describing the form, fit and
     function of the Products that obtain clearance of its Premarket
     Notification by FDA under Section 510(k) of the Act.

1.26. Territory shall mean the world.

1.27. Transfer Prices shall have the meaning ascribed thereto in Section 10.1.

1.28. Unit shall mean an individual item of Product.

1.29. Vigilance Report shall mean the incident report for death or serious
     injury required under the post market surveillance system as defined by the
     European Council Directive 93/42/EEC or the relevant and applicable
     equivalent of any other regulatory body.

                                        4

<PAGE>

                                    ARTICLE 2
                                   DEVELOPMENT

2.1. Development and Preliminary Specifications.

     (a)  Prior to the Effective Date GBI, either alone or jointly with ATS,
          developed certain technical data and Preliminary Specifications for
          the Product. During the Development Period ATS and GBI shall (i)
          continue to collaborate to further develop the Products, the
          Preliminary Specifications, the Specifications, and the manufacturing
          process for the Products and (ii) conduct the activities set forth in
          the Development Plan, attached hereto as Exhibit A. Notwithstanding
          the foregoing, ATS shall have the right to approve the Preliminary
          Specifications, Specifications and further modifications, if any.

     (b)  ATS and GBI agree that the priority for development and regulatory
          approval of the Products is for the U.S. market. Notwithstanding, both
          Parties intend that the Products be marketed in additional countries,
          including Europe, and that the Products will be developed to maximize
          the opportunity for such future market expansion.

2.2. Exclusivity. In consideration of entering into this Agreement and for other
     good and valuable consideration the receipt and sufficiency of which are
     hereby acknowledged, GBI and ATS each agree that it shall not enter into a
     development or distribution agreement or otherwise undertake any
     development project to develop a product or manufacture or distribute any
     product for itself or for any third Party that competes, either directly or
     indirectly, with the Products.

2.3. GBI Obligations. GBI shall use its commercially reasonable efforts to
     develop the Products in accordance with the Development Plan including but
     not limited to the following activities:

     (a)  Develop Preliminary Specifications and Specifications for the Products
          based on (i) design inputs and marketing requirements approved by ATS;
          and (ii) data collected during the testing of the Products;

     (b)  On its own, or jointly with ATS, develop the technical know-how and
          manufacturing processes for manufacturing both clinical and commercial
          quantities of the Products, including final assembly, packaging,
          labeling and sterilization procedures, and quality control release
          specifications for the Products;

     (c)  Provide status reports to ATS in writing on a monthly basis (or more
          frequently, but not more often than weekly, as reasonably required by
          ATS) on the progress of the Development Plan; any delays in developing
          the test quantities of Products;

     (d)  Provide project management by participating in and attending meetings,
          by teleconference or otherwise, of GBI's design control process for
          the Products;

                                        5

<PAGE>

     (e)  Establish and install, at GBI's sole cost and expense (except as
          otherwise provided by Section 5.2), all equipment and facilities
          necessary to effectuate the Development Plan;

     (f)  Deliver to ATS on the delivery date specified in the Development Plan
          such test quantities of Products to be agreed upon by the Parties to
          permit testing to determine whether such Products meet the Preliminary
          Specifications or Specifications, as the case may be, under Section
          3.1;

     (g)  Produce the quantities of Products ordered by ATS, as more
          particularly set forth in Article 9;

     (h)  Comply with all applicable laws and regulations regarding the conduct
          of work performed under the Development Plan including complying with
          all current governmental regulatory requirements concerning good
          Laboratory Practices (21 C.R.R. Part 58), GMP/QSR Regulations, and
          with all other federal, state and local laws and regulations as are
          applicable to the Development Plan for the manufacture of the
          Products.

     (i)  Provide at least one individual employed by GBI, who will be named as
          co- Program Director and whose responsibility will be for the
          oversight of the relationship between the Parties, the Development
          Plan and the commercialization of the Products.

     (j)  Fund at its sole cost and expense, except as otherwise provided in
          Section 5.2, the development of the Products.

     (k)  Conduct all necessary meetings and discussions with FDA and obtain all
          necessary IDE and IRB approvals to test the Products and obtain 510(k)
          clearance from the FDA for the Products.

2.4. ATS Obligations. ATS shall use its commercially reasonable efforts to
     assist GBI in performing its activities under the Development Plan,
     including but not limited to:

     (a)  Furnish to GBI in accordance with the schedule as set forth in the
          Development Plan, marketing requirements and design inputs and such
          other data as may be necessary to allow GBI to develop the Preliminary
          Specifications and Specifications for the Product. Notwithstanding the
          foregoing, ATS shall have the right to approve the design of the
          Products and the Specifications;

     (b)  Review design decisions during development of the test quantities of
          Products by participating in design review meeting according to the
          Development Plan and approve design documents at designation
          intervals;

     (c)  Participate in and attend meetings of, by teleconference or otherwise,
          GBI's design control process for the test quantities of the Products
          and approve the design of the test Products during such meetings;

                                        6

<PAGE>

     (d)  Provide at least one individual employed by ATS, who will be named as
          co-Program Director and whose responsibility will be for the oversight
          of the relationship between the Parties, the Development Plan and the
          commercialization of the Products.

     (e)  Provide to GBI any required parameters or standards for the Products
          to allow GBI to develop protocols to be used in verifications and
          validation of the Products.

2.5. Joint Obligations of ATS and GBI. During the Development Period ATS and GBI
     shall (a) within 120 days of the Effective Date jointly develop the
     Development Plan, which shall be attached as Exhibit A and become part of
     this Agreement; and (b) perform the activities set forth in the Development
     Plan including but not limited to: (i) develop a comprehensive test plan to
     ensure verification and validation of the Products; and (ii) jointly
     compile the technical file necessary to obtain CE marking. If a Development
     Plan that is mutually acceptable to both Parties cannot be developed within
     such 120-day period, either Party may terminate this Agreement upon thirty
     (30) days prior written notice to the other.

2.6. Changes to Products Specifications. From time to time during the
     Development Period, ATS may change the requirements for the Products as a
     result of data generated from the Pilot Study, Pivotal Clinical Trial, and
     preclinical or other testing, and shall forward such revised requirements
     to GBI. GBI shall modify the then current Preliminary Specifications to
     reflect the revised requirements. ATS shall then have the opportunity to
     review the revised Preliminary Specifications, and test Products made in
     accordance with the revised Preliminary Specifications under Section 3.1.

                                    ARTICLE 3
                             DEMONSTRATION PRODUCTS

3.1. Demonstration Products. During the Development Period, GBI shall
     manufacture quantities of clinical test grade Products for use as
     demonstration Products (a "Demonstration Product") by ATS. The Development
     Plan shall set forth the dates when Demonstration Products shall be
     available to be delivered to ATS for testing. Shipments of Demonstration
     Products shall contain detailed Preliminary Specifications for the
     Products.

3.2. Acceptance. ATS shall be deemed to have accepted the Preliminary
     Specifications for the Products being tested as provided in the Development
     Plan upon ATS' written notification to GBI of its acceptance. Upon
     acceptance, GBI shall commence the manufacture of the Products and
     Demonstration Products, as the case may be, in accordance with orders
     placed by ATS under Sections 9.1 and 9.3, respectively.

3.3. Testing and Documentation. With each lot of Products manufactured by GBI,
     GBI shall supply to ATS documentation certifying in writing that each
     shipment of Products complies with (i) the then current Specifications and
     with the testing procedures described therein; and (ii) all other
     documentation agreed to by ATS and GBI.

                                        7

<PAGE>

                                    ARTICLE 4
                             REGULATORY SUBMISSIONS

4.1. Medical Device Establishment Registration. GBI shall maintain a Medical
     Device Establishment Registration (as defined under the Act) as
     manufacturer and Specifications developer for the Products, as is required.

4.2. U.S. Approval. GBI shall be responsible, at its expense, for filing and
     obtaining and maintaining all necessary authorizations from regulatory
     authorities of the U.S. federal government, including the FDA, or of the
     various states necessary for the sale of the Products in the United States
     or export to foreign countries. GBI's obligations under this Section 4.2
     shall include the preparation and filing of any required submissions and
     the establishment and oversight of any required clinical investigations and
     clinical follow-up relating to future commercial sale of the Products. GBI
     will provide ATS with drafts of all proposed filings for U.S. federal or
     state regulatory authorization for review and comment by ATS in advance of
     filing with the applicable authority. ATS shall support the process of all
     regulatory filings and registrations by GBI by providing to GBI all
     documentation reasonably requested by GBI from ATS including, without
     limitation, clinical and technical information.

4.3. Foreign Approvals. GBI shall be responsible, on a timely basis, for filing,
     obtaining and maintaining all necessary "device" or "medical" regulatory
     approvals from foreign regulatory authorities necessary for the commercial
     sale of the Products in those foreign countries ("Foreign Approvals") into
     which the Parties mutually agree Products will be sold. The expense for
     obtaining such approvals shall be divided evenly between the Parties. If
     ATS desires to obtain Foreign Approvals for a country and GBI reasonably
     disagrees that such Foreign Approval is too costly for the anticipated
     sales in such country, GBI shall proceed to obtain such approval provided
     ATS agrees to bear the full expense of obtaining such Foreign Approval. All
     Foreign Approvals shall, to the extent permitted, be in GBI's name. GBI
     shall obtain the CE Mark in such foreign countries as ATS may determine.
     GBI and ATS shall work together to establish the strategy for obtaining in
     the most timely and efficient manner the Foreign Approvals to be obtained
     pursuant to this Section 4.3. GBI's obligations under this Section 4.3
     shall include assisting in the preparation and filing of any required
     submissions relating to future commercial sale of the Products. Except as
     otherwise required by law or agreed by the Parties, GBI shall be primarily
     responsible for all dealings with the appropriate competent authority such
     as notification, medical device vigilance and national labeling issues, and
     GBI shall bear final legal responsibility for the content of all its own
     labeling.

