EXHIBIT 10.5


                    FORM OF INCENTIVE STOCK OPTION AGREEMENT


                        INCENTIVE STOCK OPTION AGREEMENT

         THIS AGREEMENT is entered into and effective as of this ______ day of
__________, 2000 (the "Date of Grant"), by and between Northern Technologies
International Corporation (the "Company") and _______________ (the "Optionee").

         A. The Company has adopted the Northern Technologies International
Corporation 2000 Stock Incentive Plan (the "Plan") authorizing the Board of
Directors of the Company, or a committee as provided for in the Plan (the Board
or such a committee to be referred to as the "Committee"), to, among other
things, grant Incentive Stock Options (as defined in the Plan) to employees.

         B. The Company desires to give the Optionee an inducement to acquire a
proprietary interest in the Company and an added incentive to advance the
interests of the Company by granting to the Optionee an option to purchase
shares of common stock of the Company pursuant to the Plan.

         Accordingly, the parties agree as follows:

XIX.     GRANT OF OPTION.

         The Company hereby grants to the Optionee the right, privilege, and
option (the "Option") to purchase __________________ shares (the "Option
Shares") of the Company's common stock, $.02 par value (the "Common Stock"),
according to the terms and subject to the conditions hereinafter set forth and
as set forth in the Plan. The option is intended to be an "incentive stock
option," as that term is used in Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").

XX.      OPTION EXERCISE PRICE.

         The per share price to be paid by Optionee in the event of an exercise
of the Option will be $________.

XXI.     DURATION OF OPTION AND TIME OF EXERCISE

         A.       Initial Period of Exercisability. The Option will become
                  exercisable with respect to the Option Shares in ___________
                  installments. The following table sets forth the initial dates
                  of exercisability of each installment and the number of Option
                  Shares as to which this Option will become exercisable on such
                  dates:

                  Initial Date of                  Number of Option Shares
                  Exercisability                   Available for Exercise
                  --------------                   ----------------------





The foregoing rights to exercise this Option will be cumulative with respect to
the Option Shares becoming exercisable on each such date but in no event will
this Option be exercisable after, and this Option will become void and expire as
to all unexercised Option Shares at, 5:00 p.m. (Minneapolis, Minnesota time) on
________________, ____ (the "Time of Termination").


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B.       Termination of Employment or Other Service.

         1.       In the event that the Optionee's employment or other service
                  with the Company and all Subsidiaries is terminated by reason
                  of the Optionee's death, Disability or Retirement (as such
                  terms are defined in the Plan), this Option will remain
                  exercisable to the extent exercisable as of such termination
                  following such termination until the Time of Termination.

         2.       In the event the Optionee's employment or other service with
                  the Company and all Subsidiaries is terminated for any reason
                  other than death, Disability or Retirement, all rights of the
                  Optionee under the Plan and this Agreement will immediately
                  terminate without notice of any kind, and this Option will no
                  longer be exercisable; provided, however, that if such
                  termination is due to any reason other than termination by the
                  Company or any Subsidiary for "cause" (as defined in the
                  Plan), this Option will remain exercisable to the extent
                  exercisable as of such termination for a period of one month
                  after such termination (but in no event will this Option be
                  exercisable after the Time of Termination).

C.       Change in Control.

         1.       If any events constituting a Change in Control (as defined in
                  Section 13.1 of the Plan) of the Company occur, then this
                  Option will become immediately exercisable in full and will
                  remain exercisable until the Time of Termination, regardless
                  of whether the Optionee remains in the employ or service of
                  the Company or any Subsidiary. In addition, if a Change in
                  Control of the Company occurs, the Committee, in its sole
                  discretion and without the consent of the Optionee, may
                  determine that the Optionee will receive, with respect to some
                  or all of the Option Shares, as of the effective date of any
                  such Change in Control of the Company, cash in an amount equal
                  to the excess of the Fair Market Value (as defined in the
                  Plan) of such Option Shares immediately prior to the effective
                  date of such Change in Control of the Company over the option
                  exercise price per share of this Option.

