exv10w41



 





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 any



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



TERM. This Agreement shall be effective as of March 10, 2000, and shall continue thereafter until
all indebtedness of Borrower to Lender has been performed in full and the parties terminate this
Agreement 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 in
the Uniform Commercial Code. All references to dollar amounts shall mean amounts in lawful money
of the United States of America.





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




Account. The word “Account” means a trade account, account receivable, or other right to
payment for goods sold or services rendered owing to Borrower (or to a third party grantor
acceptable to Lender).




Account Debtor. The words “Account Debtor” mean the person or entity obligated upon an
Account.




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 as
provided 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 of
Eligible Accounts, plus (ii) 50.000% of the aggregate amount of Eligible inventory.




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




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



 









 






or any other security or lien interest whatsoever, whether created by law, contract, or
otherwise. The word “Collateral” includes without limitation all collateral described below
in the section titled “COLLATERAL.”




Eligible Accounts. The words “Eligible Accounts” mean, at any time, all of Borrower’s
Accounts which contain selling terms and conditions acceptable to Lender. The net amount of
any 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 or
agent of Borrower.




(b) Accounts with respect to which the Account Debtor is a subsidiary of, or
affiliated 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 be
conditional.




(d) Accounts with respect to which the Account Debtor is not a resident of the
United States, except to the extent such Accounts are supported by insurance, bonds
or other assurances satisfactory to Lender.




(e) Accounts with respect to which Borrower is or may become liable to the Account
Debtor 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, or
the services have not been rendered, to the Account Debtor.




(h) Accounts with respect to which Lender, in its sole discretion, deems the
creditworthiness 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 a
petition in bankruptcy or an application for relief under any provision of any state
or federal bankruptcy, insolvency, or debtor-in-relief acts; or who has had
appointed 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 insolvent
or fails generally to pay its debts (including its payrolls) as such debts become
due.




(j) Accounts with respect to which the Account Debtor is the United States
Government 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 ineligible
whenever the portion of the Account which has not been paid within 90 days from the
invoice 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’s
inventory as defined below except:




(a) Inventory which is not owned by Borrower free and clear of all security
interests, 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, as
amended.




Event of Default. The words “Event of Default” mean and include without limitation any of
the 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’s
commitment to lend under this Agreement.




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




Indebtedness. The word “Indebtedness” means and includes without limitation all Loans,
together with all other obligations, debts, and liabilities of Borrower to Lender, or any
one or more of them, as well as all claims by Lender against Borrower, or any one or more of
them; whether now or hereafter existing, voluntary or involuntary, due or not due, absolute
or contingent, liquidated or unliquidated; whether Borrower may be liable individually or
jointly with others; whether Borrower may be obligated as a guarantor, surety, or otherwise;
whether recovery upon such indebtedness may be or hereafter may become barred by any statute
of limitations; and whether such indebtedness may be or hereafter may become otherwise
unenforceable.




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 goods
held for sale or lease or furnished under contracts of service in which Borrower now has or
hereafter acquires any right, whether held by Borrower or others, and all documents of
title, warehouse receipts, bills of lading, and all other documents of every type covering
all or any part of the foregoing. Inventory includes inventory temporarily out of
Borrower’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 the
Section titled “LINE OF CREDIT” below.




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




Note. The word “Note” means and includes without limitation Borrower’s promissory note or
notes, if any, evidencing Borrower’s Loan obligations in favor of Lender, as well as any
substitute, replacement or refinancing note or notes therefor.




Permitted Liens. The words “Permitted Liens” mean: (a) liens and security interests
securing indebtedness owed by Borrower to Lender; (b) liens for taxes, assessments, or
similar charges either not yet due or being contested in good faith; (c) liens of
materialmen, mechanics, warehousemen, or carriers, or other like liens arising in the
ordinary course of business and securing obligations which are not yet delinquent; (d)
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”; (e) liens and security interests which, as of the date of
this Agreement have been disclosed to and approved by the Lender in writing; and (f) those
liens and security interests which in the aggregate constitute an immaterial and
insignificant monetary amount with respect to the net value of Borrower’s assets.




Related Documents. The words “Related Documents” mean and include without limitation all
promissory notes, credit agreements, loan agreements, environmental agreements, guaranties,
security agreements



 









 






mortgages, deeds of trust, and all other instruments, agreements and documents, whether now
or hereafter existing, executed in connection with the indebtedness.




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




Security Interest. The words “Security Interest” mean and include without limitation any
type of collateral security, whether in the 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 consignment
intended as a security device or any other security of lien interest whatsoever, whether
created by law, contract or otherwise.




