Exhibit 10.1

Execution Copy

CONSENT, WAIVER AND FIRST LOAN MODIFICATION AGREEMENT

This Consent, Waiver and First Loan Modification Agreement (this “Loan
Modification Agreement”) is entered into as of November 4, 2009, with an
effective date of September 30, 2009 (the “First Loan Modification Effective
Date”), by and between SILICON VALLEY BANK, a California corporation, with its
principal place of business at 3003 Tasman Drive, Santa Clara, California 95054
and with a loan production office located at 230 West Monroe, Suite 270,
Chicago, Illinois 60606 (“Bank”) and ATRICURE, INC., a Delaware corporation with
its chief executive office located at 6033 Schumacher Park Drive, West Chester,
Ohio 45069 (“Borrower”).

1.      DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other
indebtedness and obligations which may be owing by Borrower to Bank, Borrower is
indebted to Bank pursuant to a loan arrangement dated as of May 1, 2009,
evidenced by, among other documents, a certain Loan and Security Agreement dated
as of May 1, 2009, between Borrower and Bank (the “Existing Loan Agreement” and,
as amended hereby, the “Loan Agreement”). Capitalized terms used but not
otherwise defined herein shall have the same meaning as in the Loan Agreement.

2.      DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by
the Collateral as described in the Loan Agreement and in a certain Intellectual
Property Security Agreement, dated as of May 1, 2009, by and between Borrower
and Bank (the “IP Agreement”, and together with any other collateral security
granted to Bank, the “Security Documents”).

Hereinafter, the Security Documents, together with the Existing Loan Agreement
and all other documents evidencing or securing the Obligations shall be referred
to as the “Existing Loan Documents”.

3.      DESCRIPTION OF CHANGE IN TERMS.

 

  A. Modifications to Loan Agreement.

 

  1 The Loan Agreement shall be amended by deleting the following, appearing as
Section 6.8 thereof, in its entirety:

“6.8        Operating Accounts.

(a)        Beginning on the date which is 60 days after the Effective Date,
maintain all of its and all of its Subsidiaries’ operating and other deposit
accounts, securities accounts, and any other accounts at which Borrower or its
Subsidiaries maintain funds or investments (including without limitation any
Collateral Accounts), which are maintained within the United States (including
without limitation such accounts which are maintained with United States
branches of foreign institutions), with Bank and Bank’s Affiliates.
Notwithstanding the foregoing, Borrower may maintain until December 31, 2009 its
account number 0985930850 at National City Bank for purpose of continuing to
receive deposits of payment items sent to Borrower’s pre-existing lockbox,
provided that (i) National City Bank and Borrower shall, within 30 days after
the Effective Date, agree in writing that the proceeds in such account shall be
swept to Bank two times per week and provide Bank with a Control Agreement to
perfect Bank’s Lien against such account, and (ii) Borrower shall still be
required to comply with the terms of Section 6.3(c) hereof.

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(b)        Without limitation on subsection “a” above, (i) provide Bank five
(5) days prior written notice before establishing any Collateral Account at or
with any bank or financial institution other than Bank or Bank’s Affiliates, and
(ii) for each Collateral Account that Borrower at any time maintains within the
United States (including without limitation any such account which is maintained
with a United States branch of a foreign institution), Borrower shall cause the
applicable bank or financial institution (other than Bank) at or with which such
Collateral Account is maintained to execute and deliver a Control Agreement or
other appropriate instrument with respect to such Collateral Account to perfect
Bank’s Lien in such Collateral Account in accordance with the terms hereunder.
The provisions of “ii” of the previous sentence shall (x) not apply to deposit
accounts exclusively used for payroll, payroll taxes and other employee wage and
benefit payments to or for the benefit of Borrower’s employees and identified to
Bank by Borrower as such, (y) not apply to accounts which are being moved to
Bank or Bank’s Affiliates within the 60 day period provided for in
Section 6.8(a) above, and (z) shall be subject to the terms of Section 6.8(a)
above with respect to account number 0985930850 at National City Bank.”

and inserting in lieu thereof the following:

“6.8        Operating Accounts.

(a)        Maintain its and its Subsidiaries’, if any, depository, operating
accounts and securities accounts which are maintained in the United States
(including, without limitation, such accounts which are maintained with United
States branches of foreign financial institutions) with Bank and Bank’s
affiliates, with all excess funds maintained at or invested through Bank or an
affiliate of Bank. Notwithstanding the foregoing, Borrower may maintain, until
December 31, 2009, its account number 0985930850 at National City Bank for the
purpose of continuing to receive deposits of payment items sent to Borrower’s
pre-existing lockbox; provided, however, for the avoidance of doubt, Borrower
will be required to comply with the terms of Section 6.3(c) hereof.

