Exhibit 10.1

CONSULTING AGREEMENT

          THIS CONSULTING AGREEMENT (this “Agreement”) is made and entered into
effective as of this 1st day of May, 2006, by and among Northern Technologies
International Corporation, a Delaware corporation (“NTIC”), and Emeritushnic
Facilities Company, Inc., an Ohio Corporation (“EFC”) owned by Philip M. Lynch,
Juliane I. Lynch, Sarah I. Lynch, and Jennifer S. Lynch.

RECITALS

          A.          NTIC is engaged in the business of owning, developing and
distributing certain technologies and products throughout the world, including,
but not limited to, corrosion-inhibiting technology and products (the
“Business”), and commercially exploits its technology and products through,
among other things, entering into joint ventures throughout the world and
licensing such technology and products to these joint ventures for ultimate
sale.

          B.          Philip M. Lynch (“Lynch”) has retired from serving as
Chief Executive Officer and a Director of NTIC.

          C.          NTIC desires to engage EFC to render certain consulting
services and EFC desires to accept such engagement, all upon the terms and
conditions set forth herein.

          NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, NTIC and EFC, each intending to be legally bound,
agree as follows:

          1.          ENGAGEMENT.  Commencing as of May 1, 2006 and continuing
until this Agreement is terminated in accordance with Section 9 hereof, NTIC
hereby engages EFC to provide consulting services to NTIC, and EFC hereby
accepts such engagement.

          2.          SERVICES OF THIRD PARTIES.  EFC shall not utilize the
services of any person or entity in providing the Services hereunder unless
pre-approved in writing by NTIC.  NTIC hereby approves Lynch as pre-approved to
perform the Services.

          3.          SERVICES.  EFC shall provide the expertise of Lynch, as
EFC and NTIC shall agree, to communicate with NTIC’s joint venture partners as
desired to assist in maintaining ongoing good relations between the parties, to
assist and enhance revenues therefrom, and to work on projects and perform such
other services as designated and approved by NTIC’s Board of Directors and/or
Executive Management (the “Services”).  EFC shall maintain close contact with
NTIC’s Board of Directors and Executive Management and shall regularly report
its activities on behalf of NTIC hereunder to NTIC’s Management.

          4.          COMPENSATION TO EFC. 

                        (a)          In consideration for the Services, during
the term of this Agreement, NTIC shall pay to EFC a monthly fee (“Monthly Fee”)
of Twenty Five Thousand and 00/100 Dollars ($25,000.00), such fee to be payable
on the first day of each month.

                        (b)          NTIC will reimburse EFC up to a maximum of
One Hundred Eighty Thousand and 00/100 Dollars ($180,000.00) per year for the
out-of-pocket expenses reasonably incurred by EFC in the course of conducting
business on behalf of NTIC.  EFC will submit proper documentation, at a
frequency determined by EFC, to NTIC in order to substantiate expenses incurred
by EFC, including without limitation, transportation, hotel and cell-phone
charges, prior to receiving expense reimbursement.  Expenses incurred after
receipt of notice of termination in accordance with Section 10 hereof shall not
be reimbursed unless irrevocably committed prior to such receipt of notice of
termination.  EFC shall not be reimbursed for any expense whatsoever with
respect to its performance under this Agreement except as provided in this
Section 4(b) and Section 5 of this Agreement.

          5.          LOGISTIC SUPPORT TO EFC.  During the term of this
Agreement, NTIC shall provide to EFC at NTIC’s expense:  (a) an office with
e-mail, phone, fax machine, and copier access, and (b) an administrative support
person.  Any additional use of NTIC resources, including but not limited to,
people, financial resources, outside consultants and outside technical service
people, shall be subject to prior approval of NTIC’s Chief Financial Officer.

