**EXHIBIT 10.43****COMMERCIAL SECURITY AGREEMENT**               **Principal** **Loan Date** **Maturity** **Loan No.** **Call / Coll** **Account** **Officer** **Initials****$1,250,000.00** **03-10-2000** **01-16-2001**   **61** **500359790000** **G49**  References in the shaded area are for Lender’s use only and do not limit the applicability of this document to any particular loan or item.       **Grantor:** **SYNERGETICS, INC., a Missouri Corporation** **Lender:** **Union Planters Bank NA**  **(TIN: 43-1585312)**   **Clayton Banking Center**  **88 Hubble**   **8182 Maryland Avenue Suite 200**  **St. Charles, MO 63304**   **St. Louis, MO 63105****THIS COMMERCIAL SECURITY AGREEMENT is entered into between SYNERGETICS, INC., a MissouriCorporation (referred to below as “Grantor”); and Union Planters Bank N.A. (referred to below as“Lender”). For valuable consideration, Grantor grants to Lender a security interest in theCollateral to secure the Indebtedness and agrees that Lender shall have the rights stated in thisAgreement with respect to the Collateral, in addition to all other rights which Lender may have bylaw.****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 inthe Uniform Commercial Code. All references to dollar amounts shall mean amounts in lawful moneyof the United States of America.**Agreement.**The word “Agreement” means this Commercial Security Agreement, as thisCommercial Security Agreement may be amended or modified from time to time, together withall exhibits and schedules attached to this Commercial Security Agreement from time to time.**Collateral.**The word “Collateral” means the following described property of Grantor,whether now owned or hereafter acquired, whether now existing or hereafter arising, andwherever located:**All Inventory, accounts and equipment, together with the following specifically describedproperty: See Exhibit A and B attached hereto and made a part hereof**In addition, the word “Collateral” also includes all the following, whether now owned orhereafter acquired, whether now existing or hereafter arising, and wherever located:(A) All attachments, accessions, accessories, tools, parts, supplies, increases, andadditions to and all replacements of and substitutions for any property describedabove.(B) All products and produce of any of the property described in this Collateralsection.(C) All accounts, general intangibles, instruments, rents, monies, payments, and allother rights, arising out of a sale, lease, or other disposition of any of theproperty described in this Collateral section.(D) All proceeds (including insurance proceeds) from the sale, destruction, loss, orother disposition of any of the property described in this Collateral section.(E) All records and data relating to any of the property described in thisCollateral section, whether in the form of a writing, photograph, microfilm,microfiche, or electronic media, together with all of Grantor’s right, title, andinterest in and to all computer software required to utilize, create, maintain, andprocess any such records or data on electronic media.**Event of Default.**The words “Event of Default” mean and include without limitation any ofthe Events of Default set forth below in the section titled “Events of Default”.**Grantor.**The word “Grantor” means SYNERGETICS, INC., a Missouri Corporation, its successorsand assigns.
 

 
**Guarantor.**The word “Guarantor” means and includes without limitation each and all of theguarantors, sureties, and accommodation parties in connection with the Indebtedness.**Indebtedness.**The word “Indebtedness” means the indebtedness evidenced by the Note,including all principal and interest together with all other indebtedness and costs andexpenses for which Grantor is responsible under this Agreement or under any of the RelatedDocuments. In addition, the word “Indebtedness” includes all other obligations, debts andliabilities, plus interest thereon, of Grantor, or any one or more of them, to Lender, aswell as all claims by Lender against Grantor, or any one or more of them, whether existingnow or later; whether they are voluntary or involuntary, due or not due, direct or indirect,absolute or contingent, liquidated or unliquidated; whether Grantor may be liableindividually or jointly with others; whether Grantor may be obligated as guarantor, surety,accommodations party or otherwise; whether recovery upon such Indebtedness may be orhereafter may become barred by any statute of limitations; and whether such indebtedness maybe or hereafter may become otherwise unenforceable.**Lender.**The word “Lender” means Union Planters Bank N.A., its successors and assigns.**Note.**The word “Note” means the note or credit agreement dated March 10, 2000, in theprincipal amount of $1,250,000.00 from SYNERGETICS, INC., a Missouri Corporation to Lender,together with all renewals of, extensions of, modifications of, refinancings of,consolidations of, and substitutions for the note or credit agreement.**Related Documents.**The words “Related Documents” mean and include without limitation allpromissory notes, credit agreements, loan agreements, environmental agreements, guaranties,security agreements, mortgages, deeds of trust, and all other instruments, agreements anddocuments, whether now or hereafter existing, executed in connection with the Indebtedness.**RIGHT OF SETOFF.