Intricon Corp
Annual Report 2017

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark one)☒ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2017or☐TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from ____________ to ____________. Commission File Number 1-5005 INTRICON CORPORATION(Exact name of registrant as specified in its charter) Pennsylvania 23-1069060(State or other jurisdiction of (I.R.S. Employer Identification No.)incorporation or organization) 1260 Red Fox Road Arden Hills, Minnesota 55112(Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code (651) 636-9770 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange onTitle of each class which registeredCommon Shares, $1 par value per share The NASDAQ Global Market Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period thatthe registrant was required to submit and post such files). Yes ☒ No ☐ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, andwill not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See thedefinitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ☐Accelerated filer ☐ Non-accelerated filer ☐ (Do not check if a smaller reporting company)Smaller reporting company ☒ Indicate by check mark whether the registrant is a shell company (as defined by rule 12b-2 of the Act). Yes ☐ No ☒   The aggregate market value of the voting common shares held by non-affiliates of the registrant on June 30, 2017 was $48,858,093. Common shares held byeach officer and director and by each person who owns 10% or more of the outstanding common shares have been excluded in that such persons may bedeemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes. The number of outstanding shares of the registrant’s common shares on February 21, 2018 was 6,933,547. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Company’s definitive proxy statement for the 2018 annual meeting of shareholders are incorporated by reference into Part III of this report;provided, however, that the Audit Committee Report and any other information in such Proxy Statement that is not required to be included in this AnnualReport on Form 10-K, shall not be deemed to be incorporated herein or filed for the purposes of the Securities Act of 1933, as amended or the SecuritiesExchange Act of 1934, as amended. 2  Table of Contents Page No.PART I Item 1.Business4Item 1A.Risk Factors12Item 1B.Unresolved Staff Comments19Item 2.Properties19Item 3.Legal Proceedings19Item 4.Mine Safety Disclosures20Item 4A.Executive Officers of the Registrant20 PART II Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities21Item 6.Selected Financial Data22Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations24Item 7A.Quantitative and Qualitative Disclosures about Market Risk33Item 8.Financial Statements and Supplementary Data34Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure62Item 9AControls and Procedures62Item 9B.Other Information62 PART III Item 10.Directors, Executive Officers and Corporate Governance63Item 11.Executive Compensation63Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters63Item 13.Certain Relationships and Related Transactions, and Director Independence64Item 14.Principal Accounting Fees and Services64 PART IV Item 15.Exhibits, Financial Statement Schedules64 SIGNATURES69EXHIBIT INDEX70 3  PART I ITEM 1. Business Company Overview IntriCon Corporation (together with its subsidiaries referred herein as the “Company”, or “IntriCon”, “we”, “us” or “our”) is an international companyengaged in designing, developing, engineering, manufacturing and distributing body-worn devices. The Company serves the body-worn device market bydesigning, developing, engineering, manufacturing and distributing micro-miniature products, microelectronics, micro-mechanical assemblies, completeassemblies and software solutions, primarily for the emerging value based hearing healthcare market, the medical bio-telemetry market and the professionalaudio communication market. The Company, headquartered in Arden Hills, Minnesota, has facilities in Minnesota, Illinois, Singapore, Indonesia, the UnitedKingdom and Germany, and operates through subsidiaries. The Company is a Pennsylvania corporation formed in 1930, and has gone through severaltransformations since its formation. The Company’s core business of body-worn devices was established in 1993 through the acquisition of ResistanceTechnologies Inc., now known as IntriCon, Inc. The majority of IntriCon’s current management came to the Company with the Resistance Technologies Inc.acquisition, including IntriCon’s President and CEO, who was a co-founder of Resistance Technologies Inc. In December 2016, the Company’s board of directors approved plans to discontinue its cardiac diagnostic monitoring business. The Company sold thecardiac diagnostic monitoring business on February 17, 2017 to Datrix, LLC. For all periods presented, the Company classified this business as discontinuedoperations, and, accordingly, has reclassified historical financial data presented herein. Information contained in this Annual Report on Form 10-K and expressed in U.S. dollars or number of shares are presented in thousands (000s), except for pershare data and as otherwise noted. Business Highlights Major Events in 2017 In December 2017, the Company acquired the remaining 80-percent stake in Hearing Help Express, Inc. (referred to as “Hearing Help Express” or “HHE”), adirect-to-consumer mail order hearing aid provider, for $650 in cash, repayment of $1,833 in debt to HHE’s 80% holder and an earn-out. The results of HHEwere consolidated into the Company’s financial statements beginning October 31, 2016. Prior to the acquisition of 100% ownership in December 2017, theCompany allocated income and losses to the noncontrolling interest based on ownership percentage. The Company entered into an agreement to acquire a 49% stake in Soundperience for 1,500 Euros. As of December 31, 2017, the Company held a 16% stakein and obtained a technology license from Soundperience, which investment would increase to 49% upon the completion of certain milestones and paymentof the purchase price for that equity. As of December 31, 2017, the Company had an investment in Soundperience of $1,415, consisting of an equityinvestment, cash advance and license agreement. In January 2018, the Company closed on the additional 33% stake in Soundperience, bringing its totalownership to 49% and its total investment to 1,500 Euros. Soundperience has designed self-fitting hearing aid technology. The Company does not anticipatethe Soundperience business will have a notable financial impact on operating results, but rather will provide the Company with exclusive access in theUnited States to critical software technology. Soundperience’s self-fitting hearing aid technology is being used in the German market today, most notablythrough Signison, a joint venture with the owner of Soundperience. Soundperience and Signison are accounted for in the Company’s financial statementsusing either the cost or equity method. In December 2017, the Company and its domestic subsidiaries entered into an Eleventh Amendment to the Loan and Security Agreement and Waiver withCIBC Bank USA (formerly known as The PrivateBank and Trust Company), which among other things provided an additional loan of $2,000 under our termnote to assist with the acquisition of HHE and provided a capital expenditure loan facility for up to $2,500. Major Events in 2016 In December 2016, the Company’s board of directors approved plans to discontinue its cardiac diagnostic monitoring business. The Company sold thecardiac diagnostic monitoring business on February 17, 2017 to Datrix, LLC. For all periods presented, the Company classified this business as discontinuedoperations, and, accordingly, has reclassified historical financial data presented herein. In October of 2016, the Company purchased 20 percent of Hearing Help Express and began implementing cost cutting measures and business improvements. 4  On May 18, 2016, the Company completed a public offering and sale of 805 shares of common stock. The net proceeds from this offering, after deductingunderwriting discounts and offering expenses, totaled approximately $3,678 and were used for working capital and general corporate purposes. Major Events in 2015 The Company reported its then strongest financial results in over a decade, surpassing 2014 results, including its strongest revenue and margin since therebranding of the Company in 2005. On November 3, 2015, the Company acquired the assets of PC Werth, a leading supplier of hearing healthcare products and equipment to the UnitedKingdom’s National Health Service (NHS), through its IntriCon UK subsidiary. The NHS is the largest purchaser of hearing aids in the world, supplying anestimated 1.2 million hearing aids annually. On November 2, 2015, the Company launched JD Edwards EnterpriseOne platform, a $2,400 investment in an integrated applications suite of comprehensiveenterprise resource planning (ERP) software, to further support its global manufacturing and distribution footprint. On September 14, 2015, the Company and The Academy of Doctors of Audiology (ADA), announced a joint venture to provide hearing instruments andeducational resources that offer unprecedented value for audiologists and their patients. Market Overview: IntriCon serves the body-worn device market by designing, developing, engineering, manufacturing and distributing micro-miniature products,microelectronics, micro-mechanical assemblies, complete assemblies and software solutions, primarily for the emerging value based hearing healthcaremarket (which includes the hearing health direct to consumer market), the hearing health market, the medical bio-telemetry market and the professional audiocommunication market. Revenue from these markets is reported on the respective lines in the discussion of our results of operations in “Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 21 “Revenue by Market” to the Company’sconsolidated financial statements included herein. Value Based Hearing Healthcare Market The Company believes the value based hearing healthcare (VBHH) market offers significant growth opportunities. In the United States alone, there areapproximately 40 million adults that report some degree of hearing loss. In adults, the most common cause of hearing loss is aging and noise. In fact, by theage of 65, one out of three people have hearing loss. The hearing-impaired population is expected to grow significantly over the next decade due to an agingpopulation and more frequent exposure to loud sounds that can cause noise-induced hearing loss. It is estimated that hearing aids can help more than 90percent of people with hearing loss, however the current market penetration into the U.S. hearing impaired population is approximately 20 percent, apercentage that has remained essentially unchanged for the last four decades. The primary deterrents to greater penetration are cost and access. The averagecost of a hearing aid in the US market today is over $2,400 per device, more than double the cost from twelve years ago. Approximately 70 percent of thehearing impaired have hearing loss in both ears (referred to as a binaural loss), driving the total cost to almost $5,000 on average for a set of hearing aids. We believe a perfect vortex of factors has come together over the last few years to enable the emergence of a market disruptive, high-quality, low costdistribution model, including continued consolidation of retail (causing escalating hearing aid prices), consumer outcry, consumer education, advancementsin technology (such as behind-the-ear devices, advanced digital signal processing, low-power wireless, and self-fitting software) as well as regulatory actionsand pronouncements by the U.S. Food and Drug Administration, the President’s Council of Advisors on Science and Technology and the National Academiesof Science, Engineering and Medicine. Today in the US market, the conventional channel pushes all hearing impaired through the same inefficient, costly channel. However, a very large portion ofthe hearing-impaired market – mostly notably those with mild to moderate losses – could be properly served with the proper combination of high quality,outcome based devices, advanced fitting software and consumer services/care best practices – all at much lower cost. We believe fundamental change isneeded and are excited about the opportunity that we created through thoughtful hard work and planning: a chance to deliver superior outcomes-basedaffordable hearing healthcare, by combining state-of-the-art devices and software technology, along with best practices customer service and at a much lowercost directly to consumers across the country, many of whom have not been able to afford care previously. In early January 2016, the U.S. Food and Drug Administration (FDA) weighed in on low hearing aid penetration rates with an announcement that highlightedstatistics from the National Institute on Deafness and Other Communication Disorders. They found that 37.5 million U.S. adults aged 18 and older reportsome form of hearing loss. However, only 30 percent of adults over 70, and 16 percent of those aged 20 to 69, who could benefit from wearing hearing aids,have ever used them. Based on these statistics, the FDA reopened the public comment period on draft guidance related to the agency’s premarketrequirements for hearing aids and personal sound amplifiers (PSAPs). In April 2016, the FDA hosted a public workshop to gather stakeholder and public inputon draft guidance related to the agency’s premarket requirements for hearing aids and PSAPs. The FDA’s intent is to consider ways in which regulation cansupport further device penetration into the hearing market. In December 2016, the FDA announced important steps to better support consumer access tohearing aids. The agency issued a guidance document explaining that it does not intend to enforce the requirement that individuals age 18 and older receivea medical evaluation or sign a waiver prior to purchasing most hearing aids, effective immediately. It also announced its commitment to consider creating acategory of over-the-counter (OTC) hearing aids that could deliver new, innovative and lower-cost products to millions of consumers. 5  Furthermore, there have been significant public policy developments during 2017. On August 18, 2017, President Donald Trump signed into law H.R. 2430,the U.S. Food and Drug Administration (FDA) Reauthorization Act, which includes the Over-the-Counter (“OTC”) Hearing Aid Act of 2017. The legislationis designed to enable adults with mild- to moderate-hearing loss to access OTC hearing aids without being seen by a hearing care professional. The OTCHearing Aid Act requires the FDA to create and regulate a category of OTC hearing aids to ensure they meet the same high standards for safety, consumerlabeling, and manufacturing protection that all other medical devices must meet. Additionally, the OTC Hearing Aid Act mandates that the FDA establish anOTC hearing aid category for adults with “perceived” mild- to moderate-hearing loss within three years of passage of the legislation. The FDA also mustfinalize a rule within 180 days after the close of the comment period, detailing what level of safety, labeling and consumer protections will be included. Webelieve this legislation has the potential to remove the significant barriers existing today that prevent innovative hearing health solutions. We believe thatthis legislation will invigorate competition, spur innovation and facilitate the development of an ecosystem of hearing health care that provides affordableand accessible solutions to millions of unserved or underserved Americans. Additionally, these public policy changes all further support our strategic focusto gain direct access to consumers and the underserved market. In December of 2017, we purchased the remaining 80% of HHE, a direct-to-consumer mail order hearing aid provider. Over the last decade, we have investedin the technology and low-cost manufacturing to design and build superior devices and fitting solutions, to address what we estimate to be a $1+ billionannual value based hearing healthcare market. With this acquisition, we believe we now have the channel infrastructure to directly reach consumers and—importantly for millions—the ability to offer high-quality hearing healthcare at a fraction of the cost. Through our other VBHH initiatives and tests, we haveformed alliances with other key partners, which have given us experience and vital insight as we move aggressively into a more consumer-facing role. HHEprovides an efficient, traditional direct-to-consumer channel to reach consumers who likely do not have insurance that will cover hearing devices. This is achannel that we can build on and expand via technology—and one that is complementary with many of our existing relationships. We entered into an agreement to acquire a 49% stake in Soundperience for 1,500 Euros. As of December 31, 2017, we held a 16% stake in Soundperience,which would increase to 49% upon the completion of certain milestones and payment of the purchase price for that equity. As of December 31, 2017, we hadan investment in Soundperience of $1,415, consisting of an equity investment, cash advance and license agreement. In January 2018, we acquired theadditional 33% stake in Soundperience for 1,100 Euros, bringing out total ownership to 49% and our total investment to 1,500 Euros. Soundperience hasdesigned self-fitting hearing aid technology. Soundperience’s self-fitting hearing aid technology is being used in the German market today, most notablythrough our Signison joint venture with the owner of Soundperience. We believe strongly that incorporating self-fitting technology is a critical step in creating our high-quality, low-cost hearing healthcare ecosystem.Soundperience’s technology has the potential to drastically reduce the price of hearing aids, drive greater access and increase customer satisfaction. In other VBHH channels, the Company has a business relationship with hi HealthInnovations (“hi Health”), a UnitedHealth Group company, to be theirsupplier of hearing aids, which they make available to participants under their health insurance plans. The Company also has various international VBHH initiatives. On November 3, 2015, the Company acquired the assets of PC Werth through its IntriCon UKsubsidiary to gain direct access to the NHS and to have greater control over its efforts to accelerate new market penetration into the United Kingdom. IntriConUK has been appointed as a supplier to the NHS Supply Chain’s National Framework. The NHS is widely seen as the most efficient hearing aid deliverysystem in the world, supplying an estimated 1.4 million hearing aids annually. We believe IntriCon is well positioned to serve their needs, and we aredeveloping new technologies to further enhance delivery efficiencies and product standards in the future. We also believe there are niches in the conventional hearing health channel that will embrace our VBHH proposition in the United States and Europe. Highcosts of conventional devices and retail consolidation have constrained the growth potential of the independent audiologist and dispenser. We believe oursoftware and product offering can provide independent audiologists and dispensers the ability to compete with larger retailers, such as Costco, andmanufacturer owned retail distributors. In the third quarter of 2015, we announced a joint venture with The Academy of Doctors of Audiology (ADA) toprovide hearing instruments and educational resources to audiologists and their patients. The joint venture operates as a limited liability company under thename “earVenture LLC”. EarVenture was officially launched in November 2015 at the ADA conference. To date, more than 400 of the 1,200 ADA membershave registered to join the earVenture program. While we do not view earVenture, near term, as a meaningful contributor to sales, it continues to providevaluable industry insights and has the potential for future value by connecting it to our emerging direct-to-consumer channel. 6  Medical Bio-Telemetry In the medical bio-telemetry market, the Company is focused on sales of bio-telemetry devices for life-critical diagnostic monitoring. The Companymanufactures microelectronics, micro-mechanical assemblies, high-precision injection-molded plastic components and complete bio-telemetry devices foremerging and leading medical device manufacturers. The medical industry is faced with pressures to reduce the cost of healthcare. Driven by its coretechnologies, IntriCon helps shift the point of care from expensive traditional settings, such as hospitals, to less expensive non-traditional settings like thehome. IntriCon currently serves this market by offering medical manufacturers the capabilities to design, develop, manufacture and distribute medicaldevices that are easier to use, are more miniature, use less power, and are lighter. Increasingly, the medical industry is looking for wireless, low-powercapabilities in their devices. IntriCon currently has a presence in the diabetes, cardiac, catheter positioning markets. For diabetes, IntriCon has partnered with Medtronic to manufacturetheir wireless continuous glucose monitors (CGM), sensors, and accessories associated with Medtronic’s insulin pump and CGM system. In August 2016, theFDA approved the MiniMed 630G system which will replace Medtronic’s MiniMed 530G system. In addition to the MiniMed 630G system, IntriCon is alsodesigned into the MiniMed 670G system which was approved by the FDA in September 2016. The MiniMed 670G is the world’s first hybrid closed loopinsulin delivery system and we are excited to be designed into and supporting such a revolutionary diabetes management system. In June 2017, the 670G waslaunched in the U.S. Medtronic began fulfilling orders from patients enrolled in their Priority Access Program. In parallel, Medtronic began taking new ordersfrom interested customers who want to be next in line to receive the system after the Priority Access orders are filled. Looking ahead, we believe there areopportunities to expand our diabetes product offering with Medtronic, as well as move into new markets outside of the diabetes market. IntriCon has a suite of medical coils and micro coils that it offers to various original equipment manufacturing (OEM) customers. These products are currentlyused in pacemaker programming and interventional catheter positioning applications. IntriCon manufactures bubble sensors and flow restrictors that monitor and control the flow of fluid in an intravenous infusion system as well as a family ofsafety needle products for an OEM customer that utilizes IntriCon’s insert and straight molding capabilities. These products are assembled using fullautomation, including built-in quality checks within the production lines. Lastly, IntriCon is targeting other emerging biotelemetry and home care markets that could benefit from its capabilities to develop devices that are moretechnologically advanced, smaller and lightweight. To do so, IntriCon is leveraging its resources in sales and marketing and research and development toexpand its reach to other large medical device and health care companies. In order to focus financial and operational resources on value based hearing healthcare and the growing DTC opportunity, IntriCon made the strategicdecision to divest its non-core cardiac diagnostic monitoring business in 2016. The Company sold this business on February 17, 2017 to Datrix, LLC. Professional Audio Communications IntriCon entered the high-quality audio communication device market in 2001, and now has a line of miniature, professional audio headset products used bycustomers focusing on emergency response needs. The line includes several communication devices that are extremely portable and perform well in noisy orhazardous environments. These products are well suited for applications in the fire, law enforcement, safety, aviation and military markets. In addition, theCompany has a line of miniature ear- and head-worn devices used by performers and support staff in the music and stage performance markets. We believeperformance in difficult listening environments and wireless operations will continue to improve as these products increasingly include our proprietarynanoDSP, wireless nanoLink and PhysioLink technologies. For information concerning our net sales, net income and assets, see the consolidated financial statements in Item 8 of this Annual Report on Form 10-K. Core Technologies Overview: Our core technologies expertise is focused on three main markets: medical bio-telemetry, value based hearing healthcare and professional audiocommunications. Over the past several years, the Company has increased investments in the continued development of five critical core technologies: Ultra-Low-Power (ULP) Digital Signal Processing (DSP), ULP Wireless, Fitting Software, Microminiaturization, and Miniature Transducers. These five coretechnologies serve as the foundation of current and future product platform development, designed to meet the rising demand for smaller, portable, moreadvanced devices and the need for greater efficiencies in the delivery models. The continued advancements in this area have allowed the Company to furtherenhance the mobility and effectiveness of miniature body-worn devices. 7  ULP DSP DSP converts real-world analog signals into a digital format. Through our nanoDSP™ technology, IntriCon offers an extensive range of ULP DSP amplifiersfor hearing, medical and professional audio applications. Our proprietary nanoDSP incorporates advanced ultra-miniature hardware with sophisticated signalprocessing algorithms to produce devices that are smaller and more effective. The Company further expanded its DSP portfolio including improvements to itsReliant CLEAR™ feedback canceller, offering increased added stable gain and faster reaction time. Additionally, the DSP technologies are utilized in theAudion8™, our eight-channel hearing aid amplifier, and the Audion16™, our wide dynamic range compression sixteen-channel hearing aid amplifier. Theamplifiers are feature-rich and are designed to fit a wide array of applications. In addition to multiple compression channels, the amplifiers have a completeset of proven adaptive features which greatly improve the user experience. ULP Wireless Wireless connectivity is fast becoming a required technology, and wireless capabilities are especially critical in new body-worn devices. IntriCon’sBodyNet™ ULP technology, including the nanoLink™ and PhysioLink™ wireless systems, offers solutions for transmitting the body’s activities tocaregivers and wireless audio links for professional communications and surveillance products, including diabetes monitoring and audio streaming forhearing devices. IntriCon is in the final stages of commercializing its Physiolink3 wireless technology, which will be incorporated into product platforms serving the medical,hearing health and professional audio communication markets. This system is based on 2.4GHz proprietary digital radio protocol in the industrial-scientific-medical (ISM) frequency band and enables audio and data streaming and command and control to ear-worn and body-worn applications over distances of upto ten meters. The Physiolink3 technology can be used to increase productivity in the emerging VBHH channels through in office wireless programming,remote cloud based fitting and consumer directed self-fitting of hearing aids. This will provide both greater access and lower costs for patients. In addition,remote control functions will improve the patient experience while using the device especially for those with diminished dexterity. The Physiolink3technology builds on the Physiolink2 capabilities by adding wireless streaming at, what we believe, are much lower power levels than any technologycurrently on the market. This will allow for accessories to enhance the user experience in noisy environments by allowing audio streaming directly to thehearing aid. Fitting Software The ability to efficiently and effectively fit hearing aids is critical to building a value based eco-system of hearing healthcare. By developing more advancedfitting software systems, individuals can benefit from fittings that conform to their specific loss, while eliminating the need for an in-person appointment. Inaddition to the traditional fitting software, IntriFit, used in the conventional channel, IntriCon has made significant investments in various advanced fittingsoftware solutions, including its investment in Soundperience, that can enable remote and self-fitting solutions. IntriCon believes these advanced fittingsolutions, along with the other components of the eco-system, will drive access, affordability and superior customer satisfaction to the millions of individualsthat cannot receive care today, primarily due to high cost and low access. IntriCon expects to introduce our advanced fitting solutions through our variousVBHH channels later in 2018. Microminiaturization IntriCon excels at miniaturizing body-worn devices. We began honing our microminiaturization skills over 30 years ago, supplying components to thehearing health industry. Our core miniaturization technology allows us to make devices for our markets that are one cubic inch and smaller. We also arespecialists in devices that run on very low power, as evidenced by our ULP wireless and DSP. Less power means a smaller battery, which enables us to reducesize even further, and develop devices that fit into the palm of one’s hand. Miniature Transducers IntriCon’s advanced transducer technology has been pushing the limits of size and performance for over a decade. Included in our transducer line are ourminiature medical coils and micro coils used in pacemaker programming and interventional catheter positioning applications. We believe that with theincrease of greater interventional care, our coil technology harbors significant value. Marketing and Competition:IntriCon intends to focus more capital and resources in marketing and sales to expand its reach into the emerging value based hearing healthcare market andlarge medical device and healthcare companies in the medical bio-telemetry market outlined above. The Company believes this will allow us to advance ourtechnology portfolio, advance new product platforms, strengthen customer relationships and expand our market knowledge. Currently, IntriCon sells its hearing device products directly to domestic hearing instrument manufacturers, and distributors and partnerships through aninternal sales force. Sales of medical and professional audio communications products are also made primarily through an internal sales force. As a result ofthe investment in Hearing Help Express in 2016, the Company began marketing and selling hearing aid devices directly to consumers through direct mailadvertising, internet and a call center. 8  Internationally, sales representatives employed by IntriCon GmbH (“GmbH”), a wholly owned German subsidiary, solicit sales from European hearinginstrument, medical device and professional audio communications manufacturers and suppliers. In recent years, a small number of customers have accounted for a substantial portion of the Company’s sales. In 2017, one customer in our medical marketaccounted for approximately 48 percent of the Company’s net sales. During 2017, the top five customers accounted for approximately $56,006, or 63percent, of the Company’s net sales. See Note 6 to the consolidated financial statements for a discussion of net sales and long-lived assets by geographic area. IntriCon markets its high performance microphone products to the radio communication and professional audio industries and has several larger competitorswho have greater financial resources. IntriCon holds a small market share in the global market for microphone capsules and other related products. Employees. As of December 31, 2017, the Company had a total of 670 full time equivalent employees, of whom 72 are executive and administrativepersonnel, 27 are sales personnel, 30 are engineering personnel and 541 are operations personnel. The Company considers its relations with its employees tobe satisfactory. None of the Company’s employees are represented by a union. As a supplier of consumer and medical products and parts, IntriCon is subject to claims for personal injuries allegedly caused by its products. The Companymaintains what it believes to be adequate insurance coverage. Research and Development. IntriCon conducts research and development activities primarily to improve its existing products and proprietary technology.The Company is committed to investing in the research and development of proprietary technologies, such as the ULP nanoDSP and ULP wirelesstechnologies. The Company believes the continued development of key proprietary technologies will be the catalyst for long-term revenues and margingrowth. Research and development expenditures were $4,458, $4,688, and $4,279 in 2017, 2016 and 2015, respectively. These amounts are net of anycustomer and grant reimbursed research and development. IntriCon owns a number of United States patents which cover a number of product designs and processes. Although the Company believes that these patentscollectively add value to the Company, the costs associated with the submission of patent applications are expensed as incurred given the uncertainty of thepatents providing future economic benefit to the Company. Regulation. A large portion of our business operates in a marketplace subject to extensive and rigorous regulation by the FDA and by comparable agencies inforeign countries. In the United States, the FDA regulates the design control, development, manufacturing, labeling, record keeping, and surveillanceprocedures for medical devices. United States Food and Drug Administration FDA regulations classify medical devices based on perceived risk to public health as either Class I, II or III devices. Class I devices are subject to generalcontrols, Class II devices are subject to special controls and Class III devices are subject to pre-market approval (“PMA”) requirements. While most Class Idevices are exempt from pre-market submission, it is necessary for most Class II devices to be cleared by a 510(k) pre-market notification prior to marketing.A “cleared” 510(k) establishes that the device is “substantially equivalent” to a legally marketed predicate device which was legally marketed prior to May28, 1976 or which itself has been found to be substantially equivalent, through the 510(k) process, after May 28, 1976. It is “substantially equivalent” if ithas the same intended use and the same technological characteristics as the predicate. The 510(k) pre-market notification must be supported by dataestablishing the claim of substantial equivalence to the satisfaction of the FDA. The process of obtaining a 510(k) clearance typically can take severalmonths to a year or longer. If the product is notably new or different and substantial equivalence cannot be established, the FDA will require the manufacturerto submit a PMA application for a Class III device that must be reviewed and approved by the FDA prior to sale and marketing of the device in the UnitedStates. The process of obtaining PMA approval can be expensive, uncertain, lengthy and frequently requires anywhere from one to several years from the dateof FDA submission, if approval is obtained at all. The FDA controls the indicated uses for which a product may be marketed and strictly prohibits themarketing of medical devices for unapproved uses. The FDA can require the manufacturer to withdraw products from the market for failure to comply withlaws or the occurrence of safety risks. Our wireless and non-wireless hearing aids are air-conduction devices and, as such, are Class I and Class II medical devices. Air-conduction hearing aids areexempt from the 510(k) pre-market notification process. These hearing aids may be marketed either through distribution channels owned, in whole or in part,by IntriCon or through non-affiliated distribution channels. In the latter sense, IntriCon acts as the contract manufacturer to the distributing organization,assisting in design, development and manufacturing. Our manufacturing operations are subject to periodic inspections by the FDA, whose primary purpose isto audit the Company’s compliance with the Quality System Regulations published by the FDA (21CFR Part 820) and other applicable governmentstandards. Strict regulatory action may be initiated in response to audit deficiencies or to product performance problems. We believe that our manufacturingand quality control procedures are in compliance with the requirements of the FDA regulations. Our most recent FDA audits were conducted in January of2017 and in December of 2017. No issues (observations) arising from those audits were noted. 9  International Regulation International regulatory bodies have established varying regulations governing product standards, packaging and labeling requirements, import restrictions,tariff regulations, duties and tax. Many of these regulations are similar to those of the FDA. We believe we are in compliance with the regulatory requirementsin the foreign countries in which our medical devices are marketed. Medical device law in the EU requires that our quality system conforms to international quality standards and that our medical devices conform to “essentialrequirements” set forth by the Medical Device Directive (“MDD”). In order to keep pace with accelerating technical reality and manufacturing risks, medicaldevice law in Europe is changing rapidly. Effective May 5, 2017, the MDD has been replaced with a more broad-reaching Medical Device Regulation(“MDR”) with a three-year transition period. IntriCon intends to comply with the MDR prior to the end of the transition period. IntriCon manufacturing facilities are audited annually by an International Organization for Standardization (“ISO”) registrar to verify conformity of productsand quality systems to the relevant standards and regulations. The ISO registrar for our US facilities is British Standards Institute (“BSI”) while the registrarfor our Asian facilities is SGS United Kingdom Ltd. Our European Authorized Representative, CE Partner 4U, audits and retains our technical documentation and registers our products as required withcompetent authorities in all EU member states. These audits verify that our quality system conforms to the international quality standard ISO 13485 and thatour products conform to the “essential requirements” set forth by the MDD for the class of medical devices we produce. These certifications entitle us to placethe “CE” mark on our hearing aids distributed in Europe. In 2014, IntriCon obtained “CE” certification for our own hearing aid devices and we are supplyingthese devices into the European market. Our hearing aids may also bear the CE mark of our customers who then assume regulatory responsibilities for thosedevices they place on the EU market under their own name. Third Party Reimbursement The availability and level of reimbursement from third-party payers for procedures utilizing our products is significant to our business. Our products arepurchased primarily by OEM customers who sell into clinics, hospitals and other end-users, who in turn bill various third party payers for the servicesprovided to the patients. These payers, which include Medicare, Medicaid, private health insurance plans and managed care organizations, reimburse all orpart of the costs and fees associated with the procedures utilizing our products. In response to the national focus on rising health care costs, a number of changes to reduce costs have been proposed or have begun to emerge. There havebeen, and may continue to be, proposals by legislators, regulators and third party payers to curb these costs. The development or increased use of more costeffective treatments for diseases could cause such payers to decrease or deny reimbursement for surgeries or devices to favor alternatives that do not utilizeour products. A significant number of Americans enroll in some form of managed care plan. Higher managed care utilization typically drives down thepayments for health care procedures, which in turn places pressure on medical supply prices. This causes hospitals to implement tighter vendor selection andcertification processes, by reducing the number of vendors used, purchasing more products from fewer vendors and trading discounts on price for guaranteedhigher volumes to vendors. Hospitals have also sought to control and reduce costs over the last decade by joining group purchasing organizations orpurchasing alliances. We cannot predict what continuing or future impact these practices, the existing or proposed legislation, or such third-party payermeasures within a constantly changing healthcare landscape may have on our future business, financial condition or results of operations. Forward-Looking Statements Certain statements included or incorporated by reference in this Annual Report on Form 10-K or the Company’s other public filings and releases, which arenot historical facts, or that include forward-looking terminology such as “may”, “will”, “believe”, “anticipate”, “expect”, “should”, “optimistic”, “continue”,“estimate”, “intend”, “plan”, “would”, “could”, “guidance”, “potential”, “opportunity”, “project”, “forecast”, “confident”, “projections”, “scheduled”,“designed”, “future”, “discussion”, “if” or the negative thereof or other variations thereof, are forward-looking statements (as such term is defined in Section21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933, and the regulations thereunder), which are intended to be coveredby the safe harbors created thereby. These statements may include, but are not limited to statements in “Business,” “Legal Proceedings”, “Risk Factors,”“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Notes to the Consolidated Financial Statements”, such asthe Company’s ability to compete, strategic alliances and their benefits, the adequacy of insurance coverage, government regulation, potential increases indemand for the Company’s products, net operating loss carryforwards, the ability to meet cash requirements for operating needs, the ability to meet liquidityneeds, assumptions used to calculate future levels of funding of employee benefit plans, the adequacy of insurance coverage, the impacts of new accountingpronouncements and litigation. Forward-looking statements also include, without limitation, statements as to the Company’s expected future results of operations and growth, theCompany’s ability to meet working capital requirements, the Company’s business strategy, the expected increases in operating efficiencies, anticipatedtrends in the Company’s body-worn device markets, the effect of compliance with environmental protection laws and other government regulations,estimates of goodwill impairments and amortization expense of other intangible assets, estimates of asset impairment, the effects of changes in accountingpronouncements, the effects of litigation and the amount of insurance coverage, and statements as to trends or the Company’s or management’s beliefs,expectations and opinions. Forward-looking statements are subject to risks and uncertainties and may be affected by various risks, uncertainties and otherfactors that can cause actual results and developments to be materially different from those expressed or implied by such forward-looking statements,including, without limitation, the risk factors discussed in Item 1A of this Annual Report on Form 10-K. 10  The Company does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of the Company. Available Information The Company files or furnishes its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and otherinformation with the SEC. You may read and copy any reports, statements and other information that the Company files with the SEC at the SEC’s PublicReference Room at 100 F Street, N.E., Washington, D.C. 20549, on official business days during the hours of 10:00 a.m. to 3:00 p.m. You may obtaininformation on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The Company’s reports, proxy and informationstatements and other SEC filings are also available on the SEC’s website as part of the EDGAR database (http://www.sec.gov). The Company maintains an internet web site at www.IntriCon.com. The Company maintains a link to the SEC’s website by which you may review its annualreports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section13(a) or 15(d) of the Securities Exchange Act of 1934, as amended. The information on the website listed above, is not and should not be considered part of this annual report on Form 10-K and is not incorporated by referencein this document. This website is and is only intended to be an inactive textual reference. In addition, we will provide, at no cost (other than for exhibits), paper or electronic copies of our reports and other filings made with the SEC. Requestsshould be directed to: Corporate SecretaryIntriCon Corporation1260 Red Fox RoadArden Hills, MN 55112 11  ITEM 1A.Risk Factors You should carefully consider the risks described below. If any of the risks events actually occur, our business, financial condition or results of futureoperations could be materially adversely affected. This Annual Report on Form 10-K contains forward-looking statements that involve risk and uncertainties.Our actual results could differ materially from those anticipated in the forward-looking statements as a result of many factors, including the risks faced by usdescribed below and elsewhere in this Annual Report on Form 10-K. We have experienced and expect to continue to experience fluctuations in our results of operations, which could adversely affect us. Factors that affect our results of operations include, but are not limited to, the volume and timing of orders received, changes in the global economy andfinancial markets, changes in the mix of products sold, market acceptance of our products and our customer’s products, competitive pricing pressures, globalcurrency valuations, the availability of electronic components that we purchase from suppliers, our ability to meet demand, our ability to introduce newproducts on a timely basis, the timing of new product announcements and introductions by us or our competitors, changing customer requirements, delays innew product qualifications, the timing and extent of research and development expenses and regulatory changes and/or delays. These factors have causedand may continue to cause us to experience fluctuations in operating results on a quarterly and/or annual basis. These fluctuations could materially adverselyaffect our business, financial condition and results of operations, which in turn, could adversely affect the price of our common stock. The loss of one or more of our major customers could adversely affect our results of operations. We are dependent on a small number of customers for a majority of our revenues. In fiscal year 2017, our largest customer accounted for approximately 48percent of our net sales and our five largest customers accounted for approximately 63 percent of our net sales. A significant decrease or delay in the sales toor loss of any of our major customers could have a material adverse effect on our business and results of operations. Our revenues are largely dependent uponthe ability of customers to develop and sell products that incorporate our products. No assurance can be given that our major customers will not experiencefinancial, technical, regulatory or other difficulties or delays that could adversely affect their operations and, in turn, our results of operations. We may not be able to collect outstanding accounts receivable from our customers. Some of our customers purchase our products on credit, which may cause a concentration of accounts receivable. As of December 31, 2017, we had accountsreceivable, less allowance for doubtful accounts, of $8,858, which represented approximately 43 percent of our shareholders’ equity as of that date. As of thatdate, two customers accounted for a combined total of approximately 33 percent of our accounts receivable. Our financial condition and profitability may beharmed if one or more of our customers are unable or unwilling to pay these accounts receivable when due. We recently acquired Hearing Help Express and we may explore other acquisitions that complement or expand our business. Acquisitions posesignificant risks and may materially adversely affect our business, financial condition and operating results. In 2016, we acquired 20% of the equity of Hearing Help Express and, in late 2017, we completed the acquisition of the remaining 80% equity interest.Hearing Help Express represents a new and exciting business opportunity; however, we do not have any prior experience in the direct-to-consumer mail orderhearing aid business and we may not be able to successfully integrate or profitably operate this business. Our success will be largely influenced bymanagement’s ability to hire and retain skilled direct-to-consumer personnel. We may explore opportunities to buy other businesses or technologies that could complement, enhance or expand our current business or product lines orthat might otherwise offer us growth opportunities. We may have difficulty finding these opportunities or, if we do identify these opportunities, we may notbe able to complete the transactions for various reasons, including a failure to secure financing. The Hearing Help Express acquisition, and any other transactions that we are able to identify and complete, involve a number of risks, including: thediversion of our management’s attention from our existing business to integrate the operations and personnel of the acquired or combined business or jointventure; possible adverse effects on our operating results during the integration process; unanticipated liabilities and litigation; and our possible inability toachieve the intended objectives of the transaction. In addition, we may not be able to successfully or profitably integrate, operate, maintain and manage ournewly acquired operations or employees. Future acquisitions also may result in dilutive issuances of equity securities or the incurrence of additional debt. 12 Despite improvement in economic conditions, downturns in the domestic economic environment could cause a severe disruption in our operations. Our business has been negatively impacted by the domestic economic environment in past years. If the economy does not continue to improve, or worsens,there could be several severely negative implications to our business that may exacerbate many of the risk factors we identified including, but not limited to,the following: Liquidity:●The domestic economic environment, including credit markets, could worsen and reduce liquidity and this could have a negative impact onfinancial institutions and the country’s financial system, which could, in turn, have a negative impact on our business.●We may not be able to borrow additional funds under our existing credit facility and may not be able to expand our existing facility if ourlender becomes insolvent or its liquidity is limited or impaired or if we fail to meet covenant levels going forward. In addition, we may not beable to renew our existing credit facility at the conclusion of its current term in December 2022 or renew it on terms that are favorable to us.●Interest rates have begun to rise and are expected to continue to rise, which could disrupt domestic and world markets and could adverselyaffect our liquidity, costs of borrowing and results of operations. Demand:●Any downturn in the economy or a return to recession could result in lower sales to our customers. Additionally, our customers may not haveaccess to sufficient cash or short-term credit to obtain our products or services. Prices:●In the event of a downturn, certain markets could experience deflation, which would negatively impact our average prices and reduce ourmargins. Health care policy changes, including U.S. health care reform legislation signed in 2010, may have a material adverse effect on us. In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act and the Health Care and Education AffordabilityReconciliation Act of 2010, collectively referred to as the Affordable Care Act. The legislation imposed significant new taxes on medical device makers inthe form of a 2.3% excise tax on all U.S. medical device sales beginning in January 2013. Under the legislation, the total cost to the medical device industrywas estimated to be approximately $30 billion over ten years. Congress suspended the excise tax for 2016 and 2017. Further legislation was adopted inJanuary 2018 to continue the suspension for two years. If the excise tax is not repealed or further suspended, the tax would go back into effect on December31, 2019. If re-imposed, this tax could have a material, negative impact on our results of operations and our cash flows either directly, through taxes on us, orindirectly through others in our value chain being subject to the tax. Although the direct impact of the excise tax is expected to be immaterial on us, if factsor circumstances change in our business relationships, we could be subject to customer pricing pressures or required to pay additional taxes under the rules. Other elements of this legislation, such as comparative effectiveness research, an independent payment advisory board, payment system reforms, includingshared savings pilots, and other provisions, could meaningfully change the way health care is developed and delivered, and may materially impact numerousaspects of our business. The Trump Administration and members of Congress have expressed their intentions to repeal and replace the Affordable Care Act. We cannot predict if theAffordable Care Act will be modified, repealed or replaced or the effect that any such actions will have on our business. If we are unable to continue to develop new products that are inexpensive to manufacture, our results of operations could be adversely affected. We may not be able to continue to achieve our historical profit margins due to advancements in technology. The ability to continue our profit margins isdependent upon our ability to stay competitive by developing products that are technologically advanced and inexpensive to manufacture. Our need for continued investment in research and development may increase expenses and reduce our profitability. Our industry is characterized by the need for continued investment in research and development. If we fail to invest sufficiently in research and development,our products could become less attractive to existing and potential customers and our business and financial condition could be materially and adverselyaffected. As a result of the need to maintain or increase spending levels in this area and the difficulty in reducing costs associated with research anddevelopment, our operating results could be materially harmed if our research and development efforts fail to result in new products or if revenues fall belowexpectations. In addition, as a result of our commitment to invest in research and development, management believes that research and developmentexpenses as a percentage of revenues could increase in the future. 