Document:

GEHL COMPANY 

and 

AMERICAN STOCK
TRANSFER & TRUST COMPANY 

Rights Agent 

     _________________ 

RIGHTS AGREEMENT 

Dated as of May 25,
2007 

TABLE OF CONTENTS 

			
	Section 1.	Certain Definitions	1 
	
Section 2.	Appointment of Rights Agent	3 
	
Section 3.	Issue of Right Certificates	3 
	
Section 4.	Form of Right Certificates	5 
	
Section 5.	Countersignature and Registration	5 
	
Section 6.	Transfer, Split Up, Combination and Exchange of Right Certificates;	 
	 	    Mutilated, Destroyed, Lost or Stolen Right Certificates	5 
	
Section 7.	Exercise of Rights; Purchase Price; Expiration Date of Rights	6 
	
Section 8.	Cancellation and Destruction of Right Certificates	7 
	
Section 9.	Reservation and Availability of Preferred Shares	7 
	
Section 10.	Preferred Shares Record Date	8 
	
Section 11.	Adjustment of Purchase Price, Number of Shares or Number of Rights	8 
	
Section 12.	Certificate of Adjusted Purchase Price or Number of Shares	14 
	
Section 13.	Consolidation, Merger, Share Exchange or Sale or	 
	 	    Transfer of Assets or Earning Power	14 
	
Section 14.	Fractional Rights and Fractional Shares	16 
	
Section 15.	Rights of Action	17 
	
Section 16.	Agreement of Right Holders	17 
	
Section 17.	Right Certificate Holder Not Deemed a Shareholder	18 
	
Section 18.	Concerning the Rights Agent	18 
	
Section 19.	Merger or Consolidation or Change of Name of Rights Agent	19 
	
Section 20.	Duties of Rights Agent	19 
	
Section 21.	Change of Rights Agent	20 
	
Section 22.	Issuance of New Right Certificates	21 
	
Section 23.	Redemption	21 

i 

	 	 	 
	
Section 24.	Exchange	22 
	
Section 25.	Notice of Certain Events	23 
	
Section 26.	Notices	24 
	
Section 27.	Supplements and Amendments	24 
	
Section 28.	Determinations and Actions by the Board of Directors	24 
	
Section 29.	Successors	25 
	
Section 30.	Benefits of this Agreement	25 
	
Section 31.	Severability	25 
	
Section 32.	Governing Law	25 
	
Section 33.	Counterparts	25 
	
Section 34.	Descriptive Headings	25 

	 	  	Exhibit A
– Terms of Series A Preferred Stock  

	 	  	Exhibit B
– Form of Right Certificate  

	 	  	Exhibit C
– Summary of Rights to Purchase Preferred Shares  

ii 

RIGHTS AGREEMENT 

        THIS
AGREEMENT, dated as of May 25, 2007, between GEHL COMPANY, a Wisconsin
corporation (the “Company”), and AMERICAN STOCK TRANSFER & TRUST COMPANY
 (the “Rights Agent”). 

        WHEREAS,
the Board of Directors of the Company authorized the Rights Agreement, dated as of May
28, 1997 (the “1997 Rights Agreement”), between the Company and American Stock
Transfer & Trust Company (as successor to Firstar Trust Company); declared a dividend
of one preferred share purchase right (a “1997 Right”) for each Common Share (as
hereinafter defined) of the Company outstanding on June 16, 1997 (the “1997
Record Date”); and authorized the issuance of one 1997 Right for each Common Share
issued between the 1997 Record Date on the earliest of the Distribution Date, the
Redemption Date at the Final Expiration Date (as such terms are defined in the 1997 Rights
Agreement), each 1997 Right representing the right to purchase one one–hundredth of a
Preferred Share (as defined in the 1997 Rights Agreement), upon the terms and subject to
the conditions set forth in the 1997 Rights Agreement, all such 1997 Rights and the 1997
Rights Agreement expiring in accordance with their terms on May 28, 2007; 

        WHEREAS,
the Board of Directors of the Company have determined it is desirable and in the best
interests of the Company and its shareholders for the Company to extend the benefits
afforded by the 1997 Rights Agreement and to implement such extension by execution of this
Agreement; and 

        WHEREAS,
the Board of Directors of the Company has authorized and declared a dividend of one
preferred share purchase right (a “Right”) for each Common Share of the Company
outstanding upon the close of business on June 8, 2007 (the “Record Date”)
payable upon the close of business on such date (the “Payment Date”), and has
authorized and directed the issuance of one Right with respect to each Common Share that
shall become outstanding between the Record Date and the earliest of the Distribution
Date, the Redemption Date and the Final Expiration Date (as such terms are hereinafter
defined), each Right representing the right to purchase one one-hundredth of a Preferred
Share (as hereinafter defined) of the Company upon the terms and subject to the conditions
hereinafter set forth. 

        NOW,
THEREFORE, in consideration of the premises and the mutual agreements herein set
forth, the parties hereby agree as follows: 

        Section
1.    Certain Definitions. For purposes of this Agreement, the following terms
have the meanings indicated: 

         (a)       
          “Acquiring Person” shall mean any Person (as such term is hereinafter
          defined) who or which, together with all Affiliates and Associates (as such
          terms are hereinafter defined) of such Person, shall be the Beneficial Owner (as
          such term is hereinafter defined) of 15% or more of the Common Shares of the
          Company then outstanding, but shall not include the Company, any Subsidiary (as
          such term is hereinafter defined) of the Company, any employee benefit plan of
          the Company or any Subsidiary of the Company, any entity holding Common Shares
          for or pursuant to the terms of any such plan, or any trustee, administrator or
          fiduciary of such a plan. Notwithstanding the foregoing, no Person shall become
          an “Acquiring Person” as a result of an acquisition of Common Shares
          by the Company which, by reducing the number of shares outstanding, increases
          the proportionate number of shares beneficially owned by such Person to 15% or
          more of the Common Shares of the Company then outstanding; provided,
          however, that if a Person would, but for the foregoing, become an Acquiring
          Person by reason of share purchases by the Company and shall, after such share
          purchases by the Company, become the Beneficial Owner of any additional Common
          Shares of the Company at any time that the Person is or thereby becomes the
          Beneficial Owner of 15% or more of the Common Shares of the Company then
          outstanding (other than Common Shares acquired solely as a result of corporate
          action of the Company not caused, directly or indirectly, by such Person), then
          such Person shall be deemed to be an “Acquiring Person”.
          Notwithstanding the foregoing, if the Board of Directors of the Company
          determines in good faith that a Person who would otherwise be an “Acquiring
          Person”, as defined pursuant to the foregoing provisions of this Section
          1(a), has become such inadvertently, and such Person divests as promptly as
          practicable a sufficient number of Common Shares so that such Person would no
          longer be an “Acquiring Person,” as defined pursuant to the foregoing
          provisions of this Section 1(a), then such Person shall not be deemed to be an
          “Acquiring Person” for any purposes of this Agreement. 

         (b)       
          “Affiliate” and “Associate” shall have the respective
          meanings ascribed to such terms in Rule 12b-2 of the General Rules and
          Regulations under the Securities Exchange Act of 1934, as amended (the
          “Exchange Act”), as in effect on the date of this Agreement. 

         (c)       
          A Person shall be deemed the “Beneficial Owner” of and shall be deemed
          to “beneficially own” any securities: 

          		    (i)       
               which such Person or any of such Person’s Affiliates or Associates
               beneficially owns, directly or indirectly; 

               

          		    (ii)       
               which such Person or any of such Person’s Affiliates or Associates has (A)
               the right to acquire (whether such right is exercisable immediately or only
               after the passage of time) pursuant to any agreement, arrangement or
               understanding (other than customary agreements with and between underwriters and
               selling group members with respect to a bona fide public offering of
               securities), or upon the exercise of conversion rights, exchange rights, rights
               (other than these Rights), warrants or options, or otherwise; provided,
               however, that a Person shall not be deemed the Beneficial Owner of, or to
               beneficially own, securities tendered pursuant to a tender or exchange offer
               made by or on behalf of such Person or any of such Person’s Affiliates or
               Associates until such tendered securities are accepted for purchase or exchange;
               or (B) the right to vote pursuant to any agreement, arrangement or
               understanding; provided, however, that a Person shall not be deemed the
               Beneficial Owner of, or to beneficially own, any security if the agreement,
               arrangement or understanding to vote such security (1) arises solely from a
               revocable proxy or consent given to such Person in response to a public proxy or
               consent solicitation made pursuant to, and in accordance with, the applicable
               rules and regulations of the Exchange Act and (2) is not also then reportable on
               Schedule 13D under the Exchange Act (or any comparable or successor
               report); or 

               

          		    (iii)       
               which are beneficially owned, directly or indirectly, by any other Person with
               which such Person or any of such Person’s Affiliates or Associates has any
               agreement, arrangement or understanding (other than customary agreements with
               and between underwriters and selling group members with respect to a bona fide
               public offering of securities) for the purpose of, or with respect to,
               acquiring, holding, voting (except to the extent contemplated by the proviso to
               Section 1(c)(ii)(B)) hereof or disposing of any securities of the Company. 

               

        Notwithstanding
anything in this definition of Beneficial Ownership to the contrary, the phrase “then
outstanding,” when used with reference to a Person’s Beneficial Ownership of
securities of the Company, shall mean the number of such securities then issued and
outstanding together with the number of such securities not then actually issued and
outstanding which such Person would be deemed to own beneficially hereunder. 

2 

         (d)       
          “Business Day” shall mean any day other than a Saturday, a Sunday or a
          day on which the Nasdaq Stock Market banking institutions in the State of
          Wisconsin are generally authorized or obligated by law or executive order to
          close. 

         (e)       
          “Close of business” on any given date shall mean 5:00 P.M., West Bend,
          Wisconsin time, on such date; provided, however, that if such date is not
          a Business Day it shall mean 5:00 P.M., West Bend, Wisconsin time, on the next
          succeeding Business Day. 

         (f)       
          “Common Shares” when used with reference to the Company shall mean the
          shares of common stock, par value $.10 per share, of the Company, or shares
          having equivalent rights, privileges and preferences to common stock.
          “Common Shares” when used with reference to any Person other than the
          Company shall mean the capital stock (or equivalent equity interest) with the
          greatest voting power of such other Person or, if such other Person is a
          Subsidiary of another Person, the Person or Persons that ultimately control such
          first-mentioned Person. 

         (g)       
          “Distribution Date” shall have the meaning set forth in
          Section 3(a) hereof. 

         (h)       
          “Final Expiration Date” shall have the meaning set forth in
          Section 7 hereof. 

         (i)       
          “Person” shall mean any individual, firm, corporation or other entity,
          and shall include any successor (by merger or otherwise) of such entity. 

         (j)       
          “Preferred Shares” shall mean shares of Series A Preferred Stock, par
          value $.10 per share, of the Company having the preferences and rights set forth
          in Exhibit A attached to this Agreement. 

         (k)       
          “Redemption Date” shall have the meaning set forth in Section 7
          hereof. 

         (l)       
          “Shares Acquisition Date” shall mean the first date of public
          announcement (which, for purposes of this definition, shall include, without
          limitation, a report filed or amended pursuant to Section 13(d) under the
          Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has
          become such. 

         (m)       
          “Subsidiary” of any Person shall mean any corporation or other entity
          of which a majority of the voting power of the voting equity securities or
          equity interest is owned, directly or indirectly, by such Person. 

        
Section 2.    Appointment of Rights Agent. The Company hereby appoints the Rights Agent to
act as agent for the Company and the holders of the Rights (who, in accordance with
Section 3 hereof, shall prior to the Distribution Date also be the holders of the Common
Shares of the Company) in accordance with the terms and conditions hereof, and the Rights
Agent hereby accepts such appointment. The Company may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable.  

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        Section
3.    Issue of Right Certificates.  

         (a)       
          Until the earlier of (i) the tenth day after the Shares Acquisition Date or (ii)
          the tenth Business Day (or such later date as may be determined by action of the
          Company’s Board of Directors prior to such time as any Person becomes an
          Acquiring Person) after the date of the commencement of, or of the first public
          announcement of the intention of any Person to commence, a tender or exchange
          offer the consummation of which would result in any Person (other than the
          Company, any Subsidiary of the Company, any employee benefit plan of the Company
          or of any Subsidiary of the Company, any entity holding Common Shares for or
          pursuant to the terms of any such plan, or any trustee, administrator, or
          fiduciary of such a plan) becoming the Beneficial Owner of Common Shares of the
          Company aggregating 15% or more of the then outstanding Common Shares (including
          in either case any such date which is after the date of this Agreement and prior
          to the Payment Date; the earlier of such dates being herein referred to as the
          “Distribution Date”; provided, however, that if the tenth day
          or Business Day, as the case may be, after the pertinent date occurs before the
          Record Date, “Distribution Date” shall mean the Record Date),
          (x) the Rights will be evidenced (subject to the provisions of
          Section 3(b) hereof) by the certificates for Common Shares of the Company
          registered in the names of the holders thereof (which certificates shall also be
          deemed to be Right Certificates) and not by separate Right Certificates, and (y)
          the right to receive Right Certificates will be transferable only in connection
          with the transfer of Common Shares of the Company. As soon as practicable after
          the Distribution Date, the Company will prepare and execute, the Rights Agent
          will countersign, and the Company will send or cause to be sent (and the Rights
          Agent will, if requested, send) by first-class, insured, postage-prepaid mail,
          to each record holder of Common Shares of the Company as of the close of
          business on the Distribution Date, at the address of such holder shown on the
          records of the Company, a Right Certificate, in substantially the form of
          Exhibit B hereto (a “Right Certificate”), evidencing one Right for
          each Common Share of the Company so held. As of the Distribution Date, the
          Rights will be evidenced solely by such Right Certificates. 

         (b)       
          The Company has prepared a Summary of Rights to Purchase Preferred Shares,
          attached as Exhibit C hereto (the “Summary of Rights”), a copy of
          which is available free of charge from the Company. With respect to certificates
          for Common Shares of the Company outstanding as of the Record Date, until the
          Distribution Date, the Rights will be evidenced by such certificates registered
          in the names of the holders thereof. Until the Distribution Date (or the earlier
          of the Redemption Date or Final Expiration Date), the surrender for transfer of
          any certificate for Common Shares of the Company outstanding on the Record Date,
          with or without a copy of the Summary of Rights attached thereto, shall also
          constitute the transfer of the Rights associated with the Common Shares
          represented thereby. 

         (c)       
          Certificates for Common Shares of the Company that become outstanding
          (including, without limitation, certificates for reacquired Common Shares
          referred to in the last sentence of this Section 3(c) and certificates issued on
          the transfer of Common Shares) after the Record Date but prior to the earliest
          of the Distribution Date, the Redemption Date or the Final Expiration Date shall
          have impressed on, printed on, written on or otherwise affixed to them a legend
          in substantially the following form (provided, however, that certificates for
          Common Shares of the Company in existence on the Record Date may bear the legend
          required by the 1997 Rights Agreement): 

	 	        This
certificate also evidences and entitles the holder hereof to certain rights as set forth
in a Rights Agreement between Gehl Company and American Stock Transfer & Trust
Company, dated as of May 25, 2007 and as such agreement may be amended (the “Rights
Agreement”), the terms of which are hereby incorporated herein by reference and a
copy of which is on file at the principal executive offices of Gehl Company. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this certificate. Gehl Company
will mail to the holder of this certificate a copy of the Rights Agreement without charge
after receipt of a written request therefor. Under certain circumstances set forth in the
Rights Agreement, Rights issued to, or held by, an Acquiring Person or any Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement), whether held by
such person or any subsequent holder, shall become null and void. 

4 

With respect to such certificates
containing the foregoing legend, until the Distribution Date, the Rights associated with
the Common Shares represented by such certificates shall be evidenced by such certificates
alone, and the surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby. In the event
that the Company purchases or acquires any Common Shares after the Record Date but prior
to the Distribution Date, any Rights associated with such Common Shares shall be deemed
cancelled and retired so that the Company shall not be entitled to exercise any Rights
associated with the Common Shares which are no longer outstanding. 

        
Section 4.   Form of Right Certificates. The Right Certificates
(and the forms of election to purchase Preferred Shares and of assignment to be printed on
the reverse thereof) shall be substantially the same as Exhibit B hereto and may have such
marks of identification or designation and such legends, summaries or endorsements printed
thereon as the Company may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any applicable law or
with any rule or regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Section 22 hereof, the Right Certificates shall
entitle the holders thereof to purchase such number of one one-hundredths of a Preferred
Share as shall be set forth therein at the price per one one-hundredth of a Preferred
Share set forth therein (the “Purchase Price”), but the amount and type of
securities purchasable upon exercise of each Right and the Purchase Price shall be subject
to adjustment as provided herein.  

        Section
5.    Countersignature and Registration.  

         (a)       
          The Right Certificates shall be executed on behalf of the Company by its
          Chairman of the Board, Chief Executive Officer, President or any Vice President
          either manually or by facsimile signature, shall have affixed thereto the
          Company’s seal or a facsimile thereof, and shall be attested by the
          Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
          the Company, either manually or by facsimile signature. The Right Certificates
          shall be manually countersigned by the Rights Agent and shall not be valid for
          any purpose unless countersigned. In case any officer of the Company who shall
          have signed any of the Right Certificates shall cease to be such officer of the
          Company before countersignature by the Rights Agent and issuance and delivery by
          the Company, such Right Certificates, nevertheless, may be countersigned by the
          Rights Agent and issued and delivered by the Company with the same force and
          effect as though the individual who signed such Right Certificates had not
          ceased to be such officer of the Company; and any Right Certificate may be
          signed on behalf of the Company by any person who, at the actual date of the
          execution of such Right Certificate, shall be a proper officer of the Company to
          sign such Right Certificate, although at the date of the execution of this
          Rights Agreement any such individual was not such an officer. 

         (b)       
          Following the Distribution Date, the Rights Agent will keep or cause to be kept,
          at its principal office, books for registration and transfer of the Right
          Certificates issued hereunder. Such books shall show the names and addresses of
          the respective holders of the Right Certificates, the number of Rights evidenced
          on its face by each of the Right Certificates and the date of each of the Right
          Certificates. 

        Section
6.    Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates.  

         (a)       
          Subject to the provisions of Section 14 hereof, at any time after the close
          of business on the Distribution Date, and at or prior to the close of business
          on the earlier of the Redemption Date or the Final Expiration Date, any Right
          Certificate or Right Certificates (other than Right Certificates representing
          Rights that have become void pursuant to Section 11(a)(ii) hereof or that
          have been exchanged pursuant to Section 24 hereof) may be transferred,
          split up, combined or exchanged for another Right Certificate or Right
          Certificates, entitling the registered holder to purchase a like number of one
          one-hundredths of a Preferred Share as the Right Certificate or Right
          Certificates surrendered then entitled such holder to purchase. Any registered
          holder desiring to transfer, split up, combine or exchange any Right Certificate
          or Right Certificates shall make such request in writing delivered to the Rights
          Agent, and shall surrender the Right Certificate or Right Certificates to be
          transferred, split up, combined or exchanged at the principal office of the
          Rights Agent. Thereupon the Rights Agent shall countersign and deliver to the
          person entitled thereto a Right Certificate or Right Certificates, as the case
          may be, as so requested. The Company may require payment of a sum sufficient to
          cover any tax or governmental charge that may be imposed in connection with any
          transfer, split up, combination or exchange of Right Certificates. 

5 

         (b)       
          Upon receipt by the Company and the Rights Agent of evidence reasonably
          satisfactory to them of the loss, theft, destruction or mutilation of a Right
          Certificate and, in case of loss, theft or destruction, of indemnity or security
          reasonably satisfactory to them, and, at the Company’s request,
          reimbursement to the Company and the Rights Agent of all reasonable expenses
          incidental thereto, and upon surrender to the Rights Agent and cancellation of
          the Right Certificate if mutilated, the Company will make and deliver a new
          Right Certificate of like tenor to the Rights Agent for delivery to the
          registered holder in lieu of the Right Certificate so lost, stolen, destroyed or
          mutilated. 

        Section
7.    Exercise of Rights; Purchase Price; Expiration Date of Rights.  

         (a)       
          The registered holder of any Right Certificate may exercise the Rights evidenced
          thereby (except as otherwise provided herein) in whole or in part at any time
          after the Distribution Date upon surrender of the Right Certificate, with the
          form of election to purchase on the reverse side thereof duly executed, to the
          Rights Agent at the principal office of the Rights Agent, together with payment
          of the Purchase Price for each one one-hundredth of a Preferred Share as to
          which the Rights are exercised, at or prior to the earliest of (i) the close of
          business on May 25, 2017, subject to extension (the “Final Expiration
          Date”), (ii) the time at which the Rights are redeemed as provided in
          Section 23 hereof (the “Redemption Date”), and (iii) the time at
          which such Rights are exchanged as provided in Section 24 hereof. 

         (b)       
          The Purchase Price for each one one-hundredth of a Preferred Share pursuant to
          the exercise of a Right shall initially be $130.00, shall be subject to
          adjustment from time to time as provided in Sections 11 and 13 hereof and
          shall be payable in lawful money of the United States of America or in Common
          Shares of the Company in accordance with Section 7(c) hereof. 

         (c)       
          Upon receipt of a Right Certificate representing exercisable Rights, with the
          form of election to purchase duly executed, accompanied by payment of the
          Purchase Price for the shares to be purchased and an amount equal to any
          applicable transfer tax required to be paid by the holder of such Right
          Certificate in accordance with Section 9 hereof, as set forth below, the
          Rights Agent shall thereupon promptly (i) (A) requisition from any transfer
          agent of the Preferred Shares certificates for the number of Preferred Shares to
          be purchased and the Company hereby irrevocably authorizes its transfer agent to
          comply with all such requests, or (B) requisition from the depositary agent
          depositary receipts representing such number of one one-hundredths of a
          Preferred Share as are to be purchased (in which case certificates for the
          Preferred Shares represented by such receipts shall be deposited by the transfer
          agent with the depositary agent), (ii) when appropriate, requisition from
          the Company the amount of cash to be paid in lieu of issuance of fractional
          shares in accordance with Section 14 hereof, (iii) after receipt of such
          certificates or depositary receipts, cause the same to be delivered to or upon
          the order of the registered holder of such Right Certificate, registered in such
          name or names as may be designated by such holder and (iv) when appropriate,
          after receipt, deliver such cash to or upon the order of the registered holder
          of such Right Certificate. The payment of the Purchase Price (as such amount may
          be reduced pursuant to Section 11(a)(iii) hereof) shall be made by
          certified check, cashier’s check, bank draft or money order payable to the
          order of the Company, except that, if so provided by the Board of Directors of
          the Company, the payment of the Purchase Price following the occurrence of a
          Section 11(a)(ii) Event (as hereinafter defined) and until the first
          occurrence of a Section 13 Event (as hereinafter defined) may be made
          wholly or in part by delivery of a certificate or certificates (with appropriate
          stock powers executed in blank attached thereto) evidencing a number of Common
          Shares of the Company equal to the then Purchase Price divided by the closing
          price (as determined pursuant to Section 11(d) hereof) per Common Share on
          the Trading Day (as such term is hereinafter defined) immediately preceding the
          date of such exercise. If the Company is obligated to issue other securities of
          the Company, pay cash and/or distribute other property pursuant to
          Section 11(a) hereof, the Company will make all arrangements necessary so
          that such other securities, cash and/or other property are available for
          distribution by the Rights Agent, if and when appropriate. 

6

         (d)       
          In case the registered holder of any Right Certificate shall exercise less than
          all the Rights evidenced thereby, a new Right Certificate evidencing Rights
          equivalent to the Rights remaining unexercised shall be issued by the Rights
          Agent to the registered holder of such Right Certificate or to his duly
          authorized assigns, subject to the provisions of Section 14 hereof. 

         (e)       
          Notwithstanding anything in this Agreement to the contrary, neither the Rights
          Agent nor the Company shall be obligated to take any action with respect to a
          registered holder of a Right Certificate upon the occurrence of any purported
          transfer, assignment or exercise as set forth in this Section 7 unless such
          registered holder shall have (i) completed and signed the certificate following
          the form of assignment or election to purchase set forth on the reverse of the
          Right Certificate surrendered for such transfer, assignment or exercise, and
          (ii) provided such additional evidence of the identity of the Beneficial Owner
          (or former Beneficial Owner) or Affiliates or Associates thereof as the Company
          shall reasonably request. 

        
Section 8.    Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its agents, be
delivered to the Rights Agent for cancellation or in cancelled form, or if surrendered to
the Rights Agent, shall be cancelled by it, and no Right Certificates shall be issued in
lieu thereof except as expressly permitted by any of the provisions of this Rights
Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement,
and the Rights Agent shall so cancel and retire, any other Right Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Right Certificates to the Company or shall, at the written request
of the Company, destroy such cancelled Right Certificates, and in such case shall deliver
a certificate of destruction thereof to the Company. 

        Section
9.    Reservation and Availability of Preferred Shares.  

         (a)       
          The Company covenants and agrees that it will cause to be reserved and kept
          available out of its authorized and unissued Preferred Shares or any authorized
          and issued Preferred Shares held in its treasury the number of Preferred Shares
          that will be sufficient to permit the exercise in full of all outstanding Rights
          in accordance with Section 7 hereof. 

         (b)       
          So long as the Preferred Shares issuable upon the exercise of Rights may be
          listed on any national securities exchange, the Company shall use its best
          efforts to cause, from and after such time as the Rights become exercisable, all
          Preferred Shares reserved for such issuance to be listed on such exchange upon
          official notice of issuance upon such exercise. 

7

         (c)       
          The Company covenants and agrees that it will take all such action as may be
          necessary to ensure that all Preferred Shares delivered upon exercise of Rights
          shall, at the time of delivery of the certificates for such shares (subject to
          payment of the Purchase Price), be duly and validly authorized and issued and
          fully paid and nonassessable shares (except as otherwise provided by any
          corporation law applicable to the Company). 

         (d)       
          The Company further covenants and agrees that it will pay when due and payable
          any and all federal and state transfer taxes and charges which may be payable in
          respect of the issuance or delivery of the Right Certificates or of any
          Preferred Shares upon the exercise of Rights. The Company shall not, however, be
          required to pay any transfer tax which may be payable in respect of any transfer
          or delivery of Right Certificates to a person other than, or the issuance or
          delivery of certificates for the Preferred Shares in a name other than that of,
          the registered holder of the Right Certificate evidencing Rights surrendered for
          exercise or to issue or to deliver any certificates for Preferred Shares upon
          the exercise of any Rights until any such tax shall have been paid (any such tax
          being payable by the holder of such Right Certificate at the time of surrender)
          or until it has been established to the Company’s reasonable satisfaction
          that no such tax is due. 

        
Section 10.    Preferred Shares Record Date. Each Person in whose
name any certificate for Preferred Shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred Shares
represented thereby on, and such certificate shall be dated, the date upon which the Right
Certificate evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; provided, however, that if the date
of such surrender and payment is a date upon which the Preferred Shares transfer books of
the Company are closed, such Person shall be deemed to have become the record holder of
such shares on, and such certificate shall be dated, the next succeeding Business Day on
which the Preferred Shares transfer books of the Company are open. 

        
Section 11.    Adjustment of Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number of Preferred Shares covered by each
Right and the number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11. 

          		
    (a)       
               (i)    In the event the Company shall at any time after the date of this Agreement
               (A) declare a dividend on the Preferred Shares payable in Preferred Shares, (B)
               subdivide the outstanding Preferred Shares, (C) combine the outstanding
               Preferred Shares into a smaller number of Preferred Shares or (D) issue any
               shares of its capital stock in a reclassification of the Preferred Shares
               (including any such reclassification in connection with a consolidation or
               merger in which the Company is the continuing or surviving corporation), except
               as otherwise provided in this Section 11(a), the Purchase Price in effect
               at the time of the record date for such dividend or of the effective date of
               such subdivision, combination or reclassification, and the number and kind of
               shares of capital stock issuable on such date, shall be proportionately adjusted
               so that the holder of any Right exercised after such time shall be entitled to
               receive the aggregate number and kind of shares of capital stock which, if such
               Right had been exercised immediately prior to such date and at a time when the
               Preferred Shares transfer books of the Company were open, such holder would have
               owned upon such exercise and been entitled to receive by virtue of such
               dividend, subdivision, combination or reclassification; provided,
               however, that in no event shall the consideration to be paid upon the
               exercise of one Right be less than the aggregate par value of the shares of
               capital stock of the Company issuable upon exercise of one Right. If an event
               occurs which would require an adjustment under both Section 11(a)(i) and
               Section 11(a)(ii) hereof, the adjustment provided for in this
               Section 11(a)(i) shall be in addition to, and shall be made prior to, any
               adjustment required pursuant to Section 11(a)(ii) hereof. 

               

8 

          		
    (ii)       
               Subject to Section 24 hereof, in the event any Person shall become an
               Acquiring Person, other than pursuant to any transaction set forth in
               Section 13(a) hereof, each holder of a Right shall thereafter have a right
               to receive, upon exercise thereof at a price equal to the then current Purchase
               Price multiplied by the number of one one-hundredths of a Preferred Share for
               which a Right is then exercisable, in accordance with the terms of this
               Agreement and in lieu of Preferred Shares, such number of Common Shares of the
               Company as shall equal the result obtained by (x) multiplying the then current
               Purchase Price by the number of one one-hundredths of a Preferred Share for
               which a Right is then exercisable and dividing that product by (y) 50% of the
               then current per share market price of the Common Shares of the Company
               (determined pursuant to Section 11(d) hereof) on the date the Person became
               an Acquiring Person (such number of shares, the “Adjustment Shares”). 

               

	 	        From
and after such time as a Person becomes an Acquiring Person (a
“Section 11(a)(ii) Event”), any Rights that are or were acquired or
beneficially owned by such Acquiring Person (or any Associate or Affiliate of such
Acquiring Person) shall be void and any holder of such Rights shall thereafter have no
right to exercise such Rights under any provision of this Agreement. No Right Certificate
shall be issued pursuant to Section 3 hereof that represents Rights beneficially
owned by an Acquiring Person whose Rights would be void pursuant to the preceding sentence
or any Associate or Affiliate thereof; no Right Certificate shall be issued at any time
upon the transfer of any Rights to an Acquiring Person whose Rights would be void pursuant
to the preceding sentence or any Associate or Affiliate thereof or to any nominee of such
Acquiring Person, Associate or Affiliate; and any Right Certificate delivered to the
Rights Agent for transfer to an Acquiring Person whose Rights would be void pursuant to
the preceding sentence shall be cancelled. The Company shall use all reasonable efforts to
ensure that the provisions of this paragraph are complied with, but shall have no
liability to any holder of Right Certificates or other Person as a result of its failure
to make any determinations with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder. 

          		    (iii)       
               In the event that there shall not be sufficient Common Shares of the Company
               issued but not outstanding or authorized but unissued (and not reserved for
               issuance for purposes other than upon exercise of the Rights) to permit the
               exercise in full of the Rights in accordance with the foregoing subparagraph
               (ii), the Company shall: (A) determine the excess of (1) the value of the
               Adjustment Shares issuable upon the exercise of a Right (the “Current
               Value”) over (2) the Purchase Price (such excess, the “Spread”),
               and (B) with respect to each Right, make adequate provision to substitute for
               the Adjustment Shares, upon payment of the applicable Purchase Price, (1) cash,
               (2) a reduction in the Purchase Price, (3) equity securities of the Company
               (including, without limitation, one one-hundredth of a Preferred Share or
               shares, or units of shares, of preferred stock which the Board of Directors of
               the Company has deemed to have the same value as Common Shares of the Company
               (such one one-hundredth of a Preferred Share or shares of preferred stock,
               hereinafter referred to as “common stock equivalents”)), (4) debt
               securities of the Company, (5) other assets or (6) any combination of the
               foregoing, having an aggregate value equal to the Current Value, where such
               aggregate value has been determined by the Board of Directors of the Company
               based upon the advice of a nationally recognized investment banking firm
               selected by the Board of Directors of the Company; provided, however, if
               the Company shall not have made adequate provision to substitute for the
               Adjustment Shares pursuant to clause (B) above within thirty (30) days following
               the occurrence of a Section 11(a)(ii) Event (the
               “Section 11(a)(ii) Trigger Date”), then the Company shall be
               obligated to deliver, upon the surrender for exercise of a Right and without
               requiring payment of any portion of the Purchase Price, Common Shares of the
               Company (to the extent available) and then, if necessary, cash, which shares
               and/or cash have an aggregate value equal to the Spread. If the Board of
               Directors of the Company shall determine in good faith that it is likely that
               sufficient additional Common Shares of the Company might be authorized for
               issuance for exercise in full of the Rights, the thirty (30) day period set
               forth above may be extended to the extent necessary, but not more than ninety
               (90) days after the Section 11(a)(ii) Trigger Date, in order that the
               Company may seek shareholder approval for the authorization of such additional
               shares (such period, as it may be extended, the “Substitution
               Period”). To the extent that the Company determines that some action need
               be taken pursuant to the first and/or second sentences of this
               Section 11(a)(iii), the Company (x) shall provide, subject to the last
               paragraph of Section 11(a)(ii) hereof, that such action shall apply
               uniformly to all outstanding Rights, and (y) may suspend the exercisability of
               the Rights until the expiration of the Substitution Period to seek any
               authorization of additional shares and/or to decide the appropriate form of
               distribution to be made pursuant to such first sentence and to determine the
               value thereof. In the event of any such suspension, the Company shall issue a
               public announcement stating that the exercisability of the Rights has been
               temporarily suspended, as well as a public announcement at such time as the
               suspension is no longer in effect. For purposes of this Section 11(a)(iii),
               the value of the Common Shares of the Company shall be the current per share
               market price (as determined pursuant to Section 11(d) hereof) of the Common
               Shares of the Company on the Section 11(a)(ii) Trigger Date and the value
               of any “common stock equivalent” shall be deemed to have the same
               value as the Common Shares of the Company on such date. 

               

9

         (b)       
          In case the Company shall fix a record date for the issuance of rights, options
          or warrants to all holders of Preferred Shares entitling them (for a period
          expiring within 45 calendar days after such record date) to subscribe for or
          purchase Preferred Shares (or shares having the same rights, privileges and
          preferences as the Preferred Shares (“equivalent preferred shares”))
          or securities convertible into Preferred Shares at a price per Preferred Share
          or equivalent preferred share (or having a conversion price per share, if a
          security convertible into Preferred Shares or equivalent preferred shares) less
          than the then current per share market price of the Preferred Shares (as defined
          in Section 11(d) hereof) on such record date, the Purchase Price to be in
          effect after such record date shall be determined by multiplying the Purchase
          Price in effect immediately prior to such record date by a fraction, the
          numerator of which shall be the number of Preferred Shares outstanding on such
          record date plus the number of Preferred Shares which the aggregate offering
          price of the total number of Preferred Shares and/or equivalent preferred shares
          so to be offered (and/or the aggregate initial conversion price of the
          convertible securities so to be offered) would purchase at such current market
          price and the denominator of which shall be the number of Preferred Shares
          outstanding on such record date plus the number of additional Preferred Shares
          and/or equivalent preferred shares to be offered for subscription or purchase
          (or into which the convertible securities so to be offered are initially
          convertible); provided, however, that in no event shall the consideration
          to be paid upon the exercise of one Right be less than the aggregate par value
          of the shares of capital stock of the Company issuable upon exercise of one
          Right. In case such subscription price may be paid in a consideration part or
          all of which shall be in a form other than cash, the value of such consideration
          shall be as determined in good faith by the Board of Directors of the Company,
          whose determination shall be described in a statement filed with the Rights
          Agent. Preferred Shares owned by or held for the account of the Company shall
          not be deemed outstanding for the purpose of any such computation. Such
          adjustment shall be made successively whenever such a record date is fixed; and
          in the event that such rights, options or warrants are not so issued, the
          Purchase Price shall be adjusted to be the Purchase Price which would then be in
          effect if such record date had not been fixed. 

10 

         (c)       
          In case the Company shall fix a record date for the making of a distribution to
          all holders of the Preferred Shares (including any such distribution made in
          connection with a consolidation or merger in which the Company is the continuing
          or surviving corporation) of evidences of indebtedness or assets (other than a
          regular quarterly cash dividend or a dividend payable in Preferred Shares) or
          subscription rights or warrants (excluding those referred to in
          Section 11(b) hereof), the Purchase Price to be in effect after such record
          date shall be determined by multiplying the Purchase Price in effect immediately
          prior to such record date by a fraction, the numerator of which shall be the
          then current per share market price of the Preferred Shares (as defined in
          Section 11(d) hereof) on such record date, less the fair market value (as
          determined in good faith by the Board of Directors of the Company, whose
          determination shall be described in a statement filed with the Rights Agent) of
          the portion of the assets or evidences of indebtedness so to be distributed or
          of such subscription rights or warrants applicable to one Preferred Share and
          the denominator of which shall be such current per share market price of the
          Preferred Shares; provided, however, that in no event shall the
          consideration to be paid upon the exercise of one Right be less than the
          aggregate par value of the shares of capital stock of the Company to be issued
          upon exercise of one Right. Such adjustments shall be made successively whenever
          such a record date is fixed; and in the event that such distribution is not so
          made, the Purchase Price shall again be adjusted to be the Purchase Price which
          would then be in effect if such record date had not been fixed. 

         (d)       
          (i) For the purpose of any computation hereunder, the “current per share
          market price” of any security (a “Security” for the purpose of
          this Section 11(d)(i)) on any date shall be deemed to be the average of the
          daily closing prices per share of such Security for the 30 consecutive Trading
          Days (as such term is hereinafter defined) immediately prior to such date;
          provided, however, that in the event that the current per share market
          price of the Security is determined during a period following the announcement
          by the issuer of such Security of (i) a dividend or distribution on such
          Security payable in shares of such Security or securities convertible into such
          shares, or (ii) any subdivision, combination or reclassification of such
          Security and prior to the expiration of 30 Trading Days after the ex-dividend
          date for such dividend or distribution, or the record date for such subdivision,
          combination or reclassification, then, and in each such case, the current per
          share market price shall be appropriately adjusted to reflect the current market
          price per share equivalent of such Security. The closing price for each Trading
          Day shall be the last sale price, regular way, or, in case no such sale takes
          place on such day, the average of the closing bid and asked prices, regular way,
          in either case as reported in the principal consolidated transaction reporting
          system with respect to securities listed or admitted to trading on the New York
          Stock Exchange or, if the Securities are not listed or admitted to trading on
          the New York Stock Exchange, as reported in the principal consolidated
          transaction reporting system with respect to securities listed on the principal
          national securities exchange on which the Security is listed or admitted to
          trading or, if the Security is not listed or admitted to trading on any national
          securities exchange, the last quoted price or, if not so quoted, the average of
          the high bid and low asked prices in the over-the-counter market, as reported by
          the National Association of Securities Dealers, Inc. Automated Quotations System
          (“Nasdaq”) or such other system then in use, or, if on any such date
          the Security is not quoted by any such organization, the average of the closing
          bid and asked prices as furnished by a professional market maker making a market
          in the Security selected by the Board of Directors of the Company. The term
          “Trading Day” shall mean a day on which the principal national
          securities exchange on which the Security is listed or admitted to trading is
          open for the transaction of business or, if the Security is not listed or
          admitted to trading on any national securities exchange, a Business Day. 

