Exhibit 10.1

SETTLEMENT AGREEMENT

I. PARTIES

This Settlement Agreement (Agreement) is entered into among the United States of
America, acting through the United States Department of Justice and on behalf of
the Office of Inspector General of the Department of Health and Human Services
(OIG-HHS) (collectively the “United States”); Atricure, Inc. (“Atricure”); and
                     (“Relator”) (hereafter referred to collectively as “the
Parties”), through their authorized representatives.

II. PREAMBLE

As a preamble to this Agreement, the Parties agree to the following:

A. Atricure is a Delaware corporation headquartered in West Chester, Ohio that
manufactures and distributes medical devices.

B. On August 21, 2007, Relator filed a qui tam action in the United States
District Court for the Southern District of Texas captioned United States ex
rel.                      v. Atricure, Inc., Civil Action No. 07-2705 (S.D.
Tex.) (hereinafter “the Civil Action”).

C. In the Civil Action, Relator alleges that Atricure submitted or caused to be
submitted false or fraudulent claims for payment to the Medicare Program
(“Medicare”), Title XVIII of the Social Security Act, 42 U.S.C. § § 1395-
1395hhh, by engaging in the following conduct (the “Covered Conduct”) from
September 2005 through October 2008:

(1) Relator alleges that Atricure caused false claims to be submitted by
improperly instructing hospitals and other healthcare providers to code
minimally invasive procedures using the Atricure Ablation System, the Atricure
Bipolar System, and the Atricure Transpolar System (collectively, “Ablation
Devices”) as “open” procedures when it knew such procedure codes were not
correct;

 

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(2) Relator alleges that Atricure promoted the sale and use of its Ablation
Devices for the treatment of atrial fibrillation when it knew that such
treatment was not medically necessary and knowingly caused false and/or
fraudulent claims to be submitted to Medicare for such treatment;

(3) Relator alleges that Atricure caused false claims to be submitted by
knowingly inducing hospitals to purchase its Ablation Devices by providing free
or discounted marketing services and loaning or selling generators and
disposable equipment to hospitals at less than fair market value; and

(4) Relator alleges that Atricure knowingly promoted the sale and use of its
Ablation Devices for the treatment of atrial fibrillation, a use that has not
been approved by the United States Food and Drug Administration, in violation of
the Food, Drug and Cosmetic Act, 21 U.S.C. §§ 331(a).

D. The United States contends that it has certain civil claims, as specified in
Paragraph 3, below, against Atricure for engaging in the Covered Conduct.

E. The United States also contends that it has certain administrative claims
against Atricure for the Covered Conduct under the provisions for permissive
exclusion from Medicare, Medicaid and other Federal health care programs (as
defined in 42 U.S.C. § 1320a-7b(f)) under 42 U.S.C. § 1320a-7(b), the provisions
for permissive exclusion from TRICARE under 32 C.F.R, § 199.9, and the
provisions for civil monetary penalties under 42 U.S.C. § 1320a-7a.

F. Atricure denies the contentions set forth in Paragraph C and the claims and
allegations made in the Civil Action. This Agreement represents a compromise to
avoid continued litigation and associated risks and is neither an admission of
liability or wrongdoing by Atricure nor a concession by the United States that
its claims are not well founded.

 

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G. To avoid the delay, uncertainty, inconvenience, and expense of protracted
litigation of the above claims, the Parties reach a full and final settlement
pursuant to the Terms and Conditions below.

