Exhibit 10.1

 

BUSINESS LOAN AGREEMENT

 

Borrower:    EXACTECH, INC.    Lender:    SUNTRUST BANK      2320 NW 66th Court
        5080 W. Newberry Road      Gainesville, Fl., 32653         Gainesville,
Florida, 32607

 

THIS BUSINESS LOAN AGREEMENT between Borrower and Lender for the purposes set
forth herein as Borrower’s obligation, is made and executed on the following
terms and conditions. Borrower has received prior commercial loans from Lender
or has applied to Lender for a commercial loan or loans and other financial
accommodations, including those which may be described on any exhibit or
schedule attached to this Agreement. All such loans and financial
accommodations, together with all future loans and financial accommodations from
Lender to Borrower, are referred to in this Agreement individually as the “Loan”
and collectively as the “Loans.” Borrower understands and agrees that: (a) in
granting, renewing, or extending any Loan, Lender is relying upon Borrower’s
representations, warranties, and agreements, as set forth in this Agreement;
(b) the granting, renewing, or extending of any Loan by Lender at all times
shall be subject to Lender’s sole judgment and discretion; and (c)all such Loans
shall be and shall remain subject to the following terms and conditions of this
Agreement.

 

TERM. This Agreement shall be effective as of October 18, 2005, and shall
continue thereafter until all indebtedness of Borrower to Lender has been
performed in full and the parties terminate this Agreement in writing.

 

LOAN PURPOSE. The purpose of this Loan is to allow Borrower to recapture cost of
improvements to existing real estate facilities and restructure a portion of
existing working capital debt.

 

DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar amounts shall mean amounts in lawful money of the United States of
America.

 

Agreement. The word “Agreement” means this Business Loan Agreement, as this
Business Loan Agreement may be amended or modified from time to time, together
with all exhibits and schedules attached to this Business Loan Agreement from
time to time.

 

Borrower. The word “Borrower” means EXACTECH, INC.. The word “Borrower” also
includes, as applicable, all subsidiaries of Borrower as provided below in the
paragraph titled “Subsidiaries of Borrower.”

 

CERCLA. The word “CERCLA” means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.

 

Collateral. The word “Collateral” means and includes without limitation all
property and assets granted as collateral security for a Loan, whether real or
personal property, as described on attached Exhibit “A”, whether granted
directly or indirectly, whether granted now or in the future, and whether
granted in the form of a security interest, mortgage, deed of trust, assignment,
pledge, chattel mortgage, chattel trust, factor’s lien, equipment trust,
conditional sale, trust receipt, lien, charge, lien or title retention contract,
leases or consignment intended as a security device, or any other security or
lien interest whatsoever, whether created by law, contract, or otherwise.

 

Commitment Letter. The word “Commitment Letter” or “Mortgage Loan Commitment”
means that certain revised Mortgage Loan Commitment dated October 18, 2005, and
accepted by Borrower on October 18, 2005, the terms of which are incorporated
herein by reference and which control to the extent inconsistent with this Loan
Agreement, a copy of which is attached hereto as Exhibit “B”.

 

ERISA. The word “ERISA” means the Employee Retirement Income Security Act of
1974, as amended.

 

Events of Default. The word “Events of Default” mean and include with limitation
any of the Events of Default set forth below in the section titled “EVENTS OF
DEFAULT.”

 

Grantor. The word “Grantor” means and includes without limitation each and all
of the persons or entitles granting a Security Interest in any Collateral for
the indebtedness, including without limitation all Borrowers granting such a
Security Interest.

 

Guarantor. The word “Guarantor” means and includes without limitation each and
all of the guarantors, sureties, and accommodation parties in connection with
any indebtedness.

 

Indebtedness. The word “Indebtedness” means and includes without limitation all
Loans, together with all other

 

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obligations, debts and liabilities of Borrower to Lender, or any one or more of
them, as well as all claims by Lender against Borrower, or any one or more of
them; whether now or hereafter existing, voluntary or involuntary, due or not
due, absolute or contingent, liquidated or unliquidated, whether Borrower may be
liable Individually or jointly with others; whether the Borrower may be
obligated as a guarantor, surely, or otherwise; whether recovery upon such
indebtedness may be or hereafter may become barred by any statute of
limitations; and whether such indebtedness may be or hereafter may become
otherwise unenforceable.

 

Lender. The word “Lender” means Suntrust Bank, its successors and assigns.

