Document:

EX-10.2

EXHIBIT 10.2

Execution Version

MANUFACTURING AGREEMENT

THIS MANUFACTURING AGREEMENT, dated June 28, 2007 (this “Agreement”), is by and
between CryoCath Technologies Inc., a company incorporated under Part 1A of the Companies Act
(Quebec) (“Seller”), and ATS Acquisition Corp., a Minnesota corporation
(“Purchaser”).

Recitals

A. WHEREAS, the Seller and ATS Medical, Inc., a Minnesota corporation (“ATS Medical”),
have previously entered into that certain Asset Purchase Agreement dated June 19, 2007 (the
“Purchase Agreement”), whereby ATS Medical obtained the right to acquire from Seller
certain assets related to Seller’s business of designing, developing, using, manufacturing,
marketing, promoting, selling, and distributing Argon-Based Cryoablation Devices.

B. WHEREAS, ATS Medical assigned all of its rights under the Purchase Agreement to Purchaser,
a Minnesota corporation and a wholly owned subsidiary of ATS Medical, pursuant to the terms of a
certain Assignment Agreement.

C. WHEREAS, it is a condition to the obligation of both parties to consummate the transactions
contemplated in the Purchase Agreement that the parties enter into this Agreement. Capitalized
terms used herein and not defined herein shall have the meanings ascribed to them in the Purchase
Agreement.

D. WHEREAS, as contemplated by the Purchase Agreement and in connection with the transition of
the Business to Purchaser and on the terms set forth in this Agreement, Seller desires to
manufacture, assemble, and supply to Purchaser, and Purchaser desires to purchase from Seller, the
products described on Exhibit A attached hereto (together with the related consoles, the
“Products”) pursuant to purchase orders that Purchaser may, from time to time while this
Agreement remains in effect, issue to Seller.

E. WHEREAS Purchaser and Seller agree that during the term of this Agreement, Seller will
transition the manufacturing of the Products to Purchaser and Seller will assist Purchaser with
such transition, as more fully set forth herein.

Agreement

In consideration of the foregoing, incorporated herein by this reference, and the
representations, warranties, covenants and agreements contained herein, the receipt and sufficiency
of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto
agree as follows:

ARTICLE 1

DEFINITIONS

	1.1	 	“Act” means the United States Food, Drug and Cosmetic Act and the regulations
promulgated thereunder, as amended from time to time, and equivalent foreign laws applicable
to supply of medical devices.

	1.2	 	“FDA” means the Food and Drug Administration of the U.S. Department of Health and
Human Services.

	1.3	 	“Product Inventory” means all raw materials utilized by Seller in the manufacture of
the Products and related work-in-process inventory.

	1.4	 	“Product Liability Damages” means any liability, claim or expense, including but not
limited to reasonable attorneys’ fees, to the extent arising out of claims of third parties
for personal injury or loss of or damage to property to the extent relating to or arising out
of the making or the approved use of the Products.

	1.5	 	“Regulatory Authority” means the FDA or any court, tribunal, arbitrator, agency,
commission, official or other instrumentality of competent jurisdiction of any federal, state,
county, city or other political subdivision, domestic or foreign, that performs a function for
such political subdivision similar to the function performed by the FDA for the United States,
including Notified Bodies who are authorized by Competent Authorities in Europe.

	1.6	 	“Regulatory Standards” means (i) any and all permits, licensing, filings and
certifications required by the FDA or other applicable Regulatory Authorities, and compliance
with Quality Systems Regulations, set forth as 21 CFR § 820, of the FDA and equivalent
regulatory requirements of other Regulatory Authorities, applicable to the manufacturing
facility and the manufacturing, processing, handling, storage, shipment, or distribution of
the Products, and (ii) any laws, rules, regulations and standards of any Governmental
Authority, within the United States or Canada that apply to the manufacturing facility or the
manufacturing, processing, handling, storage, shipment, or distribution of the Products.

	1.7	 	“Remedial Action” means any recall, market withdrawal, or general corrective action,
including any corrections and removals requiring notification under 21 CFR Section 806,
relating to the Product, whether voluntary or involuntary.

	1.8	 	“Vigilance Report” means the incident report for death, injury and malfunction that
could lead to 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 Authority.

ARTICLE 2

ORDER, MANUFACTURE AND SUPPLY OF PRODUCTS AND RELATED SERVICES

	2.1	 	Purchase Orders. During the term of this Agreement, upon receipt of a purchase order
from Purchaser (each a “Purchase Order”), Seller shall manufacture, assemble and
deliver Products to Purchaser according to the specifications for such Products as currently
in effect (the “Specifications”), in such quantities and pursuant to the terms
specified in such Purchase Order and this Agreement. Each Purchase Order shall, at a minimum,
include: (a) identification of the Products ordered; (b) quantity; (c) requested delivery
date; and (d) shipping instructions and shipping address, subject to Section 2.5, below.

	2.2	 	Acceptance of Orders. Subject to Section 2.3 below, all Purchase Orders shall be
deemed to be an offer by Purchaser to purchase the Products pursuant to the terms of this
Agreement and shall give rise to a contract between Purchaser and Seller for the sale of the
Products ordered only to the extent Seller accepts, or is required to accept, the Purchase
Order as set forth in Section 2.3. The terms and conditions of this Agreement shall govern
and supersede any additional or contrary terms set forth in Purchaser’s Purchase Order or any
Seller or Purchaser acceptance, confirmation, invoice or other document, unless the specific
additional or contrary terms are stated in writing and duly signed by an officer of Purchaser
and an officer of Seller.

	2.3	 	Forecasts. An initial twelve (12) month forecast of Purchaser’s expected Product
needs is attached to this Agreement as Exhibit B. Such forecast will be updated on
the first business day of each calendar month during the term of this Agreement to reflect the
number of Products for which Purchaser expects to take delivery during the succeeding twelve
month period. Purchaser shall be bound by the first three (3) months of each twelve-month
forecast (each a “Binding Forecast”). Purchaser shall submit one or more Purchase
Orders that call for delivery of the quantity of Products reflected in the first three months
of the initial forecast within ten (10) days of the date hereof and will submit a Purchase
Order on the first business day of each calendar month while this Agreement is in effect that
calls for delivery of the Products reflected in the third month of the forecast being
submitted on such date (it being understood that the first two months of each newly submitted
forecast will be covered by previously submitted Purchase Orders). It is understood that raw
material procurement will be driven from the provided rolling one-year forecast attached as
Exhibit B (and the Purchaser will purchase said material from Seller at termination of this
agreement pursuant to Section 7.3(c)). Seller shall accept the Purchase Order for a given
month corresponding to the Binding Forecast up to an amount of Products in such Binding
Forecast that is equal to one hundred and twenty percent (120%) of the number of Products that
Purchaser ordered for delivery during the previous three month period divided by 3. For
example, if the initial forecast relates to the period July 1 – September 30 and Purchaser
orders 1,500 Products for delivery during such period, then Seller will accept a Purchase
Order submitted on August 1 that calls for delivery of up to 600 Products (500 * 120%) during
October. Each Binding Forecast shall represent a minimum purchase obligation of Purchaser
over the applicable three period and the 120% shall represent a maximum that Seller is
obligated to sell to Purchaser over the applicable three month period. Should the one year
forecast indicate a gradual reduction in quantities over time, the Seller reserves the right
to request a firm Purchase Order over an extended period so as to maintain a reasonably
constant rate of production. At no time shall monthly orders fall below 90% of the initial
three month average. To the extent that Purchase Orders are in excess of this amount, Seller
shall use commercially reasonable efforts to supply such excess Products. All other months of
each twelve-month forecast of Products shall constitute a non-binding good faith estimate of
expected orders for Products. Notwithstanding the foregoing, Purchaser shall not be obligated
to provide any further forecasts or place any further Purchase Orders beyond the three months
for which it becomes bound under Section 2.3 once it has given Seller notice of termination
pursuant to Section 7.