III. TERMS AND CONDITIONS

NOW, THEREFORE, in reliance on the representations contained herein and in
consideration of the mutual promises, covenants, and obligations in this
Agreement, and for good and valuable consideration, receipt of which is hereby
acknowledged, the Parties agree as follows:

1. Atricure shall pay to the United States the sum of Three Million, Seven
Hundred and Sixty-Six Thousand, Six Hundred and Twenty Three dollars
($3,766,623) (the “Settlement Amount”). On the Effective Date of this Agreement,
this sum shall constitute a debt due and immediately owing to the United States.
Atricure further agrees to pay Relator $200,000 for expenses and attorneys’ fees
and costs (the “Relator’s Attorneys’ Fees Amount”). The foregoing payments shall
be made as follows:

a. Atricure shall pay to the United States the Settlement Amount plus interest
accrued thereon at the rate of 3.125% per annum, in accordance with the payment
schedule attached hereto as Exhibit A (“Payment Schedule”). Within 10 days after
the Effective Date of this Agreement, Atricure shall pay the United States the
initial fixed payment in the amount of $500,000 (“Initial Payment”) and
thereafter make principal payments with interest according to the schedule in
Exhibit A.

b. All payments set forth in Paragraph l(a) shall be made to the United States
by electronic funds transfer pursuant to written instructions to be provided by
the Civil Division of the Department of Justice, The entire balance of the
Settlement Amount, or any portion thereof,

 

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plus any interest accrued on the principal as of the date of any prepayment, may
be prepaid without penalty.

c. Contingent upon the United States receiving the Initial Payment from Atricure
and as soon as feasible after receipt, the United States agrees to pay $82,950
to Relator, Contingent upon the United States receiving each additional payment
from Atricure identified in the schedule in Exhibit A and as soon as feasible
after receipt of each payment, the United States agrees to make the
corresponding additional payment to the Relator according to the schedule in
Exhibit A.

d. In addition to the Settlement Amount, Atricure agrees to pay the Relator’s
Attorneys’ Fees Amount, in accordance with the payment schedule attached hereto
as Exhibit B (“Relator Attorneys’ Fees Payment Schedule”), in full satisfaction
of Relator’s right to fees and costs authorized by 31 U.S.C. § 3730(d). Within
five (5) business days after receiving notice that the Federal Civil Action has
been dismissed, Atricure shall pay $12,500 (“Initial Relator Attorneys’ Fees
Payment”)’ to Relator, by check payable to her counsel, and thereafter make
payments according to the schedule in Exhibit B.

2. If Atricure fails to make any of the payments described in Paragraph l(a)
above at the specified time, upon written notice to Atricure of this default,
Atricure shall have ten (10) calendar days to cure the default. If the default
is not cured within the ten-day period: (a) the remaining unpaid principal
portion of the Settlement Amount shall become accelerated and immediately due
and payable, with interest at a simple rate of 3.125% from the Effective Date of
this Agreement to the date of default, and at a simple rate of 12% per annum,
from the date of default until the date of payment; (b) the United States may
pursue any and all actions for collection as it may choose, including, without
limitation, filing an action for specific

 

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performance of this Agreement; and (c) the United States may offset the
remaining unpaid balance of the Settlement Amount (inclusive of interest) from
any amounts due and owing to Atricure by any department, agency, or agent of the
United States. Atricure agrees not to contest any collection action undertaken
by the United States pursuant to this Paragraph 2, and to pay the United States
all reasonable costs incurred in any such collection action, including
attorney’s fees and expenses.

3. Subject to the exceptions in Paragraph 6 (concerning excluded claims), below,
in consideration of the obligations of Atricure in this Agreement and the
Corporate Integrity Agreement (CIA) entered into between OIG-HHS and Atricure,
conditioned upon Atricure’s full payment of the Settlement Amount, and subject
to Paragraph 20, below (concerning bankruptcy proceedings commenced within 91
days of the Effective Date of this Agreement or any payment made under this
Agreement), the United States (on behalf of itself, its officers, agents,
agencies, and departments) agrees to release Atricure from any civil and
administrative monetary claims the United States has or may have for the Covered
Conduct under the False Claims Act, 31 U.S.C. §§ 3729-3733; the Food Drug and
Cosmetic Act, 21 U.S.C. §§ 331(a) and 332; the Civil Monetary Penalties Law, 42
U.S.C. § 1320a-7a; the Program Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-3812;
or the common law theories of payment by mistake, unjust enrichment, and fraud.
No individuals are released by this Agreement.

