exv10w37



 






EXHIBIT 10.37




BUSINESS LOAN AGREEMENT




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Principal	 	Loan Date	 	Maturity	 	Loan No.	 	Call / Coll	 	Account	 	Officer 	 	Initials
	$1,000,000.00

	 	09-30-2005
	 	09-30-2006
	 	 	519900828192	 	 	4A / 60
	 	 	 	***	 	 





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. Any item
above containing “***” has been omitted due to text length limitations.




	 	 	 	 	 	 	 
	Borrower:

	 	SYNERGETICS, INC. (MISSOURI CORPORATION)
	 	Lender:
	 	Union Planters Bank NA
	 

	 	(TIN: 43-1585312)
	 	 	 	Clayton Commercial Lending
	 

	 	3845 CORPORATE CENTRE DRIVE
	 	 	 	8182 Maryland Avenue Suite 200
	 

	 	O’FALLON, MO 63368
	 	 	 	St. Louis, MO 63105






THIS BUSINESS LOAN AGREEMENT dated September 30, 2005, is made and executed between SYNERGETICS,
INC. (MISSOURI CORPORATION) (“Borrower”) and Union Planters Bank NA (“Lender”) on the following
terms and conditions. Borrower has received prior commercial loans from Lender or has applied to
Lender for a commercial loan or loans or other financial accommodations, including those which may
be described on any exhibit or schedule attached to this Agreement (“Loan”). Borrower understands
and agrees that: (A) in granting, renewing, or extending any Loan, Lender is relying upon
Borrower’s representations, warranties, and agreements as set forth in this Agreement; (B) the
granting, renewing, or extending of any Loan by Lender at all times shall be subject to Lender’s
sole judgment and discretion; and (C) all such Loans shall be and remain subject to the terms and
conditions of this Agreement.



TERM. This Agreement shall be effective as of September 30, 2005, and shall continue in full force
and effect until such time as all of Borrower’s Loans in favor of Lender have been paid in full,
including principal, interest, costs, expenses, attorneys’ fees, and other fees and charges, or
until such time as the parties may agree in writing to terminate this Agreement.



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




Loan Documents. Borrower shall provide to Lender the following documents for the Loan: (1)
the Note; (2) Security Agreements granting to Lender security interests in the Collateral;
(3) financing statements and all other documents perfecting Lender’s Security Interests; (4)
evidence of insurance as required below; (5) guaranties; (6) together with all such Related
Documents as Lender may require for the Loan; all in form and substance satisfactory to
Lender and Lender’s counsel.




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




Payment of Fees and Expenses. Borrower shall have paid to Lender all fees, charges, and
other expenses which are then due and payable as specified in this Agreement or any Related
Document.




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




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



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




Organization. Borrower is a corporation for profit which is, and at all times shall be,
duly organized, validly existing, and in good standing under and by virtue of the laws of
the State of Missouri Borrower has the full power and authority to own its properties and to
transact the business in which it is presently engaged or presently proposes to engage.
Borrower maintains an office at 3845 CORPORATE CENTER DRIVE,



 









 






O’FALLON, MO 63368. Unless Borrower has designated otherwise in writing, the principal
office is the office at which Borrower keeps its books and records including its records
concerning the Collateral. Borrower will notify Lender prior to any change in the location
of Borrower’s state of organization or any change in Borrower’s name, Borrower shall do all
things necessary to preserve and to keep in full force and effect its existence, rights and
privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and
decrees of any governmental or quasi-governmental authority or court applicable to Borrower
and Borrower’s business activities.




Assumed Business Names. Borrower has filed or recorded all documents or filings required by
law relating to all assumed business names used by Borrower. Excluding the name of
Borrower, the following is a complete list of all assumed business names under which
Borrower does business: None.




Authorization. Borrower’s execution, delivery, and performance of this Agreement and all
the Related Documents have been duly authorized by all necessary action by Borrower and do
not conflict with, result in a violation of, or constitute a default under (1) any provision
of (a) Borrower’s articles of incorporation or organization, or bylaws, or (b) any agreement
or other instrument binding upon Borrower or (2) any law, governmental regulation, court
decree, or order applicable to Borrower or to Borrower’s properties.




