Exhibit 10.1

 

FIRST AMENDMENT

TO

LOAN AND SECURITY AGREEMENT AND WAIVER

 

THIS FIRST AMENDMENT TO Loan AND SECURITY AGREEMENT AND WAIVER (this
“Amendment”) is made and entered into as of March 12, 2010, by and among
INTRICON CORPORATION, a Pennsylvania corporation (“IntriCon”), INTRICON, INC.
(formerly known as Resistance Technology, Inc.), a Minnesota corporation
(“Inc.”), RTI ELECTRONICS, INC., a Delaware corporation (“RTIE”), INTRICON
TIBBETTS CORPORATION (formerly known as TI Acquisition Corporation), a Maine
corporation (“Tibbetts”), and INTRICON DATRIX CORPORATION (formerly known as Jon
Barron, Inc.) (d/b/a Datrix), a California corporation (“Datrix”) (each, a
“Borrower”; collectively, the “Borrowers”), and THE PRIVATEBANK AND TRUST
COMPANY, an Illinois banking corporation (the “Bank”).

RECITALS:

A.                 The Borrowers and the Bank are parties to a certain Loan and
Security Agreement dated as of August 13, 2009 (the “Loan Agreement”).  All
capitalized terms not otherwise defined herein shall have the meanings given to
them in the Loan Agreement.

B.                 The Borrowers have requested that the Bank amend certain
provisions of the Loan Agreement, and the Bank has agreed to do so upon the
terms and subject to the conditions set forth in this Amendment.

AGREEMENTS:

NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, and for other good and valuable consideration, the
nature, receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:

Section 1.                      Delivery of Documents.  At or prior to the
execution of this Amendment, and as a condition precedent to the effectiveness
of this Amendment, the Borrowers shall have satisfied the following conditions
and delivered or caused to be delivered to the Bank the following documents each
dated such date and in form and substance satisfactory to the Bank and duly
executed by all appropriate parties:

(a)                 This Amendment.

(b)                 An Acknowledgment and Agreement Regarding Subordinated
Indebtedness, in substantially the form attached, duly executed by each holder
of Subordinated Debt.

(c)                 With respect to each Borrower, a copy of the resolutions of
the Board of Directors of such Borrower authorizing the execution, delivery and
performance of this Amendment certified as true and accurate by an officer of
such Borrower , along with a certificate of such officer which (i) certifies
that there has been no amendment to either the Articles of Incorporation or the
Bylaws of such Borrower since true and accurate copies of the same were last
delivered and certified to the Bank, and that said Articles of Incorporation or
the Bylaws remain in full force and effect as of the date of this Amendment,
(ii) identifies each officer of such Borrower authorized to execute this
Amendment and any other instrument or agreement executed by such Borrower in
connection with this Amendment, and (iii) sets forth specimen signatures of each
officer of such Borrower referred to above and identifies the office or offices
held by such officer.

 

 

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(d)                 Lender shall have received (i) an amendment fee in the
amount of $25,000, which fee shall be non-refundable when paid and wholly earned
when received; and (ii) reimbursement for its legal fees and other expenses as
described in Section 9 hereof.

(e)                 Such other documents or instruments as the Bank may
reasonably require.

Section 2.                      Waivers. 

(a)                 Financial Covenants.  Subject to the satisfaction of the
conditions precedent set forth in Section 1 above, the Bank hereby agrees to
waive any non-compliance by the Borrowers’ with Sections 10.1, 10.2, and 10.3 of
the Loan Agreement as of the December 31, 2009 and January 31, 2010 measurement
dates. 