         (ii)       
          For the purpose of any computation hereunder, the “current per share market
          price” of the Preferred Shares shall be determined in accordance with the
          method set forth in Section 11(d)(i) hereof. If the Preferred Shares are
          not publicly traded, the “current per share market price” of the
          Preferred Shares shall be conclusively deemed to be the current per share market
          price of the Common Shares of the Company as determined pursuant to
          Section 11(d)(i) hereof (appropriately adjusted to reflect any stock split,
          stock dividend or similar transaction occurring after the Record Date),
          multiplied by 100. If neither the Common Shares of the Company nor the Preferred
          Shares are publicly held or so listed or traded, “current per share market
          price” shall mean the fair value per share as determined in good faith by
          the Board of Directors of the Company, whose determination shall be described in
          a statement filed with the Rights Agent. 

11 

         (e)       
          No adjustment in the Purchase Price shall be required unless such adjustment
          would require an increase or decrease of at least 1% in the Purchase Price;
          provided, however, that any adjustments which by reason of this
          Section 11(e) are not required to be made shall be carried forward and
          taken into account in any subsequent adjustment. All calculations under this
          Section 11 shall be made to the nearest cent or to the nearest
          one-hundredth of a share as the case may be. Notwithstanding the first sentence
          of this Section 11(e), any adjustment required by this Section 11
          shall be made no later than the earlier of (i) three years from the date of the
          transaction which requires such adjustment or (ii) the date of the expiration of
          the right to exercise any Rights. 

         (f)       
          If, as a result of an adjustment made pursuant to Section 11(a) hereof, the
          holder of any Right thereafter exercised shall become entitled to receive any
          shares of capital stock of the Company other than Preferred Shares, thereafter
          the number of such other shares so receivable upon exercise of any Right shall
          be subject to adjustment from time to time in a manner and on terms as nearly
          equivalent as practicable to the provisions with respect to the Preferred Shares
          contained in Section 11(a) through (c) hereof, inclusive, and the
          provisions of Sections 7, 9, 10 and 13 hereof with respect to the Preferred
          Shares shall apply on like terms to any such other shares. 

         (g)       
          All Rights originally issued by the Company subsequent to any adjustment made to
          the Purchase Price hereunder shall evidence the right to purchase, at the
          adjusted Purchase Price, the number of Preferred Shares purchasable from time to
          time hereunder upon exercise of the Rights, all subject to further adjustment as
          provided herein. 

         (h)       
          Unless the Company shall have exercised its election as provided in
          Section 11(i) hereof, upon each adjustment of the Purchase Price as a
          result of the calculations made in Section 11(b) and (c) hereof, each Right
          outstanding immediately prior to the making of such adjustment shall thereafter
          evidence the right to purchase, at the adjusted Purchase Price, that number of
          Preferred Shares (calculated to the nearest one-hundredth of a Preferred Share)
          obtained by (i) multiplying (x) the number of one one-hundredths of a Preferred
          Share covered by a Right immediately prior to this adjustment by (y) the
          Purchase Price in effect immediately prior to such adjustment of the Purchase
          Price and (ii) dividing the product so obtained by the Purchase Price in effect
          immediately after such adjustment of the Purchase Price. 

         (i)       
          The Company may elect on or after the date of any adjustment of the Purchase
          Price to adjust the number of Rights, in substitution for any adjustment in the
          number of one one-hundredths of a Preferred Share purchasable upon the exercise
          of a Right. Each of the Rights outstanding after such adjustment of the number
          of Rights shall be exercisable for the number of one one-hundredths of a
          Preferred Share for which a Right was exercisable immediately prior to such
          adjustment. Each Right held of record prior to such adjustment of the number of
          Rights shall become that number of Rights (calculated to the nearest one
          one-hundredth) obtained by dividing the Purchase Price in effect immediately
          prior to adjustment of the Purchase Price by the Purchase Price in effect
          immediately after adjustment of the Purchase Price. The Company shall make a
          public announcement of its election to adjust the number of Rights, indicating
          the record date for the adjustment, and, if known at the time, the amount of the
          adjustment to be made. This record date may be the date on which the Purchase
          Price is adjusted or any day thereafter, but, if the Right Certificates have
          been issued, shall be at least 10 days later than the date of the public
          announcement. If Right Certificates have been issued, upon each adjustment of
          the number of Rights pursuant to this Section 11(i), the Company shall, as
          promptly as practicable, cause to be distributed to holders of record of Right
          Certificates on such record date Right Certificates evidencing, subject to
          Section 14 hereof, the additional Rights to which such holders shall be
          entitled as a result of such adjustment, or, at the option of the Company, shall
          cause to be distributed to such holders of record in substitution and
          replacement for the Right Certificates held by such holders prior to the date of
          adjustment, and upon surrender thereof, if required by the Company, new Right
          Certificates evidencing all the Rights to which such holders shall be entitled
          after such adjustment. Right Certificates so to be distributed shall be issued,
          executed and countersigned in the manner provided for herein and shall be
          registered in the names of the holders of record of Right Certificates on the
          record date specified in the public announcement. 

12 

         (j)       
          Irrespective of any adjustment or change in the Purchase Price or the number of
          one one-hundredths of a Preferred Share issuable upon the exercise of the
          Rights, the Right Certificates theretofore and thereafter issued may continue to
          express the Purchase Price and the number of one one-hundredths of a Preferred
          Share which were expressed in the initial Right Certificates issued hereunder. 

         (k)       
          Before taking any action that would cause an adjustment reducing the Purchase
          Price below the par value, if any, of the Preferred Shares issuable upon
          exercise of the Rights, the Company shall take any corporate action which may,
          in the opinion of its counsel, be necessary in order that the Company may
          validly and legally issue fully paid and nonassessable (except as otherwise
          provided by any corporation law applicable to the Company) Preferred Shares at
          such adjusted Purchase Price. 

         (l)       
          In any case in which this Section 11 shall require that an adjustment in
          the Purchase Price be made effective as of a record date for a specified event,
          the Company may elect to defer until the occurrence of such event the issuing to
          the holder of any Right exercised after such record date of the one
          one-hundredths of a Preferred Share and other capital stock or securities of the
          Company, if any, issuable upon such exercise over and above the number of one
          one-hundredths of a Preferred Share and other capital stock or securities of the
          Company, if any, issuable upon such exercise on the basis of the Purchase Price
          in effect prior to such adjustment; provided, however, that the Company
          shall deliver to such holder a due bill or other appropriate instrument
          evidencing such holder’s right to receive such additional shares upon the
          occurrence of the event requiring such adjustment. 

         (m)       
          Anything in this Section 11 to the contrary notwithstanding, the Company
          shall be entitled to make such reductions in the Purchase Price, in addition to
          those adjustments expressly required by this Section 11, as and to the
          extent that it in its sole discretion shall determine to be advisable in order
          that any consolidation or subdivision of the Preferred Shares, issuance wholly
          for cash of any Preferred Shares at less than the current market price, issuance
          wholly for cash of Preferred Shares or securities which by their terms are
          convertible into or exchangeable for Preferred Shares, dividends on Preferred
          Shares payable in Preferred Shares or issuance of rights, options or warrants
          referred to in Section 11(b) hereof, hereafter made by the Company to
          holders of its Common Shares shall not be taxable to such shareholders. 

         (n)       
          The Company covenants and agrees that it shall not, at any time after the
          earlier of the Distribution Date or the Shares Acquisition Date, (i) consolidate
          with any other Person (other than a Subsidiary of the Company in a transaction
          which complies with Section 11(o) hereof), (ii) merge with or into any
          other Person (other than a Subsidiary of the Company in a transaction which
          complies with Section 11(o) hereof), (iii) sell or transfer (or permit any
          Subsidiary to sell or transfer), in one transaction, or a series of related
          transactions, assets or earning power aggregating more than 50% of the assets or
          earning power of the Company and its Subsidiaries (taken as a whole) to any
          other Person or Persons (other than the Company and/or any of its Subsidiaries
          in one or more transactions each of which complies with Section 11(o)
          hereof) or (iv) consummate a share exchange with any other Person, if at the
          time of or immediately after such consolidation, merger, sale or share exchange
          (A) there are any rights, warrants or other instruments or securities
          outstanding or agreements in effect which would substantially diminish or
          otherwise eliminate the benefits intended to be afforded by the Rights, (B)
          prior to, simultaneously with or immediately after such consolidation, merger,
          sale or share exchange the shareholders of the Person who constitute, or would
          constitute, the “Principal Party” for purposes of Section 13(a)
          hereof shall have received a distribution of Rights previously owned by such
          Person or any of its Affiliates and Associates or (C) the form or nature of
          organization of the Principal Party would preclude or limit the exercisability
          of the Rights. 

13 

         (o)       
          The Company covenants and agrees that, after the Distribution Date, it will not,
          except as permitted by Section 23, Section 24 or Section 27
          hereof, take (or permit any Subsidiary to take) any action if at the time such
          action is taken it is reasonably foreseeable that such action will diminish
          substantially or otherwise eliminate the benefits intended to be afforded by the
          Rights. 

         (p)       
          Anything in this Agreement to the contrary notwithstanding, in the event that
          the Company shall at any time after the date hereof and prior to the
          Distribution Date (i) declare a dividend on the outstanding Common Shares
          payable in Common Shares, (ii) subdivide the outstanding Common Shares, or (iii)
          combine the outstanding Common Shares into a smaller number of shares, the
          number of Rights associated with each Common Share then outstanding, or issued
          or delivered thereafter but prior to the Distribution Date, shall be
          proportionately adjusted so that the number of Rights thereafter associated with
          each Common Share following any such event shall equal the result obtained by
          multiplying the number of Rights associated with each Common Share immediately
          prior to such event by a fraction the numerator which shall be the total number
          of Common Shares outstanding immediately prior to the occurrence of the event
          and the denominator of which shall be the total number of Common Shares
          outstanding immediately following the occurrence of such event. 

        
Section 12.    Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Sections 11 and
13 hereof, the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment, (b) file
with the Rights Agent and with each transfer agent for the Common Shares of the Company a
copy of such certificate and (c) mail a brief summary thereof to each holder of a Right
Certificate in accordance with Section 25 hereof. 

14 

        Section
13.    Consolidation, Merger, Share Exchange or Sale or Transfer of Assets or Earning
Power.  

         (a)       
          In the event that, following the Shares Acquisition Date, directly or
          indirectly, (x) the Company shall consolidate with, or merge with and into, any
          other Person (other than a Subsidiary of the Company in a transaction which
          complies with Section 11(o) hereof), and the Company shall not be the
          continuing or surviving corporation of such consolidation or merger, (y) any
          Person (other than a Subsidiary of the Company in a transaction which complies
          with Section 11(o) hereof) shall consolidate with, or merge with or into,
          the Company, and the Company shall be the continuing or surviving corporation of
          such consolidation or merger, or any Person or Persons (other than a Subsidiary
          of the Company in a transaction that complies with Section 11(o) hereof)
          shall consummate a share exchange with the Company, and, in connection with such
          consolidation, merger or share exchange, all or part of the outstanding Common
          Shares of the Company shall be changed into or exchanged for stock or other
          securities of any other Person (or the Company) or cash or any other property,
          or (z) the Company shall sell or otherwise transfer (or one or more of its
          Subsidiaries shall sell or otherwise transfer), in one transaction or a series
          of related transactions, assets or earning power aggregating more than 50% of
          the assets or earning power of the Company and its Subsidiaries (taken as a
          whole) to any Person or Persons (other than the Company or any Subsidiary of the
          Company in one or more transactions each of which complies with
          Section 11(o) hereof), then, and in each such case, proper provision shall
          be made so that: (i) each holder of a Right (except as otherwise provided
          herein) shall thereafter have the right to receive, upon the exercise thereof at
          a price equal to the then current Purchase Price multiplied by the number of one
          one-hundredths of a Preferred Share for which a Right is then exercisable (or,
          if a Section 11(a)(ii) Event has occurred prior to the first occurrence of
          any of the events described in clauses (x), (y) or (z) above (a
          “Section 13 Event”), the Purchase Price in effect immediately
          prior to the first occurrence of a Section 11(a)(ii) Event multiplied by
          the number of one one-hundredths of a Preferred Share for which a Right was
          exercisable immediately prior to such first occurrence), in accordance with the
          terms of this Agreement, such number of validly authorized and issued, fully
          paid, nonassessable (except as otherwise required by any corporation law
          applicable to the Principal Party (as such term is hereinafter defined)) and
          freely tradeable Common Shares of the Principal Party, not subject to any liens,
          encumbrances, rights of first refusal or other adverse claims, as shall be equal
          to the result obtained by (1) multiplying the then current Purchase Price by the
          number of one one-hundredths of a Preferred Share for which a Right is
          exercisable immediately prior to the first occurrence of a Section 13 Event
          (or, if a Section 11(a)(ii) Event has occurred prior to the first
          occurrence of a Section 13 Event, multiplying the number of such shares for
          which a Right was exercisable immediately prior to the first occurrence of a
          Section 11(a)(ii) Event by the Purchase Price in effect immediately prior
          to such first occurrence), and dividing that product (which, following the first
          occurrence of a Section 13 Event, shall be referred to as the
          “Purchase Price” for each Right and for all purposes of this
          Agreement) by (2) 50% of the current market price (determined pursuant to
          Section 11(d) hereof) per Common Share of such Principal Party on the date
          of consummation of such Section 13 Event; (ii) such Principal Party shall
          thereafter be liable for, and shall assume, by virtue of such Section 13
          Event, all the obligations and duties of the Company pursuant to this Agreement;
          (iii) the term “Company” shall thereafter be deemed to refer to such
          Principal Party, it being specifically intended that the provisions of
          Section 11 hereof shall apply only to such Principal Party following the
          first occurrence of a Section 13 Event; (iv) such Principal Party shall
          take such steps (including, but not limited to, the reservation of a sufficient
          number of its Common Shares) in connection with the consummation of any such
          transaction as may be necessary to assure that the provisions hereof shall
          thereafter be applicable, as nearly as reasonably may be, in relation to its
          Common Shares thereafter deliverable upon the exercise of the Rights; and (v)
          the provisions of Section 11(a)(ii) hereof shall be of no effect following
          the first occurrence of any Section 13 Event. 

      (b)
“Principal Party” shall mean

          		    (i)       
               in the case of any transaction described in clause (x) or (y) of the first
               sentence of Section 13(a) hereof, the Person that is the issuer of any
               securities into which Common Shares of the Company are converted in such merger,
               consolidation or share exchange, and if no securities are so issued, (A) the
               Person that is the other party to the merger, consolidation or share exchange
               and that survives such merger or consolidation, or, if there is more than one
               such Person, the Person the Common Shares of which have the greatest aggregate
               market value of shares outstanding or (B) if the Person that is the other party
               to the merger or consolidation does not survive the merger or consolidation, the
               Person that does survive the merger or consolidation (including the Company if
               it survives); and 

               

          		    (ii)       
               in the case of any transaction described in clause (z) of the first sentence of
               Section 13(a) hereof, the Person that is the party receiving the greatest
               portion of the assets or earning power transferred pursuant to such transaction
               or transactions; 

               

15 

provided, however, that in any
such case, (1) if the Common Shares of such Person are not at such time and have not been
continuously over the preceding twelve (12) month-period registered under Section 12
of the Exchange Act, and such Person is a direct or indirect Subsidiary of another Person
the Common Shares of which are and have been so registered, “Principal Party”
shall refer to such other Person; and (2) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Shares of two or more of which are and
have been so registered, “Principal Party” shall refer to whichever of such
Persons is the issuer of the Common Shares having the greatest aggregate market value. 

         (c)       
          The Company shall not consummate any such consolidation, merger, share exchange,
          sale or transfer unless the Principal Party shall have a sufficient number of
          authorized Common Shares which have not been issued or reserved for issuance to
          permit the exercise in full of the Rights in accordance with this
          Section 13 and unless prior thereto the Company and such Principal Party
          shall have executed and delivered to the Rights Agent a supplemental agreement
          providing for the terms set forth in Sections 13(a) and 13(b) hereof and further
          providing that, as soon as practicable after the date of any consolidation,
          merger, share exchange or sale of assets mentioned in Section 13(a) hereof,
          the Principal Party will: 

          		    (i)       
               prepare and file a registration statement under the Securities Act of 1933, as
               amended (the “Act”), with respect to the Rights and the securities
               purchasable upon exercise of the Rights on an appropriate form, and will use its
               best efforts to cause such registration statement to (A) become effective as
               soon as practicable after such filing and (B) remain effective (with a
               prospectus at all times meeting the requirements of the Act) until the Final
               Expiration Date; and 

               

          		    (ii)       
               deliver to holders of the Rights historical financial statements for the
               Principal Party and each of its Affiliates which comply in all respects with the
               requirements for registration on Form 10 under the Exchange Act. 

               

The provisions of this
Section 13 shall similarly apply to successive mergers, consolidations, share
exchanges, sales or other transfers. In the event that a Section 13 Event shall occur
at any time after the occurrence of a Section 11(a)(ii) Event, the Rights which have
not theretofore been exercised shall thereafter become exercisable in the manner described
in Section 13(a) hereof. 

        Section
14.    Fractional Rights and Fractional Shares.  

         (a)       
          The Company shall not be required to issue fractions of Rights or to distribute
          Right Certificates which evidence fractional Rights. In lieu of such fractional
          Rights, there shall be paid to the registered holders of the Right Certificates
          with regard to which such fractional Rights would otherwise be issuable, an
          amount in cash equal to the same fraction of the current market value of a whole
          Right. For the purposes of this Section 14(a), the current market value of
          a whole Right shall be the closing price of the Rights for the Trading Day
          immediately prior to the date on which such fractional Rights would have been
          otherwise issuable. The closing price for any day shall be the last sale price,
          regular way, or, in case no such sale takes place on such day, the average of
          the closing bid and asked prices, regular way, in either case as reported in the
          principal consolidated transaction reporting system with respect to securities
          listed or admitted to trading on the New York Stock Exchange or, if the Rights
          are not listed or admitted to trading on the New York Stock Exchange, as
          reported in the principal consolidated transaction reporting system with respect
          to securities listed on the principal national securities exchange on which the
          Rights are listed or admitted to trading or, if the Rights are not listed or
          admitted to trading on any national securities exchange, the last quoted price
          or, if not so quoted, the average of the high bid and low asked prices in the
          over-the-counter market, as reported by Nasdaq or such other system then in use
          or, if on any such date the Rights are not quoted by any such organization, the
          average of the closing bid and asked prices as furnished by a professional
          market maker making a market in the Rights selected by the Board of Directors of
          the Company. If on any such date no such market maker is making a market in the
          Rights the fair value of the Rights on such date as determined in good faith by
          the Board of Directors of the Company shall be used. 

16 

         (b)       
          The Company shall not be required to issue fractions of Preferred Shares (other
          than fractions which are integral multiples of one one-hundredth of a Preferred
          Share) upon exercise of the Rights or to distribute certificates which evidence
          fractional Preferred Shares (other than fractions which are integral multiples
          of one one-hundredth of a Preferred Share). Fractions of Preferred Shares in
          integral multiples of one one-hundredth of a Preferred Share may, at the
          election of the Company, be evidenced by depositary receipts, pursuant to an
          appropriate agreement between the Company and a depositary selected by it;
          provided, that such agreement shall provide that the holders of such
          depositary receipts shall have all the rights, privileges and preferences to
          which they are entitled as beneficial owners of the Preferred Shares represented
          by such depositary receipts. In lieu of fractional Preferred Shares that are not
          integral multiples of one one-hundredth of a Preferred Share, the Company shall
          pay to the registered holders of Right Certificates at the time such Rights are
          exercised as herein provided an amount in cash equal to the same fraction of the
          current market value of one Preferred Share. For purposes of this
          Section 14(b), the current market value of a Preferred Share shall be the
          closing price of a Preferred Share (as determined pursuant to the second
          sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior
          to the date of such exercise. 

         (c)       
          The holder of a Right by the acceptance of the Right expressly waives his right
          to receive any fractional Rights or any fractional shares upon exercise of a
          Right (except as provided above). 

        
Section 15.    Rights of Action. All rights of action in respect of
this Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the Common
Shares); and any registered holder of any Right Certificate (or, prior to the Distribution
Date, of the Common Shares), without the consent of the Rights Agent or of the holder of
any other Right Certificate (or, prior to the Distribution Date, of the Common Shares),
may, in his own behalf and for his own benefit, enforce, and may institute and maintain
any suit, action or proceeding against the Company to enforce, or otherwise act in respect
of, his right to exercise the Rights evidenced by such Right Certificate in the manner
provided in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically acknowledged that
the holders of Rights would not have an adequate remedy at law for any breach of this
Agreement and will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the obligations of any Person
subject to, this Agreement. 

        
Section 16.    Agreement of Right Holders. Every holder of a Right,
by accepting the same, consents and agrees with the Company and the Rights Agent and with
every other holder of a Right that: 

         (a)       
          prior to the Distribution Date, the Rights will be transferable only in
          connection with the transfer of the Common Shares; 

         (b)       
          after the Distribution Date, the Right Certificates are transferable only on the
          registry books of the Rights Agent if surrendered at the principal office of the
          Rights Agent, duly endorsed or accompanied by a proper instrument of transfer; 

         (c)       
          the Company and the Rights Agent may deem and treat the person in whose name the
          Right Certificate (or, prior to the Distribution Date, the associated Common
          Shares certificate) is registered as the absolute owner thereof and of the
          Rights evidenced thereby (notwithstanding any notations of ownership or writing
          on the Right Certificates or the associated Common Shares certificate made by
          anyone other than the Company or the Rights Agent) for all purposes whatsoever,
          and neither the Company nor the Rights Agent shall be affected by any notice to
          the contrary; and 

17 

         (d)       
          notwithstanding anything in this Agreement to the contrary, neither the Company
          nor the Rights Agent shall have any liability to any holder of a Right or other
          Person as a result of its inability to perform any of its obligations under this
          Agreement by reason of any preliminary or permanent injunction or other order,
          decree or ruling issued by a court or competent jurisdiction or by a
          governmental, regulatory or administrative agency or commission, or any statute,
          rule, regulation or executive order promulgated or enacted by any governmental
          authority, prohibiting or otherwise restraining performance of such obligation;
          provided, however, the Company must use its best efforts to have any such order,
          decree or ruling lifted or otherwise overturned as soon as possible. 

        
Section 17.    Right Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive dividends or
other distributions or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the exercise of the
Rights represented thereby, nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right Certificate, as such, any
of the rights of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders (except as provided in Section 25 hereof), or to
receive dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in accordance with the
provisions hereof. 

        Section
18.    Concerning the Rights Agent.  

         (a)       
          The Company agrees to pay to the Rights Agent reasonable compensation for all
          services rendered by it hereunder and, from time to time, on demand of the
          Rights Agent, its reasonable expenses and counsel fees and other disbursements
          incurred in the administration and execution of this Agreement and the exercise
          and performance of its duties hereunder. The Company also agrees to indemnify
          the Rights Agent for, and to hold it harmless against, any loss, liability, or
          expense, incurred without gross negligence, bad faith or willful misconduct on
          the part of the Rights Agent, for anything done or omitted by the Rights Agent
          in connection with the acceptance and administration of this Agreement,
          including the costs and expenses of defending against any claim of liability in
          the premises. 

         (b)       
          The Rights Agent shall be protected and shall incur no liability for, or in
          respect of any action taken, suffered or omitted by it in connection with, its
          administration of this Agreement in reliance upon any Right Certificate or
          certificate for the Preferred Shares or Common Shares or for other securities of
          the Company, instrument of assignment or transfer, power of attorney,
          endorsement, affidavit, letter, notice, direction, consent, certificate,
          statement, or other paper or document believed by it to be genuine and to be
          signed, executed and, where necessary, verified or acknowledged, by the proper
          person or persons, or otherwise upon the advice of counsel as set forth in
          Section 20 hereof. 

18 

        Section
19.    Merger or Consolidation or Change of Name of Rights Agent.  

         (a)       
          Any corporation into which the Rights Agent or any successor Rights Agent may be
          merged or with which it may be consolidated, or any corporation resulting from
          any merger or consolidation to which the Rights Agent or any successor Rights
          Agent shall be a party, or any corporation succeeding to the stock transfer or
          corporate trust business of the Rights Agent or any successor Rights Agent,
          shall be the successor to the Rights Agent under this Agreement without the
          execution or filing of any paper or any further act on the part of any of the
          parties hereto, provided that such corporation would be eligible for
          appointment as a successor Rights Agent under the provisions of Section 21
          hereof. In case at the time such successor Rights Agent shall succeed to the
          agency created by this Agreement, any of the Right Certificates shall have been
          countersigned but not delivered, any such successor Rights Agent may adopt the
          countersignature of the predecessor Rights Agent and deliver such Right
          Certificates so countersigned; and in case at that time any of the Right
          Certificates shall not have been countersigned, any successor Rights Agent may
          countersign such Right Certificates either in the name of the predecessor Rights
          Agent or in the name of the successor Rights Agent; and in all such cases such
          Right Certificates shall have the full force provided in the Right Certificates
          and in this Agreement. 

         (b)       
          In case at any time the name of the Rights Agent shall be changed and at such
          time any of the Right Certificates shall have been countersigned but not
          delivered, the Rights Agent may adopt the countersignature under its prior name
          and deliver Right Certificates so countersigned; and in case at that time any of
          the Right Certificates shall not have been countersigned, the Rights Agent may
          countersign such Right Certificates either in its prior name or in its changed
          name; and in all such cases such Right Certificates shall have the full force
          provided in the Right Certificates and in this Agreement. 

        
Section 20.    Duties of Rights Agent. The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates, by their
acceptance thereof, shall be bound: 

         (a)       
          The Rights Agent may consult with legal counsel (who may be legal counsel for
          the Company), and the opinion of such counsel shall be full and complete
          authorization and protection to the Rights Agent as to any action taken or
          omitted by it in good faith and in accordance with such opinion. 

         (b)       
          Whenever in the performance of its duties under this Agreement the Rights Agent
          shall deem it necessary or desirable that any fact or matter be proved or
          established by the Company prior to taking or suffering any action hereunder,
          such fact or matter (unless other evidence in respect thereof be herein
          specifically prescribed) may be deemed to be conclusively proved and established
          by a certificate signed by the Chairman of the Board, the Chief Executive
          Officer, the President or any Vice President and by the Treasurer or any
          Assistant Treasurer or the Secretary or any Assistant Secretary of the Company
          and delivered to the Rights Agent; and such certificate shall be full
          authorization to the Rights Agent for any action taken or suffered in good faith
          by it under the provisions of this Agreement in reliance upon such certificate. 

         (c)       
          The Rights Agent shall be liable hereunder to the Company and any other Person
          only for its own negligence, bad faith or willful misconduct. 

         (d)       
          The Rights Agent shall not be liable for or by reason of any of the statements
          of fact or recitals contained in this Agreement or in the Right Certificates
          (except its countersignature thereof) or be required to verify the same, but all
          such statements and recitals are and shall be deemed to have been made by the
          Company only. 

         (e)       
          The Rights Agent shall not be under any responsibility in respect of the
          validity of this Agreement or the execution and delivery hereof (except the due
          authorization, execution and delivery hereof by the Rights Agent) or in respect
          of the validity or execution of any Right Certificate (except its
          countersignature thereof); nor shall it be responsible for any breach by the
          Company of any covenant or condition contained in this Agreement or in any Right
          Certificate; nor shall it be responsible for any change in the exercisability of
          the Rights (including the Rights becoming void pursuant to
          Section 11(a)(ii) hereof) or any adjustment in the terms of the Rights
          (including the manner, method or amount thereof) provided for in Section 3,
          11, 13, 23 or 24 hereof, or the ascertaining of the existence of facts that
          would require any such change or adjustment (except with respect to the exercise
          of Rights evidenced by Right Certificates after actual notice that such change
          or adjustment is required); nor shall it by any act hereunder be deemed to make
          any representation or warranty as to the authorization or reservation of any
          Preferred Shares or other securities to be issued pursuant to this Agreement or
          any Right Certificate or as to whether any Preferred Shares or other securities
          will, when issued, be validly authorized and issued, fully paid and
          nonassessable. 

19 

         (f)       
          The Company agrees that it will perform, execute, acknowledge and deliver or
          cause to be performed, executed, acknowledged and delivered all such further and
          other acts, instruments and assurances as may reasonably be required by the
          Rights Agent for the carrying out or performing by the Rights Agent of the
          provisions of this Agreement. 

         (g)       
          The Rights Agent is hereby authorized and directed to accept instructions with
          respect to the performance of its duties hereunder from any one of the Chairman
          of the Board, the Chief Executive Officer, the President, any Vice President,
          the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer
          of the Company, and to apply to such officers for advice or instructions in
          connection with its duties, and it shall not be liable for any action taken or
          suffered by it in good faith in accordance with instructions of any such officer
          or for any delay in acting while waiting for those instructions. 

         (h)       
          The Rights Agent and any shareholder, director, officer or employee of the
          Rights Agent may buy, sell or deal in, or act as the transfer agent for, any of
          the Rights, Common Shares or other securities of the Company or become
          pecuniarily interested in any transaction in which the Company may be
          interested, or contract with or lend money to the Company or otherwise act as
          fully and freely as though it were not Rights Agent under this Agreement.
          Nothing herein shall preclude the Rights Agent from acting in any other capacity
          for the Company or for any other legal entity. 

         (i)       
          The Rights Agent may execute and exercise any of the rights or powers hereby
          vested in it or perform any duty hereunder either itself or by or through its
          attorneys or agents, and the Rights Agent shall not be answerable or accountable
          for any act, default, neglect or misconduct of any such attorneys or agents or
          for any loss to the Company resulting from any such act, default, neglect or
          misconduct, provided reasonable care was exercised in the selection and
          continued employment thereof. 

        
Section 21.    Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days’ notice in writing mailed to the Company and to each transfer agent of
the Common Shares by registered or certified mail, and, if separate Right Certificates
have been issued as of the date of such notice as contemplated by Section 3 hereof, to the
holders of the Right Certificates by first-class mail. The Company may remove the Rights
Agent or any successor Rights Agent upon 30 days’ notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of
the Common Shares by registered or certified mail, and, if separate Right Certificates
have been issued as of the date of such notice as contemplated by Section 3 hereof, to the
holders of the Right Certificates by first-class mail. If the Rights Agent shall resign or
be removed or shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated Rights Agent
or by the holder of a Right Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Company), then the registered holder of any Right
Certificate may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a
court, shall be (a) a corporation organized and doing business under the laws of the
United States or under the laws of any state of the United States so long as such
corporation is authorized to do business as a banking institution in the State of New York
or the State of Wisconsin, in good standing, which is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50 million, or (b) an
Affiliate of a corporation described in clause (a) of this sentence. After appointment,
the successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without further act or
deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares, and, if separate
Right Certificates have been issued as of the date of such notice as contemplated by
Section 3 hereof, mail a notice thereof in writing to the registered holders of the Right
Certificates. Failure to give any notice provided for in this Section 21, however, or
any defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as the case
may be. 

20 

        
Section 22.    Issuance of New Right Certificates. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in such form as may be
approved by its Board of Directors to reflect any adjustment or change in the Purchase
Price and the number or kind or class of shares or other securities or property
purchasable under the Right Certificates made in accordance with the provisions of this
Agreement. 

        Section
23.    Redemption.  

         (a)       
          The Rights may be redeemed by action of the Board of Directors pursuant to
          Section 23(b) hereof and shall not be redeemed in any other manner. 

         (b)       
          The Board of Directors of the Company may, at its option, at any time prior to
          such time as any Person becomes an Acquiring Person, redeem all but not less
          than all the then outstanding Rights at a redemption price of $.001 per Right,
          appropriately adjusted to reflect any stock split, stock dividend or similar
          transaction occurring after the date hereof (such redemption price being
          hereinafter referred to as the “Redemption Price”). The redemption of
          the Rights by the Board of Directors may be made effective at such time, on such
          basis and with such conditions as the Board of Directors in its sole discretion
          may establish. Notwithstanding anything contained in this Agreement to the
          contrary, the Rights shall not be exercisable after the first occurrence of a
          Section 11(a)(ii) Event until such time as the Company’s right of
          redemption hereunder has expired. 

         (c)       
          Immediately upon the effectiveness of the action of the Board of Directors of
          the Company ordering the redemption of the Rights pursuant to Section 23(b)
          hereof, and without any further action and without any notice, the right to
          exercise the Rights will terminate and the only right thereafter of the holders
          of Rights shall be to receive the Redemption Price. The Company shall promptly
          give public notice of any such redemption; provided, however, that the
          failure to give, or any defect in, any such notice shall not affect the validity
          of such redemption. Within 10 days after the effectiveness of the action of the
          Board of Directors ordering the redemption of the Rights pursuant to Section
          23(b) hereof, the Company shall mail a notice of redemption to all the holders
          of the then outstanding Rights at their last addresses as they appear upon the
          registry books of the Rights Agent or, prior to the Distribution Date, on the
          registry books of the transfer agent for the Common Shares. Any notice which is
          mailed in the manner herein provided shall be deemed given, whether or not the
          holder receives the notice. Each such notice of redemption will state the method
          by which the payment of the Redemption Price will be made. Neither the Company
          nor any of its Affiliates or Associates may redeem, acquire or purchase for
          value any Rights at any time in any manner other than that specifically set
          forth in this Section 23 or in Section 24 hereof, and other than in
          connection with the purchase of Common Shares prior to the Distribution Date. 

21 

        Section
24.    Exchange.  

         (a)       
          The Board of Directors of the Company may, at its option, at any time after any
          Person becomes an Acquiring Person, exchange all or part of the then outstanding
          and exercisable Rights (which shall not include Rights that have become void
          pursuant to the provisions of Section 11(a)(ii) hereof) for Common Shares
          of the Company at an exchange ratio of one Common Share per Right, appropriately
          adjusted to reflect any stock split, stock dividend or similar transaction
          occurring after the date hereof (such exchange ratio being hereinafter referred
          to as the “Exchange Ratio”). Notwithstanding the foregoing, the Board
          of Directors shall not be empowered to effect such exchange at any time after
          any Person (other than the Company, any Subsidiary of the Company, any employee
          benefit plan of the Company or any such Subsidiary, any entity holding Common
          Shares for or pursuant to the terms of any such plan, or any trustee,
          administrator or fiduciary of such a plan), together with all Affiliates and
          Associates of such Person, becomes the Beneficial Owner of 50% or more of the
          Common Shares of the Company then outstanding. 

         (b)       
          Immediately upon the action of the Board of Directors of the Company ordering
          the exchange of any Rights pursuant to Section 24(a) hereof and without any
          further action and without any notice, the right to exercise such Rights shall
          terminate and the only right thereafter of a holder of such Rights shall be to
          receive that number of Common Shares of the Company equal to the number of such
          Rights held by such holder multiplied by the Exchange Ratio. The Company shall
          promptly give public notice of any such exchange; provided, however, that
          the failure to give, or any defect in, such notice shall not affect the validity
          of such exchange. The Company promptly shall mail a notice of any such exchange
          to all of the holders of such Rights at their last addresses as they appear upon
          the registry books of the Rights Agent. Any notice which is mailed in the manner
          herein provided shall be deemed given, whether or not the holder receives the
          notice. Each such notice of exchange will state the method by which the exchange
          of the Common Shares of the Company for Rights will be effected and, in the
          event of any partial exchange, the number of Rights which will be exchanged. Any
          partial exchange shall be effected pro rata based on the number of Rights (other
          than Rights which have become void pursuant to the provisions of
          Section 11(a)(ii) hereof) held by each holder of Rights. 

         (c)       
          In any exchange pursuant to this Section 24, the Company, at its option,
          may substitute Preferred Shares (or equivalent preferred shares, as such term is
          defined in Section 11(b) hereof) for some or all of the Common Shares of
          the Company exchangeable for Rights, at the initial rate of one one-hundredth of
          a Preferred Share (or equivalent preferred share) for each Common Share of the
          Company, as appropriately adjusted to reflect adjustments in the voting rights
          of the Preferred Shares pursuant to the terms thereof, so that the fraction of a
          Preferred Share delivered in lieu of each Common Share of the Company shall have
          the same voting rights as one Common Share of the Company. 

         (d)       
          In the event that there shall not be sufficient Common Shares of the Company or
          Preferred Shares issued but not outstanding or authorized but unissued to permit
          any exchange of Rights as contemplated in accordance with this Section 24,
          the Company shall take all such action as may be necessary to authorize
          additional Common Shares of the Company or Preferred Shares for issuance upon
          exchange of the Rights. 

         (e)       
          The Company shall not be required to issue fractions of Common Shares of the
          Company or to distribute certificates which evidence fractional Common Shares of
          the Company. In lieu of such fractional Common Shares of the Company, the
          Company shall pay to the registered holders of the Right Certificates with
          regard to which such fractional Common Shares of the Company would otherwise be
          issued an amount in cash equal to the same fraction of the current market value
          of a whole Common Share of the Company. For the purposes of this Section 24(e),
          the current market value of a whole Common Share of the Company shall be the
          closing price of a Common Share of the Company (as determined pursuant to the
          second sentence of Section 11(d) hereof) for the Trading Day immediately
          prior to the date of exchange pursuant to this Section 24. 

22 

        Section
25.    Notice of Certain Events.  

         (a)       
          In case the Company shall propose, after the Distribution Date, (i) to pay any
          dividend payable in stock of any class to the holders of Preferred Shares or to
          make any other distribution to the holders of Preferred Shares (other than a
          regular quarterly cash dividend), (ii) to offer to the holders of Preferred
          Shares rights or warrants to subscribe for or to purchase any additional
          Preferred Shares or shares of stock of any class or any other securities, rights
          or options, (iii) to effect any reclassification of Preferred Shares (other than
          a reclassification involving only the subdivision of outstanding Preferred
          Shares), (iv) to effect any consolidation or merger into or with (other than a
          merger of a Subsidiary into or with the Company), to effect any share exchange
          with or to effect any sale or other transfer (or to permit one or more of its
          Subsidiaries to effect any sale or other transfer), in one or more transactions,
          of 50% or more of the assets or earning power of the Company and its
          Subsidiaries (taken as a whole) to, any other Person, or (v) to effect the
          liquidation, dissolution or winding up of the Company, then, in each such case,
          the Company shall give to each holder of a Right Certificate, in accordance with
          Section 26 hereof, a notice of such proposed action, which shall specify
          the record date for the purposes of such stock dividend, or distribution of
          rights or warrants, or the date on which such reclassification, consolidation,
          merger, share exchange, sale, transfer, liquidation, dissolution, or winding up
          is to take place and the date of participation therein by the holders of the
          Preferred Shares if any such date is to be fixed, and such notice shall be so
          given in the case of any action covered by clause (i) or (ii) above at least 10
          days prior to the record date for determining holders of Preferred Shares for
          purposes of such action, and in the case of any such other action, at least 10
          days prior to the date of the taking of such proposed action or the date of
          participation therein by the holders of the Preferred Shares, whichever shall be
          the earlier. 

