Document:

Exhibit 10.7

NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION
 2007 STOCK INCENTIVE PLAN

1.       Purpose of Plan.

          The purpose of the Northern Technologies International Corporation 2007 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 qualified individuals through opportunities for equity participation in the Company, and to reward those individuals who contribute to the achievement of the Company’s economic objectives.

2.       Definitions.

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

          2.1           “Board” means the Board of Directors of the Company.

          2.2          “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 or their nominee.

          2.3          “Cause” means (i) dishonesty, fraud, misrepresentation, embezzlement or other act of dishonesty with respect 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 non-compete agreement entered into with the Company or any Subsidiary.

          2.4          “Change in Control” means an event described in Section 14.1 of the Plan; provided, however, if distribution of an Incentive Award subject to Section 409A of the Code is triggered by a Change in Control, the term Change in Control will mean a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company, as such term is defined in Section 409A of the Code and the regulations and rulings issued thereunder.

          2.5           “Code” means the Internal Revenue Code of 1986, as amended (including, when the context requires, all regulations, interpretations and rulings issued thereunder).    

          2.6          “Committee” means the group of individuals administering the Plan, as provided in Section 3 of the Plan. 

          2.7          “Common Stock” means the common stock of the Company, par value $0.02 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. 

          2.8          “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; provided, however, if distribution of an Incentive Award subject to Section 409A of the Code is triggered by an Eligible Recipient’s Disability, such term will mean that the Eligible Recipient is disabled as defined by Section 409A of the Code and the regulations and rulings issued thereunder.

          2.9          “Eligible Recipients” means all employees (including, without limitation, officers and directors who are also employees) of the Company or any Subsidiary, and any non-employee directors, consultants, advisors 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.

          2.10        “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          2.11        “Fair Market Value” means, with respect to the Common Stock, as of any date: (i) the mean between the reported high and low sale prices of the Common Stock as of such date during the regular daily trading session, as reported on the American Stock Exchange, the New York Stock Exchange, the Nasdaq Global Select or Global Market, or any other national securities exchange or market on which the Common Stock is then traded or quoted (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); or (ii) if the Common Stock is not so listed, admitted to unlisted trading privileges, or reported on the American Stock Exchange, the New York Stock Exchange, the Nasdaq Global Select or Global Market, or any other national securities exchange or market, the mean between the reported
high and low sale prices as of such date during the regular daily trading session, as reported by the Nasdaq Capital Market, OTC Bulletin Board or the Pink Sheets LLC, or other comparable service (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); or (iii) if the Common Stock is not so listed or reported, such price as the Committee determines in good faith, and consistent with the definition of “fair market value” under Section 409A of the Code.

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

          2.13        “Incentive Stock Option” means a right to purchase shares of 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.

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

          2.15        “Option” means an Incentive Stock Option or a Non-Statutory Stock Option.  

          2.16        “Participant” means an Eligible Recipient who receives one or more Incentive Awards under the Plan. 

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          2.17        “Performance Criteria” means the performance criteria that may be used by the Committee in granting Incentive Awards contingent upon achievement of performance goals, consisting of net sales; operating income; income before income taxes; income before interest, taxes, depreciation and amortization; income before income taxes; income before interest, taxes, depreciation and amortization and other non-cash items; net income; net income per share (basic or diluted); profitability as measured by return ratios (including return on assets, return on equity, return on capital, return on investment and return on sales); cash flows; market share; cost of sales; sales, general and administrative expense, cost reduction goals; margins (including one or more of gross, operating and net income margins); stock price; total return to stockholders;
economic value added; working capital and strategic plan development and implementation.  The Committee may select one criterion or multiple criteria for measuring performance, and the measurement may be based upon Company, Subsidiary or business unit performance, either absolute or by relative comparison to prior periods or other companies or any other external measure of the selected criteria.    

          2.18        “Performance Award” means a right granted to an Eligible Recipient pursuant to Section 10 of the Plan to receive an amount of cash, a number of shares of Common Stock, or a combination of both, contingent upon achievement of Performance Criteria or other objectives during a specified period.

          2.19        “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 to the Participant upon the grant, exercise or vesting of such Incentive Award.

          2.20        “Restricted Stock Award” means an award of shares of Common Stock granted to an Eligible Recipient pursuant to Section 8 of the Plan that are subject to restrictions on transferability and a risk of forfeiture.

          2.21        “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/termination of employment or if the Company does not have any such retirement/pension plan or practice, service at age 55 or older and completion of at least 10 years of continuous service. 

          2.22        “Securities Act” means the Securities Act of 1933, as amended.

          2.23        “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 shares of Common 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 a specified exercise price of such shares.

          2.24        “Stock Bonus” means an award of shares of Common Stock granted to an Eligible Recipient pursuant to Section 11 of the Plan.

          2.25        “Stock Unit Award” means a right granted to an Eligible Recipient pursuant to Section 9 of the Plan to receive the Fair Market Value of one or more shares of Common Stock, payable in cash, shares of Common Stock, or a combination of both, the payment, issuance, retention and/or vesting of which is subject to the satisfaction of specified conditions, which may include achievement of Performance Criteria or other objectives.

          2.26        “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.

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

3.       Plan Administration.

          3.1          The Committee.  The Plan will be administered by the Board or by a committee of the Board.  So long as the Company has a class of its equity securities registered under Section 12 of the Exchange Act, any committee administering the Plan will consist solely of two or more members of the Board who are “non-employee directors” within the meaning of Rule 16b-3 under the Exchange Act, who are “independent” as required by the listing standards of the American Stock Exchange (or other applicable market or exchange on which the Company’s Common Stock may be quoted or traded) and who are “outside directors” within the meaning of Section 162(m) of the Code.  Such a committee, if established, will act by majority approval of the members (but may also take action by the written consent of all of
the members of such committee), and a majority of the members of such a committee will constitute a quorum.   As used in the Plan, “Committee” will refer to the Board or to such a committee, if established.  To the extent consistent with applicable corporate law of the Company’s jurisdiction of incorporation, 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 or whose compensation in the fiscal year may be subject to the limits on deductible compensation pursuant to Section 162(m) of the Code.  The Committee may exercise its duties, power and authority under the Plan in its sole and absolute discretion without the consent of any Participant or other
party, unless the Plan specifically provides otherwise.  Each determination, interpretation or other action made or taken by the Committee pursuant to the provisions of the Plan will be final, 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. 

