SHAREHOLDERS
JOINT VENTURE AGREEMENT


FOR
THE ESTABLISHMENT OF TIANJIN ZERUST ANTI-CORROSION 

TECHNOLOGIES LTD.


BY
AND BETWEEN


TIANJIN
CHINA MARCH GROUP LTD.


AND


NTI
ASEAN, LLC.


DATED
AS OF 1 SEPTEMBER, 1999











	
  ARTICLE 1  DEFINITIONS

  	
  5

	
   
	
  1.1
	
  Shareholders Joint Venture Agreement
  or Agreement.
	
  5

	
   
	
  1.2
	
  Ancillary Agreements.
	
  5

	
   
	
  1.3
	
  Parties.
	
  6

	
   
	
  1.4
	
  PARTY A.
	
  6

	
   
	
  1.5
	
  NTI.
	
  6

	
   
	
  1.6
	
  Taiyo.
	
  6

	
   
	
  1.7
	
  PARTY B.
	
  6

	
   
	
  1.8
	
  NTI and/or PARTY B Affiliates.
	
  6

	
   
	
  1.9
	
  Corporation or TIANJIN ZERUST.
	
  7

	
   
	
  1.10
	
  Corporation’s Business.
	
  7

	
   
	
  1.11
	
  Territory.
	
  7

	
   
	
  1.12
	
  Effective Date.
	
  7

	
   
	
  1.13
	
  NTI Intellectual Property Rights.
	
  7

	
   
	
  1.14
	
  Knowhow.
	
  7

	
   
	
  1.15
	
  Materials.
	
  8

	
   
	
  1.16
	
  Process.
	
  8

	
   
	
  1.17
	
  Product.
	
  8

	
   
	
  1.18
	
  Masterbatch.
	
  8

	
   
	
  1.19
	
  Trademark.
	
  8

	
   
	
  1.20
	
  NTI and/or Party B Trade Secrets.
	
  8

	
   
	
  1.21
	
  Other Agreed Upon Technologies.
	
  9

	
   
	
  1.22
	
  Net Sales.
	
  9

	
   
	
  1.23
	
  At Cost.
	
  9

	
   
	
  1.24
	
  Shareholder/Holder of Equity
  Interests.
	
  9

	
   
	
  1.25
	
  Equity Interests.
	
  9

	
   
	
  1.26
	
  Transfer of Equity Interests.
	
  10

	
   
	
  1.27
	
  Transferor of Equity Interests.
	
  10

	
   
	
  1.28
	
  Transfer Price for Equity Interests.
	
  10

	
   
	
  1.29
	
  Transferee.
	
  10

	
   
	
  1.30
	
  Change of Control.
	
  10

	
  ARTICLE 2  MUTUAL REPRESENTATIONS
	
  10

	
   
	
  2.1
	
  Representations of PARTY A.
	
  10

	
   
	
  2.2
	
  Representations of PARTY B
	
  11

	
  ARTICLE 3  PURPOSES OF THE JOINT VENTURE
	
  11

	
   
	
  3.1
	
  Purposes of the Joint Venture.
	
  11

	
  ARTICLE 4  FORMATION OF JOINT VENTURE CORPORATION
	
  12

	
   
	
  4.1
	
  Formation of Corporation.
	
  12

	
   
	
  4.2
	
  Articles of Incorporation.
	
  13

	
   
	
  4.3
	
  Capitalization.
	
  13

	
   
	
  4.4
	
  Payment for Equity Interest by the
  Parties.
	
  13

	
   
	
  4.5
	
  Parallel Rights to Subscribe for
  Additional Equity Interest.
	
  13

	
  ARTICLE 5  PURPOSE. EXECUTION AND INCORPORATION OF ANCILLARY AGREEMENTS
  HEREIN
	
  13

	
   
	
  5.1
	
  Execution of Ancillary Agreements.
	
  13

	
   
	
  5.2
	
  Ancillary Agreements Incorporated
  Herein and Made Part Hereof.
	
  14




i











	
  ARTICLE 6  ELECTION OF DIRECTORS AND DESIGNATION OF THE CEO OF THE
  CORPORATION

  	
  14

	
   
	
  6.1
	
  Election of Directors.
	
  14

	
   
	
  6.2
	
  Substitute Directors.
	
  14

	
   
	
  6.3
	
  Designation of Chief Executive
  Officer of the Corporation.
	
  14

	
  ARTICLE 7  RESPONSIBILITIES AND DUTIES OF THE PARTIES
	
  15

	
   
	
  7.1
	
  Responsibilities of the Parties.
	
  15

	
   
	
  7.2
	
  Specific Responsibilities and Duties
  of Individual Parties.
	
  15

	
   
	
  7.3
	
  Actions Requiring Consent of All
  Parties.
	
  15

	
   
	
  7.4
	
  Special Resolutions.
	
  17

	
  ARTICLE 8  DEVELOPMENT OF THE CORPORATION’S STAFF
	
  17

	
   
	
  8.1
	
  Development of Corporation’s Staff.
	
  17

	
   
	
  8.2
	
  Implementation of Corporate
  Governance Policies Appropriate to the Territory.
	
  17

	
  ARTICLE 9  PAYMENTS TO RELATED PARTIES
	
  17

	
   
	
  9.1
	
  Payment to Related Parties in the
  Ordinary Course of Business.
	
  17

	
   
	
  9.2
	
  Payments to Related Parties for
  Services Performed with Respect to Other Agreed Upon Technologies in the
  Ordinary Course of Business.
	
  18

	
   
	
  9.3
	
  Payments to Related Parties for
  Services Related to Special Programs for Promotion and Development.
	
  18

	
   
	
  9.4
	
  Limitation of Compensation to
  Related Parties.
	
  18

	
  ARTICLE 10  COVERAGE OF FINANCIAL SHORTFALLS BY THE PARTIES
	
  19

	
   
	
  10.1
	
  Coverage of Financial Shortfalls by
  the Parties.
	
  19

	
  ARTICLE 11  FINANCIAL BOOKS AND RECORDS -- BANKING
	
  19

	
   
	
  11.1
	
  Fiscal Year.
	
  19

	
   
	
  11.2
	
  Access to Books and Records.
	
  19

	
   
	
  11.3
	
  Bank Accounts.
	
  19

	
  ARTICLE 12  INSURANCE
	
  20

	
   
	
  12.1
	
  Independent Insurance Coverage.
	
  20

	
   
	
  12.2
	
  Inclusion of the Corporation as a
  Named Insured Under the Insurance Coverage of a Party.
	
  20

	
  ARTICLE 13  PROTECTION OF NTI AND/OR PARTY B TRADE SECRETS
	
  20

	
   
	
  13.1
	
  Recognition of NT I and/or PARTY B
  Trade Secrets.
	
  20

	
   
	
  13.2
	
  Protection of NT I and/or PARTY B
  Trade Secrets.
	
  21

	
   
	
  13.3
	
  Protection of NT I and/or PARTY B
  Trade Secrets by Agents of PARTY A.
	
  21

	
   
	
  13.4
	
  Remedies in the Event of a Violation
  of Article 13 Hereof.
	
  22

	
  ARTICLE 14  PROTECTION OF PARTY A TRADE SECRETS
	
  22

	
   
	
  14.1
	
  Identification of P ARTY A Trade
  Secrets.
	
  22

	
   
	
  14.2
	
  Protection of PARTY A Trade Secrets.
	
  22

	
   
	
  14.3
	
  Protection of PARTY A Trade Secrets
  by Agents of PARTY B.
	
  23

	
   
	
  14.4
	
  Remedies in the Event of a Violation
  of Article 14 Hereof.
	
  23

	
  ARTICLE 15  COVENANT TO OBSERVE THE DOCTRINE OF “CORPORATE OPPORTUNITY”
	
  24

	
   
	
  15.1
	
  Doctrine of Corporate Opportunity
  and Observance Thereof.
	
  24

	
   
	
  15.2
	
  Agreement Not to Divert Resources.
	
  24

	
   
	
  15.3
	
  Remedies for Breach of Agreement Not
  to Divert Resources.
	
  24




ii











	
  ARTICLE 16  GRANT OF RIGHT AND LICENSE BY PARTNER TO NTI CONCERNING
  IMPROVEMENTS AND MODIFICATIONS TO NTI INTELLECTUAL PROPERTY RIGHTS

  	
  25

	
   
	
  16.1
	
  Disclosure to NTI of Improvements to
  NTI Intellectual Property Rights by PARTY A.
	
  25

	
   
	
  16.2
	
  Grant of Right and License to NTI.
	
  25

	
   
	
  16.3
	
  Obligations of PARTY A Concerning
  the Filing of New Patents.
	
  25

	
   
	
  16.4
	
  Review of Potentially Infringing
  Technology.
	
  26

	
   
	
  16.5
	
  Disclosure to PARTY A of
  Improvements to NTI Intellectual Property Rights by NTI/PARTY B.
	
  26

	
   
	
  16.6
	
  Grant of Right and License to the
  Corporation
	
  26

	
  ARTICLE 17  TERM OF AGREEMENT
	
  26

	
   
	
  17.1
	
  Term of Cooperation.
	
  26

	
   
	
  17.2
	
  Termination.
	
  27

	
   
	
  17.3
	
  Termination Upon Change of Control
  of a Party.
	
  27

	
   
	
  17.4
	
  Termination Upon Bankruptcy or
  Insolvency.
	
  27

	
   
	
  17.5
	
  Payment of Amounts Due.
	
  28

	
   
	
  17.6
	
  Cooperation Upon Termination.
	
  28

	
   
	
  17.7
	
  Non-Release of Obligations.
	
  28

	
   
	
  17.8
	
  Cessation of Rights Upon Termination.
	
  28

	
   
	
  17.9
	
  Liquidation of the Corporation and
  Winding-up of the Corporation’s Business Upon Termination.
	
  28

	
  ARTICLE 18  DEFAULT
	
  29

	
   
	
  18.1
	
  Event of Default.
	
  29

	
   
	
  18.2
	
  Remedies Upon Default or Breach.
	
  29

	
   
	
  18.3
	
  Non-Waiver of Rights.
	
  30

	
  ARTICLE 19  DISPUTE RESOLUTION
	
  30

	
   
	
  19.1
	
  Dispute Resolution by Arbitration.
	
  30

	
   
	
  19.2
	
  Disputes Not Subject to Arbitration.
	
  31

	
   
	
  19.3
	
  Conduct of Arbitration Proceedings.
	
  31

	
   
	
  19.4
	
  Designation of the “Prevailing
  Party”.
	
  31

	
   
	
  19.5
	
  Punitive Damages Excluded.
	
  31

	
  ARTICLE 20 PROSCRIPTION OF AUTHORITY
  OF THE PARTIES TO BIND EACH OTHER
	
  32

	
  ARTICLE 21 RECIPROCAL
  INDEMNIFICATION
	
  32

	
  ARTICLE 22 TRANSFER OF EQUITY
  INTEREST
	
  32

	
   
	
  22.1
	
  Restrictions on Transfer of Equity
  Interests.
	
  32

	
   
	
  22.2
	
  Right of First Refusal to Acquire
  Equity Interests.
	
  33

	
   
	
  22.3
	
  Exercise of Right to Acquire Equity
  Interests.
	
  33

	
   
	
  22.4
	
  Sale of Equity Interests to a Third
  Party.
	
  33

	
   
	
  22.5
	
  Equity Interests Transferred to a
  Third Party Subject to Restrictions.
	
  34

	
   
	
  22.6
	
  Attempted Transfer of Equity Interests
  in Violation of this Agreement.
	
  34

	
   
	
  22.7
	
  Permitted Transfer of Equity
  Interests.
	
  34

	
   
	
  22.8
	
  Pledge of Equity Interests Subject
  to this Agreement.
	
  34




iii











	
  ARTICLE 23  GENERAL PROVISIONS

  	
  35

	
   
	
  23.1
	
  Benefit of Parties.
	
