Document:

exv10w13

 

EXHIBIT 10.13

TECHNOLOGY TRANSFER
AGREEMENT

     This Agreement is made as of 5 JUNE, 1996 by and between Manuel A.
Villafaña, a Minnesota resident (“Transferee”) and ATS Medical, Inc., a
Minnesota corporation (“ATS”).

     RECITALS:

     1. ATS has conducted preliminary design work on a synthetic
vascular graft device incorporating a manifold connection to the
native artery and has prepared a preliminary patent search on the
subject (the “Project”).

     2. ATS has not proceeded with further development or
financing of the Project beyond the initial development and patent
work.

     3. Transferee desires to acquire the Project from ATS and
continue its development in exchange for a royalty payable to ATS
from future sales of products resulting from the Project.

     AGREEMENT:

     1. Technology Transfer. Subject to the terms hereof and in
consideration of the payment of the royalties specified
hereinafter, ATS hereby transfers to Transferee all right, title
and interest in and to all of the intellectual property, designs,
ideas and concepts concerning the Project. Transferee understands
and agrees that beyond the sketches and preliminary prototypes,
there are no fixed assets associated with the Project.

     2. Royalty Payment. Transferee will pay to ATS, as payment
in full for the rights to the Project, a royalty in an amount equal
to *% of the net sales of any product resulting from the Project by
the Transferee or any person or entity acquiring the rights to the
Project directly or indirectly from the Transferee. Net sales
shall consist of net sales as defined by GAAP, excluding the actual
costs of sterilization, packaging and shipment. The royalty shall
be payable to ATS quarterly within 45 days of the end of each
calendar quarter. The royalty shall continue for the life of any
patent granted by the U. S. Patent & Trademark office covering any
product resulting from the Project or, if no such patent shall
issue, for 17 years from the date of this Agreement. In no event
shall the royalty continue longer than 25 years from the date of
this Agreement.

     3. Records. Transferee agrees to keep accurate records in
sufficient detail to enable the royalties payable by it hereunder
to be determined, and agrees to permit said records to be examined
from time to time during the royalty period by authorized
representatives of ATS at reasonable intervals during usual
business hours to the extent necessary to verify the reports and
royalty payments.

 

 

     4. Representations and Indemnity. ATS makes no
representation or warranty concerning the Project or any patent
rights associated with the Project. Transferee assumes all risk of
the Project and agrees to indemnify and hold harmless ATS from and
against any and all liabilities, claims, demands, costs, expenses
including attorneys’ fees, and other charges arising out of or
resulting from the Project or any claim of infringement upon any
patent, trademark, copyright or other proprietary right of any
third person in the Project.

     5. Exclusivity. Transferee agrees that he will not during
the life of this Agreement issue any license, grant or other right
to any other person or entity to use, manufacture, have
manufactured, sell, or resell any product resulting from the
Project unless as part of that transfer, the subsequent transferee
expressly and in writing (addressed and delivered to ATS) agrees to
the same royalties specified herein for the same term specified
herein. This Agreement may be assigned by ATS to a successor in
interest to all or substantially all of ATS’s business, whether by
merger or acquisition. Beyond the foregoing, this Agreement nor
any rights or benefits hereunder shall be assignable or
transferable by either of the parties hereto without the prior
written consent of the other, which consent shall not be
unreasonable withheld.

     6. Termination. This Agreement will terminate upon the termination of the
royalty period specified in paragraph 2 above. Upon termination, Transferee
will continue to possess all rights in the Project in perpetuity, and no
further payments to ATS will be required.

     7. Miscellaneous. This Agreement shall be governed by the laws of the
State of Minnesota as applied to residents of such State entering into
contracts wholly to be performed in such State. This Agreement may not be
modified or amended in whole or in part without the written consent of both
parties. This Agreement constitutes the entire understanding between the
parties with respect to the subject matter hereof.

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

	 	 	 
	/s/
Manuel A. Villafaña

Manuel A. Villafaña

	 	ATS MEDICAL, INC.
	 	 	 
