Document:

Exhibit
10.3

SEVERANCE
AGREEMENT

This Severance
Agreement (the “Agreement”) is made as of this 23rd day of January 2007, by and between NitroMed,
Inc., a Delaware corporation with its principal place of business at 125 Spring
Street, Lexington, Massachusetts 02421 (the “Company”), and Kenneth M. Bate,
with a residence at 33 Middle Street, Concord, MA  01742 (“Employee”).

WHEREAS, Company
has previously adopted an Executive Severance Benefit Plan (the “Plan”) for the
benefit of certain executive officers of the Company, a copy of which is
attached hereto as Exhibit A, as such Plan may be amended from time to
time by the Company;

WHEREAS, Company
wishes to extend to Employee certain severance benefits in consideration of
Employee’s continued service to the Company; and

WHEREAS,
capitalized terms not defined herein shall have the meaning set forth in the
Plan;

NOW, THEREFORE,
Company and Employee agree as follows:

1.                                                           Pursuant
to the terms of the Plan, Employee shall be deemed a Participant under the Plan
and shall be eligible for those severance benefits set forth in the Plan that
are afforded to those employees designated at the level of Senior Vice
President or higher by the Company’s Board of Directors or its Compensation
Committee, as such benefits may be amended;

2.                                                           In
addition to those benefits described in the Plan and referenced above, Employee
shall also be eligible to receive the following severance benefit, subject to
Employee’s compliance with the terms and conditions applicable to Participants
set forth in the Plan, including without limitation the eligibility conditions
set forth in Section II thereof and the execution of a Severance Agreement and
Release as set forth in Section IV thereof:

·                                          an
amount equal to the then-current annual bonus target percentage for the
Employee at the date of Employee’s termination of employment, as established by
the Company’s Board of Directors or Compensation Committee thereof, multiplied
by Employee’s then-current annualized base salary;

3.                                                           Nothing
in this Agreement shall be construed to provide Employee with a guarantee of
employment and does not supersede the Company’s policy of at-will employment;
and

4.                                                           Except
as otherwise set forth in this Agreement, the terms and conditions of the Plan
shall govern the subject matter hereof.

 

IN
WITNESS WHEREOF, this Agreement has been executed by the parties through their
duly authorized officers effective as of the date first above written.

	
  NITROMED, INC.

  	
   

  	
  KENNETH M. BATE

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ James G. Ham, III

  	
   

  	
  By:

  	
   

  	
  /s/ Kenneth M. Bate

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  James G. Ham, III

  	
   

  	
  Name:

  	
   

  	
  Kenneth M. Bate

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  VP Finance & CFO

  	
   

  	
  Title:

  	
   

  	
  President & CEO

  

 

 

Exhibit A

NITROMED, INC.

EXECUTIVE SEVERANCE BENEFIT PLAN and

SUMMARY PLAN DESCRIPTION

Section I:                                            Establishment
and Purpose of Plan

The NitroMed, Inc. (the “Company”) Executive Severance
Benefit Plan (“Plan”) is hereby established to provide severance benefits to
those categories of Company executives designated as Participants under the
Plan by the Company’s Board of Directors (the “Board”) or the Compensation
Committee thereof (the “Participants”), who are terminated on or after March
30, 2006 and prior to the termination of this Plan (“Covered Period”) and
entitled to benefits as provided herein. 
The Plan is intended to be a welfare benefit plan within the meaning of
Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”).

Section II:                                        Eligibility
for Severance

A Participant who is terminated during the Covered
Period without Cause (as defined below) is eligible to receive severance
benefits as described in Section III below (the “Severance Benefits”), except
as otherwise provided below.  A
Participant shall not be eligible to receive the Severance Payment if
he/she:  (1) voluntarily terminates
his/her employment; (2) refuses to accept other “Suitable Employment” (as
defined below) that is offered by the Company; (3) is terminated for “Cause”
(as defined below); (4) is eligible to receive severance pursuant to a
severance provision contained in an individual offer letter (and has not agreed
that the terms of this Plan shall supercede any such provision); or (5) is
terminated under circumstances governed by his/her individual written
change-of-control agreement.  This Plan
is not intended to, nor shall it, provide for any benefits in the event of
termination of employment in anticipation of, in connection with, or following
a Change in Control (as defined in the Company’s standard Change in Control
Agreement, which shall be the only source of such severance benefits).

For the purpose of this Plan:

“Cause” is determined by the Company in its sole
discretion, and can include, but is not limited to, (i) any act or omission by
the employee that may have an adverse effect on the Company’s business or on
the employee’s ability to perform services for the Company, including, without
limitation, the commission of any crime (other than ordinary traffic
violations); or (ii) any misconduct or neglect of duties by the employee in
connection with the business or affairs of the Company, including, but not
limited to, misappropriation of Company assets, or failure to perform
reasonable assigned duties.Nothing
in this Plan shall be construed to provide any employee with a guarantee of
employment and this Plan does not supersede the Company’s policy of at will
employment.