4, Subject to the exceptions in Paragraph 6 (concerning excluded claims), below,
in consideration of the obligations of Atricure in this Agreement, conditioned
upon Atricure’s full payment of the Settlement Amount, and subject to Paragraph
20, below (concerning bankruptcy proceedings commenced within 91 days of the
Effective Date of this Agreement or any payment made under this Agreement),
Relator, for herself and for her heirs, successors, attorneys, agents,

 

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and assigns, agrees to release Atricure from any civil monetary claim the United
States has or may have for the Covered Conduct under the False Claims Act, 31
U.S.C. §§ 3729-3733.

5. In consideration of the obligations of Atricure in this Agreement and the
Corporate Integrity Agreement (CIA), entered into between OIG-HHS and Atricure,
conditioned upon Atricure’s full payment of the Settlement Amount, and subject
to Paragraph 20, below (concerning bankruptcy proceedings commenced within 91
days of the Effective Date of this Agreement or any payment made under this
Agreement), the OIG-HHS agrees to release and refrain from instituting,
directing, or maintaining any administrative action seeking exclusion from
Medicare, Medicaid, and other Federal health care programs (as defined in 42
U.S.C. § 1320a-7b(f)) against Atricure under 42 U.S.C. § 1320a-7a (Civil
Monetary Penalties Law) or 42 U.S.C. § 1320a-7(b)(7) (permissive exclusion for
fraud, kickbacks, and other prohibited activities) for the Covered Conduct,
except as reserved in Paragraph 6 (concerning excluded claims), below, and as
reserved in this Paragraph. The OIG-HHS expressly reserves all rights to comply
with any statutory obligations to exclude Atricure from Medicare, Medicaid, and
other Federal health care programs under 42 U.S.C. § 1320a-7(a) (mandatory
exclusion) based upon the Covered Conduct. Nothing in this Paragraph precludes
the OIG-HHS from taking action against entities or persons, or for conduct and
practices, for which claims have been reserved in Paragraph 6, below.
Notwithstanding the foregoing, in the event of default as defined in Paragraph
2, above, OIG-HHS may, after providing written notice, exclude Atricure from
participating in all Federal health care programs until Atricure pays the
Settlement Amount and reasonable costs as set forth in Paragraph 1, above.
Atricure waives any further notice of the exclusion under 42 U.S.C. §
1320a-7(b)(7), and agrees not to contest such exclusion either administratively
or in any state or federal court. Reinstatement to program participation is not

 

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automatic. If at the end of the period of exclusion Atricure wishes to apply for
reinstatement, Atricure must submit a written request for reinstatement to
OIG-HHS in accordance with the provisions of 42 C.F.R. §§ 1001.3001-.3005.
Atricure will not be reinstated unless and until OIG-HHS approves such request
for reinstatement.

6. Notwithstanding any term of this Agreement, specifically reserved and
excluded from the scope and terms of this Agreement as to any entity or person
(including Atricure and Relator) are the following claims of the United States:
(a) any civil, criminal, or administrative liability arising under Title 26,
U.S. Code (Internal Revenue Code); (b) any criminal liability; (c) except as
expressly provided in this Agreement, any administrative liability, including
mandatory and/or permissive exclusion from Federal health care programs; (d) any
liability to the United States (or its agencies) for any conduct other than the
Covered Conduct; (e) any liability based upon such obligations as are created by
this Agreement; (f) any liability for express or implied warranty claims or
other claims for defective or deficient products or services, including quality
of goods and services; (g) any liability for failure to deliver goods or
services due; or (h) any liability of individuals, including directors, officers
and employees.

7. Relator and her heirs, successors, attorneys, agents, and assigns agree not
to object to this Agreement and agree and confirm that this Agreement is fair,
adequate, and reasonable under all the circumstances, pursuant to 31 U.S.C. §
3730(c)(2)(B) and, conditioned upon receipt of Relator’s share, Relator, for
herself individually, and for her heirs, successors, agents, and assigns, fully
and finally releases, waives, and forever discharges the United States, its
officers, agents, and employees, from any claims arising from or relating to 3l
U.S.C. § 3730; from any claims arising from the filing of the Civil Action; and
from any other claims for a share of the Settlement Amount; and in full
settlement of any claims Relator may have under this Agreement.