  35

	
   
	
  23.2
	
  Counterparts.
	
  35

	
   
	
  23.3
	
  Cooperation.
	
  35

	
   
	
  23.4
	
  Index, Captions, Definitions and
  Defined Terms.
	
  35

	
   
	
  23.5
	
  Waiver of Compliance.
	
  35

	
   
	
  23.6
	
  Force Majeure.
	
  36

	
   
	
  23.7
	
  Notices.
	
  36

	
   
	
  23.8
	
  Entire Agreement.
	
  37

	
   
	
  23.9
	
  Validity of Provisions.
	
  38

	
   
	
  23.10
	
  Governmental Filings.
	
  38

	
   
	
  23.11
	
  Payments.
	
  38

	
   
	
  23.12
	
  Derivative Enforcement by PARTY B.
	
  38

	
   
	
  23.13
	
  Derivative Enforcement by PARTY A.
	
  38

	
   
	
  23.14
	
  Publicity.
	
  39

	
   
	
  23.15
	
  Ratification by the Corporation of
  the Shareholders Joint Venture Agreement and the Ancillary Agreements.
	
  39

	
   
	
  23.16
	
  Brokers.
	
  39

	
  ARTICLE 24  LANGUAGE AND COPIES
	
  39

	
   
	
  24.1
	
  Language used in the Agreement and
  Appendixes
	
  39

	
   
	
  24.2
	
  Copies
	
  39




ANNEXES

	
  ANNEX I

  	
   
	
  NTI Affiliates as of the Date Hereof

	
   
	
   
	
   

	
  ANNEX II
	
   
	
  PARTY B Affiliates as of the Date
  Hereof

	
   
	
   
	
   

	
  ANNEX III
	
   
	
  Proposed Articles of Incorporation
  for TIANJIN ZERUST TECHNOLOGY

  LIMITED LIABIALITY CORPORATION

	
   
	
   
	
   

	
  ANNEX IV
	
   
	
  Summary of NTI Product Liability and
  Other Insurance

  as it May be Extended to the Corporation

	
   
	
   
	
   

	
  ANNEX V
	
   
	
  Summary OF PARTY A Product Liability
  and Other

  Insurance as it May be Extended to the Corporation

	
   
	
   
	
   

	
  ANNEX VI
	
   
	
  NTI and/or PARTY B Trade Secrecy
  Agreement to be

  Executed by Agents and Submanufacturers of PARTY A

	
   
	
   
	
   

	
  ANNEX VII
	
   
	
  Form of PARTY A Trade Secrecy
  Agreement to be

  Executed by Agents OF NTI




 


SHAREHOLDERS
JOINT VENTURE AGREEMENT


          This
Shareholders Joint Venture Agreement (“Agreement”), is entered into as of this
1st day of September, 1999, by and between Tianjin China March
Group, Ltd.(“CMG”), a company organized under the laws of the People’s Republic
of China (Party A), the principal place of business of which is Huoju Building
Huayuan Industry Zone, Tianjin, People’s Republic of China and Party B, NTI
ASEAN LLC a limited liability company organized under the laws of the State of
Nevada, U.S.A. (“Party B), whose registered office is in Reno, Nevada, U.S.A.


          WHEREAS,
Party A and Party B desire to form a Joint Venture in the form of a new entity
organized under the laws of the People’s Republic of China (the “Corporation”,
as hereinafter defined) to engage in the Corporation’s Business (as hereinafter
provided);

          WHEREAS,
this Joint Venture shall be called TIANJIN ZERUST ANTI-CORROSION TECHNOLOGIES
LTD. (“TIANJIN ZERUST” or the “Corporation”);

          NOW
THEREFORE, in consideration of the promises and the mutual agreements,
representations, warranties, covenants and provisions herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

          For
the purposes of this Agreement, the following Definitions of terms shall apply:

1.1     Shareholders Joint Venture Agreement or Agreement.

          That
certain Shareholders Joint Venture Agreement by and between Tianjin China March
Group, Ltd. (“PARTY A” as hereinafter defined), and NTI ASEAN (“PARTY B” as
hereinafter defined), for the formation and governance of a new entity under
the laws of the People’s Republic of China in the form of a limited liability
company which shall be known as TIANJIN ZERUST Technology Limited Liability
Company (“TIANJIN ZERUST” or the “Corporation”).

1.2     Ancillary Agreements.

          The
following are the Ancillary Agreements and the Parties thereto:

	
   
	
  1.2.1
	
  Consulting Services Agreement between P ARTY A and
  TIANJIN ZERUST (“Consulting Services Agreement”);

	
   
	
   
	
   

	
   
	
  1.2.2
	
  License Agreement between PARTY Band TIANJIN ZERUST
  (“License Agreement”); and

	
   
	
   
	
   

	
   
	
  1.2.3
	
  Technical Assistance and Marketing Support Agreement
  between PARTY B and TIANJIN ZERUST (“Technical Assistance Agreement”).




5










1.3     Parties.

          The
Parties to the Shareholders Joint Venture Agreement and/or the Ancillary
Agreements, their successors and permitted assigns.

1.4     PARTY A.

          Tianjin
China March Group, Ltd.(“CMG”), a limited liability company organized under the
laws of the People’s Republic of China, the principal place of business of
which is Tianjin HUA YUAN Industrial Zone, Huoju Building, People’s Republic of
China, and the owner of a 50% interest in the Corporation pursuant to the terms
of the Agreement. The ownership of CMG is as follows: Container (Beijing)
Industrial Company, 20%; Tianjin CNCC Zhi Hua Trading Ltd., 5%; Ping Shan CNCC
Si Qiang Group Company, 66% and CNCC 9%.

1.5     NTI.

          Northern
Technologies International Corporation, a company organized under the laws of
the State of Delaware, U.S.A. the principal place of business of which is Lino
Lakes, Minnesota, U.S.A. NTI is the owner of the NTI Intellectual Property
Rights (as hereinafter defined), and of a 50% interest in Party B (as
hereinafter defined).

1.6     Taiyo.


          Taiyo
Petroleum Gas Co Ltd. A Kabushiki Kaisha organized under the laws of Japan and
the owner of a 50% interest in Party B (as hereinafter defined).

1.7     PARTY B.

          NTI
ASEAN, a Limited Liability Company organized under the laws of the State of
Nevada, U.S.A. whose registered office is in Reno, Nevada, U.S.A., to which NTI
has assigned all of its right, title and interest in the NTI Intellectual
Property Rights (as hereinafter defined) for the Territory (as hereinafter
defined), and the owner of a 50% interest in the Corporation pursuant to the
Agreement.

1.8     NTI and/or PARTY B Affiliates.

          All
entities and/or individuals with which NTI and/or PARTY B has a joint venture relationship,
similar in character and style but not necessarily identical to the
relationship created by the Shareholders Joint Venture Agreement and the
Ancillary Agreements, or another form of alliance, for the development,
manufacture, promotion, marketing, sales and applications engineering of
Knowhow, Materials, Process, Product and/or Masterbatch anywhere in the world.

6










          1.8.1     NTI
Affiliates.

          Annex
I hereof sets forth a list of the NTI Affiliates as of the date hereof.

          1.8.2
Party B Affiliates.

          Annex
II hereof sets forth a list of the Party B Affiliates as of the date hereof.

1.9     Corporation or TIANJIN ZERUST.


          TIANJIN
ZERUST ANTI-CORROSION TECHNOLOGIES LTD., that entity created in the Territory
by the Parties pursuant to the Shareholders Joint Venture Agreement to conduct
the Corporation’s Business.

1.10     Corporation’s Business.

          The
Corporation’s Business shall be the manufacturing, marketing and distribution
of Product, pursuant to NTI Intellectual Property Rights, and any other
technologies as shall be determined by the Parties in writing and made a part
hereof pursuant to Article 1.21 of this Agreement, in the Territory.

1.11     Territory.

            The
People’s Republic of China.

1.12     Effective Date.

            The
date upon which all necessary formal approvals from the appropriate authorities
of the People’s Republic of China for the Shareholders Joint Venture Agreement
have been obtained and the Corporation has been duly registered pursuant to the
Shareholders Joint Venture Agreement and the Ancillary Agreements as
appropriate in the Territory.

1.13     NTI Intellectual Property Rights.

            The
Knowhow, Materials, Process, Product, Masterbatch, Trademark, and NTI and/or
PARTY B Trade Secrets, (all as hereinafter defined), collectively, as such
currently exist and shall hereafter be modified, developed and/or acquired by
NTI and or Party B

1.14     Knowhow.

            The
technology, formulae, methods and procedures developed by NTI at considerable
expense over a period of many years, which are unique in nature and essential
or useful in the proper application of the Process, together with all
improvements and modifications by NTI/Party B with respect thereto.


7










1.15     Materials.

            The
constituent materials and chemicals of one or more formulations developed by
NTI under strict quality controls which are required for utilization of the
Process.

1.16     Process.

            The
procedure utilizing the Knowhow for the manufacture of polyethylene substances
with corrosion inhibiting properties derived from the Materials as developed
and specified by NTI, together with any improvements and modifications of the
corrosion inhibiting technology as it relates directly to the manufacture of
corrosion inhibiting polyethylene substances, together with future technology,
knowledge and product development which is useful in the manufacture of the
Product under NTI/PARTY B Knowhow.

1.17     Product.

            Corrosion
inhibiting polyethylene film and solid substances of polyethylene in the form
of boxes, tubes and other containers, which may include other volatile
corrosion inhibiting host packaging substances such as paper, manufactured by
means of the Process, incorporating the Materials and utilizing the Trademark,
all of which have been developed and are owned by NTI.

1.18     Masterbatch.

            Any
formulation of the Materials which shall be designated by NTI, as appropriate,
to be applied to the specific requirements for corrosion protection, as
afforded by the Product, of a known customer desirous of protecting an
identified object (or objects) which are to be subjected to an anticipated
certain range of corrosive influences. In addition to Materials, Masterbatch
shall generally also contain other substances for the purpose of facilitating
the manufacture of Product utilizing the Process.

1.19     Trademark.


            The
name and style “Zerust”, which includes trade literature, technical
specifications and application instructions, and promotional material
pertaining thereto, together with any ancillary trademark registrations, which
may differ between various jurisdictions.

1.20     NTI and/or Party B Trade Secrets.

            All
information deemed and designated confidential, both in the Shareholders Joint
Venture Agreement and in the Ancillary Agreements and hereafter, including but
not limited to information regarding the Product, Knowhow, Process, Materials,
Masterbatch, technology, customers, research, techniques, processes,
applications, formulae, cost data, customer lists, suppliers, competition,
marketing strategy, supply relationships, costs and cost accounting, memoranda,
diagrams, pictures, computer software and programs and records contained
therein, sales information, financial information, costs, pricing data and
profits, relating to the Intellectual Property Rights of NTI, PARTY B, the
Corporation and NTI and/or Party B Affiliates both in the Territory and
elsewhere.

8










1.21     Other Agreed Upon Technologies.

            In
conformity with the objectives of the Parties hereto to expand the
Corporation’s Business over time, the Parties shall endeavor to identify
products, materials and/or technologies, which are both compatible with the Corporation’s
Business, and susceptible of being profitably marketed through and/or by the
Corporation in the Territory. Upon joint agreement of the Parties, in writing,
to adopt such new products, materials and/or technologies within the scope of
the Corporation’s Business, and successful negotiation of requisite commercial
rights to commercialize such new products, materials and/or technologies in the
Territory, such new products, materials and/or technologies shall be deemed to
be incorporated within the Corporation’s Business as “Other Agreed Upon
Technologies” to be treated as set forth in this Agreement.