**Grantor hereby grants Lender a contractual security interest in and herebyassigns, conveys, delivers, pledges, and transfers all of Grantor’s right, title and interest inand to Grantor’s accounts with Lender (whether checking, savings, or some other account), includingall accounts held jointly with someone else and all accounts Grantor may open in the future,excluding, however, all IRA and Keogh accounts, and all trust accounts for which the grant of asecurity interest would be prohibited by law, Grantor authorizes Lender, to the extent permitted by applicable law, to charge or setoff all Indebtedness against any andall such accounts.**OBLIGATIONS OF GRANTOR. Grantor warrants and covenants to Lender as follows:**Perfection of Security Interest.**Grantor agrees to execute financing statements and to takewhatever other actions are requested by Lender to perfect and continue Lender’s securityinterest in the Collateral. Upon request of Lender, Grantor will deliver to Lender any andall of the documents evidencing or constituting the Collateral, and Grantor will noteLender’s interest upon any and all chattel paper if not delivered to Lender for possessionby Lender.Grantor hereby appoints Lender as its irrevocable attorney-in-fact for the purpose of executing any documents necessary to perfect or to continue the security interest granted in this Agreement. Lender may at anytime, without further authorization from Grantor, file a carbon, photographic or other reproduction of any financing statement or of this Agreement for use as a financing statement. Grantor will reimburse Lender for all its expenses for the perfection and thecontinuation of the perfection of Lender’s security interest of the collateral. Grantor promptly will notify Lender before any change in Grantor’s name including any change to the assumed business names of Grantor.This is a continuing Security Agreement and will continue in effect even though all or any part of the indebtedness is paid in full and even though for a period of timeGrantor may not be indebted to Lender.**No Violation.**The execution and delivery of this Agreement will not violate any law oragreement governing Grantor or to which Grantor is a party, and its certificate or articlesof incorporation and bylaws do not prohibit any term or condition of this Agreement.**Enforceability of Collateral.**To the extent the Collateral consists of accounts, chattelpaper, or general intangibles, the Collateral isenforceable in accordance with its terms, is genuine, and complies with all applicablelaws and concerning form, content and manner of preparation and execution, andall persons appearing to be obligated on the Collateral have       2  
 

 
authority and capacity to contract and are in fact obligated as they appear to be on theCollateral. At the time any account becomes subject to a securityinterest in favor of Lender, the account shall be a good and validaccount representing an undisputed, bona fide indebtedness incurredby the account debtor, for merchandise held subject to deliveryinstructions or theretofore shipped or delivered pursuant to acontract of sale, or a service theretofore performed by Grantor withor for the account debtor, there shall be no setoffs or counterclaimsagainst any such account; and no Agreement under which any deductionsor discounts may be claimed shall have been made with the accountdebtor except those disclosed to Lender in writing.**Locationof the Collateral.**Grantor, upon request of Lender, will deliver to Lender in formsatisfactory to Lender a schedule of real properties and Collateral locations relating toGrantor’s operations, including without limitation thefollowing: (a) all real property owned or being purchased byGrantor; (b) all real property being rented or leased byGrantor; (c) allstorage facilities owned, rented, leased or being used by Grantor;and (d) all other properties whereCollateral is or may be located. Except in the ordinary course ofbusiness, Grantor shall not remove the Collateral from its existinglocations without the prior written consent of Lender.**Removalof the Collateral.**Grantor shall keep the Collateral (or to theextent the Collateral consists of intangible property such asaccounts, the records concerning the Collateral) at Grantor’s addressshown above, or at such other locations as are acceptable to Lender.Except in the ordinary course of its business, including thesale of inventory, Grantorshall not remove the Collateral from its existing location without the prior writtenconsent of Lender. To the extent that the Collateral consists of vehicles, or other titled property,Grantor shall not take or permit any action which would require application for certificatesof title for the vehicles outside the State of Missouri, without the prior writtenconsent of Lender.**Transactions Involving Collateral.**Except for inventory sold or accounts collected in theordinary course of Grantor’s business, Grantor shall not sell, offer to sell, or otherwise transfer or dispose of the Collateral.While Grantor is not in default under this Agreement, Grantor maysell inventory, but only in the ordinary course of its business andonly to buyers in the ordinary course of business. A sale in theordinary course of Grantor’s business does not include a transfer inpartial or total satisfaction of a debt or any bulk sale. Grantor shall not pledge, mortgage, encumber or otherwise permit the Collateral to besubject to any lien, security interest, encumbrance, or charge, other than the securityinterest provided for in this Agreement, without the prior written consent of Lender. Thisincludes security interests even if junior in right to the security interests granted underthis Agreement. Unless waived by Lender, all proceeds from any disposition of theCollateral (for whatever reason) shall be held in trust for Lender and shall not becommingled with any other funds; provided however, this requirement shall not constituteconsent by Lender to any sale or other disposition. Upon receipt, Grantor shall immediatelydeliver any such proceeds to Lender.