**EXHIBIT 10.41****LOAN AGREEMENT**             **Principal** **Loan Date** **Maturity** **Loan No.** **Call / Coll** **Account** **Officer Initials****$1,250,000.00** **03-10-2000** **01-15-2001** **** **61** **500359790000** ****References in the shaded area are for Lender’s use only and do not limit the applicability of this document to anyparticular loan or item.       **Borrower:** **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 LOAN AGREEMENT between SYNERGETICS, INC., a Missouri Corporation (“Borrower”) and Union Planters Bank, N.A. (“Lender”) is made andexecuted on the following terms and conditions. Borrower has received prior commercial loans fromLender 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. Allsuch loans and financial accommodations, together with all future loans and financialaccommodations 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, andagreements, as set forth in this Agreement; (b) the granting, renewing, or extending of any Loan byLender at all times shall be subject to Lender’s sole judgment and discretion; and (c) all suchLoans shall be and shall remain subject to the following terms and conditions of this Agreement.****TERM**. This Agreement shall be effective as of March 10, 2000, and shall continue thereafter untilall indebtedness of Borrower to Lender has been performed in full and the parties terminate thisAgreement in writing.**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 Loan Agreement, as this Loan Agreement may beamended or modified from time to time, together with all exhibits and schedules attached tothis Loan Agreement from time to time.**Account.**The word “Account” means a trade account, account receivable, or other right topayment for goods sold or services rendered owing to Borrower (or to a third party grantoracceptable to Lender).**Account Debtor.**The words “Account Debtor” mean the person or entity obligated upon anAccount.**Advance.**The word “Advance” means a disbursement of Loan funds under this Agreement.**Borrower.**The word “Borrower” means SYNERGETICS, INC., a Missouri Corporation. The word“Borrower” also includes, as applicable, all subsidiaries and affiliates of Borrower asprovided below in the paragraph titled “Subsidiaries and Affiliates.”**Borrowing Base.**The words “Borrowing Base” mean, as determined by Lender from time to time,the lesser of (a) $1,250,000.00; or (b) the sum of (i) 80.000% of the aggregate amount ofEligible Accounts, plus (ii) 50.000% of the aggregate amount of Eligible inventory.**CERCLA.**The word “CERCLA” means the Comprehensive Environmental Response, Compensation, andLiability Act of 1980, as amended.**Collateral.**The word “Collateral” means and includes without limitation all property andassets granted as collateral security for a Loan, whether real or personal property, whethergranted directly or indirectly, whether granted now or in the future, and whether granted inthe form of a security interest, mortgage, deed of trust, assignment, pledge, chattelmortgage, chattel trust, factor’s lien, equipment trust, conditional sale, trust receipt,lien, charge, lien or title retention contract, lease or consignment intended as a securitydevice,
 

 
or any other security or lien interest whatsoever, whether created by law, contract, orotherwise. The word “Collateral” includes without limitation all collateral described belowin the section titled “COLLATERAL.”**Eligible Accounts.**The words “Eligible Accounts” mean, at any time, all of Borrower’sAccounts which contain selling terms and conditions acceptable to Lender. The net amount ofany Eligible Account against which Borrower may borrow shall exclude all returns, discounts,credits, and offsets of any nature. Unless otherwise agreed to by Lender in writing,Eligible Accounts do not include:(a) Accounts with respect to which the Account Debtor is an officer, an employee oragent of Borrower.(b) Accounts with respect to which the Account Debtor is a subsidiary of, oraffiliated with or related to Borrower or its shareholders, officers, or directors.(c) Accounts with respect to which goods are placed on consignment, guaranteed sale,or other terms by reason of which the payment by the Account Debtor may beconditional.(d) Accounts with respect to which the Account Debtor is not a resident of theUnited States, except to the extent such Accounts are supported by insurance, bondsor other assurances satisfactory to Lender.(e) Accounts with respect to which Borrower is or may become liable to the AccountDebtor for goods sold or services rendered by the Account Debtor to Borrower.(f) Accounts which are subject to dispute, counterclaim, or setoff.(g) Accounts with respect to which the goods have not been shipped or delivered, orthe services have not been rendered, to the Account Debtor.(h) Accounts with respect to which Lender, in its sole discretion, deems thecreditworthiness or financial condition of the Account Debtor to be unsatisfactory.(i) Accounts of any Account Debtor who has filed or has had filed against it apetition in bankruptcy or an application for relief under any provision of any stateor federal bankruptcy, insolvency, or debtor-in-relief acts; or who has hadappointed a trustee, custodian, or receiver for the assets of such Account Debtor,or who has made an assignment for the benefit of creditors or has become insolventor fails generally to pay its debts (including its payrolls) as such debts becomedue.(j) Accounts with respect to which the Account Debtor is the United StatesGovernment or any department of agency of the United States.(k) Accounts which have not been paid in full within 90 days from the invoice date.The entire balance of any Account of any single Account debtor will be ineligiblewhenever the portion of the Account which has not been paid within 90 days from theinvoice date is in excess of 20.000% of the total amount outstanding on the Account.(l) That portion of the Accounts or any single Account Debtor which exceeds 20.000%of all of Borrower’s Accounts.**Eligible Inventory.**The words “Eligible Inventory” mean, at any time, all of Borrower’sinventory as defined below except:(a) Inventory which is not owned by Borrower free and clear of all securityinterests, liens, encumbrances, and claims of third parties.(b) Inventory which Lender, in its sole discretion, deems to be obsolete, unsalable,damaged, defective, or unfit for further processing.
