EXHIBIT 10.3

                               SECURITY AGREEMENT

         AGREEMENT made this 31st day of August, 2005, between IntriCon
Corporation, a Pennsylvania corporation, as debtor (herein called the "Debtor")
and Diversified Business Credit, Inc. (herein, with its participants, successors
and assigns, called the "Lender"), as secured party.

         Any term used in the Uniform Commercial Code ("UCC") and not otherwise
defined in this Agreement shall have the meaning given to the term in the UCC.

         For good and valuable consideration, Debtor hereby agrees for the
benefit of the Lender as follows:

1.01     Debtor hereby grants the Lender a security interest (collectively
         referred to as the "Security Interests") in the property described
         below, as security for the payment and performance of each and every
         debt, liability and obligation of every type and description which
         Debtor may now or at any time hereafter owe to the Lender (whether such
         debt, liability or obligation now exists or is hereafter created or
         incurred, whether it arises in a transaction involving the Lender alone
         or in a transaction involving other creditors of Debtor, and whether it
         is direct or indirect, due or to become due, absolute or contingent,
         primary or secondary, liquidated or unliquidated, or sole, joint,
         several or joint and several, and including specifically, but not
         limited to, all indebtedness of Debtor arising under any loan or credit
         agreement or guaranty between Debtor and the Lender, whether now in
         effect or hereafter entered into; all such debts, liabilities and
         obligations are herein collectively referred to as the "Obligations").
         The Security Interests shall attach to the all of the personal property
         and fixtures of Debtor (the "Collateral"), including all proceeds and
         products thereof and, including, without limitation the following:

         INVENTORY: All inventory, as such term is defined in the UCC, of every
         type and description, now owned or hereafter acquired by Debtor,
         including inventory consisting of whole goods, spare parts or
         components, supplies or materials and inventory acquired, held or
         furnished for sale, for lease or under service contracts or for
         manufacture or processing, or any other purpose, and wherever located.

         DOCUMENTS OF TITLE: All warehouse receipts, bills of lading and other
         documents of title of every type and description now owned or hereafter
         acquired by Debtor.

         ACCOUNTS: All of Debtor's accounts, as such term in the UCC, now
         existing or hereafter arising, including each and every right of Debtor
         to the payment of money, whether such right to payment now exists or
         hereafter arises, whether such right to payment arises out of a sale,
         lease or other disposition of goods or other property, out of a
         rendering of services, out of a loan, out of the overpayment of taxes
         or other liabilities, or any other transaction or event, whether such
         right to payment is created, generated or earned by Debtor or by some
         other person whose interest is subsequently transferred to Debtor,
         whether such right to

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         payment is or is not already earned by performance, and howsoever such
         right to payment may be evidenced, together with all other rights and
         interests (including all liens, security interests and guaranties)
         which Debtor may at any time have by law or agreement against any
         account debtor or other person obligated to make any such payment or
         against any property of such account debtor or other person; all
         contract rights, chattel papers, bonds, notes and other debt
         instruments, and all loans and obligations receivable, tax refunds and
         other rights to payment in the nature of general intangibles; all
         checking accounts, savings accounts and other depository accounts and
         all savings certificates and certificates of deposit maintained with or
         issued by Lender or any other bank or other financial institution.

         EQUIPMENT AND FIXTURES: All equipment, as such term is defined in the
         UCC, now owned or hereafter acquired by Debtor and all fixtures of
         every type and description now owned or hereafter acquired by Debtor,
         including (without limitation) all present and future machinery,
         vehicles, furniture, fixtures, manufacturing equipment, shop equipment,
         office and recordkeeping equipment, parts, tools, supplies and all
         other goods (except inventory) used or bought for use by Debtor for any
         business or enterprise; including (without limitation) all goods that
         are or may be attached or affixed or otherwise become fixtures upon any
         real property; and including specifically (without limitation) the
         goods described in any equipment schedule or list herewith or hereafter
         furnished to Lender by Debtor, all accessions attachments, parts and
         repairs now or hereafter attached or affixed or used in connection with
         equipment, all substitutions and replacements thereof, and all like or
         similar property now owned or hereafter acquired by Debtor. (No such
         schedule or list need be furnished in order for the security interest
         granted herein to be valid as to all of Debtor's equipment.)

