Document:

<PAGE>
                                                                   Exhibit 10.21

                    AMENDMENT NO. 4 AND WAIVER dated as of May 10, 2002 (this
               "Amendment"), to the Credit Agreement dated as of June 28, 1999,
               as amended and restated as of July 21, 1999, as amended (the
               "Credit Agreement"), among Knowles Electronics Holdings, Inc.,
               formerly known as Knowles Electronics, Inc., a Delaware
               corporation (the "Parent Borrower"); the financial institutions
               party thereto as Lenders (the "Lenders"); JPMorgan Chase Bank, as
               successor to The Chase Manhattan Bank, as administrative agent
               (in such capacity, the "Administrative Agent") and Morgan Stanley
               Senior Funding, Inc., as Syndication Agent.

          A. The Lenders and the Issuing Bank have extended credit to the
Parent Borrower, and have agreed to extend credit to the Parent Borrower, in
each case pursuant to the terms and subject to the conditions set forth in the
Credit Agreement.

          B. The Parent Borrower has requested that the Required Lenders agree
to amend and waive certain provisions of the Credit Agreement as set forth
herein. The Required Lenders are willing to agree to such amendments and waivers
pursuant to the terms and subject to the conditions set forth herein.

          C. Capitalized terms used but not defined herein have the meanings
assigned to them in the Credit Agreement as amended and waived hereby.

          Accordingly, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency and receipt
of which are hereby acknowledged, the parties hereto agree as follows:

          SECTION 1. Amendments.  The Credit Agreement is hereby amended as
follows:

          (a) The table in the definition of the term "Applicable Rate" in
Section 1.01 of the Credit Agreement is replaced with the following table:

<Table>
<Caption>
                                                           Eurodollar
                                          ABR Revolving/   Revolving/                    Eurodollar
                                            Tranche A      Tranche A     ABR Tranche B    Tranche B    Commitment
          Leverage Ratio:                    Spread          Spread          Spread         Spread      Fee Rate
------------------------------------------------------------------------------------------------------------------
<S>                                          <C>             <C>             <C>            <C>           <C>
Category 1
Greater than or equal to 4:50 to 1:00         2.50%           3.50%           3.50%          4.50%         0.50%

Category 2
Greater than or equal to 3.75 to 1.00         2.25%           3.25%           3.50%          4.50%         0.375%
and less than 4.50 to 1.00

Category 3
Greater than or equal to 3.00 to 1.00         2.00%           3.00%           3.50%          4.50%         0.375%
and less than 3.75 to 1.00

Category 4
Greater than or equal to 2.25 to 1.00         1.75%           2.75%           3.50%          4.50%         0.375%
and less than 3.00 to 1.00

Category 5
Less than 2.25 to 1.00                        1.50%           2.50%           3.50%          4.50%         0.375%
</Table>
<PAGE>
                                                                               2

          (b) Section 1.01 of the Credit Agreement is hereby amended by the
addition of the following definitions in the appropriate alphabetical position:

          "Investor Funding Agreement" means the Investor Funding Agreement
     dated as of May 10, 2002, among Key Acquisition L.L.C., the Parent Borrower
     and the Administrative Agent.

          "Parent Investment" means the investment required to be made by one or
     more of the Sponsors pursuant to the Investor Funding Agreement.

          "Required Additional Capital" means (a) Indebtedness of the Parent
     Borrower permitted pursuant to clause (xii) of paragraph (a) of Section
     6.01 or (b) capital stock of the Parent Borrower, including preferred stock
     or the Parent Investment, in each case incurred or issued after May 10,
     2002 and resulting in cash proceeds to the Parent Borrower of at least
     $10,000,000; provided that the terms and conditions of such Indebtedness or
     capital stock are reasonably satisfactory to the Administrative Agent.

          (c) Section 2.05 of the Credit Agreement is hereby amended by deleting
the reference "Section 2.11(b)" in each instance it appears in paragraph (j)
thereof and substituting in lieu thereof the following:

     paragraph (b) or (g) of Section 2.11, as applicable

          (d) Paragraph (c) of Section 2.11 of the Credit Agreement is hereby
amended by adding the following sentence after the end of the first sentence of
such paragraph: "Notwithstanding the proviso to the preceding sentence, the
aggregate amount of Net Proceeds that the Parent Borrower may elect to apply to
acquire assets in lieu of prepayment, as contemplated by such proviso, shall not
exceed $2,000,000 in the aggregate after April 1, 2002."

