LICENSE AGREEMENT

Exhibit 10.1

LICENSE AGREEMENT

     This License Agreement, effective as of March 22, 2005 (the “Effective Date”), is by and between Angiotech Pharmaceuticals, Inc. , a corporation organized and existing under the laws of the Province of British Columbia, Canada (“Angiotech Parent”), Angiodevice International GmbH , a corporation organized and existing under the laws of Switzerland (“Angiodevice”), Angiotech International AG , a corporation organized and existing under the laws of Switzerland (“Angiotech International”), Angiotech BioCoatings Corp. , a corporation organized and existing under the laws of the State of New York, USA (“Angiotech BioCoatings”) and CABG Medical, Inc. , a corporation organized and existing under the laws of the State of Minnesota, USA (“CABG”). Each of the parties hereto is referred to herein as “Party” and collectively as the “Parties”.

WITNESSETH

      WHEREAS Angiodevice, Angiotech International and Angiotech BioCoatings are all subsidiaries of Angiotech Parent (hereinafter collectively referred to as “Angiotech”) and are all Affiliates (as that term is defined below) of each other;

      AND WHEREAS Angiotech owns, or has acquired licenses to, certain domestic and foreign patents and patent applications and has developed know-how, relating to the use of paclitaxel as a therapeutic agent in local medical applications;

      AND WHEREAS Angiotech has the right to grant licenses with respect to such patents, patent applications, licenses and know-how for use in specified areas;

      AND WHEREAS CABG desires to receive a license for the use of certain of such patents, patent applications, licenses and know-how, and Angiotech is willing to grant such a license to CABG;

      NOW THEREFORE , in consideration of the mutual promises and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Angiotech and CABG hereby agree as follows:

1. Definitions.

     Capitalized terms used in this Agreement and not otherwise defined herein shall have the meaning as set forth below:

     “ Affiliate ” means any entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with a Party to this Agreement. For purposes of this definition, control means the direct or indirect ownership of at least fifty percent (50%) (or such lesser percentage which is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction), of (a) the outstanding voting securities of such entity, or (b) the decision making authority of such entity.

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     “ Agreement ” means this License Agreement, together with all exhibits annexed hereto, as the same shall be modified and in effect from time to time.

     “ CABG License ” has the meaning ascribed to it in Section 2.1.

     “ CABG Technology ” means CABG’s Holly Graft™ System which is designed to bypass blockages in coronary arteries by a single graft attached at one anastomosis/aperture to the aorta, and any other proprietary information or technology developed or acquired by CABG that relates to the bypass of blockages in coronary arteries.

     “ Change of Control ” means the acquisition by any person, or by any person acting jointly or in concert with an offeror (“Joint Actor”), whether directly or indirectly, of voting securities of CABG which, when added to all other voting securities of CABG held at same time by such person, or by such person and a Joint Actor, totals for the first time not less than fifty percent (50%) of the outstanding voting securities of CABG.

     “ Clinical Data ” means the results and analysis of data arising from the testing of a drug, device or a combination thereof in vitro , in vivo in non-human subjects and in human subjects, including safety and toxicity testing, or other pre-clinical testing, patient screening, patient enrollment, patient status, any communications with regulatory authorities, actions taken or modification in study design/conduct and summary of data collected on CRFs (Case Report Forms) either paper or electronic.

     “ Competitive Product ” means in a given jurisdiction, (i) a drug or biologic approved for marketing or in Phase III clinical development, (ii) a 510(k) device approved for marketing, or (iii) a PMA device approved for marketing or in pivotal study clinical development, other than an Eligible Product, that acts (or is being developed to act) for one or more target label indications substantially similar to one or more approved or target label indications for an Eligible Product.

