Document:

Amendment to Loan and Security Agreement

 Exhibit 10.16 
 AMENDMENT 
 TO 
 LOAN AND SECURITY AGREEMENT 
 AND 
 INTERCREDITOR AGREEMENT 
 THIS AMENDMENT to Loan and Security Agreement
and Intercreditor Agreement (this “Amendment”) is entered into as of March 28, 2008, by and among: (I) SILICON VALLEY BANK (“SVB” or “Bank”); (II) GOLD HILL VENTURE LENDING 03, L.P. (“Gold
Hill”); (III) SVB, in its capacity as the below-referenced Agent; and (IV) ACCLARENT, INC., a Delaware corporation (“Borrower”). 
 RECITALS 
 A.      Borrower currently is a party to that certain Loan
and Security Agreement, dated August 19, 2005, by and between, on the one hand, Gold Hill and SVB as the “Lenders” thereunder (collectively, the “Lenders”) and SVB as the “Agent” thereunder (the “Agent”),
and, on the other hand, Borrower (as amended, restated, supplemented, or otherwise modified from time to time, the “2005 Loan Agreement” or the “Loan Agreement”). Pursuant to the 2005 Loan Agreement: (A) SVB solely in its
capacity as a Lender has a commitment to make certain revolving advances (or ancillary credit extensions pursuant to letter of credit, foreign exchange forward contracts, and cash management services subfacilities under such commitment) to Borrower
(collectively, the “Existing Revolver Credit Extensions”) in accordance with the terms and conditions of the 2005 Loan Agreement; (B) both Lenders had commitments to make certain non-revolving Growth Capital Advances to Borrower in
accordance with the terms and conditions of the 2005 Loan Agreement, which commitments previously expired without any such Growth Capital Advances ever having been requested or funded; and (C) both Lenders had commitments to make certain term
loan Equipment Advances to Borrower (collectively, the “Existing Equipment Loans”) in accordance with the terms and conditions of the 2005 Loan Agreement, which commitments were fully funded and with respect to which the aggregate
principal balance of all outstanding Existing Equipment Loans as of the date hereof is approximately $406,150. Pursuant to the 2005 Loan Agreement, all Obligations relating solely to the Existing Equipment Loans (collectively, the “Existing
Equipment Loans Obligations”) are secured by security interests granted by Borrower to the Agent and the Lenders in solely the Financed Equipment financed by the Existing Equipment Loans and the proceeds thereof (collectively, the
“Financed Equipment Collateral”), and all Obligations other than the Existing Equipment Loans Obligations (collectively, the “Remaining Existing Obligations”) are secured by security interests granted by Borrower to the Agent and
the Lenders in the Collateral. Each of the Lenders and the Agent are parties to that certain Intercreditor Agreement, dated as of August 19, 2005 (as amended, restated, supplemented, or otherwise modified from time to time, the
“Intercreditor Agreement”) among them. 
 B.      Concurrently herewith, Bank in its separate
individual capacity, as the lender, and Borrower, as the borrower, intend to enter into a new Loan and Security Agreement, dated on or about the date hereof, between them (as amended, restated, supplemented, or otherwise modified from time to time,
the “2008 Loan Agreement”). 

 C.      Borrower has requested that Agent and the Lenders amend
certain provisions of the Loan Agreement and/or the Intercreditor Agreement, in each case, all as more fully set forth herein. 
 D.      Agent and the Lenders have agreed to so amend certain provisions of the Loan Agreement and/or the Intercreditor 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 2005 Loan Agreement. 
 2.      Amendments to Loan Agreement and/or Intercreditor Agreement. 
 2.1      Consent to the 2008 Loan Agreement, and Certain Conforming Modifications. 
 (a)      Anything in the Loan Agreement and the Intercreditor Agreement to the contrary notwithstanding, each of the
Lenders (including without limitation Gold Hill pursuant to Section 2.2 of the Intercreditor Agreement), Agent, and Borrower hereby consents to the 2008 Loan Agreement. 
 (b)      Without limiting the generality of clause (a) above, the “Obligations” of Borrower now or
hereafter owing Bank under the 2008 Loan Agreement shall constitute Permitted Indebtedness under the Loan Agreement, and the security interests of Bank in the Collateral (other than the Financed Equipment Collateral) shall constitute a Permitted
Lien under the Loan Agreement. 
 (c)      For the avoidance of doubt, neither the 2008 Loan Agreement, nor
any of the “Loan Documents” (as defined in the 2008 Loan Agreement) relating thereto, shall constitute Loan Documents under the Loan Agreement or the Intercreditor Agreement. 
 2.2      Modifications regarding Existing Revolver Credit Extensions Replacement. Agent, Lenders, and Borrower
hereby acknowledge and agree that: 
 (a)      the initial “Advances” made under Section 2.1.1
of the 2008 Loan Agreement, the initial “Letters of Credit” issued under Section 2.1.2 of the 2008 Loan Agreement, the initial “FX Forward Contracts” entered into under Section 2.1.3 of the 2008 Loan Agreement, and the
initial “Cash Management Services” utilized under Section 2.1.4 of the 2008 Loan Agreement, shall repay and replace in full (or shall be deemed to do so) the respective Existing Revolver Credit Extensions then outstanding under the
2005 Loan Agreement and, from and after such repayment and replacement, the commitment of SVB solely in its capacity as a Lender to make 

  

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Existing Revolver Credit Extensions pursuant to the 2005 Loan Agreement shall be irrevocably terminated (collectively, the “Existing Revolver Credit
Extensions Replacement”); 
 (b)      from and after giving effect to the Existing Revolver Credit
Extensions Replacement, no Remaining Existing Obligations shall be outstanding under the 2005 Loan Agreement and all commitments of the Lenders and the Agent to hereafter extend credit to Borrower under the 2005 Loan Agreement have expired or been
irrevocably terminated (it being acknowledged that the Existing Equipment Loans remain outstanding in accordance with the terms of the 2005 Loan Agreement); 
 (c)      accordingly, from and after the Existing Revolver Credit Extensions Replacement, the provisions of the Loan Agreement relating to Advances, Letters of Credit, FX Forward
Contracts, and Cash Management Services shall no longer be effective (to the extent relating to Advances, Letters of Credit, FX Forward Contracts, and Cash Management Services); and 
 (d)      accordingly, after giving effect to the foregoing, references in the Loan Agreement and/or the Intercreditor
Agreement to “Loans” shall mean and refer to solely the Equipment Advances under the Loan Agreement. 
 2.3      Acknowledgment regarding Growth Capital Loan Facility. Agent, Lenders, and Borrower hereby acknowledge and agree the commitments of both Lenders to make Growth Capital Advances to Borrower under
Section 2.1.7 of the Loan Agreement previously expired without any such Growth Capital Advances ever having been requested or funded. Accordingly, the provisions of the Loan Agreement relating to Growth Capital Advances shall no longer be
effective (to the extent relating to Growth Capital Advances). 
 2.4      Modifications regarding
Collateral securing the Obligations. Agent, Lenders, and Borrower hereby acknowledge and agree that: 
 (a)      each of (i) Gold Hill in its capacity as a Lender, and (ii) the Agent solely to the extent it holds security interests for the benefit of Gold Hill as a Lender, release (without recourse,
representation, or warranty) their respective security interests in all Collateral (other than the Financed Equipment Collateral); 
 (b)      subject to clause (c) below, the continuing security interests of each of (i) SVB in its capacity as a Lender, and (ii) the Agent solely to the extent it holds security interests for the
benefit of SVB as a Lender, in all Collateral (other than the Financed Equipment Collateral) are transferred to Bank under the 2008 Loan Agreement and shall secure all “Obligations” under the 2008 Loan Agreement instead of the Obligations
under the 2005 Loan Agreement; 
 (c)      the Lenders and the Agent shall retain their respective continuing
security interests in the Financed Equipment Collateral as security for solely the Existing Equipment Loans Obligations; 
 (d)      without limiting the generality of (and after giving effect to) the foregoing, the sentence set forth in Section 4.1 of the Loan Agreement that currently reads 

