Exhibit10.3

             **This LOANAND SECURITY AGREEMENT** dated June 28, 2001, between SILICON VALLEYBANK ("Bank"), whose address is 3003 Tasman Drive, Santa Clara,California 95054 with a loan production office located at 5775 Wayzata Drive,Suite 700, Minneapolis, Minnesota  55416and ENDOCARDIAL SOLUTIONS, INC. ("Borrower"), whose address is 1350Energy Lane, Suite 110, St. Paul, Minnesota 55108 provides the terms on which Bank will lend to Borrower andBorrower will repay Bank. The parties agree as follows:

             **ACCOUNTING AND OTHER TERMS**

             Accountingterms not defined in this Agreement will be construed following GAAP.Calculations and determinations must be made following GAAP.  The term "financial statements"includes the notes and schedules.  Theterms "including" and "includes" always mean"including (or includes) without limitation," in this or any LoanDocument.

             **LOAN AND TERMS OF PAYMENT**

             **Promise to Pay.**

             Borrowerpromises to pay Bank the unpaid principal amount of all Credit Extensions andinterest on the unpaid principal amount of the Credit Extensions.

             **Revolving Advances.**

                           Bankwill make Advances not exceeding the lesser of (A) the Committed RevolvingLine or (B) the Borrowing Base. Amounts borrowed under this Section may be repaid and reborrowed duringthe term of this Agreement.

                           Toobtain an Advance, Borrower must notify Bank by facsimile or telephone by 12:00p.m. Pacific time on the Business Day the Advance is to be made.  Borrower must promptly confirm thenotification by delivering to Bank the Payment/Advance Form attached asExhibit B.  Bank will creditAdvances to Borrower's deposit account. Bank may make Advances under this Agreement based on instructions from aResponsible Officer or his or her designee or without instructions if theAdvances are necessary to meet Obligations which have become due.  Bank may rely on any telephone notice givenby a person whom Bank believes is a Responsible Officer or designee. Borrowerwill indemnify Bank for any loss Bank suffers due to such reliance.

                           TheCommitted Revolving Line terminates on the Revolving Maturity Date, when allAdvances are immediately payable.

             **Equipment Advances.**

                           ThroughMay 31, 2002 (the "Equipment Availability End Date"), Bank will makeadvances ("Equipment Advance" and, collectively, "EquipmentAdvances") not exceeding the Committed Equipment Line.  The Equipment Advances may only be used tofinance or refinance Equipment purchased on or after 90 days before the date ofeach Equipment Advance and may not exceed 100% of the equipment invoiceexcluding taxes, shipping, warranty charges, freight discounts and installationexpense.  Software licenses, leaseholdimprovements, or other soft costs may constitute up to 25% of the aggregateEquipment Advances.  The initialEquipment Advance, which shall take place at closing, shall allow for invoicesdated August 1, 2000 or later and shall not exceed $350,000 in the aggregate.
                           Interestaccrues from the date of each Equipment Advance at the rate in Section 2.4(a)and is payable monthly until the Equipment Availability End Date occurs.  Equipment Advances outstanding on August 30,2001 (the “1st Draw Period”) are payable in 33 equal monthlyinstallments of principal plus accrued interest, beginning on September 30,2001 and all payments of principal plus interest are due on the same day ofeach month thereafter.  The finalpayment for the 1st Draw Period shall be due on June 30, 2004 andincludes all outstanding principal plus accrued unpaid interest thereon.  Equipment Advances outstanding on November30, 2001 (the “2nd Draw Period”) are payable in 33 equal monthlyinstallments of principal plus interest beginning on December 30, 2001 and allsubsequent payments of principal plus interest are due on the same day of eachmonth thereafter.  The final payment forthe 2nd Draw Period shall be due on September 30, 2004 and includes alloutstanding principal plus accrued unpaid interest thereon.  Equipment Advances outstanding on February28, 2002 (the “3rd Draw Period”) are payable in 33 equal monthly installmentsof principal plus interest beginning on March 30, 2002 and all subsequentpayments of principal plus interest are due on the same day of each monththereafter.  The final payment for the 3rdDraw Period is due on December 30, 2004 and includes all outstanding principalplus all accrued unpaid interest thereon. Equipment Advances outstanding on the May 30, 2002 (the “4th DrawPeriod”) are payable in 33 equal monthly installments of principalplus interest beginning on June 30, 2002 and all subsequent payments ofprincipal plus interest are due on the same day of each month thereafter. Thefinal payment for the 4th Draw Period is due on March 30, 2005 and includes alloutstanding principal plus all accrued unpaid interest thereon.  Equipment Advances when repaid may not bereborrowed.

                           Toobtain an Equipment Advance, Borrower must notify Bank (the notice isirrevocable) by facsimile no later than 12:00 p.m. Pacific time 1 Business Daybefore the day on which the Equipment Advance is to be made.  The notice in the form of Exhibit B(Payment/Advance Form) must be signed by a Responsible Officer or designee andinclude a copy of the invoice, or invoices for the Equipment being financed.

             **Overadvances.**

             IfBorrower’s Obligations under Section 2.1.1 exceed the lesser of either(i) the Committed Revolving Line or (ii) the Borrowing Base, Borrowermust immediately pay Bank the excess.

             **InterestRate, Payments.**

             (a) Interest Rate.  (i)Advances accrue interest on the outstanding principal balance at a per annumrate of 1.50 percentage points above the Prime Rate; and (ii) EquipmentAdvances accrue interest on the outstanding principal balance at a per annumrate of 1.50 percentage points above the Prime Rate.  After an Event of Default, Obligations accrue interest at 5percent above the rate effective immediately before the Event of Default. Theinterest rate increases or decreases when the Prime Rate changes.  Interest is computed on a 360 day year forthe actual number of days elapsed.

