Document:

EXHIBIT 10.4

                            2000 STOCK INCENTIVE PLAN

                 NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION

                            2000 STOCK INCENTIVE PLAN

I.       Purpose of Plan.

The purpose of the Northern Technologies International Corporation 2000 Stock
Incentive Plan (the "Plan") is to advance the interests of Northern Technologies
International Corporation (the "Company") and its stockholders by enabling the
Company and its Subsidiaries to attract and retain persons of ability to perform
services for the Company and its Subsidiaries by providing an incentive to such
individuals through equity participation in the Company and by rewarding such
individuals who contribute to the achievement by the Company of its economic
objectives.

II.      Definitions.

The following terms will have the meanings set forth below, unless the context
clearly otherwise requires:

         A.       "Board" means the Board of Directors of the Company.

         B.       "Broker Exercise Notice" means a written notice pursuant to
                  which a Participant, upon exercise of an Option, irrevocably
                  instructs a broker or dealer to sell a sufficient number of
                  shares or loan a sufficient amount of money to pay all or a
                  portion of the exercise price of the Option and/or any related
                  withholding tax obligations and remit such sums to the Company
                  and directs the Company to deliver stock certificates to be
                  issued upon such exercise directly to such broker or dealer.

         C.       "Change in Control" means an event described in Section 13.1
                  of the Plan.

         D.       "Code" means the Internal Revenue Code of 1986, as amended.

         E.       "Committee" means the group of individuals administering the
                  Plan, as provided in Section 3 of the Plan.

         F.       "Common Stock" means the common stock of the Company; par
                  value $.02 per share, or the number and kind of shares of
                  stock or other securities into which such Common Stock may be
                  changed in accordance with Section 4.3 of the Plan.

         G.       "Disability" means the disability of the Participant such as
                  would entitle the Participant to receive disability income
                  benefits pursuant to the long-term disability plan of the
                  Company or Subsidiary then covering the Participant or, if no
                  such plan exists or is applicable to the Participant, the
                  permanent and total disability of the Participant within the
                  meaning of Section 22(e)(3) of the Code.

         H.       "Eligible Recipients" means all employees (including, without
                  limitation, officers and directors who are also employees) of
                  the Company or any Subsidiary, any non-employee consultants
                  and independent contractors of the Company or any Subsidiary
                  and any joint venture partners (including without limitation,
                  officers, directors and partners thereof) of the Company or
                  any Subsidiary.

         I.       "Exchange Act" means the Securities Exchange Act of 1934, as
                  amended.

         J.       "Fair Market Value" means, with respect to the Common Stock,
                  as of any date (or, if no shares were traded or quoted on such
                  date, as of the next preceding date on which there was such a
                  trade or quote), the closing market price per share of the
                  Common Stock as reported on the American Stock Exchange
                  Composite Tape on that date.

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         K.       "Incentive Award" means an Option, Stock Appreciation Right,
                  Restricted Stock Award, Performance Unit or Stock Bonus
                  granted to an Eligible Recipient pursuant to the Plan.

         L.       "Incentive Stock Option" means a right to purchase Common
                  Stock granted to an Eligible Recipient pursuant to Section 6
                  of the Plan that qualifies as an "incentive stock option"
                  within the meaning of Section 422 of the Code.

         M.       "Non-Employee Director" means any member of the Board of
                  Directors of the Company who is not an employee of the Company
                  or any Subsidiary.

         N.       "Non-Statutory Stock Option" means a right to purchase Common
                  Stock granted to an Eligible Recipient pursuant to Section 6
                  of the Plan that does not qualify as an Incentive Stock
                  Option.

         O.       "Option" means an Incentive Stock Option or a Non-Statutory
                  Stock Option.

         P.       "Participant" means an Eligible Recipient who receives one or
                  more Incentive Awards under the Plan.

         Q.       "Performance Unit" means a right granted to an Eligible
                  Recipient pursuant to Section 9 of the Plan to receive a
                  payment from the Company, in the form of stock, cash or a
                  combination of both, upon the achievement of established
                  performance goals.

         R.       "Previously Acquired Shares" means shares of Common Stock that
                  are already owned by the Participant or, with respect to any
                  Incentive Award, that are to be issued upon the grant,
                  exercise or vesting of such Incentive Award.

         S.       "Restricted Stock Award" means an award of Common Stock
                  granted to an Eligible Recipient pursuant to Section 8 of the
                  Plan that is subject to the restrictions on transferability
                  and the risk of forfeiture imposed by the provisions of such
                  Section 8.

         T.       "Retirement" means termination of employment or service
                  pursuant to and in accordance with the regular (or, if
                  approved by the Board for purposes of the Plan, early)
                  retirement/pension plan or practice of the Company or
                  Subsidiary then covering the Participant, provided that if the
                  Participant is not covered by any such plan or practice, the
                  Participant will be deemed to be covered by the Company plan
                  or practice for purposes of this determination.

