Return to:
 
Donna Williams
RBC Bank (USA)
 Lending Service Center
 134 North Church Street, Rocky Mount, North Carolina 27802

 
 
 
______________________________Space Above Line for Processing Data
_______________________________________________
 
RBC Bank
Modification Agreement
(Cover Page)
 

 
 
This Agreement has been executed and delivered outside the State of Florida and
is not secured by Florida real estate. No documentary stamp taxes are due
herewith.
 
 
 
Prepared by:
John I. Van Voris, Esq
GreyRobinson, P.A.
201 N. Franklin Street, Ste 2200
Tampa, Florida 33602
 

 
State of New York
 
County of New York

 
 
From:
BOVIE MEDICAL CORPORATION, a Delaware corporation (whether one or more,
“Borrower”), with a  business and mailing address of 5115 Ulmerton Road,
Clearwater, Florida 33760.

 
 
To:
RBC BANK (USA) (“Bank”), with a business address of 134 N. Church Street, Rocky
Mount, North Carolina 27804 and a mailing address of Post Office Box 1220, Rocky
Mount, North Carolina 27802-1220, which mailing address is the place to which
all notices and communications should be sent to Bank regarding this
Modification Agreement.

 
Date:      As of  December 2, 2009
 

 
Documents Modified:
Business Loan Agreement (Asset Based), Promissory Note and Commercial Security
Agreement, each dated August 12, 2008
Original Credit Facility:
Up to $5,000.000.00
Revised Credit Facility:
Up to $8,000,000.00

 
 
 
 
Customer No.  _____________
Loan No. _________________
RBC Bank
MODIFICATION
AGREEMENT

 
 

 
1

--------------------------------------------------------------------------------

 

This Agreement has been executed and delivered outside the State of Florida and
is not secured by Florida real estate. No documentary stamp taxes are due
herewith.
 
 
THIS MODIFICATION AGREEMENT (“Modification Agreement”), entered into as of the
2nd day of December, 2009, by BOVIE MEDICAL CORPORATION, a Delaware corporation
(“Borrower”, whether one or more) with a mailing address of 5115 Ulmerton Road,
Clearwater, Florida 33760, and RBC BANK (USA) (“Bank”), with a mailing address
of Post Office Box 1220, Rocky Mount, North Carolina 27802-1220.
 
A.  
Borrower has made and issued to Bank its promissory note (“Note”) in the
original principal amount and dated as indicated on Attachment 1 attached
hereto.

 
B.  
If so indicated on Attachment 1, the Note is secured and the security is
generally as described on Attachment 1.

 
C.  
The Note, any security documents described on Attachment 1 and any other loan
and security documents that are outstanding with respect to the extension of
credit evidenced by the Note, even if not listed on Attachment 1, are
hereinafter collectively referred to as the “Contract” and the Contract is
hereby incorporated herein as a part of this Modification Agreement.

 
D.  
Bank and Borrower mutually desire to modify the provisions of the Contract in
the manner hereinafter set out, it being specifically understood and agreed
that, except as herein modified, the terms and provisions of the Contract and
the individual instruments, documents and agreements that make up the Contract
shall remain unchanged and the Contract, as herein modified, shall continue in
full force and effect as therein and herein written.

 
NOW, THEREFORE, Bank and Borrower, in consideration of the premises and the sum
of One Dollar ($1.00) to each in hand paid by the other, receipt and sufficiency
of which are hereby acknowledged by each, do hereby agree as follows:
 
Section 1. Modification.  The Contract shall be, and the same is, modified in
the manner set forth in Attachment 2.
 
