Change in Control

8/8/2006 10-Q Ex. 10.2

 

 

<DOCUMENT>

<TYPE>EX-10.12

<SEQUENCE>3

<FILENAME>c75660exv10w12.txt

<DESCRIPTION>EMPLOYMENT AGREEMENT - MICHAEL D DALE

<TEXT>

<PAGE>

                                                                   EXHIBIT 10.12

 

 

                                ATS MEDICAL, INC

 

                              EMPLOYMENT AGREEMENT

 

         THIS AGREEMENT made this 18th day of September 2002 is by and between

ATS Medical Inc., a Minnesota Corporation (the "Company"), and Michael D. Dale a

resident of the State of Minnesota (the "Employee").

 

         WHEREAS, the parties wish to provide for the employment of the Employee

by the Company; and

 

         WHEREAS, the Company desires reasonable protection of its confidential

business and technical information, which has been and will be acquired, and is

being developed by the Company, at substantial expense.

 

         NOW, THEREFORE, in consideration of mutual promises contained herein,

the Company and the Employee, each intending to be legally bound, agree as

follows:

 

         1. Employment. Subject to all of the terms and conditions of this

Agreement, the Company agrees to employ the employee as PRESIDENT/CEO and the

Employee accepts this employment.

 

         2. Duties. The Employee will make the best use of his/her energy,

knowledge and training in advancing the Company's interest. He/she will

diligently and conscientiously perform the duties of CHIEF EXECUTIVE OFFICER for

the Company, as such duties may be defined by the Company's Board of Directors

and such other tasks as may from time to time be reasonably required to further

the growth of the Company. The Employee will make every effort to avoid using

any trade secrets or confidential information that he/she may have in his/her

possessions from any previous employer. Employee's work will be confined to new

developments created at the Company or in the public domain. This will help to

avoid any conflict with Employee's previous employers.

 

         3. Term. The Employee shall be employed on an "at will" basis. Either

party may terminate the employment relationship created by this agreement for

any reason by giving ten (10) working days prior written notice to the other

party. Because the employment relationship is "at will" the Employee shall have

no right to continued employment, and the Company may terminate the Employee for

any reason (other than because of Employee's race, sex, age or other legally

protected category) at any time. If this Agreement is terminated without cause

by the Company during the first year of this Agreement, Employee shall be

entitled to six (6) months severance benefits. The provision of severance

benefits to the terminated employee shall increase to 12 months after the first

year of employment and shall not imply a policy, practice of obligation of

providing severance benefits to any other terminated employees.

 

<PAGE>

 

No document or statement (oral or written) by the Company or its officers will

create a right to continued employment or a right to severance benefits for a

terminated employee.

 

         4. Compensation.

 

                  (a) Salary. The Company shall pay the Employee a salary of

         $9,615.39 bi-weekly.

 

                  (b) Within 30 days of employment, the Company shall pay the

         Employee a "Signing Bonus" of $100,000. .

 

                  (c) Benefits. The Employee will be entitled to participate in

         benefit plans which may be established by the Board of Directors of the

         Company.

 

                  (d) Expenses; The Company shall reimburse the Employee for all

         ordinary and necessary business expenses the Employee incurs while

         performing his/her duties under this Agreement, provided that the

         Employee accounts properly for such expenses to the Company in

         accordance with the general corporate policy of the Company as

         determined by the Company's Board of Directors and in accordance with

         the requirements of Internal Revenue Service regulations relating to

         substantiation of expenses.

 

                  (e) The Company's Board of Directors shall have the sole

         discretion of giving the Employee a bonus of $50,000 based on Sales and

         Earnings.

 

                  (f) The Company shall pay for the tax preparation of the

         Employee's tax return, if prepared by the Company's auditors.

 

         5. Inventions.

 

                  (a) "Inventions", as used in this Section 5, means any

         discoveries, designs, improvements or software (whether or not they are

         in writing or reduced to practice) or works of authorship (whether or

         not they can be patented or copyrighted) that the Employee makes,

         authors or conceives (either alone or with others) and that:

 

                           (i) concern directly the Company's products, research

                  or development;

 

                           (ii) result from any work the Employee performs for

                  the Company; or

 

                           (iii) use the Company's equipment, facilities, or

                  trade secret information.