             (b)Payments.  Interestdue on the Committed Revolving Line is payable on the 28th of each month.  Interest due on the Equipment Advances ispayable on the 28th of each month until the Equipment Availability End Dateoccurs.  Bank may debit any ofBorrower’s deposit accounts including Account Number ________________________for principal and interest payments owing or any amounts Borrower owesBank.  Bank will promptly notifyBorrower when it debits Borrower's accounts. These debits are not a set-off. Payments received after 12:00 noon Pacific time are considered receivedat the opening of business on the next Business Day.  When a payment is due on a day that is not a Business Day, thepayment is due the next Business Day and additional fees or interest accrue.  If Borrower elects to prepay an EquipmentAdvance, Borrower will pay a prepayment fee equal to 1% of the outstandingEquipment Advance.

             **Fees.**

             Borrowerwill pay:
                           FacilityFee.  A fully earned, non–refundableFacility Fee of 1% of the total Committed Revolving Line and the CommittedEquipment Line due on the Closing Date; and

                           BankExpenses. All Bank Expenses (including reasonable attorneys' fees andreasonable expenses) incurred through and after the date of this Agreement, arepayable when due.

             **CONDITIONS OF LOANS**

             **Conditions Precedent to Initial Credit Extension.**

             Bank’sobligation to make the initial Credit Extension is subject to the conditionprecedent that it receive the agreements, documents and fees it requires.

             **Conditions Precedent to all Credit Extensions.**

             Bank’sobligations to make each Credit Extension, including the initial CreditExtension, is subject to the following:

                           timelyreceipt of any Payment/Advance Form; and

                           therepresentations and warranties in Section 5 must be materially true on thedate of the Payment/Advance Form and on the effective date of each CreditExtension except for representations and warranties which are made as of aspecific date, which are no longer true solely as a result of the passage oftime, and for which exceptions thereto which have been disclosed in writing toBank and which have been approved in writing by Bank and no Event of Defaultmay have occurred and be continuing, or result from the Credit Extension. EachCredit Extension is Borrower’s representation and warranty on that date thatthe representations and warranties of Section 5 remain true.

             **CREATION OF SECURITY INTEREST**

             **Grant of Security Interest.**

             Borrowergrants Bank a continuing security interest in all presently existing and lateracquired Collateral to secure all Obligations and performance of each ofBorrower’s duties under the Loan Documents. Except for Permitted Liens, any security interest will be a firstpriority security interest in the Collateral. Bank may place a "hold" on any deposit account pledged asCollateral, after an Event of Default has occurred and is continuing.  If this Agreement is terminated, Bank’s lienand security interest in the Collateral will continue until Borrower fullysatisfies its Obligations.

**      Concerning Revised Article 9 of the Uniform CommercialCode.**

             Inanticipation of the possible application of the Revised Article 9 of theUniform Commercial Code in the form or substantially in the form approved bythe American Law Institute and National Conference Commissioners on UniformState Law and contained in the 1999 Official Text of the Uniform CommercialCode ("Revised Article 9"), it is agreed that applying the law of anyjurisdiction in which Revised Article 9 is in effect, the Collateral is allassets of the Borrower whether or not within the scope of Revised Article9.  The Collateral shall include,without limitation, the following categories of assets as defined in the Code:goods (including inventory, equipment and any accessions thereto), instruments(including promissory notes), documents, accounts (includinghealth-care-insurance receivables, and license fees), chattel paper (whethertangible or electronic), deposit accounts, letter-of-credit rights (whether ornot the letter of credit is evidenced by a writing), commercial tort claims,securities and all other investment property, general intangibles (includingpayment intangibles and software) supporting obligations and any and allproceeds of any thereof, wherever located, whether now owned or hereafter acquired.
             **REPRESENTATIONSAND WARRANTIES**

             Borrowerrepresents and warrants as follows:

             **Due Organization and Authorization.**

             Borrowerand each Subsidiary is duly existing and in good standing in its state offormation and qualified and licensed to do business in, and in good standingin, any state in which the conduct of its business or its ownership of propertyrequires that it be qualified, except where the failure to do so could notreasonably be expected to cause a Material Adverse Change.

             Theexecution, delivery and performance of the Loan Documents have been dulyauthorized, and do not conflict with Borrower's formation documents, norconstitute an event of default under any material agreement by which Borroweris bound.  Borrower is not in defaultunder any agreement to which or by which it is bound in which the default couldreasonably be expected to cause a Material Adverse Change.

             **Collateral.**

             Borrowerhas good title to the Collateral, free of Liens except Permitted Liens.  The Accounts are bona fide, existingobligations, and the service or property has been performed or delivered to theaccount debtor or its agent for immediate shipment to and unconditionalacceptance by the account debtor. Borrower has no notice of any actual or imminent Insolvency Proceedingof any account debtor whose accounts are an Eligible Account in any BorrowingBase Certificate.  All Inventory is inall material respects of good and marketable quality, free from materialdefects.

             **Litigation.**

             Exceptas shown in the Schedule, there are no actions or proceedings pending or, tothe knowledge of Borrower’s Responsible Officers and legal counsel, threatenedby or against Borrower or any Subsidiary in which a likely adverse decisioncould reasonably be expected to cause a Material Adverse Change.

             **No Material Adverse Change in Financial Statements.**

             Allconsolidated financial statements for Borrower, and any Subsidiary, deliveredto Bank fairly present in all material respects Borrower's consolidatedfinancial condition and Borrower's consolidated results of operations.  There has not been any materialdeterioration in Borrower’s consolidated financial condition since the date ofthe most recent financial statements submitted to Bank.

             **Solvency.**

             Thefair salable value of Borrower's assets (including goodwill minus dispositioncosts) exceeds the fair value of its liabilities; the Borrower is not left withunreasonably small capital after the transactions in this Agreement; andBorrower is able to pay its debts (including trade debts) as they mature.