          (e) Section 2.11 of the Credit Agreement is hereby further amended by
adding at the end thereof the following:

          (g) In the event that, on the date that any proceeds of any Required
     Additional Capital are received, the Domestic Revolving Exposures exceed
     $8,250,000, then on such date the Parent Borrower shall prepay Domestic
     Revolving Borrowings or Domestic Swingline Borrowings (and, if repayment of
     all such Borrowings is insufficient to reduce the Domestic Revolving
     Exposures to $8,250,000, deposit cash collateral in an account with the
     Administrative Agent pursuant to Section 2.05(j)), in an aggregate amount
     for such repayments and deposits equal to the lesser of such excess and the
     amount of such proceeds.

          (f) Article V of the Credit Agreement is hereby amended by adding at
the end thereof the following;

          SECTION 5.15. Payment of Interest on Subordinated Debt. The Parent
     Borrower will pay the interest due April 15, 2002 with respect to the
     Subordinated Refinancing Debt immediately following the Amendment Effective
     Date (as
<PAGE>
                                                                               3

          defined in Amendment No. 4 and Waiver dated as of May 10, 2002, to
          this Agreement).

          (g)  Section 6.01 of the Credit Agreement is hereby amended by (i)
deleting the word "and" appearing at the end of clause (x) of paragraph (a)
thereof, (ii) deleting the period at the end of clause (xi) of paragraph (a)
thereof and substituting in lieu thereof the following: "; and" and (iii) adding
following clause (xi) of paragraph (a) thereof the following:

          (xii) Indebtedness of the Parent Borrower in an aggregate principal
     amount not exceeding $10,000,000; provided that such Indebtedness is
     subordinated to the Obligations, and has other terms and conditions,
     reasonably satisfactory to the Administrative Agent.

          (h)  Section 6.04 of the Credit Agreement is hereby amended by adding
at the end of clause (a) thereof the following:

     ; provided that no Permitted Acquisition will be permitted after April 1,
     2002;

          (i)  Section 6.09 of the Credit Agreement is hereby amended by adding
the following sentence at the end of such Section:

     Notwithstanding clause (e) above or any other provision of this Agreement,
     the Parent Borrower will not, and will not permit any Subsidiary to, make
     any payments of fees to any of the Sponsors (whether under the management
     agreement referred to in clause (e) above or otherwise) after April 1,
     2002.

          (j)  The table in Section 6.12 of the Credit Agreement is replaced
with the following table:

<Table>
<Caption>
                    Period                               Ratio
                    ------                               -----
<S>                                                    <C>
June 30, 2002 through March 31, 2003                    1.45 to 1.00
April 1, 2003 through March 30, 2004                    2.25 to 1.00
March 31, 2004 through March 30, 2005                   2.50 to 1.00
March 31, 2005 through March 30, 2006                   2.75 to 1.00
March 31, 2006 through March 30, 2007                   3.00 to 1.00
March 31, 2007 and thereafter                           3.25 to 1.00
</Table>

<PAGE>
                                                                               4

          (k)  The table in Section 6.13 of the Credit Agreement is replaced
with the following table:

<Table>
<Caption>
                  Period                                               Ratio
--------------------------------------------                        ------------
<S>                                                                 <C>
April 1, 2002 through September 29, 2002                            6.75 to 1.00
September 30, 2002 through December 30, 2002                        6.65 to 1.00
December 31, 2002 through March 30, 2003                            6.45 to 1.00
March 31, 2003                                                      5.85 to 1.00
April 1, 2003 through March 30, 2004                                4.00 to 1.00
March 31, 2004 through March 30, 2006                               3.75 to 1.00
March 31, 2006 and thereafter                                       3.50 to 1.00
</Table>

          (l)  Section 6.13 of the Credit Agreement is hereby further amended by
the addition of the following at the end of such Section:

          On or prior to April 10, 2003, the Parent Borrower shall deliver to
     the Administrative Agent a certificate of a Financial Officer to the effect
     that the Leverage Ratio on and as of April 1, 2003, complies with the
     requirements of this Section. Failure to deliver such certificate shall
     constitute an Event of Default.

          (m)  Section 6.14 of the Credit Agreement is hereby amended by
deleting the amount "$20,000,000" appearing in paragraph (a) thereof and
substituting in lieu thereof the amount "$15,000,000".