          6.          WAIVER OF ALL RIGHTS TO FUTURE COMPENSATION BY EFC. EFC
hereby waives all right, title and interest in and/or claim for, if any,
compensation for any and all past contributions made by EFC relating to the
commercialization of NTIC’s existing program of goods and services whether
directly or indirectly including, but not limited to, through joint ventures and
other external contractual relations.

          7.          LIABILITY INSURANCE COVERAGE OF EFC BY NTIC.  During the
pendency of this Agreement, EFC shall be covered under NTIC’s Liability
Insurance to the extent applicable and possible.

          8.          INDEPENDENT CONTRACTOR STATUS OF EFC.  Notwithstanding
anything contained herein to the contrary, EFC is and shall act as, and for all
purposes shall be deemed to be, an independent contractor of NTIC.  No contract
of partnership, joint venture or any other relationship except that of
independent contractor shall be deemed to exist between NTIC and EFC.  EFC shall
have sole and exclusive responsibility for the payment of all federal, state and
local income taxes and all other taxes with respect to any compensation provided
by NTIC to EFC hereunder.  EFC shall not bind NTIC or incur any obligation or
liability on behalf of NTIC, including but not limited to financial obligations,
promises of equity in NTIC technology projects or joint ventures, or hiring of
employees, without the prior approval of NTIC’s Board of Directors.

          9.          TERM.  Subject to the respective continuing obligations of
EFC and NTIC under Sections 11, 12 and 13 below, this Agreement shall continue
until terminated pursuant to Section 10 hereof.

          10.        TERMINATION. 

                        (a)          NTIC and EFC may mutually agree to
terminate this Agreement.

                         (b)          Either party hereto may terminate this
Agreement for any reason upon at least 90 days prior written notice to the other
party.

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                        (c)          NTIC shall have the right to terminate this
Agreement upon 90 days written notice upon any “Change of Control” of EFC (as
hereinafter defined).  A “Change in Control” shall mean any change in ownership,
management, control or scope of business activities of EFC which could affect
the performance of the duties and/or obligations of EFC to NTIC under this
Agreement. 

                        (d)          NTIC may terminate this Agreement
immediately upon written notice to EFC for cause, including (without limitation)
(i) dishonesty, fraud, misrepresentation, deliberate injury or attempted injury,
by EFC or any employees or agents of EFC and in each case related to NTIC or its
business, (ii) any unlawful or criminal activity by EFC or any employees or
agents of EFC, (iii) any willful breach of duty or habitual neglect of duty or
(iv) the breach by EFC of any provision of this Agreement.

                        (e)          This Agreement will terminate upon 90 days
written notice after the death, incapacity or discontinuation of an active
relationship with EFC for any reason of Philip M. Lynch.

                        (f)          This Agreement will terminate immediately
if EFC makes an assignment for the benefit of creditors; the institution of
voluntary or involuntary proceedings by or against EFC under bankruptcy or
insolvency laws; any general suspension by EFC of payments to creditors; EFC
files a petition of any type as to its bankruptcy, is declared bankrupt, becomes
insolvent, or goes into liquidation or receivership; or any similar actions by
or against EFC in respect of bankruptcy, insolvency or actions taken by
creditors generally.

          11.         EFFECT OF TERMINATION.  Except as set forth in this
Agreement, upon termination, the parties shall have no obligations to each other
hereunder other than NTIC’s obligation to pay any earned but unpaid Monthly Fees
under Section 4(a) and any unpaid reimbursable travel expenses as set forth in
Section 4(b).  EFC’s covenants in Sections 12 and 13 shall survive the
termination of this Agreement.