 

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This Agreement does not resolve or in any manner affect any claims the United
States has or may have against the Relator arising under Title 26, U.S. Code
(Internal Revenue Code), or any claims arising under this Agreement.

8. In consideration of the obligations of Atricure in this Agreement,
conditioned upon the full payment of the Settlement Amount and Relator’s Legal
Fees, Relator, for herself and for her heirs, successors, agents, and assigns,
agrees to generally release, acquit, waive, and forever discharge Atricure and
all the current and former officers and directors, employees, agents, attorneys,
owners and shareholders of Atricure from any and all rights, claims, expenses,
debts, liabilities, demands, obligations, costs, damages, injuries, actions and
causes of action of every nature, whether known or unknown, suspected or
unsuspected, in law or in equity from the beginning of the world to the
Effective Date of this Agreement including but not limited to those she advanced
or could have advanced in the Civil Action or otherwise under the False Claims
Act, 31 U.S.C. §§3729-3733, for expenses or attorneys’ fees and costs under 31
U.S.C. § 3730(h), or under 31 U.S.C. § 3730(h) for employment decisions by
Atricure and/or other statutory or common law doctrines of payment by mistake,
unjust enrichment, breach of contract, fraud, or the like. The foregoing
sentence is intended to be interpreted as a general release. Furthermore,
Relator covenants not to sue Atricure, its current and former officers and
directors, employees, agents, attorneys and shareholders of Atricure with
respect to any and all rights, claims, expenses, debts, liabilities, demands,
obligations, costs, damages, injuries, actions and causes of action of every
nature, whether known or unknown, suspected or unsuspected, in law or in equity,
including those, for attorneys’ fees and costs arising prior to the Effective
Date of this Agreement.

 

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9. Defendant and Relator release and forever discharge each other from any and
all claims, actions, causes of action, suits, debts dues, payments, demands,
rights, damages, losses, expenses, costs, fees, accounts, accountings,
obligations, arbitrations, judgments, executions, injunctions, awards, rights of
contribution, indemnification and apportionment, attorneys’ fees and any and all
other liabilities of any nature or amount, whether presently known or unknown,
asserted or unasserted, accrued or unaccrued, which Defendant or Relator ever
had or now have against each other from the beginning of time up to and
including the date of this Agreement. This general mutual release includes, but
is not limited to, all claims arising from or during Relator’s employment with
Defendant or relating in may way to Relator’s Civil Action

10. Atricure has provided sworn financial disclosure statements (Financial
Statements) to the United States and the United States has relied on the
accuracy and completeness of those Financial Statements in reaching this
Agreement, Atricure warrants that the Financial Statements are complete,
accurate, and current. If the United States learns of asset(s) in which Atricure
had an interest at the time of this Agreement that were not disclosed in the
Financial Statements, or if the United States learns of any misrepresentation by
Atricure on, or in connection with, the Financial Statements and if such
nondisclosure or misrepresentation changes the estimated net worth set forth in
the Financial Statements by $300,000 or more the United States may at its
option: (a) rescind this Agreement and file suit based on the Covered Conduct or
(b) let the Agreement stand and collect the full Settlement Amount plus one
hundred percent (100%) of the value of the net worth of Atricure previously
undisclosed. Atricure agrees not to contest any collection action undertaken by
the United States pursuant to this provision and immediately to pay the United
States all reasonable costs incurred in such an action, including attorney’s
fees and expenses.

 

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11. In the event that the United States, pursuant to Paragraph 10 (concerning
disclosure of assets), above, opts to rescind this Agreement, Atricure agrees
not to plead, argue, or otherwise raise any defenses under the theories of
statute of limitations, laches, estoppel, or similar theories, to any civil or
administrative claims that (a) are filed by the United States within 90 calendar
days of written notification to Atricure that this Agreement has been rescinded,
and (b) relate to the Covered Conduct, except to the extent these defenses were
available on August 21, 2007.