 

 
(c) Work in progress.**ERISA.**The word “ERISA” means the Employee Retirement Income Security Act of 1974, asamended.**Event of Default.**The words “Event of Default” mean and include without limitation any ofthe Events or Default set forth below in the section titled “EVENTS OF DEFAULT.”**Expiration Date.**The words “Expiration Date” mean the date of termination of Lender’scommitment to lend under this Agreement.**Grantor.**The word “Grantor” means and includes without limitation each and all of thepersons or entities 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 theguarantors, sureties, and accommodation parties in connection with any indebtedness.**Indebtedness.**The word “Indebtedness” means and includes without limitation all Loans,together with all other obligations, debts, and liabilities of Borrower to Lender, or anyone or more of them, as well as all claims by Lender against Borrower, or any one or more ofthem; whether now or hereafter existing, voluntary or involuntary, due or not due, absoluteor contingent, liquidated or unliquidated; whether Borrower may be liable individually orjointly with others; whether Borrower may be obligated as a guarantor, surety, or otherwise;whether recovery upon such indebtedness may be or hereafter may become barred by any statuteof limitations; and whether such indebtedness may be or hereafter may become otherwiseunenforceable.**Inventory.**The word “Inventory” means all of the Borrower’s raw materials, work in process,finished goods, merchandise, parts and supplies, of every kind and description, and goodsheld for sale or lease or furnished under contracts of service in which Borrower now has orhereafter acquires any right, whether held by Borrower or others, and all documents oftitle, warehouse receipts, bills of lading, and all other documents of every type coveringall or any part of the foregoing. Inventory includes inventory temporarily out ofBorrower’s custody or possession and all returns on Accounts.**Lender.**The word “Lender” means Union Planters Bank, N.A., its successors and assigns.**Line of Credit.**The words “Line of Credit” mean the credit facility described in theSection titled “LINE OF CREDIT” below.**Loan.**The word “Loan” or “Loans” means and includes without limitation any and allcommercial loans and financial accommodations from Lender to Borrower, whether now orhereafter existing, and however evidenced, including without limitation those loans andfinancial accommodations described herein or described on any exhibit or schedule attachedto this Agreement from time to time.**Note.**The word “Note” means and includes without limitation Borrower’s promissory note ornotes, if any, evidencing Borrower’s Loan obligations in favor of Lender, as well as anysubstitute, replacement or refinancing note or notes therefor.**Permitted Liens.**The words “Permitted Liens” mean: (a) liens and security interestssecuring indebtedness owed by Borrower to Lender; (b) liens for taxes, assessments, orsimilar charges either not yet due or being contested in good faith; (c) liens ofmaterialmen, mechanics, warehousemen, or carriers, or other like liens arising in theordinary course of business and securing obligations which are not yet delinquent; (d)purchase money liens or purchase money security interests upon or in any property acquiredor held by Borrower in the ordinary course of business to secure indebtedness outstanding onthe date of this Agreement or permitted to be incurred under the paragraph of this Agreementtitled “Indebtedness and Liens”; (e) liens and security interests which, as of the date ofthis Agreement have been disclosed to and approved by the Lender in writing; and (f) thoseliens and security interests which in the aggregate constitute an immaterial andinsignificant monetary amount with respect to the net value of Borrower’s assets.**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 and documents, whether nowor hereafter existing, executed in connection with the indebtedness.**Security Agreement.**The words “Security Agreement” mean and include without limitation anyagreements, promises, covenants, arrangements, understandings or other agreements, whethercreated by law, contract, or otherwise, evidencing, governing, representing, or creating aSecurity Interest.**Security Interest.**The words “Security Interest” mean and include without limitation anytype of collateral security, whether in the form 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 consignmentintended as a security device or any other security of lien interest whatsoever, whethercreated by law, contract or otherwise.**SARA.**The word “SARA” means the Superfund Amendments and Reauthorization Act of 1985 as nowor hereafter amended.**LINE OF CREDIT.**Lender agrees to make Advances to Borrower from time to time from the date of thisAgreement to the Expiration Date, provided the aggregate amount of such Advances outstanding at anytime does not exceed the Borrowing Base. Within the foregoing limits, Borrower may borrow,partially or wholly prepay, and reborrow under this Agreement as follows:**Conditions Precedent to Each Advance.**Lender’s obligation to make any Advance to or for theaccount of Borrower under this Agreement is subject to the following conditions precedent,with all documents, instruments, opinions, reports, and other items required under thisAgreement to be in form and substance satisfactory to Lender.(a) Lender shall have received evidence that this Agreement and all RelatedDocuments have been duly authorized, executed, and delivered by Borrower to Lender.(b) Lender shall have received such opinions of counsel, supplemental opinions, anddocuments as Lender may request.(c) The security interest in the Collateral shall have been duly authorized, createdand perfected with first lien priority and shall be in full force and effect.(d) All guaranties required by Lender for the Line or Credit shall have beenexecuted by each Guarantor, delivered to Lender, and be in full force and effect.(e) Lender, at its option and for its sole benefit, shall have conducted an audit ofBorrower’s Accounts, Inventory, books, records, and operations, and Lender shall besatisfied as to their condition.(f) Borrower shall have paid to Lender all fees, costs, and expenses specified inthis Agreement and the Related Documents as are then due and payable.