<PAGE>
Exhibit 10.43
MARKETING SERVICES AGREEMENT
This
Marketing Services Agreement (the "Agreement"), effective the 21st
day
of July, 2005 ("Effective Date"), is by and between Alabama Tissue
Center, Inc.,
also known as Regeneration Technologies, Inc. - Cardiovascular
("ATC"), an
Alabama corporation, having its principal place of business at 201
London
Parkway, Suite 300, Birmingham, Alabama, 35211 and ATS Medical,
Inc. ("ATS
MEDICAL"), a Minnesota corporation, having its principal place of
business at
3905 Annapolis Lane, Suite 105, Minneapolis, Minnesota 55447.
WHEREAS, ATC owns and uses valuable proprietary processes, methods,
trade
secrets and other intellectual properties related to human donor
tissue
processing, and distributes the resulting human cardiovascular
allograft tissue
("Cardiovascular Tissue") for use by physicians in implant
procedures around the
world;
WHEREAS, ATS MEDICAL wishes to provide marketing services for
ATC's
Cardiovascular Tissue for use by physicians for implant
procedures;
WHEREAS, ATC desires to appoint ATS MEDICAL, and ATS MEDICAL wishes
to
accept appointment, as the exclusive marketing services
representative of the
Cardiovascular Tissues within a defined territory and field of use
as set forth
herein;
NOW,
THEREFORE, in consideration of the premises and the mutual
covenants
contained herein, the receipt and sufficiency of which is hereby
acknowledged,
the parties agree as follows:
I.
DEFINITIONS
The following definitions shall apply throughout this
Agreement:
1.1
"Cardiovascular Tissue" shall mean allograft tissues for use in
the
Field of Use.
1
<PAGE>
1.2
"Field of Use" shall mean any cardiovascular procedures for
cardiovascular surgery or vascular surgical procedures.
1.3
"Territory" shall mean North America.
1.4
"Customers" shall mean patients, doctors, hospitals and clinics
within
the Territory and Field of Use.
1.5
"Processed Tissue" shall mean Cardiovascular Tissue processed by
ATC
for marketing by ATS MEDICAL to customers in the Territory and
Field of Use, as
identified on Exhibit "A" attached hereto.
1.6
"Fee" shall mean a reimbursement paid to ATC by the Customers
for
processing, research/development, manufacturing, quality assurance,
quality
control, storage, handling and maintenance, and transportation
charges of
Processed Tissue, as identified on Exhibit "A" attached hereto.
1.7
"Net Invoice Amount" shall mean the total Fee billed to Customers
per
shipment, less transportation charges and discount.
1.8
"Service Compensation" shall mean compensation to be paid to
ATS
MEDICAL by ATC, and computed as a percentage of the Net Invoice
Amount.
1.9
"Minimum Performance Level" shall mean total orders received by ATC
for
Processed Tissue that are at least ninety percent (90%) of the
aggregate
standard list price of Processed Tissue existing in ATC's inventory
on the last
day of the quarter.
1.10
"Quarterly Order Performance Level" shall mean the total orders
received from Customers for Processed Tissue to be computed on the
last day of
each quarterly period.
1.11
"ATC Intellectual Property" shall mean ATC's confidential and
proprietary process, methods, patents, pending patents, trademarks,
copyrights,
trade secrets, know-how,
2
<PAGE>
techniques, data, training materials, or other intellectual
properties
developed, used, or owned by ATC.