	2.4	 	Modification of Orders. No Purchase Order that has been accepted or which is
required to be accepted shall be modified or canceled except upon the mutual agreement of the
parties. 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, subject
to Purchaser’s obligation under Section 7.3(c), all Purchase Orders that remain open on the
effective date of termination or expiration of this Agreement shall terminate on such date.
Any such cancellation by Purchaser must be by written notice to Seller following the requested
delivery date. Seller shall be allowed to ship Products in partial shipments, provided that
such shipments are in accordance with the delivery dates set forth in the applicable Purchase
Orders. Purchaser shall not reject any shipments of Product solely for the quantity being
incorrect so long as the shipped quantity is within ten percent of the actual quantity
ordered.

	2.5	 	Shipment. All Products sold by Seller to Purchaser shall be suitably packed for
shipment in accordance with the applicable Specifications, marked for shipment to such
destination point indicated, and shall be shipped by Seller, free on board at the location
that Seller delivers the Products to the carrier as contemplated below (“F.O.B.”, as defined
in the UCC as adopted in Minnesota) to Purchaser’s facility located in Minnesota, or such
other facility as Purchaser may designate by giving notice to Seller (the “Place of
Destination”). Seller shall pack and use a manner of shipment reasonably sufficient to
prevent damage, contamination, and degradation during shipment and during unpacking at the
destination. Seller shall ship all Products via a commercially reasonable carrier selected
and designated by Purchaser. Provided that Seller has shipped the Products in accordance with
this Agreement, Purchaser assumes all risk of loss, and Seller’s title to the Products passes
to Purchaser, upon Seller’s delivery of the Products to the aforementioned carrier. Purchaser
shall pay the actual cost of all freight, shipping, and insurance charges, taxes, (excluding
taxes assessed on the income of Seller) fees, and all other government charges applicable to
the sale of Products to Purchaser under this Agreement.

	2.6	 	Inspection. Seller shall inspect and test the Products as required by the
Specifications and the Regulatory Standards. By notification to Seller, Purchaser will have
the right to reject any Product and any lot that contains Product, that does not meet, or the
manufacture, packaging, testing, or supply of which does not meet, the Specifications or
Regulatory Standards or that are otherwise defective (“Nonconforming Product”).
Purchaser will provide Seller with information as to the reason for the rejection of the
Nonconforming Product including a description of the test procedure, if any, and results or
observation on which the rejection is based. Seller shall have right to inspect Nonconforming
Product. Purchaser shall not return Products without compliance with Seller’s standard return
policy except with respect to a Nonconforming Product that is alleged to have connector
issues. Seller will instruct Purchaser as to the disposal or return of Nonconforming Product;
provided that Purchaser shall have the right to dispose of the Product in any manner if Seller
has not otherwise disposed of the Product within thirty (30) days after Purchaser rejects the
Product. If Seller instructs Purchaser to return or otherwise dispose of Nonconforming
Product, Seller will be responsible for all shipping, insurance, and other charges related to
the return or other disposition of Nonconforming Product and for any replacement Product. At
Seller’s option, Seller will either (i) replace or repair (or reimburse Purchaser’s reasonable
costs to repair) the Nonconforming Product, including units of Product that may have been
damaged in the inspection process, without additional cost to Purchaser, and deliver to
Purchaser no later than ten (10) days after Seller confirms the non-conformity alleged in
Purchaser’s notification of rejection replacement Product for the Nonconforming Product
rejected by Purchaser (if Seller does not so confirm, it will so notify Purchaser and any
dispute as to non-conformity shall be resolved pursuant to Section 8.14); or (ii) credit
Purchaser for the purchase price of Nonconforming Product; provided that all unused credits,
if any, shall be refunded to Purchaser upon termination of this Agreement. Notwitsthanding
the foregoing, for any Product that is alleged to be a Nonconforming Product because of
connector issues, Seller shall, no later than ten (10) days after receipt by Seller of such a
Nonconforming Product, ship to Purchaser (or Purchaser’s customer, at Purchaser’s request) a
replacement Product and Purchaser will pay Seller 50% of the price of such Product (with the
price determined in accordance with Section 3.1, except such price shall not be marked up).

	2.7	 	Process or Material Changes; Specifications. No deviations, exceptions or changes to
the Product Specifications, materials, manufacturing processes or packaging may be made by
either party without prior notice to, and the written consent of, the other party. This will
be accomplished through the use on the Seller’s Engineering Change Process. Purchaser shall
pay Seller the costs incurred in connection with changes in Product specifications.

	2.8	 	Packaging and Labeling. Seller shall be responsible for packaging, labeling and
shipping Products purchased under this Agreement as reasonably directed by Purchaser pursuant
to the terms of this Agreement and in accordance with specifications and Regulatory Standards.
Without limiting the foregoing, Purchaser shall have the right to use the trademarks, trade
names, logos, and the like of Seller and its Affiliates but only to the extent present on the
Products, and any packaging and labeling, supplied to Purchaser or to change labeling,
including the trademarks, trade names, logos, colors, designs, and the like, upon advance
written notice to Seller.

Notwithstanding the foregoing, Purchaser shall be solely responsible for any and all costs
and expenses related to any new packaging, labeling and shipping Products, any
“over-labeling” and any new artwork used in connection with the packaging, labeling and
shipping of Products that is requested by Purchaser, and shall indemnity Seller if any
non-Seller intellectual property that Purchaser requested to be used infringes the rights of
any other person or entity.

	2.9	 	Product Inventory. During the term of this Agreement, Seller and Purchaser will
cooperate in determining and maintaining reasonable levels of Product Inventory necessary to
fulfill the forecast and outstanding Purchase Orders, including issuance of vendor purchase
orders for purchases of raw materials by Seller during the term of this Agreement. An initial
list of raw material will be provided and verified against the forecast. Approvals will be
obtained for procurement quantities that will fall outside of the forecast period or for cost
increases that are effected due to termination notice.

	2.10	 	Limited License. During the term, Seller is hereby granted a non-exclusive, royalty
free, paid up license to all Intellectual Property owned by Purchaser necessary for the
manufacture of the Products for Purchaser under this Agreement.

