Document:

exv10w6

 

Exhibit 10.6

REVOLVING CREDIT AGREEMENT

     This Revolving Credit Agreement (the “Agreement” is made and entered into by and between
the undersigned borrower (the “Borrower) and the undersigned bank (the “Bank”) as of the date set
forth on the last page of this Agreement.

ARTICLE I. LOANS

     1.1 Revolving Credit Loans. From time to time prior to March 31, 2007 (the “Maturity Date”)
or the earlier termination hereof, the Borrower may borrow from the Bank for working capital
purposes up to the aggregate principal amount outstanding at any one time of the lesser of (i)
$2,000,000(the “Loan Amount”), less letters of credit Issued by the Bank, or (ii) if applicable,
the Borrowing Base (defined below). All revolving loans hereunder will be evidenced by a single
promissory note of the Borrower payable to the order of the Bank in the principal amount of the
Loan Amount (the “Note”). Although the Note will be expressed to be payable in the full Loan
Amount, the Borrower will be obligated to pay only the amounts actually disbursed hereunder,
together with accrued interest on the outstanding balance at the rates and on the dates specified
therein and such other charges provided for herein. In the event that the principal amount
outstanding under the Note exceeds the Borrowing Base at any time, the Borrower will immediately,
without request, prepay an amount sufficient to eliminate such excess.

     1.2 Borrowing Base. The Borrowing Base, if any, will be as set forth in an addendum to this
Agreement.

     1.3 Advances After Maturity or in Excess of Maximum Loan Amount. The Bank shall have no
obligation whatsoever, and the Bank has no present intention, to make any advance after the
Maturity Date or which would cause the principal amount outstanding under this Agreement to exceed
the maximum loan amount or any other imitations on advances stated in this Agreement.
Notwithstanding the foregoing, the Bank may from time to time, in its sole and absolute discretion,
agree to make an advance after the Maturity Date or which would cause the principal amount of
advances outstanding under this Agreement to exceed the maximum loan amount or any of the other
limitations on advances. The Borrower is and shall be and remain unconditionally liable to the
Bank for the amount of all advances, including, without limitation, advances in excess of the
maximum loan amount or any other limitation on advances and advances made after the Maturity Date.
Immediately upon the Bank’s demand, the Borrower shall pay to the Bank the amount of any advances
made after the Maturity Date or in excess of the maximum loan amount or any other limitation on
advances contained in this Agreement, together with interest on the principal amount of such excess
advances, for so long as such advances are outstanding, at the highest interest rate from time to
time in effect for such advances. Any such advances shall not be deemed an extension of this
Agreement nor an increase in the maximum loan amount available for borrowing under this Agreement.

     1.4 Advances and Paying Procedure. The Bank is authorized and directed to credit any of the
Borrower’s accounts with the Bank (or to the account the Borrower designates in writing) for all
loans made hereunder, and the Bank is authorized to debit such account or any other account of the
Borrower with the Bank for the amount of any principal, interest or expenses due under the Note or
other amount due hereunder on the due date with respect thereto. If, upon any request by the
Borrower to the Bank to issue a wire transfer, there is an inconsistency between the name of the
recipient of the wire and its identification number as specified by the Borrower, the Bank may,
without liability, transmit the payment via wire based solely upon the identification number.

     1.5 Closing Fee. The Borrower will pay the Bank a one-time closing fee of
$ n/a contemporaneously with execution of this Agreement. This fee is in
addition to all other fees, expenses and other amounts due hereunder,

     1.6 Loan Facility Fee. The Borrower will pay a loan facility fee equal to:

	 	o	 	$ n/a per annum, payable annually in advance; (or)

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	 	o	 	n/a % per annum of the Loan Amount, payable annually In
advance; (or)
	 
	 	o	 	n/a % per annum of the difference between the Loan Amount and
the actual daily unpaid principal amount of the Note outstanding from time to time,
payable quarterly, In arrears, on the last business day of each third calendar month,
and at maturity; (or)
	 
	 	o	 	n/a % per annum of the actual daily unpaid principal amount of
the Note outstanding from time to time, payable quarterly, in arrears, on the last
business day of each third calendar month, and at maturity.

The loan facility fee is payable for the entire period that this Agreement is in effect, regardless
of whether any amounts are outstanding hereunder at any given time.