         2.       Notwithstanding anything in this Section 3.3 to the contrary,
                  if, with respect to the Optionee, acceleration of the vesting
                  of this Option or the payment of cash in exchange for all or
                  part of this Option as provided above (which acceleration or
                  payment could be deemed a "payment" within the meaning of
                  Section 280G(b)(2) of the Code), together with any other
                  payments which the Optionee has the right to receive from the
                  Company or any corporation which is a member of an "affiliated
                  group" (as defined in Section 1504(a) of the Code without
                  regard to Section 1504(b) of the Code) of which the Company is
                  a member, would constitute a "parachute payment" (as defined
                  in Section 280G(b)(2) of the Code), the payments to the
                  Optionee as set forth herein will be reduced to the largest
                  amount as will result in no portion of such payments being
                  subject to the excise tax imposed by Section 4999 of the Code;
                  provided, however, that if the Optionee is subject to a
                  separate agreement with the Company or a Subsidiary that
                  specifically provides that payments attributable to one or
                  more forms of employee stock incentives or to payments made in
                  lieu of employee stock incentives will not reduce any other
                  payments under such agreement, even if it would constitute an
                  excess parachute payment, then the limitations of this Section
                  3.3(b) will, to that extent, not apply.


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XXII.    MANNER OF OPTION EXERCISE.

         A.       Notice. This Option may be exercised by the Optionee in whole
                  or in part from time to time, subject to the conditions
                  contained in the Plan and in this Agreement, by delivery, in
                  person, by facsimile or electronic transmission or through the
                  mail, to the Company at its principal executive office in Lino
                  Lakes, Minnesota (Attention: Chief Financial Officer), of a
                  written notice of exercise. Such notice will be in a form
                  satisfactory to the Committee, will identify the Option, will
                  specify the number of Option Shares with respect to which the
                  Option is being exercised, and will be signed by the person or
                  persons so exercising the Option. Such notice will be
                  accompanied by payment in full of the total purchase price of
                  the Option Shares purchased. In the event that the Option is
                  being exercised, as provided by the Plan and Section 3.2
                  above, by any person or persons other than the Optionee, the
                  notice will be accompanied by appropriate proof of right of
                  such person or persons to exercise the Option. As soon as
                  practicable after the effective exercise of the Option, the
                  Optionee will be recorded on the stock transfer books of the
                  Company as the owner of the Option Shares purchased, and the
                  Company will deliver to the Optionee one or more duly issued
                  stock certificates evidencing such ownership.

         B.       Payment. At the time of exercise of this Option, the Optionee
                  will pay the total purchase price of the Option Shares to be
                  purchased solely in cash (including a check, bank draft or
                  money order, payable to the order of the Company); provided,
                  however, that the Committee, in its sole discretion, may allow
                  such payment to be made, in whole or in part, by tender of a
                  Broker Exercise Notice, Previously Acquired Shares or by a
                  combination of such methods. For purposes of this Agreement,
                  the terms "Broker Exercise Notice" and "Previously Acquired
                  Shares" will have the meanings set forth in the Plan. In the
                  event the Optionee is permitted to pay the total purchase
                  price of this Option in whole or in part with Previously
                  Acquired Shares, the value of such shares will be equal to
                  their Fair Market Value on the date of exercise of this
                  Option.

XXIII.   ADVERSE ACTION

         A.       Termination. Notwithstanding anything in this Agreement to the
                  contrary, in the event that the Optionee materially breaches
                  the terms of any confidentiality or noncompete agreement
                  entered into with the Company or takes any other Adverse
                  Action (as defined in the Plan), whether such Adverse Action
                  occurs before or after termination of the Optionee's
                  employment or other service with the Company or any
                  Subsidiary, the Committee in its sole discretion may
                  immediately terminate all rights of the Optionee under this
                  Agreement without notice of any kind.

         B.       Recission. In addition to the Company's right of termination
                  as provided in Section 5.1, to the extent that the Optionee
                  takes such Adverse Action during the period beginning 6 months
                  prior to, and ending 6 months following, the date of such
                  employment or service termination, the Committee in its sole
                  discretion will have the authority to rescind (i) this Option
                  if it was granted during such period and (ii) any exercise of
                  this Option by the Optionee during such period, and to require
                  the Optionee to pay to the Company, within 10 days of receipt
                  from the Company of notice of such rescission, the amount of
                  any gain realized from this rescinded grant or exercise. Such
                  payment will be made in cash (including check, bank draft or
                  money order) or, with the Committee's consent, shares of
                  Common Stock with a Fair Market Value on the date of payment
                  equal to the amount of such payment. The Company will be
                  entitled to withhold and deduct from future wages of the
                  Optionee (or from other amounts that may be due and owing to
                  the Optionee from the Company or Subsidiary) or make other
                  arrangements for the collection of all amounts necessary to
                  satisfy such payment obligation.