         INVESTMENT PROPERTY: All investment property, as such term is defined
         in the UCC, whether now owned or hereafter acquired by Debtor,
         including (without limitation) all securities, security entitlements,
         securities accounts, commodity contracts, commodity accounts, stocks,
         bonds, mutual fund shares, money market shares and U.S. Government
         securities.

         GENERAL INTANGIBLES: All general intangibles of every type and
         description now owned or hereafter acquired by Debtor, including
         (without limitation) all present and future intellectual property,
         proprietary rights, foreign and domestic patents, patent applications,
         trademarks, trademark applications, service marks, service mark
         applications, trade dress, mask works, copyrights, trade names, trade
         secrets, shop drawings, engineering drawings, blueprints,
         specifications, parts lists, manuals, operating instructions, customer
         or supplier lists and contracts, licenses, permits, franchises, the
         right to use Debtor's corporate name, and the goodwill of Debtor's
         business.

         MISCELLANEOUS COLLATERAL: All instruments, chattel paper, deposit
         accounts, documents, goods, letter-of-credit rights, letters of credit,
         all sums on deposit in any collateral account, and any items in any
         lockbox, now existing or hereafter arising, and any

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         money or other assets of the Debtor that come into the possession,
         custody or control of the Lender.

         1.02     Debtor represents, warrants and agrees that:

         (a) Debtor has (or will have at the time it acquires rights in
Collateral hereafter arising) and will maintain so long as the Security
Interests may remain outstanding, absolute title to each item of Collateral and
all proceeds thereof, free and clear of all interests, liens, attachments,
encumbrances and security interests except the Security Interests as provided
herein, and except as the Lender may otherwise agree in writing. Debtor will
defend the Collateral against all claims or demands of all persons (other than
the Lender) claiming the Collateral or any interest therein. Without the
Lender's prior written consent, Debtor will not sell or otherwise dispose of the
Collateral or any interest therein, except the sale of inventory in the ordinary
course of Debtor's business or as permitted by Section 6(d) of the Credit and
Security Agreement of even date herewith by and among, the Lender, Resisitance
Technology, Inc. and RTI Electronics, Inc. (as amended and supplemented from
time to time, the "Credit Agreement".

         (b) Debtor's exact legal name and federal employer and organizational
number are as set forth below and state of organization is as set forth above.
Debtor does business solely under its own name and the trade names (if any) set
forth below. The sole place of business and chief executive office of Debtor is
located at the address set forth below and all of Debtor's records relating to
its business or the Collateral are kept at that location. Debtor will not permit
any tangible Collateral or any records pertaining to Collateral to be located in
any state or area in which, in the event of such location, a financing statement
covering such Collateral would be required to be, but has not in fact been,
filed in order to perfect the Security Interests. Debtor will not change its
identity, its name, its articles of organization or the location of its place of
business, without prior written notice to the Lender.

         (c) None of the Collateral is or will become a fixture on real estate,
unless a sufficient fixture filing is in effect with respect thereto.

         (d) Each right to payment and each instrument, document, chattel paper
and other agreement constituting or evidencing Collateral is (or, in the case of
all future Collateral, will be when arising or issued) the valid, genuine and
legally enforceable obligation, subject to no defense, setoff or counterclaim,
of the account debtor or other obligor named therein or in Debtor's records
pertaining thereto as being obligated to pay such obligation. Debtor will not
agree to modify, amend, subordinate, cancel or terminate the obligation of any
such account debtor or other obligor, without the Lender's prior written consent
except for credits and discounts granted in the ordinary course and consistent
with past practices.

         (e) Debtor will keep all tangible Collateral in good repair, working
order and condition, normal depreciation excepted, and will, from time to time,
replace any worn, broken or defective parts.