     1.7 Expenses and Attorneys’ Fees. Upon demand, the Borrower will immediately reimburse the
Bank and any participant in the Obligations (defined below) (“Participant”) for all attorneys’ fees
and all other costs, fees and out-of-pocket disbursements incurred by the Bank or any Participant
in connection with the preparation, execution, delivery, administration, defense and enforcement of
this Agreement or any of the other Loan Documents (defined below), including attorneys’ fees and
all other costs and fees (a) incurred before or after commencement of litigation or at trial, on
appeal or in any other proceeding, (b) incurred In any bankruptcy proceeding and (c) related to any
waivers or amendments with respect thereto (examples of costs and fees Include but are not limited
to fees and costs for: filing, perfecting or confirming the priority of the Bank’s lien, title
searches or insurance, appraisals, environmental audits and other reviews related to the Borrower,
any collateral or the loans, if requested by the Bank). The Borrower will also reimburse the Bank
and any Participant for all costs of collection, including all attorneys’ fees, before and after
judgment, and the costs of preservation and/or liquidation of any collateral.

     1.8 Compensating Balances. The Borrower will maintain on deposit with the Bank in
non-interest bearing accounts average daily collected balances, in excess of that required to
support account activity and other credit facilities extended to the Borrower by the Bank, an
amount at least equal to the sum of (i) $ n/a and (ii)
n/a% of the Loan Amount as computed on a monthly basis. If the Borrower
fails to keep and maintain such balances, it will pay a deficiency fee, payable within five days
after receipt of a statement therefor calculated on the amount by which the Borrower’s average
daily balances are less than the requirements set forth above, computed at a rate equal to the rate
set forth in the Note.

     1.9 Conditions to Borrowing. The Bank will not be obligated to make (or continue to make)
advances hereunder unless (i) the Bank has received executed originals of the Note and all other
documents or agreements applicable to the loans described herein, including but not limited to the
documents specified in Article III (collectively with this Agreement the “Loan Document”), in form
and content satisfactory to the Bank; (ii) if the loan is secured, the Bank has received
confirmation satisfactory to it that the Bank has a properly perfected security interest, mortgage
or lien, with the proper priority; (iii) the Bank has received certified copies of the Borrower’s
governance documents and certification of entity status satisfactory to the Bank and all other
relevant documents; (iv) the Bank has received a certified copy of a resolution or authorization in
form and content satisfactory to the Bank authorizing the loan and all acts contemplated by this
Agreement and all related documents, and confirmation of proper authorization of all guaranties and
other acts of third parties contemplated hereunder, (v) if required by the Bank, the Bank has been
provided with an opinion of the Borrower’s counsel in form and content satisfactory to the Bank
confirming the matters outlined in Section 2.2 and such other matters as the Bank requests; (vi) no
default exists under this Agreement or under any other Loan Documents, or under any other
agreements by and between the Borrower and the Bank; and (vii) all proceedings taken in connection
with the transactions contemplated by this Agreement (including any required environmental
assessments), and all instruments, authorizations and other documents applicable thereto, are
satisfactory to the Bank and its counsel.

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ARTICLE II. WARRANTIES AND COVENANTS

     While any part of the credit granted to the Borrower under this Agreement or the other Loan
Documents is available or any obligations under any of the Loan Documents are unpaid or
outstanding, the Borrower continuously warrants and agrees as follows:

     2.1 Accuracy of Information. All information, certificates or statements given to the Bank
pursuant to this Agreement and the other Loan Documents will be true and complete when given.

     2.2 Organization and Authority; Litigation. This Agreement and the other Loan Documents are
the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in
accordance with their terms. The execution, delivery and performance of this Agreement and all
other Loan Documents to which the Borrower Is a party (i) are within the borrower’s power, (ii)
have been duly authorized by all appropriate entity action; (iii) do not require the approval of
any governmental agency; and (iv) will not violate any law, agreement or restriction by which the
Borrower is bound. If the Borrower is not an individual, the Borrower is validly existing and in
good standing under the laws of its state of organization, has all requisite power and authority
and possesses all licenses necessary to conduct its business and own its properties. There is no
litigation or administrative proceeding threatened or pending against the Borrower which would, if
adversely determined, have a material adverse effect on the Borrower’s financial condition or its
property.

     2.3 Existence; Business Activities; Assets; Change of Control. The Borrower will (i)
preserve its existence, rights and franchises; (i) not make any material change in the nature or
manner of its business activities; (iii) not liquidate, dissolve, acquire another entity or merge
or consolidate with or into another entity or change its form of organization; (iv) not amend its
organizational documents in any manner that may conflict with any term or condition of the Loan
Documents; and (v) not sell, lease, transfer or otherwise dispose of all or substantially all of
its assets. Other than the transfer to a trust beneficially controlled by the transferor, no event
shall occur which causes or results in a transfer of majority ownership of the Borrower while any
Obligations are outstanding or while the Bank has any obligation to provide funding to the
Borrower.