 

                  (b) The Employee agrees that all Inventions he/she makes

         during the term of this Agreement will be the sole and exclusive

         property of the Company. The Employee will, with respect to any such

         Invention:

 

                           (i) keep current, accurate, and complete records,

                  which will belong to the Company and be kept and stored on the

                  Company's premises while the Employee is employed by the

                  Company;

 

                           (ii) promptly and fully disclose the existence and

                  describe the nature of the Invention to the Company and in

                  writing (and without request);

 

                           (iii) assign (and the Employee does hereby assign) to

                  the Company all of his/her rights to the Invention, and

                  applications he/she makes for patents or copyrights in any

                  country, and any patents or copyrights granted to him/her in

                  any country; and

 

<PAGE>

 

                           (iv) acknowledge and deliver promptly to the Company

                  any written instruments, and perform any other reasonable acts

                  necessary in the Company's opinion and at its expense to

                  preserve property rights in the Invention against forfeiture,

                  abandonment, or loss and to obtain and maintain letters,

                  patents and/or copyrights on the Invention and to vest the

                  entire right and title to the Invention in the Company,

                  provided that the Employee makes no warranty or representation

                  to the Company as to rights against third parties hereunder.

 

The requirements of this subsection 5 (b) do not apply to an Invention for which

no equipment, facility, or trade secret information of the Company was used and

which was developed entirely on the Employee's own time, and which:

 

                           (i) does not relate directly to the Company's

                  business or to the Company's actual research or development;

                  and

 

                           (ii) does not result from any work the Employee

                  performed for the Company. Except as previously disclosed to

                  the Company in writing, the Employee does not have and will

                  not assert any claims to or rights under any Inventions as

                  having been made, conceived, authored, or acquired by the

                  Employee prior to his/her employment hereunder.

 

         6. Confidential Information.

 

                  (a) "Confidential Information," as used in this Section 6,

         means information that is not generally known and that is proprietary

         to the Company or that the Company is obligated to treat as

         proprietary. This information includes, without limitation:

 

                           (i) trade secret information about the Company and

                  its products or services;

 

                           (ii) "Inventions," as defined in subsection 5 (a)

                  above;

 

                           (iii) information concerning the Company's business,

                  as the Company has conducted it or as it may conduct it in the

                  future; and

 

                           (iv) information concerning any of the Company's

                  past, current, or possible future products, including (without

                  limitation) information about the Company's research,

                  development, engineering, purchasing, manufacturing,

                  servicing, finances, marketing or selling.

 

Any information that reasonably can be expected to be treated as Confidential

Information will be presumed to be Confidential Information (whether the

Employee or other originated it and regardless of how he/she obtained it).

 

<PAGE>

 

                  (b) Except as required in his/her duties to the Company, the

Employee will not, during his/her employment or for a period of three (3) years

after termination of his/her employment with the Company, use or disclose

Confidential Information to any person not authorized by the Company to receive

it, excluding Confidential Information:

 

                           (i) which becomes publicly available by a source

                  other than the Employee;

 

                           (ii) which is received by the Employee after

                  termination of his/her employment hereunder from a source who

                  did not obtain the information directly or indirectly from

                  employees or agents of the Company; or

 

                           (iii) for which disclosure thereof the Company has

                  consented in writing. When the Employee's employment with the

                  Company ends, he/she will promptly turn over to the Company

                  all records and any compositions, articles, devices, apparatus

                  and other items that disclose, describe, or embody

                  Confidential Information including all copies, reproductions,

                  and specimens of Confidential Information in his/her

                  possession regardless of who prepared them.