13 We operate in a highly competitive business and if we are unable to be competitive, our financial condition could be adversely affected. Several of our competitors have been able to offer more standardized and less technologically advanced hearing and professional audio communicationproducts at lower prices. Price competition has had an adverse effect on our sales and margins. Many of our competitors are larger than us and have greaterresearch and development resources, marketing and financial resources, manufacturing capability and customer support organizations than we have. Therecan be no assurance that we will be able to maintain or enhance our technical capabilities or compete successfully with our existing and future competitors. Merger and acquisition activity in our hearing health market has resulted in a smaller customer base. Reliance on fewer customers may have anadverse effect on us. Several of our customers in the hearing health market have undergone mergers or acquisitions, resulting in a smaller customer base with larger customers. Ifwe are unable to maintain satisfactory relationships with the reduced customer base, it may adversely affect our operating profits and revenue. Unfavorable legislation in the hearing health market may decrease the demand for our products, and may negatively impact our financial condition. In some of our foreign markets, government subsidies cover a portion of the cost of hearing aids. A change in legislation that would reduce or eliminate thesesubsidies could decrease the demand for our hearing health products. This could result in an adverse effect on our operating results. We are unable to predictthe likelihood of any such legislation. Our failure, or the failure of our customers, to obtain required governmental approvals and maintain regulatory compliance for regulated productswould adversely affect our ability to generate revenue from those products. The markets in which our business operates are subject to extensive and rigorous regulation by the FDA and by comparable agencies in foreign countries. Inthe United States, the FDA regulates the design control, development, manufacturing, labeling, record keeping, and surveillance procedures for our medicaldevices and those of our customers. The process of obtaining marketing clearance or approvals from the FDA for new products and new applications for existing products can be time-consumingand expensive, and there is no assurance that such clearance/approvals will be granted, or that the FDA review will not involve delays that would adverselyaffect our ability to commercialize additional products or additional applications for existing products. Some of our products in the research anddevelopment stage may be subject to a lengthy and expensive pre-market approval process with the FDA. The FDA has the authority to control the indicateduses of a device. Products can also be withdrawn from the market due to failure to comply with regulatory standards or the occurrence of unforeseen problems.The FDA regulations depend heavily on administrative interpretation, and there can be no assurance that future interpretations made by the FDA or otherregulatory bodies, with possible retroactive effect, will not adversely affect us. The registration system for our medical devices in the EU requires that our quality system conform to international quality standards. Manufacturing facilitiesand processes under which our hearing aid devices are produced, are inspected and audited by various certifying bodies. These audits verify our compliancewith applicable requirements and standards. Further, the FDA, various state agencies and foreign regulatory agencies inspect our facilities to determinewhether we are in compliance with various regulations relating to quality systems, such as manufacturing practices, validation, testing, quality control,product labeling and product surveillance. A determination that we are in violation of such regulations could lead to imposition of civil penalties, includingfines, product recalls or product seizures, suspensions or shutdown of production and, in extreme cases, criminal sanctions, depending on the nature of theviolation. Further, to the extent that any of our customers to whom we supply products become subject to regulatory actions or delays, our sales to those customerscould be reduced, delayed or suspended, which could have a material adverse effect on our sales and earnings. Implementation of our growth strategy may not be successful, which could affect our ability to increase revenues. Our growth strategy includes developing new products and entering new markets, as well as identifying and integrating acquisitions. Our ability to competein new markets will depend upon a number of factors including, among others: ●our ability to create demand for products in new markets;●our ability to manage growth effectively;●our ability to strengthen our sales and marketing presence;●our ability to successfully identify, complete and integrate acquisitions;●our ability to respond to changes in our customers’ businesses by updating existing products and introducing, in a timely fashion, new productswhich meet the needs of our customers; 14 ●our ability to fund growth;●the quality of our new products; and●our ability to respond rapidly to technological change. The failure to do any of the foregoing could have a material adverse effect on our business, financial condition and results of operations. In addition, we mayface competition in these new markets from various companies that may have substantially greater research and development resources, marketing andfinancial resources, manufacturing capability and customer support organizations. We have foreign operations in Singapore, Indonesia, the United Kingdom and Germany, and various factors relating to our international operationscould affect our results of operations. In 2017, we operated in Singapore, Indonesia, the United Kingdom and Germany. Approximately 13 percent of our revenues were derived from our facilitiesin these countries in 2017. As of December 31, 2017, approximately 25 percent of our long-lived assets are located in these countries. Political or economicinstability in these countries could have an adverse impact on our results of operations due to disruption of production or diminished revenues in thesecountries. Our future revenues, costs of operations and profit results could be affected by a number of factors related to our international operations, includingchanges in foreign currency exchange rates, changes in economic conditions from country to country, changes in a country’s political condition, tradeprotection measures, licensing and other legal requirements and local tax issues. Unanticipated currency fluctuations in the British pound, euro, Singaporedollar and other currencies could lead to lower reported consolidated revenues due to the translation of this currency into U.S. dollars when we consolidateour revenues and results from operations. Events in Europe could negatively affect our ability to conduct business in those countries. Following a referendum in June 2016 in which voters in the United Kingdom approved an exit from the European Union, the United Kingdom governmenthas initiated a process to leave the European Union (often referred to as Brexit), which is currently scheduled to take place on March 29, 2019. In 2017, wederived 13 percent of our revenues from sales outside the U.S., including 6 percent from Europe. The consequences of Brexit, together with what may beprotracted negotiations around the terms of Brexit, could introduce significant uncertainties into global financial markets and adversely impact the marketsin which we and our customers operate. While we are not experiencing any immediate adverse impact on our financial condition as a result of Brexit, adverseconsequences such as deterioration in economic conditions, volatility in currency exchange rates, including the pound and the euro, or adverse changes inregulation could have a negative impact on our future operations, operating results and financial condition. All of these potential consequences could befurther magnified if additional countries were to exit the European Union. The recent debt crisis in certain European countries could cause the value of the euro to deteriorate, reducing the purchasing power of our Europeancustomers. Financial difficulties experienced by our suppliers and customers, including distributors, could result in product delays and inventory issues; risksto accounts receivable could also include delays in collection and greater bad debt expense. Also, the effect of the debt crisis in certain European countriescould have an adverse effect on the capital markets generally, specifically impacting our ability and the ability of our customers to finance our and theirrespective businesses on acceptable terms, if at all, the availability of materials and supplies and demand for our products. We are subject to tax legislation in numerous countries; changes in tax laws or challenges to our tax positions could adversely affect our business,results of operations and financial condition. We are a global corporation with a presence in the United States, Singapore, Indonesia, the United Kingdom and Germany. As such, we are subject to taxlaws, regulations and policies of the U.S. federal, state and local governments and of comparable taxing authorities in other country jurisdictions. Changes intax laws, including the recently enacted U.S. federal tax legislation commonly referred to as the Tax Cuts and Jobs Act of 2017 (“Tax Act”), as well as otherfactors, could cause us to experience fluctuations in our tax obligations and effective tax rates in 2018 and thereafter and otherwise adversely affect our taxpositions and/or our tax liabilities. There can be no assurance that our effective tax rates, tax payments, tax credits or incentives will not be adversely affectedby these or other initiatives. We may experience difficulty in paying our debt when it comes due, which could limit our ability to obtain financing. As of December 31, 2017, we had bank debt of $11,500. Our ability to pay the principal and interest on our indebtedness as it comes due will depend uponour current and future performance. Our performance is affected by general economic conditions and by financial, competitive, political, business and otherfactors. Many of these factors are beyond our control. We believe that availability under our existing credit facility combined with funds expected to begenerated from operations and control of capital spending will be sufficient to meet our anticipated cash requirements for operating needs for at least the next12 months. If, however, we are unable to renew these facilities or obtain waivers for covenant defaults in the future or do not generate sufficient cash, we maybe required to seek additional financing or sell equity on terms which may not be as favorable as we could have otherwise obtained. No assurance can begiven that any refinancing, additional borrowing or sale of equity will be possible when needed or that we will be able to negotiate acceptable terms. Inaddition, our access to capital is affected by prevailing conditions in the financial and equity capital markets, as well as our own financial condition andperformance. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources”. 15 Because of our floating rate credit facilities, we may be adversely affected by interest rate increases. Both our domestic credit facility and foreign credit facility provide for floating interest rates. Worldwide interest rates have begun to rise. Interest rates arehighly sensitive to many factors, including governmental monetary policies, domestic and international economic and political conditions and other factorsbeyond our control. A significant increase in interest rates could have an adverse effect on our financial position and results of operations. If we fail to meet our financial and other covenants under our loan agreements with our lenders, absent a waiver, we will be in default of the loanagreements and our lenders can take actions that would adversely affect our business. There can be no assurances that we will be able to maintain compliance with the financial and other covenants in our loan agreements. In the event we areunable to comply with these covenants during future periods, it is uncertain whether our lenders will grant waivers for our non-compliance. If there is anevent of default by us under our loan agreements, our lenders have the option to, among other things, accelerate any and all of our obligations under the loanagreements which would have a material adverse effect on our business, financial condition and results of operations. Our success depends on our senior management team and if we are not able to retain them, it could have a materially adverse effect on us. We are highly dependent upon the continued services and experience of our senior management team, including Mark S. Gorder, our President, ChiefExecutive Officer and a member of the Board of Directors. We depend on the services of Mr. Gorder and the other members of our senior management team to,among other things, continue the development and implementation of our business strategies and maintain and develop our client relationships. We do notmaintain key-man life insurance for any members of our senior management team. Cybersecurity incidents could disrupt business operations, result in the loss of critical and confidential information, and adversely impact ourreputation and results of operations. Global cybersecurity threats can range from uncoordinated individual attempts to gain unauthorized access to our information technology (IT) systems tosophisticated and targeted measures known as advanced persistent threats. While we employ comprehensive measures to prevent, detect, address and mitigatethese threats (including access controls, insurance, vulnerability assessments, continuous monitoring of our IT networks and systems and maintenance ofbackup and protective systems), cybersecurity incidents, depending on their nature and scope, could potentially result in the misappropriation, destruction,corruption or unavailability of critical data and confidential or proprietary information (our own or that of third parties) and the disruption of businessoperations. The potential consequences of a material cybersecurity incident include reputational damage, loss of customers, litigation with customers andother parties, loss of trade secrets and other proprietary business data, diminution in the value of our investment in research, development and engineering,and increased cybersecurity protection and remediation costs, which in turn could adversely affect our competitiveness and results of operations. Our future success depends in part on the continued service of our engineering and technical personnel and our ability to identify, hire and retainadditional personnel. There is intense competition for qualified personnel in our markets. We may not be able to continue to attract and retain engineers or other qualifiedpersonnel necessary for the development and growth of our business or to replace engineers or other qualified personnel who may leave our employ in thefuture. The failure to retain and recruit key technical personnel could cause additional expense, potentially reduce the efficiency of our operations and couldharm our business. We and/or our customers may be unable to protect our and their proprietary technology and intellectual property rights or keep up with that ofcompetitors. Our ability to compete effectively against other companies in our markets depends, in part, on our ability and the ability of our customers to protect our andtheir current and future proprietary technology under patent, copyright, trademark, trade secret and unfair competition laws. We cannot assure that our meansof protecting our proprietary rights in the United States or abroad will be adequate, or that others will not develop technologies similar or superior to ourtechnology or design around the proprietary rights we own or license. In addition, we may incur substantial costs in attempting to protect our proprietaryrights. Also, despite the steps taken by us to protect our proprietary rights, it may be possible for unauthorized third parties to copy or reverse-engineer aspects of ourand our customers’ products, develop similar technology independently or otherwise obtain and use information that we or our customers regard asproprietary. We and our customers may be unable to successfully identify or prosecute unauthorized uses of our or our customers’ technology. 16 If we become subject to material intellectual property infringement claims, we could incur significant expenses and could be prevented from sellingspecific products. We may become subject to material claims that we infringe the intellectual property rights of others in the future. We cannot assure that, if made, these claimswill not be successful. Any claim of infringement could cause us to incur substantial costs defending against the claim even if the claim is invalid, and coulddistract management from other business. Any judgment against us could require substantial payment in damages and could also include an injunction orother court order that could prevent us from offering certain products. Environmental liability and compliance obligations may affect our operations and results. Our manufacturing operations are subject to a variety of environmental laws and regulations as well as internal programs and policies governing: ●air emissions;●wastewater discharges;●the storage, use, handling, disposal and remediation of hazardous substances, wastes and chemicals; and●employee health and safety. If violations of environmental laws occur, we could be held liable for damages, penalties, fines and remedial actions. Our operations and results could beadversely affected by any material obligations arising from existing laws, as well as any required material modifications arising from new regulations thatmay be enacted in the future. We may also be held liable for past disposal of hazardous substances generated by our business or former businesses orbusinesses we acquire. In addition, it is possible that we may be held liable for contamination discovered at our present or former facilities. We are subject to numerous asbestos-related lawsuits, which could adversely affect our financial position, results of operations or liquidity. We are a defendant along with a number of other parties in lawsuits alleging that plaintiffs have or may have contracted asbestos-related diseases as a result ofexposure to asbestos products or equipment containing asbestos sold by one or more named defendants. These lawsuits relate to the discontinued heattechnologies segment which we sold in March 2005. Due to the non-informative nature of the complaints, we do not know whether any of the complaintsstate valid claims against us. Certain insurance carriers have informed us that the primary policies for the period August 1, 1970-1978 have been exhaustedand that the carriers will no longer provide defense and insurance coverage under those policies. However, we have other primary and excess insurancepolicies that we believe afford coverage for later years. Some of these other primary insurers have accepted defense and insurance coverage for these suits, andsome of them have either ignored our tender of defense of these cases, or have denied coverage, or have accepted the tenders but asserted a reservation ofrights and/or advised us that they need to investigate further. Because settlement payments are applied to all years a litigant was deemed to have beenexposed to asbestos, we believe we will have funds available for defense and insurance coverage under the non-exhausted primary and excess insurancepolicies. However, unlike the older policies, the more recent policies have deductible amounts for defense and settlements costs that we will be required topay; accordingly, we expect that our litigation costs will increase in the future as the older policies are exhausted. Further, many of the policies covering lateryears (approximately 1984 and thereafter) have exclusions for any asbestos products or operations, and thus do not provide insurance coverage for asbestos-related lawsuits. If our insurance policies do not cover the costs and any awards for the asbestos-related lawsuits, we will have to use our cash or obtainadditional financing to pay the asbestos-related obligations and settlement costs. There is no assurance that we will have the cash or be able to obtainadditional financings on favorable terms to pay asbestos related obligations or settlements should they occur. The ultimate outcome of any legal mattercannot be predicted with certainty. In light of the significant uncertainty associated with asbestos lawsuits, there is no guarantee that these lawsuits will notmaterially adversely affect our financial position, results of operations or liquidity. The market price of our common stock has been and is likely to continue to be volatile and there has been limited trading volume in our stock, whichmay make it difficult for shareholders to resell common stock when they want to and at prices they find attractive. The market price of our common stock has been and is likely to be highly volatile, and there has been limited trading volume in our common stock. Thecommon stock market price could be subject to wide fluctuations in response to a variety of factors, including the following: ●announcements of fluctuations in our or our competitors’ operating results;●required changes in our reported revenue and revenue recognition accounting policy expected under Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606); 17 ●the timing and announcement of sales or acquisitions of assets by us or our competitors;●changes in estimates or recommendations by securities analysts;●adverse or unfavorable publicity about our products, technologies or us;●the commencement of material litigation, or an unfavorable verdict, against us;●terrorist attacks, war and threats of attacks and war;●additions or departures of key personnel; and●sales of common stock by us or our shareholders. In addition, the stock market in recent years has experienced significant price and volume fluctuations. Such volatility has affected many companiesirrespective of, or disproportionately to, the operating performance of these companies. These broad fluctuations and limited trading volume may materiallyadversely affect the market price of our common stock, and your ability to sell our common stock. Most of our outstanding shares are available for resale in the public market without restriction. The sale of a large number of these shares could adverselyaffect the share price and could impair our ability to raise capital through the sale of equity securities or make acquisitions for common stock. “Anti-takeover” provisions may make it more difficult for a third party to acquire control of us, even if the change in control would be beneficial toshareholders. We are a Pennsylvania corporation. Anti-takeover provisions in Pennsylvania law and our charter and bylaws could make it more difficult for a third party toacquire control of us. These provisions could adversely affect the market price of the common stock and could reduce the amount that shareholders mightreceive if we are sold. For example, our charter provides that the board of directors may issue preferred stock without shareholder approval. In addition, ourbylaws provide for a classified board, with each board member serving a staggered three-year term. Directors may be removed by shareholders only with theapproval of the holders of at least two-thirds of all of the shares outstanding and entitled to vote. If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result,current and potential shareholders and customers could lose confidence in our financial reporting, which could harm our business, the trading price ofour stock and our ability to retain our current customers or obtain new customers. Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, referred to as Section 404, we are required to include in our Annual Reports on Form 10-K, ourmanagement’s report on internal control over financial reporting. Currently, we are not required to include a report of our independent registered publicaccounting firm on our internal controls because we are a “smaller reporting company” under SEC rules; therefore, shareholders do not have the benefit of anindependent review of our internal controls. While we have reported no “material weaknesses” in the Form 10-K for the fiscal year ended December 31, 2017,we cannot guarantee that we will not have material weaknesses in the future. Compliance with the requirements of Section 404 is expensive and time-consuming. If in the future we fail to complete this evaluation in a timely manner, or if we determine that we have a material weakness, we could be subject toregulatory scrutiny and a loss of public confidence in our internal control over financial reporting. In addition, any failure to establish an effective system ofdisclosure controls and procedures could cause our current and potential investors and customers to lose confidence in our financial reporting and disclosurerequired under the Securities Exchange Act of 1934, which could adversely affect our business and the market price of our common stock. 18 ITEM 1B.Unresolved Staff Comments Not applicable. ITEM 2.Properties The Company leases seven facilities, three domestically and four internationally, as follows: ●a 47,000 square foot manufacturing facility in Arden Hills, Minnesota, which also serves as the Company’s headquarters. At this facility, theCompany manufactures body-worn devices, other than plastic component parts. Annual base rent expense, including real estate taxes and othercharges, is approximately $509. This lease expires in January 2022.●a 46,000 square foot building in Vadnais Heights, Minnesota at which IntriCon produces plastic component parts for body-worn devices. Annualbase rent expense, including real estate taxes and other charges, is approximately $428. This lease expires in December 2022.●a 22,000 square facility in DeKalb, Illinois which houses Hearing Help Express’s sales and administrative offices and warehouse. Annual base rentexpense is approximately $241. We are also responsible for our pro rata share of common area costs, real estate taxes and insurance costs. This leaseexpires in March 2022.●a 25,000 square foot building in Singapore which houses production facilities and administrative offices. Annual base rent expense, including realestate taxes and other charges, is approximately $458. This lease expires in October 2020.●a 18,000 square foot facility in Indonesia which houses production facilities. Annual base rent expense, including real estate taxes and other chargesis approximately $70. This lease expires in July 2021.●a 2,000 square foot facility in Germany which houses sales and administrative offices. Annual base rent expense, including real estate taxes andother charges, is approximately $29. This lease expires in June 2022.●a 11,900 square foot facility in United Kingdom which houses sales and administrative offices. Annual base rent expense, including real estate taxesand other charges, is approximately $137. This lease expires in April 2021. See Notes 18 and 19 to the Company’s consolidated financial statements in Item 8 of the Annual Report on Form 10-K. ITEM 3.Legal Proceedings The Company is a defendant along with a number of other parties in lawsuits alleging that plaintiffs have or may have contracted asbestos-related diseases asa result of exposure to asbestos products or equipment containing asbestos sold by one or more named defendants. These lawsuits relate to the discontinuedheat technologies segment which was sold in March 2005. Due to the non-informative nature of the complaints, the Company does not know whether any ofthe complaints state valid claims against the Company. Certain insurance carriers have informed the Company that the primary policies for the period August1, 1970-1978 have been exhausted and that the carriers will no longer provide defense and insurance coverage under those policies. However, the Companyhas other primary and excess insurance policies that the Company believes afford coverage for later years. Some of these other primary insurers have accepteddefense and insurance coverage for these suits, and some of them have either ignored the Company’s tender of defense of these cases, or have deniedcoverage, or have accepted the tenders but asserted a reservation of rights and/or advised the Company that they need to investigate further. Becausesettlement payments are applied to all years a litigant was deemed to have been exposed to asbestos, the Company believes that it will have funds availablefor defense and insurance coverage under the non-exhausted primary and excess insurance policies. However, unlike the older policies, the more recentpolicies have deductible amounts for defense and settlements costs that the Company will be required to pay; accordingly, the Company expects that itslitigation costs will increase in the future. Further, many of the policies covering later years (approximately 1984 and thereafter) have exclusions for anyasbestos products or operations, and thus do not provide insurance coverage for asbestos-related lawsuits. The Company does not believe that the assertedexhaustion of some of the primary insurance coverage for the 1970-1978 period will have a material adverse effect on its financial condition, liquidity, orresults of operations. Management believes that the number of insurance carriers involved in the defense of the suits, and the significant number of policyyears and policy limits under which these insurance carriers are insuring the Company, make the ultimate disposition of these lawsuits not material to theCompany’s consolidated financial position or results of operations. The Company’s former wholly owned French subsidiary, Selas SAS, filed for insolvency in France. The Company may be subject to additional litigation orliabilities as a result of the completion of the French insolvency proceeding, including liabilities under guarantees aggregating approximately $468. The Company is also involved from time to time in other lawsuits arising in the normal course of business, as further described in Note 18 to the consolidatedfinancial statements in Item 8. While it is not possible to predict with certainty the outcome of these matters, management is of the opinion that thedisposition of these lawsuits and claims will not materially affect the Company’s consolidated financial position, liquidity, or results of operations. 19 ITEM 4.Mine Safety Disclosures Not applicable. ITEM 4A.Executive Officers of the Registrant The names, ages and offices (as of February 21, 2018) of the Company’s executive officers were as follows: Name Age PositionMark S. Gorder 71 President, Chief Executive Officer and Director of the CompanyScott Longval 41 Chief Financial Officer and Treasurer of the CompanyMichael P. Geraci 59 Vice President, Sales and MarketingDennis L. Gonsior 59 Vice President, Global OperationsGreg Gruenhagen 64 Vice President, Corporate Quality and Regulatory Affairs Mr. Gorder joined the Company in October 1993 when Resistance Technology, Inc. (RTI) (now known as IntriCon, Inc.) was acquired by the Company. Mr.Gorder received a Bachelor of Arts degree in Mathematics from the St. Olaf College, a Bachelor of Science degree in Electrical Engineering from theUniversity of Minnesota and a Master of Business Administration from the University of Minnesota. Prior to the acquisition, Mr. Gorder was President andone of the founders of RTI, which began operations in 1977. Mr. Gorder was promoted to Vice President of the Company and elected to the Board ofDirectors in April 1996. In December 2000, he was elected President and Chief Operating Officer and in April 2001, Mr. Gorder assumed the role of ChiefExecutive Officer. Mr. Longval has served as the Company’s Chief Financial Officer since July 2006. Mr. Longval received a Bachelor of Science degree in Accounting fromthe University of St. Thomas. Prior to being appointed as CFO, Mr. Longval served as the Company’s Corporate Controller since September 2005. Prior tojoining the Company, Mr. Longval was Principal Project Analyst at ADC Telecommunications, Inc., a provider of innovative network infrastructure productsand services, from March 2005 until September 2005. From May 2002 until March 2005 he was employed by Accellent, Inc., formerly MedSourceTechnologies, a provider of outsourcing solutions to the medical device industry, most recently as Manager of Financial Planning and Analysis. FromSeptember 1998 until April 2002, he was employed by Arthur Andersen, most recently as experienced audit senior. Mr. Geraci joined the Company in October 1983. Mr. Geraci received a Bachelor of Science degree in Electrical Engineering from Bradley University and aMaster of Business Administration from the University of Minnesota – Carlson School of Business. He has served as the Company’s Vice President of Salesand Marketing since January 1995. Mr. Gonsior joined the Company in February 1982. Mr. Gonsior received a Bachelor of Science degree from Saint Cloud State University. He has served asthe Company’s Vice President of Operations since January 1996. Mr. Gruenhagen joined the Company in November 1984. Mr. Gruenhagen received a Bachelor of Science degree from Iowa State University. He has served asthe Company’s Vice President of Corporate Quality and Regulatory Affairs since December 2007. Prior to that, Mr. Gruenhagen served as Director ofCorporate Quality since 2004 and Director of Project Management since 2000. 20 PART II ITEM 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company’s common shares are listed on the NASDAQ Global Market under the ticker symbol “IIN”. Market and Dividend Information The high and low sale prices of the Company’s common stock during each quarterly period during the past two years were as follows: 2017 Market Price Range 2016 Market Price Range Quarter High Low High Low First $9.15 6.50 $8.02 5.93 Second 9.65 6.05 6.88 5.25 Third 12.95 6.90 5.80 4.12 Fourth 21.75 10.40 6.95 5.39 The closing sale price of the Company’s common stock on February 21, 2018, was $19.75 per share. At February 21, 2018 the Company had 228 shareholders of record of common stock. Such number does not reflect shareholders who beneficially owncommon stock in nominee or street name. The Company currently intends to retain any future earnings to support operations and to finance the growth and development of its business and does notintend to pay cash dividends on its common stock for the foreseeable future. Any payment of future dividends will be at the discretion of the Board ofDirectors and will depend upon, among other things, the Company’s earnings, financial condition, capital requirements, level of indebtedness, contractualrestrictions with respect to the payment of dividends, and other factors that the Board of Directors deems relevant. Terms of the Company’s bankingagreements prohibit the payment of cash dividends without prior bank approval. See “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters — Equity Compensation Plans” of thisAnnual Report on Form 10-K for disclosure regarding our equity compensation plans. On May 18, 2016, the Company completed a public offering and sale of 805 shares of common stock. The net proceeds from this offering, after deductingunderwriting discounts and offering expenses, totaled approximately $3,678 and were used for working capital and general corporate purposes. In 2017, the Company did not sell any unregistered securities and did not repurchase any of its securities. 21  ITEM 6.Selected Financial Data Year Ended December 31 2017 2016 (a) 2015 (a) 2014 2013 Sales, net $88,310 $68,009 $68,527 $67,094 $52,961 Gross profit 26,491 17,072 18,756 18,115 12,169 Operating expenses 24,244 18,674 15,025 13,836 13,507 Interest expense (716) (553) (369) (461) (600)Other expense, net (367) (602) (261) (1) (135) Income (loss) from continuing operations beforeincome taxes, non-controlling interest anddiscontinued operations 1,164 (2,757) 3,101 3,817 (2,073) Income tax expense (8) (217) (19) (428) (217) Income (loss) from continuing operations before non-controlling interest and discontinued operations 1,156 (2,974) 3,082 3,389 (2,290) Loss on sale of discontinued operations, net of incometaxes (164) — — (120) — Loss from discontinued operations, net of income taxes (128) (1,770) (965) (1,021) (3,872)Net income (loss) 864 (4,744) 2,117 2,248 (6,162)Less: Loss allocated to non-controlling interest (938) (157) (111) — — Net income (loss) attributable to shareholders $1,802 $(4,587) $2,228 $2,248 $(6,162) Basic income (loss) per share attributable toshareholders: Continuing operations $0.31 $(0.43) $0.54 $0.59 $(0.40) Discontinued operations (0.04) (0.27) (0.16) (0.20) (0.68) Net income (loss) $0.26 $(0.71) $0.38 $0.39 $(1.08) Diluted income (loss) per share attributable toshareholders: Continuing operations $0.29 $(0.43) $0.51 $0.56 $(0.40) Discontinued operations (0.04) (0.27) (0.15) (0.19) (0.68) Net income (loss) $0.25 $(0.71) $0.36 $0.37 $(1.08) Weighted average number of shares outstandingduring year: Basic 6,852 6,497 5,907 5,791 5,699 Diluted 7,307 6,497 6,241 6,038 5,699 22  Other Financial Highlights Year Ended December 31 2017 2016 (a) 2015 (a) 2014 2013 Working capital (b) $8,210 $8,456 $11,302 $7,804 $5,978 Total assets 53,184 43,758 41,886 33,961 32,720 Long-term debt 9,321 9,284 7,929 4,627 6,271 Equity 20,664 19,011 18,897 16,107 13,308 Depreciation and amortization 2,194 2,041 1,755 2,182 2,402 (a)In 2016, the Company classified its cardiac diagnostic monitoring operations as discontinued operations. The Company revised its financialstatements for 2016 and 2015 to reflect the discontinued operations.(b)Working capital is equal to current assets less current liabilities. 23  ITEM 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations Company Overview IntriCon Corporation (together with its subsidiaries, the “Company” or “IntriCon”, “we”, “us” or “our”) is an international company engaged in designing,developing, engineering, manufacturing and distributing body-worn devices. The Company serves the body-worn device market by designing, developing,engineering, manufacturing and distributing micro-miniature products, microelectronics, micro-mechanical assemblies and complete assemblies, primarilyfor bio-telemetry devices, hearing instruments and professional audio communication devices. As discussed below, the Company has two operating segments - its body-worn device segment and its hearing health direct-to-consumer segment. Ourexpertise in these segments is focused on four main markets: emerging value based hearing healthcare, hearing health, medical bio-telemetry and professionalaudio communications. Within these chosen markets, we combine ultra-miniature mechanical and electronics capabilities with proprietary technology –including ultra low power (ULP) wireless and digital signal processing (DSP) capabilities – that enhances the performance of body-worn devices. Business Highlights In December 2017, the Company acquired the remaining 80-percent stake in Hearing Help Express, Inc. (referred to as “Hearing Help Express” or “HHE”), adirect-to-consumer mail order hearing aid provider, for $650 in cash, repayment of $1,833 in debt to HHE’s 80% holder and an earn-out. The results of HHEwere consolidated into the Company’s financial statements beginning October 31, 2016. Prior to the acquisition of 100% ownership in December 2017, theCompany allocated income and losses to the noncontrolling interest based on ownership percentage. The Company entered into an agreement to acquire a 49% stake in Soundperience for 1,500 Euros. As of December 31, 2017, the Company held a 16% stakein and obtained a technology license from Soundperience, which investment would increase to 49% upon the completion of certain milestones and paymentof the purchase price for that equity. As of December 31, 2017, the Company had an investment in Soundperience of $1,415, consisting of an equityinvestment, cash advance and license agreement. In January 2018, the Company closed on the additional 33% stake in Soundperience, bringing its totalownership to 49% and its total investment to 1,500 Euros. Soundperience has designed self-fitting hearing aid technology. The Company does not anticipatethe Soundperience business will have a notable financial impact on operating results, but rather will provide the Company with exclusive access in theUnited States to critical software technology. Soundperience’s self-fitting hearing aid technology is being used in the German market today, most notablythrough Signison, a joint venture with the owner of Soundperience. Soundperience and Signison are accounted for in the Company’s financial statementsusing either the cost or equity method. In December 2017, the Company and its domestic subsidiaries entered into an Eleventh Amendment to the Loan and Security Agreement and Waiver withCIBC Bank USA (formerly known as The PrivateBank and Trust Company), which among other things provided an additional loan of $2,000 under our termnote to assist with the acquisition of HHE and provided a capital expenditure loan facility for up to $2,500. Forward–Looking Statements The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and therelated notes appearing in Item 8 of this report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties andassumptions. Our actual results may differ materially from those anticipated in these forward- looking statements as a result of many factors, including but notlimited to those under the heading “Risk Factors” in Item 1A of this Annual Report on Form 10-K. See also Item 1. “Business—Forward-Looking Statements”for more information. 24  Results of Operations: 2017 Compared with 2016 Consolidated Net Sales Our net sales are comprised of two segments: our body-worn device segment (consisting of three markets: medical, hearing health, and professional audio)and our hearing health direct-to-consumer segment. Below is a recap of our sales by main markets for the years ended December 31, 2017 and 2016: Change 2017 2016 Dollars Percent Medical $52,336 $37,602 $14,734 39.2%Hearing Health 23,316 21,882 1,434 6.6%Hearing Health Direct-to-Consumer 6,492 1,025 5,467 533.4%Professional Audio Communications 6,166 7,500 (1,334) -17.8%Consolidated Net Sales $88,310 $68,009 $20,301 29.9% In 2017, we experienced a 39.2 percent increase in medical sales primarily driven by higher sales to Medtronic while the rest of the medical segmentremained relatively stable. IntriCon currently serves this market by offering medical manufacturers the capabilities to design, develop and manufacturemedical devices that are easier to use, are more miniature, use less power, and are lighter. IntriCon has a strong presence in the diabetes market with itsMedtronic partnership. The Company believes there are growth opportunities in this market as well other emerging biotelemetry and home care markets thatcould benefit from its capabilities to develop devices that are more technologically advanced, smaller and lightweight Net sales in our hearing health business for the year ended December 31, 2017 increased 6.6 percent over the same period in 2016. The increase was primarilydue to gains in our value based hearing healthcare markets and hi Health, partially offset by weaker sales to the conventional hearing health channel. TheCompany is optimistic about the progress that has been made and the long-term prospects of the value based hearing healthcare market. Market dynamics,such as low penetration rates, an aging population, regulatory scrutiny, and the need for reduced cost and convenience, have resulted in the emergence ofalternative care models, such the insurance channel and PSAP channel. IntriCon believes it is very well positioned to serve these value based hearinghealthcare market channels. The Company is aggressively pursuing larger customers who can benefit from our value proposition. Over the past several years,the Company has invested heavily in core technologies, product platforms and its global manufacturing capabilities geared to provide high-tech, lower-costhearing devices. Net sales in our hearing health direct-to-consumer business for the year ended December 31, 2017 increased due to a full year of results compared to 2016.We acquired 20% of the equity of HHE during the fourth quarter of 2016 and began consolidating its results at that time. Please refer to Note 4 of thefinancial statements for more information about this purchase. Net sales to the professional audio device sector decreased 17.8 percent in 2017 compared to the same period in 2016. IntriCon will continue to leverage itscore technology in professional audio to support existing customers, as well as pursue related hearing health and medical product opportunities. Gross Profit Gross profit, both in dollars and as a percent of sales, for the years ended December 31, 2017 and 2016, were as follows: 2017 2016 Change Percent Percent Dollars of Sales Dollars of Sales Dollars Percent Gross Profit $26,491 30.0% $17,072 25.1% $9,419 55.2% The 2017 gross profit increase as a percentage of sales over the prior year was primarily due to higher sales volume, sales from HHE, our direct-to-consumerbusiness, for a full year and favorable sales mix. 25  Sales and Marketing, General and Administrative and Research and Development Expenses Sales and marketing, general and administrative and research and development expenses for the years ended December 31, 2017 and 2016 were: 2017 2016 Change Percent Percent Dollars of Sales Dollars of Sales Dollars Percent Sales and Marketing $9,447 10.7% $4,700 6.9% $4,747 101.0%General and Administrative 10,339 11.7% 9,154 13.5% 1,185 12.9%Research and Development 4,458 5.0% 4,688 6.9% (230) -4.9% Sales and marketing expenses increased over the prior year due to the addition of HHE in late 2016. General and administrative expenses were greater thanthe prior year primarily due to support costs as revenue levels increased, along with costs at HHE. Research and development decreased over the prior yeardue to decreased outside service costs. Restructuring charges During 2016, the Company incurred restructuring charges of $132, related to IntriCon UK’s facility moving costs. The Company does not expect to incur anyadditional cash charges related to this restructuring. Interest Expense Interest expense for 2017 was $716, an increase of $163 from $553 in 2016. The increase in interest expense was primarily due to higher average interest ratesalong with interest expenses generated from HHE that were not incurred for the full year in 2016. Other Expense, net In 2017, other expense, net was $(367) compared to $(602) in 2016. The decrease was primarily due to foreign exchange rate gains in 2017 that did not occurin 2016 and $205 in net costs related to pursuing targeted acquisitions incurred in 2016. Income Tax Expense Income taxes were as follows: 2017 2016 Income tax expense $8 $217 Percentage of income tax expense of income (loss) fromcontinuing operations before income taxes, non-controllinginterest and discontinued operations 0.7% -7.9% The expense in 2017 and 2016 was primarily due to foreign taxes on German and Indonesia operations. In 2017, income tax expense was partially offset by aSingapore tax benefit recognized during 2017. The Company is in a net operating loss (“NOL”) position for US federal and state income tax purposes, but ourdeferred tax asset related to the NOL carry forwards have been largely offset by a full valuation allowance. We incur minimal income tax expense from thecurrent period domestic operations. We have approximately $23,725 of NOL carry forwards available to offset future U.S. federal income taxes that begin toexpire in 2022. Loss from Discontinued Operations Loss from discontinued operations, net of income taxes, was $128 and $1,770 for the years ended December 31, 2017 and December 31, 2016. Loss on Sale of Discontinued Operations Loss on sale of discontinued operations, net of income taxes, was $164 for the year ended December 31, 2017 due to our sale of Datrix, LLC. Please refer toNote 2 for additional information. 26  Loss Allocated to Non-Controlling Interest Loss allocated to non-controlling interest of $938 and $157 for the years ended December 31, 2017 and December 31, 2016 was due to losses withinearVenture and HHE, and the lack of 100% ownership in these entities for the entire year. Results of Operations: 2016 Compared with 2015Consolidated Net Sales In 2016, our net sales were comprised of two segments: our body-worn device segment (consisting of three markets: medical, hearing health, and professionalaudio) and our hearing health direct-to-consumer segment, In 2015, our net sales were comprised of one segment: our body-worn device segment (consistingof three markets: medical, hearing health, and professional audio). Below is a recap of our sales by main markets for the years ended December 31, 2016 and2015: Change Year Ended December 31 2016 2015 Dollars Percent Medical $37,602 $39,609 $(2,007) -5.1%Hearing Health 21,882 21,089 793 3.8%Hearing Health Direct-to-Consumer 1,025 — 1,025 — Professional Audio Communications 7,500 7,829 (329) -4.2%Consolidated Net Sales $68,009 $68,527 $(518) -0.8% In 2016, we experienced a 5.1 percent decrease in medical sales primarily driven by lower sales to Medtronic. Net sales in our hearing health business for the year ended December 31, 2016 increased 3.8 percent over the same period in 2015. The increase was primarilydue to gains in our emerging value based hearing healthcare business, partially offset by weaker sales to the conventional hearing health channel. Net sales in our hearing health direct-to-consumer business for the year ended December 31, 2016 increased due to the acquisition of Hearing Help Expressduring the fourth quarter of 2016. Net sales to the professional audio device sector decreased 4.2 percent in 2016 compared to the same period in 2015. Gross Profit Gross profit, both in dollars and as a percent of sales, for the years ended December 31, 2016 and 2015 were as follows: 2016 2015 Change Percent Percent Year Ended December 31 Dollars of Sales Dollars of Sales Dollars Percent Gross Profit $17,072 25.1% $18,756 27.4% $(1,684) -9.0% The 2016 gross profit decrease over the comparable prior year period was primarily due to lower sales volumes and unfavorable product mix. Sales and Marketing, General and Administrative and Research and Development Expenses Sales and marketing, general and administrative and research and development expenses for the years ended December 31, 2016 and 2015 were: 2016 2015 Change Percent Percent Year Ended December 31 Dollars of Sales Dollars of Sales Dollars Percent Sales and Marketing $4,700 6.9% $3,733 5.4% $967 25.9%General and Administrative 9,154 13.5% 7,013 10.2% 2,141 30.5%Research and Development 4,688 6.9% 4,279 6.2% 409 9.6% Sales and marketing and general and administrative expenses were greater than the prior year primarily due to increased support costs for our value basedhearing healthcare initiatives and the addition of IntriCon UK and Hearing Help Express. Research and development increased over the prior year primarilydue to increased use of outside service providers and support costs for our value based hearing healthcare initiatives. 27  Restructuring charges During 2016, the Company incurred restructuring charges of $132, related to IntriCon UK’s facility moving costs. Interest Expense Interest expense for 2016 was $553, an increase of $184 from $369 in 2015. The increase in 2016 was due to higher average debt outstanding and higher debtinterest rates. Other Expense, net In 2016, other expense, net was $(602) compared to $(261) in 2015 primarily due to a royalty earned in 2015 that did not occur in 2016 and $205 in net costsrelated to pursuing targeted acquisitions in 2016. Income Tax Expense Income taxes were as follows: 2016 2015 Income tax expense $217 $19 Percentage of income tax expense of income (loss) from continuing operations before income taxes, non-controlling interest and discontinued operations 7.9% 0.6% The expense in 2016 and 2015 was primarily due to foreign taxes on German and Indonesia operations. In 2015, income tax expense was partially offset by aSingapore tax benefit. The Company is in a NOL position for US federal and state income tax purposes, but our deferred tax asset related to the NOL carryforwards have been largely offset by a full valuation allowance. We incur minimal income tax expense from the current period domestic operations. Loss from Discontinued Operations Loss from discontinued operations, net of income taxes, of $1,770 for the year ended December 31, 2016 was due to a discontinued operations loss of $974and an asset impairment of $796 compared to a discontinued operations loss of $965 for the year ended December 31, 2015. Loss Allocated to Non-Controlling Interest Loss allocated to non-controlling interest of $157 for the year ended December 31, 2016 was due to earVenture and Hearing Help Express losses compared tolosses of $111 for the year ended December 31, 2015 due to earVenture losses. Liquidity and Capital Resources Our primary sources of cash have been cash flows from operations, bank borrowings, and sales of equity. For the last three years, cash has been used forrepayments of bank borrowings, the acquisition of HHE, purchases of equipment and working capital to support research and development. As of December 31, 2017, we had approximately $373 of cash on hand. Sources of our cash for the year ended December 31, 2017 have been from ouroperating activities, as described below. Consolidated net working capital decreased to $8,210 at December 31, 2017 from $8,456 at December 31, 2016. Our cash flows from operating, investingand financing activities, as reflected in the statement of cash flows for the years ended December 31, are summarized as follows: December 31, 2017 December 31, 2016 December 31, 2015 Cash provided by (used in): Operating activities $4,230 $(405) $664 Investing activities (4,720) (2,302) (4,179)Financing activities (103) 3,531 3,731 Effect of exchange rate changes on cash 299 (524) (177)Increase (decrease) in cash $(294) $300 $39 28  Operating Activities. The most significant items that contributed to the $4,230 of cash provided by operating activities was net income of $864, add backsfor non-cash depreciation and stock-based compensation, and increases in accounts payable and accrued expenses partially offset by increases in accountsreceivable and inventory. Days sales in inventory increased from 84 at December 31, 2016 to 89 at December 31, 2017. Days payables outstandingincreased from 54 days at December 31, 2016 to 71 days at December 31, 2017. Day sales outstanding decreased from 37 days at December 31, 2016 to 36days at December 31, 2017. Cash generated from operations may be affected by a number of factors. See “Forward Looking Statements” and “Item 1A Risk Factors” contained in thisForm 10-K for a discussion of some of the factors that can negatively impact the amount of cash we generate from our operations. Investing Activities. Net cash used in investing activities of $4,720 consisted of $2,313 of purchases of property, plant and equipment, $650 for thepurchase of the remaining 80 percent interest in Hearing Help Express and $1,776 for the Investment in Soundperience, Signison and others. Financing Activities. Net cash used in financing activities of $103 comprised primarily of proceeds from debt repayments partially offset by debtborrowing. We had the following bank arrangements at December 31: December 31, 2017 December 31, 2016 Total borrowing capacity under existing facilities $19,545 $15,287 Facility Borrowings: Domestic revolving credit facility 4,000 3,218 Domestic term loan 6,250 5,250 Foreign overdraft and letter of credit facility 1,250 1,243 Total borrowings and commitments 11,500 9,711 Remaining availability under existing facilities $8,045 $5,576 Domestic Credit Facilities The Company and its domestic subsidiaries are parties to a credit facility with CIBC Bank USA (formerly known as The PrivateBank and Trust Company).The credit facility, as amended through December 31, 2017, provides for: ■a $9,000 revolving credit facility, with a $200 sub facility for letters of credit. Under the revolving credit facility, the availability of fundsdepends on a borrowing base composed of stated percentages of the Company’s eligible trade receivables and eligible inventory, and eligibleequipment less a reserve; and ■a $2.5 million capital expenditure loan facility under which the Company at its election, can draw up to $2.5 million for qualifying capitalexpenditures over the next twelve months, with monthly amortization commencing after such time; ■a term loan in the original amount of $6,500. In December 2017, the Company and its domestic subsidiaries entered into an Eleventh Amendment to the Loan and Security Agreement and Waiver withCIBC Bank USA (formerly known as The PrivateBank and Trust Company). The amendment, among other things: ■extended the maturity of the credit facilities from February 2019 to December 2022; ■increased the term loan to $6,500 from its then current balance of $4,500; 29  ■raised the inventory cap on the borrowing base from $4,000 to $4,500. Under the revolving credit facility as amended, the availability of fundsdepends on a borrowing based composed of stated percentages of the Company’s eligible trade receivables and inventory, less a reserve; ■increased the annual capital expenditure allowed under the facilities from its then current limit of $4,500 to $5,500 for the fiscal year endingDecember 31, 2018 and in any fiscal year thereafter; and ■added a $2.5 million capital expenditure loan facility under which the Company at its election, can draw up to $2.5 million for qualifyingcapital expenditures over the next twelve months, with monthly amortization commencing after such time. All of the borrowings under this agreement have been characterized as either a current or long-term liability on our balance sheet in accordance with therepayment terms described more fully below. As of December 31, 2017, there were no borrowings under the capital expenditure loan facility. Loans under the credit facility are secured by a security interest in substantially all of the assets of the Company and its domestic subsidiaries including apledge of the stock of its domestic subsidiaries. Loans under the credit facility bear interest at varying rates based on the Company’s leverage ratio of fundeddebt / EBITDA, at the option of the Company, at: ■the London InterBank Offered Rate (“LIBOR”) plus 2.50% to 4.00%, or ■the base rate, which is the higher of (a) the rate publicly announced from time to time by the lender as its “prime rate” and (b) the Federal FundsRate plus 0.5%, plus (0.25)% to 1.25% ; in each case, depending on the Company’s leverage ratio. Interest is payable monthly in arrears, except that interest on LIBOR based loans is payable at the end of the one, two or three month interest periodsapplicable to LIBOR based loans. IntriCon is also required to pay a non-use fee equal to 0.25% per year of the unused portion of the revolving line of creditfacility, payable quarterly in arrears. Weighted average interest on our domestic credit facilities was 5.51%, 4.36%, and 3.68% for 2017, 2016, and 2015, respectively. The outstanding balance of the revolving credit facility was $4,000 and $3,218 at December 31, 2017 and 2016, respectively. The total remainingavailability on the revolving credit facility was approximately $5,000 and $5,121 at December 31, 2017 and 2016, respectively. The outstanding principal balance of the term loan, as amended, is payable in quarterly installments of $250. Any remaining principal and accrued interest ispayable on December 15, 2022. IntriCon is also required to use 100% of the net cash proceeds of certain asset sales (excluding inventory and certain otherdispositions), sale of capital securities or issuance of debt to pay down the term loan. The borrowers are subject to various covenants under the credit facility, including a maximum funded debt to EBITDA, a minimum fixed charge coverageratio and maximum capital expenditure financial covenants. Under the credit facility, except as otherwise permitted, the borrowers may not, among otherthings: incur or permit to exist any indebtedness; grant or permit to exist any liens or security interests on their assets or pledge the stock of any subsidiary;make investments; be a party to any merger or consolidation, or purchase of all or substantially all of the assets or equity of any other entity; sell, transfer,convey or lease all or any substantial part of its assets or capital securities; sell or assign, with or without recourse, any receivables; issue any capitalsecurities; make any distribution or dividend (other than stock dividends), whether in cash or otherwise, to any of its equity holders; purchase or redeem anyof its equity interests or any warrants, options or other rights to equity; enter into any transaction with any of its affiliates or with any director, officer oremployee of any borrower; be a party to any unconditional purchase obligations; cancel any claim or debt owing to it; make payment on or changes to anysubordinated debt; enter into any agreement inconsistent with the provisions of the credit facility or other agreements and documents entered into inconnection with the credit facility; engage in any line of business other than the businesses engaged in on the date of the credit facility and businessesreasonably related thereto; or permit its charter, bylaws or other organizational documents to be amended or modified in any way which could reasonably beexpected to materially adversely affect the interests of the lender. The Company was in compliance with all applicable covenants under the credit facility asof December 31, 2017. 