**Title.**Grantor represents and warrants to Lender that it holds good and marketabletitle to the Collateral, free and clear of all liens and encumbrances except for the lien ofthis Agreement. No financing statement covering any of the Collateral is on file in anypublic office other than those which reflect the security interest created by this Agreementor to which Lender has specifically consented. Grantor shall defend Lender’s rights in theCollateral against the claims and demands of all other persons.**Collateral Schedules and Locations.**As often as Lender shall require, and insofar as theCollateral consists of accounts, Grantor shall deliver to Lender schedules of suchCollateral, including such information as Lender may require, including without limitationsnames and addresses of account debtors and agings of accounts. Insofar as the Collateralconsists of inventory and equipment, Grantor shall deliver to Lender, as often as Lendershall require, such lists, descriptions, and designations of such Collateral as Lender mayrequire to identify the nature, extent, and location of such Collateral. Such informationshall be submitted for Grantor and each of its subsidiaries or related companies.**Maintenance and Inspection of Collateral.**Grantor shall maintain all tangible Collateral ingood condition and repair. Grantor will not commit or permit damage to or destruction ofthe Collateral or any part of the Collateral. Lender and its designated representatives andagents shall have the right at all reasonable times to examine, inspect and audit theCollateral wherever located. Grantor shall immediately notify Lender of all cases involvingthe return, rejection, repossession, loss or damage of or to any Collateral; of any requestfor credit or adjustment or of any other dispute arising with respect to the Collateral; andgenerally of all happenings and events affecting the Collateral or the value or the amountof the Collateral.**Taxes, Assessments and Liens.**Grantor will pay when due all taxes, assessments and liensupon the Collateral, its use or operation, upon this Agreement, upon any promissory note ornotes evidencing the Indebtedness, or upon any of the other Related Documents. Grantor maywithhold any such payment or may elect to contest any lien if Grantor is in good faithconducting an appropriate proceeding to contest the obligation to pay and so long asLender’s interest in the Collateral is not jeopardized in Lender’s sole opinion. If theCollateral is subjected to a lien which is not discharged within fifteen (15) days, Grantorshall deposit with Lender cash, a sufficient corporate surety bond or other securitysatisfactory to Lender in an amount adequate to provide for the discharge of the lien plusany interest, costs, attorneys’ fees or other       3  
 

 
charges that could accrue as a result of foreclosure or sale of the Collateral. In anycontest Grantor shall defend itself and Lender and shall satisfy any final adverse judgmentbefore enforcement against the Collateral. Grantor shall name Lender as an additionalobligee under any surety bond furnished in the contest proceedings.**Compliance with Governmental Requirements.**Grantor shall comply promptly with all laws,ordinances, rules and regulations of all governmental authorities, now or hereafter ineffect, applicable to the ownership, production, disposition, or use of the Collateral.Grantor may contest in good faith any such law, ordinance or regulation and withholdcompliance during any proceeding, including appropriate appeals, so long as Lender’sinterest in the Collateral, in Lender’s opinion, is not jeopardized.**Hazardous Substances.**Grantor represents and warrants that the Collateral never has been,and never will be so long as this Agreement remains a lien on the Collateral, used for thegeneration, manufacture, storage, transportation, treatment, disposal, release or threatenedrelease of any hazardous waste or substance, as those terms are defined in the ComprehensiveEnvironmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C.Section 9601, et seq. (“CERCLA”), the Superfund Amendments and Reauthorization Act of 1986,Pub. L. No. 99-499 (“SARA”), the Hazardous Materials Transportation Act, 49 U.S.C. Section1601, 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 ofthe foregoing. The terms “hazardous waste” and “hazardous substance” shall also include,without limitation, petroleum and petroleum by-products or any fraction thereof andasbestos. The representations and warranties contained herein are based on Grantor’s duediligence in investigating the Collateral for hazardous wastes and substances. Grantorhereby (a) releases and waives any future claims against Lender for indemnity orcontribution in the event Grantor becomes liable for cleanup or other costs under such laws,and (b) agrees to indemnify and hold harmless Lender against any and all claims and lossesresulting from a breach of this provision of this Agreement. This obligation to indemnifyshall survive the payment of the Indebtedness and the satisfaction of this Agreement.