 

         7. Competitive Activities. The Employee agrees that during his/her

employment with the Company and for a period of one (1) year after his/her

employment with the Company ends:

 

                  (a) He/she will not alone, or in any capacity with another

         firm:

 

                           (i) directly or indirectly engage in any commercial

                  activity that is competitive with any of the Company's

                  business in which the Employee participated while he/she was

                  employed by the Company or any affiliate thereof, nor will

                  he/she participate in the management or operation of, or

                  become a significant investor in, any venture or enterprise of

                  whatever kind as a principal officer, director, employee,

                  representative, agent or shareholder of any entity whose

                  business is the design, development, production, marketing or

                  servicing of any product or service competitive with the

                  business of the Company as it exists at the time his/her

                  employment with the Company or any affiliate thereof is

                  terminated;

 

                           (ii) solicit or in any way interfere or attempt to

                  interfere with the Company's relationships with any of its

                  current or potential customers; or

 

                           (iii) employ or attempt to employ any of the

                  Company's employee on behalf of any other entity competing

                  with the Company, provided that, nothing in this Section 7

                  shall restrict the Employee's employment by or association

                  with any entity, venture, or enterprise which engages in a

                  business with a product or service competitive with any

                  product or service of the Company so long as the following

                  conditions are complied with: (a) the Employee's employment or

                  association with such entity, venture or enterprise is limited

                  to work which does not involve or relate to the design,

                  development, production, marketing or servicing of a product

                  or service which is directly competitive with any product or

 

<PAGE>

 

                  service of the company; and (b) the Employee's employer takes

                  reasonable measures to insure that the Employee is not

                  involved with or consulted in any aspect of the design,

                  development, production, marketing, or servicing of such

                  competitive product or service.

 

                           (b) Employee will, prior to accepting employment with

                  any new employer, inform that employer of this Agreement and

                  provide that employer with a copy of Section 7 of this

                  Agreement, provided that he/she reasonably believed his/her

                  new position is or may be contrary to this Agreement.

 

         8. Conflicting Business. The Employee agrees that he/she will not

transact business with the Company personally, or as agent, owner, partner, or

shareholder of any other entity. The Employee further agrees that he/she will

not engage in any business activity or outside employment that may be in

conflict with the Company's proprietary or business interests.

 

         9. No adequate Remedy. The Employee understands that if he/she fails to

fulfill his/her obligations under Sections 5,6,7 or 8 of this agreement, the

damages to the Company would be very difficult to determine. Therefore, in

addition to any other rights or remedies available to the Company at law, in

equity or by statute, the Employee hereby consents to the specific enforcement

of Sections 5,6, 7 or 8 of this Agreement by the Company through an injunction

or restraining order issued by any appropriate court.

 

         10. No Prior Agreements. The Employee hereby represents and warrants to

the Company that he/she is not a party to or otherwise subject to any non

competition, confidentiality or other agreement which would in any way restrict

his/her ability to fulfill his/her duties hereunder or which would be breached

or violated by execution of this agreement by the Employee.

 

         11. Miscellaneous.

 

                  (a) Successors and Assigns. This Agreement may not be assigned

by the Employee. Except as provided in the next sentence. This Agreement may not

be assigned by the Company without the Employee's consent, which consent shall

not be unreasonably withheld. In any event, the Company may assign this

Agreement without the consent of the Employee in connection with a merger,

consolidation, assignment, sale or other disposition of substantially all of its

assets or business or the assets or business of a division of the Company.

 

                  (b) Modification. This Agreement may be modified or amended

only by a writing signed by each of the parties hereto.

 

                  (c) Governing Law. The laws of the State of Minnesota shall

govern the validity, construction, and performance of this Agreement.

 

<PAGE>

 

                  (d) Construction. Wherever possible, each provision of this

Agreement shall be interpreted so that it is valid under applicable law. If any

provision of this Agreement is to any extent invalid under applicable law in any

jurisdiction, that provision shall still be effective to the extent it remains

valid. The remainder of this Agreement also shall continue to be valid, and the

entire Agreement shall continue to be valid in other jurisdictions.

 

                  (e) Non-Waiver. No failure or delay by any of the parties

hereto in exercising any right or remedy under this Agreement shall waive any

provision of this Agreement. Any single or partial exercise by either of the

parties hereto of any right or remedy under this Agreement shall not preclude

the party from otherwise or further exercising its rights or remedies, or any

other rights or remedies granted by any law or any related document.

