ASSET PURCHASE AGREEMENT

Exhibit 10.8

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ASSET PURCHASE AGREEMENT

BETWEEN

ADVANCED CARDIOVASCULAR SYSTEMS, INC.

AND

BIOHEART, INC.

Dated as of June 24, 2003

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TABLE OF CONTENTS

     -i-     

SCHEDULES

EXHIBITS

ASSET PURCHASE AGREEMENT

     This Asset Purchase Agreement (this “ Agreement ”) is entered into this 24th day of June, 2003, between Advanced Cardiovascular Systems, Inc., a California corporation (“ Buyer ”), and Bioheart, Inc., a Florida corporation (“ Seller ”).

     WHEREAS, Seller is focused on the discovery, development, and commercialization of cell-based therapy products for the treatment of cardiovascular diseases, including myocardial infarction, congestive heart failure, and cardiovascular electrical abnormalities;

     WHEREAS, part of Seller’s business consists of the production of a catheter-based micro-implant system, including the system named MyoCath™ (the “ Product ”); and

     WHEREAS, Seller wishes to sell to Buyer certain assets of Seller specifically related to the Product as more particularly set forth herein, and Buyer wishes to purchase such assets, each under the terms and conditions herein.

     NOW, THEREFORE, the parties hereby agree as follows:

ARTICLE 1

     1.1 Items Included in the Assets . At Closing (as defined in Section 1.4 ), Seller shall sell, transfer, and assign to Buyer, and Buyer shall purchase and acquire from Seller, all of Seller’s right, title, and interest in and to the following assets (the “ Assets ”) free and clear of all liens, charges, claims, pledge, security interests, and other encumbrances (collectively, “ Liens ”), except as specifically assumed by Purchaser pursuant to the terms of this Agreement.

          (a)  Product Intellectual Property . All of Seller’s right, title and interest (whether owned, licensed, or otherwise) in all United States and foreign patents and patent applications listed on Schedule 1.1(a) , and all know-how, manufacturing processes, trade secrets, inventions, discoveries, and technical information including information embodied in drawings, designs, material specifications, processing instructions, formulas, equipment specifications, product specifications, confidential data, computer software, electronic files, research notebooks, invention disclosures, research and development reports, and the like specifically related thereto and all amendments, modifications, and improvements to any of the foregoing, in each case as they specifically relate to the Product (collectively, the “ Product Intellectual Property ”).

          (b)  Contracts . Each agreement, instrument, contract, and other commitment listed in S chedule 1.1(b) (each, an “ Assumed Contract ”)

          (c)  Files and Clinical Records . All records and documentation relating to the Product, including all (i) regulatory filings, together with any supporting documents; (ii) clinical studies and tests, including any such filings; (iii) permits, documents, studies, and tests; (iv) all reporting documents required by any regulatory authority; (vi) other correspondence with regulatory agencies, adverse event files, investigation safety reports, complaint files; (vi) manufacturing records; and (vii) foreign equivalents of the foregoing (collectively, the “ Files and Clinical Records ”). Seller may retain one copy of all such Files and Clinical Records for

evaluating the Product and to make, have made, sell, offer to sell and use the Product; provided , however , Seller shall not disclose to any other person such records and documentation or use such records and documentation for any other use.

          (d)  Manuals, Forms, and Diagrams . All of the manuals, forms, and diagrams relating to the Product listed on Schedule l.1(d) (the “ Manuals, Forms and Diagrams ”). Seller may retain one copy of all such Files and Clinical Records for evaluating the Product and to make, have made, sell, offer to sell and use the Product; provided , however , Seller shall not disclose to any other person such records and documentation or use such records and documentation for any other use.

     1.2 Excluded Assets . There shall be excluded from the Assets to be transferred and conveyed hereunder, and Seller shall retain all of its right, title and interest in and to, (a) all assets relating to the Product listed on Schedule 1.2 and (b) all other assets of Seller not specifically included in Section 1.1 . Without limiting the generality of the foregoing, Buyer acknowledges and agrees that no assets of Seller relating to the discovery, development, and commercialization of cell-based therapy products for the treatment of cardiovascular diseases, including myocardial infarction, congestive heart failure, and cardiovascular electrical abnormalities, are being conveyed under this Agreement. It is the intent of the parties that only those Assets specifically included in Section 1.1 related to the Product are to be conveyed to Buyer hereunder.