  

 -3- 

 
“Borrower hereby grants Agent, for the ratable benefit of the Lenders; and to each Lender, to secure the payment and performance in full of all of the
Obligations (other than Obligations solely relating to the Equipment Line) and the performance if each of Borrower’s duties under the Loan Documents, a continuing security interest in, and pledges and assigns to the Agent, for the ratable
benefit of the Lenders, and to each Lender the Collateral, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof.”, hereby is deleted; 
 (e)      without limiting the generality of (and after giving effect to) the foregoing, the paragraphs set forth in
Section 4.1 of the Loan Agreement that currently read: 
 Except as noted on the Perfection Certificate, Borrower is not a party to,
nor is bound by, any license or other agreement with respect to which the Borrower is the licensee that prohibits or otherwise restricts Borrower from granting a security interest in Borrower’s interest in such license or agreement or any other
property. 
 If the Agreement is terminated, Lenders’ and Agent’s lien and security interest in the Collateral shall continue
until Borrower fully satisfies its Obligations. If Borrower shall at any time, acquire a commercial tort claim, Borrower shall promptly notify Agent in a writing signed by Borrower of the brief details thereof and grant to Agent and Lenders in such
writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to Agent. 
 hereby is amended and restated in its entirety to read as follows: 
 If the Agreement is terminated, Lenders’ and Agent’s lien and security interest in the Collateral shall continue until Borrower fully satisfies its Obligations (other than inchoate indemnity obligations).

 (f)      accordingly, after giving effect to the foregoing, references in the Loan Agreement and/or the
Intercreditor Agreement to the “Collateral” shall mean and refer to solely the Financed Equipment Collateral. 
 2.5      Modifications regarding the Representations and Warranties. 
 (a)      Section 5.3 of the Loan Agreement which currently reads as follows: 
 Except as shown
in the Perfection Certificate, there are no actions or proceedings pending or, to the knowledge of Borrower’s Responsible Officers or legal counsel, threatened in writing by or against Borrower or any Subsidiary in which an adverse decision
could reasonably be expected to have a material adverse effect on Borrower’s business or operations. 
 hereby is amended and restated
in its entirety to read as follows: 
 Except as shown in the Perfection Certificate, there are no actions or proceedings pending or, to the
knowledge of Borrower’s Responsible Officers or legal counsel, threatened in writing by or against Borrower or any Subsidiary involving more than $200,000 or more in the aggregate. 
  

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 (b)      Section 5.4 of the Loan Agreement which currently reads as
follows: 
 All consolidated financial statements for Borrower, and any Subsidiary, delivered to Agent fairly present in all material
respects Borrower’s consolidated financial condition and Borrower’s consolidated results of operations. There has not been any material deterioration in Borrower’s consolidated financial condition since the date of the most recent
financial statements submitted to Agent, although Borrower’s cash may have declined to pay necessary and ordinary course business expenses. 
 hereby is amended and restated in its entirety to read as follows: 
 All consolidated financial statements for Borrower, and any
Subsidiary, delivered to Agent fairly present in all material respects Borrower’s consolidated financial condition and Borrower’s consolidated results of operations, except that interim financial statements may be subject to normal
year-end audit adjustments (which are not expected to be material in the aggregate) and need not contain footnote disclosures required by GAAP. There has not been any material deterioration in Borrower’s consolidated financial condition since
the date of the most recent financial statements submitted to Agent, although Borrower’s cash may have declined to pay necessary and ordinary course business expenses. 
 2.6      Modifications regarding the Affirmative Covenants. 
 (a)      Section 6.2(a)(ii) of the Loan Agreement which currently reads as follows: 
 (ii) as soon as available, but no later than one hundred twenty (120) days after the last day of Borrower’s fiscal year for each of
Borrower’s fiscal years commencing with the fiscal year ended 2005 and thereafter, audited consolidated financial statements prepared under GAAP, consistently applied, together with an unqualified opinion on the financial statements from an
independent certified public accounting firm reasonably acceptable to Agent provided, however, that Borrower’s 2005 fiscal year audited consolidated financial statements shall include the 2004 fiscal year and the additional time period since
the inception of Borrower); 
 hereby is amended and restated in its entirety to read as follows: 
 (ii) as soon as available, but no later than one hundred eighty (180) days after the last day of Borrower’s fiscal year for each of
Borrower’s fiscal years commencing with the fiscal year ended 2005 and thereafter, audited consolidated financial statements prepared under GAAP, consistently applied, together with an unqualified opinion on the financial statements from an
independent certified public accounting firm reasonably acceptable to Agent provided, however, that Borrower’s 2005 fiscal year audited consolidated financial statements shall include the 2004 fiscal year and the additional time period since
the inception of Borrower); 
 (b)      Section 6.2(b) of the Loan Agreement which currently reads as
follows: 
  

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 (b) Within twenty (20) days after the last day of each month, Borrower shall deliver to SVB a
Borrowing Base Certificate signed by a Responsible Officer in the form of Exhibit D with aged listings of accounts receivable and accounts payable (by invoice date). 
 hereby is amended and restated in its entirety to read as follows: 
 (b) [intentionally omitted] 
 (c)      Exhibit E of the Loan Agreement
hereby is amended and restated in its entirety to read as set forth in Exhibit E to this Amendment. For reference, such amendment and restatement causes the portion of the form of Compliance Certificate set forth on Exhibit E of the Loan
Agreement that reads as follows: 
  

					
	 Reporting Covenant
  
	  	 Required
  
	  	Complies  

	Monthly financial statements with CC	  	Monthly within 30 days	  	Yes        No    
	Annual (Company prepared)	  	FYE within 180 days for fiscal year 2004	  	Yes        No    
	Annual (CPA Audited)	  	 FYE within 120 days
 For fiscal years 2005 and thereafter
	  	Yes        No    
	Annual projections	  	FYE within 30 days of Board approval	  	 
	10-Q, 10-K and 8-K	  	Within 5 days after filing with SEC	  	Yes        No    
	BBC A/R & A/P Agings	  	Monthly within 20 days	  	Yes        No    

 to be amended and restated in its entirety to read as follows: 
  