SARA. The word “SARA” means the Superfund Amendments and Reauthorization Act of 1985 as now
or hereafter amended.


LINE OF CREDIT. Lender agrees to make Advances to Borrower from time to time from the date of this
Agreement to the Expiration Date, provided the aggregate amount of such Advances outstanding at any
time 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 the
account of Borrower under this Agreement is subject to the following conditions precedent,
with all documents, instruments, opinions, reports, and other items required under this
Agreement to be in form and substance satisfactory to Lender.




(a) Lender shall have received evidence that this Agreement and all Related
Documents have been duly authorized, executed, and delivered by Borrower to Lender.




(b) Lender shall have received such opinions of counsel, supplemental opinions, and
documents as Lender may request.




(c) The security interest in the Collateral shall have been duly authorized, created
and 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 been
executed 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 of
Borrower’s Accounts, Inventory, books, records, and operations, and Lender shall be
satisfied as to their condition.




(f) Borrower shall have paid to Lender all fees, costs, and expenses specified in
this 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 would
constitute an Event of Default under this Agreement, and Borrower shall have
delivered to Lender the compliance certificate called for in the paragraph below
titled “Compliance Certificate.”




Making Loan Advances. Advances under the Line of Credit may be requested orally by
authorized persons. Lender may, but need not, require that all oral requests be confirmed
in writing. Each Advance shall be conclusively deemed to have been made at the request of
and for the benefit of Borrower (a) when credited to any deposit account of Borrower
maintained with Lender or (b) when advanced in accordance with the instructions or an
authorized person, Lender, at its option, may set a cutoff time, after which all requests
for 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 outstanding
Advances shall exceed the applicable Borrowing Base, Borrower, immediately upon written or
oral notice from Lender, shall pay to Lender an amount equal to the difference between the
outstanding principal balance of the Advances and the Borrowing Base. On the Expiration
Date, Borrower shall pay to Lender in full the



 









 






aggregate unpaid principal amount of all Advances then outstanding and all accrued unpaid
interest, 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 shall
make entries for each Advance and such other debits and credits as shall be appropriate in
connection with the credit facility. Lender shall provide Borrower with periodic statements
of Borrower’s account, which statements shall be considered to be correct and conclusively
binding on Borrower unless Borrower notifies Lender to the contrary within thirty (30) days
after 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 grant
to 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, and
Inventory. Lender’s Security Interests in the Collateral shall be continuing liens and shall
include the proceeds and products of the Collateral, including without limitation the proceeds of
any Insurance. With respect to the Collateral, Borrower agrees and represents and warrants to
Lender:





Perfection of Security Interests. Borrower agrees to execute such financing statements and
to take whatever other actions are requests by Lender to perfect and continue Lender’s
Security Interests in the Collateral. Upon request of Lender, Borrower will deliver to
Lender any and all of the documents evidencing or constituting the Collateral, and Borrower
will note Lender’s Interest upon any and all chattel paper if not delivered to Lender for
possession by Lender. Contemporaneous with the execution of this Agreement, Borrower will
execute one or more UCC financing statements and any similar statements as may be required
by applicable law, and will file such financing statements and all such similar statements
in the appropriate location or locations. Borrower hereby appoints Lender as its
irrevocable attorney-in-fact for the purpose of executing any documents necessary to perfect
or to continue any Security Interest. Lender may at any time, and without further
authorization from Borrower, file a carbon, photograph, facsimile, or other reproduction of
any financing statement for use as a financing statement. Borrower will reimburse Lender
for all expenses for the perfection, termination, and the continuation of the perfection of
Lender’s security interest in the Collateral. Borrower promptly will notify Lender of any
change 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 Number
or Employer Identification Number. Borrower further agrees to notify Lender in writing
prior to any change in address or location of Borrower’s principal governance office or
should Borrower merge or consolidate with any other entity.




Collateral Records. Borrower does not, and at all times hereafter shall, keep correct and
accurate records of the Collateral, all of which records shall be available to Lender or
Lender’s representative upon demand for inspection and copying at any reasonable time. With
respect to the Accounts, Borrower agrees to keep and maintain such records as Lender may
require, including without limitation information concerning Eligible Accounts and Account
balances and agings. With respect to the Inventory, Borrower agrees to keep and maintain
such records as Lender may require, including without limitation information concerning
Eligible Inventory and records itemizing and describing the kind, type, quality, and
quantity of Inventory, Borrower’s Inventory costs and selling prices, and the daily
withdrawals and additions to Inventory. The following is an accurate and complete list of
all locations at which Borrower keeps or maintains business records concerning Borrower’s
Accounts 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 and
Eligible Accounts and Eligible Inventory, in form and substance satisfactory to the Lender.
Thereafter Borrower shall execute and deliver to Lender such supplemental schedules of
Eligible Accounts and Eligible Inventory and such other matters and information relating to
the Accounts and Inventory as Lender may request. Supplemental schedules shall be delivered
according to the following schedule: Quarterly.




