INCENTIVE STOCK OPTION AGREEMENT

Exhibit 10.3

METHES ENERGIES INTERNATIONAL LTD.

INCENTIVE STOCK OPTION AGREEMENT

This Agreement is between Methes Energies International Ltd., a Nevada corporation (the “Company”), and __________________________ (the “Optionee”), pursuant to the Company’s Amended and Restated 2008 Directors, Officers and Employees Stock Option Plan (the “Plan”).  The Company and the Optionee agree as follows:

1.            Option Grant.   The Company grants to the Optionee on the terms and conditions of this Agreement the right and the option (the “Option”) to purchase all or any part of _______ shares of the Company’s Common Stock at a purchase price of $______ per share.  The terms and conditions of the Option grant set forth in attached Exhibit A are incorporated into and made a part of this Agreement.  The Option is intended to be an Incentive Stock Option as defined in Section 422 of the Internal Revenue Code of 1986, as amended.

2.            Grant Date; Expiration Date.    The Grant Date for this Option is _____________.  The Option shall continue in effect until the tenth anniversary of the Grant Date (the “Expiration Date”) unless earlier terminated as provided in Sections 2, 7 or 8 of Exhibit A.  The Option shall not be exercisable on or after the Expiration Date.

3.            Exercise of Option.   The Vesting Reference Date of this Option is ____________. The Option will become exercisable in accordance with Section 1 of Exhibit A.

The parties have executed this Agreement in duplicate as of the Grant Date.

Methes Energies International Ltd.

Exhibit A to

Stock Option Agreement

1.            Time of Exercise of Option.

1.2           Special Acceleration Of Option .

(a) This option, to the extent outstanding at the time of a Corporate Transaction but not otherwise fully exercisable, shall automatically accelerate so that this option shall, immediately prior to the effective date of such Corporate Transaction, become exercisable for all of the Option shares at the time subject to this option and may be exercised for any or all of those Option shares as fully vested shares of Common Stock. No such acceleration of this option shall occur, however, if and to the extent: (i) this option is, in connection with the Corporate Transaction, to be assumed by the successor company (or parent thereof) or (ii) this option is to be replaced with a cash incentive program of the successor company which preserves the spread existing at the time of the Corporate Transaction on the Option shares for which this option is not otherwise at that time exercisable (the excess of the Fair Market Value of those Option shares over the aggregate Exercise Price payable for such shares) and provides for subsequent payout in accordance with the same option exercise/vesting schedule set forth in this Agreement.

(b) Immediately following the Corporate Transaction, this option shall terminate and cease to be outstanding, except to the extent assumed by the successor company (or parent thereof) in connection with the Corporate Transaction.

(c) If this option is assumed in connection with a Corporate Transaction, then this option shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to Optionee in consummation of such Corporate Transaction had the option been exercised immediately prior to such Corporate Transaction, and appropriate adjustments shall also be made to the Exercise Price, PROVIDED the aggregate Exercise Price shall remain the same.  (d) This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

(d)  Certain Definitions.

(i)  “Corporate Transaction” shall mean either of the following stockholder-approved transactions to which the Company is a party: (i) a merger or consolidation in which securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction, or (ii) the sale, transfer or other disposition of all or substantially all of the Company’s assets in complete liquidation or dissolution of the Company.

(ii) “Exercise Price” shall mean the exercise price per Option Share as specified in this Agreement.

(iii)  “Fair Market Value” per share of Common Stock on any relevant date shall be the closing price of the Common Stock last reported before the time in question if the Common Stock is publicly traded, or another value of the Common Stock as specified by the Board of Directors.

(iv) “Option Shares” shall mean the number of shares of Common Stock subject to the option as specified in this Agreement.

2.            Termination of Employment or Service.

2.1            General Rule.   Except as provided in this Section 2, the Option may not be exercised unless at the time of exercise the Optionee is employed by or in the service of the Company and shall have been so employed or provided such service continuously since the Grant Date.  For purposes of this Exhibit A, the Optionee is considered to be employed by or in the service of the Company if the Optionee is employed by or in the service of the Company or any parent or subsidiary of the Company (an “Employer”).

2.2            Termination Generally .  If the Optionee’s employment or service with the Company terminates for any reason other than because of total disability or death as provided in Sections 2.3 or 2.4, the Option may be exercised at any time before the Expiration Date or the expiration of 90 days after the date of termination, whichever is the shorter period, but only if and to the extent the Optionee was entitled to exercise the Option at the date of termination, provided however, if the Optionee's is terminated for Misconduct, then this option shall terminate immediately and cease to remain outstanding on the date of termination. “Misconduct” shall mean the commission of any act of fraud, embezzlement or dishonesty by Optionee, any unauthorized use or disclosure by Optionee of confidential information or trade secrets of the Company (or any parent or subsidiary), or any other intentional misconduct by Optionee adversely affecting the business or affairs of the Company (or any parent or subsidiary) in a material manner. The foregoing definition shall not be deemed to be inclusive of all the acts or omissions which the Company (or any parent or subsidiary) may consider as grounds for the dismissal or discharge of Optionee or any other individual in the service of the Company (or any parent or subsidiary).

2.3            Termination Because of Total Disability.   If the Optionee’s employment or service with the Company terminates because of total disability, the Option may be exercised at any time before the Expiration Date or before the date 12 months after the date of termination, whichever is the shorter period, but only if and to the extent the Optionee was entitled to exercise the Option at the date of termination.  The term “total disabili