exv10w7



 







Exhibit 10.7




FIRST AMENDMENT TO TERM LOAN AGREEMENT



AND ADDENDUM AND REVOLVING CREDIT AGREEMENT



AND ADDENDUM




     This First Amendment to Term Loan Agreement and Addendum and Revolving Credit Agreement and
Addendum, dated as of May 26, 2006, (the “Amendment”), between Rochester Medical Corporation, a
Minnesota corporation (the “Borrower”), and U.S. BANK NATIONAL ASSOCIATION, a national banking
association (the “Bank”).



RECITALS:




     A. The Borrower and the Bank are parties to that certain Term Loan Agreement dated May 26,
2006 (“the Term Loan Agreement”) and Addendum to Term Loan Agreement dated May 26, 2006 (“the Term
Loan Addendum”).



     B. The Borrower and the Bank are parties to that certain Revolving Credit Agreement dated May
26, 2006 (“Revolving Credit Agreement”) and Addendum to Revolving Credit Agreement dated May 26,
2006 (“the Revolving Credit Addendum”)



     C. The Borrower and Bank have further agreed to amend certain sections of the Term Loan
Agreement, Term Loan Addendum, Revolving Credit Agreement and Revolving Credit Agreement
(collectively the “Original Agreements”).



     NOW, THEREFORE, the parties agree as follows:



     1. Defined Terms. All capitalized terms used in this Amendment shall, except where
the context otherwise requires, have the meanings set forth, in the Original Agreements as amended
hereby.



     2. Amendments. The Original Agreements are amended as follows:




	 	(a)	 	Article II of the Term Loan Agreement is amended by adding the
following Covenant:
	 
	 	 	 	2.15 Restriction on Real Property Liens. The Borrower will not create,
incur, assume or permit to exist any mortgage, pledge, encumbrance or other
lien or other levy upon or security interest in any of Borrower’s real
property now owned, except (i) taxes and assessments which are either not
delinquent or which are being contested in good faith with adequate reserves
provided; (ii) easements, restrictions and minor title irregularities which
do not, as a practical matter, have an adverse effect upon the ownership and
use of the affected property, A description of the real property subject to
this covenant is attached hereto as Exhibit “A” and made a part hereof.
Borrower further agrees to execute an agreement in recordable form so
acknowledging the restriction on further liens on the property described
herein. The restriction shall last during the term of any loan made
pursuant to the Original Agreements.




 









 






	 	(b)	 	Article II of the Revolving Credit Agreement is amended by
adding the following Covenant:
	 
	 	 	 	Section 2.16 Restriction on Real Property Liens. The Borrower will not
create, incur, assume or permit to exist any mortgage, pledge, encumbrance
or other lien or other levy upon or security interest in any of Borrower’s
real property now owned, except (i) taxes and assessments which are either
not delinquent or which are being contested in good faith with adequate
reserves provided; (ii) easements, restrictions and minor title
irregularities which do not, as a practical matter, have an adverse effect
upon the ownership and use of the affected property, A description of the
real property subject to this covenant is attached hereto as Exhibit “A” and
made a part hereof. Borrower further agrees to execute an agreement in
recordable form so acknowledging the restriction on further liens on the
property described herein. The restriction shall last during the term of
any loan made pursuant to the Original Agreements.
	 
	 	(c)	 	The definition of EBITDAR appearing in the Term Loan Addendum
and Revolving Credit Addendum is amended to read as follows:
	 
	 	 	 	“EBITDAR” shall mean net income, plus interest expense, plus income tax
expense, plus depreciation expense, plus amortization expense, plus rent or
lease expense, plus non cash share-based compensation deducted in accordance
with SFAS 123.”
	 
	 	(d)	 	The Fixed Charge Coverage Ratio in the covenant to Term Loan
Addendum and Revolving Credit Addendum is amended to read as follows:
	 
	 	 	 	“Fixed Charge Coverage Ratio. As of the end of each fiscal quarter for the
fiscal quarter then ended of at least 1.3 to 1. The first measurement of
the Fixed Charge Coverage Ratio will be December 31, 2006. The test will be
using the monthly operating information from July 1, 2006 to the measurement
date. The next measurement will use the monthly operating information from
the date of the Original Agreements to March 31, 2007. The next measurement
and all measurements thereafter will use twelve (12) months of operating
information on a trailing twelve month basis.”
	 
