In
the Loan Agreement, the Borrowers made representations and warranties to the
Lender concerning, among other things: their corporate status; authorization of
the new credit facilities; the validity and binding nature of the Loan
Agreement and other loan documents; conflicts with existing laws and
agreements; ownership of assets and liens; ownership of the stock of the U.S.
Subsidiaries; intellectual property; financial statements; litigation and
contingent liabilities; events of default; material adverse effects;
environmental matters; solvency; employee benefit matters; labor relations;
security interests created under the Loan Agreement; the nature of the
relationship between the lender and the Borrowers; the business nature of the
loans; taxes; compliance with federal margin regulations; compliance with
federal statutes and regulation concerning investment companies and public
utilities; bank accounts; place of business; completeness of information
furnished; internal controls over financial reporting and disclosure controls
and procedures; insurance; and the Datrix acquisition.
It
is a condition precedent to the Lenders obligation to make any additional
advances or issue any letter of credit under the Loan Agreement that the
Borrowers representations and warranties must be true and correct in all
material respects at and that no default or event of default shall exist.
The
Loan Agreement contains affirmative covenants regarding, among other things:
payments of any increased regulatory costs incurred by the Lender with respect
to the loans; the Borrowers existence; compliance with laws; payment of taxes
and liabilities; maintenance of the Borrowers property and assets; insurance;
employee benefit plans; financial statements; management letters and
supplemental financial statements; reports and certificates to be provided to
the Lender; the Lenders right to inspect and audit the collateral pledged to
the Lender; intellectual property; notices of proceedings, events of default
and material adverse effects; environmental matters; use of the Lender as
Borrowers primary bank; the obtaining of interest rate protection with respect
to at least $1.0 million of the loans; and annual projections.
Under
the Loan Agreement, except as otherwise permitted in the Loan Agreement, the
Borrowers may not, among other things: incur or permit to exist any
indebtedness; grant or permit to exist any liens or security interests on their
assets or pledge the stock of any subsidiary; make investments; be a party to
any merger or consolidation, or purchase of all or substantially all of the
assets or equity of any other entity; sell, transfer, convey or lease all or
any substantial part of its assets or capital securities; sell or assign, with
or without recourse, any receivables; issue any capital securities; make any
distribution or dividend (other than stock dividends), whether in cash or
otherwise, to any of its equityholders; purchase or redeem any of its equity
interests or any warrants, options or other rights in respect thereof; enter
into any transaction with any of its affiliates or with any director, officer
or employee of any Borrower; be a party to any unconditional purchase obligations;
cancel any claim or debt owing to it; make payment on or changes to any
subordinated debt; enter into any agreement inconsistent with the provisions of
the Loan Agreement or other agreements and documents entered into in connection
with the Loan Agreement; engage in any line of business other than the
businesses engaged in on the date of the Loan Agreement and businesses
reasonably related thereto; or permit its charter, bylaws or other
organizational documents to be amended or modified in any way which could
reasonably be expected to materially adversely affect the interests of the
Lender.
The
Loan Agreement contains minimum EBITDA, funded debt to EBITDA, fixed charge
coverage ratio and capital expenditure financial covenants. In addition,
Borrowers must at all times maintain availability of at least $500,000 under
the revolving line of credit.
Upon
the occurrence and during the continuance of an Event of Default (as defined in
the Loan Agreement), the Lender may, among other things: terminate its
commitments to the Borrowers (including terminating or suspending its
obligation to make loans and advances); declare all outstanding loans, interest
and fees to be immediately due and payable; take possession of and sell any
pledged assets and other collateral; and exercise any and all rights and
remedies available to it under the Uniform Commercial Code or other applicable
law. In the event of the insolvency or bankruptcy of any Borrower, all
commitments of the Lender shall automatically terminate and all outstanding
loans, interest and fees shall be immediately due and payable. Events of
default include, among other things, failure to pay any amounts when due;
material misrepresentation; default in the performance of any covenant, condition
or agreement to be performed that is not cured within 20 days after notice from
the Lender; default in the performance of obligations under certain
subordinated debt, which includes the Companys note payable to the former
shareholder of Datrix (including actual or attempted termination of a
subordination agreement with the former shareholder of Datrix); default in the
payment of other indebtedness or other obligation with an outstanding principal
balance of more than $50,000, or of any other term, condition or covenant
contained in the agreement under which such obligation is created, the effect
of which is to allow the other party to accelerate such payment or to terminate
the agreements; a breach by a Borrower under certain material agreements, the
result of which breach is the suspension of the counterpartys performance
thereunder, delivery of a notice of acceleration or termination of such
agreement; the insolvency or bankruptcy of any Borrower; the entrance of any
judgment against any Borrower in excess of $50,000, which is not fully covered
by insurance; any divestiture of assets or stock of a subsidiary constituting a
substantial portion of Borrowers assets; the occurrence of a change in control
(as defined in the Loan Agreement); certain collateral impairments; a
contribution failure with respect to any employee benefit plan that gives rise
to a lien under ERISA; and the occurrence of any event which Lender determines
could be reasonably expected to have a material adverse effect (as defined in
the Loan Agreement).