         U.       "Securities Act" means the Securities Act of 1933, as amended.

         V.       "Stock Appreciation Right" means a right granted to an
                  Eligible Recipient pursuant to Section 7 of the Plan to
                  receive a payment from the Company in the form of stock, cash
                  or a combination of both, equal to the difference between the
                  Fair Market Value of one or more shares of Common Stock and
                  the exercise price of such shares under the terms of such
                  Stock Appreciation Right.

         W.       "Stock Bonus" means an award of Common Stock granted to an
                  Eligible Recipient pursuant to Section 10 of the Plan.

         X.       "Subsidiary" means any entity that is directly or indirectly
                  controlled by the Company or any entity in which the Company
                  has a significant equity interest, as determined by the
                  Committee.

         Y.       "Tax Date" means the date any withholding tax obligation
                  arises under the Code for a Participant with respect to an
                  Incentive Award.

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III.     Plan Administration.

         A.       The Committee. The Plan will be administered by the Board, all
                  of whom will be "disinterested persons" within the meaning of
                  Rule 16b-3 under the Exchange Act, or by a committee
                  consisting solely of not fewer than two members of the Board
                  who are such "disinterested persons." As used in this Plan,
                  the term "Committee" will refer to the Board or to such a
                  committee, if established. To the extent consistent with
                  corporate law, the Committee may delegate to any officers of
                  the Company the duties, power and authority of the Committee
                  under the Plan pursuant to such conditions or limitations as
                  the Committee may establish; provided, however, that only the
                  Committee may exercise such duties, power and authority with
                  respect to Eligible Recipients who are subject to Section 16
                  of the Exchange Act. Each determination, interpretation or
                  other action made or taken by the Committee pursuant to the
                  provisions of the Plan will be conclusive and binding for all
                  purposes and on all persons, and no member of the Committee
                  will be liable for any action or determination made in good
                  faith with respect to the Plan or any Incentive Award granted
                  under the Plan.

         B.       Authority of the Committee.

                  1.       In accordance with and subject to the provisions of
                           the Plan, the Committee will have the authority to
                           determine all provisions of Incentive Awards as the
                           Committee may deem necessary or desirable and as
                           consistent with the terms of the Plan, including,
                           without limitation, the following: (i) the Eligible
                           Recipients to be selected as Participants; (ii) the
                           nature and extent of the Incentive Awards to be made
                           to each Participant (including the number of shares
                           of Common Stock to be subject to each Incentive
                           Award, any exercise price, the manner in which
                           Incentive Awards will vest or become exercisable and
                           whether Incentive Awards will be granted in tandem
                           with other Incentive Awards) and the form of written
                           agreement, if any, evidencing such Incentive Award;
                           (iii) the time or times when Incentive Awards will be
                           granted; (iv) the duration of each Incentive Award;
                           and (v) the restrictions and other conditions to
                           which the payment or vesting of Incentive Awards may
                           be subject. In addition, the Committee will have the
                           authority under the Plan in its sole discretion to
                           pay the economic value of any Incentive Award in the
                           form of cash, Common Stock or any combination of
                           both.

                  2.       The Committee will have the authority under the Plan
                           to amend or modify the terms of any outstanding
                           Incentive Award in any manner, including, without
                           limitation, the authority to modify the number of
                           shares or other terms and conditions of an Incentive
                           Award, extend the term of an Incentive Award,
                           accelerate the exercisability or vesting or otherwise
                           terminate any restrictions relating to an Incentive
                           Award, accept the surrender of any outstanding
                           Incentive Award or, to the extent not previously
                           exercised or vested, authorize the grant of new
                           Incentive Awards in substitution for surrendered
                           Incentive Awards; provided, however that the amended
                           or modified terms are permitted by the Plan as then
                           in effect and that any Participant adversely affected
                           by such amended or modified terms has consented to
                           such amendment or modification. No amendment or
                           modification to an Incentive Award, however, whether

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                           pursuant to this Section 3.2 or any other provisions
                           of the Plan, will be deemed to be a regrant of such
                           Incentive Award for purposes of this Plan.

                  3.       In the event of (i) any reorganization, merger,
                           consolidation, recapitalization, liquidation,
                           reclassification, stock dividend, stock split,
                           combination of shares, rights offering, extraordinary
                           dividend or divestiture (including a spin-off) or any
                           other change in corporate structure or shares, (ii)
                           any purchase, acquisition, sale or disposition of a
                           significant amount of assets or a significant
                           business, (iii) any change in accounting principles
                           or practices, or (iv) any other similar change, in
                           each case with respect to the Company or any other
                           entity whose performance is relevant to the grant or
                           vesting of an Incentive Award, the Committee (or, if
                           the Company is not the surviving corporation in any
                           such transaction, the board of directors of the
                           surviving corporation) may, without the consent of
                           any affected Participant, amend or modify the vesting
                           criteria of any outstanding Incentive Award that is
                           based in whole or in part on the financial
                           performance of the Company (or any Subsidiary or
                           division thereof) or such other entity so as
                           equitably to reflect such event, with the desired
                           result that the criteria for evaluating such
                           financial performance of the Company or such other
                           entity will be substantially the same (in the sole
                           discretion of the Committee or the board of directors
                           of the surviving corporation) following such event as
                           prior to such event; provided, however, that the
                           amended or modified terms are permitted by the Plan
                           as then in effect.