30  Upon the occurrence and during the continuance of an event of default (as defined in the credit facility), the lender may, among other things: terminate itscommitments to the borrowers (including terminating or suspending its obligation to make loans and advances); declare all outstanding loans, interest andfees to be immediately due and payable; take possession of and sell any pledged assets and other collateral; and exercise any and all rights and remediesavailable to it under the Uniform Commercial Code or other applicable law. In the event of the insolvency or bankruptcy of any borrower, all commitments ofthe lender will automatically terminate and all outstanding loans, interest and fees will be immediately due and payable. Events of default include, amongother things, failure to pay any amounts when due; material misrepresentation; default in the performance of any covenant, condition or agreement to beperformed that is not cured within 20 days after notice from the lender; default in the performance of obligations under certain subordinated debt, default inthe payment of other indebtedness or other obligation with an outstanding principal balance of more than $50, or of any other term, condition or covenantcontained in the agreement under which such obligation is created, the effect of which is to allow the other party to accelerate such payment or to terminatethe agreements; a breach by a borrower under certain material agreements, the result of which breach is the suspension of the counterparty’s performancethereunder, delivery of a notice of acceleration or termination of such agreement; the insolvency or bankruptcy of any borrower; the entrance of anyjudgment against any borrower in excess of $50, which is not fully covered by insurance; any divestiture of assets or stock of a subsidiary constituting asubstantial portion of borrowers’ assets; the occurrence of a change in control (as defined in the credit facility); certain collateral impairments; a contributionfailure with respect to any employee benefit plan that gives rise to a lien under ERISA; and the occurrence of any event which lender determines could bereasonably expected to have a material adverse effect (as defined in the credit facility). During 2014, the Company entered into interest rate swaps with The PrivateBank and Trust Company (now CIBC Bank USA) which are accounted for aseffective cash flow hedges. The interest rate swaps had a combined initial notional amount of $3,750, with a portion of the swap amortizing on a basisconsistent with the $250 quarterly installments required under the term loan. The interest rate swaps fix the Company’s one month LIBOR interest rate on thenotional amounts at rates ranging from 0.80% - 1.45%. We hold a right to cancel the interest rate swaps starting August 31, 2016. Interest rate swaps, whichare considered derivative instruments, of ($8) and $19 are reported in the consolidated balance sheets at fair value in other current liabilities at December 31,2017 and 2016. The debt issuance costs are being amortized over the related term utilizing the effective interest method and are included in interest expense and long-termdebt and are being amortized over their estimated useful life on a straight-line basis. Debt issuance cost included in interest expense was $80, $57 and $72 forthe years ended December 31, 2017, 2016, and 2015, respectively. Foreign Credit Facility In addition to its domestic credit facilities, the Company’s wholly-owned subsidiary, IntriCon, PTE LTD., entered into an international senior secured creditagreement with Oversea-Chinese Banking Corporation Ltd. that provides for an asset based line of credit. Borrowings bear interest at a rate of .75% to 2.5%over the lender’s prevailing prime lending rate. Weighted average interest on the international credit facilities was 3.87% and 3.50% for the years endedDecember 31, 2017 and 2016. The outstanding balance was $1,250 and $1,243 at December 31, 2017 and 2016, respectively. The loans are collateralized byIntriCon, PTE’s restricted cash and receivables. The total remaining availability on the international senior secured credit agreement was approximately $545and $455 at December 31, 2017 and 2016, respectively. We believe that funds expected to be generated from operations and the available borrowing capacity through our revolving credit loan facilities will besufficient to meet our anticipated cash requirements for operating needs for at least the next 15 months. We may also seek to raise capital from theopportunistic sale of equity from time to time, the proceeds of which may be used to reduce indebtedness under our credit facility. If, however, we do notgenerate sufficient cash from operations, or if we incur additional unanticipated liabilities, we may be required to seek additional financing or sell equity ordebt on terms which may not be as favorable as we could have otherwise obtained. No assurance can be given that any refinancing, additional borrowing orsale of equity or debt will be possible when needed or that we will be able to negotiate acceptable terms. In addition, our access to capital is affected byprevailing conditions in the financial and equity capital markets, as well as our own financial condition. While management believes that we will be able tomeet our liquidity needs for at least the next 12 months, no assurance can be given that we will be able to do so. Contractual Obligations The following table represents our contractual obligations and commercial commitments, excluding interest expense, as of December 31, 2017. Contractual Obligations Total Less than 1 Year 1-3 Years 3-5 Years More than 5Years Domestic credit facility $4,000 $— $— $4,000 $— Domestic term loan 6,250 1,000 2,000 3,250 — Foreign overdraft and letter of credit facility 1,250 1,040 210 — — Pension and other postretirement benefit obligations 1,398 198 360 317 523 Other long-term obligations 2,899 138 2,761 — — Operating leases 6,486 1,647 3,260 1,579 — Total contractual obligations $22,283 $4,023 $8,591 $9,146 $523 31  There are certain provisions in the underlying contracts that could accelerate our contractual obligations as noted above. Other Long-Term Liabilities The principal amounts included in other long-term liabilities, reflected above, are amounts owed to NXP Semiconductors (“NXP”) to gain access to theirtechnology and several items related to the Company’s purchase of HHE. Currently, the Company owes NXP $2,600 which must be paid in full by December20, 2019. The parties have agreed to review and extend the payment date if warranted. Foreign Currency Fluctuation Generally, the effect of changes in foreign currencies on our results of operations is partially or wholly offset by our ability to make corresponding pricechanges in the local currency. From time to time, the impact of fluctuations in foreign currencies may have a material effect on the financial results of theCompany. Foreign currency transaction amounts included in the statements of operation include losses of $89, $128 and $40 in 2017, 2016 and 2015,respectively. See Note 15 to the Company’s consolidated financial statements included herein. Off-Balance Sheet Obligations We had no material off-balance sheet obligations as of December 31, 2017 other than the operating leases disclosed above. Related Party Transactions For a discussion of related party transactions, see Note 19 to the Company’s consolidated financial statements included herein. Litigation For a discussion of litigation, see “Item 3. Legal Proceedings” and Note 18 to the Company’s consolidated financial statements included herein. New Accounting Pronouncements See “New Accounting Pronouncements” set forth in Note 1 of the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report onForm 10-K, for information pertaining to recently adopted accounting standards or accounting standards to be adopted in the future. Critical Accounting Policies and Estimates The significant accounting policies of the Company are described in Note 1 to the consolidated financial statements and have been reviewed with the auditcommittee of our Board of Directors. The preparation of financial statements in conformity with accounting principles generally accepted in the United Statesof America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingentassets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Certain accounting estimates and assumptions are particularly sensitive because of their importance to the consolidated financial statements and possibilitythat future events affecting them may differ markedly. The accounting policies of the Company with significant estimates and assumptions are describedbelow. Revenue Recognition For its body-worn device segment, the Company recognizes revenue when the customer takes ownership, primarily upon product shipment, and assumes riskof loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists and the sales price is fixed or determinable. For itsdirect to consumer segment, the Company recognizes revenue after the customer trial period has ended (generally 60 days from shipment). For changes to theCompany’s revenue recognition policies required by ASC 606, see Note 1 to the consolidated financial statements. Body-worn device segment customers have 30 days to notify the Company if the product is damaged or defective. Beyond that, there are no significantobligations that remain after shipment other than warranty obligations. Contracts with customers do not include product return rights; however, the Companymay elect in certain circumstances to accept returns of products. The Company records revenue for product sales net of returns. Sales and use tax are reportedon a net basis. The Company defers recognition of revenue on discounts to customers if discounts are considered significant. 32  In general, the Company warrants its products to be free from defects in material and workmanship and will fully conform to and perform to specifications fora period of one year. The Company develops a warranty reserve based on historical experience. While the Company’s warranty costs have historically beenwithin its expectations, the Company cannot guarantee that it will continue to experience the same warranty return rates or repair costs that it has experiencedin the past. Accounts Receivable Reserves This reserve is an estimate of the amount of accounts receivable that are uncollectible. The reserve is based on a combination of specific customer knowledge,general economic conditions and historical trends. Management believes the results could be materially different if economic conditions change for ourcustomers. Inventory Valuation Inventory is recorded at the lower of our cost or market value. Market value is an estimate of the future net realizable value of our inventory. It is based onhistorical trends, product life cycles, forecasts of future inventory needs and on-hand inventory levels. Management believes reserve levels could bematerially affected by changes in technology, our customer base, customer needs, general economic conditions and the success of certain Company salesprograms. Goodwill and Intangible Assets Goodwill is reviewed for impairment annually or more frequently if changes in circumstances or the occurrence of events suggest impairment exists. TheCompany may apply a qualitative assessment to determine if it is more likely than not that goodwill is impaired. If the Company does not pass the qualitativeassessment, or choses to skip the assessment, it performs a test comparing fair value of a reporting unit to its carrying value. The Company would need torecognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The Company has concluded that noimpairment of goodwill or intangible assets occurred during the years ended December 31, 2017, 2016 and 2015. Long-lived Assets The carrying value of long-lived assets is periodically assessed to insure their carrying value does not exceed the undiscounted cash flows expected to begenerated from their expected use and eventual disposition. This assessment includes certain assumptions related to future needs for the asset to help generatefuture cash flow. Changes in those assessments, future economic conditions or technological changes could have a material adverse impact on the carryingvalue of these assets. Deferred Taxes The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporarydifferences become deductible. Management considers the scheduled reversal of deferred tax liabilities and projected future taxable income in making thisassessment. Actual future operating results, as well as changes in our future performance, could have a material impact on the valuation allowance. Employee Benefit Obligations We provide retirement and health care insurance for certain domestic retirees and employees of our Selas operations discontinued in 2005. We measure thecosts of our obligation based on our best estimate. The net periodic costs are recognized as employees render the services necessary to earn the post-retirement benefit. Several assumptions and statistical variables are used in the models to calculate the expense and liability related to the plans. Wedetermine assumptions about the discount rate, the expected rate of return on plan assets and the future rate of compensation increases. The actuarial modelsalso use assumptions on demographic factors such as retirement, mortality and turnover. Changes in actuarial assumptions could vary materially from actualresults due to economic events and different rates of retirement, mortality and withdrawal. ITEM 7A.Quantitative and Qualitative Disclosures About Market Risk Not applicable. 33  ITEM 8.Financial Statements and Supplementary Data Management’s Report on Internal Control over Financial Reporting Management of IntriCon Corporation and its subsidiaries (“the Company”) is responsible for establishing and maintaining adequate internal control overfinancial reporting, as such term is defined in Rules 13a-15(f) of the Securities Exchange Act of 1934. The Company’s internal control over financialreporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies andprocedures that (1) pertain to maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets ofthe Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordancewith generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations ofmanagement and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, useor disposition of the Company’s assets that could have a material effect on the financial statements. Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of theeffectiveness of internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changesin conditions, or that the degree of compliance with the policies or procedures may deteriorate. The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2017, using criteria setforth in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).Based on this assessment, the Company’s management believes that, as of December 31, 2017, the Company’s internal control over financial reporting waseffective based on those criteria. This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financialreporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to a provision of the Dodd FrankAct, which eliminated such requirement for “smaller reporting companies,” as defined in SEC regulations, such as IntriCon. There were no changes in our internal control over financial reporting during the most recent fiscal quarter covered by this report that have materiallyaffected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. 34  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the board of directors of IntriCon Corporation and Subsidiaries: Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of IntriCon Corporation and Subsidiaries (the “Company”) as of December 31, 2017 and2016, the related consolidated statements of operations, comprehensive income (loss), equity and cash flows for the years ended December 31, 2017, 2016,and 2015, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statementspresent fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cashflows for the years ended December 31, 2017, 2016, and 2015, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’sconsolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board(United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required tohave, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain anunderstanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internalcontrol over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud,and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosuresin the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Baker Tilly Virchow Krause, LLP We have served as the Company’s auditor since 2005. Minneapolis, MN March 13, 2018 35  INTRICON CORPORATIONConsolidated Statements of Operations (In Thousands, Except Per Share Amounts) Year Ended December 31 2017 2016 2015 Sales, net $88,310 $68,009 $68,527 Cost of sales 61,819 50,937 49,771 Gross profit 26,491 17,072 18,756 Operating expenses: Sales and marketing 9,447 4,700 3,733 General and administrative 10,339 9,154 7,013 Research and development 4,458 4,688 4,279 Restructuring charges (Note 3) — 132 — Total operating expenses 24,244 18,674 15,025 Operating income (loss) 2,247 (1,602) 3,731 Interest expense (716) (553) (369)Other expense, net (367) (602) (261)Income (loss) from continuing operations before income taxes and discontinued operations 1,164 (2,757) 3,101 Income tax expense 8 217 19 Income (loss) from continuing operations before discontinued operations 1,156 (2,974) 3,082 Loss from discontinued operations and impairment, net of income taxes (Note 2) (128) (1,770) (965)Loss on sale of discontinued operations (Note 2) (164) — — Net income (loss) 864 (4,744) 2,117 Less: Loss allocated to non-controlling interest (938) (157) (111)Net income (loss) attributable to IntriCon shareholders $1,802 $(4,587) $2,228 Basic income (loss) per share attributable to IntriCon shareholders: Continuing operations $0.31 $(0.43) $0.54 Discontinued operations (0.04) (0.27) (0.16) Net income (loss) per share: $0.26 $(0.71) $0.38 Diluted income (loss) per share attributable to IntriCon shareholders: Continuing operations $0.29 $(0.43) $0.51 Discontinued operations (0.04) (0.27) (0.15) Net income (loss) per share: $0.25 $(0.71) $0.36 Average shares outstanding: Basic 6,852 6,497 5,907 Diluted 7,307 6,497 6,241 (See accompanying notes to the consolidated financial statements) 36  INTRICON CORPORATIONConsolidated Statements of Comprehensive Income (Loss) (In Thousands) Year Ended December 31 2017 2016 2015 Net income (loss) $864 $(4,744) $2,117 Interest rate swap, net of taxes of $0 26 22 (20)Pension and postretirement obligations, net of taxes of $0 20 20 (195)Foreign currency translation adjustment, net of taxes of $0 235 (335) (104)Comprehensive income (loss) $1,145 $(5,037) $1,798 (See accompanying notes to the consolidated financial statements) 37  INTRICON CORPORATIONConsolidated Balance Sheets(In Thousands, Except Per Share Amounts) December 31, December 31, 2017 2016 At December 31, Current assets: Cash $373 $667 Restricted cash 644 595 Accounts receivable, less allowance for doubtful accounts of $332 at December 31, 2017 and $170 at December31, 2016 9,052 7,289 Inventories 15,397 12,343 Other current assets 1,544 957 Current assets of discontinued operations — 123 Total current assets 27,010 21,974 Property, plant, and equipment 40,124 40,152 Less: Accumulated depreciation 32,949 33,546 Net machinery and equipment 7,175 6,606 Goodwill 10,808 10,555 Intangible assets, net 2,740 2,920 Investment in partnerships 1,616 146 Other assets, net 3,835 1,557 Total assets (a) $53,184 $43,758 Current liabilities: Current maturities of long-term debt $2,040 $2,346 Accounts payable 10,423 6,722 Accrued salaries, wages and commissions 3,113 2,413 Other accrued liabilities 3,224 1,914 Liabilities of discontinued operations — 123 Total current liabilities 18,800 13,518 Long-term debt, less current maturities 9,321 9,284 Other postretirement benefit obligations 455 501 Accrued pension liabilities 772 737 Other long-term liabilities 3,172 707 Total liabilities (a) 32,520 24,747 Commitments and contingencies (Note 18) Equity: Common stock, $1.00 par value per share; 20,000 shares authorized; 6,900 and 6,820 shares issued andoutstanding at December 31, 2017 and December 31, 2016, respectively 6,900 6,820 Additional paid-in capital 21,581 21,383 Accumulated deficit (6,831) (8,633)Accumulated other comprehensive loss (733) (1,014)Total shareholders’ equity 20,917 18,556 Non-controlling interest (253) 455 Total equity 20,664 19,011 Total liabilities and equity $53,184 $43,758 (a) Assets of Hearing Help Express (HHE), a consolidated variable interest entity (at the end of 2016), that can only be used to settle obligations of HHE were$5,159 at December 31, 2016. Liabilities of HHE, for which creditors do not have recourse to the general credit of IntriCon, were $3,833 at December 31,2016. (See accompanying notes to the consolidated financial statements) 38  INTRICON CORPORATIONConsolidated Statements of Cash Flows (In Thousands) 2017 2016 2015 Cash flows from operating activities: Net income (loss) $864 $(4,744) $2,117 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 2,194 2,041 1,755 Stock-based compensation 844 685 579 Loss on impairment of assets of discontinued operations — 796 — Loss on sale of discontinued operations 164 Change in deferred gain — (55) (110)Loss on disposition of property 9 55 — Change in allowance for doubtful accounts 162 35 15 Equity in loss of investments 421 78 208 Amortization of debt issuance costs 80 57 — Changes in operating assets and liabilities: Accounts receivable (2,040) 1,493 (842) Inventories (3,114) 1,813 (4,329) Other assets (811) (741) (13) Accounts payable 3,729 (1,386) 1,588 Accrued expenses 1,622 (545) (118) Other liabilities 106 13 (186) Net cash provided by (used in) operating activities 4,230 (405) 664 Cash flows from investing activities: Proceeds from sale of property, plant and equipment 19 — — Investment in partnerships (1,776) — — Purchase of PC Werth assets (Note 4) — — (197) Purchase of Hearing Help Express (Note 4) (650) (536) — Purchases of property, plant and equipment (2,313) (1,766) (3,982)Net cash used in investing activities (4,720) (2,302) (4,179) Cash flows from financing activities: Proceeds from long-term borrowings 19,162 19,357 19,615 Repayments of long-term borrowings (19,373) (19,524) (16,284)Payment of debt issuance costs (139) (140) — Proceeds from equity offering, net of offering costs — 3,678 — Proceeds from employee stock purchases and exercise of stock options 314 137 340 Change in restricted cash (67) 23 60 Net cash (used in) provided by financing activities (103) 3,531 3,731 Effect of exchange rate changes on cash 299 (524) (177) Net increase in cash (294) 300 39 Cash, beginning of year 667 367 328 Cash, end of year $373 $667 $367 (See accompanying notes to the consolidated financial statements) 39  INTRICON CORPORATIONConsolidated Statements of Equity (In Thousands) Shareholders’ Equity Common StockNumber ofShares Common StockAmount AdditionalPaid-in Capital AccumulatedDeficit AccumulatedOtherComprehensiveLoss Non-ControllingInterest Total Equity Balance December 31, 2014 5,844 $5,844 $16,939 $(6,274) $(402) $— $16,107 Exercise of stock options 123 123 112 — — — 235 Shares issued under the ESPP 14 14 91 — — — 105 Stock-based compensation — — 579 — — — 579 Net income (loss) — — — 2,228 — (111) 2,117 Investment by non-controllinginterest — — — — — 73 73 Comprehensive loss — — — — (319) — (319)Balance December 31, 2015 5,981 $5,981 $17,721 $(4,046) $(721) $(38) $18,897 Exercise of stock options 16 16 11 — — — 27 Shares issued from EquityOffering 805 805 2,873 — — — 3,678 Shares issued under the ESPP 18 18 93 — — — 111 Stock-based compensation — — 685 — — — 685 Net loss — — — (4,587) — (157) (4,744)Investment by non-controllinginterest — — — — — 650 650 Comprehensive loss — — — — (293) — (293)Balance December 31, 2016 6,820 $6,820 $21,383 $(8,633) $(1,014) $455 $19,011 Exercise of stock options 69 69 131 — — — 200 Shares issued under the ESPP 11 11 103 — — — 114 Stock-based compensation — — 844 — — — 844 Net income (loss) — — — 1,802 — (938) 864 Comprehensive loss — — — — 281 — 281 Acquisition of non-controllinginterest — — — — — (650) (650)Allocation of non-controllinginterest at acquisition (Note4) — — (880) — — 880 — Balance December 31, 2017 6,900 $6,900 $21,581 $(6,831) $(733) $(253) $20,664 (See accompanying notes to the consolidated financial statements) 40  IntriCon Corporation Notes to Consolidated Financial Statements (In Thousands, Except Per Share Data) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Headquartered in Arden Hills, Minnesota, IntriCon Corporation (together with its subsidiaries, referred to as the Company, we, us or our) is an internationalcompany engaged in designing, developing, engineering, manufacturing and distributing body-worn devices. The Company designs, develops, engineers,manufactures and distributes micro-miniature products, microelectronics, micro-mechanical assemblies, complete assemblies and software solutions,primarily for the emerging value based hearing healthcare market, the medical bio-telemetry market and the professional audio communication market. Inaddition to its operations in the state of Minnesota, the Company has facilities in the state of Illinois, Singapore, Indonesia, the United Kingdom andGermany. Basis of Presentation – In December 2016, the Company’s board of directors approved plans to discontinue its cardiac diagnostic monitoring business. TheCompany sold the cardiac diagnostic monitoring business on February 17, 2017 to Datrix LLC. For all periods presented, the Company classified thesebusinesses as discontinued operations, and, accordingly, has reclassified historical financial data presented herein. See further information in Note 2. Consolidation – The consolidated financial statements include the accounts of the Company and its consolidated subsidiaries. All material intercompanytransactions and balances have been eliminated in consolidation. Principles of Consolidation – The Company evaluates its voting and variable interests in entities on a qualitative and quantitative basis. The Companyconsolidates entities in which it concludes it has the power to direct the activities that most significantly impact an entity’s economic success and has theobligation to absorb losses or the right to receive benefits that could be significant to the entity. Discontinued Operations – The Company records discontinued operations when the disposal of separately identified business unit constitutes a significantstrategic shift in the Company’s operations. Non-Controlling Interests – The Company owns 50 percent of earVenture and owned 20 percent of Hearing Help Express, Inc. (“Hearing Help Express” orHHE”) from October 2016 until December 2017, when it acquired the 80 percent noncontrolling interest of HHE. See further information at Note 4. TheCompany has consolidated the results of earVenture and HHE for all periods presented based on the Company’s ability to control the operations of theentities and the likelihood that the Company bears the largest risk and reward of their financial results. The Company allocates profits and losses according toownership percentages, unless contractual agreements expressly dictate otherwise. In addition, profit or loss on downstream eliminated transactions areattributable to the Company. The remaining ownership is accounted for as a non-controlling interest and reported as part of equity in the consolidatedfinancial statements. The Company allocates gains and losses to the non-controlling interest even when such allocation might result in a deficit balance,reducing the losses attributed to the controlling interest. Changes in ownership interests are treated as equity transactions if the Company maintains control. Segment Disclosures – A business segment is a distinguishable component of an enterprise that is engaged in providing an individual product or service or agroup of related products or services and that is subject to risks and returns that are different from those of other business segments. The Company hasdetermined that the Company operates in two reportable segments, our body-worn device segment and our direct to consumer hearing health segment, asfurther described in Note 5. Use of Estimates – The Company makes estimates and assumptions relating to the reporting of assets and liabilities, the recording of reported amounts ofrevenues and expenses and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements. Actual results could differfrom those estimates. Considerable management judgment is necessary in estimating future cash flows and other factors affecting the valuation of goodwill,intangible assets, and employee benefit obligations including the operating and macroeconomic factors that may affect them. The Company uses historicalfinancial information, internal plans and projections and industry information in making such estimates. Revenue Recognition –For its body-worn device segment, the Company recognizes revenue when the customer takes ownership, primarily upon productshipment, and assumes risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists and the sales price is fixedor determinable. For its direct to consumer segment, the Company recognizes revenue for hearing aids after the customer trial period has ended (generally 60days from shipment). Body-worn device segment customers have 30 days to notify the Company if the product is damaged or defective. There are no other significant obligationsthat remain after shipment other than warranty obligations. Contracts with customers do not include product return rights; however, the Company may electin certain circumstances to accept returns of products. The Company records revenue for product sales net of returns. Sales and use tax are reported on a netbasis. The Company defers recognition of revenue on discounts to customers if discounts are considered significant. 41  In general, the Company warrants its products to be free from defects in material and workmanship and will fully conform to and perform to specifications fora period of one year. The Company develops a warranty reserve based on historical experience. Shipping and Handling Costs –The Company includes shipping and handling revenues in sales and shipping and handling costs in cost of sales. Fair Value of Financial Instruments – The carrying value of cash, accounts receivable, notes payable, and trade accounts payables approximate fair valuebecause of the short maturity of those instruments. The fair values of the Company’s long-term debt obligations, pension and post-retirement obligationsapproximate their carrying values based upon current market rates of interest. Concentration of Cash – The Company deposits its cash in what management believes are high credit quality financial institutions. The balance, at times,may exceed federally insured limits. Restricted Cash – Restricted cash consists of deposits required to secure a credit facility at our Singapore location and deposits required to fund retirementrelated benefits for certain employees. Accounts Receivable – The Company reviews customers’ credit history before extending unsecured credit and establishes an allowance for uncollectibleaccounts based upon factors surrounding the credit risk of specific customers and other information. Invoices are generally due 30 days after presentation.Accounts receivable over 30 days are considered past due. The Company does not accrue interest on past due accounts receivables. Receivables are writtenoff once all collection attempts have failed and are based on individual credit evaluation and specific circumstances of the customer. An allowance fordoubtful accounts is established based on factors surrounding the credit risk of specific customers, historical trends and other information. The allowance fordoubtful accounts balance was $332 and $170 as of December 31, 2017 and 2016, respectively. Inventories – Inventories are stated at the lower of cost or market. The cost of the inventories is determined by the first-in, first-out method. Property, Plant and Equipment – Property, plant and equipment are carried at cost. Depreciation is computed on a straight-line basis using estimated usefullives of 5 to 40 years for buildings and improvements and 3 to 12 years for machinery and equipment. Leasehold improvements are amortized using thestraight-line method over the shorter of the lease term or the estimated useful life of the asset. Improvements are capitalized and expenditures formaintenance, repairs and minor renewals are charged to expense when incurred. At the time assets are retired or sold, the costs and accumulated depreciationare eliminated and the resulting gain or loss, if any, is reflected in the consolidated statement of operations. Depreciation expense was $1,739, $1,870 and$1,524 for the years ended December 31, 2017, 2016, and 2015, respectively. Intangible Assets – Definite-lived intangible assets consist of various acquired Hearing Help Express trademarks and customer relationships which areamortized over eighteen to twenty years. Impairment of Long-lived Assets and Long-lived Assets to be Disposed of – The Company reviews its long-lived assets, certain identifiable intangibles,other assets and goodwill for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset group to future net undiscounted cash flowsexpected to be generated by the asset group. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount bywhich the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fairvalue less costs to sell. As of December 31, 2017, the Company has determined that no impairment of long-lived assets from continuing operations exists. Goodwill is reviewed for impairment annually or more frequently if changes in circumstances or the occurrence of events suggest impairment exists. TheCompany may apply a qualitative assessment to determine if it is more likely than not that goodwill is impaired. If a reporting unit does not pass thequalitative assessment, or the Company choses to skip the assessment, it performs a test comparing fair value of a reporting unit to its carrying value. TheCompany would need to recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The Companyhas concluded that no impairment of goodwill or intangible assets occurred within continuing operations during the years ended December 31, 2017, 2016and 2015. Other assets, net – The principal amounts included in other assets, net are technology related assets, of which, $2,732 relates to technology access with NXPSemiconductors. The Company capitalizes costs of acquired technology which provide a future economic benefit. Amortization expense was $455, $159 and$231 for the years ended December 31, 2017, 2016, and 2015, respectively. 42  Investment in partnerships – Certain of the Company’s investments in equity securities are long-term, strategic investments in companies. Depending onwhether the Company has significant influence over the entity, the Company accounts for these investments under the cost or equity method of accounting.Under the equity method the Company records the investment at the amount the Company paid and adjusts for the Company’s share of the investee’s incomeor loss and dividends paid. If payment for an investment exceeds the underlying book value of the investment, the Company allocates the difference to thefair value of the investment assets and to goodwill; and records related amortization of those assets within the equity investment balance and related equityin income (loss) of the investment. The investments are reviewed quarterly for changes in circumstances or the occurrence of events that suggest theCompany’s investment may not be recoverable. To date there have been no impairment losses recognized. Other long-term liabilities – The principal amounts included in other long-term liabilities, are amounts owed to NXP to gain access to their technology andother items. Currently, the Company owes NXP $2,600 which is due as purchases are made, but no later than December 20, 2019. The parties have agreed toreview and extend the payment date if warranted. Income Taxes – Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future taxconsequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases,operating losses and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income inthe years in which those temporary differences are expected to be recovered or settled. Valuation allowances are established to the extent the future benefitfrom the deferred tax assets realization is more likely than not unable to be realized. The effect on deferred tax assets and liabilities of a change in tax rates isrecognized in income in the period that includes the enactment date. The Company recognizes accrued interest and penalties related to uncertain taxpositions in income tax expense. At December 31, 2017 and 2016, the Company had no accrual for the payment of tax related interest and there was no taxinterest or penalties recognized in the consolidated statements of operations. The Company’s federal and state tax returns are potentially open toexaminations for fiscal years 2003-2005 and 2009-2016. Employee Benefit Obligations – The Company provides pension and health care insurance for certain domestic retirees and employees of its operationsdiscontinued in 2005. These obligations have been included in continuing operations as the Company retained these obligations. The Company alsoprovides retirement related benefits for certain foreign employees. The Company measures the costs of its obligation based on actuarial determinations. Thenet periodic costs are recognized as employees render the services necessary to earn the post-retirement benefit and the obligation is recorded on theconsolidated balance sheet as accrued pension liabilities. Assumptions about the discount rate, the expected rate of return on plan assets and the future rate of compensation increases are determined by the Company.The Company believes the assumptions are within accepted guidelines and ranges. However, these actuarial assumptions could vary materially from actualresults due to economic events and different rates of retirement, mortality and withdrawal. Stock Option and Equity Plans – Under the Company stock-based compensation plans, executives, employees and outside directors receive awards ofoptions to purchase common stock. Under all awards, the terms are fixed at the grant date. Generally, the exercise price equals the market price of theCompany’s stock on the date of the grant. Options under the plans generally vest over three years, and have a maximum term of 10 years. The plans alsopermits the granting of stock awards, stock appreciation rights, restricted stock units and other equity based awards. The Company expenses grant-date fairvalues, based on the Black-Scholes model, of stock options and awards ratably over the vesting period of the related share-based award. Product Warranty – The Company offers a warranty on various products and services. The Company estimates the costs that may be incurred under itswarranties and records a liability in the amount of such costs at the time the product is sold. Factors that affect the Company’s warranty liability include thenumber of units sold, historical and anticipated rates of warranty claims and cost per claim. The Company periodically assesses the adequacy of its recordedwarranty liabilities and adjusts the amounts as necessary. The amount of the reserve recorded is equal to the costs to repair or otherwise satisfy the claim. Patent Costs – Costs associated with the submission of a patent application are expensed as incurred given the uncertainty of the patents providing futureeconomic benefit to the Company. Advertising Costs –Advertising costs amounted to $1,696, $190, and $0 in 2017, 2016 and 2015, respectively, and are charged to expense when incurred. Research and Development Costs – Research and development costs, net of customer funding, amounted to $4,458, $4,688, and $4,279 in 2017, 2016 and2015, respectively, and are charged to expense when incurred, net of customer funding. The Company accrues proceeds received under governmental grantswhen earned and estimable as a reduction to research and development expense. 43  Customer Funded Tooling Costs – The Company designs and develops molds and tools for reimbursement on behalf of several customers. Costs associatedwith the design and development of the molds and tools are charged to expense, net of the customer reimbursement amount. Net customer funded toolingresulted in income of $95, $102 and $121 for the years ended December 31, 2017, 2016 and 2015, respectively, and is included in cost of goods sold in theconsolidated statements of operations. Income (Loss) Per Share – Basic income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of commonstock outstanding during the year. Diluted income (loss) per common share reflects the potential dilution of securities that could share in the earnings. TheCompany uses the treasury stock method for calculating the dilutive effect of stock options. Comprehensive Income (Loss) – Comprehensive income (loss) consists of net income (loss), change in fair value of derivative instruments, pension andpost-retirement obligations and foreign currency translation adjustments and is presented in the consolidated statements of comprehensive income (loss). Foreign Currency Translation – The Company’s German subsidiary accounts for its transactions in its functional currency, the euro. The Company’s UnitedKingdom subsidiary accounts for its transactions in its functional currency, the British pound. Foreign assets and liabilities are translated into United Statesdollars using the year-end exchange rates. Equity is translated at average historical exchange rates. Results of operations are translated using the averageexchange rates throughout the year. Translation gains or losses are accumulated as a separate component of equity. Subsequent Event Policy – The Company has evaluated events occurring after the date of the consolidated financial statements for events requiringrecording or disclosure in the financial statements. Derivative Financial Instruments — When deemed appropriate, the Company enters into derivative instruments. The Company does not use derivativefinancial instruments for speculative or trading purposes. All derivative transactions are linked to an existing balance sheet item or firm commitment, and thenotional amount does not exceed the value of the exposure being hedged. We recognize all derivative financial instruments in the consolidated financial statements at fair value regardless of the purpose or intent for holding theinstrument. Generally, changes in fair values of derivatives accounted for as cash flow hedges, to the extent they are effective as hedges, are recorded in othercomprehensive income (loss), net of tax or, if ineffective, on the consolidated statements of operations. New Accounting Pronouncements In March 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-07, Retirement Benefits – Improving thePresentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This guidance requires entities to present the service cost componentof net periodic pension cost and net periodic postretirement benefit cost in the income statement line items where they report compensation cost. Entities willpresent all other components of net benefit cost outside operating income, if this subtotal is presented. The rules related to the timing of when costs arerecognized or how they are measured have not changed. This amendment only impacts where those costs are reflected within the income statement. Inaddition, only the service cost component will be eligible for capitalization in inventory and other assets. This guidance becomes effective January 1, 2018.Early adoption is permitted. The Company does not anticipate that the adoption of this new standard will have a material impact on its consolidated financialstatements. In January 2017, the FASB issued ASU No. 2017-04 “Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” Thisnew standard simplifies the accounting for goodwill impairments by eliminating step 2 from the goodwill impairment test. The amendments in this update areeffective for annual impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for goodwill impairment tests performedon or after January 1, 2017. The Company elected to adopt this new standard in 2017 and the adoption of this new standard did not have a material impact onthe Company’s consolidated financial statements. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, a consensus of the FASB’s Emerging IssuesTask Force (the “Task Force”). The new standard requires that the statement of cash flows explain the change during the period in the total of cash, cashequivalents, and amounts generally described as restricted cash or restricted cash equivalents. Entities will also be required to reconcile such total to amountson the balance sheet and disclose the nature of the restrictions. This update is effective for years beginning after December 31, 2018. The Company hasrestricted cash balances and anticipates that the adoption of this new standard will change the cash amounts and financing activities on its statement of cashflows on its consolidated financial statements. The Company is currently evaluating the effect this new standard will have on the Company’s consolidatedfinancial statements. 44  In February 2016, the FASB issued its final standard on accounting for leases. This standard, issued as ASU 2016-02, requires that an entity that is a lesseerecognize lease assets and lease liabilities on the balance sheet for all leases and disclose key information about leasing arrangements. This update iseffective for financial statement periods beginning after December 15, 2018, with earlier application permitted. The Company has not yet determined theimpact of this pronouncement on its consolidated financial statements and related disclosures but anticipates it will be required to record additional leaseliabilities and corresponding rights to use assets. In May 2014, the FASB issued guidance creating ASC Section 606, “Revenue from Contracts with Customers”, which establishes a comprehensive newmodel for the recognition of revenue from contracts with customers. This model is based on the core principle that revenue should be recognized to depict thetransfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange forthose goods or services. The Company has performed a review of the requirements of the new guidance and has identified which of its contracts will be withinthe scope of ASC 606. The Company has applied the five-step model of the new standard to a selection of contracts within each of its revenue streams and hascompared the results to its current accounting practices. Based on this analysis, the adoption of ASC 606 will likely have a material impact on the Company’sconsolidated financial statements by accelerating revenue recognition for some revenue streams. The Company will provide expanded disclosures as a resultof the adoption. The Company will adopt the new standard effective January 1, 2018 using the full retrospective transition method of adoption. TheCompany has assessed and anticipates that there will be additional processes and internal controls to support recognition and disclosure of ASC 606. In thefirst quarter of 2018, the Company will be revising its revenue recognition accounting policy and expanding revenue disclosures to reflect the requirementsof ASC 606, which include disclosures related to the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.Additionally, qualitative and quantitative disclosures are required under the standard regarding customer contracts, significant judgements and assetsrecognized from the costs to obtain or fulfill a contract. 2. DISCONTINUED OPERATIONS In December 2016, the Company’s board of directors approved plans to discontinue its cardiac diagnostic monitoring business. The Company sold thecardiac diagnostic monitoring business on February 17, 2017 to Datrix, LLC. The following table shows the cardiac diagnostic monitoring business balance sheets as of December 31, 2017 and 2016: December 31, December 31, 2017 2016 Accounts receivable, net $— $123 Current assets of discontinued operations $— $123 Accounts payable — 22 Accrued compensation and other liabilities — 101 Current liabilities of discontinued operations $— $123 The following table shows the results of the cardiac diagnostic monitoring discontinued operations: Year Ended December 31, December 31, December 31, 2017 2016 2015 Sales, net $140 $1,161 $1,212 Operating costs and expenses (268) (2,135) (2,177)Loss on impairment — (796) — Net loss from discontinued operations (128) (1,770) (965) In 2016, the Company evaluated the cardiac diagnostic monitoring business for impairment and recorded non-cash impairment charges of $796. 45 In determining the nonrecurring fair value measurements of the impairment of other short and long-term assets, the Company utilized the market valueapproach. Based on the market value assessment, the Company determined fair values for the identified assets and incurred impairment charges for theremaining book value of the assets during the year ended December 31, 2016 as set forth in the table below. These charges were reflected in the Company’sdiscontinued operations in 2016. Fair value as ofmeasurement date Quoted prices inactive markets foridentical assets(Level 1) Significant otherobservable inputs(Level 2) Significantunobservable inputs(Level 3) Impairment Charge Accounts Receivable $123 $— $— $175 $52 Inventory — — — 726 726 Other Assets — — — 18 18 The Company sold the assets of the discontinued operations on February 17, 2017 to Datrix, LLC, who also assumed certain liabilities as part of the asset saleagreement. The Company recognized a loss of $164 relating to the sale of the discontinued operations. 3. RESTRUCTURING CHARGES During 2016, the Company incurred restructuring charges of $132, related to IntriCon UK Limited facility moving costs. The Company does not expect toincur any additional cash charges related to this restructuring. 4. ACQUISITIONS Acquisition of Hearing Help Express In October 2016, the Company purchased 20 percent of Hearing Help Express. The Company paid a total of $693. Based on the facts and circumstancessurrounding the management of the business and the funding of working capital needs, the Company determined that based on its ability to control theoperations of Hearing Help Express and the likelihood that the Company bears the largest risk and reward of its financial results, the results of Hearing HelpExpress should be consolidated in the Company’s consolidated financial statements. The Company accounted for the transaction as a business combination in the fourth quarter of 2016. The transaction allows the Company entry into the saleof products directly to consumers in the United States. In accordance with ASC 805, the purchase price was allocated based on estimates of the fair value ofassets acquired and liabilities assumed. The purchase price was allocated as follows: Cash $157 Inventory 341 Accounts Receivable 333 Property, Plant and Equipment 9 Intangible Assets 2,920 Goodwill 1,257 Other Assets 500 Note Payable (2,000)Deferred Revenue (717)IRS Note (461)Non-Controlling Interest (650)Other Payables (996) $693 46 Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired. The establishment of goodwill wasprimarily due to the expected revenue growth that is attributable to increased market penetration from future customers. The Company recognized revenue of $1,025 and losses of approximately $3 relating to the sales of the hearing devices and accessories by HHE from October19, 2016 through December 31, 2016. The Company has recognized revenue of $6,492 and losses of approximately $324 relating to the sales of the hearingdevices and accessories by HHE during 2017. Acquisition costs of $216 were incurred and recorded during the year ended December 31, 2016 and are included in other expenses, net in the consolidatedstatements of operations. We consider the majority of the acquisition costs to be of the non-operating, miscellaneous nature, as they were incurred as part of anon-operating activity, a business acquisition As part of the agreement to acquire the 20 percent interest, the Company also obtained the right to acquire the remaining 80 percent ownership interest for$650 in cash, the guarantee or repayment of approximately $1,800 in debt to HHE’s 80 percent holder and an earnout. The Company exercised the right toacquire the remaining ownership in January 2017 and closed on the acquisition of the remaining 80 percent interest in December 2017. Because theCompany maintained control upon acquiring the ownership, there was no impact on the assets and liabilities acquired. The Company did record a $880change to additional paid-in capital related to losses previously allocated to the noncontrolling interest. Acquisition of Assets of PC Werth On November 3, 2015, the Company acquired the assets of PC Werth Ltd, a leading supplier of hearing healthcare products and equipment to the UnitedKingdom’s National Health Service (NHS), through its IntriCon UK subsidiary. Under the terms of the agreement, the Company paid PC Werth Ltd a total of$197 in cash and assumed payables of $393. The Company accounted for the transaction as a business combination in the fourth quarter of 2015. In accordance with ASC 805, the purchase price isbeing allocated based on estimates of the fair value of assets acquired and liabilities assumed. The purchase price was allocated as follows: Inventory $155 Property, Plant and Equipment 39 Intellectual Property 39 Goodwill 357 Payables (393) $197 Goodwill represents the excess of the purchase price for the PC Werth acquisition over the fair value of the net tangible and intangible assets acquired. Theestablishment of goodwill was primarily due to the expected revenue growth that is attributable to increased market penetration from future customers. The Company has recognized additional revenue of $414 and net losses of approximately $265 relating to the sales of the hearing devices and accessoriesfrom November 2015 through December 31, 2015. Acquisition costs of $143 were primarily incurred and recorded during the year ended December 31, 2015 and are included in other expenses, net in theconsolidated statements of operations. We consider the majority of the acquisition costs to be of the non-operating, miscellaneous nature, as they wereincurred as part of a non-operating activity, a business acquisition. Unaudited Supplemental Pro Forma Financial Information The following unaudited supplemental pro forma information combines the Company’s results with those of PC Werth Ltd (predecessor to IntriCon UK) andHearing Help Express as if the acquisitions had occurred at the beginning of each of the periods presented. The Company notes Hearing Help Express’searnings were not included within the pro forma table below for 2015 as this company was in bankruptcy and these years were not reflective of the normaloperations of Hearing Help Express. This unaudited pro forma information is not intended to represent or be indicative of the Company’s consolidated resultsof operations or financial condition that would have been reported for the periods presented had the acquisitions been completed at the beginning on each ofthe periods presented, and should not be taken as indicative of the Company’s future consolidated results of operations or financial condition. 47 Unaudited December 31,2016 December 312015 Revenue $73,828 $80,698 Net earnings attributable to IntriCon Shareholders (4,749) 955 Net earnings per share Basic $(0.73) $0.16 Diluted $(0.73) $0.15 The Company believes the above historical pro forma results are not indicative of what future results of IntriCon UK and Hearing Help Express could be dueto both companies being purchased out of bankruptcy and due to the many usual and infrequent charges that occurred for both of these companies during theperiods noted above. 5. SEGMENT REPORTING The Company currently operates in two reportable segments: body-worn devices and hearing health direct to consumer. The nature of distribution andservices has been deemed separately identifiable. Therefore, segment reporting has been applied.Income (loss) from operations is total revenues less cost of sales and operating expenses. Identifiable assets by industry segment include assets directlyidentifiable with those operations. The accounting policies applied to determine segment information are the same as those described in the summary ofsignificant accounting policies. The Company evaluates the performance of each segment based on income and loss from operations before income taxes.The following table summarizes data by industry segment:At and for the Year Ended December 31, 2017 Body Worn Devices Hearing HealthDirect-to-Consumer Total Revenue, net $81,818 $6,492 $88,310 Income (loss) from continuing operations 2,347 (1,191) 1,156 Identifiable assets (excluding goodwill) 36,651 5,725 42,376 Goodwill 9,551 1,257 10,808 Depreciation and amortization 1,982 212 2,194 Capital expenditures 2,158 155 2,313 At and for the Year Ended December 31, 2016 Body Worn Devices Hearing HealthDirect-to-Consumer Total Revenue, net $66,984 $1,025 $68,009 Loss from continuing operations (2,957) (17) (2,974)Identifiable assets (excluding goodwill) 29,048 4,155 33,203 Goodwill 9,551 1,004 10,555 Depreciation and amortization 2,041 — 2,041 Capital expenditures 1,766 — 1,766 6. GEOGRAPHIC AND CUSTOMER INFORMATION The geographical distribution of long-lived assets, consisting of property, plant and equipment and net sales to geographical areas as of and for the yearsended December 31, 2017 and 2016 is set forth below: Long-lived Assets, Net December 31, December 31, 2017 2016 United States $5,407 $4,640 Singapore 1,254 1,413 Other – primarily United Kingdom and Indonesia 514 553 Consolidated $7,175 $6,606 48  Long-lived assets consist of property and equipment. Excluded from long-lived assets are investments in partnerships, patents, license agreements, intangibleassets and goodwill. The Company capitalizes long-lived assets pertaining to the production of specialized parts. These assets are periodically reviewed toassure the net realizable value from the estimated future production based on forecasted cash flows exceeds the carrying value of the assets. Net Sales to Geographical Areas Year Ended December 31Net Sales to Geographical Areas 2017 2016 2015 United States $70,746 $47,460 $49,687 Europe 9,249 11,019 6,634 Asia 7,477 8,187 10,901 All other countries 838 1,343 1,305 Consolidated $88,310 $68,009 $68,527 Geographic net sales are allocated based on the location of the customer. Customer Information One customer accounted for 48 percent, 40 percent and 43 percent of the Company’s consolidated net sales in 2017, 2016 and 2015, respectively. During2017, 2016 and 2015, the top five customers accounted for approximately 63 percent, 59 percent and 61 percent of the Company’s consolidated net sales,respectively. At December 31, 2017, two customers accounted for a combined 33 percent of the Company’s consolidated accounts receivable. Two customers accountedfor a combined 31 percent of the Company’s consolidated accounts receivable at December 31, 2016. 7. GOODWILL The Company performed its annual goodwill impairment test as of November 30th for each of the years ended December 31, 2017, 2016 and 2015. The changes in the carrying amount of goodwill for the years presented are as follows: Carrying amount at December 31, 2014 $9,194 Acquisition of assets of PC Werth (Note 4) 357 Carrying amount at December 31, 2015 9,551 Acquisition of equity interest of Hearing Help Express (Note 4) 1,004 Carrying amount at December 31, 2016 10,555 Adjustments 253 Carrying amount at December 31, 2017 $10,808 8. INTANGIBLE ASSETS Intangible assets consisted of the following: December 31, December 31, 2017 2016 Trademark $1,370 $1,370 Customer List 1,550 1,550 Accumulated amortization (180) — Total, net of accumulated amortization $2,740 $2,920 49  The definite-lived intangible assets consist of various acquired Hearing Help Express trademarks and customer relationships. The asset life of trademarks is20 years and the life of the customer list is 18 years. The annual amortization expense for the trademark and customer list will approximate $155 for the nextfive years. 