1.22     Net Sales.


            The
total proceeds from the sale of Product and Other Agreed Upon Technologies sold
by the Corporation in normal, bona fide commercial transactions on an arm’s
length basis to, by, with, or through an entity which is not affiliated with
any Party of this Agreement, less the following items: (i) sales discounts
(including sales rebates); (ii) sales returns; (iii) shipping and transaction
costs, such as Value Added Tax, CIF charges and packaging expenses; and (iv)
sales commissions to third parties. Sales made to an entity which is not
affiliated with any Party of this Agreement, through an Affiliated Entity, in
accordance with article 4.3 of the Management and Sales Representation
Agreement shall be included in total proceeds for the purpose of this
definition of Net Sales.

1.23     At Cost.

            Without
profit component of any kind, direct or indirect, to the particular Party in
the given case (although nothing herein shall preclude such Party from
recovering all costs - direct and indirect - arising out of any transaction
with the proscription “At Cost”).

1.24     Shareholder/Holder of Equity Interests.

            Any
holder, from time to time, of Equity Interests of the Corporation and who
presently is a Party to the Shareholders Joint Venture Agreement or who may
become a Party to the Shareholders Joint Venture Agreement in the future.

1.25     Equity Interests.

            Any
validly issued Equity Interests of the Corporation owned by any Shareholder
pursuant to the Shareholders Joint Venture Agreement.

9










1.26     Transfer of Equity Interests.


            Any
sale, transfer, assignment, pledge or disposition of Equity Interests of the
Corporation in any way, whether voluntarily or involuntarily, by gift, legal
procedure, operation of law, or any other means.

1.27     Transferor of Equity Interests.

            A
Shareholder who declares an intention to Transfer Equity Interests of the
Corporation and/or initiates the Transfer of Equity Interests.

1.28     Transfer Price for Equity Interests.

            The
price for the Equity Interests of the Corporation offered on an arm’s-length
basis by an outside party to the Transferor in a bona fide written offer.

1.29     Transferee.

            Any
new Shareholder, who has heretofore not been a party to the Shareholders Joint
Venture Agreement, who acquires his Equity Interests pursuant to the provisions
of the Shareholders Joint Venture Agreement, and who thereafter signs and
becomes a Party to the Shareholders Joint Venture Agreement.

1.30     Change of Control.

            Any
change in ownership, management, control or scope of business activities of a
Party which could affect the performance of the duties and/or obligations of
such Party under the Shareholders Joint Venture Agreement or the Ancillary
Agreements.

ARTICLE 2

MUTUAL REPRESENTATIONS

2.1     
Representations of PARTY A.


            PARTY
A hereby represents and warrants to PARTY B as follows:

	
   
	
  2.1.1
	
  Organization and Standing. PARTY A is a limited
  liability company duly organized, validly existing and is in good standing
  under the laws of the People’s Republic of China, where it has its principal
  place of business. Party A’s registration certificate is attached hereto.

	
   
	
   
	
   

	
   
	
  2.1.2
	
  Due Authorization. This Agreement and the Ancillary
  Agreements to be executed pursuant to this Agreement have been duly
  authorized by appropriate corporate action and the same are binding upon
  PARTY A in accordance with their respective terms.

	
   
	
   
	
   

	
   
	
  2.1.3
	
  No Violation of Other Agreements. By entering into
  this Agreement, PARTY A will not violate or cause a default to occur under
  any other agreements to which it is a party.

	
   
	
   
	
   

	
   
	
  2.1.4
	
  Absence of Litigation. There are no lawsuits or
  legal actions pending or, to the knowledge of PARTY A, threatened against
  PARTY A which would have a material effect upon PARTY A’s ability to perform
  under this Agreement and the Ancillary Agreements.




10









2.2     
Representations of PARTY B

            PARTY
B hereby represents and warrants to PARTY A as follows:


	
   
	
  2.2.1
	
  Organization and Standing. PARTY B is a Limited
  Liability Company duly organized, validly existing and in good standing under
  the laws of the State of Nevada, U.S.A. 
  A certificate of good standing for Party B’s parent company, Northern
  Technologies International Corporation, is attached hereto:

	
   
	
   
	
   

	
   
	
  2.2.2
	
  Due Authorization. This Agreement and the Ancillary
  Agreements to be executed pursuant to this Agreement have been duly
  authorized by appropriate corporate action and the same are binding upon
  PARTY B in accordance with their respective terms.

	
   
	
   
	
   

	
   
	
  2.2.3
	
  No Violation of Other Agreements. By entering into
  this Agreement, PARTY B will not violate or cause a default to occur under
  any other agreements to which it is a party.

	
   
	
   
	
   

	
   
	
  2.2.4
	
  Absence of Litigation. There are no lawsuits or
  legal actions pending or, to the knowledge of PARTY B, threatened against
  PARTY B which would have a material effect upon PARTY B’s ability to perform
  under this Agreement and the Ancillary Agreements.

	
   
	
   
	
   

	
   
	
  2.2.5
	
  Right to License. PARTY B has the right to license
  the NTI Intellectual Property Rights together with NTI/and or Party B Trade
  Secrets to TIANJIN ZERUST for use in the Territory.




ARTICLE 3
PURPOSES OF THE JOINT VENTURE

3.1     
Purposes of the Joint Venture.


            The
purposes of the Joint Venture are as follows:


11










	
   
	
  3.1.1
	
  For the purpose of improving economic and
  technological cooperation, importing NTI developed know-how for producing
  Volatile Corrosion Inhibiting polyethylene substances and other new
  techniques, NTI providing Masterbatch, producing Volatile Corrosion
  Inhibiting polyethylene substances in the Territory, increasing the quality
  of products, developing new products, raising economic efficiency, and to
  conduct the Corporation’s Business for the benefit of the Parties;

	
   
	
   
	
   

	
   
	
  3.1.2
	
  Assisting in the export of high quality technical
  products from China by providing improved protective packaging technology
  from NTI;

	
   
	
   
	
   

	
   
	
  3.1.3
	
  To protect and preserve NTI Intellectual Property
  Rights together with NTI and/or PARTY B Trade Secrets in the Territory under
  the terms of this Agreement and the Ancillary Agreements;

	
   
	
   
	
   

	
   
	
  3.1.4
	
  To manufacture, promote and sell Product in the
  Territory under the terms hereof and of the Ancillary Agreements;

	
   
	
   
	
   

	
   
	
  3.1.5
	
  To provide for the implementation of the Ancillary
  Agreements for the benefit of the respective Parties; and

	
   
	
   
	
   

	
   
	
  3.1.6
	
  To manufacture, promote and sell Other Agreed Upon
  Technologies in the Territory.

	
   
	
   
	
   

	
   
	
  3.1.7
	
  Ergo the Business Scope of the Corporation as
  defined in Article 1.10 hereof is:

	
   
	
   
	
   

	
   
	
   
	
  Producing Volatile Corrosion Inhibiting polyethylene
  products;

	
   
	
   
	
   

	
   
	
   
	
  After-sales service thereof;

	
   
	
   
	
   

	
   
	
   
	
  Research and development of new products in China as
  related to the Corporation’s Business; and

	
   
	
   
	
   

	
   
	
   
	
  Importing other advanced new techniques as related
  to the Knowhow, Product and Other Agreed Upon Technologies.




ARTICLE 4
FORMATION OF JOINT VENTURE CORPORATION

4.1     Formation of Corporation.


          As
soon as practicable following the signing of this Agreement, the Parties shall
form a new Corporation as a limited liability company under the laws of the
People’s Republic of China. Implementation of the formalities for incorporating
the Corporation shall be the responsibility of PARTY A. The Corporation’s name
shall be TIANJIN ZERUST ANTI-CORROSION TECHNOLOGIES LTD. (“TIANJIN ZERUST”).
The Corporation’s place of business shall be No. 127 Tower 1 Huoju Building
Huayuan Industrial Zone, Tianjin People’s Republic of China or at such other
place as may be determined by the Parties.

12










4.2     Articles of Incorporation.

          A
copy of the proposed Articles of Incorporation for TIANJIN ZERUST is attached
hereto as Annex III. In case of any inconsistency between this Agreement and
the Articles of Incorporation, different settlement should be taken according
to the situation: when inconsistency is concerning the rights and liabilities
between the Corporation and a third party, the provisions of the Articles of
Incorporation shall be authoritative; when the inconsistency is only relating
to the rights and liabilities among Shareholders, the provisions of this
Agreement shall govern.

4.3     Capitalization.

          Initially,
the Registered Capital of TIANJIN ZERUST shall be divided between the Parties
as follows:




	
  PARTY A
	
  -
	
  50% equity interest

	
   
	
   
	
   

	
  PARTY B
	
  -
	
  50% equity interest





 Initial capitalization will be

	
   
	
  US$50,000 - PARTY A

	
   
	
   

	
   
	
  US$50,000 - PARTY B




4.4     
Payment for Equity Interest by the Parties.

          The
Parties shall pay for their Equity Interests, in full, upon issuance of the
certificate of approval for the Corporation by COFTEC, in accordance with the
laws of the People’s Republic of China and shall cause the Corporation to issue
evidence of their Equity Interest to Party A and Party B paid for in accordance
with the terms hereunder forthwith.

4.5     Parallel Rights to Subscribe for Additional Equity Interest.

          If
additional Equity Interests are thereafter to be issued by the Corporation, the
Holders of Equity Interests shall have the right to purchase such additional
Equity Interests in the same proportion as their holdings of Equity Interests
at the time of the issuance thereof.

ARTICLE 5

PURPOSE. EXECUTION AND INCORPORATION OF ANCILLARY 

AGREEMENTS HEREIN

5.1     
Execution of Ancillary Agreements.

          In
furtherance of the Corporation’s Business, the Parties and the Corporation
shall enter into various Agreements (herein “Ancillary Agreements”) which shall
also be effective as of the Effective Date. Such Ancillary Agreements and the
designated Parties thereto are as follows:

13











	
   
	
  5.1.1
	
  Consulting Services Agreement For Management and
  Sales Representation between PARTY A and the Corporation;

	
   
	
   
	
   

	
   
	
  5.1.2
	
  License Agreement between PARTY B and the
  Corporation; and

	
   
	
   
	
   

	
   
	
  5.1.3
	
  Technical Assistance and Marketing Support Agreement
  between PARTY B and the Corporation.




5.2     
Ancillary Agreements Incorporated Herein and Made Part Hereof.

          The
Ancillary Agreements shall be incorporated herein and made a part hereof.


ARTICLE 6

ELECTION OF DIRECTORS AND DESIGNATION OF

THE CEO OF THE CORPORATION

6.1     
Election of Directors.

          The
Corporation shall have a Board of Directors consisting of six Directors. PARTY
A and PARTY B shall each have the right to designate an equal number of
Directors. PARTY A and PARTY B, as Holders of Equity Interests in the
Corporation, agree that at meetings of Holders of Equity Interests they shall
cast their entire vote in favor of any person(s) designated by the other Party
as Directors or Substitute Directors (as hereinafter defined) to fill their pro
rata share of Director positions in accordance with the provisions hereof. The
three directors proposed by Party A are Zhang Bing Hua, Meng Tao and Sun Guan
Fu. The three directors proposed by Party B are Philip M. Lynch, Vincent 1.
Graziano and Haruhiko Rikuta.

6.2     Substitute Directors.

          A
Party shall have the right to designate a Substitute Director (“Substitute
Director”) in the event that a Director previously designated by it shall
resign, retire, die, or otherwise be unable or unavailable to serve.

6.3     Designation of Chief Executive Officer of the Corporation.

          One
of the Directors designated by PARTY A shall be the Chief Executive Officer
(“CEO”) of the Corporation, whose responsibility and authority shall be to
implement this Agreement, the Ancillary Agreements and the Articles of
Incorporation, and such Resolutions as may be passed from time to time by the
Board of Directors of the Corporation. Designation of the Chief Executive
Officer by PARTY A shall, however, be subject to the approval of PARTY B, which
approval shall not be unreasonably withheld.

14











ARTICLE 7

RESPONSIBILITIES AND DUTIES OF THE PARTIES

7.1     
Responsibilities of the Parties.

          It
shall be the responsibility of all Parties to effect the Purposes of the
Shareholders Joint Venture Agreement pursuant to Article 3 hereof.

