Document:

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                           PHASE FORWARD INCORPORATED

             AMENDED AND RESTATED 2004 EMPLOYEE STOCK PURCHASE PLAN

ARTICLE 1 - PURPOSE.

      This 2004 Employee Stock Purchase Plan (the "Plan") is intended to
encourage stock ownership by all eligible employees of Phase Forward
Incorporated (the "Company"), a Delaware corporation, and its participating
subsidiaries (as defined in Article 17) so that they may share in the growth of
the Company by acquiring or increasing their proprietary interest in the
Company. The Plan is designed to encourage eligible employees to remain in the
employ of the Company and its participating subsidiaries. The Plan is intended
to constitute an "employee stock purchase plan" within the meaning of Section
423(b) of the Internal Revenue Code of 1986, as amended (the "Code"). Purchase
options are to be granted under the Plan only to employees of the Company or its
subsidiaries as provided in Article 3.

ARTICLE 2 - ADMINISTRATION OF THE PLAN.

      This Plan shall be administered by the Board or by a committee appointed
by the Board (the "Committee"). In the event the Board fails to appoint or
refrains from appointing a Committee, the Board shall have all power and
authority to administer this Plan. In such event, the word "Committee" wherever
used herein shall be deemed to mean the Board. The Committee shall, subject to
the provisions of the Plan, have the power to construe this Plan, to determine
all questions hereunder, and to adopt and amend such rules and regulations for
the administration of this Plan as it may deem desirable. No member of the Board
or the Committee shall be liable for any action or determination made in good
faith with respect to this Plan or any option granted under it.

ARTICLE 3 - ELIGIBLE EMPLOYEES.

      All employees of the Company or any of its participating subsidiaries
whose customary employment is more than 20 hours per week and for more than five
months in any calendar year and who have completed at least 90 days of
employment with us on or before the first day of any Payment Period (as defined
in Article 5) shall be eligible to receive purchase options under the Plan to
purchase common stock of the Company, and all eligible employees shall have the
same rights and privileges hereunder. Persons who are eligible employees on the
first business day of any Payment Period shall receive their purchase options as
of such day. Persons who become eligible employees after any date on which
purchase options are granted under the Plan shall be granted purchase options on
the first day of the next succeeding Payment Period on which purchase options
are granted to eligible employees under the Plan. In no event, however, may an
employee be granted a purchase option if such employee, immediately after the
purchase option was granted, would be treated as owning stock possessing five
percent or more of the total combined voting power or value of all classes of
stock of the Company or of any parent corporation or subsidiary corporation, as
the terms "parent corporation" and "subsidiary corporation" are defined in
Section 424(e) and (f) of the Code. For purposes of determining stock ownership
under this paragraph, the rules of Section 424(d) of the Code shall apply, and
<PAGE>
stock which the employee may purchase under outstanding purchase options shall
be treated as stock owned by the employee.

ARTICLE 4 - STOCK SUBJECT TO THE PLAN.

      The stock subject to the purchase options under the Plan shall be shares
of the Company's authorized but unissued common stock, par value $0.01 per share
(the "Common Stock"), or shares of Common Stock reacquired by the Company,
including shares purchased in the open market. The aggregate number of shares
which may be issued pursuant to the Plan is three hundred twenty thousand
(320,000), subject to adjustment as provided in Article 12. If any purchase
option granted under the Plan shall expire or terminate for any reason without
having been exercised in full or shall cease for any reason to be exercisable in
whole or in part, the unpurchased shares subject thereto shall again be
available under the Plan.

ARTICLE 5 - PAYMENT PERIOD AND PURCHASE OPTIONS.

      The first Payment Period during which payroll deductions will be
accumulated under the Plan shall commence on such date as is determined by the
Board (or Committee) and shall end on November 30, 2004 (the "First Payment
Period"). For the remainder of the duration of the Plan, Payment Periods shall
consist of the six-month periods commencing on December 1 and June 1 and ending
on the last days of November and May of each calendar year.

      Twice each year, on the first business day of each Payment Period, the
Company will grant to each eligible employee who is then a participant in the
Plan a purchase option to purchase on the last day of such Payment Period, at
the Option Price hereinafter provided for, a maximum of 5,000 shares, on
condition that such employee remains eligible to participate in the Plan
throughout the remainder of such Payment Period. The participant shall be
entitled to exercise the purchase option so granted only to the extent of the
participant's accumulated payroll deductions on the last day of such Payment
Period. If the participant's accumulated payroll deductions on the last day of
the Payment Period would enable the participant to purchase more than 5,000
shares except for the 5,000-share limitation, the excess of the amount of the
accumulated payroll deductions over the aggregate purchase price of the 5,000
shares shall be promptly refunded to the participant by the Company, without
interest. The Option Price per share for each Payment Period shall be the lesser
of (i) 85% of the average market price of the Common Stock on the first business
day of the Payment Period and (ii) 85% of the average market price of the Common
Stock on the last business day of the Payment Period, in either event rounded up
to the nearest cent. The foregoing limitation on the number of shares subject to
purchase option and the Option Price shall be subject to adjustment as provided
in Article 12.