          3.2          Authority of the Committee.

	
  
 
  	
  
              (a)          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.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
              (b)          Subject to Section 3.2(d) of   the Plan, 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 
  

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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.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
              (c)          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 similar change in corporate structure or shares; (ii) any purchase,   acquisition, sale, disposition or write-down of a significant amount of   assets or a significant business; (iii) any change in accounting principles   or practices, tax laws or other such laws or provisions affecting reported   results; (iv) any uninsured catastrophic losses or extraordinary   non-recurring items as described in Accounting Principles Board Opinion No.   30 or in management’s discussion and analysis of financial performance   appearing in the Company’s annual report to stockholders for the
applicable   year; or (v) 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 (including Performance 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 or other subunit   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, including the limitations in Section 3.2(a) and 3.2(b).
  
	
   
  	
  
 
  
	
  
 
  	
  
              (d)          Notwithstanding any other   provision of this Plan other than Section 4.3, the Committee may not, without   prior approval of the Company’s stockholders, seek to effect any re-pricing   of any previously granted, “underwater” Option or Stock Appreciation Right   by:  (i) amending or modifying the   terms of the Option or Stock Appreciation Right to lower the exercise price;   (ii) canceling the underwater Option or Stock Appreciation Right and granting   either (A) replacement Options or Stock Appreciation Rights having a lower   exercise price; (B) Restricted Stock Awards; or (C) Stock Unit Awards,   Performance Awards or Stock Bonuses in exchange; or (iii) repurchasing the   underwater Options or Stock Appreciation Rights and granting new Incentive   Awards under this Plan.  For purposes   of this Section 3.2(d),
Options and Stock Appreciation Rights will be deemed   to be “underwater” at any time when the Fair Market Value of the Common Stock   is less than the exercise price of the Option or Stock Appreciation Right.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
              (e)          In addition to the authority of   the Committee under Section 3.2(b) of the Plan and notwithstanding any other   provision of the Plan, the Committee may, in its sole discretion, amend the   terms of the Plan or Incentive Awards with respect to Participants resident   outside of the United States or employed by a non-U.S. Subsidiary in order to   comply with local legal requirements, to otherwise protect the Company’s or   Subsidiary’s interests, or to meet objectives of the Plan, and may, where   appropriate, establish one or more sub-plans (including the adoption of any   required rules and regulations) for the purposes of qualifying for preferred   tax treatment under foreign tax laws.    The Committee shall have no authority, however, to take action   pursuant to this Section 3.2(e) of the Plan: (i) to reserve shares or
grant   Incentive Awards in excess of the limitations provided in Section 4.1 of the   Plan; (ii) to effect any re-pricing in violation of Section 3.2(d) of the   Plan; (iii) to grant Options or Stock Appreciation Rights having an exercise   price in 
  

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violation of Section 6.2   or 7.2 of the Plan, as the case may be; or (iv) for which stockholder   approval would then be required pursuant to Section 422 of the Code or the   rules of the New York Stock Exchange (or other applicable market or exchange   on which the Company’s Common Stock may be quoted or traded).
  

4.       Shares Available for Issuance.

          4.1          Maximum Number of Shares Available; Certain Restrictions on Awards.  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 the sum of:

	
  
 
  	
  
              (a)          400,000;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
              (b)          the number of shares issued or   Incentive Awards granted under the Plan in connection with the settlement,   assumption or substitution of outstanding awards or obligations to grant   future awards as a condition of the Company and/or any Subsidiary(ies)   acquiring, merging or consolidating with another entity; and
  
	
   
  	
  
 
  
	
  
 
  	
  
              (c)          the number of shares that are   unallocated and available for grant under a stock plan assumed by the Company   or any Subsidiary(ies) in connection with the merger, consolidation, or   acquisition of another entity by the Company and/or any of its Subsidiaries,   based on the applicable exchange ratio and other transaction terms, but only   to the extent that such shares may be utilized by the Company or its Subsidiaries   following the transaction pursuant to the rules and regulations of the   American Stock Exchange (or other applicable market or exchange on which the   Company’s Common Stock may be quoted or traded).
  

Notwithstanding any other provisions of the Plan to the contrary, (i) no Participant in the Plan may be granted Options and Stock Appreciation Rights relating to more than 100,000 shares of Common Stock in the aggregate during any calendar year; (ii) no Participant in the Plan may be granted Restricted Stock Awards, Stock Unit Awards, Performance Awards and Stock Bonuses relating to more than 100,000 shares of Common Stock in the aggregate during any calendar year; (iii) no more than 400,000 shares of Common Stock may be issued pursuant to the exercise of Incentive Stock Options granted under the Plan; and (iv) no more than 300,000 shares of Common Stock may be issued or issuable under the Plan in connection with the grant of Incentive Awards, other than Options or Stock Appreciation Rights; provided, however, that the limits in clauses (i) and (ii), above, will be 150,000 shares and 150,000 shares, respectively, as to a Participant who, during the calendar year,
is first appointed or elected as an officer, hired as an employee, elected as a director or retained as a consultant by the Company or who receives a promotion that results in an increase in responsibilities or duties.  All of the foregoing share limits are subject, in each case, to adjustment as provided in Section 4.3 of the Plan.  The limits in clauses (i), (ii) and (iv) will not apply, however, to the extent Incentive Awards are granted as a result of the Company’s assumption or substitution of like awards issued by any acquired, merged or consolidated entity pursuant to the applicable transaction terms, nor will any Incentive Stock Options issued in any such assumption or substitution pursuant to applicable provisions of the Code count towards the limit in clause (iii).  

