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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 19, 2024
NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware |
001-11038 |
41-0857886 |
(State or other jurisdiction
of incorporation) |
(Commission
File Number) |
(IRS Employer
Identification No.) |
4201 Woodland Road
P.O. Box 69
Circle Pines, Minnesota |
55014 |
(Address of principal executive offices) |
(Zip Code) |
(763) 225-6600
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last
report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following provisions:
☐ |
Written communications pursuant
to Rule 425 under the Securities Act (17 CFR 230.425) |
|
|
☐ |
Soliciting material pursuant to Rule 14a-12
under the Exchange Act (17 CFR 240.14a-12) |
|
|
☐ |
Pre-commencement communications pursuant to
Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
|
☐ |
Pre-commencement communications pursuant to
Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Common stock, par value $0.02 per share |
NTIC |
Nasdaq Global Market |
Indicate by check mark whether the registrant is an emerging growth company
as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934
(§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act. ☐
| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers. |
On January 19, 2024, the stockholders of Northern Technologies International
Corporation (the “Company”), upon recommendation of the Board of Directors of the Company (the “Board”), approved
the Northern Technologies International Corporation 2024 Stock Incentive Plan (the “2024 Plan”) at the 2024 annual meeting
of stockholders, which 2024 Plan replaced the Northern Technologies International Corporation Amended and Restated 2019 Stock Incentive
Plan (the “2019 Plan”). The Board previously approved the 2024 Plan on November 9, 2023, subject to approval by the Company’s
stockholders.
The 2024 Plan became effective immediately upon approval by the Company’s
stockholders and will expire on January 18, 2034, unless terminated earlier. The 2024 Plan permits the Board, or a committee thereof,
to grant to eligible employees, non-employee directors, consultants, advisors and independent contractors of the Company non-statutory
and incentive stock options, stock appreciation rights, restricted stock awards, restricted stock units, deferred stock units, performance
awards, non-employee director awards, and other stock-based awards. The Board, or committee thereof, may select 2024 Plan participants
and determine the nature and amount of awards to be granted.
Subject to adjustment as provided in the 2024 Plan, the maximum number of
shares of Company common stock available for issuance under the 2024 Plan is (i) 800,000 shares of Company common stock; plus (ii) the
number of shares of Company common stock remaining available for issuance under the 2019 Plan but not subject to outstanding awards under
the 2019 Plan as of January 19, 2024; plus (iii) the number of additional shares of Company common stock subject to awards outstanding
under the 2019 Plan as of January 19, 2024 but only to the extent that such outstanding awards are forfeited, cancelled, expire, or otherwise
terminate without the issuance of such shares of Company common stock after January 19, 2024.
The foregoing summary does not purport to be complete and is qualified in
its entirety by reference to the text of the 2024 Plan, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated
herein by reference. A more detailed summary of the 2024 Plan can be found in “Proposal Four—Approval of Northern Technologies International Corporation 2024 Stock Incentive Plan” in the definitive proxy statement for the Company’s 2024 annual meeting
of stockholders filed with the Securities and Exchange Commission on December 4, 2023 (the “2024 Proxy Statement”), which
description is incorporated by reference herein.
Additionally, the Board approved forms of award agreements for use in granting
incentive stock options, non-statutory stock options and restricted stock units under the 2024 Plan. These forms are filed as Exhibits
10.2, 10.3 and 10.4 to this Current Report on Form 8-K and incorporated herein by reference.
| Item 5.07. | Submission of Matters to a Vote of Security Holders. |
On January 19, 2024, the Company held an Annual Meeting of Stockholders
(the “2024 Annual Meeting”). As of the close of business on November 21, 2023, the record date for the 2024 Annual Meeting,
there were 9,427,599 shares of common stock outstanding and entitled to vote at the 2024 Annual Meeting. Each share of common stock was
entitled to one vote. Stockholders holding an aggregate of 6,466,119 shares of common stock entitled to vote at the 2024 Annual Meeting,
representing 68.58% of the outstanding shares of common stock as of the record date, and which constituted a quorum thereof, were present
in person or represented by proxy at the 2024 Annual Meeting.
At the 2024 Annual Meeting, the Company’s stockholders considered
four proposals, each of which is set forth below and described in more detail in the Company’s definitive proxy statement for the
2024 Proxy Statement.
The final results of the stockholder vote at the 2024 Annual Meeting on
each proposal brought before the Company’s stockholders were as follows:
Proposal One - |
The eight director nominees proposed by the Board were elected to serve as members of the Board until the next annual meeting of stockholders and until their respective successors have been duly elected and qualified by the following final voting results: |
|
Votes For |
|
Votes Withheld
|
|
Broker Non-Votes |
Nancy E. Calderon |
5,249,023 |
|
202,968 |
|
|
1,014,128 |
Sarah E. Kemp |
5,365,008 |
|
86,983 |
|
|
1,014,128 |
Sunggyu Lee, Ph.D. |
5,395,736 |
|
56,255 |
|
|
1,014,128 |
G. Patrick Lynch |
5,437,953 |
|
14,038 |
|
|
1,014,128 |
Ramani Narayan, Ph.D. |
5,438,383 |
|
13,608 |
|
|
1,014,128 |
Richard J. Nigon |
5,290,366 |
|
161,625 |
|
|
1,014,128 |
Cristina Pinho |
5,408,956 |
|
43,035 |
|
|
1,014,128 |
Konstantin von Falkenhausen |
5,320,318 |
|
131,673 |
|
|
1,014,128 |
Proposal Two - |
The compensation of the Company’s named executive officers, as disclosed in the Company’s proxy statement, was approved, on an advisory basis, by the following final voting results: |
Votes For |
Votes Against |
Votes Abstained |
Broker Non-Votes |
4,682,193 |
762,799 |
6,999 |
1,014,128 |
Proposal Three - |
The ratification of the appointment of Baker Tilly US, LLP as the Company’s independent registered public accounting firm for the fiscal year ending August 31, 2024 was approved by the following final voting results: |
Votes For |
Votes Against |
Votes Abstained |
Broker Non-Votes |
6,432,916 |
25,632 |
7,571 |
0 |
Proposal Four - |
The Northern Technologies International Corporation 2024 Stock Incentive
Plan was approved by the following final voting results: |
Votes For |
Votes Against |
Votes Abstained |
Broker Non-Votes |
4,476,455 |
737,650 |
237,886 |
1,014,128 |
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
NORTHERN TECHNOLOGIES |
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INTERNATIONAL CORPORATION |
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By: |
/s/ Matthew C. Wolsfeld |
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Matthew C. Wolsfeld |
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Chief Financial Officer and Corporate Secretary |
|
Exhibit 10.1
NORTHERN TECHNOLOGIES INTERNATIONAL
CORPORATION
2024 STOCK INCENTIVE PLAN
(Effective January 19, 2024)
1. Purpose
of Plan.
The purpose of the Northern Technologies International
Corporation 2024 Stock Incentive Plan (this “Plan”) is to advance the interests of Northern Technologies International Corporation,
a Delaware 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. This Plan will become effective upon its approval by the Company’s stockholders
and will replace the Northern Technologies International Corporation 2019 Stock Incentive Plan (as amended and restated, the “Prior
Plan”); provided, however, that awards outstanding under the Prior Plan as of the Effective Date will remain outstanding in accordance
with their terms. After the Effective Date, no more grants of awards will be made under the Prior Plan.
2. Definitions.
The following terms will have the meanings set forth
below, unless the context clearly otherwise requires. Terms defined elsewhere in this Plan will have the same meaning throughout this
Plan.
2.1.
“Adverse Action” means any action or conduct by a Participant that the Committee, in its sole discretion, determines
to be injurious, detrimental, prejudicial or adverse to the interests of the Company or any Subsidiary, including: (a) disclosing confidential
information of the Company or any Subsidiary to any person not authorized by the Company or Subsidiary to receive it, (b) engaging, directly
or indirectly, in any commercial activity that in the judgment of the Committee competes with the business of the Company or any Subsidiary
or (c) interfering with the relationships of the Company or any Subsidiary and their respective Employees, independent contractors, customers,
prospective customers and vendors.
2.2.
“Applicable Law” means any applicable law, including without limitation, (a) provisions of the Code, the Securities
Act, the Exchange Act and any rules or regulations thereunder; (b) corporate, securities, tax or other laws, statutes, rules, requirements
or regulations, whether federal, state, local or foreign; and (c) rules of any securities exchange, national market system or automated
quotation system on which the shares of Common Stock are listed, quoted or traded.
2.3.
“Board” means the Board of Directors of the Company.
2.4.
“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 of Common Stock 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 shares of Common Stock to be issued upon such exercise directly to such broker or dealer or their nominee.
2.5.
“Cause” means (a) “Cause” as defined in any Individual Agreement; or (b) dishonesty, fraud, misrepresentation,
embezzlement or other act of dishonesty with respect to the Company or any Subsidiary, (c) any unlawful or criminal activity of a serious
nature, (d) 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 (e) any material breach by a Participant of any employment, service, confidentiality or
non-compete agreement entered into with the Company or any Subsidiary.
2.6.
“Change in Control” means an event described in Section 14.1 of this 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 defined in Section 409A of the Code and the regulations and rulings issued thereunder.
2.7.
“Code” means the Internal Revenue Code of 1986, as amended. Any reference to a section of the Code herein will
be deemed to include a reference to any applicable regulations thereunder and any successor or amended section of the Code.
2.8.
“Committee” means the group of individuals administering this Plan, as provided in Section 3 of this Plan.
2.9.
“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 4.4 of this Plan.
2.10. “Company”
means Northern Technologies International Corporation, a Delaware corporation, and any successor thereto as provided in Section 21.6 of
this Plan.
2.11. “Deferred
Stock Unit” means a right granted to an Eligible Recipient pursuant to Section 8 of this Plan to receive shares of Common Stock
(or the equivalent value in cash or other property if the Committee so provides) at a future time as determined by the Committee, or as
determined by the Participant within guidelines established by the Committee in the case of voluntary deferral elections.
2.12. “Director”
means a member of the Board.
2.13. “Disability”
means, with respect to a Participant who is a party to an Individual Agreement, which agreement contains a definition of “disability”
or “permanent disability” (or words of like import) for purposes of termination of employment thereunder by the Company, “disability”
or “permanent disability” as defined in the most recent of such agreements; or in all other cases, 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.
2.14. “Dividend
Equivalents” means a credit, made at the discretion of the Committee, to the account of a Participant in an amount equal to
the cash dividends paid on one share of Common Stock for each share of Common Stock represented by an Incentive Award held by such Participant,
subject to Section 11 of this Plan and any other provision of this Plan and which Dividend Equivalents may be subject to the same conditions
and restrictions as the Incentive Awards to which they attach and may be settled in the form of cash, shares of Common Stock, or in any
combination of both.
2.15. “Effective
Date” means the date that this Plan is approved by the Company’s stockholders.