Representations and Warranties Concerning Accounts. With respect to the Accounts, Borrower
represents and warrants to Lender: (a) Each Account represented by Borrower to be an
Eligible Account for purposes of this Agreement conforms to the requirements of the
definition of an Eligible Account; (b) All Account Information listed on schedules delivered
to Lender will be true and correct, subject to immaterial variance; and (c) Lender, its
assigns, 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 of
such Accounts.



 









 






Representations and Warranties Concerning Inventory. With respect to the Inventory,
Borrower represents and warrants to Lender: (a) All Inventory represented by Borrower to be
Eligible Inventory for purposes of this Agreement conforms to the requirements of the
definition of Eligible Inventory; (b) All Inventory values listed on schedules delivered to
Lender will be true and correct, subject to immaterial variance; (c) The value of the
Inventory will be determined on a consistent accounting basis; (d) Except as agreed to the
contrary by Lender in writing, all Eligible Inventory is now and at all times hereafter will
be in Borrower’s physical possession and shall not be held by others on consignment, sale or
approval, or sale or return; (e) Except as reflected in the inventory schedules delivered to
Lender, all Eligible Inventory is now and at all times hereafter will be of good and
merchantable quality, free from defects; (f) Eligible Inventory is not now and will not at
any time hereafter be stored with a bailee, warehouseman, or similar party without Lender’s
prior written consent, and, in such event, Borrower will concurrently at the time of
bailment cause any such bailee, warehouseman, or similar party to issue and deliver to
Lender, in form acceptable to Lender, warehouse receipts in Lender’s name evidencing the
storage of Inventory; and (g) Lender, its assigns, or agents shall have the right at any
time and at Borrower’s expense to inspect and examine the Inventory and to check and test
the same as to quality, quantity, value, and condition.


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




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




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




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




Properties. Except for Permitted Liens, Borrower owns and has good title to all of
Borrower’s properties free and clear of all Security Interests, and has not executed any
security documents or financing statements relating to such properties. All of Borrower’s
properties are titled in Borrower’s legal name, and Borrower has not used, or filed a
financing statement under any other name for at least the last five (5) years.




Hazardous Substances. The terms “hazardous waste,” hazardous substance,” “disposal,”
“release,” and “threatened release,” as used in this Agreement, shall have the same meanings
as set forth in the “CERCLA” “SARA” the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6801,
et seq., or other applicable state or Federal laws, rules, or regulations adopted pursuant
to any of the foregoing. Except as disclosed to and acknowledged by Lender in writing,
Borrower represents and warrants that: (a) During the period of Borrower’s ownership of the
properties, there has been no use, generation, manufacture, storage, treatment, disposal,
release or threatened release of any hazardous waste or substance by any person on, under,
about or from any of the properties; (b) Borrower has no knowledge of, or reason to believe
that there has been (i) any use, generation, manufacture, storage, treatment disposal,
release, or threatened release of



 









 






any hazardous waste or substance on, under, about of from the properties by any prior owners
or occupants of any of the properties; or (ii) any actual or threatened litigation or claims
of any kind by any person relating to such matters. (c) Neither Borrower nor any tenant,
contractor, agent or other authorized user of any of the properties shall use, generate,
manufacture, store, treat, dispose of, or release any hazardous waste or substance on,
under, about or from any of the properties; and any such activity shall be conducted in
compliance with all applicable federal, state and local laws, regulations, and ordinances,
including without limitation those laws, regulations and ordinances described above.
Borrower authorizes Lender and its agents to enter upon the properties to make such
Inspections and tests as Lender may deem appropriate to determine compliance of the
properties 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 properties for hazardous waste and hazardous substances.
Borrower hereby (a) releases and waives any future claims against Lender for indemnity or
contribution in the event Borrower becomes liable for cleanup or other costs under any such
laws, and (b) agrees to indemnify and hold harmless Lender against any and all claims,
losses, liabilities, damages, penalties, and expenses which Lender may directly or
indirectly sustain or suffer resulting from a breach of this section of the Agreement or as
a consequence of any use, generation, manufacture, storage, disposal, release or threatened
release of a hazardous waste or substance on the properties. The provisions of this section
of the Agreement, including the obligation to indemnify, shall survive the payment of the
indebtedness and the termination or expiration of this Agreement and shall not be affected
by Lender’s acquisition of any interest in any of the properties, whether by foreclosure or
otherwise.