IV.      Shares Available for Issuance.

         A.       Maximum Number of Shares Available. Subject to adjustment as
                  provided in Section 4.3 of the Plan, the maximum number of
                  shares of Common Stock that will be available for issuance
                  under the Plan will be 200,000 shares.

         B.       Accounting for Incentive Awards. Shares of Common Stock that
                  are issued under the Plan or that are subject to outstanding
                  Incentive Awards will be applied to reduce the maximum number
                  of shares of Common Stock remaining available for issuance
                  under the Plan. Any shares of Common Stock that are subject to
                  an Incentive Award that lapses, expires, is forfeited or for
                  any reason is terminated unexercised or unvested and any
                  shares of Common Stock that are subject to an Incentive Award
                  that is settled or paid in cash or any form other than shares
                  of Common Stock will automatically again become available for
                  issuance under the Plan. Any shares of Common Stock that
                  constitute the forfeited portion of a Restricted Stock Award,
                  however, will not become available for further issuance under
                  the Plan.

         C.       Adjustments to Shares and Incentive Awards. 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) will make appropriate adjustment
                  (which determination will be conclusive) as to the number and
                  kind of securities available for issuance under the Plan and,
                  in order to prevent dilution or enlargement of the rights of

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                  Participants, the number, kind and, where applicable, exercise
                  price of securities subject to outstanding Incentive Awards.

V.       Participation.

Participants in the Plan will be those Eligible Recipients who, in the judgment
of the Committee, have contributed, are contributing or are expected to
contribute to the achievement of economic objectives of the Company or its
Subsidiaries. Eligible Recipients may be granted from time to time one or more
Incentive Awards, singly or in combination or in tandem with other Incentive
Awards, as may be determined by the Committee in its sole discretion. Incentive
Awards will be deemed to be granted as of the date specified in the grant
resolution of the Committee, which date will be the date of any related
agreement with the Participant.

VI.      Options.

         A.       Grant. An Eligible Recipient may be granted one or more
                  Options under the Plan, and such Options will be subject to
                  such terms and conditions, consistent with the other
                  provisions of the Plan, as may be determined by the Committee
                  in its sole discretion. The Committee may designate whether an
                  Option is to be considered an Incentive Stock Option or a
                  Non-Statutory Stock Option.

         B.       Exercise Price. The per share price to be paid by a
                  Participant upon exercise of an Option will be determined by
                  the Committee in its discretion at the time of the Option
                  grant, provided that (a) such price will not be less than 100%
                  of the Fair Market Value of one share of Common Stock on the
                  date of grant with respect to an Incentive Stock Option (110%
                  of the Fair Market Value if, at the time the Incentive Stock
                  Option is granted, the Participant owns, directly or
                  indirectly, more than 10% of the total combined voting power
                  of all classes of stock of the Company or any parent or
                  subsidiary corporation of the Company), and (b) such price
                  will not be less than 85% of the Fair Market Value of one
                  share of Common Stock on the date of grant with respect to a
                  Non-Statutory Stock Option.

         C.       Exercisabilitv and Duration. An Option will become exercisable
                  at such times and in such installments as may be determined by
                  the Committee in its sole discretion at the time of grant;
                  provided, however, that no Option may be exercisable after 10
                  years from its date of grant.

         D.       Payment of Exercise Price. The total purchase price of the
                  shares to be purchased upon exercise of an Option will be paid
                  entirely in cash (including check, bank draft or money order);
                  provided, however, that the Committee, in its sole discretion
                  and upon terms and conditions established by the Committee,
                  may allow such payments 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.

         E.       Manner of Exercise. An Option may be exercised by a
                  Participant in whole or in part from time to time, subject to
                  the conditions contained in the Plan and in the agreement
                  evidencing such Option, by delivery in person, by facsimile or
                  electronic transmission or through the mail of written notice
                  of exercise to the Company (Attention: Chief Financial
                  Officer) at its principal executive office in Lino Lakes,
                  Minnesota and by paying in full the total exercise price for
                  the shares of Common Stock to be purchased in accordance with
                  Section 6.4 of the Plan.

         F.       Aggregate Limitation of Stock Subject to Incentive Stock
                  Options. To the extent that the aggregate Fair Market Value
                  (determined as of the date an Incentive Stock Option is
                  granted) of the shares of Common Stock with respect to which

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                  incentive stock options (within the meaning of Section 422 of
                  the Code) are exercisable for the first time by a Participant
                  during any calendar year (under the Plan and any other
                  incentive stock option plans of the Company or any subsidiary
                  or parent corporation of the Company (within the meaning of
                  the Code)) exceeds $100,000 (or such other amount as may be
                  prescribed by the Code from time to time), such excess Options
                  will be treated as Non-Statutory Stock Options. The
                  determination will be made by taking incentive stock options
                  into account in the order in which they were granted. If such
                  excess only applies to a portion of an incentive stock option,
                  the Committee, in its discretion, will designate which shares
                  will be treated as shares to be acquired upon exercise of an
                  incentive stock option.