     2.4 Use of Proceeds; Margin Stock; Speculation. Advances by the Bank hereunder will be used
exclusively by the Borrower for working capital and other regular and valid purposes. The Borrower
will not, without the prior written consent of the Bank, redeem, purchase, or retire any of the
capital stock or declare or pay any dividends, or make any other payments or distributions of a
similar type or nature Including withdrawal distributions. The Borrower will not use any of the
loan proceeds to purchase or carry margin stock (as defined in Regulation U of the Board of
Governors of the Federal Reserve System). No part of any of the proceeds will be used for
speculative investment purposes, including, without limitation, speculating or hedging in the
commodities and/or futures market.

     2.5 Environmental Matters. Except as disclosed in a written schedule attached to this
Agreement (if no schedule is attached, there are no exceptions), there exists no uncorrected
violation by the Borrower of any federal, state or local laws (including statutes, regulations,
ordinances or other governmental restrictions and requirements) relating to the discharge of air
pollutants, water pollutants or process waste water or otherwise relating to the environment or
Hazardous Substances as hereinafter defined, whether such laws currently exist or are enacted in
the future (collectively “Environmental Laws”). The term “Hazardous Substances” will mean any
hazardous or toxic wastes, chemicals or other substances, the generation, possession or existence
of which Is prohibited or governed by any Environmental Laws. The Borrower is not subject to any
judgment, decree, order or citation, or a party to (or threatened with) any litigation or
administrative proceeding, which asserts that the Borrower (i) has violated any Environmental Laws;
(ii) is required to clean up, remove or take remedial or other action with respect to any Hazardous
Substances (collectively “Remedial Action”);or (iii) is required to pay all or a portion of the
cost of any Remedial Action, as a potentially responsible party. Except as disclosed on the
Borrower’s environmental questionnaire provided to the Bank, there are not now, nor to the
Borrower’s knowledge after reasonable investigation have there ever been, any Hazardous Substances
(or tanks or other facilities for the storage of Hazardous Substances) stored, deposited, recycled
or disposed of on,

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under or at any real estate owned or occupied by the Borrower during the periods that the
Borrower owned or occupied such real estate, which if present on the real estate or in soils or
ground water, could require Remedial Action. To the Borrower’s knowledge, there are no proposed or
pending changes in Environmental Laws which would adversely affect the Borrower or its business,
and there are no conditions existing currently or likely to exist while the Loan Documents are In
effect which would subject the Borrower to Remedial Action or other liability. The Borrower
currently complies with and will continue to timely comply with all applicable Environmental Laws;
and will provide the Bank, immediately upon receipt, copies of any correspondence, notice,
complaint, order or other document from any source asserting or alleging any circumstance or
condition which requires or may require a financial contribution by the Borrower or Remedial Action
or other response by or on the part of the Borrower under Environmental Laws, or which seeks
damages or civil, criminal or punitive penalties from the Borrower for an alleged violation of
Environmental Laws.

     2.6 Compliance with Laws. The Borrower has compiled with all laws applicable to Its business
and its properties, and has all permits, licenses and approvals required by such laws, copies of
which have been provided to the Bank.

     2.7 Restriction on Indebtedness. The Borrower will not create, incur, assume or have
outstanding any Indebtedness for borrowed money (including capitalized leases) except (i) any
indebtedness owing to the Bank and its affiliates, and (ii) any other indebtedness outstanding on
the date hereof, and shown on the Borrower’s financial statements delivered to the Bank prior to
the date hereof, provided that such other Indebtedness will not be increased.

     2.8 Restriction on Liens. The Borrower will not create, Incur, assume or permit to exist any
mortgage, pledge, encumbrance or other lien or levy upon or security interest in any of the
Borrower’s property now owned or hereafter acquired, 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; (iii) liens in favor of
the Bank and its affiliates; and (iv) other liens disclosed in writing to the Bank prior to the
date hereof.

     2.9 Restriction on Contingent Liabilities. The Borrower will not guarantee or become a
surety or otherwise contingently liable for any obligations of others, except pursuant to the
deposit and collection of checks and similar matters in the ordinary course of business.

     2.10 Insurance. The Borrower will maintain insurance to such extent, covering such risks and
with such insurers as is usual and customary for businesses operating similar properties, and as is
satisfactory to the Bank, including insurance for fire and other risks insured against by extended
coverage, public liability insurance and workers’ compensation insurance; and will designate the
Bank as loss payee with a “Lender’s Loss Payable” endorsement on any casualty policies and take
such other action as the Bank may reasonably request to ensure that the Bank will receive (subject
to no other Interests) the insurance proceeds on the Bank’s collateral.