	 	  	By:   /s/ Richard W. Kramp

Its: PRESIDENT/COOexv10w14

 

EXHIBIT 10.14

[CABG Medical, Inc. Letterhead]

June 3, 2004

Mr. Michael Dale

Chairman, President & CEO

ATS Medical, Inc.

3905 Annapolis Lane N., Suite 105

Minneapolis, Minnesota 55447

	 	 	 
	Re:

	 	Amendment to Technology Transfer Agreement between ATS
	

	 	Medical, Inc. and Manuel A. Villafaña

Dear Mr. Dale:

This letter concerns the Technology Transfer Agreement Dated June 5, 1996
between ATS Medical, Inc. (“ATS”) and Manuel A. Villafaña (the “Agreement”).
The purpose of this amendment is to (i) transfer the rights and obligations of
Manuel A. Villafaña to CABG Medical, Inc. (“CABG”), (ii) amend the royalty
payment provision set forth in Section 2 of the Agreement, and (iii) amend the
termination provision set forth in Section 6 of the Agreement.

Accordingly, this letter confirms the assignment of the rights and obligations
of Manuel A. Villafaña to CABG and acknowledges the consent thereto by ATS.

Additionally, this letter amends and supercedes Sections 2 and 6 of the
Agreement. Specifically, Section 2 of the Agreement is hereby amended and
restated to read in its entirety as follows:

     “2 Royalty Obligations.

(a) Definitions. The following words and phrases, as used in this
Agreement, shall have the meaning ascribed below:

“Net Sales” means the gross amount received on the sale of Royalty
Products by CABG (excluding sales for use in clinical trials or
other scientific testing for which CABG receives no revenue),
less:

 

 

(i) discounts, credits, and rebates, except any discounts,
credits and rebates granted in consideration of such third
party’s agreement to purchase any product other than Royalty
Products (other than where such discounts, credits or rebates
are “across-the-board” discounts, credits or rebates applied to
the Royalty Products and other products as part of an overall
program of discounts, credits or rebates established by CABG
covering a broad range of products);

(ii) allowances, adjustments, chargebacks, rejections, recalls
and returns;

(iii) management fees to group purchasing organizations, such
fees to be calculated as that percentage of the total
management fees associated with a purchase of products which
include the Royalty Products, equivalent to the proportionate
economic value of the Royalty Products relative to the total
economic value contributed by all the other items purchased;

(iv) sales, excise, similar taxes; turnover, inventory,
value-added and similar taxes; and

(v) transportation, insurance and other handling expenses
directly chargeable to such sales;

provided, however, that if a Royalty Product is sold together with
another item (whether as part of the sale of combination product,
package, system, kit or tray or otherwise) at a unit price,
whether packaged together or separately, “Net Sales” means the
“Net Sales” of such combination, multiplied by (x) a fraction
A/(A+B) where A is the average selling price (“ASP”) of the
Royalty Product when sold separately and B is the ASP of the other
item when sold separately, or (y) if the ASP of the Royalty
Product or the other item is not available, a fraction determined
by the mutual agreement of the parties, which represents the
proportionate economic value of the Royalty Product relative to
the economic value contributed by the other item. In either case
(x) or (y), the ASP of the Royalty Product shall be no less than
the CABG cost of goods sold for the Royalty Product. In no case
shall the amount of Net Sales include amounts paid for any item or
service other than a Royalty Product or exceed the ASP with
respect to a Royalty Product.

In the event CABG receives any fixed payment, fee or in-kind
consideration from the third party in consideration of any
discount, credit, rebate or similar allowance granted to such
third party in connection with the sale of any Royalty Product,
the dollar amount equal to such consideration shall be added to
the gross amount invoiced for such sale for purposes of
calculating “Net Sales.”

“Patent Right” or “Patent Rights” means: (x) U.S. Patent No.
6,241,761 (Stented Grafts for Coupling Vascular Members) issued on
June 5, 2001, and U.S. Patent No. 6,241,764 (Stented Grafts
Coupling Vascular Members) issued on June 5, 2001 (including any
divisions, continuations, reexaminations, reissue substitution
applications thereof and foreign

 

 

applications based thereon) and (y) any and all patents issuing
therefrom and extensions thereof.