	2.11	 	Seller Training Services. Subject to the terms and conditions of this Agreement,
from the date of this Agreement, Seller will provide to Purchaser and its Affiliates all
training reasonably necessary or helpful to manufacture the Products in accordance with all
applicable Regulatory Standard Specifications and to advise the Purchaser how to prepare
Purchaser’s place of manufacturing in order to obtain a CE Mark and FDA approval for
Purchaser’s manufacturing location (collectively, the “Seller Training Services”)
relating to the manufacture of the Products. Unless otherwise agreed in writing, such
training will include, but not be limited to, providing to Purchaser, no more than five kits
for each of the Products and the related consoles, with each kit containing all of the
materials necessary to manufacture the applicable Product or console. The number of units per
kit will be mutually agreed by the parties for each kit. Kits will be incorporated in
Purchaser’s monthly purchase forecast provided to Seller. The cost to Purchaser of such kits
shall be Seller’s actual out of pocket expenses to obtain such kits, which such cost is set
forth on Schedule 1 (plus custom packaging if required. Kits must be forecast and
ordered as set forth in Section 2.3). All Seller Training Services will be provided at
Seller’s facility located in Montreal, where the Seller will train-the-trainer and act as
mentor as this individual trains Purchaser’s workers in Minnesota. At a mutually agreed to
time, the Seller will travel to Minnesota to audit and provide additional feedback to the
process. Additional trips to Minnesota and the travel, hotel, meals and other reasonably
related travel expenses will be paid by Purchaser. Seller represents, warrants, and covenants
that each of the Seller Training Services will be provided in a commercially reasonable manner
as to allow Purchaser to continue the manufacture of the Products in substantially the same
manner as has been historically done by Seller.

	2.12	 	Term of Training Services. The Training Services will be provided commencing on the
date of this Agreement until the later of (i) Purchaser applying for the CE Mark for its
manufacturing location for any of the Products or (ii) Purchaser notifies Seller that it no
longer wishes to have Seller manufacture any Products for it; provided, however, that in no
event, notwithstanding anything to the contrary detailed in this Agreement, will Seller be
obligated to continue to manufacture Products pursuant to this Agreement after one year from
the date hereof.

	2.13	 	Access to Data and Records. Purchaser shall allow Seller to use during the term of
this Agreement all business information and related books and records, including working
papers, files, computer discs and tapes, software and hardware requirements and
specifications, invoices, credit and sales records, customer lists and agreements, all
purchase order based arrangements, supplier lists (including supplier cost information and
agreements), manuals, instructions, labeling including electronic files, design drawings,
business plans and other plans and specifications, accounting books and records, sales
literature, current price lists and discounts, promotional signs and literature, marketing and
sales programs and materials, and manufacturing and quality control records and procedures
acquired by Purchaser pursuant to the Purchase Agreement and necessary for Seller to use in
order for it to fulfill its obligation hereunder (collectively, the “Business
Information”). Seller hereby covenants and agrees to return all Business Information
(including all copies thereof), whether in written or electronic form, to Purchaser upon the
expiration of the Term. Seller agrees to provide Purchaser access to the Business Information
during the Term as Purchaser may reasonably request.

	2.14	 	Title/Risk of Loss/Maintenance/Insurance. Although title to the Purchased Assets as
provided in Section 1.1 of the Purchase Agreement (including the Finished Goods and Console
Inventory, Transferred Intellectual Property, machinery and equipment, and Business
Information) shall transfer to and remain with Purchaser as of and after the Closing Date;
notwithstanding anything to the contrary contained in the Purchase Agreement, during the term
of this Agreement Seller shall maintain possession of the equipment specified on Exhibit
C at the Seller’s facility located in Quebec, Canada (all such property is hereinafter
referred to as “Stored Property”) until Purchaser delivers written instructions to
Seller to ship the Stored Product or until this Agreement terminates or expires whichever is
earlier. Seller shall hold Stored Property as bailee for Purchaser and Seller shall bear all
risk of loss with respect to Stored Property until the Stored Property is delivered to
Purchaser unless Purchaser fails to receive the Stored Property within 20 days of giving
notice that Seller should ship the Stored Product (assuming Seller ships such Stored Product
pursuant to the immediately following sentence) or, if earlier, the expiration of this
Agreement. Seller shall ship the Stored Property (or any applicable portion thereof), at
Purchaser’s cost, to Purchaser’s facility in Minnesota upon receipt of Purchaser’s written
instructions or until this Agreement terminates or expires, whichever is earlier. During the
term of this Agreement, Seller covenants and agrees to maintain Stored Property in good
working order, ordinary wear and tear excepted and to insure Stored Property against loss from
fire, theft, flood, destruction and other casualty for its full replacement cost. Seller
further covenants and agrees to maintain general commercial liability insurance in amounts
equal to or exceeding the coverage amounts in effect as of the date hereof, insuring such
property. All such policies shall name Purchaser as an additional insured. Seller covenants
and agrees to protect all Business Information by taking commercially reasonable precautions,
including maintaining back-up copies of Business Information.

	2.15	 	Maintenance of Consoles. From time to time while this Agreement remains in effect,
Seller will, at the request of Purchaser, perform such maintenance service with respect to the
consoles that it currently performs. Purchaser will reimburse Seller for its actual out of
pocket costs it incurs to perform such maintenance services as well as labor and material that
are used to perform such services. Seller will use its commercially reasonable efforts to
perform such maintenance services in the timeframe requests by Purchaser.

	2.16	 	Vendor Information. As soon as practicable after the date hereof, Seller will
provide to Purchaser, in such commercially reasonable electronic format as is requested by
Purchaser, a file containing all pertinent information concerning the suppliers utilized by
Seller in the operation of the Business, including the suppliers from whom Seller purchased
raw materials to manufacture the Products.

	2.17	 	Further Assurances. The parties hereto each agree to execute such other documents,
agreements or instruments as may be necessary or desirable for the implementation of this
Agreement and the consummation of the transactions contemplated hereby, including the purchase
by Purchaser of certain inventory under Section 7.3(c) and the assumption by Purchaser (if it
so desires) of certain orders and contracts under Section 7.3(d).

ARTICLE 3

COMPENSATION

	3.1	 	Prices. The purchase price of all Products sold hereunder, shall be (i) for Products
scheduled for delivery during the first six (6) months of this Agreement, Seller’s fully
loaded direct costs of manufacturing such Products (i.e., the costs of raw materials
and Seller’s cost of labor plus overhead directly attributable to manufacturing the Product)
multiplied by One Hundred Twenty Percent (120%) and (ii) for Products scheduled for delivery
after the first six (6) months of this Agreement, Seller’s fully loaded direct costs of
manufacturing such Products multiplied by One Hundred Twenty-Five Percent (125%). Seller’s
good faith estimate of its current fully loaded direct costs of manufacturing Products is set
forth on Exhibit D. Seller will provide Purchaser with sixty (60) days notice of any
increase in its fully loaded costs of manufacturing and will, upon reasonable request of
Purchaser, provide documentation supporting such increase. Following the first year of this
Agreement, if Purchaser requests and Seller agrees in its sole discretion to keep this
Agreement in force, cost will be negotiated between the parties but in no event will be less
than 125% multiplied by the “fully loaded” costs described above. For purposes of clarity,
neither the 120% or 125% markup shall apply to any third party charges for which Purchaser is
responsible, including without limitation the charges for shipping, insurances and taxes for
which Purchaser is responsible hereunder and the costs specified in Section 3.3 below. The
price for Products not delivered within one week of the delivery date required by Purchaser
pursuant to a Purchase Order shall be reduced by 2% for each week past the delivery date that
the Products are delivered.