          4.2          Accounting for Incentive Awards.  Shares of Common Stock that are issued under the Plan or that are potentially issuable pursuant to outstanding Incentive Awards will be applied to reduce the maximum number of shares of Common Stock remaining available for issuance under the Plan.  All shares so subtracted from the amount available under the Plan with respect to an Incentive Award that lapses, expires, is forfeited (including issued shares forfeited under a Restricted Stock Award) or for any

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reason is terminated unexercised or unvested or 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; provided, however, that (i) any shares which would have been issued upon any exercise of an Option but for the fact that the exercise price was paid by a “net exercise” pursuant to Section 6.4(b) of the Plan or the tender or attestation as to ownership of Previously Acquired Shares pursuant to Section 6.4(a) of the Plan will not again become available for issuance under the Plan; and (ii) shares covered by a Stock Appreciation Right, to the extent exercised, will not again become available for issuance under the Plan.

          4.3          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 similar 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 or other property (including cash) available for issuance or payment under the Plan and, in order to prevent dilution or enlargement of the rights of Participants, (a) the number and kind of securities or other property
(including cash) subject to outstanding Incentive Awards, and (b) the exercise price of outstanding Options and Stock Appreciation Rights.

5.       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.

6.       Options.

          6.1          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.  To the extent that any Incentive Stock Option (or portion thereof) granted under the Plan ceases for any reason to qualify as an “incentive stock option” for purposes of Section 422 of the Code, such Incentive Stock Option (or portion thereof) will continue to be outstanding for purposes of the Plan but will thereafter be deemed to be a Non-Statutory Stock Option.

          6.2          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 such price will not be less than 100% of the Fair Market Value of one share of Common Stock on the date of grant (or 110% of the Fair Market Value of one share of Common Stock on the date of grant of an Incentive Stock Option 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).   Notwithstanding the foregoing, to the extent that Options are granted under the Plan as a result of the Company’s assumption or substitution of options issued by
any acquired, merged or consolidated entity, the exercise price for such Options shall be the price determined by the Committee pursuant to the conversion terms applicable to the transaction.

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          6.3          Exercisability and Duration.  An Option will become exercisable at such times and in such installments and upon such terms and conditions as may be determined by the Committee in its sole discretion at the time of grant (including without limitation (i) the achievement of one or more of the Performance Criteria; and/or that (ii) the Participant remain in the continuous employ or service of the Company or a Subsidiary for a certain period); provided, however, that no Option may be exercisable after ten (10) years from its date of grant (five years from its date of grant in the case of an Incentive Stock Option 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).   

          6.4          Payment of Exercise Price.

	
  
 
  	
  
              (a)          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 (i) tender of a Broker Exercise Notice; (ii) by tender, or   attestation as to ownership, of Previously Acquired Shares that are   acceptable to the Committee; (iii) by a “net exercise” of the Option (as   further described in paragraph (b), below);    or  (iv) by a combination of   such methods.
  
	
   
  	
  
 
  
	
  
 
  	
  
              (b)          In the case of a “net exercise”   of an Option, the Company will not require a payment of the exercise price of   the Option from the Participant but will reduce the number of shares of   Common Stock issued upon the exercise by the largest number of whole shares   that has a Fair Market Value on the exercise date that does not exceed the   aggregate exercise price for the shares exercised under this method. Shares   of Common Stock will no longer be outstanding under an Option (and will   therefore not thereafter be exercisable) following the exercise of such   Option to the extent of (i) shares used to pay the exercise price of an   Option under the “net exercise,” (ii) shares actually delivered to the   Participant as a result of such exercise and (iii) any shares withheld   for purposes of tax withholding pursuant
to Section 13.1 of the Plan.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
              (c)          Previously Acquired Shares   tendered or covered by an attestation as payment of an Option exercise price   will be valued at their Fair Market Value on the exercise date.
  

          6.5          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 at its principal executive office in Circle Pines, 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.

          6.6          Early Exercise.  An Option may, but need not, include a provision whereby the Participant may elect at any time before the Participant’s employment or service terminates to exercise the Option as to any part or all of the shares subject to the Option prior to the full vesting of the Option.  Any unvested shares so purchased shall be subject to a repurchase option in favor of the Company and to any other restriction the Committee determines to be appropriate.  

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7.       Stock Appreciation Rights.

          7.1          Grant.  An Eligible Recipient may be granted one or more Stock Appreciation Rights under the Plan, and such Stock Appreciation Rights 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 will have the sole discretion to determine the form in which payment of the economic value of Stock Appreciation Rights will be made to a Participant (i.e., cash, shares of Common Stock or any combination thereof) or to consent to or disapprove the election by a Participant of the form of such payment.

          7.2          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 may not be less than 100% of the Fair Market Value of one share of Common Stock on the date of grant, except as provided in Section 7.4 of the Plan.  Notwithstanding the foregoing, to the extent that Stock Appreciation Rights are granted under the Plan as a result of the Company’s assumption or substitution of stock appreciation rights issued by any acquired, merged or consolidated entity, the exercise price for such Stock Appreciation Rights shall be the price determined by the Committee pursuant to the conversion terms applicable to the transaction.  

          7.3          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 ten (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.

          7.4          Grants in Tandem with Options.  Stock Appreciation Rights may be granted alone or in addition to other Incentive Awards, or in tandem with an Option, either at the time of grant of the Option or at any time thereafter during the term of the Option.  A Stock Appreciation Right granted in tandem with an Option shall cover the same number of shares of Common Stock as covered by the Option (or such lesser number as the Committee may determine), shall be exercisable at such time or times and only to the extent that the related Option is exercisable, have the same term as the Option and shall have an exercise price equal to the exercise price for the Option.  Upon the exercise of a Stock Appreciation Right granted in tandem with an Option, the Option shall be canceled automatically to the extent of the number of shares covered
by such exercise; conversely, upon exercise of an Option having a related Stock Appreciation Right, the Stock Appreciation Right shall be canceled automatically to the extent of the number of shares covered by the Option exercise.