2.16. “Eligible
Recipients” means all Employees and consultants, advisors and independent contractors of the Company or any Subsidiary, including
Non-Employee Directors; provided, however, that an Eligible Recipient shall not include any person engaged to provide consulting or advisory
services (other than as an employee or a director) to the Company or any Subsidiary that are in connection with the offer and sale of
the Company’s securities in a capital raising transaction or directly or indirectly promote or maintain a market for the Company’s
securities.
2.17. “Employee”
means any individual performing services for the Company or a Subsidiary and designated as an employee of the Company or a Subsidiary
on the payroll records thereof. An Employee will not include any individual during any period he or she is classified or treated by the
Company or Subsidiary as an independent contractor, a consultant, or any employee of an employment, consulting or temporary agency or
any other entity other than the Company or Subsidiary, without regard to whether such individual is subsequently determined to have been,
or is subsequently retroactively reclassified as a common-law employee of the Company or Subsidiary during such period. An individual
will not cease to be an Employee in the case of: (a) any leave of absence approved by the Company, or (b) transfers between locations
of the Company or between the Company or any Subsidiaries. For purposes of Incentive Stock Options, no such leave may exceed ninety (90)
days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave
of absence approved by the Company or a Subsidiary, as applicable, is not so guaranteed, then three (3) months following the ninety-first
(91st) day of such leave, any Incentive Stock Option held by a Participant will cease to be treated as an Incentive Stock Option and will
be treated for tax purposes as a Non-Statutory Stock Option. Neither service as a Director nor payment of a Director’s fee by the
Company will be sufficient to constitute “employment” by the Company.
2.18. “Exchange
Act” means the Securities Exchange Act of 1934, as amended. Any reference to a section of the Exchange Act herein will be deemed
to include a reference to any applicable rules and regulations thereunder and any successor or amended section of the Exchange Act.
2.19. “Fair
Market Value” means, with respect to the Common Stock, as of any date: (a) 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 Nasdaq Global Select Market, Nasdaq Global
Market, Nasdaq Stock Market, the New York Stock Exchange, NYSE American or any other national securities exchange on which the Common
Stock is then listed 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 (b) if the Common Stock is not so listed, admitted to unlisted trading privileges, or reported on any national
securities exchange, the mean between the reported high and low sale prices as of such date during the regular daily trading session,
as reported by the OTC Bulletin Board, OTC Markets or other comparable quotation 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 (c) 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. If determined by the Committee, such determination will be final, conclusive and binding for all purposes and on all
persons, including the Company, the stockholders of the Company, the Participants and their respective successors-in-interest. No member
of the Committee will be liable for any determination regarding the fair market value of the Common Stock that is made in good faith.
2.20. “Grant
Date” means the date an Incentive Award is granted to a Participant pursuant to this Plan and as determined pursuant to Section
5 of this Plan.
2.21. “Incentive
Award” means an Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit, Deferred Stock Unit, Performance
Award or Other Stock-Based Award granted to an Eligible Recipient pursuant to this Plan.
2.22. “Incentive
Award Agreement” means either: (a) a written or electronic agreement entered into by the Company and a Participant setting forth
the terms and provisions applicable to an Incentive Award granted under this Plan, including any amendment or modification thereof, or
(b) a written or electronic statement issued by the Company to a Participant describing the terms and provisions of an Incentive Award,
including any amendment or modification thereof.
2.23. “Incentive
Stock Option” means a right to purchase shares of Common Stock granted to an Employee pursuant to Section 6 of this Plan that
is designated as and intended to meet the requirements of an “incentive stock option” within the meaning of Section 422 of
the Code.
2.24. “Individual
Agreement” means any employment, consulting, severance or similar agreement between the Participant and the Company or one of
its Subsidiaries.
2.25.
“Non-Employee Director” means a Director who is not an Employee.
2.26. “Non-Statutory
Stock Option” means a right to purchase shares of Common Stock granted to an Eligible Recipient pursuant to Section 6 of this
Plan that does not qualify as an Incentive Stock Option.
2.27. “Option”
means an Incentive Stock Option or a Non-Statutory Stock Option.
2.28. “Other
Stock-Based Award” means an award of shares of Common Stock granted to an Eligible Recipient pursuant to Section 10 of this
Plan.
2.29. “Participant”
means an Eligible Recipient who receives one or more Incentive Awards under this Plan.
2.30. “Performance
Award” means a right granted to an Eligible Recipient pursuant to Section 9 of this Plan to receive an amount of cash, a number
of shares of Common Stock, or a combination of both, contingent upon and the value of which at the time it is payable is determined as
a function of the extent of the achievement of one or more Performance Criteria during a specified performance period or the achievement
of other objectives during a specified period.
2.31.
“Performance Criteria” means the performance criteria that may be used by the Committee in granting Incentive Awards
contingent upon achievement of performance goals, including, without limitation, 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.
2.32. “Plan”
means the Northern Technologies International Corporation 2024 Stock Incentive Plan, as may be amended from time to time.
2.33. “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, vesting or settlement of such Incentive Award.
2.34. “Prior
Plan” means the Northern Technologies International Corporation 2019 Stock Incentive Plan, as amended and restated.
2.35. “Restricted
Stock Award” means an award of Common Stock granted to an Eligible Recipient pursuant to Section 8 of this Plan that is subject
to the restrictions on transferability and the risk of forfeiture imposed by the provisions of such Section 8.
2.36. “Restricted
Stock Unit” means an award denominated in shares of Common Stock granted to an Eligible Recipient pursuant to Section 8 of this
Plan.
2.37. “Retirement”
means termination of employment or service pursuant to and in accordance with the regular (or, if approved by the Board for purposes of
this 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.
2.38. “Securities
Act” means the Securities Act of 1933, as amended. Any reference to a section of the Securities Act herein will be deemed to
include a reference to any applicable rules and regulations thereunder and any successor or amended section of the Securities Act.
2.39. “Separation
from Service” has the meaning set forth in Section 12.4(c) of this Plan.
2.40. “Stock
Appreciation Right” means a right granted to an Eligible Recipient pursuant to Section 7 of this Plan to receive, upon exercise,
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 the grant price of such shares under the terms of such Stock Appreciation
Right.
2.41. “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 provided the Company has a “controlling interest” in the Subsidiary as defined in
Treas. Reg. Sec. 1.409A-1(b)(5)(iii)(E)(1).
2.42. “Tax
Date” means the date any withholding or employment related tax obligation arises under the Code or any Applicable Law for a
Participant with respect to an Incentive Award.
2.43.
Tax Laws” has the meaning set forth in Section 21.10 of this Plan.
3. Plan
Administration.
3.1.
The Committee. This 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 this 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 and who are “independent directors” under the Listing Rules of the Nasdaq Stock Market (or other applicable market or
exchange on which the Company’s Common Stock may be quoted or traded). 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 this 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 this 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. The Committee may exercise its duties, power and
authority under this Plan in its sole and absolute discretion without the consent of any Participant or other party, unless this Plan
specifically provides otherwise. Each determination, interpretation or other action made or taken by the Committee pursuant to the provisions
of this 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 this Plan or any Incentive Award granted under this Plan.
3.2.
Authority of the Committee.
(a) In
accordance with and subject to the provisions of this Plan, the Committee will have full and exclusive discretionary power and authority
to take such actions as it deems necessary and advisable with respect to the administration of this Plan, including the following:
(i) To
designate the Eligible Recipients to be selected as Participants;
(ii)
To determine the nature, extent and terms 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 or grant price, the manner in which Incentive Awards will vest,
become exercisable, settled or paid out and whether Incentive Awards will be granted in tandem with other Incentive Awards) and the form
of an Incentive Award Agreement;
(iii)
To determine the time or times when Incentive Awards will be granted;
(iv)
To determine the duration of each Incentive Award;
(v)
To determine the terms, restrictions and other conditions to which the payment or vesting of Incentive Awards may be subject;
(vi)
To pay the economic value of any Incentive Award in the form of cash, Common Stock or any combination of both;
(vii)
To construe and interpret this Plan and Incentive Awards granted under it, and to establish, amend and revoke rules and regulations
for its administration and in so doing, to correct any defect, omission, or inconsistency in this Plan or in an Incentive Award Agreement,
in a manner and to the extent it will deem necessary or expedient to make this Plan fully effective;
(viii)
To determine Fair Market Value in accordance with Section 2.19 of this Plan;
(ix)
To amend this Plan or any Incentive Award Agreement, as provided in this Plan;
(x)
To adopt subplans or special provisions applicable to Incentive Awards regulated by the laws of a jurisdiction other than, and
outside of, the United States, which except as otherwise provided in this Plan, such subplans or special provisions may take precedence
over other provisions of this Plan;
(xi)
To authorize any person to execute on behalf of the Company any Incentive Award Agreement or any other instrument required to effect
the grant of an Incentive Award previously granted by the Committee;
(xii)
To determine whether Incentive Awards will be settled in shares of Common Stock, cash or in any combination thereof;
(xiii)
To determine whether Incentive Awards will be adjusted for Dividend Equivalents; and
(xiv)
To impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales
by a Participant or other subsequent transfers by the Participant of any shares of Common Stock, including restrictions under an insider
trading policy, stock ownership guidelines, restrictions as to the use of a specified brokerage firm for such resales or other transfers
and other restrictions designed to increase equity ownership by Participants or otherwise align the interests of Participants with the
Company’s stockholders.
(b) Subject
to Section 3.2(d) of this Plan, the Committee will have the authority under this 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 of Common Stock or other terms
and conditions of an Incentive Award, extend the term of an Incentive Award, accelerate the exercisability or vesting or otherwise terminate
any restrictions relating to an Incentive Award, accept the surrender of any outstanding Incentive Award or, to the extent not previously
exercised or vested, authorize the grant of new Incentive Awards in substitution for surrendered Incentive Awards; provided, however
that the amended or modified terms are permitted by this 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 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 this Plan as then in effect.
(d) Notwithstanding
any other provision of this Plan other than Section 4.4 of this Plan, 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 or grant price; (ii) canceling
the underwater Option or Stock Appreciation Right in exchange for (A) cash; (B) replacement Options or Stock Appreciation Rights having
a lower exercise price or grant price; or (C) other Incentive Awards; (iii) repurchasing the underwater Options or Stock Appreciation
Rights and granting new Incentive Awards under this Plan; or (iv) a re-pricing within the meaning of the applicable accounting standard.
For purposes of this Section 3.2(d), an Option or Stock Appreciation Right 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 grant price of the Stock Appreciation
Right.