	3.2	 	Payment Terms. Seller will invoice Purchaser for amounts due under this Agreement
for the purchase by the Purchaser of Products, and all such invoices shall be due and payable
in full within thirty-five (35) days from the date thereof. All amounts set forth herein are
denominated in United States Dollars and all payments required to be made under this Agreement
shall be made in United States Dollars. Invoices not paid in full on or before the due date
and not otherwise disputed in good faith shall bear interest at the lesser of eighteen percent
(18%) per annum or the maximum rate permitted by law, until paid in full.

	3.3	 	Costs of Providing Training Services. Purchaser will reimburse Seller for all the
actual cost of all reasonable travel and lodging and meal expenses incurred by Seller’s
employees while providing Training Services at Purchaser’s facility.

ARTICLE 4

REGULATORY MATTERS; AUDIT RIGHTS

	4.1	 	Manufacturing Compliance. All Products delivered to Purchaser (or shipped to a third
party at the direction of Purchaser) under this Agreement shall be free of defects in material
and workmanship and meet the Specifications, and applicable Regulatory Standards. Seller
represents and warrants that it has the necessary expertise, personnel, facilities and
equipment to perform its obligations in accordance with this Agreement and that it shall
operate and maintain its manufacturing facility in compliance with Regulatory Standards.

	4.2	 	Remedial Actions. Each party shall notify the other immediately, and promptly
confirm such notice in writing, if it obtains information indicating that any of the Product
would reasonably be expected to be subject to Remedial Action. The parties shall assist each
other in gathering and evaluating such information as is necessary to determine the necessity
of conducting or appropriate responses to Remedial Action. Purchaser shall solely make the
final determination whether and how to commence any Remedial Action with respect to the
Product. Each party shall maintain adequate records to permit Purchaser to trace the
manufacture of the Product and the distribution and use of the Product. In the event
Purchaser 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, Purchaser shall have exclusive control of, and shall coordinate, all efforts necessary
to conduct such Remedial Action; provided, however, that if Purchaser seeks indemnity for
Seller for such Remedial Action, Seller shall be allowed to control the Remedial Action. If
Purchaser conducts any Remedial Action related to the Product and Seller is ultimately
determined to be responsible for the problem requiring the Remedial Action including faulty
manufacture, failure to comply with Regulatory Standards, or failure to produce Product that
meets Specifications, then Seller, at Purchaser’ option, shall reimburse Purchaser for its
cost of all Purchaser devices subject to such Remedial Action.

	4.3	 	Complaints and Medical Device Reporting. Purchaser will comply with applicable
governmental medical device reporting regulatory requirements (e.g., the FDA’s Medical Device
Reporting (MDR) Regulations) and applicable governmental regulatory requirements with respect
to Vigilance Reports, and Seller shall cooperate with Purchaser to the extent reasonably
necessary for Purchaser’s compliance therewith. Purchaser and Seller agree to notify the
other within ten (10) Business Days of receipt of any written complaint (provided, however,
that such notice period shall be reduced to three (3) Business Days in the event that the
complaint necessitates remedial action under 21 CFR Section 803.53)) associated with a
Product.

	4.4	 	Purchaser Audits. Seller shall maintain good and accurate records of Product
Inventory and documentation that support its direct costs of manufacturing the Products during
the term of this Agreement. Seller shall give Purchaser reasonable access to its records to
allow Purchaser to conduct audits relating to the Product and Seller’s fully loaded direct
manufacturing costs but in no event not more than two times per annum. Such audits will be
conducted during Seller’s normal business hours, after reasonable prior written notice to
Seller by Purchaser. Seller shall make appropriate personnel reasonably available to
Purchaser in connection with such audits, and Purchaser shall use commercially reasonable
efforts to minimize interference with Seller’s operations during each such audit.

	4.5	 	Regulatory Inspections. Each party to this Agreement will promptly notify the other
of any inspection of any facility related to the Product or any component part of a Product by
any Regulatory Authority or ISO organization which relates to the manufacture, assembly, or
packaging of the Product and provide to the other party full information about the progress
and outcome of such inspection, including, without limitation, copies of any notice of
observations or warnings, requests for remedial action, corrective actions or other adverse
findings.

ARTICLE 5

WARRANTIES

	5.1	 	Limited Warranty. Seller warrants to Purchaser that the Products sold to Purchaser
hereunder shall materially conform to the Specifications and will be free from defects in
materials and workmanship for one year from the date of invoice. EXCEPT AS SET FORTH IN THE
PRECEDING SENTENCE AND IN SECTION 4.1, SELLER DOES NOT MAKE ANY, AND EXPRESSLY DISCLAIMS, ALL
OTHER WARRANTIES INCLUDING MERCHANTABILITY AND FITNESS FOR A PARTICULAR USE.

ARTICLE 6

INDEMNIFICATION

	6.1	 	Indemnification by Seller. Seller shall indemnify, defend and hold harmless
Purchaser, and its directors, officers, employees and agents, from and against any and all
liabilities, damages, settlements, claims, actions, suits, penalties, fines, costs or expenses
(including, without limitation, reasonable attorneys’ fees and other expenses of litigation
any of the foregoing, “Damages”) but specifically excluding any consequential (other
than with respect to Remedial Actions) incidental, special or punitive damages suffered or
incurred by any of the foregoing Persons to the extent resulting from a claim by a
non-Affiliate third party against such a Person that concerns: (a) any breach of any express
representation or warranty on the part of Seller that is set forth in this Agreement; (b)
Product Liability Damages, but only to the extent directly resulting from the negligent
manufacture of Products, or any component thereof, by Seller or its suppliers or out of any
failure to comply with the Specifications or Regulatory Standards; or (c) any Remedial Action,
but only to the extent directly resulting from the negligent manufacture, shipping or delivery
of Products, or any component thereof, by Seller or any of its suppliers other than suppliers
approved by Purchaser or out of any failure to comply with the Specifications or Regulatory
Standards; provided, however, that Seller shall have no liability hereunder for any failure of
Seller to satisfy its obligations hereunder if such failure is a direct result of its
inability to procure raw materials from a vendor despite Seller’s commercially reasonable
attempts to do so. Nothing contained herein shall limit in any manner Purchaser’s
indemnification obligations to Seller contained in the Purchase Agreement.

	6.2	 	Indemnification by Purchaser. Purchaser shall indemnify, defend and hold harmless
Seller, its Affiliates and their respective directors, officers, employees and agents, from
and against any and all Damages suffered or incurred by any of the foregoing Persons to the
extent resulting from a claim by a non-Affiliate third party against such a Person that
concerns: (a) any breach of any express representation or warranty on the part of Purchaser
that is set forth in this Agreement; or (b) Product Liability Damages, to the extent directly
resulting from the marketing or sale of Product by Purchaser and not as the result of any
matter within the scope of Seller’s indemnity under Section 6.1; (c) any Remedial Action, to
the extent directly resulting from the marketing or sale of Product by the Purchaser or (d)
any infringement of a third party’s intellectual property rights caused by a specific request
by Purchaser of Seller to include such third party’s intellectual property rights in a Product
or on any packaging; provided that in no event shall Purchaser be liable under this Section
6.2 for any matters within the scope of Seller’s indemnity under Section 6.1. Nothing
contained herein shall limit in any manner Seller’s indemnification obligations to Purchaser
contained in the Asset Purchase Agreement.