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         (f) Debtor will promptly pay all taxes and other governmental charges
levied or assessed upon or against any Collateral or upon or against the
creation, perfection or continuance of the Security Interests.

         (g) Debtor will keep all Collateral free and clear of all security
interests, liens and encumbrances except the Security Interests provided herein
and except other security interests approved in writing by the Lender, including
any security interests permitted by Section 6(b) of the Credit Agreement.

         (h) Debtor will at all reasonable times permit the Lender or its
representatives to examine or inspect any Collateral, or any evidence of
Collateral, wherever located, and Debtor will at any time and from time to time
send requests for verification of accounts or notices of assignment to account
debtors and other obligors.

         (i) Debtor will keep accurate and complete records pertaining to the
Collateral and pertaining to Debtor's business and financial condition, prepared
on the basis of generally accepted accounting principles consistently applied;
will submit to the Lender such weekly, monthly and other periodic reports
concerning the Collateral and Debtor's business and financial condition as the
Lender may from time to time request; and will permit the Lender, or its
employees, accountants, attorneys or agents, to examine and copy any or all of
its records at any time during Debtor's business hours.

         (j) Debtor will promptly notify the Lender of any loss of or material
damage to any Collateral or of any substantial adverse change, known to Debtor,
in any Collateral or the prospect of payment thereof.

         (k) Upon request by the Lender, whether such request is made before or
after the occurrence of an Event of Default, Debtor will promptly deliver to the
Lender in pledge all instruments, documents and chattel papers constituting
Collateral, duly endorsed or assigned by Debtor.

         (l) Debtor will at all times keep all tangible Collateral insured
against risks of fire (including so-called extended coverage), theft, collision
(for Collateral consisting of motor vehicles) and such other risks and in such
amounts as the Lender may reasonably request, with any loss payable to the
Lender to the extent of its interest.

         (m) Debtor will pay or reimburse the Lender on demand for all costs of
collection of any of the Obligations and all other out-of-pocket expenses
(including in each case all reasonable attorneys' fees and legal expenses)
incurred by the Lender in connection with the creation, perfection, protection,
satisfaction, foreclosure or enforcement of the Security Interests or the
creation, continuance or enforcement of this Agreement or any or all of the
Obligations.

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         (n) Debtor will use and keep the Collateral, and will require that
others use and keep the Collateral, only for lawful purposes, without violation
of any federal, state or local law, statute or ordinance.

         (o) Debtor from time to time will execute and deliver or endorse any
and all instruments, documents, conveyances, assignments, security agreements,
financing statements and other agreements and writings which the Lender may
reasonably request in order to secure, protect, perfect or enforce the Security
Interests or the rights of the Lender under this Agreement (but any failure to
request or assure that Debtor executes, delivers or endorses any such item shall
not affect or impair the validity, sufficiency or enforceability of this
Agreement and the Security Interests, regardless of whether any such item was or
was not executed, delivered or endorsed in a similar context or on a prior
occasion).

         If Debtor at any time fails to perform or observe any of the foregoing
agreements, and if such failure shall continue for a period of ten calendar days
after the Lender gives Debtor written notice thereof (or in the case of the
agreements contained in clauses (g) and (1) above, immediately upon the
occurrence of such failure, without notice or lapse of time), the Lender may,
but need not, perform or observe such agreement on behalf and in the name, place
and stead of Debtor (or, at the Lender's option, in the Lender's name) and may,
but need not, take any and all other actions which the Lender may reasonably
deem necessary to cure or correct such failure (including, without limitation,
the payment of taxes, the satisfaction of security interests, liens or
encumbrances, the performance of obligations owed to account debtors or other
obligors, the procurement and maintenance of insurance, the execution of
assignments, security agreements and financing statements, and the endorsement
of instruments); and Debtor shall thereupon pay to the Lender on demand the
amount of all monies expended and all costs and expenses (including reasonable
attorneys' fees and legal expenses) incurred by the Lender in connection with or
as a result of the performance or observance of such agreements or the taking of
such action by the Lender, together with interest thereon from the date expended
or incurred at the highest lawful rate then applicable to any of the
Obligations. To facilitate the performance or observance by the Lender of such
agreements to Debtor, Debtor hereby irrevocably appoints the Lender, or the
delegate of the Lender, acting alone, as the attorney-in-fact of Debtor with the
right (but not the duty) from time to time after the occurrence of an Event of
Default to create, prepare, complete, execute, deliver, endorse or file in the
name and on behalf of Debtor any and all instruments, documents, assignments,
security agreements, financing statements, applications for insurance and other
agreements and writings required to be obtained, executed, delivered or endorsed
by Debtor under this Section 1.02.

