SECURITY AGREEMENT
(EQUIPMENT)
I. Grant of
Security Interest . The undersigned, Synergetics, Inc.
(“Debtor”), for value received, hereby sells, assigns,
transfers, conveys and mortgages to The Industrial Development
Authority of St. Charles County, Missouri (“Secured
Party”) and grants Secured Party a continuing security
interest in all of Debtor’s right, title and interest in and
to the following described property, all accessories and parts now
or hereafter affixed or appertaining thereto or used in connection
therewith and all additions, accessions and substitutions thereto
or therefor and all proceeds (including without limitation
insurance proceeds), products, rents and profits thereof, whether
cash or non-cash, immediate or remote (collectively, the
“Collateral”):
all personal
property, whether now owned or hereafter acquired by Debtor, and
used or intended to be used in the possession, occupation or
enjoyment thereof, and all replacements, additions and
substitutions thereof and thereto, including (but not limited to)
all furniture, furnishings and equipment
to secure the
payment of (i) any and all indebtedness, liabilities and
obligations of Debtor to Secured Party under that certain Guarantor
Agreement dated as of September 1, 2002 from the Debtor,
William L. Bates, Gregg D. Scheller and Kurt W. Gampp, Jr. for the
benefit of the Secured Party (the “Guaranty”),
(ii) any and all indebtedness, liabilities and obligations of
Debtor under this Security Agreement, and (iii) any and all
costs of collection, legal expenses and attorneys’ fees and
expenses incurred by Secured Party upon the occurrence of an Event
of Default under this Agreement, in collecting or enforcing payment
of any such indebtedness, liabilities or obligations or in
preserving, protecting or realizing on the Collateral hereunder or
in representing Secured Party in connection with bankruptcy or
insolvency proceedings (hereinafter collectively referred to as the
“Obligations”).
II.
Possession of Collateral . Until an Event of Default has
occurred under this Agreement, Debtor may have possession of the
Collateral and use the same in any lawful manner not inconsistent
with this Agreement or with any policy of insurance covering any of
the Collateral.
III.
Covenants . Debtor hereby represents, warrants, covenants
and agrees that: (1) it is duly organized, validly existing
and in good standing under the laws of the State of Missouri, (2)
it has full corporate power and authority to borrow money from
Secured Party and to grant to Secured Party the security interest
in the property hereby stated to be granted, (3) the officers
of Debtor executing this Agreement have been duly elected and
qualified and have been duly authorized and empowered to execute,
deliver and perform the terms of this Agreement on behalf of Debtor
and (4) the execution, delivery and performance of this
Agreement by Debtor do not and will not violate any of the terms or
provisions of the Articles or Certificate of Incorporation or
By-Laws of Debtor; (5) the execution, delivery and performance
of this Agreement by Debtor do not and will not violate any law,
rule, regulation, order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to
Debtor or the terms of any indenture, agreement, document,
instrument or undertaking to which Debtor is a party or by which it
is bound; (6) if Debtor shall have advised Secured Party that
any of the Collateral is being acquired with any of the proceeds of
any of the Obligations, such proceeds may be disbursed by Secured
Party directly to the seller of such Collateral; (7) unless
otherwise consented to in writing by Secured Party, the Collateral
(i) is and will be kept at Debtor’s principal place of
business, the address thereof being that shown at the end of this
Agreement, (if mobile equipment or equipment of a type normally
used in more than one location, remaining there when not in use),
(ii) is not of a type normally used in more than one state and
will not be so used, (iii) will not be attached or affixed in
any manner to or become a part of any real estate or other personal
property apart from other items of the Collateral and (iv) is
in the exclusive possession and control of Debtor; (8) it has
full title to the Collateral, and will at all times keep the
Collateral free and clear of any and all liens, claims and
encumbrances whatsoever other than the security interest hereunder,
security
interests
currently in effect in favor of Union Planters Bank, N.A. or Heller
Financial, Inc.; (9) no financing statement (other than any which
may have been filed on behalf of Secured Party, Union Planters
Bank, N.A. or Heller Financial, Inc.) covering any of the
Collateral is on file in any public office; (10) Debtor will
from time to time, on request of Secured Party, execute and deliver