					
	 Reporting Covenant
  
	  	 Required
  
	  	Complies  

	 Monthly financial
statements with CC
	  	Monthly within 30 days	  	Yes        No    
	 Annual (CPA Audited)

	  	FYE within 180 days	  	Yes        No    
	 Annual projections

	  	FYE within 30 days of Board approval	  	 
	 10-Q, 10-K and 8-K

	  	Within 5 days after filing with SEC	  	Yes        No    

 2.7      Modifications regarding the Negative Covenants

 (a)      Section 7.2 of the Loan Agreement which currently reads as follows: 
 Engage in or permit any of its Subsidiaries to engage in any business other than the businesses currently engaged in by Borrower or reasonably related
thereto, or have a change in its ownership (other than by the sale of Borrower’s equity securities in a public offering or by trading after a public offering or the sale by Borrower of Borrower’s equity securities to venture capital or
strategic investors so long as Borrower identifies to Agent the venture capital or strategic investors prior to the closing of the investment) of greater than thirty percent (30%) of the voting shares of stock, or a change in a Senior Manager
unless a replacement is approved by a majority of Borrower’s Board of Directors, including a majority of those members of the Board of Directors 

  

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who were members of the Board of Directors and not employees of Borrower (the “Outside Directors”), within 90 days of the date of termination of
such Senior Manager, provided that if a majority of the Outside Directors determine that such Senior Manager shall not be replaced, then Borrower shall notify Agent within 30 days of such determination. Borrower shall not, without at least thirty
(30) days prior written notice to Agent: (i) relocate its chief executive office, or add any new offices or business locations, including warehouses (unless such new offices or business locations contain less than Fifty Thousand Dollars
($50,000) in Borrower’s assets or property), or (ii) change its jurisdiction of organization, or (iii) change its organizational structure or type, or (iv) change its legal name, or (v) change any organizational number (if
any) assigned by its jurisdiction of organization. 
 hereby is amended and restated in its entirety to read as follows: 
 Engage in or permit any of its Subsidiaries to engage in any business other than the businesses currently engaged in by Borrower or reasonably related
thereto, or have a change in its ownership (other than by the sale of Borrower’s equity securities in a public offering or by trading after a public offering or the sale by Borrower of Borrower’s equity securities to venture capital or
strategic investors so long as Borrower identifies to Agent the venture capital or strategic investors prior to the closing of the investment) of greater than thirty-five percent (35%) of the voting shares of stock. Borrower shall not, without
at least thirty (30) days prior written notice to Agent: (i) relocate its chief executive office, or add any new offices or business locations, including warehouses (unless such new offices or business locations contain less than One
Hundred Thousand Dollars ($100,000) in Borrower’s assets or property), or (ii) change its jurisdiction of organization, or (iii) change its organizational structure or type, or (iv) change its legal name, or (v) change any
organizational number (if any) assigned by its jurisdiction of organization. 
 (b)      Section 7.5 of
the Loan Agreement which currently reads as follows: 
 Create, incur, or allow any Lien on any of its property, or assign or convey any
right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, or permit any Collateral not to be subject to the first priority security interest granted herein, except for
Permitted Liens. In addition, Borrower shall not sell, transfer, assign, mortgage, pledge, lease, grant a security interest in, or encumber, or enter into any agreement, document, instrument or other arrangement (except with or in favor of the Agent
and Lenders) with any Person which directly or indirectly prohibits or has the effect of validly prohibiting Borrower from selling, transferring, assigning, mortgaging, pledging, leasing, granting a security interest in or upon, or encumbering any
of Borrower’s Intellectual Property (other than as permitted under Section 7.1). 
 hereby is amended and restated in its entirety
to read as follows: 
 Create, incur, or allow any Lien on any of its property, or assign or convey any right to receive income, including
the sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, or permit any Collateral not to be subject to the first priority security interest granted herein, except for Permitted Liens. In addition, Borrower
shall not sell, transfer, assign, mortgage, pledge, lease, grant a security interest in, or encumber, or enter 

  

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into any agreement, document, instrument or other arrangement (except with or in favor of the Agent and Lenders) with any Person which directly or indirectly
prohibits or has the effect of validly prohibiting Borrower from selling, transferring, assigning, mortgaging, pledging, leasing, granting a security interest in or upon, or encumbering any of Borrower’s Intellectual Property (other than as
permitted under Section 7.1 and the definition of “Permitted Lien” therein). 
 2.8      Certain Conforming Modifications of the Intercreditor Agreement. Agent and the Lenders hereby agree, and Borrower hereby acknowledges, that: 
 (a)      Recital A of the Intercreditor Agreement, which currently reads as follows: 
 “A.      Gold Hill and SVB have entered into a Loan and Security Agreement dated as of August 19, 2005 (the
“Loan Agreement”) pursuant to which Gold Hill and SVB have agreed to make a growth capital and equipment line facility available to the Borrower (the “Growth Capital Facility” and the “Equipment
Line,” respectively) in the original principal amount of Four Million Dollars ($4,000,000.00) with Acclarent, Inc. (“Borrower”) in which Gold Hill and SVB are co-lenders (Gold Hill and SVB are each sometimes referred to
herein as a “Lender” or “Lenders”) and SVB is the Agent. The Obligations of Borrower under the Loan Agreement and other Loan Documents as to the Growth Capital Line are secured by the Collateral and as to the
Equipment Line are secured only by the Financed Equipment and the proceeds thereof (collectively, the “Equipment Collateral”). (The Equipment Collateral is also a portion of the Collateral.)” 
 hereby is amended and restated in its entirety to read as follows: 
 “A.      Gold Hill and SVB have entered into a Loan and Security Agreement dated as of August 19, 2005 (as amended, restated, supplemented, or otherwise modified from time to
time, the “Loan Agreement”) pursuant to which Gold Hill and SVB have agreed to make an equipment line facility available to the Borrower (the “Equipment Line”) in the original principal amount of One Million Dollars
($1,000,000.00) with Acclarent, Inc. (“Borrower”) in which Gold Hill and SVB are co-lenders (Gold Hill and SVB are each sometimes referred to herein as a “Lender” or “Lenders”) and SVB is the Agent.
The Obligations of Borrower under the Loan Agreement and other Loan Documents as the Equipment Line are secured only by the Financed Equipment and the proceeds thereof (collectively, the “Equipment Collateral”). (The Equipment
Collateral is also referred to as the “Collateral”.)” 
 (b)      Recital B of the
Intercreditor Agreement, which currently reads as follows: 
 “B.      Under the Loan Agreement, SVB is
also providing a revolving line facility in the original principal amount of Two Million Dollars ($2,000,000.00) (the “Bank Facility”), which loan arrangement is also secured by the Collateral.” 
 hereby is amended and restated in its entirety to read as follows: 
 “B.      [intentionally omitted]” 
  