      For purposes of the Plan, the term "average market price" on any date
means (i) the average (on that date) of the high and low prices of the Common
Stock on the principal national securities exchange on which the Common Stock is
traded, if the Common Stock is then traded on a national securities exchange; or
(ii) the last reported sale price (on that date) of the Common Stock on the
NASDAQ National Market, if the Common Stock is not then traded on a national
securities exchange; or (iii) the average of the closing bid and asked prices
last quoted (on that date) by an established quotation service for
over-the-counter securities, if the Common Stock is

                                      -2-
<PAGE>
not reported on the NASDAQ National Market; or (iv) if the Common Stock is not
publicly traded, the fair market value of the Common Stock as determined by the
Committee after taking into consideration all factors which it deems
appropriate, including, without limitation, recent sale and offer prices of the
Common Stock in private transactions negotiated at arm's length.

      For purposes of the Plan, the term "business day" means a day on which
there is trading on the NASDAQ National Market or the aforementioned national
securities exchange, whichever is applicable pursuant to the preceding
paragraph; and if neither is applicable, a day that is not a Saturday, Sunday or
legal holiday in the Commonwealth of Massachusetts.

      No employee shall be granted a purchase option which permits the
employee's right to purchase stock under the Plan, and under all other Section
423(b) employee stock purchase plans of the Company and any parent or subsidiary
corporations, to accrue at a rate which exceeds $25,000 of fair market value of
such stock (determined on the date or dates that purchase options on such stock
were granted) for each calendar year in which such purchase option is
outstanding at any time. The purpose of the limitation in the preceding sentence
is to comply with Section 423(b)(8) of the Code. If the participant's
accumulated payroll deductions on the last day of the Payment Period would
otherwise enable the participant to purchase Common Stock in excess of the
Section 423(b)(8) limitation described in this paragraph, the excess of the
amount of the accumulated payroll deductions over the aggregate purchase price
of the shares actually purchased shall be promptly refunded to the participant
by the Company, without interest.

ARTICLE 6 - EXERCISE OF PURCHASE OPTION.

      Each eligible employee who continues to be a participant in the Plan on
the last day of a Payment Period shall be deemed to have exercised his or her
purchase option on such date and shall be deemed to have purchased from the
Company such number of full shares of Common Stock reserved for the purpose of
the Plan as the participant's accumulated payroll deductions on such date will
pay for at the Option Price, subject to the 5,000-share limit of the purchase
option and the Section 423(b)(8) limitation described in Article 5. If the
individual is not a participant on the last day of a Payment Period, he or she
shall not be entitled to exercise his or her purchase option and the amount of
his or her aggregate payroll deductions for that period will be refunded without
interest. Only full shares of Common Stock may be purchased under the Plan.
Unused payroll deductions remaining in a participant's account at the end of a
Payment Period by reason of the inability to purchase a fractional share shall
be carried forward to the next Payment Period.

                                      -3-
<PAGE>
ARTICLE 7 - AUTHORIZATION FOR ENTERING THE PLAN.

      An employee may elect to enter the Plan by filling out, signing and
delivering to the Company an authorization in a form specified by the Company:

            A. Stating the percentage to be deducted regularly from the
      employee's pay;

            B. Authorizing the purchase of stock for the employee in each
      Payment Period in accordance with the terms of the Plan; and

            C. Specifying the exact name or names in which stock purchased for
      the employee is to be issued as provided under Article 11 hereof.

Such authorization must be received by the Company before the first day of the
next succeeding Payment Period and shall take effect only if the employee is an
eligible employee on the first business day of such Payment Period, provided,
however, that with respect to the First Payment Period, a purchase option shall
be granted to each eligible employee and such authorization to participate in
the plan must be received no more than three weeks following the first day of
the First Payment Period.

      Unless a participant files a new authorization or withdraws from the Plan,
the deductions and purchases under the authorization the participant has on file
under the Plan will continue from one Payment Period to succeeding Payment
Periods as long as the Plan remains in effect.

      The Company will accumulate and hold for each participant's account the
amounts deducted from his or her pay. No interest will be paid on these amounts.

ARTICLE 8 - MAXIMUM AMOUNT OF PAYROLL DEDUCTIONS.

      An employee may authorize payroll deductions in an amount (expressed as a
whole percentage or fixed amount) not more than ten percent (10%) of the
employee's total compensation, including base pay or salary and any overtime,
bonuses or commissions.

ARTICLE 9 - CHANGE IN PAYROLL DEDUCTIONS.

      Deductions may not be increased or decreased during a Payment Period.
However, a participant may withdraw in full from the Plan in which event the
Company will refund the amount of the participant aggregate payroll deductions
for that period will be refunded without interest.

ARTICLE 10 - WITHDRAWAL FROM THE PLAN.

      A participant may withdraw from the Plan (in whole but not in part) at any
time prior to the last day of a Payment Period by delivering a withdrawal notice
to the Company in the form specified by the Company.

                                      -4-
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      To re-enter the Plan, an employee who has previously withdrawn must file a
new authorization before the first day of the next Payment Period in which he or
she wishes to participate. The employee's re-entry into the Plan becomes
effective at the beginning of such Payment Period, provided that he or she is an
eligible employee on the first business day of the Payment Period.

ARTICLE 11 - ISSUANCE OF STOCK.

      Certificates for stock issued to participants shall be delivered as soon
as practicable after each Payment Period by the Company's transfer agent.
Certificates may be issued in paper or electronic form at the discretion of the
Company.

      Stock purchased under the Plan shall be issued only in the name of the
participant.

ARTICLE 12 - ADJUSTMENTS.