8.       Restricted Stock Awards.

          8.1          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, (i) the achievement of one or more of the Performance Criteria; and/or that (ii) the Participant remain in the continuous employ or service of the Company or a Subsidiary for a certain period.  

          8.2          Rights as a Stockholder; Transferability.  Except as provided in Sections 8.1, 8.3, 8.4 and 15.3 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.

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          8.3          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.

          8.4          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.

9.       Stock Unit Awards.

          An Eligible Recipient may be granted one or more Stock Unit Awards under the Plan, and such Stock Unit 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 payment, issuance, retention and/or vesting of such Stock Unit Awards as it deems appropriate, including, without limitation, (i) the achievement of one or more of the Performance Criteria; and/or that (ii) the Participant remain in the continuous employ or service of the Company or a Subsidiary for a certain period; provided, however, that in all cases payment of a Stock Unit Award will be made within two and one-half months following the end of the Eligible Recipient’s tax year during which
receipt of the Stock Unit Award is no longer subject to a “substantial risk of forfeiture” within the meaning of Section 409A of the Code, unless otherwise determined by the Committee pursuant to Section 18 of the Plan.

10.     Performance Awards.

          An Eligible Recipient may be granted one or more Performance Awards under the Plan, and such Performance Awards will be subject to such terms and conditions, if any, consistent with the other provisions of the Plan, as may be determined by the Committee in its sole discretion, including, but not limited to, the achievement of one or more of the Performance Criteria; provided, however, that in all cases payment of the Performance Award will be made within two and one-half months following the end of the Eligible Recipient’s tax year during which receipt of the Performance Award is no longer subject to a “substantial risk of forfeiture” within the meaning of Section 409A of the Code, unless otherwise determined by the Committee pursuant to Section 18 of the Plan.

11.     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, if any, consistent with the other provisions of the Plan, as may be determined by the Committee in its sole discretion, including, but not limited to, the achievement of one or more of the Performance Criteria; provided, however, that in all cases payment of the Stock Bonus will be made within two and one-half months following the end of the Eligible Recipient’s tax year during which receipt of the Stock Bonus is no longer subject to a “substantial risk of forfeiture” within the meaning of Section 409A of the Code, unless otherwise determined by the Committee pursuant to Section 18 of the Plan.

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12.     Effect of Termination of Employment or Other Service.  The following provisions shall apply upon termination of a Participant’s employment or other service with the Company and all Subsidiaries, except to the extent that the Committee provides otherwise in an agreement evidencing an Incentive Award at the time of grant or determines pursuant to Section 12.3 of the Plan.

          12.1       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:

	
  
 
  	
  
             (a)          All outstanding Options and   Stock Appreciation Rights then held by the Participant will, to the extent   exercisable as of such termination, remain exercisable in full for a period   of twelve months after such termination (but in no event after the expiration   date of any such Option or Stock Appreciation Right).  Options and Stock Appreciation Rights not   exercisable as of such termination will be forfeited and terminate.
  
	
   
  	
  
 
  
	
  
 
  	
  
             (b)          All Restricted Stock Awards   then held by the Participant that have not vested as of such termination will   be terminated and forfeited; and
  
	
   
  	
  
 
  
	
  
 
  	
  
             (c)          All outstanding but unpaid   Stock Unit Awards, Performance Awards and Stock Bonuses then held by the   Participant will be terminated and forfeited.
  

          12.2       Termination for Reasons Other than Death, Disability or Retirement. Subject to Section 12.4 of the Plan, 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):

	
  
 
  	
  
             (a)          All outstanding Options and   Stock Appreciation Rights then held by the Participant will, to the extent   exercisable as of such termination, remain exercisable in full for a period   of three months after such termination (but in no event after the expiration   date of any such Option or Stock Appreciation Right).  Options and Stock Appreciation Rights not   exercisable as of such termination will be forfeited and terminate;
  
	
   
  	
  
 
  
	
  
 
  	
  
             (b)          All Restricted Stock Awards   then held by the Participant that have not vested as of such termination will   be terminated and forfeited; and
  
	
  
 
  	
  
 
  
	
  
 
  	
  
             (c)          All outstanding but unpaid   Stock Unit Awards, Performance Awards and Stock Bonuses then held by the   Participant will be terminated and forfeited.
  

          12.3        Modification of Rights Upon Termination.  Notwithstanding the other provisions of this Section 12, 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), except as provided in clause (ii), below, cause Options or Stock Appreciation Rights (or any part thereof) then held by such Participant to terminate, become or continue to become exercisable and/or remain exercisable following such termination of employment or service, and Restricted Stock Awards, Stock Unit Awards, Performance Awards or Stock Bonuses then held by such Participant to terminate, vest and/or continue to vest or become free of restrictions and conditions to payment,
as the case may be, following such termination of employment or 

11

service, in each case in the manner determined by the Committee; and (ii) any such action adversely affecting any outstanding Incentive Award will not be effective without the consent of the affected Participant (subject to the right of the Committee to take whatever action it deems appropriate under Sections 3.2(c), 4.3 and 14 of the Plan).

          12.4        Effects of Actions Constituting Cause.  Notwithstanding anything in the Plan to the contrary, in the event that a Participant is determined by the Committee, acting in its sole discretion, to have committed any action which would constitute Cause as defined in Section 2.4 of the Plan, irrespective of whether such action or the Committee’s determination occurs before or after termination of such Participant’s employment with the Company or any Subsidiary, all rights of the Participant under the Plan and any agreements evidencing an Incentive Award then held by the Participant shall terminate and be forfeited without notice of any kind.  The Company may defer the exercise of any Option, the vesting of any Restricted Stock Award or the payment of any Stock Unit Award, Performance Award or Stock Bonus for a period of up
to ninety (90) days in order for the Committee to make any determination as to the existence of Cause.