(g) There shall not exist at the time of any Advance a condition which wouldconstitute an Event of Default under this Agreement, and Borrower shall havedelivered to Lender the compliance certificate called for in the paragraph belowtitled “Compliance Certificate.”**Making Loan Advances.**Advances under the Line of Credit may be requested orally byauthorized persons. Lender may, but need not, require that all oral requests be confirmedin writing. Each Advance shall be conclusively deemed to have been made at the request ofand for the benefit of Borrower (a) when credited to any deposit account of Borrowermaintained with Lender or (b) when advanced in accordance with the instructions or anauthorized person, Lender, at its option, may set a cutoff time, after which all requestsfor Advances will be treated as having been requested on the next succeeding Business Day.**Mandatory Loan Repayments.**If at any time the aggregate principal amount of the outstandingAdvances shall exceed the applicable Borrowing Base, Borrower, immediately upon written ororal notice from Lender, shall pay to Lender an amount equal to the difference between theoutstanding principal balance of the Advances and the Borrowing Base. On the ExpirationDate, Borrower shall pay to Lender in full the
 

 
aggregate unpaid principal amount of all Advances then outstanding and all accrued unpaidinterest, together with all other applicable fees, costs and charges, if any, not yet paid.**Loan Account.**Lender shall maintain on its books a record of account in which Lender shallmake entries for each Advance and such other debits and credits as shall be appropriate inconnection with the credit facility. Lender shall provide Borrower with periodic statementsof Borrower’s account, which statements shall be considered to be correct and conclusivelybinding on Borrower unless Borrower notifies Lender to the contrary within thirty (30) daysafter Borrower’s receipt of any such statement which Borrower deems to be incorrect.**COLLATERAL.**To secure payment of the Line of Credit and performance of all other Loans,obligations and duties owned by Borrower to Lender, Borrower (and others, if required) shall grantto Lender Security Interests in such property and assets as Lender may require (the “Collateral”),including without limitation Borrower’s present and future Accounts, general intangibles, andInventory. Lender’s Security Interests in the Collateral shall be continuing liens and shallinclude the proceeds and products of the Collateral, including without limitation the proceeds ofany Insurance. With respect to the Collateral, Borrower agrees and represents and warrants toLender:**Perfection of Security Interests.**Borrower agrees to execute such financing statements andto take whatever other actions are requests by Lender to perfect and continue Lender’sSecurity Interests in the Collateral. Upon request of Lender, Borrower will deliver toLender any and all of the documents evidencing or constituting the Collateral, and Borrowerwill note Lender’s Interest upon any and all chattel paper if not delivered to Lender forpossession by Lender. Contemporaneous with the execution of this Agreement, Borrower willexecute one or more UCC financing statements and any similar statements as may be requiredby applicable law, and will file such financing statements and all such similar statementsin the appropriate location or locations. Borrower hereby appoints Lender as itsirrevocable attorney-in-fact for the purpose of executing any documents necessary to perfector to continue any Security Interest. Lender may at any time, and without furtherauthorization from Borrower, file a carbon, photograph, facsimile, or other reproduction ofany financing statement for use as a financing statement. Borrower will reimburse Lenderfor all expenses for the perfection, termination, and the continuation of the perfection ofLender’s security interest in the Collateral. Borrower promptly will notify Lender of anychange in Borrower’s name including any change to the assumed business names of Borrower.Borrower also promptly will notify Lender of any change in Borrower’s Social Security Numberor Employer Identification Number. Borrower further agrees to notify Lender in writingprior to any change in address or location of Borrower’s principal governance office orshould Borrower merge or consolidate with any other entity.**Collateral Records.**Borrower does not, and at all times hereafter shall, keep correct andaccurate records of the Collateral, all of which records shall be available to Lender orLender’s representative upon demand for inspection and copying at any reasonable time. Withrespect to the Accounts, Borrower agrees to keep and maintain such records as Lender mayrequire, including without limitation information concerning Eligible Accounts and Accountbalances and agings. With respect to the Inventory, Borrower agrees to keep and maintainsuch records as Lender may require, including without limitation information concerningEligible Inventory and records itemizing and describing the kind, type, quality, andquantity of Inventory, Borrower’s Inventory costs and selling prices, and the dailywithdrawals and additions to Inventory. The following is an accurate and complete list ofall locations at which Borrower keeps or maintains business records concerning Borrower’sAccounts and Inventory: 80 Hubble, St. Charles, MO 63304.**Collateral Schedules.**Concurrently with the execution and delivery of this Agreement,Borrower shall execute and deliver to Lender schedules of Accounts and Inventory andEligible Accounts and Eligible Inventory, in form and substance satisfactory to the Lender.Thereafter Borrower shall execute and deliver to Lender such supplemental schedules ofEligible Accounts and Eligible Inventory and such other matters and information relating tothe Accounts and Inventory as Lender may request. Supplemental schedules shall be deliveredaccording to the following schedule: Quarterly.**Representations and Warranties Concerning Accounts.**With respect to the Accounts, Borrowerrepresents and warrants to Lender: (a) Each Account represented by Borrower to be anEligible Account for purposes of this Agreement conforms to the requirements of thedefinition of an Eligible Account; (b) All Account Information listed on schedules deliveredto Lender will be true and correct, subject to immaterial variance; and (c) Lender, itsassigns, or agents shall have the right at any time and at Borrower’s expense to inspect,examine, and audit Borrower’s records and to confirm with Account Debtors the accuracy ofsuch Accounts.
