Exhibit 10.38

 

FOURTH LOAN MODIFICATION AGREEMENT

 

This Fourth Loan Modification Agreement is entered into as of February 28, 2002,
by and between Novoste Corporation (“Borrower”) and Silicon Valley Bank
(“Bank”).

 

1.    DESCRIPTION OF EXISTING INDEBTEDNESS: Among other Indebtedness which may
be owing by Borrower to Bank, Borrower may become indebted to Bank pursuant to,
among other documents, a Loan and Security Agreement, dated August 1, 2001, as
amended July 30, 2002, as further amended August 27, 2002, as further amended
November 25, 2002, and as may be further amended from time to time, (the “Loan
Agreement”). The Loan Agreement provides for, among other things, a Committed
Revolving Line in the amount of Ten Million Dollars ($10,000,000). Defined terms
used but not otherwise defined herein shall have the same meanings as in the
Loan Agreement.

 

Hereinafter all indebtedness owing by Borrower to Bank shall be referred to as
the “Indebtedness.”

 

2.    DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the Indebtedness is
secured by the Collateral as described in the Loan Agreement.

 

Hereinafter, the above-described security documents and guaranties, together
with all other documents securing repayment of the Indebtedness shall be
referred to as the “Security Documents”. Hereinafter, the Security Documents,
together with all other documents evidencing or securing the Indebtedness shall
be referred to as the “ Existing Loan Documents”.

 

3.    DESCRIPTION OF CHANGE IN TERMS.

 

  A.   Borrower is currently in violation of the covenant set forth in Section
6.7(ii) of the Loan Agreement by failing to maintain a Tangible Net Worth of at
least $55,000,000. Bank hereby waives Borrower’s compliance with such covenant
through and including the month ending February 28, 2003. Bank’s agreement to
waive the above listed covenant through February 28, 2003 (1) shall in no way be
deemed an agreement by the Bank to waive the Borrower’s future compliance with
the above-described covenant, as may be amended from time to time; (2) shall
neither limit not impair the Bank’s right to demand performance of this covenant
in the future; and (3) shall neither limit nor impair the Bank’s right to demand
performance of all other covenants as of any date.

 

  B.   Section 2.3(a) of the Loan Agreement is hereby amended by deleting the
first two sentences of such Section and replacing them with the following:

 

“Advances accrue interest on the outstanding principal balance at a per annum
rate of 1 percentage point above the greater of (i) Prime Rate or (ii) 4.25%. As
such time as Borrower achieves 3 consecutive months of Profitability, the
interest rate shall be decreased to a rate equal to the greater of (i) Prime
Rate or (ii) 4.25%.”

 

  C.   Section 6.7(ii) of the Loan Agreement is hereby amended to read as
follows:

 

“(ii) Tangible Net Worth. A Tangible Net Worth of at least $48,000,000 plus 25%
of the proceeds from any stock offering.”

 

  D.   The terms “ Borrowing Base” and “ Revolving Maturity Date”, as defined in
Section 13.1 of the Loan Agreement are hereby amended to read as follows:

 

“Borrowing Base” is 75% of Eligible Accounts as determined by Bank from
Borrower’s most recent Borrowing Base Certificate; provided, however, that Bank
may lower or increase the percentage of the Borrowing Base after performing an
audit of Borrower’s Collateral.

 

“Revolving Maturity Date” is February 27, 2004.

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  E.   Borrower’s Borrowing Base Certificate is hereby amended as set forth in
Exhibit “A” hereto and Borrower’s Compliance Certificate if hereby amended as
set forth in Exhibit “B”, hereto.

 

4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.

 

5. PAYMENT OF LOAN AND DOCUMENTATION FEES. Borrower shall pay Bank a Loan Fee of
Thirty Thousand Five Hundred Dollars ($30,000.00) and a Legal Documentation Fee
in the amount of Five Hundred Twenty Dollars ($520.00), plus all out-of-pocket
expenses.

 

6. NO DEFENSES OF BORROWER. Borrower agrees that, as of the date hereof, it has
no defenses against the obligations to pay any amounts under the indebtedness.