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




Legal Effect. This Agreement constitutes, and any instrument or agreement Borrower is
required to give under this Agreement when delivered will constitute legal, valid, and
binding obligations of Borrower enforceable against Borrower in accordance with their
respective terms.




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




Hazardous Substances. Except as disclosed to and acknowledged by Lender in writing,
Borrower represents and warrants that: (1) During the period of Borrower’s ownership of the
Collateral, there has been no use, generation, manufacture, storage, treatment, disposal,
release or threatened release of any Hazardous Substance by any person on, under, about or
from any of the Collateral. (2) Borrower has no knowledge of, or reason to believe that
there has been (a) any breach or violation of any Environmental Laws; (b) any use,
generation, manufacture, storage, treatment, disposal, release or threatened release of any
Hazardous Substance on, under, about or from the Collateral by any prior owners or occupants
of any of the Collateral; or (c) any actual or threatened litigation or claims of any kind
by any person relating to such manors. (3) Neither Borrower nor any tenant, contractor,
agent or other authorized user of any of the Collateral shall use, generate, manufacture,
store, treat, dispose of or release any Hazardous Substance on, under, about or from any of
the Collateral; and any such activity shall be conducted in compliance with all applicable
federal, state, and local laws, regulations, and ordinances, including without limitation
all Environmental Laws. Borrower authorizes Lender and its agents to enter upon the
Collateral to make such inspections and tests as Lender may deem appropriate to determine
compliance of the Collateral with this section of the Agreement. Any inspections or tests
made by Lender shall be at Borrower’s expense and for Lender’s purposes only and shall not
be construed to create any responsibility or liability on the part of Lender to Borrower or
to any other person. The representations and warranties contained herein are based on
Borrower’s due diligence in investigating the Collateral for hazardous waste and Hazardous
Substances. Borrower hereby (1) releases and waives any future claims against Lender for
indemnity or contribution in the event Borrower becomes liable for cleanup or other costs
under any such laws, and (2) agrees to indemnify and hold harmless Lender against any and
all claims, losses, liabilities, damages, penalties, and expenses which Lender may directly
or indirectly sustain or suffer resulting from a breach of this section of the Agreement or
as a consequence of any use, generation, manufacture, storage, disposal, release or
threatened release of a hazardous waste or substance on the Collateral. The provisions of
this section of the Agreement, including the obligation to indemnify, shall survive the
payment of the Indebtedness and the



					
	 	 	 	 	 
	 
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termination, expiration or satisfaction of this Agreement and shall not be affected by
Lender’s acquisition of any interest in any of the Collateral, whether by foreclosure or
otherwise.




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




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




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




Binding Effect. This Agreement, the Note, all Security Agreements (if any), and all Related
Documents are binding upon the signers thereof, as well as upon their successors,
representatives and assigns, and are legally enforceable in accordance with their respective
terms.



AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long as this Agreement
remains in effect, Borrower will:




Notices of Claims and Litigation. Promptly inform Lender in writing of (1) all material
adverse changes in Borrower’s financial condition, and (2) all existing and all threatened
litigation, claims, investigations, administrative proceedings or similar actions affecting
Borrower or any Guarantor which could materially affect the financial condition of Borrower
or the financial condition of any Guarantor.




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




Financial Statements. Furnish Lender with the following:




Annual Statements. As soon as available, but in no event later than 180 days after
the end of each fiscal year, Borrower’s balance sheet and income statement for the
year ended, audited by a certified public accountant satisfactory to Lender.




Interim Statements. As soon as available, but in no event later than sixty (60)
days after the end of each fiscal quarter, Borrower’s balance sheet and profit and
loss statement for the period ended, prepared by Borrower.




All financial reports required to be provided under this Agreement shall be prepared in
accordance with GAAP, applied on a consistent basis, and certified by Borrower as being true
and correct.




Additional Information. Furnish such additional information and statements, as Lender may
request from time to time.