 

 
**Representations and Warranties Concerning Inventory.**With respect to the Inventory,Borrower represents and warrants to Lender: (a) All Inventory represented by Borrower to beEligible Inventory for purposes of this Agreement conforms to the requirements of thedefinition of Eligible Inventory; (b) All Inventory values listed on schedules delivered toLender will be true and correct, subject to immaterial variance; (c) The value of theInventory will be determined on a consistent accounting basis; (d) Except as agreed to thecontrary by Lender in writing, all Eligible Inventory is now and at all times hereafter willbe in Borrower’s physical possession and shall not be held by others on consignment, sale orapproval, or sale or return; (e) Except as reflected in the inventory schedules delivered toLender, all Eligible Inventory is now and at all times hereafter will be of good andmerchantable quality, free from defects; (f) Eligible Inventory is not now and will not atany time hereafter be stored with a bailee, warehouseman, or similar party without Lender’sprior written consent, and, in such event, Borrower will concurrently at the time ofbailment cause any such bailee, warehouseman, or similar party to issue and deliver toLender, in form acceptable to Lender, warehouse receipts in Lender’s name evidencing thestorage of Inventory; and (g) Lender, its assigns, or agents shall have the right at anytime and at Borrower’s expense to inspect and examine the Inventory and to check and testthe same as to quality, quantity, value, and condition.**REPRESENTATIONS AND WARRANTIES.**Borrower represents and warrants to Lender, as of the date of thisAgreement 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 any indebtedness exists:**Organization.**Borrower is a corporation which is duly organized, validly existing, and ingood standing under the laws of the state of Borrower’s Incorporation and is validlyexisting and in good standing in all states in which Borrower is doing business. Borrowerhas the full power and authority to own its properties and to transact the businesses inwhich it is presently engaged or presently purposes to engage. Borrower also is dulyqualified as a foreign corporation and is in good standing in all states in which thefailure to so qualify would have a material adverse effect on its businesses or financialcondition.**Authorization.**The execution, delivery, and performance of this Agreement and all RelatedDocuments 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 orapproval of any other person, regulatory authority or governmental body, and do not conflictwith, result in a violation of, or constitute a default under (a) any provision of itsarticles of incorporation or organization, or bylaws, or any agreement or other instrumentbinding upon Borrower or (b) any law, governmental regulation, court decree, or orderapplicable to Borrower.**Financial Information.**Each financial statement of Borrower supplied to Lender truly andcompletely disclosed Borrower’s financial condition as of the date of the statement, andthere has been no material adverse change in Borrower’s financial condition subsequent tothe date of the most recent financial statement supplied to Lender, Borrower has no materialcontingent obligations except as disclosed in such financial statements.**Legal Effect.**This Agreement constitutes, and any instrument or agreement requiredhereunder to be given by Borrower when delivered will constitute legal, valid and bindingobligations of Borrower enforceable against Borrower in accordance with their respectiveterms.**Properties.**Except for Permitted Liens, Borrower owns and has good title to all ofBorrower’s properties free and clear of all Security Interests, and has not executed anysecurity documents or financing statements relating to such properties. All of Borrower’sproperties are titled in Borrower’s legal name, and Borrower has not used, or filed afinancing 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 meaningsas 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 6801,et seq., or other applicable state or Federal laws, rules, or regulations adopted pursuantto 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 theproperties, 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; (b) Borrower has no knowledge of, or reason to believethat there has been (i) any use, generation, manufacture, storage, treatment disposal,release, or threatened release of
 

 
any hazardous waste or substance on, under, about of from the properties by any prior ownersor occupants of any of the properties; or (ii) any actual or threatened litigation or claimsof 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; and any such activity shall be conducted incompliance 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 suchInspections and tests as Lender may deem appropriate to determine compliance of theproperties with this section of the Agreement. Any inspections or tests made by Lendershall be at Borrower’s expense and for Lender’s purposes only and shall not be construed tocreate any responsibility or liability on the part of Lender to Borrower or to any otherperson. The representations and warranties contained herein are based on Borrower’s duediligence in investigating the properties for hazardous waste and hazardous substances.Borrower hereby (a) releases and waives any future claims against Lender for indemnity orcontribution in the event Borrower becomes liable for cleanup or other costs under any suchlaws, and (b) agrees to indemnify and hold harmless Lender against any and all claims,losses, liabilities, damages, penalties, and expenses which Lender may directly orindirectly sustain or suffer resulting from a breach of this section of the Agreement or asa consequence of any use, generation, manufacture, storage, disposal, release or threatenedrelease of a hazardous waste or substance on the properties. The provisions of this sectionof the Agreement, including the obligation to indemnify, shall survive the payment of theindebtedness and the termination or expiration of this Agreement and shall not be affectedby Lender’s acquisition of any interest in any of the properties, whether by foreclosure orotherwise.**Litigation and Claims.