          12.5        Determination of Termination of Employment or Other Service.  

	
  
 
  	
  
              (a)          The change in a Participant’s   status from that of an employee of the Company or any Subsidiary to that of a   non-employee consultant, director or advisor of the Company or any Subsidiary   will, for purposes of the Plan, be deemed to result in a termination of such   Participant’s employment with the Company and its Subsidiaries, unless the   Committee otherwise determines in its sole discretion.
  
	
   
  	
  
 
  
	
  
 
  	
  
              (b)          The change in a Participant’s   status from that of a non-employee consultant, director or  advisor of the Company or any Subsidiary   to that of an employee of the Company or any Subsidiary will not, for   purposes of the Plan, be deemed to result in a termination of such Participant’s   service as a non-employee consultant, director or advisor with the Company   and its Subsidiaries, and such Participant will thereafter be deemed to be an   employee of the Company or its Subsidiaries until such Participant’s   employment or service is terminated, in which event such Participant will be   governed by the provisions of this Plan relating to termination of employment   or service (subject to paragraph (a), above).
  
	
  
 
  	
  
 
  
	
  
 
  	
  
              (c)          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;   provided, however, if distribution of an Incentive Award subject to Section   409A of the Code is triggered by a termination of a Participant’s employment   or other service, such termination must also constitute a “separation from   service” within the meaning of Section 409A of the Code.
  

          12.6        Breach of Employment, Service, Confidentiality, Non-Compete or Non-Solicitation Agreements.  Notwithstanding anything in the Plan to the contrary and in addition to the rights of the Committee under Section 12.4 of the Plan, in the event that a Participant materially breaches the terms of any employment, service, confidentiality, non-compete or non-solicitation agreement entered into with the Company or any Subsidiary (including an employment, service, confidentiality, non-compete or non-solicitation agreement made in connection with the grant of an Incentive Award), whether such breach 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 require the Participant to surrender shares of Common Stock received, and to
disgorge any profits (however defined by the Committee), made or realized by the Participant in connection with any Incentive Awards or any shares issued upon the exercise or vesting of any Incentive Awards.   

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13.     Payment of Withholding Taxes.

          13.1        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, foreign, 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; (b) withhold cash paid or payable or shares of Common Stock from the shares issued or otherwise issuable to the Participant in connection with an Incentive Award; or (c) 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.  Shares of Common Stock issued or otherwise issuable to the Participant in connection with an Incentive Award that gives rise to the tax withholding obligation that are withheld for purposes of satisfying the Participant’s withholding or employment-related tax obligation will be valued at their Fair Market Value on the Tax Date.

          13.2        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 13.1 of the Plan by electing to tender, or by attestation as to ownership of, Previously Acquired Shares, by delivery of a Broker Exercise Notice or a combination of such methods.  For purposes of satisfying a Participant’s withholding or employment-related tax obligation, Previously Acquired Shares tendered or covered by an attestation will be valued at their Fair Market Value on the Tax Date.

14.     Change in Control.

          14.1        Definition of Change in Control.  A “Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred For purposes of this Section 14.1, 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.

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          14.2        Acceleration of Vesting.  Without limiting the authority of the Committee under Sections 3.2 and 4.3 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 outstanding Options and Stock Appreciation Rights will become immediately exercisable in full and will remain exercisable in accordance with 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 non-forfeitable; and (c) all outstanding Stock Unit Awards, Performance
Awards 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.  

          14.3        Cash Payment.  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 affected thereby, may determine that: (i) some or all Participants holding outstanding Options will receive, with respect to 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 (or, in the event that there is no excess, that such Options will
be terminated); and (ii) some or all Participants holding Performance Awards will receive, with respect to some or all of the shares of Common Stock subject to such Performance Awards, as of the effective date of any such Change in Control of the Company, cash in an amount equal the Fair Market Value of such shares immediately prior to the effective date of such Change in Control of the Company.

          14.4        Limitation on Change in Control Payments.  Notwithstanding anything in Section 14.2 or 14.3 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 14.2 of the Plan or the payment of cash in exchange for all or part of an Incentive Award as provided in Section 14.3 of the Plan (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” that 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 14.2 or 14.3 of the Plan 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, that such reduction shall be made only if the aggregate amount of the payments after such reduction exceeds the difference between (A) the amount of such payments absent such reduction minus (B) the aggregate amount of the excise tax imposed under Section 4999 of the Code attributable to any such excess parachute payments.  Notwithstanding the foregoing sentence, if a Participant is subject to a separate agreement with the Company or a Subsidiary that expressly addresses the potential application of Sections 280G or 4999 of the Code (including, without limitation, that “payments” under such agreement or otherwise will be reduced, that the
Participant will have the discretion to determine which “payments” will be reduced, that such “payments” will not be reduced or that such “payments” will be “grossed up” for tax purposes), then this Section 14.4 will not apply, and any “payments” to a Participant pursuant to Section 14.2 or 14.3 of the Plan will be treated as “payments” arising under such separate agreement.

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15.     Rights of Eligible Recipients and Participants; Transferability.

          15.1        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.

          15.2        Rights as a Stockholder; Dividends.  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 or otherwise provided by the Committee, no adjustment will be made in the amount of cash payable or in the number of shares of Common Stock issuable under Incentive Awards denominated in or based on the value of shares of Common Stock as a result of cash dividends or distributions paid to holders of Common Stock prior to the payment of, or issuance of shares of Common Stock under, such Incentive Awards.  In its discretion, the Committee may provide in an
agreement evidencing an Incentive Award that the Participant will be entitled to receive dividend equivalents, in the form of a cash credit to an account for the benefit of the Participant, for any such dividends and distributions.  The terms of any rights to dividend equivalents will be determined by the Committee and set forth in the agreement evidencing the Incentive Award, including the time and form of payment and whether such equivalents will be credited with interest or deemed to be reinvested in Common Stock; provided, however, that dividend equivalents in respect of Options and Stock Appreciation Rights will only be paid out in cash.