12. Atricure waives and shall not assert any defenses Atricure may have to any
criminal prosecution or administrative action relating to the Covered Conduct
that may be based in whole or in part on a contention that, under the Double
Jeopardy Clause in the Fifth Amendment of the Constitution, or under the
Excessive Fines Clause in the Eighth Amendment of the Constitution, this
Agreement bars a remedy sought in such criminal prosecution or administrative
action. Nothing in this paragraph or any other provision of this Agreement
constitutes an agreement by the United States concerning the characterization of
the Settlement Amount for purposes of the Internal Revenue laws, Title 26 of the
United States Code.

13. Atricure fully and finally releases the United States, its agencies,
employees, servants, and agents from any claims (including attorney’s fees,
costs, and expenses of every kind and however denominated) that Atricure has
asserted, could have asserted, or may assert in the future against the United
States, its agencies, employees, servants, and agents, related to the Covered
Conduct and the United States’ investigation and prosecution thereof.

14. The Settlement Amount shall not be decreased as a result of the denial of
claims for payment now being withheld from payment by any Medicare carrier or
intermediary or any state payer, related to the Covered Conduct; and Atricure
agrees not to resubmit to any Medicare

 

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carrier or intermediary or any state payer any previously denied claims related
to the Covered Conduct, and agrees not to appeal any such denials of claims.

15. Atricure agrees to the following:

a. Unallowable Costs Defined: that all costs (as defined in the Federal
Acquisition Regulation, 48 C.F.R. § 31.205-47; and in Titles XVIII and XIX of
the Social Security Act, 42 U.S.C. §§ 1395-1395hhh and 1396-1396v; and the
regulations and official program directives promulgated thereunder) incurred by
or on behalf of Atricure, its present or former officers, directors, employees,
shareholders, and agents in connection with the following shall be “Unallowable
Costs” on government contracts and under the Medicare, Medicaid, TRICARE,
Veterans Affairs (“VA”), or FEHBP programs:

(1) the matters covered by this Agreement;

(2) the United States’ audit(s) and civil investigation(s) of the matters
covered by this Agreement;

(3) Atricure’s investigation, defense, and corrective actions undertaken in
response to the United States’ audit(s) and civil investigation(s) in connection
with the matters covered by this Agreement (including attorney’s fees);

(4) the negotiation and performance of this Agreement;

(5) the payment Atricure makes to the United States pursuant to this Agreement
and any payments that Atricure may make to Relator, including costs and
attorneys fees; and

(6) the negotiation of and obligations undertaken pursuant to the CIA to:
(i) retain an independent review organization to perform reviews as described in
the CIA; and (ii) prepare and submit reports to OIG-HHS. However, nothing in
this paragraph 15(a)(6) that

 

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may apply to the obligations undertaken pursuant to the CIA affects the status
of costs that are not allowable based on any other authority applicable to
Atricure. (All costs described or set forth in this Paragraph 15(a) are
hereafter “Unallowable Costs,”)

b. Future Treatment of Unallowable Costs: These Unallowable Costs shall be
separately determined by Atricure, and Atricure shall not charge such
Unallowable Costs directly or indirectly to any contracts with the United States
or any State Medicaid program, or seek payment for such Unallowable Costs
through any cost report, cost statement, information statement, or payment
request submitted by Atricure or any of its subsidiaries or affiliates to the
Medicare, Medicaid, TRICARE, VA or FEHBP programs.