**No litigation, claim, investigation, administrative proceeding orsimilar action (including those for unpaid taxes) against Borrower is pending or threatened,and no other event has occurred which my materially adversely affect Borrower’s financialcondition or properties, other then litigation, claims, or other events, if any, that havebeen disclosed to and acknowledged by Lender in writing.**Taxes.**To the best of Borrower’s knowledge, all tax returns and reports of Borrower thatare or were required to be filed, have been filed, and all taxes, assessments and othergovernmental charges have been paid in full, except those presently being or to be contestedby Borrower in good faith in the ordinary course of business and for which adequate reserveshave been provided.**Lien Priority.**Unless otherwise previously disclosed to Lender in writing, Borrower has notentered into or granted any Security Agreements, or permitted the filing or attachment ofany Security Interest on or affecting any of the Collateral directly or indirectly securingrepayment of Borrower’s Loan and Note, that would be prior or that may in any way besuperior to Lender’s Security Interests and rights in and to such Collateral.**Binding Effect.**This Agreement, the Note, all Security Agreements directly or indirectlysecuring repayment of Borrower’s Loan and Note and all of the Related Documents are bindingupon Borrower as well as upon Borrower’s successors, representatives and assigns, and arelegally enforceable in accordance with their respective terms.**Commercial Purposes.**Borrower intends to use the Loan proceeds solely for business orcommercial related purposes.**Employee Benefit Plans.**Each employee benefit plan as to which Borrower may have anyliability complies in all material respects with all applicable requirements of law andregulations, 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 suchplan or initiated steps to do so, (iii) no steps have been taken to terminate any such plan,and (iv) there are not unfunded liabilities other than those previously disclosed to Lenderin writing.**Location of Borrower’s Offices and Records.**Borrower’s place of business, or Borrower’sChief Executive Office, if Borrower has more than one place of business, is located at 88Hubble, St. Charles, MO 63304. Unless Borrower has designated otherwise in writing thislocation is also the office or offices where Borrower keeps its records concerning theCollateral.**Information.**All information heretofore or contemporaneously herewith furnished by Borrowerto Lender for the purposes of or in connection with this Agreement or any transactioncontemplated hereby is, and all
 

 
information hereafter furnished by or on behalf of Borrower to Lender will be, true andaccurate in every material respect on the date as of which such information is dated orcertified; and none of such information is or will be incomplete by omitting to state anymaterial fact necessary to make such information no misleading.**Survival of Representations and Warranties.**Borrower understands and agrees that Lender,without independent investigation, is relying upon the above representations and warrantiesin extending Loan Advances to Borrower. Borrower further agrees that the foregoingrepresentations and warranties shall be continuing in nature and shall remain in full forceand effect until such time as Borrower’s indebtedness shall be paid in full, or until thisAgreement 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 ineffect, Borrower will:**Litigation.**Promptly inform Lender in writing of (a) all material adverse changes inBorrower’s financial condition, and (b) all existing and all threatened litigation, claims,investigations, administrative proceedings or similar actions affecting Borrower or anyGuarantor which could materially affect the financial condition of Borrower or the financialcondition of any Guarantor.**Financial Records.**Maintain its books and records in accordance with generally acceptedaccounting principles, applied on a consistent basis, and permit Lender to examine and auditBorrower’s books and records at all reasonable times.**Financial Statements.**Furnish Lender with, as soon as available, but in no event later thanone hundred twenty (120) days after the end of each fiscal year, Borrower’s balance sheetand income statement for the year ended, audited by a certified public accountantsatisfactory to Lender, and, as soon as available, but in no event later than thirty (30)days after the end of each month, Borrower’s balance sheet and profit and loss statement forthe period ended, prepared and certified as correct to the best knowledge and belief byBorrower’s Chief Financial Officer or other officer or person acceptable to Lender. Allfinancial reports required to be provided under this Agreement shall be prepared inaccordance with generally accepted accounting principles, applied on a consistent basis, andcertified by Borrower as being true and correct.**Additional Information.**Furnish such additional information and statements, lists of assetsand liabilities, agings of receivables and payables, inventory schedules, budgets,forecasts, tax returns, and other reports with respect to Borrower’s financial condition andbusiness operations as Lender may request from time to time.**Insurance.**Maintain fire and other risk insurance, public liability insurance, and suchother insurance as Lender may 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 orcertificates of insurance in form satisfactory to Lender includingstipulations that coverages will not be cancelled or diminishedwithout at least thirty (30) days’ prior written notice to lender. Each insurance policy also shallinclude an endorsement providing that coverage in favor of Lender will not be impaired inany way by any act, omission or default of Borrower or any other person. In connection withall policies covering assets in which Lender holds or is offered a security interest for theLoans, Borrower will provide Lender with such loss payable or other endorsements as Lendermay require.**Insurance Reports.**Furnish to Lender, upon request of Lender, reports on each existinginsurance policy showing such information as Lender may reasonably request, includingwithout limitation the following: (a) the name of the insurer; (b) the risks insured; (c)the amount of the policy; (d) the properties insured; (e) the then current property valueson the basis of which insurance has been obtained, and the manner of determining thosevalues; 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 appraisersatisfactory to Lender determine, as applicable, the actual cash value or replacement costof any Collateral. The cost of such appraisal shall be paid by Borrower.**Guaranties.**Prior to disbursement of any Loan proceeds, furnish executed guaranties of theLoans in favor of Lender, executed by the guarantors named below, on Lender’s forms, and inthe amounts and under the conditions spelled out in those guaranties:   Guarantors AmountsKurt Gampp UnlimitedGregg Scheller UnlimitedWilliam Bates Unlimited
 

 