“Suitable Employment” means any position of a
comparable or higher base salarythat
is located within 50 miles of the facility where the Participant performed
his/her principal duties for the Company immediately prior to termination.

 

Section III:                                    Severance
Benefits

Subject to the condition of execution of a Severance
Agreement described in Section IV below, the Severance Benefits provided to
eligible Participants who are terminated by the Company without Cause shall
consist of, for the period of time and as otherwise set forth on Schedule A:

1.                                       salary
continuation at the Participant’s base rate of pay (as in effect immediately
prior to termination, exclusive of any bonuses, commissions, overtime pay, or
other extra forms of compensation and less applicable taxes and withholdings)
(the “Severance Pay”); provided that the timing (although not the
aggregate amount) of such salary continuation payments shall be adjusted by the
Company to the extent necessary so that all payments shall be completed no
later than the fifteenth (15th) day of the third (3rd) month of the calendar
year following the calendar year in which termination of employment occurred;
and provided further that, if the Company determines it necessary in
order to ensure compliance with Section 409A, the Severance Pay may be paid in
a lump sum; and

2.                                       contributions to
the cost of COBRA (Consolidated Omnibus Budget Reconciliation Act) coverage on
the same basis as the Company’s contribution to Company-provided health and
dental insurance coverage immediately before the Participant’s termination,
except that if the employee secures new employment, the Company’s continued
contributions toward health and dental coverage shall end when the new
employment begins.  Participants will be
provided additional information regarding COBRA continuation costs and coverage
following termination.

The Severance Benefits shall commence within seven (7)
business days of the date on which by its terms the Severance Agreement becomes
a binding agreement between the Company and the Participant.  However, notwithstanding any provision of
this Plan to the contrary, if, at the time a Participant’s employment is
terminated, the Participant is a “specified employee” within the meaning of
Section 409A(a)(2)(B)(ii) of the Code and the regulations thereunder and the
Plan, then any payments under this Plan to the Participant that constitute “nonqualified
deferred compensation” within the meaning of Section 409A of the Code shall be
delayed by a period of six (6) months and (i) all payments that would have been
made to the Participant during such six (6) month period shall be made in a
lump sum in the seventh (7th) month following the date of termination and (ii)
all remaining payments shall commence in the seventh (7th) month following the
date of termination.

Section IV:                                   Severance
Agreement and Release

As a condition of receipt of a Severance Payment under
the Plan, a Participant shall be required to timely sign and return a severance
agreement and release in a form prepared by and satisfactory to, the Company
(the “Severance Agreement”) and to abide by the provisions of the Severance
Agreement.  Among other things, the
Severance Agreement shall contain a release and waiver of any claims the
employee or his/her representatives may have against the Company, its successors,
affiliates and/or representatives, and shall release those entities and persons
from any liability for such claims including, but not limited to, all
employment

 

discrimination claims. 
Participants are entitled and advised to consult an attorney of their
own choosing prior to signing the Severance Agreement.

The Severance Agreement must be signed and returned to
the Company within seven (7) days from the date it is received (at which time
it shall become a binding and irrevocable agreement between the Participant and
the Company), except as otherwise provided below.  Exceptions to this requirement are:

A.                                   Participants
40 or older on the date they receive the Severance Agreement and who are
terminated pursuant to a group layoff shall have forty-five (45) days to
review, sign and return the Severance Agreement.

B.                                     Participants
40 or older on the date they receive the Severance Agreement and who are not
terminated pursuant to a group layoff shall have twenty-one (21) days to
review, sign and return the Severance Agreement.

C.                                     In
addition, all Participants 40 or older on the date they receive the Severance
Agreement shall have seven (7) days to revoke the Severance Agreement after
they sign it.  If the Participant does
not revoke the Severance Agreement within seven (7) days of signing it, the Severance
Agreement shall become a binding and irrevocable agreement between the
Participant and the Company.  Revocations
must be in writing and delivered to the Plan Administrator at:

NitroMed, Inc.

125 Spring Street

Lexington, Massachusetts 02421

Section V:                                       Income
Tax Withholding, Payroll Taxes, and Other Deductions

The Company may withhold from any payment under the
Plan: (1) any federal, state, or local income or payroll taxes required by law
to be withheld with respect to such payment; (2) such sum as the Company may
reasonably estimate is necessary to cover any taxes for which the Company may
be liable and which may be assessed with regard to such payment; and (3) such
other amounts as appropriately may be withheld under the Company’s payroll
policies and procedures from time to time in effect (including, where
applicable, the Participant’s contributions to the cost of COBRA continuation
coverage pursuant to Section III (2) above).