(b)                 Sale of RTIE Assets and/or Stock.  Section 9.4 of the Loan
Agreement prohibits any Borrower from, among other things, selling,
transferring, conveying or leasing all or any substantial part of its assets or
Capital Securities.  Section 6.2 prohibits any Borrower from, among other
things, selling, assigning (by operation of law or otherwise), licensing,
leasing or otherwise disposing of, or granting any option with respect to, any
of the Collateral.  The Borrowing Agent has informed the Bank that (i) RTIE
intends to dispose of all or substantially all of its assets in a single
transaction or through an orderly liquidation process (the “RTIE Asset
Divestiture”) or (ii) IntriCon intends to sell 100% of the Capital Securities of
RTIE (the “Stock Sale”; and together with the RTIE Asset Divestiture,
collectively, the “Proposed Transactions”), and has requested the Bank waive the
prohibitions in set forth in Section 6.2 and Section 9.4 as they relate to such
Proposed Transactions.  Subject to the satisfaction of the conditions precedent
set forth in Section 1 above, the Bank hereby waives Section 6.2 and Section 9.4
to the extent (but only to the extent) that they are applicable to the Proposed
Transactions, provided that all net cash proceeds of the Proposed Transactions
are paid directly to the Bank for application against the then-outstanding
Obligations.  Upon receipt of said net cash proceeds, (A) the Bank agrees to
release its Lien on the disposed assets (and Capital Securities, if applicable)
at the request of Borrowing Agent and (B) in the case of the Stock Sale, the
Bank and Borrowers agree to release RTIE from its rights and obligations under
the Loan Documents.

(c)                 No Other Waivers.  By granting the waivers expressly set
forth above, the Bank is not consenting to or waiving any other or subsequent
non-compliance with any of the Sections identified above or any other provision
of the Loan Agreement.

Section 3.                      Amendments. 

(a)                 Definition of EBITDA.  The definition of “EBITDA” set forth
in Section 1.1 is hereby amended and restated in its entirety to read as
follows:

“EBITDA” shall mean, for any period, the sum for such period of:  (i) Net
Income, plus (ii) Interest Charges, plus (iii) federal and state income taxes,
plus (iv) Depreciation, plus (v) non-cash management compensation expense, plus
(vi) all other non-cash charges, minus (vii) all non-cash income or gains, in
each case to the extent included in determining Net Income for such period,
minus (viii) all cash payments made in such period on account of non-cash
charges expensed in a prior period, in each case determined on a consolidated
basis, plus, to the extent deducted in arriving at Net Income for such period,
the Transaction Costs; provided, however, that EBITDA shall exclude the impact
on Net Income for such period (whether positive or negative) of all items of
income, gain, expense and loss attributable to discontinued operations.

 

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(b)                 Financial Covenants.  Section 10.1 and Section 10.3 of the
Loan Agreement are hereby amended and restated in their entirety to read as
follows:

10.1        Minimum EBITDA.  As of each of the measurement dates set forth in
the chart below, for the period of twelve (12) consecutive calendar months
then-ended, the Borrowers and their respective consolidated Subsidiaries shall
maintain consolidated EBITDA in an amount not less than the amount set forth
opposite such date in the chart below:

Measurement Date

Minimum EBITDA

Last day of each calendar month ending February 28, 2010 through and including
April 30, 2010

 

$2,750,000

Last day of each calendar month ending May 31, 2010 through and including
July 31, 2010

 

$3,000,000

August 31, 2010

 

$3,300,000

September 30, 2010

 

$3,400,000

October 31, 2010 and the last day of each calendar month ending thereafter

 