(e) In addition to the authority of the Committee under Section 3.2(a) of this Plan and notwithstanding any other provision of this
Plan, the Committee may, in its sole discretion, amend the terms of this 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 this 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 will have no authority, however, to take action pursuant to this Section 3.2(e) of this Plan: (i)
to reserve shares of Common Stock or grant Incentive Awards in excess of the limitations provided in Section 4.1 and Section 4.2 of this
Plan; (ii) to effect any re-pricing in violation of Section 3.2(d) of this Plan; (iii) to grant Options or Stock Appreciation Rights having
an exercise price or grant price less than 100% of the Fair Market Value of one share of Common Stock on the Grant Date in violation of
Section 6.2 or 7.2 of this 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 Listing Rules of the Nasdaq Stock Market (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. Subject to adjustment as provided in Section 4.4 of this Plan, the maximum number of
shares of Common Stock that will be available for issuance under this Plan will be the sum of:
(a) 800,000
shares of Common Stock; plus
(b) the
number of shares of Common Stock remaining available for issuance under the Prior Plan but not subject to outstanding awards as of the
Effective Date; plus
(c) the
number of additional shares of Common Stock subject to awards outstanding under the Prior Plan as of the Effective Date but only to the
extent that such outstanding awards are forfeited, cancelled, expire or otherwise terminate without the issuance of such shares of Common
Stock after the Effective Date.
4.2.
Incentive Award and Non-Employee Director Compensation Limitations. Notwithstanding any other provisions of this Plan to
the contrary and subject to adjustment as provided in Section 4.4 of this Plan,
(a) the
maximum aggregate number of shares of Common Stock that will be available for issuance pursuant to Incentive Stock Options under this
Plan will be 800,000 shares (except in the case of Incentive Stock Options 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);
(b) the maximum aggregate number of shares of Common Stock that will be available for issuance pursuant to Incentive Awards, other
than Options or Stock Appreciation Rights, under this Plan will be 200,000 shares (except in the case of Incentive Awards 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); and
(c) the
sum of any cash compensation, or other compensation, and the value (determined as of the grant date in accordance with Financial Accounting
Standards Board Accounting Standards Codification Topic 718, or any successor thereto) of Incentive Awards granted to a Non-Employee
Director as compensation for services as a Non-Employee Director during any fiscal year of the Company may not exceed $300,000 (increased
to $400,000 with respect to any Non-Employee Director serving as Chair of the Board or Lead Independent Director or in the fiscal year
of a Non-Employee Director's initial service as a Non-Employee Director) (with any compensation that is deferred counting towards this
limit for the year in which the compensation is first earned, and not a later year of settlement).
4.3.
Accounting for Incentive Awards. Shares of Common Stock that are issued under this Plan or that are subject to outstanding
Incentive Awards will be applied to reduce the maximum number of shares of Common Stock remaining available for issuance under this Plan
only to the extent they are used; provided, however, that; (a) 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 this Plan or the tender
or attestation as to ownership of Previously Acquired Shares pursuant to Section 6.4(a) of this Plan will not again become available for
issuance under this Plan; and (b) the full number of shares of Common Stock subject to a stock-settled Stock Appreciation Right will be
counted against the shares of Common Stock authorized for issuance under this Plan, regardless of the number of shares of Common Stock
actually issued upon settlement of such Stock Appreciation Right, and will not again become available for issuance under this Plan. Furthermore,
any shares of Common Stock withheld to satisfy tax withholding obligations on Incentive Awards issued under this Plan, any shares of Common
Stock withheld to pay the exercise price or grant price of Incentive Awards under this Plan and any shares of Common Stock not issued
or delivered as a result of the “net exercise” of an outstanding Option pursuant to Section 6.4 or settlement of a Stock Appreciation
Right in shares of Common Stock pursuant to Section 7.1 will be counted against the shares of Common Stock authorized for issuance under
this Plan and will not be available again for grant under this Plan. Any shares of Common Stock repurchased by the Company on the open
market using the proceeds from the exercise of an Incentive Award will not increase the number of shares of Common Stock available for
future grant of Incentive Awards. Any shares of Common Stock related to Incentive Awards granted under this Plan or under the Prior Plan
that terminate by expiration, forfeiture, cancellation or otherwise without the issuance of the shares of Common Stock, or are settled
in cash in lieu of shares of Common Stock, or are exchanged with the Committee’s permission, prior to the issuance of shares of
Common Stock, for Incentive Awards not involving shares of Common Stock, will be available again for grant under this Plan and correspondingly
increase the total number of shares of Common Stock available for issuance under this Plan under Section 4.1.
4.4.
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 Common Stock 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 or substitutions (which determination will be conclusive) as to the number and kind of securities or other
property (including cash) available for issuance or payment under this Plan, including the sub-limits set forth in Section 4.2 of this
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 this 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 this Plan, and such Options will be subject to such
terms and conditions, consistent with the other provisions of this Plan, as may be determined by the Committee in its sole discretion.
Incentive Stock Options may be granted solely to Eligible Recipients who are Employees of the Company or a Subsidiary. 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 this 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 this Plan but will thereafter be deemed to be a Non-Statutory Stock Option. Options may be granted to an Eligible Recipient for
services provided to a Subsidiary only if, with respect to such Eligible Recipient, the underlying shares of Common Stock constitute “service
recipient stock” within the meaning of Treas. Reg. Sec. 1.409A-1(b)(5)(iii) promulgated under the Code.
6.2.
Exercise Price. The per share price to be paid by a Participant upon exercise of an Option granted pursuant to this Section
6 will be determined by the Committee in its sole discretion at the time of the Option grant; provided, however, that such price will
not be less than 100% of the Fair Market Value of one share of Common Stock on the Grant Date (or 110% of the Fair Market Value of one
share of Common Stock on the Grant Date 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 this 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.
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 (a) the
achievement of one or more of the Performance Criteria; and/or that (b) 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 10 years from its Grant
Date (five years from its Grant Date 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). Notwithstanding the foregoing, if the exercise of an Option that is exercisable in accordance
with its terms is prevented by the provisions of Section 16 of this Plan, the Option will remain exercisable until thirty (30) days after
the date such exercise first would no longer be prevented by such provisions, but in any event no later than the expiration date of such
Option.
6.4.
Payment of Exercise Price.
(a) The
total purchase price of the shares of Common Stock 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,
either by actual delivery 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); (iv) by a combination of such methods; or
(v) by any other method approved or accepted by the Committee in its sole discretion. Notwithstanding any other provision of this Plan
to the contrary, no Participant who is a Director or an “executive officer” of the Company within the meaning of Section
13(k) of the Exchange Act will be permitted to make payment with respect to any Incentive Awards granted under this Plan, or continue
any extension of credit with respect to such payment with a loan from the Company or a loan arranged by the Company in violation of Section
13(k) of the Exchange Act.
(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 this Plan.
(c) For purposes of such payment, Previously Acquired Shares tendered or covered by an attestation will be valued at their Fair Market
Value on the exercise date of the Option.
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 this Plan and in the Incentive Award 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
(or to the Company’s designee as may be established from time to time by the Company and communicated to Participants) 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 this 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.
7. Stock
Appreciation Rights.
7.1.
Grant. An Eligible Recipient may be granted one or more Stock Appreciation Rights under this Plan, and such Stock Appreciation
Rights will be subject to such terms and conditions, consistent with the other provisions of this 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. Stock Appreciation Rights may be granted to an Eligible Recipient
for services provided to a Subsidiary only if, with respect to such Eligible Recipient, the underlying shares of Common Stock constitute
“service recipient stock” within the meaning of Treas. Reg. Sec. 1.409A-1(b)(5)(iii) promulgated under the Code.
7.2.
Grant Price. The grant price of a Stock Appreciation Right will be determined by the Committee, in its discretion, at the
Grant Date; provided, however, that such price may not be less than 100% of the Fair Market Value of one share of Common Stock on the
Grant Date, except as provided in Section 7.4 of this Plan. Notwithstanding the foregoing, to the extent that Stock Appreciation Rights
are granted under this Plan as a result of the Company’s assumption or substitution of stock appreciation rights issued by any acquired,
merged or consolidated entity, the grant 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 times and in such installments as
may be determined by the Committee in its sole discretion at the time of grant; provided, however, that no Stock Appreciation Right may
be exercisable after 10 years from its Grant Date. 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 this Plan. Notwithstanding the foregoing, if the exercise of a Stock Appreciation Right that
is exercisable in accordance with its terms is prevented by the provisions of Section 16 of this Plan, the Stock Appreciation Right will
remain exercisable until thirty (30) days after the date such exercise first would no longer be prevented by such provisions, but in any
event no later than the expiration date of such Stock Appreciation Right.
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 a grant 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, Restricted Stock Units and Deferred Stock Units.
8.1.
Grant. An Eligible Recipient may be granted one or more Restricted Stock Awards, Restricted Stock Units or Deferred Stock
Units under this Plan, and such Incentive Awards will be subject to such terms and conditions, consistent with the other provisions of
this Plan, as may be determined by the Committee in its sole discretion. Restricted Stock Units and Deferred Stock Units will be similar
to Restricted Stock Awards except that no shares of Common Stock are actually awarded to the Participant on the Grant Date of the Restricted
Stock Units. Restricted Stock Units and Deferred Stock Units will be denominated in shares of Common Stock but paid in cash, shares of
Common Stock or a combination of cash and shares of Common Stock as the Committee, in its sole discretion, will determine, and as provided
in the Incentive Award Agreement. The Committee may impose such restrictions or conditions, not inconsistent with the provisions of this
Plan, to the vesting of such Restricted Stock Awards, Restricted Stock Units or Deferred Stock Units as it deems appropriate, including,
without limitation, (a) the achievement of one or more of the Performance Criteria; and/or that (b) 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 this 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. A Participant will have no voting rights to any Restricted Stock Units or Deferred Stock
Units granted hereunder.
8.3.
Dividends and Distributions.
(a) Unless
the Committee determines otherwise in its sole discretion (either in an Incentive Award Agreement 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.
(b) Unless
the Committee determines otherwise in its sole discretion (either in a Participant’s Incentive Award Agreement or at any time after
the grant of the Restricted Stock Unit or Deferred Stock Unit), to the extent permitted or required by Applicable Law, as determined
by the Committee, prior to settlement or forfeiture, any Restricted Stock Units or Deferred Stock Units awarded under this Plan may,
at the Committee’s discretion, carry with it a right to Dividend Equivalents. Such right entitles the Participant to be credited
with an amount equal to all cash dividends paid on one share of Common Stock while the Restricted Stock Unit or Deferred Stock Unit is
outstanding. Dividend Equivalents may be converted into additional Restricted Stock Units or Deferred Stock Units and may (and will,
to the extent required below) be made subject to the same conditions and restrictions as the Restricted Stock Units or Deferred Stock
Units to which they attach. Settlement of Dividend Equivalents may be made in the form of cash, in the form of shares of Common Stock,
or in a combination of both. Dividend Equivalents as to Restricted Stock Units or Deferred Stock Units will be subject to forfeiture
and termination to the same extent as the corresponding Restricted Stock Units or Deferred Stock Units as to which the Dividend Equivalents
relate. In no event will Participants holding Restricted Stock Units or Deferred Stock Units be entitled to receive any Dividend Equivalents
on such Restricted Stock Units or Deferred Stock Units until the vesting provisions of such Restricted Stock Units or Deferred Stock
Units lapse.