Datrix Note
As
discussed above, in connection with the Companys acquisition of Datrix, the
Company issued a subordinated, non-negotiable promissory note dated August 13,
2009 to the former shareholder of Datrix (Shareholder) in the principal
amount of $1.05 million (Datrix Note). The Datrix Note bears interest at an
annual rate of 6%, provided, however, that upon the occurrence of an event of
default (as defined in the Datrix Note) and during the continuance thereof, at
Shareholders option, the outstanding principal amount under the Datrix Note
shall bear interest at an annual rate of 10%. The principal amount of the
Datrix Note is due and payable in three equal annual installments of $350,000
beginning on August 13, 2010 plus accrued and unpaid interest. Amounts
outstanding under the Datrix Note shall automatically become immediately due
and payable upon the sale of assets of the Company attributable to 90% or more
of the Companys consolidated sales volume or upon the direct or indirect
acquisition of beneficial ownership of 50% or more of the combined voting power
of the Companys then-outstanding voting securities. Amounts owing under the
Datrix Note are unsecured and subordinated to the Companys obligations pursuant
to the Loan Agreement discussed above.
The
Company has the right to withhold and set off against amounts due under the
Datrix Note for certain claims for indemnification pursuant to the agreement
governing the Companys acquisition of Datrix. Upon the occurrence and during
the continuance of an event of default (as defined in the Datrix Note),
Shareholder may, among other things, declare the entire unpaid principal
balance of the Datrix Note, together with all accrued interest, immediately due
and payable. Immediate acceleration of such amounts will occur automatically in
the event of the Companys insolvency or bankruptcy. Events of default include,
among other things, the Companys failure to pay amounts due under the Datrix
Note and such failure continues for 10 days; the insolvency or bankruptcy of
the Company; the Companys liquidation, winding up, dissolution, or suspension
of operations in excess of 90 days; and the occurrence and continuation of an
event of default as set forth in the Loan Agreement described above.
The
foregoing summary of the new credit facility, the Loan Agreement and the Datrix
Note does not purport to be complete and is qualified in its entirety by
reference to the Loan Agreement, the Datrix Note and other material agreements
entered into in connection with such documents, copies of which will be filed
as exhibits to the Companys Quarterly Report on Form 10-Q for the quarter
ending September 30, 2009.
|
|
Item
7.01.
|
Regulation
FD Disclosure.
|
The
following information is being provided pursuant to Item 7.01. Such
information, including Exhibit 99.1 attached hereto, should not be deemed
filed for purposes of Section 18 of the Exchange Act.
On
August 13, 2009, the Company issued a press release announcing the new credit
facilities and the Datrix acquisition, which press release is filed as an
exhibit hereto and is incorporated herein by reference.
|
|
Item 9.01
|
Financial
Statements and Exhibits.
|
|
|
|
Exhibit
No.
|
|
Description
|
|
|
|
99.1
|
|
Press Release dated August
13, 2009 announcing earnings for the quarter ended June 30, 2009.
|
|
|
|
99.2
|
|
Press Release dated August
13, 2009 announcing the new credit facilities and the Datrix acquisition.
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
|
|
|
|
INTRICON
CORPORATION
|
|
|
|
|
Dated: August 14, 2009
|
By:
|
/s/ Scott Longval
|
|
|
Name:
|
Scott Longval
|
|
|
Title:
|
Chief Financial Officer
|
|
EXHIBIT INDEX
|
|
|
Exhibit
No.
|
|
Description
|
|
|
|
99.1
|
|
Press Release dated August
13, 2009 announcing earnings for the quarter ended June 30, 2009.
|
|
|
|
99.2
|
|
Press Release dated August
13, 2009 announcing the new credit facilities and the Datrix acquisition.
|
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