$3,500,000

10.3        Fixed Charge Coverage.  As of each of the measurement dates set
forth in the chart below, for the period of twelve (12) consecutive calendar
months then-ended, the Borrowers and their respective consolidated Subsidiaries
shall maintain a ratio (the “Fixed Charge Coverage Ratio”) of (a) the total of
consolidated EBITDA for such period, minus the sum of all income taxes paid in
cash by the Borrowers on a consolidated basis, minus all Capital Expenditures of
the Borrowers made during such period which are not financed with Funded Debt,
minus that portion of the aggregate cash payments made by the applicable
Borrower(s) in respect of the Subject Agreements and Applicable Agreements
during such period that was not deducted as an expense in arriving at Net Income
for such period, plus, without duplication, cash proceeds received during such
period by the Borrowers in respect of the promissory note made payable to
IntriCon in connection with IntriCon’s sale of its heat technology segment in
2005, plus (or minus), to the extent not included as income or gain (or deducted
as an expense or loss) in arriving at Net Income for such period, cash received
(or paid) from dividends (or capital calls) related to IntriCon’s 50% interest
in the joint venture Global Coils (in the case of capital calls, subject to any
applicable restrictions under Section 9.3) to (b) the sum for such period of (i)
Interest Charges paid in cash (other than Interest Charges in respect of the
early termination of IntriCon’s existing Hedging Agreement with Bank of America,
N.A.), plus (ii) regularly scheduled payments made (and, without duplication,
payments required to be made) in respect of principal of Funded Debt (including
the Term Loan, but excluding the Revolving Loans), plus (iii) all cash dividends
and distributions paid or declared in respect of Capital Securities of the
Borrowers, of not less than the amount set forth opposite such measurement date
in the chart below:

 

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Measurement Date

Minimum Fixed Charge
Coverage Ratio

Last day of each calendar month ending February 28, 2010 through and including
April 30, 2010

 

1.05 to 1.00

May 31, 2010 and the last day of each calendar month ending thereafter

 

1.10 to 1.00

Section 4.                      Representations; No Default.  Each Borrower
represents and warrants that: (a) such Borrower has the power and legal right
and authority to enter into this Amendment and has duly authorized the execution
and delivery of this Amendment and other agreements and documents executed and
delivered by such Borrower in connection herewith, (b) neither this Amendment
nor the agreements contained herein contravene or constitute an Unmatured Event
of Default or Event of Default under the Loan Agreement or a default under any
other agreement, instrument or indenture to which such Borrower is a party or a
signatory, or any provision of such Borrower’s Articles of Incorporation or
Bylaws or, to the best of such Borrower’s knowledge, any other agreement or
requirement of law, or result in the imposition of any lien or other encumbrance
on any of its property under any agreement binding on or applicable to such
Borrower or any of its property except, if any, in favor of the Bank, (c) no
consent, approval or authorization of or registration or declaration with any
party, including but not limited to any governmental authority, is required in
connection with the execution and delivery by the Borrower of this Amendment or
other agreements and documents executed and delivered by such Borrower in
connection herewith or the performance of obligations of such Borrower herein
described, except for those which such Borrower has obtained or provided and as
to which such Borrower has delivered certified copies of documents evidencing
each such action to the Bank, (d) no events have taken place and no
circumstances exist at the date hereof which would give such Borrower grounds to
assert a defense, offset or counterclaim to the obligations of such Borrower
under the Loan Agreement or any of the other Loan Documents, (e) there are no
known claims, causes of action, suits, debts, liens, obligations, liabilities,
demands, losses, costs and expenses (including attorneys’ fees) of any kind,
character or nature whatsoever, fixed or contingent, which such Borrower may
have or claim to have against the Bank, which might arise out of or be connected
with any act of commission or omission of the Bank existing or occurring on or
prior to the date of this Amendment, including, without limitation, any claims,
liabilities or obligations arising with respect to the indebtedness evidenced by
the Notes (as defined in the Loan Agreement), and (f) after giving effect to the
waivers expressly granted in Section 2 above, no Unmatured Event of Default or
Event of Default has occurred and is continuing under the Loan Agreement.

Section 5.                      Affirmation, Further References. The Bank and
each Borrower  acknowledge and affirm that the Loan Agreement, as hereby
amended, is hereby ratified and confirmed in all respects and all terms,
conditions and provisions of the Loan Agreement (except as amended by this
Amendment) and of each of the other Loan Documents shall remain unmodified and
in full force and effect.  All references in any document or instrument to the
Loan Agreement are hereby amended and shall refer to the Loan Agreement as
amended by this Amendment.