8.4.
Enforcement of Restrictions on Restricted Stock Awards. To enforce the restrictions referred to in this Section 8, the Committee
may place a legend on the stock certificates or book-entry notations representing Restricted Stock Awards 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. Alternatively, Restricted Stock Awards
may be held in non-certificated form pursuant to such terms and conditions as the Company may establish with its registrar and transfer
agent or any third-party administrator designated by the Company to hold Restricted Stock Awards on behalf of Participants.
9. Performance Awards.
An Eligible Recipient may be granted one or more Performance
Awards under this Plan, and such Performance Awards will be subject to such terms and conditions, if any, consistent with the other provisions
of this 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, except to the extent an Eligible Recipient
has properly elected to defer the income that may be attributable to a Performance Award under a Company or Subsidiary deferred compensation
plan.
10.
Other Stock-Based Awards.
An Eligible Recipient may be granted one or more Other
Stock-Based Awards under this Plan, and such Other-Stock Based Awards will be subject to such terms and conditions, consistent with the
other provisions of this Plan, as may be determined by the Committee in its sole discretion, not otherwise described by the terms of this
Plan (including the grant or offer for sale of unrestricted shares of Common Stock) in such amounts and subject to such terms and conditions
as the Committee will determine. Such Other-Stock Based Awards may involve the transfer of actual shares of Common Stock to Participants
as a bonus or in lieu of obligations to pay cash or deliver other property under this Plan or under other plans or compensatory arrangements,
or payment in cash or otherwise of amounts based on the value of shares of Common Stock, and may include Incentive Awards designed to
comply with or take advantage of the applicable local laws of jurisdictions other than the United States; provided, however, that in all
cases payment of the Other Stock-Based 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 Other Stock-Based Award is no longer subject to a “substantial risk of forfeiture” within
the meaning of Section 409A of the Code, except to the extent an Eligible Recipient has properly elected to defer the income that may
be attributable to an Other Stock-Based Award under a Company or Subsidiary deferred compensation plan.
11.
Dividend Equivalents
Subject to the provisions of this Plan and any Incentive
Award Agreement, any Participant selected by the Committee may be granted Dividend Equivalents based on the dividends declared on shares
of Common Stock that are subject to any Incentive Award (including any Award that has been deferred), to be credited as of dividend payment
dates, during the period between the date the Incentive Award is granted and the date the Incentive Award is exercised, vests, settles,
is paid or expires, as determined by the Committee. Such Dividend Equivalents will be converted to cash or additional shares of Common
Stock by such formula and at such time and subject to such limitations as may be determined by the Committee and the Committee may provide
that such amounts (if any) will be deemed to have been reinvested in additional shares of Common Stock or otherwise reinvested. Notwithstanding
the foregoing, the Committee may not grant Dividend Equivalents based on the dividends declared on shares of Common Stock that are subject
to an Option or Stock Appreciation Right or unvested Performance Awards; and further, no dividends or Dividend Equivalents will be paid
out with respect to any Incentive Awards until they are vested.
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, unless otherwise expressly provided by the Committee in its sole discretion
in an Incentive Award Agreement or the terms of an Individual Agreement or determined by the Committee pursuant to Section 12.3 of this
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 (12) 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 and non-vested Restricted Stock Units, Deferred Stock Units, Performance Awards and Other Stock-Based Awards then
held by the Participant will be terminated and forfeited.
12.2. Termination
for Reasons Other than Death, Disability or Retirement. 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 (3) 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 and non-vested Restricted Stock Units, Deferred Stock Units, Performance Awards and Other Stock-Based Awards 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, and subject to the terms of an Individual Agreement,
upon a Participant’s termination of employment or other service with the Company or any Subsidiary, as the case may be, the Committee
may, in its sole discretion (which may be exercised at any time on or after the Grant Date, including following such termination), except
as provided in clause (ii), below, cause Options or Stock Appreciation Rights (or any part thereof) then by such Participant as of the
effective date of such termination to terminate, become or continue to become exercisable and/or remain exercisable following such termination
of employment or service (but not beyond the earlier of the original maximum term of such Option or Stock Appreciation Right or ten (10)
years from the original Grant Date of such Option or Stock Appreciation Right), and Restricted Stock Awards, Restricted Stock Units, Deferred
Stock Units, Performance Awards or Other Stock-Based Awards held by such Participant as of the effective date of such termination 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 service, in each case in the manner determined by the Committee; provided, however, that no Option or Stock Appreciation
Right may remain exercisable beyond its expiration date; and (ii) any such action by the Committee 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), 4.4 and 14 of this Plan).
12.4. 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 this 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 this 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 this
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 or forfeiture 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 (a “Separation from Service”) and a Separation from Service shall constitute a termination
of employment or other service.
12.5. Effect
of Actions Constituting Cause or Adverse Action. Notwithstanding anything in this Plan to the contrary and in addition to the other
rights of the Committee under this Plan, including this Section 12, and subject to the terms of an Individual Agreement, if a Participant
is determined by the Committee, acting in its sole discretion, to have taken any action that would constitute Cause or an Adverse Action
during or within one (1) year after the termination of employment or other service with the Company or a Subsidiary, irrespective of whether
such action or the Committee’s determination occurs before or after termination of such Participant’s employment or other
service with the Company or any Subsidiary and irrespective of whether or not the Participant was terminated as a result of such Cause
or Adverse Action, (a) all rights of the Participant under this Plan and any Incentive Award Agreements then held by the Participant will
terminate and be forfeited without notice of any kind, and (b) the Committee in its sole discretion will have the authority to rescind
the exercise, vesting or issuance of, or payment in respect of, any Incentive Awards of the Participant that were exercised, vested or
issued, or as to which such payment was made, and to require the Participant to pay to the Company, within ten (10) days of receipt from
the Company of notice of such rescission, any amount received or the amount of any gain realized as a result of such rescinded exercise,
vesting, issuance or payment (including any dividends paid or other distributions made with respect to any shares of Common Stock subject
to any Incentive Award). The Company may defer the exercise of any Option or Stock Appreciation Right for a period of up to six (6) months
after receipt of the Participant’s written notice of exercise or the issuance of stock certificates or book-entry notations upon
the vesting of any Incentive Award for a period of up to six (6) months after the date of such vesting in order for the Committee to make
any determination as to the existence of Cause or an Adverse Action. The Company will be entitled to withhold and deduct from future wages
of the Participant (or from other amounts that may be due and owing to the Participant from the Company or a Subsidiary) or make other
arrangements for the collection of all amounts necessary to satisfy such payment obligations. Unless otherwise provided by the Committee
in an Incentive Award Agreement, this Section 12.5 will not apply to any Participant following a Change in Control.
12.6. Forfeiture
of Incentive Awards. Subject to the terms of an Incentive Award Agreement, Incentive Awards under the Plan shall be subject to any
automatic forfeiture or voluntary compensation “clawback,” forfeiture or recoupment provisions under Applicable Law and any
compensation “clawback,” forfeiture or recoupment policy of the Company, as in effect from time to time, and such forfeiture
and/or penalty conditions or provisions as determined by the Committee and set forth in the applicable Incentive Award Agreement, including
without limitation the Northern Technologies International Corporation Clawback Policy effective as of October 2, 2023.
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 the Company reasonably determines are 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, vesting or settlement 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 tax withholding obligations 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. When withholding shares of Common Stock for taxes is effected under this Plan, it will be withheld only
up to an amount based on the maximum statutory tax rates in the Participant’s applicable tax jurisdictions or such other rate that
will not trigger a negative accounting impact on the Company.
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 this Plan by withholding
shares of Common Stock underlying an Incentive Award, 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, shares of Common Stock withheld by the Company or 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. Unless otherwise provided in an Incentive Award Agreement or Individual Agreement, a “Change in Control”
shall be deemed to have occurred if the event set forth in any one of the following clauses 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 this 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 this 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
this 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 this 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 this Plan.
14.2. Acceleration
of Vesting. Without limiting the authority of the Committee under Sections 3.2 and 4.4 of this Plan, if a Change in Control of the
Company occurs, then, if approved by the Committee in its sole discretion either in an Incentive Award Agreement 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 Restricted Stock Units, Deferred Stock
Units, Performance Awards and Other Stock-Based Awards then held by the Participant will vest and/or continue to vest in the manner determined
by the Committee and set forth in the Incentive Award Agreement evidencing such Restricted Stock Units, Deferred Stock Units, Performance
Awards and Other Stock-Based Awards.
14.3. Cash
Payment. In connection with a Change in Control, the Committee in its sole discretion, either in an Incentive Award Agreement at the
time of grant of an Incentive Award or at any time after the grant of such an Incentive Award, may determine that any or all outstanding
Incentive Awards granted under the Plan, whether or not exercisable or vested, as the case may be, will be canceled and terminated and
that in connection with such cancellation and termination the holder of such Incentive Award will receive for each share of Common Stock
subject to such Incentive Award a cash payment (or the delivery of shares of stock, other securities or a combination of cash, stock and
securities with a fair market value (as determined by the Committee in good faith) equivalent to such cash payment) equal to the difference,
if any, between the consideration received by stockholders of the Company in respect of a share of Common Stock in connection with such
Change in Control and the purchase price per share, if any, under the Incentive Award, multiplied by the number of shares of Common Stock
subject to such Incentive Award (or in which such Incentive Award is denominated); provided, however, that if such product is zero ($0)
or less or to the extent that the Incentive Award is not then exercisable, the Incentive Award may be canceled and terminated without
payment therefor. If any portion of the consideration pursuant to a Change in Control may be received by holders of shares of Common Stock
on a contingent or delayed basis, the Committee may, in its sole discretion, determine the fair market value per share of such consideration
as of the time of the Change in Control on the basis of the Committee’s good faith estimate of the present value of the probable
future payment of such consideration. Notwithstanding the foregoing, any shares of Common Stock issued pursuant to an Incentive Award
that immediately prior to the effectiveness of the Change in Control are subject to no further restrictions pursuant to the Plan or an
Incentive Award Agreement (other than pursuant to the securities laws) will be deemed to be outstanding shares of Common Stock and receive
the same consideration as other outstanding shares of Common Stock in connection with the Change in Control.