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 (c)      Recital C of the Intercreditor Agreement, which currently reads
as follows: 
 “C.      Gold Hill and SVB desire to set forth in this Agreement (i) their respective
rights and obligations with respect to the Loan Agreement (and the related Loan Documents and the credit to be extended thereunder), and (ii) the exercise of rights with respect to the Collateral, and (iii) the relative priority of the
security interests in the Collateral held by the Lenders under the Loan Agreement and SVB under the Bank Facility.” 
 hereby is
amended and restated in its entirety to read as follows: 
 “C.      Gold Hill and SVB desire to set
forth in this Agreement (i) their respective rights and obligations with respect to the Loan Agreement (and the related Loan Documents and the credit to be extended thereunder), and (ii) the exercise of rights with respect to the
Collateral, and (iii) the relative priority of the security interests in the Collateral held by the Lenders under the Loan Agreement.” 
 (d)      References in the Intercreditor Agreement to the term “Bank Facility” (including without limitation the definition of “Bank Facility” set forth in Section 1.1 of the
Intercreditor Agreement and such reference in Section 4.6(b) of the Intercreditor Agreement) are hereby deleted. 
 (e)      Section 2.2 of the Intercreditor Agreement hereby is suspended, unless and except to the extent that any proposed loans or extensions of credit by any Lender would be secured by the Financed
Equipment Collateral. Agent, the Lenders, and Borrower hereby acknowledge that the 2008 Loan Agreement is not secured by the Financed Equipment Collateral unless and until the Existing Equipment Loans Obligations are paid in full in cash.

 (f)      Section 4.6(a) of the Intercreditor Agreement hereby is amended and restated in its entirety
to read as follows: 
 “(a)      Cash Collateral. [intentionally omitted]” 
 (g)      Section 4.6(b)(i) of the Intercreditor Agreement hereby is amended and restated in its entirety to read as
follows: 
 “(i)      The relative priorities of the Encumbrances of the Parties in and to the Collateral
are set forth in Section 2.1 above.” 
 (h)      Because the 2008 Loan Agreement is not secured by
the Financed Equipment Collateral unless and until the Existing Equipment Loans Obligations are paid in full in cash, Section 4.6(b)(ix) of the Intercreditor Agreement hereby is amended and restated in its entirety to read as follows:

 “(ix)      [intentionally omitted]” 
  

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

 3.2      This Amendment shall be construed in connection with and as part of the Loan Agreement, the
Intercreditor Agreement, and the other Loan Document and all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan Agreement, the Intercreditor Agreement, and the other Loan Document, all as herein amended
(as applicable), are hereby ratified and confirmed and shall remain in full force and effect. 
 4.      Representations and Warranties. To induce Agent and the Lenders to enter into this Amendment, Borrower hereby represents and warrants to Agent and the Lenders as follows: 
 4.1      Immediately after giving effect to this Amendment (a) the representations and warranties contained in
the Loan Agreement, the Intercreditor Agreement, or any other Loan Document 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, the Intercreditor Agreement, or any other Loan Document, as
amended by this Amendment (as applicable); 
 4.3      Except as otherwise disclosed and delivered to
Agent, the organizational documents of Borrower delivered to Agent on the Effective Date 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, the Intercreditor Agreement, or any other Loan Document, as amended by this Amendment (as applicable), 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, the Intercreditor Agreement, or any
other Loan Document, as amended by this Amendment (as applicable), 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; 
  

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 4.6      The execution and delivery by Borrower of this Amendment
and the performance by Borrower of its obligations under the Loan Agreement, the Intercreditor Agreement, or any other Loan Document, as amended by this Amendment (as applicable), 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 either 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.      Effectiveness. This Amendment shall be deemed effective upon the due execution and delivery to Agent of this Amendment by each party hereto. 
 [Remainder of page intentionally left blank; signature page immediately 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. 
  

			
	GOLD HILL VENTURE LENDING 03, L.P.
	
	By: Gold Hill Venture Lending Partners 03,
LLC, its General Partner

			
		
	By	 	   //s// Tim McDonough

			
	Name:	 	 Tim McDonough

	Title:	 	 Principal, Gold Hill Capital

	
	SILICON VALLEY BANK, as the Agent

			
		
	By	 	   //s// Minal Patel

			
	Name:	 	Minal Patel
	Title:	 	Relationship Manager

			
	
	SILICON VALLEY BANK, as a Lender

			
		
	By	 	   //s// Minal Patel

			
	Name:	 	Minal Patel
	Title:	 	Relationship Manager

			
	
	ACCLARENT, INC., a Delaware corporation

			
		
	By	 	   //s// George Harter

			
	Name:	 	George Harter
	Title:	 	CFO

 EXHIBIT E 
 COMPLIANCE CERTIFICATE 
  

			
	TO:	  	SILICON VALLEY BANK, as Agent
		
	FROM:	  	ACCLARENT, INC.

 The undersigned authorized officer of Acclarent, Inc. certifies that under the terms and
conditions of the Loan and Security Agreement among Borrower, Lenders, and Agent (the “Agreement”), (i) Borrower is in complete compliance for the period ending
                     with all required covenants except as noted below and (ii) all representations and warranties in the Agreement are
true and correct in all material respects on this date (except for representations and warranties which are specifically made as of a prior date, in which case the same are true and correct in all material respects as of such prior date). Attached
are the required documents supporting the certification. The Officer certifies that these are based on books and records maintained in accordance with Generally Accepted Accounting Principles (GAAP) consistently applied from one period to the next
except as explained in an accompanying letter or footnotes (except for the absence of footnotes and subject to normal year-end adjustments, in the case of unaudited financial statements). In addition, the undersigned certifies that (i) Borrower
and each Subsidiary have timely filed all required tax returns and paid, or made adequate provision to pay, all material taxes, except those being contested in good faith with adequate reserves under GAAP and (ii) no liens have been levied or
claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits which Borrower has not previously notified in writing to Agent. The Officer acknowledges that no borrowings may be requested at any time or date
of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered. 
 Please indicate compliance status by circling Yes/No under “Complies” column. 
  

					
	 Reporting Covenant
  
	  	 Required
  
	  	Complies  

	Monthly financial statements with CC	  	Monthly within 30 days	  	Yes        No    
	Annual (CPA Audited)	  	FYE within 180 days	  	Yes        No    
	Annual projections	  	FYE within 30 days of Board approval	  	 
	10-Q, 10-K and 8-K	  	Within 5 days after filing with SEC	  	Yes        No    

											
	Comments Regarding Exceptions:	 		 	BANK USE ONLY
	See Attached.	 		 		 		 	
				