(b)        Provide Bank five (5) days prior-written notice before establishing
any Collateral Account at or with any bank or financial institution other than
Bank or Bank’s Affiliates. For each Collateral Account that Borrower at any time
maintains in the United States (including, without limitation, such accounts
which are maintained with a United States branch of a foreign financial
institutions), Borrower shall cause the applicable bank or financial institution
(other than Bank) at or with which any Collateral Account is maintained to
execute and deliver a Control Agreement or other appropriate instrument with
respect to such Collateral Account to perfect Bank’s Lien in such Collateral
Account in accordance with the terms hereunder which Control Agreement may not
be terminated without the prior written consent of Bank. The provisions of the
previous sentence shall not apply to (i) deposit accounts exclusively used for
payroll, payroll taxes and other employee wage and benefit payments to or for
the benefit of Borrower’s employees and identified to Bank by Borrower as such
and (ii) Borrower’s account number 0985930850 at National City Bank; provided,
that such account number 0985930850 at National City Bank shall be terminated no
later than December 31, 2009, with the proceeds thereof transferred to an
account of Borrower maintained at Bank.”

 

  2 The Loan Agreement shall be amended by deleting the following, appearing as
Section 6.9(a) thereof, in its entirety:

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“(a)        Minimum Adjusted Quick Ratio. An Adjusted Quick Ratio of at least
1.2 to 1.0 provided that Borrower shall only be required to maintain such
minimum Adjusted Quick Ratios with respect to months during which there were any
Advances outstanding.”

and inserting in lieu thereof the following:

“(a)        Minimum Adjusted Quick Ratio. An Adjusted Quick Ratio of at least
1.2 to 1.0 at all times.”

 

  3 The Loan Agreement shall be amended by deleting the following, appearing as
Section 6.9(b) thereof, in its entirety:

“(b)        Maximum Capital Expenditures. Not contract for, purchase or make any
expenditure or commitments for capital expenditures in an aggregate amount in
excess of $1,750,000 for Borrower’s fiscal year ending December 31, 2009,
$3,400,000 for Borrower’s fiscal year ending December 31, 2010, and an amount
for each of Borrower’s fiscal years ending thereafter as Borrower and Bank shall
agree, provided that if Borrower and Bank fail to agree on the amount with
respect to any such year, such amount shall be deemed to be $3,400,000 for such
year.”

and inserting in lieu thereof the following:

“(b)        Maximum Capital Expenditures. Not contract for, purchase or make any
expenditure or commitments for Capital Expenditures in an aggregate amount in
excess of $1,750,000 for Borrower’s fiscal year ending December 31, 2009,
$3,400,000 for Borrower’s fiscal year ending December 31, 2010, and an amount
for each of Borrower’s fiscal years ending thereafter as Borrower and Bank shall
agree, provided that if Borrower and Bank fail to agree on the amount with
respect to any such year, such amount shall be deemed to be $3,400,000 for such
year; provided, further, that for each fiscal year, any Capital Expenditure
amount not used by the last day of the respective fiscal year shall be added to
the permitted Capital Expenditure amount for the next succeeding fiscal year.”

 

  4 The Loan Agreement shall be amended by deleting the following, appearing as
Section 6.9(d) thereof, in its entirety:

“(d)        Minimum EBITDA. Maintain, measured as of the end of each month, for
the three-month period ending as of the end of such month of at least the
following minimum amounts for the months ending during the following periods
(amounts in parentheses below represent negative numbers):

 

Period

   Minimum EBITDA  

Effective Date through May 31, 2009

   $ (2,280,000 ) 

June 1, 2009 through August 31, 2009

   $ (1,060,000 ) 

September 1, 2009 through November 30, 2009

   $ (100,000 ) 

December 1, 2009 through February 28, 2010

   $ 130,000   

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March 1, 2010 through May 31, 2010

   $ (1,600,000 ) 

June 1, 2010 through August 31, 2010

   $ (250,000 ) 

September 1, 2010 through November 30, 2010

   $ 50,000   

December 1, 2010 through February 28, 2011

   $ 60,000   

March 1, 2011 and thereafter

  an amount as Borrower and Bank shall agree”

and inserting in lieu thereof the following:

“(d)        Minimum EBITDA. Maintain, measured as of the end of each month, for
the trailing six-month period ending as of the end of such month, EBITDA of at
least the following minimum amounts for the months ending during the following
periods (amounts in parentheses below represent negative numbers):

 

Period

   Minimum EBITDA  

September 1, 2009 through and including December 31, 2009

   $ (500,000 ) 

January 1, 2010 through and including March 31, 2010

   $ (750,000 ) 

April 1, 2010 through and including June 30, 2010

   $ 1.00   

July 1, 2010 through and including December 31, 2010

   $ 250,000   

January 1, 2011 and thereafter

  An amount as Borrower and Bank may agree

; provided, however, that in the event Bank and Borrower have not agreed upon
such amounts for 2011 and thereafter on or before January 31, 2011, the minimum
EBITDA covenant shall revert to the amounts and thresholds for the corresponding
monthly periods in 2010, until such time as Bank and Borrower have agreed upon
such amounts.”