Insurance. Maintain fire and other risk insurance, public liability insurance, and such
other insurance as Lender may require with respect to Borrower’s properties and operations,
in form, amounts, coverages and with insurance companies acceptable to Lender. Borrower,
upon request of Lender, will deliver to Lender from time to time the policies or
certificates of insurance in form satisfactory to Lender, including stipulations that
coverages will not be cancelled or diminished without at least thirty (30) days prior
written notice to Lender. Each insurance policy also shall include an endorsement providing
that coverage in favor of Lender will not be impaired in any way by any act, omission or
default of Borrower or any other person. In connection with all policies covering assets in
which Lender holds or is offered a security interest for the Loans, Borrower will provide
Lender with such lender’s loss payable or other endorsements as Lender may require.



					
	 	 	 	 	 
	 
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Insurance Reports. Furnish to Lender, upon request of Lender, reports on each existing
insurance policy showing such information as Lender may reasonably request, including
without limitation the following: (1) the name of the insurer; (2) the risks insured; (3)
the amount of the policy; (4) the properties insured; (5) the then current property values
on the basis of which insurance has been obtained, and the manner of determining those
values; and (6) the expiration date of the policy. In addition, upon request of Lender
(however not more often than annually), Borrower will have an independent appraiser
satisfactory to Lender determine, as applicable, the actual cash value or replacement cost
of any Collateral. The cost of such appraisal shall be paid by Borrower.




Guaranties. Prior to disbursement of any Loan proceeds, furnish executed guaranties of the
Loans in favor of Lender, executed by the guarantor named below, on Lender’s forms, and in
the amount and under the conditions set forth in those guaranties.



	 	 	 
	Name of Guarantor	 	Amount
	SYNERGETICS
USA, INC. (DELAWARE
PUBLIC CORPORATION)

	 	Unlimited







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




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




Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and
obligations, including without 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, or
profits.




Performance. Perform and comply, in a timely manner, with all terms, conditions, and
provisions set forth in this Agreement, in the Related Documents, and in all other
instruments and agreements between Borrower and Lender. Borrower shall notify Lender
immediately in writing of any default in connection with any agreement.




Operations. Maintain executive and management personnel with substantially the same
qualifications and experience as the present executive and management personnel; provide
written notice to Lender of any change in executive and management personnel; conduct its
business affairs in a reasonable and prudent manner.




Environmental Studies. Promptly conduct and complete, at Borrower’s expense, all such
investigations, studies, samplings and testings as may be requested by Lender or any
governmental authority relative to any substance, or any waste or by-product of any
substance defined as toxic or a hazardous substance under applicable federal, state, or
local law, rule, regulation, order or directive, at or affecting any property or any
facility owned, leased or used by Borrower.




Compliance with Governmental Requirements. Comply with all laws, ordinances, and
regulations, now or hereafter in effect, of all governmental authorities applicable to the
conduct of Borrower’s properties, businesses and operations, and to the use or occupancy of
the Collateral, including without limitation, the Americans With Disabilities Act. Borrower
may contest in good faith any such law, ordinance, or regulation and withhold compliance
during any proceeding, including appropriate appeals, so long as Borrower has notified
Lender in writing prior to doing so and so long as, in Lender’s sole opinion, Lender’s
interests in the Collateral are not jeopardized. Lender may require Borrower to post
adequate security or a surety bond, reasonably satisfactory to Lender, to protect Lender’s
interest.




Inspection. Permit employees or agents of Lender at any reasonable time to inspect any and
all Collateral for the Loan or Loans and Borrower’s other properties and to examine or audit
Borrower’s books, accounts, and records and to make copies and memoranda of Borrower’s
books, accounts, and records. If Borrower now or at any time hereafter maintains any
records (including without limitation computer generated records



					
	 	 	 	 	 
	 
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and computer software programs for the generation of such records) in the possession of a
third party, Borrower, upon request of Lender, shall notify such party to permit Lender free
access to such records at all reasonable times and to provide Lender with copies of any
records it may request, all at Borrower’s expense.




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




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




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



LENDER’S EXPENDITURES. If any action or proceeding is commenced that would materially affect
Lender’s interest in the Collateral or if Borrower fails to comply with any provision of this
Agreement or any Related Documents, including but not limited to Borrower’s failure to discharge or
pay when due any amounts Borrower is required to discharge or pay under this Agreement or any
Related Documents, Lender on Borrower’s behalf may (but shall not be obligated to) take any action
that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens,
security interests, encumbrances and other claims, at any time levied or placed on any Collateral
and paying all costs for insuring, maintaining and preserving any Collateral. All such
expenditures incurred or paid by Lender for such purposes will then bear interest at the rate
charged under the Note from the date incurred or paid by Lender to the date of repayment by
Borrower. All such expenses will become a part of the Indebtedness and, at Lender’s option, will
(A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be
payable with any installment 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 and payable at the Note’s maturity.