 

Loan. The word “Loan” and “Loans” means and includes without limitation any and
all commercial loans and financial accommodations from Lender to Borrower,
whether now or hereafter existing, and however evidenced, including without
limitation those loans and financial accommodations described herein or
described on any exhibit or schedule attached to this Agreement from time to
time.

 

Note. The word “Note” means and includes without limitation Borrower’s
promissory note or notes, in any, evidencing Borrower’s Loan obligations in
favor of Lender, as well as any substitute, replacement or refinancing not or
notes therefor.

 

Permitted Liens. The words “Permitted Liens” means: (a) liens and security
interests securing indebtedness owed by Borrower to Lender; (b) liens for taxes,
assessments, or similar charges either not yet due or being contested in good
faith; (c) liens of materialmen, mechanics, warehousemen, or carriers, or other
like liens arising in the ordinary course of business and securing obligations
which are not yet delinquent; (d) liens to secure indebtedness outstanding on
the date of this Agreement or permitted to be incurred under the paragraph of
this Agreement titled “Indebtedness and Liens”; (e) liens and security interests
which, as of the date of this Agreement, have been disclosed to and approved by
the Lender in writing; and (f) those liens and security interests which in the
aggregate constitute an immaterial and insignificant monetary amount with
respect to the net value of Borrower’s assets. Anything contained herein to the
contrary notwithstanding, by execution of this Agreement, Lender approves a lien
in favor of Merrill Lynch Business Financial Services, Inc., with respect to all
personal property of Borrower to be created withing sixty (60) days of the date
of this Agreement.

 

Related Documents. The word “Related Documents” mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds of
trust, and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the indebtedness.

 

Security Agreement. The words “Security Agreement” mean and include without
limitation of any agreements, promises, covenants, arrangements, understandings,
or other agreements, whether created by law, contract, or otherwise, evidencing,
governing, representing, or creating a Security Interest.

 

Security Interest. The words “Security Interest” mean and include without
limitation any type of collateral security, whether in the from of a lien,
charge, mortgage, deed of trust, assignment, pledge, chattel mortgage, chattel
trust, factor’s lien, equipment trust, conditional sale, trust receipt, lien or
title retention contract, lease or consignment intended as a security device, or
any other security or lien interest whatsoever, whether created by law,
contract, or otherwise.

 

SARA. The word “SARA” means the Superfund Amendments and Reauthorization Act of
1986 as now or hereafter amended.

 

CONDITIONS PRECEDENT TO EACH ADVANCE. Lender’s obligation to make the initial
Loan Advance and each subsequent Loan Advance under this Agreement shall be
subject to the fulfillment to Lender’s reasonable satisfaction, of all of the
conditions set forth in this Agreement and in the Related Documents.

 

Loan Documents. Borrower shall provide to Lender in form reasonably satisfactory
to Lender the following documents for the Loan: (a) the Note, (b) Security
Agreements granting to Lender security interests in the Collateral,
(c) Financing Statements perfecting Lender’s Security Interests; (d) evidence of
insurance as required below; and (e) any other documents required under this
Agreement or by Lender or its counsel, including without limitation any
guaranties described below.

 

Borrower’s Authorization. Borrower shall have provided in form and substance
reasonably satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note and the
Related Documents, and such other authorizations and other documents and
instruments as Lender or its counsel, in their reasonable discretion, may
require.

 

Payment of Fees and Expenses. Borrower shall have paid to Lender all fees,
charges, and other expenses which are then due and payable as specified in this
Agreement or any Related Document including a $12,500.00 loan fee due Lender
upon execution hereof.

 

Representations and Warranties. The representations and warranties set forth in
this Agreement, in the Related Documents, and in any document or certificate
delivered to Lender under this Agreement are true and correct.

 

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No Event of Default. There shall not exist at the time of any advance a
condition which would constitute an Event of Default under this Agreement.

 

Future Advance Requirement.

 

  (a) Borrower shall pay all reasonable closing costs associated with this Loan
and any subsequent modifications or releases of collateral.

 

  (b) Said funds are to be used solely for the Loan Purpose. Borrower agrees
that Lender will hold a first mortgage and security interest against any and all
properties and/or improvements described in the Mortgage.

 

  (c) Borrower shall provide evidence of builders risk, hazard, and flood (if
applicable) insurance in an amount not less than the funds to be advanced naming
Lender as loss payee/mortgagee. Borrower shall also provide liability, workmen’s
compensation and other insurance coverages that Lender may reasonably require in
form and coverages that Lender may reasonably require in form and coverages
issued by companies acceptable to Lender.