Section VI:                                   Section
409A

All payments and benefits provided under this Plan are
intended to either comply with or be exempt from Section 409A of the Code and
this Plan shall be administered and construed accordingly.  The Company makes no representations or
warranty and shall have no liability to any Participant or any other person if
any provisions of this Plan are determined to constitute deferred compensation
subject to Section 409A but not to satisfy the conditions of that section

Section VII:                               Plan
Administration

1.          Plan
Administrator.  The Plan shall be
administered by the Board.  To the extent
permitted by applicable law, the Board may delegate any or all of its powers
under the Plan to one or more 

 

committees or
subcommittees of the Board (a “Committee”). 
All references in the Plan to the “Board” shall mean the Board or a
Committee of the Board to the extent that the Board’s powers or authority under
the Plan have been delegated to such Committee. 
The Board shall serve as the Plan Administrator.  The general administration of the Plan and
the responsibility for carrying out its provisions shall be vested in the Plan
Administrator.  The Plan Administrator
shall be the “administrator” within the meaning of Section 3(16) of ERISA and
shall have all the responsibilities and duties contained therein.

The Plan Administrator
can be contacted at the following address:

c/o Secretary

NitroMed, Inc.

125 Spring Street

Lexington, Massachusetts 02421

2.          Decisions,
Powers and Duties.  The Plan
Administrator’s decisions and determinations (including determinations of the
meaning and reference of terms used in the Plan) shall be binding on all
persons.  The Plan Administrator shall be
the Named Fiduciary for purposes of ERISA.

The Plan Administrator shall have such powers and
discretion as are necessary to discharge its duties, including, but not limited
to, interpretation and construction of the Plan, the determination of all
questions of eligibility, participation and benefits and all other related or
incidental matters, and such duties and powers of plan administration which are
not assumed from time to time by any other appropriate entity, individual or
institution.  The Plan Administrator
shall decide all such questions in its sole discretion and in accordance with
the terms of the controlling legal documents and applicable law, and its decision
will be final and binding on the Participant, the Participant’s spouse or other
dependent or beneficiary and all other interested parties.

The Plan Administrator may adopt rules and regulations
of uniform applicability in its interpretation and implementation of the Plan.

3.          Proof
of Information.  The Plan
Administrator may require that each Participant or other person submit, in such
form as it shall deem reasonable and acceptable, proof of any information which
the Plan Administrator finds necessary or desirable for the proper
administration of the Plan.

4.          Records
and Disclosures.  The Plan
Administrator shall maintain such records as are necessary to carry out the
provisions of the Plan.  The Plan
Administrator also shall make, or shall appoint one or more individuals
employed by the Company to make, all disclosures which are required by ERISA
and any subsequent amendments thereto.

5.          Mistakes.
If there has been a mistake in the amount of a Participant’s benefits paid
under the Plan, the mistake may be corrected by the Plan Administrator or its
designee when the mistake is discovered. 
The mistake may be corrected in any reasonable manner authorized by the
Plan Administrator (e.g., by offset against payments remaining to be
paid or by payments between the Participant and the Company).  In appropriate circumstances (as determined
in 

 

the Plan
Administrator’s sole discretion), the Plan Administrator may waive the making
of any correction.

6.          Expenses.  All costs and expenses incurred by the Board
in administering the Plan.

7.          No
Liability.   No director shall be
liable for any action or determination relating to or under the Plan made in
good faith.

8.          Integration
with Statutory Pay or Benefits Requirements.  To the extent that any federal, state or
local law, including, without limitation, so-called “plant closing” laws,
requires the Company to give advance notice or make a payment of any kind to an
employee because of that employee’s involuntary termination due to a layoff,
reduction in force, plant or facility closing, sale of business, or similar
event, the benefits provided under this Plan or the other arrangement shall
either be reduced or eliminated to avoid any duplication of payment.  The Company intends for the benefits provided
under this Plan to satisfy any and all statutory obligations which may arise
out of an employee’s involuntary termination for the foregoing reasons and the
Plan Administrator shall so construe and implement the terms of the Plan.  The Plan Administrator will determine how to
apply this provision, and may override other provisions of this Plan in doing
so.

9.          Plan
Name and Type.  The name of the
severance program is the NitroMed, Inc. Executive Severance Benefit Plan.  The program is intended to constitute an “Employee
Welfare Benefits Plan” under Department of Labor Regulation Section 2510.3-2(b)
and other applicable regulations and statutes. 
Accordingly, benefits hereunder shall not be contingent on retirement,
shall not exceed twice the annual compensation of the employee participating in
the Plan, and shall be completed within twenty-four (24) months of termination
of employment.  The program shall be
construed and interpreted in a manner consistent with the foregoing intent.

10.    Funding.  Benefits shall be paid from the general
assets of the Company and shall not be funded by trust or otherwise.  Nothing herein shall be deemed to create a
trust of any kind.

11.    Duration of
Plan.  The Plan shall continue in
force until all benefits are paid.

12.    Name and
Address of Employer.  The Plan is
sponsored by:

NitroMed, Inc.