 

                  (f) Captions. The headings in this Agreement are for

convenience only and shall not affect the interpretation of this Agreement.

 

                  (g) Notices. All notices and other communications required or

permitted under this Agreement shall be in writing and hand delivered or sent by

registered first-class mail, postage prepaid. Such notices and other

communication shall be effective upon receipt if hand delivered and shall be

effective five (5) business days after mailing if sent by mail to the following

addresses, or such other addresses as either party shall have notified the other

party:

 

         If to the Company:         ATS  Medical, Inc

                                    3905 Annapolis Lane,  Suite 105

                                    Plymouth, MN 55447

 

         If to the Employee:        Michael D. Dale

                                    1450 Hunter Drive

                                    Wayzata, MN 55391

 

 

 

         IN WITNESS WHEREOF, the Company and the Employee have executed this

Agreement as of the date first above written.

 

By:

    -------------------------------

Title:

       ----------------------------

Employee:

          -------------------------

 

</TEXT>

</DOCUMENT>

 

<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>c07598exv10w2.txt
<DESCRIPTION>FORM OF CHANGE IN CONTROL AGREEMENT
<TEXT>
<PAGE>
 
Exhibit 10.2
 
                       Form of Change In Control Agreement
 
                                  ______, 200_
 
[Name of Officer]
[Home Address]
 
Dear ________:
 
ATS Medical, Inc. (the "Company") recognizes that your contribution to the
growth and success of the Company will be substantial and therefore desires to
assure the Company of your continued employment. In this connection, the Board
of Directors of the Company (the "Board") recognizes that, as is the case with
many publicly held companies, the possibility of a change in control may exist
and that such possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of management
personnel to the detriment of the Company and its shareholders.
 
The Board has determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of members of the Company's
management, including yourself, to their assigned duties without distraction in
the face of potentially disturbing circumstances arising from the possibility of
a change in control of the Company.
 
In order to induce you to remain in the employ of the Company, the Company
agrees that you shall receive the severance benefits set forth in this letter
agreement ("Agreement") in the event your employment with the Company is
terminated subsequent to a "Change in Control" (as defined in Section 2 hereof)
under the circumstances described below:
 
1.   Term of Agreement. This Agreement shall commence on the date hereof and
     shall continue in effect through December 31, 200_; provided, however, that
     commencing on January 1, 200_ and each January 1 thereafter, the term of
     this Agreement shall automatically be extended for one additional year
     unless, not later than January 1 of the preceding year, the Company shall
     have given notice that it does not wish to extend this Agreement; and
     provided further, that notwithstanding any such notice by the Company not
     to extend, this Agreement shall continue in effect for a period of 24
     months beyond the term provided herein if a change in control of the
     Company (as defined in Section 2 hereof) shall have occurred during such
     term.
 
2.   Change in Control. No benefits shall be payable hereunder unless there
     shall have been a Change in Control of the Company, as set forth below, and
     your employment by the Company shall have been terminated in accordance
     with Section 3 below. For purposes
 
 
 
 
<PAGE>
 
     of this Agreement, a "Change in Control of the Company" shall be deemed to
     have occurred if (A) a change in control occurs of a nature that would be
     required to be reported in response to Item 6(e) of Schedule 14A of
     Regulation 14A promulgated under the Securities Exchange Act of 1934, as
     amended (the "Exchange Act"), whether or not the Company is then subject to
     such reporting requirement; (B) any "person" (as such term is used in
     Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
     owner" (as defined in Rule 13d-3 promulgated under the Exchange Act),
     directly or indirectly, of securities of the Company representing 35% or
     more of the combined voting power of the Company's then outstanding
     securities; (C) individuals who at the date hereof constitute the Board of
     Directors of the Company cease for any reason to constitute at least a
     majority thereof (unless the election or the nomination for election of
     each new director was approved by a vote of at least two-thirds of
     directors then still in office who were directors at the beginning of the
     period and/or their successor directors who were recommended or elected to
     succeed a beginning director by at least two-thirds of the directors who
     were directors at the beginning of the period); or (D) the shareholders of
     the Company approve (i) any consolidation or merger of the Company in which
     the Company is not the continuing or surviving corporation or pursuant to
     which shares of Company stock would be converted into cash, securities or
     other property, other than a merger of the Company in which shareholders
     immediately prior to the merger have the same proportionate ownership of
     stock of the surviving corporation immediately after the merger; (ii) any
     sale, lease, exchange or other transfer (in one transaction or a series of
     related transactions) of all or substantially all of the assets of the
     Company; or (iii) any plan of liquidation or dissolution of the Company.
     Notwithstanding the foregoing, none of the transactions contemplated by the
     Agreement and Plan of Merger dated as of January 23, 2006 by and among the
     Company, Seabiscuit Acquisition Corp., 3F Therapeutics, Inc. and Mr. Boyd
     Cox shall be deemed to constitute a Change in Control of the Company under
     this Agreement
 