 

REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times an indebtedness exists;

 

Organization. Borrower is a corporation, duly organized, validly existing, and
in good standing under the laws of the State of Florida. Borrower has the full
power and authority to own its properties and to transact the businesses in
which it is presently engaged or presently proposes to engage. Borrower also is
duly qualified and is in good standing in all states in which the failure to so
qualify would have material adverse effect on the business or financial
condition of Borrower.

 

Authorization. The execution, delivery, and performance of this Agreement and
all Related Documents by Borrower, to the extent to be executed, delivered or
performed by Borrower, have been duly authorized by all necessary action by
Borrower; do not require the consent or approval of any other person, regulatory
authority or governmental body; and to the best of Borrower’s knowledge do not
conflict with, result in a violation of, or constitute a default under (a) any
provision of the partnership agreement, or any agreement or other instrument
binding upon Borrower or (b) any law, government regulation, court decree, or
order applicable to Borrower.

 

Financial Information. Each financial statement of Borrower supplied to Lender
truly and completely disclosed Borrower’s financial condition as of the date of
the statement, and there has been no material adverse change in Borrower’s
financial condition subsequent to the date of the most recent financial
statement supplied to Lender. Borrower has no material contingent obligations
except as disclosed in such financial statements.

 

Legal Effect. This Agreement constitutes, and any instruments required hereunder
to be given by Borrower when delivered will constitute legal, valid and binding
obligations of Borrower enforceable against Borrower in accordance with their
respective terms.

 

Properties. Except as contemplated by this Agreement or as previously disclosed
in Borrower’s financial statements or in writing to Lender and as accepted by
Lender, and except for property tax liens for taxes not presently due and
payable and Permitted Liens, Borrower owns and has good title to all of
Borrower’s properties free and clear of all Security Interests, and has not
executed any security documents or financing statements relating to such
properties. All of Borrower’s properties are titled in Borrower’s legal name,
and Borrower has not used, or filled a financing statement under, any other name
for at least the last five (5) years.

 

Hazardous Substances. The terms “hazardous waste,” “hazardous substance,”
“disposal,” “release,” and “threatened release,” as used in this Agreement shall
have the same meaning as set forth in the “CERCLA,” “SARA,” the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et. seq., or other
applicable state or Federal laws, rules, or regulations adopted pursuant to any
of the foregoing. Except as disclosed to and acknowledged by Lender in writing,
Borrower represents and warrants that: (a) During the period of Borrower’s
ownership of the properties, there has been no use, generation, manufacture,
storage, treatment, disposal, release or threatened release of any hazardous
waste or substance by any person, on , under, about or from any of the
properties in violation of applicable environmental law, (b) Borrower has no
knowledge of, or reason to believe that there has been (i) any use, generation,
manufacture, storage, treatment, disposal, release , or threatened release of
any hazardous waste or substance on, under, about or from the properties by any
prior owners ro occupants of any of the properties in violation of applicable
environmental law, or (ii) any actual or threatened litigation or claims of any
kind by any person relating to such matters. (c) Neither Borrower nor any
tenant, contractor, agent or other authorized user of any of the properties
shall use, generate, manufacture, store, treat, dispose of, or release any
hazardous waste or substance on, under, about or from any of the properties in
violation of applicable environmental law; and any such activity shall by
conducted in compliance with all applicable federal, state, and local laws,
regulations, and ordinances, including without limitation those laws,
regulations and ordinances described above. Borrower authorizes Lender and its
agents to enter upon the properties to make such inspections and tests as Lender
may deem reasonably appropriate in a reasonable manner and at reasonable times,
to determine compliance of the properties with this section of the

 

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Agreement. Any inspections or tests made by Lender shall be at Borrower’s
expense and for Lender’s purposes only and shall not by construed to create any
responsibility o liability on the part of Lender to Borrower or to any other
person. The representations and warranties contained herein are based on
Borrower’s due diligence in investigating the properties for hazardous waste and
hazardous substances. Borrower hereby (a)releases and waives any future claims
against Lender for indemnity or contribution in the event Borrower becomes
liable for cleanup or other costs under any such laws, and (b) agrees to
indemnify and hold harmless Lender against any and all claims, losses,
liabilities, damages, penalties, and expenses which Lender may directly or
indirectly sustain or suffer resulting from a breach of this section of the
Agreement or as a consequence of any use, generation, manufacture, storage,
disposal, release or threatened release of a hazardous waste or substance on the
properties. The provisions of this section of the Agreement, including the
obligation to indemnify, shall survive the payment of the indebtedness and the
termination or expiration of this Agreement and shall not be affected by
Lender’s acquisition of any interest in any of the properties, whether by
foreclosure or otherwise.