	Sincerely,	 		 		 	Received by:
			
	  
	 		 	  

	Signature	 		 		 	AUTHORIZED SIGNER
					
	  
	 		 	Date:	 	 	 	 
	Title	 		 		 		 		 	
				
	  
	 		 	Verified:	 	  

	Date	 		 		 		 		 	AUTHORIZED SIGNER
						
		 		 		 	Date:	 	 	 	 
				
		 		 		 	Compliance Status:                                Yes   
         No

  

 -2-wci_ex1001-80630.htm

    EXHIBIT 10.01

    
 

    WILLIAMS
CONTROLS, INC.

    RESTATED
1993 STOCK OPTION PLAN

     

    This
Williams Controls, Inc. Restated 1993 Stock Option Plan (this "Plan") is
intended to encourage stock ownership by employees, officers and directors
(whether or not they are employees) of and consultants to Williams Controls,
Inc. (the "Corporation"), its divisions, Subsidiary corporations and Parent
corporations, so that they may acquire or increase their proprietary interest in
the Corporation, which will enable the Corporation to (i) induce qualified
persons to become employees, officers or directors of, or consultants to, the
Corporation; (ii) reward employees, directors, and consultants for past
services to the Corporation; and (iii) encourage such persons to remain in
the employ of, or associated with, the Corporation and to put forth maximum
efforts for the success of the business of the Corporation.  This Plan
was originally adopted September 20, 1993, subsequently amended to increase
the number of shares available under this Plan, and is now being restated, in
its entirety, to incorporate various changes.

     

    It is
intended that options granted by the Committee pursuant to Section 5(a) of this
Plan shall constitute "incentive stock options" ("Incentive Stock options")
within the meaning of Section 422 of the Code, and options granted by the
Committee pursuant to Section 6(b) of this Plan shall constitute "non-qualified
stock options" ("Non-qualified Stock Options").

     

    1.           Definitions. As used in this
Plan, the following words and phrases shall have the meanings
indicated:

     

    (a)           "Board"
means the Board of Directors of the Corporation.

     

    (b)           "Code"
means Internal Revenue Code of 1986, as amended from to time.

     

    (c)           "Committee"
means the Compensation Committee appointed by the Board, if one has been
appointed. If no Committee has been appointed, the term "Committee" shall mean
the Board.

     

    (d)           "Common
Stock" mean the Corporation's $.01 par value common stock.

     

    (e)           "Disability"
means a Recipient's inability to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment that can be
expected to result in death or that has lasted or can be expected to last for a
continuous period of not less than 12 months, or such other meaning ascribed in
Section 22(e)(3) or any successor provision of the Code. If the Recipient has a
disability insurance policy, the term "Disability" shall be as defined therein;
provided that said definition is not inconsistent with the meaning ascribed in
Section 22(e)(3) or any successor provision of the Code.

     

    (f)           "Exchange
Act" means Securities Exchange Act of 1934, as amended from time to
time.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    (g)           "Fair
Market Value" per share as of a particular date means the last sale price of the
Corporation's Common Stock as reported on a national securities exchange or on
the NASDAQ National Market System or, if the quotation for the last sale
reported is not available for the Corporation's Common Stock, the average of the
closing bid and asked prices of the Corporation's Common Stock as reported by
NASDAQ or on the electronic bulletin board or, if none, the National Quotation
Bureau, Inc.'s "Pink Sheets" or, if such quotations are unavailable, the value
determined by the Committee in accordance with its discretion in making a bona
fide, good faith determination of fair market value. Fair Market Value shall be
determined without regard to any restriction other than a restriction which, by
its terms, never will lapse.

     

    (h)           "Option"
means either an Incentive Stock Option or a Non-qualified Stock Option, or
either or both of them.

     

    (i)           "Option
Price" means the purchase price of the shares of Common Stock covered by an
Option determined in accordance with Section 6(c) hereunder.

     

    (j)           "Parent"
means any corporation which is a "parent corporation" as defined in Section
424(e) of the Code, with respect to the Corporation.

     

    (k)           "Plan"
means this Restated 1993 Stock Option Plan.

     

    (1)           "Recipient"
means any person granted an Option hereunder.

     

    (m)           "Securities
Act" means the Securities Act of 1933, as amended from time to
time.

     

    (n)           "Subsidiary"
means any corporation which is a "subsidiary corporation" as defined in Section
424(f) of the Code, with respect to the Corporation.

     

    2.           Administration.

     

    (a)           The
Plan shall be administered by the Committee. The Committee shall have the
authority in its discretion, subject to and not inconsistent with the express
provisions of this Plan, to administer this Plan and to exercise all the powers
and authorities either specifically conferred under this Plan or necessary or
advisable in the administration of this Plan, including the authority to grant
Options; to determine which Options shall be Incentive Stock Options and which
shall be Non-qualified Stock Options; to determine the vesting schedules and
other restrictions, if any, relating to Options; to determine the Option Price;
to determine the persons to whom, and the time or times at which, Options shall
be granted; to determine the number of shares to be covered by each Option; to
determine Fair Market Value per share; to interpret this Plan; to prescribe,
amend and rescind rules and regulations relating to this Plan; to determine the
terms and provisions of the Option agreements (which need not be identical)
entered into in connection with Options granted under this Plan; and to make all
other determinations deemed necessary or advisable for the administration of
this Plan. The Committee may delegate to one or more of its members or to one or
more agents such administrative duties as it may deem advisable, and the
Committee or any person to whom it has delegated duties as aforesaid may employ
one or more persons to render advice with respect to any responsibility the
Committee or such person may have under this Plan.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (b)           Options
granted under this Plan shall be evidenced by duly adopted resolutions of the
Committee included in the minutes of the meeting at which they are adopted or in
a unanimous written consent.

     

    (c)           With
respect to persons subject to Section 16 of the Exchange Act, transactions under
this Plan are intended to comply with all applicable conditions of Rule 16b-3 or
any successor regulation under the Exchange Act. To the extent any provision of
this Plan or action by the Committee fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Committee.
Any Option granted hereunder which would subject or subjects the Recipient to
liability under Section 16(b) of the Exchange Act is void ab initio as if it had
never been granted.

     

    (d)           No
member of the Committee or the Board shall be liable for any action taken or
determination made in good faith with respect to this Plan or any Option granted
hereunder.

     

    3.           Eligibility.

     

    (a)           Subject
to certain limitations hereinafter set forth, Options may be granted to
employees, officers and directors (whether or not they are employees) of, and
consultants to, the Corporation. In determining the persons to whom Options
shall be granted and the number of shares to be covered by each Option, the
Committee shall take into account the duties of the respective persons, their
present and potential contributions to the success of the Corporation and such
other factors as the Committee shall deem relevant to accomplish the purposes of
this Plan.

     

    (b)           A
Recipient shall be eligible to receive more than one grant of an Option during
the term of this Plan, on the terms and subject to the restrictions herein set
forth.