         (b)       
          In case any of Section 11(a)(ii) Event or Section 13 Event shall
          occur, then, in any such case, (i) the Company shall as soon as practicable
          thereafter give to each holder of a Right Certificate, in accordance with
          Section 26 hereof, a notice of the occurrence of such event, which notice
          shall include a brief summary of the Section 11(a)(ii) Event or
          Section 13 Event, as the case may be, and the consequences thereof to
          holders of Rights, and (ii) all references in the preceding paragraph to
          Preferred Shares shall be deemed thereafter to refer to Common Shares and/or, if
          appropriate, other securities. 

        Section
26.    Notices.  

         (a)       
          Notices or demands authorized by this Agreement to be given or made by the
          Rights Agent or by the holder of any Right Certificate to or on the Company
          shall be sufficiently given or made if sent by first-class mail, postage
          prepaid, addressed (until another address is filed in writing with the Rights
          Agent) as follows: 

	 	                            	Gehl Company

                           143 Water Street                            
West Bend,
Wisconsin 53095-0179                            
Attention:  Secretary 

23 

         (b)       
          Subject to the provisions of Section 21 hereof, any notice or demand
          authorized by this Agreement to be given or made by the Company or by the holder
          of any Right Certificate to or on the Rights Agent shall be sufficiently given
          or made if sent by first-class mail, postage prepaid, addressed (until another
          address is filed in writing with the Company) as follows: 

	 	     	American Stock
Transfer & Trust Company       
                     59 Maiden Lane

                           New York, NY  10038                            
Attention:
 Executive Vice President 

         (c)       
          Notices or demands authorized by this Agreement to be given or made by the
          Company or the Rights Agent to the holder of any Right Certificate shall be
          sufficiently given or made if sent by first-class mail, postage prepaid,
          addressed to such holder at the address of such holder as shown on the registry
          books of the Company. 

        
Section 27.    Supplements and Amendments. Prior to such time as any
Person becomes an Acquiring Person and subject to the penultimate sentence of this
Section 27, the Company may and the Rights Agent shall, if the Company so directs,
supplement or amend any provision of this Agreement without the approval of any holders of
certificates representing Common Shares of the Company. Without limiting the foregoing,
the Company may at any time prior to such time as any Person becomes an Acquiring Person
amend this Agreement to lower the thresholds set forth in Sections 1(a) and 3(a)
hereof from 15% to not less than 10%, with appropriate exceptions for Persons then
beneficially owning Common Shares of the Company constituting a percentage of the number
of Common Shares then outstanding equal to or in excess of the new threshold. From and
after such time as any Person becomes an Acquiring Person and subject to the penultimate
sentence of this Section 27, the Company and the Rights Agent shall, if the Company
so directs, supplement or amend this Agreement without the approval of any holders of
Right Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement any
provision contained herein which may be defective or inconsistent with any other provision
herein, (iii) to shorten or lengthen any time period hereunder, or (iv) to change or
supplement the provisions hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of Right
Certificates (other than an Acquiring Person or an Affiliate or Associate of an Acquiring
Person); provided, that from and after such time as any Person becomes an Acquiring
Person this Agreement may not be supplemented or amended to lengthen, pursuant to clause
(iii) of this sentence, (A) a time period relating to when the Rights may be redeemed at
such time as the Rights are not then redeemable, or (B) any other time period unless such
lengthening is for the purpose of protecting, enhancing or clarifying the rights of,
and/or the benefits to, the holders of Rights. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or amendment
is in compliance with the terms of this Section 27, the Rights Agent shall execute
such supplement or amendment. Notwithstanding anything contained in this Agreement to the
contrary, no supplement or amendment shall be made that changes the Redemption Price or
moves to an earlier date the then effective Final Expiration Date. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed coincident with
the interests of the holders of Common Shares of the Company. 

        
Section 28.    Determinations and Actions by the Board of Directors.
For all purposes of this Agreement, any calculation of the number of Common Shares of the
Company outstanding at any particular time, including for purposes of determining the
particular percentage of such outstanding Common Shares of which any Person is the
Beneficial Owner, shall be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act. The Board of
Directors of the Company shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the Board of
Directors or to the Company, or as may be necessary or advisable in the administration of
this Agreement, including, without limitation, the right and power to (a) interpret the
provisions of this Agreement, and (b) make all determinations deemed necessary or
advisable for the administration of this Agreement (including a determination to redeem or
not redeem the Rights or to amend the Agreement and any determination as to whether
actions or any Person shall be such as to cause such Person to beneficially own shares
held by another Person). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (ii) below, all omissions with respect
to the foregoing) which are done or made by the Board of Directors of the Company in good
faith, shall (i) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties, and (ii) not subject the Board of Directors
of the Company to any liability to the holders of the Rights or to any other person. 

24 

        
Section 29.    Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder. 

        
Section 30.    Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares of the Company) any legal or equitable right, remedy or claim
under this Agreement; but this Agreement shall be for the sole and exclusive benefit of
the Company, the Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, the Common Shares of the Company). 

        
Section 31.    Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated. 

        
Section 32.    Governing Law. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the laws of the
State of Wisconsin and for all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts to be made and performed entirely
within such State. 

        
Section 33.    Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and the same
instrument. 

        
Section 34.    Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof. 

25 

        IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
attested, all as of the day and year first above written. 

		
	 	GEHL COMPANY
	
Attest:	 
	

By:  /s/ Michael J. Mulcahy
                 	By:  /s/ William D. Gehl
                  
	Title: Vice President, Secretary and General Counsel	Title: Chairman and Chief Executive Officer
	 	

AMERICAN STOCK TRANSFER &
	 	TRUST COMPANY
	Attest:	 
	

By:  /s/ Susan Silber
                 	By:  /s/ Herbert J. Lemmer
                 
	        Susan Silber	        Herbert J. Lemmer
	Title: Assistant Secretary	Title: Vice President

26 

EXHIBIT A  

Terms of the Series A
Preferred Stock, 
$.10 par value, of 
Gehl Company 

Series A Preferred
Stock 

         (i)       
          Designation and Amount. There is hereby created a series of Preferred
          Stock which shall be designated as “Series A Preferred Stock”
          (the “Series A Preferred Stock”), and the number of shares
          constituting such series shall be Two Hundred Fifty Thousand (250,000). Such
          number of shares may be increased or decreased by resolution of the Board of
          Directors; provided that no decrease shall reduce the number of shares of Series
          A Preferred Stock to a number less than the number of shares then outstanding
          plus the number of shares reserved for issuance upon the exercise of outstanding
          options, rights or warrants or upon the conversion of any outstanding securities
          issued by the corporation into Series A Preferred Stock. 

         (ii)       
          Dividends and Distributions. 

          		    (a)       
               The holders of shares of Series A Preferred Stock, in preference to the
               holders of Common Stock and of any other junior stock, shall be entitled to
               receive, when, as and if declared by the Board of Directors out of funds legally
               available for the purpose, quarterly dividends payable in cash on the first
               business days of January, April, July and October in each year (each such date
               being referred to herein as a “Quarterly Dividend Payment Date”),
               commencing on the first Quarterly Dividend Payment Date after the first issuance
               of a share or fraction of a share of Series A Preferred Stock, in an amount
               per share (rounded to the nearest cent) equal to the greater of (i) $1.00 or
               (ii) subject to the provision for adjustment hereinafter set forth, 100 times
               the aggregate per share amount of all cash dividends, and 100 times the
               aggregate per share amount (payable in kind) of all noncash dividends or other
               distributions, other than a dividend payable in shares of Common Stock or a
               subdivision of the outstanding shares of Common Stock (by reclassification or
               otherwise), declared on the Common Stock since the immediately preceding
               Quarterly Dividend Payment Date, or, with respect to the first Quarterly Payment
               Date, since the first issuance of any share or fraction of a share of
               Series A Preferred Stock. In the event the corporation shall at any time
               after May 25, 2007 (the “Rights Declaration Date”) (a) declare any
               dividend on Common Stock payable in shares of Common Stock, (b) subdivide the
               outstanding Common Stock, or (c) combine the outstanding Common Stock into a
               smaller number of shares, then in each such case the amount to which holders of
               shares of Series A Preferred Stock were entitled immediately prior to such
               event under clause (ii) of the preceding sentence shall be adjusted by
               multiplying such amount by a fraction the numerator of which is the number of
               shares of Common Stock that are outstanding immediately after such event and the
               denominator of which is the number of shares of Common Stock that were
               outstanding immediately prior to such event. 

               

          		    (b)       
               The corporation shall declare a dividend or distribution on the Series A
               Preferred Stock as provided in paragraph (a) above immediately after it declares
               a dividend or distribution on the Common Stock (other than a dividend payable in
               shares of Common Stock); provided  that, in the event no dividend or
               distribution shall have been declared on the Common Stock during the period
               between any Quarterly Dividend Payment Date and the next subsequent Quarterly
               Dividend Payment Date, a dividend of $1.00 per share on the Series A
               Preferred Stock shall nevertheless be payable on such subsequent Quarterly
               Dividend Payment Date. 

               

          		    (c)       
               Dividends shall begin to accrue and be cumulative on outstanding shares of
               Series A Preferred Stock from the Quarterly Dividend Payment Date next
               preceding the date of issue of such shares of Series A Preferred Stock,
               unless the date of issue of such shares is prior to the record date for the
               first Quarterly Dividend Payment Date, in which case dividends on such shares
               shall begin to accrue from the date of issue of such shares, or unless the date
               of issue is a Quarterly Dividend Payment Date or is a date after the record date
               for the determination of holders of shares of Series A Preferred Stock
               entitled to receive a quarterly dividend and before such Quarterly Dividend
               Payment Date, in either of which events such dividends shall begin to accrue and
               be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
               dividends shall not bear interest. Dividends paid on the shares of Series A
               Preferred Stock in an amount less than the total amount of such dividends at the
               time accrued and payable on such shares shall be allocated pro rata on a
               share-by-share basis among all such shares at the time outstanding. The Board of
               Directors may fix a record date for the determination of holders of shares of
               Series A Preferred Stock entitled to receive payment of a dividend or
               distribution declared thereon, which record date shall be no more than 30 days
               prior to the date fixed for the payment thereof. 

               

         (iii)       
          Voting Rights. The holders of shares of Series A Preferred Stock
          shall have the following voting rights: 

          		    (a)       
               Subject to the provision for adjustment hereinafter set forth, each share of
               Series A Preferred Stock shall entitle the holder thereof to 100 votes on
               all matters submitted to a vote of the shareholders of the corporation. In the
               event the corporation shall at any time declare or pay any dividend on Common
               Stock payable in shares of Common Stock, or effect a subdivision or combination
               or consolidation of the outstanding shares of Common Stock (by reclassification
               or otherwise than by payment of a dividend in shares of Common Stock) into a
               greater or lesser number of shares of Common Stock, then in each such case the
               number of votes per share to which holders of shares of Series A Preferred
               Stock were entitled immediately prior to such event shall be adjusted by
               multiplying such number by a fraction the numerator of which is the number of
               shares of Common Stock that are outstanding immediately after such event and the
               denominator of which is the number of shares of Common Stock that were
               outstanding immediately prior to such event. 

               

          		    (b)       
               Except as otherwise provided herein, in any other resolution of the Board of
               Directors creating a series of Preferred Stock or any similar stock, or by law,
               the holders of shares of Series A Preferred Stock and the holders of shares
               of Common Stock shall vote together as one class on all matters submitted to a
               vote of shareholders of the corporation. 

               

          		    (c)       
               Except as set forth herein, holders of Series A Preferred Stock shall have
               no special voting rights and their consent shall not be required (except to the
               extent they are entitled to vote with holders of Common Stock as set forth
               herein) for taking any corporate action. 

               

    (iv)
       Certain
Restrictions.  

          		    (a)       
               Whenever quarterly dividends or other dividends or distributions payable on the
               Series A Preferred Stock as provided in subparagraph (ii) are in arrears,
               thereafter and until all accrued and unpaid dividends and distributions, whether
               or not declared, on shares of Series A Preferred Stock outstanding shall
               have been paid in full, the corporation shall not: 

               

A-2 

          		    (1)       
               declare or pay dividends on, make any other distributions on, or redeem or
               purchase or otherwise acquire for consideration any shares of stock ranking
               junior (either as to dividends or upon liquidation, dissolution or winding up)
               to the Series A Preferred Stock; 

               

          		    (2)       
               declare or pay dividends on or make any other distributions on any shares of
               stock ranking on a parity (either as to dividends or upon liquidation,
               dissolution or winding up) with the Series A Preferred Stock, except
               dividends paid ratably on the Series A Preferred Stock and all such parity
               stock on which dividends are payable or in arrears in proportion to the total
               amounts to which the holders of all such shares are then entitled; 

               

          		    (3)       
               redeem or purchase or otherwise acquire for consideration shares of any stock
               ranking on a parity (either as to dividends or upon liquidation, dissolution or
               winding up) with the Series A Preferred Stock, provided that the
               corporation may at any time redeem, purchase or otherwise acquire shares of any
               such parity stock in exchange for shares of any stock of the corporation ranking
               junior to or on a parity with (both as to dividends or upon dissolution,
               liquidation or winding up) the Series A Preferred Stock; or 

               

          		    (4)       
               purchase or otherwise acquire for consideration any shares of Series A
               Preferred Stock, or any shares of stock ranking on a parity with the
               Series A Preferred Stock, except in accordance with a purchase offer made
               in writing or by publication (as determined by the Board of Directors) to all
               holders of such shares upon such terms as the Board of Directors, after
               consideration of the respective annual dividend rates and other relative rights
               and preferences of the respective series and classes, shall determine in good
               faith will result in fair and equitable treatment among the respective series or
               classes. 

               

          		    (b)       
               The corporation shall not permit any corporation of which an amount of voting
               securities sufficient to elect at least a majority of the directors of such
               corporation is beneficially owned, directly or indirectly, by the corporation or
               otherwise controlled by the corporation to purchase or otherwise acquire for
               consideration any shares of stock of the corporation unless the corporation
               could, under paragraph (a) of this subparagraph (iv), purchase or otherwise
               acquire such shares at such time and in such manner. 

               

         (v)       
          Reacquired Shares. All shares of Series A Preferred Stock that shall
          at any time have been reacquired by the corporation shall, after such
          reacquisition, have the status of authorized but unissued shares of Preferred
          Stock of the corporation, without designation as to series, and may be reissued
          as part of a new series of Preferred Stock to be created by resolution or
          resolutions of the Board of Directors, subject to the conditions and
          restrictions on issuance set forth herein. 

         (vi)       
          Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution
          or winding up of the corporation, no distribution shall be made (a) to the
          holders of shares of stock ranking junior (either as to dividends or upon
          liquidation, dissolution or winding up) to the Series A Preferred Stock
          unless, prior thereto, the holders of shares of Series A Preferred Stock
          shall have received $100 per share, plus an amount equal to accrued and unpaid
          dividends and distributions thereon, whether or not declared, to the date of
          such payment, provided that the holders of shares of Series A
          Preferred Stock shall be entitled to receive an aggregate amount per share,
          subject to the provision for adjustment hereinafter set forth, equal to 100
          times the aggregate amount to be distributed per share to holders of shares of
          Common Stock, or (b) to the holders of shares of stock ranking on a parity
          (either as to dividends or upon liquidation, dissolution or winding up) with the
          Series A Preferred Stock, except distributions made ratably on the
          Series A Preferred Stock and all other such parity stock in proportion to
          the total amounts to which the holders of all such shares are entitled upon such
          liquidation, dissolution or winding up. In the event the corporation shall at
          any time declare or pay any dividend on the Common Stock payable in shares of
          Common Stock, or effect a subdivision or combination or consolidation of the
          outstanding shares of Common Stock (by reclassification or otherwise than by
          payment of a dividend in shares of Common Stock) into a greater or lesser number
          of shares of Common Stock, then in each such case the aggregate amount to which
          holders of shares of Series A Preferred Stock were entitled immediately
          prior to such event under the proviso in clause (a) of the preceding sentence
          shall be adjusted by multiplying such amount by a fraction the numerator of
          which is the number of shares of Common Stock outstanding immediately after such
          event and the denominator of which is the number of shares of Common Stock that
          were outstanding immediately prior to such event. 

A-3 

         (vii)       
          Consolidation, Merger, etc. In case the corporation shall enter into any
          consolidation, merger, combination, share exchange or other transaction in which
          the shares of Common Stock are exchanged for or changed into other stock or
          securities, cash and/or any other property, then in any such case the shares of
          Series A Preferred Stock shall at the same time be similarly exchanged or
          changed in an amount per share (subject to the provision for adjustment
          hereinafter set forth) equal to 100 times the aggregate amount of stock,
          securities, cash and/or any other property (payable in kind), as the case may
          be, into which or for which each share of Common Stock is changed or exchanged.
          In the event the corporation shall at any time after the Rights Declaration Date
          (a) declare any dividend on Common Stock payable in shares of Common Stock, (b)
          subdivide the outstanding Common Stock, or (c) combine the outstanding shares of
          Common Stock into a smaller number of shares, then in each such case the amount
          set forth in the preceding sentence with respect to the exchange or change of
          shares of Series A Preferred Stock shall be adjusted by multiplying such
          amount by a fraction the numerator of which is the number of shares of Common
          Stock that are outstanding immediately after such event and the denominator of
          which is the number of shares of Common Stock that were outstanding immediately
          prior to such event. 

         (viii)       
          No Redemption. The shares of Series A Preferred Stock shall not be
          redeemable. 

         (ix)       
          Amendment. To the fullest extent permitted by applicable law, prior to
          such time as shares of Series A Preferred Stock are issued and outstanding,
          the Board of Directors may modify, amend, alter or revoke any of the number of
          shares of Series A Preferred Stock, the powers, preferences or special
          rights of the Series A Preferred Stock or the other terms of the
          Series A Preferred Stock. From and after such time as shares of
          Series A Preferred Stock are issued and outstanding, the Restated Articles
          of Incorporation of the corporation shall not be amended in any manner that
          would materially alter or change the powers, preferences or special rights of
          the Series A Preferred Stock so as to affect them adversely without the
          affirmative vote of the holders of at least two-thirds of the outstanding shares
          of Series A Preferred Stock, voting together as a single class. 

         (x)       
          Fractional Shares. Series A Preferred Stock may be issued in
          fractions of a share which shall entitle the holder, in proportion to such
          holder’s fractional shares, to exercise voting rights, receive dividends,
          participate in distributions and to have the benefit of all other rights of
          holders of Series A Preferred Stock. 

A-4 

EXHIBIT B  

[Form of Right
Certificate] 

		
	Certificate No. R- 	_______ Rights 

	 	
NOT
EXERCISABLE AFTER MAY 25, 2017 (SUBJECT TO EXTENSION) OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.001 PER RIGHT AND TO EXCHANGE ON
THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. 

Right Certificate 

GEHL COMPANY 

        This
certifies that ________________, or registered assigns, is the registered owner of the
number of Rights set forth above, each of which entitles the owner thereof, subject to the
terms, provisions and conditions of the Rights Agreement, dated as of May 25, 2007, and as
such agreement may be amended (the “Rights Agreement”), between Gehl Company, a
Wisconsin corporation (the “Company”), and American Stock Transfer & Trust
Company (the “Rights Agent”), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior to
5:00 P.M., West Bend, Wisconsin time, on May 25, 2017, subject to extension,
at the principal office of the Rights Agent, or at the office of its successor as
Rights Agent, one one-hundredth of one fully paid nonassessable share of Series A
Preferred Stock, par value $.10 per share (“Preferred Shares”), of the Company,
at a purchase price of $130.00 per one one-hundredth of a Preferred Share (the
“Purchase Price”), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase duly executed. The number of Rights evidenced by
this Right Certificate (and the number of one one-hundredths of a Preferred Share which
may be purchased upon exercise hereof) set forth above, and the Purchase Price set forth
above, are the number and Purchase Price as of June 8, 2007, based on the Preferred Shares
as constituted at such date. As provided in the Rights Agreement, the Purchase Price and
the number of one one-hundredths of a Preferred Share which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events. 

        This
Right Certificate is subject to all of the terms, provisions and conditions of the Rights
Agreement, which terms, provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement reference is hereby made
for a full description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of the Right
Certificates. Copies of the Rights Agreement are on file at the principal executive
offices of the Company and the above-mentioned offices of the Rights Agent. 

        This
Right Certificate, with or without other Right Certificates, upon surrender at the
principal office of the Rights Agent, may be exchanged for another Right Certificate or
Right Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of Preferred Shares as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder to purchase.
If this Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates for the
number of whole Rights not exercised. 

        Subject
to the provisions of the Rights Agreement, the Rights evidenced by this Certificate may be
redeemed by the Company at a redemption price of $.001 per Right. 

        The
Board of Directors of the Company may, at its option, at any time after any Person becomes
an Acquiring Person, but prior to such Person’s acquisition of 50% or more of the
outstanding shares of Common Stock, par value $.10 per share (“Common Stock”),
of the Company, exchange the Rights evidenced by the certificates for Preferred Shares or
shares of Common Stock, at an exchange ratio of one one-hundredth of a Preferred Share or
one share of Common Stock, as the case may be, per Right, subject to adjustment, as
provided in the Rights Agreement. 

        No
fractional Preferred Shares will be issued upon the exercise of any Right or Rights
evidenced hereby (other than fractions which are integral multiples of one one-hundredth
of a Preferred Share, which may, at the election of the Company, be evidenced by
depositary receipts), but in lieu thereof a cash payment will be made, as provided in the
Rights Agreement. 

        No
holder of this Right Certificate shall be entitled to vote or receive dividends or be
deemed for any purpose the holder of the Preferred Shares or of any other securities of
the Company which may at any time be issuable on the exercise hereof, nor shall anything
contained in the Rights Agreement or herein be construed to confer upon the holder hereof,
as such, any of the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of meetings
or other actions affecting shareholders (except as provided in the Rights Agreement), or
to receive dividends, distributions or subscription rights, or otherwise, until the Right
or Rights evidenced by this Right Certificate shall have been exercised as provided in the
Rights Agreement. 

        This
Right Certificate shall not be valid or obligatory for any purpose until it shall have
been countersigned by the Rights Agent. 

B-2 

        WITNESS
the facsimile signature of the proper officers of the Company and its corporate seal. Dated as of
______________, ____. 

		
	ATTEST:	GEHL COMPANY
	

_____________________________________	By: _______________________________
	 	        Title: __________________________

Countersigned: 

AMERICAN STOCK TRANSFER & TRUST
COMPANY 

By: _______________________________ 

          Authorized Signature 

B-3 

[Form of Reverse Side
of Right Certificate] 

FORM OF ASSIGNMENT 

(To be executed by the
registered holder if such
 holder desires to transfer the Right Certificate.) 

         FOR
VALUE RECEIVED ______________________________________________________________________
hereby sells, assigns and transfers unto
_______________________________________________________________________________________________________ 

                  
                  
                  
                  
                  
(Please print name and
address of transferee)  

_____________________________________________________________
this Right Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint ___________________ Attorney, to transfer the
within Right Certificate on the books of the within-named Company, with full power of
substitution. 

Dated:   ____________,
____ 

		
	 	_____________________________________
	 	Signature

Signature Guaranteed: 

        The
undersigned hereby certifies that the Rights evidenced by this Right Certificate are not
beneficially owned by an Acquiring Person or an Affiliate or Associate thereof (as defined
in the Rights Agreement). 

		
	 	_____________________________________
	 	Signature

------------------------------------------------------------------------------------------------------------------------------------------- 

B-4 

[Form of Reverse Side
of Right Certificate — continued] 

FORM OF ELECTION TO
PURCHASE 

(To be executed if
holder desires to 
exercise the Right Certificate.) 

To GEHL COMPANY: 

        The
undersigned hereby irrevocably elects to exercise __________________ Rights represented by
this Right Certificate to purchase the Preferred Shares issuable upon the exercise of such
Rights and requests that certificates for such Preferred Shares be issued in the name of: 

Please insert social security 

or other identifying number 

     

(Please print name and
address)  

     

If such number of Rights shall not be
all the Rights evidenced by this Right Certificate, a new Right Certificate for the
balance remaining of such Rights shall be registered in the name of and delivered to: 

Please insert social security 
or
other identifying number 

     

(Please print name and
address)  

     

Dated: ____________, ____ 

		
	 	_____________________________________
	 	Signature

Signature Guaranteed: 

        Signatures
must be guaranteed by a member firm of a registered national securities exchange, a member
of the National Association of Securities Dealers, Inc., or a commercial bank or trust
company having an office or correspondent in the United States. 

B-5 

[Form of Reverse Side
of Right Certificate — continued] 

     

        The
undersigned hereby certifies that the Rights evidenced by this Right Certificate are not
beneficially owned by an Acquiring Person or an Affiliate or Associate thereof (as defined
in the Rights Agreement). 

		
	 	_____________________________________
	 	Signature

     

NOTICE 

        The
signature in the foregoing Forms of Assignment and Election must conform to the name as
written upon the face of this Right Certificate in every particular, without alteration or
enlargement or any change whatsoever. 

        In
the event the certification set forth above in the Form of Assignment or the Form of
Election to Purchase, as the case may be, is not completed, the Company and the Rights
Agent will deem the beneficial owner of the Rights evidenced by this Right Certificate to
be an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement) and such Assignment or Election to Purchase will not be honored. 

B-6 

EXHIBIT C  

GEHL COMPANY 

SUMMARY OF RIGHTS TO
PURCHASE
PREFERRED SHARES 

        On
May 25, 2007, the Board of Directors of Gehl Company (the “Company”) declared a
dividend of one preferred share purchase right (a “Right”) for each outstanding
share of common stock, $.10 par value per share (“Common Shares”), of the
Company. The dividend is payable upon the close of business on June 8, 2007 to the
shareholders of record upon the close of business on June 8, 2007 (the “Record
Date”). Each Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Series A Preferred Stock, par value $.10 par value
(“Preferred Shares”), of the Company, at a price of $130.00 per one
one-hundredth of a Preferred Share, subject to adjustment (the “Purchase
Price”). The description and terms of the Rights are set forth in a Rights Agreement
(the “Rights Agreement”) between the Company and American Stock Transfer &
Trust Company, as Rights Agent (the “Rights Agent”). 

        Until
the earlier to occur of (i) 10 days following a public announcement that a person or group
of affiliated or associated persons (other than the Company, a subsidiary of the Company
or an employee benefit plan of the Company or a subsidiary) (an “Acquiring
Person”) has acquired beneficial ownership of 15% or more of the outstanding Common
Shares (the “Shares Acquisition Date”) or (ii) 10 business days (or such later
date as may be determined by action of the Company’s Board of Directors prior to such
time as any person becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the consummation of
which would result in the beneficial ownership by a person or group (other than the
Company, a subsidiary of the Company or an employee benefit plan of the Company or a
subsidiary) of 15% or more of such outstanding Common Shares (the earlier of such dates
being called the “Distribution Date”), the Rights will be evidenced, with
respect to any of the Common Share certificates outstanding as of the Record Date, by such
Common Share certificate. 

        The
Rights Agreement provides that, until the Distribution Date, the Rights will be
transferred with and only with the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share certificates issued after the
Record Date, upon transfer or new issuance of Common Shares, will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date (or earlier
redemption or expiration of the Rights), the surrender for transfer of any certificates
for Common Shares, outstanding as of the Record Date, even without such notation, will
also constitute the transfer of the Rights associated with the Common Shares represented
by such certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights (“Right Certificates”) will be mailed to
holders of record of the Common Shares as of the close of business on the Distribution
Date and such separate Right Certificates alone will evidence the Rights. 

        The
Rights are not exercisable until the Distribution Date. The Rights will expire on May 25,
2017 (the “Final Expiration Date”), subject to extension, unless the Rights are
earlier redeemed or exchanged by the Company, in each case as described below. 

        The
Purchase Price payable, and the number of Preferred Shares or other securities or property
issuable, upon exercise of the Rights are subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Shares, (ii) upon the grant to holders of the Preferred
Shares of certain rights or warrants to subscribe for or purchase Preferred Shares at a
price, or securities convertible into Preferred Shares with a conversion price, less than
the then current market price of the Preferred Shares or (iii) upon the distribution to
holders of the Preferred Shares of evidences of indebtedness or assets (excluding regular
quarterly cash dividends or dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above). 

C-1 

        The
number of outstanding Rights and the number of one one-hundredths of a Preferred Share
issuable upon exercise of each Right are also subject to adjustment in the event of a
stock split of the Common Shares or a stock dividend on the Common Shares payable in
Common Shares or subdivisions, consolidations or combinations of the Common Shares
occurring, in any such case, prior to the Distribution Date. 

        Preferred
Shares purchasable upon the exercise of Rights will not be redeemable. Each Preferred
Share will be entitled to a minimum preferential quarterly dividend payment of $1.00 per
share but will be entitled to an aggregate dividend of 100 times the dividend declared per
Common Share. In the event of liquidation, the holders of the Preferred Shares will be
entitled to a minimum preferential liquidation payment of $100 per share but will be
entitled to an aggregate payment of 100 times the payment made per Common Share. Each
Preferred Share will have 100 votes, voting together with the Common Shares. Finally, in
the event of any merger, consolidation or other transaction in which Common Shares are
exchanged, each Preferred Share will be entitled to receive 100 times the amount received
per Common Share. These rights are protected by customary antidilution provisions. 

        Because
of the nature of the Preferred Shares’ dividend, voting and liquidation rights, the
value of the one one-hundredth interest in a Preferred Share purchasable upon exercise of
each Right should approximate the value of one Common Share. 

        In
the event that any person becomes an Acquiring Person (a “Flip-In Event”), each
holder of a Right (except as otherwise provided in the Rights Agreement) will thereafter
have the right to receive upon exercise that number of Common Shares (or, in certain
circumstances cash, property or other securities of the Company or a reduction in the
Purchase Price) having a market value of two times the then current Purchase Price.
Notwithstanding any of the foregoing, following the occurrence of a Flip-In Event all
Rights that are, or (under certain circumstances specified in the Rights Agreement) were,
or subsequently become beneficially owned by an Acquiring Person, related persons and
transferees will be null and void. 

        In
the event that, at any time following the Shares Acquisition Date, (i) the Company is
acquired in a merger or other business combination transaction or (ii) 50% or more of its
consolidated assets or earning power are sold (the events described in clauses (i) and
(ii) are herein referred to as “Flip-Over Events”), proper provision will be
made so that each holder of a Right (except as otherwise provided in the Rights Agreement)
will thereafter have the right to receive, upon the exercise thereof at the then current
Purchase Price, that number of shares of common stock of the acquiring company which at
the time of such transaction will have a market value of two times the then current
Purchase Price. 

        With
certain exceptions, no adjustment in the Purchase Price will be required until cumulative
adjustments require an adjustment of at least 1% in such Purchase Price. No fractional
Preferred Shares will be issued (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share, which may, at the election of the Company be evidenced
by depositary receipts). In lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date of
exercise. 

        The
Purchase Price is payable by certified check, cashier’s check, bank draft or money
order or, if so provided by the Company, the Purchase Price following the occurrence of a
Flip-In Event and until the first occurrence of a Flip-Over Event may be paid in Common
Shares having an equivalent value. 

C-2 

        At
any time after a person becomes an Acquiring Person and prior to the acquisition by such
Acquiring Person of 50% or more of the outstanding Common Shares, the Board of Directors
of the Company may exchange the Rights (other than Rights owned by any Acquiring Person
which have become void), in whole or in part, at an exchange ratio of one Common Share, or
one one-hundredth of a Preferred Share (or of a share of a class or series of the
Company’s preferred stock having equivalent rights, preferences and privileges), per
Right (subject to adjustment). 

        At
any time prior to a person becoming an Acquiring Person, the Board of Directors of the
Company may redeem the Rights in whole, but not in part, at a price of $.001 per Right
(the “Redemption Price”). The redemption of the Rights may be made effective at
such time, on such basis and with such conditions as the Board of Directors in its sole
discretion may establish. Immediately upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price. 

        Other
than amendments that would change the Redemption Price or move to an earlier date the
Final Expiration Date of the Rights, the terms of the Rights may be amended by the Board
of Directors of the Company without the consent of the holders of the Rights, including an
amendment to lower the threshold for exercisability of the Rights from 15% to not less
than 10%, with appropriate exceptions for any person then beneficially owning a percentage
of the number of Common Shares then outstanding equal to or in excess of the new
threshold, except that from and after such time as any person becomes an Acquiring Person
no such amendment may adversely affect the interests of the holders of the Rights. 

        Until
a Right is exercised, the holder thereof, as such, will have no rights as a shareholder of
the Company, including, without limitation, the right to vote or to receive dividends. 

        A
copy of the Rights Agreement has been filed with the Securities and Exchange Commission as
an Exhibit to a Registration Statement on Form 8-A filed with respect to the Rights. A
copy of the Rights Agreement is also available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is qualified in its
entirety by reference to the Rights Agreement, which is hereby incorporated herein by
reference. 

C-3Exhibit 10.1 to IntriCon Corporation Form 8-K dated May 22, 2006

Exhibit 10.1

 

LOAN AND SECURITY AGREEMENT

This LOAN AND SECURITY AGREEMENT dated as of May 22, 2007 (the “Agreement”), is executed by and among INTRICON CORPORATION a Pennsylvania corporation (“IntriCon”), RESISTANCE TECHNOLOGY, INC., a Minnesota corporation (“RTI”), RTI ELECTRONICS, INC., a Delaware corporation (“RTIE”), and INTRICON TIBBETTS CORPORATION (formerly known as TI Acquisition Corporation), a Maine corporation (“ITC”) (each, a “Borrower”; collectively, the “Borrowers”), and LASALLE BANK NATIONAL ASSOCIATION, a national
banking association (the “Bank”).

RECITALS:

A.                     The Borrowers desire to borrow funds and obtain other financial accommodations
from the Bank.

B.                     Pursuant to the Borrowers’
request, the Bank is willing to extend such financial accommodations to the Borrowers under the terms and conditions set forth
herein.

NOW THEREFORE, in consideration of the premises, and the mutual covenants and agreements set forth herein, the Borrowers agree to borrow from the Bank, and the Bank agrees to lend to the Borrowers, subject to and upon the following terms and conditions:

AGREEMENTS:

	
            Section 1.
 	
            DEFINITIONS.
 

1.1                     Defined Terms.
For the purposes of this Agreement, the following capitalized words and phrases shall have the meanings set forth
below.

“Acquisition” shall mean the asset purchase and sale transaction provided for in the Acquisition Documents, pursuant to which ITC will buy substantially all of Seller’s business and assets.

“Acquisition Agreement” shall mean that certain Asset Purchase Agreement dated April 19, 2006 by and among IntriCon, ITC and Seller, providing for the Acquisition.

“Acquisition Documents” means, collectively, the Acquisition Agreement and all other documents, instruments and agreements evidencing or otherwise relating to the asset purchase and sale transaction contemplated by the Acquisition Agreement.

“Affiliate” of any Person shall mean (a) any other Person which, directly or indirectly, controls or is controlled by or is under common control with such Person, (b) any officer or director of such Person, and (c) with respect to the Bank, any entity administered or managed by the Bank, or an Affiliate or investment advisor thereof and which is engaged in making, purchasing, holding or otherwise investing in commercial loans.  A Person shall be deemed to be “controlled by” any other Person if such Person possesses, directly or indirectly, power to direct or cause the direction of the management and policies of such Person whether by contract, ownership of voting securities, membership interests or otherwise.

 

“Applicable Agreement” shall mean any agreement, commitment, arrangement or instrument to which, as of any date, the Borrowers (or any of them) is a party or by which any Borrower or any of its properties is bound, including any note, indenture, loan agreement, mortgage, lease, or deed, the performance or non-performance of which could reasonably be expected to have a Material Adverse Effect.

“Asset Disposition” shall mean the sale, lease, assignment or other transfer for value (each a “Disposition”) by any Borrower or any Subsidiary thereof to any Person (other than another Borrower or any Subsidiary thereof) of any asset or right of such Borrower or any Subsidiary thereof (including, the loss, destruction or damage of any thereof or any actual condemnation, confiscation, requisition, seizure or taking thereof), other than (a) the Disposition of any asset which is to be replaced, and is in fact replaced, within ninety (90) days with another asset performing the same or a similar function, and (b) the sale or lease of inventory in the ordinary course of business.

“Bank Product Agreements” shall mean those certain agreements entered into from time to time by the Borrowers (or any of them) or any of their respective Subsidiaries with the Bank or any Affiliate of the Bank concerning Bank Products.

“Bank Product Obligations” shall mean, collectively, all obligations, liabilities, contingent reimbursement obligations, fees, and expenses owing by the Borrowers (or any of them) and their respective Subsidiaries to the Bank or any Affiliate of the Bank pursuant to or evidenced by the Bank Product Agreements and irrespective of whether for the payment of money, whether direct or indirect, and their absolute or contingent, due or to become due, now existing or hereafter arising.

“Bank Products” shall mean, collectively, any service or facility extended to the Borrowers (or any of them) and their Subsidiaries by the Bank or any Affiliate of the Bank, including:  (a) credit cards, (b) credit card processing services, (c) debit cards, (d) purchase cards, (e) ACH transactions, (f) cash management, including controlled disbursement, accounts or services, or (g) Hedging Agreements.

“Bankruptcy Code” shall mean the United States Bankruptcy Code, as now existing or hereafter amended.

“Base Rate” shall mean the higher of (a) the Prime Rate, and (b) the Federal Funds Rate plus 0.5% per annum.

“Base Rate Loan” or “Base Rate Loans” shall mean that portion, and collectively, those portions of the aggregate outstanding principal balance of the Loans that bear interest at the Base Rate plus the applicable margin (if any) specified in Section 2.1(b) or 2.2(b), as applicable.

“Borrowing Agent” shall mean IntriCon.

“Borrowing Base Amount” shall mean:

(a)          an amount equal to eighty-five percent (85%) of the net amount (after deduction of such reserves and allowances as the Bank deems proper and necessary in the exercise of its commercially reasonable judgment) of all Eligible Accounts of all Borrowers; plus

(b)          the lesser of (i) an
amount equal to fifty percent (50%) of the lower of cost or market value (after deduction of such reserves and allowances as the
Bank deems proper and necessary in the exercise of its commercially reasonable judgment) of all Eligible Inventory of all Borrowers, and (ii) Four Million and 00/100 Dollars ($4,000,000.00). 

 

2

“Borrowing Base Certificate” shall mean a certificate to be signed by the Borrowing Agent certifying to the accuracy of the Borrowing Base Amount in form and substance satisfactory to the Bank.