4.4. Manufacturing Compliance. GBI represents and warrants to ATS that all
     Products manufactured and sold under this Agreement will have been
     manufactured, labeled, packaged and sold to ATS in accordance with ATS
     approved Specifications and all applicable international federal, state and
     local laws and regulations pertaining to medical devices including, but not
     limited to, the Act and GMP/QSR Regulations. GBI represents and warrants to
     ATS that GBI's manufacturing facility is in compliance with all GMP/QSR
     Regulations and ISO 13485:1996, EN 46001 requirements and that GBI has all
     approvals and consents required to mark the Products with the CE mark.

                                        8

<PAGE>

4.5. Remedial Actions. Each party will notify the other immediately, and
     promptly confirm such notice in writing, if it obtains information
     indicating that any of the Products may be subject to any recall, field
     corrective action or other regulatory action (other than a corrective and
     preventive action ("CAPA") under the Act) with respect to a Product taken
     either by virtue of applicable federal, state, foreign or other law or
     regulation or good business judgment (a "Remedial Action"). The Parties
     will assist each other in gathering and evaluating such information as is
     necessary to determine the necessity of conducting Remedial Action;
     provided that ATS shall have sole responsibility for collecting information
     from its customers, including customer complaints. ATS will determine
     whether to commence any Remedial Action with respect to the Product. Each
     Party will maintain adequate records to permit the Parties to trace the
     manufacture of the Product and the distribution and use of the Product. In
     the event ATS determines that any Remedial Action with respect to the
     Product should be commenced or Remedial Action is required by any
     governmental authority having jurisdiction over the matter, ATS will
     control and coordinate all efforts necessary to conduct such Remedial
     Action. If ATS conducts any Remedial Action related to the Product and GBI
     is determined to be (either by mutual agreement or by arbitration pursuant
     to the terms of this Agreement) responsible for the problem requiring the
     Remedial Action (i.e., a problem arises from faulty manufacture), GBI, at
     ATS' option, will either issue a credit to ATS or reimburse ATS for the
     sales price of all ATS devices recalled in such Remedial Action and the
     other reasonable costs of conducting such Remedial Action. GBI shall have
     sole responsibility for handling any CAPA's. ATS shall cooperate with GBI
     to the extent reasonably requested by GBI in handling any CAPA.

4.6. Complaints and Medical Device Reporting. Each party will comply with
     applicable provisions of the Medical Device Reporting systems, including
     the requirements of 21 CFR Part 803, and each party will cooperate with the
     other for the efficient compliance therewith. ATS and GBI agree to notify
     the other within two (2) business days of receipt from any customer of any
     complaint or Medical Device Report ("MDR") filable complaint relating to
     the Product. ATS will investigate such complaint or MDRs/Vigilance Reports
     and forward to GBI all information relating to any defects in the
     performance, design, or quality of the Products. GBI shall investigate all
     instances of product failure or inadequacy documented by ATS and forwarded
     by ATS for investigation. GBI shall provide a written summary of the
     findings from such investigation to ATS within seven days following the
     date that GBI is informed of such complaint or MDR. ATS shall have sole
     responsibility for filing the MDR with the appropriate regulatory agency.

4.7. Vigilance Reporting. ATS will notify GBI in writing if a Vigilance Report
     is required to be filed with respect to the Product. ATS, at its sole cost
     and expense, will be responsible for complying with Vigilance Reporting
     requirements for the Product in cooperation with GBI as the manufacturer of
     the Product. GBI will remain responsible for any and all Product
     investigation as provided in Section 4.6.

4.8. ATS Audits. GBI will give ATS reasonable access to its records to allow ATS
     to conduct full compliance audits relating to the Product, at ATS' expense,
     as reasonably deemed necessary by ATS, but no more frequently than once in
     any twelve (12) month

                                        9

<PAGE>

4.9. period. The audit may include, without limitation, records relating to
     manufacturing compliance with the Specifications, compliance with quality
     control and inspection reports procedures, compliance with GMP/QSR
     Regulations, CE mark certification records and procedures, regulatory
     compliance, and after the following certifications have been obtained
     compliance with ISO 13485:1996 and EN 46001 requirements. Such audits will
     be conducted during GBI's normal business hours, after two (2) weeks prior
     written notice to GBI by ATS, and at times mutually agreeable to the
     parties. GBI will make its regulatory compliance and quality assurance
     personnel reasonably available to ATS in connection with such audits. If
     ATS recommends any corrective actions to GBI in connection with such
     audits, GBI will take any corrective action recommended by ATS within
     thirty (30) days of receipt of any corrective action recommendations, if
     possible, or will inform ATS in writing of the reasons why GBI believes
     such corrective action is not required or cannot be completed within such
     30-day period. ATS will be given access to audit any corrective action.

4.10. Regulatory Inspections. GBI will promptly notify ATS of any inspection of
     its facilities manufacturing the Product or any component part of a Product
     by the FDA, ISO, CE mark certification organization or other federal,
     state, or local regulatory agency which relates to the manufacture,
     assembly, or packaging of the Product and provide ATS with information
     about the progress and outcome of such inspection, including, without
     limitation, copies of any notice of observations or warnings, requests for
     Remedial Action, CAPA's or other adverse findings.

                                    ARTICLE 5
                         RESEARCH AND DEVELOPMENTS COSTS

5.1. Research and Development Costs. Except as otherwise provided in Section
     5.2, GBI shall fund the development of the Products at its sole cost and
     expense as more particularly set forth in the Development Plan attached as
     Exhibit A. Upon commercialization of the Products, GBI shall provide, at
     its own cost and expense, on-going research and development and training
     support of the Products, as more specifically provided in Sections 12.2 and
     12.3 of this Agreement.

5.2. Payments by ATS. ATS will pay GBI ***** Dollars ($*****) upon execution of
     this Agreement as payments for GBI's research and development efforts. ATS
     will pay GBI an additional ***** Dollars ($*****) upon obtaining clearance
     of the 501(k) Premarket Notification filings from the FDA for the first two
     (2) of the four (4) Products identified in Section 1.22(i)-(iv).

                                    ARTICLE 6
                              INTELLECTUAL PROPERTY

The Parties contemplate that inventions may be developed or conceived by either
Party alone or by the Parties jointly in furtherance of the development set
forth in this Agreement and agree with respect to such inventions as follows:

***** Denotes confidential information that has been omitted from the exhibit
     and filed separately, accompanied by a confidential treatment request, with
     the Securities and Exchange Commission pursuant to Rule 24b-2 of the
     Securities Exchange Act of 1934.

                                       10

<PAGE>

6.1. Ownership Generally. Except as otherwise specifically set forth in this
     Article 6 and subject to the licenses granted in this Agreement, GBI shall
     own all right, title and interest in and to GBI Confidential Information
     and GBI Inventions and ATS shall own all right, title and interest in and
     to ATS Confidential Information and ATS Inventions. The ownership of Joint
     Inventions shall be as set forth in Section 6.2.

6.2. Patenting Joint Inventions.

     (a)  Except as otherwise set forth in this Agreement, if the Parties
          develop, invent or conceive a Joint Invention during the term of this
          Agreement, the Joint Invention(s) shall have joint ownership. Each
          Party shall promptly provide notice to the other and shall disclose
          any Joint Invention to the other in sufficient technical detail to
          allow the other Party to evaluate such Joint Invention. In addition,
          GBI shall provide ATS with sufficient information to file a patent
          application on the Joint Invention, if desired. ATS shall have the
          exclusive right (except as set forth below) to prosecute (or not
          prosecute and maintain as trade secret information) and maintain all
          patent applications related to Joint Inventions, provided the Parties
          are identified as co-owners of such Joint Invention, and any patents
          issuing therefrom and to enforce and defend such patents and/or any
          and all intellectual property rights arising from such Joint
          Inventions. Each Party represents and warrants to the other that all
          employees and consultants of such Party have agreements with such
          Party assigning rights in all inventions to ATS or GBI, as applicable.

     (b)  All patent maintenance fees related to Joint Inventions shall be paid
          by ATS no later than thirty (30) days before the due date. ATS will
          notify GBI regarding each maintenance fee payment that has been made
          by ATS no later than fifteen (15) days before the due date. If ATS
          does not pay the maintenance fee for any patent as required hereby, or
          if ATS does not notify GBI of such payment, GBI shall have the right
          to pay the fee and be reimbursed by ATS for such fee and any expenses
          incurred (including reasonable attorneys' fees) in arranging for
          proper filing and payment of such fee and in seeking reimbursement
          from ATS.

     (c)  If ATS fails to take reasonable actions to defend patents and/or
          intellectual property rights arising from Joint Inventions within
          sixty (60) days following a written demand made by GBI (or sooner if
          any statute of limitation or other enforceability right will expire),
          then GBI may commence action to defend and protect such rights. ATS
          shall reimburse GBI for any expenses (including reasonable attorneys'
          fees) incurred in such action.

     (d)  Any amount recovered in any action to defend or enforce patents or
          intellectual property rights arising from Joint Inventions shall first
          be applied to the expenses of pursuing such action. Any excess
          recovery shall be split equally between the Parties.