9. INVESTMENT IN PARTNERSHIPS Investment in partnerships consisted of the following: December 31, December 31, 2017 2016 Investment in and cash advance for Soundperience $842 $— Investment in Signison 498 — Other 276 146 Total $1,616 $146 The Company has an agreement to acquire a 49% ownership interest and a technology license in Soundperience for 1,500 Euros. As of December 31, 2017,the Company held a 16% ownership interest in Soundperience, which increases to 49% upon the completion of certain milestones and payment of thepurchase price for that equity. As of December 31, 2017, the Company had an investment in Soundperience of $1,415, consisting of an equity investment,cash advance and license agreement. Soundperience is accounted for in the Company’s financial statements using the cost method. In January 2018, theCompany closed on the additional 33% stake in Soundperience. The Company has included the technology license obtained in other assets. Upon obtaining49% ownership in 2018, Soundperience will be accounted for in the Company’s financial statements using the equity method. The Company has a 50% stake in Signison as of December 31, 2017. Signison is accounted for in the Company’s financial statements using the equitymethod. 10. INVENTORIES Inventories consisted of the following: Raw materials Work-in process Finished products andcomponents Total December 31, 2017 Domestic $6,924 $1,791 $3,055 $11,770 Foreign 2,258 514 855 3,627 Total $9,182 $2,305 $3,910 $15,397 December 31, 2016 Domestic $5,731 $1,324 $2,609 $9,664 Foreign 1,751 284 644 2,679 Total $7,482 $1,608 $3,253 $12,343 11. SHORT AND LONG-TERM DEBT Short and long-term debt at December 31, 2017 and 2016 was as follows: December 31, 2017 December 31, 2016 Domestic asset-based revolving credit facility $4,000 $3,218 Capital expenditure loan facility — — Note payable — 2,000 Foreign overdraft and letter of credit facility 1,250 1,243 Domestic term loan 6,250 5,250 Unamortized finance costs (139) (81)Total debt 11,361 11,630 Less: Current maturities (2,040) (2,346)Total long-term debt $9,321 $9,284 50 Payments Due by Year 2018 2019 2020 2021 2022 Thereafter Total Domestic credit facility $— $— $ $— $4,000 $— $4,000 Domestic term loan 1,000 1,000 1,000 1,000 2,250 — 6,250 Foreign overdraft and letter of credit facility 1,040 210 — — — — 1,250 Total debt $2,040 $1,210 $1,000 $1,000 $6,250 $— $11,500 Domestic Credit Facilities The Company and its domestic subsidiaries are parties to a credit facility with CIBC Bank USA (formerly known as The PrivateBank and Trust Company).The credit facility, as amended through December 31, 2017, provides for: ▪a $9,000 revolving credit facility, with a $200 sub facility for letters of credit. Under the revolving credit facility, the availability of fundsdepends on a borrowing base composed of stated percentages of the Company’s eligible trade receivables and eligible inventory, and eligibleequipment less a reserve; and ▪a $2.5 million capital expenditure loan facility under which the Company at its election, can draw up to $2.5 million for qualifying capitalexpenditure expenditures over the next twelve months, with monthly amortization commencing after such time; ▪a term loan in the original amount of $6,500. In December 2017, the Company and its domestic subsidiaries entered into an Eleventh Amendment to the Loan and Security Agreement and Waiver withCIBC Bank USA (formerly known as The PrivateBank and Trust Company). The amendment, among other things: ▪extended the maturity of the credit facilities from February 2019 to December 2022; ▪increased the term loan to $6,500 from its then current balance of $4,500; ▪raised the inventory cap on the borrowing base from $4,000 to $4,500. Under the revolving credit facility as amended, the availability of fundsdepends on a borrowing based composed of stated percentages of the Company’s eligible trade receivables and inventory, less a reserve; ▪increased the annual capital expenditure allowed under the facilities from its then current limit of $4,500 to $5,500 for the fiscal year endingDecember 31, 2018 and in any fiscal year thereafter; and, ▪added a $2.5 million capital expenditure loan facility under which the Company at its election, can draw up to $2.5 million for qualifyingcapital expenditures over the next twelve months, with monthly amortization commencing after such time. All of the borrowings under this agreement have been characterized as either a current or long-term liability on our balance sheet in accordance with therepayment terms described more fully below. As of December 31, 2017, there were no borrowings under the capital expenditure loan facility. 51 Loans under the credit facility are secured by a security interest in substantially all of the assets of the Company and its domestic subsidiaries including apledge of the stock of its domestic subsidiaries. Loans under the credit facility bear interest at varying rates based on the Company’s leverage ratio of fundeddebt / EBITDA, at the option of the Company, at: ■the London InterBank Offered Rate (“LIBOR”) plus 2.50% to 4.00%, or ■the base rate, which is the higher of (a) the rate publicly announced from time to time by the lender as its “prime rate” and (b) the Federal FundsRate plus 0.5%, plus (0.25)% to 1.25% ; in each case, depending on the Company’s leverage ratio. Interest is payable monthly in arrears, except that interest on LIBOR based loans is payable at the end of the one, two or three month interest periodsapplicable to LIBOR based loans. IntriCon is also required to pay a non-use fee equal to 0.25% per year of the unused portion of the revolving line of creditfacility, payable quarterly in arrears. Weighted average interest on our domestic credit facilities was 5.51%, 4.36%, and 3.68% for 2017, 2016, and 2015, respectively. The outstanding balance of the revolving credit facility was $4,000 and $3,218 at December 31, 2017 and 2016, respectively. The total remainingavailability on the revolving credit facility was approximately $5,000 and $5,121 at December 31, 2017 and 2016, respectively. The outstanding principal balance of the term loan, as amended, is payable in quarterly installments of $250. Any remaining principal and accrued interest ispayable on December 15, 2022. IntriCon is also required to use 100% of the net cash proceeds of certain asset sales (excluding inventory and certain otherdispositions), sale of capital securities or issuance of debt to pay down the term loan. The borrowers are subject to various covenants under the credit facility, including a maximum funded debt to EBITDA, a minimum fixed charge coverageratio and maximum capital expenditure financial covenants. Under the credit facility, except as otherwise permitted, the borrowers may not, among otherthings: incur or permit to exist any indebtedness; grant or permit to exist any liens or security interests on their assets or pledge the stock of any subsidiary;make investments; be a party to any merger or consolidation, or purchase of all or substantially all of the assets or equity of any other entity; sell, transfer,convey or lease all or any substantial part of its assets or capital securities; sell or assign, with or without recourse, any receivables; issue any capitalsecurities; make any distribution or dividend (other than stock dividends), whether in cash or otherwise, to any of its equity holders; purchase or redeem anyof its equity interests or any warrants, options or other rights to equity; enter into any transaction with any of its affiliates or with any director, officer oremployee of any borrower; be a party to any unconditional purchase obligations; cancel any claim or debt owing to it; make payment on or changes to anysubordinated debt; enter into any agreement inconsistent with the provisions of the credit facility or other agreements and documents entered into inconnection with the credit facility; engage in any line of business other than the businesses engaged in on the date of the credit facility and businessesreasonably related thereto; or permit its charter, bylaws or other organizational documents to be amended or modified in any way which could reasonably beexpected to materially adversely affect the interests of the lender. The Company was in compliance with all applicable covenants under the credit facility asof December 31, 2017. During 2014, the Company entered into interest rate swaps with The PrivateBank (now CIBC Bank USA) which are accounted for as effective cash flowhedges. The interest rate swaps had a combined initial notional amount of $3,750, with a portion of the swap amortizing on a basis consistent with the $250quarterly installments required under the term loan. The interest rate swaps fix the Company’s one month LIBOR interest rate on the notional amounts at ratesranging from 0.80% - 1.45%. We hold a right to cancel the interest rate swaps starting August 31, 2016. Interest rate swaps, which are considered derivativeinstruments, of ($8) and $19 are reported in the consolidated balance sheets at fair value in other current liabilities at December 31, 2017 and 2016. The debt issuance costs are being amortized over the related term utilizing the effective interest method and are included in interest expense and long-termdebt and are being amortized over their estimated useful life on a straight-line basis. Debt issuance cost included in interest expense was $80, $57 and $72 forthe years ended December 31, 2017, 2016, and 2015, respectively Foreign Credit Facility In addition to its domestic credit facilities, the Company’s wholly-owned subsidiary, IntriCon, PTE LTD., entered into an international senior secured creditagreement with Oversea-Chinese Banking Corporation Ltd. that provides for an asset based line of credit. Borrowings bear interest at a rate of .75% to 2.5%over the lender’s prevailing prime lending rate. Weighted average interest on the international credit facilities was 3.87%, 3.50% and 3.37% for the yearsended December 31, 2017, 2016 and 2015. The outstanding balance was $1,250 and $1,243 at December 31, 2017 and 2016, respectively. The loans arecollateralized by IntriCon, PTE’s restricted cash and receivables. The total remaining availability on the international senior secured credit agreement wasapproximately $545 and $455 at December 31, 2017 and 2016, respectively. 52 12. OTHER ACCRUED LIABILITIES Other accrued liabilities at December 31: 2017 2016 Accrued professional fees $64 $63 Pension 93 93 Postretirement benefit obligation 78 103 Deferred revenue - direct to consumer 1,336 614 Other 1,653 1,041 $3,224 $1,914 13. DOMESTIC AND FOREIGN INCOME TAXES Domestic and foreign income taxes (benefits) were comprised as follows: Year Ended December 31 2017 2016 2015 Current Federal $129 $62 $— State 17 13 — Foreign 211 178 27 Total Current $357 $253 $27 Deferred Federal (126) (26) — State — — — Foreign (223) (10) (8)Income Tax Expense $8 $217 $19 Income (loss) from continuing operations before income taxes and discontinued operations Foreign (342) 661 1,792 Domestic 1,506 (3,418) 1,309 $1,164 $(2,757) $3,101 The following is a reconciliation of the statutory federal income tax rate to the effective tax rate based on income (loss): Year Ended December 31 2017 2016 2015 Tax provision at statutory rate 34.00% 34.00% 34.00%Change in valuation allowance (502.26) (46.42) (20.08)Impact of permanent items, including stock based compensation expense 19.62 (7.93) (21.33)Effect of foreign tax rates 7.04 2.49 7.82 State taxes net of federal benefit 8.03 5.05 1.92 Effect of dividend of foreign subsidiary in prior year 74.41 (3.85) 5.18 Prior year provision to return true-up 48.21 10.60 (6.70)Non-controlling interest 2.08 (1.77) 1.22 Change in expected future rate 331.39 — — Other (21.83) (0.03) (1.40)Domestic and foreign income tax rate 0.69% (7.86)% 0.63% 53 The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2017, and2016 are presented below: Year Ended December 31 2017 2016 Deferred tax assets: Net operating loss carry forwards and credits $6,048 $12,043 Inventory 558 650 Compensation accruals 1,083 1,447 Accruals and reserves 108 89 Credits 387 251 Other 757 459 Total Deferred tax assets 8,941 14,939 Less: valuation allowance (7,407) (13,253) Deferred tax assets net of valuation allowance $1,534 $1,686 Deferred tax liabilities Depreciation and amortization (1,117) (1,424) Undistributed earnings of foreign subsidiary — (194)Total deferred tax liabilities (1,117) (1,618)Net deferred tax $417 $68 The valuation allowance is maintained against deferred tax assets which the Company has determined are more likely than not to be unrealized. The changein valuation allowance was $5,846, (3,443), and $(291) for the years ended December 31, 2017, 2016, and 2015, respectively. For tax reporting purposes, theCompany has actual federal and state net operating loss carryforwards of $23,725 and $9,374, respectively. These net operating loss carryforwards begin toexpire in 2022 for federal tax purposes and began to expire in 2017 for state tax purposes. Subsequently recognized tax benefits, if any, related to thevaluation allowance for deferred tax assets or realization of net operating loss carryforwards will be reported in the consolidated statements of operations. Ifsubstantial changes in the Company’s ownership occur, there could be an annual limitation on the amount of the carryforwards that are available to beutilized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assetswill not be realized. The Company regularly assesses the likelihood that the deferred tax assets will be recovered from future taxable income. The Companyconsiders projected future taxable income and ongoing tax planning strategies, then records a valuation allowance to reduce the carrying value of the netdeferred taxes to an amount that is more likely than not able to be realized. Based upon the Company’s assessment of all available evidence, including theprevious three years of United States based taxable income and loss after permanent items, estimates of future profitability, and the Company’s overallprospects of future business, the Company determined that it is more likely than not that the Company will not be able to realize a portion of the deferred taxassets in the future. The Company will continue to assess the potential realization of deferred tax assets on an annual basis, or an interim basis ifcircumstances warrant. If the Company’s actual results and updated projections vary significantly from the projections used as a basis for this determination,the Company may need to change the valuation allowance against the gross deferred tax assets. 54 The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than notsustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is thelargest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant taxing authority. The Company hasanalyzed all tax positions for which the statute of limitations remains open. As a result of the assessment, the Company has not recorded any liabilities forunrecognized income tax benefits or retained earnings. The Company does not have any unrecognized tax benefits as of December 31, 2017, 2016 and 2015. The Company is subject to income taxes in the U.S. federal jurisdiction, and various states and foreign jurisdictions. Tax regulations within each jurisdictionare subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. The Company is still subject to U.S. federal,state and local, or non-U.S. income tax examinations by tax authorities for the years 2003 to 2005 and for the years 2009 and after. There are no on-going orpending IRS, state, or foreign examinations. The Company recognizes penalties and interest accrued related to liability on unrecognized tax benefits in income tax expense for all periods presented. Asof December 31, 2017 and 2016, the Company has no amounts accrued for the payment of interest and penalties. New Tax Legislation On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act of 2017 (“TCJA”) tax reform legislation. This legislationmakes significant change in U.S. tax law including a reduction in the corporate tax rates, changes to net operating loss carryforwards and carrybacks, and arepeal of the corporate alternative minimum tax. The legislation reduced the U.S. corporate tax rate from the current rate of 35% to 21%. As a result of theenacted law, the Company was required to revalue deferred tax assets and liability at the enacted rate. This revaluation didn’t have any income tax expenseimpact due to the full valuation allowance. The other provisions of the TCJA did not have a material impact on the 2017 consolidated financial statements. Prior to 2017, the Company asserted that it intended to be permanently reinvested with respect to its cumulative undistributed earnings in its non-USsubsidiaries with exception of its German subsidiary. With the enactment of the TCJA and changes in the US Federal taxation of non-US dividenddistributions, the Company is no longer permanently reinvested with respect to their cumulative undistributed earnings in its foreign subsidiaries. The netaccumulated earnings and profits of the Company’s foreign subsidiaries through December 31, 2017 will be taxed according to IRC §965. Such income willbe included in gross income under §951(a) and become previously taxed income. This previously taxed income will not be subject to US income tax upondistribution to the Company; however, local withholding tax will still apply. 14. EMPLOYEE BENEFIT PLANS The Company has a defined contribution plan for most of its domestic employees. Under these plans, eligible employees may contribute amounts throughpayroll deductions supplemented by employer contributions for investment in various investments specified in the plans. The Company contributions tothese plans were $445, $212 and $341 for the years ended December 31, 2017, 2016 and 2015. The Company provides post-retirement medical benefits to certain former domestic employees who met minimum age and service requirements. In 1999, aplan amendment was instituted which limits the liability for post-retirement benefits beginning January 1, 2000 for certain employees who retire after thatdate. This plan amendment resulted in a $1,100 unrecognized prior service cost reduction which is recognized as employees render the services necessary toearn the post-retirement benefit. The Company’s policy is to pay the cost of these post-retirement benefits when required on a cash basis. The Company alsohas provided certain foreign employees with retirement related benefits. The following table presents the amounts recognized in the Company’s consolidated balance sheets at December 31, 2017 and 2016 for post-retirementmedical benefits: 2017 2016 Change in Projected Benefit Obligation: Projected benefit obligation at January 1 $604 $645 Interest cost 19 27 Actuarial loss (7) 24 Participant contributions 15 23 Benefits paid (98) (115)Projected benefit obligation at December 31 533 604 Change in fair value of plan assets: Employer contributions 83 92 Participant contributions 15 23 Benefits paid (98) (115)Funded status (533) (604)Current liabilities 78 103 Noncurrent liabilities 455 501 Net amount recognized 533 604 Amount recognized in other comprehensive income — — Unrecognized net actuarial gain — — Total $— $— 55 Accrued post-retirement medical benefit costs are classified as other post-retirement benefit obligations as of December 31, 2017 and 2016. Net periodic post-retirement medical benefit costs for 2017, 2016, and 2015 included the following components: For measurement purposes, a 5.8% annual rate of increase in the per capita cost of covered benefits (i.e., health care cost trend rate) was assumed for 2017; therate was assumed to decrease gradually to 4.6% by the year 2066 and remain at that level thereafter. The difference in the health care cost trend rateassumption may have a significant effect on the amounts reported. The assumptions used for the years ended December 31 were as follows: 2017 2016 2015 Annual increase in cost of benefits 5.8% 5.9% 7.0%Discount rate used to determine year-end obligations 3.3% 3.3% 4.5%Discount rate used to determine year-end expense 3.3% 4.5% 4.5% In addition to the post-retirement medical benefits, the Company provides retirement related benefits to certain former executive employees and to certainemployees of foreign subsidiaries. The liabilities established for these benefits at December 31, 2017 and 2016 are illustrated below. 2017 2016 Current portion $93 $93 Long-term portion 772 737 Total liability at December 31 $865 $830 The Company calculated the fair values of the pension plans above utilizing a discounted cash flow, using standard life expectancy tables, annual pensionpayments, and a discount rate of 4.5%. Employer benefit payments (medical and pension), which reflect expected future service, are expected to be paid in the following years: 2018 $198 2019 186 2020 174 2021 164 2022 153 Years 2023-2027 523 15. CURRENCY TRANSLATION AND TRANSACTION ADJUSTMENTS All assets and liabilities of foreign operations in which the functional currency is not the U.S. dollar are translated into U.S. dollars at prevailing rates ofexchange in effect at the balance sheet date. Revenues and expenses are translated using average rates of exchange for the year. Adjustments resulting fromthe process of translating the financial statements of foreign subsidiaries into U.S. dollars are reported as a separate component of equity, net of tax, whereappropriate. 56 Foreign currency transaction amounts included in the consolidated statements of operations include losses of $89, $128 and $40 in 2017, 2016 and 2015,respectively. 16. COMMON STOCK AND STOCK OPTIONS The Company has a 2006 Equity Incentive Plan and a 2015 Equity Incentive Plan. The 2015 Equity Incentive Plan, which was approved by the shareholderson April 24, 2015, replaced the 2006 Equity Incentive Plan. New grants may not be made under the 2006 plan; however certain option grants under theseplans remain exercisable as of December 31, 2017. The aggregate number of shares of common stock for which awards could be granted under the 2015Equity Incentive Plan as of the date of adoption was 500 shares. Additionally, as outstanding options under the 2006 plan expire, the shares of theCompany’s common stock subject to the expired options will become available for issuance under the 2015 Equity Incentive Plan. Under the plans, executives, employees and outside directors receive awards of options to purchase common stock. The Company may also grant stockawards, stock appreciation rights, restricted stock units and other equity-based awards, although no such awards, other than awards under the director programand management purchase program described below, had been granted as of December 31, 2017. Under all awards, the terms are fixed on the grant date.Generally, the exercise price of stock options equals the market price of the Company’s stock on the date of the grant. Options under the plans generally vestover three years, and have a maximum term of 10 years. Additionally, the board has established the non-employee directors’ stock fee election program, referred to as the director program, as an award under the2015 equity incentive plan. The director program gives each non-employee director the right under the 2015 equity incentive plan to elect to have some orall of his quarterly director fees paid in common shares rather than cash. No shares were issued under the director program for any of the years endedDecember 31, 2017, 2016 and 2015. On July 23, 2008, the Compensation Committee of the Board of Directors approved the non-employee director and executive officer stock purchase program,referred to as the management purchase program, as an award under the 2015 Plan. The purpose of the management purchase program is to permit theCompany’s non-employee directors and executive officers to purchase shares of the Company’s Common Stock directly from the Company. Pursuant to themanagement purchase program, as amended, participants may elect to purchase shares of Common Stock from the Company not exceeding an aggregate of$100 during any fiscal year. Participants may make such election one time during each twenty business day period following the public release of theCompany’s earnings announcement, referred to as a window period, and only if such participant is not in possession of material, non-public informationconcerning the Company and subject to the discretion of the Board to prohibit any transactions in Common Stock by directors and executive officers duringa window period. There were no shares purchased under the program during the years ended December 31, 2017, 2016 and 2015. Stock option activity during the periods indicated is as follows: Number of Shares Weighted-average Exercise Price Aggregate Intrinsic Value Outstanding at December 31, 2014 1,313 $5.86 Options granted 170 7.14 Options exercised (159) 3.12 Outstanding at December 31, 2015 1,324 6.36 Options forfeited or cancelled (70) 5.75 Options granted 192 7.11 Options exercised (61) 5.22 Outstanding at December 31, 2016 1,385 6.54 Options forfeited or cancelled (15) 12.42 Options granted 303 7.28 Options exercised (220) 10.67 Outstanding at December 31, 2017 1,453 $5.95 $19,000 Exercisable at December 31, 2016 1,025 $6.45 $1,615 Exercisable at December 31, 2017 970 $5.42 $13,958 Available for future grant at December 31, 2017 251 57  The number of shares available for future grant at December 31, 2017, does not include a total of up to 925 shares subject to options outstanding under the2006 plan which will become available for grant under the 2015 Equity Incentive Plan in the event of the expiration of such options. The weighted-average remaining contractual term of options exercisable and options outstanding at December 31, 2017 was 4.37 and 5.59 years. The totalintrinsic value of options exercised during fiscal 2017, 2016 and 2015, was $631, $76 and $630, respectively. The weighted-average per share grant date fair value of options granted was $4.20, $4.17 and $4.50, in 2017, 2016 and 2015, respectively, using the Black-Scholes option-pricing model. For disclosure purposes, the fair value of each stock option granted is estimated on the date of grant using the Black-Scholes option-pricing model with thefollowing weighted average assumptions: 2017 2016 2015 Dividend yield 0.0% 0.0% 0.0%Expected volatility 59.29 - 63.51% 61.66 - 66.45% 65.15 - 72.81%Risk-free interest rate 1.87-2.16% 1.36-2.00% 1.42-1.88%Expected life (years) 6.0 6.0 6.0 The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fullytransferable. In addition, option-pricing models require the input of subjective assumptions, including the expected stock price volatility. Because theCompany’s options have characteristics different from those of traded options, in the opinion of management, the existing models do not necessarily providea reliable single measure of the fair value of its options. The Company calculates expected volatility for stock options and awards using the Company’s historical volatility. The expected term for stock options and awards is calculated based on the Company’s estimate of future exercise at the time of grant. The Company currently estimates a zero percent forfeiture rate for stock options and regularly reviews this estimate. There were no material forfeitures duringfiscal years 2017, 2016 and 2015. The risk-free rates for the expected terms of the stock options and awards and the employee stock purchase plan is based on the U.S. Treasury yield curve ineffect at the time of grant. The Company recorded $844, $685, and $579 of non-cash stock option expense for the years ended December 31, 2017, 2016 and 2015, respectively. Therewere 189 stock options that were exercised using a cashless method of exercise for the year ended December 31, 2017. As of December 31, 2017, there was$995 of total non-cash stock option expense related to non-vested awards that is expected to be recognized over a weighted-average period of 1.81 years. The Company also has an Employee Stock Purchase Plan (the “Purchase Plan”). The Purchase Plan, as amended, provides that a maximum of 300 shares maybe sold under the Purchase Plan. There were 11, 18, and 14 shares purchased under the Purchase Plan during the years ended December 31, 2017, 2016 and2015, respectively. On May 18, 2016, the Company completed a public offering and sale of 805 shares of common stock. The net proceeds from this offering, after deductingunderwriting discounts and offering expenses, totaled approximately $3,678 and were used for working capital and general corporate purposes. 58  17. INCOME (LOSS) PER SHARE The following table sets forth the computation of basic and diluted income (loss) per share: Year Ended December 31 2017 2016 2015 Numerator: Income (loss) from continuing operations before discontinued operations $1,156 $(2,974) $3,082 Loss from discontinued operations, net of income taxes (128) (1,770) (965) Loss on sale of discontinued operations (164) Net income (loss) 864 (4,744) 2,117 Less: Loss allocated to non-controlling interest (938) (157) (111) Net Income (loss) attributable to shareholders $1,802 $(4,587) $2,228 Denominator: Basic – weighted shares outstanding 6,852 6,497 5,907 Weighted shares assumed upon exercise of stock options 455 — 334 Diluted – weighted shares outstanding 7,307 6,497 6,241 Basic income (loss) per share attributable to shareholders: Continuing operations $0.31 $(0.43) $0.54 Discontinued operations (0.04) (0.27) (0.16)Net income (loss) per share: $0.26 $(0.71) $0.38 Diluted income (loss) per share attributable to shareholders: Continuing operations $0.29 $(0.43) $0.51 Discontinued operations (0.04) (0.27) (0.15)Net income (loss) per share: $0.25 $(0.71) $0.36 The Company excluded all stock options, including 37 in the money options, in 2016 from the computation of the diluted income per share because theireffect would have been anti-dilutive due to the Company’s net loss in the period. The Company excluded in the money stock options of 28 and 71 in 2017and 2015, respectively, from the computation of the diluted income per share because their effect would be anti-dilutive. For additional disclosures regardingthe stock options, see Note 16. 18. CONTINGENCIES AND COMMITMENTS The Company is a defendant along with a number of other parties in lawsuits alleging that plaintiffs have or may have contracted asbestos-related diseases asa result of exposure to asbestos products or equipment containing asbestos sold by one or more named defendants. These lawsuits relate to the discontinuedheat technologies segment which was sold in March 2005. Due to the non-informative nature of the complaints, the Company does not know whether any ofthe complaints state valid claims against the Company. Certain insurance carriers have informed the Company that the primary policies for the period August1, 1970-1978 have been exhausted and that the carriers will no longer provide defense and insurance coverage under those policies. However, the Companyhas other primary and excess insurance policies that the Company believes afford coverage for later years. Some of these other primary insurers have accepteddefense and insurance coverage for these suits, and some of them have either ignored the Company’s tender of defense of these cases, or have deniedcoverage, or have accepted the tenders but asserted a reservation of rights and/or advised the Company that they need to investigate further. Becausesettlement payments are applied to all years a litigant was deemed to have been exposed to asbestos, the Company believes that it will have funds availablefor defense and insurance coverage under the non-exhausted primary and excess insurance policies. However, unlike the older policies, the more recentpolicies have deductible amounts for defense and settlements costs that the Company will be required to pay; accordingly, the Company expects that itslitigation costs will increase in the future. Further, many of the policies covering later years (approximately 1984 and thereafter) have exclusions for anyasbestos products or operations, and thus do not provide insurance coverage for asbestos-related lawsuits. The Company does not believe that the assertedexhaustion of some of the primary insurance coverage for the 1970-1978 period will have a material adverse effect on its financial condition, liquidity, orresults of operations. Management believes that the number of insurance carriers involved in the defense of the suits, and the significant number of policyyears and policy limits under which these insurance carriers are insuring the Company, make the ultimate disposition of these lawsuits not material to theCompany’s consolidated financial position or results of operations. 59 The Company’s former wholly owned French subsidiary, Selas SAS, filed for insolvency in France. The Company may be subject to additional litigation orliabilities as a result of the completion of the French insolvency proceeding, including liabilities under guarantees aggregating approximately $468. The Company is also involved from time to time in other lawsuits arising in the normal course of business. While it is not possible to predict with certaintythe outcome of these matters, management is of the opinion that the disposition of these lawsuits and claims will not materially affect our consolidatedfinancial position, liquidity or results of operations. Total expense for 2017, 2016 and 2015 under leases pertaining primarily to engineering, manufacturing, sales and administrative facilities, with an initialterm of one year or more, aggregated $1,728, $1,498, and $1,265, respectively. Remaining payments under such leases are as follows: 2018- $1,647; 2019-$1,674; 2020 - $1,586; 2021 - $1,135; 2022 - $444, which includes two leased facility in Minnesota, both that expires in 2022, one leased facility in Illinoisthat expires in 2022, one leased facility in Singapore that expires in 2020, one leased facility in Indonesia that expires in 2021, one leased facility in theUnited Kingdom that expires in 2021, and one leased facility in Germany that expires in 2022. Certain leases contain renewal options as provided in thelease agreements. On October 5, 2007, the Company entered into employment agreements with its executive officers. The agreements call for payments ranging from elevenmonths to two years base salary and unpaid bonus, if any, to the executives should there be a change of control as defined in the agreement and theexecutives are not retained for a period of at least one year following such change of control. Under the agreements, all stock options granted to theexecutives would vest immediately and be exercisable in accordance with the terms of such stock options. The Company also agreed that if it enters into anagreement to sell substantially all of its assets, it will obligate the buyer to fulfill its obligations pursuant to the agreements. The agreements terminate, exceptto the extent that any obligation remains unpaid, upon the earlier of termination of the executive’s employment prior to a change of control or asset sale forany reason or the termination of the executive after a change of control for any reason other than by involuntary termination as defined in the agreements. 19. RELATED-PARTY TRANSACTIONS One of the Company’s subsidiaries leased office and factory space from a partnership consisting of one present and two former officers of the subsidiary,including Mark Gorder, a member of the Company’s Board of Directors and the President and Chief Executive Officer of the Company. The subsidiary wasrequired to pay all real estate taxes and operating expenses. The partnership sold the property to an unaffiliated third party on October 13, 2017. The totalbase rent expense, real estate taxes and other charges incurred under the lease was approximately $371, $484 and $487 for the years ended December 31,2017 (through October 13, 2017), 2016 and 2015, respectively. The Company uses the law firm of Blank Rome LLP for legal services. A partner of that firm is the son-in-law of the Chairman of our Board of Directors. TheCompany paid approximately $140, $406, and $203 to Blank Rome LLP for legal services and costs in 2017, 2016 and 2015, respectively. The Company has a 50% ownership in Signison, which is a German based hearing health company. Signison owes the Company a note receivable balance of$463 as of December 31, 2017. 20. STATEMENTS OF CASH FLOWS Supplemental disclosures of cash flow information: Year Ended December 31 2017 2016 2015 Interest received $1 $1 $1 Interest paid 716 568 437 Income taxes paid 166 196 263 Noncash Transactions: 2017 2016 2015 NXP technology access $2,732 $— $— NXP long-term liability 2,600 — — 60 21. REVENUE BY MARKET The following table sets forth, for the periods indicated, net revenue by market: Year Ended December 31 2017 2016 2015 Medical $52,336 $37,602 $39,609 Hearing Health 23,316 21,882 21,089 Hearing Health Direct-to-Consumer 6,492 1,025 — Professional Audio Communications 6,166 7,500 7,829 Total Net Sales $88,310 $68,009 $68,527 22. SUBSEQUENT EVENTS On March 7, 2018 IntriCon entered into a lease for an additional 30,000 square feet of manufacturing floor space near its existing Arden Hills location inMinnesota, to accommodate robotic assembly of medical components and systems. The lease commences on May 1, 2018 and runs for a term just over fiveyears, expiring June 2023. After a two month rent abatement period, annual base rent will approximate $250 for the first full year and is subject to 2.5%annual rent escalation. 61 ITEM 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None. ITEM 9A.Controls and Procedures Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this report (the “Evaluation Date”), the Company carried out anevaluation, under the supervision and with the participation of management, including the Chief Executive Officer (principal executive officer) and the ChiefFinancial Officer (principal financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules13a-15(e) or 15d-15(e) of the Exchange Act). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of theEvaluation Date, our disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports thatit files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in applicable rules and forms,and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisionsregarding required disclosure. Management’s Annual Report on Internal Control Over Financial Reporting. The report of management required under this Item 9A is contained in Item 8of this Annual Report on Form 10-K under the caption “Management’s Report on Internal Control Over Financial Reporting.” Changes in Internal Controls over Financial Reporting. There were no changes in our internal control over financial reporting (as such term is defined inRules 13a-15(f) and 15d-15(f) under the Exchange Act) during the most recent fiscal quarter covered by this report that would have materially affected, or arereasonably likely to materially affect, the Company’s internal control over financial reporting. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control systemare met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relativeto their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues andinstances of fraud, if any, within the Company have been detected. Because of the inherent limitations in a cost-effective control system, misstatements dueto error or fraud may occur and not be detected. ITEM 9B.Other Information None. 62 PART III ITEM 10.Directors, Executive Officers and Corporate Governance The information called for by Item 10 is incorporated by reference from the Company’s definitive proxy statement relating to its 2018 annual meeting ofshareholders, including but not necessarily limited to the sections of the 2018 proxy statement entitled “Proposal 1 – Election of Directors” and “Section16(a) Beneficial Ownership Reporting Compliance.” The information concerning executive officers contained in Item 4A hereof is incorporated by reference into this Item 10. Code of Ethics The Company has adopted a code of ethics that applies to its directors, officers and employees, including its principal executive officer, principal financialand accounting officer, controller and persons performing similar functions. Copies of the Company’s code of ethics are available without charge uponwritten request directed to Cari Sather, Director of Human Resources, IntriCon Corporation, 1260 Red Fox Road, Arden Hills, MN 55112. The Companyintends to satisfy the disclosure requirement under Item 10 of Form 8-K regarding any future amendments to a provision of its code of ethics by posting suchinformation on the Company’s website: www.intricon.com. ITEM 11.Executive Compensation The information called for by Item 11 is incorporated by reference from the Company’s definitive proxy statement relating to its 2018 annual meeting ofshareholders, including but not necessarily limited to the sections of the 2018 proxy statement entitled “Director Compensation for 2017,” and “ExecutiveCompensation”. ITEM 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information called for by Item 12 is incorporated by reference from the Company’s definitive proxy statement relating to its 2018 annual meeting ofshareholders, including but not necessarily limited to the section of the 2018 proxy statement entitled “Share Ownership of Certain Beneficial Owners,Directors and Certain Officers.” Equity Compensation Plan Information The following table details information regarding the Company’s existing equity compensation plans as of December 31, 2017: Plan Category (a)Number of securities tobe issued upon exerciseof outstanding options,warrants and rights (b)Weighted-averageexercise price ofoutstanding options,warrants and rights (c)Number of securitiesremaining available forfuture issuance underequity compensation plans(excluding securitiesreflected in column (a)) Equity compensation plans approved by security holders(1) 1,372 $5.95 350 Equity Compensation plans not approved by security holders — — — Total 1,372 $5.95 350 (1) The amount shown in column (c) includes 251 shares issuable under the Company’s 2015 Equity Incentive Plan (the “2015 Plan”) and 99 shares availablefor purchase under the Company’s Employee Stock Purchase Plan. Under the terms of the 2015 Plan, as outstanding options under the Company’s 2006Equity Incentive Plan expire, the shares of common stock subject to the expired options will become available for issuance under the 2015 Plan. As ofDecember 31, 2017, 925 shares of common stock were subject to outstanding options under the 2006 Equity Incentive Plan. Accordingly, if any of theseoptions expire, the shares of common stock subject to expired options also will be available for issuance under the 2015 Plan. 63 ITEM 13.Certain Relationships and Related Transactions, and Director Independence The information called for by Item 13 is incorporated by reference from the Company’s definitive proxy statement relating to its 2018 annual meeting ofshareholders, including but not necessarily limited to the sections of the 2018 proxy statement entitled “Certain Relationships and Related PartyTransactions” and “Independence of the Board of Directors.” ITEM 14.Principal Accounting Fees and Services The information called for by Item 14 is incorporated by reference from the Company’s definitive proxy statement relating to its 2018 annual meeting ofshareholders, including but not necessarily limited to the sections of the 2018 proxy statement entitled “Independent Registered Public Accounting FeeInformation.” PART IV ITEM 15.Exhibits, Financial Statement Schedules (a) The following documents are filed as a part of this report: 1)Financial Statements – The consolidated financial statements of the Registrant are set forth in Item 8 of Part II of this report. Consolidated Statements of Operations for the years ended December 31, 2017, 2016 and 2015 Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2017, 2016 and 2015. Consolidated Balance Sheets at December 31, 2017 and 2016. Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015. Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2017, 2016 and 2015. Notes to Consolidated Financial Statements. 64 3)Exhibits – 3.1The Company’s Amended and Restated Articles of Incorporation, as amended. (Incorporated by reference from the Company’s CurrentReport on Form 8-K filed with the Commission on April 24, 2008.) 3.2The Company’s Amended and Restated By-Laws. (Incorporated by reference from the Company’s Current Report on Form 8-K filed withthe Commission October 12, 2007.) 4.1Specimen Common Stock Certificate. (Incorporated by reference from the Company’s Registration Statement on Form S-3 (registration no.333-200182) filed with the Commission on November 13, 2014.) +10.1Supplemental Retirement Plan (amended and restated effective January 1, 1995). (Incorporated by reference from the Company’s AnnualReport on Form 10-K for the year ended December 31, 1995.) 10.2.1Amended and Restated Office/Warehouse Lease, between Resistance Technology, Inc. and Arden Partners I. L.L.P. dated November 1,1996. (Incorporated by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 1996.) 10.2.2Amended and Restated Office/Warehouse Lease Second Extension Agreement dated as of October 20, 2011 between IntriCon Inc. andArden Partners I, L.L.P. (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30,2011.) 10.2.3Amended and Restated Office/Warehouse Lease Third Extension Agreement dated as of September 17, 2013 between IntriCon Inc. andArden Partners I, L.L.P. (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30,2013.) 10.2.4Amended and Restated Office/Warehouse Lease Fourth Extension Agreement dated as of March 10, 2017 between IntriCon Inc. and ArdenPartners I, L.L.P. (Incorporated by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.) [wasthere any further amendment in connection with sale by Arden?] 10.2.5Guaranty dated as of March 10, 2017 by IntriCon Corporation in favor of Arden Partners I, L.L.P. (Incorporated by reference from theCompany’s Annual Report on Form 10-K for the year ended December 31, 2016.) +10.32006 Equity Incentive Plan, as amended. (Incorporated by reference from Appendix A to the Company’s proxy statement filed with the SECon March 15, 2012.) +10.4Form of Stock Option Agreement issued to executive officers pursuant to the 2006 Equity Incentive Plan. (Incorporated by reference fromthe Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2006.) +10.5Form of Stock Option Agreement issued to directors pursuant to the 2006 Equity Incentive Plan. (Incorporated by reference from theCompany’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2006.) +10.6Non-Employee Directors Stock Fee Election Program. (Incorporated by reference from the Company’s Annual Report on Form 10-K for theyear ended December 31, 2006.) +10.7Non-Employee Director and Executive Officer Stock Purchase Program, as amended. (Incorporated by reference from the Company’sQuarterly Report on Form 10-Q for the quarter ended September 30, 2008.) 10.8Land and Building Lease Agreement between Resistance Technology, Inc. (now IntriCon, Inc.) and MDSC Partners, LLP dated June 15,2006. (Incorporated by reference from the Company’s Current Report on Form 8-K filed with the Commission on June 21, 2006.) [anyfurther amendment or new lease?] 10.9Agreement by and between K/S HIMPP and IntriCon Corporation dated December 1, 2006 and the schedules thereto. (Incorporated byreference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2006.) 65 +10.10Employment Agreement with Mark S. Gorder. (Incorporated by reference from the Company’s Current Report on Form 8-K filed with theCommission October 12, 2007.) +10.11Form of Employment Agreement with executive officers. (Incorporated by reference from the Company’s Current Report on Form 8-K filedwith the Commission October 12, 2007.) 10.12.1Loan and Security Agreement dated as of August 13, 2009 by and among IntriCon Corporation, RTI Electronics, Inc., IntriCon TibbettsCorporation, IntriCon Datrix Corporation (f/k/a Jon Barron, Inc.) and The PrivateBank and Trust Company. (Incorporated by reference fromthe Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009.) 10.12.2First Amendment and Waiver dated March 12, 2010 to Loan and Security Agreement dated as of August 13, 2009 by and among IntriConCorporation, RTI Electronics, Inc., IntriCon Tibbetts Corporation, IntriCon Datrix Corporation and The PrivateBank and Trust Company.(Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010.) 10.12.3Second Amendment to Loan and Security Agreement and Limited Consent dated as of August 12, 2011 to Loan and Security Agreementdated as of August 13, 2009 by and among IntriCon Corporation, IntriCon, Inc., IntriCon Tibbetts Corporation, IntriCon Datrix Corporationand The PrivateBank and Trust Company. (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarterended September 30, 2011.) 10.12.4Third Amendment to Loan and Security Agreement and Waiver dated as of March 1, 2012 to Loan and Security Agreement dated as ofAugust 13, 2009 by and among IntriCon Corporation, IntriCon, Inc., IntriCon Tibbetts Corporation, IntriCon Datrix Corporation and ThePrivateBank and Trust Company. (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December31, 2011.) 10.12.5Fourth Amendment to Loan and Security Agreement and Consent among the Company, IntriCon, Inc., IntriCon Tibbetts Corporation,IntriCon Datrix Corporation and The PrivateBank and Trust Company, dated as of August 6, 2012. (incorporated by reference to theCompany’s Quarterly Report on Form 10-Q for the Quarter ended June 30, 2012.) 10.12.6Fifth Amendment to Loan and Security Agreement among the Company, IntriCon, Inc., IntriCon Tibbetts Corporation, IntriCon DatrixCorporation and The PrivateBank and Trust Company, dated as of December 21, 2012. (incorporated by reference to the Company’sCurrent Report on Form 8-K filed with the Commission on December 21, 2012.) 10.12.7Sixth Amendment to Loan and Security Agreement and Waiver among the Company, IntriCon, Inc., IntriCon Tibbetts Corporation,IntriCon Datrix Corporation and The PrivateBank and Trust Company, dated as of February 14, 2014. (Incorporated by reference to theCompany’s Current Report on Form 8-K filed with the Commission on February 19, 2014.) 10.12.8Seventh Amendment to Loan and Security Agreement among the Company, IntriCon, Inc., IntriCon Tibbetts Corporation and ThePrivateBank and Trust Company, dated as of March 31, 2015. (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015.) 10.12.9Eighth Amendment to Loan and Security Agreement among the Company, IntriCon, Inc., IntriCon Tibbetts Corporation and ThePrivateBank and Trust Company, dated as of April 15, 2016. (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016.) 10.12.10Ninth Amendment to Loan and Security Agreement and Waiver among the Company, IntriCon, Inc. and The PrivateBank and TrustCompany, dated as of August 15, 2016. (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarterended June 30, 2016.) 10.12.11Tenth Amendment to Loan and Security Agreement and Waiver among the Company, IntriCon, Inc. and The PrivateBank and TrustCompany, dated as of March 9, 2017. (Incorporated by reference from the Company’s Annual Report on Form 10-K for the year endedDecember 31, 2016.) 10.12.12*Eleventh Amendment to Loan and Security Agreement and Waiver among the Company, IntriCon, Inc., I-Management, LLC, Hearing HelpExpress, Inc., and CIBC Bank USA (formerly known as The PrivateBank and Trust Company), dated as of December 15, 2017. 66 10.13.1Revolving Credit Note issued to The PrivateBank and Trust Company dated August 13, 2009. (Incorporated by reference from theCompany’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009.) 10.13.2Amended and Restated Revolving Note from the Company, IntriCon, Inc. and IntriCon Tibbetts Corporation to The PrivateBank and TrustCompany dated April 15, 2016. (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarter ended March31, 2016.) 10.14.1Term Note issued to The PrivateBank and Trust Company dated August 13, 2009. (Incorporated by reference from the Company’s QuarterlyReport on Form 10-Q for the quarter ended September 30, 2009.) 10.14.2Term Note dated August 12, 2011 from IntriCon Corporation, IntriCon, Inc., IntriCon Tibbetts Corporation and IntriCon Datrix Corporationto The PrivateBank and Trust Company. (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarterended September 30, 2011.) 10.14.3Second Amended and Restated Term Note from the Company, IntriCon, Inc. and IntriCon Tibbetts Corporation to The PrivateBank andTrust Company. (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015.) 10.14.4Third Amended and Restated Term Note from the Company, IntriCon, Inc. and IntriCon Tibbetts Corporation to The PrivateBank and TrustCompany dated April 15, 2016. (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarter ended March31, 2016.) 10.14.5*Amended and Restated Term Note from the Company, IntriCon, Inc., I-Management, LLC and Hearing Help Express, Inc. to CIBC BankUSA (formerly known as The PrivateBank and Trust Company), dated December 15, 2017. 10.15.1*Capital Expenditure Note from the Company, IntriCon, Inc., I-Management, LLC and Hearing Help Express, Inc. to CIBC Bank USA(formerly known as The PrivateBank and Trust Company), dated December 15, 2017. +10.16Annual Incentive Plan for Executives and Key Employees. (Incorporated by reference from the Company’s Quarterly Report on Form 10-Qfor the quarter ended March 31, 2012.) +10.17Amended and Restated Amendment to Equity Plans. (Incorporated by reference from the Company’s Annual Report on Form 10-K for theyear ended December 31, 2013.) +10.18Amendment No. 2 to Equity Plans. (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarter endedMarch 31, 2016.) +10.192015 Equity Incentive Plan. (Incorporated by reference from Appendix A to the Company’s proxy statement filed with the SEC on March 6,2015.) +10.20Form of Stock Option Agreement issued to employees pursuant to the 2015 Equity Incentive Plan. (Incorporated by reference from theCompany’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015.) +10.21Form of Stock Option Agreement issued to directors pursuant to the 2015 Equity Incentive Plan. (Incorporated by reference from theCompany’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015.) +10.22*Form of Performance Stock Option Agreement issued to employees pursuant to the 2015 Equity Incentive Plan. +10.23*Form of Restricted Stock Unit Agreement issued to employees pursuant to the 2015 Equity Incentive Plan. +10.24*Form of Restricted Stock Unit Agreement issued to directors pursuant to the 2015 Equity Incentive Plan. +10.25Employee Stock Purchase Plan, as amended (incorporated by reference from Appendix A to the Company’s proxy statement filed with theSEC on March 11, 2016). 10.26Investment Agreement dated as of April 19, 2017 among IntriCon, Inc., Rheinton GmbH and Soundperience GmbH (English translation).(Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017.) 21.1*List of significant subsidiaries of the Company. 67 23.1*Consent of Independent Registered Public Accounting Firm (Baker Tilly Virchow Krause, LLP). 31.1*Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2*Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1*Certification of principal executive officer pursuant to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Actof 2002. 32.2*Certification of principal financial officer pursuant to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of2002. 101The following materials from IntriCon Corporation’s Annual Report on Form 10-K for the year ended December 31, 2017, formatted inXBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Operations for the years ended December 31, 2017, 2016and 2015; (ii) Consolidated Statements of Comprehensive Income (Loss); (iii) Consolidated Balance Sheets as of December 31, 2017 and2016; (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015; (v) Consolidated Statements ofShareholders’ Equity for the years ended December 31, 2017, 2016 and 2015; and (vi) Notes to Consolidated Financial Statements. *Filed herewith.+Denotes management contract, compensatory plan or arrangement. 68 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. INTRICON CORPORATION (Registrant) By:/s/ Scott Longval Scott Longval Chief Financial Officer, Treasurer and Secretary Dated: March 13, 2018 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrantand in the capacities and on the dates indicated. /s/ Mark S. Gorder Mark S. Gorder President and Chief Executive Officer and Director (principal executive officer) March 13, 2018 /s/ Scott Longval Scott Longval Chief Financial Officer Treasurer and Secretary (principal accounting and financial officer) March 13, 2018 /s/Nicholas A. Giordano Nicholas A. Giordano Director March 13, 2018 /s/Robert N. Masucci Robert N. Masucci Director March 13, 2018 /s/ Michael J. McKenna Michael J. McKenna Director March 13, 2018 /s/ Philip I. Smith Philip I. Smith Director March 13, 2018 69 EXHIBIT INDEX EXHIBITS: 10.12.12*Eleventh Amendment to Loan and Security Agreement and Waiver among the Company, IntriCon, Inc., I-Management, LLC, Hearing HelpExpress, Inc., and CIBC Bank USA (formerly known as The PrivateBank and Trust Company), dated as of December 15, 2017. 10.14.5*Amended and Restated Term Note from the Company, IntriCon, Inc., I-Management, LLC and Hearing Help Express, Inc. to CIBC BankUSA (formerly known as The PrivateBank and Trust Company), dated December 15, 2017. 10.15.1*Capital Expenditure Note from the Company, IntriCon, Inc., I-Management, LLC and Hearing Help Express, Inc. to CIBC Bank USA(formerly known as The PrivateBank and Trust Company), dated December 15, 2017. +10.22*Form of Performance Stock Option Agreement issued to employees pursuant to the 2015 Equity Incentive Plan. +10.23*Form of Restricted Stock Unit Agreement issued to employees pursuant to the 2015 Equity Incentive Plan. +10.24*Form of Restricted Stock Unit Agreement issued to directors pursuant to the 2015 Equity Incentive Plan. 21.1*List of significant subsidiaries of the Company. 23.1*Consent of Independent Registered Public Accounting Firm (Baker Tilly Virchow Krause, LLP). 31.1*Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2*Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1*Certification of principal executive officer pursuant to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Actof 2002. 32.2*Certification of principal financial officer pursuant to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of2002. 101*The following materials from IntriCon Corporation’s Annual Report on Form 10-K for the year ended December 31, 2017, formatted inXBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Operations for the years ended December 31, 2017, 2016and 2015; (ii) Consolidated Statements of Comprehensive Income (Loss); (iii) Consolidated Balance Sheets as of December 31, 2017 and2016; (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015; (v) Consolidated Statements ofShareholders’ Equity for the years ended December 31, 2017, 2016 and 2015; and (vi) Notes to Consolidated Financial Statements. 