3.   Termination Following a Change in Control. If a Change in Control shall
     have occurred, you shall be entitled to the benefits provided in Section 4
     hereof upon any termination of your employment within 24 months following
     the Change in Control unless such termination is (A) because of your death,
     (B) by the Company for Cause (as defined below) or (C) by you other than
     for Good Reason (as defined below).
 
          (i) Cause. Termination by the Company of your employment for "Cause"
          shall mean termination upon (A) the willful and continued failure by
          you to substantially perform your duties with the Company (other than
          any such failure resulting from your disability or from termination by
          you for Good Reason), after
 
 
 
 
<PAGE>
 
          a demand for substantial performance is delivered to you that
          specifically identifies the manner in which the Company believes that
          you have not substantially performed your duties, and you have failed
          to resume substantial performance of your duties on a continuous basis
          within 30 days of receiving such demand, (B) the willful engaging by
          you in conduct which is demonstrably and materially injurious to the
          Company, monetarily or otherwise or (C) your conviction of a felony
          which impairs your ability substantially to perform your duties with
          the Company. For purposes of this Subsection, no act, or failure to
          act, on your part shall be deemed "willful" unless done, or omitted to
          be done, by you not in good faith and without reasonable belief that
          your action or omission was in the best interest of the Company.
          Failure to perform your duties with the Company during any period of
          disability shall not constitute Cause.
 
          (ii) Good Reason. Termination by you of your employment for "Good
          Reason" shall mean termination within 24 months following a Change in
          Control upon the occurrence of any one or more of the following:
 
               (A) the assignment to you of any duties inconsistent in any
               respect with your position (including status, offices, titles,
               and reporting requirements), authorities, duties, or other
               responsibilities as in effect immediately prior to the Change in
               Control or any other action of the Company which results in a
               diminishment in such position, authority, duties, or
               responsibilities, other than an insubstantial and inadvertent
               action which is remedied by the Company promptly after receipt of
               notice thereof given by you;
 
               (B) a reduction by the Company in your base salary as in effect
               on the date hereof and as the same shall be increased from time
               to time hereafter;
 
               (C) the Company's requiring you to be based at a location in
               excess of thirty-five (35) miles from the location of your
               principal office immediately prior to the Change in Control;
 
               (D) the failure by the Company to (a) continue in effect any
               material compensation or benefit plan, program, policy or
               practice in which you were participating at the time of the
               Change in Control or (b) provide you with compensation and
               benefits at least equal (in terms of benefit levels and/or reward
               opportunities) to those provided for under each employee benefit
               plan, program, policy and practice as in effect immediately prior
               to
 
 
 
 
<PAGE>
 
               the Change in Control (or as in effect following the Change in
               Control, if greater); and
 
               (E) the failure of the Company to obtain a satisfactory agreement
               from any successor to the Company to assume and agree to perform
               this Agreement, as contemplated in Section 7 hereof.
 
          Your right to terminate your employment pursuant to this Subsection
          shall not be affected by your incapacity due to physical or mental
          illness. Your continued employment shall not constitute consent to, or
          a waiver of rights with respect to, any circumstance constituting Good
          Reason hereunder. Termination by you of your employment for Good
          Reason as defined in this Subsection 3(ii) shall constitute
          termination for Good Reason for all purposes of this Agreement.
 