     

    4.           Stock Reserved.

     

    (a)           The
stock subject to Options hereunder shall be shares of Common Stock. Such shares,
in whole or in part, may be authorized but unissued shares or shares that shall
have been or that may be reacquired by the Corporation. The aggregate number of
shares of Common Stock as to which Options may be granted from time to time
under this Plan (the "Available Shares") shall not exceed 4,500,000
shares.  This number was originally set at 1,500,000 and subsequently
increased to 3,000,000 (shareholder approval on March 27, 1998), and then
increased again to 4,500,000 (shareholder approval on February 26,
1999).  Notwithstanding the foregoing, no more than 4,500,000 shares
of Common Stock shall be available for the grant of Incentive Stock Options
under the Plan. The number of Available Shares shall be subject to adjustment as
provided in Section 6(i) hereof.

     

    (b)           If
any outstanding Option under this Plan for any reason expires or is terminated
without having been exercised in full, the shares of Common Stock allocable to
the unexercised portion of such Option shall become available for subsequent
grants of Options under this Plan, unless this Plan shall have been
terminated.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    5.           Stock Options

     

    (a)           Incentive Stock
Options.

     

    (1)           Options
granted pursuant to this Section 6(a) are intended to constitute Incentive Stock
Options and shall be subject to the following special terms and conditions, in
addition to the general terms and conditions specified in Section 6 hereof. Only
employees of the Corporation (as the term "employees" is defined for the
purposes of the Code) shall be entitled to receive Incentive Stock
Options.

     

    (2)           The
aggregate Fair Market Value (determined as of the date the Incentive Stock
Option is granted) of the shares of Common Stock with respect to which Incentive
Stock Options granted under this and any other plan of the Corporation, or any
Parent corporation or Subsidiary corporation, are exercisable for the first time
by an Recipient during any calendar year may not exceed the amount set forth in
Section 422(d) of the Code, as amended from time to time. On the date this Plan
was adopted, the maximum dollar amount as to which Incentive Stock options could
first become exercisable in any calendar year was $100,000.

     

    (3)           Incentive
Stock Options granted under this Plan are intended to satisfy all requirements
for incentive stock options under Section 422 of the Code and final Treasury
Regulations thereunder and, notwithstanding any other provision of this Plan,
this Plan and all Incentive Stock Options granted under it shall be so
construed, and all contrary provisions shall be so limited in scope and effect
and, to the extent they cannot be so limited they shall be void, except as
otherwise provided in Section 12 hereof.

     

    (b)           Non-qualified Stock
Options. Options granted pursuant to this Section 5(b) are intended to
constitute Non-qualified Stock Options and shall be subject only to the general
terms and conditions specified in Section 6 hereof.

     

    6.           Terms and Conditions of
Options. Each Option granted pursuant to this Plan shall be evidenced by
a written Option agreement between the Corporation and the Recipient, which
agreement shall be in substantially the form of Exhibit A hereto as modified
from time to time by the Committee in its discretion, and which shall comply
with and be subject to the following terms and conditions

     

    (a)           Number of Shares.
Each Option agreement shall state the number of shares of Common Stock covered
by the Option.

     

    (b)           Type of Option. Each
Option agreement shall specifically identify the portion, if any, of the option
which constitutes an Incentive Stock Option and the portion, if any, which
constitutes a Non-qualified Stock Option.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (c)           Option
Price.  Each Option agreement shall state the Option Price,
which shall be determined by the Committee subject only to the following
restrictions:

     

    (1)           The
Option Price of any Incentive Stock Option shall be not less than 100% of the
Fair Market Value per share on the date of grant of the Option; provided,
however, that any Incentive Stock Option granted under this Plan to a person
owning more than ten percent of the total combined voting power of the Common
Stock shall have an Option Price of not less than 110% of the Fair Market Value
per share on the date of grant of the Incentive Stock Option.

     

    (2)           Any
Non-qualified Stock Option granted under the Plan shall be at a price no less
than 80% of the Fair Market Value per share on the date of grant
thereof.

     

    (3)           The
Option Price shall be subject to adjustment as provided in Section 6(i)
hereof.

     

    (d)           Term of Option. Each
Option agreement shall state the period during and times at which the option
shall be exercisable; provided, however:

     

    (1)           The
date on which the Committee adopts a resolution expressly granting an Option
shall be considered the day on which such Option is granted, unless a future
date is specified in the resolution; provided, however, the Recipient shall have
no rights under the grant until the Recipient has executed an Option agreement
with respect to such Option.

     

    (2)           Except
as further restricted in paragraph 6(d)(3), the exercise period shall not exceed
ten years from the date of grant of the Option.

     

    (3)           Incentive
Stock Options granted to a person owning more than ten percent of the total
combined voting power of the Common Stock of the Corporation shall be for no
more than five years.

     

    (4)           The
Committee shall have the authority to accelerate or extend the exercisability of
any outstanding Option at such time and under such circumstances as it, in its
sole discretion, deems appropriate. No exercise period may be extended to
increase the term of the Option beyond ten years from the date of the
grant.

     

    (5)           The
exercise period shall be subject to earlier termination as provided in Sections
6(f) and 6(g) hereof and, furthermore, shall be terminated upon surrender of the
option by the holder thereof if such surrender has been authorized in advance by
the Committee.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (e)           Method of Exercise and
Medium and Time of Payment.

     

    (1)           An
Option may be exercised as to any or all whole shares of Common Stock as to
which it then is exercisable.

     

    (2)           Each
exercise of an Option granted hereunder, whether in whole or in part, shall be
by written notice to the secretary of the Corporation designating the number of
shares as to which the Option is being exercised, and shall be accompanied by
payment in full of the Option Price for the number of shares so designated,
together with any written statements required by any applicable securities
laws.

     

    (3)           The
Option Price shall be paid in cash, or as authorized by the Committee, in shares
of Common Stock having a Fair Market Value equal to such Option Price or in
property or in a combination of cash, shares and property and, subject to
approval of the Committee, may be effected in whole or in part (A) with monies
received from the Corporation at the time of exercise as a compensatory cash
payment, or (B) with monies borrowed from the Corporation pursuant to repayment
terms and conditions as shall be determined from time to time by the Committee,
in its discretion, separately with respect to each exercise of an Option and
each Recipient; provided, however, that each such method and time for payment
and each such borrowing and the terms and conditions of repayment shall be
permitted by and be in compliance with applicable law.

     

    (4)           The
Committee shall have the sole and absolute discretion to determine whether or
not property other than cash or Common Stock may be used to purchase the shares
of Common Stock hereunder and, if so, to determine the value of the property
received.

     

    (5)           Applicable
withholding taxes shall be paid in the manner specified by Section 7
hereof.