70 Exhibit 10.12.12 ELEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT, WAIVER AND JOINDER THIS ELEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT, WAIVER AND JOINDER (this “Amendment”) is made and enteredinto as of December 15, 2017, by and among INTRICON CORPORATION, a Pennsylvania corporation (“IntriCon”), INTRICON, INC., a Minnesotacorporation (“Inc.”, and, together with IntriCon, the “Existing Borrowers”, and each, an “Existing Borrower”), I-MANAGEMENT, LLC, a Minnesota limitedliability company (“I-Management”), HEARING HELP EXPRESS, INC., an Illinois corporation (“HHE”, and, together with I-Management, the “NewBorrowers”, and, each, a “New Borrower”, and, together with the Existing Borrowers, are herein collectively referred to as the “Borrowers”, and, each,individually, a “Borrower”), and CIBC BANK USA (formerly known as The PrivateBank and Trust Company), an Illinois banking corporation (the “Bank”). RECITALS: A. The Existing Borrowers and the Bank are parties to a certain Loan and Security Agreement dated as of August 13, 2009, as amendedby a First Amendment dated as of March 12, 2010, as further amended by a Second Amendment dated as of August 12, 2011, as further amended by a ThirdAmendment dated as of March 1, 2012, as further amended by a Fourth Amendment dated as of August 6, 2012, as further amended by a Fifth Amendmentdated December 21, 2012, as further amended by a Sixth Amendment dated February 14, 2014, as further amended by a Seventh Amendment dated March 31,2015, as further amended by a Eighth Amendment dated April 15, 2016, as further amended by a Ninth Amendment dated August 15, 2016, and as furtheramended by a Tenth Amendment dated March __, 2017 (as so amended, the “Loan Agreement”). All capitalized terms not otherwise defined herein shallhave the meanings given to them in the Loan Agreement. B. I-Management was formed on August 22, 2016 as a wholly-owned subsidiary of IntriCon, and HHE will become a wholly-ownedsubsidiary of I-Management contemporaneously with the effectiveness of this Amendment. Each New Borrower has requested to be joined to the LoanAgreement as a Borrower, and the Bank has agreed to such joinder of each New Borrower. C. The Borrowers have further requested that the Bank waive certain existing Events of Default and amend certain provisions of theLoan Agreement, and the Bank has agreed to so waive such existing Events of Default and to so amend the Loan Agreement upon the terms and subject to theconditions set forth in this Amendment. AGREEMENTS: NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, and for other good and valuableconsideration, the nature, receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: Section 1. Waiver. Section 8.2 of the Loan Agreement prohibits any Borrower from forming or otherwise acquiring a new Subsidiarywithout the prior written consent of the Bank. The Borrowers have informed the Bank that I-Management was formed on August 22, 2016, as a wholly-ownedsubsidiary of Inc., without prior notice to, or prior consent provided by, the Bank. Such instance of  noncompliance constitutes an Event of Default under Section 11.3 of the Loan Agreement (the “Existing Default”). The Borrowers have requested that theBank waive the Existing Default, and, subject to the full satisfaction of all of the conditions precedent described in Section 4 below, the Bank hereby sowaives the Existing Default. Except as expressly provided herein, all provisions of the Loan Agreement remain in full force and effect and this waiver shallnot apply to any other or subsequent failure to comply with Section 8.2 or any other provision of the Loan Agreement. Section 2. Amendments. Upon satisfaction of the conditions set forth in Section 4 hereof, the Loan Agreement is hereby amended asfollows: (a) The Loan Agreement is hereby amended to delete the bold, stricken text (indicated textually in the same manner as the followingexample: stricken text) and to add the bold, double-underlined text (indicated textually in the same manner as the following example: double-underlined text) as set forth in the pages of the Loan Agreement attached as Exhibit A hereto. (b) Schedules 6.1, 7.1, 7.6, 7.7, 7.9, 7.12, ,7.19, 7.22, 7.23, 7.27, 7.28, 7.29, 9.1, 9.3, 9.7 and 9.14 to the Loan Agreement are herebyamended and restated in their entirety as set forth on Exhibit B attached hereto. Section 3. Joinder. (a) Each New Borrower hereby acknowledges, agrees and confirms that, by its execution of this Amendment, such New Borrower will bedeemed to be a Borrower under the Loan Agreement and each of the other Loan Documents to which the Existing Borrowers are party to and shall have all ofthe obligations of a Borrower thereunder as if it had executed the Loan Agreement and such other Loan Documents. Each New Borrower acknowledges,agrees and confirms that it has received a copy of the Loan Agreement and the other Loan Documents (in each case as amended pursuant to this Amendment,as applicable). Each New Borrower hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms, provisions and conditions contained inthe Loan Agreement and such other Loan Documents, including without limitation (a) all of the representations and warranties of the Borrowers set forth inSection 7 of the Loan Agreement and (b) all of the covenants and obligations set forth in Sections 8 and 9 of the Loan Agreement. (b) Each New Borrower is, simultaneously with the execution of this Amendment, executing and delivering such documents and instrumentssecuring the Bank’s security interest in such New Borrower’s property, and such other documents and instruments or joinder agreements as requested by theBank in accordance with the Loan Agreement. (c) The address of each New Borrower for purposes of Section 13.17 of the Loan Agreement is the same as the address of the Existing Borrowersas set forth in such Section. Section 4. Delivery of Documents. At or prior to the execution of this Amendment, and as a condition precedent to the effectiveness ofthis Amendment, the Borrowers shall have satisfied the following conditions and delivered or caused to be delivered to the Bank the following documentseach dated such date and in form and substance satisfactory to the Bank and duly executed by all appropriate parties: 2 (a) This Amendment. (b) The Term Note. (c) The CapEx Note. (d) Execution and delivery of a copy of the resolutions of the Board of Directors of each Existing Borrower, duly adopted, whichauthorize the execution, delivery and performance by such Existing Borrower of this Amendment and the other documents, instruments andagreements set forth in this Section 4 (collectively, the “Amendment Documents”), certified as true and accurate by the Secretary of each ExistingBorrower, along with a certification by such Secretary (i) certifying that there has been no amendment to the Articles of Incorporation or Bylaws ofsuch Existing Borrower since true and accurate copies of the same were last delivered and certified to Bank, and that said Articles of Incorporationand Bylaws remain in full force and effect as of the date of this Amendment; and (ii) identifying each officer of such Existing Borrower authorized toexecute this Amendment, the other Amendment Documents and any other instrument or agreement executed by such Existing Borrower inconnection with this Amendment, and certifying as to specimens of such officer’s signature and such officer’s incumbency in such offices as suchofficer holds. (e) Execution and delivery of a copy of the resolutions of the Board of Directors or comparable governing body of each New Borrower,duly adopted, which authorize the execution, delivery and performance by such New Borrower of the Amendment Documents, certified as true andaccurate by the Secretary of each New Borrower, along with a certification by such Secretary (i) certifying as to and attaching copies of the true,correct, complete and current Articles of Incorporation or Certificate of Formation, as applicable, and the Bylaws or Limited Liability CompanyAgreement, as applicable, of such New Borrower; and (ii) identifying each officer of such New Borrower authorized to execute this Amendment, theother Amendment Documents and any other instrument or agreement executed by such New Borrower in connection with this Amendment, andcertifying as to specimens of such officer’s signature and such officer’s incumbency in such offices as such officer holds. (f) A favorable legal opinion letter, dated on or about the date hereof, of counsel to HHE, covering such matters as the Bank mayreasonably request (and each Borrower hereby instructs such counsel to deliver such opinion to the Bank). (g) A certificate by the Borrowers certifying as to certain factual matters relating to the HHE Acquisition. (h) Original stock certificates representing the Pledged Equity Interests, together with duly executed instruments of transfer orassignment in blank, substantially in the form provided in Exhibit C attached hereto. (i) An amendment fee paid to the Bank in the amount of $50,000, which fee shall be non-refundable when paid and wholly earnedwhen received. (d) Such other documents or instruments as the Bank may reasonably require, including those listed on Exhibit D attached hereto. 3 Section 5. Representations; No Default. Each Borrower represents and warrants that: (a) the representation and warranties contained inSection 7 of the Loan Agreement are true and correct in all material respects, as though made on the date hereof, except to the extent such representation andwarranty, by its express terms, relates solely to a prior date, and except that the representations and warranties contained in Section 7.26 of the LoanAgreement shall be true and correct in all material respects, as though made on the date of the financial statements most recently delivered to the Bankpursuant to Section 8.8(a) of the Loan Agreement; (b) such Borrower has the power and legal right and authority to enter into this Amendment and has dulyauthorized the execution and delivery of this Amendment and other agreements and documents executed and delivered by such Borrower in connectionherewith; (c) neither this Amendment nor the agreements contained herein contravene or constitute an Unmatured Event of Default or Event of Default underthe Loan Agreement or a default under any other agreement, instrument or indenture to which such Borrower is a party or a signatory, or any provision ofsuch Borrower’s Articles of Incorporation or Bylaws or, to the best of such Borrower’s knowledge, any other agreement or requirement of law, or result in theimposition of any lien or other encumbrance on any of its property under any agreement binding on or applicable to such Borrower or any of its propertyexcept, if any, in favor of the Bank; (d) no consent, approval or authorization of or registration or declaration with any party, including but not limited to anygovernmental authority, is required in connection with the execution and delivery by the Borrower of this Amendment or other agreements and documentsexecuted and delivered by such Borrower in connection herewith or the performance of obligations of such Borrower herein described, except for those whichsuch Borrower has obtained or provided and as to which such Borrower has delivered certified copies of documents evidencing each such action to the Bank;(e) no events have taken place and no circumstances exist at the date hereof which would give such Borrower grounds to assert a defense, offset orcounterclaim to the obligations of such Borrower under the Loan Agreement or any of the other Loan Documents; (f) there are no known claims, causes ofaction, suits, debts, liens, obligations, liabilities, demands, losses, costs and expenses (including attorneys’ fees) of any kind, character or nature whatsoever,fixed or contingent, which such Borrower may have or claim to have against the Bank, which might arise out of or be connected with any act of commissionor omission of the Bank existing or occurring on or prior to the date of this Amendment, including, without limitation, any claims, liabilities or obligationsarising with respect to the indebtedness evidenced by the Notes (as defined in the Loan Agreement); and (g) except as otherwise expressly provided herein,no Unmatured Event of Default or Event of Default has occurred and is continuing under the Loan Agreement. Section 6. Affirmation; Further References. The Bank and each Borrower acknowledge and affirm that the Loan Agreement, as herebyamended, is hereby ratified and confirmed in all respects and all terms, conditions and provisions of the Loan Agreement (except as amended by thisAmendment) and of each of the other Loan Documents shall remain unmodified and in full force and effect. All references in any document or instrument tothe Loan Agreement are hereby amended and shall refer to the Loan Agreement as amended by this Amendment. Section 7. Severability. Whenever possible, each provision of this Amendment and any other statement, instrument or transactioncontemplated hereby or thereby or relating hereto or thereto shall be interpreted in such manner as to be effective, valid and enforceable under the applicablelaw of any jurisdiction, but, if any provision of this Amendment or any other statement, instrument or transaction contemplated hereby or thereby or relatinghereto or thereto shall be held to be prohibited, invalid or unenforceable under the applicable law, such provision shall be ineffective in such jurisdictiononly to the extent of such prohibition, invalidity or unenforceability, without invalidating or rendering unenforceable the remainder of such provision or theremaining provisions of this Amendment or any other statement, 4 instrument or transaction contemplated hereby or thereby or relating hereto or thereto in such jurisdiction, or affecting the effectiveness, validity orenforceability of such provision in any other jurisdiction. Section 8. Successors. This Amendment shall be binding upon the Borrowers, the Bank and their respective successors and assigns,and shall inure to the benefit of the Borrowers, the Bank and to the respective successors and assigns of the Bank. Section 9. Costs and Expenses. Each Borrower agrees to reimburse the Bank, upon execution of this Amendment, for all reasonable out-of-pocket expenses (including attorneys’ fees and legal expenses of counsel for the Bank) incurred in connection with the Loan Agreement, including inconnection with the negotiation, preparation and execution of this Amendment and all other documents negotiated, prepared and executed in connectionwith this Amendment, and in enforcing the obligations of the Borrowers under this Amendment, and to pay and save the Bank harmless from all liability for,any stamp or other taxes which may be payable with respect to the execution or delivery of this Amendment. Section 10. Headings. The headings of various sections of this Amendment have been inserted for reference only and shall not bedeemed to be a part of this Amendment. Section 11. Counterparts; Digital Copies. This Amendment may be executed in several counterparts as deemed necessary or convenient,each of which, when so executed, shall be deemed an original, provided that all such counterparts shall be regarded as one and the same document, and anyparty to this Amendment may execute any such agreement by executing a counterpart of such agreement. A facsimile or digital copy (.pdf) of this signedAmendment shall be deemed to be an original thereof. Section 12. Release of Rights and Claims. Each Borrower, for itself and its successors and assigns, hereby releases, acquits, and foreverdischarges Bank and its successors and assigns for any and all manner of actions, suits, claims, charges, judgments, levies and executions occurring or arisingfrom the transactions entered into with Bank prior to entering into this Amendment whether known or unknown, liquidated or unliquidated, fixed orcontingent, direct or indirect which such Borrower may have against Bank. Section 13. Governing Law. This Amendment shall be governed by the internal laws of the State of Minnesota, without giving effect toconflict of law principles thereof. Section 14. No Waiver. Except as expressly set forth in Section 1 above, nothing contained in this Amendment (or in any otheragreement or understanding between the parties) shall constitute a waiver of, or shall otherwise diminish or impair, the Bank’s rights or remedies under theLoan Agreement or any of the other Loan Documents, or under applicable law. [Remainder of page intentionally blank; signature page follows] 5 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the day and year first above written. EXISTING BORROWERS: INTRICON CORPORATION, a Pennsylvania corporation By:/s/ Scott Longval Name: Scott Longval Title: Chief Financial Officer INTRICON, INC., a Minnesota corporation By:/s/ Scott Longval Name: Scott Longval Title: Chief Financial Officer NEW BORROWERS: I-MANAGEMENT, LLC, a Minnesota limited liability company By:/s/ Scott Longval Name: Title: HEARING HELP EXPRESS, INC., an Illinois corporation By:/s/ Scott Longval Name: Title: [Signature page to Eleventh Amendment to Loan and Security Agreement, Waiver and Joinder]  BANK: CIBC BANK USA (formerly known as The PrivateBank and Trust Company), an Illinois banking corporation By:/s/ Leanne Manning Name: Leanne Manning Title: Managing Director [Signature page to Eleventh Amendment to Loan and Security Agreement, Waiver and Joinder]  EXHIBIT A TO ELEVENTH AMENDMENT Conformed Copy of Loan and Security Agreement  EXHIBIT A TO ELEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT LOAN AND SECURITY AGREEMENT This LOAN AND SECURITY AGREEMENT dated as of August 13, 2009 (the “Agreement”), is executed by and among INTRICONCORPORATION, a Pennsylvania corporation (“IntriCon”), INTRICON, INC., a Minnesota corporation (“Inc.”), I-MANAGEMENT, LLC, a Minnesota limitedliability company (“I-Management”) and HEARING HELP EXPRESS, INC., an Illinois corporation (“HHE”) (each, a “Borrower”; collectively, the“Borrowers”), and CIBC BANK USA, an Illinois banking corporation (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 andconditions set forth herein. NOW THEREFORE, in consideration of the premises, and the mutual covenants and agreements set forth herein, the parties agree as follows, subjectto 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. “Account Debtor” means a Person who is obligated on an account. “Acquisition” shall mean the stock purchase and sale transaction provided for in the Acquisition Documents, pursuant to which IntriConwill purchase 100% of Datrix’s capital stock from the Selling Shareholder. “Acquisition Agreement” shall mean that certain Stock Purchase Agreement dated August 13, 2009 by and between IntriCon and theSelling Shareholder, providing for the Acquisition. “Acquisition Documents” means, collectively, the Acquisition Agreement and all other documents, instruments and agreements evidencingor otherwise relating to the stock 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 commoncontrol 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 anAffiliate or investment advisor thereof and which is engaged in making, purchasing, holding or otherwise investing in commercial loans. A Person shall bedeemed to be “controlled by” any other Person if such Person possesses, directly or indirectly, power to direct or cause the direction of the management andpolicies of such Person whether by contract, ownership of voting securities, membership interests or otherwise.  “Applicable Agreement” shall mean, collectively, (a) any agreement between the Borrowers (or any of them) and United Healthcare and (b)any patent license agreement, strategic license agreement or other 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, as of such date, could reasonably be expected to have a Material Adverse Effect. “Applicable Base Rate Margin,” “Applicable LIBOR Rate Margin,” “Applicable LOC Fee” and “Applicable Non-Use Fee” means, as of anydate, the applicable per annum rate shown in the applicable column in the table set forth below based on the then applicable Tier associated with the thenapplicable Leverage Ratio: Revolving LoansTerm LoanCapEx Loan TierLeverageRatioApplicable LIBORRate MarginApplicableBase RateMarginApplicableLIBOR RateMarginApplicableBase RateMarginApplicableLIBOR RateMarginApplicableBase RateMarginApplicableLOC FeeApplicableNon-Use FeeI≥ 3.00 to1.003.50%0.75%4.00%1.25%4.00%1.25%3.50%0.25%II≥ 2.00 to1.00 and <3.00 to1.003.00%0.25%3.50%0.75%3.50%0.75%3.00%0.25%III≥ 1.25 to1.00 and <2.00 to1.002.75%0.0%3.00%0.25%3.00%0.25%2.75%0.25%IV< 1.25 to1.002.50%(0.25%)2.75%0.0%2.75%0.0%2.50%0.25% For purposes of determining the Applicable LIBOR Rate Margin, the Applicable Base Rate Margin, the Applicable LOC Fee, and the Applicable Non-UseFee, the Leverage Ratio (and applicable Tier) will be determined as of the end of each calendar quarter occurring during the term of this Agreement (the endof each calendar quarter being a “Determination Date”) beginning with the calendar quarter ending June 30, 2015. On the Bank’s receipt of the financialstatements required to be delivered to the Bank pursuant to Section 8.8, the Applicable LIBOR Rate Margin, the Applicable Base Rate Margin, theApplicable LOC Fee, and the Applicable Non-Use Fee will be subject to adjustment in accordance with the table set forth above based on the then LeverageRatio and Tier so long as no Event of Default is existing as of applicable Determination Date or as of the effective date of adjustment. The foregoingadjustment, if applicable, to the Applicable LIBOR Rate Margin, the Applicable Base Rate Margin, the Applicable LOC Fee, and the Applicable Non-UseFee will become effective for LIBOR Rate Loans requested, the unpaid principal balance of Base Rate Loans outstanding, non-use fees accruing, and fees duewith respect to Letters of Credit issued or renewed, on and after the first day of the first calendar month following delivery to the Bank of the financialstatements required to be delivered to the Bank pursuant to Section 8.8 until the next succeeding effective date of adjustment pursuant to this Agreement.Each of the 2 financial statements required to be delivered to the Bank must be delivered to the Bank in compliance with Section 8.8. If the Borrowers, however, have nottimely delivered their financial statements in accordance with Section 8.8, then, without limiting any of the rights and remedies available to the Bank byreason of such noncompliance, at the Bank’s option, commencing on the date upon which such financial statements should have been delivered inaccordance with Section 8.8 and continuing until such financial statements are actually delivered in accordance with Sections 8.8, it shall be assumed forpurposes of determining the Applicable LIBOR Rate Margin, the Applicable Base Rate Margin, the Applicable LOC Fee, and the Applicable Non-Use Feethat Tier I and the pricing associated with Tier I will be applicable on the then applicable Determination Date. From the date of the Seventh Amendment tothis Agreement to and including the first Determination Date beginning with the calendar quarter ending June 30, 2015, the pricing associated with Tier IIIwill be in effect. From the date of the Eighth Amendment to this Agreement to and including the Determination Date in June 2016, the pricing associatedwith Tier II will be in effect. “Asset Disposition” shall mean the sale, lease, assignment or other transfer for value (each a “Disposition”) by any Borrower or anySubsidiary 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) theDisposition 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,(b) the sale or lease of inventory in the ordinary course of business and (c) Dispositions permitted under of Section 6.2 excluding clauses (iii) and (ix) thereof. “Bank Product Agreements” shall mean those certain agreements entered into from time to time by the Borrowers (or any of them) or any oftheir 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 expensesowing 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 BankProduct 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 theBank 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 principalbalance 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. 3 “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 deemsproper and necessary in the exercise of its commercially reasonable judgment) of all Eligible Accounts of all Borrowers (other than HHE); provided,however, that for all Eligible Accounts for which Medtronic, Inc., United Healthcare or any subsidiary thereof, is the Account Debtor, the foregoingreference to 85% shall be deemed to be 90%; 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 andallowances as the Bank deems proper and necessary in the exercise of its commercially reasonable judgment) of all Eligible Inventory of allBorrowers, and (ii) $4,500,000.00. “Borrowing Base Certificate” shall mean a certificate to be signed by the Borrowing Agent certifying to the accuracy of the Borrowing BaseAmount 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 closedfor the conduct of commercial banking business in Chicago, Illinois. “CapEx Loan” shall have the meaning assigned to such term in Section 2.14. “CapEx Loan Advance Rate” shall mean a percentage up to 100 % of the original invoice amount of the capital assets acquired inconnection with the relevant Qualified Capital Expenditure, as determined by the Bank in its reasonable discretion. “CapEx Loan Availability Period” means the period from and including the date of the Eleventh Amendment to but excluding the earlier ofthe date of termination of the CapEx Loan Commitment or the one-year anniversary of the date of the Eleventh Amendment. “CapEx Loan Commitment” shall mean an amount equal to $2,500,000, it being understood and agreed that in no event shall the aggregateprincipal amount of all CapEx Loan advances made by the Bank from time to time exceed $2,500,000. “CapEx Loan Interest Rate” shall mean, with respect to any Loan, the Borrowing Agent’s option from time to time of (i) a per annum rate ofinterest equal to the LIBOR Rate plus the Applicable LIBOR Rate Margin for the CapEx Loan, or (ii) a floating per annum rate of interest equal to the BaseRate plus the Applicable Base Rate Margin for the CapEx Loan. “CapEx Loan Maturity Date” means December 15, 2022, unless extended by the Bank pursuant to any modification, extension or renewalnote executed by the Borrowers and accepted by the Bank in its sole and absolute discretion in substitution for the CapEx Note. “CapEx Note” shall mean a term note in the form prepared by and acceptable to the Bank, in the amount of the CapEx Loan Commitmentand maturing on the CapEx Loan Maturity Date, duly executed by the Borrowers and made jointly and severally payable to the order of the Bank, togetherwith any and all renewal, extension, modification or replacement notes executed by the Borrowers and delivered to the Bank and given in substitutiontherefor. 4 “Capital Expenditures” shall mean all expenditures (including Capitalized Lease Obligations) which, in accordance with GAAP, would berequired to be capitalized and shown on the consolidated balance sheet of the Borrowers, but excluding expenditures made in connection with thereplacement, substitution or restoration of assets to the extent financed (i) from insurance proceeds (or other similar recoveries) paid on account of the loss ofor damage to the assets being replaced or restored, (ii) with awards of compensation arising from the taking by eminent domain or condemnation of the assetsbeing replaced or (iii) from the proceeds of an Asset Disposition; provided, however, that to the extent that the amounts described in clause (x) of thedefinition of “EBITDA” are capitalized in accordance with GAAP, the same shall be excluded from the calculation of Capital Expenditures. “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, ortangible or intangible, by such Person, as lessee, that is, or should be, in accordance with Financial Accounting Standards Board Statement No. 13, asamended 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 thefinancial 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 suchownership interest. “Capitalized Lease Obligations” shall mean, as to any Person, all rental obligations of such Person, as lessee under a Capital Lease whichare 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 orguaranteed by the United States government or any agency thereof, (b) commercial paper, maturing not more than one year from the date of issue, orcorporate 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 divisionof 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, maturingnot 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 acommercial 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 atthe 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 termliquid investments approved in writing by the Bank. “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 5 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 ofvoting stock of IntriCon; (ii) IntriCon shall fail to own, with the power to vote, 100% of all outstanding capital stock of Inc.; (iii) Occupation at any time of a majority of the seats (other than vacant seats) on the board of directors of IntriCon by Persons whowere not (i) directors of IntriCon on the date of the Eleventh Amendment to this Agreement or (ii) nominated or appointed by the board of directorsof IntriCon; or (iv) Mark S. Gorder shall cease to maintain his position of Chief Executive Officer of IntriCon, or shall otherwise cease to activelymanage such day-to-day business activities of IntriCon and a qualified replacement thereof, as reasonably determined by the Bank, has not beenobtained 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 amortgagee or lessor of real property on which Collateral is stored or otherwise located, or a warehouseman, processor or other bailee of Inventory or otherproperty owned by the Borrowers (or any of them) and their respective Subsidiaries, acknowledge the Liens of the Bank and waive any Liens held by suchPerson 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 propertyfollowing the occurrence and during the continuance of an Event of Default to assemble, complete, inspect, remove and/or sell any collateral stored orotherwise located thereon. “Contingent Liability” and “Contingent Liabilities” shall mean, respectively, each obligation and liability of the Borrowers (or any ofthem) and all such obligations and liabilities of the Borrowers (or any of them) incurred pursuant to any agreement, undertaking or arrangement by which anyBorrower: (a) guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to providefunds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the indebtedness, dividend, obligationor 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 theshares or ownership interest of any other Person; (c) undertakes or agrees (whether contingently or otherwise): (i) to purchase, repurchase, or otherwise acquireany indebtedness, obligation or liability of any other Person or any property or assets constituting security therefor, (ii) to advance or provide funds for thepayment or discharge of any indebtedness, obligation or liability of any other Person (whether in the form of loans, advances, stock purchases, capitalcontributions or otherwise), or to maintain solvency, assets, level of income, working capital or other financial condition of any other Person, or (iii) to makepayment to any other Person other than for value received; (d) agrees to lease property or to purchase securities, property or services from such other Personwith 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 orobligation; (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 oragrees otherwise to assure a creditor against loss. The amount of any Contingent Liability shall (subject to any limitation set forth herein) be deemed to bethe outstanding principal amount (or maximum permitted principal amount, if larger) of the indebtedness, obligation or other liability guaranteed orsupported thereby. 6 “Conversion Date” shall have the meaning set forth in Section 2.14(c). “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 thedeferred 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 unpaiddrawings in respect of such letters of credit, bankers’ acceptances and similar obligations; (e) all indebtedness secured by any Lien on any property owned bysuch Person, whether or not such indebtedness has been assumed by such Person (provided, however, if such Person has not assumed or otherwise becomeliable 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 suchLien 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 generalpartner; (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 orpossession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of suchPerson, would be characterized as the indebtedness of such Person (without regard to accounting treatment); and (k) as to the Borrowers, all Foreign OverdraftDebt. Notwithstanding the foregoing, Debt shall not include (i) trade payables and accrued expenses incurred by such Person in accordance with customarypractices and in the ordinary course of business of such Person, or (ii) obligations to fund Investments that are permitted under Section 9.3(g). “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, asreflected on a the consolidated financial statements of the Borrowers and their Subsidiaries and determined in accordance with GAAP. “Domestic Subsidiary” means, with respect to any Person, a Subsidiary of such Person, which Subsidiary is incorporated or otherwiseorganized under the laws of a state of the United States of America. “EBITDA” shall mean, for any period, the sum for such period of: (i) Net Income, plus (ii) Interest Charges, plus (iii) federal and stateincome taxes, plus (iv) Depreciation, plus (v) non-cash management compensation expense, plus (vi) all other non-cash charges, minus (vii) all non-cashincome 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 onaccount of non-cash charges expensed in a prior period, in each case determined on a consolidated basis, plus (ix) without duplication, cash receivedfollowing the date of the Seventh Amendment to this Agreement from dividends, distributions or interest payments related to any of Borrowers’ joint ventureor minority interest Investments permitted under Section 9.3(g), plus (x) to the extent deducted in arriving at Net Income for such period, an amount not toexceed $3,000,000 in the aggregate incurred in respect of a Potential Investment specifically designated by Borrowers in writing to Bank in connection withthe Seventh Amendment to this Agreement, plus (xi) to the extent deducted in arriving at Net Income for such period, an amount not to exceed $132,000 inthe aggregate for UK moving expenses, plus (xii) to the extent deducted in arriving at Net Income for such period, an amount equal to the lesser of (A) actualtransaction costs incurred by the Borrowers in 7 connection with the proposed acquisition of a target entity designated by the Borrowers to the Bank in writing in connection with the Ninth Amendment tothis Agreement and (B) $432,000, plus (xiii) the EBITDA add-backs agreed to by the Borrowers and the Bank in writing in connection with the NinthAmendment to this Agreement, plus (xiv) to the extent deducted in arriving at Net Income for such period, an amount not to exceed $872,000 in theaggregate for losses of HHE incurred during fiscal year ending December 31, 2017. “Eleventh Amendment” shall mean that certain Eleventh Amendment to Loan and Security Agreement, Waiver and Joinder, dated as ofDecember 15, 2017, by and among the Borrowers and the Bank. “Eligible Account” and “Eligible Accounts” shall mean, with respect to each Borrower (other than HHE), each Account and all suchAccounts (exclusive of sales, excise or other similar taxes) owing to each such Borrower which meets each of the following requirements: (a) it is genuine in all respects and has arisen in the ordinary course of the applicable Borrower’s business from (i) the performance ofservices by the applicable Borrower, which services have been fully performed, acknowledged and accepted by the Account Debtor (provided,however, that up to an aggregate amount of $500,000 of Accounts which are otherwise Eligible Accounts hereunder but arise from a “progressbilling” (i.e., the services and/or goods giving rise to such Account have not been fully performed or delivered (as applicable) by the applicableBorrower) shall not be excluded from Eligible Accounts solely by reason of this clause (a)(i) so long as (A) no Event of Default has occurred and iscontinuing and (B) the Account Debtor with respect to each such Account is Medtronic, Inc., Starkey Laboratories or Smiths Medical) or (ii) the saleor lease of Goods by the applicable Borrower, including C.O.D. sales, which Goods have been completed in accordance with the Account Debtor’sspecifications (if any) and delivered to the Account Debtor, and such Borrower or the applicable Subsidiary thereof has possession of, or hasdelivered 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, subjectonly to Permitted Liens that do not have priority over the Lien in favor of the Bank; (c) it is the valid, legally enforceable and unconditional obligation of the Account Debtor with respect thereto, and is not subject tothe fulfillment of any condition whatsoever or to any counterclaim or credit (provided that any Account which is so subject to a counterclaim orcredit shall only be deemed ineligible pursuant to this clause (c) to the extent of such counterclaims or credit, so long as such counterclaim or creditdoes 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 orvolume discount, allowance, discount, rebate or adjustment by the Account Debtor with respect thereto except for any such trade or volumediscount, allowance, discount, rebate or adjustment that does not exceed 25% of the applicable Account and that is granted in the ordinary course ofsuch Borrower’s business consistent with past practices and reflected and/or disclosed on the original invoice for such Account and/or theBorrowing Base Certificates and other collateral reporting delivered to the Bank, or to any claim by such Account Debtor denying liabilitythereunder in whole or in part (provided that any Account which is so subject to a partial denial of liability shall only be deemed ineligible pursuantto 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 ordinarycourse of such Borrower’s business consistent with past 8 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 thesubject 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 suchGoods 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 assuch 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 businessconsistent 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 theprovince of Quebec), unless (x) such Account is insured pursuant to a policy of credit insurance maintained by Borrowers and issued by an insurerand with deductibles satisfactory to the Bank in the exercise of its commercially reasonable judgment or (y) the sale of goods or services giving riseto such Account is on letter of credit, banker’s acceptance or other credit support terms satisfactory to the Bank in the exercise of its commerciallyreasonable judgment; (e) it is not an Account arising from a “sale on approval”, “sale or return”, “consignment”, “guaranteed sale” or “bill and hold”, and itis not 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 orretained by the applicable Borrower (or by any agent or custodian of such Borrower) for the account of, or subject to, further and/or future directionfrom the Account Debtor with respect thereto; (g) it has not arisen out of contracts with the United States or any department, agency or instrumentality thereof, unless the applicableBorrower 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 anydepartment, 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 suchAccount Debtor, including such Account, does not exceed such credit limit as increased by such Borrower from time to time in the exercise of itscommercially reasonable judgment; (i) if the Account is evidenced by chattel paper or an instrument, the originals of such chattel paper or instrument shall have beenendorsed 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 amanner 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 thedue 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; (c) it is not an Account with respect to an Account Debtor that is located in any jurisdiction which has adopted a statute or otherrequirement with respect to which any Person that obtains business from within such jurisdiction must file a notice of business activities report ormake any other required filings in a timely manner in order to enforce its claims in such 9 jurisdiction’s courts unless (i) such notice of business activities report has been duly and timely filed or the applicable Borrower is exempt fromfiling such report and has provided the Bank with satisfactory evidence of such exemption or (ii) the failure to make such filings may be curedretroactively by the applicable Borrower for a nominal fee; (k) the Account Debtor with respect thereto is not an Affiliate of any such Borrower; (l) such Account does not arise out of a contract or order which, by its terms, forbids or makes void or unenforceable the assignmentthereof by the applicable Borrower to the Bank and is not unassignable to the Bank for any other reason; (m) there is no bankruptcy, insolvency or liquidation proceeding pending by or against the Account Debtor with respect thereto, norhas the Account Debtor suspended business, made a general assignment for the benefit of creditors or failed to pay its debts generally as they comedue, and/or, to Borrower’s knowledge, no condition or event has occurred that could reasonably be expected to have a material adverse effect (asdetermined by the Bank in its commercially reasonable judgment) on the Account Debtor which would require the Accounts of such Account Debtorto be deemed uncollectible in accordance with GAAP; (n) it is not owed by an Account Debtor with respect to which twenty five percent (25.00%) or more of the aggregate amount ofoutstanding Accounts owed at such time by such Account Debtor is classified as ineligible under any other clause of this definition; (o) (i) if the aggregate amount of all Accounts owed by the Account Debtor (other than United Healthcare) thereof exceeds twenty-fivepercent (25.00%) of the aggregate amount of all Accounts at such time, then all Accounts owed by such Account Debtor in excess of such amountshall be deemed ineligible, or (ii) if the aggregate amount of all Accounts owed by United Healthcare exceeds forty percent (40.00%) of theaggregate amount of all Accounts at such time, then all Accounts owed by United Healthcare in excess of such amount shall be deemed ineligible;and (p) it does not violate the negative covenants and does satisfy the affirmative covenants of the applicable Borrower contained in thisAgreement, and it is otherwise not unacceptable to the Bank for any other reason as determined by the Bank in the exercise of its commerciallyreasonable 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 anEligible Account. Further, with respect to any Account, if the Bank at any time hereafter determine in the exercise of its commercially reasonable judgmentthat the prospect of payment or performance by the Account Debtor with respect thereto is materially impaired for any reason whatsoever, such Account shallcease 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 followingrequirements: (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, subjectonly to Permitted Liens that do not have priority over the Lien in favor of the Bank; 10 (b) it is salable and not slow-moving, obsolete or discontinued, as determined by the Bank in the exercise of its commercially reasonablejudgment; (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 suchfacilities are not so owned, the Bank is in possession of a Collateral Access Agreement with respect thereto (provided that, Inventory maintained atany such facility not owned by Borrower and for which the Bank does not possess a Collateral Access Agreement shall not be deemed ineligibleunder 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 theaggregate or to the extent the Bank has established reserves with respect to such location as described in Section 3.1(a)(v)); (d) it is not Inventory produced in violation of the Fair Labor Standards Act and subject to the “hot goods” provisions contained in Title29 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 UniformCommercial 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 toapply to the applicable Borrower’s raw materials, which shall be Eligible Inventory so long as it complies with all of the other provisions of thisdefinition; (j) it is not identified to any purchase order or contract to the extent progress or advance payments are received with respect to suchInventory; (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 EligibleInventory. “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 otherdeath benefit plan, vacation benefit plan, severance plan or other employee benefit plan or arrangement, including those pension, profit-sharing andretirement 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 11 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 permitsof, 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 orprotection 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. “Existing Seller Debt” shall mean all indebtedness and other obligations of RTIE under the promissory note made payable by RTIE inconnection with the acquisition by RTIE of Amecon, Inc. “Federal Funds Rate” shall mean, for any day, a fluctuating interest rate equal for each day during such period to the weighted average ofthe 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 forany 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 ofrecognized standing selected by the Bank. The Bank’s determination of such rate shall be binding and conclusive absent manifest error. “Final Payment” means (a) the indefeasible payment in full in cash of all outstanding Loans, together with accrued and unpaid interestthereon, (b) the cancellation and return of all outstanding Letters of Credit (or alternatively, with respect to each such Letter of Credit, the furnishing to theBank of a cash deposit or standby letter(s) of credit in amounts and pursuant to documentation acceptable to the Bank), (c) the payment in full in cash of theaccrued and unpaid fees, and (d) the payment in full in cash of all reimbursable expenses and other Obligations (other than contingent indemnificationobligations to the extent no claim giving rise thereto has been asserted), including without limitation any applicable LIBOR breakage obligations arisingunder Section 2.4(a) as a result of any such payment of the Loans and any related Hedging Obligations. “Fixed Charge Coverage Ratio” shall have the meaning set forth in Section 10.3 hereof. “Foreign Overdraft Debt” shall mean all indebtedness and other obligations of one or more of the Borrowers (and/or any of their respectiveSubsidiaries) under that certain senior secured line of credit now or hereafter made available by the Oversea-Chinese Banking Corporation Ltd. and anyreplacement thereof. “Foreign Subsidiary” means, with respect to any Person, a Subsidiary of such Person, which Subsidiary is not a Domestic Subsidiary. 12 “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 isrenewable or extendible, at the option of such Person, to a date more than one year from such date). For avoidance of doubt and without limiting thegenerality of the foregoing, as to the Borrowers (and/or any of their respective Subsidiaries), Funded Debt includes Foreign Overdraft Debt, SubordinatedDebt evidenced by the Selling Shareholder Note, and Existing Seller Debt. “GAAP” shall mean generally accepted accounting principles set forth from time to time in the opinions and pronouncements of theAccounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial AccountingStandards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to thecircumstances as of the date of determination (subject to the provisions of Section 1.2 of this Agreement below), provided, however, that interim financialstatements 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 couldreasonably be expected to become friable, urea formaldehyde foam insulation, dielectric fluid containing levels of polychlorinated biphenyls, radon gas andmold; (b) any chemicals, materials, pollutant or substances defined as or included in the definition of “hazardous substances”, “hazardous waste”, “hazardousmaterials”, “extremely hazardous substances”, “restricted hazardous waste”, “toxic substances”, “toxic pollutants”, “contaminants”, “pollutants” or words ofsimilar 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 anyother 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. “HHE” shall mean Hearing Help Express, Inc., an Illinois corporation, which joined as a Borrower under this Agreement pursuant to theEleventh Amendment. “HHE Acquisition” shall mean the acquisition by I-Management of the remaining 80% equity interest in HHE held by Better Hearing, LLC,pursuant to the HHE Acquisition Agreement. “HHE Acquisition Agreement” shall mean the Option Agreement, dated as of October 19, 2016, between Better Hearing, LLC, and I-Management, as supplemented by the letter agreement, dated as of December 15, 2017. “HHE Seller Note” shall mean the Debt of HHE to Better Hearing, LLC under that certain Second Amended Plan of Reorganization, datedJune 6, 2016, In Re Hearing Help Express, Inc., proposed by Seller, in the aggregate amount of $1,869,792.00 in existence prior to the date of the EleventhAmendment. “I-Management” shall mean I-Management, LLC, a Minnesota limited liability company, which joined as a Borrower under this Agreementpursuant to the Eleventh Amendment. 13 “Intellectual Property” shall mean the collective reference to all rights, priorities and privileges relating to intellectual property, whetherarising under United States, multinational or foreign laws or otherwise, including copyrights, patents, service marks and trademarks, and all registrations andapplications for registration therefor and all licensees thereof, trade names, domain names, technology, know-how and processes, and all rights to sue at lawor 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 and their Subsidiaries on a consolidated basis, for any period, the sum of: (a) allinterest, charges and fees and related expenses payable with respect to that fiscal period to a lender in connection with borrowed money or the deferredpurchase price of assets that are treated as interest in accordance with GAAP, plus (b) the portion of Capitalized Lease Obligations with respect to that fiscalperiod that should be treated as interest in accordance with GAAP, plus (or minus) (c) the net amount paid or payable in cash (or received or receivable incash) (without duplication) during that period with respect to any Hedging Agreements. “Interest Period” shall mean successive one, two or three 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, bymaking any loan or advance or by becoming obligated with respect to a Contingent Liability in respect of obligations of such other Person, other than (a)travel and similar advances to employees in the ordinary course of business, (b) trade accounts payable in connection with the purchase of inventory orservices in the ordinary course of business, (c) trade accounts receivable in connection with the sale of inventory or services in the ordinary course of businessor (d) shared overhead expenses with Foreign Subsidiaries of the Borrower in the ordinary course of business that do not involve the making of a loan oradvance of capital to such Foreign Subsidiary. “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 itssole 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 Letterof 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 inthe 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 theaggregate 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 Creditminus 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) theamount 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 asset forth in Section 2.7, and (iv) the portion of any issued but expired or surrendered Letter of Credit which 14 has not been drawn by the beneficiary thereunder. For purposes of determining the outstanding Letter of Credit Obligations at any time, the Bank’sacceptance 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. “Leverage Ratio” shall have the meaning set forth in Section 10.2 hereof. “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 tothe relevant Interest Period are offered in the London Interbank Eurodollar market at 11:00 a.m. (London time) two Business Days prior to the commencementof 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 inoffshore United States dollars on such second preceding Business Day), as displayed in the Bloomberg Financial Markets system (or other authoritativesource selected by the Bank in its sole discretion), divided by (b) a number determined by subtracting from 1.00 the then stated maximum reserve percentagefor 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 balanceof 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 RevolvingLoans, CapEx Loan 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 fixedduring such Interest Period. “Lien” shall mean, with respect to any Person, any interest granted by such Person in any real or personal property, asset or other rightowned or being purchased or acquired by such Person (including an interest in respect of a Capital Lease) which secures payment or performance of anyobligation and shall include any mortgage, lien, encumbrance, title retention lien, charge or other security interest of any kind, whether arising by contract, asa 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 andall such other instruments, documents, certificates and agreements from time to time executed and delivered by the Borrowers (or any of them), or any of theirrespective Subsidiaries for the benefit of the Bank pursuant to any of the foregoing, and all amendments, restatements, supplements and other modificationsthereto. “Loans” shall mean, collectively, all Revolving Loans, the CapEx Loan and the Term Loan made by the Bank to the Borrowers, in eachcase under and pursuant to this Agreement. “Lockbox Agreement” shall have the meaning set forth in Section 3.1 hereof. “Mandatory Prepayment” shall have the meaning set forth in Section 2.15 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 15 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 theCollateral, (ii) the legality, validity, binding effect or enforceability against the Borrowers (or any of them) of any of the Loan Documents, (iii) the perfectionor 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 Bankunder 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 ofinsurance 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 otherdisposition (including sales commissions and legal, accounting and investment banking fees), (ii) taxes paid or reasonably estimated by theBorrowers (or any of them) to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharingarrangements), 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 tosuch issuance, net of the direct costs relating to such issuance (including sales and underwriters’ commissions and legal, accounting and investmentbanking fees); and (c) with respect to any issuance of Debt, the aggregate cash proceeds received by the Borrowers (or any of them) pursuant to suchissuance, net of the direct costs of such issuance (including up-front, underwriters’ and placement fees and legal, accounting and investment bankingfees). “Net Income” shall mean, with respect to the Borrowers and their respective Subsidiaries for any period, the consolidated net income (orloss) of the Borrowers and their respective Subsidiaries for such period as determined in accordance with GAAP, excluding any gains or losses from AssetDispositions, any extraordinary gains or losses and any gains or losses 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, the CapEx 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 aspost-petition in connection with any bankruptcy or similar proceeding, whether or not permitted as a claim thereunder), any fees due the Bank hereunder, anyexpenses 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 liabilitiesand obligations owed by the Borrowers (or any of them), any of their respective Subsidiaries or any other Obligor (individually and collectively) to the Bankfrom time to time, howsoever created, arising or evidenced, whether direct or indirect, joint or several, absolute or contingent, now or hereafter existing, ordue or to become due, together with any and all renewals, extensions, restatements or replacements of any of the foregoing. 16 “Obligor” shall mean each Borrower, any guarantor, accommodation endorser, third party pledgor, or any other party liable with respect toall or any portion of the Obligations. “Organizational Identification Number” means, with respect to a Borrower, the organizational identification number assigned to suchBorrower 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 levieswhich 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 thereafterpayable without penalty or being contested in good faith by appropriate proceedings so long as the applicable Borrower(s) shall set aside on its booksadequate reserves with respect thereto in accordance with GAAP and, such contest proceedings stay the foreclosure of such Lien or the sale of any portion ofthe Collateral to satisfy such claim; (b) Liens arising in the ordinary course of business (such as (i) Liens of carriers, warehousemen, mechanics andmaterialmen 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, performancebonds and similar obligations) for sums not overdue or being contested in good faith by appropriate proceedings and not involving any advances orborrowed money or the deferred purchase price of property or services, which do not in the aggregate materially detract from the value of the property orassets 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 theapplicable Borrower(s) shall set aside on its books adequate reserves with respect thereto in accordance with GAAP and, such contest proceedings stay theforeclosure 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 date of the EleventhAmendment to this Agreement; (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 stayedand the claims secured thereby are being actively contested in good faith and by appropriate proceedings and to the extent such judgments or awards do notconstitute an Event of Default under Section 11.8 hereof; (e) easements, rights of way, restrictions, minor defects or irregularities in title and other similarLiens 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 forthin Section 9.1(e), Liens arising in connection with purchase money Debt and Capitalized Lease Obligations (and attaching only to the property beingpurchased or leased); (g) subject to the limitation set forth in Section 9.1(e), Liens that constitute purchase money security interests on any property securingDebt 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 withintwenty (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 LoanDocuments. “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 orother capacity. “Pledged Entities” means, collectively, Inc., HHE, and, until such time that I-Management is dissolved in accordance with Section 8.2herein, I-Management. 