	6.3	 	Claims for Indemnification.

	 	(a)	 	Whenever any claim arises for indemnification hereunder or an event which may
result in a claim for such indemnification has occurred, the party seeking
indemnification (the “Indemnified Party”), shall promptly notify the party from
whom indemnification is sought (the “Indemnifying Party”) of the claim and, to
the extent known, the facts constituting the basis for such claim; provided,
however, that any failure to give such notice will not waive any rights of the
Indemnified Party, except to the extent the Indemnifying Party is actually prejudiced
thereby. The notice to the Indemnifying Party will specify with reasonable
specificity, to the extent known, the basis under which the right to indemnification
is being asserted and the amount or an estimate of the amount of the liability arising
therefrom. The Indemnifying Party shall have the exclusive right to dispute, settle
and defend all claims and Damages for which it is responsible under this Section 6 and
thereafter shall so defend and pay any adverse final judgment or award or settlement
amount for which it is responsible under this Section 6. Such defense and settlement
shall be controlled exclusively by the Indemnifying Party, and the cost of such defense
shall be borne by the Indemnifying Party, provided that the Indemnified Party shall
have the right to participate in such defense at its own expense, subject to the
exclusive control of the Indemnifying Party. The Indemnified Party shall cooperate in
all reasonable respects in the investigation, trial, settlement and defense of each
such claim, including making personnel, books, and records relevant to the claim
available to the Indemnifying Party, without charge, except for reasonable
out-of-pocket expenses. If the Indemnifying Party fails to reasonably defend or settle
a lawsuit for which it is responsible under this Section 6 as set forth above in breach
of its obligations under this Section 6, then the Indemnified Party shall have the
right to pay, compromise or defend any such lawsuit and to assert the amount of any
judgment or settlement, plus the reasonable expenses of defense or settlement, as the
claim for which the Indemnifying Party is responsible under this Section 6. The
Indemnified Party shall also have the right, upon delivery of ten (10) days advance
written notice to such effect to the Indemnifying Party, exercisable in good faith, to
take such action as may be reasonably necessary to avoid a default judgment in such a
lawsuit prior to the assumption of the defense of the claim by the Indemnifying Party,
and any reasonable expenses incurred by Indemnified Party so acting prior to the
Indemnifying Party taking appropriate action shall be paid by the Indemnifying Party.
Except as otherwise provided in this Section 6 above, the Indemnified Party shall not
settle or compromise any claim for which it is entitled to indemnification hereunder
without the prior written consent of the Indemnifying Party, which will not be
unreasonably withheld. The parties intend that all indemnification claims be made as
promptly as practicable. Except as otherwise expressly set forth in this Section
6.3(a) above, the Indemnifying Party shall have no liability or responsibility for any
cost, expenses, or settlements incurred without its prior written consent, not to be
unreasonably withheld.

	 	(b)	 	If the Indemnifying Party is of the opinion that the Indemnified Party is not
entitled to indemnification, the Indemnifying Party will deliver a written objection to
such claim and written specifications in reasonable detail of the aspects or details
objected to, and the grounds for such objection. Any such dispute will be resolved
pursuant to the procedures referenced in Section 8.14, below.

ARTICLE 7

TERM AND TERMINATION

	7.1	 	Term. This Agreement shall take effect as of the Closing Date and shall continue in
force for twelve (12) calendar months thereafter, unless terminated earlier as provided herein
(the “Term”).

	7.2	 	Termination. Notwithstanding the provisions of Section 7.1, this Agreement may be
terminated only 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,
make a general assignment of all or substantially all of its assets for the benefit of
creditors (other than grants of security for debt), or go into liquidation or
receivership.

	 	(b)	 	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 have failed to cure such breach within thirty (30) days after notice thereof from
the non-breaching party.

	 	(c)	 	Purchaser may, in its sole discretion, terminate this Agreement upon ninety
(90) days prior written notice to Seller; provided at the time it gives such notice, it
shall also deliver a final Purchase Order to Seller for any Products (that would be in
addition to any Product previously ordered by Purchaser) it is required (or deemed to
be required) to procure from Seller during the ninety (90) day period. Any such final
Purchase Order shall be subject to the provisions of Section 2.3. If Purchaser
terminates any Purchase Order that has been accepted by Seller, Purchaser will, in
addition to, but without duplication of, its obligation under Section 7.3(c), reimburse
Seller for any out of pocket costs incurred by Seller in procuring Product Inventory
that would be necessary to fill such Purchase Orders.

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

	 	(a)	 	Unless mutually agreed to in writing, termination of this Agreement shall not
release either party from the obligation to make payment of all amounts then or
thereafter due and payable and shall not release Seller from any liability for failure
to deliver Products prior to the applicable delivery dates (regardless if the
applicable Purchase Orders are terminated effective upon the termination of this
Agreement).

	 	(b)	 	Subject to Purchaser’s obligations under Section 7.2(c), all outstanding
Purchase Orders shall automatically be terminated on the date the Agreement terminates
or expires.

	 	(c)	 	Within ten (10) Business Days of the effective date of termination Seller will
provide a list of Product Inventory, which may be observed by Purchaser and/or
Purchaser’s accountants or representative, and will list the type and quantity of all
items included in the Product Inventory and report the same to Purchaser. Within five
(5) Business Days following such count and report to Purchaser, Purchaser shall
purchase, and Seller shall sell to Purchaser, such existing Product Inventory (except
for any such Product Inventory that is related to SurgiFrost 6 which Purchaser has
indicated to Seller it does not desire) pursuant to a bill of sale (under which Seller
shall represent and warrant that it has good title to such Product Inventory, free and
clear of all liens) in consideration for payment equal to Seller’s cost of all Product
Inventory determined in accordance with Canadian GAAP plus packaging and shipping cost.
In addition, Purchaser shall purchase from Seller any finished goods inventory related
to Products, at a price equal to the price set forth in Section 3.1 with respect to any
Products that were ordered on a terminated Purchaser Order and were scheduled for
delivery after the date of such termination (and at Seller’s costs for producing any
other finished goods determined in accordance with Canadian GAAP) plus packaging and
shipping cost, provided that Purchaser shall not be obligated to purchase a quantity of
finished goods that exceeds than 110% of the quantity of Products that had scheduled
shipment dates after the date of termination on Purchaser Orders that were terminated
pursuant to Section 7.3(b).

	 	(d)	 	Purchaser shall assume all or any portion of purchase orders and contracts to
which Seller is a party, and which are assignable by Seller to Purchaser and that
relate to any supplies or materials that would have been used in making, assembling, or
manufacturing Products that were ordered on a terminated Purchaser Order and were
scheduled for delivery after the date of such termination. Seller shall take all
actions as are necessary to assign to Purchaser such purchase orders and contracts that
Purchaser wishes to assume.

	 	(e)	 	Sections 2.6, 4.1-4.5, and 7.3, and Articles, 5, 6 and 8, shall survive
termination or expiration of this Agreement. All other provisions of this Agreement
shall terminate upon termination of this Agreement.

ARTICLE 8

MISCELLANEOUS

	8.1	 	Confidentiality. The Parties agree that Section 4.1 (titled “Confidentiality”) of
the Purchase Agreement is incorporated by reference herein and shall apply to all information
disclosed in the performance of this Agreement.