6.3. Marketing Joint Inventions. Joint Inventions which constitute Products
     shall be manufactured and distributed pursuant to the terms of this
     Agreement. With respect to

                                       11

<PAGE>

     each Joint Invention which is not a Product (a "Non-Product Joint
     Invention") either Party may notify the other of its desire to further
     develop and commercialize such Non-Product Joint Invention. For a period of
     ninety (90) days after the date of delivery of such notice, the Parties
     shall negotiate in good faith with respect to the terms of the further
     development and commercialization of such Non-Product Joint Invention.
     During such 90-day period, neither party will enter into an agreement with
     any third party for the development, distribution, supply or other
     commercialization of such Non-Product Joint Invention and none of ATS, GBI
     or any officer, director, employee or representative of ATS or GBI shall
     solicit or conduct any discussions or negotiations with, or provide
     information to, any third party with respect to the Non-Product Joint
     Invention. Each Party will promptly communicate to the other the terms of
     any proposal or inquiry it receives from any third party or attempts to
     initiate such discussions or negotiations by any third party with respect
     to such a transaction. If during such 90-day period, ATS and GBI are unable
     to agree upon mutually acceptable terms and conditions for the development
     of such Non-Product Joint Invention, and such time period has not been
     extended by mutual agreement, then each Party shall have the right to
     pursue development and commercialization of the Non-Product Joint Invention
     pursuant to the profit sharing rights set forth in Section 6.4.

6.4. Profit Sharing from Non-Product Joint Inventions. Except as otherwise
     agreed in writing, any net profits made by either Party from the sale,
     transfer or other commercialization of a Non-Product Joint Invention shall
     be split evenly between the Parties. Within thirty (30) days after each
     calendar quarter, in which a Party has gross receipts from commercializing
     a Non-Product Joint Invention, such Party shall submit a report to the
     other Party identifying gross receipts from Non-Product Joint Inventions
     and a net profit calculation with a reasonably detailed explanation of the
     amounts deducted from gross receipts accompanied by payment of fifty
     percent (50%) of the net profit amount, if any.

                                    ARTICLE 7
                                  AUDIT RIGHTS

7.1. Each Party and its respective Affiliates, subdistributors, agents and
     sublicensees shall maintain accurate books and records in accordance with
     generally accepted accounting principals and showing sales of the Products
     and Non-Product Joint Inventions by such Party and its Affiliates,
     subdistributors, agents and sublicensees in sufficient detail to enable Net
     Sales and/or net profits pursuant to Section 6.4 payable hereunder to be
     determined and to otherwise enable each Party to monitor compliance by the
     other with the terms of this Agreement. Each Party (or its accountants)
     shall have the right to inspect such books and records at reasonable
     intervals (but no more frequently than once in any twelve (12) month
     period) and upon reasonable prior written notice. Such inspections shall
     occur during normal business hours at the offices of the Party being
     inspected and at the expense of the inspecting Party; provided, however,
     that if such inspection shall reveal an underpayment by a Party of amounts
     actually due of more than five percent (5%), then the Party being inspected
     shall bear the expense of such inspection. Any deficiencies in payment
     shall be immediately due and payable together with interest at the rate of
     eighteen percent (18%) per annum from the date or dates such amounts should
     have been paid.

                                       12

<PAGE>

                                    ARTICLE 8
                      APPOINTMENT AS EXCLUSIVE DISTRIBUTOR

8.1. Scope. Subject to the terms and conditions of this Agreement, GBI grants to
     ATS and its Affiliates the exclusive right to market, sell and distribute
     the Products in the Territory.

8.2. Exclusivity. ATS' distribution rights under this Agreement shall be
     exclusive in the Territory for the Products. GBI represents and warrants to
     ATS that GBI has not entered into any other agreements, written or oral,
     with any third party permitting the sale or distribution of Products in the
     Territory, and covenants and agrees that during the term of this Agreement,
     GBI will not enter into any such agreement or itself sell or distribute any
     Products in the Territory.

8.3. Subdistributors and Subagents. ATS may appoint subdistributors or subagents
     for distribution of the Products in the Territory, and will provide to GBI
     a list of such subdistributors from time to time. Notwithstanding such
     appointment of subdistributors, ATS shall remain fully responsible for the
     performance of all of its covenants and obligations hereunder, and any
     sales by GBI to such subdistributor shall be billed by GBI to ATS directly.

8.4. Additional Products. ATS' right to distribute Products under this Agreement
     includes the right to distribute Additional Products. If GBI, individually
     or jointly with ATS, develops Additional Products during the term of this
     Agreement, GBI shall notify ATS in writing promptly after GBI estimates the
     date that such Additional Product will be available for commercial sale in
     the Territory, and this Agreement shall automatically be amended to include
     any such Additional Products.

8.5. New Products.

     (a)  If GBI or ATS develops a New Product (excluding a Joint Invention)
          during the term of this Agreement, GBI or ATS, as applicable, shall
          notify the other Party in writing (a "New Product Development Notice")
          promptly after GBI or ATS, as applicable, estimates the date that such
          New Product will be available for commercial sale in the Territory,
          and (i) if GBI develops a New Product, ATS will have the right for a
          period of ninety (90) days after the date ATS receives the New Product
          Development Notice to negotiate distribution rights, transfer pricing,
          and other terms and conditions applicable to such New Product on terms
          that are substantially consistent with this Agreement and (ii) if ATS
          develops a New Product, GBI will have the right for a period of ninety
          (90) days after GBI receives the New Product Development Notice to
          negotiate manufacturing rights and other terms and conditions
          applicable to such New Product on terms that are substantially
          consistent with this Agreement. During such 90-day period, GBI or ATS,
          as applicable, will not enter into an agreement with any other party
          for the distribution or manufacture, as applicable, of such product in
          the Territory and neither GBI or ATS, as applicable, nor any officer,
          director, employee or representative of GBI or ATS, as applicable,
          shall solicit or conduct any discussions or negotiations with, or
          provide information to, any third party with

                                       13

<PAGE>

          respect to the grant by GBI of distribution rights or by ATS of
          manufacturing rights for the New Products, or the grant by GBI or ATS,
          as applicable, of license or sublicense rights to use, make or sell
          the Product. GBI or ATS, as applicable, will promptly communicate the
          terms of any proposal or inquiry it receives from any third party, or
          attempts to initiate such discussions or negotiations by any third
          party with respect to such a transaction.

     (b)  If during such 90-day period, GBI and ATS are unable to agree upon
          mutually acceptable terms and conditions for the distribution or
          manufacture of New Products, and such time period has not been
          extended by mutual written agreement, the notifying Party shall have
          no further obligation to the other under this Section 8.5 and such
          notifying Party may then at any time thereafter and from time to time,
          grant distribution or manufacturing rights, as applicable, to such New
          Product to any one or more third parties on such terms as may then be
          acceptable to the notifying Party.

     (c)  Notwithstanding the foregoing, each New Product (excluding a Joint
          Invention) that is developed by GBI or ATS shall require that a New
          Product Development Notice be provided to the other Party with the
          rights of first negotiation contained in this Section 8.5.

                                    ARTICLE 9
                         SUPPLY AND ORDERS FOR PRODUCTS

9.1. Purchase Orders. ATS shall submit purchase orders to GBI for the Products
     at the time that each forecast is updated pursuant to Section 9.3. Each
     purchase order shall cover the portion of the forecast that has become a
     firm order under Section 9.3 of this Agreement and shall, at a minimum,
     include: (a) identification of the Products ordered; (b) quantity; (c)
     requested delivery date; and (d) shipping instructions and shipping
     address.

9.2. Acceptance of Orders. Except as otherwise provided in Section 9.4, all
     purchase orders issued in accordance with this Agreement shall be
     automatically accepted by GBI. Purchase orders for the Products must be
     received by GBI at least sixty (60) days prior to delivery date requested.
     Each purchase order shall be deemed to be an offer by ATS to purchase the
     Products pursuant to the terms of this Agreement and shall give rise to a
     contract between ATS and GBI for the sale of the Products ordered and shall
     be subject to and governed by the terms of this Agreement. The terms and
     conditions of this Agreement shall govern and supersede any additional or
     contrary terms set forth in ATS' purchase order or any GBI or ATS
     acceptance, confirmation, invoice or other document, unless the specific
     additional or contrary terms are stated in writing and duly signed by an
     officer of ATS and an officer of GBI.

9.3. Forecasts. Commencing on the Effective Date of this Agreement, ATS shall
     furnish to GBI within ten (10) days of the end of each month thereafter a
     written rolling 12-month forecast of its expected orders of Products in the
     Territory. The first forecast delivered as of or following the Effective
     Date shall be mutually agreed upon by the Parties. Thereafter, forecasts
     may not be increased by more than thirty percent (30%) in any

                                       14

<PAGE>

     month or fifty percent (50%) in any 12-month period without discussing the
     same with GBI and providing GBI with a reasonable amount of time to
     increase its manufacturing capabilities to satisfy the increased demand.
     The first three months of each forecast shall constitute a firm order to
     purchase the units of the Products specified in the forecast. The last nine
     months of each forecast shall constitute a non-binding good faith estimate
     of expected orders for Products.