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




Indebtedness and Liens. (1) Except for trade debt incurred in the normal course of business
and indebtedness to Lender contemplated by this Agreement, create, incur or assume
indebtedness for borrowed money, including capital leases, (2) sell, transfer, mortgage,
assign, pledge, lease, grant a security interest in, or encumber any of Borrower’s assets
(except as allowed as Permitted Liens), or (3) sell with recourse any of Borrower’s
accounts, except to Lender.




Continuity of Operations. (1) Engage in any business activities substantially different
than those in which Borrower is presently engaged, (2) cease operations, liquidate, merge,
transfer, acquire or consolidate with any other entity, change its name, dissolve or
transfer or sell Collateral out of the ordinary course of business, or (3) pay any dividends
on Borrower’s stock (other than dividends payable in its stock), provided, however that
notwithstanding the foregoing, but only so long as no Event of Default has occurred and is
continuing or would result from the payment of dividends, if Borrower is a “Subchapter S
Corporation” (as defined in the Internal Revenue Code of 1986, as amended), Borrower may pay
cash dividends on its stock to its shareholders from time to time in amounts necessary to
enable the shareholders to pay income taxes and make estimated income tax payments to
satisfy their liabilities under federal and state law which arise solely from their status
as Shareholders of a Subchapter S Corporation because of their ownership of shares



					
	 	 	 	 	 
	 
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of Borrower’s stock, or purchase or retire any of Borrower’s outstanding shares or alter or
amend Borrower’s capital structure.




Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance money or assets to any
other person, enterprise or entity, (2) purchase, create or acquire any interest in any
other enterprise or entity, or (3) incur any obligation as surety or guarantor other than in
the ordinary course of business.




Agreements. Borrower will not enter into any agreement containing any provisions which
would be violated or breached by the performance of Borrower’s obligations under this
Agreement or in connection herewith.



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



RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in
all Borrower’s accounts with Lender (whether checking, savings, or some other account). This
includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open
in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for
which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on the Indebtedness against any and all such
accounts, and, at Lender’s option, to administratively freeze all such accounts to allow Lender to
protect Lender’s charge and setoff rights provided in this paragraph.



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




Payment Default. Borrower fails to make any payment when due under the Loan.




Other Defaults. Borrower fails 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 to
comply with or to perform any term, obligation, covenant or condition contained in any other
agreement between Lender and Borrower.




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




Insolvency. The dissolution or termination of Borrower’s existence as a going business, the
insolvency 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 the
commencement of any proceeding under any bankruptcy or insolvency laws by or against
Borrower.




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




Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings,
whether by judicial proceeding, self-help, repossession or any other method, by any creditor
of Borrower or by any governmental agency against any collateral securing the Loan. This
includes a garnishment of any of Borrower’s accounts, including deposit accounts, with
Lender. However, this Event of Default shall not apply if there is a good faith dispute by
Borrower as to the validity or reasonableness of the claim which is the basis of the
creditor or forfeiture proceeding and if Borrower gives Lender written notice of the
creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the
creditor or forfeiture proceeding, in an amount determined by Lender, in its sole
discretion, as being an adequate reserve or bond for the dispute.



					
	 	 	 	 	 
	 
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Events Affecting Guarantor. Any of the preceding events occurs with respect to any
Guarantor of any of the Indebtedness or any Guarantor dies or becomes incompetent, or
revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness.
In the event of a death, Lender, at its option, may, but shall not be required to, permit
the Guarantor’s estate to assume unconditionally the obligations arising under the guaranty
in a manner satisfactory to Lender, and, in doing so, cure any Event of Default.




Change in Ownership. Any change in ownership of twenty-five percent (25%) or more of the
common stock of Borrower.




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




Insecurity. Lender in good faith believes itself insecure.