          (n)  Article VII of the Credit Agreement is hereby amended by (i)
deleting the word "or" appearing at the end of paragraph (m) thereof, (ii)
adding the word "or" at the end of paragraph (n) thereof and (iii) adding
following paragraph (n) thereof the following:

          (o)  (i) the Parent Borrower fails to receive the Required Additional
     Capital (other than the Parent Investment) on or prior to September 3, 2002
     or (ii) the Parent Investment is not made on or prior to the Funding Date
     (as defined in the Investor Funding Agreement);

          SECTION 2. Decrease in Revolving Commitments. The parties hereto
agree that on the Amendment Effective Date the Domestic Revolving Commitments
shall be reduced by $6,750,000 to $18,250,000, with the result that the
Revolving Commitments are also $18,250,000, and that such reduction shall be
allocated pro rata among the Lenders based on their Domestic Revolving
Commitments.

          SECTION 3. Waivers. The Required Lenders hereby waive compliance by
the Parent Borrower with the provisions of (a) paragraph (a) of Section 5.01 of
the Credit Agreement with respect to the financial statements for the fiscal
year ended December 31, 2001, provided that the waiver contained in this clause
(a) shall terminate if such financial statements are not delivered on or prior
to the date that is 30 days

<PAGE>
                                                                               5

following the Amendment Effective Date (as defined below), (b) clause (iii) of
paragraph (a) of Section 6.01 of Credit Agreement with respect to the
refinancing of the Indebtedness listed on Section 1.a of Schedule 6.01 to the
Credit Agreement with Indebtedness of Ruwido Austria GmbH in favor of Ernst Bank
Vienna in the aggregate principal amount not exceeding Euro 4,200,000; provided
that following June 30, 2002, the aggregate principal amount of such
Indebtedness shall not exceed Euro 4,000,000, (c) Section 6.12 of the Credit
Agreement for the period ended March 31, 2002, (d) Section 6.13 of the Credit
Agreement for the period from January 1, 2002 through March 31, 2002, and (e)
paragraph (g) of Article VII with respect to the failure to pay the interest due
April 15, 2002 on the Subordinated Refinancing Debt prior to the Amendment
Effective Date.

          SECTION 4. Representations and Warranties. The Parent Borrower
represents and warrants to the Administrative Agent and to each of the Lenders
that:

          (a)  This Amendment has been duly authorized, executed and delivered
     by it and constitutes the legal, valid and binding obligation of the
     Parent Borrower, enforceable against the Parent Borrower in accordance with
     its terms subject to applicable bankruptcy, insolvency, reorganization,
     moratorium or other laws affecting creditors' rights generally and subject
     to general principles of equity, regardless of whether considered in a
     proceeding in equity or at law.

          (b)  On and as of the Amendment Effective Date, the representations
     and warranties set forth in Article III of the Credit Agreement are true
     and correct in all material respects with the same effect as if made on the
     Amendment Effective Date, except (i) to the extent such representations and
     warranties expressly relate to an earlier date and (ii) representations and
     warranties that are not true and correct as a result of the failure to pay
     interest due on April 15, 2002 with respect to the Subordinated Refinancing
     Debt.

          (c)  At the time of and immediately after giving effect to this
     Amendment, no Default has occurred and is continuing other than the Default
     resulting from the failure to pay interest due on April 15, 2002 with
     respect to the Subordinated Refinancing Debt.

          SECTION 5. Conditions to Effectiveness. This Amendment shall become
effective as of the first date on or after May 10, 2002, that each of the
following conditions is satisfied (such date, the "Amendment Effective Date"):

          (a)  The Administrative Agent shall have received counterparts of this
     Amendment that, when taken together, bear the signatures of the Parent
     Borrower and the Required Lenders.

          (b)  The representations and warranties set forth in Section 4 of this
     Amendment shall be true and correct.

          (c)  The Administrative Agent shall have received (i) for the account
     of each Lender that executes and delivers a counterpart of this Amendment
     on or before May 13, 2002 an Amendment Fee equal to 0.25% of the sum of its
     Domestic Revolving Commitment and its outstanding Term Loans and (ii)
     payment of all out-of-pocket expenses (including fees and disbursements of

<PAGE>
                                                                               6

   counsel for the Administrative Agent) required to be paid or reimbursed by
   the Parent Borrower under the Credit Agreement, to the extent invoices
   therefor have been presented to the Parent Borrower at least one Business Day
   prior to the Amendment Effective Date.