 

  5 The Loan Agreement shall be amended by deleting the following, appearing as
Section 6.12 thereof, in its entirety:

“6.12        Pledge of Stock of AtriCure Europe B.V. Within 60 days after the
Effective Date, Borrower shall cause Borrower and AtriCure Europe B.V. to enter
into a pledge agreement with Bank pledging to Bank shares relating to 65% of the
outstanding stock of AtriCure Europe B.V. and cause such agreement to be
notarized in accordance with the laws of the Netherlands.”

and inserting in lieu thereof the following:

“6.12        Pledge of Stock of AtriCure Europe B.V. At the request of Bank, in
its sole discretion, Borrower shall enter into a pledge agreement with Bank, in

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form and substance acceptable to Bank, in its sole discretion, pledging to Bank
shares evidencing ownership of 65% of the outstanding stock of AtriCure Europe
B.V. and cause such pledge agreement to be notarized and enforceable in
accordance with the laws of the Netherlands.”

 

  6 The Loan Agreement shall be amended by deleting the following, appearing as
Section 7.4 thereof, in its entirety:

“7.4        Indebtedness. Create, incur, assume, or be liable for (a) any
Indebtedness, or permit any Subsidiary to do so, other than Permitted
Indebtedness, or (b) any Indebtedness to any officer, director or shareholder of
Borrower unless such officer, director or shareholder subordinates such
Indebtedness to all of Borrower’s now or hereafter indebtedness to Bank
(pursuant to a subordination, intercreditor, or other similar agreement in form
and substance satisfactory to Bank entered into between Bank and such officer,
director or shareholder), on terms acceptable to Bank.”

 

  and inserting in lieu thereof the following:

“7.4        Indebtedness. Create, incur, assume, or be liable for (a) any
Indebtedness, or permit any Subsidiary to do so, other than Permitted
Indebtedness, or (b) any Indebtedness to any officer, director or shareholder of
Borrower unless such officer, director or shareholder subordinates such
Indebtedness to all of Borrower’s now or hereafter indebtedness to Bank
(pursuant to a subordination, intercreditor, or other similar agreement in form
and substance satisfactory to Bank entered into between Bank and such officer,
director or shareholder), on terms acceptable to Bank; provided, however, the
DOJ Obligations shall constitute Permitted Indebtedness hereunder, and the
regularly scheduled payment thereof shall be permitted, only to the extent such
DOJ Obligations remain unsecured and free and clear of any and all Liens or
encumbrances, whether consensual, contractual, involuntary, statutory or
otherwise, other than the right of set-off retained against any amounts due and
owing to the Borrower by the Department of Justice or other agencies or
instrumentalities of the United States of America.”

 

  7 The Loan Agreement shall be amended by inserting the following definitions
in their appropriate alphabetical order in Section 13.1 thereof:

““Capital Expenditures” means, with respect to any Person for any period, the
sum of (a) the aggregate of all expenditures by such Person and its Subsidiaries
during such period that are capital expenditures as determined in accordance
with GAAP, whether such expenditures are paid in cash or financed, plus (b) to
the extent not covered by clause (a), the aggregate of all expenditures by such
Person and its Subsidiaries during such period to acquire by purchase or
otherwise the business or capitalized assets or the capital stock of any other
Person.”

“DOJ Obligations” is unsecured payment obligations that may be incurred by
Borrower, which may become due and payable pursuant to a settlement agreement by
and between the Department of Justice and the Borrower, payable in accordance
with the scheduled terms of and in a maximum amount of principal and interest
not to exceed the amounts listed on Exhibit A provided by Bank to Borrower and
attached hereto.

“First Loan Modification Agreement” is that certain Consent, Waiver and First
Loan Modification Agreement, by and between Borrower and Bank,

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entered into as of November 4, 2009, effective as of the First Loan Modification
Effective Date.

 

  “First Loan Modification Effective Date” is defined in the preamble of the
First Loan Modification Agreement.”

 

  8 The Loan Agreement shall be amended by deleting the following definitions
from Section 13.1 thereof, each in its entirety:

““Adjusted Quick Ratio” is the ratio of (a) Borrower’s unrestricted cash and
unrestricted Cash Equivalents held with Bank and Bank’s Affiliates plus
Borrower’s Eligible Accounts, divided by (b) Borrower’s Current Liabilities
(including any amounts used for Cash Management Services and the face amount of
outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit)) minus the current portion of Deferred Revenue. (For purposes of
clarity, the parties acknowledge that Borrower’s cash or Cash Equivalents shall
not be considered to be restricted by reason of the fact that they are subject
to Bank’s Lien.)