c. Treatment of Unallowable Costs Previously Submitted for Payment: Atricure
further agrees that within 90 days of the Effective Date of this Agreement it
shall identify to applicable Medicare and TRICARE fiscal intermediaries,
carriers, and/or contractors, and Medicaid and FEHBP fiscal agents, any
Unallowable Costs (as defined in this Paragraph) included in payments previously
sought from the United States, or any State Medicaid program, including, but not
limited to, payments sought in any cost reports, cost statements, information
reports, or payment requests already submitted by Atricure or any of its
subsidiaries or affiliates, and shall request, and agree, that such cost
reports, cost statements, information reports, or payment requests, even if
already settled, be adjusted to account for the effect of the inclusion of the
unallowable costs. Atricure agrees that the United States, at a minimum, shall
be entitled to recoup from Atricure any overpayment plus applicable interest and
penalties as a result of the inclusion of such Unallowable Costs on
previously-submitted cost reports, information reports, cost statements, or
requests for payment.

 

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Any payments due after the adjustments have been made shall be paid to the
United States pursuant to the direction of the Department of Justice and/or the
affected agencies. The United States reserves its rights to disagree with any
calculations submitted by Atricure or any of its subsidiaries or affiliates on
the effect of inclusion of Unallowable Costs (as defined in this Paragraph) on
Atricure or any of its subsidiaries or affiliates’ cost reports, cost
statements, or information reports.

d. Nothing in this Agreement shall constitute a waiver of the rights of the
United States to audit, examine; or re-examine Atricure’s books and records to
determine that no Unallowable Costs have been claimed in accordance with the
provisions of this Paragraph.

16. Atricure agrees to cooperate fully and truthfully with the United States’
investigation of individuals and entities not released in this Agreement. Upon
reasonable notice, Atricure shall encourage, and agrees not to impair, the
cooperation of its directors, officers, and employees, and shall use its best
efforts to make available, and encourage the cooperation of former directors,
officers, and employees for interviews and testimony, consistent with the rights
and privileges of such individuals. Atricure agrees to furnish to the United
States, upon request, complete and unredacted copies of all non-privileged
documents, reports, memoranda of interviews, and records in its possession,
custody, or control concerning any investigation of the Covered Conduct that it
has undertaken, or that has been performed by its counsel or other agent.

17. This Agreement is intended to be for the benefit of the Parties only. The
Parties do not release any claims against any other person or entity, except to
the extent provided for in Paragraphs 8 and 9 (Atricure and relator release
paragraphs), above, and Paragraph 18 (waiver for beneficiaries paragraph),
below.

 

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18. Atricure agrees that it waives and shall not seek payment for any of the
health care billings covered by this Agreement from any health care
beneficiaries or their parents, sponsors, legally responsible individuals, or
third party payors based upon the claims defined as Covered Conduct.

19. Atricure warrants that it has reviewed its financial situation and that it
currently is solvent within the meaning of 11 U.S.C. §§ 547(b)(3) and
548(a)(1)(B)(ii)(I), and shall remain solvent following payment to the United
States of the Initial Payment. In addition, by making each subsequent payment to
the United States identified in the Payment Schedule, Atricure warrants that it
shall remain solvent following that payment. Further, the Parties warrant that,
in evaluating whether to execute this Agreement, they (a) have intended that the
mutual promises, covenants, and obligations set forth constitute a
contemporaneous exchange for new value given to Atricure, within the meaning of
11 U.S.C. § 547(c)(1); and (b) conclude that these mutual promises, covenants,
and obligations do, in fact, constitute such a contemporaneous exchange.
Further, the Parties warrant that the mutual promises, covenants, and
obligations set forth herein are intended to and do, in fact, represent a
reasonably equivalent exchange of value that is not intended to hinder, delay,
or defraud any entity to which Atricure was or became indebted to on or after
the date of this transfer, within the meaning of 11 U.S.C. § 548(a)(1).