	8.2	 	Notices. All notices, requests, demands, claims and other communications hereunder
shall be in writing. Any notice, request, demand, claim, or other communication hereunder
shall be deemed duly given (a) if personally delivered, when so delivered, (b) if given by
facsimile, once such notice or other communication is transmitted to the facsimile number
specified below and electronic confirmation is received; or (c) if sent through an overnight
delivery service in circumstances to which such service guarantees next day delivery, the day
following being so sent:

If to Seller:

To: CryoCath Technologies, Inc.

16771 Chemin Ste-Marie

Montreal, Quebec

H9H 5H3

Canada

Attn: President & CEO

Fax: 514 694 7075 (Marked Confidential)

With a copy to:

Davies Ward Phillips & Vineberg LLP

1501 McGill College Avenue, 26th Floor

Montreal, Quebec

H3A 3N9

Canada

Attn: Neil Kravitz or Elliot Greenstone.

Fax: (514) 841-6499

If to Purchaser:

To: ATS Medical, Inc.

3905 Annapolis Lane #105

Minneapolis, Minnesota 55447

Attn: Rick Curtis

Fax: (763) 557-2020

With a copy to:

Oppenheimer Wolff & Donnelly LLP

3300 Plaza VII

45 South Seventh Street

Minneapolis, Minnesota 55402

Attn: Thomas R. Marek, Esq.

Fax: (612) 607-7100

Any party may give any notice, request, demand, claim or other communication hereunder using
any other means (including ordinary mail or electronic mail), but no such notice, request,
demand, claim or other communication shall be deemed to have been duly given unless and
until it actually is received by the individual for whom it is intended. Any party may
change the address to which notices, requests, demands, claims and other communications
hereunder are to be delivered by giving the other parties notice in the manner herein set
forth.

	8.3	 	Amendments; No Waivers.

	 	(a)	 	Subject to Applicable Law, any provision of this Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing and signed, in the case
of an amendment, by all parties hereto, or in the case of a waiver, by the party
against whom the waiver is to be effective.

	 	(b)	 	No waiver by a party of any default, misrepresentation or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any prior
or subsequent default, misrepresentation or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent occurrence.
No failure or delay by a party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other right,
power or privilege. The rights and remedies herein provided shall be cumulative and
not exclusive of any rights or remedies provided by law.

	8.4	 	Expenses. Except as otherwise provided herein, all costs, fees and expenses incurred
in connection with the negotiation, preparation, execution, delivery and performance of this
Agreement and in closing and carrying out the transactions contemplated hereby shall be paid
by the party incurring such cost or expense. This Section 9.4 shall survive the termination
of this Agreement.

	8.5	 	Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted assigns. No party
hereto may assign either this Agreement or any of its rights, interests or obligations
hereunder, by operation of law or otherwise, without the prior written approval of the other
party. Notwithstanding the foregoing, either party shall have the right to assign and
otherwise transfer this Agreement as a whole without consent to any entity that acquires all
or substantially all of its business or assets to which this Agreement relates, whether by
sale of stock or assets, operation of the law, or otherwise. All transfers in violation of
the foregoing shall be void.

	8.6	 	Governing Law. This Agreement shall be governed by, construed and enforced in
accordance with the internal laws of the State of New York (regardless of the laws that might
otherwise govern under applicable principles of conflicts of law).

	8.7	 	Counterparts; Effectiveness. This Agreement may be signed in any number of
counterparts and the signatures delivered by facsimile, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received a counterpart
hereof signed by the other parties hereto.

	8.8	 	Entire Agreement. This Agreement (including all Exhibits which are hereby
incorporated by reference), all other agreements referred to herein or therein or in the
Purchase Agreement, and the other agreements signed by the parties hereto or to the Purchase
Agreement simultaneously herewith constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior and contemporaneous agreements,
understandings and negotiations, both written and oral, between the parties with respect to
the subject matter of this Agreement.

	8.9	 	Captions. The captions herein are included for convenience of reference only and
shall be ignored in the construction or interpretation hereof. All references to an Article
or Section include all subparts thereof.

	8.10	 	Severability. If any provision of this Agreement, or the application thereof to any
Person, place or circumstance, shall be held by a court of competent jurisdiction to be
invalid, unenforceable or void, the remainder of this Agreement and such provisions as applied
to other Persons, places and circumstances shall remain in full force and effect and the
parties hereto shall use diligent efforts to agree upon a substitute provision that is valid
and enforceable that reflects the original intent of the parties as nearly as possible.

	8.11	 	Construction. The parties hereto intend that each representation, warranty and
covenant contained herein shall have independent significance. If any party has breached any
representation, warranty or covenant contained herein in any respect, the fact that there
exists another representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) that the party has not breached shall not
detract from or mitigate the fact that the party is in breach of the first representation,
warranty or covenant.

	8.12	 	Cumulative Remedies. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

	8.13	 	Third Party Beneficiaries. No provision of this Agreement shall create any third
party beneficiary rights in any Person, including any employee of Purchaser or employee of
Seller or any Affiliate thereof (including any beneficiary or dependent thereof).

	8.14	 	Dispute Resolution. Any Dispute arising between the parties under this Agreement, or
in connection with the transactions contemplated hereunder, shall be resolved pursuant to
Article 9 of the Purchase Agreement.

[Remainder of Page Intentionally Left Blank]

1

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed
by their respective authorized officers as of the day and year first above written.

ATS ACQUISITION CORP.

By: /s/ Rick Curtis

Name: Rick Curtis

Title: Vice President

CRYOCATH TECHNOLOGIES INC.

By: /s/ Jan Keltjens

Name: Jan Keltjens

Title: President & CEO

SIGNATURE PAGE TO

MANUFACTURING AGREEMENT

2

EXHIBITS AND SCHEDULES

	 	 	Exhibit A – LIST OF PRODUCTS

	 	 	Exhibit B – FORECAST

	 	 	Exhibit C – EQUIPMENT TO REMAIN WITH SELLER DURING THE TERM

	 	 	Exhibit D – ESTIMATE OF SELLER’S DIRECT COSTS

	 	 	Schedule 1 – COST OF KITS

3EX-10.3

EXHIBIT 10.3

Execution Version

TERMINATION AGREEMENT

THIS TERMINATION AGREEMENT is dated June 28, 2007 (this “Termination
Agreement”), and is by and between CryoCath Technologies Inc., a company incorporated under
Part 1A of the Companies Act (Quebec) (“Seller”), and ATS Medical, Inc., a Minnesota
corporation (“Purchaser”).

Recitals

A. Seller and Purchaser have entered into that certain Asset Purchase Agreement dated June 18,
2007 (the “Purchase Agreement”), whereby Purchaser agreed to acquire from Seller certain
assets related to Seller’s business of designing, developing, using, manufacturing, marketing,
promoting, selling, and distributing Argon-Based Cryoablation Devices, consoles and related
products (the “Products”). Capitalized terms used herein and not defined herein shall have
the meanings ascribed to them in the Purchase Agreement.