125 Spring Street

Lexington, Massachusetts 02421

13.         Claims
Procedure.  Any Participant who
believes he or she is entitled to severance benefits under the Plan which are
not being paid may submit a written claim for payment to the Plan
Administrator, care of the Company’s Vice President of Human Resources. Any
Participant otherwise entitled to benefits under this Plan must make such claim
within sixty (60) days of termination of employment in order to be eligible for
benefits. Any claim for benefits shall be in writing, addressed to the Plan
Administrator and must be sufficient to notify the Plan Administrator of the
benefit claimed.  If the claim of a
Participant is denied, the Plan Administrator shall within a reasonable period
of time provide a written notice of denial to 

 

the
Participant.  The notice will include the
specific reasons for denial, the provisions of the Plan on which the denial is
based, and the procedure for a review of the denied claim.  Where appropriate, it will also include a
description of any additional material or information necessary to complete or
perfect the claim and an explanation of why that material or information is
necessary.  The Participant may request
in writing a review of a claim denied by the Plan Administrator and may review
pertinent documents and submit issues and comments in writing to the
Administrator, care of the Company’s Vice President of Human Resources.  The Plan Administrator shall provide to the
Participant a written decision upon such request for review of a denied
claim.  The decision of the Plan
Administrator upon such review shall be final.

14.         Drafting
Errors.  If, due to errors in
drafting, any Plan provision does not accurately reflect its intended meaning,
as demonstrated by consistent interpretations or other evidence of intent, or
as determined by the Plan Administrator in its sole and exclusive judgment, the
provision shall be considered ambiguous and shall be interpreted by the Plan
Administrator and all Plan fiduciaries in a fashion consistent with its intent,
as determined in the sole and exclusive judgment of the Plan
Administrator.  The Plan Administrator
shall amend the Plan retroactively to cure any such ambiguity.

Section VIII:                           Statement
of ERISA Rights

The following statement is required by federal law and
regulations.  ERISA provides that all
program participants shall be entitled to:

Examine,
without charge at the Plan Administrator’s office and at other specified
locations, such as work sites, all program documents, and copies of all
documents filed by the program with the U.S. Department of Labor, such as
detailed annual reports and program descriptions.

1.                                       Obtain
copies of all Plan documents and the Plan information upon written request to
the Plan Administrator.  The Plan
Administrator may make a reasonable charge for copies.

2.                                       Receive
a copy of a summary of the program’s annual financial report.  The Plan Administrator is required by law to
furnish each participant with a copy of this Summary Annual Report.

3.                                       Obtain
a statement advising the employee whether he or she has a right to receive
benefits under the program and what benefits the employee may receive.  This statement must be requested in writing
and is not required to be given more than once a year.  The Plan Administrator must provide the
statement free of charge.

4.                                       In
addition to creating rights for Plan participants, ERISA imposes duties upon
the people who are responsible for the operation of the employee benefit
plan.  The people who operate the Plan,
called “fiduciaries” of the program, have a duty to do so prudently and in the
interest of program participants and beneficiaries.  Employers nor any other person may fire an
employee or otherwise discriminate against an employee in any way to prevent an
employee from obtaining a benefit under the Plan or exercising the employee’s
rights under ERISA.

 

5.                                       If
an employee’s claim for a benefit is denied in whole or in part, the employee
must receive a written explanation of the reason for the denial.  The employee has the right to have the Plan
Administrator review and reconsider the employee’s claim.  Under ERISA, there are steps an employee can
take to enforce the above rights.  For
instance, if the employee requests materials from the Plan Administrator and
does not receive them within thirty (30) days, the employee may file suit in a
federal court.  In such a case, the court
may require the Plan Administrator to provide the materials and pay the
employee up to $110 per day until you receive the materials, unless the
materials were not sent because of reasons beyond the control of the Plan
Administrator.

6.                                       If
an employee’s claim for benefits is denied or ignored, in whole or in part, the
employee may file suit in a state or federal court.  If the program fiduciaries misuse the program’s
funds, or if an employee is discriminated against for asserting his or her
rights, the employee may seek assistance from the U.S. Department of Labor, or
may file suit in a federal court.  The court
will decide who should pay court costs and legal fees.

7.                                       If
an employee is successful, the court may order the person sued to pay costs and
fees.  If the employee loses, the court
may order the employee to pay these fees (for example, if the claim is frivolous).  Employees should contact the Plan
Administrator concerning questions about the program.  Employees who have any questions about this
statement or rights under ERISA should contact the nearest area office of the
Pension and Welfare Benefits Administration, U.S. Department of Labor listed in
your telephone directory or the Division of Technical Assistance and Inquiries,
Pension and Welfare Benefits Administration, U.S. Department of Labor, 200
Constitution Avenue, N.W., Washington, D.C. 20210.

Section IX:                                   Miscellaneous
Provisions

1.               No
Employment Rights.  Nothing in this
Plan shall be construed to provide any employee with a guarantee of employment
and does not supersede the Company’s policy of at will employment.

2.               Governing
Law.  The Plan and the rights of all
persons under the Plan shall be construed in accordance with and under
applicable provisions of ERISA, and the regulations thereunder, and the laws of
the Commonwealth of Massachusetts (without regard to conflict of laws
provisions) to the extent not preempted by federal law.