**Maintenance of Casualty Insurance.**Grantor shall procure and maintain all risks insurance,including without limitation fire, theft and liability coverage together with such otherinsurance as Lender may require with respect to the Collateral, in form, amounts, coveragesand basis reasonably acceptable to Lender and issued by a company or companies reasonablyacceptable to Lender. Grantor, upon request of Lender, will deliver to Lender from time totime the policies or certificates of insurance in form satisfactory to Lender, includingstipulations that coverages will not be cancelled or diminished without at least thirty (30)days’ prior written notice to Lender and not including any disclaimer of the insurer’sliability for failure to give such a notice. Each insurance policy also shall include anendorsement providing that coverage in favor of Lender will not be impaired in any way byany act, omission or default of Grantor or any other person. In connection with allpolicies covering assets in which Lender holds or is offered a security interest, Grantorwill provide Lender with such loss payable or other endorsements as Lender may require. Inno event shall the insurance be in an amount less than the amount agreed upon in theAgreement to Provide Insurance. If Grantor at any time fails to obtain or maintain anyinsurance as required under this Agreement, Lender may (but shall not be obligated to)obtain such insurance as Lender deems appropriate, including if it so chooses “singleinterest insurance,” which will cover only Lender’s interest in the Collateral.**Application of Insurance Proceeds.**Grantor shall promptly notify Lender of any loss ordamage to the Collateral. Lender may make proof of loss if Grantor fails to do so withinfifteen (15) days of the casualty. All proceeds of any insurance on the Collateral,including accrued proceeds thereon, shall be held by Lender as part of the Collateral. IfLender consents to repair or replacement of the damaged or destroyed Collateral, Lendershall, upon satisfactory proof of expenditure, pay or reimburse Grantor from the proceedsfor the reasonable cost of repair or restoration. If Lender does not consent to repair orreplacement of the Collateral, Lender shall retain a sufficient amount of the proceeds topay all of the Indebtedness, and shall pay the balance to Grantor. Any proceeds which havenot been disbursed within six (6) months after their receipt and which Grantor has notcommitted to the repair or restoration of the Collateral shall be used to prepay theIndebtedness.**Insurance Reserves.**Lender may require Grantor to maintain with Lender reserves for paymentof insurance premiums, which reserves shall be created by monthly payments from Grantor of asum estimated by Lender to be sufficient to produce, at least fifteen (15) days before thepremium due date, amounts at least equal to the insurance premiums to be paid. If fifteen(15) days before payment is due, the reserve funds are insufficient, Grantor shall upondemand pay any deficiency to Lender. The reserve funds shall be held by Lender as a generaldeposit and shall constitute a non-interest-bearing account which Lender may       4  
 

 
satisfy by payment of the insurance premiums required to be paid by Grantor as they becomedue. Lender does not hold the reserve funds in trust for Grantor, and Lender is not theagent of Grantor for payment of the insurance premiums required to be paid by Grantor. Theresponsibility for the payment of premiums shall remain Grantor’s sole responsibility.**Insurance Reports.**Grantor, upon request of Lender, shall furnish to Lender reports on eachexisting policy of insurance showing such information as Lender may reasonably requestincluding the following: (a) the name of the insurer; (b) the risks insured; (c) the amountof the policy; (d) the property insured; (e) the then current value on the basis of whichinsurance has been obtained and the manner of determining that value; and (f) the expirationdate of the policy. In addition, Grantor shall upon request by Lender (however not moreoften than annually) have an independent appraiser satisfactory to Lender determine, asapplicable, the cash value or replacement cost of the Collateral.**GRANTOR’S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS.**Until default and except as otherwiseprovided below with respect to accounts, Grantor may have possession of the tangible personalproperty and beneficial use of all the Collateral and may use it in any lawful manner notinconsistent with this Agreement or the Related Documents, provided that Grantor’s right topossession and beneficial use shall not apply to any Collateral where possession of the Collateralby Lender is required by law to perfect Lender’s security interest in such Collateral. Untilotherwise notified by Lender, Grantor may collect any of the Collateral consisting of accounts. Atany time and even though no Event of Default exists, Lender may exercise the rights to collect theaccounts and to notify account debtors to make payments directly to Lender for application to theIndebtedness. If Lender at any time has possession of any Collateral, whether before or after anEvent of Default, Lender shall be deemed to have exercised reasonable care in the custody andpreservation of the Collateral if Lender takes such action for that purpose as Grantor shallrequest or as Lender, in Lender’s sole discretion, shall deem appropriate under the circumstances,but failure to honor any request by Grantor shall not of itself be deemed to be a failure toexercise reasonable care. Lender shall not be required to take any steps necessary to preserve anyrights in the Collateral against prior parties, nor to protect, preserve or maintain any securityinterest given to secure the Indebtedness.