     (d) The Administrative Agent shall have received (i) copies of each of the
   agreement attached hereto as Exhibit A, B, C and D, respectively, which shall
   have been executed and delivered by the parties thereto, and (ii) legal
   opinions, in a form and from counsel reasonably satisfactory to it, with
   respect to the due authorization and enforceability of such agreements and
   the absence of conflicts with respect thereto.

     SECTION 6. Effect of Amendment. Except as expressly set forth herein, this
Amendment shall not by implication or otherwise limit, impair, constitute a
waiver of, or otherwise affect the rights or remedies of the Lenders under the
Credit Agreement or any other Loan Document, and shall not alter, modify, amend
or in any way affect any of the terms, conditions, obligations, covenants, or
agreements contained in the Credit Agreement or any other Loan Document, all of
which are ratified and affirmed in all respects and shall continue in full force
and effect. Nothing herein shall be deemed to entitle the Parent Borrower to a
consent to, or a waiver, amendment, modification or other change of, any of the
terms, conditions, obligations, covenants or agreements contained in the Credit
Agreement or any other Loan Document in similar or different circumstances. This
Amendment shall apply and be effective only with respect to the provisions of
the Credit Agreement set forth herein. This Amendment shall constitute a Loan
Document for all purposes under the Credit Agreement. Each of the Exhibits to
this Amendment shall constitute a Loan Document and each of the Investor, DH and
the DH Investors (as each such term is defined in the Exhibits hereto) shall
constitute a Loan Party for all purposes under Article VII of the Credit
Agreement.

     SECTION 7. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

     SECTION 8. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one agreement. Delivery of an executed
signature page to this Amendment by facsimile shall be effective as delivery of
a manually executed counterpart hereof.

     SECTION 9. Expenses. The Parent Borrower agrees to reimburse the
Administrative Agent for its out-of-pocket expenses in connection with this
Amendment, including the reasonable fees, charges and disbursements of Cravath,
Swaine & Moore, counsel for the Administrative Agent.

<PAGE>
                                                                               7

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized officers as of the day and year
first written above.

                                   KNOWLES ELECTRONICS HOLDINGS, INC.,

                                     by
                                       ------------------------------------
                                       Name:
                                       Title:

                                   JPMORGAN CHASE BANK, individually and
                                   as Administrative Agent,

                                     by
                                       ------------------------------------
                                       Name:
                                       Title:

                                   MORGAN STANLEY SENIOR FUNDING,
                                   INC., individually and as Syndication Agent,

                                     by
                                       ------------------------------------
                                       Name:
                                       Title:<PAGE>

                                                                   Exhibit 10.22

                                                                      EXHIBIT B

                          INVESTOR FUNDING AGREEMENT dated as of May 10, 2002,
                    among KEY ACQUISITION, L.L.C., a Delaware limited liability
                    company (the "Investor"), KNOWLES ELECTRONICS HOLDINGS,
                    INC., formerly known as Knowles Electronics, Inc., a
                    Delaware corporation ("Knowles"), and JPMORGAN CHASE BANK,
                    in its capacity as Administrative Agent (the "Agent") for
                    the Lenders under the Credit Agreement (as defined herein).

               Knowles, certain Lenders and the Agent are party to a Credit
Agreement dated as of June 28, 1999, as amended and restated as of July 21,
1999, as amended (as amended from time to time, the "Credit Agreement").
Knowles has requested that the Lenders agree to that certain Amendment No. 4
and Waiver to the Credit Agreement (the "Amendment"), and it is a condition to
the effectiveness of the Amendment that the parties hereto enter into this
Agreement. The Investor owns Knowles and will benefit from the Amendment.

               In order to induce the Lenders and the Agent to enter into the
Amendment and to induce the Lenders to continue to make loans and other
extensions of credit under the Credit Agreement, and to satisfy a condition to
the effectiveness of the Amendment, the Investor and Knowles are entering into
this Agreement for the benefit of the Lenders and the Agent.

               Accordingly, the parties hereto agree as follows:

               SECTION 1. Defined Terms. (a) Capitalized terms that are used
but not defined herein shall have the meanings given to them in the Credit
Agreement as in effect on the date hereof (after giving effect to the
Amendment). The rules of interpretation set forth in Section 1.03 of the Credit
Agreement shall be applicable to this Agreement.

               (b) As used in this Agreement, the following terms have the
meanings assigned to them below:

               "Acknowledgment Agreement" means the Acknowledgment Agreement
dated as of the date hereof, among DHC, the DH Investors and the Agent.