      Upon the happening of any of the following described events, a
participant's rights under purchase options granted under the Plan shall be
adjusted as hereinafter provided:

            A. In the event that the shares of Common Stock shall be subdivided
      or combined into a greater or smaller number of shares or if, upon a
      reorganization, split-up, liquidation, recapitalization or the like of the
      Company, the shares of Common Stock shall be exchanged for other
      securities of the Company, each participant shall be entitled, subject to
      the conditions herein stated, to purchase such number of shares of Common
      Stock or amount of other securities of the Company as were exchangeable
      for the number of shares of Common Stock that such participant would have
      been entitled to purchase except for such action, and appropriate
      adjustments shall be made in the purchase price per share to reflect such
      subdivision, combination or exchange; and

            B. In the event the Company shall issue any of its shares as a stock
      dividend upon or with respect to the shares of stock of the class which
      shall at the time be subject to a purchase option hereunder, each
      participant upon exercising such a purchase option shall be entitled to
      receive (for the purchase price paid upon such exercise) the shares as to
      which the participant is exercising his or her purchase option and, in
      addition thereto (at no additional cost), such number of shares of the
      class or classes in which such stock dividend or dividends were declared
      or paid, and such amount of cash in lieu of fractional shares, as is equal
      to the number of shares thereof and the amount of cash in lieu of
      fractional shares, respectively, which the participant would have received
      if the participant had been the holder of the shares as to which the
      participant is exercising his or her purchase option at all times between
      the date of the granting of such purchase option and the date of its
      exercise.

      Upon the happening of any of the foregoing events, the class and aggregate
number of shares set forth in Article 4 hereof which are subject to purchase
options which have been or may be granted under the Plan and the limitations set
forth in the second paragraph of Article 5 shall

                                      -5-
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also be appropriately adjusted to reflect the events specified in paragraphs A
and B above. Notwithstanding the foregoing, any adjustments made pursuant to
paragraphs A or B shall be made only after the Committee, based on advice of
counsel for the Company, determines whether such adjustments would constitute a
"modification" (as that term is defined in Section 424 of the Code). If the
Committee determines that such adjustments would constitute a modification, it
may refrain from making such adjustments.

      If the Company is to be consolidated with or acquired by another entity in
a merger, a sale of all or substantially all of the Company's assets or
otherwise (an "Acquisition"), the Committee or the board of directors of any
entity assuming the obligations of the Company hereunder (the "Successor Board")
shall, with respect to purchase options then outstanding under the Plan, either
(i) make appropriate provision for the continuation of such purchase options by
arranging for the substitution on an equitable basis for the shares then subject
to such purchase options either (a) the consideration payable with respect to
the outstanding shares of the Common Stock in connection with the Acquisition,
(b) shares of stock of the successor corporation, or a parent or subsidiary of
such corporation, or (c) such other securities as the Successor Board deems
appropriate, the fair market value of which shall not materially exceed the fair
market value of the shares of Common Stock subject to such purchase options
immediately preceding the Acquisition; or (ii) terminate each participant's
purchase options in exchange for a cash payment equal to the excess of (a) the
fair market value on the date of the Acquisition, of the number of shares of
Common Stock that the participant's accumulated payroll deductions as of the
date of the Acquisition could purchase, at a purchase option price determined
with reference only to the first business day of the applicable Payment Period
and subject to the 5,000-share, Code Section 423(b)(8) and fractional-share
limitations on the amount of stock a participant would be entitled to purchase,
over (b) the result of multiplying such number of shares by such purchase option
price.

      The Committee or Successor Board shall determine the adjustments to be
made under this Article 12, and its determination shall be conclusive.

ARTICLE 13 - NO TRANSFER OR ASSIGNMENT OF EMPLOYEE'S RIGHTS.

      A purchase option granted under the Plan may not be transferred or
assigned, except by will or the laws of descent and distribution, and may be
exercised, during the participant's lifetime, only by the participant.

ARTICLE 14 - TERMINATION OF EMPLOYEE'S RIGHTS.

      Whenever a participant ceases to be an eligible employee because of
retirement, voluntary or involuntary termination, resignation, layoff,
discharge, death or for any other reason, his or her rights under the Plan shall
immediately terminate, and the Company shall promptly refund, without interest,
the entire balance of his or her payroll deduction account under the Plan.
Notwithstanding the foregoing, eligible employment shall be treated as
continuing intact while a participant is on military leave, sick leave or other
bona fide leave of absence, for up to 90 days, or for so long as the
participant's right to re-employment is guaranteed either by statute or by
contract, if longer than 90 days.

                                      -6-
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ARTICLE 15 - TERMINATION AND AMENDMENTS TO PLAN.

      Unless terminated sooner as provided below, the Plan shall terminate on
May 31, 2014. The Plan may be terminated at any time by the Company's Board of
Directors but such termination shall not affect purchase options then
outstanding under the Plan. It will terminate in any case when all or
substantially all of the unissued shares of stock reserved for the purposes of
the Plan have been purchased. If at any time shares of stock reserved for the
purpose of the Plan remain available for purchase but not in sufficient number
to satisfy all then unfilled purchase requirements, the available shares shall
be apportioned among participants in proportion to the amount of payroll
deductions accumulated on behalf of each participant that would otherwise be
used to purchase stock, and the Plan shall terminate. Upon such termination or
any other termination of the Plan, all payroll deductions not used to purchase
stock will be refunded, without interest.