Section 2. Effect of Modification.  Nothing contained in this Modification
Agreement shall in any way impair the security now held for the indebtedness
evidenced by the Contract or the lien priority thereof, nor waive, annul, vary
or affect any provision, condition, covenant and agreement contained in the
Contract, nor affect or impair any rights, powers and remedies under the
Contract, except as herein specifically modified to do any one or more of the
foregoing.  If any provision in this Modification Agreement shall be interpreted
or applied by a court or other tribunal with personal and subject matter
jurisdiction over the parties hereto and the Contract, as modified, so as to
impair the security now held for the indebtedness or lien priority thereof, or
do any one or more of any of the foregoing, such provision shall be ineffective
to the extent it causes an impairment of such security or the lien priority
thereof or causes any of such other consequences, or the application thereof
shall be in a manner and to an extent which does not impair such security or the
lien priority thereof, or result in the occurrence of any of the other
consequences.  This Modification Agreement does not extend the expiration dates
or enlarge the terms of any property, physical damage, credit and any other
insurance written in connection with or financed by said Contract.
 
Section 3. Financing Statements.  Borrower irrevocably authorizes Bank to file
such financing statements as may be necessary to protect, in Bank’s opinion,
Bank’s security interests and liens and, to the extent Bank deems necessary or
appropriate, to sign the name of Borrower with the same force and effect as if
signed by Borrower and to make public in financing statements and other public
filings such information regarding Borrower as Bank deems necessary or
appropriate, including, without limitation, federal tax identification numbers,
social security numbers and other identifying information.
 
Section 4. Credit Investigations; Bank’s Responsibilities.  Bank is irrevocably
authorized by Borrower to make and Section 5. have made such credit
investigations as it deems
 

 
2

--------------------------------------------------------------------------------

 

appropriate to evaluate Borrower’s credit, personal and financial standing and
employment, and Borrower authorizes Bank to share with consumer reporting
agencies and creditors its experiences with Borrower and other information in
Bank’s possession relative to Borrower.  Bank shall not have any obligation or
responsibility to do any of the following: (1) protect and preserve any
collateral and other security given or to be given in connection with the
Contract, as herein modified, against the rights of third persons having an
interest therein; (2) provide information to third persons relative to the
Contract, as herein modified, Bank’s liens and security interests in any
collateral and other security, or otherwise with respect to Borrower; and (3)
subordinate its liens and security interests in any collateral and other
security to the interests of any third persons or to enter into control
agreements relative to such collateral and other security.
 
Section 6. Usury.  Bank does not intend to and shall not reserve, charge and
collect interest, fees and charges under the Contract, as herein modified, in
excess of the maximum rates and amounts permitted by applicable law.  If any
interest, fees and charges are reserved, charged and collected in excess of the
maximum rates and amounts, it shall be construed as a mutual mistake,
appropriate adjustments shall be made by Bank and to the extent paid, the excess
shall be returned to the person making such a payment.
 
Section 7. Documentary Stamps, etc.  To the extent not prohibited by law and
notwithstanding who is liable for payment of the taxes and fees, Borrower shall
pay, on Bank’s demand, all intangible taxes, documentary stamp taxes, excise
taxes and other similar taxes assessed, charged and required to be paid in
connection with this Modification Agreement, and any future extension, renewal
and modification of the Contract, or assessed, charged and required to be paid
in connection with any of the loan documents which make up the Contract.
 
Section 8. Anti-Terrorism. Borrower represents, warrants and covenants to Bank
as follows: (1) Borrower (a) is not and shall not become a person whose property
or interest in property is blocked or subject to blocking pursuant to Section 1
of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism
(66 Fed. Reg. 49079 (2001)), (b) does not engage in and shall not engage in any
dealings or transactions prohibited by Section 2 of such executive order, and is
not and shall not otherwise become associated with any such person in any manner
violative of Section 2, (c) is not and shall not become a person on the list of
Specially Designated Nationals and Blocked Persons, and (d) is not and shall not
become subject to the limitations or prohibitions under any other U.S.
Department of Treasury’s Office of Foreign Assets Control regulation or
executive order; (2) Borrower is and shall remain in compliance, in all material
respects, with (a) the Trading with the Enemy Act, as amended, and each of the
foreign assets control regulations of the United States Treasury Department (31
CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or
executive order relating thereto, and (b) the Uniting And Strengthening America
By Providing Appropriate Tools Required To Intercept And Obstruct Terrorism (USA
Patriot Act of 2001); and (3) Borrower has not and shall not use all or any part
of the extension of credit evidenced by the Note, directly or indirectly, for
any payments to any governmental official or employee, political party, official
of a political party, candidate for political office, or anyone else acting in
an official capacity, in order to obtain, retain or direct business or obtain
any improper advantage, in violation of the United States Foreign Corrupt
Practices Act of 1977, as amended..
 