**Other Agreements.**Comply with all terms and conditions of all other agreements, whether nowor hereafter existing, between Borrower and any other party and notify Lender immediately inwriting of any default in connection with any other such agreements.**Loan Proceeds.**Use of Loan proceeds solely for Borrower’s business operations, unlessspecifically consented to the contrary by Lender in writing.**Taxes, Charges and Liens.**Pay and discharge when due all of its indebtedness andobligations, including without limitation 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, orprofits. Provided, however, Borrower will not be required to pay and discharge any suchassessment, tax, charge, levy, lien or claim so long as (a) the legality of the same shallbe contested in good faith by appropriate proceedings, and (b) Borrower shall haveestablished on the 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 theassessments, taxes, charges, levies, liens and claims and will authorize the appropriategovernmental official to deliver to Lender at any time a written statement of anyassessments, 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 inthis Agreement and in the Related Documents in a timely manner, and promptly notify Lenderif Borrower learns of the occurrence of any event which constitutes an Event of Defaultunder this Agreement or under any of the Related Documents.**Operations.**Maintain executive and management personnel with substantially the samequalifications and experience as the present executive and management personnel; providewritten notice to Lender of any change in executive and management personnel; conduct itsbusiness affairs in a reasonable and prudent manner and in compliance with all applicablefederal, state and municipal laws, ordinances, rules and regulations respecting itsproperties, charters, businesses and operations including without limitation, compliancewith the Americans with Disabilities Act and with all minimum funding standards and otherrequirements 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 andall Collateral for the Loan or Loans and Borrower’s other properties and to examine or auditBorrower’s books, accounts, and records and to make copies and memoranda or Borrower’sbooks, accounts, and records. If Borrower now or at any time hereafter maintains anyrecords (including without limitation computer generated records and computer softwareprograms 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 recordsat all reasonable times and to provide Lender with copies of any records it may request, allat Borrower’s expense.**Compliance Certificate.**Unless waived in writing by Lender, provide Lender at leastannually and at the time of each disbursement of Loan proceeds with a certificate executedby 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 andcorrect as of the date of the certificate and further certifying that, as of the date of thecertificate, no Event of Default exists under this Agreement.**Environmental Compliance and Reports.**Borrower shall comply in all respects with allenvironmental protection federal, state and local laws, statutes, regulations andordinances; not cause or permit to exist, as a result of an intentional or unintentionalaction or omission on its part or on the part of any third party, on property owned and/oroccupied 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 apermit issued by the appropriate federal, state or local governmental authorities; shallfurnish to Lender promptly and in any event within (30) days after receipt thereof a copy ofany notice, summons, lien, citation, directive, letter or other communication from anygovernmental agency or instrumentality concerning any
 

 
intentional or unintentional action or omission on Borrower’s part in connection with anyenvironmental activity whether or not there is damage to the environment and/or othernatural resources.**Additional Assurances.**Make, execute and deliver to Lender such promissory notes,mortgages, deeds of trust, security agreements, financing statements, instruments, documentsand other agreements as Lender or its attorneys may reasonably request to evidence and securethe Loans and to perfect all Security Interests.**NEGATIVE COVENANTS.**Borrower covenants and agrees with Lender that while this Agreement is ineffect, Borrower shall not, without the prior written consent of Lender:**Indebtedness and Liens.**(a) Except for trade debt incurred in the normal course of businessand indebtedness to Lender contemplated by this Agreement, create, incur or assumeindebtedness for borrowed money, including capital leases, (b) except as allowed as aPermitted Lien, sell, transfer, mortgage, assign, pledge, lease, grant a security interestin, or encumber any of Borrower’s assets, or (c) sell with recourse any of Borrower’saccounts, except to Lender.**Continuity of Operations.**(a) Engage in any business activities substantially differentthan those in which borrower is presently engaged, (b) cease operations, liquidate, merge,transfer, acquire or consolidate with any other entity, change the name, dissolve ortransfer or sell Collateral out of the ordinary course of business, (c) pay any dividends onBorrower’s stock (other than dividends payable in its stock), provided, however thatnotwithstanding the foregoing, but only so long as no Event of Default has occurred and iscontinuing or would result from the payment of dividends, if Borrower is a “Subchapter SCorporation” (as defined in the Internal Revenue Code of 1986, as amended), Borrower may paycash dividends on its stock to its shareholders from time to time in amounts necessary toenable the shareholders to pay income taxes and make estimated income tax payments tosatisfy their liabilities under federal and state law which arise solely from their statusas Shareholders of a Subchapter S Corporation because of their ownership of shares of stockof Borrower, or (d) purchase or retire any of Borrower’s outstanding shares or alter oramend Borrower’s capital structure.