         1.03 Debtor agrees to deliver to the Lender, or, at the Lender's
option, to deposit in one or more accounts maintained for the Lender by any bank
reasonably satisfactory to the Lender, all collections on accounts, contract
rights, chattel paper and other rights to payment constituting Collateral, and
all other cash proceeds of Collateral, immediately upon receipt thereof, in the
form received, except for Debtor's endorsement when deemed necessary. Amounts
deposited in an account shall not be subject to withdrawal by Debtor, except
after full payment and discharge of all Obligations. All such collections shall
constitute proceeds of Collateral and shall not constitute payment of any
Obligation, provided however, all amounts received by the Lender representing

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payments on accounts receivable comprising part of the Collateral, or other
payments directed to be applied to loans made by the Lender to Debtor, shall be
credited to the balance of such loans after allowing two (2) business days for
collection. Until delivered to the Lender or deposited in an account, all
proceeds or collections of Collateral shall be held in trust by Debtor for and
as the property of the Lender and shall not be commingled with any funds or
property of Debtor. The Lender may deposit any and all collections received by
it from Debtor or out of any collateral account in the Lender's general account
and may commingle such collections with other property of the Lender or any
other person. All items shall be delivered to the Lender or deposited in any
collateral account subject to final payment. If any such item is returned
uncollected, Debtor will immediately pay the Lender, or, for items deposited in
a collateral account, the bank maintaining such account, the amount of that
item, or such bank at its discretion may charge any uncollected item to Debtor's
commercial account or other account. Debtor shall be liable as an endorser on
all items deposited in any collateral account, whether or not in fact endorsed
by Debtor. The Lender from time to time at its discretion may apply funds on
deposit in any collateral account to the payment of any or all Obligations, in
any order or manner of application satisfactory to the Lender.

         1.04 In addition to the rights of the Lender under Section 1.03, with
respect to any or all rights to payment constituting Collateral the Lender may
at any time after the occurrence of an Event of Default under Section 1.06
notify any account debtor or other person obligated to pay the amount due that
such right to payment has been assigned or transferred to the Lender for
security and shall be paid directly to the Lender. Debtor will join in giving
such notice, if the Lender so requests. At any time after Debtor or the Lender
gives such notice to an account debtor or other obligor, the Lender may, but
need not, in the Lender's name or in Debtor's name, (i) demand, sue for, collect
or receive any money or property at any time payable or receivable on account
of, or securing, any such right to payment, or grant any extension to, make any
compromise or settlement with or otherwise agree to waive, modify, amend or
change the obligations (including collateral obligations) of any such account
debtor or other obligor; and (ii) as agent and attorney-in-fact of Debtor notify
the United States Postal Service to change the address for delivery of Debtor's
mail to any address designated by the Lender and otherwise intercept, receive,
open and dispose of Debtor's mail, applying all Collateral as permitted under
this Agreement and holding all other mail for Debtor's account or forwarding
such mail to Debtor's last known address.

         1.05 As additional security for the payment and performance of the
Obligations, Debtor hereby assigns to the Lender any and all monies (including,
without limitation, proceeds of insurance and refunds of unearned premiums) due
or to become due under, and all other rights of Debtor with respect to, any and
all policies of insurance now or at any time hereafter covering the Collateral
or any evidence thereof or any business records or valuable papers pertaining
thereto, and Debtor hereby directs the issuer of any such policy to pay all such
monies directly to the Lender, At any time, whether before or after the
occurrence of any Event of Default, the Lender may (but need not), in the
Lender's name or in Debtor's name, execute and deliver proof of claim, receive
all such monies, endorse checks and other instruments representing payment of
such monies, and adjust, litigate, compromise or release any claim against the
issuer of any such policy.

