BACKGROUND

THIS THIRD AMENDMENT  TO  CREDIT  DOCUMENTS (this “Amendment”) is made effective as of March 31, 2013, by and between BOVIE MEDICAL CORPORATION, a Delaware corporation (the “Company”), and PNC BANK, NATIONAL ASSOCIATION(the “Bank”).

A.           The Company has executed  and delivered  to  the Bank  (or a predecessor which is now known by the Bank’s name as set forth above), one or more promissory notes, letter agreements, loan agreements, security agreements, mortgages, pledge agreements, collateral assignments, and other agreements, instruments, certificates and documents, some or all of which are more fully described on attached Exhibit A, which is made a part of this Amendment (collectively as amended from time to time, the “Credit Documents”) which evidence or secure some or all of the Company’s obligations to the Bank for one or more loans or other extensions of credit (the “Obligations”).

B.           The Company and the Bank desire to amend certain of the Credit Documents as provided for in this Amendment.

NOW, THEREFORE, in consideration of the mutual covenants herein contained and intending to be legally bound hereby, the parties hereto agree as follows:

1.           Certain of  the Credit  Documents are amended as set forth in Exhibit A.   Any and all references to any Loan Document in any other Loan Document shall be deemed to refer to such Loan Document as amended by this Amendment.  This Amendment is deemed incorporated into each of the Credit Documents. Any initially capitalized terms used in this Amendment without definition shall have the meanings assigned to those terms in the Credit Documents.  To the extent that any term or provision of this Amendment is or may be inconsistent with any term or provision in any Loan Document, the terms and provisions of this Amendment shall control.

2.           The Company  hereby  certifies that: (a) all of its representations and warranties in the Credit Documents, as amended by this Amendment, are, except as may otherwise be stated in this Amendment: (i) true and correct as of the date of this Amendment, (ii) ratified and confirmed without condition as if made anew, and (iii) incorporated into this Amendment by reference, (b) no Event of Default or event which, with the passage of time or the giving of notice or both, would constitute an Event of Default, exists under any Loan Document which will not be cured by the execution and effectiveness of this Amendment, (c) no consent, approval, order or authorization of, or registration or filing with, any third party is required in connection with the execution, delivery and carrying out of this Amendment or, if required, has been obtained, and (d) this Amendment has been duly authorized, executed and delivered so that it constitutes the legal, valid and binding obligation of the Company, enforceable in accordance with its terms.  The Company confirms that the Obligations remain outstanding without defense, set off, counterclaim, discount or charge of any kind as of the date of this Amendment.

3.           The  Company  hereby confirms that  any collateral for  the Obligations,  including liens,  security interests, mortgages,  and pledges granted by the Company or third parties (if applicable), shall continue unimpaired and in full force and effect, and shall cover and secure all of the Company’s existing and future Obligations to the Bank, as modified by this Amendment.

4.           As a condition precedent to the effectiveness of this Amendment, the Company shall comply with the terms and conditions (if any) specified in Exhibit A.

5.           To induce the Bank to enter into this Amendment, the Company waives and releases and forever discharges the Bank and its officers, directors, attorneys, agents, and employees from any liability, damage, claim, loss or expense of any kind that it may have against the Bank or any of them arising out of or relating to the Obligations.  The Company further agrees to indemnify and hold the Bank and its officers, directors, attorneys, agents and employees harmless from any loss, damage, judgment, liability or expense (including attorneys’ fees) suffered by or rendered against the Bank or any of them on account of any claims arising out of or relating to the Obligations.  The Company further states that it has carefully read the foregoing release and indemnity, knows the contents thereof and grants the same as its own free act and deed.

 

 

7.           This  Amendment  will be binding  upon  and  inure  to  the  benefit  of  the Company and the Bank and their respective heirs, executors, administrators, successors and assigns.

8.           This Amendment has been delivered to and accepted by the Bank and will be deemed to be made in the State where the Bank’s office indicated in the Credit Documents is located.  This Amendment will be interpreted and the rights and liabilities of the parties hereto determined in accordance with the laws of the State where the Bank’s office indicated in the Credit Documents is located, excluding its conflict of laws rules.

9.           Except as amended hereby,  the terms and provisions of the Credit Documents remain unchanged,  are and shall remain in full force and effect unless and until modified or amended in writing in accordance with their terms, and are hereby ratified and confirmed.  Except as expressly provided herein, this Amendment shall not constitute an amendment, waiver, consent or release with respect to any provision of any Loan Document, a waiver of any default or Event of Default under any Loan Document, or a waiver or release of any of the Bank’s rights and remedies (all of which are hereby reserved).  The Company expressly ratifies and confirms and waiver of jury trial provisions contained in the Credit Documents.

[REMAINDER OF PAGE LEFT BLANK]

WITNESS the due execution of this Amendment this 18th day of April, 2013 and effective as of the date first written above.

Signed and delivered	COMPANY:
in the presence of:
	BOVIE MEDICAL CORPORATION, a Delaware
	corporation

___________________________________________	By:   /s/ Gary Pickett
Print Name:__________________________________	Name:   Gary Pickett
	Title:   Chief Financial Officer
___________________________________________
Print Name:__________________________________

	BANK:
	PNC BANK, NATIONAL ASSOCIATION

	By:   /s/ Eric Vogt
	Eric Vogt
	Senior Vice President

A.	The “Credit Documents” that are the subject of this Amendment include the following (as any of the foregoing have previously been amended, modified or otherwise supplemented):

1.