     

    (f)           Termination. Except
as provided herein, an Option may not be exercised unless the Recipient then is
an employee, officer or director of, or consultant to, the Corporation or a
Subsidiary of or Parent to the Corporation, and unless the Recipient has
remained continuously as an employee, officer or director of, or consultant to,
the Corporation since the date of grant of the Option.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (1)           If
the Recipient ceases to be an employee, officer or director of, or consultant
to, the Corporation or a Subsidiary or Parent to the Corporation (other than by
reason of death, Disability or retirement), other than for Cause (as defined
below), all Options theretofore granted to such Recipient but not theretofore
exercised shall terminate three months after the date the Recipient ceased to be
an employee, officer or director of, or consultant to, the
Corporation.  In the event of a termination of employment or cessation
of working relationship for Cause, all unexercised Options shall immediately
terminate and expire.  For purposes of this Plan, a termination or
cessation for “Cause” means a termination of the Recipient’s employment or other
working relationship as a result of (A) willful refusal to perform his or
her obligations to the Company, (B) willful misconduct contrary to the
interests of the Company, (C) Commission of a serious criminal act, whether
denominated a felony, misdemeanor or otherwise, or (D) engaging in
activities directly in competition or antithetical to the best interests of the
Company.  To the extent a Recipient is a party to an employment
agreement or offer letter of employment with the Company that defines “cause” or
a similar term, then the meaning set forth in that agreement shall also be
considered “Cause” for purposes of this Plan.

     

    (2)           Nothing
in this Plan or in any Option granted hereunder shall confer upon an individual
any right to continue in the employ of, or other relationship with, the
Corporation or interfere in any way with the right of the Corporation to
terminate such employment or other relationship between the individual and the
Corporation.

     

    (g)           Death, Disability or
Retirement of Recipient. If a Recipient shall die while an employee,
officer or director of, or a consultant to, the Corporation, or if the
Recipient's employment, officer or director status, or consulting relationship,
shall terminate by reason of Disability or retirement, all Options theretofore
granted to such Recipient, whether or not otherwise exercisable, unless earlier
terminated in accordance with their terms, may be exercised by the Recipient or
by the Recipient's estate or by a person who acquired the right to exercise such
options by bequest or inheritance or otherwise by reason of the death or
Disability of the Recipient, at any time within one year after the date of
death, Disability or retirement of the Recipient; provided, however, that in the
case of Incentive Stock Options such one-year period shall be limited to three
months in the case of retirement.

     

    (h)           Transferability
Restriction.

     

    (1)           Options
granted under this Plan shall not be transferable other than by will or by the
laws of descent and distribution or pursuant to a qualified domestic relations
order as defined by the Code or Title I of the Employee Retirement Income
Security Act of 1974, or the rules thereunder. Options may be exercised, during
the lifetime of the Recipient, only by the Recipient and thereafter only by his
or her legal representative.

     

    (2)           Any
attempted sale, pledge, assignment, hypothecation or other transfer of an Option
contrary to the provisions hereof and the levy of any execution, attachment or
similar process upon an Option shall be null and void and without force or
effect and shall result in a termination of the Option.

     

    
      
        
        

      

      
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    (3)           (A)
As a condition to the transfer of any shares of Common Stock issued upon
exercise of an Option granted under this Plan, the Corporation may require an
opinion of counsel, satisfactory to the Corporation, to the effect that such
transfer will not be in violation of the Securities Act or any other applicable
securities laws or that such transfer has been registered under federal and all
applicable state securities laws. (B) Further, the Corporation shall be
authorized to refrain from delivering or transferring shares of Common Stock
issued under this Plan until the Committee determines that such delivery or
transfer will not violate applicable securities laws and the Recipient has
tendered to the Corporation any federal, state or local tax owed by the
Recipient as a result of exercising the Option or disposing of any Common Stock
when the Corporation has a legal liability to satisfy such tax. (C) The
Corporation shall not be liable for damages due to delay in the delivery or
issuance of any stock certificate for any reason whatsoever, including, but not
limited to, a delay caused by listing requirements of any securities exchange or
the National Association of Securities Dealers, or any registration requirements
under the Securities Act, the Exchange Act, or under any other state or federal
law, rule or regulation. (D) The Corporation is under no obligation to take any
action or incur any expense in order to register or qualify the delivery or
transfer of shares of Common Stock under applicable securities laws or to
perfect any exemption from such registration or qualification. (E) Furthermore,
the Corporation will not be liable to any Recipient for failure to deliver or
transfer shares of Common Stock if such failure is based upon the provisions of
this paragraph.

     

    (i)           Effect of Certain
Changes.

     

    (1)           If
there is any change in the number of shares of Common Stock through the
declaration of stock dividends, or through a recapitalization resulting in stock
splits, or combinations or exchanges of such shares, the number of shares of
Common Stock available for Options and the number of such shares covered by
outstanding options, and the exercise price per share of the outstanding
options, shall be proportionately adjusted by the Committee to reflect any
increase or decrease in the number of issued shares of Common Stock; provided,
however, that any fractional shares resulting from such adjustment shall be
eliminated.  A stock dividend on the Company’s Series B Preferred
Stock, which stock is convertible into Common Stock, shall not be deemed an
event that triggers an adjustment under this paragraph 6(i)(1).

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (2)           In
the event of the proposed dissolution or liquidation of the Corporation, or any
corporate separation or division, including, but not limited to, split-up,
split-off or spin-off, or a merger or consolidation of the Corporation with
another corporation, the Committee may provide that the holder of each Option
then exercisable shall have the right to exercise such Option (at its then
current Option Price) solely for the kind and amount of shares of stock and
other securities, property, cash or any combination thereof receivable upon such
dissolution, liquidation, corporate separation or division, or merger or
consolidation by a holder of the number of shares of Common Stock for which such
Option might have been exercised immediately prior to such dissolution,
liquidation, or corporate separation or division, or merger or consolidation; or
in the alternative the Committee may provide that each option granted under this
Plan shall terminate as of a date fixed by the Committee; provided, however,
that not less than 30 days' written notice of the date so fixed shall be given
to each Recipient, who shall have the right, during the period of 30 days
preceding such termination, to exercise the Option as to all or any part of the
shares of Common Stock covered thereby, including shares as to which such option
would not otherwise be exercisable.

     

    (3)           Paragraph
(2) of this Section 6(i) shall not apply to a merger or consolidation in which
the Corporation is the surviving corporation and shares of Common Stock are not
converted into or exchanged for stock, securities of any other corporation, cash
or any other thing of value. Notwithstanding the preceding sentence, in case of
any consolidation or merger of another corporation into the Corporation in which
the Corporation is the surviving corporation and in which there is a
reclassification or change (including a change which results in the right to
receive cash or other property) of the shares of Common Stock (other than a
change in par value, or from par value to no par value, or as a result of a
subdivision or combination, but including any change in such shares into two or
more classes or series of shares), the Committee may provide that the holder of
each Option then exercisable shall have the right to exercise such option solely
for the kind and amount of shares of stock and other securities (including those
of any new direct or indirect Parent of the Corporation), property, cash or any
combination thereof receivable upon such reclassification, change, consolidation
or merger by the holder of the number of shares of Common Stock for which such
option might have been exercised.