          (iii) Notice of Termination. Any purported termination of your
          employment by the Company or by you (other than by reason of your
          death) within 24 months following the month in which a Change in
          Control occurs, shall be communicated by Notice of Termination to the
          other party hereto in accordance with Section 8 hereof. Failure by you
          to provide Notice of Termination shall not limit any of your rights
          under this Agreement except to the extent the Company can demonstrate
          that it suffered actual damages by reason of such failure. For
          purposes of this Agreement, a "Notice of Termination" shall mean a
          written notice which shall indicate the specific termination provision
          in this Agreement relied upon and the Date of Termination (as defined
          below) and shall set forth in reasonable detail the facts and
          circumstances claimed to provide a basis for termination of your
          employment under the provision so indicated.
 
          (iv) Date of Termination. "Date of Termination" shall mean the date
          specified in the Notice of Termination (except in the case of your
          death, in which case Date of Termination shall be the date of death);
          provided, however, that if your employment is terminated by the
          Company other than for Cause, the date specified in the Notice of
          Termination shall be at least 30 days from the date the Notice of
          Termination is given to you and if your employment is terminated by
          you for Good Reason, the date specified in the Notice of Termination
          shall not be more than 60 days from the date the Notice of Termination
          is given to the Company.
 
          (v) Termination Prior to a Change in Control. Any termination of your
          employment by the Company without Cause prior to a Change in Control
          which occurs at the request or insistence of any person (other than
          the Company) related to the Change in Control shall be deemed to have
          occurred after the Change in Control for purposes of this Agreement.
 
 
 
 
<PAGE>
 
4.   Compensation Upon Termination. Subject to paragraph 5 of this Agreement,
     following a Change in Control, upon termination of your employment during
     the term of this Agreement you shall be entitled to the following benefits:
 
          (i) If your employment by the Company shall be terminated (y) by the
          Company for any reason other than Cause, or (z) by you for Good
          Reason, you shall be entitled to the benefits provided below:
 
               (A) the Company shall pay you your full base salary through the
               Date of Termination at the rate in effect at the time Notice of
               Termination is given;
 
               (B) the Company will pay as severance benefits to you, not later
               than 30 days following the Date of Termination, a lump sum
               severance payment equal to two times your annual base salary in
               effect at the time Notice of Termination is given or immediately
               prior to the date of the Change in Control, whichever is greater;
               and
 
               (C) for a period of 24 months after the Date of Termination, the
               Company will arrange to provide you with health and dental
               benefits substantially similar in design and cost (to you) as
               such benefits available to you immediately prior to the Notice of
               Termination; provided that such benefits shall be discontinued to
               the extent that you obtain employment providing comparable health
               and/or dental benefits during such 24-month period.
 
          (ii) The payments provided for in Section 4(i)(A) and (B) above shall
          be made not later than 30 days following the Date of Termination;
          provided, however, that if the amounts of such payments cannot be
          finally determined on or before such day, the Company shall pay to you
          on such day an estimate as determined in good faith by the Company of
          the minimum amount of such payments and shall pay the remainder of
          such payments (together with interest from the date of such estimated
          payment at the rate provided in Section 1274(b)(2)(B) of the Internal
          Revenue Code of 1986, as amended (the "Code")) as soon as the amount
          thereof can be determined but in no event later than 45 days after the
          Date of Termination.
 
          In the event that the amount of the estimated payment exceeds the
          amount subsequently determined to have been due, such excess shall
          constitute a loan by the Company to you payable no later than 30 days
          after demand by the Company
 
 
 
 
<PAGE>
 
          (together with interest from the date of such estimated payment at the
          rate provided in Section 1274(b)(2)(B) of the Code).
 
          (iii) The Company shall also pay to you any legal fees and expenses
          incurred by you (A) as a result of successful litigation against the
          Company for nonpayment of any benefit hereunder or (B) in connection
          with any dispute with any Federal, state or local governmental agency
          with respect to benefits claimed under this Agreement. If you utilize
          arbitration to resolve any such dispute, the Company will pay any
          legal fees and expenses incurred by you in connection therewith.
 