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




Taxes. To the best of Borrower’s knowledge, all tax returns and reports of Borrower that
are or were required to be filed, have been filed, and all taxes, assessments and other
governmental charges have been paid in full, except those presently being or to be contested
by Borrower in good faith in the 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 Interest on or affecting any of the Collateral directly or indirectly securing
repayment of Borrower’s Loan and Note, that would be prior or that may in any way be
superior to Lender’s Security Interests and rights in and to such Collateral.




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




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




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




Location of Borrower’s Offices and Records. Borrower’s place of business, or Borrower’s
Chief Executive Office, if Borrower has more than one place of business, is located at 88
Hubble, St. Charles, MO 63304. Unless Borrower has designated otherwise in writing this
location is also the office or offices where Borrower keeps its records concerning the
Collateral.




Information. All information heretofore or contemporaneously herewith furnished by Borrower
to Lender for the purposes of or in connection with this Agreement or any transaction
contemplated hereby is, and all



 









 






information hereafter furnished by or on behalf of Borrower to Lender will be, true and
accurate in every material respect on the date as of which such information is dated or
certified; and none of such information is or will be incomplete by omitting to state any
material fact necessary to make such information no misleading.




Survival of Representations and Warranties. Borrower understands and agrees that Lender,
without independent investigation, is relying upon the above representations and warranties
in extending Loan Advances to Borrower. Borrower further agrees that the foregoing
representations and warranties shall be continuing in nature 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.


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





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




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




Financial Statements. Furnish Lender with, as soon as available, but in no event later than
one hundred twenty (120) 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, 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 for
the period ended, prepared and certified as correct to the best knowledge and belief by
Borrower’s Chief Financial Officer or other officer or person acceptable to Lender. All
financial reports required to be provided under this Agreement shall be prepared in
accordance with generally accepted accounting principles, applied on a consistent basis, and
certified by Borrower as being true and correct.




Additional Information. Furnish such additional information and statements, lists of assets
and liabilities, agings of receivables and payables, inventory schedules, budgets,
forecasts, tax returns, and other reports with respect to Borrower’s financial condition and
business operations as Lender may 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 reasonably acceptable to Lender.
Borrower, upon request of Lender, will deliver to Lender from time to time the policies or
certificates of insurance in form 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 loss payable or other endorsements as Lender
may require.




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




Guaranties. Prior to disbursement of any Loan proceeds, furnish executed guaranties of the
Loans in favor of Lender, executed by the guarantors named below, on Lender’s forms, and in
the amounts and under the conditions spelled out in those guaranties:



	 	 	 
	Guarantors	 	Amounts
	Kurt Gampp
	 	Unlimited
	Gregg Scheller
	 	Unlimited
	William Bates
	 	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 of 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. Provided, however, Borrower will not be required to pay and discharge any such
assessment, tax, charge, levy, lien or claim so long as (a) the legality of the same shall
be contested in good faith by appropriate proceedings, and (b) Borrower shall have
established on 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 the
assessments, taxes, charges, levies, liens and claims and will authorize the appropriate
governmental official to deliver to Lender at any time a written statement of any
assessments, taxes, charges, levies, liens and claims against Borrower’s properties, income,
or profits.




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




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 and in compliance with all applicable
federal, state and municipal laws, ordinances, rules and regulations respecting its
properties, charters, businesses and operations including without limitation, compliance
with the Americans with Disabilities Act and with all minimum funding standards and other
requirements of ERISA and other laws applicable to Borrower’s employee benefit plans.




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




Compliance Certificate. Unless waived in writing by Lender, provide Lender at least
annually and at the time of each disbursement of Loan proceeds with a certificate executed
by Borrower’s Chief Financial Officer, or other officer or person acceptable to Lender,
certifying that the representations and warranties set forth in this Agreement are true and
correct 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 all
environmental protection federal, state and local laws, statutes, regulations and
ordinances; not cause or permit to exist, as a result of an intentional or unintentional
action or omission on its part or on the part of any third party, on property owned and/or
occupied by Borrower, any environmental activity where damage may result to the environment,
unless such environmental activity is pursuant to and in compliance with the conditions of a
permit issued by the appropriate federal, state or local governmental authorities; shall
furnish to Lender promptly and in any event within (30) days after receipt thereof a copy of
any notice, summons, lien, citation, directive, letter or other communication from any
governmental agency or instrumentality concerning any



 









 






intentional or unintentional action or omission on Borrower’s part in connection with any
environmental activity whether or not there is damage to the environment and/or other
natural resources.




