Exhibit
10.13 

NORTHERN TECHNOLOGIES INTERNATIONAL
CORPORATION
 
DESCRIPTION OF
NON-EMPLOYEE DIRECTOR
COMPENSATION ARRANGEMENTS

Overview 

NTIC’s non-employee directors currently
consist of Pierre Chenu, Dr. Sunggyu Lee, Mark M. Mayers, Dr. Ramani Narayan,
Dr. Barry Rosenbaum 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.

In November 2007, the Board of
Directors, upon recommendation of the Nominating and Corporate Governance
Committee, approved increases in certain meeting fees, additional Chairman of
the Board and Audit Committee retainers and increased automatic stock option
grants as described in more detail below. With the exception of the increased
automatic stock option grants, which will be effective commencing September 1,
2008, the other non-employee director compensation changes will be effective
commencing January 28, 2008. 

Annual Retainers; Meeting Fees


Each person who was a non-employee
director for all of fiscal 2007 and the Chairman of the Board received an annual
retainer of $10,000 in fiscal 2007 for services rendered as a director of NTIC.
The annual retainer is paid quarterly. Each person who was a non-employee
director for a portion of fiscal 2007 received a prorated portion of such annual
retainer. Each of our non-employee directors also received $1,000 for each Board
meeting attended and $500 for each Audit Committee, Compensation Committee and
Nominating and Corporate Governance Committee meeting attended. Any director
that is an employee of NTIC (Mr. Lynch and Dr. Kubik) does not receive any
retainer or Board or Committee meeting fees.

Commencing January 28, 2008, the
Chairman of the Board will receive an additional annual retainer of $25,000, the
Chair of the Audit Committee will receive an additional annual retainer of
$5,000 and other members of the Audit Committee will receive an additional
retainer of $4,000. In addition, commencing January 28, 2008, each of our
non-employee directors will receive $1,000 for each strategy review meeting
attended in addition to Board meetings and the fee to be paid for attendance at
each Audit Committee, Compensation Committee and Nominating and Corporate
Governance Committee meeting will be increased from $500 to $1,000. No director,
however, will earn more than $1,000 per day in Board, Board committee and
strategy review meeting fees. 

Stock Options 

For the past several years, each of our
non-employee directors have been automatically granted a five-year non-qualified
option to purchase 2,000 shares of our common stock on the first day of each
fiscal year in consideration for their services as directors of NTIC.
Non-employee directors who were elected or appointed to the Board following the
first day of our fiscal year received an automatic grant of an option to
purchase a pro rata portion of 2,000 shares of our 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 were automatically granted
at the time of their 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 our common stock on the date of
grant. 




Prior to January 23, 2007, such options
were granted under the terms of the Northern Technologies International
Corporation 2000 Stock Incentive Plan. After January 23, 2007 and the adoption
by our stockholders of the Northern Technologies International Corporation 2007
Stock Incentive Plan, such options were granted under the 2007 plan and standing
resolutions of the Board of Directors providing for such automatic
grants.

Commencing on September 1, 2008, each
of our non-employee directors will be automatically granted a five-year
non-qualified option to purchase 4,000 shares of our common stock on the first
day of each fiscal year in consideration for their services as directors of NTIC
and the Chairman of the Board will be automatically granted an additional
five-year non-qualified option to purchase 2,000 shares of our common stock on
the first day of each fiscal year in consideration for his services as Chairman.


Reimbursement of Expenses


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

Consulting Arrangements


We paid consulting fees to Bioplastic
Polymers LLC which is owned by Dr. Ramani Narayan in the aggregate amount of
$100,000 during the fiscal year ended August 31, 2007. We paid consulting fees
to Dr. Sunggyu Lee in the aggregate amount of $50,000 during the fiscal year
ended August 31, 2007. The consulting services rendered by Drs. Narayan and Lee
related to research and development associated with various new technologies.
Our consulting relationship with Dr. Lee was terminated in May 2007.

We have entered into an oral agreement
with Bioplastic Polymers LLC which is owned by Dr. Narayan, and Dr. Narayan
pursuant to which we have 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 us, three percent of
the gross margin on any net sales of products incorporating the biodegradable
polymer technology transferred to us 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 we will until the expiration of such patent pay to Bioplastic
Polymers LLC and Dr. Narayan three percent of the biodegradable polymer
technology gross margin attributable to such patent.