“Current Liabilities” are all obligations and liabilities of Borrower to Bank
(regardless of when they mature), plus, without duplication, the aggregate
amount of Borrower’s Total Liabilities that mature within one (1) year.

“EBITDA” shall mean (a) Net Income, plus (b) Interest Expense, plus (c) to the
extent deducted in the calculation of Net Income, depreciation expense and
amortization expense, plus (d) to the extent deducted in the calculation of Net
Income, income tax expense, plus (e) to the extent deducted in the calculation
of Net Income, non-cash charges including non-cash equity compensation.

“Fixed Charge Coverage Ratio” means a ratio of (a) EBITDA, minus cash income
taxes paid, and minus unfinanced capital expenditures, to (b) current portion of
long term debt, plus cash Interest Expense paid.

and inserting in lieu thereof the following:

““Adjusted Quick Ratio” is the ratio of (a) Borrower’s unrestricted cash and
unrestricted Cash Equivalents held with Bank and Bank’s Affiliates plus
Borrower’s Eligible Accounts, divided by (b) Borrower’s Current Liabilities
(including any amounts used for Cash Management Services and the face amount of
outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit)) minus the current portion of Deferred Revenue. (For purposes of
clarity, the parties acknowledge that (i) Borrower’s cash or Cash Equivalents
shall not be considered to be restricted by reason of the fact that they are
subject to Bank’s Lien and (ii) any account receivable established with respect
to expected insurance proceeds in an amount of up to Two Million Dollars
($2,000,000) associated with the settlement of a class action lawsuit by
purchasers of Borrower’s common stock related to alleged securities law
violations shall not be considered an “Eligible Account”).

“Current Liabilities” are all obligations and liabilities of Borrower to Bank
(regardless of when they mature), plus, without duplication, the aggregate
amount of Borrower’s Total Liabilities that mature within one (1) year;
provided, however, Current Liabilities shall not include (a) principal or
interest on the DOJ Obligations to the extent such amounts would otherwise
constitute Current Liabilities or (b) up to Two Million Dollars ($2,000,000) of
liability

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associated with the settlement of a class action lawsuit by purchasers of
Borrower’s common stock related to alleged securities law violations, but only
to the extent that Borrower maintains an account receivable in respect of
insurance proceeds relating to such settlement in the same amount.

“EBITDA” shall mean (a) Net Income, plus (b) Interest Expense, plus (c) to the
extent deducted in the calculation of Net Income, depreciation expense and
amortization expense, plus (d) to the extent deducted in the calculation of Net
Income, income tax expense, plus (e) to the extent deducted in the calculation
of Net Income, non-cash charges including non-cash equity compensation plus
(f) to the extent deducted from the calculation of Net Income, principal and
interest on the DOJ Obligations.

“Fixed Charge Coverage Ratio” means a ratio of (a) EBITDA, minus cash income
taxes paid, and minus unfinanced Capital Expenditures, to (b) the sum of
(i) current portion of long term debt (other than DOJ Obligations, to the extent
included in the calculation of the current portion of long term debt), plus
(ii) cash Interest Expense paid (other than Interest Expense on the DOJ
Obligations, to the extent included in the calculation of Interest Expense).”

 

  9 The Loan Agreement shall be amended by deleting the following clauses
(k) and (l) from the definition of “Permitted Indebtedness” in Section 13.1
thereof, each in its entirety:

“(k)       Contingent Obligations of Borrower relating to, and not exceeding the
amount of, the Indebtedness of any Subsidiary allowed pursuant to clause
(i) above; and

(l)          extensions, refinancings, modifications, amendments and
restatements of any items of Permitted Indebtedness (a) and (b) above, provided
that the principal amount thereof is not increased or the terms thereof are not
modified to impose more burdensome terms upon Borrower or its Subsidiary, as the
case may be.”

and inserting in lieu thereof the following:

“(k)       Contingent Obligations of Borrower relating to, and not exceeding the
amount of, the Indebtedness of any Subsidiary allowed pursuant to clause
(i) above;

(l)          extensions, refinancings, modifications, amendments and
restatements of any items of Permitted Indebtedness (a) and (b) above, provided
that the principal amount thereof is not increased or the terms thereof are not
modified to impose more burdensome terms upon Borrower or its Subsidiary, as the
case may be; and

(m)        subject to the terms and conditions contained herein and in the First
Loan Modification Agreement, including, without limitation, Section 7.4 hereof,
the DOJ Settlement.”

 

  10 The Compliance Certificate appearing as Exhibit B to the Loan Agreement is
hereby replaced with the Compliance Certificate attached as Exhibit B hereto.