               "Agent" has the meaning given to such term in the heading of
this Agreement.

               "Agent Contribution Notice" has the meaning given to such term
in Section 2(a).

<PAGE>
                                                                               2

          "Amendment" has the meaning given to such term in the preliminary
statement of this Agreement.

          "Capital Agreement" means the separate agreement entered into or to be
entered into between the Investor and Knowles providing for the issuance by
Knowles of shares of its capital stock to the Investor in consideration of the
Contribution.

          "Contribution" means, without duplication, (a) the cash payment, if
any, required to be made by the Investor to or for the benefit of Knowles
pursuant to Section 2(a) as an additional cash equity investment by the Investor
in Knowles and (b) to the extent not included in clause (a) of this definition,
each purchase by the Investor of a participating interest in Loans or Letters of
Credit pursuant to Section 2(c).

          "Contribution Amount" has the meaning given to such term in Section
2(a).

          "Credit Agreement" has the meaning given to such term in the
preliminary statement of this Agreement.

          "DHC" means Doughty Hanson & Co. Limited.

          "DH Investors" has the meaning given to such term in the DH Investment
Agreement.

          "DH Investment Agreement" means the Contribution to Capital Agreement
dated the date hereof, entered into among DHC, the DH Investors named therein
and the Investor and providing for the undertaking by such Sponsors to subscribe
for certain equity interests in the Investor.

          "Excess Amount" has the meaning given to such term in Section 2(a).

          "Funding Date" has the meaning given to such term in Section 2(a).

          "Investor" has the meaning given to such term in the heading of this
Agreement.

          "Investor Collateral Agreement" means the Collateral Agreement dated
as of the date hereof, between the Agent and the Investor providing for, among
other things, the collateral assignment by the Investor of its rights under the
DH Investment Agreement to secure its obligations under this Agreement.
<PAGE>
                                                                               3

     "Knowles" has the meaning given to such term in the heading of this
Agreement.

     "Prohibited Contribution" has the meaning given to such term in Section
2(c).

     "Release Date" means the first to occur of (a) the date on and as of which
all the Commitments have expired, have been terminated or cash collateralized,
all Letters of Credit have expired or have been terminated and all Obligations
have been paid in full, or (b) the date on which the Contribution has been fully
funded by the Investor in accordance with this Agreement (and, if funded
pursuant to Section 2(c), the Investor shall have entered into one or more
participation agreements as contemplated by such Section), or (c) October 3,
2002, if there is no Excess Amount on the Trigger Date.

     "Transaction Documents" means this Agreement, the DH Investment Agreement,
the Investor Collateral Agreement and the Acknowledgment Agreement.

     "Trigger Date" means the first to occur of (a) September 3, 2002, or (b)
the date that an Event of Default with respect to Knowles occurs that is
described in clause (h) or (i) of Article VII of the Credit Agreement, or (c)
the date on which the Loans outstanding under the Credit Agreement are declared
to be due and payable as a result of an Event of Default.

     SECTION 2. Capital Contributions.
(a)  Notwithstanding any provision to the contrary contained in the Capital
Agreement or any other agreement between the Investor and Knowles, the Investor,
Knowles and the Agent agree that if on and as of the Trigger Date Knowles has
not received Required Additional Capital resulting in net proceeds to Knowles of
at least $10,000,000, then (i) the Agent will (on such date or thereafter)
notify the Investor and Knowles of the amount of the excess of $10,000,000 over
the amount of Required Additional Capital previously received by Knowles (the
"Excess Amount"), which notice (the "Agent Contribution Notice") shall specify a
Business Day not less than 12 Business Days after the date of the Agent
Contribution Notice (the Business Day so specified, the "Funding Date") on which
the Investor will be required to make the Contribution in an amount (the
"Contribution Amount"), which shall be specified in the Agent Contribution
Notice, equal to the Excess Amount and (ii) on the Funding Date the Investor
shall make the Contribution in an amount equal to the Contribution Amount in
accordance with
<PAGE>
                                                                               4

the requirements of this Agreement. Such Contribution shall be made in United
States dollars.

