THIRD AMENDMENT TO CREDIT AND SECURITY AGREEMENT

Exhibit 10.1

THIRD AMENDMENT TO CREDIT AND SECURITY AGREEMENT

     This Third Amendment to Credit and Security Agreement (“Third Amendment”) is entered into as of June 7, 2007, by and among Synergetics, Inc., a Missouri corporation (“Synergetics”), and Synergetics USA, Inc., a Delaware corporation (“Synergetics USA”), (individually, a “Borrower” and together, the “Borrowers”), and Regions Bank (“Lender”).

RECITALS

     A. Borrowers and Lender entered into a certain Credit and Security Agreement dated as of March 13, 2006, as heretofore amended by First Amendment (the “First Amendment”) dated as of September 26, 2006 and by Second Amendment (the “Second Amendment”) dated as of December 8, 2006 (as so amended, the “Existing Credit Agreement”).

     B. Effective on or prior to the date of this Third Amendment, Lender has purchased the loan of Wachovia Bank to Borrowers heretofore made under the Existing Credit Agreement and is currently the sole Lender to Borrowers under the Existing Credit Agreement.

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

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

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

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

     2.  Sole Lender . From and after the effectiveness of this Third Amendment, all references in the Credit Agreement to “Wachovia” are hereby deleted and all references to “Agent” or “Lender” or “Lenders” shall mean Regions Bank as the sole Lender under the Credit Agreement.

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

     A. Section 1.2 , entitled “ Primary Definitions ,” is hereby amended by modifying the following definitions:

(1)

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

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

	(i)		up to 85% of Eligible Accounts, plus
	(ii)		up to the lesser of (A) 50% of Eligible Inventory or (B) $4,250,000.

Lender reserves the right to adjust the percentages and maximums stated above as a result the Field Audit in Lender’s reasonable discretion.

(2)

The definition of “Collateral” is hereby amended by adding the following to the end of the definition thereof:

“Anything to the contrary in this Agreement notwithstanding, from and after the effectiveness of the Third Amendment, there shall be deleted from this definition and from the Collateral all Accounts owed by an account debtor outside the United States (“Foreign Accounts”) and all general intangible rights of Borrower under foreign accounts insurance now and hereafter obtained by Borrower to insure Foreign Accounts.”

(3)

Item (6) under the definition of “Eligible Accounts” is hereby amended to read as follows in its entirety:

“(6) Accounts owed by an account debtor located outside the United States;”

(4)

A new definition, “Field Audit”, is hereby added to read as follows in its entirety:

“‘Field Audit’ means the one-time field audit (to be conducted within ninety (90) days of the date of the Third Amendment) of the facilities properties, books, records and Collateral of Borrowers as provided in Section 6.2 hereof.”

(5)

“Fixed Charge Coverage Ratio” means consolidated EBITDA less unfinanced Capital Expenditures, cash taxes paid or due, and distributions (including dividend distributions) divided by Current Maturities of Long Term Debt and cash interest expense paid or due plus all payments to Iridex (and Borrowers represent and warrant that the required payments are $800,000 annually, with first payment due April 15, 2008).

	(6)		“Foreign Accounts” is defined within the definition of Collateral.
	(7)		“Foreign Accounts and Insurance Security Interest” is defined in Section 10.10 hereof.
	(8)		“‘Notes’ and ‘Revolving Notes’ mean the Third Amended and Restated Revolving Note attached to the Third Amendment as Exhibit A, which replaces (without novation) the Second Amended and Restated Revolving Notes referred to in the Second Amendment.”
	(9)		“‘Revolving Loan Commitment’ means $8,500,000, unless in either case said amount is reduced pursuant to Section 2. 10(b) hereof, in which event it means the aggregate amount to which said amount is reduced.”
	(10)		“Termination Date” means December 1, 2008.”

     B. Section 2.16, entitled “Fees,” is hereby amended by adding the following subsection (c):

“(c)

Borrowers agree to pay Lender its costs incurred in connection with the Field Audit.”

     C. Subsections (c) and (d) to Section 6.1 , entitled “Reporting Requirements,” are hereby amended to read as follows in their entirety:

	“(c)		Within 30 days after the end of each month, agings of the Borrowers’ accounts receivable and their accounts payable report as at the end of such month.
	(d)		As soon as available, and in any event within 30 days after the end of each month (or more frequently if requested by Lender), a Borrowing Base certificate in a form acceptable to the Lender (currently, the form attached to the Third Amendment as Exhibit C , showing the computation of the Borrowing Base as of the close of business on the last day of the immediately preceding fiscal month (except that Inventory calculations may be updated not less than every 60 days), prepared by the Borrowers and certified by the Borrowers’ chief financial officer.”

     D. Section 6.11 , entitled “ Maximum Leverage Ratio ,” is hereby amended to read as follows in its entirety:

“ Section 6.11 Maximum Leverage Ratio . The Borrowers will not, as of the end of the fiscal quarter ending April 30, 2007, allow their Leverage

Ratio to be greater than 3.90 to 1.00, and will not, as of the end of each subsequent fiscal quarter allow their Leverage Ratio to be greater than 3.75 to 1.00”

     E. Section 10.10, entitled “Release of Collateral,” is hereby amended by adding the following sentence:

“Lender, upon the effectiveness of the Third Amendment and the execution and delivery by Borrower of the Foreign Accounts Credit Agreement (as defined in Section F to this Third Amendment), hereby releases the security interest granted to Lender in all of its Foreign Accounts and in all general intangible rights of Borrowers under any and all insurance insuring the collection of Foreign Accounts (the “Foreign Accounts and Insurance Security Interest”). Effective at such time as payment in full is made of all obligations of Borrower under, and termination of, the Foreign Accounts Credit Agreement and all payments and requirements have been made and accomplished as required under the Foreign Accounts Insurance, including without limitation, the assignment to the Insurer of all Accounts as to which a claim shall have been made under the Foreign Accounts Insurance, Borrower agrees to grant a security interest in the Foreign Accounts to Lender (or if at such time there are one or more co-lenders under this Credit Agreement, to Regions Bank as Agent for the benefit of all such Lenders), and any proceeds thereafter received from the insurer of the Foreign Accounts will be applied to reduce the principal amount of Advances outstanding, and item (6) under the definition of “Eligible Accounts” as in effect prior to this Third Amendment will be reinstated as set forth in the Existing Credit Agreement.

     F. Lender and Borrowers acknowledge that: (i) Borrowers and Lender are entering into a certain Foreign Accounts Credit and Security Agreement (“Foreign Accounts Credit Agreement”); (ii) when executed and delivered, the Indebtedness to be incurred thereunder will constitute Indebtedness permitted to be incurred under Section 7.2 of the Existing Credit Agreement, entitled “Indebtedness”; and (iii) the Foreign Accounts and Insurance Security Interest to be granted to Regions to secure such Indebtedness will constitute a “Permitted Encumbrance” under the definition thereof and Section 7.1 of the Existing Credit Agreement, entitled “Liens”.

     G. Lender and Borrowers acknowledge that the