          15.3        Restrictions on Transfer.  

	
  
 
  	
  
              (a)          Except pursuant to testamentary   will or the laws of descent and distribution or as otherwise expressly   permitted by subsections (b) and (c) below, no right or interest of any   Participant in an Incentive Award prior to the exercise (in the case of   Options) or vesting or issuance (in the case of Restricted Stock Awards and   Performance Awards) 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.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
              (b)          A Participant will be entitled   to designate a beneficiary to receive an Incentive Award upon such   Participant’s death, and in the event of such Participant’s death, payment of   any amounts due under the Plan will be made to, and exercise of any Options   or Stock Appreciation Rights (to the extent permitted pursuant to Section 12   of the Plan) may be made by, such beneficiary.  If a deceased Participant has failed to designate a   beneficiary, or if a beneficiary designated by the Participant fails to   survive the Participant, payment of any amounts due under the Plan will be   made to, and exercise of any Options or Stock Appreciation Rights (to the   extent permitted pursuant to Section 12 of the Plan) may be made by, the   Participant’s legal representatives, heirs and legatees.  If a deceased Participant has
designated a   beneficiary and such beneficiary survives the Participant but dies before   complete payment of all amounts due under the Plan or exercise of all   exercisable Options or Stock Appreciation Rights, then such payments will be   made to, and the exercise of such Options or Stock Appreciation Rights may be   made by, the legal representatives, heirs and legatees of the beneficiary.
  

15

	
  
 
  	
  
              (c)          Upon a Participant’s request,   the Committee may, in its sole discretion, permit a transfer of all or a   portion of a Non-Statutory Stock Option, other than for value, to such   Participant’s child, stepchild, grandchild, parent, stepparent, grandparent,   spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,   son-in-law, daughter-in-law, brother-in-law, or sister-in-law, any person   sharing such Participant’s household (other than a tenant or employee), a   trust in which any of the foregoing have more than fifty percent of the   beneficial interests, a foundation in which any of the foregoing (or the   Participant) control the management of assets, and any other entity in which   these persons (or the Participant) own more than fifty percent of the voting   interests.  Any permitted transferee
will remain subject to all the terms and conditions applicable to the   Participant prior to the transfer.  A   permitted transfer may be conditioned upon such requirements as the Committee   may, in its sole discretion, determine, including, but not limited to   execution and/or delivery of appropriate acknowledgements, opinion of   counsel, or other documents by the transferee.
  

          15.4        Non-Exclusivity of the Plan.  Nothing contained in the Plan is intended to modify or rescind any previously approved compensation plans or 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.

16.     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 securities laws of a state or foreign jurisdiction or an exemption from such registration under the Securities Act and applicable state or foreign securities laws, and (b) there has been obtained any other consent, approval or permit from any other U.S. or foreign 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.

17.     Performance-Based Compensation Provisions.

          The Committee, when it is comprised solely of two or more outside directors meeting the requirements of Section 162(m) of the Code (“Section 162(m)”), in its sole discretion, may designate whether any Incentive Awards are intended to be “performance-based compensation” within the meaning of Section 162(m).  Any Incentive Awards so designated will, to the extent required by Section 162(m), be conditioned upon the achievement of one or more Performance Criteria, and such Performance Criteria will be established by the Committee within the time period prescribed by, and will otherwise comply with the requirements of, Section 162(m) giving due regard to the disparate treatment under Section 162(m) of Options and Stock Appreciation Rights (where compensation is determined based solely on an increase in the value of the underlying stock after the date of grant or award), as compared to
other forms of compensation, including Restricted Stock Awards, Stock Unit Awards and Performance Awards.  The Committee shall also certify in writing that such Performance Criteria have been met prior to payment of compensation to the extent required by Section 162(m).

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18.     Compliance with Section 409A.

          It is intended that the Plan and all Incentive Awards hereunder be administered in a manner that will comply with the requirements of Section 409A of the Code, including any exceptions to such requirements.  The Committee is authorized to adopt rules or regulations deemed necessary or appropriate to qualify for an exception from or to comply with the requirements of Section 409A of the Code (including any transition or grandfather rules relating thereto).  Notwithstanding anything in this Section 18 to the contrary, with respect to any Incentive Award subject to Section 409A of the Code, no amendment to or payment under such Incentive Award will be made unless permitted under Section 409A and the regulations or rulings issued thereunder.

19.     Plan Amendment, Modification and Termination.

          The Board may suspend or terminate the Plan or any portion thereof at any time.  In addition to the authority of the Committee to amend the Plan under Section 3.2(e) of the Plan, the Board 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 no such amendments to the Plan will be effective without approval of the Company’s stockholders if: (i) stockholder approval of the amendment is then required pursuant to Section 422 of the Code or Section 162(m) of the Code or the rules of the New York Stock Exchange (or other applicable market or exchange on which the Company’s Common Stock may be quoted or traded); or (ii) such amendment seeks to
increase the number of shares authorized for issuance hereunder (other than by virtue of an adjustment under Section 4.3 of the Plan) or to modify Section 3.2(d) of the Plan.  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 3.2(c), 4.3 and 14 of the Plan.

20.     Effective Date and Duration of the Plan.

          The Plan will be effective as of the date on which the Plan is initially approved by the Company’s stockholders (the “Effective Date”).  The Plan will terminate at midnight on the day before the tenth (10th) anniversary of the Effective Date, and may be terminated prior to such time by Board action.  No Incentive Award will be granted after termination of the Plan.  Incentive Awards outstanding upon termination of the Plan may continue to be exercised, earned or become free of restrictions, according to their terms. 

21.     Miscellaneous.

          21.1        Governing Law.  Except to the extent expressly provided herein or in connection with other matters of corporate governance and authority (all of which shall be governed by the laws of the Company’s jurisdiction of incorporation), 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, notwithstanding the conflicts of laws principles of any jurisdictions.

          21.2        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.