7.2     Specific Responsibilities and Duties of Individual Parties.

          Specific
responsibilities and duties which are to be fulfilled by individual Parties to
the Shareholders Joint Venture Agreement are set forth in the Ancillary
Agreements.

7.3     Actions Requiring Consent of All Parties.

          In
addition to other provisions of the Shareholders Joint Venture Agreement and/or
the Ancillary Agreements requiring the consent or approval of all the Parties,
the unanimous specific written consent of each Party hereto shall be required
before the Corporation may take any of the following actions:

	
   
	
  7.3.1
	
  Establish annual operating budgets for the
  Corporation which the Chief Executive Officer of the Corporation shall
  prepare and submit no later than October 31st of each year for the following
  fiscal year;

	
   
	
   
	
   

	
   
	
  7.3.2
	
  Determine the amount of funds to be allocated to the
  purchase of Masterbatch, Product, and Other Agreed Upon Technologies;

	
   
	
   
	
   

	
   
	
  7.3.3
	
  Sell, assign, transfer, exchange or otherwise
  dispose of any assets of the Corporation, other than in the ordinary course
  of business;

	
   
	
   
	
   

	
   
	
  7.3.4
	
  Mortgage, pledge, encumber or hypothecate any of the
  assets of the Corporation;

	
   
	
   
	
   

	
   
	
  7.3.5
	
  Change the Corporation’s independent chartered or
  certified public accountants after the same have been appointed by the mutual
  consent of the parties;

	
   
	
   
	
   

	
   
	
  7.3.6
	
  Change or allow a change in the accounting
  procedures employed in maintaining the Corporation’s books of account or in
  preparing financial statements with respect to the operations of the
  Corporation or the Corporation’s Business;

	
   
	
   
	
   

	
   
	
  7.3.7
	
  Obligate the Corporation as a surety, guarantor or
  accommodation party to any obligation, lend funds belonging to the
  Corporation to any third party, or extend credit to any person, firm or
  entity, on behalf of the Corporation, other than in the ordinary course of
  business;




15











	
   
	
  7.3.8
	
  File material litigation against third parties on
  behalf of the Corporation or confess judgment on behalf of the Corporation;

	
   
	
   
	
   

	
   
	
  7.3.9
	
  Amend the Articles of Incorporation of the
  Corporation;

	
   
	
   
	
   

	
   
	
  7.3.10
	
  Cause the Corporation to issue any common shares or
  any debt securities or to increase its capitalization;

	
   
	
   
	
   

	
   
	
  7.3.11
	
  Borrow any money on behalf of the Corporation
  requiring a mortgage or other form of security in favor of the lender, except
  that a security interest in inventory and receivables authorized by the Chief
  Executive Officer of the Corporation in the ordinary course of business shall
  be permissible;

	
   
	
   
	
   

	
   
	
  7.3.12
	
  Cause the Corporation to merge or consolidate with
  or into any other legal entity or acquire any other legal entity;

	
   
	
   
	
   

	
   
	
  7.3.13
	
  Cause the Corporation to dissolve or to liquidate;

	
   
	
   
	
   

	
   
	
  7.3.14
	
  Cause the Corporation to engage in any business
  activity which is outside the scope of the Corporation’s Business;

	
   
	
   
	
   

	
   
	
  7.3.15
	
  Form any subsidiary or other legal entity;

	
   
	
   
	
   

	
   
	
  7.3.16
	
  Cause the Corporation to enter into a transaction or
  business relationship with any of the Parties hereto, other than as may be
  expressly provided for by this Agreement and/or the Ancillary Agreements,
  other than on an arm’s-length basis, and on prices and terms no more
  favorable to the Party than could have been obtained from an independent
  third party;

	
   
	
   
	
   

	
   
	
  7.3.17
	
  Establish pricing, discount structures, and terms of
  trade for Product or Other Agreed Upon Technologies in the Territory;

	
   
	
   
	
   

	
   
	
  7.3.18
	
  Sell, license or otherwise convey NTI Intellectual
  Property Rights or NTI and/or PARTY B Trade Secrets, or PARTY A Trade Secrets
  (as hereinafter defined), or any right thereto deriving from the Shareholders
  Joint Venture Agreement or the Ancillary Agreements, to any third party;

	
   
	
   
	
   

	
   
	
  7.3.19
	
  Engage or dismiss the Chief Executive Officer and
  other key employees of the Corporation and/or fix compensation for such
  personnel, including bonuses and perquisites; and

	
   
	
   
	
   

	
   
	
  7.3.20
	
  Acquire fixed assets for and on behalf of the
  Corporation.




16










7.4     Special Resolutions.


          Upon
reaching unanimous agreement as to the actions set forth in Article 7.3,
hereof, the Parties shall vote their Equity Interests to adopt any special
resolutions to implement same as may be required by the laws of the People’s
Republic of China.

ARTICLE 8

DEVELOPMENT OF THE CORPORATION’S STAFF

8.1     Development of Corporation’s Staff.

          Depending
on the development of business and within the judgment of the Board of
Directors, the Corporation may engage its own personnel, as appropriate, to
assist the Chief Executive Officer in the performance of his duties and
responsibilities, and to implement actions taken by the Parties in performance
of their duties and responsibilities hereunder and as set forth in the
Ancillary Agreements.

8.2     Implementation of Corporate Governance Policies Appropriate to the
Territory.

          PARTY
A shall be responsible to ensure that Corporate Governance Policies appropriate
to the Territory, including but not limited to Human Relations, Compensation,
Terms of Employment, Taxation and Employee Benefits, are implemented and
maintained by the Corporation with respect to all Agents (as hereinafter
defined), third party providers to the Corporation, and other individuals and
entities which now have or which come to have a commercial or financial
relationship of any nature with the Corporation.

ARTICLE 9

PAYMENTS TO RELATED PARTIES

9.1     
Payment to Related Parties in the Ordinary Course of Business.

          Payments
shall be made to the Parties for services performed or transactions entered
into in the ordinary course of business as the result of cash generated from
Net Sales of Product in accordance with this Agreement and the Ancillary
Agreements. Amounts shall be paid to PARTY A and PARTY B as detailed in 9.1.1
to 9.1.4.


17











	
   
	
  9.1.1
	
  Party A or a company assigned by Party A shall
  receive 5% of Net Sales of Product as its total compensation for consulting
  services to be rendered to the Corporation pursuant to the Consulting
  Services Agreement referred to in Article 5 hereof;

	
   
	
   
	
   

	
   
	
  9.1.2
	
  Party A may, if appropriate, receive a sales
  commission of 10% of Net Sales of Product pursuant to the Consulting Services
  Agreement For Management and Sales Representation referred to in Article 5
  hereof;

	
   
	
   
	
   

	
   
	
  9.1.3
	
  Party B shall receive 7.5% of Net sales of Product
  as its total compensation pursuant to the License Agreement referred to in
  Article 5 hereof; and

	
   
	
   
	
   

	
   
	
  9.1.4
	
  Party B shall receive payment for services rendered
  under the Technical Assistance Agreement referred to in Article 5 hereof.
  Such payment for services shall under no circumstances exceed 7.5% of Net
  Sales of Product.





	
  9.2

  	
  Payments to Related Parties for
  Services Performed with Respect to Other Agreed Upon Technologies in the
  Ordinary Course of Business.




          Compensation
to the Parties with respect to Other Agreed Upon Technologies shall be
determined on a case-by-case basis, as specific opportunities to add Other
Agreed Upon Technologies to the scope of the Corporation’s Business may arise.
It is the intent of the Parties, however, to share joint responsibility for the
proper commercial and technical development of Other Agreed Upon Technologies
in the Territory; and in general, each Party to this Agreement shall be
responsible to perform substantially the same set of functions with respect to
Other Agreed Upon Technologies that it does with respect to Product. It shall
therefore be a general precept of this Agreement that compensation, except the
compensation and payment stated in 16.2 and 16.3 of this Agreement, to the
Parties for services rendered with respect to Other Agreed Upon Technologies
shall be equal, reflecting the even contributions of each, and shall be
allocated within the format of the Ancillary Agreements.

	
  9.3
	
  Payments to Related Parties for
  Services Related to Special Programs for Promotion and Development.




          After
the payments and distributions referred to in Articles 9.1 and 9.2 have been
made to the Parties, the Parties may determine that additional Special Programs
for Promotion and Development (“Special Programs”) may be necessary, desirable
or appropriate in any given fiscal year to accelerate the pace or redirect the
progression and evolvement of the Corporation. In such event, upon prior
unanimous approval by the Parties, additional funds may be allocated by the
Corporation for Special Programs to be conducted by the Parties, which shall
comport joint responsibility in accordance with the percentage allocations set
forth in Article 9.1 and 9.2 hereof.

9.4     Limitation of Compensation to Related Parties.


          Except
as otherwise provided in this Agreement and the Ancillary Agreements, all
financial transactions between the Corporation and the Parties other than as
set forth in Article 9 hereof shall be At Cost.

18










ARTICLE 10

COVERAGE OF FINANCIAL

SHORTFALLS BY THE PARTIES

10.1     Coverage of Financial Shortfalls by the Parties.

           In
the event that there shall be a shortfall in any given fiscal year, then this
shortfall shall be borne by PARTY A and PARTY B in proportion to their
respective fees and other income received pursuant to Article 9 hereof, to be
reimbursed in the first instance out of the compensation set forth in Articles
9.1, 9.2, 9.3 and 9.4 hereof for that year, and thereafter out of the equity of
the Corporation until the same shall be exhausted; but neither Party shall have
any obligation to cover shortfalls beyond that point. The Parties may, however,
in the sole discretion of each, elect to provide financial support over and
above their equity in the Corporation.

ARTICLE 11

FINANCIAL BOOKS AND RECORDS -- BANKING

11.1     Fiscal Year.

           The
first fiscal year of the Corporation shall commence on the date the Corporation
is incorporated and end on December 31. Thereafter, the fiscal year of the
Corporation shall commence every year on January 1 and end on December 31. The
books of accounts shall be closed at the end of each fiscal year, and audited
statements shall be prepared by an internationally recognized firm of chartered
or certified public accountants showing the financial condition of the
Corporation and the results of its operations for the fiscal year. Copies of
the audited annual statements and unaudited monthly and quarterly statement
shall be provided to each of the Parties.

11.2     Access to Books and Records.


           The
Corporation’s financial books, records and statements of account shall be kept
at the principal place of business of the Corporation, and each Party shall
have the right at all reasonable times to inspect and copy same.

11.3     Bank Accounts.

           All
of the Corporation’s funds shall be deposited in its name in such bank account
or accounts as shall be designated from time to time by the Board of Directors.
Withdrawals from such account or accounts shall be made by checks or other
appropriate instruments signed by the Chief Executive Officer and such other
officers or persons as the Board of Directors shall from time to time duly
designate.

19








ARTICLE 12

INSURANCE


12.1     Independent
Insurance Coverage.


           The
Parties shall cause the Corporation to obtain and to maintain property damage,
product liability, public liability and other liability, casualty, and general
insurance for the Corporation’s Business, as deemed adequate for the proper
conduct of the Corporation’s Business in the Territory. In the event that
insurance is provided by means of an amendment or rider to existing insurance
maintained by any of the Parties, then the cost thereof, to the extent that the
basic insurance cost of such party is thereby increased, shall be borne by and
paid for by the Corporation.