 

7. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing Indebtedness, Bank is relying upon Borrower’s representations,
warranties, and agreements, as set forth in the Existing Loan Documents. Except
as expressly modified pursuant to this Loan Modification Agreement, the terms of
the Existing Loan Documents remain unchanged and in full force and effect.
Bank’s agreement to modifications to the existing Indebtedness pursuant to this
Loan Modification Agreement in no way shall obligate Bank to make any future
modifications to the Indebtedness. Nothing in this Loan Modification Agreement
shall constitute a satisfaction of the Indebtedness. It is the intention of Bank
and Borrower to retain as liable parties all makers and endorsers of Existing
Loan Documents, unless the party is expressly released by Bank in writing. No
maker, endorser, or guarantor will be released by virtue of this Loan
Modification Agreement. The terms of this paragraph apply not only to this Loan
Modification Agreement, but also to all subsequent loan modification agreements.

 

8. CONDITIONS. The effectiveness of this Loan Modification Agreement is
conditioned upon the following:

 

  A.   Bank’s receipt of this Fourth Loan Modification duly executed by the
Borrower; and

  B.   Bank’s receipt of payment of the Loan and Legal Documentation Fees.

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This Loan Modification Agreement is executed as of the date first written above.

 

BORROWER:

     

BANK:

         

NOVOSTE CORPORATION

     

SILICON VALLEY BANK

By:

 

/s/    ALFRED NOVAK

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By:

 

/s/    ALAN P. SPURGUN

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Name:

 

Alfred Novak

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Name:

 

Alan P. Spurgun

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Title:

 

CEO & President

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Title

 

SVP

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EXHIBIT “B”

COMPLIANCE CERTIFICATE

 

TO:

     

SILICON VALLEY BANK

3003 Tasman Drive

Santa Clara, CA 95054

FROM:

     

NOVOSTE CORPORATION

 

The undersigned authorized officer of Novoste Corporation (“Borrower”) certifies
that under the terms and conditions of the Loan and Security Agreement between
Borrower and Bank (the “Agreement”), (i) Borrower is in complete compliance for
the period ending                          with all required covenants except as
noted below and (ii) all representations and warranties in the Agreement are
true and correct in all material respects on this date. Attached are the
required documents supporting the certification. The Officer certifies that
these are prepared in accordance with Generally Accepted Accounting Principles
(GAAP) consistently applied from one period to the next except as explained in
an accompanying letter or footnotes. The Officer acknowledges that no borrowings
may be requested at any time or date of determination that Borrower is not in
compliance with any of the terms of the Agreement, and that compliance is
determined not just at the date this certificate is delivered.

 

Please indicate compliance status by circling Yes/No under “Complies” column.

 

Reporting Covenant

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Required

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Complies

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Interim financial statements

  

Monthly within 30 days

  

Yes        No

Compliance Certificate

  

Monthly w/in 30 days and Quarterly w/in 45 days

  

Yes        No

Annual (Audited)

  

FYE within 90 days

  

Yes        No

A/R Agings + BBC*

  

Monthly within 20 days

  

Yes        No

10-Q, 10-K

  

Within 5 days of filing with the SEC

  

Yes        No

*when Advances are outstanding

         

 

Financial Covenant

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Required

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Actual

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Complies

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Maintain on a Monthly Basis:

                    

Minimum Quick Ratio

    

1.75:1.00

    

            :1.00

    

Yes        No

Minimum Tangible Net Worth

    

$48,000,000**

    

($                )

    

Yes        No

**plus 25% of the proceeds from any stock offering

                             

Have there been updates to Borrower’s intellectual property, if appropriate?        

           

Yes        No

 

Borrower has deposit accounts only at the following
institutions:                                      
                                                                       

 

Comments Regarding Exceptions: See Attached.

 

           

BANK USE ONLY

Sincerely,

                   

Received by:

 

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AUTHORIZED SIGNER

NOVOSTE CORPORATION

                   

Date:

 

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/s/    ALFRED NOVAK

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SIGNATURE

     

Verified:

 

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AUTHORIZED SIGNER

            CEO & President

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TITLE

     

Date:

 

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            03-04-03

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Compliance Status:

 

Yes        No

DATE

           

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SILICON VALLEY BANK

 

PRO FORMA INVOICE FOR LOAN CHARGES

 

BORROWER:

  

NOVOSTE CORPORATION

                    

LOAN OFFICER:

  

Angela Hart

                    

DATE:

  

February 27, 2003

                         

Bank Fees:

           

Loan Fee

  

$

30,000.00

                  

Outside Counsel Fees:

           

Documentation Fee

  

$

520.00

                  

TOTAL FEE DUE

  

$

30,520.00

         

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Please indicate the method of payment:

 

{    } A check for the total amount is attached.