             **Regulatory Compliance.**

             Borroweris not an "investment company" or a company "controlled" byan "investment company" under the Investment Company Act.  Borrower is not engaged as one of itsimportant activities in extending credit for margin stock (underRegulations T and U of the Federal Reserve Board of Governors).  Borrower has complied in all materialrespects with the Federal Fair Labor Standards Act.  Borrower has not violated any laws, ordinances or rules, theviolation of which could reasonably be expected to cause a Material AdverseChange.  None of Borrower's or anySubsidiary's properties or assets has been used by Borrower or any Subsidiaryor, to the best of Borrower's knowledge, by previous Persons, in disposing,producing, storing, treating, or transporting any hazardous substance otherthan legally.  Borrower and eachSubsidiary has timely filed all required tax returns and paid, or made adequateprovision to pay, all material taxes, except those being contested in good faithwith adequate reserves under GAAP. Borrower and each Subsidiary has obtained all consents, approvals andauthorizations of, made all declarations or filings with, and given all noticesto, all government authorities that are necessary to continue its business ascurrently conducted, except where the failure to do so could not reasonably beexpected to cause a Material Adverse Change.**             **Subsidiaries.**

             Borrowerdoes not own any stock, partnership interest or other equity securities exceptfor Permitted Investments.

             **Full Disclosure.**

             Nowritten representation, warranty or other statement of Borrower in anycertificate or written statement given to Bank (taken together with all suchwritten certificates and written statements to Bank) contains any untrue statementof a material fact or omits to state a material fact necessary to make thestatements contained in the certificates or statements not materiallymisleading.  It being recognized by Bankthat the projections and forecasts provided by Borrower in good faith and basedupon reasonable assumptions are not viewed as facts and that actual resultsduring the period or periods covered by such projections and forecasts maydiffer from the projected and forecasted results.

             **AFFIRMATIVECOVENANTS**

             Borrowerwill do all of the following for so long as Bank has an obligation to lend, orthere are outstanding Obligations other than contingent indemnificationobligations:

             **Government Compliance.**

             Borrowerwill maintain its and all Subsidiaries’ legal existence and good standing inits jurisdiction of formation and maintain qualification in each jurisdictionin which the failure to so qualify would reasonably be expected to cause amaterial adverse effect on Borrower’s business or operations.  Borrower will comply, and have eachSubsidiary comply, with all laws, ordinances and regulations to which it issubject, noncompliance with which could have a material adverse effect onBorrower’s business or operations or would reasonably be expected to cause aMaterial Adverse Change.

             **Financial Statements, Reports, Certificates.**

                           Borrowerwill deliver to Bank:  (i) as soon asavailable, but no later than 30 days after the last day of each month, acompany prepared consolidated balance sheet and income statement coveringBorrower's consolidated operations during the period certified by a ResponsibleOfficer and in a form acceptable to Bank; (ii) as soon as available, but nolater than 120 days after the last day of Borrower's fiscal year, auditedconsolidated financial statements prepared under GAAP, consistently applied,together with an unqualified opinion on the financial statements from anindependent certified public accounting firm reasonably acceptable to Bank;(iii) a prompt report of any legal actions pending or threatened againstBorrower or any Subsidiary that could result in damages or costs to Borrower orany Subsidiary of $100,000 or more; (iv) budgets, sales projections, operatingplans or other financial information Bank reasonably requests;

                           Within20 days after the last day of each month, Borrower will deliver to Bank aBorrowing Base Certificate signed by a Responsible Officer in the form ofExhibit C, with aged listings of accounts receivable and accounts payable.
                           Within30 days after the last day of each month, Borrower will deliver to Bank withthe monthly financial statements a Compliance Certificate signed by aResponsible Officer in the form of Exhibit D.

                           AllowBank to audit Borrower's Collateral at Borrower's expense.  Such audits will be conducted no more oftenthan every year unless an Event of Default has occurred and is continuing.

             **Inventory; Returns.**

             Borrowerwill keep all Inventory in good and marketable condition, free from materialdefects.  Returns and allowances betweenBorrower and its account debtors will follow Borrower’s customary practices asthey exist at execution of this Agreement. Borrower must promptly notify Bank of all returns, recoveries, disputesand claims that involve more than $50,000.

             **Taxes.**

             Borrowerand each Subsidiary has timely filed all required tax returns and paid, or madeadequate provision to pay, all material taxes except those being contested ingood faith with adequate reserves under GAAP.

             **Insurance.**

             Borrowerwill keep its business and the Collateral insured for risks and in amounts, asBank may reasonably request.  Insurancepolicies will be in a form, with companies, and in amounts that aresatisfactory to Bank in Bank’s reasonable discretion.  All property policies will have a lender's loss payable endorsementshowing Bank as an additional loss payee and all liability policies will showthe Bank as an additional insured and provide that the insurer must give Bankat least 20 days notice before canceling its policy.  At Bank's request, Borrower will deliver certified copies ofpolicies and evidence of all premium payments. Proceeds payable under any policy will, at Bank’s option, be payable toBank on account of the Obligations.

             **Primary Accounts.**

             Borrowerwill maintain its primary operating accounts with Bank.  Borrower shall maintain a portion of excesscash and investments balances with Bank.

             **Financial Covenants.**

             Borrowerwill maintain as of the last day of each month:

                           (i)          Adjusted **Quick Ratio**.  A ratio of Quick Assets to CurrentLiabilities (excluding Deferred Revenue) of at least 1.50 to 1.00.

                           (ii)         **Tangible Net Worth**.  A Tangible Net Worth of at least $7,500,000.