     2.11 Taxes and Other Liabilities. The Borrower will pay and discharge, when due, all of its
taxes, assessments and other liabilities, except when the payment thereof is being contested in
good faith by appropriate procedures which will avoid foreclosure of liens securing such items, and
with adequate reserves provided therefor.

     2.12 Financial Statements and Reporting. The financial statements and other information
previously provided to the Bank or provided to the Bank in the future are or will be complete and
accurate and prepared In accordance with generally accepted accounting principles. There has been
no material adverse change In the Borrower’s financial condition since such information was
provided to the Bank. The Borrower will (i) maintain accounting records in accordance with
generally recognized and accepted principles of accounting consistently applied throughout the
accounting periods involved; (ii) provide the Bank with such information concerning its business
affairs and financial condition (including insurance coverage) as the Bank may request; and (iii)
without request, provide the Bank with such specific financial statements, certifications and/or
information as may be set forth in an addendum to this Agreement.

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     2.13 Inspection of Properties and Records; Fiscal Year. The Borrower will permit
representatives of the Bank to visit and inspect any of the properties and examine any of the books
and records of the Borrower at any reasonable time and as often as the Bank may reasonably desire.
The Borrower will not change its fiscal year.

     2.14 Financial Status. Financial Covenants, if any, will be as set forth in an addendum to
this Agreement:

     2.15 Paid-in-Full Period. o if checked here, all revolving loans under this Agreement and the
Note must be paid in full for a period of at least n/a consecutive days during each
fiscal year.

ARTICLE III. COLLATERAL AND GUARANTIES

     3.1 Collateral. This Agreement and the Note are secured by any and all security interests,
pledges, mortgages/deeds of trust (except any mortgage/deed of trust expressly limited by Its terms
to a specific obligation of Borrower to Bank) or liens now or hereafter in existence granted to the
Bank to secure indebtedness of the Borrower to the Bank, including without limitation as described
In the following documents:

	 	 	 	 	 	 	 	 	 
	o	 	Real Estate Mortgage(s)/Deed(s) of Trust dated	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	covering real estate located at	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Xo	 	Security Agreement(s) dated 05/26/06	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	o	 	Possessory Collateral Pledge Agreement(s) dated	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	o

	 	Other	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 

     3.2 Guaranties. This Agreement and the Note are guarantied by each and every guaranty now or
hereafter in existence guarantying the indebtedness of the Borrower to the Bank (except for any
guaranty expressly limited by its terms to a specific separate obligation of Borrower to the Bank)
including, without limitation, the following:                                                            

 

 

 

 

     3.3 Credit Balances; Setoff. As additional security for the payment of the obligations
described in the Loan Documents and any other obligations of the Borrower to the Bank of any nature
whatsoever (collectively the “Obligations”, the Borrower hereby grants to the Bank a security
interest in, a lien on and an express contractual right to set off against all depository account
balances, cash and any other property of the Borrower now or hereafter in the possession of the
Bank and the right to refuse to allow withdrawals from any account (collectively “Setoff”). The
Bank may, at any time upon the occurrence of a default hereunder (notwithstanding any notice
requirements or grace/cure periods under this or other agreements between the Borrower and the
Bank) Setoff against the Obligations whether or not the Obligations (including future installments)
are then due or have been accelerated, all without any advance or contemporaneous notice or demand
of any kind to the Borrower, such notice and demand being expressly waived.

     The omission of any reference to an agreement in Sections 3.1 and 3.2 above will not affect
the validity or enforceability thereof. The rights and remedies of the Bank outlined in this
Agreement and the documents identified above are intended to be cumulative.

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ARTICLE IV. DEFAULTS

     4.1 Defaults. Notwithstanding any cure periods described below, the Borrower will
immediately notify the Bank in writing when the Borrower obtains knowledge of the occurrence of any
default specified below. Regardless of whether the Borrower has given the required notice, the
occurrence of one or more of the following will constitute a default:

	 	(a)	 	Nonpayment. The Borrower shall fail to pay (i) any interest due on the Note or any
fees, charges, costs or expenses under the Loan Documents by 5 days after the same becomes
due; or (ii) any principal amount of the Note when due.
	 
	 	(b)	 	Nonperformance. The Borrower or any guarantor of Borrower’s Obligations to the Bank
(“Guarantor”) shall fail to perform or observe any agreement, term, provision, condition,
or covenant (other than a default occurring under (a), (c), (d), (e), (f) or (g) of this
Section 4.1) required to be performed or observed by the Borrower or any Guarantor
hereunder or under any other Loan Document or other agreement with or In favor of the Bank.
	 