14.4. Limitation
on Change in Control Payments. Notwithstanding anything in Section 14.2 or 14.3 of this 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 this Plan or the payment of
cash in exchange for all or part of an Incentive Award as provided in Section 14.3 of this 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 this Plan will be reduced (or acceleration of vesting eliminated) to the largest
amount as will result in no portion of such “payments” being subject to the excise tax imposed by Section 4999 of the Code;
provided, however, that such reduction will 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; and provided, further, that such payments will be reduced (or acceleration
of vesting eliminated) by first reducing or eliminating payments or benefits the full value of which are required to be recognized as
contingent upon a Change in Control (determined in accordance with Treasury Regulation § 1.280G-1, Q/A-24), followed by reducing
or eliminating payments or benefits which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse
order beginning with payments or benefits which are to be paid the farthest in time from such date. 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, then this Section 14.4 will not apply, and any “payments” to a Participant pursuant
to Section 14.2 or 14.3 of this Plan will be treated as “payments” arising under such separate agreement; provided, however,
such separate agreement may not modify the time or form of payment under any Award that constitutes deferred compensation subject to Section
409A of the Code if the modification would cause such Incentive Award to become subject to the adverse tax consequences specified in Section
409A of the Code.
15.
Rights of Eligible Recipients and Participants; Transferability.
15.1. Employment
or Service. Nothing in this Plan or an Incentive Award Agreement 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 employment or other service with the Company or any Subsidiary.
15.2. No
Rights to Incentive Awards. Subject to the terms of an Individual Agreement, no Participant or Eligible Recipient will have any claim
to be granted any Incentive Award under this Plan.
15.3. Rights
as a Stockholder. As a holder of Incentive Awards (other than Restricted Stock Awards), a Participant will have no rights as a stockholder
unless and until such Incentive Awards are exercised for, or paid in the form of, shares of Common Stock and the Participant becomes the
holder of record of such shares. Except as otherwise provided in this 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.
15.4. 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, Restricted Stock Units, Deferred Stock Units, Performance Awards and Other Stock-Based 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 this Plan will be made to, and exercise of any Options or Stock
Appreciation Rights (to the extent permitted pursuant to Section 12 of this 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 this Plan will be made to, and exercise of any Options or Stock Appreciation Rights (to the extent permitted pursuant
to Section 12 of this 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
this 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.
(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 (50%) 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 (50%) 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.
(d) The
Committee may impose such restrictions on any shares of Common Stock acquired by a Participant under this Plan as it may deem advisable,
including minimum holding period requirements, restrictions under applicable federal securities laws, under the requirements of any stock
exchange or market upon which the Common Stock is then listed or traded, or under any blue sky or state securities laws applicable to
such shares or the Company’s insider trading policy.
15.5. Non-Exclusivity
of this Plan. Nothing contained in this 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 this Plan or any
Incentive Award Agreements entered into pursuant to this 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 this 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 or book-entry notations 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.
Deferred Compensation; Compliance with Section 409A.
It is intended that all Incentive Awards issued under this
Plan be in a form and administered in a manner that will comply with the requirements of Section 409A of the Code, or the requirements
of an exception to Section 409A of the Code, and the Incentive Award Agreements and this Plan will be construed and administered in a
manner that is consistent with and gives effect to such intent. 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. With respect to an Incentive
Award that constitutes a deferral of compensation subject to Code Section 409A: (a) if any amount is payable or forfeited under such Incentive
Award upon a termination of service, a termination of service will be treated as having occurred only at such time the Participant has
experienced a Separation from Service; (b) if any amount is payable under such Incentive Award upon a Disability, a Disability will be
treated as having occurred only at such time the Participant has experienced a “disability” as such term is defined for purposes
of Code Section 409A; (c) if any amount is payable under such Incentive Award on account of the occurrence of a Change in Control, a Change
in Control will be treated as having occurred only at such time a “change in the ownership or effective control of the corporation
or in the ownership of a substantial portion of the assets of the corporation” as such terms are defined for purposes of Code Section
409A, (d) if any amount becomes payable under such Incentive Award on account of a Participant’s Separation from Service at such
time as the Participant is a “specified employee” within the meaning of Code Section 409A, then no payment will be made, except
as permitted under Code Section 409A, prior to the first business day after the earlier of (i) the date that is six (6) months after the
date of the Participant’s Separation from Service or (ii) the Participant’s death, and (e) no amendment to or payment under
such Incentive Award, including by way of an Individual Agreement, will be made except and only to the extent permitted under Code Section
409A.
18.
Plan Amendment, Modification and Termination.
The Board may suspend or terminate this Plan or any portion
thereof at any time. In addition to the authority of the Committee to amend this Plan under Section 3.2(e) of this Plan, the Board may
amend this Plan from time to time in such respects as the Board may deem advisable in order that Incentive Awards under this 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 this 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 the Listing Rules of the Nasdaq
Stock Market (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
4.4 of this Plan) or to modify Section 3.2(d) of this Plan. No termination, suspension or amendment of this 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), 4.4 and 14 of this Plan. Notwithstanding
any other provision of this Plan to the contrary, the Committee may amend this Plan, to take effect retroactively or otherwise, as deemed
necessary or advisable for the purpose of conforming this Plan to any present or future law relating to plans of this or similar nature,
and to the administration regulations and rulings promulgated thereunder. By accepting an Incentive Award under this Plan, a Participant
agrees to any amendment made pursuant to the preceding sentence to any Incentive Award granted under this Plan without further consideration
or action.
19.
Substituted Awards.
The Committee may grant Incentive Awards under this Plan
in substitution for stock and stock-based awards held by employees of another entity who become Employees of the Company or a Subsidiary
as a result of a merger or consolidation of the former employing entity with the Company or a Subsidiary or the acquisition by the Company
or a Subsidiary of property or stock of the former employing corporation. The Committee may direct that the substitute Incentive Awards
be granted on such terms and conditions as the Committee considers appropriate in the circumstances.
20.
Effective Date and Duration of this Plan.
This Plan is effective as of the Effective Date. This Plan
will terminate at 11:59 p.m., Central Time, 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 this Plan. Incentive Awards outstanding
upon termination of this Plan will remain outstanding in accordance with their applicable terms and conditions and the terms and conditions
of this Plan.
21.
Miscellaneous.
21.1. Usage.
In this Plan, except where otherwise indicated by clear contrary intention, (a) any masculine term used herein also will include the feminine,
(b) the plural will include the singular, and the singular will include the plural, (c) “including” (and with correlative
meaning “include”) means including without limiting the generality of any description preceding such term, and (d) “or”
is used in the inclusive sense of “and/or”.
21.2. Unfunded
Plan. Participants will have no right, title or interest whatsoever in or to any investments that the Company or its Subsidiaries
may make to aid it in meeting its obligations under this Plan. Nothing contained in this Plan, and no action taken pursuant to its provisions,
will create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, beneficiary,
legal representative, or any other individual. To the extent that any individual acquires a right to receive payments from the Company
or any Subsidiary under this Plan, such right will be no greater than the right of an unsecured general creditor of the Company or the
Subsidiary, as the case may be. All payments to be made hereunder will be paid from the general funds of the Company or the Subsidiary,
as the case may be, and no special or separate fund will be established and no segregation of assets will be made to assure payment of
such amounts except as expressly set forth in this Plan.
21.3. Relationship
to Other Benefits. Neither Incentive Awards made under this Plan nor shares of Common Stock paid pursuant to such Incentive Awards
under this Plan will be included as “compensation” for purposes of computing the benefits payable to any Participant under
any pension, retirement (qualified or non-qualified), savings, profit sharing, group insurance, welfare, or benefit plan of the Company
or any Subsidiary unless provided otherwise in such plan.
21.4. Fractional
Shares. No fractional shares of Common Stock will be issued or delivered under this Plan or any Incentive Award. The Committee will
determine whether cash, other Incentive Awards or other property will be issued or paid in lieu of fractional shares of Common Stock or
whether such fractional shares of Common Stock or any rights thereto will be forfeited or otherwise eliminated by rounding up or down.
21.5. Governing
Law; Venue. Except to the extent expressly provided herein or in connection with other matters of corporate governance and authority
(all of which will be governed by the laws of the Company’s jurisdiction of incorporation), the validity, construction, interpretation,
administration and effect of this Plan and any rules, regulations and actions relating to this 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.
Unless otherwise expressly provided in an Incentive Award Agreement, the Company and recipients of an Incentive Award under this Plan
hereby irrevocably submit to the exclusive jurisdiction and venue of the federal or state courts of the State of Minnesota to resolve
any and all issues that may arise out of or relate to this Plan or any Incentive Award Agreement.
21.6. Successors
and Assigns. This Plan will be binding upon and inure to the benefit of the successors and permitted assigns of the Company and the
Participants.
21.7. Construction.
Wherever possible, each provision of this Plan and any Incentive Award Agreement granted under this Plan will be interpreted so that it
is valid under the Applicable Law. If any provision of this Plan or any Incentive Award Agreement granted under this 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 this 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.
21.8. Delivery
and Execution of Electronic Documents. To the extent permitted by Applicable Law, the Company may: (a) deliver by email or other electronic
means (including posting on a Web site maintained by the Company or by a third party under contract with the Company) all documents relating
to this Plan or any Incentive Award hereunder (including prospectuses required by the Securities and Exchange Commission) and all other
documents that the Company is required to deliver to its security holders (including annual reports and proxy statements), and (b) permit
Participants to use electronic, internet or other non-paper means to execute applicable Plan documents (including Incentive Award Agreements)
and take other actions under this Plan in a manner prescribed by the Committee.
21.9. Corporate
Action Constituting Grant of Awards. Corporate action constituting a grant by the Company of an Incentive Award to any Participant
will be deemed completed as of the date of such corporate action, unless otherwise determined by the Committee, regardless of when the
instrument, certificate or letter evidencing the Incentive Award is communicated to, or actually received or accepted by, the Participant.
In the event that the corporate records (e.g., Board or Committee consents, resolutions or minutes) documenting the corporate action
constituting the grant contain terms (e.g., exercise price, vesting schedule or number of shares) that are inconsistent with those
in the Incentive Award Agreement or related grant documents as a result of a clerical error in the papering of the Incentive Award Agreement
or related grant documents, the corporate records will control and the Participant will have no legally binding right to the incorrect
term in the Incentive Award Agreement or related grant documents.
21.10. No
Representations or Warranties Regarding Tax Effect; No Obligation to Minimize or Notify Regarding Taxes. Notwithstanding any provision
of this Plan to the contrary, the Company and its Subsidiaries, the Board, and the Committee neither represent nor warrant the tax treatment
under any federal, state, local, or foreign laws and regulations thereunder (individually and collectively referred to as the “Tax
Laws”) of any Incentive Award granted or any amounts paid to any Participant under this Plan including, but not limited to, when
and to what extent such Incentive Awards or amounts may be subject to tax, penalties, and interest under the Tax Laws and have no duty
or obligation to minimize the tax consequences of an Incentive Award to the holder of such Incentive Award. The Company will have no duty
or obligation to any Participant to advise such holder as to the time or manner of exercising an Incentive Award. Furthermore, the Company
will have no duty or obligation to warn or otherwise advise such holder of a pending termination or expiration of an Incentive Award or
a possible period in which the Incentive Award may not be exercised.