     1.3 Assumed and Retained Liabilities . Except for obligations arising on or after the Closing Date (as defined in Section 1.4 ) under the Assumed Contracts which Buyer hereby assumes as of the Closing Date (the “ Assumed Liabilities ”), Buyer shall not assume any liabilities or obligations of Seller, and Seller shall be liable for all liabilities and obligations arising from or in connection with ownership of the Assets or operation of Seller’s business before the Closing Date, whether such liability or obligation be absolute, accrued, fixed, contingent or otherwise and whether known or unknown.

     1.4 Closing . The simultaneous execution of this Agreement and closing of the transactions contemplated by this Agreement (the “ Closing ”) shall occur on June 24, 2003 (the “ Closing Date ”), at 10:00 a.m., local time, at the offices of Faegre & Benson LLP, 2200 Wells Fargo Center, 90 South Seventh Street, Minneapolis, Minnesota (or at such other time or place as Buyer and Seller may agree).

     1.5 Title . Title to the Assets shall pass to Buyer as of the Closing Date.

ARTICLE 2
CONSIDERATION

     2.1 Purchase Price . As consideration for the Assets, Buyer shall pay to Seller the amount of $900,000 (the “ Purchase Price ”), on the Closing Date, by wire transfer of immediately available United States funds to an account specified by Seller.

ARTICLE 3
LICENSE AGREEMENT

     3.1 Definitions . The following terms have the meanings set forth below (which are equally applicable to both the singular and plural forms of the terms defined):

          (a) “ ACS Background IP Rights ” means all IP Rights relating to intellectual property owned, developed or controlled (via license or otherwise) by Buyer (i) existing on the date hereof, or (ii) after the Closing Date.

          (b) “ Bioheart Foreground IP Rights ” means all IP Rights specifically relating to the Product that are conceived or first reduced to practice by Seller during the term of the License granted in this Article 3 . The terms “ conceived ” and “ first reduced to practice ” will be interpreted according to U.S. patent law.

          (c) “ IP Rights ” means all intangible property rights arising under equity or operation of law including all rights under or to intellectual property.

     3.2 License from Buyer to Seller . As of the Closing Date, Buyer hereby grants to Seller, and Seller accepts from Buyer, a co-exclusive (Buyer has the right to practice the Product Intellectual Property as well as Seller), worldwide, fully paid up, irrevocable license (the “ License ”), without the right to assign, transfer or sublicense to any third party the Product Intellectual Property except as set forth in Section 3.2 of this Agreement, to make, have made, sell, offer to sell and use the Product. Except for the License granted hereunder, Buyer retains all rights under the Product Intellectual Property for itself and Affiliates (as hereinafter defined).

     3.3 Assignment; Successors and Assigns . The License granted to Seller under Section 3.2 shall be a personal right of the Seller and may not be assigned to another Person (as defined herein) without the prior consent of Buyer; provided , however , that Seller shall have the right to assign this License without the consent of Buyer in connection with (a) a change of control of the Seller, or (b) the sale of all or substantially all of the Seller’s assets. Any assignment or transfer of this License to any third party, other than in connection with a change of control of the Seller, or the sale of all or substantially all of the Seller’s assets, shall be considered a material breach of this license and this license shall automatically terminate upon such breach. Any assignment of this license shall not relieve the assignee from the requirement of obtaining the prior consent of Buyer to any further assignment. This Agreement shall be binding upon and shall inure to the benefit of the parties and their successors and permitted assigns. “ Person ” means any individual, corporation, partnership, limited liability company, association, joint venture, trust, government or governmental instrumentality, agency, division or office or any other entity, organization or group.

     3.4 Termination of License . Unless the license under this Agreement is terminated according to the provisions in this Agreement, this license shall terminate with the last to expire of any issued or granted patents, or the final rejection, including any appeals, of any patent applications, directly related to Product Intellectual Property. Seller will not acquire any rights in and is not entitled to move, sell, copy, license, or otherwise exploit ACS Background IP Rights in any manner (except the License granted under Section 3.2 ), and Buyer will not acquire

any rights in and is not entitled to use, sell, copy, license, or otherwise exploit Bioheart Foreground IP Rights in any manner.

     3.5 Government Approvals . Seller shall reasonably cooperate with Buyer in connection with the preparation, filing and prosecution of regulatory applications for the conduct of clinical trials and for the marketing of the Products in order to obtain the approval of government or regulatory authorities for the same. In addition, Seller agrees that it will grant to Buyer any necessary or appropriate authorizations to (a) allow access to, and refer to, applicable data, files, or information on file with any governmental or regulatory authorities specifically relating to the Product Intellectual Property, including without limitation safety data and drug master files and (b) reference any such data, files, or information in Buyer’s and its Affiliates’ filings with any governmental or regulatory authorities.

