Exhibit 10.3 

AMENDED AND RESTATED SALE OR CHANGE OF CONTROL,
EXCLUSIVITY AND NONCOMPETE AGREEMENT

AMENDED AND RESTATED SALE OR CHANGE OF CONTROL, EXCLUSIVITY AND NONCOMPETE
AGREEMENT (“Agreement”) made this 12th day of November, 2011 by and among United
Healthcare Services, Inc., a Minnesota corporation (together with its
affiliates, “United”) and (ii) IntriCon Corporation, a Pennsylvania corporation
(“IntriCon”).

WITNESSETH:

WHEREAS, United and IntriCon have previously entered into (i) a Software
Development and Assignment Agreement dated as of August 5, 2011 (“Software
Agreement”) and (ii) a Manufacturing Agreement dated as of September 26, 2011 as
amended and restated as of November 12th, 2011 (as amended and restated, the
“Manufacturing Agreement”); and

WHEREAS, in connection with the Software Agreement and the Manufacturing
Agreement, the parties entered into a Sale or Change of Control Agreement dated
as of October 10, 2011 (the “Prior Agreement”) and United and IntriCon and
certain shareholders of IntriCon previously entered into a Shareholders
Agreement dated as of October 10, 2011 (the “Shareholders Agreement”); and

WHEREAS, the parties desire to amend and restate the Prior Agreement on the
terms set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants in this Agreement and
other good and valuable consideration, the receipt and sufficiency of which the
parties acknowledge, United and IntriCon agree as follows:

1.                  Definitions:

Affiliate: Affiliate means any entity that controls, is controlled by or is
under common control with the identified entity, except that no entity may be
deemed an “Affiliate” solely due to the same individual or individuals serving
in the capacities of director, officer, manager, general partner and/or similar
control person of the two entities.

 

Health Insurer: (1) Any entity (including without limitation corporations, LLCs,
HMOs, not for profits) licensed by any state to offer and sell medical or health
insurance; (2) any entity that has entered into a contract with the Centers for
Medicare and Medicaid Services to provide healthcare benefits to eligible
members; (3) any entity that manages or administers the healthcare benefits
provided by any entity identified in (1) or (2) of this definition; and (4) any
Affiliate of any entity identified in (1), (2) or (3) of this definition.

 

Hearing Devices: hearing aids and hearing aid related accessories produced by
IntriCon that meet the Specification (as defined in the Manufacturing Agreement)
and are sold to United under the terms of the Manufacturing Agreement.

 

 

 

 

 

2.                  Sale Transaction Provisions. If IntriCon’s Board of
Directors determines to pursue a sale of IntriCon to any entity that
manufactures or distributes hearing aids or to a Health Insurer (directly or
indirectly), whether by way of stock purchase, asset sale, merger, other
combination or any other change of control of IntriCon (each a “Sale
Transaction”), the Board of Directors will offer to United the opportunity to
complete the transaction on the same terms as offered by any third party (it
being understood that a Sale Transaction process may involve several rounds of
bidding). If IntriCon’s Board of Directors determines to pursue a Sale
Transaction of IntriCon to any other entity (i.e., an entity other than an
entity that (i) manufactures or distributes hearing aids or (ii) is a Health
Insurer), IntriCon agrees to permit United to participate in any formal auction
process or otherwise enter a competing bid to purchase IntriCon. United
acknowledges and agrees that all actions of the IntriCon Board of Directors in
connection with such a sale or change of control must be consistent with the
Board of Directors’ legal duties and obligations to IntriCon and its
shareholders. IntriCon and United agree to cooperate to insure that IntriCon’s
obligations and United’s rights under this Section are exercised in a manner
consistent with the legal duties and obligations of the IntriCon Board of
Directors. IntriCon further agrees to cause those officers and directors
identified by United, including Mark S. Gorder, Michael J. McKenna, Robert N.
Masucci, Nicolas A. Giordano, Philip N. Seamon, Christopher D. Conger, Michael
P. Geraci, Scott Longval, Dennis L. Gonsior, and Greg Gruenhagen to enter into
the Shareholders Agreement with United. The purchaser in any Sale Transaction
must agree to cause IntriCon to perform all of IntriCon’s obligations under the
Software Agreement and the Manufacturing Agreement. If the IntriCon Board
approves a Sale Transaction, or a Sale Transaction otherwise occurs, United will
have the right, in its sole discretion, to terminate, effective at any time
within the next 180 days, all agreements between United and IntriCon, including
any pending orders. For purposes of this Section, a company that manufactures
surgically implanted hearing instruments (e.g. cochlear implants) and does not
manufacture or distribute other types of hearing aids is not an “entity that
manufactures or distributes hearing aids”. If United exits this business or if
there is a sale of IntriCon incompliance with this Section 1, IntriCon will be
released from this change of control obligation and the provisions of this
Section 1 and the related Shareholders Agreement shall expire. For
clarification, United acknowledges that this Agreement satisfies Section 17 of
the Manufacturing Agreement and that United shall not have the right to
terminate the Manufacturing Agreement pursuant to Section 17 of the
Manufacturing Agreement.

3.                  Exclusivity:

(i)                 IntriCon Exclusivity. IntriCon agrees that during the term
of the Manufacturing Agreement, IntriCon will not knowingly manufacture or sell,
directly or indirectly, Hearing Devices, hearing aids or hearing aid accessories
for any Health Insurer, provided however that this shall not prevent IntriCon
from manufacturing or selling hearing aids or components of hearing aids or
hearing aid accessories for, or on behalf of, other hearing aid manufacturers or
distributors so long as IntriCon does not know that such devices will be resold
or otherwise distributed to or for a Health Insurer. If IntriCon learns that
Hearing Devices it manufactures are intended for a Health Insurer it will not
fulfill that order, except to the extent that failure to fulfill that order
would result in a breach of a contract by IntriCon. If IntriCon fulfills such an
order, IntriCon must notify United before shipping and United will have the
right, in United’s sole discretion, to (a) terminate the Manufacturing Agreement
or (b) terminate United’s obligation under Section 15 of the Manufacturing
Agreement.