3.               No
Limitation Upon Rights of Company. 
The Plan shall not affect in any way the right or power of the Company
to make adjustments, reclassifications or changes of its capital or business
structure; to merge or consolidate; to dissolve or liquidate; or to sell or
transfer all or any part of its business or assets.

4.               Entire
Agreement.  This Plan is a
consolidation, amendment, and restatement of, and supersedes any and all
severance plans or separation policies applying to employees which may have
been in effect throughout the Company prior to the effective date of this

 

Plan, with the
exception of individual written change in control agreements applicable to
individual executives.

5.               Severability.  In case any one or more of the provisions of
this Plan (or part thereof) shall be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect the other provisions hereof, and this Plan shall be construed
as if such invalid, illegal or unenforceable provisions (or part thereof) never
had been contained herein.

6.               Non-Assignability.  No right or interest of any Participant shall
be assignable or transferable in whole or in part either directly or by
operation of law or otherwise, including, but not limited to, execution, levy,
garnishment, attachment, pledge or bankruptcy, provided, however, that this
provision shall not be applicable in the case of obligations of a Participant
to the Company.

7.               Amendment
or Termination.  The Company reserves
the right to modify, amend or terminate the Plan in whole or in part at any
time.  Such amendment, modification or
termination shall be effected by a written instrument executed by an authorized
officer of the Company.  However, in no
event shall such amendment, modification or termination reduce or diminish any
severance benefits owing under the Plan for terminations of employment prior to
the date of such amendment or termination without the consent of the
Participant to whom the benefits are owed.

 

SCHEDULE
A

Severance benefits shall be provided to Participants
as described in the NitroMed Executive Severance Benefit Plan (the “Plan”) and
Summary Plan Description, as follows:

1.             Executives who have been designated at the level of
Senior Vice President or higher by the NitroMed Board of Directors or its
Compensation Committee shall be provided salary continuation and contributions
to the cost of COBRA coverage pursuant to Section III of the Plan, and subject
to the terms the Plan, for a period of twelve (12) months from a covered
termination of employment.

2.             Executives who have been designated at the level of Vice
President or higher by the NitroMed Board of Directors or its Compensation
Committee shall be provided salary continuation and contributions to the cost
of COBRA coverage pursuant to Section III of the Plan, and subject to the terms
the Plan, for a period of six (6) months from a covered termination of
employment.

 

AMENDMENT NO. 1 TO

NITROMED, INC.

EXECUTIVE SEVERANCE BENEFIT PLAN

Pursuant to Section IX, Clause 7 of the NitroMed, Inc.
Executive Severance Benefit Plan (the “Plan”), the Plan be, and hereby is,
amended as set forth below.  Capitalized terms used and not otherwise
defined herein shall have the respective meanings ascribed to them in the Plan.

1.            
Section III, Clause 1 of the Plan is hereby deleted in its entirety and the
following is substituted in its place:

“1.                                                       salary
continuation at the Participant’s base rate of pay (as in effect immediately
prior to termination, exclusive of any bonuses, commissions, overtime pay, or
other extra forms of compensation and less applicable taxes and withholdings)
(the “Severance Pay”); provided that, if the Company determines it
necessary in order to ensure compliance with Section 409A, the Severance Pay
may be paid in a lump sum; and”

2.            
Clause 2 of Schedule A to the Plan is hereby deleted in its entirety and the
following is substituted in its place:

“2.          
Executives who have been designated at the level of Vice President or higher by
the NitroMed Board of Directors or its Compensation Committee shall be provided
salary continuation and contributions to the cost of COBRA coverage pursuant to
Section III of the Plan, and subject to the terms of the Plan, for a period of
six (6) months from a covered termination of employment.  If such an
executive remains unemployed throughout and at the conclusion of the initial
six month period referenced in the preceding sentence, such executive shall be
provided salary continuation and contributions to the cost of COBRA coverage
pursuant to Section III of the Plan, and subject to the terms of the Plan, for
up to an additional period of six (6) months; provided, however,
that if at any time during such additional six month period such executive
becomes reemployed with another employer in a comparable position, the benefits
provided pursuant to this paragraph shall terminate immediately.”

3.            
Except as herein provided, all other terms and conditions of the Plan remain
unchanged and in full force and effect.

NITROMED,
INC.

	
  By:

  	
   

  	
  /s/ Kenneth M. Bate

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Kenneth M. Bate

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Chief Financial Officer, Chief Operating Officer,

  	
   

  	
   

  
	
   

  	
   

  	
  Treasurer and SecretaryExhibit 10.1

AMENDMENT
NO. 3 TO 

LOAN AND SECURITY AGREEMENT

AMENDMENT NO. 3 dated as of January 19, 2007 to LOAN
AND SECURITY AGREEMENT among SILICON VALLEY BANK (“Bank”), 3D SYSTEMS
CORPORATION, a Delaware corporation (the “Company”), and its Subsidiary, 3D
SYSTEMS, INC., a California corporation (“3D California;” the Company and 3D
California being herein individually referred to as a “Borrower” and
collectively referred to herein, jointly and severally, as the “Borrowers”),
joined in for the purposes of Section 13 of this Amendment by (i) 3D HOLDINGS
LLC, a Delaware limited liability company, (ii) 3D SYSTEMS ASIA PACIFIC
LIMITED, a California corporation, and (iii) 3D CAPITAL CORPORATION, a
California corporation (each individually being herein individually referred to
as a “Guarantor” and collectively referred to herein, jointly and severally, as
the “Guarantors”).