 

Litigation and Claims. No litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid taxes) against Borrower
is pending or threatened, and no other event has occurred which may materially
adversely affect Borrower’s financial condition or properties, other than
litigation, claims, or other events, if any, that have been disclosed to and
acknowledged by Lender in writing.

 

Taxes. To the best of Borrower’s knowledge, all tax returns and reports of
Borrower that are or were required to be filed, have been filed, and all taxes,
assessments and other governmental charges have been paid in full, except those
presently being or to be contested by Borrower in good faith in the ordinance
course of business and for which adequate reserves have been provided.

 

Lien Priority. Unless otherwise previously disclosed to Lender in writing and
except for Permitted Liens, Borrower has not entered into or granted any
Security Agreements, or permitted the filing or attachment of any Security
Interests on or affecting any of the Collateral directly or indirectly securing
repayment of Borrower’s Loan and Note, that would be prior or that may in any
way be superior to Lender’s Security Interests and rights in and to such
Collateral.

 

Binding Effect. This Agreement, the Note, all Security Agreements directly or
indirectly securing repayment of Borrower’s Loan and Note and all of the Related
Documents are binding upon Borrower as well as upon Borrower’s successors,
representatives and assigns, and are legally enforceable in accordance with
their respective terms.

 

Commercial Purposes. Borrower intends to use the Loan proceeds solely for
business or commercial related purposes.

 

Employee Benefit Plans. To the best of Borrower’s knowledge, each employee
benefit plan as to which Borrower may have any liability, complies in all
material respects with all applicable requirements of law and regulations, and
(i) no Reportable Event nor Prohibited Transaction (as defined in ERISA) has
occurred with respect to any such plan, (ii) Borrower has not withdrawn from any
such plan or initiated steps to do so, (iii) no steps have been taken to
terminate any such plan, and (iv) there are no unfunded liabilities other than
those previously disclosed to Lender in writing.

 

Location of Borrower’s Offices and Records. Borrower’s place of business, or
Borrower’s Chief executive office, if Borrower has more than one place of
business, is located at 2320 NW 66th Court, Gainesville, Florida, 32653, unless
Borrower has designated otherwise in writing this location is also the office or
offices where Borrower keeps its records concerning the Collateral.

 

Information. All information heretofore or contemporaneously herewith furnished
by Borrower to Lender for the purposes of or in connection with this Agreement
or any transaction contemplated hereby is, and all information hereafter
furnished by or on behalf of Borrower to Lender will be, true and accurate in
every material respect on the date as of which such information is dated or
certified; and none of such information is or will be incomplete by omitting to
state any material fact necessary to make such information not misleading.

 

Survival of Representations and Warranties. Borrower understands and agrees that
Lender, without independent investigation, is relying upon the above
representations and warranties in making the above referenced Loan to Borrower.
Borrower further agrees that the foregoing representations and warranties shall
be continuing in nature and shall remain in full force and affect until such
time as Borrower’s indebtedness shall be paid in full, or until this Agreement
shall be terminated in the manner provided above, whichever is the last to
occur.

 

AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect. Borrower will:

 

Litigation. Promptly inform Lender in writing of (a) all material adverse
changes in Borrower’s financial condition, and (b) all existing and all
threatened litigation, claims, investigations, administrative proceedings or
similar actions affecting Borrower or any Guarantor which could materially
effect the financial condition of Borrower or the financial condition of any
Guarantor.

 

Financial Records. Maintain its books and records in accordance with generally
accepted accounting principles, applied on a consistent basis, and permit Lender
to examine and audit Borrower’s books and records at all reasonable times.

 

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Additional Information. Borrower shall provide Lender with annual tax returns
and internally prepared financial statements and furnish such additional
information and statements, lists of assets and liabilities, aging of
receivables and payables, inventory schedules, budgets, forecasts, tax returns,
and other reports with respect to Borrower’s financial condition and business
operations as Lender may reasonably request from time to time.