Additional Assurances. Make, execute and deliver to Lender such promissory notes,
mortgages, deeds of trust, security agreements, financing statements, 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.


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





Indebtedness and Liens. (a) Except for 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, (b) except as allowed as a
Permitted Lien, sell, transfer, mortgage, assign, pledge, lease, grant a security interest
in, or encumber any of Borrower’s assets, or (c) sell with recourse any of Borrower’s
accounts, except to Lender.




Continuity of Operations. (a) Engage in any business activities substantially different
than those in which borrower is presently engaged, (b) cease operations, liquidate, merge,
transfer, acquire or consolidate with any other entity, change the name, dissolve or
transfer or sell Collateral out of the ordinary course of business, (c) 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 of stock
of Borrower, or (d) purchase or retire any of Borrower’s outstanding shares or alter or
amend 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 any
obligation 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, whether
under this Agreement or under any other agreement Lender shall have no obligation to make Loan
Advances or to disburse Loan proceeds if: (a) Borrower or any Guarantor is in default under the
terms of this Agreement or any of the Related Documents or any other agreement that Borrower or any
guarantor has with Lender; (b) Borrower or any Guarantor becomes insolvent, files a petition in
bankruptcy or similar proceedings, or is adjudged a bankrupt; (c) there occurs a material adverse
change in Borrower’s financial condition, in the financial condition of any Guarantor, or in the
value of any Collateral securing any Loan; (d) any Guarantor seeks, claims, or otherwise attempts
to limit, modify or revoke such Guarantor’s guaranty of the Loan or any other loan with Lender; or
(e) Lender in good faith deems itself insecure, even though no Event of Default shall have
occurred.



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



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





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




Other Defaults. Failure of Borrower or any Grantor to comply with or to perform when due
any other term, obligation, covenant or condition contained in this Agreement or in any of
the Related Documents, or failure to Borrower to comply with or to perform any other 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
or on behalf of Borrower or any Grantor under this Agreement or the Related Documents is
false or misleading in any material respect of the time made or furnished, or becomes false
or misleading at any time thereafter.




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




Insolvency. The dissolution or termination of Borrower’s existence as a going business, 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.




Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings,
whether by judicial proceeding, self-help, repossession or any other method, ay any creditor
or 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 of
any of Borrower’s deposit accounts with Lender.




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.




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




Adverse Change. A material adverse change occurs in Borrower’s financial condition, or
Lender 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 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 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.



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





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




Applicable Law. This Agreement has been delivered to Lender and accepted by Lender in the
State of Missouri. If there is a lawsuit, Borrower agrees upon Lender’s request to submit
to the jurisdiction of the courts of St. Louis County, the State of Missouri. Subject to
the provisions on arbitration, this Agreement shall be governed by and construed in
accordance with the laws of the State of Missouri.




Arbitration. Lender and Borrower 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, 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 the 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 an arbitrator may be entered in
any court having jurisdiction. Nothing in this Agreement shall preclude 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.




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, or one or more participation interests in the Loans 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 it may have with respect to
such matters. Borrower additionally waives any and all notices of sale of participation
interests, as well as all notices of any repurchase of such participation interests.
Borrower also agrees that the purchasers of any such participation interest will be
considered as the absolute owners of such interest in the Loans and will have all the rights
granted under the participation agreement or agreements governing the sale of such
participation interests. Borrower further waives all rights of offset or counterclaim that
it may have now or later against Lender or against any purchaser of such a participation
interest and unconditionally agrees that either Lender or such purchaser may enforce
Borrower’s obligation under the Loans irrespective of the failure or insolvency of any
holder of any interest in the Loans. Borrower further agrees that the purchaser of any such
participation interests may enforce its interests irrespective of any personal claims or
defenses that Borrower may have against Lender.




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




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




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



 









 






Subsidiaries 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 herein shall include all subsidiaries and
affiliates of Borrower. 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 subsidiary or affiliate of Borrower.




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



Survival.
All warranties, representations and covenants made by Borrower in
this Agreement or in any certificate or other instrument delivered by
Borrower 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 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 any obligations of Borrower or of any Grantor as to any future
transactions. Whenever the consent of Lender is required under this Agreement, the granting
of such consent by Lender in any instance shall not constitute continuing consent 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.


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. TO PROTECT YOU
(BORROWER(S)) AND US (CREDITOR) 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.



BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS LOAN AGREEMENT, AND BORROWER AGREES TO
ITS TERMS. THIS AGREEMENT IS DATED MARCH 10, 2000.



THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.




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