Exhibit 10.27
SECURITY AGREEMENT
(EQUIPMENT)
I. Grant of Security Interest. The undersigned, Synergetics, Inc. (“Debtor”),
for value received, hereby sells, assigns, transfers, conveys and mortgages to
The Industrial Development Authority of St. Charles County, Missouri (“Secured
Party”) and grants Secured Party a continuing security interest in all of
Debtor’s right, title and interest in and to the following described property,
all accessories and parts now or hereafter affixed or appertaining thereto or
used in connection therewith and all additions, accessions and substitutions
thereto or therefor and all proceeds (including without limitation insurance
proceeds), products, rents and profits thereof, whether cash or non-cash,
immediate or remote (collectively, the “Collateral”):
all personal property, whether now owned or hereafter acquired by Debtor, and
used or intended to be used in the possession, occupation or enjoyment thereof,
and all replacements, additions and substitutions thereof and thereto, including
(but not limited to) all furniture, furnishings and equipment
to secure the payment of (i) any and all indebtedness, liabilities and
obligations of Debtor to Secured Party under that certain Guarantor Agreement
dated as of September 1, 2002 from the Debtor, William L. Bates, Gregg D.
Scheller and Kurt W. Gampp, Jr. for the benefit of the Secured Party (the
“Guaranty”), (ii) any and all indebtedness, liabilities and obligations of
Debtor under this Security Agreement, and (iii) any and all costs of collection,
legal expenses and attorneys’ fees and expenses incurred by Secured Party upon
the occurrence of an Event of Default under this Agreement, in collecting or
enforcing payment of any such indebtedness, liabilities or obligations or in
preserving, protecting or realizing on the Collateral hereunder or in
representing Secured Party in connection with bankruptcy or insolvency
proceedings (hereinafter collectively referred to as the “Obligations”).
II. Possession of Collateral. Until an Event of Default has occurred under this
Agreement, Debtor may have possession of the Collateral and use the same in any
lawful manner not inconsistent with this Agreement or with any policy of
insurance covering any of the Collateral.
III. Covenants. Debtor hereby represents, warrants, covenants and agrees that:
(1) it is duly organized, validly existing and in good standing under the laws
of the State of Missouri, (2) it has full corporate power and authority to
borrow money from Secured Party and to grant to Secured Party the security
interest in the property hereby stated to be granted, (3) the officers of Debtor
executing this Agreement have been duly elected and qualified and have been duly
authorized and empowered to execute, deliver and perform the terms of this
Agreement on behalf of Debtor and (4) the execution, delivery and performance of
this Agreement by Debtor do not and will not violate any of the terms or
provisions of the Articles or Certificate of Incorporation or By-Laws of Debtor;
(5) the execution, delivery and performance of this Agreement by Debtor do not
and will not violate any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to Debtor or the terms of any indenture, agreement, document,
instrument or undertaking to which Debtor is a party or by which it is bound;
(6) if Debtor shall have advised Secured Party that any of the Collateral is
being acquired with any of the proceeds of any of the Obligations, such proceeds
may be disbursed by Secured Party directly to the seller of such Collateral;
(7) unless otherwise consented to in writing by Secured Party, the Collateral
(i) is and will be kept at Debtor’s principal place of business, the address
thereof being that shown at the end of this Agreement, (if mobile equipment or
equipment of a type normally used in more than one location, remaining there
when not in use), (ii) is not of a type normally used in more than one state and
will not be so used, (iii) will not be attached or affixed in any manner to or
become a part of any real estate or other personal property apart from other
items of the Collateral and (iv) is in the exclusive possession and control of
Debtor; (8) it has full title to the Collateral, and will at all times keep the
Collateral free and clear of any and all liens, claims and encumbrances
whatsoever other than the security interest hereunder, security

 