 

Insurance. Maintain fire and other risk insurance, public liability insurance,
and such other insurance as Lender may reasonably require with respect to
Borrower’s properties and operations, in form, amounts, coverages and with
insurance companies reasonably acceptable to Lender. Borrower, upon request of
Lender, will deliver to Lender from time to time the policies or certificates of
insurance in form reasonably satisfactory to Lender, including stipulations that
coverages will not be canceled or diminished without at least ten (10) days’
prior to written notice to Lender. Each insurance policy also shall include an
endorsement providing that coverage in favor of Lender will not be impaired in
any way by any act, omission, or default of Borrower or any other person. In
connection with all policies covering assets in which Lender holds or is offered
a security interest for the Loans. Borrower will provide Lender with such loss
payable or other endorsements as Lender may require.

 

Insurance Reports. Furnish to Lender, upon request of Lender, reports on each
existing insurance policy showing such information as Lender may reasonably
request, including without limitation the following: (a) the name of the
insurer; (b) the risks insured; (c) the amount of the policy; (d) the policies
insured; (e) the then current property values on the basis of which insurance
has been obtained, and the manner of determining those values; and (f) the
expiration date of the policy. In addition, upon request of Lender (however not
more often than annually), Borrower will have an independent appraiser
satisfactory to Lender determine, as applicable, the actual cash value or
replacement cost of any Collateral. The cost of such appraisal shall be paid by
Borrower.

 

Other Agreements. Comply with all terms and conditions of all other agreements,
whether now or hereafter existing, between Borrower and any other party and
notify Lender immediately in writing of any default in connection with any other
such agreements.

 

Loan Proceeds. Use all Loan proceeds solely for Borrower’s business operations,
unless specifically consented to the contrary by Lender in writing.

 

Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and
obligations, including without limitations all assessments, taxes, governmental
charges, levies and liens, of every kind and nature, imposed upon Borrower or
its properties, income, or profits, prior to the date on which penalties would
attach, and all lawful claims that, if unpaid, might become a lien or charge
upon any of Borrower’s properties, income, or profits. Provided however,
Borrower will not be required to pay and discharge any such assessment, fax,
charge, levy, lien or claim so long as (a) the legality of the same shall be
contested in good faith by appropriate proceedings, and (b) Borrower shall have
established on its books adequate reserves with respect to such contested
assessment, tax, charge, levy, lien, or claim in accordance with generally
accepted accounting practices. Borrower, upon demand of Lender, will furnish to
Lender evidence of payment of the assessments, taxes, charges, levies, liens,
and claims and will authorize the appropriate governmental official to deliver
to Lender at any time a written statement of any assessments, taxes, charges,
levies, liens, and claims against Borrower’s properties, income, or profits.

 

Performance. Perform and comply with all terms, conditions, and provisions set
forth in this Agreement and in the Related Documents in a timely manner, and
promptly notify the Lender if Borrower learns of the occurrence of any event
which constitutes an Event of Default under this Agreement or under any of the
Related Documents.

 

Operation. Maintain executive and management personnel with substantially the
same qualifications and experience as the present executive and management
personnel; provide written notice to Lender of any change in executive and
management personnel; conduct its business affairs in a reasonable and prudent
manner and in compliance with all applicable federal, state, and municipal laws,
ordinances, rules and regulations respecting its properties, charters,
businesses and operations, including without limitation, compliance with the
Americans With Disabilities Act and with all minimum funding standards and other
requirements of ERISA and other laws applicable to Borrower’s employee benefit
plans.

 

Inspection. Permit employees or agents of Lender at any reasonable time to
inspect any and all Collateral for the Loan or Loans and Borrower’s other
properties and to examine or audit Borrower’s books, accounts, and records and
to make copies and memoranda of Borrower’s books, accounts, and records. If
Borrower now or at any time hereafter maintains any records (including without
limitation computer generated records and computer software programs for the
generation of such records) in the possession of a third party, Borrower, upon
request of Lender, shall notify such party to permit Lender free access to such
records at all reasonable times and to provide Lender with copies of any records
it may request, all at Borrower’s expense.

 

Compliance Certificate. Unless waived in writing by Lender, provide Lender at
least annually and at the time of each disbursement of Loan proceeds with a
certificate executed by Borrower’s chief financial officer, or other officer or
person acceptable to Lender, certifying that the representations and warranties
set forth in this Agreement are true and correct in all material respects as of
the date of the certificate and further certifying that, as of the date of the
certificate, no Event of Defaults exists under this Agreement.