	 	(c)	 	Misrepresentation. Any financial information, statement, certificate, representation
or warranty given to the Bank by the Borrower or any Guarantor (or any of their
representatives) in connection with entering into this Agreement or the other Loan
Documents and/or any borrowing thereunder, or required to be furnished under the terms
thereof, shall prove untrue or misleading in any material respect (as determined by the
Bank in the exercise of its judgment) as of the time when given.
	 
	 	(d)	 	Default on Other Obligations. The Borrower or any Guarantor shall be in default under
the terms of any loan agreement, promissory note, lease, conditional sale contract or other
agreement, document or instrument evidencing, governing or securing any indebtedness owing
by the Borrower or any Guarantor to the Bank or any indebtedness in excess of $10000 owing
by the Borrower to any third party, and the period of grace, if any, to cure said default
shall have passed.
	 
	 	(e)	 	Judgments. Any judgment shall be obtained against the Borrower or any Guarantor which,
together with all other outstanding unsatisfied judgments against the Borrower (or such
Guarantor), shall exceed the sum of $10,000 and shall remain unvacated, unbonded or
unstayed for a period of 30 days following the date of entry thereof.
	 
	 	(f)	 	Inability to Perform; Bankruptcy/Insolvency. (i) The Borrower or any Guarantor shall
die or cease to exist; or (ii) any Guarantor shall attempt to revoke any guaranty of the
Obligations described herein, or any guaranty becomes unenforceable in whole or in part for
any reason; or (iii) any bankruptcy, insolvency or receivership proceedings, or an
assignment for the benefit of creditors, shall be commenced under any Federal or state law
by or against the Borrower or any Guarantor; or (iv) the Borrower or any Guarantor shall
become the subject of any out-of-court settlement with its creditors; or (v) the Borrower
or any Guarantor is unable or admits in writing its inability to pay its debts as they
mature; or (vi) If the Borrower Is a limited liability company, any member thereof shall
withdraw or otherwise become disassociated from the Borrower.
	 
	 	(g)	 	Adverse Change; Insecurity. (i) There Is a material adverse change in the business,
properties, financial condition or affairs of the Borrower or any Guarantor, or in any
collateral securing the Obligations; or (ii) the Bank in good faith deems Itself insecure.

     4.2 Termination of Loans; Additional Bank Rights. Upon the Maturity Date or the occurrence
of any of the events identified in Section 4.1, the Bank may at any time (notwithstanding any
notice requirements or grace/cure periods under this or other agreements between the Borrower and
the Bank) (i) immediately terminate its obligation, if any, to make additional loans to the
Borrower; (ii) Setoff; and/or (iii) take such other steps to protect or preserve the Bank’s
interest in any collateral, including without limitation, notifying account debtors to make
payments directly to the Bank, advancing funds to protect

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any collateral and insuring collateral at the Borrower’s expense; all without demand or notice
of any kind, all of which are hereby waived.

     4.3 Acceleration of Obligations. Upon the Maturity Date or the occurrence of any of the
events identified in Sections 4.1(a) through 4.1(e) and 4.1(g), and the passage of any applicable
cure periods, the Bank may at any time thereafter, by written notice to the Borrower, declare the
unpaid principal balance of any Obligations, together with the interest accrued thereon and other
amounts accrued hereunder and under the other Loan Documents, to be immediately due and payable;
and the unpaid balance will thereupon be due and payable, all without presentation, demand, protest
or further notice of any kind, all of which are hereby waived, and notwithstanding anything to the
contrary contained herein or In any of the other Loan Documents. Upon the occurrence of any event
under Section 4.1(f), the unpaid principal balance of any Obligations, together with all interest
accrued thereon and other amounts accrued hereunder and under the other Loan Documents, will
thereupon be immediately due and payable, all without presentation, demand, protest or notice of
any kind, all of which are hereby waived, and notwithstanding anything to the contrary contained
herein or in any of the other Loan Documents. Nothing contained In Section 4.1, Section 4.2 or
this section will limit the Bank’s right to Setoff as provided in Section 3.3 or otherwise in this
Agreement.

     4.4 Other Remedies. Nothing in this Article IV is intended to restrict the Bank’s rights
under any of the Loan Documents or at law, and the Bank may exercise all such rights and remedies
as and when they are available.

ARTICLE V. OTHER TERMS

     5.1 Additional Terms; Addendum/Supplements. The warranties, covenants, conditions and other
terms described In this Section and/or in the Addendum and/or other attached document(s) referenced
in this Section are incorporated into this Agreement:

	 
	 

	 

	 

	 

	 

	 

	 

ARTICLE VI. MISCELLANEOUS

     6.1 Delay; Cumulative Remedies. No delay on the part of the Bank in exercising any right,
power or privilege hereunder or under any of the other Loan Documents will operate as a waiver
thereof, nor will any single or partial exercise of any right, power or privilege hereunder
preclude other or further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein specified are cumulative and are not exclusive of any rights or
remedies which the Bank would otherwise have.