B. In accordance with the terms and conditions of that certain Distribution Agreement dated
November 9, 2004 between Seller and Purchaser (the “Distribution Agreement”) and that
certain Agent Agreement dated November 9, 2004 between Seller and Purchaser (the “Agent
Agreement”) (together, the “Distribution Agreement” and the “Agent Agreement” are collectively
referred to as the “Agreements”), Purchaser has been a distributor of the Products in
certain territories outside the United States and the exclusive agent of the Products in the United
States.

C. As contemplated by the Purchase Agreement and in connection with the transfer and sale of
the assets related to the Business to Purchaser and on the terms set forth in this Termination
Agreement, Seller and Purchaser desire to terminate the Agreements and the parties hereto desire to
fully and finally settle any and all economic payments owing between them and to provide for the
continued survival of certain terms and provisions of the Agreements, as set forth herein.

D. Purchaser and Seller contemplate that this Termination Agreement will only become effective
upon Closing of the transactions contemplated by the Purchase Agreement.

Agreement

In consideration of the foregoing, incorporated herein by this reference, and the
representations, warranties, covenants and agreements contained herein, the receipt and sufficiency
of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto
agree as follows:

ARTICLE 1

TERMINATION OF SERVICES AND PAYMENT OF COMMISSIONS UPON CLOSING OF THE TRANSACTIONS

CONTEMPLATED BY THE PURCHASE AGREEMENT 

	 	1.1	 	Cessation of Services. Contingent upon the Closing of the transactions
contemplated by the Purchase Agreement, and effective simultaneously with the Effective
Time, except as otherwise provided in this Termination Agreement, Purchaser’s service as
distributor and agent, respectively, under the Agreements shall be terminated.

	 	1.2	 	Commissions. Set forth on Exhibit A is the parties’ good faith estimate of
commissions owed to Purchaser under the Agreements for Products sold through May 31, 2007.
On the same date that the Initial Purchase Price Adjustment is payable under Section
1.6(e) of the Purchase Agreement, Seller will pay to Purchaser any and all commissions
owed to Purchaser under the Agreements for Product sales prior to the Effective Time.

	 	1.3	 	Outstanding Orders. Seller and Purchaser covenant and agree that all
outstanding and unfilled orders for Products which are outstanding and not yet filled by
Seller as of the Closing Date are set forth on a list and attached hereto as Exhibit B
(which list sets forth all unfilled orders for Products and the date and quantity of the
order). Until the end of business on the first business day following the Closing Date,
Exhibit B may be updated by Seller to supplement the list with any orders that were
received in the ordinary course of business during the last 3 business days prior to
Closing; provided that Purchaser may ask reasonable diligence questions concerning the
updates, and Seller will use all commercially reasonable efforts to provide sufficient
information concerning the same. All orders remaining unfilled at the end of the
aforementioned business day in the ordinary course shall be assigned to Purchaser pursuant
to the Purchase Agreement as a Purchased Asset thereunder. Seller covenants and agrees
that no new orders will be taken and no Product will be shipped by Seller after the
Closing Date.

	 	1.4	 	Gross Payment of Cost Sharing Incentive in Lieu of Monthly Fee. On the
Closing Date, Seller shall pay Purchaser a one-time gross payment of      Dollars
(US) (US $      ) in full and final satisfaction of its obligation to pay Purchaser US
$ 250 per month per Console located in Europe as a cost sharing incentive for 24 months,
as provided in the Exhibit A/Addendum to the Distribution Agreement.

	 	1.5	 	Audit Rights. The parties hereto covenant and agree that each party shall
have the right to review sufficient books, records and supporting materials as either
party may reasonably request from the other in order to review the Parties’ compliance
with their respective obligations as provided in Sections 1.2 through Section 1.4 above
and the related provisions of the Agreements; provided, however, that upon such review any
objection to the payment amounts and accuracy of orders lists (and Schedules hereto) shall
be made within the time period permitted for review and objection of the Adjusted Purchase
Price and resolution of dispute mechanism as provided in Sections 1.6(e) and (f) of the
Purchase Agreement.

ARTICLE 2

WARRANTY OBLIGATIONS

	 	2.1	 	Warranty Obligations. Subject to the proviso at the end of this sentence,
Seller shall continue to remain responsible to satisfy its warranty obligations under
Article 7 and Article 8 of each of the Agreements, subject to the terms and conditions
contained therein (including all disclaimers), but only with respect to Products sold
prior to the Closing Date; provided, however, that nothing in this Section 2.1 shall be
deemed to alter Purchaser’s obligation under Section 1.3(a) of the Purchase Agreement to
be responsible for up to the first US One Hundred Thousand Dollars (US $100,000) of
Maintenance Assumed Liabilities incurred after the Closing. In order to enable Seller to
meet Seller’s warranty obligations concerning delivery of replacement Products, Purchaser
agrees to sell to Seller units of the various Products at Purchaser’s direct cost.

	 	2.2	 	Warranty Claims. Except as set forth in Section 2.17(a) of the Disclosure
Letter to the Purchase Agreement, Purchaser warrants to the Seller, and Seller warrants to
the Purchaser, that no claims for warranty repair or replacement have been made during the
last ninety (90) days which remain outstanding.

ARTICLE 3

SURVIVAL

	 	3.1	 	Survival. The parties hereto covenant and agree that the provisions of the
Agreements that shall survive the termination provided under this Termination Agreement
are: (a) the warranty obligations of Purchaser with respect to defective or non-conforming
Products as provided under Article 7 and 8 of each of the Agreements; (b) the
indemnification obligations of Seller with respect to product liability and patent
infringement claims as provided under Article 11 of each of the Agreements with respect to
Products sold prior to the Closing Date; provided, however, that the Seller’s
indemnification obligation thereunder shall be subject to the Maximum Amount as provided
in Section 5.5 of the Purchase Agreement.

	 	3.2	 	Use of Name. Purchaser and Seller agree that Purchaser shall continue to be
allowed to refer to Seller’s name (and include Seller’s name on the Products) for up to
one (1) year following the date hereof solely to promote its sale of the

Argon Based Cryoablation Devices during that period, and provided further that
Purchaser will use commercially reasonable efforts not to negatively effect the
goodwill associated with the Seller and the Seller’s name. The parties acknowledge and
agree that the rights contemplated herein include the right to continue to include
Seller’s name on the Products until Seller and Purchaser have run through the inventory
of raw materials and marketing materials in existence or under order as of the Closing
Date and in accordance with the Manufacturing Agreement.

ARTICLE 4

MUTUAL RELEASE

	 	4.1	 	Mutual Release. For good and valuable consideration, the receipt and
sufficiency of which are mutually acknowledged, each party hereto releases and forever
discharges the other and its respective officers, directors, parents, agents,
representatives, shareholders, members, employees, successors, assigns, attorneys, and all
subsidiaries and affiliates, from any and all past, present and future claims, demands,
actions, causes of action, rights and remedies of any kind, and liability whatsoever,
whether known or unknown, whether or not previously asserted, even though unknown or
unsuspected, liquidated or unliquidated, foreseen or unforeseen, accrued or unaccrued,
with respect to the parties’ respective obligations pursuant to the Agreements, including
without limitation the obligation to sell certain minimum quantities of Products under the
Agreements. Notwithstanding the foregoing, the parties do not intend and are not hereby
releasing each other from: (a) any claims stemming from the parties’ respective rights or
obligations arising under this Termination Agreement (including, without limitation,
Seller’s obligation to pay Purchaser: commissions for units as set forth in Section 1.2
above and gross payment of cost sharing incentive as set forth in Section 1.4 above); or
(b) any claims or obligations pursuant to Section 1.5 or Section 3.1 of this Termination
Agreement, or (c) any claims or obligations pursuant to the Purchase Agreement or any of
the Ancillary Agreements.