17 “Pledged Equity Interests” means all of the Capital Securities 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 Securities, and all options. The term PledgedEquity Interests shall specifically include, but shall not be limited to: (a) all capital stock, membership interests, partnership interests, shares or securities representing a dividend on any of the PledgedEquity 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 respectof, the Pledged Equity Interests; and (b) without affecting the obligations of IntriCon or any other Borrower under any provision prohibiting such action hereunder, in theevent of any consolidation or merger involving the issuer of any Pledged Equity Interests and in which such issuer is not the surviving entity, allshares of each class of Capital Securities or other equity interest of the successor entity formed by or resulting from such consolidation or merger. “Potential Investments” means the potential Investments disclosed by Borrowers to Bank in writing in connection with the SeventhAmendment to this Agreement. “Prime Rate” shall mean the floating per annum rate of interest which at any time, and from time to time, shall be most recently announcedby 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 anychange 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 anychange in the Prime Rate. “Qualified Capital Expenditure” shall mean a Capital Expenditure which meets the following requirements: (a) the applicable Borrower shall have paid (or shall cause to be paid contemporaneously with the funding of the applicable CapExLoan), in cash, the full original invoice cost of the capital assets acquired with such Capital Expenditure, and such Borrower shall have provided tothe Bank copies of the original invoice and the canceled check for payment or other evidence of payment in full; (b) it is made in the ordinary course of such Borrower’s business; (c) the capital assets acquired with such Capital Expenditure consist solely of one or more items of equipment which are intended fordirect use in such Borrower’s primary business (without limiting the generality of the foregoing, it is expressly understood and agreed that in noevent shall Capital Expenditures for such items as computers, telephone systems, office machinery, office equipment, furniture, fixtures, appliances,and other similar equipment constitute “Qualified Capital Expenditures” hereunder); (d) no portion thereof consists of any soft costs relating to the acquisition of the applicable capital assets (for purpose hereof the term“soft costs” shall include, but shall not be limited to, all taxes, delivery charges, setup fees, installation costs, insurance and other similar chargesand costs); (e) no portion thereof has been paid by or financed with any other Person; 18 (f) no portion of the capital assets acquired with such Capital Expenditure are located outside of the continental United States; (g) the capital assets acquired with such Capital Expenditure are presently in good and workable condition, ordinary wear and tearexcepted; (h) the capital assets acquired with such Capital Expenditure are not subject to any prior assignment, claim or Lien other than (i) a firstpriority Lien in favor of the Bank, and (ii) Liens consented to by the Bank in writing; (i) the capital assets acquired with such Capital Expenditure comply with the Borrower’s specifications and have been delivered to andaccepted by such Borrower; (j) there exists no material dispute with respect thereto between the Borrower and the manufacturer or supplier of the capital assetsacquired with such Capital Expenditure including, without limitation, warranties or other claims; (k) the Bank has determined in its reasonable discretion that the capital assets acquired with such Capital Expenditures are notunacceptable due to age, type, condition or quality; and (l) the Capital Expenditure is not made in payment of obligations arising under any Capital Lease, except to the extent such obligationsare satisfied in full by such payment and the liability related to such Capital Lease is removed from the Borrower’s balance sheet in accordance withGAAP. “Regulatory Change” shall mean the introduction of, or any change in any applicable law, treaty, rule, regulation or guideline or in theinterpretation or administration thereof by any governmental authority or any central bank or other fiscal, monetary or other authority having jurisdictionover the Bank or its lending office. “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 ofinterest equal to the LIBOR Rate plus the Applicable LIBOR Rate Margin for Revolving Loans, or (ii) a floating per annum rate of interest equal to the BaseRate plus the Applicable Base Rate Margin for Revolving Loans. “Revolving Loan” and “Revolving Loans” shall mean, respectively, each direct advance and the aggregate of all such direct advancesmade 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 theLetter of Credit Obligations, or (b) the Borrowing Base Amount minus the Letter of Credit Obligations. “Revolving Loan Commitment” shall mean Nine Million and 00/100 Dollars ($9,000,000.00). “Revolving Loan Mandatory Prepayment” shall have the meaning set forth in Section 2.1(c)(ii) hereof. 19 “Revolving Loan Maturity Date” means December 15, 2022, unless extended by the Bank pursuant to any modification, extension orrenewal 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 theamount of the Revolving Loan Commitment and maturing on the Revolving Loan Maturity Date, duly executed by the Borrowers and made jointly andseverally payable to the order of the Bank, together with any and all renewal, extension, modification or replacement notes executed by the Borrowers anddelivered to the Bank and given in substitution therefor. “Selling Shareholder Note” means that certain promissory note dated as of August 13, 2009 in the original principal amount of$1,050,000.00 made payable by IntriCon to the Selling Shareholder, as the same may be amended, supplemented, restated or otherwise modified from time totime. “Selling Shareholder Subordination Agreement” means that certain Subordination Agreement made by the Selling Shareholder in favor ofthe Bank bearing even date herewith, as the same may be amended, restated, supplemented or otherwise modified from time to time. “Selling Shareholder” means, Jon V. Barron, an adult individual. “Senior Debt” shall mean all Debt of the Borrowers other than Subordinated Debt. “Subject Agreements” shall mean, collectively, (a) that certain Patent License Agreement made effective as of January 1, 1997 by andbetween IntriCon and K/S HIMPP, a partnership organized and existing under the laws of Denmark, and (b) that certain Strategic Alliance Agreement dated asof October 1, 2008 by and between IntriCon and Dynamic Hearing Pty Ltd, a corporation organized and existing under the laws of Victoria, Australia, in eachcase as the same may be amended, restated, supplemented or otherwise modified from time to time. “Subordinated Debt” shall mean, collectively, (a) the Debt evidenced by the Selling Shareholder Note and (b) that portion of the other Debtof 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 ofpayment of principal and interest, priority of collateral security (if any) and remedies enforcement. “Subordinated Debt Default” means the occurrence of any of the following (or any combination of the following) other than as a result ofthe operation of the applicable subordination agreement or subordination provisions: (i) a default or breach of or under any of the Subordinated DebtDocuments, (ii) any event or circumstance that would become a default or breach on a Subordinated Creditor’s election or would become a default or breachafter notice, the lapse of time, or on the satisfaction of any other condition, or all of the foregoing, or (iii) the maturity of the Subordinated Debt without theSubordinated Debt being fully paid, performed and satisfied. “Subordinated Debt Documents” means, collectively, (i) the Selling Shareholder Note, and (ii) any and all other agreements, instruments,and documents signed or delivered by or on behalf of any Borrower in connection with the Subordinated Debt (other than the Acquisition Documents), asany or all of the foregoing documents, instruments, and agreements are now in effect or, subject to Section 9.16, as at any time after the date of this Agreementamended, modified, supplemented, restated, renewed, extended, or otherwise changed and any documents, instruments, or agreements given, subject toSection 9.16, in substitution of any of them. 20 “Subsidiary” and “Subsidiaries” shall mean, respectively, with respect to any Person, each and all such corporations, partnerships, limitedpartnerships, limited liability companies, limited liability partnerships, joint ventures or other entities of which or in which such Person owns, directly orindirectly, such number of outstanding Capital Securities as have more than fifty percent (50.00%) of the ordinary voting power for the election of directorsor other managers of such corporation, partnership, limited liability company or other entity. Unless the context otherwise requires, each reference toSubsidiaries 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 inaccordance 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 intangibleproperty in accordance with GAAP, and (ii) any amounts due from shareholders, Affiliates, officers or employees of the Borrowers. “Taxes” shall mean any and all present and future taxes, duties, levies, imposts, deductions, assessments, charges or withholdings, and anyand 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 interestequal to the LIBOR Rate plus the Applicable LIBOR Rate Margin for the Term Loan, or (ii) a floating per annum rate of interest equal to the Base Rate plusthe Applicable Base Rate Margin for the Term Loan. “Term Loan” shall have the meaning set forth in Section 2.2 hereof. “Term Loan Maturity Date” means December 15, 2022, unless extended by the Bank pursuant to any modification, extension or renewalnote executed by the Borrowers and accepted by the Bank in its sole and absolute discretion in substitution for the Term Note. “Term Note” means a term note in the form prepared by and acceptable to the Bank, dated as of the date of the Eleventh Amendment to thisAgreement, in the original principal amount of $6,500,000 and maturing on the Term Loan Maturity Date, duly executed by the Borrowers and made jointlyand severally payable to the order of the Bank, together with any and all renewal, extension, modification or replacement notes executed by the Borrowersand delivered to the Bank and given in substitution therefor. “UCC” shall mean the Uniform Commercial Code in effect in the state of Minnesota 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 anEvent 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 meaningscustomarily given them in accordance with GAAP. Calculations and determinations of financial and accounting terms used and not otherwise specificallydefined hereunder and the preparation of financial statements to be furnished to the Bank pursuant hereto shall be made and prepared, both as toclassification of items and as to amount, in accordance with sound accounting practices and GAAP as used in the preparation of the consolidated financialstatements of the 21 Borrowers on the date of this Agreement. If any changes in accounting principles or practices from those used in the preparation of the financial statementsare hereafter occasioned by the promulgation of rules, regulations, pronouncements and opinions by or required by the Financial Accounting StandardsBoard or the American Institute of Certified Public Accountants (or any successor thereto or agencies with similar functions), which results in a materialchange in the method of accounting in the financial statements 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 toreflect 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 asthey 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, Borrowerswill furnish consolidated financial statements in accordance with such changes, but shall provide calculations for all financial covenants, perform allfinancial covenants and otherwise observe all financial standards and terms in accordance with applicable accounting principles and practices in effectimmediately prior to such changes. For the sake of clarity, GAAP will be deemed to treat operating leases and Capital Leases in a manner consistent with thecurrent treatment under generally accepted accounting principles as in effect on the date of this Agreement, notwithstanding any modification or interpretivechanges which are made thereto or which may occur thereafter. 1.3 Other Terms Defined in UCC. All other capitalized words and phrases used herein and not otherwise specifically defined herein shall havethe 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 sorequires, 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 thisAgreement. (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 modificationsthereto, provided, however, that the foregoing provision shall not limit or otherwise adversely affect any of the Bank’s rights or remedies in theevent any such amendments, restatements, supplements or other modifications are prohibited by the terms of any Loan Document, and (ii) referencesto any statute or regulation shall be construed as including all statutory and regulatory provisions amending, replacing, supplementing orinterpreting such statute or regulation. 22 (f) To the extent any of the provisions of the other Loan Documents are inconsistent with the terms of this Agreement, the provisionsof this Agreement shall govern. (g) This Agreement and the other Loan Documents may use several different limitations, tests or measurements to regulate the same orsimilar matters. All such limitations, tests and measurements are cumulative and each shall be performed in accordance with its terms. 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 inreliance upon the representations and warranties of each Borrowing Agent set forth herein and in the other Loan Documents, the Bank agrees tomake such Revolving Loans at such times as the Borrowing Agent may from time to time request until, but not including, the Revolving LoanMaturity Date, and in such amounts as the Borrowing Agent may from time to time request, provided, however, that the aggregate principal balanceof all Revolving Loans outstanding at any time shall not exceed the Revolving Loan Availability. Revolving Loans made by the Bank may berepaid and, subject to the terms and conditions hereof, borrowed again up to, but not including the Revolving Loan Maturity Date unless theRevolving Loans are otherwise accelerated, terminated or extended as provided in this Agreement. The Revolving Loans shall be used by theBorrowers solely for the purpose of (i) refinancing certain existing Senior Debt, (ii) financing their working capital requirements, (iii) financingcertain transaction costs, (iv) financing the HHE Acquisition, and (v) 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 RevolvingLoans outstanding from time to time shall bear interest at the applicable Revolving Interest Rate. Accrued and unpaid interest on the unpaidprincipal 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 September 30, 2009 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 bepayable on the last Business Day of each Interest Period, commencing on the first such date to occur after the date hereof, on the date of anyprincipal repayment of a LIBOR Loan and on the Revolving Loan Maturity Date. From and after maturity, or after the occurrence and during thecontinuation of an Event of Default, interest on the outstanding principal balance of the Revolving Loans, at the option of the Bank, may accrue atthe 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 RevolvingLoan Maturity Date, unless payable sooner pursuant to the provisions of this Agreement. In the event the aggregate outstanding principalbalance 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 aresatisfactory to the Bank as shall be necessary to eliminate such excess. 23 (ii) Optional Prepayments. The Borrowers may from time to time prepay the Revolving Loans, in whole or in part, without anyprepayment penalty whatsoever, provided that any prepayment of the entire principal balance of the Base Rate Loans shall include accruedinterest on such Base Rate Loans to the date of such prepayment, and further provided that any prepayment of any LIBOR Rate Loans shallinclude accrued interest on such LIBOR Rate Loans to the date of such prepayment together with any applicable LIBOR breakageobligations arising under Section 2.4(a) as a result of such LIBOR Rate Loan prepayment. 2.2 Term Loan. (a) Term Loan. (i) The Bank has made term loans to the Borrowers in accordance with the terms of this Agreement, in connection with theSecond Amendment to this Agreement, the Fifth Amendment to this Agreement, the Seventh Amendment to this Agreement and the EighthAmendment to this Agreement (collectively, the “Prior Term Loans”). Immediately before giving effect to the Eleventh Amendment to thisAgreement, the aggregate outstanding principal balance of the Prior Term Loans was $4,500,000 and the Borrowers’ obligation to pay thePrior Term Loans was evidenced by the Third Amended and Restated Term Note of the Borrowers dated April 15, 2016 and payable to theorder of the Bank in the original principal amount of $6,000,000 (the “Prior Term Note”). (ii) The Bank agrees to make a new term loan to the Borrowers in the amount of $2,000,000 (the “Eleventh Amendment TermLoan”) on the date the conditions precedent to the Eleventh Amendment to this Agreement are satisfied and from and after such date, thePrior Term Loan and the Eleventh Amendment Term Loan will be deemed to be a single term loan in the original principal amount of$6,500,000 and will be referred to as the “Term Loan”. The obligation of the Borrowers to pay the principal of, and interest on, the TermLoan shall be evidenced by the Term Note. The Borrowers will use the proceeds of the Eleventh Amendment Term Loan for the purposes ofpaying off the HHE Seller Note. The Term Loan may be prepaid in whole or in part at any time subject to Section 2.2(e), but shall be due infull on the Term Loan Maturity Date, unless the credit extended under the Term Loan is otherwise accelerated, terminated or extended asprovided 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 Loanoutstanding from time to time shall bear interest at the applicable Term Interest Rate. Accrued and unpaid interest on that portion of the principalbalance of the Term Loan outstanding from time to time which is a Base Rate Loan, shall be due and payable monthly, in arrears, commencing onDecember 31, 2017 and continuing on the last day of each calendar month thereafter, and on the Term Loan Maturity Date. Accrued and unpaidinterest on those portions of the principal balance of the Term Loan outstanding from time to time which are LIBOR Loans shall be payable on thelast Business Day of each Interest Period, commencing on the first such date to occur after the date hereof, on the date of any principal repayment ofa LIBOR Loan and on the Term Loan Maturity Date. From and after maturity, or after the occurrence and during the continuation of an Event ofDefault, interest on the outstanding principal balance of the Term Loan, at the option of the Bank, may accrue at the Default Rate and shall bepayable upon demand from the Bank. 24 (c) Term Loan Principal Payments. The outstanding principal balance of the Term Loan shall be repaid in equal quarterly installmentsof $250,000, payable on the last day of each calendar quarter, commencing with the calendar quarter ending December 31, 2017, and the remainingunpaid principal of the Term Loan, together with all accrued and unpaid interest thereon, shall be due and payable on the Term Loan Maturity Date.Principal amounts repaid on the Term Note may not be borrowed again. (d) [Reserved]. (e) Optional Prepayments. The Borrowers may from time to time prepay the Term Loan, in whole or in part, without any prepaymentpenalty whatsoever, provided that any prepayment of the entire principal balance of the Base Rate Loans shall include accrued interest on such BaseRate Loans to the date of such prepayment, and further provided that any prepayment of any LIBOR Rate Loans shall include accrued interest onsuch LIBOR Rate Loans to the date of such prepayment together with any applicable LIBOR breakage obligations arising under Section 2.4(a) as aresult of such LIBOR Rate Loan prepayment. Any prepayments under this subsection (e) shall be applied against the remaining unpaid installmentsof the Term Loan principal in the inverse order of their maturity. 2.3 Termination of Commitments. The Borrowers may at any time terminate the Revolving Loan Commitment and the Letter of CreditCommitment upon Final Payment. 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, whethervoluntary, involuntary, by reason of acceleration or otherwise, each such prepayment of a LIBOR Loan will be accompanied by the amount ofaccrued interest on the amount prepaid and any and all costs, expenses, penalties and charges incurred by the Bank as a result of the earlytermination or breakage of a LIBOR Loan, plus the amount, if any, by which (i) the additional interest which would have been payable during theInterest Period on the LIBOR Loan prepaid had it not been prepaid, exceeds (ii) the interest which would have been recoverable by the Bank byplacing the amount prepaid on deposit in the domestic certificate of deposit market, the eurodollar deposit market, or other appropriate moneymarket 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 suchLIBOR 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 determinedin the Bank’s sole discretion based upon the assumption that the Bank funded its loan commitment for LIBOR Loans in the London InterbankEurodollar 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 theLIBOR 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 anyapplicable law, rule, regulation or directive, whether or not having the force of law, (ii) United States dollar deposits in the principal amount, and forperiods equal to the Interest Period for funding any LIBOR Loan are not available in the London Interbank Eurodollar market in the ordinary courseof business, (iii) by reason of circumstances affecting the London Interbank Eurodollar market, adequate and fair means do not exist for ascertainingthe LIBOR25 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, theBank shall promptly notify the Borrowing Agent thereof and, so long as the foregoing conditions continue, none of the Loans may be advanced as aLIBOR Loan thereafter. In addition, at the Borrowing Agent’s option, each existing LIBOR Loan shall be (i) converted to a Base Rate Loan on thelast Business Day of the then existing Interest Period or (ii) due and payable on the last Business Day of the then existing Interest Period, withoutfurther demand, presentment, protest or notice of any kind, all of which are hereby waived by each Borrower. (c) Regulatory Change. In addition, if, after the date hereof, a Regulatory Change shall, in the commercially reasonable discretion ofthe Bank, make it unlawful for the Bank to make or maintain the LIBOR Loans, then the Bank shall promptly notify the Borrowing Agent and noneof 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 thethen existing Interest Period, without further demand, presentment, protest or notice of any kind, all of which are hereby 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 ordirective of any governmental authority, central bank or comparable agency (whether or not having the force of law) shall (a) impose, modify ordeem applicable any assessment, reserve, special deposit or similar requirement against assets held by, or deposits in or for the account of or loansby, 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 orfee 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 achange 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 theBank’s funding thereof, and the Bank shall determine in its commercially reasonable discretion (which determination shall be conclusive, absentmanifest 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 ormaintaining such LIBOR Loan or to reduce the amount of principal or interest received by the Bank hereunder, then the Borrowers shall jointly andseverally pay to the Bank or such controlling Person, on demand, such additional amounts as the Bank shall, from time to time, determine aresufficient to compensate and indemnify the Bank for such increased cost or reduced amount. 2.5 Interest and Fee Computation; Collection of Funds. Except as otherwise set forth herein, all interest and fees shall be calculated on the basisof a year consisting of 360 days and shall be paid for the actual number of days elapsed. Principal payments submitted in funds not immediately availableshall 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 thana 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 inrespect of such payment. Notwithstanding anything to the contrary contained herein, the final payment due under any of the Loans must be made by wiretransfer or other immediately available funds. All payments made by the Borrowers hereunder or under any of the Loan Documents shall be made withoutsetoff, 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 accordancewith 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 26 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 Bankfor 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 areasonable 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 ofa 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 absolutediscretion, 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 ofthe 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 CreditObligations may not at any time exceed the Letter of Credit Commitment and provided further, that no Letter of Credit shall have an expiration date laterthan 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 Creditfor 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 suchpayment 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 tosuch 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 RevolvingLoans consisting of Base Rate Loans, all without demand, presentment, protest or notice of any kind, all of which are hereby waived by each Borrower, forthe purpose of cash collateralizing the Letter of Credit Obligations as contemplated by Section 12.10 below. To the extent the provisions of the Master Letterof 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 orwithholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions orwithholdings, now or hereafter imposed, levied, collected, withheld or assessed by any governmental authority, excluding net income taxes andfranchise taxes (imposed in lieu of net income taxes) imposed on the Bank as a result of a present or former connection between the Bank and thejurisdiction of the governmental authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any suchconnection arising solely from the Bank having executed, delivered or performed its obligations or received a payment under, or enforced, thisAgreement 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 sopayable 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 theBorrowers shall not be required to increase any such amounts payable to the Bank with respect to any Non-Excluded Taxes that are attributable tothe 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. 27 (c) At the request of the Borrowing Agent and at the Borrowers’ sole cost, the Bank shall take reasonable steps to (i) contest its liabilityfor 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 beenpaid. (d) Whenever any Non-Excluded Taxes or Other Taxes are payable by the Borrowers, as promptly as possible thereafter the BorrowingAgent shall send to the Bank a certified copy of an original official receipt received by the Borrower showing payment thereof. If any Borrower failsto 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 orother required documentary evidence or if any governmental authority seeks to collect a Non-Excluded Tax or Other Tax directly from the Bank forany other reason, the Borrowers shall jointly and severally indemnify the Bank on an after-tax basis for any incremental taxes, interest or penaltiesthat 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 and other Obligations shall constitute one general joint and several obligation of theBorrowers, 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, claimsand encumbrances heretofore, now or at any time or times hereafter granted by the Borrowers (or any of them) to the Bank, subject only to Permitted Liens. 2.10 Borrowing Agency Provisions. Each Borrower hereby irrevocably designates the Borrowing Agent to be its attorney and agent and in suchcapacity to borrow, sign and endorse notes, and execute and deliver all instruments, documents, writings and further assurances now or hereafter requiredhereunder, on behalf of such Borrower, and hereby authorizes the Bank to pay over or credit all Loan proceeds in accordance with the request of theBorrowing Agent. Although they are separate legal entities that observe all corporate and organizational formalities consistent with such separateness, theBorrowers are part of one consolidated organization constituting a single economic and business enterprise and share an identity of interests such that anybenefit 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 thisAgreement 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 aresult thereof. To induce the Bank to do so and in consideration thereof, each Borrower hereby indemnifies the Bank and holds the Bank harmless from andagainst any and all liabilities, expenses, losses, damages and claims of damage or injury asserted against the Bank by any Person arising from or incurred byreason of the handling of the financing arrangements of the Borrowers as provided herein, reliance by the Bank on any request or instruction from theBorrowing 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 liabilityon 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 fromthe gross negligence or willful misconduct of the Bank) including, without limitation any extension, renewal or forbearance granted by the Bank to anyBorrower, 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 assecurity for all or any part of such obligations. 28 2.12 Waiver of Subrogation. Subject only to the provisions of Section 2.13 below, each Borrower expressly waives any and all rights ofsubrogation, reimbursement, indemnity, exoneration, contribution or any other claim which such Borrower may now or hereafter have against any otherBorrower or any other Obligor, or against or with respect to any other Borrower’s property (including, without limitation, any property which is collateral forthe Obligations), arising from the existence or performance of this Agreement, until repayment in full of the Obligations. In addition, each Borrower herebyexpressly 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 theObligations; (c) presentment, demand, notice of dishonor, protest, and all other notices whatsoever; (d) all diligence in collection or protection of orrealization upon the Obligations or any thereof, any obligation hereunder, or any security for or guaranty of any of the foregoing; and (e) any event orconduct 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 guarantorbut 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 obligorsunder this Agreement. To the extent that any Borrower shall, under this Agreement as a joint and several obligor, repay any of the Obligations constitutingLoans made to (or reimbursement obligations relating to Letters of Credit issued for the account of) another Borrower (an “Accommodation Payment”), thenthe Borrower making such Accommodation Payment shall be entitled to contribution and indemnification from, and be reimbursed by, each of the otherBorrowers in an amount, for each of such other Borrowers, equal to a fraction of such Accommodation Payment, the numerator of which fraction is such otherBorrower’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 ofdetermination, the “Allocable Amount” of each Borrower shall be equal to the maximum amount of liability for Accommodation Payments which could beasserted against such Borrower hereunder without (a) rendering such Borrower “insolvent” within the meaning of Section 101(31) of Title 11 of theBankruptcy 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, orSection 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 besubordinate in right of payment to the prior payment in full of the Obligations. 2.14 CapEx Loan. (a) CapEx Loan Commitment. Upon the terms and subject to the conditions set forth in this Agreement, the Bank agrees to make oneor more term loans (collectively, the “CapEx Loan”) to the Borrowers during the CapEx Loan Availability Period, in such amounts and at such timesas the Borrowers may from time to time request, provided that the Borrower may not request, and the Bank is not obligated to make, more than sixCapEx Loan advances during the CapEx Loan Availability Period. With respect to CapEx Loan Advances, (A) each individual CapEx Loanadvance may not exceed an amount equal to the CapEx Loan Advance Rate multiplied by the amount of the Qualified Capital Expenditures to bepaid with the proceeds of such CapEx Loan advance, (B) until the Conversion Date, the CapEx Loans shall be Base Rate Loans and (C) all CapExLoan advances in the aggregate may not exceed the CapEx Loan Commitment. The proceeds of the CapEx Loan shall be used by the Borrowersolely to pay for Qualified Capital Expenditures. Each CapEx Loan advance made pursuant to this Agreement shall be evidenced by the CapExNote. The Bank shall enter in its records the amount of the CapEx Loan, the rate of interest and amortization schedule applicable and the paymentsmade on 29 such CapEx Loan, and such records shall be deemed conclusive evidence of the subject matter thereof, absent manifest error. (b) CapEx Loan Interest and Payments. Except as otherwise provided in this Section 2.14, the principal amount of the CapEx Loanoutstanding from time to time shall bear interest at the applicable CapEx Loan Interest Rate. Accrued and unpaid interest on the unpaid principalbalance of the CapEx Loan outstanding from time to time which are Base Rate Loans, shall be due and payable monthly, in arrears, commencing onthe last day of the calendar month in which the initial advance is made pursuant hereto, and continuing on the last day of each calendar monththereafter, and on the CapEx Loan Maturity Date. Accrued and unpaid interest on the unpaid principal balance of the CapEx Loan outstanding fromtime to time which are LIBOR Loans shall be payable on the last Business Day of each Interest Period, commencing on the first such date to occurafter the initial CapEx Loan is advanced pursuant hereto, on the date of any principal repayment of a LIBOR Loan and on the CapEx Loan MaturityDate, provided, that, until the Conversion Date, all CapEx Loans shall be Base Rate Loans. From and after the CapEx Loan Maturity Date, or afterthe occurrence and during the continuation of an Event of Default, interest on the outstanding principal balance of the CapEx Loan, at the option ofthe Bank, may accrue at the Default Rate and shall be payable upon demand from the Bank. (c) Conversion Date; Principal Payments. (i) CapEx Loan Mandatory Payments. Upon expiration of the CapEx Loan Availability Period (the “Conversion Date”), theBank will be under no further obligation to make any additional advances of CapEx Loans. From and after the Conversion Date, theoutstanding principal of the CapEx Loan shall bear interest at the applicable CapEx Loan Interest Rate, be payable in equal monthlyinstallments sufficient to fully amortize the aggregate principal amount of the then-outstanding CapEx Loan over a period of 60 monthsbeginning on the Conversion Date, and any remaining unpaid principal of the CapEx Loan, together with all accrued and unpaid interestthereon, shall be due and payable on the CapEx Loan Maturity Date. The CapEx Loan may be prepaid in whole or in part at any timesubject to Section 2.14(c)(ii) below. Principal amounts prepaid or repaid on the CapEx Loan may not be borrowed again. (ii) Optional Prepayments. The Borrowers may from time to time prepay the CapEx Loan, in whole or in part, without anyprepayment penalty whatsoever, provided that any prepayment of the entire principal balance of the Base Rate Loans shall include accruedinterest on such Base Rate Loans to the date of such prepayment, and further provided that any prepayment of any LIBOR Rate Loans shallinclude accrued interest on such LIBOR Rate Loans to the date of such prepayment together with any applicable LIBOR breakageobligations arising under Section 2.4(a) as a result of such LIBOR Rate Loan prepayment. (iii) Mandatory Prepayments. The Borrowers shall make a prepayment of the outstanding principal amount of the CapEx Loanif required in accordance with Section 2.15. (d) CapEx Loan Borrowing Procedures. The Borrowers shall make each request for a CapEx Loan advance in writing in a formapproved by Bank and signed by the Borrowing Agent and delivered by hand, facsimile or electronic communication. Each request: (i) shall bedelivered to the Bank not later than 12:00 p.m. (Minneapolis time) at least 3 Business Days in advance of 30 the proposed advance; (ii) shall specify the aggregate amount of the requested advance; and (iii) shall specify the date such advance is to be made,which shall be a Business Day. 2.15 Term Loan and CapEx Loan Mandatory Prepayment. The Borrowers shall make a prepayment (the “Mandatory Prepayment”) of theoutstanding principal amount of the Term Loan and the CapEx Loan until paid in full upon the occurrence of any of the following events, at the followingtimes and in the following amounts: (a) Concurrently with the receipt by the Borrowers (or any of them) of any Net Cash Proceeds from any Asset Disposition, in an amountequal to 100% of such Net Cash Proceeds. (b) 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 anyissuance of Capital Securities as payment of a stock dividend to the holders of the Capital Securities of IntriCon, and (B) any issuance by aSubsidiary to a Borrower or another Subsidiary), in an amount equal to 100% of such Net Cash Proceeds. (c) Concurrently with the receipt by the Borrowers (of any of them) of any Net Cash Proceeds from any issuance of Debt (other thanDebt 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, first, against the remaining unpaid installments of the Term Loan principal in theinverse order of their maturity, and, second, to the outstanding unpaid CapEx Loan principal in the inverse order of their maturity. 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 theTerm 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 whichmust be satisfactory to the Bank and the Bank’s counsel in form, substance and execution, except to the extent waived by Bank in its solediscretion: (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, dulyexecuted by the Borrowing Agent in favor of the Bank. 31 (v) Collateral Access Agreement. Collateral Access Agreements dated as of the date of this Agreement, from the owner, lessor ormortgagee, as the case may be, (other than any Borrower or any of its Subsidiaries) of any real estate whereon any Collateral is stored orotherwise located, in the form prepared by and reasonably acceptable to the Bank. (b) Borrowing Base Certificate. A Borrowing Base Certificate in the form prepared by the Bank, certified as accurate by the BorrowingAgent, 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, listingall effective financing statements which name the Borrowers (or any of them), under their present names and any previous names, as debtors, togetherwith (i) copies of such financing statements, (ii) payoff letters evidencing repayment in full of all existing Debt to be repaid with the Loans, thetermination of all agreements relating thereto and the release of all Liens granted in connection therewith, with UCC or other appropriatetermination statements and documents effective to evidence the foregoing (other than Permitted Liens), and (iii) such other UCC terminationstatements as the Bank may reasonably request. (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 LoanDocuments to which it is party and the transactions contemplated thereby; (iii) signature and incumbency certificates of the officers of eachBorrower, executing any of the Loan Documents, each of which such Borrower hereby certifies to be true and complete, and in full force and effectwithout modification, it being understood that the Bank may conclusively rely on each such document and certificate until formally advised bysuch Borrower of any changes therein; and (iv) good standing certificates in the state of incorporation of each Borrower and in each other staterequested 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) Subordination Agreement. The Selling Shareholder Subordination Agreement, duly executed by the Selling Shareholder andacknowledged by IntriCon, in form and substance acceptable to the Bank. (h) Pledged Equity Interests. Certificates, instruments, agreements, acknowledgements and other documents required by Section 6.12. (i) Acquisition. Evidence satisfactory to the Bank that each of the following conditions has been satisfied: 32 (i) The Acquisition Agreement shall have been duly executed and delivered by the parties thereto and shall be in full forceand effect. All material conditions precedent to the Acquisition pursuant to the Acquisition Agreement shall have been satisfied (except tothe extent waived with the written consent of the Bank, which consent shall not be unreasonably withheld or delayed). All necessaryauthorizations, consents, approvals, exceptions or other actions by or notices to or filings with any court or administrative or governmentalbody or other Person required in connection with the execution, delivery or performance of the Acquisition Agreement or theconsummation of the transactions contemplated thereby shall be final and in full force and effect. The Bank shall have received a copy ofthe Acquisition Agreement and all other Acquisition Documents, certified by a duly authorized officer of IntriCon, dated the date ofclosing, as true, correct and complete. (ii) The Selling Shareholder under the Acquisition Documents has received the Selling Shareholder Note in form andsubstance acceptable to the Bank. (j) Closing Costs. Evidence that the out-of-pocket costs, expenses and fees (including attorneys’ fees) paid or incurred by the Bank inconnection with the preparation, negotiation and closing of this Agreement and the other Loan Documents have been (or shall be simultaneously)paid in full. (k) Closing Fee. Payment by the Borrowers to the Bank of a wholly earned, non-refundable closing fee in the amount of $143,750. (l) Opinion. A favorable opinion, dated on or about the date hereof, of Blank Rome LLP, counsel to Borrowers, covering such mattersas the Bank may reasonably request (and each Borrower hereby instructs such counsel to deliver such opinion to the Bank). (m) Financial Statements. (i) Audited consolidated financial statements for the Borrowers and their respective Subsidiaries for the fiscalyears ending December 31, 2006, December 31, 2007 and December 31, 2008, and (ii) unaudited interim consolidated financial statements for theBorrowers and their respective Subsidiaries for each fiscal month ended after December 31, 2008 but at least thirty (30) days before the date hereof. (n) Projections. Consolidated projected income statements, balance sheets and cash flow statements for Borrowers’ fiscal year 2009prepared by the Borrowers and giving effect to the Loans and the use of proceeds therefrom, and giving effect to the consummation of theAcquisition. (o) EBITDA. Evidence that as of June 30, 2009 the Borrowers’ EBITDA (i) for the period of twelve (12) consecutive calendar monthsthen-ended shall be not less than $2,750,000 and (ii) for the period of six (6) consecutive calendar months then-ended shall be not less than$325,000. (p) Due Diligence. The Bank shall not be satisfied in any respect with the results of any legal or business related due diligence. (q) Appraisals. The Bank shall not have received a field audit examination and appraisals (including appraisals of fixed assets andinventory) requested by the Bank, the results of which are satisfactory to the Bank, in its sole and absolute discretion. 33 (r) Additional Documents. Such other certificates, financial statements, schedules, resolutions, opinions of counsel, notes and otherdocuments which are provided for hereunder or which the Bank shall require. (s) Event of Default. Any Event of Default, or Unmatured Event of Default shall have occurred and be continuing. (t) Material Adverse Effect. The occurrence of any event having a Material Adverse Effect upon any Borrower. (u) Litigation. Any litigation or governmental proceeding shall have been instituted against any Borrower or any of its officers orshareholders having a Materially Adverse Effect upon such Borrower. (v) Representations and Warranties. Any representation or warranty of the Borrowers (or any of them) contained herein or in any LoanDocument 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 suchrepresentation or warranty expressly relates to an earlier date. 3.2 Conditions Precedent to all Loans. The obligation of the Bank to make any Loan and/or issue any Letter of Credit hereunder shall besubject to the following additional conditions precedent (and any request for a Loan shall be deemed a representation by the Borrowers that the following aresatisfied): (a) Before and after giving effect to such Loan or Letter of Credit, the representation and warranties contained in Section 7 shall be trueand correct in all material respects, as though made on the date of such Loan, except to the extent such representation and warranty, by its expressterms, relates solely to a prior date, and except that the representations and warranties contained in Section 7.26 shall be true and correct in allmaterial respects, as though made on the date of the financial statements most recently delivered to the Bank pursuant to Section 8.8(a) hereof. (b) Before and after giving effect to such Loan, no Unmatured Event of Default or Event of Default shall have occurred and becontinuing. 3.3 Additional Conditions Precedent to CapEx Loans. In addition to the conditions set forth in Sections 3.1 and 3.2, the obligation of the Bankto make any advances of the CapEx Loan is subject to the satisfaction of the following additional conditions: (a) The Borrowers shall have complied with Section 2.14 of this Agreement. (b) The Borrowers shall deliver to the Bank a copy of an invoice, purchase order or purchase agreement for the asset to be acquired, adescription of the asset to be acquired and all other documents or agreements as required by the Bank in its sole discretion. 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 theinitial disbursement of a Revolving Loan and at each time any additional Revolving Loan shall be requested hereunder or a repayment made in whole or inpart thereon, a notation thereof shall be made on the books and records of the Bank. All amounts 34 recorded shall be, absent demonstrable error, conclusive and binding evidence of (i) the principal amount of the Revolving Loans advanced hereunder andthe amount of all Letter of Credit Obligations, (ii) any accrued and unpaid interest owing on the Revolving Loans, and (iii) all amounts repaid on theRevolving Loans or the Letter of Credit Obligations. The failure to record any such amount or any error in recording such amounts shall not, however, limitor 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 inwhole 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 TermLoan 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 orotherwise affect the joint and several obligations of the Borrowers under the Term Note to repay the principal amount of the Term Loan, together with allinterest accruing thereon. 4.3 CapEx Note. The CapEx Loan shall be evidenced by the CapEx Note. At the time of the initial disbursement of a CapEx Loan advance andat each time any additional CapEx Loan advances shall be requested hereunder or a repayment made in whole or in part thereon, a notation thereof shall bemade on the books and records of the Bank. All amounts recorded shall be, absent demonstrable error, conclusive and binding evidence of (i) the principalamount of the CapEx Loan advanced hereunder, (ii) any accrued and unpaid interest owing on the CapEx Loan, and (iii) all amounts repaid on the CapExLoan. The failure to record any such amount or any error in recording such amounts shall not, however, limit or otherwise affect the joint and severalobligations of the Borrowers under the CapEx Note to repay the principal amount of the CapEx 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 RateLoan 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 TermLoan which may be LIBOR Loans. Each advance of the CapEx Loan made during the CapEx Loan Availability Period may only be made as a Base RateLoan. Each Loan shall be made available to the Borrowers upon any written, verbal, electronic, telephonic or telecopy loan request from the BorrowingAgent 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 caseof 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 anyLIBOR 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 orbefore 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 theday 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 dayit 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 HundredThousand 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 theBorrowing Agent or by other means requested by the Borrowing Agent and acceptable to the Bank. Without limiting the generality of the indemnityprovisions set forth in Section 13.20 below, each Borrower does hereby specifically and irrevocably confirm, ratify and approve all such advances by theBank and does hereby 35 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 wouldotherwise 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 dayin 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 suchInterest 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 tothe terms and conditions of this Agreement, elect, as of the last day of the applicable Interest Period, to continue any LIBOR Loan having an Interest Periodexpiring 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 toa 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 havinga 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 BaseRate 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 anInterest 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 ofthe 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 bythe 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 tothe foregoing, each standby Letter of Credit issued under and pursuant to this Agreement shall bear an annual issuance fee equal to the Applicable LOC Feemultiplied by the undrawn face amount of such standby Letter of Credit, payable by the Borrowers prior to the issuance by the Bank of such Letter of Creditand 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 thefull 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 directsthe 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 RevolvingLoan hereunder to pay the amount of the Obligations; provided that, so long as no Unmatured Event of Default or Event of Default has occurred and iscontinuing and sufficiency availability exists under the Borrowing Base, the Bank shall first make a Revolving Loan under the preceding clause (b) to theextent 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, disburseany 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 tobe 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 theBorrowers on demand from the Bank. 36 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 toPermitted Liens) security interest in and to any and all property of such Borrower, of any kind or description, tangible or intangible, wheresoever located andwhether now existing or hereafter arising or acquired, including the following (all of which property, along with the products and proceeds therefrom, areindividually 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 transitto, 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 orother Obligations (whether for safekeeping, deposit, collection, custody, pledge, transmission or otherwise), 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 hereafterlocated, 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 allof each such Borrower’s right, title and interest in and to all computer software required to utilize, create, maintain and process any such records ordata 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 havebeen 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 thecontrary contained in the foregoing or otherwise in this Agreement, any Liens created in favor of Bank hereunder and/or under any otherLoan Document in the Capital Securities of any Subsidiary that is organized under the laws of a jurisdiction other than the United States orany state thereof or the District of Columbia (an “Excluded Foreign Subsidiary”) shall be limited to a Lien on and pledge of no more than65% of the Capital Securities of such Excluded Foreign Subsidiary if a pledge of more than 65% of such Capital Securities of suchExcluded Foreign Subsidiary would, in the reasonable and good faith judgment of Borrower, result in increased tax liability to anyBorrower; (vi) All Chattel Paper, Electronic Chattel Paper, Instruments, Documents, Letter of Credit Rights, all proceeds of letters ofcredit, Health-Care-Insurance Receivables, Supporting Obligations, notes secured by real estate, Commercial Tort 37 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 definitionof 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 othergoods; (c) all of each Borrower’s agreements, as-extracted collateral, tangible chattel paper, electronic chattel paper, health-care-insurancereceivables, leases, lease contracts, lease agreements, payment intangibles, proceeds of letters of credit, promissory notes, records, andsoftware; (d) all of each Borrower’s franchises, customer lists, insurance refunds, insurance refund claims, tax refunds, tax refund claims,pension plan refunds, pension plan reversions, patents, patent applications, service marks, service mark applications, trademarks, trademarkapplications, trade names, domain names (including without limitation, www.intricon.com, www.rti-corp.com, www.rtie.com, www.amecon-magnetics.com and www.ecgrecorder.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 franchiseagreements 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 andproceeds of insurance payable by reason of loss or damage to the foregoing property, including unearned premiums, and of eminent domainor condemnation awards. provided, however, notwithstanding anything to the contrary contained in this Agreement or the other Loan Documents, no Lien or securityinterest is hereby granted on any Excluded Property and the Collateral shall not include any Excluded Property; provided, further, that ifand when any property shall cease to be Excluded Property, a Lien on and security in such property shall be deemed granted therein andsuch property shall then constitute part of the Collateral. For purposes hereof, “Excluded Property” means, collectively, (i) any voting Capital Securities in excess of 65% of the outstanding votingCapital Securities of any Foreign Subsidiary, (ii) any permit, license, contract or agreement entered into by any Borrower (A) that prohibitsor requires the consent of any Person other than any Borrower or its Affiliates which has not been obtained as a condition to the creation bysuch Borrower of a Lien on any right, title or interest in such permit, license, contract or agreement or any Capital Securities related theretoor (B) to the extent that any requirement of law applicable thereto prohibits the creation of a Lien thereon, but only, with respect to theprohibition in (A) and (B), to the extent, and for as long as, such prohibition is not terminated or rendered unenforceable or otherwisedeemed ineffective by the UCC or any other applicable law, (iii) property owned by any Borrower that is subject to a purchase money Lienor a Capital Lease permitted under this Agreement if the contract or agreement pursuant to which such Lien is granted (or in the documentproviding for such 38 Capital Lease) prohibits or requires the consent of any Person other than any Borrower or its Affiliates which has not been obtained as acondition to the creation of any other Lien on such property, and (iv) any “intent to use” trademark applications for which a statement ofuse has not been filed (but only until such statement is filed); provided, however, that “Excluded Property” shall not include any proceeds,products, substitutions or replacements of Excluded Property (unless such proceeds, products, substitutions or replacements wouldotherwise constitute Excluded Property). 6.2 Possession and Transfer of Collateral; Fixtures. Unless an Event of Default has occurred and is continuing hereunder, the Borrowers shall beentitled to possession or use of the Collateral (other than Instruments or Documents, Tangible Chattel Paper, Investment Property consisting of certificatedsecurities and other Collateral required to be delivered to the Bank pursuant to this Section 6). The cancellation or surrender of any Note, upon payment orotherwise, 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 orotherwise), 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 (i) sellInventory in the ordinary course of business; (ii) sell any Cash Equivalent Investments; (iii) sell Equipment which is obsolete, past its useful working life orno 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 notexceed $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 replacementor additional Equipment within ninety (90) days following the date of such disposition, shall be delivered by Borrowers to the Bank to be applied to theObligations in accordance with this Agreement; (iv) lease, sublease, license or sublicense Collateral to third parties in the ordinary course of business and notinterfering with the business of the Borrowers; (v) dispose of any Account resulting from a compromise or settlement in the ordinary course of business ofsuch Account for less than the full amount thereof in a manner and to an extent substantially consistent with past practices; (vi) dispose of Collateral amongBorrowers in the ordinary course of business and for legitimate and lawful business purposes; (vii) settle, surrender, waive or release contract rights orlitigation claims in the ordinary course of business; (viii) abandon intellectual property in the ordinary course of business;. 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” underapplicable law; (ix) sell up to $250,000 of Equipment presently owned by RTIE; and (x) [reserved]. 