     6.2 Relationship to Other Documents. The warranties, covenants and other obligations of the
Borrower (and the rights and remedies of the Bank) that are outlined in this Agreement and the
other Loan Documents are intended to supplement each other. In the event of any inconsistencies in
any of the terms in the Loan Documents, all terms will be cumulative so as to give the Bank the
most favorable rights set forth in the conflicting documents, except that if there is a direct
conflict between any preprinted terms and specifically negotiated terms (whether included in an
addendum or otherwise), the specifically negotiated terms will control.

     6.3 Successors. The rights, options, powers and remedies granted in this Agreement and the
other Loan Documents shall be binding upon the Borrower and the Bank and their respective
successors and assigns, and shall inure to the benefit of the Borrower and the Bank and the
successors and assigns of the Bank, including without limitation any purchaser of any or all of the
rights and obligations of the Bank under the Note and the other Loan Documents. The Borrower may
not assign its rights or obligations under this Agreement or any other Loan Documents without the
prior written consent of the Bank.

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     6.4 Disclosure. The Bank may, In connection with any sale or potential sale of all or any
interest in the Note and other Loan Documents, disclose any financial information the Bank may have
concerning the Borrower to any purchaser or potential purchaser. From time to time, the Bank may,
in its discretion and without obligation to the Borrower, any Guarantor or any other third party,
disclose information about the Borrower and this loan to any Guarantor, surety or other
accommodation party. This provision does not obligate the Bank to supply any information or
release the Borrower from its obligation to provide such information, and the Borrower agrees to
keep all Guarantors, sureties or other accommodation parties advised of its financial condition and
other matters which may be relevant to their obligations to the Bank.

     6.5 Indemnification. Except for harm arising from the Bank’s willful misconduct, the
Borrower hereby indemnifies and agrees to defend and hold the Bank harmless from any and all
losses, costs, damages, claims and expenses of any kind suffered by or asserted against the Bank
relating to claims by third parties arising out of the financing provided under the Loan Documents
or related to any collateral (including, without limitation, the Borrower’s failure to perform its
obligations relating to Environmental Matters described in Section 2.5 above). This
indemnification and hold harmless provision will survive the termination of the Loan Documents and
the satisfaction of the Obligations due the Bank.

     6.6 Notice of Claims Against Bank; Limitation of Certain Damages. In order to allow the Bank
to mitigate any damages to the Borrower from the Bank’s alleged breach of its duties under the Loan
Documents or any other duty, if any, to the Borrower, the Borrower agrees to give the Bank
immediate written notice of any claim or defense It has against the Bank, whether in tort or
contract, relating to any action or inaction by the Bank under the Loan Documents, or the
transactions related thereto, or of any defense to payment of the Obligations for any reason. The
requirement of providing timely notice to the Bank represents the parties’ agreed-to standard of
performance regarding claims against the Bank. Notwithstanding any claim that the Borrower may
have against the Bank, and regardless of any notice the Borrower may have given the Bank, the Bank
will not be liable to the Borrower for consequential and/or special damages arising therefrom,
except those damages arising from the Bank’s willful misconduct.

     6.7 Notices. Notice of any record shall be deemed delivered when the record has been (a)
deposited in the United States Mail, postage pre-paid, (b) received by overnight delivery service,
(c) received by telex, (d) received by telecopy, (e) received through the interest, or (f) when
personally delivered.

     6.8 Payments. Payments due under the Note and other Loan Documents will be made in lawful
money of the United States. All payments may be applied by the Bank to principal, interest and
other amounts due under the Loan Documents in any order which the Bank elects.

     6.9 Applicable Law and Jurisdiction; Interpretation; Joint Liability; Severability. This
Agreement and all other Loan Documents will be governed by and Interpreted in accordance with the
internal laws of the State of Minnesota, except to the extent superseded by Federal law. THE
BORROWER HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITUATED IN
THE COUNTY OR FEDERAL JURISDICTION OF THE BANK’S BRANCH WHERE THE LOAN WAS ORIGINATED, AND WAIVES
ANY OBJECTION BASED ON FORUM NON CONVENIENS, WITH REGARD TO ANY ACTIONS, CLAIMS, DISPUTES
OR PROCEEDINGS RELATING TO THIS AGREEMENT. THE NOTE, THE COLLATERAL, ANY OTHER LOAN DOCUMENT, OR
ANY TRANSACTIONS ARISING THEREFROM, OR ENFORCEMENT AND/OR INTERPRETATION OF ANY OF THE FOREGOING.
Nothing herein will affect the Bank’s rights to serve process in any manner permitted by law, or
limit the Bank’s right to bring proceedings against the Borrower in the competent courts of any
other jurisdiction or jurisdictions. This Agreement, the other Loan Documents and any amendments
hereto (regardless of when executed) will be deemed effective and accepted only upon the Bank’s
receipt of the executed originals thereof. If there is more than one Borrower, the liability of
the Borrowers will be joint and several, and the reference to “Borrower” will be deemed to refer to
all Borrowers. Invalidity of any provision of this Agreement shall not affect the validity of any
other provision.