20. If within 91 days of the Effective Date of this Agreement or of any payment
made under this Agreement, Atricure commences, or a third party commences, any
case, proceeding, or other action under any law relating to bankruptcy,
insolvency, reorganization, or relief of debtors (a) seeking to have any order
for relief of Atricure’s debts, or seeking to adjudicate Atricure as bankrupt or
insolvent; or (b) seeking appointment of a receiver, trustee, custodian, or
other

 

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similar official for Atricure or for all or any substantial part of Atricure’s
assets, Atricure’s agrees as follows:

a. Atricure’s obligations under this Agreement may not be avoided pursuant to 11
U.S.C, § 547, and Atricure shall not argue or otherwise take the position in any
such case, proceeding, or action that: (i) Atricure’s obligations under this
Agreement may be avoided under 11 U.S.C. § 547; (ii) Atricure was insolvent at
the time this Agreement was entered into, or became insolvent as a result of the
payment made to the United States; or (iii) the mutual promises, covenants, and
obligations set forth in this Agreement do not constitute a contemporaneous
exchange for new value given to Atricure.

b. If Atricure’s obligations under this Agreement are avoided for any reason,
including, but not limited to, though the exercise of a trustee’s avoidance
powers under the Bankruptcy Code, the United States, at its sole option, may
rescind the releases in this Agreement and bring any civil and/or administrative
claim, action, or proceeding against Atricure for the claims that would
otherwise be covered by the releases provided in Paragraph 3, above, and
Atricure agrees that (i) any such claims, actions, or proceedings brought by the
United States (including any proceedings to exclude Atricure from participation
in Medicare, Medicaid, or other Federal health care programs) are not subject to
an “automatic stay” pursuant to 11 U.S.C. § 362(a) as a result of the action,
case, or proceedings described in the first clause of this Paragraph, and
Atricure shall not argue or otherwise contend that the United States’ claims,
actions, or proceedings are subject to an automatic stay; (ii) Atricure shall
not plead, argue, or otherwise raise any defenses under the theories of statute
of limitations, laches, estoppel, or similar theories, to any such civil or
administrative claims, actions, or proceeding that are brought by the United
States within 60 calendar days of written notification to Atricure that the

 

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releases have been rescinded pursuant to this Paragraph, except to the extent
such defenses were available on August 21, 2007; mad (iii) the United States has
a valid claim against Atricure in an amount not less than $11,857,980, and the
United States may pursue its claim in the case, action, or proceeding referenced
in the first clause of this Paragraph, as well as in any other case, action, or
proceeding.

c. Atricure acknowledges that its agreements in this Paragraph are provided in
exchange for valuable consideration provided in this Agreement.

21. Upon receipt of the Initial Payment described in Paragraph 1, above, the
United States shall file in the Civil Action a Notice of Intervention and the
United States and Relator shall file a Joint Stipulation of Dismissal with
prejudice of the Civil Action pursuant to the terms and conditions of this
Agreement.

22. Except as expressly provided to the contrary in this Agreement, each Party
shall bear its own legal and other costs incurred in connection with this
matter, including the preparation and performance of this Agreement.

23. Atricure represents that this Agreement is freely and voluntarily entered
into without any degree of duress or compulsion whatsoever.

24. Relator represents that this Agreement is freely and voluntarily entered
into without any degree of duress or compulsion whatsoever.

25. This Agreement is governed by the laws of the United States. The Parties
agree that the exclusive jurisdiction and venue for any dispute arising between
and among the Parties under this Agreement is the United States District Court
for the Southern District of Texas, except that disputes arising under the CIA
shall be resolved exclusively under the dispute resolution provisions in the
CIA.

 

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26. For purposes of construction, this Agreement shall be deemed to have been
drafted by all Parties to this Agreement and shall not, therefore, be construed
against any Party for that reason in any subsequent dispute.

27. This Agreement constitutes the complete agreement between the Parties. This
Agreement may not be amended except by written consent of the Parties.

28. The individuals signing this Agreement on behalf of Atricure represent and
warrant that they are authorized by Atricure to execute this Agreement. The
individual(s) signing this Agreement on behalf of Relator represent and warrant
that they are authorized by Relator to execute this Agreement. The United States
signatories represent that they are signing this Agreement in their official
capacities and that they are authorized to execute this Agreement.