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 suchfinancing statements, amendments and other documents and do such acts as the Bank deems necessary in order to establish and maintain valid, attached andperfected 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 initialfinancing statements and amendments thereto without the signature of such Borrower that (a) indicate the Collateral (i) is comprised of all assets of suchBorrower 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 theUniform Commercial Code of the jurisdiction wherein such financing statement or amendment is filed, or (ii) as being of an equal or lesser scope or withingreater 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 UniformCommercial Code of the jurisdiction wherein such financing statement or amendment is filed regarding the sufficiency or filing office acceptance of anyfinancing statement or amendment, including (i) whether such Borrower is an organization, the type of organization and any Organizational IdentificationNumber 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 ortimber to be cut, a sufficient description of the real property to 39 which the Collateral relates. Each Borrower hereby agrees that a photocopy or other reproduction of this Agreement is sufficient for filing as a financingstatement and each Borrower authorizes the Bank to file this Agreement as a financing statement in any jurisdiction. Each Borrower agrees to furnish anysuch information to the Bank promptly upon request. Each Borrower further ratifies and affirms its authorization for any financing statements and/oramendments thereto, executed and filed by the Bank in any jurisdiction prior to the date of this Agreement. In addition, each Borrower shall makeappropriate 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 bysuch 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 theCollateral, in the Bank’s commercially reasonable discretion, decline, deteriorate, depreciate or become impaired in any material respect, which collateral,when pledged, assigned and transferred to the Bank shall be and become part of the Collateral; provided that, if the additional collateral requested by theBank which would require the consent of a third-party that is not an Affiliate of any Borrower in order to create a Lien therein, Borrowers shall not be deemedto be in default of this Section 6.4 if such third-party will not grant such consent so long as Borrowers have used all commercially reasonable efforts to obtainsuch consent. The Bank’s security interests in all of the foregoing Collateral shall be valid, complete and perfected whether or not covered by a specificassignment. 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 tomaintain or protect the Collateral. The Bank shall have exercised reasonable care in the custody and preservation of the Collateral if the Bank takes suchaction 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 theBank to comply with any such request shall not be deemed a failure to exercise reasonable care; provided, however, the Bank’s responsibility for thesafekeeping of the Collateral shall (i) be deemed reasonable if such Collateral is accorded treatment substantially equal to that which the Bank accords itsown property, and (ii) not extend to matters beyond the control of the Bank, including acts of God, war, insurrection, riot or governmental actions. Inaddition, 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 topreservation 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 theCollateral. The Borrowers shall have the sole responsibility for taking such action as may be necessary, from time to time, to preserve all rights of theBorrowers and the Bank in the Collateral against prior or third parties. Without limiting the generality of the foregoing, where Collateral consists in whole orin part of securities, each Borrower represent to, and covenants with, the Bank that such Borrower has made arrangements for keeping informed of changes orpotential changes affecting the securities (including rights to convert or subscribe, payment of dividends, reorganization or other exchanges, tender offersand voting rights), and such Borrower agrees that the Bank shall have no responsibility or liability for informing such Borrower of any such or other changesor 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 ensurethe attachment, perfection and first priority (subject only to Permitted Liens) of, and the ability of the Bank to enforce, the Bank’s security interest in any andall 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 acondition to attachment, perfection or priority of, or ability of the bank to enforce, the Bank’s security interest in such Collateral, (b) complying with anyprovision 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 40 Bank’s security 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 suchconsents 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 beingunderstood and agreed, however, that any failure to obtain such waivers may (in accordance with clause (c) of the definition of Eligible Inventory) result indecreased 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 inany relevant UCC jurisdiction, or by other law as applicable in any foreign jurisdiction. Each Borrower further agrees to indemnify and hold the Bankharmless 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 orbailee, the Borrowing Agent shall promptly notify the Bank thereof, and, upon request of the Bank, Borrowers shall use all commercially reasonable efforts topromptly 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 theBorrowers that the Bank shall not give any instructions to such warehouseman or bailee pursuant to such Collateral Access Agreement unless an Event ofDefault 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 officebox (the “Lockbox”) designated by, and under the exclusive control of, the Bank. Pursuant to the Lockbox Agreement, the Borrowing Agent shall establishthe Lockbox and an account (the “Lockbox Account”) in the Borrowing Agent’s name with the Bank into which all payments received in the Lockbox shallbe deposited, and into which each Borrower will immediately deposit all payments made for Inventory sold by such Borrower or the performance of servicesby 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 ofits 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 suchBorrower shall receive any monies, checks, notes, drafts or other payments relating to or as proceeds of Accounts or other Collateral, such Borrower, suchSubsidiary 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 receiptthereof, 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 Lockboxand 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 timesfollowing the occurrence and during the continuance of an Event of Default, will be applied on account of the Revolving Loans in accordance with Section12.8 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’soperating account maintained with the Bank. Each Borrower agrees it shall be jointly and severally liable for all fees, costs and expenses which the Bankincurs in connection with opening and maintaining the Lockbox and the Lockbox Account and depositing for collection by the Bank any check or otheritem of payment received by the Bank on account of the Obligations. All of such fees, costs and expenses shall constitute Obligations hereunder, shall bepayable 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 ofpayment or proceeds of Collateral shall be endorsed by the applicable Borrower or Borrowing Agent to the Bank, and, if that endorsement of any such itemshall 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 41 Bank (and all Persons designated by the Bank for that purpose) as such Borrower’s true and lawful attorney and agent-in-fact (i) to endorse such Borrower’sname upon such items of payment and/or proceeds of Collateral and upon any Chattel Paper, document, instrument, invoice or similar document oragreement relating to any Account of such Borrower or goods pertaining thereto; (ii) to take control in any manner of any item of payment or proceedsthereof; 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 postalbox 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 Borrowerin 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 toan 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 theletter 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 thisAgreement. 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 thereofand 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 andsubstance satisfactory to the Bank, and shall execute any amendments hereto deemed reasonably necessary by the Bank to perfect its security interest in suchCommercial 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 paperor 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 16of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction, the Borrowing Agent or the Borrower shall promptly notify the Bankthereof 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 UCCof such electronic chattel paper or control under Section 201 of the federal Electronic Signatures in Global and National Commerce Act or, as the case maybe, Section 16 of the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, of such transferable record. The Bank agrees with the Borrowersthat 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 theBorrowers 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, Section201 of the federal Electronic Signatures in Global and National Commerce Act or Section 16 of the Uniform Electronic Transactions Act for a party in controlto 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 certificatesrepresenting the Pledged Equity Interests (if any), and (ii) promptly upon the receipt thereof by or on behalf of IntriCon, all other certificates andinstruments constituting Pledged Equity Interests. Prior to delivery to Bank, all such certificates and instruments constituting Pledged EquityInterests (or proceeds thereof) shall be held in trust by IntriCon for the benefit of Bank pursuant hereto. All such certificates shall be delivered in 42 suitable form for transfer by delivery or shall be accompanied by duly executed instruments of transfer or assignment in blank, substantially in theform provided in Exhibit 6.12(a) attached hereto. (b) If any issuer of Pledged Equity Interests is organized in a jurisdiction which does not permit the use of certificates to evidence equityownership, or if any of the Pledged Equity Interests is at any time not evidenced by certificates of ownership, then IntriCon shall (i) to the extentpermitted 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 ofExhibit 6.12(b) annexed hereto, and (iii) execute any customary pledge forms or other documents reasonably necessary or appropriate to completethe 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 inconnection with any increase or reduction of capital, reclassification, merger, consolidation, sale of assets, combination of shares or membership orequity 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 equityinterests in connection with a partial or total liquidation, dissolution or reduction of capital, capital surplus or paid-in surplus, then IntriCon shallreceive such certificate, instrument, option, right or distribution in trust for the benefit of Bank, shall segregate it from IntriCon’s other property andshall deliver it forthwith to Bank in the exact form received together with any necessary endorsement and/or appropriate instruments of transfer orassignment duly executed in blank, substantially in the form provided in Exhibit 6.12(a), to be held by Bank as Collateral and as further collateralsecurity for the Obligations. Section 7. REPRESENTATIONS AND WARRANTIES. To induce the Bank to make the Loans and issue the Letters of Credit, each Borrower makes the following representations and warranties to theBank, 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 currentlyconducts, 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 onSchedule 7.1; and the organizational identification number and principal place of business of each Borrower is set forth on Schedule 7.1. Each Borrower (i) isduly 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 todo 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 thefailure 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 theother 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 43 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, aBorrower hereunder. 7.2 Authorization. Each Borrower has full right, power and authority to enter into this Agreement, to make the borrowings and execute anddeliver the Loan Documents as provided herein and to perform all of its duties and obligations under this Agreement and the other Loan Documents. IntriConhas 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 andobligations thereunder. The execution and delivery of this Agreement and the other Loan Documents will not, nor will the observance or performance of anyof the matters and things herein or therein set forth, violate or contravene any provision of law or of the organizational documents of any Borrower. Allnecessary and appropriate action has been taken on the part of each Borrower to authorize the execution and delivery of this Agreement and the LoanDocuments. 7.3 Validity and Binding Nature. This Agreement and the other Loan Documents are the legal, valid and binding obligations of the eachBorrower, enforceable against each such Borrower in accordance with their terms, subject to bankruptcy, insolvency and similar laws affecting theenforceability 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 otherdocuments or instruments to be executed and delivered by each Borrower in connection with the Loans and/or the Letters of Credit, and the borrowings byeach 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, anygovernmental 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 documentsof the Borrowers, or (iii) any material agreement, indenture, instrument or other document, or any judgment, order or decree, which is binding upon anyBorrower 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 assetof 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 theforegoing, the Borrowers specifically represent and warrant to the Bank that the stock purchase and sale transaction contemplated by the AcquisitionDocuments 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 propertiesand 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, 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 andvalidly issued, fully paid, non-assessable, and in the case of Borrowers other than IntriCon, free and clear of all Liens other than those in favor of the Bank, ifany, and all such securities were issued in compliance with all applicable state and federal laws concerning the issuance of securities. Except as set forth onSchedule 7.6, as of the date of the Eleventh Amendment to this Agreement, there are no pre-emptive or other outstanding rights, options, warrants, conversionrights 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 theirrespective 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 44 priority over any other class of capital stock or other equity interests of such Borrower as to dividends or distributions or in liquidation. 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 allIntellectual Property, as are necessary for the conduct of the businesses of such Borrower as presently conducted, without any infringement upon rights ofothers which could reasonably be expected to have a Material Adverse Effect upon such Borrower, and no material claim has been asserted and is pending byany Person challenging or questioning the use of any Intellectual Property or the validity or effectiveness of any Intellectual Property nor does such Borrowerknow of any valid basis for any such claim. 7.8 Financial Statements. All financial statements submitted to the Bank have been prepared in accordance with sound accounting practicesand GAAP on a basis, except as otherwise noted therein, consistent with the previous fiscal year and present fairly in all material respects the financialcondition 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 ofinterim financial statements, to the absence of footnotes and to normal year-end accruals. Since the date of the most recent consolidated financial statementsubmitted 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 MaterialAdverse Effect on any such Borrower. 7.9 Litigation and Contingent Liabilities. There is no litigation, arbitration proceeding, demand, charge, claim, petition or governmentalinvestigation or proceeding pending, or to the knowledge of any Borrower, threatened, against any Borrower, which, if adversely determined, which mightreasonably be expected to have a Material Adverse Effect, except as set forth in Schedule 7.9. Other than any liability incident to such litigation orproceedings, and except as permitted by Section 9.1, no Borrower has any material guarantee obligations, Contingent Liabilities, liabilities for taxes, or anylong-term leases or unusual forward or long-term commitments, including any interest rate or foreign currency swap or exchange transaction or otherobligation in respect of derivatives, that are not fully-reflected or fully reserved for, to the extent required by GAAP, in the most recent audited financialstatements 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 statementsdelivered 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 themost 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 requiredby 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 ofthe 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 othercontract 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 oragreement 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 (orthreatened litigation or proceeding or basis therefor) exists which (a) would have a Material Adverse Effect, or (b) would constitute an Event of Default or anUnmatured Event of Default. No Borrower is in default under any Applicable Agreement, nor has any Borrower received any notice of breach, termination oracceleration or demand for adequate assurances under any Applicable Agreement that has not been communicated to the Bank. 45 7.12 Environmental Laws and Hazardous Substances. Except as set forth on Schedule 7.12, 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 ownedby it) in any manner which might reasonably be expected to have a Material Adverse Effect upon any Borrower. Each Borrower will comply in all materialrespects with all Environmental Laws and will obtain all licenses, permits certificates, approvals and similar authorizations thereunder. Except as could notreasonably be expected to have a Material Adverse Effect, there has been no investigation, proceeding, complaint, order, directive, claim, citation or noticeby any governmental authority or any other Person, nor is any pending or, to the best of each Borrower’s knowledge, threatened. Each Borrower shall notifythe Bank in writing in five business days upon receiving actual notice of any investigation, proceeding, complaint, order, directive, claim, or citation andshall take prompt and appropriate actions to respond thereto, with respect to any non-compliance with, or violation of, the requirements of anyEnvironmental 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, whichmight reasonably be expected to have a Material Adverse Effect upon any Borrower. Except as set forth on Schedule 7.12, no Borrower has, to the best ofeach Borrower’s knowledge, any material liability, contingent or otherwise, in connection with a release, spill or discharge, threatened or actual, of anyHazardous 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 compliancewith all Environmental Laws, and the applicable Borrower shall, following determination by the Bank that there is non-compliance, or any condition whichrequires 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 areport setting forth the result of such tests, a proposed plan for remediation as is required under applicable Environmental Laws and an estimate of the coststhereof. This Section 7.12 shall constitute the only representations that are made by each Borrower with respect to Environmental Laws and HazardousSubstances. 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 theAcquisition Agreement, the issuance of each Letter of Credit and each Loan hereunder and the use of the proceeds thereof, (a) the fair value of eachBorrower’s assets is greater than the amount of its liabilities (including disputed, contingent and unliquidated liabilities) as such value is established andliabilities 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 theamount 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 itsassets 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 isengaged in business or a transaction, and is not about to engage in business or a transaction, for which its property would constitute unreasonably smallcapital. 7.14 ERISA Obligations. All Employee Plans of each Borrower meet the minimum funding standards of Section 302 of ERISA and 412 of theInternal Revenue Code where applicable, and each such Employee Plan that is intended to be qualified within the meaning of Section 401 of the InternalRevenue Code of 1986 is qualified. No withdrawal liability has been incurred under any such Employee Plans and no “Reportable Event” or “ProhibitedTransaction” (as such terms are defined in ERISA), has occurred with respect to any such Employee Plans, unless approved by the appropriate governmentalagencies. Each Borrower has promptly paid and discharged all obligations and liabilities arising under 46 ERISA of a character which if unpaid or unperformed might result in the imposition of a Lien against any of its properties or assets. 7.15 Labor Relations. Except as could not reasonably be expected to have a Material Adverse Effect, (i) there are no strikes, lockouts or otherlabor disputes against any Borrower or, to the best knowledge of each Borrower, threatened, (ii) hours worked by and payment made to employees of anyBorrower have not been in violation of the Fair Labor Standards Act or any other applicable law, and (iii) no unfair labor practice complaint is pendingagainst 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 byfiling 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 avalid, 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 andarm’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 thisAgreement 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 and Letters of Credit, including interest rate, fees and charges as contemplated hereby, (i) are business loansunder applicable law, (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 Minnesota usury laws, any consumer credit laws or the usury laws of any state which may havejurisdiction over this transaction, any Borrower or any property securing the Loans or other Obligations. 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 haspaid all taxes, governmental charges and assessments due and payable with respect to such returns, except any such taxes or charges which are beingdiligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on itsbooks, 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 Collateralwhich is not a Permitted Lien. As of the date of the Eleventh Amendment to this Agreement, except as set forth on Schedule 7.19, there is no controversy orobjection pending, or to the knowledge of any Borrower, threatened in respect of any tax returns of any Borrower. Each Borrower has made adequate reserveson 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 or Letters of Credit shall be used by any Borrower or anySubsidiary or Affiliate of any Borrower, either directly or indirectly, for the purpose of purchasing or carrying any margin stock, within the meaning ofRegulation 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 limitingits 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 47 “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. 7.22 Bank Accounts. All Deposit Accounts and operating bank accounts of each Borrower are located at the Bank and no Borrower has otherDeposit Accounts except those listed on Schedule 7.22 attached hereto and those opened after the date hereof in accordance with Section 9.12 of thisAgreement below. 7.23 Place of Business. The principal places of business and books and records of each Borrower is set forth on Schedule 7.1, and the location ofall 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 fromtime to time pursuant to the following sentence. Each Borrower or the Borrowing Agent shall promptly notify the Bank of any change in such locations. NoBorrower will remove or permit the Collateral to be removed from such locations without at least sixth (60) days prior written notice to the Bank inconnection with the establishment of a new business location by Borrowers within the United States as contemplated by and in accordance with the previoussentence, except for transfers from one Collateral location of Borrowers disclosed to the Bank to another disclosed Collateral location of Borrowers and forCollateral sold in compliance with Section 6.2 of this Agreement, it being understood and agreed, however, that any such relocation may (in accordance withclause (c) of the definition of Eligible Inventory) result in decreased availability under the Borrowing Base unless the Borrowers have delivered to the Bank aCollateral Access Agreement covering such new location. 7.24 Complete Information. This Agreement and all financial statements, schedules, certificates, confirmations, agreements, contracts, and othermaterials and information heretofore or contemporaneously herewith furnished in writing by the Borrowers (or any of them) to the Bank for purposes of, or inconnection 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 suchinformation is dated or certified, and none of such information is or will be incomplete by omitting to state any material fact necessary to make suchinformation not misleading in light of the circumstances under which made (it being recognized by the Bank that any projections and forecasts provided bythe 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 applicableprojections or assumptions and that actual results during the period or periods covered by any such projections and forecasts may differ from projected orforecasted 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 theBorrowers is made known to IntriCon’s principal executive officer and its principal financial officer or persons performing similar functions byothers 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 reportfiled with the Securities Exchange Commission; and (iii) are effective in all material respects to perform the functions for which they wereestablished; 48 (b) Based on the evaluation of its internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f), such Borrower isnot aware of (i) any material weakness in the design or operation of internal control over financial reporting which are reasonably likely to have amaterial adverse effect on IntriCon’s ability to record, process, summarize and report financial data or (ii) any fraud, whether or not material, thatinvolves management or other employees who have a significant role in such Borrower’s internal control over financial reporting; and (c) Since the date of the most recent evaluation of its internal control over financial reporting, as defined above, there have been nochanges in internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, internal controls overfinancial 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 thecarriers 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 thePledged Equity Interests were issued pursuant to a valid exemption from the registration requirements of the Securities Act of 1933, as amended, and fullycomply with any and all applicable state securities laws. No authorization, approval or action by, and no notice or filing with any governmental authority orwith 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 thegranting of the security interest therein by IntriCon pursuant to this Agreement, or (ii) for the exercise by Bank of its rights and remedies hereunder withrespect to the Pledged Equity Interests (except as may be required by laws affecting the offering and sale of securities). This Agreement creates a validsecurity interest in favor of Bank in the Pledged Equity Interests. The taking of possession by Bank of the certificates (if any) evidencing the Pledged EquityInterests will perfect and establish the first priority of Bank’s security interest in such certificated Pledged Equity Interests. The filing of a UCC FinancingStatement describing the Pledged Equity Interests with the Secretary of State of Pennsylvania will perfect the Bank’s security interest in any uncertificatedPledged Equity Interests, and furthermore, the execution of a written agreement by the issuer of each such uncertificated Pledged Equity Interest that it willcomply with instructions originated by the Bank with respect to any such uncertificated Pledged Equity Interests issued by it without further consent byIntriCon will establish “control” (as defined in the UCC) by the Bank over any such uncertificated Pledged Equity Interest and perfect and establish the firstpriority of Bank’s security interest in such uncertificated Pledged Equity Interests. No action other than obtaining possession of the certificates representingall certificated Pledged Equity Interests and obtaining “control” over all uncertificated Pledged Equity Interests as described in the foregoing sentences isnecessary to perfect or otherwise protect the Bank’s security interest in the Pledged Equity Interests. Schedule 7.28 attached hereto sets forth a statement ofthe authorized, issued and outstanding capital stock of the Pledged Entities and, the owners of such capital stock. None of the issued and outstanding capitalstock of the Pledged Entities that are owned by IntriCon are subject to any vesting, redemption, or repurchase agreement, and there are no warrants or optionsoutstanding with respect to such capital stock. 7.29 [Intentionally Omitted] 49 Section 8. AFFIRMATIVE COVENANTS. 8.1 Compliance with Bank Regulatory Requirements; Increased Costs. If the Bank shall reasonably determine that any Regulatory Change, orcompliance by the Bank or any Person controlling the Bank with any request or directive (whether or not having the force of law) of any governmentalauthority, 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 asa 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 haveachieved but for such Regulatory Change or compliance (taking into consideration the Bank’s or such controlling Person’s policies with respect to capitaladequacy) by an amount deemed by the Bank or such controlling Person to be material or would otherwise reduce the amount of any sum received orreceivable 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 shallbe accompanied by a statement setting forth the basis for such demand and a calculation of the amount thereof in reasonable detail), the Borrowers shall paydirectly to the Bank or such controlling Person such additional amount as will compensate the Bank for such increased cost or such reduction, so long assuch 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 itsorganization, (b) preserve and maintain its qualification to do business and good standing in each jurisdiction where the nature of its business makes suchqualification necessary (other than such jurisdictions in which the failure to be qualified or in good standing could not reasonably be expected to have aMaterial Adverse Effect), and (c) continue as a going concern in the business which such Borrower is presently conducting. If any Borrower does not have anOrganizational Identification Number and later obtains one, such Borrower shall promptly notify the Bank of such Organizational Identification Number. NoBorrower shall form or otherwise acquire a new Subsidiary without the prior written consent of the Bank. Notwithstanding anything to the contrary in thisSection 8.2, I-Management may be dissolved or merged with and into Inc., provided that the surviving entity is Inc., within 180 days after the date of theEleventh Amendment to this Agreement, provided that, (i) at the time thereof and immediately after giving effect thereto, no Unmatured Event of Default orEvent of Default shall have occurred and be continuing and (ii) the Borrowers shall provide evidence to the Bank of such dissolution of I-Management, or itsmerger with and into Inc., as applicable, promptly after effectiveness thereof. If I-Management is neither dissolved nor merged with and into Inc. pursuant tothe foregoing sentence, then the Borrowers shall promptly deliver to the Bank an executed written operating agreement for I-Management, in form andsubstance satisfactory to the Bank in its sole discretion. 8.3 Compliance With Laws. Each Borrower shall use the proceeds of the Loans and Letter of Credit 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 suchcontravention) and not in violation of this Agreement, and shall comply, and cause each Subsidiary to comply, in all respects, including the conduct of itsbusiness 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 orany Subsidiary is or shall be listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by the Office of ForeignAssets 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 orLetters of Credit 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 50 Acquisition shall be consummated in accordance with the terms and conditions of the Acquisition Documents and all applicable laws. 8.4 Payment of Taxes and Liabilities. The Borrowers jointly and severally agree to pay, and cause each Subsidiary to pay, and discharge, priorto delinquency and before penalties accrue thereon, all property and other taxes, and all governmental charges or levies against it or any of the Collateral, aswell as claims of any kind which, if unpaid, could become a Lien on any of its property other than Permitted Liens; provided that the foregoing shall notrequire 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 faithby 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 whichcould 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 satisfysuch claim. 8.5 Maintain Property. Each Borrower shall at all times maintain, preserve and keep its plant, properties and Equipment, including anyCollateral, 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 reasonablyacceptable 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 suchother insurance, to such extent and against such hazards and liabilities, including employers’, public and professional liability risks and businessinterruption, as is customarily maintained by companies similarly situated, and shall have insured amounts no less than, and deductibles no higher than, arereasonably acceptable to the Bank. Each Borrower shall furnish to the Bank a certificate setting forth in reasonable detail the nature and extent of allinsurance maintained by such Borrower, which shall be reasonably acceptable in all respects to the Bank. Each Borrower shall cause each issuer of aninsurance policy to provide the Bank with an endorsement (i) showing the Bank as mortgagee and loss payee with respect to each policy of property orcasualty insurance and naming the Bank as an additional insured with respect to each policy of liability insurance; and (ii) providing that thirty (30) daysnotice will be given to the Bank prior to any cancellation of, material reduction or change in coverage provided by or other material modification to suchpolicy. Each Borrower shall execute and deliver to the Bank a collateral assignment, in form and substance satisfactory to the Bank, of each businessinterruption 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 hereaftershall 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 andmaintain such policies of insurance and pay such premiums and take any other action with respect thereto, which the Bank deems advisable. This insurancecoverage (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, oragainst, such Borrower in connection with such property, including the Collateral. Such Borrower may later cancel any such insurance purchased by theBank, but only after providing the Bank with evidence that such Borrower has obtained the insurance coverage required by this Section. If the Bankpurchases insurance for the Collateral, such Borrower will be responsible for the costs of that insurance, including interest and any other charges that may beimposed with the placement of the insurance, until the effective date of the cancellation or expiration of 51 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 thanthe cost of the insurance such Borrower may be able to obtain on its own. 8.7 ERISA Liabilities; Employee Plans. Each Borrower shall (i) keep in full force and effect any and all Employee Plans which are presently inexistence or may, from time to time, come into existence under ERISA, and not withdraw from any such Employee Plans, unless such withdrawal can beeffected or such Employee Plans can be terminated without material liability to such Borrower; (ii) make contributions to all of such Employee Plans in atimely manner and in a sufficient amount to comply with the standards of ERISA; including the minimum funding standards of ERISA; (iii) comply with allmaterial requirements of ERISA which relate to such Employee Plans; (iv) notify the Bank immediately upon receipt by such Borrower of any noticeconcerning the imposition of any withdrawal liability or of the institution of any proceeding or other action which may result in the termination of any suchEmployee Plans or the appointment of a trustee to administer such Employee Plans; (v) promptly advise the Bank of the occurrence of any “ReportableEvent” or “Prohibited Transaction” (as such terms are defined in ERISA), with respect to any such Employee Plans; and (vi) amend any Employee Plan that isintended to be qualified within the meaning of Section 401 of the Internal Revenue Code of 1986 to the extent necessary to keep the Employee Planqualified, 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 ofaccounting and in all respects in accordance with GAAP, and shall furnish to the Bank or its authorized representatives such information regarding thebusiness 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 annualaudited consolidated financial statements of Borrowers and their Subsidiaries, including consolidated balance sheet, statement of income andretained earnings, statement of cash flows for the fiscal year then ended, in reasonable detail, prepared and certified, without adverse reference togoing concern value and without qualification, by Baker Tilly Virchow Krause LLP, or another independent auditor of recognized standing selectedby the Borrowers and reasonably acceptable to the Bank and (ii) a consolidating balance sheet of the Borrowers and their Subsidiaries as of the endof 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 by each Borrower’s treasurer or chief financial officer on behalf of such Borrower as fairly presenting in all material respects the financialcondition and results of operation of the Borrowers and their consolidated Subsidiaries for the period covered thereby; (b) promptly when available, and in any event, within thirty (30) days following the end of each calendar month (or in the case of anymonth 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 andconsolidating balance sheets, income statement and cash flow statement of the Borrowers and their respective Subsidiaries for the calendar monththen ended and such other information (including nonfinancial information) as the Bank may reasonably request, in reasonable detail, prepared andcertified by each Borrower’s treasurer or chief financial officer on behalf of such Borrower as fairly presenting in all material respects the financialcondition and results of operation of the Borrowers and their consolidated Subsidiaries for the period covered thereby; (c) within ten (10) days after the filing due date (as such date may be extended in accordance with properly granted extensions) eachyear, a signed copy of the complete federal 52 and state income tax returns filed with the Internal Revenue Service and applicable state taxing authorities by each Borrower; and (d) promptly after the sending or filing thereof, copies of all regular and periodic reports which any Borrower shall file with theSecurities 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. EachBorrower represents and warrants to the Bank that the financial statements delivered to the Bank at or prior to the execution and delivery of this Agreementand to be delivered at all times thereafter fairly present in all material respects and will fairly present in all material respects the financial condition of suchBorrower 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 Bankcopies of management letters and other interim and supplemental reports if any, submitted to such Borrower by independent accountants in connection withany 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 aBorrowing Base Certificate dated as of the last Business Day of such month, certified as true and correct by an authorized representative of the BorrowingAgent 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 theBorrowing 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 aconsolidated aged schedule of the Accounts of each Borrower, listing the name and amount due from each Account Debtor and showing the aggregateamounts 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 chieffinancial officer. 8.12 Inventory Reports. The Borrowing Agent shall, within thirty (30) days after the end of each month, deliver to the Bank a consolidatedinventory 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 annual and quarterly financialstatements pursuant to Sections 8.8(a) and 8.8(b), deliver to the Bank a duly completed compliance certificate (in substantially the form attached hereto asExhibit 8.13), dated the date of such financial statements and certified as true and correct by an appropriate officer of each Borrower, containing acomputation 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 UnmaturedEvent 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 otherbusiness 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, 53 journals, orders, receipts, correspondence and other data relating to Inventory, Accounts and any other Collateral, the results of which must disclosecompliance by Borrowers with all of the terms and provisions of this Agreement and not disclose the existence of any Event of Default. All such inspectionsor 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. 8.15 Other Reports. Each Borrower shall, within such period of time as the Bank may specify, deliver to the Bank such other schedules andreports 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 andcontent 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 causeeach 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 businessas 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, arbitrationor governmental investigation or proceeding not previously disclosed by such Borrower to the Bank which has been instituted or, to the knowledge of suchBorrower, is threatened against such Borrower or any of its Subsidiaries or to which any of their respective properties is subject which might reasonably beexpected 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 tothe 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 aMaterial Adverse Effect. Without limiting the generality of the foregoing, each Borrower specifically agrees that is will notify Bank in writing, within five (5)Business Days after the earlier of when a Borrower learns, or is notified of the occurrence, of any material breach by such Borrower of, a notice of terminationor acceleration, or any demand for adequate assurances under, any Applicable Agreement to which such Borrower is a party. 8.20 Environmental Matters. If any release or threatened release or other disposal, in each case not in compliance with applicableEnvironmental Laws of Hazardous Substances shall occur or shall have occurred on any real property or any other assets of any Borrower or any of itsSubsidiaries, 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 statejudicial or administrative order requiring the performance at any real property of such Borrower or any respective Subsidiary of activities in response to therelease or threatened release of a Hazardous Substance. To the extent that the transportation of Hazardous Substances is permitted by this Agreement, eachBorrower shall, and shall cause its Subsidiaries to, dispose of such Hazardous Substances, or of any other wastes, only at licensed disposal facilities operatingin compliance with Environmental Laws. 8.21 [RESERVED] 54 8.22 Banking Relationship. Each Borrower covenants and agrees, at all times during the term of this Agreement, to utilize the Bank as itsprimary 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, (A) calculated on the basis of a year consistingof 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 onDecember 31, 2017, and on the Revolving Loan Maturity Date, equal to: the Applicable Non-Use Fee multiplied by the sum of (a) (i) the Revolving LoanCommitment, minus (ii) the sum of (1) the daily average of the aggregate principal amount of all Revolving Loans outstanding, plus (2) the daily average ofthe aggregate amount of the Letter of Credit Obligations, and (b) during the CapEx Loan Availability Period, the CapEx Loan Commitment minus the dailyaverage of the aggregate principal amount of the CapEx Loan outstanding, in each case as of each date of determination. 8.24 Interest Rate Protection. Each Borrower agrees to enter into, not later than forty-five (45) days after the date hereof, a Hedging Agreementwith a term of at least three (3) years on an ISDA standard form to hedge the interest rate with respect to not less than $1,000,000 of the Loans, in form andsubstance 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 ofBorrowers, IntriCon shall furnish to Bank detailed projections for the next fiscal year setting forth projected income and cash flow for each month, themonthly operating budget, the monthly balance sheet, and the monthly borrowing availability of Borrowers, all on a consolidated basis, accompanied by acertificate of IntriCon’s chief financial officer, countersigned by such Borrower’s chief executive officer, stating (a) the assumptions on which the projectionswere prepared, (b) that the assumptions, except as otherwise noted, were prepared on a consistent basis with the operation of Borrowers’ business during theimmediately preceding fiscal year and with factors known to exist as of the date of the certificate or reasonably anticipated to exist during the periodscovered by the projections, and (c) that the officers signing the certificate have no reason to believe that the projections are incorrect or misleading in anymaterial 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 moneyindebtedness), 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 ofbusiness; (d) Hedging Obligations incurred in favor of the Bank or an Affiliate thereof for bona fide hedging purposes and not for speculation; 55 (e) purchase money Debt and Capitalized Lease Obligations incurred to acquire Equipment or other fixed assets, whether payablecurrently or in the future, provided that the amount of such Debt incurred shall not exceed Two Million Five Hundred Thousand and 00/100 Dollars($2,500,000.00) in the aggregate for any calendar year, provided that Equipment or other fixed assets financed with a CapEx Loan made inaccordance with this Agreement shall be permitted under this clause (e) but excluded from the limitations herein; (f) Debt described on Schedule 9.1 and any extension, renewal or refinancing thereof so long as the principal amount thereof is notincreased; (g) Debt incurred as a result of endorsing negotiable instruments received in the ordinary course of business; (h) guarantees by any Borrower(s) in respect of the Debt or other obligations of any other Borrower(s) so long as, in the case of Debt,such Debt so guaranteed is 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 anykind 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 ofBank to secure the Obligations. Without limiting the generality of the foregoing, each Borrower specifically agrees that it will not pledge to any Person otherthan 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.Notwithstanding the foregoing, no Lien (other than in favor of the Bank) may at any time attach to any Borrower’s (1) Accounts, other than those permittedunder clauses (a) and (d) of the definition of Permitted Liens, or (2) Inventory, other than those permitted under clauses (a), (b) and (d) of the definition ofPermitted Liens. 9.3 Investments. No Borrower shall, either directly or indirectly, make or have outstanding any Investment, except: (a) equity Investments by any Borrower in any other Borrower; (b) guarantees by Borrower(s) of the Debts or other obligations 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 settlement of delinquent Accounts in the ordinarycourse of business consistent with past practices or in the course of any proceedings regarding such Account Debtors under the Bankruptcy Code insatisfaction of Borrowers’ claims against such Account Debtors; (e) Investments listed on Schedule 9.3 as of the date of the Eleventh Amendment to this Agreement, including Investments in theForeign Subsidiaries of Borrowers existing as of the date of the Eleventh Amendment to this Agreement; (f) Investments permitted under Section 9.7; and 56 (g) other Investments in businesses related to the core business activities of the Borrowers (including Investments in the ForeignSubsidiaries of Borrowers) made on or after the date of the Eleventh Amendment to this Agreement, provided that (i) immediately before andimmediately after giving effect to any such Investment, no Unmatured Event of Default or Event of Default shall have occurred and be continuingand (ii) the aggregate amount of such Investments (net of all repayments, returns of capital, interest payments, dividends and distributions receivedafter the date of the Eleventh Amendment to this Agreement) permitted pursuant to this clause (g) shall not exceed $4,000,000 at any time; provided, however, that any Investment which when made complies with the requirements of the definition of the term “Cash Equivalent Investment” maycontinue 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) bea 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 anypartnership or joint venture interest in, any other Person, except for (i) any such merger, consolidation, sale, transfer, conveyance, lease or assignment of or byany Borrower into any other Borrower; and (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) anyissuance of shares of the such Borrower’s common Capital Securities pursuant to any employee or director option program, benefit plan or compensationprogram, (b) any issuance of Capital Securities by a Subsidiary to the applicable Borrower or another Subsidiary to such Borrower in accordance with Section9.6 and (c) any issuance of common stock by IntriCon provided that a mandatory prepayment in the amount of the Net Cash Proceeds of such common stockis made if and to the extent required by Section 2.15. 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 respectthereof, (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, ifany, redemption, conversion, exchange, purchase, retirement, defeasance, sinking fund or any other payment in respect of any Subordinated Debt except if, asand to the extent permitted by the applicable subordination agreement or subordination provisions governing the subordination of such Subordinated Debtin favor of the Obligations, or (e) set aside funds for any of the foregoing. Notwithstanding the foregoing, any Subsidiary may pay dividends or make otherdistributions 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 anytransaction with any of its Affiliates or with any director, officer or employee of any Borrower other than (i) programs relating to the Capital Securities ofIntriCon established for the employees, officers and/or directors of Borrowers and their Subsidiaries which are approved by IntriCon’s board of directors andfully disclosed to the Bank, (ii) payment of salaries, bonuses and other compensation to the employees, directors and officers of Borrowers and theirSubsidiaries in the ordinary course of business consistent with past practices, (iii) loans and advances to employees and officers in an aggregate principalamount of $25,000 outstanding at any one time, (iv) in 57 the case of IntriCon, director fees in an aggregate amount not to exceed $200,000 in any fiscal year and (v) 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 Bankand 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 suchBorrower. Notwithstanding anything to the contrary contained in this Section or otherwise in this Agreement or any other Loan Document, nothingcontained herein or therein shall be deemed to prohibit Borrowers from accepting collections from the Account Debtors of its non-Borrower ForeignSubsidiaries and remitting such collections (but only such collections) to such non-Borrower Foreign Subsidiaries for the purposes of facilitating payment byand collection from such Account Debtors obligated to such non-Borrower Foreign Subsidiaries, which transactions shall be reflected on the books andrecords of Borrowers and their Subsidiaries as the creation of intercompany Accounts owing from Borrowers to the applicable non-Borrower ForeignSubsidiaries and the subsequent satisfaction and payment of such intercompany Accounts, all in the ordinary course of business consistent with the pastpractices 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 forthe purchase of materials, supplies or other property or services if such contract requires that payment be made by it regardless of whether delivery is evermade 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 orvolume discount, allowance, discount, rebate or adjustment granted to Account Debtors in the ordinary course of such Borrower’s business consistent withpast 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 provisionwhich 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 itsObligations 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 assetsor (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 otherdistributions 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 anyBorrower or any other Subsidiary, or (iii) transfer any of its assets or properties to any Borrower or any other Subsidiary, other than (A) customary restrictionsand 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 suchrestrictions and conditions apply only to the Subsidiary to be sold and such sale is permitted hereunder, (B) restrictions or conditions imposed by anyagreement relating to purchase money Debt, Capital Leases and other secured Debt permitted by this Agreement if such restrictions or conditions apply onlyto the property or assets securing such Debt, (C) customary provisions in leases and other contracts restricting the assignment thereof, and (D) customaryrestrictions and conditions with respect to any Foreign Subsidiary or its assets contained in agreements relating to Debt incurred by such Foreign Subsidiary. 9.11 Use of Proceeds. Neither the Borrowers nor any of their respective Subsidiaries or Affiliates shall use any portion of the proceeds of theLoans or Letters of Credit, either directly or indirectly, for the purpose of purchasing any securities underwritten by any Affiliate of the Bank. 58 9.12 Bank Accounts. No Borrower shall establish any new Deposit Accounts or other bank accounts, other than Deposit Accounts or other bankaccounts established at or with the Bank, without the prior written consent of the Bank; provided, however, that the Borrowers may maintain DepositAccounts or other bank accounts without the prior written consent of the Bank and without obtaining control agreement therefor so long as the aggregateamount maintained in such accounts does not exceed $70,000 at any time. 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, itsOrganizational Identification Number, if it has one, its type of organization, or its jurisdiction of organization without giving at least sixty (60) days priornotice of such change to the Bank, or (c) permit its charter, bylaws or other organizational documents to be amended or modified in any way which couldreasonably be expected to materially adversely affect the interests of the Bank. Notwithstanding anything to the contrary in this Section 9.13, I-Managementmay be dissolved or merged with and into Inc., in either case, in accordance with Section 8.2 of this Agreement. 9.14 Modification of Applicable Agreements. Promptly upon execution thereof, each Borrower will deliver to the Bank a true and correct copyof 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 Schedule9.14 in any way which could reasonably be expected to materially adversely affect the interests of the Bank without providing prior written notice of thesame to the Bank. Other than as set forth on Schedule 9.14, as of the date hereof, 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, orwaive, or consent to any waiver of, any of the material provisions of, the Acquisition Agreement or any other Acquisition Document without the consent ofthe Bank, not to be unreasonably withheld or delayed. 9.16 Payments on and Changes to Subordinated Debt. (a) Payments on Subordinated Debt. Each Borrower covenants that it will not (i) make any payment (including any principal, premium,interest, fee or charge) with respect to any Subordinated Debt except, in each instance, to the extent, and in the manner, expressly permitted by theSelling Shareholder Subordination Agreement or other subordination agreement relating to such Subordinated Debt, or (ii) repurchase, redeem,defease, acquire or reacquire for value any of the Subordinated Debt. (b) Changes to Subordinated Debt Terms or Documents. Each Borrower covenants that it will not seek, agree to or permit, directly orindirectly, the amendment, waiver or other change to (i) any of the pricing or payment terms (including, principal, interest or premium provisions) ofor applicable to, or the provisions governing the priority of or security for the payment and performance of the obligations under or applicable to, oracceleration, termination, or default provisions of or applicable to, the Subordinated Debt or any of the Subordinated Debt Documents other thanamendments or other changes to pricing or payment terms, or acceleration, termination or default provisions, that are more favorable to Borrowersthan such terms or provisions prior to giving effect to such amendment or change, or (ii) any other material term of or applicable to any of theSubordinated Debt Documents. For purposes of this Section 9.16, 59 “material” means any modification, waiver, or amendment of the Subordinated Debt or any of the Subordinated Debt Documents, which, in thejudgment of Bank exercised in a commercially reasonable manner, could (a) adversely affect any of Bank’s rights or remedies under the LoanDocuments, the value of the Collateral, or Bank’s security interest in or other Lien on the Collateral (including the priority of Bank’s interests) or (b)create or result in an Event of Default. Section 10. FINANCIAL COVENANTS. 10.1 Minimum EBITDA. As of March 31, 2017, the Borrowers’ consolidated EBITDA for the period of twelve (12) consecutive calendarmonths then-ended shall not be less than $1,200,000. 