     “ Confidential Information ” means all information and data provided by the parties to each other hereunder in written or other tangible medium and marked as confidential or, if disclosed orally or displayed, identified as confidential at the time of disclosure and confirmed in summary written form as confidential within thirty (30) days after disclosure, except any portion thereof which:

          (a) is known to the receiving Party, as evidenced by the receiving Party’s written records, before receipt thereof under this Agreement or any other agreement between the parties hereto providing for confidentiality;

          (b) is disclosed to the receiving Party by a third person who is under no obligation of confidentiality to the disclosing Party hereunder with respect to such information and who otherwise has a right to make such disclosure;

          (c) is or becomes generally known in the trade through no fault of the receiving Party;

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          (d) is independently developed by the receiving Party, as evidenced by the receiving Party’s written records, without access to such information; or

          (e) is required to be disclosed by applicable statute, rule or regulation of any court or regulatory authority with competent jurisdiction; provided that the Party whose information is to be disclosed shall be notified as soon as possible and the Party that is being required to disclose such information shall, if requested by the Party whose information is to be disclosed, use reasonable good faith efforts, at the expense of the requesting Party, to assist in seeking a protective order (or equivalent) with respect to such disclosure or otherwise take reasonable steps to avoid making such disclosure.

     “ Calendar Quarter ” means a calendar quarter or any part thereof.

     “ Contract Year ” means each successive period of four consecutive Calendar Quarters, with the first such Contract Year beginning on the first day of the first full Calendar Quarter that begins after the Effective Date.

     “ Diligence Date(s) ” means one or more of the date(s) set out in Section 4.1 as the context requires.

     “ Dollars ” or “ $ ” means the lawful currency of the United States of America.

     “ Eligible Product ” means any synthetic and/or biologic coronary artery bypass graft products or systems that release or elute paclitaxel and that incorporate both Licensed Technology and CABG Technology. For further clarification, “Eligible Product” does not include vascular grafts, vascular wraps, products used in bypass procedures involving vessels harvested from the patient, or products that fall within the scope of Angiotech’s 1997 license agreement with Boston Scientific Corporation and Cook Inc., a copy of which is attached hereto as Exhibit D .

     “ FDA ” means the United States Food and Drug Administration or any successor agency.

     “ First Commercial Sale ” means the date of the first sale made pursuant to Regulatory Approval, unless such Regulatory Approval is not required in such country, of an Eligible Product in a country in CABG’s normal course of business.

     “ IDE ” means an Investigational Device Exemption under 21 C.F.R. Part 812, or such other form of application or filing as may be required as a legal prerequisite to the commencement of human clinical testing of an Eligible Product in the United States.

     “ IND ” means an Investigational New Drug Application under 21 C.F.R. Part 312, or such other form of application or filing as may be required as a legal prerequisite to the commencement of human clinical testing of an Eligible Product in the United States.

     “ Improvements ” means all improvements, variations, updates, modifications, and enhancements made to the Licensed Patent Rights and/or Technical Information during the term of the Agreement.

     “ Investment Agreement ” has the meaning ascribed to it in Section 3.3.

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     “ License Fee ” has the meaning ascribed to it in Section 3.1.

     “ Licensed Field of Use ” means coronary artery bypass graft field.

     “ License Milestone Fee ” has the meaning ascribed to it in Section 3.2.

     “ Licensed Patent Rights ” means all of the existing patents and patent applications set out in Exhibit A , and all patent applications hereafter filed by Angiotech or its Affiliates, or that Angiotech or its Affiliates have rights to, that are related to the existing patents and patent applications set out in Exhibit A by way of any continuations, continuations-in-part, divisions, provisionals or any substitute applications, any patent issued with respect to any such patent applications, any reissue, re-examination, renewal or extension (including any supplemental patent certificate) of any such patent, and any confirmation patent or registration patent or patent of addition based on any such patent, and all foreign counterparts of any of the foregoing, in each case to the extent they relate directly to the claims in the parent application(s). “Licensed Patent Rights” includes “Core Patent Rights and “Focused Patent Rights”, as those terms are defined in Article 7.

     “ Licensed Technology ” means Licensed Patent Rights, Technical Information in existence as of the Effective Date, and any Improvements that CABG elects to have included in Licensed Technology pursuant to Section 2.4.