Section 9. Costs and Expenses.  All of the costs and expenses incurred by Bank
in connection with this Modification Agreement shall be paid by Borrower upon
the request of and at the time of demand for payment thereof made by Bank on
Borrower.  As used herein, “costs and expenses” include, without limitation,
reasonable attorneys’ fees and fees of legal assistants, and reasonable fees of
accountants, engineers, surveyors, appraisers and other professionals or experts
– and all references to attorneys’ fees or fees of legal assistants, or fees of
accountants, engineers, surveyors, appraisers or other professionals or experts
shall mean reasonable fees.
 
Section 10. Maintenance of Records.  Bank is authorized to maintain, store and
otherwise retain this Modification Agreement and the other documents
constituting the Contract in their original, inscribed tangible forms or records
thereof in an electronic medium or other non-tangible medium which permits such
records to be retrieved in perceivable forms.
 
Section 11. Waiver of Jury Trial.  Borrower, to the extent permitted by law,
waives any right to a trial by jury in any action arising from or related to
this Modification Agreement and waives any right to a trial by jury in any
action or proceeding arising from or related to the Contract, as herein
modified.
 

 
3

--------------------------------------------------------------------------------

 

Section 12. Governing Law.  This Agreement shall be governed and construed in
accordance with the laws of the State whose laws govern the Contract, excepting,
however, its conflict of law provisions.
 
Section 13. Reservation of Rights; Entire Agreement.  Bank does hereby reserve
all rights and remedies it may have against all parties secondarily liable for
repayment of the indebtedness evidenced by the Contract. The Contract, as herein
modified, contains the entire agreement of the parties and the undersigned do
hereby ratify and confirm the terms of the Contract, all of which shall remain
in full force and effect, as modified herein.  This Modification Agreement shall
be binding upon any assignee and successor in interest of the parties hereto.
Borrower waives and will not assert against any transferee and assignee of Bank
any claims, defenses, set-offs and rights of recoupment which Borrower could
assert against Bank, except defenses which Borrower cannot waive.  All
references herein to the “Modification Agreement” include any supplemental
agreements filed of record to reflect modifications of any of the instruments,
documents and other agreements making up the Contract that are of record.
 
The undersigned have executed this Modification Agreement under seal as of the
day and year first above stated.
 
BANK:
 
RBC BANK (USA)
 
By:  _______________________________________
Print Name:_________________________________
Title: ______________________________________
 
 

 
BOVIE MEDICAL CORPORATION,
a Delaware corporation
 
By:  ________________________________________
Print Name:  Andrew Makrides
Title:            President
 
Witness:
 
_______________________________________
Print Name: _____________________________
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
4

--------------------------------------------------------------------------------

 

Attachment 1
to
Modification Agreement
 
1.
Describe Promissory Note (Date, Original Amount, Current Amount and all
Modifications):
     
Promissory Note dated August 12, 2009 in the original principal amount of
$5,000,000.00
   
2.
Describe Security Documents (Type, Date and if recorded, Recording Information):
     
Business Loan Agreement (Asset Based) dated August 12, 2008
     
Commercial Security Agreement dated August 12, 2008
     
Assignment of Deposit Agreement dated August 12, 2008

 
 

 
5

--------------------------------------------------------------------------------

 

Attachment 2
To
Modification Agreement
 
The Contract shall be, and the same is, modified as follows:
 
1. The maturity date stated in the Note is changed to October 1, 2012 and to the
extent the maturity date is stated in any of the other individual instruments,
documents and agreements that make up the Contracts, the maturity date stated
therein is changed to the date stated herein.
 