**EXPENDITURES BY LENDER.**If not discharged or paid when due, Lender may (but shall not be obligatedto) discharge or pay any amounts required to be discharged or paid by Grantor under this Agreement,including without limitation all taxes, liens, security interests, encumbrances, and other claims,at any time levied or placed on the Collateral. Lender also may (but shall not be obligated to)pay all costs for insuring, maintaining and preserving the Collateral. All such expendituresincurred or paid by Lender for such purposes will then bear interest at the rate charged under theNote from the date incurred or paid by Lender to the date of repayment by Grantor. All suchexpenses shall become a part of the Indebtedness and, at Lender’s option, will (a) be payable ondemand; (b) be added to the balance of the Note and be apportioned among and be payable with anyinstallment payments to become due during either (1) the term of any applicable insurance policy;or (2) the remaining term of the Note; or (c) be treated as a balloon payment which will be due andpayable at the Note’s maturity. The Agreement also will secure payment of these amounts. Suchright shall be in addition to all other rights and remedies to which Lender may be entitled upon anEvent of Default.**REINSTATEMENT OF SECURITY INTEREST.**If payment is made by Grantor, whether voluntarily orotherwise, or by guarantor or by any third party, on the Indebtedness and thereafter Lender isforced to remit the amount of that payment (a) to Grantor’s trustee in bankruptcy or to any similarperson under any federal or state bankruptcy law or law for the relief of debtors, (b) by reason ofany judgment, decree or order of any court or administrative body having jurisdiction over Lenderor any of Lender’s property, or (c) by reason of any settlement or compromise of any claim made byLender with any claimant (including without limitation Grantor), the Indebtedness shall beconsidered unpaid for the purpose of enforcement of this Agreement and this Agreement shallcontinue to be effective or shall be reinstated, as the case may be, notwithstanding anycancellation of this Agreement or of any note or other instrument or agreement evidencing theIndebtedness and the Collateral will continue to secure the amount repaid or recovered to the sameextent as if that amount never had been originally received by Lender, and Grantor shall be boundby any judgment, decree, order, settlement or compromise relating to the Indebtedness or to thisAgreement.**EVENTS OF DEFAULT.**Each of the following shall constitute an Event of Default under thisAgreement:**Default on Indebtedness.**Failure of Grantor to make any payment when due on theIndebtedness.**Other Defaults.**Failure of Grantor to comply with or to perform any other term, obligation,covenant or condition contained in this Agreement or in any of the Related Documents or inany other agreement between Lender and Grantor.       5  
 

 
**False Statements.**Any warranty, representation or statement made or furnished to Lender byor on behalf of Grantor under this Agreement, the Note or the Related Documents is false ormisleading in any material respect, either now or at the time made or furnished.**Defective Collateralization.**This Agreement or any of the Related Documents ceases to be infull force and effect (including failure of any collateral documents to create a valid andperfected security interest or lien) at any time and for any reason.**Insolvency.**The dissolution or termination of Grantor’s existence as a going business, theinsolvency of Grantor, the appointment of a receiver for any part of Grantor’s property, anyassignment for the benefit of creditors, any type of creditor workout, or the commencementof any proceeding under any bankruptcy or insolvency laws by or against Grantor.**Creditor or Forfeiture Proceedings.**Commencement of foreclosure or forfeiture proceedings,whether by judicial proceeding, self-help, repossession or any other method, by any creditorof Grantor or by any governmental agency against the Collateral or any collateral securingthe Indebtedness. This includes a garnishment of any of Grantor’s accounts with Lender.**Events Affecting Guarantor.**Any of the preceding events occurs with respect to anyGuarantor of any of the Indebtedness or such Guarantor dies or becomes incompetent.**Adverse Change.**A material adverse change occurs in Grantor’s financial condition, orLender believes the prospect of payment or performance of the Indebtedness is impaired.**Insecurity.**Lender in good faith believes itself insecure.**RIGHTS AND REMEDIES ON DEFAULT.**If an Event of Default occurs under this Agreement, at any timethereafter, Lender shall have all the rights of a secured party under the Missouri UniformCommercial Code. In addition and without limitation, Lender may exercise any one or more of thefollowing rights and remedies:**Accelerate Indebtedness.**Lender may declare the entire Indebtedness, including anyprepayment penalty which Grantor would be required to pay, immediately due and payable,without notice.