exv10w1






Exhibit 10.1




FIFTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT




     This Fifth Amendment to Credit and Security Agreement (“Fifth Amendment”) is entered into as
of December 1, 2008, by and among Synergetics, Inc., a Missouri corporation, and Synergetics USA,
Inc., a Delaware corporation (individually, a “Borrower” and together, the “Borrowers”), and
Regions Bank (“Lender”).



RECITALS




     A. Borrowers and Lender entered into a certain Credit and Security Agreement dated
as of March 13, 2006, as heretofore amended from time to time (as so amended, the “Existing
Credit Agreement”).



     B. Borrowers and Lenders desire to amend the Existing Credit Agreement as
hereinafter provided.



     C. The Existing Credit Agreement and this Fifth Amendment constitute the “Credit
Agreement” from and after the effectiveness of this Fifth Amendment.



     NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Borrowers and Lender
agree as follows:



     1. Defined Terms. Each term used herein without definition or a modification to
definition shall have the same meaning as set forth in the Existing Credit Agreement, otherwise
defined in this Amendment.



     2. Credit Agreement Amendments. The Existing Credit Agreement is hereby amended as
follows, effective upon fulfillment of conditions set forth in Section 4 of this Fifth
Amendment:




     A. Section 1.2, entitled “Primary Definitions,” is hereby amended as
follows:




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





 









 






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



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







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






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




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






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




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






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




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






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








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






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




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






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






     B.
The initial sentence of Section 2.1 entitled “Advances,” is hereby amended to read as follows in its entirety:




     “Section 2.1 Advances. The Lender agrees, on the terms and subject to
the conditions herein set forth, to make Advances to the Borrowers from time to time
during the period from the date hereof to and including the Termination Date, or the
earlier date of termination in whole of the Revolving Credit Facility pursuant to
Section 2.10 or Section 8.2 hereof, in an aggregate amount at any time outstanding
not to exceed the Borrowing Base, less the L/C Amount, and less such reserve as
Lender may determine from time to time as reflected on the form of Borrowing Base
(currently in the form attached to the Fifth Amendment as Exhibit B
thereto), which Advances shall be secured by the Collateral as provided in Article
III hereof.”




     C.
Subsection (d) to Section 6.1, entitled “Reporting Requirements,” is hereby amended to read as follows in its entirety:




     (d) “As soon as available, and in any event within 15 days after the end of
each month (or more frequently if requested by Lender and in such detail as
reasonably required by Lender), a Borrowing Base certificate in a form acceptable
to the Lender (currently, the form attached to the Fifth Amendment as Exhibit
B), showing the computation of the Borrowing Base as of the close of business
on the last day of the immediately preceding fiscal month (except that Inventory
calculations may be updated not less than every 60 days), prepared by the Borrowers
and certified by the Borrowers’ chief financial officer.”



     3. Representations and Warranties. The Borrowers jointly and severally hereby
represent and warrant to the Lender as follows:




     (a) This Fifth Amendment and Second 2008 Amended and Restated Revolving Note have
been duly and validly executed by authorized officers of the



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Borrowers and constitute the legal, valid and binding obligation of the Borrowers,
enforceable against the Borrowers in accordance with their terms. The Existing Credit
Agreement, as amended by this Fifth Amendment, remains in full force and effect and remains
the valid and binding obligation of the Borrowers, enforceable against the Borrowers in
accordance with its terms. The Borrowers hereby ratify and confirm the Existing Credit
Agreement, as amended by this Fifth Amendment.




     (b) No Default or Event of Default has occurred or now exists under the Existing
Credit Agreement and no Default or Event of Default will occur as a result of the
effectiveness of this Fifth Amendment.




     (c) The representations and warranties of the Borrower contained in the Existing
Credit Agreement, are true and correct in all material respects on and as of the date of
this Fifth Amendment.



