Exhibit 10.1
FIFTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT
     This Fifth Amendment to Credit and Security Agreement (“Fifth Amendment”)
is entered into as of December 1, 2008, by and among Synergetics, Inc., a
Missouri corporation, and Synergetics USA, Inc., a Delaware corporation
(individually, a “Borrower” and together, the “Borrowers”), and Regions Bank
(“Lender”).
RECITALS
     A. Borrowers and Lender entered into a certain Credit and Security
Agreement dated as of March 13, 2006, as heretofore amended from time to time
(as so amended, the “Existing Credit Agreement”).
     B. Borrowers and Lenders desire to amend the Existing Credit Agreement as
hereinafter provided.
     C. The Existing Credit Agreement and this Fifth Amendment constitute the
“Credit Agreement” from and after the effectiveness of this Fifth Amendment.
     NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrowers and Lender agree as follows:
     1. Defined Terms. Each term used herein without definition or a
modification to definition shall have the same meaning as set forth in the
Existing Credit Agreement, otherwise defined in this Amendment.
     2. Credit Agreement Amendments. The Existing Credit Agreement is hereby
amended as follows, effective upon fulfillment of conditions set forth in
Section 4 of this Fifth Amendment:
     A. Section 1.2, entitled “Primary Definitions,” is hereby amended as
follows:

  (1)   The “Applicable Percentage” definition is hereby amended to read as
follows in its entirety:

 

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

 

     “‘Applicable Percentage’ means the percentage value of the Applicable LIBOR
Rate Margin and the Unused Line Fee set forth in the table below with respect to
each Leverage Ratio level identified in the first column of each row:

                  If the Leverage Ratio         as of the last day of   The
Applicable   The Unused Line the prior fiscal   LIBOR Rate Margin   Fee (see
Section quarter is:   is:   2.17(b)) is:
Less than or equal to 2.00
    2.00 %     0.200 %
Greater than 2.01 but less than or equal to 2.50
    2.25 %     0.200 %
Greater than 2.51 but less than or equal to 3.00
    2.50 %     0.250 %
Greater than 3.01
    2.75 %     0.250 %

  (2)   The “Eligible Accounts” definition is hereby amended to add the
following subclause (14) as an additional description of Accounts that are not
Eligible Accounts:

“(14) Three percent (3%) of all Accounts, being a reserve established pursuant
to Section 2.1 hereof.”

  (3)   The “Eligible Inventory” definition is hereby amended to add the
following subclause (7) as an additional description of Inventory that is not
Eligible Inventory:

     “(7) Inventory held and used for demonstration purposes with value in
excess of $1,000,000.”

  (4)   The definition of “Revolving Note” is hereby amended to read as follows
in its entirety:

     “ ‘Revolving Note’ shall mean the Second 2008 Amended and Restated
Revolving Note, attached as Exhibit A to the Fifth Amendment, in maximum
principal amount of $9,500,000 (the “Second 2008 Amended and Restated Revolving
Note”).”

  (5)   The definition of “Termination Date” is hereby amended to read as
follows in its entirety:

“ ‘Termination Date’ means November 30, 2009.”

2

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

 

  (6)   The “Borrowing Base” definition is hereby amended to read as follows in
its entirety:

     “‘Borrowing Base’ means, at any time and subject to change from time to
time in Lenders’ sole discretion, the lessor of:

  (a)   the Revolving Loan Commitment, or     (b)   the sum of:

  (i)   up to 85% of Eligible Accounts, plus     (ii)   up to the lesser of
(A) 50% of Eligible Inventory or (B) $4,750,000, provided that no more than
$1,000,000 of demonstration inventory may be included in Eligible Inventory.”

     B. The initial sentence of Section 2.1 entitled “Advances,” is hereby
amended to read as follows in its entirety:
     “Section 2.1 Advances. The Lender agrees, on the terms and subject to the
conditions herein set forth, to make Advances to the Borrowers from time to time
during the period from the date hereof to and including the Termination Date, or
the earlier date of termination in whole of the Revolving Credit Facility
pursuant to Section 2.10 or Section 8.2 hereof, in an aggregate amount at any
time outstanding not to exceed the Borrowing Base, less the L/C Amount, and less
such reserve as Lender may determine from time to time as reflected on the form
of Borrowing Base (currently in the form attached to the Fifth Amendment as
Exhibit B thereto), which Advances shall be secured by the Collateral as
provided in Article III hereof.”
     C. Subsection (d) to Section 6.1, entitled “Reporting Requirements,” is
hereby amended to read as follows in its entirety:
     (d) “As soon as available, and in any event within 15 days after the end of
each month (or more frequently if requested by Lender and in such detail as
reasonably required by Lender), a Borrowing Base certificate in a form
acceptable to the Lender (currently, the form attached to the Fifth Amendment as
Exhibit B), showing the computation of the Borrowing Base as of the close of
business on the last day of the immediately preceding fiscal month (except that
Inventory calculations may be updated not less than every 60 days), prepared by
the Borrowers and certified by the Borrowers’ chief financial officer.”
     3. Representations and Warranties. The Borrowers jointly and severally
hereby represent and warrant to the Lender as follows:
     (a) This Fifth Amendment and Second 2008 Amended and Restated Revolving
Note have been duly and validly executed by authorized officers of the

