EXHIBIT 10.6
FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT
NON-STATUTORY STOCK OPTION AGREEMENT
THIS AGREEMENT is entered into and effective as of this ______ day of
______________, 2000 (the "Date of Grant"), by and between Northern Technologies
International Corporation (the "Company") and ________________ (the "Optionee").
A. The Company has adopted the Northern Technologies International
Corporation 2000 Stock Incentive Plan (the "Plan") authorizing the Board of
Directors of the Company, or a committee as provided for in the Plan (the Board
or such a committee to be referred to as the "Committee"), to, among other
things, grant non-statutory stock options to employees, non-employee consultants
and independent contractors of the Company and its Subsidiaries and any joint
venture partners (including without limitation, officers, directors and partners
thereof) of the Company or any 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:
XXX. GRANT OF OPTION.
The Company hereby grants to the Optionee the right, privilege, and
option (the "Option") to purchase ______________ shares (the "Option Shares") of
the Company's common stock, $.02 par value (the "Common Stock"), according to
the terms and subject to the conditions hereinafter set forth and as set forth
in the Plan. The Option is 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").
XXXI. OPTION EXERCISE PRICE.
The per share price to be paid by Optionee in the event of an exercise
of the Option will be $________.
XXXII. DURATION OF OPTION AND TIME OF EXERCISE.
A. Initial Period of Exercisability. The Option will become
exercisable with respect to the Option Shares in _____________
installments. The following table sets forth the initial dates
of exercisability of each installment and the number of Option
Shares as to which this Option will become exercisable on such
dates:
Initial Date of Number of Option Shares
Exercisability Available for Exercise
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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 but in no event will
this Option be exercisable after, and this Option will become void and expire as
to all unexercised Option Shares at, 5:00 p.m. (Minneapolis, Minnesota time) on
____________, _________ (the "Time of Termination").
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B. Termination of Employment or Other Service.
1. In the event that the Optionee's employment or other
service with the Company and all Subsidiaries is
terminated by reason of the Optionee's death,
Disability or Retirement (as such terms are defined
in the Plan), this Option will remain exercisable to
the extent exercisable as of such termination
following such termination until the Time of
Termination.
2. In the event the Optionee's employment or other
service with the Company and all Subsidiaries is
terminated for any reason other than death,
Disability or Retirement, all rights of the Optionee
under the Plan and this Agreement will immediately
terminate without notice of any kind, and this Option
will no longer be exercisable; provided, however,
that if such termination is due to any reason other
than termination by the Company or any Subsidiary for
"cause" (as defined in the Plan), this Option will
remain exercisable to the extent exercisable as of
such termination for a period of one month after such
termination (but in no event will this Option be
exercisable after the Time of Termination).
C. Change in Control.
1. If any events constituting a Change in Control (as
defined in Section 13.1 of the Plan) of the Company
occur, then this Option will become immediately
exercisable in full and will remain exercisable until
the Time of Termination, regardless of whether the
Optionee remains in the employ or service of the
Company or any Subsidiary. In addition, if a Change
in Control of the Company occurs, the Committee, in
its sole discretion and without the consent of the
Optionee, may determine that the Optionee will
receive, with respect to some or all of the Option
Shares, as of the effective date of any such Change
in Control of the Company, cash in an amount equal to
the excess of the Fair Market Value (as defined in
the Plan) of such Option Shares immediately prior to
the effective date of such Change in Control of the
Company over the option exercise price per share of
this Option.
2. Notwithstanding anything in this Section 3.3 to the
contrary, if, with respect to the Optionee,
acceleration of the vesting of this Option or the
payment of cash in exchange for all or part of this
Option as provided above (which acceleration or
payment could be deemed a "payment" within the
meaning of Section 280G(b)(2) of the Code), together
with any other payments which the Optionee has the
right to receive from the Company or any corporation
which is a member of an "affiliated group" (as
defined in Section 1504(a) of the Code without regard
to Section 1504(b) of the Code) of which the Company
is a member, would constitute a "parachute payment"
(as defined in Section 280C1(b)(2) of the Code), the
payments to the Optionee as set forth herein will be
reduced to the largest amount as will result in no
portion of such payments being subject to the excise
tax imposed by Section 4999 of the Code; provided,
however, that if the Optionee is subject to a
separate agreement with the Company or a Subsidiary
that specifically provides that payments
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attributable to one or more forms of employee stock
incentives or to payments made in lieu of employee
stock incentives will not reduce any other payments
under such agreement, even if it would constitute an
excess parachute payment, then the limitations of
this Section 3.3(b) will, to that extent, not apply.
XXXIII. MANNER OF OPTION EXERCISE.
A. Notice. This Option may be exercised by the Optionee in whole
or in part from time to time, subject to the conditions
contained in the Plan and in this Agreement, by delivery, in
person, by facsimile or electronic transmission or through the
mail, to the Company at its principal executive office in ▇▇▇▇
Lakes, Minnesota (Attention: Chief Financial Officer), of a
written notice of exercise. Such notice will be in a form
satisfactory to the Committee, will identify the Option, will
specify the number of Option Shares with respect to which the
Option is being exercised, and will be signed by the person or
persons so exercising the Option. Such notice will be
accompanied by payment in full of the total purchase price of
the Option Shares purchased. In the event that the Option is
being exercised, as provided by the Plan and Section 3.2
above, by any person or persons other than the Optionee, the
notice will be accompanied by appropriate proof of right of
such person or persons to exercise the Option. As soon as
practicable after the effective exercise of the Option, the
Optionee will be recorded on the stock transfer books of the
Company as the owner of the Option Shares purchased, and the
Company will deliver to the Optionee one or more duly issued
stock certificates evidencing such ownership.