9.4. Order Limitations. GBI shall not be required to deliver quantities in
     excess of [120%] of forecasted requirements unless GBI has been given at
     least 90-days advance written notice of the quantities to be delivered
     which exceed the forecasted amounts; provided, however, that GBI shall use
     all commercially reasonable efforts to supply such excess. If GBI incurs
     additional expenses, such as overtime for employees to deliver quantities
     in excess of [120%] of the forecasted requirements, such expenses will be
     passed on to ATS in the Transfer Prices.

9.5. Modification of Orders. Except as otherwise provided in Section 9.4, no
     purchase order shall be modified or canceled except upon the mutual
     agreement of the parties, which shall not be unreasonably withheld by
     either party. Mutually agreed change orders shall be subject to all
     provisions of this Agreement, whether or not the changed purchase order so
     states. Notwithstanding the foregoing, any purchase order may be canceled
     by ATS as to any Products which are not delivered within thirty (30) days
     of the delivery date requested by ATS pursuant to a purchase order
     submitted to GBI under Section 9.1 and accepted by GBI under Section 9.2
     (the "Requested Delivery Date"), and any such cancellation shall not limit
     or affect any contract remedies available to ATS with respect thereto. Any
     such cancellation by ATS must be by written notice to GBI given within 45
     days following the requested delivery date and shall be effective as of the
     date received by GBI.

9.6. Shipment. All Products sold by GBI to ATS shall be shipped by GBI free on
     board ("F.O.B.") GBI's facility (the "Shipping Point") addressed to ATS'
     address set forth on the first page of this Agreement (the Shipping
     Point"). GBI shall bear all risk of loss prior to GBI's delivery of the
     Products to a common carrier at the Shipping Point, and shall have no
     further responsibility for the Products after it has delivered the Products
     to the common carrier. ATS assumes all risk of loss upon GBI's delivery of
     the Products to a common carrier at the Shipping Point. ATS shall pay all
     loading, freight, shipping, insurance, forwarding and handling charges,
     taxes, fees, storage, and all other charges applicable to the Products
     after they are delivered by GBI to the common carrier at the Shipping
     Point. If ATS requests any expedited shipping due to a modification of its
     purchase order pursuant to Section 9.5, ATS shall be responsible for all
     such expedited shipping costs.

9.7. Inspection.

     (a)  GBI will inspect and test the Product as required by the
          Specifications; however, ATS shall be responsible for testing of or
          obligated to test the Product. ATS will inspect all incoming Product.
          Upon notification to GBI, ATS will have the right to reject any lot
          that contains Product that does not meet the Specifications

                                       15

<PAGE>

          ("Nonconforming Product"). ATS will provide GBI with information as to
          the reason for the rejection of the Nonconforming Product including a
          description of the test procedure and results, if any, on which the
          rejection is based within 45 days of receipt therefor. GBI will
          instruct ATS as to the disposal or return of Nonconforming Product. If
          GBI instructs ATS to return Nonconforming Product, GBI will be
          responsible for such return shipping charges. At ATS' option, GBI will
          either (i) replace the Nonconforming Product, including units of
          Product that may have been damaged in the inspection process, without
          additional cost to ATS, permit ATS to issue a debit memorandum to GBI
          for the purchase price of the Nonconforming Product, and will
          re-invoice ATS for the Product shipped to replace the Nonconforming
          Product at the time of shipment of the replacement product; or (ii)
          credit ATS for the purchase price of Nonconforming Product after
          receipt of ATS' debit memorandum related to such Nonconforming
          Product.

     (b)  Any claims for shipping damage shall be submitted by ATS to the common
          carrier.

9.8. Process or Material Changes. No material changes, modifications, deviations
     or exceptions to the Specifications, materials or fabrication manufacturing
     or packaging processes may be made without 60-days prior written notice to
     ATS by GBI. Any such material changes to the Specifications, materials,
     fabrication, manufacturing or packaging processes proposed to be
     implemented by GBI shall be subject to the prior review by ATS for safety
     and efficacy and shall not be implemented for at least such 60-day period.
     GBI shall also provide, at its sole cost and expense, a limited number of
     samples of the Product incorporating the proposed change for such prior
     evaluation during the 60-day period. If ATS objects to the changes based on
     safety and efficacy reasons, ATS shall provide a written explanation of
     such objections to GBI and if the parties cannot agree to a solution,
     either party may terminate this Agreement upon 30-days prior written notice
     unless ATS waives its objection. If ATS does not respond to the notice, GBI
     may implement any such material changes after expiration of the 60-day
     period.

9.9. Packaging, Sterilization and Labeling. GBI shall be responsible for
     packaging, labeling, instructions for use, and any necessary sterilization
     of Products purchased under this Agreement. GBI shall deliver the text of
     proposed packaging, labeling, instructions for use to ATS for its review
     and comment prior to printing. GBI shall prepare packaging, labeling and
     instructions for use in all foreign languages that ATS reasonably requests
     at GBI's sole cost and expense, except that ATS will pay fifty percent
     (50%) of the cost of translating the instructions for use into any foreign
     language. The Products will be labeled as "Manufacturer: GBI" and
     "Distributor: ATS or ATS Medical, Inc." ATS hereby grants GBI a limited,
     non-exclusive, license to use ATS' name in accordance with ATS'
     instructions, solely for purposes of packaging and labeling Products sold
     by GBI to ATS or its Affiliates under this Agreement.

9.10. Subcontracts and Suppliers. If ATS is required to place its CE mark
     certification on the Product, GBI will promptly supply ATS a list of GBI's
     subcontractors and suppliers contributing to the manufacture of the
     Product. After GBI has supplied ATS with such

                                       16

<PAGE>

9.11. list, GBI shall provide ATS with at least 30-days notice of any proposed
     change in such subcontractors and suppliers.

                                   ARTICLE 10
                               PRICES AND PAYMENTS

10.1. Transfer Prices. The purchase price of all Products sold hereunder, F.O.B.
     Shipping Point, shall be at the ***** of GBI for such Products ("Transfer
     Prices"). The current Transfer Prices are reflected on Exhibit C. Such
     prices may be amended by GBI from time to time upon written notice to ATS
     as GBI's *****.

10.2. Payment Terms. GBI will invoice ATS upon delivery of Products. Invoices
     for Products shall be due and payable in full within ***** (*****) days
     from the date of invoice.

10.3. Taxes. The transfer prices for Products set forth in Exhibit C do not
     include any sales, use, value added or similar taxes, customs duties, or
     tariffs imposed by any governmental authority or agency on Products or any
     components thereof that are imposed on ATS by any country in the Territory.
     ATS shall pay or reimburse GBI for all such amounts incurred in connection
     with ATS' purchase of Products; provided, however, that GBI shall pay all
     income or franchise taxes imposed upon the income of GBI.

10.4. Resale Prices. ATS may resell the Products at such prices, as ATS in its
     sole discretion, shall determine.

10.5. Distribution Fee. ATS will retain ***** percent (*****%) of ***** prices
     of the Products as a distribution fee to compensate ATS for its sales and
     marketing costs (the "Distribution Fee").

10.6. Profit Sharing Payments. Within thirty (30) days after each calendar
     quarter during which Product sales occur under this Agreement, ATS will pay
     to GBI a profit sharing payment ("Profit Sharing Payment") based on the
     following formula:

          *****, minus each of the following: (i) less the ***** of such
          Products, (ii) less the *****, (iii) less the *****; and the result
          shall be divided by ***** (*****).

     Such Profit Sharing Payment shall be accompanied by a report setting forth
     in reasonable detail the calculation of the Profit Sharing Payment.

                                   ARTICLE 11
                      GENERAL RIGHTS AND OBLIGATIONS OF ATS

11.1. Sales and Marketing. ATS will provide its standard level of sales and
     marketing support for the Products and will use commercially reasonable
     efforts to further the promotion, marketing, sale and other distribution of
     the Products in the Territory. ATS will develop and produce brochures and
     other marketing and sales literature for the Product.

11.2. Post-Marketing Studies. ATS may, in its sole discretion and at its
     expense, pursue authorship and publication of post-marketing or white paper
     studies to increase market

***** Denotes confidential information that has been omitted from the exhibit
     and filed separately, accompanied by a confidential treatment request, with
     the Securities and Exchange Commission pursuant to Rule 24b-2 of the
     Securities Exchange Act of 1934.

                                       17

<PAGE>

11.3. awareness of the Products. GBI will assist ATS by providing marketing
     materials and manufacturing information reasonably necessary to support
     such studies. ATS shall provide GBI with sufficient opportunity to review
     any such proposed publications and ATS shall agree not to publish GBI
     Confidential Information or publish any information that will affect GBI's
     ability to seek patent protection.

11.4. Marketing Materials. ATS shall be responsible for the preparation of sale
     and marketing materials for the marketing and sale of the Products,
     including the translation, adaptation and/or modification of GBI's sales
     and marketing materials, as deemed appropriate by ATS, to reflect local
     culture or business practices and languages, and to reflect ATS as the
     exclusive distributor of the Product. GBI will cooperate with ATS in the
     preparation of ATS' sales and marketing materials. ATS shall submit all
     marketing material to GBI for GBI's prior approval, which approval shall
     not be unreasonably withheld.

11.5. Training. ATS shall provide its sales force with all reasonably necessary
     and appropriate training and support regarding the use of the Products.

11.6. Alteration of Products. ATS, its Affiliates and agents shall not, in any
     way, alter the Products or remove, cover, change, alter or add to the
     labels attached to the Products by GBI, except with GBI's prior written
     approval.