3

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

 

Borrowers and constitute the legal, valid and binding obligation of the
Borrowers, enforceable against the Borrowers in accordance with their terms. The
Existing Credit Agreement, as amended by this Fifth Amendment, remains in full
force and effect and remains the valid and binding obligation of the Borrowers,
enforceable against the Borrowers in accordance with its terms. The Borrowers
hereby ratify and confirm the Existing Credit Agreement, as amended by this
Fifth Amendment.
     (b) No Default or Event of Default has occurred or now exists under the
Existing Credit Agreement and no Default or Event of Default will occur as a
result of the effectiveness of this Fifth Amendment.
     (c) The representations and warranties of the Borrower contained in the
Existing Credit Agreement, are true and correct in all material respects on and
as of the date of this Fifth Amendment.
     4. Conditions to Effectiveness of Fifth Amendment. The effectiveness of
this Fifth Amendment and the agreements set forth herein are subject to
fulfillment, as determined in the sole judgment of Lender, of the following
conditions:
     (a) Borrowers shall have executed and delivered to Lender this Fifth
Amendment and the Second 2008 Amended and Restated Revolving Note;
     (b) Each Borrower shall have delivered to Lender a Certificate of the
Secretary or an Assistant Secretary of such Borrower certifying that appropriate
corporate actions authorizing the execution and delivery of this Fifth Amendment
have been taken and covering such other matters as Lender may reasonably
request;
     (c) Lender shall have determined that no Default or Event of Default
exists; and
     (d) Borrowers shall have delivered such other documents and shall have
taken such other actions as Lender in its reasonable discretion may require.
     5. Release. In consideration of the agreement of Lender to modify the terms
of the Existing Credit Agreement as set forth in this Fifth Amendment, Borrowers
hereby release, discharge and acquit forever Lender and any of its officers,
directors, servants, agents, employees and attorneys, past and present, from any
and all claims, demands and causes of action, of whatever nature, whether in
contract or tort, accrued or to accrue, contingent or vested, known or unknown,
arising out of or relating to the loans evidenced by the Existing Credit
Agreement, as hereby amended, or Lender’s administration of the same or any
other actions taken pursuant to the Existing Credit Agreement or under any other
documents or instruments evidencing loans made by Lender to Borrowers or the
administration of same; provided, however, that the foregoing release and the
following indemnity relate only to actions or inactions of Lender through the
date hereof.
     6. Payment of Costs/Expenses. Without limiting the generality of provisions
in the Existing Credit Agreement (as amended by this Fifth Amendment) relating
to payment of Lender’s costs and expenses, the Borrower will pay all reasonable
out-of-pocket expenses, costs

4

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

 

and charges of Lender’s attorneys incurred in connection with the preparation
and implementation of this Fifth Amendment.
     7. Other Documents/Provisions to Remain in Force. Except as expressly
amended hereby, the Existing Credit Agreement and all documents and instruments
executed in connection therewith or contemplated thereby and all indebtedness
incurred pursuant thereto shall remain in full force and effect and are in all
respects hereby ratified and affirmed.
     8. Successors and Assigns. Subject to any restriction on assignment set
forth in the Existing Credit Agreement, this Fifth Amendment shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
     9. Counterparts. This Fifth Amendment may be executed in any number of
counterparts, each of which shall constitute one and the same Amendment.
     10. Incorporation by Reference. The Existing Credit Agreement and all
exhibits thereto, and the exhibits to this Fifth Amendment are incorporated
herein by this reference, except to the extent replaced by Exhibits attached to
this Fifth Amendment.
     11. No Oral Loan Agreements. Pursuant to Mo. Rev. Stat. § 432.045 and §
432.047, the parties agree to the quoted language below (all references to “you”
are references to Borrower and all references to “us” are references to Lender):
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FOREBEAR FROM
ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT
ARE NOT ENFORCEABLE, REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED, THAT
IS IN ANY WAY RELATED TO THE CREDIT AGREEMENT. TO PROTECT YOU (BORROWER) AND US
(LENDER) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH
COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND
EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN
WRITING TO MODIFY IT.
[Remaining portion of this page is intentionally blank. Signature page follows]

5

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

 

     IN WITNESS WHEREOF, Lender and Borrowers have caused this Fifth Amendment
to be executed effective as of the date first written above.