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(ii)               No Investigation. This exclusivity provision does not require
IntriCon to investigate whether devices manufactured under any current
relationship are intended for a Health Insurer. If IntriCon receives an order
for devices that is significantly larger than its prior experience with the
purchaser, or from a purchaser with whom IntriCon does not have a prior
relationship, IntriCon will inquire regarding the distribution of the devices
and will not accept or fulfill the order if the devices are intended for a
Health Insurer, except, subject to United’s termination rights under the
preceding paragraph, to the extent that failure to fulfill that order would
result in a breach of a contract by IntriCon. For purposes of this Section,
“significantly larger” means an increase in an order of not less than 5,000
devices that is also an increase in order volume of not less than 20 percent. If
United exits this business, IntriCon will be released from this exclusivity
obligation.

4.                  Covenant Not To Compete. For the duration of the
Manufacturing Agreement:

(i)                 IntriCon will not distribute the Hearing Devices or hearing
aid related accessories IntriCon provides to United under the Manufacturing
Agreement (including Section 5.6 of the Manufacturing Agreement) or any similar
product, including updated versions of the same or similar products directly to
the consumer.

(ii)               If IntriCon develops a new hearing related consumer product
that is not subject to the terms of the Manufacturing Agreement (including
Section 5.6 of the Manufacturing Agreement) that IntriCon desires to offer
directly to consumer, IntriCon agrees to first offer to United the right to
distribute that product to consumers. If United declines to distribute that new
product, IntriCon may then distribute the product directly.

(iii)             If IntriCon breaches Sections 4(i) or 4(ii) of this Agreement
or if United reasonably determines that IntriCon’s distribution of any hearing
product directly to consumers, without first providing the right of first
refusal to United, measurably and negatively impacts United’s business, United
will have the right to (a) terminate United’s obligation under Section 15 of the
Manufacturing Agreement effective immediately and (b) if United determines the
breach or negative impact continues for more 30 days after providing written
notice to IntriCon, to terminate the Manufacturing Agreement, each in United’s
sole discretion.

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(iv)             If United exits this business, IntriCon will be released from
this Section 4 Covenant Not To Compete without any further action by United or
IntriCon upon completion of United’s exit from the business.

5.                  Termination. This Agreement, and the respective rights and
obligations of the parties hereto, shall terminate upon the earlier of (i) the
termination of the Manufacturing Agreement or (ii) the mutual agreement of
United and IntriCon. Notwithstanding the foregoing, specific obligations of a
party to this Agreement may expire earlier pursuant to the provisions of this
Agreement.

6.                  Notices. All notices and other communications under this
Agreement must be in writing and will be deemed given when delivered or mailed
by first class, registered or certified mail (air mail if to or from outside the
United States), return receipt requested, postage prepaid, to each party at its
address as provided pursuant to the Manufacturing Agreement.

7.                  Specific Performance. The rights of the parties under this
Agreement are unique and, accordingly, the parties have, in addition to such
other remedies as may be available to any of them at law or in equity, the right
to enforce their rights under this Agreement by actions for specific performance
to the extent permitted by law.

8.                  Entire Agreement. This Agreement and the Software Agreement,
the Manufacturing Agreement, and the Shareholders Agreement constitute the
entire agreement among the parties with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings between them or
any of them as to such subject matter, including without limitation, the Prior
Agreement.

9.                  Waivers and Further Agreements. Any of the provisions of
this Agreement may be waived by an instrument in writing executed and delivered
by United and IntriCon. Any waiver by any party of a breach of any provision of
this Agreement will not operate or be construed as a waiver of any subsequent
breach of that provision or of any other provision hereof. Each of the parties
hereto agrees to execute all such further instruments and documents and to take
all such further action as any other party may reasonably require in order to
effectuate the terms and purposes of this Agreement.

10.              Amendments. Except as otherwise expressly provided in this
Agreement, this Agreement may not be amended except by an instrument in writing
executed by United and IntriCon.

11.              Assignment; Successors and Assigns. This Agreement is binding
upon and will inure to the benefit of the parties to this Agreement and their
respective heirs, executors, legal representatives, successors and permitted
transferees, except as may be expressly provided otherwise in this Agreement.

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12.              Severability. In case any one or more of the provisions in this
Agreement is for any reason be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability will not affect any
other provision of this Agreement and such invalid, illegal and unenforceable
provision must be reformed and construed so that it will be valid, legal, and
enforceable to the maximum extent permitted by law.

13.              Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.

14.              Section Headings. The headings in this Agreement are for
reference purposes only and must not in any way affect the meaning or
interpretation of this Agreement.

15.              Governing Law. This Agreement shall be construed and enforced
in accordance with and governed by the law of the State of Minnesota, without
regard to its principles of conflicts of laws.

 

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IN WITNESS WHEREOF, the undersigned have executed this Sale or Change of Control
Agreement as of the day and year first above written.

 

  UNITED       UNITED HEALTHCARE SERVICES, INC.       By: /s/ Lisa Tseng, M.D.  
  Name: Lisa Tseng, M.D.
Title:    CEO, hi Health Innovations

 

 

 

 

 

 

 

 

 

 

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IN WITNESS WHEREOF, the undersigned have executed this Sale or Change of Control
Agreement as of the day and year first above written.

  INTRICON               By: /s/ Scott Longval     Name: Scott Longval
Title:    CFO

 

 

 

 

 

 

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