      The Committee or the Board of Directors may from time to time adopt
amendments to the Plan provided that, without the approval of the stockholders
of the Company, no amendment may (i) increase the number of shares that may be
issued under the Plan; (ii) change the class of employees eligible to receive
purchase options under the Plan, if such action would be treated as the adoption
of a new plan for purposes of Section 423(b) of the Code; or (iii) cause Rule
16b-3 under the Securities Exchange Act of 1934 to become inapplicable to the
Plan.

ARTICLE 16 - LIMITS ON SALE OF STOCK PURCHASED UNDER THE PLAN.

      The Plan is intended to provide shares of Common Stock for investment and
not for resale. The Company does not, however, intend to restrict or influence
any employee in the conduct of his or her own affairs. An employee may,
therefore, sell stock purchased under the Plan at any time the employee chooses,
subject to compliance with the Company's insider trading policy, as amended and
in effect from time to time, any applicable federal or state securities laws and
subject to any restrictions imposed under Article 22 to ensure that tax
withholding obligations are satisfied. THE EMPLOYEE ASSUMES THE RISK OF ANY
MARKET FLUCTUATIONS IN THE PRICE OF THE STOCK.

ARTICLE 17 - PARTICIPATING SUBSIDIARIES.

      The term "participating subsidiary" shall mean any present or future
subsidiary of the Company, as that term is defined in Section 424(f) of the
Code, which is designated from time to time by the Board of Directors to
participate in the Plan. The Board of Directors shall have the power to make
such designation before or after the Plan is approved by the stockholders.

                                      -7-
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ARTICLE 18 - OPTIONEES NOT STOCKHOLDERS.

      Neither the granting of a purchase option to an employee nor the
deductions from his or her pay shall constitute such employee a stockholder of
the shares covered by a purchase option until such shares have been actually
purchased by the employee.

ARTICLE 19 - NO RIGHT TO EMPLOYMENT OR OTHER STATUS.

      Participation in the Plan shall not be construed as giving a participant
the right to continued employment or any other relationship with the Company.

ARTICLE 20 - APPLICATION OF FUNDS.

      The proceeds received by the Company from the sale of Common Stock
pursuant to purchase options granted under the Plan will be used for general
corporate purposes.

ARTICLE 21 - NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.

      By electing to participate in the Plan, each participant agrees to notify
the Company in writing immediately after the participant transfers Common Stock
acquired under the Plan, if such transfer occurs within two years after the
first business day of the Payment Period in which such Common Stock was
acquired. Each participant further agrees to provide any information about such
a transfer as may be requested by the Company or any subsidiary corporation in
order to assist it in complying with the tax laws. Such dispositions generally
are treated as "disqualifying dispositions" under Sections 421 and 424 of the
Code, which have certain tax consequences to participants and to the Company and
its participating subsidiaries.

ARTICLE 22 - WITHHOLDING OF ADDITIONAL INCOME TAXES.

      By electing to participate in the Plan, each participant acknowledges that
the Company and its participating subsidiaries are required to withhold taxes
with respect to the amounts deducted from the participant's compensation and
accumulated for the benefit of the participant under the Plan, and each
participant agrees that the Company and its participating subsidiaries may
deduct additional amounts from the participant's compensation, when amounts are
added to the participant's account, used to purchase Common Stock or refunded,
in order to satisfy such withholding obligations. Each participant further
acknowledges that when Common Stock is purchased under the Plan the Company and
its participating subsidiaries may be required to withhold taxes with respect to
all or a portion of the difference between the fair market value of the Common
Stock purchased and its purchase price, and each participant agrees that such
taxes may be withheld from compensation otherwise payable to such participant.
It is intended that tax withholding will be accomplished in such a manner that
the full amount of payroll deductions elected by the participant under Article 7
will be used to purchase Common Stock. However, if amounts sufficient to satisfy
applicable tax withholding obligations have not been withheld from compensation
otherwise payable to any participant, then, notwithstanding any other provision
of the Plan, the Company may withhold such taxes from the participant's
accumulated payroll

                                      -8-
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deductions and apply the net amount to the purchase of Common Stock, unless the
participant pays to the Company, prior to the exercise date, an amount
sufficient to satisfy such withholding obligations. Each participant further
acknowledges that the Company and its participating subsidiaries may be required
to withhold taxes in connection with the disposition of stock acquired under the
Plan and agrees that the Company or any participating subsidiary may take
whatever action it considers appropriate to satisfy such withholding
requirements, including deducting from compensation otherwise payable to such
participant an amount sufficient to satisfy such withholding requirements or
conditioning any disposition of Common Stock by the participant upon the payment
to the Company or such subsidiary of an amount sufficient to satisfy such
withholding requirements.

ARTICLE 23 - GOVERNMENTAL REGULATIONS.

      The Company's obligation to sell and deliver shares of Common Stock under
the Plan is subject to the approval of any governmental authority required in
connection with the authorization, issuance or sale of such shares.

      Government regulations may impose reporting or other obligations on the
Company with respect to the Plan. For example, the Company may be required to
identify shares of Common Stock issued under the Plan on its stock ownership
records and send tax information statements to employees and former employees
who transfer title to such shares.

ARTICLE 24 - GOVERNING LAW.

      The validity and construction of the Plan shall be governed by the laws of
Delaware, without giving effect to the principles of conflicts of law thereof.