            BORROWERS:

SYNERGETICS, INC.
      By:   /s/ Pamela G. Boone         Name:   Pamela G. Boone        Title:  
Chief Financial Officer        and

SYNERGETICS USA, INC.
      By:   /s/ Pamela G. Boone         Name:   Pamela G. Boone        Title:  
Chief Financial Officer        LENDER:

REGIONS BANK
      By:   /s/ Anne D. Silvestri         Name:   Anne D. Silvestri       
Title:   Senior Vice President     

6

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

 

Exhibit A to Fifth Amendment
to Credit and Security Agreement
SECOND 2008 AMENDED AND RESTATED
REVOLVING NOTE
$9,500,000.00
St. Louis, Missouri
December 1, 2008
     FOR VALUE RECEIVED, the undersigned, SYNERGETICS, INC., a Missouri
corporation, and SYNERGETICS USA, INC., a Delaware corporation (individually, a
“Borrower” and together, the “Borrowers”), hereby jointly and severally promise
to pay on the Termination Date to the order of Regions Bank (the “Lender”), at
its main office in St. Louis, Missouri, or at any other place designated at any
time by the holder hereof, in lawful money of the United States of America and
in immediately available funds, the principal sum of Nine Million Five Hundred
Thousand and 00/100 ($9,500,000.00) or, if less, the aggregate unpaid principal
amount of all Advances and Swing Line Loans made by the Lender to the Borrowers
under the Credit Agreement (defined below), together with interest on the
principal amount hereunder remaining unpaid from time to time, computed on the
basis of the actual number of days elapsed and a 360-day year, from the date
hereof until this Note is fully paid at the rate from time to time in effect
under the Credit and Security Agreement dated as of March 13, 2006, as
heretofore amended by First Amendment dated as of September 26, 2006, by Second
Amendment dated as of December 8, 2006, by Third Amendment dated as of June 7,
2007, by Fourth Amendment dated as of January 31, 2008, and by Fifth Amendment
(“Fifth Amendment”) of even date herewith (as so amended, the “Credit
Agreement”) by and among the Lender and the Borrowers. The principal hereof and
interest accruing thereon shall be due and payable as provided in the Credit
Agreement. This Note may be prepaid only in accordance with the Credit
Agreement.
     This Note is issued pursuant, and is subject, to the Credit Agreement,
which provides, among other things, for acceleration hereof. This Note is the
Second 2008 Amended and Restated Revolving Note referred to in the Fifth
Amendment. This Note evidences not only all Advances of Lender under the
Revolving Credit Facility but also all Swing Line Loans made by Lender pursuant
to Section 2.1A of the Credit Agreement.
     This Note, among other things, is secured pursuant to the Credit Agreement
and the Security Documents as therein defined, and may now or hereafter be
secured by one or more other security agreements, mortgages, deeds of trust,
assignments or other instruments or agreements.
     The Borrowers hereby agree to pay all costs of collection, including
attorneys’ fees and legal expenses in the event this Note is not paid when due,
whether or not legal proceedings are commenced.
     Presentment or other demand for payment, notice of dishonor and protest are
expressly waived.
     This Note shall be governed by the internal substantive laws of the State
of Missouri, without regard for its conflicts-of-law principles.

7

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

 

     This Note is a replacement for, but not a novation or refinancing of:
(A) the Revolving Note dated as of September 26, 2006, as amended by Amended and
Restated Revolving Note dated as of December 8, 2006, by Borrowers payable to
the order of Lender; (B) the Revolving Note dated as of September 26, 2006, as
amended by Amended and Restated Revolving Note dated as of December 8, 2006, by
Amended and Restated Revolving Note dated as of June 7, 2007, by Borrowers
payable to the order of Wachovia Bank National Association, which Note was
purchased by Lender and by 2008 Amended and Restated Revolving Note dated as of
January 31, 2008. This Note does not evidence or effect a release, or
relinquishment of the priority, of the security interests in any Collateral (as
defined in the Credit Agreement).
     ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH
DEBT ARE NOT ENFORCEABLE, REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED,
THAT IS IN ANY WAY RELATED TO THE CREDIT AGREEMENT. TO PROTECT YOU
(BORROWERS) AND US (LENDER) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY
AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING (THIS
NOTE, THE CREDIT AGREEMENT AND THE LOAN DOCUMENTS REFERRED TO THEREIN), WHICH IS
THE COMPLETE AND EXCLUSIVE STATEMENTS OF THE AGREEMENT BETWEEN US, EXCEPT AS WE
MAY LATER AGREE IN WRITING TO MODIFY IT.

            BORROWERS:

SYNERGETICS, INC.
      By:           Name:   Pamela G. Boone        Title:   Chief Financial
Officer        and

SYNERGETICS USA INC.
      By:           Name:   Pamela G. Boone        Title:   Chief Financial
Officer     

8

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

 

Exhibit B to Fifth Amendment
to Credit and Security Agreement
[Borrowing Base Certificate]