         G.       Automatic Grants to Non-Employee Directors.

                  1.       Grant of Options. At such time as, following the
                           effective date of the Plan, Non-Employee Directors
                           are first elected or appointed to the Board of
                           Directors, such Non-Employee Directors will be
                           granted automatically, on a one-time basis on the
                           date of their election or appointment, a
                           Non-Statutory Stock Option to purchase the pro-rata
                           portion of 2,000 shares of Common Stock, calculated
                           by dividing the number of months remaining in the
                           fiscal year at the time of election or appointment
                           divided by twelve. Following the effective date of
                           the Plan, Non-Employee Directors will be granted
                           automatically, on the first day of each fiscal year,
                           a Non-Statutory Stock Option to purchase 2,000 shares
                           of Common Stock. Notwithstanding the foregoing
                           provisions of this Section 6.7(a), a Non-Statutory
                           Stock Option shall not be granted under this Section
                           6.7(a) to the extent a Non-Employee Director is
                           automatically granted a similar option under the
                           Company's 1994 Stock Incentive Plan. All automatic
                           grants pursuant to this Section 6.7 are subject to
                           adjustment as provided in Section 4.3 of the Plan.

                  2.       Option Exercise Price. The per share price to be paid
                           by the Non-Employee Director at the time an Option is
                           exercised will be 100% of the Fair Market Value of
                           one share of Common Stock on the date the Option is
                           granted. The total purchase price of the shares to be
                           purchased upon exercise will be paid entirely in cash
                           (including check, bank draft or money order).

                  3.       Duration of Options. Each Option will terminate five
                           years after its date of grant and will become
                           exercisable, on a cumulative basis, with respect to
                           33 1/3% of the shares covered by such Option on each
                           anniversary of the date of its grant.

                  4.       Effect of Termination of Directorship. In the event a
                           Non-Employee Director's service as a director of the
                           Company is terminated by reason of death, Disability
                           or retirement all outstanding Options then held by
                           the Non-Employee Director will become immediately
                           exercisable in full and will remain exercisable
                           following such termination until the expiration of
                           any such Option. In the event that a Non-Employee
                           Director's service as a director of the Company is
                           terminated for any reason other than death,
                           Disability or retirement, all outstanding Options
                           then held by the Non-Employee Director will remain
                           exercisable to the extent exercisable as of

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                           such termination of service for a period of three
                           months after such termination of service (but in no
                           event after the expiration of any such Option). Such
                           Options will not be subject to the termination
                           provisions of Section 11 of the Plan.

                  5.       Manner of Option Exercise. An Option may be exercised
                           by a Non-Employee Director in whole or in part from
                           time to time, subject to the conditions contained in
                           the Plan and in the agreement evidencing such Option,
                           by giving written notice of exercise to the Company
                           at its principal executive office (such notice to
                           specify the particular Option that is being exercised
                           and the number of shares with respect to which the
                           Option is being exercised) accompanied by payment, in
                           cash or check payable to the Company, of the total
                           purchase price of the shares to be purchased under
                           the Option.

                  6.       Non-Discretionary Grants. Options granted to
                           Non-Employee Directors pursuant to this Section 6.7
                           are intended to qualify as "formula awards" within
                           the meaning of Rule 16b-3 under the Exchange Act. As
                           a result, other than as provided in Section 16 of the
                           Plan, the Committee will not have the authority to
                           amend the eligibility requirements for, or modify the
                           terms of, such Options (including, without
                           limitation, the authority to modify the rights of
                           Non-Employee Directors in connection with termination
                           of service as a director or a change in control of
                           the Company) if such amendments or modifications
                           would disqualify such Options from treatment as
                           "formula awards."

VII.     Stock Appreciation Rights.

         A.       Grant. An Eligible Recipient may be granted one or more Stock
                  Appreciation Rights under the Plan, and such Stock
                  Appreciation Rights shall be subject to such terms and
                  conditions, consistent with the other provisions of the Plan,
                  as will be determined by the Committee in its sole discretion.

         B.       Exercise Price. The exercise price of a Stock Appreciation
                  Right will be determined by the Committee, in its discretion,
                  at the date of grant but will not be less than 100% of the
                  Fair Market Value of one share of Common Stock on the date of
                  grant.

         C.       Exercisability and Duration. A Stock Appreciation Right will
                  become exercisable at such time and in such installments as
                  may be determined by the Committee in its sole discretion at
                  the time of grant; provided, however, that no Stock
                  Appreciation Right may be exercisable after 10 years from its
                  date of grant. A Stock Appreciation Right will be exercised by
                  giving notice in the same manner as for Options, as set forth
                  in Section 6.5 of the Plan.