ARTICLE 25 - APPROVAL OF BOARD OF DIRECTORS AND STOCKHOLDERS OF THE COMPANY.

      The Plan was adopted by the Board of Directors on March 11, 2004 and was
approved by the stockholders of the Company on April 20, 2004. The Plan was
Amended and Restated by the Board of Directors, without the need for
stockholder approval, on August 2, 2004.

                                      -9-<PAGE>
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                                                                 EXHIBIT 10.(nn)

[FIRST NATIONAL BANK  LOGO]

<TABLE>
<CAPTION>
    LOAN NUMBER           LOAN NAME                ACCT. NUMBER       NOTE DATE       INITIALS
<S>                    <C>                       <C>                 <C>             <C>
2000001751/5 Renewal   M-Tron Industries, Inc.                         04/30/04           JRK
     NOTE AMOUNT          INDEX (w/Margin)             RATE          MATURITY DATE   LOAN PURPOSE
   $3,000, 000.00      FNBO National Base Rate         4.5%            04/30/05       Commercial
                                                 Creditor Use Only
</TABLE>

                                PROMISSORY NOTE
                 (Commercial - Revolving Draw - Variable Rate)

DATE AND PARTIES. The date of this Promissory Note (Note) is April 30, 2004. The
parties and their addresses are:

  LENDER:
   FIRST NATIONAL BANK OF OMAHA
   Stop Code 1030
   1620 Dodge St
   Omaha, Nebraska 68197
   Telephone: (402) 633-3555

  BORROWER:
   M-TRON INDUSTRIES, INC.
   a Delaware Corporation
   100 Douglas Avenue
   Yankton, South Dakota 57078

1. DEFINITIONS. As used in this Note, the terms have the following meanings:

   A. PRONOUNS. The pronouns "I," "me," and "my" refer to each Borrower signing
   this Note, individually and together with their heirs, successors and
   assigns, and each other person or legal entity (including guarantors,
   endorsers, and sureties) who agrees to pay this Note. "You" and "Your" refer
   to the Lender, with its participants or syndicators, successors and assigns,
   or any person or company that acquires an interest in the Loan.

   B. NOTE. Note refers to this document, and any extensions, renewals,
   modifications and substitutions of this Note.

   C. LOAN. Loan refers to this transaction generally, including obligations and
   duties arising from the terms of all documents prepared or submitted for this
   transaction such as applications, security agreements, disclosures or notes,
   and this Note.

   D. PROPERTY. Property is any property, real, personal or intangible, that
   secures my performance of the obligations of this Loan.

   E. PERCENT. Rates and rate change limitations are expressed as annualized
   percentages.

2. PROMISE TO PAY. For value received, I promise to pay you or your order, at
your address, or at such other location as you may designate, amounts advanced
from time to time under the terms of this Note up to the maximum outstanding
principal balance of $3,000,000.00 (Principal), plus interest from the date of
disbursement, on the unpaid outstanding Principal balance until this Note
matures or this obligation is accelerated.

I may borrow up to the Principal amount more than one time.

3.ADVANCES. Advances under this Note are made according to the following terms
and conditions.

   A. REQUESTS FOR ADVANCES. My requests are a warranty that I am in compliance
   with all the Loan documents. When required by you for a particular method of
   advance, my requests for an advance must specify the requested amount and the
   date and be accompanied with any agreements, documents, and instruments that
   you require for the Loan. Any payment by you of any check, share draft or
   other charge may, at your option, constitute an advance on the Loan to me.
   All advances will be made in United States dollars. I will indemnify you and
   hold you harmless for your reliance on any request for advances that you
   reasonably believe to be genuine. To the extent permitted by law, I will
   indemnify you and hold you harmless when the person making any request
   represents that I authorized this person to request an advance even when this
   person is unauthorized or this person's signature is not genuine.

   I or anyone I authorize to act on my behalf may request advances by the
   following methods.

      (1) I make a request in person.

      (2) I make a request by phone.

      (3) I make a request by mail.

      (4) I write a check or share draft.

   B. ADVANCE LIMITATIONS. In addition to any other Loan conditions, requests
   for, and access to, advances are subject to the following limitations.

      (1) Obligatory Advances. You will make all Loan advances subject to this
      Agreement's terms and conditions.

      (2) Advance Amount. Subject to the terms and conditions contained in this
      Note, advances will be made in exactly the amount I request.

      (3) Disbursement of Advances. On my fulfillment of this Note's terms and
      conditions, you will disburse the advance in any manner as you and I
      agree.

      (4) Credit Limit. I understand that you will not ordinarily grant a
      request for an advance that would cause the unpaid principal of my Loan to
      be greater than the Principal limit. You may, at your option, grant such a
      request without obligating yourselves to do so in the future.

      (5) Records. Your records will be conclusive evidence as to the amount of
      advances, the Loan's unpaid principal balances and the accrued interest.

4. INTEREST. Interest will accrue on the unpaid Principal balance of this Note
at the rate of 4.5 percent (Interest Rate) until May 1, 2004, after which time
it may change as described in the Variable Rate subsection.

   A. INTEREST AFTER DEFAULT. If you declare a default under the terms of this
   Loan, including for failure to pay in full at maturity, you may increase the
   Interest Rate payable on the outstanding Principal balance of this Note. In
   such event, interest will accrue on the outstanding Principal balance at the
   variable Interest Rate in effect from time to time, plus an additional 6.000
   percent, until paid in full.