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         1.06 Each of the following occurrences shall constitute an Event of
Default under this Agreement (herein called an "Event of Default"): (i) Debtor
shall fail to pay any or all of the Obligations when due or, if payable on
demand, on demand; or (ii) Debtor shall fail to observe or perform any covenant
or agreement binding on Debtor under this Agreement or under any other
assignment, conveyance, instrument or agreement now in effect or hereafter made
between Debtor and the Lender within any applicable grace period; or (iii) any
representation or warranty made by Debtor in this Agreement or in any such other
assignment, conveyance, instrument or agreement, or in any financial statements,
or reports or certificates heretofore or at any time hereafter submitted by or
on behalf of Debtor to the Lender, shall prove to have been false or materially
misleading when made; or (iv) payment of any substantial indebtedness of Debtor,
other than the Obligations, shall be demanded or the maturity of any such
indebtedness shall be accelerated, or any precondition or circumstance
permitting any creditor of Debtor, acting individually or with the consent of
other creditors, to accelerate the maturity of any such indebtedness shall have
occurred (for this purpose indebtedness shall be deemed substantial if it
exceeds $25,000); or (v) Debtor shall become insolvent or shall commit an act of
bankruptcy under the United States Bankruptcy Act, or shall file or have filed
against it, voluntarily or involuntarily, a petition in bankruptcy or for
reorganization or for the adoption of an arrangement or plan under the United
States Bankruptcy Code or shall procure or suffer the appointment of a receiver
for any substantial portion of its properties, or shall initiate or have
initiated against it, voluntarily or involuntarily, any act, process or
proceeding under any insolvency law or other statute or law providing for the
modification or adjustment of the rights of creditors; or (vi) the Lender shall
in good faith believe that the prospect of due and punctual payment of any or
all of the Obligations is impaired.

         1.07 Upon the occurrence of any Event of Default under Section 1.06 and
at any time thereafter, the Lender may exercise one or more of the following
rights and remedies: (i) declare all unmatured Obligations to be immediately due
and payable, and the same shall thereupon be immediately due and payable,
without presentment or other notice or demand (but the Lender expressly reserves
the right to demand payment of any Obligation payable on demand, at any time,
whether or not an Event of Default has occurred or is continuing); (ii) 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 Collateral, or any evidence thereof, proceeding
without judicial process or by judicial process (without a prior hearing or
notice thereof, which Debtor hereby expressly waives) and the right to sell,
lease or otherwise dispose of any or all of the Collateral, and in connection
therewith Debtor will on demand assemble the collateral and make it available to
the Lender at a place to be designated by the Lender which is reasonably
convenient to both parties and if notice to Debtor of any intended disposition
of Collateral or any other intended action is required by law in a particular
instance, such notice shall be deemed commercially reasonable if given (in the
manner specified in Section 1.09) at least ten (10) calendar days prior to the
date of intended disposition or other action; (iii) without notice or demand
offset any indebtedness the Lender or any of its participants, successors or
assigns then owes to Debtor, whether or not then due, against any Obligation
then owed to the Lender or any of its participants, successors or assigns by
Debtor, whether or not then due; and (iv) exercise or enforce any and all other
rights or remedies available by law or agreement against the Collateral, against
Debtor, or against any other person or property.

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         1.08 This Agreement does not contemplate a sale of accounts, contract
rights or chattel paper, and, as provided by law, Debtor is entitled to any
surplus and shall remain liable for any deficiency. The Lender's duty of care
with respect to Collateral in its possession (as imposed by law) shall be deemed
fulfilled in the selection of the bailee or other third person, and the Lender
need not otherwise preserve, protect, insure or care for any Collateral. The
Lender shall not be obligated to preserve any rights Debtor may have against
prior parties, to realize on the Collateral at all or in any particular manner
in order or to apply any cash proceeds of the Collateral in any particular order
of application.