Right to Cure. If any default, other than a default on Indebtedness, is curable and if
Borrower or Grantor, as the case may be, has not been given a notice of a similar default
within the preceding twelve (12) months, it may be cured if Borrower or Grantor, as the case
may be, after receiving written notice from Lender demanding cure of such default: (1) cure
the default within fifteen (15) days; or (2) if the cure requires more than fifteen (15)
days, immediately initiate steps which Lender deems in Lender’s sole discretion to be
sufficient to cure the default and thereafter continue and complete all reasonable and
necessary steps sufficient to produce compliance as soon as reasonably practical.



EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where otherwise
provided in this Agreement or the Related Documents, all commitments and obligations of Lender
under this Agreement or the Related Documents or any other agreement immediately will terminate
(including any obligation to make further Loan Advances or disbursements), and, at Lender’s option,
all Indebtedness 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”
subsection above, such acceleration shall be automatic and not optional. In addition, Lender shall
have all the rights and remedies provided in the Related Documents or available at law, in equity,
or otherwise. Except as may be prohibited by applicable law, all of Lender’s rights and remedies
shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue
any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or
to take action to perform an obligation of Borrower or of any Grantor shall not affect Lender’s
right to declare a default and to exercise its rights and remedies.



DEBT SERVICE. DEBT SERVICE COVERAGE RATIO TO BE MEASURED ANNUALLY. DEBT SERVICE COVERAGE RATIO
> 1.20. DEFINED AS: EARNINGS BEFORE INTEREST, DEPRECIATION AND AMORTIZATION DIVIDED BY
INTEREST EXPENSE PLUS CURRENT MATURITIES OF LONG-TERM DEBT FOR BORROWER AND GUARANTOR ON A
CONSOLIDATED BASIS.



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




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




Arbitration. Borrower and Lender agree that all disputes, claims and controversies between
them whether individual, joint, or class in nature, arising from this Agreement or
otherwise, including without limitation contract and tort disputes, shall be arbitrated
pursuant to the Rules of the American Arbitration Association in effect at the time the
claim is filed, upon request of either party. No act to take or dispose of any Collateral
shall constitute a waiver of this arbitration agreement or be prohibited by this arbitration
agreement. This includes, without limitation, obtaining Injunctive relief or a temporary
restraining order; Invoking a power of sale under any deed of trust or mortgage; obtaining a
writ of attachment or imposition of a receiver; or exercising any rights relating to
personal property, including taking or disposing of such property with or without judicial
process pursuant to Article 9 of the Uniform Commercial Code. Any disputes, 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 restrain any act of any
party. Judgment upon any award rendered by any arbitrator may be entered in any court
having jurisdiction. Nothing in this Agreement shall preclude



					
	 	 	 	 	 
	 
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any party from seeking equitable relief from a court of competent jurisdiction. The statute
of limitations, estoppel, waiver, laches, and similar doctrines which would otherwise be
applicable In an action brought by a party shall be applicable in any arbitration
proceeding, and the commencement of an arbitration proceeding shall be deemed the
commencement of an action for these purposes. The Federal Arbitration Act shall apply to
the construction, interpretation, and enforcement of this arbitration provision.




Attorneys’ Fees; Expenses. Borrower agrees to pay upon demand all of Lender’s costs and
expenses, including Lender’s attorneys’ fees and Lender’s legal expenses, incurred in
connection with the enforcement of this Agreement. Lender may hire or pay someone else to
help enforce this Agreement, and Borrower shall pay the costs and expenses of such
enforcement. Costs and expenses include Lender’s attorneys’ fees and legal expenses whether
or not there is a lawsuit, including attorneys’ fees and legal expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or injunction), and
appeals. Borrower also shall pay all court costs and such additional fees as may be
directed by the court.




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




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




Governing Law. This Agreement will be governed by federal law applicable to Lender and, to
the extent not preempted by federal law, the laws of the State of Missouri without regard to
its conflicts of law provisions. This Agreement has been accepted by Lender in the State of
Missouri.




Choice of Venue. If there is a lawsuit, Borrower agrees upon Lender’s request to submit to
the jurisdiction of the courts of St. Louis County, State of Missouri.