     3.6 Patent Filings . Buyer will have the exclusive right, at Buyer’s expense, to file, prosecute, issue, maintain, license, enforce or defend all patent applications and patents, throughout the world, containing Product Intellectual Property. Seller will provide reasonable cooperation and assistance to Buyer under this Section 3.6 related to such activities.

     3.7 Enforcement . A party learning of an infringement of the Product Intellectual Property rights by an un-Affiliated third Person will notify the other party. Buyer will have the primary right to enforce Product Intellectual Property rights under this Agreement. Any recovery as a result of enforcement under this Section 3.7 will inure solely to the benefit of Buyer. If Buyer enforces any Product Intellectual Property rights under this Agreement, (a) Seller will reasonably cooperate with Buyer in making available its employees and records for purposes of providing evidence and background information in support of the enforcement, and (b) Seller agrees to be named as a party to any claim, lawsuit or other action necessary for Buyer to initiate, maintain or pursue such claim, lawsuit or action. If Buyer shall fail, within a period of 90 days after learning of such infringement, to take such action, Seller shall have the right to take such action at Seller’s expense and for Seller’s benefit. Neither party may settle a claim or action related to the infringement of the Product Intellectual Property without the consent of the other party, if such settlement would impose any monetary obligation on the other party or require the other party to submit to an injunction or otherwise limit the other party’s rights under this Agreement.

ARTICLE 4
SUPPLY AGREEMENT

     4.1 Supply . Seller agrees to manufacture and deliver to Buyer, at no cost to Buyer, a total of 160 units of the Product, less any units of the Product delivered by Seller to Buyer prior to the Closing Date (the “ Supply Units ”).

     4.2 Labels .

          (a) Each Product shall be labeled as either having a shelf life of 6 months, 12 months, or 24 months. From the date of this Agreement until the second anniversary of such date, Seller shall replace (at no cost to Buyer) any Supply Unit delivered to Buyer and labeled as having a shelf life of 6 months that expires before the Supply Unit is used.

          (b) If any testing conducted by Seller extends the shelf life noted on any of the Supply Units delivered by Seller to Buyer, then Buyer has the option to return those Supply Units to Seller to be re-labeled with the extended expiration date (at no cost to Buyer).

     4.3 Permits . Seller shall be responsible for obtaining and maintaining any permits or approvals from any United States or foreign regulatory authorities and any other government authorities that are required in connection with its manufacture and delivery of the Supply Units to Buyer under this Article 4 . Seller shall be responsible for all process, analytical method and equipment validation and shall take all necessary steps for its facilities used for the manufacture of Supply Units to pass government inspection.

     4.4 Shipping Costs; Risk of Loss . Buyer shall pay all shipping and transportation costs associated with the shipping and transportation of the Supply Units to Buyer from Seller or by Buyer to Seller. Deliveries of Supply Units shall be F.O.B. Seller’s distribution facility or such other sites as Seller may, from time to time, designate (the “ Distribution Facility ”). Title to Supply Units sold and risk of casualty, with respect to the Supply Units, will pass to Buyer upon Seller’s tender of the Supply Units to Buyer or a common carrier at the Distribution Facility.

     4.5 Defective Products . All Supply Units delivered hereunder shall be subject to final inspection and approval by Buyer within 20 days after delivery of the Supply Units to Buyer. If such inspection discloses that a Supply Unit fails to conform to the specifications as described in Exhibit A , or is defective or damaged in any manner (a “ Defective Product ”), Buyer shall return the Defective Product to Seller within the 20-day inspection period specifying the failure, defect or damage in reasonable detail. Seller shall replace the Defective Product within 30 days of receiving the Defective Product.

     4.6 Exclusivity; Termination . Seller shall not manufacture for, or transfer any units of the Product to, any other party (except for Seller) until Seller has delivered to Buyer 160 units of the Product that Buyer has accepted and approved. Seller shall complete its obligations under this Article 4 no later than December 31, 2003. Upon the delivery of the 160th Supply Unit accepted and approved by Buyer,

          (a) Seller may continue to manufacture the Product or have the Product manufactured only for Seller and make, have made, sell, offer to sell and use the Product consistent with the License granted in Section 3.2 ; and

          (b) Seller’s obligations under this Article 4 shall be terminated.

ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER

     Seller represents and warrants to Buyer as follows:

     5.1 Organization and Good Standing . Seller is a duly incorporated, duly organized, and validly existing corporation in good standing under the laws of the State of Florida, with full corporate power and authority to own or lease its properties and assets, conduct its business as now conducted and enter into and complete all transactions contemplated by this Agreement.

     5.2 Binding Agreement . This Agreement has been duly excluded and delivered by Seller and is a valid and binding obligation and agreement of Seller, enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, reorganization, insolvency, moratorium or other similar laws from time to time in effect affecting creditors’ rights generally or by principles governing the availability of equitable remedies (the “ Enforcement Liabilities ”)). The execution, delivery, and performance of this Agreement have been approved by the board of directors of Seller and will not violate, contravene, result in a breach of, create any right of acceleration or prepayment under, or constitute a default under (with or without due notice or lapse of time or both) (a) the articles of incorporation or by-laws of Seller, (b) any judgment, law, rule, regulation or decree applicable to Seller, or (c) any contract or agreement relating to the Product.

     5.3 Assumed Contracts . Seller has made available to Buyer a true, correct, and complete copy of the Assumed Contract (or, in the case of any oral Assumed Contract, a description thereof that is included in Schedule 1.1(b) ), while together with the agreement described in Schedule 5.3(a) constitute all agreements, instruments, contracts, and other commitments, oral or written, to which Seller is a party or by which Seller is bound that relate to the Product. Seller has not breached any representation, warranty or covenant contained in any Assumed Contract and, to the best of its knowledge, is not in default with respect thereto. Except as set forth in Schedule 5.3(b) , Seller has no knowledge that any other party to any Assumed Contract is in breach or default or is claimed to be in breach or default in complying with any provision thereof. Except as set forth in Schedule 5.3(b) , each Assumed Contract is in full force and effect and is valid and binding upon the parties thereto in accordance with its terms (subject to Enforcement Limitations).

     5.4 Litigation; Claims . Except as set forth in Schedule 5.4 , there is no action, suit, litigation, proceeding, claim or investigation pending, or to Seller’s knowledge threatened, against or with respect to Seller, the Product or any Assets, and (b) Seller is not operating under, subject to or in default with respect to, any order, injunction, or decree of any court or any federal, state, municipal, or other governmental agency or instrumentality.

     5.5 Operations in Accordance with Law . To the best of its knowledge, Seller is in compliance with all laws, rules, regulations, ordinances, and administrative orders applicable to the Product. To Seller’s knowledge, its business has been conducted, and the Assets have been maintained and used, in compliance with all applicable federal, state, and local laws, regulations, ordinances, and other requirements of all governmental authorities having jurisdiction over Seller or the Assets.

     5.6 Title to Assets .

          (a) Seller has good title to the Assets (or, in the case of licensed software and other Assets not owned by Seller, such rights as are necessary to permit such use), free and clear of all Liens.

          (b) Except as set forth in Schedule 5.6 , the Assets include all assets of Seller that Seller uses or holds for use in the manufacture, use, or sale of the Product on the date hereof.

     5.7 Defaults; Liens; Required Consents . The execution, delivery and performance of this Agreement and any of the transactions contemplated hereby will not (a) violate, conflict with or constitute a breach or default under, or require any consent, approval, filing or notice under any provisions of, or result in the acceleration of any obligation under, or result in the termination of, any material contract, agreement, lease, security agreement, promissory note, mortgage, Lien or license relating to any of the Assets, Seller, or Seller’s Affiliates; (b) result in the creation or imposition of any Lien in favor of any Person upon any of the Assets; or (c) constitute an event that, after notice or lapse of time or both, would result in any such breach, default, violation, conflict, termination, acceleration or the creation or imposition of any Lien on any of the Assets. “ Affiliate ” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, that Person. For purposes of the foregoing definition, control means (i) the direct or indirect ownership of at least 50% of the outstanding voting securities or other equity interests of such Person, (ii) the present right or ability to elect or appoint 50% or more of the members of the board of directors or similar governing body of such Person, or (iii) the present right or ability to control the decision making authority of such Person.

     5.8 Intellectual Property .

          (a) Seller is the sole and exclusive owner of, or otherwise has a valid license or right to use and freely transfer, the Product Intellectual Property, free and clear of any Liens. The Product Intellectual Property constitutes all IP Rights owned by or licensed to Seller relating to the Product. All Product Intellectual Property remains in full force and effect including, without limitation, rights transferred in the Purchase Agreement between Seller and John Geis and Michael Braun.