     

    (4)           Notwithstanding
paragraph (2) of this Section 6(i), in the event of any merger or consolidation
in which the Corporation is not the surviving corporation, or any sale or
transfer by the Corporation of all or substantially all its assets, or any
tender offer or exchange offer for, or the acquisition, directly or indirectly,
by any person or group for more than 50% of the then outstanding voting
securities of the Corporation (each such transaction referred to as a “Sales
Event”), all Options granted under the Plan shall become exercisable in full,
notwithstanding any other provision of this Plan or of any outstanding Options
granted thereunder, including provisions providing for staggered vesting of
options, on and after (i) the fifteenth day prior to the effective date of such
merger, consolidation, sale, transfer or acquisition or (ii) the date of
commencement of such tender offer or exchange offer, as the case may be. To the
extent that Section 422(d) of the Code would not permit the provisions of the
foregoing sentence to apply to any outstanding Incentive Stock Options, such
Incentive Stock Options shall immediately upon the occurrence of the event
described in the foregoing sentence, be treated for all purposes of this Plan as
Non-qualified Stock Options and shall be immediately exercisable as such as
provided in the foregoing sentence. Notwithstanding the foregoing, in no event
shall any Option be exercisable after the date of termination of the exercise
period of such Option specified in Section 6(d).

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (5)           If
there is a change in the Common Stock of the Corporation as presently
constituted, which is limited to a change of all of its authorized shares with
par value into the same number of shares with a different par value or without
par value, the shares resulting from any such change shall be deemed to be the
Common Stock within the meaning of this Plan.

     

    (6)           To
the extent that the foregoing adjustments relate to stock or securities of the
Corporation, such adjustments shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive, provided
that each Incentive Stock Option granted pursuant to this Plan shall not be
adjusted in a manner that causes such option to fail to continue to qualify as
an Incentive Stock Option within the meaning of Section 422 of the Code, except
as otherwise provided in Section 6(i)(4) hereof.

     

    (7)           Except
as expressly provided in this Section 6(i), the Recipient shall have no rights
by reason of any subdivision or consolidation of shares of stock of any class or
the payment of any stock dividend or any other increase or decrease in the
number of shares of stock of any class or by reason of any dissolution,
liquidation, merger, or consolidation or split-up, split-off or spin-off of
assets or stock of another corporation; and any issue by the Corporation of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock subject to the
Option. The grant of an Option under this Plan shall not affect in any way the
right or power of the Corporation to make adjustments, reclassifications,
reorganizations or changes of its capital or business structures or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or part of its
business or assets.

     

    (j)           Rights as
Shareholder/Non-Distributive Intent.

     

    (1)           Neither
a person to whom an Option is granted, nor such person's legal representative,
heir, legatee or distributee, shall be deemed to be the holder of, or to have
any rights of a holder with respect to, any shares of Common Stock subject to
such Option until after the Option is exercised and the shares are issued to the
person exercising such Option.

     

    (2)           Upon
exercise of an Option at a time when there is no registration statement in
effect under the Securities Act relating to the shares issuable upon exercise,
shares may be issued to the Recipient only if the Recipient represents and
warrants in writing to the Corporation that the shares purchased are being
acquired for investment and not with a view to the distribution thereof and
provides the Corporation with sufficient information to establish an exemption
from the registration requirements of the Securities Act.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (3)           No
shares shall be issued upon the exercise of an Option unless and until there
shall have been compliance with any then applicable requirements of the
Securities and Exchange Commission, or any other regulatory agencies having
jurisdiction over the Corporation.

     

    (4)           No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distribution or other rights for which
the record date is prior to the date such stock certificate is issued, except as
provided in Section 6(i) hereof.

     

    (k)           Other
Provisions.  Option agreements evidencing Options granted under the
Plan shall contain such other provisions, including, without limitation, (i) the
imposition of restrictions upon the exercise of an Option, and (ii) in the case
of an Incentive Stock Option, the inclusion of any condition not consistent with
such Option qualifying as an Incentive Stock Option, as the Committee shall deem
advisable.

     

    7.           Agreement by Recipient Regarding
Withholding Taxes.   Each Recipient agrees that the
Corporation, to the extent permitted or required by law, shall deduct a
sufficient number of shares due to the Recipient upon exercise of the Option to
allow the Corporation to pay federal, state and local taxes of any kind required
by law to be withheld upon the exercise of such option from any payment of any
kind otherwise due to the Recipient. The Corporation shall not be obligated to
advise any Recipient of the existence of any tax or the amount which the
Corporation will be so required to withhold.

     

    8.           Term of Plan. Options may be
granted under this Plan from time to time within a period of ten years from the
date this Plan was last amended by the Board and the shareholders of the
Company, pursuant to IRS regulations.  Effective December 4, 1998 the
Board amended the Plan to cover up to 4,500,000 shares, which increase was
approved by the Corporation’s shareholders on February 26, 1999, and so
Options may be granted under this Plan until December 3, 2008.

     

    9.           Amendment and Termination of the
Plan. The Committee at any time and from time to time may suspend,
terminate, modify or amend this Plan.  Except as provided in
Section 6 hereof, no suspension, termination, modification or amendment of
the Plan may adversely affect any option previously granted, unless the written
consent of the Recipient is obtained.

     

    
      
        
        

      

      
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    10.           Assumption. Subject to Section
6, the terms and conditions of any outstanding Options granted under this Plan
shall be assumed by, be binding upon and shall inure to the benefit of any
successor corporation to the Corporation and continue to be governed by, to the
extent applicable, the terms and conditions of this Plan. Such successor
corporation may but shall not be obligated to assume this Plan.

     

    11.           Termination of Right of
Action.  Every right of action arising out of or in connection
with this Plan by or on behalf of the Corporation, or by any shareholder of the
Corporation against any past, present or future member of the Board, or against
any employee, or by an employee (past, present or future) against the
Corporation, irrespective of the place where an action may be brought and of the
place of residence of any such shareholder, director or employee, will cease and
be barred by the expiration of three years from the date of the act or omission
in respect of which such right of action is alleged to have risen or such
shorter period as may be provided by law.

     

    12.           Tax Litigation.  The
Corporation shall have the right, but not the obligation, to contest, at its
expense, any tax ruling or decision, administrative or judicial, on any issue
which is related to this Plan and which the Committee believes to be important
to holders of Options granted under this Plan and to conduct any such contest or
any litigation arising therefrom to a final decision.

     

    13.           Adoption.  This Plan
was originally approved by the Board of Directors of the Corporation on
September 20, 1993 and approved by the Corporation’s shareholders on
March 15, 1994.  This Plan was subsequently amended to increase
the number of shares available for grant, with the Board most recently
increasing the available shares to 4,500,000 on December 4, 1998 (and
shareholder approval of the increase on February 26, 1999).  This
Plan has been restated effective May 15, 2003 to incorporate various clarifying
changes, which changes neither increase the number of shares available nor
expand the category of individuals that may be Recipients.

     

     

     

     

     

     

     

     

     

     

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