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Consulting Agreement

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MANUEL A. VILLAFANA
CONSULTING AGREEMENT


THIS AGREEMENT is made as of the 20th day of April, 1998 by and between ATS Medical, Inc., a Minnesota corporation (the "Company") and Manuel A. Villafana, a resident of the State of Minnesota ("MAV").


WHEREAS, the parties entered into Agreements dated October 1994 and January 1995 for the employment of MAV as Chairman and Chief Executive Officer of the Company (the "October 1994 Agreement" and the "January 1995 Agreement"); and


WHEREAS, the Board of Directors and MAV desire to amend and restate the October 1994 and January 1995 Agreements to modify certain provisions and to extend the term of the agreement.


NOW, THEREFORE, in consideration of the mutual promises contained herein, the Company and MAV, each intending to be legally bound, agree to amend the October 1994 and January 1995 Agreements and restate them in their entirety as follows:


1. Employment. Subject to all of the terms and conditions of this Agreement, the Company agrees to employ MAV on a "full-time" basis as its Chairman and Chief Executive Officer and MAV accepts this employment as consultant.


2. Duties. MAV will make the best use of his energy, knowledge and training in advancing the Company's interests. He will diligently and conscientiously perform the duties of Chairman and Chief Executive Officer of 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. During the term of this Agreement, MAV may engage in any outside consulting activities which do not violate the provisions of Sections 7 and 8 of this Agreement, provided MAV continues to devote substantially all of MAV's full-time efforts to the Company.


3. Term. Unless terminated at an earlier date in accordance with the provisions of this Agreement, the term of MAV's services hereunder shall commence on the date of this Agreement and shall terminate on December 31, 2001. The Company may terminate the relationships created by this Agreement upon 60 days notice to MAV if such termination is without cause (as defined below), and with no notice if such termination is for Cause.


As used in this Agreement, the term "Cause" shall be defined as (i) MAV's breach of any of his material duties or obligations under this Agreement, which breach is not corrected within 30 days of receipt of written notice thereof by MAV from the Company's Board of Directors, (ii) embezzlement or other misappropriation of property of the Company or (iii) conviction of a felony offense. No termination of the relationship created by this Agreement shall relieve MAV of his duties under Sections 5, 6 and 7 hereof.


4. Compensation.


(a) Base Salary. The Compensation Committee of the Board of Directors
shall determine the base salary for MAV in accordance with its
compensation practices.


(b) Benefits. MAV shall be entitled to participate in any benefit plans
which may be established by the Board of Directors of the Company for
his benefit.


(c) Expenses. The Company shall reimburse MAV for all ordinary and
necessary business expenses MAV incurs while performing his duties
under this Agreement, provided that MAV 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.


(d) Bonuses. MAV shall be eligible to receive discretionary bonuses in
addition to his base salary as and when determined by the Compensation
Committee of the Board of Directors of the Company during the term of
this Agreement.


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


(i) concerns directly the Company's products, research or
development; or


(ii) results from any work MAV performs for the Company; or


(iii) uses the Company's equipment, facilities, or trade
secret information.


(b) MAV agrees that all Inventions he makes during his employment with
the Company will be the sole and exclusive property of the Company. MAV
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 MAV is employed by the Company;


(ii) promptly and fully disclose the existence and describe
the nature of the


Invention to the Company in writing (and without request);


(iii) assign (and MAV does hereby assign) to the Company all
of his rights to the Invention, any applications he makes for
patents or copyrights in any country, and any patents or
copyrights granted to him in any country; and


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