Section 6.                      Merger and Integration, Superseding Effect. This
Amendment, from and after the date hereof, embodies the entire agreement and
understanding between the parties hereto and supersedes and has merged into it
all prior oral and written agreements on the same subjects by and between the
parties hereto with the effect that this Amendment, shall control with respect
to the specific subjects hereof and thereof.

 

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Section 7.                      Severability.  Whenever possible, each provision
of this Amendment and any other statement, instrument or transaction
contemplated hereby or thereby or relating hereto or thereto shall be
interpreted in such manner as to be effective, valid and enforceable under the
applicable law of any jurisdiction, but, if any provision of this Amendment or
any other statement, instrument or transaction contemplated hereby or thereby or
relating hereto or thereto shall be held to be prohibited, invalid or
unenforceable under the applicable law, such provision shall be ineffective in
such jurisdiction only to the extent of such prohibition, invalidity or
unenforceability, without invalidating or rendering unenforceable the remainder
of such provision or the remaining provisions of this Amendment or any other
statement, instrument or transaction contemplated hereby or thereby or relating
hereto or thereto in such jurisdiction, or affecting the effectiveness, validity
or enforceability of such provision in any other jurisdiction.

Section 8.                      Successors.  This Amendment shall be binding
upon the Borrowers, the Bank and their respective successors and assigns, and
shall inure to the benefit of the Borrowers, the Bank and to the respective
successors and assigns of the Bank.

Section 9.                      Costs and Expenses.  Each Borrower agrees to
reimburse the Bank, upon execution of this Amendment, for all reasonable
out-of-pocket expenses (including attorneys’ fees and legal expenses of counsel
for the Bank) incurred in connection with the Loan Agreement, including in
connection with the negotiation, preparation and execution of this Amendment and
all other documents negotiated, prepared and executed in connection with this
Amendment, and in enforcing the obligations of the Borrowers under this
Amendment, and to pay and save the Bank harmless from all liability for, any
stamp or other taxes which may be payable with respect to the execution or
delivery of this Amendment.

Section 10.                  Headings.  The headings of various sections of this
Amendment have been inserted for reference only and shall not be deemed to be a
part of this Amendment.

Section 11.                  Counterparts; Digital Copies.  This Amendment may
be executed in several counterparts as deemed necessary or convenient, each of
which, when so executed, shall be deemed an original, provided that all such
counterparts shall be regarded as one and the same document, and any party to
this Amendment may execute any such agreement by executing a counterpart of such
agreement.  A facsimile or digital copy (pdf) of this signed Amendment shall be
deemed to be an original thereof.

Section 12.                  Release of Rights and Claims.  Each Borrower, for
itself and its successors and assigns, hereby releases, acquits, and forever
discharges Bank and its successors and assigns for any and all manner of
actions, suits, claims, charges, judgments, levies and executions occurring or
arising from the transactions entered into with Bank prior to entering into this
Amendment whether known or unknown, liquidated or unliquidated, fixed or
contingent, direct or indirect which such Borrower may have against Bank.

Section 13.                  Governing Law.  This Amendment shall be governed by
the internal laws of the State of Minnesota, without giving effect to conflict
of law principles thereof.

Section 14.                  No Waiver.  Except for the waivers expressly
granted in Section 2 above, nothing contained in this Amendment (or in any other
agreement or understanding between the parties) shall constitute a waiver of, or
shall otherwise diminish or impair, the Bank’s rights or remedies under the Loan
Agreement or any of the other Loan Documents, or under applicable law.

 

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signature page follows]

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment and Waiver to
be executed as of the day and year first above written.