Credit Agreement dated as of October 31, 2011 between the Company and the Bank related to $4,000,000 Pinellas County Industrial Development Authority Industrial Development Revenue Bonds (Bovie Medical Corporation Project) Series 2008, as amended by Amendment to Credit Documents dated as of April 7, 2012 and Second Amendment to Credit Documents dated as of October 18, 2012 (as amended, the “Credit Agreement”)

2.

Mortgage and Security Agreement dated October 31, 2011 executed by the Company in favor of the Bank and recorded November 4, 2011 in O.R. Book 17400, page 529, Public Records of Pinellas County, Florida

3.

Assignment of Rents, Leases and Profits dated October 31, 2011 executed by the Company in favor of the Bank and recorded November 4, 2011 in O.R. Book 17400, Page 547, Public Records of Pinellas County, Florida

4.

UCC-1 Financing Statement showing the Company as Debtor and the Bank as Secured Party, recorded November 4, 2011 in O.R. Book 17400, Page 556, Public Records of Pinellas County, Florida

5.

Security Agreement (Bond Swap) dated as of October 31, 2011 executed by the Company in favor of the Bank (the “Security Agreement”)

6.

All other documents, instruments, agreements, and certificates executed and delivered in connection with the Credit Documents listed in this Section A.

B.           The Credit Documents are amended as follows:

1.

Section 5.8 is hereby added to the Credit Agreement, as follows:

"5.8

Restriction Against Dividends.  The Company will not declare or pay any dividends on or make any distribution with respect to any class of its equity, or purchase, redeem, retire or otherwise acquire any of its equity, without the prior written consent of the Bank."

2.

Section 6 of the Credit Agreement is hereby deleted in its entirety as of March 31, 2013, and the following is substituted in lieu thereof:

"6.           FINANCIAL COVENANTS.  The Company covenants and agrees that so long as the Bank owns the Bonds:

6.1           Fixed Charge Coverage Ratio.  The Company will maintain a minimum Fixed Charge Coverage Ratio of at least the following as of the end of the following periods:  (a) 1.25:1.0 for the three months ending March 31, 2014; (b) 1.25:1.0 for the six months ending June 30, 2014; (c) 1.25:1.0 for the nine months ending September 30, 2014; and (d) 1.25:1.0 for the twelve months ending December 31, 2014 and for the last twelve months ending as of the end of each fiscal quarter thereafter.

 

6.2           Total Liabilities to Tangible Net Worth.  The Company will maintain at all times a ratio of total liabilities to Tangible Net Worth of less than 0.75:1.0, tested quarterly, as of the end of each fiscal quarter, commencing with the fiscal quarter ending December 31, 2011, and certified to the Bank within fifty (50) days after the end of the fiscal quarter.

6.3           Liquidity.  The company will maintain at all times minimum Liquidity of at least $1,250,000.00, tested monthly, as at the end of each month, commencing with the month of April, 2013.

6.4           Adjusted EBITDA.  The Company will maintain a minimum Adjusted EBITDA in at least the following amounts, for the following periods:  (a) ($525,000.00) for the three months ending March 31, 2013; (b) ($1,100,000.00) for the six months ending June 30, 2013; (c) ($1,400,000.00) for the nine months ending September 30, 2013; and (d) ($1,400,000.00) for the twelve months ending December 31, 2013."

3.

The definition of the term “EBITDA” contained in the Section 8 of the Credit Agreement is hereby deleted in its entirety.

4.

The definition of the term “Fixed Charge Coverage Ratio” contained in the Section 8 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“Fixed Charge Coverage Ratio” means (i) Adjusted EBITDA, divided by (ii) the sum of Current Maturities plus interest expense plus cash taxes paid plus dividends plus Unfunded Capital Expenditures.

5.

The following definitions are hereby added to Section 8, in the proper alphabetical order, as follows:

“Adjusted EBITDA” means net income, adjusted for non-cash and non-recurring income and expense items related to stock-based compensation, asset disposition, asset impairment, changes in fair value of liabilities and any other non-cash and/or non-recurring item that is deemed acceptable by the Bank in its sole discretion based on its sole interpretation of the specific circumstances surrounding an expense or income item being considered as an adjustment to EBITDA, plus interest expense plus income tax expense plus depreciation plus amortization.

“Liquidity” means cash less borrowings under the revolving line of credit loan extended to the Company by the Bank.

C.	Conditions to Effectiveness of Amendment: The Bank’s willingness to agree to the amendments set forth in this Amendment is subject to the prior satisfaction of the following conditions:

1.

Execution by all parties and delivery to the Bank of this Amendment.

2.

Reimbursement by the Company to the Bank of the fees and expenses of the Bank's outside and in-house counsel in connection with this Amendment.

D.

Post-Closing Conditions:  Within sixty (60) days after the execution of this Amendment, the Bank must receive a field exam and an updated appraisal, each of which shall be ordered by the Bank and paid for by the Borrower.  The results of such field exam and appraisal must be satisfactory to the Bank in its sole and absolute discretion.