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          21.3        Construction.  Wherever possible, each provision of the Plan and any agreement evidencing an Incentive Award granted under the Plan will be interpreted so that it is valid under the applicable law.  If any provision of the Plan or any agreement evidencing an Incentive Award granted under the Plan is to any extent invalid under the applicable law, that provision will still be effective to the extent it remains valid.  The remainder of the Plan and the Incentive Award agreement also will continue to be valid, and the entire Plan and Incentive Award agreement will continue to be valid in other jurisdictions.

18Exhibit 10.8

FORM OF INCENTIVE STOCK OPTION AGREEMENT

          THIS INCENTIVE STOCK OPTION AGREEMENT is entered into and effective as of this ____  day of ____________, ______ (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 2007 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 grant incentive stock options to employees of the Company and its Subsidiaries (as defined in the Plan).

          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:

1.  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, $0.02 par value (the “Common Stock”), according to the terms and subject to the conditions hereinafter set forth and as set forth in the Plan.  Subject to Section 9 of this Agreement, 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”).

2.  Option Exercise Price.

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

3.  Duration of Option and Time of Exercise.

          3.1          Initial Period of Exercisability.  The Option will become exercisable with respect to the Option Shares [immediately/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:

	
  
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.]  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. Circle Pines, Minnesota time on   ______________________ (the “Time of Termination”).
  

	
  
 
  	
  
3.2     Termination   of Employment.
  
	  
	  

	
  
 
  	
  
          (a)          Termination   Due to Death, Disability or Retirement.    In the event the Optionee’s employment with the Company and all   Subsidiaries is terminated by reason of death, Disability or Retirement, this   Option will remain exercisable, to the extent exercisable as of the date of   such termination, for a period of 12 months after such termination (but in no   event after the Time of Termination).
  
	
   
  	
  
 
  
	
  
 
  	
  
          (b)          Termination   for Reasons Other Than Death, Disability or Retirement.  In the event that the Optionee’s   employment with the Company and all Subsidiaries is terminated for any reason   other than death, Disability or Retirement, or the Optionee is in the employ   of a Subsidiary and the Subsidiary ceases to be a Subsidiary of the Company   (unless the Optionee continues in the employ of the Company or another   Subsidiary), 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 three months after   such termination (but in no event after the Time of Termination).
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (c)          Breach   of Employment, Service, Confidentiality, Non-Compete or Non-Solicitation   Agreements.  Notwithstanding   anything in this Agreement to the contrary and in addition to the rights of   the Committee under Section 12.4 of the Plan, in the event that the Optionee   materially breaches the terms of any employment, service, confidentiality,   non-compete or non-solicitation agreement entered into with the Company or   any Subsidiary (including an employment, service, confidentiality,   non-compete or non-solicitation agreement made in connection with the grant   of the Option), whether such breach 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 require the Participant   to surrender shares of Common Stock
received, and to disgorge any profits   (however defined by the Committee), made or realized by the Participant in   connection with this Option or any shares issued upon the exercise or vesting   of this Option.
  
	
   
  	
  
 
  
	
  
 
  	
  
3.3     Change   in Control.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (a)          Impact   of Change in Control.  If a Change   in Control (as defined in the Plan) of the Company occurs, 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   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.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (b)          Limitation   on Change in Control Payments.    Notwithstanding anything in this Section 3.3 to the contrary, if,   with respect to the Optionee, the acceleration of the vesting of this Option   or the payment of cash in exchange for all or part of the Option Shares 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” that the Optionee has the right to receive from the Company   or any corporation that is a member of an “affiliated group”
  

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  (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 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, that such reduction shall be made only if the   aggregate amount of the payments after such reduction exceeds the difference   between (A) the amount of such payments absent such reduction minus (B) the   aggregate amount of the excise tax imposed under Section 4999 of the Code attributable   to any such excess parachute payments.    Notwithstanding the foregoing sentence, if the Optionee is subject to   a separate agreement with the Company or a Subsidiary that expressly   addresses the
potential application of Sections 280G or 4999 of the Code   (including, without limitation, that “payments” under such agreement or   otherwise will be reduced, that the Optionee will have the discretion to   determine which “payments” will be reduced, that such “payments” will not be   reduced or that such “payments” will be “grossed up” for tax purposes), then   this Section 3.3(b) will not apply, and any “payments” to the Optionee as   provided herein will be treated as “payments” arising under such separate   agreement
  

4.  Manner of Option Exercise.

          4.1      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 Circle Pines, Minnesota, of a written notice of exercise.  Such notice must be in a form satisfactory to the Committee, must identify the Option, must specify the number of Option Shares with respect to which the Option is being exercised, and must be signed by the person or persons so exercising the Option.  Such notice must 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 must 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 certificated or uncertificated (“book entry”) shares.  In the event that the Option is being exercised, as provided by resolutions of the Committee and Section 4.2 below, by tender of a Broker Exercise Notice, the Company will deliver such shares directly to the Optionee’s broker or dealer or their nominee.

          4.2      Payment.  

	
  
 
  	
  
          (a)          At   the time of exercise of this Option, the Optionee must pay the total purchase   price of the Option Shares to be purchased 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 (i) tender of a   Broker Exercise Notice; (ii) by tender, or attestation as to ownership, of   Previously Acquired Shares that are acceptable to the Committee; (iii) by a   “net exercise” of the Option (as described in the Plan);  or    (iv) by a combination of such methods.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (b)          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.
  
	
  
 
  	
  
 
  
	
   
  	
  
          (c)          In   the case of a “net exercise” of an Option, the Company will not require a   payment of the exercise price of the Option from the Optionee but will reduce   the number of shares of Common Stock issued upon the exercise by the largest   number of whole shares that has a Fair Market Value on the exercise date that   does not exceed the aggregate exercise price for the shares exercised under   this method.
  

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          (d)          Shares   of Common Stock will no longer be outstanding under this Option (and will   therefore not thereafter be exercisable) following the exercise of such   Option to the extent of (i) shares used to pay the exercise price of an   Option under the “net exercise,” (ii) shares actually delivered to the   Optionee as a result of such exercise and (iii) any shares withheld for   purposes of tax withholding.
  