29. This Agreement may be executed in counterparts, each of which constitutes an
original and all of which Constitute one and the same Agreement.

30. This Agreement is binding on Atricure’s successors, transferees, heirs, and
assigns.

31. This Agreement is binding on Relator’s successors, transferees, heirs, and
assigns.

32. All parties consent to the United States’ disclosure of this Agreement, and
information about this Agreement, to the public.

33. This Agreement is effective on the date of signature of the last signatory
to the Agreement (Effective Date of this Agreement). Facsimiles of signatures
shall constitute acceptable, binding signatures for purposes of this Agreement.

 

  -17-      

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  THE UNITED STATES OF AMERICA DATED: 2/2/10   BY:  

/s/ Edward C. Crooke

    EDWARD C. CROOKE    

Trial Attorney

Commercial Litigation Branch

Civil Division

United States Department of Justice

DATED: 1/29/10   BY:  

/s/ Michelle Zingaro

    MICHELLE ZINGARO    

Assistant United States Attorney

United States Attorney’s Office

        for the Southern District of Texas

DATED: 1/29/10   BY:  

/s/ Gregory E. Demske

    GREGORY E. DEMSKE    

Assistant Inspector General for Legal Affairs

Office of Counsel to the Inspector General

Office of Inspector General

United States Department of Health and Human Services

 

  -18-      

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

    ATRICURE, INC. DATED: 1/28/10   BY:  

/s/ David Drachman

    DAVID DRACHMAN    

President, Chief Executive Officer, and Director

Atricure, Inc.

DATED: 1/28/10   BY:  

/s/ Stuart Gerson

    STUART GERSON    

Epstein, Becket, & Green, LLP

Counsel to Atricum, Inc.

 

  -19-      

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

  RELATOR DATED:     2/1/2010   BY:  

/s/

        Relator DATED:     1/31/2010   BY:  

/s/ Mitchell Kreindler

    MITCHELL KREINDLER    

Kreindler & Associates

Counsel to Relator

DATED:     2/1/2010   BY:  

/s/ David W. Sanford

    DAVID W. SANFORD    

Sanford, Wittels & Heisler, LLP

Counsel to Relator

DATED:     2/1/2010   BY:  

/s/ Grant Morris

    GRANT MORRIS    

Law Offices of Grant Morris

Counsel to Relator

 

  -20-      

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EXHIBIT A

SETTLEMENT AND RELATOR SHARE PAYMENT SCHEDULE

(U.S. DOLLARS)

 

    Quarter    Payment    Relator’s
Share

At signing

   500,000    82,950

11/30/2010

   125,000    20,738

02/28/2011

   125,000    20,738

05/31/2011

   125,000    20,738

08/31/2011

   125,000    26,959

11/30/2011

   162,500    26,959

02/28/2012

   162,500    26,959

05/31/2012

   162,500    26,959

08/31/2012

   162,500    26,959

11/30/2012

   250,000    41,475

02/28/2013

   250,000    41,475

05/31/2013

   250,000    41,475

08/31/2013

   250,000    41,475

11/30/2013

   375,000    62,213

02/28/2014

   375,000    62,213

05/31/2014

   375,000    62,213

08/31/2014

   375,000    62,213

 

  -21-      

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EXHIBIT B

RELATOR ATTORNEYS’ FEES PAYMENT SCHEDULE

(U.S. DOLLARS)

 

                 Quarter    Payment

Initial Relator Attorneys’

          Fees Payment

   $ 12,500

06/30/10

   $ 12,500

09/30/10

   $ 12,500

12/31/10

   $ 12,500

03/31/11

   $ 12,500

06/30/11

   $ 12,500

09/30/11

   $ 12,500

12/31/11

   $ 12,500

03/31/12

   $ 12,500

06/30/12

   $ 12,500

09/30/12

   $ 12,500

12/31/12

   $ 12,500

03/31/13

   $ 12,500

06/30/13

   $ 12,500

09/30/13

   $ 12,500

12/31/13

   $ 12,500

 

  -22-