     “ Net Sales ” means, with respect to any Eligible Product, gross sales from the sale, rent, lease or otherwise making available of such Eligible Product to end-user third parties by or on behalf of CABG and its Affiliates and permitted sublicensees, less the following, to the extent the same are credited or deducted from the invoiced amount:

          (a) discounts, refunds, replacements, credits, rebates, allowances, adjustments, rejections, recalls and returns (in the amount of the credit provided to the customer), all as usual and customary in the business;

          (b) freight, postage, insurance, and other transportation charges;

          (c) sales and use taxes, customs duties, and any other governmental tax or charge (except income taxes) imposed on or at the time of the production, importation, use, or sale of Eligible Products (if separately invoiced), including any value added taxes (VAT), as adjusted for reasonable and customary rebates and refunds; and

          (d) transfers at or below cost by or on behalf of CABG of Eligible Products in connection with compassionate use, emergency use, bona fide research, treatment, Investigational New Drug Applications (INDs) or the like, authorized by the FDA or corresponding foreign agencies.

     “ NIH ” means the National Institutes of Health (U.S.), also known as the “PHS”.

     “ NIH Agreement ” means the license agreement dated as of November 19, 1997, between Angiotech and the NIH, as amended from time to time.

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     “ Patent Coverage ” means, for a particular Eligible Product in a given country, there is a Valid Claim that, but for the license granted to CABG under this Agreement, would be infringed by the manufacture, use or sale of such Eligible Product in such country or, where such Eligible Product is used or sold but not manufactured, in such country, by the manufacture of such Eligible Product in the country of manufacture.

     “ Royalty ” has the meaning ascribed to it in Section 3.4.

     “ Regulatory Approval ” means any approvals, licenses, registrations or authorizations of any federal, state, provincial or local regulatory agency, department, bureau or other governmental entity necessary for the manufacture and sale of a product in a regulatory jurisdiction.

     “ Senior Staff at Angiotech ” means individuals employed by Angiotech Parent who are at the level of Senior Vice President or above.

     “ Technical Information ” means all know-how, information, materials, formulations, trade secrets, data and other proprietary information in the possession of, developed by, or acquired by Angiotech or its Affiliates that are necessary or useful to practice the Licensed Patent Rights, but excluding the Licensed Patent Rights and Confidential Information of third parties that cannot be shared; provided however that any know-how, information, materials, formulations, trade secrets, data and other proprietary information disclosed by Angiotech to CABG shall continue to be Confidential Information of Angiotech.

     “ Third Party License ” means any license between Angiotech and a third party, including but not limited to NIH and UBC, as such license may be amended from time to time, that includes in its terms a grant of rights to Angiotech to use, and to sublicense the use of, technology that forms part of the Licensed Technology.

     “ Term ” means that this Agreement shall, subject to the early termination provisions specifically provided for herein, have a term from the Effective Date until the expiration of all of the United States or foreign patents included in the Licensed Technology, including any United States or foreign patents which become part of the Licensed Technology after the date of this Agreement as provided for herein.

     “ Territory ” means worldwide.

     “ Triggering Event ” has the meaning ascribed to it in Section 3.2.

     “ UBC ” means The University of British Columbia and its sublicensees and assigns.

     “ UBC Agreement ” means the license agreement executed as of November 7, 1997 between Angiotech and UBC, as amended from time to time.

     “ Valid Claim ” shall mean a claim in an issued patent or unexpired patent or patent application within the Licensed Patent Rights that, (a) has not been finally cancelled, withdrawn, abandoned or rejected by any administrative agency or other body of competent jurisdiction not subject to further appeal, (b) has not been revoked, held invalid, or declared unpatentable or unenforceable in a decision of a court or other body of competent jurisdiction that is

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unappealable or unappealed within the time allowed for appeal, and (c) has not been rendered unenforceable through disclaimer or otherwise.

     “ Warrant Agreement ” means the Warrant Agreement entered into by Angiodevice and CABG on March 22, 2005, a copy of which is attached hereto as Exhibit B.