WITNESSETH:

WHEREAS, the Bank and the Borrowers are parties to a
Loan and Security Agreement dated as of June 30, 2004 ( as amended by Amendment
No. 1 and Amendment No. 2 and as it may be further amended, supplemented, or
otherwise modified, the “Credit Agreement”), and the other Loan Documents
provided for in the Credit Agreement;

WHEREAS, the parties desire to amend certain
provisions of the Credit Agreement as set forth in this Amendment;

WHEREAS, the Guarantors have guaranteed the
Obligations of the Borrowers pursuant to the Guaranties; and

WHEREAS, terms used herein in capitalized form that
are not defined herein are used herein as defined in the Credit Agreement;

NOW, THEREFORE, the parties agree as follows:

Section 1.               Effective Date.  The amendments to the Credit Agreement set
forth herein shall be effective as of January 12, 2007 (the “Third Amendment
Effective Date”).

Section 2.               Revolving Advances.  Section 2.1 of the Credit Agreement is hereby
amended as of the Third Amendment Effective Date to read as follows:

2.1.1        Revolving Advances.

(a)           Bank will make Advances not exceeding
the Committed Revolving Line, minus an amount equal to the outstanding
Revolving Obligations.

(b)           Notwithstanding clause (a) above,
from the Third Amendment Effective Date until the Covenant Threshold Date,
during a Threshold Period, Bank will make Advances in an amount not to exceed
the lesser of (A) the Committed Revolving Line minus an amount
equal to all outstanding Revolving

     
 

Obligations or
(B) the Borrowing Base minus an amount equal to all outstanding
Revolving Obligations.

(c)           Amounts borrowed under this Section
may be repaid and reborrowed during the term of this Agreement.

(d)           The Company shall request Advances
pursuant to the terms of Exhibit A-1.

(e)           The Committed Revolving Line
terminates on the Revolving Maturity Date, when all outstanding Advances are
immediately payable.

(f)            During a Threshold Period all
outstanding Advances shall be made pursuant to clause (b) above and all
outstanding Advances shall be subject to Borrowing Base availability as set
forth in clause (b) above. Prior to the Covenant Threshold Date, if Borrowers
are not within a Threshold Period all outstanding Advances shall be made
pursuant to clause (a) above.  On the
Covenant Threshold Date all Advances shall be made pursuant to clause (a) above
and clause (b) shall be of no further force or effect.

Section 3.               Overadvances.  Section 2.2 of the Credit Agreement is hereby
amended as of the Third Amendment Effective Date to read as follows:

(a)           If, prior to the Covenant Threshold
Date, during a Threshold Period and Borrowers’ Revolving Obligations at any
time exceed the lesser of the Committed Revolving Line or the Borrowing Base or
exceed the sublimits set forth in Sections 2.1.2 and 2.1.3,
Borrowers must immediately pay Bank the lesser of: (i) such excess or (ii) an
amount sufficient to reduce the Revolving Obligations to an amount less than or
equal to the Threshold Amount. In the case that the sublimits set forth in Sections
2.1.2 and 2.1.3 are exceeded, the Borrowers may, at their option,
cash collateralize (instead of repaying) such excess to the extent necessary to
reduce the Revolving Obligations to an amount equal to the greater of: (i) an
amount less than or equal to the Threshold Amount or (ii) the lesser of: (y)
the Committed Revolving Line or (z) the Borrowing Base; and

(b)           Other than during a Threshold Period
or if the Covenant Threshold Date has passed and Revolving Obligations exceed
the Committed Revolving Line or exceed the sublimits set forth in Sections
2.1.2 and 2.1.3, Borrowers must immediately pay Bank the excess or,
in the case that the sublimits set forth in Sections 2.1.2 and 2.1.3
are exceeded, the Borrowers shall cash collateralize such excess.

Section 4.               Accounts Receivable and
Accounts Payable.  Section 6.2 of the
Credit Agreement is hereby amended as of the Third Amendment Effective Date by
adding the following subsection (d) immediately after subsection (c):

(d) at all times
prior to the Covenant Threshold Date, as soon as available but in any event
within 30 days after the last day of each month, accounts receivable aging and

 2
 

accounts payable
aging for such month, in form and substance satisfactory to Bank.

Section 5.               Adjusted Quick Ratio.  Section 6.8 (i) of the Credit Agreement is
hereby amended as of the Third Amendment Effective Date to read as follows:

“Quick Ratio (Adjusted).  (a) as of December 31, 2006, a ratio of Quick
Assets to Adjusted Current Liabilities of at least 0.80 to 1.00,  (b) as of March 31, 2007, a ratio of Quick
Assets to Adjusted Current Liabilities of at least 0.95 to 1.00, and (c) as of
June 30, 2007, and as of the last day of each calendar quarter thereafter, a
ratio of Quick Assets to Adjusted Current Liabilities of at least 1.00 to 1.00.