**Loans, Acquisitions and Guaranties.**(a) Loan, invest in or advance money or assets, (b)purchase, create or acquire any interest in any other enterprise or entity, or (c) incur anyobligation as surety or guarantor other than in the ordinary course of business.**CESSATION OF ADVANCES.**If Lender has made any commitment to make any Loan to Borrower, whetherunder this Agreement or under any other agreement Lender shall have no obligation to make LoanAdvances or to disburse Loan proceeds if: (a) Borrower or any Guarantor is in default under theterms of this Agreement or any of the Related Documents or any other agreement that Borrower or anyguarantor has with Lender; (b) Borrower or any Guarantor becomes insolvent, files a petition inbankruptcy or similar proceedings, or is adjudged a bankrupt; (c) there occurs a material adversechange in Borrower’s financial condition, in the financial condition of any Guarantor, or in thevalue of any Collateral securing any Loan; (d) any Guarantor seeks, claims, or otherwise attemptsto 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 haveoccurred.**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 andto, Borrower’s accounts with Lender (whether checking, savings, or some other account), includingwithout limitation all accounts held jointly with someone also and all accounts Borrower may openin the future, excluding, however all IRA and Keough accounts, and all trust accounts for which thegrant of a security interest would be prohibited by law. Borrower authorizes Lender, to the extentpermitted by applicable law, to charge or setoff all sums owing on the indebtedness against any andall such accounts.**EVENTS OF DEFAULT.**Each of the following shall constitute an Event of Default under thisAgreement:**Default on Indebtedness.**Failure of Borrower to make any payment when due on the Loans.**Other Defaults.**Failure of Borrower or any Grantor to comply with or to perform when dueany other term, obligation, covenant or condition contained in this Agreement or in any ofthe Related Documents, or failure to Borrower to comply with or to perform any other term,obligation, covenant or condition contained in any other agreement between Lender andBorrower.
 

 
**False Statements.**Any warranty, representation or statement made or furnished to Lender byor on behalf of Borrower or any Grantor under this Agreement or the Related Documents isfalse or misleading in any material respect of the time made or furnished, or becomes falseor misleading at any time thereafter.**Defective Collateralization.**This Agreement or any of the Related Documents ceases to be infull force and effect (including failure of any Security Agreement to create a valid andperfected Security Interest) at any time and for any reason.**Insolvency.**The dissolution or termination of Borrower’s existence as a going business, theinsolvency of Borrower, the appointment of a receiver for any part of Borrower’s property,any assignment for the benefit of creditors, any type of creditor workout, or thecommencement of any proceeding under any bankruptcy or insolvency laws by or againstBorrower.**Creditor or Forfeiture Proceedings.**Commencement of foreclosure or forfeiture proceedings,whether by judicial proceeding, self-help, repossession or any other method, ay any creditoror Borrower, any creditor of any Grantor against any collateral securing the indebtedness,or by any governmental agency. This includes a garnishment, attachment, or levy on or ofany of Borrower’s deposit accounts with Lender.**Events Affecting Guarantor.**Any of the preceding events occurs with respect to anyGuarantor of any of the indebtedness or any Guarantor dies or becomes incompetent, orrevokes or disputes the validity of, or liability under, any Guaranty of the indebtedness.**Change in Ownership.**Any change in ownership of twenty-five percent (25%) or more of thecommon stock of the Borrower.**Adverse Change.**A material adverse change occurs in Borrower’s financial condition, orLender believes the prospect or payment or performance of the indebtedness is impaired.**Insecurity.**Lender, in good faith, deems itself insecure.**EFFECT OF AN EVENT OF DEFAULT.**If any Event of Default shall occur, except where otherwiseprovided in this Agreement or the Related Documents, all commitments and obligations of Lenderunder this Agreement or the Related Documents or any other agreement immediately will terminate(including any obligation to make Loan Advances or disbursements), and, at Lender’s option, allindebtedness immediately will become due and payable, all without notice of any kind to Borrower,except that in the case of an Event of Default of the type described in the “Insolvency” subsectionabove, such acceleration shall be automatic and not optional. In addition, Lender shall have allthe rights and remedies provided in the Related Documents or available at law, in equity, orotherwise. Except as may be prohibited by applicable law, all of Lender’s rights and remediesshall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursueany remedy shall not exclude pursuit of any other remedy, and an election to make expenditures orto take action to perform an obligation of Borrower or of any Grantor shall not affect Lender’sright to declare a default and to exercise its rights and 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, Borrower agrees upon Lender’s request to submitto the jurisdiction of the courts of St. Louis County, the State of Missouri. Subject tothe provisions on arbitration, this Agreement shall be governed by and construed inaccordance with the laws of the State of Missouri.**Arbitration.