**Assemble Collateral.**Lender may require Grantor to deliver to Lender all or any portion ofthe Collateral and any and all certificates of title and other documents relating to theCollateral. Lender may require Grantor to assemble the Collateral and make it available toLender at a place to be designated by Lender. Lender also shall have full power to enterupon the property of Grantor to take possession of and remove the Collateral. If theCollateral contains other goods not covered by this Agreement at the time of repossession,Grantor agrees Lender may take such other goods, provided that Lender makes reasonableefforts to return them to Grantor after repossession.**Sell the Collateral.**Lender shall have full power to sell, lease, transfer, or otherwisedeal with the Collateral or proceeds thereof in Lender’s own name or that of Grantor.Lender may sell the Collateral at public auction or private sale. Unless the Collateralthreatens to decline speedily in value or is of a type customarily sold on a recognizedmarket, Lender will give Grantor reasonable notice of the time after which any private saleor any other intended disposition of the Collateral is to be made. The requirements ofreasonable notice shall be met if such notice is given at least ten (10) days before thetime of the sale or disposition. All expenses relating to the disposition of theCollateral, including without limitation the expenses of retaking, holding, insuring,preparing for sale and selling the Collateral, shall become a part of the Indebtednesssecured by this Agreement and shall be payable on demand, with interest at the Note ratefrom date of expenditure until repaid.**Appoint Receiver.**To the extent permitted by applicable law, Lender shall have thefollowing rights and remedies regarding the appointment of a receiver: (a) Lender may havea receiver appointed as a matter of right, (b) the receiver may be an employee of Lender andmay serve without bond, and (c) all fees of the receiver and his or her attorney shallbecome part of the Indebtedness secured by this Agreement and shall be payable on demand,with interest at the Note rate from date of expenditure until repaid.**Collect Revenues, Apply Accounts.**Lender, either itself or through a receiver, may collectthe payments, rents, income, and revenues from the Collateral. Lender may at any time inits discretion transfer any      6  
 

 
Collateral into its own name or that of its nominee and receive the payments, rents, income,and revenues therefrom and hold the same as security for the Indebtedness or apply it topayment of the Indebtedness in such order of preference as Lender may determine. Insofar asthe Collateral consists of accounts, general intangibles, insurance policies, instruments,chattel paper, choses in action, or similar property, Lender may demand, collect, receiptfor, settle, compromise, adjust, sue for, foreclose, or realize on the Collateral as Lendermay determine, whether or not Indebtedness or Collateral is then due. For these purposes,Lender may, on behalf of and in the name of Grantor, receive, open and dispose of mailaddressed to Grantor; change any address to which mail and payments are to be sent; andendorse notes, checks, drafts, money orders, documents of title, instruments and itemspertaining to payment, shipment, or storage of any Collateral. To facilitate collection,Lender may notify account debtors and obligors on any Collateral to make payments directlyto Lender.**Obtain Deficiency.**If Lender chooses to sell any or all of the Collateral, Lender mayobtain a judgment against Grantor for any deficiency remaining on the Indebtedness due toLender after application of all amounts received from the exercise of the rights provided inthis Agreement. Grantor shall be liable for a deficiency even if the transaction describedin this subsection is a sale of accounts or chattel paper.**Other Rights and Remedies.**Lender shall have all the rights and remedies of a securedcreditor under the provisions of the Uniform Commercial Code, as may be amended from time totime. In addition, Lender shall have and may exercise any or all other rights and remediesit may have available at law, in equity, or otherwise.**Cumulative Remedies.**All of Lender’s rights and remedies, whether evidenced by thisAgreement or the Related Documents, or by any other writing, shall be cumulative and may beexercised singularly or concurrently. Election by Lender to pursue any remedy shall notexclude pursuit of any other remedy, and an election to make expenditures or to take actionto perform an obligation of Grantor under this Agreement, after Grantor’s failure toperform, shall not affect Lender’s right to declare a default and exercise its remedies.**MISCELLANEOUS PROVISIONS.**The following miscellaneous provisions are a part of this Agreement:**Amendments.**This Agreement, together with any Related Documents, constitutes the entireunderstanding 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 writingand signed by the party or parties sought to be charged or bound by the alteration oramendment.**Applicable Law. This Agreement has been delivered to Lender and accepted by Lender in theState of Missouri. If there is a lawsuit, Grantor agrees upon Lender’s request to submit tothe jurisdiction of the courts of St. Louis County the State of Missouri. Subject to theprovisions on arbitration, this Agreement shall be governed by and construed in accordancewith the laws of the State of Missouri.