2. License Grant.

     2.1 Grant . Subject to terms and conditions of this Agreement, including but not limited to the reservation of rights set forth below in Section 2.3, Angiotech hereby grants to CABG an exclusive right and license to use the Licensed Technology to make, have made, use, offer to sell, sell and import Eligible Products solely in the Licensed Field of Use in the Territory (the “CABG License”). The Parties agree that, for the avoidance of doubt, the granting of the CABG License in this Section 2.1, (a) does not give CABG any rights to make, have made, use, offer for sale, sell or import any component parts of the Eligible Products for use in any third party devices, and (b) Subject to Section 2.3, Angiotech has no rights to grant any further right or license in the Licensed Technology to any third party to make, have made, use, offer for sale, sell or import any Eligible Products in the Licensed Field of Use in the Territory, and does not itself have the right to make, have made, use, offer for sale, sell or import any Eligible Products in the Licensed Field of Use in the Territory. As soon as is reasonably practical after the execution of this Agreement, Angiotech shall disclose to CABG all Technical Information and shall make their employees available to CABG to answer any questions CABG may have regarding such Technical Information.

     2.2 Sublicensing . CABG shall not have any rights to sublicense its rights to the Licensed Technology obtained pursuant to Section 2.1, except to (a) its Affiliates with written notice to be provided to Angiotech at least thirty (30) days in advance of any such sublicense or, (b) as otherwise consented to by Angiotech, with such consent to be granted or withheld at the sole discretion of Angiotech. No granting of any sublicense by CABG shall relieve CABG from, or diminish any obligation of CABG, under this Agreement and CABG shall be responsible for the performance by its permitted sublicensees under such sublicense. Any sublicense granted by CABG under this Agreement shall be subject to the terms and conditions of this Agreement and any applicable Third Party License.

     2.3 Reservation of Rights . Angiotech reserves the following rights, among others, to the Licensed Technology; (a) any use or purpose outside the Licensed Field of Use, (b) research purposes in all fields and applications, including in the Licensed Field of Use, (c) to the extent reserved or specified under any Third Party Licenses, including but not limited to the reservation by UBC of rights to use the Licensed Technology for research, or (d) to the United States Government by applicable legislation and regulations.

     2.4 Angiotech Improvements . Angiotech hereby grants to CABG a right to elect to include in the Licensed Technology any Improvements made by or for Angiotech after the Effective Date, to the extent that such Improvements relate to the Eligible Product(s). Angiotech shall notify CABG in writing of such Improvements, providing a description of the Improvements and any financial and other obligations under any applicable Third Party License, and CABG may, by giving written notice to Angiotech within thirty (30) days following receipt

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of Angiotech’s written notice describing such Improvements, elect to include such Improvements as Licensed Technology under this Agreement; provided that :

          (a) CABG will be obligated to reimburse Angiotech for all of the costs and expenses of Angiotech under any Third Party License (if applicable, to be apportioned by Angiotech acting reasonably, among CABG, Angiotech and other sublicensees of such technology from Angiotech, notice of such apportionment to be given to CABG together with the basis upon which the apportionment determination was made) and CABG will be obligated to pay royalties on sales as required by any Third Party License in addition to the Royalties payable under this Agreement; and

          (b) CABG will be subject to all performance, minimum sales and other obligations set forth in the Third Party License (as apportioned by Angiotech, if applicable) relating to such Improvements.

In the event that CABG does not elect to include such Improvements as Licensed Technology within such thirty (30) day period, then CABG shall have no rights to such Improvements thereafter. If CABG does not elect to include such Improvement as Licensed Technology, Angiotech agrees it shall not grant any right or license to any third party to use the Improvement to make, have made, use, offer to sell, sell and import Eligible Products in the Licensed Field of Use in the Territory.

     2.5 Improvements Made by CABG . Any Improvements made by CABG to Licensed Patent Rights and Licensed Technology other than to Licensed Patent Rights or Technical Information licensed to Angiotech Parent under the UBC Agreement, shall be owned by CABG. CABG hereby grants to Angiotech a non-exclusive, perpetual, non-royalty bearing, worldwide right and license, excluding the Licensed Field of Use, to make, use, offer to sell, sell and import, with the right to sublicense all such rights, to any Improvements made by or for CABG. Any Improvements made by CABG to the Licensed Patent Rights or Technical Information licensed to Angiotech Parent under the UBC Agreement shall be owned by Angiotech and shall automatically be included in Licensed Technology. CABG hereby agrees that it shall promptly provide Angiotech with notice of any Improvements that could be covered under this Section 2.5 and that it will take all steps necessary to transfer ownership to Angiotech of Improvements relating to the UBC rights as described above.