2. The interest rate stated in the Note is changed by changing the base index
used for determining the rate.  The base index is changed to the LIBOR Base Rate
effective December 2, 2009, and after the change the new interest rate will be
the LIBOR BASE RATE  plus 2.00%. The “LIBOR Base Rate” is the London Interbank
Offer Rate for U.S. Dollars for a term of one month which appears on Bloomberg
Professional Screen BBAM (or any generally recognized successor method or means
of publication) as of 11:00 a.m., London time, two (2) London business days
prior to the day on which the rate will become effective. The rate for the first
month or part thereof will initially become effective on the date of this
Modification Agreement as shown on the face hereof. Thereafter, the rate will
change and a new rate will become effective on the first calendar day of each
succeeding month. If for any reason, the London Interbank Offer Rate is not
available, then the “LIBOR Base Rate” shall mean the rate per annum which banks
charge each other in a market comparable to England’s Eurodollar market on
short-term money in U.S. Dollars for an amount substantially equivalent to the
principal amount due under the Contract as determined at 11:00 A.M., London
time, two (2) London business days prior to the day on which the rate will
become effective, as determined in the Bank’s sole discretion. Bank’s
determination of such interest rate shall be conclusive, absent manifest error.
Under no circumstances will the effective rate of interest on the Note be less
that a minimum floor rate of 4.00% per annum or greater than the maximum rate
allowed by applicable law.
 
3. The Note is supplemented by adding the following provisions:
 
Unused Fee.  Borrower shall pay a fee to Bank equal to 0.40% per annum (40 basis
points) on the undrawn balance of the Credit Facility. The fee shall be billed
with the interest and shall be due and payable monthly at the time the interest
is due and payable.
 
Annual Fee.  Borrower shall pay an annual fee to Bank equal to 0.50% (50 basis
points) which shall be due and payable on the date hereof and on October 12,
2010.
 
 Late Charges.  Borrower agrees to pay, upon demand by Bank or if demand is not
sooner made, on maturity of this Note, whether such maturity occurs by
acceleration or on the Maturity Date, for each payment past due for fifteen (15)
or more calendar days, a late charge in an amount equal to the lesser of  (1)
five percent (5%) of the amount of the payment past due or (2) the maximum
percentage of the payment past due permitted by applicable law, or the maximum
amount if not expressed as a percentage. 
 
4. The financial reporting requirements set forth in the Business Loan Agreement
(Asset Based) is changed to the following:
 
Financial Statements.  Furnish Lender with the following:
 
Annual Statements. As soon as available, but in no event later than ninety (90)
days after the end of each fiscal year, Borrower shall provide an annual budget
for the upcoming calendar year, together with a consolidated and consolidating
balance sheet, statement of income and retained earnings for the period then
ended and a statement of changes in the financial position of Borrower, all
prepared in accordance with GAAP consistently applied. The financial statements
shall be audited by an independent certified accountant satisfactory to the
Bank.

 
6

--------------------------------------------------------------------------------

 

Quarterly Reports. As soon as available, but in no event later than 45 days
after the end of each calendar quarter, Borrower shall provide a balance sheet,
statement of income and retained earnings, a borrowing base report, accounts
payable report and an accounts receivable with aging and inventory report for
the period then ended and a statement of changes in financial position, all in
reasonable detail, and all prepared in accordance with GAAP consistently applied
and certified as true and correct by the chief financial officer or Borrower of
other officer approved by Bank.
 
Monthly Reports.  As soon as available, but in no event later than 20 days after
the end of each calendar month, Borrower shall provide a Borrowing Base report,
accounts receivable with aging and summary inventory report for the period then
ended, together with a foreign receivables report showing the Accounts that are
insured through a Credit Insurance Policy acceptable to Bank.
 
Additional Information. Furnish such additional information and statements, as
Lender may request from time to time.
 
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.
 