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         C.       Certification. Upon exercise, payment or delivery pursuant to
                  this Option, the Optionee or grantee shall certify on a form
                  acceptable to the Committee that he or she is in compliance
                  with the terms and conditions of the Plan and this Agreement.

XXIV.    NONTRANSFERABILITY.

         Neither this Option nor the Option Shares acquired upon exercise may be
transferred by the Optionee, either voluntarily or involuntarily, or subjected
to any lien, directly or indirectly, by operation of law or otherwise, except as
provided in the Plan. Any attempt to transfer or encumber this Option or the
Option Shares other than in accordance with this Agreement and the Plan will be
null and void and will void this Option.

XXV.     LIMITATION OF LIABILITY.

         Nothing in this Agreement will be construed to (a) limit in any way the
right of the Company to terminate the employment or service of the Optionee at
any time, or (b) be evidence of any agreement or understanding, express or
implied, that the Company will retain the Optionee in any particular position,
at any particular rate of compensation or for any particular period of time.

XXVI.    WITHHOLDING TAXES.

         The Company is entitled to (a) withhold and deduct from future wages of
the Optionee (or from other amounts which may be due and owing to the Optionee
from the Company), or make other arrangements for the collection of, all legally
required amounts necessary to satisfy any federal, state or local withholding
and employment-related tax requirements attributable to the grant or exercise of
this Option or otherwise incurred with respect to this Option, or (b) require
the Optionee promptly to remit the amount of such withholding to the Company
before acting on the Optionee's notice of exercise of this Option. In the event
that the Company is unable to withhold such amounts, for whatever reason, the
Optionee hereby agrees to pay to the Company an amount equal to the amount the
Company would otherwise be required to withhold under federal, state of local
law.

XXVII.   ADJUSTMENTS.

         In the event of any reorganization, merger, consolidation,
recapitalization, liquidation, reclassification, stock dividend, stock split,
combination of shares, rights offering, divestiture or extraordinary dividend
(including a spin-off), or any other change in the corporate structure or shares
of the Company, the Committee (or, if the Company is not the surviving
corporation in any such transaction, the board of directors of the surviving
corporation), in order to prevent dilution or enlargement of the rights of the
Optionee, will make appropriate adjustment (which determination will be
conclusive) as to the number, kind and exercise price of securities subject to
this Option.


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XXVIII.  SUBJECT TO PLAN.

         The Option and the Option Shares granted and issued pursuant to this
Agreement have been granted and issued under, and are subject to the terms of,
the Plan. The terms of the Plan are incorporated by reference in this Agreement
in their entirety, and the Optionee, by execution of this Agreement,
acknowledges having received a copy of the Plan. The provisions of this
Agreement will be interpreted as to be consistent with the Plan, and any
ambiguities in this Agreement will be interpreted by reference to the Plan. In
the event that any provision of this Agreement is inconsistent with the terms of
the Plan, the terms of the Plan will prevail.

XXIX.    MISCELLANEOUS.

         A.       Binding Effect. This Agreement will be binding upon the heirs,
                  executors, administrators and successors of the parties to
                  this Agreement.

         B.       Governing Law. This Agreement and all rights and obligations
                  under this Agreement will be construed in accordance with the
                  Plan and governed by the laws of the State of Minnesota.

         C.       Entire Agreement. This Agreement and the Plan set forth the
                  entire agreement and understanding of the parties to this
                  Agreement with respect to the grant and exercise of this
                  Option and the administration of the Plan and supersede all
                  prior agreements, arrangements, plans and understandings
                  relating to the grant and exercise of this Option and the
                  administration of the Plan.

         D.       Amendment and Waiver. Other than as provided in the Plan, this
                  Agreement may be amended, waived, modified or canceled only by
                  a written instrument executed by the parties hereto or, in the
                  case of a waiver, by the party waiving compliance.


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         The parties to this Agreement have executed this Agreement effective
the day and year first above written.


                                       NORTHERN TECHNOLOGIES
                                       INTERNATIONAL CORPORATION



                                       By:
                                          --------------------------------------

                                       Its:
                                           -------------------------------------


                                       OPTIONEE



                                       -----------------------------------------
                                                     (Signature)

                                       -----------------------------------------
                                                  (Name and Address)


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


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


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