          12.         CONFIDENTIAL INFORMATION.  For purposes hereof, the term
“Confidential Information” means information:  (a) disclosed to or actually
known by EFC, (b) not generally known outside NTIC, and (c) that relates to the
Business.  The parties agree that Confidential Information includes, but is not
limited to, the products and services of NTIC, all of NTIC’s technology and
other technical information such as designs, trade secrets, know-how, methods
and materials, all marketing information, business strategies, pricing
information, customer lists, and so forth.  EFC recognizes and acknowledges that
NTIC develops Confidential Information, that EFC may develop Confidential
Information for NTIC, and that EFC has previously learned of and will continue
to learn of the Confidential Information.  EFC and NTIC further recognize and
acknowledge that Confidential Information is a valuable, special and unique
asset of NTIC and is the sole property of NTIC.  As a result, both during the
term of this Agreement and thereafter, EFC shall not, without the prior written
consent of NTIC, for any reason, either directly or indirectly, divulge to any
third party or use for their own benefit, or for any other purpose other than
the exclusive benefit of NTIC, any Confidential Information.

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          13.         NON-COMPETITION/NON-SOLICITATION.  EFC acknowledges that
NTIC devotes substantial resources to develop the Business and its practices,
methods, trade secrets, know-how, services, products and customers.  EFC and
NTIC further acknowledge that NTIC would be unfairly and irreparably harmed if
EFC competes with NTIC.  Therefore, EFC agrees that during the term of this
Agreement and for a period of three (3) years thereafter, EFC shall not,
directly or indirectly, whether alone or in association with others, whether as
principal, agent, partner, member, manager or in any other capacity:  (a)
compete with NTIC or its affiliates (including any joint venture) in any
geographic market in which it has done business during the term of this
Agreement, (b) cause or seek to cause any client, customer, or supplier of NTIC
or any of its affiliates (including any joint venture) to cease or alter its, or
not enter into a, relationship with NTIC or a NTIC affiliate, or (c) cause or
seek to cause any employee, agent, or contractor of NTIC or any of its
affiliates (including any joint venture) to cease or alter such employee’s,
agent’s or contractor’s relationship with NTIC or its affiliate.  The restricted
period set forth in the preceding sentence will be extended for a period equal
to the duration of any breach of the preceding restrictive covenants.  EFC and
NTIC agree not to slander or libel the other party, its officers, employees,
directors or affiliates at any time.

          14.         REMEDIES.  EFC acknowledges and agrees that by virtue of
the special knowledge of NTIC’s Business that EFC shall develop, great loss and
irreparable damage would be suffered by NTIC if EFC should breach or violate any
of the terms or provisions of the covenants and agreements set forth herein. 
EFC further acknowledges and agrees that each such covenant and agreement is
reasonably necessary to protect and preserve NTIC’s interests.  Therefore, in
addition to all other remedies available at law or in equity, EFC agrees that
NTIC shall be entitled to a temporary restraining order and a permanent
injunction (with or without bond) to prevent a breach of any of the covenants or
agreements of EFC contained herein.

          15.         MISCELLANEOUS.

                        (a)          Compliance with Laws.  EFC and NTIC will
perform their respective obligations under this Agreement in accordance with all
applicable statutes, laws, judgments, writs, injunctions, decisions, decrees,
orders, regulations, ordinances or other similar authoritative matters of any
foreign, federal, state or local governmental or quasi-governmental,
administrative, regulatory or judicial court, department, commission, agency,
board, bureau, instrumentality or other authority.

                        (b)          No Conflicts.  EFC and NTIC represent and
warrant each to the other party that neither the entering into of this Agreement
nor the performance of any of the representing party’s obligations hereunder
will conflict with or constitute a breach under any obligation of the
representing party under any agreement or contract to which the representing
party is a party or any other obligation by which the representing party is
bound.  Without limiting the foregoing, EFC agrees that at no time will it use
any trade secrets or other intellectual property of any third party while
performing services hereunder.

                        (c)          NTIC Policies and Procedures.  In carrying
out its duties under this Agreement, EFC agrees that it and its employees and
agents providing services hereunder, including Lynch, will follow without
limitation NTIC’s insider trading policy and code of ethics and conduct, as such
policy and code may be amended or supplemented from time to time and provided by
NTIC to EFC.