             **Further Assurances.**

             Borrowerwill execute any further instruments and take further action as Bank reasonablyrequests to perfect or continue Bank's security interest in the Collateral orto effect the purposes of this Agreement.
             **NEGATIVECOVENANTS**

             Borrowerwill not do any of the following without Bank’s prior written consent, whichwill not be unreasonably withheld, for so long as Bank has an obligation tolend and there are any outstanding Obligations other than contingentindemnification obligations:

             **Dispositions.**

             Convey,sell, lease, transfer or otherwise dispose of (collectively"Transfer"), or permit any of its Subsidiaries to Transfer, all orany part of its business or property, exceptfor Transfers(i) of Inventory in the ordinary course of business; (ii) ofnon-exclusive licenses and similar arrangements for the use of the property ofBorrower or its Subsidiaries in the ordinary course of business; or(iii) of worn-out or obsolete Equipment, and (iv) involving jointmarketing arrangements with suppliers (including joint ventures resultingtherefrom).  To the extent anyCollateral is sold or otherwise disposed of as permitted by this Section 7.1,such Collateral shall be sold or otherwise disposed of free and clear of theLiens created by this Agreement, and Bank shall take any actions reasonablyrequested by Borrower in order to effect the foregoing.

             **Changes inBusiness, Ownership, Management or Business Locations.**

             Engagein or permit any of its Subsidiaries to engage in any business other than thebusinesses currently engaged in by Borrower or reasonably related thereto orhave a material change in its ownership or management of greater than 25%(other than by the sale of Borrower’s equity securities in a public offering orto venture capital investors so long as Borrower identifies the venture capitalinvestors prior to the closing of the investment).  Borrower will not, without at least 30 days prior written notice,relocate its chief executive office or add any new offices or businesslocations in which Borrower maintains or stores over $5,000 in Borrower’sassets or property.

             **Mergers or Acquisitions.**

             Mergeor consolidate, or permit any of its Subsidiaries to merge or consolidate, withany other Person, or acquire, or permit any of its Subsidiaries to acquire, allor substantially all of the capital stock or property of another Person, exceptwhere (i) no Event of Default has occurred and is continuing or would resultfrom such action during the term of this Agreement and (ii) such transactionwould not result in a decrease of more than 25% of Tangible Net Worth.  A Subsidiary may merge or consolidate intoanother Subsidiary or into Borrower.

             **Indebtedness.**

             Create,incur, assume, or be liable for any Indebtedness, or permit any Subsidiary todo so, other than Permitted Indebtedness.

             **Encumbrance.**

             Create,incur, or allow any Lien on any of its property, or assign or convey any rightto receive income, including the sale of any Accounts, or permit any of itsSubsidiaries to do so, except for Permitted Liens, or permit any Collateral notto be subject to the first priority security interest granted here, subject toPermitted Liens.

             **Distributions; Investments.**

             Directlyor indirectly acquire or own any Person, or make any Investment in any Person,other than Permitted Investments, or permit any of its Subsidiaries to doso.  Pay any dividends or make anydistribution or payment or redeem, retire or purchase any capital stock, exceptfor the repurchases of stock from former employees and directors of Borrowerunder terms of applicable repurchase agreements in an aggregate amount not toexceed $500,000 in the aggregate of any fiscal year, provided that no Event ofDefault has occurred, is continuing or would exist after giving effect to therepurchase.**             **Transactions with Affiliates.**

             Directlyor indirectly enter into or permit to exist any material transaction with anyAffiliate of Borrower except for transactions that are in the ordinary courseof Borrower's business, upon fair and reasonable terms that are no lessfavorable to Borrower than would be obtained in an arm's length transactionwith a non­affiliated Person, provided that the foregoing restrictions shallnot apply to (i) advances to officers or employees of Borrower to the extentpermitted by Section 7.6, (ii) redemptions or repurchases of Borrower’s stockotherwise permitted under Section 7.6, and (iii) employement arrangements(including arrangements made with respect to bonuses) entered into the ordinarycourse of business with members of the Board of Directors and officers ofBorrower.

             **Subordinated Debt.**

             Makeor permit any payment on any Subordinated Debt, except under the terms of theSubordinated Debt, or amend any provision in any document relating to theSubordinated Debt without Bank's prior written consent.

             **Compliance.**

             Becomean "investment company" or a company controlled by an"investment company," under the Investment Company Act of 1940 orundertake as one of its important activities extending credit to purchase orcarry margin stock, or use the proceeds of any Credit Extension for thatpurpose; fail to meet the minimum funding requirements of ERISA, permit aReportable Event or Prohibited Transaction, as defined in ERISA, to occur; failto comply with the Federal Fair Labor Standards Act or violate any other law orregulation, if the violation could reasonably be expected to have a materialadverse effect on Borrower’s business or operations or would reasonably beexpected to cause a Material Adverse Change, or permit any of its Subsidiariesto do so.

             **EVENTS OF DEFAULT**

             Anyone of the following is an Event of Default:

             **Payment Default.**

             IfBorrower fails to pay any of the Obligations within 3 days after their duedate.  During the additional period thefailure to cure the default is not an Event of Default (but no Credit Extensionwill be made during the cure period);

             **Covenant Default.**

             IfBorrower does not perform any obligation in Section 6 or violates anycovenant in Section 7 or does not perform or observe any other materialterm, condition or covenant in this Agreement, any Loan Documents, or in anyagreement between Borrower and Bank and as to any default under a term,condition or covenant that can be cured, has not cured the default within 10days after it occurs, or if the default cannot be cured within 10 days orcannot be cured after Borrower’s attempts within 10 day period, and the defaultmay be cured within a reasonable time, then Borrower has an additional period(of not more than 30 days) to attempt to cure the default.  During the additional time, the failure tocure the default is not an Event of Default (but no Credit Extensions will bemade during the cure period);

             **Material Adverse Change.**

             Ifthere (i) occurs a material adverse change in the business, operations, orcondition (financial or otherwise) of the Borrower, or (ii) is a materialimpairment of the prospect of repayment of any portion of the Obligations; or(iii) is a material impairment of the value or priority of Bank’s securityinterests in the Collateral.**             **Attachment.**

             Ifany material portion of Borrower's assets is attached, seized, levied on, orcomes into possession of a trustee or receiver and the attachment, seizure orlevy is not removed in 10 days, or if Borrower is enjoined, restrained, orprevented by court order from conducting a material part of its business or ifa judgment or other claim becomes a Lien on a material portion of Borrower'sassets, or if a notice of lien, levy, or assessment is filed against any ofBorrower's assets by any government agency and not paid within 10 days afterBorrower receives notice.  These are notEvents of Default if stayed or if a bond is posted pending contest by Borrower(but no Credit Extensions will be made during the cure period);