or authorize the filing of such financing statements and other
documents and instruments and do such other acts and things, all as
Secured Party may request, to establish and maintain a valid and
perfected security interest in the Collateral to secure the payment
of the Obligations, including, without limitation, the execution of
applications for certificates of ownership or title naming Secured
Party as first lienholder and the delivery of such certificates to
Secured Party and Debtor hereby authorizes the filing of financing
statements under the Uniform Commercial Code in connection with the
security interest granted hereunder; (12) it will reimburse
Secured Party for all costs incident to perfecting, maintaining or
terminating the security interest granted hereby, including filing
and recording fees, fees for obtaining and transferring
certificates of title and all taxes and legal and clerical fees and
expenses paid or incurred by Secured Party in connection with any
of the foregoing; (13) it will not sell, transfer, lease or
otherwise dispose of or offer to dispose of any of the Collateral
or any interest therein except with the prior written consent of
Secured Party and Bondowner Consent as defined in that certain
Indenture of Trust dated as of September 1, 2002 between the
Secured Party and UMB Bank, N.A., as Trustee; (14) it will at
all times keep the Collateral in first class order and repair,
excepting any loss, damage or destruction which is fully covered by
proceeds of insurance, and will not use the Collateral in violation
of any law, regulation or insurance policy; (15) it will pay
promptly when due all taxes and assessments on the Collateral or
for its use or operation or upon this Agreement or any Obligation
or with respect to the perfection of any security interest or other
lien hereunder (except as otherwise provided by law); (16) it
will at all times keep the Collateral insured against loss, damage,
theft and other risks, in such amounts and companies and under
policies in such form, all as shall be satisfactory to Secured
Party, which policies shall provide that loss thereunder shall be
payable to Secured Party and shall provide for thirty
(30) days’ minimum written notice of cancellation or
amendment to Secured Party and that coverage in favor of Secured
Party will not be impaired in any way by any act, omission or
default of Debtor or any other person (and Secured Party may apply
any proceeds of such insurance which may be received by it toward
payment of the Obligations, whether or not due, in such order of
application as the Secured Party may determine) and such policies
and certificates thereof shall, if Secured Party so requests, be
deposited with Secured Party; (17) Secured Party may examine
and inspect the Collateral or any part thereof, wherever located,
at any reasonable time or times; (18) it shall notify Secured
Party in writing at least fifteen (15) days in advance of its
new name and the effective date of its name change before changing
its name; (19) it shall give Secured Party fifteen
(15) days’ advance written notice of any change of its
principal place of business and of the cessation of maintenance of
any other place of business of Debtor; and (20) it shall
immediately notify Secured Party in writing of any change of
location of any of the Collateral to any location other than
Debtor’s principal place of business.
IV.
Additional Actions by Secured Party . Secured Party, at its
option, may from time to time perform any agreement of Debtor
hereunder which Debtor shall fail to perform and take any other
action which Secured Party deems necessary for the maintenance or
preservation of any of the Collateral or its interest therein
(including, without limitation, the discharge of taxes or liens of
any kind against the Collateral or the procurement of insurance or
the payment of warehousing charges, landlord’s bills or other
charges), and Debtor agrees to forthwith reimburse Secured Party
for all costs and expenses incurred by Secured Party in connection
with the foregoing, together with interest thereon at a rate per
annum equal to the lesser of Twenty Percent (20%) or the highest
rate allowed by law from the date incurred until reimbursed by
Debtor. Secured Party may for the foregoing purposes act in its own
name or that of Debtor and may also so act for the purposes of
adjusting, settling or cancelling any policy of insurance on the
Collateral or endorsing any draft received in connection therewith,
in payment of a loss or otherwise, for all of which purposes Debtor
hereby grants to Secured Party its power of attorney, irrevocable
during the term of this Agreement. This power of attorney shall not
be a
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