          (b)  Notwithstanding any provision to the contrary contained in the
Capital Agreement or any other agreement between the Investor and Knowles (but
subject to paragraph (c) below), Knowles hereby irrevocably directs the Investor
to make, and the Investor shall make, the Contribution to Knowles required to be
made by it pursuant to paragraph (a) of this Section by making, on or before the
Funding Date, a wire transfer of immediately available funds equal to the
Contribution Amount directly to the Agent for the benefit of the Secured
Parties, into such account as the Agent may specify in the Agent Contribution
Notice. Knowles hereby irrevocably directs the Agent to apply, and the Agent
will promptly apply, all such funds received by it to the payment of Domestic
Revolving Borrowings and/or Domestic Swingline Borrowings (and/or, to the extent
of any remaining excess after giving effect to payment of all outstanding
Domestic Revolving Borrowing and domestic Swingline Borrowings, to the cash
collateralization of outstanding Letters of Credit). The Investor and Knowles
acknowledge and agree that the making by the Investor of the Contribution
provided in this paragraph (b) shall entitle the Investor to the issuance to it
of additional shares of capital stock of Knowles in accordance with the Capital
Agreement.

          (c)  In the event that the Contribution required to be made by the
Investor pursuant to this Section, or the application thereof contemplated by
paragraph (b) above, is prohibited by law or any injunction, decree or similar
legal restraint, including as a result of any bankruptcy, reorganization,
insolvency or similar proceeding affecting Knowles (a "Prohibited
Contribution"), then the Agent for the benefit of the Secured Parties shall have
the option of requiring the Investor to purchase for cash, at par, a
subordinated, undivided participating interest in the outstanding Domestic
Revolving Borrowings and/or Domestic Swingline Borrowings (and/or, to the extent
that the Contribution Amount exceeds the outstanding principal amount of
Domestic Revolving Borrowings and Domestic Swingline Borrowings, Letters of
Credit) for an aggregate purchase price equal to the Contribution Amount. The
Agent shall exercise such option by giving written notice thereof to the
Investor (which notice may be given on or after the Trigger Date, whether or not
an Agent Contribution Notice has been given, provided that such notice is given
before the Contribution is actually made as contemplated by paragraphs (a) and
(b) above) specifying a closing date that shall not be prior to the Funding Date
specified in the Agent Contribution Notice. On such closing date the Investor
<PAGE>
                                                                              5

shall purchase such participating interest by a wire transfer to the Agent of
immediately available funds equal to the Contribution Amount; provided that the
amount of the purchase price, if any, attributable to any such participations
in outstanding Letters of Credit shall be held by the Agent until all
outstanding Letters of Credit have either terminated or are drawn, and returned
to the Investor to the extent not applied to participations in LC Disbursements
after giving effect to all such drawn Letters of Credit. Such participating
interest will be subordinated to each Lender's retained interest in the Loans,
Letter of Credit reimbursement obligations and other Obligations, and
distributions in respect of such participating interest will be made only after
all Obligations in respect of such retained interests have been paid in full.
On such closing date, the Investor will execute and deliver one or more
participation agreements with respect to its participating interest, in the
standard form employed by the Agent for such agreements (modified to reflect
the subordination referred to above), but failure to do so shall not relieve
the Investor of its obligations hereunder. Each such participation will be
allocated on a pro rata basis to the Domestic Revolving Loans and/or Domestic
Swingline Loans (and, if applicable, participations in Letters of Credit) of
each Lender. Upon entering into such participation agreements and making
payment of the purchase price for its participating interest as provided above
on such closing date, the Investor will be relieved of its obligation hereunder
to make the Prohibited Contribution. In the event the Investor transfers funds
to the Agent in respect of a Contribution to be made by it hereunder as
contemplated by paragraph (b) above, but the corresponding equity investment in
Knowles or the application of the proceeds thereof to pay Domestic Revolving
Borrowings and/or Domestic Swingline Borrowings is prohibited by law or any
injunction, decree or similar legal restraint, then such contribution shall be
deemed a Prohibited Contribution and such funds shall be retained by the Agent
(for itself and on behalf of the Lenders) and utilized to make payment of the
purchase price for a subordinated participating interest of the Investor in
Domestic Revolving Loans and/or Domestic Swingline Loans (and/or, at the
Agent's election, Letters of Credit) in accordance with the foregoing
provisions.

