Exhibit 10.8
FORM OF INCENTIVE STOCK OPTION
AGREEMENT
THIS
INCENTIVE STOCK OPTION AGREEMENT is entered into and effective as
of this ____ day of ____________, ______ (the “Date of
Grant”), by and between Northern Technologies International
Corporation (the “Company”) and ----_________________
(the “Optionee”).
A. The
Company has adopted the Northern Technologies International
Corporation 2007 Stock Incentive Plan (the “Plan”)
authorizing the Board of Directors of the Company, or a committee
as provided for in the Plan (the Board or such a committee to be
referred to as the “Committee”), to grant incentive
stock options to employees of the Company and its Subsidiaries (as
defined in the Plan).
B. The
Company desires to give the Optionee an inducement to acquire a
proprietary interest in the Company and an added incentive to
advance the interests of the Company by granting to the Optionee an
option to purchase shares of common stock of the Company pursuant
to the Plan.
Accordingly,
the parties agree as follows:
1. Grant of
Option .
The
Company hereby grants to the Optionee the right, privilege, and
option (the “Option”) to purchase _______________
(______) shares (the “Option Shares”) of the
Company’s common stock, $0.02 par value (the “Common
Stock”), according to the terms and subject to the conditions
hereinafter set forth and as set forth in the Plan. Subject
to Section 9 of this Agreement, the Option is intended to be an
“incentive stock option,” as that term is used in
Section 422 of the Internal Revenue Code of 1986, as amended (the
“Code”).
2. Option Exercise
Price .
The
per share price to be paid by Optionee in the event of an exercise
of the Option will be $______.
3. Duration of
Option and Time of Exercise .
3.1
Initial Period of Exercisability . The Option will
become exercisable with respect to the Option Shares
[immediately/in _____ installments]. [The following table
sets forth the initial dates of exercisability of each installment
and the number of Option Shares as to which this Option will become
exercisable on such dates:
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Exercisability
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Available for Exercise
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___________________
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_______
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___________________
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_______
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___________________
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_______
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___________________
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_______]
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[The foregoing rights to exercise
this Option will be cumulative with respect to the Option Shares
becoming exercisable on each such date.] In no event will
this Option be exercisable after, and this Option will become void
and expire as to all unexercised Option Shares at 5:00 p.m. Circle
Pines, Minnesota time on ______________________ (the “Time of
Termination”).
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3.2
Termination of Employment .
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(a)
Termination Due to Death, Disability or Retirement .
In the event the Optionee’s employment with the Company and
all Subsidiaries is terminated by reason of death, Disability or
Retirement, this Option will remain exercisable, to the extent
exercisable as of the date of such termination, for a period of 12
months after such termination (but in no event after the Time of
Termination).
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(b)
Termination for Reasons Other Than Death, Disability or
Retirement . In the event that the Optionee’s
employment with the Company and all Subsidiaries is terminated for
any reason other than death, Disability or Retirement, or the
Optionee is in the employ of a Subsidiary and the Subsidiary ceases
to be a Subsidiary of the Company (unless the Optionee continues in
the employ of the Company or another Subsidiary), all rights of the
Optionee under the Plan and this Agreement will immediately
terminate without notice of any kind, and this Option will no
longer be exercisable; provided, however, that if such termination
is due to any reason other than termination by the Company or any
Subsidiary for “cause” (as defined in the Plan), this
Option will remain exercisable to the extent exercisable as of such
termination for a period of three months after such termination
(but in no event after the Time of Termination).
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(c)
Breach of Employment, Service, Confidentiality, Non-Compete or
Non-Solicitation Agreements . Notwithstanding anything in
this Agreement to the contrary and in addition to the rights of the
Committee under Section 12.4 of the Plan, in the event that the
Optionee materially breaches the terms of any employment, service,
confidentiality, non-compete or non-solicitation agreement entered
into with the Company or any Subsidiary (including an employment,
service, confidentiality, non-compete or non-solicitation agreement
made in connection with the grant of the Option), whether such
breach occurs before or after termination of such
Participant’s employment or other service with the Company or
any Subsidiary, the Committee in its sole discretion may require
the Participant to surrender shares of Common Stock received, and
to disgorge any profits (however defined by the Committee), made or
realized by the Participant in connection with this Option or any
shares issued upon the exercise or vesting of this
Option.
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3.3
Change in Control .
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(a)
Impact of Change in Control . If a Change in Control
(as defined in the Plan) of the Company occurs, this Option will
become immediately exercisable in full and will remain exercisable
until the Time of Termination, regardless of whether the Optionee
remains in the employ of the Company or any Subsidiary. In
addition, if a Change in Control of the Company occurs, the
Committee, in its sole discretion and without the consent of the
Optionee, may determine that the Optionee will receive, with
respect to some or all of the Option Shares, as of the effective
date of any such Change in Control of the Company, cash in an
amount equal to the excess of the Fair Market Value (as defined in
the Plan) of such Option Shares immediately prior to the effective
date of such Change in Control of the Company over the option
exercise price per share of this Option.
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(b)
Limitation on Change in Control Payments .
Notwithstanding anything in this Section 3.3 to the contrary,
if, with respect to the Optionee, the acceleration of the vesting
of this Option or the payment of cash in exchange for all or part
of the Option Shares as provided above (which acceleration or
payment could be deemed a “payment” within the meaning
of Section 280G(b)(2) of the Code), together with any other
“payments” that the Optionee has the right to receive
from the Company or any corporation that is a member of an
“affiliated group”
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2
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(as defined in
Section 1504(a) of the Code without regard to
Section 1504(b) of the Code) of which the Company is a member,
would constitute a “parachute payment” (as defined in
Section 280G(b)(2) of the Code), then the
“payments” to the Optionee as set forth herein will be
reduced to the largest amount as will result in no portion of such
“payments” being subject to the excise tax imposed by
Section 4999 of the Code; provided, that such reduction shall be
made only if the aggregate amount of the payments after such
reduction exceeds the difference between (A) the amount of such
payments absent such reduction minus (B) the aggregate amount of
the excise tax imposed under Section 4999 of the Code attributable
to any such excess parachute payments. Notwithstanding the
foregoing sentence, if the Optionee is subject to a separate
agreement with the Company or a Subsidiary that expressly addresses
the potential application of Sections 280G or 4999 of the Code
(including, without limitation, that “payments” under
such agreement or otherwise will be reduced, that the Optionee will
have the discretion to determine which “payments” will
be reduced, that such “payments” will not be reduced or
that such “payments” will be “grossed up”
for tax purposes), then this Section 3.3(b) will not apply, and any
“payments” to the Optionee as provided herein will be
treated as “payments” arising under such separate
agreement
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4. Manner of
Option Exercise .
4.1
Notice . This Option may be exercised by the Optionee
in whole or in part from time to time, subject to the conditions
contained in the Plan and in this Agreement, by delivery, in
person, by facsimile or electronic transmission or through the
mail, to the Company at its principal executive office in Circle
Pines, Minnesota, of a written notice of exercise. Such
notice must be in a form satisfactory to the Committee, must
identify the Option, must specify the number of Option
Shares
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