“Business Day” shall mean any day other than a Saturday, Sunday or a legal holiday on which banks are authorized or required to be closed for the conduct of commercial banking business in Chicago, Illinois.

“Capital Expenditures” shall mean all expenditures (including Capitalized Lease Obligations) which, in accordance with GAAP, would be required to be capitalized and shown on the consolidated balance sheet of the Borrowers, but excluding expenditures made in connection with the replacement, substitution or restoration of assets to the extent financed (i) from insurance proceeds (or other similar recoveries) paid on account of the loss of or damage to the assets being replaced or restored or (ii) with awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced.

“Capital Lease” shall mean, as to any Person, a lease of any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, by such Person, as lessee, that is, or should be, in accordance with Financial Accounting Standards Board Statement No. 13, as amended from time to time, or, if such statement is not then in effect, such statement of GAAP as may be applicable, recorded as a “capital lease” on the financial statements of such Person prepared in accordance with GAAP.

“Capital Securities” shall mean, with respect to any Person, all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of such Person’s capital, whether now outstanding or issued or acquired after the date hereof, including common shares, preferred shares, membership interests in a limited liability company, limited or general partnership interests in a partnership or any other equivalent of such ownership interest.

“Capitalized Lease Obligations” shall mean, as to any Person, all rental obligations of such Person, as lessee under a Capital Lease which are or will be required to be capitalized on the books of such Person.

“Cash Equivalent Investment” shall mean, at any time, (a) any evidence of Debt, maturing not more than one year after such time, issued or guaranteed by the United States government or any agency thereof, (b) commercial paper, maturing not more than one year from the date of issue, or corporate demand notes, in each case (unless issued by the Bank or its holding company) rated at least A-l by Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. or P-l by Moody’s Investors Service, Inc., (c) any certificate of deposit, time deposit or banker’s acceptance, maturing not more than one year after such time, or any overnight Federal Funds transaction that is issued or sold by the Bank or its holding company (or by a commercial banking institution that is a member of the Federal Reserve
System and has a combined capital and surplus and undivided profits of not less than $500,000,000), (d) any repurchase agreement
entered into with the Bank, or other commercial banking institution of the nature referred to in clause
(c), which (i) is secured by a fully perfected security interest in any obligation of the type described
in any of clauses (a) through (c)
above, and (ii) has a market value at the time such repurchase agreement is entered into of not less than 100% of the repurchase
obligation of the Bank, or other commercial banking institution, thereunder, (e) money market accounts or mutual funds which invest exclusively in assets satisfying the foregoing requirements, and (f) other short term liquid investments approved in writing by the Bank.

 

3

“Change in Control” shall mean the occurrence of any of the following events:  

(i)           any Person or “group” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a Person will be deemed to have “beneficial ownership” of all securities that such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the voting power of all classes of voting stock of IntriCon;

(ii)          IntriCon shall fail to own, with the power to vote, 100% of all outstanding capital stock of each other Borrower;

(iii)         During any consecutive two-year period, individuals who at the beginning of such period constituted the board of directors of IntriCon (together with any new directors whose election to such board of directors, or whose nomination for election by the owners of IntriCon, was approved by a vote of 66-2/3% of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the board of directors of IntriCon then in office; or

(iv)         Mark S. Gorder shall cease to maintain his position of Chief Executive Officer of IntriCon,or shall otherwise cease to actively manage such day-to-day business activities of IntriCon and a qualified replacement thereof, as reasonably determined by the Bank, has not been obtained within ninety (90) days thereafter.

“Collateral” shall have the meaning set forth in Section 6.1 hereof.

“Collateral Access Agreement” shall mean an agreement in form and substance reasonably satisfactory to the Bank pursuant to which a mortgagee or lessor of real property on which Collateral is stored or otherwise located, or a warehouseman, processor or other bailee of Inventory or other property owned by the Borrowers (or any of them) and their respective Subsidiaries, acknowledge the Liens of the Bank and waive any Liens held by such Person on such property, and, in the case of any such agreement with a mortgagee or lessor, permit the Bank reasonable access to and use of such real property following the occurrence and during the continuance of an Event of Default to assemble, complete and sell any collateral stored or otherwise located thereon.

“Contingent Liability” and “Contingent Liabilities” shall mean, respectively, each obligation and liability of the Borrowers (or any of them) and all such obligations and liabilities of the Borrowers (or any of them) incurred pursuant to any agreement, undertaking or arrangement by which any Borrower:  (a) guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the indebtedness, dividend, obligation or other liability of any other Person in any manner (other than by endorsement of instruments in the course of collection), including any indebtedness, dividend or other
obligation which may be issued or incurred at some future time; (b) guarantees the payment of dividends or other distributions upon the shares or ownership interest of any other Person; (c) undertakes or agrees (whether contingently or otherwise):  (i) to purchase, repurchase, or otherwise acquire any indebtedness, obligation or liability of any other Person or any property or assets constituting security therefor, (ii) to advance or provide funds 

 

4

for the payment or discharge of any indebtedness, obligation or liability of any other Person (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), or to maintain solvency, assets, level of income, working capital or other financial condition of any other Person, or (iii) to make payment to any other Person other than for value received; (d) agrees to lease property or to purchase securities, property or services from such other Person with the purpose or intent of assuring the owner of such indebtedness or obligation of the ability of such other Person to make payment of the indebtedness or obligation; (e) to induce the issuance of, or in connection with the issuance of, any letter of credit for the benefit of such other Person; or (f) undertakes or agrees otherwise to assure a creditor against loss.  The amount of any Contingent Liability shall (subject to any
limitation set forth herein) be deemed to be the outstanding principal amount (or maximum permitted principal amount, if larger) of the indebtedness, obligation or other liability guaranteed or supported thereby.

“Debt” shall mean, as to any Person, without duplication, (a) all indebtedness of such Person; (b) all borrowed money of such Person (including principal, interest, fees and charges), whether or not evidenced by bonds, debentures, notes or similar instruments; (c) all obligations to pay the deferred purchase price of property or services; (d) all obligations, contingent or otherwise, with respect to the maximum face amount of all letters of credit (whether or not drawn), bankers’ acceptances and similar obligations issued for the account of such Person (including the Letters of Credit), and all unpaid drawings in respect of such letters of credit, bankers’ acceptances and similar obligations; (e) all indebtedness secured by any Lien on any property owned by such Person, whether or not such indebtedness has been assumed
by such Person (provided, however, if such Person has not assumed or otherwise become liable in respect of such indebtedness, such indebtedness shall be deemed to be in an amount equal to the fair market value of the property subject to such Lien at the time of determination); (f) the aggregate amount of all Capitalized Lease Obligations of such Person; (g) all Contingent Liabilities of such Person, whether or not reflected on its balance sheet; (h) all Hedging Obligations of such Person; (i) all Debt of any partnership of which such Person is a general partner; and (j) all monetary obligations of such Person under (i) a so-called synthetic, off-balance sheet or tax retention lease, or (ii) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).
Notwithstanding the foregoing, Debt shall not include trade payables and accrued expenses incurred by such Person in accordance with customary practices and in the ordinary course of business of such Person.

“Default Rate” shall mean a per annum rate of interest equal to the Prime Rate plus two percent (2%).

“Depreciation” shall mean the total amounts added to depreciation, amortization, obsolescence, valuation and other proper reserves, as reflected on a Borrower’s financial statements and determined in accordance with GAAP.

“EBITDA” shall mean, for any period, the sum for such period of:  (i) Net Income, plus (ii) Interest Charges, plus (iii) federal and state income taxes (including the Illinois replacement tax), plus (iv) Depreciation, plus (v) non-cash management compensation expense, plus (vi) all other non-cash charges, minus (vii) all non-cash income or gains, in each case to the extent included in determining Net Income for such period, minus (viii) all cash payments made in such period on account of non-cash charges
expensed in a prior period, in each case determined on a consolidated basis.

“Eligible Account” and “Eligible Accounts” shall mean, with respect to each Borrower, each Account and all such Accounts (exclusive of sales, excise or other similar taxes) owing to each such Borrower which meets each of the following requirements:

 

5

(a)          it is genuine in all respects and has arisen in the ordinary course of the applicable Borrower’s business from (i) the performance of services by the applicable Borrower, which services have been fully performed, acknowledged and accepted by the Account Debtor or (ii) the sale or lease of Goods by the applicable Borrower, including C.O.D. sales, which Goods have been completed in accordance with the Account Debtor’s specifications (if any) and delivered to the Account Debtor, and such Borrower or the applicable Subsidiary thereof has possession of, or has delivered to the Bank at the Bank’s request, shipping and delivery receipts evidencing such delivery;

(b)          it is subject to a perfected, first priority Lien in favor of the Bank and is not subject to any other assignment, claim or Lien;

(c)          it is the valid, legally enforceable and unconditional obligation of the Account Debtor with respect thereto, and is not subject to the fulfillment of any condition whatsoever or to any counterclaim or credit (provided that any Account which is so subject to a counterclaim or credit shall only be deemed ineligible pursuant to this clause (c) to the extent of such counterclaims or credit, so long as such counterclaim or credit does not exceed 25% of such Account and arises in the ordinary course of such Borrower’s business consistent with past practices), or to any trade or volume discount, allowance, discount, rebate or adjustment by the Account Debtor with respect thereto except for any such trade or volume discount, allowance, discount, rebate or adjustment
that does not exceed 25% of the applicable Account and that is granted in the ordinary course of such Borrower’s business consistent with past practices and reflected and/or disclosed on the original invoice for such Account and/or the Borrowing Base Certificates and other collateral reporting delivered to the Bank, or to any claim by such Account Debtor denying liability thereunder in whole or in part (provided that any Account which is so subject to a partial denial of liability shall only be deemed ineligible pursuant to this clause (c) to the extent of such partial denial, so long as such partial denial does not exceed 25% of such Account and arises in the ordinary course of such Borrower’s business consistent with past practices) and the Account Debtor has not refused to accept and/or has not returned or offered to return any of the Goods or services which are the subject of such Account; (provided that any Account which is so subject to any refusal to accept or return
or offer to return some but not all of such Goods or services shall only be deemed ineligible pursuant to this clause (c) to the extent of such refused or returned Goods or services, so long as such to accept or return or offer to return does not exceed 25% of such Account and arises in the ordinary course of such Borrower’s business consistent with past practices);

(d)          the Account Debtor with respect thereto is a resident or citizen of, and is located within, the United States or Canada (other than the province of Quebec), unless (x) such Account is insured pursuant to a policy of credit insurance maintained by Borrowers and issued by an insurer and with deductibles satisfactory to the Bank in the exercise of its commercially reasonable judgment or (y) the sale of goods or services giving rise to such Account is on letter of credit, banker’s acceptance or other credit support terms satisfactory to the Bank in the exercise of its commercially reasonable  judgment;

(e)          it is not an Account arising from a “sale on approval”, “sale or return”, “consignment”, “guaranteed sale” or “bill and hold”, or are subject to any other repurchase or return agreement;

(f)          it is not an Account
with respect to which possession and/or control of the goods sold giving rise thereto is held, maintained or retained by the
applicable Borrower (or by any agent or custodian of such Borrower) for the account of, or subject to, further and/or future direction from the Account Debtor with respect thereto;

 

6

(g)          it has not arisen out of contracts with the United States or any department, agency or instrumentality thereof, unless the applicable Borrower has assigned its right to payment of such Account to the Bank pursuant to the Assignment of Claims Act of 1940, and evidence (satisfactory to the Bank) of such assignment has been delivered to the Bank, or any state, county, city or other governmental body, or any department, agency or instrumentality thereof;

(h)          if the applicable Borrower maintains a credit limit for an Account Debtor, the aggregate dollar amount of Accounts due from such Account Debtor, including such Account, does not exceed such credit limit as increased by such Borrower from time to time in the exercise of its commercially reasonable judgment;

(i)           if the Account is evidenced by chattel paper or an instrument, the originals of such chattel paper or instrument shall have been endorsed and/or assigned and delivered to the Bank or, in the case of electronic chattel paper, shall be in the control of the Bank, in each case in a manner satisfactory to the Bank;

(j)           such Account is evidenced by an invoice delivered to the related Account Debtor and is not more than (i) sixty (60) days past the due date thereof, or (ii) one hundred twenty (120) days past the original invoice date thereof, in each case according to the original terms of sale;

(k)          it is not an Account with respect to an Account Debtor that is located in any jurisdiction which has adopted a statute or other requirement with respect to which any Person that obtains business from within such jurisdiction must file a notice of business activities report or make any other required filings in a timely manner in order to enforce its claims in such jurisdiction’s courts unless (i) such notice of business activities report has been duly and timely filed or the applicable Borrower is exempt from filing such report and has provided the Bank with satisfactory evidence of such exemption or (ii) the failure to make such filings may be cured retroactively by the applicable Borrower for a nominal fee;

(l)           the Account Debtor with respect thereto is not an Affiliate of any such Borrower;

(m)         such Account does not arise out of a contract or order which, by its terms, forbids or makes void or unenforceable the assignment thereof by the applicable Borrower to the Bank and is not unassignable to the Bank for any other reason;

(n)          there is no bankruptcy, insolvency or liquidation proceeding pending by or against the Account Debtor with respect thereto, nor has the Account Debtor suspended business, made a general assignment for the benefit of creditors or failed to pay its debts generally as they come due, and/or, to Borrower’s knowledge, no condition or event has occurred that could reasonably be expected to have a material adverse effect (as determined by the Bank in its commercially reasonable judgment) on the Account Debtor which would require the Accounts of such Account Debtor to be deemed uncollectible in accordance with GAAP;

(o)          it is not owed by an Account Debtor with respect to which twenty five percent (25.00%) or more of the aggregate amount of outstanding Accounts owed at such time by such Account Debtor is classified as ineligible under any other clause of this definition;

 

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(p)          if the aggregate amount of all Accounts owed by the Account Debtor thereon exceeds twenty five percent (25.00%) of the aggregate amount of all Accounts at such time, then all Accounts owed by such Account Debtor in excess of such amount shall be deemed ineligible; and

(q)          it does not violate the negative covenants and does satisfy the affirmative covenants of the applicable Borrower contained in this Agreement, and it is otherwise not unacceptable to the Bank for any other reason as determined by the Bank in the exercise of its commercially reasonable judgment.

An Account which is at any time an Eligible Account, but which subsequently fails to meet any of the foregoing requirements, shall forthwith cease to be an Eligible Account.  Further, with respect to any Account, if the Bank at any time hereafter determine in the exercise of its commercially reasonable judgment that the prospect of payment or performance by the Account Debtor with respect thereto is materially impaired for any reason whatsoever, such Account shall cease to be an Eligible Account after notice of such determination is given to the applicable Borrower.

“Eligible Inventory” shall mean, with respect to each Borrower, all Inventory of the applicable Borrower which meets each of the following requirements:

(a)          it is subject to a perfected, first priority Lien in favor of the Bank and is not subject to any other assignment, claim or Lien;

(b)          it is salable and not slow-moving, obsolete or discontinued, as determined by the Bank in the exercise of its commercially reasonable judgment;

(c)          it is in the possession and control of the applicable Borrower and it is stored and held in facilities owned by such Borrower or, if such facilities are not so owned, the Bank is in possession of a Collateral Access Agreement with respect thereto (provided that, Inventory maintained at any such facility not owned by Borrower and for which the Bank does not possess a Collateral Access Agreement shall not be deemed ineligible under this clause (c) to the extent the value of such Inventory does not exceed $100,000 at any such facility or $200,000 for all such facilities in the aggregate or to the extent the Bank has established reserves with respect to such location as described in Section 3.1(e));

(d)          it is not Inventory produced in violation of the Fair Labor Standards Act and subject to the “hot goods” provisions contained in Title 29 U.S.C. §215;

(e)          it is not subject to any agreement or license which would restrict the Bank’s ability to sell or otherwise dispose of such Inventory; 

(f)          it is located in the United States or in any territory or possession of the United States that has adopted Article 9 of the Uniform Commercial Code;

(g)          it is not “in transit” to applicable Borrower or held by such Borrower on consignment; 

(h)          it is not “work-in-progress” Inventory;

(i)           it is not
supply items, packaging or any other similar materials, provided that, nothing
contained in the foregoing shall be deemed to apply to the applicable Borrower’s raw materials, which shall be Eligible Inventory so long as it complies with all of the other provisions of this definition;

 

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(j)           it is not identified to any purchase order or contract to the extent progress or advance payments are received with respect to such Inventory; 

(k)          it does not breach any of the representations, warranties or covenants pertaining to Inventory set forth in the Loan Documents; and

(l)           the Bank shall not have determined in the exercise of its commercially reasonable judgment that it is unacceptable due to age, type, category, quality, quantity and/or any other reason whatsoever.

Inventory which is at any time Eligible Inventory but which subsequently fails to meet any of the foregoing requirements shall forthwith cease to be Eligible Inventory.

“Employee Plan” includes any pension, stock bonus, employee stock ownership plan, retirement, profit sharing, deferred compensation, stock option, bonus or other incentive plan, whether qualified or nonqualified, or any disability, medical, dental or other health plan, life insurance or other death benefit plan, vacation benefit plan, severance plan or other employee benefit plan or arrangement, including those pension, profit-sharing and retirement plans of any Borrower described from time to time in the consolidated financial statements of Borrowers and any pension plan, welfare plan, Defined Benefit Pension Plans (as defined in ERISA) or any multi-employer plan, maintained or administered by such Borrower or to which such Borrower is a party or may have any liability or by which such Borrower is bound.  

“Environmental Laws” shall mean all present or future federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative or judicial orders, consent agreements, directed duties, requests, licenses, authorizations and permits of, and agreements with, any governmental authority, in each case relating to any matter arising out of or relating to public health and safety, or pollution or protection of the environment or workplace, including any of the foregoing relating to the presence, use, production, generation, handling, transport, treatment, storage, disposal, distribution, discharge, emission, release, threatened release, control or cleanup of any Hazardous Substance.  

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

“Event of Default” shall mean any of the events or conditions which are set forth in Section 11 hereof.

“Federal Funds Rate” shall mean, for any day, a fluctuating interest rate equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Bank from three Federal funds brokers of recognized standing selected by the Bank.  The Bank’s determination of such rate shall be binding and conclusive absent manifest error.

 

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“Funded Debt” shall mean, as to any Person, all Debt of such Person that matures more than one year from the date of its creation (or is renewable or extendible, at the option of such Person, to a date more than one year from such date).

“GAAP” shall mean generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of determination (subject to the provisions of Section 1.2 of this Agreement below), provided, however, that interim financial statements or reports shall be deemed in compliance with GAAP despite the absence of footnotes and fiscal year-end adjustments as required by GAAP.

“Hazardous Substances” shall mean (a) any petroleum or petroleum products, radioactive materials, asbestos in any form that is or could reasonably be expected to become friable, urea formaldehyde foam insulation, dielectric fluid containing levels of polychlorinated biphenyls, radon gas and mold; (b) any chemicals, materials, pollutant or substances defined as or included in the definition of “hazardous substances”, “hazardous waste”, “hazardous materials”, “extremely hazardous substances”, “restricted hazardous waste”, “toxic substances”, “toxic pollutants”, “contaminants”, “pollutants” or words of similar import, under any applicable Environmental Law; and (c) any other chemical, material or substance, the exposure to, or
release of which is prohibited, limited or regulated by any governmental authority or for which any duty or standard of care is imposed pursuant to, any Environmental Law.  

“Hedging Agreement” shall mean any interest rate, currency or commodity swap agreement, cap agreement or collar agreement, and any other agreement or arrangement designed to protect a Person against fluctuations in interest rates, currency exchange rates or commodity prices.

“Hedging Obligation” shall mean, with respect to any Person, any liability of such Person under any Hedging Agreement.

“Intellectual Property” shall mean the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including copyrights, patents, service marks and trademarks, and all registrations and applications for registration therefor and all licensees thereof, trade names, domain names, technology, know-how and processes, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.

“Interest Charges” shall mean, with respect to the Borrowers on a consolidated basis, for any period, the sum of:  (a) all interest, charges and fees and related expenses payable with respect to that fiscal period to a lender in connection with borrowed money or the deferred purchase price of assets that are treated as interest in accordance with GAAP, plus (b) the portion of Capitalized Lease Obligations with respect to that fiscal period that should be treated as interest in accordance with GAAP, plus (c) all charges paid or payable (without duplication) during that period with respect to any Hedging Agreements.

“Interest Period” shall mean successive one, two, three or six month periods, beginning and ending as provided in this Agreement.

“Investment” shall mean, with respect to any Person, any investment in another Person by acquisition of any debt or equity security, by making any loan or advance or by becoming obligated with respect to a Contingent Liability in respect of obligations of such other Person (other than travel and similar advances to employees in the ordinary course of business).

 

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“Letter of Credit” and “Letters of Credit” shall mean, respectively, a letter of credit and all such letters of credit issued by the Bank, in its sole discretion, upon the execution and delivery by the Borrowing Agent and the acceptance by the Bank of a Master Letter of Credit Agreement and a Letter of Credit Application, as set forth in Section 2.7 of this Agreement.

“Letter of Credit Application” shall mean, with respect to any request for the issuance of a Letter of Credit, a letter of credit application in the form being used by the Bank at the time of such request for the type of Letter of Credit requested.

“Letter of Credit Commitment” shall mean, at any time, an amount equal to the lesser of (a) the Revolving Loan Commitment minus the aggregate amount of all Revolving Loans outstanding, (b) the Borrowing Base Amount minus the aggregate amount of all Revolving Loans outstanding, or (c) Two Hundred Thousand and 00/100 Dollars ($200,000.00).

“Letter of Credit Maturity Date” shall mean the date that is twenty five (25) days prior to the Revolving Loan Maturity Date.

“Letter of Credit Obligations” shall mean, at any time, an amount equal to the aggregate of the original face amounts of all Letters of Credit minus the sum of (i) the amount of any reductions in the original face amount of any Letter of Credit which did not result from a draw thereunder, (ii) the amount of any payments made by the Bank with respect to any draws made under a Letter of Credit for which the Borrowers have reimbursed the Bank, (iii) the amount of any payments made by the Bank with respect to any draws made under a Letter of Credit which have been converted to a Revolving Loan as set forth in Section 2.7, and (iv) the portion of any issued but expired or surrendered Letter of Credit which has not been drawn by the beneficiary thereunder.  For purposes of determining the
outstanding Letter of Credit Obligations at any time, the Bank’s acceptance of a draft drawn on the Bank pursuant to a Letter of Credit shall constitute a draw on the applicable Letter of Credit at the time of such acceptance.

“Liabilities” shall mean at all times all liabilities of the Borrowers that would be shown as such on a consolidated balance sheet of such Borrowers prepared in accordance with GAAP.  

“LIBOR” shall mean a rate of interest equal to (a) the per annum rate of interest at which United States dollar deposits for a period equal to the relevant Interest Period are offered in the London Interbank Eurodollar market at 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period (or three Business Days prior to the commencement of such Interest Period if banks in London, England were not open and dealing in offshore United States dollars on such second preceding Business Day), as displayed in the Bloomberg Financial Markets system (or other authoritative source selected by the Bank in its sole discretion), divided by (b) a number determined by subtracting from 1.00 the then stated maximum reserve percentage for determining reserves to be
maintained by member banks of the Federal Reserve System for Eurocurrency funding or liabilities as defined in Regulation D (or any successor category of liabilities under Regulation D).  The Bank’s determination of LIBOR shall be conclusive, absent manifest error.

“LIBOR Loan” or “LIBOR Loans” shall mean that portion, and collectively those portions, of the aggregate outstanding principal balance of the Loans that bear interest at the LIBOR Rate, of which at any time, the Borrowing Agent may identify no more than six (6) advances of the Revolving Loans and/or the Term Loan which bear interest at the LIBOR Rate.

“LIBOR Rate” shall mean a per annum rate of interest equal to LIBOR for the relevant Interest Period, which LIBOR Rate shall remain fixed during such Interest Period.

 

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“Lien” shall mean, with respect to any Person, any interest granted by such Person in any real or personal property, asset or other right owned or being purchased or acquired by such Person (including an interest in respect of a Capital Lease) which secures payment or performance of any obligation and shall include any mortgage, lien, encumbrance, title retention lien, charge or other security interest of any kind, whether arising by contract, as a matter of law, by judicial process or otherwise.

“Loan Documents” shall mean each of the agreements, documents, instruments and certificates set forth in Section 3.1 hereof, and any and all such other instruments, documents, certificates and agreements from time to time executed and delivered by the Borrowers (or any of them), or any of their respective Subsidiaries for the benefit of the Bank pursuant to any of the foregoing, and all amendments, restatements, supplements and other modifications thereto.

“Loans” shall mean, collectively, all Revolving Loans and the Term Loan made by the Bank to the Borrowers, and all Letter of Credit Obligations, in each case under and pursuant to this Agreement.

“Lockbox Agreement” shall have the meaning set forth in Section 3.1 hereof.

“Master Letter of Credit Agreement” shall have the meaning set forth in Section 2.7 hereof.

“Material Adverse Effect” shall mean (a) a material adverse change in, or a material adverse effect upon, the assets, business, properties, condition (financial or otherwise) or results of operations of the Borrowers taken as a whole, (b) a material impairment of the ability of the Borrowers taken as a whole to perform any of the Obligations under any of the Loan Documents, or (c) a material adverse effect on (i) any substantial portion of the Collateral,  (ii) the legality, validity, binding effect or enforceability against the Borrowers (or any of them) of any of the Loan Documents, (iii) the perfection or priority of the Liens on any material portion of the Collateral granted to the Bank under any Loan Document, or (iv) the rights or remedies of the Bank under any Loan Document.

“Net Cash Proceeds” shall mean:

(a)          with respect to any Asset Disposition, the aggregate cash proceeds (including cash proceeds received pursuant to policies of insurance or by way of deferred payment of principal pursuant to a note, installment receivable or otherwise, but only as and when received) received by the Borrowers (or any of them) pursuant to such Asset Disposition net of (i) the direct costs relating to such sale, transfer or other disposition (including sales commissions and legal, accounting and investment banking fees), (ii) taxes paid or reasonably estimated by the Borrowers (or any of them) to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), and (iii) amounts required to be applied to the repayment of
any Debt secured by a Lien on the asset subject to such Asset Disposition (other than the Loans);

(b)          with respect to any issuance of Capital Securities, the aggregate cash proceeds received by the Borrowers (or any of them) pursuant to such issuance, net of the direct costs relating to such issuance (including sales and underwriters’ commissions and legal, accounting and investment banking fees); and

(c)          with respect to any
issuance of Debt, the aggregate cash proceeds received by the Borrowers (or any of them) pursuant to such issuance, net of the
direct costs of such issuance (including up-front, underwriters’ and placement fees and legal, accounting and investment banking fees).

 

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“Net Income” shall mean means, with respect to the Borrowers and their respective Subsidiaries for any period, the consolidated net income (or loss) of the Borrowers and their respective Subsidiaries for such period as determined in accordance with GAAP, excluding any gains from Asset Dispositions, any extraordinary gains and any gains from discontinued operations.

“Non-Excluded Taxes” shall have the meaning set forth in Section 2.8(a) hereof.

“Note” and “Notes” shall mean, respectively, each of and collectively, the Revolving Note and the Term Note.

“Obligations” shall mean the Loans, as evidenced by any Note, all interest accrued thereon (including interest which would be payable as post-petition in connection with any bankruptcy or similar proceeding, whether or not permitted as a claim thereunder), any fees due the Bank hereunder, any expenses incurred by the Bank hereunder, including without limitation, all liabilities and obligations under this Agreement, under any other Loan Document, any reimbursement obligations of the Borrowers (or any of them) in respect of Letters of Credit, all Hedging Obligations of the Borrowers (or any of them) which are owed to the Bank or any Affiliate of the Bank, and all Bank Product Obligations of the Borrowers (or any of them), and any and all other liabilities and obligations owed by the Borrowers (or any of them), any of their
respective Subsidiaries or any other Obligor (individually and collectively) to the Bank from time to time, howsoever created, arising or evidenced, whether direct or indirect, joint or several, absolute or contingent, now or hereafter existing, or due or to become due, together with any and all renewals, extensions, restatements or replacements of any of the foregoing.

“Obligor” shall mean each Borrower, any guarantor, accommodation endorser, third party pledgor, or any other party liable with respect to all or any portion of the Obligations.

“Organizational Identification Number” means, with respect to a Borrower, the organizational identification number assigned to such Borrower by the applicable governmental unit or agency of the jurisdiction of organization of such Borrower.

“Other Taxes” shall mean any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from the execution, delivery, enforcement or registration of, or otherwise with respect to, this Agreement or any of the other Loan Documents.

“Permitted Liens” shall mean (a) Liens for Taxes, assessments or other governmental charges not at the time delinquent or thereafter payable without penalty or being contested in good faith by appropriate proceedings so long as the applicable Borrower(s) shall set aside on its books adequate reserves with respect thereto in accordance with GAAP and, such contest proceedings stay the foreclosure of such Lien or the sale of any portion of the Collateral to satisfy such claim; (b) Liens arising in the ordinary course of business (such as (i) Liens of carriers, warehousemen, mechanics and materialmen and other similar Liens imposed by law, and (ii) Liens in the form of deposits or pledges incurred in connection with worker’s compensation, unemployment compensation and other types of social security (excluding Liens arising
under ERISA) or in connection with surety bonds, bids, performance bonds and similar obligations) for sums not overdue or being contested in good faith by appropriate proceedings and not involving any advances or borrowed money or the deferred purchase price of property or services, which do not in the aggregate materially detract from the value of the property or assets of the Borrowers (or any of them) or materially impair the use thereof in the operation of such Borrower’s business and, in each case, so long as the applicable Borrower(s) shall set aside on its books adequate reserves with 

 

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respect thereto in accordance with GAAP and, such contest proceedings stay the foreclosure of such Lien or the sale of any portion of the Collateral to satisfy such claim; (c) Liens described on Schedule 9.2 as of the Closing Date; (d) attachments, appeal bonds, judgments and other similar Liens, for sums not exceeding Fifty Thousand and 00/100 Dollars ($50,000.00) in the aggregate arising in connection with court proceedings, provided the execution or other enforcement of such Liens is effectively stayed and the claims secured thereby are being actively contested in good faith and by appropriate proceedings and to the extent such judgments or awards do not constitute an Event of Default under Section 11.8 hereof; (e) easements, rights of way, restrictions, minor
defects or irregularities in title and other similar Liens not interfering in any material respect with the ordinary conduct of the business of the Borrowers (or any of them); (f) subject to the limitation set forth in Section 9.1(e), Liens arising in connection with purchase money Debt and Capitalized Lease Obligations (and attaching only to the property being purchased or leased); (g) subject to the limitation set forth in Section 9.1(e), Liens that constitute purchase money security interests on any property securing Debt incurred for the purpose of financing all or any part of the cost of acquiring such property, provided that any such Lien attaches to such property within twenty (20) days of the acquisition thereof and attaches solely to the property so acquired; and (h) Liens granted to the Bank hereunder and under the Loan
Documents.

“Person” shall mean any natural person, partnership, limited liability company, corporation, trust, joint venture, joint stock company, association, unincorporated organization, government or agency or political subdivision thereof, or other entity, whether acting in an individual, fiduciary or other capacity.

“Pledged Entities” means, collectively, RTI, RTIE, and ITC.

“Pledged Equity Interests” means all of the capital stock of the Pledged Entities, in each case now or hereafter owned by IntriCon, together with the certificates or other agreements or instruments, if any, representing or evidencing such capital stock, and all options.  The term Pledged Equity Interests shall specifically include, but shall not be limited to:

(a)          all capital stock, membership interests, shares or securities representing a dividend on any of the Pledged Equity Interests, or representing a distribution or return of capital upon or in respect of the Pledged Equity Interests, or resulting from a split, revision, reclassification or other exchange therefor, and any subscriptions, warrants, rights or options issued to the holder of, or otherwise in respect of, the Pledged Equity Interests; and

(b)          without affecting the obligations of IntriCon or any other Borrower under any provision prohibiting such action hereunder, in the event of any consolidation or merger involving the issuer of any Pledged Equity Interests and in which such issuer is not the surviving entity, all shares of each class of capital stock or other equity interest of the successor entity formed by or resulting from such consolidation or merger.

“Prime Rate” shall mean the floating per annum rate of interest which at any time, and from time to time, shall be most recently announced by the Bank as its Prime Rate, which is not intended to be the Bank’s lowest or most favorable rate of interest at any one time.  The effective date of any change in the Prime Rate shall for purposes hereof be the date the Prime Rate is changed by the Bank.  The Bank shall not be obligated to give notice of any change in the Prime Rate.

“Regulatory Change” shall mean the introduction of, or any change in any applicable law, treaty, rule, regulation or guideline or in the interpretation or administration thereof by any governmental authority or any central bank or other fiscal, monetary or other authority having jurisdiction over the Bank or its lending office.

 

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“Revolving Interest Rate” shall mean, with respect to any Loan, the Borrowing Agent’s option from time to time of (i) a per annum rate of interest equal to the LIBOR Rate plus one and ninety hundredths percent (1.90%), or (ii) a floating per annum rate of interest equal to the Base Rate.

“Revolving Loan” and “Revolving Loans” shall mean, respectively, each direct advance and the aggregate of all such direct advances made by the Bank to the Borrowers (or any of them) under and pursuant to this Agreement, as set forth in Section 2.1 of this Agreement.

“Revolving Loan Availability” shall mean, at any time, an amount equal to the lesser of (a) the Revolving Loan Commitment minus the Letter of Credit Obligations, or (b) the Borrowing Base Amount minus the Letter of Credit Obligations.

“Revolving Loan Commitment” shall mean Ten Million and 00/100 Dollars ($10,000,000.00).

“Revolving Loan Mandatory Prepayment” shall have the meaning set forth in Section 2.1(c)(ii) hereof.

“Revolving Loan Maturity Date” shall mean June 30, 2012, unless extended by the Bank pursuant to any modification, extension or renewal note executed by the Borrowers and accepted by the Bank in its sole and absolute discretion in substitution for the Revolving Note.

“Revolving Note” shall mean a revolving note in the form prepared by and acceptable to the Bank, dated as of the date hereof, in the amount of the Revolving Loan Commitment and maturing on the Revolving Loan Maturity Date, duly executed by the Borrowers and made jointly and severally payable to the order of the Bank, together with any and all renewal, extension, modification or replacement notes executed by the Borrowers and delivered to the Bank and given in substitution therefor.

“Seller” shall mean Tibbetts Industries, Inc., a Maine corporation.

“Senior Debt” shall mean all Debt of the Borrowers other than Subordinated Debt.

“Subordinated Debt” shall mean that portion of the Debt of the Borrowers (or any of them) which is subordinated to the Obligations in a manner satisfactory to the Bank, including subordination of right and time of payment of principal and interest, priority of collateral security (if any) and remedies enforcement.

“Subsidiary” and “Subsidiaries” shall mean, respectively, with respect to any Person, each and all such corporations, partnerships, limited partnerships, limited liability companies, limited liability partnerships, joint ventures or other entities of which or in which such Person owns, directly or indirectly, such number of outstanding Capital Securities as have more than fifty percent (50.00%) of the ordinary voting power for the election of directors or other managers of such corporation, partnership, limited liability company or other entity.  Unless the context otherwise requires, each reference to Subsidiaries herein shall be a reference to Subsidiaries of any Borrower.

“Tangible Assets” shall mean the aggregate total of all assets appearing on the consolidated balance sheets of the Borrowers prepared in accordance with GAAP (with Inventory being valued at the lower of cost or market), after deducting all proper reserves (including reserves for Depreciation) minus the sum of (i) goodwill, patents, trademarks, prepaid expenses, deposits, deferred charges and other personal property which is classified as intangible property in accordance with GAAP, and (ii) any amounts due from shareholders, Affiliates, officers or employees of the Borrowers.  

 

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“Tangible Net Worth” shall mean at any time the total of Tangible Assets minus Liabilities plus Subordinated Debt.

“Taxes” shall mean any and all present and future taxes, duties, levies, imposts, deductions, assessments, charges or withholdings, and any and all liabilities (including interest and penalties and other additions to taxes) with respect to the foregoing.

“Term Interest Rate” shall mean, with respect to any Loan, the Borrowing Agent’s option from time to time of (i) a per annum rate of interest equal to the LIBOR Rate plus two and fifteen hundredths percent (2.15%), or (ii) a floating per annum rate of interest equal to the Base Rate.

“Term Loan” shall mean the direct advance made by the Bank to the Borrowers in the form of a term loan under and pursuant to this Agreement, as set forth in Section 2.2 of this Agreement.

“Term Loan Commitment” shall mean Four Million Five Hundred Thousand and 00/100 Dollars ($4,500,000.00).

“Term Loan Mandatory Prepayment” shall have the meaning set forth in Section 2.2(d) hereof.

“Term Loan Maturity Date” shall mean June 30, 2012, unless extended by the Bank pursuant to any modification, extension or renewal note executed by the Borrowers and accepted by the Bank in its sole and absolute discretion in substitution for the Term Note.

“Term Note” shall mean a term note in the form prepared by and acceptable to the Bank, dated as of the date hereof, in the amount of the Term Loan Commitment and maturing on the Term Loan Maturity Date, duly executed by the Borrowers and made jointly and severally payable to the order of the Bank, together with any and all renewal, extension, modification or replacement notes executed by the Borrowers and delivered to the Bank and given in substitution therefor.

“Total Debt” shall mean all Debt of the Borrowers determined on a consolidated basis.

“UCC” shall mean the Uniform Commercial Code in effect in the state of Illinois from time to time.

“Unmatured Event of Default” shall mean any event which, with the giving of notice, the passage of time or both, would constitute an Event of Default.

“Voidable Transfer” shall have the meaning set forth in Section 13.21 hereof. 

1.2                   Accounting
Terms. Any accounting terms used in this Agreement which are not specifically defined herein shall have the meanings
customarily given them in accordance with GAAP. Calculations and determinations of financial and accounting terms used and not
otherwise specifically defined hereunder and the preparation of financial statements to be furnished to the Bank pursuant hereto
shall be made and prepared, both as to classification of items and as to amount, in accordance with sound accounting practices and
GAAP as used in the preparation of the consolidated financial statements of the Borrowers on the date of this Agreement. If any
changes in accounting principles or practices from those used in the preparation of the financial statements are hereafter
occasioned by the promulgation of rules, regulations, pronouncements and opinions by or required by the Financial Accounting
Standards Board or the American Institute of Certified Public Accountants (or any successor thereto or agencies with similar
functions), which results in a material change in the method of accounting in the financial statements  

 

16

required to be furnished to the Bank hereunder or in the calculation of financial covenants, standards or terms contained in this Agreement, the parties hereto agree to enter into good faith negotiations to amend such provisions so as equitably to reflect such changes to the end that the criteria for evaluating the financial condition and performance of the Borrowers will be the same after such changes as they were before such changes; and until any such amendment is agreed on and/or if the parties fail to agree on the amendment of such provisions, Borrowers will furnish consolidated financial statements in accordance with such changes, but shall provide calculations for all financial covenants, perform all financial covenants and otherwise observe all financial standards and terms in accordance with applicable accounting principles and practices in effect immediately prior to such changes.  