 

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Environmental Compliance and Reports. Borrower shall comply in all respects with
all environmental protection federal, state and local laws, statutes,
regulations, and ordinances; not cause or permit to exist, as a result of an
intentional or unintentional action or omission on its part or on the part of
any third party, on property owned and/or occupied by Borrower, any
environmental activity where damage may result to the environment, unless such
environmental activity is pursuant to and in compliance with the conditions of a
permit issued by the appropriate federal, state or local governmental
authorities; shall furnish to Lender promptly and in any event within thirty
(30) days after receipt thereof a copy of any notice, summons, lien, citation,
directive, letter or other communication from any governmental agency or
instrumentality concerning any Intentional or unintentional action or omission
on Borrower’s part in connection with any environmental activity whether or not
there is damage to the environment and/or other natural resources.

 

Additional Assurances. Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of trust, security agreements, financing statements,
instrument, documents and other agreements as Lender or its attorneys may
reasonably request to evidence and secure the Loans and to perfect all Security
Interests.

 

NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:

 

Indebtedness and Liens. (a) Except for Permitted Liens and except for trade debt
incurred in the normal course of business and indebtedness to Lender
contemplated by this Agreement, create, incur or assume indebtedness for
borrowed money, including capital leases, or (b) except as allowed as a
Permitted Lien, sell, transfer, mortgage, assign, pledge, lease, grant a
security interest in, or encumber any of Borrower’s assets.

 

Continuity of Operations. (a) Engage in any business activities substantially
different than those in which Borrower is presently engaged, or (b) cease
operations, liquidate, merge,( except for the contemplated business combination
between Borrower and Altiva,) transfer, acquire or consolidate with any other
entity, change ownership, change its name, dissolve or transfer or sell
Collateral out of the ordinary course of business.

 

ADDITIONAL COVENANTS.

 

Borrower shall submit annually a copy of its Securities and Exchange Commission
filing and such other financial statements and tax returns as reasonably
requested by Lender. Borrower agrees to maintain individual direct deposit
accounts with Lender Borrower, with the exception for Permitted Liens, will not
further encumber the subject property without the Lender’s written consent
except for Permitted Liens.

 

CESSATION OF ADVANCES. If the Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
(a) Borrower or any Guarantor is in default under the terms of this Agreement or
any of the Related Documents or any other agreement that Borrower or any
Guarantor has with Lender; (b) Borrower or any Guarantor becomes insolvent,
files a petition in bankruptcy or similar proceedings, or is adjudged a
bankrupt; (c) there occurs a material adverse change in Borrower’s financial
condition, in the financial condition of any Guarantor, or in the value of any
Collateral securing any Loan; (d) any Guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such Guarantor’s guaranty of the Loan or any
other loan with Lender; or (e) Lender in good faith deems itself insecure, even
though no Event of Default shall have occurred.

 

RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest in,
and hereby assigns, conveys, delivers, pledges, and transfers to Lender all
Borrower’s right, title and interest in and to, Borrower’s accounts with Lender
(whether checking, savings, or some other account), including without limitation
all accounts held jointly with someone else and all accounts Borrower may open
in the future, excluding however all IRA and Keogh accounts, and all trust
accounts for which the grant of a security interest would be prohibited by law.
Borrower authorizes Lender, to the extent permitted by applicable law, to charge
or setoff all sums owing on the indebtedness against any and all such accounts,
and, at Lender’s option, to administratively freeze all such accounts to allow
Lender to protect Lender’s charge and setoff rights provided on this paragraph.

 

EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:

 

Default on Indebtedness. Failure of Borrower to make any payment when due on the
Loans.

 

Other Defaults. Other than a non-payment default, failure of Borrower or any
Guarantor to comply with or to perform when due any other term, obligation,
covenant or condition contained in this Agreement or in any of the Related
Documents, or failure of Borrower to comply with or to perform any other term,
obligation, covenant or condition contained in any other agreement between
Lender and Borrower, the same not having been cured within thirty (30) days of
the event of default..

 

Default In Favor of Third Parties. Should Borrower or any Guarantor default
under any loan, extension of credit,

 

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security agreement, purchase or sales agreement, or any other agreement, in
favor of any other creditor or person that may materially affect any of
Borrower’s property or Borrower’s or any Guarantor’s ability to repay the Loans
or perform their respective obligations under this Agreement or any of the
Related Documents.

 

False Statements. Any warranty, representation or statement made or furnished to
Lender by or on behalf of Borrower or any Guarantor under this Agreement or the
Related Documents is false or misleading in any material respect at the time
made or furnished, or becomes false or misleading at any time thereafter.

 

Defective Collateralization. This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any Security
Agreement to create a valid and perfected Security Interest) at any time and for
any reason.