1.12
"Confidential Information" shall mean ATC Intellectual Property,
as
well know-how, trade secrets, and other proprietary or confidential
information
of either party, including, in the case of ATS MEDICAL, names of
physicians,
hospitals or other health care providers solicited by ATS MEDICAL
on behalf of
ATC, excluding information which:
(a) was already in the possession of receiving party prior to
its
receipt from the disclosing party (provided that the receiving
party is able to
provide the disclosing party with reasonable documentary proof
thereof);
(b) is or becomes part of the public domain by reason of acts
not
attributable to the receiving party;
(c) is or becomes available to receiving party from a source
other
than the disclosing party which source, to the best of receiving
party's
knowledge, has rightfully obtained such information and has no
obligation of
non-disclosure or confidentiality to the disclosure party with
respect thereto;
(d) is made available by the disclosing party to a third party
unaffiliated with the disclosing party on an unrestricted
basis;
(e) is independently developed by the receiving party
completely
without reference to any Confidential Information of the disclosing
party, as
evidenced by the receiving party's written records; or
(f) has been or must be publicly disclosed by reason of legal
accounting or regulatory requirements beyond the reasonable
control, and despite
the reasonable efforts of the receiving party.
3
<PAGE>
1.13
"FDA" shall mean the United Stated Department of Health and
Human
Services, Food and Drug Administration, or any successor
agency.
1.14
"NOTA" shall mean the National Organ Transplant Act (42 U.S.C.
Section
273 et seq.), as amended.
1.15
"AATB" shall mean American Association of Tissue Banks.
II. RIGHTS GRANTED
2.1
Subject to the terms and conditions contained herein, ATC hereby
grants
ATS MEDICAL the exclusive right to market the Processed Tissue
within the Field
of Use and Territory.
2.2
Nothing contained herein shall prevent or prohibit ATC or a third
party
designated by ATC from marketing or distributing the Processed
Tissue outside
the Territory or Field of Use.
2.3
The exclusive rights granted to ATS MEDICAL hereunder are
contingent
upon ATC receiving firm orders for Processed Tissue at or above the
Minimum
Performance Level to be measured on a quarterly basis throughout
the term of
this Agreement.
2.4
Notwithstanding the foregoing, and on the last day of any
quarterly
period during the term of this Agreement, if ATS MEDICAL's
Quarterly Order
Performance Level is below the Minimum Performance Level, ATC will
deliver a
letter of warning to ATS MEDICAL.
2.5
In the event ATS MEDICAL fails to fulfill orders at or above
the
Minimum Performance Level for two (2) consecutive quarters, ATC
will notify ATS
MEDICAL in writing of such failure. In such event, and if ATC
delivers all of
the foregoing notices to ATS MEDICAL, ATC shall have the right to
declare this
Agreement non-exclusive or terminate it in accordance with Section
VIII herein.
4
<PAGE>
2.6
From time to time and upon the request by ATC, the Parties shall
meet
to discuss the status of ATC's Inventory and mutually develop
strategies to
reduce such inventory.
2.7
ATC will provide ATS MEDICAL with data at the end of each month
reporting the level of inventory available for distribution for the
following
month. In the event any Processed Tissue remains in inventory for a
period of
six (6) months, ATS MEDICAL and ATC will mutually agree on reducing
the Fee for
those respective Processed Tissue or ATC may be allowed to use the
Processed
Tissue in research if applicable.
2.8
If ATC processes any new Cardiovascular Tissue after the date of
this
Agreement, it shall promptly notify ATS MEDICAL of such new
Cardiovascular
Tissue and the associated Fee. ATS MEDICAL will have the right to
add such new
Cardiovascular Tissue to this Agreement by giving written notice to
ATC within
thirty (30) days, and Exhibit A shall be appropriately amended.
2.9
If ATC decides to pursue the marketing of Processed Tissue,
whether
directly or through a third party, in any geographic area outside
of the
Territory, ATC shall promptly notify ATS MEDICAL of the geographic
area that ATC
intends to pursue. ATS MEDICAL will have the right to negotiate for
the addition
of such geographic area to this Agreement by giving written notice
to ATC within
thirty (30) days. ATC shall not grant any third party the right to
market
Processed Tissue outside the Territory without first complying with
this Section
2.9.
III. TERMS OF MARKETING SERVICES
3.1
Processed Tissue shall be marketed pursuant to this Agreement
and,
except as otherwise expressly agreed by ATC in advance and in
writing, this
Agreement shall control all aspects of the dealings between ATC and
ATS MEDICAL
with respect to the Processed Tissue.