Section 6.               Minimum EBITDA Covenant.  Section 6.8 (iii) of the Credit Agreement is
hereby amended as of the Third Amendment Effective Date to read as follows:

“(iii)        Minimum EBITDA Covenant. 
EBITDA of not less than (w) $3,000,000 for the calendar quarter ending
December 31, 2006, (x) $1,000,000 for the calendar quarter ending March 31,
2007, (y) $2,500,000 for the calendar quarter ending June 30, 2007, and (z)
$15,000,000 for each Test Period ending on and after September 30, 2007.”

Section 7.               Section 13.1 Amendment to
Definitions.  the following
definitions in Section 13.1 of the Credit Agreement are hereby amended as of
the Third Amendment Effective Date to read as follows:

“Committed Revolving Line” means,
without duplication, either: (i) other than during a Threshold Period, Bank’s
commitment to lend up to the Threshold Amount or (ii) solely during a
Threshold Period, Bank’s commitment to lend up to $15,000,000, provided,
however that if Borrowers achieve the Covenant Threshold, then on the Covenant
Threshold Date and thereafter, “Committed Revolving Line” shall mean Bank’s
Commitment to lend up to $15,000,000.

Section 8.               Section 13.1 New Definitions.  the following definitions are hereby added to
Section 13.1 of the Credit Agreement as of the Third Amendment Effective Date
in the appropriate alphabetical order:

“Borrowing Base” is as determined by
Bank in its reasonable discretion: (i) 70% of the amount of Borrowers’
domestic accounts receivable plus (ii) 30% of the amount of Borrowers’ foreign
accounts receivable, in each case as reasonably determined by Bank based on the
most recent accounts receivable aging prepared by the Company and delivered to
Bank pursuant to Section 6.2.

“Covenant Threshold” means the
satisfaction by the Borrowers of each the following covenants:

(i)            Quick Ratio
(Adjusted).  As of the last day of any
calendar quarter, a ratio of Quick Assets to Adjusted Current Liabilities of at
least 1.00 to 1.00;

 3
 

(ii)           Adjusted Total
Liabilities/Tangible Net Worth Ratio.  As
of the last day of any calendar quarter, a ratio of (y) Total Liabilities less
Subordinated Debt to (z) Tangible Net Worth, of not more than 2.00 to 1.00; and

(iii)          Minimum EBITDA
Covenant.  As of the end of any calendar
quarter EBITDA for the most recent Test Period of not less than $15,000,000.

“Covenant Threshold Date” means the date
to be determined by Bank that is within two weeks after the date Borrowers
delivered the financial statements in accordance with Section 6.2 and in
accordance with such financial statements, Bank determines that Borrowers have
achieved the Covenant Threshold.

 “Revolving
Obligations” means, as of any date of determination, the sum of:
(i) outstanding Advances; plus (ii) the amounts reserved against the
Borrowing Base or the Committed Revolving Line, as applicable, for the
following: (y) FX Reserve, plus (z) outstanding Letters of
Credit (including drawn but unreimbursed Letters of Credit).

“Threshold Amount” means
$10,000,000.

“Threshold Period”  means at any time prior to the Covenant
Threshold Date, a period of time commencing with the date on which outstanding
Revolving Obligations exceed the Threshold Amount or would exceed the Threshold
Amount after giving effect to any Advance requested by Borrowers and ending on
the first Business Day immediately following the date on which outstanding
Revolving Obligations are reduced to less than or equal to the Threshold
Amount.

Section 9.               Exhibit A-1 Amendments to
Definitions.  The following
definitions in Exhibit A-1 of the Credit Agreement are hereby amended as of the
Third Amendment Effective Date to read as follows:

“Interest Rate” shall mean:  (a) with respect to Advances that are Prime
Rate Loans, a rate per annum equal to the Prime Rate plus the Prime Rate Margin
and (b)  with respect to Advances that
are LIBOR Rate Loans, a rate per annum equal to the LIBOR Rate (based on the
LIBOR Rate applicable for the Interest Period selected by the Borrower) plus
the LIBOR Rate Margin.

“LIBOR Rate Margin” means: (a) with
respect to outstanding Advances of $10,000,000 or less, in the aggregate, 275
basis points (2.75%) and (b) with respect to outstanding Advances in excess of
$10,000,000 in the aggregate (but only with respect to the portion of the
outstanding Advances that exceed $10,000,000), 325 basis points (3.25%),
provided however that if Borrowers achieve the Covenant Threshold, then as of
the Covenant Threshold Date and thereafter, the LIBOR Rate Margin shall be 225
basis points (2.25%) with respect to all Advances.