     2.6 Stand-Still and Potential Expansion of Eligible Products Definition .

          (a) Angiotech hereby agrees that it will not develop, or enter into any agreement with a third party that would have the effect of permitting such third party to develop, a system or products to be used in conventional coronary artery bypass procedures involving vessels harvested from the patient, using all or any part of the Licensed Technology, for a period of twelve (12) months after the Effective Date. If, during that twelve (12) month period, CABG successfully completes, or has made material progress towards the completion of, feasibility studies on products for use in conventional coronary artery bypass procedures involving vessels

          harvested from the patient and the Parties have agreed on development milestone timelines for such product, Angiotech agrees that it will amend the definition of Eligible Products to read as follows:

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“ Eligible Product ” means any synthetic and/or biologic (including but not limited to vessels harvested from the patient) coronary artery bypass graft products or systems that release or elute paclitaxel and that incorporate both Licensed Technology and CABG Technology. For further clarification, “Eligible Product” does not include vascular grafts, vascular wraps or products that fall within the scope of Angiotech’s 1997 license agreement with Boston Scientific Corporation and Cook Inc., a copy of which is attached hereto as Exhibit D .

          (b) During the twelve (12) month period set out in (a) above, the Parties agree to negotiate in good faith to define what “successful completion of feasibility studies or material progress towards the completion of feasibility studies” will involve and to agree on development milestone timelines (similar to those provided for herein) for the product and, in the event that the Parties agree to a definition and to milestones, the Parties shall amend this Agreement to incorporate any such language and to give effect to the other provisions of this Section 2.6. In the event that (a) the parties have agreed on what “successful completion of feasibility studies or material progress towards the completion of feasibility studies” will involve and on development milestone timelines for such product, and CABG fails to “successfully complete feasibility studies, or to make material progress towards the completion of feasibility studies”, or (b) the Parties fail, after good faith negotiations, to agree on what “successful completion of feasibility studies or material progress towards the completion of feasibility studies” will involve and/or on development milestone timelines for such product, all within the twelve (12) month time period, then Angiotech will be free to develop, or enter into any agreement with a third party that would have the effect of permitting such third party to develop, a system or products to be used in conventional coronary artery bypass procedures involving vessels harvested from the patient, using all or any part of the Licensed Technology.

3. CABG License Fees & Royalties.

     3.1 License Maintenance Fees . In consideration for the license granted under Section 2.1 of this Agreement, CABG shall issue to Angiotech Angiodevice penny warrants for CABG voting common shares with a value equivalent to five million Dollars ($5,000,000) (“License Fee”) under the terms and conditions of the Warrant Agreement attached hereto as Exhibit B (the “Warrant Agreement”). The CABG voting common shares will be valued as provided for in the Warrant Agreement.

     3.2 CABG License Milestone Fees . As additional consideration for the license granted under Section 2.1 of this Agreement, CABG shall pay the following license milestone fees (each, a “License Milestone Fee”) to Angiotech Angiodevice within thirty (30) days of the occurrence of the applicable event triggering payment of the License Milestone Fee (each, a “Triggering Event”):

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          (a) Receipt by CABG of a CE Mark for an Eligible Product, *** Dollars ($***) shall be payable by CABG to Angiotech,

          (b) Receipt by CABG of approval of a Premarket Approval Application (“PMA”) from the FDA to sell an Eligible Product in the United States, *** Dollars ($***) shall be payable by CABG to Angiotech.

     3.3 Election to Pay in Common Stock . CABG shall have the option under Section 3.2(a) and (b) of electing to pay Angiotech in equivalent value of CABG common shares, under terms that are at least as favorable to Angiotech as provided for in the Investment Agreement entered into by Angiotech Parent and CABG on March 22, 2005 (“Investment Agreement”), rather than in cash. In the event that CABG wishes to elect to pay Angiotech in equivalent value of CABG voting common shares, written notice of such election shall be provided to Angiotech within ten (10) business days after the occurrence of the applicable Triggering Event. In the event that CABG makes an election as provided for in this Section 3.3, the voting common shares of CABG will be valued by taking an average of the closing price of the CABG common shares over the ten (10) trading days immediately subsequent to the date of the applicable Triggering Event. In the event that Angiotech has not received such notice of CABG’s election as provided for hereunder within ten (10) business days after the occurrence of the applicable Triggering Event, CABG shall pay Angiotech in cash as provided for in Section 3.2 (a) and/or (b) as applicable. CABG shall not be entitled to elect to pay Angiotech in CABG voting common shares if such payment would take Angiotech’s total ownership of CABG’s outstanding voting common shares above 20% without the express written approval of Angiotech’s Board of Directors.