21.11. Indemnification.
Subject to any limitations and requirements of Delaware law, each individual who is or will have been a member of the Board, or a Committee
appointed by the Board, or an officer or Employee of the Company to whom authority was delegated in accordance with Section 3.1 of this
Plan, will be indemnified and held harmless by the Company against and from any loss, cost, liability or expense that may be imposed upon
or reasonably incurred by him or her in connection with or resulting from any claim, action, suit or proceeding to which he or she may
be a party or in which he or she may be involved by reason of any action taken or failure to act under this Plan and against and from
any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction
of any judgment in any such action, suit or proceeding against him or her, provided he or she will give the Company an opportunity, at
its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his/her own behalf. The foregoing
right of indemnification will not be exclusive of any other rights of indemnification to which such individuals may be entitled under
the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or pursuant to any agreement with the Company,
or any power that the Company may have to indemnify them or hold them harmless.
25
Exhibit 10.2
FORM OF INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT is entered into
and effective as of __________, 20__ (the “Grant Date”), by and between Northern Technologies International Corporation (the
“Company”) and ______________ (the “Optionee”).
A. The Company
has adopted the Northern Technologies International Corporation 2024 Stock Incentive Plan (as amended from time to time, 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 Optionee
is an employee of the Company or one of its Subsidiaries (as defined in the Plan).
C. 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.
Effective as of the Grant Date, 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, par value $0.02 per share (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. Except as otherwise provided in Sections 3.2 and 3.3 below, 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 the Option will become exercisable on such dates:
Exercisability |
Available for Exercise |
__________________ |
_______ |
__________________ |
_______ |
__________________ |
_______ |
__________________ |
_______] |
[The foregoing rights to exercise the Option
will be cumulative with respect to the Option Shares becoming exercisable on each such date.] In no event will the Option be exercisable
after, and the 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
Effect of Termination of Employment or Other Service. The following provisions shall apply upon termination of the Optionee’s
employment or other service with the Company and all Subsidiaries, unless otherwise expressly provided by the terms of an Individual Agreement
(as defined in the Plan) or determined by the Committee pursuant to Section 12.3 of the Plan.
(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 (as defined in the Plan) or Retirement (as defined in the Plan), the Option
will remain exercisable, to the extent exercisable as of the date of such termination, for a period of twelve (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 the 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), the Option will remain exercisable to the extent exercisable as of
such termination for a period of three (3) months after such termination (but in no event after the Time of Termination).
(c)
Effect of Actions Constituting Cause or Adverse Action. Notwithstanding anything in this Agreement to the contrary and in
addition to the rights of the Committee under Sections 12.3, 12.5 and 12.6 of the Plan, in the event that the Optionee is determined by
the Committee, acting in its sole discretion, to have taken any action that would constitute Cause (as defined in the Plan) or an Adverse
Action (as defined in the Plan) during or within one (1) year after the termination of employment with the Company or a Subsidiary, irrespective
of whether such action or the Committee’s determination occurs before or after termination of such Optionee’s employment with
the Company or any Subsidiary and irrespective of whether or not the Optionee was terminated as a result of such Cause or Adverse Action,
(a) all rights of the Optionee under the Plan and any agreements evidencing an Incentive Award then held by the Optionee, including without
limitation the Option and this Agreement, will terminate and be forfeited without notice of any kind, and (b) the Committee in its sole
discretion will have the authority to rescind the exercise, vesting or issuance of, or payment in respect of, any Incentive Awards of
the Optionee that were exercised, vested or issued, or as to which such payment was made, including without limitation the Option, and
to require the Optionee to pay to the Company, within ten (10) days of receipt from the Company of notice of such rescission, any amount
received or the amount of any gain realized as a result of such rescinded exercise, vesting, issuance or payment (including any dividends
paid or other distributions made with respect to any shares of Common Stock subject to any Incentive Award). The Company may defer the
exercise of the Option for a period of up to six (6) months after receipt of the Optionee’s written notice of exercise for a period
of up to six (6) months after the date of such vesting in order for the Committee to make any determination as to the existence of Cause
or an Adverse Action. The Company will be entitled to withhold and deduct from future wages of the Optionee (or from other amounts that
may be due and owing to the Optionee from the Company or a Subsidiary) or make other arrangements for the collection of all amounts necessary
to satisfy such payment obligations. This Section 3.2(c) shall not apply following a Change in Control.
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, the 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 the 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 the 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” (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 (or acceleration of vesting eliminated)
to the largest amount as will result in no portion of such “payments” being subject to the excise tax imposed by Section 4999
of the Code; provided, however, that such reduction will 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; and provided, further, that such payments will be reduced
(or acceleration of vesting eliminated) by first reducing or eliminating payments or benefits the full value of which are required to
be recognized as contingent upon a Change in Control (determined in accordance with Treasury Regulation § 1.280G-1, Q/A-24), followed
by reducing or eliminating payments or benefits which are not payable in cash and then by reducing or eliminating cash payments, in each
case in reverse order beginning with payments or benefits which are to be paid the farthest in time from such date. 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, 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; provided, however, such separate agreement
may not modify the time or form of payment under any Incentive Award that constitutes deferred compensation subject to Section 409A of
the Code if the modification would cause such Incentive Award to become subject to the adverse tax consequences specified in Section 409A
of the Code.
4.
Manner of Option Exercise.
4.1
Notice. The 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 (or to the Company’s designee as may be established from time to time
by the Company and communicated to the Optionee), 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 (as defined in the Plan), 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 the 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, either by actual delivery or attestation as to ownership, of Previously Acquired Shares (as defined in the Plan) that
are acceptable to the Committee; (iii) by a “net exercise” of the Option (as described in the Plan); (iv) by a combination
of such methods; or (v) by any other method approved or accepted by the Committee in its sole discretion.
(b)
In the event the Optionee is permitted to pay the total purchase price of the 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 the 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.
(d)
Shares of Common Stock will no longer be outstanding under the 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 employment 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 the Option (including, without limitation, the conditions set forth in Sections 3, 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 the 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 the 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 the Option upon such Optionee’s death,
and, in the event of the Optionee’s death, exercise of the 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.
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 the Company reasonably determines are 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, the 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 the 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 the Option. Shares of Common Stock issued or otherwise issuable to the Optionee in connection
with the 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. When withholding shares of Common Stock
for taxes is effected under this Agreement, it will be withheld only up to an amount based on the maximum statutory tax rates in the Optionee’s
applicable tax jurisdictions or such other rate that will not trigger a negative accounting impact on the Company.
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 Common Stock 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 or substitutions (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,
the 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 Grant Date) 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 Grant Date 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. The Optionee shall notify the Company in writing with thirty (30) days after a disqualifying disposition
of the date and terms of such disposition and such other information concerning the disposition as the Company reasonably determines it
is required to have for tax purposes.
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
the Option to qualify as an incentive stock option. In addition, the Option may contain terms and conditions that allow for exercise of
the 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 the 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 the 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; Venue. 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 the Option and the administration of the Plan and supersede all prior agreements, arrangements,
plans and understandings relating to the grant and exercise of the 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.
10.7
Nature of the Grant. In accepting the Option and by execution of this Agreement, the Optionee acknowledges that:
(a)
The Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or
terminated by the Company at any time, unless otherwise provided in the Plan or this Agreement.
(b)
The grant of the Option is voluntary and occasional and does not create any contractual or other right to receive future Option
grants, or benefits in lieu of Option grants, even if Option grants have been granted repeatedly in the past.
(c)
All decisions with respect to future Option grants, if any, will be at the sole discretion of the Company.
(d)
Optionee is voluntarily participating in the Plan.
(e)
The grant of the Option is not part of normal or expected compensation or salary for any purposes, including, but not limited to,
calculating any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement
benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the
Company.
(f)
The future value of the underlying Common Stock is unknown and cannot be predicted with certainty and if Optionee vests in the
Option grant, exercises the Option in accordance with the terms of this Agreement and is issued shares of Common Stock, the value of such
shares may increase or decrease.
(g)
In consideration of the grant of the Option, no claim or entitlement to compensation or damages shall arise from termination of
the Option or diminution in value of the Option or shares acquired upon exercise of the Option resulting from termination of Optionee’s
employment or service by the Company or one of its Subsidiaries (for any reason whatsoever and whether or not in breach of local labor
laws) and Optionee irrevocably releases the Company and its Subsidiaries from any such claim that may arise; if, notwithstanding the foregoing,
any such claim is found by a court of competent jurisdiction to have arisen, then, by acceptance of the Option and execution of this Agreement,
Optionee shall be deemed irrevocably to have waived his or her entitlement to pursue such claim.
(h)
The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding Optionee’s
participation in the Plan, or Optionee’s purchase or sale of the underlying Option Shares.
(i)
Optionee is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation
in the Plan before taking any action related to the Plan.
[Remainder of page intentionally left blank]
The parties to this Agreement have executed this Agreement
effective the day and year first above written.
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NORTHERN TECHNOLOGIES |
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INTERNATIONAL CORPORATION |
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By |
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Its: |
*By execution of this Agreement, the Optionee acknowledges having received electronically a copy of the Plan, the Prospectus relating to the Plan and the Company’s most recent Annual Report on Form 10-K. The Optionee hereby agrees to accept electronic delivery of copies of any future amendments or supplements to the Prospectus or any future Prospectuses relating the Plan and copies of all reports, proxy statements and other communications distributed to the Company’s security holders generally by email directed to the Optionee’s Company email address. |
OPTIONEE*
(Signature)
(Name and Address)
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8
Exhibit 10.3
FORM OF NON-STATUTORY STOCK OPTION AGREEMENT
THIS NON-STATUTORY STOCK OPTION AGREEMENT is entered
into and effective as of __________, 20__ (the “Grant Date”), by and between Northern Technologies International Corporation
(the “Company”) and ______________ (the “Optionee”).
A. The Company
has adopted the Northern Technologies International Corporation 2024 Stock Incentive Plan (as amended from time to time, 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 non-statutory stock options to Eligible Recipients (as defined in the Plan).
B. The Optionee
is an Eligible Recipient (as defined in the Plan).
C. 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.
Effective as of the Grant Date, 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, par value $0.02 per share (the “Common Stock”), according to the terms
and subject to the conditions hereinafter set forth and as set forth in the Plan. The Option is not 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. Except as otherwise provided in Sections 3.2 and 3.3 below, 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 the Option will become exercisable on such dates:
Exercisability |
Available for Exercise |
|
|
___________________ |
_______ |
___________________ |
_______ |
___________________ |
_______ |
___________________ |
_______] |
[The foregoing rights to exercise the Option
will be cumulative with respect to the Option Shares becoming exercisable on each such date.] In no event will the Option be exercisable
after, and the 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
Effect of Termination of Employment or Other Service. The following provisions shall apply upon termination of the Optionee’s
employment or other service with the Company and all Subsidiaries, unless otherwise expressly provided by the terms of an Individual Agreement
(as defined in the Plan) or determined by the Committee pursuant to Section 12.3 of the Plan.