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                        (d)             Notices.  All notices, requests,
consents and other communications required or permitted to be given hereunder,
shall be in writing and shall be deemed to have been given: (i) when received if
delivered by hand; (ii) the next business day after placement with a reputable
express carrier for delivery during the morning of the following business day;
or (iv) three (3) business days after deposit in the U.S. mail for delivery by
registered or certified mail, return receipt requested, and addressed to the
appropriate party at the following address), to the parties at the following
addresses or at such other address as either party shall designate by notice in
writing to the other in accordance herewith:

 

(i)

If to EFC:

 

 

 

 

 

13720 Shaker Boulevard, Suite 702

 

 

Cleveland, OH  44120

 

 

 

 

(ii)

If to NTIC:

 

 

 

 

 

6680 N Hwy 49

 

 

Lino Lakes, MN 55014

                        (e)          Assignment.  This Agreement is for services
to be provided by EFC and may not be assigned or transferred, or the duties or
services of EFC be performed or provided by any third party without the prior
written consent of NTIC.  This Agreement may not be assigned by NTIC (by
operation of law or otherwise) without the prior written consent of EFC.

                        (f)          Binding Effect.  This Agreement shall be
binding upon, and shall inure to the benefit of, NTIC and its officers,
directors, successors and assigns, and EFC and its officers, successors and
permitted assigns, respectively.

                        (g)          Governing Law/Jurisdiction.  This Agreement
shall be governed by and construed in accordance with the laws of the State of
Minnesota.  The parties hereto agree that the Federal and state courts located
in Minneapolis, Minnesota shall be the exclusive venue and shall have
jurisdiction with respect to the enforcement of any right or remedy of any party
hereto.

                        (h)          Entire Agreement.  This Agreement sets
forth the entire agreement and understanding of the parties relating to the
subject matter hereof, and supersedes all prior agreements, arrangements and
understandings, written or oral, relating to the subject matter hereof.  Except
as modified herein, all of the terms and conditions of the Agreement shall
remain in full force and effect.

                        (i)          Amendments; Waivers.  This Agreement may be
amended, modified, superseded, canceled, renewed or extended, and the terms or
covenants hereof may be waived, only by a written instrument executed by all of
the parties hereto, or in the case of a waiver, by the party against whom the
waiver is sought to be enforced, which instrument specifically refers to this
Agreement.  The failure of any party at any time or times to require compliance
with any provision hereof shall in no manner affect the right of such party at a
later time to enforce the same.  No waiver by either party of the breach of any
term or covenant contained in this Agreement, whether by conduct or otherwise,
in any one or more instances, shall be deemed to be, or construed as, a further
or continuing waiver of any such breach of any term or covenant contained in
this Agreement.

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                        (j)          Headings/Recitals.  The headings contained
herein are for reference only and shall not in any way affect the meaning or
interpretation of this Agreement.  The Recitals to this Agreement are an
integral part of this Agreement and are incorporated herein by reference.

          IN WITNESS WHEREOF, the parties have executed this agreement as of the
day and year first above written.

 

NORTHERN TECHNOLOGIES

 

INTERNATIONAL CORPORATION

 

 

 

 

By

 

 

 

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Its

 

 

 

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EMERITUSHNIC FACILITIES COMPANY, INC.

 

 

 

 

By

 

 

 

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Its

 

 

 

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INDIVIDUAL UNDERTAKING

I, Philip M. Lynch, an individual, acknowledge that I have read and understand
the above Agreement.  Further, I agree, as an individual, to provide for EFC the
agreed services and to be bound by all of the terms and conditions stated in the
said Agreement as fully as if I were a party thereto.  My agreement shall
continue until the Agreement is fully performed or terminated in accordance with
its terms.

________________________________

 

_________________, 2006

Philip M. Lynch

 

 

16210 Parkland Drive

 

 

Shaker Heights, OH 44120

 

 

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