   B. MAXIMUM INTEREST AMOUNT. Any amount assessed or collected as interest
   under the terms of this Note or obligation will be limited to the Maximum
   Lawful Amount of interest allowed by state or federal law. Amounts collected
   in excess of the Maximum Lawful Amount will be applied first to the unpaid
   Principal balance. Any remainder will be refunded to me.

M-Tron Industries, Inc.
Nebraska Promissory Note                                            Initials____
NE/4XX270735007252000043    (c)1996 Bankers Systems, Inc.,                Page 1
64005051404N                 St. Cloud, MN  [ILLEGIBLE](TM)

<PAGE>

C. STATUTORY AUTHORITY. The amount assessed or collected on this Note is
authorized by the Nebraska usury laws under Neb. Rev. Stat. S 45.101.03.

D. ACCRUAL. During the scheduled term of this Loan interest accrues using an
Actual/360 days counting method.

E. VARIABLE RATE. The Interest Rate may change during the term of this
transaction.

   (1) Index. Beginning with the first Change Date, the Interest Rate will be
   based on the following index: the base rate in effect from time to time and
   designated by First National Bank of Omaha as its National Base Rate.

   The Current Index is the most recent index figure available on each Change
   Date. You do not guaranty by selecting this index, or the margin, that the
   interest Rate on this Note will be the same rate you charge on any other
   loans or class of loans you make to me or other borrowers. If this Index is
   no longer available, you will substitute a similar index. You will give me
   notice of your choice.

   (2) Change Date. Each date on which the Interest Rate may change is called a
   Change Date. The Interest Rate may change May 15, 2004 and daily thereafter.

   (3) Calculation Of Change. On each Change Data, you will calculate the
   Interest Rate, which will be the Current Index plus 0.500 percent. The result
   of this calculation will be rounded to the nearest .001 percent. Subject to
   any limitations, this will be the Interest Rate until the next Change Date.
   The new Interest Rate will become effective on each Change Date. The Interest
   Rate and other charges on this Note will never exceed the highest rate or
   charge allowed by law for this Note.

   (4) Limitations. The Interest Rate changes are subject to the following
   limitations:

      (a) Lifetime. The Interest Rate will never be less than 4.500 percent.

   (5) Effect Of Variable Rate. A change in the Interest Rate will have the
   following effect on the payments: The amount of the final payment will
   change.

5. PAYMENT. I agree to pay this Note as follows: I agree to pay this Note in 36
payments. This Note is amortized over 60 payments. A payment of $22,369.76 will
be due May 31, 2004. and on the last day of each month thereafter. A final
payment of the entire unpaid balance of Principal and interest will be due April
30, 2007. Any changes in the Interest Rate will affect the amount of this
payment.

Payments will be rounded to the nearest $.01. With the final payment I also
agree to pay any additional fees or charges owing and the amount of any advances
you have made to others on my behalf. Payments scheduled to be paid on, the
29th, 30th or 31st day of a month that contains no such day will, instead, be
made on the last day of such month.

Each payment I make on this Note will be applied first to interest that is due
then 10 principal that is due, and finally to any charges that I owe other than
principal and interest If you and I agree to a different application of
payments, we will describe our agreement on this Note. The actual amount of my
final payment will depend on my payment record.

6. PREPAYMENT. I may prepay this Loan in full or in part at any time. Any
partial prepayment will not excuse any later scheduled payments until I pay in
full.

7. LOAN PURPOSE. The purpose of this Loan is to fund the purchase of new and
used equipment.

8. SECURITY. This Loan is secured by the following, previously executed,
security instruments or agreements: Restated Loan/Security Agreement dated
August 31, 2001. Letter of Credit #RS1361047 issued by Fleet National Bank on
behalf of Lynch Corporation in the amount of $1,000,000.00 dated September 9,
2002.

 9. DEFAULT. I will be in default if any of the following occur:

   A. PAYMENTS. I fail to make a payment in full when due.

   B. INSOLVANCY OR BANKRUPTCY. I make an assignment for the benefit of
   creditors or become Insolvent, either because my liabilities exceed my assets
   or I am unable to pay my debts as they become due; or I petition for
   protection under federal, state or local bankruptcy, insolvency or debtor
   relief laws, or am the subject of a petition or action under such laws and
   fail to have the petition of action dismissed within a reasonable period of
   time not to exceed 60 days.

   C. BUSINESS TERMINATION. I merge, dissolve, reorganize, and my business or
   existence, or a partner or majority owner dies or is declared legally
   incompetent.

   D. FAILURE TO PERFORM. I fail to perform any condition or to keep any promise
   or covenant of this Note.

   E. OTHER DOCUMENTS. A default occurs under the terms of any other transaction
   document.

   F. OTHER AGREEMENTS. I am in default or any other debt or agreement I have
   with you.

   G. MISREPRESENTATION. I make any verbal Of written statement or provide any
   financial information that is untrue, inaccurate, or conceals a material fact
   at the time it is made or provided.