	 	(e)	 	The Net Working Capital covenant in the Term Loan Addendum and
Revolving Credit Addendum, is amended to read as follows:
	 
	 	 	 	“Net Working Capital. As of the end of each fiscal quarter commencing
December 31, 2006, and quarterly thereafter in the amount of at least
$8,000,000.00.”




2









 











     3. Conditions to Effectiveness. This Amendment shall become effective on the date
(the “Effective Date”) when, and only when, the Bank shall have received:




	 	(a)	 	Counterparts of this Amendment executed by the Borrower;
	 
	 	(b)	 	A copy of the corporate resolution of the Borrower authorizing
the execution, delivery and performance of this Amendment certified by the
Secretary or an Assistant Secretary of the Borrower;
	 
	 	(c)	 	An incumbency certificate showing the names and titles and
bearing the signatures of the officers of the Borrower and Subsidiary
authorized to execute this Amendment certified by the Secretary or an Assistant
Secretary of such Loan Party;
	 
	 	(d)	 	A certificate of good standing for the Borrower in the
jurisdiction of its incorporation certified by the appropriate governmental
officials as of a date not more than 30 days prior to the date of this
Amendment;
	 
	 	(e)	 	Such other documents, certificates or other items as the Bank
may reasonably request.





     4. Representations and Warranties. To induce the Bank to enter into this Amendment,
the Borrower represents and warrants to the Bank as follows:




	 	(a)	 	The execution, delivery and performance by the Borrower of this
Amendment, and any other documents required to be executed and/or delivered by
the Borrower by the terms of this Amendment have been duly authorized by all
necessary corporate action do not require any approval or consent of, or any
registration, qualification or filing with, any government agency or authority
or any approval or consent of any other person (including, without limitation,
any stockholder), do not and will not conflict with, result in any violation of
or constitute any default under, any provision of the Borrower’s articles of
incorporation or bylaws, any agreement binding on or applicable to the Borrower
or any of its property, or any law or governmental regulation or court decree
or order binding upon or applicable to the Borrower or of any of its property
and will not result in the creation or imposition of any security interest or
other lien or encumbrance in or on any of its property pursuant to the
provisions of any agreement applicable to the Borrower or any of its property;





     5. Costs, Expenses and Taxes. The Borrower agrees to pay on demand all costs and
expenses of the Bank in connection with the preparation, reproduction, execution and delivery of
this Amendment and the other documents to be delivered hereunder or thereunder, including the
Bank’s reasonable attorneys’ fees and legal expenses. In addition, the Borrower shall pay any and
all stamp and other taxes and fees payable or determined to be payable in connection with the
execution and delivery, filing or recording of this Amendment and the other instruments and
documents to be delivered hereunder, and the Borrower agrees to hold the Bank harmless from



3









 







and against any and all liabilities with respect to, or resulting from, any delay in the
Borrower’s paying or omission to pay, such taxes or fees.



     6. Governing Law. THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS AMENDMENT
SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT
OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES APPLICABLE TO
NATIONAL BANKS.



     7. Headings. Section headings in this Amendment are included herein for convenience
of reference only and shall not constitute a part of this Amendment for any other purpose.



     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by then
respective officers thereunto duly authorized as of the date first written above.



ROCHESTER MEDICAL CORPORATION




	 	 	 	 	 
	By

	 	/s/ Anthony J. Conway
 

Anthony J. Conway, President/CEO
	 	 
	 
	 	 	 	 
	By

	 	/s/ David A. Jonas
 

David A. Jonas, Financial Officer
	 	 






U.S. BANK, NATIONAL ASSOCIATION




	 	 	 	 	 
	By

	 	/s/ Bruce A. Gudlin
 

Bruce A. Gudlin, Vice President
	 	 







4