Fourth Loan Modification Agreement



 
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. 








	 	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. 








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

	 BORROWER:
	 	 	 	 BANK:

	 	 	 	 	 
	 NOVOSTE CORPORATION
	 	 	 	 SILICON VALLEY
BANK

	
	 By:
	 	 /s/    ALFRED NOVAK

	 	 	 	 By:
	 	 /s/    ALAN P. SPURGUN


	 Name:
	 	 Alfred Novak

	 	 	 	 Name:
	 	 Alan P. Spurgun


	 Title:
	 	 CEO & President

	 	 	 	 Title
	 	 SVP










 
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

	  	 Required

	  	 Complies


	 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

	    	 Required

	    	 Actual

	    	 Complies


	 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:
	 	

	 	 	 	 	 	 	 AUTHORIZED SIGNER

	 NOVOSTE CORPORATION
	 	 	 	 	 	 
	 	 	 	 	 Date:
	 	

	 /s/    ALFRED NOVAK

	 	 	 	 	 	 
	 SIGNATURE
	 	 	 	 Verified:
	 	

	 	 	 	 	 	 	 AUTHORIZED SIGNER

	             CEO &
President

	 	 	 	 	 	 
	 TITLE
	 	 	 	 Date:
	 	

	 	 	 	 	 	 	 
	             03-04-03

	 	 	 	 Compliance Status:
	 	 Yes        No

	 DATE
	 	 	 	 	 	 








 
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

	 	  	 	  	
	


 
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        

	 	 	 	 03-04-03


	 Borrower
	 	 	 	 (Date)

	 	 	 	 	 
	
	 	 	 	

	 Silicon Valley Bank
	 	 	 	 (Date)

	 Account Officer’s Signature
	 	 	 	 
	 	 	 	 	 








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) 
 

 ̈    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:
                                        
                         

 

 

	 ̈	 	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:
                                        
                 

 

 

	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                                    
                    
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