EXHIBIT 10.5

Amendment No. 2 to Equity Plans

Background

WHEREAS, IntriCon Corporation (the “Company”) has adopted an Amended and
Restated Non-Employee Directors Stock Option Plan (the “Directors Plan”), a 2001
Stock Option Plan, as amended (the “2001 Plan”) and a 2006 Equity Incentive
Plan, as amended (the “2006 Plan” and, collectively with the Director Plan and
the 2001 Plan, the “Plans”); and

WHEREAS, upon recommendation of the Compensation Committee which administers the
Plans, the Board of Directors has determined to amend the Plans to permit option
holders under the Plans that die, become disabled or retire to exercise stock
options granted under the Plans for the balance of the term of the stock
options; and

WHERAS, under applicable Internal Revenue Service regulations and applicable
rules and interpretations of the Nasdaq Stock Market, the amendments described
below do not require shareholder approval and are permitted to be adopted by the
Board.

NOW, THEREFORE, intending to be legally bound hereby, the Plans are hereby
amended as follows:

1.                   Amendment to Directors Plan.

1.1All capitalized terms used and not defined in this Section 1 shall have the
meanings given to them in the Directors Plan.

1.2For the avoidance of doubt, all outstanding stock options previously granted
under the Directors Plan have become fully vested and exercisable.

1.3Clauses (e), (f) and (g) of Section 6 of the Directors Plan are amended and
restated in their entirety to read hereinafter as follows:

“(e)                  Termination of Service of a Non-Employee Director as
Director. If a Non-Employee Director’s service as a director of the Company
terminates prior to the expiration of the original term of the Non-Employee
Directors Option (the “Expiration Date”) due to the disability (within the
meaning of section 22(e)(3) of the Code), death or Retirement (as defined in the
Company’s 2006 Equity Incentive Plan, as amended (“2006 Plan”), and including in
the case of a director who meets the age and years of service requirements in
the definition of Retirement in clause 6(e) of the 2006 Plan, the failure to be
re-nominated for election, the failure to be re-elected by the shareholders,
removal by shareholders or the Board (other than a removal for Cause (as defined
in the 2006 Plan)) and resignation) of such Director, then notwithstanding
anything to the contrary in Option Agreement evidencing such Option, such Option
may be exercised by the Non-Employee Director at any time prior to the
Expiration Date of such Option. If a Non-Employee Director ceases to be a
Director for any other reason, then such Option may be exercised by the
Non-Employee Director at any time prior to the earlier of (i) the Expiration
Date of such Option, or (ii) the date three months after the date of such
termination of service as a director, unless (in the case of this clause (ii))
the Committee provided for a different period in its action granting the Option.
In the event of the Non-Employee Director’s disability, such Option may be
exercised by the Non-Employee Directors legal representative. In the event of
the Non-Employee Director’s death, such Option may be exercised by the
Non-Employee Director’s estate, personal representative or beneficiary who
acquired the right to exercise such Option by bequest or inheritance or by
reason of the death of the Non-Employee Director.

 

 

 

(f)                  [intentionally omitted].

(g)                 [intentionally omitted].”

1.4The exercise periods set forth above shall be available for all Options
previously issued under the Directors Plan, regardless of any language to the
contrary contained in the Option Agreement evidencing such Options.

2.                   Amendment to 2001 Plan.

2.1All capitalized terms used and not defined in this Section 2 shall have the
meanings given to them in the 2001 Plan.

2.2For the avoidance of doubt, all outstanding stock options previously granted
under the 2001 Plan have become fully vested and exercisable.

2.3Clauses (f), (g) and (h) of Section 7 of the 2001Plan are amended and
restated in their entirety to read hereinafter as follows:

“(f)                  Retirement. If an Optionee retires in accordance with the
retirement policy of the Company, or with the express consent of the Board,
prior to the original expiration date fixed for his or her Option, such Option
may be exercised, to the extent of the number of shares with respect to which
the Optionee could have exercised it on the date of such Termination of
Employment, or to any greater extent permitted by the Committee, by the Optionee
at any time prior to the original expiration date specified in the Option
Agreement. “Retirement” does not include Termination of Employment for Cause,
even if the Optionee is otherwise eligible to retire.

(g)                  Disability. If an Optionee becomes disabled (within the
meaning of section 22(e)(3) of the Code) prior to the original expiration date
fixed for his or her Option, and the Optionee’s Termination of Employment occurs
as a consequence of such disability, such Option may be exercised, to the extent
of the number of shares with respect to which the Optionee could have exercised
it on the date of such Termination of Employment, or to any greater extent
permitted by the Committee, by the Optionee at any time prior to the original
expiration date specified in the Option Agreement. In the event of the
Optionee’s legal disability, such Option may be exercised by the Optionee’s
legal representative.

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(h)                  Death. If an Optionee’s Termination of Employment occurs as
a result of death, prior to the original expiration date fixed for his or her
Option, or if the Optionee dies following his or her Termination of Employment
under clause (e) but prior to the expiration date fixed for his or her Option
under clause (e), such Option may be exercised, to the extent of the number of
shares with respect to which the Optionee could have exercised it on the date of
his or her death, or to any greater extent permitted by the Committee, by the
Optionee’s estate, personal representative, or beneficiary who acquired the
right to exercise such Option by bequest or inheritance or by reason of the
death of the Optionee. Such post-death exercise may occur at any time prior to
the original expiration date specified in such Option.”

2.4The exercise periods set forth above shall be available for all Options
previously issued under the 2001 Plan, regardless of any language to the
contrary contained in the Option Agreement evidencing such Options.

3.                   Amendment to 2006 Plan.

3.1All capitalized terms used and not defined in this Section 3 shall have the
meanings given to them in the 2006 Plan.

3.2The first two paragraphs of Section 6.1 of the 2006 Plan are amended and
restated in their entirety to read hereinafter as follows:

“6.1                  Termination of Service by Death or Permanent Disability or
Retirement. If a Participant who is an Employee or director ceases to be an
Employee or director, or if there is a termination of the consulting, service or
other relationship in respect of which a non-Employee Participant was granted an
Award under the Plan (such termination of employment or other relationship
referred to as a “Status Change”) in any case by reason of death or Permanent
Disability or Retirement (which, in the case of a director who meets the age and
years of service requirement in the definition of Retirement in clause (e)
below, shall include, without limitation, the failure to be re-nominated for
election, the failure to be re-elected by the shareholders, removal by
shareholders or the Board (other than a removal for Cause) and resignation), the
following rules shall apply, unless otherwise determined by the Committee:

(a)                 All Options and SARs held by the Participant at the time of
such Status Change shall automatically become exercisable in full and shall
continue to be exercisable by the Participant or his or her heirs, executor,
administrator or other legal representative for a period equal to the unexpired
term of the Option or SAR.”

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3.3The exercise periods set forth above shall be available for all Options
previously issued under the 2006 Plan, regardless of any language to the
contrary contained in the Award evidencing such Options.

4.No Other Amendment. Except as set forth above, the Plans shall continue in
full force and effect in accordance with their respective terms.

 

 

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