             **Insolvency.**

             IfBorrower becomes insolvent or if Borrower begins an Insolvency Proceeding or anInsolvency Proceeding is begun against Borrower and not dismissed or stayedwithin 30 days (but no Credit Extensions will be made before any InsolvencyProceeding is dismissed);

             **Other Agreements.**

             Ifthere is a default in any agreement between Borrower and a third party thatgives the third party the right to accelerate any Indebtedness exceeding$250,000 or that could cause a Material Adverse Change;

             **Judgments.**

             Ifa money judgment(s) in the aggregate of at least $50,000 is rendered againstBorrower and is unsatisfied and unstayed for 10 days (but no Credit Extensionswill be made before the judgment is stayed or satisfied); or

             **Misrepresentations.**

             IfBorrower or any Person acting for Borrower makes any material misrepresentationor material misstatement now or later in any warranty or representation in thisAgreement or in any writing delivered to Bank or to induce Bank to enter thisAgreement or any Loan Document.

             **BANK'S RIGHTS AND REMEDIES**

             **Rights andRemedies.**

             Whenan Event of Default occurs and continues Bank may, using its best efforts toprovide written notice or demand with respect thereto, do any or all of thefollowing:

                           Declareall Obligations immediately due and payable (but if an Event of Defaultdescribed in Section 8.5 occurs all Obligations are immediately due andpayable without any action by Bank);

                           Stopadvancing money or extending credit for Borrower’s benefit under this Agreementor under any other agreement between Borrower and Bank;

                           Settleor adjust disputes and claims directly with account debtors for amounts, onterms and in any order that Bank considers advisable;
                           Makeany payments and do any acts it considers necessary or reasonable to protectits security interest in the Collateral. Borrower will assemble the Collateral if Bank requires and make itavailable as Bank designates.  Bank mayenter premises where the Collateral is located, take and maintain possession ofany part of the Collateral, and pay, purchase, contest, or compromise any Lienwhich appears to be prior or superior to its security interest and pay allexpenses incurred. Borrower grants Bank a license to enter and occupy any ofits premises, without charge, to exercise any of Bank's rights or remedies;

                           Applyto the Obligations any (i) balances and deposits of Borrower it holds, or(ii) any amount held by Bank owing to or for the credit or the account ofBorrower and promptly thereafter notify Borrower of such application;

                           Ship,reclaim, recover, store, finish, maintain, repair, prepare for sale, advertisefor sale, and sell the Collateral.; and

                           Disposeof the Collateral according to the Code.

             **Power of Attorney.**

             Effectiveonly when an Event of Default occurs and continues, Borrower irrevocablyappoints Bank as its lawful attorney to: (i) endorse Borrower's name on any checks or other forms of paymentor security; (ii) sign Borrower's name on any invoice or bill of ladingfor any Account or drafts against account debtors, (iii) make, settle, andadjust all claims under Borrower's insurance policies; (iv) settle andadjust disputes and claims about the Accounts directly with account debtors,for amounts and on terms Bank determines reasonable; and (v) transfer theCollateral into the name of Bank or a third party as the Code permits.  Bank may exercise the power of attorney tosign Borrower’s name on any documents necessary to perfect or continue theperfection of any security interest regardless of whether an Event of Defaulthas occurred.  Bank’s appointment asBorrower's attorney in fact, and all of Bank's rights and powers, coupled withan interest, are irrevocable until all Obligations have been fully repaid andperformed and Bank's obligation to provide Credit Extensions terminates.

             **Accounts Collection.**

             Whenan Event of Default occurs and continues, Bank may notify any Person owingBorrower money of Bank's security interest in the funds and verify the amountof the Account.  Borrower must collectall payments in trust for Bank and, if requested by Bank, immediately deliverthe payments to Bank in the form received from the account debtor, with properendorsements for deposit.

             **Bank Expenses.**

             IfBorrower fails to pay any amount or furnish any required proof of payment tothird persons, Bank may make all or part of the payment or obtain insurancepolicies required in Section 6.5, and take any action under the policiesBank deems prudent.  Any amounts paid byBank are Bank Expenses and immediately due and payable, bearing interest at thethen applicable rate and secured by the Collateral.  No payments by Bank are deemed an agreement to make similarpayments in the future or Bank’s waiver of any Event of Default.

             **Bank's Liability for Collateral.**

             IfBank complies with reasonable banking practices and Section 9-207 of the Code,it is not liable for: (a) the safekeeping of the Collateral; (b) any lossor damage to the Collateral; (c) any diminution in the value of the Collateral;or (d) any act or default of any carrier, warehouseman, bailee, or otherperson.  Borrower bears all risk ofloss, damage or destruction of the Collateral.             **Remedies Cumulative.**
             Bank'srights and remedies under this Agreement, the Loan Documents, and all otheragreements are cumulative.  Bank has allrights and remedies provided under the Code, by law, or in equity. Bank’sexercise of one right or remedy is not an election, and Bank’s waiver of anyEvent of Default is not a continuing waiver. Bank’s delay is not a waiver,election, or acquiescence. No waiver is effective unless signed by Bank andthen is only effective for the specific instance and purpose for which it wasgiven.

             **Demand Waiver.**

             Exceptas expressly set forth herein, Borrower waives demand, notice of default ordishonor, notice of payment and nonpayment, notice of any default, nonpaymentat maturity, release, compromise, settlement, extension, or renewal ofaccounts, documents, instruments, chattel paper, and guarantees held by Bank onwhich Borrower is liable.

             **NOTICES**

             Allnotices or demands by any party about this Agreement or any other relatedagreement must be in writing and be personally delivered or sent by an overnightdelivery service, by certified mail, postage prepaid, return receipt requested,or by telefacsimile to the addresses set forth at the beginning of thisAgreement.  A party may change itsnotice address by giving the other party written notice.