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interests currently in effect in favor of Union Planters Bank, N.A. or Heller
Financial, Inc.; (9) no financing statement (other than any which may have been
filed on behalf of Secured Party, Union Planters Bank, N.A. or Heller Financial,
Inc.) covering any of the Collateral is on file in any public office;
(10) Debtor will from time to time, on request of Secured Party, execute and
deliver or authorize the filing of such financing statements and other documents
and instruments and do such other acts and things, all as Secured Party may
request, to establish and maintain a valid and perfected security interest in
the Collateral to secure the payment of the Obligations, including, without
limitation, the execution of applications for certificates of ownership or title
naming Secured Party as first lienholder and the delivery of such certificates
to Secured Party and Debtor hereby authorizes the filing of financing statements
under the Uniform Commercial Code in connection with the security interest
granted hereunder; (12) it will reimburse Secured Party for all costs incident
to perfecting, maintaining or terminating the security interest granted hereby,
including filing and recording fees, fees for obtaining and transferring
certificates of title and all taxes and legal and clerical fees and expenses
paid or incurred by Secured Party in connection with any of the foregoing;
(13) it will not sell, transfer, lease or otherwise dispose of or offer to
dispose of any of the Collateral or any interest therein except with the prior
written consent of Secured Party and Bondowner Consent as defined in that
certain Indenture of Trust dated as of September 1, 2002 between the Secured
Party and UMB Bank, N.A., as Trustee; (14) it will at all times keep the
Collateral in first class order and repair, excepting any loss, damage or
destruction which is fully covered by proceeds of insurance, and will not use
the Collateral in violation of any law, regulation or insurance policy; (15) it
will pay promptly when due all taxes and assessments on the Collateral or for
its use or operation or upon this Agreement or any Obligation or with respect to
the perfection of any security interest or other lien hereunder (except as
otherwise provided by law); (16) it will at all times keep the Collateral
insured against loss, damage, theft and other risks, in such amounts and
companies and under policies in such form, all as shall be satisfactory to
Secured Party, which policies shall provide that loss thereunder shall be
payable to Secured Party and shall provide for thirty (30) days’ minimum written
notice of cancellation or amendment to Secured Party and that coverage in favor
of Secured Party will not be impaired in any way by any act, omission or default
of Debtor or any other person (and Secured Party may apply any proceeds of such
insurance which may be received by it toward payment of the Obligations, whether
or not due, in such order of application as the Secured Party may determine) and
such policies and certificates thereof shall, if Secured Party so requests, be
deposited with Secured Party; (17) Secured Party may examine and inspect the
Collateral or any part thereof, wherever located, at any reasonable time or
times; (18) it shall notify Secured Party in writing at least fifteen (15) days
in advance of its new name and the effective date of its name change before
changing its name; (19) it shall give Secured Party fifteen (15) days’ advance
written notice of any change of its principal place of business and of the
cessation of maintenance of any other place of business of Debtor; and (20) it
shall immediately notify Secured Party in writing of any change of location of
any of the Collateral to any location other than Debtor’s principal place of
business.
IV. Additional Actions by Secured Party. Secured Party, at its option, may from
time to time perform any agreement of Debtor hereunder which Debtor shall fail
to perform and take any other action which Secured Party deems necessary for the
maintenance or preservation of any of the Collateral or its interest therein
(including, without limitation, the discharge of taxes or liens of any kind
against the Collateral or the procurement of insurance or the payment of
warehousing charges, landlord’s bills or other charges), and Debtor agrees to
forthwith reimburse Secured Party for all costs and expenses incurred by Secured
Party in connection with the foregoing, together with interest thereon at a rate
per annum equal to the lesser of Twenty Percent (20%) or the highest rate
allowed by law from the date incurred until reimbursed by Debtor. Secured Party
may for the foregoing purposes act in its own name or that of Debtor and may
also so act for the purposes of adjusting, settling or cancelling any policy of
insurance on the Collateral or endorsing any draft received in connection
therewith, in payment of a loss or otherwise, for all of which purposes Debtor
hereby grants to Secured Party its power of attorney, irrevocable during the
term of this Agreement. This power of attorney shall not be affected by the
subsequent disability or incapacity of the Debtor and shall in all respects
constitute a durable power of attorney.