VIII.    Restricted Stock Awards.

         A.       Grant. An Eligible Recipient may be granted one or more
                  Restricted Stock Awards under the Plan, and such Restricted
                  Stock Awards will be subject to such terms and conditions,
                  consistent with the other provisions of the Plan, as may be
                  determined by the Committee in its sole discretion. The
                  Committee may impose such restrictions or conditions, not
                  inconsistent with the provisions of the Plan, to the vesting
                  of such Restricted Stock Awards as it deems appropriate,
                  including, without limitation, that the Participant remain in
                  the continuous employ or service of the Company or a
                  Subsidiary for a certain period or that the Participant or the

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                  Company (or any Subsidiary or division thereof) satisfy
                  certain performance goals or criteria.

         B.       Rights as a Stockholder; Transferability. Except as provided
                  in Sections 8.1, 8.3 and 14.3 of the Plan, a Participant will
                  have all voting, dividend, liquidation and other rights with
                  respect to shares of Common Stock issued to the Participant as
                  a Restricted Stock Award under this Section 8 upon the
                  Participant becoming the holder of record of such shares as if
                  such Participant were a holder of record of shares of
                  unrestricted Common Stock.

         C.       Dividends and Distributions. Unless the Committee determines
                  otherwise in its sole discretion (either in the agreement
                  evidencing the Restricted Stock Award at the time of grant or
                  at any time after the grant of the Restricted Stock Award),
                  any dividends or distributions (including regular quarterly
                  cash dividends) paid with respect to shares of Common Stock
                  subject to the unvested portion of a Restricted Stock Award
                  will be subject to the same restrictions as the shares to
                  which such dividends or distributions relate. In the event the
                  Committee determines not to pay such dividends or
                  distributions currently, the Committee will determine in its
                  sole discretion whether any interest will be paid on such
                  dividends or distributions. In addition, the Committee in its
                  sole discretion may require such dividends and distributions
                  to be reinvested (and in such case the Participants consent to
                  such reinvestment) in shares of Common Stock that will be
                  subject to the same restrictions as the shares to which such
                  dividends or distributions relate.

         D.       Enforcement of Restrictions. To enforce the restrictions
                  referred to in this Section 8, the Committee may place a
                  legend on the stock certificates referring to such
                  restrictions and may require the Participant, until the
                  restrictions have lapsed, to keep the stock certificates,
                  together with duly endorsed stock powers, in the custody of
                  the Company or its transfer agent or to maintain evidence of
                  stock ownership, together with duly endorsed stock powers, in
                  a certificateless book-entry stock account with the Company's
                  transfer agent.

IX.      Performance Units.

An Eligible Recipient may be granted one or more Performance Units under the
Plan, and such Performance Units will be subject to such terms and conditions,
consistent with the other provisions of the Plan, as may be determined by the
Committee in its sole discretion. The Committee may impose such restrictions or
conditions, not inconsistent with the provisions of the Plan, to the vesting of
such Performance Units as it deems appropriate, including, without limitation,
that the Participant remain in the continuous employ or service of the Company
or any Subsidiary for a certain period or that the Participant or the Company
(or any Subsidiary or division thereof) satisfy certain performance goals or
criteria. The Committee will have the sole discretion either to determine the
form in which payment of the economic value of vested Performance Units will be
made to the Participant (i.e., cash, Common Stock or any combination thereof) or
to consent to or disapprove the election by the Participant of the form of such
payment.

X.       Stock Bonuses.

An Eligible Recipient may be granted one or more Stock Bonuses under the Plan,
and such Stock Bonuses will be subject to such terms and conditions, consistent
with the other provisions of the Plan, as may be determined by the Committee in
its sole discretion. The Participant will have all voting, dividend, liquidation
and other rights with respect to the shares of Common Stock issued to a
Participant as a Stock Bonus under this Section 10 upon the Participant becoming
the holder of record of such shares; provided, however, that the Committee may
impose such restrictions on the assignment or transfer of a Stock Bonus as it
deems appropriate.

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XI.      Effect of Termination of Employment or Other Service.

         A.       Termination Due to Death, Disability or Retirement. In the
                  event a Participant's employment or other service with the
                  Company and all Subsidiaries is terminated by reason of death,
                  Disability or Retirement:

                  1.       All outstanding Options and Stock Appreciation Rights
                           then held by the Participant will remain exercisable
                           to the extent exercisable as of such termination
                           following such termination until the expiration date
                           of such Option or Stock Appreciation Right;

                  2.       All Restricted Stock Awards then held by the
                           Participant that have not vested will be terminated
                           and forfeited; and

                  3.       All Performance Units and Stock Bonuses then held by
                           the Participant will vest and/or continue to vest in
                           the manner determined by the Committee and set forth
                           in the agreement evidencing such Performance Units or
                           Stock Bonuses.

