UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) August 1, 2005
INTRICON CORPORATION
(Exact name of registrant as specified in its charter)
Pennsylvania 1-5005 23-1069060
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1260 Red Fox Road, Arden Hills, MN 55112
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (651) 636-9770
____________________________________________________
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM. 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
DIRECTOR COMPENSATION
Effective August 1, 2005, the Chairman of the Board of the Company will
receive an annual retainer of $44,000, payable in quarterly installments, plus
meeting fees. Previously, the Chairman received an annual retainer of $134,000
plus meeting fees. Meeting fees payable to all non-employee directors consist of
$800 per Board or Committee meeting attended on a particular day and $400 for
each additional Board or Committee meeting attended on the same day, except for
meetings of the Nominating and Corporate Governance Committee, for which no per
meeting compensation is paid.
CREDIT FACILITIES
The information contained in Item 2.03 of this Form 8-K is incorporated by
reference herein.
ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT
On August 31, 2005, the Company's wholly-owned subsidiaries Resistance
Technology, Inc. and RTI Electronics, Inc. (the "Borrowers") entered into a
senior secured credit agreement with Diversified Business Credit, Inc. (the
"Agreement"), and related Term Loan Supplement (Real Estate) and Term Loan
Supplement (Equipment). In connection with the Agreement, on August 31, 2005,
the Company also entered into a security agreement and a guaranty by corporation
with Diversified Business Credit, Inc. whereby the Company guaranteed the full
amount that the Borrowers may owe Diversified Business Credit, Inc. Under these
agreements, the Company and the Borrowers granted Diversified Business Credit,
Inc. a security interest in substantially all of their assets. In addition,
Resistance Technology, Inc. granted a mortgage on its Vadnais Heights, Minnesota
facility.
The Agreement has a term of three years. The Agreement provides for the
following:
o $5.5 million asset-backed revolving credit facility supported by a
monthly borrowing base;
o $1.5 million real estate term loan amortized on a 12-year schedule; and
o $1.0 million equipment term loan amortized on a five-year schedule.
The domestic revolving credit facility bears interest at 0.5% over the
prime rate or, at the option of the Borrower, subject to certain exceptions, the
London InterBank Offered Rate ("LIBOR") plus 3.25%, provided that in no event
will the rate be less than 5.25%. The domestic term loans bear interest at 0.75%
over the prime rate or, at the option of the Borrower, subject to certain
exceptions, LIBOR plus 3.50%, provided that in no event will the rate be less
than 5.25%. Notwithstanding the foregoing, interest paid on advances for each
twelve month period may never be less than $100,000. Under the Agreement, an
unused line fee at the rate of 0.25% per annum on the daily average unused
amount of the revolving credit facility is due and payable monthly in arrears on
the first day of the month. In addition, the Borrowers must pay an annual fee
equal to the greater of $27,500 or one-half percent of the maximum amount
permitted to be borrowed under the revolving credit facility. In addition, if
the facility is terminated by the Borrowers prior to the end of the term, the
Borrowers will also be required to pay a termination fee equal to 3% (if
terminated before the first anniversary of the facility), 2% (if terminated
before the second anniversary of the facility) and 1% (if terminated before the
third anniversary of the facility), respectively, of the total of the maximum
amount available under the revolving credit facility plus the amounts then
outstanding under the terms loans.
The real estate term loan requires monthly principal payments of $10,285,
with any balance due on August 31, 2008. The equipment term loan requires
monthly principal payments based on a assumed amortization period of 60 months,
with any balance due on August 31, 2008.
As of August 31, 2005, approximately $1.6 million was outstanding under the
revolving credit facility and approximately $1.5 million was outstanding under
the real estate term loan.
Under the Agreement, without the prior written consent from Diversified
Business Credit, Inc., the Company and the Borrowers are restricted or limited,
except as otherwise permitted in the Agreement, from, among other things:
becoming or remaining liable in any manner with respect of indebtedness or
contractual liability; declaring or paying any cash dividends (except that
Borrowers may declare and pay dividends to the Company as described in the
Agreement), purchasing or redeeming any of its capital stock or otherwise
distributing any property on its capital stock; creating, expending or
contracting to expend, in any one calendar year, with respect to the Borrowers
collectively, more than $2.0 million in the aggregate, or more than $250,000 in
any one transaction, for the lease, purchase or other acquisition of any capital
asset, or for the lease of any other asset whether payable currently or in the
future; selling, leasing or otherwise disposing of any collateral (as defined in
the agreement) or all or any substantial part of its property; consolidating or
merging with any other corporation or acquiring stock of any corporation or
entering into any other partnership or joint venture; substantially alter the
nature of the business in which it is engaged; permitting any breach, default or
event of default to occur under any note, loan, agreement or other contractual
obligation binding the Borrowers; or amending governing documents.
In the case of an event of default (as defined in the Agreement), unless
waived by Diversified Business Credit, Inc., Diversified Business Credit, Inc.,
by notice, may terminate the Agreement and declare the Borrowers' obligations
under the Agreement due and payable. Diversified Business Credit, Inc. may also
in accordance with the Agreement and the law, exercise and enforce any and all
rights and remedies available upon default to a secured party under the Uniform
Commercial Code, including, without limitation, the right to take possession of
the collateral (as defined in the Agreement). Upon the occurrence of any
default, Diversified Business Credit, Inc. can suspend the making of advances
until the default has been cured or waived. All obligations will be immediately
and automatically due and payable, without further act or condition, if any
cause under the United States Bankruptcy Code is commenced voluntarily by any
Borrower, guarantor (as defined in the Agreement and includes the Company) or
involuntary against any Borrower or guarantor. Events of default include, among
other things, the failure to maintain certain financial covenants or insurance
coverage, the failure to make payment of any obligation due under the Agreement
or the occurrence of a default under any bond, debenture, note or other evidence
of material indebtedness of any Borrower or guarantor owed to any person or
entity other than Diversified Business Credit, Inc., or under any indenture or
other instrument under which any such evidence of indebtedness has been issued
or by which it is governed, or under any material lease or other contract, and
the expiration of the applicable period of grace, if any, specified in such
evidence of indebtedness, indenture, other instrument, lease or contract.
On August 15, 2005, the Company's wholly-owned subsidiary, RTI Tech, PTE
LTD. , entered into an international senior secured credit agreement with
Oversea-Chinese Banking Corporation Ltd. that provides for a $2.0 million line
of credit. Borrowings bear interest at a rate of 6.47%. This facility will be
reviewed annually to determine whether it will be renewed.
A copy of the press release announcing the new credit facilities is
attached as Exhibit 99.1 and is incorporated herein by reference.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
99.1 Press Release dated September 6, 2005
SIGNATURE
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 thereunto duly authorized.
IntriCon Corporation
By: /s/William J. Kullback
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Date: September 7, 2005 William J. Kullback
Chief Financial Officer