4.      ACKNOWLEDGMENT OF POTENTIAL DEFAULTS; CONDITIONAL WAIVER AND CONSENT.
Borrower acknowledges that its proposed settlement agreement with the Department
of Justice with respect to certain claims asserted to date by the Department of
Justice (the “DOJ Settlement”) relating to threatened legal

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action is subject to the reporting requirements of Section 6.2(k), and the
failure to promptly report such action could constitute a breach of
Section 6.2(k) and the incurrence of the DOJ Obligation may be in violation of
Section 7.4 of the Existing Loan Agreement (the “Anticipated Defaults”). Subject
to the terms and conditions described in Section 5 hereof and delivery of the
Conditions Precedent described in Section 7 hereof, Bank hereby consents to the
incurrence of the DOJ Obligations by Borrower pursuant to the DOJ Settlement,
and waives the Anticipated Defaults. Bank’s waiver shall only apply to the
Anticipated Defaults, and Borrower hereby acknowledges and agrees that except as
specifically provided herein, nothing in this Section or anywhere in this Loan
Modification Agreement shall be deemed or otherwise construed as a waiver by the
Bank of any of its rights and remedies pursuant to the Existing Loan Documents,
applicable law or otherwise, including, without limitation, any Event of Default
(other than the Anticipated Defaults), whether now existing or hereafter
occurring. Bank acknowledges that the incurrence of the DOJ Obligations does not
constitute a Material Adverse Change.

5.      DOJ SETTLEMENT. On or before February 28, 2010, or such later date as
Bank and Borrower may, in their good faith business judgment, mutually agree,
Borrower shall have entered into the DOJ Settlement. Borrower shall keep Bank
informed, no less than two times per month or more frequently as Bank shall
require, of the status of the negotiations with the Department of Justice with
respect to the definitive DOJ Settlement. Borrower shall ensure that such DOJ
Settlement provides, at a minimum, that, until the termination of the Loan
Agreement when all Obligations of Borrower to Bank are paid-in-full and Bank has
no obligation to make any further Credit Extensions to Borrower, the DOJ
Obligations shall (i) be payable in accordance with scheduled terms with a
present value of and in a maximum amount of principal and interest not to exceed
the present value and the amount provided by Borrower to Bank, listed on Exhibit
A attached hereto; and (ii) be unsecured and remain free and clear of any and
all Liens or encumbrances, whether consensual, involuntary, contractual,
statutory or otherwise, other than the right of set-off retained against any
amounts due and owing to the Borrower by the Department of Justice or other
agencies or instrumentalities of the United States of America. Borrower shall
deliver to Bank, as soon as available, an executed copy of such definitive DOJ
Settlement. Failure of Borrower to comply with any portion of this Section 5
shall result in an immediate Event of Default under the Loan Agreement, for
which there shall be no cure period available.

6.      FEES. Borrower shall reimburse Bank for all legal fees and expenses
incurred in connection with this amendment to the Existing Loan Documents.

7.      CONDITIONS PRECEDENT TO EFFECTIVENESS. Borrower hereby agrees that the
following documents shall be delivered to the Bank prior to the entering into
and the effectiveness of this Loan Modification Agreement, each in form and
substance satisfactory to the Bank (collectively, the “Conditions Precedent”):

 

  a) copies, certified by a duly authorized officer of the Borrower to be true
and complete as of the date hereof, of each of (i) the governing documents of
the Borrower as in effect on the date hereof (to the extent such governing
documents have been amended since the same were last delivered to Bank),
(ii) the resolutions of the Borrower authorizing the execution and delivery of
this Loan Modification Agreement, the other documents executed in connection
herewith and the Borrower’s performance of all of the transactions contemplated
hereby, and (iii) an incumbency certificate giving the name and bearing a
specimen signature of each individual who shall be so authorized;

 

  b) a certificate of the from the Secretary of State for the applicable
jurisdiction, as of a recent date as to the Borrower’s existence, good standing
and foreign qualification (where applicable);

 

  c) a duly executed copy of this Loan Modification Agreement, together with
updated Schedule 5.9 attached thereto;

 

  d) a legal opinion of counsel to the Borrower as to authority and
enforceability of the Loan Modification Agreement;

 

  e) a copy of Borrower’s 10-Q for the fiscal quarter ended September 30, 2009,
unless such report is timely filed with the SEC and is otherwise publicly
available; and

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  f) such other documents as the Bank may reasonably request.

8.      AUTHORIZATION TO FILE. Borrower hereby authorizes Bank to file UCC
financing statements without notice to Borrower, with all appropriate
jurisdictions, as Bank deems appropriate, in order to further perfect or protect
Bank’s interest in the Collateral, including a notice that any disposition of
the Collateral, by either the Borrower or any other Person, shall be deemed to
violate the rights of the Bank under the Code.

9.      CONSISTENT CHANGES. The Existing Loan Documents are hereby amended
wherever necessary to reflect the changes described above.