11.7. Import Approvals. ATS shall be responsible for obtaining all import
     licenses and permits (other than regulatory approvals described in Article
     4) as may be required to import the Products into such countries as are
     selected by ATS in accordance with then prevailing laws and regulations of
     such countries. All such filings and registrations of the Products shall be
     in the name of ATS, whenever feasible in accordance with prevailing laws
     and regulations. GBI shall cooperate fully with ATS in its efforts to
     obtain any such approvals.

                                   ARTICLE 12
                      GENERAL RIGHTS AND OBLIGATIONS OF GBI

12.1. Manufacture and Supply of Products. During the term of this Agreement, GBI
     shall manufacture and sell Products to ATS in accordance with the
     Specifications and the terms and conditions set forth in this Agreement. If
     GBI fails to manufacture the Products in accordance with the Specification
     or is unable meet the volume requirements established in accordance with
     this Agreement, GBI shall promptly notify ATS in writing of such
     manufacturing deficiency. In addition, if ATS becomes aware of any such
     manufacturing deficiency, ATS shall have the right provide written notice
     to GBI of such manufacturing deficiency. If GBI is not able to cure the
     deficiency within three months of notice from either GBI or ATS will be
     automatically granted the right to manufacture the Products and GBI shall
     provide all documentation and assistance necessary for ATS to manufacture
     the Products.

12.2. Training and Support. GBI shall (a) assist, at no charge, in the training
     of ATS' sales personnel representing the Products with respect to the
     promotion and use of the Products; and (b) travel, at ATS' sole cost and
     expense, with ATS' sales personnel to

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<PAGE>

     assist in problem solving, market needs identification and general market
     development, in each case as may be reasonably requested by ATS.

12.3. Research and Development. GBI will continue its product development
     programs, at its sole expense, and will not materially reduce its spending
     on research and development from current levels. ATS will provide GBI
     feedback from ATS' sales force with regard to market needs and GBI will use
     commercially reasonable efforts to develop product enhancements to meet
     these needs.

12.4. Marketing Samples. GBI will provide to ATS, at no charge, the number of
     non-sterile samples of the Products set forth on Exhibit D in the first
     year of this Agreement. ATS will provide such samples to its sales force
     and customers at no charge. At ATS' request, GBI shall sell to ATS
     additional non-sterile samples at the price per Unit set forth on Exhibit
     D. Exhibit D shall be updated as Additional Products are added to this
     Agreement and annually by mutual agreement of the Parties.

12.5. Sales Leads. GBI shall forward to ATS all leads for sales of Products in
     the Territory.

12.6. Export. GBI shall be responsible for obtaining all required export
     licenses and other authorizations and permits from the United States
     Government for the sale of the Products to ATS. ATS shall cooperate fully
     with GBI in its efforts to obtain any such approvals.

                                   ARTICLE 13
                              TERM AND TERMINATION

13.1. Term. This Agreement shall take effect as of the date first above written
     and shall continue in force for a period of five years (the "Initial Term")
     from the Effective Date. Thereafter, this Agreement shall automatically
     renew for consecutive one year terms for an indefinite number of additional
     one year terms (each a "Renewal Period"), unless either ATS or GBI gives
     written notice of termination to the other at least six months prior to the
     end of the Initial Term or a Renewal Period, as applicable.

13.2. Termination. Notwithstanding the provisions of Section 13.1, this
     Agreement may be terminated in accordance with the following provisions:

     (a)  Either Party may terminate this Agreement at any time by giving notice
          in writing to the other Party, which notice shall be effective upon
          dispatch, should the other Party file a petition of any type as to its
          bankruptcy, be declared bankrupt, become insolvent, make an assignment
          for the benefit of creditors, go into liquidation or receivership, or
          otherwise lose legal control of its business.

     (b)  Either Party may terminate this Agreement by giving notice in writing
          to the other Party should an event of Force Majeure, as defined below,
          continue for more than six months.

     (c)  Either Party may terminate this Agreement by giving notice in writing
          to the other Party in the event the other Party is in material breach
          of this Agreement and shall

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<PAGE>

          have failed to cure such breach within sixty (60) days of receipt of
          written notice thereof specifying the breach in detail from the
          non-breaching Party, unless such breach cannot be cured within such
          60-day period, in which case the breaching Party shall have undertaken
          good faith effort to cure such breach within such 60-day period.

     (d)  ATS may terminate this Agreement by giving thirty (30) days notice in
          writing to GBI, which notice shall be effective upon dispatch, should
          ATS exercise its right of first refusal option as provided in Section
          19.1 or if there shall occur a Change in Control of GBI.

13.3. Rights and Obligations on Termination. In the event of termination of this
     Agreement for any reason, the parties shall have the following rights and
     obligations:

     (a)  Termination of this Agreement shall not release either party from the
          obligation to make payment of all amounts then or thereafter due and
          payable.

     (b)  The terminating party shall have the right, at its option, to cancel
          any or all purchase orders that provide for delivery after the
          effective date of termination.

     (c)  ATS shall be permitted to resell any inventory of Products on hand at
          the time of termination.

     (d)  ATS' and GBI's obligations pursuant to Sections 10.6, 15.1, 15.3 and
          15.4 and Articles 6, 7, 14, 16 and 17 shall survive termination of
          this Agreement. All other provisions of this Agreement shall terminate
          upon termination of this Agreement.

                                   ARTICLE 14
                               PRODUCT WARRANTIES

14.1. Warranty. GBI warrants to ATS that the Products sold to ATS under this
     Agreement will meet the then current Preliminary Specifications or
     Specifications for Products, as the case may be, and will be free from
     defects in design, manufacturing, materials and workmanship under normal
     intended use and service, in accordance with all applicable FDA, QSR, and
     CE standards and requirements for a period of twelve (12) months from the
     date of delivery to ATS. During the 12-month period, GBI will repair or
     replace, at GBI's sole option, any defective Product at no charge to ATS
     provided that ATS returns the Product to the Shipping Point at GBI's
     expense, properly packed, and further provided, in all cases, that such
     repair or replacement is conditioned upon a finding by GBI that the repair
     or replacement is attributable solely to a defect in materials or
     workmanship and not to improper use, accidents, fault or negligence of ATS
     or user, or other causes. Replacement shall mean furnishing a new shipment
     (F.O.B. place of original shipment) of the Product in an amount sufficient
     to replace any Product found to be defective. Prior to returning any
     Products alleged to be defective, ATS shall notify GBI in writing of the
     claimed defect and shall include the lot and serial number of such
     Products, as well as the number and date of the invoice therefor. Any
     Products that does not otherwise appear defective but is deemed defective
     by a physician using the Products

                                       20

<PAGE>

     shall be replaced by GBI at a cost to ATS of 50% of the then applicable
     Transfer Price for such Product.

14.2. Limited Warranty and Limitation of Liability. THE WARRANTIES SET FORTH IN
     SECTION 14.1 ARE INTENDED SOLELY FOR THE BENEFIT OF ATS. ALL CLAIMS
     HEREUNDER SHALL BE MADE BY ATS AND MAY NOT BE MADE BY ATS' CUSTOMERS. THE
     WARRANTIES SET FORTH ABOVE ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR
     IMPLIED, WHICH ARE HEREBY DISCLAIMED AND EXCLUDED BY GBI, INCLUDING WITHOUT
     LIMITATION ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR PARTICULAR
     PURPOSE. THE SOLE AND EXCLUSIVE REMEDIES OF ATS FOR BREACH OF PRODUCT
     WARRANTY SHALL BE LIMITED TO THE REMEDIES PROVIDED IN THIS AGREEMENT. IN NO
     EVENT SHALL GBI BE LIABLE FOR ANY LOST PROFITS OR SPECIAL, INDIRECT,
     INCIDENTAL OR CONSEQUENTIAL LOSSES OR DAMAGES OF ANY KIND, FOR ANY REASON
     WHATSOEVER, INCLUDING, BUT NOT LIMITED TO, CHARGES BASED ON NEGLIGENCE,
     BREACH OF WARRANTY, STRICT LIABILITY, OR ANY OTHER THEORY, EVEN IF GBI
     SHALL HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH POTENTIAL LOSS OR
     DAMAGE.

14.3. ATS Warranty Obligations. ATS shall not make any representations or
     warranties with respect to Products or GBI's liability therefore except as
     set forth in this Article.

                                   ARTICLE 15
                           REPRESENTATIONS, WARRANTIES
                               AND INDEMNIFICATION

15.1. Indemnification.

     (a)  Cross Indemnity. GBI and ATS hereby agree to indemnify, defend and
          hold each other harmless from and against all suits, actions, claims,
          demands, causes of action, judgments, liabilities and expenses
          (including court costs and reasonable attorneys' fees) which arise or
          result from their respective misrepresentations of any representation
          contained herein, or default in the observance or performance of any
          term or provision hereof. Further, each Party agrees to indemnify,
          defend and hold the other Party harmless from and against all suits,
          actions, claims, demands, causes of action, judgments, liabilities and
          expenses (including court costs and reasonable attorneys' fees) which
          arise or result from activities on the part of the Other Party in
          carrying out clinical studies, where a third party may sue the first
          Party based on alleged violations by the other Party of HIPPA, or
          other statutory regulations related to carrying out a clinical
          activity. In addition, ATS shall indemnify, defend and hold GBI
          harmless from and against all suits, actions, claims, demands, causes
          of action, judgments, liabilities and expenses (including court costs
          and reasonable attorneys' fees) which are the result of ATS'
          relationship with an Affiliate, subdistributor of ATS or any other
          third parties appointed by ATS to distribute the Product.

