EX-10.1






EXHIBIT 10.1



Amendment

to

Loan and Security Agreement




THIS AMENDMENT to Loan and Security Agreement (this “Amendment”) is entered as of
February 29, 2008 by and between Silicon Valley Bank (“Bank”) and ATS Medical, Inc., a Minnesota
corporation (the “Borrower”) whose address is 3905 Annapolis Lane, Suite 105, Minneapolis,
Minnesota 55447.



Recitals




A. Bank and Borrower have entered into that certain Loan and Security Agreement dated as
of July 28, 2004 (as amended, modified, supplemented or restated from time to time, the “Loan
Agreement”).



B. Bank has extended credit to Borrower for the purposes permitted in the Loan Agreement.



C. Borrower has requested that Bank amend the Loan Agreement to (i) change the principal
repayment schedule for the Term Loan and (ii) make certain other revisions to the Loan Agreement,
as more fully set forth herein.



D. Bank has agreed to so amend certain provisions of the Loan Agreement, but only to the
extent, in accordance with the terms, subject to the conditions and in reliance upon the
representations and warranties set forth below.



Agreement




Now, Therefore, in consideration of the foregoing recitals and other good and
valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to
be legally bound, the parties hereto agree as follows:



1. Definitions. Capitalized terms used but not defined in this Amendment shall have the
meanings given to them in the Loan Agreement.



2. Amendments to Loan Agreement.



2.1 Repayment of Term Loan. Section 2.1.7(c) of the Loan Agreement reads as follows:



(c) Repayment. Borrower shall make monthly payments of
interest only on the Term Loan beginning on July 1, 2007 and
continuing on the first day of each successive month until
December 31, 2007. Beginning on January 1, 2008 and continuing
on the first day of each successive month thereafter, Borrower
shall make forty-two (42) monthly payments, each consisting of
(i) $204,761.90 principal plus (ii) interest. On the due-date
for such 42nd monthly payment (the “Term Loan Maturity Date”) any
remaining unpaid principal and accrued interest is due and
payable in full. The Term Loan may only be prepaid in accordance
with Sections 2.1.7(e) and 2.1.7(f).



Said Section 2.1.7(c) is amended to read as follows:



(c) Repayment. Borrower shall make monthly payments
of interest only on the Term Loan beginning on July 1, 2007 and
continuing on the first day of each successive month until March
31, 2008. Beginning on April 1, 2008 and continuing on the first
day of each successive month thereafter, Borrower shall make
thirty-nine (39) monthly payments, each consisting of (i)
$220,512.82 principal plus (ii) interest. On the due-date for
such 39th monthly payment (the “Term Loan Maturity Date”) any
remaining unpaid principal and accrued interest is due and
payable in full. The Term Loan may only be prepaid in accordance
with Sections 2.1.7(e) and 2.1.7(f).



2.2 Collateral Audits. Section 6.2(d) of the Loan Agreement reads as follows:



(d) Allow Bank to audit Borrower’s Collateral at Borrower’s
expense. Such audits may be conducted (i) within 90 days of the
Closing Date, (ii) once every twelve months thereafter, and
(iii) at such more frequent times as the Bank may from time to
time determine.



Said Section 6.2(d) is amended to read as follows:



(d) Allow Bank to audit Borrower’s Collateral at Borrower’s
expense. Such audits may be conducted (i) within 90 days of the
Closing Date, (ii) once every twelve months thereafter, and
(iii) at such more frequent times as the Bank may from time to
time determine, provided that Bank shall not require such an
audit if both (y) an Event of Default does not then exist and (z)
the ratio described below is equal to or greater than 1.5 to 1.0.
The ratio referred to above shall be, as of the date of
determination, (1) the greater of the daily average balance of
unrestricted cash (and equivalents) of Borrower on deposit with
Bank for the month prior to such date of determination or the
amount of Borrower’s unrestricted cash (and equivalents) on
deposit with Bank as of the last day of the month prior to such
date of determination, (2) divided by the aggregate outstanding
Term Loan as of the last day of the month prior to such date of
determination.



2.3 Secured Guaranty From Domestic Subsidiaries. Section 3.10 of the June 2007 Amendment
reads as follows:



3.10 Secured Guaranty from Domestic Subsidiaries. Within 30 days
of the date hereof, Borrower shall cause each of 3F Therapeutics,
Inc., a California corporation (“3F”), and ATS Acquisition Corp.
(“ATSAC”), a Minnesota corporation, to (a) execute and deliver to
Bank a guaranty of all of the Obligations of Borrower to Bank and
a security agreement providing Bank with a security interest in
the assets of such company which are of the same type as the
assets of Borrower in which Bank has been provided a security
interest, in such form as Bank shall reasonably request, and
(b) provide Bank with a first-priority perfected security
interest in such assets. Borrower represents and warrants that
such assets are free and clear of Liens (other than Permitted
Liens; provided that for purposes of the use of the term
“Permitted Liens” in the context of 3F and ATSAC, when “Borrower”
is used in such definition it shall be deemed to refer to 3F or
ATSAC, as applicable).