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V. Defaults. The occurrence of any of the following events or conditions shall
constitute an “Event of Default” hereunder: (a) non-payment of any principal of
or interest on any of the Obligations owed by Debtor to Secured Party within
fifteen days of the date when the same shall become due and payable, whether by
reason of demand, acceleration or otherwise; (b) default by Debtor in the due
performance or observance of any of the terms, provisions, covenants or
agreements contained in this Agreement for a period of 30 days after written
notice of such default has been given to Debtor by Secured Party during which
time such default is neither cured by Debtor nor waived in writing by the
Secured Party, provided that, if the failure stated in the notice cannot be
corrected within said 30-day period, Secured Party may, with Bondowner Consent,
consent in writing to an extension of such time prior to its expiration if
corrective action is instituted by Debtor within the 30-day period and
diligently pursued to completion; (c) any representation or warranty made by
Debtor in this Agreement shall prove to be untrue or incorrect in any material
respect; (d) loss, theft, damage, destruction, sale or encumbrance to or of any
of the Collateral or the making of any levy, seizure or attachment thereof or
thereon; or (e) any event of default shall occur under or within the meaning of
the Guaranty or under any agreement, document or instrument (including any
guaranty) evidencing or securing any of the Obligations secured hereby.
VI. Remedies. Upon the occurrence of an Event of Default: (a) notwithstanding
any provision contained in any agreement secured hereby to the contrary, Secured
Party shall be under no further obligation to make any further advances required
by such agreement; (b) Secured Party may, by written notice to Debtor effective
upon mailing or delivery, declare the principal of and the interest on the
Obligations of Debtor to Secured Party to be forthwith due and payable,
whereupon all such indebtedness, liabilities and other obligations shall become
forthwith due and payable, notwithstanding any other terms thereof or hereof;
(c) whether or not such indebtedness, liabilities or other obligations are
declared to be forthwith due and payable, Secured Party shall have the right to
take immediate possession of the Collateral covered hereby, and, for that
purpose may pursue the same wherever said Collateral may be found, and may enter
upon any of the premises of Debtor with or without force or process of law,
wherever said Collateral may be or may be supposed to be, and search for the
same, and, if found, take possession of and remove and sell and dispose of said
Collateral, or any part thereof; and (d) Secured Party may exercise any one or
more of the rights and remedies accruing to a secured party under the Uniform
Commercial Code of the relevant state or states and any other applicable law
upon default by a debtor. Debtor shall, upon Secured Party’s request, assemble
the Collateral and make the Collateral available to Secured Party at any place
designated by Secured Party which is reasonably convenient to Debtor.
VII. Foreclosure. Foreclosure on the Collateral covered hereby may be had at
public or private sale or sales, disposing of such portion or portions of the
Collateral at each such sale, for cash or on credit, on such terms, at such
place or places, and with or without the Collateral being present at such sale,
all as Secured Party in its sole and absolute discretion shall determine from
time to time. In the case of public sale, notice thereof shall be deemed and
held to be adequate and reasonable if such notice shall appear three (3) times
in a newspaper published in the City or County wherein the sale is to be held,
the first such publication being at least ten (10) days before such sale and the
last such publication being not more than three (3) days before such sale. In
the case of a private sale, notice thereof shall be deemed and held to be
adequate and reasonable if such notice shall be mailed to Debtor at its last
known address at least ten (10) days before such sale. The enumeration of these
methods of notice shall not be deemed or construed to render unreasonable any
other method of notice which would otherwise be reasonable under the
circumstances.
VIII. Application of Proceeds and Deficiency. Secured Party may apply the net
proceeds of any sale, lease or other disposition of the Collateral, after
deducting all costs and expenses of every kind incurred therein or incidental to
the retaking, holding, preparing for sale, selling, leasing or the like of the
Collateral on Debtor’s premises, or elsewhere, or in any way related to Secured
Party’s rights thereunder (including, without limitation, attorneys’ fees and
expenses, court costs, bonds and other legal expenses, insurance, security guard
and alarm expenses incurred in connection with the holding of the Collateral,
advertisements of sale of the Collateral, and rental and utilities expense on
the premises or elsewhere in connection with storage

