Exhibit 10.11


 


NORTHERN
TECHNOLOGIES INTERNATIONAL CORPORATION


 


DESCRIPTION
OF NON-EMPLOYEE DIRECTOR


COMPENSATION
ARRANGEMENTS


 


Overview


 


NTIC’s
non-employee directors currently consist of Pierre Chenu, Tilman B. Frank, M.D.
Soo Keong Koh, Ph.D., Sunggyu Lee, Ph.D., Mark M. Mayers, Ramani Narayan, Ph.D.
and Mark J. Stone. We use a combination of cash and long-term equity-based
incentive compensation in the form of annual stock option grants to attract and
retain qualified candidates to serve on the Board of Directors.


 


Annual Retainers; Meeting Fees


 


Each person who
is a non-employee director receives an annual retainer of $10,000 for services
rendered as a director of NTIC.  The
annual retainer is paid quarterly.  NTIC’s
Chairman of the Board receives an additional annual retainer of $25,000, the
Chair of the Audit Committee receives an additional annual retainer of $5,000
and other members of the Audit Committee received an additional annual retainer
of $4,000.  Each of our non-employee
directors also receives $1,000 for each Board and strategy review meeting
attended and $1,000 for each Audit Committee, Compensation Committee and
Nominating and Corporate Governance Committee meeting attended.  No director, however, will earn more than
$1,000 per day in Board, Board committee and strategy review meeting fees.  Any director that is an employee of NTIC (G.
Patrick Lynch and Donald A. Kubik, Ph.D.) does not receive any retainer or
Board or Committee meeting fees.


 


Stock Options


 


Each of
non-employee director is automatically granted a five-year non-qualified option
to purchase 4,000 shares of NTIC common stock in consideration for their
services as directors of NTIC and the Chairman of the Board is automatically
granted an additional five-year non-qualified option to purchase 2,000 shares
of NTIC common stock in consideration for his services as Chairman on the first
day of each fiscal year.  Each
non-employee directors who is elected or appointed to the Board following the first
day of the fiscal year receives an automatic grant of an option to purchase a
pro rata portion of 4,000 shares of NTIC common stock calculated by dividing
the number of months remaining in the fiscal year at the time of election or
appointment divided by 12, which options are automatically granted at the time
of the new director’s election or appointment. Each automatically granted
option becomes exercisable, on a cumulative basis, with respect to one-third of
the shares covered by such option on each one-year anniversary of the date of
its grant.  The exercise price of such
option is equal to the fair market value of a share of NTIC common stock on the
date of grant.  All such options are
granted under the Northern Technologies International Corporation 2007 Stock
Incentive Plan.


 


Reimbursement of Expenses


 


All of directors
of NTIC are reimbursed for travel expenses for attending meetings and other
miscellaneous expenses incurred in performing their Board functions.


 


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Indemnification Agreements


 


NTIC has entered
into agreements with all of its directors under which NTIC is required to
indemnify them against expenses, judgments, penalties, fines, settlements and
other amounts actually and reasonably incurred, including expenses of a
derivative action, in connection with an actual or threatened proceeding if any
of them may be made a party because he or she is or was a director of
NTIC.  NTIC will be obligated to pay
these amounts only if the director acted in good faith and in a manner that he
or she reasonably believed to be in or not opposed to NTIC’s best
interests.  With respect to any criminal
proceeding, NTIC will be obligated to pay these amounts only if the director
had no reasonable cause to believe his or her conduct was unlawful.  The indemnification agreements also set forth
procedures that will apply in the event of a claim for indemnification.


 


Consulting Arrangements


 


NTIC paid consulting fees to Bioplastic
Polymers LLC which is owned by Dr. Ramani Narayan in the aggregate amount
of $100,000 and royalty fees in an aggregate amount of $1,323 during the fiscal
year ended August 31, 2008.  The consulting services rendered by
Bioplastic Polymers LLC related to research and development associated with
various new technologies.  The royalty fees were paid pursuant to an oral
agreement pursuant to which NTIC has agreed to pay Bioplastic Polymers LLC and Dr. Narayan
in consideration of the transfer and assignment by Biopolymer Plastics LLC and Dr. Narayan
of certain biodegradable polymer technology to NTIC, an aggregate of three
percent of the gross margin on any net sales of products incorporating the
biodegradable polymer technology transferred to NTIC by Bioplastic Polymers LLC
and Dr. Narayan for a period of 10 years, provided that if a patent for or
with respect to biodegradable polymer technology is issued before the
expiration of such 10 year period, then NTIC will until the expiration of such
patent pay to Bioplastic Polymers LLC and Dr. Narayan an aggregate three
percent of the biodegradable polymer technology gross margin attributable to
such patent.


 


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