1.3                     Other Terms Defined in
UCC. All other capitalized words and phrases used herein and not otherwise specifically defined herein
shall have the respective meanings assigned to such terms in the UCC, to the extent the same are used or defined
therein.

1.4                     Other Interpretive Provisions.

(a)          The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.  Whenever the context so requires, the neuter gender includes the masculine and feminine, the single number includes the plural, and vice versa, and in particular the word “Borrower” shall be so construed.

(b)          Section and Schedule references are to this Agreement unless otherwise specified.  The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

(c)          The term “including” is not limiting, and means “including, without limitation”.

(d)          In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding”, and the word “through” means “to and including”.

(e)          Unless otherwise expressly provided herein, (i) references to agreements (including this Agreement and the other Loan Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, supplements and other modifications thereto, provided, however, that the foregoing provision shall not limit or otherwise adversely affect any of the Bank’s rights or remedies in the event any such amendments, restatements, supplements or other modifications are prohibited by the terms of any Loan Document, and (ii) references to any statute or regulation shall be construed as including all statutory and regulatory provisions amending, replacing, supplementing or interpreting such
statute or regulation.

(f)           To the extent any of the provisions of the other Loan Documents are inconsistent with the terms of this Agreement, the provisions of this Agreement shall govern.

(g)          This Agreement and the other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters.  All such limitations, tests and measurements are cumulative and each shall be performed in accordance with its terms.

 

17

	
            Section 2.
 	
            COMMITMENT OF THE BANK.
 

	
             
 	
            2.1
 	
            Revolving Loans.
 

(a)          Revolving Loan
Commitment. Subject to the terms and conditions of this Agreement and the other Loan Documents, and in
reliance upon the representations and warranties of each Borrowing Agent set forth herein and in the other Loan Documents, the
Bank agrees to make such Revolving Loans at such times as the Borrowing Agent may from time to time request until, but not
including, the Revolving Loan Maturity Date, and in such amounts as the Borrowing Agent may from time to time request, provided,
however, that the aggregate principal balance of all Revolving Loans outstanding at any time shall not exceed the Revolving Loan
Availability. Revolving Loans made by the Bank may be repaid and, subject to the terms and conditions hereof, borrowed again up
to, but not including the Revolving Loan Maturity Date unless the Revolving Loans are otherwise accelerated, terminated or
extended as provided in this Agreement. The Revolving Loans shall be used by the Borrowers solely for the purpose of (i)
refinancing certain existing Senior Debt, (ii) financing their working capital requirements, (iii) financing certain transaction
costs, and (iv) for general corporate purposes.

(b)          Revolving Loan Interest and Payments.  Except as otherwise provided in this Section 2.1(b), the principal amount of the Revolving Loans outstanding from time to time shall bear interest at the applicable Revolving Interest Rate.  Accrued and unpaid interest on the unpaid principal balance of all Revolving Loans outstanding from time to time which are Base Rate Loans, shall be due and payable monthly, in arrears, commencing on May 31, 2007 and continuing on the last day of each calendar month thereafter, and on the Revolving Loan Maturity Date.  Accrued and unpaid interest on the unpaid principal balance of all Revolving Loans outstanding from time to time which are LIBOR Loans shall be payable
on the last Business Day of each Interest Period (provided, however, that for Interest Periods of six months, accrued interest shall also be paid on the date which is three months from the first day of such Interest Period), commencing on the first such date to occur after the date hereof, on the date of any principal repayment of a LIBOR Loan and on the Revolving Loan Maturity Date. From and after maturity, or after the occurrence and during the continuation of an Event of Default, interest on the outstanding principal balance of the Revolving Loans, at the option of the Bank, may accrue at the Default Rate and shall be payable upon demand from the Bank.

(c)          Revolving Loan Principal Payments.

(i)           Revolving Loan Mandatory Payments.  All Revolving Loans hereunder shall be repaid by the Borrowers on the Revolving Loan Maturity Date, unless payable sooner pursuant to the provisions of this Agreement.  In the event the aggregate outstanding principal balance of all Revolving Loans and Letter of Credit Obligations hereunder exceeds the Revolving Loan Availability, the Borrowers shall, without notice or demand of any kind, immediately make such repayments of the Revolving Loans or take such other actions as are satisfactory to the Bank as shall be necessary to eliminate such excess. 

(ii)          Optional
Prepayments. The Borrowers may from time to time prepay the Revolving Loans, in whole or in part, without
any prepayment penalty whatsoever, provided that any prepayment of the entire principal balance of the Base Rate Loans shall
include accrued interest on such Base Rate Loans to the date of such prepayment, and further provided that any prepayment of any
LIBOR Rate Loans shall include accrued interest on such LIBOR Rate Loans to the date of such prepayment together with any
applicable LIBOR breakage obligations arising under Section 2.4(a) as a result of such LIBOR Rate Loan prepayment. 

 

18

	
             
 	
            2.2
 	
            Term Loan.
 

(a)          Term Loan Commitment.  Subject to the terms and conditions of this Agreement and the other Loan Documents, and in reliance upon the representations and warranties of each Borrower set forth herein and in the other Loan Documents, the Bank agrees to make a Term Loan equal to the Term Loan Commitment.  The Term Loan shall be available to the Borrowers in a single principal advance on such date as the conditions set forth in Section 3 shall have been satisfied.  The Term Loan shall be used by the Borrowers solely for the purposes of (i) funding the purchase price payable under the Acquisition Agreement and the costs and expenses (including legal fees) associated with the Acquisition and all related
transactions (including the costs and expenses of obtaining the credit facilities provided under and the closing on the Agreement and the other Loan Documents) and (ii) to the extent of any excess proceeds of the Term Loan, financing their working capital requirements and general corporate purposes.  The Term Loan may be prepaid in whole or in part at any time subject to Section 2.2(e), but shall be due in full on the Term Loan Maturity Date, unless the credit extended under the Term Loan is otherwise accelerated, terminated or extended as provided in this Agreement.

(b)          Term Loan Interest and Payments.  Except as otherwise provided in this Section 2.2(b), the principal amount of the Term Loan outstanding from time to time shall bear interest at the applicable Term Interest Rate.  Accrued and unpaid interest on that portion of the principal balance of the Term Loan outstanding from time to time which is a Base Rate Loan, shall be due and payable monthly, in arrears, commencing on May 31, 2007 and continuing on the last day of each calendar month thereafter, and on the Term Loan Maturity Date.  Accrued and unpaid interest on those portions of the principal balance of the Term Loan outstanding from time to time which are LIBOR Loans shall be payable on the last
Business Day of each Interest Period (provided, however, that for Interest Periods of six months, accrued interest shall also be paid on the date which is three months from the first day of such Interest Period), commencing on the first such date to occur after the date hereof, on the date of any principal repayment of a LIBOR Loan and on the Term Loan Maturity Date.  From and after maturity, or after the occurrence and during the continuation of an Event of Default, interest on the outstanding principal balance of the Term Loan, at the option of the Bank, may accrue at the Default Rate and shall be payable upon demand from the Bank.

(c)          Term Loan Principal Payments.  The outstanding principal balance of the Term Loan shall be repaid in installments, commencing on September 30, 2007, payable on the last day of each fiscal quarter during the periods set forth below, in the following amounts:

	
             
 	
            Period
 	
            Quarterly Installment
 

	
             
 	
            September 30, 2007 through March 31, 2008
 	
            $112,500
 

	
             
 	
            June 30, 2008 through March 31, 2009
 	
            $140,625
 

	
             
 	
            June 30, 2009 through March 31, 2010
 	
            $225,000
 

	
             
 	
            June 31, 2010 through March 31, 2011
 	
            $309,375
 

	
             
 	
            June 30, 2011 through March 31, 2012
 	
            $337,500
 

 

19

Principal amounts repaid on the Term Note may not be borrowed again.  The remaining unpaid principal of the Term Loan, together with all accrued and unpaid interest thereon, shall be due and payable on the Term Loan Maturity Date.

(d)          Term Loan Mandatory Prepayment.  The Borrowers shall make a prepayment (the “Term Loan Mandatory Prepayment”) of the outstanding principal amount of the Term Loan until paid in full upon the occurrence of any of the following events, at the following times and in the following amounts:

(i)           Concurrently with the receipt by the Borrowers (or any of them) of any Net Cash Proceeds from any Asset Disposition, in an amount equal to 100% of such Net Cash Proceeds.

(ii)          Concurrently with the receipt by the Borrowers (or any of them) of any Net Cash Proceeds from any issuance of Capital Securities (excluding (A) any issuance of Capital Securities pursuant to any employee or director option program, benefit plan or compensation program or any issuance of Capital Securities as payment of a stock dividend to the holders of the Capital Securities of IntriCon, and (B) any issuance by a Subsidiary to a Borrower or another Subsidiary), in an amount equal to 100% of such Net Cash Proceeds.

(iii)         Concurrently with the receipt by the Borrowers (of any of them) of any Net Cash Proceeds from any issuance of Debt (other than Debt permitted under Section 9.1(e)) in an amount equal to 100% of such net Cash Proceeds.

Any prepayments under this subsection (d) shall be applied against the remaining unpaid installments of the Term Loan principal in the inverse order of their maturity.

(e)          Optional Prepayments.  The Borrowers may from time to time prepay the portions of the Term Loan which are Base Rate Loans, in whole or in part, without any prepayment penalty whatsoever, provided that any prepayment of the entire principal balance of the Base Rate Loans shall include accrued interest on such Base Rate Loans to the date of such prepayment, and further provided that any prepayment of any LIBOR Rate Loans shall include accrued interest on such LIBOR Rate Loans to the date of such prepayment together with any applicable LIBOR breakage obligations arising under Section 2.4(a) as a result of such LIBOR Rate Loan prepayment.  Any prepayments under this subsection (e) shall be applied
against the remaining unpaid installments of the Term Loan principal in the inverse order of their maturity. 

	
             
 	
            2.3
 	
             [RESERVED].
 

	
             
 	
            2.4
 	
             Additional LIBOR Loan Provisions.
 

(a)          LIBOR Loan Prepayments.  If, for any reason, a LIBOR Loan is paid prior to the last Business Day of any Interest Period, whether voluntary, involuntary, by reason of acceleration or otherwise, each such prepayment of a LIBOR Loan will be accompanied by the amount of accrued interest on the amount prepaid and any and all costs, expenses, penalties and charges incurred by the Bank as a result of the early termination or breakage of a LIBOR Loan, plus the amount, if any, by which (i) the additional interest which would have been payable during the Interest Period on the LIBOR Loan prepaid had it not been prepaid, exceeds (ii) the interest which would have been recoverable by the Bank by placing the amount prepaid on deposit in the domestic
certificate of deposit market, the eurodollar deposit market, or other 

 

20

appropriate money market selected by the Bank, for a period starting on the date on which it was prepaid and ending on the last day of the Interest Period for such LIBOR Loan.  The amount of any such loss or expense payable by the Borrowers (or any of them) to the Bank under this Section shall be determined in the Bank’s sole discretion based upon the assumption that the Bank funded its loan commitment for LIBOR Loans in the London Interbank Eurodollar market and using any reasonable attribution or averaging methods which the Bank deems appropriate and practical, provided, however, that the Bank is not obligated to accept a deposit in the London Interbank Eurodollar market in order to charge interest on a LIBOR Loan at the LIBOR Rate.

(b)          LIBOR Unavailability.  If the Bank determines in its commercially reasonable discretion (which determination shall be conclusive, absent manifest error) prior to the commencement of any Interest Period that (i) the making or maintenance of any LIBOR Loan would violate any applicable law, rule, regulation or directive, whether or not having the force of law, (ii) United States dollar deposits in the principal amount, and for periods equal to the Interest Period for funding any LIBOR Loan are not available in the London Interbank Eurodollar market in the ordinary course of business, (iii) by reason of circumstances affecting the London Interbank Eurodollar market, adequate and fair means do not exist for ascertaining the LIBOR Rate to be
applicable to the relevant LIBOR Loan, or (iv) the LIBOR Rate does not accurately reflect the cost to the Bank of a LIBOR Loan, the Bank shall promptly notify the Borrowing Agent thereof and, so long as the foregoing conditions continue, none of the Loans may be advanced as a LIBOR Loan thereafter.  In addition, at the Borrowing Agent’s option, each existing LIBOR Loan shall be (i) converted to a Base Rate Loan on the last Business Day of the then existing Interest Period or (ii) due and payable on the last Business Day of the then existing Interest Period, without further demand, presentment, protest or notice of any kind, all of which are herby waived by each Borrower.

(c)          Regulatory Change.  In addition, if, after the date hereof, a Regulatory Change shall, in the commercially reasonable discretion of the Bank, make it unlawful for the Bank to make or maintain the LIBOR Loans, then the Bank shall promptly notify the Borrowing Agent and none of the Loans may be advanced as a LIBOR Loan thereafter.  In addition, at the Borrowing Agent’s option, each existing LIBOR Loan shall be (i) converted to a Base Rate Loan on the last Business Day of the then existing Interest Period or (ii) due and payable on the last Business Day of the then existing Interest Period, without further demand, presentment, protest or notice of any kind, all of which are herby waived by each Borrower.

(d)          LIBOR Indemnity.  If any Regulatory Change, or compliance by the Bank or any Person controlling the Bank with any request or directive of any governmental authority, central bank or comparable agency (whether or not having the force of law) shall (a) impose, modify or deem applicable any assessment, reserve, special deposit or similar requirement against assets held by, or deposits in or for the account of or loans by, or any other acquisition of funds or disbursements by, the Bank; (b) subject the Bank or any LIBOR Loan to any tax, duty, charge, stamp tax or fee or change the basis of taxation of payments to the Bank of principal or interest due from the Borrowers to the Bank hereunder (other than a change in the taxation of the overall net
income of the Bank); or (c) impose on the Bank any other condition regarding such LIBOR Loan or the Bank’s funding thereof,
and the Bank shall determine in its commercially reasonable discretion (which determination shall be conclusive, absent manifest
error) that the result of the foregoing is to increase the cost to, or to impose a cost on, the Bank or such controlling Person of
making or maintaining such LIBOR Loan or to reduce the amount of principal or interest received by the Bank hereunder, then the
Borrowers shall jointly and severally pay to the Bank or such controlling Person, on demand, such additional amounts as the Bank
shall, from time to time, determine are sufficient to compensate and indemnify the Bank for such increased cost or reduced amount.

 

21

2.5                   Interest and Fee Computation; Collection
of Funds. Except as otherwise set forth herein, all interest and fees shall be calculated on the basis of
a year consisting of 360 days and shall be paid for the actual number of days elapsed. Principal payments submitted in funds not
immediately available shall continue to bear interest until collected. If any payment to be made by the Borrowers hereunder or
under any Note shall become due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day
and such extension of time shall be included in computing any interest in respect of such payment. Notwithstanding anything to the
contrary contained herein, the final payment due under any of the Loans must be made by wire transfer or other immediately
available funds. All payments made by the Borrowers hereunder or under any of the Loan Documents shall be made without setoff,
counterclaim, or other defense.

2.6                   Late Charge.  If any payment of interest or principal due hereunder is not made within ten (10) days after such payment is due in accordance with the terms hereof, then, in addition to the payment of the amount so due, the Borrowers shall pay to the Bank a “late charge” of five cents for each whole dollar so overdue to defray part of the cost of collection and handling such late payment.  Each Borrower agrees that the damages to be sustained by the Bank for the detriment caused by any late payment are extremely difficult and impractical to ascertain, and that the amount of five cents for each one dollar due is a reasonable estimate of such damages, does not constitute interest, and is not a penalty.

2.7                   Letters of Credit. Subject to the terms and conditions of this Agreement and upon (i) the execution by the Borrowing Agent and the Bank of a
Master Letter of Credit Agreement in form and substance acceptable to the Bank (together with all amendments, modifications and
restatements thereof, the “Master Letter of Credit Agreement”), and (ii)
the execution and delivery by the Borrowing Agent, and the acceptance by the Bank, in its sole and absolute discretion, of a
Letter of Credit Application, the Bank agrees to issue for the account of the applicable Borrower such Letters of Credit in the
standard form of the Bank and otherwise in form and substance acceptable to the Bank, from time to time during the term of this
Agreement, provided that the Letter of Credit Obligations may not at any time exceed the Letter of Credit Commitment and provided
further, that no Letter of Credit shall have an expiration date later than the Letter of Credit Maturity Date. The amount of any
payments made by the Bank with respect to draws made by a beneficiary under a Letter of Credit for which the Borrowers have failed
to reimburse the Bank upon the earlier of (i) the Bank’s demand for repayment, or (ii) five (5) days from the date of such
payment to such beneficiary by the Bank, shall be deemed to have been converted to a Revolving Loan as of the date such payment
was made by the Bank to such beneficiary. Upon the occurrence of an Event of a Default and at the option of the Bank, all Letter
of Credit Obligations shall be converted to Revolving Loans consisting of Base Rate Loans, all without demand, presentment,
protest or notice of any kind, all of which are hereby waived by each Borrower, for the purpose of cash collateralizing the Letter
of Credit Obligations as contemplated by Section 12.10 below. To the extent the
provisions of the Master Letter of Credit Agreement differ from, or are inconsistent with, the terms of this Agreement, the
provisions of this Agreement shall govern.

	
             
 	
            2.8
 	
            Taxes.
 

(a)          All payments made by the Borrowers (or any of them) under this Agreement shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any governmental authority, excluding net income taxes and franchise taxes (imposed in lieu of net income taxes) imposed on the Bank as a result of a present or former connection between the 

 

22

Bank and the jurisdiction of the governmental authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from the Bank having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any other Loan Document).  If any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings (collectively, “Non-Excluded Taxes”) or Other Taxes are required to be withheld from any amounts payable to the Bank hereunder, the amounts so payable to the Bank shall be increased to the extent necessary to yield to the Bank (after payment of all Non-Excluded Taxes and Other Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement,
provided, however, that the Borrowers shall not be required to increase any such amounts payable to the Bank with respect to any Non-Excluded Taxes that are attributable to the Bank’s failure to comply with the requirements of Section 2.8(c).

(b)          The Borrowers shall pay any Other Taxes to the relevant governmental authority in accordance with applicable law.

(c)          At the request of the Borrowing Agent and at the Borrowers’ sole cost, the Bank shall take reasonable steps to (i) contest its liability for any Non-Excluded Taxes or Other Taxes that have not been paid, or (ii) seek a refund of any Non-Excluded Taxes or Other Taxes that have been paid.

(d)          Whenever any Non-Excluded Taxes or Other Taxes are payable by the Borrowers, as promptly as possible thereafter the Borrowing Agent shall send to the Bank a certified copy of an original official receipt received by the Borrower showing payment thereof.  If any Borrower fails to pay any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing authority or fails to remit to the Bank the required receipts or other required documentary evidence or if any governmental authority seeks to collect a Non-Excluded Tax or Other Tax directly from the Bank for any other reason, the Borrowers shall jointly and severally indemnify the Bank on an after-tax basis for any incremental taxes, interest or penalties that may become payable by the Bank.

(e)          The agreements in this Section shall survive the satisfaction and payment of the Obligations and the termination of this Agreement.

2.9                   All Loans to Constitute Single
Obligation. The Loans shall constitute one general joint and several obligation of the Borrowers, and
shall be secured by Bank’s first priority security interest in and Lien upon all of the Collateral and by all other security
interests, Liens, claims and encumbrances heretofore, now or at any time or times hereafter granted by the Borrowers (or any of
them) to the Bank.

2.10                 Borrowing Agency Provisions. Each
Borrower hereby irrevocably designates the Borrowing Agent to be its attorney and agent and in such capacity to borrow, sign and
endorse notes, and execute and deliver all instruments, documents, writings and further assurances now or hereafter required
hereunder, on behalf of such Borrower, and hereby authorizes the Bank to pay over or credit all Loan proceeds in accordance with
the request of the Borrowing Agent. Although they are separate legal entities that observe all corporate and organizational
formalities consistent with such separateness, the Borrowers are part of one consolidated organization constituting a single
economic and business enterprise and share an identity of interests such that any benefit received by any Borrower benefits the
other Borrowers. The handling of this credit facility as a co-borrowing facility in the manner set forth in this Agreement is
solely as an accommodation to the Borrowers and at their request. The Bank shall not incur liability to any Borrower or any other
Person as a result thereof. To induce the Bank to do so and in consideration thereof, each Borrower hereby indemnifies the Bank
and holds the Bank harmless from and against any 

 

23

and all liabilities, expenses, losses, damages and claims of damage or injury asserted against the Bank by any Person arising from or incurred by reason of the handling of the financing arrangements of the Borrowers as provided herein, reliance by the Bank on any request or instruction from the Borrowing Agent or any other action taken by the Bank with respect to this Section 2.10, except due to willful misconduct or gross negligence of the Bank.

2.11                 Obligations Joint and Several. All
obligations of the Borrowers hereunder and under the other Loan Documents shall be joint and several. Each Borrower hereby agrees
to make payment upon the maturity of the Obligations, whether by acceleration or otherwise, and such obligation and liability on
the part of each Borrower shall in no way be impaired or otherwise affected by any act or omission of the Bank (other than acts or
omissions resulting from the gross negligence or willful misconduct of the Bank) including, without limitation any extension,
renewal or forbearance granted by the Bank to any Borrower, any failure of the Bank to pursue or preserve its rights against any
Borrower or the release by the Bank of any collateral now or hereafter given as security for all or any part of such
obligations.

2.12                 Waiver of Subrogation. Subject
only to the provisions of Section 2.13 below, each Borrower expressly waives any
and all rights of subrogation, reimbursement, indemnity, exoneration, contribution or any other claim which such Borrower may now
or hereafter have against any other Borrower or any other Obligor, or against or with respect to any other Borrower’s
property (including, without limitation, any property which is collateral for the Obligations), arising from the existence or
performance of this Agreement, until repayment in full of the Obligations. In addition, each Borrower hereby expressly waives: (a)
notice of the acceptance by the Bank of this Agreement; (b) notice of the existence or creation or non-payment of all or any of
the Obligations; (c) presentment, demand, notice of dishonor, protest, and all other notices whatsoever; (d) all diligence in
collection or protection of or realization upon the Obligations or any thereof, any obligation hereunder, or any security for or
guaranty of any of the foregoing; and (e) any event or conduct or action of any other Borrower, the Bank or any other party that
might otherwise constitute a legal or equitable discharge of a surety or guarantor but for this provision, other than payment in
full of the Obligations.

2.13                 Contribution and Indemnification Among the
Borrowers. Each Borrower is obligated to repay the Obligations as joint and several obligors under this
Agreement. To the extent that any Borrower shall, under this Agreement as a joint and several obligor, repay any of the
Obligations constituting Loans made to another Borrower (an “Accommodation Payment”), then the Borrower making such Accommodation Payment shall be entitled to contribution and indemnification from,
and be reimbursed by, each of the other Borrowers in an amount, for each of such other Borrowers, equal to a fraction of such
Accommodation Payment, the numerator of which fraction is such other Borrower’s “Allocable Amount” (as defined
below) and the denominator of which the sum of the Allocable Amounts of all of the Borrowers. As of any date of determination, the
“Allocable Amount” of each Borrower shall be equal to the maximum amount of liability for Accommodation Payments which
could be asserted against such Borrower hereunder without (a) rendering such Borrower “insolvent” within the meaning of
Section 101(31) of Title 11 of the Bankruptcy Code, Section 2 of the Uniform Fraudulent Transfer Act (the “UFTA”), or Section 2 of the Uniform Fraudulent Conveyance Act (“UFCA”), (b) leaving such Borrower with unreasonably small capital or assets, within the
meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA, or Section 4 of the UFCA, or (c) leaving such Borrower
unable to pay its debts as they become due within the meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA, or
Section 5 of the UFCA. All rights and claims of contribution, indemnification and reimbursement under this Section 2.13 shall be subordinate in right of payment to the prior payment in full of the
Obligations.

 

24

	
            Section 3.
 	
            CONDITIONS OF BORROWING.
 

3.1                   Conditions of Initial
Loan. Notwithstanding any other provision of this Agreement, the Bank shall not be required to disburse or
make the Term Loan or the initial Revolving Loan, if any of the following conditions shall have occurred:

(a)          Delivery of Documents.  The Borrowers (or any of them) shall have failed to deliver to the Bank any of the following, all of which must be satisfactory to the Bank and the Bank’s counsel in form, substance and execution, except to the extent waived by Bank in its sole discretion:

(i)           Loan Agreement.  Two copies of this Agreement duly executed by the Borrowers.

(ii)          Revolving Note.  A Revolving Note duly executed by the Borrowers, in the form prepared by and acceptable to the Bank.

(iii)         Term Note.  A Term Note duly executed by the Borrowers, in the form prepared by and acceptable to the Bank.

(iv)         Master Letter of Credit Agreement.  A Master Letter of Credit Agreement prepared by and acceptable to the Bank, duly executed by the Borrowing Agent in favor of the Bank.

(v)          Collateral Access Agreement.  Collateral Access Agreements dated as of the date of this Agreement, from the owner, lessor or mortgagee, as the case may be, (other than any Borrower or any of its Subsidiaries) of any real estate whereon any Collateral is stored or otherwise located (except to the extent that the value of the Inventory stored at any such location(s) does not exceed $100,000 at any such location or $200,000 for all such locations in the aggregate), in the form prepared by and reasonably acceptable to the Bank; provided that, to the extent Borrowers have been unable to obtain a Collateral Access Agreement with respect to any such location after using all commercially reasonable
efforts, this condition may be satisfied by the Bank establishing a reserve against the Borrowing Base in the amount of three (3) months rent and all other charges payable by the applicable Borrower(s) under the lease for such location (or, if applicable, other agreement (such as a warehouse agreement) pursuant to which Borrower(s) are present on or storing the Collateral at such location).

(b)          Borrowing Base Certificate.  A Borrowing Base Certificate in the form prepared by the Bank, certified as accurate by the Borrowing Agent, and dated as of the Business Day immediately preceding the date such Loan is requested to be made. 

(c)          Search Results; Lien Terminations.  Copies of UCC search reports dated such a date as is reasonably acceptable to the Bank, listing all effective financing statements which name the Borrowers (or any of them) or the Seller, under their present names and any previous names, as debtors, together with (i) copies of such financing statements, (ii) payoff letters evidencing repayment in full of all existing Debt to be repaid with the Loans, the termination of all agreements relating thereto and the release of all Liens granted in connection therewith, with UCC or other appropriate termination statements and documents effective to evidence the foregoing (other than Permitted Liens), and (iii) such other UCC termination statements as the Bank may
reasonably request.

 

25

(d)          Organizational and Authorization Documents.  Copies of (i) the Articles of Incorporation and Bylaws of each Borrower; (ii) resolutions of the board of directors of each Borrower approving and authorizing such Person’s execution, delivery and performance of the Loan Documents to which it is party and the transactions contemplated thereby; (iii) signature and incumbency certificates of the officers of each Borrower, executing any of the Loan Documents, each of which such Borrower hereby certifies to be true and complete, and in full force and effect without modification, it being understood that the Bank may conclusively rely on each such document and certificate until formally advised by such Borrower of any changes therein; and (iv)
good standing certificates in the state of incorporation of each Borrower and in each other state requested by the Bank.

(e)          Insurance.  Evidence satisfactory to the Bank of the existence of insurance required to be maintained pursuant to Section 8.6, together with evidence that the Bank has been named as a lender’s loss payee and as an additional insured on all related insurance policies.  

(f)           Lockbox Agreement.  The Master Cash Management Service Agreement, duly executed by the Borrowers and the Bank (the “Lockbox Agreement”), in the form prepared by and acceptable to the Bank. 

(g)          Pledged Equity Interests.  Certificates, instruments, agreements, acknowledgements and other documents required by Section 6.12.

(h)          Acquisition.  Evidence satisfactory to the Bank that each of the following conditions has been satisfied:

The Acquisition Agreement shall have been duly executed and delivered by the parties thereto and shall be in full force and effect.  All material conditions precedent to the Acquisition pursuant to the Acquisition Agreement shall have been satisfied (except to the extent waived with the written consent of the Bank, which consent shall not be unreasonably withheld or delayed).  All necessary authorizations, consents, approvals, exceptions or other actions by or notices to or filings with any court or administrative or governmental body or other Person required in connection with the execution, delivery or performance of the Acquisition Agreement or the consummation of the transactions contemplated thereby shall be final and in full force and effect.  The Bank  shall have received a copy of the Acquisition Agreement and all other Acquisition Documents, certified by a duly authorized
officer of the Seller, dated the date of closing, as true, correct and complete. 

(i)           Closing Costs.  Evidence that the out-of-pocket costs, expenses and fees (including attorneys’ fees) paid or incurred by the Bank in connection with the preparation, negotiation and closing of this Agreement and the other Loan Documents have been (or shall be simultaneously) paid in full.

(j)           Opinion.  A favorable opinion, dated on or about the date hereof, of Blank Rome LLP, counsel to Borrowers, covering such matters as the Bank may reasonably request (and each Borrower hereby instructs such counsel to deliver such opinion to the Bank).  

(k)          Financial
Statements. (i) Audited consolidated financial statements for the Borrowers and their respective
Subsidiaries for the fiscal years ending December 31, 2004, December 31, 2005 and December 31, 2006, and (ii) unaudited interim
consolidated financial statements for the Borrowers and their respective Subsidiaries for each fiscal month ended after December 31, 2006 but at least thirty (30) days before the date hereof. 

 

26

(l)           Projections.  Consolidated projected income statements, balance sheets and cash flow statements for Borrowers’ fiscal year 2007 prepared by the Borrowers and giving effect to the Loans and the use of proceeds therefrom, and giving effect to the consummation of the Acquisition.

(m)         Due Diligence.  The Bank shall not be satisfied in any respect with the results of any legal or business related due diligence.  

(n)          Appraisals. The Bank shall not have received a field audit examination and appraisals (including appraisals of fixed assets and inventory) requested by the Bank, the results of which are satisfactory to the Bank, in its sole and absolute discretion.

(o)          Additional Documents.  Such other certificates, financial statements, schedules, resolutions, opinions of counsel, notes and other documents which are provided for hereunder or which the Bank shall require.

(p)          Event of Default.  Any Event of Default, or Unmatured Event of Default shall have occurred and be continuing.

(q)          Material Adverse Effect.  The occurrence of any event having a Material Adverse Effect upon any Borrower.

(r)           Litigation.  Any litigation or governmental proceeding shall have been instituted against any Borrower or any of its officers or shareholders having a Materially Adverse Effect upon such Borrower.

(s)           Representations and Warranties.  Any representation or warranty of the Borrowers (or any of them) contained herein or in any Loan Document shall be untrue or incorrect in any material respect as of the date of any Loan as though made on such date, except to the extent such representation or warranty expressly relates to an earlier date.

3.2                   Conditions Precedent to all
Loans. The obligation of the Bank to make any Loan hereunder shall be subject to the following additional
conditions precedent (and any request for a Loan shall be deemed a representation by the Borrowers that the following are
satisfied): 

(a)          Before and after giving effect to such Loan, the representation and warranties contained in Section 7 shall be true and correct in all material respects, as though made on the date of such Loan, except to the extent such representation and warranty, by its express terms, relates solely to a prior date.

(b)          Before and after giving effect to such Loan, no Default or Event of Default shall have occurred and be continuing.

	
            Section 4.
 	
            NOTES EVIDENCING LOANS.
 

4.1                   Revolving Note.
The Revolving Loans and the Letter of Credit Obligations shall be evidenced by the Revolving Note. At the time of the initial
disbursement of a Revolving Loan and at each time any additional Revolving Loan shall be requested hereunder or a repayment made
in whole or 

 

27

in part thereon, a notation thereof shall be made on the books and records of the Bank.  All amounts recorded shall be, absent demonstrable error, conclusive and binding evidence of (i) the principal amount of the Revolving Loans advanced hereunder and the amount of all Letter of Credit Obligations, (ii) any accrued and unpaid interest owing on the Revolving Loans, and (iii) all amounts repaid on the Revolving Loans or the Letter of Credit Obligations.  The failure to record any such amount or any error in recording such amounts shall not, however, limit or otherwise affect the joint and several obligations of the Borrowers under the Revolving Note to repay the principal amount of the Revolving Loans, together with all interest accruing thereon.

4.2                   Term Note. The
Term Loan shall be evidenced by the Term Note. At the time of the disbursement of the Term Loan or a repayment made in whole or in
part thereon, a notation thereof shall be made on the books and records of the Bank. All amounts recorded shall be, absent
demonstrable error, conclusive and binding evidence of (i) the principal amount of the Term Loan advanced hereunder, (ii) any
accrued and unpaid interest owing on the Term Loan and (iii) all amounts repaid on the Term Loan. The failure to record any such
amount or any error in recording such amounts shall not, however, limit or otherwise affect the joint and several obligations of
the Borrowers under the Term Note to repay the principal amount of the Term Loan, together with all interest accruing
thereon.

	
            Section 5.
 	
            MANNER OF BORROWING.
 

5.1                   Borrowing Procedures. Each Revolving Loan and the Term Loan, or any portion of the Term Loan, may be advanced either as a Base Rate Loan or a
LIBOR Loan, provided, however, that at any time, the Borrowing Agent may identify no more than six (6) Revolving Loans or portions
of the Term Loan which may be LIBOR Loans. Each Loan shall be made available to the Borrowers upon any written, verbal,
electronic, telephonic or telecopy loan request from the Borrowing Agent which the Bank in good faith believes to emanate from a
properly authorized representative of such Borrower, whether or not that is in fact the case. Each such request shall be effective
upon receipt by the Bank, shall be irrevocable, and shall specify the date, amount and type of borrowing and, in the case of a
LIBOR Loan, the initial Interest Period therefor. The Borrowing Agent shall select Interest Periods so as not to require a payment
or prepayment of any LIBOR Loan during an Interest Period for such LIBOR Loan. The final Interest Period for any LIBOR Loan must
be such that its expiration occurs on or before the Maturity Date of such Loan. A request for a Base Rate Loan must be received by
the Bank no later than 11:00 a.m. Chicago, Illinois time, on the day it is to be funded. A request for a LIBOR Loan must be (i)
received by the Bank no later than 11:00 a.m. Chicago, Illinois time, three days before the day it is to be funded, and (ii) in an
amount equal to One Hundred Thousand and 00/100 Dollars ($100,000.00) or a higher integral multiple of One Hundred Thousand and
00/100 Dollars ($100,000.00). The proceeds of each Loan shall be made available at the office of the Bank by credit to the account
of the Borrowing Agent or by other means requested by the Borrowing Agent and acceptable to the Bank. Without limiting the
generality of the indemnity provisions set forth in Section 13.20 below, each
Borrower does hereby specifically and irrevocably confirm, ratify and approve all such advances by the Bank and does hereby
indemnify the Bank against losses and expenses (including court costs, attorneys’ and paralegals’ fees) and shall hold
the Bank harmless with respect thereto. 

5.2                   LIBOR Conversion and Continuation
Procedures. Whenever the last day of any Interest Period with respect to any LIBOR Loan would otherwise
occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding
Business Day. Whenever an Interest Period with respect to any LIBOR Loan would otherwise end on a day of a month for which there
is no numerically corresponding day in the calendar month, such Interest Period shall end on the last day of such calendar month,
unless such day is not a Business Day, in which event such Interest Period shall be extended to end on the next Business Day.
[Upon receipt by the Bank of such subsequent notice, the Borrowing Agent may, subject to the terms and conditions of this
Agreement, 

 

28

elect, as of the last day of the applicable Interest Period, to continue any LIBOR Loan having an Interest Period expiring on such day for a different Interest Period, or to convert any such LIBOR Loan to a Base Rate Loan.  Such notice shall, in the case of a conversion to a Base Rate Loan, be given before 11:00 a.m., Chicago time, on the proposed date of such conversion, and in the case of conversion to a LIBOR Loan having a different Interest Period, be given before 11:00 a.m., Chicago time, at least three Business Days prior to the proposed date of such conversion, specifying: (i) the proposed date of conversion; (ii) the aggregate amount of Loans to be converted; (iii) the type of Loans resulting from the proposed conversion; and (iv) the duration of the requested Interest Period.  Absent timely notice of continuation or conversion, each LIBOR Loan shall automatically convert into a Base Rate Loan on
the last day of an applicable Interest Period, unless paid in full on such last day.  The Borrowing Agent may not elect a LIBOR Rate, and an Interest Period for a LIBOR Loan shall not automatically renew, with respect to any principal amount which is scheduled to be repaid before the last day of the applicable Interest Period, and any such amounts shall bear interest at the Base Rate until repaid.

5.3                   Letters of Credit. All Letters of Credit shall bear such application, issuance, renewal, negotiation and other fees and charges as charged
by the Bank according to its standard rates as in effect from time to time or otherwise payable pursuant to the Master Letter of
Credit Agreement. In addition to the foregoing, each standby Letters of Credit issued under and pursuant to this Agreement shall
bear an annual issuance fee equal to one and ninety hundredths percent (1.90%) of the face amount of such standby Letter of
Credit, payable by the Borrowers prior to the issuance by the Bank of such Letter of Credit and annually thereafter, until (i)
such Letter of Credit has expired or has been returned to the Bank, or (ii) the Bank has paid the beneficiary thereunder the full
face amount of such Letter of Credit.

5.4                   Automatic Debit.  In order to effectuate the timely payment of any of the Obligations when due, each Borrower hereby authorizes and directs the Bank, at the Bank’s option, to (a) debit the amount of the Obligations to any ordinary deposit account of the Borrowing Agent, or (b) make a Revolving Loan hereunder to pay the amount of the Obligations; provided that, so long as no Default or Event of Default has occurred and is continuing and sufficiency availability exists under the Borrowing Base, the Bank shall first make a Revolving Loan under the preceding clause (b) to the extent of such availability before exercising its rights under the preceding clause (a).

5.5                   Discretionary Disbursements.  The Bank, in its sole and absolute discretion, may immediately upon notice to the Borrowing Agent, disburse any or all proceeds of the Loans made or available to the Borrowers pursuant to this Agreement to pay any fees, costs, expenses or other amounts required to be paid by the Borrowers hereunder and not so paid.  All monies so disbursed shall be a part of the Obligations, jointly and severally payable by the Borrowers on demand from the Bank.

	
            Section 6.
 	
            SECURITY FOR THE OBLIGATIONS.
 