Page 8 of 11

 

     6.10 Copies; Entire Agreement; Modification. The Borrower hereby acknowledges the receipt of
a copy of this Agreement and all other Loan Documents. This Agreement is a “transferable record”
as defined in applicable law relating to electronic transactions. Therefore, the holder of this
Agreement may, on behalf of Borrower, create a microfilm or optical disk or other electronic image
of this Agreement that is an authoritative copy as defined in such law. The holder of this
Agreement may store the authoritative copy of such Agreement In its electronic form and then
destroy the paper original as part of the holder’s normal business practices. The holder, on Its
own behalf, may control and transfer such authoritative copy as permitted by such law.

IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD BE READ CAREFULLY BECAUSE ONLY
THOSE TERMS IN WRITING, EXPRESSING CONSIDERATION AND SIGNED BY THE PARTIES ARE ENFORCEABLE. NO
OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED. THE
TERMS OF THIS AGREEMENT MAY ONLY BE CHANGED BY ANOTHER WRITTEN AGREEMENT. THIS NOTICE SHALL ALSO
BE EFFECTIVE WITH RESPECT TO ALL OTHER CREDIT AGREEMENTS NOW IN EFFECT BETWEEN BORROWER AND THE
BANK A MODIFICATION OF ANY OTHER CREDIT AGREEMENTS NOW IN EFFECT BETWEEN BORROWER AND THE BANK,
WHICH OCCURS AFTER RECEIPT BY BORROWER OF THIS NOTICE, MAY BE MADE ONLY BY ANOTHER WRITTEN
INSTRUMENT. ORAL OR IMPLIED MODIFICATIONS TO SUCH CREDIT AGREEMENTS ARE NOT ENFORCEABLE AND SHOULD
NOT BE RELIED UPON.

     6.11 Waiver of Jury Trial. TO THE EXTENT PERMITTED BY LAW, THE BORROWER AND THE BANK HEREBY.
JOINTLY AND SEVERALLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
RELATING TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS THEREUNDER, ANY COLLATERAL SECURING THE
OBLIGATIONS, OR ANY TRANSACTION ARISING THEREFROM OR CONNECTED THERETO. THE BORROWER AND THE BANK
EACH REPRESENTS TO THE OTHER THAT THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.

     6.12 Attachments. All documents attached hereto, including any appendices, schedules,
riders, and exhibits to this Agreement, are hereby expressly incorporated by reference.

     IN WITNESS WHEREOF, the undersigned have executed this REVOLVING CREDIT AGREEMENT as of May
26, 2006.

	 	 	 	 	 	 	 
	(Individual Borrower)	 	Rochester Medical Corporation	 	 
	 

	 	 	 	Borrower Name (Organization)	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	a Minnesota Corporation	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Borrower Name

	 	 	 	By /s/ Anthony J. Conway	 	 
	 

	 	 

	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Name and Title: Anthony J. Conway,	 	 
	 	 	 	 	 
	 

	 	 	 	President/CEO	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	By /s/ David A. Jonas	 	 
	 
	 	 	 	 	 	 
	Borrower Name	 	 	 	Name and Title: David A. Jonas, Chief Financial
	 

	 	 

	 	 Officer	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	U. S. Bank N.A.
	 	(Bank)
	 

	 	 	 	 	 	 
	 

	 	 	 	By /s/ Bruce A. Gudlin	 	 
	 	 	 	 	Name and Title: Bruce A. Gudlin, Vice President

Page 9 of 11

 

Exhibit 10.6

ADDENDUM TO REVOLVING CREDIT AGREEMENT AND NOTE

This Addendum is made part of the Revolving Credit Agreement and Note (the “Agreement”) made and
entered into by and between the undersigned borrower (the “Borrower”) and the undersigned bank (the
“Bank”) as of the date identified below. The warranties, covenants and other terms described below
are hereby added to the Agreement

Financial Covenants. Financial terms used herein which are not specifically defined herein shall
have the meanings ascribed to them under generally accepted accounting principles. For any
Borrower who does not have a separate fiscal year end for tax reporting purposes, the fiscal year
will be deemed to be the calendar year. Borrower (herein referred to as the “Subject Party”) will
maintain the following:

Fixed Charge Coverage Ratio as of the end of each fiscal quarter for the fiscal quarter then ended
of at least 1.30 to 1.