         1.09 This Agreement can be waived, modified, amended, terminated or
discharged, and the Security Interests can be released, only explicitly in a
writing signed by the Lender. A waiver so signed shall be effective only in the
specific instance and for the specific purpose given. Mere delay or failure to
act shall not preclude the exercise or enforcement of any rights or remedies
available to the Lender. All rights and remedies of the Lender shall be
cumulative and may be exercised singularly in any order or sequence, or
concurrently, at the Lender's option, and the exercise or enforcement of any
such right or remedy shall neither be a condition to nor bar the exercise or
enforcement of any other. All notices to be given to Debtor shall be deemed
sufficiently given if delivered or mailed by registered, certified or ordinary
mail, postage prepaid, to Debtor at its address set forth below or at its most
recent address shown on the Lender's records.

         1.10 The Lender and its participants, if any, are not partners or joint
venturers, and the Lender shall not have any liability or responsibility for any
obligation, act or omission of any of its participants.

         1.11 This Agreement, and the Security Interests granted hereby, shall
be binding upon Debtor, its successors and assigns, and shall inure to the
benefit of and be enforceable by the Lender and each and all of its
participants, successors and assigns, and shall be effective when executed by
Debtor and delivered to the Lender whether or not this Agreement is executed by
the Lender. All rights and powers specifically conferred upon the Lender may be
transferred or delegated to any of the participants, successors or assigns of
the Lender. Except to the extent otherwise required by law, this Agreement and
the transaction evidenced hereby shall be governed by the substantive laws of
the state in which this Agreement is accepted by the Lender. If any provision or
application of this Agreement is held unlawful or unenforceable in any respect,
such illegality or unenforceability shall not affect other provisions or
applications which can be given effect, and this Agreement shall be construed as
if the unlawful or unenforceable provision or application had never been
contained herein or prescribed hereby. All representations and warranties
contained in this Agreement or in any other agreement between Debtor and the
Lender shall survive the execution, delivery and performance of this Agreement
and the creation and payment of the Obligations. Debtor waives notice of the
acceptance of this Agreement by the Lender.

         1.12. DEBTOR HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE
OR FEDERAL COURT SITUATED IN HENNEPIN OR RAMSEY COUNTY, MINNESOTA AND WAIVES ANY
OBJECTION BASED ON FORUM NON CONVENIENS,

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WITH REGARD TO ANY ACTIONS, CLAIMS, DISPUTES OR PROCEEDINGS RELATED TO THIS
AGREEMENT, THE COLLATERAL, THE OBLIGATIONS OR ANY OTHER AGREEMENTS OR
TRANSACTIONS BETWEEN DEBTOR AND LENDER, OR ENFORCEMENT AND/OR INTERPRETATION OF
ANY OF THE FOREGOING. Nothing herein shall affect Lender's right to serve
process in any manner permitted by law, or limit Lender's right to bring
proceedings against the undersigned in the competent courts of any other
jurisdiction or jurisdictions.

         1.13 DEBTOR HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING ARISING OUT OF THIS AGREEMENT, THE OBLIGATIONS, THE COLLATERAL OR ANY
OTHER AGREEMENTS OR TRANSACTIONS BETWEEN DEBTOR AND LENDER.

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         IN WITNESS WHEREOF, this Security Agreement has been duly executed and
delivered by the proper officers thereunto duly authorized on the day and year
first above written.


                                      INTRICON CORPORATION


                                      By:  /s/Mark S. Gorder
                                           -------------------------------------
                                           President


                                      By:  /s/William J. Kullback
                                           -------------------------------------
                                           Secretary


                                      Federal Identification Number:  23-1069060

                                      Organizational Number: 323408




TRADE NAMES:                                         INVENTORY LOCATIONS:






Accepted at Minneapolis, Minnesota
on August 31, 2005

Diversified Business Credit, Inc.


By /s/
   ------------------------------------
         Its
             --------------------------