                                       21

<PAGE>

     (b)  Products Liability. GBI hereby agrees to defend, indemnify and hold
          ATS and its Affiliates (each an "ATS Indemnified Party") harmless from
          and against all suits, actions, claims, demands, causes of action,
          judgments, liabilities and expenses (including court costs and
          reasonable attorneys' fees) which arise out of or result from personal
          injury incident to the use of any Products to the extent resulting
          from the failure of GBI to manufacture the Products to meet the
          Preliminary Specifications or Specifications, as the case may be. As a
          condition precedent to GBI's obligation under this Section 15.1(b),
          the ATS Indemnified Party charged in such suit shall promptly notify
          GBI and shall not settle any suit in which it seeks indemnification
          hereunder without GBI's prior written approval and GBI shall have the
          right to defend such actions at its sole expense.

          ATS hereby agrees to defend, indemnify and hold GBI and its Affiliates
          (each a "GBI Indemnified Party") harmless from and against all suits,
          actions, claims, demands, causes of action, judgments, liabilities and
          expenses (including court costs and reasonable attorneys' fees) which
          arise out of or result from personal injury incident to the use of any
          Products to the extent resulting from a defect in the Preliminary
          Specifications or Specifications, as the case may be. As a condition
          precedent to ATS' obligations under this Section 15.1(b), the GBI
          Indemnified Party charged in such suit shall promptly notify ATS and
          shall not settle same without ATS' prior written approval and ATS
          shall have the right to defend such actions at its sole expense.

15.2. Insurance Requirements.

     (a)  GBI Insurance Requirements. GBI will carry product liability insurance
          covering any loss, damage, expense or liability incurred or suffered
          by any Party other than GBI arising out of any use of a Product. Such
          policy or policies shall (i) have aggregate limits of liability of not
          less than $1,000,000 with respect to any incident or occurrence and of
          not less than $2,000,000 in the aggregate on the Effective Date; (ii)
          name ATS as an additional insured Party; (iii) provide for a
          deductible or retained amount of not more than $100,000; and (iv)
          provide that such policy may not be canceled except upon not less than
          30 days' written notice to both GBI and ATS. Upon request, GBI shall
          provide such evidence of the effectiveness of such insurance to ATS.
          GBI shall use commercially reasonable efforts to increase such
          insurance to $10,000,000 in the aggregate before the first date
          clinical quality Products are delivered pursuant to this Agreement.

     (b)  ATS Insurance Requirements. ATS will carry product liability insurance
          covering any loss, damage, expense or liability incurred or suffered
          by a Party other than ATS arising out of any use of a Product. Such
          policy or policies shall (a) have aggregate limits of liability of not
          less than $1,000,000 with respect to any incident or occurrence and of
          not less than $10,000,000 in the aggregate; (b) name GBI as an
          additional insured Party; (c) provide for a deductible or retained
          amount of not more than $1,000,000; and (d) provide that such policy
          may not be canceled except upon not less than 30 days' written notice
          to both GBI and ATS.

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<PAGE>

          Upon request, ATS shall provide evidence of the effectiveness of such
          insurance to GBI.

15.3. Third Party Claims. If a claim by a third party is made against an
     indemnified Party and if the indemnified Party intends to seek indemnity
     with respect thereto under this Article 15, such indemnified Party shall
     promptly notify the indemnifying Party of such claim; provided, however,
     that the failure to give timely notice shall not affect the rights of the
     indemnified Party so long as such failure to give timely notice does not
     adversely affect the indemnifying Party's ability to defend such claim
     against a third Party. The indemnifying Party shall be entitled to assume
     the defense thereof, with counsel selected by the indemnifying Party and
     reasonably satisfactory to the indemnified Party. The indemnifying Party
     shall have control of the defense of any such action, including any appeals
     and negotiations for the settlement or compromise thereof and shall have
     full authority to enter into a binding settlement or compromise; provided
     that, the indemnifying Party shall not enter into any settlement or
     compromise which may adversely affect the indemnified Party without the
     indemnified Party's consent, which consent shall not be unreasonably
     withheld. If the indemnifying Party assumes the defense of such claim, the
     indemnifying Party shall not be responsible for any legal or other expenses
     subsequently incurred by such indemnified Party in connection with the
     defense thereof. The indemnified Party may participate, at its own cost and
     expense, in the defense of any such claim; provided, however, that such
     defense shall be controlled by the indemnifying Party.

15.4. Cooperation as to Indemnified Liability. Each Party hereto shall cooperate
     fully with other Parties with respect to access to books, records, or other
     documentation within such Party's control, if deemed reasonably necessary
     or appropriate by any Party in the defense of any claim, which may give
     rise to indemnification hereunder.

15.5. ATS' Representations and Warranties. ATS hereby represents and warrants to
     GBI that as of the date hereof:

     (a)  ATS is a corporation duly organized, validly existing and in good
          standing under the laws of Minnesota, and this Agreement has been duly
          authorized by all necessary corporate action.

     (b)  This Agreement is the legal, valid and binding obligation of ATS,
          enforceable against ATS in accordance with its terms.

     (c)  Neither the execution and delivery of this Agreement nor the
          compliance with the terms and conditions hereof will conflict with,
          result in a breach or violation by ATS of or constitute a default
          under any of the terms, conditions or provisions of any contract,
          agreement or other instrument to which ATS is or may be bound or
          affected.

     (d)  ATS is the sole and exclusive owner of the ATS Inventions and ATS
          Confidential Information, free and clear of any security interests,
          claims, encumbrances or

                                       23

<PAGE>

          charges of any kind, and has full right, power and authority to enter
          into this Agreement and to grant to GBI the rights granted and to be
          granted hereunder.

     (e)  To the best of ATS' knowledge, ATS Inventions are valid and
          enforceable, and the rights and licenses granted under this Agreement
          do not infringe any patent, copyright, trademark, license or other
          intellectual property right of any third party and do not
          misappropriate any trade secret of any third party.

     (f)  There is no legal, administrative, arbitration, or other proceeding,
          suit, claim or action of any nature, judgment, decree, decision,
          injunction, writ or order pending or, to the knowledge of ATS,
          threatened or contemplated by or against or involving ATS or its
          shareholders, directors or officers (but only in their capacity as
          such), ATS Inventions, ATS Confidential Information or this Agreement,
          whether at law or in equity, before or by any person, entity
          governmental or quasi-governmental, administrative or regulatory
          agency or any court.

     (g)  All proprietary technical information developed by and belonging to
          ATS that has not been patented has been kept confidential.

     (h)  Except as otherwise set forth on Exhibit B, ATS has not patented or
          applied for patent protection on any the technology it proposes to use
          in developing the Product.

     (i)  ATS is not under any obligations inconsistent with the provisions of
          this Agreement.

15.6. GBI's Representations and Warranties. GBI hereby represents and warrants
     to ATS that as of the date hereof:

     (a)  GBI is a corporation duly organized, validly existing and in good
          standing under the laws of Colorado, and this Agreement has been duly
          authorized by all necessary corporate action.

     (b)  This Agreement is the legal, valid and binding obligation of GBI,
          enforceable against GBI in accordance with its terms.

     (c)  Neither the execution and delivery of this Agreement nor the
          compliance with the terms and conditions hereof will conflict with,
          result in a breach or violation by GBI of or constitute a default
          under any of the terms, conditions or provisions of any contract,
          agreement or other instrument to which GBI is or may be bound or
          affected.

     (d)  GBI is the sole and exclusive owner of the GBI Inventions and GBI
          Confidential Information, free and clear of any security interests,
          claims, encumbrances or charges of any kind other than a term loan
          with Community Banks of Colorado, and has full right, power and
          authority to enter into this Agreement and to grant to ATS the rights
          granted and to be granted hereunder.

                                       24

<PAGE>

     (e)  To the best of GBI's knowledge, GBI Inventions are valid and
          enforceable, and the rights and licenses granted under this Agreement
          do not infringe any patent, copyright, trademark, license or other
          intellectual property right of any third party and do not
          misappropriate any trade secret of any third party.

     (f)  There is no legal, administrative, arbitration, or other proceeding,
          suit, claim or action of any nature, judgment, decree, decision,
          injunction, writ or order pending or, to the knowledge of GBI,
          threatened or contemplated by or against or involving GBI or its
          shareholders, directors or officers (but only in their capacity as
          such), GBI Inventions, GBI Confidential Information or this Agreement,
          whether at law or in equity, before or by any person, entity
          governmental or quasi-governmental, administrative or regulatory
          agency or any court.

     (g)  All proprietary technical information developed by and belonging to
          GBI that has not been patented has been kept confidential.

     (h)  Except as otherwise set forth on Exhibit B, GBI has not patented or
          applied for patent protection on any the technology it proposes to use
          in developing the Product.

     (i)  GBI is not under any obligations inconsistent with the provisions of
          this Agreement.

                                   ARTICLE 16
                            CONFIDENTIAL INFORMATION

16.1. Confidentiality. Except as otherwise specifically provided in this
     Agreement, ATS and GBI each agree that during the term of this Agreement
     and for a period of five (5) years thereafter, it will not use any GBI
     Confidential Information or ATS Confidential Information, respectively, for
     any purpose other than as permitted or required for performance by such
     Party under this Agreement and not to disclose or provide any Confidential
     Information to any third Party and to take all reasonably necessary
     measures to prevent any such disclosure by its employees, agents,
     contractors or consultants. Upon request of the other Party or termination
     of this Agreement, each Party shall return all such Confidential
     Information to the other Party.