“Fixed Charge Coverage Ratio” shall mean (a) EBITDAR minus cash taxes, cash dividends and
Maintenance Capital Expenditures divided by (b) the sum of all required principal payments (on
short and long term debt and capital leases), interest and rental or lease expense.

“EBITDAR” shall mean net income, plus interest expense, plus income tax expense, plus depreciation
expense plus amortization expense plus rent or lease expense.

“Maintenance Capital Expenditures” shall mean the dollar amount of Capital Expenditures that are
necessary to maintain the current level of revenues. For the purposes of the covenant calculation,
at no time shall the amount of the Capital Expenditures used be less than $300,000.00 per fiscal
year, prorated evenly for the measurement periods required above.

“Capital Expenditures” shall mean the aggregate amount of all purchases or acquisitions of fixed
assets, including real estate, motor vehicles, equipment, fixtures, leases and any other items that
would be capitalized on the books of the Subject Party under generally accepted accounting
principles. The term “Capital Expenditures” will not include expenditures or charges for the usual
and customary maintenance, repair and retooling of any fixed asset or the acquisition of new
tooling in the ordinary course of business.

Net Working Capital as of the end of each fiscal quarter in the amount of at least $8,000,000.00.

“Net Working Capital” shall mean:

	(i)	 	the amount of all assets which under generally accepted accounting principles would appear as
current assets on the balance sheet of the Subject Party, plus 60% of LIFO reserve, if any,

Less

	(ii)	 	the amount of all liabilities which under generally accepted accounting principles would
appear as current liabilities on such balance sheet, including all indebtedness payable on
demand or maturing (whether by reason of specified maturity, fixed prepayments, sinking funds
or accruals of any kind, or otherwise) within 12 calendar months or less from the date of the
relevant statement, including all lease and rental obligations due in 12 calendar months or
less under capitalized leases, and including customers’ advances and progress billings on
contracts.

Financial Information and Reporting. This provision replaces in its entirety the provision of the
Agreement titled “Financial Information and Reporting”. Financial terms used herein which are not
specifically defined herein shall have the meanings ascribed to them under generally accepted
accounting principles. For any Borrower who does not have a separate fiscal year end for tax
reporting purposes, the fiscal year will be deemed to be the calendar year. The financial
statements and other information previously provided to Bank or provided to Bank in the future are
or will be complete and accurate and prepared in accordance with generally accepted accounting
principles. There has been no material adverse change in Borrower’s financial condition since such
information was provided to Bank. Borrower will (i) maintain accounting records in accordance with
generally recognized and accepted principles of accounting consistently applied throughout the
accounting periods involved; (ii) provide Bank with such information

 

 

concerning its business affairs and financial condition (including insurance coverage) as Bank may
request; and (iii) without request, provide to Bank the following financial information, in form
and content acceptable to Bank, pertaining to Borrower

Interim Financial Statements: Not later than
60 days after the end of each fiscal quarter, interim financial statements, compiled by a certified
public accounting firm acceptable to Bank.

Annual Financial Statements: Not later than 120 days after the end of each fiscal year, annual
financial statements, audited by a certified public accounting fine acceptable to Bank.

Permitted Indebtedness. Notwithstanding the restrictions on indebtedness in Section 2.7 of the
Agreement, and so long as (a) no default has occurred and (b) no default would be caused by such
indebtedness, Borrower may without the prior consent of Bank incur indebtedness to third parties in
an aggregate amount not to exceed $6,000,000.00 outstanding at any time.

Dated as of May 26, 2006

	 	 	 
	(Individual)

	 	(Non-Individual)
	 
	 	 
	 

	 	Rochester Medical Corporation
	 

Borrower Name n/a

	 	 a/an
Minnesota Corporation
	 
	 	 
	 

	 	By: /s/ Anthony J. Conway
	 

	 	 
	Borrower Name n/a

	 	Name and Title: Anthony J. Conway, President/CEO
	 
	 	 
	 

	 	By: /s/ David A. Jonas
	 

	 	Name and Title: David A. Jonas, Chief Financial
	 

	 	Officer
	 
	 	 
	 

	 	Agreed to:
	 

	 	U.S. BANK N.A.
	 
	 	 
	 

	 	By: /s/ Bruce A. Gudlin
	 

	 	Name and Title: Bruce A, Gudlin, Vice Presidentexv10w7

 

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

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