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and sale of the Collateral) to the payment, in whole or in part, of the
Obligations of Debtor to Secured Party, whether due or not due, absolute or
contingent, and only after payment by Secured Party of any other amounts
required by any existing or future provision of law (including Section
9-504(1)(c) of the Uniform Commercial Code or any comparable statutory provision
of any jurisdiction in which any of the Collateral may at the time be located)
need Secured Party account to Debtor for the surplus, if any. Debtor shall
remain liable to Secured Party for the payment of any deficiency, with interest.
IX. Secured Party’s Care of Collateral. Secured Party shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
its possession if it takes such action for that purpose as Debtor requests in
writing, but failure of Secured Party to comply with any such request shall not
of itself be deemed a failure to exercise reasonable care, and no failure of
Secured Party to preserve or protect any rights with respect to such Collateral
against prior parties, or to do any act with respect to the preservation of such
Collateral not so requested by Debtor, shall be deemed a failure to exercise
reasonable care in the custody or preservation of such Collateral.
X. Amendments; Waivers; Remedies Cumulative. No delay on the part of Secured
Party in the exercise of any right hereunder shall operate as a waiver thereof
and no single or partial exercise by Secured Party of any right shall preclude
other or further exercise thereof or the exercise of any other right. Each and
every right granted to Secured Party hereunder, under any other security
agreement, note, loan agreement, mortgage, pledge or other instrument, document
or agreement, or at law or in equity, shall be deemed cumulative and may be
exercised from time to time. Secured Party shall not by any act, delay, omission
or otherwise be deemed to have waived any of its rights or remedies hereunder
and no waiver whatsoever shall be valid unless in writing and signed by Secured
Party, and then only to the extent therein set forth. A waiver by Secured Party
of any right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy which Secured Party would otherwise have on any
future occasion. This Agreement may not be amended except by a writing duly
signed by Debtor and Secured Party. The headings of the paragraphs hereof shall
not be considered in the construction or interpretation of this Agreement.
XI. Durable Power of Attorney. Debtor hereby makes, constitutes and appoints
Secured Party the true and lawful agent and attorney-in-fact of Debtor with full
power of substitution to do any and all things necessary and take such action in
the name and on behalf of Debtor to carry out the intent of this Agreement,
including, without limitation, the grant of the security interest granted under
this Agreement and to perfect and protect the security interest granted to
Secured Party in respect to the Collateral and Secured Party’s rights created
under this Agreement, which power of attorney is irrevocable during the term of
this Agreement. Debtor agrees that neither Secured Party nor any of its
shareholders, directors, officers, employees, agents, designees or
attorneys-in-fact will be liable for any acts of commission or omission, or for
any error of judgment or mistake of fact or law in respect to the exercise of
any power of attorney provided for under this Agreement. This power of attorney
shall not be affected by the subsequent disability or incapacity of the Debtor
and shall in all respects constitute a durable power of attorney.
XII. Notices. All notices provided for in this Agreement shall be in writing and
shall be deemed to have been given when delivered personally or when deposited
in the United States mail, registered or certified mail, return receipt
requested and postage prepaid, addressed as follows, or to such other address as
may hereafter be designated in writing by the respective parties hereto: if to
Secured Party to 5988 Mid Rivers Mall Drive, St. Charles, Missouri 63304,
Attention: President, and if to Debtor, to the address of the principal place of
business of Debtor listed at the end of this Agreement.
XIII. Applicable Law and Severability. It is the intention of the parties hereto
that this Agreement is entered into pursuant to the provisions of the Uniform
Commercial Code as it is in force in the State of Missouri (the “Code”). Any
applicable provisions of the Code, not specifically included herein, shall be
deemed a part of this Agreement in the same manner as if set forth herein at
length; and any provisions of