No Waiver by Lender. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No delay or omission
on the part of Lender in exercising any right shall operate as a waiver of such right or any
other right. A waiver by Lender of a provision of this Agreement shall not prejudice or
constitute a waiver of Lender’s right otherwise to demand strict compliance with that
provision or any other provision of this Agreement. No prior waiver by Lender, nor any
course of dealing between Lender and Borrower, or between Lender and any Grantor, shall
constitute a waiver of any of Lender’s rights or of any of Borrower’s or any Grantor’s
obligations as to any future transactions. Whenever the consent of Lender is required under
this Agreement, the granting of such consent by Lender in any instance shall not constitute
continuing consent to subsequent instances where such consent is required and in all cases
such consent may be granted or withheld in the sole discretion of Lender.




Notices. Any notice required to be given under this Agreement shall be given in writing,
and shall be effective when actually delivered, when actually received by telefacsimile
(unless otherwise required by law), when deposited with a nationally recognized overnight
courier, or, if mailed, when deposited in the United States mail, as first class, certified
or registered mail postage prepaid, directed to the addresses shown near the beginning of
this Agreement. Any party may change its address for notices under this Agreement by giving
formal written notice to the other parties, specifying that the purpose of the notice is to
change the party’s address. For notice purposes, Borrower agrees to keep Lender informed at
all times of Borrower’s



					
	 	 	 	 	 
	 
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current address. Unless otherwise provided or required by law, if there is more than one
Borrower, any notice given by Lender to any Borrower is deemed to be notice given to all
Borrowers.




Severability. If a court of competent jurisdiction finds any provision of this Agreement to
be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make
the offending provision illegal, invalid, or unenforceable as to any other circumstance. If
feasible, the offending provision shall be considered modified so that it becomes legal,
valid and enforceable. If the offending provision cannot be so modified, it shall be
considered deleted from this Agreement. Unless otherwise required by law, the illegality,
invalidity, or unenforceability of any provision of this Agreement shall not affect the
legality, validity or enforceability of any other provision of this Agreement.




Subsidiaries and Affiliates of Borrower. To the extent the context of any provisions of
this Agreement makes it appropriate, including without limitation any representation,
warranty or covenant, the word “Borrower” as used in this Agreement shall include all of
Borrower’s subsidiaries and affiliates. Notwithstanding the foregoing however, under no
circumstances shall this Agreement be construed to require Lender to make any Loan or other
financial accommodation to any of Borrower’s subsidiaries or affiliates.




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




Survival of Representations and Warranties. Borrower understands and agrees that in
extending Loan Advances, Lender is relying on all representations, warranties, and covenants
made by Borrower in this Agreement or in any certificate or other instrument delivered by
Borrower to Lender under this Agreement or the Related Documents. Borrower further agrees
that regardless of any investigation made by Lender, all such representations, warranties
and covenants will survive the extension of Loan Advances and delivery to Lender of the
Related Documents, shall be continuing in nature, shall be deemed made and redated by
Borrower at the time each Loan Advance is made, and shall remain in full force and effect
until such time as Borrower’s Indebtedness shall be paid in full, or until this Agreement
shall be terminated in the manner provided above, whichever is the last to occur.




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



DEFINITIONS. The following capitalized words and terms shall have the following meanings when used
in this Agreement. Unless specifically stated to the contrary, all references to dollar amounts
shall mean amounts in lawful money of the United States of America. Words and terms used in the
singular shall include the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the meanings
attributed to such terms in the Uniform Commercial Code. Accounting words and terms not otherwise
defined in this Agreement shall have the meanings assigned to them in accordance with generally
accepted accounting principles as in effect on the date of this Agreement:




Advance. The word “Advance” means a disbursement of Loan funds made, or to be made, to
Borrower or on Borrower’s behalf on a line of credit or multiple advance basis under the
terms and conditions of this Agreement.




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




Borrower. The word “Borrower” means SYNERGETICS, INC. (MISSOURI CORPORATION) and includes
all co-signers and co-makers signing the Note.




Collateral. The word “Collateral” means all property and assets granted as collateral
security for a Loan, whether real or personal property, whether granted directly or
indirectly, whether granted now or in the future, and whether granted in the form of a
security interest, mortgage, collateral mortgage, deed of trust, assignment, pledge, crop
pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor’s lien,
equipment trust, conditional sale, trust receipt, lien, charge, lien or title retention
contract, lease or consignment intended as a security device, or any other security or lien
interest whatsoever, whether created by law, contract, or otherwise.