          (iv) You shall not be required to mitigate the amount of any payment
          provided for in this Section 4 by seeking other employment or
          otherwise, nor shall the amount of any payment provided for in this
          Section 4 be reduced by any compensation earned by you as the result
          of employment by another employer after the Date of Termination, or
          otherwise, except as set forth in Section 4(i)(C) hereof.
 
          (v) Notwithstanding the foregoing, if and to the extent that you are
          entitled under any other agreement with the Company to receive any
          payment of severance upon termination, the amount payable to you
          pursuant to Section 4(i)(B) above shall be reduced by the amount of
          such other severance payment.
 
          (vi) Notwithstanding the foregoing, the Company shall, to the extent
          necessary and only to the extent necessary, modify the timing of
          delivery of severance benefits if the Company determines that the
          timing would subject the severance benefits to any additional tax or
          interest assessed under Section 409A of the Code. In such event, the
          payments will occur as soon as practicable without causing the
          severance benefits to trigger such additional tax or interest under
          Section 409A of the Code. In addition, if your base salary
          continuation under Section 4(i)(A) above is delayed to comply with
          Section 409A of the Code, the Company shall pay any missed payments in
          a single lump sum at the time your base salary continuation commences.
 
5.   Limitation on Payments. In the event that any payment or benefit received
     or to be received by you in connection with a change in control of the
     Company or a termination of your employment (whether payable pursuant to
     the terms of this Agreement or any other plan, arrangement or agreement
     with the Company or with any person constituting a member of an "affiliated
     group" (as defined in Section 280G(d)(5) of the Code) which includes the
     Company or with any person whose actions result in a change in control of
     the Company (which shall be deemed to include any member of an affiliated
     group as
 
 
 
 
<PAGE>
 
     defined above)) (collectively with the amounts payable under this
     Agreement, "Total Payments") would not be deductible (in whole or in part)
     by the Company, an Affiliate or other person making such payment or
     providing such benefit solely as a result of Section 280G of the Code, the
     payments under this Agreement shall be reduced until no portion of the
     Total Payments is not deductible as a result of Section 280G of the Code,
     or the payments under this Agreement are reduced to zero. For purposes of
     this limitation: (i) no portion of the Total Payments the receipt or
     enjoyment of which you shall have effectively waived pursuant to Section
     280G of the Code in writing prior to the date of payment of the payments
     under this Agreement shall be taken into account, (ii) no portion of the
     Total Payments shall be taken into account which in the opinion of tax
     counsel selected by the Company's independent auditors and acceptable to
     you does not constitute a "parachute payment" within the meaning of Section
     280G(b)(2) of the Code, (iii) the payments under this Agreement shall be
     reduced only to the extent necessary so that the Total Payments (other than
     those referred to in clause (ii)) in their entirety constitute reasonable
     compensation within the meaning of Section 280G(b)(4)(B) of the Code, in
     the opinion of the tax counsel referred to in clause (ii); and (iv) the
     value of any non-cash benefit or any deferred cash payment included in the
     Total Payments shall be determined by the Company's independent auditors in
     accordance with the principles of Sections 280G(d)(3) and (4) of the Code.
 
6.   Nonexclusivity of Rights. Nothing in this Agreement shall prevent or limit
     your continuing or future participation in any benefit, bonus, incentive,
     retirement or other plan or program provided by the Company and for which
     you may qualify, nor shall anything herein limit or reduce such rights as
     you may have under any other agreement with, or plan, program, policy or
     practice of, the Company. Amounts which are vested benefits or which you
     are otherwise entitled to receive under any agreement with, or plan,
     program, policy or practice of, the Company (including, without limitation,
     the cash-out of unused vacation days upon termination of employment) shall
     be payable in accordance with such agreement, plan, program, policy or
     practice, except as explicitly modified by this Agreement.
 