6.1                   Security for Obligations.  As security for the payment and performance of the Obligations, each Borrower does hereby pledge, assign, transfer, deliver and grant to the Bank, for its own benefit and as agent for its Affiliates, a continuing and unconditional first priority (subject only to Permitted Liens) security interest in and to any and all property of such Borrower, of any kind or description, tangible or intangible, wheresoever located and whether now existing or hereafter arising or acquired, including the following (all of which property, along with the products and proceeds therefrom, are individually and collectively referred to as the “Collateral”):

(a)          all property of, or for the account of, such Borrower now or hereafter coming into the possession, control or custody of, or in transit to, the Bank or any agent or bailee for the Bank or any parent, Affiliate or Subsidiary of the Bank or any participant with the Bank in the Loans (whether for safekeeping, deposit, collection, custody, pledge, transmission or otherwise), 

 

29

including all earnings, dividends, interest, or other rights in connection therewith and the products and proceeds therefrom, including the proceeds of insurance thereon; and

(b)          the additional property of such Borrower, whether now existing or hereafter arising or acquired, and wherever now or hereafter located, together with all additions and accessions thereto, substitutions, betterments and replacements therefor, products and Proceeds therefrom, and all of such Borrower’s books and records and recorded data relating thereto (regardless of the medium of recording or storage), together with all of each such Borrower’s right, title and interest in and to all computer software required to utilize, create, maintain and process any such records or data on electronic media, identified and set forth as follows:

(i)           All Accounts and all Goods whose sale, lease or other disposition by such Borrower has given rise to Accounts and have been returned to, or repossessed or stopped in transit by, such Borrower, or rejected or refused by an Account Debtor;

(ii)          All Inventory, including raw materials, work-in-process and finished goods;

(iii)         All Goods (other than Inventory), including embedded software, Equipment, vehicles, furniture and Fixtures;

(iv)         All Software and computer programs;

(v)          All Securities, Investment Property, Financial Assets and Deposit Accounts; provided that, notwithstanding anything to the contrary contained in the foregoing or otherwise in this Agreement, any Liens created in favor of Bank hereunder and/or under any other Loan Document in the Capital Securities of any Subsidiary that is organized under the laws of a jurisdiction other than the United States or any state thereof or the District of Columbia  (an “Excluded Foreign Subsidiary”) shall be limited to a Lien on and pledge of no more than 65% of the Capital Securities of such Excluded Foreign Subsidiary if a pledge of more than 65% of such Capital Securities of such
Excluded Foreign Subsidiary would, in the reasonable and good faith judgment of Borrower, result in increased tax liability to any Borrower;

(vi)        All Chattel Paper,
Electronic Chattel Paper, Instruments, Documents, Letter of Credit Rights, all proceeds of letters of credit,
Health-Care-Insurance Receivables, Supporting Obligations, notes secured by real estate, Commercial Tort Claims described on
Schedule 6.1. and General Intangibles, including Payment Intangibles; 

(vii)       All Pledged Equity Interests;

(viii)      Without limiting the description of the
property or any rights or interests in the property described above in this definition of Collateral, all of each Borrower’s
rights, titles and interests in and to (a) all money, cash, and other funds; (b) all attachments, accessions, parts and
appurtenances to, all substitutions for, and all replacements of any and all of each Borrower’s equipment, fixtures and other
goods; (c) all of each Borrower’s agreements, as-extracted collateral, tangible chattel paper, electronic chattel paper,
health-care-insurance receivables, leases, lease contracts, lease agreements, payment intangibles, proceeds of letters of credit,
promissory notes, records, and software; (d) all of each Borrower’s franchises, customer lists, insurance refunds,

 

30

insurance refund claims, tax
refunds, tax refund claims, pension plan refunds, pension plan reversions, patents, patent applications, service marks, service
mark applications, trademarks, trademark applications, trade names, domain names (including without limitation, www.intricon.com,www.rti-corp.com, www.rtie.com, and 
www.amecon-magnetics.com) trade secrets, goodwill, copyrights, copyright applications, and
licenses; and (e) all royalty fees, franchise payments, or licensing fees or other amounts owing at any time and from time to time
to any Borrower pursuant to the franchise agreements or similar documents to which it is a party from time to time.

(ix)          All supporting obligations; and

(x)          All Proceeds (whether Cash Proceeds or Noncash Proceeds) of the foregoing property, including all insurance policies and proceeds of insurance payable by reason of loss or damage to the foregoing property, including unearned premiums, and of eminent domain or condemnation awards.

6.2                   
Possession and Transfer of Collateral; Fixtures.  Unless an Event of Default has occurred and is continuing hereunder, the Borrowers shall be entitled to possession or use of the Collateral (other than Instruments or Documents, Tangible Chattel Paper, Investment Property consisting of certificated securities and other Collateral required to be delivered to the Bank pursuant to this Section 6).  The cancellation or surrender of any Note, upon payment or otherwise, shall not affect the right of the Bank to retain the Collateral for any other of the Obligations.  No Borrower shall sell, assign (by operation of law or otherwise), license, lease or otherwise dispose of, or grant any option with respect to any of the Collateral, except that Borrowers (or any of them) may sell (i) Inventory in the ordinary course of business, (ii) any Cash
Equivalent Investments and (iii) Equipment which is obsolete, past its useful working life or no longer needed in the conduct of Borrowers’ business, so long as (x) the fair market value of all Equipment disposed of under this clause (iii) shall not exceed $50,000 in any fiscal year and (y) all proceeds of any such distribution of Equipment under this clause (iii), if not earlier used to purchase replacement or additional Equipment within ninety (90) days following the date of such disposition, shall be delivered by Borrowers to the Bank to be applied to the Obligations in accordance with this Agreement.  Each Borrower hereby represents, warrants and covenants to the Bank that no material portion of the Collateral owned by such Borrower is now or will hereafter become a “fixture” under applicable law.

6.3                   Financing Statements. Each Borrower shall, at the Bank’s request, at any time and from time to time, execute and deliver to the Bank such
financing statements, amendments and other documents and do such acts as the Bank deems necessary in order to establish and
maintain valid, attached and perfected first priority security interests in the Collateral in favor of the Bank, free and clear of
all Liens and claims and rights of third parties whatsoever, except Permitted Liens. Each Borrower hereby irrevocably authorizes
the Bank at any time, and from time to time, to file in any jurisdiction any initial financing statements and amendments thereto
without the signature of such Borrower that (a) indicate the Collateral (i) is comprised of all assets of such Borrower or words
of similar effect, regardless of whether any particular asset comprising a part of the Collateral falls within the scope of
Article 9 of the Uniform Commercial Code of the jurisdiction wherein such financing statement or amendment is filed, or (ii) as
being of an equal or lesser scope or within greater detail as the grant of the security interest set forth herein, and (b) contain
any other information required by Section 5 of Article 9 of the Uniform Commercial Code of the jurisdiction wherein such financing
statement or amendment is filed regarding the sufficiency or filing office acceptance of any financing statement or amendment,
including (i) whether such Borrower is an organization, the type of organization and any Organizational Identification Number
issued to such Borrower, and (ii) in the case of a financing statement filed as a fixture filing or indicating Collateral as
as-extracted collateral or timber to be cut, a sufficient description of the real property to 

 

31

which the Collateral relates.  Each Borrower hereby agrees that a photocopy or other reproduction of this Agreement is sufficient for filing as a financing statement and each Borrower authorizes the Bank to file this Agreement as a financing statement in any jurisdiction.  Each Borrower agrees to furnish any such information to the Bank promptly upon request.  Each Borrower further ratifies and affirms its authorization for any financing statements and/or amendments thereto, executed and filed by the Bank in any jurisdiction prior to the date of this Agreement.  In addition, each Borrower shall make appropriate entries on its books and records disclosing the Bank’s security interests in the Collateral.

6.4                   Additional Collateral. Each Borrower shall pledge, assign or transfer to the Bank immediately upon its demand, such collateral owned by such
Borrower which is other than the collateral addressed in Section 6.1 above, as the
Bank may from time to time request, should the value of the Collateral, in the Bank’s sole and absolute discretion, decline,
deteriorate, depreciate or become impaired, and does hereby grant to the Bank a continuing security interest in such other
collateral, which, when pledged, assigned and transferred to the Bank shall be and become part of the Collateral; provided that, if the additional collateral requested by the Bank shall consist of any leasehold
interests of Borrower in real estate which would require the consent of the applicable landlord in order to create a Lien therein,
Borrowers shall not be deemed to be in default of this Section 6.4 if such landlord
will not grant such consent so long as Borrower have used all commercially reasonable efforts to obtain such consent. The
Bank’s security interests in all of the foregoing Collateral shall be valid, complete and perfected whether or not covered by
a specific assignment.

6.5                   Preservation of the
Collateral. The Bank may, but is not required, to take such actions from time to time as the Bank deems
appropriate to maintain or protect the Collateral. The Bank shall have exercised reasonable care in the custody and preservation
of the Collateral if the Bank takes such action as the Borrowing Agent shall reasonably request in writing which is not
inconsistent with the Bank’s status as a secured party, but the failure of the Bank to comply with any such request shall not
be deemed a failure to exercise reasonable care; provided, however, the Bank’s responsibility for the safekeeping of the
Collateral shall (i) be deemed reasonable if such Collateral is accorded treatment substantially equal to that which the Bank
accords its own property, and (ii) not extend to matters beyond the control of the Bank, including acts of God, war, insurrection,
riot or governmental actions. In addition, any failure of the Bank to preserve or protect any rights with respect to the
Collateral against prior or third parties, or to do any act with respect to preservation of the Collateral, not so requested by a
Borrower, shall not be deemed a failure to exercise reasonable care in the custody or preservation of the Collateral. The
Borrowers shall have the sole responsibility for taking such action as may be necessary, from time to time, to preserve all rights
of the Borrowers and the Bank in the Collateral against prior or third parties. Without limiting the generality of the foregoing,
where Collateral consists in whole or in part of securities, each Borrower represent to, and covenants with, the Bank that such
Borrower has made arrangements for keeping informed of changes or potential changes affecting the securities (including rights to
convert or subscribe, payment of dividends, reorganization or other exchanges, tender offers and voting rights), and such Borrower
agrees that the Bank shall have no responsibility or liability for informing such Borrower of any such or other changes or
potential changes or for taking any action or omitting to take any action with respect thereto.

6.6                   Other Actions as to any and all
Collateral. Each Borrower further agrees to take any other action reasonably requested by the Bank to
ensure the attachment, perfection and first priority of, and the ability of the Bank to enforce, the Bank’s security interest
in any and all of the Collateral, including (a) causing the Bank’s name to be noted as secured party on any certificate of
title for a titled good if such notation is a condition to attachment, perfection or priority of, or ability of the bank to
enforce, the Bank’s security interest in such Collateral, (b) complying with any provision of any statute, regulation or
treaty of the United States as to any Collateral if compliance with such provision is a condition to attachment, perfection or
priority of, or ability of the Bank to enforce, the Bank’s security 

 

32

interest in such Collateral, (c) using all commercially reasonable efforts to obtain governmental and other third party consents and approvals, including any consent of any licensor, lessor or other Person obligated on Collateral, it being understood and agreed, however, that any failure to obtain such consents and approvals may (in accordance with clause (e) of the definition of Eligible Inventory) result in decreased availability under the Borrowing Base, (d) using all commercially reasonable efforts to obtain waivers from mortgagees and landlords in form and substance satisfactory to the Bank, it being understood and agreed, however, that any failure to obtain such waivers may (in accordance with clause (c) of the definition of Eligible Inventory) result in decreased availability under the Borrowing Base, and
(e) taking all actions required by the UCC in effect from time to time or by other law, as applicable in any relevant UCC jurisdiction, or by other law as applicable in any foreign jurisdiction.  Each Borrower further agrees to indemnify and hold the Bank harmless against claims of any Persons not a party to this Agreement concerning disputes arising over the Collateral.

6.7                   Collateral in the Possession of a
Warehouseman or Bailee. If any of the Collateral at any time is in the possession of a warehouseman or
bailee, the Borrowing Agent shall promptly notify the Bank thereof, and, upon request of the Bank, Borrowers shall use all
commercially reasonable efforts to promptly obtain a Collateral Access Agreement, it being understood and agreed, however, that
any failure to obtain such Collateral Access Agreement may (in accordance with clause (c) of the definition of Eligible Inventory) result in decreased availability under the Borrowing Base. The Bank agrees with
the Borrowers that the Bank shall not give any instructions to such warehouseman or bailee pursuant to such Collateral Access
Agreement unless an Event of Default has occurred and is continuing.

6.8                   Lockbox Arrangement. Each Borrower shall direct all of its Account Debtors to make all payments on the Accounts directly to a post office box
(the “Lockbox”) designated by, and under the exclusive control of, the
Bank. Pursuant to the Lockbox Agreement, the Borrowing Agent shall establish the Lockbox and an account (the “Lockbox Account”) in the Borrowing Agent’s name with the Bank into which all payments
received in the Lockbox shall be deposited, and into which each Borrower will immediately deposit all payments made for Inventory
sold by such Borrower or the performance of services by such Borrower, and received by such Borrower in the identical form in
which such payments were made, whether by cash or check. If any Borrower, any of its Subsidiaries or any director, officer,
employee, or agent of any such Borrower or any such Subsidiary, or any other Person acting for or in concert with such Borrower
shall receive any monies, checks, notes, drafts or other payments relating to or as proceeds of Accounts or other Collateral, such
Borrower, such Subsidiary and each such Person shall receive all such items in trust for, and as the sole and exclusive property
of, the Bank and, immediately upon receipt thereof, shall remit the same (or cause the same to be remitted) in kind to the Lockbox
Account. The parties agree that all payments made to such Lockbox and Lockbox Account or otherwise received by the Bank, whether
in respect of the Accounts or as proceeds of other Collateral or otherwise, (a) at all times following the occurrence of an Event
of Default, will be applied on account of the Revolving Loans in accordance with Section
12.8 of this Agreement, [and (b) at all other times, subject to final collection and the Bank’s
availability schedule, will be released to the Borrowing Agent’s operating account (Account No. ________) maintained with the
Bank. Each Borrower agrees it shall be jointly and severally liable for all fees, costs and expenses which the Bank incurs in
connection with opening and maintaining the Lockbox and the Lockbox Account and depositing for collection by the Bank any check or
other item of payment received by the Bank on account of the Obligations. All of such fees, costs and expenses shall constitute
Obligations hereunder, shall be payable to the Bank by the Borrowers upon demand, and, until paid, shall bear interest at the
Default Rate. All checks, drafts, instruments and other items of payment or proceeds of Collateral shall be endorsed by the
applicable Borrower or Borrowing Agent to the Bank, and, if that endorsement of any such item shall not be made for any reason,
the Bank is hereby irrevocably authorized to endorse the same on such Borrower’s behalf. For the purpose of this Section,
each Borrower irrevocably hereby makes, constitutes and appoints the Bank (and all Persons designated by the Bank for that
purpose) as such Borrower’s true and lawful 

 

33

attorney and agent-in-fact (i) to endorse such Borrower’s name upon such items of payment and/or proceeds of Collateral and upon any Chattel Paper, document, instrument, invoice or similar document or agreement relating to any Account of such Borrower or goods pertaining thereto; (ii) to take control in any manner of any item of payment or proceeds thereof; and (iii) to have access to the Lockbox, and also, after the occurrence and during the continuance of an Event of Default any other lockbox or postal box into which any of such Borrower’s mail is deposited, and open and process all mail addressed to such Borrower and deposited therein.

6.9                   Letter-of-Credit Rights. If any Borrower at any time is a beneficiary under a letter of credit now or hereafter issued in favor of such Borrower
in a face amount of $10,000 or more, such Borrower shall promptly notify the Bank thereof and, at the request and option of the
Bank, such Borrower shall, pursuant to an agreement in form and substance satisfactory to the Bank, either (i) arrange for the
issuer and any confirmer of such letter of credit to consent to an assignment to the Bank of the proceeds of any drawing under the
letter of credit, or (ii) arrange for the Bank to become the transferee beneficiary of the letter of credit, with the Bank
agreeing, in each case, that the proceeds of any drawing under the letter to credit are to be applied as provided in this
Agreement.

6.10                  Commercial Tort Claims. If any
Borrower shall at any time hold or acquire a Commercial Tort Claim seeking damages of $10,000 or more, the Borrowing Agent or such
Borrower shall immediately notify the Bank in writing signed by the Borrowing Agent or such Borrower of the details thereof and
grant to the Bank in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement,
in each case in form and substance satisfactory to the Bank, and shall execute any amendments hereto deemed reasonably necessary
by the Bank to perfect its security interest in such Commercial Tort Claim.

6.11                  Electronic Chattel Paper and Transferable
Records. If any Borrower at any time holds or acquires an interest in any electronic chattel paper or any
“transferable record”, as that term is defined in Section 201 of the federal Electronic Signatures in Global and
National Commerce Act, or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction, the
Borrowing Agent or the Borrower shall promptly notify the Bank thereof and, at the request of the Bank, shall take such action as
the Bank may reasonably request to vest in the Bank control under Section 9-105 of the UCC of such electronic chattel paper or
control under Section 201 of the federal Electronic Signatures in Global and National Commerce Act or, as the case may be, Section
16 of the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, of such transferable record. The Bank agrees
with the Borrowers that the Bank will arrange, pursuant to procedures satisfactory to the Bank and so long as such procedures will
not result in the Bank’s loss of control, for the Borrowers to make alterations to the electronic chattel paper or
transferable record permitted under Section 9-105 of the UCC or, as the case may be, Section 201 of the federal Electronic
Signatures in Global and National Commerce Act or Section 16 of the Uniform Electronic Transactions Act for a party in control to
make without loss of control.

6.12                  Pledged
Equity Interests. With respect to the Pledged Equity Interests, IntriCon hereby agrees as follows:

(a)          IntriCon shall
deliver to Bank (i) simultaneously with or prior to the execution and delivery of this Agreement, all certificates representing
the Pledged Equity Interests (if any), and (ii) promptly upon the receipt thereof by or on behalf of IntriCon, all other
certificates and instruments constituting Pledged Equity Interests. Prior to delivery to Bank, all such certificates and
instruments constituting Pledged Equity Interests (or proceeds thereof) shall be held in trust by IntriCon for the benefit of Bank
pursuant hereto. All such certificates shall be delivered in suitable form for transfer by delivery or shall be accompanied by
duly executed instruments of transfer or assignment in blank, substantially in the form provided in Exhibit 6.12(a) attached hereto.

 

34

(b)          If any issuer of Pledged Equity Interests is organized in a jurisdiction which does not permit the use of certificates to evidence equity ownership, or if any of the Pledged Equity Interests is at any time not evidenced by certificates of ownership, then IntriCon shall (i) to the extent permitted by applicable law, record on the equityholder register or the books of the issuer the pledge of the Pledged Equity Interests hereunder, (ii) cause the issuer to execute and deliver to Bank an acknowledgment of such pledge of the Pledged Equity Interests substantially in the form of Exhibit 6.12(b) annexed hereto, and (iii) execute any customary pledge forms or other documents reasonably necessary or appropriate to complete the
pledge and give Bank the right and power to transfer such Pledged Equity Interests in accordance with the terms hereof.

(c)          If IntriCon shall receive, by virtue of its being or having been the owner of any Pledged Equity Interests (or any proceeds thereof), any (i) certificate representing Pledged Equity Interests, including without limitation, any certificate representing a dividend or distribution in connection with any increase or reduction of capital, reclassification, merger, consolidation, sale of assets, combination of shares or membership or equity interests, stock splits, spin-off or split-off, promissory notes or other instrument; (ii) option or right, whether as an addition to, substitution for, or an exchange for, any Pledged Equity Interests or otherwise; (iii) dividends payable in securities; or (iv) distributions of securities or other equity interests in connection with a
partial or total liquidation, dissolution or reduction of capital, capital surplus or paid-in surplus, then IntriCon shall receive such certificate, instrument, option, right or distribution in trust for the benefit of Bank, shall segregate it from IntriCon’s other property and shall deliver it forthwith to Bank in the exact form received together with any necessary endorsement and/or appropriate instruments of transfer or assignment duly executed in blank, substantially in the form provided in Exhibit 6.12(a), to be held by Bank as Collateral and as further collateral security for the Obligations.

	
            Section 7.
 	
            REPRESENTATIONS AND WARRANTIES.
 

To induce the Bank to make the Loans, each Borrower makes the following representations and warranties to the Bank, each of which shall survive the execution and delivery of this Agreement:

7.1                   Corporate Status. The exact legal name of each Borrower is as set forth in the first paragraph of this Agreement, and no Borrower currently
conducts, nor has it during the last five (5) years conducted, business under any other name or trade name, other than those names
and trade names listed on Schedule 7.1; and the organizational identification no.
and principal place of business of each Borrower is set forth on Schedule 7.1. Each
Borrower (i) is duly organized and is and shall remain validly existing and in good standing under the laws of its state of
organization, and is and shall remain qualified to do business as a foreign corporation under the laws of the jurisdictions listed
on Schedule 7.1 and under the laws of each other jurisdiction in which the failure
to be so qualified and in good standing would have a Material Adverse Effect, and (ii) has and shall maintain all requisite power
and authority, corporate or otherwise, to conduct its business, to own its property, to execute, deliver and perform all of its
obligations under this Agreement and each of the other Loan Documents, and to grant the Liens on the Collateral provided by it. No
Borrower is (a) an “investment company”, (b) an “investment adviser”, or (c) a company “controlled”
by an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended. Other than
IntriCon Pte Ltd and IntriCon GmbH, there are no Subsidiaries of any Borrower that are not, themselves, a Borrower hereunder.

 

35

7.2                   Authorization.
Each Borrower has full right, power and authority to enter into this Agreement, to make the borrowings and execute and deliver the
Loan Documents as provided herein and to perform all of its duties and obligations under this Agreement and the other Loan
Documents. Each of IntriCon and ITC has the full right, power and authority to enter into the Acquisition Agreement and all of the
other Acquisition documents and to perform all of its duties and obligations thereunder. The execution and delivery of this
Agreement and the other Loan Documents will not, nor will the observance or performance of any of the matters and things herein or
therein set forth, violate or contravene any provision of law or of the organizational documents of any Borrower. All necessary
and appropriate action has been taken on the part of each Borrower to authorize the execution and delivery of this Agreement and
the Loan Documents.

7.3                   Validity and Binding
Nature. This Agreement and the other Loan Documents are the legal, valid and binding obligations of the
each Borrower, enforceable against each such Borrower in accordance with their terms, subject to bankruptcy, insolvency and
similar laws affecting the enforceability of creditors’ rights generally and to general principles of equity.

7.4                   Consent; Absence of
Breach. The execution, delivery and performance of this Agreement, the other Loan Documents and any other
documents or instruments to be executed and delivered by each Borrower in connection with the Loans, and the borrowings by each
Borrower hereunder, do not and will not (a) require any consent, approval, authorization of, or filings with, notice to or other
act by or in respect of, any governmental authority or any other Person (other than any consent or approval which has been
obtained and is in full force and effect); (b) conflict with (i) any provision of law or any applicable regulation, order, writ,
injunction or decree of any court or governmental authority, (ii) the organizational documents of the Borrowers, or (iii) any
material agreement, indenture, instrument or other document, or any judgment, order or decree, which is binding upon any Borrower
or any of its Subsidiaries or any of their respective properties or assets; or (c) require, or result in, the creation or
imposition of any Lien on any asset of any Borrower or any of its Subsidiaries, other than Liens in favor of the Bank created
pursuant to this Agreement. Without limiting the generality of the foregoing, the Borrowers specifically represent and warrant to
the Bank that the asset purchase and sale transaction contemplated by the Acquisition Documents will be entered into and
consummated in accordance with applicable law.

7.5                   Ownership of Properties;
Liens. No Borrower owns the fee interest in any real property. Each Borrower is the sole owner all of its
properties and assets, real and personal, tangible and intangible, of any nature whatsoever (including patents, trademarks, trade
names, service marks and copyrights), free and clear of all Liens, charges and claims (including infringement claims with respect
to patents, trademarks, service marks, copyrights and the like), other than Permitted Liens.

7.6                   Equity Ownership. All issued and outstanding Capital Securities of each Borrower and each of its Subsidiaries are duly authorized and
validly issued, fully paid, non-assessable, and free and clear of all Liens other than those in favor of the Bank, if any, and
such securities were issued in compliance with all applicable state and federal laws concerning the issuance of securities. Except
as set forth on Schedule 7.6, as of the date hereof, there are no pre-emptive or
other outstanding rights, options, warrants, conversion rights or other similar agreements or understandings for the purchase or
acquisition of any Capital Securities of the Borrowers (or any of them) or any of their respective Subsidiaries. There exists no
“adverse claim” within the meaning of Section 9-102 of the UCC with respect to any of the Pledged Equity Interests. No
Borrower has any outstanding shares of any class of capital stock or other equity interests which has priority over any other
class of capital stock or other equity interests of such Borrower as to dividends or distributions or in liquidation.

 

36

7.7                   Intellectual Property. Except as set forth on Schedule 7.7, each Borrower owns and possesses or
has a license or other right to use all Intellectual Property, as are necessary for the conduct of the businesses of such Borrower
as presently conducted, without any infringement upon rights of others which could reasonably be expected to have a Material
Adverse Effect upon such Borrower, and no material claim has been asserted and is pending by any Person challenging or questioning
the use of any Intellectual Property or the validity or effectiveness of any Intellectual Property nor does such Borrower know of
any valid basis for any such claim.

7.8                   Financial Statements. ITC was formed on April 2, 2007. As of the date hereof, ITC has not engaged in any business or activity, or entered into
any contract, except the negotiation, execution and delivery of the Acquisition Agreement, this Agreement and the other Loan
Documents to which it is a party, and activities incidental thereto, nor has ITC incurred any obligations or liabilities,
contingent or otherwise, except under the foregoing agreements or incidental to the foregoing activities. All financial statements
submitted to the Bank have been prepared in accordance with sound accounting practices and GAAP on a basis, except as otherwise
noted therein, consistent with the previous fiscal year and present fairly the financial condition of each Borrower and the
results of the operations for each such Borrower as of such date and for the periods indicated, subject in the case of interim
financial statements, to the absence of footnotes and to normal year-end accruals. Since the date of the most recent consolidated
financial statement submitted by the Borrowers to the Bank, there has been no change in the financial condition or in the assets
or liabilities of any Borrower having a Material Adverse Effect on any such Borrower.

7.9                   Litigation and Contingent
Liabilities. There is no litigation, arbitration proceeding, demand, charge, claim, petition or
governmental investigation or proceeding pending, or to the knowledge of any Borrower, threatened, against any Borrower, which, if
adversely determined, which might reasonably be expected to have a Material Adverse Effect, except as set forth in Schedule 7.9. Other than any liability incident to such litigation or proceedings, and except as
permitted by Section 9.1, no Borrower has any material guarantee obligations,
Contingent Liabilities, liabilities for taxes, or any long-term leases or unusual forward or long-term commitments, including any
interest rate or foreign currency swap or exchange transaction or other obligation in respect of derivatives, that are not
fully-reflected or fully reserved for, to the extent required by GAAP, in the most recent audited financial statements delivered
pursuant to Section 8.8(a) or fully-reflected or fully reserved, to the extent
required by GAAP, for in the most recent financial statements delivered pursuant to Section
8.8(b), except for any such obligations or liabilities or transactions entered into after the date hereof
and after the date of the most recent financial statements delivered under Section 8.8(a) or Section 8.8(b) and which will be fully reflected or fully reserved for,
to the extent required by GAAP, on the next set of financial statements to be delivered by Borrowers under
Section 8.8(a) or Section 8.8(b).

7.10                 Event of Default. No Event of
Default or Unmatured Event of Default exists or would result from the incurrence by any Borrower of any of the Obligations
hereunder or under any of the other Loan Document, and no Borrower is in default (without regard to grace or cure periods) under
any other contract or agreement to which it is a party if the terminations of such contract or agreement and/or failure of the
other party or parties to such contract or agreement to perform their obligations under such contract or agreement, would have a
Material Adverse Effect.

7.11                 Adverse Circumstances. No
condition, circumstance, event, agreement, document, instrument, restriction, litigation or proceeding (or threatened litigation
or proceeding or basis therefor) exists which (a) would have a Material Adverse Effect, or (b) would constitute an Event of
Default or an Unmatured Event of Default.

 

37

7.12                 Environmental Laws and Hazardous
Substances. Except as set forth on Schedule 7.9, no
Borrower has generated, used, stored, treated, transported, manufactured, handled, produced or disposed of any Hazardous
Substances, on or off any of the premises of any Borrower (whether or not owned by it) in any manner which might reasonably be
expected to have a Material Adverse Effect upon any Borrower. Each Borrower will comply in all material respects with all
Environmental Laws and will obtain all licenses, permits certificates, approvals and similar authorizations thereunder. Except as
could not reasonably be expected to have a Material Adverse Effect, there has been no investigation, proceeding, complaint, order,
directive, claim, citation or notice by any governmental authority or any other Person, nor is any pending or, to the best of each
Borrower’s knowledge, threatened. Each Borrower shall notify the Bank in writing in five business days upon receiving actual
notice of any investigation, proceeding, complaint, order, directive, claim, or citation and shall take prompt and appropriate
actions to respond thereto, with respect to any non-compliance with, or violation of, the requirements of any Environmental Law by
any Borrower or the release, spill or discharge, threatened or actual, of any Hazardous Material or the generation, use, storage,
treatment, transportation, manufacture, handling, production or disposal of any Hazardous Material or any other environmental,
health or safety matter, which might reasonably be expected to have a Material Adverse Effect upon any Borrower. Except as set
forth on Schedule 7.9, no Borrower has, to the best of each Borrower’s
knowledge, any material liability, contingent or otherwise, in connection with a release, spill or discharge, threatened or
actual, of any Hazardous Substances or the generation, use, storage, treatment, transportation, manufacture, handling, production
or disposal of any Hazardous Material. Each Borrower further agrees to allow the Bank or its agent access to the properties of
such Borrower and its respective Subsidiaries to confirm compliance with all Environmental Laws, and the applicable Borrower
shall, following determination by the Bank that there is non-compliance, or any condition which requires any action by or on
behalf of such Borrower in order to avoid any non-compliance, with any Environmental Law, at such Borrower’s sole expense,
cause an independent environmental engineer acceptable to the Bank to conduct such tests of the relevant site as are appropriate,
and prepare and deliver a report setting forth the result of such tests, a proposed plan for remediation as is required under
applicable Environmental Laws and an estimate of the costs thereof.. This Section 7.12 shall constitute the only representations that are made by each Borrower with respect to Environmental Laws and Hazardous
Substances.

7.13                 Solvency, etc. As of the date
hereof, and immediately prior to and after giving effect to the payment of the purchase price under the Acquisition Agreement, the
issuance of each Letter of Credit and each Loan hereunder and the use of the proceeds thereof, (a) the fair value of each
Borrower’s assets is greater than the amount of its liabilities (including disputed, contingent and unliquidated liabilities)
as such value is established and liabilities evaluated as required under the Section 548 of the Bankruptcy Code, (b) the present
fair saleable value of each Borrower’s assets is not less than the amount that will be required to pay the probable liability
on its debts as they become absolute and matured, (c) each Borrower is able to realize upon its assets and pay its debts and other
liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business, (d) no
Borrower intends to, nor believes that it will, incur debts or liabilities beyond its ability to pay as such debts and liabilities
mature, and (e) no Borrower is engaged in business or a transaction, and is not about to engage in business or a transaction, for
which its property would constitute unreasonably small capital.

7.14                 ERISA Obligations. All Employee
Plans of each Borrower meet the minimum funding standards of Section 302 of ERISA and 412 of the Internal Revenue Code where
applicable, and each such Employee Plan that is intended to be qualified within the meaning of Section 401 of the Internal Revenue
Code of 1986 is qualified. No withdrawal liability has been incurred under any such Employee Plans and no “Reportable
Event” or “Prohibited Transaction” (as such terms are defined in ERISA), has occurred with respect to any such
Employee Plans, unless approved by the appropriate governmental agencies. Each Borrower has promptly paid and discharged all
obligations and liabilities arising under ERISA of a character which if unpaid or unperformed might result in the imposition of a Lien against any of its properties or assets.  

 

38

7.15                 Labor Relations. Except as could
not reasonably be expected to have a Material Adverse Effect, (i) there are no strikes, lockouts or other labor disputes against
any Borrower or, to the best knowledge of each Borrower, threatened, (ii) hours worked by and payment made to employees of any
Borrower have not been in violation of the Fair Labor Standards Act or any other applicable law, and (iii) no unfair labor
practice complaint is pending against any Borrower or, to the best knowledge of each Borrower, threatened before any governmental
authority.

7.16                 Security Interest. This Agreement
creates a valid security interest in favor of the Bank in the Collateral and, when properly perfected by filing in the appropriate
jurisdictions, or by possession or Control of such Collateral by the Bank or delivery of such Collateral to the Bank, shall
constitute a valid, perfected, first-priority security interest in such Collateral except for Permitted Liens.

7.17                 Lending Relationship. The
relationship hereby created between the Borrower and the Bank is and has been conducted on an open and arm’s length basis in
which no fiduciary relationship exists, and no Borrower has relied and is not relying on any such fiduciary relationship in
executing this Agreement and in consummating the Loans. The Bank represents that it will receive any Note payable to its order as
evidence of a bank loan.

7.18                 Business Loan. The Loans,
including interest rate, fees and charges as contemplated hereby, (i) are business loans within the purview of 815 ILCS
205/4(1)(c), as amended from time to time, (ii) are an exempted transaction under the Truth In Lending Act, 12 U.S.C. 1601
et seq., as amended from time to
time, and (iii) do not, and when disbursed shall not, violate the provisions of the Illinois usury laws, any consumer credit laws
or the usury laws of any state which may have jurisdiction over this transaction, any Borrower or any property securing the
Loans.

7.19                 Taxes. Each Borrower has timely
filed all federal, state and local tax returns and reports required by law to have been filed by it and has paid all taxes,
governmental charges and assessments due and payable with respect to such returns, except any such taxes or charges which are
being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall
have been set aside on its books, or are insured against or bonded over to the satisfaction of the Bank, and the contesting of
such payment does not create a Lien on the Collateral which is not a Permitted Lien. As of the Closing Date, except as set forth
on Schedule 7.19, there is no controversy or objection pending, or to the knowledge
of any Borrower, threatened in respect of any tax returns of any Borrower. Each Borrower has made adequate reserves on its books
and records in accordance with GAAP for all taxes that have accrued but which are not yet due and payable.

7.20                 Compliance with Regulations U and X. No portion of the proceeds of the Loans shall be used by any Borrower or any Subsidiary Affiliate of any Borrower, either
directly or indirectly, for the purpose of purchasing or carrying any margin stock, within the meaning of Regulation U or
Regulation X as adopted by the Board of Governors of the Federal Reserve System or any successor thereto.

7.21                 Governmental Regulation. No
Borrower, nor any of its Subsidiaries or any other Obligors are, or after giving effect to any loan, will be, (a) subject to
regulation under the ICC Termination Act of 1995 or the Investment Company Act of 1940 or to any federal or state statute or
regulation limiting its ability to incur indebtedness for borrowed money; (b) a “holding company” or a “subsidiary
company” or an “affiliate” of a “holding company” or of a “subsidiary company” of a
“holding company”, within the meaning of the Energy Policy Act of 2005 or (c) a “public utility” within the
meaning of the Federal Power Act, as amended.

 

39

7.22                 Bank Accounts. All Deposit
Accounts and operating bank accounts of each Borrower are located at the Bank and no Borrower has other Deposit Accounts except
those listed on Schedule 7.22 attached hereto and those opened after the Closing
Date in accordance with Section 9.12 of this Agreement below.

7.23                 Place of Business. The principal
places of business and books and records of each Borrower is set forth in the signature page to this Agreement, and the location
of all Collateral, if other than at such principal places of business, is as set forth on Schedule
7.23 attached hereto and made a part hereof, and as updated from time to time pursuant to the following
sentence. Each Borrower or the Borrowing Agent shall promptly notify the Bank of any change in such locations. No Borrower will
remove or permit the Collateral to be removed from such locations without at least sixth (60) days prior written notice to the
Bank in connection with the establishment of a new business location by Borrowers within the United States as contemplated by and
in accordance with the previous sentence, except for transfers from one Collateral location of Borrowers disclosed to the Bank to
another disclosed Collateral location of Borrowers and for Collateral sold in compliance with Section
6.2 of this Agreement, it being understood and agreed, however, that any such relocation may (in
accordance with clause (c) of the definition of Eligible Inventory) result in
decreased availability under the Borrowing Base unless the Borrowers have delivered to the Bank a Collateral Access Agreement
covering such new location. 

7.24                 Complete Information. This
Agreement and all financial statements, schedules, certificates, confirmations, agreements, contracts, and other materials and
information heretofore or contemporaneously herewith furnished in writing by the Borrowers (or any of them) to the Bank for
purposes of, or in connection with, this Agreement and the transactions contemplated hereby is, and all written information
hereafter furnished by or on behalf of the Borrowers (or any of them) to the Bank pursuant hereto or in connection herewith will
be, true and accurate in every material respect on the date as of which such information is dated or certified, and none of such
information is or will be incomplete by omitting to state any material fact necessary to make such information not misleading in
light of the circumstances under which made (it being recognized by the Bank that any projections and forecasts provided by the
Borrowers (or any of them) are based on good faith estimates and assumptions believed by the Borrowers to be reasonable as of the
date of the applicable projections or assumptions and that actual results during the period or periods covered by any such
projections and forecasts may differ from projected or forecasted results).

	
             
 	
            7.25
 	
            [RESERVED].
 

	
             
 	
            7.26
 	
            Internal Controls.
 

(a)          IntriCon has established and maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”)), which (i) are designed to ensure that material information relating to the Borrowers is made known to IntriCon’s principal executive officer and its principal financial officer or persons performing similar functions by others within those entities, particularly during the periods in which the periodic reports required under the Exchange Act are being prepared; (ii) have been evaluated for effectiveness as a date within ninety (90) days prior to the filing of such Borrower’s most recent annual or quarterly
report filed with the Securities Exchange Commission; and (iii) are effective in all material respects to perform the functions for which they were established;

(b)          Based on the
evaluation of its internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f), such Borrower is not aware
of (i) any significant deficiency or material weakness in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect IntriCon’s ability to record, process, summarize and report financial data or (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in such Borrower’s internal control over financial reporting; and

 

40

(c)          Since the date of the most recent evaluation of its internal control over financial reporting, as defined above, there have been no changes in internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, internal controls over financial reporting, including any corrective actions with regard to significant deficiencies and material weaknesses.

7.27                 Insurance. Schedule 7.27 correctly describes all of the insurance policies maintained by Borrowers as of the
date hereof, including the carriers thereof, and the types of coverage and insured amounts covered thereby.