 

{    } Debit DDA #                                  for the total amount.

 

{    } Loan proceeds

 

/s/    ALFRED NOVAK        

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03-04-03

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Borrower

     

(Date)

         

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Silicon Valley Bank

     

(Date)

Account Officer’s Signature

                 

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LOAN PAYMENT/ADVANCE REQUEST FORM

 

DEADLINE FOR SAME DAY PROCESSING IS 3:00 E.S.T

 

Fax To:        404-495-4500

 

Date:                                                              

 

NOVOSTE CORPORATION.

(Client Name/Borrower)

 

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¨    LOAN PAYMENT:

 

From Account #:                                         
                            

                                         (Deposit Account Number)

 

Principal $                                                       and/or
Interest $                                                                      

 

ALL BORROWER’S REPRESENTATION AND WARRANTIES IN THE LOAN AND SECURITY AGREEMENT
ARE TRUE, CORRECT AND COMPLETE IN ALL MATERIAL RESPECTS TO ON THE DATE OF THE
TELEPHONE TRANSFER REQUEST FOR AND ADVANCE, BUT THOSE REPRESENTATIONS AND
WARRANTIES EXPRESSLY REFERRING TO ANOTHER DATE SHALL BE TRUE, CORRECT AND
COMPLETE IN ALL MATERIAL RESPECTS AS OF THE DATE:

 

Authorized Signature:                                         
                                             Phone Number:
                                                                 

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¨   LOAN ADVANCE:

     COMPLETE OUTGOING WIRE REQUEST SECTION BELOW IF ALL OR A PORTION OF THE
FUNDS FROM THIS LOAN ADVANCE ARE FOR AN OUTGOING WIRE.

 

From Account #:                                                              

    

To Account #:                                                                 

(Loan Account Number)

    

(Deposit Account Number)

 

Amount of Advance $                                

ALL BORROWER’S REPRESENTATION AND WARRANTIES IN THE LOAN AND SECURITY AGREEMENT
ARE TRUE, CORRECT AND COMPLETE IN ALL MATERIAL RESPECTS TO ON THE DATE OF THE
TELEPHONE TRANSFER REQUEST FOR AND ADVANCE, BUT THOSE REPRESENTATIONS AND
WARRANTIES EXPRESSLY REFERRING TO ANOTHER DATE SHALL BE TRUE, CORRECT AND
COMPLETE IN ALL MATERIAL RESPECTS AS OF THE DATE:

 

Authorized Signature:                                         
                                           Phone Number:
                                                         

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x       OUTGOING WIRE REQUEST:

 

Beneficiary Name:  McKenna Long & Aldridge LLP

  

Amount of Wire:  $520.00

Beneficiary Bank:  SunTrust Bank

  

Account Number:  8800918057

City and State:  Atlanta, GA

    

Beneficiary Bank Transit (ABA)#: 061000104

    

Special Instruction:  Notify Lisa Stipancic (404) 527-8366. Invoice #09875.0041
for Novoste.

 

BY SIGNING BELOW, I (WE) ACKNOWLEDGE AND AGREE THAT MY (OUR) FUNDS TRANSFER
REQUEST SHALL BE PROCESSED IN ACCORDANCE WITH AND SUBJECT TO THE TERMS AND
CONDITIONS SET FORTH IN THE AGREEMENTS(S) COVERING FUNDS TRANSFER SERVICE(S),
WHICH AGREEMENTS(S) WERE PREVIOUSLY RECEIVED AND EXECUTED BY ME (US).

 

Authorized Signature:  /s/ ALFRED NOVAK                                 

 

2nd Signature (If Required):                                         
            

Print Name/Title:  Alfred Novak CEO & President                

 

Print Name/Title:                                      
                                    

Telephone #  770-717-6096                                    
                    

 

Telephone #                                        
                                           

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