16.2. Existence of Agreement. The existence of this Agreement and the
     participation of the Parties in it shall be deemed to be confidential
     information subject to the provisions of this Article 16. Any publication,
     public reference or other transfer of information into the public sector
     regarding the relationship as defined in the Agreement or any of the terms
     contained in the Agreement shall be prohibited without prior written
     consent of the other Party.

16.3. Exclusions to Confidential Information. Confidential Information of either
     Party shall exclude information that:

                                       25

<PAGE>

     (a)  was already in the possession of receiving Party prior to its receipt
          from the disclosing Party (provided that the receiving Party is able
          to provide the disclosing Party with reasonable documentary proof
          thereof);

     (b)  is or becomes part of the public domain by reason of acts not
          attributable to the receiving Party;

     (c)  is or becomes available to receiving Party from a source other than
          the disclosing Party which source, to the best of receiving Party's
          knowledge, has rightfully obtained such information and has no
          obligation of non-disclosure or confidentiality to the disclosure
          Party with respect thereto;

     (d)  is made available by the disclosing Party to a third Party
          unaffiliated with the disclosing Party on an unrestricted basis;

     (e)  is independently developed by the receiving Party completely without
          reference to any Confidential Information of the disclosing Party, as
          evidenced by the receiving Party's written records; or

     (f)  has been or must be publicly disclosed by reason of legal accounting
          or regulatory requirements beyond the reasonable control, and despite
          the reasonable efforts of the receiving Party.

     All Confidential Information disclosed by one Party to the other under this
     Agreement shall be in writing and bear a legend "Proprietary,"
     "Confidential" or words of similar import or, if disclosed in any manner
     other than writing, shall be preceded by an oral statement indicating that
     the information is proprietary or confidential.

                                   ARTICLE 17
                    PATENTS AND INTELLECTUAL PROPERTY RIGHTS

17.1. Defense of Claims. Except with regard to Joint Inventions covering the
     Product, GBI shall, at its own expense, defend any suit instituted against
     ATS which is based on an allegation that any Product constitutes an
     infringement of any patent or any other intellectual property right
     protected under the laws of the United States, any State of the United
     States, or any other nation. GBI shall have control of the defense of any
     such action, including any appeals and negotiations for the settlement or
     compromise thereof and shall have full authority to enter into a binding
     settlement or compromise; provided that, GBI shall not enter into any
     settlement or compromise which may adversely affect ATS without ATS'
     consent, which consent shall not be unreasonably withheld. GBI shall
     indemnify ATS against any award of damages and costs made against ATS as a
     result of any such action.

17.2. Limitation of Liability. GBI shall have no liability of any kind to ATS
     under Section 17.1 or based upon any other claim ATS may have to the extent
     any such claim is based upon or arises out of (a) the use of any Product in
     combination with an apparatus or device not manufactured, supplied or
     approved by GBI, (b) the use of any Product in a

                                       26

<PAGE>

     manner for which it was not designed or intended to be used, or (c) any
     modification of any Product by ATS or any third party which causes it to
     become infringing.

17.3. Replacement Product. In order to avoid or limit any liability for
     infringement, GBI may, at any time and irrespective of whether it shall be
     obligated to do so by order of any court, at its expense and option replace
     any Product with a non-infringing item providing substantially the same
     performance and has received all necessary regulatory approvals.

17.4. Intellectual Property. GBI represents and warrants to ATS that: (a) Except
     with respect to Joint Inventions, GBI owns or possesses licenses or other
     rights to use all Intellectual Property used in the development,
     manufacture or sale of the Products ("GBI Intellectual Property"); (b) no
     claim is pending or threatened to the effect that the Product or GBI's use
     of GBI Intellectual Property infringes upon or conflicts with the valid
     rights of any other person under any Intellectual Property, and, to the
     best of GBI's knowledge, there is no basis for any such claim; (c) no claim
     is pending or threatened to the effect that any such GBI Intellectual
     Property is invalid or unenforceable by GBI, and, to the best of GBI's
     knowledge, there is no basis for any such claim (whether or not pending or
     threatened) and (d) all proprietary technical information developed by and
     belonging to GBI which has not been patented has been kept confidential.

17.5. Protection of GBI's Intellectual Property and Improvements. GBI shall be
     responsible for filing and prosecuting all U.S. and foreign patent,
     copyright and mask work applications it deems necessary or appropriate to
     protect GBI Intellectual Property.

                                   ARTICLE 18
                                   TRADEMARKS

18.1. License. GBI hereby grants to ATS a non-exclusive, non-transferable, and
     royalty-free right and license to use GBI's trademarks, trade names and
     logotypes in connection with the sale, distribution, promotion and
     advertising of the Products as long as such trademarks are used by ATS in
     accordance with GBI's standards, specifications and instructions, but in no
     event beyond the term of this Agreement. ATS shall not acquire any right,
     title or interest under the laws of any nation in such trademarks, trade
     names or logotypes of GBI other than the foregoing limited license and
     shall not attempt to assert or register any such right, title or interest.
     ATS shall not use any of GBI's trademarks, trade names or logotypes as part
     of ATS' corporate or trade names or permit any third party to do so without
     the prior written consent of GBI. ATS shall permit GBI to inspect any
     material on which GBI's trademarks, trade names and logo types appear, and
     ATS agrees to make any changes reasonably required by GBI. ATS shall in
     addition have the right to promote and sell the Products under trademarks,
     trade names and logotypes of ATS selected by ATS, which trademarks, trade
     names and logotypes shall be and shall remain the property of ATS.

18.2. Infringement. ATS shall promptly notify GBI of any use by any third party
     of GBI's trademarks, trade names or logotypes or any use by such third
     parties of similar marks which may constitute an infringement or passing
     off of GBI's trademarks, trade names or

                                       27

<PAGE>

18.3. logotypes of which ATS has knowledge. GBI reserves the right in its sole
     discretion to institute any proceedings against such third party infringers
     and ATS shall refrain from doing so. ATS agrees to cooperate fully with GBI
     in any action taken by GBI against such third parties, provided that all
     expenses of such action shall be borne by GBI and all damages which may be
     awarded or agreed upon in settlement of such action shall accrue to GBI.

18.4. Termination of Use. ATS acknowledges GBI's proprietary rights in and to
     GBI's trademarks, trade names and logotypes, and ATS hereby waives all
     right to any trademarks, trade names and logotypes now or hereafter
     originated by GBI. ATS shall not adopt, use or register any words, phrases
     or symbols which are identical to or confusingly similar to any of GBI's
     trademarks. Upon termination of this Agreement, ATS shall cease using GBI's
     trademarks, trade names and logotypes in any manner, subject to ATS' right,
     if any, to continue to sell Products held in inventory.

                                   ARTICLE 19
           RIGHT OF FIRST REFUSAL UPON PROPOSED SALE OF PRODUCT LINE;
                                PAYMENT UPON SALE

19.1. Right of First Refusal.

     (a)  If GBI receives any offer to purchase, or reaches an agreement in
          principal (subject to ATS' rights under this Article) with, or
          otherwise determines that it is willing to accept an offer from, any
          third party, which agreement or offer includes terms and provisions
          regarding the sale, license or other transfer of any GBI Intellectual
          Property used in the development, manufacture, processing, packaging,
          sterilization, or sale of the Products (whether as an entire product
          line, or as one, several or all of the Products), then GBI shall,
          within ***** (*****) days after receipt of any such offer or agreement
          in principal, or after such determination, notify ATS in writing
          thereof (referred to in this Section 19.1 as "GBI's Notice"). GBI's
          Notice shall (i) specify the pricing, terms, conditions, timing and
          all material provisions with respect to the proposed transaction, (ii)
          identify the proposed party or parties to such transaction, and (iii)
          include a copy of the proposed agreement in principal or offer for the
          proposed transaction between GBI and the proposed third party or
          parties.

     (b)  ATS shall have the irrevocable right and option (referred to in this
          Section 19.1 as the "first refusal option"), exercisable in writing to
          GBI any time within ***** (*****) days after ATS' receipt of GBI's
          Notice (the "Option Period"), to elect to enter into such proposed
          transaction upon the same pricing (or the monetary equivalent of any
          nonmonetary consideration), terms, conditions and other material
          provisions as set forth in GBI's Notice. If ATS so elects to exercise
          its first refusal option, GBI and ATS shall use their best efforts to
          consummate such proposed transaction within ***** (*****) days
          following exercise of the first refusal option by ATS.

***** Denotes confidential information that has been omitted from the exhibit
     and filed separately, accompanied by a confidential treatment request, with
     the Securities and Exchange Commission pursuant to Rule 24b-2 of the
     Securities Exchange Act of 1934.

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     (c)  Subject to ATS' rights under Section 19.2 below, if ATS fails to
          exercise its first refusal option to enter into such proposed
          transaction, GBI and the proposed party identified in the Notice may
          complete such proposed transaction upon the pricing, terms, conditions
          and material provisions specified in GBI's Notice; provided that, if
          (i) GBI and such third party fail to complete such transaction within
          ***** days after the expiration of ATS' first refusal option, or (ii)
          if any of the pricing, terms, conditions or other material provisions
          contained in GBI's Notice are modified so as to be less favorable to
          GBI, or (iii) if the identity of such third party changes, then, in
          any such event, GBI shall give a new GBI's Notice to ATS, and ATS
          shall have a new first refusal option pursuant to the procedures above
          with respect to such delayed or modified proposed transaction.