“Royalty Product” means a product developed and sold by CABG that
is covered by a Valid Claim of an Unexpired patent that is
included within the Patent Rights.

“Unexpired” shall mean a patent that has not reached its
expiration date, been abandoned, cancelled, disclaimed, awarded to
another party in an interference proceeding, or been declared
invalid or unenforceable by a court or other authority of
competent jurisdiction (including final rejection in a
re-examination or re-issue proceedings).

“Valid Claim” means a claim of an issued, Unexpired patent
included in the Patent Rights, which has not been:

(i) held invalid, unpatentable or unenforceable by a final
decision, which was not appealed or is unappealable, of a court
of competent jurisdiction, or an administrative agency having
authority over patents, or

(ii) admitted to be invalid, unpatentable or unenforceable by
the holder by reissue, disclaimer or otherwise.

(b) Earned Royalty. Following marketing approval by the United
States Food and Drug Administration (“FDA”) of any Royalty Product,
CABG shall pay ATS an earned royalty of *** percent (*%) on Net
Sales of such Royalty Product sold anywhere in the world. Prior to
FDA approval of any Royalty Product, CABG shall pay ATS an earned
royalty as described in parts (i), (ii), and (iii) below.

(i) Net Sales of Royalty Products in the United States.

Prior to CABG obtaining marketing approval of any Royalty Product
by the FDA, CABG shall pay ATS an earned royalty of *** percent
(*%) on Net Sales of such Royalty Product sold in the United
States.

(ii) Net Sales of Royalty Products outside the United States
between the June 5, 1996 and March 31, 2008

Prior to CABG obtaining marketing approval of any Royalty Product
by the FDA, from the June 5, 1996 to March 31, 2008, CABG shall
pay ATS an earned royalty of *** percent (*%) on Net Sales of such
Royalty Product sold outside the United States.

(iii) Net Sales of Royalty Products outside the United States
after March 31, 2008

After March 31, 2008, CABG shall pay ATS an earned royalty of ***
percent (*%) on Net Sales of any Royalty Product sold outside the
United States if such sale is made prior to CABG receiving
marketing approval for such

 

 

Royalty Product by a regulatory body of competent jurisdiction
outside the United States; however, after March 31, 2008 and upon
CABG receiving marketing approval of such Royalty Product by a
regulatory body of competent jurisdiction outside the United
States, CABG shall thereafter pay ATS an earned royalty of ***
percent (*%) on Net Sales of such Royalty Product sold in that
jurisdiction.”

Section 6 of the Agreement is hereby amended and restated to read in its
entirety as follows:

     “6. Termination. This Agreement shall terminate when there are no
Unexpired patents included in the Patent Rights. Upon termination, CABG will
continue to possess all rights in the Project in perpetuity, and no further
payments to ATS will be required.”

Except as specified in this letter agreement, all terms of the Agreement remain
unchanged. Capitalized terms used in this letter agreement and not otherwise
defined have the meanings given to them in the Agreement. As amended hereby,
the Agreement shall be read and construed as one and the same instrument.

Sincerely,

/s/ John L. Babitt, CFO

John L. Babitt

President & CFO

Agreed and accepted by:

ATS Medical, Inc.

/s/ Michael Dale

Michael Dale

Chairman, President & CEO

/s/ Manuel A. Villafaña

Manuel A. Villafaña,
individually

NOTE: IN THE EVENT OF A CHANGE IN CONTROL, VIA THE SALE OR OTHERWISE MEANS, OF
CABG MEDICAL, THIS AMENDMENT WILL BECOME NULL AND VOID, AND ALL PREVIOUS
REQUIREMENTS AND OBLIGATIONS WITH RESPECT TO THE TECHNOLOGY TRANSFER AGREEMENT
DATED JUNE, 1996, BETWEEN ATS MEDICAL AND MANUEL VILLAFANA WILL RESUME
IMMEDIATELY. /s/ M.D., M.A.V.

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