**Lender and Borrower 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 the arbitration agreement. This includes, without limitation,obtaining injunctive relief or a temporary restraining order; invoking a power of sale underany deed of trust
 

 
or mortgage; obtaining a writ of attachment or imposition of a receiver; or exercising anyrights relating to personal property, including taking or disposing of such property with orwithout judicial process pursuant to Article 9 of the Uniform Commercial Code. Anydisputes, claims, or controversies concerning the lawfulness or reasonableness of any act,or exercise of any right, concerning any Collateral, including any 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 the power to enjoin or restrainany act of any party. Judgment upon any award rendered by an arbitrator may be entered inany court having jurisdiction. Nothing in this Agreement shall preclude any party fromseeking equitable relief from a court of competent jurisdiction. The statute oflimitations, estoppel, waiver, laches, and similar doctrines which would otherwise beapplicable in an action brought by a party shall be applicable in any arbitrationproceeding, and the commencement of an arbitration proceeding shall be deemed thecommencement of an action for these purposes. The Federal Arbitration Act shall apply tothe construction, interpretation, and enforcement of this arbitration provision.**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.**Consent to Loan Participation.**Borrower agrees and consents to Lender’s sale or transfer,whether now or later, or one or more participation interests in the Loans to one or morepurchasers, whether related or unrelated to Lender. Lender may provide, without anylimitation whatsoever, to any one or more purchasers or potential purchasers, anyinformation or knowledge Lender may have about Borrower or about any other matter relatingto the Loan, and Borrower hereby waives any rights to privacy it may have with respect tosuch matters. Borrower additionally waives any and all notices of sale of participationinterests, as well as all notices of any repurchase of such participation interests.Borrower also agrees that the purchasers of any such participation interest will beconsidered as the absolute owners of such interest in the Loans and will have all the rightsgranted under the participation agreement or agreements governing the sale of suchparticipation interests. Borrower further waives all rights of offset or counterclaim thatit may have now or later against Lender or against any purchaser of such a participationinterest and unconditionally agrees that either Lender or such purchaser may enforceBorrower’s obligation under the Loans irrespective of the failure or insolvency of anyholder of any interest in the Loans. Borrower further agrees that the purchaser of any suchparticipation interests may enforce its interests irrespective of any personal claims ordefenses that Borrower may have against Lender.**Costs and Expenses.**Borrower agrees to pay upon demand all of Lender’s expenses, includingwithout limitation attorneys’ fees incurred in connection with the preparation, execution,enforcement, modification and collection of this Agreement or in connection with the Loansmade pursuant to this Agreement. Lender may pay someone else to help collect the Loans andto enforce this Agreement, and Borrower will pay that amount. This includes, subject to anylimits under applicable law, Lender’s attorneys’ fees and Lender’s legal expenses, whetheror not there is a lawsuit, including attorneys’ fees for bankruptcy proceedings (includingefforts to modify or vacate any automatic stay or injunction), appeals, and any anticipatedpost-judgment collection services. Borrower also will pay any court costs, in addition toall 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 whenactually delivered or when deposited with a nationally recognized overnight courier ordeposited in the United States mail, first class, postage prepaid, addressed to the party towhom the notice is to be given at the address shown above. Any party may change its addressfor notice 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 extentpermitted by applicable law, if there is more than one Borrower, notice to any Borrower willconstitute notice to all Borrowers. For notice purposes, Borrower will keep Lender informedat all times of Borrower’s current address(es).**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.
 

 
**Subsidiaries and Affiliates of Borrower.**To the extent the context of any provisions ofthis Agreement makes it appropriate, including without limitation any representation,warranty or covenant, the word “Borrower” as used herein shall include all subsidiaries andaffiliates of Borrower. Notwithstanding the foregoing however, under no circumstances shallthis Agreement be construed to require Lender to make any Loan or other financialaccommodation to any subsidiary or affiliate of Borrower.**Successors and Assigns.**All covenants and agreements contained by or on behalf of Borrowershall bind its successors and assigns and shall inure to the benefit of Lender, itssuccessors and assigns. Borrower shall not, however, have the right to assign its rightsunder this Agreement or any interest therein, without the prior written consent of theLender.**Survival.All warranties, representations and covenants made by Borrower inthis Agreement or in any certificate or other instrument delivered byBorrower to Lender under this Agreement shall be considered to have been relied upon by Lender and will survive the making of the Loan and delivery to Lender of the Related Documents, regardless of any investigation made by Lender or on Lender’s behalf.**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 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 Borrower, or between Lender and any Grantor, shall constitute a waiver ofany of Lender’s rights or any obligations of Borrower or of any Grantor as to any futuretransactions. Whenever the consent of Lender is required under this Agreement, the grantingof such consent by Lender in any instance shall not constitute continuing consent tosubsequent instances where such consent is required and in all cases such consent may begranted or withheld in the sole discretion of Lender.ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FOREBEAR FROM ENFORCING REPAYMENTOF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT YOU(BORROWER(S)) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACHCOVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENTOF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.**BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS LOAN AGREEMENT, AND BORROWER AGREES TOITS TERMS. THIS AGREEMENT IS DATED MARCH 10, 2000.****THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.****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**
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