19.2. Right to Receive ***** Percent of Consideration. If any or all of the
     Products, or GBI's Intellectual Property related to the Products, directly
     or indirectly, are sold, licensed or transferred in any fashion to any
     third party during the term of this Agreement, GBI covenants and agrees to
     pay and transfer to ATS ***** percent (*****%) of the ***** received by GBI
     and its Affiliates, directly or indirectly, in connection with any
     transaction or agreement described in Section 19.1(a) (the "ATS Share of
     Consideration"), and GBI further covenants and agrees to make such payment
     or transfer of ATS' Share of Consideration not later than within *****
     (*****) business days after the receipt by GBI and/or its shareholders of
     the consideration from the transaction. At the same time, GBI covenants and
     agrees to provide ATS with a copy of the signed definitive agreement(s)
     within ***** (*****) business days after execution of such agreement(s),
     and a copy of all material documentation and information evidencing the
     closing of such transactions that relates in any way to the consideration
     within ***** (*****) business days of the closing. "Consideration" shall
     include all forms of consideration received or to be received by GBI and
     its shareholders in connection with any of the transactions or agreements
     described in this Article 19, including any earnout or deferred
     consideration when and as it is paid to GBI and its shareholders. If a
     sale, transfer or license of the Products (whether an entire product line
     or as one, several or all of the Products) occurs as part of a Change in
     Control transaction (excluding a Change of Control transaction between GBI
     and ATS), then the Parties hereto shall negotiate in good faith in order to
     allocate as reasonably as possible a portion of the overall consideration
     received by GBI and its shareholders in such Change in Control transaction
     to the fair value of the business and assets represented by such Products
     taking into account its fair market value, and such good faith negotiations
     shall be promptly completed so that GBI will pay and transfer, or cause to
     be paid and transferred, to ATS the ATS Share of Consideration within *****
     (*****) days after the receipt by GBI and/or its shareholders of the
     consideration from the transaction.

                                   ARTICLE 20
                                   ARBITRATION

20.1. Disputes. Any dispute, controversy or claim arising out of or relating to
     this Agreement, or the breach, termination or invalidity thereof, shall be
     finally settled by arbitration in accordance with the Commercial
     Arbitration Rules of the American Arbitration

***** Denotes confidential information that has been omitted from the exhibit
     and filed separately, accompanied by a confidential treatment request, with
     the Securities and Exchange Commission pursuant to Rule 24b-2 of the
     Securities Exchange Act of 1934.

                                       29

<PAGE>

     Association in effect on the date of this Agreement by a single arbitrator
     who shall be experienced in the medical device industry and who shall be
     appointed in accordance with such rules. The place of arbitration shall be
     Minneapolis, Minnesota.

20.2. Governing Law. This Agreement shall be governed by, and interpreted and
     construed in accordance with the laws of the State of Minnesota.

                                   ARTICLE 21
                                  FORCE MAJEURE

21.1. Definition. Force Majeure shall mean any event or condition, not existing
     as of the date of this Agreement, not reasonably foreseeable as of such
     date and not reasonably within the control of either Party, which prevents
     in whole or in material part the performance by one of the Parties of its
     obligations hereunder or which renders the performance of such obligations
     so difficult or costly as to make such performance commercially
     unreasonable. Without limiting the foregoing, the following shall
     constitute events or conditions of Force Majeure: riots, civil or military
     disturbances, war, strikes, lockouts, labor slowdowns or stoppages,
     prolonged shortage of energy supplies, epidemics, fire, flood, hurricane,
     typhoon, earthquake, lightning, and explosion.

21.2. Notice. Upon giving notice to the other Party, a Party affected by an
     event of Force Majeure shall be released without any liability on its part
     from the performance of its obligations under this Agreement, except for
     the obligation to pay any amounts due and owing hereunder, but only to the
     extent and only for the period that its performance of such obligations is
     prevented by the event of Force Majeure. Such notice shall include a
     description of the nature of the event of Force Majeure, its cause and
     possible consequences. The Party claiming Force Majeure shall promptly
     notify the other Party of the termination of such event.

21.3. Suspension of Performance. During the period that the performance by one
     of the Parties of its obligations under this Agreement has been suspended
     by reason of an event of Force Majeure, the other Party may likewise
     suspend the performance of all or part of its obligations hereunder, except
     for the obligation to pay any amounts due and owing hereunder, to the
     extent that such suspension is commercially reasonable.

                                   ARTICLE 22
                                  MISCELLANEOUS

22.1. Relationship. This Agreement does not make either Party the employee,
     agent or legal representative of the other for any purpose whatsoever.
     Neither Party is granted any right or authority to assume or to create any
     obligation or responsibility, express or implied, on behalf of or in the
     name of the other Party. In fulfilling its obligations pursuant to this
     Agreement each Party shall be acting as an independent contractor.

22.2. Assignment. Except as otherwise provided in this Agreement, neither Party
     may assign or otherwise transfer its rights and obligations under this
     Agreement without the prior written consent of the other Party.
     Notwithstanding any other provision in this Agreement to the contrary, and
     subject to ATS' rights as set forth in Article 19, either Party may

                                       30

<PAGE>

     assign this Agreement to its successor in connection with a Change in
     Control of such Party. Any prohibited assignment shall be null and void.
     All terms and conditions of this Agreement shall be binding on and inure to
     the benefit of the successors and permitted assigns of the Parties.

22.3. Notices. Notice permitted or required to be given under this Agreement
     shall be deemed sufficient if given in writing by facsimile, commercial air
     delivery service or by registered or certified air mail, postage prepaid,
     return receipt requested, addressed to the respective addresses of the
     Parties set forth below or at such other address as the respective Parties
     may designate by like notice from time to time. Notices so given shall be
     effective upon the earlier of: (a) receipt by the Party to which notice is
     given (which, in the instance of a facsimile, shall be deemed to have
     occurred at the time that the machine transmitting the facsimile verifies a
     successful transmission of the facsimile); (b) on the seventh business day
     following the date such notice was deposited in the mail; or (c) on the
     second business day following the date such notice was delivered to a
     commercial air delivery service. Notices shall be given as follows:

     If to GBI:        Genesee Biomedical, Inc.
                       1308 South Jason Street,
                       Denver, Colorado 80223
                       Attn: John T.M. Wright
                             Woodrow G. Mathison
                       Fax: (303) 777-8866

     With a copy to:   Davis Graham & Stubbs LLP
                       1550 Seventeenth Street, Suite 500
                       Denver, Colorado 80202
                       Attn: Wanda J. Abel
                       Fax: (303) 893-1379

     If to ATS:        ATS Medical, Inc.
                       3905 Annapolis Lane North
                       Minneapolis, Minnesota 55447
                       Attn: 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
                       Fax: (612) 607-7100

22.4. Entire Agreement. This Agreement, including the exhibits and schedules
     attached hereto and incorporated as an integral part of this Agreement,
     constitutes the entire agreement of the Parties with respect to the subject
     matter hereof, and supersedes all previous

                                       31

<PAGE>

     proposals, oral or written, and all negotiations, conversations or
     discussions heretofore had between the Parties related to this Agreement.

22.5. Amendment. This Agreement shall not be deemed or construed to be modified,
     amended, rescinded, canceled or waived, in whole or in part, other than by
     written amendment signed by the Parties hereto, except as expressly
     provided in this Agreement.

22.6. Severability. In the event that any of the terms of this Agreement are in
     conflict with any rule of law or statutory provision or otherwise
     unenforceable under the laws or regulations of any government or
     subdivision thereof, such terms shall be deemed stricken from this
     Agreement, but such invalidity or unenforceability shall not invalidate any
     of the other terms of this Agreement and this Agreement shall continue in
     force, unless the invalidity or unenforceability of any such provisions of
     this Agreement substantially violates, comprises an integral part of or is
     otherwise inseparable from the remainder of this Agreement.

22.7. Counterparts. This Agreement shall be executed in two or more
     counterparts, and each such counterpart shall be deemed an original hereof.

22.8. Waiver. No failure by either Party to take any action or assert any right
     hereunder shall be deemed to be a waiver of such right in the event of the
     continuation or repetition of the circumstances giving rise to such right.

22.9. Publications. GBI and ATS may pursue publication of the results of any
     clinical study or trial conducted with respect to Products including white
     paper publications by ATS to expand market usage for Products. The Party
     seeking to publish shall provide the non-publishing Party with sufficient
     opportunity to review any such proposed publications and make
     recommendations as to revisions to any such proposed publication.
     Notwithstanding the foregoing, neither Party shall publish the other
     Party's Confidential Information, without the express written consent of
     the non-publishing Party, or publish any information that will affect the
     non-publishing Party's ability to seek patent protection.

                     [Following Page is the Signature Page]

                                       32

<PAGE>

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed on the
date first above written.

ATS MEDICAL, INC.                       GENESEE BIOMEDICAL, INC.

By                                      By
   ----------------------------------      -------------------------------------
Its                                     Its
    ---------------------------------       ------------------------------------

                                       33

<PAGE>

                                    EXHIBIT A

                                DEVELOPMENT PLAN

<PAGE>

                                    EXHIBIT B

                                 GBI INVENTIONS

<PAGE>

                                    EXHIBIT C

                                 TRANSFER PRICES

                               (See Section 10.1)

<PAGE>

                                    EXHIBIT D

                                     SAMPLES

                               (See Section 12.4)

Number of non-sterile samples in year one            ____________
Transfer price of additional non-sterile marketing
samples to be provided by GBI to ATS                 $___________

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