     4. Conditions to Effectiveness of Fifth Amendment. The effectiveness of this
Fifth Amendment and the agreements set forth herein are subject to fulfillment, as determined
in
the sole judgment of Lender, of the following conditions:




     (a) Borrowers shall have executed and delivered to Lender this Fifth Amendment and
the Second 2008 Amended and Restated Revolving Note;




     (b) Each Borrower shall have delivered to Lender a Certificate of the Secretary or
an Assistant Secretary of such Borrower certifying that appropriate corporate actions
authorizing the execution and delivery of this Fifth Amendment have been taken and
covering such other matters as Lender may reasonably request;




     (c) Lender shall have determined that no Default or Event of Default exists; and




     (d) Borrowers shall have delivered such other documents and shall have taken such
other actions as Lender in its reasonable discretion may require.



     5. Release. In consideration of the agreement of Lender to modify the terms of the
Existing Credit Agreement as set forth in this Fifth Amendment, Borrowers hereby release, discharge
and acquit forever Lender and any of its officers, directors, servants, agents, employees and
attorneys, past and present, from any and all claims, demands and causes of action, of whatever
nature, whether in contract or tort, accrued or to accrue, contingent or vested, known or unknown,
arising out of or relating to the loans evidenced by the Existing Credit Agreement, as hereby
amended, or Lender’s administration of the same or any other actions taken pursuant to the Existing
Credit Agreement or under any other documents or instruments evidencing loans made by Lender to
Borrowers or the administration of same; provided, however, that the foregoing release and the
following indemnity relate only to actions or inactions of Lender through the date hereof.



     6. Payment of Costs/Expenses. Without limiting the generality of provisions in the
Existing Credit Agreement (as amended by this Fifth Amendment) relating to payment of Lender’s
costs and expenses, the Borrower will pay all reasonable out-of-pocket expenses, costs



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and charges of Lender’s attorneys incurred in connection with the preparation and implementation
of this Fifth Amendment.



     7. Other Documents/Provisions to Remain in Force. Except as expressly amended hereby,
the Existing Credit Agreement and all documents and instruments executed in connection therewith or
contemplated thereby and all indebtedness incurred pursuant thereto shall remain in full force and
effect and are in all respects hereby ratified and affirmed.



     8. Successors and Assigns. Subject to any restriction on assignment set forth in the
Existing Credit Agreement, this Fifth Amendment shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.



     9. Counterparts. This Fifth Amendment may be executed in any number of counterparts,
each of which shall constitute one and the same Amendment.



     10. Incorporation by Reference. The Existing Credit Agreement and all exhibits
thereto, and the exhibits to this Fifth Amendment are incorporated herein by this reference,
except to the extent replaced by Exhibits attached to this Fifth Amendment.



     11. No Oral Loan Agreements. Pursuant to Mo. Rev. Stat. § 432.045 and § 432.047, the
parties agree to the quoted language below (all references to “you” are references to Borrower and
all references to “us” are references to Lender):




ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FOREBEAR FROM
ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT
ENFORCEABLE, REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED, THAT IS IN ANY WAY
RELATED TO THE CREDIT AGREEMENT. TO PROTECT YOU (BORROWER) AND US (LENDER) FROM
MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE
CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE
AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.



[Remaining portion of this page is intentionally blank. Signature page follows]




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



	 	 	 	 	 
	 	BORROWERS:




SYNERGETICS, INC.

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




SYNERGETICS USA, INC.