 

Insolvency. The dissolution or termination of Borrower’s existence as a going
business or the insolvency of Borrower, the appointment of a receiver for any
part of Borrower’s property, any assignment from the benefit of creditors, any
type of creditor workout, or the commencement of any proceeding under any
bankruptcy or insolvency laws or against Borrower.

 

Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Borrower, any creditor of any Guarantor against
any collateral securing the Indebtedness, or by any governmental agency. This
includes a garnishment, attachment, or levy on or of any of Borrower’s deposit
accounts with Lender.

 

Event Affecting Guarantor. Any of the preceding events occurs with respect to
any Guarantor of any of the indebtedness or any Guarantor dies or becomes
incompetent, or revokes or disputes the validity of, or liability under, any
Guaranty of the indebtedness. Lender agrees that if the obligations of Borrower
to Lender evidenced by the various loan documents executed by Borrower and
Guarantor pursuant to the extension of credit to Borrower are not in default and
continue to be in compliance with all such loan documents, upon the death or
incompetency of Guarantor, Borrower shall have sixty (60) days from the death or
adjudication of incompetency of Guarantor to replace said Guarantor with a new
guarantor acceptable in the sole and absolute discretion of Lender, failing
which Lender shall at its election shall have the right to exercise its rights
hereunder.

 

Events Affecting Member of Borrower. Any of the preceding events occurs with
respect to any member of Borrower.

 

Change in Ownership. The resignation or expulsion of any member with an
ownership interest of twenty-five percent (25%) or more in Borrower.

 

Adverse Change. A material adverse change occurs in Borrower’s financial
condition, or Lender believes the prospect of payment or performance of the
indebtedness is impaired.

 

Cure Period. As to any non-payment default, Borrower shall not be declared in
default unless and until Borrower has failed to cure the default within thirty
(30) from the date of the default.

 

EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement or the Related Documents or any
other agreement immediately will terminate and, at Lender’s option, all
indebtedness immediately will become due and payable, all without notice of any
kind to the Borrower, except that in the case of an Event of Default of the type
described in the “Insolvency” subsection above, such acceleration shall be
automatic and not optional. In addition, Lender shall have all the rights and
remedies provided in the Related Documents or available at law, in equity, or
otherwise. Except as may be prohibited by applicable law, all of Lender’s rights
and remedies shall be cumulative and may be exercised singularity or
concurrently. Election by Lender to pursue any remedy shall not exclude pursuit
of any other remedy, and an election to make expenditures or to take action to
perform an obligation of Borrower or of an Grantor shall not affect Lender’s
right to declare a default and to exercise its rights and remedies.

 

Should Lender elect to declare Borrower in default in the event and event of
default should occur, Lender shall do so in writing and upon such notice
Borrower shall have five (5) days from the date of the notice to cure any
monetary default so declared by Lender and fifteen (15) days to cure any
non-monetary default so declared by Lender.

 

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:

 

Amendments. This Agreement, together with any Related Documents, constitutes the
entire understanding and agreement of the parties as to the matters set forth in
this Agreement. No alteration of or amendment to this Agreement shall be
effective unless given in writing and signed by the party or parties sought to
be charged or bound by the alteration or amendment.

 

Applicable Law. This Agreement has been delivered to Lender and accepted by
Lender in the State of Florida. If there is a lawsuit, Borrower agrees upon
Lender’s request to submit to the jurisdiction of the courts of the State of
Florida, with venue Alachua County, Florida, as selected by Lender. Lender and
Borrower hereby waive the

 

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right to any jury trial in any action, proceeding, or counterclaim brought by
either Lender or Borrower against the other. This Agreement shall be governed by
and construed in accordance with the laws of the State of Florida.

 

Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions of
this Agreement.

 

Multiple Parties. All obligations of Borrower under this Agreement shall be
joint and several, and all references to Borrower shall mean each and every
Borrower. This means that each of the persons signing below is responsible for
all obligations in this Agreement.