(a)
Termination Due to Death, Disability or Retirement. In the event the Optionee’s employment or service relationship
with the Company and all Subsidiaries is terminated by reason of death, Disability (as defined in the Plan) or Retirement (as defined
in the Plan), the Option will remain exercisable, to the extent exercisable as of the date of such termination, for a period of twelve
(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 or service
relationship 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 or perform services to a Subsidiary and the Subsidiary ceases to be a Subsidiary of the Company (unless
the Optionee continues in the employ of or performs services to 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 the 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), the Option will remain exercisable to the extent exercisable as of such termination for a period of three
(3) months after such termination (but in no event after the Time of Termination).
(c)
Effect of Actions Constituting Cause or Adverse Action. Notwithstanding anything in this Agreement to the contrary and in
addition to the rights of the Committee under Sections 12.3, 12.5 and 12.6 of the Plan, in the event that the Optionee is determined by
the Committee, acting in its sole discretion, to have taken any action that would constitute Cause (as defined in the Plan) or an Adverse
Action (as defined in the Plan) during or within one (1) year after the termination of employment or other service with the Company or
a Subsidiary, irrespective of whether such action or the Committee’s determination occurs before or after termination of such Optionee’s
employment or other service with the Company or any Subsidiary and irrespective of whether or not the Optionee was terminated as a result
of such Cause or Adverse Action, (a) all rights of the Optionee under the Plan and any agreements evidencing an Incentive Award then held
by the Optionee, including without limitation the Option and this Agreement, will terminate and be forfeited without notice of any kind,
and (b) the Committee in its sole discretion will have the authority to rescind the exercise, vesting or issuance of, or payment in respect
of, any Incentive Awards of the Optionee that were exercised, vested or issued, or as to which such payment was made, including without
limitation the Option, and to require the Optionee to pay to the Company, within ten (10) days of receipt from the Company of notice of
such rescission, any amount received or the amount of any gain realized as a result of such rescinded exercise, vesting, issuance or payment
(including any dividends paid or other distributions made with respect to any shares of Common Stock subject to any Incentive Award).
The Company may defer the exercise of the Option for a period of up to six (6) months after receipt of the Optionee’s written notice
of exercise for a period of up to six (6) months after the date of such vesting in order for the Committee to make any determination as
to the existence of Cause or an Adverse Action. The Company will be entitled to withhold and deduct from future wages of the Optionee
(or from other amounts that may be due and owing to the Optionee from the Company or a Subsidiary) or make other arrangements for the
collection of all amounts necessary to satisfy such payment obligations. This Section 3.2(c) shall not apply following a Change in Control.
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, the Option will become
immediately exercisable in full and will remain exercisable until the Time of Termination, regardless of whether the Optionee remains
in the employ or service of the Company or any Subsidiary. In addition, if a Change in Control of the Company occurs, the Committee, in
its sole discretion and without the consent of the Optionee, may determine that the Optionee will receive, with respect to some or all
of the Option Shares, as of the effective date of any such Change in Control of the Company, cash in an amount equal to the excess of
the Fair Market Value (as defined in the Plan) of such Option Shares immediately prior to the effective date of such Change in Control
of the Company over the option exercise price per share of the 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 the 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” (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 (or acceleration of vesting eliminated)
to the largest amount as will result in no portion of such “payments” being subject to the excise tax imposed by Section 4999
of the Code; provided, however, that such reduction will 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; and provided, further, that such payments will be reduced
(or acceleration of vesting eliminated) by first reducing or eliminating payments or benefits the full value of which are required to
be recognized as contingent upon a Change in Control (determined in accordance with Treasury Regulation § 1.280G-1, Q/A-24), followed
by reducing or eliminating payments or benefits which are not payable in cash and then by reducing or eliminating cash payments, in each
case in reverse order beginning with payments or benefits which are to be paid the farthest in time from such date. 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, 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; provided, however, such separate agreement
may not modify the time or form of payment under any Incentive Award that constitutes deferred compensation subject to Section 409A of
the Code if the modification would cause such Incentive Award to become subject to the adverse tax consequences specified in Section 409A
of the Code.
4. Manner
of Option Exercise.
4.1
Notice. The 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 (or to the Company’s designee as may be established from time to time
by the Company and communicated to the Optionee), 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 (as defined in the Plan), 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 the 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, either by actual delivery or attestation as to ownership, of Previously Acquired Shares (as defined in the Plan) that
are acceptable to the Committee; (iii) by a “net exercise” of the Option (as described in the Plan); (iv) by a combination
of such methods; or (v) by any other method approved or accepted by the Committee in its sole discretion.
(b)
In the event the Optionee is permitted to pay the total purchase price of the 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 the 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.
(d)
Shares of Common Stock will no longer be outstanding under the 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 or Service. Nothing in this Agreement will interfere with or limit in any way the right of the Company or any
Subsidiary to terminate the employment or service of the Optionee at any time, nor confer upon the Optionee any right to continue in the
employment or other service with 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 the Option (including, without limitation, the conditions set forth in Sections 3, 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 the 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 the 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 the Option upon such Optionee’s death,
and, in the event of the Optionee’s death, exercise of the 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.
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 the Company reasonably determines are 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, the 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 the 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 the Option. Shares of Common Stock issued or otherwise issuable to the Optionee in connection
with the 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. When withholding shares of Common Stock
for taxes is effected under this Agreement, it will be withheld only up to an amount based on the maximum statutory tax rates in the Optionee’s
applicable tax jurisdictions or such other rate that will not trigger a negative accounting impact on the Company.
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 Common Stock 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 or substitutions (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,
the 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. Miscellaneous.
9.1
Binding Effect. This Agreement will be binding upon the heirs, executors, administrators and successors of the parties to
this Agreement.
9.2
Governing Law; Venue. 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.
9.3
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 the Option and the administration of the Plan and supersede all prior agreements, arrangements,
plans and understandings relating to the grant and exercise of the Option and the administration of the Plan.
9.4
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.
9.5
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.
9.6
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.
9.7
Nature of the Grant. In accepting the Option and by execution of this Agreement, the Optionee acknowledges that:
(a) The
Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or
terminated by the Company at any time, unless otherwise provided in the Plan or this Agreement.
(b)
The grant of the Option is voluntary and occasional and does not create any contractual or other right to receive future Option
grants, or benefits in lieu of Option grants, even if Option grants have been granted repeatedly in the past.
(c)
All decisions with respect to future Option grants, if any, will be at the sole discretion of the Company.
(d)
Optionee is voluntarily participating in the Plan.
(e)
The grant of the Option is not part of normal or expected compensation or salary for any purposes, including, but not limited to,
calculating any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement
benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the
Company.
(f)
The future value of the underlying Common Stock is unknown and cannot be predicted with certainty and if Optionee vests in the
Option grant, exercises the Option in accordance with the terms of this Agreement and is issued shares of Common Stock, the value of such
shares may increase or decrease.
(g)
In consideration of the grant of the Option, no claim or entitlement to compensation or damages shall arise from termination of
the Option or diminution in value of the Option or shares acquired upon exercise of the Option resulting from termination of Optionee’s
employment or service by the Company or one of its Subsidiaries (for any reason whatsoever and whether or not in breach of local labor
laws) and Optionee irrevocably releases the Company and its Subsidiaries from any such claim that may arise; if, notwithstanding the foregoing,
any such claim is found by a court of competent jurisdiction to have arisen, then, by acceptance of the Option and execution of this Agreement,
Optionee shall be deemed irrevocably to have waived his or her entitlement to pursue such claim.
(h)
The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding Optionee’s
participation in the Plan, or Optionee’s purchase or sale of the underlying Option Shares.
(i)
Optionee is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation
in the Plan before taking any action related to the Plan.
[Remainder of page intentionally left blank]
The parties to this Agreement have executed this Agreement
effective the day and year first above written.
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NORTHERN TECHNOLOGIES
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INTERNATIONAL CORPORATION |
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By |
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Its: |
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*By execution of this Agreement, the Optionee
acknowledges having received electronically a
copy of the Plan, the Prospectus relating to the
Plan and the Company’s most recent Annual
Report on Form 10-K. The Optionee hereby
agrees to accept electronic delivery of copies of
any future amendments or supplements to the
Prospectus or any future Prospectuses relating the
Plan and copies of all reports, proxy statements
and other communications distributed to the
Company’s security holders generally by email
directed to the Optionee’s Company email address. |
OPTIONEE*
____________________________________________________________________________________________
(Signature)
____________________________________________________________________________________________
(Name and Address)
____________________________________________________________________________________________
____________________________________________________________________________________________
|
8
Exhibit 10.4
FORM OF RESTRICTED STOCK UNIT AWARD AGREEMENT
THIS RESTRICTED STOCK UNIT AWARD AGREEMENT is entered
into and effective as of __________, 20__ (the “Grant Date”), by and between Northern Technologies International Corporation
(the “Company”) and ______________ (the “Participant”).
A. The Company
has adopted the Northern Technologies International Corporation 2024 Stock Incentive Plan (as amended from time to time, 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 restricted stock units to Eligible Recipients (as defined in the Plan).
B. The Participant
is an Eligible Recipient (as defined in the Plan).
C. The Company
desires to give the Participant 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 Participant restricted stock units pursuant to the Plan.
Accordingly, the parties agree as follows:
1.
Grant of Restricted Stock Units.
Effective as of the Grant Date, the Company hereby
grants to the Participant __________ restricted stock units (“RSUs”), each of which, once vested pursuant to this Agreement,
will be settled in one (1) share of the Company’s common stock, par value $0.02 per share (the “Common Stock”), according
to the terms and subject to the conditions hereinafter set forth and as set forth in the Plan.
2.
Vesting and Conditions to Issuance of Common Stock; Forfeiture.
2.1
Vesting Conditions. Except as otherwise provided in Sections 2.2 and 2.3 below, the RSUs will vest and such vested RSUs
will be converted into shares of Common Stock immediately thereafter [immediately/in _____ installments]. [The following table sets forth
the vesting dates and the number of RSUs that will become fully vested on such dates:
Vesting Date |
RSUs Vesting on Such Date |
__________________ |
_______ |
__________________ |
_______ |
__________________ |
_______ |
__________________ |
_______] |
2.2
Effect of Termination of Employment or Other Service. The following provisions shall apply upon termination of the Participant’s
employment or other service with the Company and all Subsidiaries, unless otherwise expressly provided by the terms of an Individual Agreement
(as defined in the Plan) or determined by the Committee pursuant to Section 12.3 of the Plan.
(a)
Termination Due to Death, Disability or Retirement. In the event the Participant’s employment or service relationship
with the Company and all Subsidiaries is terminated by reason of death, Disability (as defined in the Plan) or Retirement (as defined
in the Plan), all outstanding but non-vested RSUs then held by the Participant will be terminated and forfeited.