****Arbitration. Lender and Grantor agree that all disputes, claims and controversies betweenthem whether individual, joint, or class in nature, arising from this Agreement orotherwise, including without limitation contract and tort disputes, shall be arbitratedpursuant to the Rules of the American Arbitration Association, upon request of either party.No act to take or dispose of any Collateral shall constitute a waiver of this arbitrationagreement or be prohibited by this arbitration agreement. This includes, withoutlimitation, obtaining injunctive relief or a temporary restraining order; invoking a powerof sale under any deed of trust or mortgage; obtaining a writ of attachment or imposition ofa receiver; or exercising any rights relating to personal property, including taking ordisposing of such property with or without judicial process pursuant to Article 9 of theUniform Commercial Code. Any disputes, claims, or controversies concerning the lawfulnessor reasonableness of any act, or exercise of any right, concerning any Collateral, includingany claim to rescind, reform, or otherwise modify any agreement relating to the Collateral,shall also be arbitrated, provided however that no arbitrator shall have the right or thepower to enjoin or restrain any act of any party. Judgment upon any award rendered by anyarbitrator may be entered in any court having jurisdiction. Nothing in this Agreement shallpreclude any party from seeking equitable relief from a court of competent jurisdiction.The statute of limitations, estoppel, waiver, laches, and similar doctrines which wouldotherwise be applicable in an action brought by a party shall be applicable in anyarbitration proceeding, and the commencement of an arbitration proceeding shall be deemedthe commencement of an action for these purposes. The Federal Arbitration Act shall applyto the construction, interpretation, and enforcement of this arbitration provision.**       7  
 

 
**Attorneys’ Fees; Expenses.**Grantor agrees to pay upon demand all of Lender’s costs andexpenses, including attorneys’ fees and Lender’s legal expenses, incurred in connection withthe enforcement of this Agreement. Lender may pay someone else to help enforce thisAgreement, and Grantor shall pay the costs and expenses of such enforcement. Costs andexpenses include Lender’s attorneys’ fees and legal expenses whether or not there is alawsuit, including attorneys’ fees and legal expenses for bankruptcy proceedings (includingefforts to modify or vacate any automatic stay or injunction), and appeals and anyanticipated post-judgment collection services. Grantor also shall pay all court costs andsuch additional fees as may be directed by the court.**Caption Headings.**Caption headings in this Agreement are for convenience purposes only andare not to be used to interpret or define the provisions of this Agreement.**Notices.**Any notice 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 whenactually delivered or when deposited with a nationally recognized overnight courier ordeposited in the United States mail, as first class, postage prepaid, addressed to the partyto whom the notice is to be given at the address shown above. Any party may change itsaddress for notices under this Agreement by giving formal written notice to the otherparties, specifying that the purpose of the notice is to change the party’s address. To theextent permitted by applicable law, if there is more than one Grantor, notice to any Grantorwill constitute notice to all Grantors. For notice purposes, Grantor will keep Lenderinformed at all times of Grantor’s current address(es).**Power of Attorney.**Grantor hereby appoints Lender as its true and lawful attorney-in-fact,irrevocably, with full power of substitution to do the following: (a) to demand, collect,receive, receipt for, sue and recover all sums of money or other property which may now orhereafter become due, owing or payable from the Collateral; (b) to execute, sign and endorseany and all claims, instruments, receipts, checks, drafts or warrants issued in payment forthe Collateral; (c) to settle or compromise any and all claims arising under the Collateral,and, in the place and stead of Grantor, to execute and deliver its release and settlementfor the claim; and (d) to file any claim or claims or to take any action or institute ortake part in any proceedings, either in its own name or in the name of Grantor, orotherwise, which in the discretion of Lender may seem to be necessary or advisable. Thispower is given as security for the Indebtedness, and the authority hereby conferred is andshall be irrevocable and shall remain in full force and effect until renounced by Lender.**Severability.**If a court of competent jurisdiction finds any provision of this Agreement tobe invalid or unenforceable as to any person or circumstance, such finding shall not renderthe offending provision invalid or unenforceable as to any other persons or circumstances.If feasible any such offending provision shall be deemed to be modified to be within thelimits of enforceability or validity; however, if the offending provision cannot be somodified, it shall be stricken and all other provisions of this Agreement in all otherrespects shall remain valid and enforceable.**Successors Interests.**Subject to any limitations set forth above on transfer of theCollateral, this Agreement shall be binding upon and inure to the benefit of the parties,their successors and assigns.