3.2
ATC shall use commercially reasonably efforts to promptly ship
Processed Tissue
5
<PAGE>
directly to Customers as instructed by ATS MEDICAL, subject to the
availability
of Cardiovascular and Processed Tissue. All orders, however, are
subject to
acceptance by ATC, and ATC shall be under no obligation to accept
such order
received.
3.3
ATS MEDICAL will provide ATC with the name, address and contact
information for the customers to which ATC is directed to ship and
invoice
Processed Tissue.
3.4 ATC shall be responsible
for all billing and collections. ATC shall
promptly invoice the Customer for the applicable Fee of the
Processed Tissue
ordered, payable net thirty (30) days.
3.5
The Fee Schedule, attached hereto as Exhibit "A", is subject to
change
at the sole discretion of ATC, provided that ATC provides ATS
MEDICAL at least
thirty (30) days advance written notice.
3.6
ATS MEDICAL shall be paid a Service Compensation for all
Processed
Tissue orders invoiced by ATC prior to the termination date of this
Agreement,
in accordance with the terms hereunder.
3.6.1 Service Compensation shall be paid at the rate of *****
(*****%)
of the ***** during the initial year of this Agreement; *****
percent (*****%)
of the ***** during the second year; and ***** percent (*****%) of
the *****
during the third year and any subsequent renewal year of this
Agreement.
3.6.2 Service Compensation shall be paid monthly as set forth
in
Section III herein, but shall only be considered "earned" by ATS
MEDICAL upon
ATC's receipt of the Fee due for the respective Processed Tissue
Shipment.
----------
***** Denotes confidential information that has been omitted from
the exhibit
and
filed separately, accompanied by a confidential treatment request,
with
the
Securities and Exchange commission pursuant to Rule 24B-2 of
the
Securities Exchange Act of 1934.
6
<PAGE>
3.7
ATC shall provide a listing of all past due accounts to ATS MEDICAL
at
the end of each month, and ATS MEDICAL shall use reasonable efforts
to assist
ATC in the collection of all past due accounts.
3.7.1 In the event that ATC is unable to collect a Fee from a
Customer
within ninety (90) days of the respective Processed Tissue
shipment, ATC shall
deduct the amount of such Service Compensation originally paid to
ATS MEDICAL
from the Service Compensation next or currently due to ATS
MEDICAL.
3.7.2 In the event, and only in such event, that within twelve
(12)
months from the original ship date of such unpaid Processed Tissue
shipment, the
respective payment is collected, ATC shall reissue the respective
Service
Compensation to ATS MEDICAL.
3.8
ATC shall provide ATS MEDICAL with a monthly statement of ATS
MEDICAL
activity for all Processed Tissue shipped in the previous month,
within thirty
(30) days after the end of such month. Such statement shall include
an
itemization of shipments as to Processed Tissue type, quantities
shipped and
invoiced amounts, by Customer, and the calculated Service
Compensation due.
Payment for the Service Compensation reflected on such statement
shall be made
in conjunction with transmission of the statement.
3.9
The Parties shall conduct weekly status calls to coordinate and
maximize marketing and distribution of Processed Tissue.
IV. GENERAL DUTIES OF
ATC
4.1
For the term of this Agreement, ATC shall maintain any and all AATB
and
local, state, federal, and other governmental licenses,
certifications and
registrations required for processing and distributing the
Processed Tissue.
7
<PAGE>
4.2
ATC shall at all times conduct itself and all activities
performed
under this Agreement in full compliance with all applicable
federal, state and
local laws, rules, regulations and standards relating to the
processing and
marketing of human tissue including, as applicable, regulations
promulgated by
the FDA, NOTA, as amended from time to time, and AATB
standards.
4.3
ATC or an affiliate of ATC will obtain all required consents
from
tissue donors for Processed Tissue. ATC will ensure that donors
processed are
screened according to suitability criteria as set forth by the AATB
and
applicable Federal regulations. ATC will perform serologic,
bacterial and
microbiological testing on all donor tissue processed in accordance
with AATB
standards and/or applicable U.S. federal regulations.