         B.       Termination for Reasons Other than Death, Disability or
                  Retirement.

                  1.       In the event a Participant's employment or other
                           service is terminated with the Company and all
                           Subsidiaries for any reason other than death,
                           Disability or Retirement, or a Participant is in the
                           employ or service of a Subsidiary and the Subsidiary
                           ceases to be a Subsidiary of the Company (unless the
                           Participant continues in the employ or service of the
                           Company or another Subsidiary), all rights of the
                           Participant under the Plan and any agreements
                           evidencing an Incentive Award will immediately
                           terminate without notice of any kind, and no Options
                           or Stock Appreciation Rights then held by the
                           Participant will thereafter be exercisable, all
                           Restricted Stock Awards then held by the Participant
                           that have not vested will be terminated and
                           forfeited, and all Performance Units and Stock
                           Bonuses then held by the Participant will vest and/or
                           continue to vest in the manner determined by the
                           Committee and set forth in the agreement evidencing
                           such Performance Units or Stock Bonuses; provided,
                           however, that if such termination is due to any
                           reason other than termination by the Company or any
                           Subsidiary for "cause," all outstanding Options and
                           Stock Appreciation Rights then held by such
                           Participant will remain exercisable to the extent
                           exercisable as of such termination for a period of
                           one month after such termination (but in no event
                           after the expiration date of any such Option or Stock
                           Appreciation Right).

                  2.       For purposes of this Section 11.2, "cause" (as
                           determined by the Committee) will be as defined in
                           any employment or other agreement or policy
                           applicable to the Participant or, if no such
                           agreement or policy exists, will mean (i) dishonesty,
                           fraud, misrepresentation, embezzlement or deliberate
                           injury or attempted injury, in each case related to
                           the Company or any Subsidiary, (ii) any unlawful or
                           criminal activity of a serious nature, (iii) any
                           intentional and deliberate breach of a duty or duties
                           that, individually or in the aggregate, are material
                           in relation to the Participant's overall duties, or
                           (iv) any material breach of any employment, service,
                           confidentiality or noncompete agreement entered into
                           with the Company or any Subsidiary.

                                       54
<PAGE>

         C.       Modification of Rights Upon Termination. Notwithstanding the
                  other provisions of this Section 11, upon a Participant's
                  termination of employment or other service with the Company
                  and all Subsidiaries, the Committee may, in its sole
                  discretion (which may be exercised at any time on or after the
                  date of grant, including following such termination), cause
                  Options and Stock Appreciation Rights (or any part thereof)
                  then held by such Participant to become or continue to become
                  exercisable and/or remain exercisable following such
                  termination of employment or service and Restricted Stock
                  Awards, Performance Units and Stock Bonuses then held by such
                  Participant to vest and/or continue to vest or become free of
                  transfer restrictions, as the case may be, following such
                  termination of employment or service, in each case in the
                  manner determined by the Committee; provided, however, that no
                  Option may remain exercisable beyond its expiration date.

         D.       Breach of Confidentiality or Noncompete Agreements.
                  Notwithstanding anything in this Plan to the contrary, in the
                  event that a Participant materially breaches the terms of any
                  confidentiality or noncompete agreement entered into with the
                  Company or any Subsidiary or takes any other action that the
                  Committee, in its sole discretion, deems to be adverse to the
                  interests of the Company or any Subsidiary (an "Adverse
                  Action"), whether such Adverse Action occurs before or after
                  termination of such Participant's employment or other service
                  with the Company or any Subsidiary, the Committee in its sole
                  discretion may immediately terminate all rights of the
                  Participant under the Plan and any agreements evidencing an
                  Incentive Award then held by the Participant without notice of
                  any kind. In addition, to the extent that a Participant 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 (by so providing in the agreement
                  evidencing such Incentive Award at the time of grant) to
                  rescind (i) any grant of an Incentive Award made to such
                  Participant during such period and (ii) any exercise of an
                  Option of the Participant that was exercised during such
                  period, and to require the Participant 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 such
                  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 Participant (or from other amounts
                  that may be due and owing to the Participant from the Company
                  or Subsidiary) or make other arrangements for the collection
                  of all amounts necessary to satisfy such payment obligation.

         E.       Date of Termination of Employment or Other Service. Unless the
                  Committee otherwise determines in its sole discretion, a
                  Participant's employment or other service will, for purposes
                  of the Plan, be deemed to have terminated on the date recorded
                  on the personnel or other records of the Company or the
                  Subsidiary for which the Participant provides employment or
                  other service, as determined by the Committee in its sole
                  discretion based upon such records.

                                       55
<PAGE>

XII.     Payment of Withholding Taxes.

         A.       General Rules. The Company is entitled to (a) withhold and
                  deduct from future wages of the Participant (or from other
                  amounts that may be due and owing to the Participant from the
                  Company or a Subsidiary), or make other arrangements for the
                  collection of, all legally required amounts necessary to
                  satisfy any and all federal, state and local withholding and
                  employment-related tax requirements attributable to an
                  Incentive Award, including, without limitation, the grant,
                  exercise or vesting of, or payment of dividends with respect
                  to, an Incentive Award or a disqualifying disposition of stock
                  received upon exercise of an Incentive Stock Option, or (b)
                  require the Participant promptly to remit the amount of such
                  withholding to the Company before taking any action, including
                  issuing any shares of Common Stock, with respect to an
                  Incentive Award.