12.2     Inclusion
of the Corporation as a Named Insured Under the Insurance Coverage of a Party.

           To
the extent possible, each Party shall include the Corporation as a named
insured under its own insurance coverage:

	
   
	
  12.2.1
	
  PARTY B shall notify NTI’s product liability
  insurance carrier that the Corporation will be importing Materials and
  Masterbatch from PARTY B to manufacture and sell Product under the Trademark
  utilizing NTI and/or PARTY B Trade Secrets and NTI Intellectual Property
  Rights in the Territory. A summary of NTI product liability and other
  insurance coverage as it may be extended is attached hereto Annex IV; and any
  material change thereto shall be reported forthwith to PARTY A; and

	
   
	
   
	
   

	
   
	
  12.2.2
	
  PARTY A shall notify its insurer of the scope of
  activities and responsibilities it shall carry out for the Corporation, both
  under the Joint Venture Agreement, and under the applicable Ancillary
  Agreements, including the Management Agreement. A summary of PARTY A product
  liability and other insurance coverage as it may be extended is attached
  hereto as Annex V; and any material change thereto shall be reported
  forthwith to PARTY B.




ARTICLE 13

PROTECTION OF NTI AND/OR PARTY B TRADE SECRETS

13.1     Recognition
of NTI and/or PARTY B Trade Secrets.


           PARTY
A acknowledges and agrees that (i) NTI Intellectual Property Rights; (ii) NTI
and/or PARTY B Trade Secrets; (iii) the Knowhow, Materials, Process, Product
and Masterbatch and (iv) other information deemed confidential by NTI and PARTY
Band designated herein and hereafter relating to the business of NTI and/or
PARTY B, of the Corporation, and of NT I and/or PARTY B Affiliates, both in the
Territory and elsewhere, including but not limited to applications of NTI
Intellectual Property Rights, cost and cost accounting data, customer lists,
competition, marketing strategy, supply relationships, memoranda, diagrams,
pictures, computer software and programs as well as records contained therein,
sales information, financial information, pricing data and margins, are also
included within the definition of NTI and/or PARTY B Trade Secrets set forth in
Article 1.20 hereof and constitute valuable property rights of NTI, PARTY Band
NTI and/or PARTY B Affiliates.

20










13.2     Protection
of NTI and/or PARTY B Trade Secrets.

           PARTY
A agrees that during the term of this Agreement, as well as following its
termination and for all times thereafter, it shall keep secret and confidential
all NTI and/or PARTY B Trade Secrets which it now knows or may hereafter come
to know as a result of the Shareholders Joint Venture Agreement and the
Ancillary Agreements. NTI and/or PARTY B Trade Secrets shall not be disclosed
by PARTY A to third parties and shall be kept secret and confidential, except
(i) to the extent that the same have entered into the public domain by means
other than the improper actions of PARTY A, or (ii) to the extent that the
disclosure thereof may be required pursuant to the order of any court or other
governmental body. If an NTI and/or PARTY B Trade Secret shall be in the public
domain as the result of an act by PARTY A or any Agent thereof (as hereinafter
defined), then PARTY A shall nevertheless continue to keep such NTI and/or
PARTY B Trade Secret secret and inviolate.

13.3     Protection
of NT I and/or PARTY B Trade Secrets by Agents of PARTY A.


           Neither
PARTY A, nor its Agents (as hereinafter defined), shall at any time copy,
remove from their proper location - be it within the Corporation or elsewhere -
or retain without NTI or PARTY B’s prior written consent, the originals or
copies of any NTI and/or PARTY B Trade Secrets or of any of the unpublished
records, books of account, documents, letters, diagrams, computer disks, papers
or memoranda of NTI and/or PARTY B or the Corporation. It is understood that
from time to time it may be necessary that certain of the foregoing items be
copied or removed from their location; however, this shall be done subject to
the requirement of this Article that the original material be returned to its
proper location as soon as possible and that the confidential nature and
integrity of the foregoing as NTI and/or PARTY B Trade Secrets be strictly
maintained both as to original documents and copies thereof.

	
   
	
  13.3.1
	
  Insofar as the officers, employees and consultants
  of PARTY A and/or  the Corporation,
  (herein collectively “Agents”) who come in contact with NTI and/or PARTY B
  Trade Secrets are concerned, PARTY A shall cause such Agents to enter into
  NTI and/or PARTY B Trade Secrecy Agreements substantially in the form of
  Annex VI to this Agreement. PARTY A shall exert its best efforts to cause its
  Agents to adhere to and to abide by the provisions, restrictions and
  limitations of the NTI and/or PARTY B Trade Secrecy Agreements, which efforts
  shall include the institution and prosecution of appropriate litigation if
  such be necessary and desirable.




21











	
   
	
  13.3.2
	
  The Parties hereby agree and acknowledge that both
  NTI and PARTY B are intended third party beneficiaries of the NTI and/or
  PARTY B Trade Secrecy Agreements, and that NTI and/or PARTY B may each, in
  its sole discretion, on its own behalf or derivatively and/or on behalf of
  the Corporation, directly enforce the provisions of the NTI and/or PARTY B
  Trade Secrecy Agreements and/or any breach thereof against any and all Agents
  (as defined in Article 13.3.1. hereof) and/or Sub-manufacturers (as defined
  in Article 7.3.1(i) of the License Agreement and in Article 7.3.1 (i) of the
  Technical Assistance Agreement) who have executed same.




13.4     Remedies
in the Event of a Violation of Article 13 Hereof.

           It
is understood and recognized by PARTY A that in the event of any violation by
PARTY A and/or its Agents of the provisions of Article 13 hereof, NTI and/or
PARTY B’s remedy at law will be inadequate and NTI and PARTY B will suffer
irreparable injury.  Accordingly, PARTY
A consents to injunctive and other appropriate equitable relief upon the
institution of legal proceedings therefor by NTI and/or PARTY B and in any
court of competent jurisdiction to protect NTI and/or PARTY B Trade Secrets.
Such relief shall be in addition to any other relief to which NTI and/or PARTY
B may be entitled at law or in equity, which shall include but not be limited
to the right of immediate termination of this Agreement.


ARTICLE 14

PROTECTION OF PARTY A TRADE SECRETS

14.1     Identification
of PARTY A Trade Secrets.

           The
Parties acknowledge that it is not intended that PARTY A impart its technology
or trade secrets to the Corporation or, through the Corporation, to PARTY
B.   The Parties recognize, however,
that PARTY A may impart information to the Corporation to further the Corporation’s
Business, which PARTY A considers to be proprietary in nature and thus wishes
to be kept confidential, and that such Party A Trade Secrets may come to be
imparted to PARTY B through the Corporation. In order for such information to
be considered under the category of PARTY A Trade Secrets, PARTY A must alert
the Corporation and PARTY B to the fact that it intends to impart information
it considers proprietary to the Corporation, in writing, in advance of
imparting such information, and clearly identify such information as a PARTY A
Trade Secret (“PARTY A Trade Secrets”).

14.2     Protection
of PARTY A Trade Secrets.

           PARTY
B agrees that during the term of this Agreement, as well as following its
termination and for all times thereafter, it shall keep secret and confidential
all P ARTY A Trade Secrets which it now knows or may hereafter come to know as
a result of this Shareholders Joint Venture Agreement and the Ancillary
Agreements. PARTY A Trade Secrets shall not be disclosed by PARTY B to third
parties and shall be kept secret and confidential except, (i) to the extent
that the same have entered into the public domain by means other than the
improper actions of PARTY B, or (ii) to the extent that the disclosure thereof
may be required pursuant to the order of any court or other governmental body.
If a PARTY A Trade Secret shall be in the public domain as the result of an act
by PARTY B or any Agent thereof, then PARTY B shall nevertheless continue to
keep such PARTY A Trade Secret secret and inviolate. 

22











14.3     Protection
of PARTY A Trade Secrets by Agents of PARTY B.

           Neither
PARTY B, nor its Agents (as hereinafter defined), shall at any time copy,
remove from their proper location - be it within the Corporation or elsewhere -
or retain without PARTY A’s prior written consent, the originals or copies of
any PARTY A Trade Secrets. It is understood that from time to time it may be
necessary that certain of the foregoing items be copied or removed from their
location; however, this shall be done subject to the requirement of this
Article that the original material be returned to its proper location as soon
as possible and that the confidential nature and integrity of the foregoing as
PARTY A Trade Secrets be strictly maintained both as to original documents and copies
thereof.

	
   
	
  14.3.1
	
  Insofar as the officers, employees and consultants
  of PARTY B (herein collectively “Agents”) who come in contact with PARTY A
  Trade Secrets are concerned, PARTY B shall cause such Agents to enter into
  PARTY A Trade Secrecy Agreements substantially in the form of Annex VII to
  this Agreement. PARTY B shall exert its best efforts to cause its Agents to
  adhere to and to abide by the provisions, restrictions and limitations of the
  PARTY A Trade Secrecy Agreements, which efforts shall include the institution
  and prosecution of appropriate litigation if such be necessary and desirable.

	
   
	
   
	
   

	
   
	
  14.3.2
	
  The Parties hereby agree and acknowledge that PARTY
  A is an intended third party beneficiary of the PARTY A Trade Secrecy
  Agreements, and that PARTY A may in its sole discretion, on its own behalf or
  derivatively and/or on behalf of the Corporation directly enforce the
  provisions of the PARTY A Trade Secrecy Agreements and/or any breach thereof
  against any and all Agents of PARTY B (as defined in Article 14.3.1 hereof)
  who have executed same.




14.4     Remedies
in the Event of a Violation of Article 14 Hereof.

           It
is understood and recognized by PARTY B that in the event of any violation by
PARTY B and/or its Agents of the provisions of Article 14 hereof, PARTY A’s
remedy at law will be inadequate and PARTY A will suffer irreparable injury.
Accordingly, PARTY B consents to injunctive and other appropriate equitable
relief upon the institution of legal proceedings therefor by PARTY A and in any
court of competent jurisdiction to protect PARTY A Trade Secrets. Such relief
shall be in addition to any other relief to which PARTY A may be entitled at
law or in equity, which shall include but not be limited to the right of
immediate termination of this Agreement.


23










ARTICLE 15

COVENANT TO OBSERVE

THE DOCTRINE OF “CORPORATE OPPORTUNITY”

15.1     Doctrine
of Corporate Opportunity and Observance Thereof.

           It
is the intent of the Parties to this Shareholders Joint Venture Agreement and
to the Ancillary Agreements to deal solely with each other with respect to the
commercial, technical and strategic development of the Corporation’s Business
in the Territory. Consequently, the Parties to each agreement cited above
hereby renounce and covenant not to engage in any activity which would either
(a) negatively impact the performance of their duties under this Shareholders
Joint Venture Agreement or the Ancillary Agreements in the Territory, or (b)
have the effect of displacing or substituting Net Sales of Product and/or Other
Agreed Upon Technologies and/or the application of NTI Intellectual Property
Rights in the Territory; except as specifically agreed to by the Parties in
furtherance of the Corporation’s Business (“Corporate Opportunity”).

15.2     Agreement
Not to Divert Resources.

           PARTY
A and PARTY B agree that during the term of this Agreement they shall not,
directly or indirectly, in any capacity whatsoever, engage in, own, manage,
operate, control, act as a consultant to, have a financial interest in, or
otherwise participate in the ownership, licensing, management, operation or
control of, a business which would impede, substitute, displace or divert Net
Sales of Product and/or of Other Agreed Upon Technologies from the Corporation
within the Territory except through the Corporation in furtherance of the
Corporation’s Business. During said term neither of such Parties shall in any
way, directly or indirectly, divert, take away or interfere with or attempt to
divert, take away or interfere with, any of the customers, accounts, suppliers,
employees, representatives or patronage of the Corporation. In the event that
this Agreement is terminated: (i) because of a material Breach of this
Shareholders Joint Venture Agreement by a Party; (ii) because of a material
Breach of any Ancillary Agreement by a Party; (iii) upon the bankruptcy or
other adverse condition of a Party as described in Article 17 hereof; (iv)
pursuant to Article 18 hereof; or (v) upon a Breach of Articles 13, 14 or 15
hereof, then the Party in Breach or subject to such adverse condition shall
continue to be bound by the provisions of Article 15 of this Shareholders Joint
Venture Agreement for a period of three years following the date of
termination, but shall at no time be permitted to use NTI and/or PARTY B Trade
Secrets or PARTY A Trade Secrets, as the case may be, for any activity outside
the Corporation.