 

 

BORROWERS:

INTRICON CORPORATION,
a Pennsylvania corporation

 

 

 

 

 

 

 

 

 

By

/s/ Scott Longval

 

 

Name:

Scott Longval

 

 

Title:

Chief Financial Officer

 

 

 

 

 

 

 

 

 

INTRICON, INC. (formerly known as Resistance 
Technology, Inc.), a Minnesota corporation

 

 

 

 

 

 

 

 

 

By

/s/ Scott Longval

 

 

Name:

Scott Longval

 

 

Title:

Chief Financial Officer

 

 

 

 

 

 

 

 

 

RTI ELECTRONICS, INC.,
a Delaware corporation

 

 

 

 

 

 

 

 

 

By

/s/ Scott Longval

 

 

Name:

Scott Longval

 

 

Title:

Chief Financial Officer

 

 

 

 

 

 

 

 

 

INTRICON TIBBETTS CORPORATION
(formerly known as TI Acquisition Corporation),
a Maine corporation

 

 

 

 

 

 

 

 

 

By

/s/ Scott Longval

 

 

Name:

Scott Longval

 

 

Title:

Chief Financial Officer

 

 

 

 

 

 

 

 

 

INTRICON DATRIX CORPORATION
(formerly known as Jon Barron, Inc.) (d/b/a Datrix),
a California corporation

 

 

 

 

 

 

 

 

 

By

/s/ Scott Longval

 

 

Name:

Scott Longval

 

 

Title:

Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

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BANK:

THE PRIVATEBANK AND TRUST COMPANY,
an Illinois banking corporation

 

 

 

 

 

 

 

 

 

By

/s/ Seth Hove

 

 

Name:

Seth Hove

 

 

Title:

Associate Managing Director

 

 

 

 

 

 

 

 

 

 

 

 

 

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ACKNOWLEDGMENT AND AGREEMENT
REGARDING SUBORDINATED INDEBTEDNESS

The undersigned, being the creditor under a certain Subordination Agreement
dated as of August 13, 2009 (the "Subordination Agreement") executed by the
undersigned in favor of THE PRIVATEBANK AND TRUST COMPANY, an Illinois banking
corporation (the "Senior Lender") regarding certain liabilities, obligations and
indebtedness of INTRICON CORPORATION, a Pennsylvania corporation (“IntriCon”),
INTRICON, INC. (formerly known as Resistance Technology, Inc.), a Minnesota
corporation (“Inc.”), RTI ELECTRONICS, INC., a Delaware corporation (“RTIE”),
INTRICON TIBBETTS CORPORATION (formerly known as TI Acquisition Corporation), a
Maine corporation (“Tibbetts”), and INTRICON DATRIX CORPORATION (formerly known
as Jon Barron, Inc.) (d/b/a Datrix), a California corporation (“Datrix”) (each,
a “Borrower”; collectively, the “Borrowers”) to the Senior Lender arising under
that certain Loan and Security Agreement dated as of August 13, 2009 by and
among the Borrowers and the Senior Lender (the “Loan Agreement”) and each of the
Loan Documents (as defined in the Loan Agreement) executed in connection
therewith, hereby (a) acknowledges the execution and delivery by the Borrowers
that certain First Amendment to Loan and Security Agreement and Waiver dated on
or about the date herewith (the "Amendment"), (b) acknowledges and agrees that
all of the debts, liabilities and obligations of the Borrowers to the Senior
Lender under the Loan Agreement (as amended by the Amendment), are and remain
"Senior Liabilities" as that term is defined in the Subordination Agreement, and
(c) ratifies and confirms that the Subordination Agreement remains in full force
and effect after giving effect to the Amendment and is enforceable against the
undersigned in accordance with its terms.  The undersigned agrees and
acknowledges that the Amendment shall in no way impair or limit the right of the
Senior Lender under the Subordination Agreement.

This Acknowledgment shall not be construed, by implication or otherwise, as
imposing any requirement that the Senior Lender notify or seek the consent of
the undersigned relative to any past or future extension of credit, or
modification, extension or other action with respect thereto, in order for any
such extension of credit or modification, extension or other action with respect
thereto to be subject to the Subordination Agreement, it being expressly
acknowledged and reaffirmed that the undersigned has, under the Subordination
Agreement, consented to modifications, extensions and other actions with respect
thereto without any notice thereof.

Dated as of March 12, 2010.

 

 

/s/ Jon V. Barron

 

 

Jon V. Barron

 

 

 

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