     (d)  The obligations of the Investor to make the Contribution required
pursuant to the provisions of this Section shall be absolute and unconditional
in any and all circumstances, notwithstanding the failure to satisfy any one or
more conditions under, or the breach by any party thereto of, the Capital
Agreement or any other agreement to which the Investor or Knowles is a party or
bound, and

<PAGE>
                                                                               6

notwithstanding any bankruptcy, reorganization, liquidation, insolvency or
similar proceeding instituted by or against the Investor or Knowles, and
notwithstanding any failure of any Person that has agreed to provide funds to
the Investor to make such Contribution to provide such funds. The Investor or
any other investor in Knowles may make, but shall not be obligated by this
Agreement to make, any investment in Knowles at any time, but no such
investment or failure to make such investment shall excuse, reduce, satisfy or
otherwise vary the obligations of the Investor to make the Contribution.

     SECTION 3. Certain Covenants. Until the Release Date, the Investor
covenants and agrees with Knowles and the Agent that:

    (a) Indebtedness and Other Liabilities. The Investor will not create,
incur, assume or permit to exist any Indebtedness or other liability of it,
except liabilities under this Agreement.

    (b) Activities. The Investor will not engage in any business or activity
other than the ownership of equity investments in Knowles and activities
incidental thereto, including the performance of its obligations under this
Agreement.

     (c) Fundamental Changes. The Investor will not (i) merge into or
consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, (ii) liquidate, dissolve or wind up, (iii) sell, transfer
or otherwise dispose of any of its assets (including pursuant to any dividend or
distribution with respect to its Equity Interests), except that this clause
shall not be construed to prohibit the Contribution or any other investments in
Knowles permitted by the Credit Agreement, (iv) permit any amendment or
modification to its organizational documents that would restrict or impair the
performance of any Transaction Document, (v) commence, or suffer to be commenced
by any other Person, any proceeding or file, or suffer to be filed by any other
Person, any petition, in either case seeking (A) liquidation, reorganization or
other relief in respect of the Investor or its debts or assets under any
Federal, state or foreign bankruptcy, insolvency, receivership or similar law
now or hereafter in effect or (B) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Investor or its
assets, (vi) make a general assignment for the benefit of creditors, or (vii)
take any other action that would, or permit or suffer to exist any
<PAGE>
                                                                               7

other circumstance or event that would, restrict or impair the performance of
any Transaction Document.

          SECTION 4.  Security Interest.  (a) Knowles hereby confirms to and
agrees with the Agent that all right, title and interest of Knowles under this
Agreement constitutes "Collateral" under, and as defined in, the Security
Agreement. In furtherance of the foregoing, Knowles hereby assigns to the
Agent, as security, all its rights hereunder, including its rights to enforce
this Agreement and to receive the proceeds of the Capital Contribution. Knowles
acknowledges and confirms that the power of attorney granted to the Agent under
Section 5.03 of the Security Agreement applies to this Agreement and Knowles'
rights hereunder.

          (b)  The Investor consents to the security interest and assignment
referred to in paragraph (a) above and acknowledges and agrees that (i) the
Agent may enforce Knowles' rights under this Agreement and (ii) all payments
that the Investor is required to make to or for the benefit of Knowles pursuant
to this Agreement shall be made directly to the Agent (for the benefit of the
Secured Parties) for Knowles' account (it being understood that payments
pursuant to Section 2(c) of this Agreement also shall be made directly to the
Agent but are not for Knowles' account).

          SECTION 5.  Representations and Warranties. The Investor represents
and warrants to Knowles and the Agent that:

          (a)  the Investor is a duly organized and validly existing limited
     liability company organized under the laws of the State of Delaware;

          (b)  the execution, delivery and performance by the Investor of the
     Transaction Documents are within the Investor's powers and have been duly
     authorized by all necessary action on the part of the Investor and the
     holders of its Equity Interests;

          (c)  each of the Transaction Documents has been duly executed and
     delivered by it and constitutes a legal, valid and binding obligation of
     it, enforceable against it in accordance with its terms, subject to
     applicable bankruptcy, insolvency, reorganization, moratorium or other
     similar laws affecting creditors' rights generally and subject to general
     principles of equity, regardless of whether considered in a proceeding in
     equity or at law;

<PAGE>
                                                                               8

          (d) its execution, delivery and performance of each of the Transaction
     Documents (i) except for the filing of appropriate Uniform Commercial Code
     financing statements, does not require any consent or approval of,
     registration or filing with, or other action by any Governmental Authority,
     (ii) will not violate any applicable law or regulation or its limited
     liability company agreement or other organizational documents or any or
     order of any Governmental Authority and (iii) will not violate or result in
     a default under any agreement or instrument binding on it; and

          (e) the Investor does not have any Indebtedness or other liabilities,
     other than its obligations under the Transaction Documents.