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this Agreement that might in any manner be in conflict with any provision of the
Code shall be deemed to be modified so as not to be inconsistent with the Code.
In all respects this Agreement and all transactions, assignments and transfers
hereunder, and all the rights of the parties, shall be governed as to validity,
construction, enforcement and in all other respects by the laws of the State of
Missouri. To the extent any provision of this Agreement is not enforceable under
applicable law, such provision shall be deemed null and void and shall have no
effect on the remaining portions of this Agreement.
XIV. Successors and Assigns; Other Obligations; Duration of Security Interest.
This Agreement shall be binding upon and inure to the benefit of Debtor and
Secured Party and their respective heirs, executors, administrators, personal
representatives, successors and assigns, except that Debtor may not assign any
of its rights or delegate any of its obligations under this Agreement. Nothing
contained in this Agreement shall be deemed or held to impair or limit in any
way the enforcement of the terms of any instrument evidencing any indebtedness,
liability or other obligation of Debtor to Secured Party. This Agreement shall
continue in full force and effect and the security interest granted hereby and
all of the representations, warranties, covenants and agreements of Debtor
hereunder and all of the terms, conditions and provisions hereof relating
thereto shall continue to be fully operative until such time as (a) Debtor shall
have paid or caused to be paid, or otherwise discharged, all Obligations to
Secured Party and (b) there shall be no remaining obligation of Secured Party to
advance funds to Debtor under any loan agreement or credit agreement or
otherwise. Debtor expressly agrees that to the extent a payment or payments to
Secured Party, or any part thereof, are subsequently invalidated, declared to be
void or voidable or set aside and are required to be repaid to a trustee,
custodian, receiver or any other party under any bankruptcy act, state or
federal law, common law or equitable cause, then to the extent of such payment
or repayment, the obligation or part thereof intended to be satisfied shall be
revived and continued in full force and effect as if said payment had not been
made.
XV. Guaranty to Prevail. In the event of any conflict between the provisions of
this Agreement and the Guaranty, the provisions of the Guaranty shall prevail.
XVI. Miscellaneous. The neuter pronoun, when used herein, shall include the
masculine and feminine and also the plural. If this Agreement is not dated when
executed by Debtor, Secured Party is authorized, without notice to Debtor, to
date this Agreement.
XVII. Changes in Organization. Debtor agreements to immediately notify the
Secured Party and UMB Bank, N.A., as Trustee in writing if Debtor changes its
place of formation, changes its form of organization, changes its name or takes
any other action which could affect the property location for filing of Uniform
Commercial Code financing statements or continuation statements or which could
render existing filings seriously misleading or invalid and promptly deliver to
the Secured Party or UMB Bank, N.A., as Trustee such additional information or
documentation regarding such change as such parties may reasonably request for
the purpose of amending and/or refilling, at the expense of the Debtor , as may
be reasonably determined to be necessary by the Secured Party or UMB Bank, N.A.,
as Trustee and their respective counsel.
XVIII. Entire 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. TO PROTECT THE DEBTOR AND THE
SECURED PARTY FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS THE DEBTOR
AND THE SECURED PARTY REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING,
WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE
SECURED PARTY AND THE DEBTOR, EXCEPT AS THE SECURED PARTY AND THE DEBTOR MAY
LATER AGREE IN WRITING TO MODIFY IT.
     IN WITNESS WHEREOF, Debtor has executed this Security Agreement at St.
Charles, Missouri as of this first day of September, 2002.

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  SYNERGETICS, INC.
(Debtor)
 
   
 
  By: /s/ Kurt W. Gampp
 
 
 
 
  Title: EXECUTIVE VICE PRESIDENT
 
 
 
 
   
 
  Address of Principal Place of Business of Debtor:
 
   
 
  88 Hubble Drive
O’Fallon, Missouri 63304

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