7.28                 Pledged Equity Interests. All of
the Pledged Equity Interests are duly authorized and validly issued capital stock or membership interests (as applicable) of the
applicable Pledged Entity, are fully paid and nonassessable and are not subject to the preemptive rights of any Person. All of the
Pledged Equity Interests were issued pursuant to a valid exemption from the registration requirements of the Securities Act of
1933, as amended, and fully comply with any and all applicable state securities laws. No authorization, approval or action by, and
no notice or filing with any governmental authority or with the issuer of any Pledged Equity Interests is required either (i) for
the pledge of the Pledged Equity Interests made by IntriCon hereunder or for the granting of the security interest therein by
IntriCon pursuant to this Agreement, or (ii) for the exercise by Bank of its rights and remedies hereunder with respect to the
Pledged Equity Interests (except as may be required by laws affecting the offering and sale of securities). This Agreement creates
a valid security interest in favor of Bank in the Pledged Equity Interests. The taking of possession by Bank of the certificates
(if any) evidencing the Pledged Equity Interests will perfect and establish the first priority of Bank’s security interest in
such certificated Pledged Equity Interests. The filing of a UCC Financing Statement describing the Pledged Equity Interests with
the Secretary of State of Pennsylvania will perfect the Bank’s security interest in any uncertificated Pledged Equity
Interests, and furthermore, the execution of a written agreement by the issuer of each such uncertificated Pledged Equity Interest
that it will comply with instructions originated by the Bank with respect to any such uncertificated Pledged Equity Interests
issued by it without further consent by IntriCon will establish “control” (as defined in the UCC) by the Bank over any
such uncertificated Pledged Equity Interest and perfect and establish the first priority of Bank’s security interest in such
uncertificated Pledged Equity Interests. No action other than obtaining possession of the certificates representing all
certificated Pledged Equity Interests and obtaining “control” over all uncertificated Pledged Equity Interests as
described in the foregoing sentences is necessary to perfect or otherwise protect the Bank’s security interest in the Pledged
Equity Interests. Schedule 7.28 attached hereto sets forth a statement of the
authorized, issued and outstanding capital stock of the Pledged Entities and, the owners of such capital stock. None of the issued
and outstanding capital stock of the Pledged Entities that are owned by IntirCon are subject to any vesting, redemption, or
repurchase agreement, and there are no warrants or options outstanding with respect to such capital stock.

7.29                 Acquisition. Set forth on
Schedule 7.29 is an accurate and complete list of all of the material Acquisition
Documents. Except as set forth on Schedule 7.29, the Acquisition Documents have not
been amended, modified, revoked or rescinded since their respective dates of execution, and none of the conditions to the
obligations of the respective parties to the Acquisition Documents have been waived by any such party. Subject to the
qualifications contained therein (including knowledge qualifiers), the representations and warranties of IntriCon and ITC, and, to
the best of the IntriCon’s and ITC’s knowledge, of each other party contained in the Acquisition Documents are true and
correct in all 

 

41

material respects.  All transactions described in the Acquisition Documents that are to occur prior to the date hereof have been consummated in all material respects in accordance with the terms and provisions thereof, and, except as set forth in Schedule 7.29, the only condition to the consummation of the contemplated asset purchase and sale transaction in accordance with the Acquisition Documents remaining to be satisfied thereunder (which condition will be satisfied contemporaneously with the funding of the initial Revolving Loan and Term Loan hereunder) is the delivery of funds sufficient to pay the purchase price required to be paid under the Acquisition Documents.  The purchase price that is payable under the Acquisition Agreement does not exceed $4,500,000.

	
            Section 8.
 	
            AFFIRMATIVE COVENANTS.
 

8.1                 Compliance with Bank Regulatory
Requirements; Increased Costs. If the Bank shall reasonably determine that any Regulatory Change, or
compliance by the Bank or any Person controlling the Bank with any request or directive (whether or not having the force of law)
of any governmental authority, central bank or comparable agency has or would have the effect of reducing the rate of return on
the Bank’s or such controlling Person’s capital as a consequence of the Bank’s obligations hereunder or under any
Letter of Credit to a level below that which the Bank or such controlling Person could have achieved but for such Regulatory
Change or compliance (taking into consideration the Bank’s or such controlling Person’s policies with respect to capital
adequacy) by an amount deemed by the Bank or such controlling Person to be material or would otherwise reduce the amount of any
sum received or receivable by the Bank under this Agreement or under any Note with respect thereto, then from time to time, upon
demand by the Bank (which demand shall be accompanied by a statement setting forth the basis for such demand and a calculation of
the amount thereof in reasonable detail), the Borrowers shall pay directly to the Bank or such controlling Person such additional
amount as will compensate the Bank for such increased cost or such reduction, so long as such amounts have accrued on or after the
day which is one hundred eighty days (180) days prior to the date on which the Bank first made demand therefor.

8.2                 Borrowers’
Existence. Each Borrower shall at all times (a) preserve and maintain its existence and good standing in
the jurisdiction of its organization, (b) preserve and maintain its qualification to do business and good standing in each
jurisdiction where the nature of its business makes such qualification necessary (other than such jurisdictions in which the
failure to be qualified or in good standing could not reasonably be expected to have a Material Adverse Effect), and (c) continue
as a going concern in the business which such Borrower is presently conducting. If any Borrower does not have an Organizational
Identification Number and later obtains one, such Borrower shall promptly notify the Bank of such Organizational Identification
Number. No Borrower shall form or otherwise acquire a new Subsidiary without the prior written consent of the Bank.

8.3                 Compliance With Laws. Each Borrower shall use the proceeds of the Loans for the purposes permitted in Sections
2.1(a) and 2.2(a) (as applicable) and not in contravention
of any requirements of law (except to the extent no Material Adverse Effect would result from any such contravention) and not in
violation of this Agreement, and shall comply, and cause each Subsidiary to comply, in all respects, including the conduct of its
business and operations and the use of its properties and assets, with all applicable laws, rules, regulations, decrees, orders,
judgments, licenses and permits, except where failure to comply could not reasonably be expected to have a Material Adverse
Effect. In addition, and without limiting the foregoing sentence, each Borrower shall (a) ensure, and cause each Subsidiary to
ensure, that no Person who owns a controlling interest in or otherwise controls any Borrower or any Subsidiary is or shall be
listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by the Office of Foreign
Assets Control (“OFAC”), the Department of the Treasury or included in
any Executive Orders, (b) not use or permit the use of the proceeds of the Loans to violate any of the foreign asset control
regulations of OFAC or any enabling statute or Executive Order relating thereto, and (c) comply, and cause each Subsidiary to
comply, with all applicable Bank Secrecy Act (“BSA”) laws and regulations, as amended.  The Acquisition shall be consummated in accordance with the terms and conditions of the Acquisition Documents and all applicable laws.

 

42

8.4                 Payment of Taxes and
Liabilities. The Borrowers jointly and severally agree to pay, and cause each Subsidiary to pay, and
discharge, prior to delinquency and before penalties accrue thereon, all property and other taxes, and all governmental charges or
levies against it or any of the Collateral, as well as claims of any kind which, if unpaid, could become a Lien on any of its
property; provided that the foregoing shall not require the Borrowers (or any of them) or any respective Subsidiary to pay any
such tax or charge so long as it shall contest the validity thereof in good faith by appropriate proceedings and shall set aside
on its books adequate reserves with respect thereto in accordance with GAAP and, in the case of a claim which could become a Lien
on any of the Collateral, such contest proceedings stay the foreclosure of such Lien or the sale of any portion of the Collateral
to satisfy such claim.

8.5                 Maintain Property. Each Borrower shall at all times maintain, preserve and keep its plant, properties and Equipment, including any
Collateral, in good repair, working order and condition, normal wear and tear excepted, and shall from time to time make all
needful and proper repairs, renewals, replacements, and additions thereto so that at all times the efficiency thereof shall be
fully preserved and maintained.

8.6                 Maintain Insurance. Each Borrower shall at all times maintain, and cause each Subsidiary to maintain, with insurance companies reasonably
acceptable to the Bank, such insurance coverage as may be required by any law or governmental regulation or court decree or order
applicable to it and such other insurance, to such extent and against such hazards and liabilities, including employers’,
public and professional liability risks and business interruption, as is customarily maintained by companies similarly situated,
and shall have insured amounts no less than, and deductibles no higher than, are reasonably acceptable to the Bank. Each Borrower
shall furnish to the Bank a certificate setting forth in reasonable detail the nature and extent of all insurance maintained by
such Borrower, which shall be reasonably acceptable in all respects to the Bank. Each Borrower shall cause each issuer of an
insurance policy to provide the Bank with an endorsement (i) showing the Bank as mortgagee and loss payee with respect to each
policy of property or casualty insurance and naming the Bank as an additional insured with respect to each policy of liability
insurance; and (ii) providing that thirty (30) days notice will be given to the Bank prior to any cancellation of, material
reduction or change in coverage provided by or other material modification to such policy. Each Borrower shall execute and deliver
to the Bank a collateral assignment, in form and substance satisfactory to the Bank, of each business interruption insurance
policy maintained by such Borrower.

In the event any Borrower either fails to provide the Bank with evidence of the insurance coverage required by this Section or at any time hereafter shall fail to obtain or maintain any of the policies of insurance required above, or to pay any premium in whole or in part relating thereto, then the Bank, without waiving or releasing any obligation or default by such Borrower hereunder, may at any time (but shall be under no obligation to so act), obtain and maintain such policies of insurance and pay such premiums and take any other action with respect thereto, which the Bank deems advisable.  This insurance coverage (a) may, but need not, protect such Borrower’s interests in such property, including the Collateral, and (b) may not pay any claim made by, or against, such Borrower in connection with such property, including the Collateral. Such Borrower may later cancel any such
insurance purchased by the Bank, but only after providing the Bank with evidence that such Borrower has obtained the insurance
coverage required by this Section. If the Bank purchases insurance for the Collateral, such Borrower will be responsible for the
costs of that insurance, including interest and any other charges that may be imposed with the placement of the insurance, until
the effective date of the cancellation or expiration of the insurance. The costs of the insurance may be added to the principal
amount of the Loans owing hereunder.  The costs of the insurance may be more than the cost of the insurance such Borrower may be able to obtain on its own.

 

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8.7                 ERISA Liabilities; Employee
Plans. Each Borrower shall (i) keep in full force and effect any and all Employee Plans which are
presently in existence or may, from time to time, come into existence under ERISA, and not withdraw from any such Employee Plans,
unless such withdrawal can be effected or such Employee Plans can be terminated without material liability to such Borrower; (ii)
make contributions to all of such Employee Plans in a timely manner and in a sufficient amount to comply with the standards of
ERISA; including the minimum funding standards of ERISA; (iii) comply with all material requirements of ERISA which relate to such
Employee Plans; (iv) notify the Bank immediately upon receipt by such Borrower of any notice concerning the imposition of any
withdrawal liability or of the institution of any proceeding or other action which may result in the termination of any such
Employee Plans or the appointment of a trustee to administer such Employee Plans; (v) promptly advise the Bank of the occurrence
of any “Reportable Event” or “Prohibited Transaction” (as such terms are defined in ERISA), with respect to
any such Employee Plans; and (vi) amend any Employee Plan that is intended to be qualified within the meaning of Section 401 of
the Internal Revenue Code of 1986 to the extent necessary to keep the Employee Plan qualified, and to cause the Employee Plan to
be administered and operated in a manner that does not cause the Employee Plan to lose its qualified status.

8.8                 Financial Statements. Each Borrower shall at all times maintain a standard and modern system of accounting, on the accrual basis of accounting
and in all respects in accordance with GAAP, and shall furnish to the Bank or its authorized representatives such information
regarding the business affairs, operations and financial condition of such Borrower, including:

(a)          promptly when available, and in any event, within ninety (90) days after the close of each of its fiscal years, a copy of (i) the annual audited consolidated financial statements of Borrowers and their Subsidiaries, including consolidated balance sheet, statement of income and retained earnings, statement of cash flows for the fiscal year then ended and such other information (including nonfinancial information) as the Bank may reasonably request, in reasonable detail, prepared and certified, without adverse reference to going concern value and without qualification, by Virchow, Krause & Company LLP, or another independent auditor of recognized standing selected by the Borrowers and reasonably acceptable to the Bank and (ii) a consolidating balance sheet of the
Borrowers and their Subsidiaries as of the end of each of its fiscal years and consolidating statements of earnings and cash flows for the Borrowers and their Subsidiaries for each of its fiscal years, certified as true and correct by each Borrower’s treasurer or chief financial officer; 

(b)          promptly when available, and in any event, within thirty (30) days following the end of each calendar month (or in the case of any month that is the last month in a fiscal quarter, forty-five (45) days), other than the last fiscal month in any fiscal year, a copy of the consolidated and consolidating balance sheets and income statement of the Borrowers and their respective Subsidiaries for the calendar month then ended and such other information (including nonfinancial information) as the Bank may reasonably request, in reasonable detail, prepared and certified as true and correct by each Borrower’s treasurer or chief financial officer; 

(c)          within ten (10) days after the filing due date (as such date may be extended in accordance with properly granted extensions) each year, a signed copy of the complete federal and state income tax returns filed with the Internal Revenue Service and applicable state taxing authorities by each Borrower; and

 

44

(d)          promptly after the sending or filing thereof, copies of all regular and periodic reports which any Borrower shall file with the Securities and Exchange Commission or any national securities exchange.

No change with respect to such accounting principles shall be made by the Borrowers (or any of them) without giving prior notification to the Bank.  Each Borrower represents and warrants to the Bank that the financial statements delivered to the Bank at or prior to the execution and delivery of this Agreement and to be delivered at all times thereafter accurately reflect and will accurately reflect the financial condition of such Borrower in accordance with GAAP, subject in the case of interim statements to the absence of footnotes and to normal year-end adjustments.

8.9                 Management Letters; Supplemental
Financial Statements. Each Borrower shall immediately upon receipt thereof, provide to the Bank copies of
management letters and other interim and supplemental reports if any, submitted to such Borrower by independent accountants in
connection with any annual, interim or special audit or review of the books of such Borrower.

8.10               Borrowing Base Certificate. The
Borrowing Agent shall, within thirty (30) days after the end of each month, deliver to the Bank a Borrowing Base Certificate dated
as of the last Business Day of such month (or as of the Business Day immediately prior to the date of such request, as
applicable), certified as true and correct by an authorized representative of the Borrowing Agent and acceptable to the Bank in
its sole and absolute discretion; provided, however, at any time an Event of
Default exists, the Bank may require the Borrowing Agent to deliver Borrowing Base Certificates more frequently.

8.11               Aged Accounts Schedule. The
Borrowing Agent shall, within thirty (30) days after the end of each month, deliver to the Bank a consolidated aged schedule of
the Accounts of each Borrower, listing the name and amount due from each Account Debtor and showing the aggregate amounts due from
(a) 0-30 days, (b) 31-60 days, (c) 61-90 days and (d) more than 90 days, and certified as accurate by such Borrower’s
treasurer or chief financial officer.

8.12               Inventory Reports. The Borrowing
Agent shall, within thirty (30) days after the end of each month, deliver to the Bank a consolidated inventory report, certified
as accurate by each Borrower’s treasurer or chief financial officer, and within each such time as the Bank may reasonably
specify, such other schedules and reports as the Bank may require.

8.13               Covenant Compliance Certificate.
The Borrowers shall, contemporaneously with the furnishing of the financial statements pursuant to Section
8.8, deliver to the Bank a duly completed compliance certificate (in substantially the form attached
hereto as Exhibit 8.14), dated the date of such financial statements and certified
as true and correct by an appropriate officer of each Borrower, containing a computation of each of the financial covenants set
forth in Section 10 and stating that no Borrower has become aware of any Event of
Default or Unmatured Event of Default that has occurred and is continuing or, if there is any such Event of Default or Unmatured
Event of Default describing it and the steps, if any, being taken to cure it.

8.14                 Collateral Inspections; Field Audits. Each Borrower shall permit the Bank to inspect the Inventory, other Tangible Assets and/or other business operations of
such Borrower and each Subsidiary, to perform appraisals of the Equipment of such Borrower and each Subsidiary, and to inspect,
audit, check and make copies of, and extracts from, the books, records, computer data, computer programs, journals, orders,
receipts, correspondence and other data relating to Inventory, Accounts and any other Collateral, the results of which must
disclose compliance by Borrowers with all of the terms and provisions of this Agreement and not disclose the existence of any
Event of Default. All such inspections or audits by the Bank shall be at such Borrower’s sole expense, provided, however,
that so long as no Event of Default or Unmatured Event of Default exists, such Borrower shall not be required to reimburse the Bank for more than one (1) inspection or audit each fiscal year.

 

45

8.15                Other Reports. Each Borrower
shall, within such period of time as the Bank may specify, deliver to the Bank such other schedules and reports as the Bank may
reasonably require.

8.16                Collateral Records. Each Borrower
shall keep full and accurate books and records relating to the Collateral and place a legend, in form and content acceptable to
the Bank, on all Chattel Paper created by such Borrower indicating that the Bank has a Lien in such Chattel Paper. IntriCon shall
cause each issuer of Pledged Equity Interests to mark its books and records to reflect the security interest granted to the Bank
pursuant to this Agreement.

8.17                Intellectual Property. Each
Borrower shall maintain, preserve and renew all Intellectual Property necessary for the conduct of its business as and where the
same is currently located as heretofore or as hereafter conducted by it.

8.18                Notice of Proceedings. Each
Borrower, promptly upon becoming aware, shall give written notice to the Bank of any litigation, arbitration or governmental
investigation or proceeding not previously disclosed by such Borrower to the Bank which has been instituted or, to the knowledge
of such Borrower, is threatened against such Borrower or any of its Subsidiaries or to which any of their respective properties is
subject which might reasonably be expected to have a Material Adverse Effect.

8.19                Notice of Event of Default or Material Adverse
Effect. Each Borrower shall, immediately after the commencement thereof, give notice to the Bank in
writing of the occurrence of any Event of Default or any Unmatured Event of Default, or the occurrence of any condition or event
having a Material Adverse Effect.

8.20                Environmental Matters. If any
release or threatened release or other disposal, in each case not in compliance with applicable Environmental Laws of Hazardous
Substances shall occur or shall have occurred on any real property or any other assets of any Borrower or any of its Subsidiaries,
the applicable Borrower shall, or shall cause the applicable Subsidiary to, comply with applicable Environmental Laws with respect
to any non-compliance.. Without limiting the generality of the foregoing, each Borrower shall, and shall cause each Subsidiary to,
comply with any Federal or state judicial or administrative order requiring the performance at any real property of such Borrower
or any respective Subsidiary of activities in response to the release or threatened release of a Hazardous Substance. To the
extent that the transportation of Hazardous Substances is permitted by this Agreement, each Borrower shall, and shall cause its
Subsidiaries to, dispose of such Hazardous Substances, or of any other wastes, only at licensed disposal facilities operating in
compliance with Environmental Laws. 

	
             
 	
            8.21
 	
            [RESERVED]  
 

8.22                Banking Relationship. Each
Borrower covenants and agrees, at all times during the term of this Agreement, to utilize the Bank as its primary bank of account
and depository for all financial services, including all receipts, disbursements, cash management and related service.

8.23                Non-Use Fee. Each Borrower jointly
and severally agrees to pay to the Bank a non-use fee equal to one-quarter of one percent (0.25%) of the total of (a) the
Revolving Loan Commitment, minus (b) the sum of (i) the daily average of the
aggregate principal amount of all Revolving Loans outstanding, plus (ii) the daily
average of the aggregate amount of the Letter of Credit Obligations, which non- use fee shall be (A) calculated on the basis of a
year consisting of 360 days, (B) paid for the actual number of days elapsed, and (C) payable quarterly in arrears on the last day of each calendar quarter, commencing on June 30, 2007, and on the Revolving Loan Maturity Date. 

 

46

8.24                Interest Rate Protection. Each
Borrower agrees to enter into, not later than forty-five (45) days after the date hereof, a Hedging Agreement with a term of at
least three (3) years on an ISDA standard form to hedge the interest rate with respect to not less than $4,000,000 of the Loans,
in form and substance reasonably satisfactory to the Bank.

8.25                Annual Projections. Promptly when
available and in any event not later than thirty (30) days prior to the end of the fiscal year of Borrowers, IntriCon shall
furnish to Bank detailed projections for the next fiscal year setting forth projected income and cash flow for each month, the
monthly operating budget, the monthly balance sheet, and the monthly borrowing availability of Borrowers, all on a consolidated
basis, accompanied by a certificate of IntriCon’s chief financial officer, countersigned by such Borrower’s chief
executive officer, stating (a) the assumptions on which the projections were prepared, (b) that the assumptions, except as
otherwise noted, were prepared on a consistent basis with the operation of Borrowers’ business during the immediately
preceding fiscal year and with factors known to exist as of the date of the certificate or reasonably anticipated to exist during
the periods covered by the projections, and (c) that the officers signing the certificate have no reason to believe that the
projections are incorrect or misleading in any material respect. 

	
             
 	
            8.26
 	
            [RESERVED]  
 

	
            Section 9.
 	
            NEGATIVE COVENANTS.
 

9.1                  Debt. No
Borrower shall, either directly or indirectly, create, assume, incur or have outstanding any Debt (including purchase money
indebtedness), or become liable, whether as endorser, guarantor, surety or otherwise, for any debt or obligation of any other
Person, except:

(a)          the Obligations under this Agreement and the other Loan Documents;

(b)          obligations of the Borrowers (or any of them) for Taxes, assessments, municipal or other governmental charges;

(c)          obligations of the Borrowers (or any of them) for accounts payable, other than for money borrowed, incurred in the ordinary course of business;

(d)          Hedging Obligations incurred in favor of the Bank or an Affiliate thereof for bona fide hedging purposes and not for speculation;

(e)          purchase money Debt and Capitalized Lease Obligations incurred to acquire Equipment or other fixed assets, whether payable currently or in the future, provided that the amount of such Debt incurred shall not exceed (i) Two Million Five Hundred Thousand and 00/100 Dollars ($2,500,000.00) in the aggregate during calendar year 2007, or (ii) Three Million and 00/100 Dollars ($3,000,000.00) in the aggregate during calendar year 2008, or any calendar year thereafter.

(f)           Debt described on Schedule 9.1 and any extension, renewal or refinancing thereof so long as the principal amount thereof is not increased; 

(g)          Debt incurred as a result of endorsing negotiable instruments received in the ordinary course of business; 

 

47

(h)          Debt consisting of guarantees by any Borrower(s) of the Debt of any other Borrower(s) so long as the Debts so guaranteed are otherwise permitted under this Section 9.1; and 

(i)           Subordinated Debt. 

9.2                   Encumbrances. No
Borrower shall, either directly or indirectly, create, assume, incur or suffer or permit to exist any Lien or charge of any kind
or character upon any asset of any Borrower, whether owned at the date hereof or hereafter acquired, except for Permitted Liens
and Liens in favor of Bank to secure the Obligations. Without limiting the generality of the foregoing, each Borrower specifically
agrees that it will not pledge to any Person other than the Bank, or otherwise permit to exist any Lien against, any of its
capital stock or other equity interests (if any) in IntriCon Pte Ltd or IntriCon GmbH.

9.3                   Investments. No
Borrower shall, either directly or indirectly, make or have outstanding any Investment, except:

(a)          equity contributions by any Borrower to any other Borrower

(b)          guarantees by Borrower(s) of the Debts of other Borrower(s) permitted under Section 9.1(h) above;

(c)          Cash Equivalent Investments;

(d)          Equity and/or debt securities issued by any Account Debtors of Borrowers in the course of any proceedings regarding such Account Debtors under the Bankruptcy Code in satisfaction of Borrowers’ claims against such Account Debtors ; and

(e)          Investments listed on Schedule 9.3 as of the date hereof;

provided, however, that (i) any Investment which when made complies with the requirements of the definition of the term “Cash Equivalent Investment” may continue to be held notwithstanding that such Investment if made thereafter would not comply with such requirements.

9.4                   Transfer; Merger; Sales. No Borrower shall, nor permit any Subsidiary to, whether in one transaction or a series of related transactions, (a) be a
party to any merger or consolidation, or purchase or otherwise acquire all or substantially all of the assets or any Capital
Securities of any class of, or any partnership or joint venture interest in, any other Person, except for (i) any such merger,
consolidation, sale, transfer, conveyance, lease or assignment of or by any Borrower into any other Borrower; (ii) any such
purchase or other acquisition by any Borrower of the assets or equity interests of any other Borrower, (b) sell, transfer, convey
or lease all or any substantial part of its assets or Capital Securities (including the sale of Capital Securities of any
Subsidiary), except for asset dispositions permitted pursuant to Section 6.2, or
(c) sell or assign, with or without recourse, any receivables.

9.5                   Issuance of Capital
Securities. No Borrower shall and shall not permit any Subsidiary to, issue any Capital Securities other
than (a) any issuance of shares of the such Borrower’s common Capital Securities pursuant to any employee or director option
program, benefit plan or compensation program, or (b) any issuance of Capital Securities by a Subsidiary to the applicable
Borrower or another Subsidiary to such Borrower in accordance with Section 9.6.

 

48

9.6                   Distributions.
No Borrower shall and shall not permit any Subsidiary to, (a) make any distribution or dividend (other than stock dividends),
whether in cash or otherwise, to any of its equityholders, (b) purchase or redeem any of its equity interests or any warrants,
options or other rights in respect thereof, (c) pay any management fees or similar fees to any of its equityholders or any
Affiliate thereof, (d) pay or prepay interest on, principal of, premium, if any, redemption, conversion, exchange, purchase,
retirement, defeasance, sinking fund or any other payment in respect of any Subordinated Debt except if, as and to the extent
permitted by the applicable subordination agreement or subordination provisions governing the subordination of such Subordinated
Debt in favor of the Obligations, or (e) set aside funds for any of the foregoing. Notwithstanding the foregoing, any Subsidiary
may pay dividends or make other distributions to the applicable Borrower.

9.7                   Transactions with
Affiliates. Except as set forth on Schedule 9.7, no
Borrower shall, directly or indirectly, enter into or permit to exist any transaction with any of its Affiliates or with any
director, officer or employee of any Borrower other than (i) programs relating to the Capital Securities of IntriCon established
for the employees, officers and/or directors of Borrowers and their Subsidiaries which are approved by IntriCon’s board of
directors and fully disclosed to the Bank, (ii) payment of salaries, bonuses and other compensation to the employees, directors and officers
of Borrowers and their Subsidiaries in the ordinary course of business consistent with past practices, (iii) loans and advances to
employees and officers in an aggregate principal amount of $25,000 outstanding at any one time and (iv) any other transactions in
the ordinary course of, and pursuant to the reasonable requirements of, the business of any such Borrower and upon fair and
reasonable terms which are fully disclosed to the Bank and are no less favorable to such Borrower than would be obtained in a
comparable arm’s length transaction with a Person that is not an Affiliate of such Borrower. Notwithstanding anything to the
contrary contained in this Section or otherwise in this Agreement or any other Loan Document, nothing contained herein or therein
shall be deemed to prohibit Borrowers from accepting collections from the Account Debtors of its non-Borrower foreign Subsidiaries
and remitting such collections (but only such collections) to such non-Borrower foreign Subsidiaries for the purposes of
facilitating payment by and collection from such Account Debtors obligated to such non-Borrower foreign Subsidiaries, which
transactions shall be reflected on the books and records of Borrowers and their Subsidiaries as the creation of intercompany
Accounts owing from Borrowers to the applicable non-Borrower foreign Subsidiaries and the subsequent satisfaction and payment of
such intercompany Accounts, all in the ordinary course of business consistent with the past practices of Borrowers and their
non-Borrower foreign Subsidiaries with respect to such matters.

9.8                   Unconditional Purchase
Obligations. No Borrower shall and shall not permit any Subsidiary to, enter into or be a party to any
contract for the purchase of materials, supplies or other property or services if such contract requires that payment be made by
it regardless of whether delivery is ever made of such materials, supplies or other property or services.

9.9                   Cancellation of Debt. No Borrower shall and shall not permit any Subsidiary to, cancel any claim or debt owing to it, except for (i) trade or
volume discount, allowance, discount, rebate or adjustment granted to Account Debtors in the ordinary course of such
Borrower’s business consistent with past practices and (ii) other cancellations for reasonable consideration or in the
ordinary course of business.

9.10                 Inconsistent Agreements. No
Borrower shall and shall not permit any Subsidiary to, enter into any agreement containing any provision which would (a) be
violated or breached by any borrowing by any Borrower hereunder or by the performance by any Borrower or any Subsidiary of any of
its Obligations hereunder or under any other Loan Document, (b) prohibit any Borrower or any Subsidiary from granting to the Bank
a Lien on any of its assets or (c) create or permit to exist or become effective any encumbrance or restriction on the ability of
any Subsidiary to (i) pay dividends or make 

 

49

other distributions to any Borrower or any other Subsidiary, or pay any Debt owed to any Borrower or any other Subsidiary, (ii) make loans or advances to any Borrower or any other Subsidiary, or (iii) transfer any of its assets or properties to any Borrower or any other Subsidiary, other than (A) customary restrictions and conditions contained in agreements relating to the sale of all or a substantial part of the assets of any Subsidiary pending such sale, provided that such restrictions and conditions apply only to the Subsidiary to be sold and such sale is permitted hereunder, (B) restrictions or conditions imposed by any agreement relating to purchase money Debt, Capital Leases and other secured Debt permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Debt, and (C) customary provisions in leases and other contracts restricting the
assignment thereof.

9.11                 Use of Proceeds. Neither the
Borrowers nor any of their respective Subsidiaries or Affiliates shall use any portion of the proceeds of the Loans, either
directly or indirectly, for the purpose of purchasing any securities underwritten by ABN AMRO Incorporated, LaSalle Bank Financial
Services, Inc., or any other Affiliate of the Bank.

9.12                 Bank Accounts. No Borrower shall
establish any new Deposit Accounts or other bank accounts, other than Deposit Accounts or other bank accounts established at or
with the Bank, without the prior written consent of the Bank.

9.13                 Business Activities; Change of Legal Status and
Organizational Documents. No Borrower shall and shall not permit any Subsidiary to, (a) engage in any line
of business other than the businesses engaged in on the date hereof and businesses reasonably related thereto, (b) change its
name, its Organizational Identification Number, if it has one, its type of organization, or its jurisdiction of organization
without giving at least sixty (60) days prior notice of such change to the Bank, provided, however, that ITC may change its name to IntriCon Tibbetts Corporation so long as the documents, certificates and other
evidence of such name change is promptly delivered to the Bank, or (c) permit its charter, bylaws or other organizational
documents to be amended or modified in any way which could reasonably be expected to materially adversely affect the interests of
the Bank.

9.14                 Modification of Applicable Agreements. Promptly upon execution thereof, each Borrower will deliver to the Bank a true and correct copy of any and all
amendments, restatements, replacements, extensions, supplements or other modifications of any Applicable Agreement, provided,
however, each Borrower agrees that it will not amend, restate, replace, extend, supplement or otherwise modify any of the
Applicable Agreements set forth on Schedule 9.14 in any way which could reasonably
be expected to materially adversely affect the interests of the Bank without providing prior written notice of the same to the
Bank. Other than as set forth on Schedule 9.14, as of the Closing Date, no Borrower
is a party to any Applicable Agreement.

9.15                 Amendments to Acquisition Agreement. Each Borrower covenants that it will not enter into any material amendment or modification of, or waive, or consent to
any waiver of, any of the material provisions of, the Acquisition Agreement or any other Acquisition Document without the consent
of the Bank, not to be unreasonably withheld or delayed.

	
            Section 10.
 	
            FINANCIAL COVENANTS.
 

10.1                 Tangible Net Worth. As of each of
the measurement dates set forth in the chart below, the Borrowers shall maintain consolidated Tangible Net Worth in an amount not
less than the amount set opposite such date in the chart below:

 

 

50

 

	
            Measurement Date
 	
            Tangible Net Worth Requirement
 
	
            Last day of each calendar month through and including November 30, 2007:
 	
            $5,800,000
 
	
            Last day of each calendar month from and after December 31, 2007:
 	
            $6,000,000, plus fifty percent (50.00%) of the aggregate consolidated Net Income earned by the Borrowers and their respective Subsidiaries during all previous calendar years, commencing with the calendar year ending on December 31, 2007, provided, however, that net losses incurred in any  calendar year shall not be subtracted in the determination of the Tangible Net Worth requirement.
 

 

10.2                 Funded Debt to EBITDA. As of the
last day of each calendar quarter, the Borrowers shall maintain a ratio of consolidated Funded Debt to consolidated EBITDA, for
the period of four (4) consecutive calendar months then-ended, of not greater than 3.00 to 1.00 on and before December 31, 2008,
and not greater than 2.75 to 1.00 thereafter.

10.3                 Fixed Charge Coverage. As of the
last day of each calendar quarter, for the period of four (4) consecutive calendar quarters then-ended, the Borrowers and their
respective Subsidiaries shall maintain a ratio of (a) the total of consolidated EBITDA for such period, minus the sum of all income taxes paid in cash by the Borrowers on a consolidated basis and all
Capital Expenditures of the Borrowers made during such period which are not financed with Funded Debt (excluding, however, Capital Expenditures in the amount of $616,299 made in the fourth quarter of
2006, and Capital Expenditures in the amount of $279,144 made in the first quarter of 2007, in each case for the purpose of
constructing clean rooms), to (b) the sum for such period of (i) Interest Charges plus (ii) payments made (and, without duplication, payments required to be made) in respect of principal of Funded Debt
(including the Term Loan, but excluding the Revolving Loans), of not less than 1.25 to 1.00 on and before December 31, 2008, and
not less than 1.50 to 1.00 thereafter. 

10.4                 Capital Expenditures. The
Borrowers shall not incur Capital Expenditures in an amount greater than Three Million Five Hundred Thousand and 00/100 Dollars
($3,500,000.00) in the aggregate in any one fiscal year.

	
            Section 11.
 	
            EVENTS OF DEFAULT.
 

The Borrowers, without notice or demand of any kind, shall be in default under this Agreement upon the occurrence of any of the following events (each an “Event of Default”).

11.1                 Nonpayment of Obligations. Any
amount due and owing on any Note or any of the Obligations, whether by its terms or as otherwise provided herein, is not paid when
due.

11.2                 Misrepresentation. Any written
warranty, representation, certificate or statement of any Obligor in this Agreement, the other Loan Documents shall be false in
any material respect when made (or deemed made pursuant to Section 3.5), or if any
financial data or any other information now or hereafter furnished to the Bank by or on behalf of any Obligor shall prove to be false, inaccurate or misleading in any material respect.

 

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11.3                 Nonperformance. Any failure to
perform or default in the performance of any covenant, condition or agreement contained in this Agreement and, if capable of being
cured, such failure to perform or default in performance continues for a period of twenty days (20) days after the Borrowing Agent
receives notice or knowledge from any source of such failure to perform or default in performance, or in the other Loan Documents
and, if capable of being cured, such failure to perform or default in performance continues for a period of twenty (20) days after
the Borrowing Agent receives notice or knowledge from any source of such failure to perform or default in performance;
provided that, in either such case, if Borrowers have promptly commenced
appropriate actions to cure such default during such twenty (20) day period and have diligently pursued such actions but are not
able to complete such cure within such twenty (20) days through no fault of their own, such period shall be extended by an
additional ten (10) days; and provided further, that failure by any Borrower to
comply with Section 8.24 hereof shall not be subject to the foregoing twenty
(20)-day cure period or additional ten (10)-day cure period.

11.4                 [RESERVED].

11.5                 Default under Other Debt. Any
default by any Obligor in the payment of any Debt for any other obligation with an outstanding principal balance of $50,000 or
more beyond any period of grace provided with respect thereto or in the performance of any other term, condition or covenant
contained in any agreement (including any capital or operating lease or any agreement in connection with the deferred purchase
price of property) under which any such obligation is created, the effect of which default is to cause or permit the holder of
such obligation (or the other party to such other agreement) to cause such obligation to become due prior to its stated maturity
or terminate such other agreement.

11.6                 [RESERVED].

11.7                 Bankruptcy, Insolvency, etc. Any
Obligor becomes insolvent or generally fails to pay, or admits in writing its inability or refusal to pay, debts as they become
due; or any decree or order for relief in respect of any Obligor is entered under any bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law, whether now or hereafter in effect, of
any jurisdiction; or any Obligor applies for, consents to, or acquiesces in the appointment of a trustee, receiver or other
custodian for such Obligor or any property thereof, or makes a general assignment for the benefit of creditors; or, in the absence
of such application, consent or acquiescence, a trustee, receiver or other custodian is appointed for any Obligor or for a
substantial part of the property of any thereof and is not discharged within sixty (60) days; or any bankruptcy, reorganization,
debt arrangement, or other case or proceeding under any bankruptcy or insolvency law, or any dissolution or liquidation
proceeding, is commenced in respect of any Obligor, and if such case or proceeding is not commenced by such Obligor, it is
consented to or acquiesced in by such Obligor, or remains undismissed for sixty (60) days; or any Obligor takes any action to
authorize, or in furtherance of, any of the foregoing.

11.8                 Judgments. The entry of any final
judgment, decree, levy, attachment, garnishment or other process for the amount in excess of $50,000 against any Borrower or any
other Obligor which is not fully covered by insurance, and such judgment or other process shall not have been, within thirty (30)
days from the entry thereof, (i) bonded over to the satisfaction of the Bank and appealed, (ii) vacated, or (iii)
discharged.

11.9                 Divestitures. Any order, judgment
or decree is entered in any proceedings against the any Obligor decreeing a split-up of such Obligor which requires the
divestiture of assets representing a substantial part, or the divestiture of the stock
of a Subsidiary of any Obligor whose assets represent a substantial part, of the consolidated assets of the such Obligor and its
Subsidiaries (determined in accordance with GAAP) or which requires the divestiture of assets, or stock of a Subsidiary, which
shall 

 

52

have contributed a substantial part of the Net Income of any Obligor and its Subsidiaries (determined in accordance with
GAAP) for any of the three fiscal years then most recently ended, and such order, judgment or decree remains unstayed and in
effect for more than 60 days.

11.10                 Change in Control.  The occurrence of any Change in Control.

11.11               Collateral Impairment. Any event shall occur,
whether or not insured or insurable, as a result of which (a) the Borrowing Base is reduced during any month by more than fifteen
percent (15%) other than as a result of sales of Inventory and collections of Accounts in the ordinary course, (b) Contingent
Liabilities are incurred by the Borrowers on a consolidated basis in excess of $1,000,000 which would be required to be reflected
in the footnotes or a balance sheet prepared in accordance with generally accepted accounting principles, consistently applied,
(c) operations of any Borrower are suspended or terminated for twenty (20) days or more at any facility of any Borrower generating
more than twenty percent (20%) of such Borrower’s consolidated revenues for the preceding fiscal year; or (d) any customer or
group of customers representing more than twenty (20%) of any Borrower’s consolidated revenues for the preceding fiscal year
terminate or suspend purchases of Inventory from such Borrower.

11.12               [RESERVED].

11.13               Employee Plan. A contribution failure occurs
with respect to any Employee Plan sufficient to give rise to a Lien under Section 302(f) of ERISA. 

	
            Section 12.
 	
            REMEDIES.
 