          SECTION 6.  Termination. This Agreement shall remain in full force
and effect until the Release Date, at which time this Agreement shall terminate
and the Investor shall have no further obligations hereunder.

          SECTION 7.  Notices. All notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by telecopy, as
follows:

          (a) if to Knowles, to it at 1151 Maplewood Drive, Itasca, IL 60143,
     Attention of Chief Financial Officer (Telecopy No. (630) 250-0575);

          (b) if to the Investor, to it c/o Doughty Hanson & Co. Limited at 152
     W. 57th Street, 47th Floor, New York, NY 10019, Attention of Kevin Luzak
     (Telecopy No. (212) 641-3750); and

          (c) if to the Agent, to it at 270 Park Avenue, New York, New York
     10017, Attention of Mr. William Caggiano (Telecopy No. (212) 972-0009).

Any party hereto may change its address or telecopy number of notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the
provisions of this Agreement shall be deemed to have been given on the date of
receipt.

          SECTION 8.  Waivers; Amendments. (a) No failure or delay by Knowles
or the Agent exercising any right or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power,

<PAGE>
                                                                               9

or any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. No waiver of any provision of this Agreement or consent to any
departure by the Investor therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) of this Section, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given.

          (b)  Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement in writing entered into by
Knowles, the Investor and the Agent; provided that any waiver, amendment or
modification that affects only the rights and obligations of the Agent and the
Investor with respect to the purchase and sale of participations in Loans or
Letters of Credit as contemplated by Section 2(c), shall not require the consent
or approval of Knowles.

          SECTION 9. Successors and Assigns.  (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including, in the
case of the Agent, any successor Administrative Agent under the Credit
Agreement), except that neither the Investor nor Knowles may assign or otherwise
transfer any of its rights or obligations hereunder (except, in the case of
Knowles, as provided in Section 4) and any attempted assignment or transfer in
violation thereof shall be null and void.

          (b)  In acting under this Agreement, the Agent will be acting for and
on behalf of the Lenders under the Credit Agreement. It is understood and agreed
that the Agent shall be entitled to seek the approval of the Required Lenders in
connection with (in which case such approval shall be a condition to) any
consent or approval requested from the Agent hereunder or any waiver,
modification or amendment of this Agreement, and the Agent shall have no
liability hereunder in its capacity as such for any action taken or not taken by
it with the consent or at the request of the Required Lenders.

          SECTION 10. Counterparts; Integration.  This Agreement may be executed
in counterparts (and by different parties hereto on different counterparts),
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement and the other Transaction
Documents constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and

<PAGE>
understandings, oral or written, relating to the subject matter hereof. This
Agreement shall become effective when it shall have been executed by the Agent
and when the Agent shall have received counterparts hereof which, when taken
together, bear the signatures of each of the other parties hereto. Delivery of
an executed counterpart of a signature page of this Agreement by telecopy shall
be effective as delivery of a manually executed counterpart of this Agreement.

          SECTION 11.  Severability.  Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity or a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

          SECTION 12.  Governing Law; Jurisdiction; Consent to Service of
Process.  (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.

          (b) Each of the Investor and Knowles hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement, or for recognition or enforcement
of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement or any other Transaction Document
shall affect any right that the Agent may otherwise have to bring any action or
proceeding relating to this Agreement against any party hereto or its properties
in the courts of any jurisdiction.

          (c) Each of the Investor and Knowles hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively
do so, any objection which it may now or hereafter have to the laying of venue
of

<PAGE>
                                                                              11

any suit, action or proceeding arising out of or relating to this Agreement or
any other Transaction Document in any court referred to in paragraph (b) of
this Section. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.

          (d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 7. Nothing in this
Agreement or any other Transaction Document will affect the right of any party
to this Agreement to serve process in any other manner permitted by law.

          SECTION 13. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

          SECTION 14. Headings. Section headings used herein are for
convenience of reference only, are not part of this Agreement and shall not
affect the construction of, or be taken into consideration in interpreting,
this Agreement.
<PAGE>
                                                                              12

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.

                                        KEY ACQUISITION, L.L.C,

                                        by
                                          --------------------------------------
                                          Name:
                                          Title:

                                        KNOWLES ELECTRONICS HOLDINGS, INC.,

                                        by
                                          --------------------------------------
                                          Name:
                                          Title:

                                        JPMORGAN CHASE BANK, as Agent,

                                        by
                                          --------------------------------------
                                          Name:
                                          Title:

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