(b)
Termination for Reasons Other Than Death, Disability or Retirement. In the event that the Participant’s employment
or service relationship with the Company and all Subsidiaries is terminated for any reason other than death, Disability or Retirement,
or the Participant is in the employ of or perform services to a Subsidiary and the Subsidiary ceases to be a Subsidiary of the Company
(unless the Participant continues in the employ of or performs services to the Company or another Subsidiary), all outstanding but non-vested
RSUs then held by the Participant will be terminated and forfeited.
(c)
Effect of Actions Constituting Cause or Adverse Action. Notwithstanding anything in this Agreement to the contrary and in
addition to the rights of the Committee under Sections 12.3, 12.5 and 12.6 of the Plan, in the event that the Participant is determined
by the Committee, acting in its sole discretion, to have taken any action that would constitute Cause (as defined in the Plan) or an Adverse
Action (as defined in the Plan) during or within one (1) year after the termination of employment or other service with the Company or
a Subsidiary, irrespective of whether such action or the Committee’s determination occurs before or after termination of such Participant’s
employment or other service with the Company or any Subsidiary and irrespective of whether or not the Participant was terminated as a
result of such Cause or Adverse Action, (a) all rights of the Participant under the Plan and any agreements evidencing an Incentive Award
then held by the Participant, including without limitation the RSUs and this Agreement, will terminate and be forfeited without notice
of any kind, and (b) the Committee in its sole discretion will have the authority to rescind the exercise, vesting or issuance of, or
payment in respect of, any Incentive Awards of the Participant that were exercised, vested or issued, or as to which such payment was
made, including without limitation the RSUs, and to require the Participant to pay to the Company, within ten (10) days of receipt from
the Company of notice of such rescission, any amount received or the amount of any gain realized as a result of such rescinded exercise,
vesting, issuance or payment (including any dividends paid or other distributions made with respect to any shares of Common Stock subject
to any Incentive Award). The Company will be entitled to withhold and deduct from future wages of the Participant (or from other amounts
that may be due and owing to the Participant from the Company or a Subsidiary) or make other arrangements for the collection of all amounts
necessary to satisfy such payment obligations. This Section 2.2(c) shall not apply following a Change in Control.
2.3
Change in Control.
(a)
Impact of Change in Control. If a Change in Control (as defined in the Plan) of the Company occurs, the RSUs will immediately
vest in full, regardless of whether the Participant remains in the employ or service of the Company or any Subsidiary. In addition, if
a Change in Control of the Company occurs, the Committee, in its sole discretion and without the consent of the Participant, may determine
that the Participant will receive, with respect to some or all of the RSUs, 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 RSUs immediately prior to
the effective date of such Change in Control of the Company over the consideration to be received by the Participant in connection with
such Change in Control.
(b)
Limitation on Change in Control Payments. Notwithstanding anything in this Section 2.3 to the contrary, if, with respect
to the Participant, the acceleration of the vesting of the RSUs or the payment of cash in exchange for all or part of the RSUs as provided
above (which acceleration or payment could be deemed a “payment” within the meaning of Section 280G(b)(2) of the Internal
Revenue Code of 1986, as amended (the “Code”)), together with any other “payments” that the 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 the Participant as set forth herein
will be reduced (or acceleration of vesting eliminated) to the largest amount as will result in no portion of such “payments”
being subject to the excise tax imposed by Section 4999 of the Code; provided, however, that such reduction will 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;
and provided, further, that such payments will be reduced (or acceleration of vesting eliminated) by first reducing or eliminating payments
or benefits the full value of which are required to be recognized as contingent upon a Change in Control (determined in accordance with
Treasury Regulation § 1.280G-1, Q/A-24), followed by reducing or eliminating payments or benefits which are not payable in cash and
then by reducing or eliminating cash payments, in each case in reverse order beginning with payments or benefits which are to be paid
the farthest in time from such date. Notwithstanding the foregoing sentence, if the 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, then this Section
2.3(b) will not apply, and any “payments” to the Participant as provided herein will be treated as “payments”
arising under such separate agreement; provided, however, such separate agreement may not modify the time or form of payment
under any Incentive Award that constitutes deferred compensation subject to Section 409A of the Code if the modification would cause such
Incentive Award to become subject to the adverse tax consequences specified in Section 409A of the Code.
3.
Settlement; Issuance of Common Stock.
3.1
Timing and Manner of Settlement. Vested RSUs will be converted to shares of Common Stock which the Company will issue and
deliver to the Participant (either by delivering one or more certificates for such shares or by entering such shares in book entry form
in the name of the Participant or depositing such shares for the Participant’s benefit with any broker with which the Participant
has an account relationship or the Company has engaged to provide such services under the Plan, as determined by the Company in its sole
discretion) within seventy four (74) days following the vesting date, except to the extent that shares of Common Stock are withheld to
pay tax withholding obligations pursuant to Section 5 of this Agreement or the Participant has properly elected to defer income that may
be attributable to such RSUs under a Company deferred compensation plan or arrangement. Payment of amounts under this Agreement (by issuance
of shares of Common Stock or otherwise) is intended to comply with the requirements of an exception to Section 409A of the Code and this
Agreement shall in all respects be administered and construed to give effect to such intent. The Committee in its sole discretion may
accelerate or delay the distribution of any payment under this Agreement to the extent allowed under Section 409A of the Code.
3.2
Dividend Equivalents. The RSUs are being granted without Dividend Equivalents, as defined in the Plan.
4.
Rights of Participant; Transferability.
4.1
Employment or Service. Nothing in this Agreement will interfere with or limit in any way the right of the Company or any
Subsidiary to terminate the employment or service of the Participant at any time, nor confer upon the Participant any right to continue
in the employment or other service with the Company or any Subsidiary at any particular position or rate of pay or for any particular
period of time.
4.2
Rights as a Shareholder. The Participant will have no rights as a shareholder unless and until all conditions to the effective
settlement of the RSU (including, without limitation, the conditions set forth in Sections 2, 3 and 5 of this Agreement) have been satisfied
and the Participant has become the holder of record of such shares. No adjustment will be made for dividends or distributions with respect
to the RSUs as to which there is a record date preceding the date the Participant becomes the holder of record of the underlying shares,
except as may otherwise be provided in the Plan or determined by the Committee in its sole discretion.
4.3
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 Participant in the RSUs prior to vesting or issuance may be assigned or transferred,
or subjected to any lien, during the lifetime of the Participant, either voluntarily or involuntarily, directly or indirectly, by operation
of law or otherwise.
5.
Withholding Taxes.
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 the Company reasonably determines are necessary to satisfy
any and all federal, foreign, state and local withholding and employment-related tax requirements attributable to the RSUs, including,
without limitation, the vesting or settlement of, the RSUs; (b) withhold cash paid or payable or shares of Common Stock from the shares
issued or otherwise issuable to the Participant in connection with the RSUs; 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 the RSUs. Shares
of Common Stock issued or otherwise issuable to the Participant in connection with the RSUs 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. When withholding shares of Common Stock for taxes is effected under this Agreement, it will be
withheld only up to an amount based on the maximum statutory tax rates in the Participant’s applicable tax jurisdictions or such
other rate that will not trigger a negative accounting impact on the Company.
6.
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 Common Stock 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 Participant, will make appropriate adjustment or substitutions (which
determination will be conclusive) as to the number and kind of securities or other property (including cash) subject to the RSUs.
7.
Stock Subject to Plan.
The RSUs and shares of Common Stock 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 Participant, 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.
8.
Miscellaneous.
8.1
Binding Effect. This Agreement will be binding upon the heirs, executors, administrators and successors of the parties to
this Agreement.
8.2
Governing Law; Venue. 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.
8.3
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 settlement of the RSUs and the administration of the Plan and supersede all prior agreements, arrangements,
plans and understandings relating to the grant and settlement of the RSUs and the administration of the Plan.
8.4
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.
8.5
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.
8.6
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.
8.7
Nature of the Grant. In accepting the RSUs and by execution of this Agreement, the Participant acknowledges that:
(a)
The Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or
terminated by the Company at any time, unless otherwise provided in the Plan or this Agreement.
(b)
The grant of the RSUs is voluntary and occasional and does not create any contractual or other right to receive future awards of
RSUs, or benefits in lieu of RSUs, even if RSUs have been granted repeatedly in the past.
(c)
All decisions with respect to future RSU award grants, if any, will be at the sole discretion of the Company.
(d)
Participant is voluntarily participating in the Plan.
(e)
The grant of the RSUs is not part of normal or expected compensation or salary for any purposes, including, but not limited to,
calculating any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement
benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the
Company.
(f)
The future value of the underlying Common Stock is unknown and cannot be predicted with certainty and if Participant vests in the
RSUs and is issued shares of Common Stock, the value of such shares may increase or decrease.
(g)
In consideration of the grant of the RSUs, no claim or entitlement to compensation or damages shall arise from termination of the
RSUs or diminution in value of the RSUs or shares acquired upon vesting of the RSUs resulting from termination of Participant’s
employment or service by the Company or one of its Subsidiaries (for any reason whatsoever and whether or not in breach of local labor
laws) and Participant irrevocably releases the Company and its Subsidiaries from any such claim that may arise; if, notwithstanding the
foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by acceptance of the RSUs and execution
of this Agreement, Participant shall be deemed irrevocably to have waived his or her entitlement to pursue such claim.
(h)
The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding Participant’s
participation in the Plan, or Participant’s acquisition of shares of Common Stock upon vesting of the RSUs or any sale of such shares.
(i)
Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation
in the Plan before taking any action related to the Plan.
[Remainder of page intentionally left blank]
The parties to this Agreement have executed this Agreement
effective the day and year first above written.
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NORTHERN TECHNOLOGIES |
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INTERNATIONAL CORPORATION |
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By |
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Its: |
*By execution of this Agreement, the Participant acknowledges having received electronically a copy of the Plan, the Prospectus relating to the Plan and the Company’s most recent Annual Report on Form 10-K. The Participant hereby agrees to accept electronic delivery of copies of any future amendments or supplements to the Prospectus or any future Prospectuses relating the Plan and copies of all reports, proxy statements and other communications distributed to the Company’s security holders generally by email directed to the Participant’s Company email address. |
PARTICIPANT*
(Signature)
(Name and Address)
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7
v3.23.4
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Jan. 19, 2024 |
Cover [Abstract] |
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8-K
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false
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Jan. 19, 2024
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Entity File Number |
001-11038
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Entity Registrant Name |
NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION
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Entity Central Index Key |
0000875582
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Entity Tax Identification Number |
41-0857886
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Entity Incorporation, State or Country Code |
DE
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Entity Address, Address Line One |
4201 Woodland Road
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Entity Address, Address Line Two |
P.O. Box 69
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Entity Address, City or Town |
Circle Pines
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MN
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55014
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(763)
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225-6600
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Common stock, par value $0.02 per share
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NTIC
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NASDAQ
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