             **CHOICE OF LAW , VENUE AND JURY TRIAL WAIVER**

             Californialaw governs the Loan Documents without regard to principles of conflicts oflaw.  Borrower and Bank each submit tothe exclusive jurisdiction of the State and Federal courts in Santa ClaraCounty, California.

**BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OFANY CLAIM OR CAUSE OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANYCONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALLOTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTERINTO THIS AGREEMENT.  EACH PARTY HASREVIEWED THIS WAIVER WITH ITS COUNSEL.**

             **GENERAL PROVISIONS**

             **Successors and Assigns.**

             ThisAgreement binds and is for the benefit of the successors and permitted assignsof each party.  Borrower may not assignthis Agreement or any rights under it without Bank's prior written consentwhich may be granted or withheld in Bank's discretion.  Bank has the right, without the consent ofor notice to Borrower, to sell, transfer, negotiate, or grant participation inall or any part of, or any interest in, Bank's obligations, rights and benefitsunder this Agreement.

             **Indemnification.**

             Borrowerwill indemnify, defend and hold harmless Bank and its officers, employees, andagents against:  (a) all obligations,demands, claims, and liabilities asserted by any other party in connection withthe transactions contemplated by the Loan Documents; and (b) all losses or BankExpenses incurred, or paid by Bank from, following, or consequential totransactions between Bank and Borrower (including reasonable attorneys fees andexpenses), except for losses caused by Bank's gross negligence or willfulmisconduct.  A Person seeking tobe indemnified under this Section 12.2 shall notify Borrower of any eventrequiring indemnification within ten Business Days following such Person’sreceipt of notice of commencement of any action or proceeding, or such Person’sobtaining knowledge of the occurrence of any other event, giving rise to aclaim for indemnification hereunder.  Inany such proceeding, such Person shall keep the Borrower reasonably informed ofits defense and any settlement of any such action or proceeding andnegotiations to settle or otherwise resolve any claim, provided that suchPerson shall have the exclusive right to decide to accept or reject anysettlement offer.**             **Time of Essence.**

             Timeis of the essence for the performance of all obligations in this Agreement.

             **Severability of Provision.**

             Eachprovision of this Agreement is severable from every other provision indetermining the enforceability of any provision.

             **Amendments in Writing, Integration.**

             Allamendments to this Agreement must be in writing and signed by Borrower andBank.  This Agreement represents theentire agreement about this subject matter, and supersedes prior negotiationsor agreements.  All prior agreements,understandings, representations, warranties, and negotiations between theparties about the subject matter of this Agreement merge into this Agreementand the Loan Documents.

             **Counterparts.**

             ThisAgreement may be executed in any number of counterparts and by differentparties on separate counterparts, each of which, when executed and delivered,are an original, and all taken together, constitute one Agreement.

             **Survival.**

             Allcovenants, representations and warranties made in this Agreement continue infull force while any Obligations remain outstanding.  The obligations of Borrower in Section 12.2 to indemnifyBank will survive until all statutes of limitations for actions that may bebrought against Bank have run.

             **Confidentiality.**

             Inhandling any confidential information, Bank will exercise the same degree ofcare that it exercises for its own proprietary information, but disclosure ofinformation may be made (i) to Bank’s subsidiaries or affiliates inconnection with their business with Borrower, (ii) to prospectivetransferees or purchasers of any interest in the loans (provided, however, Bankshall use commercially reasonable efforts in obtaining such prospectivetransferee’s or purchaser’s written agreement of the terms of this provision),(iii) as required by law, regulation, subpoena, or other order,(iv) as required in connection with Bank’s examination or audit and(v) as Bank considers appropriate exercising remedies under thisAgreement.  Confidential informationdoes not include information that either: (a) is in the public domain or inBank’s possession when disclosed to Bank, or becomes part of the public domainafter disclosure to Bank; or (b) is disclosed to Bank by a third party, if Bankdoes not know that the third party is prohibited from disclosing theinformation.

             **Attorneys’ Fees, Costs and Expenses.**

             Inany action or proceeding between Borrower and Bank arising out of the LoanDocuments, the prevailing party will be entitled to recover its reasonableattorneys’ fees and other reasonable costs and expenses incurred, in additionto any other relief to which it may be entitled.**             **DEFINITIONS**

             **Definitions.**

             Inthis Agreement:

             "**Accounts**"are all existing and later arising accounts, contract rights, and otherobligations owed Borrower in connection with its sale or lease of goods(including licensing software and other technology) or provision of services,allcredit insurance, guaranties, other security and all merchandise returned orreclaimed by Borrower and Borrower's Books relating to any of the foregoing, assuch definition may be amended from time to time according to the Code.

             "**Advance**"or "**Advances**"is a loan advance (or advances) under the Committed Revolving Line.

             "**Affiliate**"of a Person is a Person that owns or controls directly or indirectly thePerson, any Person that controls or is controlled by or is under common controlwith the Person, and each of that Person's senior executive officers,directors, partners and, for any Person that is a limited liability company,that Person’s managers and members.

             "**BankExpenses**" are all audit fees and expenses and reasonable costsand expenses (including reasonable attorneys' fees and expenses) for preparing,negotiating, administering, defending and enforcing the Loan Documents(including appeals or Insolvency Proceedings).

             "**Borrower'sBooks**" are all Borrower's books and records including ledgers,records regarding Borrower's assets or liabilities, the Collateral, businessoperations or financial condition and all computer programs or discs or anyequipment containing the information.

             "**BorrowingBase**" is 75% of Eligible Accounts as determined by Bank fromBorrower’s most recent Borrowing Base Certificate; provided, however,that Bank may lower the percentage of the Borrowing Base after performing anaudit of Borrower’s Collateral.

             "**Business Day**"is any day that is not a Saturday, Sunday or a day on which the Bank is closed.

             "**Closing Date**"is the date of this Agreement.