10.2 Funded Debt to EBITDA. As of each of the measurement dates set forth in the chart below, the Borrowers and their respective consolidatedSubsidiaries shall maintain a ratio of: (a) consolidated Funded Debt as of such date, minus the aggregate collected cash balance in Deposit Accounts of theBorrowers maintained with the Bank as of such date; to (b) consolidated EBITDA (the “Leverage Ratio”) for the period of twelve (12) consecutive calendarmonths then-ended of not greater than the amount set forth opposite such measurement date in the chart below: Measurement DateMaximum Leverage RatioJune 30, 20174.75 to 1.00September 30, 20173.00 to 1.00December 31, 2017 and the last day of each calendarquarter ending thereafter2.50 to 1.00 10.3 Fixed Charge Coverage. As of each of the measurement dates set forth in the chart below, for the period of twelve (12) consecutivecalendar months then-ended, the Borrowers and their respective consolidated Subsidiaries shall maintain a ratio (the “Fixed Charge Coverage 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, minus all CapitalExpenditures of the Borrowers made during such period which are not financed with Funded Debt, minus that portion of the aggregate cash payments madeby the applicable Borrower(s) in respect of the Subject Agreements and Applicable Agreements during such period that was not deducted as an expense inarriving at Net Income for such period, minus, to the extent not deducted as an expense or loss in arriving at EBITDA for such period, cash paid following thedate of the Seventh Amendment to this Agreement in respect of capital calls related to any of Borrowers’ joint venture or minority interest Investmentspermitted under Section 9.3(g); to (b) the sum for such period of (i) Interest Charges paid in cash, plus (ii) (A) regularly scheduled payments made (and,without duplication, payments required to be made) in respect of principal of Funded Debt (including the Term Loan and the CapEx Loans, but excluding (I)the Revolving Loans and (II) the payoff of the HHE Seller Note on the date of the Eleventh Amendment) and (B) a payment of $250,000 assumed to havebeen made with respect to the Term Loan on March 31, 2015 (notwithstanding that no such payment is required to be made on such date), plus (iii) all cashdividends and distributions paid or declared in respect of Capital Securities of the Borrowers, of not less than the amount set forth opposite such measurementdate in the chart below: 60 Measurement DateMinimum Fixed Charge Coverage RatioJune 30, 20171.05 to 1.00September 30, 20171.25 to 1.00December 31, 2017 and the last day of each calendarquarter ending thereafter1.25 to 1.00 10.4 Capital Expenditures. The Borrowers shall not incur Capital Expenditures in an amount greater than (a) $4,500,000 in the aggregate in thefiscal year ending December 31, 2017, or (b) $5,500,000 in the aggregate in the fiscal year ending December 31, 2018 or in any fiscal year thereafter. 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 otherwiseprovided herein, is not paid when due. 11.2 Misrepresentation. Any written warranty, representation, certificate or statement of any Obligor in this Agreement, the other LoanDocuments 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 nowor hereafter furnished to the Bank by or on behalf of any Obligor shall prove to be false, inaccurate or misleading in any material respect. 11.3 Nonperformance. Any failure to perform or default in the performance of any covenant, condition or agreement contained in thisAgreement and, if capable of being cured, such failure to perform or default in performance continues for a period of twenty days (20) days after theBorrowing Agent receives notice or knowledge from any source of such failure to perform or default in performance, or in the other Loan Documents and, ifcapable of being cured, such failure to perform or default in performance continues for a period of twenty (20) days after the Borrowing Agent receives noticeor knowledge from any source of such failure to perform or default in performance; provided that, in either such case, if Borrowers have promptly commencedappropriate actions to cure such default during such twenty (20) day period and have diligently pursued such actions but are not able to complete such curewithin 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 byany 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 Subordinated Debt Default. (i) There occurs a Subordinated Debt Default, (ii) the Selling Shareholder Subordination Agreement isterminated or ceases, for any reason, to be in full and effect, or (iii) the Selling Shareholder attempts to limit or terminate or revoke his obligations under theSelling Shareholder Subordination Agreement. 11.5 Default under Other Debt. Any default by any Obligor in the payment of any Debt for any other obligation with an outstanding principalbalance of $50,000 or more beyond any period of grace provided with respect thereto or in the performance of any other term, condition or covenantcontained in any agreement (including any capital or operating lease or any agreement in connection with the deferred purchase price of property) underwhich any such obligation is created, the effect of which default is to 61 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 maturityor terminate such other agreement. 11.6 Default under Applicable Agreement. There occurs a material breach by any Borrower under any Applicable Agreement, the result ofwhich breach is the suspension of the other parties’ performance thereunder, the delivery of a notice of acceleration, or the termination of such ApplicableAgreement. 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 Obligorapplies 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 generalassignment for the benefit of creditors; or, in the absence of such application, consent or acquiescence, a trustee, receiver or other custodian is appointed forany Obligor or for a substantial part of the property of any thereof and is not discharged within sixty (60) days; or any bankruptcy, reorganization, debtarrangement, or other case or proceeding under any bankruptcy or insolvency law, or any dissolution or liquidation proceeding, is commenced in respect ofany 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 undismissedfor 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 $50,000against 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 Obligorwhich requires the divestiture of assets representing a substantial part, or the divestiture of the stock of a Subsidiary of any Obligor whose assets represent asubstantial part, of the consolidated assets of the such Obligor and its Subsidiaries (determined in accordance with GAAP) or which requires the divestiture ofassets, or stock of a Subsidiary, which shall have contributed a substantial part of the Net Income of any Obligor and its Subsidiaries (determined inaccordance 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 morethan 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 reducedduring 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 footnotesor a balance sheet prepared in accordance with generally accepted accounting principles, consistently applied and could reasonably be expected to becomeactual liabilities of one or more of the Borrowers, excluding, however, Contingent Liabilities arising from pending litigation, arbitration proceedings orgovernmental investigations or proceedings that have not resulted in a final judgment, decree, levy, attachment, garnishment or other process that wouldconstitute an Event of Default under Section 11.8, (c) operations of any Borrower are suspended or 62 terminated for twenty (20) days or more at any facility of any Borrower generating more than twenty percent (20%) of such Borrower’s consolidated revenuesfor the preceding fiscal year; or (d) any customer or group of customers representing more than twenty (20%) of any Borrower’s consolidated revenues for thepreceding fiscal year terminate or suspend purchases of Inventory from such Borrower. 11.12 Material Adverse Effect. Any event shall occur that the Bank determines (which determination shall be conclusive) could reasonably beexpected to have a Material Adverse Effect. 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) ofERISA. 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 LoanDocuments, in any written agreement or instrument (other than this Agreement or the Loan Documents) relating to any of the Obligations or any securitytherefor, 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 itsoption upon the occurrence and during the continuance of an Event of Default, declare its commitments to the Borrowers to be terminated and all Obligationsto 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 tothe Borrowers shall immediately terminate and all Obligations shall be automatically due and payable, all without demand, notice or further action of anykind required on the part of the Bank. Each Borrower hereby waives any and all presentment, demand, notice of dishonor, protest, and all other notices anddemands in connection with the enforcement of Bank’s rights under the Loan Documents, and hereby consents to, and waives notice of release, with orwithout consideration, of any of the Borrowers or of any of the other Obligors or of any Collateral, notwithstanding anything contained herein or in the LoanDocuments 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 allof 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 samewherever 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 tostore 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 suchBorrower’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 reasonablyconvenient to the Bank and such Borrower. 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 maydeem 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 apublic sale of all or any portion of the Collateral because of certain legal and/or practical restrictions and provisions which may be applicable to theCollateral and, therefore, may be compelled to resort to one or more private sales to a restricted group of offerees and purchasers. Each Borrower consents toany 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 noobligation to clean-up or otherwise prepare the Collateral for sale. The Bank may apply the net proceeds, after deducting all costs, expenses, attorneys’ andparalegals’ fees incurred or paid at any time in the collection, protection and sale of the Collateral and the Obligations, to 63 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 forany amount remaining unpaid after such application, with interest at the Default Rate. Any notification of intended disposition of the Collateral required bylaw 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. EachBorrower hereby confirms, approves and ratifies all acts and deeds of the Bank relating to the foregoing, and each part thereof, and expressly waives any andall 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 orcollecting any portion of the Collateral. Each Borrower consents to releases of the Collateral at any time (including prior to default) and to sales of theCollateral in groups, parcels or portions, or as an entirety, as the Bank shall deem appropriate. Each Borrower expressly absolves the Bank from any loss ordecline in market value of any Collateral by reason of delay in the enforcement or assertion or nonenforcement of any rights or remedies under thisAgreement. 12.3 Standards for Exercising Remedies. To the extent that applicable law imposes duties on the Bank to exercise remedies in a commerciallyreasonable manner, each Borrower acknowledges and agrees that it is not commercially unreasonable for the Bank (a) to fail to incur expenses reasonablydeemed significant by the Bank to prepare Collateral for disposition or otherwise to complete raw material or work-in-process into finished goods or otherfinished 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 otherlaw, 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 exercisecollection remedies against Account Debtors or other Persons obligated on Collateral or to remove liens or encumbrances on or any adverse claims againstCollateral, (d) to exercise collection remedies against Account Debtors and other Persons obligated on Collateral directly or through the use of collectionagencies and other collection specialists, (e) to advertise dispositions of Collateral through publications or media of general circulation, whether or not theCollateral 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 ofinterest 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 ornot 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 inthe 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 thanretail markets, (j) to disclaim disposition warranties, including any warranties of title, (k) to purchase insurance or credit enhancements to insure the Bankagainst 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 theBank in the collection or disposition of any of the Collateral. Each Borrower acknowledges that the purpose of this Section is to provide non-exhaustiveindications of what actions or omissions by the Bank would not be commercially unreasonable in the Bank’s exercise of remedies against the Collateral andthat 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 imposeany 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. 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 underany 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 betweenany Obligor and the Bank, and may, without demand or notice of any kind, appropriate and apply toward the payment of such of the Obligations, whethermatured 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, 64 any indebtedness of the Bank to any Obligor, however created or arising, including balances, credits, deposits, accounts or moneys of such Obligor in thepossession, 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 thatwould otherwise restrict or limit the Bank in the exercise of its right, which is hereby acknowledged, to appropriate at any time hereafter any suchindebtedness 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 directlynotify 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 makepayment to the Bank of any amounts due or to become due with respect thereto, and thereafter, collect any such amounts due on the Collateraldirectly 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 withrespect to any of the Collateral, or surrender, release or exchange all or any part thereof, or compromise, extend or renew for any period (whether ornot 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 theObligations, 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 theObligations, 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 withoutdisclosing, 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 theBank 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 tomake such further transfer, and shall not be liable for transferring the same; (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 anyother 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 rightsand remedies at law, in equity or by statute, nor release, discharge, nor be construed to release or discharge, any Borrower, any guarantor or otherPerson liable to the Bank for the Obligations; 65 (i) at any time, and from time to time, accept additions to, releases, reductions, exchanges or substitution of the Collateral, without inany way altering, impairing, diminishing or affecting the provisions of this Agreement, the Loan Documents, or any of the other Obligations, or theBank’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 electto 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, toacquire such Collateral for their own account, for investment and not with a view to the distribution or resale thereof. Each Borrower acknowledgesthat 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 obtainedat a public sale and, notwithstanding the foregoing, agrees that such private sale shall be deemed to have been made in a commercially reasonablemanner 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 suchsecurities to register such securities for public sale under the Securities Act of 1933. To the extent not specified by applicable law, the parties agreethat 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 Interestsinto 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 thisSection 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 grossnegligence 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 Persondesignated 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 andstead, with full power of substitution, to (i) take such actions as are permitted in this Agreement, (ii) execute such financing statements and other documentsand 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 ofpayment, and proceeds of the Collateral, executing change of address forms with the postmaster of the United States Post Office serving the address of suchBorrower, changing the address of such Borrower to that of the Bank, opening all envelopes addressed to such Borrower and applying any paymentscontained therein to the Obligations; provided that all such powers (other than the powers to (1) endorse Borrowers’ names to checks, drafts, instruments andother 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)) tothe Obligations, which powers the Bank may exercise at any time) shall be exercisable by the Bank only after either (x) a request for the applicableBorrower(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 thecontinuance of an Event of Default. Each Borrower hereby acknowledges that the constitution and appointment of such proxy and attorney-in-fact arecoupled 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 ofany provision of this Agreement. 66 12.7 No Marshaling. The Bank shall not be required to marshal any present or future collateral security (including this Agreement and theCollateral) 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 anyparticular 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 whichmight 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 theObligations 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 ofpayment, proceeds of Collateral or any other source, apply the whole or any part thereof against the Obligations secured hereby. After the occurrence andduring the continuance of an Event of Default, the Bank shall further have the exclusive right to determine how, when and what application of such paymentsand such credits shall be made on the Obligations, and such determination shall be conclusive upon each Borrower. Any proceeds of any disposition by theBank 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 exercisingany 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 partialexercise 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. Thereshall 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 cumulativeand 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 ordischarge any of its Obligations or liabilities under this Agreement or any other agreements with the Bank, no remedy of law will provide adequate relief tothe Bank, and further agrees that the Bank shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of provingactual 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 anacceleration 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 theLetter of Credit Obligations then outstanding. Amounts held in such cash collateral account shall be applied by the Bank to the payment of drafts drawnunder 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 beapplied to repay the Obligations, in such order of application as the Bank may, in its sole discretion, from time to time elect. After Final Payment has beenmade and the Revolving Loan Commitment and Letter of Credit Commitment have been terminated, the balance, if any, in such cash collateral account shallbe returned to the Borrowers or such other Person as may be lawfully entitled thereto. 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 theBank 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 exerciseany 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 ofthis 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 rightsunder this Section 12.11, all rights of IntriCon to exercise the voting and other consensual rights which it 67 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 shallthen 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 itis 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 orinterest 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 isexercising 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 receiveand retain pursuant to paragraph (a) of this Section 12.12 shall cease and all such rights shall thereupon be vested in Bank which shall thenhave 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 thisclause shall be received in trust for the benefit of Bank, shall be segregated from other property or funds of IntriCon, and shall be forthwithpaid over to Bank as additional Collateral in the exact form received, to be held by Bank as additional Collateral and as further collateralsecurity 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’srights 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 respectto 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, orthe compromise of the liability of any Borrower or any other Obligor; or (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 theObligations 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 theBank in accordance with their respective provisions and no conditions exist as to their legal effectiveness; (ii) constitute the entire agreement between theparties with respect to the subject matter hereof and thereof; and (iii) are the final expression of the intentions of 68 each Borrower and the Bank. No promises, either expressed or implied, exist between any Borrower and the Bank, unless contained herein or therein. ThisAgreement, 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 anymatter, directly or indirectly related to the terms of this Agreement and the other Loan Documents. This Agreement and the other Loan Documents are theresult of negotiations among the Bank, the Borrowers and the other parties thereto, and have been reviewed (or have had the opportunity to be reviewed) bycounsel to all such parties, and are the products of all parties. Accordingly, this Agreement and the other Loan Documents shall not be construed more strictlyagainst 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, norshall 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 inany event be effective unless the same shall be in writing and acknowledged by the Bank, and then any such amendment, modification, waiver or consentshall 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 PRESENTAND FUTURE DEFENSE, CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH THE SUCH BORROWER MAY NOW HAVE OR HEREAFTERMAY HAVE TO ANY ACTION BY THE BANK IN ENFORCING THIS AGREEMENT. PROVIDED THE BANK ACTS IN GOOD FAITH, EACH BORROWERRATIFIES AND CONFIRMS WHATEVER THE BANK MAY DO PURSUANT TO THE TERMS OF THIS AGREEMENT. THIS PROVISION IS A MATERIALINDUCEMENT 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 INCONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THECOURTS OF THE STATE OF MINNESOTA, OR IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA; PROVIDED THATNOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE BANK FROM BRINGING SUIT OR TAKING OTHER LEGALACTION IN ANY OTHER JURISDICTION. EACH BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THECOURTS OF THE STATE OF MINNESOTA, AND THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA FOR THE PURPOSEOF ANY SUCH LITIGATION AS SET FORTH ABOVE. EACH BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BYREGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID AND RETURN RECEIPT REQUESTED, OR BY PERSONAL SERVICE WITHIN OR WITHOUTTHE STATE OF MINNESOTA. EACH BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BYLAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANYSUCH 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 TOCONSULT WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE IRREVOCABLY, ANY RIGHT 69 TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANYOTHER LOAN DOCUMENT, ANY OF THE OTHER OBLIGATIONS, THE COLLATERAL, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT ORAGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROMANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, OR ANY COURSE OF CONDUCT OR COURSE OFDEALING IN WHICH THE BANK AND EACH BORROWER ARE ADVERSE PARTIES, AND EACH AGREES THAT ANY SUCH ACTION ORPROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANKGRANTING 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 anypart 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 suchCollateral; provided, however, that so long as no Event of Default has occurred and is continuing, the Bank shall not make any such assignment other than toan Affiliate of the Bank without the prior written of the Borrowers, such consent not to be unreasonably withheld, conditioned or delayed. In addition, theBank may at any time sell one or more participations in the Loans and/or other Obligations. No Borrower may sell or assign this Agreement, or any otheragreement with the Bank or any portion thereof, either voluntarily or by operation of law, without the prior written consent of the Bank. This Agreement shallbe binding upon the Bank and each Borrower and their respective legal representatives and successors. All references herein to the Borrowers or Borrowershall 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 theother in writing the aggregate unpaid principal amount of the Loans and/or other Obligations 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 theconfidentiality of its own confidential information) to maintain as confidential all information provided to it by any Borrower, including all informationdesignated 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 and/or Letters of Credit; (b) to any assignee or participant or potential assignee or participant that has agreed tocomply with the covenant contained in this Section 13.9 (and any such assignee or participant or potential assignee or participant may disclose suchinformation to Persons employed or engaged by them as described in clause (a) above); (c) as required or requested by any federal or state regulatoryauthority 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 inconnection with any litigation to which the Bank is a party; (f) to any nationally recognized rating agency that requires access to information about theBank’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 toany 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 orcontains any blanks when executed by the 70 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, andto 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 becontracts made under and governed by the internal laws of the State of Minnesota (but giving effect to federal laws applicable to national banks) applicableto 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 underapplicable law, but if any provision of this Agreement shall be prohibited by, unenforceable or invalid under any jurisdiction, such provision shall as to suchjurisdiction, be severable and be ineffective to the extent of such prohibition or invalidity, without invalidating the remaining provisions of this Agreementor 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 thisAgreement and the Loan Documents and the issuance of any Note, and shall be deemed to be continuing representations and warranties until such time as theBorrowers have fulfilled all of their Obligations to the Bank, and the Bank has been indefeasibly paid in full in cash. The Bank, in extending financialaccommodations 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’scommitment hereunder, and (ii) any replacement note executed by the Borrowers and accepted by the Bank in its sole and absolute discretion in substitutionfor 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 performanceand 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 onseparate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the sameAgreement. 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. 13.17 Notices. Except as otherwise provided herein, the Borrower waives all notices and demands in connection with the enforcement of theBank’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 71 With a copy to:Blank Rome LLP One Logan Square 130 North 18th Street Philadelphia, PA 19103 Attention: Francis E. Dehel To the Bank:CIBC Bank USA 50 South 6th Street, Suite 1400 Minneapolis, MN 55402 Attention: Leanne Manning With copy to:Briggs and Morgan, P.A. 2200 IDS Center80 South Eighth StreetMinneapolis, MN 55402-2157Attention: Michael Gordon 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 termsof 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 anypost 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 theBorrowers (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 and issuing the Letters of Credit, each Borrower and allother 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 orunknown, 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 thisLoan Agreement, including any claim arising from any reports (environmental reports, surveys, appraisals, etc.) prepared by any parties hired orrecommended by the Bank. Each Borrower and all other Obligors confirm to Bank that they have reviewed the effect of this release with competent legalcounsel of their choice, or have been afforded the opportunity to do so, prior to execution of this Agreement and the Loan Documents and do eachacknowledge and agree that the Bank is relying upon this release in extending the Loans and issuing the Letters of Credit to the Borrowers. 13.19 Costs, Fees and Expenses. Subject to any express limitations otherwise set forth in this Agreement or any other Loan Document, theBorrowers 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 Bankbecomes obligated in connection with the negotiation, preparation, consummation, collection of the Obligations or enforcement of this Agreement, the otherLoan 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’ feesand 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 ofthe 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 inconnection with this Agreement or the other Loan 72 Documents, whether or not the transaction contemplated hereby shall be consummated. In furtherance of the foregoing, the Borrowers jointly and severallyagree 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 ofthis 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 andall 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 ofcosts, 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 orprior 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) employscounsel 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, orproceeding (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 otherLoan 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 thatmay 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 otherwisedispose 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, thecosts 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 bythe 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 harmlesseach Indemnified Party from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses anddistributions of any kind or nature (including the disbursements and the reasonable fees of counsel for each Indemnified Party thereto, which shall alsoinclude, without limitation, reasonable attorneys’ fees and time charges of attorneys who may be employees of any Indemnified Party), which may beimposed on, incurred by, or asserted against, any Indemnified Party (whether direct, indirect or consequential and whether based on any federal, state or locallaws or regulations, including securities laws, Environmental Laws, commercial laws and regulations, under common law or in equity, or based on contract orotherwise) 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 attendantthereto, the preparation, execution and delivery of this Agreement and the Loan Documents, including the making or issuance and management of the Loansand/or Letters of Credit, the use or intended use of the proceeds of the Loans and/or Letters of Credit, the enforcement of the Bank’s rights and remedies underthis Agreement, the Loan Documents, any Note, any other instruments and documents delivered hereunder, or under any other agreement between theBorrowers (or any of them) and the Bank; provided, however, that no Borrower shall have any obligations hereunder to any Indemnified Party with respect tomatters determined by a court of competent jurisdiction by final and nonappealable judgment to have been caused by or resulting from the willfulmisconduct or gross negligence of such Indemnified Party. To the extent that the undertaking to indemnify set forth in the preceding sentence may beunenforceable 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 failingprompt payment, together with interest thereon at the Default Rate from the date incurred by each Indemnified Party until paid by the Borrowers, shall beadded to the Obligations of the Borrowers and be secured by the Collateral. The provisions of this Section shall survive the satisfaction and payment of theother Obligations and the termination of this Agreement. 73 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 anyproperty should for any reason subsequently be declared to be void or voidable under any state or federal law relating to creditors’ rights, includingprovisions of the Bankruptcy Code relating to fraudulent conveyances, preferences, or other voidable or recoverable payments of money or transfers ofproperty (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 doso 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 orrestore, and as to all reasonable costs, expenses, and attorneys fees of the Bank, the Obligations shall automatically shall be revived, reinstated, and restoredand 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 USAPatriot 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 Borrowerand such other information that will allow the Bank to identify the Borrowers in accordance with the Act. 13.23 Release of Collateral, etc. (a) Upon (i) Final Payment and (ii) termination of the Revolving Loan Commitment and the Letter of Credit Commitment, theCollateral shall be released from the Liens created hereby, and this Agreement and all obligations (other than those expressly stated to survive suchtermination) of Bank and Borrowers hereunder shall terminate, all without delivery of any instrument or performance of any act by any party. At therequest and sole expense of Borrowers following any such termination, Bank shall deliver to Borrowers any Collateral held by Bank hereunder, andexecute and deliver to Borrowers such documents as Borrowers shall reasonably request to evidence such termination. (b) If any of the Collateral shall be sold, transferred or otherwise disposed of by any Borrower in a transaction permitted hereunder,then Bank, at the request and sole expense of Borrowers, shall execute and deliver to Borrowers all releases or other documents reasonably necessaryor desirable for the release of the Liens created hereby on such Collateral. (c) The foregoing provisions of this Section 13.23 are expressly subject to the terms of Section 13.21 above. [Remainder of page intentionally left blank; signature pages follow] 74 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: 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, INC. (formerly known as Resistance Technology, Inc.), a Minnesota corporation By: 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  SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT  SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT  SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT  BORROWER: I-MANAGEMENT, LLC, a Minnesota limited liability company By: Name: Title: 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: HEARING HELP EXPRESS, INC.,an Illinois corporation By: Name: Title: 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:CIBC BANK USA (Successor by merger to THE PRIVATEBANK AND TRUST COMPANY), an Illinois banking corporation By: Name: Seth Hove Title: Officer Address for notices: CIBC Bank USA 50 South 6th Street, Suite 1400 Minneapolis, MN 55402 Attn: Leanne Manning Fax: (612) 605-6193  SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT  EXHIBIT BTO ELEVENTH AMENDMENT Restated Schedules to Loan and Security Agreement (see attached)  EXHIBIT CTO ELEVENTH AMENDMENT IRREVOCABLE ASSIGNMENT IN BLANK FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to ______________________________________________the following capital stock of _____________________________, a __________________ corporation: No. of Capital Stock Certificate No. and irrevocably appoints __________________________________ its agent and attorney-in-fact to transfer all or any part of such capital stock and to takeall necessary and appropriate action to effect any such transfer. The agent and attorney-in-fact may substitute and appoint one or more persons to act for him.The effectiveness of a transfer pursuant to this assignment shall be subject to any and all transfer restrictions referenced on the face of the certificatesevidencing such interest or in the articles of organization or operating agreement of the subject corporation, to the extent they may from time to time exist. INTRICON, INC. By: Name: Scott Longval Title: Chief Financial Officer  EXHIBIT D TO ELEVENTH AMENDMENT List of Closing Documents (see attached)  Exhibit 10.14.5 AMENDED AND RESTATED TERM NOTE $6,500,000Minneapolis, Minnesota December 15, 2017 FOR VALUE RECEIVED, the undersigned, INTRICON CORPORATION, a Pennsylvania corporation, INTRICON, INC., a Minnesota corporation, I-MANAGEMENT, LLC, a Minnesota limited liability company, and HEARING HELP EXPRESS, INC., an Illinois corporation (each, a “Borrower”;collectively, the “Borrowers”), hereby JOINTLY AND SEVERALLY promise to pay to the order of CIBC BANK USA (formerly known as The PrivateBankand Trust Company), the principal sum of SIX MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($6,500,000), payable in periodicinstallments on the dates and in the amounts set forth in the Loan Agreement (as hereinafter defined), with one final balloon payment on the Term LoanMaturity Date. The actual amount due and owing from time to time hereunder shall be evidenced by Bank’s records of receipts and disbursements withrespect to the Term Loan, which shall, absent manifest error, be conclusive evidence of such amount. Each Borrower further promises to pay interest on the aggregate unpaid principal amount hereof at the rates provided in the Loan Agreement fromthe date hereof until payment in full hereof. Accrued interest shall be payable on the dates specified in the Loan Agreement. All payments of principal and interest under this Amended and Restated Term Note (the “Note”) shall be made in lawful money of the United Statesof America in immediately available funds at the Bank’s office at 50 South 6th Street, Suite 1400, Minneapolis, MN 55402, or at such other place as may bedesignated by the Bank to the Borrowers in writing. This Note is the Term Note referred to in, and evidences indebtedness incurred under, a Loan and Security Agreement dated as of August 13, 2009(as previously amended, as further amended on or about the date hereof and as the same may be hereafter further amended, modified or supplemented fromtime to time, the “Loan Agreement”), among the Borrowers and the Bank, to which Loan Agreement reference is made for a statement of the terms andprovisions thereof, including those under which the Borrowers are permitted and required to make prepayments and repayments of principal of suchindebtedness and under which such indebtedness may be declared to be immediately due and payable. Capitalized terms used here and not otherwise definedherein have the meanings ascribed to them in the Loan Agreement. All parties hereto, whether as makers, endorsers or otherwise, severally waive presentment, demand, protest and notice of dishonor in connectionwith this Note. This Note is made under and governed by the internal laws of the State of Minnesota. This Note amends, restates and replaces, but does not evidence repayment of or constitute a novation with respect to, that certain Third Amendedand Restated Term Note, dated April 15, 2016 made payable jointly and severally by the Borrowers to the order of the Bank in the original principal amountof $6,000,000.00. [REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]  IN WITNESS WHEREOF, the undersigned have caused this Note to be executed as of the date first set forth above. INTRICON CORPORATION, a Pennsylvania corporation By:/s/ Scott Longval Name: Scott Longval Title: Chief Financial Officer INTRICON, INC., a Minnesota corporation By:/s/ Scott Longval Name: Scott Longval Title: Chief Financial Officer I-MANAGEMENT, LLC, a Minnesota limited liability company By:/s/ Scott Longval Name: Title: HEARING HELP EXPRESS, INC., an Illinois corporation By:/s/ Scott Longval Name: Title: [Amended and Restated Term Note]  Exhibit 10.15.1 CAPEX NOTE $2,500,000Minneapolis, MinnesotaDecember 15, 2017 FOR VALUE RECEIVED, the undersigned, INTRICON CORPORATION, a Pennsylvania corporation, INTRICON, INC., a Minnesota corporation, I-MANAGEMENT, LLC, a Minnesota limited liability company, and HEARING HELP EXPRESS, INC., an Illinois corporation (each, a “Borrower”;collectively, the “Borrowers”), hereby JOINTLY AND SEVERALLY promise to pay to the order of CIBC BANK USA (formerly known as The PrivateBankand Trust Company), the principal sum of TWO MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($2,500,000), or if less, the then aggregateunpaid principal amount of the CapEx Loan as may be borrowed by the Borrowers (or any of them) under the Loan Agreement (as hereinafter defined). Theactual amount due and owing from time to time hereunder shall be evidenced by Bank’s records of receipts and disbursements with respect to the CapExLoan, which shall, absent manifest error, be conclusive evidence of such amount. Each Borrower further promises to pay interest on the aggregate unpaid principal amount hereof at the rates provided in the Loan Agreement fromthe date hereof until payment in full hereof. Accrued interest shall be payable on the dates specified in the Loan Agreement. All payments of principal and interest under this CapEx Note (the “Note”) shall be made in lawful money of the United States of America inimmediately available funds at the Bank’s office at 50 South 6th Street, Suite 1415, Minneapolis, MN 55402, or at such other place as may be designated bythe Bank to the Borrowers in writing. This Note is the CapEx Note referred to in, and evidences indebtedness incurred under, a Loan and Security Agreement dated as of August 13, 2009(as previously amended, as further amended on or about the date hereof and as the same may be hereafter further amended, modified or supplemented fromtime to time, the “Loan Agreement”), among the Borrowers and the Bank, to which Loan Agreement reference is made for a statement of the terms andprovisions thereof, including those under which the Borrowers are permitted and required to make prepayments and repayments of principal of suchindebtedness and under which such indebtedness may be declared to be immediately due and payable. Capitalized terms used here and not otherwise definedherein have the meanings ascribed to them in the Loan Agreement. All parties hereto, whether as makers, endorsers or otherwise, severally waive presentment, demand, protest and notice of dishonor in connectionwith this Note. This Note is made under and governed by the internal laws of the State of Minnesota. [REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]  Exhibit 10.15.1 IN WITNESS WHEREOF, the undersigned have caused this Note to be executed as of the date first set forth above. INTRICON CORPORATION, a Pennsylvania corporation By:/s/ Scott Longval Name: Scott Longval Title: Chief Financial Officer INTRICON, INC., a Minnesota corporation By:/s/ Scott Longval Name: Scott Longval Title: Chief Financial Officer I-MANAGEMENT, LLC, a Minnesota limited liability company By:/s/ Scott Longval Name: Title: HEARING HELP EXPRESS, INC., an Illinois corporation By:/s/ Scott Longval Name: Title: [CapEx Note]  Exhibit 10.22 «Date» «Full_Name»IntriCon Corporation1260 Red Fox RoadArden Hills, MN 55112 Dear «M_1st_Name»: I am pleased to inform you that on «Grant_Date» the Compensation Committee of the Board of Directors of IntriCon Corporation granted youoptions to purchase «Shares» Common Shares of the Company under the Company’s 2015 Equity Incentive Plan (the “Plan”) at an exercise priceof $«Price» per share. Under the Plan, the Company may grant either incentive stock options or non-qualified stock options. The options granted to you are intended tobe incentive stock options. Provided you do not experience a Status Change (as defined in the Plan, generally a termination of employment) prior to each applicable vestingdate and subject to earlier vesting as provided in the Plan, the options will become vested and exercisable as follows: (i) if the 2017 minimum netincome from continuing operations target is achieved and the applicable percentage (up to 100%) of your respective strategic objectives are met,all as set forth on Exhibit A (the “Performance Conditions”); AND (ii) thereafter in three equal annual installments beginning with the first installmentbecoming vested and exercisable on the first anniversary of the date that the Performance Conditions described in clause (i) are satisfied. If and tothe extent that the Performance Conditions described in clause (i) are satisfied, the Company will provide to you an acknowledgement in the formattached as Exhibit B setting forth the number of shares subject to this option that will be subject to the time-based vesting and exercisabilityconditions described in clause (ii) and the applicable dates of exercisability. If and to the extent that the Performance Conditions described inclause (i) are not satisfied, this option will terminate as set forth in the acknowledgement. The exercise price for your options shall be payable in cash, by the “net exercise” method without the payment of cash or as otherwise permittedunder the Plan. Once options become exercisable, they will remain exercisable until they are exercised or until they terminate. Unless earlier terminated pursuantto the terms of the Plan, all options granted hereby shall terminate on «Terminate»1 (the “Scheduled Expiration Date”). While the specific terms ofthe Plan will govern, generally: ●If you experience a Status Change due to your death, Disability or Retirement (as defined in the Plan), all of your options will becomeimmediately exercisable in full and may be exercised at any time prior to the Scheduled Expiration Date; 1 Insert July 25, 2027.  ●If you experience a Status Change due to any other reason, any options that you had that were not exercisable as of the date of yourStatus Change will expire. You may exercise options that were exercisable as of the date of your Status Change at any time prior to theearlier of (a) 90 days after the date of your Status Change and (b) the Scheduled Expiration Date. Subject to the Plan, this option shall become exercisable in full upon the occurrence of a Change in Control (as defined in the Plan), [subject to thesatisfaction of the Performance Conditions.] This option is subject to cancellation in the event that your employment is terminated for Cause (as defined in the Plan) and under othercircumstances described in the Plan. Further terms governing the options granted to you are set forth in the Plan, which is incorporated herein by reference. A copy of the Plan isavailable from the Human Resources Department. If you wish to accept the grant of the options as provided above and in the Plan, please so indicate by signing and returning the enclosed copy ofthis letter, whereupon you and the Company shall be legally bound hereby under Pennsylvania law. Very truly yours, INTRICON CORPORATION By: «From» «Title» «M_2nd_line» Accepted and Agreed: «Full_Name» 1260 Red Fox Road ● Arden Hills, MN 55112 ● Tel: 651-636-9770 ● Fax: 651-357-1097 ● www.IntriCon.com  Exhibit APerformance Conditions Financial Component Strategic Component Strategic ObjectivePercentage of Options 100% 1260 Red Fox Road ● Arden Hills, MN 55112 ● Tel: 651-636-9770 ● Fax: 651-357-1097 ● www.IntriCon.com  Exhibit B Form of Acknowledgement [insert A or B] [A] [The Compensation Committee of the Board of Directors of IntriCon Corporation has determined that with respect to the stock optiongranted to you as of «Grant_Date» (the “Option Award”), the Performance Conditions applicable to such Option Award have been satisfied withrespect to [ ] shares of common stock subject to the Option Award. [Add if applicable: The balance of the Option Award has terminated]. Provided you do not experience a Status Change (as defined in the Plan) prior to each applicable vesting date and subject to earlier vesting asprovided in the Plan, these options will become exercisable as follows: Date First ExercisableNumber of Shares«M_1st_Exercise»«M__shares»«M_2nd_Ex»«M__shares1»«M_3rd_Ex»«M__shares2»] [B] [The Compensation Committee of the Board of Directors of IntriCon Corporation has determined that with respect to the stock optiongranted to you as of «Grant_Date» (the “Option Award”), none of the Performance Conditions applicable to such Option Award have been satisfiedand such Option Award has fully terminated]. Very truly yours, INTRICON CORPORATION By: «From» «Title» «M_2nd_line» 1260 Red Fox Road ● Arden Hills, MN 55112 ● Tel: 651-636-9770 ● Fax: 651-357-1097 ● www.IntriCon.com Exhibit 10.23 «Date» «Full_Name» IntriCon Corporation1260 Red Fox RoadArden Hills, MN 55112 Dear «M_1st_Name»: I am pleased to inform you that on «Grant_Date» the Compensation Committee of the Board of Directors of IntriCon Corporation granted youRestricted Stock Units for «Shares» of Common Stock of the Company (“RSUs”) under the Company’s 2015 Equity Incentive Plan (the “Plan”). The RSUs will vest on the following dates (each a “Vesting Date”): Vesting Date Number of Shares«M_1st_Exercise» «M__shares» «M_2nd_Ex» «M__shares1»«M_3rd_Ex» «M__shares2» In addition, while the specific terms of the Plan will govern, generally: ●If your employment is terminated due to your death or Disability (as defined in the Plan), all of your RSUs will immediately vest in full; ●If your employment is terminated due to your Retirement (as defined in the Plan), all of your RSUs will immediately vest in full; ●If your employment is terminated due to any other reason, any RSUs that you had that were not vested as of the date of the terminationof your employment will expire. Subject to the Plan, all of your RSUs will immediately vest in full upon the occurrence of a Change in Control (as defined in the Plan). Within ten (10) business days following each Vesting Date (including any accelerated vesting date provided in the Plan), the Company shall issueto you, either by book-entry registration or issuance of a stock certificate or certificates, a number of shares of Common Stock equal to thenumber of RSUs granted hereunder that have vested as of such date. Any shares of Common Stock issued to you hereunder shall be fully paidand non-assessable. At the time of vesting, the Company shall withhold from any shares of Common Stock deliverable in payment of the RSUs a number of shares ofCommon Stock having a value equal to the minimum amount of income and employment taxes required to be withheld under applicable laws andregulations, and pay the amount of such withholding taxes in cash to the appropriate taxing authorities. Any fractional shares resulting from thepayment of the withholding amounts shall be liquidated and paid in  «Full_Name» Page 2 cash to the U.S. Treasury as additional federal income tax withholding for you. You shall be responsible for any withholding taxes not satisfied bymeans of such mandatory withholding and for all taxes in excess of such withholding taxes that may be due upon vesting of the RSUs.Notwithstanding the foregoing, prior to the date that such withholding taxes are due to the appropriate taxing authorities as a result of the vesting ofthe RSUs, you may pay to the Company in cash or cash equivalents the amount of such withholding taxes, in which case such withholding taxeswill not be withheld from the Shares deliverable in payment of the RSUs. You shall not have any rights as a shareholder, including voting or dividend rights, with respect to shares of Common Stock covered by the RSUsuntil you become the holder of record with respect to such Shares in accordance with this award and the Plan. No adjustment shall be made fordividends or other rights for which the record date is prior to such date, except as provided in the Plan. This award is subject to cancellation in the event that your employment is terminated for Cause (as defined in the Plan) and under othercircumstances described in the Plan. Further terms governing the RSUs granted to you are set forth in the Plan, which is incorporated herein by reference. A copy of the Plan isavailable from the Human Resources Department. If you wish to accept the grant of the RSUs as provided above and in the Plan, please so indicate by signing and returning the enclosed copy ofthis letter, whereupon you and the Company shall be legally bound hereby under Pennsylvania law. Very truly yours, INTRICON CORPORATION By: «From» «Title» «M_2nd_line» Accepted and Agreed: «Full_Name» 1260 Red Fox Road ● Arden Hills, MN 55112 ● Tel: 651-636-9770 ● Fax: 651-357-1097 ● www.IntriCon.com Exhibit 10.24 «Date» «Full_Name» IntriCon Corporation 1260 Red Fox Road Arden Hills, MN 55112 Dear «M_1st_Name»: I am pleased to inform you that on «Grant_Date», you were awarded an automatic grant of Restricted Stock Units for «Shares» of Common Stockof the Company (“RSUs”) under the Company’s 2015 Equity Incentive Plan (the “Plan”). The RSUs will vest on the following dates (each a “Vesting Date”): Vesting Date Number of Shares«M_1st_Exercise» «M__shares»«M_2nd_Ex» «M__shares1»«M_3rd_Ex» «M__shares2» In addition, while the specific terms of the Plan will govern, generally: ●If your directorship is terminated due to your death, Disability or Retirement (as defined in the Plan), all of your RSUs will immediately vestin full; ●If your directorship is terminated due to any other reason, any RSUs that you had that were not vested as of the date of the termination ofyour directorship will expire. Subject to the Plan, all of your RSUs will immediately vest in full upon the occurrence of a Change in Control (as defined in the Plan). Within ten (10) business days following each Vesting Date (including any accelerated vesting date provided in the Plan), the Company shall issueto you, either by book-entry registration or issuance of a stock certificate or certificates, a number of shares of Common Stock equal to thenumber of RSUs granted hereunder that have vested as of such date. Any shares of Common Stock issued to you hereunder shall be fully paidand non-assessable. You shall not have any rights as a shareholder, including voting or dividend rights, with respect to shares of Common Stock covered by the RSUsuntil you become the holder of record with respect to such Shares in accordance with this award and the Plan. No adjustment shall be made fordividends or other rights for which the record date is prior to such date, except as provided in the Plan. This award is subject to cancellation in the event that your directorship is terminated for Cause (as defined in the Plan) and under othercircumstances described in the Plan.  «Full_Name» Page 2 Further terms governing the RSUs granted to you are set forth in the Plan, which is incorporated herein by reference. A copy of the Plan isavailable from the Human Resources Department. If you wish to accept the grant of the RSUs as provided above and in the Plan, please so indicate by signing and returning the enclosed copy ofthis letter, whereupon you and the Company shall be legally bound hereby under Pennsylvania law. Very truly yours, INTRICON CORPORATION By: «From» «Title» «M_2nd_line» Accepted and Agreed: «Full_Name» 1260 Red Fox Road ● Arden Hills, MN 55112 ● Tel: 651-636-9770 ● Fax: 651-357-1097 ● www.IntriCon.com  EXHIBIT 21.1 Significant Subsidiaries ofIntriCon Corporation Subsidiary Place of Incorporation IntriCon GmbH Vertrieb von Elecktronikteilen Germany IntriCon UK Limited United Kingdom IntriCon, Inc. Minnesota IntriCon PTE LTD. Singapore PT IntriCon Indonesia Indonesia Hearing Help Express, Inc. Illinois  EXHIBIT 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the incorporation by reference in the Registration Statements on Form S-3 (Registration No 333-200182) and Forms S-8 (Registration Nos.333-16377, 333-66433, 333-59694, 333-129104, 333-134256, 333-145577, 333-168586, 333-173837, 333-181160, 333-204123 and 333-211326) ofIntriCon Corporation and Subsidiaries of our report dated March 15, 2017, relating to the consolidated financial statements, which appears on page 36 of thisannual report on Form 10-K for the year ended December 31, 2017. /s/ BAKER TILLY VIRCHOW KRAUSE, LLP Minneapolis, MinnesotaMarch 13, 2018  EXHIBIT 31.1 CERTIFICATION I, Mark S. Gorder, certify that: 1.I have reviewed this annual report on Form 10-K of IntriCon Corporation; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared; b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles; c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting. Date: March 13, 2018 /s/ Mark S. Gorder Chief Executive Officer (principal executive officer)  EXHIBIT 31.2 CERTIFICATION I, Scott Longval, certify that: 1.I have reviewed this annual report on Form 10-K of IntriCon Corporation; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared; b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles; c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting. Date: March 13, 2018 /s/ Scott Longval Chief Financial Officer(principal financial officer)  EXHIBIT 32.1 CERTIFICATION PURSUANT TO18 U.S.C.SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Mark S. Gorder, Chief Executive Officer (principal executive officer) of IntriCon Corporation (the “Company”), certify, pursuant to Section 906 of theSarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that: 1)the annual report on Form 10-K of the Company for the year ended December 31, 2017 (the “Report”) fully complies with the requirements ofSection 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany. Date: March 13, 2018 /s/ Mark S. Gorder Mark S. Gorder President and Chief Executive Officer(principal executive officer) The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350 of Chapter 63 of Title 18 ofthe United States Code) and is not being filed as part of the Report or as a separate disclosure document.  EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C.SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Scott Longval, Chief Financial Officer (principal financial officer)of IntriCon Corporation (the “Company”), certify, pursuant to Section 906 of theSarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that: 1)the annual report on Form 10-K of the Company for the year ended December 31, 2017 (the “Report”) fully complies with the requirements ofSection 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany. Date: March 13, 2018 /s/ Scott Longval Scott Longval Chief Financial Officer and Treasurer (principal financial officer) The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350 of Chapter 63 of Title 18 ofthe United States Code) and is not being filed as part of the Report or as a separate disclosure document. 

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