         B.       Special Rules. The Committee may, in its sole discretion and
                  upon terms and conditions established by the Committee, permit
                  or require a Participant to satisfy, in whole or in part, any
                  withholding or employment-related tax obligation described in
                  Section 12.1 of the Plan by electing to tender Previously
                  Acquired Shares or a Broker Exercise Notice, or by a
                  combination of such methods.

XIII.    Change in Control.

         A.       Change in Control. For purposes of this Section 13.1, a
                  "Change in Control" of the Company will mean (a) the sale,
                  lease, exchange or other transfer of substantially all of the
                  assets of the Company (in one transaction or in a series of
                  related transaction) to a person or entity that is not
                  controlled, directly or indirectly, by the Company, (b) a
                  merger or consolidation to which the Company is a party if the
                  stockholders of the Company immediately prior to effective
                  date of such merger or consolidation do not have "beneficial
                  ownership" (as defined in Rule 13d-3 under the Exchange Act)
                  immediately following the effective date of such merger or
                  consolidation of more than 80% of the combined voting power of
                  the surviving corporation's outstanding securities ordinarily
                  having the right to vote at elections of directors, or (c) a
                  change in control of the Company of a nature that would be
                  required to be reported pursuant to Section 13 or 15(d) of the
                  Exchange Act, whether or not the Company is then subject to
                  such reporting requirements, including, without limitation,
                  such time as (i) any person becomes, after the effective date
                  of the Plan, the "beneficial owner" (as defined in Rule 13d-3
                  under the Exchange Act), directly or indirectly, of 40% or
                  more of the combined voting power of the Company's outstanding
                  securities ordinarily having the right to vote at elections of
                  directors, or (ii) individuals who constitute the Board on the
                  effective date of the Plan cease for any reason to constitute
                  at least a majority of the Board, provided that any person
                  becoming a director subsequent to the effective date of the
                  Plan whose election, or nomination for election by the
                  Company's stockholders, was approved by a vote of at least a
                  majority of the directors comprising the Board on the
                  effective date of the Plan will, for purposes of this clause
                  (ii), be considered as though such persons were a member of
                  the Board on the effective date of the Plan.

         B.       Acceleration of Vesting. Without limiting the authority of the
                  Committee under Section 3.2 of the Plan, if a Change in
                  Control of the Company occurs, then, if approved by the
                  Committee in its sole discretion either in an agreement
                  evidencing an Incentive Award at the time of grant or at any
                  time after the grant of an Incentive Award, (a) all Options
                  and Stock Appreciation Rights will become immediately
                  exercisable in full and will remain exercisable for the
                  remainder of their terms, regardless of whether the
                  Participants to whom such Options or Stock Appreciation Rights
                  have been granted remain in the employ or service of the
                  Company or any Subsidiary; (b) all outstanding Restricted
                  Stock Awards will become immediately fully vested; and (c) all
                  Performance Units and Stock Bonuses then held by the
                  Participant will vest and/or continue to vest in the manner
                  determined by the Committee and set forth in the agreement
                  evidencing such Performance Units or Stock Bonuses.

                                       56
<PAGE>

         C.       Cash Payment for Options. If a Change in Control of the
                  Company occurs, then the Committee, if approved by the
                  Committee in its sole discretion either in an agreement
                  evidencing an Incentive Award at the time of grant or at any
                  time after the grant of an Incentive Award, and without the
                  consent of any Participant effected thereby, may determine
                  that some or all Participants holding outstanding Options will
                  receive, with respect to and in lieu of some or all of the
                  shares of Common Stock subject to such Options, 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
                  of such shares immediately prior to the effective date of such
                  Change in Control of the Company over the exercise price per
                  share of such Options.

         D.       Limitation on Change in Control Payments. Notwithstanding
                  anything in Section 13.2 or 13.3 of the Plan to the contrary,
                  if, with respect to a Participant, the acceleration of the
                  vesting of an Incentive Award as provided in Section 13.2 or
                  the payment of cash in exchange for all or part of an
                  Incentive Award as provided in Section 13.3 (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 such Participant has the right to receive
                  from the Company or any corporation that 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), then the
                  payments to such Participant pursuant to Section 13.2 or 13.3
                  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 such Participant is subject to a separate agreement with
                  the Company or a Subsidiary which 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 13.4 will, to
                  that extent, not apply.

XIV.     Rights of Eligible Recipients and Participants: Transferability.

         A.       Employment or Service. Nothing in the Plan will interfere with
                  or limit in any way the right of the Company or any Subsidiary
                  to terminate the employment or service of any Eligible
                  Recipient or Participant at any time, nor confer upon any
                  Eligible Recipient or Participant any right to continue in the
                  employ or service of the Company or any Subsidiary.