4.4
ATC will cooperate with ATS MEDICAL in providing for effective
training
and education to ATS MEDICAL and Customers with respect to the
Processed Tissue
throughout the Territory and Field of Use.
V. GENERAL
DUTIES OF ATS MEDICAL
5.1
ATS MEDICAL shall use commercially reasonable efforts to
promote,
market and solicit orders for Processed Tissue to Customers in the
Territory in
the Field of Use including generation of necessary marketing
materials and
literature, with the content of such marketing materials and
literature being
subject to the final approval of ATC.
5.2
ATS MEDICAL will engage in marketing and distribution promotion
activities in which Processed Tissue shall be designated by their
correct names
and identified as Cardiovascular Tissue processed by ATC being
marketed by ATS
MEDICAL.
5.3
ATS MEDICAL will maintain a qualified marketing organization for
the
Processed Tissue in the Territory.
8
<PAGE>
5.4
For the term of this Agreement, ATS MEDICAL shall maintain any and
all
local, state, federal, and other governmental licenses,
certifications and
registrations required for marketing the Processed Tissue.
5.5
ATS MEDICAL shall at all times conduct itself and all
activities
performed under this Agreement in full compliance with all
applicable federal,
state and local laws, rules, regulations and standards relating to
the marketing
of Cardiovascular Tissue including those of any jurisdiction where
ATS MEDICAL
may be engaged in activities pursuant to this Agreement and
including, as
applicable, regulations promulgated by the FDA, as well as NOTA and
AATB
standards.
5.6
ATS MEDICAL personnel and representatives shall make
commercially
reasonable efforts to be adequately trained regarding the Processed
Tissue.
5.7
ATS MEDICAL agrees to participate in a training session at a
mutually
agreed location within one month of the Effective Date herein, or
at a mutually
agreed upon time. ATS MEDICAL and ATC will jointly agree on the
timing, location
and content of any supplemental training and education sessions
that may be
necessary or appropriate for ATS MEDICAL'S representatives related
to the
marketing of Processed Tissue.
5.8
ATS MEDICAL shall provide ATC with a written, non-binding,
annual
orders forecast, broken down by quarter, as requested by ATC.
5.9
ATS MEDICAL shall not alter, modify, create, publish or distribute
any
advertisement or literature of any kind which represents an ATC
Processed Tissue
or which bears the ATC logo without prior review and written
approval by the
General Manager of ATC or their designate. ATS MEDICAL agrees to
permit ATC to
review all of ATS MEDICAL's promotion and advertising material for
the Processed
Tissue prior to use. ATS MEDICAL shall
9
<PAGE>
not use and shall withdraw and retract any promotion or advertising
that ATC
finds unsuitable for any reason, or would otherwise cause a breach
of the terms
of this Agreement.
5.10
ATS MEDICAL will assist ATC in assessing customer requirements
for
Cardiovascular Tissue and in developing modifications and
improvements of the
Processed Tissue, with a view towards maximizing the potential
market for
Processed Tissue in the Territory. ATS MEDICAL will keep ATC fully
informed of
all governmental, commercial, and competitive activities or plans
that could or
do affect the market for Processed Tissue in the Territory.
5.11
ATS MEDICAL will refer to ATC for direct action with respect to
any
orders or inquiries for Processed Tissue from Customers outside of
the Territory
or which involve non-standard versions of the Processed Tissue.
5.12
ATS MEDICAL shall be responsible for all expenses incurred by it
in
connection with the implementation and performance of its duties
and obligations
under this Agreement including, but not limited to, costs and
expenses
associated with establishing and maintaining its sales and
marketing
organization and offices, advertising and promotion expenses, and
any and all
taxes, duties, tariffs or charges which may be imposed on ATS
MEDICAL.
5.13 ATS MEDICAL shall
diligently endeavor to train and educate Customers
with respect