10.      RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and
reaffirms all terms and conditions of all security or other collateral granted
to the Bank, and confirms that the indebtedness secured thereby includes,
without limitation, the Obligations.

11.      NO DEFENSES OF BORROWER. Borrower hereby acknowledges and agrees that
Borrower has no offsets, defenses, claims, or counterclaims against Bank with
respect to the Obligations, or otherwise, and that if Borrower now has, or ever
did have, any offsets, defenses, claims, or counterclaims against Bank, whether
known or unknown, at law or in equity, all of them are hereby expressly WAIVED
and Borrower hereby RELEASES Bank from any liability thereunder.

12.      CONTINUING VALIDITY. Borrower understands and agrees that in modifying
the existing Obligations, Bank is relying upon Borrower’s representations,
warranties, and agreements, as set forth in the Existing Loan Documents. Except
as expressly modified pursuant to this Loan Modification Agreement, the terms of
the Existing Loan Documents remain unchanged and in full force and effect.
Bank’s agreement to modifications to the existing Obligations pursuant to this
Loan Modification Agreement in no way shall obligate Bank to make any future
modifications to the Obligations. Nothing in this Loan Modification Agreement
shall constitute a satisfaction of the Obligations. It is the intention of Bank
and Borrower to retain as liable parties all makers of Existing Loan Documents,
unless the party is expressly released by Bank in writing. No maker will be
released by virtue of this Loan Modification Agreement.

13.      RIGHT OF SET-OFF. In consideration of Bank’s agreement to enter into
this Loan Modification Agreement, Borrower hereby reaffirms and hereby grants to
Bank, a lien, security interest and right of set off as security for all
Obligations to Bank, whether now existing or hereafter arising upon and against
all deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of Bank or any entity under the
control of Silicon Valley Bank (including a Bank subsidiary) or in transit to
any of them. At any time after the occurrence and during the continuance of an
Event of Default, without demand or notice, Bank may set off the same or any
part thereof and apply the same to any liability or obligation of Borrower even
though unmatured and regardless of the adequacy of any other collateral securing
the loan. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES
WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO
EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

14.      CONFIDENTIALITY. Bank may use confidential information for the
development of databases, reporting purposes, and market analysis, so long as
such confidential information is aggregated and anonymized prior to distribution
unless otherwise expressly permitted by Borrower. The provisions of the
immediately preceding sentence shall survive the termination of the Loan
Agreement.

JURISDICTION/VENUE. California law governs the Loan Documents, including,
without limitation, this Loan Modification Agreement without regard to
principles of conflicts of law. Borrower and Bank each submit to the exclusive
jurisdiction of the State and Federal courts in Santa Clara County, California;
provided, however, that nothing in this Agreement shall be deemed to operate to
preclude Bank from bringing suit or taking other legal action in any other
jurisdiction to realize on the Collateral or any other security for the
Obligations, or to enforce a judgment or other court order in favor of Bank.
Borrower expressly submits and consents in advance to such jurisdiction in any
action or suit commenced in any such court, and Borrower hereby waives any
objection that it may have based upon lack of personal jurisdiction, improper
venue, or forum non conveniens and hereby consents to

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the granting of such legal or equitable relief as is deemed appropriate by such
court. Borrower hereby waives personal service of the summons, complaints, and
other process issued in such action or suit and agrees that service of such
summons, complaints, and other process may be made by registered or certified
mail addressed to Borrower at the address set forth in, or subsequently provided
by Borrower in accordance with, Section 10 of the Loan Agreement and that
service so made shall be deemed completed upon the earlier to occur of
Borrower’s actual receipt thereof or three (3) days after deposit in the U.S.
mails, proper postage prepaid.

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK EACH WAIVE
THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR
BASED UPON THIS LOAN MODIFICATION AGREEMENT, THE LOAN AGREEMENT, THE LOAN
DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF
DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES
TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS
COUNSEL.

WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY, if the above waiver of the right to a trial
by jury is not enforceable, the parties hereto agree that any and all disputes
or controversies of any nature between them arising at any time shall be decided
by a reference to a private judge, mutually selected by the parties (or, if they
cannot agree, by the Presiding Judge of the Santa Clara County, California
Superior Court) appointed in accordance with California Code of Civil Procedure
Section 638 (or pursuant to comparable provisions of federal law if the dispute
falls within the exclusive jurisdiction of the federal courts), sitting without
a jury, in Santa Clara County, California; and the parties hereby submit to the
jurisdiction of such court. The reference proceedings shall be conducted
pursuant to and in accordance with the provisions of California Code of Civil
Procedure §§ 638 through 645.1, inclusive. The private judge shall have the
power, among others, to grant provisional relief, including without limitation,
entering temporary restraining orders, issuing preliminary and permanent
injunctions and appointing receivers. All such proceedings shall be closed to
the public and confidential and all records relating thereto shall be
permanently sealed. If during the course of any dispute, a party desires to seek
provisional relief, but a judge has not been appointed at that point pursuant to
the judicial reference procedures, then such party may apply to the Santa Clara
County, California Superior Court for such relief. The proceeding before the
private judge shall be conducted in the same manner as it would be before a
court under the rules of evidence applicable to judicial proceedings. The
parties shall be entitled to discovery which shall be conducted in the same
manner as it would be before a court under the rules of discovery applicable to
judicial proceedings. The private judge shall oversee discovery and may enforce
all discovery rules and orders applicable to judicial proceedings in the same
manner as a trial court judge. The parties agree that the selected or appointed
private judge shall have the power to decide all issues in the action or
proceeding, whether of fact or of law, and shall report a statement of decision
thereon pursuant to California Code of Civil Procedure § 644(a). Nothing in this
paragraph shall limit the right of any party at any time to exercise self-help
remedies, foreclose against collateral, or obtain provisional remedies. The
private judge shall also determine all issues relating to the applicability,
interpretation, and enforceability of this paragraph.

15.      COUNTERSIGNATURE. This Loan Modification Agreement shall become
effective only when it shall have been executed by Borrower and Bank.

[The remainder of this page is intentionally left blank]

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This Loan Modification Agreement is executed as of the date first written above.

 

BORROWER:

   BANK:

ATRICURE, INC.

   SILICON VALLEY BANK

By:

  /S/    JULIE A. PITON          By:    /S/    ADAM M. GLICK         Name:  
Julie A. Piton    Name:    Adam M. Glick Title:  

Vice President, Finance and Administration and

Chief Financial Officer

   Title:    Relationship Manager

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EXHIBIT A

Proposed Payment Schedule

(see attached)

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EXHIBIT B

COMPLIANCE CERTIFICATE

 

TO:       SILICON VALLEY BANK

Date:                            

FROM: ATRICURE, INC.

The undersigned authorized officer of AtriCure, Inc. (“Borrower”) certifies that
under the terms and conditions of the Loan and Security Agreement between
Borrower and Bank (the “Agreement”):

(1) Borrower is in complete compliance for the period ending              with
all required covenants except as noted below; (2) there are no Events of
Default; (3) all representations and warranties in the Agreement are true and
correct in all material respects on this date except as noted below; provided,
however, that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by
materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date;
(4) Borrower, and each of its Subsidiaries, has timely filed all required tax
returns and reports, and Borrower has timely paid all foreign, federal, state
and local taxes, assessments, deposits and contributions owed by Borrower except
as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement;
and (5) no Liens have been levied or claims made against Borrower or any of its
Subsidiaries relating to unpaid employee payroll or benefits of which Borrower
has not previously provided written notification to Bank.

Attached are the required documents supporting the certification. The
undersigned certifies that these are prepared in accordance with GAAP
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes. The undersigned acknowledges that no
borrowings may be requested at any time or date of determination that Borrower
is not in compliance with any of the terms of the Agreement, and that compliance
is determined not just at the date this certificate is delivered. Capitalized
terms used but not otherwise defined herein shall have the meanings given them
in the Agreement.

Please indicate compliance status by circling Yes/No under “Complies” column.

 

Reporting Covenant

  

Required

  

Complies

Transaction Reports

   Non-Streamline: Weekly; Streamline: monthly within 15 days    Yes  No

Monthly payable & receivable items, check
registers, general ledger, & reconciliations

   Monthly within 15 days    Yes  No

Monthly financial statements with Compliance Certificate

   Monthly within 30 days    Yes  No

Annual financial statement (CPA Audited)

   FYE within 120 days    Yes  No

Annual budgets and projections

   Prior to FYE    Yes  No

 

Financial Covenants

  

Required

  

Actual

  

Complies

Maintain on a Monthly Basis:

        

Minimum Adjusted Quick Ratio (when required)

   1.2:1.0                  :1.0    Yes  No

Maximum Capital Expenditures

   *    $                 Yes  No

Minimum Fixed Charge Coverage Ratio (when required)

   1.5:1.0                  :1.0    Yes  No

Minimum EBITDA

   *    $                 Yes  No

 

*See Loan Agreement

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Performance Pricing  

  

Applies

Adjusted Quick Ratio:

     

greater or equal to 2 to 1

   First Tier Rate    Yes  No

greater or equal to 1.5 to 1, but less than 2 to 1

   Second Tier Rate    Yes  No

Less than 1.5 to 1, or Event of Default exists

   Regular Rate    Yes  No

 

Streamline Requirement  

    

Minimum Cash Condition

   See Loan Agreement    Yes  No

Borrower is party to, or bound by, the following material Restricted Licenses
that were not previously noted in the Perfection Certificate or a prior
Compliance Certificate:                                       
                     .