					
	 	 	 	 	 
	 
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Environmental Laws. The words “Environmental Laws” mean any and all state, federal and
local statutes, regulations and ordinances relating to the protection of human health or the
environment, including without limitation the Comprehensive Environmental 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. Section 1601, 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 thereto.




Event of Default. The words “Event of Default” mean any of the events of default set forth
in this Agreement in the default section of this Agreement.




GAAP. The word “GAAP” means generally accepted accounting principles.




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




Guarantor. The word “Guarantor” means any guarantor, surety, or accommodation party of any
or all of the Loan.




Guaranty. The word “Guaranty” means the guaranty from Guarantor to Lender, including
without limitation a guaranty of all or part of the Note.




Hazardous Substances. The words “Hazardous Substances” mean materials that, because of
their quantity, concentration or physical, chemical or infectious characteristics, may cause
or pose a present or potential hazard to human health or the environment when improperly
used, treated, stored, disposed of, generated, manufactured, transported or otherwise
handled, The words “Hazardous Substances” are used in their very broadest sense and include
without limitation any and all hazardous or toxic substances, materials or waste as defined
by or listed under the Environmental Laws. The term “Hazardous Substances” also includes,
without limitation, petroleum and petroleum by-products or any fraction thereof and
asbestos.




Indebtedness. The word “Indebtedness” means the indebtedness evidenced by the Note or
Related Documents, including all principal and interest together with all other indebtedness
and costs and expenses for which Borrower is responsible under this Agreement or under any
of the Related Documents.




Lender. The word “Lender” means Union Planters Bank NA, its successors and assigns.




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




Note. The word “Note” means the Note executed by SYNERGETICS, INC. (MISSOURI CORPORATION)
in the principal amount of $1,000,000.00 dated September 30, 2005, together with all
renewals of, extensions of, modifications of, refinancings of, consolidations of, and
substitutions for the note or credit agreement.




Permitted Liens. The words “Permitted Liens” mean (1) liens and security interests securing
Indebtedness owed by Borrower to Lender; (2) liens for taxes, assessments, or similar
charges either not yet due or being contested in good faith; (3) liens of materialmen,
mechanics, warehousemen, or carriers, or other like liens arising in the ordinary course of
business and securing obligations which are not yet delinquent; (4) purchase money liens or
purchase money security interests upon or in any property acquired or held by Borrower in
the ordinary course of business to secure indebtedness outstanding on the date of this
Agreement or permitted to be incurred under the paragraph of this Agreement titled
“Indebtedness and Liens”; (5) liens and security interests which, as of the date of this
Agreement, have been disclosed to and approved by the Lender in writing; and (6) those liens
and security interests which in the aggregate constitute an immaterial and insignificant
monetary amount with respect to the net value of Borrower’s assets.




Related Documents. The words “Related Documents” mean all promissory notes, credit
agreements, loan agreements, environmental agreements, guaranties, security agreements,
mortgages, deeds of trust,



					
	 	 	 	 	 
	 
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security deeds, collateral mortgages, and all other instruments, agreements and documents,
whether now or hereafter existing, executed in connection with the Loan.




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




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



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(S)) 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.



WAIVE JURY. All parties to this Agreement hereby waive the right to any jury trial in any action,
proceeding, or counterclaim brought by any party against any other party.



BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT AND BORROWER
AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS DATED SEPTEMBER 30, 2005.



	 	 	 	 	 
	BORROWER:	 	 
	 
	 	 	 	 
	SYNERGETICS, INC. (MISSOURI CORPORATION)	 	 
	 
	 	 	 	 
	By:

	 	     /s/ Gregg D. Scheller	 	 
	 

	 	 	 	 
	 

	 	GREGG D. SCHELLER, President of SYNERGETICS,
INC. (MISSOURI CORPORATION)	 	 
	 
	 	 	 	 
	LENDER:	 	 
	 
	 	 	 	 
	UNION PLANTERS BANK NA	 	 
	 
	 	 	 	 
	By:

	 	     /s/ Anne D. Silvestri	 	 
	 

	 	 	 	 
	 

	 	Authorized Signer	 	 






					
	 	 	 	 	 
	
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