**Waiver.**Lender shall not be deemed to have waived any rights under this Agreement unlesssuch waiver is given in writing and signed by Lender. No delay or omission on the part ofLender 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 awaiver of Lender’s right otherwise to demand strict compliance with that provision or anyother provision of this Agreement. No prior waiver by Lender, nor any course of dealingbetween Lender and Grantor, shall constitute a waiver of any of Lender’s rights or of any ofGrantor’s obligations as to any future transactions. Whenever the consent of Lender isrequired under this Agreement, the granting of such consent by Lender in any instance shallnot constitute continuing consent to subsequent instances where such consent is required andin all cases such consent may be granted or withheld in the sole discretion of Lender.**EXHIBIT A.**An exhibit, titled “Exhibit A,” is attached to this Agreement and by this reference ismade a part of this Agreement just as if all the provisions, forms and conditions of the Exhibithad been fully set forth in this Agreement.**EXHIBIT B.**An exhibit, titled “Exhibit B,” is attached to this Agreement and by this reference ismade a part of this Agreement just as if all the provisions, forms and conditions of the Exhibithad been fully set forth in this Agreement.       8  
 

 
**GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY AGREEMENT, ANDGRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED MARCH 10, 2000.****THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.**   **GRANTOR:**      **SYNERGETICS, INC., a Missouri Corporation**   **By:** **/s/ William Bates VP**     **William Bates, Vice President**      **LENDER:**      **Union Planters Bank, N.A.**   **By:** **/s/ Anne Silvestri V.P.**     **Authorized Officer**       9  
 

 
**EXHIBIT A**       Borrower: SYNERGETICS, INC., a Lender: Union Planters Bank, N.A.  Missouri Corporation   Clayton Banking Center  (TIN: 43-1585312)   8182 Maryland Avenue  88 Hubble   St. Louis, MO 63105  St. Charles, MO 63304    This Exhibit A is attached to and by this reference is made a part of such Security Agreement,dated March 10, 2000, and executed in connection with a loan or other financial accommodationsbetween Union Planters Bank, N.A. and SYNERGETICS, INC., a Missouri Corporation.All (a) inventory, including raw materials, goods and merchandise, work in process, parts andsupplies, finished products and returned items, (b) Accounts, including accounts receivable, (c)Contract Rights, (d) goods, merchandise or other personal property (i) returned to or repossessedby or on behalf of Debtor, and (ii) the sale or lease of which shall have given or shall give riseto any Accounts, Contract Rights, chattel paper or instrument, (e) notes, drafts, cash,acceptances, instruments, chattel paper, warehouse receipts, letters of credit and repurchaseagreements, (f) General Intangibles, including goodwill, patent rights, patents, licenses,trademarks, service marks, trade names and copyrights, and all income including infringementdamages with respect thereto, (g) documents and instruments evidencing any obligation to Debtor forpayment of goods, merchandise or other personal property sold or services rendered, (h) all federal, state and local tax refunds, (i) customer lists and files, (j) drawings, blueprints, promotionalbrochures and mailing lists, (k) insurance policies covering any collateral, (l) franchises andlicenses, (m) [illegible], (n) proceeds and cash surrender values of any life insurance policies ofwhich the Debtor may be a beneficiary or owner, (o) documents, books and records relating to theCollateral, and (p) cash and non-cash proceeds (including insurance proceeds), substitutes,replacements, accretions and products of the Collateral.THIS EXHIBIT A IS EXECUTED ON MARCH 10, 2000.BORROWER:   SYNERGETICS, INC., a Missouri Corporation   By: /s/ William Bates VP     William Bates, Vice President      LENDER:   Union Planters Bank, N.A.   By: /s/ Anne Silvestri V.P.     Authorized Officer       10  
 

 
**EXHIBIT B**       Borrower: SYNERGETICS, INC., a Lender: Union Planters Bank, N.A.  Missouri Corporation   Clayton Banking Center  (TIN: 43-1585312)   8182 Maryland Avenue  88 Hubble   St. Louis, MO 63105  St. Charles, MO 63304    This Exhibit B is attached to and by this reference is made a part of such Security Agreement,dated March 10, 2000, and executed in connection with a loan or other financial accommodationsbetween Union Planters Bank, N.A. and SYNERGETICS, INC., a Missouri Corporation.All (a) equipment, (b) furniture, fixtures and machinery, (c) accessories, furnishings, molds,motor vehicles, tools, toolings, jigs, dies, sparer parts, manufacturing implements, trailers andimprovements to real property, (d) tangible personal property, artwork and drawings, (e) insurancepolicies covering any Collateral, (f) documents, books and records relating to the Collateral, and(g) cash and non-cash proceeds (including insurance proceeds), substitutes, replacements,accretions, accessions and products of the Collateral.THIS EXHIBIT B IS EXECUTED ON MARCH 10, 2000.BORROWER:   SYNERGETICS, INC., a Missouri Corporation   By: /s/ William Bates VP     William Bates, Vice President      LENDER:   Union Planters Bank, N.A.   By: /s/ Anne Silvestri V.P.     Authorized Officer       11  
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