ARTICLE 5

MISCELLANEOUS

	 	5.1	 	Confidentiality. The Parties agree that Section 4.1 (titled
“Confidentiality”) of the Purchase Agreement is incorporated by reference herein and shall
apply to all information disclosed in the performance of this Termination Agreement.

	 	5.2	 	Notices. All notices, requests, demands, claims and other communications
hereunder shall be in writing. Any notice, request, demand, claim, or other communication
hereunder shall be deemed duly given (a) if personally delivered, when so delivered,
(b) if given by facsimile, once such notice or other communication is transmitted to the
facsimile number specified below and electronic confirmation is received; or (c) if sent
through an overnight delivery service in circumstances to which such service guarantees
next day delivery, the day following being so sent:

If to Seller:

To: CryoCath Technologies Inc.

16771 Chemin Ste-Marie

Montreal, Quebec

H9H 5H3

Canada

Attn: President and Chief Executive Officer

Fax: (514) 694 7075 (Marked Confidential)

With a copy to:

Davies Ward Phillips & Vineberg LLP

1501 McGill College

Montreal, Quebec

H3A 3N9

Canada

Attn: Neil Kravitz and Elliot Greenstone

Fax: (514) 841-6499

If to Purchaser:

To: ATS Medical, Inc.

3905 Annapolis Lane #105

Minneapolis, Minnesota 55447

Attn: Rick Curtis

Fax: (763) 557-2020 (Marked Confidential)

With a copy to:

Oppenheimer Wolff & Donnelly LLP

3300 Plaza VII

45 South Seventh Street

Minneapolis, Minnesota 55402

Attn: Thomas Marek and Phillip Martin

Fax: (612) 607-7100

Any party may give any notice, request, demand, claim or other communication hereunder using
any other means (including ordinary mail or electronic mail), but no such notice, request,
demand, claim or other communication shall be deemed to have been duly given unless and
until it actually is received by the individual for whom it is intended. Any party may
change the address to which notices, requests, demands, claims and other communications
hereunder are to be delivered by giving the other parties notice in the manner herein set
forth.

	 	5.3	 	Amendments; No Waivers.

	 	(a)	 	Subject to Applicable Law, any provision of this Termination Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and signed,
in the case of an amendment, by all parties hereto, or in the case of a waiver, by the
party against whom the waiver is to be effective.

	 	(b)	 	No waiver by a party of any default, misrepresentation or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any prior
or subsequent default, misrepresentation or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent occurrence.
No failure or delay by a party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other right,
power or privilege. The rights and remedies herein provided shall be cumulative and
not exclusive of any rights or remedies provided by law.

	 	5.4	 	Expenses. Except as otherwise provided herein, all costs, fees and expenses
incurred in connection with the negotiation, preparation, execution, delivery and
performance of this Termination Agreement and in closing and carrying out the transactions
contemplated hereby shall be paid by the party incurring such cost or expense. This
Section 6.4 shall survive the termination of this Termination Agreement.

	 	5.5	 	Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted assigns.
No party hereto may assign either this Termination Agreement or any of its rights,
interests or obligations hereunder, by operation of law or otherwise, without the prior
written approval of the other party. Notwithstanding the foregoing, either party shall
have the right to assign and otherwise transfer this Termination Agreement as a whole
without consent to any entity that acquires all or substantially all of its business or
assets to which this Termination Agreement relates, whether by sale of stock or assets,
operation of the law, or otherwise. All transfers in violation of the foregoing shall be
void.

	 	5.6	 	Governing Law. This Termination Agreement shall be governed by, construed
and enforced in accordance with the internal laws of the State of New York (regardless of
the laws that might otherwise govern under applicable principles of conflicts of law).

	 	5.7	 	Counterparts; Effectiveness. This Termination Agreement may be signed in any
number of counterparts and the signatures delivered by facsimile, each of which shall be
an original, with the same effect as if the signatures thereto and hereto were upon the
same instrument. This Termination Agreement shall become effective when each party hereto
shall have received a counterpart hereof signed by the other parties hereto.

	 	5.8	 	Entire Agreement. This Termination Agreement (including all Exhibits which
are hereby incorporated by reference), all other agreements referred to herein or therein
or in the Purchase Agreement, and the other agreements signed by the parties hereto or to
the Purchase Agreement simultaneously herewith constitutes the entire agreement between
the parties with respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements, understandings and negotiations, both written and oral,
between the parties with respect to the subject matter of this Termination Agreement.

	 	5.9	 	Further Assurances. The parties hereto each agree to execute such other
documents, agreements or instruments as may be necessary or desirable for the
implementation of this Termination Agreement and the consummation of the transactions
contemplated hereby.

	 	5.10	 	Captions. The captions herein are included for convenience of reference only
and shall be ignored in the construction or interpretation hereof. All references to an
Article or Section include all subparts thereof.

	 	5.11	 	Severability. If any provision of this Termination Agreement, or the
application thereof to any Person, place or circumstance, shall be held by a court of
competent jurisdiction to be invalid, unenforceable or void, the remainder of this
Termination Agreement and such provisions as applied to other Persons, places and
circumstances shall remain in full force and effect and the parties hereto shall use
diligent efforts to agree upon a substitute provision that is valid and enforceable that
reflects the original intent of the parties as nearly as possible.

	 	5.12	 	Construction. The parties hereto intend that each representation, warranty
and covenant contained herein shall have independent significance. If any party has
breached any representation, warranty or covenant contained herein in any respect, the
fact that there exists another representation, warranty or covenant relating to the same
subject matter (regardless of the relative levels of specificity) that the party has not
breached shall not detract from or mitigate the fact that the party is in breach of the
first representation, warranty or covenant.

	 	5.13	 	Cumulative Remedies. The rights, remedies, powers and privileges herein
provided are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.

	 	5.14	 	Third Party Beneficiaries. No provision of this Termination Agreement shall
create any third party beneficiary rights in any Person, including any employee of
Purchaser or employee of Seller or any Affiliate thereof (including any beneficiary or
dependent thereof).

	 	5.15	 	Dispute Resolution. Any Dispute arising between the parties under this
Termination Agreement, or in connection with the transactions contemplated hereunder,
shall be resolved pursuant to Article 6 of the Purchase Agreement.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Termination Agreement to be
duly executed by their respective authorized officers as of the day and year first above written.

ATS MEDICAL, INC.

By: /s/ Michael Dale

Name: Michael Dale

Title: President and CEO

CRYOCATH TECHNOLOGIES INC.

By: /s/ Jan Keltjens

Name: Jan Keltjens

Title: President & CEO

SIGNATURE PAGE TO

TERMINATION AGREEMENT

2

EXHIBITS

	 	 	Exhibit A – CALCULATION OF COMMISSIONS OWED

	 	 	Exhibit B – LIST OF OUTSTANDING PRODUCT ORDERS

3

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