 

Consent to Loan Participation. Borrower agrees and consents to Lender’s sale or
transfer of this Loan, whether related or unrelated to Lender. Lender may
provide, without any limitation whatsoever, to any one or more purchasers, or
potential purchasers, any information or knowledge Lender may have about
Borrower or about any other matter relating to the Loan, and Borrower hereby
waives any rights to privacy it may have with respect to such matters. Borrower
additionally waives any and all notices of sale of participation interests, as
well as all notices of any repurchase of such participation interests. Borrower
also agrees that the purchasers of any such participation interests will be
considered as the absolute owners of such interests in the Loans and will have
all the rights granted under the participation agreement or agreements governing
the sale of such participation interests. Borrower further waives all rights of
offset or counterclaim that it may have now or later against Lender or against
any purchaser of such a participation interest and unconditionally agrees that
either Lender or such purchaser may enforce Borrower’s obligation under the
Loans irrespective of the failure or insolvency of any holder of any interest in
the Loans. Borrower further agrees that the purchaser of any such participation
interests may enforce its interests irrespective of any personal claims or
defenses that Borrower may have against Lender.

 

Costs and Expenses. Borrower agrees to pay upon demand all of Lender’s expenses,
including without limitation reasonable attorneys’ fees, incurred in connection
with the preparation, execution, enforcement, modification and collection of
this Agreement or in connection with the Loans made pursuant to this Agreement.
Lender may pay someone else to help collect the Loans and to enforce this
Agreement, and Borrower will pay that amount. This includes, subject to any
limits under applicable law, Lender’s reasonable attorneys’ fees and Lender’s
legal expenses, whether or not there is a lawsuit, including reasonable
attorneys’ fees for bankruptcy proceedings (including efforts to modify or
vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. Borrower also will pay any court costs, in
addition to all other sums provided by law.

 

Notices. All notices required to be given under this Agreement shall be given in
writing, may be sent by telefacsimile (unless otherwise required by law), and
shall be effective when actually delivered or when deposited with a nationally
recognized overnight courier or deposited in the United Sates mail, first class,
postage prepaid, addressed to the party to whom the notice is to be given at the
address shown above. Any party may change its address for notices under this
Agreement by giving formal written notice to the other parties, specifying that
the purpose of the notice is to change the party’s address. To the extent
permitted by applicable law, if there is more than one Borrower, notice to any
Borrower will constitute notice to all Borrowers. For notice purposes, Borrower
will keep Lender informed at all times of Borrower’s current address(es).

 

Severability. If a court of competent jurisdiction finds any provisions of this
Agreement to be invalid or unenforceable as to any person or circumstance, such
finding shall not render that provision invalid or unenforceable as to any
person or circumstances. If feasible, any such offending provision shall be
deemed to be modified to be within the limits of enforceability or validity;
however, if the offending provision cannot be so modified, it shall be stricken
and all other provisions of this Agreement in all other respects shall remain
valid and enforceable.

 

Subsidiaries of Borrower. To the extent the context of any provisions of this
Agreement makes it appropriate, including without limitation any representation,
warranty or covenant , the word “Borrower” as used herein shall include all
subsidiaries of Borrower. Notwithstanding the foregoing however, under no
circumstances shall this Agreement be construed to require Lender to make any
loan or other financial accommodations to any subsidiary of Borrower.

 

Successors and Assigns. All covenants and agreements contained by or on behalf
of Borrower shall bind its successors and assigns and shall inure to the benefit
of Lender, its successors and assigns. Borrower shall not, however, have the
right to assign its right under this Agreement or any interest therein, without
the prior written consent of Lender.

 

Survival. All warranties, representations, and covenants made by Borrower in
this Agreement or in any certificate or other interest therein, without the
prior written consent of Lender.

 

Time is of the Essence. Time is of the essence in the performance of this
Agreement.

 

Waiver. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No delay
or omission on the part of Lender in exercising any right shall operate as a
waiver of such right or any other right. A waiver by Lender of a provision of
this Agreement shall not prejudice or constitute a waiver of Lender’s right
otherwise to demand strict compliance with that provision or any other provision
of this

 

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Agreement. No prior waiver by lender, not any course of dealing between Lender
and Borrower, or between Lender and any Grantor, shall constitute a waiver of
any of Lender’s rights or of any obligations of Borrower or of any Grantor as to
any future transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall not
constitute continuing consent in subsequent instances where such consent is
required, and in all cases such consent may be granted or withheld in the sole
discretion of Lender.

 

BORROWER AND GUARANTOR ACKNOWLEDGE HAVING READ ALL THE PROVISIONS OF THIS
BUSINESS LOAN AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS
DATED OCTOBER 18, 2005.

 

BORROWER:       LENDER: EXACTECH, INC., a       SUNTRUST BANK, Florida
corporation                 By:  

/s/ Joel C. Phillips

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      By:  

/s/ Robert Dilts

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        JOEL C. PHILLIPS, CHIEF FINANCIAL OFFICER           ROBERT DILTS, Vice
President

 

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