15.3     Remedies
for Breach of Agreement Not to Divert Resources.


           It
is understood and recognized by the Parties that in the event of a violation of
the provisions of Article 15 hereof by a Party, the remedy at law will be
inadequate and that the other Party to this Shareholders Joint Venture
Agreement shall suffer irreparable injury. Accordingly, each Party to this
Agreement consents to injunctive or other appropriate equitable relief upon the
institution of legal proceedings therefor by the non-violating Party.  Such relief shall be in addition to any
other relief to which a Party may be entitled at law or in equity, which shall
include but not be limited to the right of immediate termination of this
Agreement.

24










ARTICLE 16

GRANT OF RIGHT AND LICENSE BY PARTNER TO NTI

CONCERNING IMPROVEMENTS AND MODIFICATIONS TO NTI 

INTELLECTUAL PROPERTY RIGHTS

16.1     Disclosure
to NTI of Improvements to NTI Intellectual Property Rights by PARTY A.

           PARTY
A agrees to disclose promptly to PARTY B any improvements or modifications to
NTI Intellectual Property Rights of whatever nature or description, which come
to be learned by PARTY A or which are made by or through its efforts, without
any obligation by NTI or PARTY B to make payment therefor during the effective
time of the Agreement.

16.2     Grant
of Right and License to NTI.

           PARTY
A hereby grants to NTI a sole, worldwide and fully paid-up right and license
under any intellectual property rights, trade secrets and know-how owned,
controlled, acquired or which may otherwise be transferred or granted to PARTY
A during the term of this Agreement to make, have made, use, sell or otherwise
dispose of products incorporating any or all improvements in and modifications
to NTI Intellectual Property Rights together with the Know-how, Materials,
Process, Product and/or Masterbatch and/or to sublicense third parties to do
the same during the effective time of the Agreement. But NTI/PARTY B should
fully reimburse all the expenses incurred PARTY A spent for the development of
such improvements in and/or modifications to the Know-how, NTI and/or Party B
Trade Secrets and NTI Intellectual Property Rights provided that NTI/Party B
are informed of and agree to any research program to be conducted by Party A,
in writing, in advance of incurring any expenses therefrom. The reimbursement
is not included in the compensation and payment stated in 9.1, 9.2, 9.3 and
9.4.

16.3     Obligations
of PARTY A Concerning the Filing of New Patents.


           PARTY
A agrees that at NTI’s request and at NTI’s cost it will promptly file and
diligently prosecute applications for letters patent in NTI’s name on any and
all patentable improvements to NTI Intellectual Property Rights coming into its
purview in the Territory. PARTY A further agrees, upon NTI’s request and at
NTI’s cost, that it will promptly file and diligently prosecute corresponding
patent applications in NTI’s name in such other countries outside the Territory
as are designated by NTI and/or PARTY B. But when PARTY A apply for patents in
NTI/PARTY B’s name on the invention made or grant by PARTY A, PARTY A have the
right to state in the letters of patent that PARTY A is the inventor, and shall
get paid by NTI/PARTY B. This payment is on a Case-by-Case basis, and shall be
a negotiable decision by and between PARTY A and NTI/PARTY B. The payment is
not included in the compensation and payment stated in 9.1, 9.2 and 9.3.

25










16.4     Review
of Potentially Infringing Technology.

           In
the event that PARTY A shall learn of any technology, processes or patents
developed or owned by third parties which may infringe or otherwise be in
conflict with NTI Intellectual Property Rights, then PARTY A will forthwith
provide NTI with whatever information it may have with respect thereto. NTI
and/or PARTY B and PARTY A will then consult with one another as to:

	
   
	
  16.4.1
	
  Taking appropriate legal action against such third
  party for infringement of NTI Intellectual Property Rights together with NTI
  and/or PARTY B Trade Secrets; and/or

	
   
	
   
	
   

	
   
	
  16.4.2
	
  Purchasing, licensing or otherwise acquiring rights
  to such technology, processes or patents of such third parties, in which
  event such rights as are acquired shall be extended to NTI pursuant to
  Article 16.2 hereof. Based upon their joint decision, PARTY A shall exert its
  best efforts to carry out whatever the Parties have determined to be in their
  mutual best interest.




16.5     Disclosure
to PARTY A of Improvements to NTI Intellectual Property Rights by NTI/PARTY B.

           NTI/PARTY
B agrees to disclose to PARTY A any improvements or modifications to NTI
Intellectual Property Rights, which come to be learned by NTI/PARTY B or which
are made by or through its efforts during the effective time of the Agreement.
The disclosure is still included in the NTI/PARTY B compensation stipulated in
9.1.3 and 9.1.4 hereof., without any obligation by PARTY A or the Corporation
to make additional payment therefor.


16.6     Grant
of Right and License to the Corporation

           NTI/PARTY
B further agrees to grant a sole license in the Territory under the disclosure
of the improvements or modifications to the Corporation. The Corporation shall
use the improvements or modifications to NTI Intellectual Property Rights to
make, use and sell Product for the purpose of the profit in the Territory. The
Corporation is not obligated to make any additional payment therefor.

ARTICLE 17

TERM OF AGREEMENT

17.1     Term
of Cooperation.

           This
Agreement shall become effective on the Effective Date and shall, unless
otherwise terminated in accordance with the provisions hereof, continue in
effect for a term of 40 years.

26










17.2     Termination.

           This
Agreement, having become effective as of the Effective Date hereof, shall
continue in effect unless:

	
   
	
  17.2.1
	
  Terminated by either Party in accordance with the
  provisions of Articles 13, 14 and/or 15 hereof;

	
   
	
   
	
   

	
   
	
  17.2.2
	
  Terminated in accordance with Article 17.3 and/or
  Article 17.4 hereof;

	
   
	
   
	
   

	
   
	
  17.2.3
	
  Terminated by either Party by reason of a material
  Breach or Default of this Agreement by the other Party which has not been
  cured or remedied in accordance with Article 18 hereof; or

	
   
	
   
	
   

	
   
	
  17.2.4
	
  Terminated automatically, in conjunction with the
  termination of any of the Ancillary Agreements by a Party thereto by reason
  of a material Breach (as therein defined) or Default (as therein defined) of
  any such Ancillary Agreement by a Party thereto, which Breach or Default has
  not been cured or remedied in accordance with the curative provisions
  thereof. In such event this Agreement shall likewise terminate on the same
  date, without any further act or notice given by a Party hereto.




17.3     Termination
Upon Change of Control of a Party.

           In
the event that a Change of Control of a Party hereto shall occur, then the
other Party may, upon six (6) months prior written notice given to such Party,
terminate this Agreement, unless the Change of Control of such Party shall have
been effected upon prior notification and with the written understanding of the
other Party.


17.4     Termination
Upon Bankruptcy or Insolvency.

           If
a Party hereto shall become bankrupt or insolvent or shall file any debtor
relief proceedings, or if there shall be filed in Court against a Party legal
proceedings or bankruptcy or insolvency or reorganization or for the
appointment of a receiver or trustee of all or a portion of such Party’s
property, or if a Party makes an assignment for the benefit of creditors or
petitions for or enters into an arrangement for debtor relief and such
proceedings as are described aforesaid are not dismissed within a period of
ninety (90) days after the institution thereof, then, at the option of the
other Party, this Agreement shall forthwith terminate by written notice given
to the Party who has filed, instituted or against whom any of the proceedings
aforesaid have been brought; provided that if a stay has been granted by a
Trustee or Judge in Bankruptcy by virtue of which this Agreement is to be
deemed an executory contract, then the other Party shall continue to perform
under the terms of this Agreement if:

	
   
	
  17.4.1
	
  Payments due under this Agreement for past
  obligations are rendered in full;




27










	
   
	
  17.4.2
	
  Payments due under this Agreement for present
  obligations are rendered pursuant to a payment schedule acceptable to the
  other Party; and

	
   
	
   
	
   

	
   
	
  17.4.3
	
  All other provisions of this Agreement are complied
  with fully.




17.5     Payment
of Amounts Due.

           In
the event of termination of this Agreement, each Party shall pay to each other
Party all amounts due and owing pursuant to this Agreement prior to the
effective date of termination.


17.6     Cooperation
Upon Termination.

           Upon
termination of this Shareholder Joint Venture Agreement, the Corporation shall
cooperate with PARTY A in transferring PARTY A Trade Secrets to PARTY A or its
designated assignee; and PARTY A and Corporation shall cooperate with NTI and
Party B in transferring NTI Intellectual Property Rights, and NTI and/or Party
B Trade Secrets to NTI, Party B or their designated assignee.

17.7     Non-Release
of Obligations.

           The
termination of this Agreement shall not release the Parties from their
obligations to settle all financial accounts between themselves in cash
forthwith. Notwithstanding the termination hereof, each Party shall be
responsible for the performance of all of its obligations and responsibilities
hereunder up to the effective date of termination. As provided in Articles 13
and 14, upon termination of this Agreement, NTI Intellectual Property Rights,
together with NTI and/or PARTY B Trade Secrets and PARTY A Trade Secrets shall
continue to be kept secret and confidential.

17.8     Cessation
of Rights Upon Termination.

           Upon
the termination of this Agreement for reason of Default or Breach of this
Agreement or of an Ancillary Agreement, all rights which the Defaulting Party
may have had under or pursuant to this Agreement shall forthwith cease and terminate.
If a dispute as to whether a Default or Breach exists is submitted to
Arbitration under Article 19 hereof, the Parties shall jointly appoint a
trustee or agent to oversee the execution of the duties hereunder and the
protection of the rights hereunder of the Party allegedly in Default and/or
Breach. If the Parties cannot agree on a trustee or agent for such purposes,
the Arbitration Panel shall forthwith appoint same.

17.9     Liquidation
of the Corporation and Winding-up of the Corporation’s Business Upon Termination.


           Upon
termination of this Agreement:

28











	
   
	
  17.9.1
	
  The Corporation shall be liquidated forthwith; and,
  following payment of all known just obligations of the Corporation, and
  establishment of a reasonable reserve to pay such just obligations of the
  Corporation as are unknown at the time of liquidation of the Corporation, the
  remaining assets shall be divided equally between the Parties pursuant to an
  independent valuation thereof by the outside auditors of the Corporation or,
  in the event Arbitration has been invoked in accordance with Article 19
  hereof, by the arbitration panel. 
  Notwithstanding the foregoing: 

	
   
	
   
	
   

	
   
	
   
	
  (i) PARTY A Trade Secrets, as defined in Article 14
  hereof, shall not constitute an asset of the Corporation upon termination of
  this Agreement, but rather shall revert to PARTY A in accordance with Article
  17.6. hereof; and

	
   
	
   
	
   

	
   
	
   
	
  (ii) NTI Intellectual Property Rights, together with
  NTI and/or PARTY B Trade Secrets, as defined in Article 13 hereof, shall not
  constitute an asset of the Corporation upon termination of this Agreement,
  but rather shall revert to NTI and/or PARTY B in accordance with Article
  17.6. hereof.

	
   
	
   
	
   

	
   
	
  17.9.2
	
  The Corporation’s Business shall be wound up
  forthwith; and no further orders shall be accepted by the Corporation for
  Product or for Other Agreed Upon Technologies, provided that orders for
  Product and/or Other Agreed Upon Technologies which were received by the
  Corporation prior to termination of this Agreement shall be filled by the
  Corporation either out of its own existing inventory and/or its own
  manufacturing capabilities, or through imports from NTI or a PARTY B
  Affiliate, as appropriate.