5.  Rights of Optionee; Transferability.

          5.1      Employment.  Nothing in this Agreement will interfere with or limit in any way the right of the Company or any Subsidiary to terminate the employment of the Optionee at any time, nor confer upon the Optionee any right to continue in the employ of the Company or any Subsidiary at any particular position or rate of pay or for any particular period of time.

          5.2      Rights as a Shareholder.  The Optionee will have no rights as a shareholder unless and until all conditions to the effective exercise of this Option (including, without limitation, the conditions set forth in Sections 4 and 6 of this Agreement) have been satisfied and the Optionee has become the holder of record of such shares.  No adjustment will be made for dividends or distributions with respect to this Option as to which there is a record date preceding the date the Optionee becomes the holder of record of such shares, except as may otherwise be provided in the Plan or determined by the Committee in its sole discretion.

          5.3      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 the Optionee in this Option prior to exercise may be assigned or transferred, or subjected to any lien, during the lifetime of the Optionee, either voluntarily or involuntarily, directly or indirectly, by operation of law or otherwise.  The Optionee will, however, be entitled to designate a beneficiary to receive this Option upon such Optionee’s death, and, in the event of the Optionee’s death, exercise of this Option (to the extent permitted pursuant to Section 3.2(a) of this Agreement) may be made by the Optionee’s legal representatives, heirs and legatees.

          5.4      Breach of Agreements.  Notwithstanding anything in this Agreement or the Plan to the contrary, in the event that the Optionee materially breaches the terms of any employment, service, confidentiality, non-compete or non-solicitation agreement entered into with the Company or any Subsidiary, whether such breach 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 the Plan and this Agreement without notice of any kind or may require the Optionee to surrender shares of Common Stock received, and to disgorge any profits (however defined by the Committee), made or realized by the Optionee in connection with this Option or any shares issued upon the exercise or vesting of this Option.

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6.  Withholding Taxes.

          The Company is entitled to (a) 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 a Subsidiary), or make other arrangements for the collection of, all legally required amounts necessary to satisfy any and all federal, foreign, state and local withholding and employment-related tax requirements attributable to the Option, including, without limitation, the grant, exercise or vesting of, this Option or a disqualifying disposition of any Option Shares; (b) withhold cash paid or payable or shares of Common Stock from the shares issued or otherwise issuable to the Optionee in connection with this Option; or (c) require the Optionee 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 this Option.  Shares of Common Stock
issued or otherwise issuable to the Optionee in connection with this Option that gives rise to the tax withholding obligation that are withheld for purposes of satisfying the Optionee’s withholding or employment-related tax obligation will be valued at their Fair Market Value on the Tax Date.

7.  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 similar 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 and kind of securities or other property (including cash) subject to, and the exercise price of, this Option.  

8.  Stock 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.

9.  Incentive Stock Option Limitations.

          9.1      Limitation on Amount.  To the extent that the aggregate Fair Market Value (determined as of the date of grant) of the shares of Common Stock with respect to which incentive stock options (within the meaning of Section 422 of the Code) are exercisable for the first time by the Optionee 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 incentive stock options will be treated as non-statutory stock options in the manner set forth in the Plan.

          9.2      Limitation on Exercisability; Disposition of Option Shares.  Any incentive stock option that remains unexercised more than one year following termination of employment by reason of death or disability or more than three months following termination for any reason other than death or Disability will thereafter be deemed to be a non-statutory stock option.  In addition, in the event that a disposition (as defined in Section 424(c) of the Code) of shares of Common Stock acquired pursuant to the exercise of an incentive stock option occurs prior to the expiration of two years after its date of grant or the expiration of one year after its date of exercise (a “disqualifying disposition”), such incentive stock option will, to the extent of such disqualifying disposition, be treated in a manner similar to a non-statutory stock option.

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          9.3      No Representation or Warranty.  Section 422 of the Code and the rules and regulations thereunder are complex, and neither the Plan nor this Agreement purports to summarize or otherwise set forth all of the conditions that need to be satisfied in order for this Option to qualify as an incentive stock option.  In addition, this Option may contain terms and conditions that allow for exercise of this Option beyond the periods permitted by Section 422 of the Code, including, without limitation, the periods described in Section 9.2 of this Agreement.  Accordingly, the Company makes no representation or warranty regarding whether the exercise of this Option will qualify as the exercise of an incentive stock option, and the Company recommends that the Optionee consult with the Optionee’s own advisors before making any determination regarding the
exercise of this Option or the sale of the Option Shares. 

10.  Miscellaneous.

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

          10.2     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, without regard to conflicts of laws provisions.  Any legal proceeding related to this Agreement will be brought in an appropriate Minnesota court, and the parties to this Agreement consent to the exclusive jurisdiction of the court for this purpose.

          10.3     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.

          10.4     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 to this Agreement or, in the case of a waiver, by the party waiving compliance.

          10.5     Construction.  Wherever possible, each provision of this Agreement will be interpreted so that it is valid under the applicable law.  If any provision of this Agreement is to any extent invalid under the applicable law, that provision will still be effective to the extent it remains valid.  The remainder of this Agreement also will continue to be valid, and the entire Agreement will continue to be valid in other jurisdictions.

          10.6     Counterparts.  For convenience of the parties hereto, this Agreement may be executed in any number of counterparts, each such counterpart to be deemed an original instrument, and all such counterparts together to constitute the same agreement.

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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
  	
  
 
  
	
  
 
  	
  
 
  	
  

  
	
  
 
  	
  
 
  	
  
 
  
	
  By execution   of this Agreement,
  	
  
OPTIONEE
  
	
  
the Optionee   acknowledges having
  	
  
 
  	
  
 
  
	
  
received a   copy of the Plan.
  	

  
  
	
  
 
  	
  
 (Signature)

  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
    
  
	
  
 
  	
  
 (Name and   Address)

  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	

  
  
	
   
  	
   
  	
   
  
	
   
  	

  
  

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