 4
 

“Prime Rate Margin” means: (a) with
respect to outstanding Advances of $10,000,000 or less, 50 basis points (0.50%)
and (b) with respect to outstanding Advances in excess of $10,000,000 in the
aggregate (but only with respect to the portion of the outstanding Advances
that exceed $10,000,000), 100 basis points (1.00%), provided however that if
Borrowers achieve the Covenant Threshold, then as of the Covenant Threshold
Date and thereafter, the Prime Rate Margin shall be 0 basis points (0.00%) with
respect to all Advances.

Section 10.             Chief Executive Office Address.  Schedule 6.6(b) to the Credit
Agreement is hereby amended to reflect the following address as the Borrowers’
chief executive office:

333
Three D Systems Circle

Rock Hill, SC 29730 USA

Section
11.             Waiver.

(i)            Bank hereby waives: (A) solely with
respect to the fiscal quarter ending September 30, 2006, the following Events
of Default arising under Section 8.2 as a result of Borrowers’ violation
of: (w) Section 6.8 (i) (failure to comply with the Quick Ratio
(Adjusted) covenant), (x) Section 6.8(iii) (failure to comply with the
EBITDA covenant), (y) Section 6.2(a) 
(failure to deliver financial statements), and (z) Section 6.2(b)
(failure to deliver the Compliance Certificate) and (B) solely with respect to
the fiscal quarter ending December 31, 2005, the Event of Default arising under
Section 8.2 as a result of Borrowers’ violation of Section 6.8(iii)
(collectively, the “Waived Defaults”).

(ii)           The waiver in this Section 11
shall become effective only in accordance with Section 15 hereof and
then only in this specific instance and for the specific purposes set forth
herein.

Section 12.             Representations and Warranties
of the Borrowers.  The Borrowers
represent and warrant that the representations and warranties set forth in
Section 5 of the Credit Agreement are true and correct in all material respects
as of the Third Amendment Effective Date.

Section 13.             Consent of the Guarantors.  Each of the undersigned Guarantors has
executed an Unconditional Guaranty (each a “Guaranty”) in favor of Bank
respecting the obligations of each Borrower owing to Bank.  The Guarantors hereby consent to the
amendments to the Credit Agreement set forth in this Amendment and each
Guarantor agrees that nothing in its Guaranty obligates Bank to notify it of
any changes in the financial accommodations made available to the Borrowers and
no requirements to so notify it in the future shall be implied by the execution
of this Amendment.

Section 14.             Effect on the Loan Documents.  Except to the extent that the provisions of
the Credit Agreement are expressly amended by the terms and conditions of this
Amendment, the covenants, terms and conditions of the Credit Agreement and the
other Loan Documents shall remain in full force and effect in accordance with
their terms.

 5
 

Section 15.             Effectiveness.  The effectiveness of this Amendment is
subject to each of the following:

(a)           receipt by Bank of fully executed
copies of this Amendment signed by the Borrowers and the Bank; and

(b)           receipt by Bank of an amendment fee
in the amount of $15,000.

Section 16.             Conditions Subsequent.  Borrowers shall deliver to Bank on or before
January 31, 2007 the quarterly financial statement required under Section
6.2(a) for the fiscal quarter ending September 30, 2006 and the Compliance
Certificate with respect to the fiscal quarter ending September 30, 2006 as
required pursuant to Section 6.2(b). 
Failure by Borrowers to fulfill the foregoing conditions subsequent
shall constitute an Event of Default under the Credit Agreement.

[Remainder of this page intentionally left blank]

 6

IN
WITNESS WHEREOF, the parties have executed this Amendment pursuant to due
authorization as of the date first set forth above.

	
  

  	
  BORROWERS:

  
	
   

  	
   

  	
   

  
	
   

  	
  3D SYSTEMS CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
  /s/ Fred R. Jones

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Fred R. Jones

  
	
   

  	
   

  	
  Title:

  	
  Vice President and CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  3D SYSTEMS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
  /s/ Fred R. Jones

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Fred R. Jones

  
	
   

  	
   

  	
  Title:

  	
  Vice President and CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GUARANTORS:

  
	
   

  	
   

  	
   

  
	
   

  	
  3D HOLDINGS LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
  /s/ Fred R. Jones

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Fred R. Jones

  
	
   

  	
   

  	
  Title:

  	
  Vice President and CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  3D SYSTEMS ASIA PACIFIC LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
  /s/ Fred R. Jones

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Fred R. Jones

  
	
   

  	
   

  	
  Title:

  	
  Vice President and CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  3D CAPITAL CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
  /s/ Fred R. Jones

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Fred R. Jones

  
	
   

  	
   

  	
  Title:

  	
  Vice President and CFO

  
							

 

Amendment No 3 to Loan and Security Agreement

 S-1
 

 

	
  

  	
  BANK:

  
	
   

  	
   

  
	
   

  	
  SILICON VALLEY BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Jack Garza

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jack Garza

  
	
   

  	
   

  	
  Title:

  	
  Relationship Manager

  
					

 

Amendment No 3 to
Loan and Security Agreement

 S-2

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