ARTICLE 18

DEFAULT

18.1     Event
of Default.


           A
Default (“Default”) hereunder shall exist in the event of:

	
   
	
  18.1.1
	
  Non-payment of funds by one Party to another Party
  when due and owing; and/or

	
   
	
   
	
   

	
   
	
  18.1.2
	
  A material Breach (“Breach”) of any provision of
  this Shareholders Joint Venture Agreement other than Articles 13, 14 or 15
  hereof, or any of the Ancillary Agreements; and/or 

	
   
	
   
	
   

	
   
	
  18.1.3
	
  A Breach of Articles 13, 14 and/or 15 hereof.




18.2     Remedies
Upon Default or Breach.

           The
remedies available to each Party in an instance of Default or Breach by the
other Party shall be as follows:

29










	
   
	
  18.2.1
	
  If a Party shall fail to make any payments required
  hereunder after the same are due, (other than due to governmental delays) or
  if it shall commit a Default or Breach in the performance of, or by failure
  to observe and comply with, any other material term or provision of this
  Agreement or any of the Ancillary Agreements to be performed, observed or
  complied with by it, then the other Party shall have the right to declare a
  Default and terminate this Agreement unless the Party in Default or Breach
  shall cure such failure to pay, and/or Breach or Default, or cause the same
  to be cured, within thirty (30) days (fifteen (15) days in case of monetary
  default) after receipt of written notice from the other Party; provided.
  however, that if the Party in Breach or Default commences to cure same within
  the curative period specified herein, then the right of termination shall be
  held in abeyance for a reasonable period of time so long as the Party in
  Default or Breach proceeds to cure such Default or Breach with due diligence.
  A Party’s right of termination shall be in addition to and not in limitation
  of any of its other rights at law or in equity based upon the other Party’s
  Default or Breach. Any notice of termination shall stipulate the effective
  date of termination which shall be not less than three (3) months nor more
  than six (6) months following the date that such notice is given.

	
   
	
   
	
   

	
   
	
  18.2.2
	
  Notwithstanding the foregoing, in the event of a
  violation of Articles 13, 14 and/or 15 hereof by a Party hereto, the other
  Party may at its sole discretion terminate this Agreement with immediate
  effect upon giving notice to the Party in Breach of Article 13, 14 and/or 15
  hereof as provided herein.




18.3     Non-Waiver
of Rights.

            A
Party’s failure to terminate this Agreement on account of any Breach or Default
by the other Party as provided in Article 18.1 or 18.2 hereof shall in no event
constitute or be deemed to constitute a waiver by such Party of its right to
terminate this Agreement at any time while any such Breach or Default continues
(subject to the provisions of Article 18.2 hereof), or on account of any
subsequent Breach or Default by a Party.


ARTICLE 19

DISPUTE RESOLUTION

19.1     Dispute
Resolution by Arbitration.

            Any
and all disputes; except as excluded under Article 19.2 hereof, which may arise
between the Parties during the term of this Agreement, after the termination
thereof, or following the liquidation or dissolution of the Corporation, upon
failure by the Parties to amicably resolve same after mutual good faith
negotiations, shall be exclusively settled by arbitration, including, but not
limited to, the following:

30











	
   
	
  19.1.1
	
  A dispute as to whether a Default exists;

	
   
	
   
	
   

	
   
	
  19.1.2
	
  A dispute as to whether a Default entitles the
  non-defaulting Party to terminate this Agreement;

	
   
	
   
	
   

	
   
	
  19.1.3
	
  A dispute as to the validity of this Article 19;

	
   
	
   
	
   

	
   
	
  19.1.4
	
  A dispute relating to the construction, meaning,
  interpretation, application or effect of this Agreement or anything contained
  herein;

	
   
	
   
	
   

	
   
	
  19.1.5
	
  A dispute as to the rights, obligations or
  liabilities of the Parties hereunder.




19.2     Disputes
Not Subject to Arbitration.

            Notwithstanding
anything to the contrary set forth in this Agreement:


	
   
	
  19.2.1
	
  Arbitration may not be invoked regarding matters
  expressed in this Agreement to be agreed upon by or determined with the
  consent or approval of both Parties.

	
   
	
   
	
   

	
   
	
  19.2.2
	
  Arbitration may not be invoked if a Party violates
  the provisions of this Agreement relating to NTI Intellectual Property
  Rights, NTI and/or PARTY B Trade Secrets, PARTY A Trade Secrets or Corporate
  Opportunity. In such event, the remedies set forth in Articles 13, 14, 15
  and/or 18 hereof shall apply.




19.3     Conduct
of Arbitration Proceedings.

            All
disputes concerning this Agreement or arising out of the exercise hereof shall
be settled by friendly agreement of the Parties; where no agreement can be
reached such disputes shall be submitted for arbitration. Such Arbitration
shall be conducted in English and shall be carried out by the Arbitration
Commission of the International Chamber of Commerce of Singapore under the
UNCITRAL Arbitration Rules. The laws of the People’s Republic of China shall
apply. The decision of this Arbitration Panel is final and binding upon both
Parties. Judgment upon the award rendered by the arbitrator, including an award
concerning the payment of costs, attorneys’ fees, and expenses of the
Arbitration proceedings, may be entered in any court of competent jurisdiction
and assets may be attached in any country in the world pursuant to such
judgment.

19.4     Designation
of the “Prevailing Party”.

            In
each case in which arbitration is invoked under this Agreement or any of the
Ancillary Agreements, the arbitration panel shall be required to designate one
or the other Party as the Prevailing Party (“Prevailing Party”).


19.5     Punitive
Damages Excluded.

            The
Prevailing Party in an arbitration proceeding convened hereunder shall be
entitled to recover all reasonable damages plus documented costs incurred in
pursuing its arbitration claim, including but not limited to legal fees and
travel expenses, but shall not be entitled to exemplary or punitive damages.

31










ARTICLE 20

PROSCRIPTION OF AUTHORITY

OF THE PARTIES TO BIND EACH OTHER

            Nothing
contained in this Agreement shall be construed to constitute the Parties as
agents for one another or to render any Party liable for any debts, liabilities
or obligations of the other (“Indebtedness”). It is understood that such
Indebtedness, if incurred, is outside the scope of this Agreement and the
Ancillary Agreements. No Party shall have the authority to extend or to utilize
the credit of the other, to extend credit in the other Party’s name, or to
represent that it is authorized to do so without the express written consent of
the other. In the event that a creditor of a Party shall assert a claim against
that Party based on such Indebtedness, then the Party who in fact is obligated
thereon shall indemnify and hold the other Party harmless from and against any
losses, claims or liabilities by reason thereof.

ARTICLE 21
RECIPROCAL INDEMNIFICATION

            Each
Party shall indemnify and hold the other and the Corporation harmless from and
against any and all claims, demands, actions, rights of action, damages, costs
and expenses which shall or may arise by virtue of anything done or omitted to
be done by the indemnifying Party (or through or by its Agents) in breach of
the terms of this Agreement. The indemnifying Party shall be notified promptly
of the existence of the claims, demands, actions or rights of action and shall
be given reasonable opportunity to defend same in which defense the Party to be
indemnified shall cooperate. If the indemnifying Party fails forthwith upon
notice to assume such defense, then the Party to be indemnified may proceed
with the defense thereof including settlement, in which case the indemnifying
Party shall bear the costs of defense including attorneys’ fees and shall pay
the amount of any judgment or settlement.

ARTICLE 22
TRANSFER OF EQUITY INTEREST


22.1     Restrictions
on Transfer of Equity Interests.


            Following
the initial issuance of Equity Interests of the Corporation pursuant to Article
4 hereof, no Holder of Equity Interests shall Transfer any Equity Interests or
any right, title or interest herein owned or held by it except and only in
strict accordance with the terms and subject to the restrictions, rights,
obligations and options hereinafter set forth. The Corporation, PARTY A and
PARTY B shall be under no obligation to recognize as holder of Equity
Interests, or Transferee of any of a Shareholder’s Equity Interests which were
transferred to such Transferee, other than in strict compliance with the terms
and provisions of this Agreement and, unless so complied with, any such
Transferee of such Equity Interests shall have no rights as a Holder of Equity
Interests of the Corporation with respect of such Equity Interests.

32










22.2     Right
of First Refusal to Acquire Equity Interests.

            Any
Holder of Equity Interests receiving a bona fide offer (“Offer”) for the
purchase of its Equity Interests, and who wishes to Transfer such Equity
Interests to a proposed Transferee in accordance with such Offer shall, prior
to making any Transfer of Equity Interests, give written notice (hereinafter
called “Notice”) thereof to the Corporation and to the other Holders of Equity
Interests. Such Notice shall enclose a copy of the offer and shall set forth
the name and address of the proposed Transferee, the selling price, the terms
of payment, and all other significant terms and conditions relating thereto.
The proposed Transferor of Equity Interests shall furnish to the Corporation
and to the other Holders of Equity Interests such additional information
concerning the prospective Transfer of Equity Interests and/or Transferee as
any of them may reasonably request. In order that the other Holders of Equity
Interests may be better able to determine the compatibility of the proposed
Transferee as a Shareholder of the Corporation, the proposed Transferor of
Equity Interests shall arrange for the other Holders of Equity Interests, if so
requested, to be introduced to the proposed Transferee and to have discussions
with same. For a period of forty-five (45) days following the receipt of said
Notice of Offer, the other Holders of Equity Interests shall have the right of
first refusal to purchase any or all of the Equity Interests specified in the
Notice at the terms set forth therein.

22.3     Exercise
of Right to Acquire Equity Interests.


            The
foregoing right of first refusal shall be exercisable by written notice to the
prospective Transferor of Equity Interests within the forty five (45) day
period aforesaid and the exercise of said right shall be effective upon receipt
of the written notice by said Transferor of Equity Interests. If the right of
first refusal is exercised, the purchase and sale shall be closed at the
offices of the Corporation or at such other place as agreed within ten (10)
days after the expiration of the period for exercise thereof on the terms and
conditions set forth in the Notice of Offer. The Transferor of Equity Interests
at the time of sale shall represent and warrant that upon any Transfer of
Equity Interests, whether to the proposed Transferee or to an existing
Shareholder, such Transferee or existing Shareholder shall be the sole owner of
such Equity Interests free and clear of any and all liens, encumbrances,
equities or restrictions of any nature whatsoever, except that any future
Shareholder shall also become subject to the provisions of this Agreement.

22.4     Sale
of Equity Interests to a Third Party.

            If
the other Shareholder does not accept the offer of the Equity Interests made as
hereinabove required within the time period hereinabove provided, in writing,
the Transferor of Equity Interests may then for a period of sixty (60) days
following the expiration of such time period transfer all of the Equity
Interests specified in the Notice in accordance with the terms and conditions
therein set forth; provided that the Transferee shall have joined in this
Agreement by instrument in form and substance satisfactory to the remaining
Shareholder and shall thereupon be bound as a Shareholder. The Parties agree
that if Equity Interests are to be sold to a third party in accordance with the
provisions of this Article 22.4, they shall call a meeting of the Holders of
Equity Interests of the Corporation and at such meeting shall approve the sale
to such third party upon the terms herein provided.

33











22.5     Equity
Interests Transferred to a Third Party Subject to Restrictions.

            Equity
Interests transferred to a third party and Equity Interests not so transferred
within the sixty (60) day period referred to in Article 22.4 hereof shall again
be subject to all of the terms, conditions and restrictions of this Agreement.
Unless the other Shareholder shall so agree in writing, Equity Interests may
not be transferred to the third party if the terms and conditions under which
the Transferor of Equity Interests intends to consummate the Transfer of Equity
Interests differ in any material way from the terms and conditions set forth in
the Notice.

22.6     Attempted
Transfer of Equity Interests in Violation of this Agreement.

            In
the event of any act of Transfer of Equity Interests in violation of the terms
of this Agreement, the Corporation shall continue to recognize only the
Shareholder of record as the bona fide owner of such Equity Interests and as
having any rights therein and the purported Transferee of such Equity Interests
shall not be entitled to vote such Equity Interests, receive any dividends or
other distribution in respect thereof or exercise any other rights in relation
thereto. Moreover, the non-transferring Shareholder shall have the right to
vote the Equity Interests of the purported Transferor of Equity Interests until
such time as the purported Transfer of Equity Interests has been rescinded.
This Article 22.6 shall not be construed as limiting any remedy which any
Shareholder may have under law upon any Transfer of Equity Interests subject to
this Agreement which is attempted in violation of this Agreement.