Pursuant to the June 2007 Amendment, Borrower agreed to provide Bank with a guaranty and security
of 3F and ATSAC in such form as Bank would reasonably request within 30 days of the date of the
June 2007 Amendment. Bank hereby waives said time period set forth in the June 2007 Amendment for
receipt of such guaranty and security agreement, and Borrower agrees that Borrower shall complete,
execute and deliver to Bank such guaranty and security agreement within 30 days of the date hereof.



2.4 Perfection Certificate. Pursuant to the June 2007 Amendment, Borrower agreed to provide
Bank with a Perfection Certificate within 30 days of the date of the June 2007 Amendment. Bank
hereby waives said time period set forth in the June 2007 Amendment for receipt of a Perfection
Certificate, and Borrower agrees that Borrower shall complete, execute and deliver to Bank a
Perfection Certificate on Bank’s standard form on or before March 31, 2008.




3. Limitation of Amendments.



3.1 The amendments and waivers set forth in Section 2, above, are effective for the purposes
set forth herein and shall be limited precisely as written and, except as set forth in Section 2,
above, shall not be deemed to (a) be a consent to any amendment, waiver or modification of any
other term or condition of any Loan Document, or (b) otherwise prejudice any right or remedy which
Bank may now have or may have in the future under or in connection with any Loan Document.



3.2 This Amendment shall be construed in connection with and as part of the Loan Documents and
all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan
Documents, except as herein amended, are hereby ratified and confirmed and shall remain in full
force and effect.



4. Representations and Warranties. To induce Bank to enter into this Amendment, Borrower
hereby represents and warrants to Bank as follows:



4.1 Immediately after giving effect to this Amendment (a) the representations and warranties
contained in the Loan Documents are true, accurate and complete in all material respects as of the
date hereof (except to the extent such representations and warranties relate to an earlier date, in
which case they are true and correct as of such date), and (b) no Event of Default has occurred and
is continuing;



4.2 Borrower has the power and authority to execute and deliver this Amendment and to perform
its obligations under the Loan Agreement, as amended by this Amendment;



4.3 The Second Restated Articles of Incorporation of ATS Medical, Inc. filed with the
Minnesota Secretary of State on November 8, 2006, a copy of which was provided to Bank via email on
June 13, 2007, remain true, accurate and complete and have not been amended, supplemented or
restated and are and continue to be in full force and effect;



4.4 The execution and delivery by Borrower of this Amendment and the performance by Borrower
of its obligations under the Loan Agreement, as amended by this Amendment, have been duly
authorized;



4.5 The execution and delivery by Borrower of this Amendment and the performance by Borrower
of its obligations under the Loan Agreement, as amended by this Amendment, do not and will not
contravene (a) any law or regulation binding on or affecting Borrower, (b) any contractual
restriction with a Person binding on Borrower, (c) any order, judgment or decree of any court or
other governmental or public body or authority, or subdivision thereof, binding on Borrower, or
(d) the organizational documents of Borrower;



4.6 The execution and delivery by Borrower of this Amendment and the performance by Borrower
of its obligations under the Loan Agreement, as amended by this Amendment, do not require any
order, consent, approval, license, authorization or validation of, or filing, recording or
registration with, or exemption by any governmental or public body or authority, or subdivision
thereof, binding on Borrower, except as already has been obtained or made; and



4.7 This Amendment has been duly executed and delivered by Borrower and is the binding
obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or
other similar laws of general application and equitable principles relating to or affecting
creditors’ rights.



5. Counterparts. This Amendment may be executed in any number of counterparts and all of such
counterparts taken together shall be deemed to constitute one and the same instrument.



6. Fees and Expenses. In consideration for Bank entering into this Amendment, Borrower shall
concurrently pay Bank a fee in the amount of $5,000, which fee is deemed fully earned on the date
hereof, and shall be non-refundable and in addition to all interest and other fees payable to Bank
under the Loan Documents. Without limitation on the terms of the Loan Documents, Borrower agrees
to reimburse Bank for all its costs and expenses (including reasonable attorneys’ fees) incurred in
connection with this Amendment. Bank is authorized to charge said fees, costs and expenses to
Borrower’s loan account or any of Borrower’s deposit accounts maintained with Bank.



[Signature page follows]




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In Witness Whereof, the parties hereto have caused this Amendment to be duly
executed and delivered as of the date first written above.



	 	 	 
	BANK	 	BORROWER
	Silicon Valley Bank

By: /s/ Nick Honigman 

Name: Nick Honigman      

	 	ATS Medical, Inc.

By: /s/ Michael Kramer

Name:  Michael Kramer
	 

	 	 
	Title:  Relationship Manager

	 	Title: CFO 
	 

	 	 







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