   H. JUDGMENT. I fail to satisfy or appeal any judgment against me.

   I. FORFEITURE. The Property is used in a manner or for a purpose that
   threatens confiscation by a legal authority.

   J. NAME CHANGE. I change my name or assume an additional name without
   notifying you before making such a change.

   K. PROPERTY TRANSFER. I transfer all or a substantial part of my money or
   property.

   L. PROPERTY VALUE. The value of the Property declines or is impaired.

   M. MATERIAL CHANGE. Without first notifying you, there is a material change
   in my business, including ownership, management, and financial conditions.

   N. INSECURITY. You reasonably believe that you are insecure.

10. ASSUMPTIONS. Someone buying the Property cannot assume the obligation. You
may declare the entire balance of the Note to be immediately due and payable
upon the creation of, or contract for the creation of, any lien, encumbrance, or
transfer of the property.

11. WAIVERS AND CONSENT. To the extent not prohibited by law, I waive protest,
presentment for payment, demand, notice of acceleration, notice of intent to
accelerate and notice of dishonor.

   A. ADDITIONAL WAIVERS BY BORROWER. In addition, I, and any party to this Note
   and Loan, to the extent permitted by law. consent to certain actions you may
   take, and generally waive defenses that may be available based on these
   actions or based on the status of a party to this Note.

      (1) You may renew or extend payments on this Note, regardless of the
      number of such renewals or extensions.

      (2) You may release any Borrower, endorser, guarantor, surety,
      accommodation maker or any other co-signer.

      (3) You may release, substitute or impair any Property securing this Note.

      (4) You, or any institution participating in this Note, may invoke your
      right of set-off.

      (5) You may enter into any sales, repurchases or participations of this
      Note to any person in any amounts and I waive notice of such sales,
      repurchases or participations.

      (6) I agree that any of us signing this Note as a Borrower is authorized
      to modify the terms of this Note or any instrument securing, guarantying
      or relating to this Note.

   B. NO WAIVER BY LENDER. Your course of dealing, or your forbearance from, or
   delay in, the exercise of any of your rights, remedies, privileges or right
   to insist upon my strict performance of any provisions contained in this
   Note, or other Loan documents, shall not be construed as a waiver by you,
   unless any such waiver is in writing and is signed by you.

12. REMEDIES, After I default, and after you give any legally required notice
and opportunity to cure the default, you may at your option do any one or more
of the following.

   A. ACCELERATION. You may make all or any part of the amount owing by the
   terms of this Note immediately due.

   B. SOURCES. You may use any and all remedies you have under state or federal
   law or in any instrument securing this Note.

M-Tron Industries, Inc.
Nebraska Promissory Note                                            Initials____
NE/4XX270735007252000043    (c)1996 Bankers Systems, Inc.,                Page 2
64003051404N                 St. Cloud, MN  [ILLEGIBLE](TM)

<PAGE>

   C. INSURANCE BENEFITS. You may make a claim for any and all insurance
   benefits or refunds that may be available on my default.

   D. PAYMENTS MADE ON MY BEHALF. Amounts advanced on my behalf will be
   immediately due and may be added to the balance owing under the terms of this
   Note, and accrue interest at the highest post-maturity interest rate.

   E. TERMINATION. You may terminate my right to obtain advances and may refuse
   to make any further extensions of credit.

   F. SET-OFF. You may use the right of set-off. This means you may set-off any
   amount due and payable under the terms of this Note against any right I have
   to receive money from you.

   My right to receive money from you includes any deposit or share account
   balance I have with you: any money owed to me on an item presented to you or
   in your possession for collection or exchange; end any repurchase agreement
   or other non-deposit obligation, "Any amount due and payable under the terms
   of this Note" means the total amount to which you are entitled to demand
   payment under the terms of this Note at the time you set-off.

   Subject to any other written contract, if my right to receive money from you
   is also owned by someone who has not agreed to pay this Note, your right of
   set-off will apply to my interest in the obligation and to any other amounts
   I could withdraw on my sole request or endorsement.

   Your right of set-off does not apply to an account or other obligation where
   my rights arise only in a representative capacity, It also does not apply to
   any individual Retirement Account or other tax-deferred retirement account.

   You will not be liable for the dishonor of any check when the dishonor occurs
   because you set-off against any of my accounts. I agree to hold you harmless
   from any such claims arising as a result of your exercise of your right of
   set-off.

   G. WAIVER. Except as otherwise required by law. by choosing any one or more
   of these remedies you do not give up your right to use any other remedy. You
   do not waive a default if you choose not to use a remedy. By electing not to
   use any remedy, you do not waive your right to later consider the event a
   default and to use any remedies if The default continues or occurs again.

13. COLLECTION EXPENSES AND ATTORNEYS' FEES. On or after Default, to the extent
permitted by law, I agree to pay all expenses of collection, enforcement or
protection of your rights and remedies under this Note. Expenses include, but
are not limited to, attorneys' fees, court costs and other legal expenses. These
expenses are due and payable immediately, If not paid immediately, these
expenses will bear interest from the date of payment until paid in full at the
highest interest rate In effect as provided for in the terms of this Note. All
fees and expenses will be secured by the Property I have granted to you, if any.
To the extent permitted by the United States Bankruptcy Code. I agree to pay the
reasonable attorneys' fees you incur to collect this Debt as awarded by any
court exercising jurisdiction under the Bankruptcy Code.

14. WARRANTIES AND REPRESENTATIONS. I make to you the following warranties and
representations which will continue as long as this Note is in effect:

   A. POWER. I am duly organised, and validly existing and in good standing in
   all jurisdictions in which I operate. I have the power and authority to enter
   into this transaction and to carry on my business or activity as it is now
   being conducted and, as applicable, am qualified to do so in each
   jurisdiction in which I operate.