B. Payment. At the time of exercise of this Option, the Optionee
will pay the total purchase price of the Option Shares to be
purchased solely in cash (including a check, bank draft or
money order, payable to the order of the Company); provided,
however, that the Committee, in its sole discretion, may allow
such payment to be made, in whole or in part, by tender of a
Broker Exercise Notice, Previously Acquired Shares or by a
combination of such methods. For purposes of this Agreement,
the terms "Broker Exercise Notice" and "Previously Acquired
Shares" will have the meanings set forth in the Plan. In the
event the Optionee is permitted to pay the total purchase
price of this Option in whole or in part with Previously
Acquired Shares, the value of such shares will be equal to
their Fair Market Value on the date of exercise of this
Option.
XXXIV. ADVERSE ACTION
A. Termination. Notwithstanding anything in this Agreement to the
contrary, in the event that the Optionee materially breaches
the terms of any confidentiality or noncompete agreement
entered into with the Company or takes any other Adverse
Action (as defined in the Plan), whether such Adverse Action
occurs before or after termination of the Optionee's
employment or other service with the Company or any
Subsidiary, the Committee in its sole discretion may
immediately terminate all rights of the Optionee under this
Agreement without notice of any kind.
B. Recission. In addition to the Company's right of termination
as provided in Section 5.1, to the extent that the Optionee
takes such Adverse Action during the period beginning 6 months
prior to, and ending 6 months following, the date of such
employment or service termination, the Committee in its sole
discretion will have the authority to rescind (i) this Option
if it was granted during such period and (ii) any exercise of
this Option by the Optionee during such period, and to require
the Optionee to pay to the Company, within 10 days of receipt
from the Company of notice of such rescission, the amount of
any gain realized from this rescinded grant or exercise. Such
payment will be made in cash (including check, bank draft or
money order) or, with the Committee's consent, shares of
Common Stock with a Fair Market Value on the date of payment
equal to the amount of such payment. The Company will be
entitled to withhold and deduct from future wages of the
Optionee (or from other amounts that may be due and owing to
the Optionee from the Company or Subsidiary) or make other
arrangements for the collection of all amounts necessary to
satisfy such payment obligation.
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C. Certification. Upon exercise, payment or delivery pursuant to
this Option, the Optionee or grantee shall certify on a form
acceptable to the Committee that he or she is in compliance
with the terms and conditions of the Plan and this Agreement.
XXXV. NONTRANSFERABILITY.
Neither this Option nor the Option Shares acquired upon exercise may be
transferred by the Optionee, either voluntarily or involuntarily, or subjected
to any lien, directly or indirectly, by operation of law or otherwise, except as
provided in the Plan. Any attempt to transfer or encumber this Option or the
Option Shares other than in accordance with this Agreement and the Plan will be
null and void and will void this Option.
XXXVI. LIMITATION OF LIABILITY.
Nothing in this Agreement will be construed to (a) limit in any way the
right of the Company to terminate the employment or service of the Optionee at
any time, or (b) be evidence of any agreement or understanding, express or
implied, that the Company will retain the Optionee in any particular position,
at any particular rate of compensation or for any particular period of time.
XXXVII. WITHHOLDING TAXES.
The Company is entitled to (a) withhold and deduct from future wages of
the Optionee (or from other amounts which may be due and owing to the Optionee
from the Company), or make other arrangements for the collection of, all legally
required amounts necessary to satisfy any federal, state or local withholding
and employment-related tax requirements attributable to the grant or exercise of
this Option or otherwise incurred with respect to this Option, or (b) require
the Optionee promptly to remit the amount of such withholding to the Company
before acting on the Optionee's notice of exercise of this Option. In the event
that the Company is unable to withhold such amounts, for whatever reason, the
Optionee hereby agrees to pay to the Company an amount equal to the amount the
Company would otherwise be required to withhold under federal, state or local
law.
XXXVIII. ADJUSTMENTS.
In the event of any reorganization, merger, consolidation,
recapitalization, liquidation, reclassification, stock dividend, stock split,
combination of shares, rights offering, divestiture or extraordinary dividend
(including a spin-off), or any other change in the corporate structure or shares
of the Company, the Committee (or, if the Company is not the surviving
corporation in any such transaction, the board of directors of the surviving
corporation), in order to prevent dilution or enlargement of the rights of the
Optionee, will make appropriate adjustment (which determination will be
conclusive) as to the number, kind and exercise price of securities subject to
this Option.
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XXXIX. 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.
XL. MISCELLANEOUS.
A. Binding Effect. This Agreement will be binding upon the heirs,
executors, administrators and successors of the parties to
this Agreement.
B. Governing Law. This Agreement and all rights and obligations
under this Agreement will be construed in accordance with the
Plan and governed by the laws of the State of Minnesota.
C. Entire Agreement. This Agreement and the Plan set forth the
entire agreement and understanding of the parties to this
Agreement with respect to the grant and exercise of this
Option and the administration of the Plan and supersede all
prior agreements, arrangements, plans and understandings
relating to the grant and exercise of this Option and the
administration of the Plan.
D. Amendment and Waiver. Other than as provided in the Plan, this
Agreement may be amended, waived, modified or canceled only by
a written instrument executed by the parties hereto or, in the
case of a waiver, by the party waiving compliance.
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The parties to this Agreement have executed this Agreement effective
the day and year first above written.
NORTHERN TECHNOLOGIES
INTERNATIONAL CORPORATION
By:
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Its:
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[By execution of this Agreement,
the Optionee acknowledges having OPTIONEE
received a copy of the Plan.]
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(Signature)
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(Name and Address)
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