Borrower intends to register the following copyrights or mask works with the
United States Copyright Office that were not previously noted in a prior
Compliance Certificate:                                          
                   .

Borrower has (i) obtained the following Patents, registered Trademarks,
registered Copyrights, registered mask work, or any pending application for any
of the foregoing, whether as owner, licensee or otherwise, and (ii) applied for
the following Patents and the registration of the following Trademarks; in each
case, that were not previously noted in the Perfection Certificate or a prior
Compliance Certificate (to be reported on as part of the Compliance Certificate
due following the last month of each fiscal quarter):
                                                         .

The following financial covenant analyses and information set forth in Schedule
1 attached hereto are true and accurate as of the date of this Certificate.

The following are the exceptions with respect to the certification above: (If no
exceptions exist, state “No exceptions to note.”)

 

 

 

 

 

 

 

ATRICURE, INC.

   BANK USE ONLY

By:

  

 

   Received by:   

 

AUTHORIZED SIGNER

Name:

  

 

   Date:   

 

Title:

  

 

   Verified:   

 

AUTHORIZED SIGNER

      Date:   

 

      Compliance Status:    Yes        No

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Schedule 1 to Compliance Certificate

Financial Covenants of Borrower

In the event of a conflict between this Schedule and the Loan Agreement, the
terms of the Loan Agreement shall govern.

Dated:                             

 

I. Minimum Adjusted Quick Ratio (Section 6.9(a))

Required:             at least 1.20:1.00, at all times

Actual:

 

A.

   Borrower’s unrestricted cash (and Cash Equivalents) held with Bank and its
Affiliates    $                

B.

   Borrower’s Eligible Accounts (excluding any account receivable established
with respect to expected insurance proceeds in an amount of up to Two Million
Dollars ($2,000,000) associated with the settlement of a class action lawsuit)
   $                

C.

   Line A plus line B    $                

D.

   Borrower’s Current Liabilities (including any amounts used for Cash
Management Services and the face amount of outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit), but excluding the amount
of principal or interest on the DOJ Obligations and excluding up to Two Million
Dollars ($2,000,000) of liability associated with the settlement of a class
action lawsuit, but only to the extent that Borrower maintains an account
receivable in respect of insurance proceeds relating to such settlement in the
same amount)    $                

E.

   The current portion of Deferred Revenue   

F.

   Line D minus line E   

G.

   Adjusted Quick Ratio (line C divided by line F)            :        

Is line G greater than or equal to 1.20:1.00?

 

             No, not in compliance

                Yes, in compliance

 

II. Maximum Capital Expenditures (Section 6.9(b))

Required:             not to exceed per fiscal year the limits provided for in
Section 6.9(b) of the Loan Agreement

Actual:

 

A.

   Capital expenditure limit provided for in Section 6.9(b) (including any
prior-year rollover amount)    $                

B.

   Capital expenditures for fiscal year    $                

C.

   Line A minus line B    $                

Is line C greater than or equal to zero?

 

             No, not in compliance

                Yes, in compliance

--------------------------------------------------------------------------------

III. Minimum Fixed Charge Coverage Ratio (Section 6.9(c))

Required:              not less than 1.50:1.00 (required upon release of the
Term Loan-Related Reserve)

Actual:

 

A.

   EBITDA (as defined in the Loan Agreement)    $              

B.

   Cash income taxes paid    $              

C.

   Unfinanced Capital Expenditures    $              

D.

   Line A minus line B minus line C    $              

E.

   Current portion of long term debt, other than DOJ Obligations to the extent
included in calculation of the current portion of long term debt   
$              

F.

   Interest Expense, other than Interest Expense on the DOJ Obligations, to the
extent included in the calculation of Interest Expense    $              

G

   Line E plus line F    $              

H.

   Fixed Charge Coverage Ratio (line D divided by line G)    ___:___

Is line H greater than or equal to 1.50:1.00?

 

             No, not in compliance                 Yes, in compliance

--------------------------------------------------------------------------------

IV. Minimum EBITDA (Section 6.9(d))

Required:              equal to or greater than the amounts set forth in
Section 6.9(d) of the Loan Agreement

Actual:

 

A.

   EBITDA (as defined in the Loan Agreement)    $                

B.

   Minimum required per Section 6.9(d)    $                

C.

   Line A minus line B    $                

Is line C greater than or equal to zero?

 

             No, not in compliance

                Yes, in compliance

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SCHEDULE 5.9

Pension Plans

The Borrower has prepared and submitted to the internal revenue service a report
for the period January 31, 2002 through December 31, 2008 detailing certain
non-compliance under borrower’s 401(k) plan, including as a result of improper
calculations of compensation under the plan documents, errors in properly
calculating required “matching” contributions to be made by the borrower and
improper exclusion of certain employees from participation in the plan. The
Borrower has also submitted an amendment to the plan which is effective
January 1, 2009.