                                       57
<PAGE>

         B.       Rights as a Stockholder. As a holder of Incentive Awards
                  (other than Restricted Stock Awards), a Participant will have
                  no rights as a stockholder unless and until such Incentive
                  Awards are exercised for, or paid in the form of, shares of
                  Common Stock and the Participant becomes the holder of record
                  of such shares. Except as otherwise provided in the Plan, no
                  adjustment will be made for dividends or distributions with
                  respect to such Incentive Awards as to which there is a record
                  date preceding the date the Participant becomes the holder of
                  record of such shares, except as the Committee may determine
                  in its discretion.

         C.       Restrictions on Transfer. Except pursuant to testamentary will
                  or the laws of descent and distribution or as otherwise
                  expressly permitted by the Plan, no right or interest of any
                  Participant in an Incentive Award prior to the exercise or
                  vesting of such Incentive Award will be assignable or
                  transferable, or subjected to any lien; during the lifetime of
                  the Participant, either voluntarily or involuntarily, directly
                  or indirectly by operation of law or otherwise. A Participant
                  will, however, be entitled to designate a beneficiary to
                  receive an Incentive Award upon such Participant's death, and
                  in the event of a Participant's death, payment of any amounts
                  due under the Plan will be made to, and exercise of any
                  Options (to the extent permitted pursuant to Section 9 of the
                  Plan) may be made by, the Participant's legal representatives,
                  heirs and legatees.

         D.       Non-Exclusivity of the Plan. Nothing contained in the Plan is
                  intended to modify or rescind any previously approved
                  compensation plans of programs of the Company or create any
                  limitations on the power or authority of the Board to adopt
                  such additional or other compensation arrangements as the
                  Board may deem necessary or desirable.

XV.      Securities Law and Other Restrictions.

Notwithstanding any other provision of the Plan or any agreements entered into
pursuant to the Plan, the Company will not be required to issue any shares of
Common Stock under this Plan, and a Participant may not sell, assign, transfer
or otherwise dispose of shares of Common Stock issued pursuant to Incentive
Awards granted under the Plan, unless (a) there is in effect with respect to
such shares a registration statement under the Securities Act and any applicable
state securities laws or an exemption from such registration under the
Securities Act and applicable state securities laws, and (b) there has been
obtained any other consent, approval or permit from any other regulatory body
which the Committee, in its sole discretion, deems necessary or advisable. The
Company may condition such issuance, sale or transfer upon the receipt of any
representations or agreements from the parties involved, and the placement of
any legends on certificates representing shares of Common Stock, as may be
deemed necessary or advisable by the Company in order to comply with such
securities law or other restrictions.

XVI.     Plan Amendment. Modification and Termination

The Board may suspend or terminate the Plan or any portion thereof at any time,
and may amend the Plan from time to time in such respects as the Board may deem
advisable in order that Incentive Awards under the Plan will conform to any
change in applicable laws or regulations or in any other respect the Board may
deem to be in the best interests of the Company; provided, however, that (a) the
Board will not have the authority to amend the eligibility requirements for
Options granted pursuant to Section 6.7 of the Plan, or to modify the number of
shares, exercise price, exercisability, duration, manner of payment or other
terms with respect to such Options, more than once every six months, other than
to comply with changes in the Code, the Employee Retirement Income Security Act
or the rules promulgated thereunder; and (b) no amendments to the Plan will be
effective without approval of the stockholders of the Company if stockholder
approval of the amendment is then required pursuant to Rule 16b-3 under the
Exchange Act, Section 422 of the Code or the rules of the National Association
of Securities Dealers, Inc. No termination, suspension or amendment of the Plan
may adversely affect any outstanding Incentive Award without the consent of the
affected Participant; provided, however, that this sentence will not impair the
right of the Committee to take whatever action it deems appropriate under
Sections 4.3 and 13 of the Plan.

                                       58
<PAGE>

XVII.    Effective Date and Duration of the Plan

The Plan is effective as of November 19, 1999, the date it was adopted by the
Board. The Plan will terminate at midnight on November 18, 2009, and may be
terminated prior to such time to by Board action, and no Incentive Award will be
granted after such termination. Incentive Awards outstanding upon termination of
the Plan may continue to be exercised, or become free of restrictions, in
accordance with their terms.

XVIII.   Miscellaneous

         A.       Governing Law. The validity, construction, interpretation,
                  administration and effect of the Plan and any rules,
                  regulations and actions relating to the Plan will be governed
                  by and construed exclusively in accordance with the laws of
                  the State of Minnesota.

         B.       Successors and Assigns. The Plan will be binding upon and
                  inure to the benefit of the successors and permitted assigns
                  of the Company and the Participants.

                                       59EXHIBIT 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").

                                       60
<PAGE>

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.

                                       61
<PAGE>

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.

                                       62
<PAGE>

         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.

                                       63
<PAGE>

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.

                                       64
<PAGE>

         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)

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

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

                                       65

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