5. The financial covenants set forth in the Business Loan Agreement (Asset
Based) are changed to the following:
 
Financial Covenants and Ratios. Comply with the following covenants and ratios:
 
Borrower to maintain a ratio of Maximum Debt to Tangible Net Worth of less than
2.00 to 1.00, defined as the ratio of Total Liabilities [Total Debt] to Tangible
Net Worth. The ratio shall be measured quarterly beginning September 30, 2009.
 
Tangible Net Worth is defined as the total of Equity less (a) Intangibles, (b)
deferred charges, (c) leasehold improvements and (d) in certain circumstances,
loans, receivable from and investment in related parties. deferred taxes,
doubtful accounts not provided for, pre-paid expenses, etc.
 
Intangible means any asset lacking physical substance or value.
 
Borrower to maintain a ratio of Maximum Funded Debt to EBITDA of less than 3.25
to 1.00, defined as the ratio of Funded Debt to EBITDA. The ratio shall be
measured quarterly beginning September 30, 2009
 
Funded Debt is defined as the total of (a) all obligations for borrowed money
which bears interest or to which interest is imputed, (b) all obligations for
the deferred payment of the purchase of property, (c) all capital lease
obligations, (d) all indebtedness secured by purchase money security interests
(e) the amount of any contingent liabilities such as guarantees or other
financial assistance provided in respect of liabilities of a third party. The
term Funded Debt excludes Subordinated Debt and Borrower’s indebtedness under
that certain Promissory Note dated as of November 1, 2008 in the original
principal amount of $4,000,000.00 payable to the Pinellas County Economic
Development Authority.
 
EBITDA is defined as the total of (a) net income from continuing operations
(excluding extraordinary gains or losses), and to the extent deducted in
determining net income, (b) interest expense, (c) income taxes (d) depreciation,
depletion and/or amortization expenses.
 
Borrower to maintain a ratio of Minimum Debt Service Coverage of 1.50 to 1.00,
defined as the ratio of (a) EBITDA to the total of (b) Interest Expense plus
scheduled principal payments in respect of Funded Debt. The ratio shall be
measured quarterly on a rolling four quarter basis, beginning September 30,
2009.

 
7

--------------------------------------------------------------------------------

 

Except as provided above, all computations made to determine compliance with the
requirements contained in this paragraph shall be made in accordance with GAAP,
applied on a consistent basis, and certified by Borrower as being true and
correct.
 
6. The negative covenants set forth in the Business Loan Agreement (Asset Based)
are supplemented by adding the following:
 
Change in Management. Borrower shall not permit a material change in its senior
management as identified in its 10-K Annual Report for the calendar year ending
December 31, 2008.
 
7. The definitions of “Borrowing Base” and “Note” set forth in the Business Loan
Agreement (Asset Based) are changed to read as follows:
 
Borrowing Base. The words "Borrowing Base" means the lesser of (1) $8,000,000.00
or (2) the sum of (a) 80% of good effective assigned unencumbered trade accounts
receivable, plus (b) 85% advance against eligible foreign Accounts Receivable
that are insured by a Credit Insurance Policy acceptable to the Bank, Plus (c)
50% of the less or cost or current market value of saleable inventory and raw
materials Inventory advances shall be limited to 50% of the total line amount.,
plus (d) 95% of assigned cash held in a deposit instrument at Bank, with a
proper collateral hold.
 
Note. The word "Note" means the Renewal Note dated as of October 12, 2009 in the
principal amount of $8,000,000.00 from Borrower to Lender and any other Note
from Borrower to Lender pursuant to which future advances intended to be secured
by this Agreement are made, together with all present and future obligations
evidenced thereby and secured by this Agreement and together with all renewals,
extensions, modifications, refinancings, and substitutions for the Note.
 
8. Any reference to a negative pledge relating to the commercial property
located at 5115 Ulmerton Road, Clearwater, Florida is hereby deleted.
 
9.  Borrower’s General Intangibles are hereby released as Collateral for the
Note and all references to General Intangibles in the Commercial Security
Agreement are deleted.
 

 

 
8

--------------------------------------------------------------------------------