 	 
	 	By:  	/s/ Pamela G. Boone
 	 
	 	 	Name:  	Pamela G. Boone 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	LENDER:


REGIONS BANK

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




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Exhibit A to Fifth Amendment

to Credit and Security Agreement




SECOND 2008 AMENDED AND RESTATED

REVOLVING NOTE




$9,500,000.00




St. Louis, Missouri

December 1, 2008




     FOR VALUE RECEIVED, the undersigned, SYNERGETICS, INC., a Missouri corporation, and
SYNERGETICS USA, INC., a Delaware corporation (individually, a “Borrower” and together, the
“Borrowers”), hereby jointly and severally promise to pay on the Termination Date to the order of
Regions Bank (the “Lender”), at its main office in St. Louis, Missouri, or at any other place
designated at any time by the holder hereof, in lawful money of the United States of America and
in immediately available funds, the principal sum of Nine Million Five Hundred Thousand and 00/100
($9,500,000.00) or, if less, the aggregate unpaid principal amount of all Advances and Swing Line
Loans made by the Lender to the Borrowers under the Credit Agreement (defined below), together
with interest on the principal amount hereunder remaining unpaid from time to time, computed on
the basis of the actual number of days elapsed and a 360-day year, from the date hereof until this
Note is fully paid at the rate from time to time in effect under the Credit and Security Agreement
dated as of March 13, 2006, as heretofore amended by First Amendment dated as of September 26,
2006, by Second Amendment dated as of December 8, 2006, by Third Amendment dated as of June 7,
2007, by Fourth Amendment dated as of January 31, 2008, and by Fifth Amendment (“Fifth Amendment”) of even date herewith (as so amended, the “Credit
Agreement”) by and among the Lender and the Borrowers. The principal hereof and interest accruing
thereon shall be due and payable as provided in the Credit Agreement. This Note may be prepaid
only in accordance with the Credit Agreement.



     This Note is issued pursuant, and is subject, to the Credit Agreement, which provides, among
other things, for acceleration hereof. This Note is the Second 2008 Amended and Restated Revolving
Note referred to in the Fifth Amendment. This Note evidences not only all Advances of Lender under
the Revolving Credit Facility but also all Swing Line Loans made by Lender pursuant to Section
2.1A of the Credit Agreement.



     This Note, among other things, is secured pursuant to the Credit Agreement and the Security
Documents as therein defined, and may now or hereafter be secured by one or more other security
agreements, mortgages, deeds of trust, assignments or other instruments or agreements.



     The Borrowers hereby agree to pay all costs of collection, including attorneys’ fees and
legal expenses in the event this Note is not paid when due, whether or not legal proceedings are
commenced.



     Presentment or other demand for payment, notice of dishonor and protest are expressly waived.



     This Note shall be governed by the internal substantive laws of the State of Missouri,
without regard for its conflicts-of-law principles.



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     This Note is a replacement for, but not a novation or refinancing of: (A) the Revolving Note
dated as of September 26, 2006, as amended by Amended and Restated Revolving Note dated as of
December 8, 2006, by Borrowers payable to the order of Lender; (B) the Revolving Note dated as of
September 26, 2006, as amended by Amended and Restated Revolving Note dated as of December 8, 2006,
by Amended and Restated Revolving Note dated as of June 7, 2007, by Borrowers payable to the order
of Wachovia Bank National Association, which Note was purchased by Lender and by 2008 Amended and
Restated Revolving Note dated as of January 31, 2008. This Note does not evidence or effect a
release, or relinquishment of the priority, of the security interests in any Collateral (as defined
in the Credit Agreement).



     ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING
REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE, REGARDLESS
OF THE LEGAL THEORY UPON WHICH IT IS BASED, THAT IS IN ANY WAY RELATED TO THE CREDIT AGREEMENT. TO
PROTECT YOU (BORROWERS) AND US (LENDER) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE
REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING (THIS NOTE, THE CREDIT AGREEMENT AND THE
LOAN DOCUMENTS REFERRED TO THEREIN), WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENTS OF THE
AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.



	 	 	 	 	 
	 	BORROWERS:




SYNERGETICS, INC.

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




SYNERGETICS USA INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Pamela G. Boone 	 
	 	 	Title:  	Chief Financial Officer 	 
	 




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Exhibit B to Fifth Amendment

to Credit and Security Agreement




[Borrowing Base Certificate]