22.7     Permitted
Transfer of Equity Interests.

            Notwithstanding
anything to the contrary contained in this Agreement, any Shareholder shall
have the right, without regard to or compliance with any of the provisions of
Article 22 hereof, to transfer any Equity Interests owned by it to any
corporation or entity which controls, is controlled by, or is under common
control with such Shareholder without first obtaining the consent to such
Transfer of Equity Interests by the other Shareholder. Upon such Transfer of
Equity Interests the Transferee shall join in this Agreement and be bound as a
Shareholder to all of the provisions hereof. Any Transfer of Equity Interests
permitted by this Article 22.7 shall also be subject to the provisions of
Article 23.1 hereof, and shall only be made in accordance with the laws of the
People’s Republic of China.

22.8     Pledge
of Equity Interests Subject to this Agreement.


            Any
pledge of Equity Interests by a Shareholder for any of its obligations shall be
subject to the provisions of this Agreement.

34










ARTICLE 23

GENERAL PROVISIONS

23.1     Benefit
of Parties.

            All
of the terms and provisions of this Shareholders Joint Venture Agreement and of
the Ancillary Agreements shall be binding upon the Parties executing same and
their respective permitted successors and assigns. Except as expressly provided
herein, a Party may not assign its rights and obligations to a third party
without the written consent of the other Party; provided, however, that a Party
may assign this Agreement and all of its rights hereunder (or a portion of this
Agreement and the rights hereunder relating thereto) to, or provide for the
performance of all or part of its obligations hereunder by, a Party which
controls, is controlled by or is under common control with such Party.  In such event, (I) the assignor shall
unconditionally guarantee the performance and obligations of the assignee and
shall not be released of its liabilities, obligations and responsibilities
hereunder and (ii) the assignee shall expressly assume in writing and agree to
perform such obligations, liabilities and responsibilities of the assignor.

23.2     Counterparts.

            This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

23.3     Cooperation.

            During
the term of this Agreement, each Party shall cooperate with and assist each
Party in taking such acts as may be appropriate to enable all Parties to effect
compliance with the terms of the Shareholders Joint Venture Agreement and of
the Ancillary Agreements, and to carry out the true intent and purposes
thereof.


23.4     Index,
Captions, Definitions and Defined Terms.

            The
captions of the Articles of this Agreement and subsections thereof are solely
for convenient reference and shall not be deemed to affect the meaning or
interpretation of any provisions hereof. Notwithstanding the foregoing, the
Definitions set forth in Article 1 hereof, together with any other defined
terms in this Agreement, as identified by their insertion in parentheses and
quotation marks, (“Defined Terms”) shall be incorporated herein as written,
made a part hereof, and govern the interpretation of the text of this
Agreement, irrespective of whether such Definitions or Defined Terms appear in
the text of this Agreement before or after they are defined.

23.5     Waiver
of Compliance.

            The
Party for whose benefit a warranty, representation, covenant or condition is
intended may in writing waive any inaccuracies in the warranties and
representations contained in this Agreement or waive compliance with any of the
covenants or conditions contained herein and so waive performance of any of the
obligations of the other Party hereto, and any Breach or Defaults hereunder;
provided, however, that such waiver shall not affect or impair the waiving
Party’s rights in respect to any other covenants, condition, Breach or Default
hereunder.

35










23.6     Force
Majeure.

            In
the event that a Party is prevented or delayed from performing, fulfilling or
completing an obligation provided for in this Agreement as a result of delays
caused by strikes, lock-outs, unavailability of materials, acts of God, acts of
any national, state or local governmental agency or authority of a foreign
government, war, insurrection, rebellion, riot, civil disorder, fire, explosion
or the elements, then the time for performance, fulfillment or completion shall
be extended for a period not exceeding the number of days by which the same was
so delayed. If a force majeure event shall be in existence for one year or
more, then either Party shall have the right to terminate this Agreement at any
time thereafter by giving at least thirty (30) days written notice of
termination to the other Party, provided that the force majeure event continues
to be in effect as of the date that such notice is given.

23.7     Notices.


            All
notices, requests, demands or other communications which are required or may be
given pursuant to the terms of this Agreement shall be in writing and delivery
shall be effective in all respects if delivered (i) by telefax promptly
confirmed by letter, (ii) personally, (iii) by registered or certified air
mail, postage prepaid, or (iv) by neutral commercial courier service, such as
Federal Express, DHL, UPS or equivalent, as follows:

	
  If to PARTY A, to:
	
  Tianjin China March Group, Ltd.

	
   
	
  Attention: Mr. Zhang Bing Hua

	
   
	
  Tianjin HUA YUAN Industrial Zone, Huoju Building 

	
   
	
  Tianjin

	
   
	
  People’s Republic of China

	
   
	
  Telefax: 011 862223670120

	
   
	
   

	
   Copy to:
	
  TIANJIN ZERUST

	
   
	
  C/o Tianjin China March Group, Ltd. Company

	
   
	
  Attention: Mr. Meng Tao

	
   
	
  Tianjin HUA YUAN Industrial Zone, 

	
   
	
  Huoju Building, Tower 1, No. 127 

	
   
	
  Tianjin

	
   
	
  People’s Republic of China Telefax: 011 862223670120




36









	
   If to PARTY
  B, to:

  	
  NTI ASEAN LLC

	
   
	
  c/o Northern Technologies International Corporation 

	
   
	
  Attention: President

	
   
	
  6680 North Highway 49

	
   
	
  Lino Lakes, MN 55014

	
   
	
  Telefax: 1-612-784-2902

	
   

  	
   

	
  Copy to:
	
  Mr. Yoshiharu Rikuta

	
   
	
  Mr. Haruhiko Rikuta

	
   
	
  Taiyo Petroleum Gas Co., LTD. 

	
   
	
  4-9 Nihonbashi-honcho l-chome 

	
   
	
  Chuo-ku Tokyo 103

	
   
	
  Japan

	
   
	
  Telefax: 81 33 2420986

	
   

  	
   

	
  Copy to:
	
  Northern Technologies International Corporation 

	
   
	
  Attention: Chairman

	
   
	
  One Commerce Park Square

	
   
	
  23200 Chagrin Blvd., Suite 107

	
   
	
  Beachwood, OH 44122

	
   
	
  Telefax: 1-216-595-1741




or to such other address
as may be specified in writing by any of the above.

23.8     Entire
Agreement.


            This
Shareholders Joint Venture Agreement and the Ancillary Agreements, contain the
entire understanding of the Parties as of the date of execution of each such
agreement. There are no representations, promises, warranties, covenants,
agreements or undertakings other than those expressly set forth or provided for
in this Shareholders Joint Venture Agreement and the Ancillary Agreements, and
the same supersede all prior agreements and understandings between the Parties
with respect to the relationships and transactions contemplated by this
Shareholders Joint Venture Agreement. It is the intent of the Parties to
develop the relationship established hereunder, however, and to amend and
supplement this Shareholders Joint Venture Agreement so as to provide for
expansion both of Net Sales of Product and of the scope of the Corporation’s
Business with Other Agreed Upon Technologies. Any amendment or supplement to
this Shareholders Joint Venture Agreement and the Ancillary Agreements must,
however, be clearly identified as such and set forth in writing (“Supplemental
Documents”).  Supplemental Documents may
include Corporate Resolutions and/or other written exchanges between Parties,
but must be manually signed, in the original, by duly authorized
representatives of the Parties to constitute valid Supplemental Documents for
purposes hereof.

37










23.9     Validity
of Provisions.

            Should
any part of this Agreement or the Ancillary Agreements be declared by any court
of competent jurisdiction to be invalid, such decision shall not affect the
validity of the remaining portion, which remaining portion shall continue in
full force and effect as if such instrument had been executed with the invalid
portion thereof eliminated therefrom, it being the intent of the Parties that
they would have executed the remaining portion without including any such part
or portion which may for any reason be declared invalid. In the event that a
provision of this Agreement or any Ancillary Agreement shall be declared to be
invalid, then the Parties agree that they shall, in good faith, negotiate with
one another to replace such invalid provision with a valid provision as similar
as possible to that which had been held to be invalid, giving due recognition
to the reason for which such provision had been held invalid.

23.10     Governmental
Filings.


               PARTY
A shall be responsible for the preparation and filing of all necessary reports
relating to this Agreement and the transactions contemplated hereby with each
appropriate government agency in the Territory, and shall maintain all required
governmental filings and permits current. 
PARTY B shall provide whatever information and documentation reasonably
required of and available to it in connection with the preparation and filing
of such reports.

23.11     Payments.

              Any
payment to be made to PARTY B or PARTY A pursuant to any provision of this
Agreement shall be made by means of a wire transfer or by means of a deposit to
a bona fide bank account as designated by PARTY A or PARTY B, as the case may
be. PARTY A and PARTY B shall each have the right to specify in writing any
bank account to which payments due them (respectively) shall be made.

23.12     Derivative
Enforcement by PARTY B.

              In
the event of a Material Breach or Default of this Agreement or any of the
Ancillary Agreements by PARTY A and/or its Agents, NTI PARTY B may,
derivatively for and on behalf of the Corporation enforce the terms thereof
against PARTY A and/or its Agents. In the event of derivative enforcement
hereunder, the matter shall be adjudicated in accordance with the provisions of
Article 19 hereof.

23.13     Derivative
Enforcement by PARTY A.

               In
the event of a Material Breach or Default of this Agreement or any of the
Ancillary Agreements by PARTY B and/or its Agents, PARTY A may, derivatively
for and on behalf of the Corporation, enforce the terms of this Agreement or
any of the Ancillary Agreements against PARTY B and/or its Agents. In the event
of derivative enforcement hereunder, the matter shall be adjudicated in
accordance with the provisions of Article 19 hereof.

38











23.14     Publicity.

              Any
publicity with respect to this Agreement prior to the formation of the
Corporation shall be under the joint control of both Parties. After the
formation of the Corporation, publicity shall be under the control of the
Corporation as determined by the Board of Directors of TIANJIN ZERUST.

23.15     Ratification
by the Corporation of the Shareholders Joint Venture Agreement and the
Ancillary Agreements.

              The
Parties shall cause the Corporation to expressly ratify, assume, approve, and
adopt this Shareholders Joint Venture Agreement and to enter into the Ancillary
Agreements as of the Effective Date so that the same, to the extent applicable
to the Corporation, shall be binding upon it.

23.16     Brokers.

              The
Parties acknowledge that all negotiations relative to this Shareholders Joint
Venture Agreement and the Ancillary Agreements and the transactions
contemplated   hereunder have been
carried on by them directly, without intervention of any other person retained
by either of them so as to give rise to any valid claim against any of the Parties
hereto or the Corporation for a brokerage commission, finder’s fee or any
similar payment.

ARTICLE 24

LANGUAGE AND COPIES

24.1     
Language used in the Agreement and Appendixes

              There
are two versions of the Agreements made respectively in Chinese and English,
both of which are of the same legal effect.

24.2     
Copies


              The
original Chinese and English versions of the Agreement shall have six copies.
Both PARTY A and NTI/PARTY B get two copies respectively, copies in English or
Chinese or both will be provided to pursuant Chinese approval offices and for
files in Chinese Industrial and Commercial Administration offices.

              IN
WITNESS WHEREOF, the Parties have executed this Shareholders Joint Venture
Agreement as of the day and year first above written.

	
  NTI ASEAN, LLC
	
   
	
  TIANJIN CHINA MARCH GROUP LTD.

	
   
	
   
	
   

	
   
	
   
	
   

	
  By:  /s/
	
   
	
  By:  /s/

	
   
	
  



  	
   
	
   
	
  



  
					



39