     3.4 Royalty .

          (a) Royalty Where Patent Coverage Exists . As further additional consideration for the license granted under Section 2.1, within sixty (60) days after the end of each Calendar Quarter during the Term, CABG shall pay to Angiotech Angiodevice a Royalty of *** percent (***%) of all Net Sales in jurisdictions where Patent Coverage exists. In the event that CABG undergoes a Change of Control during the Term, CABG shall be required to pay a Royalty of *** percent (***%) of all Net Sales in jurisdictions where Patent Coverage exists.

          (b) Royalty Where No Patent Coverage Exists . As further additional consideration for the license granted under Section 2.1, within sixty (60) days after the end of each Calendar Quarter during the Term, CABG shall pay to Angiotech Angiodevice a Royalty of *** percent (***%) of all Net Sales in jurisdictions where no Patent Coverage exists in consideration for the license granted to CABG pursuant to Section 2.1 to the Technical Information within the Licensed Technology.

          (c) First Commercial Sale . A Royalty shall become due and payable to Angiotech Angiodevice by CABG in a country within sixty (60) days after the end of the

*** Confidential Treatment Required

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     Calendar Quarter within which the First Commercial Sale of an Eligible Product takes place in that country.

     3.5 Non-Arm’s Length Sales . On sales made in other than an arm’s length transaction, the value of the Net Sales attributed under this Section 3 to such a transaction shall be that which would have been received in an arm’s length transaction. Sales between and among CABG and its Affiliates that are intended for resale shall not be included in Net Sales until those Eligible Products are sold to a third party by the Affiliate.

     3.6 Sales of Eligible Products in Combination . In the event that CABG or any Affiliate sells an Eligible Product together with any other distinct product for a single price, such as in a kit, (collectively, the “Combination Product”) the Net Sales of the Eligible Product for the purposes of determining Royalties payable hereunder, shall be calculated by multiplying the total Net Sales of the Combination Product by the fraction A/B, where A is the price of the Eligible Product and B is the price of the Combination Product. The price of the Eligible Product and the Combination Product shall be CABG’s standard, published resale price for each product. If CABG does not have standard published resale prices for such products, the values shall be determined by the mutual written agreement between the Parties, acting reasonably, or, failing agreement, within thirty (30) days from written notice by one Party to the other, as determined by the dispute resolution steps described in Article 9.

     3.7 Reporting of CABG Royalties . CABG shall deliver to Angiotech Angiodevice, together with each Royalty payment due under Section 3.4 a written Royalty report setting forth for the applicable Calendar Quarter, at least the following information:

          (a) The date of the First Commercial Sale of an Eligible Product in each country in the Territory;

          (b) The number of Eligible Products sold, rented, leased or otherwise made available to third parties by or on behalf of CABG and its Affiliates, reported on a country-by-country basis (including a separate item for sales where there is Patent Coverage and where there is not);

          (c) Total gross sales amounts received for such Eligible Products by jurisdiction, including separate items for the value of any goods or services received in exchange for Eligible Products, any additional amounts to be added to Net Sales pursuant to Section 3.5;

          (d) Deductions applicable to determine Net Sales for such period by jurisdiction;

          (e) The amount of Royalties due or, if no Royalties are due, a statement that no Royalties are due; and

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          (f) Such other information as may reasonably be requested by Angiotech for purposes of determining the amount of Royalties owing by CABG hereunder and for Angiotech to fulfill its obligations under the Third Party Licenses.

Each Royalty report shall be certified as correct by the CFO of CABG and shall include a reasonably detailed listing of all deductions made to determine Net Sales and to calculate the Royalties payable hereunder.