7.   Successors.
 
          (i) The Company will require any successor (whether direct or
          indirect, by purchase, merger, consolidation, or otherwise) to all or
          substantially all of the business and/or assets of the Company or of
          any division or subsidiary thereof employing you to expressly assume
          and agree to perform this Agreement in the same manner and to the same
          extent that the Company would be required to perform if no such
          succession had taken place. Failure of the Company to obtain
 
 
 
 
<PAGE>
 
          such assumption and agreement prior to the effectiveness of any such
          succession shall be a breach of this Agreement and shall entitle you
          to compensation from the Company in the same amount and on the same
          terms as you would be entitled hereunder if you terminated your
          employment for Good Reason following a Change in Control, except that
          for purposes of implementing the foregoing, the date on which any such
          succession becomes effective shall be deemed the Date of Termination
          and Notice of Termination shall be deemed to have been given on such
          date.
 
          (ii) This Agreement shall inure to the benefit of and be enforceable
          by your personal or legal representatives, executors, administrators,
          successors, heirs, distributees, devisees, and legatees. If you should
          die while any amount would still be payable to you hereunder if you
          had continued to live, all such amounts, unless otherwise provided
          herein, shall be paid in accordance with the terms of this Agreement
          to your devisee, legatee or other designee or, if there is no such
          designee, to your estate or, if no estate, in accordance with
          applicable law.
 
8.   Notice. For the purpose of this Agreement, notices and all other
     communications provided for in the Agreement shall be in writing and shall
     be deemed to have been duly given when delivered or mailed by United States
     registered mail, postage prepaid, addressed to the other party as follows:
 
          If to the Company, to:
             ATS Medical, Inc.
             Attention: Corporate Secretary
             3905 Annapolis Lane, Suite 105
             Minneapolis, Minnesota 55447
 
          If to you, to:
             [Name of Officer]
             [Home Address]
 
     Either party to this Agreement may change its address for purposes of this
     Section 8 by giving 15 days' prior notice to the other party hereto.
 
9.   Miscellaneous. No provision of this Agreement may be modified, waived or
     discharged unless such waiver, modification or discharge is agreed to in
     writing and signed by you and such officer as may be specifically
     designated by the Board. The validity, interpretation, construction, and
     performance of this Agreement shall be governed by the laws of the State of
     Minnesota.
 
 
 
 
<PAGE>
 
10.  Validity; Integration. The invalidity or unenforceability of any provision
     of this Agreement shall not affect the validity or enforceability of any
     other provision of this Agreement, which shall remain in full force and
     effect. This Agreement represents the entire agreement between the parties
     as to the subject matter hereof and supersedes and replaces any prior
     agreements, written or oral, between the parties hereto specifically with
     respect to severance payments triggered by termination of employment after
     a change in control.
 
11.  Counterparts. This Agreement may be executed in several counterparts, each
     of which shall be deemed to be an original but all of which together will
     constitute one and the same instrument.
 
12.  Arbitration. If you so elect, any dispute or controversy arising under or
     in connection with this Agreement shall be settled exclusively by
     arbitration in accordance with the rules of the American Arbitration
     Association then in effect. Judgment may be entered on the arbitrator's
     award in any court having jurisdiction; provided, however, that you shall
     be entitled to seek specific performance of your right to be paid until the
     Date of Termination during the pendency of any dispute or controversy
     arising under or in connection with this Agreement. If you do not elect
     arbitration, you may pursue any and all legal remedies available to you.
 
13.  Effective Date. This Agreement shall become effective as of the date set
     forth above.
 
14.  Employment. This Agreement does not constitute a contract of employment or
     impose on the Company any obligation to retain you as an employee, to
     continue your current employment status or to change any employment
     policies of the Company.
 
 
 
 
<PAGE>
 
If this letter sets forth our agreement on the subject matter hereof, kindly
sign and return to the Company the enclosed copy of this letter which will then
constitute our agreement on this subject.
 
Sincerely,
 
ATS MEDICAL, INC.
 
 
By
   ----------------------------------
Name:
      -------------------------------
Title:
       ------------------------------
 
 
Agreed to this       day
               -----
of           , 200
   ----------     -
 
 
By
   ----------------------------------
Name:
      -------------------------------
 
 
 
</TEXT>
</DOCUMENT>