Upon the occurrence and during the continuance of an Event of Default, the Bank shall have all rights, powers and remedies set forth in the Loan Documents, in any written agreement or instrument (other than this Agreement or the Loan Documents) relating to any of the Obligations or any security therefor, as a secured party under the UCC or as otherwise provided at law or in equity.  Without limiting the generality of the foregoing, the Bank may, at its option upon the occurrence of an Event of Default, declare its commitments to the Borrowers to be terminated and all Obligations to be immediately due and payable, provided, however, that upon the occurrence of an Event of Default under Section 11.7, all commitments of the Bank to the Borrowers shall immediately terminate and all Obligations shall
be automatically due and payable, all without demand, notice or further action of any kind required on the part of the Bank.  Each Borrower hereby waives any and all presentment, demand, notice of dishonor, protest, and all other notices and demands in connection with the enforcement of Bank’s rights under the Loan Documents, and hereby consents to, and waives notice of release, with or without consideration, of any of the Borrowers or of any of the other Obligors or of any Collateral, notwithstanding anything contained herein or in the Loan Documents to the contrary.  In addition to the foregoing, upon the occurrence and during the continuation of any Event of Default:

12.1                 Possession and Assembly of Collateral. The Bank may, without notice, demand or legal process of any kind, take possession of any or all of the Collateral (in
addition to Collateral of which the Bank already has possession), wherever it may be found, and for that purpose may pursue the
same wherever it may be found, and may at any time enter into any Borrower’s premises where any of the Collateral may be or
is supposed to be, and search for, take possession of, remove, keep and store any of the Collateral until the same shall be sold
or otherwise disposed of and the Bank shall have the right to store and conduct a sale of the same in any Borrower’s premises
without cost to the Bank. At the Bank’s request, the applicable Borrower will, at such Borrower’s sole expense, assemble
the Collateral and make it available to the Bank at a place or places to be designated by the Bank which is reasonably convenient to the Bank and such Borrower.

 

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12.2                 Sale of Collateral. The Bank may
sell any or all of the Collateral at public or private sale, upon such terms and conditions as the Bank may deem proper, and the
Bank may purchase any or all of the Collateral at any such sale. Each Borrower acknowledges that the Bank may be unable to effect
a public sale of all or any portion of the Collateral because of certain legal and/or practical restrictions and provisions which
may be applicable to the Collateral and, therefore, may be compelled to resort to one or more private sales to a restricted group
of offerees and purchasers. Each Borrower consents to any such private sale so made even though at places and upon terms less
favorable than if the Collateral were sold at public sale. The Bank shall have no obligation to clean-up or otherwise prepare the
Collateral for sale. The Bank may apply the net proceeds, after deducting all costs, expenses, attorneys’ and
paralegals’ fees incurred or paid at any time in the collection, protection and sale of the Collateral and the Obligations,
to the payment of any Note and/or any of the other Obligations, returning the excess proceeds, if any, to the Borrowers. The
Borrowers shall remain liable for any amount remaining unpaid after such application, with interest at the Default Rate. Any
notification of intended disposition of the Collateral required by law shall be conclusively deemed reasonably and properly given
if given by the Bank at least ten (10) calendar days before the date of such disposition. Each Borrower hereby confirms, approves
and ratifies all acts and deeds of the Bank relating to the foregoing, and each part thereof, and expressly waives any and all
claims of any nature, kind or description which it has or may hereafter have against the Bank or its representatives, by reason of
taking, selling or collecting any portion of the Collateral. Each Borrower consents to releases of the Collateral at any time
(including prior to default) and to sales of the Collateral in groups, parcels or portions, or as an entirety, as the Bank shall
deem appropriate. Each Borrower expressly absolves the Bank from any loss or decline in market value of any Collateral by reason
of delay in the enforcement or assertion or nonenforcement of any rights or remedies under this Agreement.

12.3                 Standards for Exercising Remedies.
To the extent that applicable law imposes duties on the Bank to exercise remedies in a commercially reasonable manner, each
Borrower acknowledges and agrees that it is not commercially unreasonable for the Bank (a) to fail to incur expenses reasonably
deemed significant by the Bank to prepare Collateral for disposition or otherwise to complete raw material or work-in-process into
finished goods or other finished products for disposition, (b) to fail to obtain third party consents for access to Collateral to
be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the
collection or disposition of Collateral to be collected or disposed of, (c) to fail to exercise collection remedies against
Account Debtors or other Persons obligated on Collateral or to remove liens or encumbrances on or any adverse claims against
Collateral, (d) to exercise collection remedies against Account Debtors and other Persons obligated on Collateral directly or
through the use of collection agencies and other collection specialists, (e) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral is of a specialized nature, (f) to contact other
Persons, whether or not in the same business as the Borrowers (or any of them), for expressions of interest in acquiring all or
any portion of the Collateral, (g) to hire one or more professional auctioneers to assist in the disposition of Collateral,
whether or not the collateral is of a specialized nature, (h) to dispose of Collateral by utilizing internet sites that provide
for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that
match buyers and sellers of assets, (i) to dispose of assets in wholesale rather than retail markets, (j) to disclaim disposition
warranties, including any warranties of title, (k) to purchase insurance or credit enhancements to insure the Bank against risks
of loss, collection or disposition of Collateral or to provide to the Bank a guaranteed return from the collection or disposition
of Collateral, or (l) to the extent deemed appropriate by the Bank, to obtain the services of other brokers, investment bankers,
consultants and other professionals to assist the Bank in the collection or disposition of any of the Collateral. Each Borrower
acknowledges that the purpose of this Section is to provide non-exhaustive indications of what actions or omissions by the Bank
would not be commercially unreasonable in the Bank’s exercise of remedies against the Collateral and that other actions or omissions by the Bank shall not be deemed commercially unreasonable solely on account of not being indicated in this Section.  Without limitation upon the foregoing, nothing contained in this Section shall be construed to grant any rights to the Borrowers (or any of them) or to impose any duties on the Bank that would not have been granted or imposed by this Agreement or by applicable law in the absence of this Section.

 

54

12.4                 UCC and Offset Rights. The Bank
may exercise, from time to time, any and all rights and remedies available to it under the UCC or under any other applicable law
in addition to, and not in lieu of, any rights and remedies expressly granted in this Agreement or in any other agreements between
any Obligor and the Bank, and may, without demand or notice of any kind, appropriate and apply toward the payment of such of the
Obligations, whether matured or unmatured, including costs of collection and attorneys’ and paralegals’ fees, and in
such order of application as the Bank may, from time to time, elect, any indebtedness of the Bank to any Obligor, however created
or arising, including balances, credits, deposits, accounts or moneys of such Obligor in the possession, control or custody of, or
in transit to the Bank. Each Borrowers, on behalf of itself and each Obligor, hereby waives the benefit of any law that would
otherwise restrict or limit the Bank in the exercise of its right, which is hereby acknowledged, to appropriate at any time
hereafter any such indebtedness owing from the Bank to any Obligor.

12.5                 Additional Remedies.  The Bank shall have the right and power to:

(a)          instruct the Borrowers (or any of them), at such Borrower’s own expense, to notify any parties obligated on any of the Collateral, including any Account Debtors, to make payment directly to the Bank of any amounts due or to become due thereunder, or the Bank may directly notify such obligors of the security interest of the Bank, and/or of the assignment to the Bank of the Collateral and direct such obligors to make payment to the Bank of any amounts due or to become due with respect thereto, and thereafter, collect any such amounts due on the Collateral directly from such Persons obligated thereon;

(b)          enforce collection of any of the Collateral, including any Accounts, by suit or otherwise, or make any compromise or settlement with respect to any of the Collateral, or surrender, release or exchange all or any part thereof, or compromise, extend or renew for any period (whether or not longer than the original period) any indebtedness thereunder;

(c)          take possession or control of any proceeds and products of any of the Collateral, including the proceeds of insurance thereon;

(d)          extend, renew or modify for one or more periods (whether or not longer than the original period) any Note, any other of the Obligations, any obligation of any nature of any other obligor with respect to any Note or any of the Obligations;

(e)          grant releases, compromises or indulgences with respect to any Note, any of the Obligations, any extension or renewal of any of the Obligations, any security therefor, or to any other obligor with respect to any Note or any of the Obligations;

(f)           transfer the
whole or any part of securities which may constitute Collateral into the name of the Bank or the Bank’s nominee without
disclosing, if the Bank so desires, that such securities so transferred are subject to the security interest of the Bank, and any
corporation, association, or any of the managers or trustees of any trust issuing any of such securities, or any transfer agent,
shall not be bound to inquire, in the event that the Bank or such nominee makes any further transfer of such securities, or any
portion thereof, as to whether the Bank or such nominee has the right to make such further transfer, and shall not be liable for transferring the same;

 

55

(g)          vote the Collateral;

(h)          make an election with respect to the Collateral under Section 1111 of the Bankruptcy Code or take action under Section 364 or any other section of the Bankruptcy Code; provided, however, that any such action of the Bank as set forth herein shall not, in any manner whatsoever, impair or affect the liability of any Borrower hereunder, nor prejudice, waive, nor be construed to impair, affect, prejudice or waive the Bank’s rights and remedies at law, in equity or by statute, nor release, discharge, nor be construed to release or discharge, any Borrower, any guarantor or other Person liable to the Bank for the Obligations; 

(i)           at any time, and from time to time, accept additions to, releases, reductions, exchanges or substitution of the Collateral, without in any way altering, impairing, diminishing or affecting the provisions of this Agreement, the Loan Documents, or any of the other Obligations, or the Bank’s rights hereunder, under any Note or under any of the other Obligations;

(j)           to the extent that Bank deems it impracticable to effect a public sale of all or any part of the Pledged Equity Interests, Bank may elect to make one or more private sales of any such Collateral to a restricted group of purchasers who will be obligated to agree, among other things, to acquire such Collateral for their own account, for investment and not with a view to the distribution or resale thereof.  Each Borrower acknowledges that any such private sale may be at prices and on terms less favorable to the seller than the prices and other terms which might have been obtained at a public sale and, notwithstanding the foregoing, agrees that such private sale shall be deemed to have been made in a commercially reasonable manner and that Bank shall have no
obligation to delay sale of any such securities for the period of time necessary to permit the issuer of such securities to register such securities for public sale under the Securities Act of 1933.  To the extent not specified by applicable law, the parties agree that ten (10) days shall constitute a “commercially reasonable amount of time” for purpose of this subsection (j); and

(k)          to vote for a board resolution, or to sign an instrument in writing, sanctioning the transfer of any or all of the Pledged Equity Interests into the name of Bank or into the name of any transferee to whom the Pledged Equity Interests or any part thereof may be sold pursuant to this Section 12.

Each Borrower agrees that the Bank shall not be liable for any error of judgment or mistakes of fact or law made in good faith, and not constituting gross negligence or intentional misconduct, with respect to actions taken in connection with the Collateral or the administration or enforcement of this Agreement.

12.6                 Attorney-in-Fact. Each Borrower
hereby irrevocably makes, constitutes and appoints the Bank (and any officer of the Bank or any Person designated by the Bank for
that purpose) as such Borrower’s true and lawful proxy and attorney-in-fact (and agent-in-fact) in such Borrower’s name,
place and stead, with full power of substitution, to (i) take such actions as are permitted in this Agreement, (ii) execute such
financing statements and other documents and to do such other acts as the Bank may require to perfect and preserve the Bank’s
security interest in, and to enforce such interests in the Collateral, and (iii) carry out any remedy provided for in this
Agreement, including endorsing such Borrower’s name to checks, drafts, instruments and other items of payment, and proceeds
of the Collateral, executing change of address forms with the postmaster of the United States Post Office serving the address of
such Borrower, changing the address of such Borrower to that of the Bank, opening all envelopes addressed to such Borrower and
applying any payments contained therein to the Obligations; provided that all such powers (other than the powers to (1) endorse
Borrowers’ names to checks, drafts, instruments and other items of payment, and proceeds of the Collateral received by the
Bank, (2) opening mail received into any Lockbox established under Section 6.8 and
(3) applying all proceeds of Collateral received by the Bank (including any such proceeds enclosed with the mail opened under the
preceding clause (2)) to the Obligations, which powers the Bank may exercise at any time) shall be exercisable by the Bank only
after 

 

56

either (x) a request for the applicable Borrower(s) to take such actions and the failure by Borrowers to take such actions
within five (5) days of such request or (y) the occurrence and during the continuance of an Event of Default. Each Borrower hereby
acknowledges that the constitution and appointment of such proxy and attorney-in-fact are coupled with an interest and are
irrevocable. Each Borrower hereby ratifies and confirms all that such attorney-in-fact may do or cause to be done by virtue of any
provision of this Agreement.

12.7                 No Marshaling. The Bank shall not
be required to marshal any present or future collateral security (including this Agreement and the Collateral) for, or other
assurances of payment of, the Obligations or any of them or to resort to such collateral security or other assurances of payment
in any particular order. To the extent that it lawfully may, each Borrower hereby agrees that it will not invoke any law relating
to the marshaling of collateral which might cause delay in or impede the enforcement of the Bank’s rights under this
Agreement or under any other instrument creating or evidencing any of the Obligations or under which any of the Obligations is
outstanding or by which any of the Obligations is secured or payment thereof is otherwise assured, and, to the extent that it
lawfully may, each Borrower hereby irrevocably waives the benefits of all such laws.

12.8                 Application of Proceeds. The Bank
will within three (3) Business Days after receipt of cash or solvent credits from collection of items of payment, proceeds of
Collateral or any other source, apply the whole or any part thereof against the Obligations secured hereby. After the occurrence
and during the continuance of an Event of Default, the Bank shall further have the exclusive right to determine how, when and what
application of such payments and such credits shall be made on the Obligations, and such determination shall be conclusive upon
each Borrower. Any proceeds of any disposition by the Bank of all or any part of the Collateral may be first applied by the Bank
to the payment of expenses incurred by the Bank in connection with the Collateral, including attorneys’ fees and legal
expenses as provided for in Section 13 hereof.

12.9                 No Waiver. No Event of Default
shall be waived by the Bank except in writing. No failure or delay on the part of the Bank in exercising any right, power or
remedy hereunder shall operate as a waiver of the exercise of the same or any other right at any other time; nor shall any single
or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other
right, power or remedy hereunder. There shall be no obligation on the part of the Bank to exercise any remedy available to the
Bank in any order. The remedies provided for herein are cumulative and not exclusive of any remedies provided at law or in equity.
Each Borrower agrees that in the event that such Borrower fails to perform, observe or discharge any of its Obligations or
liabilities under this Agreement or any other agreements with the Bank, no remedy of law will provide adequate relief to the Bank,
and further agrees that the Bank shall be entitled to temporary and permanent injunctive relief in any such case without the
necessity of proving actual damages.

12.10               Letters of Credit. With respect to all Letters
of Credit for which presentment for honor shall not have occurred at the time of an acceleration pursuant to this Section 12, the Borrowers shall at such time deposit in a cash collateral account opened by the
Bank an amount equal to the Letter of Credit Obligations then outstanding. Amounts held in such cash collateral account shall be
applied by the Bank to the payment of drafts drawn under such Letters of Credit, and the unused portion thereof after all such
Letters of Credit shall have expired or been fully drawn upon, if any, shall be applied to repay the Obligations, in such order of
application as the Bank may, in its sole discretion, from time to time elect. After all such Letters of Credit shall have expired or been fully drawn upon, all commitments to make Loans hereunder have terminated and all other Obligations have been indefeasibly satisfied and paid in full in cash, the balance, if any, in such cash collateral account shall be returned to the Borrowers or such other Person as may be lawfully entitled thereto.

 

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12.11               Voting Rights in Respect of the Pledged Equity
Interests. So long as no Event of Default shall have occurred and be continuing and the Bank shall not
have given notice to Borrowers that it is exercising its rights under this Section 12.11, to the extent permitted by law, IntriCon may exercise any and all voting and other consensual rights pertaining to the
Pledged Equity Interests or any part thereof for any purpose not inconsistent with the terms of this Agreement. Upon the
occurrence and during the continuance of an Event of Default and notice from the Bank to Borrowers that it is exercising its
rights under this Section 12.11, all rights of IntriCon to exercise the voting and
other consensual rights which it would otherwise be entitled to exercise pursuant to this Section
12.11 shall cease and all such rights shall thereupon become vested in the Bank which shall then have the
sole right to exercise such voting and other consensual rights.

12.12               Distribution Rights in Respect of the Pledged Equity Interests.

(a)          So long as no Event of Default shall have occurred and be continuing and the Bank shall not have given notice to Borrowers that it is exercising its rights under this Section 12.12, and subject to Section 6.12(c) hereof, IntriCon may receive and retain any and all distributions or interest paid in respect of the Pledged Equity Interests.

(b)          Upon the occurrence and during the continuance of an Event of Default and after notice from the Bank to Borrowers that it is exercising its rights under this Section 12.12:

(i)           all rights of IntriCon to receive the distributions and interest payments which it would otherwise be authorized to receive and retain pursuant to paragraph (a) of this Section 12.12 shall cease and all such rights shall thereupon be vested in Bank which shall then have the sole right to receive and hold as additional Collateral such dividends and interest payments; and

(ii)          all distributions and interest payments which are received by IntriCon contrary to the provisions of paragraph (ii) of this clause shall be received in trust for the benefit of Bank, shall be segregated from other property or funds of IntriCon, and shall be forthwith paid over to Bank as additional Collateral in the exact form received, to be held by Bank as additional Collateral and as further collateral security for the Obligations.

	
            Section 13.
 	
            MISCELLANEOUS.
 

13.1                 Obligations Absolute. None of the
following shall affect the Obligations of any Borrower to the Bank under this Agreement or the Bank’s rights with respect to
the Collateral:

(a)          acceptance or retention by the Bank of other property or any interest in property as security for the Obligations;

(b)          release by the Bank of any of the Borrowers or any of the other Obligors or of all or any part of the Collateral (other than with respect to the Obligor or Collateral so released);

(c)          release, extension, renewal, modification or substitution by the Bank of any Note, or any note evidencing any of the Obligations, or the compromise of the liability of any Borrower or any other Obligor; or

 

58

(d)          failure of the Bank to resort to any other security or to pursue Borrowers (or any of them) or any other obligor liable for any of the Obligations before resorting to remedies against the Collateral.

13.2                 Entire Agreement. This Agreement
and the other Loan Documents (i) are valid, binding and enforceable against each Borrower and the Bank in accordance with their
respective provisions and no conditions exist as to their legal effectiveness; (ii) constitute the entire agreement between the
parties with respect to the subject matter hereof and thereof; and (iii) are the final expression of the intentions of each
Borrower and the Bank. No promises, either expressed or implied, exist between any Borrower and the Bank, unless contained herein
or therein. This Agreement, together with the other Loan Documents, supersedes all negotiations, representations, warranties,
commitments, term sheets, discussions, negotiations, offers or contracts (of any kind or nature, whether oral or written) prior to
or contemporaneous with the execution hereof with respect to any matter, directly or indirectly related to the terms of this
Agreement and the other Loan Documents. This Agreement and the other Loan Documents are the result of negotiations among the Bank,
the Borrowers and the other parties thereto, and have been reviewed (or have had the opportunity to be reviewed) by counsel to all
such parties, and are the products of all parties. Accordingly, this Agreement and the other Loan Documents shall not be construed
more strictly against the Bank merely because of the Bank’s involvement in their preparation.

13.3                 Amendments; Waivers. No delay on
the part of the Bank in the exercise of any right, power or remedy shall operate as a waiver thereof, nor shall any single or
partial exercise by the Bank of any right, power or remedy preclude other or further exercise thereof, or the exercise of any
other right, power or remedy. No amendment, modification or waiver of, or consent with respect to, any provision of this Agreement
or the other Loan Documents shall in any event be effective unless the same shall be in writing and acknowledged by the Bank, and
then any such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific
purpose for which given.

13.4                 WAIVER OF DEFENSES. EACH BORROWER,
ON BEHALF OF ITSELF AND ANY OTHER OBLIGOR, WAIVES EVERY PRESENT AND FUTURE DEFENSE, CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH
THE SUCH BORROWER MAY NOW HAVE OR HEREAFTER MAY HAVE TO ANY ACTION BY THE BANK IN ENFORCING THIS AGREEMENT. PROVIDED THE BANK ACTS
IN GOOD FAITH, EACH BORROWER RATIFIES AND CONFIRMS WHATEVER THE BANK MAY DO PURSUANT TO THE TERMS OF THIS AGREEMENT. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK GRANTING ANY FINANCIAL ACCOMMODATION TO THE BORROWERS.

13.5                 FORUM SELECTION AND CONSENT TO
JURISDICTION. ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS, IN THE UNITED
STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, THE COURTS OF THE STATE OF MINNESOTA OR IN THE UNITED STATE DISTRICT
COURT FOR THE DISTRICT OF MINNESOTA; PROVIDED THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE BANK FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION. EACH BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO
THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS, THE STATE OF MINNESOTA, THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS AND THE UNITED
STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. EACH BORROWER
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID AND RETURN RECEIPT

 

59

REQUESTED, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. EACH BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.

13.6                 WAIVER OF JURY TRIAL. THE BANK AND
EACH BORROWER, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE IRREVOCABLY, ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER
THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT, ANY OF THE OTHER OBLIGATIONS, THE COLLATERAL, OR ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH THE
BANK AND EACH BORROWER ARE ADVERSE PARTIES, AND EACH AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK GRANTING ANY FINANCIAL ACCOMMODATION TO THE
BORROWERS.

13.7                 Assignability. The Bank may at any
time assign the Bank’s rights in this Agreement, the other Loan Documents, the Obligations, or any part thereof and transfer
the Bank’s rights in any or all of the Collateral, and the Bank thereafter shall be relieved from all liability with respect
to such Collateral. In addition, the Bank may at any time sell one or more participations in the Loans. No Borrower may sell or
assign this Agreement, or any other agreement with the Bank or any portion thereof, either voluntarily or by operation of law,
without the prior written consent of the Bank. This Agreement shall be binding upon the Bank and each Borrower and their
respective legal representatives and successors. All references herein to the Borrowers or Borrower shall be deemed to include any
successors, whether immediate or remote. In the case of a joint venture or partnership, the terms “Borrower” or
“Borrowers” shall be deemed to include all joint venturers or partners thereof, who shall be jointly and severally
liable hereunder.

13.8                 Confirmations. Each Borrower and
the Bank agree from time to time, upon written request received by it from the other, to confirm to the other in writing the
aggregate unpaid principal amount of the Loans then outstanding under such Note.

13.9                 Confidentiality. The Bank agrees
to use commercially reasonable efforts (equivalent to the efforts the Bank applies to maintain the confidentiality of its own
confidential information) to maintain as confidential all information provided to it by any Borrower, including all information
designated as confidential, except that the Bank may disclose such information (a) to Persons employed or engaged by the Bank in
evaluating, approving, structuring or administering the Loans; (b) to any assignee or participant or potential assignee or
participant that has agreed to comply with the covenant contained in this Section 13.9 (and any such assignee or participant or potential assignee or participant may disclose such information to Persons
employed or engaged by them as described in clause (a) above); (c) as required or requested by any federal or state regulatory
authority or examiner, or as reasonably believed by the Bank to be compelled by any court
decree, subpoena or legal or administrative order or process; (d) as, on the advice of the Bank’s counsel, is required by
law; (e) in connection with the exercise of any right or remedy under the Loan Documents or in connection with any litigation to
which the Bank is a party; (f) to any nationally recognized rating agency that requires access to information about the

 

60

Bank’s investment portfolio in connection with ratings issued with respect to the Bank; (g) to any Affiliate of the Bank who
may provide Bank Products to any Borrower or any Subsidiary of any Borrower, or (h) that ceases to be confidential through no
fault of the Bank.

13.10                 Binding Effect. This Agreement shall become
effective upon execution by each Borrower and the Bank. If this Agreement is not dated or contains any blanks when executed by the
Borrowers, the Bank is hereby authorized, without notice to the Borrowers, to date this Agreement as of the date when it was
executed by the Borrowers, and to complete any such blanks according to the terms upon which this Agreement is
executed.

13.11                 Governing Law. This Agreement, the Loan
Documents and any Note shall be delivered and accepted in and shall be deemed to be contracts made under and governed by the
internal laws of the State of Illinois (but giving effect to federal laws applicable to national banks) applicable to contracts
made and to be performed entirely within such state, without regard to conflict of laws principles.

13.12                 Enforceability. Wherever possible, each
provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by, unenforceable or invalid under any jurisdiction, such provision shall as to
such jurisdiction, be severable and be ineffective to the extent of such prohibition or invalidity, without invalidating the
remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other
jurisdiction.

13.13                 Survival of Borrowers’ Representations.
All covenants, agreements, representations and warranties made by each Borrower herein shall, notwithstanding any investigation by
the Bank, be deemed material and relied upon by the Bank and shall survive the making and execution of this Agreement and the Loan
Documents and the issuance of any Note, and shall be deemed to be continuing representations and warranties until such time as the
Borrowers have fulfilled all of their Obligations to the Bank, and the Bank has been indefeasibly paid in full in cash. The Bank,
in extending financial accommodations to the Borrowers, is expressly acting and relying on the aforesaid representations and
warranties.

13.14                 Extensions of Bank’s Commitment. This
Agreement shall secure and govern the terms of (i) any extensions or renewals of the Bank’s commitment hereunder, and (ii)
any replacement note executed by the Borrowers and accepted by the Bank in its sole and absolute discretion in substitution for
any Note.

13.15                 Time of Essence. Time is of the essence in
making payments of all amounts due the Bank under this Agreement and in the performance and observance by each Borrower of each
covenant, agreement, provision and term of this Agreement.

13.16                 Counterparts; Facsimile Signatures. This
Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts and each such
counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Agreement.
Receipt of an executed signature page to this Agreement by facsimile or other electronic transmission shall constitute effective
delivery thereof. Electronic records of executed Loan Documents maintained by the Bank shall deemed to be originals
thereof.

 

61

13.17                 Notices. Except as otherwise provided herein,
the Borrower waives all notices and demands in connection with the enforcement of the Bank’s rights hereunder. All notices,
requests, demands and other communications provided for hereunder shall be in writing and addressed as follows:

 

	
            To any Borrower:
 	
            IntriCon Corporation 

1260 Red Fox Road

Arden Hills, MN  55112

Attention:  Scott Longval
 
	
             
 	
             
 
	
            With a copy to:
 	
            Blank Rome LLP

One Logan Square

130 North 18th Street

Philadelphia, PA  19103

Attention:  Francis E. Dehel
 
	
             
 	
             
 
	
            To the Bank:
 	
            LaSalle Bank National Association

3500 IDS Center

80 South Eight Street

Minneapolis, Minnesota 55402

Attention: Commercial Lending Division 
 
	
             
 	
             
 
	
            With copy to:
 	
            Briggs and Morgan, P.A.

2200 IDS Center
 80 South Eighth Street
 Minneapolis, MN  55402-2157 
 Attention:  Todd D. Lee
 

 

or, as to each party, at such other address as shall be designated by such party in a written notice to each other party complying as to delivery with the terms of this Subsection.  All notices addressed as above shall be deemed to have been properly given (i) if served in person, upon acceptance or refusal of delivery; (ii) if mailed by certified or registered mail, return receipt requested, postage prepaid, on the third (3rd) day following the day such notice is deposited in any post office station or letter box; or (iii) if sent by recognized overnight courier, on the first (1st) day following the day such notice is delivered to such carrier.  No notice to or demand on the Borrowers (or any of them) in any case where such notice or demand is not expressly required hereunder shall entitle the Borrowers (or any of them) to any other or further notice or demand in similar or other circumstances.

13.18                 Release of Claims Against Bank. In
consideration of the Bank making the Loans, each Borrower and all other Obligors do each hereby release and discharge the Bank of
and from any and all claims, harm, injury, and damage of any and every kind, known or unknown, legal or equitable, which any
Obligor may have against the Bank from the date of their respective first contact with the Bank until the date of this Loan
Agreement, including any claim arising from any reports (environmental reports, surveys, appraisals, etc.) prepared by any parties
hired or recommended by the Bank. Each Borrower and all other Obligors confirm to Bank that they have reviewed the effect of this
release with competent legal counsel of their choice, or have been afforded the opportunity to do so, prior to execution of this
Agreement and the Loan Documents and do each acknowledge and agree that the Bank is relying upon this release in extending the
Loans to the Borrowers.

 

62

13.19                 Costs, Fees and Expenses. Subject to any
express limitations otherwise set forth in this Agreement or any other Loan Document, the Borrowers jointly and severally agree to
pay or reimburse the Bank for all reasonable costs, fees and expenses incurred by the Bank or for which the Bank becomes obligated
in connection with the negotiation, preparation, consummation, collection of the Obligations or enforcement of this Agreement, the
other Loan Documents and all other documents provided for herein or delivered or to be delivered hereunder or in connection
herewith (including any amendment, supplement or waiver to any Loan Document), or during any workout, restructuring or
negotiations in respect thereof, including reasonable consultants’ fees and attorneys’ fees and time charges of counsel
to the Bank, which shall also include attorneys’ fees and time charges of attorneys who may be employees of the Bank or any
Affiliate of the Bank, plus costs and expenses of such attorneys or of the Bank; search fees, costs and expenses; and all taxes
payable in connection with this Agreement or the other Loan Documents, whether or not the transaction contemplated hereby shall be
consummated. In furtherance of the foregoing, the Borrowers jointly and severally agree to pay any and all stamp and other taxes,
UCC search fees, filing fees and other costs and expenses in connection with the execution and delivery of this Agreement, any
Note and the other Loan Documents to be delivered hereunder, and agrees to save and hold the Bank harmless from and against any
and all liabilities with respect to or resulting from any delay in paying or omission to pay such costs and expenses. That portion
of the Obligations consisting of costs, expenses or advances to be reimbursed by the Borrowers to the Bank pursuant to this
Agreement or the other Loan Documents which are not paid on or prior to the date hereof shall be jointly and severally payable by
the Borrowers to the Bank on demand. If at any time or times hereafter the Bank: (a) employs counsel for advice or other
representation (i) with respect to this Agreement or the other Loan Documents, (ii) to represent the Bank in any
litigation, contest, dispute, suit or proceeding or to commence, defend, or intervene or to take any other action in or with
respect to any litigation, contest, dispute, suit, or proceeding (whether instituted by the Bank, the Borrowers (or any of them),
or any other Person) in any way or respect relating to this Agreement, the other Loan Documents or any Borrower’s business or
affairs, or (iii) to enforce any rights of the Bank against the Borrowers (or any of them) or any other Person that may be
obligated to the Bank by virtue of this Agreement or the other Loan Documents; (b) takes any action to protect, collect,
sell, liquidate, or otherwise dispose of any of the Collateral; and/or (c) attempts to or enforces any of the Bank’s
rights or remedies under the Agreement or the other Loan Documents, the costs and expenses incurred by the Bank in any manner or
way with respect to the foregoing, shall be part of the Obligations, jointly and severally payable by the Borrowers to the Bank on
demand.

13.20                 Indemnification. Each Borrower agrees to
defend (with counsel satisfactory to the Bank), protect, indemnify, exonerate and hold harmless each Indemnified Party from and
against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and
distributions of any kind or nature (including the disbursements and the reasonable fees of counsel for each Indemnified Party
thereto, which shall also include, without limitation, reasonable attorneys’ fees and time charges of attorneys who may be
employees of any Indemnified Party), which may be imposed on, incurred by, or asserted against, any Indemnified Party (whether
direct, indirect or consequential and whether based on any federal, state or local laws or regulations, including securities laws,
Environmental Laws, commercial laws and regulations, under common law or in equity, or based on contract or otherwise) in any
manner relating to or arising out of this Agreement or any of the Loan Documents, or any act, event or transaction related or
attendant thereto, the preparation, execution and delivery of this Agreement and the Loan Documents, including the making or
issuance and management of the Loans, the use or intended use of the proceeds of the Loans, the enforcement of the Bank’s
rights and remedies under this Agreement, the Loan Documents, any Note, any other instruments and documents delivered hereunder,
or under any other agreement between the Borrowers (or any of them) and the Bank; provided, however, that no Borrower shall have
any obligations hereunder to any Indemnified Party with respect to matters determined by a court of competent jurisdiction by
final and nonappealable judgment to have been caused by or resulting from the willful misconduct or gross negligence of such
Indemnified Party. 

 

63

To the extent that the undertaking to indemnify set forth in the preceding sentence may be unenforceable because it violates any law or public policy, each Borrower shall satisfy such undertaking to the maximum extent permitted by applicable law.  Any liability, obligation, loss, damage, penalty, cost or expense covered by this indemnity shall be paid to each Indemnified Party on demand, and failing prompt payment, together with interest thereon at the Default Rate from the date incurred by each Indemnified Party until paid by the Borrowers, shall be added to the Obligations of the Borrowers and be secured by the Collateral.  The provisions of this Section shall survive the satisfaction and payment of the other Obligations and the termination of this Agreement.

13.21                 Revival and Reinstatement of Obligations. If
the incurrence or payment of the Obligations by any Obligor or the transfer to the Bank of any property should for any reason
subsequently be declared to be void or voidable under any state or federal law relating to creditors’ rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances, preferences, or other voidable or recoverable payments of
money or transfers of property (collectively, a “Voidable Transfer”), and
if the Bank is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the
reasonable advice of its counsel, then, as to any such Voidable Transfer, or the amount thereof that the Bank is required or
elects to repay or restore, and as to all reasonable costs, expenses, and attorneys fees of the Bank, the Obligations shall
automatically shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer had never been
made.

13.22                 Customer Identification - USA Patriot Act Notice. The Bank hereby notifies the Borrowers that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L.
107-56, signed into law October 26, 2001) (the “Act”), and the
Bank’s policies and practices, the Bank is required to obtain, verify and record certain information and documentation that
identifies each Borrower, which information includes the name and address of each Borrower and such other information that will
allow the Bank to identify the Borrowers in accordance with the Act.

 

 

[Remainder of page intentionally left blank;

signature pages follow]

 

64

IN WITNESS WHEREOF, the Borrowers and the Bank have executed this Loan and Security Agreement as of the date first above written.

 

	
            BORROWER
 AND BORROWING AGENT:
 	
             
 	
            INTRICON CORPORATION,
 
	
             
 	
             
 	
            a Pennsylvania corporation
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
            By:
 	
            
 /s/ Scott Longval
 
	
             
 	
             
 	
            Name:  Scott Longval
 Title:    Chief Financial Officer
 
	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
            Address for notices:
 
	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
            1260 Red Fox Road
 Arden Hills, MN  55112
 Attention:  Scott Longval
 Telephone:  651.636.9770
 Facsimile:  651.636.9503
 
					

            

 

 

 

 

 

 

 

 

 

 

 

 

 

SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT

 

	
            BORROWER:
 	
             
 	
            RESISTANCE TECHNOLOGY, INC.,
 
	
             
 	
             
 	
            a Minnesota corporation
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
            By:
 	
            /s/ Scott Longval
 
	
             
 	
             
 	
            Name:  Scott Longval
 Title:    Chief Financial Officer
 
	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
            Address for notices:
 
	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
            1260 Red Fox Road
 Arden Hills, MN  55112
 Attention:  Scott Longval
 Telephone:  651.636.9770
 Facsimile:  651.636.9503
 
					

            

 

 

 

 

 

 

 

 

 

 

 

 

 

SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT

 

	
            BORROWER:
 	
             
 	
            RTI ELECTRONICS, INC.,
 
	
             
 	
             
 	
            a Delaware corporation
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
            By:
 	
            /s/ Scott Longval
 
	
             
 	
             
 	
            Name:  Scott Longval
 Title:    Chief Financial Officer
 
	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
            Address for notices:
 
	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
            1260 Red Fox Road
 Arden Hills, MN  55112
 Attention:  Scott Longval
 Telephone:  651.636.9770
 Facsimile:  651.636.9503
 
					

            

 

 

 

 

 

 

 

 

 

 

 

 

 

SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT

 

	
            BORROWER:
 	
             
 	
            INTRICON TIBBETTS CORPORATION 
 
	
             
 	
             
 	
            (formerly known as TI Acquisition Corporation),
 a Maine corporation
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
            By:
 	
            /s/ Scott Longval
 
	
             
 	
             
 	
            Name:  Scott Longval
 Title:    Chief Financial Officer
 
	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
            Address for notices:
 
	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
            1260 Red Fox Road
 Arden Hills, MN  55112
 Attention:  Scott Longval
 Telephone:  651.636.9770
 Facsimile:  651.636.9503
 
					

            

 

 

 

 

 

 

 

 

 

 

 

 

 

SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT

 

 

	
            BANK:
 	
             
 	
            LASALLE BANK NATIONAL ASSOCIATION,
 
	
             
 	
             
 	
            a national banking association
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
            By:
 	
            /s/ Peter L. Eaton
 
	
             
 	
             
 	
            Name:  Peter L. Eaton
 Title:    Senior Vice President
 
	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
            Address for notices:
 
	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
            3500 IDS Center
 80 South Eighth Street
 Minneapolis, MN  55402
 Attention:  Peter L. Eaton
 Telephone:  612.752.9898
 Facsimile:  612.752.9881
 
					

            

 

 

 

 

 

 

 

 

 

 

 

 

 

SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT

EXHIBITS AND SCHEDULES

TO LOAN AND SECURITY AGREEMENT

 

 

	
            Exhibit 6.12(a)
 	
            IRREVOCABLE ASSIGNMENT IN BLANK
 
	 
	
            Exhibit 6.12(b)
 	
            ISSUER ACKNOWLEDGEMENT 
 
	 
	
            Exhibit 8.14
 	
            FORM OF COMPLIANCE CERTIFICATE
 
	 
	
            Schedule 6.1
 	
            COMMERCIAL TORT CLAIMS
 
	 
	
            Schedule 7.1
 	
            CORPORATE STATUS
 
	 
	
            Schedule 7.6
 	
            EQUITY OWNERSHIP
 
	 
	
            Schedule 7.7
 	
            INTELLECTUAL PROPERTY 
 
	 
	
            Schedule 7.9
 	
            LITIGATION AND CONTINGENT LIABILITIES
 
	 
	
            Schedule 7.19
 	
            TAXES
 
	 
	
            Schedule 7.22
 	
            BANK ACCOUNTS
 
	 
	
            Schedule 7.23
 	
            PLACE OF BUSINESS
 
	 
	
            Schedule 7.27
 	
            INSURANCE
 
	 
	
            Schedule 7.28
 	
            PLEDGED EQUITY INTERESTS
 
	 
	
            Schedule 7.29
 	
            ACQUISITION DOCUMENTS
 
	 
	
            Schedule 9.1
 	
            DEBT
 
	 
	
            Schedule 9.2
 	
            ENCUMBRANCES 
 
	 
	
            Schedule 9.3
 	
            INVESTMENTS 
 
	 
	
            Schedule 9.7
 	
            TRANSACTIONS WITH AFFILIATES
 
	 
	
            Schedule 9.14
 	
            APPLICABLE AGREEMENTS

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