             "**Code**"is the Uniform Commercial Code, as applicable.

             "**Collateral**"is the property described on Exhibit A.

             "**CommittedEquipment Line**” is a Credit Extension of up to $1,500,000.

             "**CommittedRevolving Line**" is an Advance of up to $2,000,000.

             "**ContingentObligation**" is, for any Person, any direct or indirectliability, contingent or not, of that Person for (i) any indebtedness,lease, dividend, letter of credit or other obligation of another such as anobligation directly or indirectly guaranteed, endorsed, co–made,discounted or sold with recourse by that Person, or for which that Person isdirectly or indirectly liable; (ii) any obligations for undrawn letters ofcredit for the account of that Person; and (iii) all obligations from anyinterest rate, currency or commodity swap agreement, interest rate cap orcollar agreement, or other agreement or arrangement designated to protect aPerson against fluctuation in interest rates, currency exchange rates orcommodity prices;  but "ContingentObligation" does not include endorsements in the ordinary course ofbusiness.  The amount of any ContingentObligation shall not, in any event, exceed the amount, which, in light of thefacts and circumstances, represents the amount that can reasonably be expectedto become an actual or matured liability in accordance with GAAP.
             "**CreditExtension**" is each Advance, Equipment Advance, or any otherextension of credit by Bank for Borrower’s benefit.

             "**CurrentLiabilities**" are the aggregate amount of Borrower’s Total Liabilitieswhich mature within one (1) year.

             **“DeferredRevenue”** is all amounts received in advance of performance and notyet recognized as revenue.

             "**EligibleAccounts**" are Accounts in the ordinary course of Borrower'sbusiness that meet all Borrower's representations and warranties inSection 5; but Bank may change eligibility standards by givingBorrower notice.  Unless Bank agreesotherwise in writing, Eligible Accounts will not include:

(a)         Accounts that the account debtor hasnot paid within 90 days of invoice date;

(b)        Accounts for an account debtor, 50% ormore of whose Accounts have not been paid within 90 days of invoice date;

(c)         Credit balances over 90 days frominvoice date;

(d)        Accounts for an account debtor,including Affiliates, whose total obligations to Borrower exceed 25% of allAccounts, for the amounts that exceed that percentage, unless the Bank approvesin writing except for those certain Accounts from, for which the percentage maybe 25%;

(e)         Accounts for which the account debtordoes not have its principal place of business in the United States, or Canadain which Bank has a first priority perfected security interest (or localequivalent thereto) to the Bank’s satisfaction;

(f)         Accounts for which the account debtoris a federal, state or local government entity or any department, agency, orinstrumentality;

(g)        Accounts for which Borrower owes theaccount debtor, but only up to the amount owed (sometimes called"contra" accounts, accounts payable, customer deposits or creditaccounts);

(h)        Accounts for demonstration orpromotional equipment, or in which goods are consigned, sales guaranteed, saleor return, sale on approval, bill and hold, or other terms if account debtor’spayment may be conditional;

(i)          Accounts for which the account debtoris Borrower’s Affiliate, officer, employee, or agent;

(j)          Accounts in which the account debtordisputes liability or makes any claim and Bank believes there may be a basisfor dispute (but only up to the disputed or claimed amount), or if the AccountDebtor is subject to an Insolvency Proceeding, or becomes insolvent, or goesout of business;

(k)         Accounts for which Bank reasonablydetermines collectionto be doubtful.

             "**Equipment**"is all present and future machinery, equipment, tenant improvements, furniture,fixtures, vehicles, tools, parts and attachments in which Borrower has anyinterest.

             "**EquipmentAdvance**" is defined in Section 2.1.2.
             "**EquipmentAvailability End Date**" is defined in Section 2.1.2.

             "**ERISA**"is the Employment Retirement Income Security Act of 1974, and its regulations.

             "**GAAP**"is generally accepted accounting principles.

             "**Indebtedness**”is (a) indebtedness for borrowed money or the deferred price of property orservices, such as reimbursement and other obligations for surety bonds andletters of credit, (b) obligations evidenced by notes, bonds, debentures orsimilar instruments, (c) capital lease obligations and (d) ContingentObligations.

             "**InsolvencyProceeding**" are proceedings by or against any Person under theUnited States Bankruptcy Code, or any other bankruptcy or insolvency law,including assignments for the benefit of creditors, compositions, extensionsgenerally with its creditors, or proceedings seeking reorganization,arrangement, or other relief.

             "**Inventory**"is present and future inventory in which Borrower has any interest, includingmerchandise, raw materials, parts, supplies, packing and shipping materials,work in process and finished products intended for sale or lease or to befurnished under a contract of service, of every kind and description now orlater owned by or in the custody or possession, actual or constructive, ofBorrower, including inventory temporarily out of its custody or possession orin transit and including returns on any accounts or other proceeds (includinginsurance proceeds) from the sale or disposition of any of the foregoing andany documents of title.

             "**Investment**"is any beneficial ownership of (including stock, partnership interest or othersecurities) any Person, or any loan, advance or capital contribution to anyPerson.

             "**Lien**"is a mortgage, lien, deed of trust, charge, pledge, security interest or otherencumbrance.

             "**LoanDocuments**" are, collectively, this Agreement, any note, ornotes or guaranties executed by Borrower or Guarantor, and any other present orfuture agreement between Borrower and/or for the benefit of Bank in connectionwith this Agreement, all as amended, extended or restated.

             "**MaterialAdverse Change**" is defined in Section 8.3.

             "**Obligations**"are debts, principal, interest, Bank Expenses and other amounts Borrower owesBank now or later, including cash management services, letters of credit andforeign exchange contracts, if any and including interest accruing afterInsolvency Proceedings begin and debts, liabilities, or obligations of Borrowerassigned to Bank.