     3.8 Payment of Maintenance License Fees, Milestone License Fees and Royalties . All Royalties due under this Article 3 are to be paid in Dollars. For conversion of foreign currency to Dollars, the conversion rate shall be the New York foreign exchange rate quoted in The Wall Street Journal on the day that the payment is due. All payments shall be made by wire transfer to Angiotech’s account in accordance with the following instructions (unless amended by written notice):

Any loss of exchange, value, taxes, or other expenses incurred in the transfer or conversion to Dollars shall be paid entirely by CABG. The Royalty report required by Section 3.7 shall accompany each such payment.

     3.9 Late Payments . Interest will be assessed by Angiotech Angiodevice on any overdue payments at a rate of one percent (1%) per month, compounded monthly beginning on the due date of the applicable payment (an effective annual rate of 12.68 % per annum), or at such lower maximum rate permitted by law. The payment of such interest will not prevent Angiotech from exercising any other rights it may have as a consequence of the lateness of any payment.

     3.10 Governmental Filings . Except for taxes based on Angiotech’s income, CABG will be solely responsible for determining if any tax on Net Sales and Royalty payments is owed to any governmental authority and shall pay any such tax and be responsible for all filings with appropriate governmental authorities related thereto.

     3.11 Audit Rights . CABG shall keep accurate records of all of its operations, and shall cause its Affiliates to keep accurate records of all of their respective operations, within the scope of this Agreement, for five (5) years following each reporting period (as described in Section 3.7), and Angiotech, at its expense, shall have the right to have a certified public accountant inspect such records, solely for the purpose of verifying the calculation and payment of the

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Royalties due hereunder, at the offices of CABG and its Affiliates, as applicable, no later than one (1) year after the end of the Calendar Quarter to which they pertain upon two (2) weeks prior written notice by Angiotech. The certified public accountant shall agree in writing with CABG to be bound by reasonable confidentiality provisions with respect to such information prior to receiving access to such information. In the event the examination shows an underpayment for any Contract Year, CABG shall pay to Angiotech the amounts underpaid, together with interest pursuant to Section 3.9. In the event the examination shows an overpayment for any Contract Year, CABG shall offset the amount overpaid, together with interest calculated at the rates set forth in Section 3.9, on the next Royalty payment made to Angiotech hereunder. Where the amount of any underpayment is more than three percent (3%) for any Contract Year, CABG shall also reimburse Angiotech for the actual out-of-pocket costs incurred by Angiotech to conduct such examination.

4. CABG Diligence Obligations.

     4.1 Diligence Obligations . CABG is required to meet the following obligations relating to the development and sale of Eligible Products during the Term of this Agreement:

          (a) In the United States;

     (i) A safety trial in humans must be initiated for an Eligible Product by January 1, 2007; and

     (ii) A submission for a product approval for an Eligible Product must be submitted to the FDA in the U.S. by January 1, 2009.

          (b) In Europe;

     (i) The first clinical trial in humans must be initiated for an Eligible Product by January 1, 2006;

     (ii) An application for a CE Mark for an Eligible Product must be submitted by January 1, 2008; and

     (iii) The first commercial sale of an Eligible Product must be made by January 1, 2009.

          (c) The dates provided for in Sections 4.1(a) and (b) above shall each be referred to as a “Diligence Date”.

     4.2 Failure to Meet Diligence Timelines . In the event that CABG has not fulfilled the required obligation by the applicable Diligence Date, then Angiotech shall be entitled, at its discretion, to treat any such failure as a material breach in accordance with Section 8.1(a) of this

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Agreement; provided, however, that the cure period shall be ninety (90) days rather than forty five (45) days.

     4.3 Progress Reports . CABG will provide written annual reports on development progress for Eligible Products or efforts to commercialize Eligible Products, as applicable, to be received by Angiotech within thirty (30) days after the end of each calendar year. These progress reports shall include, but not be limited to, progress on research and development (including detailed information and data, including any and all Clinical Data generated), plans for future clinical studies, status of current clinical studies, status of applications for regulatory approvals, manufacturing, marketing and sales efforts during the preceding calendar year, as well as plans for the present calendar year, including the schedule of all upcoming clinical development meetings. CABG agrees to provide any additional i