   B. AUTHORITY. The execution, delivery end performance of this Note and the
   obligation evidenced by this Note are within my powers, have been duly
   authorized, have received all necessary governmental approval, will not
   violate any provision of law, or order of court or governmental agency, and
   will not violate any agreement to which I am a party or to which I am or any
   of my Property is subject.

   C. NAME AND PLACE OF BUSINESS. Other than previously disclosed in writing to
   you I have not changed my name or principal place of business within the last
   10 years and have not used any other trade or fictitious name. Without your
   prior written consent, I do not and will not use any other name end will
   preserve my existing name, trade names and franchises.

15. APPLICABLE LAW. This Note is governed by the laws of Nebraska, the United
States of America and to the extent required, by the laws of the jurisdiction
where the Property is located. In the event of a dispute, the exclusive forum,
venue and place of jurisdiction will be in Nebraska, unless otherwise required
by law.

16. JOINT AND INDIVIDUAL LIABILITY AND SUCCESSORS. My obligation to pay this
Loan is independent of the obligation of any other person who has also agreed to
pay it, You may sue me alone, or anyone else who is obligated on this Loan, or
any number of us together, to collect this Loan, Extending this Loan or new
obligations under this Loan, will not affect my duty under this Loan and I will
still be obligated to pay this loan. The duties and benefits of this Loan will
bind and benefit the successors and assigns of you and me.

17. AMENDMENT, INTEGRATION AND SEVERABILITY. This Note may not be amended or
modified by oral agreement. No amendment or modification of this Note is
effective unless made in writing and executed by you and me. This Note is the
complete and final expression of the agreement. If any provision of this Note is
unenforceable, then the unenforceable prevision will be severed and the
remaining provisions will still be enforceable.

18. INTERPRETATION. Whenever used, the singular includes the plural and the
plural includes the singular. The section headings are for convenience only and
are not to be used to interpret or define the terms of this Note.

19. NOTICE, FINANCIAL REPORTS AND ADDITIONAL DOCUMENTS. Unless otherwise
required by law, any notice will be given by delivering it or mailing it by
first class mail to the appropriate party's address listed in the DATE AND
PARTIES section, or to any other address designated in writing. Notice to one
party will be deemed to be notice to all parties. I will inform you in writing
of any change in my name, address or other application information. I will
provide you any financial statement or information you request. All financial
statements and information I give you will be correct and complete. I agree to
sign, deliver, and file any additional documents or certifications that you may
consider necessary to perfect, continue, and preserve my obligations under this
Loan and to confirm your lien status on any Property. Time is of the essence.

20. CREDIT INFORMATION. I agree to supply you with whatever information you
reasonably request. You will make requests for this information without undue
frequency, and win give me reasonable time in which to supply the Information.

21. ERRORS AND OMISSIONS. I agree, if requested by you, to fully cooperate in
the correction, if necessary, in the reasonable discretion of you of any and all
loan closing documents so that all documents accurately describe the loan
between you and me. I agree to assume all costs including by way of illustration
and not limitation, actual expenses, legal fees and marketing losses for failing
to reasonably comply with your requests within thirty (30) days.

M-Tron Industries, Inc.
Nebraska Promissory Note                                            Initials____
NE/4XX270735007252000043    (c)1996 Bankers Systems, Inc.,                Page 3
64003051404N                 St. Cloud, MN  [ILLEGIBLE](TM)

<PAGE>

A CREDIT AGREEMENT MUST BE IN WRITING TO BE ENFORCEABLE UNDER NEBRASKA LAW. TO
PROTECT YOU AND US FROM ANY MISUNDERSTANDINGS OR DISAPPOINTMENTS, ANY CONTRACT,
PROMISE, UNDERTAKING, OR OFFER TO FOREBEAR REPAYMENT OF MONEY OR TO MAKE ANY
OTHER FINANCIAL ACCOMMODATION IN CONNECTION WITH THIS LOAN OF MONEY OR GRANT OR
EXTENSION OF CREDIT, OR ANY AMENDMENT OF CANCELLATION OF, WAIVER OF, OR
SUBSTITUTION FOR ANY OR ALL OF THE TERMS OR PROVISIONS OF ANY INSTRUMENT OR
DOCUMENT EXECUTED IN CONNECTION WITH THIS LOAN OF MONEY OR GRANT OR EXTENSION OF
CREDIT, MUST BE IN WRITING TO BE EFFECTIVE.

   BORROWER:

      M-Tron Idustries, Inc.

         By /s/ DAVID L. REIN
         -----------------------------------
         Authorized Signer

22. SIGNATURES. By signing. I agree to the terms contained in this Note. I also
acknowledge receipt of copy of this Note.

   BORROWER:

      M-Tron Idustries, Inc.

         By /s/ DAVID L. REIN
         -----------------------------------
         Authorized Signer

   LENDER:

      First National Bank of Omaha

      By /s/ James R. Kamm
         -----------------------------------
         James R. Kamm, Vice President

M-Tron Industries, Inc.
Nebraska Promissory Note                                            Initials____
NE/4XX270735007252000043    (c)1996 Bankers Systems, Inc.,                Page 4
64005051404N                 St. Cloud, MN  EXPERTS(TM)

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