             "**PermittedIndebtedness**" is:
(a)Borrower’s  indebtedness to Bank under this Agreement or any other Loan Document;  (b)Indebtedness  existing on the Closing Date and shown on the Schedule and any extensions or  renewals thereof;  (c)Subordinated  Debt;  (d)Indebtedness  to trade creditors incurred in the ordinary course of business; and  (e)Indebtedness  secured by Permitted Liens; and  (f)Other  indebtedness not to exceed $100,000 in the aggregate at any time.
 

 

             "**PermittedInvestments**” are:
(a)Investments  shown on the Schedule and existing on the Closing Date;  (b)(i)  marketable direct obligations issued or unconditionally guaranteed by the  United States or its agency or any State maturing within 1 year from its  acquisition, (ii) commercial paper maturing no more than 1 year after  its creation and having the highest rating from either Standard &  Poor's Corporation or Moody's Investors Service, Inc., and (iii) Bank’s  certificates of deposit issued maturing no more than 1 year after issue;  (c)Investments  consisting of the endorsement of negotiable instruments for deposits or  collection of similar transactions in the ordinary course of Borrower.  (d)Investments  accepted in connection with Transfers permitted by Section 7.1.  (e)Investments  of Subsidiaries in or to the other Subsidiaries or Borrower and Investments  by Borrower in Subsidiaries not to exceed $50,000 in the aggregate in any  fiscal year.  (f)Investments  consisting of (i) travel advances and employee relocation loans and other  employee loans and advances in the ordinary course of business, and (ii)  loans to employees, officers or directors relating to the purchase of equity  securities of Borrower or its Subsidiaries pursuant to the employee stock  purchase plans or agreements approved by Borrower’s Board of Directors.  (g)Investments  (including debt obligations) received in connection with the bankruptcy or  reorganization of customers or suppliers and in settlement of delinquent  obligations of, and other disputes with, customers or suppliers arising in  the ordinary course of business.  (h)Investments  consisting of notes receivable of, or prepaid royalties and other credit  extensions, to customers and suppliers who are not Affiliates, in the  ordinary course of business; provided that this paragraph (h) shall not apply  to Investments of Borrower in any Subsidiary;  (i)Joint  ventures or strategic alliances in the ordinary course of Borrower’s business  consisting of the non-exclusive licensing of technology, the development of  technology or the providing of technical support, provided that any cash  investments by Borrower do not exceed $250,000 in the aggregate in any fiscal  year; and
             "**PermittedLiens**" are:

             (a)         Liens existing on the Closing Date andshown on the Schedule or arising under this Agreement or other Loan Documents;

             (b)        Liens for taxes, fees, assessments orother government charges or levies, either not delinquent or being contested ingood faith and for which Borrower maintains adequate reserves on its Books, ifthey have no priority over any of Bank's security interests;

             (c)         Purchase money Liens (i) onEquipment acquired or held by Borrower or its Subsidiaries incurred forfinancing the acquisition of the Equipment, or (ii) existing on equipmentwhen acquired, if the Lien is confined to the property and improvementsand the proceeds of the equipment;
             (d)        Licenses or sublicenses granted in theordinary course of Borrower's business and any interest or title of a licensoror under any license or sublicense, if the licenses and sublicensespermit granting Bank a security interest;

             (e)Leases or subleases granted in the ordinary course of Borrower's business,including in connection with Borrower’s leased premises or leased property;

             (f)         Liens incurred in the extension,renewal or refinancing of the indebtedness secured by Liens described in (a)through (c), but any extension, renewal or replacement Lien must belimited to the property encumbered by the existing Lien and the principalamount of the indebtedness may not increase.

             (g)        Liens arising from judgments, decrees orattachments in circumstances not constituting and Event of Default underSection 8.4 or 8.7;

             (h)        Liens in favor of other financial institutionsarising in connection with Borrower’s deposit accounts held at suchinstitutions, provided that Bank has a perfected security interest in theamounts held in such deposit accounts; and

             (i)          Other Liens not described abovearising in the ordinary course of business and not having or not reasonablylikely to have a material adverse effect on Borrower and its Subsidiaries takenas a whole.

             "**Person**"is any individual, sole proprietorship, partnership, limited liability company,joint venture, company association, trust, unincorporated organization,association, corporation, institution, public benefit corporation, firm, jointstock company, estate, entity or government agency.

             "**Prime Rate**"is Bank’s most recently announced "prime rate," even if it is notBank’s lowest rate.

             "**Quick Assets**"is, on any date, the Borrower’s consolidated, unrestricted cash, cashequivalents, plus net billed trade accounts receivable determined according toGAAP.

             "**Responsible****Officer**"is each of the Chief Executive Officer, the President, the Chief FinancialOfficer and the Controller of Borrower.

             "**RevolvingMaturity Date**" is June 30, 2002.

             "**Schedule**"is any attached schedule of exceptions.

             "**SubordinatedDebt**" is debt incurred by Borrower subordinated to Borrower’sindebtedness owed to Bank and which is reflected in a written agreement in amanner and form acceptable to Bank and approved by Bank in writing.

             "**Subsidiary**"is for any Person, or any other business entity of which more than 50% of thevoting stock or other equity interests is owned or controlled, directly orindirectly, by the Person or one or more Affiliates of the Person.

             "**Tangible NetWorth**" is, on any date, the consolidated total assets ofBorrower and its Subsidiaries minus, (i) any amounts attributableto (a) goodwill, (b) intangible items such as unamortized debt discount andexpense, Patents, trade and service marks and names, Copyrights and researchand development expenses except prepaid expenses, and (c) reserves not alreadydeducted from assets, and (ii) Total Liabilities.

             "**Total****Liabilities**"is on any day, obligations that should, under GAAP, be classified asliabilities on Borrower’s consolidated balance sheet, including allIndebtedness, and current portion Subordinated Debt allowed to be paid, butexcluding all other Subordinated Debt.

BORROWER:

ENDOCARDIAL SOLUTIONS, INC.

By: /s/ Michael Fredrick

Title: Controller

BANK:

SILICON VALLEY BANK

By: /s/ Jay McNeil

Title: Vice President**********